AGREEMENT AND PLAN OF REORGANIZATION

         AGREEMENT AND PLAN OF  REORGANIZATION  ("Agreement")  dated as of April
30, 1997, by and among INTERCHANGE FINANCIAL SERVICES CORPORATION,  a New Jersey
corporation  ("Parent"),  WASHINGTON INTERCHANGE CORP., a New Jersey corporation
("Target"),  WIC ACQUISITION  CORP., a New Jersey  corporation and  wholly-owned
subsidiary  of Parent  ("Sub")  (Sub and Target being  hereinafter  collectively
referred to as the "Constituent Corporations") and the Target's shareholders, as
listed on Exhibit A and who are signatories  hereto,  (each of such  individuals
being referred to herein as a "Shareholder" and collectively as "Shareholders").

         WHEREAS,  Shareholders  own an aggregate of 200 shares of common stock,
no par value, of Target (the "Target  Stock"),  constituting  100% of the issued
and outstanding shares of capital stock of Target;

         WHEREAS,  Parent desires to indirectly acquire Target, through a merger
of Sub into Target on the terms and subject to the  conditions set forth in this
Agreement;

         WHEREAS,  the  Boards of  Directors  of  Parent,  Sub and  Target  have
approved  the merger of Sub into  Target  (the  "Merger")  and the  transactions
contemplated  hereby in  accordance  with the  applicable  provisions of the New
Jersey Business Corporation Act ("NJBCA");

         WHEREAS, the parties to the transaction contemplated hereby have relied
on the provision of Sections  368(a)(2)(E) of the Internal  Revenue Code of 1986
as amended (the "Code"),  and desire that the transaction to be treated as a tax
free reorganization, commonly referred to as a reverse triangular merger; and

         NOW  THEREFORE,  in  consideration  of  the  premises  and  the  mutual
agreements  contained herein,  intending to be legally bound hereby, the parties
hereto agree as follows:

                                    ARTICLE I

                                   THE MERGER

          (a) On the terms and  subject to the  conditions  as set forth in this
     Agreement, and on the basis of the representations and warranties contained
     herein,  the parties  hereto  jointly  and  severally  agree  that,  at the
     Effective Time (as  hereinafter  defined),  Sub shall be merged into Target
     and the separate  existence of Sub shall thereupon cease in accordance with
     the applicable provisions of the NJBCA.

          (b) Target will be the surviving  corporation in the Merger (sometimes
     referred to herein as the "Surviving  Corporation") and will continue to be
     governed by the laws of the State of New Jersey, and the separate corporate
     existence  of Target  and all of its  rights,  privileges,  immunities  and
     franchises,  public or  private,  and all its duties and  liabilities  as a
     corporation will continue unaffected by the Merger.

          (c) The Merger will have the effects specified by the NJBCA.

          (d) As soon as practicable  following  fulfillment of or waiver of the
     conditions specified in Articles VII or VIII hereof, and provided that this
     Agreement  has not been  terminated  or  abandoned  pursuant  to Article XI
     hereof, the Constituent  Corporations will cause a Certificate of Merger in
     the form of Exhibit B (the  "Certificate  of  Merger") to be filed with the
     office of the  Secretary  of State of the State of New Jersey and will take
     any other actions as are necessary to effectuate the Merger including,  but
     not  limited  to,  filing  any  required  documents  with  the  New  Jersey
     Department of Taxation or filing any required  documents with the office of
     the  Secretary  of State  of the  State of New  Jersey.  Subject  to and in
     accordance with the laws of the State of New Jersey, the Merger will become
     effective at the date and time the  Certificate of Merger is filed with the
     office of the  Secretary  of State of the State of New Jersey or such later
     time  or  date  as may be  specified  in the  Certificate  of  Merger  (the
     "Effective  Time").  Each of the parties will use its best efforts to cause
     the  Merger  to  be  consummated  as  soon  as  practicable  following  the
     fulfillment  or waiver of the  conditions  specified in Article VII or VIII
     hereof.

                                   ARTICLE II

                            THE SURVIVING CORPORATION

         2.1 CERTIFICATE OF  INCORPORATION.  The Certificate of Incorporation of
Target  as in  effect  immediately  prior  to the  Effective  Time  shall be the
Certificate of  Incorporation of the Surviving  Corporation  after the Effective
Time.

         2.2 BY-LAWS.  The By-Laws of Target as in effect  immediately  prior to
the Effective Time shall be the By-Laws of the Surviving  Corporation  after the
Effective Time.

         2.3 BOARD OF DIRECTORS AND OFFICERS. From and after the Effective Time,
the Board of Directors  and Officers of Sub shall be the Board of Directors  and
Officers of the Surviving Corporation after the Merger. The members of the Board
of Directors  and Officers of Target  prior to the  Effective  Time shall resign
prior to the Merger.

                                   ARTICLE III

                              CONVERSION OF SHARES

         3.1 CONVERSION OF TARGET SHARES IN THE MERGER.  At the Effective  Time,
by virtue of the Merger and  without any action on the part of any holder of any
capital stock of Target, the Target Stock owned by the Shareholders,  other than
Target Dissenting Shares (as defined in Section 3.4 hereof),  shall,  subject to
Section  3.3(e)  hereof,  be  converted  into the right to  receive  and  become
exchangeable  for the number of shares  validly  issued  common  stock of Parent
equal to the  Conversion  Ratio times the number of shares of Target Stock owned
by the  Shareholders  and the Target  Stock shall cease to be shares of Stock in
Washington  Interchange  Corp.  For purposes of this  Agreement,  the Conversion
Ratio means a fraction,  (A) the numerator of which is equal to Target's  agreed
upon net value,  which shall be based upon the net fair  market  value of Target
computed as follows:  (i) Target's  interest in 83,237  shares of Parent  Common
Stock  (prior to the 3 for 2 stock split  declared on February 27, 1997) and the
amount of Parent Common Stock held by Target to be valued at the average closing
sale price of Parent  Common  Stock as  reported on the  composite  tape for the
American  Stock  Exchange (the "ASE") for the ten (10) trading days  immediately
preceding  the date which is seven (7)  calendar  days prior to the Closing Date
(the  "Valuation  Price");  plus (ii) the bank  building and land located at 590
Pascack Road, Washington Township,  New Jersey ("590 Pascack") at an agreed upon
value of $500,000.00;  plus (iii) cash on deposit in Target's corporate accounts
as of the  valuation  date;  and less (iv) the unpaid  balance  of the  mortgage
referred to in Subsection  4.6(b) (it being  recognized  that Target  intends to
satisfy  this  mortgage  prior to the  Effective  Time),  divided by the average
closing  sale  price of a share  of  Parent  Common  Stock  as  reported  on the
composite tape for the ASE for the ten (10) trading days  immediately  preceding
the date which is seven (7) calendar days prior to the Closing Date; and (B) the
denominator  which is equal to two hundred (200). For example,  if Parent Common
Stock has a value of $25.00  per share and  absent  any cash on  deposit  and/or
outstanding mortgage, the Conversion Ratio would be 516.185 based on a numerator
of 103,237 [(i) 83,237 shares times $25 per share plus (ii) $500,000 real estate
value plus (iii) $0 cash (iv) less $0 mortgage  divided by 25] and a denominator
of 200. The Parent  Common  Stock  received by the  Shareholders  based upon the
Conversion  Ratio,  together  with any  fractional  shares  shall,  for purposes
hereof, be referred to as the "Merger  Consideration".  The Merger Consideration
shall be adjusted as of the Closing Date to apportion the unpaid  mortgage liens
and expenses  payable by the Target  Corporation with respect to 590 Pascack and
other liabilities of Target including, but not limited to any unpaid obligations
of the Target  Corporation  (including  Taxes) other than as set forth herein as
well as in Schedule 1.2(b).

         3.2  STATUS OF SUB  SHARES.  At the  Effective  Time,  by virtue of the
Merger and without any action on the part of Parent each issued and  outstanding
share of common  stock of Sub owned by Parent shall be converted to one share of
common stock in the Surviving Corporation.

         3.3  EXCHANGE  OF  PARENT  STOCK  CERTIFICATES.  (a) On or prior to the
Closing Date, Parent shall make available to the Exchange Agent the certificates
representing  shares of Parent  Common  Stock  required  to effect the  exchange
referred to in Target to in Section 3.3(b).  Parent shall also make available to
the  Exchange  Agent  the cash  required  to make the cash  payments  in lieu of
fractional  shares referred to in Section 3.3(e) below.  Shares of Parent Common
Stock into which shares of Target  Common Stock shall be converted in the Merger
shall be deemed to have been issued at the Effective Time.

         (b) From and after the Effective Time, each Target  Shareholder,  other
than shares owned by Shareholders with respect to which  dissenters'  rights, if
any, are granted by reason of the Merger  under the NJBCA,  shall be entitled to
receive in  exchange  for their  shares in  Target,  upon  surrender  thereof to
Continental Stock and Transfer Company (the "Exchange  Agent"), a certificate or
certificates representing the number of whole shares of Parent Common Stock into
which such  holder's  shares of Target Common Stock were  converted  pursuant to
Section  3.1 and cash in lieu of any  fractional  shares of such  Parent  Common
Stock  pursuant to Section  3.3(e).  From and after the Effective  Time,  Parent
shall be  entitled  to treat the  certificates  which  immediately  prior to the
Effective Time represented  shares of Target Common Stock and which have not yet
been  surrendered for exchange as evidencing the ownership of the number of full
shares of Parent  Common  Stock  into which the  shares of Target  Common  Stock
represented by such certificates  shall have been converted  pursuant to Section
3.1,  notwithstanding  the  failure to  surrender  such  certificates.  However,
notwithstanding  any  other  provision  of  this  Agreement,  until  holders  or
transferees  of  certificates  which  immediately  prior to the  Effective  Time
represented  shares of Target Common Stock have surrendered them for exchange as
provided  herein,  no  dividends  shall  be  paid  with  respect  to any  shares
represented by such  certificates and no payment for fractional  shares shall be
made. Upon surrender of a certificate  which  immediately prior to the Effective
Time represented  outstanding shares of Target Common Stock, there shall be paid
to the holder of such certificate the amount of any dividends which  theretofore
became payable,  but which were not paid by reason of the foregoing with respect
to the  number  of whole  shares  of  Parent  Common  Stock  represented  by the
certificate or certificates  issued upon such surrender.  If any certificate for
shares of Parent Common Stock is to be issued in a name other than that in which
the  certificate,  which  immediately  prior to the Effective  Time  represented
shares of Target Common Stock,  surrendered in exchange  therefor is registered,
it  shall be a  condition  of such  exchange  that the  person  requesting  such
exchange  shall  pay any  transfer  or other  taxes  required  by  reason of the
issuance of certificates  for such shares of Parent Common Stock in a name other
than that of the registered holder of any such certificate surrendered.

     (c) [INTENTIONALLY OMITTED].

     (d) As soon as  practicable  after the Effective  Time,  the Exchange Agent
shall  mail to each  holder of  record of a  certificate  or  certificates  that
immediately prior to the Effective Time represented outstanding shares of Target
Common  Stock  (collectively,  the "Target  Certificates")  (i) a form letter of
transmittal  (which shall specify that delivery  shall be effected,  and risk of
loss and title to Target  Certificates  shall pass, only upon actual delivery of
Target  Certificates  to the Exchange  Agent) and (ii)  instructions  for use in
effecting  the  surrender of Target  Certificates  in exchange for  certificates
representing   shares  of  Parent  Common  Stock.   Upon   surrender  of  Target
Certificates  for  cancellation  to the  Exchange  Agent,  together  with a duly
executed  letter of transmittal  and such other  documents as the Exchange Agent
shall  require,  the holder of such  Target  Certificates  shall be  entitled to
receive in exchange  therefor a  certificate  representing  that number of whole
shares of Parent  Common  Stock  into which the  shares of Target  Common  Stock
represented  by Target  Certificates  so  surrendered  shall have been converted
pursuant  to  the  provisions  of  Section  3.1,  and  Target   Certificates  so
surrendered shall forthwith be cancelled. Notwithstanding the foregoing, neither
the Exchange Agent nor any party hereto shall be liable to a holder of shares of
Target  Common  Stock for any  shares of Parent  Common  Stock or  dividends  or
distributions  thereon  delivered to a public  official  pursuant to  applicable
escheat laws.

     (e) Notwithstanding any other provision of this Agreement,  no certificates
or scrip for  fractional  shares of Parent Common Stock shall be issued upon the
surrender for exchange of Target  Certificates  pursuant to this Article III and
no Parent  Common Stock  dividend,  stock split or interest  shall relate to any
fractional  security,  and such fractional interests shall not entitle the owner
thereof to vote or to any other rights of a security holder. In lieu of any such
fractional  shares,  each holder of Target Common Stock who would otherwise have
been entitled to a fraction of a share of Parent Common Stock upon  surrender of
Target  Certificates for exchange pursuant to this Article III shall be entitled
to receive  from the Exchange  Agent a cash  payment in lieu of such  fractional
share equal to such fraction multiplied by the Valuation Price.

         3.4  DISSENTING  SHARES.   Notwithstanding  anything  to  the  contrary
contained  in this  Agreement,  holders  of shares of Target  Common  Stock with
respect to which dissenters' rights, if any, are granted by reason of the Merger
under the NJBCA and who do not vote in favor of the Merger and otherwise  comply
with the NJBCA ("Target Dissenting Shares"),  shall not be entitled to shares of
Parent Common Stock pursuant to Section 3.1, unless and until the holder thereof
shall have failed to perfect or shall have  effectively  withdrawn  or lost such
holder's right to dissent from the Merger under the NJBCA, and shall be entitled
to receive  only the payment  provided  for  pursuant to the NJBCA.  If any such
holder shall have failed to perfect or shall have effectively  withdrawn or lost
such  holder's   dissenters'  rights  under  the  NJBCA,  such  holder's  Target
Dissenting  Shares shall  thereupon be deemed to have been converted into and to
have become exchangeable for, as of the Effective Time, the right to receive the
Merger Consideration.

         3.5 CLOSING OF TRANSFER  BOOKS.  From and after the Effective Time, the
stock  transfer  books of Target  shall be closed and no  transfer  of shares of
Target Common Stock owned by the  Shareholders  shall  thereafter  be made.  If,
after the Effective  Time,  Target  Certificates  are presented to Parent,  they
shall be cancelled and exchanged for the Merger Consideration in accordance with
the procedures set forth in this Article III.

         3.6 CLOSING.  Subject to the  fulfillment  or waiver of any  conditions
precedent set forth herein, it is presently contemplated that the closing of the
transactions  under this Agreement (the  "Closing")  shall take place on May 13,
1997, (the "Closing Date"),  at 10:00 a.m., New York City time at the offices of
Harwood Lloyd,  counsel to Parent, or at such other place or such other time and
date as the parties may mutually agree in writing.  The time and date upon which
the Closing occurs is herein  referred to as the "Closing  Date." If the Closing
has not occurred  prior to June 30, 1997,  Parent,  if not then in default under
this  Agreement,  may terminate  this  Agreement by giving five (5) days written
notice to Target.

                                   ARTICLE IV

            REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND TARGET

         Except as  otherwise  set forth,  all  warranties  and  representations
contained  herein shall survive the Merger and are subject to the exceptions set
forth in each disclosure  schedule attached hereto. As a material  inducement to
Parent to execute and perform its obligations  under this Agreement,  Target and
Shareholders  hereby  jointly and  severally  represent and warrant to Parent as
follows:

         4.1  ORGANIZATION  AND  QUALIFICATION.  Target  is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
New Jersey;  has the  requisite  corporate  power and  authority to carry on its
business  as it is now  being  conducted  and to  own,  lease  and  operate  the
properties and assets used in connection therewith.

         4.2  CAPITALIZATION;  OPTIONS OR OTHER RIGHTS.  The authorized  capital
stock of Target consists of  One-Thousand  (1000) shares of Common Stock, no par
value per share, of which  Two-Hundred  (200) shares are issued and outstanding.
All issued and outstanding  shares of capital stock of the Target have been duly
authorized  and  validly  issued and are fully paid and  non-assessable  with no
personal liability attaching to the ownership thereof and are owned beneficially
and of record by  Shareholders  in the amounts as set forth on Exhibit A hereto.
There  are  no  Liens  (as  hereinafter  defined)  on or  with  respect  to  any
outstanding shares of capital stock of the Target.  There are no outstanding (i)
securities convertible into or exchangeable for any capital stock of the Target;
(ii) options, warrants,  preemptive rights, calls or other rights to purchase or
subscribe for any capital stock of the Target or securities  convertible into or
exchangeable  for  capital  stock  thereof;  or  (iii)  contracts,  commitments,
agreements,  understandings or arrangements of any kind relating to the issuance
of any capital stock of Target, any such convertible or exchangeable  securities
or any such options,  warrants, calls or rights.  Shareholders  collectively own
100% of the  outstanding  capital  stock of Target.  Except for Target's  83,237
shares of Parent  Common  Stock,  Target  does not own or  control,  or have any
ownership  interest in or any obligation to acquire an ownership  interest in or
any obligation to acquire an ownership interest,  either directly or indirectly,
in, nor is it controlled by or under common control with, any other corporation,
partnership, joint venture or other entity.

         4.3 STOCK OWNERSHIP.  Each Shareholder currently has and/or the time of
the Closing  will have good and valid title to the Target  Stock to be exchanged
by such Shareholder  hereunder,  in all such cases free and clear of any and all
Liens.  Exhibit A of this Agreement contains a complete and accurate list of all
of the  Shareholders  of Target and Target Stock held by each  Shareholder.  

         4.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. Shareholders will furnish
Parent  prior to Closing  true and  complete  copies of the (i)  Certificate  of
Incorporation  of  Target,  as in effect on the date  hereof,  (ii)  By-laws  of
Target,  as in  effect on the date  hereof,  and  (iii)  minute  books of Target
(containing  records of all  meetings  and  consents  in lieu of meetings of its
shareholders and Boards of Directors (and any committees thereof) since the time
of its incorporation and accurately  reflecting all transactions  referred to in
such  minutes and consents in lieu of  meetings).  Target is not in violation of
any provisions of its Certificate of Incorporation  or By-Laws,  as in effect as
of the date hereof.

         4.5  FINANCIAL  STATEMENTS  AND  BOOKS  AND  RECORDS.  There  have been
delivered  to  Parent  true  and  correct  copies  of  the  following  financial
statements: (i) the compiled balance sheet of Target as of December 31, 1996 and
the  income  statement  for the  fiscal  year then ended  prepared  by  Target's
accountants  (the "1996 Year-End  Financial  Statements")  and (ii) the compiled
balance  sheets of Target as of March 31, 1997 and the income  statement for the
three months then ended.  The 1996 Year-End  Financial  Statements and the March
31,  1997  Financial  Statements,  are  collectively  referred  to herein as the
"Financial  Statements."  Copies of the  Financial  Statements  are  annexed  as
Exhibit C hereto. The Financial Statements have been prepared and are based upon
the books and records of Target and such Financial Statements present fairly the
financial position,  and related results of operations of Target as of the dates
and for the periods  referred to therein,  in accordance  with GAAP.  All of the
financial  books and  records of Target have been made  available  to Parent and
such books and records  completely  and fairly  record in all respects  Target's
financial  affairs  which  should  normally be recorded in  financial  books and
records.

         4.6 LIABILITIES. (a) Except as set forth on Schedule 4.6, Target has no
liabilities  or  obligations  of any nature  (absolute,  accrued,  contingent or
otherwise) whether as principal,  agent,  partner,  plan fiduciary,  coventurer,
guarantor or in any  capacity  whatsoever  which are not  properly  reflected or
reserved  against  in  the  Financial  Statements  (except  for  liabilities  or
obligations  which have been incurred in the ordinary  course of business  since
December 31, 1996 in a manner consistent with past practice,  which individually
or in the  aggregate do not exceed  $10,000)  and the reserves  reflected in the
Financial Statements are adequate, appropriate and reasonable.

         (b) Target will have the existing mortgage loan encumbering 590 Pascack
paid in full  prior to  Closing or the  Merger  Consideration  will be  adjusted
accordingly.

         4.7 TAX MATTERS.  (a) Except with  respect to property  Taxes and other
Taxes (as  defined  below)  for which  adequate  reserves  are  included  in the
Financial  Statements or as otherwise  set forth in Schedule 4.7,  Target or the
Shareholders,  where  applicable,  have timely paid all federal and state taxes,
including,  without  limitation,  income taxes,  excise taxes,  sales taxes, use
taxes,  gross receipts taxes,  franchise taxes, and all other taxes,  levies and
charges of any nature  whatsoever  and  however  denominated  together  with all
penalties,  additions to tax,  interest,  assessment  or other  damages  imposed
thereon  with  respect to  Target's  business  (collectively,  "Tax" or "Taxes")
required to be paid or deposited by Target through the date hereof. For purposes
of this  Section  4.7,  timely  payment  shall be deemed to  include  payment in
accordance with any available extensions.

         (b)  Target or the  Shareholders,  where  applicable,  have filed on or
before the applicable due date (including  extensions) all tax returns,  reports
or  declarations  which it is required to have filed through the date hereof and
has  timely  paid  all  amounts  shown  as  payable  thereon,  as  well  as  any
deficiencies or other  additional  amounts  subsequently  assessed by any taxing
authority with respect to each such tax return, report or declaration.  All such
returns, reports or declarations are true, correct and complete in all respects.

         (c)  Target has not waived  any  statute of  limitations  in respect of
Taxes or agreed to any  extension  of time with respect to a Tax  assessment  or
deficiency  and the assessment of any additional Tax with respect to periods for
which returns have been filed is not expected.

         (d)  Except  for  the  State  of New  Jersey's  claim  for  outstanding
penalties and interest with respect to Target's 1987 Business  Corporation  Tax,
there are no proposed  deficiencies  or unresolved  claims  concerning  Target's
liability for Taxes.  Any proposed  deficiency or unresolved  claim set forth on
Schedule 4.7 is being  contested in good faith by  appropriate  proceedings  for
which adequate  reserves have been created,  maintained and disclosed in writing
to  Parent.   Target  shall  escrow  $3500.00  with  Parent's  attorney  pending
resolution of the State of New Jersey's claim.

         (e) Copies of all federal and state income tax returns  (including  all
attachments  and  amendments  thereto) of Target for all taxable years for which
the limitation periods (including any extensions or waivers thereof)  applicable
to deficiencies not expired have been delivered to Parent.

         4.8  COMPLIANCE  WITH  LAWS.  To the best of its  actual  knowledge  or
belief,  Target is not in violation of any  applicable  law,  rule,  regulation,
order,  judgment,  injunction,  award or decree,  relating to, arising out of or
affecting  the business or  operations  of Target.  Target has not been notified
that it is in violation of any statute, law, rule, regulation, ordinance, or any
other  requirement  of  any  federal,  state,  local,  regional,   municipal  or
regulatory  department,  body,  commission,   agency,  board,   instrumentality,
authority,  court or arbitrator  having  jurisdiction  over Target or any of its
businesses or properties  (collectively,  a "Governmental  Agency")  (including,
without limitation, laws relating to the environment),  other than insignificant
or  immaterial  violations  which do not and will  not have a  Material  Adverse
Effect. Each authorization,  license, consent, permit, order and approval of any
Governmental  Agency over the conduct of Target's  business  (collectively,  the
"Permits") that is material to the conduct of Target's business is in full force
and effect, no violations are or have been recorded in respect of any Permit and
no  proceeding  is  pending  or,  to  the  actual  knowledge  of  Target  or any
Shareholder,  threatened,  to revoke or limit any Permit. Except as set forth on
Schedule  4.8,  no approval or consent of any person is needed in order that the
Permits  continue in full force and effect  following  the  consummation  of the
transactions contemplated by this Agreement.

         4.9  AUTHORITY  TO EXECUTE AND PERFORM  AGREEMENT;  NO BREACH.  Each of
Shareholders and Target has the full legal right and power and all authority and
approvals  required to enter into,  execute and deliver this Agreement (and each
other  agreement  delivered or to be delivered in  connection  herewith)  and to
perform fully its, his or her respective  obligations  hereunder and thereunder.
This  Agreement  (and each  other  agreement  delivered  or to be  delivered  in
connection  herewith)  has been duly  executed and delivered to Parent by Target
and  the  Shareholders   and,  assuming  due  execution  and  delivery  by,  and
enforceability against, Parent,  constitutes the valid and binding obligation of
Target and each Shareholder,  enforceable  against them in accordance with their
respective terms,  subject to the qualifications  that enforcement of the rights
and  remedies   created  hereby  and  thereby  is  subject  to  (i)  bankruptcy,
insolvency,  reorganization,  moratorium  and other laws of general  application
affecting the rights and remedies of creditors,  and (ii) general  principles of
equity  (regardless of whether such enforcement is considered in a proceeding in
equity or at law). No approval or consent of, or filing with,  any  governmental
or  regulatory  body,  and no approval or consent of, or filing with,  any other
person is required to be obtained by Target and any  Shareholder  in  connection
with the execution and delivery by Target and the Shareholders of this Agreement
(and each other agreement  delivered or to be delivered in connection  herewith)
and the consummation  and performance by them of the  transactions  contemplated
hereby and  thereby,  other than as set forth on Schedule  4.9.  The  execution,
delivery and performance of this Agreement (and each other  agreement  delivered
or to be delivered in connection  herewith) by Target and the  Shareholders  and
the  consummation  of  the  transactions  contemplated  hereby  and  thereby  in
accordance with the terms and conditions  hereof and thereof by the Shareholders
will not:

         (i) violate any provision of Target's  Certificate of  Incorporation or
By-laws;

         (ii) violate, conflict with or result in the breach of any of the terms
of, or constitute  (or with notice or lapse of time or both would  constitute) a
default under, any Contract (as hereinafter  defined),  Lease (as defined below)
or other agreement to which Target and any Shareholder is a party or by to which
any of its or their respective assets may be bound or subject;

         (iii)violate any order, judgment,  injunction,  award or, decree of any
Governmental  Agency  by  which  any  Shareholder,  or the  securities,  assets,
properties or business of any of them, is bound or subject; or

         (iv) violate any statute, law or regulation.

         4.10   LITIGATION.   There  are  no  outstanding   orders,   judgments,
injunctions,  awards or decrees of any court, governmental or regulatory body or
arbitration  tribunal by which Target or the securities,  assets,  properties or
business  of any of them is bound or  subject.  Except as set forth on  Schedule
4.10, there are no actions, suits, legal, administrative or arbitral proceedings
or inquiries  relating to Target  pending or, to the  knowledge of Target or any
Shareholder,  threatened  (whether or not the defense  thereof or liabilities in
respect  thereof are covered by  insurance)  against  Target,  or any officer or
director of Target (in his or her capacity as such).

         4.11  CONTRACTS.  Other than the Lease between  Target and  Interchange
Bank with  respect  to 590  Pascack,  (the  "Lease"),  there are no  agreements,
contracts,  understandings,  arrangements (including,  without limitation,  bank
lines), obligations, leases or licenses, whether written or oral, between Target
and any other party, under or pursuant to which Target is obligated to make cash
payments of or delivery  products or render  services  with a value greater than
$5,000 or receive cash payments of or receive  products or services with a value
greater  than $5,000 or which are  otherwise  material to Target  (collectively,
"Contracts").  Except  for the  Lease,  Target  is not a party to any  contract,
agreement, arrangement or understanding,  whether written or oral, which, either
individually  or in the  aggregate,  is  material to the  business or  financial
condition  of  Target,  it  being  understood  that  the  contracts  which  fall
underneath the dollar  threshold  shall be deemed material if they are otherwise
material to Target for non-monetary reasons. There have been delivered to Parent
true and complete copies of the Lease. The Lease is valid,  subsisting,  in full
force and effect and binding upon Target and the other  parties  thereto and are
enforceable in accordance  with its terms,  subject to the  qualifications  that
enforcement  of the  rights  and  remedies  created  thereby  is  subject to (i)
bankruptcy,  insolvency,  reorganization,  moratorium  and other laws of general
application  affecting  the rights and remedies of  creditors,  and (ii) general
principles of equity  (regardless of whether such enforcement is considered in a
proceeding in equity or at law);  and Target and, to the knowledge of Target and
Shareholders,  each other party to the Lease have  satisfied in full or provided
for all of their  respective  liabilities and obligations  thereunder  requiring
performance  prior to the  date  hereof  in all  material  respects,  are not in
default  under any of them,  nor does any  condition  exist that with  notice or
lapse of time or both  would  constitute  such a default or would  constitute  a
basis of force majeure or other claim of excusable delay or non-performance.  To
the knowledge of Target and each of the Shareholders, there is no material fact,
event or circumstance  which may give rise to an event of default on the part of
Target or any other party under the Lease.  No approval or consent of any person
is needed in order that the Lease  continue in full force and effect  subsequent
to the consummation of the transactions contemplated by this Agreement and, upon
consummation  of such  transactions,  the Lease  will be  enforceable  by Target
(subject  to the  qualifications  that  enforcement  of the rights and  remedies
created  thereby  are  subject to (i)  bankruptcy,  insolvency,  reorganization,
moratorium  and other  laws of  general  application  affecting  the  rights and
remedies of  creditors,  and (ii) general  principles of equity  (regardless  of
whether such  enforcement  is  considered  in a proceeding in equity or at law).
Schedule 4.11 hereto contains a list of all licenses or personal property leases
under or  pursuant  to which  Target is  obligated  to make cash  payments of or
deliver  products or render services with a value greater than $1,000 or receive
cash payments of or receive  products  services with a value greater than $1,000
or which are otherwise material to Target (collectively, "Leases") together with
the location and nature of each of the leased or licensed  personal  properties,
the termination  date of each such license or lease, the name of the licensor or
lessor and all rental and other  payments made or required to be made during the
twelve-month period ending December 31, 1996.

         4.12  TITLE TO  PROPERTY;  ENCUMBRANCES.  (a)  Target  has,  and at the
Closing  will  have,  good  and  valid  title  to  its  property  (tangible  and
intangible),  including  without  limitation,  all  property  reflected  on,  or
included in, the balance sheet (the "Balance  Sheet")  included in the Financial
Statements  as owned by Target,  and all  property  acquired by Target since the
date of the last Balance Sheet supplied to Parent (the "Balance Sheet Date"), in
each case free and clear of all Liens  except (i) as set forth on Schedule  4.12
hereto,  (ii) for sales and other  dispositions in the usual and ordinary course
of business  since the Balance  Sheet Date for not less than the carrying  value
thereof and (iii) Permitted Liens (as hereinafter defined). The term "Liens", as
used in this Agreement,  shall mean all liens,  mortgages,  security  interests,
pledges,  deeds  of  trust,  options,   adverse  claims  or  other  charges  and
encumbrances (including, without limitation, any conditional sale or other title
retention  agreement  or lease in the nature  thereof as to which  Target is the
buyer or lessee,  any sale of  receivables  with recourse  against Target or any
other  person  except the account  debtor,  any filing or  agreements  to file a
financing statement as a debtor under the Uniform Commercial Code or any similar
statute of any  jurisdiction  to reflect  ownership by a third party of property
leased to Target under a lease that is not in the nature of a  conditional  sale
or title retention agreement,  or any subordination  arrangement in favor of any
person). The term "Permitted Liens", as used in this Agreement, shall mean liens
for ad valorem real or personal property taxes or assessments  accrued since the
Balance Sheet Date but not due and liens in respect of pledges or deposits under
workers'  compensation laws or similar legislation,  carriers',  warehousemen's,
mechanics',  laborers' and  materialmen's  and similar liens,  accrued since the
Balance Sheet Date if the  obligations  secured by such liens are not delinquent
and arose in the ordinary  course of business  consistent  with past  practices,
together with liens that are specifically  identified on the Balance Sheet or in
the notes thereto.

         (b) [INTENTIONALLY OMITTED]

         (c) 590  Pascack  is the only real  property  owned or leased by Target
(the "Real Property").  Except as set forth in Schedule 4.12(c), Target has good
and  marketable  title to 590  Pascack  free and clear of all Liens,  other than
Liens listed on Schedule 4.12(c) and Permitted Liens. Title to 590 Pascack shall
be insurable at regular rate by a suitable  title company doing  business in the
State of New Jersey.  Target has not  received  any notice that such  buildings,
structures,  mechanical systems and structures violate any zoning regulations or
ordinances  of the state,  city,  town or  village  where the Real  Property  is
located or any applicable  statutes,  regulations,  ordinances and  requirements
(collectively,  "Laws")  governing  the Real  Property.  Except  as set forth on
Schedule  4.12(c),  no officer or director of Target or any of Shareholders  has
knowledge,  or reason to know, of any past or present violation,  or any past or
present use of the Real Property which is likely to result in any violation,  or
of any pending or  threatened  action or proceeding  alleging any  violations or
past violations which have been waived or remedied and, in either case, will not
result in any future liability to Target or Parent.

         4.13  ENVIRONMENTAL,  HEALTH  AND  SAFETY  MATTERS.  To the best of its
knowledge,  except as  described in Schedule  4.13,  Target has not received any
notice  from  a  Governmental  Agency  that  any of its  properties  are  not in
compliance with all federal,  state and local laws,  ordinances,  codes,  rules,
standards,  regulations,  orders and common law  applicable to worker health and
safety;  air emissions;  water discharges;  solid wastes;  hazardous  materials;
drinking water; toxic substances;  waste storage, treatment,  transportation and
disposal; and groundwater and soil monitoring;  or otherwise relating to workers
and/or the  environment  applicable to its business as presently  conduced;  and
except as so described there are no violations,  citations or claims pending or,
to the  knowledge of each of the  Shareholders,  threatened  with respect to any
such matters. To the best of its knowledge,  except as so described,  Target has
received no notice that any toxic,  hazardous or otherwise regulated  substances
("Hazardous  Materials") have been disposed of, discharged,  buried or deposited
in, on or under the ground by or on behalf of Target within the  boundaries of a
location occupied or formerly  occupied by it or elsewhere,  in violation of, or
has not been reported to a  Governmental  Agency as required by, any  applicable
law, regulation or order (now in effect or in effect at the time of the relevant
act);  neither Target nor any of the  Shareholders  have received  notice of any
spills, discharges or emission of Hazardous Materials which have occurred within
the boundaries of any such location during or prior to the occupancy  thereof by
Target or a subsidiary  thereof in violation  of, or has not been  reported to a
Governmental Agency as required by, any applicable law, regulation or order (now
in  effect  or in effect at the time of the  relevant  act);  and,  except as so
described, Target has received no notice that there are any materials containing
urea formaldehyde,  asbestos or polychlorinated biphenyls or any other Hazardous
Materials in or about any location  presently utilized by Target in violation of
any applicable law, regulation or order.

         4.14 ABSENCE OF CERTAIN CHANGES.  Except as set forth in Schedule 4.14,
since December 31, 1996 Target has not:

         (i)  Suffered  any  material  adverse  change in its  working  capital,
condition  (financial or otherwise),  assets,  liabilities  (absolute,  accrued,
contingent or otherwise), reserves, business, operations or, to the knowledge of
Target or any of its officers or directors, prospects;

         (ii)  Incurred  any  liabilities  or  obligations  (absolute,  accrued,
contingent  or otherwise)  except  non-material  items  incurred in the ordinary
course of business and consistent with past practice;

         (iii)Paid,   discharged  or  satisfied  any  claims,   liabilities   or
obligations  (absolute,  accrued,  contingent or  otherwise)  other than (A) the
payment,  discharge  or  satisfaction  in the  ordinary  course of business  and
consistent  with past  practice of  liabilities  and  obligations  reflected  or
reserved against in the Financial  Statements or incurred in the ordinary course
of business and consistent with past practice since such date or (B) the payment
of the outstanding principal and interest of the mortgage against 590 Pascack or
(C) payment of the premium to the bonding company with respect to the lost stock
certificate for the 83,237 shares of Parent Stock owned by Target;

         (iv)  Permitted  or  allowed  any  of its  property  or  assets  (real,
personal,  or mixed, tangible or intangible) to be subjected to any Lien, except
for Permitted Liens;

         (v) Cancelled  any debts or waived any claims or rights of  substantial
value;

         (vi) Made any single  capital  expenditure  or  commitment in excess of
$5,000 for additions to property,  plant, equipment or intangible capital assets
or made aggregate capital  expenditures and commitments in excess of $10,000 for
additions to property, plant, equipment or intangible capital assets;

         (vii)Declared,  paid or set aside for  payment  any  dividend  or other
distribution in respect of its capital stock or redeemed, purchased or otherwise
acquired,  or issued or sold, or authorized or proposed the issuance or sale of,
directly  or  indirectly,  any shares of capital  stock or other  securities  of
Target;

         (viii)  Made any  change in any  method  of  accounting  or  accounting
practice or in depreciation or amortization policies or rates adopted by it;

         (ix) Paid,  loaned or advanced any amount to, or sold,  transferred  or
leased  any  properties  or  assets  (real,   personal  or  mixed,  tangible  or
intangible)  to, or entered into any agreement or  arrangement of any kind with,
any of its officers  directors or  stockholders or any affiliate or associate of
any of its officers,  directors or stockholders (other than legal and accounting
expenses);

         (x)  Agreed,  whether  in  writing  or  otherwise,  to take any  action
described in this Section.

         4.15 BANK ACCOUNTS. Schedule 4.15 sets forth the names and locations of
all banks,  trust companies,  savings and loan  associations and other financial
institutions at which Target  maintains  accounts of any nature and names of all
persons  authorized to draw thereon,  make withdrawals  therefrom or have access
thereto.  The  Shareholders  have  delivered  to Parent  copies of all  records,
including  all  signature  or  authorization  cards,  pertaining  to  such  bank
accounts.

         4.16 RELATED PARTY TRANSACTION.  No officer, director,  shareholder or,
to the knowledge of Target and each  Shareholder and no affiliate or relative of
any of them:

         (i) owns, directly or indirectly,  in whole or in part, any tangible or
intangible  property,  the use of which is necessary for the conduct of Target's
business,  and which if not  obtained  from such  person  could  have a Material
Adverse Effect; or

         (ii) owes any  amount to Target  or,  to the  knowledge  of Target  and
Shareholders,  has any cause of action or other claim against  Target other than
for current wages  accrued in the ordinary  course of business  consistent  with
past practices.

         4.17 BROKERS AND FINDERS.  All negotiations on the part of Shareholders
relative to the  transactions  contemplated  by this Agreement have been carried
out by Shareholders  without the intention of any person in a manner giving rise
to any valid claim for a finders fee,  brokerage  commission  or similar  claim.
None  of  Target,  Shareholders  or any of its  or  their  respective  officers,
directors  or  employees  has  employed  any  broker or finder or  incurred  any
liability for any  brokerage  fees,  commissions  or finders' fees in connection
with the transactions  contemplated by this Agreement. Any claim for a brokerage
fee,  commission or finder fee shall be a liability of Shareholders,  not Parent
or Target.

         4.18  DISCLOSURE.  No  representations  or warranties  of  Shareholders
contained  in  this  Agreement  and  no  statement  contained  in  any  document
(including,  without limitations,  the Financial Statements and the Schedules to
this Agreement),  certificate,  or other writing furnished or to be furnished by
Target or Shareholders to Parent or any of its  representatives  pursuant to the
provisions  hereof or in connection with the transactions  contemplated  hereby,
contains or will  contain any untrue  statement  of a material  fact or omits or
will omit to state any material fact required to be stated therein or necessary,
in the context in which made, to make the statements herein or therein not false
or misleading.

         4.19 OWNERSHIP OF PARENT'S COMMON STOCK.  Target  currently owns 83,237
Shares of Parent's  Common  Stock  (subject  to the stock  split  referred to in
Section 3.1(b)) free and clear of any liens or encumbrances.

         4.20 SCHEDULES.  Inclusion in any Schedule of any disclosure  shall not
be  construed  as  relevant to any  determination  of  materiality.  Any matters
disclosed on one Schedule  shall be disclosed for purposes of that Schedule only
except for cross references from one Schedule to another Schedule.

         4.21 OTHER MATERIAL  ADVERSE  INFORMATION.  Except as set forth in this
Agreement or in the Financial  Statements,  certificates,  exhibits or Schedules
delivered  pursuant hereto,  neither Target nor any of the Shareholders have any
knowledge of any information of a materially  adverse nature with respect to the
business, assets,  operations,  properties or condition (financial or otherwise)
of Target.

         4.22  INFORMATION  CONCERNING  PARENT.  Each Shareholder has received a
package of information  concerning  Parent  including  Parent's Annual Report on
Form 10-K for the year ended December 31, 1995;  Quarterly  Reports on Form 10-Q
for each of the quarters ended March 31, 1996,  June 30, 1996, and September 30,
1996;  and the  1997  Proxy  Statement.  Each  Shareholder  acknowledges  having
reviewed the forgoing  information  and having had opportunity to ask management
of Parent questions concerning the financial condition and business prospects of
Parent.

                                    ARTICLE V

                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

         Parent and Sub hereby represent and warrant to Shareholders as follows:

         5.1 ORGANIZATION.  Parent and Sub are corporations each duly organized,
validly  existing and in good standing under the laws of New Jersey and each has
the  requisite  corporate  power and  authority  to carry on its business as now
being conducted.

         5.2 AUTHORITY TO EXECUTE AND PERFORM  AGREEMENT;  NO BREACH.  Except as
listed on Schedule 5.2, upon  receiving the required  approval of its respective
Board of  Directors,  Parent and Sub each has the full legal right and power and
all authority and  approvals  required to enter into,  execute and delivery this
Agreement and to perform fully its  obligations  hereunder.  This  Agreement has
been duly  executed and  delivered by Parent and Sub, and assuming due execution
and  delivery  by Target and  Shareholders,  constitutes  the valid and  binding
obligation of Parent and Sub,  enforceable  against each in accordance  with its
terms, subject to the qualifications that enforcement of the rights and remedies
created  hereby  is  subject  to  (i)  bankruptcy,  insolvency,  reorganization,
moratorium  and other  laws of  general  application  affecting  the  rights and
remedies of  creditors,  and (ii) general  principles of equity  (regardless  of
whether such  enforcement  is  considered  in a proceeding in equity or at law).
Except as otherwise  specified in this  Agreement  or any  Schedule  hereto,  no
approval or consent of, or filing with, any  government or regulatory  authority
is  required  to be  obtained by Parent in  connection  with the  execution  and
delivery by Parent of this Agreement and the  consummation and performance by it
of the transactions contemplated hereby, other than (i) as set forth on Schedule
5.2, and (ii) consents or approvals the denial of which or the failure to obtain
which could not affect in any  material  respect the  transactions  contemplated
hereby. The execution,  delivery and performance of this Agreement by Parent and
the consummation of the transactions  contemplated hereby in accordance with the
terms and conditions hereof by Parent will not:

         (i) violate any provision of Parent's  Certificate of  Incorporation of
By-Laws; 

         (ii) violate, conflict with or result in the breach of any of the terms
of, or constitute (or with notice or lapse of time or both constitute) a default
under,  any  contract or other  agreement to which Parent is a party or by or to
which it or its assets or properties may be bound or subject;

         (iii) violate any order, judgment,  injunction,  award or decree of any
court,  arbitrator,  governmental  or regulatory  body, by which Parent,  or the
securities, assets, properties or business of Parent is bound; or

         (iv) violate any statute, law or regulation.

         5.3  BROKERS  AND  FINDERS.  Neither  Parent  nor any of its  officers,
directors,  employees  or  stockholders  has  employed  any  broker or finder or
incurred any liability for any brokerage  fees,  commissions or finders' fees in
connecting with the transactions contemplated by this Agreement.

         5.4 DISCLOSURE. No representations or warranties of Parent contained in
this Agreement and no statement contained in any document,  certificate or other
writing  furnished or to be furnished  by Parent to  Shareholders  or any of its
representatives  pursuant to the  provisions  hereof or in  connection  with the
transactions  contemplated hereby, contains or will contain any untrue statement
of a material  fact or omits or will omit to state any material fact required to
be stated  therein  or  necessary,  in the  context in which  made,  to make the
statements herein or therein not false or misleading.

                                   ARTICLE VI

                                    COVENANTS

         The parties hereby covenant and agree as follows:

         6.1 REASONABLE EFFORTS;  FURTHER ACTIONS.  The parties hereto each will
use all reasonable efforts to take or cause to be taken all actions and to do or
cause to be done all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the  transactions  contemplated
by this  Agreement,  and Target and each  Shareholder  will use its,  his or her
respective  best  efforts  to assure  that  Parent  has the  benefits  of all of
Target's and Shareholders' covenants and agreements contained in this Agreement.
If, at any time after the Closing  Date,  any  further  action is  necessary  or
desirable  to carry out the  purposes  of this  Agreement  or to vest Parent and
Target with full title to the Shares,  each party to this  Agreement  shall take
all such necessary action.

         6.2 CONSENTS.  Parent, Target and Shareholders will cooperate,  and the
Shareholders  will  cause  Target to  cooperate,  with each  other in filing any
necessary applications,  reports or other documents with, giving any notices to,
and  seeking any  consents  from,  all  regulatory  bodies and all  governmental
agencies and  authorities and all third parties as may be required in connection
with the consummation of the transactions contemplated by this Agreement, and in
seeking  necessary  consultation  with and prompt  favorable  action by any such
body, agency,  authority or third party. Each of the parties hereto will use its
best efforts to obtain all such  consents and favorable  actions  required by it
for the consummation of the transactions contemplated hereby.

         6.3 CERTAIN TAXES. Target or the Shareholders will pay or reserve Funds
for all Taxes with  respect to the income of Target  earned  through the Closing
Date.

         6.4  CORRECT  AS  OF  CLOSING.  Each  representation  and  warranty  of
Shareholders,  Target and/or Parent,  set forth in this Agreement  shall be true
and correct as of the Closing Date.

         6.5.  TARGET STOCK.  No  Shareholder  will create or incur or suffer to
exist  any  mortgage,  lien,  pledge,  hypothecation,   charge,  encumbrance  or
restriction  of any  kind on the  Target  Stock  other  than  disclosed  in this
Agreement.

         6.6 SECURITIES LAW - PROVISIONS. (a) Each Shareholder acknowledges that
Parent's  Common Shares to be delivered to him pursuant to this  Agreement  have
not  been and are not  being  registered  under  the  Securities  Act of 1933 as
amended (the "1933 Act"),  and that  accordingly  Parent's Common Shares are not
transferable except as permitted under various exemptions  contained in the 1933
Act and the rules of the Securities and Exchange  Commission ("SEC") thereunder.
The Provisions contained in this Paragraph 6.6 are intended to ensure compliance
with the 1933 Act.

         (b) Each Shareholder  covenants,  warrants, and represents that none of
Parent's  Common  Shares  that  will be issued  to him or her  pursuant  to this
Agreement will be offered, sold, assigned, pledged,  hypothecated,  transferred,
or otherwise disposed of except after full compliance with all of the applicable
provisions of the 1933 Act and the rules and  regulations  of the Securities and
Exchange Commission under the 1933 Act.

         (c) Each  Shareholder  represents and warrants to Parent that he or she
is acquiring Parent's Common Shares to be issued under this Agreement for his or
her own account,  for  investment,  and not with a view to their resale or other
distribution  except as the same may be  permitted  under the 1933 Act and under
the rules and regulations of the SEC thereunder.

         (d) Each  Shareholder  agrees not to sell,  transfer,  hypothecate,  or
otherwise  dispose of any of Parent's  Common Shares  received  pursuant to this
Agreement  unless and until he or she (a) shall  have  presented  Parent  with a
written legal opinion in form and substance  satisfactory  to counsel for Parent
(which may include  counsel to the Parent) to the effect that the disposition is
permissible  under the terms of the 1933 Act and regulations under the 1933 Act;
or (b) shall have complied with the registration and prospectus  requirements of
the 1933 Act  relating  to the  disposition.  The  Shareholders  recognize  that
certain  of the  Shareholders  who are not  deemed  affiliates  of Parent may be
eligible for an exemption from  registration  requirements  pursuant to SEC Rule
145 and other  Shareholders  who would be deemed  affiliates  of Parent  and not
eligible to avail themselves of Rule 145. Each  Shareholder  further agrees that
the  certificates  evidencing  the Common  Shares he or she will  receive  shall
contain the following legend:

                        THE SECURITIES EVIDENCED BY THIS

                      CERTIFICATE HAVE NOT BEEN REGISTERED

                   UNDER THE SECURITIES ACT OF 1933, HAVE BEEN

                    TAKEN FOR INVESTMENT AND MAY NOT BE SOLD

                    OR OFFERED FOR SALE UNLESS A REGISTRATION

                     STATEMENT UNDER THE FEDERAL SECURITIES

                     ACT OF 1933, AS AMENDED WITH RESPECT TO

                     THESE SHARES, IS THEN IN EFFECT OR ANY

                         EXEMPTION FROM THE REGISTRATION

                     REQUIREMENTS OF THE ACT IS THEN IN FACT

                         APPLICABLE TO THE OFFER OR SALE

         Parent shall also place a "stop transfer" order against any transfer of
the Common Shares until one of the conditions set forth above has been met.

         (e) If within two years after the  Closing  Date,  Parent  shall file a
registration  statement  under  the 1933 Act,  as then in  effect,  covering  an
offering by Parent of Parent's Common Shares for cash,  Parent will mail to each
Shareholder (at his or her address in Parent's share transfer  records)  written
notice of its intent to file the registration  statement. If a Shareholder shall
deliver a written request to Parent, within twenty days after the mailing of the
notice,  setting  forth the number of Common Shares he or she intends to dispose
of,  Parent  agrees to use  reasonable  efforts to include  those shares of each
Shareholder in the registration statement and related underwriting arrangements.
Each Shareholder  agrees that if the offering by Parent is underwritten,  his or
her shares are to be underwritten by the same underwriter or underwriters on the
same basis as the other shares included.  If in spite of the reasonable  efforts
of Parent the  inclusion of all of the shares that each  Shareholder  intends to
sell shall not be acceptable to the managing  underwriter or underwriters of the
offering,  Parent  may limit the  number  of  shares of each  Shareholder  to be
registered  to the  number  of  shares  bearing  the  same  proportion  as  such
Shareholder's  shares  relate to the total number of shares being offered in the
registration  statement  and  related  underwriting.  If  the  offering  is  not
completed  within  ninety  days  after the  effective  date of the  registration
statement,  Parent shall be entitled to  de-register  any unsold  portion of the
shares.  The manner and conduct of any  registration,  including the contents of
the registration  statement and of any underwriting or other related agreements,
shall be  entirely in the control and  discretion  of Parent.  Each  Shareholder
agrees  to  cooperate  with  Parent  in  the   preparation  and  filing  of  any
registration statement prepared and filed under this subparagraph.  Parent shall
bear  all  out-of-pocket   expenses,   fees,  and   disbursements   (except  for
underwriter's  discount  and  registration  fees  related  to the  Shares of any
Shareholder) incurred in connection with carrying out its obligations under this
subparagraph,  provided, however, that each Shareholder shall make the customary
agreements,   representations,   warranties,   and   indemnifications   to   the
underwriters  in any offering with respect to any shares  included at his or her
request. Nothing in the subparagraph shall be deemed to prevent the inclusion in
any offering of other and further  shares for the account of other  shareholders
of Parent.

         (f)  Parent  will  make  reasonable  efforts  to  obtain,  prior to the
Effective  Time,  approval  for the  listing  on the ASE of the shares of Parent
Common Stock to be received by the Shareholders as the Merger Consideration.

         6.7 NEW JERSEY  SECURITIES  ACT. It is  understood  and agreed that the
Closing is subject to any and all requirements of New Jersey law applying to the
issuance  and  transfer of  Parent's  Common  Shares in exchange  for all of the
issued and outstanding  shares of the  Corporation.  In no event shall Parent be
liable to anyone for  failure to sell or issue any of its Common  Shares  unless
and until all applicable requirements of New Jersey law relating to the sale and
issuance have been met.

         6.8 APPROVAL OF  SHAREHOLDERS.  Target shall (a) cause a meeting of its
Shareholders to be duly called and held in accordance with the laws of the State
of New Jersey and Target's  Certificate of Incorporation  and By-Laws as soon as
reasonably practicable for the purpose of voting on the adoption and approval of
the   Agreement  and  the  Merger  (the   "Proposal"),   (b)  recommend  to  its
Shareholders'  approval of the Proposal  (except to the extent that the Board of
Directors in the discharge of their fiduciary  duties to Target deems the Merger
to be not in the best  interest of Target),  (c) use its best  efforts to obtain
the necessary  approval of its Shareholders,  (d) take all action required under
the NJBCA with respect to the holders of Target  Dissenting  Shares,  and (e) in
cooperation  with Parent mail to  Shareholders a transmittal  letter in form and
substance  reasonably  satisfactory to Parent to be used by such Shareholders in
forwarding their certificates for surrender and exchange.

         6.9 THIRD PARTY  CONSENTS.  Each party to this Agreement  shall use its
best  efforts  to  obtain,  as  soon as  reasonably  practicable,  all  permits,
authorizations,   consents,   waivers  and  approvals   from  third  parties  or
governmental  authorities  necessary to consummate this Agreement and the Merger
Agreement  and the  transactions  contemplated  hereby  or  thereby,  including,
without limitation, any permits, authorizations, consents, waivers and approvals
required in connection with the Merger.

                                   ARTICLE VII

                       CONDITIONS TO TARGET'S OBLIGATIONS

         The obligations of Target to effect the Merger under this Agreement are
subject to the  fulfillment  on or prior to the  Closing  Date of the  following
conditions, any one or more of which may be waived by Shareholders:

         7.1 REPRESENTATIONS,  WARRANTIES AND COVENANTS. The representations and
warranties of Parent and Sub contained in this Agreement and in any  certificate
delivered to  Shareholders  pursuant to this Agreement shall be true and correct
on and as of the  Closing  Date with the same force and effect as though made on
and as of the Closing Date.  Parent and Sub shall have performed and complied in
all material respects with all agreements,  obligations, and conditions required
by this  Agreement  to be  performed  or complied  with by it at or prior to the
Closing Date.

         7.2 NO ACTION OR PROCEEDINGS.  No statute,  rule,  regulation,  decree,
order or  injunction  shall  have been  promulgated,  enacted  or  entered by an
Governmental  Agency or judicial authority and be in effect which would prohibit
the  consummation  of the  transactions  contemplated  by this  Agreement and no
action or proceeding by or before any court or other  Governmental  Agency shall
have been  instituted or threatened by any party to restrain or prohibit  Parent
from  consummating  the  transactions  contemplated  by  this  Agreement  or  to
invalidate the transactions contemplated by this Agreement.

         7.3 OFFICER'S  CERTIFICATE.  Target shall have received a  certificate,
executed by an executive officer of Parent, dated the Closing Date, satisfactory
in form  and  substance  to  Target  and  their  counsel,  certifying  as to the
satisfaction of the conditions set forth in Sections 7.1 and 7.2.

         7.4 SECRETARY'S CERTIFICATE.  Target shall have received a certificate,
dated the Closing  Date,  of the  Secretary or an Assistant  Secretary of Parent
with respect to the accuracy and completeness of the resolutions  adopted by the
Board of Directors of Parent  authorizing this Agreement and the consummation of
the transactions contemplated hereby.

         7.5  OPINION.  Target  and the  Shareholders  shall have  received  the
Opinion described in Section 8.5(c). 

         7.6 OTHER CLOSING DELIVERIES.  Target shall have received all documents
and payments  required to be delivered and/or made to Shareholders by Parent and
Sub pursuant to Sections 9.2 and 9.3 hereof, respectively.

                                  ARTICLE VIII

                  CONDITIONS TO PARENT'S AND SUB'S OBLIGATIONS

         The  obligation  of Parent  and Sub to effect  the  Closing  under this
Agreement are subject to the  fulfillment on or prior to the Closing Date of the
following conditions, any one or more of which may be waived by Parent:

         8.1 REPRESENTATIONS,  WARRANTIES AND COVENANTS. The representations and
warranties  of  Target  Shareholders  contained  in  this  Agreement  and in any
certificate  delivered to Parent  pursuant to this  Agreement  shall be true and
correct on and as of the  Closing  Date with the same force and effect as though
made on and as of the Closing Date. Target and Shareholders shall have performed
and complied in all  material  respects  with all  agreements,  obligations  and
conditions required by this Agreement to be performed or complied with by it and
them at or prior to the Closing.

         8.2 GOVERNMENTAL APPROVALS; CONSENTS. All consents, permits, approvals,
licenses or orders from any Governmental Agency or other third party required to
be obtained for the lawful consummation of the transactions contemplated by this
Agreement,  shall  have been  obtained  except  where  failure  to  obtain  such
consents,  permits,  approvals,  licenses  or orders  would not have a  Material
Adverse  Effect  (whether or not such effect is referred to or  described in any
Schedule).

         8.3 NO ACTION OR PROCEEDINGS.  No statute,  rule,  regulation,  decree,
order or  injunction  shall  have been  promulaged,  enacted  or  entered by any
Governmental  Agency or judicial authority and be in effect which would prohibit
the  consummation  of the  transactions  contemplated  by this  Agreement and no
action or proceeding by or before any court or other  Governmental  Agency shall
have  been  instituted  or  threatened  by any  party to  restrain  or  prohibit
Shareholders or Target from  consummating the transactions  contemplated by this
Agreement.

         8.4 MATERIAL ADVERSE CHANGE.  From the hereof date to the Closing Date,
Target  shall not have  suffered  any change  which has or could have a Material
Adverse  Effect  (whether or not such effect is referred to or  described in any
Schedule).

         8.5 OPINION OF COUNSEL.  (a) Target  shall have  delivered to Parent an
opinion of counsel for Target,  addressed to Parent dated the Closing  Date,  in
form  acceptable to Parent stating that the Target is duly  organized,  validity
existing  and good  standing  under the laws of the State of New Jersey and that
Target has taken all  necessary  actions to  effectuate  the Merger;  (b) Parent
shall have received an opinion from special banking counsel, Norris,  McLaughlin
& Marcus,  P.A.,  in form  acceptable  to Parent  stating  that all  banking law
requirements  have been  satisfied and (c) Parent shall have received an opinion
from special tax and securities counsel, Norris, McLaughlin & Marcus, P.A., in a
form  acceptable  to Parent  stating  that the Merger will qualify as a tax free
reorganization  and that SEC Rule 145 applies to the Merger and the consequences
of the  application  of such Rule.  Parent,  Target and the  Shareholders  shall
provide  Norris,  McLaughlin  & Marcus,  P.A.  with such  representation  as may
customarily be required in connection with their opinions.

         8.6 CONTINUITY OF INTEREST AGREEMENT.  At or prior to the Closing Date,
Target,  Parent and a majority in interest of the  Shareholders  shall execute a
Continuity of Interest Agreement in substantially the form attached as Exhibit D
hereto.

         8.7 OFFICER'S  CERTIFICATE.  Parent shall have received a  certificate,
executed by an executive officer of Target, dated the Closing Date, satisfactory
in  form  and  substance  to  Parent  and  its  counsel,  certifying  as to  the
satisfaction of the conditions set forth in Section 8.1 and 8.2 hereof.

         8.8 SECRETARY'S  CERTIFICATE.  Parent shall have received a certificate
dated the Closing Date, from the Secretary or Assistant Secretary of Target with
respect to the accuracy and completeness of the resolutions adopted by the Board
of Directors of Target  authorizing  this Agreement and the  consummation of the
transactions contemplated hereby.

         8.9 GOOD STANDING CERTIFICATE.  Parent shall have received certificates
issued by appropriate Governmental Agencies evidencing, as of a recent date, the
good  standing  and tax  status  of Target  in the  jurisdiction  in which it is
incorporated  and in the  jurisdictions in which it is qualified to do business;
and as of a date not more than two days prior to the Closing Date, telegrams, if
available,  issued by the appropriate  Governmental Agencies with respect to the
good standing and tax status of Target in such jurisdictions.

         8.10 CERTIFIED CHARTER DOCUMENTS.  Parent shall have received a copy of
the Certificate of Incorporation or other applicable  charter instrument and all
amendments thereto of Target, certified by the appropriate Government Agencies.

         8.11  CERTIFIED  BY-LAWS.  Parent  shall  have  received  a copy of the
By-Laws of Target,  as amended  through the Closing Date,  certified by Target's
Secretary.

         8.12 STRUCTURAL AND ENVIRONMENTAL  REPORTS.  Parent shall have obtained
reports from experts,  satisfactory to Parent,  or shall otherwise be satisfied,
that the  improvements to 590 Pascack are free of material  structural  defects,
that there are no material defects to the HVAC systems or electrical systems and
there are no adverse environmental conditions affecting 590 Pascack.

         8.13   MATTERS   SATISFACTORY   TO  PARENT'S   COUNSEL.   All  actions,
proceedings,  opinions and  ancillary  documents  required or  incidental to the
consummation of the transactions  contemplated by this Agreement,  and all legal
matters related thereto, shall be reasonably satisfactory to counsel for Parent.

         8.14 OTHER CLOSING DELIVERIES. Parent shall have received all documents
required  to be  delivered  to Parent by  Shareholders  and Target  pursuant  to
Sections 7.1 and 7.3 hereof, respectively.

         8.15 ISRA.  Parent shall have received  satisfactory  evidence that the
transactions contemplated by this Agreement will not trigger compliance with the
provisions of the Environmental Clean-up  Responsibility Act, N.J.S.A.  13:1K-6,
et seq. ("ISRA") or that all provisions of ECRA have been satisfied.

         8.16  SHAREHOLDER  OFFER  PROCEDURES.   All  requirements  of  N.J.S.A.
14A:10-9,  including  shareholder  notice and  governmental  authorities  filing
requirements, have been complied with by Parent; it being understood that Parent
will make its best effort to have these  requirements  complied  within a timely
manner.

                                   ARTICLE IX

                       ACTIONS TO BE TAKEN AT THE CLOSING

         The  following  actions  shall be taken at the  Closing,  each of which
shall be  conditional  on completion of all the others and all of which shall be
deemed to have taken place simultaneously:

         9.1 DELIVERIES BY SHAREHOLDERS AND TARGET.  At or prior to the Closing,
Shareholders  shall deliver the Target stock  certificates to the Exchange Agent
in compliance  with Section  3.3(d) hereof.  Shareholders  and Target shall also
deliver to Parent all of the following:

         (a) the  opinions  of counsel  required  to be  delivered  pursuant  to
Section 8.5; 

         (b) the  certificate of an executive  officer of Target  required to be
delivered pursuant to Section 8.7;

         (c) the certificate required to be delivered pursuant to Section 8.8;

         (d) the  resignation  of those  directors  and officers of Target whose
names are set forth in Schedule 9.1 hereto and such others as shall be requested
in writing by Parent prior to the Closing;

         (e) the good standing and other  certificates and telegrams required to
be delivered pursuant to Section 8.9;

         (f) the certificate copies of the Certificate of Incorporation required
to be delivered pursuant to Section 8.10;

         (g) the stock books, stock ledgers,  minute books,  corporate seals and
financial records and statements of Target;

         (h) the copies of the  By-Laws  required  to be  delivered  pursuant to
Section 8.11; and 

         (i)  certificates  with respect to the  incumbency  and  signatures  of
certain  officers  of Target  who have  executed  this  Agreement  and any other
certificates or documents executed or to be executed in connection herewith.

         9.2 DELIVERIES BY PARENT. At the Closing, Parent shall deliver or cause
to be delivered:
                      
         (i) Merger Consideration,  as adjusted, required to be paid pursuant to
Section 1.2 (to be paid within seven (7) days of Closing);

         (ii) the  certificate of an executive  officer of Parent required to be
delivered pursuant to Section 7.4;

         (iii) the certificate of the Secretary or Assistant Secretary of Parent
required to be delivered pursuant to Section 7.5; and

         (iv)  certificates  with respect to the  incumbency  and  signatures of
certain  officers  of Parent  who have  executed  this  Agreement  and any other
certificates or documents executed or to be executed in connection herewith.

                                    ARTICLE X

                            INDEMNIFICATION; SURVIVAL

         10.1 INDEMNIFICATION. (a) Shareholders, jointly and severally, agree to
indemnify and hold harmless Parent (and its directors,  officers,  stockholders,
employees,  affiliates, agents and assigns) from and against any and all losses,
liabilities,  damages, deficiencies,  assessments,  judgments, costs or expenses
(including,  without limitation,  interest,  penalties and reasonable attorneys'
fees and  disbursements)  (collectively,  "Claims") arising out of or based upon
the breach or inaccuracy of any  representation or warranty  contained herein or
in any of the documents  delivered  pursuant  hereto made by  Shareholders,  the
non-performance  or breach by Target or  Shareholders  of any covenant,  term or
provision to be  performed  by it or any of them whether  hereunder or in any of
the  documents   delivered  pursuant  hereto.   Notwithstanding  the  foregoing,
Shareholders shall not be liable under this Section 10.1(a) unless and until the
aggregate  amount of  liability  under this  Section  10.1(a)  exceeds  $10,000,
whereupon  Shareholders shall be jointly and severally liable for all amounts in
excess of $10,000.

         (b) Parent hereby  agrees to indemnify  and hold harmless  Shareholders
(and their respective successors and legal representatives) from and against any
Claims   arising  out  of  or  based  upon  the  breach  or  inaccuracy  of  any
representation or warranty contained herein or in any of the documents delivered
pursuant hereto made by Parent,  or the  non-performance  or breach by Parent of
any covenant, term or provision to be performed by it hereunder or in any of the
documents delivered pursuant hereto.

         (c) Parent's right to  indemnification as provided in this Section 10.1
shall not be eliminated,  reduced or modified in any way as a result of the fact
that (i)  Parent  has notice of a breach or  inaccuracy  of any  representation,
warranty or covenant  contained  herein,  or (ii) Parent has been  provided with
access,  as requested by Parent, to officers and employees of Target and such of
Target's books, documents,  contracts and records as has been provided to Parent
in response to Parent's requests.

         10.2   CONDITIONS  OF   INDEMNIFICATION.   (a)  A  party   entitled  to
indemnification  hereunder (the  "Indemnified  Party") shall notify the party or
parties liable for such indemnification (the "Indemnifying Party") in writing of
any Claim which the  Indemnified  Party has  determined  has given or could give
rise to a right of  indemnification  under this Agreement.  Such notice shall be
given within a reasonable  (taking into account the nature of the Claim)  period
of  time  after  the  Indemnified  Party  has  actual  knowledge  thereof.   The
Indemnifying  Party shall  satisfy its  obligations  under this Article X within
twenty days after  receipt of  subsequent  written  notice from the  Indemnified
Party if an amount is  specified  therein,  or  promptly  following  receipt  of
subsequent  written  notice or  notices  specifying  the amount of such Claim or
additions thereto; provided, however, that for so long as the Indemnifying Party
is in good faith  defending a Claim  pursuant  to Section  10.2(b)  hereof,  its
obligation  to indemnify  the  Indemnified  Party with respect  thereto shall be
suspended (other than with respect to any costs,  expenses or other  liabilities
incurred by the Indemnified  Party prior to the assumption of the defense by the
Indemnifying Party). Failure to provide a notice of Claim within the time period
referred  to above  shall not  constitute  a defense to a Claim or  release  the
Indemnifying Party from any obligation hereunder to the extent that such failure
does not prejudice the position of the Indemnifying Party.

         (b) If the facts  giving rise to any such  indemnification  involve any
actual, threatened or possible Claim or demand by any person not a party to this
Agreement  against  the  Indemnified  Party,  the  Indemnifying  Party  shall be
entitled  to contest or defend  such claim or demand at its  expense and through
counsel of its own choosing, which counsel shall be reasonably acceptable to the
Indemnified  Party,  if the  Indemnifying  Party  gives  written  notice  of its
intention  to assume  the  contest  and  defense  of such Claim or demand to the
Indemnified Party as soon as practicable,  but in no event more than thirty days
after receipt of the notice of Claim,  and provides the  Indemnified  Party with
appropriate  assurances as to the  creditworthiness  of Indemnifying Party, that
the  Indemnifying  Party will be in a  position  to pay all fees,  expenses  and
judgments that might arise out of such Claim or demand.  The  Indemnified  Party
shall  have the  obligation  to  cooperate  in the  defense of any such Claim or
demand and the right,  at its own expense,  to participate in the defense of any
Claim.  So long as the  Indemnifying  Party is  defending in good faith any such
Claim or demand  asserted by a third party against the  Indemnified  Party,  the
Indemnified  Party  shall not settle or  compromise  such  Claim or demand.  The
Indemnifying  Party shall have the right to settle or compromise  any such Claim
or demand without the consent of the Indemnified Party at any time utilizing its
own funds to do so if in  connection  with such  settlement  or  compromise  the
Indemnified  Party is fully released by the third party and its paid in full any
indemnification  amounts  due  hereunder.   The  Indemnified  Party  shall  make
available  to the  Indemnifying  Party  or its  agents  all  records  and  other
materials in the Indemnified  Party's possession  reasonably  required by it for
its use in  contesting  any  third  party  Claim or demand  and shall  otherwise
cooperate,  at the expense of the Indemnifying  Party, in the defense thereof in
such manner as the Indemnifying Party may reasonably request. Whether or not the
Indemnifying  Party elects to defend such Claim or demand, the Indemnified party
shall have no obligation to do so.

         10.3  SURVIVAL.   The   representations,   warranties,   covenants  and
agreements  made by the  parties  herein  or in any of the  documents  delivered
pursuant  hereto shall  survive the Closing Date hereof until  twenty-four  (24)
months  after the date  hereof;  provided,  however,  that the  representations,
warranties and agreements  made with regard to Taxes and  environmental  matters
(as set forth in Section 4.13) shall survive  until the  applicable  statutes of
limitations have expired; provided,  further, that with respect to any covenant,
term or provision to be performed hereunder or in any of the documents delivered
pursuant hereto, the right of indemnification under this Article X shall survive
until such  covenant,  term or  provision  has been fully  paid,  performed  and
discharged.

                                   ARTICLE XI

                                   TERMINATION

         11.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective  Time,  whether  before or after approval by the  Shareholders  of
Target:

         (a) by mutual consent of Parent and Target; or

         (b) by either  Parent or Target if (i) the  Merger  shall not have been
consummated  on or before  June 30,  1997  (the  "Termination  Date"),  (ii) the
requisite  vote of the  Shareholders  of Target to approve this  Agreement,  the
Merger Agreement and the transactions  contemplated hereby and thereby shall not
be obtained at the meetings, or any adjournments thereof, called therefor, (iii)
any  governmental or regulatory body, the consent of which is a condition to the
obligations  of  Parent,   Sub  and  Target  to  consummate   the   transactions
contemplated  hereby or by the Merger  Agreement,  shall have  determined not to
grant its consent and all  appeals of such  determination  shall have been taken
and have been unsuccessful,  or (iv) any court of competent  jurisdiction in the
United States or any State shall have issued an order, judgment or decree (other
than  a  temporary  restraining  order)  restraining,   enjoining  or  otherwise
prohibiting  the Merger and such  order,  judgment  or decree  shall have become
final and nonappealable.

         11.2  EFFECT  OF  TERMINATION.  In the  event  of  termination  of this
Agreement  by either  Parent or  Target,  as  provided  in  Section  11.1,  this
Agreement  shall  forthwith  become void and there shall be no  liability on the
part of either Target,  Parent,  Sub or their  respective  officers or directors
(except as set forth in this Section  11.2).  Nothing in this Section 11.2 shall
relieve any party from liability for any breach of this Agreement.

                                   ARTICLE XII

                                  MISCELLANEOUS

         12.1  WAIVER.  Parent or  Shareholders  may (i) extend the time for the
performance of any of the obligations or other acts of the other, (ii) waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto and (iii) waive compliance with any
of the agreements of the other or  satisfaction  of any of the conditions to its
obligations  contained  herein.  Any  extension or waiver made  pursuant to this
Section 12.1 must be by an instrument  in writing  signed on behalf of the party
granting the extension of waiver.  A waiver by any party of any provision hereof
or breach  hereof  shall not operate or be  construed as the waiver of any other
provision or any subsequent breach.

         12.2  EXPENSES.  Except  as  provided  in this  Section,  all  fees and
expenses,  including,  without limitation,  all fees of counsel and accountants,
incurred in connection  with this  Agreement and the  Transactions  contemplated
hereby  shall  be  borne  by  the  party   incurring  such  fees  and  expenses.
Notwithstanding the preceding sentence,  the legal fees of Harwood Lloyd will be
borne by Parent  and the legal fees of Andora,  Palmisano  & Geaney and  Norris,
McLaughlin & Marcus,  P.A. and the accounting fees of R.D. Hunter & Company will
be borne by Target.  Such fees will be deducted from the cash of Target prior to
determination of the Conversion Ratio.

         12.3 NOTICES. All notices,  requests,  demands and other communications
required or permitted  hereunder shall be in writing and shall be deemed to have
been duly given when  delivered  by hand one  business  day after  delivery to a
reputable  overnight  carrier or four business  days after  delivery to the U.S.
Postal Services,  if sent by first class mail, certified or registered mail with
postage  prepaid or by telecopy  with a copy  following  by hand or by overnight
carrier to mailed, certified or registered mail with postage prepaid:

         (a) if to Shareholders, to:

                              Anthony D. Andora, Esq.
                              Andora, Palmisano & Geaney
                              303 Molnar Drive
                              Elmwood Park, NJ  07407

         (b) if to Parent, to:

                              Mr. Anthony Labozzetta
                              Senior Vice President
                              Interchange State Bank
                              Park 80 West/Plaza Two
                              Saddle Brook, NJ 07662

               with a copy to:       
                              Harwood Lloyd
                              130  Main Street
                              Hackensack, NJ  07601

                           Attention:  Maurice L. Stone, Esq.
                           Telephone No.:  (201) 487-1080
                           Telecopy No.:   (201) 489-5005

or to such  other  person or  address  as any party  shall  furnish to the other
parties in writing.

         12.4 GOVERNING LAW AND  JURISDICTION.  This Agreement shall be governed
by and  construed  in  accordance  with the  internal  laws of the  State of New
Jersey,  without  regard to  principles  of conflicts of law. Any and all suits,
legal  actions or  proceedings  against  any party  hereto  arising  out of this
Agreement  shall be brought in the Superior Court of New Jersey venued in Bergen
County  or, if such  court  shall  not have  jurisdiction,  any  other  court of
appropriate  jurisdiction  sitting  in the State of New  Jersey  and each  party
hereby submits to and accepts the exclusive  jurisdiction of such courts for the
purpose of such suits,  legal  action or  proceedings.  Shareholders  agree that
service of all writs, process and summons in any such suit, action or proceeding
may be made upon their agent.  Parent agrees that service of all writs,  process
and summons in any such suit, action or proceeding brought in any such court may
be  made  upon  having  an  address  as its  agent.  Each  party  hereto  hereby
irrevocably  waives  any  objection  which it may now or  hereafter  have to the
laying of venue of any such suit,  legal action or  proceeding in any such court
and hereby  further  waives any claim that any suit,  legal action or proceeding
brought in any such court has been brought in an inconvenient forum.

         12.5 BINDING  EFFECT;  NO ASSIGNMENT.  This Agreement  shall be binding
upon and inure to the benefit of the parties and their respective successors and
legal representatives.  This Agreement is not assignable except by Parent to any
of its affiliates and any other purported  assignment shall be null and void. In
the event of any  assignment  by Parent to an  affiliate,  Parent  shall  remain
jointly and severally  liable with such  affiliate for any  obligation of Parent
hereunder.  Nothing  contained in this  Agreement  shall be deemed to confer any
right or benefit  upon any person  other than the  parties  hereto to the extent
herein provided.

         12.6 [INTENTIONALLY OMITTED]

         12.7  VARIATIONS IN PRONOUNS.  All pronouns and any variations  thereof
refer to the masculine,  feminine or neuter,  singular or plural, as the context
may require.

         12.8 COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts,  each of which when so executed and delivered shall be
an original,  but all such  counterparts  shall together  constitute one and the
same instrument.  Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.

         12.9  HEADINGS;  SEVERABILITY.  The headings in this  Agreement are for
reference only, and shall not affect the interpretation of this Agreement.  Each
and every  provision of this Agreement shall be treated as separate and distinct
and, in the event of any provision hereof being declared  invalid,  such invalid
provision shall be deemed to be severable and all other provisions  hereof shall
remain in full force and effect.

         12.10 ENTIRE  AGREEMENT.  This  Agreement  (including  the Exhibits and
Schedules)  and the  agreements,  certificates  and  other  documents  delivered
pursuant  hereto contain the entire  agreement among the parties with respect to
the  transactions  described  herein,  and  supersede all prior  agreements  and
understandings, written or oral, with respect thereto.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date first above written. 

ATTEST/WITNESS 

                               INTERCHANGE FINANCIAL SERVICES CORP.

                                    BY: /s/Anthony S. Abbate
                                        ---------------------
                                    ANTHONY S. ABBATE, PRESIDENT

                               WASHINGTON INTERCHANGE CORP.

  /s/JoAnn Mistritto               BY: /s/Jeremiah F. O'Connor
                                        -----------------------
                                    JEREMIAH F. O'CONNOR, PRESIDENT

                               WIC ACQUISITION CORP.

                                    BY: /s/Anthony Labozzetta
                                        ---------------------
                                    ANTHONY LABOZZETTA, PRESIDENT

   /s/JoAnn Mistritto                   /s/Michael Albarelli
                                        ----------------------
                                    MICHAEL ALBARELLI, SHAREHOLDER

                                        /s/Anthony D. Andora
   /s/JoAnn Mistritto                   -----------------------
                                    ANTHONY D. ANDORA, SHAREHOLDER

   /s/Karen M Piano                     /s/Lucien Baron
                                        -----------------------
                                    LUCIEN BARON, SHAREHOLDER

   /s/Frances E. Ciolino                /s/Robert Ciolino
                                        -----------------------
                                    ROBERT CIOLINO, SHAREHOLDER


   /s/JoAnn Mistritto                   /s/Alfred J. Cinelli
                                        -----------------------
                                    ALFRED J. CINELLI, DDS,SHAREHOLDER

   /s/JoAnn Mistritto                   /s/John J. Eccleston
                                        -----------------------
                                    JOHN J. ECCLESTON, SHAREHOLDER

   /s/JoAnn Mistritto                   /s/Joseph S. Gradzki
                                        -----------------------
                                    JOSEPH S. GRADZKI, SHAREHOLDER

   /s/Ben Rosenzweig                    /s/Roger L. Helias
                                        ------------------------
                                    ROGER L. HELIAS, SHAREHOLDER

   /s/JoAnn Mistritto                   /s/Paul Kleinkops
                                        ------------------------
                                    PAUL KLEINKOPS, SHAREHOLDER

   /s/JoAnn Mistritto                   /s/Jeremiah F. O'Connor
                                        ------------------------
                                    JEREMIAH F. O'CONNOR, SHAREHOLDER


<PAGE>



                                    EXHIBIT A

                                   AMOUNT                         CERTIFICATE
STOCKHOLDERS                     OF SHARES         PROPORTION          NO.
------------                     ---------         ----------          ---

Michael Albarelli                   20                10%
Anthony D. Andora                   20                10%
Lucien Baron                        20                10%
Robert Ciolino                      20                10%
Alfred J. Cinelli, DDS              20                10%
John J. Eccleston                   20                10%
Joseph S. Gradzki                   20                10%
Roger L. Helias                     20                10%
Paul Kleinkops                      20                10%
Jeremiah F. O'Connor                20                10%
                                    ==                ===

                  TOTAL:           200               100%