EXHIBIT 10.2
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                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS  AGREEMENT  entered  into  this 15th day of  September,  1999 (the
"Effective Date"), by and between Lewis J. Critelli (the "Employee"), Wayne Bank
(the "Bank"), and Norwood Financial Corp. (the "Company").

         WHEREAS,  the  Executive  continues  to serve the bank in an  executive
capacity under the terms and conditions set forth in this agreement; and

         WHEREAS,  the Employee has heretofore  been employed by the Bank as its
Chief Financial  Officer and is experienced in all phases of the business of the
Bank; and

         WHEREAS, the Boards of Directors of the Bank and of the Company believe
it is in their  mutual  best  interests  to enter into this  Agreement  with the
Employee  in order to assure  continuity  of  management  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 Employee, the Bank and the Company.

         NOW, THEREFORE, it is AGREED as follows:

Description of Duties: Responsible for managing the Finance and Operations Group
in an effective  manner.  Primary duties include ongoing  management of finance,
accounting  and  investment  activities;  timely  and  accurate  filing  of  all
regulatory  reports;  an appropriate  budgeting process and  asset/liability and
interest  rate risk  management.  Managing the  Operations  Division in order to
provide efficient, accurate and cost-effective technical and operational support
services.  Managing the Bank marketing efforts,  coordinating investor relations
function  and  oversight  of the Bank  non-deposit  product  sales.  Supervising
assigned  personnel;  communicating  and  interfacing  with other  divisions and
management personnel. Reports to the President and Chief Executive Officer.

         1.       Defined Terms

         When used anywhere in this  Agreement,  the following  terms shall have
the meaning set forth herein.

     (a) "Change in Control" shall mean any one of the following events: (I) the
acquisition  of ownership,  holding or power to vote more than 25% of the Bank's
or the Company's  voting stock,  (ii) the  acquisition of the ability to control
the election of a majority of the Bank's or the Company's  directors,  (iii) 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), or (iv) during
any period of two consecutive  years,  individuals (the "Continuing  Directors")
who at the



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beginning  of such period  constitute  the Board of Directors of the Bank or the
Company  (the  "Existing  Board")  cease for any reason to  constitute  at least
two-thirds  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 two-thirds of the Continuing  Directors then in office shall be considered
a Continuing Director.  Notwithstanding the foregoing,  in the case of (I), (ii)
and (iii) hereof,  ownership or control of the Bank by the Company  itself shall
not  constitute a Change in Control.  For purposes of this  paragraph  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.

     (b) "Code"  shall mean the Internal  Revenue Code of 1986,  as amended from
time to time, and as interpreted  through  applicable rulings and regulations in
effect from time to time.

     (c) "Codess.280G  Maximum" shall mean product of 2.99 and his "base amount"
as defined in Code ss.280G(b)(3).

     (d) "Good  Reason" shall mean any of the  following  events,  which has not
been  consented  to in advance by the Employee in writing:  (I) the  requirement
that  the  Employee  move his  personal  residence,  or  perform  his  principal
executive  functions,  more than sixty (60) 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  increased  from time to time;  (iii) the failure by the Bank or the
Company to continue to provide  the  Employee  with  compensation  and  benefits
provided for on the date of the Change in Control,  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 or the
Company  which  would  directly  or  indirectly  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 or within the protected period;  (iv) the assignment to
the  Employee of duties and  responsibilities  materially  different  from those
normally  associated  with his  position;  (v) a failure to elect or reelect the
Employee to the Board of Directors  of the Bank or the Company,  if the Employee
is serving on such 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 or the Company;  or (vii) a material  reduction in the  secretarial  or
other administrative support of the Employee. In addition,  "Good Reasons" shall
mean an impairment of the Employee's health to an extent that it makes continued
performance of his duties hereunder hazardous to his physical or mental health.

     (e) "Just Cause" shall mean, in the good faith  determination of the Bank's
Board of Directors,  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)

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or final  cease-and-desist  order,  or material  breach of any provision of this
Agreement.  The Employee  shall have no right to receive  compensation  or other
benefits for any period after  termination for Just Cause. No act, or failure to
act, on the Employee's part shall be considered  "willful"  unless he has acted,
or failed to act, with an absence of good faith and without a reasonable  belief
that his action or failure to act was in the best  interest  of the Bank and the
Company.

     (f)  "Protected  Period"  shall mean the period that begins on the date six
months  before a Change in  Control  and ends on the  later of the first  annual
anniversary of the Change in Control or the expiration date of this Agreement.

     2. Employment.  The Employee is employed as the Chief Financial  Officer of
the Bank and of the Company.  In each  capacity,  the Employee shall render such
administrative  and  management  services  for the Bank and the  Company  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 and
the  Company.  The  Employee's  other  duties  shall  be such as the  Boards  of
Directors of the Bank and the Company may from time to time  reasonably  direct,
including normal duties as an officer of the Bank.

     3. Base  Compensation.  The Bank agrees to pay the Employee during the term
of this Agreement a salary at the rate of $110,000.00 per annum, payable in cash
not less  frequently  than  monthly.  The Board of  Directors  of the Bank shall
review,  not less often than annually,  the rate of the Employee's  salary,  and
shall increase the employee's base salary by no less than $3,000.00 per year for
2000,  2001, 2002, 2003, 2004. The Company hereby agrees that, in lieu of paying
the  Employee  a base  salary  during  the term of this  Agreement,  it shall be
jointly  and  severally  liable with the Bank for the payment of all amounts due
under this Agreement. Nevertheless, the Board of Directors of the Company may in
its  discretion at any time during the term of this  Agreement  agree to pay the
Employee a base salary for the remaining term of this Agreement. If the Board of
Directors of the Company agrees to pay such salary,  the Board shall  thereafter
review, not less often than annually,  the rate of the Employee's salary, and in
its sole discretion may decide to increase his salary.

     Notwithstanding the foregoing, following a Change in Control, the Boards of
Directors of the Bank and the Company shall continue to annually review the rate
of the Employee's salary, and shall increase said rate of salary by a percentage
which is not less than the average annual percentage increase in salary that the
Employee received over the three calendar years  immediately  preceding the year
in which the Change in Control occurs.

     4.  Discretionary  Bonuses.  The Employee shall participate in an equitable
manner  with  all  other  senior  management   employees  of  the  Bank  and  in
discretionary  bonuses  that the Boards of Directors of the Bank and the Company
may  award  from time to time to their  senior  management  employees.  No other
compensation provided for in this Agreement shall be deemed

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a substitute  for the  Employee's  right to  participate  in such  discretionary
bonuses.  Notwithstanding  the  foregoing,  following a Change in  Control,  the
Employee shall receive  discretionary  bonuses that are made no less  frequently
than,  and in annual  amounts not less than,  the average  annual  discretionary
bonuses  paid to the  Employee  during  the  three  calendar  years  immediately
preceding the year in which the Change in Control occurs.

     5. Participation in Retirement, Medical and Other Plans.
        ----------------------------------------------------

     (a) During the 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,
retirement,  pension, and/or other present or future qualified plans provided by
the  Bank,  generally  which  benefits,  taken as a  whole,  must be at least as
favorable as those in effect on the Effective Date and the Company.

     (b) The Employee shall be eligible to  participate  in any fringe  benefits
which  are or may  become  available  to the  Bank's  and the  Company'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  and the  Company.  Additionally,  the  Employee  shall be
entitled to:

     (1) Banking Industry Functions.  The Employee may devote reasonable time to
attending   seminars  and  meetings   sponsored  by  the  Pennsylvania   Bankers
Association,  the American Bankers  Association and other banking or educational
organizations at the expense of the Bank.

     (2) Other  Perquisites  and Benefits.  The  Executive  shall be entitled to
receive such other  perquisites and fringe benefits as the Board of Directors of
the Bank reasonably deems appropriate in its sole discretion.

     6. Term.  The Bank and the  Company  hereby  employ the  Employee,  and the
Employee  hereby accepts such employment  under this  Agreement,  for the period
commencing on the  Effective  Date and ending sixty months  thereafter  (or such
earlier date as is determined in accordance with Section 10 or 12).

     In the event the Employee serves the full term of this  Agreement,  and the
Bank does not offer to renew this  Agreement upon  substantially  the same terms
and  conditions  for an  additional  five (5) year term,  the Employee  shall be
entitled to a severance  allowance  of twelve  months of his then  current  base
annual salary,  plus such vested employee  benefits to which the Employee may be
entitled when due and payable, and the Bank shall have no further obligations to
the Employee  under this  Agreement,  EXCEPT that in such event,  the Bank shall
provide,  at the


                                      -4-
<PAGE>

Employee's request,  out-placement services to the Employee through Drake, Beam,
and Moran, New York, New York, or such comparable  out-placement  service as the
parties shall select. The Bank's costs for such services shall not exceed 17% of
the Employee's then current base annual salary.


         7.       Loyalty; Noncompetition; Nondisclosure.
                  --------------------------------------

     (a) Loyalty.  During the period of his employment  hereunder and except for
illnesses,  reasonable vacation periods,  and reasonable leaves of absence,  the
Employee  shall devote  substantially  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,
the Company or any of their 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.  Except  with the prior  written  approval  of the Board of
Directors of the Bank,  the Executive  shall not engage in any other business or
commercial  activities,  duties or pursuits,  during the term of this Agreement.
Under no  circumstances  may the Employee  engage in any business or  commercial
activities,  duties or pursuits  which  compete with the business or  commercial
activities of the Bank nor may the Employee serve as a director or officer or in
any other capacity in a company or financial institution which competes with the
Bank. Investments and personal activities not resulting in material compensation
or a  conflict  of  interest  with the Bank  shall not be deemed a breach of the
restrictions of this paragraph. Participation in trade associations, charitable,
civil or similar  not-for-profit,  philanthropic or eleemosynary  organizations,
including  service as an officer  or  director,  shall not be deemed a breach of
this  Agreement,  but the total  amount of time  spent by the  Employee  in such
activities  during normal  working hours shall be  periodically  reviewed by the
Board of Directors of the Bank.

     (b)  Noncompetition.  The  Employee  covenants  and agrees as follows:  the
Employee shall not directly or indirectly, within the marketing area of the Bank
or the Company  (defined as Wayne County,  Pennsylvania) or any future marketing
area of the Bank or the Company  (defined as an area within  fifty (50) miles of
any branch office located outside of Wayne County, Pennsylvania and begun during
the  Employee's  employment  under the terms of this  Agreement),  enter into or
engage  generally in  competition  with the Bank or the Company either as a sole
proprietor  or as a  partner  or  joint  venturer,  or as a  director,  officer,
shareholder  (except  as a  shareholder  of less than five  percent  (5%) of the
outstanding shares of a corporation if Executive is not an employee,  officer or
director of such corporation), employee or agent for any person, for a period of
one  (1)  year  after  the  date of  termination  of his  employment  if (I) the
Employee's  employment  is terminated  for Just Cause  pursuant to Section 10 of
this Agreement,  or (ii) such  termination is the result of a resignation by the
Employee other than pursuant to subsection


                                      -5-
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10(d)(2) or subsection  12(a) of this  Agreement.  The Employee  agrees that any
breach of  restrictions  set forth in this paragraph shall result in irreparable
injury to the Bank and the  Company  and for which they shall have not  adequate
remedy  at law and the Bank and the  Company  shall be  entitled  to  injunctive
relief  in order to  enforce  the  provisions  hereof.  In the  event  that this
paragraph  shall be  determined  by any court of  competent  jurisdiction  to be
unenforceable  in part by  reason  of it being  too  great a  period  of time or
covering too great a geographical  area, it shall be in full force and effect as
to that period of time or  geographical  area determined to be reasonable by the
court.

     (c) Unauthorized Disclosure. At no time during the period of his employment
hereunder and thereafter, shall the Employee, without the written consent of the
Boards  of  Directors  of the Bank or a  person  authorized  thereby,  knowingly
disclose to any  person,  other than an employee of the Bank or the Company or a
person to whom  disclosure is reasonably  necessary or appropriate in connection
with the  performance  by the Employee of his duties as an executive of the Bank
or the Company, any material  confidential  information obtained by him while in
the employ of the Bank or the Company  with  respect to any of the Bank's or the
Company's  services,  products,  improvements,   formulas,  designs  or  styles,
processes,  customers,  methods of  distribution  of any business  practices the
disclosure  of which he knows  will be  materially  damaging  to the Bank or the
Company; provided,  however, that confidential information shall not include any
information   known  generally  to  the  public  (other  than  as  a  result  of
unauthorized  disclosure  by the  Employee)  or any  information  of a type  not
otherwise  considered  confidential by persons engaged in the same business or a
business similar to that conducted by the Bank and the Bank.

     (d) Nothing  contained in this Section  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 the  Company,  or,  solely  as a
passive or minority investor, in any business.

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

     9. 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,  but not less than  three  weeks in any  calendar  year
(pro-rated in any calendar year during which the

                                      -6-
<PAGE>

Employee  is  employed  hereunder  for less  than the  entire  calendar  year in
accordance with the number of days in such year which he is so employed).

     (b) The Employee  shall not receive any  additional  compensation  from the
Bank or the  Company on account of his failure to take a vacation or sick leave,
and the Employee  shall not accumulate  unused  vacation 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 and the Company for such  additional  periods of
time  and  for  such  valid  and  legitimate  reasons  as the  Board  may in its
discretion  determine.  Further,  the  Boards of  Directors  of the Bank and the
Company 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 Boards in
their discretion may determine.

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

     10.  Termination and  Termination  Pay.  Subject to Section 12 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.

     (b)  Disability.  The Bank and the Company  may  terminate  the  Employee's
employment  if the  Employee  becomes  totally  and  permanently  disabled.  The
Employee shall be deemed totally and  permanently  disabled if he becomes unable
to  perform a  substantial  portion of his duties  under  this  Agreement  and a
physician  selected by Bank determines such inability will continue for a period
of six (6)  months  or more  and is  likely  to be  permanent  and the  Employee
qualifies to receive total disability benefits under Bank's disability insurance
plan. Such termination  shall be without prejudice to any right the Employee may
have to receive benefits under any disability  insurance plan maintained by Bank
or the Company.

     (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. For the purposes of this Agreement,  the Bank
shall have "Just Cause" to terminate the Employee's employment hereunder upon:


                                      -7-
<PAGE>

               (1) the willful failure by the Employee to substantially  perform
          his material duties  hereunder  other than any such failure  resulting
          from the Employee's incapacity due to physical or mental illness; or

               (2) conviction of a felony; or

               (3) the willful  violation by the Employee of the  provisions  of
          this Agreement; or

               (4) the willful  violation  by the  Employee of material  Bank or
          Company policy as formally  expressed by the Board of Directors of the
          Company or the Bank; or

               (5) the violation of state or federal  banking,  tax or financial
          laws,  regulations  or rules in his own conduct or in the operation of
          the Bank or the Company,  the result of which is materially adverse to
          the Bank or the Company; or

     None of the above  which are  capable of being  cured  shall be grounds for
termination  until Bank and the Company give notice  thereof to the Employee and
the Employee fails to cure such failure or violation  within thirty (30) days of
said notice,  or if said failure or violation cannot be cured within thirty (30)
days,  within  a  reasonable  time  thereafter  if the  Employee  is  diligently
attempting to cure the failure or violation.

     Bank and the  Company  may  terminate  this  Agreement  without  notice and
opportunity  to cure upon receipt of a final  written  directive or order of any
governmental  body or entity  having  jurisdiction  over the Bank or the Company
requiring  termination or removal of the Employee from the positions  referenced
in Section 2 of this Agreement.

     (d) Without Just Cause; Constructive Discharge. (1) The Boards of Directors
of the Bank and the Company 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 during the  Protected  Period in
which  event the  benefits  and  compensation  provided  for in Section 12 shall
apply): (I) the salary provided pursuant to Section 3 hereof, up to the later of
the  expiration  date of this  Agreement  (including  any renewal  term) of this
Agreement  and the date  that is 12  months  after  the  employee's  last day of
employment,  and (ii)  long-term  disability  and such  medical  benefits as are
available  to the  Employee  under the  provisions  of COBRA for  eighteen  (18)
months.  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 shall be entitled to receive the compensation and benefits
payable  under  subsection  10(d)(1)  hereof  in the  event  that  the  Employee
voluntarily  terminates  employment  within 90 days of an event that constitutes
Good Reason,  (unless such  voluntary

                                      -8-
<PAGE>

termination  occurs during the Protected Period, in which event the benefits and
compensation provided for in Section 12 shall apply).

     (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 of the Bank under this Agreement  shall  terminate as of the date of
default;  however,  this  Paragraph  shall not affect  the vested  rights of the
parties.

     (3) 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 12(a)(ii) 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 Section 10(d)(2) hereof
or within the  Protected  Period,  in which event the benefits and  compensation
provided for in Sections 10(d) or 12, as applicable, shall apply).

     11. 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.

     12. Change in Control Severance Payments.

     (a) Trigger Events. The Employee shall be entitled to collect the severance
benefits set forth in  Subsection  (b) hereof in the event that (I) the Employee
voluntarily terminates employment either for any reason within the 30-day period
beginning  on the date of a Change in  Control,  (ii) the  Employee  voluntarily
terminates  employment  within 90 days of an event that both  occurs  during the
Protected Period and constitutes  Good Reason,  or (iii) the Bank or the Company
or their  successor(s) in interest  terminate the Employee's  employment without
his  written  consent  and for any  reason  other  than Just  Cause  during  the
Protected Period.



                                      -9-
<PAGE>

     (b) Amount of  Severance  Benefit.  If the  Employee  becomes  entitled  to
collect severance  benefits pursuant to Section 12(a) hereof, the Bank shall pay
the Employee:

                    (I) a  severance  benefit  equal to the  maximum  as defined
               under Code ss.280G(b)(2) that the Employee receives on account of
               the Change in Control, and

                    (ii) pay for long-term  disability  and provide such medical
               benefits as are available to the Employee under the provisions of
               COBRA, for eighteen (18) months (or such longer period,  up to 24
               months, if COBRA is amended).

     Said sum shall be paid in one lump sum within ten (10) days of the later of
the date of the Change in Control and the Employee's last day of employment with
the Bank or the Company.

     (c) Funding of Grantor  Trust upon  Change in  Control.  Not later than ten
business days after a Change in Control,  the Bank shall (I) establish a grantor
trust (the "Trust") that is designed in accordance with Revenue  Procedure 92-64
and has a trustee independent of the Bank and the Company,  (ii) deposit in said
Trust an amount  equal to the Code  ss.280G  Maximum,  unless the  Employee  has
previously  provided a written release of any claims under this  Agreement,  and
(iii)  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.  Upon the earlier of the Trust's
final  payment of all amounts due under the  following  paragraph or the date 15
months  after the Change in  Control,  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.

     During the  12-consecutive  month  period  after a Change in  Control,  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 this Agreement.  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)  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 this Agreement,  and the costs of such arbitration shall be paid by the Bank.
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.


                                      -10-
<PAGE>

     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  11(d), 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.

     (d)  Indemnification.  The Bank  shall  indemnify  and  hold the  Executive
harmless  from any and all loss,  expense or liability  that he may incur due to
his services for the Company  (including  any  liability he may ever incur under
Code ss. 4999, or a successor, as the result of benefits he collects pursuant to
Sections 10 or 12).

     13.  Indemnification.  The Bank and the Company agree that their respective
Bylaws shall  continue to provide for  indemnification  of directors,  officers,
employees and agents of the Bank and the Company,  including the Employee during
the full term of this Agreement,  and to at all times provide adequate insurance
for such purposes.

     14.  Additional  Offices.  The Employee agrees to serve without  additional
compensation,  if elected  or  appointed  thereto,  as an officer in one or more
offices or as a director of any subsidiary of the Company or the Bank; provided,
however,  the Employee shall not be required to serve in such additional offices
or as a director of any  subsidiary,  if such  service  would  expose him, as an
individual, to adverse financial conditions.

     15.  Reimbursement  of Employee for Enforcement  Proceedings.  In the event
that any dispute  arises  between the  Employee  and the Bank as to the terms or
interpretation of this Agreement, whether instituted by formal legal proceedings
or otherwise, including any action that the Employee takes to defend against any
action taken by the Bank or the Company,  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  obtains either a
written  settlement  or a final  judgement by a court of competent  jurisdiction
substantially  in his favor.  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 canceled  check or  receipt,  of any costs or
expenses incurred by the Employee.

     16. Federal Income Tax  Withholding.  The Bank and the Company 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.

     17.Successors and Assigns.

     (a) Bank and Company.  This  Agreement  shall not be assignable by the Bank
and the Company,  provided that this Agreement shall inure to the benefit of and
be binding  upon any  corporate  or other  successor of the Bank and the Company
which shall acquire, directly or

                                      -11-
<PAGE>

indirectly,   by  merger,   consolidation,   purchase  or   otherwise,   all  or
substantially all of the assets or stock of the Bank.

     (b) Employee. Since the Bank and the Company are 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 and the Company; 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.

     18.  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.

     19. Applicable Law. Except to the extent preempted by Federal law, the laws
of the Commonwealth of Pennsylvania shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.

     20.  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.

     21. 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.


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