LEASE MODIFICATION AGREEMENT

 

                                                              EXHIBIT (10)Q.(ii)

                          LEASE MODIFICATION AGREEMENT

              THIS LEASE MODIFICATION AGREEMENT, made this 22nd day of
February, 1995 (the "date hereof"), effective as of the 1st day of October,
1994 (the "Effective Date"), by and between HARTZ MOUNTAIN INDUSTRIES, INC., a
New York corporation, having an office at 400 Plaza Drive, Secaucus, New Jersey
07094-3688 (hereinafter referred to as "Landlord"), and THE SUMMIT
BANCORPORATION, a New Jersey corporation, having an office at One Main Street,
Chatham, New Jersey 07928 (hereinafter referred to as "Tenant").

                                  WITNESSETH:

              WHEREAS, by Agreement of Lease dated June 5, 1990 (the "Lease"),
Landlord leased to Tenant office premises in an existing building (referred to
in the Lease as "Building C") and a building to be constructed by Landlord
(referred to in the Lease as "Building B") located in Cranford, New Jersey; and

              WHEREAS, in accordance with Exhibit C to the Lease, Landlord is
required to construct the core and shell of Building B and to perform the
Tenant buildout for Building B; and

              WHEREAS, Tenant has requested the right to perform the Tenant
buildout of Building B; and

              WHEREAS, Landlord and Tenant have now agreed that Tenant shall
have sole responsibility  to construct and complete such Tenant buildout; and

              WHEREAS, the parties have agreed to modify the Parking Area 
available for use by Tenant; and

              WHEREAS, the parties have agreed to amend and modify the Lease to
reflect and incorporate all of the foregoing, and certain other amendments and
modifications, as hereinafter specifically provided.

              NOW, THEREFORE, for and in consideration of the Lease, the mutual
covenants herein contained and the consideration set forth herein, the parties
agree as follows:

         1.   The foregoing "WHEREAS" clauses and definitions contained therein
are hereby incorporated into this Agreement.  All capitalized terms not
otherwise defined herein shall have the same meaning as defined or set forth in
the Lease.

         2.   Paragraph 1 b. of Exhibit C to the Lease is hereby deleted and
the following substituted therefor:

              b.   Landlord shall, subject to Paragraph 6 below of this Exhibit
C, construct the core and shell of Building B in accordance with the Shell and
Core Design Criteria for Building B dated August 8, 1989, and last revised May
21, 1990, annexed hereto and made a part hereof (the "Design Criteria"), as the
same shall be amended and modified by Change Orders duly authorized and
approved by Tenant ("Change Orders").  Landlord shall grant to Tenant an
allowance of $1,588,398.00 (based on $21.00 per square foot multiplied by
75,638

                                     - 1 -

square feet of Floor Space) for the Tenant Buildout, subject, however, to
Paragraph 6 below of this Exhibit C (the "Tenant Buildout Allowance").  Tenant
shall diligently perform to completion, the Tenant Buildout for Building B,
including, without limitation, those items referred to as constituting "Tenant
Buildout" in the Design Criteria.  For the purposes hereof "Tenant Buildout"
and/or "Tenant's Buildout" shall be deemed part of "Tenant's Work", as defined
in Section 1.10(NN).  That portion of Tenant's Work attributable to Building B
is hereinafter referred to as the "Tenant Buildout" or "Tenant's Buildout".
Said Tenant Buildout Allowance shall be disbursed to Tenant in accordance with
the provisions of Paragraph 3 below of this Exhibit C.  In the event less than
the entire Tenant Buildout Allowance is expended for the construction and
completion of the Tenant Buildout, and provided that Tenant is not otherwise in
default under the Lease beyond any applicable notice and/or cure period, Tenant
shall be entitled to the amount of such savings.  Tenant shall be solely and
wholly responsible for any costs for Tenant's Buildout in excess of the Tenant
Buildout Allowance, and Landlord shall not be obligated to expend any monies
over and above the Tenant Buildout Allowance in respect of Tenant's Buildout.

The Design Criteria referred to above are annexed hereto and made a part hereof
as Schedule "D".

         3.   The following is added to Exhibit C to the Lease as Paragraph 1
c. thereof:

              c. Tenant agrees to pay to Landlord the sum of $134,225.00 with
respect to Building B architectural and engineering services performed by
Landlord (the "Architectural Fees").

Tenant agrees to pay said Architectural Fees upon execution of this Lease
Modification Agreement by both parties in full satisfaction of Tenant's
obligation under the Lease with respect to the payment to Landlord for
architectural and engineering services performed by or on behalf of Landlord in
connection with the construction and build-out of Building B.  Notwithstanding
anything contained herein to the contrary, Landlord and Tenant acknowledge that
said Architectural Fees are scheduled among the change orders set forth on
Schedule A annexed hereto and made a part hereof, and Tenant hereby authorizes
Landlord to net said Architectural Fees out of sums to which Tenant is
otherwise entitled to from the Tenant Buildout Allowance, with the balance of
the Tenant Buildout Allowance to be disbursed and applied as set forth in
Exhibit C to the Lease, as modified by this Lease Modification Agreement.

         4.   Paragraph 2 of Exhibit C to the Lease, with respect to Building
B, shall be deemed to read as follows:

              2.          All construction and materials for Landlord's Work
(exclusive of Tenant's Buildout), shall be performed and furnished by Landlord.
Construction and materials for Tenant's Work, including Tenant's Buildout,
shall be furnished and performed by Tenant.  Any costs or expenses incurred in
connection with Tenant's Buildout which exceed the Tenant Buildout Allowance
shall be the Tenant's sole cost and expense.

         5.   Paragraph 3 of Exhibit C to the Lease is hereby deleted and the
following substituted therefor:

                                     - 2 -

              3.  So long as Tenant is not in default in the payment of Rent or
under any other material term or provision of the Lease beyond any applicable
notice and/or cure period, Tenant shall be entitled to receive disbursements of
the Tenant Buildout Allowance during the pendency of Tenant's Buildout, as
follows:

              At Tenant's request (each such request being an "Advance
Request") from time to time, but not more frequently than once each month,
Landlord shall, within fifteen (15) days of verification, disburse portions of
the Tenant Buildout Allowance to Tenant in an amount equal to the product of
the maximum Tenant Buildout Allowance and the percentage of completion of
Tenant's Buildout (less any Tenant Buildout Allowance theretofore funded), as
certified by the architect employed by Tenant in connection with Tenant's
Buildout and verified or objected to by the Architect within fifteen (15) days
of receipt thereof (it being agreed that if the Architect shall fail to respond
within such fifteen (15) day period, such certification shall be deemed to have
been verified).  Landlord agrees that the Architect shall only have grounds to
object to any Advance Request if, in Architect's opinion, the Tenant Buildout
is not being performed or has not been performed in accordance with the
approved plans and specifications therefor.  In the event that the Architect
shall object to any Advance Request, Landlord may withhold only that portion of
the Advance Request to which Architect's objection relates (but shall pay the
balance of such Advance Request to Tenant), until such time as the Architect's
objection is withdrawn or otherwise resolved by the parties or though
arbitration.  In the event that the Tenant and the Architect are unable to
resolve the Architect's objection within thirty (30) days' of the Advance
Request to which it relates, any of Tenant, Landlord or the Architect may
submit the matter to arbitration in accordance with and subject to the terms
and provisions of Article 36 of the Lease.  Landlord acknowledges that Tenant
has submitted Advance Requests in the aggregate amount of $1,288,852.00, and
that Landlord and the Architect have approved, verified and certified said
amount and the applicable percentage of completion of Tenant's Buildout, and
Landlord agrees to disburse said amount to Tenant simultaneously with the
execution of this Lease Modification Agreement.

         6.   The following Paragraph 4 is hereby added to and made a part of
Exhibit C to the Lease:

              4.   Landlord shall be permitted, but not required, to bid upon
the Tenant's Buildout.  Tenant shall be responsible (and may employ a
construction manager if Tenant so desires to employ such at its own expense)
for all Tenant's Buildout.  Tenant shall, prior to commencing construction of
any portion of Tenant's Buildout, give written notice to Landlord (which notice
shall include a complete set of the plans and specifications for that portion
of Tenant's Buildout, sealed by Tenant's architect or engineer, as the case may
be) of Tenant's solicitation of bids for that portion of Tenant's Buildout (in
which case Tenant shall request Landlord to bid on that portion of the Tenant's
Buildout).  Notwithstanding anything to the contrary contained herein, Tenant
shall have sole and absolute discretion in selecting any such bid(s).  Landlord
hereby acknowledges and agrees that, as of October 1, 1994, Tenant has complied
in full, with all of its responsibilities and obligations pursuant to this
Paragraph.

                                     - 3 -

         7.   The following Paragraph 5 is hereby added to and made a part of
Exhibit C to the Lease:

              5.  In the event Tenant shall utilize an outside contractor for
Tenant's Buildout, Landlord shall fully cooperate with such contractor to
assist its timely completion of Tenant's Buildout.  Tenant shall cause such
contractor to utilize employees and subcontractors who use union labor.
Nothing contained herein shall require Landlord to expend any funds in
connection with said cooperation.  Tenant and its contractor, architect and
engineers shall coordinate and cooperate with Landlord, its contractors and
Architect, so as to minimize any conflicts or interference in the prosecution
to completion of Landlord's Work.

         8.   The following Paragraph 6 is hereby added to and made a part of
Exhibit C to the Lease:

              6.  Any increase in the cost of prosecuting and completing
Landlord's Work occasioned by any Change Orders to the Design Criteria over the
cost to Landlord of implementing the Landlord's Work as described in the Design
Criteria, shall be borne solely by Tenant, and at Landlord's sole option, (i)
deducted from the Tenant Buildout Allowance, or (ii) to the extent such Tenant
Buildout Allowance shall be exhausted or as Landlord shall otherwise elect,
paid for as an Additional Charge, within thirty (30) days of invoice for same
by Landlord to Tenant.  Landlord hereby acknowledges and agrees that, as of the
date hereof, Tenant has complied in full, with all of its responsibilities and
obligations pursuant to this Paragraph.

         9.   Landlord and Tenant acknowledge and agree that annexed hereto and
made a part hereof as Schedule "A" are the change orders authorized and
approved by Tenant as of the date hereof, which change orders constitute Change
Orders to the Design Criteria.  Tenant hereby authorizes Landlord to net said
Change Orders out of sums to which Tenant is otherwise entitled to from the
Tenant Buildout Allowance, with the balance of the Tenant Buildout Allowance to
be disbursed and applied as set forth in Exhibit C to the Lease, as modified by
this Lease Modification Agreement.

       10.   For the purposes of this Lease Modification Agreement and the
construction and delivery of Building B, the definition of "Ready for
Occupancy" set forth in Section 1.01(CC) of the Lease shall be replaced with
the term "Ready for Delivery" which shall be defined as follows:

             CC.  Ready for Delivery: The condition of Building B when for the
first time the Landlord's Work shall have been substantially completed.
Landlord's Work shall be deemed substantially completed notwithstanding the
fact that Tenant's Buildout shall not then have been completed or commenced and
further notwithstanding the fact that minor or insubstantial details of
construction, mechanical adjustment or decoration remain to be performed, the
noncompletion of which does not materially interfere with Tenant's prosecution
and completion of Tenant's Buildout.

       11.   Tenant hereby acknowledges that Building B is "Ready for Delivery"
and acknowledges that it has received and is in possession thereof.

                                     - 4 -

       12.   Commencing as of the Effective Date, Tenant shall pay the full
Fixed Rent applicable to Building "B" in accordance with Schedule "B" annexed
hereto and made a part hereof, which Schedule "B" shall in all respects be
deemed to replace and supercede in its entirety Section 1 of Exhibit F to the
Lease.  Landlord and Tenant confirm and agree that all Fixed Rent through the
period ending February 28, 1995 has been paid in full.

       13.   Landlord and Tenant agree that the "Parking Area" as defined in
Section 7.03 of the Lease is hereby modified in accordance with the plan
annexed hereto and made a part hereof as Schedule "C", which Schedule "C"
replaces and supercedes Exhibit I to the Lease.

       14.  Landlord agrees that commencing as of October 1, 1994 though and
including September 30, 1999, so long as Tenant shall not be in default under
the Lease beyond any applicable notice or cure periods, Landlord shall grant to
Tenant a credit against the annual Parking Charges at the rate of Seven
Thousand Five Hundred Dollars ($7,500.00) per annum, or Six Hundred Twenty-Five
Dollars ($625.00) per month.

       15.   Except as provided herein, all of the terms and conditions of the
Lease as amended above, are in full force and effect and are confirmed as if
fully set forth herein.  In the event of any inconsistency between the
provisions of the Lease and this Lease Modification Agreement, the provisions
of this Lease Modification shall prevail.

             IN WITNESS WHEREOF, the parties hereto have caused this Lease
Modification Agreement to be duly executed as of the day and year first above
written.

ATTEST:                                    HARTZ MOUNTAIN INDUSTRIES, INC.

/s/VINCENT J. RUBIANO, JR.                  By: /s/IRWIN A. HOROWITZ
- ---------------------------                    -------------------------
Vincent J. Rubiano, Jr.                          Irwin A. Horowitz
Assistant Secretary                              Executive Vice President

ATTEST:                                    THE SUMMIT BANCORPORATION

/s/JOHN F. KUNTZ                             By:/s/ROBERT COX
- ---------------------------                    -------------------------
John F. Kuntz                                    Robert Cox
Corporate Secretary                              President

                                     - 5 -

                                  SCHEDULE "A"

                     CHANGE ORDERS THROUGH THE DATE HEREOF

                                                                  
             Tx No.  911593                                                         $ 14,876.40
             Tx No.  911594                                                           16,377.90
             Tx No.  911596                                                           47,355.00
             Tx No.  911597                                                           13,264.02
             Tx No.  911598                                                           25,356.67
             Tx No.  911599 (credit)                                                 (19,266.00)
             Tx No.  911609                                                            2,079.00
             Tx No.  911647 (credit)                                                 (43,425.95)
             Tx No.  911652                                                            4,414.41
             Tx No.  911696                                                          134,225.00
             Tx No.  911935                                                              911.29
             Tx No.  911938 (credit)                                                  (3,389.83)
                                                                                   -------------
             Total Amount of Tx's                                                   $192,778.11
                                                                                   ============

             Tenant Buildout Allowance Remaining (prior to any Advance Requests):

                                                                                  $3,395,619.89
SCHEDULE "B" FIXED RENT BUILDING B For the period from and including October 1, 1994 through and including the day immediately preceding the Initial Permanent Mortgage Loan Closing Date (as hereinafter defined), the Fixed Rent per square foot of Building B Floor Space per annum shall be computed at the following rates (the "Initial Rates");
Lease Period Fixed Rent - ------------ ---------- 10/1/94 through and including 5/31/97 $13.75 6/1/97 through and including 5/31/2002 $14.50 6/1/2002 through and including 5/31/2007 $15.50 6/1/2007 through and including 5/31/2012 $16.75 6/1/2012 through and including 5/31/2017 $18.50
For the period from and including the Initial Permanent Mortgage Loan Closing Date through the balance of the initial Term hereunder, the Fixed Rent per square foot of Building B Floor Space per annum shall be computed as follows: The sum of (i) an amount equal to (a) $134.61 per square foot of Floor Space multiplied by (b) a debt service constant based upon the effective interest rate (including, but not limited to, commitment fees, application fees, future funding fees, letter of credit or other credit enhancement fees, and brokerage commissions (collectively, the "Loan Expenses"), but excluding fees such as attorneys' fees, consultant fees, title search fees and premiums, and appraisal fees) on Landlord's actual Initial Permanent Mortgage Loan (as hereinafter defined) with respect to the Demised Premises and a hypothetical amortization component (as to principal) based upon a 35 year amortization schedule (it being understood that the Loan Expenses, for the purpose of the calculations set forth in this paragraph shall be amortized over the life of the actual loan term), plus (ii) the Cash Flow Component (as hereinafter defined); provided, however, that in no event shall the Fixed Rent per square foot of Building B Floor Space be less than the Initial Rates. For the purposes of this Schedule "B", the following terms shall have the meanings indicated: "Initial Permanent Mortgage Loan": The first loan obtained by Landlord which is secured by a Mortgage, the proceeds of which are not required to be used solely for construction or related reimbursement (a "Construction Loan"). It is acknowledged and agreed that as of the date hereof, Landlord has not yet obtained such an Initial Permanent Mortgage Loan, and that a further extension or modification of Landlord's existing Construction Loan from National Westminster Bank USA shall not constitute an Initial Permanent Mortgage Loan. Notwithstanding any of the foregoing to the contrary, in the event that any such Initial Permanent Mortgage Loan shall have a loan-to-value ratio upon closing of greater than seventy-five (75%) percent, as determined by such lender's appraisal (which appraisal shall be conclusive and binding upon the parties, absent manifest error, provided such appraisal shall have been performed by an independent MAI appraiser), the effective interest rate component of the debt service constant set forth above shall be adjusted to reflect what the same would have been if the Initial Permanent Mortgage Loan had a loan-to-value ratio at closing equal to seventy-five (75%) percent. In SCHEDULE "B" continued the event of any dispute in calculating the effective interest rate where the loan to value ratio exceeds seventy-five (75%) percent, the parties shall submit the same to arbitration pursuant to and in accordance with the terms and conditions of Article 36 of the Lease. "Initial Permanent Mortgage Loan Closing Date": The date upon which the Initial Permanent Mortgage Loan shall be closed and funded. "Cash Flow Component": A per annum, per square foot amount as follows:
Lease Period Cash Flow Component - ------------ ------------------- 10/1/94 through and including 5/31/97 - 0 - 6/1/97 through and including 5/31/2002 .70 6/1/2002 through and including 5/31/2007 1.70 6/1/2007 through and including 5/31/2012 2.95 6/1/2012 through and including 5/31/2017 4.70
See EXAMPLE below: EXAMPLE: To illustrate the calculation of Fixed Rent for Building "B" for the period from and including the Initial Permanent Mortgage Loan Closing Date through the balance of the initial Term hereunder, based on the following assumptions, the rent schedule for Building "B" would be as follows: Assumptions: Term of Initial Permanent Mortgage: 10 years. Interest Rate: 9.25% Loan Expenses: 1.50% Floor Space: 75,638 square feet
Computation of Effective Interest Rate and Debt Service Constant: Interest Rate: 9.25% Loan Expenses (amortized over term of Initial Permanent Mortgage Loan (10 yrs.) at the Interest Rate (9.25%) .23% ----- Effective Interest Rate: 9.48% Debt Service Constant based on Effective Interest Rate of 9.48% and 25-year amortization schedule 10.47% ======
Adjusted Base Rent: $134.61 per square foot x 10.47% - $14.09 per square foot SCHEDULE "B" continued
Cash Adjusted Flow Adjusted Annual Monthly Lease Period Base Rent Component Fixed Rent Fixed Rent Fixed Rent - ------------ --------- --------- ---------- -------------- -------------- 10/1/94 to 5/31/97 $14.09 $ 0 $14.09 $1,065,739.42 $ 88,811.62 6/1/97 to 5/31/2002 14.09 .70 14.79 1,118,686.02 93,233.84 6/1/2002 to 5/31/2007 14.09 1.70 15.79 1,194.324.02 99,527.00 6/1/2007 to 5/31/2012 14.09 2.95 17.04 1,288,871.52 107,405.96 6/1/2012 to 5/31/2017 14.09 4.70 18.79 1,421,238.02 118,436.50
SCHEDULE "C" REVISED PARKING PLAN

Basic Info X:

Name: LEASE MODIFICATION AGREEMENT
Type: Lease
Date: April 11, 1996
Company: SUMMIT BANCORP/NJ/
State: New Jersey

Other info:

Date:

  • 22nd day of February , 1995
  • 1st day of October , 1994
  • June 5 , 1990
  • August 8 , 1989
  • May 21 , 1990
  • February 28 , 1995
  • September 30 , 1999
  • October 1 , 1994

Organization:

  • HARTZ MOUNTAIN INDUSTRIES
  • Agreement of Lease
  • Tenant Buildout Allowance to Tenant
  • Seven Thousand Five Hundred Dollars
  • Lease Modification Agreement
  • Total Amount of Tx
  • National Westminster Bank USA
  • Initial Permanent Mortgage Loan Closing Date
  • Effective Interest Rate
  • Cash Adjusted Flow Adjusted Annual Monthly Lease Period Base Rent Component Fixed Rent Fixed Rent Fixed Rent

Location:

  • New York
  • Secaucus
  • Chatham
  • Cranford
  • New Jersey

Money:

  • $ 1,588,398.00
  • $ 21.00
  • $ 134,225.00
  • $ 1,288,852.00
  • $ 7,500.00
  • $ 625.00
  • $ 14,876.40
  • $ 192,778.11
  • $ 3,395,619.89
  • $ 13.75
  • $ 14.50
  • $ 15.50
  • $ 16.75
  • $ 18.50
  • $ 134.61
  • $ 14.09 $ 0 $ 14.09 $ 1,065,739.42 $ 88,811.62

Person:

  • Vincent J. Rubiano
  • Irwin A. Horowitz
  • John F. Kuntz Robert Cox

Percent:

  • 75 % percent
  • 1.50 %
  • 9.25 %
  • .23 %
  • 9.48 %
  • 10.47 %