Document:

SEVERANCE AGREEMENT

     Agreement  made this 1st day of  January,  2001,  by and  between  Nazareth
National Bank & Trust Co., a banking association organized under the laws of the
United States ("Bank") and S. Eric Beattie, an individual ("Employee").

                                   BACKGROUND

     Effective  January 1, 2001 and subject to the terms of this Agreement,  the
Bank will continue to employ Employee as President and Chief  Executive  Officer
of the Bank,  and to perform  such other duties as may be assigned to him by the
Board of  Directors  of the  Bank.  Employee  agrees  to serve  the Bank in this
capacity on a full-time basis, and to perform such duties faithfully, diligently
and to the best of his ability.  Employee further agrees to fully cooperate with
the  officers and  employees of the Bank to the best of his ability,  and not to
engage in any outside for profit  business deemed to be in conflict with general
commercial banking,  employment or commercial activity without the prior written
consent of the Board of  Directors of the Bank.  The Bank and  Employee  wish to
provide for the payment of certain  compensation  and other benefits to Employee
upon the occurrence of certain events, all as more fully set forth below.

     In consideration of the mutual covenants and agreements  herein  contained,
and intending to be legally bound hereby, the parties agree as follows:

     1. Term.  This Agreement shall begin on January 1, 2001 and shall terminate
at the earliest of the following dates (the "Term"):  (a) the date Employee dies
or becomes  permanently  disabled (i.e.,  upon his failure to render services of
the  character  which he had  previously  rendered  to the Bank,  because of his
physical   or   mental  illness  or  other  incapacity  beyond his control for a

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continuous period of six months or for shorter periods aggregating six months in
any twelve month period);  (b) the date of termination of Employee's  employment
with the Bank for cause (as  hereinafter  defined);  (c) the date  specified  by
mutual agreement of the Bank and Employee;  (d) subject to Section 2 hereof, the
date of  termination  by  Employee  of  Employee's  employment  with the Bank by
resignation or otherwise;  (e) December 31, 2001. If this  Agreement  expires on
December  31,  2001  pursuant to (e) of the  foregoing  sentence  ("the  Initial
Term"),  it shall renew  automatically  for  successive  terms of up to one year
beginning on January 1 of the applicable succeeding year ("Successive Term(s)"),
provided  neither of the parties has given written  notice to the other party of
his or its intention not to renew at least two months prior December 31, 2001 or
December 31 of the applicable  succeeding year. In the event that this Agreement
is renewed pursuant to the foregoing sentence,  the Agreement shall terminate on
the earliest of the following dates: (i) a date listed in the (a) through (d) of
the  first  sentence  of this  paragraph;  (ii)  December  31 of the  applicable
succeeding year. If Employee's employment with the Bank is terminated during the
Initial  Term or any  Successive  Term  (other  than as set  forth in  Section 2
hereof),  Employee shall have no rights or benefits under this Agreement  except
to receive payment of base salary through the effective date of his termination.
For purposes of this  Agreement,  the term "cause" shall mean (i)  conviction of
Employee for any felony,  fraud or embezzlement  or (ii)  Employee's  failure or
refusal to comply with the written policies or written  directives of the Bank's
Board of Directors or Employee being guilty of misconduct in connection with the
performance  of his duties for the Bank,  provided  Employee  fails to cure such
non-compliance  or misconduct within twenty (20)  days  after receiving  written

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notice from the Bank's  Board of Directors  specifying  such  non-compliance  or
misconduct.

     2.  Termination.  If during the Initial Term or any Successive Term of this
Agreement Employee's  employment with the Bank is terminated as set forth below,
the Bank will pay the  Employee  the  amount  set forth in  Section 3 hereof and
Employee shall be entitled to the benefits set forth in Section 4 hereof:

          (a) the Bank  terminates  Employee's  employment with the Bank without
     cause; or

          (b) Employee  terminates  his  employment  with the Bank:  (i) for any
     reason at any time within  eighteen  months  after a "change in control" of
     the Bank (as defined  hereinafter),  or (ii) due to the fact that,  without
     Employee's  consent  and whether or not a change of control of the Bank has
     occurred,  the nature and scope of  Employee's  duties and authority or his
     responsibilities  with the Bank or the  surviving or  acquiring  person are
     materially  reduced  to a level  below  that  which he  enjoys  on the date
     hereof,  his then  current  base annual  salary is reduced to a level below
     that which he enjoys on the date hereof or at any time hereafter (whichever
     may be  greater),  Employee's  position  or  title  with  the  Bank  or the
     surviving  or  acquiring  person is  materially  reduced  from his  current
     position  or  title  with  the  Bank,  or  Employee's  principal  place  of
     employment with the Bank is changed to a location  greater than fifty miles
     from his current  principal  place of employment  with the Bank,  provided,
     however,  that for any  termination  by Employee under this clause (ii) the
     Employee shall have first given the Bank written notice of his intention to
     terminate  his  employment  pursuant to this clause  (ii),  specifying  the
     reason(s) for such termination, and provided further, that the Bank shall

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     the Bank shall not have cured or remedied the  reason(s)  specified in such
     notice prior to the  expiration  of twenty (20) days after  receipt of such
     written notice.

          (c) For  purposes of this  Agreement,  a "change in control"  shall be
     deemed to have occurred upon the happening of any of the following events:

               (1) A change  within a twelve  month  period in a majority of the
          members of the Board of Directors of the Bank or its holding  company,
          First Colonial Group, Inc. (the "Holding Company");

               (2) A change  within a twelve month period in the holders of more
          than 50% of the  outstanding  voting  stock of the Bank or its Holding
          Company;  or

               (3) Any other event deemed to constitute a "change in control" by
          the  Board of  Directors  of the  Bank.

     3.  Termination  Payments to  Employee.  Commencing  not later than 30 days
after the date Employee's  employment  with the Bank is terminated  pursuant any
event  enumerated in subsection  (a) or subsection  (b) of Section 2 hereof (the
"Termination Date") and subject to Employee's  compliance with Section 8 hereof,
the Bank shall pay compensation to Employee for a period of eighteen (18) months
following  the  Termination  Date ("the  Severance  Period") at a per annum rate
equal to 100% of the amount of the Employee's Highest Annual Compensation during
the three calendar years ending prior to the Termination Date (the  "Measurement
Period"). For purposes of this Agreement, the term "Highest Annual Compensation"
shall mean Employee's  highest annual cash  compensation  during a calendar year
during the  Measurement  Period,  excluding  cash bonuses under the Bank's bonus
plans, if any, and excluding other fringe benefits. The Bank agrees that it will
make the  payments due  under Section 3 on the first day of each month following

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the  Termination  Date in an amount equal to 1/12 of 100% of Employee's  Highest
Annual  Compensation.  If  Employee's  employment  with the  Bank is  terminated
pursuant to any event  enumerated in subsection (a) or subsection (b) of Section
2  hereof,  Employee  shall  have  a  duty  to  seek  substantially   equivalent
employment.  The  payments  required  by this  Section 3 shall be  reduced  on a
dollar-for-dollar  basis by any income or earnings received by Employee from any
other  employer or by any income or  earnings  obtained  from any other  working
activity in which  Employee may engage  during the  Severance  Period.  Employee
shall notify the Bank  promptly of his receipt of any income or earnings  during
the Severance Period.

     4. Other Benefits.  In addition to the  compensation set forth in Section 3
hereof,  Employee  shall be entitled to the following  benefits from the Bank in
the event that Employee's employment with the Bank is terminated pursuant to any
event enumerated in subsection (a) or subsection (b) of Section 2 hereof:

          (a)  for  a  period  of  one  year  following  the  Termination  Date,
     reimbursement   for  all  reasonable   expenses  incurred  by  Employee  in
     connection  with  the  search  for  new  employment,   including,   without
     limitation,  those of a placement agency or service,  and reimbursement for
     all reasonable  relocation expenses incurred by Employee in connection with
     securing new employment;  provided,  however, in no event shall the Bank be
     obligated  to  reimburse  Employee in excess of 1/3 of his  Highest  Annual
     Compensation  for the sum of  Employee's  search  and  relocation  expenses
     hereunder.

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          (b)  for  the  Severance   Period,   Employee  shall  be  entitled  to
     participate  in the following  group  programs of the Bank if such programs
     are in effect at the  Termination  Date (or, if such  participation  is not
     permitted  by  the  terms  of the  group  programs,  through  substantially
     equivalent  benefits),  with the Bank paying for the  Employee's  continued
     participation  in such group  programs at the same annual rate at which the
     Bank was paying on the Termination Date: all medical, hospitalization, life
     and disability  group  insurance  benefits which existed at the Termination
     date,  except  that  should  other  subsequent  employment  be  obtained by
     Employee  during  the  Severance  Period,   continuation  of  any  medical,
     hospitalization,  life and  disability  group  insurance  benefits  will be
     offset by coverages provided through the Employee's subsequent employer.

          (c)  If  permitted  by the  terms  thereof,  Employee  will  remain  a
     participant of the Bank's defined benefit pension plan.

     5. Withholding.  The Bank may withhold from any benefits payable under this
Agreement all federal,  state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.

     6. Source of Payment.  All payments  provided under this Agreement shall be
paid by the Bank from such funds as the Board of  Directors  shall direct in its
sole and absolute  discretion.  No special or separate fund shall be required to
be established and Employee shall have no right, title or interest whatsoever in
or to any  investment  which  the Bank may make to aid the Bank in  meeting  its
obligations hereunder.  Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be contrued to create a trust of any

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kind or a  fiduciary  relationship  between  the Bank and  Employee or any other
person.

     7. (a) Nonassignability. Neither  this  Agreement nor any right or interest
hereunder shall be assignable by Employee or his legal  representatives  without
the Bank's prior written consent.

        (b) Attachment.Except as required by law, the right to receive  payments
under this Agreement shall not be subject to  anticipation,  sale,  encumbrance,
charge, levy, or similar process or assignment by operation of law.

         8. Confidentiality and Non-Competition. All payments to Employee under
this Agreement shall be subject to Employee's compliance with the provisions of
this Section 8. If Employee fails to comply with such provisions, his right to
any future payments under this Agreement shall terminate and the Bank's
obligations under this Agreement to make such payments and provide such benefits
shall cease.

          (a) Employee covenants and agrees that he will not, during the term of
     his  employment  or at any time  thereafter,  except with the express prior
     written consent of the Bank or pursuant to the lawful order of any judicial
     or administrative agency of government,  directly or indirectly,  disclose,
     communicate or divulge to any person, or use for the benefit of any person,
     any knowledge or information  with respect to the conduct or details of the
     Banks' business which he, acting reasonably,  believes or should believe to
     be of a  confidential  nature and the  disclosure of which not to be in the
     Bank's interest.

          (b) Employee covenants and agrees that he will not, during the term of
     his  employment  or for a period of one year  thereafter,  except  with the
     express prior

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     written consent of the Bank,  directly or indirectly,  whether as employee,
     owner, partner, consultant, agent, director, officer, shareholder or in any
     other  capacity,  engage  in or assist  any  person to engage in any act or
     action which he,  acting  reasonably,  believes or should  believe would be
     harmful or inimical to the interests of the Bank.

          (c) Employee covenants and agrees that he will not, during the term of
     his  employment  or for a period of one year  thereafter,  except  with the
     express prior written consent of the Bank, in any capacity (including,  but
     not limited to, owner, partner,  shareholder,  consultant, agent, employee,
     officer,  director  or  otherwise),  directly  or  indirectly,  for his own
     account  or for the  benefit of any  person,  engage or  participate  in or
     otherwise be connected  with any  commercial  bank which has its  principal
     office in Lehigh,  Northampton or Monroe Counties in Pennsylvania or Warren
     County in New Jersey, except that the foregoing shall not prohibit Employee
     from owning as a shareholder  less than 1% of the  outstanding  stock of an
     issuer whose stock is publicly traded.

          (d) The  parties  agree  that any  breach  by  Employee  of any of the
     covenants  or  agreements  contained  in  this  Section  8 will  result  in
     irreparable injury to the Bank for which money damages could not adequately
     compensate  the Bank and  therefore,  in the event of any such breach,  the
     Bank shall be entitled (in addition to any other rights and remedies  which
     it may  have  at law or in  equity)  to have an  injunction  issued  by any
     competent court enjoining and restraining  Employee and/or any other person
     involved therein from continuing such breach. The existence of any claim or
     cause of  action  which  Employee  may have  against  the Bank or any other

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     person  (other  than a claim for the Bank's  breach of this  Agreement  for
     failure to make payments  hereunder)  shall not constitute a defense or bar
     to the enforcement of such covenants.

          (e) If any portion of the  covenants or  agreements  contained in this
     Section  8, or the  application  hereof,  is  construed  to be  invalid  or
     unenforceable,  the other portions of such  covenant(s) or  agreement(s) or
     the application thereof shall not be affected and shall be given full force
     and effect without regard to the invalid or  unenforceable  portions to the
     fullest extent possible.  If any covenant or agreement in this Section 8 is
     held  unenforceable  because of the geographic  area covered,  the duration
     thereof,  or the scope  thereof,  then the court making such  determination
     shall have the power to reduce the area and/or  duration  and/or  limit the
     scope thereof,  and the covenant or agreement  shall then be enforceable in
     its reduced form.

          (f) For purposes of this Section 8, the term "the Bank" shall  include
     the Bank, any successor to the Bank under Section 9 hereof, and all present
     and future direct and indirect subsidiaries and affiliates of the Bank.

     9. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding  upon any  corporate or other  successor of the Bank which  acquires,
directly or indirectly, by merger, consolidation, purchase, or otherwise, all or
substantially  all of the assets of the Bank, and shall  otherwise  inure to the
benefit of and be binding upon the parties  hereto and their  respective  heirs,
executors,  administrators,  successors  and assigns.  Nothing in the  Agreement
shall  preclude  the  Bank  from  consolidating  or  merging  into  or  with  or
transferring all or substantially  all of its assets to another person.  In that
event,  such other person shall assume this Agreement and all obligations of the
Bank  hereunder. Upon  such a consolidation,  merger, or  transfer of assets and

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assumption, the term "the Bank" as used herein, shall mean such other person and
this Agreement shall continue in full force and effect.

     10.  Waivers  Not to be  Continued.  Any waiver by a party of any breach of
this Agreement by another party shall not be construed as a continuing waiver or
as a consent to any subsequent breach by the other party.

     11.  Notices.  All  notices,  requests,  demands  and other  communications
hereunder  shall be in  writing  and shall be deemed to have been duly  given if
delivered  by hand or mailed,  certified  or  registered  mail,  return  receipt
requested,  with postage  prepared,  to the  following  address or to such other
address as either party may designate by like notice:

     A. If to  Employee,  to:

                   S. Eric  Beattie
                   2841 Hope  Ridge  Drive
                   Easton, Pennsylvania 18045

     B. If to the Bank, to:

                   Nazareth National Bank and Trust Co.
                   76 South Main Street
                   Nazareth, Pennsylvania  18064

and to such other or  additional  person or persons as either  party  shall have
designated to the other party in writing by like notice.

     12. Jurisdiction.  Bank and Employee consent to the exclusive  jurisdiction
or the courts or the Commonwealth of Pennsylvania and the United States District
Court for the Eastern  District of  Pennsylvania  in any and all actions arising
hereunder and irrevocably  consent to service of process as set forth in Section
11 hereof.

<PAGE>

     13. General Provisions.

     (a) This Agreement  constitutes  the entire  agreement  between the parties
with respect to the subject matter hereof, and supersedes and replaces all prior
agreements  between the parties.  No amendment,  waiver or termination of any of
the  provisions  hereof shall be  effective  unless in writing and signed by the
party against whom it is sought to be enforced. Any written amendment, waiver or
termination  hereof executed by the Bank and Employee shall be binding upon them
and upon all other persons, without the necessity of securing the consent of any
other person and no person shall be deemed to be a third party beneficiary under
this Agreement. (

     b) This Agreement shall not limit or infringe upon the right of the Bank to
terminate the  employment  of Employee at any time for any reason,  nor upon the
right of Employee to terminate his employment with the Bank.

     (c) The term  "person" as used in this  Agreement  means a natural  person,
joint venture,  corporation,  sole proprietorship,  trust, estate,  partnership,
cooperative,   association,   non-profit   organization  or  any  other  legally
cognizable entity.

     (d) This  Agreement  may be executed in one or more  counterparts,  each of
which  shall be  deemed  an  original,  but all of which  taken  together  shall
constitute one and the same Agreement.

     (e) No failure on the part of any party  hereto to exercise and no delay in
exercising  any  right,  power or remedy  hereunder  shall  operate  as a waiver
thereof;  nor shall any single or partial exercise of any right, power or remedy
hereunder  preclude any other or further exercise thereof or the exercise of any
other rights, power or remedy.

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     (f) The headings of the sections of this  Agreement  have been inserted for
convenience  of reference only and shall in no way restrict or modify any of the
terms or provisions  hereof.  (g) This Agreement shall be governed and construed
and the legal  relationships  of the parties  determined in accordance  with the
laws of the Commonwealth of Pennsylvania applicable to contracts executed and to
be performed solely in the Commonwealth of Pennsylvania.

                                            NAZARETH NATIONAL BANK & TRUST CO.

(Corporate Seal)                            By: _____________________________

                                            ATTEST: ________________________

Witness:
_______________________                     ____________________________(SEAL)
                                            S. ERIC BEATTIESEVERANCE AGREEMENT

     Agreement  made this 1st day of  January,  2001,  by and  between  Nazareth
National Bank and Trust Company, a banking association  organized under the laws
of the United States ("Bank") and Reid L. Heeren, an individual ("Employee").

                                   BACKGROUND

     Effective  January 1, 2001 and subject to the terms of this Agreement,  the
Bank  will  continue  to employ  Employee  in the  position  of  Executive  Vice
President and Chief Financial  Officer,  and to perform such other duties as may
be assigned to him by the  President of the Bank.  Employee  agrees to serve the
Bank in this capacity on a full-time  basis,  faithfully,  diligently and to the
best of his  ability.  Employee  further  agrees  to  fully  cooperate  with the
officers and employees of the Bank to the best of his ability, and not to engage
in any  outside  for  profit  business  deemed to be in  conflict  with  general
commercial banking,  employment or commercial activity without the prior written
consent of the President of the Bank.  The Bank and Employee wish to provide for
the payment of certain  compensation  and other  benefits  to Employee  upon the
occurrence  of  certain   events,   all  as  more  fully  set  forth  below.

     In consideration of the mutual covenants and agreements  herein  contained,
and intending to be legally bound hereby, the parties agree as follows:

     1. Term.  This Agreement shall begin on January 1, 2001 and shall terminate
at the earliest of the following dates ---- (the "Term"):  (a) the date Employee
dies or becomes permanently  disabled (i.e., upon his failure to render services
of the character  which he had previously  rendered to the Bank,  because of his
physical  or  mental  illness  or other  incapacity  beyond  his  control  for a
continuous period of six months or for shorter periods aggregating six months in

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any twelve month period);  (b) the date of termination of Employee's  employment
with the Bank for cause (as  hereinafter  defined);  (c) the date  specified  by
mutual agreement of the Bank and Employee;  (d) subject to Section 2 hereof, the
date of  termination  by  Employee  of  Employee's  employment  with the Bank by
resignation or otherwise; or (e) December 31, 2001. If this Agreement expires on
December  31,  2001  pursuant to (e) of the  foregoing  sentence  ("the  Initial
Term"),  it shall renew  automatically  for  successive  terms of up to one year
beginning on January 1 of the applicable succeeding year ("Successive Term(s)"),
provided  neither of the parties has given written  notice to the other party of
his or its intention not to renew at least two months prior to December 31, 2001
or  December  31 of the  applicable  succeeding  year.  In the  event  that this
Agreement is renewed  pursuant to the foregoing  sentence,  the Agreement  shall
terminate on the earliest of the following  dates:  (i) a date listed in the (a)
through (d) of the first  sentence of this  paragraph;  (ii)  December 31 of the
applicable succeeding year. If Employee's employment with the Bank is terminated
during the  Initial  Term or any  Successive  Term  (other  than as set forth in
Section  2  hereof),  Employee  shall  have no  rights or  benefits  under  this
Agreement except to receive payment of base salary through the effective date of
his termination. For purposes of this Agreement, the term "cause" shall mean (i)
conviction of Employee for any felony,  fraud or embezzlement or (ii) Employee's
failure or refusal to comply with the written policies or written  directives of
the  Bank's  Board of  Directors  or  Employee  being  guilty of  misconduct  in
connection  with the performance of his duties for the Bank,  provided  Employee
fails to cure  such non-compliance or  misconduct  within twenty (20) days after

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receiving  written  notice from the Bank's  Board of Directors  specifying  such
non-compliance or misconduct.

     2.  Termination.  If during the Initial Term or any Successive Term hereof,
the Employee's  employment with the Bank  is terminated as set forth
below,  the Bank will pay to  Employee  the amount set forth in Section 3 hereof
and  Employee  shall be entitled to the  benefits set forth in Section 4 hereof:

          (a) the Bank  terminates  Employee's  employment with the Bank without
     cause; or

          (b) Employee  terminates  his  employment  with the Bank:  (i) for any
     reason at any time within  eighteen  months  after a "change in control" of
     the Bank (as defined  hereinafter),  or (ii) due to the fact that,  without
     Employee's  consent  and whether or not a change of control of the Bank has
     occurred,  the nature and scope of  Employee's  duties and authority or his
     responsibilities  with the Bank or the  surviving or  acquiring  person are
     materially  reduced  to a level  below  that  which he  enjoys  on the date
     hereof,  his then  current  base annual  salary is reduced to a level below
     that which he enjoys on the date hereof or at any time hereafter (whichever
     may be  greater),  Employee's  position  or  title  with  the  Bank  or the
     surviving  or  acquiring  person is  materially  reduced  from his  current
     position or title with the Bank, or, without Employee's consent, Employee's
     principal  place  of  employment  with the Bank is  changed  to a  location
     greater  than fifty miles from his current  principal  place of  employment
     with the Bank,  provided,  however,  that for any  termination  by Employee
     under this clause (ii) the Employee shall have first given the Bank written
     notice of his intention to terminate his employment pursuant to this clause
     (ii), specifying  the reason(s) for such termination, and provided further,

<PAGE>

     that the Bank shall not have cured or remedied the  reason(s)  specified in
     such notice prior to the  expiration  of twenty (20) days after  receipt of
     such written notice.

          (c) For  purposes of this  Agreement,  a "change in control"  shall be
     deemed to have occurred upon the happening of any of the following events:

               (1) A change  within a twelve  month  period in a majority of the
               members  of the  Board of  Directors  of the Bank or its  holding
               company, First Colonial Group, Inc. (the "Holding Company");

               (2) A change  within a twelve month period in the holders of more
               than  50% of the  outstanding  voting  stock  of the  Bank or its
               Holding Company; or

               (3) Any other event deemed to constitute a "change in control" by
               the Board of Directors of the Bank.

     3.  Termination  Payments to  Employee.  Commencing  not later than 30 days
after the date Employee's employment with the Bank is terminated pursuant to any
event  enumerated in subsection  (a) or subsection  (b) of Section 2 hereof (the
"Termination Date") and subject to Employee's  compliance with Section 8 hereof,
the Bank shall pay  compensation to Employee for a one year period following the
Termination  Date (the "Severance  Period") at a per annum rate equal to 100% of
Employee's  "base annual salary" on the  Termination  Date. For purposes of this
Agreement,  the term  "base  annual  salary"  shall mean the  Employee's  annual
compensation rate on the Termination Date exclusive of cash bonuses and payments
under the Bank's  bonus  plan(s),  if any. The Bank agrees that it will make the
payments due under this Section 3 on the first day of each month  following  the

<PAGE>

Termination  Date in an amount equal to 1/12 of 100% of  Employee's  base annual
salary  on the  Termination  Date.  If  Employee's  employment  with the Bank is
terminated  pursuant to any event enumerated in subsection (a) or subsection (b)
of Section 2 hereof, Employee shall have a duty to seek substantially equivalent
employment.  The  payments  required  by this  Section 3 shall be  reduced  on a
dollar-for-dollar  basis by any income or earnings received by Employee from any
other  employer or by any income or  earnings  obtained  from any other  working
activity in which  Employee may engage  during the  Severance  Period.  Employee
shall notify the Bank  promptly of his receipt of any income or earnings  during
the Severance Period.

     4. Other Benefits.  In addition to the  compensation set forth in Section 3
hereof,  Employee  shall be entitled to the following  benefits from the Bank in
the event that Employee's employment with the Bank is terminated pursuant to any
event  enumerated in subsection (a) or subsection  (b) of Section 2 hereof:

          (a)  for  the  Severance  Period,  reimbursement  for  all  reasonable
     expenses  incurred  by  Employee  in  connection  with the  search  for new
     employment,  including,  without limitation, those of a placement agency or
     service, and reimbursement for all reasonable  relocation expenses incurred
     by Employee in connection with securing new employment;  provided, however,
     in no event shall the Bank be obligated to reimburse  Employee in excess of
     1/3 of his  base  annual  salary  on the  Termination  Date  for the sum of
     Employee's search and relocation expenses hereunder.

          (b)  for  the  Severance   Period,   Employee  shall  be  entitled  to
     participate  in the following  group  programs of the Bank if such programs
     are  in effect  at  the Termination  Date (or, if such participation is not

<PAGE>

     permitted  by  the  terms  of the  group  programs,  through  substantially
     equivalent  benefits),  with the Bank paying for the  Employee's  continued
     participation  in such group  programs at the same annual rate at which the
     Bank was paying on the Termination Date: all medical, hospitalization, life
     and disability  group  insurance  benefits which existed at the Termination
     date,  except  that  should  other  subsequent  employment  be  obtained by
     Employee  during  the  Severance  Period,   continuation  of  any  medical,
     hospitalization,  life and  disability  group  insurance  benefits  will be
     offset by coverages provided through the Employee's subsequent employer.

          (c)  If  permitted  by the  terms  thereof,  Employee  will  remain  a
     participant of the Bank's defined benefit pension plan.

     5. Withholding.  The Bank may withhold from any benefits payable under this
Agreement all federal,  state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.

     6. Source of Payment.  All payments  provided under this Agreement shall be
paid by the Bank from such funds as the President  shall  direct.  No special or
separate  fund shall be required to be  established  and Employee  shall have no
right,  title or interest  whatsoever in or to any investment which the Bank may
make to aid the Bank in meeting its obligations hereunder.  Nothing contained in
this Agreement, and no action taken pursuant to its provisions,  shall create or
be construed to create a trust of any kind or a fiduciary  relationship  between
the Bank and Employee or any other person.

<PAGE>

     7.  (a)  Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by Employee or his legal  representatives  without
the Bank's prior written consent.

         (b)  Attachment.  Except as  required  by  law,  the  right to  receive
     payments under this Agreement shall not be subject of  anticipation,  sale,
     encumbrance, charge, levy, or similar process or assignment by operation of
     law. 8. Confidentiality and Non-Competition. All payments to Employee under
     this  Agreement  shall  be  subject  to  Employee's   compliance  with  the
     provisions  of this  Section  8. If  Employee  fails to  comply  with  such
     provisions,  his right to any future  payments under this  Agreement  shall
     terminate  and the Bank's  obligations  under this  Agreement  to make such
     payments and provide such benefits shall cease. (a) Employee  covenants and
     agrees that he will not,  during the term of his employment and at any time
     thereafter,  except with the express prior  written  consent of the Bank or
     pursuant to the lawful  order of any judicial or  administrative  agency of
     government, directly or indirectly, disclose, communicate or divulge to any
     person, or use for the benefit of any person,  any knowledge or information
     with  respect to the  conduct or details of the Bank's  business  which he,
     acting  reasonably,  believes  or should  believe  to be of a  confidential
     nature and the  disclosure of which not to be in the Bank's  interest.  (b)
     Employee  covenants  and  agrees  that he will not,  during the term of his
     employment and for a period of one year thereafter, except with the express
     prior  written  consent of the Bank,  directly  or  indirectly,  whether as
     employee, employer, owner, partner,  consultant,  agent, director, officer,
     shareholder  or in any other capacity,  engage  in or assist any  person to

<PAGE>

     engage in any act or action which he, acting reasonably, believes or should
     believe  would be harmful or inimical  to the  interests  of the Bank.

          (c) Employee covenants and agrees that he will not, during the term of
     his  employment  and for a period of one year  thereafter,  except with the
     express prior written consent of the Bank, in any capacity (including,  but
     not limited to, owner, partner,  shareholder,  consultant, agent, employee,
     employer, officer, director or otherwise),  directly or indirectly, for his
     own account or for the benefit of any person,  engage or  participate in or
     otherwise be connected  with any  commercial  bank which has its  principal
     office in either  Northampton,  Lehigh or Monroe Counties,  Pennsylvania or
     Warren  County,  New Jersey  except that the  foregoing  shall not prohibit
     Employee from owning as a shareholder less than 1% of the outstanding stock
     of an issuer whose stock is publicly traded.

          (d) The  parties  agree  that any  breach  by  Employee  of any of the
     covenants  or  agreements  contained  in  this  Section  8 will  result  in
     irreparable injury to the Bank for which money damages could not adequately
     compensate  the Bank and  therefore,  in the event of any such breach,  the
     Bank shall be entitled (in addition to any other rights and remedies  which
     it may  have  at law or in  equity)  to have an  injunction  issued  by any
     competent court enjoining and restraining  Employee and/or any other person
     involved therein from continuing such breach. The existence of any claim or
     cause of  action  which  Employee  may have  against  the Bank or any other
     person  (other  than a claim for the Bank's  breach of this  Agreement  for
     failure to make payments  hereunder)  shall not constitute a defense or bar
     to the enforcement of such covenants.

<PAGE>

          (e) If any portion of the  covenants or  agreements  contained in this
     Section  8, or the  application  thereof,  is  construed  to be  invalid or
     unenforceable,  the other portions of such  covenant(s) or  agreement(s) or
     the application thereof shall not be affected and shall be given full force
     and effect without regard to the invalid or  unenforceable  portions to the
     fullest extent possible.  If any covenant or agreement in this Section 8 is
     held unenforceable  because of the area covered,  the duration thereof,  or
     the scope thereof,  then the court making such determination shall have the
     power to reduce the area and/or  duration  and/or limit the scope  thereof,
     and the  covenant or  agreement  shall then be  enforceable  in its reduced
     form.

          (f) For purposes of this Section 8, the term "the Bank" shall  include
     the Bank, any successor to the Bank under Section 9 hereof, and all present
     and future direct and indirect subsidiaries and affiliates of the Bank.

     9. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon any corporate or other  successor of the Bank which may acquire,
directly or indirectly, by merger, consolidation, purchase, or otherwise, all or
substantially  all of the assets of the Bank, and shall  otherwise  inure to the
benefit of and be binding upon the parties  hereto and their  respective  heirs,
executors,  administrators,  successors  and assigns.  Nothing in the  Agreement
shall  preclude  the  Bank  from  consolidating  or  merging  into  or  with  or
transferring all or substantially  all of its assets to another person.  In that
event,  such other person shall assume this Agreement and all obligations of the
Bank hereunder.  Upon such a  consolidation,  merger,  or transfer of assets and
assumption, the term "the Bank" as used herein, shall mean such other person and
this Agreement shall continue in full force and effect.

<PAGE>

     10.  Waivers  Not to be  Continued.  Any waiver by a party of any breach of
this Agreement by another party shall not be construed as a continuing waiver or
as a consent to any subsequent breach by the other party.

     11.  Notices.  All  notices,  requests,  demands  and other  communications
hereunder  shall be in  writing  and shall be deemed to have been duly  given if
delivered  by hand or mailed,  certified  or  registered  mail,  return  receipt
requested,  with postage  prepaid,  to the following  addresses or to such other
address as either party may designate by like notice:

                       If to Employee, to:
                       Mr. Reid L. Heeren
                       714 Lexington Road
                       Nazareth, Pennsylvania 18064

                       If to the Bank, to:

                       Nazareth National Bank and Trust Company
                       76 South Main Street
                       Nazareth, Pennsylvania 18064

                       Attn:  Board of Directors

and to such other or  additional  person or persons as either  party  shall have
designated to the other party in writing by like notice.

     12. Applicable Law;  Jurisdiction.  This Agreement shall be governed by and
construed  and  enforced  in  accordance  with  the  substantive   laws  of  the
Commonwealth  of  Pennsylvania  with respect to contracts  executed in and to be
wholly   performed   therein.   Bank  and  Employee  consent  to  the  exclusive
jurisdiction of the Court of Common Pleas,  Northampton County,  Commonwealth of
Pennsylvania  and the United States  District Court for the Eastern  District of
Pennsylvania in any and all actions arising hereunder and irrecovably consent to
service of process as set forth in Section 11 hereof.

<PAGE>

     13. General Provisions.

          (a) This  Agreement  constitutes  the  entire  agreement  between  the
     parties with  respect to the subject  matter  hereof,  and  supersedes  and
     replaces all prior agreements between the parties. No amendment,  waiver or
     termination  of any of the provisions  hereof shall be effective  unless in
     writing and signed by the party  against  whom it is sought to be enforced.
     Any written  amendment,  waiver or termination  hereof executed by the Bank
     and Employee shall be binding upon them and upon all other persons, without
     the  necessity  of securing  the consent of any other  person and no person
     shall be deemed to be a third party beneficiary under this Agreement.

          (b) This  Agreement  shall not limit or infringe upon the right of the
     Bank to terminate  the  employment  of Employee at any time for any reason,
     nor upon the right of Employee to terminate his employment with the Bank.

          (c) The  term  "person"  as used in  this  Agreement  means a  natural
     person, joint venture,  corporation,  sole  proprietorship,  trust, estate,
     partnership, cooperative, association, non-profit organization or any other
     legally cognizable entity.

          (d) This Agreement may be executed in one or more  counterparts,  each
     of which shall be deemed an original, but all of which taken together shall
     constitute one and the same Agreement.

          (e) No  failure  on the part of any party  hereto to  exercise  and no
     delay in exercising any right, power or remedy hereunder preclude any other
     or further exercise  thereof or the exercise of any other rights,  power or
     remedy.

<PAGE>

          (f) The headings of the sections of this  Agreement have been inserted
     for  convenience  of reference  only and shall in no way restrict or modify
     any of the terms or provisions hereof.

          (g) Nothing contained herein shall be construed to require the Bank to
     violate applicable law,  including,  but not limited to, applicable banking
     laws and regulations,  and all obligations of the Bank under this Agreement
     shall be deemed to be qualified accordingly.

ATTEST:                             NAZARETH NATIONAL BANK AND
                                        TRUST COMPANY

By: _________________________       By:____________________________
                                       S. Eric Beattie, President

Witness:

____________________________           ____________________________(SEAL)
                                       Reid L. Heeren

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