<PAGE>
 
                                TRUST AGREEMENT

                                    BETWEEN

                                WEST ESSEX BANK

                                      AND

                              MARINE MIDLAND BANK

                                    FOR THE

                                WEST ESSEX BANK
                      EMPLOYEE STOCK OWNERSHIP PLAN TRUST
<PAGE>
 
                                   CONTENTS



                                                            Page No.
<TABLE>
<CAPTION>
 
 
<S>                                                      <C>
Section 1    Creation of Trust                                 1
 
Section 2    Investment of Trust Fund and
             Administrative Powers of the
             Trustee                                           2
 
Section 3    Compensation and Indemnification
             of Trustee and Payment of Expenses
             and Taxes                                         7
 
Section 4    Records and Valuation                             8
 
Section 5    Instructions from Committee                       9
 
Section 6    Change of Trustees                               10
 
Section 7    Miscellaneous                                    11
</TABLE>
<PAGE>
 
     This TRUST AGREEMENT dated September 10, 1998, BETWEEN WEST ESSEX BANK, a
federally-chartered savings bank with its principal office at 417 Bloomfield
Avenue, Caldwell, New Jersey 07006-4980 (hereinafter called the "Bank"), AND
MARINE MIDLAND BANK, with offices at 140 Broadway, 11th Floor, New York, New
York 10005 (hereinafter called the "Trustee"),

                         W I T N E S S E T H  T H A T:

     WHEREAS, effective January 1, 1998, the Bank approved and adopted an
employee stock ownership plan for the benefit of its employees, West Essex Bank
Employee Stock Ownership Plan, (hereinafter called the "Plan"); and

     WHEREAS, the Bank has authorized the execution of this Trust Agreement and
has appointed Marine Midland Bank as Trustee of the Trust Fund created pursuant
to the Plan; and

     WHEREAS, Marine Midland Bank has agreed to act as trustee and to hold and
administer the assets of the Plan in accordance with the terms of this Trust
Agreement;

     NOW, THEREFORE, the Bank and the Trustee agree as follows:

     Section 1.  Creation of Trust.
                 ------------------

     1.1  Trustee. Marine Midland Bank shall be trustee of the Trust Fund
          -------                                                        
created in accordance with and in furtherance of the Plan, and shall serve as
Trustee until its removal or resignation in accordance with Section 6.

     1.2  Trust Fund.  The Trustee hereby agrees to accept contributions from
          ----------                                                         
the Employer as defined in the Plan and amounts transferred from other qualified
retirement plans from time to time in accordance with the terms of the Plan.
All such property and contributions, together with income thereon and increments
thereto, shall constitute the "Trust Fund" to be held in accordance with the
terms of the Trust Agreement.

     1.3  Incorporation of Plan.  An instrument entitled "West Essex Bank
          ---------------------                                         
Employee Stock Ownership Plan" is incorporated herein by reference, and this
Trust Agreement shall be interpreted consistently with that Plan. All words and
phrases defined in that Plan shall have the same meaning when used in this Trust
Agreement, unless otherwise noted.

     1.4  Name.  The name of this trust shall be "West Essex Bank Employee Stock
          -----                                                                 
Ownership Plan Trust."

     1.5  Nondiversion of Assets.  In no event shall any part of the corpus or
          ----------------------                                             
income of the Trust Fund be used for, or diverted to, purposes other than for
the exclusive benefit of the Participants and their Beneficiaries prior to the
satisfaction of all liabilities under the Plan, except to the extent that assets
may be returned to the Employer in accordance with the Plan where the Plan fails
to qualify initially under Section 401(a) of the Internal Revenue Code (the
"Code"), or where they are attributable to contributions made by mistake of fact
or in excess of the deductibility allowed under the Code.
<PAGE>
 
     Section 2.  Investment of Trust Fund and Administrative Powers of the
                 ---------------------------------------------------------
Trustee.
-------

     2.1  Stock and Other Investments.  The basic investment policy of the Plan
          ----------------------------                                         
shall be to invest primarily in Stock of the Employer for the exclusive benefit
of the Participants and their Beneficiaries. The Committee shall have full and
complete investment authority and responsibility with respect to the purchase,
retention, sale, exchange, and pledge of Stock and the payment of Acquisition
Loans, and the Trustee shall not deal in any way with Stock except in accordance
with the Trustee's obligations pursuant to this trust document and the written
instructions of the Committee. The Trustee shall invest, or keep invested, all
or a portion of the Trust Fund in Stock, and shall pay Acquisition Loans out of
assets of the Trust Fund, as instructed from time to time by the Committee. The
Trustee shall invest any balance of the Trust Fund (the "Investment Fund") in
such other property as the Committee, in its sole discretion, shall deem
advisable, subject to any delegation of such investment responsibility pursuant
to Section 2.2. Nothing contained herein shall provide investment discretion
authority or any like kind responsibility in regard to the assets of the Trust
Fund.
 
     In connection with instructions to acquire Stock, the Trustee may purchase
newly issued or outstanding Stock from the Employer or any other holders of
Stock, including Participants, Beneficiaries, and Plan fiduciaries. All
purchases and sales of Stock shall be made by the Trustee at fair market value
as determined by the Committee in good faith and in accordance with any
applicable requirements under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Such purchases may be made with assets of the Trust
Fund, with funds borrowed for this purpose (with or without guarantees of
repayment to the lender by the Employer), or by any combination of the
foregoing.

     Notwithstanding any other provision of this Trust Agreement or the Plan,
neither the Committee nor Trustee shall make any purchase, sale, exchange,
investment, pledge, valuation, or loan, or take any other action involving those
assets for which it is responsible which (i) is inconsistent with the policy of
the Plan and Trust, (ii) is inconsistent with the prudence and diversification
requirements set forth in Sections 404(a)(1)(B) and (C) of ERISA (to the extent
such requirements apply to an employee stock ownership plan and trust), (iii) is
prohibited by Section 406 or 407 of ERISA, or (iv) would impair the
qualification of the Plan or the exemption of the Trust under Sections 401 and
501, respectively,  of the Code.

     2.2  Delegation of Investment Responsibility.  The Committee may, by
          ----------------------------------------                       
written notice and in accordance with the Plan, direct the Trustee to segregate
any portion or all of the Investment Fund into one or more separate accounts for
each of which full investment responsibility will be delegated to an investment
manager appointed in such notice pursuant to Section 402(c)(3) of ERISA
(hereinafter a "Manager").  For any separate account where the Trustee is to
maintain custody of the assets, the Trustee and the Manager shall agree upon
procedures for the transmittal of investment 

                                       2
<PAGE>
 
instructions from the Manager to the Trustee, and the Trustee may provide the
Manager with such documents as may be necessary to authorize the Manager to
effect transactions directly on behalf of the segregated account.

     Further, the Committee may, by written notice and in accordance with the
Plan, direct the Trustee to segregate any portion or all of the Investment Fund
into one or more separate accounts for each of which full investment
responsibility will be delegated to an insurance company through one or more
group annuity contracts, deposit administration contracts, or similar contracts,
which may provide for investments in any commingled separate accounts
established under such contracts. An insurance company shall be a Manager with
respect to any amounts held under such a contract except to the extent the
insurer's assets are not deemed assets of the Plan and Trust Fund pursuant to
Section 401(b)(2) of ERISA. The allocation of amounts held under such a
contract among the insurer's general account and one or more individual or
commingled separate accounts shall be determined by the Committee except as
otherwise agreed by the Committee and the insurer.

     Any Manager shall have all of the powers given to the Trustee pursuant to
Section 2.3 with respect to the portion of the Trust Fund committed to its
investment discretion and control. The Trustee shall be responsible for the
safekeeping of any assets which remain in its custody, but in no event shall the
Trustee be under any duty to question or make any inquiry or suggestion
regarding the action or inaction of a Manager or an insurer or the advisability
of acquiring, retaining, or disposing of any asset of a segregated account. The
Employer shall indemnify and hold the Trustee harmless from any and all costs,
damages, expenses, and liabilities which the Trustee may incur by reason of any
action taken or omitted to be taken by the Trustee upon directions from the
Committee, a Manager, or an insurer pursuant to this Section 2.2.

     2.3  Trustee Powers.  In addition to and not by way of limitation upon the
          ---------------                                                      
fiduciary powers granted to it by law, the Trustee shall have the following
specific powers, subject to the limitations set forth in Section 2.1:

     2.3-1  to receive, hold, manage, invest and reinvest the money or other
property which constitutes the Trust Fund, without distinction between principal
and income;

     2.3-2  to hold funds uninvested temporarily without liability for interest
thereon, and to deposit funds in one or more savings or similar accounts with
any banks and savings and loan associations which are insured by an
instrumentality of the federal government, including the Trustee if it is such
an institution.

     2.3-3  at the direction of the Committee,  to invest or reinvest the whole
or any portion of the money or other property which constitutes the Trust Fund
in such common or preferred stocks, investment trust shares, mutual funds,
commingled trust funds, partnership interests, bonds, notes, or other evidences
of indebtedness, and real and personal property as the Trustee in its absolute
judgment and discretion may deem to be for the best interests of the Trust Fund,
regardless of nondiversification to the extent that such nondiversification is
clearly prudent, and regardless of 

                                       3
<PAGE>
 
whether any such investment or property is authorized by law regarding the
investment of trust funds, of a wasting asset nature, temporarily nonincome
producing, or within or without the United States;

     2.3-4  to invest in common and preferred stocks, bonds, notes, or other
obligations of any corporation or business enterprise in which an Employer or
its owners may own an interest;

     2.3-5  at the direction of the Committee, to exchange any investment or
property, real or personal, for other investments or properties at such time and
upon such terms as the Trustee shall deem proper;

     2.3-6  at the direction of the Committee, to sell, transfer, convey or
otherwise dispose of any investment or property, real or personal, for cash or
on credit, in such manner and upon such terms and conditions as the Trustee
shall deem advisable, and no person dealing with the Trustee shall be under any
duty to inquire as to the validity, expediency, or propriety of any such sale or
as to the application of the purchase money paid to the Trustee;

     2.3-7  to hold any investment or property in the name of the Trustee, with
or without the designation of any fiduciary capacity, or in name of a nominee,
or unregistered, or in such other form that title may pass by delivery;
provided, however, that the Trustee's records always show that such investment
or property belongs to the Trust Fund and the Trustee shall not be relieved
hereby of its responsibility to maintain safe custody of such investment or
property;

     2.3-8  to organize one or more corporations to hold, manage, or liquidate
any property, including real estate, owned or acquired by the Trust Fund if in
the sole discretion of the Trustee the organization of such corporation or
corporations is for the best interest of the Trust and the Plan participants and
beneficiaries;

     2.3-9  to extend the time for payment of, to modify, to renew, or to
release security from any mortgage, note or other evidence of indebtedness, or
to take advantage of or waive any default; to foreclose mortgages and bid on
property under foreclosure or to take title to property by conveyance in lieu of
foreclosure, either with or without the payment of additional consideration;

     2.3-10  to vote in person or by proxy all stocks and other securities
having voting privileges; to exercise or refrain from exercising any option or
privilege with respect to stocks and other securities, including any right or
privilege to subscribe for or otherwise to acquire stocks and other securities;
or to sell any such right or privilege; to assent to and join in any plan of
refinance, merger, consolidation, reorganization or liquidation of any
corporation or other enterprise in which this Trust may have an interest, to
deposit stocks and other securities with any committee formed to effectuate the
same, to pay any expense incidental thereto, to exchange stocks and other
securities for those which may be issued pursuant to any such plan, and to
retain as an investment the stocks and other securities received by the Trustee;
and to deposit any investment in a voting trust; notwithstanding the preceding,
participants and beneficiaries shall be entitled to direct the manner in which
stock 

                                       4
<PAGE>
 
allocated to their respective accounts are to be voted on all matters. All stock
which has been allocated to participant's accounts for which the Trustee has
received no written direction and all unallocated Employer securities will be
voted by the Trustee in direct proportion to any participant directions received
and solely in the interest of the participants and beneficiaries. Whenever such
voting rights are to be exercised, the Employer, the Committee and the Trustee
shall see that all participants and beneficiaries are provided with adequate
opportunity to deliver their instructions to the Trustee regarding voting of
stock allocated to their accounts. The instructions of the participants with
respect to the voting of allocated shares hereunder shall be confidential;

     2.3-11  to abandon any property, real or personal, which the Trustee shall
consider to be worthless or not of sufficient value to warrant its keeping or
protecting; to abstain from the payment of taxes, water rents, assessments,
repairs, maintenance, and upkeep of any such property; to permit any such
property to be lost by tax sale or other proceedings, and to convey any such
property for a nominal consideration or without consideration;

     2.3-12  to borrow money from the Employer or from others (including the
Trustee), and to enter into installment contracts, for the purchase of Stock
upon such terms and conditions and at such reasonable rates of interest as the
Committee may deem to be advisable, to issue its promissory notes as Trustee to
evidence such debt, to secure the payment of such notes by pledging any property
of the Trust Fund, and to authorize the holders of any such notes to pledge them
to secure obligations of the holders and in connection therewith to repledge any
assets of the Trust as security therefor; provided that, with respect to any
extension of credit to the Trust involving, as a lender or guarantor, the
Employer or other "disqualified person" within the meaning of Section 4975(e)(2)
of the Code:

     (a) each loan or installment contract is primarily for the benefit of
         Participants and Beneficiaries of the Plan;
     (b) any interest on a loan or installment contract does not exceed a
         reasonable rate;
     (c) the proceeds of any loan shall be used only to acquire Stock, to repay
         the loan, or to repay a previous loan meeting these conditions, and the
         subject of any installment contract shall be only the Trust's purchase
         of Stock;
     (d) any collateral pledged to a creditor by the Trustee shall consist only
         of qualifying employer securities as that term is defined under Section
         4975(e)(8) of the Code and any other collateral permissible under
         applicable law and the creditor shall have no recourse against the
         Trust Fund except with respect to the collateral (although the creditor
         may have recourse against an Employer as guarantor);
     (e) payments with respect to a loan or installment contract shall be made
         only from those amounts contributed by the Employer to the Trust Fund,
         from amounts earned on such contributions, and from cash dividends
         received on unallocated Stock held by the Trust as collateral for such
         an obligation; and
     (f) upon the payment of any portion of balance due on a loan or upon any
         installment payment, a proportionate part of any qualified employer
         securities originally pledged as collateral for such indebtedness shall
         be released from encumbrance in accordance with the applicable
         provisions of the Plan and the Committee shall at least annually 

                                       5
<PAGE>
 
         advise the Trustee of the number of shares of Stock so released and the
         proper allocation of such shares under the terms of the Plan;

     2.3-13  to manage and operate any real property which shall at any time
constitute an asset of the Trust Fund; to make repairs, alterations, and
improvements thereto; to insure such property against loss by fire or other
casualty; to lease or grant options for the sale of such property, which lease
or option may be for a period of time which may extend beyond the life of this
Trust; and to take any other action or enter into any other contract respecting
such property which is consistent with the best interests of the Trust;

     2.3-14  to pay any and all reasonable and normal expenses incurred in
connection with the exercise of any power, right, authority or discretion
granted herein, and, upon prior notice to the Company, to employ and compensate
agents, investment counsel, custodians, actuaries, attorneys, and accountants in
such connection;

     2.3-15  to employ and consult with any legal counsel, who also may be
counsel to an Employer or the Administrator, with respect to the meaning or
construction of this Trust Agreement, the extent of the Trustee's obligations
and duties hereunder, and whether the Trustee should take or decline to take a
particular action hereunder, and the Trustee shall be fully protected with
respect to any action taken or omitted by such Trustee in good faith pursuant to
such advice;

     2.3-16  to defend any action or proceeding instituted against the Trust
Fund, to institute any action on behalf of the Trust Fund, and to compromise or
submit to arbitration any dispute concerning the Trust Fund;

     2.3-17  to make, execute, acknowledge and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be necessary
or appropriate to carry out the powers herein granted;

     2.3-18  to commingle the Trust Fund created pursuant hereto, in whole or in
part, in a single trust with all or any portion of any other trust fund,
assigning an undivided interest to each such commingled trust fund, provided
that such commingled trust is itself exempt from taxation pursuant to Section
501(a) of the Code, or its successor Section; and provided further that the
trust agreement governing such commingled trust shall be deemed incorporated by
reference in the Plan;

     2.3-19  where two or more trusts governed by this Trust Agreement have an
undivided interest in any property, to credit the income from such property to
such trusts in proportion to their undivided interests, and when non pro rata
distributions of property or money are made from such trusts, to make
appropriate adjustments to the undivided fractional interests of such trusts;

     2.3-20  to invest all or any portion of the Trust Fund in one or more group
annuity contracts, deposit administration contracts, and other such contracts
with insurance companies, including any commingled separate accounts established
under such contracts;

                                       6
<PAGE>
 
     2.3-21  generally, with respect to all cash, stocks and other securities,
and property, both real and personal, received or held in the Trust Fund by the
Trustee, to exercise all the same rights and powers as are or may be lawfully
exercised by persons owning cash, or stocks and other securities, or such
property in their own right; and to do all other acts, whether or not expressly
authorized, which it may deem necessary or proper for the protection of the
Trust Fund; and

     2.3-22  whenever more than two persons shall qualify to act as co-trustees,
to exercise and perform every power (including discretionary powers), authority
or duty by the concurrence of a majority of them the same effect as if all had
joined therein, except that the unanimous vote of such persons shall be
necessary to determine the number (one or more) and identity of persons who may
sign checks, make withdrawals from financial institutions, have access to safe
deposit boxes, or direct the sale of trust assets and the disposition of the
proceeds.

     2.4  Brokerage.  If permitted in writing by the Committee the Trustee shall
          ----------                                                            
have the power and authority, to be exercised in its sole discretion at any time
and from time to time, to issue and place orders for the purchase or sale of
securities with qualified brokers and dealers.  Such orders may be placed with
such qualified brokers and/or dealers who also provide investment information or
other research or statistical services to the Trustee in its capacity as a
fiduciary or investment manager for other clients.

     Section 3.  Compensation and Indemnification of Trustee and Payment of
                 ----------------------------------------------------------
Expenses and Taxes.
-------------------

     3.1  Fees and Expenses from Fund.  Compensation of Trustee.  In
          ---------------------------                               
consideration for rendering services pursuant to this Trust Agreement the
Trustee shall be paid fees in accordance with the Trustee's fee schedule as in
effect from time to time. Fee changes resulting in fee increases shall be
effective upon not less than 30 days' notice to the Company. In addition, the
Trustee shall be reimbursed for any reasonable expenses, including reasonable
attorneys' fees, incurred in the administration of the Trust created hereby.
Fees and expenses shall be allocated to Participant Accounts, if any, unless
paid directly by the Employer. All compensation and expenses of the Trustee
shall be paid out of the Trust Fund or by the Employer as specified in the Plan.
If and to the extent the Trust Fund shall not be sufficient, such compensation
and expenses shall be paid by the Employer upon demand. If payment is due but
not paid by the Employer, such amount shall be paid from the assets of the Trust
Fund. The Trustee is hereby empowered to withdraw all such compensation and
expenses which are 60 days past due from the Trust Fund, and, in furtherance
thereof, liquidate any assets of the Trust Fund, without further authorization
or direction from or by any person.

     3.2  Indemnification.  Notwithstanding any other provision of this Trust
          ----------------                                                   
Agreement, any individual designated as a trustee hereunder shall be indemnified
and held harmless by the Employer to the fullest extent permitted by law against
any and all costs, damages, expenses and liabilities including, but not limited
to attorneys' fees and disbursements reasonably incurred by or imposed upon such
individual in connection with any claim made against him or in which he may be
involved 

                                       7
<PAGE>
 
by reason of his being, or having been, a trustee hereunder, to the extent such
amounts are not satisfied by insurance maintained by the Employer, except
liability which is adjudicated to have resulted from the gross negligence or
willful misconduct of the Trustee by reason of any action so taken. Further, any
corporate trustee and its officers, directors and agents may be indemnified and
held harmless by the Employer to the fullest extent permitted by law against any
and all costs, damages, expenses and liabilities including, but not limited to
attorneys' fees and disbursements reasonably incurred by or imposed upon such
persons and/or corporation in connection with any claim made against it or them
or in which such persons and/or corporation may be involved by reason of its
being, or having been, a trustee hereunder, except liability which is
adjudicated to have resulted from the gross negligence or willful misconduct of
the Trustee by reason of any action so taken.

     3.3  Expenses.  All expenses of administering this Trust and the Plan,
          ---------                                                        
whether incurred by the Trustee or the Committee, shall be paid by the Trustee
from the Trust Fund to the extent such expenses shall not have been assumed by
the Employer.

     3.4  Taxes.  All taxes that may be levied or assessed upon or in respect of
          ------                                                                
the Trust Fund shall be paid from the Trust Fund. The Trustee shall notify the
Committee of any proposed or final assessments of taxes and may assume that any
such taxes are lawfully levied or assessed unless the Committee advises it in
writing to the contrary within fifteen days after receiving the above notice
from the Trustee. In such case, the Trustee, if requested by the Committee in
writing, shall contest the validity of such taxes in any manner deemed
appropriate by the Committee; the Employer may itself contest the validity of
any such taxes, in which case the Committee shall so notify the Trustee and the
Trustee shall have no responsibility or liability respecting such contest. If
either party to this Agreement contests any such proposed levy or assessments,
the other party shall provide such information and cooperation as the party
conducting the contest shall reasonably request.

     Section 4.  Records and Valuation.
                 ----------------------

     4.1  Records.  The Trustee, and any investment manager appointed pursuant
          --------                                                            
to Section 2.2, shall maintain accurate and detailed records and accounts of all
investments, receipts, disbursements and other transactions made by it with
respect to the Trust Fund, and all accounts, books and records relating thereto
shall be open at all reasonable time to inspection and audit by the Committee
and the Employer.

     4.2  Valuation.  From time to time upon the request of the Committee, but
          ----------                                                          
at least annually as of the last day of each Plan Year, the Trustee shall
prepare a balance sheet of the Investment Fund in accordance with Section 8.2 of
the Plan and shall deliver copies of the balance sheet to the Committee and the
Employer.

     4.3  Discharge of Trustee.  Ninety days after the filing of any balance
          ---------------------                                             
sheet under Section 4.2 or any accounting under Section 6, the Trustee shall be
forever released and discharged from any liability or accountability other than
for gross negligence or wilful misconduct on the part of the 


                                       8
<PAGE>
 
Trustee to anyone with respect to the transactions shown or reflected in such
balance sheet or accounting, except with respect to any acts or transactions as
to which the Committee, within such ninety-day period, files written objections
with the Trustee. The written approval of the Committee of any balance sheet or
accounting so filed by the Trustee, or the Committee's failure to file written
objections within ninety days, shall be a settlement of such balance sheet or
accounting as against all persons, and shall forever release and discharge the
Trustee from any liability of accountability to anyone with respect to the
transactions shown or reflected in such balance sheet or accounting other than
liability arising out of the Trustee's gross negligence or wilful misconduct. If
a statement of objections is filed by the Committee and the Committee is
satisfied that its objections should be withdrawn or if the balance sheet or
accounting is adjusted to its satisfaction, the Committee shall indicate its
approval of the balance sheet or accounting in a written statement filed with
the Trustee and the Trustee shall be forever released and discharged from any
liability of accountability to anyone in accordance with the immediately
preceding sentence. If an objection is not settled by the Committee and the
Trustee, the Trustee may start a proceeding for a judicial settlement of the
balance sheet or accounting in any court of competent jurisdictions; the only
parties that need be joined in such a proceeding are the Trustee, the Committee,
the Employer and any other parties whose participation is required by law.

     4.4  Right to Judicial Settlement.  Nothing in this Agreement shall prevent
          -----------------------------                                         
the Trustee from having its account settled by a court of competent jurisdiction
at any time. The only parties that need be joined in any such proceeding are the
Employer, the Committee, the Trustee and any other parties whose participation
is required by law.

     Section 5.  Instructions from Committee.
                 ----------------------------

     5.1  Certification of Members of the Committee.  From time to time the
          ------------------------------------------                       
Company shall certify to the Trustee in writing the names of the individuals
comprising the Committee and shall furnish to the Trustee specimens of their
signatures and the signatures of their agents, if any. The Trustee shall be
entitled to presume that the identities of such individuals and their agents are
unchanged until it receives a certification from the Company notifying it of any
changes.

     5.2  Instructions to Trustee.
          ------------------------

     (a)  The Trustee shall pay benefits and administrative expenses under the
Plan only when it receives (and in accordance with) written instructions of the
Committee indicating the amount of the payment and the name and address of the
recipient in accordance with the terms of the Plan. The Trustee need not inquire
into whether any payment the Committee instructs the Trustee to make is
consistent with the terms of the Plan or applicable law or otherwise proper. Any
payment made by the Trustee in accordance with such instructions shall be a
complete discharge and acquittance to the Trustee. If the Committee advises the
Trustee that benefits have become payable with respect to a Participant's
interest in the Trust Fund but does not instruct the Trustee as to the manner of
payment, the Trustee shall hold the Participant's interest in the Trust until
the Trustee receives written instructions from the Committee as to the manner of
payment. The Trustee shall not pay benefits

                                       9
<PAGE>
 
from the Trust Fund without such instructions, even though it may be informed
from other sources, including, without limitation, a Participant or Beneficiary,
that benefits are payable under the Plan. The Trustee shall have no
responsibility to determine when, to whom or in what amount benefits and
expenses are payable under the Plan. Further, the Trustee shall have no power,
authority or duty to interpret the Plan or inquire into the decisions or
determinations of the Committee, or to question the instructions given to it by
the Committee. If the Committee so directs, the Trustee shall segregate amounts
payable with respect to the interest in the Plan of any Participant and
administer them separately from the rest of the Trust Fund in accordance with
the Committee's instructions.

     (b)  The Trustee may require the Committee to certify in writing that any
payment of benefits or expenses it instructs the Trustee to make pursuant to
Section 5.2(a) above is: (i) in accordance with the terms of the Plan and/or
(ii) one which the Committee is authorized by the Plan and any other applicable
instruments to direct and/or (iii) made for the exclusive purpose of providing
benefits to Participants and Beneficiaries, or defraying reasonable expenses of
Plan administration and/or (iv) not made to a party in interest (within the
meaning of ERISA Section 3(14)), and/or (v) not a prohibited transaction (within
the meaning of Code Section 4975 and ERISA Section 406). If the Trustee
requests, instructions to pay benefits shall be made by the Committee on forms
prepared by the Trustee to include any or all of the above representations. The
Trustee shall be fully protected in relying on the truth of any such
representation by the Committee and shall have no duty to investigate whether
such representations are correct or to see to the application of any amounts
paid to and received by the recipient.

     5.3  Plan Change.  In the event of an amendment, merger, division, or
          ------------                                                    
termination of the Plan, the Trustee shall continue to disburse funds and to
take other proper actions in accordance with the instructions of the Committee.

     Section 6.  Change of Trustees.
                 -------------------

     The Company may at any time remove any person or entity serving as Trustee
hereunder by giving to such person or entity written notice of removal and, if
applicable, the name and address of the successor trustee. Any person or entity
serving as Trustee hereunder may resign at any time by giving written notice to
the Company. Any such removal or resignation shall take effect within 30 days
after notice has been given by the Trustee or by the Company, as the case may
be. Within those 30 days, the removed or resigned Trustee shall transfer, pay
over and deliver any portion of the Trust Fund in its possession or control
(less an appropriate reserve for any unpaid fees, expenses, and liabilities) and
all pertinent records to the successor or remaining trustee; provided, however,
that any assets which are invested in a collective fund or in some other manner
which prevents their immediate transfer shall be transferred and delivered to
the successor trustee as soon as may be practicable. Thereafter, the removed or
resigned Trustee shall have no liability for the Trust Fund or for its
administration by the successor or remaining trustee, but shall render an
accounting to the Committee of its administration of the Trust Fund through the
date on which its trusteeship shall have been terminated. The Company may also,
upon 30 days' notice to each person currently serving as a Trustee, appoint one
or more persons to serve as co-trustees hereunder.


                                      10
<PAGE>
 
     Section 7.  Miscellaneous.
                 --------------

     7.1  Right to Amend.  This Trust Agreement may be amended from time to time
          ---------------                                                       
by an instrument executed by the Company; provided, however, that any amendment
affecting the powers, duties or liabilities of the Trustee must be approved by
the Trustee, and provided, further, that no amendment may divert any portion of
the Trust Fund to purposes other than the exclusive benefit of the Participants
and their Beneficiaries prior to the satisfaction of all liabilities for
benefits. Any amendment shall apply to the Trust Fund as constituted at the
time of the amendment as well as to that portion of the Trust Fund which is
subsequently acquired.

     7.2  Compliance with ERISA.  In the exercise of its powers and the
          ----------------------                                       
performance of its duties, the Trustee shall act in good faith and in accordance
with the applicable requirements under ERISA. Except as may be otherwise
required by ERISA, the Trustee shall not be required to furnish any bond in any
jurisdiction for the performance of its duties and, if a bond is required
despite this provision, no surety shall be required on it.

     7.3  Nonresponsibility for Funding.  The Trustee shall be under no duty to
          ------------------------------                                       
enforce the payment of any contributions and shall not be responsible for the
adequacy of the Trust Fund to satisfy any obligations for benefits, expenses,
and liabilities under the Plan.

     7.4  Reports.  The Trustee shall file any report which it is required by
          --------                                                           
law to file with any governmental authority with respect to this Trust, and the
Committee shall furnish to the Trustee whatever information is necessary to
prepare the report.

     7.5  Dealings with Trustee.  Persons dealing with the Trustee, including
          ----------------------                                             
but not limited to banks, brokers, dealers, and insurers, shall be under no
obligation to inquire concerning the validity of anything which the Trustee
purports to do, nor need any person see to the proper application of any money
paid or any property transferred upon the order of the Trustee or to inquire
into the Trustee's authority as to any transaction.

     7.6  Limitation Upon Responsibilities.  The Trustee shall have no
          ---------------------------------                           
responsibilities with respect to the Plan or Trust other than those specifically
enumerated or explicitly allocated to it under this Trust Agreement or the
provisions of ERISA. All other responsibilities are retained and shall be
performed by one or more of the Employer, the Committee, and such advisors or
agents as they choose to engage.

     The Trustee may execute any of the trusts or powers hereof and perform any
of its duties by or through attorneys, agents, receivers or employees and shall
not be answerable for the conduct of the same if chosen with reasonable care and
shall be entitled to advice of counsel concerning all matters of trust hereof
and the duties hereunder, and may in all cases pay such reasonable compensation
to all such attorneys, agents, receivers and employees as may reasonably be
employed in connection with the trusts hereof.  The Trustee may act upon the
opinion or advice of any attorney (who may be the attorney for the trustee or
attorney for the Committee), approved 


                                      11
<PAGE>
 
by the Trustee in the exercise of reasonable care. The Trustee shall not be
responsible for any loss or damage resulting from any action or non-action in
good faith in reliance upon such opinion or advice.

     The Trustee shall be protected in acting upon any notice, request, consent,
certificate, order, affidavit, letter, telegram or other paper or document
believed to be genuine and correct and to have been signed or sent by the proper
person or persons, and the Trustee shall be under no duty to make any
investigation or inquiry as to any statement contained in any such writing but
may accept the same as conclusive evidence of the truth and accuracy of the
statements therein contained.

     The Trustee shall not be liable for other than its gross negligence or
willful misconduct. Except in the case of gross negligence or wilful misconduct
on the part of the Trustee, the Trustee in its corporate capacity shall not be
liable for claims of any persons in any manner regarding the Plan; such claims
shall be limited to the Trust Fund. Unless the Trustee participates knowingly
in, or knowingly undertakes to conceal, an act or omission of the Committee or
any other fiduciary, knowing such act or omission to be a breach of fiduciary
responsibility, the Trustee shall be under no liability for any loss of any kind
which may result by reason of such act or omission.

     Before taking any action hereunder at the request or direction of the
Committee, the Trustee may require that indemnity in form and amount
satisfactory to the Trustee be furnished for the reimbursement of any and all
costs and expenses to which it may be put including, without limitation,
reasonable attorneys' fees and to protect it against all liability, except
liability which is adjudicated to have resulted from the gross negligence or
willful misconduct of the Trustee by reason of any action so taken.

     No provision of this Agreement shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or powers..

     7.7  Qualification of Plan and Trust.  The Trustee shall be fully protected
          --------------------------------                                      
in assuming that the Plan and Trust meet the requirements of Code Section 401
and 501, respectively, and all the applicable provisions of ERISA unless it is
advised to the contrary in writing by the Committee or a governmental agency.

     7.8  Party in Interest Information.  The Employer shall provide the Trustee
          ------------------------------                                        
with such information concerning the relationship between any person or
organization and the Plan as the Trustee reasonably requests in order to
determine whether such person or organization is a party in interest with
respect to the Plan within the meaning of ERISA Section 3(14).

     7.9  Disputes.  If a dispute arises as to the payment of any funds or
          ---------                                                       
delivery of any assets by the Trustee, the Trustee may withhold such payment or
delivery until the dispute is determined by a court of competent jurisdiction or
finally settled in writing by the parties concerned.

                                      12
<PAGE>
 
     7.10  Successor Trustees.  This Trust Agreement shall apply to any person
           -------------------                                                
who shall be appointed to succeed the person currently appointed as the Trustee;
and any reference herein to the Trustee shall be deemed to include any one or
more individuals or corporations or any combination thereof who or which have at
any time acted as a co-trustee or as the sole trustee.

     7.11  Governing State Law.  This Trust Agreement shall be interpreted in
           --------------------                                              
accordance with the laws of the State of New Jersey to the extent those laws may
be applicable under the provisions of ERISA.

                                      13
<PAGE>
 
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

ATTEST:                             WEST ESSEX BANK
 


/s/ Craig L. Montanaro                  By: /s/ Dennis A. Petrello
-----------------------------               --------------------------
Craig L. Montanaro                          Dennis A. Petrello
Secretary                                   Executive Vice President and
                                            Chief Financial Officer
 


ATTEST:                                 MARINE MIDLAND BANK
                                        as TRUSTEE


                                        By: /s/ Richard A. Glover
------------------------------              --------------------------
                                            Richard A. Glover


                                      14