<PAGE>
As filed with the Securities and Exchange Commission on April 14, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------
COLORADO BUSINESS BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Colorado 6021 84-0826324
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
---------------------
821 Seventeenth Street
Denver, Colorado 80202
(303) 293-2265
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Steven Bangert
Chairman of the Board and Chief Executive Officer
Colorado Business Bankshares, Inc.
821 Seventeenth Street
Denver, Colorado 80202
(303) 293-2265
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies of Communications to:
Kevin A. Cudney, Esq. Andrew L. Blair, Jr., Esq.
Jonathan P. Freedman, Esq. Gregory J. Ramos, Esq.
Dorsey & Whitney LLP Sherman & Howard, L.L.C.
Republic Plaza Building, Suite 4400 633 Seventeenth Street
370 Seventeenth Street Denver, Colorado 80202
Denver, Colorado 80202 (303) 297-2900
(303) 629-3400
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
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, as amended (the "Securities Act") 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, 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,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Offering Amount of
Securities to be Registered Registered (1) Per Share (2) Price (2) Registration Fee
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par 1,610,000 shares $12.00 $19,320,000 $5,669.40
value
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</TABLE>
(1) Includes 210,000 shares that may be purchased by the underwriters from the
registrant to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee.
---------------------
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 said
Section 8(a), may determine.
================================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED APRIL 14, 1998
1,400,000 Shares
[Colorado Business Bankshares Logo]
Common Stock
All of the shares of Common Stock offered hereby are offered by Colorado
Business Bankshares, Inc. Prior to the Offering, there has been no public
market for the Common Stock. It is currently estimated that the initial public
offering price per share will be between $10.00 and $12.00. See "Underwriting"
for a discussion of the factors considered in determining the initial public
offering price. The Company has applied for the inclusion of the Common Stock
on the Nasdaq National Market under the symbol "COBZ."
Up to 90,000 shares of the Common Stock offered hereby have been reserved
for sale to certain directors, executive officers and key employees of the
Company who have expressed an interest in purchasing shares of Common Stock in
the Offering, including Steven Bangert, the Company's Chairman of the Board and
Chief Executive Officer, and Howard R. Ross, a director of the Company.
--------------------
The Common Stock offered hereby involves a high degree of risk.
See "Risk Factors" at page 7.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
===============================================================================
Underwriting
Price to Discounts and Proceeds to
Public Commissions (1) Company (2)
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Per Share..................... $ $ $
- -------------------------------------------------------------------------------
Total (3)..................... $ $ $
===============================================================================
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, and to pay certain other compensation to the Representative of the
Underwriters. The Underwriters have agreed with the Company that the
Underwriting Discounts and Commissions will be reduced to $ per
share for the shares reserved for sale to directors, executive officers and
key employees. See "Underwriting."
(2) Before deducting offering expenses payable by the Company estimated at
$450,000. See "Use of Proceeds."
(3) The Company has granted to the Underwriters an option, exercisable within 30
days of the date of this Prospectus, to purchase up to 210,000 additional
shares of Common Stock solely to cover over-allotments, if any. If the
Underwriters exercise this option in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$ , $ and $ , respectively. See
"Underwriting."
--------------------
The shares of Common Stock are being offered severally by the Underwriters
named herein, when, as and if delivered to and accepted by the Underwriters,
subject to prior sale and to certain other conditions. It is expected that
delivery of the shares of Common Stock will be made on or about , 1998.
Dain Rauscher Wessels
A division of Dain Rauscher Incorporated
The date of this Prospectus is , 1998
<PAGE>
[Map of Denver metropolitan area, indicating various locations of the Bank]
-------------------------------------
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, ANY
OTHER GOVERNMENT AGENCY OR OTHERWISE.
-------------------------------------
The Company intends to furnish its shareholders with annual reports
containing audited financial statements, together with a report from its
independent public auditors, and quarterly reports for the first three quarters
of each fiscal year containing unaudited interim financial information. Prior to
the Offering, the Company has not been a reporting company with the Securities
and Exchange Commission.
-------------------------------------
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
COMMON STOCK, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
2
<PAGE>
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PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed information
and the Consolidated Financial Statements and the Notes thereto included
elsewhere in this Prospectus. Unless otherwise indicated, all information in
this Prospectus (i) reflects a 4.7125-for-1 stock split of the Company's Common
Stock, par value $.01 per share (the "Common Stock"), to be effected prior to
the Offering and (ii) assumes that the Underwriters' over-allotment option is
not exercised. This Prospectus contains forward-looking statements that involve
risks and uncertainties. The Company's actual results may differ materially
from those described in such forward-looking statements. Factors that might
cause such a difference, include, but are not limited to, those discussed under
the caption "Risk Factors." Unless the context otherwise requires, references
to the Company contained in this Prospectus include all of the Company's
subsidiaries.
The Company
Colorado Business Bankshares, Inc. (the "Company") is a bank holding
company headquartered in Denver, Colorado that owns Colorado Business Bank, N.A.
(the "Bank"), a full-service, commercial banking institution with five locations
in the Denver metropolitan area. As of December 31, 1997, the Company had total
assets of $264.1 million, net loans and leases of $164.1 million and deposits of
$221.1 million. The Bank provides a broad range of sophisticated banking
products and services, including credit, cash management, investment, deposit
and trust products, to its targeted customer base of small- and medium-sized
businesses and high net worth individuals. Each of the Bank's locations
operates as a separate community bank, with significant local decision-making
authority. Support functions, such as accounting, data processing, bookkeeping,
credit administration, loan operations and investment and cash management
services, are provided centrally from the Company's downtown Denver office. As
a result of this operating approach, the Company believes that it is well
positioned as a community business bank, combining the elements of personalized
service found in community banks with sophisticated banking products and
services traditionally offered by larger regional banks. The Company believes
that its market position and experienced personnel give it the potential to
generate growth and financial returns in excess of industry averages.
The Company's objective is to build a highly profitable, customer-focused
community banking network with assets in excess of $500 million by the end of
the year 2000. The Company believes that its senior management and systems
infrastructure are adequate to support growth to this level without incurring
proportionate increases in general, administrative and other noninterest
expenses. The Company's growth and operating strategies are designed to
achieve this objective. Although management intends to build the Company
primarily through internal growth, the introduction of new product lines and de
novo branching, the Company will also explore opportunities to expand through
acquisitions of existing banks. At the same time, the Company will continue to
execute its operating strategy, the principal components of which are: (i)
assembling a top-quality team, (ii) expanding existing banking relationships,
(iii) emphasizing high quality customer service, (iv) capitalizing on the use of
technology, (v) achieving efficiencies and economies of scale through
centralized administrative and support operations and (vi) maintaining asset
quality and controlling interest rate risk.
The Company's approach to expansion is predicated on recruiting key
personnel to lead new initiatives. While the Company normally considers an
array of new locations and product lines as potential expansion initiatives, it
generally will proceed only upon identifying quality management personnel with a
loyal customer following in the community or product line that is the target of
the initiative. The Company believes that, by focusing on individuals who are
established in their community and are experienced in offering sophisticated
banking products and services, it enhances its market position and adds
profitable growth opportunities while managing credit risk.
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3
<PAGE>
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The Company acquired ownership of the predecessors of the Bank in September
1994 (the "Acquisition"). At that time, the Bank's operations were conducted
through two separate banks -- Equitable Bank of Littleton, located in Littleton,
Colorado, and The Women's Bank, located in downtown Denver. From December 31,
1994 to December 31, 1997, the Company's assets increased to $264.1 million from
$143.9 million, an increase of 83.5%, its net loan and lease portfolio increased
to $164.1 million from $70.6 million, an increase of 132.6%, and deposits
increased to $221.1 million (31.2% of which were noninterest-bearing deposits)
from $124.5 million, an increase of 77.6%. During that period, the Company made
several changes in operations that it believes have had a significant positive
impact on its business, including:
. Assembled experienced management team. Since the Acquisition, the
Company has assembled a senior management team comprised primarily of
experienced Colorado banking professionals. These individuals brought
to the Company a network of existing relationships with Denver
metropolitan area businesses.
. Established new locations in the Denver metropolitan area. The Bank
established three new banking locations, each staffed with bankers
experienced in their respective markets: a Boulder location, which was
opened in November 1995, a second location in Littleton, which was
opened in March 1997, and a location in West Denver, which was opened
in December 1997. As of December 31, 1997, these three locations had
grown to $31.0 million, $10.0 million and $37,000 in assets,
respectively.
. Expanded product and service offerings. Product and service offerings
introduced since the Acquisition include (i) equipment leasing,
(ii) a variety of new investment options and (iii) trust and estate
administration services, including the administration of employee
benefit plans. In addition, the Company has significantly expanded the
capability of its commercial real estate lending department.
. Consolidated banks. The Company consolidated its two bank charters
into the Bank, which was renamed "Colorado Business Bank." The Company
believes that, by placing all of its operations under the "Colorado
Business Bank" standard, it has increased its name recognition, better
described its market focus and eliminated duplicative regulatory
functions and costs.
The Company was incorporated in Colorado in 1980 as Equitable
Bancorporation, Inc. and changed its name to Colorado Business Bankshares, Inc.
in September 1995. The Company's principal executive office is located at 821
Seventeenth Street, Denver Colorado 80202, and its telephone number is (303)
293-2265.
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4
<PAGE>
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The Offering
<TABLE>
<S> <C>
Common Stock offered.......................................... 1,400,000 shares
Common Stock to be outstanding after the Offering............. 6,274,968 shares (1)
Proposed Nasdaq National Market symbol........................ COBZ
Use of proceeds............................................... To repay indebtedness, to redeem all of the
Company's outstanding Preferred Stock and
to contribute to the capital of the Bank. See
"Use of Proceeds."
Risk factors.................................................. The Common Stock offered hereby involves
a high degree of risk. See "Risk Factors."
</TABLE>
- --------------------
(1) Excludes (a) 433,551 shares of Common Stock issuable upon exercise of
outstanding options held by officers, directors and employees of the
Company, (b) 278,553 shares of Common Stock reserved for issuance pursuant
to future grants of options to officers, directors and employees of the
Company and (c) 100,000 shares of Common Stock issuable upon exercise of a
warrant to be issued to the Representative of the Underwriters. See
"Management" and "Underwriting."
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5
<PAGE>
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Summary Historical Financial Data
The summary financial data presented below is derived from the Consolidated
Financial Statements of the Company included elsewhere in this Prospectus and
should be read in conjunction with such financial statements, and the notes
thereto, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
<TABLE>
<CAPTION>
At or for the
year ended December 31,
------------------------------------------------
1997 1996 1995
--------------- --------------- --------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C>
Statement of Income Data:
Interest income................................................. $ 18,147 $ 13,711 $ 11,231
Interest expense................................................ 7,016 5,323 4,400
---------- ---------- ----------
Net interest income before provision for loan and lease losses.. 11,131 8,388 6,831
Provision for loan and lease losses............................. 949 493 242
---------- ---------- ----------
Net interest income after provision for loan and lease losses... 10,182 7,895 6,589
Noninterest income.............................................. 3,303 1,794 1,191
Noninterest expense............................................. 10,387 7,827 6,632
---------- ---------- ----------
Income before income taxes...................................... 3,098 1,862 1,148
Provision for income taxes...................................... 1,245 762 432
---------- ---------- ----------
Net income...................................................... $ 1,853 $ 1,100 $ 716
========== ========== ==========
Earnings per share -- basic..................................... $ 0.37 $ 0.29 $ 0.19
========== ========== ==========
Weighted average common shares and common share equivalents
outstanding -- basic........................................... 4,690,852 3,771,885 3,773,063
========== ========== ==========
Earnings per share -- diluted................................... $ 0.36 $ 0.29 $ 0.19
========== ========== ==========
Weighted average common shares and common share equivalents
outstanding -- diluted......................................... 4,802,778 3,826,467 3,800,147
========== ========== ==========
Statement of Financial Condition Data:
Total assets.................................................... $ 264,059 $ 190,645 $ 160,421
Loans and leases, net........................................... 164,091 110,748 87,310
Investments..................................................... 58,784 57,571 50,991
Deposits........................................................ 221,058 155,310 137,513
Note payable.................................................... 7,500 10,000 10,500
Preferred shareholders' equity.................................. 1,500 -- --
Common shareholders' equity..................................... 15,925 10,189 9,066
</TABLE>
<TABLE>
<CAPTION>
At or for the
year ended December 31,
------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Key Ratios:
Net interest margin..................................................... 5.52% 5.46% 5.44%
Efficiency ratio (1).................................................... 71.96 76.87 82.67
Return on average assets................................................ 0.83 0.64 0.50
Return on average common shareholders' equity........................... 12.21 11.47 8.24
Common shareholders' equity to total assets............................. 6.35 5.54 6.01
Total shareholders' equity to total assets.............................. 6.85 5.54 6.01
Nonperforming assets to total assets.................................... 0.31 0.36 0.58
Nonperforming loans and leases to total loans and leases................ 0.49 0.52 0.69
Allowance for loan and lease losses to total loans and leases........... 1.35 1.48 1.57
Allowance for loan and lease losses to nonperforming loans and leases... 277.19 285.22 225.97
</TABLE>
_______________
(1) Efficiency ratio is the ratio of noninterest expense to the sum of net
interest income before provision for loan and lease losses and noninterest
income.
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6
<PAGE>
RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of
risk. In addition to the other information contained in this Prospectus, the
following factors should be considered carefully. This Prospectus contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results may differ from those described in such forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in the following risk factors.
Impact of Economic Conditions and Interest Rates
The Company's operating results may be materially and adversely affected
by changes in prevailing local and national economic conditions, including
declines in real estate market values, rapid changes in interest rates and the
monetary and fiscal policies of the federal government. Substantially all of
the Company's loans and leases are to businesses and individuals in the Denver
metropolitan area, and any decline in the economy of this market area could
impact the Company adversely. Although recent economic conditions in the Denver
metropolitan area have been generally more favorable than those in many other
regions of the country, there can be no assurance that such favorable conditions
will continue to prevail. In addition, the Company's profitability is, in part,
a function of the spread between the interest rates earned on loans and leases
and the interest rates paid on deposits and other interest-bearing liabilities.
Since 1991, many banking organizations, including the Company, have experienced
historically high interest rate spreads. There can be no assurance, however,
that the Company will continue to experience such high interest rate spreads. A
decrease in interest rate spreads would have a negative effect on the Company's
business, financial condition, results of operations and cash flows. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Net Interest Income" and "-- Asset/Liability Management,"
"Business -- Market Area Served" and "Supervision and Regulation -- Monetary
Policy."
Loan and Lease Losses
The inability of borrowers to repay loans and leases can erode the earnings
and capital of a bank. As a community business bank, the Bank's loan and lease
portfolio is somewhat less diversified than that of a traditional community bank
because it includes a higher concentration of larger commercial loans. The Bank
maintains an allowance for loan and lease losses to provide for loan and lease
defaults and nonperformance. The allowance is based on prior experience with
loan and lease losses, as well as an evaluation of the risks in the current loan
and lease portfolio. Although the Bank's allowance for loan and lease losses is
maintained at a level considered adequate by the Company to absorb anticipated
losses, the amount of future losses is susceptible to changes in economic,
operating and other conditions, including changes in interest rates, that may be
beyond the Company's control. Despite the Company's efforts to estimate future
loan and lease losses, such losses may exceed the Bank's allowance for loan and
lease losses. As of December 31, 1997, the Company had total nonperforming loans
and leases of $811,000 (0.49% of total loans and leases). At the same date, the
Bank's allowance for loan and lease losses was $2.2 million (1.35% of total
loans and leases and 277.19% of nonperforming loans and leases). There can be no
assurance that such allowance will be adequate to cover actual losses. Moreover,
future additions to the Bank's allowance for loan and lease losses could result
in a material decrease in the Company's net income and capital. See "Business --
Nonperforming Assets" and "-- Analysis of Allowance for Loan and Lease Losses."
Risks of Growth Strategy
The Company intends to pursue a measured growth strategy through internal
growth, the introduction of new product lines and de novo branching. The
Company's growth initiatives are based upon recruiting experienced personnel to
lead such initiatives, and, accordingly, the failure to identify and retain such
7
<PAGE>
personnel would place significant limitations on the Company's ability to
execute its growth strategy. In addition, the Company may grow by acquiring
other financial institutions. There are a limited number of attractive
acquisition candidates that operate in the Company's target markets, and the
Company may face significant competition from other institutions, including
larger regional bank holding companies seeking to acquire such candidates. Any
such acquisitions will be subject to regulatory approval, and there can be no
assurance that the Company will obtain such approval. The Company does not have
any agreement, arrangement or understanding regarding the acquisition of any
financial institution. In addition, in the event that the Company does
proceed with any acquisition, there can be no assurance that it will be
successful in integrating the acquired institution into its business.
Furthermore, the Company must maintain sufficient regulatory capital levels to
support any such acquisition. There can be no assurance that the Company will
successfully implement its growth strategy. See "Business -- Growth Strategy"
and "Supervision and Regulation -- The Holding Company."
Dependence on Key Personnel
Consistent with its policy of focusing growth initiatives on the
recruitment of qualified personnel, the Company is highly dependent on the
continued services of a number of its executive officers and key employees. The
loss of the services of any of these individuals could adversely affect the
Company's business, financial condition, results of operations and cash flows.
The Company does not have key person life insurance on the life of any of these
individuals. Moreover, the Company's anticipated growth is expected to place
increased demands on its human resources. While the Company believes that its
senior management and systems infrastructure are adequate to support anticipated
growth, the Company will be required to recruit additional middle management
personnel. The failure to recruit such personnel could have a material adverse
effect on the Company's business, financial condition, results of operations and
cash flows. See "Business -- Growth Strategy" and "Management."
Competitive Banking Environment
The banking business in the Denver metropolitan area is highly competitive.
The Company competes for loans and deposits with other commercial banks, savings
and loan associations, finance companies, mutual funds, credit unions and
mortgage bankers. In addition to traditional financial institutions, the
Company also competes for loans with brokerage and investment banking companies,
nonfinancial institutions, including retail stores that maintain their own
credit programs, and governmental agencies that make available low cost or
guaranteed loans to certain borrowers. Particularly in times of high interest
rates, the Company also faces significant competition for deposits from sellers
of short-term money market securities and other corporate and government
securities. By virtue of their larger capital bases or affiliation with larger
multi-bank holding companies, many of the Company's competitors have
substantially greater resources and lending limits than the Company and perform
other functions that the Company offers only through correspondents. Interstate
banking is permitted in Colorado, and, since January 1, 1997, unlimited state-
wide branch banking has been permitted. As a result, the Company may experience
greater competition in its primary service areas. The Company's business,
financial condition, results of operations and cash flows may be adversely
affected by an increase in competition. Moreover, recently enacted and proposed
legislation has focused on expanding the ability of participants in the banking
industry to engage in other lines of business. The enactment of such
legislation could put the Company at a competitive disadvantage because it may
not have the capital to participate in other lines of business to the same
extent as more highly capitalized bank holding companies. See "Business --
Competition" and "Supervision and Regulation."
8
<PAGE>
Conversion to New Data Processing System
The Company is in the process of converting to a data processing system
designed, installed and serviced by Jack Henry & Associates, Inc. (the "Jack
Henry System") and is scheduled to begin operating on the new system in June
1998. The Company anticipates investing approximately $1.8 million in
converting to the Jack Henry System. There can be no assurance that the Company
will be able to complete the conversion without temporary interruptions of
service. Any such interruptions of service could have a material adverse effect
on the Company's relationships with its customers and, therefore, its business,
financial condition, results of operations and cash flows. See "Business --
Data Processing Systems."
Year 2000 Compliance
As the year 2000 approaches, a significant business issue has emerged
regarding how existing application software programs and operating systems can
accommodate the date value for the year 2000. Many existing software application
products, including software application products used by the Bank, were
designed to accommodate only a two-digit date value, which represents the year.
For example, information relating to the year 1996 is stored in the system as
"96." As a result, the year 1999 (i.e., "99") could be the maximum date value
that these systems will be able to process accurately. In response to concerns
about this issue, bank regulatory agencies have begun to monitor bank holding
companies' and banks' readiness for the year 2000 as part of the regular
examination process. In the event that a bank holding company or a bank is
determined not to be satisfactorily prepared for the year 2000, it will be
required to submit a written plan establishing a timetable for year 2000
compliance and periodic progress reports on its efforts to implement the plan.
Failure to formulate a satisfactory plan, or to implement the plan successfully,
could result in an enforcement action. The Company conducts all of its data
processing operations in-house, with the assistance of third-party software
vendors, and is working with these vendors to assure that it is prepared for the
year 2000. The Company has appointed a Year 2000 Committee to oversee issues
relating to its year 2000 compliance program. The Company's year 2000
compliance program calls for all critical systems to be certified as year 2000
compliant by December 31, 1998. As a result of the conversion to the Jack Henry
System, which is designed to be year 2000 compliant, the Company does not
anticipate incurring any incremental costs in connection with year 2000
compliance. See " -- Conversion to New Data Processing System." The inability
of the Company to address year 2000 issues successfully could result in
significant interruptions in its operations and, therefore, could have a
material adverse effect on the Company's business, financial condition, results
of operations and cash flows. See "Business -- Data Processing Systems" and
"Supervision and Regulation -- The Bank -- Monitoring of Year 2000 Compliance."
Government Regulation and Recent Legislation
The Company and the Bank are subject to extensive federal and state
legislation, regulation and supervision, which is intended to protect depositors
rather than shareholders of the Company. Recently enacted, proposed and future
legislation and regulations have had, and will likely continue to have, a
significant impact on the Company, the Bank and the banking industry. Although
some of these legislative and regulatory changes may benefit the Company and the
Bank, others will increase their costs of doing business and create competitive
advantages for their competitors. For example, recently enacted and proposed
legislation has focused on expanding the ability of participants in the banking
industry to engage in other lines of business. The enactment of such
legislation could put the Company at a competitive disadvantage because it may
not have the capital to participate in other lines of business to the same
extent as more highly capitalized bank holding companies. See "Business --
Competition" and "Supervision and Regulation."
9
<PAGE>
Potential Liability for Undercapitalized Subsidiary
Under federal law, a bank holding company may be required to guarantee a
capital plan filed by an undercapitalized bank subsidiary with its primary
regulator. If the subsidiary defaults under the plan, the holding company may
be required to contribute to the capital of the subsidiary bank an amount equal
to the lesser of 5% of the bank's assets at the time it became
undercapitalized or the amount necessary to bring the bank into compliance with
applicable capital standards. Therefore, it is possible that the Company will
be required to contribute capital to the Bank or any other bank that it may
acquire in the event that such bank becomes undercapitalized. Moreover, the
Company may be required to make such capital contribution at a time when it has
other significant capital needs, and, therefore, such requirement may adversely
affect the Company's business, financial condition, results of operations and
cash flows. See "Supervision and Regulation -- The Holding Company -- Capital
Adequacy" and "-- The Bank -- Capital Adequacy."
Need for Technological Change
The banking industry is undergoing rapid technological change, with
frequent introductions of new technology-driven products and services. The
Company's future success will depend, in part, on its ability to address the
needs of its customers by using technology to provide products and services that
will satisfy customer demands for convenience, as well as its ability to create
additional efficiencies in its operations. Many of the Company's competitors
have substantially greater resources to invest in technological improvements.
There can be no assurance that the Company will be able to effectively implement
new technology-driven products and services or be successful in marketing such
products and services to its customers. See "Business -- Operating Strategy."
No Dividends to Date; Restrictions on Payments of Dividends
The Company has never paid cash dividends on its Common Stock and does not
intend to pay dividends in the foreseeable future. Instead, the Company intends
to retain earnings to support the growth of its business. Moreover, the
Company's ability to pay a cash dividend on its Common Stock, if it determines
to do so, is largely dependent upon the payment of dividends by the Bank to the
Company. The Bank's ability to pay dividends to the Company is restricted by
federal regulations. Without prior regulatory approval, the Bank cannot pay
dividends during any calendar year in excess of the sum of its earnings during
that year and the two previous years (less any other distributions to
shareholders during that period). See "Dividend Policy" and "Supervision and
Regulation --The Bank -- Dividend Restrictions."
Concentration of Ownership
As of December 31, 1997, directors, executive officers and key employees of
the Company beneficially owned approximately 61.8% of the Common Stock. Upon
completion of this offering (the "Offering"), directors, executive officers and
key employees of the Company will beneficially own approximately 50.1% of the
Common Stock (including the 90,000 shares of Common Stock reserved for sale to
directors, executive officers and key employees of the Company in the Offering).
Accordingly, such persons will be in a position to exercise substantial
influence over the affairs of the Company. See "Management" and "Principal
Shareholders."
10
<PAGE>
Anti-takeover Provisions
The Company's Articles of Incorporation and Bylaws include a number of
provisions that may have the effect of encouraging persons considering
unsolicited tender offers or other unilateral takeover proposals to negotiate
with the Board of Directors of the Company rather than pursue non-negotiated
takeover attempts. These provisions include preferred stock as to which the
Company's Board of Directors has the authority to issue additional series and to
fix the rights, preferences and limitations thereof without shareholder
approval, the availability for issuance of authorized but unissued Common Stock
and a classified Board of Directors, with three classes of directors having
staggered terms of three years each. See "Description of Capital Stock" and
"Management -- Classified Board of Directors." Moreover, the Company has entered
into employment agreements with a number of its executive officers and key
employees that require the Company to make a lump sum payment to such employee
in an amount equal to a multiple of such employee's annual compensation in the
event that his or her employment is terminated within two years after the
occurrence of certain types of changes in control of the Company. As of December
31, 1997, the estimated aggregate amount of such payments that would be due if
the employment of each such executive officer and key employee were to terminate
after such a change of control was $2.7 million. See "Management --Employment
Agreements." These anti-takeover provisions have the effect of discouraging a
change in control of the Company not approved by its Board of Directors, thereby
potentially depriving shareholders of an opportunity to sell their shares at a
substantial premium over market price. See "Description of Capital Stock --
Certain Charter and Bylaw Provisions." In addition, no person or entity,
individually or together with persons or entities acting in concert with such
person or entity, may acquire the ownership, control, right to vote or right to
acquire 10% or more of the Company's total outstanding Common Stock, without
first complying with the requirements of the Change in Bank Control Act and the
Bank Holding Company Act of 1956. These requirements also may have the effect of
delaying or preventing a change of control of the Company. See "Supervision and
Regulation."
No Prior Market; Possible Volatility of Market Price; Dilution
Prior to the Offering, there has been no public market for the Common
Stock. The Company has applied for the inclusion of the Common Stock on the
Nasdaq National Market. However, there can be no assurance that a market for
the Common Stock will develop or, if developed, will be sustained. The initial
public offering price of the Common Stock will be determined by negotiations
between the Company and the Representative of the Underwriters based upon
several factors. See "Underwriting." There can be no assurance that future
market prices will equal or exceed the initial public offering price. Following
the Offering, the market price of the Common Stock may fluctuate, depending on
various factors, including the general economy, stock market conditions, general
trends in the banking industry, announcements by the Company or its competitors
and variations in the Company's quarterly and annual operating results. In
addition, purchasers of the Common Stock offered hereby will incur substantial
immediate dilution. See "Dilution."
Shares of Common Stock Eligible for Future Sale
Sales of a substantial number of shares of Common Stock in the public
market following the Offering could adversely affect the market price of the
Common Stock. Following the Offering, the Company will have outstanding
6,274,968 shares of Common Stock. As of the date of this Prospectus, the
1,400,000 shares of Common Stock offered hereby and approximately 313,999
additional shares of Common Stock may be sold in the public market. Beginning
90 days after the date of this Prospectus, approximately 636,942 additional
shares of Common Stock may be sold in the public market, subject to the volume
limitations and other requirements contained in Rule 144 ("Rule 144"),
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
Beginning 180 days after the date of this Prospectus, approximately
11
<PAGE>
3,854,849 additional shares of Common Stock subject to lock-up agreements
between the Representative and the Company's directors, executive officers and
key employees, and certain other shareholders, will become available for sale in
the public market. Thereafter, substantially all of the outstanding shares of
Common Stock may be sold in the public market, subject to compliance with Rule
144. See "Shares Eligible for Future Sale."
12
<PAGE>
USE OF PROCEEDS
Assuming an initial public offering price of $11.00 per share, the net
proceeds to the Company from the sale of the Common Stock offered hereby, after
deducting underwriting discounts and commissions and estimated offering
expenses, will be approximately $13.9 million ($16.0 million if the
underwriters' over-allotment option is exercised in full).
The Company anticipates that approximately $7.3 million of the net proceeds
will be used to repay all remaining outstanding indebtedness under the Company's
credit facility (the "Credit Facility") with American National Bank and Trust
Company ("ANB"). The Credit Facility is secured by the Company's pledge of all
of the capital stock of the Bank. Interest on the Credit Facility accrues at
the prime rate and is payable quarterly. All outstanding indebtedness under the
Credit Facility is payable in full on June 30, 2001. Approximately $1.5 million
of the net proceeds will be used to redeem all of the Company's outstanding
Preferred Stock, including the payment of accrued but unpaid dividends (which
accrue at a variable rate that is 2.25% higher than the prime rate and are
payable quarterly). The outstanding shares of the Preferred Stock may be
redeemed by the Company at any time without premium or penalty. All such shares
of Preferred Stock were issued to ANB in April 1997 in connection with ANB's
exchange of $1.5 million of outstanding indebtedness under the Credit Facility
for Preferred Stock. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview." The remaining net proceeds
from the Offering will be contributed to the capital of the Bank. Although the
Bank currently exceeds regulatory capital requirements, the additional capital
will enable it to continue asset growth.
DIVIDEND POLICY
The Company's policy is to retain its earnings to support the growth of its
business. The Board of Directors of the Company has never declared cash
dividends on the Common Stock and does not plan to do so in the foreseeable
future. The ability of the Company to pay cash dividends largely depends on the
amount of cash dividends paid to it by the Bank. Capital distributions,
including dividends, by institutions such as the Bank are subject to
restrictions tied to the institution's earnings. See "Supervision and
Regulation -- The Bank -- Dividend Restrictions."
13
<PAGE>
DILUTION
The net tangible book value of the Company's Common Stock at December 31,
1997 was approximately $10.8 million, or approximately $2.22 per share. After
giving effect to the Offering (at an assumed initial public offering price of
$11.00 per share of Common Stock) and the application of the estimated net
proceeds therefrom, the net tangible book value of the Common Stock at December
31, 1997 would have been approximately $24.7 million, or $3.94 per share. This
represents an immediate dilution to investors of $7.06 per share, as illustrated
by the following table:
<TABLE>
<S> <C> <C>
Assumed public offering price per share.............................................. $11.00
Net tangible book value per share of Common Stock as of December 31, 1997....... $2.22
Increase per share of Common Stock attributable to new investors................ 1.72
-----
Pro forma net tangible book value per share of Common Stock after the Offering (1)... 3.94
------
Dilution per share of Common Stock to new investors (1).............................. $ 7.06
======
</TABLE>
- ----------------
(1) Excludes (a) 433,551 shares of Common Stock issuable upon exercise of
outstanding options held by officers, directors and employees of the
Company, (b) 278,553 shares of Common Stock reserved for issuance pursuant
to future grants of options to officers, directors and employees of the
Company and (c) 100,000 shares of Common Stock issuable upon exercise of a
warrant to be issued to the Representative of the Underwriters.
The following table summarizes, as of December 31, 1997, on a pro forma
basis, the number of shares of Common Stock issued by the Company, the total
consideration received by the Company for such shares and the average price per
share of Common Stock paid by existing shareholders and by investors in the
Offering (based upon an assumed initial public offering price of $11.00 per
share), before deducting the estimated underwriting discounts and commissions
and offering expenses.
<TABLE>
<CAPTION>
Shares purchased Total consideration Average
------------------- ------------------------- price per
Shares Percent Amount Percent share
--------- -------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders........ 4,874,968 77.7% $11,982,000 43.8% $ 2.46
New investors................ 1,400,000 22.3% 15,400,000 56.2% 11.00
--------- ----- ----------- -----
Total................... 6,274,968 100.0% $27,382,000 100.0%
========= ===== =========== =====
</TABLE>
14
<PAGE>
CAPITALIZATION
The following table, which should be read in conjunction with the
Consolidated Financial Statements and related Notes thereto included elsewhere
in this Prospectus, sets forth the capitalization (including deposits) of the
Company as of December 31, 1997, and as adjusted to reflect the Offering (at an
assumed public offering price of $11.00 per share) and the application of the
estimated net proceeds therefrom.
<TABLE>
<CAPTION>
At December 31, 1997
----------------------------------
Actual As adjusted
--------------- -----------------
(In thousands)
<S> <C> <C>
Deposits................................................................................ $221,058 $221,058
======== ========
Borrowings:
Securities sold under agreements to repurchase......................................... $ 13,024 $ 13,024
Federal funds purchased................................................................ -- --
FHLB notes payable..................................................................... 3,260 3,260
Note payable........................................................................... 7,500 --
-------- --------
Total borrowings..................................................................... $ 23,784 $ 16,284
======== ========
Shareholders' equity:
Preferred Stock, $.01 par value per share, 2,000,000 shares authorized;
1,500 shares issued and outstanding, actual; no shares issued
and outstanding, as adjusted......................................................... $ 1,500 $ --
Common Stock, $.01 par value per share, 25,000,000 shares authorized;
4,874,968 shares issued and outstanding, actual; 6,274,968 shares issued and
outstanding, as adjusted............................................................. 49 63
Additional paid-in capital............................................................. 11,933 25,819
Retained earnings...................................................................... 3,833 3,833
Net unrealized appreciation on available for sale securities, net of taxes............. 110 110
-------- --------
Total shareholders' equity........................................................... $ 17,425 $ 29,825
======== ========
</TABLE>
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Company acquired ownership of the predecessors of the Bank in September
1994 for a purchase price of approximately $17.4 million. The purchase price
was financed, in part, by a loan obtained by the Company in the amount of $10.5
million from ANB. In connection with the Acquisition, the Company recorded (i)
a deposit intangible valued at $352,000, which was amortized over a three-year
period, and (ii) goodwill of $6.4 million, which is being amortized over a 15-
year period. The amortization of these assets adversely affects the Company's
net income, although it has no effect on its cash flow.
In March 1997, the Company completed a private placement of 1,102,725 shares
of Common Stock at a price of $3.61 per share for an aggregate of approximately
$4.0 million, which was used to fund the Company's continuing growth. The
capital raised in this transaction was provided primarily by certain Colorado-
based investors who have played a significant role in the growth of the Company
by providing deposits and loan opportunities, both directly and indirectly
through referrals. In April 1997, the Company increased its regulatory capital
by converting $1.5 million of its outstanding indebtedness to ANB into Preferred
Stock.
Since the Acquisition, the Company's objective has been to maximize its
return on shareholders' equity and to retain earnings to support growth. From
December 31, 1994 to December 31, 1997, the Company's shareholders' equity
(excluding preferred stock) increased 92.1%, from $8.3 million to $15.9 million
(including the $4.0 million in additional capital raised in March 1997 in the
private placement referred to above). During that same time period, the
Company's outstanding loans and leases increased 131.4%, from $71.9 million to
$166.3 million. This increase has primarily been the result of the Company's
focus on local relationship banking and commercial lending to small- and medium-
sized businesses. In addition, the Company has emphasized building and
maintaining asset quality through its credit underwriting and monitoring
process. See "Business -- Lending Activities." Nonperforming assets have
ranged from 0.31% to 0.58% of total assets during this period. While the Company
has maintained asset quality, it has continued to build its allowance for loan
and lease losses. The Company's allowance for loan and lease losses was
increased 90.4%, from $1.2 million as of December 31, 1994 to $2.2 million as of
December 31, 1997 to maintain strong reserve coverage of the Company's growing
loan and lease portfolio.
In March 1996, the Company formed an equipment leasing subsidiary, Colorado
Business Leasing, Inc. ("CBL"). The Company owns an 80% interest in CBL and the
remaining 20% is owned by CBL's management. Currently, the Bank purchases all
leases originated by CBL and, accordingly, assumes all credit risk associated
with such leases. The Bank pays a servicing fee to CBL for each lease, and
customers may pay additional origination fees directly to CBL. The Company and
CBL are considering restructuring their relationship so that all leases are held
by CBL, with the Bank providing CBL a line of credit to fund the purchase of
leased equipment. The Company believes that the restructuring would not have a
material effect on its consolidated financial statements.
The Company's management has focused on developing an organization with
personnel, management systems and products that will allow it to compete
effectively and position it for growth. The cost of this process relative to
the Company's size has been high.
16
<PAGE>
In addition, the Company has operated with excess capacity during the start-up
phases of various projects. As a result, the Company's earnings over the past
several years have been adversely affected by relatively high levels of
noninterest expense. Salaries and employee benefits comprised most of this
overhead category, but the Company believes that its compensation levels have
allowed it to recruit and retain a highly qualified management team capable of
implementing its business strategies. The Company believes that its compensation
policies, which include the granting of options to purchase Common Stock to many
employees, have highly motivated its employees and have enhanced its ability to
maintain customer loyalty and generate earnings. While the Company will continue
to add personnel to lead new growth initiatives, including middle management, it
believes that its senior management and systems infrastructure are adequate to
support its anticipated growth without incurring proportionate increases in
general, administrative and other noninterest expenses.
This discussion should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto included elsewhere in this
Prospectus. For a description of the Company's accounting policies, see Note 1
of Notes to Consolidated Financial Statements.
Net Interest Income
The largest component of the Company's net income is its net interest
income. Net interest income is the difference between interest income,
principally from loans, leases and investment securities, and interest expense,
principally on customer deposits and borrowings. Changes in net interest income
result from changes in volume, net interest spread and net interest margin.
Volume refers to the average dollar levels of interest-earning assets and
interest-bearing liabilities. Net interest spread refers to the difference
between the average yield on interest-earning assets and the average cost of
interest-bearing liabilities. Net interest margin refers to net interest income
divided by average interest-earning assets and is influenced by the level and
relative mix of interest-earning assets and interest-bearing liabilities.
The following table presents, for the periods indicated, certain information
related to the Company's average balance sheet items or accounts and its average
yields on assets and average costs of liabilities. Such yields are derived by
dividing income or expense by the average balance of the corresponding assets or
liabilities.
17
<PAGE>
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------
1997 1996
------------------------------- -----------------------------
Interest Average Interest Average
Average earned yield Average earned yield
balance or paid or cost balance or paid or cost
---------- -------- -------- ---------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold.......................... $ 5,204 $ 360 6.92% $ 2,633 $ 179 6.80%
Investment securities (1)................... 59,602 3,616 6.07 54,397 3,415 6.28
Loans and leases (2)........................ 138,787 14,171 10.21 98,075 10,117 10.32
Allowance for loan and lease losses......... (1,933) -- -- (1,518) -- --
-------- ------- -------- -------
Total interest-earning assets.............. 201,660 18,147 9.00 153,587 13,711 8.93
Noninterest-earning assets:
Cash and due from banks.................... 12,810 9,997
Other...................................... 9,758 9,580
-------- --------
Total assets.......................... $224,228 $173,164
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits:
NOW and money market accounts............... $ 66,222 2,141 3.23% $ 63,037 1,950 3.09%
Savings..................................... 5,780 152 2.63 5,669 150 2.65
Certificates of deposit:
Under $100,000............................ 16,942 877 5.18 9,872 445 4.51
$100,000 and over......................... 35,936 2,083 5.80 26,227 1,450 5.53
-------- ------- -------- -------
Total interest-bearing deposits............. 124,880 5,253 4.21 104,805 3,995 3.81
Short-term borrowings:
Securities and loans sold under
agreements to repurchase and federal
funds purchased........................... 15,059 751 4.99 5,287 377 7.13
FHLB notes payable.......................... 4,167 280 6.72 1,073 68 6.34
Long-term borrowings......................... 8,458 732 8.65 10,417 883 8.48
-------- ------- -------- -------
Total interest-bearing liabilities.... 152,564 7,016 4.60 121,582 5,323 4.38
Noninterest-bearing demand accounts....... 54,706 41,070
-------- --------
Total deposits and interest-bearing
liabilities.......................... 207,270 162,652
Other noninterest-bearing liabilities........ 1,606 923
-------- --------
Total liabilities........................... 208,876 163,575
Shareholders' equity......................... 15,352 9,589
-------- --------
Total liabilities and shareholders' equity.. $224,228 $173,164
======== ========
Net interest income.......................... $11,131 $ 8,388
======= =======
Net interest spread.......................... 4.40% 4.55%
==== ====
Net interest margin.......................... 5.52% 5.46%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities......... 132.18% 126.32%
======== ========
</TABLE>
- ---------------------
(1) Yields do not include adjustments for tax-exempt interest because the
amount of such interest is not material.
(2) Loan fees included in interest income are not material. Nonaccrual loans
and leases are included in average loans and leases outstanding.
18
<PAGE>
The following table illustrates, for the periods indicated, the changes in
the Company's net interest income due to changes in volume and changes in
interest rates. Changes in net interest income due to both volume and rate have
been included in the changes due to rate.
<TABLE>
<CAPTION>
Year ended December 31, 1997
compared with year ended
December 31, 1996
Increase (decrease)
in net interest income due to changes in
-------------------------------------------
Volume Rate Total
-------------- ------------ -------------
(In thousands)
<S> <C> <C> <C>
Interest-Earning Assets
Federal funds sold.............................. $ 176 $ 5 $ 181
Investments..................................... 326 (125) 201
Loans and leases................................ 4,200 (146) 4,054
------ ----- ------
Total interest-earning assets.................. 4,702 (266) 4,436
------ ----- ------
Interest-Bearing Liabilities
NOW and money market accounts................... 99 92 191
Savings......................................... 3 (1) 2
Certificates of deposits:
Under $100,000................................. 319 113 432
$100,000 and over.............................. 537 96 633
Short-term borrowings:
Securities and loans sold under agreements to
repurchase and federal funds purchased....... 696 (322) 374
FHLB notes payable............................. 197 15 212
Long-term borrowings............................ (166) 15 (151)
------ ----- ------
Total interest-bearing liabilities............. 1,685 8 1,693
------ ----- ------
Net increase (decrease) in net interest income. $3,017 $(274) $2,743
====== ===== ======
</TABLE>
Asset/Liability Management
The Company's results of operations depend significantly on net interest
income. Like most financial institutions, the Company's interest income and cost
of funds are affected by general economic conditions and by competition in the
marketplace. Rising and falling interest rate environments can have various
impacts on net interest income, depending on the interest rate profile (i.e.,
the difference between the repricing of interest-earning assets and interest-
bearing liabilities), the relative changes in interest rates that occur when
various assets and liabilities reprice, unscheduled repayments of loans and
leases and investments, early withdrawals of deposits and other factors.
Assuming no change in the Company's interest rate profile, a rise in interest
rates is likely to result in increased net interest income, while a decline in
interest rates is likely to result in decreased net interest income.
To manage these relationships, the Company evaluates the following factors:
liquidity, equity, debt/capital ratio, anticipated prepayment rates, portfolio
maturities, maturing assets and maturing liabilities. The Company's Asset and
Liability Management Committee is responsible for establishing procedures that
enable the Company to achieve its goals while adhering to prudent banking
practices and existing loan and
19
<PAGE>
investment policies. The Company's policy is intended to control the exposure of
its operations to changing interest rates by attempting to maintain a position
within a narrow range around an "earnings neutral position," which is defined as
the mix of assets and liabilities that generates the net interest margin that is
least affected by interest rate changes.
The Company has focused on maintaining balance between interest rate
sensitive assets and liabilities and repricing frequencies. An important
element of this focus has been to emphasize variable rate loans and investments
funded by deposits which also mature or reprice over periods of twelve months or
less.
The following table presents, at December 31, 1997, loans and leases by
maturity in each major category of the Company's portfolio. Actual maturities
may differ from the contractual maturities shown below as a result of renewals
and prepayments. Loan renewals are evaluated in the same manner as new credit
applications.
<TABLE>
<CAPTION>
At December 31, 1997
-------------------------------------------
Less than One to Over
one year five years five years Total
--------- ---------- ---------- --------
(In thousands)
<S> <C> <C> <C> <C>
Commercial....................... $ 65,049 $11,535 $1,568 $ 78,152
Real estate -- mortgage.......... 15,530 19,192 5,540 40,262
Real estate -- construction...... 26,506 1,179 101 27,786
Consumer......................... 7,507 3,838 387 11,732
Direct financing leases.......... 2,781 5,626 -- 8,407
-------- ------- ------ --------
Total loans and leases.......... $117,373 $41,370 $7,596 $166,339
======== ======= ====== ========
</TABLE>
Of the $49.0 million of loans and leases that mature after one year,
approximately $48.1 million are fixed rate loans and leases and $914,000 are
variable rate loans and leases.
Results of Operations
The following table sets forth selected statement of income data for the
periods indicated.
<TABLE>
<CAPTION>
Year ended
December 31,
--------------------------
1997 1996 1995
------- ------- --------
(In thousands)
<S> <C> <C> <C>
Interest income.................................................... $18,147 $13,711 $11,231
Interest expense................................................... 7,016 5,323 4,400
------- ------- -------
Net interest income before provision for loan and lease losses..... 11,131 8,388 6,831
Provision for loan and lease losses................................ 949 493 242
------- ------- -------
Net interest income after provision for loan and lease losses...... 10,182 7,895 6,589
Noninterest income................................................. 3,303 1,794 1,191
Noninterest expense................................................ 10,387 7,827 6,632
------- ------- -------
Income before income taxes......................................... 3,098 1,862 1,148
Provision for income taxes......................................... 1,245 762 432
------- ------- -------
Net income......................................................... $ 1,853 $ 1,100 $ 716
======= ======= =======
</TABLE>
20
<PAGE>
Year ended December 31, 1997 compared to year ended December 31, 1996
Overview. Net income increased 68.5%, to $1.9 million in 1997 from $1.1
million in 1996. This increase was primarily due to increases of $2.7 million
in net interest income and $1.5 million in noninterest income, which were
partially offset by increases in noninterest expense and income taxes. Return
on average assets and return on average common equity were 0.83% and 12.21%,
respectively, for 1997, compared with 0.64% and 11.47%, respectively, for 1996.
Total assets increased by 38.5%, to $264.1 million at December 31, 1997 from
$190.6 million at December 31, 1996, primarily as a result of an increase of
$53.3 million in net loans and leases.
Interest Income. Interest income increased 32.4%, to $18.1 million in
1997 from $13.7 million in 1996. This increase was caused primarily by an
increase of $40.7 million in average loan and lease volume, which resulted in
$4.1 million of additional interest income. The yield on average interest-
earning assets increased to 9.00% from 8.93% as a result of a change in the mix
of interest-earning assets from investments to higher yielding loans and leases.
Yield on average investment securities decreased to 6.07% from 6.28%, and yields
on average loans and leases decreased to 10.21% from 10.32%.
Interest Expense. Interest expense increased 31.8%, to $7.0 million in
1997 from $5.3 million in 1996, primarily due to increased volume of interest-
bearing liabilities. Average interest-bearing deposits increased $20.1 million
and average interest-bearing liabilities increased $31.0 million, while the cost
of interest-bearing liabilities increased to 4.60% from 4.38%. The volume
increase resulted in $1.7 million in additional interest expense. The increase
in cost of liabilities was primarily the result of a $9.7 million increase in
higher cost certificates of deposit. The cost of interest-bearing deposits
increased to 4.21% in 1997 from 3.81% in 1996.
Provision for Loan and Lease Losses. The provision for loan and lease
losses increased 92.5%, to $949,000 in 1997 from $493,000 in 1996. This increase
was due to the increase in total loans and leases outstanding in 1997, and was
not reflective of a deterioration of credit quality.
Noninterest Income. Noninterest income increased 84.1%, to $3.3 million in
1997 from $1.8 million in 1996, primarily due to an increase of $1.1 million in
lease revenue associated with operating leases. The Company believes that
noninterest income has not grown at as high a rate as loans and leases and
deposits, in part, because the Company provides customers with the option of
paying for services in cash or by maintaining additional noninterest-bearing
account balances. Although the use of compensating balances in lieu of fees
decreases noninterest income, it increases the percentage of noninterest-bearing
deposits. At December 31, 1997, 31.2% of deposits at the Bank were noninterest-
bearing deposits.
Noninterest Expense. Noninterest expense increased 32.7%, to $10.4
million in 1997 from $7.8 million in 1996. Of this increase, approximately
$975,000 was additional personnel cost and $184,000 was related to increased
occupancy expense. A substantial portion of the additional personnel and
occupancy costs were due to additional staff hired, and office space leased, to
accommodate growth. In addition, $1.2 million of the noninterest expense
incurred was related to depreciation expense from operating leases.
Year ended December 31, 1996 compared to year ended December 31, 1995
Overview. Net income increased 53.6%, to $1.1 million in 1996 from
$716,000 in 1995. This increase was primarily due to increases of $1.6 million
in net interest income and $603,000 in noninterest income, which were partially
offset by increases in noninterest expense and income taxes. Return on average
assets and return on average common equity were 0.64% and 11.47%, respectively,
for 1996, compared with 0.50% and 8.24%, respectively, for 1995. Total assets
increased by 18.8%, to $190.6 million at December 31, 1996 from $160.4 million
at December 31, 1995, primarily as a result of increases of $23.4 million in net
loans and leases and $2.1 million in operating leases.
21
<PAGE>
Interest Income. Interest income increased 22.1%, to $13.7 million in
1996 from $11.2 million in 1995. This increase resulted primarily from increases
of $20.1 million in average loan and lease volume and $12.0 million in the
average balance of investment securities. The loan and lease volume increase
resulted in $1.9 million of additional interest income, while the investment
securities volume increase resulted in $580,000 of additional interest income.
The yield on average interest-earning assets remained relatively constant from
1995 to 1996.
Interest Expense. Interest expense increased 21.0%, to $5.3 million in
1996 from $4.4 million in 1995, primarily due to increased volume of interest-
bearing liabilities. The increases in average interest-bearing deposits of
$15.9 million and in average interest-bearing liabilities of $20.6 million were
the primary causes of the increase in interest expense. The cost of interest-
bearing liabilities increased only marginally. The volume increase resulted in
$923,000 of additional interest expense. The increase in costs of liabilities
was primarily the result of an $11.0 million increase in higher cost
certificates of deposit. The cost of interest-bearing deposits increased only
marginally.
Provision for Loan and Lease Losses. The provision for loan and lease
losses was increased 103.7%, to $493,000 in 1996 from $242,000 in 1995. This
increase was due to the increase in total loans and leases outstanding in 1996,
and was not reflective of a deterioration of credit quality.
Noninterest Income. Noninterest income increased 50.6%, to $1.8 million
in 1996 from $1.2 million in 1995, due to increases of $261,000 in lease revenue
associated with operating leases, $123,000 in mortgage origination fees and
$80,000 in service charges.
Noninterest Expense. Noninterest expense increased 18.0%, to $7.8 million
in 1996 from $6.6 million in 1995. Of this increase, approximately $898,000 was
additional personnel cost and $302,000 was related to increased occupancy
expense. A substantial portion of the additional personnel and occupancy costs
were due to additional staff hired, and office space leased, to accommodate
growth.
Liquidity and Capital Resources
The Company's liquidity management objective is to ensure its ability to
satisfy the cash flow requirements of depositors and borrowers and allow the
Company to meet its own cash flow needs. The Company's primary source of funds
historically has been customer deposits. Scheduled loan and lease repayments
are a relatively stable source of funds, while deposit inflows and unscheduled
loan and lease prepayments, which are influenced by fluctuations in general
interest rates, returns available on other investments, competition, economic
conditions and other factors, are relatively unstable. Company borrowings may
be used on a short-term basis to compensate for reductions in other sources of
funds (such as deposit inflows at less than projected levels). Company
borrowings may also be used on a longer term basis to support expanded lending
activities and to match the maturity or repricing intervals of assets.
Deposits increased by $65.8 million or 42.3% in 1997. The Company believes
that the increase in deposits during 1997 was the result of (i) the continuing
growth of Colorado Business Bank -- Boulder, (ii) the opening of Colorado
Business Bank -- West and a second location in Littleton, (iii) increased
marketing activities by the Company and (iv) customer dissatisfaction with
service at large banks owned by regional bank holding companies. The Company
anticipates that it will continue to rely primarily upon customer deposits,
sales and maturities of investment securities, loan and lease sales and payments
on loans and leases, as well as retained earnings, to provide liquidity to fund
loans and leases and purchase investment securities.
The Company believes that the proceeds from the Offering, together with the
Company's cash flow, will be sufficient to support its operations for the
foreseeable future. If, however, additional liquidity or regulatory capital is
needed, the Company will be required to raise such capital by obtaining
additional debt or equity financing, in either the public or private markets.
There can be no assurance that such financing will be available to the Company
upon acceptable terms or at all.
22
<PAGE>
Effects of Inflation and Changing Prices
The primary impact of inflation on the Company's operations is increased
operating costs. Unlike most retail or manufacturing companies, virtually all
of the assets and liabilities of a financial institution such as the Bank are
monetary in nature. As a result, the impact of interest rates on a financial
institution's performance is generally greater than the impact of inflation.
Although interest rates do not necessarily move in the same direction, or to the
same extent, as the prices of goods and services, increases in inflation
generally have resulted in increased interest rates. Over short periods of
time, interest rates may not move in the same direction, or at the same
magnitude, as inflation.
Year 2000 Compliance
As a result of the conversion to the Jack Henry System, which is designed
to be year 2000 compliant, the Company does not anticipate incurring any
incremental costs in connection with year 2000 compliance. See "Risk Factors --
Conversion to New Data Processing System" and "-- Year 2000 Compliance."
Recent Accounting Pronouncements
In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was issued.
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general purpose financial statements. SFAS No. 130 requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. SFAS No. 130 requires that a
company (a) classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of the balance sheet. SFAS No. 130 is effective
for fiscal years beginning after December 15, 1997. Reclassification of
financial statements for earlier periods provided for comparative purposes is
required. The Company has not determined the effects, if any, that SFAS No. 130
will have on the disclosures in the Consolidated Financial Statements.
Also, in June 1997, SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," was issued. SFAS No. 131 establishes
standards for the way that public companies report selected information about
operating segments in annual financial statements and requires that those
companies report selected information about segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
Generally, financial information is required to be reported on the basis that it
is used internally for evaluating segment performance and deciding how to
allocate resources to segments. SFAS No. 131 requires that a public company
report a measure of segment profit or loss, certain specific revenue and expense
items and segment assets. SFAS No. 131 is effective for financial statements
for periods beginning after December 15, 1997. The Company has not determined
the effects, if any, that SFAS No. 131 will have on the disclosures in the
Consolidated Financial Statements.
23
<PAGE>
BUSINESS
General
Colorado Business Bankshares, Inc. (the "Company") is a bank holding
company headquartered in Denver, Colorado that owns Colorado Business Bank, N.A.
(the "Bank"), a full-service, commercial banking institution with five locations
in the Denver metropolitan area. As of December 31, 1997, the Company had total
assets of $264.1 million, net loans and leases of $164.1 million and deposits of
$221.1 million. The Bank provides a broad range of sophisticated banking
products and services, including credit, cash management, investment, deposit
and trust products, to its targeted customer base of small- and medium-sized
businesses and high net worth individuals. Each of the Bank's locations
operates as a separate community bank, with significant local decision-making
authority. Support functions, such as accounting, data processing, bookkeeping,
credit administration, loan operations and investment and cash management
services, are provided centrally from the Company's downtown Denver office. As
a result of this operating approach, the Company believes that it is well
positioned as a community business bank, combining the elements of personalized
service found in community banks with sophisticated banking products and
services traditionally offered by larger regional banks. The Company believes
that its market position and experienced personnel give it the potential to
generate growth and financial returns in excess of industry averages.
The Company acquired ownership of the predecessors of the Bank in September
1994 (the "Acquisition"). At that time, the Bank's operations were conducted
through two separate banks -- Equitable Bank of Littleton, located in Littleton,
Colorado, and The Women's Bank, located in downtown Denver. From December 31,
1994 to December 31, 1997, the Company's assets increased to $264.1 million from
$143.9 million, an increase of 83.5%, its net loan and lease portfolio increased
to $164.1 million from $70.6 million, an increase of 132.6%, and deposits
increased to $221.1 million (31.2% of which were noninterest-bearing deposits)
from $124.5 million, an increase of 77.6%. During that period, the Company made
several changes in operations that it believes have had a significant positive
impact on its business, including:
. Assembled experienced management team. Since the Acquisition, the Company
has assembled a senior management team comprised primarily of experienced
Colorado banking professionals. These individuals brought to the Company
a network of existing relationships with Denver metropolitan area
businesses.
. Established new locations in the Denver metropolitan area. The Bank
established three new banking locations, each staffed with bankers
experienced in their respective markets: a Boulder location, which was
opened in November 1995, a second location in Littleton, which was opened
in March 1997, and a location in West Denver, which was opened in
December 1997. As of December 31, 1997, these three locations had grown
to $31.0 million, $10.0 million and $37,000 in assets, respectively.
. Expanded product and service offerings. Product and service offerings
introduced since the Acquisition include (i) equipment leasing, (ii) a
variety of new investment options and (iii) trust and estate
administration services, including the administration of employee benefit
plans. In addition, the Company has significantly expanded the capability
of its commercial real estate lending department.
. Consolidated banks. The Company consolidated its two bank charters into
the Bank, which was renamed "Colorado Business Bank." The Company
believes that, by placing all of its
24
<PAGE>
operations under the "Colorado Business Bank" standard, it has increased
its name recognition, better described its market focus and eliminated
duplicative regulatory functions and costs.
Growth Strategy
The Company's objective is to build a highly profitable, customer-focused
community banking network with assets in excess of $500 million by the end of
the year 2000. The Company believes that its senior management and systems
infrastructure are adequate to support growth to this level without incurring
proportionate increases in general, administrative and other noninterest
expenses. The Company plans to achieve this objective by (i) leveraging
existing customer relationships and growing the Company's core business of
providing loans and attracting deposits, (ii) de novo branching and (iii)
introducing new product lines. The Company will also explore opportunities to
expand through acquisitions of existing banks.
. Internal growth. The Company believes that conditions in the Colorado
banking market provide it with significant opportunities for internal
growth. The market is currently dominated by a number of large regional
financial institutions which have acquired Colorado-based bank holding
companies. The Company believes that this consolidation has created gaps
in the banking industry's ability to serve certain customers in the
Denver metropolitan area because small- and medium-sized businesses often
are not large enough to warrant significant marketing focus and customer
service by these large banks. In addition, the Company believes that
these banks often do not satisfy the needs of high net worth individuals
who desire personal attention from experienced bankers. Similarly, the
Company believes that many of the remaining independent banks in the area
are unable to satisfy the needs of these businesses and individuals
because, although these banks are dedicated to customer service, they do
not provide the sophisticated banking products and services that such
customers require. Through its ability to combine personalized service,
experienced personnel who are established in their community,
sophisticated technology and a broad product line, the Company believes
that it will continue to achieve strong internal growth by attracting
customers currently banking at both larger and smaller financial
institutions and expanding its business with existing customers. A
significant amount of the Company's loan and lease growth to date has
resulted from pre-existing relationships between customers and the Bank's
lending officers and senior management recruited by the Company.
. De novo branching. The Company also intends to explore growth
opportunities to expand through de novo branching in areas with high
concentrations of the Company's target customers. The Company intends to
use Colorado Business Bank -- Boulder as a model for further de novo
branching. Colorado Business Bank -- Boulder opened in November 1995 with
a staff of three experienced lending officers from the Boulder branch of
a large regional bank. Operations are conducted in a relatively small
office in an office building in downtown Boulder, rather than in a
traditional, free-standing bank building, thereby substantially
decreasing overhead. Colorado Business Bank -- Boulder achieved
profitability in eight months and had grown to more than $31.0 million in
assets as of December 31, 1997.
. New product lines. In addition, the Company will seek to grow through the
addition of new product lines. The Company's product development efforts
are focused on providing enhanced credit, cash management, investment,
deposit and trust products to its target customer base. For example, in
March 1996, the Company formed CBL, an 80% owned equipment leasing
subsidiary, which provides equipment leasing primarily to middle-market
companies. CBL offers leasing programs for computers, telecommunications
equipment,
25
<PAGE>
telephone systems, business furniture, manufacturing equipment, materials
handling equipment and other capital equipment. Within the past few
years, the Company has also greatly expanded its commercial real estate
lending department to allow for the origination of larger and more
complex real estate loans. In addition, the Company began to offer trust
and estate administration services in March 1998. The Company believes
that offering such complementary products allows it to both broaden its
relationships with existing customers and attract new customers to its
core business. In addition, the Company believes that the fees generated
by these services will increase its noninterest income.
. Acquisitions. The Company will consider acquisition candidates that
present attractive opportunities to expand its business in its target
market segment. However, the Company currently has no agreement,
arrangement or understanding regarding the acquisition of any financial
institution.
The Company's approach to expansion is predicated on recruiting key
personnel to lead new initiatives. While the Company normally considers an
array of new locations and product lines as potential expansion initiatives, it
generally will proceed only upon identifying quality management personnel with a
loyal customer following in the community or product line that is the target of
the initiative. The Company believes that, by focusing on individuals who are
established in their community and are experienced in offering sophisticated
banking products and services, it enhances its market position and adds
profitable growth opportunities with limited credit risk.
Operating Strategy
The Company believes that it has a competitive advantage due to its market
position as a community business bank. The Company has adopted a multi-faceted
strategy to maintain and enhance this market position, the principal elements of
which include:
. Assembling a top-quality team. In all areas of its operations, the
Company focuses on attracting and retaining the highest quality
personnel. A significant number of the Company's employees have previous
work experience with larger banking organizations in the Denver
marketplace and have been attracted to the Company's entrepreneurial
culture and decentralized banking approach. The Company believes that
such an experienced, quality team reduces the risks associated with
pursuing its growth strategy.
. Expanding existing banking relationships. The Company normally is not a
transaction lender and typically requires that borrowers enter into a
multiple product banking relationship with the Company, including
deposits and cash management services, in connection with the receipt of
credit from the Bank. The Company believes that such relationships
provide it with the opportunity to introduce its customers to a broader
array of the products and services offered by the Company and generate
additional noninterest income. In addition, the Company believes that
this philosophy aids in customer retention.
. Emphasizing high quality customer service. The Company believes that its
ability to offer high quality customer service provides it with a
competitive advantage over many regional banks that operate in the Denver
metropolitan area. Customer service is emphasized in all aspects of the
Company's operations and is an integral component of its employee
training programs. Moreover, the Company is constantly exploring methods
to make banking an easier and more convenient process for its customers.
For example, the Company has recently begun to offer a courier service to
pick up deposits for customers who are not in
26
<PAGE>
close proximity to any of the Bank's five locations or simply do not have
the time to go to the Bank.
. Capitalizing on the use of technology. The Company believes that it has
been able to distinguish itself from traditional community banks
operating in its market through the use of technology, particularly in
the area of depository relationships. Services currently offered by the
Bank include controlled disbursement, lock box services, repurchase
agreements and sweep investment accounts, and the planned conversion of
the Company's data processing system will allow it to add several new
customer services, including upgraded P.C. Banking and cash management
products and check and document imaging, as well as a 24-hour voice
response system, to its product portfolio. In addition to providing
sophisticated services for its customers, the Company utilizes technology
extensively in its systems and operational support functions in order to
improve customer service, maximize profitability and provide management
with the information and analyses necessary to manage the Company's
growth effectively.
. Achieving efficiencies and economies of scale through centralized
administrative and support operations. The Company seeks to maximize
operational and support efficiencies in a manner consistent with
maintaining high quality customer service. Various management and
administrative functions, including accounting, data processing,
bookkeeping, credit administration, loan operations and investment and
cash management services, have been consolidated at the Bank's downtown
Denver office. The Company believes that this structure allows Bank
personnel to focus on customer service and sales strategies adapted to
each individual community that the Bank serves.
. Maintaining asset quality and controlling interest rate risk. The Company
seeks to maintain asset quality through a program that includes regular
reviews of loans by responsible loan officers and monitoring of the loan
and lease portfolio by a loan review officer who reports directly to the
Audit Committee of the Bank's Board of Directors. As of December 31,
1997, the Company's ratio of nonperforming loans and leases to total
loans and leases was 0.49%. In addition, the Company seeks to control its
exposure to changing interest rates by attempting to maintain an interest
rate profile within a narrow range around an earnings neutral position.
Market Area Served
The Company's current market area is the Denver metropolitan area, which
is comprised of the counties of Denver, Boulder, Adams, Arapahoe, Douglas and
Jefferson. This area is the most densely populated in the Rocky Mountain region.
Total population is approximately 2.2 million, and the area has experienced net
immigration of over 200,000 people since 1990. Employment in the Denver
metropolitan area has become increasingly diversified across the manufacturing,
financial services, tourism, transportation, technology, cable television,
retail trade, services and government sectors. In 1996, Colorado achieved its
tenth straight year of employment growth, with nonagricultural employment
increasing 3.4% during the year to approximately 1.9 million.
The Bank has one location each in downtown Denver, Boulder and West Denver,
and two locations in Littleton. Downtown Denver is the business center of
metropolitan Denver. Boulder has one of the highest concentrations of small
businesses and affluent individuals in the Rocky Mountain region. West Denver
contains a number of newer industrial and office parks. The Littleton locations
serve a more
27
<PAGE>
residential area, including Highlands Ranch, one of the fastest growing
communities in the Denver metropolitan area.
While the Company's expansion initiatives will continue to focus on the
Denver metropolitan area, it will consider adding locations in other geographic
regions, either through de novo branching or acquisitions.
Lending Activities
General. The Company provides a broad range of commercial and retail
lending services, including commercial loans, commercial and residential real
estate construction loans, commercial and residential real estate mortgage
loans, consumer loans, revolving lines of credit and equipment lease financing.
The Company's primary lending focus is on commercial lending to small- and
medium-sized businesses that have annual sales of $2 million to $50 million
and businesses and individuals with borrowing requirements of $200,000 to $3
million. As of December 31, 1997, substantially all of the Bank's outstanding
loans and leases were to customers within the Denver metropolitan area.
Interest rates charged on loans vary with the degree of risk, maturity,
underwriting and servicing costs, principal amount and extent of other banking
relationships between the Bank and the customer, and are further subject to
competitive pressures, money market rates, availability of funds and government
regulations. As of December 31, 1997, approximately 54.4% of the loans in the
Bank's portfolio were at interest rates that float with the Bank's base rate or
some other reference rate.
Credit Procedures and Review. The Company addresses credit risk through
internal credit policies and procedures, including underwriting criteria,
officer and customer lending limits, a multi-layered loan approval process for
larger loans, periodic document examination, justification for any exceptions to
credit policies, loan review and concentration monitoring. In addition, the
Company provides ongoing loan officer training and review.
The Company's loan approval process varies depending upon the size of the
loan. Each of the Bank's senior loan officers has the authority to approve
loans of up to $250,000. Other loan officers have the authority to approve
loans of lower amounts up to limits set by the Bank's Board of Directors. Loans
of between $250,000 and $500,000 must be approved by the Chief Executive Officer
of the Bank or the President of Colorado Business Bank -- Denver. Loans in
excess of $500,000 must be approved by the Bank's loan committee, which consists
of most of the Bank's executive officers and certain other designated officers.
In cases requiring expedited treatment, approvals may be made by a smaller sub-
section of the committee.
The Company has a continuous loan review process designed to promote early
identification of credit quality problems. All loan officers are charged with
the responsibility of reviewing, no less frequently than monthly, all past due
loans in their respective portfolios. In addition, each of the loan officers
establishes a watch list of loans to be reviewed monthly by the Bank's Board of
Directors. The loan and lease portfolio is also monitored regularly by a loan
review officer who reports directly to the Audit Committee of the Bank's Board
of Directors.
28
<PAGE>
Loan and Lease Portfolio Composition. The following table sets forth the
composition of the Bank's loan and lease portfolio by type of loan or lease at
the dates indicated.
<TABLE>
<CAPTION>
At December 31,
------------------------------------
1997 1996
---------------- ----------------
Amount % Amount %
--------- ----- --------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Commercial................................. $ 78,152 47.6 $ 58,727 53.0
Real estate -- mortgage.................... 40,262 24.6 24,491 22.1
Real estate -- construction................ 27,786 16.9 19,119 17.3
Consumer................................... 11,732 7.2 8,266 7.5
Direct financing leases, net............... 8,407 5.1 1,805 1.6
-------- ----- -------- -----
Loans and leases........................... 166,339 101.4 112,408 101.5
Less allowance for loan and lease losses... (2,248) (1.4) (1,660) (1.5)
-------- ----- -------- -----
Net loans and leases....................... $164,091 100.0 $110,748 100.0
======== ===== ======== =====
</TABLE>
Under federal law, the aggregate amount of loans that may be made to one
borrower by the Bank is generally limited to 15% of the Bank's unimpaired
capital, surplus, undivided profits and allowance for loan and lease losses (the
"Individual Lending Limit"). See "Supervision and Regulation -- The Bank --
Restrictions on Loans to One Borrower." As of December 31, 1997, the Bank's
Individual Lending Limit was $3.1 million. To accommodate customers whose
financing needs exceed applicable lending limits, and to address portfolio
concentration concerns, the Company sells loan participations to outside
participants, including Hawthorne Colorado, Inc., an entity controlled by
Messrs. Bangert and Ross. See "Certain Transactions." At December 31, 1997 and
1996, the outstanding balances of loan participations sold by the Company were
$10.6 million and $3.5 million, respectively. The Company has retained servicing
rights on all loan participations sold. In addition, the Company may purchase
loan participations from other banks, although it has not done so to date. While
the Company would use the same analysis in deciding whether or not to purchase a
participation in a loan as it would in deciding whether to originate the same
loan, the purchase of a significant amount of loan participations by the Company
could decrease its control over the magnitude of risk in its loan and lease
portfolio because the Company would not be able to control the ongoing
relationship with the borrower after purchasing the participation.
In the ordinary course of business, the Company enters into various types
of transactions that include commitments to extend credit. The Company applies
the same credit standards to these commitments as it applies to its other
lending activities and has included these commitments in its lending risk
evaluations. The Company's exposure to credit loss under commitments to extend
credit is represented by the amount of these commitments.
Commercial Loans. Commercial lending, which is the primary focus of the
Company's lending activities, consists of loans to small- and medium-sized
businesses in a wide variety of industries. The Bank's areas of emphasis in
commercial lending include, but are not limited to, loans to wholesalers,
manufacturers and business services companies. The Company provides a broad
range of commercial loans, including lines of credit for working capital
purposes and term loans for the acquisition of equipment and other purposes.
Commercial loans are generally collateralized by inventory, accounts receivable,
equipment, real estate and other commercial assets and may be supported by other
credit enhancements such as personal guarantees. However, where warranted by
the overall financial condition of the borrower, loans may be made on an
unsecured basis. Terms of commercial loans generally range from one to five
years, and the majority of such loans have floating interest rates.
29
<PAGE>
Real Estate Mortgage Loans. Real estate mortgage loans include various
types of loans for which the Company holds real property as collateral. The
Company generally restricts commercial real estate lending activity to owner-
occupied properties or to investor properties that are owned by customers with
which the Company has a current banking relationship. Commercial real estate
loans are made at both fixed and floating interest rates, with maturities
generally ranging from five to seven years. The Bank's underwriting standards
generally require that a commercial real estate loan not exceed 75% of the
appraised value of the property securing the loan. In addition, the Company
originates SBA loans on owner-occupied properties with maturities of up to 25
years in which the SBA finances up to 90% of the project cost and takes a
security position that is subordinated to that of the Company. The Company also
originates residential mortgage loans on a limited basis as a service to
preferred customers.
The primary risks of real estate mortgage loans include the borrower's
inability to pay, material decreases in the value of the real estate that is
being held as collateral and significant increases in interest rates, which may
make the real estate mortgage loan unprofitable. The Company does not actively
seek permanent mortgage loans for its own portfolio, but, rather, syndicates
such loans to other financial institutions. However, on those permanent
mortgage loans that are extended, the Company attempts to apply conservative
loan-to-value ratios and obtain personal guarantees and generally requires a
strong history of debt servicing capability and fully amortized terms of 15
years or less.
Real Estate Construction Loans. The Company originates loans to finance
construction projects involving one- to four-family residences. It provides
financing to residential developers that the Company believes have demonstrated
a favorable record of accurately projecting completion dates and budgeting
expenses. The Company provides loans for the construction of both pre-sold
projects and projects built prior to the location of a specific buyer, although
loans for projects built prior to the identification of a specific buyer are
provided on a more selective basis. Residential construction loans are due upon
the sale of the completed project and are generally collateralized by first
liens on the real estate and have floating interest rates. In addition, these
loans are generally secured by personal guarantees to provide an additional
source of repayment. The Company generally requires that a permanent financing
commitment be in place before it makes a residential construction loan.
Moreover, the Company generally monitors construction draws monthly and inspects
property to ensure that construction is progressing as specified. The Company's
underwriting standards generally require that the principal amount of the loan
be no more than 75% of the appraised value of the completed construction
project. Values are determined only by approved, independent appraisers.
The Company also originates loans to finance the construction of multi-
family, office, industrial and tax credit projects. These projects are
predominantly owned by the user of the property or are sponsored by financially
strong developers who maintain an ongoing banking relationship with the Company.
The Company's underwriting standards generally require that the principal amount
of these loans be no more than 75% of appraised value.
The Company selectively provides loans for the acquisition and development
of land for residential building projects by financially strong developers who
maintain an ongoing banking relationship with the Company. The Company's
underwriting standards generally require that the principal amount of these
loans be no more than 65% of the appraised value.
Consumer Loans. The Company provides a broad range of consumer loans to
customers, including personal lines of credit, credit and debit cards, home
equity loans and automobile loans. In order to improve customer service,
continuity and customer retention, management of commercial banking customers
often work with the same loan officer who handles their commercial banking
relationship.
30
<PAGE>
Direct financing leases. The Company, through CBL, provides lease
financing as a complement to its other lending services. These leases are
structured as either operating or direct financing leases, with the Company
retaining title to the leased assets as security for payment. Only direct
financing leases are included in the Company's loan and lease portfolio.
Operating leases are reported as investment in operating leases. Although the
leasing program acts as a stand-alone product, it offers the opportunity to
introduce leasing customers to other products and services offered by the Bank.
Nonperforming Assets
The Company's nonperforming assets consist of nonaccrual loans and leases,
restructured loans and leases, past due loans and leases and other real estate
owned. The following table sets forth information with respect to these assets
at the dates indicated.
<TABLE>
<CAPTION>
At December 31,
----------------------------
1997 1996 1995
-------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C>
Nonperforming loans and leases:
Loans and leases 90 days or more
delinquent and still accruing interest.................... $ -- $ -- $ --
Nonaccrual loans and leases................................. 470 234 --
Restructured loans and leases............................... 341 348 616
------ ------ ------
Total nonperforming loans and leases...................... 811 582 616
Real estate acquired by foreclosure........................... -- 109 310
------ ------ ------
Total nonperforming assets................................ $ 811 $ 691 $ 926
====== ====== ======
Allowance for loan and lease losses........................... $2,248 $1,660 $1,392
====== ====== ======
Ratio of nonperforming assets to total assets................. 0.31% 0.36% 0.58%
Ratio of nonperforming loans and leases to total loans
and leases.................................................. 0.49 0.52 0.69
Ratio of allowance for loan and lease losses to
total loans and leases...................................... 1.35 1.48 1.57
Ratio of allowance for loan and lease losses to
nonperforming loans and leases.............................. 277.19 285.22 225.97
</TABLE>
Accrual of interest is discontinued on a loan or lease when management
believes, after considering economic and business conditions and collection
efforts, that the borrower's financial condition is such that the collection of
interest is doubtful. A delinquent loan or lease is generally placed on
nonaccrual status when it becomes 90 days past due. When a loan or lease is
placed on nonaccrual status, all accrued and unpaid interest on the loan or
lease is reversed and deducted from earnings as a reduction of reported interest
income. No additional interest is accrued on the loan or lease balance until
the collection of both principal and interest becomes reasonably certain. When
the issues relating to a nonaccrual loan or lease are finally resolved, there
may ultimately be an actual write down or charge-off of the principal balance of
the loan or lease, which may necessitate additional charges to earnings.
Restructured loans and leases are those for which concessions, including
the reduction of interest rates below a rate otherwise available to the
borrower, or the deferral of interest or principal, have been granted due to the
borrower's weakened financial condition. Interest on restructured loans and
leases is accrued at the restructured rates when it is anticipated that no loss
of original principal will occur.
The additional interest income that would have been recognized for the year
ended December 31, 1997 if the Company's nonaccrual and restructured loans and
leases had been current in accordance with their original terms, and the
interest income on nonaccrual and restructured loans and leases actually
included in the Company's net income for the year ended December 31, 1997, were
not material.
31
<PAGE>
Real estate acquired by foreclosure includes deeds acquired under
agreements with delinquent borrowers. Real estate acquired by foreclosure is
appraised annually and is carried at the lesser of (i) fair market value less
anticipated closing costs or (ii) the balance of the related loan. As of
December 31, 1997, the Company did not own any real estate acquired in
foreclosure proceedings or under agreements with delinquent borrowers.
Potential Problem Loans and Leases. A potential problem loan or lease is
one where management has serious doubts about the borrower's future performance
under the terms of the loan or lease contract. These loans and leases
are current as to the principal and interest and, accordingly, are not included
in the nonperforming asset categories. However, further deterioration may result
in the loan or lease being classified as nonperforming. Management monitors
these loans and leases closely to protect the Company. At December 31, 1997, the
Company held 17 loans and leases considered by management to be potential
problem loans or leases with principal totaling approximately $2.5 million. The
level of potential problem loans and leases is factored into the determination
of the adequacy of the allowance for loan and lease losses.
Analysis of Allowance for Loan and Lease Losses
The allowance for loan and lease losses represents management's recognition
of the risks of extending credit and its evaluation of the quality of the loan
and lease portfolio. The allowance for loan and lease losses is maintained at a
level considered adequate to provide for anticipated loan and lease losses,
based on various factors affecting the loan and lease portfolio, including a
review of problem loans and leases, business conditions, historical loss
experience, evaluation of the quality of the underlying collateral and holding
and disposal costs. The allowance is increased by additional charges to
operating income and reduced by loans and leases charged off, net of recoveries.
32
<PAGE>
The following table sets forth information regarding changes in the
Company's allowance for loan and lease losses for the periods indicated.
<TABLE>
<CAPTION>
Year ended
December 31,
---------------------
1997 1996
---------- ----------
(Dollars in thousands)
<S> <C> <C>
Balance of allowance for loan and lease losses at beginning of period........ $ 1,660 $ 1,392
-------- -------
Charge-offs:
Commercial................................................................. 356 275
Real estate -- mortgage.................................................... -- --
Real estate -- construction................................................ -- 47
Consumer................................................................... 38 6
Direct financing leases.................................................... -- --
-------- -------
Total charge-offs........................................................ 394 328
-------- -------
Recoveries:
Commercial................................................................. 6 61
Real estate -- mortgage.................................................... -- --
Real estate -- construction................................................ -- 39
Consumer................................................................... 27 3
Direct financing leases.................................................... -- --
-------- -------
Total recoveries......................................................... 33 103
-------- -------
Net (charge-offs) recoveries................................................. (361) (225)
Provisions for loan and lease losses charged to operations................... 949 493
-------- -------
Balance of allowance for loan and lease losses at end of period.............. $ 2,248 $ 1,660
======== =======
Ratio of net (charge-offs) recoveries to average loans and leases............ (0.26%) (0.23%)
======== =======
Average loans and leases outstanding during the period....................... $138,787 $98,075
======== =======
</TABLE>
The Company's lending personnel are responsible for continuous monitoring of
the quality of the loan and lease portfolio. The loan and lease portfolio is
monitored regularly by a loan review officer who reports directly to the Audit
Committee of the Bank's Board of Directors. In addition, the Bank's Board of
Directors reviews monthly reports of delinquent and potential problem loans.
These reviews assist in the identification of potential and probable losses and
also in the determination of the level of the allowance for loan and lease
losses. The allowance for loan and lease losses is based primarily on
management's estimates of possible loan and lease losses from the foregoing
processes and historical experience. These estimates involve ongoing judgments
and may be adjusted in the future, depending on economic conditions and changing
portfolio performance. At December 31, 1997, the allowance for loan and lease
losses equaled 1.35% of total loans and leases. See " -- Lending Activities."
Federal regulatory agencies, as an integral part of their examination
process, review the Company's loans and allowance for loan and lease losses.
The Company believes that its allowance for loan and lease losses is adequate to
cover anticipated loan and lease losses. However, management may determine a
need to increase the allowance for loan and lease losses, or regulators, when
reviewing the Bank's loan and lease portfolios in the future, may request the
Bank to increase such allowance. Either of these events could adversely affect
the Company's earnings. Further, there can be no assurance that the Company's
actual loan and lease losses will not exceed its allowance for loan and lease
losses.
Additions to the allowance for loan and lease losses, which are charged as
expenses on the Company's income statement, are made periodically to maintain
the allowance at the appropriate level, based on management's analysis of the
potential risk in the loan and lease portfolio. The allowance for loan and
lease losses is reduced by loans and leases charged off, net of amounts
recovered from such loans and leases. The amount of the allowance is a function
of the levels of loans and leases outstanding, the level of
33
<PAGE>
performing loans and leases, historical loan and lease loss experience, the
amount of loan and lease losses actually charged against the reserve during a
given period and current and anticipated economic conditions.
The following table sets forth the allowance for loan and lease losses by
category to the extent specific allocations have been determined relative to
particular loans or leases. The unallocated portion of the allowance is intended
to cover loss exposure related to potential problem loans or leases for which no
specific allocation has been estimated and for the possible risk in the
remainder of the loan and lease portfolio. Management believes that any
allocation of the allowance into categories lends an appearance of precision
which does not exist. The allocation table should not be interpreted as an
indication of the specific amounts, by loan or lease classification, to be
charged to the allowance. Management believes that the table is a useful device
for assessing the adequacy of the allowance as a whole. The table has been
derived in part by applying historical loan and lease loss ratios to both
internally classified loans and leases and the portfolio as a whole in
determining the allocation. The allowance is utilized as a single unallocated
allowance available for all loans and leases.
<TABLE>
<CAPTION>
At December 31,
-------------------------------------------------
1997 1996
----------------------- ------------------------
Loans or Loans or
leases in leases in
category as category as
a percentage a percentage
Amount of total Amount of total
of gross loans of gross loans
allowance and leases allowance and leases
--------- ------------ --------- ------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Commercial.................... $ 811 47.0% $ 510 52.2%
Real estate -- mortgage....... 296 24.2 189 21.8
Real estate -- construction... 318 16.7 237 17.0
Consumer...................... 73 7.0 51 7.4
Direct financing leases....... -- 5.1 -- 1.6
Unallocated................... 750 -- 673 --
------ ----- ------ -----
Total................... $2,248 100.0% $1,660 100.0%
====== ===== ====== =====
</TABLE>
Investments
The Company's investment portfolio is comprised of A-rated or better
securities, with the majority of the portfolio either maturing or repricing
within a one- to five-year period. The Company's practice is to purchase U.S.
Treasury and U.S. Governmental Agency securities exclusively. The primary
factors considered in the overall management of the securities portfolio are
liquidity, yield, volatility, asset/liability management and the ability to
pledge securities for public deposits. Since November 1994, the Company has
selected primarily mortgage-backed securities which reprice annually. The
Company's investment strategies are reviewed at the quarterly meetings of the
Asset and Liability Management Committee.
The Company's mortgage-backed securities are typically classified as
available for sale. The Company's goals with respect to its securities
portfolio are to (i) maximize safety and soundness, (ii) provide adequate
liquidity, (iii) maximize rate of return within the constraints of applicable
liquidity requirements and (iv) complement asset/liability management
strategies.
34
<PAGE>
The following table sets forth the book value of the securities in the
Company's investment portfolio by type at the dates indicated.
<TABLE>
<CAPTION>
At December 31,
---------------------
1997 1996
-------- ---------
(In thousands)
<S> <C> <C>
U.S. Treasury and U.S. government agency securities... $ 7,009 $15,822
Mortgage-backed securities............................ 48,354 38,611
State and municipal bonds............................. 1,198 1,919
Federal Reserve and FHLB stock........................ 2,012 1,054
Other investments..................................... 211 165
------- -------
Total......................................... $58,784 $57,571
======= =======
</TABLE>
The following table sets forth the book value, maturity and approximate
yield of the securities in the Company's investment portfolio at December 31,
1997.
<TABLE>
<CAPTION>
Maturity
--------------------------------------------------------------------------
Within 1 year 1-5 years 5-10 years Over 10 years Total book value
----------------- ---------------- ---------------- ---------------- ----------------
Amount Yield(1) Amount Yield(1) Amount Yield(1) Amount Yield(1) Amount Yield(1)
------- -------- ------- -------- ------- -------- ------- -------- ------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and U.S.
government agency
securities............... $ 500 6.14% $ 6,509 5.66% $ -- --% $ -- --% $ 7,009 5.69%
Mortgage-backed
securities (2)........... 46,670 6.60 1,250 5.92 434 5.76 -- -- 48,354 6.58
State and municipal
bonds.................... 210 6.32 978 7.04 10 10.20 -- -- 1,198 6.94
Federal Reserve and
FHLB stock.............. -- -- -- -- -- -- 2,012 6.73 2,012 6.73
Other investments.......... -- -- -- -- -- -- 211 9.50 211 9.50
------- ---- ------- ---- ------- ----- ------- ---- ------- ----
Total................ $47,380 6.60% $ 8,737 5.85% $ 444 5.87% $ 2,223 6.99% $58,784 6.49
======= ==== ======= ==== ======= ===== ======= ==== ======= ====
</TABLE>
- ---------------------
(1) Yields do not include adjustments for tax-exempt interest, because the
amount of such interest is not material.
(2) Mortgage-backed securities are generally one year or less adjustable rate
securities.
Deposits
The Company's primary source of funds has historically been customer
deposits. The Company offers a variety of accounts for depositors, which are
designed to attract both short-term and long-term deposits. These accounts
include certificates of deposit ("CDs"), savings accounts, money market
accounts, checking and negotiable order of withdrawal accounts and individual
retirement accounts. At December 31, 1997, $69.1 million or 31.2% of the
Company's deposits were noninterest-bearing deposits. The Company believes that
it receives a large amount of noninterest-bearing deposits because it provides
customers with the option of paying for services in cash or by maintaining
additional noninterest-bearing account balances. However, since proposed changes
in banking regulations would allow for the payment of interest on commercial
accounts, there can be no assurance that the Company will be able to continue to
maintain such a high level of noninterest-bearing deposits. Interest-bearing
accounts earn interest at rates established by management based on competitive
market factors and its desire to increase or decrease certain types of
maturities or deposits. The
35
<PAGE>
Company has not actively sought brokered deposits and does not currently intend
to do so. The following table presents the average balances for each major
category of deposits and the weighted average interest rates paid for interest-
bearing deposits for the periods indicated.
<TABLE>
<CAPTION>
For the year ended December 31,
------------------------------------------------------
1997 1996
----------------------- -----------------------
Weighted Weighted
average average
Average interest Average interest
balance rate balance rate
-------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
NOW and money market accounts............... $ 66,222 3.23% $ 63,037 3.09%
Savings..................................... 5,780 2.63 5,669 2.65
Certificates of deposit under $100,000...... 16,942 5.18 9,872 4.51
Certificates of deposit $100,000 and over... 35,936 5.80 26,227 5.53
-------- --------
Total interest-bearing deposits........ 124,880 4.21 104,805 3.81
Noninterest-bearing deposits................ 54,706 __ 41,070 __
-------- -------
Total deposits..................... $179,586 2.93% $145,875 2.74%
======== ========
</TABLE>
The following table sets forth the amount and maturity of CDs that had
balances of more than $100,000 at December 31, 1997.
<TABLE>
<CAPTION>
At December 31,
Remaining Maturity 1997
- ------------------ ---------------
(In thousands)
<S> <C>
Less than three months.............. $29,828
Three months up to six months....... 8,387
Six months up to one year........... 7,976
One year and over................... 5,939
-------
Total.......................... $52,130
=======
</TABLE>
Short-Term Borrowings
The Company's short-term borrowings include federal funds purchased
and securities sold under agreements to repurchase, which generally mature
within 60 days. The following table sets forth information relating to the
Company's short-term borrowings.
<TABLE>
<CAPTION>
At or for the year
ended December 31,
-------------------------
1997 1996
----------- -----------
(Dollars in thousands)
<S> <C> <C>
Federal funds purchased......................................... -- $ 6,226
Weighted average interest rate at period end.................... -- 5.87%
Securities sold under agreement to repurchase................... $13,024 $ 3,422
Weighted average interest rate at period end.................... 4.58% 4.89%
Maximum borrowings outstanding at any month end during the
period........................................................ $25,251 $11,990
Average borrowings outstanding for the period................... 17,602 7,323
Weighted average interest rate for the period................... 5.21% 5.92%
</TABLE>
36
<PAGE>
Competition
The banking business in the Denver metropolitan area is highly competitive
and is currently dominated by a number of large regional financial institutions,
including Norwest Corporation, U.S. Bancorp, Inc. (formerly First Bank System)
Banc One Corporation, Zions Bancorporation, KeyCorp and Wells Fargo & Company.
In addition to these regional banks, there are a number of community banks that
operate in the area, including, Guaranty Bank and Trust Company, Colorado State
Bank & Trust, First Bank Holding Company of Colorado and Union Bank and Trust.
The Company competes for loans and deposits with other commercial banks
(including those listed above), savings and loan associations, finance
companies, credit unions and mortgage bankers. In addition to the traditional
financial institutions, the Company also competes for loans with brokerage and
investment banking companies, nonfinancial institutions, including retail stores
that maintain their own credit programs, and governmental agencies that make
available low cost or guaranteed loans to certain borrowers. Particularly in
times of high interest rates, the Company also faces significant competition for
deposits from sellers of short-term money market securities and other corporate
and government securities.
By virtue of their larger capital bases or affiliation with larger multi-
bank holding companies, many of the Company's competitors have substantially
greater capital resources and lending limits than the Company and perform other
functions that the Company offers only through correspondents. Interstate
banking is permitted in Colorado, and, since January 1, 1997, unlimited state-
wide branch banking is permitted. As a result, the Company may experience
greater competition in its primary service areas. The Company's business,
financial condition, results of operations and cash flows may be adversely
affected by an increase in competition. Moreover, recently enacted and proposed
legislation has focused on expanding the ability of participants in the banking
industry to engage in other lines of business. The enactment of such
legislation could put the Company at a competitive disadvantage because it may
not have the capital to participate in other lines of business to the same
extent as more highly capitalized bank holding companies.
The Company competes for loans and deposits principally through the scope
and quality of the services it provides, interest rates and loan fees. The
Company believes that its emphasis on personalized service enables it to compete
favorably with larger financial institutions in its target market of small- to
medium-sized businesses and high net worth individuals. The Company actively
solicits deposit-related clients and competes for deposits by offering customers
personal attention and professional service. The Company also believes that its
technology-based cash management and short-term investment products provide it
with a competitive advantage over other local community banks.
Data Processing Systems
The Company is currently in the process of converting to the Jack Henry
System, a data processing system that will provide the Company with the ability
to offer more advanced services such as upgraded P.C. banking, a voice response
system and check and document imaging. The Company anticipates investing
approximately $1.8 million in converting to the Jack Henry System. The Company
is scheduled to begin operating on the Jack Henry System in June 1998. In
addition, unlike the Company's current data processing system, the Jack Henry
System is designed to be year 2000 compliant. The Company has formed a Year
2000 Committee to oversee issues relating to its year 2000 compliance program
The program calls for all critical systems to be certified as year 2000
compliant by December 31, 1998. See "Risk Factors -- Conversion to New Data
Processing System" and "-- Year 2000 Compliance."
37
<PAGE>
Facilities
The Company presently leases an aggregate of approximately 59,000 square
feet. The Company also owns a 22,500 square foot building and drive-up facility
in downtown Denver, but has entered into a contract to sell this property for
$275,000. Pursuant to the sale contract for this property, the Company has the
option to lease the drive-up facility from the new owners of the building.
The Company's Downtown Denver facility is approximately 40,500 square feet,
of which 26,600 square feet are leased from Kesef, LLC ("Kesef"), an entity in
which Jack Stern and Evan Makovsky (both directors of the Bank) and Messrs.
Bangert, Lorenz and Ross each own a 20% interest, for approximately $22,200 per
month. The remaining 13,900 square feet are subleased from another tenant in the
building for approximately $3,400 per month. Kesef purchased the building from
its previous owners in January 1998. The initial term of the lease with Kesef
expires in June 1998, with an option to renew for an additional five-year term
at 90% of then-current market rates. Rather than exercising its renewal option,
the Company is currently renegotiating the lease to provide for a longer term
and to provide the Company with the opportunity to improve the property. The
Company anticipates that the new lease will have a ten-year term and will
include an option by the Company to renew for additional terms. The new lease
will also provide the Company with the right to make improvements on the leased
space and to offset the costs of such improvements against lease payments on an
amortized basis. Once the improvements have been made, monthly rental payments
will increase. Payments under the new lease will be at 100% of market rental
value (as determined by an independent market valuation report) at the
commencement of the lease. In connection with the renegotiation of this lease,
the Company will be moving some of its operations to other spaces within the
same building and will be leasing approximately 5,000 square feet of additional
space. See "Certain Transactions."
The Company also leases facilities for its Boulder, West Denver and two
Littleton locations. The two Littleton facilities include approximately 6,800
and 2,600 square feet of space, respectively, and current lease payments are
approximately $7,600 and $1,800 per month, respectively. Colorado Business
Bank -- Boulder's facilities include approximately 2,900 square feet of space in
downtown Boulder. Current lease payments are approximately $4,000 per month and
will increase to $4,600 at the expiration of the current lease term in 2000. The
Company plans to lease additional space to accommodate the anticipated growth of
Colorado Business Bank -- Boulder. Colorado Business Bank -- West's facilities
include approximately 3,500 square feet of space in Golden. Current lease
payments are $3,000 per month.
Legal Proceedings
Periodically and in the ordinary course of business, various claims and
lawsuits which are incidental to the Company's business are brought against, or
by, the Company. The Company believes that the ultimate liability, if any,
resulting from such claims or lawsuits will not have a material adverse effect
on the business, financial condition or results of operations of the Company.
Employees
As of December 31, 1997, the Company had approximately 120 employees,
including 111 full-time employees. None of the Company's employees is covered
by a collective bargaining agreement, and the Company believes that its
relationship with its employees is good.
38
<PAGE>
MANAGEMENT
Directors, Executive Officers and Key Employees
The following table sets forth certain information with respect to the
Company's directors, executive officers and key employees.
<TABLE>
<CAPTION>
Name Age Position
- -------------------- --- -------------------------------------------
<S> <C> <C>
Steven Bangert 41 Chairman of the Board and Chief Executive
Officer
Jonathan C. Lorenz 46 Vice Chairman of the Board and President
Virginia K. Berkeley 45 President of Colorado Business Bank --
Downtown Denver and Director
Richard J. Dalton 41 Senior Vice President and Chief Financial
Officer
Lyne B. Andrich 31 Vice President and Controller
Darrell J. Schulte 43 President of Colorado Business Bank --
Littleton
Charles E. Holmes 41 President of Colorado Business Bank -- Boulder
Andrew L. Bacon 42 President of Colorado Business Bank -- West
K. Denise Albrecht 45 President of Community Trust Division
Richard M. Hall, Jr. 51 President of Colorado Business Leasing, Inc.
Mark S. Kipnis 50 Director
Noel N. Rothman 68 Director
Howard R. Ross 71 Director
</TABLE>
There are no family relationships among any of the directors, executive
officers or key employees of the Company.
At the annual meeting of the shareholders of the Company to be held in May
1998, the Company will propose that Michael B. Burgamy, age 52, and Timothy J.
Travis, age 53, be elected to fill two newly created vacancies on the Board of
Directors. Messrs. Burgamy and Travis have agreed to accept election to the
Board of Directors. Their election is subject to regulatory approval.
Steven Bangert has served as Chairman of the Board and Chief Executive
Officer of the Company since September 1994. He also serves as Chairman of the
Board of the Bank and a director of CBL. From August 1992 to present, Mr.
Bangert has served as President and a director of Western Capital Holdings, Inc.
("Western Capital"), formerly the bank holding company for River Valley Bank --
Texas, located in McAllen, Texas. From March 1992 to July 1996, Mr. Bangert also
served as Chairman of the Board of River Valley Bank -- Texas, and, from April
1988 to July 1994, he served as Vice Chairman of the Board and
39
<PAGE>
Chief Executive Officer of River Valley Savings Bank -- Illinois, a financial
institution with approximately $500 million of assets and locations in Chicago
and Peoria, Illinois. From February 1994 to July 1996, Mr. Bangert served
as a director and member of the Executive Committee of Lafayette American Bank.
He holds a B.S. degree in business administration from the University of
Nebraska -- Lincoln.
Jonathan C. Lorenz has served as President and Vice Chairman of the Company
since March 1995. He also serves as Vice Chairman of the Board and Chief
Executive Officer of the Bank. From June 1993 to March 1995, Mr. Lorenz pursued
various business investment opportunities, including the formation of First
Western Growth Fund, a small business investment company. Mr. Lorenz was
employed by Colorado National Bank ("CNB") in various capacities from September
1976 to June 1993. Mr. Lorenz' last position with CNB was Senior Vice President
and Manager of Corporate Banking, where he was responsible for a $600 million
commercial and real estate loan portfolio. He holds a B.A. degree in political
science and an M.B.A. degree from the University of Colorado.
Virginia K. Berkeley has served as President of Colorado Business Bank --
Downtown Denver since May 1995 and as a director of the Company since October
1995. Ms. Berkeley served as Senior Vice President and Manager of Business
Banking of Bank One, Denver from January 1994 to May 1995. From December 1986
to January 1994, Ms. Berkeley held several positions with CNB, including
President of CNB -- Tech Center and CNB -- Northeast. She holds a B.S. degree
in economics from Purdue University and an M.B.A. degree from the University of
Oklahoma.
Richard J. Dalton has served as the Senior Vice President and Chief
Financial Officer of the Company since January 1996. From August 1992 to
January 1998, Mr. Dalton was the Vice President of Western Capital. From August
1992 to June 1996, Mr. Dalton served as the President and Chief Executive
Officer of River Valley Bank -- Texas. He holds a B.S. degree in business
administration from the University of Southern Colorado and an M.B.A. from the
University of Colorado.
Lyne B. Andrich has served as Vice President and Controller of the of the
Company since May 1997. From November 1995 to May 1997, Ms. Andrich was a line
of business reporting manager for Key Bank. From June 1989 to November 1995, Ms.
Andrich served as an accounting manager and internal auditor for Bank One,
Colorado, N.A. She holds a M.S. degree in accounting from the University of
Florida.
Darrell J. Schulte has served as President of Colorado Business Bank --
Littleton since May 1985. Mr. Schulte has been employed in the banking industry
for 21 years. He holds a B.S. degree in finance from Colorado State University.
Charles E. Holmes has served as President of Colorado Business Bank --
Boulder since June 1995. Mr. Holmes has been employed in the banking industry
for 17 years. Mr. Holmes served as Vice President and Manager of Commercial
Lending at Bank One -- Boulder from June 1992 to June 1995, where he was
responsible for a $300 million loan portfolio. He holds a B.S. degree in
business administration from Oklahoma State University.
Andrew L. Bacon has served as President of Colorado Business Bank -- West
since November 1997. From March 1997 to September 1997, Mr. Bacon served as
Senior Vice President of UMB Bank. From June 1988 to December 1996, Mr. Bacon
served as Senior Vice President in charge of the Commercial Banking Division at
Norwest Bank -- Golden. He holds a B.A. degree in business administration from
Colorado State University.
K. Denise Albrecht has served as the President of Community Trust Division
of the Company since October 1997. From May 1993 to October 1997, Ms. Albrecht
served as Senior Vice President and Denver
40
<PAGE>
Market Manager of the Trust Department of Bank One, Colorado, N.A. Ms. Albrecht
was employed, in several capacities, with CNB from December 1988 to May 1993.
From January 1993 to May 1993, Ms. Albrecht served as President of Colorado
Capital Advisors, a subsidiary of CNB, and, from September 1988 to January 1993,
she served as Vice President and Institutional Services Division Manager for
CNB. She holds a B.S. degree in business administration and an M.B.A. from
Northern Michigan University.
Richard M. Hall, Jr. has served as President of CBL, the Company's
equipment leasing subsidiary, since March 1996 and has been employed in the
banking and financial services industry for 21 years. Prior to leading the
formation of CBL, Mr. Hall served as President of Evergreen Lifetime Income,
Inc., a development stage company in the reverse mortgage industry which was
formed in March 1995. From March 1992 to February 1995, Mr. Hall was employed
by CNB, where he served as a commercial banking division manager and as
President of Colorado National Leasing, Inc., a subsidiary of CNB. He holds
B.S. and M.S. degrees in business administration from Wichita State University
and a graduate degree in banking from the Southwestern Graduate School of
Banking at Southern Methodist University.
Mark S. Kipnis has served as a director of the Company since September
1994. Since January 1998, he has also served as Vice President, Secretary and
Corporate Counsel for Hollinger International Inc., a newspaper publishing
company that is publicly traded on the New York Stock Exchange. From January
1979 to December 1997, Mr. Kipnis was a partner of the Chicago-based law firm of
Holleb & Coff. He holds a B.S. degree in accounting from the University of
Illinois and a J.D. degree from Northwestern University School of Law.
Noel N. Rothman has served as a director of the Company since September
1994. Mr. Rothman is a private investor and has served as President of Namtor,
Inc., a closely held business services company in which he is a principal
shareholder, since September 1985. Mr. Rothman attended Wayne University.
Howard R. Ross has served as a director of the Company since September
1994. Mr. Ross is a private investor and has served as President of H.R.
Financial, Inc., a closely held investment company in which he is the principal
shareholder, since May 1994. From August 1992 to present, he has served as a
director of Western Capital, and, from August 1992 to July 1995, he served as
Vice Chairman of the Board of River Valley Bank -- Texas. He holds a B.S.
degree in mechanical engineering from the Illinois Institute of Technology.
Michael B. Burgamy is a nominee for director of the Company. From 1991 to
present, Mr. Burgamy has served as the president of Perky-Pet Products Co., a
manufacturer of pet products and supplies. From 1976 to 1994, he was President
of CGS Distributing, Inc., a wholesale distributor of lawn and garden supplies.
He holds a B.S. degree in engineering management from the United States Air
Force Academy.
Timothy J. Travis is a nominee for director of the Company. Since 1981, Mr.
Travis has been the President and Chief Executive Officer of Eaton Metal
Products Company, with which he has been employed since 1958. Mr.
Travis is also a director of Stico Insurance Company.
Classified Board of Directors
Subject to approval by the shareholders of the Company at the annual
meeting of shareholders to be held in May 1998, the Company's Articles of
Incorporation and Bylaws will provide for a classified board of directors.
Assuming that the slate of directors to be nominated by management is elected
and that regulatory approval for the election of Messrs. Burgamy and Travis is
obtained, three class I directors,
41
<PAGE>
Messrs. Lorenz and Kipnis, and Ms. Berkeley, will be elected for an initial term
expiring at the 1999 annual meeting; three class II directors, Messrs.
Bangert, Rothman and Travis, will be elected for an initial term expiring at the
2000 annual meeting; and two class III directors, Messrs. Ross and Burgamy, will
be elected for an initial term expiring at the 2001 annual meeting. All
subsequent elections will be for successive three-year terms.
Director Compensation
Each director who is not an employee of the Company is paid a director's
fee of $1,000 for each meeting of the Board of Directors, or any committee
thereof, attended by such director. Directors of the Company who also serve as
officers do not receive additional compensation for their service as directors.
All directors are reimbursed for expenses incurred in attending board and
committee meetings.
Committees
The Company's Board of Directors has an Audit Committee and a Compensation
Committee.
Assuming that the slate of directors nominated by management is elected at
the annual shareholders meeting to be held in May 1998 and that regulatory
approval for the election of Messrs. Burgamy and Travis is obtained, the Audit
Committee will be comprised of Ms. Berkeley and Messrs. Kipnis, Burgamy and
Travis. The Audit Committee is responsible for (i) making recommendations to
the Board of Directors concerning the engagement of independent public
accountants, (ii) consulting with the Company's independent public accountants
with regard to the plan of audit, (iii) consulting directly with the Company's
Chief Financial Officer on any matter that the Audit Committee or the Chief
Financial Officer deems appropriate in connection with carrying out the audit,
(iv) reviewing the results of audits of the Company by its independent public
accountants and certain regulatory agencies, (v) discussing audit
recommendations with management and reporting results of its reviews to the
Board of Directors, and (vi) performing such other functions as may be
prescribed by the Board of Directors.
Assuming that the slate of directors nominated by management is elected at
the annual shareholders meeting to be held in May 1998 and that regulatory
approval for the election of Messrs. Burgamy and Travis is obtained, the
Compensation Committee will be comprised of Messrs. Ross, Rothman, Burgamy and
Travis. The Compensation Committee is authorized to review the compensation of
the executive officers and key employees of the Company and the Bank and to make
recommendations to the Board of Directors concerning salaries, stock option
grants and other forms of compensation, review recommendations to the Board of
Directors concerning the compensation of directors and to perform such other
functions as the Board of Directors may direct.
42
<PAGE>
Executive Compensation
The following table summarizes the compensation that the Company paid to
its chief executive officer and each of its four next most highly compensated
executive officers (the "Named Executive Officers") for the year ended December
31, 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual compensation
-----------------------
Name and principal position Year Salary Bonus
- --------------------------- ---- ---------- ---------
<S> <C> <C> <C>
Steven Bangert, Chief Executive Officer................ 1997 $125,000 --
Jonathan C. Lorenz, President.......................... 1997 $145,000 $39,000
Virginia K. Berkeley, President of Colorado
Business Bank -- Downtown Denver..................... 1997 $106,000 $25,000
Richard M. Hall, Jr., President of Colorado Business
Leasing, Inc......................................... 1997 $ 99,837 $26,236
Darrell J. Schulte, President of Colorado
Business Bank -- Littleton........................... 1997 $ 90,000 $15,000
</TABLE>
The following table summarizes the value of the options held at the end of
fiscal year 1997 by the Named Executive Officers. None of the Named Executive
Officers exercised any options during 1997.
<TABLE>
<CAPTION>
Number of securities Value of unexercised
underlying unexercised in-the-money options
options at end of 1997 at end of 1997 (1)
-------------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Steven Bangert............ 28,275 -- $251,025 $ --
Jonathan C. Lorenz........ 56,785 19,086 504,182 169,442
Virginia K. Berkeley...... 11,781 16,494 102,094 138,931
Richard M. Hall, Jr....... -- -- -- --
Darrell J. Schulte........ 4,948 9,661 42,679 77,517
</TABLE>
- --------------------
(1) Value based on the difference between $11.00 (the assumed initial public
offering price) and the option exercise price, multiplied by the number of
shares of Common Stock subject to such option.
Stock Incentive Plans
1995 and 1997 Plans. In 1995 and 1997, respectively, the Company adopted a
1995 Incentive Stock Option Plan (the "1995 Plan") and a 1997 Incentive Stock
Option Plan (the "1997 Plan") to provide long-term incentives in the form of
stock options to the key employees of the Company and its subsidiaries. The
1995 and 1997 Plans provide for the authorization of an aggregate of 298,961
shares of Common Stock for issuance thereunder.
The 1995 and 1997 Plans, which are identical, except with respect to the
number of shares authorized for issuance thereunder, are both administered by
the Compensation Committee of the Company's Board of Directors. Subject to the
terms of the 1995 or 1997 Plan (as applicable), the Compensation Committee
determines the key employees to whom options are granted, the number of shares
subject to the options, the type of consideration to be paid to the Company upon
exercise of options, and the term of any option (which cannot exceed ten years).
One-fourth of the options included in each grant under either the 1995 Plan or
the 1997 Plan vest on each of the first four anniversaries of the grant.
43
<PAGE>
Under both the 1995 and 1997 Plans, the Company may grant incentive stock
options ("Incentive Stock Options") intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended. Incentive Stock Options may not be
granted at an exercise price of less than the fair market value of the Common
Stock on the date of grant and may not have a term exceeding ten years. The
exercise price of Incentive Stock Options granted to holders of more than 10% of
the Common Stock must be at least 110% of the fair market value of the Common
Stock on the date of the grant, and the term of these options cannot exceed five
years. Incentive Stock Options granted pursuant to either the 1995 or 1997 Plan
may not be exercised more than three months after the option holder ceases to be
an employee of the Company or its subsidiaries, except that, in the event of the
death or permanent and total disability of the option holder, the option may be
exercised by the holder (or his or her estate, as the case may be) for a period
of up to one year after the date of death or permanent and total disability.
As of December 31, 1997, options had been granted under the 1995 and 1997
Plans to purchase 245,051 shares of Common Stock at a weighted average exercise
price of $3.12 per share.
Both the 1995 and 1997 Plans provide that the total number of shares
covered by such plan, the number of shares covered by each option or performance
award and the exercise price per share will be proportionately adjusted by the
Company in the event of a stock split, reverse stock split, stock dividend or
similar capital adjustment effected without receipt of consideration by the
Company.
1998 Plan. The Colorado Business Bankshares, Inc. 1998 Stock Incentive Plan
(the "1998 Plan") was adopted by the Board of Directors, subject to shareholder
approval, in April 1998. As currently in effect, the maximum number of shares
authorized to be issued under the 1998 Plan is 225,000 shares of Common Stock,
and the maximum number of shares underlying awards that may be granted to an
individual employee in a calendar year is 22,500 shares of Common Stock. As of
March 31, 1998, no awards had been granted under the 1998 Plan. The exercise
price for options granted under the 1998 Plan must be at least equal to 100%
of the fair market value of the Common Stock on the date of grant. The 1998 Plan
permits the granting of stock options, including Incentive Stock Options and
non-qualified stock options. The purpose of the 1998 Plan is to reward and
provide incentives for executive officers and key employees of the Company by
providing them with an opportunity to acquire an equity interest in the Company,
thereby increasing their personal interest in its continued success and
progress.
The 1998 Plan is administered by the Compensation Committee, which has
the sole and complete authority to select the employees (including executive
officers) who will receive awards under the 1998 Plan. The Compensation
Committee has the authority to determine the number of stock options to be
granted to eligible individuals, whether the options will be Incentive Stock
Options or non-qualified stock options, and the terms and conditions of the
options (which may vary from grantee to grantee). The number of shares
available under the 1998 Plan and the exercise price of the options granted
thereunder are subject to adjustment to reflect stock splits, stock dividends,
recapitalizations, mergers or other major corporate actions.
The Compensation Committee also has the authority under the 1998 Plan to
grant stock appreciation rights ("SARs") to employees. SARs confer on the
holder a right to receive, upon exercise, the excess of the fair market value of
one share of Common Stock on the date of exercise over the grant price of the
SAR as specified by the Compensation Committee, which price may not be less than
100% of the fair market value of one share of Common Stock on the date of
grant of the SAR. The grant price, term, methods of exercise, dates of
exercise, methods of settlement and any other terms and conditions of any SAR
are determined by the Compensation Committee.
The Compensation Committee is also authorized to grant restricted stock,
restricted stock units, performance awards, dividend equivalents or other stock-
based awards pursuant to the 1998 Plan.
44
<PAGE>
The Board of Directors may discontinue, amend, or suspend the 1998 Plan in
a manner consistent with the its provisions, provided such changes do not
violate the federal or state securities laws.
Employment Agreements
The Company has entered into employment agreements with each of Jonathan C.
Lorenz, Virginia K. Berkeley, Richard M. Hall, Jr. and Darrell J. Schulte. Each
such agreement is terminable at will by the Company or the employee and provides
for annual salary, the use of a Company automobile, expenses related to
membership at a country, health or social club and eligibility for a bonus and
stock option grants. Each such agreement provides that, during the term of the
agreement and for one year thereafter, the employee is prohibited from
soliciting any employees or customers of the Company or the Bank. In the event
that the Company terminates the employment agreement for reasons other than "for
cause," or the Company constructively discharges the employee (for example, by
materially decreasing his or her responsibilities or decreasing his or her
compensation) or the employee's employment is terminated because of disability
or death, the Company is required to pay the employee one full year of salary
(including bonus) and maintain all other benefits for one full year after
termination. Moreover, each such employment agreement requires the Company to
make a lump sum payment to such employee in an amount equal to a multiple of
such employee's annual compensation in the event that their employment is
terminated within two years of the occurrence of certain types of changes of
control of the Company or the Bank. As of December 31, 1997, the estimated
payments that would be due to Mr. Lorenz, Ms. Berkeley, Mr. Hall and Mr. Schulte
upon a termination of employment after such a change in control were $653,000,
$385,000, $101,000 and $236,000, respectively.
Limitation of Directors' and Officers' Liability and Indemnification
The Company's Articles of Incorporation and Bylaws provide that the Company
will indemnify its directors and officers to the fullest extent now or hereafter
permitted by Colorado law. Under such provisions, any director or officer who,
in his or her capacity as such, is made, or threatened to be made, a party to
any suit or proceeding will be indemnified if such director or officer acted in
good faith and in a manner reasonably believed to be in, or not opposed to, the
best interests of the Company and, with respect to any criminal proceeding, had
no reasonable cause to believe that his or her conduct was unlawful. The
Articles of Incorporation, Bylaws and Colorado law further provide that such
indemnification is not exclusive of any other rights to which such individuals
may be entitled under the Articles of Incorporation, Bylaws, any agreement,
insurance policies, vote of shareholders or disinterested directors or
otherwise.
In addition, the Articles of Incorporation provide that, to the fullest
extent now or hereafter permitted by Colorado law, the Company's directors will
not be liable for monetary damages for breach of their fiduciary duty of care to
the Company and its shareholders. This provision in the Articles of
Incorporation does not eliminate the directors' fiduciary duty of care, and, in
appropriate circumstances, equitable remedies such as an injunction or other
forms of non-monetary relief would remain available under Colorado law. Each
director will continue to be subject to liability for breach of his or her duty
of loyalty to the Company and its shareholders for acts or omissions not in good
faith or involving intentional misconduct or knowing violations of law, for
certain activities prohibited by Colorado law (relating primarily to the
unlawful payment of dividends or repurchase of stock), or for any transaction
from which the director derived an improper personal benefit. This provision
also does not affect a director's responsibilities under any other laws, such as
the federal securities laws or state or federal environmental laws.
The Company believes that these provisions are necessary to attract and
retain qualified individuals to serve as directors. In addition, such
provisions allow directors to perform their duties in good faith,
45
<PAGE>
without concern for the application of monetary liability on a retrospective
basis in the event that a court determines that their conduct was negligent.
There is no pending litigation or proceeding involving a director, officer,
employee or other agent of the Company as to which indemnification is being
sought. The Company is not aware of any other threatened litigation that may
result in claims for indemnification by any director, officer, employee or other
agent.
The Company maintains directors' and officers' liability insurance with a
$1.5 million limit per year per occurrence. The Company pays annual premiums
and expenses relating to the policy of approximately $10,000 per year. There
can be no assurance that coverage will continue to be available at a cost that
the Company considers reasonable.
Insofar as indemnification for liabilities arising under the
Securities Act may be provided to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
46
<PAGE>
CERTAIN TRANSACTIONS
The executive officers, key employees, directors and principal shareholders
of the Company, members of their immediate family and businesses in which they
hold controlling interests are customers of the Company, and it is anticipated
that such parties will continue to be customers of the Company in the future.
All outstanding loans and extensions of credit by the Company to these parties
were made in the ordinary course of business in accordance with applicable laws
and regulations and on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
unaffiliated persons, and, in the Company's opinion, do not involve more than
the normal risk of collectibility or present other unfavorable features. At
December 31, 1997, the aggregate balance of the Company's loans and advances
under existing lines of credit to these parties was approximately $2.1 million,
or 1.3% of the Company's total loans.
In consideration for their agreement to personally guarantee the Company's
$10.5 million loan from ANB, Messrs. Bangert and Ross were each paid $2,500 per
quarter for each of the first three quarters of 1995. Messrs. Bangert and Ross
agreed to forego further payment for the guarantees as of October 1995, and ANB
released them from such guarantees, effective July 1996.
From time to time, Hawthorne Colorado, Inc. ("Hawthorne"), an entity
controlled by Messrs. Bangert and Ross, purchases participations in loans
originated by the Company that the Company does not fund fully because of its
legal lending limit or in order to manage portfolio concentration. To date,
Hawthorne has participated in 14 real estate loans, with an aggregate
participation commitment of $12.2 million, of which five loans, with an
aggregate balance of $2.8 million, were outstanding as of December 31, 1997. The
Company believes that the terms of such participations were commensurate with
what would be negotiated in similar transactions between unrelated third
parties. Hawthorne receives interest on the portion of such loans funded by it
at the same rate as the Bank does on the portion that it funds. In addition,
Hawthorne receives a share of origination fees for such loans.
The Company leases 26,600 square feet of its Downtown Denver facility from
Kesef, an entity in which Jack Stern and Evan Makovsky (both directors of the
Bank) and Messrs. Bangert, Lorenz and Ross each own a 20% interest, for
approximately $22,200 per month. Kesef purchased the building from its previous
owners in January 1998. The initial term of this lease expires in June 1998,
with an option to renew for an additional five-year term at 90% of then-current
market rates. Rather than exercising its renewal option, the Company is
currently renegotiating the lease to provide for a longer term and to provide
the Company with the opportunity to improve the property. The Company
anticipates that the new lease will have a ten-year term and will include an
option by the Company to renew for additional terms. The new lease will also
provide the Company with the right to make improvements on the leased space and
to offset the costs of such improvements against lease payments on an amortized
basis. Once the improvements have been made, monthly rental payments will
increase. Payments under the new lease will be at 100% of market rental value
(as determined by an independent market valuation report) at the commencement of
the lease. In connection with the renegotiation of this lease, the Company will
be moving some of its operations to other spaces within the office building and
will be leasing approximately 5,000 square feet of additional space.
In July 1997, the Bank committed to purchase up to $500,000 of limited
partnership interests in Prairie Capital Mezzanine Fund, L.P. ("Prairie
Capital"), an investment fund, having $24 million of total capital commitments,
that makes subordinated debt and preferred stock investments in a wide variety
of small businesses throughout the United States. Prairie Capital is licensed as
a Small Business Investment Company (an "SBIC"). The Company intends to refer
companies in its market area requiring this type of investment capital to
Prairie Capital. Messrs. Bangert and Ross act as consultants to Prairie Capital
and have invested in the fund individually. As of December 31, 1997, the Bank's
aggregate investment in Prairie Capital was $61,000, and the Bank was subject to
additional capital calls pursuant to which it may be required to invest
additional capital of $439,000 in the fund. To date, Messrs. Bangert and Ross
have each received $60,000 in consulting fees from Prairie Capital, and they are
each entitled to receive a final payment of $20,000 in June 1998. In addition,
Messrs. Bangert and Ross are members of the advisory board of Prairie Capital.
The general partner of Prairie Capital has agreed to make certain payments to
the Bank and Messrs. Bangert and Ross (pro rata, in proportion to their
respective investments in the fund) following the liquidation of the investment
fund in the event that they do not realize an internal rate of return of at
least 25% on their investments in the fund.
47
<PAGE>
SUPERVISION AND REGULATION
The Company and the Bank are extensively regulated under federal and
Colorado law. These laws and regulations are primarily intended to protect
depositors and federal deposit insurance funds, not shareholders of the Company.
The following information summarizes certain material statutes and regulations
affecting the Company and the Bank and is qualified in its entirety by reference
to the particular statutory and regulatory provisions. Any change in applicable
laws, regulations or regulatory policies may have a material adverse effect on
the business, financial condition, results of operations and cash flows of the
Company and the Bank. The Company is unable to predict the nature or extent of
the effects that fiscal or monetary policies, economic controls or new federal
or state legislation may have on its business and earnings in the future.
The Holding Company
General. The Company is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), and is subject to
regulation, supervision and examination by the Board of Governors of the Federal
Reserve System (the "FRB"). The Company is required to file an annual report
with the FRB and such other reports as the FRB may require pursuant to the BHCA.
Acquisitions. As a bank holding company, the Company is required to obtain
the prior approval of the FRB before acquiring direct or indirect ownership or
control of more than 5% of the voting shares of a bank or bank holding
company. The FRB will not approve any acquisition, merger or consolidation that
would result in substantial anti-competitive effects, unless the anti-
competitive effects of the proposed transaction are outweighed by a greater
public interest in meeting the needs and convenience of the public. In reviewing
applications for such transactions, the FRB also considers managerial,
financial, capital and other factors, including the record of performance of the
applicant and the bank or banks to be acquired under the Community Reinvestment
Act of 1977, as amended (the "CRA"). See "-- The Banks -- Community
Reinvestment Act."
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, as
amended (the "1994 Act"), which became effective September 29, 1995, displaces
state laws governing interstate bank acquisitions. Under the 1994 Act, a bank
holding company can acquire a bank outside of its home state without regard to
local law. Thus, an out-of-state holding company could acquire the Bank, and
the Company could acquire a bank outside of Colorado.
All acquisitions pursuant to the 1994 Act require regulatory approval. In
reviewing applications under the 1994 Act, an applicant's record under the CRA
must be considered, and a determination must be made that the transaction will
not result in any violations of federal or state antitrust laws. In addition,
there is a limit of 25% on the amount of deposits in insured depository
institutions in Colorado that can be controlled by any bank or bank holding
company.
The 1994 Act also permits bank subsidiaries of a bank holding company to
act as agents for affiliated institutions by receiving deposits, renewing time
deposits, closing loans, servicing loans and receiving payments on loans. As a
result, a relatively small Colorado bank owned by an out-of-state holding
company could make available to customers in Colorado some of the services of a
larger affiliated institution located in another state.
Permissible Activities. A bank holding company may not engage in, or
acquire direct or indirect control of more than 5% of the voting shares of any
company engaged in, a non-banking activity, unless such activity has been
determined by the FRB to be closely related to banking or managing banks. The
FRB
48
<PAGE>
has identified certain non-banking activities in which a bank holding company
may engage without notice or prior approval of the FRB.
Capital Adequacy. The FRB monitors, on a consolidated basis, the capital
adequacy of bank holding companies that have total assets in excess of $150
million by using a combination of risk-based and leverage ratios. Failure to
meet the capital guidelines may result in the application by the FRB of
supervisory or enforcement actions. Under the risk-based capital guidelines,
different categories of assets, including certain off-balance sheet items, such
as loan commitments in excess of one year and letters of credit, are assigned
different risk weights, based generally on the perceived credit risk of the
asset. These risk weights are multiplied by corresponding asset balances to
determine a "risk-weighted" asset base. For purposes of the risk-based capital
guidelines, total capital is defined as the sum of "Tier 1" and "Tier 2" capital
elements, with Tier 2 capital being limited to 100% of Tier 1 capital. Tier 1
capital includes, with certain restrictions, common shareholders' equity,
perpetual preferred stock (no more than 25% of Tier 1 capital being comprised
of cumulative preferred stock or trust preferred stock) and minority interests
in consolidated subsidiaries. Tier 2 capital includes, with certain
limitations, perpetual preferred stock not included in Tier 1 capital, certain
maturing capital instruments and the allowance for loan and lease losses
(limited to 1.25% of risk-weighted assets). The regulatory guidelines require a
minimum ratio of total capital to risk-weighted assets of 8% (of which at
least 4% must be in the form of Tier 1 capital). The FRB has also implemented
a leverage ratio, which is defined to be a company's Tier 1 capital divided by
its average total consolidated assets. The minimum required leverage ratio for
top-rated bank holding companies is 3%, but most companies are required to
maintain an additional cushion of at least 100 to 200 basis points.
The table below sets forth the Company's ratios of (i) total capital to
risk-weighted assets, (ii) Tier 1 capital to risk-weighted assets and (iii) Tier
1 leverage ratio, at December 31, 1997, and as adjusted to give effect to the
Offering.
<TABLE>
<CAPTION>
At December 31, 1997
----------------------------------------------
As adjusted for the Minimum
Ratio Actual Offering (1) required
----- ------ ------------------- --------
<S> <C> <C> <C>
Total capital to risk-weighted assets 7.6% 14.1% 8.0%
Tier 1 capital to risk-weighted assets 6.4 12.9 4.0
Tier 1 leverage ratio 4.9 9.9 3.0
</TABLE>
- -------------------
(1) As adjusted to reflect the Offering (at an assumed public offering price of
$11.00 per share) and the application of the estimated net proceeds
therefrom.
Support of Banks. As discussed below, the Bank is also subject to capital
adequacy requirements. Under the Federal Deposit Insurance Corporation
Improvement Act of 1991 (the "FDICIA"), the Company could be required to
guarantee the capital restoration plan of the Bank, should the Bank become
"undercapitalized," as defined in the FDICIA and the regulations thereunder. See
"-- The Bank -- Capital Adequacy." The Company's maximum liability under any
such guarantee would be the lesser of 5% of the Bank's total assets at the
time it became undercapitalized or the amount necessary to bring the Bank into
compliance with the capital plan. The FRB also has stated that bank holding
companies are subject to the "source of strength doctrine," which requires bank
holding companies to serve as a source of "financial and managerial" strength to
their subsidiary banks.
The FDICIA requires the federal banking regulators to take "prompt
corrective action" with respect to capital-deficient institutions. In addition
to requiring the submission of a capital restoration plan, the FDICIA contains
broad restrictions on certain activities of undercapitalized institutions
involving asset growth, acquisitions, branch establishment and expansion into
new lines of business. With certain exceptions, an insured depository
institution is prohibited from making capital distributions, including
49
<PAGE>
dividends, and is prohibited from paying management fees to control persons, if
the institution would be undercapitalized after any such distribution or
payment.
Monitoring of Year 2000 Compliance. Bank regulatory agencies have begun to
monitor bank holding companies' and banks' readiness for the year 2000 as part
of the regular examination process. In the event that a bank holding company or
a bank is determined not to be satisfactorily prepared for the year 2000, it
will be required to submit a written plan establishing a timetable for year 2000
compliance and periodic progress reports on its efforts to implement the plan.
Failure to formulate a satisfactory plan, or to implement the plan successfully,
could result in an enforcement action.
The Banks
General. The Bank is a national banking association, the deposits of
which are insured by the Bank Insurance Fund of the FDIC (the "FDIC"), and is
subject to supervision, regulation and examination by the Office of the
Comptroller of the Currency (the "OCC") and by the FDIC. Pursuant to such
regulation, the Bank is subject to special restrictions, supervisory
requirements and potential enforcement actions. The FRB's supervisory authority
over the Company can also affect the Bank.
Branching. The Colorado Revised Statutes were amended in 1991 to
phase in open branching over a six-year period. Colorado law also provides a
phase-in schedule for the conversion of an affiliate bank into a branch bank.
Banks desiring to establish a de novo branch bank have been allowed to do so
since January 1, 1993, though only one branch bank could initially be created.
Since January 1, 1997, no limitations are placed on the number of branches a
bank may establish, and any bank which has had its charter approved or
conditionally or preliminarily approved on or after April 1, 1991, may, upon 30
days' written notice to the Colorado banking board or banking commissioner, be
converted to a branch of any bank.
Community Reinvestment Act. The CRA requires the Bank to adequately
meet the credit needs of the communities in which it operates. The CRA allows
regulators to reject an applicant seeking, among other things, to make an
acquisition or establish a branch, unless it has performed satisfactorily under
the CRA. Federal regulators regularly conduct examinations to assess the
performance of financial institutions under the CRA. In its most recent CRA
examination, the Bank received a satisfactory rating.
Transactions with Affiliates. The Bank is subject to Section 23A of
the Federal Reserve Act, which limits the amount of loans to, investments in,
and certain other transactions with, affiliates of the Bank, requires certain
levels of collateral for such loans or transactions, and limits the amount of
advances to third parties that are collateralized by the securities or
obligations of affiliates, unless the affiliate is a bank and is at least 80%
owned by the Company. If the affiliate is a bank and is at least 80% owned by
the Company, such transactions are generally exempted from these restrictions,
except as to "low quality" assets, as defined under the Federal Reserve Act, and
transactions not consistent with safe and sound banking practices. In addition,
Section 23A generally limits transactions with affiliates of the Bank to 10%
of the Bank's capital and surplus and generally limits all transactions with
affiliates to 20% of the Bank's capital and surplus.
Section 23B of the Federal Reserve Act requires that certain transactions
between the Bank and any non-bank affiliate must be on substantially the same
terms, or at least as favorable to the Bank, as those prevailing at the time for
comparable transactions with, or involving, non-affiliated companies or, in the
absence of comparable transactions, on terms and under circumstances, including
credit standards, that in good faith would be offered to, or would apply to,
non-affiliated companies. The aggregate amount of the Bank's loans to its
officers, directors and principal shareholders (or their affiliates) is limited
to the amount of its unimpaired capital and surplus, unless the FDIC determines
that a lesser amount is appropriate.
50
<PAGE>
A violation of the restrictions of Section 23A or Section 23B of the
Federal Reserve Act may result in the assessment of civil monetary penalties on
the Bank, or a person participating in the conduct of the affairs of the Bank or
the imposition of an order to cease and desist.
Dividend Restrictions. Dividends paid by the Bank are expected to
provide substantially all of the Company's cash flow. The approval of the OCC
is required prior to the declaration of any dividend by the Bank if the total of
all dividends declared by the Bank in any calendar year exceeds the total of its
net profits of that year combined with the retained net profits for the
preceding two years. In addition, the FDICIA provides that the Bank cannot pay
a dividend if it will cause the Bank to be "undercapitalized," as discussed
below.
Examinations. The OCC periodically examines and evaluates national
banks. Based upon such an evaluation, the examining regulator may revalue the
assets of an insured institution and require that it establish specific reserves
to compensate for the difference between the value determined by the regulator
and the book value of such assets.
Capital Adequacy. Federal regulations establish minimum requirements
for the capital adequacy of depository institutions that are generally the same
as those established for bank holding companies. See "-- The Holding Company --
Capital Adequacy." Banks with capital ratios below the required minimum are
subject to certain administrative actions, including the termination of deposit
insurance and the appointment of a receiver, and may also be subject to
significant operating restrictions pursuant to regulations promulgated under the
FDICIA. See "-- The Holding Company -- Support of Banks."
The following table sets forth the capital ratios of the Bank at December
31, 1997, and as adjusted to give effect to the Offering.
<TABLE>
<CAPTION>
At December 31, 1997
----------------------------------------------
As adjusted for the Minimum
Ratio Actual Offering (1) required
----- ------ ------------------- --------
<S> <C> <C> <C>
Total capital to risk-weighted assets 11.6% 13.9% 8.0%
Tier 1 capital to risk-weighted assets 10.3 12.7 4.0
Tier 1 leverage ratio 7.6 9.4 4.0
</TABLE>
- --------------------
(1) As adjusted to reflect the Offering (at an assumed public offering price
of $11.00 per share) and the application of the estimated net proceeds
therefrom.
Pursuant to the FDICIA, regulations have been adopted defining five
capital levels: well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized. Increasingly
severe restrictions are placed on a depository institution as its capital level
classification declines. An institution is critically undercapitalized if it
has a tangible equity to total assets ratio less than or equal to 2%. An
institution is adequately capitalized if it has a total risk-based capital ratio
less than 10%, but greater than or equal to 8%, or a Tier 1 risk-based
capital ratio less than 6%, but greater than or equal to 4% or a leverage
ratio less than 5%, but greater than or equal to 4% (3% in certain
circumstances). An institution is well capitalized if it has a total risk-based
capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 6% or
greater, and a leverage ratio of 5% or greater, and the institution is not
subject to an order, written agreement, capital directive or prompt corrective
action directive to meet and maintain a specific capital level for any capital
measure. Under these regulations, as of December 31, 1997, the Bank was well
capitalized, which classification places no significant restrictions on the
Bank's activities.
Internal Operating Requirements. Federal regulations promote the
safety and soundness of individual institutions by specifically addressing,
among other things: (1) internal controls, information
51
<PAGE>
systems and internal audit systems; (2) loan documentation; (3) credit
underwriting; (4) interest rate exposure; (5) asset growth; and (6) compensation
and benefit standards for management officials.
Real Estate Lending Evaluations. Federal regulators have adopted uniform
standards for the evaluation of loans secured by real estate or made to finance
improvements to real estate. The Bank is required to establish and maintain
written internal real estate lending policies consistent with safe and sound
banking practices and appropriate for its size and the nature and scope of its
operations. The regulations establish loan to value ratio limitations on real
estate loans, which are equal to or higher than the loan to value limitations
established by the Company.
Deposit Insurance Premiums. Under current regulations, FDIC-insured
depository institutions that are members of the FDIC pay insurance premiums at
rates based on their assessment risk classification, which is determined, in
part, based on the institution's capital ratios and, in part, on factors that
the FDIC deems relevant to determine the risk of loss to the FDIC. Assessment
rates range from $0 to $0.27 per $100. The Bank currently does not pay an
assessment rate on insured deposits. This classification for determination of
assessment rate may be reviewed semi-annually.
Restrictions on Loans to One Borrower. Under federal law, the aggregate
amount of loans that may be made to one borrower by the Bank is generally
limited to 15% of its unimpaired capital, surplus, undivided profits and
allowance for loan and lease losses. The Bank seeks participations to
accommodate borrowers whose financing needs exceed the Bank's lending limits.
Monitoring of Year 2000 Compliance. Banking regulators monitor the year
2000 compliance of the Bank in the same manner as they do the compliance of the
Company. See "-- The Holding Company -- Monitoring of Year 2000 Compliance."
Changing Regulatory Structure
Regulation of the activities of national and state banks and their holding
companies imposes a heavy burden on the banking industry. The FRB, OCC and FDIC
all have extensive authority to police unsafe or unsound practices and
violations of applicable laws and regulations by depository institutions and
their holding companies. These agencies can assess civil monetary penalties,
issue cease and desist or removal orders, seek injunctions and publicly disclose
such actions. Moreover, the authority of these agencies has expanded in recent
years, and the agencies have not yet fully tested the limits of their powers.
The laws and regulations affecting banks and bank holding companies have
changed significantly in recent years, and there is reason to expect that
changes will continue in the future, although it is difficult to predict the
outcome of these changes. From time to time, various bills are introduced in the
United States Congress with respect to the regulation of financial institutions.
Certain of these proposals, if adopted, could significantly change the
regulation of banks and the financial services industry. In particular, recently
enacted and proposed legislation has focused on expanding the ability of
participants in the banking industry to engage in other lines of business. The
enactment of such legislation could put the Company at a competitive
disadvantage because it may not have the capital to participate in other lines
of business to the same extent as more highly capitalized bank holding
companies. The Company cannot predict whether any of these proposals will be
adopted or, if adopted, how these proposals would affect the Company.
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<PAGE>
Monetary Policy
The Monetary policy of the FRB has a significant effect on the operating
results of bank holding companies and their subsidiaries. Among the means
available to the FRB to affect the money supply are open market transactions in
U.S. government securities, changes in the discount rate on member bank
borrowings and changes in reserve requirements against member bank deposits.
These means are used in varying combinations to influence overall growth and
distribution of bank loans, investments and deposits, and their use may affect
interest rates charged on loans or paid on deposits. FRB monetary policies have
materially affected the operations of commercial banks in the past and are
expected to continue to do so in the future. The nature of future monetary
policies and the effect of such policies on the business and earnings of the
Company and its subsidiaries cannot be predicted.
53
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of December 31, 1997, certain information
regarding beneficial ownership of the Common Stock by (i) each shareholder known
by the Company to be the beneficial owner of more than 5% of the outstanding
Common Stock, (ii) each director of the Company, (iii) each Named Executive
Officer and (iv) all of the Company's directors, executive officers and key
employees as a group. Unless otherwise indicated, the Company believes that the
shareholders listed below have sole investment and voting power with respect to
their shares based on information furnished to the Company by such owners.
<TABLE>
<CAPTION>
Percent of
outstanding
Common Stock
Number of shares ----------------------------
beneficially Before After
Name of beneficial owner (1) owned (2) Offering Offering
- ---------------------------- ---------------- ------------- ------------
<S> <C> <C> <C>
Steven Bangert (3)................................... 1,023,183 20.9% 16.2%
Jonathan C. Lorenz (4)............................... 142,200 2.9 2.2
Virginia K. Berkeley (5)............................. 26,390 -- --
Richard M. Hall, Jr.................................. -- -- --
Darrell J. Schulte (6)............................... 10,132 -- --
Mark S. Kipnis (7)................................... 82,403 1.7 1.3
Noel N. Rothman (8).................................. 705,494 14.4 11.2
Howard R. Ross (9)................................... 958,320 19.5 15.2
Edward W. Ross as Trustee for the Edward W. Ross
Revocable Trust................................... 325,935 6.7 5.2
All directors, executive officers and key employees
as a group (13 persons)(2).......................... 3,052,032 61.8 48.2
</TABLE>
- ----------------------
(1) Unless otherwise indicated, the address of each of the above-named
shareholders is c/o Colorado Business Bankshares, Inc., 821 Seventeenth
Street, Denver, Colorado 80202
(2) Does not include shares of Common Stock that may be purchased in the
Offering. If all 90,000 shares of Common Stock that have been reserved for
sale to directors, executive officers and key employees are purchased by
such persons, directors, executive officers and key employees will
beneficially own approximately 50.1% of the Common Stock after the Offering.
See "Underwriting."
(3) Includes 28,275 shares which may be issued upon the exercise of options
exercisable within 60 days of December 31, 1997 and 32,375 shares held
jointly by Mr. Bangert and his wife. Also includes 105,981 shares held by
Mr. Bangert's minor children.
(4) Includes 66,328 shares which may be issued upon the exercise of options
exercisable within 60 days of December 31, 1997.
(5) Includes 14,137 shares which may be issued upon the exercise of options
exercisable within 60 days of December 31, 1997.
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<PAGE>
(6) Includes 4,948 shares which may be issued upon the exercise of options
exercisable within 60 days of December 31, 1997.
(7) Includes 9,425 shares which may be issued upon the exercise of options
exercisable within 60 days of December 31, 1997.
(8) Includes 9,425 shares which may be issued upon the exercise of options
exercisable within 60 days of December 31, 1997.
(9) Includes 28,275 shares which may be issued upon the exercise of options
exercisable within 60 days of December 31, 1997 and 28,275 shares held by
Mr. Ross' wife. Does not include 36,588 shares held by Mr. Ross' adult
daughter and his grandchildren.
55
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock and 2,000,000 shares of preferred stock, $.01 par value per
share, issuable in series (the "Preferred Stock"). Prior to the Offering, there
has been no public market for the Common Stock. The Company has applied for the
inclusion of the Common Stock on the Nasdaq National Market. However, there can
be no assurance that a market for the Common Stock will develop or, if
developed, that it will be sustained. The following description of the capital
stock of the Company is qualified in its entirety by reference to the Company's
Articles of Incorporation (the "Articles") and Bylaws, copies of which are filed
as exhibits to the registration statement of which this Prospectus forms a part.
Common Stock
As of December 31, 1997, 4,874,968 shares of Common Stock were outstanding
and held of record by 83 persons. Each holder of Common Stock is entitled to
one vote for each share held of record on all matters on which shareholders are
entitled to vote; shareholders may not cumulate votes for the election of
directors. Subject to the preferences accorded to the holders of outstanding
shares of the Preferred Stock, if any, holders of Common Stock are entitled to
dividends at such times and in such amounts as the Board of Directors may
determine. The Company has never paid cash dividends on its Common Stock and
does not intend to pay dividends in the foreseeable future. The ability of the
Company to pay cash dividends in the future largely depends on the amount of
cash dividends paid to it by the Bank. Capital distributions, including
dividends, by the Bank are subject to federal and state regulatory restrictions
tied to the Bank's earnings and capital. Upon the dissolution, liquidation or
winding up of the Company, after payment of debts and expenses and payment of
the liquidation preference, plus any accrued dividends on any outstanding shares
of Preferred Stock, the holders of Common Stock will be entitled to receive all
remaining assets of the Company ratably in proportion to the number of shares
held by them. Holders of shares of Common Stock have no preemptive,
subscription, conversion or redemption rights and are not subject to further
calls or assessments, or rights of redemption by the Company. The outstanding
shares of Common Stock are, and the shares of Common Stock being sold in the
Offering will be, validly issued, fully paid and nonassessable.
Preferred Stock
The Company's Board of Directors has the authority, without approval of the
shareholders, to issue shares of Preferred Stock in one or more series and to
fix the number of shares and rights, preferences and limitations of each series.
Among the specific matters that may be determined by the Board of Directors are
the dividend rights, the redemption price, if any, the terms of a sinking fund,
if any, the amount payable in the event of any voluntary liquidation,
dissolution or winding up of the affairs of the Company, conversion rights, if
any, and voting powers, if any.
To date, the Board of Directors has created only one series of Preferred
Stock, 1,500 shares of Series A Preferred Stock, all of which are outstanding
and held of record by one person. All such shares will be redeemed with a
portion of the proceeds of the Offering. For a description of the terms and
conditions of the Series A Preferred Stock, see Note 9 of Notes to Consolidated
Financial Statements.
One of the effects of the existence of authorized but unissued Common Stock
and undesignated Preferred Stock may be to enable the Board of Directors to make
more difficult, or to discourage, any attempt to obtain control of the Company
by means of a merger, tender offer, proxy contest of otherwise, and thereby to
protect the continuity of the Company's management. If, in the exercise of its
fiduciary obligations, the Board of Directors were to determine that a takeover
proposal was not in the Company's best interest, such shares could be issued by
the Board of Directors without shareholder approval in one or more transactions
56
<PAGE>
that might prevent or make more difficult or costly the completion of the
takeover transaction by diluting the voting or other rights of the proposed
acquirer or insurgent shareholder group, by creating a substantial voting block
in institutional or other hands that might undertake to support the position of
the incumbent Board of Directors, by effecting an acquisition that might
complicate or preclude the takeover, or otherwise. In this regard, the Company's
Articles of Incorporation grant the Board of Directors broad power to establish
the rights and preferences of the authorized and unissued Preferred Stock, one
or more series of which could be issued entitling holders to, among other
things, (i) vote separately as a class on any proposed merger or consolidation,
(ii) cast a proportionately larger vote together with the Common Stock on any
such transaction or for all purposes, (iii) elect directors having terms of
office or voting rights greater than those of other directors, (iv) convert
Preferred Stock into a greater number of shares of Common Stock or other
securities, (v) demand redemption at a specified price under prescribed
circumstances related to a change of control or (vi) exercise other rights
designated to impede a takeover. The issuance of shares of Preferred Stock
pursuant to the Board of Directors' authority described above may adversely
effect the rights of holders of the Common Stock.
In addition, certain other provisions of the Company's Articles of
Incorporation that are described below, either alone, in combination with each
other or with the existence of authorized by unissued capital stock of the
Company, may have the effect of discouraging, or making more difficult, an
acquisition of the Company deemed undesirable by the Board of Directors.
Certain Charter and Bylaw Provisions
Subject to approval by the shareholders of the Company at the annual
meeting of shareholders to be held in May 1998, the Company's Articles of
Incorporation and Bylaws will provide for a classified board of directors.
Assuming that the slate of directors to be nominated by management is elected
and that regulatory approval for the election of Messrs. Burgamy and Travis is
obtained, three class I directors, Messrs. Lorenz and Kipnis, and Ms. Berkeley,
will be elected for an initial term expiring at the 1999 annual meeting; three
class II directors, Messrs. Bangert, Rothman and Travis, will be elected for an
initial term expiring at the 2000 annual meeting; and two class III directors,
Messrs. Ross and Burgamy, will be elected for an initial term expiring at the
2001 annual meeting. All subsequent elections will be for successive three-year
terms.
Transfer Agent and Registrar
The Transfer Agent and Registrar for the Common Stock is Corporate Stock
Transfer, Inc.
57
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), for whom Dain Rauscher Wessels, a
division of Dain Rauscher Incorporated, is acting as representative (the
"Representative"), have severally agreed to purchase from the Company an
aggregate of 1,400,000 shares of Common Stock at the initial public offering
price, less the underwriting discounts and commissions, set forth on the cover
page of this Prospectus, in the amounts set forth below opposite their
respective names.
<TABLE>
<CAPTION>
Number of
shares to be
Underwriters purchased
------------ ------------
<S> <C>
Dain Rauscher Wessels................. 1,400,000
---------
Total.................................. 1,400,000
=========
</TABLE>
The Underwriting Agreement provides that the Underwriters' obligation to
pay for and accept delivery of the shares of Common Stock offered hereby is
subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all such shares, excluding shares covered by the over-
allotment option, if any are purchased. The Underwriters have informed the
Company that no sales of Common Stock will be confirmed to discretionary
accounts.
The Company and the Representative have agreed that the Underwriters will
purchase the shares of Common Stock offered hereby at an initial public offering
price of $ per share, less Underwriting Discounts and Commissions of $
per share.
Up to 90,000 shares of the Common Stock offered hereby have been reserved
for sale to certain directors, executive officers and key employees of the
Company who have expressed an interest in purchasing shares of Common
Stock in the Offering and who will each sign a 180-day lock up agreement as
described below (the "Selected Purchasers"). The Underwriting Discounts and
Commissions will be reduced to $ per share with respect to sales to the
Selected Purchasers.
The Company has been advised by the Underwriters that they propose
initially to offer the Common Stock to the public at the Price to Public, and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow and such dealers may reallow a concession not
in excess of $ per share to certain other brokers and dealers. After the
Offering, the Price to Public, the concession and reallowances to dealers and
other selling terms may be changed by the Underwriters.
The Company has granted to the Underwriters an option, exercisable for 30
days after the date of this Prospectus, to purchase up to an aggregate of
210,000 additional shares of Common Stock to cover overallotments, if any, at
the same price per share to be paid by the Underwriters for the other shares of
Common Stock offered hereby. If the Underwriters purchase any such additional
shares pursuant to the overallotment option, each Underwriter will be committed,
subject to certain conditions, to purchase a number of the additional shares of
Common Stock proportionate to such Underwriter's initial commitment.
58
<PAGE>
In connection with the Offering, the Company has agreed to sell to the
Representative, for nominal consideration, a warrant to purchase 100,000 shares
of Common Stock (the "Warrant"). The Warrant will be exercisable at a price
equal to 120% of the initial public offering price ($ per share). The
Warrant will be exercisable commencing one year from the date of this Prospectus
and will remain exercisable for a period of four years after such date. The
Warrant includes a net exercise provision pursuant to which the holder may
convert the Warrant by, in effect, paying the exercise price using shares of
Common Stock underlying such Warrant valued at the fair market value at the time
of the conversion. For a period of one year after it is issued, the Warrant
cannot be sold, transferred, assigned, pledged or hypothecated except to or
among officers of the Representative and except for transfers by operation of
law, by will or pursuant to the laws of descent and distribution. The Warrant
contains anti-dilution provisions that adjust the exercise price and the number
of shares issuable thereunder upon the occurrence of certain events, including,
with certain exceptions, any stock dividend, stock split, stock combination,
reorganization, reclassification, consolidation, merger, sale or similar
transaction. The holders of the Warrant will have no voting, cash dividend or
other rights as shareholders of the Company with respect to shares underlying
the Warrant, unless the Warrant has been exercised. The Warrant grants to the
holders thereof certain limited rights of registration of the Common Stock
issuable upon exercise of such Warrant. Any profits realized by the
Representative upon the sale of the Warrant or the securities issuable upon
exercise thereof may be deemed to constitute additional underwriting
compensation.
The Company, its directors and executive officers, the Selected Purchasers
and certain other shareholders, (who beneficially own an aggregate of 3,854,849
shares of the Common Stock outstanding before the Offering) have agreed with the
Representative, for a period of 180 days after the date of this Prospectus, not
to issue, sell, offer to sell, grant any options for the sale of, or otherwise
dispose of any shares of Common Stock or any rights to purchase shares of Common
Stock (other than stock issued or options granted pursuant to the 1995 Plan, the
1997 Plan or the 1998 Plan), without the prior written consent of the
Representative. See "Shares Eligible for Future Sale."
Pursuant to the Underwriting Agreement entered into by the Company and the
Underwriters in connection with the Offering, the Company has agreed to
indemnify the Underwriters against certain liabilities that may be incurred in
connection with the sale of the Common Stock, including liabilities arising
under the Securities Act, and to contribute to payments that the Underwriters
may be required to make with respect thereto.
In connection with the Offering, the Underwriters may purchase and sell
Common Stock in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover syndicate short positions
created in connection with the Offering. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the Common Stock. Syndicate short positions involve the
sale by the Underwriters of a greater number of shares of Common Stock than they
are required to purchase from the Company in the Offering. The Underwriters may
also impose a penalty bid, whereby selling concessions allowed to syndicate
members or other broker-dealers in respect of the Common Stock sold in the
Offering for their account may be reclaimed by the syndicate if such shares of
Common Stock are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the Common Stock, which may be higher than the price that might
otherwise prevail in the open market; and these activities, if commenced, may be
discontinued at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.
Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be
determined by negotiation between the Company and the Representative. Among
other factors considered in determining the initial public offering price were
59
<PAGE>
prevailing market and economic conditions, revenues and earnings of the Company,
the state of the Company's business operation, an assessment of the Company's
management and consideration of the above factors in relation to market
valuation of companies in related businesses and other factors deemed relevant.
There can be no assurance, however, that the prices at which the Common Stock
will sell in the public market after the Offering will be equal to or greater
than the initial public offering price.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 6,274,968 shares of
Common Stock outstanding (excluding 433,551 shares issuable upon the exercise of
outstanding options and the Warrant). The 1,400,000 shares of Common Stock sold
in the Offering (plus any additional shares sold upon the Underwriters' exercise
of their over-allotment option) will be freely transferable without restriction
under the Securities Act, by persons who are not deemed to be affiliates of the
Company or acting as underwriters, as those terms are defined in the Securities
Act. The remaining 4,874,968 shares of Common Stock held by existing
shareholders are "restricted securities" within the meaning of Rule 144.
Consequently, such shares may not be resold unless they are registered under the
Securities Act or are sold pursuant to an applicable exemption from
registration, such as Rule 144.
In general, under Rule 144, as currently in effect, if at least one year
has elapsed since shares of Common Stock that constitute restricted securities
were last acquired from the Company or an affiliate of the Company, the holder
is entitled to sell within any three-month period a number of shares that does
not exceed the greater of one percent of the total shares of Common Stock then
outstanding or the average weekly trading volume of the Common Stock in the
over-the-counter market during the four calendar weeks preceding the date on
which notice of the sale is filed with the Securities and Exchange Commission.
Sales under Rule 144 are subject to certain manner of sale provisions, notice
requirements and the availability of current public information about the
Company. If at least two years have elapsed since the shares were last acquired
from the Company or an affiliate, a person who has not been an affiliate of the
Company at any time during the three months preceding the sale is entitled to
sell such shares under Rule 144(k) without regard to volume limitations, manner
of sale provisions, notice requirements or the availability of current public
information concerning the Company.
Approximately 313,999 shares of the Common Stock that constitute restricted
securities within the meaning of Rule 144 will be eligible for sale immediately
following the date of this Prospectus in reliance on Rule 144. An additional
636,942 of such shares will be eligible for sale in reliance on Rule 144
commencing 90 days after the date of this Prospectus. The Company, its
directors and executive officers, the Selected Purchasers and certain other
shareholders, who hold, in the aggregate, approximately 3,854,849 shares, have
agreed that they will not, with certain limited exceptions, issue, offer for
sale, sell, transfer, grant options to purchase or otherwise dispose of any
shares of Common Stock without the prior written consent of the Representative
for a period of 180 days from the date of this Prospectus.
The Company is unable to estimate the number of shares that will be sold
under Rule 144, since this will depend on the market price for the Common Stock
of the Company, the personal circumstances of the sellers and other factors.
Prior to the Offering, there has been no public market for the Common Stock, and
there can be no assurance that a significant public market for the Common Stock
will develop or be sustained after the Offering. Any future sale of substantial
amounts of Common Stock in the open market or the perception that such sales may
occur could adversely affect the market price of the Common Stock offered
hereby.
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<PAGE>
CHANGES IN ACCOUNTANTS
In July 1996, Baird, Kurtz & Dobson purchased the Denver office of
McGladrey & Pullen, LLP, which had previously acted as the Company's independent
public accountants and thereby replaced McGladrey & Pullen, LLP as the Company's
independent public accountants. The report of McGladrey & Pullen, LLP on the
Company's financial statements as of and for the year ended December 31, 1995
did not contain an adverse opinion or disclaimer of opinion and was not modified
as to uncertainty, audit scope or accounting principles. There were no
disagreements with McGladrey & Pullen, LLP on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure at the time of the change of independent public accountants or with
respect to the Company's financial statements as of and for the year ended
December 31, 1995. Prior to the purchase by Baird, Kurtz & Dobson of the
McGladrey & Pullen, LLP office, the Company had not consulted with it regarding
accounting principles.
In July 1997, the Company's Board of Directors replaced Baird, Kurtz &
Dobson with Deloitte & Touche LLP as the Company's independent public
auditors. The report of Baird, Kurtz & Dobson on the Company's financial
statements as of and for the year ended December 31, 1996 did not contain an
adverse opinion or disclaimer of opinion and was not modified as to uncertainty,
audit scope or accounting principles. There were no disagreements with Baird,
Kurtz & Dobson on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure at the time of the change of
independent public accountants or with respect to the Company's financial
statements as of and for the year ended December 31, 1996. Prior to retaining
Deloitte & Touche LLP, the Company had not consulted with it regarding
accounting principles.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Dorsey & Whitney LLP, Denver, Colorado. Sherman & Howard L.L.C.,
Denver, Colorado, is acting as counsel for the Underwriters in connection with
certain legal matters relating to the shares of Common Stock offered hereby.
EXPERTS
The Consolidated Financial Statements of the Company as of and for the year
ended December 31, 1997 included in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein, and are included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
The Consolidated Financial Statements of the Company as of and for the year
ended December 31, 1996 included in this Prospectus have been audited by Baird,
Kurtz & Dobson, independent accountants, as stated in their report appearing
herein, and are included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
The Consolidated Financial Statements of the Company for the year ended
December 31, 1995 included in this Prospectus have been audited by McGladrey &
Pullen, LLP, independent accountants, as stated in their report appearing
herein, and are included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
61
<PAGE>
OTHER INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 under the Securities Act
with respect to the Common Stock being offered pursuant to this Prospectus.
This Prospectus does not contain all information set forth in the Registration
Statement, certain portions of which are omitted in accordance with the rules
and regulations of the Commission. The Registration Statement may be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and
7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials can be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington D.C. 20549. In
addition, the Commission maintains a World Wide Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the site is
http://www.sec.gov. Statements contained herein concerning the provisions of
any document are not necessarily complete and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement.
62
<PAGE>
TABLE OF CONTENTS
- -----------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORTS....................... F-1, 2 and 3
CONSOLIDATED FINANCIAL STATEMENTS:
Statements of Condition............................ F-4
Statements of Income............................... F-6
Statements of Shareholders' Equity................. F-7
Statements of Cash Flows........................... F-8
Notes to Consolidated Financial Statements......... F-10
<PAGE>
The accompanying consolidated financial statements give effect to the completion
of the 4.7125 for 1 split of the Company's outstanding common stock which will
take place prior to the effective date of the offering. The following report is
in the form that will be furnished by Deloitte & Touche LLP upon the completion
of the stock split of the Company's outstanding common stock described in Note
13 to the consolidated financial statements and assuming that from April 3, 1998
to the date of such completion no other material events have occurred that would
affect the accompanying consolidated financial statements or required disclosure
therein.
INDEPENDENT AUDITORS' REPORT
"Colorado Business Bankshares, Inc.
Denver, Colorado
We have audited the accompanying consolidated statement of condition of Colorado
Business Bankshares, Inc. and subsidiaries (the Company) as of December 31,
1997, and the related consolidated statements of income, shareholders' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1997 consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the Company and
subsidiaries as of December 31, 1997, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
April 3, 1998 (May 18, 1998 as to the effects
of the stock split described in Note 13)
Denver, Colorado"
DELOITTE & TOUCHE LLP
F-1
<PAGE>
The accompanying consolidated financial statements give effect to the completion
of the 4.7125 for 1 split of the Company's outstanding common stock which will
take place prior to the effective date of the offering. The following report is
in the form that will be furnished by Baird, Kurtz & Dobson upon the completion
of the stock split of the Company's outstanding common stock described in Note
13 to the consolidated financial statements and assuming that from January 24,
1997 to the date of such completion no other material events have occurred that
would affect the accompanying consolidated financial statements or required
disclosure therein.
INDEPENDENT ACCOUNTANTS' REPORT
"To the Board of Directors and Stockholders
Colorado Business Bankshares, Inc.
Denver, Colorado
We have audited the accompanying consolidated statement of condition of Colorado
Business Bankshares, Inc. and subsidiaries as of December 31, 1996, and the
related consolidated statements of income, shareholders' equity and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1996 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Colorado
Business Bankshares, Inc. and subsidiaries as of December 31, 1996, and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
January 24, 1997
Denver, Colorado"
Baird, Kurtz & Dobson
F-2
<PAGE>
The accompanying consolidated financial statements give effect to the completion
of the 4.7125 for 1 split of the Company's outstanding common stock which will
take place prior to the effective date of the offering. The following report is
in the form that will be furnished by McGladrey & Pullen, LLP upon the
completion of the stock split of the Company's outstanding common stock
described in Note 13 to the consolidated financial statements and assuming that
from January 12, 1996 to the date of such completion no other material events
have occurred that would affect the accompanying consolidated financial
statements or required disclosure therein.
INDEPENDENT AUDITORS' REPORT
"To the Board of Directors and Stockholders
Colorado Business Bankshares, Inc.
Denver, Colorado
We have audited the accompanying consolidated statements of income,
shareholders' equity and cash flows of Colorado Business Bankshares, Inc. and
subsidiaries for the year ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1995 consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Colorado Business Bankshares, Inc. and subsidiaries for the year ended
December 31, 1995, in conformity with generally accepted accounting principles.
January 12, 1996
Denver, Colorado"
McGladrey & Pullen, LLP
F-3
<PAGE>
COLORADO BUSINESS BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CONDITION
DECEMBER 31, 1997 AND 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1997 1996
<S> <C> <C>
Cash and due from banks.............................................................. $ 15,075,000 $ 10,672,000
Federal funds sold................................................................... 12,700,000 -
------------ ------------
Total cash and cash equivalents............................................... 27,775,000 10,672,000
------------ ------------
Investment securities available for sale (cost of $41,456,000
and $29,314,000, respectively)..................................................... 41,630,000 29,457,000
Investment securities held to maturity (fair value of $15,189,000
and $27,142,000, respectively)..................................................... 14,931,000 26,895,000
Other investments.................................................................... 2,223,000 1,219,000
------------ ------------
Total investments............................................................. 58,784,000 57,571,000
------------ ------------
Loans and leases, net................................................................ 164,091,000 110,748,000
Excess of cost over fair value of net assets acquired,
at amortized cost.................................................................. 5,116,000 5,550,000
Investment in operating leases....................................................... 3,297,000 2,076,000
Premises and equipment, net.......................................................... 1,266,000 1,474,000
Accrued interest receivable.......................................................... 1,331,000 1,114,000
Real estate acquired through foreclosure, net........................................ - 109,000
Deferred income taxes................................................................ 777,000 448,000
Other................................................................................ 1,622,000 883,000
------------ ------------
TOTAL ASSETS......................................................................... $264,059,000 $190,645,000
============ ============
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
<S> <C> <C>
LIABILITIES:
Deposits:
Demand........................................................................... $ 69,069,000 $ 48,741,000
NOW and money market............................................................. 75,164,000 63,276,000
Savings.......................................................................... 5,971,000 5,839,000
Certificates of deposit.......................................................... 70,854,000 37,454,000
------------ ------------
Total deposits................................................................. 221,058,000 155,310,000
Federal funds purchased............................................................ - 6,226,000
Securities sold under agreements to repurchase..................................... 13,024,000 3,422,000
Advances from the Federal Home Loan Bank........................................... 3,260,000 4,400,000
Note payable....................................................................... 7,500,000 10,000,000
Accrued interest and other liabilities............................................. 1,792,000 1,098,000
------------ ------------
Total liabilities.............................................................. 246,634,000 180,456,000
MINORITY INTEREST (Note 1)
COMMITMENTS AND CONTINGENCIES (Note 10)
SHAREHOLDERS' EQUITY:
Cumulative preferred, $.01 par value; 2,000,000 shares
authorized; 1,500 issued and outstanding, $1,000 liquidation
preference...................................................................... 1,500,000 -
Common, $.01 par value; 25,000,000 shares authorized;
4,874,968 and 3,771,885 issued and outstanding, respectively..................... 49,000 38,000
Additional paid-in capital......................................................... 11,933,000 7,965,000
Retained earnings.................................................................. 3,833,000 2,096,000
Net unrealized appreciation on available for sale securities,
net of income tax of $65,000 and $53,000, respectively........................... 110,000 90,000
------------ ------------
Total shareholders' equity..................................................... 17,425,000 10,189,000
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................................... $264,059,000 $190,645,000
============ ============
</TABLE>
F-5
<PAGE>
COLORADO BUSINESS BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans and leases............................ $ 14,171,000 $ 10,117,000 $ 8,217,000
Interest on investments.......................................... 3,976,000 3,594,000 3,014,000
------------ ------------ -----------
Total interest income.......................................... 18,147,000 13,711,000 11,231,000
INTEREST EXPENSE:
Interest on deposits............................................. 5,253,000 3,995,000 3,357,000
Interest on short-term borrowings................................ 1,031,000 445,000 93,000
Interest on note payable......................................... 732,000 883,000 950,000
------------ ------------ -----------
Total interest expense......................................... 7,016,000 5,323,000 4,400,000
NET INTEREST INCOME BEFORE PROVISION
FOR LOAN AND LEASE LOSSES........................................ 11,131,000 8,388,000 6,831,000
PROVISION FOR LOAN AND LEASE LOSSES................................ 949,000 493,000 242,000
------------ ------------ -----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN AND LEASE LOSSES........................................ 10,182,000 7,895,000 6,589,000
------------ ------------ -----------
OTHER INCOME:
Service charges.................................................. 830,000 804,000 724,000
Operating lease income........................................... 1,334,000 261,000 -
Other income..................................................... 1,139,000 729,000 467,000
------------ ------------ -----------
Total other income............................................. 3,303,000 1,794,000 1,191,000
------------ ------------ -----------
OTHER EXPENSE:
Salaries and employee benefits................................... 5,339,000 4,364,000 3,466,000
Occupancy expenses, premises and equipment....................... 1,202,000 1,018,000 716,000
Depreciation on leases........................................... 1,168,000 247,000 -
Amortization of intangibles...................................... 501,000 639,000 697,000
Other............................................................ 2,177,000 1,559,000 1,753,000
------------ ------------ -----------
Total other expenses........................................... 10,387,000 7,827,000 6,632,000
------------ ------------ -----------
INCOME BEFORE INCOME TAXES......................................... 3,098,000 1,862,000 1,148,000
PROVISION FOR INCOME TAXES......................................... 1,245,000 762,000 432,000
------------ ------------ -----------
NET INCOME......................................................... $ 1,853,000 $ 1,100,000 $ 716,000
============ ============ ===========
EARNINGS PER SHARE:
Basic............................................................ $ 0.37 $ 0.29 $ 0.19
============ ============ ===========
Diluted.......................................................... $ 0.36 $ 0.29 $ 0.19
============ ============ ===========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
COLORADO BUSINESS BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net
Unrealized
Appreciation
Common Stock Additional Preferred Stock on Available
Shares Paid-In Shares Retained for Sale
Issued Amount Capital Issued Amount Earnings Securities Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995................. 3,774,241 $ 38,000 $ 7,971,000 - $ - $ 280,000 $ - $ 8,289,000
REDEMPTION OF COMMON STOCK............... (2,356) - (6,000) - - - - (6,000)
NET CHANGE IN UNREALIZED APPRECIATION
ON AVAILABLE FOR SALE SECURITIES,
net of income taxes of $40,000......... - - - - - - 68,000 68,000
NET INCOME............................... - - - - - 716,000 - 716,000
--------- -------- ----------- ----- ---------- ---------- -------- -----------
BALANCE, DECEMBER 31, 1995............... 3,771,885 38,000 7,965,000 - - 996,000 68,000 9,067,000
NET CHANGE IN UNREALIZED APPRECIATION
ON AVAILABLE FOR SALE SECURITIES,
net of income taxes of $13,000......... - - - - - - 22,000 22,000
NET INCOME............................... - - - - - 1,100,000 - 1,100,000
--------- -------- ----------- ----- ---------- ---------- -------- -----------
BALANCE, DECEMBER 31, 1996............... 3,771,885 38,000 7,965,000 - - 2,096,000 90,000 10,189,000
ISSUANCE OF COMMON STOCK................. 1,102,725 11,000 3,967,000 - - - - 3,978,000
ISSUANCE OF PREFERRED STOCK.............. - - - 1,500 1,500,000 - - 1,500,000
OPTIONS EXERCISED........................ 358 - 1,000 - - - - 1,000
DIVIDENDS PAID-PREFERRED
($12.93 per share)...................... - - - - - (116,000) - (116,000)
NET CHANGE IN UNREALIZED APPRECIATION
ON AVAILABLE FOR SALE SECURITIES,
net of income taxes of $65,000......... - - - - - - 20,000 20,000
NET INCOME............................... - - - - - 1,853,000 - 1,853,000
--------- -------- ----------- ----- ---------- ---------- -------- -----------
BALANCE, DECEMBER 31, 1997............... 4,874,968 $ 49,000 $11,933,000 1,500 $1,500,000 $3,833,000 $110,000 $17,425,000
========= ======== =========== ===== ========== ========== ======== ===========
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
COLORADO BUSINESS BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................... $ 1,853,000 $ 1,100,000 $ 716,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Net accretion on securities................................... (988,000) (116,000) (104,000)
Depreciation and amortization................................. 2,141,000 1,247,000 828,000
Provision for loan and lease losses........................... 949,000 493,000 242,000
Deferred income taxes......................................... (341,000) (184,000) (237,000)
Gain on sale of premises and equipment........................ - (1,000) (5,000)
Gain on sale of real estate acquired through
foreclosure................................................. - (79,000) (20,000)
Changes in:
Accrued interest receivable................................... (217,000) (34,000) (30,000)
Other assets.................................................. (1,962,000) (270,000) (272,000)
Accrued interest and other liabilities........................ 694,000 (163,000) 634,000
------------ ------------ ------------
Net cash provided by operating activities................. 2,129,000 1,993,000 1,752,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities held to maturity.............. (2,024,000) (13,261,000) (18,365,000)
Purchase of investment securities available for sale............ (25,809,000) (8,444,000) (24,343,000)
Proceeds from maturities of investment
securities held to maturity.................................. 13,966,000 8,570,000 36,789,000
Proceeds from maturities and sale of investment
securities available for sale................................. 13,662,000 6,708,000 2,046,000
Loan originations and repayments, net........................... (55,513,000) (24,040,000) (16,997,000)
Proceeds from sale of real estate acquired
through foreclosure.......................................... 109,000 389,000 70,000
Purchase of premises and equipment.............................. (370,000) (2,615,000) (1,136,000)
Proceeds from sale of premises and equipment.................... 106,000 1,000 22,000
------------ ------------ ------------
Net cash used in investing activities..................... (55,873,000) (32,692,000) (21,914,000)
</TABLE>
(Continued)
F-8
<PAGE>
COLORADO BUSINESS BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand, NOW, money market,
and savings account............................................. $ 32,348,000 $ 12,944,000 $ 4,118,000
Net increase in certificates of deposit.......................... 33,400,000 4,853,000 8,905,000
Net (decrease) increase in federal funds purchased............... (6,226,000) 6,226,000 -
Net increase in securities sold under agreements
to repurchase................................................. 9,602,000 1,341,000 2,081,000
Advances from the Federal Home Loan Bank......................... (1,140,000) 4,400,000 -
Payment on notes payable......................................... (1,000,000) (500,000) -
Proceeds from issuance of common stock........................... 3,978,000 - -
Dividends paid on preferred stock................................ (116,000) - -
Proceeds from options exercised.................................. 1,000 - -
Redemption of stock.............................................. - - (6,000)
------------ ------------ ------------
Net cash provided by financing activities.................. 70,847,000 29,264,000 15,098,000
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS............................................. 17,103,000 (1,435,000) (5,064,000)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR................................................ 10,672,000 12,107,000 17,171,000
------------ ------------ ------------
CASH AND CASH EQUIVALENTS,
END OF YEAR...................................................... $ 27,775,000 $ 10,672,000 $ 12,107,000
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF
CASH INFORMATION:
Cash paid during the year for:
Interest....................................................... $ 6,910,000 $ 5,241,000 $ 4,344,000
============ ============ ============
Income taxes................................................... $ 1,455,000 $ 874,000 $ 659,000
============ ============ ============
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
During the year ended December 31, 1997, the Company issued preferred stock of
$1,500,000 in consideration for repayment of notes payable.
See notes to consolidated financial statements. (Concluded)
F-9
<PAGE>
COLORADO BUSINESS BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting practices of Colorado Business Bankshares, Inc.
("Parent"), its wholly-owned subsidiary, the Colorado Business Bank, N.A.
("Bank"), and its 80% owned equipment leasing subsidiary, Colorado Business
Leasing, Inc. ("Leasing"), collectively referred to as the "Company," conform
to generally accepted accounting principles and prevailing practices within
the banking industry.
The Bank, formerly operating under two separate charters, is a full-service,
commercial banking institution with five locations in the Denver metropolitan
area. Leasing provides equipment leasing primarily to middle-market
companies. In preparing its financial statements, management of the Company
is required to make estimates and assumptions that affect the reported amount
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
significantly from those estimates. Material estimates that are particularly
susceptible to significant changes in the near-term relate to the
determination of the allowance for loan and lease losses, the valuation of
real estate acquired through foreclosures or in satisfaction of loans, lease
residuals and valuation of property under operating leases. The following is
a summary of the Company's significant accounting and reporting policies.
Consolidation - The consolidated financial statements include the accounts of
the Parent, the Bank and Leasing. All significant intercompany balances and
transactions have been eliminated. Losses attributable to minority
shareholders of Leasing have exceeded their capital contribution.
Cash and Cash Equivalents - The Company considers all liquid investments with
original maturities of three months or less to be cash equivalents. At
December 31, 1997 and 1996, cash equivalents consisted of federal funds sold.
Investments - The Company classifies its investment securities as held to
maturity, available for sale, or trading according to management's intent.
As of December 31, 1997 and 1996, the Company has no trading securities.
a. Investment Securities Held to Maturity - Bonds, notes and debentures for
which the Company has the positive intent and ability to hold to maturity
are reported at cost, adjusted for premiums and discounts.
b. Investment Securities Available for Sale - Available for sale securities
consist of bonds, notes, and debentures not classified as
held-to-maturity securities. Unrealized holding gains and losses, net of
tax are reported as a net amount in a separate component of shareholders'
equity until realized.
Premiums and discounts are recognized in interest income using the level-
yield method over the period to maturity. Declines in the fair value of
individual held to maturity and available for sale securities below their
cost that are other than temporary are recorded as write-downs of the
individual securities
F-10
<PAGE>
to their fair value and the related write-downs are included in earnings as
realized losses. Gains and losses on disposal of securities are determined
using the specific-identification method.
Other investments, including primarily Federal Home Loan Bank and Federal
Reserve Bank stock, are accounted for under the cost method.
Loans and Leases - Loan and leases that management has the intent and ability
to hold for the foreseeable future or until maturity or pay-off are reported
at their outstanding principal balance adjusted for any charge-offs, the
allowance for loan and lease losses, deferred fees or costs on originated
loans and leases, and unamortized premiums or discounts on purchased loans.
Loan fees and certain costs of originating loans and leases are being
deferred and the net amount is amortized over the contractual life of the
related loans and leases. Interest is accrued and credited to income daily
based on the principal balance outstanding. The accrual of interest income
is generally discontinued when a loan or lease becomes 90 days past due as to
principal and interest. When a loan is designated as nonaccrual, the current
period's accrued interest receivable is charged against current earnings
while any portions applicable to prior periods are charged against the
allowance for loan and lease losses. Interest payments received on
nonaccrual loans are applied to the principal balance of the loan.
Management may elect to continue the accrual of interest when the loan is in
the process of collection and the realizable value of collateral is
sufficient to cover the principal balance and accrued interest.
Net Investment in Direct Financing Leases - The Company has entered into
various lease agreements which are accounted for as direct financing leases,
in accordance with Statement of Financial Accounting Standards No. 13.
Under this method, the present value of the future lease payments, the
present value of the unguaranteed residual and initial direct costs are
recorded as assets, which are equal to the fair value of the equipment
leased. In each period, initial direct costs are amortized and interest
income, which is included in income from direct financing leases, is
recognized as a constant percentage return on the net investment in the
lease.
Residual values are established at lease inception equal to the estimated
value, as determined by the Company, to be received from the equipment
following termination of the initial lease. In estimating such values, the
Company considers all relevant information and circumstances regarding the
equipment and the lessee. Any permanent reduction in the estimated residual
value of lease property is charged to operations in the period it occurs.
Allowance for Loan and Lease Losses - The allowance for loan and lease losses
is based primarily on management's estimate of probable losses, as determined
by analysis of the loan and lease portfolio and historical experience as
adjusted for other factors which, in management's judgment, deserve current
recognition in estimating probable loan and lease losses. Loans and leases
deemed uncollectible are charged to the allowance. Recoveries on loans and
leases previously charged-off are added to the allowance.
A loan is considered impaired when it is probable that the Company will not
receive all amounts due according to the contractual terms of the loan. This
includes loans that are nonaccrual loans and certain other loans classified
by management. Interest is recognized for nonaccrual loans only upon receipt
and only after all principal amounts are current according to the terms of
the contract.
F-11
<PAGE>
Excess of Cost Over Fair Value of Net Assets Acquired - Excess of cost over
fair value of net assets acquired is amortized by the straight-line method
over 15 years. The Company periodically reviews such asset if changes in
events or circumstances arise.
Investment in Operating Leases - The Company has entered into various
equipment leases accounted for as operating leases in accordance with
Statement of Financial Accounting Standards No. 13. The equipment, which is
reported as investment in operating leases, is depreciated over the estimated
useful life or lease term, if shorter.
Premises and Equipment - Premises and equipment are stated at cost less
accumulated depreciation and amortization, which is calculated by the
straight-line method over the estimated useful lives of the respective assets
as follows:
Office buildings 20 to 40 years
Furniture, fixtures and equipment 3 to 10 years
Leasehold improvements are capitalized and amortized using the straight-line
method over the terms of the respective leases or the estimated useful lives
of the improvements, whichever is shorter.
Real Estate Acquired through Foreclosure - Assets acquired by foreclosure or
in settlement of debt and held for sale are valued at estimated fair value as
of the date of foreclosure, and a related valuation allowance is provided for
estimated costs to sell the assets. Management periodically evaluates the
value of foreclosed assets held for sale and increases the valuation
allowance for any subsequent declines in fair value less selling costs.
Subsequent declines in value are charged to operations.
Income Taxes - A deferred income tax liability or asset is recognized for
temporary differences which exist in the recognition of certain income and
expense items for financial statement reporting purposes in periods different
than for tax reporting purposes. The provision for income taxes is based on
the amount of current and deferred income taxes payable or refundable at the
date of the financial statements as measured by the provisions of current tax
laws.
Earnings Per Share - Basic earnings per share is based on net income divided
by the weighted average number of common shares outstanding during the
period. The weighted average number of shares outstanding used to compute
diluted earnings per share include the number of additional common shares
that would be outstanding if the potential dilutive common shares and common
share equivalents had been issued at the beginning of the year.
Recent Accounting Pronouncements - In June 1997, SFAS No. 130, "Reporting
Comprehensive Income," was issued. SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose financial
statements. SFAS No. 130 requires that all items that are required to be
recognized under accounting standards as components of comprehensive income
be reported in a financial statement that is displayed with the same
prominence as other financial statements. SFAS No. 130 requires that a
company (a) classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of the balance sheet. SFAS No. 130 is
effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required. The Company has not determined the effects,
if any, that SFAS No. 130 will have on the disclosures in the Consolidated
Financial Statements.
In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," was issued. SFAS No. 131 establishes standards for the
way that public companies report selected information about operating
segments in annual financial statements and requires that those companies
F-12
<PAGE>
report selected information about segments in interim financial reports
issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and major
customers. Generally, financial information is required to be reported on
the basis that it is used internally for evaluating segment performance and
deciding how to allocate resources to segments. SFAS No. 131 requires that a
public company report a measure of segment profit or loss, certain specific
revenue and expense items, and segment assets. SFAS No. 131 is effective for
financial statements for periods beginning after December 15, 1997. The
Company has not determined what its reporting segments will be under SFAS No.
131.
2. INVESTMENTS
The amortized cost and estimated fair values of investment securities are
summarized as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
December 31, 1997 Cost Gains Losses Value
-----------------
<S> <C> <C> <C> <C>
Available for sale securities:
Mortgage-backed securities................ $ 36,957,000 $ 185,000 $ 1,000 $ 37,141,000
U.S. treasury............................. 1,499,000 - 1,000 1,498,000
U.S. government agencies.................. 3,000,000 - 9,000 2,991,000
------------ --------- -------- ------------
$ 41,456,000 $ 185,000 $ 11,000 $ 41,630,000
============ ========= ======== ============
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Held to maturity securities:
U.S. government agencies.................. $ 1,500,000 $ - $ 3,000 $ 1,497,000
Mortgage-backed securities................ 11,213,000 239,000 23,000 11,429,000
Obligations of states and
political subdivisions.................. 1,198,000 50,000 - 1,248,000
U.S. treasury............................. 1,020,000 - 5,000 1,015,000
------------ --------- -------- ------------
$ 14,931,000 $ 289,000 $ 31,000 $ 15,189,000
============ ========= ======== ============
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
December 31, 1996 Cost Gains Losses Value
-----------------
<S> <C> <C> <C> <C>
Available for sale securities:
Mortgage-backed securities................ $ 22,811,000 $ 238,000 $ 76,000 $ 22,973,000
U.S. treasury............................. 3,500,000 8,000 - 3,508,000
U.S. government agencies
and corporations......................... 3,003,000 - 27,000 2,976,000
------------ --------- --------- ------------
$ 29,314,000 $ 246,000 $ 103,000 $ 29,457,000
============ ========= ========= ============
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Held to maturity securities:
U.S. government agencies
and corporations......................... $ 7,804,000 $ 2,000 $ 7,000 $ 7,799,000
Mortgage-backed securities................. 15,638,000 256,000 27,000 15,867,000
Obligations of states and
political subdivisions................... 1,919,000 40,000 4,000 1,955,000
U.S. treasury.............................. 1,534,000 1,000 14,000 1,521,000
------------ --------- -------- ------------
$ 26,895,000 $ 299,000 $ 52,000 $ 27,142,000
============ ========= ======== ============
</TABLE>
The amortized cost and estimated fair value of investments in debt securities
at December 31, 1997 by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without penalties.
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
-------------------------------- --------------------------------
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
<S> <C> <C> <C> <C>
Due in one year or less...................... $ 500,000 $ 500,000 $ 210,000 $ 214,000
Due after one year through five years........ 3,999,000 3,989,000 3,498,000 3,536,000
Due after five years through ten years....... - - 10,000 10,000
Mortgage-backed securities................... 36,957,000 37,141,000 11,213,000 11,429,000
------------ ------------ ------------ ------------
$ 41,456,000 $ 41,630,000 $ 14,931,000 $ 15,189,000
============ ============ ============ ============
</TABLE>
During the years ended December 31, 1997, 1996 and 1995, there were no sales
of held to maturity securities. Proceeds from sales of available for sale
securities totaled $9,155,000, $0 and $2,046,000,
F-14
<PAGE>
respectively during the year ended December 31, 1997, 1996 and 1995. The
related gross realized gains were $82,000, $0 and $20,000, respectively.
Investment securities with an approximate fair value of $10,793,000 and
$13,221,000 were pledged to secure public deposits of $8,976,000 and
$9,677,000 at December 31, 1997 and 1996, respectively.
Obligations of states and political subdivisions at December 31, 1997 and
1996 do not include any single issuer for which the aggregate carrying amount
exceeds 10% of the Company's shareholders' equity.
Other investments at December 31, 1997 consists primarily of Federal Home
Loan Bank stock (carrying value $1,399,000) and Federal Reserve Bank stock
(carrying value $613,000). In addition, the Bank had a $230,000 investment
in a trust company which was liquidated in February 1998 at cost, and $61,000
in an investment partnership being accounted for on the cost method. The
Bank has committed to investing up to $500,000 in the partnership. Certain
shareholders and directors have also invested and received consulting fees
from the partnership.
3. LOANS AND LEASES
Categories of loans and leases, net of deferred fees at December 31, include:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Commercial.................................................................. $ 78,152,000 $ 58,727,000
Real estate - mortgage...................................................... 40,262,000 24,491,000
Real estate - construction.................................................. 27,786,000 19,119,000
Consumer.................................................................... 11,732,000 8,266,000
Direct financing leases, net................................................ 8,407,000 1,805,000
------------- -------------
166,339,000 112,408,000
Less: Allowance for loan and lease loss.................................... 2,248,000 1,660,000
------------- -------------
$ 164,091,000 $ 110,748,000
============= =============
</TABLE>
The majority of the Company's lending and leasing activities are with
customers located in the Denver metropolitan area.
In the ordinary course of business, the Company makes various direct and
indirect loans to officers and directors of the Company and its subsidiaries
at competitive rates. Activity with respect to officer and director loans
is as follows for the years ended December 31, 1997 and 1996, respectively:
<TABLE>
1997 1996
---- ----
<S> <C> <C>
Balance, beginning of period.............................. $ 2,201,000 $ 1,717,000
New loans................................................. 4,867,000 2,709,000
Principal paydowns and payoffs............................ (4,929,000) (2,225,000)
----------- -----------
Balance, end of period.................................... $ 2,139,000 $ 2,201,000
=========== ===========
</TABLE>
The recorded investment in loans that are considered to be impaired under
SFAS No. 114 as amended by SFAS No. 118, was $811,000 and $582,000 at
December 31, 1997 and 1996, respectively (all of which were on a non-accrual
basis). The related impaired loan allowance for credit losses were
F-15
<PAGE>
$224,000 and $144,000 at December 31, 1997 and 1996, respectively. Interest
of $33,000, $117,000 and $147,000 was recognized on average impaired loans of
$697,000, $1,105,000, $1,630,000, during 1997, 1996 and 1995, respectively.
The gross interest income that would have been recorded if the loans had been
current in accordance with the original terms is insignificant for the years
ended December 31, 1997, 1996 and 1995.
The Company sells participations in loans to an entity controlled by the
Chairman of the Board of Directors and a member of the Board of Directors at
December 31, 1997. The amount of participations outstanding with the
affiliate was $2,753,000.
Transactions in the allowance for loan and lease loss are summarized as
follows:
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Balance, beginning of year..................................... $ 1,660,000 $ 1,392,000 $ 1,181,000
Provision for loan and lease losses............................ 949,000 493,000 242,000
----------- ----------- -----------
2,609,000 1,885,000 1,423,000
Losses charged off, net of recoveries of $33,000
for 1997, $103,000 for 1996 and $14,000 for 1995............. (361,000) (225,000) (31,000)
----------- ----------- -----------
Balance, end of year........................................... $ 2,248,000 $ 1,660,000 $ 1,392,000
=========== =========== ===========
</TABLE>
4. INVESTMENT IN LEASES
The Company is the lessor of equipment under agreements expiring in various
future years. Certain of the equipment leases provide for additional rents,
based on use in excess of stipulated minimum number of hours, and allow the
lessees to purchase the equipment for fair value at the end of the lease
terms.
Property leased or held for lease to others under operating leases consists
of the following at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Equipment................................................................... $ 4,290,000 $ 2,279,000
Unamortized initial direct costs............................................ 64,000 44,000
----------- -----------
4,354,000 2,323,000
Less accumulated depreciation............................................... 1,057,000 247,000
----------- -----------
Total....................................................................... $ 3,297,000 $ 2,076,000
=========== ===========
</TABLE>
F-16
<PAGE>
The Company's net investment in direct financing leases consists of the
following at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Minimum lease payments receivable................................................ $ 9,819,000 $ 2,115,000
Unamortized initial direct costs................................................. 150,000 21,000
Estimated unguaranteed residual values........................................... 17,000 2,000
Unearned income.................................................................. (1,579,000) (333,000)
----------- -----------
Total............................................................................ $ 8,407,000 $ 1,805,000
=========== ===========
</TABLE>
At December 31, 1997, future minimum lease payments receivable under direct
financing leases and noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
Direct
Financing Operating
Leases Leases
<S> <C> <C>
1998............................................................................. $ 3,141,000 $ 1,400,000
1999............................................................................. 2,870,000 934,000
2000............................................................................. 1,884,000 571,000
2001............................................................................. 1,333,000 102,000
2002............................................................................. 490,000 -
Thereafter....................................................................... 101,000 -
----------- -----------
Total............................................................................ $ 9,819,000 $ 3,007,000
=========== ===========
</TABLE>
5. PREMISES AND EQUIPMENT
The major classes of premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
December 31,
1997 1996
<S> <C> <C>
Building......................................................................... $ 355,000 $ 355,000
Leasehold improvements........................................................... 951,000 693,000
Furniture, fixtures, and equipment............................................... 2,049,000 772,000
----------- -----------
3,355,000 1,820,000
Accumulated depreciation......................................................... 2,089,000 346,000
----------- -----------
$ 1,266,000 $ 1,474,000
=========== ===========
</TABLE>
F-17
<PAGE>
6. CERTIFICATE OF DEPOSITS
The composition of certificate of deposits is as follows:
<TABLE>
<CAPTION>
December 31,
1997 1996
<S> <C> <C>
Less than $100,000............................................................. $ 18,724,000 $ 9,936,000
$100,000 and more.............................................................. 52,130,000 27,518,000
------------ ------------
$ 70,854,000 $ 37,454,000
============ ============
</TABLE>
Related interest expense is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Less than $100,000............................................. $ 877,000 $ 445,000 $ 349,000
$100,000 and more.............................................. 2,083,000 1,450,000 843,000
----------- ----------- -----------
$ 2,960,000 $ 1,895,000 $ 1,192,000
=========== =========== ===========
</TABLE>
Maturities of certificates of deposit of $100,000 and more are as follows:
<TABLE>
<CAPTION>
December 31,
1997
<S> <C>
Less than three months............................................................................ $ 29,828,000
Three months up to six months..................................................................... 8,387,000
Six months up to one year......................................................................... 7,976,000
One year and over................................................................................. 5,939,000
------------
$ 52,130,000
============
</TABLE>
7. BORROWED FUNDS
The Company has advances from the Federal Home Loan Bank of Topeka (FHLB)
with interest rates that range from 5.98% to 6.89%. Advances are
collateralized generally by all assets of the Company.
F-18
<PAGE>
Aggregate annual maturities of advances are as follows:
<TABLE>
<CAPTION>
Year
<S> <C>
1998............................................................................................... $ 1,140,000
1999............................................................................................... 1,140,000
2000............................................................................................... 140,000
2001............................................................................................... 140,000
2002............................................................................................... 140,000
Thereafter......................................................................................... 560,000
-----------
Total.............................................................................................. $ 3,260,000
===========
</TABLE>
Securities sold under agreements to repurchase are summarized as follows:
<TABLE>
<CAPTION>
December 31,
1997 1996
<S> <C> <C>
Securities with an estimated fair value of
$13,152,000 in 1997 and $3,431,000 in 1996.................................... $ 13,024,000 $ 3,422,000
============ ===========
</TABLE>
F-19
<PAGE>
The Company enters into sales of securities under agreements to repurchase.
The amounts received under these agreements represent short-term borrowings
and are reflected as a liability in the consolidated statement of condition.
During the period, securities were pledged to the customers' and segregated
into a separate safekeeping account that explicitly recognizes the customers'
interest in the securities. Securities sold under agreements to repurchase
averaged $1,861,000 and $2,583,000 and the maximum amounts outstanding at any
month-end during 1997 and 1996 were $16,817,000 and $6,084,000, respectively.
At December 31, 1997, the weighted average interest rate was 5.21%.
Note payable at December 31, 1997, consists of a $7,500,000 promissory note
due to a bank. Interest on the note is payable quarterly and is set at the
lending bank's prime rate. Principal is payable in quarterly installments of
$250,000 through July 1998, increasing to $313,000 through April 2001 with
the remaining outstanding balance due July 2001. The note is collateralized
by a pledge of all of the Colorado Business Bank, N.A.'s common stock. The
agreement also contains covenants which include compliance with certain
financial requirements including minimum tangible equity capital to total
quarterly average assets at the subsidiary bank of 6.50%.
Aggregate annual maturities are as follows:
<TABLE>
<CAPTION>
Year
<S> <C>
1998............................................................................................... $ 813,000
1999............................................................................................... 1,250,000
2000............................................................................................... 1,250,000
2001............................................................................................... 4,187,000
-----------
Total.............................................................................................. $ 7,500,000
===========
</TABLE>
8. INCOME TAXES
The components of consolidated income tax expense are as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Current tax expense..................................... $ 1,586,000 $ 946,000 $ 669,000
Deferred tax expense (benefit).......................... (341,000) (184,000) (237,000)
----------- --------- ---------
Total................................................... $ 1,245,000 $ 762,000 $ 432,000
=========== ========= =========
</TABLE>
F-20
<PAGE>
A deferred tax asset or liability is recognized for the tax consequences of
temporary differences in the recognition of revenue and expense for financial
and tax reporting purposes. The net change during the year in the deferred
tax asset or liability results in a deferred tax expense or benefit. The
temporary differences, tax effected, which give rise to the Company's net
deferred tax assets are as follows:
<TABLE>
<CAPTION>
December 31,
1997 1996
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses....................................................... $ 688,000 $ 486,000
Depreciation.................................................................... 43,000 -
Deferred loan fees.............................................................. 102,000 105,000
Vacation and other accrued liabilities.......................................... 44,000 -
Other........................................................................... 62,000 35,000
--------- ---------
Total deferred tax assets....................................................... 939,000 626,000
--------- ---------
Deferred tax liabilities:
Building leasehold improvements................................................. 97,000 125,000
Unrealized gain on available-for-sale securities................................ 65,000 53,000
--------- ---------
Total deferred tax liabilities.................................................. 162,000 178,000
--------- ---------
Net deferred tax assets........................................................... $ 777,000 $ 448,000
========= =========
</TABLE>
A reconciliation of income tax expense at the statutory rate to the Company's
actual income tax expense is shown below:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Computed at the statutory rate (34%)............................... $ 1,053,000 $ 633,000 $ 390,000
Increase (decrease) resulting from:
Tax exempt interest income on loans and securities............... (10,000) (61,000) (56,000)
Nondeductible goodwill amortization.............................. 148,000 146,000 136,000
State income taxes, net of federal income tax effect............. 65,000 50,000 32,000
Other............................................................ (11,000) (6,000) (70,000)
----------- --------- ---------
Actual tax provision............................................... $ 1,245,000 $ 762,000 $ 432,000
=========== ========= =========
</TABLE>
9. SHAREHOLDERS' EQUITY
Preferred Stock - The Board of Directors is authorized, among other things,
to fix the designation and the powers, preferences and relative,
participating, optional and other special rights for preferred shares. At
December 31, 1997 all outstanding preferred shares are held by the holder of
the note payable referred to in Note 7 and are designated by the Board as
Series A Adjustable Rate Cumulative Perpetual Preferred Stock. Holders of
the Series A Preferred Stock have no voting rights except under certain
conditions. The Board further entitled the holders of Preferred Stock to
receive preferential cumulative cash dividends at the applicable floating
rate payable quarterly in arrears (prime plus 2.25%). Prime was 8.50% at
December 31, 1997. Shares of the Preferred Stock are redeemable by the
Company in whole or in part at the outstanding redemption price of $1,000
per share plus all unpaid dividends. The Preferred Stock is putable to two
current shareholders and directors of the Company. However, the
F-21
<PAGE>
Company is not required to redeem the stock. All shares of Common Stock of
the Company, and all other capital stock of any class or series of the
Company issued after the issue date, rank junior to the Preferred Stock as to
dividends and rights upon liquidation, dissolution or winding up of the
Company.
Stock Options - Certain officers of the Company have been granted options to
purchase shares of the Company's common stock pursuant to two stock option
plans. The plan's options are granted at prices not less than the fair
market value of the Company's stock at the date of grant. Generally, the
options are exercisable commencing one year from the date of grant and vest
25% per year thereafter becoming fully exercisable after four years. The
options expire after ten years and, as of December 31, 1997 the total number
of shares reserved under the plans is 298,603, and remaining shares available
for granting is 53,552. The following is a summary of changes in shares
under option:
<TABLE>
<CAPTION>
1997 1996 1995
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year..... 157,162 $ 2.54 138,783 $ 2.42 -
Granted.......................... 102,733 4.00 27,804 3.21 138,783 $ 2.42
Exercised........................ 358 2.12 - - - -
Forfeited........................ 14,486 3.18 9,425 2.76 - -
------- ------ ------- ------ ------- ------
Outstanding, end of year........... 245,051 $ 3.12 157,162 $ 2.54 138,783 $ 2.42
======= ====== ======= ====== ======= ======
Options exercisable, end of year... 67,153 31,574 -
======= ======= =======
</TABLE>
The Company granted other stock options ("Other Options") in 1994 to
individuals for their contributions to the Company which were immediately
exercisable at $2.12 per share. An aggregate of 188,500 shares of common
stock are reserved for issuance under these agreements which expire September
1, 1999.
The Company has elected to continue to account for its stock options using
the intrinsic value method prescribed by Accounting Principles Board Opinion
No. 25 and related interpretations. Accordingly, no compensation cost has
been recognized for its stock option plans. The Company estimated the fair
value of options granted in 1997, 1996 and 1995 to be $119,000, $11,000, and
$123,000, respectively using an analysis similar to the Black-Scholes option
pricing model prescribed by SFAS No. 123, "Accounting for Stock-Based
Compensation." Had compensation cost been determined based on fair value at
the grant date for the Company's stock options in accordance with SFAS No.
123, the proforma effect on net income in 1997, 1996 and 1995 would have been
a decrease of $41,000, $35,000, and $19,000, respectively. The effect on
earnings per share is not material.
At December 31, 1997, the Company's ability to pay dividends on its common
stock, if it determines to do so, is largely dependent upon the payment of
dividends by the Bank. At December 31, 1997, the Bank could have paid total
dividends to the Company of approximately $1 million, without prior
regulatory approval.
F-22
<PAGE>
The weighted average shares outstanding used in the calculation of Basic and
Diluted Earnings Per Share are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net income................................................... $ 1,853,000 $ 1,100,000 $ 716,000
Less: Preferred stock dividends............................. 116,000 - -
----------- ----------- ---------
Income available to common shareholders...................... $ 1,737,000 $ 1,100,000 $ 716,000
=========== =========== =========
Weighted average shares outstanding -
basic earnings per share................................... 4,690,852 3,771,885 3,773,063
Effect of dilutive securities - stock options................ 111,926 54,582 27,084
----------- ----------- ---------
Weighted average shares outstanding -
diluted earnings per share................................. 4,802,778 3,826,467 3,800,147
=========== =========== =========
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
Employee Profit Sharing Trust - The Company has a defined contribution
pension plan covering substantially all employees. Employees may contribute
up to 15% of their compensation with the Company's discretionary match
within the limits defined for a 401(k) Plan. Employer contributions charged
to expense for 1997, 1996, and 1995 were $123,000, $114,000 and $67,000,
respectively.
Lease Commitments - The Company entered into various operating lease
agreements for office space. Total rental expense for the year ended
December 31, 1997, 1996 and 1995 was $533,000, $477,000, and $374,000,
respectively. The Company's corporate office lease expires June 30, 1998.
Subsequent to December 31, 1997, certain officers and directors acquired the
building in which the corporate office is located and certain banking
operations are performed. Future minimum lease payments at December 31, 1997
under all noncancelable operating leases are as follows:
<TABLE>
<S> <C>
1998............................................................................................... $ 405,000
1999............................................................................................... 318,000
2000............................................................................................... 319,000
2001............................................................................................... 169,000
2002............................................................................................... 146,000
Thereafter......................................................................................... 343,000
-----------
Total.............................................................................................. $ 1,700,000
===========
</TABLE>
F-23
<PAGE>
Financial Instruments with Off-Balance Sheet Risk - In the normal course of
business the Company has entered into financial instruments which are not
reflected in the accompanying consolidated financial statements. These
financial instruments include commitments to extend credit and stand-by
letters of credit. At December 31, 1997, the Company had the following
commitments:
<TABLE>
<S> <C>
Commitments to originate commercial or
real estate construction loans and unused
lines of credit granted to customers............................................................ $ 79,354,000
============
Commitments to fund consumer loans:
Personal lines of credit........................................................................ $ 3,499,000
============
Credit card loans............................................................................... $ 1,285,000
============
Standby and performance letters of credit......................................................... $ 1,027,000
============
</TABLE>
The Company makes contractual commitments to extend credit and provide
standby letters of credit, which are binding agreements to lend money to its
customers at predetermined interest rates for a specific period of time. The
credit risk involved in issuing these financial instruments is essentially
the same as that involved in granting on-balance sheet financial instruments.
As such, the Company's exposure to credit loss in the event of non-
performance by the counter-party to the financial instrument is represented
by the contractual amounts of those instruments. However, the Company
applies the same credit policies, standards and ongoing reassessments in
making commitments and conditional obligations as they do for loans. In
addition, the amount and type of collateral obtained, if deemed necessary
upon extension of a loan commitment or standby letter of credit, is
essentially the same as the collateral requirements provided for loans.
Additional risk associated with providing these commitments arise when they
are drawn upon, such as the demands on liquidity the banks would experience
if a significant portion were drawn down at the same time. However, this is
considered unlikely, as many commitments expire without being drawn upon and
therefore do not necessarily represent future cash requirements.
Employment Contracts - Certain officers of the Company have entered into
employment agreements providing for salaries and fringe benefits. In
addition, severance is provided in the event of termination for other than
cause and under certain changes in control a lump sum payment is required.
Other Matters - The Company is involved in various lawsuits which have arisen
in the normal course of business. It is management's opinion, based upon
advice of legal counsel, that the ultimate outcome of these lawsuits will not
have a material impact upon the financial condition or results of operations
of the Company.
Pursuant to normal banking practices, the Company is required to maintain
certain balances (reserves) with the Federal Reserve Bank. At December 31,
1997, the required balance was approximately $1,568,000.
F-24
<PAGE>
11. REGULATORY MATTERS
The Company and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory - and possibly
additional discretionary - actions by regulators that, if undertaken, could
have a direct material effect on the Company's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Company and the Bank must meet specific capital
guidelines that involve quantitative measures of the Company and its Bank's
assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Company and the Banks' capital amounts
and classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier I capital (as defined in the
regulations) to risk-weighted assets, and of Tier I capital to average
assets.
The Company's total capital to risk weighted assets at December 31, 1997 was
$14,448,000, or $838,000 less than the required 8% minimum. As of December
31, 1997 the most recent notification from the Office of the Comptroller of
the Currency categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well
capitalized the Bank must maintain minimum total risk-based, Tier I risk-
based, and Tier I leverage ratios as set forth in the table. There are no
conditions or events that management believes have changed the Bank's
categories.
The following table shows the Company and the Bank's actual capital
amounts and ratios and regulatory thresholds as of December 31, 1997 and
1996 (Note that the Company does not meet the criteria for the minimum
tier 1 capital to average assets ratio of 3%):
<TABLE>
<CAPTION>
To Be "Well
Capitalized" Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
As of --------------------------- ------------------------------- ---------------------------
December 31, 1997 Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
Company
-------
Total capital
(to risk weighted assets)...... $ 14,448,000 7.6 % $ 15,286,000 8.0 % N/A N/A
Tier I capital
(to risk weighted assets)...... 12,200,000 6.4 % 7,643,000 4.0 % N/A N/A
Tier I capital
(to average assets)............ 12,200,000 4.9 % 9,980,000 4.0 % N/A N/A
Colorado Business Bank, N.A.
----------------------------
Total capital
(to risk weighted assets)...... $ 21,179,000 11.6 % $ 14,652,000 8.0 % $ 18,315,000 10.0 %
Tier I capital
(to risk weighted assets)...... 18,931,000 10.3 % 7,326,000 4.0 % 10,989,000 6.0 %
Tier I capital
(to average assets)............ 18,931,000 7.6 % 9,964,000 4.0 % 12,455,000 5.0 %
</TABLE>
F-25
<PAGE>
<TABLE>
<CAPTION>
To Be "Well
Capitalized" Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
As of --------------------------- ------------------------------- ---------------------------
December 31, 1996 Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
Company
-------
Total capital
(to risk weighted assets)...... $ 6,063,000 5.3 % $ 9,152,000 8.0 % N/A N/A
Tier I capital
(to risk weighted assets)...... 4,549,000 4.0 % 4,549,000 4.0 % N/A N/A
Tier I capital
(to average assets)............ 4,549,000 2.6 % 6,998,000 4.0 % N/A N/A
The Women's Bank
----------------
Total capital
(to risk weighted assets)...... $11,733,000 15.1 % $ 6,225,000 8.0 % $ 7,781,000 10.0 %
Tier I capital
(to risk weighted assets)...... 10,655,000 13.7 % 3,112,000 4.0 % 4,668,000 6.0 %
Tier I capital
(to average assets)............ 10,655,000 7.9 % 5,394,000 4.0 % 6,743,000 5.0 %
Colorado Business Bank, N.A.
----------------------------
Total capital
(to risk weighted assets)...... $ 3,830,000 10.3 % $ 2,986,000 8.0 % 3,732,000 10.0 %
Tier I capital
(to risk weighted assets)...... 3,391,000 9.1 % 1,493,000 4.0 % 2,239,000 6.0 %
Tier I capital
(to average assets)............ 3,391,000 7.2 % 1,895,000 4.0 % 2,369,000 5.0 %
</TABLE>
F-26
<PAGE>
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of the Company's
financial instruments is made in accordance with the requirements of SFAS No.
107, "Disclosures about Fair Value of Financial Instruments." The estimated
fair value amounts have been determined by the Company using available market
information and appropriate valuation methodologies. However, considerable
judgment is required to interpret market data in order to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize in a current
market exchange. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents...................... $ 27,775,000 $ 27,775,000 $ 10,672,000 $ 10,672,000
Investment securities available-for-sale....... 41,630,000 41,630,000 29,457,000 29,457,000
Investment securities held-to-maturity......... 14,931,000 15,189,000 26,895,000 27,142,000
Other investments.............................. 2,223,000 2,223,000 1,219,000 1,219,000
Accrued interest receivable.................... 1,331,000 1,331,000 1,114,000 1,114,000
Loans and leases, net.......................... 164,091,000 164,020,000 110,748,000 111,479,000
Financial liabilities:
Deposits....................................... 221,058,000 220,972,000 155,310,000 155,383,000
Accrued interest payable....................... 361,000 361,000 211,000 211,000
Note payable................................... 7,500,000 7,500,000 10,000,000 10,000,000
Federal funds purchased........................ - - 6,226,000 6,226,000
Securities sold under agreement to repurchase.. 13,024,000 13,024,000 3,422,000 3,422,000
Advances from Federal Home Loan Bank........... 3,260,000 3,298,000 4,400,000 4,391,000
</TABLE>
The estimation methodologies utilized by the Company are summarized as
follows:
Cash and Cash Equivalents - For cash and due from banks and federal funds
sold the carrying amount is a reasonable estimate of fair value.
Investment Securities - For investment securities, fair value equals the
quoted market price, if available. If a quoted market price is not
available, fair value is estimated using quoted market prices for similar
investment securities.
Loans and Leases - The fair value of fixed rate loans and leases is
estimated by discounting the future cash flows using the current rates at
which similar loans would be made to borrowers with similar credit ratings
and for the same remaining maturities. In computing the estimate of fair
value for all loans and leases, the estimated cash flows and/or carrying
value have been reduced by specific and general reserves for loan losses.
Accrued Interest Receivable/Payable - The carrying amount of accrued interest
receivable/payable is a reasonable estimate of fair value due to the short-
term nature of these amounts.
F-27
<PAGE>
Deposits - The fair value of demand deposits, NOW and savings accounts, and
certain money market deposits is the amount payable on demand at December 31,
1997 and 1996. The fair value of fixed-maturity certificates of deposit is
estimated using the rates currently offered for deposits with similar
remaining maturities.
Note Payable, Federal Funds Purchased, Securities Sold under Repurchase
Agreement - The estimated fair value of variable rate borrowed funds
approximates their carrying value.
Advances from the Federal Home Loan Bank - Estimated fair value is based on
discounting cash flows for comparable instruments.
Commitments to Extend Credit and Standby Letters of Credit - The Company's
off-balance sheet commitments are funded at current market rates at the date
they are drawn upon. It is management's opinion that the fair value of these
commitments would approximate their carrying value, if drawn upon.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1997 and 1996. Although
management is not aware of any factors that would significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date and,
therefore, current estimates of fair value may differ significantly from the
amounts presented herein.
13. SUBSEQUENT EVENT
At the Company's annual shareholders meeting, held on May 18, 1998, the
shareholders approved a 4.7125 for 1 stock split of the Company's common
stock and increased authorized shares to 25,000,000. In addition, the
shareholders approved an increase in the number of preferred shares
authorized to 2,000,000 shares. All references to outstanding shares,
options and earnings per share have been adjusted for the stock split.
* * * * * *
F-28
<PAGE>
=======================================================
No dealer, salesperson or any other person has
been authorized to give any information or to
make any representation other than is contained in
this Prospectus, and, if given or made, such
information or representation must not be relied
upon as having been authorized by the Company or
the Underwriters. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there
has been no change in the affairs of the Company
since any of the dates as to which information is
furnished herein or since the date hereof. This
Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities
offered hereby to any person or in any jurisdiction in
which the person making such offer or solicitation is
not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation in such
jurisdiction.
___________________
TABLE OF CONTENTS
Page
----
Prospectus Summary..........................................
Risk Factors................................................
Use of Proceeds.............................................
Dividend Policy.............................................
Dilution....................................................
Capitalization..............................................
Summary Consolidated Financial Data.........................
Management's Discussion and Analysis
of Financial Condition and Results
of Operations.............................................
Business....................................................
Management..................................................
Certain Transactions........................................
Supervision and Regulation..................................
Principal Shareholders......................................
Description of Capital Stock................................
Underwriting................................................
Shares Eligible for Future Sale.............................
Changes in Accountants......................................
Legal Matters...............................................
Experts.....................................................
Other Information...........................................
Index to Consolidated Financial Statements..................
___________________
Until , 1998 (25 days after the
date of this Prospectus), all dealers effecting
transactions in the Common Stock, whether or not
participating in this distribution, may be required to
deliver a Prospectus. This is in addition to the
obligation of dealers to deliver a Prospectus when
acting as Underwriters and with respect to their
unsold allotments or subscriptions.
=======================================================
=======================================================
1,400,000 Shares
[COLORADO
BUSINESS
BANKSHARES LOGO]
Common Stock
___________________
PROSPECTUS
___________________
Dain Rauscher Wessels
A division of Dain Rauscher Incorporated
, 1998
=======================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
The Registrant's Articles of Incorporation and Bylaws provide that the
Registrant shall indemnify its directors, officers, employees and agents to the
fullest extent now or hereafter permitted by Colorado law. Under such
provisions, any director or officer who, in his or her capacity as such, is
made, or threatened to be made, a party to any suit or proceeding will be
indemnified if such director or officer acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interests of the
Registrant and, with respect to any criminal proceeding, had no reasonable cause
to believe that his or her conduct was unlawful. The Articles of Incorporation,
Bylaws and Colorado law further provide that such indemnification is not
exclusive of any other rights to which such individual may be entitled under the
Articles of Incorporation, Bylaws, any agreement, insurance policies, vote of
shareholders or disinterested directors or otherwise.
In addition, the Articles of Incorporation provide that, to the full extent
now or hereafter permitted by Colorado law, the Registrant's directors will not
be liable for monetary damages for breach of their fiduciary duty of care to the
Registrant and its shareholders. This provision in the Articles of
Incorporation does not eliminate the directors' fiduciary duty of care, and, in
appropriate circumstances, equitable remedies such as an injunction or other
forms of non-monetary relief would remain available under Colorado law. Each
director will continue to be subject to liability for breach of his or her duty
of loyalty to the Registrant and its shareholders for acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law, for
certain activities prohibited by Colorado law (relating primarily to the
unlawful payment of dividends or repurchase of stock), or for any transaction
from which the director derived an improper personal benefit. This provision
does not affect a director's responsibilities under any other laws, such as the
federal securities laws or state or federal environmental laws.
The Registrant maintains directors' and officers' liability insurance with a
$1.5 million limit per year per occurrence. The Registrant pays annual premiums
and expenses relating to the policy of approximately $10,000 per year.
II-1
<PAGE>
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale of
the Common Stock being registered hereby. All amounts are estimates except the
Commission registration fee and the NASD filing fee.
Item Amount
---- ------
Commission registration fee $ 5,669.40
NASD filing fee 2,432.00
Nasdaq listing fee 66,875.00
Printing and engraving expenses 90,000.00
Legal fees and expenses 150,000.00
Accounting fees and expenses 80,000.00
Transfer agent fees 3,500.00
Miscellaneous expenses 51,523.60
-----------
Total $450,000.00
===========
Item 26. Recent Sales of Unregistered Securities.
The following is a summary of the transactions by Registrant during the
last three years involving sales of Registrant's securities that were not
registered under the Securities Act of 1933, as amended (the "Securities Act"):
1. In March 1997, the Registrant issued and sold approximately 1,102,725
(after giving effect to a 4.7125-for-1 stock split, effected prior to the
effective date of this Registration Statement) shares of its Common Stock, $.01
par value, to 48 purchasers at approximately $3.61 per share, for an aggregate
purchase price of approximately $4 million.
2. In April 1997, the Registrant issued 1,500 shares of Series A
Adjustable Rate Cumulative Perpetual Preferred Stock, par value $.01, to one
purchaser in exchange for the forgiveness of $1.5 million in indebtedness of the
Registrant.
The above-described sales were deemed to be exempt from registration under the
Securities Act in reliance on Section 4(2) of such Act, and/or Regulation D
promulgated thereunder.
Item 27. Exhibits and Financial Statement Schedules.
(a) Exhibits
*1.1 Form of Underwriting Agreement.
*3.1 Amended and restated Articles of Incorporation of the Registrant.
*3.2 Amended and restated Bylaws of the Registrant.
*4.1 Form of Underwriters' Warrant
*5.1 Opinion of Dorsey & Whitney LLP.
II-2
<PAGE>
10.1 Colorado Business Bankshares, Inc. 1998 Stock Incentive Plan.
10.2 Amended and Restated Colorado Business Bankshares, Inc. 1997
Incentive Stock Option Plan.
10.3 Amended and Restated Colorado Business Bankshares, Inc. 1995
Incentive Stock Option Plan.
10.4 Shareholders Agreement of Colorado Business Leasing, Inc., dated as
of March 29, 1996, by and among The Women's Bank, N.A., Richard M.
Hall, Jr., James F. Enssle, Andrea J. Johnson and Colorado Business
Leasing, Inc.
+10.5 License Agreement, dated as of November 19, 1997, by and between
Jack Henry & Associates, Inc. and Colorado Business Bank, N.A.
+10.6 Contract Modification, dated as of November 19, 1997, by and between
Jack Henry & Associates, Inc. and Colorado Business Bank, N.A.
+10.7 Computer Software Maintenance Agreement, dated as of November 19,
1997, by and between Jack Henry & Associates, Inc. and Colorado
Business Bank, N.A.
10.8 Employment Agreement, dated as of March 1, 1995, by and between
Equitable Bankshares of Colorado, Inc. and Jonathan C. Lorenz.
10.9 Employment Agreement, dated as of May 8, 1995, by and between
Equitable Bankshares of Colorado, Inc. and Virginia K. Berkeley.
10.10 Employment Agreement, dated as of January 3, 1998, by and between
Colorado Business Bankshares, Inc. and Richard J. Dalton.
10.11 Employment Agreement, dated as of February 29, 1996, by and between
Equitable Bankshares of Colorado, Inc. and Darrell J. Schulte.
10.12 Employment Agreement, dated as of June 12, 1995, by and between
Colorado Business Bankshares, Inc. and Charles E. Holmes.
10.13 Employment Agreement, dated as of November 16, 1997, by and between
Colorado Business Bankshares, Inc. and Andrew L. Bacon.
10.14 Employment Agreement, dated as of October 1, 1997, by and between
Colorado Business Bankshares, Inc. and K. Denise Albrecht.
10.15 Employment Agreement, dated as of March 29, 1996, by and between
Colorado Business Leasing, Inc. and Richard M. Hall, Jr.
10.16 Employment Agreement, dated as of September 29, 1995, by and between
Equitable Bankshares of Colorado, Inc. and Katherine H. Kaley.
II-3
<PAGE>
10.17 Employment Agreement, dated as of January 8, 1996, by and between
Colorado Business Bankshares, Inc. and Robert J. Ostertag.
10.18 Retail Lease, dated as of April 1, 1991, by and between Southbridge
Plaza, L.P. and Equitable Bank of Littleton, N.A.
10.19 First Amendment to Retail Lease, dated as of January 4, 1996, by
and between Southbridge Plaza, L.P. and Colorado Business Bank,
N.A., formerly known as Equitable Bank of Littleton, N.A.
*10.20 Office Lease, dated as of December 2, 1996, by and between
Elliott Kiowa, Inc. and Colorado Business Bank, N.A.
*10.21 Lease, dated as of December 1, 1997, by and between Spencer
Enterprises and Colorado Business Bank, N.A.
10.22 Office Building Lease, dated as of July 19, 1995, by and between
Chrisman, Bynum & Johnson P.C. and Equitable Bank of Littleton.
10.23 Office Lease, dated as of February 23, 1996, by and between
Colorado Business Leasing, Inc. and Denver Place Associates Limited
Partnership.
21.1 List of subsidiaries.
*23.1 Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1).
*23.2 Consent of Deloitte & Touche LLP.
*23.3 Consent of Baird, Kurtz & Dobson.
*23.4 Consent of McGladrey & Pullen LLP.
24.1 Power of Attorney (included in the signature page of this
Registration Statement).
27.1 Financial Data Schedule.
- ---------------------------
* To be filed by amendment.
+ Confidential treatment requested as to certain portions of exhibit. Such
portions have been redacted.
Item 28. Undertakings.
The Registrant hereby undertakes to provide to the Underwriters, at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to
II-4
<PAGE>
directors, officers and controlling persons of the Registrant pursuant to the
provisions described in Item 14, or otherwise, the Registrant has been advised
that, in the opinion of the Securities and Exchange Commission, 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 of 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 Registrant hereby undertakes that, for the purposes of determining any
liability under the Securities Act:
(1) 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; and
(2) 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
<PAGE>
SIGNATURES
In accordance with the requirement of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City and County
of Denver, State of Colorado, on the 14/th/ day of April, 1998.
COLORADO BUSINESS BANKSHARES, INC.
By: /s/ Steven Bangert
----------------------------------------
Steven Bangert
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Steven Bangert and Jonathan C. Lorenz and each of
them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
II-6
<PAGE>
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities
indicated below and on the dates stated.
Signature Title Date
--------- ----- ----
/s/ Steven Bangert Chairman of the Board of Directors April 14, 1998
- -------------------------- and Chief Executive Officer
Steven Bangert (Principal Executive Officer)
/s/ Jonathan C. Lorenz Vice Chairman of the Board, April 14, 1998
- -------------------------- President and Director
Jonathan C. Lorenz
/s/ Virginia K. Berkeley President of Colorado April 14, 1998
- -------------------------- Business Bank -- Downtown Denver
Virginia K. Berkeley and Director
/s/ Mark S. Kipnis Director April 14, 1998
- --------------------------
Mark S. Kipnis
/s/ Howard R. Ross Director April 14, 1998
- --------------------------
Howard. R. Ross
/s/ Noel N. Rothman Director April 14, 1998
- --------------------------
Noel N. Rothman
/s/ Richard J. Dalton Senior Vice President April 14, 1998
- -------------------------- and Chief Financial Officer
Richard J. Dalton (Principal Financial and
Accounting Officer)
II-7
<PAGE>
Exhibit 10.1
COLORADO BUSINESS BANKSHARES, INC.
1998 STOCK INCENTIVE PLAN
Section 1. Purpose.
-------
The purpose of the Plan is to promote the interests of the Company and
its shareholders by aiding the Company in attracting and retaining management
personnel capable of assuring the future success of the Company, to offer such
personnel incentives to put forth maximum efforts for the success of the
Company's business and to afford such personnel an opportunity to acquire a
proprietary interest in the Company.
Section 2. Definitions.
-----------
As used in the Plan, the following terms shall have the meanings set
forth below:
(a) "Affiliate" shall mean (i) any entity that, directly or
indirectly through one or more intermediaries, is controlled by the Company, and
(ii) any entity in which the Company has a significant equity interest, in each
case as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent
or Other Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.
(e) "Committee" shall mean a committee of the Board of Directors of
the Company designated by it to administer the Plan, which shall consist of
members appointed from time to time by the Board of Directors.
(f) "Company" shall mean Colorado Business Bankshares, Inc., a
Colorado corporation, and any successor corporation.
(g) "Dividend Equivalent" shall mean any right granted under Section
6(e) of the Plan.
(h) "Effective Date" shall mean the date, if any, on which the Plan
is adopted by the shareholders of the Company.
<PAGE>
(i) "Eligible Person" shall mean any employee or officer of the
Company or any Affiliate who the Committee determines to be an Eligible Person.
A director of the Company who is not also an employee of the Company or an
Affiliate shall not be an Eligible Person.
(j) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee; provided, however, that if the
--------
Shares are publicly traded on an exchange or on Nasdaq or a successor quotation
system, "Fair Market Value" shall mean (i) the closing price per Share of the
Shares on the principal exchange on which the Shares are then trading, if any,
on such date, or if the Shares were not traded on such date, then on the next
preceding trading day during which a sale occurred; or (ii) if the Shares are
not traded on an exchange but are quoted on Nasdaq or a successor quotation
system, (1) the last sales price (if the Shares are then listed on the Nasdaq
National Market) of the Shares for such date as reported by Nasdaq or such
successor quotation system or (2) the mean between the closing representative
bid and asked prices (in all other cases) for the Shares on such date as
reported by Nasdaq or such successor quotation system.
(k) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of Section
422 of the Code or any successor provision.
(l) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(m) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
(n) "Other Stock-Based Award" shall mean any right granted under
Section 6(f) of the Plan.
(o) "Participant" shall mean an Eligible Person designated to be
granted an Award under the Plan.
(p) "Performance Award" shall mean any right granted under Section
6(d) of the Plan.
(q) "Person" shall mean any individual, corporation, partnership,
association, trust, limited liability company or other entity.
(r) "Plan" shall mean this 1998 Stock Incentive Plan, as amended
from time to time.
-2-
<PAGE>
(s) "Restricted Stock" shall mean any Share granted under Section
6(c) of the Plan.
(t) "Restricted Stock Unit" shall mean any unit granted under
Section 6(c) of the Plan evidencing the right to receive a Share (or a cash
payment equal to the Fair Market Value of a Share) at some future date.
(u) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended,
or any successor rule or regulation.
(v) "Shares" shall mean shares of Common Stock, $.01 par value, of
the Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.
(w) "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
Section 3. Administration.
--------------
(a) Power and Authority of the Committee. The Plan shall be
------------------------------------
administered by the Committee. Subject to the express provisions of the Plan
and to applicable law, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be
granted to each Participant under the Plan; (iii) determine the number of Shares
to be covered by (or with respect to which payments, rights or other matters are
to be calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of Options or
the lapse of restrictions relating to Restricted Stock, Restricted Stock Units
or other Awards; (vi) determine whether, to what extent and under what
circumstances Awards may be exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited or suspended; (vii) determine
whether, to what extent and under what circumstances cash, Shares, other
securities, other Awards, other property and other amounts payable with respect
to an Award under the Plan shall be deferred, either automatically or at the
election of the holder thereof or the Committee; (viii) interpret and administer
the Plan and any instrument or agreement relating to, or Award made under, the
Plan; (ix) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (x) make any other determination and take any other action that
the Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon any
Participant, any holder or beneficiary of any Award and any employee of the
Company or any Affiliate. In exercising its authority pursuant to the Plan, the
Committee shall adhere to all provisions of the Code as are applicable to the
grant,
-3-
<PAGE>
issuance and exercise of any Award.
(b) Delegation. The Committee may delegate its powers and duties
----------
under the Plan to one or more officers of the Company or any Affiliate or a
committee of such officers, subject to such terms, conditions and limitations as
the Committee may establish in its sole discretion; provided, however, that the
-------- -------
Committee shall not delegate its powers and duties under the Plan with regard to
officers or directors of the Company or any Affiliate who are subject to Section
16 of the Securities Exchange Act of 1934, as amended.
Section 4. Shares Available for Awards.
---------------------------
(a) Shares Available. Subject to adjustment as provided in Section
----------------
4(c), the number of Shares available for granting Awards under the Plan shall be
225,000. Shares to be issued under the Plan may be either Shares reacquired and
held in the treasury or authorized but unissued Shares. If any Shares covered
by an Award or to which an Award relates are not purchased or are forfeited, or
if an Award otherwise terminates without delivery of any Shares, then the number
of Shares counted against the aggregate number of Shares available under the
Plan with respect to such Award, to the extent of any such forfeiture or
termination, shall again be available for granting Awards under the Plan. The
Company shall at all times keep available the number of Shares to satisfy Awards
granted under the Plan.
(b) Accounting for Awards. For purposes of this Section 4, if an
---------------------
Award entitles the holder thereof to receive or purchase Shares, the number of
Shares covered by such Award or to which such Award relates shall be counted on
the date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan.
(c) Adjustments. In the event that the Committee shall determine
-----------
that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the interest in the Company represented by the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and type of Shares (or
other securities or other property) which thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other securities or other
property) subject to outstanding Awards and (iii) the purchase or exercise
price with respect to any Award; provided, however, that the number of
-------- -------
Shares covered by any Award or to which such Award relates shall always be a
whole number.
-4-
<PAGE>
Section 5. Eligibility.
-----------
(a) Designation of Participants. Any Eligible Person, including any
---------------------------
Eligible Person who is an officer or director of the Company or any Affiliate,
shall be eligible to be designated a Participant. In determining which Eligible
Persons shall receive an Award and the terms of any Award, the Committee may
take into account the nature of the services rendered by the respective Eligible
Persons, their present and potential contributions to the success of the Company
or such other factors as the Committee, in its sole discretion, shall deem
relevant. Notwithstanding the foregoing, an Incentive Stock Option may only be
granted to full or part-time employees (which term as used herein includes,
without limitation, officers and directors [who are also employees]) and an
Incentive Stock Option shall not be granted to an employee of an Affiliate
unless such Affiliate is also a "subsidiary corporation" of the Company within
the meaning of Section 424(f) of the Code or any successor provision.
(b) Award Limitations Under the Plan. No Eligible Person who is an
--------------------------------
employee of the Company at the time of grant may be granted any Award or
Awards, the value of which Awards are based solely on an increase in the value
of the Shares after the date of grant of such Awards, for more than 22,500
Shares, in the aggregate, in any one calendar year. The foregoing annual
limitation specifically includes the grant of any Awards representing "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code.
Section 6. Awards.
------
(a) Options. The Committee is hereby authorized to grant Options to
-------
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable under
--------------
an Option shall be determined by the Committee; provided, however, that
-------- -------
such purchase price shall not be less than 100% of the Fair Market Value of
a Share on the date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by the
-----------
Committee.
(iii) Time and Method of Exercise. The Committee shall determine the
---------------------------
time or times at which an Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including, without
limitation, cash, Shares, promissory notes, other securities, other Awards
or other property, or any combination thereof, having a Fair Market Value
on the exercise date equal to the relevant exercise price) in which,
payment of the exercise price with respect thereto may be made or deemed to
have been made.
-5-
<PAGE>
(iv) Incentive and Non-Qualified Stock Options. Each Option granted
-----------------------------------------
pursuant to the Plan shall specify whether it is an Incentive Stock Option
or a Non-qualified Stock Option, provided that the Committee may, in the
case of the grant of an Incentive Stock Option, give the Participant the
right to receive in its place a Non-qualified Stock Option.
(b) Stock Appreciation Rights. The Committee is hereby authorized to
-------------------------
grant Stock Appreciation Rights to Participants, subject to the terms of the
Plan and any applicable Award Agreement. A Stock Appreciation Right granted
under the Plan shall confer on the holder thereof a right to receive upon
exercise thereof the excess of (i) the Fair Market Value of one Share on the
date of exercise (or, if the Committee shall so determine, at any time during a
specified period before or after the date of exercise) over (ii) the grant price
of the Stock Appreciation Right as specified by the Committee, which price shall
not be less than 100% of the Fair Market Value of one Share on the date of grant
of the Stock Appreciation Right. Subject to the terms of the Plan and any
applicable Award Agreement, the grant price, term, methods of exercise, dates of
exercise, methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units. The Committee is
-------------------------------------------
hereby authorized to grant Awards of Restricted Stock and Restricted Stock Units
to Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Restrictions. Shares of Restricted Stock and Restricted Stock
------------
Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a Share
of Restricted Stock or the right to receive any dividend or other right or
property with respect thereto), which restrictions may lapse separately or
in combination at such time or times, in such installments or otherwise as
the Committee may deem appropriate.
(ii) Stock Certificates. Any Restricted Stock granted under the Plan
------------------
shall be evidenced by issuance of a stock certificate or certificates,
which certificate or certificates shall be held by the Company. Such
certificate or certificates shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock. In the
case of Restricted Stock Units, no Shares shall be issued at the time such
Awards are granted.
(iii) Forfeiture; Delivery of Shares. Except as otherwise
------------------------------
determined by the Committee, upon termination of employment (as determined
under criteria established by the Committee) during the applicable
restriction period, all Shares of Restricted Stock and all Restricted Stock
Units at such time subject to restriction shall be forfeited and reacquired
by the Company; provided, however, that the Committee may, when it finds
-------- -------
that a waiver would be in the best interest of the Company, waive, in whole
or in part, any or all remaining
-6-
<PAGE>
restrictions with respect to Shares of Restricted Stock or Restricted Stock
Units. Any Share representing Restricted Stock that is no longer subject to
restrictions shall be delivered to the holder thereof promptly after the
applicable restrictions lapse or are waived. Upon the lapse or waiver of
restrictions and the restricted period relating to Restricted Stock Units
evidencing the right to receive Shares, such Shares shall be issued and
delivered to the holders of the Restricted Stock Units.
(d) Performance Awards. The Committee is hereby authorized to grant
------------------
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and (ii)
shall confer on the holder thereof the right to receive payments, in whole or in
part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish. Subject to the terms of the Plan and
any applicable Award Agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted, the amount of any payment or transfer to be made
pursuant to any Performance Award and any other terms and conditions of any
Performance Award shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is hereby authorized to
--------------------
grant to Participants Dividend Equivalents under which such Participants shall
be entitled to receive payments (in cash, Shares, other securities, other Awards
or other property as determined in the discretion of the Committee) equivalent
to the amount of cash dividends paid by the Company to holders of Shares with
respect to a number of Shares determined by the Committee. Subject to the terms
of the Plan and any applicable Award Agreement, such Dividend Equivalents may
have such terms and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is hereby authorized to
------------------------
grant to Participants such other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related to,
Shares (including, without limitation, securities convertible into Shares), as
are deemed by the Committee to be consistent with the purpose of the Plan;
provided, however, that such grants must comply with Rule 16b-3 and applicable
- -------- -------
law. Subject to the terms of the Plan and any applicable Award Agreement, the
Committee shall determine the terms and conditions of such Awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms (including without limitation,
cash, Shares, promissory notes, other securities, other Awards or other property
or any combination thereof), as the Committee shall determine, the value of
which consideration, as established by the Committee, shall not be less than
100% of the Fair Market Value of such Shares or other securities as of the date
such purchase right is granted.
-7-
<PAGE>
(g) General.
-------
(i) No Cash Consideration for Awards. Awards shall be granted
--------------------------------
for no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in
--------------------------------------------
the discretion of the Committee, be granted either alone or in addition to,
in tandem with or in substitution for any other Award or any award granted
under any plan of the Company or any Affiliate other than the Plan. Awards
granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under any such other plan of the Company or
any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
(iii) Forms of Payment under Awards. Subject to the terms of the
-----------------------------
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or payment of
an Award may be made in such form or forms as the Committee shall determine
(including, without limitation, cash, Shares, promissory notes, other
securities, other Awards or other property or any combination thereof), and
may be made in a single payment or transfer, in installments or on a
deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents with respect to installment or deferred payments.
(iv) Limits on Transfer of Awards. No Award and no right under any
----------------------------
such Award shall be transferable by a Participant otherwise than by will or
by the laws of descent and distribution; provided, however, that, if so
-------- -------
determined by the Committee, a Participant may, in the manner established
by the Committee, designate a beneficiary or beneficiaries to exercise the
rights of the Participant and receive any property distributable with
respect to any Award upon the death of the Participant. Each Award or
right under any Award shall be exercisable during the Participant's
lifetime only by the Participant or, if permissible under applicable law,
by the Participant's guardian or legal representative. No Award or right
under any such Award may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or encumbrance
thereof shall be void and unenforceable against the Company or any
Affiliate and, at the discretion of the Committee, any Award may be
extinguished if the holder of such Award attempts to pledge, alienate,
attach or encumber the Award in violation of this Section 6(g)(iv).
----------------
(v) Term of Awards. The term of each Award shall be for such
--------------
period as may be determined by the Committee.
(vi) Restrictions; Securities Exchange Listing. All certificates
-----------------------------------------
for Shares or other securities delivered under the Plan pursuant to any
Award or the exercise thereof shall be
-8-
<PAGE>
subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations and
other requirements of the Securities and Exchange Commission and any
applicable federal or state securities laws, and the Committee may cause a
legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions. If the Shares or other securities are
traded on a securities exchange, the Company shall not be required to
deliver any Shares or other securities covered by an Award unless and until
such Shares or other securities have been admitted for trading on such
securities exchange.
Section 7. Amendment and Termination; Adjustments.
--------------------------------------
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company
----------------------
may amend, alter, suspend, discontinue or terminate the Plan; provided, however,
-------- -------
that, notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the shareholders of the Company, no such amendment,
alteration, suspension, discontinuation or termination shall be made that,
absent such approval:
(i) would cause Rule 16b-3 to become unavailable with respect to the
Plan;
(ii) would violate the rules or regulations of the Nasdaq National
Market, any other securities exchange or the National Association of
Securities Dealers, Inc. that are applicable to the Company; or
(iii) would cause the Company to be unable, under the Code, to grant
Incentive Stock Options under the Plan.
(b) Amendments to Awards. The Committee may waive any conditions of
--------------------
or rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof, except as otherwise
herein provided.
(c) Correction of Defects, Omissions and Inconsistencies. The
----------------------------------------------------
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
(d) Income Tax Withholding; Tax Bonuses.
-----------------------------------
(i) Withholding. In order to comply with all applicable federal or
-----------
state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all
-9-
<PAGE>
applicable federal or state payroll, withholding, income or other taxes, which
are the sole and absolute responsibility of a Participant, are withheld or
collected from such Participant. In order to assist a Participant in paying all
or a portion of the federal and state taxes to be withheld or collected upon
exercise or receipt of (or the lapse of restrictions relating to) an Award, the
Committee, in its discretion and subject to such additional terms and conditions
as it may adopt, may permit the Participant to satisfy such tax obligation by
(a) electing to have the Company withhold a portion of the Shares otherwise to
be delivered upon exercise or receipt of (or the lapse of restrictions relating
to) such Award with a Fair Market Value equal to the amount of such taxes or (b)
delivering to the Company Shares other than Shares issuable upon exercise or
receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes. The election, if any, must be
made on or before the date that the amount of tax to be withheld is determined.
(j) Tax Bonuses. The Committee, in its discretion, shall have the
-----------
authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve cash bonuses to designated Participants to be paid upon
their exercise or receipt of (or the lapse of restrictions relating to) Awards
in order to provide funds to pay all or a portion of federal and state taxes due
as a result of such exercise or receipt (or the lapse of such restrictions).
The Committee shall have full authority in its discretion to determine the
amount of any such tax bonus.
Section 8. General Provisions.
------------------
(a) No Rights to Awards. No Eligible Person, Participant or other
-------------------
Person shall have any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.
(b) Award Agreements. No Participant will have rights under an
----------------
Award granted to such Participant unless and until an Award Agreement shall have
been duly executed on behalf of the Company.
(c) No Limit on Other Compensation Arrangements. Nothing contained
-------------------------------------------
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(d) No Right to Employment. The grant of an Award shall not be
----------------------
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate, nor will it affect in any way the right of the Company
or an Affiliate to terminate such employment at any time, with or without cause.
In addition, the Company or an Affiliate may at any time dismiss a Participant
from employment free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement.
-10-
<PAGE>
(e) Governing Law. The validity, construction and effect of the
-------------
Plan or any Award, and any rules and regulations relating to the Plan or any
Award, shall be determined in accordance with the internal laws of the State of
Colorado, without regard to conflicts of law principles.
(f) Severability. If any provision of the Plan or any Award is or
------------
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall
------------------------
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or
--------------------
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of
--------
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 9. Term of the Plan.
----------------
Unless the Plan shall have been discontinued or terminated as provided
in Section 7(a), the Plan shall terminate on the tenth anniversary of the
Effective Date. No Award shall be granted after the termination of the Plan.
However, unless otherwise expressly provided in the Plan or in an applicable
Award Agreement, any Award theretofore granted may extend beyond the termination
of the Plan, and the authority of the Committee provided for hereunder with
respect to the Plan and any Awards, and the authority of the Board of Directors
of the Company to amend the Plan, shall extend beyond the termination of the
Plan.
-11-
<PAGE>
Exhibit 10.2
AMENDED AND RESTATED
COLORADO BUSINESS BANKSHARES, INC.
1997 INCENTIVE STOCK OPTION PLAN
----------------------------------
Colorado Business Bankshares, Inc., a Colorado corporation (the "Company"),
hereby amends and restates, in its entirety, its 1997 Incentive Stock Option
Plan (the "Plan").
1. Purpose.
-------
This Plan is intended to advance the interests of the Company by providing
its Key Employees with (i) an opportunity to acquire a proprietary interest in
the Company through the purchase of stock of the Company, (ii) an additional
incentive to promote the success of the Company, and (iii) encouragement to
remain in the employ of the Company. The Company intends that Stock Options
granted under the Plan will qualify as Incentive Stock Options under Section 422
of the Code.
2. Definitions.
-----------
For purposes of this Plan and the Stock Option Agreements entered into
hereunder, the following definitions shall control:
(a) Board of Directors. The duly elected Board of Directors of the Company.
------------------
(b) Code. The Internal Revenue Code of 1986, as amended from time to time.
----
(c) Common Stock. Shares of the common stock, $0.01 par value per share, of
------------
the Company.
(d) Compensation Committee. The duly appointed members of the Compensation
----------------------
Committee of the Board of Directors.
(e) Fair Market Value. Fair Market Value shall be determined as follows:
-----------------
(i) the closing price per share of Common Stock on the date of grant
of the Stock Option as reported by a nationally recognized stock
exchange, (ii) if the Common Stock is not listed on such an exchange,
as reported by the National Association of Securities Dealers
Automated Quotation System, Inc. ("NASDAQ"), or (iii) if the Common
Stock is not quoted on NASDAQ, as determined by the independent
certified public accountants then retained by the Company in
accordance with generally accepted accounting principles applied on a
consistent basis, adjusted to reflect such market value factors as the
independent certified public accountants deem advisable in arriving at
Fair Market Value.
<PAGE>
(f) Greater-Than-Ten Percent (10%) Shareholder. An Employee who at the time
------------------------------------------
of the grant of a Stock Option owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Company.
(g) Incentive Stock Option. A Stock Option which qualifies as an Incentive
----------------------
Stock Option under Section 422(b) of the Code.
(h) Incentive Stock Option Agreement. The Incentive Stock Option Agreements
--------------------------------
pursuant to which Stock Options under this Plan are granted.
(i) Involuntary Termination of Employment. Any termination of an Optionee's
-------------------------------------
employment with the Company by reason of the discharge, firing or other
involuntary termination of an Optionee's employment by action of the
Company other than a Termination For Cause as described in subparagraph
(3) of paragraph 9(e).
(j) Key Employee. An executive of the Company or any of its subsidiaries so
------------
designated as a Key Employee by the Compensation Committee.
(k) Permanent and Total Disability. An Optionee is permanently and totally
------------------------------
disabled if he is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment
which can be expected to last for a continuous period of not less than
twelve (12) months; provided, however, that permanent and total
disability shall be determined in accordance with Section 22(e)(3) of
the Code and the regulations issued thereunder.
(l) Optionee. Any Key Employee who has been granted a Stock Option under
--------
this Plan.
(m) Option Price. The purchase price of each share of Common Stock issued
------------
pursuant to this Plan, which price shall be determined in accordance
with Section 2(d) of this Plan, as of the date such Stock Option is
granted.
(n) Stock Option. The right to purchase Common Stock granted to an Optionee
------------
pursuant to this Plan and under the Incentive Stock Option Agreement.
(o) Voluntary Termination of Employment. Any voluntary termination of
-----------------------------------
employment with the Company by reason of Optionee's quitting or
otherwise voluntarily leaving the Company's employ other than a
voluntary termination of
-2-
<PAGE>
employment constituting a Termination For Cause as described in
subparagraph (3) of paragraph 9(e).
(p) Years of Service. An Optionee shall receive credit for one (1) year of
----------------
service on each anniversary date of the grant of the Stock Option to
the Optionee if the Optionee was employed by the Company for at least
one (1) day in each month of the consecutive twelve (12) month period
ending with the month which includes the anniversary date of the grant.
3. Administration of the Plan.
--------------------------
This Plan shall be administered by the Compensation Committee. The
Compensation Committee shall have full power and authority to (a) designate Key
Employees; (b) determine when Stock Options will be granted; (c) determine the
number of Stock Options to be granted; (d) determine the terms and conditions of
respective Incentive Stock Option Agreements which shall be consistent with the
terms of this Plan; and (e) adopt rules and regulations from time to time for
carrying out this Plan. In rendering decisions, the Compensation Committee is
expressly granted sole discretion to interpret and construe any provision of
this Plan and his determination shall be final, conclusive and binding upon the
Company and Optionees.
4. Eligibility.
-----------
The Company shall grant Stock Options only to Key Employees who perform
services of major importance in the management, operation and development of the
business of the Company.
5. Stock.
-----
The total number of shares of Common Stock that may be issued pursuant to
Stock Options shall not exceed an aggregate of one-hundred-one thousand thirty-
six (101,036) shares of Common Stock; provided, however, that the class and
aggregate number of shares which may be granted under this Plan shall be subject
to adjustment as provided under Section 13 hereof. Stock Options to purchase any
shares of Common Stock issued pursuant to this Plan that, for any reason, are
terminated or expire unexercised may be reissued under this Plan. The Company
shall not be required to issue or deliver any certificate for Common Stock
purchased upon the exercise of any part of the Stock Option before (i) the
Optionee shall represent, in writing, that the purchase of all shares of Common
Stock is being made for investment only and not for resale with a view to
distribution, and (ii) the Optionee shall consent, in writing, that the Company
may (x) endorse the certificate evidencing such shares with appropriate legends
to the effect that said shares have not been registered under any securities
laws of any federal, state or
-3-
<PAGE>
foreign jurisdiction, were issued in a transaction not involving a public
offering under an investment representation, are further subject to restrictions
imposed by the Incentive Stock Option Agreement relating to such shares and that
transfer of said shares is accordingly restricted, and (y) place a stop transfer
order with the transfer agent with respect to said shares. The Company shall not
be obligated to deliver any shares until there has been compliance with such
laws and regulations as the Company may deem applicable. No fractional shares
shall be delivered.
6. Limitations Upon Greater-Than-Ten-Percent (10%) Shareholders.
------------------------------------------------------------
Except as otherwise permitted by the Code or other applicable law or
regulations, no Stock Option shall be granted to an individual who, at the time
the Stock Option is granted, is a Greater-Than-Ten Percent (10%) Shareholder
unless such Stock Option provides that (i) the Option Price shall not be less
than one hundred ten percent (110%) of the Fair Market Value of the Common Stock
at the time such Stock Option is granted, and (ii) that such Stock Option shall
not be exercised to any extent after the expiration of five (5) years from the
date it is granted.
7. Grant of Stock Option.
---------------------
The Company may, in its sole discretion, grant Stock Options to any Key
Employee; provided, however, that (i) no Stock Option shall be granted later
than ten (10) years from the earlier of the date this Plan is adopted by the
Board of Directors or the date this Plan is approved by the shareholders of the
Company, and (ii) the aggregate Fair Market Value (determined at the time of
grant) of the Common Stock which first becomes exercisable during any calendar
year granted to an Optionee (under this or under any other stock option plan
established by the Company) shall not exceed One Hundred Thousand and no/100
Dollars ($100,000.00).
8. Terms of the Incentive Stock Option Agreements.
----------------------------------------------
Each Stock Option granted under this Plan shall be evidenced by an
Incentive Stock Option Agreement which shall be in writing and shall contain
such terms, conditions, restrictions, if any, and provisions as the Company
shall from time to time deem appropriate. Such provisions or conditions may
include without limitation restrictions on transfer, repurchase rights, or such
other provisions as shall be determined by the Company; provided, however, such
additional provisions shall not be inconsistent with any other term or condition
of this Plan and such additional provisions shall not cause any Stock Option
granted under this Plan to fail to qualify as an Incentive Stock Option.
Incentive Stock Option Agreements need not be identical, but each Incentive
Stock Option Agreement by appropriate language shall
-4-
<PAGE>
include the substance of the provisions contained in Section 9 of this Plan.
9. Period of Option and Certain Limitations on Right to Exercise.
-------------------------------------------------------------
(a) Number of Shares. Each Stock Option shall state the number of Shares of
----------------
Common Stock to which it pertains.
(b) Option Price. Each Stock Option shall state the Option Price per share
------------
of Common Stock, as determined in accordance with Section 2(1) of this
Plan.
(c) Term and Exercise of Stock Options. All Stock Options issued under the
----------------------------------
Plan shall be exercisable for such period as the Board of Directors
shall determine, but no Stock Option may be exercised later than ten
(10) years from the date of grant thereof (or as provided in Section 6,
five (5) years in the case of a Greater-Than-Ten Percent (10%)
Shareholder).
(d) Vesting. Each Stock Option granted under this Plan shall first become
-------
exercisable (i.e., the Optionee's ability to exercise shall vest) as to
the following percentages of the shares of Common Stock granted under
each Stock Option:
<TABLE>
<CAPTION>
Years of Service Percentage of Stock
After the Grant Date Option Grant Exercisable
-------------------- ------------------------
<S> <C>
Less than 1 year 0%
At least 1 year but less than 2 years 25%
At least 2 years but less than 3 years 50%
At least 3 years but less than 4 years 75%
4 years or more 100%
</TABLE>
In the case of any resulting fractional shares from any calculations
under this Plan, the number of shares available for exercise shall be
determined by disregarding the fractional amount.
(e) Exercise Period and Termination of Employment. Except as hereinafter
---------------------------------------------
provided, no Stock Option may be exercised after the termination of
employment of the Optionee with the Company specifically subject,
however, to the provisions of paragraph (c) of this Section 9.
(1) Involuntary Termination of Employment. Stock Options granted under
-------------------------------------
the Plan may be exercised, if otherwise timely, within three (3)
months after the Involuntary Termination of Employment of the
Optionee with the Company, and the Stock Options
-5-
<PAGE>
shall only be exercisable for the shares of Common Stock as
determined under paragraph (d) of this Section 9.
(2) Voluntary Termination of Employment. Stock Options granted under
-----------------------------------
the Plan may be exercised, if otherwise timely, within three (3)
months after the Voluntary Termination of Employment of the
Optionee with the Company, and the Stock Options shall only be
exercisable for the shares of Common Stock as determined under the
provisions of paragraph (d) of this Section 9.
(3) Termination for Cause. Notwithstanding anything contained herein
---------------------
to the contrary, if the termination of an Optionee's employment
with the Company is a result of or caused by the Optionee's theft
or embezzlement from the Company, the violation of a material term
or condition of his employment, the disclosure by the Optionee of
confidential information of the Company, conviction of the
Optionee of a crime of moral turpitude, the Optionee's theft or
unauthorized use of trade secrets or intellectual property owned
by the Company, any act by the Optionee in competition with the
Company or any other act, activity or conduct of the Optionee
which in the opinion of the Compensation Committee is adverse to
the best interests of the Company, then any Stock Options and any
and all rights granted to such Optionee thereunder, to the extent
not effectively exercised as of the date of termination of the
Optionee's employment, shall become null and void effective as of
the date of the occurrence of the event which results in the
Optionee ceasing to be an employee of the Company and any
purported exercise of a Stock Option by or on behalf of said
Optionee following such date shall be of no effect.
(4) Death or Permanent and Total Disability of Optionee. In the event
---------------------------------------------------
of the (i) death of the Optionee or (ii) Permanent and Total
Disability of the Optionee, prior to termination of the Optionee's
employment with the Company, and before the date of expiration of
such Stock Option, such Stock Option shall terminate on the
earlier of such date of expiration or one (1) year following the
date of such death or Permanent and Total Disability. After the
death of the Optionee, such Optionee's executors, administrators
or any person or persons to whom the Stock Option may be
-6-
<PAGE>
transferred by will or by the laws of descent and distribution,
shall have the right, at any time prior to such termination, to
exercise the Stock Option to the extent the Optionee was entitled
to exercise such Stock Option immediately prior to such Optionee's
death.
(f) Manner of Exercise and Payment for Shares. Any Stock Option granted
-----------------------------------------
under this Plan may be exercised by the Optionee or his guardian, in
the case of his Permanent and Total Disability, or such Optionee's
executors, administers, or any other person to whom the Stock Option
may have been transferred under the Optionee's will or by the laws of
descent and distribution, by delivery to the Company on any business
day a written notice specifying the number of shares of Common Stock
that such holder of the Stock Option then desires to purchase and such
other information that the Company may require from time to time. The
exercise of any Stock Option shall also be contingent upon receipt by
the Company of cash or a certified bank check to its order in an amount
equal to the full Option Price of the shares of Common Stock being
purchased.
(g) Decrease In Common Stock Available Under Plan. An exercise of a Stock
---------------------------------------------
Option shall result in a corresponding decrease in the number of shares
of Common Stock which thereafter may be available for purchase under
this Plan by the number of shares of Common Stock acquired pursuant to
the exercise of the Stock Options by the same number of shares of
Common Stock as to which the Stock Options that were exercised relates.
(h) Withholding of Taxes. To the extent that the exercise of any Stock
--------------------
Option or the disposition of any optioned shares shall result in income
to the Optionee, or any other person to whom ownership of the Stock
Option or Common Stock has vested in accordance with the terms of this
Plan, the Company will withhold from the proceeds of such disposition
an appropriate amount for federal, state and local taxes. The Company's
obligation to honor an exercise of the Stock Options or disposition of
Common Stock acquired hereunder shall be subject to the holder of the
Stock Option making appropriate arrangements with the Company for the
satisfaction of all federal, state or local income tax withholding
requirements.
10. Assignability of Option.
-----------------------
No Stock Option granted under this Plan nor any of the rights and
privileges thereby conferred shall be transferred, assigned,
-7-
<PAGE>
pledged, hypothecated or alienated in any way, or by operation of law during the
Optionee's lifetime. After the Optionee's death, the Stock Options may only be
transferrable by the Optionee's will or under the laws of descent and
distribution. No Stock Option, right or privilege shall be subject to execution,
attachment or similar process. Upon any attempt to so transfer, assign, pledge,
hypothecate, alienate or otherwise dispose of the Stock Option, or of any right
or privilege conferred thereby, contrary to the provisions hereof, or upon the
levy of any attachment or similar process upon such Stock Option, right or
privilege, the Stock Option and such rights and privileges shall immediately
become null and void. A Stock Option shall be exercisable only by the Optionee
to whom the Stock Option is granted, the Optionee's guardian in the case of such
Optionee's Permanent and Total Disability or such Optionee's executors,
administrators or any person or persons to whom the Stock Option may be
transferred by will or the laws of descent and distribution.
11. Right of First Refusal and Call Option.
--------------------------------------
(a) Right of First Refusal During Employment. If any Optionee, at any time
----------------------------------------
during the period of employment with the Company, desires to transfer
all or any part of or any interest in the Common Stock acquired
pursuant to the exercise of Stock Options granted under this Plan, such
Optionee shall first offer to sell such shares of Common Stock to the
Company upon the following terms and conditions:
(i) Notice. The Optionee shall give written notice to the Company of
------
his desire to sell or otherwise transfer shares of Common Stock
pursuant to a bona fide offer and shall set forth the number of
shares he desires to sell, the person or entity to whom such
shares will be sold, if known, and the terms upon which such
shares would be sold, including the price per share to be
received for such shares.
(ii) Option of Company. For a period of twenty-one (21) days after
-----------------
such notice is received by the Company, the Company shall have
the option to purchase all of the shares covered by said notice
at the price per share equal to the price per share which the
Optionee would receive on transfer of the shares, as set forth in
the Optionee's notice. The Company shall exercise each option by
giving the Optionee written notice of exercise within the twenty-
one (21) day period. The shares as to which the Company exercises
its option shall be redeemed no later than sixty (60) days after
the date such option was exercised and the purchase price shall
be paid in
-8-
<PAGE>
cash or by certified bank check to Optionee's order.
(b) Call Option Upon Termination of Employment or Gift of Stock. In the
-----------------------------------------------------------
event (i) of the termination of the employment of the Optionee with the
Company, for any reason, including, but not limited to termination on
account of death, Permanent and Total Disability, Voluntary Termination
of Employment, Involuntary Termination of Employment, or (ii) the
Optionee desires to transfer by gift, that is a transfer for no
consideration, all or any part or interest in the Common Stock acquired
by the Optionee pursuant to this Plan; then, for a period of twenty-one
(21) days after the (x) date of termination, (y) notice of gift, or (z)
acquisition of any shares following the termination of employment, the
Company shall have the option to purchase all of the shares of Common
Stock acquired by the Optionee pursuant to this Plan at the price per
share equal to the Fair Market Value per share determined at the date
of termination or notice of gift. The Company shall exercise this
option by giving the Optionee, or the Optionee's representative of a
deceased Optionee, as the case may be, written notice of exercise
within the twenty-one (21) day period. The shares as to which the
Company exercises its call option under this Section 11(b) shall be
redeemed sixty (60) days after the date such call option was exercised;
and the purchase price shall be paid in cash or by certified bank check
to Optionee's order. The Company's rights under this Section 11(b)
shall be in addition to its rights under Section 11(a), 11(c), and
11(d); and exercise or failure to exercise any call option under this
Section 11(b) shall not in any way limit the Company's rights of first
refusal under Section 11(a), 11(c) and 11(d).
(c) Right of First Refusal After Employment. If any Optionee or the
---------------------------------------
personal representative of a Permanently and Totally Disabled Optionee
or deceased Optionee, as the case may be, at any time after termination
of employment with the Company, desires to transfer all or any part of
or any interest in the Common Stock acquired pursuant to exercise of
Stock Options granted under this Plan, such Optionee, or the personal
representative of the Optionee, shall first offer to sell the shares of
such Common Stock to the Company upon the terms and conditions set
forth in Section 11(a)(i) and 11(a)(ii).
(d) Effect of Failure to Exercise Right of First Refusal. If the Company
----------------------------------------------------
shall fail to exercise its right to acquire the shares of Common Stock
pursuant to Sections 11(a),
-9-
<PAGE>
(b) or (c) within the time period set forth in Section 11(a)(ii), then
the Optionee shall thereafter for a period of ninety (90) days be free
to transfer all of such shares at a price per share not less than the
price per share set forth in the notice to the Company. If all shares
are not transferred within said ninety (90) day period, such shares
shall again be subject to all of the terms and provisions of this
Section 11.
12. Listing and Registration of Shares.
----------------------------------
Each Stock Option shall be subject to the requirement that if at any time
the Company shall determine that the listing, registration or qualification of
the shares covered thereby upon any securities exchange or under any state or
federal law or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the granting of
such Stock Option or the issue or purchase of shares thereunder, such Stock
Option may not be exercised in whole or in part unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.
13. Changes In Company's Capital Structure.
--------------------------------------
(a) Rights of Company. The existence of outstanding Stock Options shall not
-----------------
affect in any way the right or power of the Company or its stockholders
to make or authorize, without limitation, any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business, or any merger or consolidation of
the Company, or any issue of Common Stock, or any issue of bonds,
debentures, preferred or prior preference stock or other capital stock
ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of
all or any part of its assets or business, or any other corporate act
or proceeding, whether of a similar character or otherwise.
(b) Recapitalization, Stock Splits and Dividends. If the Company shall
--------------------------------------------
effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend, or other increase or
reduction of the number of shares of the Common Stock outstanding, in
any such case without receiving compensation therefore in money,
services or property, then (i) the number, class and price per share of
shares of Common Stock subject to outstanding Stock Options hereunder
shall be appropriately adjusted in such a manner as to entitle an
Optionee to receive upon exercise of a Stock Option, for
-10-
<PAGE>
the same aggregate cash consideration, the same total number and class
of shares as he would have received as a result of the event requiring
the adjustment had he exercised his Stock Options in full immediately
prior to such event; and (ii) the number and class of shares with
respect to which Stock Options may be granted under the Plan shall be
adjusted by substituting for the total number of shares of Common Stock
then reserved for issuance under the Plan that number and class of
shares of stock that the owner of an equal number of outstanding shares
of Common Stock would own as the result of the event requiring the
adjustment.
(c) Adjustments to Common Stock Subject to Options. Except as expressly
----------------------------------------------
provided herein, the issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, for
cash or property, or for labor or services, either upon direct sale or
upon the exercise of rights or warrants to subscribe thereto, or upon
conversion of shares or obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of
shares of Common Stock then subject to outstanding Stock Options.
(d) Miscellaneous. Adjustments under this Section 13 shall be determined by
-------------
the Company and such determinations shall be conclusive. No fractional
shares of Common Stock shall be issued under this Plan on account of
any adjustment specified above.
14. Amendment of Plan.
-----------------
The Company may at any time and from time to time modify and amend this
Plan (including such form of Incentive Stock Option Agreement) in any respect;
provided, however, that no such amendment shall: (a) increase (except in
accordance with Section 13) the maximum number of shares for which Stock Options
may be granted under this Plan either in the aggregate or to any individual
employee; or (b) reduce (except in accordance with Section 13) the minimum
Option Prices which may be established under the Plan; or (c) extend the period
or periods during which Stock Options may be granted or exercised; or (d) change
the provisions relating to the determination of employees to which Stock Options
shall be granted and the number of shares to be covered by such Stock Options;
or (e) change the provisions relating to adjustments to be made upon changes in
capitalization. The termination or any modification or amendment of this Plan
shall not, without the consent of the Optionee, affect his rights under a Stock
Option theretofore granted to him.
-11-
<PAGE>
15. Applicability of Plan to Outstanding Stock Options.
--------------------------------------------------
This Plan shall not affect the terms and conditions of any non-qualified
Stock Options heretofore granted to any employee of the Company, if any, under
any plan relating to non-qualified Stock Options; nor shall it affect any of the
rights of any employee to whom such a non-qualified Stock Option was granted.
16. Effective Date and Duration of Plan.
-----------------------------------
This Plan shall become effective upon its adoption by the Board of
Directors of the Company provided that the shareholders of the Company shall
have approved the Plan within twelve (12) months prior to or following adoption
of the Plan by the Board of Directors. No Stock Option shall be granted under
the Plan after the tenth (l0th) anniversary of the effective date. The Plan
shall terminate upon the earlier of: (i) when the total number of shares of
Common Stock with respect to which Stock Options may be granted shall have been
issued upon the exercise of Stock Options, or (ii) by action of the Company
pursuant to Section 14, hereof.
17. Employment Obligation.
---------------------
The granting of any Stock Option shall not impose upon the Company any
obligation to employ or continue to employ any Optionee; and the right of the
Company to terminate the employment of any officer or other employee shall not
be diminished or affected by reason of the fact that a Stock Option has been
granted to him or her.
18. Rights as a Shareholder.
-----------------------
An Optionee shall have no rights as a shareholder with respect to any
shares covered by any of said Optionee's Stock Options until the date that the
Company receives payment in full for the purchase of said shares pursuant to the
effective exercise of said Stock Option. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
the date such payment is received by the Company.
-12-
<PAGE>
Exhibit 10.3
AMENDED AND RESTATED
COLORADO BUSINESS BANKSHARES, INC.
1995 INCENTIVE STOCK OPTION PLAN
----------------------------------
Colorado Business Bankshares, Inc., a Colorado corporation formerly known
as Equitable Bankshares of Colorado, Inc.(the "Company"), hereby amends and
restates, in its entirety, its 1995 Incentive Stock Option Plan (the "Plan").
1. Purpose.
-------
This Plan is intended to advance the interests of the Company by providing
its Key Employees with (i) an opportunity to acquire a proprietary interest in
the Company through the purchase of stock of the Company, (ii) an additional
incentive to promote the success of the Company, and (iii) encouragement to
remain in the employ of the Company. The Company intends that Stock Options
granted under the Plan will qualify as Incentive Stock Options under Section 422
of the Code.
2. Definitions.
-----------
For purposes of this Plan and the Stock Option Agreements entered into
hereunder, the following definitions shall control:
(a) Board of Directors. The duly elected Board of Directors of the Company.
------------------
(b) Code. The Internal Revenue Code of 1986, as amended from time to time.
----
(c) Common Stock. Shares of the common stock, $0.01 par value per share, of
------------
the Company.
(d) Compensation Committee. The duly appointed members of the Compensation
----------------------
Committee of the Board of Directors.
(e) Fair Market Value. Fair Market Value shall be determined as follows:
-----------------
(i) the closing price per share of Common Stock on the date of grant of
the Stock Option as reported by a nationally recognized stock exchange,
(ii) if the Common Stock is not listed on such an exchange, as reported
by the National Association of Securities Dealers Automated Quotation
System, Inc. ("NASDAQ"), or (iii) if the Common Stock is not quoted on
NASDAQ, as determined by the independent certified public accountants
then retained by the Company in accordance with generally accepted
accounting principles applied on a consistent basis, adjusted to
reflect such market value factors as the independent certified public
accountants deem advisable in arriving at Fair Market Value.
<PAGE>
(f) Greater-Than-Ten Percent (10%) Shareholder. An Employee who at the time
------------------------------------------
of the grant of a Stock Option owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Company.
(g) Incentive Stock Option. A Stock Option which qualifies as an Incentive
----------------------
Stock Option under Section 422(b) of the Code.
(h) Incentive Stock Option Agreement. The Incentive Stock Option Agreements
--------------------------------
pursuant to which Stock Options under this Plan are granted.
(i) Involuntary Termination of Employment. Any termination of an Optionee's
-------------------------------------
employment with the Company by reason of the discharge, firing or other
involuntary termination of an Optionee's employment by action of the
Company other than a Termination For Cause as described in subparagraph
(3) of paragraph 9(e).
(j) Key Employee. An executive of the Company or any of its subsidiaries so
------------
designated as a Key Employee by the Compensation Committee.
(k) Permanent and Total Disability. An Optionee is permanently and totally
------------------------------
disabled if he is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment
which can be expected to last for a continuous period of not less than
twelve (12) months; provided, however, that permanent and total
disability shall be determined in accordance with Section 22(e)(3) of
the Code and the regulations issued thereunder.
(l) Optionee. Any Key Employee who has been granted a Stock Option under
--------
this Plan.
(m) Option Price. The purchase price of each share of Common Stock issued
------------
pursuant to this Plan, which price shall be determined in accordance
with Section 2(d) of this Plan, as of the date such Stock Option is
granted.
(n) Stock Option. The right to purchase Common Stock granted to an Optionee
------------
pursuant to this Plan and under the Incentive Stock Option Agreement.
(o) Voluntary Termination of Employment. Any voluntary termination of
-----------------------------------
employment with the Company by reason of Optionee's quitting or
otherwise voluntarily leaving the Company's employ other than a
voluntary termination of
-2-
<PAGE>
employment constituting a Termination For Cause as described in
subparagraph (3) of paragraph 9(e).
(p) Years of Service. An Optionee shall receive credit for one (1) year of
----------------
service on each anniversary date of the grant of the Stock Option to
the Optionee if the Optionee was employed by the Company for at least
one (1) day in each month of the consecutive twelve (12) month period
ending with the month which includes the anniversary date of the grant.
3. Administration of the Plan.
--------------------------
This Plan shall be administered by the Compensation Committee. The
Compensation Committee shall have full power and authority to (a) designate Key
Employees; (b) determine when Stock Options will be granted; (c) determine the
number of Stock Options to be granted; (d) determine the terms and conditions of
respective Incentive Stock Option Agreements which shall be consistent with the
terms of this Plan; and (e) adopt rules and regulations from time to time for
carrying out this Plan. In rendering decisions, the Compensation Committee is
expressly granted sole discretion to interpret and construe any provision of
this Plan and his determination shall be final, conclusive and binding upon the
Company and Optionees.
4. Eligibility.
-----------
The Company shall grant Stock Options only to Key Employees who perform
services of major importance in the management, operation and development of the
business of the Company.
5. Stock.
-----
The total number of shares of Common Stock that may be issued pursuant to
Stock Options shall not exceed an aggregate of one-hundred-ninety-seven thousand
nine-hundred-twenty-five(197,925) shares of Common Stock; provided, however,
that the class and aggregate number of shares which may be granted under this
Plan shall be subject to adjustment as provided under Section 13 hereof. Stock
Options to purchase any shares of Common Stock issued pursuant to this Plan
that, for any reason, are terminated or expire unexercised may be reissued under
this Plan. The Company shall not be required to issue or deliver any certificate
for Common Stock purchased upon the exercise of any part of the Stock Option
before (i) the Optionee shall represent, in writing, that the purchase of all
shares of Common Stock is being made for investment only and not for resale with
a view to distribution, and (ii) the Optionee shall consent, in writing, that
the Company may (x) endorse the certificate evidencing such shares with
appropriate legends to the effect that said shares have not been registered
-3-
<PAGE>
under any securities laws of any federal, state or foreign jurisdiction, were
issued in a transaction not involving a public offering under an investment
representation, are further subject to restrictions imposed by the Incentive
Stock Option Agreement relating to such shares and that transfer of said shares
is accordingly restricted, and (y) place a stop transfer order With the transfer
agent with respect to said shares. The Company shall not be obligated to deliver
any shares until there has been compliance with such laws and regulations as the
Company may deem applicable. No fractional shares shall be delivered.
6. Limitations Upon Greater-Than-Ten-Percent (10%) Shareholders.
------------------------------------------------------------
Except as otherwise permitted by the Code or other applicable law or
regulations, no Stock Option shall be granted to an individual who, at the time
the Stock Option is granted, is a Greater-Than-Ten Percent (10%) Shareholder
unless such Stock Option provides that (i) the Option Price shall not be less
than one hundred ten percent (110%) of the Fair Market Value of the Common Stock
at the time such Stock Option is granted, and (ii) that such Stock Option shall
not be exercised to any extent after the expiration of five (5) years from the
date it is granted.
7. Grant of Stock Option.
---------------------
The Company may, in its sole discretion, grant Stock Options to any Key
Employee; provided, however, that (i) no Stock Option shall be granted later
than ten (10) years from the earlier of the date this Plan is adopted by the
Board of Directors or the date this Plan is approved by the shareholders of the
Company, and (ii) the aggregate Fair Market Value (determined at the time of
grant) of the Common Stock which first becomes exercisable during any calendar
year granted to an Optionee (under this or under any other stock option plan
established by the Company) shall not exceed One Hundred Thousand and no/100
Dollars ($100,000.00).
8. Terms of the Incentive Stock Option Agreements.
----------------------------------------------
Each Stock Option granted under this Plan shall be evidenced by an
Incentive Stock Option Agreement which shall be in writing and shall contain
such terms, conditions, restrictions, if any, and provisions as the Company
shall from time to time deem appropriate. Such provisions or conditions may
include without limitation restrictions on transfer, repurchase rights, or such
other provisions as shall be determined by the Company; provided, however, such
additional provisions shall not be inconsistent with any other term or condition
of this Plan and such additional provisions shall not cause any Stock Option
granted under this Plan to fail to qualify as an Incentive Stock Option.
-4-
<PAGE>
Incentive Stock Option Agreements need not be identical, but each Incentive
Stock Option Agreement by appropriate language shall include the substance of
the provisions contained in Section 9 of this Plan.
9. Period of Option and Certain Limitations on Right to Exercise.
-------------------------------------------------------------
(a) Number of Shares. Each Stock Option shall state the number of Shares of
----------------
Common Stock to which it pertains
(b) Option Price. Each Stock option shall state the Option Price per share
------------
of Common Stock, as determined in accordance with Section 2(1) of this
Plan.
(c) Term and Exercise of Stock Options. All Stock Options issued under the
----------------------------------
Plan shall be exercisable for such period as the Board of Directors
shall determine, but no Stock Option may be exercised later than ten
(10) years from the date of grant thereof (or as provided in Section 6,
five (5) years in the case of a Greater-Than-Ten Percent (10%)
Shareholder).
(d) Vesting. Each Stock Option granted under this Plan shall first become
-------
exercisable (i.e., the Optionee's ability to exercise shall vest) as to
the following percentages of the shares of Common Stock granted under
each Stock Option:
<TABLE>
<CAPTION>
Years of Service Percentage of Stock
After the Grant Date Option Grant Exercisable
-------------------- ------------------------
<S> <C>
Less than 1 year 0%
At least 1 year but less than 2 years 25%
At least 2 years but less than 3 years 50%
At least 3 years but less than 4 years 75%
4 years or more 100%
</TABLE>
In the case of any resulting fractional shares from any calculations
under this Plan, the number of shares available for exercise shall be
determined by disregarding the fractional amount.
(e) Exercise Period and Termination of Employment. Except as hereinafter
---------------------------------------------
provided, no Stock Option may be exercised after the termination of
employment of the Optionee with the Company specifically subject,
however, to the provisions of paragraph (c) of this Section 9.
(1) Involuntary Termination of Employment. Stock Options granted under
-------------------------------------
the Plan may be exercised, if otherwise timely, within three (3)
months after the
-5-
<PAGE>
Involuntary Termination of Employment of the Optionee with the
Company, and the Stock options shall only be exercisable for the
shares of Common Stock as determined under paragraph (d) of this
Section 9.
(2) Voluntary Termination of Employment. Stock Options granted under
-----------------------------------
the Plan may be exercised if otherwise timely, within three (3)
months after the Voluntary Termination of Employment of the
Optionee with the Company, and the Stock Options shall only be
exercisable for the shares of Common Stock as determined under the
provisions of paragraph (d) of this Section 9.
(3) Termination for Cause. Notwithstanding anything contained herein
---------------------
to the contrary, if the termination of an Optionee's employment
with the Company is a result of or caused by the Optionee's theft
or embezzlement from the Company, the violation of a material term
or condition of his employment, the disclosure by the Optionee of
confidential information of the Company, conviction of the
Optionee of a crime of moral turpitude, the Optionee's theft or
unauthorized use of trade secrets or intellectual property owned
by the Company, any act by the Optionee in competition with the
Company or any other act, activity or conduct of the Optionee
which in the opinion of the Compensation Committee is adverse to
the best interests of the Company, then any Stock Options and any
and all rights granted to such Optionee thereunder, to the extent
not effectively exercised as of the date of termination of the
Optionee's employment, shall become null and void effective as of
the date of the occurrence of the event which results in the
Optionee ceasing to be an employee of the Company and any
purported exercise of a Stock Option by or on behalf of said
Optionee following such date shall be of no effect.
(4) Death or Permanent and Total Disability of Optionee. In the event
---------------------------------------------------
of the (i) death of the Optionee or (ii) Permanent and Total
Disability of the Optionee, prior to termination of the Optionee's
employment with the Company, and before the date of expiration of
such Stock Option, such Stock Option shall terminate on the
earlier of such date of expiration or one (1) year following the
date of such death or Permanent and Total Disability. After the
death of the Optionee, such
-6-
<PAGE>
Optionee's executors, administrators or any person or persons to
whom the Stock Option may be transferred by will or by the laws of
descent and distribution, shall have the right, at any time prior
to such termination, to exercise the Stock Option to the extent
the Optionee was entitled to exercise such Stock Option
immediately prior to such Optionee's death.
(f) Manner of Exercise and Payment for Shares. Any stock Option granted
-----------------------------------------
under this Plan may be exercised by the Optionee or his guardian, in
the case of his Permanent and Total Disability, or such Optionee's
executors administers, or any other person to whom the Stock Option may
have been transferred under the Optionee's will or by the laws of
descent and distribution, by delivery to the Company on any business
day a written notice specifying the number of shares of Common Stock
that such holder of the Stock Option then desires to purchase and such
other information that the Company may require from time to time. The
exercise of any Stock Option shall also be contingent upon receipt by
the Company of cash or a certified bank check to its order in an amount
equal to the full Option Price of the shares of Common Stock being
purchased.
(g) Decrease In Common Stock Available Under Plan. An exercise of a Stock
---------------------------------------------
Option shall result in a corresponding decrease in the number of shares
of Common Stock which thereafter may be available for purchase under
this Plan by the number of shares of Common Stock acquired pursuant to
the exercise of the Stock Options by the same number of shares of
Common Stock as to which the Stock Options that were exercised relates.
(h) Withholding of Taxes. To the extent that the exercise of any Stock
--------------------
Option or the disposition of any optioned shares shall result in income
to the Optionee, or any other person to whom ownership of the Stock
Option or Common Stock has vested in accordance with the terms of this
Plan, the Company will withhold from the proceeds of such disposition
an appropriate amount for federal, state and local taxes. The Company's
obligation to honor an exercise of the Stock Options or disposition of
Common Stock acquired hereunder shall be subject to the holder of the
Stock Option making appropriate arrangements with the Company for the
satisfaction of all federal, state or local income tax withholding
requirements.
-7-
<PAGE>
10. Assignability of Option.
-----------------------
No Stock Option granted under this Plan nor any of the rights and
privileges thereby conferred shall be transferred, assigned, pledged,
hypothecated or alienated in any way, or by operation of law during the
Optionee's lifetime. After the Optionee's death, the Stock Options may only be
transferrable by the Optionee's will or under the laws of descent and
distribution. No Stock option, right or privilege shall be subject to execution,
attachment or similar process. Upon any attempt to so transfer, assign, pledge
hypothecate, alienate or otherwise dispose of the Stock Option or of any right
or privilege conferred thereby, contrary to the provisions hereof, or upon the
levy of any attachment or similar process upon such Stock option, right or
privilege, the Stock Option and such rights and privileges shall immediately
become null and void. A Stock Option shall be exercisable only by the Optionee
to whom the Stock Option is granted, the Optionee's guardian in the case of such
Optionee's Permanent and Total Disability or such Optionee's executors,
administrators or any person or persons to whom the Stock Option may be
transferred by will or the laws of descent and distribution.
11. Right of First Refusal and Call Option.
--------------------------------------
(a) Right of First Refusal During Employment. If any Optionee, at any time
----------------------------------------
during the period of employment with the Company, desires to transfer
all or any part of or any interest in the Common Stock acquired
pursuant to the exercise of Stock Options granted under this Plan, such
Optionee shall first offer to sell such shares of Common Stock to the
Company upon the following terms and conditions:
(i) Notice. The Optionee shall give written notice to the Company of
------
his desire to sell or otherwise transfer shares of Common Stock
pursuant to a bona fide offer and shall set forth the number of
shares he desires to sell, the person or entity to whom such
shares will be sold, if known, and the terms upon which such
shares would be sold, including the price per share to be received
for such shares.
(ii) Option of Company. For a period of twenty-one (21) days after such
-----------------
notice is received by the Company, the Company shall have the
option to purchase all of the shares covered by said notice at the
price per share equal to the price per share~which the Optionee
would receive on transfer of the shares, as set forth in the
Optionee's notice. The Company shall exercise each option by
giving the Optionee
-8-
<PAGE>
written notice of exercise within the twenty-one (21) day period. The
shares as to which the Company exercises its option shall be redeemed no
later than sixty 60) days after the date such option was exercised and the
purchase price shall be paid in cash or by certified bank check to
Optionee's order.
(b) Call Option Upon Termination of Employment or Gift of Stock. In the
-----------------------------------------------------------
event (i) of the termination of the employment of the Optionee with the
Company, for any reason, including, but not limited to termination on
account of death, Permanent and Total Disability Voluntary Termination
of Employment, Involuntary Termination of Employment, or (ii) the
Optionee desires to transfer by gift, that is a transfer for no
consideration, all or any part or interest in the Common Stock acquired
by the Optionee pursuant to this Plan; then, for a period of twenty-one
(21) days after the (x) date of termination, (y) notice of gift, or (z)
acquisition of any shares following the termination of employment, the
Company shall have the option to purchase all of the shares of Common
Stock acquired by the Optionee pursuant to this Plan at the price per
share equal to the Fair Market Value per share determined at the date
of termination or notice of gift. The Company shall exercise this
option by giving the Optionee, or the Optionee's representative of a
deceased Optionee, as the case may be, written notice of exercise
within the twenty-one (21) day period. The shares as to which the
Company exercises its call option under this Section 11(b) shall be
redeemed sixty (60) days after the date such call option was exercised;
and the purchase price shall be paid in cash or by certified bank check
to Optionee's order. The Company's rights under this Section 11(b)
shall be in addition to its rights under Section 11(a), 11(c), and
11(d); and exercise or failure to exercise any call option under this
Section 11(b) shall not in any way limit the Company's rights of first
refusal under Section 11(a), 11(c) and 11(d).
(c) Right of First Refusal After Employment. If any Optionee or the
---------------------------------------
personal representative of a Permanently and Totally Disabled Optionee
or deceased Optionee, as the case may be, at any time after termination
of employment with the Company, desires to transfer all or any part of
or any interest in the Common Stock acquired pursuant to exercise of
Stock Options granted under this Plan, such Optionee, or the personal
representative of the Optionee, shall first offer to sell the shares of
such Common Stock
-9-
<PAGE>
to the Company upon the terms and conditions set forth in Section
11(a)(i) and 11(a)(ii).
(d) Effect of Failure to Exercise Right of First Refusal. If the Company
----------------------------------------------------
shall fail to exercise its right to acquire the shares of Common Stock
pursuant to Sections 11(a), (b) or (c) within the time period set forth
in Section 11(a)(ii), then the Optionee shall thereafter for a period
of ninety (90) days be free to transfer all of such shares at a price
per share not less than the price per share set forth in the notice to
the Company. If all shares are not transferred within said ninety (90)
day period, such shares shall again be subject to all of the terms and
provisions of this Section 11.
12. Listing and Registration of Shares.
----------------------------------
Each Stock Option shall be subject to the requirement that if at any time
the Company shall determine that the listing, registration or qualification of
the shares covered thereby upon any securities exchange or under any state or
federal law or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the granting of
such Stock Option or the issue or purchase of shares thereunder, such Stock
Option may not be exercised in whole or in part unless and until such listing,
registration, qualification, consent or approval shall have, been effected or
obtained free of any conditions not acceptable to the Company.
13. Changes In Company's Capital Structure.
--------------------------------------
(a) Rights of Company. The existence of outstanding Stock Options shall not
-----------------
affect in any way the right or power of the Company or its stockholders
to make or authorize, without limitation, any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business, or any merger or consolidation of
the Company, or any issue of Common Stock, or any issue of bonds,
debentures, preferred or prior preference stock or other capital stock
ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of
all or any part of its assets or business, or any other corporate act
or proceeding, whether of a similar character or otherwise.
(b) Recapitalization, Stock Splits and Dividends. If the Company shall
--------------------------------------------
effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend, or other increase or
reduction of the number of shares of the Common Stock outstanding, in
any
-10-
<PAGE>
such case without receiving compensation therefore in money, services
or property, then (i) the number, class and price per share of shares
of Common Stock subject to outstanding Stock Options hereunder shall be
appropriately adjusted in such a manner as to entitle an Optionee to
receive upon exercise of a Stock Option, for the same aggregate cash
consideration, the same total number and class of shares as he would
have received as a result of the event requiring the adjustment had he
exercised his Stock Options in full immediately prior to such event;
and (ii) the number and class of shares with respect to which Stock
Options may be granted under the Plan shall be adjusted by substituting
for the total number of shares of Common Stock then reserved for
issuance under the Plan that number and class of shares of stack that
the owner of an equal number of Outstanding shares of Common Stock
would own as the result of the event requiring the adjustment.
(c) Adjustments to Common Stock Subject to Options. Except as expressly
----------------------------------------------
provided herein the issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, for
cash or property, or for labor or services, either upon direct sale or
upon the exercise of rights or warrants to subscribe thereto, or upon
conversion of shares or obligations of the Company convertible into
such shares or other securities, shall not affects and no adjustment by
reason thereof shall be made with respect to, the number or price of
shares of Common Stock then subject to outstanding Stock Options.
(d) Miscellaneous. Adjustments under this Section 13 shall be determined by
-------------
the Company and such determinations shall be conclusive. No fractional
shares of Common Stock shall be issued under this Plan on account of
any adjustment specified above.
14. Amendment of Plan.
-----------------
The Company may at any time and from time to time modify and amend this
Plan (including such form of Incentive Stock Option Agreement) in any respect;
provided, however, that no such amendment shall: (a) increase (except in
accordance with Section 13) the maximum number of shares for which Stock Options
may be granted under this Plan either in the aggregate or to any individual
employee; or (b) reduce (except in accordance with Section 13) the minimum
Option Prices which may be established under the Plan; or (c) extend the period
or periods during which Stock Options may be granted or exercised; or (d) change
the provisions relating to the determination of employees to which
-11-
<PAGE>
Stock Options shall be granted and the number of shares to be covered by such
Stock Options; or (e) change the provisions relating to adjustments to be made
upon changes in capitalization. The termination or any modification or amendment
of this Plan shall not, without the consent of the Optionee, affect his rights
under a Stock Option theretofore granted to him.
15. Applicability of Plan to Outstanding Stock Options.
--------------------------------------------------
This Plan shall not affect the terms and conditions of any non-qualified
Stock Options heretofore granted to any employee of the Company, if any, under
any plan relating to non-qualified Stock Options; nor shall it affect any of the
rights of any employee to whom such a non-qualified Stock Option was granted.
16. Effective Date and Duration of Plan.
-----------------------------------
This Plan shall become effective upon its adoption by the Board of
Directors of the Company provided that the shareholders of the Company shall
have approved the Plan within twelve (12) months prior to or following adoption
of the Plan by the-Board of Directors. No Stock Option shall be granted under
the Plan after the tenth (l0th) anniversary of the effective date. The Plan
shall terminate upon the earlier of: (i) when the total number of shares of
Common Stock with respect to which Stock Options may be granted shall have been
issued upon the exercise of Stock Options, or (ii) by action of the Company
pursuant to Section 14, hereof.
17. Employment Obligation.
---------------------
The granting of any Stock Option shall not impose upon the Company any
obligation to employ or continue to employ any Optionee; and the right of the
Company to terminate the employment of any officer or other employee shall not
be diminished or affected by reason of the fact that a Stock Option has been
granted to him or her.
18. Rights as a Shareholder.
-----------------------
An Optionee shall have no rights as a shareholder with respect to any
shares covered by any of said Optionee's Stock Options until the date that the
Company receives payment in full for the purchase of said shares pursuant to the
effective exercise of said Stock Option. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
the date such payment is received by the Company.
-12-
<PAGE>
Exhibit 10.4
SHAREHOLDERS AGREEMENT
OF
COLORADO BUSINESS LEASING INC.
THIS AGREEMENT (the "Agreement") is made and entered into the 29th day of
March, 1996 (the "Effective Date") by and among The Women's Bank, N.A. (the
"Bank"); Richard M. Hall, Jr., James F. Enssle and Andrea J. Johnson
(individually an "Employee Shareholder" and collectively the "Employee
Shareholders") (sometimes herein, the Bank and the Employee Shareholders are
collectively referred to as the "Shareholders"); and Colorado Business Leasing
Inc., a Colorado corporation (the "Company"), with respect to all shares of the
Company's capital stock now or hereafter outstanding, for the purpose of
protecting the Company and the Shareholders in the event of a transfer of the
shares of any Shareholder or his successor in interest as provided for in this
Agreement. The Shareholders together own all of the outstanding shares of the
Company's stock (collectively and in any amount, the "Shares") as of the
Effective Date.
IT IS HEREBY AGREED:
ARTICLE I
SHARE CERTIFICATES
Upon execution of this Agreement, each Shareholder shall have placed on the
certificates representing his Shares the legend set forth in Article IX of this
Agreement. None of the Shares shall be transferred, encumbered or in any way
alienated except under the terms of this Agreement. Each Shareholder shall have
the right to vote his Shares and receive the dividends paid on them until the
Shares are sold or transferred as provided in this Agreement.
ARTICLE II
TRANSFER RESTRICTIONS
SECTION 2.1. EMPLOYEE SHAREHOLDERS. (A) OFFER FROM THIRD PARTY. No
Employee Shareholder shall transfer, encumber or in any way dispose of any of
his Shares or any right or interest in them, except to another Employee
Shareholder or the Bank as set forth herein, without obtaining the prior written
consent of the Bank and the other Employee Shareholders.
(B) TERMINATION OF EMPLOYMENT OF EMPLOYEE SHAREHOLDER. In the event that
an Employee Shareholder's employment with the Company terminates for any reason
or no reason, including death, the Company shall provide written notice, in
accordance with Section 12.5 of this Agreement, to the other Employee
Shareholders, who shall have the option to purchase the
<PAGE>
Shares of the terminating Employee Shareholder at the price determined in
accordance with Article VI of this Agreement. Within 15 days after giving the
notice, any non-terminating Employee Shareholder desiring to acquire any part or
all of the Shares shall deliver to the Secretary of the Company a written
election to purchase the Shares or a specified number of them. If the total
number of Shares specified in the elections exceeds the number of available
Shares, each Employee Shareholder shall have priority, up to the number of
Shares specified in his notice of election to purchase such proportion of the
available Shares as the number of the Company's Shares that he holds bears to
the total number of the Company's Shares held by all Employee Shareholders
electing to purchase. The Shares not purchased on such a priority basis shall be
allocated in one or more successive allocations to those Employee Shareholders
electing to purchase more than the number of Shares to which they have a
priority right, up to the number of Shares specified in their respective
notices, in the proportion that the number of Shares held by each of them bears
to the number of Shares held by all of them.
If the option is not exercised by the other Employee Shareholders as to all
of the Shares of the terminating Employee Shareholder, notice shall be given
immediately by the Company in accordance with Section 12.5 of this Agreement to
the Bank, who shall have the option to purchase any Shares not purchased by the
other Employee Shareholders at the price determined in accordance with Article
VI of this Agreement. Within 15 days after giving the notice, if the Bank
desires to acquire any part or all of the remaining Shares, it shall deliver to
the Secretary of the Company a written election to purchase the remaining Shares
or a specified number of them.
Within the earlier to occur of (i) the twentieth day after the mailing of
the notice to the Bank, or (ii) the twentieth day after the Employee
Shareholders agree to acquire all of the Shares, the Secretary of the Company
shall notify each Employee Shareholder and/or the Bank of the number of Shares
as to which his or its election was effective and the Employee Shareholder and
the Bank shall meet the terms and conditions of the purchase within 10 days
thereafter.
If the Bank and the non-terminating Employee Shareholders do not purchase
all of the Shares of the terminating Employee Shareholder, the remaining Shares
not purchased by them may be held by the terminating Employee Shareholder
pursuant to the terms of this Agreement.
SECTION 2.2. BANK. Except as provided elsewhere in this Agreement, the
Bank shall not transfer, encumber or in any way dispose of any of its Shares or
any right or interest in them without obtaining the prior written consent of all
Employee Shareholders, unless the Bank shall first have given written notice to
the Company, in accordance with Section 12.5 of this Agreement, of its intention
to do so and complied with the remaining provisions of this Agreement. The
notice shall be accompanied by an executed counterpart of any document of
transfer, which must name the proposed purchaser and specify the number of
Shares to be transferred, the price per Share, and the terms of payment.
Promptly on receipt of the notice, the Secretary of the Company shall forward a
copy of the notice and the executed counterpart to each Employee Shareholder,
who shall have the option to purchase such Shares at the price and on the same
terms and conditions specified in the notice and any accompanying transfer
documents. Within 15 days after giving the notice, any Employee Shareholder
desiring to acquire any part or all of the Shares offered shall deliver to the
Secretary of the Company a written election to
<PAGE>
purchase the Shares or a specified number of them. If the total number of Shares
specified in the elections exceeds the number of available Shares, each Employee
Shareholder shall have priority, up to the number of Shares specified in his
notice of election to purchase such proportion of the available Shares as the
number of the Company's Shares that he holds bears to the total number of the
Company's Shares held by all Employee Shareholders electing to purchase. The
Shares not purchased on such a priority basis shall be allocated in one or more
successive allocations to those Employee Shareholders electing to purchase more
than the number of Shares to which they have a priority right, up to the number
of Shares specified in their respective notices, in the proportion that the
number of Shares held by each of them bears to the number of Shares held by all
of them.
Within 20 days after the mailing of the notice to the Employee
Shareholders, the Secretary of the Company shall notify each Employee
Shareholder of the number of Shares as to which his election was effective and
the Employee Shareholder shall meet the terms and conditions of the purchase
within 10 days thereafter.
Notwithstanding the above, if the Employee Shareholders do not elect to
purchase all the Shares set forth in the notice, they shall have no right to
purchase any of the Shares set forth in the notice, and all the Shares set forth
in the notice may be transferred to the purchaser named in the notice at any
time within 50 days from the date of the original notice to the Company from the
Bank and on the same terms specified in the notice. The purchaser shall hold
the Shares pursuant to all the provisions of this Agreement. No transfer of the
Shares shall be made after the end of the 50-day period, nor shall any change in
the terms of transfer be permitted without a new notice of intention to transfer
and compliance with the requirements of this Section 2.2.
SECTION 2.3. SALE OF CONTROLLING BLOCK. Notwithstanding the remaining
provisions of this Agreement, in the event that the Bank or any other
Shareholders collectively owning at least 50 percent of the Shares (the
"Controlling Group") desires to sell 50 percent or more of the Shares (the
"Controlling Block") in one or a series of sales, such sales shall be made in
compliance with this Section 2.3 and the remaining applicable provisions of this
Agreement. In the event that the Controlling Group desires to sell, transfer,
encumber or in any other way dispose of at least 50 percent of the total number
of Shares, it shall provide written notice to the Company with an executed
counterpart of any document of transfer, which must name the proposed purchaser
and specify the number of Shares to be transferred, the price per Share, and the
terms of payment. Promptly upon receipt of the notice, the Secretary of the
Company shall promptly forward a copy of the notice and the executed counterpart
to each other Shareholder, who shall have the option to purchase all, but not
less than all, of the offered Shares at the price specified in the notice and
any accompanying transfer documents and on the same other terms stated in the
notice and accompanying transfer documents. Within 15 days after giving the
notice, if any Employee Shareholder desires to acquire any part or all of the
Shares, he shall deliver to the Secretary of the Company a written election to
purchase the Shares or a specified number of them. If the total number of Shares
specified in the elections exceeds the number of offered Shares, each non-
selling Shareholder shall have priority, up to the number of Shares specified in
his notice of election to purchase such proportion of the offered Shares as the
number of the Company's Shares that he holds bears to the total number of the
Company's Shares held by all
<PAGE>
non-selling Shareholders electing to purchase. The Shares not purchased on such
a priority basis shall be allocated in one or more successive allocations to
those non-selling Shareholders electing to purchase more than the number of
Shares to which they have a priority right, up to the number of Shares specified
in their respective notices, in the proportion that the number of Shares held by
each of them bears to the number of Shares held by all of them.
Within the twentieth day after the non-selling Shareholders agree to
acquire all of the offered Shares, the Secretary of the Company shall notify
each non-selling Shareholder of the number of Shares as to which his election
was effective and each non-selling Shareholder shall meet the terms and
conditions of the purchase within 10 days thereafter.
If the non-selling Shareholders do not purchase all the Shares set forth in
the notice of intention to transfer, they may not purchase any of such Shares,
and each non-selling Shareholder shall be required to join in such sale of the
Controlling Block so that all of the Shares will be transferred to the
purchaser(s). Each Shareholder shall receive a share of the net purchase price
relating to the sale of all of the Shares based upon the proportion of the
number of Shares held by such Shareholder in relation to the total of Shares
held by all of the Shareholders. For example, in the event that the Bank elects
to sell all of the Shares to a third party in exchange for proceeds of
$1,000,000 net of the costs relating to the sale, then an Employee Shareholder
who owns five percent of the Shares shall be required to sell and transfer all
of his Shares to the purchaser and such Employee Shareholder shall receive
$50,000 for such sale.
SECTION 2.4. PROVISIONS OF SECTION 2.3 SHALL PREVAIL. In the event that
any of the provisions of Sections 2.1 or 2.2 conflict with any of the provisions
of Section 2.3, the provisions of Section 2.3 shall prevail.
SECTION 2.5. LIMITATION ON OWNERSHIP AND ISSUANCE OF STOCK. At all times
during the term of this Agreement, the Bank shall always own at least 80 percent
of the Shares, unless the Bank consents otherwise in writing. As a result, all
parties acknowledge and agree that this ownership limitation creates additional
transfer restrictions on the Shares and may prevent the Company from issuing
additional Shares of common stock.
SECTION 2.6. TRANSFER OF SHARES TO EMPLOYEE SHAREHOLDERS. Notwithstanding
the remaining provisions of this Agreement, all Employee Shareholders may
transfer, pledge and encumber any or all of their Shares to any other Employee
Shareholder during the term of this Agreement, and such Shares shall remain
subject to the terms of this Agreement.
ARTICLE III
SALE OF BANK
In the event that the Bank sells all or substantially all of its assets or
is acquired in another manner including but not limited to consolidation, merger
or share exchange, then the acquiror of the Bank must purchase all of the Shares
from all of the Employee Shareholders at a price determined in accordance with
Article VI of this Agreement.
<PAGE>
ARTICLE IV
OBLIGATIONS OF TRANSFEREES
Each transferee and all subsequent transferees of Shares or any interest in
such Shares shall, unless this Agreement expressly provides otherwise, hold such
Shares or interest in the Shares subject to all of the provisions of this
Agreement and shall make no further transfers except as provided in this
Agreement. Each transferee shall execute a counterpart to this Agreement as a
condition precedent to the transfer of Shares to the transferee and to the
transferee becoming a Shareholder. Each transferee and subsequent transferee
shall be deemed to be a party to this Agreement even if he does not execute a
counterpart to this Agreement.
ARTICLE V
PURCHASE ON DEATH OF EMPLOYEE SHAREHOLDER
Each Shareholder shall instruct his executor to provide prompt written
notice to the Company in the event of the Shareholder's death.
In the event of the death of a Shareholder, Section 2.1 (b) shall control.
ARTICLE VI
FAIR VALUE OF SHARES
The purchase price to be paid for Shares pursuant to this Article VI shall
be the fair value of such Shares as mutually agreed upon by the Shareholders. In
the event the Shareholders do not agree on the fair value of the Shares, the
holder(s) of a majority of the outstanding Shares shall determine, in good
faith, the fair value of such Shares. Fair value of the Shares shall be
determined at least as often as once per year.
ARTICLE VII
PAYMENT AND TRANSFER OF SHARES
On the occurrence of any event that leads to the purchase of Shares under
this Agreement, the consideration to be paid for the Shares shall be paid to the
transferring Shareholder or his estate, as the case may be. The decedent's
personal representative shall apply for and obtain all necessary court approvals
and confirmations of the sale of the decedent's Shares under this Agreement. In
all events, consideration for the Shares shall be delivered as soon as
practicable to the person entitled to it and the parties shall cause the
certificates representing the purchased Shares to be properly endorsed and shall
issue new certificates in the names of the purchaser or purchasers.
<PAGE>
ARTICLE VIII
ADMINISTRATIVE REQUIREMENTS
The Company agrees to apply for and use its best efforts to obtain all
governmental and administrative approvals required in connection with the
purchase and sale of Shares under this Agreement. The Shareholders agree to
cooperate in obtaining the approvals and to execute any and all documents that
may be required to be executed by them in connection with the approvals. Any
required governmental approvals shall be considered a condition precedent to the
acquisition of any Shares pursuant to this Agreement. The party or parties
required to obtain such approvals shall have a reasonable period of time to
obtain such approvals, and to the extent necessary, any time periods set forth
in the Agreement shall automatically be extended to permit either the Company or
any Shareholder to obtain any necessary approval(s).
ARTICLE IX
LEGENDS ON SHARE CERTIFICATES
Each Share certificate, when issued, shall have conspicuously endorsed on
its face the following words: "Sale, transfer, or hypothecation of the Shares
represented by this certificate is restricted by the provisions of a
Shareholders Agreement, dated ___________________, 1996, a copy of which may be
inspected at the principal office of the Company and all the provisions of which
are incorporated by reference in this certificate." A copy of this Agreement
shall be delivered to the Secretary of the Company.
ARTICLE X
TERMINATION OF AGREEMENT
This Agreement shall terminate on the occurrence of the first of the
following events:
i) The written agreement of all parties;
ii) The dissolution, bankruptcy or insolvency of the Bank or the
Company;
iii) Fifty years after the Effective Date; or
iv) At such time as only one Shareholder of the Company remains, the
Shares of all other Shareholders having been transferred or
redeemed.
<PAGE>
ARTICLE XI
SHAREHOLDER WILLS
Each Shareholder agrees to include in his Will a direction and
authorization to his executor to comply with the provisions of this Agreement
and to will his Shares in accordance with this Agreement; however, the failure
of any Shareholder to do so shall not affect the validity or enforceability of
this Agreement.
ARTICLE XII
MISCELLANEOUS MATTERS
SECTION 12.1. AGREEMENT TO PERFORM NECESSARY ACTS. Each party to this
Agreement agrees to perform any further acts and execute and deliver any
documents that may be reasonably necessary to carry out the provisions of this
Agreement.
SECTION 12.2. AMENDMENTS. The provisions of this Agreement may be waived,
altered, amended or repealed, in whole or in part, only by the written consent
of all parties to this Agreement.
SECTION 12.3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on
and shall inure to the benefit of the parties to it and their respective heirs,
legal representatives, successors and permitted assigns.
SECTION 12.4. VALIDITY OF AGREEMENT. It is intended that each section and
article of this Agreement shall be viewed as separate and divisible and in the
event that any section or article shall be held to be invalid, the remaining
sections and articles shall continue to be in full force and effect.
SECTION 12.5. NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is to be given or within three days after mailing, if mailed to the
party to whom notice is to be given, by first class mail, and properly addressed
to the party at his address set forth on the signature page of this Agreement or
any other address that any party may designate by written notice to the others.
SECTION 12.6. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of Colorado.
SECTION 12.7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
SECTION 12.8. DEFINITIONS. Whenever used in this Agreement, the singular
shall include the plural and vice versa, and the use of any gender shall include
all genders and the neuter.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the Effective Date.
COMPANY:
COLORADO BUSINESS LEASING, INC.
999 Eighteenth Street
Suite 2500
Denver, Colorado 80202
(address of principal By: /s/ Richard M. Hall, Jr.
office of corporation) -------------------------------------------
Richard M. Hall, Jr., President
BANK:
THE WOMEN'S BANK, N.A.
821 Seventeenth Street
P.O. Box 8779
Denver, Colorado 80201
(address of principal By: /s/ Jonathan C. Lorenz
office of corporation) -------------------------------------------
Jonathan C. Lorenz, Director
EMPLOYEE SHAREHOLDERS:
16273 West 66th Circle
Golden, CO 80403 /s/ Richard M. Hall, Jr.
(address) -------------------------------------------
Richard M. Hall, Jr.
6098 West Iowa Place
Lakewood, CO 80232 /s/ James F. Enssle
(address) -------------------------------------------
James F. Enssle
7821 South Lafayette Way
Littleton, CO 80122 /s/ Andrea J. Johnson
(address) -------------------------------------------
Andrea J. Johnson
<PAGE>
Exhibit 10.5
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
LICENSE AGREEMENT # 1020-0320-6-0001
LICENSE AGREEMENT
-----------------
THIS AGREEMENT made and executed this 19th day of November, 1997 between
JACK HENRY & ASSOCIATES, INC. ("JHA") P. O. Box 807, 663 Highway 60, Monett,
MO 65708 and COLORADO BUSINESS BANK, N.A. ("LICENSEE") having its principal
office at 821 17th Street, Denver, CO 80202.
WITNESSETH:
WHEREAS, JHA is engaged in the business of providing various services
relating to the design of computer software programming for use by financial
institutions; and
WHEREAS, Licensee is a financial institution engaged in providing various
financial services; and
WHEREAS, Licensee agrees to obtain from JHA, and JHA by its execution of
this Agreement, agrees to furnish to Licensee on the terms and conditions
contained herein all of the computer software and services detailed in Exhibit A
which is specifically made part of this Agreement.
NOW, THEREFORE, in consideration of the premises and in further
consideration of the performance of the terms and provisions herein contained,
JHA and Licensee do hereby contract and agree as follows:
1. Software Definition. In this Agreement Software shall mean only the
--------------------
computer application programs, manuals, specifications, other documentation or
services itemized in Exhibit A,
1
<PAGE>
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
together with all future releases, modifications and customization furnished or
performed by JHA; in any printed, machine readable or other form including but
not limited to listings, manuals, and magnetic media.
2. Fees. Licensee agrees to pay to JHA the fees, payments and expenses
-----
set out in attached Exhibit A, for the licensed use of computer Software
programs and services described in said Exhibit A.
In addition to fees and payments provided for in this Agreement, Licensee
will promptly reimburse JHA for all actual, out-of-pocket expenses including but
not limited to travel, lodging, meals, telephone, postage and shipping costs
together with any taxes related to this Agreement that might be levied by any
governmental body against JHA, other than personal property taxes or income
taxes.
Licensee will pay JHA [ *** ] interest per month [ *** ]
--- ---
all attorney fees and expenses actually incurred by JHA in collecting any
delinquent or past due fees, payments or reimbursements of any kind due JHA by
Licensee.
3. License. JHA hereby grants and Licensee accepts a non-transferable
--------
and non-exclusive license (the "License") to use the Software described in
Exhibit A for the original term and all renewals of this Agreement.
The License granted herein is restricted as follows:
2
<PAGE>
The Software will be used only to process data of those financial
institutions listed in Exhibit B hereto, on IBM AS/400 equipment operated only
by Licensee employees or the employees of such financial institutions.
Additional license fees for processing data for additional financial
institutions, other than those listed on Exhibit B, and for processing
acquisitions by any of the financial institutions listed on Exhibit B, on JHA
Software as described in Exhibit A, will be determined by an addendum to this
Agreement.
The License and the Software may not be assigned, sublicensed, or otherwise
transferred or copied in any manner by Licensee without prior written consent
from JHA. Licensee agrees not to remove or alter proprietary notices of JHA on
any of the materials associated with the Software.
Licensee shall use the Software only at the site locations of Licensee or
the financial institutions that are described in Exhibit B hereto. However off-
site testing and/or disaster processing is permitted provided the owner/operator
of the off-site facility has signed JHA's Confidentiality Agreement, and JHA is
promptly notified by Licensee.
Licensee also covenants and warrants to JHA that all other financial
institutions being processed and off-site test/disaster facilities will conform
to, abide by and be governed and bound by this License Agreement the same as
though they were a signing Licensee. Licensee accepts full responsibility and
liability to JHA for any violation or breach of this License Agreement by any
other financial institution being processed by Licensee and an off-site
test/disaster facility used by Licensee. If Licensee or any other financial
institution being processed by Licensee or off-site test/disaster facility
violates or breaches this or any other written agreement it has with JHA or any
of its subsidiaries, and such violation or breach is not corrected within thirty
days after Licensee receives written notice thereof from JHA, then JHA may
terminate Licensee's license to use the Software, and Licensee will cease using
the Software and will return all of same to JHA. Licensee further covenants and
warrants
3
<PAGE>
to JHA that neither Licensee, nor any of its affiliated companies, nor
any financial institutions processed by Licensee, will employ, in any capacity,
any personnel of JHA or any of its affiliated companies within one year of their
employment termination from JHA or any of its affiliated companies, unless JHA
consents in writing.
4. Warranties. JHA warrants that unmodified Software will operate in
-----------
accordance with the then current documentation provided by JHA. This warranty
is valid for sixty (60) days from the date of last initial installation of all
of said Software. Under this warranty, JHA will correct any program errors in
the unmodified Software at no extra charge to Licensee. THIS WARRANTY IS
EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, OR ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT
SHALL JHA BE LIABLE FOR INDIRECT, CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
5. Proprietary Product. All Software, customization, modification,
--------------------
releases and optional modules furnished now or hereafter by JHA to Licensee,
shall be and remain the property of JHA, subject to the rights of the Licensee
as defined in this Agreement.
6. Term. This Agreement grants the Licensee a non-exclusive, paid-up
-----
license to use the Software described in Exhibit A, in the manner provided in
paragraph 3 above, for twenty-five (25) years immediately subsequent to the date
of this Agreement, except as modified by conditions described in paragraph 9 of
this Agreement.
7. Trade Secret. Licensee hereby acknowledges that the Software provided
-------------
by JHA under this Agreement is a trade secret of JHA, and as such is protected
by civil and criminal law, is very valuable to JHA, and that its use must be
carefully and continuously controlled. In accordance with the aforesaid,
Licensee agrees to use the highest standard of diligence to ensure the
confidentiality of the
4
<PAGE>
Software, and will prohibit the unauthorized access to, use or duplication of
any of the Software. Licensee agrees to keep all machine-readable Software in a
secure place which is as secure as Licensee provides for its most confidential
materials. Licensee will not cause, permit nor allow the Software or materials
provided by JHA to be copied, duplicated transcribed, reverse engineered, sold
to, revealed to, or used by any other person, firm or company without prior
written consent of JHA. Licensee agrees to notify JHA immediately of the
unauthorized possession, use or knowledge of any item supplied under this
Agreement by any person or organization not authorized by this Agreement to have
such possession, use or knowledge. Licensee will promptly furnish JHA full
details of such possession, use or knowledge, and will cooperate fully with JHA
in any litigation against third parties deemed necessary by JHA to protect its
proprietary rights. Licensee's compliance with the above shall not be construed
in any way as a waiver of JHA's right to recover damages or obtain other relief
against Licensee for its negligent or intentional harm to JHA's proprietary
rights or for breach of contractual rights. If Licensee attempts or allows
others to attempt to use, copy, duplicate, transcribe or convey the items
supplied by JHA pursuant to this Agreement, in a manner contrary to the terms of
this Agreement or in derogation of JHA's proprietary rights, whether these
rights are explicitly herein stated, determined by law, or otherwise, JHA shall
have, in addition to any other remedies available to it at law or equity, the
right to injunctive relief enjoining such actions, Licensee hereby acknowledging
that irreparable harm will occur to JHA and that other remedies are inadequate.
This paragraph will survive expiration or termination of this Agreement.
8. Compliance with Laws. Licensee assumes all responsibility in assuring
---------------------
compliance with all regulations relating to Licensee's use of the Software.
9. Business Termination. At JHA's option, all of Licensee's rights under
---------------------
this Agreement shall terminate, and the Software shall be returned to JHA if the
ownership or management of Licensee
5
<PAGE>
or any of its subsidiaries changes by reason of voluntary or involuntary
bankruptcy, receivership, conservatorship, custodianship, assignment for benefit
of creditors, seizure of assets, liquidation, dissolution, ceasing to do
business, or action by FDIC, RTC or other State or Federal authorities which
would divest control from present ownership and management of Licensee.
In the event JHA ceases to do business, the successor to JHA's assets will
be bound by this Agreement the same as JHA, and Licensee may continue to use the
Software under all the terms and conditions of this Agreement. If there is no
successor to JHA's assets, then the Software shall become the non-exclusive
proprietary product of Licensee subject to all of the confidentiality
restrictions described in paragraph 7 above, except that Licensee may reveal
Software and/or materials to third parties for the sole purpose of maintenance
and customization of the Software for the sole use of Licensee, provided said
third parties have signed similar written confidentiality restrictions.
10. Confidentiality. JHA and Licensee each agree that all information
----------------
communicated to it by the other, including the terms and conditions of this
Agreement, whether before the effective date or during the term of this
Agreement, shall be received in strict confidence, shall be used only for the
purposes of this Agreement, and that no such information shall be disclosed by
the recipient party, its agents or employees without prior written consent of
the other party, unless such information is publicly available from other than a
breach of this provision. Each party agrees to take all reasonable precautions
to prevent the disclosure to outside parties of such information, including
without limitation, the terms of this Agreement except as may be necessary by
reason of legal, accounting or regulatory requirements beyond the reasonable
control of JHA or Licensee, as the case may be.
6
<PAGE>
11. Delivery. Delivery of said Software shall be at a time mutually
---------
agreed upon by JHA and Licensee, but in no instance shall such date be longer
than ninety (90) days following the execution of this Agreement.
12. Modification. Licensee may modify source code or procedures, but
-------------
shall notify JHA in writing of any modifications so made.
13. Statute of Limitations. No action arising out of this Agreement may be
-----------------------
brought by Licensee or JHA more than two years after the cause of action has
accrued and the injured party has actual knowledge of the accrual.
14. Complete Agreement. This document contains the entire agreement
-------------------
between the parties with respect to the transactions contained herein, and it
may be modified or altered only by a written instrument signed by all parties
hereto. Attached Exhibits A and B are part of this Agreement.
15. Headings. The headings of each paragraph contained herein are
---------
provided only for convenience and shall not he deemed controlling.
16. Binding. This Agreement shall be binding upon and inure to the
--------
benefit of the parties hereto and their respective assigns and successors.
17. Assignability. This Agreement shall not be transferable or assignable
--------------
by Licensee without prior written consent by JHA. However, Licensee may assign
its rights and obligations under this Agreement by written document, to which
JHA is a signing party, to any holding company which becomes a majority
stockholder or parent company of Licensee by voluntary action and with the
written approval of Licensee and its stockholders. In this event, both Licensee
and the assignee shall be responsible and liable to JHA for the performance of
the obligations and duties of Licensee pursuant to this Agreement.
18. Governing Law. This Agreement shall be governed by, construed and
--------------
enforced under, and subject to, the laws of the State of Missouri. If any of
the Provisions of this Agreement are
7
<PAGE>
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
invalid under any applicable statute or rule of law, they are, to that extent,
deemed omitted. Such omission does not change the intent or binding nature of
any or all of the rest of this Agreement.
19. Services. At Licensee's request JHA will provide the following
---------
services:
(a) Software customization and/or modification, to the extent
possible with Licensee's equipment and the Software. Licensee
accepts responsibility for any requested customization and
modification.
(b) Training and education for Licensee's employees concerning the
operation and use of the Software.
(c) Consultation concerning Licensee's electronic data processing
needs,
problems and solutions.
(d) Licensee will promptly pay JHA its then current fees for services
performed per (a), (b) and (c) above plus all associated out-of-
pocket expenses. As of the date of this Agreement the current
fees for items (a), (b) and (c) above are listed in attached
Exhibit A.
20. Installation. JHA will install said unmodified Software at Licensee's
-------------
principal office so it will properly operate on Licensee's IBM computer, as
specified on Exhibit A and will assist Licensee in converting the financial
institutions listed in Exhibit B to the Software system. Licensee will furnish
data needed and requested by JHA, and will co-operate with and assist JHA
personnel in the installation and conversion of said Software. For the
installation and conversion of said Software, Licensee agrees to pay JHA its
current fees as described in Exhibit A attached hereto. [ ***
---
] All installation and conversion charges and out-of-pocket
expenses will be billed monthly and promptly paid by Licensee. JHA's current
billing terms are payable
8
<PAGE>
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
upon receipt. A [ *** ] interest charge per month
---
[ *** ] will be added to delinquent
---
accounts. Installation of said Software will be in accordance with attached
Exhibit C which is incorporated herein.
21. Limitation of Liability. JHA shall not be liable to Licensee or any
------------------------
other person, firm or company, for failure to fulfill its obligation hereunder
due to an event of "force majeure" (herein defined as acts of God, public
disaster, fire, flood, riot, war, labor strikes/disputes, judicial
orders/decrees, government laws/regulations, or interruptions of communications,
transportation or electricity). Any liability of JHA for any loss, damage, or
cost hereunder shall be limited to actual direct damages incurred by Licensee,
but in no event shall the aggregate of liability exceed the total license fees
paid by Licensee to JHA under paragraph 2 above, nor shall any amount of the
liability include any indirect, consequential, punitive or special damages
incurred by Licensee.
22. Supersedes. This Agreement supersedes all prior agreements, if any,
-----------
for the licensed use of or the support/maintenance of other JHA software or
products.
23. Notice. Any notices under this Agreement shall be written and shall
-------
be deemed delivered when actually received, or three days after they are
deposited with the United States Postal Service, certified mail return receipt
requested when addressed to the other party at its above address, which may be
changed by written notice.
24. Counterparts. Two (2) duplicate originals of this Agreement are
-------------
executed with each party retaining one (1) copy.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
(Seal) JACK HENRY & ASSOCIATES, INC.
ATTEST: 663 Highway 60 - P. O. Box 807
Monett, MO 65708
(JHA)
BY: /s/ Janet E. Gray BY: /s/ Michael R. Wallace
------------------- ------------------------
Secretary Michael R. Wallace
------------------------
Print/Type Name
Title: President/COO
---------------
Date: December 1, 1997
------------------
(Seal) COLORADO BUSINESS BANK, N.A.
ATTEST: 821 17/th/ Street
Denver, CO 80202
(LICENSEE)
BY: /s/ Thora R. Aarvig BY: /s/ Richard J. Dalton
--------------------- -----------------------
Secretary Richard J. Dalton
-----------------------
Print/Type Name
Title: SVP/CFO
--------
Date: 11/25/97
---------
10
<PAGE>
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
EXHIBIT A
---------
SOFTWARE AND SERVICES PROVIDED BY LICENSE AGREEMENT # 1020-0320-6-0001
FOR: COLORADO BUSINESS BANK, N.A., 821 17th Street, Denver, CO 80202 (LICENSEE)
PROGRAMMING FOR JHA SILVERLAKE SYSTEM(R) TO BE INSTALLED ON LICENSEE'S IBM
AS/400 COMPUTER
Customer Information File Customer Profitability
Demand Deposit Accounting Loan Pricing
Savings Accounting Stockholder Accounting
Account Analysis General Ledger System
Cash Reserve Gap Analysis
Cash Sweep Safe Deposit Box Accounting
ACH Origination Audit Confirmations
Automatic Funds Transfer Accounts Payable
Account Reconciliation Report Distribution System
Time Deposit Accounting Job Accounting
Individual Retirement Accounting On-Line Loan Collection System
Loan System Collateral Tracking
Equity Lines of Credit Enhanced Statement Module
<TABLE>
<CAPTION>
<S> <C>
SUB-TOTAL LICENSE FEE............................................................... [ *** ]
---
Interface to ACH Fed Line........................................................... [ *** ]
---
Interface to Call Reporter (Sheshunoff)............................................. [ *** ]
---
Interface to Inclearing via Fed..................................................... [ *** ]
---
Enhanced Account Analysis........................................................... [ *** ]
---
Interface to Dial-up ATM Switch (PBF File)* w/o intercept processing................ [ *** ]
---
JHA POD............................................................................. [ *** ]
---
JHA Platform System/(TM)/ (Deposits only)........................................... [ *** ]
---
Implementation of Bankers Systems, Inc. Laser Forms per attached
Exhibit BSI.................................................................... [ *** ]
---
[ *** ]
---
Interface to Regency's Express Banking (Real Time).................................. [ *** ]
---
JHA Interface to FTI - Profit Vision................................................ [ *** ]
---
JHA Interface to FTI - Enterprise Information System................................ [ *** ]
---
JHA Demand Account Reclassification Module/(TM)/.................................... [ *** ]
---
[ *** ]........................................ [ *** ]
--- ---
[ *** ]............................ [ *** ]
--- ---
</TABLE>
11
<PAGE>
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
[ ***
---
]
SILVERLAKE EXHIBIT A (Continued)
The following will be furnished for the above programming. Items 1, 2 and 3
below will be provided for the above programming and standard enhancements which
are generally distributed by JHA. Also, Items 2 and 3 will be provided for any
custom programming provided by JHA.
1. Documentation
2. Source Code
3. Programs on a media and in a format readable by Licensee's said
computer.
APPLICABLE TAXES:
In addition to the fees due under this Agreement, the Licensee agrees to
pay amounts equal to all taxes, if any, resulting from this Agreement, or
any activities hereunder, exclusive of property taxes and taxes based on
net income.
SERVICES PROVIDED:
1. On-site Education and Training of Licensee's employees at Licensee's
location............................................ [ ***
---
]
2. a) Configuration meeting held at Licensee's location at a time mutually
convenient to the parties, at which time JHA will review Licensee's
operation, identify programming changes necessary to conform to
Licensee's specific requirements, establish necessary form
requirements and establish timetable for installation.
b) Software installation and conversion as described in Paragraph 20.
For the above services, 2(a) and 2(b), to install JHA's Standard
Programming for JHA Silverlake
<TABLE>
<S> <C>
[ *** ]
---
Interface to ACH Fed Line................................................. [ *** ]
---
Interface to Call Reporter (Sheshunoff)................................... [ *** ]
---
Interface to Inclearing via Fed........................................... [ *** ]
---
Enhanced Account Analysis................................................. [ *** ]
---
Interface to Dial-Up ATM Switch (PBF File) w/o intercept processing....... [ *** ]
---
JHA POD................................................................... [ *** ]
---
JHA Platform System/(TM)/ (Deposits Only)................................. [ *** ]
---
JHA Demand Account Reclassification Module/(TM)/.......................... [ *** ]
---
[ *** [ *** ]
--- ---
]
</TABLE>
12
<PAGE>
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have
---
been separately filed with the Securities and Exchange Commission.
3. Program customization and consulting services as described in
Paragraph 19(a) and 19(c)................................ [ *** ]
---
4. Licensee will reimburse JHA for all out-of-pocket expenses in
providing the above services.
All fees and expenses for services will be billed monthly and promptly paid by
Licensee.
13
<PAGE>
EXHIBIT B for LICENSE AGREEMENT # 1020-0320-6-0001
---------
FOR: COLORADO BUSINESS BANK, N.A., 821 17/th/ Street, Denver, CO 80202
(LICENSEE)
FINANCIAL INSTITUTIONS AND LOCATIONS
------------------------------------
<TABLE>
<CAPTION>
NAME LOCATION BILLING ADDRESS
- ---- --------------- ---------------
<S> <C> <C>
COLORADO BUSINESS 821 17/th/ Street
BANK, N.A. Denver, CO 80202 ---------------
---------------
ATTN:
---------------
</TABLE>
14
<PAGE>
EXHIBIT C for LICENSE AGREEMENT # 1020-0320-6-001
FOR: COLORADO BUSINESS BANK, N.A., 821 17/th/ Street, Denver, CO 80202
SOFTWARE IMPLEMENTATION PLAN
----------------------------
1. All applications for the Licensee will be converted at the same time
on a date mutually agreed upon by JHA and Licensee.
2. JHA will write conversion programs to translate and convert all
balance, transaction, history, customer, and master files from
Licensee's current system to JHA's Silverlake System.
3. Licensee's files will be provided to JHA on 1600 bpi nine track
magnetic tape, along with field descriptions, record layouts and other
documentation necessary to interpret the data contained in said files.
4. JHA will assist Licensee in the initial set up of the bank control
files and in the selection and designation of all parameters necessary
to duplicate Licensee's product offerings including, but not limited
to, service charge, interest rates, maturity schedules, statement
cycles, etc.
5. Prior to the scheduled Final Conversion Date, on a date mutually
agreed upon by JHA and Licensee, JHA will provide a pre-conversion
test of the Software by processing all applications to be converted on
Licensee's IBM AS/400 computer. The test will include, but not be
limited to: receiving magnetic tapes as of a specified date from
Licensee's current system; converting the files from said magnetic
tapes to the Silverlake System; adding the next subsequent processing
days transactions; processing all applications of the Software;
producing and printing all standard system reports, customer
statements, customer notices, and balancing all applications to
application reports generated by Licensee's current system. JHA will
review the results of the test with Licensee for the purpose of
identifying errors and/or potential conversion problems. Licensee
will review all reports, notices, and statements generated for
appearance, accuracy, and acceptability. Licensee will report and JHA
will correct, prior to the scheduled Final Conversion Date, all data
conversion errors.
6. JHA agrees to accurately convert all monetary and non-monetary data.
JHA will assist Licensee in balancing data converted to the Silverlake
System to application reports generated by Licensee's current system.
All out-of-balance conditions and data conversion discrepancies will
be researched and identified jointly by Licensee and JHA. JHA will
correct, at its own expense, all data which was incorrectly converted
due to error of JHA. JHA will correct, at Licensee's request and
expense, all data which was incorrectly converted due to error of
Licensee.
15
<PAGE>
SILVER LAKE - Exhibit C - continued
7. JHA will provide Licensee written documentation for the Silverlake
System within thirty (30) days of the execution of this Agreement.
Licensee will be responsible for preparing customized user and
procedural documentation for each department.
8. JHA will provide Licensee with access to a test bank on Licensee's IBM
AS/400 for the purpose of training Licensee's employees to use the
Software. JHA will provide training before, during, and after the
conversion to assist Licensee's employees in learning to use and
operate the Software.
9. Prior to the scheduled Final Conversion, JHA agrees to provide program
customization and modifications per the detailed written request of
Licensee, which must be accepted in writing by JHA.
10. "Final Conversion Date" shall mean the point at which the applications
have been successfully converted, balanced and updated on Licensee's
new system, such that the applications meet all acceptance test
criteria as set forth in the JHA Silverlake System Conversion and
Verification Document, at which time a representative of JHA and a
representative of Licensee will sign the Cover Page of said Document.
The JHA Silverlake System Conversion and Verification Document is
incorporated herein by reference. The Cover Page to such Document is
attached hereto as Exhibit D.
16
<PAGE>
EXHIBIT D for LICENSE AGREEMENT # 1020-0320-6-0001
FOR: COLORADO BUSINESS BANK, N.A., 821 17th Street, Denver, CO 80202
COVER PAGE TO THE
-----------------
JHA SILVERLAKE SYSTEM CONVERSION AND VERIFICATION DOCUMENT
----------------------------------------------------------
The following signature blocks shall be executed by Jack Henry and Associates,
Inc., Monett, Missouri (JHA), and COLORADO BUSINESS BANK, N.A. (Licensee), upon
successful conversion, balance and updating of a Software system installed by
JHA on behalf of Licensee pursuant to Exhibit C to a certain License Agreement
dated _______________ by and between JHA and Licensee.
<TABLE>
<CAPTION>
<S> <C>
COLORADO BUSINESS BANK, N.A. JACK HENRY & ASSOCIATES, INC.
821 17/th/ Street W. Highway 60 - P. O. Box 807
Denver, CO 80202 Monett, MO 65708
(Licensee) (JHA)
By: By:
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
Print/type name Print/type name
Title: Title:
------------------------------ ------------------------------
Date: Date:
-------------------------------- -------------------------------
</TABLE>
17
<PAGE>
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
EXHIBIT BSI
-----------
1 - Licensee will sign a separate LICENSE/SUPPORT-LINE AGREEMENT (LSLA)
directly with Bankers Systems, Inc (BSI) which will permit Licensee to
acquire and use the proprietary Laser Forms of BSI on the JHA Platform
System/(TM)/
2 - Licensee will pay JHA in advance as follows:
[ ***
---
]
3 - Licensee will receive support for use of BSI's Laser Forms directly
from BSI and not from JHA. The Warranty on said Laser Forms is granted to
Licensee by BSI in said LSLA. Licensee understands and agrees that JHA makes
no warranty or guaranty of said Laser Forms, and has no liability or
responsibility to Licensee or any other entity for said Laser Forms, or the
use thereof.
18
<PAGE>
AUTHORIZED PERSONNEL OF
-----------------------
COLORADO BUSINESS BANK, N.A., 821 17th Street, Denver, CO 80202 (LICENSEE)
The following employees/officers of Licensee are authorized by Licensee to
contact and work with JHA on support, maintenance, customization or
modifications of JHA Software. This list may, from time to time, be changed by
Licensee upon written notice to JHA.
NAME POSITION
- ---- --------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
COLORADO BUSINESS BANK, N.A.
821 17/th/ Street
Denver, CO 80202
(LICENSEE)
BY: /s/ Richard J. Dalton
---------------------
TITLE: SVP/CFO
-------
DATE: 11/25/97
--------
19
<PAGE>
- ------------------------------------------------------------------------------
BANK EMPLOYEE AUTHORIZED FOR
- ------------------------------------------------------------------------------
CBB-DENVER BRENDA THAYER PROFIT, DL
CBB-DENVER CHRISTA STOUT ALL
CBB-DENVER CONNIE WRIGHT ALL
CBB-DENVER DAVID WARBACH BATCH PROCESSING
CBB-DENVER LYNE ANDRICH GL
CBB-DENVER IRENE LABIAK SECURITY, BKKP
CBB-DENVER JEAN MATSUDA AUDIT FUNCTIONS
CBB-DENVER CHRIS RODRIGUEZ* ALL
CBB-DENVER CINDY VANGULICK LOANS
CBB-DENVER PENNY DODD ALL
20
<PAGE>
Exhibit 10.6
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
LICENSE AGREEMENT #1020-0320-6-0001
CONTRACT MODIFICATION
---------------------
This Contract Modification is entered into on November 19, 1997, by and between
COLORADO BUSINESS BANK, N.A. (Licensee) and JACK HENRY & ASSOCIATES, INC. (JHA)
who mutually contract and agree as follows:
Licensee and JHA are signing and entering into multiple other written contracts
and agreements dated November 19, 1997. Certain of those contracts and
agreements are changed and modified as follows:
1. The "LICENSE AGREEMENT" is changed and modified as follows:
A. In Section "3. License.":
--------
a. Add a new subparagraph: "The Software will calculate and perform
prior to, during, and after the year 2000. JHA will guaranty
that all year 2000 testing on the Software will be completed and
any errors corrected by 12/31/98. JHA will also guaranty that an
independent third party review of the Software will be completed
by 12/31/98.".
b. To the fourth subparagraph add: "If, in the future, Licensee
acquires full ownership and control of another Bank and wants to
process that Bank's data on the Software, then (1) if that Bank
is merged into Licensee and operates under Licensee's original
charter, no additional license fee is owed to JHA, and (2) if
that Bank is operated under a charter other than Licensee's
original charter, an additional license fee will be owed to JHA."
B. In Section "4. Warranties.":
-----------
a. In the first sentence of the first subparagraph insert "and
subsequent updates thereto" immediately following "Software".
b. In the second sentence of the first subparagraph strike "sixty
(60)" and replace it with "(120)".
c. To the end of the third sentence add: "JHA warrants that (i) it
has full title and ownership of the Software; (ii) JHA has the
full power and authority
<PAGE>
Contract Modification
Denver, CO
Page 2
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
to grant the License granted by this Agreement to Licensee; (iii)
the licensing of the Software to Licensee under this Agreement
and use of Software by Licensee pursuant to this Agreement will
not constitute an infringement or other violation of any
copyright, trade secret, trademark, patent or any proprietary
rights of any third party.".
C. In Section "17. Assignability.":
--------------
a. To the end of the first subparagraph add: "In the event that
Licensee is acquired by a holding company or entity and the
acquiring entity or holding company wishes to convert Licensee to
another software package, JHA will continue to allow Licensee to
use this license for up to 180 days following the acquisition
provided that the acquiring entity or holding company promptly
signs and returns JHA's then current confidentiality agreement
and deconversion agreement.".
b. Add a new subparagraph "In the event that Licensee makes a public
offering, JHA shall not consider such public offer to constitute
an assignment as provided for above.".
D. In Section "19. Services.":
---------
a. "JHA warrants that any customized code hereafter requested or
authorized by Licensee with written detailed specifications and
accepted in writing by JHA will be customized and installed by
JHA on Licensee's computer, and will perform in accordance with
said written detailed specifications furnished by Licensee."
E. In Section "20 Installation.":
-------------
a. To the end of the first subparagraph add: "So long as Licensee
promptly pays the undisputed portion of any billing, said
interest will be paid only on the portion of the disputed billing
ultimately resolved in favor of JHA.".
2. The "EXHIBIT A" is changed and modified as follows:
A. Reform the payment terms as follows:
"Deposit at execution of Agreement [ *** ] ................... [ *** ]
--- ---
Due upon delivery of Software [ *** ] ........................ [ *** ]
--- ---
<PAGE>
Contract Modification
Denver, CO
Page 3
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
Due upon installation of last application, or 120 days after
delivery of the Software, whichever occurs first [ *** ] ..... [ *** ]
--- ---
B. Under "SERVICES PROVIDED:" add:
a. In Section "2." create an item "c)" as follows: "JHA will at the
time of conversion convert the data of the Colorado Business Bank
of Littleton and merge it into the data of the Colorado Business
Bank of Denver.".
b. Create a new item "d)" as follows: [ ***
---
]
c. Create a new item "e)" as follows: "JHA will use its best efforts
to provide Licensee with a live conversion date as of the end of
processing on June 11, 1998.".
3. The "COMPUTER SOFTWARE MAINTENANCE AGREEMENT" is changed and modified as
follows:
A. In Section "1. Maintenance and Support.":
------------------------
a. In item "(a)" add: "However, JHA will use due diligence to see
that its Software is kept in compliance with Federal and State
banking laws.".
b. To item "(b)" add: "Updates and enhancements to the base Software
which has been licensed by Licensee shall be performed at no
additional charge except for those amounts specified in "3.
Maintenance Fees.".
-----------------
c. To item "(c)" add: "JHA maintains an 800 toll free number for
customer support which is staffed twenty four (24) hours a day,
seven (7) days a week.".
d. To item "(d)" add: "Such corrections shall be made in a timely
manner and the speed of such corrections shall he directly
correlated to the severity of the presenting problem."
B. In Section "2. Exceptions to Maintenance & Support.":
------------------------------------
a. To item "(f)" add: "Except in the event that Licensee is
instructed by JHA technical support staff to use the Software or
modules thereto which were provided by JHA in an undocumented
manner.".
<PAGE>
Contract Modification
Denver, CO
Page 4
b. Add a new item "(h)" as follows: "Nothing in this section shall
infringe upon the IBM warranty on Licensee's equipment.".
C. In Section "3. Maintenance Fees.":
-----------------
a. To item "(b)" add: "In the event that this Agreement is
terminated by JHA or by reason of any default other than the sale
of Licensee, JHA will refund the unused portion of the annual
advance fee for Maintenance.".
b. To item "(e)" add: "So long as Licensee promptly pays the
undisputed portion of any billing, said interest will be paid
only on the portion of the disputed billing ultimately resolved
in JHA's favor."
D. In Section "4. Term and Automatic Renewal.":
---------------------------
a. "JHA shall not increase the annual advance fee prior to June 30,
2000 unless Licensee acquires additional modules from JHA or
acquires the assets of another institution. If Licensee acquires
such assets, the maintenance fee will only be adjusted to reflect
the acquired assets."
4. The "AGREEMENT FOR PURCHASE OF MACHINES FROM JACK HENRY & ASSOCIATES, INC."
is changed and modified as follows:
A. Create a new Section titled "Miscellaneous":
. Once Customer has paid JHA in full for the purchase of the
equipment, JHA will transfer the warranty and documentation of
ownership on the equipment to Customer. JHA shall also convey the
Warranty of Good Title to Customer.
. Equipment is insured against loss up until the point of delivery
by manufacturer.
. In the Section titled "General":
. In the third subparagraph add: "In the next transaction between
JHA and Customer any changes to this Agreement will be required
to be signed by both Customer and JHA.".
<PAGE>
Contract Modification
Denver, CO
Page 5
In witness whereof, the parties have caused this CONTRACT MODIFICATION to be
executed by their duly authorized representatives.
JACK HENRY & ASSOCIATES, INC. COLORADO BUSINESS BANK, N.A.
663 Highway 60, P. O. Box 807 821 17/th/ Street
Monett, MO 65708 Denver, CO 80202
(JHA) (LICENSEE)
BY: /s/ Michael R. Wallace BY: /s/ Richard J. Dalton
------------------------------- -----------------------------------
Michael R. Wallace Richard J. Dalton
- ----------------------------------- ---------------------------------------
Type/Print Name Type/Print Name
TITLE: President/COO TITLE: SVP/CFO
----------------------------- ---------------------------------
<PAGE>
Exhibit 10.7
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
LOGO jack henry
& ASSOCIATES, INC.
LICENSE AGREEMENT # 1020-0320-6-0001
COMPUTER SOFTWARE MAINTENANCE AGREEMENT
---------------------------------------
WHEREAS, Licensee has acquired a non-transferable license to use the JHA
Silverlake System(R) Software to process on an IBM AS/400 computer and;
WHEREAS, Licensee needs continuing maintenance and support for said
Software;
NOW THEREFORE, on this 19th day of November, 1997, JHA and Licensee
mutually contract and agree as follows:
COLORADO BUSINESS BANK, N.A. (LICENSEE)
Address: 821 17th Street, P.O. Box 8779
Denver, CO 80202
Phone: 303-312-3458
Central Processing
Unit Location: SAME
JACK HENRY & ASSOCIATES, INC. (JHA)
Address: P. O. Box 807, Monett, MO 65708
Phone: 417-235-6652
1
<PAGE>
1. Maintenance and Support.
------------------------
Licensee at its expense, will provide JHA with remote dial up communication
access for support, with Licensee initiating the call. During the term of
this Agreement, JHA will provide Licensee the following maintenance and
support for said Software:
(a) Modified or new software programs required by a change in Federal or
State banking laws, within a reasonable time after Licensee gives JHA
written notice of such changes.
(b) Updates and enhancements of existing Software programs on the same
terms on which they are offered by JHA to all licensed users of same.
(c) Technical support, via telephone, for questions or problems with the
use of said Software.
(d) Correct any RPG 400 or Control Language Program procedure defects
which prevent normal use of said Software, upon prompt written notice
to JHA by Licensee and reasonable access to Licensee's CPU.
(e) JHA will keep a copy of Licensee's program library, including all
updates made by JHA, and authorized program changes made by Licensee
(which Licensee will promptly furnish JHA). If Licensee's programs
library is destroyed, JHA will furnish Licensee a copy of Licensee's
program library then in JHA's possession.
2. Exceptions to Maintenance & Support.
------------------------------------
JHA will not furnish Licensee maintenance or support for any Software
---
problems caused or contributed to by the following:
(a) program was not originally provided by JHA, or
(b) an unauthorized alteration or revision to the JHA Silverlake System
Software, or
(c) program problems that were previously corrected by JHA, delivered to
Licensee, but not installed by Licensee, or
(d) any problems with data on tape, disk or diskettes which have been
caused by defects in IBM (or other hardware manufacturers)
programming, or
2
<PAGE>
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[ *** ]", have been
---
separately filed with the Securities and Exchange Commission.
(e) failure of Licensee to load IBM (or other hardware manufacturers)
operational/system software new Releases and/or Program Temporary
Fixes (PTFs), or
(f) program problems which are the result of improper operator handling or
use.
(g) JHA will not provide maintenance or support for Static Gap Reporting
Software, Financial Workstation, or Management Information and
Planning System Software, which Licensee can obtain by separate
contract direct with FinSer Corporation.
3. Maintenance Fees.
-----------------
(a) The Effective Date is the final conversion date when the software
applications are successfully converted, balanced and updated in
accordance with all acceptance test criteria contained in the JHA
Silverlake System Conversion and Verification Document.
(b) Licensee will pay JHA an annual advance fee of [ *** ]. The
---
advance fee for the original term will be pro-rated from the above
Effective Date to next July 1st.
(c) Each annual advance payment in "b" above will be increased [ *** ] if
---
Licensee has not installed an uninterruptible power supply.
(d) Licensee will also reimburse JHA for sales/use taxes (if any), and all
actual out-of-pocket expenses, including but not limited to telephone,
transportation, meals, lodging, postage and shipping.
(e) Licensee will pay JHA [ *** ] interest per month,
---
[ *** ], plus all attorney fees and expenses actually
---
incurred by JHA in collecting any delinquent or past due payments of
any kind due JHA by Licensee.
(f) JHA may refuse to furnish maintenance or support to Licensee if any
fees or payments of any kind due JHA or any of its subsidiaries from
Licensee are delinquent and Licensee fails or refuses to cure any such
delinquency within thirty (30) days after written notice from JHA, or
if Licensee is in breach or default on any written Agreement with JHA
or any of its subsidiaries.
3
<PAGE>
(g) The annual advance fee will be increased pro-rata if and when Licensee
contracts for additional software programs, software customization or
processing of additional banks.
4. Term and Automatic Renewal.
---------------------------
The original term of this Agreement runs from the above Effective Date to
the next 1st day of July. This Agreement automatically renews for
successive terms of 12 months each, unless either JHA or Licensee gives
written non-renewal notice to the other party thirty (30) or more days
before the end of a term. JHA may review and change the maintenance fee
for any renewal term, but must notify Licensee sixty (60) or more days
before the end of a term. If no such change is made, Licensee will pay JHA
an annual advance fee on July 1 of each renewal term, which is the same as
the full year annual fee for the last expired term.
5. Financial Institutions Covered by this Agreement.
-------------------------------------------------
This Agreement covers only those financial institutions listed on Exhibit
'A' attached hereto. Additional maintenance fees for providing maintenance
and support services to financial institutions other than those listed on
Exhibit 'A' will be determined by an Addendum to this Agreement.
6. Validity.
---------
In the event any provision of this Agreement is legally determined to be
invalid, void or unenforceable, the remaining provisions shall continue in
full force and effect. This Agreement shall be governed by the laws of
Missouri.
7. Notice.
-------
Any notices under this Agreement shall be written and shall be deemed
delivered when actually received, or three days after they are deposited
with the United States Postal Service, postage prepaid, and addressed to
the other party at its above address, which may be changed by written
notice.
8. Limitation of Liability.
------------------------
JHA shall not be liable to Licensee or any other person, firm or company,
for failure to fulfill its obligations hereunder due to causes beyond its
control. Any liability of JHA for any loss, damage, or cost hereunder
shall be limited to actual direct damages incurred by Licensee, but in no
event shall the aggregate of liability exceed the annual maintenance fee
paid by Licensee for the current annual term, nor shall any amount of the
liability include any punitive, indirect or consequential damages incurred
by Licensee.
4
<PAGE>
9. Complete Agreement.
-------------------
This document supersedes all prior Maintenance Agreements and contains the
entire agreement between the parties with respect to the transactions
contained herein, and except as provided herein, it may be modified or
altered only by a written instrument signed by all parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
<TABLE>
<CAPTION>
<S> <C>
JACK HENRY & ASSOCIATES, INC. COLORADO BUSINESS BANK, N.A.
663 Highway 60 821 17/th/ Street
Monett, MO 65708 Denver, CO 80202
(JHA) (LICENSEE)
By: /s/ Michael R. Wallace By: /s/ Richard J. Dalton
---------------------- ---------------------
Michael R. Wallace Richard J. Dalton
------------------ -----------------
Print/Type Name Print/Type Name
Title: President/COO Title: SVP/CFO
------------- -------
</TABLE>
5
<PAGE>
EXHIBIT A
---------
FINANCIAL INSTITUTIONS COVERED BY AGREEMENT
-------------------------------------------
NAME ADDRESS
- ---- -------
COLORADO BUSINESS BANK, N.A. 821 17/th/ Street, Denver, CO 80202
6
<PAGE>
AUTHORIZED PERSONNEL
--------------------
The following employees/officers of Licensee are authorized by Licensee to
contact and work with JHA on support, maintenance, customization or
modifications of JHA Software. This list may, from time to time, be changed by
Licensee upon written notice to JHA.
<TABLE>
<CAPTION>
NAME POSITION
- ---- --------
<S> <C>
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
COLORADO BUSINESS BANK, N.A.
821 17/th/ Street
Denver, CO 80202
(LICENSEE)
Date: BY: /S/ Richard J. Dalton
------------------------------ ---------------------
TITLE: SVP/CFO
</TABLE>
7
<PAGE>
- -----------------------------------------------------------------------
BANK EMPLOYEE AUTHORIZED FOR
- -----------------------------------------------------------------------
CBB-DENVER BRENDA THAYER PROFIT, DL
CBB-DENVER CHRISTA STOUT ALL
CBB-DENVER CONNIE WRIGHT ALL
CBB-DENVER DAVID WARBACH BATCH PROCESSING
CBB-DENVER LYNE ANDRICH GL
CBB-DENVER IRENE LABIAK SECURITY, BKKP
CBB-DENVER JEAN MATSUDA AUDIT FUNCTIONS
CBB-DENVER CHRIS RODRIGUEZ* ALL
CBB-DENVER CINDY VANGULICK LOANS
CBB-DENVER PENNY DODD ALL
8
<PAGE>
Exhibit 10.8
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
1st day of March, 1995, by and between Equitable Bankshares of Colorado, Inc., a
Colorado corporation ("Company"), and Jonathan C. Lorenz ("Employee").
WITNESSETH:
WHEREAS, Company desires Employee to become employed by Company and
Employee desires to become employed by Company upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT. Company hereby agrees to employ Employee, and Employee
----------
hereby agrees to be employed by Company, as (a) an Executive Vice President of
Company, (b) Chairman of the Board of Directors of Company's wholly-owned
subsidiary Equitable Bank of Littleton ("Littleton Bank"), (c) such executive
capacity as Employee and Company may agree for. Company's majority-owned
subsidiary The Women's Bank ("Women's Bank"), and (d) such other or different
executive capacities as may be determined from time to time by the Boards of
Directors of Company and Littleton Bank.
2. RESPONSIBILITIES OF EMPLOYMENT. During the term of his employment,
------------------------------
Employee:
(a) shall diligently and faithfully serve Company and Littleton Bank
in such executive capacities as may be determined from time to time by the
Boards of Directors of Company and Littleton Bank, and he shall devote his
best efforts and entire business time, services and attention to the
advancement of Company's interests;
(b) shall not, without the prior written consent of the Board of
Directors of Company, engage in any other employment or business, directly
or indirectly, as a sole proprietor, a member of a partnership or limited
liability company, as a director, officer, employee or shareholder of a
corporation not affiliated with Company, or as a consultant or otherwise,
whether for compensation or otherwise, which could reasonably be expected
to or does interfere with Employee's performance of his duties hereunder or
which business is in competition in any way with the business then being
conducted by Company, Littleton Bank or Women's Bank; provided, however,
that the provisions of this subparagraph (b) shall not be deemed to
prohibit Employee's ownership of stock in any publicly owned corporation so
long as Employee's ownership, directly and indirectly, when aggregated with
the direct and indirect ownership of all members of Employee's family, does
not exceed
<PAGE>
one percent (1%) of the total outstanding stock of such publicly owned
corporation, measured by reference to either market value or voting power;
(c) shall diligently and faithfully carry out the policies, programs
and directions of the Boards of Directors of Company and Littleton Bank;
(d) shall fully cooperate with such other officers of Company and
Littleton Bank as may be elected or appointed by the Boards of Directors of
Company and Littleton Bank; and
(e) shall report to the Chief Executive Officer of Company.
3. COMPENSATION. Company will compensate Employee for his services
------------
during the term of this Agreement and his employment hereunder as follows:
(a) Basic Compensation. Company shall pay to Employee as basic
------------------
compensation the sum of One Hundred Twenty-Five Thousand Dollars
($125,000.00) per year, payable in equal monthly installments. Employee's
basic compensation may be increased from time to time in the sole
discretion of Company's Board of Directors.
(b) Benefits. Employee shall be entitled to use a Company automobile
--------
(model and year to be agreed upon from time to time by Employee and
Company's Chief Executive Officer) in the course of performing his duties
hereunder and shall be entitled to participate in any and all other
benefits from time to time afforded executive employees of Company,
including, without limitation, health, accident, hospitalization and life
insurance programs. Company shall additionally pay the monthly (not
initial or initiation) dues for Employee at a country, health or social
club to be agreed upon by Employee and Company's Chief Executive Officer.
(c) Reimbursement of Expenses. Employee shall be entitled to
-------------------------
reimbursement of ordinary and necessary out-of-pocket expenses reasonably
incurred by him on behalf of Company in the course of performing his duties
hereunder, subject to his furnishing appropriate documentation relative to
such expenses in form and substance satisfactory to Company.
(d) Vacations. Employee shall be entitled to four (4) weeks paid
---------
vacation each year, subject to Company's general vacation policy.
2
<PAGE>
(e) Discretionary Bonus Plan. Company is in the process of developing
------------------------
a discretionary bonus plan for key executives. Employee shall be entitled
to participate in such discretionary bonus plan.
(f) Stock Option. Company is in the process of developing an Incentive
------------
Stock Option Plan (the "Plan") for key employees. If the Plan is approved
by Company's Board of Directors, subject to further approval of the Plan by
Company's shareholders, Company will grant Employee the option to purchase
up to 8,100 shares of Company's common stock pursuant to the Plan. It is
contemplated that the option price per share will approximate $10.00 and
that the options will vest annually over a four (4) year vesting schedule.
If Company's Board of Directors or shareholders do not approve the Plan,
Company agrees to find an alternative, commercially equivalent means of
compensating Employee in lieu of granting options under the Plan.
(g) Allocations. As Company and Employee intend that Employee will be
-----------
a dual employee of Company and Littleton Bank, and that Employee will be
devoting substantial time and attention to the affairs of Littleton Bank
(and Women's Bank, if applicable), Company may allocate to Littleton Bank
(and Women's Bank, if applicable) any portion of Employee's basic and other
compensation that Company and Littleton Bank (and Women's Bank, if
applicable) deem to be a lawful and appropriate allocation, but no such
allocation will relieve Company of any of its obligations to Employee under
this Agreement.
4. TERM AND TERMINATION.
--------------------
(a) Term. The term of Employee's employment shall be a one (1) year
----
term beginning on the date hereof. Upon expiration of the stated term of
this Agreement, Employee's employment with Company shall revert to the
status of employment at will and shall thereafter be subject to termination
by either party and at any time subject to the rights and obligation of
employee as defined in 4(b).
(b) Termination. Upon termination of this Agreement by Company, by
-----------
Employee or upon the death or disability of Employee, the rights and
obligations of Employee shall be as follows:
(i) Termination by Employee. In the event Employee elects to
-----------------------
terminate his employment hereunder, this Agreement shall immediately
terminate without any further obligation on the part of Company,
except that Company shall pay to Employee such compensation pursuant
to
3
<PAGE>
Paragraph 3 hereof as may be accrued and unpaid on the date of
termination of employment.
(ii) Termination by Company for Cause. If Employee's employment
--------------------------------
hereunder is terminated by Company for cause, this Agreement shall
immediately terminate without any further obligation on the part of
Company, except that Company shall pay to Employee such compensation
pursuant to Paragraph 3 hereof as may be accrued and unpaid on the
date of such termination of employment. For purposes of this
Agreement, "cause" shall mean willful failure or neglect of Employee
to perform his duties as prescribed herein, the conviction of a
felony, theft, embezzlement or improper use of corporate funds by
Employee, self dealing detrimental to Company, any attempt to obtain
any personal profit from any transaction in which Company has an
interest or any breach of the terms of Paragraphs 6 or 7 of this
Agreement by Employee.
(iii) Termination by Company for Other Reasons. Company shall
----------------------------------------
have the right at any time to terminate Employee's employment
hereunder for any reason by giving him written notice (which notice
shall fix the date as of which Employee's employment is to terminate)
of its intention to do so. If Employee's employment hereunder is
terminated by Company other than for cause, Company shall be obligated
to pay Employee the severance benefits set forth in Paragraph 4(c)
hereof.
(iv) Constructive Discharge. If Employee is ever constructively
----------------------
discharged, he may terminate this Agreement and his employment
hereunder by delivering written notice to Company no later than thirty
(30) days before the effective date of termination. If Employee is
constructively discharged, Company shall be obligated to pay Employee
the severance benefits set forth in Paragraph 4(c) hereof. For
purposes of the foregoing, "constructive discharge" means the
occurrence of any one or more of the following: (i) Employee is
removed from all of the offices described in Paragraph 1 hereof; (ii)
Company fails to vest with or removes from Employee the duties,
responsibilities, authority or resources that he reasonably needs to
competently perform the duties of his office; (iii) Company decreases
Employee's basic compensation or arbitrarily and capriciously
decreases Employee's bonus; or (iv) Company transfers Employee to a
location outside the Denver metropolitan area; and in any of such
events, Company fails to cure any of the above within thirty (30) days
after Employee gives Company written notice of such breach.
4
<PAGE>
(v) Termination Upon Change of Control. Employee may terminate
----------------------------------
this Agreement and his employment hereunder for any reason within two
(2) years after a Change of Control occurs by delivering written
notice of termination to Company or its successor no less than thirty
(30) days before the effective date of termination. After two (2)
years following the Change of Control, Employee may terminate this
Agreement and his employment hereunder only in accordance with
Paragraph 4 (b) (i) hereof. If Employee so terminates, Company shall
be obligated to pay Employee two and ninety-nine hundredths (2.99)
times the severance benefits set forth in Paragraph 4 (c) hereof, with
the exception that the Paragraph 4(c) (ii) bonus component shall be
based upon a full year and not prorated to the date of Employee's
termination.
(A) A "Change of Control" will be deemed to have occurred
if: a) any person (as such term is defined in Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act") other than a person who is a shareholder of Company
as of the date of this Agreement acquires beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act)
of fifty percent (50%) or more of the combined voting power of
the then outstanding voting securities of Company; or b) the
individuals who were members of Company's Board of Directors as
of the date of this Agreement (the "Current Board Members") cease
for any reason to constitute a majority of the Board of Directors
of Company or its successor; however, if the election or the
nomination for election of any new director of Company or its
successor is approved by a vote of a majority of the individuals
who are Current Board Members, such new director shall, for the
purposes of this paragraph, be considered a Current Board Member;
or c) Company's stockholders approve (l) a merger or
consolidation of Company or Women's Bank and the stockholders of
Company immediately before such merger or consolidation do not,
as a result of such merger or consolidation, own, directly or
indirectly, more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of the entity
resulting from such merger or consolidation in substantially the
same proportion as their ownership of the combined voting power
of the outstanding securities of Company immediately before such
merger or consolidation; or (2) a complete liquidation or
dissolution or an agreement
5
<PAGE>
for the sale or other disposition of all or substantially all of
the assets of Company or Women's Bank.
(B) Notwithstanding and in lieu of Paragraph 4 (b) (v) (A),
a Change of Control will not be deemed to have occurred: a)
solely because fifty percent (50%) or more of the combined voting
power of the then outstanding voting securities of Company are
acquired by (1) a trustee or other fiduciary holding securities
under one or more employee benefit plans maintained for employees
of Company, Littleton Bank or Women's Bank, or (2) any person
pursuant to the will or trust of any existing stockholder of
Company, or who is a member of the immediate family of such
stockholder, or (3) any corporation which, immediately prior to
such acquisition, is owned directly or indirectly by the
stockholders in the same proportion as their ownership of stock
immediately prior to such acquisition; or b) if Employee agrees
in writing to waive a particular Change of Control for the
purposes of this Agreement.
(vi) Termination Upon Employee's Disability. In the event
--------------------------------------
Employee's employment is terminated by Company due to Employee's
disability, Company shall be obligated to pay Employee the severance
benefits set forth in Paragraph 4(c) hereof. For purposes of the
foregoing, "disability" shall mean Employee's inability due to illness
or other physical or mental disability to substantially perform his
duties as prescribed herein for a period of forty-five (45) days
within any consecutive six (6) month period, and any action to be
taken hereunder based on disability shall not be effective until the
expiration of such forty-five (45) day period:
(vii) Termination Upon Employee's Death. In the event that
---------------------------------
Employee dies while employed by Company, then Company shall be
obligated to pay Employee's estate the severance benefits set forth in
Paragraph 4(c) hereof.
(viii) Continuing Obligations of Employee. Notwithstanding
----------------------------------
anything to the contrary contained herein, termination of this
Agreement or Employee's employment hereunder, for whatsoever reason or
for no reason at all, by Employee or otherwise, shall not be deemed in
any way to affect Employee's obligations under Paragraphs 6 and 7 of
this Agreement, with respect to which he shall remain bound.
6
<PAGE>
(c) Severance Benefits. Provided Employee is in compliance with
------------------
Paragraph 4 (b) (viii) hereof, Company will pay or provide the following
severance benefits to Employee in lieu of any separation payments otherwise
provided upon termination of employment under any other severance pay or
similar plan or policy of Company:
(i) Twelve (12) consecutive monthly payments each equal to one-
twelfth (l/l2th) of Employee's annual basic compensation in effect
immediately prior to Employee's termination;
(ii) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of the higher of (A) Employee's discretionary bonus
for the previous calendar year, or (B) the average of Employee's
discretionary bonus for the previous three (3) calendar years (or such
fewer calendar years as Employee has been employed), in each case
prorated to the date of Employee's termination
(iii) For the twelve (12) month period following the date of
termination of Employee's employment, Company will maintain in full
force and effect for the continued benefit of Employee each employee
benefit plan in which Employee was a participant immediately prior to
the date of Employee's termination, unless an essentially equivalent
and no less favorable benefit is provided bet a subsequent employer at
no additional cost to Employees If the terms of any employee benefit
plan of Company do not permit continued participation by Employee,
then Company will arrange to provide to Employee (at Company's cost) a
benefit substantially similar to and no less favorable than the
benefit Employee was entitled to receive under such plan at the end of
the period Of coverage.(This provision specifically is not applicable
to Employee's automobile and club dues, which benefits end upon
Employee's date of termination of employment.)
(iv) For the twelve (12) month period following the date of
termination of Employee's employment, Company will treat Employee for
all purposes as an Employee under all of Company's retirement plans in
which Employee was a participant on the date of termination of
Employee's employment or under which Employee would become eligible
during such twelve (12) month period (hereinafter referred to
collectively as the "Plan"). Benefits due to Employee under the Plan
shall be computed as if Employee had continued to be an Employee of
Company for the twelve (12) month period following termination of
employment. If under the terms of the Plan such continued coverage is
not permitted, Company will pay to Employee or Employee's
7
<PAGE>
estate a supplemental benefit in an amount which, when added to the
benefits that Employee is entitled to receive under the Plan, shall
equal the amount that Employee would have received under the Plan had
Employee remained an employee of Company during such twelve (12) month
period.
(v) If any excise tax imposed under Internal Revenue Code Section
4999 or any successor provision, as amended after the date hereof, is
due and owing by Employee as a result of any amount paid or payable
pursuant to this Paragraph 4(c), Company shall indemnify and hold
Employee harmless against all such excise taxes and any interest,
penalties or costs with respect thereto.
(vi) Company will be obligated to make all payments that become
due to Employee under this Paragraph 4(c) whether or not he obtains
other employment following termination. The payments and other
benefits provided for in this Paragraph 4(c) are intended to
supplement any compensation or other benefits that have accrued or
vested with respect to Employee or his account as of the effective
date of termination.
(vii) Company may elect to defer any payments that may become due
to Employee under this Paragraph 4(c) if, at the time the payments
become due, Company or Women's Bank is not in compliance with any
regulatory-mandated minimum capital requirements or if making the
payments would cause Company's or Women's Bank's capital to fall below
such minimum capital requirements. In this event, Company will resume
making the payments as soon as it can do so without violating such
minimum capital requirements.
5. SALE OR REORGANIZATION OF COMPANY. This Agreement shall not restrict
---------------------------------
the sale, transfer, consolidation, liquidation, reorganization or disposition of
the assets of Company and to the extent that the business of Company is
conducted in another form or through another entity or entities, such entity or
entities shall be obligated to fulfill Company's obligations hereunder.
6. RESTRICTIVE COVENANT. It is mutually recognized and agreed that the
--------------------
services to be rendered pursuant to this Agreement by Employee are special,
unique and of extraordinary character. Therefore, as a condition to Company's
obligations hereunder Employee agrees that without Company's prior written
consents during the term of this Agreement and for a period ending on first
anniversary of the date of termination of his employment hereunder, regardless
of cause, he will not engage in any manner directly or indirectly, to solicit or
induce any employee or agent of Company,
8
<PAGE>
Littleton Bank or Women's Bank to terminate employment with Company, Littleton
Bank or Women's Bank, as the case may be, or solicit or induce any customer of
Company, Littleton Bank or Women's Bank to become a customer of any person,
firm, partnership, corporation, trust or other entity that owns, controls or is
a bank, savings and loan association, credit union or similar financial
institution. Furthermore, Employee will at no time during or subsequent to the
term of his employment by Company make any statements or take any actions which
could reasonably be expected to damage the reputation or business of Company. It
is further recognized and agreed that irreparable injury will result to Company,
its businesses and property in the event of a breach of this covenant by
Employee, that such injury would be difficult if not impossible to ascertain,
and therefore, any remedy at law for any breach by Employee of this covenant
will be inadequate and Company shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damage to Company by
reason of any such breach. In addition, in the event of a breach of this
covenant by Employee, Company shall also be entitled to recover reasonable costs
and attorneys' fees incurred in connection with the enforcement of its rights
hereunder. Whenever used herein, Company shall be deemed to include any
successors or any other person or entity which may hereafter acquire the
business of Company, Littleton Bank or Women's Bank. The foregoing
notwithstanding, should the assets of Company be disposed of in such a manner
that no purchaser thereof has acquired a going business, then Employee shall not
be bound by the covenants expressed in this paragraph.
7. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee hereby covenants
------------------------------------------
and agrees that he will not, except as may be required in connection with his
employment under this Agreement, directly or indirectly, use or disclose to any
other person, firm or corporation, whether during or subsequent to the term of
his employment by Company, irrespective of the time, manner or cause of the
termination of his employment, any information of a proprietary nature belonging
to Company, or which could be reasonably expected to have an adverse effect on
Company, its businesses, property or financial condition, including but not
limited to records, data, documents, processes, specifications, methods of
operation, techniques and know-how, plans, policies, customer lists, the names
and addresses of suppliers or representatives, investigations or other matters
of any kind or description relating to the products, services, suppliers,
customers, sales or businesses of Company. All records, files, documents,
equipment and the like relating to Company's businesses which Employee shall
prepare, use or observe shall be and remain the sole property of Company, and
upon termination of this Agreement or his employment hereunder for any reason,
Employee shall return to the possession of Company any items of that nature and
any copies thereof which he may have in his possession.
9
<PAGE>
8. INDEMNITY.
---------
(a) Indemnification. Company will indemnify Employee (and, upon his
---------------
death, his heirs, executors and administrators) to the fullest extent
permitted by law against all expenses, including reasonable attorneys'
fees, court and investigative costs, judgments, fines and amounts paid in
settlement (collectively, "Expenses") reasonably incurred by him in
connection with or arising out of any pending, threatened or completed
action, suit or proceeding in which he may become involved by reason of his
having been an officer or director of Company or Littleton Bank (or Women's
Bank, if applicable). The indemnification rights provided for herein are
not exclusive and will supplement any rights to indemnification that
Employee may have under any applicable bylaw or charter provision of
Company or Littleton Bank (or Women's Bank, if applicable), or any
resolution of Company or Littleton Bank (or Women's Bank, if applicable),
or any applicable statute.
(b) Advancement of Expenses. In the event that Employee becomes a
-----------------------
party, or is threatened to be made a party, to any pending, threatened or
completed action, suit or proceeding for which Company or Littleton Bank
(or Women's Bank, if applicable) is permitted or required to indemnify him
under this Agreement, any applicable bylaw or charter provision of Company
or Littleton Bank (or Women's Bank, if applicable), any resolution of
Company or Littleton Bank (or Women's Bank, if applicable), or any
applicable statute, Company will, to the fullest extent permitted by law,
advance all Expenses incurred by Employee in connection with the
investigation, defense, settlement or appeal of any threatened, pending or
completed action, suit or proceeding, subject to receipt by Company of a
written undertaking from Employee to reimburse Company for all Expenses
actually paid by Company to or on behalf of Employee in the event it shall
be ultimately determined that Company or Littleton Bank (or Women's Bank,
if applicable) cannot lawfully indemnify Employee for such Expenses, and to
assign to Company all rights of Employee to indemnification under any
policy of directors' and officers' liability insurance to the extent of the
amount of Expenses actually paid by Company to or on behalf of Employee.
(c) Litigation. Unless precluded by an actual or potential conflict of
----------
interest, Company will have the right to recommend counsel to Employee to
represent him in connection with any claim covered by this Section 8.
Further, Employee's choice of counsel, his decision to contest or settle
any such claim, and the terms and amount of the settlement of any such
claim will be subject to Company's prior reasonable approval
in writing.
9. ARBITRATION. Any disputes arising out of this Agreement or connected
-----------
with Employee's employment shall be submitted by
10
<PAGE>
Employee and Company to arbitration by the American Arbitration Association or
its successor, and the determination of the American Arbitration Association or
its successor shall be final and absolute. The arbitrator shall be governed by
the duly promulgated rules and regulations of the American Arbitration
Association or its successor, and the pertinent provisions of the laws of the
State of Colorado relating to arbitration. The decision of the arbitrator may be
entered as a judgment in any court in the State of Colorado or elsewhere. The
prevailing party shall be entitled to receive reasonable attorneys' fees
incurred in connection with such arbitration in addition to such other costs and
expenses as the arbitrators may award.
10. INTERPRETATION. This Agreement shall be construed in accordance with
--------------
the internal laws of the State of Colorado. The titles of the paragraphs have
been inserted as a matter of convenience of reference only and shall not be
construed to control or affect the meaning or construction of this Agreement.
11. SEVERABILITY. In the event that any portion of this Agreement is found
------------
to be in violation of or conflict with any federal or state law, the parties
agree that said portion shall be modified only to the extent necessary to enable
it to comply with such law.
12. ASSIGNMENT. This Agreement shall not be assignable by Employee, but
----------
shall be binding upon and inure to the benefit of the successors and assigns of
Company.
13. NOTICES. All notices or other communications in connection with this
-------
Agreement shall be in writing and shall be deemed to have been duly given when
delivered, sent by professional courier or mailed first class, postage prepaid
and addressed as follows:
(i) If to Company, addressed to:
Equitable Bankshares of Colorado, Inc.
821 - 17th Street
Denver, Colorado 80202
Attn: Steven Bangert
with a copy to:
Holleb & Coff
Suite 4100
55 E. Monroe
Chicago, Illinois 60603
Attn: Mark S. Kipnis
If to Employee, addressed to:
Jonathan C. Lorenz
11
<PAGE>
3029 S. Detroit Way
Denver, Colorado 80210
with a copy to:
--------------------------------
--------------------------------
--------------------------------
--------------------------------
or such other address or addressed to the attention of such other person or
persons as either of the parties may notify the other in accordance with the
provisions of this paragraph.
14. ENTIRE AGREEMENT. This Agreement is the entire agreement and
----------------
understanding of the parties hereto with respect to the subject matter hereof
and supersedes any and all prior and contemporaneous negotiations,
understandings and agreements with regard to the subject matter hereof, whether
oral or written. No representation, inducement, agreement, promise or
understanding altering, modifying, taking from or adding to the terms and
conditions hereof shall have any force or effect unless the same is in writing
and validly executed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EQUITABLE BANKSHARES OF
COLORADO, INC.
/S/ Jonathan C. Lorenz By: /S/ Steven Bangert
- ---------------------------------- ------------------------
JONATHAN C. LORENZ Steven Bangert
Chief Executive Officer
12
<PAGE>
Exhibit 10.9
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
8th day of May, 1995, by and between Equitable Bankshares of Colorado, Inc., a
Colorado corporation ("Company"), and Virginia K. Berkeley ("Employee").
WITNESSETH:
WHEREAS, Company desires Employee to become employed by Company and
Employee desires to become employed by Company upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT. Company hereby agrees to employ Employee, and Employee
----------
hereby agrees to be employed by Company, as (a) President, Chief Executive
Officer and a director of Company's majority-owned subsidiary The Women's Bank
("Women's Bank"), and (b) such other different executive capacities with the
Company, Women's Bank or the Company's wholly-owned subsidiary Equitable Bank of
Littleton ("Littleton Bank") as may be determined from time to time by the
Boards of Directors of Company, Women's Bank and Littleton Bank.
2. RESPONSIBILITIES OF EMPLOYMENT. During the term of her employment,
------------------------------
Employee:
(a) shall diligently and faithfully serve Company, Women's Bank and
Littleton Bank in such executive capacities as may be determined from time
to time by the Boards of Directors of Company, Women's Bank and Littleton
Bank, and she shall devote her best efforts and entire business time,
services and attention to the advancement of Company's, Women's Bank's and
Littleton Bank's interests;
(b) shall not, without the prior written consent of the Board of
Directors of Company, engage in any other employment or business, directly
or indirectly, as a sole proprietor, a member of a partnership or limited
liability company, as a director, officer, employee or shareholder of a
corporation not affiliated with Company, or as a consultant or otherwise
whether for compensation or otherwise, which could reasonably be expected
to or does interfere with Employee's performance of her duties hereunder or
which business is in competition in any way with the business then being
conducted by Company, Littleton Bank or Women's Bank; provided, however,
that the provisions of this subparagraph (b) shall not be deemed to
prohibit Employee's ownership of stock in any publicly owned corporation so
long as Employee's ownership, directly and indirectly, when aggregated with
the direct and indirect Ownership of all members of Employee's family, does
not exceed one percent (1%) of the total outstanding stock of such
<PAGE>
publicly owned corporation, measured by reference to either market value or
voting power;
(c) shall diligently and faithfully carry out the policies, programs
and directions of the Boards of Directors of Company, Women's Bank and
Littleton Bank;
(d) shall fully cooperate with such other officers of Company, Women's
Bank and Littleton Bank as may be elected or appointed by the Boards of
Directors of Company, Women's Bank and Littleton Bank; and
(e) shall report to the Chief Executive Officer of Company.
3. COMPENSATION. Company will compensate Employee for her services during
------------
the term of this Agreement and her employment hereunder as follows:
(a) Basic Compensation. Company shall pay to Employee a minimum basic
------------------
compensation the sum of Eight-Five Thousand Dollars ($85,000.00) per year,
payable in equal monthly installments. Employee's basic compensation may
be increased from time to time in the sole discretion of Company's Board Of
Directors.
(b) Benefits. Employee shall be entitled to use a Company automobile
--------
(model and year to be agreed upon from time to time by Employee and
Company's Chief Executive Officer) with car phone and parking privileges,
in the course of performing her duties hereunder and shall be entitled to
participate in any and all other benefits from time to time afforded
executive employees of Company, including, without limitation, health,
accident, hospitalization and life insurance programs. Company shall
additionally pay the monthly (not initial or initiation) dues for Employee
at community or business related clubs or activities to be agreed upon by
Employee and Company's Chief Executive Officer.
(c) Reimbursement of Expenses. Employee shall be entitled to
-------------------------
reimbursement of ordinary and necessary out-of-pocket expenses reasonably
incurred by her on behalf of Company in the course of performing her duties
hereunder, subject to her furnishing appropriate documentation relative to
such expenses in form and substance satisfactory to Company.
(d) Vacations. Employee shall be entitled to four (4) weeks paid
---------
vacation each year, subject to Company's general vacation policy.
2
<PAGE>
(e) Discretionary Bonus Plan. Company is in the process of developing
------------------------
a discretionary bonus plan for key executives. Employee shall be entitled
to participate in such discretionary bonus plan.
(f) Stock Option. Company is in the process of developing an Incentive
------------
Stock Option Plan (the "Plan") for key employees. Subject to approval of
the Plan by Company's shareholders, Company will grant Employee the option
to purchase up to 4,000 shares of Company's common stock pursuant to the
Plan. It is contemplated that the option price per share will approximate
$10.00 and that the options will vest annually over a four (4) year vesting
schedule. If Company's Board of Directors or shareholders do not approve
the Plan, Company agrees to find an alternative, commercially equivalent
means of compensating Employee in lieu of granting options under the Plan.
(g) Allocations. As Company and Employee intend that Employee may be a
------------
dual employee of Company, Women's Bank and Littleton Bank, Company may
allocate to Littleton Bank and Women's Bank any portion of Employee's basic
and other compensation that Company, Littleton Bank and Women's Bank deem
to be a lawful and appropriate allocation, but no such allocation will
relieve Company of any of its obligations to Employee under this Agreement.
4. TERM AND TERMINATION.
--------------------
(a) Term. The term of Employee's employment shall be a (1) year term
----
beginning on the date hereof. Upon expiration of the stated term of this
Agreement, Employee's employment with Company shall revert to the status of
employment at will and shall thereafter be subject to termination by either
party and at any time regardless of cause.
(b) Termination. Upon termination of this Agreement by Company, by
-----------
Employee or upon the death or disability of Employee, the rights and
obligations of Employee shall be as follows:
(i) Termination by Employee. In the event Employee elects to
-----------------------
terminate her employment hereunder, this Agreement shall immediately
terminate without any further obligation on the part of Company,
except that Company shall pay to Employee such compensation pursuant
to Paragraph 3 hereof as may be accrued and unpaid on the date of
termination of employment.
(ii) Termination by Company for Cause. If Employee's employment
--------------------------------
hereunder is terminated by Company
3
<PAGE>
for cause, this Agreement shall immediately terminate without any
further obligation on the part of Company, except that Company shall
pay to Employee such compensation pursuant to Paragraph 3 hereof as
may be accrued and unpaid on the date of such termination of
employment. For purposes of this Agreement, "cause" shall mean
willful failure or neglect of Employee to perform her duties as
prescribed herein, the conviction of a felony, theft, embezzlement or
improper use of corporate funds by Employee, self dealing detrimental
to Company, any attempt to obtain any personal profit from any
transaction in which Company has an interest or any breach of the
terms of Paragraphs 6 or 7 of this Agreement by Employee.
(iii) Termination by Company for Other Reasons. Company shall
----------------------------------------
have the right at any time to terminate Employee's employment
hereunder for any reason by giving her written notice (which notice
shall fix the date as of which Employee's employment is to terminate)
of its intention to do so. If Employee's employment hereunder is
terminated by Company other than for cause, Company shall be obligated
to pay Employee the severance benefits set forth in Paragraph 4(c)
hereof.
(iv) Constructive Discharge. If Employee is ever constructively
----------------------
discharged, she may terminate this Agreement and her employment
hereunder by delivering written notice to Company no later than thirty
(30) days before the effective date of termination. If Employee is
constructively discharged, Company shall be obligated to pay Employee
the severance benefits set forth in Paragraph 4(c) hereof. For
purposes of the foregoing, "constructive discharge" means the
occurrence of any one or more of the following: (i) Employee is
removed from all of the offices described in Paragraph 1 hereof; (ii)
Company fails to vest with or removes from Employee the duties,
responsibilities, authority or resources that she reasonably needs to
competently perform the duties of her office; (iii) Company decreases
Employee's basic compensation or arbitrarily and capriciously
decreases Employee's bonus; or (iv) Company transfers Employee to a
location outside the Denver metropolitan area; and in any of such
events, Company fails to cure any of the above within thirty (30) days
after Employee gives Company written notice of such breach.
(v) Termination Upon Change of Control. Employee may terminate
----------------------------------
this Agreement and her employment hereunder for any reason
within two (2) years after a Change of Control occurs by
delivering written notice of termination to Company or its
successor no less than
4
<PAGE>
thirty (30) days before the effective date of termination (any such
notice by Employee which can be construed as a notice under either
Paragraph 4(b)(iv) or this Paragraph 4(b)(v) shall be deemed a notice
under this Paragraph 4(b)(v)). After two (2) years following the
Change of Control, Employee may terminate this Agreement and her
employment hereunder only in accordance with Paragraph 4(b)(i) hereof.
If Employee so terminates, Company shall be obligated to pay Employee
two and one-half (2.50) times the severance benefits set forth in
Paragraph 4 (c) hereof, with the exception that the Paragraph 4(c)(ii)
bonus component shall be based upon a full year and not prorated to
the date of Employee's termination.
(A) A "Change of Control" will be deemed to have occurred
if: a) any person (as such term is defined in Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act") other than a person who is a shareholder of Company
as of the date of this Agreement acquires beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act)
of fifty percent (50%) or more of the combined voting power of
the then outstanding voting securities of Company; or b) the
individuals who were members of Company's Board of Directors as
of the date of this Agreement (the "Current Board Members") cease
for any reason to constitute a majority of the Board of Directors
of Company or its successor; however, if the election or the
nomination for election of any new director of Company or its
successor is approved by a vote of a majority of the individuals
who are Current Board Members, such new director shall, for the
purposes of this paragraph, be considered a Current Board Member;
or c) Company's stockholders approve (1) a merger or
consolidation of Company or Women's Bank and the stockholders of
Company immediately before such merger or consolidation do not,
as a result of such merger or consolidation, own, directly or
indirectly, more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of the entity
resulting from such merger or consolidation in substantially the
same proportion as their ownership of the combined voting power
of the outstanding securities of Company immediately before such
merger or consolidation; or (2) a complete liquidation or
dissolution or an agreement for the sale or other disposition of
all or substantially all of the assets or stock of Company or
Women's Bank.
5
<PAGE>
(B) Notwithstanding and in lieu of Paragraph 4(b)(v)(A), a
Change of Control will not be deemed to have occurred: a) solely
because fifty percent (50%) or more of the combined voting power
of the then outstanding voting securities of Company are acquired
by (1) a trustee or other fiduciary holding securities under one
or more employee benefit plans maintained for employees of
Company; Littleton Bank or Women's Bank, or (2) any person
pursuant to the will or trust of any existing stockholder of
Company, or who is a member of the immediate family of such
stockholder, or (3) any corporation which, immediately prior to
such acquisition, is owned directly or indirectly by the
stockholders in the same proportion as their ownership of stock
immediately prior to such acquisition; or b) if Employee agrees
in writing to waive a particular Change of Control for the
purposes of this Agreement.
(vi) Termination Upon Employee's Disability. In the event
--------------------------------------
Employee's employment is terminated by Company due to Employee's
disability, Company shall be obligated to pay Employee the severance
benefits set forth in Paragraph 4(c) hereof. For purposes of the
foregoing, "disability" shall mean Employee's inability due to illness
or other physical or mental disability to substantially perform her
duties as prescribed herein for a period of sixty (60) days within any
consecutive six (6) month period, and any action to be taken hereunder
based on disability shall not be effective until the expiration of
such sixty (60) day period.
(vii) Termination Upon Employee's Death. In the event that
---------------------------------
Employee dies while employed by Company, then Company shall be
obligated to pay Employee's estate the severance benefits set forth in
Paragraph 4(c) hereof.
(viii) Continuing Obligations of Employee. Notwithstanding
----------------------------------
anything to the contrary contained herein, termination of this
Agreement or Employee's employment hereunder, for whatsoever reason or
for no reason at all, by Employee or otherwise, shall not be deemed in
any way to affect Employee's obligations under Paragraphs 6 and 7 of
this Agreement, with respect to which she shall remain bound.
(c) Severance Benefits. Provided Employee is in compliance with
------------------
Paragraph 4(b)(viii) hereof, Company will pay or provide the following
severance benefits to Employee in lieu of any separation payments otherwise
provided upon
6
<PAGE>
termination of employment under any other severance pay or similar plan or
policy of Company:
(i) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of Employee's annual basic compensation in effect
immediately prior to Employee's termination;
(ii) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of the higher of (A) Employee's discretionary bonus
for the previous calendar year, or (B) the average of Employee's
discretionary bonus for the previous three (3) calendar years (or such
fewer calendar years as Employee has been employed), in each case
prorated to the date of Employee's termination;
(iii) For the twelve (12) month period following the date of
termination of Employee's employment, Company will maintain in full
force and effect for the continued benefit of Employee each employee
benefit plan in which Employee was a participant immediately prior to
the date of Employee's termination, unless an essentially equivalent
and no less favorable benefit is provided by a subsequent employer at
no additional cost to Employee. If the terms of any employee benefit
plan of Company do not permit continued participation by Employee,
then Company will arrange to provide to Employee (at Company's cost) a
benefit substantially similar to and no less favorable than the
benefit Employee was entitled to receive under such plan at the end of
the period of coverage. (This provision specifically is not
applicative to Employee's automobile and club dues, which benefits end
upon Employee's date of termination of employment.)
(iv) For the twelve (12) month period following the date of
termination of Employee's employment, Company will treat Employee for
all purposes as an Employee under all of Company's retirement plans in
which Employee was a participant on the date of termination of
Employee's employment or under which Employee would become eligible
during such twelve (12) month period (hereinafter referred to
collectively as the "Plan"). Benefits due to Employee under the Plan
shall be computed as if Employee had continued to be an Employee of
Company for the twelve (12) month period following termination of
employment. If under the terms of the Plan such continued coverage is
not permitted, Company will pay to Employee or Employee's estate a
supplemental benefit in an amount which, when added to the benefits
that Employee is entitled to receive under the Plan, shall equal the
amount that Employee would have received under the Plan had Employee
7
<PAGE>
remained an employee of Company during such twelve (12) month period.
(v) If any excise tax imposed under Internal Revenue Code Section
4999 or any successor provision, as amended after the date hereof, is
due and owing by Employee as a result of any amount paid or payable
pursuant to this Paragraph 4(c), Company shall indemnify and hold
Employee harmless against all such excise taxes and any interest,
penalties or costs with respect thereto.
(vi) Company will be obligated to make all payments that become
due to Employee under this Paragraph 4(c) whether or not she obtains
other employment following termination. The payments and other
benefits provided for in this Paragraph 4(c) are intended to
supplement any compensation or other benefits that have accrued or
vested with respect to Employee or her account as of the effective
date of termination.
(vii) Company may elect to defer any payments that may become
due to Employee under this Paragraph 4(c) if, at the time the payments
become due, Company or Women's Bank is not in compliance with any
regulatory-mandated minimum capital requirements or if making the
payments would cause Company's or Women's Bank's capital to fall below
such minimum capital requirements. In this event, Company will resume
making the payments as soon as it can do so without violating such
minimum capital requirements.
5. SALE OR REORGANIZATION OF COMPANY. This Agreement shall not restrict
---------------------------------
the sale, transfer, consolidation, liquidation reorganization or disposition of
the assets of Company and to the extent that the business of Company is
conducted in another form or through another entity or entities, such entity or
entities shall be obligated to fulfill Company's obligations hereunder.
6. RESTRICTIVE COVENANT. It is mutually recognized and agreed that the
--------------------
services to be rendered pursuant to this Agreement by Employee are special,
unique and of extraordinary character. Therefore, as a condition to Company's
obligations hereunder, Employee agrees that without Company's prior written
consent during the term of this Agreement and for a period ending on the first
anniversary of the date of termination of her employment hereunder, regardless
of cause, she will not engage in any manner, directly or indirectly, to solicit
or induce any employee or agent of Company, Littleton Bank or Women's Bank to
terminate employment with Company, Littleton Bank or Women's Bank, as the case
may be, or solicit or induce any customer of Company, Littleton Bank or Women's
Bank to become a customer of any person, firm, partnership,
8
<PAGE>
corporation, trust or other entity that owns, controls or is a bank, savings and
loan association, credit union or similar financial institution. Furthermore,
Employee will at no time during or subsequent to the term of her employment by
Company make any statements or take any actions which could reasonably be
expected to damage the reputation or business of Company. It is further
recognized and agreed that irreparable injury will result to Company, its
businesses and property in the event of a breach of this covenant by Employee,
that such injury would be difficult if not impossible to ascertain, and
therefore, any remedy at law for any breach by Employee of this covenant will be
inadequate and Company shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damage to Company by reason of
any such breach. In addition, in the event of a breach of this covenant by
Employee, Company shall also be entitled to recover reasonable costs and
attorneys' fees incurred in connection with the enforcement of its rights
hereunder. Whenever used herein, Company shall be deemed to include any
successors or any other person or entity which may hereafter acquire the
business of Company, Littleton Bank or Women's Bank. The foregoing
notwithstanding, should the assets of Company be disposed of in such a manner
that no purchaser thereof has acquired a going business, then Employee shall not
be bound by the covenants expressed in this paragraph.
7. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee hereby covenants
------------------------------------------
and agrees that she will not, except as may be required in connection with her
employment under this Agreement or compelled by any judicial or administrative
order, directly or indirectly, use or disclose to any other person, firm or
corporation, whether during or subsequent to the term of her employment by
Company, irrespective of the time, manner or cause of the termination of her
employment, any information of a proprietary nature belonging to Company, or
which could be reasonably expected to have an adverse effect on Company, its
businesses, property or financial condition, including but not limited to
records, data, documents, processes, specifications, methods of operation,
techniques and know-how, plans, policies, customer lists, the names and
addresses of suppliers or representatives, investigations or other matters of
any kind or description relating to the products, services, suppliers,
customers, sales or businesses of Company. All records, files, documents,
equipment and the like relating to Company's businesses which Employee shall
prepare, use or observe shall be and remain the sole property of Company, and
upon termination of this Agreement or her employment hereunder for any reason,
Employee shall return to the possession of Company any items of that nature and
any copies thereof which she may have in her possession.
9
<PAGE>
8. INDEMNITY.
---------
(a) Indemnification. Company will indemnify Employee (and, upon her
---------------
death, her heirs, executors and administrators) to the fullest extent
permitted by law against all expenses, including reasonable attorneys'
fees, court and investigative costs, judgments, fines and amounts paid in
settlement (collectively, "Expenses") reasonably incurred by her in
connection with or arising out of any pending, threatened or completed
action, suit or proceeding in which she may become involved by reason of
her having been an officer or director of Company, Littleton Bank or
Women's Bank. The indemnification rights provided for herein are not
exclusive and will supplement any rights to indemnification that Employee
may have under any applicable bylaw or charter provision of Company,
Littleton Bank or Women's Bank, or any resolution of Company, Littleton
Bank or Women's Bank, or any applicable statute.
(b Advancement of Expenses. In the event that Employee becomes a
-----------------------
party, or is threatened to be made a party, to any pending, threatened or
completed action, suit or proceeding for which Company, Littleton Bank or
Women's Bank is permitted Or required to indemnify her under this
Agreement, any applicable bylaw or charter provision of Company, Littleton
Bank or Women's Bank, any resolution of Company, Littleton Bank or Women's
Bank, or any applicable statute, Company will, to the fullest extent
permitted by law, advance all Expenses incurred by Employee in connection
with the investigation, defense, settlement or appeal of any threatened,
pending or completed action, suit or proceeding, subject to receipt by
Company of a written undertaking from Employee to reimburse Company for all
Expenses actually paid by Company to or on behalf of Employee in the event
it shall be ultimately determined that Company, Littleton Bank or Women's
Bank cannot lawfully indemnify Employee for such Expenses, and to assign to
Company all rights of Employee to indemnification under any policy of
directors' and officers' liability insurance to the extent of the amount of
Expenses actually paid by Company to or on behalf of Employee.
(c) Litigation. Unless precluded by an actual or potential conflict of
----------
interest, Company will have the right to recommend counsel to Employee to
represent her in connection with any claim covered by this Section 8.
Further, Employee's choice of counsel, her decision to contest or settle
any such claim, and the terms and amount of the settlement of any such
claim will be subject to Company's prior reasonable approval in writing.
9. ARBITRATION. Any disputes arising out of this Agreement
-----------
or connected with Employee's employment shall be submitted by
10
<PAGE>
Employee and Company to arbitration by the American Arbitration Association or
its successor, and the determination of the American Arbitration Association or
its successor shall be final and absolute. The arbitrator shall be governed by
the duly promulgated rules and regulations of the American Arbitration
Association or its successor, and the pertinent provisions of the laws of the
State of Colorado relating to arbitration. The decision of the arbitrator may
be entered as a judgment in any court in the State of Colorado or elsewhere.
The prevailing party shall be entitled to receive reasonable attorneys' fees
incurred in connection with such arbitration in addition to such other costs and
expenses as the arbitrators may award.
10. INTERPRETATION. This Agreement shall be construed in accordance with
--------------
the internal laws of the State of Colorado. The titles of the paragraphs have
been inserted as a matter of convenience of reference only and shall not be
construed to control or affect the meaning or construction of this Agreement.
11. SEVERABILITY. In the event that any portion of this Agreement is found
------------
to be in violation of or conflict with any federal or state law, the parties
agree that said portion shall be modified only to the extent necessary to enable
it to comply with such law.
12. ASSIGNMENT. This Agreement shall not be assignable by Employee, but
----------
shall be binding upon and inure to the benefit of the heirs, successors and
assigns of Employee and Company.
13. NOTICES. All notices or other communications in connection with this
-------
Agreement shall be in writing and shall be deemed to have been duly given when
delivered, sent by professional courier or mailed first class, postage prepaid
and addressed as follows:
(i) If to Company, addressed to:
Equitable Bankshares of Colorado, Inc.
821 - 17th Street
Denver, Colorado 80202
Attn: Steven Bangert
with a copy to:
Holleb & Coff
Suite 4100
55 E. Monroe
Chicago, Illinois 60603
Attn: Mark S. Kipnis
11
<PAGE>
(ii) If to Employee, addressed to:
Virginia K. Berkeley
2631 S. Jackson
Denver, Colorado 80210
or such other address or addressed to the attention of such other person or
persons as either of the parties may notify the other in accordance with the
provisions of this paragraph.
14. ENTIRE AGREEMENT. This Agreement is the entire agreement and
----------------
understanding of the parties hereto with respect to the subject matter hereof
and supercedes any and all prior and contemporaneous negotiations,
understandings and agreements with regard to the subject matter hereof, whether
oral or written. No representation, inducement, agreement, promise or
understanding altering, modifying, taking from or adding to the terms and
conditions hereof shall have any force or effect unless the same is in writing
and validly executed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EQUITABLE BANKSHARES OF
COLORADO, INC.
/S/ Virginia K. Berkeley By: /S/ Steven Bangert
- ------------------------ -------------------------
VIRGINIA K. BERKELEY Steven Bangert,
Chief Executive Officer
12
<PAGE>
Exhibit 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the 3rd
day of January, 1998, by and between Colorado Business Bankshares, Inc., a
Colorado corporation ("Company"), and Richard J. Dalton ("Employee").
WITNESSETH:
WHEREAS, Company desires Employee to become employed by Company and Employee
desires to become employed by Company upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT. Company hereby agrees to employ Employee, and Employee
----------
hereby agrees to be employed by Company, as (a) a Senior Vice President of
the Company, (b) Chief Financial Officer of the Company and (c) a Senior
Vice President and Chief Financial Officer of the Company's wholly-owned
subsidiary Colorado Business Bank, N.A.(the "Bank"), and (d) such other or
different executive capacities as may be determined from time to time by
the Boards of Directors of Company and the Bank.
2. RESPONSIBILITIES OF EMPLOYMENT. During the term of his employment,
------------------------------
Employee:
(a) shall diligently and faithfully serve Company and the Bank in such
executive capacities as may be determined from time to time by the
Boards of Directors of Company and the Bank, and he shall devote
his best efforts and entire business time, services and attention
to the advancement of Company's interests;
(b) shall not, without the prior written consent of the Board of
Directors of Company, engage in any other employment or business,
directly or indirectly, as a sole proprietor, a member of a
partnership or limited liability company, as a director, officer,
employee or shareholder of a corporation not affiliated with
Company, or as a consultant or otherwise, whether for compensation
or otherwise, which could reasonably be expected to or does
interfere with Employee's performance of his duties hereunder or
which business is in competition in any way with the business then
being conducted by Company or the Bank; provided, however, that
the provisions of this subparagraph (b) shall not be deemed to
prohibit Employee's ownership of stock in any publicly owned
corporation so long as Employee's ownership, directly and
indirectly, when aggregated with the direct and indirect ownership
of all members of Employee's family, does not exceed one percent
(1%) of the total
<PAGE>
outstanding stock of such publicly owned corporation, measured by
reference to either market value or voting power;
(c) shall diligently and faithfully carry out the policies, programs
and directions of the Boards of Directors of Company and the Bank;
(d) shall fully cooperate with such other officers of the Company and
the Bank as may be elected or appointed by the Boards of Directors
of Company and the Bank; and
(e) shall report to the Chief Executive Officer of Company.
3. COMPENSATION. Company will compensate Employee for his services during the
------------
term of this Agreement and his employment hereunder as follows:
(a) Basic Compensation. Company shall pay to Employee as basic
------------------
compensation the sum of Ninety Thousand Dollars ($90,000.00) per
year, payable in equal monthly installments. Employee's basic
compensation may be increased from time to time in the sole
discretion of Company's Board of Directors.
(b) Benefits. Employee shall be entitled to use a Company automobile
--------
(model and year to be agreed upon from time to time by Employee
and Company's Chief Executive officer) in the course of performing
his duties hereunder and shall be entitled to participate in any
and all other benefits from time to time afforded executive
employees of Company, including, without limitation, health,
accident, hospitalization and life insurance programs. Company
shall additionally pay the monthly (not initial or initiation)
dues for Employee at a country, health or social club to be agreed
upon by Employee and Company's Chief Executive Officer.
(c) Reimbursement of Expenses. Employee shall be entitled to
-------------------------
reimbursement of ordinary and necessary out-of-pocket expenses
reasonably incurred by him on behalf of Company in the course of
performing his duties hereunder, subject to his furnishing
appropriate documentation relative to such expenses in form and
substance satisfactory to Company.
(d) Vacations. Employee shall be entitled to four (4) weeks paid
---------
vacation each year, subject to Company's general vacation policy.
(e) Discretionary Bonus Plan. Company has a discretionary bonus plan
------------------------
for key executives. Employee shall be entitled to participate in
such discretionary bonus plan.
(f) Stock Option. Company has an Incentive Stock Option Plan (the
------------
"Plan") for key employees. Employee shall be entitled to
participate in the plan.
(g) Allocations. As Company and Employee intend that Employee will be
-----------
a dual employee of Company and the Bank, and that Employee will be
devoting substantial time and attention to the affairs of the
Bank, Company may allocate to the Bank any portion of Employee's
basic and other compensation that Company and the Bank deem to be
a lawful and appropriate allocation,
-2-
<PAGE>
but no such allocation will relieve Company of any of its
obligations to Employee under this Agreement.
4. TERM AND TERMINATION.
--------------------
(a) Term. The term of Employee's employment shall be a one (1) year term
----
beginning on the date hereof. Upon expiration of the stated term of
this Agreement, Employee's employment with Company shall revert to the
status of employment at will and shall thereafter be subject to
termination by either party and at any time subject to the rights and
obligations of employee as defined in 4(b).
(b) Termination. Upon termination of this Agreement by Company, by Employee
-----------
or upon the death or disability of Employee, the rights and obligations
of Employee shall be as follows:
(i) Termination by Employee. In the event Employee elects to
-----------------------
terminate his employment hereunder, this Agreement shall
immediately terminate without any further obligation on the part
of Company, except that Company shall pay to Employee such
compensation pursuant to Paragraph 3 hereof as may be accrued and
unpaid on the date of termination of employment.
(ii) Termination by Company for Cause. If Employee's employment
--------------------------------
hereunder is terminated by Company for cause, this Agreement
shall immediately terminate without any further obligation on the
part of Company, except that Company shall pay to Employee such
compensation pursuant to Paragraph 3 hereof as may be accrued and
unpaid on the date of such termination of employment. For
purposes of this Agreement, "cause" shall mean willful failure or
neglect of Employee to perform his duties as prescribed herein,
the conviction of a felony, theft, embezzlement or improper use
of corporate funds by Employee, self dealing detrimental to
Company, any attempt to obtain any personal profit from any
transaction in which Company has an interest or any breach of the
terms of Paragraphs 6 or 7 of this Agreement by Employee.
(iii) Termination by Company for Other Reasons. Company shall have
----------------------------------------
the right at any time to terminate Employee' s employment
hereunder for any reason by giving him written notice (which
notice shall fix the date as of which Employee's employment is to
terminate) of its intention to do so. If Employee's employment
hereunder is terminated by Company other than for cause, Company
shall be obligated to pay Employee the severance benefits set
forth in Paragraph 4( c) hereof.
(iv) Constructive Discharge. If Employee is ever constructively
----------------------
discharged, he may terminate this Agreement and his employment
hereunder by delivering written notice to Company no later than
thirty (30) days before the effective date of termination. If
Employee is constructively discharged, Company shall be obligated
to pay Employee the severance benefits set forth in Paragraph 4
(c) hereof. For purposes of the foregoing, "constructive
discharge" means
-3-
<PAGE>
the occurrence of any one or more of the following: (i) Employee
is removed from all of the offices described in Paragraph 1
hereof; (ii) Company fails to vest with or removes from Employee
the duties, responsibilities, authority or resources that he
reasonably needs to competently perform the duties of his office;
(iii) Company decreases Employee's basic compensation or
arbitrarily and capriciously decreases Employee's bonus; or (iv)
Company transfers Employee to a location outside the Denver
metropolitan area: and in any of such events, Company fails to
cure any of the above within thirty (30) days after Employee gives
Company written notice of such breach.
(v) Termination Upon Change of Control. Employee may terminate this
----------------------------------
Agreement and his employment hereunder for any reason within two
(2) years after a Change of Control occurs by delivering written
notice of termination to Company or its successor no less than
thirty (30) days before the effective date of termination. After
two (2) years following the Change of Control, Employee may
terminate this Agreement and his employment hereunder only in
accordance with Paragraph 4 (b) (i) hereof. If Employee so
terminates, Company shall be obligated to pay Employee one and
ninety-nine hundredths (1.99) times the severance benefits set
forth in Paragraph 4 ( c) hereof, with the exception that the
Paragraph 4 ( c) (ii) bonus component shall be based upon a full
year and not prorated to the date of Employee's termination. (A) A
"Change of Control" will be deemed to have occurred if: a) any
person (as such term is defined in Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act") other
than a person who is a shareholder of Company as of the date of
this Agreement acquires beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the 1934 Act) of fifty percent
(50%) or more of the combined voting power of the then outstanding
voting securities of Company; or b) the individuals who were
members of Company's Board of Directors as of the date of this
Agreement (the "Current Board Members") cease for any reason to
constitute a majority of the Board of Directors of Company or its
successor; however, if the election or the nomination for election
of any new director of Company or its successor is approved by a
vote of a majority of the individuals who are Current Board
Members, such new director shall, for the purposes of this
paragraph, be considered a Current Board Member; or c) Company's
stockholders approve (1) a merger or consolidation of Company or
the Bank and the stockholders of Company immediately before such
merger or consolidation do not, as a result of such merger or
consolidation, own, directly or indirectly, more than fifty
percent (50%) of the combined voting power of the then outstanding
voting securities of the entity resulting from such merger or
consolidation in substantially the same proportion as their
ownership of the combined voting power of the outstanding
securities of Company immediately before such merger or
consolidation; or (2) a complete liquidation or dissolution or an
agreement for
-4-
<PAGE>
the sale or other disposition of all or substantially all of the
assets of Company or the Bank. (B) Notwithstanding and in lieu of
Paragraph 4(b)(v)(A), a Change of Control will not be deemed to
have occurred: a) solely because fifty percent (50%)or more of
the combined voting power of the then outstanding voting
securities of Company are acquired by (1) a trustee or other
fiduciary holding securities under one or more employee benefit
plans maintained for employees of Company or the Bank, or (2) any
person pursuant to the will or trust of any existing stockholder
of Company, or who is a member of the immediate family of such
stockholder, or (3) any corporation which, immediately prior to
such acquisition, is owned directly or indirectly by the
stockholders in the same proportion as their ownership of stock
immediately prior to such acquisition; or b) if Employee agrees
in writing to waive a particular Change of Control for the
purposes of this Agreement.
(vi) Termination Upon Employee's Disability. In the event Employee's
--------------------------------------
employment is terminated by Company due to Employee's disability,
Company shall be obligated to pay Employee the severance benefits
set forth in Paragraph 4 ( c) hereof. For purposes of the
foregoing, "disability,' shall mean Employee's inability due to
illness or other physical or mental disability to substantially
perform his duties as prescribed herein for a period of forty-
five (45) days within any consecutive six (6) month period, and
any action to be taken hereunder based on disability shall not be
effective until the expiration of such forty-five (45) day
period.
(vii) Termination Upon Employee's Death. In the event that Employee
---------------------------------
dies while employed by Company, then Company shall he obligated
to pay Employee's estate the severance benefits set forth in
Paragraph 4 ( c) hereof.
(viii) Continuing Obligations of Employee. Notwithstanding anything to
----------------------------------
the contrary contained herein, termination of this Agreement or
Employee's employment hereunder, for whatsoever reason or for no
reason at all, by Employee or otherwise, shall not be deemed in
any way to affect Employee's obligations under Paragraphs 6 and 7
of this Agreement, with respect to which he shall remain bound.
(c) Severance Benefits. Provided Employee is in compliance with Paragraph
------------------
4(b)(viii) hereof, Company will pay or provide the following severance benefits
to Employee in lieu of any separation payments otherwise provided upon
termination of employment under any other severance pay or similar plan or
policy of Company:
(i) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of Employee's annual basic compensation in
effect immediately prior to Employee's termination;
(ii) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of the higher of (A) Employee's discretionary
bonus for the previous calendar year, or (B) the average of
Employee's discretionary bonus for the previous three (3)
calendar years (or such fewer calendar years as Employee
-5-
<PAGE>
has been employed), in each case prorated to the date of
Employee's termination;
(iii) For the twelve (12) month period following the date of
termination of Employee's employment, Company will maintain in
full force and effect for the continued benefit of Employee each
employee benefit plan in which Employee was a participant
immediately prior to the date of Employee's termination, unless
an essentially equivalent and no less favorable benefit is
provided by a subsequent employer at no additional cost to
Employee. If the terms of any employee benefit plan of Company
do not permit continued participation by Employee, then Company
will arrange to provide to Employee (at Company's cost) a
benefit substantially similar to and no less favorable than the
benefit Employee was entitled to receive under such plan at the
end of the period of coverage. (This provision specifically is
not applicable to Employee's automobile and club dues, which
benefits end upon Employee's date of termination of employment.)
(iv) For the twelve (12) month period following the date of
termination of Employee's employment, Company will treat
Employee for all purposes as an Employee under all of Company's
retirement plans in which Employee was a participant on the date
of termination of Employee's employment or under which Employee
would become eligible during such twelve (12) month period
(hereinafter referred to collectively as the "Plan") . Benefits
due to Employee under the Plan shall be computed as if Employee
had continued to be an Employee of Company for the twelve (12)
month period following termination of employment. If under the
terms of the Plan such continued coverage is not permitted,
Company will pay to Employee or Employee's estate a supplemental
benefit in an amount which, when added to the benefits that
Employee is entitled to receive under the Plan, shall equal the
amount that Employee would have received under the Plan had
Employee remained an employee of Company during such twelve (12)
month period.
(v) If any excise tax imposed under Internal Revenue Code Section
4999 or any successor provision, as amended after the date
hereof, is due and owing by Employee as a result of any amount
paid or payable pursuant to this Paragraph 4 (c), Company shall
indemnify and hold Employee harmless against all such excise
taxes and any interest, penalties or costs with respect thereto.
(vi) Company will be obligated to make all payments that become due
to Employee under this Paragraph 4 (c) whether or not he obtains
other employment following termination. The payments and other
benefits provided for in this Paragraph 4 (c) are intended to
supplement any compensation or other benefits that have accrued
or vested with respect to Employee or his account as of the
effective date of termination.
(vii) Company may elect to defer any payments that may become due to
Employee under this Paragraph 4 (c) if, at the time the payments
become due, Company
-6-
<PAGE>
or the Bank is not in compliance with any regulatory mandated
minimum capital requirements or if making the payments would
cause Company's or the Bank's capital to fall below such minimum
capital requirements. In this event, Company will resume making
the payments as soon as it can do so without violating such
minimum capital requirements.
5. SALE OR REORGANIZATION OF COMPANY. This Agreement shall not restrict the
---------------------------------
sale, transfer, consolidation, liquidation, reorganization or disposition
of the assets of Company and to the extent that the business of Company is
conducted in another form or through another entity or entities, such
entity or entities shall be obligated to fulfill Company's obligations
hereunder.
6. RESTRICTIVE COVENANT. It is mutually recognized and agreed that the
--------------------
services to be rendered pursuant to this Agreement by Employee are special,
unique and of extraordinary character. Therefore, as a condition to
Company's obligations hereunder, Employee agrees that without Company's
prior written consent, during the term of this Agreement and for a period
ending on the first anniversary of the date of termination of his
employment hereunder, regardless of cause, he will not engage in any
manner, directly or indirectly, to solicit or induce any employee or agent
of Company or the Bank to terminate employment with Company or the Bank, as
the case may be, or solicit or induce any customer of Company or the Bank
to become a customer of any person, firm, partnership, corporation, trust
or other entity that owns, controls or is a bank, savings and loan
association, credit union or similar financial institution. Furthermore,
Employee will at no time during or subsequent to the term of his employment
by Company make any statements or take any actions which could reasonably
be expected to damage the reputation or business of Company. It is further
recognized and agreed that irreparable injury will result to Company, its
businesses and property in the event of a breach of this covenant by
Employee, that such injury would be difficult if not impossible to
ascertain, and therefore, any remedy at law for any breach by Employee of
this covenant will be inadequate and Company shall be entitled to temporary
and permanent injunctive relief without the necessity of proving actual
damage to Company by reason of any such breach. In addition, in the event
of a breach of this covenant by Employee, Company shall also be entitled to
recover reasonable costs and attorneys' fees incurred in connection with
the enforcement of its rights hereunder. Whenever used herein, Company
shall be deemed to include any successors or any other person or entity
which may hereafter acquire the business of Company or the Bank. The
foregoing notwithstanding, should the assets of Company he disposed of in
such a manner that no purchaser thereof has acquired a going business, then
Employee shall not be bound by the covenants expressed in this paragraph.
7. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee hereby covenants and
------------------------------------------
agrees that he will not, except as may be required in connection with his
employment under this Agreement, directly or indirectly, use or disclose to
any other person, firm or corporation, whether during or subsequent to the
term of his employment by Company,
-7-
<PAGE>
irrespective of the time, manner or cause of the termination of his
employment, any information of a proprietary nature belonging to Company,
or which could be reasonably expected to have an adverse effect on Company,
its businesses, property or financial condition, including but not limited
to records, data, documents, processes, specifications, methods of
operation, techniques and know-how, plans, policies, customer lists, the
names and addresses of suppliers or representatives, investigations or
other matters of any kind or description relating to the products,
services, suppliers, customers, sales or businesses of Company. All
records, files, documents, equipment and the like relating to Company's
businesses which Employee shall prepare, use or observe shall be and remain
the sole property of Company, and upon termination of this Agreement or his
employment hereunder for any reason, Employee shall return to the
possession of Company any items of that nature and any copies thereof which
he may have in his possession.
8. INDEMNITY.
---------
(a) Indemnification. Company will indemnify Employee (and, upon his death,
---------------
his heirs, executors and administrators) to the fullest extent
permitted by law against all expenses, including reasonable attorneys'
fees, court and investigative costs, judgments, fines and amounts paid
in settlement (collectively, "Expenses") reasonably incurred by him in
connection with or arising out of any pending, threatened or completed
action, suit or proceeding in which he may become involved by reason of
his having been an officer or director of Company or the Bank. The
indemnification rights provided for herein are not exclusive and will
supplement any rights to indemnification that Employee may have under
any applicable bylaw or charter provision of Company or the Bank, or
any resolution of Company or the Bank, or any applicable statute.
(b) Advancement of Expenses. In the event that Employee becomes a party, or
-----------------------
is threatened to be made a party, to any pending, threatened or
completed action, suit or proceeding for which Company or the Bank is
permitted or required to indemnify him under this Agreement, any
applicable bylaw or charter provision of Company or the Bank, any
resolution of Company or the Bank, or any applicable statute, Company
will, to the fullest extent permitted by law, advance all Expenses
incurred by Employee in connection with the investigation, defense,
settlement or appeal of any threatened, pending or completed action,
suit or proceeding, subject to receipt by Company of a written
undertaking from Employee to reimburse Company for all Expenses
actually paid by Company to or on behalf of Employee in the event it
shall be ultimately determined that Company or the Bank cannot lawfully
indemnify Employee for such Expenses, and to assign to Company all
rights of Employee to indemnification under any policy of directors,
and officers, liability insurance to the extent of the amount of
Expenses actually paid by Company to or on behalf of Employee.
(c) Litigation. Unless precluded by an actual or potential conflict of
----------
interest, Company will have the right to recommend counsel to Employee
to represent him in connection
-8-
<PAGE>
with any claim covered by this Section 8. Further, Employee's choice of
counsel, his decision to contest or settle any such claim, and the
terms and amount of the settlement of any such claim will be subject to
Company's prior reasonable approval in writing.
9. ARBITRATION. Any disputes arising out of this Agreement or connected with
-----------
Employee's employment shall be submitted by Employee and Company to
arbitration by the American Arbitration Association or its successor, and
the determination of the American Arbitration Association or its successor
shall be final and absolute. The arbitrator shall be governed by the duly
promulgated rules and regulations of the American Arbitration Association
or its successor, and the pertinent provisions of the laws of the State of
Colorado relating to arbitration. The decision of the arbitrator may be
entered as a judgment in any court in the State of Colorado or elsewhere.
The prevailing party shall be entitled to receive reasonable attorneys'
fees incurred in connection with such arbitration in addition to such other
costs and expenses as the arbitrators may award.
10. INTERPRETATION. This Agreement shall be construed in accordance with the
--------------
internal laws of the State of Colorado. The titles of the paragraphs have
been inserted as a matter of convenience of reference only and shall not be
construed to control or affect the meaning or construction of this
Agreement.
11. SEVERABILITY. In the event that any portion of this Agreement is found to
------------
be in violation of or conflict with any federal or state law, the parties
agree that said portion shall be modified only to the extent necessary to
enable it to comply with such law.
12. ASSIGNMENT. This Agreement shall not be assignable by Employee, but shall
----------
be binding upon and inure to the benefit of the successors and assigns of
Company.
13. NOTICES. All notices or other communications in connection with this
-------
Agreement shall be in writing and shall be deemed to have been duly given
when delivered, sent by professional courier or mailed first class, postage
prepaid and addressed as follows:
(i) If to Company, addressed to:
Colorado Business Bankshares, Inc.
821 - I7th Street
Denver, Colorado 80202
Attn: Steven Bangert
-9-
<PAGE>
with a copy to:
Holleb & Coff
Suite 4100
55 E. Monroe
Chicago, Illinois 60603
Attn: Mark S. Kipnis
(ii) If to Employee, addressed to:
Richard J. Dalton
10489 E. Aberdeen Ave.
Englewood, CO 80111
with a copy to:
__________________
__________________
__________________
or such other address or addressed to the attention of such other person or
persons as either of the parties may notify the other in accordance with the
provisions of this paragraph.
14. ENTIRE AGREEMENT. This Agreement is the entire agreement and understanding
----------------
of the parties hereto with respect to the subject matter hereof and
supersedes any and all prior and contemporaneous negotiations,
understandings and agreements with regard to the subject matter hereof,
whether oral or written. No representation, inducement, agreement, promise
or understanding altering, modifying, taking from or adding to the terms
and conditions hereof shall have any force or effect unless the same is in
writing and validly executed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Colorado Business Bankshares, Inc.
/s/ Richard J. Dalton By: /s/ Steven Bangert
- ------------------------- ------------------------------
Richard J. Dalton Steven Bangert
Chief Executive Officer
-10-
<PAGE>
Exhibit 10.11
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EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
29th day of February, 1996, by and between Colorado Business Bankshares, Inc.,
a Colorado corporation ("Company"), and Darrell Schulte ("Employee").
WITNESSETH:
WHEREAS, Employee has been employed by Company or one of its subsidiaries
and the parties desire to set forth certain conditions of Employee's employment
as hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT. Company hereby agrees to employ Employee, and Employee
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hereby agrees to be employed by Company, as (a) President of Company's
subsidiary Colorado Business Bank ("CBB"), and (b) such other different
executive capacities with the Company, CBB or any other Company subsidiary as
may be determined from time to time by the Boards of Directors of Company, CBB
or such other subsidiary.
2. RESPONSIBILITIES OF EMPLOYMENT. During the term of his employment,
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Employee:
(a) shall diligently and faithfully serve Company and its
subsidiaries in such executive capacities as may be determined from time to
time by the Boards of Directors of Company and its subsidiaries, and he
shall devote his best efforts and entire business time, services and
attention to the advancement of Company's interests;
(b) shall not, without the prior written consent of the Board of
Directors of Company, engage in any other employment or business, directly
or indirectly, as a sole proprietor, a member of a partnership or limited
liability company, as a director, officer, employee or shareholder of a
corporation not affiliated with Company, or as a consultant or otherwise,
whether for compensation or otherwise, which could reasonably be expected
to or does interfere with Employee's performance of his duties hereunder or
which business is in competition in any way with the business then being
conducted by Company and its subsidiaries; provided, however, that the
provisions of this subparagraph (b) shall not be deemed to prohibit
Employee's ownership of stock in any publicly owned corporation so long as
Employee's ownership, directly and indirectly, when aggregated with the
direct and indirect ownership of all members of Employee's family, does not
exceed one percent (1%) of the total outstanding stock of such publicly
owned corporation, measured by reference to either market value or voting
power;
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(c) shall diligently and faithfully carry out the policies, programs
and directions of the Boards of Directors of Company and its subsidiaries;
(d) shall fully cooperate with such other officers of Company and its
subsidiaries as may be elected or appointed by the Boards of Directors of
Company and its subsidiaries; and
(e) shall report to the appropriate executive officer of Company.
3. COMPENSATION. Company will compensate Employee for his services during
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the term of this Agreement and his employment hereunder as follows:
(a) Basic Compensation. Company shall pay to Employee as a minimum
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basic compensation the sum of Eighty-Eight Thousand Dollars ($88,000.00)
per year, payable in equal monthly installments. Employee's basic
compensation may be increased from time to time in the sole discretion of
Company's Board of Directors.
(b) Benefits. Employee shall be entitled to use a Company car (with
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the option to purchase same pursuant to a January 4, 1996 agreement) with
phone at Company's expense in the course of performing his duties hereunder
and shall be entitled to participate in any and all other benefits from
time to time afforded executive employees of Company, including, without
limitation, health, accident, hospitalization and life insurance programs.
Company shall additionally pay the monthly (not initial or initiation) dues
for Employee at a health club to be agreed upon by Employee and Company.
(c) Reimbursement of Expenses. Employee shall be entitled to
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reimbursement of ordinary and necessary out-of-pocket expenses reasonably
incurred by Employee on behalf of Company in the course of performing his
duties hereunder subject to his furnishing appropriate documentation
relative to such expenses in form and substance satisfactory to Company.
(d) Vacations. Employee shall be entitled to four (4) weeks paid
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vacation each year, subject to Company's general vacation policy.
(e) Discretionary Bonus Plan. Company is in the process of developing
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a discretionary bonus plan for key executives. Employee shall be entitled
to participate in such discretionary bonus plan.
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(f) Allocations. As Company and Employee intend that Employee may
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be a dual employee of Company and one or more of its subsidiaries, Company
may allocate to one or more of its subsidiaries any portion of Employee's
basic and other compensation that Company and one or more of its
subsidiaries deem to be a lawful and appropriate allocation, but no such
allocation will relieve Company of any of its obligations to Employee under
this Agreement.
4. TERM AND TERMINATION.
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(a) Term. The term of Employee's employment shall be a one (1) year
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term beginning on the date hereof. Upon expiration of the stated term of
this Agreement, Employee's employment with Company shall revert to the
status of employment at will and shall thereafter be subject to termination
by either party and at any time regardless of cause.
(b) Termination. Upon termination of this Agreement by Company, by
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Employee or upon the death or disability of Employee, the rights and
obligations of Employee shall be as follows:
(i) Termination by Employee. In the event Employee elects to
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terminate his employment hereunder, this Agreement shall immediately
terminate without any further obligation on the part of Company,
except that Company shall pay to Employee such compensation pursuant
to Paragraph 3 hereof as may be accrued and unpaid on the date of
termination of employment.
(ii) Termination by Company for Cause. If Employee's employment
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hereunder is terminated by Company for cause, this Agreement shall
immediately terminate without any further obligation on the part of
Company, except that Company shall pay to Employee such compensation
pursuant to Paragraph 3 hereof as may be accrued and unpaid on the
date of such termination of employment. For purposes of this
Agreement, "cause" shall mean willful failure or neglect of Employee
to perform his duties as prescribed herein, the conviction of a
felony, theft, embezzlement or improper use of corporate funds by
Employee, self dealing detrimental to Company, any attempt to obtain
any personal profit from any transaction in which Company has an
interest or any breach of the terms of Paragraphs 6 or 7 of this
Agreement by Employee.
(iii) Termination by Company for Other Reasons. Company shall
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have the right at any time to terminate Employee's employment
hereunder for any reason by giving
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Employee written notice (which notice shall fix the date as of which
Employee's employment is to terminate) of its intention to do so. If
Employee's employment hereunder is terminated by Company other than
for cause, Company shall be obligated to pay Employee the severance
benefits set forth in Paragraph 4(c) hereof.
(iv) Constructive Discharge. If Employee is ever constructively
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discharged, he may terminate this Agreement and his employment
hereunder by delivering written notice to Company no later than thirty
(30) days before the effective date of termination. If Employee is
constructively discharged, Company shall be obligated to pay Employee
the severance benefits set forth in Paragraph 4(c) hereof. For
purposes of the foregoing "constructive discharge" means the
occurrence of any one or more of the following: (i) Employee is
removed from all of the offices described in Paragraph 1 hereof; (ii)
Company fails to vest with or removes from Employee the duties,
responsibilities, authority or resources that he reasonably needs to
competently perform the duties of his office; (iii) Company decreases
Employee's basic compensation or arbitrarily and capriciously
decreases Employee's bonus; or (iv) Company transfers Employee to a
location outside the Denver metropolitan area; and in any of such
events, Company fails to cure any of the above within thirty (30) days
after Employee gives Company written notice of such breach.
(v) Termination Upon Change of Control. If a Change of Control
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occurs within five (5) years after the date of this Agreement,
Employee may terminate this Agreement and his employment hereunder for
any reason within two (2) years after a Change of Control occurs by
delivering written notice of termination to Company or its successor
no less than thirty (30) days before the effective date of termination
(any such notice by Employee which can be construed as a notice under
either Paragraph 4(b)(iv) or this Paragraph 4(b)(v) shall be deemed a
notice under this Paragraph 4(b)(v)). If Employee so terminates,
Company shall be obligated to pay Employee two (2) times the severance
benefits set forth in Paragraph 4(c) hereof, with the exception that
the Paragraph 4(c)(ii) bonus component shall be based upon a full year
and not prorated to the date of Employee's termination.
(A) A "Change of Control" will be deemed to have occurred
if: a) any person (as such term is defined in Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act") other than a person who is a shareholder of Company
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as of the date of this Agreement acquires beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act)
of fifty percent (50%) or more of the combined voting power of
the then outstanding voting securities of Company; or b) the
individuals who were members of Company's Board of Directors as
of the date of this Agreement (the "Current Board Members") cease
for any reason to constitute a majority of the Board of Directors
of Company or its successor; however, if the election or the
nomination for election of any new director of Company or its
successor is approved by a vote of a majority of the individuals
who are Current Board Members, such new director shall, for the
purposes of this paragraph, be considered a Current Board Member;
or c) Company's stockholders approve (1) a merger or
consolidation, of Company or CBB and the stockholders of Company
immediately before such merger or consolidation do not, as a
result of such merger or consolidation, own, directly or
indirectly, more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of the entity
resulting from such merger or consolidation in substantially the
same proportion as their ownership of the combined voting power
of the outstanding securities of Company immediately before such
merger or consolidation; or (2) a complete liquidation or
dissolution or an agreement for the sale or other disposition of
all or substantially all of the assets or stock of Company or CBB
(provided that a complete liquidation or dissolution or the sale
or other disposition of all or substantially all the assets or
stock of just CBB will be deemed a "Change of Control" only if
Employee is not offered a position with Company or one of its
subsidiaries with responsibilities, although not necessarily the
same title, and reporting requirements consistent with those
responsibilities and reporting requirements set forth in
Paragraph 2 hereof).
(B) Notwithstanding and in lieu of Paragraph 4(b)(v)(A), a
Change of Control will not be deemed to have occurred: a) solely
because fifty percent (50%) or more of the combined voting power
of the then outstanding voting securities of Company are acquired
by (l) a trustee or other fiduciary holding securities under one
or more employee benefit plans maintained for employees of
Company and its subsidiaries, or (2) any person pursuant to the
will or trust of any existing stockholder of
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Company, or who is a member of the immediate family of such
stockholder, or (3) any corporation which, immediately prior to
such acquisition, is owned directly or indirectly by the
stockholders in the same proportion as their ownership of stock
immediately prior to such acquisition; or b) if Employee agrees
in writing to waive a particular Change of Control for the
purposes of this Agreement.
(vi) Termination Upon Employee's Disability. In the event
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Employee's employment is terminated by Company due to Employee's
disability, Company shall be obligated to pay Employee the severance
benefits set forth in Paragraph 4(c) hereof. For purposes of the
foregoing, "disability" shall mean Employee's inability due to illness
or other physical or mental disability to substantially perform his
duties as prescribed herein for a period of sixty (60) days within any
consecutive six (6) month period, and any action to be taken hereunder
based on disability shall not be effective until the expiration of
such sixty (60) day period.
(vii) Termination Upon Employee's Death. In the event that
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Employee dies while employed by Company, then Company shall be
obligated to pay Employee's estate the severance benefits set forth in
Paragraph 4(c) hereof.
(viii) Continuing Obligations of Employee. Notwithstanding
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anything to the contrary contained herein, termination of this
Agreement or Employee's employment hereunder, for whatsoever reason or
for no reason at all, by Employee or otherwise, shall not be deemed in
any way to affect Employee's obligations under Paragraphs 6 and 7 of
this Agreement, with respect to which he shall remain bound.
(c) Severance Benefits. Provided Employee is in compliance with
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Paragraph 4(b)(viii) hereof, Company will pay or provide the following
severance benefits to Employee in lieu of any separation payments otherwise
provided upon termination of employment under any other severance pay or
similar plan or policy of Company:
(i) Twelve (12) consecutive monthly payments each equal to
one-twelfth (1/12th) of Employee's annual basic compensation in effect
immediately prior to Employee's termination;
(ii) Twelve (12) consecutive monthly payments each equal to
one-twelfth (1/12th) of the higher of (A) Employee's discretionary
bonus for the previous calendar
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year, or (B) the average of Employee's discretionary bonus for the
previous three (3) calendar years (or such fewer calendar years as
Employee has been employed), in each case prorated to the date of
Employee's termination;
(iii) For the twelve (12) month period following the date of
termination of Employee's employment, Company will maintain in full
force and effect for the continued benefit of Employee each employee
benefit plan in which Employee was a participant immediately prior to
the date of Employee's termination, unless an essentially equivalent
and no less favorable benefit is provided by a subsequent employer at
no additional cost to Employee. If the terms of any employee benefit
plan of Company do not permit continued participation by Employee,
then Company will arrange to provide to Employee (at Company's cost) a
benefit substantially similar to and no less favorable than the
benefit Employee was entitled to receive under such plan at the end of
the period of coverage. (This provision specifically is not
applicable to Employee's car phone, parking and club dues, which
benefits end upon Employee's date of termination of employment.)
(iv) For the twelve (12) month period following the date of
termination of Employee's employment, Company will treat Employee for
all purposes as an Employee under all of Company's retirement plans in
which Employee was a participant on the date of termination of
Employee's employment or under which Employee would become eligible
during such twelve (12) month period (hereinafter referred to
collectively as the "Plan"). Benefits due to Employee under the Plan
shall be computed as if Employee had continued to be an Employee of
Company for the twelve (12) month period following termination of
employment. If under the terms of the Plan such continued coverage is
not permitted, Company will pay to Employee or Employee's estate a
supplemental benefit in an amount which, when added to the benefits
that Employee is entitled to receive under the Plan, shall equal the
amount that Employee would have received under the Plan had Employee
remained an employee of Company during such twelve (12) month period.
(v) If any excise tax imposed under Internal Revenue Code
Section 4999 or any successor provision, as amended after the date
hereof, is due and owing by Employee as a result of any amount paid or
payable pursuant to this Paragraph 4(c), Company shall indemnify and
hold Employee harmless against all such excise taxes and any interest,
penalties or costs with respect thereto.
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(vi) Company will be obligated to make all payments that become
due to Employee under this Paragraph 4(c) whether or not he obtains
other employment following termination. The payments and other
benefits provided for in this Paragraph 4(c) are intended to
supplement any compensation or other benefits that have accrued or
vested with respect to Employee or his account as of the effective
date of termination.
(vii) Company may elect to defer any payments that may become
due to Employee under this Paragraph 4(c) if, at the time the payments
become due, Company, CBB or any of Company's other subsidiaries is not
in compliance with any regulatory-mandated minimum capital
requirements or if making the payments would cause Company's, CBB's or
any of Company's other subsidiaries' capital to fall below such
minimum capital requirements. In this event, Company will resume
making the payments as soon as it can do so without violating such
minimum capital requirements.
5. SALE OR REORGANIZATION OF COMPANY. This Agreement shall not restrict
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the sale, transfer, consolidation, liquidation, reorganization or disposition of
the assets of Company and to the extent that the business of Company is
conducted in another form or through another entity or entities, such entity or
entities shall be obligated to fulfill Company's obligations hereunder.
6. RESTRICTIVE COVENANT. It is mutually recognized and agreed that the
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services to be rendered pursuant to this Agreement by Employee are special,
unique and of extraordinary character. Therefore, as a condition to Company's
obligations hereunder, Employee agrees that without Company's prior written
consent, during the term of this Agreement and for a period ending on the first
anniversary of the date of termination of his employment hereunder, regardless
of cause, he will not engage in any manner, directly or indirectly, to solicit
or induce any employee or agent of Company or any of its subsidiaries to
terminate employment with Company or any of its subsidiaries, as the case may
be, or solicit or induce any customer of Company or any of its subsidiaries to
become a customer of any person, firm, partnership, corporation, trust or other
entity that owns, controls or is a bank, savings and loan association, credit
union or similar financial institution. Furthermore, Employee will at no time
during or subsequent to the term of his employment by Company make any
statements or take any actions which could reasonably be expected to damage the
reputation or business of Company. It is further recognized and agreed that
irreparable injury will result to Company, its businesses and property in the
event of a breach of this covenant by Employee, that such injury would be
difficult if not impossible to ascertain, and therefore, any remedy at law for
any breach by Employee of this covenant will be inadequate and Company shall be
entitled to
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temporary and permanent injunctive relief without the necessity of proving
actual damage to Company by reason of any such breach. In addition, in the
event of a breach of this covenant by Employee, Company shall also be entitled
to recover reasonable costs and attorneys' fees incurred in connection with the
enforcement of its rights hereunder. Whenever used herein, Company shall be
deemed to include any successors or any other person or entity which may
hereafter acquire the business of Company or any of its subsidiaries. The
foregoing notwithstanding, should the assets of Company be disposed of in such a
manner that no purchaser thereof has acquired a going business, then Employee
shall not be bound by the covenants expressed in this paragraph.
7. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee hereby covenants
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and agrees that he will not, except as may be required in connection with his
employment under this Agreement or compelled by any judicial or administrative
order, directly or indirectly, use or disclose to any other person, firm or
corporation, whether during or subsequent to the term of his employment by
Company, irrespective of the time, manner or cause of the termination of his
employment, any information of a proprietary nature belonging to Company, or
which could be reasonably expected to have an adverse effect on Company, its
businesses, property or financial condition, including but not limited to
records, data, documents, processes, specifications, methods of operation,
techniques and know-how, plans, policies, customer lists, the names and
addresses of suppliers or representatives, investigations or other matters of
any kind or description relating to the products, services, suppliers,
customers, sales or businesses of Company. All records, files, documents,
equipment and the like relating to Company's businesses which Employee shall
prepare, use or observe shall be and remain the sole property of Company, and
upon termination of this Agreement or his employment hereunder for any reason,
Employee shall return to the possession of Company any items of that nature and
any copies thereof which he may have in his possession.
8. INDEMNITY.
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(a) Indemnification. Company will indemnify Employee (and, upon his
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death, his heirs, executors and administrators) to the fullest extent
permitted by law against all expenses, including reasonable attorneys'
fees, court and investigative costs, judgments, fines and amounts paid in
settlement (collectively, "Expenses") reasonably incurred by Employee in
connection with or arising out of any pending, threatened or completed
action, suit or proceeding in which he may become involved by reason of his
having been an officer or director of Company or any of its subsidiaries.
The indemnification rights provided for herein are not exclusive and will
supplement any rights to indemnification that Employee may have under any
applicable bylaw or charter provision of
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Company or any of its subsidiaries, or any resolution of Company or any of
its subsidiaries, or any applicable statute.
(b) Advancement of Expenses. In the event that Employee becomes a
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party, or is threatened to be made a party, to any pending, threatened or
completed action, suit or proceeding for which Company or any of its
subsidiaries is permitted or required to indemnify Employee under this
Agreement, any applicable bylaw or charter provision of Company or any of
its subsidiaries, any resolution of Company or any of its subsidiaries, or
any applicable statute, Company will, to the fullest extent permitted by
law, advance all Expenses incurred by Employee in connection with the
investigation, defense, settlement or appeal of any threatened, pending or
completed action, suit or proceeding, subject to receipt by Company of a
written undertaking from Employee to reimburse Company for all Expenses
actually paid by Company to or on behalf of Employee in the event it shall
be ultimately determined that Company or any of its subsidiaries cannot
lawfully indemnify Employee for such Expenses, and to assign to Company all
rights of Employee to indemnification under any policy of directors' and
officers' liability insurance to the extent of the amount of Expenses
actually paid by Company to or on behalf of Employee.
(c) Litigation. Unless precluded by an actual or potential conflict
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of interest, Company will have the right to recommend counsel to Employee
to represent Employee in connection with any claim covered by this Section
8. Further, Employee's choice of counsel, his decision to contest or settle
any such claim, and the terms and amount of the settlement of any such
claim will be subject to Company's prior reasonable approval in writing.
9. ARBITRATION. Any disputes arising out of this Agreement or connected
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with Employee's employment shall be submitted by Employee and Company to
arbitration by the American Arbitration Association or its successor, and the
determination of the American Arbitration Association or its successor shall be
final and absolute. The arbitrator shall be governed by the duly promulgated
rules and regulations of the American Arbitration Association or its successor,
and the pertinent provisions of the laws of the State of Colorado relating to
arbitration. The decision of the arbitrator may be entered as a judgment in any
court in the State of Colorado or elsewhere. The prevailing party shall be
entitled to receive reasonable attorneys' fees incurred in connection with such
arbitration in addition to such other costs and expenses as the arbitrators may
award.
10. INTERPRETATION. This Agreement shall be construed in accordance with
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the internal laws of the State of Colorado. The titles of the paragraphs have
been inserted as a matter of
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convenience of reference only and shall not be construed to control or affect
the meaning or construction of this Agreement.
11. SEVERABILITY. In the event that any portion of this Agreement is found
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to be in violation of or conflict with any federal or state law, the parties
agree that said portion shall be modified only to the extent necessary to enable
it to comply with such law.
12. ASSIGNMENT. This Agreement shall not be assignable by Employee, but
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shall be binding upon and inure to the benefit of the heirs, successors and
assigns of Employee and Company.
13. NOTICES. All notices or other communications in connection with this
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Agreement shall be in writing and shall be deemed to have been duly given when
delivered, sent by professional courier or mailed first class, postage prepaid
and addressed as follows:
(i) If to Company, addressed to:
Colorado Business Bankshares, Inc.
821 - 17th Street
Denver, Colorado 80202
Attn: Steven Bangert
with a copy to:
Holleb & Coff
Suite 4100
55 E. Monroe
Chicago, Illinois 60603
Attn: Mark S. Kipnis
(ii) If to Employee, addressed to:
Darrell Schulte
6541 W. Calhoun Place
Littleton, Colorado 80123
or such other address or addressed to the attention of such other person or
persons as either of the parties may notify the other in accordance with the
provisions of this paragraph.
14. ENTIRE AGREEMENT. This Agreement is the entire agreement and
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understanding of the parties hereto with respect to the subject matter hereof
and supersedes any and all prior and contemporaneous negotiations,
understandings and agreements with regard to the subject matter hereof, whether
oral or written. No representation, inducement, agreement, promise or
understanding altering, modifying, taking from or adding to the terms and
conditions hereof
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shall have any force or effect unless the same is in writing and validly
executed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COLORADO BUSINESS BANKSHARES,
INC.
/s/ Darrell Schulte By: /s/ Steven Bangert
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DARRELL SCHULTE Steven Bangert,
Chief Executive Officer
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Exhibit 10.12
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
12th day of June, 1995, by and between Equitable Bankshares of Colorado, Inc., a
Colorado corporation ("Company"), and Charles E. Holmes ("Employee").
WITNESSETH:
WHEREAS, Company desires Employee to become employed by Company or one of
its subsidiaries and Employee desires to become employed by Company or one of
its subsidiaries upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT. Company hereby agrees to employ Employee, and Employee
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hereby agrees to be employed by Company, as (a)President of the Boulder branch
of Company's subsidiary Equitable Bank of Littleton ("Littleton Bank"), (b) a
Director of Littleton Bank, and (c) such other different executive capacities
with the Company, Littleton Bank or any other Company subsidiary as may be
determined from time to time by the Boards of Directors of Company, Littleton
Bank or such other subsidiary.
2. RESPONSIBILITIES OF EMPLOYMENT. During the term of his employment,
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Employee:
(a) shall diligently and faithfully serve Company and its
subsidiaries in such executive capacities as may be determined from time to
time by the Boards of Directors of Company and its subsidiaries, and he
shall devote his best efforts and entire business time, services and
attention to the advancement of Company's interests;
(b) shall not, without the prior written consent of the Board of
Directors of Company, engage in any other employment or business, directly
or indirectly, as a sole proprietor, a member of a partnership or limited
liability company, as a director, officer, employee or shareholder of a
corporation not affiliated with Company, or as a consultant or otherwise,
whether for compensation or otherwise, which could reasonably be expected
to or does interfere with Employee's performance of his duties hereunder or
which business is in competition in any way with the business then being
conducted by Company and its subsidiaries; provided, however, that the
provisions of this subparagraph (b) shall not be deemed to prohibit
Employee's ownership of stock in any publicly owned corporation so long as
Employee's ownership, directly and indirectly, when aggregated with the
direct and indirect ownership of all members of Employee's family, does not
exceed
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one percent (1%) of the total outstanding stock of such publicly owned
corporation, measured by reference to either market value or voting power;
(c) shall diligently and faithfully carry out the policies, programs
and directions of the Boards of Directors of Company and its subsidiaries;
(d) shall fully cooperate with such other officers of Company and its
subsidiaries as may be elected or appointed by the Boards of Directors of
Company and its subsidiaries; and
(e) shall report to the President of Company.
3. COMPENSATION. Company will compensate Employee for his services
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during the term of this Agreement and his employment hereunder as follows:
(a) Basic Compensation. Company shall pay to Employee as a minimum
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basic compensation the sum of Seventy-Four Thousand Dollars ($74,000.00)
per year, payable in equal monthly installments. Employee's basic
compensation may be increased from time to time in the sole discretion of
Company's Board of Directors.
(b) Benefits. Employee shall be entitled to use a Company automobile
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(model and year to be agreed upon from time to time by Employee and
Company's President), with car phone and parking privileges in the course
of performing his duties hereunder and shall be entitled to participate in
any and all other benefits from time to time afforded executive employees
of Company, including, without limitation, health, accident,
hospitalization and life insurance programs. Company shall additionally
pay the monthly (not initial or initiation) dues for Employee at community
or business related clubs or activities to be agreed upon by Employee and
Company's President.
(c) Reimbursement of Expenses. Employee shall be entitled to
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reimbursement of ordinary and necessary out-of-pocket expenses reasonably
incurred by him on behalf of Company in the course of performing his duties
hereunder, subject to his furnishing appropriate documentation relative to
such expenses in form and substance satisfactory to Company.
(d) Vacations. Employee shall be entitled to four (4) weeks paid
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vacation each year, subject to Company's general vacation policy.
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(e) Discretionary Bonus Plan. Company is in the process of
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developing a discretionary bonus plan for key executives. Employee shall
be entitled to participate in such discretionary bonus plan.
(f) Stock Option. Company is in the process of developing an
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Incentive Stock Option Plan (the "Plan") for key employees. Subject to
approval of the Plan by Company's shareholders, Company will grant Employee
the option to purchase up to 4,000 shares of Company's common stock
pursuant to the Plan. It is contemplated that the option price per share
will approximate $11.00 and that the options will vest annually over a four
(4) year vesting schedule. If Company's Board of Directors or shareholders
do not approve the Plan, Company agrees to find an alternative,
commercially equivalent means of compensating Employee in lieu of granting
options under the Plan.
(g) Allocations. As Company and Employee intend that Employee may
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be a dual employee of Company and one or more of its subsidiaries, Company
may allocate to one or more of its subsidiaries any portion of Employee's
basic and other compensation that Company and one or more of its
subsidiaries deem to be a lawful and appropriate allocation, but no such
allocation will relieve Company of any of its obligations to Employee under
this Agreement.
4. TERM AND TERMINATION.
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(a) Term. The term of Employee's employment shall be a one (1) year
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term beginning on the date hereof. Upon expiration of the stated term of
this Agreement, Employee's employment with Company shall revert to the
status of employment at will and shall thereafter be subject to termination
by either party and at any time subject to the rights and obligation of
employee as defined in 4(b).
(b) Termination. Upon termination of this Agreement by Company, by
-----------
Employee or upon the death or disability of Employee, the rights and
obligations of Employee shall be as follows:
(i) Termination by Employee. In the event Employee elects to
-----------------------
terminate his employment hereunder, this Agreement shall immediately
terminate without any further obligation on the part of Company,
except that Company shall pay to Employee such compensation pursuant
to Paragraph 3 hereof as may be accrued and unpaid on the date of
termination of employment.
(ii) Termination by Company for Cause. If Employee's employment
--------------------------------
hereunder is terminated by Company for cause, this Agreement shall
immediately terminate without any
3
<PAGE>
further obligation on the part of Company,except that Company shall
pay to Employee such compensation pursuant to Paragraph 3 hereof as
may be accrued and unpaid on the date of such termination of
employment. For purposes of this Agreement, "cause' shall mean
willful failure or neglect of Employee to perform his duties as
prescribed herein, the conviction of a felony, theft, embezzlement or
improper use of corporate funds by Employee, self dealing detrimental
to Company, any attempt to obtain any personal profit from any
transaction in which Company has an interest or any breach of the
terms of Paragraphs 6 or 7 of this Agreement by Employee.
(iii) Termination by Company for Other Reasons. Company shall
----------------------------------------
have the right at any time to terminate Employee's employment
hereunder for any reason by giving him written notice (which notice
shall fix the date as of which Employee's employment is to terminate)
of its intention to do so. If Employee's employment hereunder is
terminated by Company other than for cause, Company shall be obligated
to pay Employee the severance benefits set forth in Paragraph 4(c)
hereof.
(iv) Constructive Discharge. If Employee is ever constructively
----------------------
discharged, he may terminate this Agreement and his employment
hereunder by delivering written notice to Company no later than thirty
(30) days before the effective date of termination. If Employee is
constructively discharged, Company shall be obligated to pay Employee
the severance benefits set forth in Paragraph 4(c) hereof. For
purposes of the foregoing, "constructive discharge" means the
occurrence of any one or more of the following: (i) Employee is
removed from all of the offices described in Paragraph 1 hereof; (ii)
Company fails to vest with or removes from Employee the duties,
responsibilities, authority or resources that he reasonably needs to
competently perform the duties of his office; (iii) Company decreases
Employee's basic compensation or arbitrarily and capriciously
decreases Employee's bonus; or (iv) Company transfers Employee to a
location outside the Boulder County area; and in any of such events,
Company fails to cure any of the above within thirty (30) days after
Employee gives Company written notice of such breach.
(v) Termination Upon Change of Control. Employee may terminate
----------------------------------
this Agreement and his employment hereunder for any reason within two
(2) years after a Change of Control occurs by delivering written
notice of termination to Company or its successor no less than thirty
(30) days before the effective date of termination (any such notice by
Employee which can be construed as a
4
<PAGE>
notice under either Paragraph 4 (b) (iv) or this Paragraph 4 (b) (v)
shall be deemed a notice under this Paragraph 4 (b) (v)). If Employee
so terminates, Company shall be obligated to pay Employee two and one-
half (2.50) times the severance benefits set forth in Paragraph 4 (c)
hereof, with the exception that the Paragraph 4(c) (ii) bonus
component shall be based upon a full year and not prorated to the date
of Employee's termination.
(A) A "Change of Control" will be deemed to have occurred
if: a) any person (as such term is defined in Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act") other than a person who is a shareholder of Company
as of the date of this Agreement acquires beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act)
of fifty percent (50%) or more of the combined voting power of
the then outstanding voting securities of Company; or b) the
individuals who were members of Company's Board of Directors as
of the date of this Agreement (the "Current Board Members") cease
for any reason to constitute a majority of the Board of Directors
of Company or its successor; however, if the election or the
nomination for election of any new director of Company or its
successor is approved by a vote of a majority of the individuals
who are Current Board Members, such new director shall, for the
purposes of this paragraph, be considered a Current Board Member;
or c) Company's stockholders approve (l) a merger or
consolidation of Company or Littleton Bank and the stockholders
of Company immediately before such merger or consolidation do
not, as a result of such merger or consolidation, own, directly
or indirectly, more than fifty percent (50%) of the combined
voting power of the then outstanding voting securities of the
entity resulting from such merger or consolidation in
substantially the same proportion as their ownership of the
combined voting power of the outstanding securities of Company
immediately before such merger or consolidation; or (2) a
complete liquidation or dissolution or an agreement for the sale
or other disposition of all or substantially all of the assets or
stock of Company or Littleton Bank (provided that a complete
liquidation or dissolution or the sale or other disposition of
all or substantially all the assets or stock of just Littleton
Bank will be deemed a "Change of Control" only if Employee is not
offered a position with Company or one of its subsidiaries with
responsibilities and reporting requirements
5
<PAGE>
Consistent with those responsibilities and reporting requirements
set forth in Paragraph 2 hereof).
(B) Notwithstanding and in lieu of Paragraph 4 (b) (v) (A),
a Change of Control will not be deemed to have occurred: a)
solely because fifty percent (50%) or more of the combined voting
power of the then outstanding voting securities of Company are
acquired by (1) a trustee or other fiduciary holding securities
under one or more employee benefit plans maintained for employees
of Company and its subsidiaries, or (2) any person pursuant to
the will or trust of any existing stockholder of Company, or who
is a member of the immediate family of such stockholder, or (3)
any corporation which, immediately prior to such acquisition, is
owned directly or indirectly by the stockholders in the same
proportion as their ownership of stock immediately prior to such
acquisition; or b) if Employee agrees in writing to waive a
particular Change of Control for the purposes of this Agreement.
(vi) Termination Upon Employee's Disability. In the event
--------------------------------------
Employee's employment is terminated by Company due to Employee's
disability, Company shall be obligated to pay Employee the severance
benefits set forth in Paragraph 4(c) hereof. For purposes of the
foregoing, "disability" shall mean Employee's inability due to illness
or other physical or mental disability to substantially perform his
duties as prescribed herein for a period of sixty (60) days within any
consecutive six (6) month period, and any action to be taken hereunder
based on disability shall not be effective until the expiration of
such sixty (60) day period:
(vii) Termination Upon Employee's Death. In the event that
---------------------------------
Employee dies while employed by Company, then Company shall be
obligated to pay Employee's estate the severance benefits set forth in
Paragraph 4(c) hereof.
(viii) Continuing Obligations of Employee. Notwithstanding
----------------------------------
anything to the contrary contained herein, termination of this
Agreement or Employee's employment hereunder, for whatsoever reason or
for no reason at all, by Employee or otherwise, shall not be deemed in
any way to affect Employee's obligations under Paragraphs 6 and 7 of
this Agreement, with respect to which he shall remain bound.
6
<PAGE>
(c) Severance Benefits. Provided Employee is in compliance with
------------------
Paragraph 4 (b) (viii) hereof, Company will pay or provide the following
severance benefits to Employee in lieu of any separation payments otherwise
provided upon termination of employment under any other severance pay or
similar plan or policy of Company:
(i) Twelve (12) consecutive monthly payments each equal to
one-twelfth (l/l2th) of Employee's annual basic compensation in effect
immediately prior to Employee's termination;
(ii) Twelve (12) consecutive monthly payments each equal to
one-twelfth (1/12th) of the higher of (A) Employee's discretionary
bonus for the previous calendar year, or (B) the average of Employee's
discretionary bonus for the previous three (3) calendar years (or such
fewer calendar years as Employee has been employed), in each case
prorated to the date of Employee's termination;
(iii) For the twelve (12) month period following the date of
termination of Employee's employment, Company will maintain in full
force and effect for the continued benefit of Employee each employee
benefit plan in which Employee was a participant immediately prior to
the date of Employee's termination, unless an essentially equivalent
and no less favorable benefit is provided by a subsequent employer at
no additional cost to Employee. If the terms of any employee benefit
plan of Company do not permit continued participation by Employee,
then Company will arrange to provide to Employee (at Company's cost) a
benefit substantially similar to and no less favorable than the
benefit Employee was entitled to receive under such plan at the end of
the period of coverage.(This provision specifically is not applicable
to Employee's automobile and club dues, which benefits end upon
Employee's date of termination of employment.)
(iv) For the twelve (12) month period following the date of
termination of Employee's employment, Company will treat Employee for
all purposes as an Employee under all of Company's retirement plans in
which Employee was a participant on the date of termination of
Employee's employment or under which Employee would become eligible
during such twelve (12) month period (hereinafter referred to
collectively as the "Plan"). Benefits due to Employee under the Plan
shall be computed as if Employee had continued to be an Employee of
Company for the twelve (12) month period following termination of
employment. If under the terms of the Plan such continued coverage is
not permitted, Company will pay to Employee or Employee's estate a
supplemental benefit in an amount which, when
7
<PAGE>
added to the benefits that Employee is entitled to receive under the
Plan, shall equal the amount that Employee would have received under
the Plan had Employee remained an employee of Company during such
twelve (12) month period.
(v) If any excise tax imposed under Internal Revenue Code
Section 4999 or any successor provision, as amended after the date
hereof, is due and owing by Employee as a result of any amount paid or
payable pursuant to this Paragraph 4(c), Company shall indemnify and
hold Employee harmless against all such excise taxes and any interest,
penalties or costs with respect thereto.
(vi) Company will be obligated to make all payments that become
due to Employee under this Paragraph 4(c) whether or not he obtains
other employment following termination. The payments and other
benefits provided for in this Paragraph 4(c) are intended to
supplement any compensation or other benefits that have accrued or
vested with respect to Employee or his account as of the effective
date of termination.
(vii) Company may elect to defer any payments that may become
due to Employee under this Paragraph 4(c) if, at the time the payments
become due, Company or Littleton Bank or any one of Company's other
subsidiaries is not in compliance with any regulatory-mandated minimum
capital requirements or if making the payments would cause Company's
or Littleton Bank's or any of Company's other subsidiaries' capital to
fall below such minimum capital requirements. In this event, Company
will resume making the payments as soon as it can do so without
violating such minimum capital requirements.
5. SALE OR REORGANIZATION OF COMPANY. This Agreement shall not restrict
---------------------------------
the sale, transfer, consolidation, liquidation, reorganization or disposition of
the assets of Company and to the extent that the business of Company is
conducted in another form or through another entity or entities, such entity or
entities shall be obligated to fulfill Company's obligations hereunder.
6. RESTRICTIVE COVENANT. It is mutually recognized and agreed that the
--------------------
services to be rendered pursuant to this Agreement by Employee are special,
unique and of extraordinary character. Therefore, as a condition to Company's
obligations hereunder, Employee agrees that without Company's prior written
consent, during the term of this Agreement and for a period ending on the first
anniversary of the date of termination of his employment hereunder, regardless
of cause, he will not engage in any manner, directly or indirectly, to solicit
or induce any employee or agent
8
<PAGE>
of Company or any of its subsidiaries to terminate employment with Company or
any of its subsidiaries, as the case may be, or solicit or induce any customer
of Company or any of its subsidiaries to become a customer of any person, firm,
partnership, corporation, trust or other entity that owns, controls or is a
bank, savings and loan association, credit union or similar financial
institution. Furthermore, Employee will at no time during or subsequent to the
term of his employment by Company make any statements or take any actions which
could reasonably be expected to damage the reputation or business of Company. It
is further recognized and agreed that irreparable injury will result to Company,
its businesses and property in the event of a breach of this covenant by
Employee, that such injury would be difficult if not impossible to ascertain,
and therefore, any remedy at law for any breach by Employee of this covenant
will be inadequate and Company shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damage to Company by
reason of any such breach. In addition, in the event of a breach of this
covenant by Employees Company shall also be entitled to recover reasonable costs
and attorneys' fees incurred in connection with the enforcement of its rights
hereunder. Whenever used herein, Company shall be deemed to include any
successors or any other person or entity which may hereafter acquire the
business of Company or any of its subsidiaries. The foregoing notwithstanding,
should the assets of Company be disposed of in such a manner that no purchaser
thereof has acquired a going business, then Employee shall not be bound by the
covenants expressed in this paragraph.
7. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee hereby covenants
------------------------------------------
and agrees that he will not, except as may be required in connection with his
employment under this Agreement or compelled by any judicial or administrative
order, directly or indirectly, use or disclose to any other person, firm or
corporation, whether during or subsequent to the term of his employment by
Company, irrespective of the time, manner or cause of the termination of his
employment, any information of a proprietary nature belonging to Company, or
which could be reasonably expected to have an adverse effect on Company, its
businesses, property or financial condition, including but not limited to
records, data, documents, processes, specifications, methods of operation,
techniques and know-how, plans, policies, customer lists, the names and
addresses of suppliers or representatives, investigations or other matters of
any kind or description relating to the products, services, suppliers,
customers, sales or businesses of Company. All records, files, documents,
equipment and the like relating to Company's businesses which Employee shall
prepare, use or observe shall be and remain the sole property of Company, and
upon termination of this Agreement or his employment hereunder for any reason,
Employee shall return to the possession of Company any items of that nature and
any copies thereof which he may have in his possession.
9
<PAGE>
8. INDEMNITY.
---------
(a) Indemnification. Company will indemnify Employee (and, upon his
---------------
death, his heirs, executors and administrators) to the fullest extent
permitted by law against all expenses, including reasonable attorneys'
fees, court and investigative costs, judgments, fines and amounts paid in
settlement (collectively, "Expenses") reasonably incurred by him in
connection with or arising out of any pending, threatened or completed
action, suit or proceeding in which he may become involved by reason of his
having been an officer or director of Company or any of its subsidiaries.
The indemnification rights provided for herein are not exclusive and will
supplement any rights to indemnification that Employee may have under any
applicable bylaw or charter provision of Company or any of its
subsidiaries, or any resolution of Company or any of its subsidiaries, or
any applicable statute.
(b) Advancement of Expenses. In the event that Employee becomes a
-----------------------
party, or is threatened to be made a party, to any pending, threatened or
completed action, suit or proceeding for which Company or any of its
subsidiaries is permitted or required to indemnify him under this
Agreement, any applicable bylaw or charter provision of Company or any of
its subsidiaries, any resolution of Company or any of its subsidiaries, or
any applicable statute, Company will, to the fullest extent permitted by
law, advance all Expenses incurred by Employee in connection with the
investigation, defense, settlement or appeal of any threatened, pending or
completed action, suit or proceeding, subject to receipt by Company of a
written undertaking from Employee to reimburse Company for all Expenses
actually paid by Company to or on behalf of Employee in the event it shall
be ultimately determined that Company or any of its subsidiaries cannot
lawfully indemnify Employee for such Expenses, and to assign to Company all
rights of Employee to indemnification under any policy of directors' and
officers' liability insurance to the extent of the amount of Expenses
actually paid by Company to or on behalf of Employee.
(c) Litigation. Unless precluded by an actual or potential conflict
----------
of interest, Company will have the right to recommend counsel to Employee
to represent him in connection with any claim covered by this Section 8.
Further, Employee's choice of counsel, his decision to contest or settle
any such claim, and the terms and amount of the settlement of any such
claim will be subject to Company's prior reasonable approval in writing.
9. ARBITRATION. Any disputes arising out of this Agreement or connected
-----------
with Employee's employment shall be submitted by Employee and Company to
arbitration by the American Arbitration Association or its successor, and the
determination of the American
10
<PAGE>
Arbitration Association or its successor shall be final and absolute. The
arbitrator shall be governed by the duly promulgated rules and regulations of
the American Arbitration Association or its successor, and the pertinent
provisions of the laws of the State of Colorado relating to arbitration. The
decision of the arbitrator may be entered as a judgment in any court in the
State of Colorado or elsewhere. The prevailing party shall be entitled to
receive reasonable attorneys' fees incurred in connection with such arbitration
in addition to such other costs and expenses as the arbitrators may award.
10. INTERPRETATION. This Agreement shall be construed in accordance with
--------------
the internal laws of the State of Colorado. The titles of the paragraphs have
been inserted as a matter of convenience of reference only and shall not be
construed to control or affect the meaning or construction of this Agreement.
11. SEVERABILITY. In the event that any portion of this Agreement is found
------------
to be in violation of or conflict with any federal or state law, the parties
agree that said portion shall be modified only to the extent necessary to enable
it to comply with such law.
12. ASSIGNMENT. This Agreement shall not be assignable by Employee, but
----------
shall be binding upon and inure to the benefit of the heirs, successors and
assigns of Employee and Company.
13. NOTICES. All notices or other communications in connection with this
-------
Agreement shall be in writing and shall be deemed to have been duly given when
delivered, sent by professional courier or mailed first class, postage prepaid
and addressed as follows:
(i) If to Company, addressed to:
Equitable Bankshares of Colorado, Inc.
821 - 17th Street
Denver, Colorado 80202
Attn: Steven Bangert
with a copy to:
Holleb & Coff
Suite 4100
55 E. Monroe
Chicago, Illinois 60603
Attn: Mark S. Kipnis
11
<PAGE>
(ii) If to Employee, addressed to:
Charles E. Holmes
1959 Poplar Avenue
Boulder, Colorado 80304
or such other address or addressed to the attention of such other person or
persons as either of the parties may notify the other in accordance with the
provisions of this paragraph.
14. ENTIRE AGREEMENT. This Agreement is the entire agreement and
----------------
understanding of the parties hereto with respect to the subject matter hereof
and supersedes any and all prior and contemporaneous negotiations,
understandings and agreements with regard to the subject matter hereof, whether
oral or written. No representation, inducement, agreement, promise or
understanding altering, modifying, taking from or adding to the terms and
conditions hereof shall have any force or effect unless the same is in writing
and validly executed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written
EQUITABLE BANKSHARES OF
COLORADO, INC.
/s/ Charles E. Holmes By: /s/ Steven Bangert
------------------------- ----------------------------
CHARLES E. HOLMES Steven Bangert
Chief Executive Officer
12
<PAGE>
Exhibit 10.13
-------------
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
16th day of November 1997, by and between Colorado Business Bankshares of
Colorado, Inc., a Colorado corporation ("Company"), and Andrew L. Bacon
("Employee").
WITNESSETH:
WHEREAS, Company desires Employee to become employed by Company or one of
its subsidiaries and Employee desires to become employed by Company or one of
its subsidiaries upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT. Company hereby agrees to employ Employee, and Employee
----------
hereby agrees to be employed by Company, as (a) President of the West branch of
Company's subsidiary Colorado Business Bank, N.A. (Bank"), and such other
different executive capacities with the Company, Bank or any Company subsidiary
as may be determined from time to time by the Boards of Directors of Company,
Bank or such other subsidiary.
2. RESPONSIBILITIES OF EMPLOYMENT. During the term of his employment,
------------------------------
Employee:
(a) shall diligently and faithfully serve Company and its subsidiaries in
such executive capacities as may be determined from time to time by the Boards
of Directors of Company and its subsidiaries, and he shall devote his best
efforts and entire business time, services and attention to the advancement of
Company's interests;
(b) shall not, without the prior written consent of the Board of Directors
of Company, engage in any other employment or business, directly or indirectly,
as a sole proprietor, a member of a partnership or limited liability company, as
a director, officer, employee or shareholder of a corporation not affiliated
with Company, or as a consultant or otherwise, whether for compensation or
otherwise, which could reasonably be expected to or does interfere with
Employee's performance of his duties hereunder or which business is in
competition in any way with the business then being conducted by Company and its
subsidiaries; provided, however, that the provisions of this subparagraph (b)
shall not be deemed to prohibit Employee's ownership of stock in any publicly
owned corporation so long as Employee's ownership, directly and indirectly, when
aggregated with the direct and indirect ownership of all members of Employee's
family, does not exceed one percent (1%) of the total outstanding stock of such
publicly owned corporation, measured by reference to either market value or
voting power;
<PAGE>
(c) shall diligently and faithfully carry out the policies, programs and
directions of the Boards of Directors of Company and its subsidiaries;
(d) shall fully cooperate with such other officers of Company and its
subsidiaries as may be elected or appointed by the Boards of Directors of
Company and its subsidiaries; and
(e) shall report to the President of Company.
3. COMPENSATION. Company will compensate Employee for his services during the
------------
term of this Agreement and his employment hereunder as follows:
(a) Basic Compensation. Company shall pay to Employee as a minimum basic
------------------
compensation the sum of Seventy-Five Thousand Dollars ($75,000.00) per year,
payable in equal monthly installments. Employee's basic compensation may be
increased from time to time in the sole discretion of Company's Board of
Directors.
(b) Benefits. Employee shall be entitled to a monthly automobile allowance
--------
(amount to be agreed upon by Employee and Company's President), a cellular
phone, to be used in the course of performing his duties hereunder and shall be
entitled to participate in any and all other benefits from time to time afforded
executive employees of Company, including, without limitation, health, accident,
hospitalization and life insurance programs. Company shall additionally pay the
monthly (not initial or initiation) dues for Employee at community or business
related clubs or activities to be agreed upon by Employee and Company's
President.
(c) Reimbursement of expenses. Employee shall be entitled to reimbursement
-------------------------
of ordinary and necessary out-of-pocket expenses reasonably incurred by him on
behalf of Company in the course of performing his duties hereunder, subject to
his furnishing appropriate documentation relative to such expenses in form and
substance satisfactory to Company.
(d) Vacations. Employee shall be entitled to four (4) weeks paid vacation
---------
each year, subject to Company's general vacation policy.
(e) Discretionary Bonus Plan. Company has a discretionary bonus plan for
------------------------
key executives. Employee shall been titled to participate in such discretionary
bonus plan.
(f) Company has an Incentive Stock Option Plan (the " Plan" ) for key
employees. Employee shall be entitled to participate in such plan.
(g) Allocations. As Company and Employee intend that Employee may he a
-----------
dual employee of Company and one or more of its subsidiaries, Company may
allocate to one or more of its subsidiaries any portion of Employee's basic and
other compensation that Company and one or more of its subsidiaries deem to be a
lawful and appropriate allocation, but no such allocation will relieve Company
of any of its obligations to Employee under this Agreement.
2
<PAGE>
4. TERM AND TERMINATION.
--------------------
(a) Term. The term of Employee's employment shall be a one (1) year term
----
beginning on the date hereof. Upon expiration of the stated term of this
Agreement, Employee's employment with Company shall revert to the status of
employment at will and shall thereafter be subject to termination by either
party and at any time regardless of cause.
(b) Termination. Upon termination of this Agreement by Company, by Employee
-----------
or upon the death or disability of Employee, the rights and obligations of
Employee shall be as follows:
(i) Termination by Employee. In the event Employee elects to
-----------------------
terminate his employment hereunder, this Agreement shall immediately
terminate without any further obligation on the part of Company, except
that Company shall pay to Employee such compensation pursuant to Paragraph
3 hereof as may be accrued and unpaid on the date of termination of
employment.
(ii) Termination by Company for Cause. if Employee's employment
--------------------------------
hereunder is terminated by Company for cause, this Agreement shall immediately
terminate without any further obligation on the part of Company, except that
Company shall pay to Employee such compensation pursuant to Paragraph 3 hereof
as may be accrued and unpaid on the date of such termination of employment. For
purposes of this Agreement, "cause shall mean willful failure or neglect of
Employee to perform his duties as prescribed herein, the conviction of a felony,
theft, embezzlement or improper use of corporate funds by Employee, self dealing
detrimental to Company, any attempt to obtain any personal profit from any
transaction in which Company has an interest or any breach of the terms of
Paragraphs 5 or 7 of this Agreement by Employee.
Termination by Company for Other Reasons. Company shall have the right at any
- ----------------------------------------
time to terminate Employee's employment hereunder for any reason by giving him
written notice (which notice shall fix the date as of which Employee's
employment is to terminate) of its intention to do so. If Employee's employment
hereunder is terminated by Company other than for cause, Company shall be
obligated to pay Employee the severance benefits set forth in Paragraph 4(c)
hereof.
(iv) Constructive Discharge. If Employee is ever constructively discharged,
----------------------
he may terminate this Agreement and his employment hereunder by delivering
written notice to Company no later than thirty (30) days before the effective
date of termination. If Employee is constructively discharged, Company shall be
obligated to pay Employee the severance benefits set forth in Paragraph 4(c)
hereof. For purposes of the foregoing, "constructive discharge" means the
occurrence of any-one or more of the following: (i) Employee is removed from all
of the offices described in Paragraph 1 hereof; (ii) Company fails to vest with
or removes from Employee the duties, responsibilities, authority or resources
that he reasonably needs to competently perform the duties of his office; (iii)
Company decreases Employee's basic compensation or arbitrarily and capriciously
decreases Employee's bonus; or (iv) Company transfers Employee to a location
outside the Denver
3
<PAGE>
Metropoliton area; and in any of such events, Company fails to cure any of the
above within thirty (30) days after Employee gives Company written notice of
such breach.
(v) Termination Upon Change of Control. Employee may terminate this
----------------------------------
Agreement and his employment hereunder for any reason within two (2) years after
a Change of Control occurs by delivering written notice of termination to
Company or its successor no less than thirty (30) days before the effective date
of termination (any such notice by Employee which can be construed as a notice
under either Paragraph 4 (b) (iv) or this Paragraph 4 (b) (v)shall be deemed a
notice under this Paragraph 4b)(v). If Employee so terminates, Company shall be
obligated to pay Employee one and ninety-nine hundredths (1.99) times the
severance benefits set forth in Paragraph 4(c) hereof, with the exception that
the Paragraph 4(c) (ii) bonus component shall be based upon a full year and not
prorated to the date of Employee's termination.
(A) A "Change of Control" will be deemed to have occurred if: a) any person
(as such term is defined in Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the 111934 Act") other than a person who is a
shareholder of Company as of the date of this Agreement acquires beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
fifty percent (50%) or more of the combined voting power of the then outstanding
voting securities of Company; or b) the individuals who were members of
Company's Board of Directors as of the date of this Agreement (the "Current
Board Members") cease for any reason to constitute a majority of the Board of
Directors of Company or its successor; however, it the election or the
nomination for election of any new director of Company or its successor is
approved by a vote of a majority of the individuals who are Current Board
Members, such new director shall, for the purposes of this paragraph, be
considered a Current Board Member; or c) Company's stockholders approve (1) a
merger or consolidation of Company or Bank and the stockholders of Company
immediately before such merger or consolidation do not, as a result of such
merger or consolidation, own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting securities of
the entity resulting from such merger or consolidation in substantially the same
proportion as their ownership of the combined voting power of the outstanding
securities of Company immediately before such merger or consolidation; or (2,) a
complete liquidation or dissolution or an agreement for the sale or other
disposition of all or substantially all of the assets or stock of Company or
Bank (provided that a complete liquidation or dissolution or the sale or other
disposition of all or substantially all the assets or stock of just Bank will be
deemed a "Change of Control" only if Employee is not offered a position with
Company or one of its subsidiaries with responsibilities and reporting
requirements consistent with those responsibilities and reporting requirements
set forth in Paragraph 2 -hereof).
(B) Notwithstanding and in lieu of Paragraph 4(b)(v)(A), a Change of
Control will not be deemed to have occurred: a) solely because fifty percent
(50%) or more of the combined voting power of-the then outstanding voting
securities of Company are acquired by (1) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained for employees of
Company and its subsidiaries, or (2) any person pursuant to the will or trust of
any existing stockholder of Company, or who is a member of the immediate family
of such stockholder, or (3)
4
<PAGE>
any corporation which, immediately prior to such acquisition, is owned directly
or indirectly by the stockholders in the same proportion as their ownership of
stock immediately prior to such acquisition; or b) if Employee agrees in writing
to waive a particular Change of Control for the purposes of this Agreement.
(vi) Termination Upon Employee's Disability. In the event Employee's
--------------------------------------
employment is terminated by Company due to Employee's disability, Company shall
be obligated to pay Employee the severance benefits set forth in Paragraph 4(c)
hereof. For purposes of the foregoing, "disability" shall mean Employee's
inability due to illness or other physical or mental disability to substantially
perform his duties as prescribed herein for a period of sixty (60) days within
any consecutive six (6) month period, and any action to be taken hereunder based
on disability shall not be effective until the expiration of such sixty (60) day
period.
(vii) Termination Upon Employee's Death. In the event that Employee
---------------------------------
dies while employed by Company, then Company shall be obligated to pay
Employee's estate the severance benefits set forth in Paragraph 4(c) hereof.
(viii) Continuing Obligations of Employee. Notwithstanding anything to
----------------------------------
the contrary contained herein, termination of this Agreement or Employee's
employment hereunder, for whatsoever reason or for no reason at all, by Employee
or otherwise, shall not be deemed in any way to affect Employee's obligations
under Paragraphs 6 and 7 of this Agreement, with respect to which he shall
remain bound.
(c) Severance Benefits. Provided Employee is in compliance with Paragraph
------------------
4(B)(viii) hereof, Company will pay or provide the following severance benefits
to Employee in lieu of any separation payments otherwise provided upon
termination of employment under any other severance pay or similar plan or
policy of Company:
(i) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of Employee's annual basic compensation in effect immediately
prior to Employee's termination;
(ii) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of the higher of (A) Employee's discretionary bonus for the
previous calendar year, or (B) the average of Employee's discretionary bonus for
the previous three (3) calendar years (or such fewer calendar years as Employee
has been employed), in each case prorated to the date of Employee's termination;
(iii) For the twelve (12) month period following the date of
termination of Employee Is employment, Company will maintain in full force and
effect for the continued benefit of Employee each employee benefit plan in which
Employee was a participant immediately prior to the date of Employee's
termination, unless an essentially equivalent and no less favorable benefit is
provided by a subsequent employer at no additional cost to Employee. If the
terms of any employee benefit plan of Company do not permit continued
participation by Employee, then Company will arrange to provide to Employee (at
Company' s cost) a benefit substantially similar to and no less
5
<PAGE>
favorable than the benefit Employee was entitled to receive under such plan at
the end of the period of coverage. (This provision specifically is not
applicable to Employee's automobile and club dues, which benefits end upon
Employee's date of termination of employment.)
(iv) For the twelve (12) month period following the date of
termination of Employee's employment, Company will treat Employee for all
purposes as an Employee under all of Company's retirement plans in which
Employee was a participant on the date of termination of Employee's employment
or under which Employee would become eligible during such twelve (12) month
period (hereinafter referred to collectively as the "Plan"). Benefits due to
Employee under the Plan shall be computed as if Employee had continued to be an
Employee of Company for the twelve (12) month period following termination of
employment. If under the terms of the Plan such continued coverage is not
permitted, Company will pay to Employee or Employee Is estate a supplemental
benefit in an amount which, when added to the benefits that Employee is entitled
to receive under the Plan, shall equal the amount that Employee would have
received under the Plan had Employee remained an employee of Company during such
twelve (12) month period.
(v) If any excise tax imposed under Internal Revenue Code Section
4999 or any successor provision, as amended after the date hereof, is due and
owing by Employee as a result of any amount paid or payable pursuant to this
Paragraph 4 (c), Company shall indemnify and hold Employee harmless against all
such excise taxes and any interest, penalties or costs with respect thereto.
(vi) Company will be obligated to make all payments that become due
to Employee under this Paragraph 4(c) whether or not he obtains other employment
following termination. The payments and other benefits provided for in this
Paragraph 4(c) are intended to supplement any compensation or other benefits
that have accrued or vested with respect to Employee or his account as of the
effective date of termination.
(vii) Company may elect to defer any payments that may become due to
Employee under this Paragraph 4(c) if, at the time the payments become due,
Company, Bank or any of Company's other subsidiaries is not in compliance with
any regulatory-mandated minimum capital requirements or if making the payments
would cause Company's, Bank's or any of Company's other subsidiaries, capital to
fall below such minimum capital requirements. In this event, Company will resume
making the payments as soon as it can do so without violating such minimum
capital requirements.
5. SALE OR REORGANIZATION OF COMPANY. This Agreement shall not restrict
---------------------------------
the sale, transfer, consolidation, liquidation, reorganization or disposition of
the assets of Company and to the extent that the business of Company is
conducted in another form or through another entity or entities, such entity or
entities shall be obligated to fulfill Company's obligations hereunder.
6. RESTRICTIVE COVENANT. It is mutually recognized and agreed that the
--------------------
services to be rendered pursuant to this Agreement by Employee are special,
unique and of extraordinary
6
<PAGE>
character. Therefore, as a condition to Company's obligations hereunder,
Employee agrees that without Company's prior written consent, during the term of
this Agreement and for a period ending on the first anniversary of the date of
termination of his employment hereunder, regardless of cause, he will not engage
in any manner, directly or indirectly, to solicit or induce any employee or
agent of Company or any of its subsidiaries to terminate employment with Company
or any of its subsidiaries, as the case may be, or solicit or induce any
customer of Company or any of its subsidiaries to become a customer of any
person, firm, partnership, corporation, trust or other entity that owns,
controls or is a bank, savings and loan association, credit union or similar
financial institution. Furthermore, Employee will at no time during or
subsequent to the term of his employment by Company make any statements or take
any actions which could reasonably be expected to damage the reputation or
business of Company. It is further recognized and agreed that irreparable injury
will result to Company, its businesses and property in the event of a breach of
this covenant by Employee, that such injury would be difficult if not impossible
to ascertain, and therefore, any remedy at law for any breach by Employee of
this covenant will be inadequate and Company shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damage to
Company by reason of any such breach. In addition, in the event of a breach of
this covenant by Employee, Company shall also be entitled to recover reasonable
costs and attorneys' fees incurred in connection with the enforcement of its
rights hereunder. Whenever used herein, Company shall be deemed to include any
successors or any other person or entity which may hereafter acquire the
business of Company or any of its subsidiaries. The foregoing notwithstanding,
should the assets of Company be disposed of in such a manner that no purchaser
thereof has acquired a going business, then Employee shall not be bound by the
covenants expressed in this paragraph.
7. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee hereby covenants
------------------------------------------
and agrees that he will not, except as may be required in connection with his
employment under this Agreement or compelled by any judicial or administrative
order, directly or indirectly, use or disclose to any other person, firm or
corporation, whether during or subsequent to the term of his employment by
Company, irrespective of the time, manner or cause of the termination of his
employment, any information of a proprietary nature belonging to Company, or
which could be reasonably expected to have an adverse effect on Company, its
businesses, property or financial condition, including but not limited to
records, data, documents, processes, specifications, methods of operation,
techniques and know-how, plans, policies, customer lists, the names and
addresses of suppliers or representatives, investigations or other matters of
any kind or description relating to the products, services, suppliers,
customers, sales or businesses of Company. All records, files, documents,
equipment and the like relating to Company's businesses which Employee shall
prepare, use or observe shall be and remain the sole property of Company, and
upon termination of this Agreement or his employment hereunder for any reason,
Employee shall return to the possession of Company any items of that nature and
any copies thereof which he may have in his possession.
8. INDEMNITY.
---------
(a) Indemnification. Company will indemnify Employee (and, upon his
---------------
death, his heirs, executors and administrators) to the fullest extent permitted
by law against all expenses,
7
<PAGE>
including reasonable attorneys' fees, court and investigative costs, judgments,
fines and amounts paid in settlement (collectively, "Expenses") reasonably
incurred by him in connection with or arising out of any pending, threatened or
completed action, suit or proceeding in which he may become involved by reason
of his having been an officer or director of Company or any of its subsidiaries.
The indemnification rights provided for herein are not exclusive and will
supplement any rights to indemnification that Employee may have under any
applicable bylaw or charter provision of Company or any of its subsidiaries, or
any resolution of Company or any of its subsidiaries, or any applicable statute.
(b) Advancement of Expenses. In the event that Employee becomes a party, or
-----------------------
is threatened to be made a party, to any pending, threatened or completed
action, suit or proceeding for which Company or any of its subsidiaries is
permitted or required to indemnify him under this Agreement, any applicable
bylaw or charter provision of Company or any of its subsidiaries, any resolution
of Company or any of its subsidiaries, or any applicable statute, Company will,
to the fullest extent permitted by law, advance all Expenses incurred by
Employee in connection with the investigation, defense, settlement or appeal of
any threatened, pending or completed action, suit or proceeding, subject to
receipt by Company of a written undertaking from Employee to reimburse Company
for all Expenses actually paid by Company to or on behalf of Employee in the
event it shall be ultimately determined that Company or any of its subsidiaries
cannot lawfully indemnify Employee for such Expenses, and to assign to Company
all rights of Employee to indemnification under any policy of directors' and
officers' liability insurance to the extent of the amount of Expenses actually
paid by Company to or on behalf of Employee.
(c) Litigation. Unless precluded by an actual or potential conflict of
----------
interest, Company will have the right to recommend counsel to Employee to
represent him in connection with any claim covered by this Section 8. Further,
Employee's choice of counsel, his decision to contest or settle any such claim,
and the terms and amount of the settlement of any such claim will be subject to
Company's prior reasonable approval in writing.
9. ARBITRATION. Any disputes arising out of this Agreement or connected
-----------
with Employee's employment shall be submitted by Employee and Company to
arbitration by the American Arbitration Association or its successor, and the
determination of the American Arbitration Association or its successor shall be
final and absolute. The arbitrator shall be governed by the duly promulgated
rules and regulations of the American Arbitration Association or its successor,
and the pertinent provisions of the laws of the State of Colorado relating to
arbitration. The decision of the arbitrator may be entered as a judgment in any
court in the State of Colorado or elsewhere. The prevailing party shall be
entitled to receive reasonable attorneys' fees incurred in connection with such
arbitration in addition to such other costs and expenses as the arbitrators may
award.
10. INTERPRETATION. This Agreement shall be construed in accordance with
--------------
the internal laws of the State of Colorado. The titles of the paragraphs have
been inserted as a matter
8
<PAGE>
of convenience of reference only and shall not be construed to control or affect
the meaning or construction of this Agreement.
11. SEVERABILITY. In the event that any portion of this Agreement is found
------------
to be in violation of or conflict with any federal or state law, the parties
agree that said portion shall be modified only to the extent necessary to enable
it to comply with such law.
12. ASSIGNMENT. This Agreement shall not be assignable by Employee, but
----------
shall be binding upon and inure to the benefit of the heirs, successors and
assigns of Employee and Company.
13. NOTICES. All notices or other communications in connection with this
-------
Agreement shall be in writing and shall be deemed to have been duly given when
delivered, sent by professional courier or mailed first class, postage prepaid
and addressed as follows:
(i) If to Company, addressed to:
Colorado Bankshares of Colorado, Inc.
821 - 17th Street
Denver, Colorado 80202
Attn: Steven Bangert
(ii) If to Employee, addressed to:
Andrew L. Bacon
12442 W. 16th Dr.
Lakewood, CO 80215
Or such other address or addressed to the attention of such other person or
persons as either of the parties may notify the other in accordance with the
provisions of this paragraph.
14. ENTIRE AGREEMENT. This Agreement is the entire agreement and
----------------
understanding of the parties hereto with respect to the subject matter hereof
and supersedes any and all prior and contemporaneous negotiations,
understandings and agreements within,
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COLORADO BUSINESS BANKSHARES, INC.
By: /s/ Andrew L. Bacon By: /s/ Steven Bangert
----------------------------- ----------------------------------
Andrew L. Bacon Steven Bangert
Chief Executive Officer
9
<PAGE>
Exhibit 10.14
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the 1st
day of October, 1997, by and between Colorado Business Bankshares, Inc., a
Colorado corporation ("Company"), and K. Denise Albrecht ("Employee").
WITNESSETH:
WHEREAS, Employee desires to be employed by Company or one of its
subsidiaries and the parties desire to set forth certain conditions of
Employee's employment as hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT. Company hereby agrees to employ Employee, and Employee hereby
----------
agrees to be employed by Company, as (1) Senior Vice President and (b) such
other different executive capacities with the Company, CBB or any other Company
subsidiary as may be determined from time to time by the Boards of Directors of
Company, CBB or such other subsidiary.
2. RESPONSIBILITIES OF EMPLOYMENT. During the term of Employee's employment,
------------------------------
Employee:
(a) shall diligently and faithfully serve Company and its subsidiaries
in such executive capacities as may be determined from time to time by the
Boards of Directors of Company and its subsidiaries, and Employee shall
devote Employee's best efforts and entire business time, services and
attention to the advancement of Company's interests;
(b) shall not, without the prior written consent of the Board of
Directors of Company, engage in any other employment or business, directly
or indirectly, as a sole proprietor, a member of a partnership or limited
liability company, as a director, officer, employee or shareholder of a
corporation not affiliated with Company, or as a consult or otherwise,
whether for compensation or otherwise, which could reasonably be expected
to or does interfere with Employee's performance of Employee's duties
hereunder or which business is in competition in any way with the business
then being conducted by Company and its subsidiaries; provided, however,
that the provisions of this subparagraph (b) shall not be deemed to
prohibit Employee's ownership of stock in any publicly owned corporation
so long as Employee's ownership, directly and indirectly, when aggregated
with the direct and indirect ownership of all members of Employee's family,
does not exceed one percent ( 1%.) of the total outstanding stock of such
publicly owned corporation, measured by reference to either market value or
voting power;
<PAGE>
(c) shall diligently and faithfully carry out the policies, programs
and directions of the Boards of Directors of Company and its subsidiaries;
(d) shall fully cooperate with such other officers of Company and its
subsidiaries as may be elected or appointed by the Boards of Directors of
Company and its subsidiaries; and
(e) shall report to the appropriate executive officer of Company.
3. COMPENSATION. Company will compensate Employee for Employee's services
------------
during the term of this Agreement and Employee's employment hereunder as
follows:
(a) Basic Compensation. Company shall pay to Employee as a minimum
------------------
basic compensation the sum of Ninety Thousand Dollars ($90,000.00) per
year, payable in equal semi-monthly installments. Employee's basic
compensation may be increased from time to time in the sole discretion of
Company's Board of Directors,
(b) Benefits. Employee shall be entitled to use a cellular phone and
--------
have parking privileges in the course of performing her duties hereunder
and shall be entitled to participate in any and all other benefits from
time to time afforded executive employees of Company, including, without
limitation, health, accident, hospitalization and life insurance programs.
Company shall additionally pay the monthly (not initial or initiation) dues
for Employee at community or business related clubs or activities to be
agreed upon by Employee and Company.
(c) Reimbursement of Expenses. Employee shall be entitled to
-------------------------
reimbursement of ordinary and necessary out-of-pocket expenses reasonably
incurred by Employee on behalf of Company in the course of performing
Employee's duties hereunder, subject to Employee furnishing appropriate
documentation relative to such expenses in form and substance satisfactory
to Company.
(d) Vacations. Employee shall be entitled to four (4) weeks paid
---------
vacation each year, subject to Company's general vacation policy.
(e) Discretionary Bonus Plan. Company is in the process of developing
------------------------
a discretionary bonus plan for key executives. Employee shall be entitled
to participate in such discretionary bonus plan. Employee shall
additionally receive a Ten Thousand Dollar ($10,000.00) bonus on February
28, 1998 providing you are still actively employed by Company on that date
and have met the qualitative goals agreed upon and referenced in employment
offer dated September 9, 1997.
2
<PAGE>
(f) Allocations. As Company and Employee intend that Employee may be
-----------
a dual employee of Company and one or more of its subsidiaries, Company may
allocate to one or more of its subsidiaries any portion of Employee's basic
and other compensation that Company and one or more of its subsidiaries
deem to be a lawful and appropriate allocation, but no such allocation will
relieve Company of any of its obligations to Employee under this Agreement.
4. TERM AND TERMINATION.
--------------------
(a) Term. The term of Employee's employment shall be a one (1) year term
----
beginning on the date hereof. Upon expiration of the stated term of this
Agreement, Employee's employment with Company shall revert to the status of
employment at will and shall thereafter be subject to termination by either
party and at any time regardless of cause.
(b) Termination. Upon termination of this Agreement by Company, by
-----------
Employee or upon the death or disability of Employee, the rights and obligations
of Employee shall be as follows:
(i) Termination by Employee. In the event Employee elects to
-----------------------
terminate Employee's employment hereunder, this Agreement shall immediately
terminate without any further obligation on the part of Company, except
that Company shall pay to Employee such compensation pursuant to Paragraph
3 hereof as may be accrued and unpaid on the date of termination of
employment.
(ii) Termination by Company for Cause. if Employee's employment
--------------------------------
hereunder is terminated by Company for cause, this Agreement shall
immediately terminate without any further obligation on the part of
Company, except that Company shall pay to Employee such compensation
pursuant to Paragraph 3 hereof as may be accrued and unpaid on the date of
such termination of employment. For purposes of this Agreement, "cause"
shall mean willful failure or neglect of Employee to perform Employee's
duties as prescribed herein, the conviction of a felony, theft,
embezzlement or improper use of corporate funds by Employee, self dealing
detrimental to Company, any attempt to obtain any personal profit from any
transaction in which Company has an interest or any breach of the terms of
Paragraphs 6 or 7 of this Agreement by Employee.
3
<PAGE>
(iii) Termination by Company for Other Reasons. Company shall have
----------------------------------------
the right at any time to terminate Employee' s employment hereunder for any
reason by giving Employee written notice (which notice shall fix the date
as of which Employee's employment is to terminate) of its intention to do
so. If Employee's employment hereunder is terminated by Company other than
for cause, Company shall be obligated to pay Employee the severance
benefits set forth in Paragraph 4(c) hereof.
(iv) Constructive Discharge. If Employee is ever constructively
----------------------
discharged, Employee may terminate this Agreement and Employee's employment
hereunder by delivering written notice to Company no later than thirty (30)
days before the effective date of termination. If Employee is
constructively discharged, Company shall be obligated to pay Employee the
severance benefits set forth in Paragraph 4(c) hereof. For purposes of the
foregoing, "constructive discharge" means the occurrence of any one or more
of the following: (i) Employee is removed from all of the offices
described in Paragraph 1 hereof;(ii) Company fails to vest with or removes
from Employee the duties, responsibilities, authority or resources that
Employee reasonably needs to competently perform the duties of Employee's
office; (iii) Company decreases Employee's basic compensation or
arbitrarily and capriciously decreases Employee's bonus; or (iv) Company
transfers Employee to a location outside the Denver metropolitan area; and
in any of such events, Company fails to cure any of the above within thirty
(30) days after Employee gives Company written notice of such breach.
(v) Termination Upon Change of Control. If a Change of Control
----------------------------------
occurs within seven (7) years after the date of this Agreement, Employee
may terminate this Agreement and Employee's employment hereunder for any
reason within two (2) years after a Change of Control occurs by delivering
written notice of termination to Company or its successor no less than
thirty (30) days before the effective date of termination (any such notice
by Employee which can be construed as a notice under either Paragraph 4 (b)
(iv) or this Paragraph 4 (b) (v) shall be deemed a notice under this
Paragraph 4 (b) (v)). If Employee so terminates, Company shall be obligated
to pay Employee two (2) times the severance benefits set forth in Paragraph
4 (c) hereof, with the exception that the Paragraph 4(c)(ii) bonus
component shall be based upon a full year and not prorated to the date of
Employee's termination.
(A) A "Change of Control" will be deemed to have occurred if: a) any
person (as such term is defined in Section 13 (d) or 14 (d) of the Securities
Exchange Act of 1934, as amended (the 111934 Act") other than a person who is a
shareholder of Company as of the date of this Agreement acquires beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
fifty
4
<PAGE>
percent (50%) or more of the combined voting power of the then outstanding
voting securities of Company; or b) the individuals who were members of
Company's Board of Directors as of the date of this Agreement (the "Current
Board Members") cease for any reason to constitute a majority of the Board of
Directors of Company or its successor; however, if the election or the
nomination for election of any new director of Company or its successor is
approved by a vote of a majority of the individuals who are Current Board
Members, such new director shall, for the purposes of this paragraph, be
considered a Current Board Member; or c) Company's stockholders approve (1) a
merger or consolidation of Company or CBB and the stockholders of Company
immediately before such merger or consolidation do not, as a result of such
merger or consolidation, own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting securities of
the entity resulting from such merger or consolidation in substantially the same
proportion as their ownership of the combined voting power of the outstanding
securities of Company immediately before such merger or consolidations or (2) a
complete liquidation or dissolution or an agreement for the sale or other
disposition of all or substantially all of the assets or stock of Company or CBB
(provided that a complete liquidation or dissolution or the sale or other
disposition of all or substantially all the assets or stock of just CBB will be
deemed a "Change of Control", only if Employee is not offered a position with
Company or one of its subsidiaries with responsibilities, although not
necessarily the same title, and reporting requirements consistent with those
responsibilities and reporting requirements set forth in Paragraph 2 hereof).
(B) Notwithstanding and in lieu of Paragraph 4(b)(v)(A), a Change of
Control will not be deemed to have occurred: a) solely because fifty percent
(50%) or more of the combined voting power of the then outstanding voting
securities of Company are acquired by (1) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained for employees of
Company and its subsidiaries, or (2) any person pursuant to the will or trust of
any existing stockholder of Company, or who is a member of the immediate family
of such stockholder, or (3) any corporation which, immediately prior to such
acquisition, is owned directly or indirectly by the stockholders in the same
proportion as their ownership of stock immediately prior to such acquisition; or
b) if Employee agrees in writing to waive a particular Change of Control for the
purposes of this Agreement.
5
<PAGE>
(vi) Termination Upon Employee's Disability. In the event
--------------------------------------
Employee's employment is terminated by Company due to Employee's
disability, Company shall be obligated to pay Employee the severance
benefits set forth in Paragraph 4(c) hereof. For purposes of the foregoing,
"disability" shall mean Employee's inability due to illness or other
physical or mental disability to substantially perform Employee's duties as
prescribed herein for a period of sixty (60) days within any consecutive
six (6) month period, and any action to be taken hereunder based on
disability shall not be effective until the expiration of such sixty (60)
day period.
(vii) Termination Upon Employee's Death. In the event that Employee
---------------------------------
dies while employed by Company, then Company shall be obligated to pay
Employee's estate the severance benefits set forth in Paragraph 4(c)
hereof.
(viii) Continuing Obligations of Employee. Notwithstanding anything
----------------------------------
to the contrary contained herein, termination of this Agreement or
Employee's employment hereunder, for whatsoever reason or for no reason at
all, by Employee or otherwise shall not be deemed in any way to affect
Employee's obligations under Paragraphs 6 and 7 of this Agreement, with
respect to which Employee shall remain bound.
(c) Severance Benefits. Provided Employee is in compliance with
------------------
Paragraph 4(b)(viii) hereof, Company will pay or provide the following severance
benefits to Employee in lieu of any separation payments otherwise provided upon
termination of employment under any other severance pay or similar plan or
policy of Company:
(i) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of Employee's annual basic compensation in effect
immediately prior to Employee's termination;
(ii) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of the higher of (a) Employee's discretionary bonus for
the previous calendar year, or (b) the average of Employee's discretionary
bonus for the previous three (3) calendar years (or such fewer calendar
years as Employee has been employed), in each case prorated to the date of
Employee termination.
6
<PAGE>
(iii) For the twelve (12) month period following the date of
termination of Employee' s employment, Company will maintain in full force
and effect for the continued benefit of Employee each employee benefit plan
in which Employee was a participant immediately prior to the date of
Employee's termination, unless an essentially equivalent and no less
favorable benefit is provided by a subsequent employer at no additional
cost to Employee. If the terms of any employee benefit plan of Company do
not permit continued participation by Employee, then Company will arrange
to provide to Employee (at Company's cost) a benefit substantially similar
to and no less favorable than the benefit Employee was entitled to receive
under such plan at the end of the period of coverage. (This provision
specifically is not applicable to any car, car phone, parking and club
dues, which benefits, if any, end upon Employee's date of termination of
employment.)
(iv) For the twelve (12) month period following the date of
termination of Employee's employment, Company will treat Employee for all
purposes as an Employee under all of Company's retirement plans in which
Employee was a participant on the date of termination of Employee's
employment or under which Employee would become eligible during such twelve
(12) month period (hereinafter referred to collectively as the "Plan").
Benefits due to Employee under the Plan shall be computed as if Employee
had continued to be an Employee of Company for the twelve (12) month period
following termination of employment. If under the terms of the Plan such
continued coverage is not permitted, Company will pay to Employee or
Employee's estate a supplemental benefit in an amount which, when added to
the benefits that Employee is entitled to receive under the Plan, shall
equal the amount that Employee would have received under the Plan had
Employee remained an employee of Company during such twelve (12) month
period.
(v) If any excise tax imposed under Internal Revenue Code Section
4999 or any successor provision, as amended after the date hereof, is due
and owing by Empioyee as a result of any amount paid or payable pursuant to
this Paragraph 4 (c), Company shall indemnify and hold Employee harmless
against all such excise taxes and any interest, penalties or costs with
respect thereto.
7
<PAGE>
(vi) Company will be obligated to make all payments that become due
to Employee under this Paragraph 4 (c) whether or not Employee obtains
other employment following termination. The payments and other benefits
provided for in this Paragraph 4 (c) are intended to supplement any
compensation or other benefits that have accrued or vested with respect to
Employee or Employee's account as of the effective date of termination.
(vii) Company may elect to defer any payments that may become due to
Employee under this Paragraph 4(c) if, at the time the payments become due,
Company, CBB or any of Company's other subsidiaries is not in compliance
with any regulatory-mandated minimum capital requirements or if making the
payments would cause Company's, CBB's or any of Company's other
subsidiaries' capital to fall below such minimum capital requirements. In
this event, Company will resume making the payments as soon as it can do so
without violating such minimum capital requirements.
5. SALE OR REORGANIZATION OF COMPANY. This Agreement shall not restrict the
---------------------------------
sale, transfer, consolidation, liquidation, reorganization or disposition of the
assets of Company and to the extent that the business of Company is conducted in
another form or through another entity or entities, such entity or entities
shall be obligated to fulfill Company's obligations hereunder.
6. RESTRICTIVE COVENANT. It is mutually recognized and agreed that the
--------------------
services to be rendered pursuant to this Agreement by Employee are special,
unique and of extraordinary character. Therefore, as a condition to Company's
obligations hereunder, Employee agrees that without Company's prior written
consent, during the term of this Agreement and for a period ending on the first
anniversary of the date of termination of Employee's employment hereunder,
regardless of cause, Employee will not engage in any manner, directly or
indirectly its solicit or induce any employee or agent of Company or any of its
subsidiaries to terminate employment with Company or any of its subsidiaries, as
the case may be, or solicit or induce any customer of Company or any of its
subsidiaries to become a customer of any person, firm, partnership, corporation,
trust or other entity that owns, controls or is a bank, savings and loan
association, credit union or similar financial institution. Furthermore,
Employee will at no time during or subsequent to the term of Employee's
employment by Company make any statements or take any actions which could
reasonably be expected to damage the reputation or business of Company. It is
further recognized and agreed that irreparable injury will result to Company,
its businesses and property in the event of a breach of this covenant by
Employee, that such injury would be difficult if not impossible to ascertain,
and therefore, any remedy at law for any breach by Employee of this covenant
will
8
<PAGE>
be inadequate and Company shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damage to Company by
reason of any such breach. In addition, in the event of a breach of this
covenant by Employee, Company shall also be entitled to recover reasonable costs
and attorneys' fees incurred in connection with the enforcement of its rights
hereunder. Whenever used herein, Company shall be deemed to include any
successors or any other person or entity which may hereafter acquire the
business of Company or any of its subsidiaries. The foregoing notwithstanding,
should the assets of Company be disposed of in such a manner that no purchaser
thereof has acquired a going business, then Employee shall not be bound by the
covenants expressed in this paragraph.
7. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee hereby covenants
------------------------------------------
and agrees that Employee will not, except as may be required in connection with
Employee's employment under this Agreement or compelled by any judicial or
administrative order, directly or indirectly, use or disclose to any other
person, firm or corporation, whether during or subsequent to the term of
Employee's employment by Company, irrespective of the time, manner or cause of
the termination of Employee's employment, any information of a proprietary
nature belonging to Company, or which could be reasonably expected to have an
adverse effect on Company, its businesses, property or financial condition,
including but not limited to records, data, documents, processes,
specifications, methods of operation, techniques and know-how, plans, policies,
customer lists, the names and addresses of suppliers or representatives,
investigations or other matters of any kind or description relating to the
products, services, suppliers, customers, sales or businesses of Company. All
records, files, documents, equipment and the like relating to Company's
businesses which Employee shall prepare; use or observe shall be and remain the
sole property of Company, and upon termination of this Agreement or Employee's
employment hereunder for any reason, Employee shall return to the possession of
Company any items of that nature and any copies thereof which Employee may have
in Employee's possession.
8. INDEMNITY.
----------
(a) Indemnification. Company will indemnify Employee (and, upon
---------------
Employee's death, Employees heirs, executors and administrators) to the
fullest extent permitted by law against all expenses, including reasonable
attorneys' fees, court and investigative costs, judgments, fines and
amounts paid in settlement (collectively, "Expenses") reasonably incurred
by Employee in connection with or arising out of any pending, threatened or
completed action, suit or proceeding in which Employee may become involved
by reason of Employee having been an officer or director of Company or any
of its subsidiaries. The indemnification rights provided for herein are
not
9
<PAGE>
exclusive and will supplement any rights to indemnification that Employee
may have under any applicable bylaw or charter provision of Company or any
of its subsidiaries, or any resolution of Company or any of its
subsidiaries, or any applicable statute.
(b) Advancement of Expenses. In the event that Employee becomes a
-----------------------
party, or is threatened to be made a party, to any pending, threatened or
completed action suit or proceeding for which Company or any of its
subsidiaries is permitted or required to indemnify Employee under this
Agreement, any applicable bylaw or charter provision of Company or any of
its subsidiaries, any resolution of Company or any of its subsidiaries, or
any applicable statute, Company will, to the fullest extent permitted by
law, advance all Expenses incurred by Employee in connection with the
investigation, defense, settlement or appeal of any threatened, pending or
completed action, suit or proceeding, subject to receipt by Company of a
written undertaking from Employee to reimburse Company for all Expenses
actually paid by Company to or on behalf of Employee in the event it shall
be ultimately determined that Company or any of its subsidiaries cannot
lawfully indemnify Employee for such Expenses, and to assign to Company all
rights of Employee to indemnification under any policy of directors' and
officers' liability insurance to the extent of the amount of Expenses
actually paid by Company to or on behalf of Employee.
(c) Litigation. Unless precluded by an actual or potential conflict
----------
of interest, Company will have the right to recommend counsel to Employee
to represent Employee in connection with any claim covered by this Section
8. Further, Employee's choice of counsel, Employee's decision to contest
or settle any such claim, and the terms and amount of the settlement of any
such claim will be subject to Company's prior reasonable approval in
writing.
9. ARBITRATION. Any disputes arising out of this Agreement or connected
-----------
with Employee's employment shall be submitted by Employee and Company to
arbitration by the American Arbitration Association or its successor, and the
determination of the America Arbitration Association or its successor shall be
final and absolute. The arbitrator shall be governed by the duly promulgated
rules and regulations of the American Arbitration Association or its successor,
and the pertinent provisions of the laws of the State of Colorado relating to
arbitration. The decision of the arbitrator may be entered as a judgment in any
court in the State of Colorado or elsewhere. The prevailing party shall be
entitled to receive reasonable attorneys fees incurred in connection with such
arbitration in addition to such other costs and expenses as the arbitrators may
award.
10
<PAGE>
10. INTERPRETATION. This Agreement shall be construed in accordance with
---------------
the internal laws of the State of Colorado. The titles of the paragraphs have
been inserted as a matter of convenience of reference only and shall not be
construed to control or affect the meaning or construction of this Agreement.
11. SEVERABILITY. In the event that any portion of this Agreement is
------------
found to be in violation of or conflict with any federal or state law, the
parties agree that said portion shall be modified only to the extent necessary
to enable it to comply with such law.
12. ASSIGNMENT. This Agreement shall not be assignable by Employee, but
----------
shall be binding upon and inure to the benefit of the heirs, successors and
assigns of Employee and Company.
13. NOTICES. All notices or other communications in connection with
-------
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered, sent by professional courier or mailed first class, postage
prepaid and addressed as follows:
(i) If to Company, addressed to:
Colorado Business Bankshares, Inc.
821 - 17th Street
Denver, Colorado 80202
Attn: Steven Bangert
with a copy to:
Holleb & Coff
Suite 4100
55 E. Monroe
Chicago, Illinois 60603
Attn: Mark S. Kipnis
(ii) If to Employee, addressed to:
K. Denise Albrecht
31346 Burn Lane
Evergreen, CO 80439
or such other address or addressed to the attention of such other person or
persons as either of the parties may notify the other in accordance with the
provisions of this paragraph.
11
<PAGE>
14. ENTIRE AGREEMENT. This Agreement is the entire agreement and understanding
----------------
of the parties hereto with respect to the subject matter hereof and supersedes
any and all prior and contemporaneous negotiations, understandings and
agreements with regard to the subject matter hereof, whether oral or written.
No representation, inducement, agreement, promise or understanding altering,
modifying, taking from or adding to the terms and conditions hereof shall have
any force or effect unless the same is in writing and validly executed by the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COLORADO BUSINESS BANKSHARES, INC.
/s/ K. Denise Albrecht By: /s/ Steven Bangert
- ------------------------------------- -----------------------------------
Senior Vice President Steven Bangert,
Chief Executive Officer
12
<PAGE>
Exhibit 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated this 29th day of March,
----
1996, is between Richard M. Hall, Jr. (hereinafter called "Employee") and
Colorado Business Leasing, Inc. (hereinafter called "Employer").
RECITALS
--------
WHEREAS, Employer is a leasing company; and
WHEREAS, Employee has certain skills and experience related to the business
of Employer; and
WHEREAS, in order to utilize Employee's skills and promote the business of
Employer now and in the future, and to provide opportunity and incentive to
Employee, the parties desire to enter into this Agreement on the terms and
conditions hereinafter set forth.
AGREEMENT
---------
NOW THEREFORE, in consideration of the mutual premises and covenants herein
contained, the sufficiency and adequacy of which are hereby acknowledged, the
parties agree as follows:
1. Employment. Employer hereby agrees to employ Employee and Employee hereby
----------
accepts employment from Employer as President of Employer.
2. Term. Unless sooner terminated in accordance with the provisions of this
----
Agreement, the term of this Agreement shall be for a period of five years
commencing on January 16, 1996.
3. Duties. Employee shall devote adequate time and his best efforts to assure
------
the efficient operation of the business of Employer and shall serve in the
capacity agreed above with the duties usually incident to such position and such
reasonable duties and responsibilities as Employer's Board of Directors may
request of him from time to time.
4. Compensation. For all services rendered by Employee under this Agreement,
------------
Employer shall compensate Employee the following:
(a) Employee shall receive an annual salary for the fiscal year ending
December 31, 1996, of $80,000;
(b) Employee shall receive a cash bonus in the amount of $15,000 if
Employer's net loss for the fiscal year ending December 31, 1996, does
not exceed $223,399;
<PAGE>
(c) Employee shall receive reimbursement for his actual costs on an
automobile lease which amount shall not exceed $511.64 per month;
(d) Participation in the incentive plan for lease production developed for
the Employer, the terms of which are attached hereto as Exhibit A and
incorporated by reference herein; and
(e) Employee's annual salary for fiscal year 1997 shall be $100,700 as
provided in the business plan submitted to and approved by Colorado
Business Bankshares, Inc. Any bonus for fiscal year 1997, will be
determined by the Board of Directors of Employer based on performance
in relation to such business plan. Salary and bonus for subsequent
fiscal years shall be determined by the Board of Directors of Employer.
5. Benefits.
--------
(a) Insurance. Medical insurance will be provided for Employee under the
medical insurance plan maintained by the Women's Bank, N.A.(the
"Bank"), its successors and assigns, for all its full time employees.
(b) Vacation. Employee shall be entitled to vacation of twenty (20) working
days each calendar year, which shall accrue and vest annually as of
January 16, five of which vacation days may be carried forward to the
subsequent year and none of which will be payable in cash except at
termination, at which time all accrued and unused vacation for the year
in which termination takes place, up to a maximum of 25 days, will be
paid at the Employee's then current salary rate.
(c) Parking. Employer will pay for Employee's parking in the building in
which Employer's principal place of business is located, or as close as
reasonably feasible and available.
(d) Other Benefits. Employee shall be entitled to all other benefits
available to employees of the Employer and/or the Bank.
6. Termination.
-----------
(a) At-Will. Employer may terminate Employee at any time for any reason or
-------
no reason.
(b) By Employee. Employee may resign his position with Employer for any
-----------
reason or no reason by providing Employer with thirty (30) days prior
written notice of his intention to do so.
(c) Change of Control. In the event that (i) there is a change of control
-----------------
(as defined below) of the Bank, of CBB or of Employer, and (ii)
Employee's employment is
<PAGE>
terminated within one (1) year of such change in control, then Employer
shall pay Employee a sum equal to Employee's then current annual
salary. "Change of Control" shall mean any of the following: the sale
of all, or substantially all, of the Bank's or of CBB's assets, or a
merger, consolidation, share exchange or other similar transaction to
which the Bank or CBB is a party whereby the Bank's or CBB's existing
shareholders wind up owning less than 40 percent of the voting stock of
the combined entity or the acquirer, as the case may be, or a sale of
50 percent or more of the Bank's share of Employers' capital stock.
(d) Termination Compensation. If, during the term of this Agreement,
------------------------
Employer terminates its employment of Employee, except for cause, then,
in addition to any other compensation that may be payable to Employee
pursuant to this Agreement, Employer will pay the Employee (1) an
amount equal to four months of Employee's then current annual salary,
divided into eight equal installments payable commencing on the payroll
date next scheduled following such termination, and (2) within 15 days
following such termination and on each of the seven following scheduled
payroll dates, a prorated amount of bonus, if any, that would be
payable pursuant to any program then in effect, with such prorated
amount being calculated by annualizing the year to date financial
information otherwise required to calculate such bonus, determining
what the amount of such bonus would be for the entire year, and
prorating such amount to reflect the number of days during such year
occurring prior to such termination. "For cause" shall mean (a) a
material breach of this Agreement by Employee; or (b) as a result of a
determination by the Board of Directors of Employer, acting reasonably,
that Employee has (i) committed a felony, or (ii) committed any
fraudulent act, or (iii) intentionally breached Employee's duty of
loyalty to Employer.
7. Disclosure of Information. Employee recognizes and acknowledges that
-------------------------
Employer's trade secrets, confidential information, proprietary information and
processes, customer lists, marketing analysis and contracts are valuable,
special and unique assets of Employer's business, access to and knowledge of
which are essential to the performance of Employee's duties hereunder (the
"Trade Secrets"). Trade Secrets shall not include information generally known or
used by other leasing companies, and specifically does not include any form of
contract and agreement, and other forms of documents relating to those contracts
and agreements, in use for the generation and monitoring of lease and loan
transactions, nor any personal database which does not detail the customers and
terms of any leases or agreements between Employer and said customers, employed
by Employee in the course of his employment with Employer. Employee will not,
except in the ordinary course of his employment with Employer, during the term
of his employment or after termination by Employer, in whole or in part,
disclose the Trade Secrets to any person, firm, corporation or other entity
(except Employer and other parties to which Employer may have an interest in
disclosing such Trade Secrets) under any circumstances during the term of his
employment, and after termination. Employee shall consider and treat as
Employer's confidential property, all memoranda, papers, letters, formulas,
selling and pricing information, customer lists, distribution and trade
agreements, internal financial statements and
<PAGE>
other data, and on the termination of his employment, or on demand of Employer,
at any time, to deliver same to Employer.
8. Notices. Any notice required or permitted to be given under this Agreement
-------
shall be sufficient and shall be deemed given when delivered to the addressee if
in writing and if hand delivered or sent by Certified Mail or reputable
overnight courier to the address of Employee or the principal office of Employer
as set forth above.
9. Further Instruments. The parties shall execute and deliver any and all
-------------------
other instruments and shall take any and all other actions as may be reasonably
necessary to carry the intent of this Agreement into full force and effect.
10. Severability. If any provision of this Agreement shall be held, declared
------------
or pronounced void, voidable, invalid, unenforceable or inoperative for any
reason by any court of competent jurisdiction, government authority or
otherwise, such holding, declaration or pronouncement shall not effect adversely
any other provisions of this Agreement, which shall otherwise remain in full
force and effect and be enforced in accordance with its terms and the effect of
such holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
11. Waiver of Breach. All the rights and remedies of either party under this
----------------
Agreement are cumulative and not exclusive of any other rights and remedies
provided by law. No delay or failure on the part of either party in the exercise
of any right or remedy arising from a breach of this Agreement shall operate as
a waiver of any subsequent right or remedy arising from a subsequent breach of
this Agreement. The consent of any party where required hereunder to any act or
occurrence shall not be deemed to be a consent to any other act or occurrence.
12. Assignment. The rights and obligations of Employer under this Agreement
----------
shall inure to the benefit of and be binding upon the successors and assigns of
Employer. This Agreement is a personal service contract, and this Agreement and
the rights and obligations of Employee hereunder may not be transferred or
assigned by Employee (including by will or by operation of law) without the
prior written consent of Employer.
13. General Provisions. This Agreement shall be construed and enforced in
------------------
accordance with, and governed by, the laws of the State of Colorado. Except as
otherwise expressly stated herein, time is of the essence in performance by each
party. This Agreement embodies the entire agreement and understanding between
the parties and supersedes all prior agreements and understandings relating to
this subject matter. This Agreement may not be modified or amended or any term
or provision hereof waived or discharged except in writing signed by the party
against whom such amendment, modification, waiver or discharge is sought to be
enforced. The headings of this Agreement are for convenience in reference only
and shall not limit or otherwise affect the meaning thereof. This Agreement may
be executed in any number of counterparts, each of which shall be deemed an
original but all of which taken together shall constitute one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement as
of the day and year first above written.
EMPLOYER:
COLORADO BUSINESS LEASING, INC.
-----------------------------------------------
By: /s/ Richard M. Hall, Jr.
-------------------------------------------
Its: President
-----------------------------------------
EMPLOYEE:
/s/ Richard M. Hall, Jr.
-----------------------------------------------
ACKNOWLEDGED AND APPROVED THIS 29TH DAY OF MARCH, 1996:
----
COLORADO BUSINESS BANKSHARES, INC.
By: /s/ Jonathan C. Lorenz
------------------------------------------------
Jonathan C. Lorenz, President
<PAGE>
- --------------------------------------------------------------------------------
COLORADO BUSINESS LEASING, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTION: INCENTIVE PLAN - LEASE ORIGINATION
- --------------------------------------------------------------------------------
PURPOSE OF PLAN
- ---------------
The purpose of the Incentive Plan is to compensate the staff of Colorado
Business Leasing, Inc. for the generation of new lease and loan business that
achieves specific targets for quality and rate of return. Incentive compensation
will be paid in addition to normal salary and will be shared as outlined in this
document by all CBL staff.
COMPENSATION YEAR
- -----------------
The Incentive Compensation plan will operate on a calendar year basis from
January 1 through December 31. This plan is effective January 1, 1996.
COMPUTATION OF INCENTIVE COMPENSATION
- -------------------------------------
Incentive compensation will be paid on all transactions which meet Colorado
Business Leasing, Inc.'s credit risk profile and target yield. The incentive
will be paid out at a rate of four tenths of one percent (0.4 %) of the
transaction amount for all transactions which meet the criteria noted above.
The incentive is designed to compensate employees and managers for developing
high quality and profitable relationships for CBL. Since each member of the CBL
team has an important role within the successful operation of the company, each
person will be incented to assure achievement of sales and profitability goals.
Each staff member will share in every sales incentive payment as detailed
herein.
PAYMENTS UNDER THE PLAN
- -----------------------
All payments shall be made on a quarterly basis following the closing and review
of transactions for compliance with specified criteria. Payments will be made
through the normal payroll process concurrently with the nearest pay period
following the approval of the quarterly incentive compensation payment.
<PAGE>
The total quarterly incentive plan will be shared among all active employees in
accordance with the following schedule:
<TABLE>
<CAPTION>
<S> <C>
Employee responsible for sale of the transaction: 40%
Documentation Staff 20%
Credit Staff 20%
Clerical Staff 10%
President 10%
</TABLE>
In instances where there are more than one person in an incentified group, the
area manager will recommend an appropriate division of the incentive pool for
the group. The President of CBL will be responsible for final approval of all
payments under the incentive plan, and will submit the approved amounts, by
individual, for payment.
TERMINATION OF EMPLOYMENT
- -------------------------
In the event of termination of employment, only transactions completed through
the most recently ended calendar quarter will be considered for incentive
payment. Transactions in process during the calendar quarter of termination will
not be included in any compensation calculation.
ADMINISTRATION OF THE PLAN
- --------------------------
The senior management of Colorado Business Leasing, Inc. will be responsible for
monitoring and administering the plan in accordance with its terms.
This plan is not an employment contract and is subject to review, alteration or
cancellation by senior management or the Board of Directors at any time. In the
event of termination of employment, this plan will be automatically terminated
and compensation will be paid in accordance with the "Termination of Employment"
paragraph, above.
Colorado Business Leasing, Inc.
By: _______________________________ Date: _______________________________
Plan Participant
____________________________________
Name _______________________________ Date: _______________________________
<PAGE>
Exhibit 10.16
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
29th day of September, 1995, by and between Equitable Bankshares of Colorado,
- ---- ---------
Inc , a Colorado corporation ("Company"), and Katherine H. Kaley ("Employee").
WITNESSETH:
WHEREAS, Company desires Employee to become employed by Company or one of
its subsidiaries and Employee desires to become employed by Company or one of
its subsidiaries upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT. Company hereby agrees to employ Employee, and Employee
----------
hereby agrees to be employed by Company, as (a) Senior Vice President-Real
Estate of Company's subsidiary Women's Bank ("Women's Bank"), and (b) such other
different executive capacities with the Company, Women's Bank or any other
Company subsidiary as may be determined from time to time by the Boards of
Directors of Company, Women's Bank or such other subsidiary.
2. RESPONSIBILITIES OF EMPLOYMENT. During the term of her employment,
------------------------------
Employee:
(a) shall diligently and faithfully serve Company and its subsidiaries
in such executive capacities as may be determined from time to time by the
Boards of Directors of Company and its subsidiaries, and she shall devote
her best efforts and entire business time, services and attention to the
advancement of Company's interests;
(b) shall not, without the prior written consent of the Board of
Directors of Company, engage in any other employment or business, directly
or indirectly, as a sole proprietor, a member of a partnership or limited
liability company, as a director, officer, employee or shareholder of a
corporation not affiliated with Company, or as a consultant or otherwise,
whether for compensation or otherwise, which could reasonably be expected
to or does interfere with Employee's performance of her duties hereunder or
which business is in competition in any way with the business then being
conducted by Company and its subsidiaries; provided, however, that the
provisions of this subparagraph (b) shall not be deemed to prohibit
Employee's ownership of stock in any publicly owned corporation so long as
Employee's ownership, directly and indirectly, when aggregated with the
direct and indirect ownership of all members of Employee's family, does not
exceed one percent (1%) of the total outstanding stock of such
<PAGE>
publicly owned corporation, measured by reference to either market value or
voting power;
(c) shall diligently and faithfully carry out the policies, programs
and directions of the Boards of Directors of Company and its subsidiaries;
(d) shall fully cooperate with such other officers of Company and its
subsidiaries as may be elected or appointed by the Boards of Directors of
Company and its subsidiaries; and
(e) shall report to the President of Women's Bank.
3. COMPENSATION. Company will compensate Employee for her services during
------------
the term of this Agreement and her employment hereunder as follows:
(a) Basic Compensation. Company shall pay to Employee as a minimum
------------------
basic compensation the sum of Seventy-Two Thousand Dollars ($72,000.00) per
year, payable in equal monthly installments. Employee's basic compensation
may be increased from time to time in the sole discretion of Company's
Board of Directors.
(b) Benefits. Employee shall be entitled to use a car phone and have
--------
parking privileges in the course of performing her duties hereunder and
shall be entitled to participate in any and all other benefits from time to
time afforded executive employees of Company, including, without
limitation, health, accident, hospitalization and life insurance programs.
Company shall additionally pay the monthly (not initial or initiation) dues
for Employee at community or business related clubs or activities to be
agreed upon by Employee and the President of Women's Bank.
(c) Reimbursement of Expenses. Employee shall be entitled to
-------------------------
reimbursement of ordinary and necessary out-of-pocket expenses reasonably
incurred by her on behalf of Company in the course of performing her duties
hereunder, subject to her furnishing appropriate documentation relative to
such expenses in form and substance satisfactory to Company.
(d) Vacations. Employee shall be entitled to four (4) weeks paid
---------
vacation each year, subject to Company's general vacation policy.
(e) Discretionary Bonus Plan. Company is in the process of developing
------------------------
a discretionary bonus plan for key executives Employee shall be entitled to
participate in such discretionary bonus plan.
2
<PAGE>
(f) Stock Option. Company has developed an Incentive Stock Option
------------
Plan (the "Plan") for key employees. Company will grant Employee the option
to purchase up to 2,000 shares of Company's common stock pursuant to the
Plan. It is contemplated that the option price per share will approximate
$11.00 and that the options will vest annually over a four (4) year vesting
schedule.
(g) Allocations. As Company and Employee intend that Employee may be a
-----------
dual employee of Company and one or more of its subsidiaries, Company may
allocate to one or more of its subsidiaries any portion of Employee's basic
and other compensation that Company and one or more of its subsidiaries
deem to be a lawful and appropriate allocation, but no such allocation will
relieve Company of any of its obligations to Employee under this Agreement.
4. TERM AND TERMINATION.
--------------------
(a) Term. The term of Employee's employment shall be a one (1) year
----
term beginning on the date hereof. Upon expiration of the stated term of
this Agreement, Employee's employment with Company shall revert to the
status of employment at will and shall thereafter be subject to termination
by either party and at any time regardless of cause.
(b) Termination. Upon termination of this Agreement by Company, by
-----------
Employee or upon the death or disability of Employee, the rights and
obligations of Employee shall be as follows:
(i) Termination by Employee. In the event Employee elects to
-----------------------
terminate her employment hereunder, this Agreement shall immediately
terminate without any further obligation on the part of Company,
except that Company shall pay to Employee such compensation pursuant
to Paragraph 3 hereof as may be accrued and unpaid on the date of
termination of employment.
(ii) Termination by Company for Cause. If Employee's employment
--------------------------------
hereunder is terminated by Company for cause, this Agreement shall
immediately terminate without any further obligation on the part of
Company, except that Company shall pay to Employee such compensation
pursuant to Paragraph 3 hereof as may be accrued and unpaid on the
date of such termination of employment. For purposes of this
Agreement, "cause" shall mean willful failure or neglect of Employee
to perform her duties as prescribed herein, the conviction of a
felony, theft, embezzlement or improper use of corporate funds by
Employee, self
3
<PAGE>
dealing detrimental to Company, any attempt to obtain any personal
profit from any transaction in which Company has an interest or any
breach of the terms of Paragraphs 6 or 7 of this Agreement by
Employee.
(iii) Termination by Company for Other Reasons. Company shall
----------------------------------------
have the right at any time to terminate Employee's employment
hereunder for any reason by giving her written notice (which notice
shall fix the date as of which Employee's employment is to terminate)
of its intention to do so. If Employee's employment hereunder is
terminated by Company other than for cause, Company shall be obligated
to pay Employee the severance benefits set forth in Paragraph 4(c)
hereof.
(iv) Constructive Discharge. If Employee is ever constructively
----------------------
discharged, she may terminate this Agreement and her employment
hereunder by delivering written notice to Company no later than thirty
(30) days before the effective date of termination. If Employee is
constructively discharged, Company shall be obligated to pay Employee
the severance benefits set forth in Paragraph 4(c) hereof. For
purposes of the foregoing, "constructive discharge" means the
occurrence of any one or more of the following: (i) Employee is
removed from all of the offices described in Paragraph 1 hereof; (ii)
Company fails to vest with or removes from Employee the duties,
responsibilities, authority or resources that she reasonably needs to
competently perform the duties of her office; (iii) Company decreases
Employee's basic compensation or arbitrarily and capriciously
decreases Employee's bonus; or (iv) Company transfers Employee to a
location outside the Denver metropolitan area; and in any of such
events, Company fails to cure any of the above within thirty (30) days
after Employee gives Company written notice of such breach.
(v) Termination Upon Change of Control. If a Change of Control
----------------------------------
occurs within five (5) years after the date of this Agreement,
Employee may terminate this Agreement and her employment hereunder for
any reason within two (2) years after a Change of Control occurs by
delivering written notice of termination to Company or its successor
no less than thirty (30) days before the effective date of termination
(any such notice by Employee which can be construed as a notice under
either Paragraph 4(b)(iv) or this Paragraph 4(b)(v) shall be deemed a
notice under this Paragraph 4(b)(v)). If Employee so terminates,
Company shall be obligated to pay Employee the severance benefits set
forth in Paragraph 4(c) hereof, with the exception that the Paragraph
4
<PAGE>
4(c)(ii) bonus component shall be based upon a full year and not
prorated to the date of Employee's termination.
(A) A "Change of Control" will be deemed to have occurred
if: a) any person (as such term is defined in Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act") other than a person who is a shareholder of Company
as of the date of this Agreement acquires beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act)
of fifty percent (50%) or more of the combined voting power of
the then outstanding voting securities of Company; or b) the
individuals who were members of Company's Board of Directors as
of the date of this Agreement (the "Current Board Members") cease
for any reason to constitute a majority of the Board of Directors
of Company or its successor; however, if the election or the
nomination for election of any new director of Company or its
successor is approved by a vote of a majority of the individuals
who are Current Board Members, such new director shall, for the
purposes of this paragraph, be considered a Current Board Member;
or c) Company's stockholders approve (1) a merger or
consolidation of Company or Women's Bank and the stockholders of
Company immediately before such merger or consolidation do not,
as a result of such merger or consolidation, own, directly or
indirectly, more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of the entity
resulting from such merger or consolidation in substantially the
same proportion as their ownership of the combined voting power
of the outstanding securities of Company immediately before such
merger or consolidation; or (2) a complete liquidation or
dissolution or an agreement for the sale or other disposition of
all or substantially all of the assets or stock of Company or
Women's Bank (provided that a complete liquidation or dissolution
or the sale or other disposition of all or substantially all the
assets or stock of just Women's Bank will be deemed a "Change of
Control" only if Employee is not offered a position with Company
or one of its subsidiaries with responsibilities and reporting
requirements consistent with those responsibilities and reporting
requirements set forth in Paragraph 2 hereof).
5
<PAGE>
(B) Notwithstanding and in lieu of Paragraph 4(b)(v)(A), a
Change of Control will not be deemed to have occurred: a) solely
because fifty percent (50%) or more of the combined voting power
of the then outstanding voting securities of Company are acquired
by (1) a trustee or other fiduciary holding securities under one
or more employee benefit plans maintained for employees of
Company and its subsidiaries, or (2) any person pursuant to the
will or trust of any existing stockholder of Company, or who is a
member of the immediate family of such stockholder, or (3) any
corporation which, immediately prior to such acquisition, is
owned directly or indirectly by the stockholders in the same
proportion as their ownership of stock immediately prior to such
acquisition; or b) if Employee agrees in writing to waive a
particular Change of Control for the purposes of this Agreement.
(vi) Termination Upon Employee's Disability. In the event
--------------------------------------
Employee's employment is terminated by Company due to Employee's
disability, Company shall be obligated to pay Employee the severance
benefits set forth in Paragraph 4(c) hereof. For purposes of the
foregoing "disability" shall mean Employee's inability due to illness
or other physical or mental disability to substantially perform her
duties as prescribed herein for a period of sixty (60) days within any
consecutive six (6) month period, and any action to be taken hereunder
based on disability shall not be effective until the expiration of
such sixty (60) day period.
(vii) Termination Upon Employee's Death. In the event that
---------------------------------
Employee dies while employed by Company, then Company shall be
obligated to pay Employee's estate the severance benefits set forth in
Paragraph 4(c) hereof.
(viii) Continuing Obligations of Employee. Notwithstanding
----------------------------------
anything to the contrary contained herein, termination of this
Agreement or Employee's employment hereunder, for whatsoever reason or
for no reason at all, by Employee or otherwise, shall not be deemed in
any way to affect Employee's obligations under Paragraphs 6 and 7 of
this Agreement, with respect to which she shall remain bound.
(c) Severance Benefits. Provided Employee is in compliance with
------------------
Paragraph 4(b)(viii) hereof, Company will pay or provide the following
severance benefits to Employee in lieu of any separation payments otherwise
provided upon
6
<PAGE>
termination of employment under any other severance pay or similar plan or
policy of Company:
(i) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of Employee's annual basic compensation in effect
immediately prior to Employee's termination;
(ii) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of the higher of (A) Employee's discretionary bonus
for the previous calendar year, or (B) the average of Employee's
discretionary bonus for the previous three (3) calendar years (or such
fewer calendar years as Employee has been employed), in each case
prorated to the date of Employee's termination
(iii) For the twelve (12) month period following the date of
termination of Employee's employment, Company will maintain in full
force and effect for the continued benefit of Employee each employee
benefit plan in which Employee was a participant immediately prior to
the date of Employee's termination, unless an essentially equivalent
and no less favorable benefit is provided by a subsequent employer at
no additional cost to Employee. If the terms of any employee benefit
plan of Company do not permit continued participation by Employee,
then Company will arrange to provide to Employee (at Company's cost) a
benefit substantially similar to and no less favorable than the
benefit Employee was entitled to receive under such plan at the end of
the period of coverage. (This provision specifically is not applicable
to Employee's car phone, parking and club dues, which benefits end
upon Employee's date of termination of employment.)
(iv) For the twelve (12) month period following the date of
termination of Employee's employment, Company will treat Employee for
all purposes as an Employee under all of Company's retirement plans in
which Employee was a participant on the date of termination of
Employee's employment or under which Employee would become eligible
during such twelve (12) month period (hereinafter referred to
collectively as the "Plan"). Benefits due to Employee under the Plan
shall be computed as if Employee had continued to be an Employee of
Company for the twelve (12) month period following termination of
employment. If under the terms of the Plan such continued coverage is
not permitted, Company will pay to Employee or Employee's estate a
supplemental benefit in an amount which, when added to the benefits
that Employee is entitled to receive under the Plan, shall equal the
amount that
7
<PAGE>
Employee would have received under the Plan had Employee remained an
employee of Company during such twelve (12) month period.
(v) If any excise tax imposed under Internal Revenue Code
Section 4999 or any successor provision, as amended after the date
hereof, is due and owing by Employee as a result of any amount paid or
payable pursuant to this Paragraph 4(c), Company shall indemnify and
hold Employee harmless against all such excise taxes and any interest,
penalties or costs with respect thereto.
(vi) Company will be obligated to make all payments that become
due to Employee under this Paragraph 4(c) whether or not she obtains
other employment following termination. The payments and other
benefits provided for in this Paragraph 4(c) are intended to
supplement any compensation or other benefits that have accrued or
vested with respect to Employee or her account as of the effective
date of termination.
(vii) Company may elect to defer any payments that may become due
to Employee under this Paragraph 4(c) if, at the time the payments
become due, Company, Women's Bank or any of Company's other
subsidiaries is not in compliance with any regulatory-mandated minimum
capital requirements or if making the payments would cause Company's,
Women's Bank's or any of Company's other subsidiaries' capital to fall
below such minimum capital requirements. In this event, Company will
resume making the payments as soon as it can do so without violating
such minimum capital requirements.
5. SALE OR REORGANIZATION OF COMPANY. This Agreement shall not restrict
---------------------------------
the sale, transfer, consolidation, liquidation, reorganization or disposition of
the assets of Company and to the extent that the business of Company is
conducted in another form or through another entity or entities, such entity or
entities shall be obligated to fulfill Company's obligations hereunder.
6. RESTRICTIVE COVENANT. It is mutually recognized and agreed that the
--------------------
services to be rendered pursuant to this Agreement by Employee are special,
unique and of extraordinary character. Therefore, as a condition to Company's
obligations hereunder, Employee agrees that without Company's prior written
consent, during the term of this Agreement and for a period ending on the first
anniversary of the date of termination of her employment hereunder, regardless
of cause, she will not engage in any manner, directly or indirectly, to solicit
or induce any employee or agent of Company or any of its subsidiaries to
terminate employment with
8
<PAGE>
Company or any of its subsidiaries, as the case may be, or solicit or induce any
customer of Company or any of its subsidiaries to become a customer of any
person, firm, partnership, corporation, trust or other entity that owns,
controls or is a bank, savings and loan association, credit union or similar
financial institution. Furthermore, Employee will at no time during or
subsequent to the term of her employment by Company make any statements or take
any actions which could reasonably be expected to damage the reputation or
business of Company. It is further recognized and agreed that irreparable injury
will result to Company, its businesses and property in the event of a breach of
this covenant by Employee, that such injury would be difficult if not impossible
to ascertain and therefore, any remedy at law for any breach by Employee of this
covenant will be inadequate and Company shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damage to
Company by reason of any such breach. In addition, in the event of a breach of
this covenant by Employee, Company shall also be entitled to recover reasonable
costs and attorneys' fees incurred in connection with the enforcement of its
rights hereunder. Whenever used herein, Company shall be deemed to include any
successors or any other person or entity which may hereafter acquire the
business of Company or any of its subsidiaries. The foregoing notwithstanding,
should the assets of Company be disposed of in such a manner that no purchaser
thereof has acquired a going business, then Employee shall not be bound by the
covenants expressed in this paragraph.
7. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee hereby covenants
------------------------------------------
and agrees that she will not, except as may be required in connection with her
employment under this Agreement or compelled by any judicial or administrative
order, directly or indirectly, use or disclose to any other person, firm or
corporation, whether during or subsequent to the term of her employment by
Company, irrespective of the time, manner or cause of the termination of her
employment, any information of a proprietary nature belonging to Company, or
which could be reasonably expected to have an adverse effect on Company, its
businesses, property or financial condition, including but not limited to
records, data, documents, processes, specifications, methods of operation,
techniques and know-how, plans, policies, customer lists, the names and
addresses of suppliers or representatives, investigations or other matters of
any kind or description relating to the products, services, suppliers,
customers, sales or businesses of Company. All records, files, documents,
equipment and the like relating to Company's businesses which Employee shall
prepare, use or observe shall be and remain the sole property of Company, and
upon termination of this Agreement or her employment hereunder for any reason,
Employee shall return to the possession of Company any items of that nature and
any copies thereof which she may have in her possession.
9
<PAGE>
8. INDEMNITY.
---------
(a) Indemnification. Company will indemnify Employee (and, upon her
---------------
death, her heirs, executors and administrators) to the fullest extent
permitted by law against all expenses, including reasonable attorneys'
fees, court and investigative costs, judgments, fines and amounts paid in
settlement (collectively, "Expenses") reasonably incurred by her in
connection with or arising out of any pending, threatened or completed
action, suit or proceeding in which she may become involved by reason of
her having been an officer or director of Company or any of its
subsidiaries. The indemnification rights provided for herein are not
exclusive and will supplement any rights to indemnification that Employee
may have under any applicable bylaw or charter provision of Company or any
of its subsidiaries, or any resolution of Company or any of its
subsidiaries, or any applicable statute.
(b) Advancement of Expenses. In the event that Employee becomes a
-----------------------
party, or is threatened to be made a party, to any pending, threatened or
completed action, suit or proceeding for which Company or any of its
subsidiaries is permitted or required to indemnify her under this
Agreement, any applicable bylaw or charter provision of Company or any of
its subsidiaries, any resolution of Company or any of its subsidiaries, or
any applicable statute, Company will, to the fullest extent permitted by
law, advance all Expenses incurred by Employee in connection with the
investigation, defense, settlement or appeal of any threatened, pending or
completed action, suit or proceeding, subject to receipt by Company of a
written undertaking from Employee to reimburse Company for all Expenses
actually paid by Company to or on behalf of Employee in the event it shall
be ultimately determined that Company or any of its subsidiaries cannot
lawfully indemnify Employee for such Expenses, and to assign to Company all
rights of Employee to indemnification under any policy of directors' and
officers' liability insurance to the extent of the amount of Expenses
actually paid by Company to or on behalf of Employee.
(c) Litigation. Unless precluded by an actual or potential conflict of
----------
interest, Company will have the right to recommend counsel to Employee to
represent her in connection with any claim covered by this Section 8.
Further, Employee's choice of counsel, her decision to contest or settle
any such claim, and the terms and amount of the settlement of any such
claim will be subject to Company's prior reasonable approval in writing.
9. ARBITRATION. Any disputes arising out of this Agreement or connected
-----------
with Employee's employment shall be submitted by
10
<PAGE>
Employee and Company to arbitration by the American Arbitration Association or
its successor, and the determination of the American Arbitration Association or
its successor shall be final and absolute. The arbitrator shall be governed by
the duly promulgated rules and regulations of the American Arbitration
Association or its successor, and the pertinent provisions of the laws of the
State of Colorado relating to arbitration. The decision of the arbitrator may be
entered as a judgment in any court in the State of Colorado or elsewhere. The
prevailing party shall be entitled to receive reasonable attorneys' fees
incurred in connection with such arbitration in addition to such other costs and
expenses as the arbitrators may award.
10. INTERPRETATION. This Agreement shall be construed in accordance with
--------------
the internal laws of the State or Colorado. The titles of the paragraphs have
been inserted as a matter of convenience of reference only and shall not be
construed to control or affect the meaning or construction of this Agreement.
11. SEVERABILITY. In the event that any portion of this Agreement is found
------------
to be in violation of or conflict with any federal or state law, the parties
agree that said portion shall be modified only to the extent necessary to enable
it to comply with such law.
12. ASSIGNMENT. This Agreement shall not be assignable by Employee, but
----------
shall be binding upon and inure to the benefit of the heirs, successors and
assigns of Employee and Company.
13. NOTICES. All notices or other communications in connection with this
-------
Agreement shall be in writing and shall be deemed to have been duly given when
delivered, sent by professional courier or mailed first class, postage prepaid
and addressed as follows:
(i) If to Company, addressed to:
Equitable Bankshares of Colorado, Inc.
821 - 17th Street
Denver, Colorado 80202
Attn: Steven Bangert
with a copy to:
Holleb & Coff
Suite 4100
55 E. Monroe
Chicago, Illinois 60603
Attn: Mark S. Kipnis
(ii) If to Employee, addressed to:
11
<PAGE>
Katherine H. Kaley
3005 Eldridge Street
Golden, Colorado 80401
or such other address or addressed to the attention of such other person or
persons as either of the parties may notify the other in accordance with the
provisions of this paragraph.
14. ENTIRE AGREEMENT. This Agreement is the entire agreement and
----------------
understanding of the parties hereto with respect to the subject matter hereof
and supersedes any and all prior and contemporaneous negotiations,
understandings and agreements with regard to the subject matter hereof, whether
oral or written. No representation, inducement, agreement, promise or
understanding altering, modifying, taking from or adding to the terms and
conditions hereof shall have any force or effect unless the same is in writing
and validly executed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EQUITABLE BANKSHARES OF
COLORADO, INC.
/s/ Katherine H. Kaley By: /s/ Steven Bangert
--------------------------- ---------------------------
KATHERINE H. KALEY Steven Bangert
Chief Executive Officer
12
<PAGE>
Exhibit 10.17
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
8th day of January, 1996, by and between Colorado Business Bankshares, Inc., a
- ---
Colorado corporation ("Company), and Robert B. Ostertag ("Employee").
WITNESSETH:
WHEREAS, Company desires Employee to become employed by Company or one of
its subsidiaries and Employee desires to become employed by Company or one of
its subsidiaries upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT. Company hereby agrees to employ Employee and Employee
----------
hereby agrees to be employed by Company, as (a) Senior Vice President-Commercial
and Private Banking of Company's subsidiary Women's Bank ("Women's Bank"), which
position will encompass management of Women's Bank's Commercial and Private
Banking Department and the bank's installment lending function, and (b) such
other different executive capacities with the Company, Women's Bank or any other
Company subsidiary as may be determined from time to time by the Boards of
Directors of Company, Women's Bank or such other subsidiary. It is initially
contemplated that Employee will serve on Women's Bank's Senior Loan Committee.
2. RESPONSIBILITIES OF EMPLOYMENT. During the term of his employment,
------------------------------
Employee:
(a) shall diligently and faithfully serve Company and its subsidiaries
in such executive capacities as may be determined from time to time by the
Boards of Directors of Company and its subsidiaries, and he shall devote
his best efforts and entire business time, services and attention to the
advancement of Company's interests;
(b) shall not, without the prior written consent of the Board of
Directors of Company, engage in any other employment or business, directly
or indirectly, as a sole proprietor a member of a partnership or limited
liability company, as a director, officer, employee or shareholder of a
corporation not affiliated with Company, or as a consultant or otherwise,
whether for compensation or otherwise, which could reasonably be expected
to or does interfere with Employee's performance of his duties hereunder or
which business is in competition in any way with the business then being
conducted by Company and its subsidiaries; provided, however, that the
provisions of this subparagraph (b) shall not be deemed to prohibit
Employee's ownership of stock in any publicly owned corporation so long as
Employee's ownership, directly and
<PAGE>
indirectly, when aggregated with the direct and indirect ownership of all
members of Employee's family, does not exceed one percent (l%) of the total
outstanding stock of such publicly owned corporation measured by reference
to either market value or voting power;
(c) shall diligently and faithfully carry out the policies, programs
and directions of the Boards of Directors of Company and its subsidiaries;
(d) shall fully cooperate with such other officers of Company and its
subsidiaries as may be elected or appointed by the Boards of Directors of
Company and its subsidiaries; and
(e) shall report to the President of Women's Bank.
3. COMPENSATION. Company will compensate Employee for his services during
------------
the term of this Agreement and his employment hereunder as follows:
(a) Basic Compensation. Company shall pay to Employee as a minimum
------------------
basic compensation the sum of Seventy Thousand Dollars ($70,000.00) per
year, payable in equal monthly installments. Employee's basic compensation
may be increased from time to time in the sole discretion of Company's
Board of Directors.
(b) Benefits. Employee shall be entitled to use a car phone and have
--------
parking privileges in the course of performing his duties hereunder and
shall be entitled to participate in any and all other benefits from time to
time afforded executive employees of Company, including, without
limitation, health, accident, hospitalization and life insurance programs.
Company shall additionally pay the monthly (not initial or initiation) dues
for Employee at community or business related clubs or activities to be
agreed upon by Employee and the President of Women's Bank.
(c) Reimbursement of Expenses. Employee shall be entitled to
-------------------------
reimbursement of ordinary and necessary out-of-pocket expenses reasonably
incurred by Employee on behalf of Company in the course of performing his
duties hereunder, subject to his furnishing appropriate documentation
relative to such expenses in form and substance satisfactory to Company.
(d) Vacations. Employee shall be entitled to four (4) weeks paid
---------
vacation each year, subject to Company's general vacation policy.
2
<PAGE>
(e) Discretionary Bonus Plan. Company is in the process of developing
------------------------
a discretionary bonus plan for key executives Employee shall be entitled to
participate in such discretionary bonus plan. Employee shall additionally
receive a Five Thousand Dollar ($5,000.00) bonus on March 31, 1996
providing you are still actively employed by Women's Bank on that date.
(f) Stock Option. Company has developed an Incentive Stock Option Plan
------------
(the "Plan") for key employees. Company will grant Employee the option to
purchase up to 2,000 shares of Company's common stock pursuant to the Plan.
It is contemplated that the option price per share will approximate $12.00
and that the options will vest annually over a four (4) year vesting
schedule.
(g) Allocations. As Company and Employee intend that Employee may be a
-----------
dual employee of Company and one or more of its subsidiaries, Company may
allocate to one or more of its subsidiaries any portion of Employee's basic
and other compensation that Company and one or more of its subsidiaries
deem to be a lawful and appropriate allocation, but no such allocation will
relieve Company of any of its obligations to Employee under this Agreement.
4. TERM AND TERMINATION.
--------------------
(a) Term. The term of Employee's employment shall be a one (1) year
----
term beginning on the date hereof. Upon expiration of the stated term of
this Agreement, Employee's employment with Company shall revert to the
status of employment at will and shall thereafter be subject to termination
by either party and at any time regardless of cause.
(b) Termination. Upon termination of this Agreement by Company, by
-----------
Employee or upon the death or disability of Employee, the rights and
obligations of Employee shall be as follows:
(i) Termination by Employee. In the event Employee elects to
-----------------------
terminate his employment hereunder, this Agreement shall immediately
terminate without any further obligation on the part of Company,
except that Company shall pay to Employee such compensation pursuant
to Paragraph 3 hereof as may be accrued and unpaid on the date of
termination of employment.
(ii) Termination by Company for Cause. If Employee's employment
--------------------------------
hereunder is terminated by Company for cause, this Agreement shall
immediately terminate without any
3
<PAGE>
further obligation on the part of Company, except that Company shall
pay to Employee such compensation pursuant to Paragraph 3 hereof as
may be accrued and unpaid on the date of such termination of
employment. For purposes of this Agreement, "cause" shall mean willful
and intentional failure or neglect of Employee to perform his duties
as prescribed herein, the conviction of a felony, theft, embezzlement
or improper use of corporate funds by Employee, self dealing
detrimental to Company, any attempt to obtain any personal profit from
any transaction in which Company has an interest or any breach of the
terms of Paragraphs 6 or 7 of this Agreement by Employee.
(iii) Termination by Company for Other Reasons. Company shall
----------------------------------------
have the right at any time to terminate Employee's employment
hereunder for any reason by giving Employee written notice (which
notice shall fix the date as of which Employee's employment is to
terminate) of its intention to do so. If Employee's employment
hereunder is terminated by Company other than for cause, Company shall
be obligated to pay Employee the severance benefits set forth in
Paragraph 4(c) hereof.
(iv) Constructive Discharge. If Employee is ever constructively
----------------------
discharged, he may terminate this Agreement and his employment
hereunder by delivering written notice to Company no later than thirty
(30) days before the effective date of termination. If Employee is
constructively discharged, Company shall be obligated to pay Employee
the severance benefits set forth in Paragraph 4(c) hereof. For
purposes of the foregoing, "constructive discharge" means the
occurrence of any one or more of the following: (i) Employee is
removed from all of the offices described in Paragraph 1 hereof; (ii)
Company fails to vest with or removes from Employee the duties,
responsibilities, authority or resources that he reasonably needs to
competently perform the duties of his office; (iii) Company decreases
Employee's basic compensation or arbitrarily and capriciously
decreases Employee's bonus; or (iv) Company transfers Employee to a
location outside the Denver metropolitan area; and in any of such
events, Company fails to cure any of the above within thirty (30) days
after Employee gives Company written notice of such breach.
(v) Termination Upon Change of Control. If a Change of Control
----------------------------------
occurs within seven (7) years after the date of this Agreement,
Employee may terminate this Agreement and his employment hereunder for
any reason within two(2) years after a Change of Control occurs by
delivering
4
<PAGE>
written notice of termination to Company or its successor no less than
thirty (30) days before the effective date of termination (any such
notice by Employee which can be construed as a notice under either
Paragraph 4(b)(iv) or this Paragraph 4(b)(v) shall be deemed a notice
under this Paragraph 4(b)(v)). If Employee so terminates, Company
shall be obligated to pay Employee two (2) times the severance
benefits set forth in Paragraph 4(c) hereof, with the exception that
the Paragraph 4(c)(ii) bonus component shall be based upon a full year
and not prorated to the date of Employee's termination.
(A) A "Change of Control" will be deemed to have occurred
if: a) any person (as such term is defined in Section-13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act") other than a person who is a shareholder of Company
as of the date of this Agreement acquires beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act)
of fifty percent (50%) or more of the combined voting power of
the then outstanding voting securities of Company; or b) the
individuals who were members of Company's Board of Directors as
of the date of this Agreement (the "Current Board Members") cease
for any reason to constitute a majority of the Board of Directors
of Company or its successor; however, if the election or the
nomination for election of any new director of Company or its
successor is approved by a vote of a majority of the individuals
who are Current Board Members, such new director shall, for the
purposes of this paragraph, be considered a Current Board Member;
or c) Company's stockholders approve (1) a merger or
consolidation of Company or Women's Bank and the stockholders of
Company immediately before such merger or consolidation do not,
as a result of such merger or consolidation, own, directly or
indirectly, more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of the entity
resulting from such merger or consolidation in substantially the
same proportion as their ownership of the combined voting power
of the outstanding securities of Company immediately before such
merger or consolidation; or (2) a complete liquidation or
dissolution or an agreement for the sale or other disposition of
all or substantially all of the assets
5
<PAGE>
or stock of Company or Women's Bank (provided that a complete
liquidation or dissolution or the sale or other disposition of
all or substantially all the assets or stock of just Women's Bank
will be deemed a "Change of Control" only if Employee is not
offered a position with Company or one of its subsidiaries with
responsibilities and reporting requirements consistent with those
responsibilities and reporting requirements set forth in
Paragraph 2 hereof).
(B) Notwithstanding and in lieu of Paragraph 4(b)(v)(A), a
Change of Control will not be deemed to have occurred: a) solely
because fifty percent (50%) or more of the combined voting power
of the then outstanding voting securities of Company are acquired
by (1) a trustee or other fiduciary holding securities under one
or more employee benefit plans maintained for employees of
Company and its subsidiaries, or (2) any person pursuant to the
will or trust of any existing stockholder of Company, or who is a
member of the immediate family of such stockholder, or (3) any
corporation which immediately prior to such acquisition, is owned
directly or indirectly by the stockholders in the same proportion
as their ownership of stock immediately prior to such
acquisition; or b) if Employee agrees in writing to waive a
particular Change of Control for the purposes of this Agreement.
(vi) Termination Upon Employee's Disability. In the event
--------------------------------------
Employee's employment is terminated by Company due to Employee's
disability, Company shall be obligated to pay Employee the severance
benefits set forth in Paragraph 4(c) hereof. For purposes of the
foregoing, "disability" shall mean Employee's inability due to illness
or other physical or mental disability to substantially perform his
duties as prescribed herein for a period of sixty (60) days within any
consecutive six (6) month period, and any action to be taken hereunder
based on disability shall not be effective until the expiration of
such sixty (60) day period.
(vii) Termination Upon Employee's Death. In the event that
---------------------------------
Employee dies while employed by Company, then Company shall be
obligated to pay Employee's estate the severance benefits set forth in
Paragraph 4(c) hereof.
(viii) Continuing Obligations of Employee. Notwithstanding
----------------------------------
anything to the contrary contained herein, termination of this
Agreement or Employee's employment hereunder, for whatsoever reason or
for no reason at all, by Employee or otherwise, shall not be
6
<PAGE>
deemed in any way to affect Employee's obligations under Paragraphs 6
and 7 of this Agreement, with respect to which he shall remain bound.
(c) Severance Benefits. Provided Employee is in compliance with
------------------
Paragraph 4(b)(viii) hereof, Company will pay or provide the following
severance benefits to Employee in lieu of any separation payments otherwise
provided upon termination of employment under any other severance pay or
similar plan or policy of Company:
(i) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of Employee's annual basic compensation in effect
immediately prior to Employee's termination;
(ii) Twelve (12) consecutive monthly payments each equal to one-
twelfth (1/12th) of the higher of (A) Employee's discretionary bonus
for the previous calendar year, or (B) the average of Employee's
discretionary bonus for the previous three (3) calendar years (or such
fewer calendar years as Employee has been employed), in each case
prorated to the date of Employee's termination;
(iii) For the twelve (12) month period following the date of
termination of Employee's employment, Company will maintain in full
force and effect for the continued benefit of Employee each employee
benefit plan in which Employee was a participant immediately prior to
the date of Employee's termination, unless an essentially equivalent
and no less favorable benefit is provided by a subsequent employer at
no additional cost to Employee. If the terms of any employee benefit
plan of Company do not permit continued participation by Employee,
then Company will arrange to provide to Employee (at Company's cost) a
benefit substantially similar to and no less favorable than the
benefit Employee was entitled to receive under such plan at the end of
the period of coverage. (This provision specifically is not applicable
to Employee's car phone, parking and club dues, which benefits end
upon Employee's date of termination of employment.)
(iv) For the twelve (12) month period following the date of
termination of Employee's employment, Company will treat Employee for
all purposes as an Employee under all of Company's retirement plans in
which Employee was a participant on the date of termination of
Employee's employment or under which Employee would become eligible
during such twelve (12) month period (hereinafter referred to
collectively as the "Plan"). Benefits due to
7
<PAGE>
Employee under the Plan shall be computed as if Employee had continued
to be an Employee of Company for the twelve (12) month period
following termination of employment. If under the terms of the Plan
such continued coverage is not permitted, Company will pay to Employee
or Employee's estate a supplemental benefit in an amount which, when
added to the benefits that Employee is entitled to receive under the
Plan, shall equal the amount that Employee would have received under
the Plan had Employee remained an employee of Company during such
twelve (12) month period
(v) If any excise tax imposed under Internal Revenue Code
Section 4999 or any successor provision, as amended after the date
hereof, is due and owing by Employee as a result of any amount paid or
payable pursuant to this Paragraph 4(c), Company shall indemnify and
hold Employee harmless against all such excise taxes and any interest,
penalties or costs with respect thereto.
(vi) Company will be obligated to make all payments that become
due to Employee under this Paragraph 4(c) whether or not he obtains
other employment following termination. The payments and other
benefits provided for in this Paragraph 4(c) are intended to
supplement any compensation or other benefits that have accrued or
vested with respect to Employee or his account as of the effective
date of termination.
(vii) Company may elect to defer any payments that may become due
to Employee under this Paragraph 4(c) if, at the time the payments
become due, Company, Women's Bank or any of Company's other
subsidiaries is not in compliance with any regulatory-mandated minimum
capital requirements or if making the payments would cause Company's,
Women's. Bank's or any of Company's other subsidiaries' capital to
fall below such minimum capital requirements. In this event, Company
will resume making the payments as soon as it can do so without
violating such minimum capital requirements.
5. SALE OR REORGANIZATION OF COMPANY. This Agreement shall not restrict
---------------------------------
the sale, transfer, consolidation, liquidation, reorganization or disposition of
the assets of Company and to the extent that the business of Company is
conducted in another form or through another entity or entities, such entity or
entities shall be obligated to fulfill Company's obligations hereunder.
6. RESTRICTIVE COVENANT. It is mutually recognized and agreed that the
--------------------
services to be rendered pursuant to this Agreement
8
<PAGE>
by Employee are special, unique and of extraordinary character. Therefore, as a
condition to Company's obligations hereunder, Employee agrees that without
Company's prior written consent, during the term of this Agreement and for a
period ending on the first anniversary of the date of termination of his
employment hereunder, regardless of cause, he will not engage in any manner
directly or indirectly, to solicit or induce any employee or agent of Company or
any of its subsidiaries to terminate employment with Company or any of its
subsidiaries, as the case may be, or solicit or induce any customer of Company
or any of its subsidiaries to become a customer of any person, firm,
partnership, corporation, trust or other entity that owns, controls or is a
bank, savings and loan association, credit union or similar financial
institution. Furthermore, Employee will at no time during or subsequent to the
term of his employment by Company make any willful and intentional false
statements or take any actions which could reasonably be expected to damage the
reputation or business of Company. It is further recognized and agreed that
irreparable injury will result to Company, its businesses and property in the
event of a breach of this covenant by Employee, that such injury would be
difficult if not impossible to ascertain, and therefore, any remedy at law for
any breach by Employee of this covenant will be inadequate and Company shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damage to Company by reason of any such breach. In addition, in
the event of a breach of this covenant by Employee, Company shall also be
entitled to recover reasonable costs and attorneys' fees incurred in connection
with the enforcement of its rights hereunder. Whenever used herein, Company
shall be deemed to include any successors or any other person or entity which
may hereafter acquire the business of Company or any of its subsidiaries. The
foregoing notwithstanding, should the assets of Company be disposed of in such a
manner that no purchaser thereof has acquired a going business, then Employee
shall not be bound by the covenants expressed in this paragraph.
7. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee hereby covenants
------------------------------------------
and agrees that he will not, except as may be required in connection with his
employment under this Agreement or compelled by any judicial or administrative
order, directly or indirectly, use or disclose to any other person, firm or
corporation, whether during or subsequent to the term of his employment by
Company, irrespective of the time, manner or cause of the termination of his
employment, any information of a proprietary nature belonging to Company, or
which could be reasonably expected to have an adverse effect on Company, its
businesses, property or financial condition, including but not limited to
records, data, documents, processes, specifications, methods of operation
techniques and know-how, plans, policies, customer lists, the names and
addresses of suppliers or representatives, investigations or other matters of
any kind or description relating to the products, services, suppliers,
customers, sales or businesses of Company.
9
<PAGE>
All records, files, documents, equipment and the like relating to Company's
businesses which Employee shall prepare, use or observe shall be and remain the
sole property of Company, and upon termination of this Agreement or his
employment hereunder for any reason, Employee shall return to the possession of
Company any items of that nature and any copies thereof which he may have in his
possession.
8. INDEMNITY.
---------
(a) Indemnification. Company will indemnify Employee (and, upon his
---------------
death, his heirs, executors and administrators to the fullest extent
permitted by law against all expenses, including reasonable attorneys'
fees, court and investigative costs, judgments, fines and amounts paid in
settlement (collectively, "Expenses") reasonably incurred by Employee in
connection with or arising out of any pending, threatened or completed
action, suit or proceeding in which he may become involved by reason of his
having been an officer or director of Company or any of its subsidiaries.
The indemnification rights provided for herein are not exclusive and will
supplement any rights to indemnification that Employee may have under any
applicable bylaw or charter provision of Company or any of its
subsidiaries, or any resolution of Company or any of its subsidiaries, or
any applicable statute.
(b) Advancement of Expenses. In the event that Employee becomes a
-----------------------
party, or is threatened to be made a party, to any pending, threatened or
completed action, suit or proceeding for which Company or any of its
subsidiaries is permitted or required to indemnify Employee under this
Agreement, any applicable bylaw or charter provision of Company or any of
its subsidiaries, any resolution of Company or any of its subsidiaries, or
any applicable statute, Company will, to the fullest extent permitted by
law, advance all Expenses incurred by Employee in connection with the
investigation, defense, settlement or appeal of any threatened, pending or
completed action, suit or proceeding, subject to receipt by Company of a
written undertaking from Employee to reimburse Company for all Expenses
actually paid by Company to or on behalf of Employee in the event it shall
be ultimately determined that Company or any of its subsidiaries cannot
lawfully indemnify Employee for such Expenses, and to assign to Company all
rights of Employee to indemnification under any policy of directors' and
officers' liability insurance to the extent of the amount of Expenses
actually paid by Company to or on behalf of Employee.
(c) Litigation. Unless precluded by an actual or potential conflict of
----------
interest, Company will have the right to recommend counsel to Employee to
represent Employee in
10
<PAGE>
connection with any claim covered by this Section 8. Further, Employee's
choice of counsel, his decision to contest or settle any such claim, and
the terms and amount of the settlement of any such claim will be subject to
Company's prior reasonable approval in writing.
9. ARBITRATION. Any disputes arising out of this Agreement or connected
-----------
with Employee's employment shall be submitted by Employee and Company to
arbitration by the American Arbitration Association or its successor, and the
determination of the American Arbitration Association or its successor shall be
final and absolute. The arbitrator shall be governed by the duly promulgated
rules and regulations of the American Arbitration Association or its successor,
and the pertinent provisions of the laws of the State of Colorado relating to
arbitration. The decision of the arbitrator may be entered as a judgment in any
court in the State of Colorado or elsewhere. The prevailing party shall be
entitled to receive reasonable attorneys' fees incurred in connection with such
arbitration in addition to such other costs and expenses as the arbitrators may
award.
10. INTERPRETATION. This Agreement shall be construed in accordance with
--------------
the internal laws of the State of Colorado. The titles of the paragraphs have
been inserted as a matter of convenience of reference only and shall not be
construed to control or affect the meaning or construction of this Agreement.
11. SEVERABILITY. In the event that any portion of this Agreement is found
------------
to be in violation of or conflict with any federal or state law, the parties
agree that said portion shall be modified only to the extent necessary to enable
it to comply with such law.
12. ASSIGNMENT. This Agreement shall not be assignable by Employee, but
----------
shall be binding upon and inure to the benefit of the heirs, successors and
assigns of Employee and Company.
13. NOTICES. All notices or other communications in connection with this
-------
Agreement shall be in writing and shall be deemed to have been duly given when
delivered, sent by professional courier or mailed first class, postage prepaid
and addressed as follows:
(i) If to Company, addressed to:
Colorado Business Bankshares, Inc.
821 - 17th Street
Denver, Colorado 80202
Attn: Steven Bangert
with a copy to:
11
<PAGE>
Holleb & Coff
Suite 4100
55 E. Monroe
Chicago, Illinois 60603
Attn: Mark S. Kipnis
(ii) If to Employee, addressed to:
Robert B. Ostertag
7151 E. Hinsdale Place
Englewood, Colorado 80112
or such other address or addressed to the attention of such other person or
persons as either of the parties may notify the other in accordance with the
provisions of this paragraph.
14. ENTIRE AGREEMENT. This Agreement is the entire agreement and
----------------
understanding of the parties hereto with respect to the subject matter hereof
and supersedes any and all prior and contemporaneous negotiations,
understandings and agreements with regard to the subject matter hereof, whether
oral or written. No representation, inducement, agreement, promise or
understanding altering, modifying, taking from or adding to the terms and
conditions hereof shall have any force or effect unless the same is in writing
and validly executed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COLORADO BUSINESS BANKSHARES,
INC.
/s/ Robert B. Ostertag By: /s/Steven Bangert
- --------------------------- --------------------------
ROBERT B. OSTERTAG Steven Bangert
Chief Executive Officer
12
<PAGE>
Exhibit 10.18
RETAIL LEASE
SOUTHBRIDGE PLAZA SHOPPING CENTER
LITTLETON, COLORADO
Landlord: Southbridge Plaza, L.P. a Colorado limited partnership
Tenant: Equitable Bank of Littleton, N.A.
Date: Executed on April 1, 1991
Term Commencement - October 1, 1991
<PAGE>
SOUTHBRIDGE PLAZA SHOPPING CENTER LEASE
This Lease is made and entered into on this 1st day of April, 1991, between
---
SOUTHBRIDGE PLAZA, L.P., a Colorado limited partnership ("Landlord") and
Equitable Bank of Littleton, N.A. ("Tenant").
RECITALS
A. Bob Reynolds and Associates, Ltd., as landlord, and Equitable Bank of
South Park, a national banking association then in organization, as tenant,
entered into that certain office lease dated November 5, 1982, and amended as of
October 1, 1986 (the "Prior Lease"). The landlord's interest in said Prior Lease
was assigned to Landlord. Tenant is the successor in interest to Equitable Bank
of South Park.
B. Landlord and Tenant have negotiated the terms of a new lease, as more
fully set forth herein, with a term to commence immediately upon the expiration
of the Prior Lease.
In consideration of the rental and the mutual covenants and agreements
hereinafter contained, Landlord and Tenant hereby enter into the following Lease
(the "Lease"):
1. PREMISES. Landlord leases to Tenant, and Tenant leases from Landlord,
--------
a certain single-story commercial office building and drive-up facility (the
"Leased Premises") in the Southbridge Plaza Shopping Center (the "Shopping
Center"), located in Littleton, Colorado. The Shopping Center, its improvements
and location of the Leased Premises are as outlined on Exhibit A attached
---------
hereto. The drive-up facilities which are part of the Leased Premises shall not
be included within the determination of Tenant's Net Rentable Area. The Leased
Premises does include a ____% undivided interest in the foyer and bathrooms,
which interest is included in the Net Rentable Area.
2. SUMMARY. The terms and conditions of this Lease are summarized as
-------
follows:
TENANT'S NAME: Equitable Bank of Littleton, N.A.
TYPE OF ENTITY: ______ corporation ______ partnership
______ limited partnership ______ individual
X other national association
------ -------------------------
TENANT'S
ADDRESS: 101 West Mineral Avenue
Littleton, Colorado 80120
USE OF
PREMISES: Banking Facility
<PAGE>
GUARANTOR'S
NAME: N/A
GUARANTOR'S
ADDRESS: N/A
LEASED
PREMISES SPACE
NUMBER(S): N/A
NET RENTABLE
AREA OF THE
LEASED
PREMISES: 6,423 square feet, plus 66% of 565 square feet (foyer and
bathroom) for a total of 6,796 square feet
TERM OF LEASE: Five (5) years
COMMENCEMENT
DATE: October 1, 1991
TERMINATION
DATE: September 30, 1996
MONTHLY BASE
RENT: $5,097.00 (subject to adjustment)
TENANT'S PRO
RATA SHARE: 4.2% based on 6,796 square feet and the total net rentable
area of the Shopping Center which may change from time to
time
SECURITY
DEPOSIT: $ -0-
-----------------------------------
TENANT
FINISH PERIOD
(if any): N/A
3. TERM. This Lease shall be for a term of five (5) years, beginning on
----
October 1, 1991 (such date determined as above to be hereinafter referred to as
the "Commencement Date"), and terminating September 30, 1996, unless sooner
terminated as herein provided.
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<PAGE>
3.1. Right to Extend Lease Term. If Tenant is not then in default
--------------------------
under the provisions of this Lease, Tenant shall have the option to extend the
term of this Lease for one additional five-year extension period beginning on
October 1, 1996, and ending on September 30, 2001. As a condition to the
exercise of such option, Tenant shall deliver written notice of Tenant's desire
to extend the term to Landlord no more than 12 months and no less than six
months prior to the expiration of the initial period of the term of this Lease.
Upon the giving of such notice by Tenant, Landlord and Tenant shall enter into
good faith negotiations intended to reach agreement upon the Base Rent for such
extension period. If Landlord and Tenant reach agreement upon the Base Rent for
such extension period by July 1, 1996, the term of this Lease shall be
automatically extended for such extension period without the necessity of any
further agreement or document. Such extension shall be upon all the terms,
covenants and conditions of the initial period of the term of this Lease except
that: (i) there shall be no further right to extend after the expiration of the
extension period; (ii) the limitation on Tenant's payment of Operating Expenses
set forth in Section 4.3.2 shall not apply during the extension period and (iii)
the amount of the Base Rent for each month of the extension period shall be an
amount agreed upon by Landlord and Tenant which reflects market rents for
similar space at the beginning of the extension period for the term of the
extension period. If Landlord and Tenant are unable to reach agreement upon the
Base Rent for such extension period by July 1, 1996, the option to extend the
term of this Lease granted pursuant to this Section 3.1 shall terminate and the
term of this Lease shall expire on September 30, 1996.
4. RENT.
----
4.1. Base Rent. Base Rent under this Lease for the use of the Leased
---------
Premises shall be payable in lawful money of the United States, in monthly
installments in advance as follows:
October 1, 1991, through and including September 1, 1994:
$9.00 per Net Rentable Area (6,796 sq. ft.) per annum equal to
$5,097.00 per month;
October 1, 1994, through and including September 1, 1995:
$9.50 per Net Rentable Area (6,796 sq. ft.) per annum equal to
$5,380.17 per month;
October 1, 1995, through and including September 1, 1996:
$10.00 per Net Rentable Area (6,796 sq. ft.) per annum equal to
$5,663.33 per month.
Tenant agrees to pay Landlord such amount at: c/o Sevo Miller, Inc., 3600 South
Yosemite, 10th Floor, Denver, Colorado 80237, or at such other place as Landlord
may from time to time designate in writing.
-3-
<PAGE>
4.2. Rental Concession. Notwithstanding any provision to the contrary
-----------------
contained herein, as a rental concession to Tenant, Landlord hereby permits
Tenant to occupy the Leased Premises without the obligation to pay Base Rent
during the months of October and November, 1991. Tenant shall, however, be
responsible for the payment of all other amounts due hereunder during such
months, including, without limitation, Tenant's pro rata share of Operating
Expenses, Real Estate Taxes and Insurance. Such rental concession granted to
Tenant shall be null and void ab initio if Tenant, at any time during the term
-- ------
of this Lease, shall default under the provisions of this Lease, and in such
event, Landlord, in addition to all other remedies of Landlord set forth in this
Lease or at law or equity, shall be entitled to recover from Tenant, in addition
to any other amounts to which Landlord may be entitled, an amount equal to such
rental concession.
4.3. CAM/Additional Rent. In addition to Base Rent, Tenant shall pay
-------------------
to Landlord in monthly installments, as additional rent, an amount equal to
Tenant's Pro Rata Share of Landlord's operating Expenses. "Tenant's Pro Rata
Share" is set forth in paragraph 2 of this Lease. "Landlord's Operating
Expenses" shall be defined as (i) all costs, expenses and disbursements involved
in owning, managing, maintaining and operating the Shopping Center and grounds,
including but not limited to material and supplies for maintenance, repair,
restoration and operation of the Shopping Center and grounds, all landscaping,
cleaning, snow and ice removal, and other services, all costs of heating, air
conditioning, water, sewer, gas, electricity and other utilities serving the
Common Areas (as hereinafter defined) of the Shopping Center, all insurance
costs, and all taxes and special assessments levied upon the Shopping Center,
grounds, fixtures and personal property used by Landlord, and the cost of all
professional services (but excluding legal fees for the collection of rent from
specific tenants); plus (ii) administrative and overhead expenses in an amount
equal to fifteen percent (15%) of all the foregoing costs. If Landlord installs
equipment or materials or makes other improvements to the Shopping Center and
grounds which are designed or intended to reduce Landlord's Operating Expenses
or to improve the operation of the Shopping Center and grounds, or are required
to comply with any applicable laws, orders or regulations of governmental
authorities enacted after the date hereof, the cost of such installation, or
allocable portion thereof to be amortized over such reasonable period as
Landlord shall determine in its sole discretion, shall be included in Landlord's
Operating Expenses. Except as otherwise expressly set forth herein, Landlord's
operating Expenses shall not include property additions and capital improvements
to the Property, alterations made for specific tenants, depreciation, interest
or principal amortization costs, income taxes paid by Landlord, any amounts
reimbursed to Landlord from sources other than payments by tenants as CAM, any
costs or fees related to lease negotiations and space planning costs. For
purposes of this Section 4.3, "capital improvements" shall mean only (i)
structural modifications to load bearing walls not occurring as a result of a
tenant's negligence or actions, (ii) replacement of an entire roof, and (iii)
replacement of the entire parking lot.
4.3.1. Payment of Additional Rent. Prior to January 1 of each
--------------------------
calendar year following the calendar year in which this Lease commences (the
"Base Year"), Landlord shall furnish to Tenant a written statement showing in
reasonable detail the estimated Landlord's
-4-
<PAGE>
Operating Expenses for the next forthcoming calendar year. At the first monthly
rent payment date in such calendar year that occurs at least twenty (20) days
following Tenant's receipt of such statement and at each of the other monthly
rent payment dates during such year, Tenant shall pay to Landlord, as additional
rent, 1/12th of an amount equal to Tenant's Pro Rata Share of the estimated
annual Landlord's Operating Expenses. In the event of the inability of Landlord
for any reason to furnish said statement prior to January 1, Tenant shall pay,
at the monthly rent payment date next following Tenant's receipt of said
statement, any additional rent which shall have accrued prior to such payment
date.
On or before March 31 (or as soon thereafter as possible) in each calendar
year commencing with the calendar year after the Base Year, Landlord shall
furnish to Tenant a written statement showing in reasonable detail (i) the
actual Landlord's Operating Expenses incurred during the preceding calendar year
or portion thereof, and (ii) an itemized schedule of all Landlord's estimated
Operating Expenses during the then current calendar year. At the monthly rent
payment date that occurs at least twenty (20) days next following Tenant's
receipt of such statement, Tenant shall pay to Landlord, as additional rent, in
the event of an excess (or Tenant shall receive a refund, in the event of a
deficiency, in an amount equal to the difference between (i) the additional rent
payable by Tenant based upon the actual Landlord's Operating Expenses for the
preceding calendar year, and (ii) the actual additional rent paid by Tenant
based upon estimated Landlord's Operating Expenses for such year. Estimates of
Landlord's Operating Expenses shall be made exclusively by Landlord, based upon
Landlord's experience with actual costs and reasonable projections upon five (5)
days prior written notice Tenant may review the books and records of Landlord
from which Landlord's Operating Expenses are determined.
4.3.2. Cap on CAM. Notwithstanding anything contained herein
----------
to the contrary, the annual amount of estimated and Actual Operating Expenses
payable pursuant to the provisions of this paragraph 4.3 shall not exceed the
following amounts per square foot of Net Rentable Area for the following
calendar years:
1991 - $2.13 1995 - $2.84
1992 - $2.45 1996 - $2.98 (prorated
1993 - $2.57 accordingly to account for
1994 - $2.70 the expiration of this Lease
during the calendar year 1996)
4.4. Late Payment. All payments of Base Rent, and Additional Rent
------------
shall be paid when due, without deduction, setoff, abatement or demand. In
addition to any other remedies available to Landlord as a result of Tenant's
Default, if any installment of Base Rent, Additional Rent or any other sum to be
paid to Landlord pursuant to the terms of this Lease is not paid within 10 days
after such payment is due, Landlord shall be entitled to assess thereon a late
fee of 15% of the amount of the past due payment. Such sum shall also bear
interest at the lesser of 18% per annum, or the highest rate then allowed by
law, from the date due until paid. The payment of such interest shall not
excuse or cure any Default by Tenant under this Lease.
-5-
<PAGE>
5. SECURITY DEPOSIT. There is no security deposit.
----------------
6. TAXES.
-----
6.1. Payment of Taxes by Tenant. Tenant covenants and agrees to pay
--------------------------
promptly when due all personal property taxes on personal property of Tenant on
the Leased Premises and all federal, state and local income taxes, sales taxes,
use taxes Social Security taxes, unemployment taxes and taxes withheld from
wages or salaries paid to Tenant's employees, the nonpayment of which might give
rise to a lien on the Leased Premises or Tenant's interest therein, and to
furnish, if requested by Landlord, evidence of such payments.
6.2. Landlord's Sole Right to Contest Taxes. Landlord shall have the
--------------------------------------
sole right to contest any taxes assessed against the Shopping Center. Landlord
shall pay to or credit Tenant with any abatement, reduction or recovery of any
taxes attributable to the lease term to the extent such abatement, reduction or
recovery reduces Tenant's Pro Rata Share of taxes for any calendar year within
the lease term, less Tenant's Pro Rata Share of all costs and expenses incurred
by Landlord, including attorneys' fees, in connection with such abatement,
reduction or recovery. This paragraph shall survive the termination or
expiration of the Lease.
7. RULES AND REGULATIONS. Tenant and Tenant's agents, employees and
---------------------
invitees shall fully comply with the Rules and Regulations of the Shopping
Center as promulgated by Landlord. At the execution of this lease, Landlord
does not have in effect any Rules and Regulations. However, Landlord shall have
the right to promulgate and subsequently amend such Rules and Regulations at
such times and in such manner as Landlord deems necessary or desirable for the
safety, care, cleanliness or proper operation of the Leased Premises and the
Shopping Center, and for the preservation of good order therein so long as any
such amendments do not materially affect Tenant's right to the quiet enjoyment
of the Leased Premises.
8. ASSIGNMENT OR SUBLEASE. Tenant shall not assign this Lease or sublet
----------------------
the whole or any part of the Leased Premises, or permit any other person except
agents and employees of Tenant to occupy the Leased Premises, or any part
thereof, without the prior written consent of Landlord, which consent may not be
unreasonably withheld. The term "assign" as used herein shall include (i) any
assignment of a part interest in this Lease, (ii) any assignment from any co-
tenant to another, (iii) any change in control or ownership of Tenant, and (iv)
if Tenant is a corporation, any type of transfer or assignment, whether by
merger, consolidation, liquidation or otherwise, or any change in the ownership
or control to vote a majority of Tenant's outstanding voting stock. Any
proposed use to be made of the Leased Premises by any permitted assignee or
subtenant must be consistent with the use contemplated hereunder, and must be
consistent with the use allowed under any applicable laws, orders or regulations
of governmental authorities. Consent of Landlord to one or more assignments or
subleases shall not operate as a release of Tenant's obligations hereunder, or
as a waiver of Landlord's rights under this paragraph to deny any subsequent
requests for assignment or
-6-
<PAGE>
subletting. Tenant agrees to reimburse Landlord up to $500.00 for all reasonable
expenses incurred in connection with any assignment or subletting, including but
not limited to attorneys' fees, lender approval fees, management fees and a
processing fee.
Landlord shall have the unlimited right to assign or collaterally assign
its interest under this Lease or the rent reserved hereunder, or to sell or
otherwise transfer the Shopping Center or any portion thereof. In the event of
any such assignment, sale or transfer (except by way of security only),
including a sale by foreclosure or deed in lieu thereof, Landlord shall be
entirely relieved of any and all liability under the terms and conditions of
this Lease that accrue after the date of the assignment, sale or transfer;
provided that any funds in the hands of Landlord at the time of such assignment,
sale or transfer, in which Tenant has an interest, shall be turned over to the
assignee or transferee. In the event of any such sale, Tenant shall attorn to
and become the tenant of Landlord's successor in interest.
9. There is no paragraph 9.
10. UTILITIES, REPAIRS, MAINTENANCE AND ALTERATIONS.
-----------------------------------------------
10.1. Utility charges.
---------------
10.1.1. Water, Sewage, etc. Tenant covenants and agrees to pay
------------------
all charges for water, sewage disposal, electricity, light, power, telephone or
other utility services used or consumed in, or supplied to, the Leased Premises.
Should Landlord elect to supply any of such utility services to the Leased
Premises, Tenant shall purchase and pay for the same upon being invoiced by
Landlord therefor, at Landlord's actual cost. The determination of any such
utilities shall, at the option of Landlord, be either (a) by a separate meter
installed by Tenant at its expense, or (b) allocated by Landlord to Tenant on an
equitable basis.
10.1.2. Gas, Heat, etc. Landlord and Tenant acknowledge and
--------------
agree that gas, heating, ventilating and air conditioning for the Leased
Premises is shared with other space ("Adjoining Space") in the building. If the
Adjoining Space is occupied, Tenant shall pay Landlord a pro rata share of the
gas, heating, ventilating and air conditioning charges, based upon relative
occupied square footage in the building. If the Adjoining Space is not
occupied, Tenant shall pay Landlord ninety-nine percent (99%) of such charges.
Notwithstanding, Landlord agrees to pay $25 towards the heating bill, if the
space is unoccupied each month.
10.1.3. General. Landlord shall incur no liability to Tenant
-------
in the event that any utility becomes unavailable from any source of supply or
for any reason not within Landlord's reasonable control. All utilities required
by Tenant and not provided by Landlord, as set forth above, shall be contracted
for by Tenant in Tenant's own name with the appropriate utility suppliers.
Tenant shall pay for all such utilities as from time to time invoiced by the
suppliers of such utilities. Landlord covenants and agrees to pay for all
utilities used or consumed in the Common Areas (as described in paragraph 13
hereof), subject to Landlord's
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<PAGE>
right to receive from Tenant Tenant's Pro Rata Share of Operating Expense as
provided in paragraph 4.3. The parties acknowledge that a separate electricity
meter for the adjacent premises is located within the Leased Premises. Tenant
shall allow the relocation of said meter at no cost or expense to Tenant.
10.2. Landlord's Obligation to Repair and Maintain. Subject to
--------------------------------------------
paragraphs 4.3, 15 and 19, Landlord covenants and agrees to maintain, repair,
replace and keep the Common Areas (as hereinafter defined) and those portions of
the Shopping Center containing rentable areas that consist of foundations,
exterior weather walls (excluding storefronts and glass), structural subfloors
and roofs, the structural portions of bearing walls and structural columns and
beams, in good, safe and sanitary condition, order and repair and in accordance
with all applicable laws, ordinances, orders, rules and regulations of
governmental authorities having jurisdiction.
10.3. Tenant's Obligation to Repair and Maintain. Tenant
------------------------------------------
covenants and agrees to maintain, repair, replace and keep the Leased Premises
(except only such parts thereof expressly the obligation of Landlord under
paragraph 10.2), including all leasehold improvements therein, whether installed
by Landlord or Tenant (including, without limitation, the entire storefront, all
ceilings, interior walls, floor coverings and glass, all Tenant's signs, and the
portion of the heating, ventilating and cooling equipment in, and for the
exclusive use of, the Leased Premises) and all of Tenant's furnishings, fixtures
and personal property in the Leased Premises, in good, safe and sanitary
condition, order and repair and in accordance with all applicable laws,
ordinances, orders, rules and regulations of governmental authorities having
jurisdiction; to pay all costs and expenses in connection therewith (including,
without limitation, costs and expenses for janitorial and cleaning services,
painting, replacement of damaged or broken glass and other breakable materials
in the Leased Premises and replacement of lights and light fixtures in or
serving the Leased Premises); and to contract for the same in Tenant's own name.
All maintenance and repairs by Tenant shall be done promptly, in a good and
workmanlike fashion, and without diminishing the original quality of the Leased
Premises or the Shopping Center.
10.4. Landlord's Alterations. Landlord may from time to time
----------------------
alter or change any of the improvements, or permit such to be altered or
changed, on the Shopping Center (including the Common Areas) by the
construction, removal, relocation or alteration of such improvements. In the
course of conducting any such alterations, Landlord shall have the right to make
alterations, structural or otherwise, to the Leased Premises, including services
and utilities for the Leased Premises, but in so doing shall to the extent
possible minimize any interference with Tenant's use and occupancy of, or access
to the Leased Premises.
10.5. Tenant's Alterations. Tenant covenants and agrees not to
--------------------
improve, change, alter, add to, remove or demolish any improvements on the
Leased Premises, ("Changes"), without the prior written consent of Landlord,
which consent shall not be unreasonably withheld, provided Tenant complies with
all conditions which may be imposed by Landlord, in its
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reasonable discretion, in connection with such consent; and unless Tenant pays
to Landlord the reasonable costs and expenses of Landlord for architectural,
engineering or other consultants which may be reasonably incurred by Landlord in
determining whether to approve any such Changes. If such consent is given, no
such Changes shall be permitted unless Tenant shall have procured and paid for
all necessary permits and authorizations from any governmental authorities
having jurisdiction; unless such Changes will not reduce the value of the
Shopping Center, and will not affect or impair existing insurance on the
Shopping Center; and unless Tenant, at Tenant's sole cost and expense, shall
maintain or cause to be maintained workmen's compensation insurance covering all
persons employed in connection with the work and obtains liability insurance
covering any loss or damage to persons or property arising in connection with
any such Changes and such other insurance or bonds as Landlord may reasonably
require. Tenant covenants and agrees that any such Changes approved by Landlord
shall be completed with due diligence and in a good and workmanlike fashion and
in compliance with all conditions imposed by Landlord and all applicable
permits, authorizations, laws, ordinances, orders, rules and regulations of
governmental authorities having jurisdiction and that the costs and expenses
with respect to such Changes shall be paid promptly when due and that the
changes shall be accomplished free of liens of mechanics and materialmen. Except
as otherwise provided herein, Tenant covenants and agrees that all such Changes
shall become the property of the Landlord at the expiration of the Lease Term
or, if Landlord so requests, Tenant shall, at or prior to expiration of the
Lease Term and at its sole cost and expense, remove such Changes and restore the
Leased Premises to their condition prior to such Changes. The provisions and
requirements of paragraph 18 hereof, including but not limited to Tenant's
obligation to secure a bond(s) indemnifying Landlord, shall apply to all
Changes.
All trade fixtures (including drapes) installed by or at the expense of
Tenant, susceptible of being removed from the Leased Premises without
substantial damage thereto, shall remain the property of Tenant and Tenant shall
be entitled to remove the same or any part thereof (subject to Landlord's option
to require the removal of same at Tenant's expense) at the expiration of the
term of this Lease, provided there is then no existing default in the terms,
covenants, conditions, provisions, and agreements of this Lease and provided
that any damage to the Leased Premises caused by the installation, maintenance
or removal of such trade fixtures shall be repaired and restored forthwith by
Tenant at its own expense. Notwithstanding Tenant's right to remove trade
fixtures, the following items shall not be removed and shall remain the property
of the Landlord upon the termination of this Lease: all plumbing fixtures; all
heating and air conditioning units, controls, wiring and ducting; all ceilings,
light fixtures, lens and lighting tubes and bulbs; all glass doors and windows;
all electrical outlets and wiring; and all carpets.
11. USE OF LEASED PREMISES. The Leased Premises are leased to Tenant, and
----------------------
are to be used by Tenant, its assignees or sublessees, if any, for the purpose
of general office, commercial bank and related activities of the bank and any
parent bank holding company usage (the "Permitted Use") and for no other
purpose. Tenant shall use the Leased Premises in such a manner as to not
interfere with the rights of other tenants in the shopping Center, or in any way
cause rates of insurance covering the Leased Premises or any portion of the
Shopping Center to
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increase. Tenant shall comply with any applicable laws, orders or regulations of
governmental authorities, now or hereafter enacted, and the requirements of any
Board of Fire Underwriters now or hereafter constituted, in connection with its
use of the Leased Premises. Tenant shall keep the Leased Premises in a clean and
sanitary condition and shall prevent waste, damage or injury to the Leased
Premises. In addition, and without limiting the generality of the foregoing,
Tenant shall not use or occupy the Leased Premises in violation of any
Environmental Requirement (as hereinafter defined) or cause, permit or suffer
the existence or the commission by Tenant, its agents, employees, contractors,
or invitees, or by any other persons of any violation of the Environmental
Requirements upon, about or in the Leased Premises. Specifically, Tenant shall
not cause, permit or suffer any Hazardous Material (as hereinafter defined) to
be brought upon, treated, kept, stored, disposed of, discharged, released, or
used upon, about or in the Leased Premises by Tenant, its agents, employees,
contractors or invitees, or any other person. To the best of Landlord's
knowledge and belief, without imposing on Landlord any further obligation for
investigation, there is no Hazardous Material within the Leased Premises.
12. CONDITION OF LEASED PREMISES. Tenant acknowledges that no promises,
----------------------------
representations, statements or warranties have been made by or on behalf of
Landlord to Tenant respecting the condition of the Leased Premises, the manner
of operating the Shopping Center or the making of repairs to the Leased
Premises. The taking of possession of the Leased Premises by Tenant shall
constitute an acknowledgment by Tenant that the Leased Premises were taken "as
is," in good and satisfactory condition and free of any latent defects. Tenant
shall, upon the termination of this Lease, by lapse of time or otherwise, remove
all of Tenant's property therefrom as permitted by this Lease, and shall
surrender the Leased Premises to Landlord in as good condition as when Tenant
took possession, normal wear excepted.
13. COMMON AREAS. All portions of the Shopping Center, except the Leased
------------
Premises and other areas from time to time designated by Landlord for the common
use by Tenant, other tenants of space in the Shopping Center and their invitees,
shall be designated as Common Areas for purposes of this Lease. Such Common
Areas shall include, without limitation, parking areas, driveways, walkways,
lobby areas, halls, stairs and restrooms located outside of rentable areas. For
so long as Tenant rightfully occupies the Leased Premises, Tenant is hereby
granted the non-exclusive right to use, in common with other tenants and users
of rentable space within the Shopping Center, so much of the Common Areas as may
be necessary for the convenient use and enjoyment of the Leased Premises,
provided that the common Areas shall at all times be used only for their
intended purposes as determined by Landlord.
14. TENANT'S PERSONAL PROPERTY. All personal property in the Leased
--------------------------
Premises shall be placed therein at the risk of Tenant only. Landlord shall not
be liable for any loss or damage to any property of Tenant or its agents,
employees or invitees caused by theft, vandalism, steam, electricity, sewage,
gas or odors, or from water, rain or snow which may leak into, issue or flow
into the Leased Premises from any part of the Shopping Center, or from any other
place or quarter, or for any damage done to Tenant's property in moving same to
or from the Shopping Center or the Leased Premises, unless such loss or damage
is caused by the gross
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negligence of Landlord. Tenant shall give Landlord prompt written notice of any
damage to or defects in the Leased Premises.
15. LANDLORD'S RESERVED RIGHTS. Without notice to Tenant, without
--------------------------
liability to Tenant for damage or injury to property, person or business, and
without giving rise to a claim for eviction or constructive eviction of Tenant,
disturbance of Tenant's use or possession or setoff or abatement of rent,
Landlord shall have the right to:
a. Change the name or street address of the shopping Center.
b. Install and maintain signs on the exterior of the Shopping
Center.
c. At reasonable times, to decorate, and to make, at its own
expense, repairs, alterations, additions and improvements, structural or
otherwise, in or to the Leased Premises, the Shopping Center or part thereof,
and any adjacent building, land, street or alley, and during such operations to
take into and through the Leased Premises or any part of the Shopping Center all
required materials, and to temporarily close or suspend operation of entrances,
doors, corridors, elevators or other facilities to do so.
d. To enter the Leased Premises at all reasonable times during usual
business hours for the purposes of (a) inspecting same, and (b) making such
repairs or reconstruction required or permitted by Landlord, and (c) performing
any work therein that may be necessary by reason of Tenant's default under the
terms of this Lease, without prior written notice thereof to Tenant. Nothing
herein shall imply any duty upon the part of Landlord to do any such work which,
under the provisions of this Lease, Tenant may be required to perform, and the
performance thereof by Landlord shall not constitute a waiver of Tenant's
Default in failing to perform the same. In the event Landlord makes any repairs
or maintenance which Tenant has failed to do, the cost thereof shall be paid to
Landlord with the next installment of rental hereunder.
e. Show the Leased Premises to prospective tenants at reasonable
times during the last six (6) months of the term of this Lease.
f. Take any and all reasonable measures, including inspections or
the making of repairs, alterations, and additions and improvements to the Leased
Premises or to the Shopping Center which Landlord deems necessary or desirable
for the safety, protection, operation or preservation of the Leased Premises or
the Shopping Center.
g. Approve all sources furnishing signs, painting and/or lettering
to the Leased Premises, and approve all signs on or about the Leased Premises
and the Shopping Center prior to installation thereof, which signs must, without
limitation, conform with such sign criteria as shall from time to time be
established for the Shopping Center.
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16. INSURANCE.
---------
16.1. Landlord's Insurance. Landlord shall, during the lease
--------------------
term, provide and keep in force or cause to be provided or kept in force:
16.1.1. Comprehensive general liability insurance with respect
to Landlord's operation of the Shopping Center covering bodily injury, death and
damage to property of others; and
16.1.2. Fire and extended coverage insurance (with coverage at
Landlord's option by endorsement or otherwise, for all risks, vandalism and
malicious mischief, sprinkler damage, boilers and rental loss) with respect to
the Shopping Center (excluding those portions of the Leased Premises required to
be insured by Tenant pursuant to paragraph 16.2 below).
Insurance effected by Landlord shall be in amounts which Landlord shall from
time to time determine reasonable and sufficient, shall be subject to such
reasonable deductibles and exclusions as Landlord may deem appropriate and shall
otherwise be on such terms and conditions as Landlord shall from time to time
determine reasonable and sufficient. At the time of the execution of this lease
Landlord has in effect $1,000,000 of comprehensive general liability coverage,
which shall be considered sufficient unless otherwise required by Landlord's
lenders. Insurance obtained by Landlord, need not name Tenant as an insured
party and may, at Landlord's option, name any mortgagee or holder of a deed of
trust as an insured party as its interest may appear. Insurance obtained by
Landlord shall contain a waiver of rights of subrogation as among Tenant,
Landlord and the holder of any mortgage or deed of trust so long as the
Landlord's insurance carrier consents to such waiver. Any insurance provided
for in paragraph 16.1 may be maintained by means of a policy or policies of
blanket insurance, covering additional items or locations or insureds.
16.2. Tenant's Insurance. Tenant covenants and agrees to obtain
------------------
on, and to keep in full force and effect during the Lease Term:
16.2.1. Comprehensive general liability insurance with respect
to the business carried on, in or from the Leased Premises and the use and
occupancy thereof, covering bodily injury, death and damage to property of
others; and
16.2.2. Fire and extended coverage insurance (including
sprinkler damage, vandalism and malicious mischief), with respect to those
portions of the Leased Premises which Tenant is required to maintain and repair
pursuant to paragraph 10.3, which include all leasehold improvements in the
Leased Premises, whether installed by Landlord or Tenant (including, without
limitation, the entire storefront, all ceilings, interior walls, floor coverings
and glass, and the portion of the heating, ventilating and cooling equipment in,
and for the exclusive use, of, the Leased Premises) and with respect to all of
the Tenant's furnishings, fixtures and personal property in the Leased Premises.
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Insurance obtained by Tenant under paragraph 16.2 shall be in amounts which
Landlord and its mortgagee shall from time to time determine as being sufficient
(and in the case of insurance under paragraph 16.2.1, shall have combined single
limits of not less than $1,000,000 in respect of any one accident or occurrence,
and in the case of insurance under paragraph 16.2.2, shall be on a full
replacement cost basis subject only to such deductibles and exclusions as
Landlord may approve). Except as otherwise approved in writing by Landlord, all
insurance obtained by Tenant shall be on forms and with insurors selected or
approved by Landlord, which approval shall not be unreasonably withheld; shall
name Landlord and the holder of any mortgage or deed of trust encumbering the
Shopping Center as additional insured parties, as their interests may appear;
shall contain a waiver of rights of subrogation as among Tenant, Landlord and
the holder of any such mortgage or deed of trust so long as the insurance
carrier consents to such waiver; and shall provide, by certificate of insurance
or otherwise, that the insurance coverage shall not be canceled or altered
except upon 30 days' prior written notice to Landlord and the holder of any such
mortgage or deed of trust. Tenant shall obtain and file with Landlord
certificates of insurance evidencing the insurance coverage required above and
shall deliver such certificates to Landlord on or before the date the term
hereunder commences and from time to time thereafter as may be reasonably
required by Landlord to establish Tenant's insurance coverage.
16.3. Cooperation in the Event of Loss. Landlord and Tenant shall
--------------------------------
cooperate with each other in the collection of any insurance proceeds which may
be payable in the event of any loss, including the execution and delivery of any
proof of loss or other actions required to effect recovery.
16.4. No Use To Invalidate Policies. Tenant shall not use or
-----------------------------
occupy the Leased Premises or any part thereof in any manner which could
invalidate any policies of insurance now or hereafter carried by Landlord,
increase the risks covered by such insurance or necessitate additional insurance
premiums or policies of insurance, even if such use may be in furtherance of
Tenant's business purposes. In the event any policies of insurance are
invalidated by acts or omissions of Tenant, Landlord shall have the right to
terminate this Lease or, at Landlord's option, to charge Tenant for extra
insurance premiums required on account of the increased risk caused by Tenant's
use and occupancy of the Leased Premises.
17. INDEMNITY.
---------
17.1. General Indemnity. Tenant shall indemnify, hold harmless
-----------------
and defend Landlord, and Landlord's agents, from and against, any and all costs,
expenses, liabilities, losses, damages, suits, actions, fines, penalties,
demands or claims of any kind, including attorneys' fees, asserted by or on
behalf of any person, entity or governmental authority arising out of or in any
way connected with either (i) a failure by Tenant to perform any of the
agreements, terms or conditions of this Lease required to be performed by
Tenant, (ii) a failure by Tenant to comply with any applicable laws, orders or
regulations of governmental authorities, or (iii) any accident, death, or
personal injury, or damage to, or loss or theft of property which shall occur on
or about
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the Leased Premises. This indemnity does not apply to any losses caused by the
negligence of Landlord.
17.2. Environmental Indemnity. Tenant, its successors, assigns
-----------------------
and guarantors, shall indemnify, defend, reimburse and hold harmless Landlord
from and against any and all "Environmental Damages" arising from the presence
or use of "Hazardous Materials" caused, permitted or suffered by Tenant's use or
occupancy of the Leased Premises, or arising in any manner whatsoever out of the
violation by Tenant of any "Environmental Requirements" pertaining to the Leased
Premises and the activities thereon, or the breach of any warranty or covenant
or the inaccuracy of any representation of Tenant contained in this Lease.
a. "Hazardous Material" means any substance:
i. The presence of which requires investigation or remediation
under any federal, state or local statute, regulation, ordinance,
order, action, policy or common law; or
ii. Which is or becomes defined as "hazardous waste," "hazardous
substance," pollutant or contaminant under any federal, state or local
statute, regulation, rule or ordinance or amendments thereto
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") (42 U.S.C. (S)(S)
9601 et seq.) and/or the Resource Conservation and Recovery Act (42
------
U.S.C. (S)(S) 6901 et seq.); or
------
iii. Which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous and is or becomes regulated by any governmental authority or
instrumentality of the United States, the State of Colorado or the
County of Arapahoe; or
iv. The presence of which in, on or about the Leased Premises
causes or threatens to cause a nuisance upon the Leased Premises or to
adjacent properties or poses or threatens to pose a hazard to health
or safety of persons on or about the Leased Premises; or
v. The presence of which on adjacent properties could constitute
a trespass by Tenant; or
vi. Without limitation which contains gasoline, diesel fuel, or
other petroleum hydrocarbons.
b. "Environmental Requirements" means all applicable present and
future statutes, regulations, rules, ordinances, codes, licenses, permits,
orders, approvals and similar items, of all governmental authorities or
instrumentalities of the United States, Colorado, the
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County of Arapahoe and all applicable judicial, administrative and regulatory
decrees, judgments or orders relating to the protection of human health or the
environment.
c. "Environmental Damages" means all claims, judgments, damages,
losses, penalties, fines, liabilities, encumbrances, liens, costs and expenses
of whatever kind or nature, contingent or otherwise, matured or unmatured,
foreseeable or unforeseeable, including without limitation reasonable attorneys'
and consultants' fees, any of which are incurred at any time as a result of
Tenant's use or occupancy of the Leased Premises or violation by Tenant of any
Environmental Requirement in, on or about the Leased Premises or any portion
thereof.
d. The obligations of Tenant, its successors, assigns and
guarantors, in this paragraph shall survive the expiration or termination of
this Lease.
e. If either Tenant or Landlord shall become aware of or receive
notice or other communication concerning any actual, alleged, suspected or
threatened violation of Environmental Requirements or liability for
Environmental Damages in connection with the Leased Premises or past or present
activities of any person thereon, then, within ten (10) days of becoming aware
of or the receipt of notice or other communication, the party receiving such
notice shall deliver to the other party a written description of same, together
with copies of any supporting documents.
f. This indemnification contained in paragraph 17.2 shall not apply
to Environmental Damages arising from the actions of Landlord.
18. MECHANIC'S LIENS. Tenant agrees to keep all of the Leased Premises
----------------
and every part thereof and all buildings and other improvements within the
Shopping Center free and clear of and from any and all mechanic's, materialmen's
and other liens for work or labor done, services performed, materials,
appliances, transportation or power contributed, used or furnished to be used in
or about the Leased Premises to or on the order of Tenant, and at all times
Tenant shall promptly and fully pay and discharge any and all claims upon which
any such lien may or could be based; and Tenant shall save and hold Landlord and
all of the Leased Premises and all buildings and improvements within the
Shopping center free and harmless of and from any and all such liens and claims
of liens and suits or other proceedings arising out of materials or services
furnished to or on the order of Tenant. Tenant agrees to give Landlord written
notice not less than ten (10) days in advance of the commencement of any
construction, alteration, addition, improvement, installation, or repair costing
in excess of Five Thousand and 00/100 Dollars ($5,000.00) in order that Landlord
may post appropriate notices of Landlord's nonresponsibility and, further, to
secure, at Tenant's sole cost and expense, a bond indemnifying Landlord and the
Leased Premises against all aforesaid liens, with corporate surety and in form
satisfactory to Landlord.
19. DAMAGE BY FIRE OR OTHER CASUALTY. In the event of such damage, if
--------------------------------
such damage can be repaired within sixty (60) days after it is determined that
there are
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substantially sufficient insurance proceeds to repair the damage, then Landlord
shall so repair the Leased Premises. If such damage cannot be repaired within
that time, or if there are insufficient insurance proceeds available to make
such repairs, then Landlord shall elect whether to repair the Leased Premises or
cancel this lease, and shall notify Tenant in writing of its election within
sixty (60) days after the allowance of the claim for insurance proceeds. In the
event Landlord elects to repair the Leased Premises, the work or repair shall
begin promptly, and shall be carried on without unnecessary delay. In the event
Landlord or Tenant elects not to repair the Leased Premises, the lease shall be
deemed canceled as of the date Landlord gives notice to Tenant as provided
above. Such damage shall not extend the lease term. Tenant shall not be entitled
to any damages by reason of any inconvenience or loss sustained by Tenant as a
result of the Leased Premises or any portion thereof being untenantable while
the Leased Premises is being repaired; unless such damages are caused by
Landlord's gross negligence, or in the event Landlord elects to cancel the lease
as provided above.
20. DEFAULT OR BREACH. Each of the following events shall constitute a
-----------------
default or a breach of this Lease by Tenant ("Default"):
a. If Tenant fails to pay Landlord any Base Rent when due hereunder;
b. If Tenant fails to pay Landlord any Additional Rent within the
period specified in paragraph 4.3.1, and within five (5) days after written
notice;
c. If Tenant vacates or abandons the Leased Premises;
d. If Tenant files a petition in bankruptcy or insolvency or for
reorganization under any bankruptcy act, voluntarily takes advantage of any such
act by answer or otherwise, makes an assignment for the benefit of creditors or
becomes insolvent or unable to meet its obligations as they become due;
e. If involuntary proceedings under any bankruptcy or insolvency act
shall be instituted against Tenant, or if a receiver or trustee shall be
appointed for all or substantially all of the property of Tenant, and such
proceedings shall not be dismissed or the receivership or trusteeship vacated
within thirty (30) days after the institution or appointment; or
f. If Tenant fails to perform or comply with any other term or
condition of this Lease and such nonperformance shall continue for a period of
three (3) days after notice thereof from Landlord to Tenant; provided, however,
if the nonperformance cannot be cured by the payment of money, then Tenant shall
have thirty (30) days after notice to correct the nonperformance.
Notwithstanding any provision of this Lease to the contrary, in the event
the bank to be operated on the Leased Premises is taken over by the Comptroller
of the currency or other bank supervisory authority, Landlord may terminate the
Lease only with the concurrence of the
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Comptroller or other bank supervisory authority (provided that the Comptroller
or other supervisory authority continues to pay all rent and other charges as
and when due and complies with all other terms, conditions, covenants, and
agreements of this Lease) and any such authority shall in any event have the
election to either continue or terminate the Lease, provided that in the event
this Lease is terminated, the maximum claim of Landlord for damages or indemnity
of injury resulting from the rejection or abandonment of the unexpired Lease
shall in no event be in an amount exceeding the rent reserved by the Lease,
without acceleration for the year next succeeding the date of the surrender of
the Leased Premises to Landlord, or the date of reentry of Landlord, whichever
first occurs, whether before or after the closing of the bank, plus an amount
equal to the unpaid rent accrued, without acceleration, up to such date. Lease
terminates and obligations cease if Comptroller elects not to continue in
existence. If at any time said term shall terminate as aforesaid or in any other
way, Tenant hereby agrees to surrender and deliver up the Leased Premises
peaceably to Landlord immediately upon the termination of such term, and if
Tenant shall remain in possession of the same after termination thereof, Tenant
shall be deemed guilty of a forcible detainer of the Leased Premises under the
laws of the State of Colorado.
21. EFFECT OF DEFAULT. In the event of any default or breach hereunder,
-----------------
in addition to any other right or remedy available to Landlord, either at law or
in equity, Landlord may (but need not) exercise any one or more of the following
rights:
a. Landlord may re-enter the Leased Premises in accordance with the
procedures provided by Colorado statutes without being deemed to have terminated
this Lease and remove the property and personnel of Tenant without being guilty
in any manner of trespass, and shall have the right, but not the obligation, to
store such property in a public warehouse or at a place selected by Landlord, at
the risk and expense of Tenant.
b. Landlord may terminate this Lease by giving written notice of
termination to Tenant. Without such notice, Landlord's re-entering and/or
reletting of the Leased Premises will not terminate the Lease. On termination,
Landlord may recover from Tenant all damages proximately resulting from the
breach, including the cost of recovering the Leased Premises and the value of
the balance of the Lease over the reasonable rental value of the Leased Premises
for the remainder of the lease term, which sum shall be immediately due Landlord
from Tenant.
c. Landlord may, on behalf of Tenant, relet the Leased Premises or
any part thereof for any term without being deemed to have terminated this
Lease, at such rent and on such terms as it may choose. Landlord may make
alterations and repairs to the Leased Premises. In addition to Tenant's
continuing liability to Landlord for Tenant's obligations under this Lease,
Tenant shall be liable for all expenses of the reletting (including brokerage
and legal fees), for any alterations and repairs made, and for the difference
between the rent received by Landlord under any new lease agreement and the rent
installments that are due for the same period under this Lease.
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d. Landlord may make any payment or perform any act on behalf of
Tenant necessary to cure such Default by Tenant, and make all necessary payments
in connection therewith, including without limitation the payment of reasonable
attorneys' fees, costs and charges of or in connection with any legal
proceedings which may have been commenced. Tenant shall pay to Landlord, as
Additional Rent, upon demand, any amount so paid by Landlord, together with
interest thereon at the lesser of 18% per annum, or the highest rate then
allowed by law, from the date said payment was due until paid by Tenant. The
payment of such interest shall not excuse or cure any Default by Tenant under
this Lease.
e. All costs and expenses incurred by Landlord in connection with
collecting any amounts and damages owing by Tenant pursuant to the provisions of
this Lease or to enforce any provision of this Lease, including, without
limitation, reasonable attorneys' fees and Landlord's internal personnel costs,
whether or not any action is commenced by Landlord, shall be paid by Tenant to
Landlord upon demand. If Landlord, without fault, is at any time made a party
to any litigation instituted by or against Tenant, Tenant shall reimburse to
Landlord and shall indemnify and hold Landlord harmless against all costs and
expenses, including, but not limited to, attorneys' fees and Landlord's internal
personnel costs, incurred by Landlord in connection therewith.
22. There is no paragraph 22.
23. SURRENDER; HOLDING OVER. Tenant shall, upon the termination of this
-----------------------
Lease, whether by lapse of time or otherwise, peaceably and promptly surrender
the Leased Premises to Landlord. If Tenant remains in possession after the
termination of this Lease without a written lease duly executed by the parties,
Tenant shall be deemed a trespasser. If Tenant pays, and Landlord accepts, rent
for a period after termination of this Lease, Tenant shall be deemed to be
occupying the Leased Premises only as a tenant from month to month, at a Base
Rent equal to two times the Base Rent in effect immediately prior to such
termination, and subject to all of the other terms and conditions of this Lease.
24. SUBORDINATION AND ATTORNMENT. Landlord reserves the right to place
----------------------------
liens and encumbrances on the Leased Premises superior in lien and effect to
this Lease. This Lease, and all rights of Tenant hereunder shall be subject and
subordinate to any liens and encumbrances now or hereafter imposed by Landlord
upon the Leased Premises or the Shopping Center or any part thereof; provided,
however, that so long as Tenant is not in default under the terms and conditions
of this Lease, Tenant's possession of the Leased Premises shall not be
disturbed. Tenant agrees to execute, acknowledge and deliver to Landlord, upon
demand, any and all instruments required by Landlord or Landlord's lender(s) to
subordinate this Lease and all rights herein to any such lien or encumbrance.
In the event of a foreclosure of any mortgage on the Shopping Center or a deed
in lieu thereof, Tenant shall attorn to, and become the Tenant of, the purchaser
at the foreclosure sale or the grantee of such deed in lieu thereof, and shall
recognize such party as the Landlord under this Lease.
-18-
<PAGE>
Tenant waives any right to terminate this Lease because of any such
foreclosure proceedings or deed in lieu thereof.
25. ESTOPPEL CERTIFICATES. Tenant agrees that at any time, and from time
---------------------
to time during the term of this Lease, and within five (5) business days after
demand therefor by Landlord, to execute and deliver to Landlord, or any
mortgagee (existing or proposed), trustee, beneficiary or purchaser of the
Shopping Center, a certificate in recordable form certifying that this Lease is
in full force and effect, that the Lease is unmodified, or if modified,
describing such modification, that there are no defenses or offsets thereto, or
describing any such defenses or offsets as are claimed, the dates to which all
rentals have been paid and any other matters reasonably requested by Landlord.
26. CONDEMNATION. If the whole or any part of the Leased Premises shall
------------
be taken for any public or quasi-public use under the power of eminent domain,
then the term of this Lease shall cease as to that portion of the Leased
Premises so taken, from the date of title vesting, and the rent shall be paid to
that date, with a proportionate refund by Landlord to Tenant of such rent as may
have been paid by Tenant in advance. If the portion of the Leased Premises
taken is such that it prevents the practical use of the Leased Premises for
Tenant's purposes, then Tenant shall have the right either (i) to terminate this
Lease by giving written notice of such termination to Landlord not later than 30
days after the taking, or (ii) to continue in possession of the remainder of the
Leased Premises, except that the rent shall be reduced in proportion to the
nature, value and area of the Leased Premises taken.
In the event of any taking or condemnation of the Leased Premises, in whole
or in part, the entire resulting award of damages shall be the exclusive
property of Landlord, including all damages awarded as compensation for
diminution in value to the leasehold, without any obligation to allocate any
portion of such award to Tenant for the value of any unexpired term of this
Lease, or for any other estate or interest in the Leased Premises now or
hereafter vested in Tenant; provided, however, that Tenant shall have the right
to seek an award for losses and expenses relating to any move that Tenant may be
required to make as a result of such condemnation and Tenant may retain any such
award specifically awarded to Tenant by the condemning authority.
27. There is no paragraph 27.
28. NOTICES. Any notices, demands or other communications to be given
-------
hereunder shall be given in writing and sent by (i) personal delivery, (ii)
overnight courier service, or (iii) registered or certified mail, return receipt
requested to the following addresses:
If to Landlord: c/o Sevo Miller, Inc.
3600 South Yosemite, l0th Floor
Denver, Colorado 80237
-19-
<PAGE>
If to Tenant: Equitable Bank of
Littleton, N.A.
101 West Mineral Avenue
Littleton, Colorado 80120
Attn: Darrell J. Schulte, President
or at such other address as either party may from time to time designate in
writing. Each such notice shall be deemed to have been given at the time it
shall be delivered, sent by overnight courier service, or if mailed, at the time
it shall be deposited in the United States mail in the manner prescribed herein.
Nothing contained herein shall be construed to preclude personal service of any
notice in the manner prescribed by law for personal service of a summons or
other legal process.
29. MERCHANTS' ASSOCIATION/PROMOTION FUND. Landlord reserves the right at
-------------------------------------
any time to alternately establish either a Merchants' Association or Promotion
Fund. Upon receipt of written notice from Landlord at any time during the term
hereof, notifying Tenant of the establishment of a Merchants' Association,
Tenant may elect to become a member of the Merchants' Association within ten
(10) days of such notice by giving written notice to Landlord. Upon the
establishment of either a Merchants' Association in which Tenant elects to
become a member or Promotion Fund, Tenant shall comply with all of its
obligations with respect thereto as set forth in subparagraphs 29.1 and 29.2 of
this Lease.
29.1. Merchants' Association. During the term of this Lease Tenant
----------------------
agrees fully to participate in and to remain a member in good standing of said
Association. Tenant agrees to pay the Merchants' Association dues in equal
monthly installments, in advance, on the first day of each month, as Tenant's
contribution towards the advertising, promotion, public relations, and
administrative expenses paid or incurred by the Association, subject, however,
to annual adjustments in such dues as may be approved by appropriate vote of the
members of the Association increasing said dues to the extent required to meet
increases in the costs of advertising, promotion, public relations, and
administrative expenses. Said dues shall not exceed $.20 per Net Rentable Area
per year. Tenant agrees to advertise in any and all special Merchants'
Association newspaper sections, tabloids, or other advertisements and agrees to
cooperate and participate in all special sales and promotions sponsored by the
Merchants' Association. The failure of any other tenant of the Shopping Center
to contribute to, or become or remain a member of the Merchants' Association
shall in no way release Tenant from Tenant's obligation hereunder, such
membership and participation in the Association by Tenant being a separate and
independent covenant of this Lease. Tenant agrees to abide by the bylaws of the
Merchants' Association and by any amendments thereof and any regulations of the
Merchants' Association as may hereafter be duly adopted. Tenant's failure to pay
dues to such Association shall be treated as a default hereunder and Landlord
may collect the same on behalf of said Association.
29.2. Promotion Fund. Upon receipt of written notice from Landlord
--------------
at any time during the term hereof, notifying Tenant of the establishment of a
Promotion Fund, the following provisions will apply:
-20-
<PAGE>
29.2.1. Tenant shall pay to the Landlord, as Additional Rent, in each
Rental Year (or in any other period determined by the Landlord, from time to
time) for the purpose of the creation and maintenance of a common fund (the
"Promotion Fund") for the promotion or benefit of the Shopping Center, an annual
payment in an amount established by Landlord in its reasonable discretion, not
to exceed $.20 pet Net Rentable Area per year.
29.2.2. The Promotion Fund payment for each Rental Year (or other
annual period), including the Rental Year in which the Commencement Date occurs,
shall be increased at the commencement of each subsequent Rental Year (or other
annual period) to equal the amount obtained by multiplying the Promotion Fund
payment specified herein by a fraction that has as its numerator the Consumer
Price Index described in paragraph 4.1.1 hereof (CPI-U) for the first month of
the current Rental Year (or other annual period), and as its denominator the
CPI-U for the month (or month closest thereto) during which the Promotion Fund
is established; provided, however, that the payment shall never exceed $.20 per
Net Rentable Area per year.
29.2.3. The Promotion Fund payment shall be made monthly, in advance,
as Additional Rent on the first day of each calendar month during each Rental
Year of the term (or during any such other annual period during the term).
29.2.4. The Promotion Fund payment shall be used by the Landlord for
the promotion or benefit of the Shopping Center in such manner as the Landlord
from time to time decides. However, the Landlord may pay all or any part of the
Promotion Fund to any Merchants' Association which has been or may be formed in
the Shopping Center, and any such payment is a good and sufficient discharge of
the Landlord's obligation in respect of the amount so paid. It is understood and
agreed that any and all amounts paid to the Landlord under this paragraph 29 are
not deemed income of the Landlord but shall be expended by it as provided in
this paragraph.
30. CHANGES TO SHOPPING CENTER. Landlord reserves the right at any time
--------------------------
to change the size, area or dimensions of the shopping Center, change the size
or location of points of access or parking areas, and grant such easements to
others as Landlord may deem desirable in connection with the use or development
of the Shopping Center or any adjacent or neighboring properties. Tenant
acknowledges that any such change might have the effect of altering Tenant's Pro
Rata Share. Tenant shall not, in such event, claim or be allowed any damages or
right to terminate this Lease for injury or inconvenience occasioned thereby.
Landlord shall notify Tenant of any change in its Pro Rata Share occasioned by
such change to the Shopping Center.
31. CONTINUOUS OPERATION. Tenant covenants to operate the Leased Premises
--------------------
continuously during the entire term of this Lease with due diligence and
efficiency so as to produce a maximum volume of gross sales, subject to causes
beyond Tenant's control. For purposes of this Lease, "continuously" shall mean
being open for business on all days and during the hours that are customary
considering the nature of Tenant's business and the location of the Shopping
Center or as otherwise determined by Landlord in its discretion.
-21-
<PAGE>
32. BANKRUPTCY. Landlord and Tenant understand that notwithstanding
----------
certain provisions to the contrary contained herein, a trustee or debtor in
possession under the Bankruptcy Code of the United States (the "Bankruptcy
Code") may have certain rights to assume or assign this Lease. Landlord and
Tenant further understand that in any event Landlord is entitled under the
Bankruptcy Code to adequate assurances of future performance of the terms,
covenants and conditions of this Lease. For purposes of any such assumption or
assignment, the parties hereto agree that the term "Adequate Assurance" shall
include at least the following:
a. In order to assure Landlord that the proposed assignee will have
the resources with which to pay all rent due hereunder, any proposed assignee
must have demonstrated to Landlord's satisfaction a net worth (as defined in
accordance with generally accepted accounting principles consistently applied)
at least as great as the net worth of Tenant on the date this Lease became
effective. The financial condition and resources of Tenant were a material
inducement to Landlord in entering into this Lease.
b. Any proposed assignee must have been engaged in the Permitted Use
at least five (5) years prior to any such proposed assignment.
c. In entering into this Lease, Landlord considered extensively the
Permitted Use and determined that the Permitted Use would add substantially to
Landlord's tenant balance and that if it were not for Tenant's agreement to
limit its operations to the Permitted Use, Landlord would not have entered into
this Lease. Landlord's overall operation will be substantially impaired if the
trustee in bankruptcy or any assignee of this Lease makes any use of the Leased
Premises other than the Permitted Use.
d. Any proposed assignee of this Lease must assume and agree to be
personally bound by the terms, provisions and covenants of this Lease.
33. DEFAULT BY LANDLORD. In the event of any default by Landlord
-------------------
("Landlord Default"), Tenant's exclusive remedy shall be to commence an action
for damages. Prior to instituting any such action, Tenant shall advise
Landlord, and any mortgagee whose name and address has been given to Tenant, by
written notice specifying such Landlord Default with particularity and Landlord
shall thereupon have thirty (30) days in which to cure any such Landlord
Default; provided, however, that if the nature of the Landlord Default is such
that more than thirty (30) days are required for its cure, then Landlord shall
not be in default if Landlord commences performance within said thirty (30) days
and thereafter diligently prosecutes the same to completion. Unless and until
Landlord fails to so cure any Landlord Default after such notice, Tenant shall
not have any remedy or cause of action by reason thereof. All obligations of
Landlord hereunder will be construed as covenants, not conditions.
34. SIGNS, FIXTURES, EXTERIOR IMPROVEMENTS. Tenant shall not make or
--------------------------------------
cause to be made any alterations, additions, or improvements to the Shopping
Center or install or cause to be installed any exterior signs, floor covering,
exterior lighting, plumbing fixtures,
-22-
<PAGE>
shades or awnings, window coverings, radio or television antennae, loud
speakers, sound amplifiers or similar devices, or make any changes to the
storefront or exterior of the Shopping Center. All signs installed and
maintained by Tenant shall conform in all respects with sign criteria
established for the Shopping Center.
35. MISCELLANEOUS.
-------------
a. Binding on Assigns. All terms, conditions and agreements of this
------------------
Lease shall be binding upon, apply and inure to the benefit of the parties
hereto and their respective heirs, representatives, successors, assigns and
authorized agents.
b. Amendment in Writing. This Lease, together with any and all
--------------------
exhibits and addenda, attached or unattached hereto, all of which exhibits and
addenda are incorporated herein by reference, contains the entire agreement
between the parties and may be amended only by subsequent written agreement,
executed by both parties.
c. Waiver. The failure of Landlord to insist upon strict
------
performance of any of the terms, conditions and agreements of this Lease, or the
acceptance of rent from Tenant during a time Tenant is in Default of any
obligation hereunder, shall not be deemed a waiver of any of Landlord's rights
or remedies hereunder, and shall not be deemed a waiver of any subsequent breach
or Default of any of such terms, conditions and agreements. The doing of
anything by Landlord which Landlord is not obligated to do hereunder shall not
impose any further obligation on Landlord nor otherwise amend any provisions of
this Lease.
d. No Surrender. No surrender of the Leased Premises by Tenant
------------
shall be effected by Landlord's acceptance of the keys to the Leased Premises or
of rent due hereunder, or by any other means whatsoever, without Landlord's
written acknowledgment that such acceptance constitutes a surrender.
e. Quiet Enjoyment. Upon due performance of all of the covenants
---------------
and agreements to be performed by Tenant hereunder, Landlord covenants that
Tenant shall and may at all times peaceably and quietly have, hold and enjoy the
Leased Premises during the term of this Lease.
f. Attorney's Fees. In the event that legal proceedings are brought
---------------
or commenced to enforce the terms of this Lease, the prevailing party shall be
entitled to recover from the other party its reasonable attorneys' fees and
costs, whether or not such proceedings are pursued to judgment or other final
disposition.
g. No Recording. This Lease shall not be recorded by either party
------------
hereto and any such recording shall be void. At Landlord's option, a memorandum
of such lease identifying the parties thereto, the Leased Premises, and the
lease term may be recorded.
-23-
<PAGE>
h. Authorization. Tenant hereby warrants and represents to Landlord
-------------
that the execution and delivery of this Lease by the parties signing below on
behalf of Tenant, as well as Tenant's performance hereunder, has been duly
authorized.
i. Captions. The captions of the various paragraphs in this Lease
--------
are for convenience only and do not define or limit the contents of such
paragraphs.
j. Brokers. Tenant hereby warrants that no real estate broker has
-------
represented or will represent it in this transaction and that no finder's fees
have been earned by a third party. Tenant acknowledges that Sevo Associates,
Inc. and its agents, are agents of Landlord and are not representing Tenant in
this transaction.
k. Applicable Law. This Lease shall be governed by and construed in
--------------
accordance with the laws of the State of Colorado.
l. Time of Essence. Time is of the essence in the performance of
---------------
each and every obligation by Tenant hereunder.
m. Name of Shopping Center. Landlord reserves the right to change
-----------------------
the name of the Shopping Center from time to time and any new name will be
determined by Landlord in its sole discretion. Tenant shall not acquire any
rights in and to the name "Southbridge Plaza Shopping Center" or any other name
in which Landlord may operate the Shopping center.
n. Relationship of Parties. Nothing herein contained shall be
-----------------------
deemed and construed by the parties hereto, nor by any third party, as creating
the relationship of principal and agent or of partnership or of joint venture
between the parties hereto, it being understood and agreed that neither the
method of computation of rent, nor any other provision contained herein, nor any
acts of the parties hereto, shall be deemed to create any relationship between
the parties hereto other than the relationship of Landlord and Tenant.
o. Landlord Exculpation. Landlord, its partners, employees and
--------------------
agents, shall have absolutely no personal liability with respect to any
provision of this Lease, or any obligation or liability arising in connection
herewith. Tenant shall look solely to the equity in the Leased Premises or the
Shopping Center, for the satisfaction of any remedies of Tenant in the event of
a breach by the Landlord of any of its obligations. Such exculpation of
liability shall be absolute without any exception whatsoever.
p. Liquor Licenses. Tenant, its principals, employees and agents,
---------------
agree not to object to or oppose in any manner applications for issuance of
liquor licenses to any establishment located within the Shopping Center.
Until this Lease is executed on behalf of all parties hereto, it shall be
construed as an offer by Tenant to enter into this Lease.
-24-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Lease effective
as of the day and year first above written.
LANDLORD:
SOUTHBRIDGE PLAZA L.P., a Colorado limited
partnership
By: SBG Joint Venture, a Colorado general
partnership, General Partner
By: Sevo Miller, Inc., a Colorado
corporation (f/k/a The Sevo
Corporation of Colorado),
General Partner
BY:
----------------------------------
John M. Sevo, President
TENANT:
EQUITABLE BANK OF LITTLETON, N.A.
By: /s/ Darrell J. Schulte, as President
---------------------------------------
Darrell J. Schulte, President
-25-
<PAGE>
EXHIBIT "A"
TO
SOUTHBRIDGE PLAZA SHOPPING CENTER LEASE
[Attach drawing of Shopping Center with Leased Premises outlined]
[Drawing omitted]
-26-
<PAGE>
EXHIBIT "B"
TO
SOUTHBRIDGE PLAZA SHOPPING CENTER LEASE
[There is no Exhibit B]
-27-
<PAGE>
EXHIBIT "C"
TO
SOUTHBRIDGE PLAZA SHOPPING CENTER LEASE
SIGN CRITERIA
A. GENERAL REQUIREMENTS:
1. Each Tenant shall submit or cause to be submitted to Landlord for
approval before fabrication at least two (2) copies of detailed
drawings indicating the location, size, layout, design and color of the
proposed signs, including all lettering and/or graphics.
2. All permits for signs and their installation shall be obtained by
Tenant or his representative.
3. Tenant shall be responsible for the fulfillment of all requirements and
specifications.
4. All signs shall be constructed and installed, including electrical
hookup, at Tenant's expense.
5. All signs shall be reviewed for conformance with this criteria and
overall design quality. Approval or disapproval of sign submittals
based on esthetics of design shall remain the right of Landlord at its
sole discretion.
6. Signs shall be permitted only within the sign fascia areas as
designated by the Landlord. Tenant will be permitted to install one
illuminated sign on the sign fascia.
7. Tenant shall be responsible for the installation and maintenance of all
signs.
8. All signs are to be installed under the direction of Landlord or its
representatives.
9. Tenant's sign contractor shall repair any damage caused by said
contractor's work, or by its agents or employees.
10. Tenant shall be liable for the operations of Tenant's sign contractor.
11. Electrical service to all signs shall be on Tenant meters.
-28-
<PAGE>
12. Painted lettering shall not be permitted.
B. GENERAL SPECIFICATIONS:
1. All signs shall be composed of individual pan-channel letters and
fabricated per specifications provided by attachment D1. Cabinet or
letter body will be painted to match the building facia with Kwal-
Howells #5633M or match. All signs and letter will use black jewelite
trim where same is necessary. Existing raceway to be removed and angled
endcaps are to be installed where cut.
2. No audible, flashing or animated signs will permitted.
3. No projections above or below the sign limits will be permitted. Signs
must be within sign band. No sign or any portion thereof may project
above the fascia on which it is mounted.
4. Lettering may be script or block.
5. Letter size is to be not less than 18 inches in height and not more
than 36" in height. Landlord reserves the right to designate the letter
size .
6. Stacked letters will be no greater than 42" in overall height, with a
12" minimum letter height. Landlord reserves the right to designate
overall size and letter size of all stacked letter configurations.
7. All signs and their installation shall comply with all local building
and electrical codes.
8. No exposed raceways, crossovers or conduit will be permitted.
9. All conductors, transformers and other equipment shall be concealed.
10. All signs must meet UL requirements and bear UL label. All sign
contractors must be licensed Class A Electrical Sign Contractors.
11. Wording of signs shall not include the product sold except as part of
Tenant's trade name or insignia.
12. The width of Tenant's fascia sign shall not exceed two-thirds (2/3) of
the linear frontage of the store or shop. Landlord will designate exact
location of sign, in relation to Tenant's storefront width, prior to
any installation. Signs shall be centered in respect to the Tenant's
store space or in the event the roof lines of the
-29-
<PAGE>
adjacent buildings do not permit the sign to be centered as such, shall
be centered in respect to the Tenant's entry door into the shop.
13. No signs perpendicular to the face of the building or storefront will
be permitted, except under the soffit, intended for pedestrian traffic.
14. No signmaker's label or other identification shall be permitted on the
exposed surface of the sign, except for those required by local
ordinance which then shall be placed in an inconspicuous location.
15. All penetrations of the building structure required for sign
installation shall be neatly sealed in a watertight condition and
properly maintained.
16. All signs, bolts, fastenings, and clips shall be hotdipped galvanized
iron, stainless steel, aluminum, brass or bronze. No black iron
materials of any type shall be permitted.
17. No exposed neon lighting shall be used on signs, symbols, or decorative
elements.
18. Pylon or pole signs shall not be permitted. Except as already agreed
to in Sign Addendum, dated 03/31/1991.
C. CONSTRUCTION REQUIREMENTS:
1. Each Tenant shall be permitted to place upon each entrance of its
premises not more than one-hundred forty-four (144) square inches of
gold leaf or decal application lettering not to exceed two (2) inches
in height, indicating hours of business, emergency telephone numbers,
etc.
2. Except as provided herein, no advertising placates, banners, pennants,
names, insignia, trademarks or other descriptive material shall be
affixed or maintained upon the glass panes and supports of the show
windows and doors upon the exterior wall of buildings, or within
twenty-four (24) inches of the show windows.
3. Each Tenant who has a non-customer door for receiving merchandise may
have uniformly applied on said door in location, as directed by
Landlord, in two (2) inch high block letters, the Tenant's name and
address. Where more than one (1) Tenant uses the same door, each name
and address shall be applied. Color and letters will be as selected by
Landlord.
4. Tenant may install on the storefront, if required by the U.S. Post
Office, the numbers only for the street address in exact location
stipulated by size, type and color of number shall be as stipulated by
Landlord. These numbers shall be three
-30-
<PAGE>
inches (3"0) high with bottom 6'.0" above finish floor and centered on
glass entrance door. Numbers shall match lettering in Item C-1.
5. Tenants should note that approval action by Landlord will generally
take one week. No installation will be permitted without proper
approvals.
6. This sign criteria may be changed to reflect the code of governing
bodies involved.
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<PAGE>
EXHIBIT "D"
TO
SOUTHBRIDGE PLAZA SHOPPING CENTER LEASE
ESTOPPEL CERTIFICATE
Dated: 4/1 , 19 91
-------------- ---
Gentlemen:
The undersigned, as Lessee, hereby confirms and represents to you the following:
1. That it has accepted possession of the premises demised pursuant to the
terms of the aforesaid lease.
2. That the building(s), improvements and space required to be furnished
according to the aforesaid lease have been satisfactorily completed in all
respects.
3. That the Lessor has fulfilled all of its duties of an inducement nature,
and is not in default in any manner in the performance of any of the terms,
covenants, or provisions of said lease.
4. That the aforesaid lease has not been modified, altered, or amended except
by agreement dated 4/2/91 .
--------------------------------------------
5. That there are no offsets or credits against rentals, nor have rentals been
prepaid, except as provided by the lease terms.
6. That said rentals commence to accrue on the 1st day of October , 19 01.
----- ------------ ---
The primary lease term expires on September 30 , 19 96 . The fixed
----------------- ----
monthly rental is $ 5,097 .
-----------
7. That we have no notice of assignment, hypothecation, or pledge of rents or
the lease, except to your company.
The above statements are made upon the understanding that your company will rely
on them in connection with the making of a loan collaterally secured by an
assignment of our lease, and that these statements are true to the best of our
knowledge and belief.
Sincerely,
By: /s/ Darrell J. Schulte
--------------------------------
as President of
Equitable Bank of Littleton
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<PAGE>
SIGN ADDENDUM
This Addendum modifies and shall be attached to, and considered part of,
that Lease Agreement entered into by and between Southbridge Plaza L.P., as
Landlord, and Equitable Bank of Littleton, N.A., as Tenant, dated the 31st day
------
of March , 1991.
-----------
It is understood and agreed between the parties that Equitable Bank of
Littleton, N.A., on the date this lease is being executed, has four (4) signs on
the premises and Tenant is entitled to retain all four (4) signs during the
Lease Term subject to the limitations contained herein. One (1) sign is located
on the pylon sign and consists of approximately 26 square feet. The other three
(3) signs are located on the building facia and are shown on the attachment to
this Addendum as locations A, B, and C.
The sign designated at location A on the attached addendum, consists of a logo
and a sign for Equitable Bank. The logo is 30" x 30" and the sign is 16' x 20".
It is agreed that upon request of Landlord, Tenant at Tenant's expense will
relocate that sign and logo further to the West of the building in close
proximity to Tenant's door.
The sign designated at location B consists of Tenant's logo, which is 30" x 30"
and the Equitable Bank sign, which is 16' x 20".
The sign designated at location C consists of an Equitable Bank sign, which is
16' x 20". Landlord and Tenant hereby agree that all of the aforementioned
signs including the pylon sign will not be increased in size in any manner
whatsoever during the Lease Term.
Furthermore, the tenant occupying the space contiguous to Equitable Bank will
from this day forward be entitled to two (2) signs on the building facia. At
the date this lease is executed, this tenant is Century 21 and Century 21
presently has two (2) signs designated as Location D on the addendum attached
hereto. In addition to that sign, Century 21 is being allowed one (1) more
sign, which shall be placed at Location A after Equitable Bank has relocated the
sign presently situated in Location A.
It is agreed and understood between the parties that all the terms and
conditions of this addendum are subject to the approval of the appropriate
municipal authorities and in the event any such approval is not obtained, Tenant
shall immediately conform said signs to any sign code.
Landlord has consented to the flagpole and the use of the flagpole by Tenant
through the term of the lease. However, Landlord's consent is subject to all
local laws and ordinances which may be adopted by the appropriate municipalities
from time to time.
<PAGE>
LANDLORD:
SOUTHBRIDGE PLAZA L.P.
- ----------------------------------- -----------------------------
Date
TENANT:
/s/ Darrell J. Schulte as President 3/31/91
- ----------------------------------- -----------------------------
Date
<PAGE>
Exhibit 10.19
FIRST AMENDMENT TO RETAIL LEASE
-------------------------------
THIS First Amendment to Retail Lease ("Amendment")is made this 4th day
------
of January , 1996, by and between SOUTHBRIDGE PLAZA, L.P., a Colorado
---------------
limited partnership ("Landlord"), and COLORADO BUSINESS BANK, N.A., formerly
known as EQUITABLE BANK OF LITTLETON, N.A., a national banking association
("Tenant").
RECITALS
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A. Landlord and Tenant are parties to a certain Retail Lease (the
"Lease"), dated April 1, 1991, governing Tenant's occupancy of certain space at
the Southbridge Plaza Shopping Center in Littleton, Colorado (the "Premises").
B. The parties desire to amend the terms of the Lease as provided below.
AGREEMENT
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FOR VALUABLE CONSIDERATION, the parties agree as follows:
1. Extension of Term. The term of the Lease is hereby extended so that
-----------------
it will expire on December 31, 2000, instead of the original termination date of
September 30, 1996.
2. Modification of Base Rent. The "Base Rent" (as that term is defined
-------------------------
in Section 4 of the Lease) is hereby amended to require Tenant to make the
following payments:
(a) From and including January 1, 1996, through and including December
31, 1996, Tenant shall pay Landlord on the first day of each and
every month the sum of $6,937.58;
(b) From and including January 1, 1997, through and including December
31, 1997, Tenant shall pay Landlord on the first day of each and
every month the sum of $7,503.92;
(c) From and including January 1, 1998, through and including December
31, 1998, Tenant shall pay Landlord on the first day of each and
every month the sum of $7,645.50;
(d) From and including January 1, 1999, through and including December
31, 1999, Tenant shall pay Landlord on the first day of each and
every month the sum of $8,070.25;
<PAGE>
(e) From and including January 1, 2000, through and including December
31, 2000, Tenant shall pay Landlord on the first day of each and
every month the sum of $8,353.42;
Accordingly, the total Base Rent owing from and including January 1, 1996,
through and including December 31, 2000, shall total $462,128.00. All Base Rent
accruing prior to January 1, 1996, shall accrue in accordance with the terms of
the Lease as originally drafted. In addition to Base Rent, all other charges
and amounts owing under the Lease, including, without limitation, Additional
Rent (as that term is defined in the Lease) shall also accrue in accordance with
the Lease terms as originally drafted.
3. Deletion of Section 4.3.2. Section 4.3.2 of the Lease, dealing with
the "Cap on CAM" is hereby deleted in its entirety.
4. Tenant's Work Allowance. Landlord will provide Tenant an improvement
-----------------------
allowance to partially compensate Tenant for any improvements that Tenant may
make to the Premises (the "Allowance"). The Allowance shall be in the amount of
$10,000.00, or the actual costs incurred by Tenant to complete such
improvements, whichever amount is less. The Allowance shall be utilize by
Tenant is its reasonable discretion to improve the Premises in a manner which is
in strict compliance with Section 10.5 of the Lease. Such compliance shall
included, without limitation, obtaining Landlord's prior written consent prior
to making such improvements. Landlord shall only be obligated to pay Tenant the
Allowance if each of the following conditions are strictly satisfied:
(a) All such work is completed by Tenant in accordance with Section
10.5 of the Lease, and Landlord receives copies of paid invoices
or other similar documentation acceptable to Landlord evidencing
work performed and/or materials supplied;
(b) Tenant delivers to Landlord all lien waivers in form satisfactory
to Landlord for the work performed and/or materials supplied;
(c) all such work must be substantially completed by Tenant in a
manner consistent with the plans and specifications submitted
pursuant to Section 10.5 of the Lease;
(d) All applicable permits and certificates of occupancy have been
issued by all appropriate government agencies; and
(e) Tenant is not then in default under the terms of the Lease.
Tenant shall contract directly with all applicable contractors, subcontractors,
and materialmen providing any of the services or materials necessary to complete
such improvements. No other
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<PAGE>
person or entity is an intended beneficiary of this provision and Landlord shall
have no obligation whatsoever to pay any materialmen, contractors,
subcontractors or other person for any improvements to the Premises. The
Allowance shall not be used to compensate Tenant for any "personal property",
except for fixtures which become part of the "fee" interest of the Premises and
owned exclusively by Landlord. Accordingly, Tenant shall not remove or disturb
such improvements upon vacating the Premises.
5. Right to Extend Lease Term. The "Right to Extend Lease Term", set
--------------------------
forth in Section 3.1 of the Lease, is hereby deleted. Notwithstanding the
foregoing, if Tenant is never in default under the provisions of the Lease,
Tenant shall have the option to extend the term of this Lease for one additional
five-year extension period beginning on January 1, 2001, and ending on December
31, 2005. As a condition to the exercise of such option, Tenant shall deliver
written notice of Tenant's desire to extend the term to Landlord no more than 12
months and no less than six months prior to the expiration of the initial period
of the term of the Lease. Upon the giving of such notice by Tenant, Landlord
and Tenant shall enter into good faith negotiations intended to reach agreement
upon the Base Rent for such extension period. If Landlord and Tenant reach
agreement upon the Base Rent for such extension period by October 1, 2000, the
term of this Lease shall be automatically extended for such extension period
without the necessity of any further agreement or document. Such extension
shall be upon all the terms, covenants and conditions of the initial period of
the term of the Lease except that: (i) there shall be no further right to extend
after the expiration of the extension period; (ii) the limitation on Tenant's
payment of Operating Expenses set forth in Section 4.3.2 shall not apply during
the extension period; and (iii) the amount of the Base Rent for each month of
the extension period shall be an amount agreed upon by Landlord and Tenant which
reflects market rents for similar space at the beginning of the extension
period. If, for any reason, Landlord and Tenant are unable to reach agreement
upon the amount of Base Rent for such extension period by October 1, 2000, the
option to extend the term of the Lease granted pursuant to this paragraph shall
terminate and the term of this Lease shall expire on December 31, 2000.
6. Release of Landlord. Tenant hereby releases and fully discharges
-------------------
Landlord, its employees, officers, agents, representatives, directors,
shareholders, partners, predecessors, successors, and assigns from any and all
claims, causes of action, counterclaims, defenses, and rights to offset which
exist as of the date of this Amendment, whether the same are known or unknown.
7. Ratification. Except as expressly modified herein, all of the terms
------------
and provisions of the Lease are hereby ratified and confirmed as if fully set
forth herein, and shall be binding upon the parties hereto, their respective
heirs, representatives, successors, and assigns, and all guarantors, if any, of
the Lease. Should any provision of this Amendment conflict with any provision
in the Lease, the provision set forth herein shall control.
8. Tenant Acknowledgment. Tenant hereby acknowledges that:
---------------------
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<PAGE>
(a) It has had an opportunity to consult with its own independent
legal counsel concerning the legal significance of this Amendment;
(b) It is not relying on any legal advice or information provided by
Landlord or its counsel; and
(c) It has received and reviewed the Amendment and understands the
provisions and responsibilities outlined therein, as modified
hereby.
9. HVAC Condition. On or before December 31, 1995, Landlord shall cause
--------------
the heating, air conditioning and ventilation system at the Premises to be
inspected by a company which is in the business of repairing such systems. If
such system is in need of repair, Landlord shall cause the system to be repaired
so that it is in good operating condition. If Tenant does not object to the
condition of such system on or before January 15, 1996, then Tenant shall have
waived its right to contest the condition of such system. From and including
January 15, 1996, through the balance of the Lease term, the repair, maintenance
and replacement obligations for such system shall rest solely on Tenant. Upon
written request from Tenant, Landlord shall assign to Tenant all manufacturer's
and/or supplier's warranties concerning the HVAC system, if any, to the extent
the same are assignable. Landlord will not warrant in any fashion the HVAC
system.
10. Lack of Default. Landlord and Tenant each hereby acknowledge that the
---------------
other party is not in default under any term or provision set forth in the Lease
as of the date of this Amendment.
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<PAGE>
11. Counterpart. This Amendment may be executed in separate counterparts,
-----------
each of which is deemed to be an original and all of which taken together shall
constitute the same Amendment.
LANDLORD:
SOUTHBRIDGE PLAZA, L.P., a Colorado
Limited Partnership
By: SBG Joint Venture, a Colorado General
Partnership, general partner
By: Sevo Financial Network of Denver,
Inc., a Colorado corporation, general
partner
By: /s/ [Officer of Sevo Financial Network
--------------------------------------
of Denver, Inc.]
----------------
Title: President
-----------------------------------
TENANT:
COLORADO BUSINESS BANK, N.A.,
formerly known as EQUITABLE BANK OF
LITTLETON, N.A.
By: /s/ Darrell J. Schulte
-------------------------------------
Title: President
-----------------------------------
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<PAGE>
Exhibit 10.22
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OFFICE BUILDING LEASE
---------------------
l. PARTIES. This Lease, dated, for reference purposes only, July 19,
1995, is made by and between CHRISMAN, BYNUM, & JOHNSON P.C. (herein called
"Landlord") and EQUITABLE BANK OF LITTLETON, (herein called "Tenant").
2. PREMISES. Landlord does hereby lease to Tenant and Tenant hereby
leases from Landlord that certain office space (herein called "Premises")
indicated on Exhibit "A" attached hereto and by reference thereto made a part
hereof, said Premises being agreed, for the purposes of this Lease, to have an
area of approximately 2,400 square feet, (including a pro rata share of the
common areas) and being situated on the FIRST FLOOR of that certain building
known as CHRISMAN, BYNUM, AND JOHNSON LAW BUILDING located at 1900 15th Street,
Boulder, Colorado. Said Lease is subject to the terms, covenants and conditions
herein set forth and the Tenant covenants as a material part of the
consideration for this Lease to keep and perform each and all of said terms,
covenants and conditions by it to be kept and performed and that this Lease is
made upon the condition of said performance.
3. TERM. The term of this Lease shall be for FIVE (5) years, commencing
on the 1st day of October, 1995, and ending on the 30th day of September 2000.
4. POSSESSION.
a. Landlord shall deliver possession of the Premises to Tenant "as
is" on October 1, 1995, subject to warranty claims.
b. In the event that Landlord shall permit Tenant to occupy the
Premises prior to the commencement date of the term, such occupancy shall be
subject to all the provisions of the Lease. Said early possession shall not
advance the termination date herein above provided.
5. RENT.
a. Tenant agrees to pay to Landlord as basic monthly rental, without
prior notice or demand, as follows:
<TABLE>
<S> <C>
October 1, 1995 through September 30, 1996 $3,600.00
October 1, 1996 through September 30, 1997 $3,800.00
October 1, 1997 through September 30, 1998 $4,000.00
October 1, 1998 through September 30, 1999 $4,200.00
October 1, 1999 through September 30, 2000 $4,600.00
</TABLE>
payable on or before the first day of each calendar month of the term hereof,
except that the first month's rent shall be paid upon the execution hereof. Rent
for any period during the term hereof which is for less than one (1) month shall
be a prorated portion of the monthly installment herein,
<PAGE>
based upon a thirty (30) day month. Said rental shall be paid to Landlord,
without deduction or offset in lawful money of the United States of America,
which shall be legal tender at the time of payment at 1900 Fifteenth Street,
Boulder, Colorado 80302, or to such other person or at such other place as
Landlord may from time to time designate in writing.
b. Notwithstanding any provision contained herein, the basic monthly
rental due under the terms hereof shall at no time be less than THREE THOUSAND
SIX HUNDRED and 00/100 Dollars ($3.600.00).
6. SECURITY DEPOSIT. Tenant shall deposit with Landlord the sum of FOUR
THOUSAND NINE HUNDRED DOLLARS AND 00/100 Dollars ($4,900.00). Said sum shall be
held by landlord as security for the faithful performance by Tenant of all the
terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the term hereof. If Tenant defaults with respect to any provision
of this Lease, including, but not limited to the provisions relating to the
payment of rent, Landlord may (but shall not be required to) use, apply or
retain all or any part of this security deposit for the payment of any rent or
any other sum in default, or for the payment of any amount which Landlord may
spend or become obligated to spend by reason of Tenant's default, or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant's default. If any portion of said deposit is so used or
applied, Tenant shall within five (5) days after receipt of written demand
therefor, deposit cash with Landlord in an amount sufficient to restore the
security deposit to its original amount and Tenant's failure to do so shall be a
material breach of this Lease. Landlord shall not be required to keep this
security deposit separate from its general funds, and Tenant shall not be
entitled to interest on such deposit. If Tenant shall fully and faithfully
perform every provision of this Lease to be performed by it, the security
deposit or any balance thereof shall be returned to Tenant (or at Landlord's
option, to the last assignee of Tenant's interest hereunder) at the expiration
of the Lease term. In the event of termination of Landlord's interest in this
Lease, Landlord shall transfer said deposit to Landlord's successor in interest.
7. OPERATING EXPENSES. For the purposes of this Article, operating
expenses means all reasonable and necessary costs and expenses of every kind and
nature, other than those expressly excluded below, paid or incurred by Landlord
in operating, managing, repairing, maintaining and administering the Building
including, without limitation or duplication:
a. The cost of all insurance required to be kept by Landlord
pursuant to this Lease and any other insurance which Landlord may reasonably
elect to obtain with respect to the operation or ownership of the Property and
the part of any claim required to be paid under the deductible portion of any
insurance policies carried by Landlord in connection with the Property (where
Landlord is unable to obtain insurance without such deductible from a major
insurance carrier at reasonable rates).
b. The cost of general repairs, maintenance and replacements
(excluding replacement HVAC equipment and roof) made from time to time by
Landlord to the Property,
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<PAGE>
including costs under mechanical or other maintenance contracts and repairs and
replacements of equipment used in connection with such maintenance and repair
work.
c. The cost of pest control, security, cleaning and snow and ice
removal services.
d. The cost of maintaining, repairing, redecorating, renovating,
replacement of floor coverings, and landscaping the Common Facilities, and of
maintaining and operating any fire detection, fire prevention, lighting and
communications systems.
e. The cost of all utilities (including, without limitation, water,
sewer, gas and electricity) used or consumed.
f. The cost of providing heating, ventilating and cooling to the
interior portions of the Building, if any.
g. Remuneration (including wages, usual expense accounts and fringe
benefits, costs to Landlord of workmen's compensation and disability insurance
and payroll taxes) and fees of persons and companies to the extent engaged in
operating, managing, repairing, maintaining, or administering the Property.
h. The cost of reasonable and market rate professional property
management fees, supplying any on-site manager with necessary office space,
office equipment and supplies in the Building, and costs incurred by Landlord or
its agents in engaging accountants or other consultants to assist in making the
computations required hereunder.
i. The cost of capital improvements and structural repairs and
replacements made in, on or to the Property that are [i] made in order to
conform to changes subsequent to the Commencement Date in any applicable laws,
ordinances, rules, regulations or orders of any governmental or quasi-
governmental authority having jurisdiction over the Property, or [ii] designed
primarily to reduce operating Expenses or the rate of increase in Operating
Expense [iii] the replacement of the roof, heating, ventilating and air
conditioning equipment; such costs shall be charged by Landlord to Operating
Expense in equal annual installments over the useful life of such capital
improvement or structural repair or replacement (as reasonably determined by
Landlord) together with interest on the balance of the unreimbursed cost at 4%
above the Prime Rate charged by Bank One in Boulder on the date the cost was
incurred by Landlord.
j. Real property taxes and assessments, gross receipts, taxes
(whether assessed against the Landlord or assessed against the Tenant and
collected by the Landlord, or both).
k. Other costs and expenses, including supplies, not otherwise
expressly excluded hereunder attributable to the operation, management, repair,
maintenance and administration of the Property.
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<PAGE>
l. A reserve for replacement of heating, ventilating and air
conditioning equipment and replacement of the roof of Nineteen Thousand Dollars
($19,000.00) per annum.
Operating Expenses shall not, however, include the following:
m. Any charge for depreciation of the Building or equipment and any
interest or other finance charge.
n. The cost of any work, including painting, decorating and work in
the nature of tenant finish, which Landlord performs in any Rentable Premises
other than work of a kind and scope which Landlord would be obligated to perform
in the Demised Premises.
o. The cost of repairs, replacements or other work occasioned by
insured casualty or defects in construction or equipment to the extent such cost
is reimbursed to Landlord (or not charged to Landlord) by reason of collected
insurance proceeds (using Landlord's good faith efforts to collect such
proceeds) or any contractors, manufacturers' or suppliers' warranties.
p. Expenditures required to be capitalized for federal income tax
purposes (except as provided in Article 7, paragraph 1.).
q. Leasing commissions, advertising expenses and other costs
incurred in leasing space in the Building except as otherwise expressly provided
in this Lease.
r. The cost of repairing or rebuilding necessitated by condemnation.
s. The cost of any damage to the Property or any settlement, payment
or judgment incurred by Landlord, resulting in neither case from Landlord's
tortious act, neglect or breach of this Lease that is not covered by insurance
proceeds.
Tenant shall pay 8.5938% of Operating Expenses paid or incurred by the
Landlord for the operation or maintenance of the Building of which the Premises
are a part. This percentage is calculated on the assumption of a total net
rentable area of 27,927 square feet for floors one (1) through (3). The
percentage set forth above is based upon the assumption that the Premises are
approximately 2,400 square feet. If the leasable square footage is less or more
than 2,400 square feet the percentage will change to conform to the actual
leasable square footage as determined by the project architect, OZ Architecture.
Upon commencement of this Lease, Landlord shall give Tenant a statement of the
amount of Operating Expenses payable by Tenant with each payment of rent, which
shall be based upon a best estimate of such expenses if no record of actual
expenses for the prior year are available. Landlord shall reasonably endeavor to
give to Tenant on or before the first day of March of each year thereafter a
statement of the increase in Operating Expenses payable by Tenant hereunder, but
failure by Landlord to give such statement by said date shall not constitute a
waiver by Landlord of its right to require an increase in Operating Expenses.
The total amount of
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<PAGE>
actual Operating Expenses for the prior year shall be used as an estimate for
current year and this amount shall be divided into twelve (12) equal monthly
installments, and Tenant shall pay to Landlord, concurrently with the regular
monthly rent payment next due following the receipt of such statement, an amount
equal to one (1) monthly installment multiplied by the number of months from
January in the calendar year in which said statement is submitted to the month
of such payment. Subsequent installments shall be payable concurrently with the
regular monthly rent payments for the balance of that calendar year and shall
continue until the next year's statement is rendered. If Operating Expenses are
more than estimated, then upon receipt of a statement from Landlord, Tenant
shall pay a lump sum equal to such total increase with the regular monthly rent
payment. If Operating Expenses are less than estimated, then Tenant shall
receive credit against future rent and operating expenses.
Even though the term has expired and Tenant has vacated the Premises, when
the final determination is made of Tenant's share of Operating Expenses for the
year in which this Lease terminates, Tenant shall immediately pay any increase
due over the estimated expenses paid and, conversely, any overpayment made in
the event said expenses decrease shall be immediately rebated by Landlord to
Tenant.
8. USE. Tenant shall use the Premises for GENERAL OFFICE AND BANKING
purposes and shall not use or permit the Premises to be used for any other
purpose without the prior written consent of Landlord.
Tenant shall not do or permit anything to be done in or about the Premises
nor bring or keep anything therein which will in any way increase the existing
rate or affect any fire or other insurance upon the Building or any of its
contents, or cause cancellation of any insurance policy covering said Building
or any part thereof or any of its contents. Tenant shall not do or permit
anything to be done in or about the Premises which will, in any way, obstruct or
interfere with the rights of other tenants or occupants of the Building or
injure or annoy them or use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or
permit any nuisance in, on or about the Premises. Tenant shall not commit or
suffer to be committed any waste in or upon the Premises.
9. COMPLIANCE WITH LAW. Tenant shall not use the Premises or permit
anything to be done in or about the Premises which will, in any way, conflict
with any law, statute, ordinance or governmental rule or regulation now in force
or which may hereafter by enacted or promulgated. Tenant shall, at its sole cost
and expense, promptly comply with all laws, statutes, ordinances and
governmental rules, regulations or requirements now in force or which may
hereafter be in force, and with the requirements of any board of fire insurance
underwriters or other similar bodies now or hereafter constituted, relating to,
or affecting the condition, use or occupancy of the Premises, excluding
structural changes not related to or affected by Tenant's improvements or acts.
The judgment against Tenant, whether the Landlord be a party thereto or not,
that Tenant has violated any law, statute, ordinance or governmental rule,
regulation or requirement, shall be conclusive of that fact as between the
Landlord and Tenant.
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<PAGE>
10. ALTERATIONS AND ADDITIONS. Tenant shall not make or suffer to be made
any alterations, additions or improvements to or of the Premises or any part
thereof without the written consent of Landlord first had and obtained, and any
alterations, additions or improvements to or of said Premises, including, but
not limited to, wall covering, paneling and built-in cabinet work, but excepting
movable furniture and trade fixtures, shall, on the expiration of the term,
become a part of the realty and belong to the Landlord and shall be surrendered
with the Premises. In the event Landlord consents to the making of any
alterations, additions or improvements to the Premises by Tenant, the same shall
be made by Tenant at Tenant's sole cost and expense, and any contractor or
person selected by Tenant to make the same, must first be approved of in writing
by the Landlord. Upon the expiration or earlier termination of the term hereof,
Tenant shall, upon the written demand by the Landlord, given at least thirty
(30) days prior to the end of the term, at Tenant's sole cost and expense,
forthwith and with all due diligence, remove any alterations, additions, or
improvements made which have been designated by the Landlord to be removed, and
repair any damage to the Premises caused by such removal.
11. REPAIRS.
a. By taking possession of the Premises, Tenant shall be deemed to
have accepted the Premises as being in good, sanitary order, condition and
repair. Tenant shall, at Tenant's sole cost and expense, keep the Premises and
every part thereof in good condition and repair, damage thereto from causes
beyond the reasonable control of Tenant and ordinary wear and tear excepted.
Tenant shall, upon the expiration or sooner termination of this Lease hereof;
surrender the Premises to the Landlord in good condition, ordinary wear and tear
and damage from causes beyond the reasonable control of Tenant excepted. Except
as specifically provided herein, if any, to this Lease, Landlord shall have no
obligation whatsoever to alter, remodel, improve, repair, decorate or paint the
Premises or any part thereof, and the parties hereto affirm that Landlord has
made no representations to Tenant respecting the condition of the Premises or
the Building except as specifically herein set forth.
b. Landlord shall repair and maintain the structural portions of the
Building, including the basic plumbing, air conditioning, heating, and
electrical systems installed or furnished by Landlord, unless such maintenance
and repairs are caused in part or in whole by the act, neglect, fault or
omission of any duty by the Tenant, its agents, servants, employees or invitees,
in which case Tenant shall pay to Landlord the reasonable cost of such
maintenance and repairs. The cost of all such repairs (except repairs of
structural defects) shall be included in Operating Expenses as provided in
Article 7 hereof. Landlord shall not be liable for any failure to make any such
repairs or to perform any maintenance unless such failure shall persist for an
unreasonable time after written notice of the need of such repairs or
maintenance is given to Landlord by Tenant. Except as provided in Article 22
hereof, there shall be no abatement of rent and no liability of Landlord by
reason of any injury to or interference with Tenant's business arising from the
making of any repairs, alterations or improvements in or to any portion of the
Building or the Premises or in or to fixtures, appurtenances and equipment
therein. Tenant shall waive the right to make repairs at Landlord's expense
under any law, statute or ordinance now or hereafter in effect.
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<PAGE>
12. LIENS. Tenant shall keep the Premises and the property in which the
Premises are situated free from any liens arising out of any work performed,
materials furnished or obligations incurred by Tenant. Landlord may require, at
Landlord's sole option, that Tenant shall provide to Landlord, at Tenant's sole
cost and expense, a lien and completion bond in an amount equal to one and one-
half (1-1/2) times any and all estimated cost of improvements, additions, or
alterations in the Premises, to insure Landlord against any liability for
mechanics' and materialmen's liens and to insure completion of the work.
13. ASSIGNMENT AND SUBLETTING. Tenant shall not either voluntarily or by
operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber
this Lease or any interest therein, and shall not sublet the said Premises or
any part thereof, or any right or privilege appurtenant thereto, or suffer any
other person (the employees, agents, servants and invitees of Tenant excepted)
to occupy or use the said Premises, or any portion thereof, without the written
consent of Landlord first had and obtained, which consent shall not be
unreasonably withheld, and a consent to one assignment, subletting, occupation
or use by any other person shall not be deemed to be a consent to any subsequent
assignment, subletting, occupation or use by another person. Any such assignment
or subletting without such consent shall be void, and shall, at the option of
the Landlord, constitute a default under this Lease.
14. HOLD HARMLESS. Tenant shall indemnify and hold harmless Landlord
against and from any and all claims arising from Tenant's use of the Premises
for the conduct of its business or from any activity, work, or other thing done,
permitted or suffered by the Tenant in or about the Building, and shall further
indemnify and hold harmless Landlord against and from any and all claims arising
from any breach or default in the performance of any obligation on Tenant's part
to be performed under the terms of this Lease, or arising from any act or
negligence of the Tenant, or any officer, agent, employee, guest, or invitee of
Tenant, and from all and against all costs, attorneys' fees, expenses and
liabilities incurred in or about any such claim or any action or proceeding
brought thereon, and, in any case, action or proceeding be brought against
Landlord by reason of any such claim, Tenant, upon notice from Landlord shall
defend the same at Tenant's expense by counsel reasonably satisfactory to
Landlord. Tenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage to property or injury to persons, in, upon or about
the Premises, from any cause other than Landlord's negligence, and Tenant hereby
waives all claims in respect thereof against Landlord. Landlord or its agents
shall not be liable for any damage to property entrusted to employees of the
Building, nor for loss or damage to any property by theft or otherwise, nor for
any injury to or damage to persons or property resulting from fire, explosion,
falling plaster, steam, gas, electricity, water or rain which may leak from any
part of the Building or from the pipes, appliances or plumbing works therein or
from the roof, street or subsurface or from any other place resulting from
dampness or any other cause whatsoever, unless caused by or due to the
negligence of Landlord, its agents, servants or employees. Landlord or its
agents shall not be liable for interference with the light or other incorporeal
hereditament, loss of business by Tenant, nor shall Landlord be liable for any
latent defects in the Premises or in the Building. Tenant shall give prompt
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<PAGE>
notice to Landlord in case of fire or accidents in the Premises or in the
Building or of defects therein or in the fixtures or equipment.
15. SUBROGATION. As long as their respective insurers so permit, Landlord
and Tenant hereby mutually waive their respective rights of recovery against
each other for any loss insured by fire, extended coverage and other property
insurance policies existing for the benefit of the respective parties. Each
party shall obtain any special endorsements, if required by their insurer to
evidence compliance with the aforementioned waiver.
16. LIABILITY INSURANCE. Tenant shall, at Tenant's expense, obtain and
keep in force during the term of this Lease a policy of comprehensive public
liability insurance of not less than One Million Dollars ($1,000,000.00)
insuring Landlord and Tenant against any liability arising out of the ownership,
use, occupancy or maintenance of the Premises and all areas appurtenant thereto.
The limit of said insurance shall not, however, limit the liability of the
Tenant hereunder. Tenant may carry said insurance under a blanket policy,
providing, however, said insurance by Tenant shall have a Landlord's protective
liability endorsement attached thereto. If Tenant shall fail to procure and
maintain said insurance, Landlord may, but shall not be required to, procure and
maintain same, but at the expense of Tenant. Insurance required hereunder, shall
be in companies rated A+, AAA or better in "Best's Insurance Guide." Tenant
shall deliver to Landlord prior to occupancy of the Premises copies of policies
of liability insurance required herein or certificates evidencing the existence
and amounts of such insurance with loss payable clauses satisfactory to
Landlord. No policy shall be cancelable or subject to reduction of coverage
except after ten (10) days' prior written notice to Landlord.
17. SERVICES AND UTILITIES. Provided that Tenant is not in default
hereunder, Landlord agrees to furnish to the Premises during reasonable hours of
generally recognized business days, to be determined by Landlord at its sole
discretion, and subject to the rules and regulations of the Building of which
the Premises are a part, electricity for normal lighting and fractional
horsepower office machines, heat and air conditioning required in Landlord's
reasonable judgment for the comfortable use and occupation of the Premises.
Landlord shall also maintain and keep lighted the common stairs, common entries
and toilet rooms in the Building of which the Premises are a part. Landlord
shall not be liable for, and Tenant shall not be entitled to, any reduction of
rental by reason of Landlord's failure to furnish any of the foregoing when such
failure is caused by accident, breakage, repairs, strikes, lockouts or other
labor disturbances or labor disputes of any character, or by any other cause,
similar or dissimilar, beyond the reasonable control of Landlord. Landlord shall
not be liable under any circumstances for a loss or injury to property, however
occurring, through or in connection with or incidental to failure to furnish any
of the foregoing. Wherever heat generating machines or equipment are used in the
Premises which affect the temperature otherwise maintained by the air
conditioning system, Landlord reserves the right to install supplementary air
conditioning units in the Premises and the cost thereof, including the cost of
installation, and the cost of operation and maintenance thereof shall be paid by
Tenant to Landlord upon demand by Landlord.
-8-
<PAGE>
Tenant will not, without written consent of Landlord, use any apparatus or
device in the Premises, including, but without limitation thereto, electronic
data processing machines, punch card machines, and machines using in excess of
120 volts, which will in any way increase the amount of electricity usually
furnished or supplied for the use of the Premises as general office space; nor
connect with electric current except through existing electrical outlets in the
Premises any apparatus or device, for the purpose of using electric current. If
Tenant shall require water or electric current in excess of that usually
furnished or supplied for the use of the Premises as general office space,
Tenant shall first procure the written consent of Landlord, which Landlord may
refuse, to the use thereof and Landlord may cause a water meter or electrical
current meter to be installed in the Premises, so as to measure the amount of
water and electric current consumed for any such use. The cost of any such
meters and of installation, maintenance and repair thereof shall be paid for by
the Tenant and Tenant agrees to pay to Landlord promptly upon demand therefor by
Landlord for all such water and electric current consumed as shown by said
meters at the rates charged for such services by the local public utility
furnishing the same, plus any additional expense incurred in keeping account of
the water and electric current so consumed. If a separate meter is not
installed, such excess cost for such water and electric current will be
established by an estimate made by a utility company or electrical engineer.
18. PROPERTY TAXES. Tenant shall pay, or cause to be paid, before
delinquency, any and all taxes levied or assessed and which become payable
during the term hereof upon all Tenant's leasehold improvements, equipment,
furniture, fixtures and personal property located in the Premises; except that
which has been paid for by Landlord, and is the standard of the Building. In the
event any or all of Tenant's leasehold improvements, equipment, furniture,
fixtures and personal property shall be assessed and taxed with the Building,
Tenant shall pay to Landlord its share of such taxes within ten (10) days after
delivery to Tenant by Landlord of a statement in writing setting forth the
amount of such taxes applicable to Tenant's property.
19. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with
the rules and regulations that Landlord shall, from time to time, promulgate.
Landlord reserves the right, from time to time, to make all reasonable
modifications to said rules. The additions and modifications to those rules
shall be binding upon Tenant upon delivery of a copy of them to Tenant. Landlord
shall not be responsible to Tenant for the nonperformance of any said rules by
any other tenants or occupants.
20. HOLDING OVER. If Tenant remains in possession of the Premises or any
part after the expiration of the term hereof, without the express written
consent of Landlord, such occupancy shall be a tenancy from month-to-month at a
rental in the amount of the last monthly rental, plus all other charges payable
hereunder, and upon all the terms hereof applicable to a month-to-month tenancy.
21. ENTRY BY LANDLORD. Landlord reserves, and shall at any and all times,
reasonably have the right to enter the Premises, inspect the same, and any
service to be provided by Landlord to Tenant hereunder, to submit said Premises
to prospective purchasers or tenants, to post
-9-
<PAGE>
notices of non-responsibility, and to alter, improve or repair the Premises and
any portion of the Building of which the Premises are a part that Landlord may
deem necessary or desirable, without abatement of rent and may for that purpose
erect scaffolding and other necessary structures where reasonably required by
the character of the work to be performed, always providing that the entrance to
the Premises shall not be blocked thereby, and further providing that the
business of the Tenant shall not be interfered with unreasonably; and provided
further, such entry shall be limited as required by national banking laws and in
the presence of a Tenant representative during normal and usual business hours.
Tenant hereby waives any claim for damages or for any injury or inconvenience to
or interference with Tenant's business, any loss of occupancy or quiet enjoyment
of the Premises, and any other loss occasioned thereby. For each of the
aforesaid purposes, Landlord shall, at all times, have and retain a key with
which to unlock all of the doors in, upon and about the Premises, excluding
Tenant's vaults, safes and files, and Landlord shall have the right to use any
and all means which Landlord may deem proper to open said doors in an emergency,
in order to obtain entry to the Premises without liability to Tenant except for
any failure to exercise due care for Tenant's property. Any entry to the
Premises obtained by Landlord by any of said means, or otherwise shall not,
under any circumstances, be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or an eviction of Tenant from the
Premises or any portion thereof.
22. RECONSTRUCTION. In the event the Premises or the Building of which the
Premises are a part are damaged by fire or other perils covered by extended
coverage insurance, Landlord agrees to forthwith repair the same; and this Lease
shall remain in full force and effect, except that the Tenant shall be entitled
to a proportionate reduction of the rent while such repairs are being made, such
proportionate reduction to be based upon the extent to which the making of such
repairs shall materially interfere with the business carried on by the Tenant in
the Premises. If the damage is due to the fault or neglect of Tenant or its
employees, there shall be no abatement of rent.
In the event the Premises or the Building of which the Premises are a part
are damaged as a result of any cause other than the perils covered by fire and
extended coverage insurance, then Landlord shall forthwith repair the same,
provided the extent of the destruction be less than twenty-five percent (25%) of
the then full replacement cost of the Premises or the Building of which the
Premises are a part. In the event the destruction of the Premises or the
Building is to an extent greater than twenty-five percent (25%) of the full
replacement cost, then Landlord shall have the option: (1) to repair or restore
such damage, this Lease continuing in full force and effect, but the rent to be
proportionately reduced as hereinabove in this Article provided; or (2) give
notice to Tenant at any time within sixty (60) days after such damage
terminating this Lease as of the date specified in such notice, which date shall
be no less than thirty (30) and no more than sixty (60) days after the giving of
such notice. In the event of giving such notice, this Lease shall expire and all
interest of the Tenant in the Premises shall terminate on the date so specified
in such notice and the Rent, reduced by a proportionate amount, based upon the
extent, if any, to which such damage materially interfered with the business
carried on by the Tenant in the Premises, shall be paid up to date of said such
termination. Notwithstanding anything to the contrary contained in this Article,
Landlord shall not have any obligation whatsoever to repair, reconstruct or
restore the Premises when
-10-
<PAGE>
the damage resulting from any casualty covered under this Article occurs during
the last twelve (12) months of the term of this Lease or any extension thereof.
Landlord shall not be required to repair any injury or damage by fire or
other cause, or to make any repairs or replacements of any panels, decoration,
office fixtures, railings, floor coverings, or partitions, with respect to
property installed in the Premises by Tenant.
The Tenant shall not be entitled to any compensation or damages from
Landlord for loss of the use of the whole or any part of the Premises, Tenant's
personal property or any inconvenience or annoyance occasioned by such damage,
repair, reconstruction or restoration.
23. DEFAULT. The occurrence of any one or more of the following events
shall constitute a default and breach of this Lease by Tenant:
a. The vacating or abandonment of the Premises by Tenant
b. The failure by Tenant to make any payment of rent or any other
payment required to be made by Tenant hereunder, as and when due, where such
failure shall continue for a period of three (3) days after written notice is
received by Tenant from Landlord.
c. The failure by Tenant to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by the
Tenant, other than described in Article 23.b above, where such failure shall
continue for a period of thirty (30) days after written notice thereof by
Landlord to Tenant; provided, however, that if the nature of Tenant's default is
such that more than thirty (30) days are reasonably required for its cure, then
Tenant shall not be deemed to be in default if Tenant commences such cure within
said thirty (30) day period and thereafter diligently prosecutes such cure to
completion.
d. The making by Tenant of any general assignment or general
arrangement for the benefit of creditors; or the filing by or against Tenant of
a petition to have Tenant adjudged a bankrupt, or a petition of reorganization
or arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Tenant, the same is dismissed within sixty [60] days); or
the appointment of a trustee or a receiver to take possession of substantially
all of Tenant's assets located at the Premises or of Tenant's interest in this
Lease, where possession is not restored to Tenant within thirty (30) days; or
the attachment, execution or other judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this Lease,
where such seizure is not discharged in thirty (30) days.
24. REMEDIES IN DEFAULT. In the event of any such default or breach by
Tenant, Landlord may at any time thereafter, with or without notice or demand,
and without limiting Landlord in the exercise of a right or remedy which
Landlord may have by reason of such default or breach:
-11-
<PAGE>
a. Terminate Tenant's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. In such event
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default including, but not limited to, the cost
of recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
any real estate commission actually paid; the worth at the time of award by the
court having jurisdiction thereof of the amount by which the unpaid rent for the
balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Tenant proves could be reasonably avoided;
that portion of the leasing commission paid by Landlord and applicable to the
unexpired term of the Lease. Unpaid installments of rent or other sums shall
bear interest from the date due at the rate of twenty percent (20%) per annum.
In the event Tenant shall have abandoned the Premises, Landlord shall have the
option of (a) taking possession of the Premises and recovering from Tenant the
amount specified in this paragraph, or (b) proceeding under the provisions of
the following Article 24.b.
b. Maintain Tenant's right to possession, in which case this Lease
shall continue in effect whether or not Tenant shall have abandoned the
Premises. In such event, Landlord shall be entitled to enforce all of Landlord's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder.
c. Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decision of the State in which the Premises are
located.
25. EMINENT DOMAIN. If more than twenty-five percent (25%) of the Premises
shall be taken or appropriated by any public or quasi-public authority under the
power of eminent domain, either party hereto shall have the right, at its
option, to terminate this Lease, and Landlord shall be entitled to any and all
income, rent, award, or any interest therein whatsoever which may be paid or
made in connection with such public or quasi-public use or purpose, and Tenant
shall have no claim against Landlord for the value of any unexpired term of this
Lease. If either less than or more than twenty-five (25%) of the premises is
taken, and neither party elects to terminate as herein provided, the rental
thereafter to be paid shall be equitably reduced. If any part of the Building
other than the Premises may be so taken or appropriated, Landlord shall have the
right at its option to terminate this Lease and shall be entitled to the entire
award as above provided.
26. ESTOPPEL STATEMENT. Tenant shall at any time and from time to time
upon not less than ten (10) days' prior written notice from Landlord execute,
acknowledge, and deliver to Landlord a statement in writing, (a) certifying that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease as so modified,
is in full force and effect), and the date to which the rental and other charges
are paid in advance, if any, and (b) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of the Landlord hereunder,
or specifying such defaults if any are claimed. Any such statement may be relied
upon by any prospective purchaser or encumbrancer of all or any portion of the
real property of which the Premises are a part.
-12-
<PAGE>
27. PARKING. Tenant shall have the use of four (4) parking permits, so
long as available to Landlord, for City parking lots located within a five block
radius of building of which the Premises are a part. Tenant will be billed
quarterly for these permits the months of January, April, July, and October and
shall pay therefor at the time of paying rent for said months.
28. AUTHORITY OF PARTIES.
a. Corporate Authority. If Tenant is a corporation, each individual
-------------------
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of the
corporation, in accordance with a duly adopted resolution of the board of
directors of said corporation or in accordance with the bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms.
b. Limited Partnerships. If the Landlord herein is a limited
--------------------
partnership, it is understood and agreed that any claims by Tenant on Landlord
shall be limited to the assets of the limited partnership, and furthermore,
Tenant expressly waives any and all rights to proceed against the individual
partners or the officers, directors or shareholders of any corporate partner,
except to the extent of their interest in said limited partnership.
29. GENERAL PROVISIONS.
a. Plats and Riders. Clauses, plats and riders, if any, signed by
----------------
the Landlord and the Tenant and endorsed on or affixed to this Lease are a part
hereof.
b. Waiver. The waiver by Landlord of any term, covenant, or
------
condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of the Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of the acceptance of
such rent.
c. Notices. All notices and demands which may or are to be required
-------
or permitted to be given by either party to the other hereunder shall be in
writing. All notices and demands by the Landlord to the Tenant shall be sent by
United States Mail, postage prepaid, addressed to the Tenant at the Premises, or
to such other place as Tenant may, from time to time, designate in a notice to
the Landlord. All notices and demands by the Tenant to the Landlord shall be
sent by United States Mail, postage prepaid, addressed to the Landlord at the
Office of the Building, or to such other person or place as the Landlord may,
from time to time, designate in a notice to the Tenant.
d. Joint Obligation. If there be more than one Tenant the
----------------
obligations hereunder imposed upon Tenants shall be joint and several.
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<PAGE>
e. Marginal Headings. The marginal headings and Article titles to
-----------------
the Articles of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any part hereof.
f. Time. Time is of the essence of this Lease and each and all of
----
its provisions in which performance is a factor.
g. Successors and Assigns. The covenants and conditions herein
----------------------
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
h. Recordation. Neither the Landlord nor Tenant shall record this
-----------
Lease or a short form memorandum hereof without the prior written consent of the
other party.
i. Quiet Possession. Upon Tenant paying the rent reserved hereunder
----------------
and observing and performing all of the covenants, conditions and provisions of
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire term hereof, subject to all the
provisions of this Lease.
j. Late Charges. Tenant hereby acknowledges that late payment by
------------
Tenant to Landlord of rent or other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Landlord by terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or of a sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to five
percent (5%) of such overdue amount. The parties hereby agree that such late
charges represent a fair and reasonable estimate of the cost that Landlord will
incur by reason of the late payment by Tenant. Acceptance of such late charges
by the Landlord shall in no event constitute a waiver of Tenant's default with
respect to such overdue amount, nor prevent Landlord from exercising any of the
other rights and remedies granted hereunder.
k. Prior Agreements. This Lease contains all of the agreements of
----------------
the parties hereto with respect to any matter covered or mentioned in this
Lease, and no prior agreements or understanding pertaining to any such matters
shall be effective for any purpose. No provision of this Lease may be amended or
added to except by an agreement in writing signed by the parties hereto or their
respective successors in interest. This Lease shall not be effective or binding
on any party until fully executed by both parties hereto.
l. Attorneys' Fees. In the event of any action or proceeding
---------------
brought by either party against the other under this Lease, the prevailing party
shall be entitled to recover all costs and expenses, including the fees of its
attorneys in such action or proceeding in such amount as the court may adjudge
reasonable as attorneys' fees.
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<PAGE>
m. Sale of Premises by Landlord. In the event of any sale of the
----------------------------
Building, Landlord shall be and is hereby entirely freed and relieved of all
liability under any and all of its covenants and obligations contained in or
derived from this Lease arising out of any act, occurrence or omission occurring
after the consummation of such sale; and the purchaser, at such sale or any
subsequent sale of the Premises, shall be deemed, without any further agreement
between the parties or their successors in interest or between the parties and
any such purchaser, to have assumed and agreed to carry out any and all of the
covenants and obligations of the Landlord under this Lease.
n. Subordination, Attornment. Upon request of the Landlord, Tenant
-------------------------
will, in writing, subordinate its rights hereunder to the lien of any first
mortgage or first deed of trust to any bank, insurance company or other lending
institution, now or hereafter in force against the land and Building of which
the Premises are a part, and upon any buildings hereafter placed upon the land
of which the Premises are a part, and to all advances made or hereafter to be
made upon the security thereof.
In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deed of trust
made by the Landlord covering the Premises, the Tenant shall attorn to the
purchaser upon any such foreclosure or sale and recognize such purchaser as the
Landlord under this Lease.
The provisions of this Article to the contrary notwithstanding, and so
long as Tenant is not in default hereunder, this Lease shall remain in full
force and effect for the full term hereof.
o. Name. Tenant shall not use the name of the Building or of the
----
development in which the Building is situated for any purpose other than as an
address of the business to be conducted by the Tenant in the Premises.
p. Separability. Any provision of this Lease which shall prove to
------------
be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof and such other provision shall remain in full force and
effect.
q. Cumulative Remedies. No remedy or election hereunder shall be
-------------------
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
r. Choice of Law. This Lease shall be governed by the laws of the
-------------
State in which the Premises are located.
s. Signs and Auctions. Tenant shall seek Landlord's written approval
------------------
for any signage to be place upon the Premises or Building, such approval shall
not be unreasonably withheld. Any signage is subject to the City of Boulder Sign
Code. Tenant shall not conduct any auction thereon without Landlord's prior
written consent.
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<PAGE>
t. Landlord's Liability. The liabilities of Landlord, pursuant to
--------------------
this Lease, shall be limited to the assets of Landlord. Tenant, its successors
and assigns, hereby waives all right to proceed against any of the officers,
shareholders, or directors of Landlord. The term "Landlord," as used in this
article, shall mean only the owner or owners at the time in question of the fee
title or an interest in a ground lease of the building. Notwithstanding
anything to the contrary contained herein, the extent of Landlord's liability
under this Lease shall be limited to the property of which the Premises herein
are a part, and Tenant shall not seek any personal liability against Landlord or
any of Landlord's shareholders.
u. Waiver of Jury Trial. Landlord and Tenant waive trial by jury in
--------------------
any action, proceeding or counterclaim brought by either of the parties to this
Lease against the other on any matters whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant, Tenant's use
of occupancy of the Premises, or any other claims (except claims for personal
injury or property damage), and any emergency statutory or any other statutory
remedy.
v. Arbitration. With the exception of an action to gain possession
-----------
of the Premises, in the event of any other dispute arising out of this
Agreement, the parties agree to submit that dispute to binding arbitration in
Boulder, Colorado, according to the then existing rules for commercial
arbitration of the American Arbitration Association. Either of the parties shall
agree to submit the dispute to the Judicial Arbiter Group, or if they do not so
agree, then each party shall appoint one (1) arbitrator. Those two (2)
arbitrators shall select a third (3rd) arbitrator. The dispute shall be heard
within forty-five (45) days of selection of the third arbitrator. The prevailing
party shall be entitled to recover costs and attorneys' fees in addition to any
other relief to which they may be entitled. A decision shall be rendered no
later than ten (10) days after the close of the arbitration hearing.
w. Financial Statements. Tenant and any guarantors of Tenant's
--------------------
obligations hereunder shall provide their most recent financial statement(s),
including statements of income and expense and statements of net worth within 15
days following the request of Landlord. Landlord may request said statements
once during any twelve (12) month period. Said statements shall be verified as
being true and correct and Landlord agrees to keep said statements confidential,
but may use the statements for purposes of obtaining financing upon the
property. At the time Landlord requests financial statements from Tenant,
Landlord shall advise Tenant to whom the statements will be submitted and
Landlord shall, if requested to do so by Tenant, obtain dram such individual or
entity a written agreement which shall provide that said financial statements
will be and shall remain confidential. Within fifteen days after the execution
of this Lease, Tenant shall submit to Landlord its most recent financial
statements.
x. Both Landlord and Tenant agree to act reasonably when acting or
being requested to act in accordance with the terms and conditions of this
Lease.
30. BROKERS. Tenant warrants that it has had no dealings with any real
estate brokers or agents in connection with the negotiation of this Lease
excepting only The Colorado Group, Inc.
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<PAGE>
and it knows of no other real estate broker or agent who is entitled to a
commission in connection with this Lease.
31. MISCELLANEOUS
a. Tenant shall use its best efforts to obtain charter approval in a
timely manner, but not later than 90 days from the execution of this Lease
agreement. The payment of rent shall commence upon branch approval, but not
sooner than September 1, 1995, nor later than November 1, 1995. This Lease
agreement is subject to Tenant receiving branch approval on or before November
1, 1995. If Tenant fails to receive branch approval on or before November 1,
1995, this Lease Agreement shall be null and void and of no further effect.
b. A non-refundable deposit of SIX THOUSAND SEVEN HUNDRED FIFTY
DOLLARS AND 00/100 ($6, 750.00) will be made at time of lease execution, and
shall be applied to the basic rent, operating expenses and security deposit if
the bank charter is approved. Landlord agrees to remove the space from the
market while awaiting charter approval.
c. Tenant at its expense shall have the right to install a night
deposit box in a location mutually agreed upon by Landlord and Tenant.
d. Any improvements or alterations made for Tenant's use of the
Premises, except carpeting and the eastern hallway providing access to the rest
room facilities, shall be at Tenant's expense and must be approved in writing by
Landlord prior to the commencement of construction. Such approval shall not be
unreasonably withheld. Tenant shall use Landlord's contractor or another
contractor approved by Landlord, pursuant to the provisions of Paragraph 10
hereof.
e. Janitorial Service. Tenant shall provide janitorial service
------------------
within the Premises at its own expense.
f. Extended Lease Periods. Upon full and complete performance of all
----------------------
the terms, covenants and conditions herein contained by Tenant and payment of
all rental due under the terms hereof, Tenant shall have the option to renew
this Lease for one additional term of one (1) year. In the event Tenant desires
to exercise said option, Tenant shall give written notice of such fact to
Landlord not less than ninety (90) days nor more than one hundred twenty days
(120) prior to the expiration of the then current term of the Lease. In the
event of such exercise, this Lease shall be deemed to be extended for the
additional period; provided, however, the basic rental shall be at the then
current market rate.
g. Option. Tenant shall have an option to lease office number 124.
------
This option will expire 18 months from occupancy date. Tenant shall pay all
costs to remove the dividing wall between the Premises and office number 124.
-17-
<PAGE>
The parties hereto have executed this Lease at the place and on the dates
specified immediately adjacent to their respective signatures.
If this Lease has been filled in, it has been prepared for submission to
Tenant's attorney for his approval. No representation or recommendation is made
by the real estate broker or its agents or employees as to the legal
sufficiency, legal effect, or tax consequences of this Lease, or the
transactions relating thereto.
LANDLORD: TENANT:
CHRISMAN, BYNUM, AND EQUITABLE BANK OF LITTLETON
JOHNSON P.C.
By: /s/ Byron R. Chrisman By: /s/ Charles E. Holmes
-------------------------------- ------------------------------------
Byron R. Chrisman Charles E. Holmes
Secretary
Senior Vice President
1900 15th Street
821 17th Street
Boulder, Colorado 80302 Denver, CO 80202
-18-
<PAGE>
Exhibit 10.23
DENVER PLACE
Office Lease Facing Page
------------------------
THIS OFFICE LEASE FACING PAGE, together with the General Lease Provisions
and any Schedules or Riders and Lease Guaranties attached hereto, shall
constitute the Lease between Tenant described below, as Tenant, and DENVER PLACE
ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership, by Amerimar
Realty Management Co.Colorado, as agent for the Landlord, for the Premises
described below, made and entered into as of the Lease Date specified below.
LEASE DATE: February 23, 1996
LANDLORD: DENVER PLACE ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited
partnership
TENANT: COLORADO BUSINESS LEASING, INC., a Colorado corporation
LEASED PREMISES:
Suite Number: 2500
Floor: 25th, South Tower
Total Rentable Area: 2,650 square fleet
LEASE TERM:
Commencement Date: June 15, 1996
Lease Period: Five (5) years plus one and one-half (1 1/2) months
Lease Expiration: July 31, 2001
BASE RENT:
06/15/96 - 07/31/2001: $39,750.00 annually/$3,312.50 monthly
Base Operating Cost including Real Estate Taxes shall be $6.20 (Landlord's
Operating Expense Contribution)
Tenant will not be obligated to pay any additional rent for Tenant's Share
of Operating Expenses during the Calendar Year 1996
Tenant's Share of applicable taxes 2,650= .0035
----------
and Complex Operating Expenses 754,288 (Total Rentable Area of the
Building)
LEASE DEPOSIT: $3,312.50 due upon execution of the Lease Agreement
<PAGE>
DENVER PLACE
OFFICE LEASE
I N D E X
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<TABLE>
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Office Lease Facing Page.......................... 3
General Lease Provisions
The Leased Premises............................... 4 1.01
Definitions....................................... 4 2.01
Term of Lease..................................... 5 3.01
Base Rent......................................... 5 4.01
Commencement and Conduct of Business.............. 6 5.01
Quiet Enjoyment................................... 6 6.01
Services.......................................... 6
Climate Control................................. 6 7.01
Elevator Service................................ 6 7.02
Janitorial Services............................. 7 7.03
Water and Electricity........................... 7 7.04
Interruption of Service......................... 7 7.05
Telephone Service Paid by Tenant................ 8 7.06
Business Taxes, Etc............................... 8 8.01
Meters............................................ 8 9.01
Use of Electricity................................ 8 10.01
Tenant Repair..................................... 9 11.01
Assignment, Subletting, Parting with Possessions.. 9 12.01
Rules and Regulations............................. 10 13.01
Use of Leased Premises............................ 11 14.01
Tenant's Insurance................................ 11 15.01
Cancellation of Insurance......................... 12 16.01
Observance of Law................................. 12 17.01
Waste and Nuisance................................ 13 18.01
Entry by Landlord................................. 13 19.01
Indemnification of Landlord....................... 13 20.01
Exhibiting Premises............................... 14 21.01
Alterations, Tenants.............................. 14 22.01
Glass............................................. 15 23.01
Signs and Advertising............................. 15 24.01
Name of Building.................................. 15 25.01
Subordination and Attornment...................... 15 26.01
Acceptance of Premises............................ 15 27.01
Estoppel Certificates............................. 16 28.01
Fixtures.......................................... 16 29.01
Landlord's Insurance.............................. 16 30.01
Fires, Etc........................................ 17 31.01
Condemnation...................................... 17 32.01
Loss and Damage................................... 18 33.01
Delays............................................ 18 34.01
Default........................................... 18 35.01
</TABLE>
<PAGE>
<TABLE>
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<S> <C> <C>
Remedies of Landlord............................................ 19 36.01
Holding Over.................................................... 21 37.01
Directory Board................................................. 22 38.01
Transfer by Landlord............................................ 22 39.01
Notice.......................................................... 22 40.01
Governing Law................................................... 23 41.01
Lease Entire Agreement.......................................... 23 42.01
Binding Effect.................................................. 23 43.01
Security Deposit................................................ 23 44.01
Interpretation.................................................. 24 45.01
Severability.................................................... 24 46.01
Independent Covenants........................................... 24 47.01
Additional Notices.............................................. 24 48.01
Governmentally Required Improvements............................ 24 49.01
Recording - Short Form Memo..................................... 25 50.01
Real Estate Broker.............................................. 25 51.01
Captions and Exhibits........................................... 25 52.01
Substitution of Premises........................................ 25 53.01
Additional Charges for Taxes and Landlord's Operating Expenses.. 26 54.01
Hazardous Materials............................................. 29 55.01
Telephone and Telecommunications Services....................... 29 56.01
Time Is Of The Essence.......................................... 31 57.01
Signature Page.................................................. 31
</TABLE>
Addendum
Exhibit A - Leased Premises Plan
Exhibit B - Rules and Regulations
Exhibit C - Lease Term Agreement
Exhibit D - Parking Agreement
Exhibit E - Equipment List
<PAGE>
General Office Lease Provisions
-------------------------------
WHEREAS, Landlord has constructed a building commonly known as Denver Place
and located at 999 Eighteenth Street, Denver, Colorado 80202 (hereinafter called
the "Building"), which is situated on a portion of real property being more
particularly described as Lots 1 through 32 inclusive, Block 110, East Denver
Subdivision City and County of Denver, State of Colorado. The Building, the
land upon which (i.e., Building stands and the land and improvements surrounding
the Building and designated from time to time by Landlord as land or common
areas appurtenant to or servicing the Building, together with any other
buildings or land located on the above-described real property are hereinafter
called the "Real Property"; and
WHEREAS, Landlord has agreed to lease to Tenant the Leased Premises
hereinafter on the terms and conditions hereinafter set forth:
THE LEASED PREMISES
- -------------------
1.01 NOW, THEREFORE, in consideration of the rent and the covenants and
agreements hereinafter made on the part of the Tenant to be paid, observed and
performed, the Landlord has demised and leased and by these presents does demise
and lease the Leased Premises described on the Office Lease Facing Page,
attached hereto and Outlined in the Plan attached hereto as Exhibit "A" and
forming part hereof but excluding therefrom any part of the exterior face of the
Building to the Tenant, together with the right of the Tenant in common with the
Landlord, its other tenants, sub-tenants and invitees thereof to the
nonexclusive use of the following portions of the Building:
a) the entrance foyer and lobby of the Building; and
b) the common corridors on the floor of the Building on which the
Leased Premises are situated and other areas appurtenant to or servicing the
Building, together with public entrance doors, walls, stairways, passages,
elevators, shipping and receiving areas and lavatories in the Building,
provided, however, that Landlord shall have the right from time to time to
eliminate, substitute, build upon or rearrange all of items (a) and (b) above,
including, but not limited to, the garden Court on the third floor of the
Building, as Landlord deems appropriate in its discretion.
DEFINITIONS
- -----------
2.01 In this Indenture or on the Office Lease Facing Page, the following
terms or words shall have the following meanings:
(a) "Business Day" means any of the days from Monday to Friday of each
week and one-half on Saturdays of each week inclusive unless such day is a
nationally recognized holiday.
(b) "Commencement Date" means the date so designated on the Office
Lease Facing Page, attached hereto, or the date upon which the Landlord notifies
the Tenant that the Leased Premises are ready For occupancy, whichever last
occurs.
(c) "Net Rentable Square Feet" or "Net Rentable Area", as the term is
used throughout this Lease, for a multiple tenancy floor means the total square
feet which is computed by measuring to the inside finish of permanent outer
building walls, or to the center line of the glass if at least 50% of the outer
building wall is glass, to the center line of corridor partitions, and to the
center of partitions that separate the Leased Premises from adjoining rentable
area. No deductions shall be made for columns and projections necessary to the
Building.
4
<PAGE>
(d) "Net Rentable Square Feet" or "Net Rentable Area", as the term is
used throughout this Lease, for a single tenancy floor, means the total square
feet which is computed by measuring to the inside finish of permanent outer
building walls, or from the center line of glass. Net Rentable Area shall
include all area within outside walls less stairs, elevator shafts, flues, pipe
shafts, vertical ducts, air conditioning rooms, fan rooms, all their enclosing
walls. No deductions shall be made for Columns and projections necessary to the
Building. Lavatories or public toilets within and exclusively serving only that
floor, janitor closets, electrical closets, telephone closets, and slop sinks
shall be included in Net Rentable Area for a single tenancy floor.
(e) "Normal Business Hours" means the hours from 8 a.m. to 6 p.m. on
Business Days and the hours 8 a.m. to 1 p.m. on Saturdays excluding nationally
recognized holidays.
(f) "Proportionate Share" means the amount so designated on the Office
Lease Facing Page, attached hereto and calculated by dividing the Total Rentable
Area as set forth on the Facing Page by 95% of the total Rentable Area of the
Building.
(g) "Public Areas" means and shall include all square feet or areas on
the floor less the Net Rentable square feet and less public stairs, public
elevator shafts, flues, stacks, pipe shafts, vertical ducts and vents.
(h) "Rent", as the term is used throughout this Lease, shall denote
the "Base Rent", as is hereinafter defined, and all other financial obligations
of the Tenant hereunder which are herein described as "additional rental" or
"additional rent".
(i) "Term" means the number of years and months in the Lease Period,
set forth on the Office Lease Facing Page attached hereto, to be computed from
12 o'clock noon on the Commencement Date and expiring at 12 o'clock noon the
last day of such Lease Term. Should the Term of this Lease end on a day other
than the last day of a calendar month, then the Term of this Lease shall be
extended to the last day of the calendar month.
(j) "Total Rentable Area" means the total square feet of the Net
Rentable Area and Tenant's share of the Public Areas on a multi-Tenant floor.
TERM OF LEASE
- -------------
3.01 Tenant shall have the right to have and hold the Leased Premises for
and during the Term subject to the payment of the base rental and the additional
rent and the full and timely performance by Tenant of the covenants and
conditions hereinafter set forth. In the event that the Term shall not have
commenced on or before such date as shall be two (2) years from the date of this
Lease, then this Lease shall be automatically terminated without any further act
of either party hereto, ind both parties hereto shall be released from all
obligations hereunder.
BASE RENT
- ---------
4.01 Tenant covenants and agrees to timely pay without notice, deduction,
set-off or abatement to the Landlord at DENVER PLACE ASSOCIATES LIMITED
PARTNERSHIP, A/R DEPARTMENT, DENVER, COLORADO 80256-0165, Or Such other address
as Landlord may notify Tenant of in writing yearly and every year during the
Term hereof, the annual base rent (based on the Total Rentable Area as set forth
on the Office Lease Facing Page), in lawful money of the United States, payable
in monthly installments set forth on the Office Lease Facing Page, attached
hereto, each month, in advance on the first day of each month during the Term
hereof. If the Term hereof, commences on any day other than the first day of
the month, base rent for the fractions of a month at the commencement of the
Term shall be adjusted pro rata on a per diem basis using a thirty (30) day
month.
5
<PAGE>
COMMENCEMENT AND CONDUCT OF BUSINESS
- ------------------------------------
5.01 Tenant shall commence its business in the Leased Premises on the
Commencement Date and thereafter shall operate its business in the entire Leased
Premises in a reputable manner and in compliance with the provisions of this
Lease and file requirements of all applicable governmental laws and regulations
during the Term hereof, provided that nothing in this section shall require the
Tenant to carry on business during any period prohibited by any law or ordinance
regulating or limiting the hours during which such business may be carried on.
QUIET ENJOYMENT
- ---------------
6.01 Landlord agrees to warrant and defend Tenant in the quiet enjoyment
and possession of the Leased Premises during the term of this Lease.
SERVICES
- --------
7.01 Climate Control. Subject to any applicable law, rule, or governmental
---------------
order or regulation, Landlord shall provide climate control to file Leased
Premises during Normal Business Hours to maintain a temperature adequate for
comfortable occupancy, except during the making of repairs, alterations or
improvements, provided that the recommendations of Landlord's engineer regarding
occupancy and use of the Leased Premises are complied with by Tenant, and
provided that the Landlord shall have no responsibility or liability for failure
to supply climate control service when stopped as aforesaid or when prevented
from doing so by strikes or any cause beyond the Landlord's reasonable control,
including failure of any utility company to provide the Building with
appropriate utility service. The Tenant acknowledges that the Landlord has
installed in the Building a system for the purpose of climate control, which
system is designed to beat and cool during normal occupancy of the Leased
Premises as general offices on the basis of the recommendation of Landlord's
engineer regarding occupancy and use of the Leased Premises and based upon the
window shading (which shading shall, unless otherwise consented to by Landlord,
be uniform in the Building) being fully closed in those offices having exterior
windows exposed to the sun and without regard to the Tenant's specific use
thereof or the installation of any computers or data processing equipment. Any
use of the Leased Premises not in accordance with the design standards or
arrangement of partitioning which interferes with the normal operation of such
system may require changes or alterations in the system or ducts through which
the same operates. Any changes or alterations so occasioned, if such changes
can be accommodated by the Landlord's equipment, shall be made by the Tenant at
its cost and expense but only with the prior written consent of the Landlord,
first had and obtained, and in accordance with drawings and specifications and
by a contractor first approved in writing by the Landlord, at Tenant's cost and
expense. If Tenant shall install, or cause to have installed partitions,
equipment or fixtures after the Premises have been balanced originally and such
installation necessitates the re-balancing of the climate control equipment in
the Leased Premises, the same will he performed by the Landlord at the Tenant's
expense as additional rental payable on demand. The Tenant acknowledges that
one (1) year may be required after the Tenant has fully occupied the Leased
Premises in order to adjust and balance the climate control systems.
7.02 Elevator Service:
----------------
(a) Subject to the Rules and Regulations referred to in Section 13.01,
the Landlord shall furnish to the Building in which the Leased Premises are
located, except when repairs are being made, elevator service during Normal
Business Hours, provided that the Tenant, its employees and all other persons
using the same shall do so at their own risk.
(b) There shall he no liability on the Landlord for my claim in
respect of any failure by the Landlord to provide elevator service during any
power failure or other cause beyond the control of the Landlord or by reason of
the carrying out of any repairs, maintenance, or
6
<PAGE>
replacement of elevators, nor shall there be, as a result of the foregoing, any
repayment of or reduction or abatement in the rent reserved hereby,
7.03 Janitorial Services: The Landlord shall cause, when reasonably
-------------------
necessary from time to time, the floors to be swept or vacuumed and windows to
be cleaned and the desks, tables and other furniture of the Tenant to be dusted
and trash removed (waste baskets) all in keeping with a first class office
building, provided, however, that Landlord shall not be responsible for any let
of omission or commission on the part of the person or persons employed to
perform such work; such work shall be done at the Landlord's direction without
interference by the Tenant, its servants or employees.
7.04 Water and Electricity: Subject to any law, rule or governmental order
---------------------
or regulation, the Landlord shall make available domestic water and, if
available, at Landlord's discretion, condenser water, in reasonable quantity and
cause electric current to be supplied for lighting the Leased Premises and
public walls and for the operation of office equipment, subject to the
provisions of paragraphs 9 and 10 hereof. If the Tenant's equipment requires,
utilities in excess of normal quantities, any facilities to supply excess
quantities may be provided by the Landlord at the sole expense of the Tenant
subject to the following conditions:
(a) the Landlord's electrical engineer or other consultants shall
determine that such excess facilities are required by the Tenant's equipment;
(b) it is within the capabilities of the Landlord and the existing
structure to provide such excess utilities;
(c) the Landlord shall have the right of refusal to supply in the
event that the supplying of additional facilities shall in any way affect the
operation of, the aesthetics of or structure of the Building, or in any way
reduce the efficiency of existing electricity, water or other utility supplied
to the Building as a part of the whole thereof;
(d) the supplying of additional facilities in order to make the
required utilities available to the Tenant shall be subject to compliance with
all provisions of law including, without limitation, federal legislative
enactments, ordinances and other governmental or municipal regulations which
shall in any way relate to the work necessary to be undertaken to make said
utilities available; and
(e) the Tenant shall pay to the Landlord, as additional rental from
time to time upon demand, a charge as determined by the Landlord's engineer for
the supply of condenser water to the Leased Premises.
7.05 Interruption of Service: Tenant agrees that Landlord shall not be
-----------------------
liable for failure to supply any such heating, air conditioning, elevator or
janitor services or electric current during any period when Landlord uses
reasonable diligence to supply such services or current. It is understood that
Landlord reserves the right to temporarily discontinue such services, or any of
them, or such current at such time as may be necessary by reason of accident,
unavailability of employees, repairs, alterations or improvements or whenever by
reason of strikes, lockouts, riots, acts of God or any other happening beyond
the control of Landlord. Landlord shall not be liable for damages to persons or
property for any such discontinuance, nor shall such discontinuance in any way
be construed as eviction of or cause will abatement of rent or operate to
release Tenant from any of the Tenant's obligations hereunder. Landlord's
obligation to furnish services or current shall be conditioned upon the
availability of adequate energy sources from the public utility companies then
servicing the downtown area of the City and County of Denver. Landlord shall
have the right to reduce heating, cooling or lighting within the Leased Premises
and in the public areas in the Building as required by any mandatory or
voluntary fuel or energy program. Landlord shall have the right to enter upon
the Leased Premises at all reasonable times in order to make such repairs,
alterations or adjustments as shall be necessary in order to comply with the
provisions of any mandatory or voluntary fuel or
7
<PAGE>
energy saving allocation or similar statute, regulation or program.
7.06 Telephone Service Paid by Tenant: Tenant shall separately arrange with
--------------------------------
the applicable local public authorities or utilities, as the case may be, for
the furnishing of, and payment for all telephone services as may be required by
Tenant in the use of the Premises. Tenant shall directly pay for such telephone
services, including the establishment and connection thereof, at the rates
charged for such services by said authority or utility and the failure of Tenant
to obtain or to continue to receive such services for any reason whatsoever
shall not relieve Tenant of any of its obligations under this Lease.
BUSINESS TAXES, ETC.
- --------------------
8.01 Tenant shall fully and timely pay all business and other taxes,
charges, rates, duties, assessments and license fees levied, rates imposed,
charged or assessed against or in respect of the Tenant's occupancy of the
Leased Premises or in respect of the personal property, trade fixtures,
furniture and facilities of the Tenant or the business or income of the Tenant
on and from the Leased Premises, if any, as and when the same shall become due,
and to indemnify and hold Landlord harmless from and against all payment of such
taxes, charges, rates, duties, assessments and license fees and against all
loss, costs, charges and expenses occasioned by or arising from any and all such
taxes, rates, duties, assessments and license fees.
8.02 Tenant shall promptly deliver to Landlord for inspection at Landlord's
option, upon written request of the Landlord, receipts for payment of all taxes,
charges, rates, duties, assessments and licenses in respect of all equipment and
facilities of the Tenant on or in the Leased Premises which were due and payable
up to one (1) year prior to such request, and in my event to furnish to the
Landlord, if requested by the Landlord, evidence, satisfactory to the Landlord
of any such payments.
METERS
- ------
9.01 Tenant shall pay as additional rental, on demand, the cost of any
metering which may be requested by the Tenant to be installed by the Landlord in
the Building for the purpose of determining any utility (including electricity
and water) consumed in the Leased Premises or any metering which may be required
by the Landlord to measure any excess usage of electricity, water or other
utility or energy.
USE OF ELECTRICITY
- ------------------
10.01 Tenant's use of electricity in the Leased Premises shall be for
the operation of building standard lighting, electrical fixtures, typewriters
and other office machines and lamps and shall not at any time exceed the
capacity of any of the electrical conductors and equipment in or otherwise
serving the Leased Premises.
10.02 In order to ensure that such capacity is not exceeded and to
avert possible adverse effect upon the Building's electrical services, the
Tenant shall not, without the Landlord's prior written consent in each instance,
connect any additional fixtures, appliances or equipment (other than normal
office electrical fixtures, lamps, typewriters, and similar office machines) to
the Building's electrical distribution system or make any alterations or
additions to the electrical system of the Leased Premises existing at the
commencement of the Term. If the Landlord grants such consent, the cost of all
additional risers and other equipment required therefor shall be paid as
additional rent by the Tenant to the Landlord upon demand. Furthermore, Tenant
shall, at Landlord's option, pay on demand as additional rent to Landlord, the
cost of any electric current or other energy for the operation of heavy
accounting equipment, copy equipment, computer equipment or other equipment
requiring more than is necessary for normal business office use as determined by
the Landlord. Landlord acknowledges that Tenant's electrical usage as provided
for on the attached Exhibit E is considered normal business office use and will
---------
not give rise to any additional electrical charges.
8
<PAGE>
TENANT REPAIR
- -------------
11.01 If the Building, the elevators, boilers, engines, pipes and other
apparatus, or members or elements of the Building (or any of them) used for the
purpose of climate control of the Building or operating the elevators, or if the
water pipes, drainage pipes, electric lighting or other equipment of the
Building or the roof or outside wills of the Building or parking facilities of
Landlord become damaged or are destroyed through the negligence, carelessness or
misuse of the Tenant, its servant, agents, employees or anyone permitted by him
to be in the Building, or through him or them, then the cost of the necessary
repairs, replacements or alterations shall be borne by the Tenant who shall
forthwith pay the same on demand to the Landlord as additional rental.
11.02 Tenant shall keep the Leased Premises in as good order, condition
and repair as when they were entered upon, loss of fire (unless caused by the
negligence of Tenant, its agents, employees or invitees), unavoidable accident
or ordinary wear and tear excepted. If Tenant fails, to keep the Leased
Premises in such good order, condition and repair as required hereunder to the
satisfaction of Landlord, Landlord may restore the Leased Premises to such good
order and condition and make such repairs without liability to Tenant for any
loss or damage that may accrue to Tenant's property or business by reason
thereof, and upon completion thereof, Tenant shall pay to Landlord, as
additional rental, upon demand, the cost of restoring the Leased Premises to
such good order and condition and of the making of such repairs.
11.03 Tenant shall deliver, at the expiration of the Term hereof or
sooner upon termination of the Term, the Leased Premises in good repair as
aforesaid and in a state of broom cleanliness. In the event Tenant fails to
vacate the Premises on a timely basis as required, Tenant shall be responsible
to Landlord for all costs incurred by Landlord as a result of such failure,
including, but not limited to, any amounts required to be paid to third parties
who were to have occupied the Leased Premises.
11.04 Tenant shall leave the Leased Premises at the end of each
Business Day in a reasonably tidy condition for the purpose of allowing the
performance of the Landlord's cleaning services hereinabove described.
ASSIGNMENT, SUBLETTING, PARTING WITH POSSESSION
- -----------------------------------------------
12.01 Tenant shall not permit any part of the Leased premises to be
used or occupied by any persons other than the Tenant, any subtenants permitted
under Section 12.02 and the employees of the Tenant and any such permitted
subtenant, or permit any part of the Leased Premises to be used or occupied by
any licensee or concessionaire, or permit any person to be upon the Leased
Premises other than the Tenant, such permitted subtenants, and their respective
employees, customers and others having lawful business with them.
12.02 Tenant shall not assign or sublet nor part with the possession of
all or part of the Leased Premises without the prior written consent of
Landlord, which consent shall not be unreasonably withheld; provided, however,
such consent to any assignment or subletting shall not relieve the Tenant from
its obligations for the payment of all rental due hereunder and for the full and
faithful observance and performance of the covenants, terms and conditions
herein contained. Landlord shall be entitled to withhold consent to a proposed
assignment arbitrarily if Landlord exercises the right hereinafter set out in
Section 12.03. The sale of 50 percent or more of the stock of Tenant, if Tenant
is a corporation, shall constitute an assignment of the Lease for purposes of
this paragraph; provided, however that the sale of any stock of Tenant by
Women's Bank Holding Co. to an affiliate or subsidiary of Women's Bank Holding
Co. shall not constitute an assignment of the Lease for purposes of this
paragraph. Tenant acknowledges that it has represented to Landlord that 81% of
all the issued and outstanding stock of Tenant is owned by. Consent of the
Landlord to an assignment or subletting shall not in any way be construed to
relieve the Tenant from obtaining the consent of the Landlord to any further
assignment or subletting.
12.03 If Tenant requests Landlord's consent to an assignment of this
Lease or to a subletting of the whole or nay part of the Leased Premises, Tenant
shall submit to Landlord the name of the
9
<PAGE>
proposed assignee or subtenant and such information as to the nature of its
business and its financial responsibility and standing as Landlord may
reasonably require, and the effective date of the proposed assignment. Upon
receipt of such request and information from Tenant, Landlord shall have the
right exercisable by notice in writing within fourteen (14) days after such
receipt to cancel and terminate this Lease if the request is to assign this
Lease or to sublet all of the Leased Premises or, if the request is to assign or
sublet a portion of the Leased Premises to cancel and terminate the Lease with
respect to such portion, in each case as of the date set forth in Landlord's
notice of exercise of such right, which shall be neither less than sixty (60)
nor more than one hundred and twenty (120) days following the giving of such
notice; provided, however, that Landlord shall not have the right to cancel and
terminate the Lease in whole or in part if: (a) Tenant withdraws its request to
assign or sublet in writing within three (3) business days after Tenant receives
Landlord's notice of exercise of such right, or (b) the request concerns the
sublet of a portion of the Leased Premises which is not bordered by a wall
demising the Leased Premises from some other. If Landlord shall exercise such
right Tenant shall surrender possession of the entire Leased Premises or the
portion which is the subject of the right, as the case may be, on the date set
forth in such notice in accordance with the provisions of this Lease relating to
surrender of the Leased Premises at the expiration of the Term. If this Lease
shall be canceled as to a portion of the Leased Premises only, the base rent
payable by the Tenant under this Lease shall be abated proportionately.
12.04 If the Tenant is a corporation or if this Lease with the consent
of the Landlord as aforesaid is assigned to a corporation, and if any time
during the Term hereof, any part or all of its corporate shares or voting rights
of shareholders shall be transferred by sale, assignment, bequest, inheritance
trust, operation of law or other disposition, or shares be issued so as to
result in a change in the control of said corporation by reason of ownership of
greater than fifty percent (50%) of the voting shares of the corporation or
otherwise, then and so often as such a change of control shall occur, the Tenant
shall notify the Landlord in writing of such changes and the Landlord shall have
the right to terminate this Lease and the Term, at any time after such change of
control by termination. The Tenant shall, upon request of the Landlord, make
available to the Landlord for inspection or copying or both, all books and
records of the Tenant which, alone or with other data, show the applicability or
inapplicability of this Section 12.04. If any shareholder of the Tenant shall,
upon request of the Landlord fail or refuse to furnish to the Landlord any data
verified by the affidavit of such shareholder or other credible person, which
data, alone or with other data, show the applicability of Section 12.04, then
the Landlord may terminate this Lease on sixty (60) day's notice as aforesaid.
This Section 12.04 shall not apply to the Tenant if on and from the date of this
Lease the control of the Tenant is represented by shares listed on a national
stock exchange or the NASDAQ Quotation System.
12.05 Contemporaneously with any request or proposal by tenant to
sublet or assign any part of this Lease, Tenant shall pay all costs, including
reasonable attorneys' fees, incurred by Landlord or anticipated to be incurred
by Landlord, in connection with Landlord's investigation of any financial or
other information of the proposed assignee or subtenant. Landlord may require
that all or a portion of the costs or anticipated costs be paid in advance by
Tenant. The payment of such costs shall not obligate Landlord in any way to
consent to any proposed assignment or subletting nor shall the amount of costs
paid by Tenant be applied or used as a set-off to any amounts due or to become
due by Tenant to Landlord.
12.06 Notwithstanding any provision contained in this paragraph 12 to
the contrary, Tenant shall be permitted to sublet one office located within the
Leased Premises with a rentable area not to exceed 300 square feet, to an
affiliate or subsidiary of the Tenant without Landlord's consent, provided that
Tenant notifies Landlord in writing of such sublet prior to the commencement
date of the sublet. Such notification of the sublet shall include the name of
the sublessee together with a description of the relationship of Tenant and
sublessee in detail reasonably acceptable to Landlord.
RULES AND REGULATIONS
- ---------------------
13.01 Tenant and employees and all persons visiting or doing business
with the Tenant in the Leased Premises shall be bound by and shall observe the
reasonable Rules and Regulations promulgated from time to time by the Landlord
relating to the Building or the Leased Premises of which notice in writing shall
be given to the Tenant and all such rules and regulations shall be
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deemed to be incorporate into and be a part of this Lease. Any default in the
performance or observance of such rules and regulations shall be a default
hereunder and Landlord shall have all remedies provided for in this Lease in the
event of default by Tenant. Landlord, however, shall not be responsible to
Tenant for nonobservance by any other tenant or person of such rules or
regulations.
USE OF LEASED PREMISES
- ----------------------
14.01 Except as expressly permitted by prior written consent of the
Landlord, the Leased Premises shall not be used other than for general business
office purposes. All use of the premises shall comply with the terms of this
Lease and all applicable laws, ordinances, regulations or other governmental
ordinances from time to time in existence, including but not limited to the
Skyline Urban Renewal Plan and the deed restriction imposed thereunder by the
Denver Urban Renewal Authority. Landlord represents to Tenant that the
provisions of the Skyline Urban Renewal Plan and the deed restrictions imposed
thereunder by the Denver Urban Renewal Authority do not forbid or prohibit the
operation of a business equipment leasing business from the Leased Premises.
TENANT'S INSURANCE
- ------------------
15.01 (a) Tenant shall, during its occupancy of the Leased Premises
and during the entire term hereof, at its sole cost and expense, obtain,
maintain and keep in full force and effect, and with the Tenant, the Landlord
and the mortgagees of the Landlord named as beneficiaries therein as their
respective interests may appear, the following types and kinds of insurance:
(i) "All Risk" or "Special Coverage Form" insurance upon property of
every description and kind owned by the Tenant and located in the Building or
for which the Tenant, is legally liable or installed by or on behalf of the
Tenant after occupancy by Tenant and which was not required by Landlord,
including, without limitation, furniture, fittings, installations, alterations,
additions, partitions, fixtures, and in the event that there shall be a dispute
as to the amount which comprises full replacement cost, the decision of the
Landlord or the mortgagees of the Landlord shall be conclusive.
(ii) Public Liability coverage with respect to the Leased Premises and
Tenant's use of any part of the building which coverage shall include the
business operations conducted by the Tenant and any other persons on the Leased
Premises. Insurance shall be a Comprehensive-General Liability form (including
Contractual Liability) in an amount not less than $500,000.00 per person and
$1,000,000.00 per occurrence whether involving personal injury liability (or
death resulting therefrom), or property damage liability, or a combination
thereof with a minimum aggregate limit of $1,000,000.00 or such higher limits as
the Landlord may reasonably require from time to time.
(iii) Any other form or forms of insurance as the Tenant or the
Landlord or the mortgagees of the Landlord may reasonable require from time to
time in form, in amounts and for insurance risks against which a prudent tenant
would protect itself.
(iv) Business interruption insurance in such amounts as will reimburse
the Tenant for direct or indirect loss of earnings attributable to all perils
commonly insured against by prudent tenants or attributable to prevention of
access for the Leased Premises or to the Building as a result of such perils.
(v) If Tenant performs any work on the Leased Premises, prior to the
commencement of any such work, Tenant shall deliver to Landlord certificates
issued by insurance companies qualified to do business in the State of Colorado,
evidencing that workmen's compensation and public liability insurance and
property damage insurance, all in the amounts satisfactory to Landlord, are in
force and effect and maintained by all contractors and subcontractors engaged by
Tenant to perform such work.
(b) All property damage policies written on behalf of the Tenant shall
contain a waiver of any subrogation rights which the Tenant's insurers may have
against the Landlord and
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against those for whom the Landlord is, in law, responsible whether any such
damage is caused by the act, omission or fault of the Landlord or by those for
whom the Landlord is, in law, responsible.
(c) All policies shall be taken out with insurers acceptable to the
Landlord and in form satisfactory From time to time to the Landlord. All
policies shall name Landlord as an additional insured. The Tenant agrees that
certificates of insurance, or, if required by the Landlord or the mortgagees of
the Landlord, certified copies of each such insurance policies will be delivered
to the Landlord as soon as practicable after the placing of the required
insurance, but in no event later than ten (10) days after Tenant takes
possession of all or any part of the Leased Premises. All policies shall
contain an undertaking by the insurers to notify the Landlord and the mortgagees
of the Landlord in writing not less than thirty (30) (lays prior to any material
change, cancellation or other termination thereof.
(d) The Tenant covenants and agrees that in the event of damage or
destruction to the leasehold improvements in the Leased Premises covered by
insurance required to be taken out by the Tenant pursuant to Section 15.01
(a)(i). In the event of damage to or destruction of the Building entitling the
Landlord to terminate this Lease pursuant to Section 31.02 hereof, then, if the
Leased Premises have not been damaged, the Tenant will deliver to the Landlord,
in accordance with the provisions of this Lease, the leasehold improvements and
the Leased Premises.
CANCELLATION OF INSURANCE
- -------------------------
16.01 If any insurance policy upon the Building or any part thereof
shall be canceled or cancellation shall be threatened or the coverage thereunder
reduced or threatened to be reduced or the premium therefore increased, in any
way by reason of the use or occupation of the Leased Premises or any part
thereof by the Tenant or by any assignee or subtenant of the Tenant or by anyone
permitted by the Tenant to be upon the Leased Premises and, if the Tenant fails
to remedy the condition giving rise to cancellation, threatened cancellation,
reduction of coverage, or increase in premium within forty-eight (48) hours
after notice, the Landlord may, at its option, enter upon the Leased Premises
and attempt to remedy such condition or demand payment of the amount of
increased premium by Tenant and the Tenant shall forthwith pay the cost thereof
to the Landlord as additional rent. The Landlord shall not be liable for any
damage or injury caused to any property of the Tenant or of other located on the
Leased Premises as a result of such entry. In the event that the Landlord shall
be unable to remedy such condition, then Landlord shall have all of the remedies
provided for in the Lease in the event of a default by Tenant. Notwithstanding
the foregoing provisions of this Section 16.01, if Tenant fails to remedy is
aforesaid, Tenant shall be in default of its obligation hereunder and Landlord
shall have no obligation to attempt to remedy.
OBSERVANCE OF LAW
- -----------------
17.01 Tenant shall comply with all provisions of law, including,
without limitation, Federal, state, county and city laws, ordinances and
regulations and any other governmental, quasi-government or municipal
regulations which relate to the partitioning, equipment operation, alteration,
occupancy and use of the Leased Premises, and to the making of any repairs,
replacements, alterations, additions, changes, substitutions or improvements of
or to the Leased Premises. Moreover, the Tenant shall comply with all police,
fire, and sanitary regulations imposed by any federal, state, County or
municipal authorities, or made by insurance underwriters, and to observe and
obey all governmental and municipal regulations and other requirements governing
the conduct of any business conducted in the Leased Premises. Notwithstanding
the foregoing, it shall be the Landlord's responsibility to comply with federal,
state, county and city legislative enactments, building codes and any other
governmental or municipal which relate to the Building insofar as they may
require changes of a structural nature in the Building, provided, nevertheless,
that such changes shall be the responsibility of the Tenant if there are changes
required to be made in the Tenant's improvements or partitioning whether such
changes are required by reason of the nature of the use or improvements
contemplated or made by the Tenant.
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WASTE AND NUISANCE
- ------------------
18.01 Tenant shall not commit, suffer or permit any waste or damage or
disfiguration or injury to the Leased Premises or common areas in the Building
or the fixtures and equipment located therein or thereon, or permit or suffer
any overloading of the floors thereof and shall not place therein any safe,
heavy business machinery, computers, data processing machines, or other heavy
items without first obtaining the consent in writing of the Landlord and, if
requested, by Landlord's superintending architect, and not use or permit to be
used any part of the Leased Premises for any dangerous, noxious or offensive
trade or business, and shall not cause or permit any nuisance, noise or action
in, at or on the Leased Premises.
ENTRY BY LANDLORD
- -----------------
19.01 Tenant agrees to and shall permit the Landlord, its servants or
agents to enter upon the Leased Premises with notice and knowledge of Tenant
except in the event of an emergency, at any time making repairs, alterations or
improvements to the Leased Premises or to the Building, or for the purpose of
having access to the underfloor or ceiling, ducts, if any, or to the access
panels to mechanical shafts (which the Tenant agrees not to obstruct), and the
Tenant shall not be entitled to compensation For any inconvenience, nuisance or
discomfort occasioned thereby. The Landlord, or its servants or agents may at
any time and from time to time enter upon the Leased Premises to remove any
article or remedy any condition which in the opinion of the Landlord, reasonably
arrived at, would be likely to lead to cancellation of any policy of insurance
hereof, and such entry by the Landlord shall not he deemed to be re-entry under
Section 36.01 (b) hereof. The Landlord shall have the right to enter the Leased
Premises in order to check, calibrate, adjust and balance controls and other
parts of the heating, ventilation and climate control system it any time. The
Landlord shall attempt to proceed hereunder in such manner as to minimize
interference with the Tenant's use and enjoyment of the Leased Premises.
INDEMNIFICATION OF LANDLORD
- ---------------------------
20.01 Tenant shall indemnify the Landlord and save it harmless from and
against any and all loss (including loss of rentals payable by the Tenant or
other tenants in the event of loss either directly or indirectly caused by
commission or omission of Tenant), claims, actions, damages, liability and
expenses in connection with loss of life, personal injury and damage to property
arising from any occurrence in, upon or at the Leased Premises or any part
thereof, or occasioned wholly or in part by any act or omission of the Tenant,
its agents, or contractors, employees, servants, licensees, or concessionaires
or invitees. In case the Landlord shall, without fault on its part, be made a
party to any litigation commenced by or against the Tenant, then the Tenant
shall protect and hold the Landlord harmless and shall pay all costs, expenses
and reasonable attorneys' fees incurred or paid by the Landlord in connection
with such litigation. In the event of any litigation between Landlord and
Tenant the prevailing party shall be entitled to reasonable court costs and
attorneys' fees.
20.02 Unless caused by the negligence of Landlord, Tenant shall neither
hold nor attempt to hold Landlord liable for any injury or damage, either
proximate or remote, occurring through or caused by any repairs, alteration,
injury or accident to the Leased Premises, to adjacent premises or other parts
of the Building not herein demised, or for any injury or damage occasioned by
gas, smoke, rain, snow, wind, ice, hail, lightning, earthquake, war, civil
disorder, strike, defective electrical wiring, or the breaking or stoppage of
the plumbing or sewage upon or in the Building or adjacent premises whether said
breaking or stoppage results from freezing or otherwise.
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EXHIBITING PREMISES
- -------------------
21.01 Tenant shall permit the Landlord or its agents to exhibit and
show the Leased Premises to prospective tenants during normal Business Hours of
the last six (6) months of the Term or any renewal thereof or earlier in the
event Tenant notifies Landlord Tenant does not intend to.
22.01 Tenants: Tenant shall not make install or erect in or to the
-------
Leased Premises any installations, alterations, additions or partitions without
submitting the drawings and specifications to the Landlord and obtaining the
Landlord's prior written consent in each instance. Furthermore, the Tenant shall
obtain the Landlord's prior written consent to any change or changes in such
drawings or specifications Submitted as aforesaid, subject to the payment of the
cost to the Landlord of having its architects review such plans and changes
thereto prior to proceeding with any work based on such drawings or
specifications. All such work shall be performed free and clear of all
mechanic's liens and Landlord shall have no liability for the performance of
such work, notwithstanding its consent to any plans and specifications.
Provided nevertheless that the Landlord may, at its option, at Tenant's expense,
require that the Landlord's contractors be engaged for any mechanical,
electrical or structural work or other leasehold improvement. Without limiting
the generality of the foregoing any work performed by or for the Tenant shall be
performed by competent workmen whose labor union affiliations are not
incompatible with those of any workmen who may be employed in the Building by
the Landlord, its contractors or Subcontractors. The Tenant shall submit to the
Landlord's supervision over construction, shall provide Landlord upon request
with financial assurances prior to the commencement of alterations, and promptly
pay to the Landlord's or the Tenant's subcontractors, as the case may be, when
due, the cost of all such work and of all materials, labor and services involved
therein and of all decoration and all changes in the Building, its equipment or
services, necessitated thereby. The Tenant covenants that the Tenant will not
stiffer or permit during the Term hereof any mechanics' or other liens for work,
labor, services or materials ordered by the Tenant or for the cost of which the
Tenant may be in any way obligated, to attach to the Leased Premises or to the
Building and that whenever and so often as any such liens shall attach or claims
therefor shall be filed, the Tenant shall, within twenty (20) days after the
Tenant has notice of the claim for lien, procure the discharge thereof by
payment or by giving security or in such other manner as is or may be required
or permitted by law or which shall otherwise satisfy Landlord. The Tenant
shall, at its own cost and expense, take out or cause to be taken out any
additional insurance or bonds reasonably required by the Landlord to protect the
Landlord's and the Tenant's interest during the period of alteration.
22.02 At least five (5) days prior to the commencement of any work
permitted to be done by persons requested by the Tenant on the Leased Premises,
the Tenant shall notify the Landlord of the proposed work and the names and
addresses of the persons supplying labor and materials for the proposed work so
that the Landlord may avail itself of the provisions of statutes such as Section
38-22-105(2) of the Colorado Revised Statutes (1973). During any such work on
the Leased Premises, the Landlord, or its representatives, shall have the right
to go upon and inspect the Leased Premises at all reasonable times, and shall
have the right to post and keep posted thereon notices such as those provided
for by Section 38-22-105(2) C.R.S. (1973) or to take any further action which
the Landlord may deem to be proper for the protection of the Landlord's interest
in the Leased Premises.
22.03 Landlord hereby reserves the right at any time and from time to
time to make changes in, additions to, subtractions from or rearrangements of
the Building, including, without limitation, all improvements at any time
thereof, all entrances and exits thereto, and to grant, modify and terminate
easements or other agreements pertaining to the use and maintenance of all or
parts of the Building, including, but not limited to, the entrance foyer and
lobby, the garden court on the third floor of the Building, or elsewhere and the
common corridors and to make changes, or additions to the pipes, conduits,
ducts, utilities and other necessary building services in the Leased Premises
which serve other portions of the Building, provided that prior to the
Commencement Date, the Landlord may alter the Leased Premises to the extent
found necessary by the Landlord to accommodate changes in construction design or
facilities including major alterations but provided always that the Leased
Premises, as altered, shall be in material aspects comparable to the Leased
Premises is defined herein.
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GLASS
- -----
23.01 Landlord shall pay on demand the cost of replacement with as good
quality and size of any glass broken on the Leased Premises, including outside
windows and doors of the perimeter of the Leased Premises (including perimeter
windows in the exterior walls) during the continuance of this Lease, unless the
glass shall be broken by the Tenant, its servants, employees or agents acting on
its behalf, in which event Tenant shall pay on demand the cost of replacement.
SIGNS AND ADVERTISING
- ---------------------
24.01 Tenant shall not install, paint, display, inscribe, place or
affix any sign, picture, advertisements, notice, lettering or direction on any
part of the outside of the Building or in the interior of the Leased Premises;
provided the same are not visible from the outside of the Building or other
portion of the Building. The Landlord will prescribe a uniform pattern of
identification signs for tenants to be placed on the outside of the doors
leading into the Leased Premises and other than such identification signs,
Tenant shall not install, paint, display, inscribe, place or affix, or otherwise
attach, any sign, picture, advertisement, notice, lettering or direction on the
outside of the Leased Premises for exterior view without the written consent of
the Landlord. Tenant shall have the right to install or erect an interior sign
bearing Tenant's name.
NAME OF BUILDING
- ----------------
25.01 Tenant shall not refer to the Building by other than that
designated from time to time by the Landlord, nor to use such name for any
purpose other than that of the business address of Tenant provided that the
Tenant may use the street address of the Building assigned to it by the Landlord
instead of the name of the Building.
SUBORDINATION AND ATTORNMENT
- ----------------------------
26.01 This Lease is subject to and subordinate to all mortgages
(including any deed of trust and mortgage securing bonds and all indentures
supplemental thereto) whether now in existence or subsequently placed on the
Real Property and to all underlying, superior, ground or land leases which may
now or hereafter encumber the Real Property of which the Leased Premises are a
part, and to all or any declaration of covenants regarding maintenance or use of
any areas contained in any portion of the Building , and all advances, renewals,
modifications, consolidations, replacements and extensions thereof of such
mortgages and leases and declaration of covenants which may now or hereafter
affect the Leased Premises or any part thereof. This clause shall be self-
operative and no further instrument of subordination shall be required in order
for the same to be effective. Notwithstanding the foregoing, Tenant hereby
appoints the Landlord, the agent, or attorney of the Tenant coupled with an
interest for the purpose of executing any acknowledgment or agreement required
by any mortgagee or lender of Landlord. Tenant, hereby attorns to all successor
owners of the Building, whether or not such ownership is acquired or a result of
a sale, through foreclosure of a deed of trust or mortgage or otherwise. If any
holder of a mortgage or deed of trust shall elect to have this Lease superior to
the lien of its mortgage or deed of trust, and shall give written notice thereof
to Tenant, (his Lease shall be deemed prior to such mortgage or deed of trust,
whether this Lease is dated prior or subsequent to the date of said mortgage,
deed of trust or the date of recording thereof.
ACCEPTANCE OF PREMISES
- ----------------------
27.01 Tenant acknowledges that it will examine the Leased Premises
before taking possession hereunder and agrees that unless Tenant furnishes
Landlord with a notice in writing
15
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specifying any defect in the construction of the Leased Premises or otherwise,
within ten (10) days after such taking of possession, that Tenant shall be
conclusively deemed to have examined the Leased Premises and that the same were
ill good order and such taking of possession without giving the notice aforesaid
within such tell (10) days shall be conclusive evidence as against the Tenant
that at the time thereof the Leased Premises were in good order and satisfactory
condition, subject to latent defects, it' any, and shall lie acknowledgment of
satisfactory completion of any fix-up or remodeling, as the case may be which
Landlord has agreed to perform.
27.02 Tenant agrees that there is no promise, representation or
undertaking by or binding upon the Landlord with respect to any alteration,
remodeling or redecorating of or installation of equipment or fixtures ill the
Leased Premises, except such, if any, as are expressly set forth in this Lease.
ESTOPPEL CERTIFICATES
- ---------------------
28.01 Tenant agrees that it shall at any time and from time to time
upon not less than ten (10) days' prior notice, execute and deliver to the
Landlord a statement in writing certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the modifications and that the
same is ill full force and effect as modified), the amount of the annual rental
then being paid hereunder, the dates to which the same, by installment or
otherwise, and other charges hereunder have been paid, and whether or not there
is any existing default on the part of the Landlord of which the Tenant has
knowledge and such other information reasonably required by Landlord, its
mortgagees and the City and County of Denver.
FIXTURES
- --------
29.01 Any or all installations, alterations, additions, partitions and
fixtures other than Tenant's trade fixtures in or upon the Leased Premises,
whether placed there by the Tenant or the Landlord, shall, immediately upon such
placement, become the property of the Landlord without compensation therefor to
the Tenant. Notwithstanding anything herein contained, the Landlord shall be
under no obligation to repair, maintain or insure such installations,
alterations, additions, partitions or fixtures or anything in the nature of a
leasehold improvement made or installed by or on behalf of the Tenant. The
Landlord may elect at the time of Tenant's request as a condition for Landlord's
approval that any or all installations made or installed by or on behalf of the
Tenant subsequent to the initial installation and improvements done by Landlord
on behalf of Tenant be removed at the end of the Lease Term and it shall be the
Tenant's obligation to restore the Leased Premises to the conditions they were
in previous to such alterations, installations, participations and fixtures.
Such removal and restoration shall be at the sole expense of the Tenant.
LANDLORD'S INSURANCE
- --------------------
30.01 The Landlord covenants and agrees that throughout the Term it
will insure the Building (excluding foundations and excavations) and the
machinery, boilers and equipment contained therein owned by the Landlord
(excluding any property with respect to which the Tenant is obliged to insure
pursuant to the provisions of Section 15.01 hereof) against damage by fire and
extended perils coverage in such reasonable amounts as would be carried by a
prudent owner of a similar property in the same locale. The Landlord will also,
throughout the Term, carry public liability and property damage insurance with
respect to the operation of the Building in reasonable amounts as would be
carried by a prudent owner of a similar property in the same locale. The
Landlord may, but shall not be obliged to, take out and carry any other form or
forms of insurance as it or the mortgagees of the Landlord may reasonably
determine advisable. Notwithstanding any contribution by the Tenant to the cost
of insurance premiums, as provided herein, the Tenant acknowledges that it has
no right to receive any proceeds from any such insurance policies carried by the
Landlord and that such insurance will be for the sole benefit of Landlord with
no coverage for Tenant for any risk insured against.
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All property damage policies written on behalf of file Landlord shall
contain a waiver of any subrogation rights which the Landlord's insurers may
have against the Tenant and against those for whom the Tenant is, in law,
responsible whether any such damage is caused by the act, omission or fault of
the Tenant or by those for whom the Tenant is, in law, responsible.
FIRES - ETC.
- ------------
31.01 In the event of damage to the Leased Premises by fire, or other
casualty, or damage resulting from structural defect, or damage by other
casualty against which the Landlord is insured, and which is not caused by the
negligence of Tenant, rent shall abate in the proportion that the unusable
portion of the Leased Premises as determined by landlord is of the Total
Rentable Area of the Leased Premises until the Leased Premises are rebuilt; and
the Landlord agrees that it will with reasonable diligence repair such damage
under the terms hereof, unless this Lease is terminated as hereinafter provided
in Sections 31.02 and 31.03.
31.02 If the Leased Premises are damaged or destroyed by any cause
whatsoever, and if, in the reasonable opinion of the Landlord, the Leased
Premises cannot be rebuilt or made fit for the purposes of the Tenant within
ninety (90) days of the damage or destruction, the Landlord or Tenant instead of
rebuilding or making the Leased Premises fit for the Tenant, may at their
option, terminate this Lease by giving to the other party, within thirty (30)
days after such damage or destruction, notice of termination, and thereupon,
rent and any other payments for which the Tenant is liable under this Lease
shall be apportioned and paid to the date of such damage and the Tenant shall
immediately deliver up possession of the Leased Premises to the Landlord.
Provided, however, that those provisions of this Lease which are designated to
cover matters of termination and thereafter shall survive the termination
hereof.
31.03 Irrespective of whether the Leased Premises are damaged or
destroyed, in the event that fifty percent (50%) or more of the Total Rentable
Area in the Building is damaged or destroyed or made unusable by any cause
whatsoever, and if, in the reasonable opinion of the Landlord the said Total
Rentable Area cannot be rebuilt or made fit for the purpose of the tenants of
such space within one hundred and eighty (180) days after the damage or
destruction, the Landlord may, at its option, terminate this Lease by giving to
the Tenant within thirty (30) days after such damage notice of termination
requiring it to vacate the Leased Premises sixty (60) days after delivery of the
notice of termination and thereupon, rent and any other payments for which the
Tenant is liable under this Lease shall be apportioned and paid to the date on
which possession is relinquished and the Tenant shall deliver up possession of
the Leased Premises to the Landlord in accordance with such notice of
termination.
31.04 If the fire or other casualty causing damage to the Leased
Premises or other parts of the Building shall have been caused by the negligence
or misconduct of Tenant, its agents, servants, or employees, or by any other
persons entering the Building under express or implied invitation of Tenant such
damage shall be repaired by Landlord at the expense of Tenant, not to exceed
however, the greater of the amount of Tenant's insurance coverage at the time of
the casualty or the amount of insurance coverage the Tenant is required to
maintain pursuant to the provisions of Section 15.01.
CONDEMNATION
- ------------
32.01 If more than twenty percent (20%) of the Total Rentable Area of
the Leased Premises shall be taken by eminent domain, or by conveyance in lieu
thereof, and if such taking interferes substantially with the Tenant's use of
the Leased Premises, then this Lease, at the option of either party evidenced by
notice to the other given within thirty (30) days from the taking or conveyance,
shall forthwith cease and terminate entirely. In the event of such termination
of this Lease, then rental shall be due and payable to the actual date of such
termination. If less than twenty percent (20%) of the Total Rentable Area of
the Leased Premises shall be taken, or if more than twenty percent (20%) of the
Leased Premises is taken and neither party terminates this Lease, this Lease
shall cease and terminate as to that portion of the Leased Premises so taken as
of the date of taking, and the rental thereafter payable under this Lease shall
be abated pro rata from the date of such taking in an amount by which that
portion of the Total Rentable Area of the Leased Premises prior to such taking.
If any part of the Building or Real Property shall be taken by eminent domain,
or by
17
<PAGE>
conveyance in lieu thereof, and if such taking substantially interferes
with the Landlord's ownership or use of the Building, the Landlord, at its
option, may terminate this lease as of the date of such taking. In any event,
the Landlord shall receive the entire award for the land and improvements taken
by condemnation and the Tenant shall not he entitled to any portion thereof.
LOSS AND DAMAGE
- ---------------
33.01 The Landlord shall not be liable or responsible in any way for:
(a) any death or injury arising from or out of any occurrence in,
upon or at the Building or for damage to property of the Tenant or others
located on the Leased Premises, nor shall it be responsible in the event of
damage to any property of the Tenant or others from any cause whatsoever, unless
such damage, loss, injury or death results from the negligence of the Landlord,
its agents, servants, or employees or others for whom it may be responsible.
Without limiting the generality of the foregoing, the Landlord shall not be
liable for any injury or damage to persons or property resulting from fire,
explosion, falling plaster, steam, gas, electricity, water, rain, snow or leaks
from any part of the Leased Premises or from the pipes, appliances, or plumbing
works, roof, street, or subsurface of any floor or ceiling or from any other
place or because of dampness or climatic conditions from any other cause of
whatsoever kind. The Landlord shall not be liable for any damage whatsoever
caused by any other tenant or persons in the Building, or by an occupant of
adjacent property thereto, or the public, or construction of any private, public
or quasi-public work. All property of the Tenant kept or stored on the Leased
Premises shall be kept or stored at the risk of the Tenant only and the Tenant
shall indemnify the Landlord in the event of any claims arising out of damages
to the same, including any subrogation claim by the Tenant's insurers;
(b) any act or omission (including theft, malfeasance or negligence)
on the part of ,any agent, contractor or person from time to time employed by
Landlord to perform janitor services or security services, or repairs or
maintenance services, in or about the Leased Premises of the Building; or
(c) loss or damage, however caused, to money, securities, negotiable
instruments, papers or other valuables of the Tenant.
DELAYS
- ------
34.01 Whenever and to the extent that the Landlord shall be unable to
fulfill, or shall be delayed or restricted in the fulfillment of any obligation
hereunder in respect to the supply or provision of any service or utility or the
doing of any work or the making of any repairs by reason of being unable to
obtain the material, goods, equipment, service, utility or labor required to
enable it to fulfill such obligation or by reason of any statute, law or any
regulation or order passed or made pursuant thereto, or by reason of the order
or direction of any administrator, controller or board, or ally governmental
department or officer or other authority, or by reason of not being able to
obtain any permission or authority required thereby, or by reason of any other
cause beyond its control whether of the foregoing character or not, the Landlord
shall be entitled to extend the time for fulfillment of such obligation by a
time equal to the duration of such delay or restriction, and the Tenant shall
not be entitled to compensation for any inconvenience, nuisance or discomfort
thereby occasioned.
DEFAULT
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35.01 Upon the happening of any one or more of the following events,
Landlord may give notice to Tenant stating that the Term of this Lease is
terminated on a date and if such notice shall be given, the Term of this Lease
shall terminate on the date so stated:
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(a) The failure of Tenant to timely and fully pay any installment of
rent, or other charge or money obligation herein required to be paid by Tenant
within five (5) days after payment thereof is due (for the first default of any
such payment) the Landlord agrees to give written notice to the Tenant and
permit the Tenant one (1) business to cure such default.
(b) The failure of Tenant to perform anyone or more of its other
covenants under this Lease within ten (10) days after written notice to Tenant
specifying the covenant or covenants Tenant has not performed; provided,
however, if such default is not reasonably capable of being cured within such
ten (10) day period Tenant shall not be deemed to have committed an event of
default if Tenant commences curing the default within said ten (10) day period
and diligently pursues the same to completion within sixty (60) days after
delivery of the written notice to Tenant.
(c) The making by Tenant of an assignment for the benefit of its
creditors.
(d) The levying of a writ of execution or attachment on or against the
property of Tenant if the same is not released or discharged within thirty (30)
days thereafter.
(e) The instituting of proceedings in a court of competent
jurisdiction for the involuntary bankruptcy, arrangement, reorganization,
liquidation or dissolution of Tenant under the Federal Bankruptcy Code (as now
or hereafter in effect) or any state bankruptcy or insolvency act, or for its
adjudication as a bankrupt or insolvent, or for the appointment of a receiver of
the property of Tenant, and said proceedings are not dismissed, or any receiver,
trustee, or liquidator appointed therein is not discharged within thirty (30)
days after the institution of said proceedings.
(f) The instituting of proceedings for the voluntary bankruptcy
arrangement, reorganization, liquidation or dissolution of Tenant under the
Federal Bankruptcy Code (as now or hereafter in effect) or any state bankruptcy
or insolvency act or if Tenant shall otherwise take advantage of any state or
federal bankruptcy or insolvency act as a bankrupt or insolvent.
(g) The doing, or permitting to be done, by Tenant of any act which
creates a mechanic's lien or claim therefor against the land or Building of
which the Leased Premises are a part of the same is not released or otherwise
provided for by indemnification satisfactory to Landlord within twenty (20) days
thereafter.
(h) The abandonment or vacating of the Leased Premises.
(i) The failure to take possession of the Leased Premises on the term
Commencement Date.
Notwithstanding any such termination, Tenant shall remain liable to Landlord as
hereinafter provided in Article 36 of this Lease.
35.02 No condoning, excusing or overlooking by the Landlord of any
default, breach or non-observance by the Tenant at any time or times in respect
of any covenants, provisions or conditions herein contained shall operate as a
waiver of the Landlord's rights hereunder in respect of any continuing or
subsequent default, breach or non-observance, or so as to defeat or affect such
continuing or subsequent default or breach, and no waiver shall be inferred from
or implied by anything done or omitted by the Landlord save only express waiver
in writing. All rights and remedies of the Landlord in this Lease contained
shall be cumulative and not alternative.
REMEDIES OF LANDLORD
- --------------------
36.01 If an event of default set forth in Section 35.01 occurs, the
Landlord shall have the following rights and remedies in addition to all other
remedies, at law or in the equity, and none of the following, whether or not
exercised by the Landlord, shall preclude the exercise of any other right or
remedy whether herein set forth or existing at law or in equity:
(a) Landlord shall have the right to terminate this Lease by giving
the Tenant notice in writing, and upon the giving of such notice, this Lease and
the Term hereof as well as all
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the right, title and interest of the Tenant under this Lease shall wholly cease
and expire in the same manner and with the same force and effect on the date
specified in such notice as if such date were the expiration date of the Term of
this Lease, without the necessity of re-entry or any other act on the Landlord's
part. Upon termination, the Tenant shall quit and surrender to Landlord the
Leased Premises as set forth in Section 11.03. If this Lease is so terminated by
the landlord the Landlord shall be entitled to recover from the Tenant as
damages the worth at the time of such termination of the excess, if any, of the
amount of rent reserved in this Lease for the balance of the term of this Lease
(which shall be calculated on the then current rent under this Lease) in excess
of the then reasonable rental value of the Premises for the same period plus all
costs and expenses of Landlord caused by the Tenant's default.
(b) Landlord may, without demand, or notice, re-enter and take
possession of the Leased Premises or any part thereof, repossess the same and
expel the Tenant and those claiming through or under the Tenant, and remove the
effect of any and all such persons (forcibly, if necessary) without being deemed
guilty of any manner of trespass and without prejudice to any remedies for
arrears of rent or preceding breach of covenants. Should the Landlord elect to
re-enter as provided in this Section 36.01 or should the Landlord take
possession pursuant to legal proceedings or pursuant to any notice provided for
by law, the Landlord may, from time to time, without terminating this Lease,
relet the Leased Premises or any part thereof for such other conditions as the
Landlord may deem advisable with the right to make alterations and repairs to
the Leased Premises. No such re-entry or repossession of the Leased Premises by
the Landlord shall be construed as an election on the Landlord's part to
terminate this Lease unless a written notice of termination is given to the
Tenant by the Landlord. No such re-entry or repossession of the Leased Premises
shall relieve the Tenant of its liability and obligation under this Lease, all
of which shall survive such re-entry or repossession. Upon the occurrence of
such re-entry or repossession, the Landlord shall be entitled to damages in the
amount of the monthly rent, and any other sums, which would be payable hereunder
if such re-entry or repossession had not occurred, less the net proceeds, if
any, of any reletting of the Leased Premises after deducting all the Landlord's
expenses in connection with such reletting, including, but without limitation,
all repossession costs, brokerage commissions, legal expenses, attorney's fees,
expenses of employees, alteration costs and expenses of preparation for such
reletting, Tenant shall pay such liquidated damages to the Landlord on the days
on which the rent or any other sums due hereunder would have been payable
hereunder if possession had not bee retaken. In no event shall the Tenant be
entitled to receive any excess, if any, of net rent collected by the Landlord as
a result of such reletting over the sums payable by the Tenant to the Landlord
hereunder.
36.02 Subject to the first lien on all assets by Women's Bank and
Colorado Business Bankshares, Inc., as additional security for the Tenant's
performance of its obligations under this Lease, the Tenant hereby grants to the
Landlord a security interest in and to all improvements, equipment and other
personal property of Tenant, but not of Tenant's employees, situated on the
Leased Premises as security for the payment of all rent and other sums due or to
become due under this Lease. Tenant shall execute such documents as the
Landlord may reasonably require to evidence the Landlord's security interest in
such personal property. If the Tenant is in default under this Lease, such
personal property shall not be removed from the Leased Premises (except to the
extent such property is replaced with an item of equal or greater value) without
the prior written consent of the Landlord. It is intended by the parties hereto
that this instrument shall have the effect of a security agreement covering such
personal property, and the Landlord, upon the occurrence of an event of default
set forth in Section 35.01, may exercise any rights of a secured party under the
Uniform Commercial Code of the State of Colorado including the right to take
possession of such personal property (after ten (10) days' notice to those
parties required by statute to be notified) to sell the same for the best price
that can be obtained at public or private sale, and out of the money derived
therefrom, pay the amount due the Landlord and all costs arising out of the
execution of the provisions of this Section, paying the surplus, if any, to the
Tenant. If such personal property, or any portion thereof, shall be offered at
the public sale, the Landlord may become the purchaser thereof. In addition, all
movable furniture and personal effects of Tenant not removed from the Leased
Premises upon the vacation or abandonment thereof or upon the termination of
this Lease or for any cause whatsoever shall conclusively be deemed to have been
abandoned and may be appropriated, sold, stored, destroyed or otherwise disposed
of by Landlord without notice to Tenant or any other
20
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power and without obligation to account therefor; and Tenant shall pay Landlord
all expenses incurred in connection with the disposition of such property.
36.03 If the Tenant shall default in making any payment required to be
made by the Tenant (other than payments of rent) or shall default in performing
any other obligations of the Tenant under this Lease, the Landlord may, but
shall not be obligated to, make such payment or, on behalf of the Tenant, expend
such sums as may be necessary to perform such obligations. All sums so expended
by the Landlord, shall bear interest thereon at the rate of eighteen percent
(18%) per year, and shall be repaid by the Tenant to the Landlord on demand. No
such payment or expenditure by the Landlord shall be deemed a waiver of the
Tenant's default nor shall it affect any other remedy of the Landlord by reason
of such default.
If any payment of rent or any other sum, or any part of any such payment,
to be made by Tenant under the terms of this Lease shall become overdue for a
period in excess of five days Tenant shall pay to Landlord (x) a "late charge"
of$.05 for each dollar so overdue, for the purpose of defraying the expense
incident to handling Such overdue or delinquent payment, and (y) interest on the
overdue amount at the Lease Interest Rate (defined below) from the date when
such payment was due until the date paid, but in no event more than the amount
or rate which is the maximum amount or rate Landlord may lawfully charge in
respect of Tenant in such circumstances under applicable law. The "Lease
Interest Rate" shall mean the greater of 18% per annum, or such variable rate
which is from time to time equal to 3% above the prime rate as stated by
Colorado National Bank, Denver, Colorado or its successor, or, in the absence of
there being a Successor to Colorado National Bank, by such other bank having an
office in the City of Denver, as Landlord may from time to time select. Nothing
herein shall be construed as waiving any rights of Landlord arising out of any
default of Tenant by reason of Landlord's accepting any such late charge or
interest; the right to collect a late charge and interest is separate and apart
from any other rights or remedies of Landlord after default by Tenant.
36.04 Nothing in this Lease contained shall limit or prejudice the
right of Landlord to prove and obtain as liquidated damages in any bankruptcy,
insolvency, receivership, reorganization, or dissolution proceeding an amount
equal to the maximum allowed by any Statute or rule of law governing such a
proceeding and in effect at the time when such damages are to be proved, whether
or not such amount be greater, equal to or less than the amounts recoverable,
either as damages or rent, referred to in any of the preceding provisions of
this Lease.
36.05 Notwithstanding anything in this Article 36 or any other
provision of this Lease to the contrary, this Lease shall not be terminated by
service upon Tenant of a notice from Landlord demanding payment of rent or
possession of the Premises following default by Tenant, or by any action of
Tenant to vacate the Premises following receipt of such a notice, unless the
notice served by Landlord includes a statement expressly terminating this Lease.
Further, Landlord reserves the right to receive payment of all unaccrued rent
for the balance of the Term originally contemplated under Section 2.01(i) of
this Lease (and any extensions or renewals thereof which Tenant shall have
become bound) following service of such a notice for payment of rent or
possession, or a notice terminating this Lease for Tenant's default.
HOLDING OVER
- ------------
37.01 If the Tenant shall continue to occupy and continue to pay rent
for the Leased Premises after the expiration of this Lease without the written
consent of the Landlord, and without any further written agreement, the Tenant
shall be a tenant from month to month at a monthly base rent equal to one
hundred fifty percent (150%) of the last full monthly base rent payment due
hereunder, and subject to all of the additional rentals, terms and conditions
herein set out except as to expiration of the Leased Term.
37.02 No payments of money by Tenant to Landlord after the termination
of this Lease, in any manner, or after giving of any notice (other than a demand
for payment of money) by Landlord to Tenant, shall reinstate, continue or extend
the term of this Lease or affect any notice
21
<PAGE>
given to Tenant prior to the payment of such money, it being agreed that after
the service of notice or the commencement of a suit or other final judgment
granting Landlord possession of said premises, Landlord may receive and collect
any sums of rent due, or any other sums of money due under the terms of this
Lease, or otherwise exercise its rights and remedies hereunder. The payment of
such Sums of money, whether as rent or otherwise, shall not waive said notice,
or in any manner affect any pending suit or judgment theretofore obtained.
DIRECTORY BOARD
- ---------------
38.01 The Tenant shall be entitled to have its name shown upon the
Directory Board of the Building. The Landlord shall designate the style of such
Directory Board, which shall be located in an area designated by the Landlord in
the main lobby.
TRANSFER BY LANDLORD
- --------------------
39.01 In the event of a safe, lease or other transfer by the Landlord
of the Building or a portion thereof containing the Leased Premises, the
Landlord shall, without further written agreement, be freed, released and
relieved of all liability or obligations under this Lease, subject to the
provisions of Section 44.01 hereof.
NOTICE
- ------
40.01 Any notice, request, statement or other writing pursuant to this
Lease shall be deemed to have been given if sent by registered or certified
mail, postage prepaid, return receipt requested to the party at the address
stated below:
To Landlord: AMERIMAR REALTY MANAGEMENT CO. -
COLORADO, as agent for Landlord
999 18th Street, Suite 300
Denver, Colorado 80202
With Copy to: Denver Place Associates Limited Partnership
210 W. Rittenhouse Square, Suite 2000
Philadelphia, PA 19103
or to Tenant at the following address until occupancy of the Leased Premises and
after occupancy of the Leased Premises by Tenant, at the Leased Premises.
Colorado Business Leasing, Inc.
707 17th Street, Suite 2900
Denver, Colorado 80202
With Copy to: Colorado Business Bankshares, Inc.
821 - 17/th/ Street
Denver, Colorado 80202
and such notice shall be deemed to have been received by the Landlord or Tenant,
as the case may be, on the second business day after the date on which it shall
have been so mailed.
40.02 Notice shall also be sufficiently given if and when the same
shall be delivered, in the case of notice to Landlord, to an executive officer
of the Landlord, and in the case of notice to the Tenant or the Guarantor, to
him personally or to in executive officer of the Tenant or the Guarantor if the
Tenant or the Guarantor is a corporation. Such notice, if delivered, shall be
conclusively deemed to have been given and received at the time of such
delivery. If in this Lease two or more persons are named as Tenant, such notice
shall also be sufficiently given if and when the same shall he delivered
personally to any one of such persons.
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40.03 Any party may, by notice to the other, from time to time,
designate another address in the United States or Canada to which notices mailed
more than ten (10) days thereafter shall be addressed.
GOVERNING LAW
- -------------
41.01 This Lease shall be deemed to have been made in and shall be
construed in accordance with the laws of the State of Colorado.
LEASE ENTIRE AGREEMENT
- ----------------------
42.01 The Tenant acknowledges that there are no covenants,
representations, warranties, agreements or conditions, expressed or implied,
collateral or otherwise forming part of or in any way affecting or relating to
this Lease save those expressly set out in this Lease, the Facing Page and
Exhibits attached hereto and that this Lease, the Facing Page and Exhibits
attached hereto and the Rules and Regulations promulgated by Landlord in
accordance with Section 13.01 hereof constitute the entire agreement between the
Landlord and the Tenant and may not be amended or modified except as explicitly
provided or except by subsequent agreement in writing of equal formality hereto
executed by the Landlord and the Tenant.
BINDING EFFECT
- --------------
43.01 Except as expressly provided herein, this Indenture shall inure
to the benefit of, and be binding upon, the parties hereto and their respective
successors and permitted assigns, and all covenants and agreements herein
contained to be observed and performed by the Tenant shall be joint and several.
Tenant shall look solely to the estate and interest of Landlord, its successors
and assigns, in and to the Real Property or the proceeds therefrom for the
collection of a judgment (or other judicial process) requiring the payment of
money by Landlord hereunder, and no other property or assets of Landlord shall
be subject to levy, execution or other enforcement procedure for the
satisfaction of Tenant's remedies under or with respect to this Lease, the
relationship of Landlord and Tenant hereunder or Tenant's use of occupancy of
the lease Premises.
SECURITY DEPOSIT
- ----------------
44.01 The Tenant shall keep on deposit with the Landlord at all times
during the term of this Lease, the Lease Deposit specified on the Facing Page
hereof as security for the payment by the Tenant of the rent or any other sums
due under this Lease and for the faithful performance of all the terms,
conditions and covenants of this Lease. If at any time during the term of this
Lease the Tenant shall be in default in the performance of any provision of this
Lease, the Landlord may (but shall not be required to) use any such deposit, or
so much thereof as necessary, in payment of any rent or any other sums due under
this Lease in default, in reimbursement of any expense incurred by the Landlord
and in payment of the damages incurred by the landlord by reason of the Tenant's
default, or at the option of the Landlord, the same may be retained by the
Landlord as liquidated damages. In such event, the Tenant shall, on written
demand of the Landlord, forthwith remit to the Landlord a sufficient amount in
cash to restore such deposit to its original amount. If such deposit has not
been utilized as aforesaid, such deposit, or as much thereof as has not been
utilized for such purposes, shall be refunded to the Tenant, without interest,
upon full performance of this Lease by the Tenant. Landlord shall have the
right to commingle such deposit with other funds of the Landlord. Landlord
shall deliver the funds deposited herein by the Tenant to any purchaser of the
Landlord's interest in the Leased Premises in the event such interest be sold,
and thereupon, the Landlord shall be discharged from further liability with
respect to such deposit. Notwithstanding the above provisions of this Section,
if claims of the Landlord exceed the deposit provided for therein, the Tenant
shall remain liable for the balance of such claims.
23
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INTERPRETATION
- --------------
45.01 Unless the context otherwise requires, the word "Landlord"
whenever it is used herein shall be construed to include and shall mean the
Landlord, its successors and/or assigns, and the word "Lease" shall be construed
to include and shall mean the General Lease Provisions, the Office Lease Facing
Page and any Exhibits attached hereto unless the context otherwise specifies and
the word "Tenant" shall be construed to include and shall mean the Tenant, and
the executors, administrators, successors and/or assigns of the Tenant and when
there are two or more tenants, or two or more persons bound by the Tenant's
covenants herein contained, their obligations hereunder shall be joint and
several; the word "Tenant" and the personal pronouns "his" and "it" relating
thereto and used therewith shall be read and construed as tenants, and "his",
"her", "its" or "their", respectively, as the number and gender of the party or
parties referred to each require and the number of the verb agreeing (herewith,
shall be construed and agree with the said word or pronoun so substituted. Time
shall be of the essence in all respects hereunder.
SEVERABILITY
- ------------
46.01 Landlord and Tenant agree that all of the provisions of this
Lease are to be construed as covenants and agreements where used in each
separate paragraph hereof. Should any provision or provisions of this Lease be
illegal or not enforceable, it or they shall be considered separate and
severable from this Lease and its remaining provisions shall remain in force and
be binding upon the parties hereto is though the said provision or provisions
had never been included.
INDEPENDENT COVENANTS
- ---------------------
47.01 This Lease shall be construed as though the covenants herein
between Landlord and Tenant are independent, and not dependent, and Tenant shall
not be entitled to any set off of the rent or other amounts owing hereunder
against Landlord, if Landlord fails to perform its obligations set forth herein;
provided, however, the foregoing shall in no way impair the right of Tenant to
commence a separate action against Landlord for my violation by Landlord of the
provisions hereof so long as notice is first given to Landlord and any holder of
a mortgage or deed of trust covering the Building or any portion thereof and an
opportunity granted to Landlord and such holder to correct such violation as
provided in Section 48.01 below.
ADDITIONAL NOTICES
- ------------------
48.01 In the event of any alleged default on the part of Landlord
hereunder, Tenant shall give written notice to Landlord in the manner herein set
forth and shall afford Landlord a reasonable opportunity to cure any such
default. In addition, Tenant shall send notice of such default by certified or
registered mail, postage prepaid, to the holder of my mortgages or deeds of
trust covering the Building or any portion thereof whose address Tenant has been
notified in writing, and shall afford such holder a reasonable opportunity to
cure any alleged default on Landlord's behalf. In no event will Landlord be
responsible for any damages incurred by Tenant including, but not limited to,
lost profits or interruption of business as a result of any alleged default by
Landlord hereunder.
GOVERNMENTALLY REQUIRED IMPROVEMENTS
- ------------------------------------
49.01 If any improvement or structural modification or addition to the
Building is required subsequent to the commencement of the term hereof by any
change in the laws, ordinances, rules, regulations or orders of any governmental
or quasi-governmental authority having jurisdiction over the Building, the rent
to be paid by Tenant shall be further adjusted, in such amount as Landlord's
independent certified public accountants may determine so that Tenant pays its
pro rata share of Landlord's per square foot cost (computed in the same manner
as otherwise provided in this Lease) of such improvement or structural
modification or addition, amortized at a market rate of return over the useful
life thereof. In determining such adjustment in rent, Landlord's independent
certified
24
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public accountant shall consider any cost reductions to Landlord in operating
the Building resulting from such improvement or structural modification or
addition. Tenant shall commence payment of any adjustment in its rent pursuant
to this Section 49.01 on the first day of the month following thereof by
Landlord.
RECORDING - SHORT FORM MEMO
- ---------------------------
50.01 This Lease shall not be recorded in its entirety. If recorded by
Tenant, at Landlord's option this Lease shall terminate as of the date of
recording and Landlord shall have all rights and remedies provided in the case
of default by Tenant hereunder. If requested by Landlord, Tenant shall execute
in recordable form a short form memorandum of Lease which may, at Landlord's
option, be placed of record. In addition, if requested by Landlord, Tenant
shall execute a memorandum of Lease to be filed with the Colorado Department of
Revenue on such form as may be prescribed by said Department within ten (10)
days after the execution of the Lease or any other such memorandum so that the
Landlord may avail itself of the provision of statutes such as section 039-22-
604 (7) (c) of the Colorado Revised Statutes (1973).
REAL ESTATE BROKER
- ------------------
51.01 Tenant represents that Tenant has dealt directly with (and only
with) Oberndorf Properties, Ltd., Donald Oberndorf, Broker, whose address is 650
South Cherry Street, Suite 1400, Denver, CO 80222 in connection with this Lease
and that no other broker has negotiated this Lease or be entitled to any
commission in compensation herewith. Tenant warrants and commissions, costs and
agrees to save and hold Landlord harmless from any and all leasing commissions,
costs and liability, including reasonable attorney fees with respect to the
Leased Premises regarding any other broker.
CAPTIONS AND EXHIBITS
- ---------------------
52.01 The captions appearing within the body of this Lease have been
inserted as a matter of convenience and for reference only and in no way define,
limit or enlarge the scope or meaning of this Lease or of any provision hereof.
The Exhibits to the Lease are as follows:
Addendum
Exhibit A Leased Premises Plan
Exhibit B Rules and Regulations
Exhibit C Lease Term Agreement
Exhibit D Parking Agreement
Exhibit E Equipment List
SUBSTITUTION OF OTHER PREMISES
- ------------------------------
53.01 (a) At any time hereafter, Landlord shall have the right to
substitute for the premises then being leased or to be leased hereunder (the
"Existing Premises") other premises within the high-rise elevator bank of the
Building (herein referred to as the "New Premises") the same size with a
comparable view and shall either have substantially the same perimeter
configuration or a perimeter configuration substantially as usable for the
purposes for which the Existing Premises were being used by Tenant or, if
possession of the Existing Premises had not yet been received by Tenant, then
for the purposes for which the Existing Premises were to be used by Tenant.
(b) If Tenant shall not have received possession of the Existing
Premises, then, as of the date Landlord gives notice of a substitution, such
substitution shall be effective, the New Premises shall be the premises
hereunder and the Existing Premises shall cease to he the Premises hereunder.
25
<PAGE>
(c) The provisions of this subsection 53.01 (c) shall apply if Tenant
shall have already received possession of the Existing Premises as of the date
Landlord gives notice of substitution. Tenant shall vacate and surrender the
Existing Premises not later than the later of the 30th day after the date that
Landlord shall notify Tenant of Landlord's intent to make the substitution in
question or the 15th day after Landlord shall have substantially completed the
work to be done by landlord in the New Premises pursuant to the subparagraph
(iii). As of the sooner of such 15th day or the date of such surrender and
vacation, the New Premises shall be the Premises leased under this Lease and the
Existing Premises shall cease to be the Premises leased under this Lease.
Landlord shall (A) pay the actual and reasonable out-of-pocket expenses which
shall include the printing of reasonable quantities of stationary of Tenant's
moving of its property from the Existing Premises to the New Premises, and (B)
shall improve the New Premises so that they are substantially similar to the
Existing Premises and promptly reimburse Tenant for its actual and reasonable
out-of-pocket costs in connection with the relocation of any telephone or other
communications equipment from the Existing Premises to the New Premises.
However, instead of only paying the expenses of Tenant's moving of its property,
Landlord may elect to either move Tenant's property or provide personnel to do
so under Tenant's direction, in which event move may not be made except during
evenings, weekends or holidays, so as to incur the least inconvenience to
Tenant.
(d) Tenant shall not he entitled to any compensation for my
inconvenience or interference with Tenant's business, nor to any abatement or
reduction in rent, nor shall Tenant's obligations under this Lease be otherwise
affected, as a result of the substitution except as otherwise provided in this
Section 53.01. Tenant agrees to cooperate with Landlord so as to facilitate the
prompt completion by Landlord of its obligation under this Section 53.01.
Without limiting the generality of the preceding sentence, Tenant agrees to
provide to Landlord promptly such approvals, instruction, plans, specifications
or other information, as may be reasonably requested by Landlord.
ADDITIONAL CHARGES FOR TAXES AND LANDLORD'S OPERATING EXPENSES
- --------------------------------------------------------------
54.01 During each lease year of the Term (and pro rata for partial
lease years) Tenant shall pay to Landlord, as additional rent, Tenant's Share of
Operating Expenses. Such payment shall be made in equal monthly installments in
advance, together with the Rent.
54.02 For purposes of this Article 54, the following terms shall have
the meaning hereinafter set forth:
(a) "Calendar Year" shall mean each calendar year in which any part of
the Term falls, through and including the year in which the Term expires.
(b) "Common Areas" shall mean such areas and facilities of common
benefit to the tenants and occupants of the complex of any portion thereof as
Landlord shall make available from time to time. Landlord shall operate,
manage, equip, heat, ventilate, cool, light, insure, repair and maintain the
Common Areas for their intended purposes in such manner as Landlord shall in its
sole discretion determine, and may from time to time change the size, location
and nature of any Common area, and may make installation therein, and after,
move and remove the same, and Landlord shall not be subject to liability
therefore, nor shall Tenant be entitled to any compensation, or diminution or
abatement of rent, nor shall any such action be deemed an actual or constructive
eviction of Tenant.
(c) "Landlord's Operating Expense Contribution" shall mean $6.20 per
square foot of the Total Rentable Area of the Building. Tenant will not be
obligated to pay any additional rent for Tenant's Share of Operating Expenses
during the Calendar Year 1996.
(d) "Operating Expenses" shall mean the total costs and expenses of
every kind and nature whatsoever paid or incurred by Landlord (including
appropriate reserves) in connection with the ownership, operation, management,
maintenance and repair of the Real Property or Complex (exclusive of the
Enclosed Shopping Mall which is for the benefit of both the retail and office
tenants of the Complex) and, as allocated by Landlord, those paid or incurred in
connection with the ownership, operation, management, maintenance and repair of
any garage or other
26
<PAGE>
improvements the use of which is shared by the Building and one or more other
buildings. Operating Expenses include, but are not limited to, the costs of
utilities, insurance, Taxes, reasonable administration, general maintenance,
wages and related taxes, cleaning, repairs and replacements, window washing,
rubbish removal, snow removal, sewer charges, fuel, air conditioning, fire
protection, signs, general landscape maintenance, operation of loudspeakers and
any other equipment supplying music and any other costs, charges and expenses
which, under sound management practice, would be regarded as operating expenses,
including such costs, charges and expenses as would normally be amortized over a
period not exceeding seven years.
(e) "Taxes" shall mean all real estate taxes and assessments, special
or otherwise, levied or assessed upon or with respect to the Real Property and
Complex (including without limitation, any leasehold improvements therein) and,
as allocated by Landlord, those levied or assessed upon or with respect to any
garage or other improvements (and their land) the use of which is shared by the
Building and one or more other buildings, and ad valorem taxes for any personal
property used in the operation of the Real Property and Complex and all taxes
levied or assessed upon or with respect to the leasing, use or occupancy of the
Real Property or any part thereof or the rents or receipts paid or payable to
Landlord therefrom (including, without limitation, any general gross receipts
tax and any income tax levied or assessed especially with respect to real
property or any type of real property which includes the Real Property), which
Landlord shall become obligated to pay or which could become liens on the Real
Property. Should the State of Colorado, or any political subdivision thereof, or
any other governmental authority, impose a fix, assessment, charge or fee, which
Landlord shall be required to pay, wholly or partially in substitution for any
of the above Taxes, all such taxes, assessments, fees or charges shall be deemed
to constitute Taxes hereunder but shall be computed as if the Real property and
any other shared use real property referred to in this subparagraph was the only
real property of Landlord. "Taxes" shall include all fees and costs, including
attorneys' fees, appraisals and consultants' fees, incurred by Landlord in
seeking to obtain a reduction of, or a limit on, any increase in any Taxes
(regardless or whether any reduction or limitation is obtained). The amount of
any refund of Taxes received by Landlord shall be credited against Taxes for the
year in which such refund is received.
(f) "Tenant's Share of Operating Expenses" shall be the product of:
(i) the excess of total Operating Expenses over Landlord's Operating Expense
Contribution multiplied by (ii) Tenant's Proportionate Share defined in Section
2.01(f) above.
(g) "Total Rentable Area of the Building" shall mean 754,288 square
feet which is 95% of the rentable area of the Building.
54.03 Landlord may allocate between the Enclosed Shopping Mall area and
the remainder of the Complex, Taxes and other Operating Expenses as it deems
appropriate. If parts of the Building are leased partly for retail use and
partly for general office use, Landlord may allocate Taxes and the other
Operating Expenses between the office space users and the retail space users as
it deems appropriate. In determining the amount of Operating Expenses for each
Calendar Year, if less than 95% of the rentable office area of the Building
shall have been occupied at any time during such Calendar Year, Operating
Expenses shall be deemed for such Calendar Year to be in the amount reasonably
determined by Landlord to be equal to that amount of like expenses which
normally would be expected to be incurred had such occupancy been 95% throughout
such Calendar Year. If Landlord shall not be furnishing any particular work or
service (the cost of which, if furnished by Landlord would be included in
Operating Expenses) to a tenant who undertakes to itself perform or obtain such
work or service in lieu of the furnishing thereof by Landlord, Operating
Expenses shall be deemed for purposes of this Section 54 to be increased by an
amount equal to the additional Operating Expenses, as reasonably determined by
Landlord, which would have been incurred during such period if Landlord had at
its own expense furnished such work or service to such tenant.
27
<PAGE>
54.04 (a) Landlord may, from time to time, compute and furnish Tenant
with a bona fide estimate of the Operating Expenses for the current or ensuing
Calendar Year and Tenant's Share of Operating Expenses for such Year; provided,
however, that such estimate shall not constitute any representation or assurance
by landlord of the amount that the actual Operating Expenses for such year will
be. Thereafter, Tenant shall pay to Landlord, on the first day of each month,
together with payments of Rent, one-twelfth (1/12th) of Landlord's estimate of
Tenant's Share of Operating Expenses for that Calendar Year. With reasonable
promptness after the expiration of each Calendar Year, Landlord shall furnish
Tenant with a statement (hereinafter called Landlord's Expense Statement),
setting forth in reasonable detail the Operating Expenses for such Calendar Year
and Tenant's Share of Operating Expenses for such Calendar Year. If Tenant's
Share of Operating Expenses for such Calendar Year exceeds the amount previously
paid by Tenant on account of Landlord's estimate of such expenses, Tenant shall
pay to Landlord the full amount of such excess within fifteen (15) days after
receipt of landlord's Expense Statement. If the total amount paid by Tenant on
account of Landlord's estimate exceeds Tenant's Share of Operating Expenses such
excess shall be credited against the new installment of the rent due.
(b) Notwithstanding the foregoing, if Landlord is required to pay an
amount which it is entitled to collect from the tenants of the Building, more
frequently than required as of the Commencement Date or if Landlord is required
to prepay any such amount, or if adjustments to the normal rate for any
electric, gas or water utility bill or utility charge applicable during the
first year of the Term, Tenant shall pay to Landlord upon demand Tenant's
Proportionate Share of such amount calculated in accordance with this Lease.
54.05 If the Expiration Date fixed for this Lease shall occur on a date
other than the end of a Calendar Year, Tenant's Share of Operating Expenses for
such year shall be prorated according to the ratio that the number of days in
such Calendar Year during which the Term was in effect bears to 365; provided
however, Landlord may, pending the determination of Operating Expenses for such
year, Furnish Tenant with a statement of estimated Operating Expenses and
Tenant's Share thereof for such partial Calendar Year. Within fifteen (15) days
after receipt of such statement, Tenant shall remit to Landlord, as additional
rent, the amount of Tenant's Share of Operating Expenses as shown on Landlord's
statement. After the Operating Expenses for such Calendar Year have been
finally determined and Landlord's Expense Statement has been furnished to Tenant
pursuant to Section 54.04, if there shall have been an underpayment by Tenant of
Tenant's Share of Operating Expenses, Tenant shall remit the amount of such
underpayment to Landlord within fifteen (15) days after receipt of such
statement, and if there shall have been an overpayment, Landlord shall remit the
amount of such overpayment to Tenant within fifteen (15) days after the issuance
of such statement, provided that Tenant is not in default under this Lease. The
expiration or termination of this lease shall not terminate or impair Tenant's
obligation to pay Tenant's Share of Operating Expenses for the Calendar Year in
which the Term ends.
54.06 Any statement furnished to Tenant by Landlord tinder the
provisions of this Section 54 shall constitute a final determination as between
Landlord and Tenant as to the rent set forth therein due from Tenant for the
period represented thereby, unless Tenant, within 60 days after such statement
is furnished, shall give a notice to Landlord that it disputes the correctness
thereof, specifying in detail the basis for such assertion. Pending resolution
of such dispute, Tenant shall pay all disputed amounts in accordance with the
statement furnished by Landlord. Landlord agrees, upon prior written request,
during normal business hours to make available for Tenant's inspection, at
Landlord's offices, Landlord's books and records which are relevant to any items
in dispute, provided Tenant has paid all amounts billed to Tenant on account of
Tenant's Share of Operating Expenses.
54.07 Tenant and its permitted concessionaires, officers, employees,
agents, customers and invitees shall have the nonexclusive right, in common with
Landlord and all others to whom Landlord has or may hereafter grant rights, to
use the Common Areas as designated from time to
28
<PAGE>
time by Landlord, subject to such reasonable regulations as Landlord may from
time to time impose. Tenant agrees to abide by such regulations and to cause its
officers, Employees, agents, customers and invitees to conform thereto.
Landlord may at any time close temporarily any Common Areas to make repairs or
changes, to prevent the inquisition of public rights therein, and may do such
other acts in and to the Common Areas as, in its judgment, may be desirable to
improve the convenience thereof.
HAZARDOUS MATERIALS
- -------------------
55.01 Tenant shall not store highly flammable materials or goods,
explosives, perishable foodstuffs, contraband, live animals, materials or goods
which emit odors in or upon the Leased Premises. The Tenant covenants that it
shall not store, use or possess nor permit the storage, use or possession of any
Hazardous Substance (hereinafter defined) upon the Leased Premises. Hazardous
Substance for purposes of this Lease shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea-formaldehyde
foal insulation, polychlorinated biphenyls, petroleum and petroleum based
products, methane, hazardous materials, hazardous wastes, hazardous or toxic
substances or related materials, as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections
9601 et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
-- ---
Sections 1801 et seq.), Sections 6901 et seq.), the Toxic Substances Control
-- --- -- ---
Act, as amended (15 U.S.C. Sections 2601 et seq.), or any other similar law,
-- ---
rules, regulation or statute concerning the protection of the environment
(collectively "Environment Laws"). Tenant hereby covenants and agrees, at its
sole cost and expense, to indemnify, protect and defend and save harmless the
Landlord and any of its partners, employees and agents from and against any all
damages, losses, liabilities, obligations, penalties, claims, litigation,
demands, defenses, judgments, suits, actions, proceedings, costs, disbursements
and/or expenses (including, without limitation, attorneys' and experts' fees,
expenses and disbursements) of any kind or nature whatsoever which may at any
time impose upon, incurred by or asserted or awarded against the Landlord, its
partners, agents or employees relating to, resulting from or arising out of
Tenant's failure to comply with its obligations tinder the foregoing paragraph
or Tenant's violation of any Environmental Law with respect to its use of the
Leased Premises. Notwithstanding any provision contained in this Lease to the
contrary, the indemnification provisions set forth in this Section 55.01 shall
survive any expiration and/or termination of this Lease.
TELEPHONE AND TELECOMMUNICATIONS SERVICE
- ----------------------------------------
56.01 (a) Tenant acknowledges and agrees that all telephone and
telecommunications ("Telecommunications Services") desired by Tenant shall be
ordered and utilized at the sole expense of Tenant. Unless Landlord otherwise
requests or consents in writing, all equipment, apparatus and devices, including
without limitation wiring and cables, for the provisions of Telecommunications
Services (the "Telecommunications Equipment") shall be and remain solely in the
Leased Premises. Unless otherwise specifically agreed in writing, Landlord shall
have no responsibility for the maintenance of Tenant's Telecommunications
Equipment, nor for any wiring or other infrastructure to which Tenant's
Telecommunications Equipment may be connected. Tenant agrees that, to the extent
any Telecommunications Services are interrupted, curtailed or discontinued,
Landlord shall have no obligation or liability with respect thereto and it shall
be the sole obligation of Tenant, at its sole expense, to obtain substitute
service.
(b) Landlord shall have the right, upon Such notice as is practicable
in the case of emergencies, and otherwise upon reasonable prior notice to
Tenant, to interrupt or turn off telecommunications facilities in the event of
emergency or as necessary in connection with repairs to the Building or
installation of telecommunications equipment for other tenants of the Building.
(c) Any and all Telecommunications Equipment installed in the Leased
Premises, or elsewhere in the Building by or on behalf of Tenant, including
wiring and other facilities for the provision of Telecommunications Services,
shall be removed by Tenant upon the expiration or earlier termination of the
Term of this Lease, by Tenant at its sole expense or, at Landlord's election, by
Landlord at Tenant's sole expense, with the cost thereof to be paid as
Additional Rent under this Lease.
29
<PAGE>
(d) If the Telecommunications Equipment is not removed within thirty
(30) days of the termination or expiration of this Lease, the Telecommunications
Equipment shall conclusively be deemed to have been abandoned and may be
removed, appropriated, sold, stored, destroyed, otherwise disposed of, or
retained and used, by Landlord without notice to Tenant, without obligation to
account therefor, and without payment to Tenant or credit against any amount due
from Tenant to Landlord pursuant to this Lease. Tenant shall pay to Landlord
upon demand all costs of any such removal, disposition and storage of the
Telecommunications Equipment, as well as all costs to repair any damage to the
Building caused by such removal.
(e) In the event that Tenant wishes at any time to utilize the
services of a telephone or telecommunications provider whose equipment is not
then servicing the Building (a "New Provider"), no such New Provider shall be
permitted to install its lines or other equipment within the Building without
first securing the prior written approval of the Landlord, which approval may be
withheld in Landlord's sole and absolute discretion. Landlord's approval shall
not be deemed any kind of warranty or representation by Landlord, including,
without limitation, any warranty or representation as to the suitability,
competence or financial strength of the New Provider. Without limitation of
Landlord's right to withhold consent in its sole and absolute discretion,
Landlord may refuse to give its approval unless all of the following conditions
are satisfied: (i) Landlord shall incur no expense whatsoever with respect to
any aspect of the New Provider's provision of its services, including, without
limitation, the costs of installation, materials and services; (ii) prior to
commencement of any work in or about the Building by the New Provider, the New
provider shall supply Landlord with such written indemnities, insurance,
financial statements, and such other items as Landlord, in its sole and absolute
discretion, determines to be necessary to protect its financial interests and
the interests of the Building related to the proposed activities of the New
Provider; (iii) the New Provider agrees in writing to abide by such rules and
regulations, building and other codes, job site rules and such other
requirements as are determined by Landlord, in its sole and absolute discretion,
to be necessary to protect the interest of the Building, the tenants in the
Building and Landlord; (iv) Landlord determines, in its sole and absolute
discretion, that there is sufficient space in the Building for the placement of
all of the New Provider's equipment and materials; (v) Landlord receives from
the New Provider such compensation as is determined by the Landlord, in its sole
and absolute discretion, to compensate it for space used in the Building for the
storage and maintenance of the New Provider's equipment, for the fair market
value of the New Provider's access to the Building, and any costs which may be
expected to be incurred by Landlord; and (vi) all of the foregoing matters ire
documented in a written agreement between Landlord and the New Provider, the
form and content of which are satisfactory to Landlord in its sole and absolute
discretion.
(f) Notwithstanding any provision of the preceding subsection to the
contrary, the refusal of Landlord the grant its approval to any New Provider
shall not be deemed a default or breach by Landlord of its obligation under this
Lease, and in no event shall Tenant have the right to terminate this Lease or
claim entitlement to rent abatement for Landlord's refusal to grant Tenant's
request for approval of a New Provider. The provisions of this Section 56.01
may be enforced solely by Tenant and Landlord and are not for the benefit of any
other party. Specifically, but without limitation, no telephone or
telecommunications provider is intended to be, nor shall he deemed, a third
party beneficiary of this Lease.
(g) Tenant shall not utilize any wireless communications equipment
(other than usual and customary cellular telephones), including antenna and
satellite receiver dishes, within the Leased Premises or the Building, without
Landlord' prior written consent. Such consent shall be granted only in the sole
and absolute discretion of the Landlord, and shall be conditioned in such a
manner, in Landlord's sole and absolute discretion, so as to protect Landlord's
financial interests and the interests of the Building, and the other tenants
therein.
30
<PAGE>
TIME IS OF THE ESSENCE
- ----------------------
56.01 Time is of the essence hereof.
IN WITNESS WHEREOF, Landlord and Tenant, intending to be legally bound
hereby, have executed this Agreement of Lease as of the day and year first above
written.
LANDLORD:
DENVER PLACE ASSOCIATES
LIMITED PARTNERSHIP
By Amerimar Realty Management Co. -
Colorado
By Amerimar Realty Management -
Pennsylvania, its general partner,
By ARC-Management Company,
its general partner
By: /s/ David G. Marshall
---------------------------------------
David G. Marshall, President
Date:
----------------------------
TENANT:
COLORADO BUSINESS LEASING, INC.,
a Colorado corporation
By: /s/ Richard M. Hall, Jr.
--------------------------------------
Date: 3-6-96 Richard M. Hall, Jr., President
----------------------------
31
<PAGE>
ADDENDUM
THIS ADDENDUM, made as of the 23rd day of February, 1996, is between
Amerimar Realty Management Co. - Colorado, as agent for DENVER PLACE ASSOCIATES
LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and COLORADO
BUSINESS LEASING, INC., a Colorado corporation ("Tenant"). Landlord and Tenant
have executed simultaneously with this Addendum that certain Denver Place Office
Lease (the "Lease") pertaining to certain space in the building commonly known
as Denver Place and located at 999 Eighteenth Street, Denver, Colorado. In the
event of any conflict between the provisions of this Addendum and the provisions
of the other portions of the lease, the provisions of this Addendum shall
control. The capitalized terms used herein and not defined herein shall have
the same meanings used in the other portions of the Lease. Landlord and Tenant
hereby agree that the Lease is amended and supplemented as follows:
COMPLETION OF PREMISES
- ----------------------
58.01 Landlord shall, at its own cost and expense, in a good and
workmanlike manner, cause the Leased Premises to be improved and completed in
accordance with the plans and specifications attached as Exhibit A to be
---------
mutually agreed upon by Landlord and Tenant (such work being herein called
"Landlord's Work"). Landlord reserves the right, however: (i) to make
substitutions of material or components of equivalent grade and quality when and
if any specified material or component shall not be readily or reasonably
available, and (ii) to make changes necessitated by conditions met in the course
of construction, provided that Tenant's approval of any substantial change shall
first be obtained (which approval shall not be unreasonably withheld or delayed
so long as there shall be general conformity with the Final Layout Plans).
58.02 If Landlord shall, for any reason (including, without limitation,
failure to complete the work, if any, required to be done by Landlord under this
lease) fail to make available to Tenant possession of the Leased Premises on or
before the Commencement Date or any other date, Landlord shall not be subject to
any liability for such failure nor for any failure to timely complete any work.
Under such circumstances, Tenant's obligations to pay Base Rent and Tenant's
Share of Operating Expenses shall not commence until Landlord makes possession
available; and such failure to make available to Tenant possession of the Leased
Premises on or before the Commencement Date or any other date or to timely
complete any work, shall not in any other way affect the validity or continuance
of this Lease, nor the Term or the obligations of Tenant hereunder. Such
deferral of rent shall be Tenant's sole and exclusive right and remedy with
respect to any such failure. There shall be no deferral of rent, however, if
any such failure is caused in whole or part by any act or omission of Tenant,
its agents, servants, employees or contractors, which has the effect of
hindering or delaying Landlord's delivery of possession or the timely completion
of any work to be done by Landlord (hereinafter a "Tenant Delay") including,
without limitation, (a) any delay which is caused by changes in the work to be
performed by Landlord in readying the Leased Premises for Tenant's occupancy,
(b) any delay, not caused by Landlord, in furnishing materials or procuring
labor required to be furnished or procured for the completion of the Leased
Premises, or (c) any delay which is caused by any failure by Tenant, without
regard to any grace period applicable thereto, promptly to furnish to Landlord
any required information, approval or consent or caused by any good faith
reluctance on the part of Landlord to approve any information required to be
submitted by Tenant and approved by Landlord, or (d) any delay which is caused
by the performance of any work or activity in the Leased Premises by Tenant or
any of its employees, agents or contractors. Tenant also shall pay to Landlord,
within 10 days after receipt of demand made from time to time, a sum equal to
any additional cost to Landlord in completing the Leased Premises resulting from
any Tenant Delay.
<PAGE>
TENANT'S OPTION TO TERMINATE
- ----------------------------
59.01 Subject to the terms of this paragraph 59.01, Tenant shall have
the one time option to terminate this Lease ("Termination Option") at the end of
the thirty-sixth (36th) month of the Lease term and receipt by Landlord of the
Base Rent and additional rent payment for the 36th month of the term from Tenant
("Optional Expiration Date"). Such option may be exercised by Tenant only by
giving written notice of termination ("Termination Notice") to Landlord six (6)
months prior to the Optional Expiration Date, and provided that Tenant pay
Landlord a sum equal to three (3) months rent, plus (b) the product of the
number of months remaining in the Lease Term as of the Optional Expiration Date
divided by sixty (60) months multiplied by the sum of (i) the costs and expenses
incurred by Landlord to complete the Leased Premises for Tenant's occupancy,
including, but not limited to, the costs and expenses of completing all
Landlord's Work; (ii) all commissions and/or brokerage fees incurred by Landlord
in connection with the Lease; (iii) legal fees and expenses incurred by Landlord
in connection with the preparation of the Lease and any exhibits, addenda and
amendments thereto; (iv) the fees and costs incurred by Landlord in the
completion of architectural work and engineering for improvements to the Leased
Premises and mechanical systems serving Leased the Premises. Time is of the
essence with respect to such notice and if Tenant fails to give proper notice
Tenant shall be deemed to have waived its option to terminate this Lease
pursuant to this Paragraph 59.01. If Tenant timely gives proper notice, this
Lease shall expire on the Optional Expiration Date as if such date were the
expiration date originally specified in this lease. Notwithstanding any other
provision of this Paragraph 59.01, any Termination Notice given by Tenant shall,
at Landlord's option, not be effective if Tenant is in default under this Lease
at the time such notice is given or at any time thereafter through the Optional
Expiration Date and, at landlord's option, this Lease shall remain in full force
and effect for the full term specified above.
All of the terms and provisions of the Lease, as herein amended and
supplemented, are hereby ratified and confirmed, and shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be duly
executed as of the day and year first above written.
LANDLORD:
DENVER PLACE ASSOCIATES
LIMITED PARTNERSHIP, a Delaware
limited partnership
By: Amerimar Realty Management Co.
- Colorado,
By: Amerimar Realty Management -
Pennsylvania, it's general
partner
By: ARC - Management
Company, it's general partner
By: /s/ David G. Marshall
-----------------------------------
David G. Marshall, President
Date:
-------------------
TENANT:
COLORADO BUSINESS LEASING, INC.,
a Colorado corporation
By: /s/ Richard M. Hall, Jr.
------------------------------------
Richard M. Hall, Jr., President
Date: 3-6-96
---------------------
<PAGE>
EXHIBIT "B"
-----------
RULES AND REGULATIONS
Rules and Regulations, to Lease between DENVER PLACE ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited partnership, by Amerimar Realty Management Co. -
Colorado, as agent for Landlord ("Landlord") and COLORADO BUSINESS LEASING,
INC., a Colorado corporation ("Tenant") pertaining to certain space in Denver
Place, 999 18th Street, Denver, Colorado 80202.
1. The sidewalks, entries, passages, stairways shall not be obstructed by
the Tenant, or its agents, or used by them for any purpose other than ingress
and egress to and from their offices.
2. (a) Furniture, equipment and supplies shall be moved in or out of the
building only during such hours and in such manner as may be prescribed by the
Landlord.
(b) Landlord shall have the right to approve or disapprove the movers
or moving company employed by Tenant, and Tenant shall cause said movers to use
only the loading facilities and elevator designated by Landlord. In the event
Tenant's movers damage the elevator or any part of the building, Tenant shall
forthwith pay to Landlord the amount required to repair said damage.
(c) No safe or article, the weight of which may constitute a hazard or
danger to the building or its equipment shall be moved into the Leased Premises.
(d) Safes and other equipment, the weight of which is not excessive
shall be moved into, from or about building only during such hours and in such
manner as shall be prescribed by the Landlord, and the Landlord shall have the
right to designate the location of such articles in the space hereby demised.
3. No furniture shall be placed in front of the building or in any lobby
or corridor, without the prior written consent of Landlord. Landlord shall have
the right to remove all non-permitted signs and furniture, without notice to
Tenant, and at the expense of Tenant.
4. Restrooms and other water fixtures shall not be used for any purpose
other than that which the same are intended and any damage resulting to the same
from misuse on the part of the Tenant, its agents or employees shall be paid for
by the Tenant, no person shall waste water by tying back or wedging the faucets,
or in any other manner.
5. No animals shall be allowed in the offices, halls, corridors in the
building.
6. Roller skates, bicycles or other vehicles shall not be permitted in
the offices, halls, common areas or corridors in the building. All vehicles
shall use designated parking areas.
7. No person shall disturb the occupants of this or adjoining buildings
by the use of any television, radio or musical instrument or by the making of
loud or disruptive noises.
8. No additional lock or locks shall be placed by the Tenant on any door
in the building unless written consent of the Landlord shall first be obtained.
A reasonable number of keys to the Leased Premises and to the restrooms will be
furnished by the Landlord, and neither the Tenant, its agents or employees,
shall have any duplicate key made. At the termination of this tenancy, the
Tenant shall promptly return to the Landlord all keys to offices, restrooms or
vaults.
9. No window shades, blinds, screens, draperies or other window coverings
will be attached or detached by Tenant without Landlord's prior written consent.
Tenant agrees to abide by Landlord's rules with respect to maintaining uniform
curtains, draperies and/or linings at all windows and hallways.
<PAGE>
10. The use of oil, gas or inflammable liquids for heating, lighting, or
any other purpose is expressly prohibited. Explosives or other articles deemed
hazardous shall not be brought into the building.
11. If any Tenant desires telegraphic, telephonic, computer or other
electric connections, Landlord, or its agents, will direct the electricians as
to where and how the wires may be introduced, and without such directions, no
boring or cutting for wires will be permitted. Any such installation and
connection shall be made at Tenant's expense, and, at Landlord's option, shall
be removed at Tenant's expense at the expiration or termination of its Lease.
12. The Tenant shall not mark upon, paint signs upon, cut, drill into,
drive nails or screws into, or in any way deface the walls, ceiling partitions
or floors of the Leased Premises or of the building, and any defacement, damage
or injury caused by the Tenant, its agents or employees, shall be paid for by
the Tenant.
13. The Tenant shall not unduly obstruct such pipes, conduits, and ducts
in the Leased Premises so as to prevent reasonable access thereto.
14. Tenant agrees to use chair pads to be furnished by Tenant under all
rolling and ordinary desk chairs in the carpeted areas throughout the term of
this Lease.
15. Electric floor space heaters, humidifiers or A/C fans shall not be
used.
16. Canvassing, soliciting and peddling in or about the building are
prohibited. The Tenant will advise Landlord of any person canvassing,
soliciting or peddling in the building.
17. Except for the following smoking areas specifically designated by
Landlord, the outdoor Plaza level of 1099 - 18th Street, the outdoor areas at
the corner of 18th and Champa and 19th and Curtis and the Smoke Haus in the
mall, all common areas of the building, including all sidewalks, entries,
passages, stairways, elevators, restrooms, lobbies and hallways, shall be non-
smoking areas. Tenant shall be responsible to prevent its employees, agents,
visitors, customers and guests from smoking in such common areas.
18. During the normal office hours of 6:00 a.m. to 6:00 p.m., Monday
through Friday, Tenant and its employees and agents shall observe the building
dress code, which requires a neat and clean appearance and prohibits the wearing
of cutoffs and ragged, torn, ripped, rent or holey apparel.
19. The Landlord reserves the right to modify and make such other and
further reasonable rules and regulations as in its judgment may, from time to
time, be needful and desirable for the safety, security, care and cleanliness of
the Leased Premises and preservation of good order and therein.
<PAGE>
EXHIBIT "C"
-----------
LEASE TERM AGREEMENT
THIS AGREEMENT, made as of the 23rd day of February, 1996, between Amerimar
Realty Management Co.-Colorado, as agent for DENVER PLACE ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited partnership (hereinafter referred to as
"Landlord") and COLORADO BUSINESS LEASING, INC., a Colorado corporation,
(hereinafter referred to is "Tenant").
WITNESSETH
WHEREAS, by Lease (hereinafter called "Lease") made the 23rd day of
February, 1996, Landlord leased unto Tenant certain premises known as Suite
Number 2530, located it 999 Eighteenth Street, Denver, Colorado, for a term of
FIVE (5) years, ONE and ONE-HALF (11/2) months and ZERO (0) days commencing on
June 16, 1996, unless sooner terminated or extended as provided therein, and
WHEREAS, Landlord and Tenant now desire to set forth the correct
Commencement Date of the term and to adjust the Expiration Date of the Term to
provide for a full term of the Lease of _______________ years, _______________
months and ________________ days.
NOW, THEREFORE, Landlord and Tenant do hereby agree as follows:
1. The Term of the Lease commenced on ____________________________, 19____,
and shall continue until _____________________________, __________, unless
sooner terminated or extended as provided therein.
2. Except is hereby amended, the Lease shall continue in full force and
effect.
3. This Agreement shall be binding on the parties hereto, their heirs,
executors, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
LANDLORD:
DENVER PLACE ASSOCIATES
LIMITED PARTNERSHIP, a Delaware
limited partnership
By: Amerimar Realty Management Co.-
Colorado,
By: Amerimar Realty Management -
Pennsylvania, its general
partner,
By: ARC-Management
Company, its general
partner
By:
-----------------------------------
David G. Marshall, President
Date:
------------------
TENANT:
COLORADO BUSINESS LEASING, INC.,
a Colorado corporation
By: /s/ Richard M. Hall, Jr.
-------------------------
Richard M. Hall, Jr., President
Date: 3-6-96
-----------------
<PAGE>
EXHIBIT "D"
-----------
PARKING AGREEMENT
DENVER PLACE ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited
partnership, by Amerimar Realty Management Co. - Colorado, as agent for
Landlord, and Colorado Business Leasing, Inc., a Colorado corporation, as
Tenant, have executed simultaneously with this Agreement a Lease (hereinafter
called "Lease") pertaining to certain space at 999 Eighteenth Street to be
occupied by Tenant. In consideration of the mutual covenants herein contained,
Landlord and Tenant further agree as follows:
The Building in which the Premises are located contains a parking garage
for the benefit of Tenants and the general public (hereinafter called "Parking
Garage"). Landlord does not operate or manage the Parking Garage, but maintains
a management agreement with an independent contractor (hereinafter called
"Operator") for the management and operation of the Parking Garage. In order to
rent parking spaces in the Parking Garage, Tenant must contract separately with
the Operator for such rentals. Landlord shall reserve for Tenant and Tenant
shall have a non-assignable option to rent from Operator four (4) parking spaces
located in the Denver Place complex free for the period march 15, 1996 through
August 14, 1996 and at prevailing market rates charged by the Parking Garage
thereafter. The parking spaces shall be reserved for Tenant to rent for a
period expiring April 30, 1996. Tenant must exercise its option within this
period by renting the parking spaces directly from the Operator.
The terms and conditions of Tenant's rental shall be governed and fixed
solely by the rental agreement between Tenant and Operator, however, Tenant's
failure to comply with any term of any such rental agreement shall constitute a
default under the Lease. Landlord's reservation of parking spaces shall not
constitute any assumption of and Tenant hereby releases Landlord from any and
all liability with respect to such rentals, and any and all damage, loss or
injury with respect to such rentals shall be at the sole risk of Tenant unless
otherwise provided by Operator under the rental agreement.
The provisions of this Agreement supplement but are subject to all
provisions of the Lease. Capitalized terms not otherwise defined in this
Agreement have the same meaning as the same terms have in the Lease.
LANDLORD:
DENVER PLACE ASSOCIATES
LIMITED PARTNERSHIP, a Delaware
limited partnership
By: Amerimar Realty Management Co.-
Colorado,
By: Amerimar Realty Management -
Pennsylvania, its general
partner,
By: ARC-Management
Company, its general
partner
By: /s/ David G. Marshall
--------------------------------
David G. Marshall, President
Date:
---------------------
TENANT:
COLORADO BUSINESS LEASING, INC.,
a Colorado corporation
By: /s/ Richard M. Hall, Jr.
--------------------------------
Richard M. Hall, Jr., President
Date: 3-6-96
--------------------
<PAGE>
OFFICE LEASE GUARANTY
---------------------
LEASE:
Lease Date: February 23, 1996
Guaranty Date: February 23, 1996
TENANT:
Name: Colorado Business Leasing, Inc.
Address: 999 18th Street
Denver, Colorado 80202
Suite Number: 2500
COMMENCEMENT DATE: June 15, 1996
LEASE PERIOD: Five (5) years plus one and one-half (1 1/2) months
GUARANTOR:
Name: The Women's Bank, N.A.
Address: Denver, Colorado
THIS OFFICE LEASE GUARANTY is attached to and made a part of the Lease
referenced above. To induce the Landlord to enter into, to waive a default
under or to extend or renew the term of the Lease, the Guarantor agrees as
follows:
(1) The Guarantor hereby covenants and agrees with the Landlord:
(a) to make due and punctual payment of all rent up to a total of
$36,000.00, moneys and charges payable under the Lease during the
Term thereof and all renewals thereof,
(b) to effect prompt and complete performance of all and each of the
terms, covenants, conditions and provisions in the Lease required
on the part of the Tenant to be kept, observed and performed
during the period of the Term and any renewals thereof, and
(c) to indemnify and save harmless the Landlord from any loss,
attorney's fees, costs or damages arising out of any failure to
pay the aforesaid rent, moneys and charges or the failure to
perform any of the terms, covenants, conditions and provisions of
the Lease.
(2) In the event of a default under the lease, the Guarantor waives any
fight to require the Landlord to:
(a) proceed against the Tenant or pursue any rights or remedies with
respect to the Lease;
(b) proceed against or exhaust any security of the Tenant held by the
Landlord; or
(c) pursue any other remedy whatsoever in the Landlord's power.
<PAGE>
The Landlord shall have the right to enforce this indemnity regardless of
the acceptance of additional security from the Tenant and regardless of the
release or discharge of the Tenant by the Landlord or by others, or by operation
of any law or the amendment or modification of any term of the Lease, to which
the Guarantor gives the Tenant the express authority to consent on behalf of the
Guarantor.
(3) The Guarantor hereby expressly waives notice of the acceptance of this
indemnity and all notice of non-performance, non-payment or non-observance on
the part of the Tenant of the terms, covenants or conditions and provisions of
the Lease.
(4) Without limiting the generality of the foregoing, the liability of the
Guarantor under this Guaranty shall not be deemed to have been waived, released,
discharged, impaired or affected by reason of the release or discharge of the
Tenant in any receivership, bankruptcy, winding-up or other creditors'
proceedings or the rejection, disaffirmance or disclaimer of the Lease by any
part, and shall continue with respect to the periods prior thereto and
thereafter, for and with respect to the Term originally contemplated and
expressed in the Lease. The liability of the Guarantor shall not be affected by
any repossession of the Leased Premises by the Landlord, provided, however, that
the net payments received by the Landlord after deducting all costs and expenses
of repossession and/or reletting the same, shall be credited from time to time
by the Landlord to the account of Guarantor and the Guarantor shall pay any
balance owing to the Landlord from time to time immediately upon ascertainment.
(5) This Guaranty shall be one of payment and performance and not of
collection. Notwithstanding the use of the word "indemnity" or "guarantee" each
guarantor or indemnitor shall be jointly and severally liable under this and any
other guaranty of the Lease.
(6) The Guarantor shall, without limiting the generality of the foregoing,
be bound by this Guaranty in the same manner as though the Guarantor were the
Tenant named in the Lease.
(7) All of the terms, agreements and conditions of this Guaranty shall
extend to and be binding upon the Guarantor, his heirs, executors,
administrators, successors and assigns, and shall insure to the benefit of and
may be enforced by the Landlord, its successors and assigns, and the holder of
any mortgage to which the Lease may be subject.
(8) If Landlord brings any action to enforce this Guaranty, then the
Guarantor shall pay Landlord's reasonable attorneys' fees, and all costs
incurred therein, if Landlord prevails in such action.
(9) This Guaranty is delivered in and to be performed in the City and
County of Denver, State of Colorado, and shall be governed in all respects by
the laws of the State of Colorado. Should any action at law or in equity be
brought by Landlord to secure, enforce or protect its rights under this
Guaranty, such action may be brought by landlord in either the United States
District Court for the District of Colorado or in the appropriate Colorado State
Court in the City and County of Denver, State of Colorado. The Guarantor hereby
consents to the venue and personal jurisdiction of those courts regarding any
matter arising out of this Guaranty.
(10) This Guaranty may not be changed, modified, discharged or terminated
orally or in any manner other than by an agreement in writing signed by the
Guarantors and Landlord.
(11) The defined terms used in this Guaranty shall have the same meaning as
set forth in the Lease.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed as of the Guaranty Date first above written.
LANDLORD:
DENVER PLACE ASSOCIATES
LIMITED PARTNERSHIP
By: Amerimar Realty Management Co.-
Colorado,
By: Amerimar Realty Management-
Pennsylvania, its general
partner,
By: ARC-Management
Company, its general
partner
By: /s/ David G. Marshall
--------------------------------------
David G. Marshall, President
Date:
---------------------
GUARANTOR:
THE WOMEN'S BANK, N.A.
By: /s/ Virginia K. Berkeley
-------------------------------------
Pres. & CEO
Date: 2-23-96
---------------------
<PAGE>
FIRST AMENDMENT TO LEASE
------------------------
THIS FIRST AMENDMENT TO LEASE ("Second Amendment") is made and entered into
this 12th day of April, 1996 by and between DENVER PLACE ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited partnership (hereinafter called "Landlord") and
COLORADO BUSINESS LEASING, INC., a Colorado corporation, (hereinafter called
"Tenant").
R E C I T A L S
---------------
A. Landlord and Tenant entered into that certain Denver Place Office
Lease dated as of February 23, 1996 (the "Original Lease"), pursuant to which
Tenant leased approximately 2,650 square feet of rentable area on the 25th floor
("Original Leased Premises"), known as Suite 2500, of the office building known
as Denver Place South Tower, located at 999 18th Street, Denver, Colorado (the
"Building").
B. Landlord and Tenant have agreed to lease to Tenant 2,650 rentable
square feet of area located on the 24th floor of the Building.
C. Landlord and Tenant are the sole parties in interest under the Lease.
D. Landlord and Tenant now desire to amend the Lease in the manner and
form set forth herein.
AGREEMENT
---------
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Landlord and Tenant hereby amend the Lease as follows:
1. Substitution of Leased Premises. The existing Leased Premises known
as Suite 2500 shall be substituted with that certain office space located on the
24th floor of the South Tower of the Building, known as Suite 2400, which is
comprised of 2,650 square feet of rentable area on the floor plan attached as
Exhibit A-1, and hereby made a part here of (sometimes herein referred to as the
- -----------
"New Leased Premises"). Tenant shall move into the New Leased Premises on the
later of May 18, 1996 or a date as soon thereafter as commercially practicable
(the "New Lease Date"). The New Leased Premises shall be substituted as the
Leased Premises under the Lease as of the New Lease Date, and as of such date
the New Leased Premises shall be deemed to be the Leased Premises for all
purposes of this Lease and all references in the Lease to the Leased Premises
shall be deemed to refer to the New Leased Premises and the existing Leased
Premises known as Suite 2500 shall no longer constitute the Leased Premises.
2. Base Rent. The "Base Rent" section of the Office Lease Facing page is
amended in its entirety to reflect these rent adjustments, as follows:
BASE RENT:
07/13/96 - 08/31/2001: 39,750.00 per annum/$3,312.50 per month
Base Operating Cost including Real Estate Taxes: $6.20
Operating Expenses (as defined in the Lease) 2,650 = .0035
---------
754,288
<PAGE>
3. Improvements to the New Leased Premises.
(a) Landlord shall, at its own cost and expense, cause the New Leased
Premises to be improved and completed in accordance with the final layout
plans and specifications prepared by Waring McLaughlin, Inc., attached as
Exhibit A-1 ("New Leased Premises Plans") (such work being herein called
-----------
"Landlord's New Leased Premises Work"). Landlord reserves the right,
however, (i) to make substitutions of material or components of equivalent
grade and quality when and if any specified material or component shall not
be readily or reasonably available, and (ii) to make changes necessitated
by conditions met in the course of construction, provided that Tenant's
approval of any substantial change shall first be obtained (which approval
shall not be unreasonably withheld or delayed so long as there shall be
general conformity with the Final Layout Plans).
(b) If Landlord shall, for any reason (including, without limitation,
failure to complete the work, if any, required to be done by Landlord under
this lease) fail to make available to Tenant possession of the New Leased
Premises on or before May 18, 1996, or any other date, Landlord shall not
be subject to any liability for such failure nor for any failure to timely
complete any work. Under such circumstances, Tenant's obligations to pay
Base Rent and Tenant's Share of Operating Expenses with respect to the New
Leased Premises shall not commence until sixty (60) days after Landlord
makes possession available; and such failure to make available to Tenant
possession of the New Leased Premises on May 18, 1996 or any other date or
to timely complete any work, shall not in any other way affect the validity
or continuance of this First Amendment, nor the Term or the obligations of
Tenant hereunder. Such deferral of rent shall be Tenant's sole and
exclusive right and remedy with respect to any such failure. There shall
be no deferral of rent, however, if any such failure is caused in whole or
part by any act or omission of Tenant, its agents, servants, employees or
contractors, which has the effect of hindering or delaying Landlord's
delivery of possession or the timely completion of any work to be done by
Landlord (hereinafter a "Tenant Delay") including, without limitation, (a)
any delay which is caused by changes in the work to be performed by
Landlord in readying the New Leased Premises for Tenant's occupancy, (b)
any delay, not caused by Landlord, in furnishing materials or procuring
labor required to be furnished or procured for the completion of the New
Leased Premises, or (c) any delay which is caused by any failure by Tenant,
without regard to any grace period applicable thereto, promptly to furnish
to Landlord any required information, approval or consent or caused by any
good faith reluctance on the part of Landlord to approve any information
required to be submitted by Tenant and approved by Landlord, or (d) any
delay which is caused by the performance of any work or activity in the New
Leased Premises by Tenant or any of its employees, agents or contractors.
Tenant also shall pay to Landlord, within 10 days after receipt of demand
made from time to time, a sum equal to any additional cost to Landlord in
completing the New Leased Premises resulting from any Tenant Delay.
4. Stationery Expenses. Landlord shall reimburse to the Tenant within
fourteen (14) days of presentation of original invoices the actual and
reasonable out-of-pocket expenses ("Stationery Expenses") incurred as a result
of Tenant's anticipated move to the 25th floor of the Building. Such Stationery
Expenses shall be in an amount not to exceed $4,369.25 as shown on the attached
Schedule A.
- ----------
<PAGE>
5. Binding Effect. This Second Amendment becomes effective only upon the
execution by Landlord and Tenant.
6. Conflict. If there is any conflict between the terms and provisions
of this Second Amendment and the terms and provisions of the Lease, the terms
and provisions of this Second Amendment shall govern. Except as herein
specifically set forth, all of the provisions of the Lease shall remain in full
force and effect and be binding upon the parties hereto.
7. Definitions. All capitalized terms used herein, but not defined
herein, shall have the same meanings given to such terms in the Lease unless
otherwise indicated.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Second
Amendment to Lease as of the day and year first above written.
LANDLORD:
DENVER PLACE ASSOCIATES
LIMITED PARTNERSHIP, a Delaware
limited partnership
By: Amerimar Realty Management Co.-
Colorado,
By: Amerimar Realty Management -
Pennsylvania, its general
partner,
By: ARC-Management
Company, its general
partner
By:
--------------------------------
David G. Marshall, President
Date:
----------------------
TENANT:
COLORADO BUSINESS LEASING, INC.,
a Colorado corporation
By: /s/ Richard M. Hall, Jr.
------------------------------------
Richard M. Hall, Jr., President
Date: 4-25-96
---------------------
<PAGE>
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE ("First Amendment") is made and entered into
this 29th day of September, 1997, by and between DENVER PLACE ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited partnership (hereinafter called "Landlord") and
COLORADO BUSINESS LEASING, INC., a Colorado corporation, (hereinafter called
"Tenant").
RECITALS
A. Landlord and Tenant entered into that certain Denver Place Office
Lease dated February 23, 1996 (the "Original Lease"), pursuant to which Tenant
leased approximately 2,650 square feet of rentable area on the 25th floor, known
as Suite 2500, of the office building known as Denver Place South Tower, located
at 999 18th Street, Denver, Colorado (the "Building").
B. The Original Lease was amended by First Amendment to Lease dated April
12, 1996 ("First Amendment") pursuant to which the Leased Premises known as
Suite 2500 were substituted with space on the 24th floor of the Building known
as Suite 2400. (The Original Lease and First Amendment are sometimes
hereinafter collectively referred to as the "Lease").
C. Tenant has requested and Landlord has agreed to lease to Tenant an
additional 361 rentable square feet of area on the 24th floor of the Building.
D. Landlord and Tenant are the sole parties in interest under the Lease.
E. Landlord and Tenant now desire to amend the Lease in the manner and
form set forth herein.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Landlord and Tenant hereby amend the Lease as follows:
1. First Added Premises. Effective November 1, 1997, or the date upon
which the Landlord notifies the Tenant that the expansion space (defined below)
is ready for occupancy, whichever last occurs, that certain space on the 24th
floor of the South Tower of the Building, containing approximately 361 square
feet of rentable area and designated as the first added premises (the "First
Added Premises"), as shown on the floor plan attached as Exhibit A-1, shall be
-----------
added to the Leased Premises for the balance of the Term, upon and subject to
all of the terms, covenants and conditions of the Lease, except as outlined in
this Amendment.
2. Base Rent. The "Base Rent" section of the Office Lease Facing page is
amended in its entirety these rent adjustments, as follows:
BASE RENT:
07/13/96 - 11/01/97: $39,750.00 annually/$3,312.50 monthly
11/01/97 - 08/31/01: $39,750.00 annually/$3,312.50 monthly (on 2,650
r.s.f.)
$5,956.56 annually/$496.38 monthly (on 361 r.s.f.)
<PAGE>
Base Operating Cost including Real Estate Taxes: $6.20
Operating Expenses (as defined in the Lease) 3,011 = .00399
----------
754,288
3. Improvements of Added Leased Premises.
(a) Landlord shall, at its own cost and expense, cause the First
Added Premises to be improved and completed in accordance with the
final layout plans and specifications ("First Added Premises Plans")
attached to this Second Amendment as Exhibit A-1 (such work being
-----------
herein called "Landlord's First Added Premises Work"). Landlord
reserves the right, however, (i) to make substitutions of material or
components of equivalent grade and quality when and if any specified
material or component shall not be readily or reasonably available,
and (ii) to make changes necessitated by conditions met in the course
of construction, provided that Tenant's approval of any substantial
change shall first be obtained (which approval shall not be
unreasonably withheld or delayed so long as there shall be general
conformity with the Final Layout Plans).
(b) If Landlord shall, for any reason (including, without
limitation, failure to complete the work, if any, required to be done
by Landlord under this lease) fail to make available to Tenant
possession of the First Added Premises on or before November 1, 1997,
or any other date, Landlord shall not be subject to any liability for
such failure nor for any failure to timely complete any work. Under
such circumstances, Tenant's obligations to pay Base Rent and Tenant's
Share of Operating Expenses with respect to the First Added Premises
shall not commence until Landlord makes possession available; and such
failure to make available to Tenant possession of the First Added
Premises on November 1, 1997 or any other date or to timely complete
any work, shall not in any other way affect the validity or
continuance of this Second Amendment, nor the Term or the obligations
of Tenant hereunder. Such deferral of rent shall be Tenant's sole and
exclusive right and remedy with respect to any such failure. There
shall be no deferral of rent, however, if any such failure is caused
in whole or part by any act or omission of Tenant, its agents,
servants, employees or contractors, which has the effect of hindering
or delaying Landlord's delivery of possession or the timely completion
of any work to be done by Landlord (hereinafter a "Tenant Delay")
including, without limitation, (a) any delay which is caused by
changes in the work to be performed by Landlord in readying the First
Added Premises for Tenant's occupancy, (b) any delay, not caused by
Landlord, in furnishing materials or procuring labor required to be
furnished or procured for the completion of the Added Leased Premises,
or (c) any delay which is caused by any failure by Tenant, without
regard to any grace period applicable thereto, promptly to furnish to
Landlord any required information, approval or consent or caused by
any good faith reluctance on the part of Landlord to approve any
information required to be submitted by Tenant and approved by
Landlord, or (d) any delay which is caused by the performance of any
work or activity in the First Added Premises by Tenant or any of its
employees, agents or contractors. Tenant also shall pay to Landlord,
within 10 days after receipt of demand made from time to time, a sum
equal to any additional cost to Landlord in completing the First Added
Premises resulting from any Tenant Delay.
2
<PAGE>
4. Binding Effect. This Second Amendment becomes effective only upon the
execution by Landlord and Tenant.
5. Conflict. If there is any conflict between the terms and provisions
of this Second Amendment and the terms and provisions of the Lease, the terms
and provisions of this Second Amendment shall govern. Except as herein
specifically set forth, all of the provisions of the Lease shall remain in full
force and effect and be binding upon the parties hereto.
6. Definitions. All capitalized terms used herein, but not defined
herein, shall have the same meanings given to such terms in the Lease unless
otherwise indicated.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Second
Amendment to Lease as of the day and year first above written.
LANDLORD:
DENVER PLACE ASSOCIATES
LIMITED PARTNERSHIP, a Delaware
limited partnership
By: Amerimar Realty Management Co.-
Colorado,
By: Amerimar Realty Management -
Pennsylvania, its general
partner,
By: ARC-Management
Company, its general
partner
By: /s/ David G. Marshall
--------------------------------------
David G. Marshall, President
Date:
--------------------
TENANT:
COLORADO BUSINESS LEASING, INC.,
a Colorado corporation
By: /s/ Richard M. Hall, Jr.
--------------------------------------
Richard M. Hall, Jr., President
Date: 10/14/97
---------------------
3
<PAGE>
EXHIBIT "C"
-----------
LEASE TERM AGREEMENT
THIS AGREEMENT, made as of the 18th day of May, 1996, between Amerimar
Realty Management Co.-Colorado, as agent for DENVER PLACE ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited partnership (hereinafter referred to as
"Landlord") and COLORADO BUSINESS LEASING, INC., a Colorado corporation,
(hereinafter referred to as "Tenant").
WITNESSETH
WHEREAS, by Lease (hereinafter called "Lease") made the 23rd day of
February, 1996, Landlord leased unto Tenant certain premises known as Suite
Number 2400, located at 999 Eighteenth Street, Denver, Colorado, for a term of
FIVE (5) years, ONE and ONE-HALF (11/2) months and ZERO (0) days commencing on
June 16, 1996, unless sooner terminated or extended as provided therein, and
WHEREAS, Landlord and Tenant now desire to set forth the correct
Commencement Date of the term and to adjust the Expiration Date of the Term to
provide for a full term of the Lease of FIVE years, ONE AND ONE-HALF months and
---- ----------------
ZERO days.
- ----
NOW, THEREFORE, Landlord and Tenant do hereby agree as follows:
1. The Term of the Lease commenced on July 18, 1996, and shall continue
--------------
until August 31, 2001, unless sooner terminated or extended as provided
---------------
therein.
2. Except as hereby amended, the Lease shall continue in full force and
effect.
3. This Agreement shall be binding on the parties hereto, their heirs,
executors, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
LANDLORD:
DENVER PLACE ASSOCIATES
LIMITED PARTNERSHIP, a Delaware
limited partnership
By: Amerimar Realty Management Co.-
Colorado,
By: Amerimar Realty Management -
Pennsylvania, its general
partner,
By: ARC-Management
Company, its general
partner
By: /s/ David G. Marshall
---------------------------------------
David G. Marshall, President
Date:
----------------------
TENANT:
COLORADO BUSINESS LEASING, INC.,
a Colorado corporation
By: /s/ Richard M. Hall, Jr.
---------------------------------------
Richard M. Hall, Jr., President
Date: 9-29-97
---------------------
<PAGE>
Exhibit 21.1
Subsidiaries of the Registrant
The following is a list of all of the subsidiaries, including their
respective jurisdictions of organization, of Colorado Business Bankshares, Inc.
(the "Registrant"):
1. Colorado Business Bank, N.A., a national banking association organized
under the statutes of the United States of America; and
2. Colorado Business Leasing, Inc., a Colorado corporation.
The respective names under which the foregoing subsidiaries do business
are:
1. Colorado Business Bank, N.A.; and
2. Colorado Business Leasing, Inc.
There are no other subsidiaries of the Registrant, and there are no other
names under which either of the subsidiaries do business.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1997 JAN-01-1996 JAN-01-1995
<PERIOD-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<CASH> 15,075,000 10,672,000 0
<INT-BEARING-DEPOSITS> 151,989,000 106,569,000 0
<FED-FUNDS-SOLD> 12,700,000 0 0
<TRADING-ASSETS> 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 41,630,000 29,457,000 0
<INVESTMENTS-CARRYING> 14,931,000 26,895,000 0
<INVESTMENTS-MARKET> 15,189,000 27,142,000 0
<LOANS> 166,339,000 112,408,000 0
<ALLOWANCE> 2,248,000 1,660,000 0
<TOTAL-ASSETS> 264,059,000 190,645,000 0
<DEPOSITS> 221,058,000 155,310,000 0
<SHORT-TERM> 13,024,000 9,648,000 0
<LIABILITIES-OTHER> 1,792,000 1,098,000 0
<LONG-TERM> 10,760,000 14,400,000 0
0 0 0
1,500,000 0 0
<COMMON> 49,000 38,000 0
<OTHER-SE> 15,876,000 10,151,000 0
<TOTAL-LIABILITIES-AND-EQUITY> 264,059,000 190,645,000 0
<INTEREST-LOAN> 14,171,000 10,117,000 8,217,000
<INTEREST-INVEST> 3,976,000 3,594,000 3,014,000
<INTEREST-OTHER> 0 0 0
<INTEREST-TOTAL> 18,147,000 13,711,000 11,231,000
<INTEREST-DEPOSIT> 5,253,000 3,995,000 3,357,000
<INTEREST-EXPENSE> 7,016,000 5,323,000 4,400,000
<INTEREST-INCOME-NET> 11,131,000 8,388,000 6,831,000
<LOAN-LOSSES> 949,000 493,000 242,000
<SECURITIES-GAINS> 82,000 0 20,000
<EXPENSE-OTHER> 10,387,000 7,827,000 6,632,000
<INCOME-PRETAX> 3,098,000 1,862,000 1,148,000
<INCOME-PRE-EXTRAORDINARY> 1,853,000 1,100,000 716,000
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 1,853,000 1,100,000 716,000
<EPS-PRIMARY> .37 .29 .19
<EPS-DILUTED> .36 .29 .19
<YIELD-ACTUAL> 5.5 5.5 5.4
<LOANS-NON> 470,000 234,000 0
<LOANS-PAST> 0 0 0
<LOANS-TROUBLED> 341,000 348,000 616,000
<LOANS-PROBLEM> 2,511,000 711,000 867,000
<ALLOWANCE-OPEN> 1,660,000 1,392,000 1,181,000
<CHARGE-OFFS> 394,000 328,000 45,000
<RECOVERIES> 33,000 103,000 14,000
<ALLOWANCE-CLOSE> 2,248,000 1,660,000 1,392,000
<ALLOWANCE-DOMESTIC> 2,248,000 1,660,000 1,392,000
<ALLOWANCE-FOREIGN> 0 0 0
<ALLOWANCE-UNALLOCATED> 750,000 673,000 561,000
</TABLE>
