-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RUkPxMmQuuVujcHiBuBLICuuYpARFTd0ouPRW41Y91gcSaxQcR9bp/0Qqtmi03vY b37t0U4C2f61SmSACCGm5A== 0000950116-02-002074.txt : 20020906 0000950116-02-002074.hdr.sgml : 20020906 20020906161209 ACCESSION NUMBER: 0000950116-02-002074 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20020906 FILER: COMPANY DATA: COMPANY CONFORMED NAME: YARDVILLE NATIONAL BANCORP CENTRAL INDEX KEY: 0000787849 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 222670267 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-99269 FILM NUMBER: 02758670 BUSINESS ADDRESS: STREET 1: 3111 QUAKERBRIDGE RD CITY: MERCERVILLE STATE: NJ ZIP: 08619 BUSINESS PHONE: 6095855100 MAIL ADDRESS: STREET 1: 3111 QUAKERBRIDGE RD CITY: MERCERVILLE STATE: NJ ZIP: 08619 S-3 1 s-3.txt As filed with the Securities and Exchange Commission on September 6, 2002 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------------- YARDVILLE NATIONAL BANCORP (Exact Name of Registrant as Specified in its Charter) NEW JERSEY 22-2670267 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 2465 Kuser Road Hamilton, New Jersey 08690 (609) 585-5100 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Patrick M. Ryan President and Chief Executive Officer Yardville National Bancorp 2465 Kuser Road Hamilton, New Jersey 08690 (609) 585-5100 (Name, address, including zip code, and telephone number, including area code, of agent for service) With copies to: J. Bradley Boericke, Esquire Joanne R. Soslow, Esquire Steven J. Feder, Esquire Morgan, Lewis & Bockius LLP Pepper Hamilton LLP 1701 Market Street 3000 Two Logan Square Philadelphia, PA 19103 18th and Arch Streets (215) 963-5000 Philadelphia, PA 19103 (215) 981-4000 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, check the following box. / / If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the "Securities Act"), other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. / / If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / -----------------------------
- ---------------------------------------------------------------------------------------------------------------------- CALCULATION OF REGISTRATION FEE - ---------------------------------------------------------------------------------------------------------------------- Title of Shares to be Amount to be Proposed Maximum Offering Proposed Maximum Amount of Registered Registered(2) Price Per Unit(1) Aggregate Offering Registration Price(1)(2) Statement Fee - ------------------------- ------------------ ---------------------------- ------------------------ ------------------- Common Stock 1,725,000 $19.16 $33,051,000 $3,041 - ----------------------------------------------------------------------------------------------------------------------
(1) Estimated in accordance with Rule 457(c) solely for the purpose of determining the registration fee, based upon the average of the high and low prices of the common stock as reported on the Nasdaq National Market on September 4, 2002 for purposes of calculating the registration fee. (2) Includes 225,000 shares of common stock that the underwriters will have the right to purchase to cover over-allotments, if any. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 6, 2002 PROSPECTUS 1,500,000 Shares [LOGO] Common Stock We are selling shares of our common stock. Our common stock is listed on the Nasdaq National Market under the symbol "YANB." On September ____, 2002, the last sale price of our common stock as reported by the Nasdaq National Market was $___ per share. Investing in our common stock involves significant risks. You should read the "Risk Factors" section beginning on page 8 before investing. Neither the Securities and Exchange Commission nor any state securities commission or regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. These securities are not deposits or accounts or obligations of any bank and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
Per Share Total --------- -------- Public offering price .................................. $_______ $_______ Underwriting discount .................................. $_______ $_______ Proceeds, before expenses, to Yardville National Bancorp............................................... $_______ $_______
We have granted to the underwriters, Legg Mason Wood Walker, Incorporated and Sandler O'Neill & Partners, L.P., a 30-day option to purchase up to 225,000 additional shares to cover over-allotments, if any. The underwriters expect to deliver the shares on or about _______, 2002, subject to customary closing conditions. Legg Mason Wood Walker Sandler O'Neill & Partners, L.P. Incorporated The date of this Prospectus is _______, 2002 [MAP OF BRANCH LOCATIONS AND MARKET AREA] TABLE OF CONTENTS
Page ---- ABOUT THIS PROSPECTUS ................................................... i CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS ............... ii PROSPECTUS SUMMARY ...................................................... 1 RISK FACTORS ............................................................ 8 USE OF PROCEEDS ......................................................... 12 MARKET FOR COMMON STOCK AND DIVIDENDS ................................... 12 CAPITALIZATION .......................................................... 13 MANAGEMENT .............................................................. 14 STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS ................ 16 DESCRIPTION OF CAPITAL STOCK ............................................ 18 UNDERWRITING ............................................................ 21 LEGAL MATTERS ........................................................... 23 EXPERTS ................................................................. 23 WHERE YOU CAN FIND MORE INFORMATION ..................................... 24 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ......................... 24
ABOUT THIS PROSPECTUS You should rely only on the information contained in this prospectus or incorporated by reference into this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. We are not, and the underwriters are not, making offers to sell, or seeking offers to buy, shares of our common stock in jurisdictions where offers and sales are not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common stock. Unless otherwise indicated, all information in this prospectus assumes that the underwriters will not exercise their option to purchase additional shares of common stock to cover over-allotments. In this prospectus, we frequently use the terms "we," "our," "us," "Company" and "YNB" to refer to both Yardville National Bancorp and The Yardville National Bank, our wholly owned bank subsidiary. We sometimes refer to The Yardville National Bank as the "Bank." To understand this offering fully, you should read this entire document carefully, including particularly the "Risk Factors" section, as well as the documents identified in the section titled "Where You Can Find More Information." i CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This prospectus and the documents incorporated by reference in this prospectus contain express and implied statements relating to the future financial condition, results of operations, plans, objectives, performance and business of YNB, which are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that relate to, among other things, profitability, liquidity, loan loss reserve adequacy, plans for growth, interest rate sensitivity, market risk, regulatory compliance and financial and other goals. These forward- looking statements are subject to risks, uncertainties and assumptions, including, among other things: o the results of our efforts to implement our retail strategy; o adverse changes in our loan portfolio and the resulting credit risk- related losses and expenses; o interest rate fluctuations and other economic conditions; o continued levels of our loan quality and origination volume; o our ability to attract core deposits; o continued relationships with major customers; o competition in product offerings and product pricing; o adverse changes in the economy that could increase credit-related losses and expenses; o compliance with laws and regulatory requirements of federal and state agencies; o other factors, including those matters discussed in the section titled "Risk Factors"; and o other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission (the "SEC"). Although the expectations in the forward-looking statements are based on our current beliefs and expectations, we do not assume responsibility for the accuracy and completeness of such statements. Further, we are under no duty to update any of the forward-looking statements after the date of this prospectus to conform such statements to actual results. ii PROSPECTUS SUMMARY This summary highlights information contained elsewhere in, or incorporated by reference into, this prospectus. Because this is a summary, it may not contain all of the information that is important to you. Therefore, you also should read carefully the more detailed information set forth in this prospectus, our financial statements and the other information that is included in this prospectus or incorporated by reference in this prospectus, before making a decision to invest in our common stock. Our Company We are a registered financial holding company headquartered in Mercer County, New Jersey with total assets of $2.1 billion, total deposits of $1.2 billion and total stockholders' equity of $103.8 million at June 30, 2002. We conduct a general commercial and retail banking business through our principal operating subsidiary, The Yardville National Bank, which commenced operations as a commercial bank in 1925. We provide a broad range of lending, deposit and other financial products and services with an emphasis on commercial real estate and commercial and industrial lending to small to mid-sized businesses and individuals. Our existing and target markets are located in the corridor between New York City and Philadelphia. We currently operate 18 full-service branches, including 13 branches in our primary market of Mercer County, where we have the largest deposit market share of any New Jersey based financial or bank holding company of 13.0%. As part of our expansion strategy, we have opened three branches in Hunterdon County, New Jersey, one branch in Burlington County, New Jersey and one branch in Bucks County, Pennsylvania. From December 31, 1997 to June 30, 2002, we achieved substantial growth without any acquisitions, while improving our asset quality: o We increased our total loans from $385.8 million to $1.1 billion for a 25.5% compound annual growth rate; o Our ratio of nonperforming assets to total loans and other real estate owned decreased from 2.18% to 0.68%; o We increased our total assets from $614.7 million to $2.1 billion; and o We doubled our branch network from nine branches to 18 branches. Due to consolidation, we continue to see opportunities to grow our asset base both in our existing markets and by expanding into contiguous markets in New Jersey and Pennsylvania. We believe these regions have customers with banking needs that can no longer be adequately served by smaller local institutions but who still desire the personalized service that larger institutions typically do not offer. We believe that the key differentiating factors between us and our larger competitors are our philosophy of relationship banking and our in-market expertise, while our ability to enter into larger loan relationships enables us to effectively compete against smaller institutions. Key Operating Strengths We believe the following operating strengths set us apart from our competitors and position us for further growth: o Relationship Banking. We target small to mid-sized businesses and individuals that value long-term banking relationships and personal service. Our senior managers directly interact with our customers, strengthening our ability to develop long-term relationships, maintain high quality service and respond quickly to customer needs. This senior level approach to serving and understanding our customers' needs enables us to personalize our products and services. We believe the continued 1 consolidation of national and regional banks in our existing and target markets has increased the opportunities for us to attract customers with our relationship banking approach. o Loan Growth. Historically, we have emphasized making commercial real estate and commercial and industrial loans to small to mid-sized businesses and individuals. Our commercial loan portfolio has grown from $255.2 million at December 31, 1997 to $823.8 million at June 30, 2002. By establishing our niche as a strong commercial lender and expanding geographically, we have taken advantage of consolidation in our markets to increase commercial loan volume solely through internal growth. At June 30, 2002, 76.8% of our loans were commercial real estate and commercial and industrial loans. o Asset Quality. We have successfully grown our loan portfolio while at the same time maintaining high credit quality. Our significant lending experience and our hands-on, collateral based approach to developing and managing our commercial lending relationships has resulted in low levels of nonperforming assets and net charge-offs. o The ratio of annualized net loan charge-offs as a percent of average total loans was 0.01% for the six months ended June 30, 2002 and has averaged 0.18% for the five year period ended December 31, 2001. o The ratio of nonperforming assets to total assets was 0.35% at June 30, 2002, and has averaged 0.80% for the five year period ended December 31, 2001 (based on the ratios at year end). o The ratio of nonperforming loans to total loans was 0.57% at June 30, 2002 and has averaged 0.80% for the five year period ended December 31, 2001 (based on the ratios at year end). o The ratio of allowance for loan losses to nonperforming loans was 247.75% at June 30, 2002 and has averaged 198.10% for the five year period ended December 31, 2001 (based on the ratios at year end). o In-Market Expertise. We believe our management team has the leadership and experience to enable us to compete effectively. Our commercial lending officers have an average of over 20 years of commercial banking experience. We hire talented and experienced local bankers who understand their communities and are given the flexibility to make decisions. We have maintained strong community relationships by, among other things, supporting the active participation of our employees in local charitable, civic, school, religious and community development activities. Members of our business development board are local business leaders with significant ties to the communities we serve who, in addition to our experienced loan officers, provide insight and guidance for our business development strategies. o Competitive Position. We were ranked 4th in our primary market of Mercer County with a deposit market share of 13.0% according to FDIC rankings dated June 30, 2001. Both Mercer County, where the majority of our business currently is generated, and Hunterdon County, where we have most recently focused our expansion efforts, have higher household incomes than the national average. We believe that the strength of our markets, our relationship banking philosophy and our experienced management team, combined with industry consolidation, provide us with continued opportunities to expand our market share. Retail Strategy Our goals are to further develop the earnings power and increase the value of our franchise. In order to achieve these goals, we plan to reduce our cost of funds and increase our non-interest income by attracting lower cost transaction and other core deposit accounts. Specifically, we are implementing our retail strategy by expanding our branch network, enhancing our brand image and upgrading our technology infrastructure. 2 o Branch Expansion. We have opened eight new branches since 1999, including our first branches in Burlington County, Hunterdon County and Bucks County. Our focus has been expansion in Mercer County and Hunterdon County, and we intend to continue our expansion in these counties. We also plan to add branches in contiguous counties. For example, we recently received regulatory approval for a branch in Middlesex County, New Jersey and expect to open this branch by the end of 2002. We currently have strong business relationships in Middlesex County, and we believe this new branch will help us capture the lower cost deposit and fee-based business of these customers and attract new customers. We believe our relationship-oriented approach to community banking fills a void left by the consolidation of the financial services industry in these markets. We believe our branch expansion will strengthen our retail position in our markets, helping to accelerate deposit growth. In addition, from time to time, we may explore opportunities to expand through acquisitions. o Brand Image. While we historically have focused on commercial lending, we intend to strengthen our retail brand image in our markets. We believe expanding our branch network and upgrading our current facilities, while delivering personalized community banking services, will develop our retail brand image as a local bank for local businesses and individuals. We also plan to expand our marketing efforts to increase awareness of our broad range of products and services. We believe these improvements to our brand image will increase customer loyalty, attract new customers and improve the profitability of our business. o Technological Improvements. As we have grown, we have continued to strengthen our technological capabilities. By the end of 2002, we intend to complete an upgrade of our technological infrastructure so that we can improve service to existing customers and support the internal demands of our growing franchise. Our new systems will enhance our capabilities to provide financial products and services such as internet banking, including bill payment and cash management, and will enhance our ability to provide quicker service, faster updating of account statements and other detailed information to our customers. Our new systems will strengthen our internal reporting and management information systems to provide senior management access to more timely and detailed data on our operations. Further, our new systems will have the capacity to support significant growth, which we believe will enable us to continue to develop our retail banking franchise. Portfolio Management We manage a portion of our investment portfolio with the primary objective of enhancing return on equity and earnings per share. We refer to this as our Investment Growth Strategy. The income generated from this Investment Growth Strategy has offset the costs associated with the growth of our infrastructure and enhanced total net interest income. In connection with the Investment Growth Strategy, we utilize asset liability simulation models to analyze risk and reward relationships in different interest rate environments based on the composition of investments in the portfolio and our overall interest rate risk position. The Investment Growth Strategy includes United States agency mortgage backed securities and bonds, which are funded through Federal Home Loan Bank advances and other borrowings. While the Investment Growth Strategy has minimal credit risk, it does increase our overall interest rate risk. The amount of securities managed in the Investment Growth Strategy totaled $362.7 million at June 30, 2002, and we have capped it at $380.0 million for 2002. We expect the amount of securities managed in the Investment Growth Strategy to decline over time. 3 Market Area We have existing and targeted markets in Central New Jersey and Eastern Pennsylvania. Our primary market of Mercer County ranks 6th among the 21 counties in New Jersey with an average household income of $87,348. Hunterdon County, where we have opened three branches since November 2000, including two branches in 2002, ranks 3rd among counties in New Jersey with an average household income of $110,533. Burlington County, where we opened a branch in 2001, ranks 11th among counties in New Jersey with an average household income of $74,277. Bucks County, where we opened a branch in 1999, with an average household income of $79,767 ranks 3rd among the 67 counties in Pennsylvania. We have recently received regulatory approval to open our first branch in Middlesex County, which ranks 9th among counties in New Jersey with an average household income of $79,811. We also have targeted Somerset County, which ranks 2nd among counties in New Jersey with an average household income of $115,447. All of these markets currently exceed the national average household income of $61,904. All market data and rankings are as of June 30, 2001 (the most recently available data). Our principal and executive offices are located at 2465 Kuser Road, Hamilton, New Jersey 08690. Our telephone number is (609) 585-5100 and our website address is www.yanb.com. 4 The Offering
Common Stock Offered................................................... 1,500,000 shares Common Stock Outstanding After the Offering ......................................................... 9,576,343 shares Use of Proceeds........................................................ We intend to use the net proceeds from this offering to increase the Bank's capital position in anticipation of future growth and for other general corporate purposes. Promptly following this offering, we intend to contribute substantially all of the net proceeds to the Bank to increase its capital position. Dividends.............................................................. Our annualized dividend over the past four quarters has been $0.44 per share. Nasdaq National Market Symbol.......................................... YANB
The number of shares of common stock offered assumes the underwriters' over- allotment option is not exercised. If the over-allotment option is exercised in full, we will offer, issue and sell an additional 225,000 shares, and the common stock outstanding after this offering will be 9,801,343 shares. In addition, the number of shares outstanding after this offering excludes 1,117,430 shares reserved for issuance under our stock option plans (of which options to purchase 977,280 shares at an average option price of $13.50 were outstanding at June 30, 2002), 68,500 shares reserved for issuance upon exercise of outstanding stock warrants exercisable at a price of $12.00 per share, which expire on June 23, 2010, and 172,000 shares held in our treasury. 5 Financial Summary The following table sets forth certain historical financial data of YNB and its subsidiaries on a consolidated basis. This table should be read in conjunction with our historical consolidated financial statements and related notes.
At or For the Six Months Ended June 30, At or For the Year Ended December 31, ----------------------- ------------------------------------------------------------- 2002 2001 2001 2000 1999 1998 1997 ---------- ---------- ---------- ---------- ---------- -------- -------- (in thousands, except per share data and ratios) Statement of Income: Interest income....................... $ 58,790 $ 59,358 $ 118,948 $ 100,389 $ 69,719 $ 50,923 $ 40,768 Interest expense...................... 36,554 41,373 82,813 62,654 39,645 28,392 21,100 ---------- ---------- ---------- ---------- ---------- -------- -------- Net interest income................... 22,236 17,985 36,135 37,735 30,074 22,531 19,668 Provision for loan losses............. 1,625 1,575 3,925 3,700 3,175 1,975 1,125 Securities gains (losses), net........ 1,626 1,128 3,182 46 (301) 151 24 Other non-interest income............. 2,594 2,352 4,855 3,380 3,066 2,851 2,520 Non-interest expense.................. 15,125 12,947 26,835 22,861 18,457 15,337 13,341 ---------- ---------- ---------- ---------- ---------- -------- -------- Income before income tax expense and extraordinary item .............. 9,706 6,943 13,412 14,600 11,207 8,221 7,746 Income tax expense.................... 2,679 1,815 3,395 4,259 3,187 2,639 2,740 ---------- ---------- ---------- ---------- ---------- -------- -------- Income before extraordinary item...... 7,027 5,128 10,017 10,341 8,020 5,582 5,006 Extraordinary loss on early retirement of debt, net of tax benefit ......... - - (1,464) - - - - ---------- ---------- ---------- ---------- ---------- -------- -------- Net income............................ $ 7,027 $ 5,128 $ 8,553 $ 10,341 $ 8,020 $ 5,582 $ 5,006 ========== ========== ========== ========== ========== ======== ======== Balance Sheet: Assets................................ $2,119,795 $1,754,259 $1,943,389 $1,619,312 $1,123,598 $757,666 $614,686 Loans................................. 1,073,070 882,811 1,007,973 818,289 646,737 491,649 385,751 Securities............................ 858,052 751,957 812,236 675,638 417,465 221,688 186,636 Deposits.............................. 1,219,529 952,218 1,092,690 950,318 743,807 519,643 422,944 Borrowed funds........................ 746,825 667,127 707,113 545,223 298,689 177,888 134,316 Stockholders' equity.................. 103,767 82,230 93,245 78,237 58,825 40,756 39,745 Allowance for loan losses............. 15,098 11,449 13,542 10,934 8,965 6,768 5,570 Per Share Data (1): Basic earnings per share Income before extraordinary item...... $ 0.88 $ 0.69 $ 1.32 $ 1.47 $ 1.33 $ 1.11 $ 0.99 Extraordinary loss, net of tax benefit - - (0.19) - - - - ---------- ---------- ---------- ---------- ---------- -------- -------- Net income............................ $ 0.88 $ 0.69 $ 1.13 $ 1.47 $ 1.33 $ 1.11 $ 0.99 ========== ========== ========== ========== ========== ======== ======== Diluted earnings per share Income before extraordinary item...... $ 0.86 $ 0.69 $ 1.30 $ 1.47 $ 1.33 $ 1.10 $ 0.98 Extraordinary loss, net of tax benefit.............................. - - (0.19) - - - - ---------- ---------- ---------- ---------- ---------- -------- -------- Net income............................ $ 0.86 $ 0.69 $ 1.11 $ 1.47 $ 1.33 $ 1.10 $ 0.98 ========== ========== ========== ========== ========== ======== ======== Cash dividends........................ $ 0.22 $ 0.22 $ 0.44 $ 0.40 $ 0.34 $ 0.29 $ 0.24 Stockholders' equity (tangible book value) .............................. 12.90 11.14 11.68 10.64 8.88 8.20 7.82 Other Share Data (1): Average shares outstanding - basic.... 8,018 7,384 7,601 7,022 6,015 5,017 5,052 Average shares outstanding - diluted.. 8,170 7,460 7,678 7,039 6,041 5,059 5,117 Period end shares outstanding......... 8,076 7,446 8,043 7,445 6,746 4,968 5,082 Financial Ratios: Return on average assets.............. 0.70% 0.61% 0.48% 0.79% 0.83% 0.82% 0.93% Return on average stockholders' equity 14.41 12.66 9.86 15.64 15.34 13.96 13.32 Net interest margin FTE (2)........... 2.35 2.28 2.17 3.07 3.33 3.55 3.95 Efficiency ratio (3).................. 57.17 60.32 60.75 55.54 56.20 60.07 60.06 Total loans to total assets........... 50.62 50.32 51.87 50.53 57.56 64.89 62.76
(See footnotes on following page) 6
At or For the Six Months Ended June 30, At or For the Year Ended December 31, ------------------------ --------------------------------------------- 2002 2001 2001 2000 1999 1998 1997 ------ ------ ------ ------ ------ ------ ------ (in thousands, except per share data and ratios) Capital Ratios: Average stockholders equity to average assets .................................... 4.84% 4.79% 4.85% 5.05% 5.39% 5.84% 7.00% Dividend payout ratio .............................. 24.19 31.20 39.06 27.46 25.40 25.96 24.63 Tier 1 leverage ratio (4) .......................... 6.52 6.67 6.92 8.13 7.90 7.68 9.53 Tier 1 capital as a percentage of risk-weighted assets .............................. 10.04 10.39 10.03 10.56 10.26 9.91 12.24 Total capital as a percentage of risk-weighted assets .............................. 11.16 11.90 11.25 11.65 11.46 11.17 13.49 Asset Quality Ratios: Allowance for loan losses to total loans............ 1.41% 1.30% 1.34% 1.34% 1.39% 1.38% 1.44% Net loan charge offs to average total loans ............................................. 0.01 0.25 0.15 0.24 0.17 0.18 0.14 Nonperforming loans (5) to total loans ............................................. 0.57 0.60 0.51 0.86 0.48 0.79 1.38 Nonperforming assets (6) to total loans and other real estate owned ................. 0.68 0.92 0.74 1.11 0.87 1.78 2.18 Nonperforming assets (6) to total assets ............................................ 0.35 0.47 0.38 0.56 0.50 1.17 1.38 Allowance for loan losses to nonperforming assets .............................. 205.39 140.25 181.67 120.50 158.31 76.65 65.64 Allowance for loan losses to nonperforming loans (5) ........................... 247.75 215.69 264.23 155.47 291.26 174.75 104.80
- --------------- (1) All share and per share data have been restated to reflect the 2.5% stock dividend declared in March 1998 and the two-for-one stock split effected in the form of a stock dividend declared in December 1997. (2) Tax equivalent based on a 34% Federal tax rate for all periods presented (FTE = Federal tax equivalent basis). (3) Efficiency ratio is equal to non-interest expense divided by the sum of the net interest income and non-interest income. (4) Tier 1 leverage ratio is Tier 1 capital to average assets. (5) Nonperforming loans include nonaccrual loans, restructured loans and loans 90 days past due or greater and still accruing. (6) Nonperforming assets include nonperforming loans and other real estate owned. 7 RISK FACTORS You should carefully consider the risk factors listed below. These risk factors may cause our future earnings or our financial condition to be less favorable than we expect. This list includes only the risk factors that we believe are most important and is not a complete list of risks. Other risks may be significant, and the risks listed below may affect us to a greater extent than indicated. You should read this section together with the other information in this prospectus and the documents that are incorporated into this prospectus by reference. We may not be able to continue to grow our business, which may adversely impact our results of operations. During the last five years, our total assets have grown substantially from $614.7 million at December 31, 1997 to $2.1 billion at June 30, 2002. Our business strategy calls for continued expansion, but we do not anticipate growth to continue at this rate. Our ability to continue to grow depends, in part, upon our ability to open new branch locations, successfully attract deposits to existing and new branches and identify favorable loan and investment opportunities. In the event that we do not continue to grow, our results of operations could be adversely impacted. We may not be able to manage our growth, which may adversely impact our financial results. As part of our expansion strategy, we plan to open new branches in our existing and target markets. However, we may be unable to identify attractive locations on terms favorable to us or to hire qualified management to operate the new branches, and the organizational and overhead costs may be greater than we anticipated. In addition, we may not be able to obtain the regulatory approvals necessary to open new branches. The new branches may take longer than expected to reach profitability, and we cannot assure you they will become profitable. The additional costs of starting new branches may adversely impact our financial results. Our ability to manage growth successfully will depend on whether we can continue to fund this growth while maintaining cost controls and asset quality, as well as on factors beyond our control, such as national and regional economic conditions and interest rate trends. If we are not able to control costs and maintain asset quality, such growth could adversely impact our earnings and financial condition. Loss of our key personnel or an inability to hire and retain qualified personnel could adversely affect our business. Our future operating results are substantially dependent on the continued service of Patrick M. Ryan, our President and Chief Executive Officer, Jay G. Destribats, our Chairman of the Board, and other key personnel. The loss of the services of Mr. Ryan would have a negative impact on our business because of his lending expertise and years of industry experience. In addition, the loss of the services of Mr. Ryan or Mr. Destribats could have a negative impact on our business because of their business development skills and community involvement. Our success also depends on the experience of our branch managers and our lending officers and on their relationships with the communities they serve. The loss of these or other key persons could negatively impact our banking operations. Although we have employment agreements with Mr. Ryan, Mr. Destribats and our other key personnel, our employees may voluntarily terminate their employment at any time. We cannot assure you that we will be able to retain our key personnel or attract the qualified personnel necessary for the management of our business. Our exposure to credit risk, because we focus on commercial lending, could adversely affect our earnings and financial condition. There are certain risks inherent in making loans. These risks include interest rate changes over the time period in which loans may be repaid, risks resulting from changes in the economy, risks inherent in dealing with borrowers and, in the case of a loan backed by collateral, risks resulting from uncertainties about the future value of the collateral. 8 Commercial loans are generally viewed as having a higher credit risk than residential real estate or consumer loans because they usually involve larger loan balances to a single borrower and are more susceptible to a risk of default during an economic downturn. Commercial and industrial loans and commercial real estate loans, which comprise our commercial loan portfolio, were 76.8% of our total loan portfolio at June 30, 2002. Construction loans, which are included as part of our commercial real estate loans, were 9.1% of our total loan portfolio at June 30, 2002. Construction financing typically involves a higher degree of credit risk than commercial mortgage lending. Risk of loss on a construction loan depends largely on the accuracy of the initial estimate of the property's value at completion of construction compared to the estimated cost (including interest) of construction. If the estimated property value proves to be inaccurate, the loan may be undersecured. Because our loan portfolio contains a significant number of commercial real estate loans and commercial and industrial loans with relatively large balances, the deterioration of one or a few of these loans may cause a significant increase in nonperforming loans. An increase in nonperforming loans could cause an increase in the provision for loan losses and an increase in loan charge-offs which could adversely impact our results of operations and financial condition. If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings would decrease. In an attempt to mitigate any loan losses which we may incur, we maintain an allowance for loan losses based on, among other things, national and regional economic conditions and historical loss experience and delinquency trends among loan types. However, we cannot predict loan losses with certainty and we cannot assure you that charge-offs in future periods will not exceed the allowance for loan losses. In addition, regulatory agencies, as an integral part of their examination process, review our allowance for loan losses and may require additions to the allowance based on their judgment about information available to them at the time of their examination. Factors that require an increase in our allowance for loan losses could reduce our earnings. Changes in interest rates may adversely affect our earnings and financial condition. Our net income depends primarily upon our net interest income. Net interest income is the difference between interest income earned on loans, investments and other interest-earning assets and the interest expense incurred on deposits and borrowed funds. Different types of assets and liabilities may react differently, and at different times, to changes in market interest rates. We expect that we will periodically experience "gaps" in the interest rate sensitivities of our assets and liabilities. That means either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest- earning assets, or vice versa. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets, an increase in market rates of interest could reduce our net interest income. Likewise, when interest- earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could reduce our net interest income. We are unable to predict changes in market interest rates, which are affected by many factors beyond our control, including inflation, recession, unemployment, money supply, domestic and international events and changes in the United States and other financial markets. We use an Investment Growth Strategy to increase net interest income by purchasing securities with borrowed funds. Although this Investment Growth Strategy has minimal credit risk, it does increase our overall interest rate risk. We attempt to manage risk from changes in market interest rates, in part, by controlling the mix of interest rate sensitive assets and interest rate sensitive liabilities. However, interest rate risk management techniques are not exact. A rapid increase or decrease in interest rates could adversely affect our results of operations and financial performance. Adverse economic and business conditions in our market area may have an adverse effect on our earnings. Substantially all of our business is with customers located within Mercer County and contiguous counties. Generally, we make loans to small to mid-sized businesses whose success depends on the regional 9 economy. These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities. Adverse economic and business conditions in our market area could reduce our growth rate, affect our borrowers ability to repay their loans and, consequently, adversely affect our financial condition and performance. Further, we place substantial reliance on real estate as collateral for our loan portfolio. A sharp downturn in real estate values in our market area could leave many of our loans undersecured. If we are required to liquidate the collateral to satisfy the debt securing a loan during a period of reduced real estate values, our earnings could be adversely affected. Competition from other financial institutions in originating loans and attracting deposits may adversely affect our profitability. We face substantial competition in originating loans. This competition comes principally from other banks, savings institutions, mortgage banking companies and other lenders. Many of our competitors enjoy advantages, including greater financial resources and higher lending limits, a wider geographic presence, more accessible branch office locations, the ability to offer a wider array of services or more favorable pricing alternatives, as well as lower origination and operating costs. This competition could reduce our net income by decreasing the number and size of loans that we originate and the interest rates we may charge on these loans. In attracting deposits, we face substantial competition from other insured depository institutions such as banks, savings institutions and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds. Many of our competitors enjoy advantages, including greater financial resources, more aggressive marketing campaigns and better brand recognition and more branch locations. These competitors may offer higher interest rates than we do, which could decrease the deposits that we attract or require us to increase our rates to retain existing deposits or attract new deposits. Increased deposit competition could adversely affect our ability to generate the funds necessary for lending operations which would increase our cost of funds. We also compete with non-bank providers of financial services, such as brokerage firms, consumer finance companies, insurance companies and governmental organizations which may offer more favorable terms. Some of our non-bank competitors are not subject to the same extensive regulations that govern our operations. As a result, such non-bank competitors may have advantages over us in providing certain products and services. This competition may reduce or limit our margins on banking services, reduce our market share and adversely affect our earnings and financial condition. We continually encounter technological change, and we may have fewer resources than many of our competitors to continue to invest in technological improvements, which could reduce our ability to effectively compete. The financial services industry is undergoing rapid technological changes with frequent introduction of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services to enhance customer convenience, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We cannot assure you that we will be able to effectively implement new technology-driven products and services, which could reduce our ability to effectively compete. Our hardware and software systems are vulnerable to damage that could harm our business. We rely upon our existing information systems for operating and monitoring all major aspects of our business, including deposit and loan information, as well as various internal management functions. These systems and our operations are vulnerable to damage or interruption from natural disasters, power loss, network failure, improper operation by our employees, security breaches, computer viruses or intentional attacks by third parties. Any disruption in the operation of our information systems could adversely impact our operations, which may affect our results of operations and financial condition. 10 Government regulation significantly affects our business. The banking industry is extensively regulated. Banking regulations are intended primarily to protect depositors, consumers and the Federal deposit insurance funds, not stockholders. We are subject to regulation and supervision by the Board of Governors of the Federal Reserve System. The Bank is subject to regulation and supervision by the Office of the Comptroller of the Currency. Regulatory requirements affect our lending practices, capital structure, investment practices, dividend policy and growth. The bank regulatory agencies possess broad authority to prevent or remedy unsafe or unsound practices or violations of law. We are subject to various regulatory capital requirements, which involve both quantitative measures of our assets and liabilities and qualitative judgments by regulators regarding risks and other factors. Failure to meet minimum capital requirements or comply with other regulations could result in actions by regulators that could adversely affect our ability to pay dividends or otherwise adversely impact operations. In addition, changes in laws, regulations and regulatory practices affecting the banking industry, including New Jersey's recent change in corporate income taxes, may limit the manner in which we may conduct our business. Such changes may adversely affect us, including our ability to offer new products and services, obtain financing, attract deposits, make loans and achieve satisfactory spreads and impose additional costs on us. As a public company, we are also subject to the corporate governance standards set forth in the recently enacted Sarbanes-Oxley Act of 2002, as well as any rules or regulations promulgated by the SEC or The Nasdaq Stock Market, Inc. Complying with these standards, rules and regulations may impose administrative costs and burdens on us. Changes in New Jersey's unclaimed property law may adversely affect our financial condition. The State of New Jersey recently changed its unclaimed property law. The new law reduces the dormancy period from 10 years to three years after which the Bank will be required to remit abandoned property to the state. If an account has been inactive for at least three years, it will be presumed to be abandoned and must be remitted to the state. The law, which became effective on July 1, 2002, does not phase in or grandfather existing accounts. We are in the process of notifying customers who may be affected by this change and intend to comply fully with the new law. At this point, we cannot be certain of the impact, if any, this law will have on our operations. We do not expect it to materially affect our income; however, it may adversely affect our financial condition and available cash. There is a limited trading market for our common stock; you may not be able to resell your shares at or above the price you pay for them. Although our common stock is listed for trading on the National Market of the Nasdaq Stock Market, the trading in our common stock has substantially less liquidity than many other companies quoted on the Nasdaq National Market. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the market of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. We cannot provide any assurance that the offering will increase the volume of trading in our common stock. Future sales of shares of our common stock in the public market, or the perception that such sales may occur, may depress our stock price. If our existing stockholders sell substantial amounts of our common stock in the public market following this offering, or if there is a perception that these sales may occur, the market price of our common stock could decline. Following completion of this offering, we will have outstanding 9,576,343 shares of common stock (assuming the underwriters' over-allotment option is not exercised) that are tradable in the public market. All of our directors and executive officers and certain of our stockholders, owning in the aggregate approximately 2,400,000 shares, have agreed not to sell their shares of common stock for a period of 180 days from the effective date of the registration statement of which this prospectus is a part. 11 USE OF PROCEEDS We will receive net proceeds of approximately $ __________ ($__________ if the underwriters' over-allotment option is exercised in full), at an assumed public offering price of $_____ per share in this offering, after deduction of estimated offering expenses of $450,000 and underwriting discounts and commissions. We intend to use the net proceeds from this offering to increase the Bank's capital position in anticipation of future growth and for other general corporate purposes. Promptly following this offering, we intend to contribute substantially all of the net proceeds to the Bank to increase its capital position. We may also use a portion of the proceeds for possible acquisitions of businesses in the future. However, we have no present understanding, agreement or definitive plans relating to any specific acquisitions. MARKET FOR COMMON STOCK AND DIVIDENDS Our common stock is listed for quotation on the Nasdaq National Market under the symbol YANB. As of August 14, 2002, there were 681 stockholders of record of our common stock. Set forth below are the high and low last sale prices for our common stock (as reported by The Nasdaq Stock Market, Inc.) for each quarter of 2000 and 2001, and for the first three quarters of 2002, as well as the amount of cash dividends per share we declared in each quarter.
Period - ------ High Low Dividend ------- ------- -------- 2000 First Quarter..................................... $ 11.13 $ 8.81 $ 0.10 Second Quarter.................................... 10.75 8.56 0.10 Third Quarter..................................... 12.19 10.31 0.10 Fourth Quarter.................................... 12.25 10.88 0.10 2001 First Quarter..................................... 14.25 12.06 0.11 Second Quarter.................................... 14.45 13.56 0.11 Third Quarter..................................... 14.10 11.00 0.11 Fourth Quarter.................................... 12.80 10.96 0.11 2002 First Quarter..................................... 13.45 12.26 0.11 Second Quarter.................................... 19.94 12.89 0.11 Third Quarter (through September __, 2002)........ 0.11
Dividends. In 2000, we declared four quarterly cash dividends on our common stock of $0.10 per share, for an aggregate amount of approximately $2.8 million. In 2001, we declared four quarterly cash dividends on our common stock of $0.11 per share, for an aggregate amount of approximately $3.3 million. We declared a cash dividend in the amount of $0.11 per share on our common stock in the first, second and third quarters of 2002, for an aggregate amount of approximately $2.7 million. We expect to pay a quarterly cash dividend in the fourth quarter of 2002 to holders of common stock, subject to our financial condition. Cash dividends are generally declared and paid quarterly. Because substantially all of the funds available for the payment of cash dividends are derived from the Bank, future cash dividends will depend primarily upon the Bank's earnings, financial condition, need for funds, and government policies and regulations applicable to both the Bank and us. As of December 31, 2001, the net profits of the Bank available for distribution to us as dividends without regulatory approval were approximately $11.5 million. If required payments on outstanding trust preferred securities issued by three of our subsidiaries are not made, we will be prohibited from paying dividends on our common stock. 12 CAPITALIZATION The following table sets forth our historical consolidated capitalization at June 30, 2002 and as adjusted to give effect to our sale of 1,500,000 shares of common stock at an assumed offering price of $________ per share in this offering. For this table, we have assumed that our net proceeds will be approximately $__________ after deducting estimated offering expenses and underwriting discounts and commissions and that these proceeds will be invested in assets with a 20% risk weighting for regulatory capital purposes. If the underwriters' over-allotment option is exercised in full, 1,725,000 shares would be sold, resulting in net proceeds of approximately $__________ (based on an assumed offering price of $_______) after deducting estimated offering expenses and underwriting discounts and commissions. The following data should be read in conjunction with the financial information appearing elsewhere in this prospectus, as well as financial information and the other documents incorporated by reference into this prospectus.
June 30, 2002 ----------------------------------------- Actual As Adjusted -------- ----------- (in thousands, except per share data and ratios) Company Obligated Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures of the Company ..................................... $ 32,500 $ Stockholders' Equity: Preferred stock, no par value, 1,000,000 shares authorized, none issued ................................................................ -- Common stock, no par value, 12,000,000 shares authorized, 8,248,343 shares issued, 9,748,343 as adjusted ............................. 54,760 Surplus...................................................................... 2,205 Undivided profits............................................................ 45,432 Treasury stock, at cost, 172,000 shares...................................... (3,030) Unallocated ESOP shares...................................................... (600) Accumulated other comprehensive income....................................... 5,000 -------- Total Stockholders' Equity................................................... 103,767 -------- Total Capitalization ........................................................... $136,267 ======== Book Value Per Share ........................................................... $ 12.90 Capital Ratios: Tier 1 leverage ratio........................................................ 6.5% % Tier 1 capital to risk-weighted assets....................................... 10.0% Total capital to risk-weighted assets........................................ 11.2%
13 MANAGEMENT The following table lists our executive officers and directors, and the directors and senior executive officers of the Bank.
Name Age Positions ---- --- --------- Jay G. Destribats .............. 67 Chairman of the Board of YNB and the Bank Patrick M. Ryan ................ 58 President, Chief Executive Officer and Director of YNB and the Bank Stephen F. Carman .............. 45 Treasurer of YNB, Executive Vice President and Chief Financial Officer of the Bank Timothy J. Losch ............... 51 Executive Vice President and Chief Operating Officer of the Bank James F. Doran ................. 59 First Senior Vice President and Senior Lending Officer of the Bank Frank Durand, III .............. 52 First Senior Vice President and Bank Administrator of the Bank Howard N. Hall ................. 42 Assistant Treasurer of YNB, First Senior Vice President and Controller of the Bank Eugene C. McCarthy ............. 41 First Senior Vice President and Market Manager Hunterdon Region of the Bank Stephen R. Walker .............. 58 First Senior Vice President and Chief Information Officer of the Bank C. West Ayres .................. 74 Director of YNB and the Bank Elbert G. Basolis .............. 41 Director of YNB and the Bank Lorraine Buklad ................ 66 Director of YNB and the Bank Anthony M. Giampetro, M.D ...... 66 Director of YNB and the Bank Sidney L. Hofing ............... 67 Director of YNB and the Bank Gilbert W. Lugossy ............. 66 Director of YNB and the Bank Louis R. Matlack ............... 67 Director of YNB and the Bank Martin Tuchman ................. 61 Director of YNB and the Bank F. Kevin Tylus ................. 47 Director of YNB and the Bank Christopher S. Vernon .......... 37 Director of YNB and the Bank
Jay G. Destribats has served as the Chairman of the Board of both YNB and the Bank since 1990. He also was a Partner in the law firm of Destribats, Campbell, DeSantis and Magee until July 1999 and is now of Counsel. Mr. Destribats also is a Commissioner of the Mercer County Improvement Authority. Patrick M. Ryan has served as a director and as President and Chief Executive Officer of both YNB and the Bank since November 1992. Mr. Ryan also is a member of the Federal Reserve Bank of Philadelphia's Community Bank Advisory Council and serves on the Board of Trustees of the New Jersey Bankers Association. Mr. Ryan has approximately 33 years of commercial banking experience. Stephen F. Carman has served as Treasurer of YNB and as Executive Vice President and Chief Financial Officer of the Bank since December 1993 and served as Secretary of YNB from December 1993 to April 2002. Mr. Carman has approximately 23 years of commercial banking experience. Timothy J. Losch has served as Executive Vice President and Chief Operating Officer of the Bank since June 1997. Mr. Losch has approximately 30 years of commercial banking experience. James F. Doran has served as First Senior Vice President and Senior Loan Officer of the Bank since April 1996. Mr. Doran has approximately 37 years of commercial banking experience. Frank Durand, III has served as First Senior Vice President and Bank Administrator of the Bank since December 2000 and as Senior Vice President and Bank Administrator of the Bank from February 1995 to December 2000. Mr. Durand has approximately 32 years of commercial banking experience. Howard N. Hall has served as Assistant Treasurer of YNB since April 2002 and as First Senior Vice President and Controller of the Bank since February 2000 and as Senior Vice President and Controller of the Bank from November 1997 to February 2000. Prior to joining the Bank in 1997, he served as Vice President 14 and Chief Financial Officer of Commonwealth State Bank from April 1992 to October 1997. Mr. Hall has approximately 16 years of commercial banking experience. Eugene C. McCarthy has served as First Senior Vice President and Market Manager, Hunterdon Region, of the Bank since October 2001. After joining YNB in February 2001, Mr. McCarthy served as Senior Vice President - Lending until September 2001. Prior to joining the Bank in 2001, he served as Senior Vice President and Underwriting Site Manager for First Union National Bank from March 1998 to January 2001 and Vice President and Regional Manager from March 1995 to March 1998. Mr. McCarthy has approximately 19 years of commercial banking experience. Stephen R. Walker has served as First Senior Vice President and Chief Information Officer of the Bank since June 2002. Prior to joining the Bank, he served at Merrill Lynch as First Vice President and Chief Technology Officer from 2000 to 2002 and as First Vice President and Director of Core Applications Technology from 1995 to 2000. Prior to joining Merrill Lynch, in 1993 Mr. Walker had approximately 11 years of commercial banking experience. C. West Ayres has served as a director of YNB and the Bank since 1978. He also has been President of Ayres Pontiac-Cadillac Company, Inc. since 1968. We have a mandatory retirement policy for members of the board of directors. Mr. Ayres will reach the mandatory retirement age of 75 in October 2002. Elbert G. Basolis has served as a director of YNB and the Bank since 1996. He also owns and has served as President for Aqua Controls, Inc., a water consulting business, since 1982. Lorraine Buklad has served as a director of YNB and the Bank since 1988. She serves as a Funeral Director and President of Buklad Memorial Homes. Anthony M. Giampetro, M.D. has served as a director of YNB and the Bank since 1994. He also is a physician in private practice. Sidney L. Hofing has served as a director of YNB and the Bank since 1997. He serves as President and CEO of The Eagle Group, Inc., a real estate development and management company. Mr. Hofing also served as Chairman of General Packaging Services, Inc. from November 1986 to December 1998. Mr. Hofing also is a director of Admiralty Bancorp, a bank holding company. Gilbert W. Lugossy has served as a director of YNB and the Bank since 1991. He served as a member of the New Jersey State Parole Board from April 1990 to April 1997 and is now retired. Louis R. Matlack has served as a director of YNB and the Bank since 1997. He has been a Principal of Matlack Mediation, a mediation services firm, since 1988. Martin Tuchman has served as a director of YNB and the Bank since 2000. He also has served as the Chairman of the Board and Chief Executive Officer of Interpool, Inc., a container and leasing corporation. F. Kevin Tylus has served as a director of YNB and the Bank since 1992. He serves as President and CEO of CIGNA Dental and Senior Vice President of Cigna Health Services since November 1999. Mr. Tylus also served as Vice President/ Director of Prudential Health Care Group from July 1995 to November 1999. Christopher S. Vernon has served as a director of YNB and the Bank since 2002. He also has been the owner and President of Mercer Management and Development, Inc., a real estate development and management company concentrating on low and moderate-income multifamily housing, since 1983. 15 STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS The table below sets forth the beneficial ownership of our common stock as of August 1, 2002, by each person we know to beneficially own 5% or more of the common stock, each of our directors, the executive officers named individually in our most recent proxy statement and all of our directors and executive officers as a group. The number of beneficially owned shares includes shares over which the named person, directly or indirectly through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote, or direct the voting of, such security; or investment power, which includes the power to dispose of, or to direct the disposition of, such security. All shares of a named person are deemed to be subject to that person's sole voting and investment power unless otherwise indicated. Shares subject to stock options are included as outstanding shares of common stock, except if these options are not exercisable within 60 days.
Number of Shares Percent of Name of Beneficial Owner Beneficially Owned Common Stock - ------------------------ ------------------ ------------ FMR Corporation(1) ........................ 743,619 9.25% Jay G. Destribats(2) ...................... 351,485 4.24% Patrick M. Ryan(3) ........................ 317,855 3.92% Stephen F. Carman(4) ...................... 71,504 * Timothy J. Losch(5) ....................... 56,624 * Howard N. Hall(6) ......................... 9,864 * C. West Ayres(7) .......................... 85,435 1.06% Elbert G. Basolis, Jr.(8) ................. 31,534 * Lorraine Buklad(9) ........................ 144,724 1.80% Anthony M. Giampetro M.D.(10) ............. 88,656 1.10% Sidney L. Hofing(11) ...................... 196,350 2.44% Gilbert W. Lugossy(12) .................... 19,604 * Louis R. Matlack(13) ...................... 55,063 * Martin Tuchman(14) ........................ 569,375 7.03% F. Kevin Tylus(15) ........................ 187,933 2.34% Christopher S. Vernon(16) ................. 64,025 * Directors and Executive Officers as a group (19 persons)....................... 2,300,125(17) 26.58%
- --------------- * Less than 1% (1) Information with respect to beneficial ownership is based on a Schedule 13F filed with the SEC on August 14, 2002. FMR Corporation's address is 82 Devonshire Street, Boston, Massachusetts 02109. (2) Includes 42,800 shares issuable upon exercise of options held by Mr. Destribats under our 1997 Stock Option Plan (the "1997 Plan"), 52,000 shares held in the Destribats Family Trust under which Mr. Destribats is the Trustee, 3,000 shares held jointly by Mr. Destribats and his spouse, 9,921 shares in The Yardville National Bank 401(k) Plan (the "401(k) Plan"), 62,136 shares in the Yardville National Bank Employee Stock Ownership Plan Trust (the "ESOP") over which Mr. Destribats, as a trustee, shares voting rights with Mr. Ryan and Mr. Tylus (including 2,288 shares held in the ESOP for Mr. Destribats' account), and 164,376 shares and 6,748 shares issuable upon the exercise of options under our 1994 Stock Option Plan (the "1994 Plan") held by the estate of James J. Kelly of which Mr. Destribats is the executor. (3) Includes 60,600 shares issuable upon exercise of options held by Mr. Ryan under the 1997 Plan, 3,619 shares in the 401(k) Plan, 187 shares held by Mr. Ryan as custodian for his children and/or grandchildren, 1,000 shares held by Mr. Ryan's spouse as to which Mr. Ryan disclaims beneficial ownership and 62,136 shares held in the ESOP over which Mr. Ryan, as a trustee, shares voting rights with Mr. Destribats and Mr. Tylus (including 2,288 shares held in the ESOP for Mr. Ryan's account). 16 (4) Includes 57,300 shares issuable upon exercise of options held by Mr. Carman under our 1988 Stock Option Plan (the "1988 Plan") and the 1997 Plan, 1,790 shares held in the ESOP for Mr. Carman's account, 3,037 shares held jointly with Mr. Carman's wife and 225 shares held by Mr. Carman as custodian for his child. (5) Includes 40,490 shares issued upon the exercise of options held by Mr. Losch under the 1997 Plan, 4,156 shares in the 401(k) Plan, 1,791 shares in the ESOP for Mr. Losch's account and 166 shares held by Mr. Losch as custodian for his son. (6) Includes 8,560 shares issuable upon exercise of options held by Mr. Hall under the 1997 Plan and 1,253 shares held in the ESOP for Mr. Hall's account. (7) Includes 2,152 shares held by Mr. Ayres' spouse and 6,748 shares issuable upon exercise of options held by Mr. Ayres under the 1994 Plan. (8) Includes 9,100 shares held by Aqua Control Inc. and 6,748 shares issuable upon exercise of options held by Mr. Basolis, Jr. under the 1994 Plan. (9) Includes 6,748 shares issuable upon exercise of options held by Ms. Buklad under the 1994 Plan. (10) Includes 6,748 shares issuable upon exercise of options held by Dr. Giampetro under the 1994 Plan, 26,908 shares held as custodian for his children and/or grandchildren, 16,400 shares held in the name of Bellarmino-Giampetro Profit Sharing Fund, 24,190 shares held in the name of Bellarmino-Giampetro Pension Voluntary Contribution Plan and 11,540 shares held in the name of Bellarmino-Giampetro-Scheurman profit sharing plan. (11) Includes 176,977 shares held by Mr. Hofing's spouse, 12,025 shares held in the Hofing Family Limited Partnership and 6,748 shares issuable upon exercise of options held by Mr. Hofing under the 1994 Plan. (12) Includes 6,748 shares issuable upon exercise of options held by Mr. Lugossy under the 1994 Plan and 3,043 shares held jointly with Mr. Lugossy's wife. (13) Includes 6,748 shares issuable upon exercise of options held by Mr. Matlack under the 1994 Plan and 6,199 shares held in the Matlack Family Trust under which Mr. Matlack is a co-trustee. (14) Includes 1,500 shares issuable upon the exercise of options held by Mr. Tuchman under the 1994 Plan, 33,000 shares held by Warren Martin Associates, 2,000 shares held by Tuchman Foundation and 15,300 shares in a retirement account in the name of Mr. Tuchman's spouse. Also includes 50,000 shares issuable upon exercise of stock purchase warrants held by Warren Martin Associates, Martom Associates and Mr. Tuchman. Mr. Tuchman's address is 211 College Road East, Princeton, New Jersey 08540. (15) Includes 6,748 shares issuable upon exercise of options held by Mr. Tylus under the 1994 Plan, 21,165 shares held jointly with Mr. Tylus' spouse, 91,744 shares owned by Mr. Tylus' spouse as to which Mr. Tylus disclaims beneficial ownership, 3,200 shares held by Mr. Tylus as custodian for his children and/or grandchildren and 62,136 shares held in the ESOP over which Mr. Tylus, as a trustee of the ESOP, shares voting rights with Mr. Destribats and Mr. Ryan. (16) Includes 25 shares held jointly with Mr. Vernon's spouse and 3,000 shares issuable upon exercise of stock purchase warrants held by Mr. Vernon. (17) Includes an aggregate of 288,514 shares issuable upon exercise of options held by such persons under the 1988 Plan, the 1994 Plan, and the 1997 Plan, 53,000 shares issuable upon exercise of stock purchase warrants beneficially owned by Mr. Tuchman and Mr. Vernon and 62,136 ESOP shares over which Mr. Destribats, Mr. Ryan and Mr. Tylus have shared voting rights as trustees. 17 DESCRIPTION OF CAPITAL STOCK The following summary description of our capital stock is qualified in its entirety by reference to our Restated Certificate of Incorporation and By- Laws. Capital Stock We are authorized to issue 13,000,000 shares of stock, consisting of 12,000,000 shares of common stock, no par value per share, and 1,000,000 shares of preferred stock, no par value per share, with presently unspecified rights. As of August 14, 2002, there were 8,076,343 shares of common stock outstanding and 989,580 shares reserved for issuance upon exercise of outstanding stock options with a weighted average price of $13.50 and 68,500 warrants to purchase common stock exercisable at a price of $12.00 per share with an expiration date of June 23, 2010. No shares of preferred stock have been issued. Preferred Stock Under the terms of our Restated Certificate of Incorporation, our Board of Directors may, without stockholder approval, issue shares of preferred stock from time to time. The Board of Directors may determine the relative rights, preferences and limitations of the preferred stock including, without limitation, stated value, dividend rights, rights to convert such shares into shares of another class or series (such as common stock or another class or series of preferred stock), voting rights, liquidation preference, redemption rights, division into classes and into series within any class or classes, sinking fund provisions and similar matters, and generally to determine all the characteristics of such preferred stock, other than the total number of shares of preferred stock which the Board of Directors has authority to issue. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions, financings and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, a controlling interest in YNB. We have no present plans to issue any shares of preferred stock. Rights of Holders of Common Stock Dividend Rights. The holders of our common stock are entitled to receive dividends when, as and if declared by our Board of Directors, subject to the rights of holders of then outstanding shares, if any, having preferences with respect to dividends. Dividends must be paid out of funds legally available for the payment of dividends. The only statutory limitation is that such dividends may not be paid when YNB is insolvent and may be paid only out of statutory surplus. If we do not make required payments on outstanding trust preferred securities, we will be prohibited from paying dividends on our common stock. In addition, funds for the payment of dividends by YNB must come primarily from the earnings of the Bank. As a practical matter, any dividend restrictions on the subsidiaries of YNB act as restrictions on the amount of funds available for the payment of dividends which can be paid by YNB itself. See "Market for Common Stock and Dividends" on page 12. Voting Rights. Each holder of common stock is entitled to one vote per share. The quorum for stockholders' meetings is a majority of the outstanding shares entitled to vote represented in person or by proxy. Provisions Regarding Certain Business Combinations. Article VIII of the Restated Certificate of Incorporation requires the affirmative vote of the holders of at least 80% of the outstanding shares of our capital stock entitled to vote generally in the election of directors to approve certain mergers and other business combinations. Such business combinations include those involving YNB and any holder of 10% or more of the common stock (an "Interested Stockholder"). There are two exceptions to this provision. First, if a majority of the Board of Directors who are unaffiliated with an Interested Stockholder and who were directors before the Interested Stockholder became an Interested Stockholder approve the transaction, the supermajority stockholder vote is not required. Second, if certain minimum price, form of consideration and procedural requirements are met, the supermajority stockholder vote is not required. If either of these 18 exceptions are met, only a simple majority vote is required for approval, unless otherwise required by law or another provision of our Restated Certificate of Incorporation. As of August 1, 2002, our directors and executive officers possessed sole or shared voting power with respect to approximately 23% of the outstanding common stock. The share ownership of our current directors and executive officers as of August 1, 2002, will represent approximately 19% of the outstanding common stock after the completion of this offering. In addition, as of August 1, 2002, our directors and officers had the right to acquire an additional 346,762 shares of common stock under options and warrants that are exercisable within 60 days of the date of this prospectus. See "Stock Ownership of Management and Principal Stockholders" on page 16. Consequently, the directors and executive officers possess sufficient voting power to significantly affect the vote on, and perhaps prevent, certain mergers and other business combinations. Election, Classification and Removal of Directors. Our Restated Certificate of Incorporation provides for a classified Board of Directors, with approximately one-third of the entire Board of Directors being elected each year and with directors serving for terms of three years. Directors are elected by a plurality of votes cast. Holders of common stock do not have cumulative voting rights. Our Restated Certificate of Incorporation provides that any director, or the entire Board of Directors, may be removed at any time by our stockholders, with or without cause, by the affirmative vote of the holders of at least 80% of the shares entitled to vote for the election of directors. These provisions, coupled with the Board of Director's authority to issue preferred stock, may have the effect of deterring hostile takeovers, enhancing the ability of current management to remain in control of YNB, and generally making the acquisition of a controlling interest in YNB more difficult. Approval of Major Transactions. Except for mergers and certain business combinations with Interested Stockholders and the adoption of any plan or proposal for the liquidation or dissolution of YNB proposed by or on behalf of an Interested Stockholder or any affiliate of any Interested Stockholder, we are able to amend our Restated Certificate of Incorporation (except as otherwise stated in that document), to merge or consolidate with other corporations, to make a bulk sale of our assets not in the regular course of business and to dissolve, if the majority of the votes cast at the stockholders meeting (at which a quorum is present) called for the purpose of considering any such action are cast in favor of the proposal. Liquidation Rights. In the event of liquidation, dissolution or winding up of YNB, holders of our common stock are entitled to receive equally and pro rata per share any assets distributable to stockholders, after payment of debts and liabilities and after the distribution to holders of any outstanding preferred stock or any other outstanding shares hereafter issued which have prior rights upon liquidation. Other Matters. Holders of common stock do not have preemptive rights or conversion rights with respect to any securities of YNB. Except in connection with certain business combinations and except as noted below, we can issue new shares of authorized but unissued common stock and/or preferred stock without stockholder approval. The bylaws of The Nasdaq Stock Market, Inc. governing the Nasdaq National Market, on which our common stock is quoted, require issuers to obtain stockholder approval for the issuance of securities in connection with the acquisition of a business, company, assets, property, or securities representing such interests where the present or potential issuance of common stock or securities convertible into common stock in connection with such acquisition could result in an increase of 20% or more in the outstanding shares of common stock. Accordingly, the future issuance of common stock or a series of preferred stock convertible into common stock may require stockholder approval under those rules. Anti-Takeover Effects of the New Jersey Shareholders Protection Act We are subject to the provisions of Section 14A-10A of the New Jersey Business Corporation Act, which is known as the "New Jersey Shareholders Protection Act." Under the New Jersey Shareholders Protection Act, we are prohibited from engaging in any "business combination" with any "interested shareholder" for a period of five years following the time at which that shareholder becomes an "interested shareholder" unless the business combination is approved by our Board of Directors before that shareholder became an "interested shareholder." Covered business combinations include certain mergers, dispositions of assets or shares and recapitalizations. An "interested shareholder" is (1) any person that directly or indirectly 19 beneficially owns 10% or more of the voting power of our outstanding voting stock; or (2) any of our affiliates or associates (as such terms are defined in the New Jersey Shareholders Protection Act) that directly or indirectly beneficially owned 10% or more of the voting power of our then-outstanding stock at any time within a five-year period immediately prior to the date in question. In addition, under the New Jersey Shareholders Protection Act, we may not engage in a business combination with an interested shareholder at any time unless: o our Board of Directors approved the business combination prior to the time the shareholder became an interested shareholder; o the holders of two-thirds of our voting stock not beneficially owned by the interested shareholder affirmatively vote to approve the business combination at a meeting called for that purpose; or o the consideration received by the non-interested shareholders in the business combination meets the standards of the statute, which is designed to ensure that all other shareholders receive at least the highest price per share paid by the interested shareholder. Transfer Agent First City Transfer Company, Iselin, New Jersey, serves as the transfer agent of our issued and outstanding common stock. 20 UNDERWRITING Legg Mason Wood Walker, Incorporated and Sandler O'Neill & Partners, L.P. have entered into an underwriting agreement with us to purchase shares of our common stock from us and to offer the shares to the public as described below. Legg Mason Wood Walker, Incorporated and Sandler O'Neill & Partners, L.P. are referred to in this section as the "underwriters." Subject to the terms of the underwriting agreement, each of the underwriters has agreed to purchase from us the number of shares of common stock shown opposite its name below.
Underwriters Number of Shares of Common Stock ------------ -------------------------------- Legg Mason Wood Walker, Incorporated ........ Sandler O'Neill & Partners, L.P. ............ --------- Total .................................... 1,500,000 =========
The underwriting agreement provides that the obligations of the underwriters to purchase shares of common stock depend on the satisfaction of certain conditions contained in the underwriting agreement, and that if any of the shares of common stock are purchased by the underwriters under the underwriting agreement, then all of the shares of common stock which the underwriters have agreed to purchase must be purchased (other than those covered by the over-allotment option described below). The conditions contained in the underwriting agreement include, among others, the requirement that the representations and warranties made by us to the underwriters are true, that we have performed certain agreements that we have made with respect to this offering and that there is no material adverse change in the financial markets or our operations. The underwriters have advised us that they propose to offer the shares of common stock directly to the public at the public offering price set forth on the cover page of this prospectus, and to certain dealers at such public offering price less a selling concession not in excess of $_____ per share. The underwriters may allow, and these dealers may re-allow, a concession not in excess of $_____ per share to other brokers and dealers. After the commencement of this offering, the underwriters may change the offering price and other selling terms. We have granted to the underwriters an option to purchase up to an aggregate of 225,000 additional shares of common stock, exercisable solely to cover over-allotments, if any, at the public offering price less the underwriting discounts and commissions shown on the cover page of this prospectus. The underwriters may exercise this option at any time until 30 days after the date of this prospectus. If this option is exercised, each underwriter will be committed, so long as the conditions of the underwriting agreement are satisfied, to purchase a number of additional shares of common stock proportionate to the initial commitment of that underwriter as indicated in the preceding table, and we will be obligated to sell the shares of common stock to the underwriters in accordance with that over-allotment option. We have agreed that, without the prior consent of the underwriters, we will not directly or indirectly, offer, sell or otherwise dispose of any shares of common stock or any securities which may be converted into common stock for a period of 180 days after the effective date of the registration statement of which this prospectus is a part, subject to certain exceptions. All of our executive officers and directors and certain other stockholders have agreed that, without the prior written consent of the underwriters, they will not, directly or indirectly, offer, sell or otherwise dispose of any shares of common stock or any securities which may be converted into or exchanged for such shares for a period ending 180 days after the effective date of the registration statement of which this prospectus is a part subject to certain exceptions. The following table shows the public offering price, underwriting discount and proceeds before expenses to YNB. The information assumes either no exercise or full exercise by the underwriters of their over-allotment option.
Per share Without option With option --------- -------------- ----------- Public Offering Price....................................................... $ $ $ Underwriting Discount....................................................... Proceeds, before expenses, to YNB...........................................
21 In addition to the underwriting discounts and commissions shown on the cover page of this prospectus, we will reimburse the underwriters for their legal expenses in an amount not to exceed $50,000. The expenses of the offering, not including the underwriting discount, are estimated at $450,000 and are payable by YNB. In connection with this offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, syndicate covering transactions and stabilizing transactions. Short sales involve syndicate sales of common stock in excess of the number of shares to be purchased by the underwriters in this offering, which creates a syndicate short position. "Covered" short sales are sales of shares made in an amount up to the number of shares represented by an underwriters' over- allotment option. In determining the source of shares to close out the covered syndicate short position, an underwriter will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which it may purchase shares through the over-allotment option. Transactions to close out the covered syndicate short position involve either purchases in the open market after the distribution has been completed or the exercise of the over-allotment option. The underwriters may also make "naked" short sales of shares in excess of the over-allotment option. An underwriter must close out any naked short position by purchasing shares of common stock in the open market. A naked short position is more likely to be created if an underwriter is concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in this offering. Stabilizing transactions consist of bids for, or purchases of, shares in the open market while the offering is in progress. The underwriters also may impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the underwriters repurchase shares originally sold by that syndicate member in order to cover syndicate short positions or make stabilizing purchases. Any of these activities may have the effect of preventing or retarding a decline in the market price of the common stock. They may also cause the price of the common stock to be higher than the price that would otherwise exist on the open market in the absence of these transactions. The underwriters may conduct these transactions on the Nasdaq National Market, in the over-the- counter market or otherwise. Neither we nor either of the underwriters makes any representation or prediction as to the direction or magnitude of any affect that the transactions described above may have on the price of the common stock. In addition, neither we nor either of the underwriters makes any representation that the underwriters will engage in any such transactions or that such transactions, once commenced, will not be discontinued without notice. In connection with this offering, the underwriters and any selling group members who are qualified market makers on the Nasdaq National Market may also engage in passive market making transactions in our common stock on the Nasdaq National Market. Passive market making consists of displaying bids on the Nasdaq National Market limited by the prices of independent market makers and effecting purchases limited by those prices in response to order flow. Rule 103 of Regulation M promulgated by the SEC limits the amount of net purchase that each passive market maker may make and the displayed size of each bid. Passive market making may stabilize the market price of our common stock at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time. We have agreed to indemnify the underwriters and persons who control the underwriters against liabilities, including liabilities under the Securities Act of 1933 (the "Securities Act") and liabilities arising from breaches of the representations and warranties contained in the underwriting agreement, and to contribute to payments that the underwriters may be required to make for these liabilities. The underwriters have in the past and may in the future, from time to time, engage in transactions and perform services for us, including underwritings, private placements and general investment banking services. 22 LEGAL MATTERS The validity of the shares of common stock offered hereby will be passed upon for us by Pepper Hamilton LLP, Philadelphia, Pennsylvania. Certain matters in connection with this offering will be passed upon for the underwriters by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania. EXPERTS The consolidated financial statements of YNB and its subsidiaries as of December 31, 2001 and 2000, and for each of the years in the three-year period ended December 31, 2001, have been incorporated by reference herein and in the registration statement in reliance upon the report of KPMG LLP, independent accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. 23 WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information that we file with the SEC at the SEC's public reference room at 450 Fifth Street, NW, Washington, D.C. 20549. Please call the SEC at 1-800- SEC-0330 for further information on the public reference room. The SEC maintains a website at "www.sec.gov" that contains reports, proxy and information statements, and other information regarding companies that file electronically with the SEC, including YNB. You may also find copies of reports, proxy and information statements we file electronically with the SEC via a link to "Investor News" from our website at "www.yanb.com." We have filed a Registration Statement on Form S-3 to register the common stock to be sold by us in this offering. This prospectus is a part of that Registration Statement. As allowed by SEC rules, this prospectus does not contain all the information you can find in the Registration Statement or the exhibits to that Registration Statement. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE SEC regulations allow us to "incorporate by reference" information into this prospectus, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered part of this prospectus. Information incorporated by reference from earlier documents is superseded by information set forth herein and information that has been incorporated by reference from more recent documents. The following documents filed by YNB with the SEC are incorporated in this prospectus by reference: o Our Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2001; o Our Quarterly Report on Form 10-Q for the Fiscal Quarter Ended March 31, 2002; o Our Quarterly Report on Form 10-Q for the Fiscal Quarter Ended June 30, 2002; o Our Registration Statement on Form 8-A filed on May 17, 1995 describing the terms, rights and provisions applicable to the common stock, including any amendments or reports filed for the purpose of updating such description; and o In addition, all documents subsequently filed by YNB pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the date of the initial registration statement and prior to effectiveness of the registration statement shall be deemed incorporated by reference herein from their respective dates of filing. You can obtain any of the documents incorporated by reference from the SEC or the SEC's Internet web site as described above. Documents incorporated by reference also are available from us without charge, including any exhibits specifically incorporated by reference therein. You may obtain documents incorporated by reference in this prospectus by requesting them in writing or by telephone from YNB at the following address: Mr. Stephen F. Carman Treasurer Yardville National Bancorp 2465 Kuser Road Hamilton, NJ 08690 Telephone: (609) 631-6222 You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with information that is different from what is contained in this prospectus. This prospectus is dated _______, 2002. You should not assume that the information contained in this prospectus is accurate as of any date other than that date. 24 =============================================================================== 1,500,000 SHARES [LOGO] Common Stock ___________________ PROSPECTUS ___________________ Legg Mason Wood Walker Sandler O'Neill & Partners, L.P. Incorporated _______, 2002 =============================================================================== PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The estimated expenses payable by the registrant in connection with the issuance and distribution of the securities being registered are estimated (except for the SEC and NASD filing fees) as follows: SEC Registration Fee........................................ $3,041 Nasdaq Additional Listing Fee............................... $17,250 NASD Filing Fee............................................. $3,806 Legal Fees.................................................. $300,000 Printing.................................................... $25,000 Accounting Fees and Expenses................................ $75,000 Miscellaneous .............................................. $25,903 Total....................................................... $450,000 ======== Item 15. Indemnification of Directors and Officers. Statutory Indemnification. We refer you to Section 14A:3-5 of the New Jersey Business Corporation Act, as amended (the "Act"), which sets forth the extent to which a corporation may indemnify its directors, officers, employees and agents. More specifically, such law empowers a corporation to indemnify a corporate agent against his or her expenses and liabilities incurred in connection with any proceeding (other than a derivative law suit) involving the corporate agent by reason of his or her being or having been a corporate agent if (a) the corporate agent acted in good faith or in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and (b) with respect to any criminal proceeding, the corporate agent had no reasonable cause to believe his or her conduct was unlawful. For purposes of such law, the term "corporate agent" means any person who is or was a director, officer, employee or agent of the indemnifying corporation or of any constituent corporation absorbed by the indemnifying corporation in a consolidation or merger and any person who is or was a director, officer, trustee, employee or agent of any other enterprise, serving as such at the request of the indemnifying corporation, or of any such constituent corporation, or the legal representative of any such director, officer, trustee, employee or agent. For purposes of this section, "proceeding" means any pending, threatened or completed civil, criminal, administrative or arbitrative action, suit, or proceeding, and any appeal therein and any inquiry or investigation which could lead to such action, suit or proceeding. With respect to any derivative action, the corporation is empowered to indemnify a corporate agent against his or her expenses (but not his or her liabilities) incurred in connection with any proceeding involving the corporate agent by reason of his or her being or having been a corporate agent if the agent acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation. However, only a court can empower a corporation to indemnify a corporate agent against expenses with respect to any claim, issue or matter as to which the agent was adjudged liable to the corporation. II-1 The corporation may indemnify a corporate agent against his or her expenses in a specific case under Section 14A:3-5(2) of the Act and, unless ordered by a court, under Section 14A:3-5(3) of the Act if a determination is made by any of the following that the applicable standard of conduct was met by such corporate agent: (i) the Board of Directors, or a committee thereof, acting by a majority vote of a quorum consisting of disinterested directors; (ii) by independent legal counsel, if there is not a quorum of disinterested directors or if the disinterested quorum empowers counsel to make the determination; or (iii) by the stockholders. A corporate agent is entitled to mandatory indemnification to the extent that the agent is successful on the merits or otherwise in any proceeding, or in defense of any claim, issue or matter in the proceeding. If a corporation fails or refuses to indemnify a corporate agent, whether the indemnification is permissive or mandatory, the agent may apply to a court to grant him or her the requested indemnification. In advance of the final disposition of a proceeding, the Board of Directors may direct the corporation to pay an agent's expenses if the agent agrees to repay the expenses in the event that it is ultimately determined that he or she is not entitled to indemnification. The indemnification and advancement of expenses provided by or granted pursuant to the statute do not exclude any other rights, including the right to be indemnified against liabilities and expenses incurred in proceedings by or in the right of the corporation, to which a corporate agent may be entitled under a certificate of incorporation, bylaw, agreement, vote of shareholders, or otherwise; provided that no indemnification may be made to or on behalf of a corporate agent if a judgment or other final adjudication adverse to the corporate agent establishes that his acts or omissions (a) were in breach of his duty of loyalty to the corporation or its shareholders, as defined in Section 14A:2-7(3) of the Act, (b) were not in good faith or involved a knowing violation of law or (c) resulted in receipt by the corporate agent of an improper personal benefit. Indemnification Pursuant to Restated Certificate of Incorporation of the Registrant. In accordance with the foregoing statutory provision, Article VI of our Restated Certificate of Incorporation provides as follows: "The Corporation shall indemnify its officers, directors, employees, and agents and former officers, directors, employees and agents, and any other persons serving at the request of the Corporation as an officer, director, employee or agent of another corporation, association, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys' fees, judgments, fines, and amounts paid in settlement) incurred in connection with any pending or threatened action, suit, or proceeding, whether civil, criminal, administrative or investigative, with respect to which such officer, director, employee, agent or other person is a party, or is threatened to be made a party, to the full extent permitted by the New Jersey Business Corporation Act. The indemnification provided herein shall not be deemed exclusive of any other right to which any person seeking indemnification may be entitled under any by-law, agreement, or vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity; and shall inure to the benefit of the heirs, executors, and the administrators of any such person. The Corporation shall have the power to purchase and maintain insurance on behalf of any persons enumerated above against any liability asserted against him and incurred by him in any such capacity, arising out of his status as such, whether or not the Corporation could have the power to indemnify him against such liability under the provisions under this Article VI." II-2 Item 16. Exhibits 1.1 Form of Underwriting Agreement* 4.1 See Exhibits 3.1 and 3.2 for YNB's Certificate of Incorporation and By-Laws, which contain provisions defining the rights of shareholders of YNB. (Exhibit 3.1 is incorporated by reference to Exhibit 3.1 to YNB's Annual Report on Form 10-K for the fiscal year ended December 31, 1997.) (Exhibit 3.2 is incorporated by reference to Exhibit 3.2 to the 1996 SB-2.) 5.1 Opinion of Pepper Hamilton LLP 10.1 Real property lease between the Bank and BYN, LLC for our branch located at 1041 Route 206, Bordentown, New Jersey. 10.2 Real property lease between the Bank and FYNB, LLC for our branch located in Raritan, New Jersey. 10.3 Real property lease between the Bank and Union Properties, LLC for our branch located at 1575 Brunswick Avenue, Lawrence, New Jersey. 10.4 Real property lease between the Bank and The Lalor Urban Renewal Limited Partnership for our branch located in the Lalor Plaza in Trenton, New Jersey. 10.5 Employment Contract between Registrant and Stephen F. Carman (Exhibit 10.5 is incorporated by reference to Exhibit 10.3 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000) 10.6 Employment Contract between Registrant and James F. Doran (Exhibit 10.6 is incorporated by reference to Exhibit 10.4 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000) 10.7 Employment Contract between Registrant and Eugene C. McCarthy. (Exhibit 10.7 is incorporated by reference to Exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001) 10.8 Employment Contract between Registrant and Mary C. O'Donnell . (Exhibit 10.8 is incorporated by reference to Exhibit 10.6 to the Registrant's Annual Report on Form 10-K for the fiscal year ended by December 31, 2000) 10.9 Employment Contract between Registrant and Frank Durand III. (Exhibit 10.9 is incorporated by reference to Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year ended by December 31, 2000) 10.10 Supplemental Executive Retirement Plan Summary for the benefit of Patrick M. Ryan. (Exhibit 10.8 is incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001) 10.11 Supplemental Executive Retirement Plan Summary for the Benefit of Jay G. Destribats. (Exhibit 10.11 is incorporated by reference to Exhibit 10.9 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001) *To be filed by amendment II-3 10.12 1988 Stock Option Plan. (Exhibit 10.12 is incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997, as amended by Form 10-Q/A filed on August 15, 1997) 10.13 Supplemental Executive Retirement Plan (Exhibit 10.13 is incorporated by reference to Exhibit 10.11 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001) 10.14 Directors' Deferred Compensation Plan (Exhibit 10.14 is incorporated by reference to the Registrant's Annual Report on Form 10-KSB/A filed July 25, 1995) 10.15 Supplemental Executive Retirement Plan Summary for the Benefit of Stephen F. Carman. 10.16 1997 Stock Option Plan (Exhibit 10.16 is incorporated by reference to the Registrant's Registration Statement on Form S-8 (Registration No. 333-28193)) 10.17 Employment contract between Registrant and Howard N. Hall (Exhibit 10.17 is incorporated by reference to Exhibit 10.15 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000) 10.18 Employment contract between Registrant and Timothy J. Losch (Exhibit 10.18 is incorporated by reference to Exhibit 10.16 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000) 10.19 Supplemental Executive Retirement Plan Summary for the Benefit of Timothy J. Losch. (Exhibit 10.19 is incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001) 10.20 1994 Stock Option Plan (Exhibit 10.20 is incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1998, as amended by Form 10-Q/A filed June 9, 1998) 10.21 Lease agreement between Crestwood Construction and the Bank dated May 25, 1998. (Exhibit 10.21 is incorporated by reference to Exhibit 10.27 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1998) 10.22 Yardville National Bank Employee Stock Ownership Plan, as amended. (Exhibit 10.22 is incorporated by reference to the Registrant's Statement on Form S-8 (Registration No. 333-71741)) 10.23 Employment contract between Registrant and Stephen R. Walker (Exhibit 10.23 is incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002) 23.1 Consent of KPMG LLP 23.2 Consent of Pepper Hamilton LLP (included in Exhibit 5.1) 24.1 Power of Attorney (see page II-6) II-4 Item 17. Undertakings Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that: (i) for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (ii) for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (iii) for purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-5 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Hamilton Township, State of New Jersey on September 6, 2002. YARDVILLE NATIONAL BANCORP By: /s/ Patrick M. Ryan --------------------------------------- Patrick M. Ryan, President and Chief Executive Officer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act, this registration statement has been signed below by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby constitutes and appoints Patrick M. Ryan and Stephen F. Carman his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him or her in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, or any registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act, and to file the same, with exhibits thereto and other documents in connection therewith or in connection with the registration of the common stock offered hereby under the Exchange Act, with the SEC, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that such attorney-in-fact and agent or his substitutes may do or cause to be done by virtue hereof.
Name Title Date - ---------------------------- -------------------------------------- ------------------- /s/Jay G. Destribats Chairman of the Board September 6, 2002 --------------------------- Jay G. Destribats /s/Patrick M. Ryan President, Chief Executive Officer and September 6, 2002 --------------------------- Director (Principal Executive Officer) Patrick M. Ryan /s/Stephen F. Carman Treasurer (Principal Financial Officer September 6, 2002 --------------------------- and Principal Accounting Officer) Stephen F. Carman /s/C. West Ayres Director September 6, 2002 --------------------------- C. West Ayres /s/Elbert G. Basolis, Jr. Director September 6, 2002 --------------------------- Elbert G. Basolis, Jr. /s/Lorraine Buklad Director September 6, 2002 --------------------------- Lorraine Buklad /s/Anthony M. Giampetro, M.D. Director September 6, 2002 ----------------------------- Anthony M. Giampetro, M.D.
II-6
/s/Sidney L. Hofing Director September 6, 2002 --------------------------- Sidney L. Hofing /s/Gilbert W. Lugossy Director September 6, 2002 --------------------------- Gilbert W. Lugossy /s/Louis R. Matlack Director September 6, 2002 --------------------------- Louis R. Matlack /s/ Martin Tuchman Director September 6, 2002 --------------------------- Martin Tuchman /s/ F. Kevin Tylus Director September 6, 2002 --------------------------- F. Kevin Tylus /s/ Christopher S. Vernon Director September 6, 2002 --------------------------- Christopher S. Vernon
II-7 Exhibit Index 5.1 Opinion of Pepper Hamilton LLP 10.1 Real property lease between the Bank and BYN, LLC for our branch located at 1041 Route 206, Bordentown, New Jersey. 10.2 Real property lease between the Bank and FYNB, LLC for our branch located in Raritan, New Jersey. 10.3 Real property lease between the Bank and Union Properties, LLC for our branch located at 1575 Brunswick Avenue, Lawrence, New Jersey. 10.4 Real property lease between the Bank and The Lalor Urban Renewal Limited Partnership for our branch located in the Lalor Plaza in Trenton, New Jersey. 10.15 Supplemental Executive Retirement Plan Summary for the Benefit of Stephen F. Carman. 23.1 Consent of KPMG LLP 23.2 Consent of Pepper Hamilton LLP (included in Exhibit 5.1) 24.1 Power of Attorney (see page II-6) II-8 EX-5 3 exh5-1.txt EXHIBIT 5.1 September 6, 2002 Yardville National Bancorp 2465 Kuser Road Hamilton, NJ 08690 Re: Registration Statement on Form S-3 ---------------------------------- Ladies and Gentlemen: We have acted as counsel for Yardville National Bancorp, a New Jersey corporation (the "Company"), in connection with the registration pursuant to the Securities Act of 1933, as amended (the "Act"), of a public offering by the Company (the "Offering") of up to 1,725,000 shares (the "Shares") of the Company's common stock, no par value per share (the "Common Stock"). In our capacity as counsel, you have requested that we render the opinion set forth in this letter and we are furnishing this opinion letter pursuant to Item 601(b)(5) of Regulation S-K under the Act. We have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Company's Registration Statement on Form S-3 filed by the Company under the Act with the U.S. Securities and Exchange Commission (the "Commission") on September 6, 2002 (the "Registration Statement"), (ii) the form of underwriting agreement, filed as Exhibit 1 to the Registration Statement (the "Underwriting Agreement"), to be entered into by the Company and by Legg Mason Wood Walker, Incorporated and Sandler O'Neill & Partners, L.P. (the "Underwriters"), (iii) the Company's Restated Certificate of Incorporation, as amended, (iv) the Company's By-Laws, (v) certain resolutions of the Board of Directors of the Company relating to the Offering, and (vi) such other documents as we have deemed necessary or appropriate for purposes of rendering the opinion set forth herein. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. As to any facts material to the opinion expressed herein that were not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Company and others. Yardville National Bancorp Page 2 September 6, 2002 The law covered by this opinion letter is limited to the laws of the State of New Jersey and the Federal laws of the United States of America. Based upon and subject to the foregoing, we are of the opinion, as of the date hereof, that the Shares will be duly authorized, legally issued, fully paid and nonassessable when (i) the Board of Directors of the Company or the Pricing Committee duly appointed by the Board of Directors authorizes the price per Share, (ii) the duly appointed officers of the Company and the Underwriters execute and deliver the Underwriting Agreement, and (iii) the Shares are issued and delivered against payment therefor in accordance with the terms of the Underwriting Agreement. We hereby consent to the use of this opinion letter as an exhibit to the Registration Statement and to the reference to this firm under the caption "Legal Matters" in the prospectus filed as part of the Registration Statement. In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder. As counsel to the Company, we have furnished this opinion letter to you in connection with the filing of the Registration Statement. Except as provided in the immediately preceding paragraph, this opinion letter may not be used, circulated, quoted or otherwise referred to for any purpose or relied upon by any other person without the express written permission of this firm. Very truly yours, /s/ PEPPER HAMILTON LLP EX-10.1 4 ex10-1.txt EXHIBIT 10.1 OFFICE LEASE Between BYN, LLC, Landlord And Yardville National Bank, Tenant Premises: Yardville National Bank 1041 Route 206 Bordentown Township, New Jersey 08648 Block 129 Lot 1 Date: May 1, 2001
TABLE OF CONTENTS Page ---- ARTICLE 1 Premises - Term of Lease and Use........................................................................1 ARTICLE 2 Basic Rent..............................................................................................1 ARTICLE 3 Repair Obligations of Tenant............................................................................1 ARTICLE 4 Compliance with Statutes, Ordinances, Etc...............................................................1 ARTICLE 5 Landlord's Right to Perform Tenant's Covenants..........................................................2 ARTICLE 6 Assignment or Subletting................................................................................2 ARTICLE 7 Alterations or Improvements by Tenant...................................................................2 ARTICLE 8 Damage or Destruction...................................................................................3 ARTICLE 9 Landlord's Right of Entry...............................................................................3 ARTICLE 10 Vacancy or Eviction....................................................................................3 ARTICLE 11 Replacement of Glass and Damage Due to Tenant's Negligence.............................................4 ARTICLE 12 Obstruction Of Premises................................................................................4 ARTICLE 13 Signs..................................................................................................4 ARTICLE 14 Landlord's Non-Liability for Damages...................................................................4 ARTICLE 15 Subordination..........................................................................................5 ARTICLE 16 Security Deposit.......................................................................................5 ARTICLE 17 Impossibility of Insurance Coverage....................................................................6 ARTICLE 18 Tenant's Insurance.....................................................................................6 ARTICLE 19 Conditional Limitations and Default....................................................................7 ARTICLE 20 Abatement of Trade Fixtures...........................................................................10 ARTICLE 21 Strict Performance....................................................................................10 ARTICLE 22 Re-Entry of Landlord..................................................................................11 ARTICLE 23 Condemnation..........................................................................................11 ARTICLE 24 Delay in Performance..................................................................................11 ARTICLE 25 Limitation of Liability...............................................................................11 ARTICLE 26 Delivery of Possession................................................................................12 ARTICLE 27 Real Estate Broker....................................................................................12 ARTICLE 28 Indemnification of Landlord and Tenant................................................................12 ARTICLE 29 Termination of Landlord's Liability...................................................................12 ARTICLE 30 Triple Net - Additional Rent..........................................................................13
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Page ---- ARTICLE 31 Tenant's Additional Obligation........................................................................14 ARTICLE 32 Tenant's Services.....................................................................................14 ARTICLE 33 Notices...............................................................................................14 ARTICLE 34 Right to Lock Premises on Default.....................................................................15 ARTICLE 35 Proration of Rent.....................................................................................15 ARTICLE 36 Quiet Enjoyment.......................................................................................15 ARTICLE 37 Covenants to Bind Parties.............................................................................15 ARTICLE 38 Notification of Default to Mortgagee..................................................................15 ARTICLE 39 Waiver of Subrogation.................................................................................16 ARTICLE 40 Mechanic's Liens......................................................................................16 ARTICLE 41 Certificates by Tenant and Landlord...................................................................16 ARTICLE 42 Cumulative Remedies - No Waiver - No Oral Change......................................................17 ARTICLE 43 Change of Terms.......................................................................................17 ARTICLE 44 Attornment............................................................................................17 ARTICLE 45 Applicable Law........................................................................................18 ARTICLE 46 Holding Over..........................................................................................18 ARTICLE 47 Memorandum and Recording..............................................................................18 ARTICLE 48 Utility Easements.....................................................................................18 ARTICLE 49 Rules and Regulations.................................................................................19 ARTICLE 50 Building Improvements.................................................................................19 ARTICLE 51 Renewal Option........................................................................................19 ARTICLE 52 Notice Requirement....................................................................................19 ARTICLE 53 Common Areas..........................................................................................20
ii Exhibits -------- A. Location- Project Description B. Basic Rent iii THIS AGREEMENT, dated the 9th day of April, 2001, between BYN, L.L.C. as Landlord and Yardville National Bank, as Tenant. WITNESSETH: ARTICLE 1 Premises - Term of Lease and Use The said Landlord has let unto the said Tenant and the said Tenant has hired from said Landlord the following premises: Yardville National Bank,1041 Route 206, Bordentown Township, New Jersey, Block 129, Lot 1 for the term of Ten (10) years to commence from the issuance of a temporary or permanent Certificate of Occupancy or May 1, 2001 whichever occurs sooner, to be used and occupied only for lawful purposes, more specifically bank branch and office use, only. Upon the conditions and covenants following: ARTICLE 2 Basic Rent For rent specifications see Lease Addendum. The square footage for the building is estimated at 2,200 sq. ft. subject to architectural measurement. Said rent to be paid in equal monthly payments in advance on the 1st day of each and every month during the term aforesaid in the amount of $(see Lease Addendum) per month (year 1), said rent to be paid without benefit of offset or deduction. This is a triple net lease, and Tenant will pay additional rent as set forth in Paragraph 29 and is in addition to the basic rent. The rental Schedule is set forth in Exhibit "B". All rent not received by the 10th of the month will incur a late charge of five (5%) percent. ARTICLE 3 Repair Obligations of Tenant That the Tenant shall take good care of the premises and shall at the Tenants own cost and expense make all repairs, that Tenant is required to make under this lease, and at the end or other expiration of the term shall deliver up the demised premises in good order or condition, damages caused by the elements and ordinary wear and tear excepted. Tenant shall provide chair pads under all movable chairs in the demises premises, or otherwise be responsible for all damage to flooring and carpet resulting from the absence of the use of chair pads. Tenant will not overload the electrical wiring serving the leased premises or within the leased premises, and will install at its own expense, but only after obtaining Landlord's approval, any additional electrical wiring which may be required in connection with Tenant's apparatus. ARTICLE 4 Compliance with Statutes, Ordinances, Etc. That the Tenant shall promptly execute and comply with all statutes, ordinances, rules, orders, regulations and requirements of the Federal, State and City Government and of any and all their Departments and Bureaus applicable to said premises, for the correction, prevention, and abatement of nuisances, violations or other grievances, in, upon or connected with said premises during said term, and which are directly related to Tenant's use of the said premises; shall also promptly comply with and execute all rules, orders, and regulations of the Board of Fire Underwriters, or any other similar body, for the prevention of fires, at the Tenant's own cost and expense. ARTICLE 5 Landlord's Right to Perform Tenant's Covenants That in case the Tenant shall fail or neglect to comply with the aforesaid statutes, ordinances, rules, orders, regulations and requirements or any of them, or in case the Tenant shall fail or neglect to make any necessary repairs, then if Tenant fails to remediate within thirty (30) days after Landlord's written notice to remediate, the Landlord or the Landlord's Agency may enter said premises and make said repairs and comply with any and all of the said statutes, ordinances, rules, orders, regulations or requirements, at the cost and expense of the Tenant and in case of the Tenant's failure to pay therefore, the said cost and expense shall be added to the next month's rent and be due and payable as such, or the Landlord may deduct the same from the balance of any sum remaining in the Landlord's hands. This provision is in addition to the right of the Landlord to terminate this lease by reason of any default on the part of the Tenant. ARTICLE 6 Assignment or Subletting That should the Tenant desire to assign this agreement or underlet said premises, it shall first offer same to Landlord at the rental set forth herein. Should Landlord not accept the assignment or underletting offered or not respond within twenty (20) days of receipt of Tenant's written offer, then Tenant shall be allowed to assign this agreement or underlet the premises provided that the Tenant shall not (a) assign this agreement, or underlet or underlease the premises or any part thereof without the prior written consent of Landlord, which consent will not be unreasonably withheld or delayed; provided, however, that notwithstanding such assignment, Tenant shall not thereby be relieved from responsibility hereunder, or (b) permit or suffer the premises or any part thereof to be occupied for any business or purpose deemed disreputable or extra-hazardous on account of fire, under penalty of damages and forfeiture. Tenant shall be permitted to assign this lease or sublet the premises without Landlord's consent and without first offering the premises to Landlord if the proposed sublease or assignee is an entity owned by, controlled by, affiliated with, or is the Parent Company of the Tenant. In the event that the Tenant enters into an agreement to sell all of its stock of Yardville National Bank, it is permissible under the Lease Agreement. ARTICLE 7 Alterations or Improvements by Tenant That except for the planned improvements made in accordance with plans and specifications no alterations, additions or improvements, painting or decorating shall be made in or to the premises without the consent of the Landlord in writing, which consent shall not be unreasonably withheld or delayed, under penalty of damages and forfeiture, and all additions and improvements made by the Tenant shall become the property of the Landlord and -2- shall remain on and be surrendered with the demised premises. Landlord hereby consents to the installation of paint and carpet throughout the premises and of sheetrock or glass on the cubicles contained in the premises. At Landlord's request all such alterations and improvements shall be restored to their original condition at Tenant's expense at the termination of the Lease, provided Landlord notifies Tenant, in writing, prior to the end of the term of its desire to have the premises restored. ARTICLE 8 Damage or Destruction In case of damage, by fire or other cause, to the building in which the leased premises are located, without the fault of the Tenant or of Tenant's agent or employees, if the damage is so extensive as to amount practically to the total destruction of the leased premises or of the building, or if the Landlord shall within a reasonable time decide not to rebuild, the lease shall cease and come to an end, and the rent shall be apportioned to the time of the damage. In all other cases where the leased premises are damaged by fire without the fault of the Tenant or of Tenant's agents or employees the Landlord shall repair the damage with reasonable dispatch after notice of damage, and if the damage has rendered the premises untenantable, in whole or in part, there shall be no abatement, diminution or reduction of fixed rent or other charges payable by Tenant under this lease. ARTICLE 9 Landlord's Right of Entry (a) That said Tenant agrees that the said Landlord and Landlord's Agents, and other representatives, shall have the right to enter into and upon said premises, or any part thereof, at all reasonable hours upon prior written notice to the Tenant except where an emergency exists and the Landlord is obligated to take immediate action for the purpose of examining the same, or making such repairs or alterations therein as may be necessary for the safety and preservation thereof provided such entry shall not unreasonably interfere with Tenant's business. (b) The Tenant also agrees to permit the Landlord or Landlord's Agents to show the premises at all reasonable hours, upon prior written notice to Tenant, to persons wishing to hire or purchase the same; and the Tenant further agrees that during the six months next prior to the expiration of the term, the Landlord or Landlord's Agents shall have the right to place notices on the front of said premises, or any part thereof, offering the premises "to Let" or "For Sale", and the Tenant hereby agrees to permit the same to remain thereon without hindrance or molestation. ARTICLE 10 Vacancy or Eviction That if the said premises, or any part thereof, shall become vacant during the said term, or should Tenant be evicted by summary proceedings or otherwise, the Landlord or Landlord's representatives may re-enter the same, either by force or otherwise, without being liable to prosecution therefor; and re-let the said premises as the Agent of the said Tenant and receive the rent thereof; applying the same, first to the payment of such expenses as the Landlord may be put to in re-entering and then to the payment of the rent due by these presents; it being understood that the Tenant shall remain liable for any deficiencies. -3- ARTICLE 11 Replacement of Glass and Damage Due to Tenant's Negligence Tenant shall replace any and all broken glass in and about the demised premises. Landlord may insure, and keep insured, all plate glass in the demised premises for and in the name of Landlord. Damage and injury to the said premises, caused by the carelessness or improper conduct on the part of the said Tenant or the Tenant's agents or employees shall be repaired as speedily as possible by the Tenant at the Tenant's own cost and expense. ARTICLE 12 Obstruction Of Premises That the Tenant shall neither encumber, nor obstruct the sidewalk in front of, entrance to or hall and stairs of said building, other common areas, parking areas or driveways, nor allow the same to be obstructed or encumbered in any manner without Landlord's written consent. ARTICLE 13 Signs The Tenant shall neither place, nor cause, nor allow to be placed, any sign or signs of any kind whatsoever at, in or about the entrance to said premises nor any other part of same except in or at such place or places as may be indicated by the said Landlord and consented to by Landlord in writing. Landlord hereby consents to the placement of a sign on the outside door of the premises which sign shall be of the same type as those signs used by other Tenants and in case the Landlord or Landlord's representatives shall deem it necessary to remove any such sign or signs in order to paint or to make any other repairs, alterations or improvements in or upon said premises or the building wherein same is situated or any part thereof, the Landlord shall have the right to do so, providing the same be removed and replaced at the Landlord's expense whenever the said repairs, alterations or improvements shall have been completed. Landlord will provide a Directory of Tenants in an appropriate place on the property which the demised premises are located. ARTICLE 14 Landlord's Non-Liability for Damages It is expressly agreed and understood by and between the parties to this agreement, that the Landlord shall not be liable for any damage or injury to person or property caused by or resulting from steam, electricity, gas, water, rain, ice or snow, or any leak or flow from or into any part of said building, except as may be caused by the negligence of Landlord or its Agents or Employees. Landlord shall not be liable for any damage or injury resulting or arising from any other cause or happening whatsoever that is not caused by the negligence or other acts or omissions of Landlord or its Agents or Employees. -4- ARTICLE 15 Subordination That this lease shall not be a lien against said premises in respect to any mortgages that are now on or that hereafter may be placed against said premises, and that the recording of such mortgage or mortgages shall have preference and precedence and be superior and prior in lien of this lease irrespective of the date of recording and the Tenant agrees to execute any instrument without cost, which may be deemed necessary or desirable to further effect the subordination of this lease to any such mortgage or mortgages, and a refusal to execute such instruments shall entitle the Landlord, or the Landlord's assigns and legal representatives to the option of cancelling this lease without incurring any expense or damage, and the term hereby granted is expressly limited accordingly. In the event that Landlord procures mortgage loans or recasts the existing mortgage loan on said premises, Tenant agrees to furnish to Landlord on request, copies of its most recent financial statements prepared by the Certified Public Accountant regularly retained by it. ARTICLE 16 Security Deposit 16.1. The Landlord hereby acknowledges receipt of $ N/A which it is to be placed in an interest bearing account and is to be retained as security for the faithful performance of all of the covenants, conditions and agreements to this lease, but in no event shall Landlord be obliged to apply same on rents or other charges in arrears or damages for the Tenant's failure to perform said covenants, conditions and agreements; the Landlord may so apply the security at its option; and the Landlord's right to the possession of the premises for non-payment of rent or for any other reason shall not in any event be affected by reason of the fact that Landlord holds this security. The said sum if not applied toward the payment of rent in arrears or toward the payment of damages suffered by Landlord by reason of the Tenant's breach of the covenants, conditions and agreements of this lease is to be returned to the tenant when this lease is terminated, according to these terms, and in no event is the said security to be returned until the Tenant has vacated the premises and delivered possession to the Landlord. 16.2. In the event that the Landlord repossesses itself of said premises because of the Tenant's default or because of the Tenant's failure to carry out the covenants, conditions and agreements of this lease, the Landlord may apply the said security on all damages suffered to the date of repossession and may retain the said security to apply on such damages as may be suffered or shall accrue thereafter by reason of the Tenant's default or breach. The Landlord shall keep the said security as a separate fund. The security deposited under this lease shall not be mortgaged, assigned, pledged, or encumbered by Tenant without the written consent of Landlord. In the event of filing by or against Tenant of a petition in bankruptcy or assignment for the benefit of creditors, or upon the insolvency of Tenant, title to the monies paid over to Landlord as security shall vest in the Landlord free and clear of any claims of the Trustees in bankruptcy, assignee for the benefit of creditors or Receiver that may be appointed for the insolvent Tenant. -5- 16.3. In the event of a bona fide sale, subject to this lease, the Landlord shall have the right to transfer the security to the vendee for the benefit of the Tenant upon such transfer and Landlord shall be considered released by the Tenant of all liability for the return of said security, and it is agreed that this shall apply to every transfer or assignment made of the security to the new Landlord. ARTICLE 17 Impossibility of Insurance Coverage 17.1. It is expressly understood and agreed that if for any reason it shall be impossible to obtain fire insurance and extended coverage on the buildings and improvements on the demised premises in an amount, and in the form, and in fire insurance companies acceptable to the Landlord the Landlord may, if the Landlord so elects, at any time thereafter terminate this lease and the term thereof, on giving to the Tenant three days' notice in writing of Landlord's intention so to do and upon the giving of such notice, this lease and the term thereof shall terminate and come to an end. In the event that Tenant's occupancy causes any increase in premium for the fire and extended coverage insurance rates on the demised premises or the balance of the building in which Tenant's demised premises are located, Tenant shall pay, as additional rent, the additional premium on said fire and extended coverage insurance. Bills for such additional premiums, if any, shall be rendered by Landlord to Tenant at such time as Landlord shall elect, and shall be due and payable by Tenant when rendered; and the amount thereof shall be deemed to be and paid as additional rent. 17.2. That the Tenant will not nor will the Tenant permit other tenants or other persons to do anything in said premises or bring anything into said premises, or permit anything to be brought into said premises or to be kept therein, which will in any way increase the rate of fire insurance on said demised premises, nor use the demised premises or any part thereof, nor suffer or permit their use for any business or purpose which would cause an increase in the rate of fire insurance on said building, and the Tenant agrees to pay on demand any such increase. ARTICLE 18 Tenant's Insurance At all times after the execution of this lease, Tenant shall take out and keep in force, at its expense: 18.1. Tenant's Insurance (a) Public liability insurance, including insurance against assumed or contractual liability with respect to the premises, to afford protection to the limit, for each occurrence, of not less than one million dollars ($1,000,000) with respect to personal injury or death, and five hundred thousand dollars ($500,000) with respect to property damages; and (b) All-risk casualty insurance, written at replacement cost value and with replacement cost endorsement, covering all of Tenant's personal property in the premises (including, without limitation, inventory, trade fixtures, floor coverings, furniture and other property removable by Tenant under the provisions of this lease) and all leasehold improvements installed in the premises by Tenant; and -6- (c) If and to the extent required by law, worker's compensation or similar insurance in form and amounts required by law. 18.2. Tenant's Contractor's Insurance (a) Comprehensive general liability insurance, including contractor's liability coverage, contractual liability coverage, completed operations coverage, broad form property damage endorsement and contractor's protective liability coverage, to afford protection to the limit, of each occurrence, with respect to property damage; and (b) Worker's compensation or similar insurance in form and amounts required by law. 18.3. Policy Requirements (a) The company or companies writing any insurance which Tenant is required to take out and maintain shall be licensed to do business in New Jersey. Each policy evidencing such insurance shall name Landlord or its designee as additional insured and shall also contain a provision by which the insurer agrees that such policy shall not be cancelled except after thirty (30) days written notice to Landlord or its designee. Each such policy, or a certificate thereof, shall be deposited with Landlord by Tenant promptly upon commencement of Tenant's obligation to procure the same. If Tenant shall fail to perform any of its obligations under this ARTICLE, Landlord may perform the same and the cost of same shall be deemed additional rental and shall be payable by Tenant upon Landlord's demand. ARTICLE 19 Conditional Limitations and Default 19.1. If at any time during the term of this Lease: (a) If Tenant shall file a petition in bankruptcy or insolvency or for reorganization or arrangement or for the appointment of a receiver of all or a portion of Tenant's property or, such filing shall continue for a period of ten days. (b) Any involuntary petition of the kind referred to in subdivision (a) of this section shall be filed against Tenant and such petition shall not be calcite or withdrawn within ninety (90) days after the date of filing thereof, or (c) Tenant shall be adjudicated a bankrupt by any court, or (d) Tenant shall make an assignment for the benefit of creditors, or (e) A permanent receiver shall be appointed for the property of Tenant by order of a court of competent jurisdiction by reason of the insolvency of Tenant (except where such receiver shall be appointed in an involuntary proceeding, if he shall not be withdrawn within ninety (90) days after the date of his appointment), or -7- (f) The operation of Tenant's business shall be suspended by any authority having jurisdiction thereover or the conduct and operation of Tenant's business shall be taken over by (i) a receiver appointed by order of a court of competent jurisdiction or (ii) an agency or governmental authority having jurisdiction thereover, then Landlord, at Landlord's option may terminate this Lease on ten (10) days' notice to Tenant, and upon such termination, Tenant shall quit and surrender the Leased Premises to Landlord. The word "Tenant" as used in this section shall be deemed to mean the Tenant herein named, or in the event of an assignment of this Lease in accordance with the provisions of ARTICLE VIII, such word shall be deemed to also mean the ten assignee. 19.2. If this Lease shall terminate pursuant to the provisions of Section 19.1: (a) Landlord shall be entitled to receive from Tenant arrears in Basic Annual Rent and Additional Rent and, in addition thereto as liquidated damages, an amount equal to the balance of rentals due under the remaining term of the Lease, the remaining rentals shall be accelerated hereby plus any other damages to which Landlord may be entitled including, but not limited to, reasonable legal fees. Tenant shall receive a credit for any monies including, but not limited to, all rents received by Landlord in mitigation of such default and Landlord shall make best efforts to re-let the premises. All funds received shall first go to pay Landlord's costs and expenses of mitigating the damages, then towards Tenant's credit. 19.3. (a) If Tenant shall fail to pay any Basic Annual Rent or Additional Rent when due and payable hereunder, and any such default shall continue for a period of ten (10) days after such payment is due; or -8- (b) If Tenant shall be in default in the performance of any of the other terms, covenants, and conditions of this Lease: (i) and such default shall not have been remedied within ten (10) days after notice by Landlord to Tenant specifying such default and requiring it to be remedied; or (ii) where such default reasonably cannot be remedied within such period of ten (10) days, if Tenant shall not have commenced the remedying thereof with such period of time and shall not be proceeding with due diligence to remedy it; Then Landlord, at its election, may terminate this Lease on ten (10) days' notice to Tenant, and upon such termination Tenant shall quit and surrender the Leased Premises to Landlord. 19.4. If this Lease shall terminate as provided in Section 19.3, or if Tenant shall be in default in the payment of Basic Annual Rent or Additional Rent when due and payable and such default shall continue for a period of ten (10) days after such payment is due: (a) Landlord may re-enter and resume possession of the Leased Premises and remove all persons and property therefrom either by summary dispossess proceedings or by a suitable action or proceeding at law or in equity or by peaceable self-help or otherwise, without being liable for any damages therefor; and (b) Landlord may relet the whole or any part of the Leased Premises for a period equal to, greater or less than the remainder of the then term of this Lease at such rental and upon such terms and conditions as Landlord shall deem reasonable to any tenant it may deem suitable and for any use and purpose it may deem appropriate. Landlord shall use its best efforts in re-letting the premises, and, provided Landlord uses such best efforts. Landlord shall not be liable in any respect for failure to relet the Leased Premises or, in the event of such reletting, for failure to collect the rent thereunder and any sums received by Landlord on a reletting in excess of the rent reserved in this Lease shall belong to Landlord. 19.5. If this Lease shall terminate as provided in this ARTICLE or by summary dispossess proceedings (except as to any termination under Section 35), Landlord shall be entitled to recover from Tenant as damages in addition to arrears in Basic Annual Rent and Additional Rent, (a) (i) amounts equal to all expenses reasonably incurred by Landlord in recovering possession of the Leased Premises and in connection with the reletting of the Leased Premises including, without limitation, reasonable legal fees, the cost of repairing, renovating or remodeling the Leased Premises, and to the condition they were in at the inception of the Lease, reasonable wear and tear excepted; (ii) broker's commissions incurred by Landlord in reletting the Leased Premises which amounts set forth in this subsection shall be due and payable by Tenant to Landlord at such time or times as they shall have been incurred; and (b) amounts equal to the deficiency between the Basic Annual Rent and Additional Rent which would have become due and payable had this Lease not terminated and the net amount, if any, of rent and Additional Rent collected by Landlord on reletting the Leased Premises. The amounts specified in this subsection shall be due and payable by Tenant on the several days on which such Basis Annual Rent and Additional Rent would have become due and payable had this Lease not terminated. Tenant consents that Landlord shall be entitled to institute separate suits or actions or proceedings and hereby waives the right to enforce or assert the rule against splitting a cause of an action as a defense thereto. Landlord, at its election, which shall be exercised by the service of a notice on Tenant, may collect from Tenant as damages and Tenant shall pay in lieu of the sums becoming due under the provisions of subsection (b) hereof after the service of such notice, an amount equal to the difference between the Basic Annual Rent and Additional Rent which would become due and payable had this Lease not terminated (from the date of the service of such notice to the end of the term of this Lease which would have been in effect if it had not terminated) and the maximum allowed by statute or rule or law in effect at the time when in governing the proceedings in which such damages are to be proved. Tenant shall be credited with any rental received from a new tenant. 19.6. The words "re-enter" and "re-entry" as used in this ARTICLE are not restricted to their technical legal meaning. 19.7. Tenant hereby waives the service of any notice in writing by Landlord of its intention to re-enter except as otherwise provided in this Lease. -9- 19.8. If this Lease shall terminate as provided in this ARTICLE or by summary proceedings or otherwise, Landlord, in addition to any other rights under this ARTICLE, shall be entitled to recover as damages; (a) the cost of performing any work required to be done by Tenant under this Lease and all damages resulting from Tenant's default in performing such work, and (b) the cost of replacing the Leased Premises in the same condition as that in which Tenant is required to surrender them to Landlord under this lease. 19.9. At any time (a) within fifteen (15) days prior to the expiration of the term of this Lease or (b) after Landlord shall have served any notice of termination of this Lease, as provided in this Lease, but prior to the date of termination, or (c) after Landlord shall have commenced a summary dispossess proceeding or an appropriate action or proceeding to recover possession of the Leased Premises but prior to the termination of this Lease by reason of the issuance of a warrant in the dispossess proceeding or the entry of a judgment in such other action or proceeding, any or all subleases theretofore executed by Tenant and the rent payable thereunder shall, at the option of Landlord (such option to be exercised by notice to Tenant), be assigned by Tenant to Landlord as of the date of the service of such notice. Such assignment shall be deemed to be and shall be effected as of the date of service of such notice without execution by Tenant of any instrument. However, Tenant, at Landlord's request, shall execute, acknowledge and deliver to Landlord an instrument in recordable form, confirming such assignment and, in the event that Tenant shall fail or refuse to execute, acknowledge or deliver such instrument, Landlord in addition to all other rights and remedies it may have by reason of such failure or refusal, may, as the agent or attorney-in-fact of Tenant, execute, acknowledge and deliver it and Tenant hereby irrevocably nominates, constitutes and appoints Landlord as Tenant's proper and legal attorney-in-fact for such purpose, as coupled with an interest, hereby ratifying all that Landlord may do as such attorney-in-fact of Tenant, and such assignment shall recall that it has made pursuant to this article. ARTICLE 20 Abatement of Trade Fixtures If after default in payment of rent or violation of any other provision of this lease, or upon the expiration of this lease or upon abandonment of the premises by Tenant, the Tenant moves out or is dispossessed, Tenant shall not be permitted to remove any trade fixtures or other property from said premises until said default or violation is cured. Should said default or violation not be cured within one month of its occurrence, or upon abandonment of the premises said fixtures shall become the property of Landlord. ARTICLE 21 Strict Performance The failure of the Landlord to insist upon strict performance of any of the covenants or conditions of this lease or to exercise any option herein conferred in any one or more instances, shall not be construed as a waiver or relinquishment for the future of any such covenants, conditions or options, but the same shall be and remain in full force and effect. -10- ARTICLE 22 Re-Entry of Landlord In the event that the relation of the Landlord and Tenant may cease or terminate by reason of the re-entry of the Landlord under the terms and covenants contained in this lease or by the ejectment of the Tenant by summary proceedings or otherwise, or after the abandonment of the premises by the Tenant, it is hereby agreed that the Tenant shall remain liable for all unpaid sums covering the balance of said term and shall pay said amounts promptly. ARTICLE 23 Condemnation In the event that the premises shall be taken for public use by the city, state, federal government, public authority or other corporation having the power of eminent domain, then this lease shall terminate as of the date on which possession thereof shall be taken for such public use, or, at the option of the Tenant, as of the date on which the premises shall become unsuitable for Tenant's regular business by reason of such taking; provided, however, that if only a part of the leased premises shall be so taken, such termination shall be at the option of Tenant only. If such a taking of only a part of the leased premises occurs, and Tenant elects not to terminate the lease, there shall be a proportionate reduction of the Basic Rent and Additional Rent to be paid under this lease from and after the date such possession is taken for public use. Tenant shall have the right to participate, directly or indirectly, in any award for such public taking to the extent that it may have suffered compensable damage as a Tenant on account of such public taking. ARTICLE 24 Delay in Performance This lease and the obligation of Tenant to pay rent hereunder and perform all of the other covenants and agreements hereunder on part of Tenant to be performed shall in no way be affected, impaired or excused because Landlord is unable to supply or is delayed in supplying any service expressly or implied to be supplied or is unable to make, or is delayed in making any repairs, addition, alterations, or decorations or is unable to supply or is delayed in supplying any equipment or fixtures if Landlord is prevented or delayed from so doing by reason of governmental preemption in connection with a national Emergency declared by the President of the United States or in connection with any rule, order or regulation of any department or subdivision thereof of any governmental agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency. ARTICLE 25 Limitation of Liability Landlord shall be under no personal liability with respect to any of the provisions of this lease, and if it is in breach or default with respect to his obligations or otherwise, under this lease, Tenant shall look solely to the equity of Landlord in the premises for the satisfaction of Tenant's remedies. It -11- is expressly understood and agreed that Landlord's liability under the terms, covenants, conditions, warranties and obligations of this lease shall in no event exceed the loss of its equity in the premises. ARTICLE 26 Delivery of Possession DELETED ARTICLE 27 Real Estate Broker Tenant represents that it has not contacted or dealt with any real estate broker, agent or salesman regarding the within lease other than NOT APPLICABLE and that should any other broker, agent or salesman make claim to a commission in connection with this transaction, Tenant shall save and hold harmless Landlord from any such claim and shall, at Tenant's cost and expense defend against any such claims. ARTICLE 28 Indemnification of Landlord and Tenant Landlord and Tenant agree to protect, defend, indemnify and save harmless each other against and from any and all claims arising from any breach or default on the part of either party in the performance of any covenant or agreement on their part to be performed, pursuant to the terms of this lease, or arising from any act of negligence of either party, or any of its agents, contractors, servants, employees or licensees, or arising from any accident, injury or damage whatsoever caused to any person (other than through the fault of the other party or its agents) occurring during the term of this lease in or about the demised premises or upon or under the sidewalks and the land adjacent thereto, and from and against all costs, expenses and liabilities incurred in or about any such claim or act or proceeding brought thereon, but only to the extent the losses or liabilities are not covered by insurance; and in case any action or proceeding be brought against either party by reason of any such claim, the responsible party upon notice from the responsible party covenants to resist or defend such action or proceeding by counsel reasonably satisfactory at the responsible party's sole cost and expense. ARTICLE 29 Termination of Landlord's Liability If after Landlord delivers possession of the demised premises to Tenant, the Landlord conveys the demised premises during the term hereof, the Landlord shall not thereafter be liable for the covenants and agreements to be observed and performed by the Landlord hereunder, provided that the grantee of Landlord has assumed and become liable for the observance and performance of said covenants and agreements. Nothing herein contained, however, shall relieve Landlord of any liability which may have been incurred or which may have accrued prior to any such conveyance. -12- ARTICLE 30 Triple Net - Additional Rent Tenant shall pay, as additional rent, its "proportionate share", as hereinafter defined, of "triple nets" over the "basic rent", as hereinafter defined; due and payable with respect to the building in which the demised premises are located (hereinafter called "Office Building") and the land underlying said Office Building. Landlord's "operating costs" shall be those of operating and maintaining the Office Building in a manner deemed by Landlord reasonable and appropriate and for the best interests of the tenants in the Office Building, including without limitation, the following: 30.1. Real estate taxes or any other tax imposed in lieu of real estate taxes assessed on the Office Building and the land underlying same. 30.2. All costs and expenses directly related to the Office Building of managing, operating, repairing, lighting, cleaning, insurance, removing snow, ice and debris, policing and regulating traffic in the area immediately adjacent to the Office Building Project and depreciation of machinery and equipment used for such operation. 30.3. All costs and expense of replacing paving, curbs, walkways, landscaping (including replanting and replacing flowers and other planting), drainage and lighting facilities in the Office Building Project and area immediately adjacent thereto. 30.4. Electricity used in lighting common areas of the Office Building Project, water including water used in fire prevention equipment and sewer. 30.5. Maintenance, replacement, repair of mechanical and electrical equipment including heating, ventilating and air-conditioning equipment in the Office Building Project. 30.6. Maintenance of common areas of the Office Building Project. 30.7. Painting, decoration and carpeting of all common areas in the Office Building Project. 30.8. All other expenses which would be considered as an expense of maintaining, operating or repairing the Office Building under sound accounting principals. 30.9. Tenant's proportionate share of operating costs for any fiscal year of Landlord shall be determined as follows: the amount shall be multiplied by a fraction, the numerator of which is the total number of square feet of the leased premises and the denominator of which is the total number of square feet of the leased premises plus Tenant's pro rata share of common areas, and the denominator of which is the total number of square feet of the office building and the result shall the percentage of all operating costs payable by Tenant including electrical and utilities. The Landlord shall bill Tenant for 100% of the real estate taxes, operating costs, insurance and maintenance as well as the electrical and utilities and Tenant shall pay the same to Landlord as part of its monthly rent which shall be billed separately. -13- 30.10. Irrespective of the language contained in ARTICLE 30, the Tenant shall assume the total obligation in connection with the maintenance of the building including the replacement of any and all equipment in connection with the operation of the building. In the event any equipment is required to be replaced including the HVAC, electrical, plumbing, roof, windows, the total obligation shall be that of the Tenant. 30.11. Tenant shall have the right to audit the operating cost of the Landlord on a yearly basis to determine if they are reasonable and customary. ARTICLE 31 Tenant's Additional Obligation Tenant shall as an incident to the within demise at Tenant's cost and expense. furnish, supply and maintain the following: (a) Water, (b) Sewer, (c) Exterior Building and Common Area Maintenance, (d) Painting and cleaning, stripping, sealing, repairing, replacing and remarking paved and unpaved surfaces, curbs, sidewalks and parking areas and bumpers, (e) sign lighting, maintenance and repair, (f) trash removal, (g) Maintenance, repair and replacement costs of the retention ponds located on the project property, (h)maintenance, repair and replacement of all utilities; pipes, conduit, lines etc. on the project property, (i) public liability insurance, (j) all risk insurance (fire and other hazards) including rental abatement insurance in the amount of one (1) year's minimum rental for the office project, (k) maintenance of HVAC equipment. ARTICLE 32 Tenant's Services Tenant agrees to provide and pay for electric and gas utilities; and maintain temperature at levels to prevent freezing or boiling of any parts of the demised premises. Tenant will pay for and utilize a janitorial service for interior maintenance and removal of trash to Landlord's designated receptacles. Tenant shall provide on a regular basis all interior maintenance and decorating. ARTICLE 33 Notices The receipt by Landlord of a written notice and/or demand and/or request sent by Registered or Certified Mail in a sealed, postpaid envelope, addressed to the Landlord, BYN, L.L.C. at c/o Hofing Management, 928 West State Street, Trenton, New Jersey 08618, and the receipt by Tenant of a written notice and/or demand and/or request sent by Registered or Certified Mail in a sealed, post paid envelope, addressed to Tenant at Yardville National Bank, Attn: Mr. Frank Durand, Box 8487, Trenton, New Jersey 08650 and a written notice and/or demand and/or request sent by Registered or Certified Mail in a sealed, post paid envelope, addressed to Daniel J. O'Donnell, Esquire, Destribates Campbell, DeSantis, Mages & O'Donnell, 247 White Horse Avenue, Trenton, New Jersey 08610 shall be sufficient notice and/or demand and/or request in any case arising under this lease. The return receipt shall be conclusive evidence of the receipt by Landlord or Tenant, as the case may be, of such notice demand or request -14- The above addresses may be changed at any time hereafter by giving notice in the manner provided. ARTICLE 34 Right to Lock Premises on Default In the event that the relation of Landlord and Tenant shall cease or terminate by reason of the re-entry of the Landlord under the terms and covenants contained in this lease or by the eviction or ejectment of Tenant on summary proceedings, or otherwise, or after abandonment of the premises by Tenant, Landlord, in addition to his other rights hereunder shall have the right to lock said premises and at Landlord's option may keep same locked until said default is cured and Landlord shall have the right to sell all fixtures, goods and materials of Tenant at said premises and apply the proceeds thereof against unpaid rent. No action under this paragraph shall be deemed to waive Landlord's rights as set forth in other paragraphs of this lease. ARTICLE 35 Proration of Rent In the event that this lease commences on other than the first day of a month, Tenant shall, together with the second month's rent pay to the Landlord the prorated rent for the portion of the month, if any, preceding the first full calendar month of the term of this lease. ARTICLE 36 Quiet Enjoyment And the said Landlord both covenant that the said Tenant on paying the said yearly rent, and performing the covenants aforesaid, shall and may peacefully and quietly have, hold and enjoy the said demised premises for the term aforesaid, provided however, that this covenant shall be conditioned upon the retention of title to the premises by the Landlord. ARTICLE 37 Covenants to Bind Parties And it is further understood and agreed, that the covenants and agreements herein contained are binding on the parties hereto and upon their respective successors, heirs, executors, administrators and assigns. It is further expressly agreed that the words used in the singular shall include words in the plural where the text of this instrument so requires. ARTICLE 38 Notification of Default to Mortgagee In the event of a default by the Lessor hereunder, the Mortgagee will be notified in writing, and it is understood that the Mortgagee will have the right to cure said default within thirty (30) days of notification by the Lessee. -15- ARTICLE 39 Waiver of Subrogation Landlord and Tenant hereby releases the other from any and all liability or responsibility (to the other or anyone claiming through or under them by the way of subrogation or otherwise) under fire and extended coverage or supplementary contract casualties, if such fire or other casualty shall have been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible; provided, however, that, except as otherwise provided in this lease, this release shall be applicable and in force and effect only with respect to loss or damage occurring during such time as the releasor's policies shall contain a clause or endorsement to the effect that any such release shall not adversely affect or impair said policies or prejudice the right of the releasor to recover thereunder. Each of Landlord and Tenant agrees that its policies will include such a clause or endorsement so long as the same shall be obtainable without extra cost, or if such cost shall be charged therefore, so long as the other party pays such extra cost, if extra cost shall be chargeable therefore, each party shall notify the other party therefore and of the amount of the extra cost, and the other party shall be obligated to pay the extra cost unless, within ten (10) days after such notice, it elects not to be obligated so to do by written notice to the original party. If such clause or endorsement is not available, or if either party should not desire the coverage at extra cost to it, then the provisions of this ARTICLE shall not apply to the policy or policies in question. ARTICLE 40 Mechanic's Liens Tenant shall not suffer or permit any mechanic's liens to be filed against the fee of the demised premises, nor against the Tenant's leasehold interest therein by reason of work, labor services or materials supplied or claimed or have been supplied to Tenant or anyone holding the demised premises or any part thereof through or under Tenant and Tenant agrees to indemnify Landlord against such liens. If any such mechanic's lien shall at any time be filed against the demised premises, Tenant shall with 15 days after notice of the filing thereof, cause the same to be discharged of record; provided, however, that the Tenant shall have the right to contest the amount or validity, in whole or in part, of any such lien by appropriate proceedings but in such event, Tenant shall notify Landlord in writing and if requested by Landlord shall promptly bond such lien with a responsible surety company. Tenant shall prosecute such proceedings with all due diligence and dispatch. Nothing herein contained shall be construed as a consent on the part of Landlord to subject the estate of the Landlord to liability under the Mechanic's Lien Law of the State of New Jersey, it being expressly understood that the Landlord's estate shall not be subject to such liability. ARTICLE 41 Certificates by Tenant and Landlord Tenant agrees at any time and from time to time upon not less than 15 days' notice by Landlord to execute, acknowledge and deliver to Landlord a statement in writing certifying (1) that this lease is unmodified and in full -16- force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modification, (2) whether or not there are then existing any offsets or defenses against the enforcement of any of the terms, covenants or conditions hereof upon the part of Tenant to be performed (and is so specifying the same), and (3) the dates to which the basic rent and other charges have been paid in advance, if any, it being intended that any such statement delivered pursuant to this Section may be relied upon by any prospective purchaser or mortgagee of the fee of the demised premises or any assignee of any such mortgagee. ARTICLE 42 Cumulative Remedies - No Waiver - No Oral Change The specific remedies to which Landlord or Tenant may resort under the terms of this lease are cumulative and are not intended to be exclusive of any other remedies or means of redress to which they may be lawfully entitled in case any breach or threatened breach by either of them of any provision of this lease. The failure of Landlord to insist in any one or more cases upon the strict performance of any of the covenants of this lease, or to exercise any option herein contained, shall not be construed as a waiver or relinquishment for the future of such covenant or option. A receipt by Landlord of basic rent with knowledge of the breach of any covenant hereof shall not be deemed a waiver of such breach, and no waiver, change, modification or discharge by either party hereto of any provision in this lease shall be deemed to have been made or shall be effective unless expressed in writing and signed by both Landlord and Tenant. In addition to the other remedies in this lease provided, Landlord and Tenant shall be entitled to the restraint by injunction of the violation, or attempted or threatened violation of any of the covenants, conditions or provisions of this lease, or to a decree compelling performance of any of such covenants, conditions or provisions. ARTICLE 43 Change of Terms In the event that a prospective mortgagee of the demised premises shall request a change in the language or terms of the lease, or the execution of any paper in connection therewith, the Tenant shall agree to such change provided the same shall not materially and adversely affect rights of the Tenant under this lease or increase Tenant's cost for Basic Rent or Additional Rent. ARTICLE 44 Attornment Tenant shall, if requested by a first mortgagee of the premises at any time, or in the event of any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage made by the Landlord covering the demised premises, attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Landlord under this lease. -17- ARTICLE 45 Applicable Law This Lease shall be governed by and construed under the laws of the State of New Jersey. ARTICLE 46 Holding Over In the event that the Tenant shall remain in the demised premises after the expiration of the term of this lease without having executed a new written lease with the Landlord, or having exercised its option to renew in accordance with ARTICLE 51, such holding over shall not constitute a renewal or extension of this lease. The Landlord may, at its option, elect to treat the Tenant as one who has not removed at the end of its term, and thereupon be entitled to all the remedies against the Tenant provided by law in that situation, or the Landlord may elect, at its option, to construe such holding over as a tenancy from month to month, subject to all the terms and conditions of this lease, except as to duration thereof, and rent shall be due pursuant to statute for such case made and provided that the holdover rent shall not be less than 120% of the last month's rent covered under the base and or option term of the lease. Landlord shall give Tenant six (6) months notice, in writing of its intention to charge Tenant hold over rent on the premises. Should Tenant fail to give Landlord acknowledgment of Tenant's lease termination, within sixty (60) days of receipt of said notice, Tenant shall be liable to Landlord for an additional month's rental or proportionate part thereof for every month or proportionate part thereof that Tenant fails to give the aforesaid notice, at one hundred twenty (120%) percent of it's last month's rent. ARTICLE 47 Memorandum and Recording This lease shall not be recorded under penalty of damages and forfeiture. At the request of either party, the other party shall execute a memorandum of lease setting forth a description of the demised premises and the term. ARTICLE 48 Utility Easements Unless such easements reduce Tenant's useable space, Landlord shall have the right to grant easements and/or utilize areas of the demised premises for the installation of utilities, provided, however, that the use of said easement areas for said purposes does not substantially interfere with the operation of Tenant's business. Tenant shall not be entitled to any compensation or abatement of rent in regard thereto. If the leased property consists of one or more floors, or portions thereof, of a building, and at the time of the making of this lease there are upon any such floors, or portions thereof, hallways, passageways, stairways, elevators, or other means of access, although within the leased property, shall be reserved for the use of the Landlord and all tenants in the building and shall not be considered a portion of the leased property. -18- ARTICLE 49 Rules and Regulations DELETED ARTICLE 50 Building Improvements See Attached Exhibit C ARTICLE 51 Renewal Option The Tenant shall have the right to renew this Lease Agreement for an additional (see Lease Addendum) beyond the initial (see Lease Addendum) term. The option shall commence provided the following conditions have been complied with: 51.1. The Tenant is not then in default with all terms and conditions of this Lease Agreement; and 51.2. The Tenant shall notify the Landlord in writing not later then six months prior to the expiration of the initial Lease Agreement of its desire to renew, and agrees to sign a new lease upon the same terms and conditions as contained in the original Lease Agreement, except as to the duration dates and the exclusion of any further option to renew. ARTICLE 52 Notice Requirement 52.1. Sending of Notices Any notice, request, demand, approval or consent given, or required to be given, under this lease shall be in writing and shall be deemed to have been given on the (3rd) day following the day on which the same shall have been mailed by United States registered or certified mail, return receipt requested, with all postal charges prepaid, or if hand delivered shall be deemed given upon delivery. All notices shall be addressed, if intended for Landlord, BYN, L.L.C. to c/o Hofing Management. 928 West State St., Trenton, New Jersey 08618 or, if intended for the Tenant, to Yardville National Bank. P.O. Box 8487, Trenton, New Jersey. Either party may, at any time, change its address for the above purposes by sending a notice to the other party stating the change of and setting forth the new address. 52.2. Notice to Mortgagees If any mortgagee shall notify Tenant that it is the holder of a mortgage affecting the premises, no notice, request or demand thereafter sent by Tenant to Landlord shall be effective unless and until a copy of the same shall also be sent to such mortgagee at such address as such mortgagee shall designate. -19- ARTICLE 53 Common Areas 53.1. Management and Operation of Common Areas Tenant will operate and maintain or will cause to be operated and maintained the common areas including all parking areas in a manner deemed by Landlord to be reasonable and appropriate and in the best interest of the building. Landlord shall have the right (i) to establish, modify and enforce reasonable rules and regulations with respect to the common areas; (ii) to enter into, modify and terminate easement and other agreements pertaining to the use and maintenance of the parking areas and common areas; (iii) to close temporarily any or all portions of the common areas; (iv) to discourage non-customer parking; and (v) to do and perform such other acts in and to said areas and improvements as, in the exercise of good business judgment, Landlord shall determine to be advisable. Landlord agrees that it shall use its best efforts to make available to Tenant's employees convenient parking facilities in reasonable proximity to the premises. [THIS SECTION INTENTIONALLY LEFT BLANK] -20- IN WITNESS WHEREOF, the parties hereto have affixed their hands and seals or caused these presents to be signed and sealed by their proper corporate offices the day and year first above written. Witness/Attest: Landlord: BYN, L.L.C., a NJ Corporation /s/ Daniel J. O'Donnell By: /s/ Sidney L. Hofing - ------------------------------ ---------------------------------------- Sidney L. Hofing Managing Member Witness/Attest: Tenant: Yardville National Bank, a NJ National Bank /s/ Daniel J. O'Donnell By: /s/ Patrick M. Ryan - ------------------------------ ---------------------------------------- Patrick M. Ryan President-CEO -21- ACKNOWLEDGMENT -------------- State of New Jersey ) ) SS: County of Mercer ) Be It Remembered, that on this 9th day of April, 2001, before me, the subscriber, personally appeared SIDNEY L. HOFING, who I am satisfied, is the person named in and who executed the within instrument, and thereupon he acknowledged that he signed, sealed and delivered the same as his act and deed, for the uses and purposes therein expressed. /s/ Daniel J. O'Donnell ------------------------------------ My Commission Expires: State of New Jersey ) ) SS: County of Mercer ) Be It Remembered, that on this 9th day of April, 2001 , before me the subscriber, personally appeared PATRICK M. RYAN, who I ant satisfied, is the person named in and who executed the within instrument, and thereupon he acknowledged that he signed, sealed and delivered the same as his act and deed, for the uses and purposes therein expressed. /s/ Daniel J. O'Donnell ------------------------------------ My Commission Expires: Lease Addendum -------------- This Lease Addendum shall supplement the Lease Agreement between BYN, L.L.C. and the Yardville National Bank dated May 1, 2001 for the premises located at 1041 Route 206, Bordentown Township, New Jersey. In the event of a conflict between this Addendum and the Lease Agreement, the Addendum shall prevail. 1. The initial base year rental shall be $64,000. 2. The Landlord shall be obligated to pay to the Tenant as of closing on April 6, the following sums: a) Property Acquisition $421,000 b) Exterior Costs 110,325 c) Soft Costs 10,000 -------- Total Purchase Price $541,325 3. The initial base year rental shall be $64,000 due and payable on May 1, 2001. Total monthly rental shall be $5,333.33. 4. The initial base rental shall increase every five (5) years by 12%. 5. The Lease Agreement shall be for a length often (10) years with three (3) five-year options. Years 1 - 10 Initial lease term Years 11 - 15 First option period Years 16 - 20 Second option period Years 21 - 25 Third option period IN WITNESS WHEREOF, the parties hereto have affixed their hands and seals or caused these present to be signed and sealed by their proper corporate offices this 9th day of April, 2001. Witness/Attest: Landlord: BYN, L.L.C., a NJ Corporation /s/ Daniel J. O'Donnell By: /s/ Sidney L. Hofing - ------------------------------ ---------------------------------------- Sidney L. Hofing Managing Member Witness/Attest: Tenant: Yardville National Bank, a NJ National Bank By: /s/ Daniel J. O'Donnell /s/ Patrick M. Ryan - ------------------------------ ---------------------------------------- Patrick M. Ryan President-CEO SECOND LEASE ADDENDUM --------------------- Landlord: BYN, LLC Tenant: Yardville National Bank Date of Lease: April 9, 2001 Property: 1041 Route 206, Bordentown Township, NJ This Second Lease Addendum shall supplement the Lease Agreement and First Lease Addendum between BYN, LLC and Yardville National Bank Dated April 9, 2001 for the property located at 1041 Route 206, Bordentown Township, New Jersey. In the event of a conflict between this Second Lease Addendum and the Lease Agreement or First Lease Addendum, the Second Lease Addendum shall prevail. 1. ARTICLE 29 of the Lease Agreement should be deleted in its entirety and replaced with the following: ARTICLE 54 Additional Rent Tenant shall pay, as additional rent, the following: 1. Real estate or any other tax imposed in lieu of real estate taxes assessed on the Office Building and the land underlying same. 2. All risk insurance (fire and other hazard) including rental abatement insurance in the amount of one (1) year's minimal rental for the office project. 2. ARTICLE 30 should be modified to delete the language in subparagraph 0) and replace said language with the following: "removal of all snow, ice and debris." Agreed and accepted this 14 day of May,2001. Attest/Witness: BYN, LLC /s/ Daniel J. O'Donnell By: /s/ Sidney L. Hofing - ------------------------------ ---------------------------------- Sidney L. Hofing Managing Member Attest/Witness: Tenant: Yardville National Bank /s/ Daniel J. O'Donnell By: /s/ Patrick M. Ryan - ------------------------------ ---------------------------------- Patrick M. Ryan President-CEO EX-10.2 5 ex10-2.txt EXHIBIT 10.2 Exhibit 10.2 OFFICE LEASE Between FYNB, LLC, Landlord And Yardville National Bank, Tenant Premises: Yardville National Bank Walter E. Foran Boulevard Block 18.01, Lot 1 Township of Raritan, County of Hunterdon, New Jersey Date: October 22, 2001
TABLE OF CONTENTS Page ---- ARTICLE 1 Premises - Term of Lease and Use........................................................................1 ARTICLE 2 Basic Rent..............................................................................................1 ARTICLE 3 Repair Obligations of Tenant............................................................................1 ARTICLE 4 Compliance with Statutes, Ordinances, Etc...............................................................1 ARTICLE 5 Landlord's Right to Perform Tenant's Covenants..........................................................2 ARTICLE 6 Assignment or Subletting................................................................................2 ARTICLE 7 Alterations or Improvements by Tenant...................................................................2 ARTICLE 8 Damage or Destruction...................................................................................3 ARTICLE 9 Landlord's Right of Entry...............................................................................3 ARTICLE 10 Vacancy or Eviction....................................................................................3 ARTICLE 11 Replacement of Glass and Damage Due to Tenant's Negligence.............................................4 ARTICLE 12 Obstruction of Premises................................................................................4 ARTICLE 13 Signs..................................................................................................4 ARTICLE 14 Landlord's Non-Liability for Damages...................................................................4 ARTICLE 15 Subordination..........................................................................................5 ARTICLE 16 Security Deposit.......................................................................................5 ARTICLE 17 Impossibility of Insurance Coverage....................................................................6 ARTICLE 18 Tenant's Insurance.....................................................................................6 ARTICLE 19 Conditional Limitations and Default....................................................................7 ARTICLE 20 Abatement of Trade Fixtures...........................................................................10 ARTICLE 21 Strict Performance....................................................................................10 ARTICLE 22 Re-Entry of Landlord..................................................................................11 ARTICLE 23 Condemnation..........................................................................................11 ARTICLE 24 Delay in Performance..................................................................................11 ARTICLE 25 Limitation of Liability...............................................................................11 ARTICLE 26 Delivery of Possession DELETED.......................................................................12 ARTICLE 27 Real Estate Broker....................................................................................12 ARTICLE 28 Indemnification of Landlord and Tenant................................................................12 ARTICLE 29 Termination of Landlord's Liability...................................................................12 ARTICLE 30 Triple Net - Additional Rent..........................................................................13 ARTICLE 31 Tenant's Additional Obligation........................................................................13 ARTICLE 32 Tenant's Services.....................................................................................13 ARTICLE 33 Notices...............................................................................................13 ARTICLE 34 Right to Lock Premises on Default.....................................................................14 ARTICLE 35 Proration of Rent.....................................................................................14 ARTICLE 36 Quiet Enjoyment.......................................................................................14 ARTICLE 37 Covenants to Bind Parties.............................................................................14 ARTICLE 38 Notification of Default to Mortgagee..................................................................14 ARTICLE 39 Waiver of Subrogation.................................................................................15 ARTICLE 40 Mechanic's Liens......................................................................................15 ARTICLE 41 Certificates by Tenant and Landlord...................................................................15 ARTICLE 42 Cumulative Remedies - No Waiver - No Oral Change......................................................16 ARTICLE 43 Change of Terms.......................................................................................16
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Page ---- ARTICLE 44 Attornment............................................................................................16 ARTICLE 45 Applicable Law........................................................................................17 ARTICLE 46 Holding Over..........................................................................................17 ARTICLE 47 Memorandum and Recording..............................................................................17 ARTICLE 48 Utility Easements.....................................................................................17 ARTICLE 49 Rules and Regulations.................................................................................18 ARTICLE 50 Building Improvements.................................................................................18 ARTICLE 51 Renewal Option........................................................................................18 ARTICLE 52 Notice Requirement....................................................................................18 ARTICLE 53 Common Areas..........................................................................................19 ARTICLE 54 Improvements to Property..............................................................................19 Exhibits: - -------- A Location - Project Description B Basic Rent C Building Improvements D Shopping Center Sign
-ii- THIS AGREEMENT, dated the 22nd day of October, 2001, between FYNB, L.L.C. as Landlord and Yardville National Bank, as Tenant. WITNESSETH: ARTICLE 1 Premises - Term of Lease and Use The said Landlord has let unto the said Tenant and the said Tenant has hired from said Landlord the following premises: Lot 1, Block 18.01, Township of Raritan, County of Hunterdon, State of New Jersey for the term of fifteen (15) years to commence from the issuance of a temporary or permanent Certificate of Occupancy consisting of approximately 6,732 sq. ft. building to be used and occupied only for lawful purposes, more specifically a bank branch and related office use, only. Upon the conditions and covenants following: ARTICLE 2 Basic Rent For rent specifications see Lease Addendum. The square footage for the building is estimated at 6,732 sq. ft. subject to architectural measurement. Said rent to be paid in1 equal monthly payments in advance on the 1st day of each and every month during the term aforesaid in the amount of $(see Lease Addendum) per month (year 1), said rent to be paid without benefit of offset or deduction. This is a triple net lease, and Tenant will pay additional rent as set forth in Paragraph 30 and is in addition to the basic rent. The rental schedule is set forth in Exhibit "B". All rent not received by the 10th of the month will incur a late charge of five (5%) percent. ARTICLE 3 Repair Obligations of Tenant That the Tenant shall take good care of the premises and shall at the Tenant's own cost and expense make all repairs, that Tenant is required to make under this lease, and at the end or other expiration of the term shall deliver up the demised premises in good order or condition, damages caused by the elements and ordinary wear and tear excepted. Tenant shall provide chair pads under all movable chairs in the demises premises, or otherwise be responsible for all damage to flooring and carpet resulting from the absence of the use of chair pads. Tenant will not overload the electrical wiring serving the leased premises or within the leased premises, and will install at its own expense, but only after obtaining Landlord's approval, any additional electrical wiring which may be required in connection with Tenant's apparatus. ARTICLE 4 Compliance with Statutes, Ordinances, Etc. That the Tenant shall promptly execute and comply with all statutes, ordinances, rules, orders, regulations and requirements of the Federal, State and City Government and of any and all their Departments and Bureaus applicable to said premises, for the correction, prevention, and abatement of nuisances, violations or other grievances, in, upon or connected with said premises during said term, and which are directly related to Tenant's use of the said premises; shall also promptly comply with and execute all rules, orders, and regulations of the Board of Fire Underwriters, or any other similar body, for the prevention of fires, at the Tenant's own cost and expense. ARTICLE 5 Landlord's Right to Perform Tenant's Covenants That in case the Tenant shall fail or neglect to comply with the aforesaid statutes, ordinances, rules, orders, regulations and requirements or any of them, or in case the Tenant shall fail or neglect to make any necessary repairs, then if Tenant fails to remediate within thirty (30) days after Landlord's written notice to remediate, the Landlord or the Landlord's Agency may enter said premises and make said repairs and comply with any and all of the said statutes, ordinances, rules, orders, regulations or requirements, at the cost and expense of the Tenant and in case of the Tenant's failure to pay therefore, the said cost and expense shall be added to the next month's rent and be due and payable as such, or the Landlord may deduct the same from the balance of any sum remaining in the Landlord's hands. This provision is in addition to the right of the Landlord to terminate this lease by reason of any default on the part of the Tenant. ARTICLE 6 Assignment or Subletting That should the Tenant desire to assign this agreement or underlet said premises, it shall first offer same to Landlord at the rental set forth herein. Should Landlord not accept the assignment or underletting offered or not respond within twenty (20) days of receipt of Tenant's written offer, then Tenant shall be allowed to assign this agreement or underlet the premises provided that the Tenant shall not (a) assign this agreement, or underlet or underlease the premises or any part thereof without the prior written consent of Landlord, which consent will not be unreasonably withheld or delayed; provided, however, that notwithstanding such assignment, Tenant shall not thereby be relieved from responsibility hereunder, or (b) permit or suffer the premises or any part thereof to be occupied for any business or purpose deemed disreputable or extra-hazardous on account of fire, under penalty of damages and forfeiture. Tenant shall be permitted to assign this lease or sublet the premises without Landlord's consent and without first offering the premises to Landlord if the proposed sublease or assignee is an entity owned by, controlled by, affiliated with, or is the Parent Company of the Tenant. In the event that the Tenant enters into an agreement to sell all of its stock of Yardville National Bank, it is permissible under the Lease Agreement. ARTICLE 7 Alterations or Improvements by Tenant That except for the planned improvements made in accordance with plans and specifications no alterations, additions or improvements, painting or decorating shall be made in or to the premises without the consent of the Landlord in writing, which consent shall not be unreasonably withheld or delayed, under penalty of damages and forfeiture, and all additions and improvements made by the Tenant shall become the property of the Landlord and -2- shall remain on and be surrendered with the demised premises. Landlord hereby consents to the installation of paint and carpet throughout the premises and of sheetrock or glass on the cubicles contained in the premises. At Landlord's request all such alterations and improvements shall be restored to their original condition at Tenant's expense at the termination of the Lease, provided Landlord notifies Tenant, in writing, prior to the end of the term of its desire to have the premises restored. ARTICLE 8 Damage or Destruction In case of damage, by fire or other cause, to the building in which the leased premises are located, without the fault of the Tenant or of Tenant's agent or employees, if the damage is so extensive as to amount practically to the total destruction of the leased premises or of the building, or if the Landlord shall within a reasonable time decide not to rebuild, the lease shall cease and come to an end, and the rent shall be apportioned to the time of the damage. In all other cases where the leased premises are damaged by fire without the fault of the Tenant or of Tenant's agents or employees the Landlord shall repair the damage with reasonable dispatch after notice of damage, and if the damage has rendered the premises untenantable, in whole or in part, there shall be no abatement, diminution or reduction of fixed rent or other charges payable by Tenant under this lease. ARTICLE 9 Landlord's Right of Entry (a) That said Tenant agrees that the said Landlord and Landlord's Agents, and other representatives, shall have the right to enter into and upon said premises, or any part thereof, at all reasonable hours upon prior written notice to the Tenant except where an emergency exists and the Landlord is obligated to take immediate action for the purpose of examining the same, or making such repairs or alterations therein as may be necessary for the safety and preservation thereof provided such entry shall not unreasonably interfere with Tenant's business. (b) The Tenant also agrees to permit the Landlord or Landlord's Agents to show the premises at all reasonable hours, upon prior written notice to Tenant, to persons wishing to hire or purchase the same; and the Tenant further agrees that during the six months next prior to the expiration of the term, the Landlord or Landlord's Agents shall have the right to place notices on the front of said premises, or any part thereof, offering the premises "to Let" or "For Sale", and the Tenant hereby agrees to permit the same to remain thereon without hindrance or molestation. ARTICLE 10 Vacancy or Eviction That if the said premises, or any part thereof, shall become vacant during the said term, or should Tenant be evicted by summary proceedings or otherwise, the Landlord or Landlord's representatives may re-enter the same, either by force or otherwise, without being liable to prosecution therefor; and re-let the said premises as the Agent of the said Tenant and receive the rent thereof; applying the same, first to the payment of such expenses as the -3- Landlord may be put to in re-entering and then to the payment of the rent due by these presents; it being understood that the Tenant shall remain liable for any deficiencies. ARTICLE 11 Replacement of Glass and Damage Due to Tenant's Negligence Tenant shall replace any and all broken glass in and about the demised premises. Landlord may insure, and keep insured, all plate glass in the demised premises for and in the name of Landlord. Damage and injury to the said premises, caused by the carelessness or improper conduct on the part of the said Tenant or the Tenant's agents or employees shall be repaired as speedily as possible by the Tenant at the Tenant's own cost and expense. ARTICLE 12 Obstruction of Premises That the Tenant shall neither encumber, nor obstruct the sidewalk in front of, entrance to or hall and stairs of said building, other common areas, parking areas or driveways, nor allow the same to be obstructed or encumbered in any manner without Landlord's written consent. ARTICLE 13 Signs The Tenant shall neither place, nor cause, nor allow to be placed, any sign or signs of any kind whatsoever at, in or about the entrance to said premises nor any other part of same except in or at such place or places as may be indicated by the said Landlord and consented to by Landlord in writing. Landlord hereby consents to the placement of a sign on the outside door of the premises which sign shall be of the same type as those signs used by other Tenants and in case the Landlord or Landlord's representatives shall deem it necessary to remove any such sign or signs in order to paint or to make any other repairs, alterations or improvements in or upon said premises or the building wherein same is situated or any part thereof, the Landlord shall have the right to do so, providing the same be removed and replaced at the Landlord's expense whenever the said repairs, alterations or improvements shall have been completed. Landlord will provide a Directory of Tenants in an appropriate place on the property which the demised premises are located. ARTICLE 14 Landlord's Non-Liability for Damages It is expressly agreed and understood by and between the parties to this agreement, that the Landlord shall not be liable for any damage or injury to person or property caused by ,or resulting from steam, electricity, gas, water, rain, ice or snow, or any leak or flow from or into any part of said building, except as may be caused by the negligence of Landlord or its Agents or Employees. Landlord shall not be liable for any damage or injury resulting or arising from any other cause or happening whatsoever that is not caused by the negligence or other acts or omissions of Landlord or its Agents or Employees. -4- ARTICLE 15 Subordination That this lease shall not be a lien against said premises in respect to any mortgages that are now on or that hereafter may be placed against said premises, and that the recording of such mortgage or mortgages shall have preference and precedence and be superior and prior in lien of this lease irrespective of the date of recording and the Tenant agrees to execute any instrument without cost, which may be deemed necessary or desirable to further effect the subordination of this lease to any such mortgage or mortgages, and a refusal to execute such instruments shall entitle the Landlord, or the Landlord's assigns and legal representatives to the option of canceling this lease without incurring any expense or damage, and the term hereby granted is expressly limited accordingly. In the event that Landlord procures mortgage loans or recasts the existing mortgage loan on said premises, Tenant agrees to furnish to Landlord on request, copies of its most recent financial statements prepared by the Certified Public Accountant regularly retained by it. ARTICLE 16 Security Deposit 16.1. The Landlord hereby acknowledges receipt of $ N/A which is to be placed in an interest bearing account and is to be retained as security for the faithful performance of all of the covenants, conditions and agreements to this lease, but in no event shall Landlord be obliged to apply same on rents or other charges in arrears or damages for the Tenant's failure to perform said covenants, conditions and agreements; the Landlord may so apply the security at its option; and the Landlord's right to the possession of the premises for non-payment of rent or for any other reason shall not in any event be affected by reason of the fact that Landlord holds this security. The said sum if not applied toward the payment of rent in arrears or toward the payment of damages suffered by Landlord by reason of the Tenant's breach of the covenants, conditions and agreements of this lease is to be returned to the tenant when this lease is terminated, according to these terms, and in no event is the said security to be returned until the Tenant has vacated the premises and delivered possession to the Landlord. 16.2. In the event that the Landlord repossesses itself of said premises because of the Tenant's default or because of the Tenant's failure to carry out the covenants, conditions and agreements of this lease, the Landlord may apply the said security on all damages suffered to the date of repossession and may retain the said security to apply on such damages as may be suffered or shall accrue thereafter by reason of the Tenant's default or breach. The Landlord shall keep the said security as a separate fund. The security deposited under this lease shall not be mortgaged, assigned, pledged, or encumbered by Tenant without the written consent of Landlord. In the event of filing by or against Tenant of a petition in bankruptcy or assignment for the benefit of creditors, or upon the insolvency of Tenant, title to the monies paid over to Landlord as security shall vest in the Landlord free and clear of any claims of the Trustees in bankruptcy, assignee for the benefit of creditors or receiver that may be appointed for the insolvent Tenant. 16.3. In the event of a bona fide sale, subject to this lease, the Landlord shall have the right to transfer the security to the vendee for the benefit of the Tenant upon such transfer and Landlord shall be considered -5- released by the Tenant of all liability for the return of said security, and it is agreed that this shall apply to every transfer or assignment made of the security to the new Landlord. ARTICLE 17 Impossibility of Insurance Coverage 17.1. It is expressly understood and agreed that if for any reason it shall be impossible to obtain fire insurance and extended coverage on the buildings and improvements on the demised premises in an amount, and in the form, and in fire insurance companies acceptable to the Landlord the Landlord may, if the Landlord so elects, at any time thereafter terminate this lease and the term thereof, on giving to the Tenant three days' notice in writing of Landlord's intention so to do and upon the giving of such notice, this lease and the term thereof shall terminate and come to an end. In the event that Tenant's occupancy causes any increase in premium for the fire and extended coverage insurance rates on the demised premises or the balance of the building in which Tenant's demised premises are located, Tenant shall pay, as additional rent, the additional premium on said fire and extended coverage insurance. Bills for such additional premiums, if any, shall be rendered by Landlord to Tenant at such time as Landlord shall elect, and shall be due and payable by Tenant when rendered; and the amount thereof shall be deemed to be and paid as additional rent. 17.2. That the Tenant will not nor will the Tenant permit other tenants or other persons to do anything in said premises or bring anything into said premises, or permit anything to be brought into said premises or to be kept therein, which will in any way increase the rate of fire insurance on said demised premises, nor use the demised premises or any part thereof, nor suffer or permit their use for any business or purpose which would cause an increase in the rate of fire insurance on said building, and the Tenant agrees to pay on demand any such increase. ARTICLE 18 Tenant's Insurance At all times after the execution of this lease, Tenant shall take out and keep in force, at its expense: 18.1. Tenant's Insurance (a) Public liability insurance, including insurance against assumed or contractual liability with respect to the premises, to afford protection to the limit, for each occurrence, of not less than one million dollars ($1,000,000) with respect to personal injury or death, and five hundred thousand dollars ($500,000) with respect to property damages; and (b) All-risk casualty insurance, written at replacement cost value and with replacement cost endorsement, covering all of Tenant's personal property in the premises (including, without limitation, inventory, trade fixtures, floor coverings, furniture and other property removable by Tenant under the provisions of this lease) and all leasehold improvements installed in the premises by Tenant; and -6- (c) If and to the extent required by law, worker's compensation or similar insurance in form and amounts required by law. 18.2. Tenant's Contractor's Insurance (a) Comprehensive general liability insurance, including contractor's liability coverage, contractual liability coverage, completed operations coverage, broad form property damage endorsement and contractor's protective liability coverage, to afford protection to the limit, of each occurrence, with respect to property damage; and (b) Worker's compensation or similar insurance in form and amounts required by law. 18.3. Policy Requirements (a) The company or companies writing any insurance which Tenant is required to take out and maintain shall be licensed to do business in New Jersey. Each policy evidencing such insurance shall name Landlord or its designee as additional insured and shall also contain a provision by which the insurer agrees that such policy shall not be cancelled except after thirty (30) days written notice to Landlord or its designee. Each such policy, or a certificate thereof, shall be deposited with Landlord by Tenant promptly upon commencement of Tenant's obligation to procure the same. If Tenant shall fail to perform any of its obligations under this Article, Landlord may perform the same and the cost of same shall be deemed additional rental and shall be payable by Tenant upon Landlord's demand. ARTICLE 19 Conditional Limitations and Default 19.1. If at any time during the term of this Lease: (a) Tenant shall file a petition in bankruptcy or insolvency or for reorganization or arrangement or for the appointment of a receiver of all or a portion of Tenant's property, such filing shall continue for a period of ten (10) days. (b) Any involuntary petition of the kind referred to in subdivision (a) of this section shall be filed against Tenant and such petition shall not be calcite or withdrawn within ninety (90) days after the date of filing thereof, or (c) Tenant shall be adjudicated a bankrupt by any court, or (d) Tenant shall make an assignment for the benefit of creditors, or (e) A permanent receiver shall be appointed for the property of Tenant by order of a court of competent jurisdiction by reason of the insolvency of Tenant (except where such receiver shall be appointed in an involuntary proceeding, if he shall not be withdrawn within ninety (90) days after the date of his appointment), or -7- (f) The operation of Tenant's business shall be suspended by any authority having jurisdiction thereover or the conduct and operation of Tenant's business shall be taken over by (i) a receiver appointed by order of a court of competent jurisdiction or (ii) an agency or governmental authority having jurisdiction thereover, then Landlord, at Landlord's option may terminate this Lease on ten (10) days' notice to Tenant, and upon such termination, Tenant shall quit and surrender the Leased Premises to Landlord. The word "Tenant" as used in this section shall be deemed to mean the Tenant herein named, or in the event of an assignment of this Lease in accordance with the provisions of Article VIII, such word shall be deemed to also mean the ten assignee. 19.2. If this Lease shall terminate pursuant to the provisions of Section 19.1: (a) Landlord shall be entitled to receive from Tenant arrears in Basic Annual Rent and Additional Rent and, in addition thereto as liquidated damages, an amount equal to the balance of rentals due under the remaining term of the Lease, the remaining rentals shall be accelerated hereby plus any other damages to which Landlord may be entitled including, but not limited to, reasonable legal fees. Tenant shall receive a credit for any monies including, but not limited to, all rents received by Landlord in mitigation of such default and Landlord shall make best efforts to re-let the premises. All funds received shall first go to pay Landlord's costs and expenses of mitigating the damages, then towards Tenant's credit. (b) If Tenant shall fail to pay any Basic Annual Rent or Additional Rent when due and payable hereunder, and any such default shall continue for a period of ten (10) days after such payment is due; or (c) If Tenant shall be in default in the performance of any of the other terms, covenants, and conditions of this Lease: (i) and such default shall not have been remedied within ten (10) days after notice by Landlord to Tenant specifying such default and requiring it to be remedied; or (ii) where such default reasonably cannot be remedied within such period of ten (10) days, if Tenant shall not have commenced the remedying thereof with such period of time and shall not be proceeding with due diligence to remedy it; Then Landlord, at its election, may terminate this Lease on ten (10) days' notice to Tenant, and upon such termination Tenant shall quit and surrender the Leased Premises to Landlord. 19.3. If this Lease shall terminate as provided in Section 19.2, or if Tenant shall be in default in the payment of Basic Annual Rent or Additional Rent when due and payable and such default shall continue for a period of ten (10) days after such payment is due: (a) Landlord may re-enter and resume possession of the Leased Premises and remove all persons and property therefrom either by summary dispossess proceedings or by a suitable action or proceeding at law or in equity or by peaceable self-help or otherwise, without being liable for any damages therefor; and -8- (b) Landlord may relet the whole or any part of the Leased Premises for a period equal to, greater or less than the remainder of the then term of this Lease at such rental and upon such terms and conditions as Landlord shall deem reasonable to any tenant it may deem suitable and for any use and purpose it may deem appropriate. Landlord shall use its best efforts in reletting the premises, and provided Landlord uses such best efforts, Landlord shall not be liable in any respect for failure to relet the Leased Premises or, in the event of such reletting, for failure to collect the rent thereunder and any sums received by Landlord on a reletting in excess of the rent reserved in this Lease shall belong to Landlord. 19.4. If this Lease shall terminate as provided in this Article or by summary dispossess proceedings (except as to any termination under Section 35), Landlord shall be entitled to recover from Tenant as damages in addition to arrears in Basic Annual Rent and Additional Rent, (a) (i) amounts equal to all expenses reasonably incurred by Landlord in recovering possession of the Leased Premises and in connection with the reletting of the Leased Premises including, without limitation, reasonable legal fees, the cost of repairing, renovating or remodeling the Leased Premises, and to the condition they were in at the inception of the Lease, reasonable wear and tear excepted; (ii) broker's commissions incurred by Landlord in reletting the Leased Premises, which amounts set forth in this subsection shall be due and payable by Tenant to Landlord at such time or times as they shall have been incurred; and (b) amounts equal to the deficiency between the Basic Annual Rent and Additional Rent which would have become due and payable had this Lease not terminated and the net amount, if any, of rent and Additional Rent collected by Landlord on reletting the Leased Premises. The amounts specified in this subsection shall be due and payable by Tenant on the several days on which such Basis Annual Rent and Additional Rent would have become due and payable had this Lease not terminated. Tenant consents that Landlord shall be entitled to institute separate suits or actions or proceedings and hereby waives the right to enforce or assert the rule against splitting a cause of an action as a defense thereto. Landlord, at its election, which shall be exercised by the service of a notice on Tenant, may collect from Tenant as damages and Tenant shall pay in lieu of the sums becoming due under the provisions of subsection (b) hereof after the service of such notice, an amount equal to the difference between the Basic Annual Rent and Additional Rent which would become due and payable had this Lease not terminated (from the date of the service of such notice to the end of the term of this Lease which would have been in effect if it had not terminated) and the maximum allowed by statute or rule or law in effect at the time when in governing the proceedings in which such damages are to be proved. Tenant shall be credited with any rental received from a new tenant. 19.5. The words "re-enter" and "re-entry" as used in this Article are not restricted to their technical legal meaning. 19.6. Tenant hereby waives the service of any notice in writing by Landlord of its intention to re-enter except as otherwise provided in this Lease. -9- 19.7. If this Lease shall terminate as provided in this Article or by summary proceedings or otherwise, Landlord, in addition to any other rights under this Article, shall be entitled to recover as damages; (a) the cost of performing any work required to be done by Tenant under this Lease and all damages resulting from Tenant's default in performing such work, and (b) the cost of replacing the Leased Premises in the same condition as that in which Tenant is required to surrender them to Landlord under this lease. 19.8. At any time (a) within fifteen (15) days prior to the expiration of the term pf this Lease or (b) after Landlord shall have served any notice of termination of this Lease, as provided in this Lease, but prior to the date of termination, or (c) after Landlord shall have commenced a summary dispossess proceeding or an appropriate action or proceeding to recover possession of the Leased Premises but prior to the termination of this Lease by reason of the issuance of a warrant in the dispossess proceeding or the entry of a judgment in such other action or proceeding, any or all subleases theretofore executed by Tenant and the rent payable thereunder shall, at the option of Landlord (such option to be exercised by notice to Tenant), be assigned by Tenant to Landlord as of the date of the service of such notice. Such assignment shall be deemed to be and shall be effected as of the date of service of such notice without execution by Tenant of any instrument. However, Tenant, at Landlord's request, shall execute, acknowledge and deliver to Landlord an instrument in recordable form, confirming such assignment and, in the event that Tenant shall fail or refuse to execute, acknowledge or deliver such instrument, Landlord in addition to all other rights and remedies it may have by reason of such failure or refusal, may, as the agent or attorney-in-fact of Tenant, execute, acknowledge and deliver it and Tenant hereby irrevocably nominates, constitutes and appoints Landlord as Tenant's proper and legal attorney-in-fact for such purpose, as coupled with an interest, hereby ratifying all that Landlord may do as such attorney-in-fact of Tenant, and such assignment shall recall that it has made pursuant to this article. ARTICLE 20 Abatement of Trade Fixtures If after default in payment of rent or violation of any other provision of this lease, or upon the expiration of this lease or upon abandonment of the premises by Tenant, the Tenant moves out or is dispossessed, Tenant shall not be permitted to remove any trade fixtures or other property from said premises until said default or violation is cured. Should said default or violation not be cured within one month of its occurrence, or upon abandonment of the premises said fixtures shall become the property of Landlord. ARTICLE 21 Strict Performance The failure of the Landlord to insist upon strict performance of any of the covenants or conditions of this lease or to exercise any option herein conferred in any one or more instances, shall not be construed as a waiver or -10- relinquishment for the future of any such covenants, conditions or options, but the same shall be and remain in full force and effect. ARTICLE 22 Re-Entry of Landlord In the event that the relation of the Landlord and Tenant may cease or terminate by reason of the re-entry of the Landlord under the terms and covenants contained in this lease or by the ejectment of the Tenant by summary proceedings or otherwise, or after the abandonment of the premises by the Tenant, it is hereby agreed that the Tenant shall remain liable for all unpaid sums covering the balance of said term and shall pay said amounts promptly. ARTICLE 23 Condemnation In the event that the premises shall be taken for public use by the city, state, federal government, public authority or other corporation having the power of eminent domain, then this lease shall terminate as of the date on which possession thereof shall be taken for such public use, or, at the option of the Tenant, as of the date on which the premises shall become unsuitable for Tenant's regular business by reason of such taking; provided, however, that if only a part of the leased premises shall be so taken, such termination shall be at the option of Tenant only. If such a taking of only a part of the leased premises occurs, and Tenant elects not to terminate the lease, there shall be a proportionate reduction of the Basic Rent and Additional Rent to be paid under this lease from and after the date such possession is taken for public use. Tenant shall have the right to participate, directly or indirectly, in any award for such public taking to the extent that it may have suffered compensable damage as a Tenant on account of such public taking. ARTICLE 24 Delay in Performance This lease and the obligation of Tenant to pay rent hereunder and perform all of the other covenants and agreements hereunder on part of Tenant to be performed shall in no way be affected, impaired or excused because Landlord is unable to supply or is delayed in supplying any service expressly or implied to be supplied or is unable to make, or is delayed in making any repairs, addition, alterations, or decorations or is unable to supply or is delayed in supplying any equipment or fixtures if Landlord is prevented or delayed from so doing by reason of governmental preemption in connection with a national Emergency declared by the President of the United States or in connection with any rule, order or regulation of any department or subdivision thereof of any governmental agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency. ARTICLE 25 Limitation of Liability Landlord shall be under no personal liability with respect to any of the provisions of this lease, and if it is in breach or default with respect to his obligations or otherwise, under this lease, Tenant shall look solely to the equity of Landlord in the premises for the satisfaction of Tenant's remedies. It -11- is expressly understood and agreed that Landlord's liability under the terms, covenants, conditions, warranties and obligations of this lease shall in no event exceed the loss of its equity in the premises. ARTICLE 26 Delivery of Possession DELETED ARTICLE 27 Real Estate Broker Tenant represents that it has not contacted or dealt with any real estate broker, agent, or salesman regarding the within lease other than NOT APPLICABLE and that should any other broker, agent or salesman make claim to a commission in connection with this transaction, Tenant shall save and hold harmless Landlord from any such claim and shall, at Tenant's cost and expense defend against any such claims. ARTICLE 28 Indemnification of Landlord and Tenant Landlord and Tenant agree to protect, defend, indemnify and save harmless each other against and from any and all claims arising from any breach or default on the part of either party in the performance of any covenant or agreement on their part to be performed, pursuant to the terms of this lease, or arising from any act of negligence of either party, or any of its agents, contractors, servants, employees or licensees, or arising from any accident, injury or damage whatsoever caused to any person (other than through the fault of the other party or its agents) occurring during the term of this lease in or about the demised premises or upon or under the sidewalks and the land adjacent thereto, and from and against all costs, expenses and liabilities incurred in or about any such claim or act or proceeding brought thereon, but only to the extent the losses or liabilities are not covered by insurance; and in case any action or proceeding be brought against either party by reason of any such claim, the responsible party upon notice from the responsible party covenants to resist or defend such action or proceeding by counsel reasonably satisfactory at the responsible party's sole cost and expense. ARTICLE 29 Termination of Landlord's Liability If after Landlord delivers possession of the demised premises to Tenant, the Landlord conveys the demised premises during the term hereof, the Landlord shall not thereafter be liable for the covenants and agreements to be observed and performed by the Landlord hereunder, provided that the grantee of Landlord has assumed and become liable for the observance and performance of said covenants and agreements. Nothing herein contained, however, shall relieve Landlord of any liability which may have been incurred or which may have accrued prior to any such conveyance. -12- ARTICLE 30 Triple Net - Additional Rent Tenant shall pay as additional rent, the following: (a) real estate tax or any other tax imposed in lieu of real estate taxes assessed on the office building and land underlying the same. (b) all risk insurance, fire and other hazard, including rental loss insurance in the amount of one year's minimum rental for the office project. ARTICLE 31 Tenant's Additional Obligation Tenant shall as an incident to the within demise at Tenant's cost and expense, furnish, supply and maintain the following: (a) Water, (b) Sewer, (c) Exterior Building and Common Area Maintenance, (d) Painting and cleaning, stripping, sealing, repairing, replacing and remarking paved and unpaved surfaces, curbs, sidewalks and parking areas and bumpers, (e) sign lighting, maintenance and repair, (t) trash removal, (g) Maintenance, repair and replacement costs of the retention ponds located on the project property, (h) maintenance, repair and replacement of all utilities; pipes, conduit, lines etc. on the project property, (i) public liability insurance, (j) removal of all snow, ice and debris, and (k) maintenance of HVAC equipment. ARTICLE 32 Tenant's Services Tenant agrees to provide and pay for electric and gas utilities and maintain temperature at levels to prevent freezing or boiling of any parts of the demised premises. Tenant will pay for and utilize a janitorial service for interior maintenance and removal of trash to Landlord's designated receptacles. Tenant shall provide on a regular basis all interior maintenance and decorating. ARTICLE 33 Notices The receipt by Landlord of a written notice and/or demand and/or request sent by Registered or Certified Mail in a sealed, postpaid envelope, addressed to the Landlord, FYNB, L.L.C. at c/o Hofing Management, 928 West State Street, Trenton, New Jersey 08618, and the receipt by Tenant of a written notice and/or demand and/or request sent by Registered or Certified Mail in a sealed, post paid envelope, addressed to Tenant at Yardville National Bank, Attn: Mr. Frank Durand, Box 8487, Trenton, New Jersey 08650, and a written notice and/or demand and/or request sent by Registered or Certified Mail in a sealed, post paid envelope, addressed to Daniel J. O'Donnell, Esquire, Sr. Vice President, Yardville National Bank, 2465 Kuser Road, Hamilton, New Jersey 08690, shall be sufficient notice and/or demand and/or request in any case arising under this lease. The return receipt shall be conclusive evidence of the receipt by Landlord or Tenant, as the case may be, of such notice demand or request. -13- The above addresses may be changed at any time hereafter by giving notice in the manner provided. ARTICLE 34 Right to Lock Premises on Default In the event that the relation of Landlord and Tenant shall cease or terminate by reason of the re-entry of the Landlord under the terms and covenants contained in this lease or by the eviction or ejectment of Tenant on summary proceedings, or otherwise, or after abandonment of the premises by Tenant, Landlord, in addition to his other rights hereunder shall have the right to lock said premises and at Landlord's option may keep same locked until said default is cured and Landlord shall have the right to sell all fixtures, goods and materials of Tenant at said premises and apply the proceeds thereof against unpaid rent. No action under this paragraph shall be deemed to waive Landlord's rights as set forth in other paragraphs of this lease. ARTICLE 35 Proration of Rent In the event that this lease commences on other than the first day of a month, Tenant shall, together with the second month's rent pay to the Landlord the prorated rent for the portion of the month, if any, preceding the first full calendar month of the term of this lease. ARTICLE 36 Quiet Enjoyment And the said Landlord both covenant that the said Tenant on paying the said yearly rent, and performing the covenants aforesaid, shall and may peacefully and quietly have, hold and enjoy the said demised premises for the term aforesaid, provided however, that this covenant shall be conditioned upon the retention of title to the premises by the Landlord. ARTICLE 37 Covenants to Bind Parties And it is further understood and agreed, that the covenants and agreements herein contained are binding on the parties hereto and upon their respective successors, heirs, executors, administrators and assigns. It is further expressly agreed that the words used in the singular shall include words in the plural where the text of this instrument so requires. ARTICLE 38 Notification of Default to Mortgagee In the event of a default by the Lessor hereunder, the Mortgagee will be notified in writing, and it is understood that the Mortgagee will have the right to cure said default within thirty (30) days of notification by the Lessee. -14- ARTICLE 39 Waiver of Subrogation Landlord and Tenant hereby releases the other from any and all liability or responsibility (to the other or anyone claiming through or under them by the way of subrogation or otherwise) under fire and extended coverage or supplementary contract casualties, if such fire or other casualty shall have been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible; provided, however, that, except as otherwise provided in this lease, this release shall be applicable and in force and effect only with respect to loss or damage occurring during such time as the releasor's policies shall contain a clause or endorsement to the effect that any such release shall not adversely affect or impair said policies or prejudice the right of the releasor to recover thereunder. Each of Landlord and Tenant agrees that its policies will include such a clause or endorsement so long as the same shall be obtainable without extra cost, or if such cost shall be charged therefore, so long as the other party pays such extra cost, if extra cost shall be chargeable therefore, each party shall notify the other party therefore and of the amount of the extra cost, and the other party shall be obligated to pay the extra cost unless, within ten (10) days after such notice, it elects not to be obligated so to do by written notice to the original party. If such clause or endorsement is not available, or if either party should not desire the coverage at extra cost to it, then the provisions of this Article shall not apply to the policy or policies in question. ARTICLE 40 Mechanic's Liens Tenant shall not suffer or permit any mechanic's liens to be filed against the fee of the demised premises, nor against the Tenant's leasehold interest therein by reason of work, labor services or materials supplied or claimed or have been supplied to Tenant or anyone holding the demised premises or any part thereof through or under Tenant and Tenant agrees to indemnify Landlord against such liens. If any such mechanic's lien shall at any time be filed against the demised premises, Tenant shall with 15 days after notice of the filing thereof, cause the same to be discharged of record; provided, however, that the Tenant shall have the right to contest the amount or validity, in whole or in part, of any such lien by appropriate proceedings but in such event, Tenant shall notify Landlord in writing and if requested by Landlord shall promptly bond such lien with a responsible surety company. Tenant shall prosecute such proceedings with all due diligence and dispatch. Nothing herein contained shall be construed as a consent on the part of Landlord to subject the estate of the Landlord to liability under the Mechanic's Lien Law of the State of New Jersey, it being expressly understood that the Landlord's estate shall not be subject to such liability. ARTICLE 41 Certificates by Tenant and Landlord Tenant agrees at any time and from time to time upon not less than 15 days' notice by Landlord to execute, acknowledge and deliver to Landlord a statement in writing certifying (1) that this lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full -15- force and effect as modified and stating the modification, (2) whether or not there are then existing any offsets or defenses against the enforcement of any of the terms, covenants or conditions hereof upon the part of Tenant to be performed (and is so specifying the same), and (3) the dates to which the basic rent and other charges have been paid in advance, if any, it being intended that any such statement delivered pursuant to this Section may be relied upon by any prospective purchaser or mortgagee of the fee of the demised premises or any assignee of any such mortgagee. ARTICLE 42 Cumulative Remedies - No Waiver - No Oral Change The specific remedies to which Landlord or Tenant may resort under the terms of this lease are cumulative and are not intended to be exclusive of any other remedies or means of redress to which they may be lawfully entitled in case any breach or threatened breach by either of them of any provision of this lease. The failure of Landlord to insist in any one or more cases upon the strict performance of any of the covenants of this lease, or to exercise any option herein contained, shall not be construed as a waiver or relinquishment for the future of such covenant or option. A receipt by Landlord of basic rent with knowledge of the breach of any covenant hereof shall not be deemed a waiver of such breach, and no waiver, change, modification or discharge by either party hereto of any provision in this lease shall be deemed to have been made or shall be effective unless expressed in writing and signed by both Landlord and Tenant. In addition to the other remedies in this lease provided, Landlord and Tenant shall be entitled to the restraint by injunction of the violation, or attempted or threatened violation of any of the covenants, conditions or provisions of this lease, or to a decree compelling performance of any of such covenants, conditions or provisions. ARTICLE 43 Change of Terms In the event that a prospective mortgagee of the demised premises shall request a change in the language or terms of the lease, or the execution of any paper in connection therewith, the Tenant shall agree to such change provided the same shall not materially and adversely affect rights of the Tenant under this lease or increase Tenant's cost for Basic Rent or Additional Rent. ARTICLE 44 Attornment Tenant shall, if requested by a first mortgagee of the premises at any time, or in the event of any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage made by the Landlord covering the demised premises, attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Landlord under this lease. -16- ARTICLE 45 Applicable Law This Lease shall be governed by and construed under the laws of the State of New Jersey. ARTICLE 46 Holding Over In the event that the Tenant shall remain in the demised premises after the expiration of the term of this lease without having executed a new written lease with the Landlord, or having exercised its option to renew in accordance with Article 51, such holding over shall not constitute a renewal or extension of this lease. The Landlord may, at its option, elect to treat the Tenant as one who has not removed at the end of its term, and thereupon be entitled to all the remedies against the Tenant provided by law in that situation, or the Landlord may elect, at its option, to construe such holding over as a tenancy from month to month, subject to all the terms and conditions of this lease, except as to duration thereof, and rent shall be due pursuant to statute for such case made and provided that the holdover rent shall not be less than 120% of the last month's rent covered under the base and or option term of the lease. Landlord shall give Tenant six (6) months notice, in writing of its intention to charge Tenant hold over rent on the premises. Should Tenant fail to give Landlord acknowledgment of Tenant's lease termination, within sixty (60) days of receipt of said notice, Tenant shall be liable to Landlord for an additional month's rental or proportionate part thereof for every month or proportionate part thereof that Tenant fails to give the aforesaid notice, at one hundred twenty (120%) percent of it's last month's rent. ARTICLE 47 Memorandum and Recording This lease shall not be recorded under penalty of damages and forfeiture. At the request of either party, the other party shall execute a memorandum of lease setting forth a description of the demised premises and the term. ARTICLE 48 Utility Easements Unless such easements reduce Tenant's useable space, Landlord shall have the right to grant easements and/or utilize areas of the demised premises for the installation of utilities, provided, however, that the use of said easement areas for said purposes does not substantially interfere with the operation of Tenant's business. Tenant shall not be entitled to any compensation or abatement of rent in regard thereto. If the leased property consists of one or more floors, or portions thereof, of a building, and at the time of the making of this lease there are upon any such floors, or portions thereof, hallways, passageways, stairways, elevators, or other means of access, although within the leased property, shall be reserved for the use of the Landlord and all tenants in the building and shall not be considered a portion of the leased property. -17- ARTICLE 49 Rules and Regulations DELETED ARTICLE 50 Building Improvements See Attached Exhibit C ARTICLE 51 Renewal Option The Tenant shall have the right to renew this Lease Agreement for an additional (see Lease Addendum) beyond the initial (see Lease Addendum) term. The option shall commence provided the following conditions have been complied with: 51.1. The Tenant is not then in default with all terms and conditions of this Lease Agreement; and 51.2. The Tenant shall notify the Landlord in writing not later then six months prior to the expiration of the initial Lease Agreement of its desire to renew, and agrees to sign a new lease upon the same terms and conditions as contained in the original Lease Agreement, except as to the duration dates and the exclusion of any further option to renew. ARTICLE 52 Notice Requirement 52.1. Sending of Notices Any notice, request, demand, approval or consent given, or required to be given, under this lease shall be in writing and shall be deemed to have been given on the (3rd) day following the day on which the same shall have been mailed by United States registered or certified mail, return receipt requested, with all postal charges prepaid, or if hand delivered shall be deemed given upon delivery. All notices shall be addressed, if intended for Landlord, to FYNB. L.L.C., c/o Hofing Management, 928 West State St., Trenton, New Jersey 08618 or, if intended for the Tenant, to Yardville National Bank, P0 Box 8487, Trenton, New Jersey. Either party may, at any time, change its address for the above purposes by sending a notice to the other party stating the change of and setting forth the new address. 52.2. Notice to Mortgagees If any mortgagee shall notify Tenant that it is the holder of a mortgage affecting the premises, no notice, request or demand thereafter sent by Tenant to Landlord shall be effective unless and until a copy of the same shall also be sent to such mortgagee at such address as such mortgagee shall designate. -18- ARTICLE 53 Common Areas (a) Management and Operation of Common Areas Tenant will operate and maintain or will cause to be operated and maintained the common areas including all parking areas in a manner deemed by Landlord to be reasonable and appropriate and in the best interest of the building. Landlord shall have the right (i) to establish, modify and enforce reasonable rules and regulations with respect to the common areas; (ii) to enter into, modify and terminate easement and other agreements pertaining to the use and maintenance of the parking areas and common areas; (iii) to close temporarily any or all portions of the common areas; (iv) to discourage non-customer parking; and (v) to do and perform such other acts in and to said areas and improvements as, in the exercise of good business judgment, Landlord shall determine to be advisable. Landlord agrees that it shall use its best efforts to make available to Tenant's employees convenient parking facilities in reasonable proximity to the premises. ARTICLE 54 Improvements to Property The Landlord will provide a 6,732 sq. ft. building on the subject site in accordance with the plans and specifications that were prepared by Mertz Architects, P.C., whose office is located at P.O. Box 1016, Pennington, New Jersey 08534, which said drawings were dated April 5, 2001, with revision dated June 2, 2001. The said plans and specifications are to be deemed by reference a part of this agreement as if more fully set forth at length. IN WITNESS WHEREOF, the parties hereto have affixed their hands and seals or caused these presents to be signed and sealed by their proper corporate offices the day and year first above written. Witness/Attest: Landlord: FYNB, L.L.C., a NJ Limited Liability Company /s/ Daniel J. O'Donnell By: /s/ Leslie E. Goodman - ------------------------------- ---------------------------------- Leslie E. Goodman Managing Member Witness/Attest: Tenant: Yardville National Bank, a NJ National Bank /s/ Daniel J. O'Donnell By: /s/ Patrick M. Ryan - ------------------------------- ---------------------------------- Patrick M. Ryan President - CFO -19- ACKNOWLEDGMENT -------------- State of New Jersey : : SS: County of Mercer : Be It Remembered, that on this 22nd day of October, 2001, before me, the subscriber, personally appeared LESLIE E. GOODMAN, who I am satisfied, is the person named in and who executed the within instrument, and thereupon he acknowledged that he signed, sealed and delivered the same as his act and deed, for the uses and purposes therein expressed. /s/ Daniel J. O'Donnell ------------------------------------------ Daniel J. O'Donnell Attorney of Law of the State of New Jersey State of New Jersey : : SS: County of Mercer : Be It Remembered, that on this 22nd day of October, 2001, before me, the subscriber, personally appeared PATRICK M. RYAN, who I am satisfied, is the person named in and who executed the within instrument, and thereupon he acknowledged that he signed, sealed and delivered the same as his act and deed, for the uses and purposes therein expressed. /s/ Daniel J. O'Donnell ------------------------------------------ Daniel J. O'Donnell Attorney of Law of the State of New Jersey EXHIBIT A SCHEDULE A DESCRIPTION PROPOSED LOT 1, BLOCK 18.01 TOWNSHIP OP RARiTAN HUNTERDON COUNTY, NEW JERSEY BEGINNING at a concrete monument found in the westerly right of way line of New Jersey State Route 31 (75 feet from centerline) where the same is intersected by the division line between Lot 1 in Block 18.01 on the northwest and Lot 12.02 in Block 18 on the southeast as shown on a map entitled "Minor Subdivision for Yardville Bank, Block 18.01, Lot 1 Raritan Township, Hunterdon County, New Jersey" prepared by Maitra Associates, P.C. and dated November 11, 2000, revised through July 17, 2001 and being the southeast corner of Lot 1, Block 18.01 as shown on a map entitled "Final Plat, Towne Centre, Lot 4, Block 18, Raritan Twp., Hunterdon Co., NJ," prepared by Maitra Associates, P.C,, Bridgewater, New Jersey, dated February 29, 1996 and revised through July 22, 1998. Filed in the Hunterdon County Clerk's office on September 2, 1998 as Map No. 1294, and running, thence; 1. Along the aforesaid division line between Lot 1 in Block 18.01 on the northwest and Lot 12.02 in Block 18 on the southeast, South 47(degree) 57' 49" West, 195.11 feet to a point where the same is intersected by the division line between proposed Lot 1 on the north and proposed Lot 2 on the south in Block 18.01, thence; 2. Along the aforesaid division line between proposed Lots I and 2 in Block 18.01, North 42(degree) 02' 11" West, 292.65 feet to a point where the same is intersected by a point on curve in the south easterly right of way line of Walter E. Foran Boulevard (variable width), thence; 3. Along the aforesaid southeasterly right of way line of Walter E. Foran Boulevard, on a curve to the right having a radius of 561.00 feet, an arc length of 202.97 feet, a delta of 20(degree).43' 47", a chord bearing of North 66(degree)25' 22" East, and a chord distance of 201.86 feet to a point of tangency, thence; 4. Still along the same, North 76(degree)47' 15" East, 87.19 feet to a point of curvature, thence; 5. Still along the same, on a curve to the right having a radius of 40.00 feet, an arc length of 66.32 feet, a delta of 95(degree) 00' 00", a chord bearing of South 55(degree) 42' 45" East, and a chord distance of 58.98 feet to a point of tangency where the same is intersected by the aforementioned westerly right of way line of New Jersey State Route 31, thence; 6. Along the aforesaid westerly right of way line of New Jersey State Route 31, South 08(degree)12' 45" East, 155.75 feet to the point or place of BEGINNING. OFFICE: 450 Seventh Avenue o Suite 2505 o New York, NY 10123 o 212-868-4848 o Fax: 212-868-4877 A-1 EXHIBIT B Lease Addendum -------------- This Lease Addendum shall supplement the Lease Agreement between FYNB, L.L.C. and the Yardville National Bank dated October 22, 2001 for the premises located at Walter E. Foran Boulevard, in the Township of Raritan, County of Hunterdon, State of New Jersey, commonly known as Block 18.01, Lot 1. In the event of a conflict between this Addendum and the Lease Agreement, the Addendum shall prevail. 1. The initial base rental shall be $240,000 payable monthly at the rate of $20,000 per month. 2. The initial base rental of $240,000 shall be due and payable at such time as a temporary or permanent Certificate of Occupancy is issued by the governmental authorities of the Township of Raritan. 3. The initial base rental shall increase every five (5) years by 10%. 4. The Lease Agreement shall provide for an initial term of fifteen (15) years with three (3) five-year options. Years 1 - 15 Initial lease term Years 16 - 20 First option period Years 21 -25 Second option period Years 26 - 30 Third option period 5. In the event that the total cost including land, hard costs as well as all soft costs, which shall include fees, interests, appraisals, cost of financing, shall be less than Two Million ($2,000,000) Dollars, in such event the rental shall be determined by calculating twelve percent (12%) of the actual costs in arriving at the reduced annual rental. In such event, the initial five-year term for the rental shall be the reduced amount as determined by the formula. Landlord shall provide Tenant with a certified accounting of the actual costs referred to above, together with supporting documentation (i.e. invoices) within sixty (60) days following the commencement date of this lease. B-1 IN WITNESS WHEREOF, the parties hereto have affixed their hands and seals or caused these presents to be signed and sealed by their proper corporate offices this 22nd day of October, 2001. Witness/Attest: Landlord: FYNB, L.L.C /s/ Daniel J. O'Donnell By: /s/ Leslie E. Goodman - ------------------------------- ---------------------------------- Leslie E. Goodman Managing Member Witness/Attest: Tenant: Yardville National Bank, a National Bank /s/ Daniel J. O'Donnell By: /s/ Patrick M. Ryan - ------------------------------- ---------------------------------- Patrick M. Ryan President - CFO B-2 EXHIBIT A Containing 64,143 Square Feet or 1.47 Acres more or less. Subject to all restrictions, covenants, easements or right of ways written or implied. MAITRA Associates, P.C. /s/ Michael J. McAlpin - ------------------------------------------ Michael J. McAlpin, Professional Land Surveyor New Jersey License No. 36747 July 18, 2001 B-3 EXHIBIT C Building Improvements --------------------- C-1 EXHIBIT D Shopping Center Sign -------------------- D-1 EX-10.3 6 ex10-3.txt EXHIBIT 10.3 Exhibit 10.3 OFFICE LEASE Between Union Properties, LLC , Landlord And Yardville National Bank, Tenant Premises: 1575 Brunswick Avenue Lawrence, NJ 08648 Date: July 5, 2000 - Revised September 5, 2000 INDEX To Lease Between Union Properties, LLC, as Landlord, and Yardville National Bank, a National Bank, as Tenant Dated: July 5, 2000
Page ---- ARTICLE 1 PREMISES - TERM OF LEASE AND USE........................................................................1 ARTICLE 2 BASIC RENT..............................................................................................1 ARTICLE 3 REPAIR OBLIGATIONS OF TENANT............................................................................1 ARTICLE 4 COMPLIANCE WITH STATUTES, ORDINANCES, ETC...............................................................1 ARTICLE 5 LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS..........................................................2 ARTICLE 6 ASSIGNMENT OR SUBLETTING................................................................................2 ARTICLE 7 ALTERATIONS OR IMPROVEMENTS BY TENANT...................................................................2 ARTICLE 8 DAMAGE OR DESTRUCTION...................................................................................3 ARTICLE 9 LANDLORD'S RIGHT OF ENTRY...............................................................................3 ARTICLE 10 VACANCY OR EVICTION....................................................................................3 ARTICLE 11 REPLACEMENT OF GLASS AND DAMAGE DUE TO TENANT'S NEGLIGENCE.............................................4 ARTICLE 12 OBSTRUCTION OF PREMISES................................................................................4 ARTICLE 13 SIGNS..................................................................................................4 ARTICLE 14 LANDLORD'S NON-LIABILITY FOR DAMAGES...................................................................4 ARTICLE 15 SUBORDINATION..........................................................................................5 ARTICLE 16 SECURITY DEPOSIT.......................................................................................5 ARTICLE 17 IMPOSSIBILITY OF INSURANCE COVERAGE....................................................................6 ARTICLE 18 TENANT'S INSURANCE.....................................................................................6 ARTICLE 19 CONDITIONAL LIMITATIONS AND DEFAULT....................................................................7 ARTICLE 20 ABATEMENT OF TRADE FIXTURES...........................................................................10 ARTICLE 21 STRICT PERFORMANCE....................................................................................10 ARTICLE 22 RE-ENTRY OF LANDLORD..................................................................................11 ARTICLE 23 CONDEMNATION..........................................................................................11 ARTICLE 24 DELAY IN PERFORMANCE..................................................................................11 ARTICLE 25 LIMITATION OF LIABILITY...............................................................................11 ARTICLE 26 DELIVERY OF POSSESSION................................................................................12
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ARTICLE 27 REAL ESTATE BROKER....................................................................................12 ARTICLE 28 INDEMNIFICATION OF LANDLORD AND TENANT................................................................12 ARTICLE 29 TERMINATION OF LANDLORD'S LIABILITY...................................................................12 ARTICLE 30 TRIPLE NET - ADDITIONAL RENT..........................................................................13 ARTICLE 31 TENANT'S ADDITIONAL OBLIGATION........................................................................14 ARTICLE 32 TENANT'S SERVICES.....................................................................................14 ARTICLE 33 NOTICES...............................................................................................14 ARTICLE 34 RIGHT TO LOCK PREMISES ON DEFAULT.....................................................................15 ARTICLE 35 PRORATION OF RENT.....................................................................................15 ARTICLE 36 QUIET ENJOYMENT.......................................................................................15 ARTICLE 37 COVENANTS TO BIND PARTIES.............................................................................15 ARTICLE 38 NOTIFICATION OF DEFAULT TO MORTGAGE...................................................................15 ARTICLE 39 WAIVER OF SUBROGATION.................................................................................16 ARTICLE 40 MECHANIC'S LIENS......................................................................................16 ARTICLE 41 CERTIFICATES BY TENANT AND LANDLORD...................................................................16 ARTICLE 42 CUMULATIVE REMEDIES - NO WAIVER - NO ORAL CHANGE......................................................17 ARTICLE 43 CHANGE OF TERMS.......................................................................................17 ARTICLE 44 ATTORNMENT............................................................................................17 ARTICLE 45 APPLICABLE LAW........................................................................................18 ARTICLE 46 HOLDING OVER..........................................................................................18 ARTICLE 47 MEMORANDUM AND RECORDING..............................................................................18 ARTICLE 48 UTILITY EASEMENTS.....................................................................................18 ARTICLE 49 RULES AND REGULATIONS.................................................................................19 ARTICLE 50 BUILDING IMPROVEMENTS.................................................................................19 ARTICLE 51 RENEWAL OPTION........................................................................................19 ARTICLE 52 NOTICE REQUIREMENT....................................................................................19 ARTICLE 53 MANAGEMENT AND OPERATION OF COMMON AREAS..............................................................20
-ii- Exhibits - -------- A Location - Project Description B Basic Rent -iii- THIS AGREEMENT, dated the 5th day of July, 2000, between Union Properties, LLC as Landlord and Yardville National Bank, a National Bank, as Tenant. WITNESSETH: ARTICLE 1 Premises - Term of Lease and Use The said Landlord has let unto the said Tenant and the said Tenant has hired from said Landlord the following premises: 1575 Brunswick Avenue, Alternate Route 1, Lawrence, New Jersey 08648, for the term of Ten (10) years to commence from the 1st day of August 2000, and to end on the 30th day of July, 2010, to be used and occupied only for lawful purposes, more specifically office use, only. RENT SHALL COMMENCE ON AUGUST 1, 2000. TENANT IS NOT OBLIGATED TO PAY RENT FOR THE MONTH OF JULY. Upon the conditions and covenants following: ARTICLE 2 Basic Rent That the Tenant shall pay the basic rent in the total amount of $70,180.00 at the annual rate of ($15.50/sq. ft. FOR THE UPPER FLOOR AND $5.00/sq. ft. FOR THE LOWER LEVEL). The square footage for the upper floor is 3,560 sq. ft. and the lower level is 3,000 sq. ft. Said rent to be paid in equal monthly payments in advance on the 1st day of each and every month during the term aforesaid in the amount of $5,848.33 per month (year 1), said rent to be paid without benefit of offset or deduction. This is a triple net lease, and Tenant will pay additional rent as set forth in Paragraph 29 and is in addition to the basic rent. The rental Schedule is set forth in Exhibit "B". All rent not received by the 10th of the month will incur a late charge of five (5%) percent. ARTICLE 3 Repair Obligations of Tenant That the Tenant shall take good care of the premises and shall at the Tenants own cost and expense make all repairs, that Tenant is required to make under this lease, and at the end or other expiration of the term shall deliver up the demised premises in good order or condition, damages caused by the elements and ordinary wear and tear excepted. Tenant shall provide chair pads under all movable chairs in the demises premises, or otherwise be responsible for all damage to flooring and carpet resulting from the absence of the use of chair pads. Tenant will not overload the electrical wiring serving the leased premises or within the leased premises, and will install at its own expense, but only after obtaining Landlord's approval, any additional electrical wiring which may be required in connection with Tenant's apparatus. ARTICLE 4 Compliance with Statutes, Ordinances, Etc. That the Tenant shall promptly execute and comply with all statutes, ordinances, rules, orders, regulations and requirements of the Federal, State and City Government and of any and all their Departments and Bureaus applicable to said premises, for the correction, prevention, and abatement of nuisances, violations or other grievances, in, upon or connected with said premises during said term, and which are directly related to Tenant's use of the said premises; shall also promptly comply with and execute all rules, orders, and regulations of the Board of Fire Underwriters, or any other similar body, for the prevention of fires, at the Tenant's own cost and expense. ARTICLE 5 Landlord's Right to Perform Tenant's Covenants That in case the Tenant shall fail or neglect to comply with the aforesaid statutes, ordinances, rules, orders, regulations and requirements or any of them, or in case the Tenant shall fail or neglect to make any necessary repairs, then if Tenant fails to remediate within thirty (30) days after Landlord's written notice to remediate, the Landlord or the Landlord's Agency may enter said premises and make said repairs and comply with any and all of the said statutes, ordinances, rules, orders, regulations or requirements, at the cost and expense of the Tenant and in case of the Tenant's failure to pay therefore, the said cost and expense shall be added to the next month's rent and be due and payable as such, or the Landlord may deduct the same from the balance of any sum remaining in the Landlord's hands. This provision is in addition to the right of the Landlord to terminate this lease by reason of any default on the part of the Tenant. ARTICLE 6 Assignment or Subletting That should the Tenant desire to assign this agreement or underlet said premises, it shall first offer same to Landlord at the rental set forth herein. Should Landlord not accept the assignment or underletting offered or not respond within twenty (20) days of receipt of Tenant's written offer, then Tenant shall be allowed to assign this agreement or underlet the premises provided that the Tenant shall not (a) assign this agreement, or underlet or underlease the premises or any part thereof without the prior written consent of Landlord, which consent will not be unreasonably withheld or delayed: provided, however, that notwithstanding such assignment, Tenant shall not thereby be relieved from responsibility hereunder, or (b) permit or suffer the premises or any part thereof to be occupied for any business or purpose deemed disreputable or extra-hazardous on account of fire, under penalty of damages and forfeiture. Tenant shall be permitted to assign this lease or sublet the premises without Landlord's consent and without first offering the premises to Landlord if the proposed sublease or assignee is an entity owned by, controlled by, affiliated with, or is the Parent Company of the Tenant. In the event that the Tenant enters into an agreement to sell all of its stock of Yardville National Bank, it is permissible under the Lease Agreement. ARTICLE 7 Alterations or Improvements by Tenant That except for the planned improvements made in accordance with plans and specifications no alterations, additions or improvements, painting or decorating shall be made in or to the premises without the consent of the Landlord in writing, which consent shall not be unreasonably withheld or -2- delayed, under penalty of damages and forfeiture, and all additions and improvements made by the Tenant shall become the property of the Landlord and shall remain on and be surrendered with the demised premises. Landlord hereby consents to the installation of paint and carpet throughout the premises and of sheetrock or glass on the cubicles contained in the premises. At Landlord's request all such alterations and improvements shall be restored to their original condition at Tenant's expense at the termination of the Lease, provided Landlord notifies Tenant, in writing, prior to the end of the term of its desire to have the premises restored. ARTICLE 8 Damage or Destruction In case of damage, by fire or other cause, to the building in which the leased premises are located, without the fault of the Tenant or of Tenant's agent or employees, if the damage is so extensive as to amount practically to the total destruction of the leased premises or of the building, or if the Landlord shall within a reasonable time decide not to rebuild, the lease shall cease and come to an end, and the rent shall be apportioned to the time of the damage. In all other cases where the leased premises are damaged by fire without the fault of the Tenant or of Tenant's agents or employees the Landlord shall repair the damage with reasonable dispatch after notice of damage, and if the damage has rendered the premises untenantable, in whole or ???? ARTICLE 9 Landlord's Right of Entry (a) That said Tenant agrees that the said Landlord and Landlord's Agents, and other representatives, shall have the right to enter into and upon said premises, or any part thereof, at all reasonable hours upon prior written notice to the Tenant except where an emergency exists and the Landlord is obligated to take immediate action for the purpose of examining the same, or making such repairs or alterations therein as may be necessary for the safety and preservation thereof provided such entry shall not unreasonably interfere with Tenant's business. (b) The Tenant also agrees to permit the Landlord or Landlord's Agents to show the premises at all reasonable hours, upon prior written notice to Tenant, to persons wishing to hire or purchase the same; and the Tenant further agrees that during the six months next prior to the expiration of the term, the Landlord or Landlord's Agents shall have the right to place notices on the front of said premises, or any part thereof, offering the premises "to Let" or "For Sale", and the Tenant hereby agrees to permit the same to remain thereon without hindrance or molestation. ARTICLE 10 Vacancy or Eviction That if the said premises, or any part thereof, shall become vacant during the said term, or should Tenant be evicted by summary proceedings or otherwise, the Landlord or Landlord's representatives may re-enter the same, either by force or otherwise, without being liable to prosecution therefor; and re-let the said premises as the Agent of the said Tenant and receive the rent -3- thereof; applying the same, first to the payment of such expenses as the Landlord may be put to in re-entering and then to the payment of the rent due by these presents; it being understood that the Tenant shall remain liable for any deficiencies. ARTICLE 11 Replacement of Glass and Damage Due to Tenant's Negligence Tenant shall replace any and all broken glass in and about the demised premises. Landlord may insure, and keep insured, all plate glass in the demised premises for and in the name of Landlord. Damage and injury to the said premises, caused by the carelessness or improper conduct on the part of the said Tenant or the Tenant's agents or employees shall be repaired as speedily as possible by the Tenant at the Tenant's own cost and expense. ARTICLE 12 Obstruction of Premises That the Tenant shall neither encumber, nor obstruct the sidewalk in front of, entrance to or hall and stairs of said building, other common areas, parking areas or driveways, nor allow the same to be obstructed or encumbered in any manner without Landlord's written consent. ARTICLE 13 Signs The Tenant shall neither place, nor cause, nor allow to be placed, any sign or signs of any kind whatsoever at, in or about the entrance to said premises nor any other part of same except in or at such place or places as may be indicated by the said Landlord and consented to by Landlord in writing. Landlord hereby consents to the placement of a sign on the outside door of the premises which sign shall be of the same type as those signs used by other Tenants. And in case the Landlord or Landlord's representatives shall deem it necessary to remove any such sign or signs in order to paint or to make any other repairs, alterations or improvements in or upon said premises or the building wherein same is situated or any part thereof. the Landlord shall have the right to do so, providing the same be removed and replaced at the Landlord's expense whenever the said repairs, alterations or improvements shall have been completed. Landlord will provide a Directory of Tenants in an appropriate place on the property which the demised premises are located. ARTICLE 14 Landlord's Non-Liability for Damages It is expressly agreed and understood by and between the parties to this agreement, that the Landlord shall not be liable for any damage or injury to person or property caused by or resulting from steam, electricity, gas, water, rain, ice or snow, or any leak or flow from or into any part of said building, except as may be caused by the negligence of Landlord or its Agents or Employees. Landlord shall not be liable for any damage or injury resulting or arising from any other cause or happening whatsoever that is not caused by the negligence or other acts or omissions of Landlord or its Agents or Employees. -4- ARTICLE 15 Subordination That this lease shall not be a lien against said premises in respect to any mortgages that are now on or that hereafter may be placed against said premises, and that the recording of such mortgage or mortgages shall have preference and precedence and be superior and prior in lien of this lease irrespective of the date of recording and the Tenant agrees to execute any instrument without cost, which may be deemed necessary or desirable to further effect the subordination of this lease to any such mortgage or mortgages, and a refusal to execute such instruments shall entitle the Landlord, or the Landlord's assigns and legal representatives to the option of cancelling this lease without incurring any expense or damage, and the term hereby granted is expressly limited accordingly. In the event that Landlord procures mortgage loans or recasts the existing mortgage loan on said premises, Tenant agrees to furnish to Landlord on request, copies of its most recent financial statements prepared by the Certified Public Accountant regularly retained by it. ARTICLE 16 Security Deposit 16.1. The Landlord hereby acknowledges receipt of $0.00 which it is to be placed in an interest bearing account and is to be retained as security for the faithful performance of all of the covenants, conditions and agreements to this lease, but in no event shall Landlord be obliged to apply same on rents or other charges in arrears or damages for the Tenant's failure to perform said covenants, conditions and agreements; the Landlord may so apply the security at its option; and the Landlord's right to the possession of the premises for non-payment of rent or for any other reason shall not in any event be affected by reason of the fact that Landlord holds this security. The said sum if not applied toward the payment of rent in arrears or toward the payment of damages suffered by Landlord by reason of the Tenant's breach of the covenants, conditions and agreements of this lease is to be returned to the tenant when this lease is terminated, according to these terms, and in no event is the said security to be returned until the Tenant has vacated the premises and delivered possession to the Landlord. 16.2. In the event that the Landlord repossesses itself of said premises because of the Tenant's default or because of the Tenant's failure to carry out the covenants, conditions and agreements of this lease, the Landlord may apply the said security on all damages suffered to the date of repossession and may retain the said security to apply on such damages as may be suffered or shall accrue thereafter by reason of the Tenant's default or breach. The Landlord shall keep the said security as a separate fund. The security deposited under this lease shall not be mortgaged, assigned, pledged, or encumbered by Tenant without the written consent of Landlord. In the event of filing by or against Tenant of a petition in bankruptcy or assignment for the benefit of creditors, or upon the insolvency of Tenant, title to the monies paid over to Landlord as security shall vest in the Landlord free and clear of any claims of the Trustees in bankruptcy, assignee for the benefit of creditors or Receiver that may be appointed for the insolvent Tenant. 16.3. In the event of a bona fide sale, subject to this lease, the Landlord shall have the right to transfer the security to the vendee for the benefit of the Tenant upon such transfer and Landlord shall be considered -5- released by the Tenant of all liability for the return of said security, and it is agreed that this shall apply to every transfer or assignment made of the security to the new Landlord. ARTICLE 17 Impossibility of Insurance Coverage 17.1. It is expressly understood and agreed that if for any reason it shall be impossible to obtain fire insurance and extended coverage on the buildings and improvements on the demised premises in an amount, and in the form, and in fire insurance companies acceptable to the Landlord the Landlord may, if the Landlord so elects, at any time thereafter terminate this lease and the term thereof, on giving to the Tenant three days' notice in writing of Landlord's intention so to do and upon the giving of such notice, this lease and the term thereof shall terminate and come to an end. In the event that Tenant's occupancy causes any increase in premium for the fire and extended coverage insurance rates on the demised premises or the balance of the building in which Tenant's demised premises are located, Tenant shall pay, as additional rent, the additional premium on said fire and extended coverage insurance. Bills for such additional premiums, if any, shall be rendered by Landlord to Tenant at such time as Landlord shall elect, and shall be due and payable by Tenant when rendered; and the amount thereof shall be deemed to be and paid as additional rent. 17.2. That the Tenant will not nor will the Tenant permit other tenants or other persons to do anything in said premises or bring anything into said premises, or permit anything to be brought into said premises or to be kept therein, which will in any way increase the rate of fire insurance on said demised premises, nor use the demised premises or any part thereof, nor suffer or permit their use for any business or purpose which would cause an increase in the rate of fire insurance on said building, and the Tenant agrees to pay on demand any such increase. ARTICLE 18 Tenant's Insurance At all times after the execution of this lease, Tenant shall take out and keep in force, at its expense: 18.1. Tenant's Insurance (a) Public liability insurance, including insurance against assumed or contractual liability with respect to the premises, to afford protection to the limit, for each occurrence, of not less than one million dollars ($1,000,000) with respect to personal injury or death, and five hundred thousand dollars ($500,000) with respect to property damages; and (b) All-risk casualty insurance, written at replacement cost value and with replacement cost endorsement, covering all of Tenant's personal property in the premises (including, without limitation, inventory, trade fixtures, floor coverings, furniture and other property removable by Tenant under the provisions of this lease) and all leasehold improvements installed in the premises by Tenant; and -6- (c) If and to the extent required by law, worker's compensation or similar insurance in form and amounts required by law. 18.2. Tenant's Contractor's Insurance (a) Comprehensive general liability insurance, including contractor's liability coverage, contractual liability coverage, completed operations coverage, broad form property damage endorsement and contractor's protective liability coverage, to afford protection to the limit, of each occurrence, with respect to property damage; and (b) Worker's compensation or similar insurance in form and amounts required by law. 18.3. Policy Requirements (a) The company or companies writing any insurance which Tenant is required to take out and maintain shall be licensed to do business in New Jersey. Each policy evidencing such insurance shall name Landlord or its designee as additional insured and shall also contain a provision by which the insurer agrees that such policy shall not be cancelled except after thirty (30) days written notice to Landlord or its designee. Each such policy, or a certificate thereof, shall be deposited with Landlord by Tenant promptly upon commencement of Tenant's obligation to procure the same. If Tenant shall fail to perform any of its obligations under this Article, Landlord may perform the same and the cost of same shall be deemed additional rental and shall be payable by Tenant upon Landlord's demand. ARTICLE 19 Conditional Limitations and Default 19.1. If at any time during the term of this Lease: (a) If Tenant shall file a petition in bankruptcy or insolvency or for reorganization or arrangement or for the appointment of a receiver of all or a portion of Tenant's property or, such filing shall continue for a period of ten days. (b) Any involuntary petition of the kind referred to in subdivision (a) of this section shall be filed against Tenant and such petition shall not be calcite or withdrawn within ninety (90) days after the date of filing thereof, or (c) Tenant shall be adjudicated a bankrupt by any court, or (d) Tenant shall make an assignment for the benefit of creditors, or (e) A permanent receiver shall be appointed for the property of Tenant by order of a court of competent jurisdiction by reason of the insolvency of Tenant (except where such receiver shall be appointed in an involuntary proceeding, if he shall not be withdrawn within ninety (90) days after the date of his appointment), or -7- (f) The operation of Tenant's business shall be suspended by any authority having jurisdiction thereover or the conduct and operation of Tenant's business shall be taken over by (i) a receiver appointed by order of a court of competent jurisdiction or (ii) an agency or governmental authority having jurisdiction thereover, then Landlord, at Landlord's option may terminate this Lease on ten (10) days' notice to Tenant, and upon such termination, Tenant shall quit and surrender the Leased Premises to Landlord. The word "Tenant" as used in this section shall be deemed to mean the Tenant herein named, or in the event of an assignment of this Lease in accordance with the provisions of Article VIII, such word shall be deemed to also mean the ten assignee. 19.2. If this Lease shall terminate pursuant to the provisions of Section 18.1: (a) Landlord shall be entitled to receive from Tenant arrears in Basic Annual Rent and Additional Rent and, in addition thereto as liquidated damages, an amount equal to the balance of rentals due under the remaining term of the Lease, the remaining rentals shall be accelerated hereby plus any other damages to which Landlord may be entitled including, but not limited to, reasonable legal fees. Tenant shall receive a credit for any monies including, but not limited to, all rents received by Landlord in mitigation of such default and Landlord shall make best efforts to re-let the premises. All funds received shall first go to pay Landlord's costs and expenses of mitigating the damages, then towards Tenant's credit. 19.3. (a) If Tenant shall fail to pay any Basic Annual Rent or Additional Rent when due and payable hereunder, and any such default shall continue for a period of ten (10) days after such payment is due; or (b) If Tenant shall be in default in the performance of any of the other terms, covenants, and conditions of this Lease: (i) and such default shall not have been remedied within ten (10) days after notice by Landlord to Tenant specifying such default and requiring it to be remedied; or (ii) where such default reasonably cannot be remedied within such period of ten (10) days, if Tenant shall not have commenced the remedying thereof with such period of time and shall not be proceeding with due diligence to remedy it; Then Landlord, at its election, may terminate this Lease on ten (10) days' notice to Tenant, and upon such termination Tenant shall quit and surrender the Leased Premises to Landlord. 19.4. If this Lease shall terminate as provided in Section 18.3, or if Tenant shall be in default in the payment of Basic Annual Rent or Additional Rent when due and payable and such default shall continue for a period of ten (10) days after such payment is due: (a) Landlord may re-enter and resume possession of the Leased Premises and remove all persons and property therefrom either by summary dispossess proceedings or by a suitable action or proceeding at law or in equity or by peaceable self-help or otherwise, without being liable for any damages therefor; and -8- (b) Landlord may relet the whole or any part of the Leased Premises for a period equal to, greater or less than the remainder of the then term of this Lease at such rental and upon such terms and conditions as Landlord shall deem reasonable to any tenant it may deem suitable and for any use and purpose it may deem appropriate. Landlord shall use its best efforts in re-letting the premises, and, provided Landlord uses such best efforts. Landlord shall not be liable in any respect for failure to relet the Leased Premises or, in the event of such reletting, for failure to collect the rent thereunder and any sums received by Landlord on a reletting in excess of the rent reserved in this Lease shall belong to Landlord. 19.5. If this Lease shall terminate as provided in this Article or by summary dispossess proceedings (except as to any termination under Section 35), Landlord shall be entitled to recover from Tenant as damages in addition to arrears in Basic Annual Rent and Additional Rent, (a) (i) amounts equal to all expenses reasonably incurred by Landlord in recovering possession of the Leased Premises and in connection with the reletting of the Leased Premises including, without limitation, reasonable legal fees, the cost of repairing, renovating or remodeling the Leased Premises, and to the condition they were in at the inception of the Lease, reasonable wear and tear excepted; (ii) broker's commissions incurred by Landlord in reletting the Leased Premises, which amounts set forth in this subsection shall be due and payable by Tenant to Landlord at such time or times as they shall have been incurred; and (b) amounts equal to the deficiency between the Basic Annual Rent and Additional Rent which would have become due and payable had this Lease not terminated and the net amount, if any, of rent and Additional Rent collected by Landlord on reletting the Leased Premises. The amounts `specified in this subsection shall be due and payable by Tenant on the several days on which such Basis Annual Rent and Additional Rent would have become due and payable had this Lease not terminated. Tenant consents that Landlord shall be entitled to institute separate suits or actions or proceedings and hereby waives the right to enforce or assert the rule against splitting a cause of an action as a defense thereto. Landlord, at its election, which shall be exercised by the service of a notice on Tenant, may collect from Tenant as damages and Tenant shall pay in lieu of the sums becoming due under the provisions of subsection (b) hereof after the service of such notice, an amount equal to the difference between the Basic Annual Rent and Additional Rent which would become due and payable had this Lease not terminated (from the date of the service of such notice to the end of the term of this Lease which would have been in effect if it had not terminated) and the maximum allowed by statute or rule or law in effect at the time when in governing the proceedings in which such damages are to be proved. Tenant shall be credited with any rental received from a new tenant. 19.6. The words "re-enter" and "re-entry" as used in this Article are not restricted to their technical legal meaning. 19.7. Tenant hereby waives the service of any notice in writing by Landlord of its intention `to re-enter except as otherwise provided in this Lease. -9- 19.8. If this Lease shall terminate as provided in this Article or by summary proceedings or otherwise, Landlord, in addition to any other rights under this Article, shall be entitled to recover as damages; (a) the cost of performing any work required to be done by Tenant under this Lease and all damages resulting from Tenant's default in performing such work, and (b) the cost of replacing the Leased Premises in the same condition as that in which Tenant is required to surrender them to Landlord under this lease. 19.9. At any time (a) within fifteen (15) days prior to the expiration of the term of this Lease or (b) after Landlord shall have served any notice of termination of this Lease, as provided in this Lease, but prior to the date of termination, or (c) after Landlord shall have commenced a summary dispossess proceeding or an appropriate action or proceeding to recover possession of the Leased Premises but prior to the termination of this Lease by reason of the issuance of a warrant in the dispossess proceeding or the entry of a judgment in such other action or proceeding, any or all subleases theretofore executed by Tenant and the rent payable thereunder shall, at the option of Landlord (such option to be exercised by notice to Tenant), be assigned by Tenant to Landlord as of the date of the service of such notice. Such assignment shall be deemed to be and shall be effected as of the date of service of such notice without execution by Tenant of any instrument. However, Tenant, at Landlord's request, shall execute, acknowledge and deliver to Landlord an instrument in recordable form, confirming such assignment and, in the event that Tenant shall fail or refuse to execute, acknowledge or deliver such instrument, Landlord in addition to all other rights and remedies it may have by reason of such failure or refusal, may, as the agent or attorney-in-fact of Tenant, execute, acknowledge and deliver it and Tenant hereby irrevocably nominates, constitutes and appoints Landlord as Tenant's proper and legal attorney-in-fact for such purpose, as coupled with an interest, hereby ratifying all that Landlord may do as such attorney-in-fact of Tenant, and such assignment shall recall that it has made pursuant to this article. ARTICLE 20 Abatement of Trade Fixtures If after default in payment of rent or violation of any other provision of this lease, or upon the expiration of this lease or upon abandonment of the premises by Tenant, the Tenant moves out or is dispossessed, Tenant shall not be permitted to remove any trade fixtures or other property from said premises until said default or violation is cured. Should said default or violation not be cured within one month of its occurrence, or upon abandonment of the premises said fixtures shall become the property of Landlord. ARTICLE 21 Strict Performance The failure of the Landlord to insist upon strict performance of any of the covenants or conditions of this lease or to exercise any option herein conferred in any one or more instances, shall not be construed as a waiver or -10- relinquishment for the future of any such covenants, conditions or options, but the same shall be and remain in full force and effect. ARTICLE 22 Re-Entry of Landlord In the event that the relation of the Landlord and Tenant may cease or terminate by reason of the re-entry of the Landlord under the terms and covenants contained in this lease or by the ejectment of the Tenant by summary proceedings or otherwise, or after the abandonment of the premises by the Tenant, it is hereby agreed that the Tenant shall remain liable for all unpaid sums covering the balance of said term and shall pay said amounts promptly. ARTICLE 23 Condemnation In the event that the premises shall be taken for public use by the city, state, federal government, public authority or other corporation having the power of eminent domain, then this lease shall terminate as of the date on which possession thereof shall be taken for such public use, or, at the option of the Tenant, as of the date on which the premises shall become unsuitable for Tenant's regular business by reason of such taking; provided, however, that if only a part of the leased premises shall be so taken, such termination shall be at the option of Tenant only. If such a taking of only a part of the leased premises occurs, and Tenant elects not to terminate the lease, there shall be a proportionate reduction of the Basic Rent and Additional Rent to be paid under this lease from and after the date such possession is taken for public use. Tenant shall have the right to participate, directly or indirectly, in any award for such public taking to the extent that it may have suffered compensable damage as a Tenant on account of such public taking. ARTICLE 24 Delay in Performance This lease and the obligation of Tenant to pay rent hereunder and perform all of the other covenants and agreements hereunder on part of Tenant to be performed shall in no way be affected, impaired or excused because Landlord is unable to supply or is delayed in supplying any service expressly or implied to be supplied or is unable to make, or is delayed in making any repairs, addition, alterations, or decorations or is unable to supply or is delayed in supplying any equipment or fixtures if Landlord is prevented or delayed from so doing by reason of governmental preemption in connection with a national Emergency declared by the President of the United States or in connection with any rule, order or regulation of any department or subdivision thereof of any governmental agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency. ARTICLE 25 Limitation of Liability Landlord shall be under no personal liability with respect to any of the provisions of this lease, and if it is in breach or default with respect to his obligations or otherwise, under this lease, Tenant shall look solely to the equity of Landlord in the premises for the satisfaction of Tenant's remedies. It -11- is expressly understood and agreed that Landlord's liability under the terms, covenants, conditions, warranties and obligations of this lease shall in no event exceed the loss of its equity in the premises. ARTICLE 26 Delivery of Possession DELETED ARTICLE 27 Real Estate Broker Tenant represents that it has not contacted or dealt with any real estate broker, agent or salesman regarding the within lease other than NOT APPLICABLE and that should any other broker, agent or salesman make claim to a commission in connection with this transaction, Tenant shall save and hold harmless Landlord from any such claim and shall, at Tenant's cost and expense defend against any such claims. ARTICLE 28 Indemnification of Landlord and Tenant Landlord and Tenant agree to protect, defend, indemnify and save harmless each other against and from any and all claims arising from any breach or default on the part of either party in the performance of any covenant or agreement on their part to be performed, pursuant to the terms of this lease, or arising from any act of negligence of either party, or any of its agents, contractors, servants, employees or licensees, or arising from any accident, injury or damage whatsoever caused to any person (other than through the fault of the other party or its agents) occurring during the term of this lease in or about the demised premises or upon or under the sidewalks and the land adjacent thereto, and from and against all costs, expenses and liabilities incurred in or about any such claim or act or proceeding brought thereon, but only to the extent the losses or liabilities are not covered by insurance; and in case any action or proceeding be brought against either party by reason of any such claim, the responsible party upon notice from the responsible party covenants to resist or defend such action or proceeding by counsel reasonably satisfactory at the responsible party's sole cost and expense. ARTICLE 29 Termination of Landlord's Liability If after Landlord delivers possession of the demised premises to Tenant, the Landlord conveys the demised premises during the term hereof, the Landlord shall not thereafter be liable for the covenants and agreements to be observed and performed by the Landlord hereunder, provided that the grantee of Landlord has assumed and become liable for the observance and performance of said covenants and agreements. Nothing herein contained, however, shall relieve Landlord of any liability which may have been incurred or which may have accrued prior to any such conveyance. -12- ARTICLE 30 Triple Net - Additional Rent Tenant shall pay, as additional rent, its "proportionate share", as hereinafter defined, of "triple nets" over the "basic rent", as hereinafter defined; due and payable with respect to the building in which the demised premises are located (hereinafter called "Office Building") and the land underlying said Office Building. Landlord's "operating costs" shall be those of operating and maintaining the Office Building in a manner deemed by Landlord reasonable and appropriate and for the best interests of the tenants in the Office Building, including without limitation, the following: 30.1. Real estate taxes or any other tax imposed in lieu of real estate taxes assessed on the Office Building and the land underlying same. 30.2. All costs and expenses directly related to the Office Building of managing, operating, repairing, lighting, cleaning, insurance, removing snow, ice and debris, policing and regulating traffic in the area immediately adjacent to the Office Building Project and depreciation of machinery and equipment used for such operation. 30.3. All costs and expense of replacing paving, curbs, walkways, landscaping (including replanting and replacing flowers and other planting), drainage and lighting facilities in the Office Building Project and area immediately adjacent thereto. 30.4. Electricity used in lighting common areas of the Office Building Project, water including water used in fire prevention equipment and sewer. 30.5. Maintenance, replacement, repair of mechanical and electrical equipment including heating, ventilating and air-conditioning equipment in the Office Building Project. 30.6. Maintenance of common areas of the Office Building Project. 30.7. Painting, decoration and carpeting of all common areas in the Office Building Project. 30.8. All other expenses which would be considered as an expense of maintaining, operating or repairing the Office Building under sound accounting principals. 30.9. Tenant's proportionate share of operating costs for any fiscal year of Landlord shall be determined as follows: the amount shall be multiplied by a fraction, the numerator of which is the total number of square feet of the leased premises and the denominator of which is the total number of square feet of the leased premises plus Tenant's pro rata share of common areas, and the denominator of which is the total number of square feet of the office building and the result shall the percentage of all operating costs payable by Tenant including electrical and utilities. The Landlord shall bill Tenant for 100% of the real estate taxes, operating costs, insurance and maintenance as well as the electrical and utilities and Tenant shall pay the same to Landlord as part of its monthly rent which shall be billed separately. -13- 30.10. Irrespective of the language contained in Article 30, the Tenant shall assume the total obligation in connection with the maintenance of the building including the replacement of any and all equipment in connection with the operation of the building. In the event any equipment is required to be replaced including the HVAC, electrical, plumbing, the total obligation shall be that of the Tenant. 30.11. Tenant shall have the right to audit the operating cost of the Landlord on a yearly basis to determine if they are reasonable and customary. ARTICLE 31 Tenant's Additional Obligation Tenant shall as an incident to the within demise at Tenant's cost and expense, furnish, supply and maintain the following: (a) Water, (b) Sewer, (c) Exterior Building and Common Area Maintenance, (d) Painting and cleaning, stripping, sealing, repairing, replacing and remarking paved and unpaved surfaces, curbs, sidewalks and parking areas and bumpers, (e) sign lighting, maintenance and repair, (0 trash removal, (g) Maintenance, repair and replacement costs of the retention ponds located on the project property, (h) maintenance, repair and replacement of all utilities; pipes, conduit, lines etc. on the project property, (i) public liability insurance, (j) all risk insurance (fire and other hazards) including rental abatement insurance in the amount of one (1) year's minimum rental for the office project, (k) maintenance of HVAC equipment. ARTICLE 32 Tenant's Services Tenant agrees to provide and pay for electric and gas utilities; and maintain temperature at levels to prevent freezing or boiling of any parts of the demised premises. Tenant will pay for and utilize a janitorial service for interior maintenance and removal of trash to Landlord's designated receptacles. Tenant shall provide on a regular basis all interior maintenance and decorating. ARTICLE 33 Notices The receipt by Landlord of a written notice and/or demand and/or request sent by Registered or Certified Mail in a sealed, postpaid envelope, addressed to the Landlord at c/o Holing Management, 928 West State Street, Trenton, New Jersey 08618, and the receipt by Tenant of a written notice and/or demand and/or request sent by Registered or Certified Mail in a sealed, post paid envelope, addressed to Tenant at Yardville National Bank, Attn: Mr. Frank Durand, Box 8487, Trenton, New Jersey 08650 shall be sufficient notice and/or demand and/or request in any case arising under this lease. The return receipt shall be conclusive evidence of the receipt by Landlord or Tenant, as the ease may be, of such notice demand or request. The above addresses may be changed at any time hereafter by giving notice in the manner provided. -14- ARTICLE 34 Right to Lock Premises on Default In the event that the relation of Landlord and Tenant shall cease or terminate by reason of the re-entry of the Landlord under the terms and covenants contained in this lease or by the eviction or ejectment of Tenant on summary proceedings, or otherwise, or after abandonment of the premises by Tenant, Landlord, in addition to his other rights hereunder shall have the right to lock said premises and at Landlord's option may keep same locked until said default is cured and Landlord shall have the right to sell all fixtures, goods and materials of Tenant at said premises and apply the proceeds thereof against unpaid rent. No action under this paragraph shall be deemed to waive Landlord's rights as set forth in other paragraphs of this lease. ARTICLE 35 Proration of Rent In the event that this lease commences on other than the first day of a month, Tenant shall, together with the second month's rent pay to the Landlord the prorated rent for the portion of the month, if any, preceding the first full calendar month of the term of this lease. ARTICLE 36 Quiet Enjoyment And the said Landlord both covenant that the said Tenant on paying the said yearly rent, and performing the covenants aforesaid, shall and may peacefully and quietly have, hold and enjoy the said demised premises for the term aforesaid, provided however, that this covenant shall be conditioned upon the retention of title to the premises by the Landlord. ARTICLE 37 Covenants to Bind Parties And it is further understood and agreed, that the covenants and agreements herein contained are binding on the parties hereto and upon their respective successors, heirs, executors, administrators and assigns. It is further expressly agreed that the words used in the singular shall include words in the plural where the text of this instrument so requires. ARTICLE 38 Notification of Default to Mortgagee In the event of a default by the Lesser hereunder, the Mortgagee will be notified in writing, and it is understood that the Mortgagee will have the right to cure said default within thirty (30) days of notification by the Lessee. -15- ARTICLE 39 Waiver of Subrogation Landlord and Tenant hereby releases the other from any and all liability or responsibility (to the other or anyone claiming through or under them by the way of subrogation or otherwise) under fire and extended coverage or supplementary contract casualties, if such fire or other casualty shall have been caused by the fault or. negligence of the other party, or anyone for whom such party may be responsible; provided, however, that, except as otherwise provided in this lease, this release shall be applicable and in force and effect only with respect to loss or damage occurring during such time as the releasor's policies shall contain a clause or endorsement to the effect that any such release shall not adversely affect or impair said policies or prejudice the right of the releasor to recover thereunder. Each of Landlord and Tenant agrees that its policies will include such a clause or endorsement so long as the same shall be obtainable without extra cost, or if such cost shall be charged therefore, so long as the other party pays such extra cost, if extra cost shall be chargeable therefore, each party shall notify the other party therefore and of the amount of the extra cost, and the other party shall be obligated to pay the extra cost unless, within ten (10) days after such notice, it elects not to be obligated so to do by written notice to the original party. If such clause or endorsement is not available, or if either party should not desire the coverage at extra cost to it, then the provisions of this Article shall not apply to the policy or policies in question. ARTICLE 40 Mechanic's Liens Tenant shall not suffer or permit any mechanic's liens to be filed against the fee of the demised premises, nor against the Tenant's leasehold interest therein by reason of work, labor services or materials supplied or claimed or have been supplied to Tenant or anyone holding the demised premises or any part thereof through or under Tenant and Tenant agrees to indemnify Landlord against such liens. If any such mechanic's lien shall at any time be filed against the demised premises, Tenant shall with 15 days after notice of the filing thereof, cause the same to be discharged of record; provided, however, that the Tenant shall have the right to contest the amount or validity, in whole or in part, of any such lien by appropriate proceedings but in such event, Tenant shall notify Landlord in writing and if requested by Landlord shall promptly bond such lien with a responsible surety company. Tenant shall prosecute such proceedings with all due diligence and dispatch. Nothing herein contained shall be construed as a consent on the part of Landlord to subject the estate of the Landlord to liability under the Mechanic's Lien Law of the State of New Jersey, it being expressly understood that the Landlord's estate shall not be subject to such liability. ARTICLE 41 Certificates by Tenant and Landlord Tenant agrees at any time and from time to time upon not less than 15 days notice by Landlord to execute, acknowledge and deliver to Landlord a statement in writing certifying (1) that this lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full -16- force and effect as modified and stating the modification, (2) whether or not there are then existing any offsets or defenses against the enforcement of any of the terms, covenants or conditions hereof upon the part of Tenant to be performed (and is so specifying the same), and (3) the dates to which the basic rent and other charges have been paid in advance, if any, it being intended that any such statement delivered pursuant to this Section may be relied upon by any prospective purchaser or mortgagee of the fee of the demised premises or any assignee of any such mortgagee. ARTICLE 42 Cumulative Remedies - No Waiver - No Oral Change The specific remedies to which Landlord or Tenant may resort under the terms of this lease are cumulative and are not intended to be exclusive of any other remedies or means of redress to which they may be lawfully entitled in case any breach or threatened breach by either of them of any provision of this lease. The failure of Landlord to insist in any one or more cases upon the strict performance of any of the covenants of this lease, or to exercise any option herein contained, shall not be construed as a waiver or relinquishment for the future of such covenant or option. A receipt by Landlord of basic rent with knowledge of the breach of any covenant hereof shall not be deemed a waiver of such breach, and no waiver, change, modification or discharge by either party hereto of any provision in this lease shall be deemed to have been made or shall be effective unless expressed in writing and signed by both Landlord and Tenant. In addition to the other remedies in this lease provided, Landlord and Tenant shall be entitled to the restraint by injunction of the violation, or attempted or threatened violation of any of the covenants, conditions or provisions of this lease, or to a decree compelling performance of any of such covenants, conditions or provisions. ARTICLE 43 Change of Terms In the event that a prospective mortgagee of the demised premises shall request a change in the language or terms of the lease, or the execution of any paper in connection therewith, the Tenant shall agree to such change provided the same shall not materially and adversely affect rights of the Tenant under this lease or increase Tenant's cost for Basic Rent or Additional Rent. ARTICLE 44 Attornment Tenant shall, if requested by a first mortgagee of the premises at any time, or in the event of any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage made by the Landlord covering the demised premises, attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Landlord under this lease. -17- ARTICLE 45 Applicable Law This Lease shall be governed by and construed under the laws of the State of New Jersey. ARTICLE 46 Holding Over In the event that the Tenant shall remain in the demised premises after the expiration of the term of this lease without having executed a new written lease with the Landlord, or having exercised its option to renew, in accordance with Article 51, such holding over shall not constitute a renewal or extension of this lease. The Landlord may, at its option, elect to treat the Tenant as one who has not removed at the end of its term, and thereupon be entitled to all the remedies against the Tenant provided by law in that situation, or the Landlord may elect, at its option, to construe such holding over as a tenancy from month to month, subject to all the terms and conditions of this lease, except as to duration thereof, and rent shall be due pursuant to statute for such ease made and provided that the holdover rent shall not be less than 120% of the last month's rent covered under the base and or option term of the lease. Landlord shall give Tenant six (6) months notice, in writing of its intention to charge Tenant hold over rent on the premises. Should Tenant fail to give Landlord acknowledgement of Tenants lease termination, within sixty (60) days of receipt of said notice, Tenant shall be liable to Landlord for an additional month's rental or proportionate part thereof for every month or proportionate part thereof that Tenant fails to give the aforesaid notice, at one hundred twenty (120%) percent of it's last month's rent. ARTICLE 47 Memorandum and Recording This lease shall not be recorded under penalty of damages and forfeiture. At the request of either party, the other party shall execute a memorandum of lease setting forth a description of the demised premises and the term. ARTICLE 48 Utility Easements Unless such easements reduce Tenant's useable space, Landlord shall have the right to grant easements and/or utilize areas of the demised premises for the installation of utilities, provided, however, that the use of said easement areas for said purposes does not substantially interfere with the operation of Tenant's business. Tenant shall not be entitled to any compensation or abatement of rent in regard thereto. If the leased property consists of one or more floors, or portions thereof, of a building, and at the time of the making of this lease there are upon any such floors, or portions thereof, hallways, passageways, stairways, elevators, or other means of access, although within the leased property, shall be reserved for the use of the Landlord and all tenants in the building and shall not be considered a portion of the leased property. -18- ARTICLE 49 Rules and Regulations DELETED ARTICLE 50 Building Improvements See Attached Exhibit C ARTICLE 51 Renewal Option The Tenant shall have the right to renew this Lease Agreement for an additional Four (4) five (5)Year Options beyond the initial 10-year term. The option shall commence provided the following conditions have been complied with: 51.1. The Tenant is not then in default with all terms and conditions of this Lease Agreement; and 51.2. The Tenant shall notify the Landlord in writing not later then six months prior to the expiration of the initial Lease Agreement of its desire to renew, and agrees to sign a new lease upon the same terms and conditions as contained in the original Lease Agreement, except as to the duration dates and the exclusion of any further option to renew. ARTICLE 52 Notice Requirement 52.1. Sending of Notices Any notice, request, demand, approval or consent given, or required to be given, under this lease shall be in writing and shall be deemed to have been given on the (3rd) day following the day on which the same shall have been mailed by United States registered or certified mail, return receipt requested, with all postal charges prepaid, or if hand delivered shall be deemed given upon delivery. All notices shall be addressed, if intended for Landlord, to c/o Hofing Management, 928 West State St., Trenton. New Jersey 08618 or, if intended for the Tenant, to Yardville National Bank. PO Box 8487, Trenton, New Jersey. Either party may, at any time, change its address for the above purposes by sending a notice to the other party stating the change of and setting forth the new address. 52.2. Notice to Mortgagees If any mortgagee shall notify Tenant that it is the holder of a mortgage affecting the premises, no notice, request or demand thereafter sent by Tenant to Landlord shall be effective unless and until a copy of the same shall also be sent to such mortgagee at such address as such mortgagee shall designate. -19- ARTICLE 53 Common Areas (a) Management and Operation of Common Areas Tenant will operate and maintain or will cause to be operated and maintained the common areas including all parking areas in a manner deemed by Landlord to be reasonable and appropriate and in the best interest of the building. Landlord shall have the right (i) to establish, modify and enforce reasonable rules and regulations with respect to the common areas; (ii) to enter into, modify and terminate easement and other agreements pertaining to the use and maintenance of the parking areas and common areas; (iii) to close temporarily any or all portions of the common areas; (iv) to discourage non-customer parking; and (v) to do and perform such other acts in and to said areas and improvements as, in the exercise of good business judgment, Landlord shall determine to be advisable. Landlord agrees that it shall use its best efforts to make available to Tenant's employees convenient parking facilities in reasonable proximity to the premises. IN WITNESS WHEREOF, the parties hereto have affixed their hands and seals or caused these presents to be signed and sealed by their proper corporate offices the day and year first above written. Witness/Attest: Landlord: Union Properties, LLC _______________________________ By: /s/ Sidney L. Hofing ------------------------------- Sidney L. Hofing Managing Member Witness/Attest: Tenant: Yardville National Bank, A National Bank /s/ Frank Durand By: /s/ Patrick M. Ryan - ---------------------------------- ------------------------------- Patrick M. Ryan President/CEO -20- ACKNOWLEDGEMENT --------------- State of New Jersey : : SS: County of Mercer : Be It Remembered, that on this 13th day of September, 2000,before me, the subscriber, personally appeared PATRICK M. RYAN, who I am satisfied, is the person named in and who executed the within instrument, and thereupon he acknowledged that lie signed, sealed and delivered the same as his act and deed, for the uses and purposes therein expressed. /s/ Cynthia Aust ---------------------------------- My Commission Expires: State of New Jersey : : SS County of Mercer : Be It Remembered, that on this day of , 2000 , before me the subscriber, personally appeared SIDNEY L. HOFING, who I am satisfied, is the person named in and who executed the within instrument, and thereupon he acknowledged that he signed, sealed and delivered the same as his act and deed, for the uses and purposes therein expressed. __________________________________ My Commission Expires: EXHIBIT "A" PROJECT DESCRIPTION 1575 BRUNSWICK AVENUE LAWRENCE TOWNSHIP, NEW JERSEY PROPERTY SIZE: 24,121 SF BUILDING SIZE: First Floor 3,560+/- Basement 3,000+/- -------- TOTAL 6,560 DRIVE THRU LANES: 3 ZONING: NC-2, Neighborhood Commercial (See Zoning Regulations) YEAR OF CONSTRUCTION: 1954 (approximate) CONSTRUCTION TYPE: Concrete slab with stone walls (exterior), flat roof, public water and sewer EXHIBIT "B" Basic Rent Rent Based Upon 3,560 + 3,000 Sq. Ft. A. Annual Basic Rental shall be payable in equal monthly installments, in advance, on the first day of each full calendar month during the term, the first such payment to include also any prorated annual basic rental for the period from the date of the commencement of the term to the first day of the first full calendar month in the term. B. Front years two (2) to ten (10) there will be a minimum rental increase annually of a minimum 3% or a maximum of 5% based upon the annual CPI index as described herein. The rental increase will be based upon the Index for the New York-Northeastern New Jersey area of the "Consumers Price Index for all Urban Consumers" (revised CPI-U (1982-1984 equal to 100) published by the Bureau of Labor Statistics of the U.S. Department of Labor Statistics of the U.S. Department Labor (hereinafter referred to as the "Index"). The Index figure for the initial month, shall be compared with the Index figure for the anniversary month in each subsequent year during the option period. If the latter figure is more than the Index for the initial month, the latter figure shall be divided by the former figure to determine the new base rent. The new base rent will be divided by 12 to determine the new monthly installment. Provided, however, in no event shall the new monthly base rent be less than the prior years monthly base rent with a minimum increase for each year will be a minimum of three (3%) percent with a maximum of five (5%) percent. Since Index figures for the month of the anniversary month are not available for several weeks after said month of each year, the base rental will continue to be paid on an estimated basis in monthly installments equal to the monthly installments for the preceding year. Upon the availability of the actual month's Index figures, the base rent will be recomputed and Tenant will pay to Landlord, upon demand, the demand, the deficiencies, if any, in each monthly installment of the current year paid prior to the date of such computation. Thereafter, Tenant will pay the base rental on the newly computed monthly installment. C. The Tenant has four 5 year option periods covering the following years: (1) 1st Option - Years 11 - 15 (2) 2nd Option - Years 16 - 20 (3) 3rd Option - Years 21 - 25 (4) 4th Option - Years 26 - 30 The basic rent during the option periods will increase annually in accordance with the CPI Index with a minimum of 3% and a maximum of 5%. State of : : SS County of : Be It Remembered, that on this ________ day of _______________, 2000, before me, the subscriber, personally appeared _______________________________, who acknowledged hereof to be the ____________________ of ____________________, and that he as such ___________________________ of _________________________ being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as ________________________ of ____________________________ ____________________________________ My Commission Expires: State of : : SS County of : Be It Remembered, that on this ________ day of _______________, 2000, before me, the subscriber, personally appeared _______________________________, who acknowledged hereof to be the ____________________ of ____________________, a corporation, and that he as such ___________________________ of _________________________ being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as ________________________ of ____________________________ ___________________________________ My Commission Expires: Lease Addendum -------------- This lease addendum shall supplement the lease agreement by Union Properties L.L.C. and the Yardville National Bank dated July 2000 for the premises located at 1575 Brunswick Ave. in Lawrence Township, New Jersey 08648. In the event of a conflict between this addendum and the lease agreement, the addendum shall prevail. 1. The Landlord shall provide a new roof. After the installation of the roof, the tenant shall be responsible for all future repairs, replacement, and maintenance issues. Tenant shall have right to warranties provided by contractor. 2. Landlord shall provide the HVAC system in good working order. After initial repairs have been completed, tenant shall be responsible for future maintenance and replacement. 3. The Base rental shall increase every five years including but not limited to base term and any subsequent option periods by the lesser of the Consumer Price Index (New York Region) increase over the preceding term or by a fixed rate of 15%. Example of Increase: Consumer Price Index Year 1 of Lease 120 Consumer Price Index Year 5 of Lease 160 Increase Value 40 Increase % 33.33% 33.33% is greater than 15% lease addendum specifies lesser would be utilized. The rent would increase by 15% and be fixed for next five years of lease agreement. Landlord: Union Properties Witness/Attest /s/ Sidney L. Hofing, Managing Member ------------------------------------- --------------------------- Tenant: Yardville National Bank /s/ Patrick M. Ryan ------------------------------------- --------------------------- Patrick M. Ryan, President/CEO SECOND LEASE ADDENDUM Landlord: Union Properties, LLC Tenant: Yardville National Bank Date of Lease: 9/13/2000 Property: 1575 Brunswick Avenue, Lawrence Township, NJ This Second Lease Addendum shall supplement the Lease Agreement and First Lease Addendum between Union Properties, LLC and Yardville National Bank Dated September 13, 2000 for the property located at 1575 Brunswick Avenue in Lawrence Township, New Jersey. In the event of a conflict between this Second Lease Addendum and the Lease Agreement or First Lease Addendum, the Second Lease Addendum shall prevail. 1. Article 30 of the Lease Agreement should be deleted in its entirety and replaced with the following: ARTICLE 30 Additional Rent Tenant shall pay, as additional rent, the following: 30.1. Real estate or any other tax imposed in lieu of real estate taxes assessed on the Office Building and the land underlying same. 30.2. All risk insurance (fire and other hazard) including rental abatement insurance in the amount of one (1) year's minimal rental for the office project. 2. Article 31 should be modified to delete the language in subparagraph (j) and replace said language with the following: "removal of all snow, ice and debris. Agreed and accepted this 14th day of May, 2001. Attest/Witness: UNION PROPERTIES, LLC /s/ Daniel J. O'Donnell By: /s/ Sidney L. Hofing - ---------------------------------- --------------------------------- Sidney L. Hofing, Managing Member Attest/Witness: YARDVILLE NATIONAL BANK /s/ Daniel J. O'Donnell By: /s/ Patrick M. Ryan - ---------------------------------- --------------------------------- Patrick M. Ryan, President/CEO EX-10.4 7 exh10-4.txt EXHIBIT 10.4 LEASE AGREEMENT --------------- This Lease Agreement ("Lease") made as of the __________ of October , 1994, by and between The Lalor Urban Renewal Limited Partnership ("Landlord"), a LIMITED PARTNERSHIP existing under the laws of the State of NEW JERSEY, having its principal offices at 928 West State Street, Trenton, New Jersey 08618, and The Yardville National Bank ("Tenant"), WITNESSETH: That for and in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows: ARTICLE I LEASE PROVISIONS AND SCHEDULES Section 1.1. Certain Defined Terms A. Retail center area" or "retail center" means that area within that certain parcel of land, situated in Trenton, NEW JERSEY, commonly known as The Lalor Plaza. B. "Building complex" means the building or store in which the premises are located which is known as Unit No, B-lb Right. C. "Premises" means that portion of the building complex having approximately 1500 square feet of floor area. D. "Term" means a period of 5 (Five ) YEARS commencing and ending as provided in Section 3.1. E. "Permitted Use" means Bank. For this purpose and this purpose only. F. "Annual basic rental" means the sum of $ 15.00 per square foot multiplied by the number of square feet in the floor area of the premises, which shall be subject to the proration as provided in this Agreement. $ 15.00 x 1500 sq. feet = $ 22,500.00 for the first year or $ 1875.00 per month. The annual basic rental shall increase each annual anniversary date on the basis of the Consumer Price Index for all Urban Consumers, New York, New York-Northeastern New Jersey, all items (Index average for all items was 100 in 1967) issued by the Bureau of Labor Statistics for the United State Department of Labor or by a *SEE BASIC LEASE PROVISION increase over the previous year's base rental, whichever is greater. G. "Renewal Option(s)" means Tenant shall have the right and option to extend the term of this lease on the same terms, conditions and covenants as provided herein for 3 periods of five (5 years beyond the original term hereof, except that Section 1.lF Annual Basic Rental shall be amended as shown in Basic Lease Provisions. Rent during each option period is payable in advance on the first day of each and every month. The Tenant will notify the Landlord in writing See Basic Lean Provisions prior to the expiration of the Lease of their intentions to vacate, renew or exercise option. In the event the Tenant fails to give the above referred to notice and has an option to renew, the Landlord may choose one of the following: 1) Waive the notice requirements and consider the option exercised; 2) Serve the Tenant notice to vacate on the expiration date of the present term; or 3) Renegotiate the terms of any extension of the Lease. The Landlord will make one of the above choices prior to the expiration date of the particular term of the Lease in force, at that time. H. "Security Deposit" means the sum of $ See Basic Lease Provisions. To secure the covenants and promises of the Tenant contained herein, the Tenant shall deposit with the Landlord the sum of the See Basic Lease Provisions in cash, as a security deposit. This sum shall be returned to the Tenant without interest at the expiration of the term provided the Tenant has performed in accordance with the terms hereof. The Landlord may apply any part of said sum to cure any default of Tenant and the Tenant shall, upon demand, deposit with the Landlord an amount equal to that applied so that Landlord shall have the full deposit on hand at all times during the term of this Lease. If, at the end of the term, repairs are necessary to correct any condition beyond ordinary wear and tear or any payment to be made by Tenant to Landlord remains unpaid, then the security, or a portion thereof, may be used by the Landlord to make such repairs or payments and the balance remaining shall be returned to the Tenant. The security deposited under this Lease shall not be mortgaged, assigned or encumbered by the Tenant without the written consent of the Landlord. Tenant hereby waives any future law or laws which may require the Landlord to segregate the aforementioned security deposit or to pay interest on said security deposit. I. "Advance Rental" means that, upon the execution hereof, Tenant shall pay to the Landlord the first month's rent of $ See Basic Lease Provisions. J. "Tenant notice address" means See Basic Lease Provisions. K. "Tenant trade name" means See Basic Lease Provisions. L. "Floor area" means the actual number of square feet in the building complex `which is See Basic Lease Provisions square feet designed f or the exclusive use and occupancy of rent paying tenants, excluding common areas. M. "Common area" means those areas and facilities which may be furnished by Landlord on or near the retail area for the non-exclusive general common use of tenants, and other occupants of the center areas, also use of such areas of facilities, their officers, agents, employees and customers, including (without limitation) all parking areas, access roads, employee parking area, truckways, driveways, loading docks and areas, delivery passages, package pick-up stations, sidewalks, malls, courts, ramps, landscapes and planted areas, retaining walls, roofs, lighting facilities, rest rooms, and other similar areas, facilities or improvements. "Common area" shall specifically include all lands lying within the retail area with respect to which Landlord by agreement either provides maintenance and/or landscaping services or contributes all or any portion of the cost of providing such service. -2- N. "Landlord" means and includes only the owner of the fee title of the premises. Upon the transfer by Landlord of the fee title hereunder, the Landlord shall advise the Tenant, in writing, by certified mail, return receipt requested, of the name of Landlord's transferee. In such event, the then Landlord shall be automatically freed and relieved from and after the date of such transfer of title of all liability with respect to the performance of any of the covenants and obligations on the part of the Landlord herein contained to be performed subsequent to the date of such transfer of title, provided any such transfer and conveyance by the Landlord is expressly subject to the assumption by the grantee or transferee of the obligations of the Landlord to be performed pursuant to the terms and conditions of the within lease, including an express assumption by the said grantee or transferee of the obligation to repay any security which has been or may be deposited with the Landlord pursuant to the terms and conditions of the within lease. O. "Default rate" means the monthly rate of interest as set forth in paragraphs 16.1 F "Event of Default" Defined and 16.2 B Remedies. Section 1.2. Attachments The following document is attached hereto, and such document, as well as all drawings and documents prepared pursuant thereto, shall be deemed to be a part of this lease. See List of second page of Basic Lease Provisions. ARTICLE II PREMISES Section 2.1. Demise Landlord hereby leases to Tenant, and Tenant hereby takes from Landlord, the premises for the term and at the rental hereinafter described. Tenant takes the premises "as is" except as otherwise may be specifically set forth herein. Section 2.2. Measurement of Premises Notice is hereby given that the floor area of the premises is See Basic Lease Provisions square feet. Said measurements shall be deemed to be the floor area of the premises for all purposes of this lease unless, within ten (10) days after receipt of this notice, Tenant shall give Landlord written notice that Tenant believes Landlord's measurement to be inaccurate, in which event Landlord shall cause its architect or engineer to make such measurement and certify the same to the parties and shall be deemed to be floor area of the premises for all purposes of this lease. Landlord warrants that the floor area of the premises determined by measurement pursuant to this Section shall be within ten percent (10%) of the approximate floor area shown in Clause C of Section 1.1. (Optional Measurement of Premises paragraph) -3- On or before the commencement of the term, Landlord shall measure the premises and shall give Tenant notice of the floor area so determined. The floor area of the premises disclosed by +, such notice shall be deemed to be floor area of the premises - See Basic Lease Provisions with the language continuing from this point as set forth in above paragraph). ARTICLE III TERM Section 3.1. Term A. The term shall commence as hereafter provided unless sooner terminated hereby. Said term, and Tenants' obligation to pay rent, shall commence on the earlier of the following dates: (a) the See Basic Lease Provisions day of _______________l9_: (b) the date which is Basic Lease Provisions days after the Tenant has been notified in writing the demised premises are ready for occupancy, or the date the tenant shall open the Demised Premises for business, whichever shall first occur. In the event that the Basic Lease Provisions day period does not occur on the first day of the month or Tenant shall have opened the demised premises for business on a day other than the first day of the month, then the term shall commence on the first day of the month next succeeding. However, the Tenant shall pay rent for the fractional month on a per diem basis (calculated on the basis of a thirty day month) until the first day of the month when the term commences: and thereafter the rent shall be paid in equal monthly installments in advance on the first day of each month during the term of this lease. It is presently contemplated that the commencement date of this lease shall be on or about See Basic Lease Provisions, 19__, subject to terms and conditions hereinafter provided. Section 3.2. Termination This lease shall terminate at the end of the term without the necessity of any notice from either Landlord or Tenant to terminate the same, and Tenant hereby waives notice to vacate or quit the premises and agrees that Landlord shall be entitled to the benefit of provisions of law respecting summary recovery of possession of the premises from a Tenant holding over to the same extent as if statutory notice has been given. For the period of three (3) months prior to the expiration of the term, Landlord shall have the right to display on the exterior of the premises the customary sign "For Rent" and during such period Landlord may show the premises, and all parts thereof, to prospective tenants during normal business hours. Section 3.3. Holding Over A. If Tenant shall be in possession of the premises at the end of the term with the consent or permission of Landlord, the tenancy under this lease shall become month-to-month, terminable by either party on thirty (30) days' written notice. B. During and for any hold-over period in which Tenant occupies the premises after expiration of the term, the monthly rental shall be double the monthly rental for the month immediately preceding the hold-over period, and all other responsibilities and obligations of Tenant hereunder shall continue in full force and effect. -4- Section 3.4. Surrender of Premises On the last day or sooner termination of the term, Tenant shall quit and surrender the premises broom-clean, in good condition and repair (reasonable wear and tear and damage by Acts of God, fire extended coverage perils excepted), together with all alterations, additions and improvements which may have been made in, on or to the premises, except movable furniture or unattached movable trade fixtures put in at the sole expense of Tenant; Trade fixtures which are built in specifically with regard to use as will be removed by the tenant and at tenants expense. If the premises be not surrendered as and when aforesaid, Tenant shall indemnify Landlord against loss of liability resulting from the delay by Tenant in so surrendering the premises including, without limitation, the claims made by any succeeding occupant founded on such delay. Tenant's obligation under this Section shall survive the expiration or sooner termination of the term. Section 3.5. Tenants Personal Property Any equipment, fixtures, goods, or other property of the tenant not removed by the tenant upon the termination of this lease or upon any quitting, vacating, or abandonment of the premises by the tenant, or upon the tenant's eviction, shall be considered as abandoned and the landlord shall have the right, without any notice to the tenant, to sell or otherwise dispose of the same at the expense of the tenant and shall not be held accountable to the tenant for any part of the proceeds of such sale, if any. However, in the event that the Landlord incurs substantial costs in the disposition of the personal property of the tenant, then, in that event, Landlord shall be entitled to add the cost to all sums due it from the Tenant and proceed with the new amount as a claim against the tenant. ARTICLE IV CONTINUOUS OPERATION AND USE Section 4.1. Prompt Occupancy and Use Tenant shall occupy the premises upon commencement of the term and thereafter shall continuously use the premises for the permitted use and for no other purpose whatsoever. In addition to the conditions set forth in Article VIII (Operations), Tenant shall: A. Keep its store continuously, fully stocked with high quality, salable merchandise except under circumstances in which tenant is a service business; B. Keep its store fully staffed with employees, no store shall be left open with out an attendant; C. Tenant shall cause its business to be conducted and operated in good faith and in such manner as shall assure the transaction of a maximum volume of business in and at the premises. -5- Section 4.2. Storage and Office Area Tenant shall use only such minor portions of the premises for storage and office purposes as are reasonably required therefor and shall not perform any office or clerical function in the premises for any other store. Section 4.3. Tenant's Trade Name Unless otherwise approved by Landlord, Tenant shall conduct business in the premises only in Tenant's trade name. Section 4.4. Operating Hours A. Unless other hours are approved by Landlord, in writing, Tenant shall cause the premises to be open for business at least 40 hours per week. ARTICLE V RENTAL Section 5.1. Rentals Payable Tenant covenants and agrees to pay to Landlord as rental for the premises, the following; An annual sum equal to the annual basic rental specified in Clause F of Section 1.1. Section 5.2. A. Annual basic rental shall be payable in equal monthly installments, in advance, on the first day of each full calendar month during the term, the first such payment to include also any prorated annual basic rental for the period from the date of the commencement of the term to the first day of the first full calendar month in the term. B. Annual increases in the base rent in the event of increases in the cost of living based on the "all items" Index for the New York-Northeastern New Jersey area of the "Consumers Price Index for all Urban Consumers" (revised CPI-U (1982 - 1984 equal to 100) published by the Bureau of Labor Statistics of the U.S. Department of Labor (hereinafter referred to as the "Index"). The Index figure for the initial month, shall be compared with the Index figure for the anniversary month in each subsequent year during the term of this lease, If the latter figure is more than the Index for the initial month, the latter figure shall be divided by the former figure to determine the new base rent. The new base rent will be divided by 12 to determine the new monthly installment. The computations are shown in the following example: -6- Example: ------- Index Point Change ------------------ CPI - 305.8 299.9 - previous CPI equals 5.90 Index Point Change Percentage Change ----------------- Index point difference is 5.90 divided by the previous Index of 299.9-----0.020 x 100 or 2.00 percent change - -------------------------------------------------------------------------------- 0.020 x $(annual total) annual equals $(yearly total of increase) or $(monthly increase)27.50 CPI increase base rental $ (monthly base rent) + (monthly increase) -------------------------------------------- $ (total) new monthly installment Provided, however, in no event shall the new monthly base rent be less than the prior years monthly base rent. Since Index figures for the month of the anniversary month are not available for several weeks after said month of each year, the base rental will continue to be paid on an estimated basis in monthly installments equal to the monthly installments for the preceding year. Upon the availability of the actual month's Index figures, the base rent will be recomputed and Tenant will pay to Landlord, upon demand, the deficiencies, if any, in each monthly installment of the current year paid prior to the date of such computation. Thereafter, Tenant will pay the base rental based on the newly computed monthly installment. Section 5.3. "Rental Year" Defined The term "rental year" shall mean the twelve (12) full calendar months of the term commencing with the first payment immediately following the first day of the term and shall end on the last day of the term. Section 5.4. Payment of Rental Tenant shall pay all rental when due and payable, without any setoff, deduction or prior demand. Any rental which is not paid within seven (7) days after the same is due shall bear interest at the rate of ten percent (10%) per month as set forth in Section 16.2 (B) Remedies of this Lease, calculated from the due date until such rental is paid. In the event Tenant issues a check for any rental which is returned to Landlord as unpaid for any reason, Landlord shall be entitled to add the 10% per month rate to the next rental bill representing a service charge for such occurrence. Such amount shall be collectible by Landlord as additional rental based on a 360-day year. Any additional rental which shall become due shall be payable, unless otherwise provided herein, with the next Installment of annual basic rental. Rental and statements required of Tenant shall be paid and delivered to Landlord at the management office of Landlord in the retail center or at such other place as Landlord may, from time to time, designate in a notice to Tenant. Any payment by Tenant or acceptance by Landlord of a lesser amount than shall be due from Tenant to Landlord shall be treated as payment on account. The acceptance by Landlord of a check for a lesser amount with an endorsement or statement thereon, or upon any letter accompanying such check, that such lesser amount is payment in full, shall be given no effect, and Landlord may accept such check without prejudice to any other rights or remedies which Landlord may have against Tenant. -7- ARTICLE VI TAXES Section 6.1. Tenant to Pay Proportionate Share of Taxes Tenant shall pay in each tax year during the term, as additional rental, a proportionate share of all real estate taxes, ad valorem taxes and assessments, general and special assessments, taxes on real estate rental receipts, taxes on Landlord's gross receipts, business use and occupancy taxes, business operations taxes, or any other tax imposed upon or levied against real estate or upon owners of real estate as such rather than personally, generally, or payments made to a federal, state or local government authority by Landlord in lieu of any such taxes or assessments, payable with respect to or allocable to the entire tax lot of which the premises are a part (excepting only those portions of the said lot which are a part of the "common areas" as defined herein), together with the reasonable cost (including fees of attorneys, consultants and appraisers) of any negotiation, contest or appeal pursued by Landlord in an effort to reduce any such tax, assessment or charge, the same being collectively referred to herein as "taxes". In computing the value of the common area to be excepted, the entire assessed value of the land shall be deemed to be distributed equally throughout the lot on a square foot basis. Tenant's proportionate share of taxes for any tax year shall be computed by multiplying the amount of such taxes by a fraction, the numerator of which shall be the floor area of the premises and the denominator of which shall be the total floor area of all leasable area. For the tax year in which the term commences or terminates, Tenant's liability for its proportionate share of any taxes shall be subject to a prorated adjustment based upon the number of days of such tax year falling within the term, as set forth in Section 6.3 below. (Note above mentioned taxes apply only if in existence in state of property this lease is on.) Section 6.2. Payment of Proportionate Share of Taxes Tenant's proportionate share of taxes shall be paid by Tenant, in equal monthly installments, in such amounts as are estimated and billed for each tax year by Landlord at the commencement of the term and at the beginning of each successive tax year during the term, each such installment being due on the first day of each month. Within sixty (60) days after Landlord's receipt of tax bills for each tax year, or such reasonable (in Landlord's determination) time thereafter, Landlord will certify to Tenant the amount of taxes for the tax year in question and the amount of Tenant's proportionate share thereof. Annual taxes will be divided by 10 installments and billed monthly. Due to advance collection of taxes by municipalities the annual contribution towards taxes by Tenant will be billed monthly but divided by ten (10). Tenants' excess contributions of real estate taxes, if any, will be credited at the end of the term. If tenants' contribution of real estate taxes have not fully paid its proportionate share, the amount so due and owing shall be paid by the Tenant to the Landlord at the end of the term. -8- Section 6.3. "Tax Year" Defined The term "tax year" shall mean the twelve (12) full calendar months of the term commencing with the January 1st immediately following the first day of the term and shall end December 31st of such calendar year; thereafter each tax year shall consist of successive periods of twelve (12) calendar months; provided, however, that the first tax year shall commence on the first day of the term and terminate on the immediately following 31st day of December, and the last tax year shall terminate on the last day of the term. Section 6.4. Taxes on Rental In addition to Tenant's proportionate share of taxes, Tenant shall pay to the appropriate agency any and all sales taxes, excise taxes, and business use and occupancy taxes (not including, however, Landlord's income taxes) levied, imposed or assessed by the State of See Basic Lease Provisions or any political subdivision thereof or other taxing authority, upon any rental payable hereunder. Section 6.5. Change in Method or Scope of Taxation A. If at any time following the execution of this lease the method or scope of taxation prevailing at the date of such execution shall be altered, modified or enlarged so as to cause the method of taxation to be changed, in whole or in part, so that some other tax, levy or other imposition is substituted in whole or in part for the real estate taxes assessed against the premises on the date of execution of this lease, then and in such event, each and every such substituted tax or other imposition shall be payable and discharged by Tenant in the manner required pursuant to the law promulgating such tax or other imposition. If any such substitute tax or other imposition shall be in the form of an income tax or in the form of any other tax or imposition which the law promulgating the same shall require Landlord to pay, then Tenant shall pay Landlord as additional rental during the term of this lease such amount as shall be equivalent to the amount by which the real estate taxes have been decreased or diminished. Such payments shall be made by Tenant to Landlord at such time or times as Landlord shall be required to pay such substitute taxes in accordance with law and with the provisions of this lease. B. It being Tenant's obligation to pay all prorated shares of real estate taxes assessed against the premises as provided elsewhere in this lease, the parties recognize and acknowledge that the intent and purpose of this paragraph is to provide against and assure that Landlord does not suffer or sustain any diminution in the Landlord's gross receipts from the rental of the premises resulting from any change in the scope or form of taxation which has the effect of shifting any of Tenant's obligations under this lease, or any part thereof, to Landlord; and Tenant hereby agrees to protect Landlord against any such diminution in gross receipts as a result thereof. C. In the event that any dispute shall arise between the parties with respect to any provisions contained in this Section, then the parties agree to submit such dispute for arbitration in accordance with the rules of the American Arbitration Association. -9- D. Landlord agrees to provide Tenant with all reasonable tax bill documentation, including a copy of tax bill and a copy of calculations required to support the bill. ARTICLE VII IMPROVEMENTS Section 7.1. Tenant's Improvements A. On or before the commencement of the term, Tenant shall, at its sole cost and expense, complete all improvements and other work to be performed by it. Tenant shall be permitted by Landlord to enter the premises for the purpose of performing its improvements and for the purpose of installing its fixtures and other equipment, provided: (i) Tenant shall have obtained Landlord's written approval of the plans and specifications for such work as attached Exhibit "E"; and (ii) Tenant shall have deposited with Landlord the policies or certificates of insurance required in Article XIII; and (iii) Tenant shall have secured all necessary permits and approvals of all boards, bureaus and agencies having jurisdiction and Tenant shall have provided copies of such to Landlord; and (iv) Tenant's activities shall be conducted so as not unreasonably to interfere with Landlord's construction activities or with other tenants. B. Tenant shall, at its expense, remove from the premises and from the retail center area, all trash which may accumulate in connection with Tenant's activities. During such period, Tenant shall perform all duties and obligations imposed by this lease, including, without limitation, those provisions relating to insurance and indemnification, saving and excepting only the obligation to pay rental (other than any additional rental arising out of any failure of Tenant to perform its obligations under this lease), which obligation shall commence when the term commences. Section 7.2. Mechanic's Liens No work which Landlord permits Tenant to do pursuant to this lease, whether in the nature of erection, construction, alteration or repair, shall be deemed to be for the immediate use and benefit of Landlord so that no mechanic's or other lien shall be allowed against the estate of Landlord by reason of any consent given by Landlord to Tenant to improve the premises. Tenant shall pay promptly all persons furnishing labor or materials with respect to any work performed by Tenant or its contractor on or about the premises. In the event any mechanic's or other lien or notice of intention to claim such lien shall at any time be filed against the premises by reason of work, labor, services or materials performed or furnished, or alleged to be performed or furnished, to Tenant or to anyone holding the premises through or under Tenant, Tenant shall forthwith cause the same to be discharged of record or bonded to the satisfaction of Landlord. If Tenant shall fail to cause such lien or notice forthwith to be so discharged or bonded after being notified of the filing thereof, then, in addition to any other right or remedy of Landlord, Landlord may discharge the same by paying the amount claimed to be due, and the amount so paid by Landlord including reasonable attorneys' fees incurred by Landlord in procuring the discharge of such lien or notice, together with interest thereon at the default rate, shall be due and payable by Tenant to Landlord as additional rental and shall be paid in -monthly installments. -10- Section 7.3. Tenant's Trade Fixtures All unattached, movable trade fixtures and movable furniture (as distinguished from leasehold improvements) owned by Tenant and installed in the premises shall remain the property of Tenant and shall be removable at any time, including upon the expiration of the term; provided Tenant shall not at such time be in default of any terms, conditions, provisions or covenants of this lease, and provided further that Tenant shall repair any damage to the premises caused by the removal of said fixtures and furniture. If Tenant is in default, Landlord shall have the benefit of any applicable lien on Tenant's property located in or on the premises as may be permitted under any federal or state laws, and in the event such lien is asserted by Landlord in any manner or by operation of law, Tenant shall not remove or permit the removal of said property until the lien has been removed and all defaults have been cured. ARTICLE VIII OPERATIONS Section 8.1. Operations by Tenant A. In regard to the use and occupancy of the premises, Tenant shall, at its expense (i) keep the inside and outside of all glass in the doors and windows of the premises clean; (ii) keep all exterior store surfaces of the premises, including, but not limited to, Tenant's awnings and signs, clean and iii good condition; (iii) replace promptly any cracked or broken glass of the premises with glass of like kind and quality; (iv) maintain the premises in a clean, orderly and sanitary condition and free of insects, rodents, vermin and other pests; (v) keep any garbage, trash, rubbish or other refuse in rat proof containers within the interior of the premises until removed; (vi) have such garbage, trash, rubbish and refuse removed as directed by Landlord; (vii) keep all mechanical apparatus free of vibration and noise which may be transmitted beyond the premises; (viii) comply with all rules, regulations and reasonable recommendations of Landlord's fire insurance rating organization now or hereafter in effect; (ix) conduct its business in all respects in a dignified manner in accordance with the highest standards of store operation of the retail center area and comply, at its own expense, with all municipal and other governmental laws, ordinances, rules and regulations applicable to the use and occupancy of the premises. B. In regard to the use and occupancy of the premises and the common area, Tenant will not: (i) place or maintain any merchandise, trash, refuse or other articles in any vestibule or entry of the premises, on the footwalks adjacent thereto or elsewhere on the exterior of the premises so as to obstruct any driveway, corridor, footwalk, parking area, mall or any other common area, or throw, discard or deposit any paper, glass or extraneous matter of any kind, except in designated receptacles, or create litter or hazards of any kind; (ii) use or permit the use of any objectionable advertising medium -11- such as, without limitation, loudspeakers, phonographs, public address systems, sound amplifiers, reception of radio or television broadcasts within the retail center in such manner that any sounds reproduced, transmitted or produced shall be directed beyond the interior of the premises; (iii) use any sound-making device of any kind or create or produce in any manner noise or sound that is annoying or unpleasant or constitutes a nuisance in the common areas; (iv) permit undue accumulations of or burn garbage, trash, rubbish or other refuse within or without the premises; (v) cause or permit objectionable odors to emanate or to be dispelled from the premises; (vi) vend, peddle or solicit orders for sale or distribution of any merchandise, device, service, periodical, book, pamphlet or other material whatsoever in the common areas; (vii) solicit membership in any organization, group or association or contribution for any purpose in the common areas; (viii) exhibit or distribute any sign, placard, banner, notice, circular, booklet, pamphlet, handbill or other written material in the common areas; (ix) permit the operation of any "elephant trains" or similar transportation devices or any solicitations, demonstrations or itinerant vending in the common areas, unless the same shall be part of promotional activities of the retail center which are approved by Landlord and do not unreasonably interfere with the commercial operations of tenants and other occupants of the retail center; (x) permit the parking of delivery vehicles so as to interfere unreasonably with the use of any driveway, corridor, footwalk, parking area, mall, or other common areas; (xi) receive or ship articles of any kind outside the designated loading areas for the premises; (xii) parade, rally, patrol, picket, demonstrate or engage in any conduct that might tend to interfere with or impede the use of the common areas by persons entitled to use the same, create a disturbance, attract attention or harass, annoy, disparage of be detrimental to the interest of any of the retail establishments within the retail center; (xiii) use or permit the use of the premises, the common areas, or any part thereof, in a manner likely to injure the reputation of the retail center or which will violate the laws of any applicable unit of government, nor permit any part of the premises or the common areas to be used for any disreputable or immoral purpose or for any activity of a type which is not generally considered appropriate for first class retail centers conducted in accordance with good and generally accepted standards of operation; (xiv) use or permit the use of any portion of the premises as regular living quarters, sleeping apartments of lodging rooms; (xv) conduct or permit to be conducted any auction, fire, going out of business, bankruptcy, or other similar type sale in or connected with the premises (but this provision shall not restrict the absolute freedom of Tenant in determining its own selling prices, nor shall it preclude the conduct of periodic seasonal, promotional or clearance sales; (xvi) place a load upon any floor which exceeds the floor load which the floor was designed to carry (xvii) deface, damage or demolish any sign, light standard or fixtures, landscaping material or other improvement or property in the common areas; or (xviii) operate its heating or air conditioning in such a manner as to drain heat or air conditioning from the premises of any other tenant or other occupant of the retail center. C. Tenant acknowledges that it is Landlord's intent that the retail center area be operated in a manner which is consistent with the highest standards of decency and morals prevailing in the community which it serves. Accordingly, Tenant agrees it will not sell, distribute, display or offer for sale any item which, in Landlord's good faith judgment, is inconsistent with the quality of operation of the retail center area or may tend to injure or detract from the moral character or image of the retail center within such community. Without limiting the generality of the foregoing, subject to prevailing local ordinances, Tenant will not sell, distribute, display or offer for sale (i) any paraphernalia commonly used in the ingestion of illicit drugs, or (ii) any pornographic, lewd, suggestive or "adult" newspaper, book, magazine, picture, representation or merchandise of any kind. -12- Section 8.2. Signs and Advertising A. Tenant shall not place on any exterior door, wall or window of the premises any sign or advertising matter without first obtaining Landlord's written approval and consent. Tenant agrees to maintain such sign or advertising matter as approved by Landlord in good condition and repair. All signs shall comply with applicable ordinances or other governmental restrictions and with determination of such requirements and the prompt compliance therewith shall be the responsibility of the Tenant. The Landlord may elect to provide signage in accordance with the architectural design of center. In the event that the Landlord exercises this option the Tenant will be obligated to reimburse the Landlord for the cost and expense for providing the signage. The payment shall be due prior to installation of signage. B. All advertising used by Tenant shall clearly indicate that Tenant is located at or is a part of See Basic Lease Provisions should the shopping center have a sign identifying its name. Tenant shall not paint or decorate any part of the exterior of the premises, or any part of the interior visible from the exterior thereof, without first obtaining Landlord's written approval. Tenant will install and maintain at all times, subject to the other provisions of this lease, displays or merchandise in the show window (if any) of the premises. All articles, and the arrangement, style, color and general appearance thereof, in the interior of the premises including, without limitation, window displays, advertising matter, signs, merchandise and store fixtures shall be in keeping with the character of the retail center area and standards of Landlord. Landlord reserves the right to require Tenant to correct any non-conformity. Section 8.3. Trash Removal Service See Basic Lease Provisions The Tenant shall maintain a trash removal service for their store at the cost and expense of the Tenant. Tenant shall keep any and all garbage, trash, rubbish or other refuse in rat proof containers within the exterior of the premises in the rear in a place designated therefor until removed. Section 8.4. Compliance Upon notice by Landlord to Tenant that Tenant is not complying with and of the aforesaid as required in this Article, Tenant agrees forthwith to cease and discontinue the same within ten (10) days thereafter, to make such changes in the premises and install therein or remove therefrom such apparatus or equipment as may be required by Landlord for the purpose of remedying any such condition or conduct. If any such condition or conduct is not so remedied, then Landlord may, at its option, either (i) enter upon the premises and cure such condition in any manner Landlord shall deem necessary and add the cost and expense incurred by Landlord, together with all damages, including reasonable attorneys' fees sustained by Landlord to the next installment of the additional rental due and Tenant agrees to pay such amount; or (ii) treat such failure on the part of the Tenant to remedy such condition as an event of default hereunder. Tenant hereby further agrees to indemnify and save Landlord free and harmless of and from all fines, claims, demands, actions, proceedings, judgments and damages (including reasonable attorneys' fees) of any kind or nature by anyone whomsoever, arising or growing out of any breach or non-performance by Tenant of the covenants contained in this Article. -13- ARTICLE IX REPAIRS AND ALTERATIONS Section 9.1. Repairs to be Made by Landlord Landlord, at its expense, will make, or cause to be made structural repairs to exterior walls, structural columns and structural floors which collectively enclose the premises (excluding, however, all door frames, storefronts, windows and glass); provided Tenant shall give Landlord notice of the necessity for such repairs and provided that the necessity for such repairs shall not have arisen from nor shall have been caused by the negligence or willful acts of Tenant, its agents, concessionaires, officers, employees, licensees, invitees or contractors. Section 9.2. Repairs to be Made by Tenant All repairs to the premises or any installations, equipment or facilities therein, other than those repairs required shall be made by Landlord pursuant to Section 9.1 or Section 14.1, agents, shall be made by Tenant at its expense.(as set forth in Article XII, Landlord shall cause certain repairs and maintenance to be done, on Tenant's behalf and as Tenant's agent, for which Tenant shall remain responsible and for which Tenant shall pay, as provided in Article XII). Without limiting the generality of the foregoing, Tenant shall keep the interior of the premises, together with all electrical, plumbing, roofing and air conditioning and other mechanical installations therein (other than items to be repaired by Landlord pursuant to Section 9.1), in good order and repair and shall make all replacements from time to time required thereto at its expense; (tenant may avail himself of any warranties that landlord may have on the installations) Tenant will not overload the electrical wiring serving the premises or within the premises, and will install at its expense, subject to the provisions of Section 9.4, any additional electrical wiring which may be required in connection with Tenant's apparatus. Any damage or injury sustained by any person because of mechanical, electrical, plumbing, roofing, air conditioning or any other equipment or installations whose maintenance and repair shall be the responsibility of Tenant, shall be paid for by Tenant, and Tenant shall indemnify and hold Landlord harmless from and against all claims, actions, damages and liability in connection therewith, including but not limited to, attorneys' and other professional fees, and any other cost which Landlord might reasonably incur. In the event that Tenant shall be in occupancy of the within premises for a term in excess of five (5) years (including any renewal options if provided for elsewhere in this lease agreement) Tenant does agree to redecorate the interior of the leased premises at least every five years of the lease term or renewal term. At landlords request should the interior of the store fall below responsible standards of acceptable cosmetic appearance. -14- Section 9.3. Damage to Premises Tenant shall repair promptly, at its expense, any damage to the premises, and, upon demand, shall reimburse Landlord (as additional rental) for the cost of the repair of any damage elsewhere in the retail center, caused by bringing into the premises any property for Tenant's use, or by the installation or removal of such property, regardless of fault or by whom such damage shall be caused (unless caused solely by Landlord, its agents, employees or contractors), and in default of such repairs by Tenant, at the expiration of five (5) days after notice to Tenant, Landlord may make or cause the same to be made and Tenant agrees to pay to Landlord promptly upon Landlord's demand, as additional rental, the cost thereof with interest thereon at the default rate until paid. Section 9.4. Alterations by Tenant Tenant shall not make any alterations, renovations, improvements or other installations in, on or to the premises or any part thereof (including without limitation, any alterations of the storefront or signs, structural alterations, or any cutting or drilling into any part of the premises or any securing of any fixture, apparatus, or equipment of any kind to any part of the premises) unless and until Tenant shall have caused plans and specifications therefor to have been prepared, at Tenant's expense by an architect or other duly qualified person and shall have obtained Landlord's written approval thereof. If such approval is granted, Tenant shall cause the work described in such plans and specifications to be performed, at its expense, promptly, efficiently and competently by duly qualified or licensed persons or entities without interference with or disruption of the operations of tenants or other occupants of the retail center. All such work shall comply with all applicable laws, codes, rules, regulations and ordinances. In addition, Tenant may not disturb or tamper with Landlord's mechanical and electrical equipment that have been installed within the leasehold premises, or building complex, without first obtaining Landlord's written approval. Section 9.5. Changes and Additions to Center Landlord reserves the right at any time and from time to time to: A. Make or permit changes in or revisions to the common area, including without limitation, additions to subtractions from, rearrangements of, alterations of, modifications of or supplements to the building areas, walkways, parking areas, driveways or other common areas; and B. Construct other buildings or improvements in the retail center area and to make alterations thereof or additions thereto and to build additional stories on any such building or buildings and to build adjoining same; and C. Make or permit changes or revisions to the building complex, including additions and alterations thereto; and D. Convey portions of the retail center area to others for the purpose of constructing thereon other buildings or improvements, including additions thereto and alterations thereof; provided, however, that no such changes, rearrangements or other construction shall reduce the parking areas provided by Landlord below the number of parking spaces required by law to be provided for the retail center area. -15- Section 9.6. Roof and Walls Landlord shall have the exclusive right to use all or any part of the roof of the premises for any purpose; to erect additional stories or other structures over all or any part of the premises; to erect in connection with the construction thereof temporary scaffolds and other aids to construction on the exterior of the premises, provided that access to the premises shall not be denied; and to install, maintain, use, repair and replace within the premises, pipes, ducts, conduits, wires and all other mechanical equipment serving other parts of the retail center area, the same to be in a location within the premises as will not unreasonably deny Tenant's use thereof. Landlord may make any use it desires of the side or rear walls of the premises, provided that such use shall not encroach on the interior of the premises. Should landlords above mentioned rights damage the roof the landlord will make repairs. Section 9.7. Acceptance of Premises After Tenant opens for business, Tenant shall have no right to cancel this lease, seek a diminution of rental, sue for damages, or assert any other contractual, legal or equitable remedy based either on a claim that Landlord failed to deliver possession in accordance with the terms of this lease or based on a claim that the size, location, layout, dimensions or construction of the building in which the premises are located or service areas (if any), sidewalks, parking or other common areas (if any) or other facilities to be furnished by Landlord, were not completed or furnished in accordance with the terms of this lease. Notwithstanding the foregoing, if after Tenant's opening for business and during the term hereof, Landlord is in default under any of its lease obligations, Tenant shall have such rights at law or equity to which it may be entitled on account of such default, except that Tenant hereby waives any right to seek a diminution of rental. Upon opening of the premises for business to the public, Tenant shall be deemed to have certified to Landlord and to the holder of any mortgage to which this lease is, or shall thereafter be, subject and subordinate, that the premises has been delivered to it in accordance with the terms of this lease, that possession thereof has been fully and completely accepted by Tenant who is then in possession of the same, and that the term of this lease and the opening for business to the public and the date for the payment of annual basic rental hereunder have all theretofore commenced and that the premises, the parking areas, and all other portions of the retail center have been completed in accordance with the requirements and terms of this lease and that there has not been any violation of any of the lease terms on the part of the Landlord. The foregoing provision shall be self-operative and no further instrument, letter or certificate shall be required by the Landlord or any such mortgagee unless either said Landlord or mortgagee shall deem same appropriate, in which event, in confirmation of the foregoing, the Tenant shall promptly execute, in writing, any instrument letter and/or certificate containing the foregoing and such other like provisions in regard to the condition of the premises, the building in which the premises are located, the retail center (and/or portions thereof), the rental(s), term and date of the opening of the premises for business to the public shall be requested by the Landlord and/or said mortgagee and Tenant hereby constitutes and appoints Landlord the Tenant's attorney-in-fact to execute any such instrument(s), letter(s), and/or certificate(s) for and on behalf of the Tenant. Should Landlord execute any such document, Landlord agrees to provide Tenant with an exact copy of such document within ten (10) days of its execution. -16- ARTICLE X COMMON AREAS Section 10.1. Use of Common Areas Landlord grants to Tenant and its agents, employees and customers, a non-exclusive license to use the common areas in common with others during the term, subject to the exclusive control and management thereof at all times by Landlord and subject, further, to the rights of Landlord set forth in Section 10.2. Section 10.2. Management and Operation of Common Areas Landlord will operate and maintain or will cause to be operated and maintained the common areas including all parking areas in a manner deemed by Landlord to be reasonable and appropriate and in the best interest of the retail center. Landlord shall have the right (i) to establish, modify and enforce reasonable rules and regulations with respect to the common areas; (ii) to enter into, modify and terminate easement and other agreements pertaining to the use and maintenance of the parking areas and common areas; (iii) to close temporarily any or all portions of the common areas; (iv) to discourage non-customer parking; and (v) to do and perform such other acts in and to said areas and improvements as, in the exercise of good business judgment, Landlord shall determine to be advisable. Landlord agrees that it shall use its best efforts to make available to Tenant's employees convenient parking facilities in reasonable proximity to the premises. Section 10.3. Tenant to Share Expenses of Common Areas In each rental year Tenant shall pay Landlord, as additional rental, a proportionate share of that portion of Landlord's operating costs which are allocated to retail use as set forth in Section 10.4 below which shall be computed by multiplying Landlord's operating costs allocated to retail use as set forth in Section 10.4 below for the rental year in question by a fraction, the numerator of which shall be the floor area of the premises and the denominator which shall be the total retail floor area of all leasable area in the retail center area. Such proportionate share shall be paid by Tenant in monthly installments in such amounts as are estimated and billed by Landlord in the beginning of each twelve (12) month period commencing and ending on dates designated by Landlord, each installment being due on the first day of each calendar month. Within one hundred twenty (120) days (or such additional time thereafter as is reasonable under the circumstances), after the end of each such twelve (12) month period, Landlord shall deliver to Tenant a statement of Landlord's operating costs for such twelve (12) month period and the monthly installments paid or payable shall be adjusted between Landlord and Tenant, the parties hereby' agreeing that Tenant shall pay Landlord or Landlord shall credit Tenant's account (or, if such adjustment is at the end of the term, pay Tenant), as the case may be, within thirty (30) days of receipt of such statement, such accounts as may be necessary to effect adjustment to the agreed proportionate share for such twelve (12) month period. Upon reasonable notice, Landlord shall make available for Tenant's inspection at Landlord's office, during normal business hours, Landlord's records relating to Landlord's operating costs for such preceding twelve (12) month period. Failure of Landlord to provide the statement called for hereunder within the time prescribed shall not relieve Tenant from its obligations hereunder. Landlord will bill Tenant for its share of expenses of common areas on a monthly basis as part of its rental bill and Tenant shall be obligated to pay the same on a monthly basis. -17- Section 10.4. "Landlord's Operating Costs" Defined A. The term "landlord's operating costs" including taxes and insurance means the costs and expenses incurred in operating and maintaining or in causing to be operated and maintained the common areas (including all parking areas) pursuant to Section 10.2, including, without limitation, all costs and expenses of operating, maintaining, repairing, lighting, signing, cleaning, painting, striping, policing, and security (if any) of the common areas (including costs of uniforms, equipment and employment taxes), alarm system (if any), insurance (including liability insurance for personal injury, death and property damage, insurance against fire, extended coverage, theft or ether casualties, worker's compensation insurance covering personnel, fidelity bonds for personnel, insurance against liability for defamation and claims of false arrest occurring in and about the common areas and plate glass insurance for glass exclusively serving the common areas); maintenance for sprinkler system serving the common areas; removal of snow, ice, trash, and debris; regulation of traffic; costs and expenses of inspecting and depreciation of machinery and equipment used in the operation and maintenance of the common areas and personal property taxes and other charges incurred in connection with such equipment; costs and expenses of repair or normal maintenance of paving, curbs, walkways, landscaping, drainage, pipes, ducts, conduits and similar items, and lighting facilities; costs and expenses of planting, replanting, and replacing flowers, shrubbery and planters; costs and expenses incurred in the rental of music program services and loudspeaker systems, including furnishing electricity therefor; costs of providing energy to heat, ventilate and air condition interior areas in which any part of the common areas are located; cost of the water services, if any, furnished by Landlord for non-exclusive use of all tenants' parcel pick-up and delivery services; vacant store window display; replacement and installation of new awnings and cleaning and maintenance of store fronts and windows; social security, unemployment and other payroll taxes; legal, accounting and other professional fees and disbursements incurred in connection with the operation and management of the common areas; charges of independent contractors performing work included within this definition of Landlord's operating costs; and administrative costs equal to fifteen percent (15%) of the total costs and expenses of operating and maintaining the common areas. Such costs and expenses shall n0t include depreciation (other than depreciation as above specified). B. Landlord's operating costs shall be allocated on an equitable basis among the respective classes of retail, office, end residential occupants of See Basic Lease Provisions retail center area. For the purposes of this Article X, Landlord's operating costs shall include all amounts, costs of operation and expenditures (as hereinabove defined) which are identified as applicable and relating solely to the total leasable retail floor area in the retail center and that portion of the common areas reasonably allocable thereto, together with those items, amounts, costs, and expenditures which (if they cannot be so specifically identified) are allocated on an equitably proportionate basis to said retail floor area and common area. -18- ARTICLE XI UTILITIES Section 11.1. Heating The Landlord shall install the heating and air conditioning facilities and same shall be in working order, except as provided below. The Tenant shall be obligated to pay for the cost of: (i) Maintenance of the heating facilities; (ii) floating and air conditioning the premises; and (iii) semi-annual cleaning of the heating and air conditioning systems. Section 11.2. Other Utilities The Landlord will provide to the premises the facilities necessary to obtain water, electricity, telephone and sanitary sewer service or septic and all costs thereafter rendered by the various authorities shall be the sole obligation of the Tenant. Repairs to the utilities shall be Tenant's responsibility. ARTICLE XII INDEMNITY AND INSURANCE Section 12.1. Indemnity by Tenant Tenant agrees to indemnify and save Landlord and Landlord's agents harmless of and from all losses, costs, liabilities, claims, damages and expenses, including reasonable attorneys' fees, penalties and fines, incurred in connection with or arising from (i) any default by Tenant in the observance or performance of any of the terms, covenants, or conditions of this lease on Tenant's part to be observed or performed, or (ii) the use, occupancy, control or management, or manner of use, occupancy, control or management of the premises by Tenant or any person claiming through or under Tenant, or (iii) any acts, omissions or negligence of Tenant or contractors, agents, servants, employees, of Tenant or any such person, in or about the premises or the building complex or the retail center either prior to, during, or after the expiration of, the term including any acts, omissions or negligence in the making or performing of any improvements. Section 12.2. Indemnity Payments by Tenant Tenant shall pay to Landlord, as additional rental, within ten (10) days next following receipt by Tenant of bills or statements therefor, sums equal to all losses, costs, liabilities, claims, damages and expenses referred to in Section 12.1 Tenant's obligations under this Article shall survive the termination of the term. -19- Section 12.3. Landlord Not Responsible for Acts of Others Landlord shall not by responsible or liable to Tenant, or to those claiming by, through or under Tenant, for any loss or damage which may he occasioned by or through the acts or omissions of persons occupying apace adjoining the premises or any part of the premises adjacent to or connecting with the premises or any other part of the retail center, or otherwise, or for any loss or damage incurred by Tenant, or those claiming by, through or under Tenant or its or their property, from the breaking, bursting, stoppage or leaking of electrical cable and wires, water, gas, sewer or steam pipes. To the maximum extent permitted by law, Tenant agrees to use and occupy the premises, and to use such other portions of the common areas and retail center as Tenant is herein given the right to use, at Tenant's own risk. Section 12.4. Tenant's Insurance At all times after the execution of this lease, Tenant shall take out and keep in force, at its expense: A. Public liability insurance, including insurance against assumed or contractual liability with respect to the premises, to afford protection to the limit, for each occurrence, of not less than one million dollars ($1,000,000) with respect to personal injury or death, and five hundred thousand dollars ($500,000) with respect to property damages; and B. All-risk casualty insurance, written at replacement cost value and with replacement cost endorsement, covering all of Tenant's personal property in the premises (including, without limitation, inventory, trade fixtures, floor coverings, furniture and other property removable by Tenant under the provisions of this lease) and all leasehold improvements installed in the premises by Tenant; and C. If and to the extent required by law, worker's compensation or similar insurance in form and amounts required by law. Section 12.5. Tenant's Contractor's Insurance Tenant shall require any contractor of Tenant performing work on the premises to take out and keep in force, at no expense to Landlord: A. Comprehensive general liability insurance, including contractor's liability coverage, contractual liability coverage, completed operations coverage, broad form property damage endorsement and contractor's protective liability coverage, to afford protection to the limit, of each occurrence, with respect to property damage; and B. Worker's compensation or similar insurance if form and amounts required by law. -20- Section 12.6. Policy Requirements The company or companies writing any insurance which Tenant is required to take out and maintain or cause to be taken out or maintained pursuant to Sections 13.4 and 13.5 as well as the form of such insurance shall at all times be subject to Landlord's approval and any such company or companies shall be licensed to do business in New Jersey. Each policy evidencing such insurance shall name Landlord or its designee as additional insured and shall also contain a provision by which the insurer agrees that such policy shall not be cancelled except after thirty (30) days written notice to Landlord or its designee. Each such policy, or a certificate thereof, shall be deposited with Landlord by Tenant promptly upon commencement of Tenant's obligation to procure the same. If Tenant shall fail to perform any of its obligations under Sections 12.4, 12.5 or 12.6, Landlord may perform the same and the cost of same shall be deemed additional rental and shall be payable by Tenant upon Landlord's demand. Section 12.7. Landlord's Insurance A. Tenant shall pay to Landlord during each rental year or partial rental year its prorated share of the total fire, extended coverage and public liability insurance premiums charged to Landlord for insuring the building complex, and any improvements thereon, for any such year. For any partial lease year of the term hereof, such amount shall be further prorated on a time basis. Tenant's prorated share shall mean a fractional portion of said total insurance premiums, the numerator of which shall be the floor area of the premises and the denominator of which shall be the floor area of all leasable area of the building complex. Payment hereunder shall be made within thirty (30) days after receipt of a written statement from Landlord setting forth the amount of such share of insurance premiums together with reasonable proof of payment thereof by Landlord. Said are payable as and constitute additional rental. The Tenants' annual insurance contribution will be collected on a monthly basis but will be divided by Ten (10) in order to allow for the insurance company's advance collection of premiums. Tenants' excess contributions to annual insurance, if any, will be credited at the end of the term. If Tenants' contribution of insurance have not fully paid its proportionate share, the amount so due and owing shall be paid by the Tenant to the Landlord at the end of the term. B. Tenant shall not do or suffer to be done, or keep or suffer to be kept, anything in, upon or about the premises which shall contravene Landlord's policies of hazard or liability insurance or which will prevent Landlord from procuring such policies of companies acceptable to Landlord. If anything done, omitted to be done or suffered by Tenant to be kept in, upon or about the premises shall cause the rate of fire or other insurance on the premises or the building complex or on other property of Landlord or of others within the retail center to be increased beyond the minimum rate from time to time applicable to the premises or the building complex, or to any such property for the use or uses made thereof, Tenant shall pay, as additional rental, the amount of any such increase upon Landlord's demand, notwithstanding that what is done or kept by Tenant is otherwise permitted under this lease. Section 12.8. Waiver of Right of Recovery Neither party shall be liable to the other party or to any insurance company (by way of subrogation or otherwise) insuring the other party for loss or damage to any building, structure or other tangible property, even though such loss or damage might have been occasioned by the negligence of such party, its agents or employees; provided, however, that if, by reason of the foregoing waiver, either party shall be unable to obtain any such insurance without the payment of an additional premium therefor, then, unless the party claiming the benefit of such waiver shall agree to pay the party seeking to obtain insurance for the cost of such additional premium, within thirty (30) days after notice by such party setting forth such requirements and the amount of the additional premium, such waiver shall be of no force and effect between the parties. -21- ARTICLE XIII DAMAGE AND DESTRUCTION Section 13.1. Landlord's Obligation to Repair and Reconstruct If the premises shall be damaged by fire,, the elements, accident or other casualty (any of such causes being referred to herein as a "casualty"), provided not caused by or attributable to any act or omission of Tenant, its servants, employees, agents, invitees, and the like, but the premises shall not be thereby rendered wholly or partially untenantable, Landlord shall promptly cause such damage to be repaired and there shall be no abatement of rental or additional rental. If, as the result of casualty, the premises shall be rendered wholly or partially untenantable, then, subject to the provisions of Section 13.2, Landlord shall cause such damage to be repaired and all rental (other than additional rental due Landlord by reason of Tenant's failure to perform any of its obligations hereunder) shall be abated proportionately to the portion of the premises rendered untenantable, during the period of such untenantability. All such repairs shall be made at the expense of the Landlord. Landlord shall not be liable for interruption to Tenant's business or for damage to or replacement or repair of Tenant's personal property (including, without limitation, inventory, trade fixtures, floor coverings, furniture and other property removable by Tenant under the provisions of this lease) or to any leasehold improvements installed in the premises by Tenant or otherwise, all of which damage, replacement or repair shall be undertaken and completed by Tenant promptly. Section 13.2. Landlord's Option to Terminate Lease If the premises are (i) rendered wholly untenantable, or (ii) damaged as a result of any cause which is not covered by Landlord's insurance, or (iii) damaged or destroyed on whole or in part during the last three years of the term, or if the building complex or the entire retail center is damaged to the extent of thirty percent (30%) or more of the respective floor areas thereof, then, in any of such events, Landlord may elect to terminate this lease by giving to Tenant notice of such election within ninety (90) days after the occurrence of such event. If such notice is given, the rights and obligations of the parties shall cease as of the date of such notice, and rental (other than any additional rental due Landlord by reason of Tenant's failure to perform any of its obligations hereunder) shall be adjusted as of the date of such termination. Section 13.3. Demolition of Building Complex If the building complex shall be so substantially damaged that it is reasonably necessary, in Landlord's judgment, to demolish such building complex for the purpose of reconstruction, Landlord may demolish the same in which event the rental shall be abated to the same extent as if the premises were rendered untenantable by a casualty. -22- ARTICLE XIV CONDEMNATION Section 14.1. Effect of Taking If the whole or any part of the premises shall be taken under the power of eminent domain, this lease shall terminate as to the part so taken on the date Tenant is required to yield possession thereof to the condemning authority. Landlord shall make such repairs and alterations as may be necessary in order to restore the part not taken to useful condition and all rental (other than any additional rental due Landlord by reason of Tenant's failure to perform any of its obligations hereunder) shall be reduced proportionately to the portion of the premises so taken. If the loss of the portion of the premises so taken substantially impairs the usefulness of the remainder of the premises for the permitted use, either party may terminate this lease as of the date when Tenant is required to yield possession by giving notice to that effect within thirty (30) days after such date. If twenty percent (20%) or more of the floor area in the retail center is taken as aforesaid, or if parking spaces in the retail center are reduced below the number required by law, and Landlord does not deem it reasonably feasible to replace such parking spaces with other parking spaces on the portion of the retail center area not taken, then Landlord may elect to terminate this lease as of the date on which possession thereof is required to be yielded to the condemning authority, by giving notice of such election within ninety (90) days after such date. If any notice of termination is given pursuant to this Section, this lease and the rights and obligations of the parties hereunder shall cease as of the date such notice, and rental (other than any additional rental due Landlord by reason of Tenant's failure to perform any of its obligations hereunder) shall be adjusted as of such date. Section 14.2. Condemnation Awards All compensation awarded, for any taking of the premises or the retail center area or any interest in either (including, without limitation, the value of the unexpired portion of the term) shall belong to and be the property of Landlord, Tenant hereby assigning to Landlord all rights with respect thereto; provided, however, nothing contained herein shall prevent Tenant from applying for reimbursement from the condemning authority (if permitted by law) for moving expenses, or the expense of removal of Tenant's trade fixtures, but if, and only if, such action shall not reduce the amount of the award or other compensation otherwise recoverable from the condemning authority by Landlord or the owner of the fee simple estate in the retail center area. -23- ARTICLE XV ASSIGNMENT AND SUBLETTING Section 15.1. Landlord's Consent Required A. Tenant shall not assign this lease, in whole or in part, nor sublet all or any part of the premises, nor license concessions or lease departments therein, without first obtaining the written consent of Landlord. This prohibition includes any subletting or assignment which would otherwise occur by operation of law, merger, consolidation, reorganization, transfer or other change of Tenant's corporate or proprietary structure, or an assignment, subletting to or by a receiver or trustee in any federal or state bankruptcy, insolvency, or other proceedings. Consent by Landlord to any assignment or subletting shall not constitute a waiver of any obligation of the Tenant to Landlord (it being understood that Tenant shall remain liable not withstanding any assignment or subletting) nor shall consent by the Landlord constitute a waiver of the requirement for such consent to any subsequent assignment or subletting, provided that such consent shall not be unreasonably withheld. B. If this lease is assigned to any person or entity pursuant to the provisions of the bankruptcy code, 11 U.S.C. 101 et seq. (the "bankruptcy code"), any and all moneys or other considerations payable or otherwise to be delivered in connection with such assignment shall be paid or delivered to Landlord and shall be and remain the exclusive property of Landlord or of the estate of Landlord within the meaning of the Bankruptcy Code. Any and all moneys or other considerations constituting Landlord's property under the preceding sentence not paid or delivered to Landlord shall be held in trust for the benefit of Landlord and be promptly paid or delivered to Landlord. Section 15.2. Acceptance of Rent from Transferee The acceptance by Landlord of the payment of rental following any assignment or other transfer prohibited by this Article shall not be deemed to be a consent by Landlord to any such assignment or the transfer nor shall the same be deemed to be a waiver of any right or remedy of Landlord hereunder. Section 15.3. Subletting or Assignment at Higher Rental In the event that Landlord consents to a subletting of the premises, or an assignment of this lease by Tenant, Landlord shall be entitled to recapture and receive payment from Tenant of any profit realized by Tenant from assignment of the lease or subletting of the premises at a rent greater than the rental reserved hereunder. Tenant shall pay any such profit to Landlord promptly upon its receipt by Tenant, whether it is received in monthly or other periodic payments or in a lump sum. For purposes of this Section "profit" shall refer to the difference between: (i) all payments made by a subtenant or assignee to Tenant as rental or otherwise under or in connection with said assignment or sublease; and (ii) the costs and expenses paid by Tenant in connection with said assignment or sublease including annual basic rental and additional rental payable hereunder with respect to the assigned or sublet space and the reasonable brokerage, legal and alteration expenses, if any, incurred in connection with said assignment or sublease. Promptly after the commencement of any such assignment or sublease Tenant shall deliver to Landlord a statement of the expenses incurred in connection with the assignment or subletting and payments of the profit in connection therewith shall be made monthly as additional rental hereunder. -24- ARTICLE XVI DEFAULT Section 16.1. "Event of Default" Defined Any one or more of the following events shall constitute an "event of default": A. The sale of Tenant's interest in the premises under attachment, execution or similar legal process; or B. The filing of any petition in bankruptcy or insolvency by Tenant, or any guarantor of Tenant's obligations hereunder, or the reorganization of Tenant or any such guarantor with its creditors, whether pursuant to the federal Bankruptcy Act or any similar federal or state proceeding, unless such petition is filed by a party other than Tenant or any such guarantor and is withdrawn or dismissed within thirty (30) days after the date of its filing; or C. The admission, in writing, by Tenant or any such guarantor of its inability to pay its debts when due; or D. The appointment of a receiver or trustee for the business or property of Tenant, or any such guarantor, unless such appointment shall be vacated within ten (10) days of its entry; or E. The making by Tenant, or any such guarantor, of an assignment for the benefit of its creditors; or F. The failure of Tenant to pay any rental, additional rental, or other sum of money when due hereunder. All such sums of money which are not paid within ten (10) days of the due date thereof, shall bear penalty at the rate of ten percent (10%) per month. G. The failure of Tenant either to continuously operate and use the premises as required (unless beyond the tenants control) in Section 4.1 or to maintain the minimum operating hours required in Section 4.4; or H. Default by Tenant in the performance or observance of any covenant or agreement of this lease (other than a default involving the payment of money), which default is not cured within ten (10) days after the giving of notice thereof by Landlord, unless such default is of such nature that it cannot be cured within such ten (10) period, in which case no event of default shall occur so long as Tenant shall commence the curing of the default within such ten (10) day period and shall thereafter diligently prosecute the curing of same. I. Tenant shall not at any time during the term hereof permit its net worth, determined in accordance with generally accepted accounting principles consistently applied, to be less than one year's annual basic rental. If Tenant shall default in the payment of any installment of rental hereunder, Tenant shall deliver to Landlord within five (5) business days after demand a balance sheet of Tenant as of a date not more than thirty (30) days prior to the first day of the month during which said installment of rental was due hereunder, certified by Tenant's President or Chief Financial Officer to present fairly the financial position of Tenant as of the date of such balance sheet. If Tenant fails to deliver its balance sheet in accordance with the provisions of the preceding sentence, Tenant shall be conclusively deemed to be in default under the first sentence of this subparagraph. The obligations of Tenant under this subparagraph are a material obligation of Tenant's tenancy under this lease. -25- Section 16.2. Remedies A. Upon the occurrence of an event of default, Landlord, without notice to Tenant in any instance (except where expressly provided for below) may do any one or more of the following: (i) Landlord may sell at public or private sale all or any part of the goods, chattels, fixtures and other personal property belonging to Tenant which are or may be put into the premises during the term, whether exempt or not from sale under execution or attachment (it being agreed that said property shall at all times be bound with a lien in favor of Landlord and shall be chargeable for the payment of all rental and for the fulfillment of the other covenants and agreements herein contained) and apply the proceeds of such sale, first, to the payment of all costs and expenses of conducting the sale or caring for or storing paid property, including the payment of all legal and other professional fees and disbursements; second, to the payment of any indebtedness, including (without limitation) indebtedness for rental, which may be or may become due from Tenant to Landlord; and third, to the payment to Tenant, on demand, in writing, of any surplus remaining after all indebtedness of Tenant to Landlord has been fully paid. (ii) Landlord may perform, on behalf and at the expense of Tenant, any obligation of Tenant under this lease which Tenant has failed to perform and of which Landlord shall have given Tenant notice, the cost of which performance by Landlord, together with interest thereon at the default rate from the date of such expenditure, shall be deemed additional rental and shall be payable by Tenant to Landlord upon demand. (iii) Landlord may elect to terminate this lease and the tenancy created hereby by giving ten (10) days notice of such election to Tenant, and/or may re-enter the premises, by summary proceedings or otherwise, and may remove Tenant and all other persons and property from the premises, and may store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant without resort to legal process and without Landlord being deemed guilty of trespass or conversion or becoming liable for any loss or damage occasioned thereby. (iv) If Tenant shall default (i) in the payment of any rental, or additional rental, and any such default shall continue or be repeated for two (2) consecutive months, or for a total of four (4) months in any period of twelve (12) months, or (ii) in the performance of any other covenant of this lease more than six (6) times in the aggregate, in any period of twelve (12) months then, notwithstanding that such defaults have been cured (within any period after notice if applicable, as above provided), any further similar default shall be deemed deliberate and an immediate event of default and Landlord may thereafter serve a three (3) day notice of termination without offering Tenant an opportunity to cure such default. -26- (v) Landlord may exercise any other legal or equitable right or remedy which it may have. B. Anything in this lease agreement to the contrary notwithstanding, at Landlord's option, Tenant shall pay as a "late charge" and not as a penalty ten percent (10%) per month of any installment of fixed annual rent and additional rent paid more than seven (7) days after the due date thereof, to cover the extra expense involved in handling delinquent payments. Each month the payment is not submitted in a timely manner, an additional Late Charge shall be assessed. C. Should Tenant pay rent later than seven (7) days after the due date more than twice within a six (6) month period or more than four times within a Lease Year, then Tenant will be considered an "habitual late payer". If Tenant defaults in the performance of any of its obligations hereunder, or if Tenant shall be an habitual late payer, or if Tenant fails to perform or observe any of the provisions required by it to be performed or observed by Tenant under any other agreement relating to the Demised Premises, then Landlord may at its option terminate this Lease upon giving ten (10) days notice of termination to Tenant, in which event neither Tenant nor any person claiming through or under the Tenant shall be entitled to possession or to remain in possession of the Demised Premises but shall forthwith quit and surrender the Demised Premises. Section 16.3. Bankruptcy A. In the event Tenant becomes the subject debtor in a case pending under the Bankruptcy Code, or in any bankruptcy court or Division, Landlord's right to terminate this lease shall be subject to the rights of the trustee in bankruptcy to assume or assign this lease. To the extent permitted or allowed by law, the trustee shall not have the right to assume or assign this lease until the trustee (i) promptly cures all defaults under the lease, (ii) promptly compensates Landlord for monetary damages incurred as a result of such default, and (iii) provides "adequate assurance of future performance" which shall mean (in addition to any other statutory requirements) that all of the following have been satisfied; (i) in addition to rental payable under the lease, the trustee shall establish with Landlord a security deposit equal to three (3) months' annual basic rental; (ii) maintain said security deposit in said amount whenever it is drawn upon by Landlord; (iii) trustee must agree that Tenant's business shall be conducted in a first class manner; (iv) the use of the premises shall not change. If all of the foregoing are not satisfied, Tenant shall be deemed not to have provided Landlord with adequate assurance of future performance of this lease. B. In addition, if Tenant becomes the subject debtor under the Bankruptcy Code or in any bankruptcy court or Division, any person or entity to which this lease is assigned pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. 101 et seq., shall be deemed without further act or deed to have assumed all of the obligations arising under this lease on and after the date of such assignment. Any such assignee shall, upon demand, execute and deliver to Landlord an instrument confirming such assumption. -27- Section 16.4. Damages A. If this lease is terminated by Landlord pursuant to Section 16.2C, Tenant nevertheless shall remain liable for any rental and damages which may be due or sustained prior to such termination, and all reasonable costs, fees and expenses incurred by Landlord in pursuit of its remedies hereunder, or in renting the premises to others from time to time (all such rental, damages, costs, fees and expenses being referred to herein as "termination damages") and additional damages (the "liquidated damages") equal to the rental which, but for termination of this lease, would have become due during the remainder of the term, less the amount of rental, if any, which Landlord may receive during such period from others to whom the premises may be rented (other than any additional rental received by Landlord as a result of any failure of such other person to perform any of its obligations to Landlord). B. Termination damages shall be due and payable immediately upon demand by Landlord following any termination of this lease pursuant to Section 16.2C. Liquidated damages shall be computed and payable in monthly installments, in advance, on the first day of each calendar month following termination of the lease and continuing until the date on which the term would have expired but for such termination. Any suit or action brought to collect any liquidated damages for any month shall not, in any manner, prejudice the right of Landlord to collect any liquidated damages for any subsequent month by a similar proceeding. C. If this lease is terminated pursuant to Section 16.2 C, Landlord may relet the premises, or any part thereof, alone or together with other premises, for such term or terms (which may be greater or less than the period which otherwise would have constituted the balance of the term) and on such terms and conditions (which may include rent concessions, or free rent and alterations of the premises) as Landlord, in its uncontrolled discretion, may determine but Landlord shall not be liable for, nor shall Tenant's obligations hereunder, be diminished by reason of, any failure by Landlord to relet, or to attempt to relet, the premises or any failure of Landlord to collect any rent due upon such reletting. D. Whether or not Landlord shall have collected any monthly deficiencies as aforesaid, Landlord shall, at its sole option, be entitled to recover from Tenant, and Tenant shall pay Landlord, on demand, as and for total liquidated and agreed final damages, a sum equal to the amount by which the rental payable hereunder for the period which otherwise would have constituted the unexpired portion of the term (conclusively presuming the annual basic rental to be the amount arrived at pursuant to the calculation set forth in section 16.4 A above) exceeds the then fair and reasonable rental value of the premises for the same period, both discounted to present worth at the rate of 10% per annum. If, before presentation of proof of such total liquidated damages to any court, commission or tribunal, the premises, or any part thereof, shall have been relet by Landlord for the period which otherwise would have constituted the unexpired portion of the term, or any part thereof, the amount of rental upon such reletting shall be deemed, prima facie, to be the fair and reasonable rental value for the part or the whole of the premises so relet during the term of the reletting. -28- ARTICLE XVII SUBORDINATION, ATTORNMENT AND FINANCING Section 17.1. Subordination A. Unless a mortgagee (as hereinafter defined) shall otherwise elect, as provided in Section 17.2, Tenant's rights under this lease are and shall remain subject and subordinate to the operation and effect of: (i) Any lease of land only, or of land and buildings, in a sale-leaseback transaction involving the premises; or (ii) Any mortgage, deed of trust or other security constituting a lien upon the premises, whether the same shall be in existence on the date hereof or created hereafter, any such lease, mortgage, deed of trust or other security instrument being referred to herein as a "mortgage" and the party or parties having the benefit of the same, whether as lessor, mortgagee, trustee or note holder, being referred to herein as a "mortgagee". Tenant's knowledge of and agreement to subordination provided for in this Section is self-operative and no further instrument of subordination shall be required; however, Tenant shall execute such further assurances thereof as shall be required or as may be requested, from time to time, by Landlord or a mortgagee. B. In the event that a bona fide institutional lender shall request reasonable modifications in this lease, as a condition of providing Landlord with financing for the construction of any alterations or improvements of the premises, building complex or retail center area, then Tenant shall not unreasonably withhold or delay its written consent to such modifications provided that same do not increase the obligations of Tenant hereunder or materially adversely effect either the leasehold interest hereby created or Tenant's use and enjoyment of the premises. Section 17.2. Mortgagee's Unilateral Subordination If a mortgagee shall so elect by notice to Tenant or by the recording of a unilateral declaration of subordination, this lease and Tenant's rights hereunder shall be superior and prior in right to the mortgage of which such mortgagee has the benefits with the same force and effect as if this lease had been executed, delivered and recorded prior to the execution, delivery and recording of such mortgage, subject, nevertheless, to such conditions as may be set forth in any such notice of declaration. Section 17.3. Attornment If any person shall succeed to all or part of Landlord's interest in the premises, whether by purchase, foreclosure, deed in lieu of foreclosure, power of sale, termination of lease, or otherwise, and if so requested or required by such successor in interest and shall execute such agreement in confirmation of such attornment as such successor in interest shall reasonably request. -29- ARTICLE XVIII NOTICES Section 18.1. Sending of Notices Any notice, request, demand, approval or consent given, or required to be given, under this lease shall be in writing and shall be deemed to have been given on the third (3rd) day following the day on which the same shall have been mailed by United States registered or certified mail, return receipt requested, with all postal charges prepaid, and shall be addressed, if intended for Landlord, to See Basic Lease Provisions, c/o Hofing Management, P.O. Box 77061, West Trenton, New Jersey 08628 or, if intended for the Tenant, to Tenant, at the Tenant Notice Address. Either party may, at any time, change its address for the above purposes by sending a notice to the other party stating the change of and setting forth the new address. Section 18.2. Notice to Mortgagees If any mortgagee shall notify Tenant that it is the holder of a mortgage affecting the premises, no notice, request or demand thereafter sent by Tenant to Landlord shall be effective unless and until a copy of the same shall also be sent to such mortgagee in the manner prescribed in Section 19.1 and to such address as such mortgagee shall designate. ARTICLE XIX MISCELLANEOUS Section 19.1. Estoppel Certificates At any time, and from time to time, within ten (10) days after Landlord shall request the same, Tenant shall execute, acknowledge and deliver to Landlord and to such mortgagee or other party as may be designated by Landlord, a certificate in the form attached hereto as Exhibit "A", with respect to the matters set forth in Schedule A, and such other matters relating to this lease or the status of performance of obligations of the parties hereunder as may be reasonably requested by Landlord. In the event that Tenant fails to provide such certificate submitted to Tenant by Landlord and Landlord is hereby authorized to so certify. Section 19.2. Inspections by Landlord Tenant shall permit Landlord, its agents, employees and contractors to enter all parts of the premises during Tenant's business hours to inspect the same and to enforce or carry out any provisions of this lease. Section 19.3. Memorandum of Lease The parties hereby agree that, upon the request of either party, each shall execute, acknowledge and deliver a short form of memorandum of this lease in recordable form. Recording, filing and like charges and any charge for recording or for transfer or other tax shall be paid by the party requesting execution of the same. -30- Section 19.4. Waiver of Jury Trial and Counterclaim The parties hereby waive trial by jury in any action, proceeding or counterclaim brought by either party against the other on any matter whatsoever arising out of or in any way connected with this lease, the relationship of Landlord and Tenant created hereby, the use or occupancy of the premises or any claim for injury or damage. Tenant shall not interpose any counterclaim of whatever nature or description in any such proceedings. In addition, Tenant expressly waives any and all rights of redemption granted by or under any present or future laws in the event Tenant shall be evicted or dispossessed from the premises for any cause, or Landlord re-enters the premises, following the occurrence of an event of default hereunder, or this lease is terminated before the expiration date originally fixed herein. Section 19.5. Remedies Cumulative No reference to any specific right or remedy shall preclude Landlord from exercising any other right or from having any other remedy or from maintaining any action to which it may otherwise be entitled at law or in equity. No failure by Landlord to insist upon strict performance of any agreement, term, covenant or condition hereof, or to exercise any right or remedy consequent upon a breach thereof, and no acceptance of full or partial rent during the continuance of any such breach, shall constitute a present or future waiver of any such breach, agreement, term, covenant or condition. No waiver by Landlord of any breach by Tenant under this lease, or of any breach by any other tenant under any other lease of any portion of' the retail center, shall affect or alter this lease in any way whatsoever, nor shall constitute a waiver for the future of any such breach or any provision hereof. Section 19.6. Successors and Assigns This lease and the covenants and conditions herein contained shall inure to the benefit of and be binding upon Landlord, its successors and assigns, and shall be binding upon Tenant, its successors and assigns and shall inure to the benefit of Tenant and only such assigns of Tenant to whom the assignment of this lease by Tenant has been consented to by Landlord. Upon any sale or other transfer by Landlord of its interest in the premises, Landlord shall be relieved of all obligations under this lease occurring thereafter. Section 19.7. Compliance with Laws and Regulations Tenant, at its sole cost and expense, shall comply with and shall cause the premises to comply with (i) all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations and ordinances affecting the premises, or any part thereof, or the use thereof, including those which require the making of any structural, unforeseen or extraordinary changes, whether or not any such statutes, laws, rules, orders, regulations or ordinances which may hereafter be enacted involve a change of policy on the part of the governmental body enacting the same; and (ii) all rules, orders and regulations of the National Board of Fire Underwriters of Landlord's fire insurance rating organization or other bodies exercising similar functions in connection with the prevention of fire or the correction of hazardous conditions which apply to the premises. Notwithstanding the foregoing, any structural changes shall be the responsibility of the Landlord. -31- Section 19.8. Captions and Headings The table of contents and the Article and Section captions and headings are for convenience of reference only and in no way shall be used to construe or modify the provisions set forth in this lease. Section 19.9. Joint and Several Liability If two or more individuals, corporations, partnerships or other business associations (or any combination of the two or more thereof) shall sign this lease as Tenant, the liability of each such individual, corporation, partnership or other business association to pay rent and perform all other obligations hereunder, shall be deemed to be joint and several, and all notices, payments and agreements given or made by, with or to any one of such individuals, corporations, partnerships or other business associations shall be deemed to have been given or made by, with or to all of them. In like manner, if Tenant shall be a partnership or other business association, the members of which are, by virtue of statute or federal law, subject to personal liability, the liability of each such member shall be joint and several. Section 19.10. No Discrimination It is intended that the retail center shall be developed so that all prospective tenants thereof, and all customers, employees, licensees and invitees of all tenants shall have the opportunity to obtain all the goods, services, accommodations, advantages, facilities and privileges of the retail center without discrimination because of race, creed, color, sex, age national origin or ancestry. To that end, Tenant shall not discriminate in the conduct and operation of its business in the premises against any person or group of persons because of the race, creed, color, sex, age, national origin, or ancestry of such person or group of persons. Section 19.11. No Joint Venture Any intention to create a joint venture or partnership relation between the parties herein is hereby expressly disclaimed. The provisions of this lease in regard to the payment by Tenant and the acceptance by Landlord of a percentage of gross sales of Tenant and others is a reservation of rent by Landlord for the use of the premises by Tenant. Section 19.12. No Option The submission of this lease for examination does not constitute a reservation of or option to lease the premises, and this lease shall become effective only upon execution and delivery thereof by both parties. -32- Section 19.13. No Modification This writing is intended by the parties as a final expression of their agreement and as a complete and exclusive statement of the terms thereof; all negotiations, considerations and representations between the parties have been incorporated herein. No course of prior dealings between the parties or their officers, employees, agents or affiliates shall be relevant or admissible to supplement, explain, or vary any of the terms of this lease. Acceptance of, or acquiescence in, a course or performance rendered under this or any prior agreement between the parties or their affiliates shall not be relevant or admissible to determine the meaning of any of the terms of this lease. No representations, understandings, or agreements have been made or relied upon in the making of this lease other than those specifically set forth herein. This lease can be modified only by a writing signed by the party against whom the modification is enforceable. Section 19.14. Severability If any term or provision, or any portion thereof, of this lease, or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this lease shall be valid and be enforced to the fullest extent permitted by law. Section 19.15. Third Party Beneficiary Nothing contained in this lease shall be construed so as to confer upon any other party the rights of a third party beneficiary except rights contained herein for the benefit of a mortgagee. Section 19.16. Corporate Tenants In the event Tenant is a corporation, the persons executing this lease on behalf of Tenant hereby covenant and warrant that: Tenant is a duly constituted corporation qualified to do business in New Jersey, all Tenant's franchise and corporate taxes have been paid to date; all future forms, reports, fees and other documents necessary for Tenant to comply with applicable laws shall be filed by Tenant when due; and such persons are duly authorized by the board of directors of such corporation to execute and deliver this lease on behalf of the corporation. (Tenant to furnish Landlord with a resolution authorizing execution of the within lease.) Section 19.17. Applicable Law This lease and the rights and obligations of the parties hereunder shall be construed in accordance with the internal laws of the state of New Jersey applicable to leases made and to be performed in the state of New Jersey without regard to principles of conflicts of law. Section 19.18. Construction of Lease A. This lease shall be construed without regard to any presumption or other rule requiring construction against the party causing this lease to be drafted. B. Words and phrases used in the singular shall be deemed to include the plural and vice versa, and nouns and pronouns used in any particular gender shall be deemed to include any other gender. -33- C. The rule of "ejusdem generis" shall not be applicable to limit a general statement following or referable to an enumeration of specific matters to matters similar to the matters specifically mentioned. Section 19.19. Performance of Landlord's Obligations by Mortgagee Tenant shall accept performance of any of Landlord's obligations hereunder by any mortgagee. Section 19.20. Limitation of Liability In connection with the provisions of this lease and the obligations and covenants of Landlord herein set forth, if Landlord or any successor in interest be an individual, joint venture, tenancy-in-common, partnership, unincorporated association or other unincorporated aggregate of individuals (all of which are referred to below, individually and collectively, as an "unincorporated landlord"), then anything elsewhere to the contrary notwithstanding, unincorporated landlord in the premises, building complex and retail center area for the satisfaction of Tenant's remedies, for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord in the event of any default or breach by Landlord with respect to any of the terms, covenants and conditions of this lease to be observed and/or performed by Landlord, and no other property or assets of such unincorporated landlord, or any general or limited partner thereof, shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant's remedies. (Optional Paragraphs To Be Used) Section 19.21. Lessee's Franchisor Required Statements. Anything contained in this lease to the contrary not withstanding, upon Landlord's prior written consent, which may be granted or withheld for any or no reason, this lease and the right, title and interest of the Tenant thereunder, may be assigned by the Tenant to See Basic Lease Provisions (Tenant's Franchisor), or its designee, provided that said See Basic Lease Provisions shall execute such documents evidencing its agreement to thereafter keep and perform, or cause to be kept and performed, all of the obligations of the Tenant arising under his lease from and after the time of such assignment and Tenant shall remain fully liable for all obligations under this lease. Section 19.22. Additional Notice. Landlord shall give written notice to See Basic Lease Provisions (Name of Tenant's Franchisor) concurrently with the giving of such notice to Tenant, of any default, by Tenant under the lease and See Basic Lease Provisions shall have, after the expiration of the period during which the Tenant may cure such default, an additional five (5) days to cure, at its sole option, any such default. Mailing address: See Basic Lease Provisions. Section 19.23. Additional Terms The expressed intent of the parties as set forth in Sections 6.1 Taxes, 10.3 Tenant to Share Expenses of Common Area and 12.7 Landlord's Insurance is that Tenant will be responsible only for its prorated share of the entire premises based upon their percentage of occupancy. -34- (Optional Paragraphs to be Used) Section 19.24. Landlord's Approval Whenever this lease requires Landlord's consent or approval, Landlord will not withhold its approval or consent unreasonably or in bad faith, and Landlord will not unreasonably delay its response to Tenant's request for its approval or consent. Landlord will be deemed to have given its consent or approval to any request made by Tenant if Landlord does not respond to Tenant in writing within ten (10) days after Landlord's receipt of the request. If Landlord withholds its consent or approval; its response will explain its reason for doing so. Section 19.25. Exclusive Agreement Landlord agrees that Tenant shall be the only tenant in the shopping center allowed to See Exhibit "G" of any kind and Landlord shall not lease to any other tenant nor allow a tenant to sublease to anyone performing such services. This shall also apply to any future leases of space which is within 1000 feet of the boundary of this shopping center if said space has ownership by any stockholder, officer, partner, or proprietary interest of Landlord. Section 19.26. Submission of Lease to Tenant THE SUBMISSION BY LANDLORD TO TENANT OF THIS LEASE SHALL HAVE NO BINDING FORCE OR EFFECT, SHALL NOT CONSTITUTE AN OPTION FOR THE LEASING OF THE PREMISES, NOR CONFER ANY RIGHTS OR IMPOSE ANY OBLIGATIONS UPON' EITHER PARTY UNTIL THE EXECUTION THEREOF BY LANDLORD AND THE DELIVERY OF AN EXECUTED ORIGINAL COPY THEREOF TO TENANT OR ITS REPRESENTATIVES. ARTICLE XX TENANT'S RESPONSIBILITY REGARDING HAZARDOUS SUBSTANCES Section 20.1. Hazardous Substances The term "Hazardous Substances," as used in this Lease, shall include, without limitation, flammables, explosives, radioactive materials, asbestos, polychlorinated biphenyls (PCBS), chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances or related materials, petroleum and petroleum products, and substances declared to be hazardous or toxic under any law or regulation now or hereafter enacted or promulgated by any governmental authority. Section 20.2. Tenant's Restrictions A. Tenant shall not cause or permit to occur: (i) Any violation of any federal, state, or local law, ordinance, or regulation now or hereafter enacted, related to environmental conditions on, under, or about the Premises, or arising from Tenant's use or occupancy of the Premises, including, but not limited to, soil and ground water conditions; or -35- (ii) The use, generation, release, manufacture, refining, production, processing, storage, or disposal of any Hazardous Substance on, under, or about the Premises, or the transportation to or from the Premises of any Hazardous Substance, except as specifically disclosed on Schedule A to this Lease. Section 20.3. Environmental Clean-up A. Tenant shall, at Tenant's own expense, comply with all laws regulating-the use, generation, storage, transportation, or disposal of Hazardous Substances ("Laws"). B. Tenant shall, at Tenant's own expense, make all submissions to, provide all information required by, and comply with all requirements of all governmental authorities (the "Authorities") under the Laws. C. Should any Authority or any third party demand that a cleanup plan be prepared and that a clean-up be undertaken because of any deposit, spill, discharge, or other release of Hazardous Substances that occurs during the term of this Lease, at or from the Premises, or which arises at any time from Tenant's use or occupancy of the Premises, then Tenant shall, at Tenant's own expense, prepare and submit the required plant and all related bonds and other financial assurances; and Tenant shall carry out all such cleanup plans. D. Tenant shall promptly provide all information regarding the use, generation, storage, transportation, or disposal of Hazardous Substances that is requested by Owner. If Tenant fails to fulfill any duty imposed under this Section (20.3) within a reasonable time, Owner may do so; and in such case, Tenant shall cooperate with Owner in order to prepare all documents Owner deems necessary or appropriate to determine the applicability of the Laws to the Premises and Tenant's use thereof, and for compliance therewith, and Tenant shall execute all documents promptly upon Owner's request. No such action by Owner and no attempt made by Owner to mitigate damages under any Law shall constitute a waiver of any of Tenant's obligations under this Section (20.3). Section 20.4. Tenant's Indemnity A. Tenant shall indemnify, defend, and hold harmless Owner, the manager of the property, and their respective officers, directors, beneficiaries, shareholders, partners, agents, and employees from all fines, suits, procedures, claims, and actions of every kind, and all costs associated therewith (including attorneys' and consultants' fees) arising out of or in any way connected with any deposit, spill, discharge, or other release of Hazardous Substances that occurs during the term of this Lease, at or from the Premises, or which arises at any time from Tenant's use or occupancy of the Premises, or from Tenant's failure to provide all information, make all submissions, and take all steps required by all Authorities under the Laws and all other environmental laws. B. Tenant's obligations and liabilities under this Section (20.4) shall survive the expiration of this Lease. -36- ARTICLE XXI OWNER'S RIGHT TO PERFORM BUILDING RENOVATIONS A. Tenant understands and agrees that Owner may, at any time or from time to time during the term of this Lease, perform substantial renovation work in and to the Building or the mechanical systems serving the Building (which work may include, but need not be limited to, the repair or replacement of the building's exterior facade, exterior window glass, elevators, electrical systems, air conditioning and ventilating systems, plumbing systems, common hallways, or lobby), any of which work may require access to the same from within the premises. B. Tenant agrees that: (i) Owner shall have access to the premises at all reasonable times, upon reasonable notice, for the purpose of performing such work, and (ii) Owner shall incur no liability to Tenant, nor shall Tenant be entitled to any abatement of rent on account of any noise, vibration, or other disturbance of Tenant's business at the Premises (provided that Tenant is not denied access to said Premises) which shall arise out of said access by Owner or by the performance by Owner of the aforesaid renovations at the building. C. Owner shall use reasonable effort (which shall not include any obligation to employ labor at overtime rates or payment to any subcontractor in excess of those sums originally agreed upon for normal working hour provisions or materials ordered) to avoid disruption of Tenant's business during any such entry upon the Premises by Owner. D. It is expressly understood and agreed by and between Owner and Tenant that if Tenant shall commence any action or proceeding seeking injunctive, declaratory, or monetary relief in connection with the rights reserved to Owner under this provision, or if Owner shall commence any action or proceeding to obtain access to the Premises in accordance with this provision, and if Owner shall prevail in any such action, then Tenant shall pay to Owner, as additional rent under this Lease, a sum equal to all legal fees, costs, and disbursements incurred by Owner in any way related to or arising out of such action or proceeding. ARTICLE XXII CONSTRUCTION AND FINANCING OF LEASED PREMISES A. In the event this Lease is on property that is to be constructed, Landlord shall, at its own cost and expense, construct the Leased Premises in accordance with plans and specifications prepared by Landlord, incorporating in such construction all items of work described in "Exhibit C" (annexed hereto and made a part hereof). B. If Landlord's construction work, as specified in "Exhibit C" or in "Addendum C", is not substantially underway on or before See Basic Lease Provision either Landlord or Tenant may elect to terminate this Lease by giving the other written notice within sixty (60) days of said date. Failure to give such notice shall constitute a waiver of the right to so terminate. In the event of such termination, this Lease shall become null and void with neither party having any further liability to the other. -37- C. Landlord shall not be obligated to proceed with the construction of the Shopping Center or the Leased Premises unless and until financing acceptable to Landlord is obtained. Should such financing not be obtained within eighteen (18) months after execution of this Lease, Landlord shall have the right at any time during and after said period to cancel this Lease. If Landlord can obtain financing only upon the basis of modifications of the terms of this Lease, Landlord shall have the right to caned this Lease if Tenant refused to approve in writing any such modifications within fifteen (15) days after Landlord's request therefor, which request may not be made after delivery of possession. If Landlord's right to cancel is exercised as herein provided, this Lease shall thereafter be null and void, any money or security deposited hereunder shall be returned to Tenant, and neither party shall have any further liability to the other. IN WITNESS WHEREOF, the parties hereto intending to be legally bound hereby have executed this Lease as of the day and year first above written. Witness/Attest: The Lalor Urban Renewal Limited Partnership _____________________________ By: /s/ Sidney L. Hofing ---------------------------------------- Sidney L. Hofing, President The Lalor Corporation General Partner Yardville National Bank _____________________________ By: /s/ Patrick R. Ryan ---------------------------------------- Patrick R. Ryan, President & CEO Yardville National Bank _____________________________ By: /s/ Jay G. Destribats ---------------------------------------- Jay G. Destribats Chairman of the Board -38- EXHIBIT A October , 1994 Re: Lease dated the ______ day of October, 1994, between The Lalor Urban Renewal Limited Partnership, as Landlord, and Yardville National Bank, as Tenant. Tenant Trade Name: Yardville National Bank Gentlemen: It is our understanding that you have committed to make a mortgage loan secured by some part or all of the premises known as The Lalor Plaza, Unit #B-lb Right and that as a condition precedent to the making of such loan you have required this certificate by the undersigned. The undersigned as Tenant under the above-captioned lease hereby ratifies said lease and certifies that the undersigned has entered into occupancy of the premises on November 1, 1994, and the annual basic rental in the amount of $22,500.00 CPI increases annually commenced to accrue from that date; that said lease is in full force and effect and has not been assigned, modified, supplemented or amended in any way except by agreement between Landlord and Tenant as to this leasing; that the term of said lease commenced on date above set forth; that Tenant's floor area is 1500 square feet; that all conditions under said lease to be performed by Landlord have been satisfied, including without limitation, all co-tenancy requirements thereunder, all required contributions by Landlord to Tenant on account of Tenant's improvements that have been received, and on this date there are no existing defenses or offsets which the undersigned has against the full enforcement of said lease by Landlord; no rental has been paid in advance; that all rental due up to and including 1995 has been paid; and that the approximate costs of Tenant's improvements to the premises (exclusive of any contributions toward the cost of such improvement by Landlord) is $________ . Unless the context otherwise requires, all capitalized terms used herein have the same meanings as are ascribed to them in said lease. Very truly yours, The Yardville National Bank By: /s/ Patrick M. Ryan ------------------------ Patrick M. Ryan President & CEO By: /s/ Jay G. Destribats ------------------------ Jay G. Destribats Chairman of the Board A-1 EXHIBIT F --------- Date: October , 1994 COMMISSION AGREEMENT -------------------- Joseph R. Ridolfi of Casual Consulting Services, Broker of Record, a licensed Real Estate Broker in the State of NEW JERSEY, is recognized by both Landlord and Tenant as the sole and exclusive broker, and the sole procuring cause, consummating a Lease Agreement between The Lalor Urban Renewal Limited Partnership, Landlord, and Yardville National Bank, Tenant, with said Lease commencing on the 1st day of November, 1994, for premises located in Lalor Plaza, Trenton, New Jersey. WHEREIN said Joseph R. Ridolfi, shall be entitled to a commission of .06% percent of the gross base rent, payable quarterly by the Landlord from the proceeds of rent collected, with the first payment being due Three (3) Months from the date rent is collected, Rent is due to commence March 1, 1995. In the event the initial Lease expires and a new Lease is negotiated between said Landlord and Tenant, or whether Tenant remains on a month-to-month basis or becomes a hold-over tenant after the expiration of the initial term of the Lease, or any exercised options thereof, Joseph R, Ridolfi, shall still be entitled to the same rate of commission as set forth herein above. In the event of non-payment of rent, the obligation to pay commission will terminate or be delayed until rent is collected from the Tenant. Landlord agrees to pay a commission for any options, extensions and renewals. The Broker will receive the same commission in the event the Tenant occupies additional space at the Lalor Plaza location, or any other property the Landlord owns or controls for a period of three (3) years commencing as of the execution of this Lease Agreement. IN THE EVENT that during the time this Lease is in full force and effect there is a sale of the entire building by the Landlord to a third party or their legal representatives, successors or assigns respectively, then this Commission Agreement shall survive the closing date of said sale. FURTHER, it is understood and agreed that the covenants and agreements herein contained are binding on the parties hereto and upon their respective successors, heirs, executors, administrators and assigns, and personal representatives. Witness/Attest: The Lalor Urban Renewal Limited Partnership _____________________________ By: /s/ Sidney L. Hofing ---------------------------------------- Sidney L. Hofing, President The Lalor Corporation General Partner F-1 Capital Consulting Services By:________________________________________ Joseph R. Ridolfi, President Yardville National Bank _____________________________ By: /s/ Patrick R. Ryan ---------------------------------------- Patrick R. Ryan, President & CEO Yardville National Bank _____________________________ By: /s/ Jay G. Destribats ---------------------------------------- Jay G. Destribats Chairman of the Board F-2 EXHIBIT G --------- ADDENDUM TO LEASE AGREEMENT --------------------------- The Lalor Urban Renewal Limited Partnership, Landlord AND Yardville National Bank, Tenant The following changes to the Lease dated October, 1994 indicated above arc hereby agreed to by the Lessor and the Lessee. In the event of a conflict between this Addendum and the Main Lease, the Addendum shall prevail. All other provisions of the existing Lease will prevail except that the Lease is subject to the following: 1. Yardville National Bank (YNB) must successfully obtain approval for this branch location from the Office of the Comptroller of the Currency (0CC). 2. Yardville National Bank (YNB) must successfully obtain necessary local approvals for this local branch. 3. Yardville National Bank (YNB) must be able to secure permission and approvals to construct a bank drive-thru window facility on building B at the Lalor Plaza Shopping Center or on vacant land owned by the City of Trenton known as Block 160, Lot 39. 4. In the event the above conditions are not fulfilled by January 1, 1995, then in that event, this lease shall become null and void unless Yardville National Bank chooses to waive one or more of the above conditions. 5. In the event H&R Block does not exercise their option to renew their lease, then in that event, Yardville National Bank will have the First Right of Refusal for thirty (30) days to rent the additional 1500 square feet to the left of YNB's unit #B-lb. IN WITNESS WHEREOF, the parties hereto intending to be legally bound hereby have executed Witness/Attest: The Lalor Urban Renewal Limited Partnership _____________________________ By: /s/ Sidney L. Hofing ---------------------------------------- Sidney L. Hofing, President The Lalor Corporation General Partner G-1 Yardville National Bank _____________________________ By: /s/ Patrick M. Ryan ---------------------------------------- Patrick M. Ryan, President & CEO Yardville National Bank _____________________________ By: /s/ Jay G. Destribats ---------------------------------------- Jay G. Destribats Chairman of the Board G-2 ADDENDUM -------- TO -- LEASE ----- The contents of this Addendum are intended to be an integral part of the Lease Agreement between Lalor Urban Renewal Limited Partnership - -and- Yardville National Bank and wherever the terms of this Addendum and the Lease Agreement conflict, the Addendum shall govern. 1. This is to clarify that the proportionate share of Tenant's responsibility for real estate taxes, common area maintenance, operating costs and insurance on the project is 3.3%. The Tenant's late charge for any late payment (more than 7 days after the due date) is 10% of the monthly payment. There is no additional interest charged on late payments. 2. Paragraph 3.3 of the Lease is modified to state that the monthly rental shall be increased to 1 1/2 times the existing rent if the Tenant were to hold over after the expiration of the lease term. 3. Paragraph 3.5 of the Lease is modified to require the Landlord to give the Tenant ten days notice prior to the removal or disposal of any items of the Tenant's personal property following the termination of this Lease or eviction of the Tenant. 4. Paragraph 6.1 of the Lease is modified to state that the Tenant will only be responsible for reasonable attorney's fees associated with any negotiation, contest or appeal of the real estate taxes pursued by the Landlord in an effort to reduce any such tax, assessment or charge. 5. Paragraph 6.4 of the Lease is hereby modified to state that the Tenant will pay its sales tax, excess tax, business use and occupancy tax affecting its leased property but will not be responsible for any other of said taxes affecting any other leased premises in the Lalor Shopping Plaza. 6. Paragraph 7.2 of the Lease is modified to state that the Tenant shall be given 45 days in which to discharge any mechanics liens affecting the property from the date the lien is filed. 7. Paragraph 8.2 of the Lease is modified to state that the Tenant will have the option to place signage visible to traffic on Interstate 29 provided Tenant obtains the proper written approval of the Landlord and approval from all city and state authorities, If Landlord approves said signage, Landlord agrees to cooperate with the Tenant to obtain all necessary approvals from the city and state authorities. 8. Paragraph 9.3 of the Lease is modified to state that the Tenant will be responsible for the repairs mentioned therein only if they are caused by the negligence of the Tenant. 9. Paragraph 11.2 of the Lease is hereby modified to state that Tenant will only be responsible for repairing those utilities within its leased premises. Tenant will not be responsible for repairing any utilities outside of the leased premises or within any other Tenant's premises. 10. Paragraph 12.3 of the Lease is hereby modified to state that the Tenant will not be limited from bringing an action against the Landlord for any actions of the Landlord in allowing another Tenant to conduct activity on its leased premises which adversely affects the Tenant in this Lease. 11. Paragraph 13.2 of the Lease is modified to state that the Tenant also has the option to terminate the Lease for the same reasons that the Landlord has the option to terminate the Lease under this paragraph. 12. Paragraph 19.4 of the Lease is hereby deleted. 13. The Lease is contingent upon Yardville National Bank obtaining all necessary permits, variances, approvals, etc. from the City of Trenton and State of New Jersey to build/construct its proposed drive-thru facility at the subject premises by March 1, 1995. If approvals are not obtained by March 1, 1994 and Tenant waives this contingency, Landlord, nevertheless, agrees to cooperate with Tenant to obtain this approval at some future date and consents to the construction of a drive-thru facility at the location presently contemplated. 14. The Tenant shall not be responsible for any additional offsite improvements required of the Landlord by the City of Trenton or State of New Jersey subsequent to the execution of this Lease. Landlord may not include such costs into the common area maintenance or operating costs to be proportionately shared by this Tenant. 15. Landlord agrees not to lease any other rental unit within the Lalor Plaza Shopping Center to any state or federally chartered bank and/or savings and loan during the term of this Lease or any extensions hereof. In the event the Landlord violates this covenant not to lease to a competitor of Yardville National Bank, then the Tenant will have the right to seek injunctive relief with a court of law to prevent this violation. In the event Tenant is required to incur attorney's fees in connection with this injunctive relief the Landlord agrees to pay the reasonable attorney's fees of the Tenant incurred for this reason. 16. Payments of rent under this Lease shall commence on March 1, 1995. IN WITNESS WHEREOF, the parties hereto intending to be legally bound hereby have executed this Addendum to Lease as of this 20th day of December, 1994. Witness/Attest: The Lalor Urban Renewal Limited Partnership ____________________________ By: /s/ Sidney L. Hofing ---------------------------------------- Sidney L. Hofing, President The Lalor Corporation General Partner -2- Yardville National Bank ____________________________ By: /s/ Patrick M. Ryan ---------------------------------------- Patrick M. Ryan, President & CEO ____________________________ By: /s/ Jay M. Destribats ---------------------------------------- Jay G. Destribats Chairman of the Board -3- EX-10 8 ex10-15.txt EXHIBIT 10.15 YARDVILLE NATIONAL BANK SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ("SERP") SUMMARY OF TERMS FOR STEPHEN F. CARMAN -------------------------------------- o Eligibility. ------------ The Board has established your eligibility to participate in the SERP. Your Eligibility Date of 01/22/96 will be carried forward from the prior survivor income plan between you and the Bank. o Accrued Benefit. --------------- Your accrued benefit under the SERP will be equal to a Target Benefit (40% of Final Average Earnings) multiplied by a fraction: "Years of Participation" over the full number of years beginning on your Eligibility Date and ending on your Normal Retirement Date. Years of Participation means the number of full years measured from your Eligibility Date. Final Average Earnings is the average of the high three years' compensation out of the last five years of employment. Compensation taken into account includes salary, bonus and pre-tax deferrals under other benefit arrangements, but excludes payments received under equity compensation arrangements, any cost of living differential and automobile allowances. Normal Retirement Age is age 60. Based on your date of birth of October 12, 1956, your Normal Retirement Date will be November 1, 2016. o Vesting. ------- The Vested Amount will be determined by using a vesting percentage which is the same percentage as is used to determine the Accrued Benefit. However, special rules apply in the case of death, Disability and termination following a Change in Control. For example, assume you terminate employment voluntarily with the Bank in December, 2014 at age 58. Your Vested Amount is a fraction equal to the full number of years of participation in the SERP (20) over the full number of years from your Eligibility Date to your Normal Retirement Date (22). Thus, you are about 91% vested in whatever pension you have earned to that point. Complete vesting (in the accrued benefit you have earned to date) occurs upon: o retirement after your Normal Retirement Date o termination of employment by the Bank within three years following a Change in Control (after three years, the regular rules apply, and you will earn vesting credit over your years of service until normal retirement) o voluntary termination of employment by you within six months following a Change in Control, under limited circumstances -1- In addition, you will qualify for benefits if your employment terminates due to death or disability. Disability means a condition that qualifies you for receipt of disability income payments under the Bank's long-term disability plan. Your benefits under the Plan will be forfeited if you are terminated for cause at any time. "Change in Control" means an acquisition directly or indirectly by any person or entity of the ownership of or power to vote 40% or more of the outstanding voting securities of the Bank. "Cause" means a significant deficiency in performance, disloyalty, fraud, violation of federal or state law involving commission of a crime against the Bank and the commission of a felony or gross misdemeanor against others. o Distributions ------------- Distributions will generally be paid in 180 monthly installments beginning on the first day of the month following the later of termination of employment or your Normal Retirement Age. Distributions that would be payable in monthly amounts less than $100 will be automatically commuted to an actuarially equivalent lump-sum. You may request payment in a lump-sum rather than in monthly installments. Distributions will be accelerated upon death, Disability or certain circumstances following a Change in Control as described above. In those instances, payments will begin on the first day of the month following the triggering event. Distributions upon death are payable to your designated Beneficiary. If no effective designation has been made, payments will be made to the your estate. In the event of Disability, a pension is payable to you in an amount equal to 100% of your Final Average Earnings as of the first day of the 7th month following the onset of your Disability. Any Disability payments you receive under the SERP will be reduced by Social Security disability benefits and by any amounts received by you under the Bank's long-term disability plan. Your disability pension ends at the same time as your Bank-provided disability insurance. After that, the usual rules of the SERP apply, and you will qualify for a SERP benefit based on your years of service at termination of employment. Administration The Plan is administered by a committee appointed by the Board (the "Committee"). The Committee has the discretion to take remedial action, resolve discrepancies and establish rules, forms and procedures for the administration of the Plan. The Plan also contains a detailed Claims procedure. This is a summary of the Supplemental Executive Retirement Plan and how it applies to you. In the case of any discrepancy, the terms of the formal SERP document, as interpreted by the administrative committee appointed by the Board, control. -2- EX-23 9 ex23-1.txt EXHIBIT 23.1 Exhibit 23.1 Independent Auditors' Consent The Board of Directors Yardville National Bancorp: We consent to the use of our report dated January 29, 2002, with respect to the consolidated statements of condition of Yardville National Bancorp and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2001, incorporated herein by reference and to the reference to our firm under the heading "Experts" in the prospectus. /s/ KPMG LLP Short Hills, New Jersey September 6, 2002 -----END PRIVACY-ENHANCED MESSAGE-----