EXHIBIT 10.7

                              OPERATING AGREEMENT

                                      FOR

                            FEDERAL HOLDINGS L.L.C.












                                                             Dated: June 12,1995


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INDEX
Page No.

Article 1         Definitions
Article 2         Formation
Article 3         Principal Office
Article 4         Term and Duration
Article 5         Purpose
Article 6         Capital Contributions by the Members
Article 7         Additional Capital Contributions
Article 8         Distributions of Net Proceeds
Article 9         Tax Allocations and Distributions
Article 10        Rights, Powers and Representations of  the Investment
                  Manager and Administrative Manager; Management Fee
Article 11        Books, Records and Reports
Article 12        Indemnification
Article 13-       Tax Matters
Article 14-       Death, Dissolution or Bankruptcy of A Member
Article 15-       Assignability, Transfer or Pledge of
                  Interests; Resignation of A Member
Article 16-       Admission of Substituted Members;
                  Incapacity; Further Condition
Article 17        Liquidation
Article 18        Miscellaneous

Schedule A -      Members' Percentage Interests and Capital
                  Contributions


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                              OPERATING AGREEMENT

                                      FOR

                            FEDERAL HOLDINGS L.L.C.


AGREEMENT  made June  12,1995  by and among the  members  listed on  Schedule  A
annexed hereto (individually, a "Member" and collectively, the "Members").


W I T N E S S E T H:

WHEREAS,  the Members desire to form a limited liability company pursuant to the
New York Limited  Liability  Company Law (the "Law") and adopt this Agreement in
connection therewith; and

WHEREAS,  by  executing  this  Agreement,  each  Member  represents  that it has
sufficient  right and  authority to execute this  Agreement and is not acting on
behalf of any undisclosed or partially disclosed principal.

NOW,  THEREFORE,  in  consideration  of ten ($10) dollars and for other good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto agree as follows effective as of the date first
written above.


                                   ARTICLE 1

                                  DEFINITIONS

1.1      For purposes of this Agreement, the following terms shall have the
definitions set forth below:

"Account":   As defined in Section 10.4

"Additional  Member":  Means any person or entity  other than the  Members of
 the Company as of the date hereof who acquires an interest in the Company.

"Administrative Manager':   Kevin Moore.

"Advance":   As defined in Section 7.2.


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"Agreement":  This Operating  Agreement as originally executed and as amended,
 modified,  supplemented or restated
from time to time.

"Articles of  Organization":  The Articles of  Organization of the Company filed
with the  Secretary  of State of the State of New York,  pursuant  to the Law to
form the Company, as originally executed and as amended, modified,  supplemented
or restated from time to time.

"Capital Account" or "Capital Accounts":   As defined in Section 6.4.

"Capital  Contributions":  The respective capital  contributions,  including any
 additional  Capital  Contribution,of each Member to the Company.

"Capital  Transaction"  or "Capital  Transactions":  Any  transaction  which, in
accordance with generally accepted accounting  principles  consistently applied,
is treated as a capital transaction including,  without limitation,  any sale of
all or substantially all of the assets of the Company.

"Closing Price":   As defined in Section 16.4

"Code":  The  Internal  Revenue Code of 1986,  as amended,  and any  reference
 to a particular  section of the Code shall be deemed to include any successor
 section to such section.

"Company":   FEDERAL HOLDINGS L.L.C., a New York limited liability company.

"Contributing Member":    A Member which has made its additional Capital
Contribution.

"Current Market Value":    As defined in Section 16.4.

"Fair Market Value":   As defined in Section 16.4.

"Gain  from  a  Capital  Transaction":   The  gain  recognized  by  the  Company
attributable to a Capital Transaction,  determined in accordance with the method
of accounting used by the Company for federal income tax purposes.

"Interest":   The respective percentage interest of each Member as set forth on
 Schedule A.

"Investment Manager":   Shall mean Lawrence Seidman, subject to the provisions
 of Section 10.5.

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"Loss  from  a  Capital  Transaction":   The  loss  recognized  by  the  Company
attributable to a Capital Transaction,  determined in accordance with the method
of accounting used by the Company for federal income tax purposes.

"Management Fee":   As defined in Section 10.2.

"Member":  Means each of the parties who has executed  this  Agreement  and any
 party who may  hereafter  become an Additional Member or a Substitute Member
 pursuant to this Agreement.

"Net Proceeds":   As defined in Section 8.1.

"Net Profit" and "Net Loss": The net income  (including  income exempt from tax)
and net  loss  (including  expenditures  that can  neither  be  capitalized  nor
deducted),  respectively,  of the Company,  determined  in  accordance  with the
method of accounting  used by the Company for federal  income tax purposes,  but
computed  without regard for Gain from Capital  Transactions,  Loss from Capital
Transactions  and items of income or loss, if any, that are specially  allocated
to  Members.  In the event  there is a  revaluation  of  Company  assets and the
Capital  Accounts  are  adjusted  pursuant  to  Section  704(b)  of the Code and
applicable regulations promulgated thereunder,  Net Profits and Net Losses shall
be computed by reference to the "book items" and not corresponding "tax items".

"Preferred Return":  With respect to a Member, an amount equal to 7.5% per annum
simple  interest  (prorated for any partial year) on the amount of such Member's
Unrecovered Capital Contribution,  from time to time, calculated from the date a
Capital Contribution is made.

"Substitute  Member":  Any transferee of a Member's  Interests who is admitted
 as a Member in the Company  pursuant to Article 15 or 16.

"Trading Day":   As defined in Section 16.4.

"Unrecovered  Capital  Contribution":  For any Member,  the aggregate amount of
 capital  contributed by such Member reduced by the aggregate amount of capital
 theretofore distributed to such Member pursuant to Articles 16 and 17.

"Unrecovered  Preferred  Return":  For any Member an amount equal to the
 Preferred  Return reduced by the aggregate amount of distributions theretofore
 made to such Member pursuant to Section 8.1(b)(i).


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"Unrecovered  20% IM  Fee":  An  amount  equal  to 20% of the  aggregate  annual
Preferred  Return for all Members divided by .8, reduced by the aggregate amount
of  distributions  of Net Proceeds  theretofore  made pursuant to Section 8.1(b)
(ii).


                                   ARTICLE 2

                                   FORMATION

2.1      The parties hereto do hereby form the Company under the name of FEDERAL
  HOLDINGS  L.L.C.  pursuant to the Law.

In order to maintain the Company as a limited  liability  company under the laws
of the State of New York,  the Company shall from time to time take  appropriate
action,  including the preparation and filing of such amendments to the Articles
of Organization and such other assumed name certificates, documents, instruments
and  publications  as may be required  by law,  including,  without  limitation,
action to reflect:

(i)      a change in the Company name;

(ii)     a correction of a defectively or erroneously executed Articles of
Organization;

(iii)  a  correction  of  false  or  erroneous  statements  in the  Articles  of
Organization  or the  desire of the  Members  to make a change in any  statement
therein in order that it shall  accurately  represent  the  agreement  among the
Members; or

(iv)     a change in the time for  dissolution  of the  Company as stated in
 the Articles of  Organization  and in this Agreement.

2.2 Each Member hereby agrees to execute and deliver to the Company  within five
(5) days after  receipt of a written  request  therefor,  such other and further
documents and  instruments,  statements of interest and holdings,  designations,
powers of attorney  and other  instruments  and to take such other action as the
Company deems necessary, useful or appropriate to comply with any laws, rules or
regulations   as  may  be  necessary  to  enable  the  Company  to  fulfill  its
responsibilities  under this  Agreement,  to  preserve  the Company as a limited
liability  company  under the Law and to  enable  the  Company  to be taxed as a
partnership for federal and state income tax purposes.



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                                   ARTICLE 3

                                PRINCIPAL OFFICE

3.1      The  Company's  registered  office in New York shall be at 30 Wall
 Street,  Ninth  Floor,  New York,  New
York. The Company's  registered  agent who is a resident of New York is
Jonathan A. Bernstein,  Esq. whose business address is Pryor,  Cashman,
Sherman & Flynn,  410 Park Avenue,  New York, New York 10022. At any time, the
Company may designate another registered agent and/or office.

3.2 The  principal  place of business of the Company shall be at 30 Wall Street,
Ninth  Floor,  New York,  New York.  At any time,  the  Company  may  change the
location  of its  principal  place  of  business  and may  establish  additional
offices.


                                   ARTICLE 4

                               TERM AND DURATION

4.1 The Company shall commence upon the filing of the Articles of  Organization,
and shall  continue  in full force and effect  until April 30,  2045;  provided,
however,  that the  Company  shall be  dissolved  prior  to such  date  upon the
happening of any of the following events:

(a)      The mutual written consent of all of the Members to dissolve the
Company;

                  (b) The divestiture or  distribution  of all or  substantially
all of the assets of the  Company,  (other  than a transfer  to a nominee of the
Company for any Company purpose,  which event shall not be construed as an event
of termination);

(c)      The entry of a decree of judicial dissolution under Section 702 of the
 Law; or

(d) The  happening  of any other  prior  event  which  pursuant to the terms and
provisions of this  Agreement  shall cause a dissolution  or  termination of the
Company.

4.2 Upon any dissolution of the Company, the liquidation of the Company's assets
and the winding up of its affairs shall be concluded in accordance  with Article
17 of this Agreement.


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                                   ARTICLE 5

                                    PURPOSE

5.1 The purpose of the Company is to legally or beneficially acquire, own, sell,
transfer, hold and vote shares of common stock, preferred stock,  convertible or
exchangeable  securities  of any bank,  bank holding  company,  savings and loan
association or trust company  (hereinafter  referred to as "Stock") and to enter
into any contracts or commitments,  assume any obligation, execute any documents
and do any and all other acts and things, either directly or in conjunction with
others through  corporations,  joint  ventures,  partnerships,  trusts,  limited
liability  companies  or  otherwise,  which  may  be  necessary,  incidental  or
convenient  to carry on the  business  of the  Company as  contemplated  by this
Agreement.  The Company may also sell covered calls,  repurchase  such calls and
buy puts, but the Company shall not sell uncovered calls or puts.

5.2 The purpose of the Company  shall also be for any other  lawful  purpose for
which  the  Members  shall  herewith  agree  in  writing  by  amendment  to this
Agreement.


                                   ARTICLE 6

                      CAPITAL CONTRIBUTIONS BY THE MEMBERS

6.1      Each Member shall contribute to the capital of the Company the amounts
 set forth on Schedule A.

6.2 No  Member  shall  have  the  right  to  withdraw  any  part of his  Capital
Contribution  or  receive  any  distribution,  except  in  accordance  with  the
provisions  of  this  Agreement.  No  interest  shall  be  paid  on any  Capital
Contribution other than the Preferred Return.

6.3 No Member shall have any priority  over any other Member with respect to the
return of Capital Contributions.

6.4 The Company shall maintain a capital account (a "Capital  Account") for each
Member within the provisions of Treasury  Regulation Section 1.704-1(b) (2) (iv)
as such regulation may be amended from time to time.


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6.5      To the extent not inconsistent with the foregoing, the following shall
 apply:

(a) The  Capital  Account of each Member  shall be  credited  with (1) an amount
equal to such Member's cash  contributions and the fair market value of property
contributed  to the  Company by such Member (net of  liabilities  securing  such
contributed property that the Company is considered to assume or take subject to
under Section 752 of the Code) and (2) such Member's  share of the Company's Net
Proceeds  (or items  thereof) and Gain from a Capital  Transaction.  The Capital
Account of each Member shall be debited by (1) the amount of cash  distributions
to such Member and the fair market value of property  distributed to such Member
(net of  liabilities  assumed  by such  Member  and  liabilities  to which  such
distributed  property is subject) and (2) such  Member's  share of the Company's
Net Losses (or items thereof) and Loss from a Capital Transaction.

(b) Upon the  transfer  of an  Interest  in the  Company  after the date of this
Agreement,  (x) if such  transfer  does not cause a  termination  of the Company
within the meaning of Section 708 (b) (1) (B) of the Code,  the Capital  Account
of the transferor  Member that is attributable to the transferred  Interest will
be carried over to the  transferee  Member but, if the Company has a Section 754
election  in effect,  the  Capital  Account  will not be adjusted to reflect any
adjustment  under  Section  743 of the Code,  or (y) if such  transfer  causes a
termination  of the Company within the meaning of Section 708 (b) (1) (B) of the
Code, the income tax consequences of the deemed distribution of the property and
of the deemed immediate contribution of the property to a new Company (which for
all  other  purposes  continues  to be the  Company)  shall be  governed  by the
relevant provisions of Subchapter K of Chapter 1 of the Code and the regulations
promulgated  thereunder,  and the initial Capital Accounts of the Members in the
new Company shall be determined in accordance with Treasury  Regulation Sections
1.704-1(b) (2) (iv) (d, (e), (f), (g), and (i) and thereafter in accordance with
Section 6.5 (a).

(c) Upon (i) the "liquidation of the Company" (as hereinafter defined), (ii) the
"liquidation of a Member's  Interest in the Company" (as  hereinafter  defined),
(iii) the distribution of money or property to a Member as consideration  for an
Interest in the  Company , or (iv) the  contribution  of money or (if  permitted
pursuant to (a) above)  property  to the Company by a new or existing  Member as
consideration  for an Interest in the Company,  or upon any  transfer  causing a
termination  of the Company for tax  purposes  within the meaning of Section 708
(b) (1) (B) of the Code, then adjustments  shall be made to the Members' Capital
Accounts in the following manner:  All property of the Company which is not sold
in connection with such event shall be valued at its then "agreed  value".  Such
"agreed  value" shall be used to determine both the amount of gain or loss which
would have been  recognized by the Company if the property had been sold for its
agreed value (subject to any debt secured by the property) at such time, and the
amount of Net Proceeds,  as the case may be, which would have been distributable
by the Company  pursuant to Section  9.2 if the  property  had been sold at such
time for said value,  less the amount of any debt secured by the  property.  The
Capital  Accounts  of the  Members  shall be  adjusted  to  reflect  the  deemed
allocation of such hypothetical gain or loss in accordance with Section 9.1. The
Capital  Accounts  of  the  Members  (or  of a  transferee  of a  Member)  shall
thereafter  be adjusted to reflect  "book items" and not tax items in accordance
with Treasury Regulation Section 1.704 1(b) (2) (iv) (g) and 1.704-1(b) (4) (i).

(d) For purposes of this Section 6.5, (i) the term  "liquidation of the Company"
shall mean (A) a termination  of the Company  effected in  accordance  with this
Agreement,  which shall be deemed to occur,  for  purposes of this Article 6, on
the date upon which the Company ceases to be a going concern and is continued in
existence  solely to wind-up its affairs,  or (B) a  termination  of the Company
pursuant to Section 708 (b) (1) of the Code; and (ii) the term "liquidation of a
Member's  Interest in the Company"  shall mean the  termination  of the Member's
entire  Interest  in the  Company  effected  by a  distribution,  or a series of
distributions, by the Company to the Member.


                                   ARTICLE 7

                        ADDITIONAL CAPITAL CONTRIBUTIONS

7.1 No Member shall be obligated to make additional Capital Contributions to the
Company.  If the  Administrative  Manager determines that the Company shall need
additional funds for any Company purpose,  including,  without  limitation,  (a)
those  purposes set forth in Article 5, or (b) cash in excess of Net Proceeds in
order to satisfy any  obligations  and  liabilities of the Company,  then within
fifteen (15) days of notice of such requirement,  each Member may, but shall not
be obligated to, contribute to the Company his pro rata share.

If a Member elects to make an additional Capital Contribution and another Member
forgoes  contributing  additional  capital,  the Company shall,  for purposes of
distributions and allocations,  recompute each Member's  percentage  Interest in
the Company in proportion to the total capital  contributed  to the Company such
that  thereafter  each Member's  Interest shall be equal to the percentage  that
such Member's  aggregate  Capital  Contribution  theretofore made to the Company
bears to the total Capital Contributions theretofore made by all the Members.

7.2 A Member  may from  time to time,  upon the  consent  of the  Administrative
Manager but  without  the  consent of a majority  in  interest  of the  Members,

<PAGE>

advance  additional  monies (an "Advance") to or for the benefit of the Company,
and such  advances  shall not be treated as Capital  Contributions  but shall be
considered as loans to be repaid upon demand  together with annual interest at a
rate not less than the lowest  applicable  federal rate of interest which allows
for the  avoidance  of imputed or  unstated  interest,  for  federal  income tax
purposes.  Such loans shall be  evidenced  by a  promissory  note  executed  and
delivered by the Company to the Member making such Advance.


                                   ARTICLE 8

                         DISTRIBUTIONS OF NET PROCEEDS

8.1 (a) Net Proceeds  shall be computed and  distributed by the Company once, on
an  aggregated  basis of all  stocks in which the  Company  has  traded,  at the
earlier of (i) a determination by the Investment Manager in his sole discretion,
(ii) the resignation or other termination of the Investment  Manager,  (iii) the
liquidation or winding up of the Company or (iv) the end of the Management Term.
"Net Proceeds" shall be defined as dividends received,  interest income, all net
trading  profits (i.e.  proceeds from the sale of Stock less the Company's basis
in the  Stock)  less  all  expenses  (including  but not  limited  to  brokerage
commissions,  the Management Fee and other applicable accounting or professional
fees but not including the Unrecovered 20% IM Fee) all as computed in accordance
with generally accepted accounting principles.

(b)      Net Proceeds shall be distributed as follows:

(i) first, to the Members, pro rata, an amount equal to each Member's cumulative
Unrecovered Preferred Return in proportion to their Unrecovered Preferred Return
until the Preferred Return shall be paid in full;

(ii)     second, to the Investment Manager an amount equal to the Unrecovered
20% IM Fee; and

(iii)    the balance,  if any,  shall be paid 80% to the Members in  proportion
 to their  Interests and 20% to the Investment Manager.

(c) If Stock cannot be readily sold because of the lack of its  liquidity in the
market or if the Administrative Manager elects not to sell the Stock at the time
of a distribution  of Net Proceeds,  the Company shall calculate the fair market
value of the Stock by averaging  the closing sale prices (or if there is no sale
on a  particular  day,  the  average  closing  bid and ask  prices) for the five
consecutive  trading days preceding the date of computation.  Thereafter,  based

<PAGE>

upon its valuation,  the Company shall calculate the amount of Net Proceeds that
would be  distributed  if the Stock had  actually  been sold for its fair market
value (including all applicable commissions).  The Company shall then distribute
the Stock in kind in  accordance  with  Section  8.1(b) as if the Stock were Net
Proceeds.

(d)   Notwithstanding   Section  8.1(c),  if  the  Investment  Manager  makes  a
determination  to distribute Net Proceeds in accordance  with Section  8.1(a)(i)
and the Stock  cannot be readily  sold  because of its lack of  liquidity in the
market,  the Investment  Manager shall liquidate the Stock in an orderly fashion
over a six (6) month period.  Thereafter,  Net Proceeds  shall be distributed in
accordance with Section 8.1(b).

8.2  Notwithstanding  Section 8.1, Net Proceeds from a Capital Transaction which
constitutes a liquidation of the Company, together with other funds remaining to
be  distributed,  shall be distributed to the Members no later than the later of
(a) the end of the taxable year of the Company in which such liquidation  occurs
or (b) within ninety (90) days after the date of such liquidation  event,  after
payment of all Company liabilities and expenses (or adequate provision therefor)
including the Management  Fee,  except that in no event shall (x) a distribution
be made to any  Member  if,  after  giving  effect  to  such  distribution,  all
liabilities  of the  Company,  other than  liabilities  to Members on account of
their  Interests  and  liabilities  for which the  recourse of  creditors of the
Company is limited to specified property of the Company,  exceed the Fair Market
Value (as defined in Section 16.4(c)) of the assets of the Company,  except that
the Fair Market  Value of assets  that is subject to a  liability  for which the
recourse of creditors is limited  shall be included in the assets of the Company
only to the extent  that the Fair  Market  Value of those  assets  exceeds  that
liability and (y) the  distribution  to a Member exceed the positive  balance in
such Member's  Capital  Account after giving effect to all  allocations  to such
Member under Article 9 50 that  liquidation  proceeds  shall be  distributed  in
accordance  with each Member's  positive  Capital  Account  balance  (within the
meaning of Treasury Regulation Section  1.704-1(b)(2)(ii)(~  as in effect on the
date hereof). If a Member shall receive a distribution that should not have been
made based upon the  provisions  of Section  8.2(x),  the  provisions of Section
508(b)  of the Act shall  apply.  Section  508(c) of the Law shall  apply to all
distributions made to the Members.


                                   ARTICLE 9

                       TAX ALLOCATIONS AND DISTRIBUTIONS

9.1      The Net Profits of the Company for each fiscal year shall be allocated
 among the Members as follows:


<PAGE>

(a)      First to the  Members in an amount  equal to, and in  proportion  to,
the  aggregate  amount of Net Losses
theretofore allocated to each Member; and

(b)      Thereafter, in proportion to their respective Interests in the Company

Any credit  available  for  income tax  purposes  shall be  allocated  among the
Members in proportion to their respective Interests in the Company.

9.2      Gain from a Capital Transaction shall be allocated in the following
 order:

(a) There shall first be  allocated to those  Members,  if any, who have deficit
balances in their Capital Accounts  immediately  prior to such  transaction,  an
amount of such gain  equal to the  aggregate  amount of such  deficit  balances,
which amount shall be allocated in the same proportion as such deficit balances.

(b) There  shall next be  allocated  to each of the  Members,  gain equal to the
amount by which (x) the  aggregate  Net Proceeds  derived from such  transaction
distributable to each Member in accordance with the provisions of Section 8.1(b)
(i) and (iii), assuming such amounts are distributable, exceeds (y) the positive
balance,  if any, in such Member's  Capital Account after such Member's  Capital
Account has been adjusted to reflect the gain allocated to such Member  pursuant
to  paragraph  (a)  above;  provided,   however,  that  if  there  shall  be  an
insufficient amount of gain determined by this paragraph, then the gain shall be
allocated to the Members in  proportion  to the  respective  amounts  determined
pursuant to this paragraph.

(c)      Any remaining  gain shall be allocated  among the Members in
 proportion to their  respective  Interests in the Company.

(d) If the Company shall realize,  upon such transaction,  gain which is treated
as ordinary  income under Section 1245 or 1250 of the Code, such ordinary income
shall be allocated to the Members who receive the allocation of the depreciation
or cost recovery  deduction  that  generated the ordinary  income,  which amount
shall be allocated in the same proportions as such deductions.

9.3  Net Losses of the Company shall be allocated among the Members as follows:

(a)      First,  to the Members in proportion to their  respective  positive
Capital  Account  balances until such balances are reduced to zero; and

(b)      The balance shall be allocated to the Members in proportion to their
respective Interests in the Company.


<PAGE>

9.4 Loss from a Capital Transaction from the sale or other disposition of all or
substantially all of the assets shall be allocated in the following order:

(a) First, to those Members, if any, who have positive balances in their Capital
Accounts,  an amount of such loss equal to the aggregate amount of such positive
balances,  which  amount  shall  be  allocated  in the same  proportion  as such
positive balances; and

(b)      The balance of such loss shall be allocated to the Members in
 proportion  to their  respective  Interests in the Company

9.5      Notwithstanding the foregoing provisions of Article 9:

(a) In  accordance  with  Sections  704 (b) and (c) of the Code and the Treasury
Regulations  thereunder,  income,  gain,  loss and deduction with respect to any
property contributed to the capital of the Company (including all or part of any
deemed Capital Contribution under Section 708 of the Code) shall, solely for tax
purposes,  be  allocated  among  the  Members  so as to take  into  account  any
variation  between the  adjusted  basis of such  property to the Company and its
agreed value. In the event that Capital  Accounts are ever adjusted  pursuant to
Treasury  Regulation  Section 1.704-1(b) (2) to reflect the fair market value of
any Company property, subsequent allocations of income, gain, loss and deduction
with  respect to such asset  shall take  account of any  variation  between  the
adjusted  basis of such asset and its value as  adjusted  in the same  manner as
required  under  Section  704  (c) of the  Code  and  the  Treasury  Regulations
thereunder.

(b) At no time  shall  any  allocation  of  losses  be made to a Member  if such
allocation would cause the deficit in the Member's adjusted Capital Account,  if
any, to exceed his  allocable  share of "Company  Minimum Gain" or "Minimum Gain
Attributable  to Member  Nonrecourse  Debt" (as defined in  Treasury  Regulation
Sections  1.704-2  (g) (1) and  (i)  (5),  respectively),  and  any  losses  not
allocated  to a Member by reason of this clause (b) shall be  allocated  to each
Member whose deficit,  if any, in the Member's  adjusted Capital Account of such
Member  shall not exceed his  allocable  share of such minimum gain by reason of
such allocation.


<PAGE>

(c) If there is a net decrease in the Company's minimum gain (within the meaning
of Treasury  Regulation Section 1.704-2 (g) (2)) for a Company taxable year and,
at the end of such  taxable  year,  the deficit,  if any, in a Member's  Capital
Account  exceeds his allocable  share of such minimum gain,  gross income of the
Company  shall be  allocated to such Member in an amount equal to such excess so
as to satisfy  the  requirements  of  Treasury  Regulation  Section  1.704-2 (f)
(minimum gain chargeback).

(d) If, during any taxable year, there is a net decrease in Company Minimum Gain
Attributable to Member  Nonrecourse Debt, then, before any other allocations are
made for such year other than those  pursuant  to clause (b) above,  each Member
with a share of the Company Minimum Gain Attributable to Member Nonrecourse Debt
at the beginning of the year shall be allocated items of Company income and gain
for such year (and, if necessary,  for  subsequent  years) in an amount equal to
each Member's share of the net decrease in Minimum Gain  Attributable  to Member
Nonrecourse  Debt as determined in accordance with Treasury  Regulation  Section
1.704-2 (i) (4) in a manner so as to satisfy the  requirements  of said Treasury
Regulation.

(e) If, during any taxable year, a Member  unexpectedly  receives an adjustment,
allocation or  distribution  described in paragraph  (4), (5) or (6) of Treasury
Regulation Section 1.704-1(b) (2) (ii) (~, and if such adjustment, allocation or
distribution  would  cause at the end of the taxable  year a deficit  balance in
such Member's  Capital  Account in excess of his allocable share of minimum gain
as described above, then such Member shall be allocated items of income and gain
for such taxable year (and, if necessary, subsequent taxable years) in an amount
and in a manner  sufficient  to  eliminate  such  excess  balance  as quickly as
possible before any other  allocation is made for such year, other than pursuant
to  Sections  9.5(b) and (c),  so as to satisfy  the  requirements  of  Treasury
Regulation Section 1.704-1(b) (2) (ii) (~ (qualified income offset).

(f) In the event any Member has a deficit  balance in his Capital Account at the
end of the  fiscal  year  which is in excess of the sum of (i) the  amount  such
Member is obligated to restore  pursuant to any provision of this Agreement,  if
any,  and (ii) the  amount  such  Member is deemed to be  obligated  to  restore
pursuant to the penultimate  sentences of Treasury  Regulations Sections 1.704-2
(g) (1) and 1.704-2 (i) (5), each Member shall be specially  allocated  items of
Company income and gain in the amount of such excess as quickly as possible.


                                   ARTICLE 10

                       RIGHTS, POWERS AND REPRESENTATIONS
                         OF THE INVESTMENT MANAGER AND
                     ADMINISTRATIVE MANAGER: MANAGEMENT FEE

10.1 The  Investment  Manager shall have the full,  exclusive and complete power
and authority to buy, sell and vote the Stock. The Investment Manager shall have
all necessary and appropriate powers to carry out the authority so granted,  and
no other party,  including  any Member,  shall have the right to take any action
with respect to the acquisition,  sale or voting of the Stock. "Management Term"
shall mean a term of two (2) years commencing on the date hereof,  unless sooner

<PAGE>

terminated by the Administrative  Manager for cause. The Administrative  Manager
may terminate the  Investment  Manager for cause upon 30 days written  notice to
the  Investment   Manager  setting  forth  with   specificity  the  grounds  for
termination.  For  purposes  of this  Section,  "cause"  means any  willful  (i)
dissemination  of genuine trade secrets or other  confidences  of the Company or
any  of its  affiliates  by  the  Investment  Manager;  (ii)  dishonesty  of the
Investment  Manager as  punishable  by criminal law or for which the  Investment
Manager would be liable to the Company or its affiliates  under civil law; (iii)
deliberate  activity  of the  Investment  Manager  which is  prejudicial  to the
interests of the Company or its affiliates;  and (iv) deliberate  failure by the
Investment Manager to perform any of his material obligations hereunder which is
not cured by the  Investment  Manager within 30 days after ~ from the Company of
such failure. In the event of a termination of the Investment Manager under this
Section,  or upon the death or  adjudication  of  incompetency of the Investment
Manager,  the Company shall, within 30 days, make a distribution of Net Proceeds
in accordance with Section 8.1 above.

10.2 The  Company  shall  pay the  Investment  Manager  a  Management  Fee.  The
"Management  Fee" shall be equal to .25% of the Fair  Market  Value (as  defined
Section 16.4(c)) of the assets of the Company,  payable  quarterly,  on the last
day of  March,  June,  September  and  December  of  each  calendar  year of the
Management  Term.  The  Management  Fee shall be  prorated  as to the first such
quarter  and  upon  the  termination,  resignation,  death  or  adjudication  of
incompetency of the Investment Manager


10.3  Except for the  matters set forth in Section  10.1,  all other  decisions,
consents,  authorizations  and rights in connection  with the  management of the
Company  shall  be  made,  given  or  performed,  as the  case  may  be,  by the
Administrative  Manager.  In furtherance of the  foregoing,  the  Administrative
Manager may: i (a) negotiate,  execute, deliver and perform on behalf of, and in
the  name  of,  the  Company  any,  wire  transfer  instructions,   disbursement
authorizations,  agreements,  contracts, promissory notes and other evidences of
indebtedness,  and any and all other instruments  necessary or incidental to the
business of the Company and the financing thereof;

(b)      to secure the payment  thereof by all or any part of the assets then
 owned or  thereafter  acquired by the
Company;

(c)     effectuate the purpose of the Company as provided in Article 5 hereof;


<PAGE>

(d)      establish,  maintain  and draw upon any  brokerage,  money  market,
  demand  deposit,  checking  and other accounts of the Company;

(e) execute any  notifications,  statements,  reports,  returns or other filings
that are  necessary or  desirable to be filed with any state or federal  agency,
commission or authority;

(f)      enter into contracts in connection with the business of the Company;

(g)      retain  professionals,  accountants,  lawyers,  consultants  as the
 case may be to further the purpose and business of the Company;

(h) arrange for  facsimile  signatures  for the Members in executing any and all
documents,  papers,  checks or other writings or legal  instruments which may be
necessary or desirable in the Company's business;

(i)      execute,  acknowledge and deliver any and all contracts,  documents and
instruments  deemed appropriate to carry out any of the foregoing purposes and
intent of this Agreement;

(j)      establish  reserves for  anticipated  expenses,  debts and  obligations
incident to the  operation of the Company's business; and

(k) perform all other duties and make all other  decisions in furtherance of the
management  and operation of the Company's  business in accordance  with the Law
except as otherwise set forth in this Agreement.

10.4 The  Administrative  Manager,  on behalf of the Company,  shall establish a
brokerage  account  (the  "Account")  at Spear,  Leeds and  Kellogg or any other
brokerage company (the "Broker") approved by the Administrative  Manager through
which the  Investment  Manager shall have the  exclusive  power and authority to
direct the Broker to disburse the funds  necessary to acquire  Stock and to sell
Stock. The Investment Manager shall have no power or authority to cause funds to
be disbursed from the Account other than for the purpose of acquiring Stock. Any
withdrawals  of any kind from the  Account  shall be made by the  Administrative
Manager.

10.5 Upon the expiration of the  Management  Term,  the  Administrative  Manager
shall, upon the concurrence of the Investment Manager,  have the right to extend
the Management Term or, in his sole  discretion,  select a successor  Investment
Manager.  The duties of a successor  Investment  Manager shall commence upon the
date so designated by the Administrative  Manager, and from and after such date,
the prior  existing  Investment  Manager  shall be  relieved  of all  duties and

<PAGE>

obligations with respect to the Company, shall no longer hold himself or herself
out to any other  person or entity as the  Investment  Manager  of the  Company,
shall turn over to the  Administrative  Manager any and all books and records of
the Company, and shall take such action as the Company shall request in order to
effectuate  such discharge and  termination.  No such discharge shall affect any
obligations of the Company to the Investment  Manager,  including  reimbursement
and indemnity obligations as set forth herein or in the Law.

10.6 The fact that the Members,  the  Investment  Manager or the  Administrative
Manager are directly or indirectly  interested in or connected  with any person,
firm or corporation  employed by the Company to render or perform a service,  or
from which or whom the Company may buy merchandise,  material, services or other
property shall not prohibit the Company from  employing  such persons,  firms or
corporations, or from otherwise dealing with such persons, firms or corporations
so long as such terms and conditions  are  equivalent to those  available at the
Company and the transaction was on an arms-length basis.


                                   ARTICLE 11

                           BOOKS, RECORDS AND REPORTS

11.1 At all times  during the  continuance  of the Company,  the  Administrative
Manager shall keep or cause to be kept full and true books of account,  in which
shall be entered fully and accurately each transaction of the Company. The books
of account,  together with an executed copy of the Articles of  Organization  of
the Company and any amendments thereto,  shall at all times be maintained at the
principal  office of the Company and shall be open to inspection and examination
by the Members or their  representatives at reasonable hours and upon reasonable
notice. For purposes hereof, the Company shall keep its books and records on the
same method of accounting employed for tax purposes.

11.2 The  fiscal  year of the  Company  shall  be the  calendar  year.  Within a
reasonable  time after the end of each fiscal year and in any event on or before
thirty (30) days prior to the filing date for individual tax returns  (including
extensions), the accountants for the Company shall deliver to each Member (a) an
annual  statement of the  Company's  receipts and expenses for such year and the
Capital Account of such Member as of the end of each such year,  prepared by the
Company's  accountants,  and (b) a report or a tax  return  setting  forth  such
Member's  share of the Company's  profit or loss for such year and such Member's
allocable  share of all items of income,  gain,  loss,  deduction and credit for
federal income tax purposes.


<PAGE>

11.3 The Company  shall also cause to be prepared and filed all  federal,  state
and local tax  returns  required of the  Company.  All books,  records,  balance
sheets, statements, reports and tax returns required pursuant to this Section 11
shall be prepared at the expense of the Company.

11.4 In accordance with Section 301(e) of the Law,. the  Administrative  Manager
shall cause to be prepared and filed  biennially  the requisite  statements  for
which  service of process  shall be accepted by the Secretary of State on behalf
of the Company.


                                   ARTICLE 12

                                INDEMNIFICATION

12.1 Subject to the limitations  and conditions  provided in this Article 12 and
in the Law, each person ("Indemnified  Person") who was or is made a party or is
threatened  to be made a party to or is involved in any  threatened,  pending or
completed action, suit or proceeding,  whether civil, criminal,  administrative,
arbitrative or investigative ("Proceeding"),  or any appeal in such a Proceeding
or any action or investigation  that could lead to such a Proceeding,  by reason
of the fact that any  manager  or member  was or is a  Member,  a Manager  or an
officer of the  Company or was or is the legal  representative  of or a manager,
director,  officer, member, venturer,  proprietor,  trustee,  employee, agent or
similar  functionary of a Member,  shall be  indemnified by the Company  against
judgments,  penalties (including excise and similar taxes and punitive damages),
fines,  settlements  and  reasonable  costs  and  expenses  (including,  without
limitation,  attorneys' fees) actually  incurred by such  Indemnified  Person in
connection with such Proceeding if such  Indemnified  Person acted in good faith
and in a manner he  reasonably  believed  to be in, or not  opposed to, the best
interests of the Company and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful.  The termination of
any Proceeding by judgment,  order,  settlement,  conviction,  or upon a plea of
nolo  contendere or its equivalent,  shall not, of itself,  create a presumption
that the  Indemnified  Person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Company
or, with  respect to any criminal  action or  proceeding,  that the  Indemnified
Person had reasonable cause to believe that such conduct was unlawful.

12.2 Subject to the limitations  and conditions  provided in this Article 12 and
in the Law, the Company shall and does hereby indemnify any person who was or is
a party,  or is threatened  to be made a party,  to any  threatened,  pending or
completed action or suit by or in the right of the Company to procure a judgment
in its  favor by reason  of the fact  that  such  person  is or was a Member,  a

<PAGE>

Manager or an officer of the Company,  the legal  representative  of a Member or
officer, or manager, director, officer, member, venturer,  proprietor,  trustee,
employee,  agent or similar  functionary of a Member against expenses (including
attorneys'  fees) actually and reasonably  incurred by such person in connection
with the defense or  settlement  of such action or suit, if such person acted in
good faith and in a manner he  reasonably  believed to be in, or not opposed to,
the best  interests of the Company,  provided that no  indemnification  shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for  negligence or misconduct in the  performance  of
his duty to the Company unless,  and only to the extent that, the court in which
such action or suit was brought shall determine upon application  that,  despite
the adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably  entitled to indemnity for such expenses as
the court shall deem proper.

12.3  To the  extent  that a  person  has  been  successful,  on the  merits  or
otherwise,  in the  defense of any  action,  suit or  proceeding  referred to in
Sections 12.1 or 12.2, or in defense of any claim, issue or matter there;-' such
person  shall  be  indemnified  against  expenses  (including  attorneys'  fee3)
actually and reasonably incurred by such person in connection therewith.


<PAGE>


12.4 Any indemnification under Sections 12.1 or 12.2 (unless ordered by a court)
shall  be  made by the  Company  except  upon a  reasonable  determination  that
indemnification  is proper in the circumstances  because such person has not met
the applicable  standard of conduct set forth  therein;  and if such standard is
met indemnification shall be mandatory.  Such determination shall be made (i) by
the holders of a majority of the Interests  held by Members who were not parties
to such action, suit or proceedings, or (ii) if such a quorum is not obtainable,
or even if obtainable,  if a quorum of disinterested  Members so directs, by the
Company's independent legal counsel in a written opinion.

12.5 Indemnification under this Article 12 shall continue as to a person who has
ceased  to serve  in the  capacity  which  initially  entitled  such  person  to
indemnity  hereunder.  The rights  granted  pursuant to this Article 12 shall be
deemed contract rights, and no amendment, modification or repeal of this Article
12 shall have the effect of limiting or denying any such rights with  respect to
actions taken or Proceedings  arising prior to any such amendment,  modification
or repeal.

12.6 The right to indemnification conferred by this Article 12 shall include the
right  to be paid or  reimbursed  by the  Company  for the  reasonable  expenses
incurred in advance of the final  disposition  of the Proceeding and without any
determination  as to  the  person's  ultimate  entitlement  to  indemnification;
provided,  however, that the payment of such expenses incurred in advance of the
final  disposition  of a  Proceeding  shall be made  only upon  delivery  to the

<PAGE>

Company of a written affirmation by such person of his good faith belief that he
has met the standard of conduct necessary for indemnification under this Article
12 and a  written  undertaking,  by or on behalf  of such  person,  to repay all
amounts so advanced if it shall ultimately be determined that such person is not
entitled to be indemnified under this Article 12 or otherwise.

12.7 The right to  indemnification  and the  advancement and payment of expenses
conferred  by this  Article 12 shall not be exclusive of any other right which a
person  may have or  hereafter  acquire  under any law  (common  or  statutory),
provision of the Articles of Organization or this Agreement, agreements, vote of
Members or otherwise.

12.8 Insurance. The Company may purchase and maintain insurance, at its expense,
to protect itself and any Indemnified  Person against any expense,  liability or
loss,  whether or not the Company would have the power to indemnify  such person
against such expense, liability or loss under this Article 12.

12.9  Savings  Clause.  If Sections  12.1,12.2 or any portion  thereof  shall be
invalidated  on any  ground by any  court of  competent  jurisdiction,  then the
Company shall  nevertheless  indemnify and hold harmless each Indemnified Person
as to costs, charges and expenses (including attorneys' fees), judgments,  fines
and accounts paid in settlement with respect to any action,  suit or proceeding,
whether civil,  criminal,  administrative  or  investigative  to the full extent
permitted by any applicable  portion of this Article 12 that shall not have been
invalidated and to the fullest extent permitted by applicable law.


                                   ARTICLE 13

                                  TAX MATTERS

13.1 (a)  Notwithstanding  any  provisions  hereof to the contrary,  each of the
Members hereby  recognizes  that the Company will be a Company for United States
federal  income  tax  purposes  and  that the  Company  will be  subject  to all
provisions  of  Subchapter  K of Chapter 1 of Subtitle A of the Code;  provided,
however, that the filing of United States Company Returns of Income shall not be
construed  to extend the  purposes of the Company or expand the  obligations  or
liabilities of the Members. At the request of any Member, the Company shall file
an election under Section 754 of the Code.

(b) The Company shall engage an accountant (the  "Accountant") to prepare at the
expense of the Company all tax returns  and  statements,  if any,  which must be

<PAGE>

filed  on  behalf  of the  Company  regarding  the  operation,  dissolution  and
liquidation of the Company with any taxing authority.

(c) The  Administrative  Manager is designated  the Tax Matters  Member  (herein
"TMM") for  purposes  of Chapter 63 of the Code and the  Members  will take such
actions  as  may  be  necessary,   appropriate,  or  convenient  to  effect  the
designation  of the  Administrative  Manager  as TMM.  The TMM shall  attempt to
comply with the  responsibilities  outlined in this Section 13.1 and in Sections
6222' through 6231 of the Code (including any Treasury  Regulations  promulgated
thereunder.


                                   ARTICLE 14

                             DEATH, DISSOLUTION OR
                             BANKRUPTCY OF A MEMBER

14.1  Upon  the  death,   dissolution,   resignation,   retirement,   expulsion,
adjudication of bankruptcy or  adjudication  of  incompetency  of a Member,  the
Company  shall be dissolved  and its affairs shall be wound up unless within 180
days after such event,  the Company is  continued by the vote of the majority in
Interest  of the  Members  (which  approval  may be granted or  withheld in such
Member's sole  discretion).  In the event the Company is continued,  such Member
(a) making an assignment  for the benefit of  creditors;  (b) filing a voluntary
petition in  bankruptcy;  (c) being  adjudged  bankrupt or insolvent,  or having
entered  against  him an order  for  relief,  in any  bankruptcy  or  insolvency
proceeding;   (d)  filing  a  petition   or  answer   seeking  for  himself  any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation;  (e) filing an answer or
other  pleading  admitting or failing to contest the material  allegations  of a
petition  filed against him in any  proceeding  of this nature;  or (f) seeking,
consenting  to or  acquiescing  in the  appointment  of a trustee,  receiver  or
liquidator of the Member or of all or any substantial part of its assets,  shall
not be entitled to vote on any matters  regarding  the  operation of the Company
except for matters described in Articles 14 and 15.


                                   ARTICLE 15

                      ASSIGNABILITY, TRANSFER OR PLEDGE OF
                         INTERESTS RESIGNATION OF MEMBER

15.1 (a) No Member  shall have the right to assign,  convey,  sell or  otherwise
transfer or dispose of, or pledge,  mortgage,  hypothecate or otherwise encumber
his Interest,  whether record or beneficial interest thereof,  without the prior

<PAGE>

written consent of the Administrative  Manager and a majority in Interest of the
Members,  which  consent  may be  withheld  or  delayed  in each  Member's  sole
discretion.   Notwithstanding  the  preceding  sentence,   but  subject  to  the
restrictions on transferability  required by law, or set forth in any instrument
or  agreement  by which the Company may be bound,  or which may be  contained in
this  Agreement,  an  individual  Member may,  with the consent of a majority in
interest of the other Members,  assign,  convey,  sell or otherwise  transfer or
dispose of all or any portion of his  Interest in the Company to any one or more
of the members of his immediate family or families  (defined for the purposes of
this Agreement as a mother,  father,  sister,  brother, son, daughter,  stepson,
stepdaughter  or spouse (in each  instance  whether by marriage  or  otherwise))
and/or to a trust or other entity for the benefit  thereof or  themselves,  by a
written instrument of assignment and assumption, provided that the instrument of
transfer  provides  for  the  assumption  of  the  assignor's   liabilities  and
obligations  hereunder  and has  been  duly  executed  by the  assignor  of such
Interest and by the transferee. Upon consent of the Administrative Manager, such
assignee  shall become a Member and shall  thereafter  have the rights,  powers,
preferences and limitations and be subject to the  restrictions  and limitations
of a Member  under this  Agreement.  The Member  shall notify the Company of any
assignment,  transfer or disposition of a beneficial interest in any Interest of
the Member which occurs  without a transfer of record  ownership,  although such
notification,  or the  absence  of a  response  thereto,  shall  not be deemed a
consent thereof.

(b) An assignee or  transferee  of any portion of the Interest of a Member shall
be  entitled  to  receive  allocations  and  distributions  attributable  to the
Interest  acquired by reason of such  assignment,  from and after the  effective
date of the  assignment of such  Interest to such  assignee;  however,  anything
herein to the contrary  notwithstanding,  the Company shall be entitled to treat
the assignor of such Interest of the Member as the absolute owner thereof in all
respects,  and shall incur no liability  for  allocations  of net  profits,  net
losses, or gain or loss on sale of Company assets or property, or transmittal of
reports and notices required to be given to Members  hereunder which are made in
good faith to such assignor  until such time as the written  assignment has been
received by the Company,  approved  and recorded on its books and the  effective
date of the assignment  has passed.  Provided that the Company has actual notice
of any  assignment  of the Interest of the Member,  the  effective  date of such
assignment on which the assignee  shall be deemed an assignee of record shall be
the date set forth on the written instrument of assignment.

(c)  Any  assignment,   sale,   exchange,   transfer  or  other  disposition  in
contravention  of any of the provisions of this Article 15 and Article 16 hereof
shall  be void and  ineffective  and  shall  not  bind or be  recognized  by the
Company.


<PAGE>

(d) In the  event  that  there  shall  be more  than one  assignee,  transferee,
representative or other successor-in-interest as permitted herein (collectively,
the  "Transferees") and the Member as of the date of this Agreement shall remain
a Member,  then the Member  shall be  authorized  to act,  and shall so act,  on
behalf of the Member and all of the  Transferees  acting as such by,  through or
under the Member. In the event that there shall be more than one Transferee, and
the Member as of the date of this  Agreement  shall no longer be a Member,  then
the Company must be advised by the Member whose  Interest is the subject of such
event or failing  which by a  two-thirds  (2/3)  majority  in  interest of those
holding any  portion of the  Interests  of the  Member,  of one person to act on
behalf of all of the  Transferees.  The  Member,  if the first  sentence of this
paragraph  shall be  applicable,  or the person so noted to the Company,  if the
second  sentence of this paragraph  shall be applicable,  shall be authorized to
act, and shall so act, for all of the Transferees, all of whom shall be bound by
any  decision  or action  taken by such  person,  and the Company and all of the
other  Members  shall be entitled to rely on the  decisions or actions  taken by
such  person.  Until the  Company  shall be advised as to the  identity  of such
person,  (i) the  Transferees  shall be entitled only to  distributions  and tax
allocations  as  provided  in  Article 8 and 9 hereof,  but shall have no right,
power or authority with respect to any decision  making  reserved  herein to the
Members or any of them and (ii) wherever in this  Agreement  provision  shall be
made for the Members to make  decisions with respect to.  Company  matters,  the
Interest of the Member, as transferred to the Transferees, shall not be included
in  determining  whether the requisite  Interest of Members have consented to or
approved of such decision.

15.2 Without the prior written  consent of all Members,  a Member may not resign
from the Company prior to the dissolution and winding up of the Company.



<PAGE>


                                   ARTICLE 16

                       ADMISSION OF SUBSTITUTED MEMBERS;
                         INCAPACITY FURTHER CONDITIONS

16.1 No  assignment  or transfer of all or any part of the  Interest of a Member
permitted  to be made under this  Agreement  shall be binding  upon the  Company
unless and until a  duplicate  original  of such  assignment  or  instrument  of
transfer, duly executed and acknowledged by the assignor and the transferee, has
been delivered to the Company.

16.2 As a condition to the admission of any Substituted  Member,  as provided in
Article 16 hereof,  the person so to be admitted  shall execute and  acknowledge
such instruments,  in form and substance as the Administrative  Manager may deem

<PAGE>

necessary or desirable to effectuate such admission and to confirm the agreement
of the person to be  admitted  as a Member to be bound by all of the  covenants,
terms and conditions of this Agreement, as the same may have been amended.

16.3 Any person to be admitted as a Member  pursuant to the  provisions  of this
Agreement  shall,  as a  condition  to  such  admission  as a  Member,  pay  all
reasonable  expenses in connection  with such admission as a Member,  including,
but not limited to, the cost of the  preparation,  filing and publication of any
amendment to this Agreement and/or Articles of Organization.

16.4 (a) In the event of the death or  adjudication of incompetency of a Member,
or upon the  happening  of any event  described  in Article  14,  the  executor,
administrator,  committee or other legal  representative  of such Member, or the
successor-in-interest of such Member, shall succeed to the rights of such Member
to receive allocations and distributions hereunder, and at such party's election
may be  admitted  to the  Company  as a Member  in the  place  and  stead of the
deceased,  incompetent, or bankrupt Member (as defined in Article 14), but shall
not be deemed to be a Substituted  Member until admitted in accordance  with the
procedures of this Article 16.

(b) Upon the death of a Member,  the estate of a deceased Member or his heirs or
legatees  thereunder,  as the case may be,  shall have the option to continue in
the  Company,  or,  alternatively,  may  elect  within  ninety  (90) days of the
deceased  Member's  death,  to offer in writing,  within nine (9) months of such
deceased  Member's death, to sell the deceased  Member's Interest to the Company
at a price equal to the then Fair Market Value thereof, and upon such additional
terms and  conditions  as may be agreed  upon.  If the Company does not elect to
purchase the deceased  Member's Interest within thirty (30) days of said written
offer, then the remaining Member or Members,  as the case may be, shall have the
option,  for a period of thirty (30) days  thereafter,  to purchase the deceased
Member's entire Interest,  either in proportion to their respective Interests in
the Company or in such other  proportions as they may agree, at a price equal to
the Fair Market Value thereof and upon such  additional  terms and conditions as
may be agreed upon.

(c) For  purposes  of this  Agreement,  "Fair  Market  Value"  shall be the then
aggregate value of the Company's  assets  including cash or cash equivalents and
Stock as determined by the Current Market Value,  computed as of the Trading Day
immediately  preceding the valuation  date.  "Current  Market Value" on any date
shall mean the  average of the  Closing  Price for a share of Stock for five (5)
consecutive Trading Days ending on such date. "Closing Price" shall mean, on any
date, with respect to a share of Stock, the last sale price, regular way, or, in
case no such sale takes  place on such day,  the  average of the closing bid and
asked prices,  regular way, for one share of Stock in either case as reported in
the  principal  consolidated   transaction  reporting  system  with  respect  to
securities  listed or admitted to trading on its national  securities  exchange.
"Trading  Day"  shall  mean a day on which  the  principal  national  securities
exchange  on which the Stock is listed or  admitted  to  trading is open for the
transaction of business or, if the Stock is not listed or admitted to trading on
any national securities exchange, any day other than a Saturday, Sunday or a day
on which  banking  institutions  in the  State of New  York  are  authorized  or
obligated by law or executive order to close.

16.5  Notwithstanding  anything to the contrary contained in this Agreement,  no
sale or exchange  of an  Interest  in the  Company  may be made if the  Interest
sought to be sold or exchanged,  when added to the total of all other  Interests
sold or  exchanged  within the period of twelve (12)  consecutive  months  prior
thereto, results in the termination of the Company under Section 708 of the Code
without the prior written consent of a majority in Interest of the Members.

16.6 In the event of a permitted  transfer  of all or part of the  Interest of a
Member,  the Company shall,  if requested,  file an election in accordance  with
Section  754 of the Code or a similar  provision  enacted  in lieu  thereof,  to
adjust  the basis of the  assets of the  Company.  The  Member  requesting  said
election shall pay all costs and expenses  incurred by the Company in connection
therewith.


                                   ARTICLE 17

                                  LIQUIDATION

17.1 Upon the  dissolution  of the Company,  the Company shall be liquidated and
its assets distributed as required by Article VII of the Law.

17.2 The assets of the Company shall be liquidated as promptly as possible,  but
in an orderly and businesslike manner so as not to involve undue sacrifice.

17.3 In the event that any proceeds are to be distributed  to the Members,  same
shall be distributed,  if practicable, no later than the later of (i) the end of
the taxable year of the Company in which such liquidation occurs; or (ii) within
ninety (90) days after the date of such liquidating event.

17.4 In any  liquidation,  the  Company's  assets shall be used first to pay the
costs and expenses of the  dissolution and  liquidation.  In connection with any
liquidation,  the  Members  may  establish  any  reserves  they deem  reasonably
necessary for any  contingent or unforeseen  liabilities  or  obligations of the
Company or of the Members arising out of or in connection with the Company. Such
reserves shall be paid over by the Members to an attorney-at-law of the State of
New  York  as  escrowee  designated  by the  Members,  to be held by him for the

<PAGE>

purpose of  disbursing  such  reserves  in payment of any of the  aforementioned
contingencies.  At the  expiration  of such  period as the  Members  shall  deem
advisable,  said escrowee shall  distribute the balance  remaining in the manner
hereinafter provided. No reserves shall be held for longer than two (2) years.

17.5     Any remaining proceeds shall be distributed as follows:

(a) first,  to all Members in  proportion  to and to the extent of any remaining
positive  balances in such Member's  Capital  Account after giving effect to all
allocations to such Member under Article 9 of this Agreement so that liquidation
proceeds shall be distributed in accordance with each Member's  positive Capital
Account balance (within the meaning of Treasury  Regulation  Section  1.704-1(b)
(2) (ii) (~ as in effect on the date hereof); and

(b)      second, in accordance with Section 8.1 hereof.

17.6 Each of the Members  shall be  furnished  with a statement  prepared by the
Company's then Accountants,  which shall set forth the assets and liabilities of
the Company as at the date of  completion  of  liquidation.  Upon the  Company's
compliance  with the provisions of Section 17.4  (including  payment over to the
Attorney-Escrowee  if there are sufficient  funds  therefor),  the Members shall
cease to be such under this Agreement, and shall execute,  acknowledge and cause
to be filed the Articles of Dissolution of the Company.


ARTICLE 18

MISCELLANEOUS

18.1 All terms  and words  used in this  Agreement,  regardless  of the sense or
gender in which they are used,  shall be deemed to include  each other sense and
gender unless the context requires otherwise.

18.2  The  Members  agree   immediately  and  from  time  to  time  to  execute,
acknowledge,  deliver,  file,  record and  publish  such  further  certificates,
amendments to certificates,  instruments and documents, and to do all such other
acts and  things as may be  required  by law,  or as may,  in the  opinion  of a
majority in Interest of the Members,  be necessary or advisable to carry out the
intent and purposes of this Agreement.

18.3 The Members, on behalf of themselves,  their legal representatives,  heirs,
successors  and assigns,  hereby  specifically  renounce,  waive and forfeit all

<PAGE>

rights whether arising under contract, statute, or by operation of law, to seek,
bring,  or  maintain  any  action  for  partition  in any court of law or equity
pertaining  to any  property  which the  Company  may now or in the future  own,
regardless of the manner in which title to any such real property may be held.

18.4  Unless  otherwise  specified  in this  Agreement,  all  notices,  demands,
requests or other  communications which any of the parties to this Agreement may
desire or be required to give hereunder (hereinafter referred to collectively as
"Notices")  shall be in writing  and shall be  delivered  by  personal  delivery
against  receipt  or by  any  nationally  recognized  overnight  courier  to the
appropriate  Member at the  address  first set forth  above,  with a copy of any
Notice being sent simultaneously to Pryor, Cashman,  Sherman & Flynn, Attention:
Jonathan A. Bernstein,  Esq., 410 Park Avenue, New York, New York 10022.  Notice
may also be sent to such other  addresses  or  substitute  addresses  of which a
Member  advises  the  Company by notice  given in the  manner set forth  herein.
Notices given in compliance  with the provisions of this Article shall be deemed
given on the day received or attempted delivery.

18.5 The parties agree that the parties shall be governed by, and this Agreement
construed in accordance  with,  the laws of the State of New York  applicable to
agreements  made and to be performed in such State and that all claims and suits
shall be heard in the courts located in the State of New York.

18.6  All  section  titles  or  captions  contained  in this  Agreement  are for
convenience only and shall not be deemed a part of this Agreement.

18.7 This  Agreement may be executed in  counterparts  and each  counterpart  so
executed by each Member shall  constitute  an original,  all of which when taken
together shall  constitute one agreement,  notwithstanding  that all the parties
are not signatories to the same counterpart.

18.8 This Agreement may not be changed,  modified, amended waived or discharged,
in whole or in part,  unless in writing  and signed by a majority in Interest of
the  Members.  This  Agreement  shall be  binding  upon the  Members  and  their
respective executors, administrators,  legal representatives,  heirs, successors
and  assigns.  The  singular  of any defined  term or term used herein  shall be
deemed to include the plural.

18.9 If any term or provision of this  Agreement or the  application  thereof to
any person or circumstance shall to any extent be invalid or unenforceable,  the

<PAGE>

remainder  of this  Agreement  or the  application  of such term or provision to
persons or  circumstances  other  than  those as to which it is held  invalid or
unenforceable  shall not be affected thereby and each term and provision of this
Agreement shall be valid and enforced to the fullest extent permitted by law.

18.10 This Agreement is the entire  agreement  among the parties with respect to
the subject matter hereof and supersedes all prior  agreements  relative to such
subject matter.

18.11 It is expressly understood that the Investment Manager, the Administrative
Manager  and each  Member  may  engage  in any  other  business  or  investment,
including the ownership of or investment in stocks,  options,  bonds, funds, and
other  investment  vehicles,  whether  or not in  direct  competition  with  the
business of the Company and neither the Company nor any other  Member shall have
any rights in and to said  businesses or  investments,  or the income or profits
derived therefrom.



<PAGE>


IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement as of the
day and year first above written.

                                             CHARISMA PARTNERS, L.P., a New York
                                             limited Partnership

                                   By:  8th Floor Realty Corp., its sole general
                                        partner

                                                   By:
                                                   Name:      /S/ Kevin S. Moore
                                                   Title:       Vice President

                                                    ---------------------------
                                                    /S/Anne L. Peretz

                                                     ---------------------------
                                                    /S/Jesse W. Peretz

                                                     ---------------------------
                                                    /S/Eugenia Peretz

                                                     ---------------------------
                                                    /S/David L. Farnsworth

                                                     ---------------------------
                                                    /S/ Anne Farnsworth

                                                     ---------------------------
                                                    /S/ Edmund S. Twining III

                                                     ---------------------------
                                                    /S/Taylor Twining

                                                     ---------------------------
                                                    /S/ Edmund S. Twining IV

                               FIRST AMENDMENT TO
                               OPERATING AGREEMENT

         This First Amendment to Operating Agreement -dated August 1, 1995 by
and among the parties who are Members in Federal Holdings L.L.C. prior to the
date hereof (the "Original Members*) and Jonathan A. Bernstein ('JAB').

                               STATEMENT OF FACTS

                  By  execution  of  that  certain   Operating   Agreement  (the
                  "Agreementm)  for Federal  Holdings  L.L.C.  (the OLLC") dated
                  June 12,  1995,  the  Original  Members  formed  the LLC.  The
                  Original Members have agreed to amend the Agreement to provide
                  for the inclusion of JAB as an Additional Member and to permit
                  the Administrative  Manager (a) to admit such other persons as
                  he shall deem proper as Additional Members and (b) provide for
                  and accept Substitute  Members as he shall deem proper, all in
                  his sole and exclusive discretion.

                            NOW,  THEREFORE,  the parties hereto hereby agree as
follows:

                           1. All terms used in this First Amendment and not
defined hereinshall be as defined in the Agreement.

                           2. JAB is hereby admitted into the LLC as an
Additional Member as of the date hereof, with all of the rights and obligations
of a Member, and fromand after the date  hereof,  JAB shall be  considered
a Member for all purposes under the Agreement, as the same may be modified or
amended from time to time.

                  3. On the  date  hereof,  JAB is  making  an  Initial  Capital
Contribution  to the LLC of  $100,000.  As a result of JAB becoming a Member and
making his Initial Capital Contribution, the Interests of each Member in the LLC
is as set forth on Schedule A annexed  hereto and by this  reference made a part
hereof.

                  4.       The Administrative Manager shall have the sole and
exclusive right to admit Additional Members and provide for and accept
Substitute Members.

                  5.       Except as modified by this First Amendment, the
Agreement remains unmodified and in full force and effect.




<PAGE>


         IN  WITNESS  WHEREOF,  the  parties  hereto  have  executed  this First
Amendment as of the day and year first above written.

                                            CHARISMA PARTNERS, L.P., a New York
                                              limited Partnership

                                              By:   8th Floor Realty Corp.,
                                                    its sole general partner By:
                                                    Name:     /S/ Kevin S. Moore
                                                    Title: Vice President

                                                     /s/      Attorney in fact
                                                              Anne L. Peretz

                                                     /s/      Attorney in fact
                                                              Jesse W. Peretz

                                                     /s/      Attorney in fact
                                                              Eugenia Peretz

                                                     /s/      Attorney in fact
                                                              Anne Farnsworth

                                                     /s/      Attorney in fact
                                                         Edmund S. Twining III

                                                     /s/      Attorney in fact
                                                              Taylor Twining
                                                     /s/      Attorney in fact
                                                          Edmund S. Twining IV

                                                     /s/      Attorney in fact
                                                         Jonathan A. Bernstein

<PAGE>

                                                                 SCHEDULE A

                                 INITIAL CAPITAL
                                  CONTRIBUTION


CHARISMA PARTNERS, LP                             $600,000.00

ANNE PERETZ                                       $100,000.00

JESSE W. PERETZ                                    $50,000.00

EUGENIA PERETZ                                     $50,000.00

DAVID L. FARNSWORTH                                $50,000.00

ANNE FARNSWORTH                                    $50,000.00

EDMUND TWINING III                                 $50,000.00

TAYLOR TWINING                                     $25,000.00

EDMUND S. TWINING IV                               $25,000.00

JONATHAN A. BERNSTEIN                             $100,000.00

                               SECOND AMENDMENT TO
                               OPERATING AGREEMENT

     THIS Second  Amendment to Operating  Agreement  dated as of July 1, 1998 by
and among the parties who are Members in Federal Holdings L.L.C.

                               STATEMENT OF FACTS
     This Second  Amendment to Operating  Agreement  dated as of July 1, 1998 by
and among the parties who are Members in Federal Holdings L.L.C.

By execution of that certain Operating Agreement (the "Original  Agreement") for
Federal Holdings L.L.C. (the "LLC") dated June 12, 1995, the LLC was formed. The
Original Agreement was amended by a First Amendment to Operating Agreement dated
August  1,  1995 To admit an  additional  member.  The  original  Agreement,  As
modified by the First Amendment To Operating Agreement,  is hereinafter referred
to as the  "Agreement".  The Members  have agreed to amend the  Agreement on the
Terms and conditions set forth below.
         NOW, THEREFORE the parties hereto herby agree as follows:

1.       All terms used in this Amendment and not defined herein shall be as
         defined in the Agreement.

2.       The definition of "Preferred Return" in Section 1.1 of the Original
         Agreement is deleted in its entirety and the following is substituted
         in its place and stead:

"Preferred Return":  with respect to a Member, an amount equal to the Bank Index
Percentage on a per annum interest basis  (prorated for any partial year) on the
amount of such Member's  Unrecovered  Capital  Contribution,  from time to time,
calculated from the date a Capital Contribution is made.

3.       The following definitions are hereby inserted into section 1.1;

"Bank Index Percentage":  A percentage  determined by subtracting 2,123 from the
Current Index Value, and dividing the resulting number 2,123.

"Current Index Value":  the value of the NASDAQ Bank Index as reported by NASDAQ
at the close of trading on any trading  day, as provided in rule  2871(e) in the
NASDQ Manual and  published in The Wall Street  Journal  under the NASDAQ Market
Indices. If The Wall Street Journal shall no longer publish such value, then the
Administrative  Manger  shall  select  another  publication  whether in print or
electronic form. As of the close of business on June 30, 1998, the Current Index
Value was 2,123.

"NASDAQ  Bank  Index":  The index  commonly  known as the  NASDAQ  Bank Index as
reported  by  NASDAQ.  In the  event  that the  NASDAQ  Bank  Index is no longer
reported by NASDAQ,  the  administrative  Manager shall select  another index in
substitution thereof.

4.       Modifying section 3.1 of the Original Agreement, the Company's
         registered office in New York shall be at One Rockefeller Plaza, 31st
         Floor, New York, New York 10120.

5.       The reference to "20%" in the defined term of "Unrecovered 20% IM Fee",
         and in the definition thereof, shall be and hereby is changed to "25%."

6.       Section 8.1 (b)(iv) is hereby deleted in its entirety and the following
         is substituted in its place and stead: "the balance,if any, shall be
         paid 75% of  the Members in proportion to their Interest and 25% to
         the Investment Manager."

7.       The Management Term shall mean a term of (2) years commencing as of the
         date hereof and continuing through and including June 30, 2000.

8.       Modifying Sections 10.4, the "Account" is currently at Bear Stearns &
         Co., Inc.

9.       Except as modified by this Second Amendment, the Agreement remains
         unmodified and in full force and effect.

         IN WITHNESS WHEREOF, the parties hereto have executed this Second
         Amendment as of the day and year first above written.
                                             CHARISMA PARTNERS, L.P., a New York
                                             limited Partnership

                                              By:   8th Floor Realty Corp.,
                                                    its sole general partner By:
                                                    Name:     /S/ Kevin S. Moore
                                                    Title: Vice President

                                                     /s/      Attorney in fact
                                                              Anne L. Peretz

                                                     /s/      Attorney in fact
                                                              Jesse W. Peretz

                                                     /s/      Attorney in fact
                                                              Eugenia Peretz

                                                     /s/      Attorney in fact
                                                              Anne Farnsworth

                                                     /s/      Attorney in fact
                                                         Edmund S. Twining III

                                                     /s/      Attorney in fact
                                                              Taylor Twining
                                                     /s/      Attorney in fact
                                                          Edmund S. Twining IV

                                                     /s/      Attorney in fact
                                                         Jonathan A. Bernstein

<PAGE>

     The undersigned,  as Investment Manager, is executing this Second Amendment
to evidence its  acknowledgment  and agreement to the terms and  conditions  set
forth above.


                                                              Lawrence Seidman