EMPLOYMENT AGREEMENT
                              --------------------

     THIS AGREEMENT,  entered into this 4th day of April,  1996, is an amendment
and restatement of the agreement entered into the 11th day of January,  1996, by
and between First Lancaster Federal Savings Bank (the "Bank") and Tony A. Merida
(the  "Employee"),  effective on the date (the  "Effective  Date") of the Bank's
conversion from mutual to stock form.

     WHEREAS,  the  Employee  has  heretofore  been  employed by the Bank as its
Executive Vice President and is experienced in all phases of the business of the
Bank; and

     WHEREAS,  the Board of  Directors  of the Bank  believes  it is in the best
interests of the Bank to enter into this Agreement with the Employee in order to
assure  continuity  of management of the Bank and to reinforce and encourage the
continued attention and dedication of the Employee to his assigned duties; and

     WHEREAS,  the parties  desire by this  writing to set forth the  continuing
employment relationship of the Bank and the Employee.

     NOW, THEREFORE, it is AGREED as follows:

     1. Employment.  The Employee is employed as the Executive Vice President of
        ---------
the Bank. The Employee shall render such  administrative and management services
for the Bank as are  currently  rendered  and as are  customarily  performed  by
persons  situated  in a similar  executive  capacity.  The  Employee  shall also
promote,  by entertainment or otherwise,  as and to the extent permitted by law,
the business of the Bank. The Employee's other duties shall be such as the Board
of Directors (the "Board") of the Bank may from time to time reasonably  direct,
including normal duties as an officer of the Bank.

     2. Base  Compensation.  The Bank agrees to pay the Employee during the term
        ------------------
of this Agreement a salary at the rate of $51,420 per annum, payable in cash not
less  frequently  than  monthly.  The Board  shall  review,  not less often than
annually,  the rate of the  Employee's  salary,  and in its sole  discretion may
decide to increase his salary.

     3.  Discretionary  Bonuses.  The Employee shall participate in an equitable
         ----------------------
manner with all other senior  management  employees of the Bank in discretionary
bonuses  that  the  Board  may  award  from  time to time to the  Bank's  senior
management employees. No other compensation provided for in this Agreement shall
be  deemed  a  substitute  for  the  Employee's  right  to  participate  in such
discretionary bonuses.

     4. (a)  Participation  in Retirement,  Medical and Other Plans.  During the
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term of this  Agreement,  the Employee  shall be eligible to  participate in the
following benefit plans: group hospitalization, disability, health, dental, sick
leave, life insurance,  travel and/or accident  insurance,  auto  allowance/auto
lease,  retirement,  pension,  and/or other  present or future  qualified  plans
provided by the Bank.

        (b)  Employee  Benefits;  Expenses.  The  Employee  shall be eligible to
             -----------------------------
participate  in any fringe  benefits  which are or may become  available  to the
Bank's senior management  employees,  including for example: any stock option or
incentive compensation plans, and any other benefits which are commensurate with
the  responsibilities  and functions to be performed by the Employee  under this
Agreement.  The Employee shall be reimbursed  for all  reasonable  out-of-pocket
business  expenses  which he shall incur in connection  with his services  under
this  Agreement  upon  substantiation  of such expenses in  accordance  with the
policies of the Bank.

     5. Term.  The Bank hereby  employs the  Employee,  and the Employee  hereby
        ----
accepts such employment under this Agreement,  for the period  commencing on the
Effective Date and ending  thirty-six months thereafter (or such earlier date as
is  determined  in  accordance  with  Section 9).  Additionally,  on each annual

<PAGE>
anniversary  date from the Effective  Date,  the  Employee's  term of employment
shall be extended for an additional  one-year  period beyond the then  effective
expiration date provided the Board determines in a duly adopted  resolution that
the performance of the Employee has met the Board's  requirements and standards,
and that this  Agreement  shall be extended.  Only those members of the Board of
Directors  who have no personal  interest  in this  Employment  Agreement  shall
discuss and vote on the approval and subsequent review of this Agreement.

     6. Loyalty; Noncompetition.
        ------------------------

        (a)  During  the  period of his  employment  hereunder  and  except  for
illnesses,  reasonable vacation periods,  and reasonable leaves of absence,  the
Employee shall devote all his full business time, attention,  skill, and efforts
to the faithful  performance of his duties hereunder;  provided,  however,  from
time to time,  Employee  may serve on the boards of  directors  of, and hold any
other  offices or  positions  in,  companies  or  organizations,  which will not
present any  conflict of interest  with the Bank or any of its  subsidiaries  or
affiliates,  or unfavorably affect the performance of Employee's duties pursuant
to this  Agreement,  or will not violate any  applicable  statute or regulation.
"Full business time" is hereby defined as that amount of time usually devoted to
like companies by similarly situated executive officers.  During the term of his
employment  under this Agreement,  the Employee shall not engage in any business
or activity  contrary to the business  affairs or  interests of the Bank,  or be
gainfully employed in any other position or job other than as provided above.

        (b) Nothing  contained in this Paragraph 6 shall be deemed to prevent or
limit the Employee's right to invest in the capital stock or other securities of
any  business  dissimilar  from that of the  Bank,  or,  solely as a passive  or
minority investor, in any business.

     7. Standards. The Employee shall perform his duties under this Agreement in
        ---------
accordance with such  reasonable  standards as the Board may establish from time
to time.  The Bank will provide  Employee with the working  facilities and staff
customary for similar executives and necessary for him to perform his duties.

     8. Vacation and Sick Leave. At such reasonable  times as the Board shall in
        -----------------------
its discretion permit,  the Employee shall be entitled,  without loss of pay, to
absent himself  voluntarily  from the  performance of his employment  under this
Agreement, all such voluntary absences to count as vacation time, provided that:

        (a) The Employee  shall be entitled to an annual  vacation in accordance
with the policies that the Board periodically  establishes for senior management
employees of the Bank.

        (b) The Employee shall not receive any additional  compensation from the
Bank on  account  of his  failure  to take a  vacation  or sick  leave,  and the
Employee shall not accumulate unused vacation or sick leave from one fiscal year
to the next, except in either case to the extent authorized by the Board.

        (c) In addition to the aforesaid paid  vacations,  the Employee shall be
entitled without loss of pay, to absent himself voluntarily from the performance
of his employment with the Bank for such additional periods of time and for such
valid and  legitimate  reasons  as the Board  may in its  discretion  determine.
Further, the Board may grant to the Employee a leave or leaves of absence,  with
or without pay, at such time or times and upon such terms and conditions as such
Board in its discretion may determine.

        (d) In addition,  the Employee shall be entitled to an annual sick leave
benefit as established by the Board.

     9.  Termination  and  Termination  Pay.  Subject to Section 11 hereof,  the
         ----------------------------------
Employee's   employment   hereunder  may  be  terminated   under  the  following
circumstances:

        (a)  Death.  The  Employee's   employment  under  this  Agreement  shall
             -----
terminate upon his death during the term of this  Agreement,  in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which his death occurred.
<PAGE>

        (b)  Disability.  (1) The Bank may terminate the  Employee's  employment
             ----------
after  having  established  the  Employee's  Disability.  For  purposes  of this
Agreement,  "Disability"  means a physical or mental infirmity which impairs the
Employee's ability to substantially  perform his duties under this Agreement and
which  results  in the  Employee  becoming  eligible  for  long-term  disability
benefits under the Bank's long-term disability plan (or, if the Bank has no such
plan in effect,  which impairs the Employee's  ability to substantially  perform
his  duties  under  this  Agreement  for a period of one  hundred  eighty  (180)
consecutive  days).  The  Employee  shall be  entitled to the  compensation  and
benefits provided for under this Agreement for (i) any period during the term of
this  Agreement  and prior to the  establishment  of the  Employee's  Disability
during  which  the  Employee  is unable  to work due to the  physical  or mental
infirmity,  or (ii) any period of  Disability  which is prior to the  Employee's
termination  of  employment  pursuant to this Section  9(b);  provided  that any
benefits paid pursuant to the Bank's long term  disability plan will continue as
provided in such plan.

     (2) During any period that the Employee shall receive  disability  benefits
and to the extent that the Employee  shall be physically and mentally able to do
so, he shall furnish such information,  assistance and documents so as to assist
in the continued  ongoing  business of the Bank and, if able, shall make himself
available to the Bank to undertake  reasonable  assignments  consistent with his
prior  position  and his  physical  and  mental  health.  The Bank  shall,  upon
substantiation  by the Employee in accordance with the policies of the Bank, pay
all reasonable  expenses  incident to the performance of any assignment given to
the Employee during the disability period.

        (c)  Just  Cause.  The Board  may,  by written  notice to the  Employee,
             -----------
immediately  terminate his employment at any time, for Just Cause.  The Employee
shall have no right to receive  compensation  or other  benefits  for any period
after  termination  for Just  Cause.  Termination  for "Just  Cause"  shall mean
termination  because  of, in the good  faith  determination  of the  Board,  the
Employee's personal  dishonesty,  incompetence,  willful  misconduct,  breach of
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  willful  violation of any law, rule or  regulation  (other than traffic
violations or similar  offenses) or final  cease-and-desist  order,  or material
breach of any provision of this Agreement. Notwithstanding the foregoing, in the
event of  termination  for Just Cause there shall be delivered to the Employee a
copy of a  resolution  duly adopted by the  affirmative  vote of not less than a
majority of the entire  membership of the Board at a meeting of the Board called
and held for that  purpose  (after  reasonable  notice  to the  Employee  and an
opportunity for the Employee,  together with the Employee's counsel, to be heard
before the Board), such meeting and the opportunity to be heard to be held prior
to, or as soon as reasonably practicable following, termination, but in no event
later than 60 days  following such  termination,  finding that in the good faith
opinion of the Board the  Employee  was guilty of conduct set forth above in the
second sentence of this Subsection (c) and specifying the particulars thereof in
detail. If following such meeting the Employee is reinstated,  the Board may, in
its discretion,  direct payment to the Employee in an amount up to the amount of
pay that the Employee  would have  received if he had been  employed by the Bank
during the period between his termination and reinstatement.

        (d) Without Just Cause;  Constructive  Discharge.  (1) The Board may, by
            --------------------------------------------
written notice to the Employee, immediately terminate his employment at any time
for a reason  other  than  Just  Cause,  in which  event the  Employee  shall be
entitled  to receive  the  following  compensation  and  benefits  (unless  such
termination  occurs within the time periods set forth in Section 11(b) hereof in
which  event the  benefits  and  compensation  provided  for in Section 11 shall
apply):  (i) the salary provided pursuant to Section 2 hereof, up to the date of
termination  of the term as provided in Section 5 hereof  (including any renewal
term) of this  Agreement  (the  "Expiration  Date"),  plus  said  salary  for an
additional  12-month period, and (ii) at the Employee's election either (A) cash
in an amount equal to the cost to the Employee of  obtaining  all health,  life,
disability  and other  benefits  which the Employee  would have been eligible to
participate  in  through  the  Expiration  Date based  upon the  benefit  levels
substantially equal to those that the Bank provided for the Employee at the date
of  termination  of employment or (B)  continued  participation  under such Bank
benefit plans through the  Expiration  Date, but only to the extent the Employee
continues  to qualify for  participation  therein.  All  amounts  payable to the
Employee  shall be paid, at the option of the  Employee,  either (I) in periodic
payments  through the  Expiration  Date, or (II) in one lump sum within ten (10)
days of such termination.

     (2) The  Employee  may  voluntarily  terminate  his  employment  under this
Agreement,  and  the  Employee  shall  thereupon  be  entitled  to  receive  the
compensation  and benefits  payable under Section 9(d)(1) hereof,  within ninety
(90) days following the occurrence of any of the following events, which has not
been  consented to in advance by the Employee in writing  (unless such voluntary
termination  occurs within the time periods set forth in

<PAGE>
Section 11(b) hereof in which event the benefits and  compensation  provided for
in Section 11 shall  apply):  (i) the  requirement  that the  Employee  move his
personal  residence,  or perform his principal  executive  functions,  more than
thirty  (30) miles from his primary  office;  (ii) a material  reduction  in the
Employee's  base  compensation,  as the same may be changed by mutual  agreement
from time to time other than in connection with an  institution-wide  reduction;
(iii)  the  failure  by the  Bank to  continue  to  provide  the  Employee  with
compensation and benefits provided for under this Agreement,  as the same may be
increased  from time to time,  or with benefits  substantially  similar to those
provided to him under any of the  employee  benefit  plans in which the Employee
now or hereafter becomes a participant,  or the taking of any action by the Bank
which,  directly or indirectly,  would materially reduce any of such benefits or
deprive the Employee of any material  fringe  benefit  enjoyed by him;  (iv) the
assignment to the Employee of duties and  responsibilities  materially different
from those normally associated with his position as referenced at Section 1; (v)
a failure to elect or reelect the Employee to the Board of Directors of the Bank
if the Employee was serving on the Board on the Effective  Date or was otherwise
elected  to the  Board  during  the  term of  this  Agreement;  (vi) a  material
diminution  or  reduction  in  the  Employee's   responsibilities  or  authority
(including  reporting  responsibilities)  in connection with his employment with
the  Bank;  or  (vii)  a  material   reduction  in  the   secretarial  or  other
administrative  support  of the  Employee  other  than  in  connection  with  an
institution-wide reduction in force.

     (3)  Notwithstanding  the foregoing,  but only to the extent required under
federal banking law, the amount payable under clause  (d)(1)(i)  hereof shall be
reduced  to the  extent  that  on the  date  of the  Employee's  termination  of
employment,  the present value of the benefits  payable under clauses  (d)(1)(i)
and (ii) hereof exceeds the  limitation on severance  benefits that is set forth
in Regulatory Bulletin 27a of the Office of Thrift Supervision,  as in effect on
the Effective Date. In the event that Section 280G of the Internal  Revenue Code
of 1986, as amended (the "Code") becomes  applicable to payments made under this
Section 9(d), and the payments exceed the "Maximum Amount" as defined in Section
11(a)(1)  hereof,  the payments shall be reduced as provided by Section 11(a)(2)
of this Agreement.

        (e)  Termination or Suspension Under Federal Law. (1) If the Employee is
             -------------------------------------------
removed and/or  permanently  prohibited from participating in the conduct of the
Bank's  affairs  by an order  issued  under  Sections  8(e)(4) or 8(g)(1) of the
Federal Deposit  Insurance Act ("FDIA") (12 U.S.C.  1818(e)(4) and (g)(1)),  all
obligations  of  the  Bank  under  this  Agreement  shall  terminate,  as of the
effective  date of the order,  but  vested  rights of the  parties  shall not be
affected.

     (2) If the Bank is in default (as defined in Section 3(x)(1) of FDIA),  all
obligations  under this  Agreement  shall  terminate  as of the date of default;
however, this Paragraph shall not affect the vested rights of the parties.

     (3) All  obligations  under this Agreement shall  terminate,  except to the
extent  determined  that  continuation  of this  Agreement is necessary  for the
continued  operation  of the Bank:  (i) by the  Director of the Office of Thrift
Supervision  ("Director of OTS"),  or his or her designee,  at the time that the
Federal  Deposit  Insurance   Corporation   ("FDIC")  or  the  Resolution  Trust
Corporation  enters into an agreement to provide  assistance  to or on behalf of
the Bank under the authority  contained in Section 13(c) of FDIA; or (ii) by the
Director of the OTS, or his or her  designee,  at the time that the  Director of
the OTS,  or his or her  designee  approves  a  supervisory  merger  to  resolve
problems  related to operation of the Bank or when the Bank is determined by the
Director of the OTS to be in an unsafe or unsound  condition.  Such action shall
not affect any vested rights of the parties.

     (4) If a notice  served  under  Section  8(e)(3)  or (g)(1) of the FDIA (12
U.S.C.  1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the Employee
from participating in the conduct of the Bank's affairs,  the Bank's obligations
under this Agreement  shall be suspended as of the date of such service,  unless
stayed by appropriate  proceedings.  If the charges in the notice are dismissed,
the  Bank  may in its  discretion  (i)  pay  the  Employee  all or  part  of the
compensation  withheld while its contract  obligations were suspended,  and (ii)
reinstate (in whole or in part) any of its obligations which were suspended.

        (f) Voluntary Termination by Employee. Subject to Section 11 hereof, the
            ---------------------------------
Employee may voluntarily  terminate  employment with the Bank during the term of
this  Agreement,  upon at least  ninety (90) days' prior  written  notice to the
Board  of  Directors,  in  which  case  the  Employee  shall  receive  only  his
compensation,  vested  rights  and  employee  benefits  up to  the  date  of his
termination  (unless such termination  occurs pursuant to

<PAGE>
Section  9(d)(2)  hereof or within the time  period  set forth in Section  11(a)
hereof in which event the  benefits  and  compensation  provided for in Sections
9(d) or 11, as applicable, shall apply).

     10. No  Mitigation.  The  Employee  shall not be required  to mitigate  the
         --------------
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.

     11. Change in Control.
         -----------------

         (a) Change in Control; Involuntary Termination. (1) Notwithstanding any
             ------------------------------------------
provision  herein to the  contrary,  if the  Employee's  employment  under  this
Agreement  is  terminated  by the Bank,  without the  Employee's  prior  written
consent and for a reason  other than Just Cause,  in  connection  with or within
twelve (12) months after any change in control of the Bank or the  Company,  the
Employee  shall,  subject to  paragraph  (2) of this Section  11(a),  be paid an
amount equal to the  difference  between (i) the product of 2.99 times his "base
amount" as defined in Section 280G(b)(3) of the Code and regulations promulgated
thereunder  (the  "Maximum  Amount"),  and (ii) the sum of any  other  parachute
payments (as defined  under  Section  280G(b)(2)  of the Code) that the Employee
receives on account of the change in control. Said sum shall be paid in one lump
sum within ten (10) days of such termination.  This paragraph would not apply to
a termination of employment due to death, Disability or voluntary termination by
the Employee.

     (2) In the event that the Employee and the Bank jointly determine and agree
that the total  parachute  payments  receivable  under  clauses  (i) and (ii) of
Section 11(a)(1) hereof exceed the Maximum Amount,  notwithstanding  the payment
procedure set forth in Section  11(a)(1)  hereof,  the Employee shall  determine
which and how much,  if any, of the  parachute  payments to which he is entitled
shall be  eliminated  or  reduced  so that the total  parachute  payments  to be
received by the Employee do not exceed the Maximum Amount.  If the Employee does
not make his  determination  within ten business days after  receiving a written
request from the Bank,  the Bank may make such  determination,  and shall notify
the Employee promptly  thereof.  Within five business days of the earlier of the
Bank's receipt of the Employee's determination pursuant to this paragraph or the
Bank's determination in lieu of a determination by the Employee,  the Bank shall
pay to or  distribute  to or for the benefit of the Employee such amounts as are
then due the Employee under this Agreement.

     (3) As a result of  uncertainty  in application of Section 280G of the Code
at the time of payment  hereunder,  it is possible  that such payments will have
been made by the Bank which  should not have been made  ("Overpayment")  or that
additional  payments  will not have been made by the Bank which should have been
made  ("Underpayment"),  in each case, consistent with the calculations required
to be made under Section 11(a)(1) hereof. In the event that the Employee,  based
upon the  assertion by the Internal  Revenue  Service  against the Employee of a
deficiency  which the  Employee  believes  has a high  probability  of  success,
determines  that an  Overpayment  has been made,  any such  Overpayment  paid or
distributed  by the Bank to or for the benefit of Employee  shall be treated for
all  purposes  as a loan ab initio  which the  Employee  shall repay to the Bank
together  with interest at the  applicable  federal rate provided for in Section
7872(f)(2)(B) of the Code; provided,  however, that no such loan shall be deemed
to have been made and no amount  shall be payable by the Employee to the Bank if
and to the extent  such  deemed  loan and  payment  would not either  reduce the
amount on which the Employee is subject to tax under  Section 1 and Section 4999
of the Code or generate a refund of such taxes.  In the event that the  Employee
and the Bank determine,  based upon controlling  precedent or other  substantial
authority,  that an Underpayment has occurred,  any such  Underpayment  shall be
promptly  paid by the Bank to or for the benefit of the Employee  together  with
interest at the applicable federal rate provided for in Section 7872(f)(2)(B) of
the Code.

     (4) The term  "change  in  control"  shall  mean  any one of the  following
events: (1) the acquisition of ownership, holding or power to vote more than 25%
of the Bank's or the Company's  voting stock, (2) the acquisition of the ability
to control the election of a majority of the Bank's or the Company's  directors,
(3) the  acquisition of a controlling  influence over the management or policies
of the Bank or the  Company  by any  person  or by  persons  acting as a "group"
(within the meaning of Section  13(d) of the  Securities  Exchange Act of 1934),
(4) the  acquisition of control of the Bank or the Company within the meaning of
12 C.F.R. Part 574 or its applicable equivalent (except in the case of (1), (2),
(3) and (4) hereof, ownership or control of the Bank by the Company itself shall
not  constitute  a  "change  in  control"),  or (5)  during  any  period  of two
consecutive  years,  individuals who at the beginning of such period  constitute
the Board of  Directors of the Company or the Bank (the  "Existing  Board") (the

<PAGE>
"Continuing  Directors")  cease for any reason to constitute at least a majority
thereof,  provided that any individual whose election or nomination for election
as a member of the Existing  Board was approved by a vote of at least a majority
of the  Continuing  Directors  then in office  shall be  considered a Continuing
Director. For purposes of this subparagraph only, the term "person" refers to an
individual or a corporation,  partnership,  trust,  association,  joint venture,
pool, syndicate, sole proprietorship,  unincorporated  organization or any other
form of entity not specifically listed herein.

         Notwithstanding  the foregoing,  but only to the extent  required under
federal banking law, the amount payable under  Subsection (a) of this Section 11
shall be reduced to the extent that on the date of the Employee's termination of
employment,  the amount payable under  Subsection (a) of this Section 11 exceeds
the  limitation on severance  benefits that is set forth in Regulatory  Bulletin
27a of the Office of Thrift Supervision, as in effect on the Effective Date.

        (b) Change in Control; Voluntary Termination.  Notwithstanding any other
            ----------------------------------------
provision of this Agreement to the contrary,  but subject to Sections  11(a)(2),
11(a)(3),   and  11(c)  hereof,  the  Employee  may  voluntarily  terminate  his
employment  under this  Agreement  within thirty (30) days following a change in
control of the Bank or the Company,  as defined in Section 11(a)(4) hereof,  and
be  entitled  to receive  the  payment  described  in Section  11(a)(1)  of this
Agreement.  Alternatively, the Employee may voluntarily terminate his employment
under this Agreement  within twelve (12) months following such change in control
of the Bank or the  Company  and the  Employee  shall  thereupon  be entitled to
receive the payment  described in Section  11(a)(1) of this  Agreement  upon the
occurrence of any of the following events,  or within 90 days thereafter,  which
has not been  consented  to in  advance  by the  Employee  in  writing:  (i) the
requirement  that the Employee  perform his principal  executive  functions more
than thirty  (30) miles from his primary  office as of the date of the change in
control;  (ii) a material  reduction in the Employee's  base  compensation as in
effect on the date of the  change in  control  or as the same may be  changed by
mutual   agreement  from  time  to  time  other  than  in  connection   with  an
institution-wide  reduction in force;  (iii) the failure by the Bank to continue
to provide the Employee with  compensation and benefits  provided for under this
Agreement,  as the same may be  increased  from time to time,  or with  benefits
substantially  similar to those  provided to him under any  employee  benefit in
which the  Employee  is a  participant  or the  taking of any action by the Bank
which,  directly or indirectly,  would materially reduce any of such benefits or
deprive the Employee of any material  fringe benefit  enjoyed by him at the time
of the change in  control;  (iv) the  assignment  to the  Employee of duties and
responsibilities  materially  different from those normally  associated with his
position  as  referenced  at Section  1; (v) a failure  to elect or reelect  the
Employee to the Board of  Directors  of the Bank,  if the Employee is serving on
the Board on the date of the change in control;  (vi) a material  diminution  or
reduction in the Employee's  responsibilities or authority  (including reporting
responsibilities)  in  connection  with  his  employment  with  the  Bank if the
Employee was serving on the Board on the Effective Date or was otherwise elected
to the Board during the term of this Agreement; or (vii) a material reduction in
the  secretarial or other  administrative  support of the Employee other than in
connection with an institution-wide reduction in force.

        (c) Compliance with 12 U.S.C.  Section 1828(k). Any payments made to the
            -----------------------------------------
Employee  pursuant  to  this  Agreement,  or  otherwise,   are  subject  to  and
conditioned  upon  their  compliance  with 12  U.S.C.  Section  1828(k)  and any
regulations promulgated thereunder.

        (d)  Trust.  (1) Within five  business  days before or after a change in
             -----
control as defined in Section 11(a) of this Agreement  which was not approved in
advance by a resolution of a majority of the  Continuing  Directors of the Bank,
the Bank shall (i) deposit,  or cause to be  deposited,  in a grantor trust (the
"Trust)  substantially  in the  form of the  trust  that  the  Bank's  Board  of
Directors  approved  on  January  11,  1996,  an amount  equal to 2.99 times the
Employee's "base amount" as defined in Section  280G(b)(3) of the Code, and (ii)
provide  the trustee of the Trust with a written  direction  to hold said amount
and any investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of such amounts from the Trust.

     (2) During the twelve (12)  consecutive  month period following the date on
which the Bank makes the deposit  referred to in the  preceding  paragraph,  the
Employee may provide the trustee of the Trust with a written  notice  requesting
that the trustee pay to the Employee an amount designated in the notice as being
payable  pursuant to Section  11(a) or (b).  Within  three  business  days after
receiving said notice,  the trustee of the Trust shall send a copy of the notice
to the Bank via overnight and registered mail return receipt  requested.  On the
tenth (10th)

<PAGE>
business  day after  mailing  said notice to the Bank,  the trustee of the Trust
shall pay the Employee the amount  designated  therein in immediately  available
funds,  unless prior thereto the Bank provides the trustee with a written notice
directing the trustee to withhold such payment. In the latter event, the trustee
shall  submit  the  dispute  to   non-appealable   binding   arbitration  for  a
determination of the amount payable to the Employee pursuant to Section 11(a) or
(b)  hereof,  and the party  responsible  for the  payment  of the costs of such
arbitration  (which may include any reasonable legal fees and expenses  incurred
by the Employee) shall be determined by the arbitrator. The trustee shall choose
the arbitrator to settle the dispute,  and such arbitrator shall be bound by the
rules of the American Arbitration  Association in making his determination.  The
parties and the trustee  shall be bound by the results of the  arbitration  and,
within 3 days of the determination by the arbitrator, the trustee shall pay from
the Trust the amounts  required to be paid to the Employee  and/or the Bank, and
in no event shall the trustee be liable to either  party for making the payments
as determined by the arbitrator.

     (3) Upon the earlier of (i) any payment from the Trust to the Employee,  or
(ii) the date  twelve  (12)  months  after the date on which the Bank  makes the
deposit  referred  to in the first  paragraph  of this  subsection  (d)(1),  the
trustee of the Trust shall pay to the Bank the entire  balance  remaining in the
segregated  account  maintained  for the benefit of the  Employee.  The Employee
shall  thereafter  have  no  further  interest  in the  Trust  pursuant  to this
Agreement.

        (e) In the event that any dispute  arises  between the  Employee and the
Bank as to the terms or interpretation of this Agreement, including this Section
11, whether  instituted by formal legal proceedings or otherwise,  including any
action that the  Employee  takes to enforce  the terms of this  Section 11 or to
defend  against any action taken by the Bank,  the Employee  shall be reimbursed
for all costs and expenses,  including reasonable  attorneys' fees, arising from
such dispute,  proceedings or actions, provided that the Employee shall obtain a
final  judgement by a court of competent  jurisdiction in favor of the Employee.
Such reimbursement  shall be paid within ten (10) days of Employee's  furnishing
to the Bank written evidence, which may be in the form, among other things, of a
cancelled check or receipt, of any costs or expenses incurred by the Employee.

     12. Federal Income Tax  Withholding.  The Bank may withhold all Federal and
         -------------------------------
State  income or other taxes from any benefit  payable  under this  Agreement as
shall be required  pursuant to any law or government  regulation or ruling.

     13. Successors and Assigns.
         ----------------------

        (a) Bank. This Agreement  shall not be assignable by the Bank,  provided
            ----
that this  Agreement  shall  inure to the  benefit  of and be  binding  upon any
corporate  or other  successor  of the Bank which  shall  acquire,  directly  or
indirectly,   by  merger,   consolidation,   purchase  or   otherwise,   all  or
substantially all of the assets or stock of the Bank.

        (b) Employee.  Since the Bank is contracting for the unique and personal
            --------
skills of the  Employee,  the  Employee  shall be  precluded  from  assigning or
delegating his rights or duties  hereunder  without first  obtaining the written
consent of the Bank;  provided,  however,  that nothing in this paragraph  shall
preclude (i) the Employee from  designating a beneficiary to receive any benefit
payable  hereunder  upon his death,  or (ii) the executors,  administrators,  or
other legal  representatives  of the Employee or his estate from  assigning  any
rights hereunder to the person or persons entitled thereunto.

        (c) Attachment.  Except as required by law, no right to receive payments
            ----------
under this Agreement shall be subject to anticipation,  commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation or to exclusion,
attachment,  levy or similar  process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.

     14.  Amendments.  No  amendments  or additions to this  Agreement  shall be
          ----------
binding  unless  made in  writing  and signed by all of the  parties,  except as
herein otherwise specifically provided.

     15. Applicable Law. Except to the extent preempted by Federal law, the laws
         --------------
of the  Commonwealth  of Kentucky  shall govern this  Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
<PAGE>

     16.  Severability.  The  provisions  of  this  Agreement  shall  be  deemed
          ------------
severable and the  invalidity  or  unenforceability  of any provision  shall not
affect the validity or enforceability of the other provisions hereof.

     17. Entire  Agreement.  This Agreement,  together with any understanding or
         -----------------
modifications  thereof as agreed to in writing by the parties,  shall constitute
the entire agreement between the parties hereto.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.

ATTEST:                           FIRST LANCASTER FEDERAL SAVINGS BANK




/s/ Kathy G. Johnica             By: /s/ Virginia R.S. Stump
---------------------------          ---------------------------------
Secretary                            Its: Chairman of the Board


WITNESS:



/s/ Karen S. Hatfield                /s/ Tony A. Merida
---------------------------          ---------------------------------
                                     Tony A. Merida