ESOP LOAN AGREEMENT

     THIS LOAN AGREEMENT,  dated April 22, 1998 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 Five Hundred Thousand and 00/100 Dollars ($500,000) (the "Loan").  The
purpose of the loan is to refinance the purchase of certain shares of the common
stock of First  Colonial  Group,  Inc. (the "Common  Stock") made in 1993 and to
purchase  an  additional  4,071  shares of Common  Stock  from  certain  Trustee
employees.  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 Five
Hundred Thousand and 00/100 Dollars  ($500,000) to the Borrower at Closing which
will be  repayable in seven (7) equal  annual  installments  of $65,000 each due
each October 1,  commencing  October 1, 1998,  with a final  installment  of the
entire unpaid  principal  balance due October 1, 2005 and  semi-annual  interest
payments of all  outstanding  accrued and unpaid  interest due on each October 1
and April 1,  commencing  October 1, 1998, and a final  interest  payment of all
outstanding accrued and unpaid interest due on October 1, 2005.

     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 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."

<PAGE>

     (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>

                                                                        Copy


                                 ESOT TERM NOTE
DATE: April 22, 1998                                                $500,000


     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 Five Hundred
Thousand and 00/100 Dollars ($500,000) in seven (7) equal annual installments of
principal in the amount of $65,000 each due each October 1,  commencing  October
1, 1998,  with a final  installment of the entire unpaid  principal  balance due
October 1, 2005, and semi-annual  interest  payments of all outstanding  accrued
and unpaid interest  thereon due each October 1 and April 1, commencing  October
1, 1998.

     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

<PAGE>

                               PLEDGE AGREEMENT

TO:  First C. G. Company, Inc. (the "Pledgee")                 April 22, 1998
     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 Five Hundred  Thousand  and 00/100  Dollars
($500,000) 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 done or notice

<PAGE>

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