FIRST COLONIAL GROUP INC
LOAN AGREEMENTS
<DOCUMENT>
<TYPE>EX-10.22
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>LOAN AGREEMENTS
<TEXT>

                              ESOP LOAN AGREEMENT

     THIS  LOAN  AGREEMENT,  dated  October  19,  2000 by and  between  Nazareth
National Bank and Trust Company  Employee  Stock  Ownership  Plan Trust, a trust
formed under the laws of the  Commonwealth of  Pennsylvania  pursuant to a Trust
Agreement dated June 28, 1994 (the "Borrower"), Nazareth National Bank and Trust
Company in its  capacity as trustee  for  Borrower  ("Trustee")  and First C. G.
Company, Inc., a Delaware Corporation (the "Lender").

                                   BACKGROUND

     The Borrower has requested the Lender to lend to it moneys in an amount not
to exceed Seventy-one  Thousand Eight Hundred  Seventy-five Dollars ($71,875.00)
(the  "Loan").  The purpose of the loan is to  refinance  the  purchase of 5,000
shares of Common Stock of First Colonial Group, Inc. from the market. The Lender
is willing to make the Loan to the  Borrower  pursuant to the terms of a note of
even date herewith (the "ESOT Term Note").

          NOW, THEREFORE, in consideration of the promises herein contained, and
each intending to be legally bound hereby, the parties agree as follows:

Section I. The Loan

     1.01  General  Terms.  Subject to the terms  hereof,  the Lender  will lend
Seventy-one  Thousand Eight Hundred  Seventy-five  Dollars  ($71,875.00)  to the
Borrower  at  Closing   which  will  be  repayable  in  ten  (10)  equal  annual
installments of $7,187.50 each due each October 1,  commencing  October 1, 2001,
with a final  installment of the entire unpaid principal  balance due October 1,
2010 and  quarterly  interest  payments  of all  outstanding  accrued and unpaid
interest due on each April 1, July 1, October 1 and January 1, commencing  April
1, 2000,  and a final  interest  payment of all  outstanding  accrued and unpaid
interest due on October 1, 2010.

     1.02  Disbursement of the Loans. The Lender will wire transfer the proceeds
of the Loan to Borrower.

     1.03 Interest Rate and Payments of Interest.

          (A) Interest on the principal  balance of the Loan,  from time to time
     outstanding,  will be payable at the rate of the Nazareth National Bank and
     Trust Company's (or its successor, the "Bank") Prime Rate and shall be paid
     as provided herein.

          (B) Changes in the Prime Rate shall be effective  at the  beginning of
     business  on the same day on which  the Bank  effects a change in its Prime
     Rate.  Interest shall be calculated by the Lender on the basis of a 365 day
     year and the actual number of days elapsed.

          (C) For purposes of this  Agreement,  "Prime  Rate" and "Bank's  Prime
     Rate" shall mean the commercial lending rate of interest per annum as fixed
     from  time to time by the  management  of the Bank at its main  office  and
     designated  as "Prime Rate".  The  determination  and publication of "Prime


<PAGE>


     Rate" by the Bank  shall  not in any way  preclude  or limit  the Bank from
     lending to certain  borrowers  from time to time at a rate of interest less
     than "Prime Rate."

          (D) If,  at any  time,  the  interest  rate  shall  be  deemed  by any
     competent  court of law,  governmental  agency or  tribunal  to exceed  the
     maximum rate of interest  permitted by any applicable  laws, then, for such
     time as the interest rate would be deemed excessive,  its application shall
     be  suspended  and there  shall be  charged  instead  the  maximum  rate of
     interest permissible under such laws.

          (E) If an  event  of  default,  as set  forth  in  Section  VI of this
     Agreement,  should  occur,  the  interest  rate  hereunder  shall  increase
     thereafter  to the rate of three  percent  (3%) per annum  over the  Bank's
     Prime Rate and shall be paid as provided herein.

     1.04 Payment to the Lender.  All sums payable to the Lender hereunder shall
be paid directly to the Lender in immediately  available funds. The Lender shall
send the Borrower  statements  of all amounts due  hereunder,  which  statements
shall be considered correct and conclusively  binding on the Borrower unless the
Borrower  notifies  the  Lender to the  contrary  within  sixty (60) days of its
receipt of any statement which it deems to be incorrect.

Section II. Conditions Precedent

     2.01 The  obligation of the Lender to make the Loan hereunder is subject to
the following conditions precedent:

          (A)  Delivery  of the ESOT Term Note  executed  by the  Trustee of the
     Borrower;

          (B)  Delivery  of a  certified  (as of the  date of  Closing)  copy of
     resolutions of the Borrower's Trustee  authorizing the execution,  delivery
     and performance of this Agreement and the ESOT Term Note;

          (C) A copy  (certified by the Trustee) of the trust  agreement for the
     ESOT; and

          (D) A certificate (dated the date of the request for the advance under
     the  Loan)  of the  secretary  of the  Trustee  as to  the  incumbency  and
     signatures of the officers of the Trustee signing the ESOT Term Note.

Section III. Collateral

     3.01 First Colonial Group,  Inc. has executed a Pledge  Agreement this date
and  delivered  134,946  shares of the common stock of Nazareth  Nation Bank and
Trust Company (the "Stock") to the Lender together with stock powers executed in
blank,  as security for the performance of the obligations of the Trustee of the
ESOT under a certain note from the Trustee to the Lender.  The Pledge  Agreement
and  the  Stock  held  pursuant   thereto  shall  be  collateral  for  Trustee's
obligations hereunder.


<PAGE>


Section IV. Subordination and Set Off

     4.01 Lender  hereby  waives its right to set off  obligations  due from the
Lender to the  Borrower  and  agrees  that,  in the event of an event of default
hereunder  or  otherwise,  it will  not set off any  amounts  due from it to the
Borrower.

Section V. Warranties and Covenants

     5.01 Within ninety (90) days after the close of each fiscal year,  Borrower
shall provide annual financial  statements all in reasonable  detail,  including
all  supporting  schedules  and  comments;  the  statements  to be audited by an
independent  certified public accountant selected by the Borrower and acceptable
to the  Lender,  and  certified  by such  accountants  to have been  prepared in
accordance with generally accepted accounting principles consistently applied by
the Borrower, except for any inconsistencies explained in such certificate.  The
Lender  shall  have the right,  from time to time,  to  discuss  the  Borrower's
affairs directly with the Borrower's  independent  certified public  accountants
after notice to the Borrower and opportunity of the Borrower to be present at an
such discussions.

     5.02 Within forty-five (45) days after the end of the first three financial
quarters of any fiscal year in which the Loan is outstanding, the Borrower shall
provide  financial  statements for the preceding quarter prepared by the Trustee
or Trustee's designee,  all in reasonable detail and certified by the Trustee as
having been prepared in accordance with generally accepted accounting principals
consistently applied.

     5.03 The Borrower  represents that it is not in default with respect to any
of its existing indebtedness,  and the making and performance of this Agreement,
and the Note executed in connection herewith,  will not, immediately or with the
passage of time,  the giving of notice,  or both,  constitute  default under any
notes or agreements with third parties.

     5.04 The Borrower will notify the Lender  immediately  of the occurrence of
any event of  default  or of any  fact,  condition  or event  that only with the
giving  of  notice  or the  passage  of time or both,  could  become an event of
default,  or of the failure of the  Borrower to observe any of its  undertakings
hereunder.

     5.05 The Borrower will not furnish to the Lender any  certificate  or other
document  that will contain any untrue  statement of material  fact or that will
omit to state a material  fact  necessary to make it not  misleading in light of
the circumstances under which it was furnished.

Section VI. Acts of Default

     6.01  The  occurrence  of any  one or more of the  following  events  shall
constitute an event of default:

          (A) The Borrower  shall fail to pay any amounts to be paid  hereunder,
     or under  the  ESOT  Term  Note  when and as due,  and such  failure  shall
     continue  uncured  for ten (10) days  after  notice  from the Lender to the
     Borrower;


<PAGE>


          (B) The Borrower shall fail to observe or perform any other obligation
     to be  observed  or  performed  by it  herein  or in any of  the  notes  or
     agreements  secured  hereby and such failure shall continue for thirty (30)
     days after notice of such failure to the Borrower by the Lender;

          (C) Any financial statement,  representation,  warranty or certificate
     made or furnished  by the  Borrower to the Lender or the Lender's  agent or
     representatives in connection with this Agreement,  or as inducement to the
     Lender to enter  into  this  Agreement,  or in any  separate  statement  or
     document  to be  delivered  hereunder  to the Lender,  shall be  materially
     false, incorrect, or incomplete when made;

          (D) The  Borrower  shall admit its  inability to pay its debts as they
     mature,  or shall make an  assignment  for the benefit of its or any of its
     creditors;

          (E) Proceedings in bankruptcy,  or for reorganization of the Borrower,
     or for the  readjustment  of any of its debts,  under the Bankruptcy Act of
     1978,  as amended,  or any part thereof,  or under any other laws,  whether
     State or Federal,  for the relief of borrowers,  now or hereafter existing,
     shall be  commenced  by the  Borrower,  or shall be  commenced  against the
     Borrower  and  shall  not  be   discharged   within  thirty  (30)  days  of
     commencement,  or stayed  pending  legal  action  to have  such  proceeding
     dismissed; or

          (F) A  receiver  shall  be  appointed  for  the  Borrower  or for  any
     substantial part of its assets,  or any proceedings shall be instituted for
     the  dissolution or the full or partial  liquidation  of the Borrower,  and
     such  receiver  shall  not be  discharged  within  ninety  (90) days of his
     appointment, or such proceedings shall not be discharged within ninety (90)
     days of their commencement.

     6.02  Acceleration.  Upon the  occurrence  of an event of  default,  at the
option of the  Lender,  but only upon  notice to the  Borrower,  all amounts due
hereunder shall immediately become due and payable without further action of any
kind.

Section VII. Miscellaneous

     7.01 Construction. The provisions of this Agreement shall be in addition to
those of any pledge, note, assignment or other evidence of liability held by the
Lender, all of which shall be construed as complementary to each other.  Nothing
herein contained shall prevent the Lender from enforcing any or all of any other
notes,  pledges or  security  agreements  it may have in  accordance  with their
respective terms.

     7.02 Further  Assurance.  From time to time,  the Borrower will execute and
deliver to the Lender such additional documents and will provide such additional
information as the Lender may reasonably  require to carry out the terms of this
Agreement and to be informed of the Borrower's status and affairs.

     7.03 Expenses of the Lender.  The Borrower  will, on demand,  reimburse the
Lender for all  expenses,  including the  reasonable  fees and expenses of legal
counsel  for  the  Lender,  incurred  by  the  Lender  in  connection  with  the
preparation,  administration,  amendment,  modification  or  enforcement of this
Agreement and the collection or attempted collection of the notes.


<PAGE>


     7.04 Applicable Law. Except to the extent  preempted by applicable  Federal
law,  the  substantive  laws of the  Commonwealth  of  Pennsylvania  relating to
contracts  executed and to be performed therein shall govern the construction of
this Agreement and the rights and remedies of the parties hereto.

     7.05  Notices.  Any  notices or  consents  required  or  permitted  by this
Agreement  shall be in writing and shall be deemed  delivered  if  delivered  in
person or if sent by certified mail, postage prepaid,  return receipt requested,
or  telegraph,  as  follows,  unless such  address is changed by written  notice
hereunder:

          (A) If to the Borrower:

              Nazareth  National  Bank and Trust  Company  as  Trustee
              76 South Main Street
              Nazareth, PA 18064
              Attn:  S. Eric Beattie, President

              With copy to:

              Frederick D. Lipman, Esquire
              Blank Rome Comisky & McCauley LLP
              One Logan Square
              Philadelphia, PA 19103

          (B) If to the Lender:

              First C. G. Company, Inc.
              103 Springer Building
              3411 Silverside Road
              Wilmington, DE 19810
              Attn:  Reid L. Heeren, President

     7.06 Binding Effect,  Assignment and Entire Agreement. This Agreement shall
inure to the benefit of, and shall be binding upon,  the  respective  successors
and permitted assigns of the parties hereto. The Borrower has no right to assign
any of its rights or obligations  hereunder without the prior written consent of
the Lender.  This Agreement,  and the documents  executed and delivered pursuant
hereto,  constitute the entire agreement between the parties, and may be amended
only by a writing signed on behalf of each party.

     7.07 Severability. If any provision of this Agreement shall be held invalid
under any applicable  laws, such invalidity shall not affect any other provision
of this Agreement that can be given effect with the invalid  provision,  and, to
this end, the provisions hereof are severable.


<PAGE>


     7.08 Waivers.  The Lender may at any time, and from time to time, waive any
one or more of the conditions or provisions contained herein; however, no waiver
shall be effective unless in writing.

Section VIII. Miscellaneous

     8.01  Counterparts.  This  Agreement  may  be  executed  in any  number  of
counterparts,  each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.

Section IX. Seal

     9.01 This document is intended to take effect as an instrument under seal.



                                FIRST C. G. COMPANY, INC.

                                By: /S/ Reid L. Heeren     (Seal)
                                          President

                                NAZARETH NATIONAL BANK AND TRUST
                                COMPANY EMPLOYEE STOCK OWNERSHIP
                                PLAN TRUST


                                By: /S/ Barbara A. Seifert     (Seal)
                                        Vice President of Trustee


                                NAZARETH NATIONAL BANK AND
                                TRUST COMPANY

                                By: /S/ S. Eric Beattie     (Seal)
                                        President
<PAGE>

                              PLEDGE AGREEMENT

TO:       First C. G. Company, Inc. (the "Pledgee")             October 19, 2000
          103 Springer Building
          3411 Silverside Road
          Wilmington, DE 19810
          Attn: Reid L. Heeren, President

          In order to induce the  Pledgee to make  loans or  otherwise  to give,
grant or extend  credit at any time(s) to the Nazareth  National  Bank and Trust
Company  Employee  Stock  Ownership  Plan Trust (the  "ESOT") or the  trustee or
trustees for the ESOT (individually and collectively  "Trustee") for the benefit
of the ESOT,  First  Colonial  Group,  Inc.  (the  "Pledgor")  hereby agrees and
consents:

                                   BACKGROUND

     The  Pledgee is lending the ESOT  Seventy-one  Thousand  Eight  Hundred and
Seventy-five  Dollars  ($71,875.00)  pursuant to the ESOT Loan Agreement of even
herewith  between  the ESOT and the  Pledgee  (the  "ESOT Loan  Agreement")  and
pursuant to an ESOT Term Note (as defined in the ESOT Loan Agreement).

          NOW, THEREFORE, in consideration of the promises herein contained, and
each  intending to be legally  bound  hereby,  and  incorporating  the foregoing
Background herein, the parties agree as follows:

          1.  That,  as  security  for  any and all  indebtedness  and/or  other
liabilities of the ESOT to the Pledgee, now existing or to arise pursuant to the
ESOT Loan  Agreement  and the ESOT Term Note  between  the ESOT and the  Pledgee
(hereinafter  referred to as the  "Obligations"),  the Pledgee shall have and is
hereby given a lien upon and security interest in the following property,  which
is owned by the  Pledgor  and is in due form for  transfer  and all of which has
been or is herewith deposited with the Pledgee:

                   134,946 shares of common stock of the Nazareth  National Bank
          and  Trust  Company  hereby  warranted  by  the  Pledgor  to  be  duly
          authorized,  validly issued,  fully paid and non-assessable,  free and
          clear of any  liens,  encumbrances,  security  interests,  claims  and
          demands of any person  whatsoever  and which the  Pledgor has power to
          pledge and the Pledgee  shall be under no duty with  respect to all or
          any of the aforesaid property except to account therefor in due course
          pursuant to the terms and conditions hereof.

          2. The Pledgor  grants to the Pledgee the unlimited and  unconditional
right to vote all stock pledged hereunder only after default has occurred.

          3.  The  Pledgee  assumes  no  Responsibility   for  the  custody  and
preservation  of stock in its possession  other than the use of reasonable  care
which the parties by agreement  determine as follows:  the Pledgor will give the
Pledgee at least ten  (10) days  prior  written  notice of any act or acts to be


<PAGE>


done or notice or notices to be served which are  necessary  to preserve  rights
under the stock,  necessary  to collect  money  thereunder,  or any act which is
necessary,  advisable  or  desirable  to preserve  any  interest  against  third
parties,  exercise  rights or options  which the Pledgor may have in stock or to
preserve  its value or to take any other act or action,  similar or  dissimilar;
and,  unless so notified,  the Pledgee or any holder will not be responsible for
any  loss or  impairment  of such  interest,  rights,  options  or  benefits  in
connection therewith. Neither the Pledgee nor any holder will be required to see
to the  collection  of any sums which may become due with  respect to said stock
nor to give  notice  to the  Pledgor  or any one else in  respect  thereto.  The
Pledgee  shall have no  obligation  to give  notice to the  Pledgor or any other
person or to consult with it, him or them  regarding any rights or options which
the Pledgor may at any time have to vote,  tender,  sell,  convert or  otherwise
deal with such  securities or to purchase,  obtain or receive any  securities or
other property by virtue of ownership of said stock. The Pledgee is also granted
a security  interest in all  additional  securities  issued by the issuer of the
securities  pledged  hereunder,  if any, including but not limited to, all stock
dividends,  stock  splits,  stock  received  in exchange  for the stock  pledged
herein,  whether  by  merger,  consolidation,   liquidation,  reorganization  or
otherwise  and all other  securities  of every  kind and  character  whatsoever,
whether similar or dissimilar to that pledged hereunder, now or hereafter issued
by the issuer thereof to the Pledgor.

          4.  That,  in  event  of the  happening  of any  one  or  more  of the
following,  to wit:  (a) the  non-payment  to the Pledgee when due of all or any
part of the  Obligations  which shall  continue  uncured for ten (10) days after
notice from the  Pledgee to the  Pledgor  and the ESOT;  (b) failure in business
dissolution  or  termination  of existence  of the Pledgor or the ESOT;  (c) any
petition in bankruptcy being filed by or against the Pledgor, or any proceedings
in bankruptcy,  or under any Acts of Congress relating to the relief of debtors,
being  commenced  for the  relief or  readjustment  of any  indebtedness  of the
Pledgor or the ESOT, either through  reorganization,  composition,  extension or
otherwise  and such  petition or  commencement  shall not be  discharged  within
ninety (90) days of filing or  commencement,  or stayed pending  proceedings for
dismissal;  (d) a receiver of any  property of the Pledgor or the ESOT which may
be in or come into your  possession  or  control,  or that of any third party as
agent or pledgeholder for Pledgor or the ESOT, being attached or distrained,  or
becoming  subject to any mandatory order of court or other legal process,  which
writ of attachment,  distraint,  order or process shall not be discharged within
ninety  (90) days of its  issuance  or  entry,  then,  or at any time  after the
happening of any such event and  expiration of the periods for cure. The Pledgee
is authorized and empowered, acting in its discretion and either before or after
the maturity of all or any part, of the property upon which you then have a lien
hereunder, at public or private sale, upon ten (10) days prior written notice to
the Pledgor which is agreed to be reasonable notice.

          5. That no delay on the part of the Pledgee in exercising any power of
sale, lien,  option or other right hereunder,  and no notice or demand which may
be given to or made upon the Pledgor by the Pledgee with respect to any power of
sale, lien, option or other right hereunder,  shall constitute a waiver thereof,
or limit or impair the right of the Pledgee to take any other  right  hereunder,
without notice or demand,  or prejudice the rights of the Pledgee as against the
Pledgor in any respect.


<PAGE>


          6. That the Pledgee may, at its option and without any  obligation  to
do so,  transfer to or  register  all or any part of said stock into its name or
its  nominee's  all or any  part of  property  upon  which  you may  have a lien
hereunder at any time, only after default on all or an part of the  Obligations,
with written notice to the Pledgor.

          7. That the Pledgee may release or surrender at any time(s) all or any
of the  property  upon  which  it has a lien  at any  time,  together  with  any
substitution(s)  therefor  and/or any  addition(s)  thereto  and/or any proceeds
thereof  without in any way  affecting  the liability of the Pledgor or the ESOT
hereunder or otherwise.

          8. That it will not vote its stock of the Nazareth  National  Bank and
Trust  Company in favor of, or consent to, or otherwise  approve the issuance of
any  additional  shares of the common stock of Nazareth  National Bank and Trust
Company, unless such shares are pledged to the Pledgee.

          9. That this is a continuing  agreement and shall remain in full force
and  effect  and be  binding  upon the  Pledgor  and the  legal  representatives
successors  or assigns of the Pledgor  until  payment in full of all sums due to
become due to the Pledgee.

          10.  That  all  remedies  of  the  Pledgee  shall  be  cumulative  not
     alternative.

          11.  Except to the extent  preempted by  applicable  Federal law, this
agreement  shall be deemed to be made under and shall be governed by the laws of
the  Commonwealth  of  Pennsylvania  in  all  respects,   including  matters  of
construction,  validity and  performance and none of its terms or provisions may
be waived,  altered,  modified  or  amended,  except as the  Pledgee may consent
thereto in writing duly signed by the Pledgee.

          12. This is the entire agreement between the Pledgor and the Pledgee.


                                             FIRST C. G. COMPANY, INC.


                                             By:  /S/ Reid L. Heeren
                                                       President

                                             FIRST COLONIAL GROUP, INC.


                                             By:  /S/ S. Eric Beattie
                                                      President

<PAGE>

                                 ESOT TERM NOTE

DATE: October 19, 2000                                              $71,875.00


     Nazareth  National Bank and Trust Company,  Employee  Stock  Ownership Plan
Trust, a trust formed under the laws of the  Commonwealth of  Pennsylvania  (the
"ESOT") pursuant to a trust agreement dated June 28, 1994 (the "Agreement"),  by
the trustee(s) under the Agreement (individually and collectively the "Trustee")
for value received,  hereby promises to pay to the order of First C. G. Company.
Inc., a Delaware  corporation  (the "Lender"),  the principal sum of Seventy-one
Thousand  Eight  Hundred  Seventy-five  Dollars  ($71,875.00)  in ten (10) equal
annual  installments  of  principal  in the  amount of  $7,187.50  each due each
October 1, commencing  October 1, 2001,  with a final  installment of the entire
unpaid principal balance due October 1, 2010, and quarterly interest payments of
all outstanding  accrued and unpaid  interest  thereon due each April 1, July 1,
October 1 and January 1, commencing January 1, 2001.

          The ESOT shall pay  interest at the Nazareth  National  Bank and Trust
Company's (or its successor, the "Bank") prime rate plus on the unpaid principal
balance due hereunder,  in such coin or currency of the United States of America
as at the time of payment  shall be legal  tender for the  payment of public and
private  debts.  The interest shall be calculated on the basis of a 365 day year
and the actual number of days elapsed.  The Bank's prime rate shall be that rate
of interest  which the  management of the Bank  establishes  as its "prime rate"
from time to time. The determination and publication of "prime rate" by the Bank
shall  not in any way  preclude  or  limit  the Bank  from  lending  to  certain
borrowers from time to time at a rate of interest less than the Bank's announced
"prime  rate."  Changes,  from time to time,  in the Bank's  prime rate shall be
effective at the beginning of business on the same day on which the Bank effects
a change in its prime rate.  If an event of default,  as set forth in this Note,
should  occur,  the  interest  rate  hereunder  shall  increase to rate of three
percent  (3%) per annum over prime  rate.  Interest,  at the rate  provided  for
herein, shall continue to accrue at such rate and continue to be paid even after
default, maturity,  acceleration,  recovery of judgment, bankruptcy,  insolvency
proceedings  of any kind or the happening of any event or occurrence  similar or
dissimilar.

          The Trustee may prepay the balance due hereunder in whole at any time,
or in part from time to time, without penalty or premium.

          The ESOT, and any and all endorsers hereby:

          1.  Waive  presentment,  demand,  protest  and  notice of  protest  or
     dishonor;

          2.  Consent  to  any  extension,  renewal,  compromise,   forbearance,
     acceleration or release of any party;

          3. Agree that any provisions may be modified between the holder hereof
     and any party;

<PAGE>


          4. Consent to the exchange,  release or surrender of any collateral to
     any party or to any guarantor,  for the waiver, release or subordination of
     any security interest, in whole or in part; and

          5.  Waive  all  other  notices  in   connection   with  the  delivery,
     acceptance. performance, default or enforcement of payment of this Note.

          The  occurrence  of any of the following  events or  conditions  shall
constitute an event of default hereunder:

          1. The ESOT shall fail to pay when due any  amounts due  hereunder  of
     principal or interest and such  failure  shall  continue for a period often
     (10) days:

          2. The ESOT shall fail to observe or perform any other  obligation  to
     be observed or  performed  by it  hereunder  or under any other  agreements
     pledges,  or instruments  relating hereto,  and such failure shall continue
     uncured for thirty (30) days after  notice of such  failure from the Lender
     to the Trustee;

          3. Any financial  statement,  representation,  warranty or certificate
     made or furnished by the Trustee to the Lender or to the Lender's  agent or
     representative   in  connection   with  this  Note  or  any  agreements  or
     instruments entered into in connection herewith, or as an inducement to the
     Lender to make any loans shall be materially false, incorrect or incomplete
     when made;

          4. The institution of any proceedings by or against the ESOT under any
     bankruptcy  or  insolvency  statute  or an  assignment  for the  benefit of
     creditors or the  appointment  of a receiver,  conservator,  liquidator  or
     other  judicial  representative  by or for the  ESOT,  whether  similar  or
     dissimilar, for the ESOT's assets, which if commenced by the ESOT shall not
     be discharged within ninety (90) days of their commencement; or

          5. The Trustee  shall admit its  inability  to pay the ESOT's debts as
     they become due.

     Upon the  occurrence  of an Event of Default,  at the option of the Lender,
but only upon notice to the  Trustee,  all amounts due  hereunder  shall  become
immediately due and payable,  and the Lender shall thereupon have all rights and
remedies  provided  hereunder and under any other agreements  between the Lender
and the ESOT or otherwise available at law or in equity.

     A  waiver  by the  Lender  of any  event of  default  hereunder  shall  not
constitute a waiver of any subsequent event of default.

     The Lender waives its right to set off  obligations due from it to the ESOT
and  agrees  that,  in event of default  or  otherwise,  it will not set off any
amounts due from it to the ESOT.


<PAGE>


     The Trustee shall be liable hereunder only in its capacity as Trustee under
the  agreement  of trust  for the  ESOT and  recourse  for the  obligations  due
hereunder shall be limited to the assets of the ESOT.

     Except to the extent  preempted by applicable  Federal law, this Note shall
be governed and construed in  accordance  with the laws of the  Commonwealth  of
Pennsylvania  applicable to contracts made and to be performed in  Pennsylvania,
but all  rights  of the  Lender  hereunder  shall  inure to the  benefit  of its
successors and assigns and all obligations of the ESOT shall bind its successors
and assigns.

     Any provision hereof found to be illegal,  invalid or unenforceable for any
reason  whatsoever shall not effect the validity,  legality or enforceability of
the remainder of the provisions hereof.

                                       NAZARETH NATIONAL BANK AND TRUST
                                       COMPANY EMPLOYEE STOCK OWNERSHIP
                                       PLAN TRUST

                                       By: /S/ Barbara A. Seifert  (SEAL)
                                               Vice President of Trustee

</TEXT>
</DOCUMENT>
