SPACE LEASE

         THIS AGREEMENT, made as of the 11th day of March, 1996 by and between

     ROBERT F. GALLO and W. CARY EDWARDS,  JR., having an office at 3 Post Road,
Oakland, Bergen County, New Jersey 07436 (the "Landlord"), and

         INTERCHANGE  STATE BANK,  having an office at Park 80  West/Plaza  Two,
Saddle Brook, New Jersey 07662-5893 (the "Tenant");

                                   WITNESSETH:

         1.  Premises  and Term - The  Landlord  has let unto the Tenant and the
Tenant has hired from the Landlord 2565 square feet of space on the ground floor
of the building located at the  northwesterly  corner of Long Hill Road and Post
Road, in the Borough of Oakland,  Bergen County, New Jersey, commonly known as 3
Post Road,  Oakland,  new Jersey  (the  space let being  hereinafter  called the
("premises")  for a period of five (5) years  beginning April 1, 1996 and ending
on March 31,  2001,  to be used as a bank  office or for any other  business  or
professional office use permitted by law and not otherwise.  Notwithstanding the
foregoing, the Tenant will be permitted to occupy the premises prior to April 1,
1996 provided the Tenant has received all governmental and regulatory  approvals
necessary for the operation of a branch banking facility at the premises and the
current  tenant has vacated the premises.  In the event the Tenant  occupies the
premises  prior to April 1, 1996,  the term of this Lease shall commence on such
date and the Tenant shall pay rent for the portion of the period of time it goes
into possession prior to April 1, 1996 at the rate of $5,000.00 per month.

         TO HAVE AND TO HOLD the premises,  with the appurtenances thereto, unto
the  Tenant  for and  during  the full  term of five (5)  years,  unless  sooner
terminated as hereinafter provided.

         2. Rent - The Tenant shall pay to the Landlord at its place of business
at 3 Post Road,  Oakland,  New Jersey 07436, or at such other place or places as
may be  designated  by the Landlord  from time to time,  the annual rent for the
first  three  (3)  years of the term of  $60,000.00,  payable  in equal  monthly
installments  of  $5,000.00 on the first day of each and every month in advance,
annual  rent for the fourth and fifth  years of the term of this Lease  shall be
$63,000.00,  payable in equal monthly installments of $5,250.00 on the first day
of each and every  month in  advance  subject  to  adjustments  as  provided  in
Subsection 7.04 and, in addition, all other amounts, liabilities and obligations
which the Tenant  assumes or agrees to pay or discharge  pursuant to this Lease,
whether or not specifically designated as additional rent, which additional sums
are hereby declared to be additional rent and due and payable as rent under this
Lease, each of which, if not paid within the grace period hereinafter  provided,
shall bear  interest  at a rate two  percentage  points  above the Prime Rate in
effect  from  time to time  from the day it is  payable  under the terms of this
Lease until it shall have been fully paid.

         3.  Definitions -

          (a) The term "Improvements"  means the building erected on the land in
          which the premises are located, and all equipment,  fixtures and items
          of  personal  property  attached  to  and  used  in the  operation  or
          maintenance of the building,  specifically including,  but not limited
          to, pavement,  curbs,  walks and other site  improvements,  machinery,
          elevators,  heating and air-conditioning systems and equipment and all
          additions,  alterations,  restorations and repairs to and replacements
          of any of the foregoing (but not including trade  fixtures,  machinery
          and equipment  and/or  computers which are the property of a subtenant
          or third  parties).  

          (b) The term "Property" means the land and the Improvements located at
          3 Post Road, Oakland, New Jersey.

          (c) The term "Tenant" means the tenant in possession  under this Lease
          and shall include any successor  assignee of the Tenant's  interest in
          this Lease.

          (d) The term "Tenant's estate" means all the right, title and interest
          of the Tenant in the premises.

          (e) The term  "Landlord's  estate"  means  all the  right,  title  and
          interest of the Landlord in the Property.

          (f) The term  "Mortgage"  means any  mortgage,  deed of trust or other
          security  instrument  from  Landlord to a third party which  creates a
          first lien on the Landlord's estate.

          (g) The term  "Mortgagee"  means the mortgagee or a beneficiary  under
          the Mortgage.

          (h) The term "Prime Rate" means the announced  prime rate from time to
          time of Tenant or by such banking institution as may have succeeded to
          the business of Tenant.

         4.   Defaults -

          (a) If the rent or any part thereof or any sum of money due or payable
          as additional  rent is not paid on any day such payment is due, and if
          such default  continues for a period of ten (10) days after notice and
          demand, or

          (b) If the Tenant at any time fails in the  performance  of or permits
          the violation of any of the covenants, conditions, terms or provisions
          contained  in this Lease,  which,  on the part of the  Tenant,  are or
          ought to be  observed,  performed  or  fulfilled  and,  except where a
          specific  time is  provided  for the  performance  of any  covenant or
          condition,  when such default is not made good within thirty (30) days
          after  written  notice and  demand  (or,  if the  default is of such a
          nature that it cannot  reasonably  be cured  within  thirty (30) days,
          when  correction of such default has not been commenced  within thirty
          (30) days and diligently prosecuted to conclusion), then and in any of
          the events  enumerated  in paragraphs  (a) or (b) above,  the Landlord
          may, at its option, on five (5) days' notice in writing terminate this
          Lease and this Lease and the term thereof  shall  automatically  cease
          and terminate at the  expiration  of such five (5) day period,  and it
          shall be lawful for the Landlord, at its option, to enter the premises
          or any part  thereof,  and to have,  hold,  repossess  and  enjoy  the
          premises,  and the  Landlord  may recover the  premises and remove all
          persons by summary  proceedings or by any action or proceeding,  or by
          force  or  otherwise,   anything  herein  contained  to  the  contrary
          notwithstanding,  and  any  notice  required  by any  statutes  now or
          hereafter in force are waived.

          5.  Tenant's  Covenants - The Tenant  covenants and agrees to and with
the Landlord as follows:

              5.01  Payment  of Rent - That it will pay the rent at the time and
place, and in the manner provided in Section 2.

              5.02  Condition of  Premises;  Repairs - The Tenant will take good
care of the premises and, at its own cost and expense, make all repairs thereto,
except:

                    (a)  Such  repairs  as are to be  made  by the  Landlord  as
                    hereinafter provided, or

                    (b) Such  repairs as are  necessary as a result of damage or
                    destruction by fire or other casualty and which are provided
                    for in Subsection  7.07; and, at the end or other expiration
                    of the  term,  deliver  up the  premises  in good  order  or
                    condition,  ordinary  wear and tear  excepted;  all  repairs
                    shall be in quality and class equal to the original work; if
                    the Tenant fails to make any such repairs,  the Landlord may
                    make the same for the account of the Tenant.

              5.03  Real Estate Taxes -

                    (a) It will pay to the  Landlord,  as additional  rent,  its
                    share of the real estate taxes assessed against the Property
                    each  calendar  year during the term of this Lease in excess
                    of the amount of the real estate taxes assessed  against the
                    Property for the calendar year 1995.

                    (b)  The  Tenant's  share  of real  estate  taxes  for  each
                    calendar  year  after  1995  shall be 21% of the  difference
                    between the tax which  becomes due and payable  with respect
                    to the Property for the calendar year 1995 and the tax which
                    becomes  due and payable  with the  respect to the  Property
                    during the calendar  year in  question.  The Tenant shall be
                    entitled  to  deduct  or be  reimbursed  for all  reasonable
                    expenses  incurred by Tenant in connection with a tax appeal
                    filed   pursuant  to  the   provisions   hereof,   including
                    reasonable  filing  fees,  appraisal  fees,  legal  fees and
                    disbursements.  The balance of the proceeds of the refund in
                    excess of such expenses shall be turned over to the Landlord
                    and the Landlord  will  reimburse  the Tenant in  connection
                    with the  percentage  of taxes for which the Tenant has paid
                    under this Lease.

                    (c) The Tenant's  share of the increase of real estate taxes
                    for  each  calendar  year  shall be due and  payable  within
                    thirty (30) days after billing therefor by the Landlord.

                    (d) If the  expiration  date of the Lease does not  coincide
                    with  the  calendar  year,  then the  Tenant's  share of the
                    increase  of tax for the year in which the Lease  terminates
                    shall be proportionately reduced according to the portion of
                    the year which will elapse prior to the termination date.

                    (e) The  Tenant  may,  in its own name or in the name of the
                    Landlord,  with the  consent  of  twenty-one  (21%)  percent
                    (based on floor area) of all of the tenants  affected by any
                    real estate tax, file such  applications or protests for the
                    correction or reduction of assessed valuations and prosecute
                    such actions or  proceedings as it may deem  advisable.  The
                    Landlord  shall sign such  applications,  protests and other
                    instruments  as  may  be  necessary  for  a  review  by  any
                    regulatory body or by any court of such assessed  valuation.
                    All   expenses   of  any  kind  in   connection   with  such
                    applications,  protests or proceedings before any regulatory
                    body or any court for the foregoing  purposes  shall be paid
                    by the Tenant.  The  Landlord  shall make  available  to the
                    Tenant  in  connection   with  any  such   applications   or
                    proceedings such information as may be reasonably  necessary
                    for the proper prosecution of any such action or proceeding.

          5.04 Landlord's Operating Expense - It will reimburse the Landlord for
its share of the  increase  in the  Landlord's  gross cost of  operation  of the
Property,  excluding real estate taxes and insurance,  over the Landlord's gross
cost of operation of the Property for the calendar year 1995 in accordance  with
the following:

                    (a) Common facilities shall mean common hallways, stairways,
                    elevator,  parking area, driveways,  sidewalks and all other
                    areas  in the  Property  now or  hereafter  constructed  and
                    intended  to be used in common by or for the  tenants of the
                    Property.

                    (b) The  Tenant's  share of the  increase of the  Landlord's
                    gross  cost  for the  operation  of the  Property  shall  be
                    determined  for each calendar year by  subtracting  the cost
                    for the year 1995 from the  costs for the  calendar  year in
                    question and multiplying the difference by the same ratio as
                    is used to determine the Tenant's share of real estate taxes
                    in accordance with Subsection 5.03 (Real Estate Taxes).

                    (c) The Landlord's gross cost shall include:

                              (i)       Electricity   for   lighting  of  common
                                        facilities.

                              (ii)      Repairs  and  maintenance  to the common
                                        facilities (including landscaping,  snow
                                        removal, trash removal and burglar alarm
                                        services)  not  properly  chargeable  to
                                        capital account under generally accepted
                                        accounting principles.

                              (iii)     Fuel for hot water.

                              (iv)      Water

                              (v)       Other similar direct costs, exclusive of
                                        real estate taxes and insurance.

                              (vi)      A  management  fee  equal  to  ten  (10)
                                        percent  of the  aggregate  of items (i)
                                        through  (v) above  and the real  estate
                                        taxes for the applicable  calendar year,
                                        the insurance  premiums  payable for the
                                        applicable  year  and  the  increase  in
                                        mortgage  interest expenses as described
                                        in Subsection 5.06.

                    (d) If the  expiration  date of the Lease does not  coincide
                    with  the  calendar  year,  then the  Tenant's  share of the
                    increase of operating expense for the calendar year in which
                    the  Lease  terminates  shall  be  proportionately   reduced
                    according to the portion of the year which will elapse prior
                    to the termination date.

          5.05  Insurance  Premiums - It will pay to the Landlord as  additional
rent its share of any  increase  in premiums  for fire,  extended  coverage  and
general  liability  insurance  policies  covering  the  Property  ("insurance"),
whether  resulting  from an increase in premium  rates  (unless the  increase is
caused by a higher risk use of other space in the building by another tenant) or
from a reasonable  increase in the amount of insurance  carried,  in  accordance
with the following provisions:

                    (a) The base  premium  shall be the total of the  annualized
                    premiums  for all  insurance  which is in effect at the last
                    day of the calendar year 1995.

                    (b) The increase in insurance  premiums  shall be calculated
                    at the close of each calendar year by  subtracting  the base
                    premium  from the total of the  annualized  premiums for all
                    insurance  in  effect  at the  last  day of each  succeeding
                    calendar year.

                    (c) The Tenant's share of the increase in insurance premiums
                    for each calendar  year shall be  calculated by  multiplying
                    the  increase  by the  same  fraction  as  that  defined  in
                    Subsection  5.03  (Real  Estate  Taxes) and shall be due and
                    payable  within  thirty  (30)  days  after  billing  by  the
                    Landlord.

                    (d) If the  expiration  date of the Lease does not  coincide
                    with the calendar  year and then the  Tenant's  share of the
                    increase of  insurance  premiums  for the  calendar  year in
                    which the Lease terminates shall be proportionately  reduced
                    according to the portion of the year which will elapse prior
                    to the termination date.

          5.06 Increased Mortgage Interest Expense - It will pay to the Landlord
as  additional  rent  its  share of any  increase  in the  interest  paid by the
Landlord  under any mortgage  loan which the Landlord  secures to refinance  the
unamortized  balance of the existing Mortgage at its maturity (a "new mortgage")
or the unamortized  balance of any new mortgage at its maturity (likewise a "new
mortgage") in accordance with the following:

                    (a) There will be no additional rent payable if the interest
                    rate on a new  mortgage  loan is equal to or lower  than the
                    interest rate on the Mortgage.

                    (b) The interest paid by the Landlord under any new mortgage
                    loan shall be the rate actually  used to calculate  interest
                    under any new mortgage.

                    (c) The Tenant's share of the Landlord's  increased interest
                    cost  shall  be  calculated  by  multiplying   the  increase
                    [determined from the calculation described in paragraph (b)]
                    by the same  fraction  as that  defined in  Subsection  5.03
                    (Real Estate  Taxes) and shall be due and payable  within 30
                    days after billing by the Landlord.

                    (d)  Nothing  contained  in this  Subsection  5.06  shall be
                    deemed to limit the right of the Landlord to  refinance  for
                    such principal amount and on such terms as it may wish.

                    (e) The Tenant shall not be responsible  for the cost of any
                    such  refinance  of the  Mortgage;  nor shall the  Tenant be
                    responsible  for any  interest on the  principal  balance of
                    such new mortgage in excess of the outstanding  principal of
                    the Mortgage.

          5.07  Compliance  with Laws - It will not use,  occupy,  or permit the
premises to be used or occupied  for any  unlawful  purpose,  and will  promptly
execute and comply with all statutes, ordinances, rules, orders, regulations and
requirements of the Federal, State and Municipal Government, and of all of their
Departments  and  Bureaus   applicable  to  the  premises  for  the  correction,
prevention and abatement of nuisances,  violations or other grievances, in, upon
or connected with the premises  during the term,  and also promptly  comply with
and execute all rules,  orders and regulations of the Board of Fire Underwriters
for the prevention of fires, at its own cost and expense;  nothing  contained in
this  paragraph  shall apply to those  portions of the  building or the property
constructed  or maintained by the Landlord  pursuant to this Lease nor shall the
Tenant be responsible to pay for structural  changes to the premises required by
the Tenant's use of the premises as a branch banking facility.

          If it fails or  neglects  to comply  with such  statutes,  ordinances,
rules, orders,  regulations and requirements,  or any of them, or if it fails or
neglects  to make  the  repairs  required  to be made by the  Tenant,  then  the
Landlord,  or its agents,  may enter the premises,  provided Tenant's failure or
neglect has continued  for ten (10) days after  written  notice from Landlord to
Tenant, and make such repairs and comply with all of such statutes,  ordinances,
rules,  orders,  regulations  or  requirements  at the cost and  expense  of the
Tenant,  and in case of its failure to pay therefor,  the cost and expense shall
be  deemed to be  additional  rent and shall be due and  payable  as such.  This
provision is in addition to the right of the Landlord to terminate this Lease by
reason of any default on the part of the Tenant.

          5.08  Compliance  with  Insurance  - It will comply with and cause the
premises to comply with all terms of any insurance policy covering or applicable
to the  premises,  all  requirements  of the  issuer of any such  policy and all
regulations and then current  standards  applicable to or affecting the premises
or any use or condition  thereof which may at the time be  recommended by either
(a) National Fire Protection  Association (or any other body exercising  similar
functions) or 9b) the Board of Fire  Underwriters  if any,  having  jurisdiction
over the  premises;  nothing  contained in this  paragraph  shall apply to those
portions of the building or the Property constructed, furnished or maintained by
the Landlord  pursuant to this Lease; nor shall the Tenant be responsible to pay
for structural  changes to the premised required by Tenant's use of the premises
as a branch banking facility.

          5.09  Mechanic's  Liens'  Construction  Lien Claims - It will,  within
twenty (20) days after the filing thereof, discharge by payment or by bonding or
any other lawful  manner all  mechanics' or other liens for the payment of money
filed  against  the  premises  for work  claimed  to have been done for,  or for
materials claimed to have been furnished to, the Tenant; if the Tenant shall not
discharge the same, the Landlord, in addition to any other remedies it may have,
may pay the lien without inquiring into the validity thereof,  and the amount so
paid shall be payable to the Landlord as additional rent;  nothing  contained in
this Lease  shall be  construed  as  constituting  the consent or request of the
Landlord,  expressed  or  implied,  to or for the  performance  of any  labor or
services  or the  furnishing  of  any  goods  or  materials  by any  contractor,
subcontractor, laborer, material men or vendor.

          5.10  Indemnity and Liability  Insurance - It will  indemnify and save
the Landlord  harmless  from and against any and all injury,  loss or damage and
any and all claims for injury,  loss or damage of whatever  nature (a) caused by
or resulting  from, or claimed to have been caused by or to have resulted  from,
any act,  omission  or  negligence  of the  Tenant or anyone  claiming  under or
through  the Tenant  (including,  but  without  limitation,  contractors  of the
Tenant), no matter where occurring,  and (b) occurring in or about the premises,
no matter how caused.

          It will provide and keep in force, for the benefit of the Landlord and
the Tenant,  general liability insurance in an insurance company selected by the
Tenant and reasonably  satisfactory to the landlord;  such insurance shall be in
amounts not less than  $500,000./$1,000,000.  in respect to personal injuries in
any one accident,  and not less than  $25,000.00 in respect to property  damage;
the policies of such  insurance  shall  provide that they may not be canceled by
the  issuer  except  on  ten  (10)  days'  written  notice  to the  Landlord;  a
certificate of each such policy shall be delivered to the Landlord not less than
ten (10) days prior to the date upon which it is effective.

          5.11 Surrender - It will,  upon the expiration or earlier  termination
of this Lease, peaceably leave and surrender the premises to the Landlord in the
same condition in which the premises were originally  received from the Landlord
at the commencement of the term of this Lease,  except as improved or altered as
provided in,  permitted by or required by any provision of this Lease and except
for ordinary wear and tear.

          5.12  Mortgages - This Lease is and shall be, without the execution of
any  further  instrument,  subordinate  at all  times  to all  Mortgages  in any
amounts,  and all  advances  thereon,  which  may now or  hereafter  affect  the
premises and to all  renewals,  modifications,  consolidations,  participations,
replacements  and  extensions  thereof  (the term  "Mortgages"  being  deemed to
include  trust  indentures  and  deeds of  trusts),  provided  that no action or
proceeding may be instituted or taken by any Mortgagee to terminate the Tenant's
estate in the  premises  for any reason  other than one which would  entitle the
Landlord to terminate this Lease;  if any Mortgagee or any of its successors and
assigns shall  hereafter  succeed to the rights of the Landlord in the premises,
whether through possession or foreclosure  action, the Tenant will attorn to and
recognize such successor as the Tenant's  landlord under this Lease;  the Tenant
will promptly execute such subordination or other documents or agreements as may
be requested  or required by any  Mortgagee  to confirm the  provisions  of this
Subsection  5.12 and containing  such other  conditions as are not  inconsistent
with the  provisions of this  Subsection  5.12.  Landlord  shall use  reasonable
effort to obtain a non-disturbance  agreement from each future Mortgagee but the
failure to obtain such  non-disturbance  agreement shall not effect the right of
the Tenant under this Subsection 5.12.

          5.13  Broker  - It has had no  dealings  with any  broker  or agent in
connection  with the  premises  on the basis of which any broker or agent  could
claim  commission from the Landlord and will save and hold harmless the Landlord
from any claim which may be asserted  by any broker or agent with  reference  to
this Lease where the claim is based upon any alleged  dealing of the Tenant with
any broker or agent.

          5.14 Electricity and Gas - It will pay all charges for electricity and
gas used by it in connection with the operation of the premises.

          6.  Landlord's  Covenants - The Landlord,  on its part,  covenants and
agrees to and with the Tenant that:

          6.01 Quite Possession - If the Tenant shall pay the rent and all other
amounts  required to be paid by Tenant  under this Lease as herein  provided and
shall keep,  observe and perform all of the other  covenants of this Lease by it
to be kept,  observed and performed,  the Tenant may peaceably and quietly have,
hold and enjoy the premises for the term aforesaid.

          6.02 Use of Common Areas - It grants to the Tenant the exclusive right
to use:

                    (a) 7 assigned  parking spaces near the bank entrance in the
                    parking areas currently used by NatWest Bank.

                    (b) The  drive-in  lanes and stack-up  space  located at the
                    Property.

          In addition,  it hereby grants to the Tenant a  nonexclusive  right to
use:

                    (a) Any  unassigned  space in the  parking  areas for use by
                    Tenant's visitors.

                    (b) The public  conveniences of the building,  the hallways,
                    elevator, if any, walks,  driveways and other similar common
                    facilities.

          Employees of the Tenant shall use the upper parking area.

          6.03 Repairs and  Maintenance by Landlord - It will make all necessary
repairs to the foundation,  roof, exterior walls and other structural components
of the  building,  the  elevator  (if any) and all  portions of the  electrical,
plumbing,  heating, cooling and sewage disposal systems installed by it, and all
pavement, landscaping, curbs, walks and other site improvements.

          In addition, it will do the following:

                    (a) Keep all of the common  facilities  of the building in a
                    neat and clean condition and in a good state of repair;

                    (b) Keep all walks,  driveways and parking areas,  including
                    drive-in and stack-up  lanes,  in good repair and reasonably
                    free from ice, snow, refuse and obstructions; and

                    (c) Keep all driveways and parking areas clearly striped and
                    marked for parking, stack-up spaces and traffic flow.

          7.  Mutual  Covenants  - It is  hereby  mutually  agreed  between  the
Landlord and the Tenant as follows:

          7.01 Furnishing and Fixturing - The Tenant may install in the premises
any and all fixtures,  electric fixtures, trade equipment,  (including alarm and
security equipment),  furniture,  furnishings and decoration as may be useful or
desirable in connection  with the use of the premises as a banking  office;  the
Tenant may commence the installation of all of the same upon commencement of the
term of this Lease;  the Landlord,  at its option,  shall have  ownership of all
fixtures and electric  fixtures and at the expiration of the term of this Lease,
at  Landlord's  option,  the Tenant  will  remove any or all such  fixtures  and
electric  fixtures  and at the  Tenant's  cost  restore the premises to the same
condition  as existed  prior to such  installation;  the  Tenant  shall have and
retain ownership of all equipment and furnishings from time to time installed by
the Tenant at the  Tenant's  expense;  the  Tenant  reserves  the right,  at the
Tenant's  election,  to remove any of such equipment and furnishings at any time
during the term of this Lease,  provided the Tenant promptly repairs any and all
damage to the building caused by any such removal;  the Tenant's  failure at the
expiration or other  termination of this Lease to remove all or any part of such
equipment and  furnishings  installed by it, shall not be deemed or construed to
constitute a holdover by Tenant;  any such  property and  equipment  not removed
shall be deemed  abandoned and become the property of the  Landlord.  The Tenant
recognizes and acknowledges  that the premises are currently  equipped as a full
service branch banking  facility and all such furniture,  fixtures and equipment
are the property of the Landlord.  The Tenant shall have no obligation to remove
any furniture,  fixtures or equipment  belonging to the Landlord  referred to in
the preceding sentence.

          7.02 Signs - The Tenant may letter the windows of the premises; Tenant
is authorized  to erect and display signs on the building,  provided they comply
with all applicable rules and regulations of all governmental agencies and other
offices  having  jurisdiction  thereof  and  provided  they do not exceed in the
aggregate an area equal to the total sign area permitted for the entire building
multiplied  by the same  fraction as that used in  Subsection  5.03 (Real Estate
Taxes).  All such signs and  lettering  shall be subject to the  approval of the
Landlord.

          7.03  Options  to Renew - The  tenant  may renew  this Lease for three
further periods of five (5) years each at the same rental, except as provided in
Subsection  7.04,  and upon the same terms and  provisions  as contained in this
Lease; if the Tenant wishes to renew this Lease for any such additional  period,
it must give  notice to that effect to the  Landlord  not later than twelve (12)
months prior to the  expiration of the term of this Lease (or the  expiration of
the next preceding  exercised  renewal period, as the case may be) time being of
the  essence;  notwithstanding  the  foregoing,  no right of the Tenant to renew
shall, in any event, be deemed to be extinguished  unless the Landlord has given
to the Tenant a notice  advising the Tenant that its right to renew shall expire
ten (10) days after  receipt of the  notice and the Tenant  thereafter  fails to
exercise its option within such ten (10) day period.

          7.04  Increase  in Rent - The annual rent for the first three years of
any renewal  term shall be the greater of (i) five (5) percent  above the annual
rent for the year  immediately  preceding  such  renewal term or (ii) the annual
rent for the year  immediately  preceding  such  renewal  term  increased by the
percentage increase in the Index (as hereinafter defined) for the month of March
1, 1996 over the Index as of March 1st  immediately  preceding the  commencement
date of any such  renewal  term  but in no  event  shall  the  increase  in rent
provided in this (ii) exceed seven (7) percent over the rent for the immediately
preceding  year.  Further,  the annual  rental for the fourth and fifth years of
each such  renewal  term shall be the greater of (i) five (5) percent  above the
annual rent for the third year of such  renewal term or (ii) the annual rent for
the third year of such renewal term increased by the percentage  increase in the
Index for the month of March 1, 1996 over the Index as of March 1st of the third
year of such renewal term but in no event shall the increase in rent provided in
this (ii) exceed seven (7) percent over the rent for the  immediately  preceding
year.  The Index shall mean the Consumer  Price Index for the New York City area
for all items promulgated by the Bureau of Labor Statistics of the United States
Department of Labor or if the Consumer Price Index is no longer published,  such
other index as the Landlord may reasonably determine.

          7.05  Reletting  on Default;  Deficiency  - If, at any time during the
term of this Lease,  the Landlord  should  retake  possession of the premises by
reason of any default on the part of the Tenant,  (a) the rent shall  become due
thereupon and be paid up until the time of re-entry,  dispossess or  expiration,
together with reasonable  expenses of the Landlord as hereinafter  defined;  (b)
the Landlord may relet the premises or any part  thereof,  either in the name of
the  Landlord or  otherwise,  for a term or terms  which may, at the  Landlord's
option, be less than or exceed the period which would otherwise have constituted
the balance of the term of this Lease, and may grant reasonable concessions; and
(c) the  Tenant  or the legal  representatives  of the  Tenant  shall pay to the
Landlord,  for each month of the period which would  otherwise have  constituted
the balance of the term of this Lease, as liquidated  damages for the failure of
the Tenant to observe and perform the terms and  provisions  of this Lease,  the
deficiency between:

          (i) the amount of the monthly rent for the month immediately preceding
          such re-entry or termination, and

          (ii) the net amount,  if any, of the rents collected on account of the
          lease or leases of the premises; in computing such liquidated damages,
          there shall be added to the deficiency such reasonable expenses as the
          Landlord may incur in connection with relenting,  such as court costs,
          attorneys' fees, brokerage commissions and the expenses of keeping the
          premises in good order and of preparing  the same for  reletting;  any
          such liquidated  damages shall be paid in monthly  installments by the
          Tenant:  on the rent day specified in this Lease, and any suit brought
          to  collect  the  amount of the  deficiency  for any  month  shall not
          prejudice  in any  way  the  right  of the  Landlord  to  collect  the
          deficiency  for any  subsequent  month by a  similar  proceeding;  the
          making of any  alterations  or  decorations  in the premises which the
          Landlord  considers   advisable  and  necessary  for  the  purpose  of
          reletting  the same shall not operate or be  construed  to release the
          Tenant from liability hereunder.

         7.06  Condemnation -

              (a)  If

               (i)  the  whole  of  the  premises   shall  be  taken  in  or  by
               condemnation or other eminent domain proceedings  pursuant to any
               law,  general or special,  or (ii) only a portion of the premises
               shall be so taken,  and/or all or a portion of the  drive-in  and
               stack-up  areas,  and  if  such  taking  is  sufficient,  in  the
               good-faith judgment of Tenant, to render the remaining portion of
               the  premises  uneconomic  for  the  Tenant's  continued  use  or
               occupancy, and if the Tenant shall elect to terminate this Lease,
               then,  in either of such  events,  the term of this  Lease  shall
               cease and terminate as of the date of title  vesting  (unless the
               Tenant  shall  occupy a portion of the  premises  thereafter,  in
               which event the term shall cease when the Tenant vacates);

               (b) If any portion of the Property is taken in or by condemnation
               or other  eminent  domain  proceedings  and if this  Lease is not
               terminated  pursuant  to the  preceding  sentence,  the  Landlord
               shall,  at its expense,  repair any damage to the Property and to
               the premises  caused by such taking promptly after such taking so
               that,  after the completion of such repair,  the Property and the
               premises  shall  be,  as  nearly  as  practicable,  in  the  same
               condition as immediately prior to such taking;

               (c) If the Tenant  elects to terminate  this Lease by reason of a
               partial  taking of the premises,  or a taking of the drive-in and
               stack-up  areas,  it must  give  notice to the  Landlord  to that
               effect  not later  than  sixty  (60) days after the date on which
               title vests in the condemning authority; in the event of a taking
               as a result of which the term of this  Lease is  terminated,  the
               current annual rent and  additional  rent shall be apportioned as
               of the date of vesting of title; if this Lease is not terminated,
               the annual rent and additional  rent payable  hereunder  shall be
               reduced pro rata,  based upon the proportion which the floor area
               in the space taken bears to the entire floor area of the premises
               immediately prior to such taking.

          7.07 Damage or  Destruction  by  Insurable  Casualty - If, at any time
during the term of this Lease,  the  Property is damaged or destroyed by fire or
by any other  casualty or by the elements,  the Tenant shall give notice of such
damage or  destruction  to the Landlord  and,  except as  hereinafter  otherwise
provided,  the Landlord,  at the  Landlord's  expense,  shall  promptly  repair,
rebuild and  restore the  Property  as nearly as  practicable  to the  condition
existing  immediately  prior to such damage or  destruction;  if,  however,  the
building in which the premises are located is so damaged or destroyed by fire or
any other  casualty or by the  elements  that the  Landlord  shall decide not to
repair,  rebuild or restore the same, then the Landlord may terminate this Lease
by giving written notice of termination to the Tenant not later than ninety (90)
days after such damage or destruction occurs.

          7.08  Abatement of Rent - If the premises are  destroyed or so damaged
by fire or by any other  casualty  or  occurrence  or by the  elements  so as to
become  untenantable  or  unfit  for  occupancy  or for the  normal  conduct  of
business, then the annual rent and additional rent allocabble to the period from
the date of such  destruction  or damage  until the  premises  are  repaired  or
restored  and made fit for  occupancy  and use,  or if this Lease be  terminated
pursuant to this Subsection 7.08, until the date of such  termination,  shall be
abated during such period. In the event that the damage to the premises shall be
such as to render the same only partially  untenantable,  then during the period
from the date of such damage until the completion of the repair and  restoration
of the  premises  (or if this  Lease be  terminated  by the  giving of notice of
termination  pursuant to this Sub-section 7.08, then until the date of giving of
such notice),  the annual rent and  additional  rent, if any,  allocable to such
period payable by the Tenant  hereunder  shall abate in the proportion  that the
part of the  premises  which  shall be  untenantable  bears to the  whole of the
premises.

          7.09 Waiver of  Subrogation - Each party shall  endeavor to obtain and
maintain  provisions in its fire insurance  policies to the effect that any such
policy shall not be invalidated should the insured waive in writing,  prior to a
loss,  any or all right of recovery  against any party for loss occurring to any
of the property covered by the policy; so long as such or similar provisions are
included  in a fire  insurance  policy,  each party  hereby  waives any right of
recovery against the other for any loss covered by either party's fire insurance
policies;  if at any time a fire  insurance  carrier  will not  include  such or
similar  provisions in a fire insurance policy,  the party to whom the policy is
issued shall have the other party named in the policy as one of the insured;  if
any additional premium is imposed for the inclusion of any such provision or for
naming the other party as a party  insured,  as the case may be, the other party
shall pay such additional premium, except, however, in lieu of such payment, the
party may waive  the  provisions  of this  Subsection  7.09;  so long as such or
similar  provisions are included in party's fire insurance policies or the other
party is named in such  policies  as one of the  insured,  the  party  will look
solely to the proceeds of such  policies to  compensate  it for any loss covered
thereunder.  If either party is named as one of the insured in  accordance  with
the foregoing,  it will endorse promptly  without  recourse any check,  draft or
order for the payment of money representing the proceeds of any such policies or
representing  any other payment growing out of or connected with any such policy
and each party does hereby  irrevocably  waive any and all rights in and to such
proceeds and payments and  irrevocably  appoints the party to whom the policy is
issued as its attorney-in-fact to endorse any such check, draft or order.

          7.10  Holding Over - Should the Tenant hold over in  possession  after
the expiration of the original term or any renewal term, such holding over shall
not be deemed to extend the term or renew the Lease.

          7.11 Assignment and Subletting - The Tenant may assign or transfer its
interest in this Lease and may sublet the whole or any part of the  premises for
any use  described in Paragraph 1. No assignment or transfer of this Lease shall
be  binding  upon the  Landlord  until a copy of the  document  of  transfer  or
assignment,  executed by both the transferor and transferee,  has been delivered
to the  Landlord.  In the event of any  assignment  or transfer  pursuant to the
provisions of this  Subsection  7.11,  the transferee  shall be deemed,  without
further  agreement,  to have  assumed  and agreed to  observe  and  perform  all
obligations  of the Tenant under this Lease.  Any such  assignment or subletting
shall not release the Tenant from its obligation under this Lease.

          7.12  Permitted  Contests - The Tenant shall not be required to comply
with any statute,  law,  order,  rule,  regulation  or ordinance  referred to in
Subsection  5.06 so long as the Tenant shall contest,  in good faith and without
expense  to  the  Landlord,  the  existence,   amount  or  validity  thereof  by
appropriate  proceedings which shall operate,  during the pendancy  thereof,  to
prevent any  interference  with the use or occupancy of the Property or any part
thereof or the  imposition  of any criminal or  quasi-criminal  liability on the
Landlord;  while any such  proceedings are pending,  the Landlord shall not have
the  right to  undertake  compliance  with any such  statue,  law,  rule,  order
regulation or ordinance;  Tenant will promptly  prosecute each such contest to a
final conclusion;  the Tenant will pay or cause to be paid and save the Landlord
harmless  from and  against any and all  losses,  judgments,  decrees and costs,
(including all reasonable attorneys' fees and expenses),  in connection with any
such contest,  and will promptly after the final  settlement or determination of
such  contest  perform all acts,  the  performance  of which shall be ordered or
decreed as a result thereof.

          7.13  Waiver  - The  failure  of  either  party  to seek  redress  for
violation  of or to insist on the strict  performance  of any  covenant  of this
Lease shall not prevent a subsequent act which would have originally constituted
a violation from having all the force and effect of any original violations. The
receipt by the Landlord of rent with  knowledge of the breach of any covenant of
this Lease shall not be deemed a waiver of such breach.

          7.14 Estoppel  Certificates  - Each party will,  without charge at any
time and from time to time hereafter,  within ten (10) days after request by the
other,  certify by written  instrument,  duly executed and acknowledged,  to any
mortgagee,  purchaser or assignee as to the  validity,  force and effect of this
Lease in accordance with its tenor as then  constituted,  as to the existence of
any default on the part of either  party,  as to the  existence  of any offsets,
counterclaims  or  defenses  on its  part  and to any  other  matters  as may be
reasonably requested by the other party.

          7.15  Limitation  of Liability - The term  "Landlord"  as used in this
Lease means only the owner in fee or the  mortgagee in  possession  for the time
being of the premises or the holder of the Landlord's interest in this Lease, so
that in the event of any transfer of the fee title or  assignment of this Lease,
the  Landlord  shall  be  and is  hereby  entirely  freed  and  relieved  of all
obligations  of the Landlord under this Lease,  and it shall be deemed,  without
further  agreement  between the  transferor  or assignor and the  transferee  or
assignee,  that the transferee or assignee has assumed and agreed to perform all
obligations of the Landlord under this Lease.

          If Landlord is in breach or default with  respect to tits  obligations
or otherwise  under this Lease,  Tenant shall look for  satisfaction of Tenant's
damages,  rights and  remedies  solely to the equity of Landlord in the Property
and  Landlord  shall be under no  personal  liability  other  than  such  equity
therein. Landlord's liability under the terms, covenants, conditions, warranties
and  obligations  of this Lease shall in no event  exceed the loss of the equity
interest in the Property.

          8.  Notices  - All  notices  given  under  this  Lease  or in any  way
affecting this Lease shall be given in writing and delivered by Registered Mail,
Return Receipt Requested, addressed as follows:

          To the Landlord at 3 Post Road, Oakland, new Jersey, 07436.

          To the Tenant at 80 West/Plaza Two,  Saddle Brook,  New Jersey 07662 -
5893.

          The date of deposit of a notice in a United  States  Post  office with
the postage  prepaid shall be considered as the date of service or giving of the
notice.  Either  party may change the place at which notice is to be given to it
by notice given in accordance with this section.

          9. Recording - This Lease shall not be recorded or filed in any public
filing or recording  office;  if requested by either party, the other party will
join  in the  execution  of a  memorandum  of  this  agreement  containing  such
provisions  as either  party may request  except  those  provisions  which would
disclose  the  amount of rental or other  payments  to be made to the  Landlord,
which  memorandum  may be recorded or filed in lieu of  recording or filing this
Lease.

          10.  Entire  Agreement  - This Lease  contains  the  entire  agreement
between the parties with respect to the premises and may not be changed, altered
or modified except by an agreement signed by the parties hereto.

          11.  Gender and Number - Throughout  this Lease the  masculine  gender
shall be deemed to include the  feminine or neuter  gender,  as the case may be,
and the singular the plural, and vice versa.

          12. Binding Effect - This Lease, and all the covenants, provisions and
conditions herein contained shall endure to the benefit of, and be binding upon,
the parties hereto and their respective personal representatives, successors and
assigns,  provided,  however, that no assignment by, from , through or under the
Tenant in  violation  of any of the  provisions  of this Lease shall vest in the
assignee any right, title or interest whatsoever.

          IN WITNESS WHEREOF, this Agreement has been executed and sealed by the
Landlord and the Tenant the day and year first above written. Signed, Sealed and
Delivered

         in the Presence of

/S/ MADELINE EDWARDS                                 ROBERT F. GALLO L.S.

Notary Public of New Jersey
My commission expires Oct 13, 1997

S/S CLINTON A. POFF, ESQ.                          S/S W. CARY EDWARDS, JR. L.S.

ATTEST:                                              INTERCHANGE STATE BANK

S/S TIMOTHY MCDERMOTT                                  S/S FRANK C. GIANCOLA
Assistant Secretary