<PAGE>
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1999.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
---------------------------------
Commission file number 000-24445
---------------------------------
COLORADO BUSINESS BANKSHARES, INC.
(Exact name of small business issuer as specified in its charter)
COLORADO 84-0826324
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
821 l7th Street
Denver, CO 80202
(Address of principal executive offices) (Zip Code)
(303) 293-2265
(Issuer's telephone number, including area code)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the issuer was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
There were 6,673,481 shares of the issuer's Common Stock, $0.01 par value per
share, outstanding as of November 12, 1999.
Transitional Small Business Disclosure Format
Yes No X
----- -----
================================================================================
<PAGE>
COLORADO BUSINESS BANKSHARES, INC.
PART I. FINANCIAL INFORMATION
Page
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis or Plan of
Operation 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings None
Item 2. Changes in Securities and Use of Proceeds None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a Vote of Security Holders None
Item 5. Other information None
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
<PAGE>
PART I - FINANCIAL INFORMATION
COLORADO BUSINESS BANKSHARES, INC.
Consolidated Condensed Balance Sheets
September 30, 1999 (unaudited) and December 31, 1998
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---------------- ---------------
(unaudited)
ASSETS
<S> <C> <C>
Cash and due from banks $ 25,102,000 $ 20,058,000
Federal funds sold - -
---------------- ---------------
Total cash and cash equivalents 25,102,000 20,058,000
---------------- ---------------
Investment securities available for sale (cost of $94,055,000 (unaudited) and
$95,994,000, respectively) 92,791,000 96,463,000
Investment securities held to maturity (fair value of $7,816,000 (unaudited) and
$9,481,000, respectively) 7,841,000 9,370,000
Other investments 2,749,000 2,104,000
---------------- ---------------
Total investments 103,381,000 107,937,000
---------------- ---------------
Loans and leases, net 303,423,000 223,279,000
Excess of cost over fair value of net assets acquired, net 4,353,000 4,682,000
Investment in operating leases 4,349,000 4,180,000
Premises and equipment, net 3,762,000 2,884,000
Accrued interest receivable 2,033,000 1,597,000
Deferred income taxes 1,733,000 934,000
Other 1,187,000 999,000
---------------- ---------------
TOTAL ASSETS $ 449,323,000 $ 366,550,000
================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $ 107,060,000 $ 95,169,000
NOW and money market 124,525,000 101,455,000
Savings 6,488,000 6,931,000
Certificates of deposit 94,860,000 69,473,000
---------------- ---------------
Total deposits 332,933,000 273,028,000
Federal funds purchased 8,800,000 3,500,000
Securities sold under agreements to repurchase 34,373,000 24,956,000
Other liabilities 1,291,000 1,774,000
Advances from the Federal Home Loan Bank 32,050,000 26,120,000
Note payable 556,000 -
---------------- ---------------
Total liabilities 410,003,000 329,378,000
Shareholders' Equity:
Common, $.01 par value; 25,000,000 shares authorized; 6,673,481 (unaudited)
issued and outstanding 67,000 67,000
Additional paid-in capital 29,839,000 29,839,000
Retained earnings 10,206,000 6,972,000
Accumulated other comprehensive income, net of income tax
of ($475,000) (unaudited) and $172,000, respectively (792,000) 294,000
---------------- ---------------
Total shareholders' equity 39,320,000 37,172,000
---------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 449,323,000 $ 366,550,000
================ ===============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
1
<PAGE>
COLORADO BUSINESS BANKSHARES, INC.
Consolidated Statements of Income and Comprehensive Income
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
1999 1998 1999 1998
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans and leases $ 6,827,000 $ 5,179,000 $ 18,264,000 $ 14,435,000
Interest on investments 1,640,000 1,081,000 4,777,000 2,994,000
----------- ----------- ------------ ------------
Total interest income 8,467,000 6,260,000 23,041,000 17,429,000
INTEREST EXPENSE:
Interest on deposits 2,274,000 1,771,000 6,036,000 5,122,000
Interest on short-term borrowings & FHLB advances 801,000 380,000 2,131,000 974,000
Interest on note payable 18,000 14,000 18,000 315,000
----------- ----------- ------------ ------------
Total interest expense 3,093,000 2,165,000 8,185,000 6,411,000
NET INTEREST INCOME BEFORE PROVISION FOR
LOAN AND LEASE LOSSES 5,374,000 4,095,000 14,856,000 11,018,000
Provision for loan and lease losses 371,000 243,000 1,006,000 964,000
----------- ----------- ------------ ------------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN AND LEASE LOSSES 5,003,000 3,852,000 13,850,000 10,054,000
----------- ----------- ------------ ------------
OTHER INCOME:
Service charges 307,000 245,000 847,000 692,000
Operating lease income 604,000 556,000 1,742,000 1,807,000
Other income 229,000 345,000 764,000 638,000
----------- ----------- ------------ ------------
Total other income 1,140,000 1,146,000 3,353,000 3,137,000
----------- ----------- ------------ ------------
OTHER EXPENSE:
Salaries and employee benefits 2,113,000 1,819,000 6,142,000 5,077,000
Occupancy expenses, premises and equipment 790,000 502,000 2,001,000 1,306,000
Depreciation on leases 504,000 487,000 1,487,000 1,403,000
Amortization of intangibles 110,000 109,000 331,000 332,000
Other 608,000 566,000 1,703,000 1,503,000
----------- ----------- ------------ ------------
Total other expense 4,125,000 3,483,000 11,664,000 9,621,000
----------- ----------- ------------ ------------
INCOME BEFORE INCOME TAXES 2,018,000 1,515,000 5,539,000 3,570,000
Provision for income taxes 745,000 598,000 2,117,000 1,431,000
----------- ----------- ------------ ------------
NET INCOME $ 1,273,000 $ 917,000 $ 3,422,000 $ 2,139,000
----------- ----------- ------------ ------------
UNREALIZED (DEPRECIATION) APPRECIATION ON
AVAILABLE FOR SALE SECURITIES, net of tax (106,000) 86,000 (1,086,000) 244,000
=========== =========== ============ ============
COMPREHENSIVE INCOME $ 1,167,000 $ 1,003,000 $ 2,336,000 $ 2,383,000
=========== =========== ============ ============
EARNINGS PER SHARE:
Basic $ 0.19 $ 0.14 $ 0.51 $ 0.37
=========== =========== ============ ============
Diluted $ 0.19 $ 0.13 $ 0.50 $ 0.35
=========== =========== ============ ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
COLORADO BUSINESS BANKSHARES, INC.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------------
1999 1998
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,422,000 $ 2,139,000
Adjustments to reconcile net income to net cash provided
by and used in operating activities:
Net amortization on securities 170,000 160,000
Depreciation and amortization 2,531,000 2,176,000
Provision for loan and lease losses 1,006,000 964,000
Deferred income taxes (152,000) (234,000)
Gain on sale of securities (44,000) (113,000)
Loss (gain) on sale of premises and equipment (1,000) 34,000
Changes in:
Accrued interest receivable (436,000) (324,000)
Other assets (188,000) (9,229,000)
Accrued interest and other liabilities (337,000) 404,000
----------------- -----------------
Net cash provided by and used in operating activities 5,971,000 (4,023,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net change in other investments (645,000) (2,000)
Purchase of available for sale securities (35,438,000) (42,760,000)
Proceeds from maturities of held to maturity securities 2,996,000 4,331,000
Proceeds from maturities and sale of available for
sale securities 35,785,000 20,177,000
Loan and lease originations and repayments, net (82,920,000) (46,953,000)
Purchase of premises and equipment (1,593,000) (2,220,000)
Proceeds from sale of premises and equipment 114,000 536,000
----------------- -----------------
Net cash used in investing activities (81,701,000) (66,891,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand, NOW, money market,
and savings accounts 34,518,000 28,265,000
Net increase (decrease) in certificates of deposit 25,387,000 (4,099,000)
Net increase in federal funds purchased 5,300,000 17,000,000
Net increase in securities sold under agreements
to repurchase 9,417,000 7,626,000
Advances from the Federal Home Loan Bank 5,930,000 3,930,000
Change in notes payable 556,000 (7,500,000)
Proceeds from issuance of common stock - 17,523,000
Redemption of preferred stock - (1,500,000)
Dividends paid on preferred stock - (78,000)
Dividends paid on common stock (334,000) -
Proceeds from options exercised - 400,000
----------------- -----------------
Net cash provided by financing activities 80,774,000 61,567,000
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 5,044,000 (9,347,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 20,058,000 27,775,000
----------------- -----------------
CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 25,102,000 $ 18,428,000
================= =================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
Colorado Business Bankshares, Inc. and Subsidiaries
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1. Consolidated Condensed Financial Statements
The accompanying consolidated condensed financial statements are unaudited
and include the accounts of Colorado Business Bankshares, Inc. ("Parent"), its
wholly owned subsidiary, Colorado Business Bank, N.A. ("Bank"), and its 80%
owned equipment leasing subsidiary, Colorado Business Leasing, Inc. ("Leasing"
and, collectively with Parent and Bank, the "Company").
All significant intercompany accounts and transactions have been
eliminated. These financial statements and notes thereto should be read in
conjunction with, and are qualified in their entirety by reference to, the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1998, as
filed with the Securities and Exchange Commission on March 31, 1999.
The consolidated condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normally recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine months ended September 30, 1999 are not necessarily
indicative of the results that may be expected for the full year ending December
31, 1999.
2. Earnings per Common Share
Income available to common shareholders and the weighted average shares
outstanding used in the calculation of Basic and Diluted Earnings Per Share are
as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- ------------------------------------
1999 1998 1999 1998
----------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net income $ 1,273,000 $ 917,000 $ 3,422,000 $ 2,139,000
Less: Preferred stock dividends - - - 78,000
----------------- --------------- ----------------- -----------------
Income available to common shareholders $ 1,273,000 $ 917,000 $ 3,422,000 $ 2,061,000
================= =============== ================= =================
Weighted average shares outstanding -
basic earnings per share 6,673,481 6,673,481 6,673,481 5,613,164
Effect of dilutive securities - stock options 190,375 204,352 189,804 223,069
----------------- --------------- ----------------- -----------------
Weighted average shares outstanding -
diluted earnings per share 6,863,856 6,877,833 6,863,285 5,836,233
================= =============== ================= =================
Earnings per common share - Diluted $ 0.19 $ 0.13 $ 0.50 $ 0.35
================= =============== ================= =================
</TABLE>
4
<PAGE>
3. Recent Accounting Pronouncements
SFAS No. 133, "Accounts for Derivative Instruments and Hedging Activities,"
establishes accounting and reporting standards for derivative instruments and
hedging activities and requires recognition of all derivatives as either assets
or liabilities measured at fair value. The accounting for changes in fair value
of a derivative depends on the intended use of the derivative and the resulting
designation. The statement is required for the year 2001. The adoption of SFAS
No. 133 is not expected to have a material effect on the consolidated financial
statements.
4. Comprehensive Income
Comprehensive income is the total of (1) net income plus (2) all other
changes in net assets arising from nonowner sources, which are referred to as
other comprehensive income. Presented below are the changes in other
comprehensive income for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Other comprehensive income (loss), before tax:
Unrealized gain (loss) on available for sale
securities arising during the period $ (169) $ 250 $ (1,688) $ 502
Reclassification adjustment for (gains) losses
arising during the period - (113) (44) (113)
------------- ------------- ------------- -------------
Other comprehensive income (loss), before tax (169) 137 (1,732) 389
Tax (expense) benefit related to items of
other comprehensive income (loss) 63 (51) 646 (145)
------------- ------------- ------------- -------------
Other comprehensive income (loss), net of tax $ (106) $ 86 $ (1,086) $ 244
============= ============= ============= =============
</TABLE>
5. Segments
The Company's principal activities include Commercial Banking and Equipment
Leasing. The Commercial Banking segment offers a broad range of banking products
and services, including credit, cash management, investment, deposit and trust
products. The Equipment Leasing segment offers leasing programs for computers,
telecommunications equipment, telephone systems, business furniture,
manufacturing equipment, materials handling equipment and other capital
equipment.
5
<PAGE>
The financial information for each business segment reflects that
information which is specifically identifiable or which is allocated based on an
internal allocation method. The allocation has been consistently applied for
all periods presented. Revenues from affiliated transactions, principally the
Commercial Banking division's funding of Equipment Leasing activity, are
generally charged at the Commercial Banking division's marginal cost of funds.
Results of operations and selected financial information by operating
segment are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- -----------------------------
1999 1998 1999 1998
------------ ------------- ------------- --------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Total interest income:
Commercial Banking $ 8,415 $ 6,246 $ 22,914 $ 17,540
Equipment Leasing 371 276 1,045 665
All other 5 35 18 44
Eliminations (324) (297) (936) (820)
------------ ------------- ------------- --------------
Consolidated $ 8,467 $ 6,260 $ 23,041 $ 17,429
============ ============= ============= ==============
Total interest expense:
Commercial Banking $ 3,088 $ 2,191 $ 8,172 $ 6,138
Equipment Leasing 329 271 949 795
All other - - - 301
Eliminations (324) (297) (936) (823)
------------ ------------- ------------- --------------
Consolidated $ 3,093 $ 2,165 $ 8,185 $ 6,411
============ ============= ============= ==============
Other noninterest income:
Commercial Banking $ 558 $ 551 $ 1,612 $ 1,278
Equipment Leasing 632 569 1,862 1,938
All other 1,510 1,082 4,130 2,832
Eliminations (1,560) (1,056) (4,251) (2,911)
------------ ------------- ------------- --------------
Consolidated $ 1,140 $ 1,146 $ 3,353 $ 3,137
============ ============= ============= ==============
Net Income:
Commercial Banking $ 1,328 $ 970 $ 3,569 $ 2,558
Equipment Leasing 38 (25) 96 (16)
All other 1,273 918 3,421 2,139
Eliminations (1,366) (946) (3,664) (2,542)
------------ ------------- ------------- --------------
Consolidated $ 1,273 $ 917 $ 3,422 $ 2,139
============ ============= ============= ==============
</TABLE>
6
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Overview
Net earnings available to common shareholders was $1,273,000 for the
quarter ended September 30, 1999 compared with $917,000 for the quarter ended
September 30, 1998, an increase of 39%. Earnings per share on a fully diluted
basis for the third quarter was $0.19, versus $0.13 for the same period a year
ago, an increase of 46%. For the nine months ended September 30, 1999, net
earnings available to common shareholders was $3,422,000, an increase of
$1,361,000, or 66%, from the first nine months of 1998. Earnings per share on a
fully diluted basis for the nine months ended September 30, 1999 was $0.50,
compared with $0.35 for the same period a year ago, an increase of 43%.
On an operating basis, before the amortization of goodwill, consolidated
net income available to common shareholders for the three months ended September
30, 1999 and 1998, was $1,383,000 and $1,026,000, or $0.20 and $0.15 per diluted
share, respectively. Return on average tangible assets was 1.26% in the third
quarter of 1999 compared with 1.33% in the third quarter of 1998. Return on
average common shareholders' equity was 12.96% for the quarter ended September
30, 1999, versus 10.21% for the quarter ended September 30, 1998. For the first
nine months of 1999 and 1998, respectively, return on average tangible assets
was 1.24% and 1.17%, and return on average common shareholders' equity was
11.88% and 11.89%.
Consolidated Condensed Balance Sheets
The Company's total assets increased by $82.7 million to $449.3 million as
of September 30, 1999, from $366.6 million as of December 31, 1998. A robust
Colorado economy continues to fuel the Company's strong loan growth,
particularly in the Boulder, Denver, Vail Valley, and West Metropolitan Denver
("West Metro") markets. In the first nine months of 1999, the loan and lease
portfolio (net) increased by $80.1 million, from $223.3 million at December 31,
1998 to $303.4 million as of September 30, 1999. Investment securities were
$103.4 million as of September 30, 1999 compared to $107.9 million as of
December 31, 1998. The decrease in the investment portfolio is the result of the
Company utilizing its funding resources to support stronger than anticipated
loan demand, rather than investment purchases.
Deposits increased by $59.9 million to $332.9 million as of September 30,
1999, from $273.0 million as of December 31, 1998. Noninterest-bearing deposits
increased by $11.9 million, and interest-bearing deposits increased by $48.0
million. Low-cost demand deposits comprised 32% of total deposits as of
September 30, 1999. Federal funds purchased and securities sold under agreements
to repurchase increased by $14.7 million in the first nine months of 1999 to
$43.2 million. Of this total, $34.4 million are repurchase agreements transacted
on behalf of the Company's customers and are not considered a wholesale
borrowing source.
7
<PAGE>
Results of Operations
Net Interest Income
Net interest income before provision for loan and lease losses was $5.4
million for the quarter ended September 30, 1999, an increase of $1.3 million,
or 31%, compared with the quarter ended September 30, 1998. Yields on the
Company's interest-earning assets declined by 52 basis points to 8.27% for the
three months ended September 30, 1999, down from 8.79% for the three months
ended September 30, 1998. Rates paid on interest-bearing liabilities declined by
only 27 basis points during this same period. The net interest margin was 5.32%
for the quarter ended September 30, 1999, down from 5.83% for the quarter ended
September 30, 1998. This decline corresponds with industry-wide pricing
pressures, and resulted primarily from a higher proportionate share of fixed
rate real estate term loans, as compared to commercial loans, in the portfolio.
However, growth of the Company's average earning assets helped mitigate the
margin compression. Average earning assets increased by 44% to $400.9 million
for the third quarter of 1999, from $278.7 million for the third quarter of
1998.
Net interest income before provision for loan and lease losses was $14.9
million for the nine months ended September 30, 1999, an increase of $3.8
million, or 35%, compared with the nine months ended September 30, 1998. The net
interest margin was 5.31% for the first nine months of 1999, down from 5.73% for
the same period in 1998.
The following tables set forth the average amounts outstanding for each
category of interest-earning assets and interest-bearing liabilities, the
interest earned or paid on such amounts, and the average rate earned or paid for
the quarters ended September 30, 1999 and 1998 and for the nine months ended
September 30, 1999 and 1998.
8
<PAGE>
<TABLE>
<CAPTION>
Three months ended September 30,
---------------------------------------------------------------------
1999 1998
---------------------------------- ---------------------------------
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 $ 4,534 $ 55 4.75% $ 789 $ 11 5.46%
Investment securities 107,072 1,585 5.79% 73,614 1,070 5.69%
Loans and leases 293,207 6,827 9.11% 207,273 5,179 9.78%
Allowance for loan and lease losses (3,959) - 0.00% (2,970) - 0.00%
------------- ---------- ------------ ----------
Total interest-earning assets 400,854 8,467 8.27% 278,706 6,260 8.79%
Noninterest-earning assets:
Cash and due from banks 21,972 17,003
Other 16,545 15,032
------------- ------------
Total assets $ 439,371 $ 310,741
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
NOW and money market accounts $ 122,661 $ 1,007 3.26% $ 88,448 $ 772 3.46%
Savings 6,475 36 2.21% 6,169 41 2.64%
Certificates of deposit:
Under $100,000 22,391 285 5.05% 20,835 289 5.50%
$100,000 and over 73,585 946 5.10% 47,504 669 5.59%
------------- ---------- ------------ ----------
Total interest-bearing deposits 225,112 2,274 4.01% 162,956 1,771 4.31%
Short-term borrowings:
Securities and loans sold under agreements to
repurchase and federal funds purchased 46,864 539 4.50% 25,197 323 5.02%
FHLB advances & notes payable 20,597 280 5.32% 4,416 71 6.29%
Long-term borrowings - - 0.00% - - 0.00%
------------- ---------- ------------ ----------
Total interest-bearing liabilities 292,573 3,093 4.18% 192,569 2,165 4.45%
Noninterest-bearing demand accounts 106,429 80,931
------------- ------------
Total deposits and interest-bearing
liabilities 399,002 273,500
Other noninterest-bearing liabilities 1,400 1,609
------------- ------------
Total liabilities 400,402 275,109
Shareholders' equity 38,969 35,632
============= ============
Total liabilities and shareholders' equity $ 439,371 $ 310,741
============= ============
Net interest income $ 5,374 $ 4,095
========== ==========
Net interest spread 4.09% 4.34%
========= ========
Net interest margin 5.32% 5.83%
========= ========
Ratio of average interest-bearing assets to
average interest-bearing liabilities 137.01% 144.73%
============= ============
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Nine months ended September 30,
---------------------------------------------------------------------
1999 1998
---------------------------------- ---------------------------------
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 $ 4,033 $ 143 4.68% $ 2,645 $ 106 5.28%
Investment securities 107,483 4,634 5.69% 65,177 2,888 5.84%
Loans and leases 266,215 18,264 9.05% 191,832 14,435 9.92%
Allowance for loan and lease losses (3,635) - 0.00% (2,723) - 0.00%
------------- ---------- ------------ ----------
Total interest-earning assets 374,096 23,041 8.12% 256,931 17,429 8.95%
Noninterest-earning assets:
Cash and due from banks 19,330 15,014
Other 15,525 14,636
------------- ------------
Total assets $ 408,951 $ 286,581
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
NOW and money market accounts $ 115,074 $ 2,698 3.13% $ 83,172 $ 2,112 3.40%
Savings 6,619 110 2.22% 6,024 119 2.64%
Certificates of deposit:
Under $100,000 26,237 991 5.05% 19,741 800 5.42%
$100,000 and over 59,066 2,237 5.06% 49,592 2,091 5.64%
------------- ---------- ------------ ----------
Total interest-bearing deposits 206,996 6,036 3.90% 158,529 5,122 4.32%
Short-term borrowings:
Securities and loans sold under agreements to
repurchase and federal funds purchased 44,704 1,475 4.35% 21,187 818 5.09%
FHLB advances & notes payable 17,423 674 5.10% 3,596 170 6.23%
Long-term borrowings - - 0.00% 4,918 301 8.07%
------------- ---------- ------------ ----------
Total interest-bearing liabilities 269,123 8,185 4.05% 188,230 6,411 4.54%
Noninterest-bearing demand accounts 99,801 71,900
------------- ------------
Total deposits and interest-bearing
liabilities 368,924 260,130
Other noninterest-bearing liabilities 1,518 1,513
------------- ------------
Total liabilities 370,442 261,643
Shareholders' equity 38,509 24,938
------------- ------------
Total liabilities and shareholders' equity $ 408,951 $ 286,581
============= ============
Net interest income $ 14,856 $ 11,018
========== ==========
Net interest spread 4.07% 4.40%
========= ========
Net interest margin 5.31% 5.73%
========= ========
Ratio of average interest-bearing assets to
average interest-bearing liabilities 139.01% 136.50%
============= ============
</TABLE>
10
<PAGE>
Noninterest Income
Total noninterest income decreased slightly to $1,140,000 for the three
months ended September 30, 1999, from $1,146,000 for the three months ended
September 30, 1998. The most significant variance relates to the recognition of
$113,000 of gains on sale of available for sale securities during the third
quarter of 1998. There were no sales of investment securities during the third
quarter of 1999.
For the nine months ended September 30, 1999, noninterest income was
$3,353,000, compared with $3,137,000 for the same period in 1998. The increase
was primarily attributable to growth in deposit service charges, trust fees, and
other banking service related fees. Historically, increases in deposit service
charges have not corresponded with the growth in deposit balances. This is due
to the Company offering its customers the choice of either paying for services
in cash or by maintaining additional non-interest bearing account balances.
Noninterest Expense
Total noninterest expense increased by $642,000 to $4,125,000 for the three
months ended September 30, 1999, up from $3,483,000 for the three months ended
September 30, 1998. For the nine months ended September 30, 1999, noninterest
expense was $11,664,000, up from $9,621,000 for the nine months ended September
30, 1998. During these same periods, however, the efficiency ratio before
goodwill improved to 62% for the quarter ended September 30, 1999, down from 66%
for the comparable period in 1998. The efficiency ratio for the first nine
months of 1999 was 63%, as compared to 66% in 1998.
These increases in noninterest expense were primarily the result of
additional personnel and occupancy expenses incurred to accommodate internal
growth. The Denver Technological Center location opened in September of 1998, a
second Boulder location was added in May of 1999, and the Vail Valley location
opened in June of 1999. In addition, the data processing system conversion,
which was completed in the third quarter of 1998, as well as other on-going
technological upgrades, contributed to a higher level of noninterest expense.
11
<PAGE>
Provision and Allowance for Loan Losses
The provision for loan and lease losses increased by $128,000 to $371,000
for the three months ended September 30, 1999, up from $243,000 for the three
months ended September 30, 1998. The provision for loan and lease losses
increased by $42,000 to $1,006,000 for the nine months ended September 30, 1999,
up from $964,000 for the nine months ended September 30, 1998. The leading
factor in the moderate nine-month increase relates to the Company's sustained,
positive credit quality. Key indicators of asset quality have remained
favorable, while average outstanding loan amounts have increased to $266.2
million for the first nine months of 1999, up from $191.8 million for the first
nine months of 1998. As of September 30, 1999, the allowance for loan losses
amounted to $4.2 million, or 1.36% of total loans and leases.
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 Company maintains an allowance for loan losses based
upon a number of factors, including, among others, the amount of problem loans
and leases, general economic conditions, historical loss experience, and the
evaluation of the underlying collateral and holding and disposal costs. In
addition to unallocated allowances, specific allowances are provided for
individual loans when ultimate collection is considered questionable by
management after reviewing the current status of those loans that are
contractually past due and considering the net realizable value of the
collateral for the loans. Management actively monitors the Company's asset
quality and will charge-off loans against the allowance for loan losses when
appropriate and will provide specific loss allowances when necessary. Although
management believes it uses the best information available to make
determinations with respect to the allowance for loan losses, future adjustments
may be necessary if economic conditions differ from the assumptions used in
making the initial determinations. The following table presents, for the periods
indicated, an analysis of the allowance for loan and lease losses and other
related data.
12
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1999 1998
------------------------ -------------------------
(Dollars in thousands)
<S> <C> <C>
Balance of allowance for loan and lease
losses at beginning of period $ 3,271 $ 2,248
------------------------ -------------------------
Charge-offs:
Commercial 4 200
Real estate - mortgage 51 -
Real estate - construction 4 -
Consumer 26 32
Direct financing leases - 4
------------------------ -------------------------
------------------------ -------------------------
Total charge-offs 85 236
------------------------ -------------------------
Recoveries:
Commercial 3 66
Real estate - mortgage - -
Real estate - construction - -
Consumer - 5
Direct financing leases - -
------------------------ -------------------------
------------------------ -------------------------
Total recoveries 3 71
------------------------ -------------------------
Net charge-offs (82) (165)
Provisions for loan and lease losses
charged to operations 1,006 1,188
------------------------ -------------------------
Balance of allowance for loan and lease
losses at end of period $ 4,195 $ 3,271
======================== =========================
Ratio of net charge-offs to average
loans and leases .03% .08%
Average loans and leases outstanding during
the period $ 266,215 $ 197,851
======================== =========================
</TABLE>
13
<PAGE>
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. Nonperforming assets were $538,000 as of September 30, 1999, compared
with $467,000 as of December 31, 1998 and $939,000 as of September 30, 1998. The
following table presents information regarding nonperforming assets as of the
dates indicated:
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1999 1998 1998
--------------------- -------------------- --------------------
(Dollars in thousands)
<S> <C> <C> <C>
Nonperforming loans and leases:
Loans and leases 90 days or more delinquent
and still accruing interest $ 45 $ 4 $ 277
Nonaccrual loans and leases 493 125 323
Restructured loans and leases - 338 339
--------------------- -------------------- --------------------
Total nonperforming loans and leases 538 467 939
Real estate acquired by foreclosure - - -
--------------------- -------------------- --------------------
Total nonperforming assets $ 538 $ 467 $ 939
===================== ==================== ====================
Allowance for loan and lease losses $ 4,195 $ 3,271 $ 3,108
===================== ==================== ====================
Ratio of nonperforming assets to total assets 0.12% 0.13% 0.29%
Ratio of nonperforming loans and leases to
total loans and leases 0.17% 0.21% 0.45%
Ratio of allowance for loan and lease losses to
total loans and leases 1.36% 1.44% 1.48%
Ratio of allowance for loan and lease losses to
nonperforming loans and leases 779.74% 700.43% 331.10%
</TABLE>
14
<PAGE>
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 to allow the
Company to sustain its operations. Historically, the Company's primary source of
funds 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 level of
interest rates, returns available on other investments, competition, economic
conditions and other factors, are relatively unstable. The Company also has a
significant commercial real estate portfolio, which is readily salable, that, if
needed, would be considered an additional source of liquidity. 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.
The Company uses various forms of short-term borrowings for cash management
and liquidity purposes on a limited basis. These forms of borrowings include
federal funds purchases, securities sold under agreements to repurchase, the
State of Colorado Treasury's Time Deposit program, and borrowings from the
Federal Home Loan Bank of Topeka ("FHLB"). The Bank has approved federal funds
purchase lines with six other banks with an aggregate credit line of $49
million. In addition, the Bank may apply for up to $16 million of State of
Colorado time deposits. The Bank also has available a $153 million line of
credit from the FHLB. Borrowings under the FHLB line are required to be secured
by unpledged securities and qualifying loans.
During the first nine months of 1999, cash and cash equivalents increased
by $5.0 million. This increase was primarily the result of $6.0 million in cash
provided by operating activities. Offsetting this increase was cash used in
investing activities of $81.7 million (mainly loan and lease originations),
which was not entirely matched by cash provided by financing activities
(primarily increases in customer deposits) of $80.7 million.
During the first nine months of 1998, cash and cash equivalents decreased
by $9.3 million. This decline was, in part, caused by a net decrease of $4.0
million in cash provided by operating activities. This was largely due to a
$9.9 million receivable for an investment trade. (Without this trade
receivable, cash provided by operating activities would have increased by $5.9
million.) Also contributing to the decline in cash and cash equivalents was
cash used in investing activities of $66.9 million (mainly loan and lease
originations and security purchases) which were not entirely offset by cash
generated by financing activities (primarily increased customer deposits, short
term borrowings, and proceeds from the issuance of common stock) of $61.6
million.
15
<PAGE>
Data Processing Systems and Year 2000 Compliance
General. The Year 2000 Issue is the result of computer programs being
written using two digits rather than four to define the applicable year. Any of
our computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. The failure to correct any such programs or hardware could result in
system failures or miscalculations causing disruptions of our operations,
including, among other things, a temporary inability to process transactions,
send statements or engage in similar normal business activities. To date we have
modified or replaced significant portions of our information processing systems
so that those systems will properly utilize dates beyond December 31, 1999. We
plan to complete any remaining modifications and replacements necessary to
correct our systems prior to December 31, 1999. If such modifications and
replacements are not made, or are not completed on a timely basis, the Year 2000
Issue could have a material impact on our future operating performance.
State of Readiness. The Company has substantially completed its "Year 2000
Program" efforts. The Company has a Year 2000 Committee that oversees issues
relating to its Year 2000 Program. In September 1998, the Company converted to
the Jack Henry System, a data processing system that provides the Company with
the ability to deliver upgraded P.C. banking, a voice response system and check
and document imaging. The Jack Henry System is designed to be year 2000
compliant. The renovation phase for other mission critical components was
completed by December 31, 1998. Renovation for non-mission critical components
was completed during the first quarter of 1999. The validation phase for mission
critical components, including the Jack Henry System, was completed in first
quarter 1999 and for non-critical components was completed in the third quarter
1999. The Company utilizes third party servicers for some of its information and
data processing needs, and it is monitoring the progress of these entities in
addressing the Year 2000 Issue. Validation of these third-party provided systems
was completed during the third quarter of 1999. The Company expects, but cannot
guarantee, that all of these third party servicers will continue to be
compliant. The Company is also assessing the operability of other devices after
1999, including vaults, fax machines, stand-alone personal computers and
security systems. Although the Company does not believe that the failure of
these systems would have a material adverse effect on the financial condition of
the enterprise, it is addressing deficiencies in these systems in an effort to
make them compliant during 1999.
Costs. In order to achieve and confirm year 2000 readiness, significant
costs are being incurred to test and modify or replace computer software and
hardware. The Company believes that its remediation costs have been mitigated
since it has replaced, in the ordinary course of business, a substantial portion
of its core banking systems during the past five years with year 2000 compliant
software. However, the considerable effort required to implement new software
and sufficiently test its compliance is consuming a substantial portion of the
Company's internal information technology resources. This diversion of resources
to the Year 2000 Program has resulted in delays in implementing enhancements to
a number of the Company's systems and products. The Company does not believe,
however, that these delays will have a significant effect on its revenue or
expense growth. The aggregate increase in operating expense to achieve Year 2000
readiness is estimated to be $1.9 million, of which $850,000 has been incurred
through September 30, 1999, including approximately $559,000 incurred in
converting to the Jack Henry System. In addition, a significant portion of the
Company's personal computers have been replaced to achieve Year 2000 compliance.
The capital outlay to replace these assets is estimated to have been $198,000, a
portion of which would have been incurred in the ordinary course of business
without regard to Year 2000 issues.
16
<PAGE>
Risks. If the Company's mission-critical applications are not compliant
by 2000, it may not be able to correctly process transactions in a reasonable
period of time. This scenario could result in a wide variety of claims against
the Company for improper handling of its assets and deposits and other
borrowings from its customers. The Company is also at risk if the credit
worthiness of a few of its large borrowers, or a significant number of its small
borrowers, were to deteriorate quickly and severely as a result of their
inability to conduct business operations after December 31, 1999 due to Year
2000 issues or any other reason. Although the Company has surveyed and is
presently reviewing the Year 2000 plans of a number of its credit customers to
ascertain the sufficiency of their remediation efforts and the implications of
their actions on their credit worthiness, the Company cannot control or predict
whether such customers' remediation efforts will be successful.
Contingency Plans. The Company has developed business resumption plans for
each significant business unit in the event that its remediation plan is not
completed in time or fails for reasons that are not presently foreseen. In the
event of such a failure, these plans outline the steps that will be taken to
remediate the situation and minimize the effect on customers and losses to the
Company. These plans are complete and were tested in the third quarter of 1999.
Forward Looking Statements
The discussion in this report contains forward-looking statements,
including, without limitation, statements relating to the Company's Year 2000
compliance, which are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Although the Company believes that the
expectations reflected in the forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to be correct. The forward-
looking statements involve risks and uncertainties that affect the Company's
operations, financial performance and other factors as discussed in the
Company's filings with the Securities and Exchange Commission. These risks
include the impact of economic conditions and interest rates, loan and lease
losses, risks related to the execution of the Company's growth strategy, the
possible loss of key personnel, factors that could affect the Company's ability
to compete in its trade areas, changes in regulations and government policies
and other factors discussed in the Company's filing with the Securities and
Exchange Commission. In particular, risks related to the Company's year 2000
compliance include those discussed under the heading "Data Processing Systems
and Year 2000 Compliance" in this report.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.30 Lease, dated July 27, 1999, between Joan H. Travis and Colorado
Business Bank, N.A.
10.31 Employment Agreement, dated April 12, 1999, by and between Colorado
Business Bankshares, Inc. and Randal Garman.
27.1 Financial Data Schedule as of September 30, 1999.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September 30,
1999.
17
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COLORADO BUSINESS BANKSHARES, INC.
Date: November 14, 1999 By: /s/ Steven Bangert
----------------------------------------------------
Steven Bangert, Chief Executive Officer and Chairman
Date: November 14, 1999 By: /s/ Richard J. Dalton
----------------------------------------------------
Richard J. Dalton, Executive Vice President and
Chief Financial Officer
18
<PAGE>
EXHIBIT 10.30
LEASE
by and between
JOAN H. TRAVIS,
an individual,
as Landlord
and
COLORADO BUSINESS BANK, N.A.,
a national banking association
as Tenant
Dated as of July 27, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <S> <C>
ARTICLE I BASIC LEASE PROVISIONS.....................................................................1
----------------------
1.1 DATE OF LEASE...................................................................................1
1.2 LANDLORD........................................................................................1
1.3 TENANT .........................................................................................1
1.4 BUILDING........................................................................................1
1.5 PREMISES........................................................................................1
1.6 TERM ...........................................................................................1
1.7 RENT COMMENCEMENT DATE..........................................................................1
1.8 BASE RENT.......................................................................................2
1.9 BASE RENT ADJUSTMENT:...........................................................................2
1.10 ADDITIONAL RENT.................................................................................2
1.11 USE OF PREMISES.................................................................................2
1.12 PREPAID RENT....................................................................................2
1.13 BROKER .........................................................................................2
1.14 ADDRESSES FOR NOTICES AND REPORTS...............................................................2
1.15 ADDRESS FOR PAYMENTS............................................................................3
1.16 PARKING.........................................................................................3
ARTICLE II PREMISES...................................................................................3
--------
2.1 BUILDING........................................................................................3
2.2 PREMISES........................................................................................3
2.3 EASEMENT........................................................................................3
ARTICLE III TERM.......................................................................................4
----
3.1 TERM ...........................................................................................4
3.2 HOLDING OVER....................................................................................4
ARTICLE IV POSSESSION.................................................................................4
----------
4.1 CONDITION OF PREMISES...........................................................................4
4.2 DELIVERY OF POSSESSION..........................................................................5
4.3 TENANT'S WAIVER.................................................................................5
ARTICLE V RENT.......................................................................................5
----
5.1 GENERAL PROVISIONS..............................................................................5
5.2 BASE RENT.......................................................................................6
5.3 ADDITIONAL RENT.................................................................................6
5.4 OPERATING EXPENSES..............................................................................6
5.5 REAL ESTATE TAXES...............................................................................7
5.6 PAYMENT OF OPERATING EXPENSES AND REAL ESTATE TAXES.............................................7
A. Payment of Operating Expenses..............................................................7
B. Real Property Taxes; Personal Property Taxes...............................................8
5.7 PROPERTY INSURANCE MAINTAINED BY LANDLORD.......................................................8
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
ARTICLE VI SECURITY DEPOSIT...........................................................................8
----------------
6.1 SECURITY DEPOSIT................................................................................8
6.2 USE OF SECURITY DEPOSIT.........................................................................9
6.3 REFUND AND TRANSFER.............................................................................9
ARTICLE VII USE OF THE PREMISES........................................................................9
-------------------
7.1 TENANT'S USE OF THE PREMISES....................................................................9
7.2 COMPLIANCE WITH LANDLORD'S RULES AND REGULATIONS...............................................10
7.3 PARKING........................................................................................10
7.4 PERMITTED USE..................................................................................10
7.5 COMPLIANCE WITH LAWS; NUISANCE.................................................................10
7.6 ENVIRONMENTAL COMPLIANCE.......................................................................11
7.7 LANDLORD'S RIGHT OF ENTRY......................................................................11
ARTICLE VIII UTILITIES.................................................................................12
---------
8.1 TENANT'S OBLIGATIONS...........................................................................12
8.2 LIMITATION ON LANDLORD LIABILITY...............................................................12
8.3 ALTERNATIVE TELEPHONE OR TELECOMMUNICATIONS PROVIDER...........................................12
A. No Expense................................................................................12
B. Provider's Good Standing..................................................................13
C. Tenant Responsible for Service Interruptions..............................................13
D. No Third Party Rights.....................................................................13
ARTICLE IX INSURANCE.................................................................................13
---------
9.1 GENERAL INSURANCE..............................................................................13
9.2 COMMERCIAL GENERAL LIABILITY INSURANCE.........................................................13
9.3 WORKERS'COMPENSATION INSURANCE.................................................................14
9.4 PROPERTY AND EXTENDED COVERAGE INSURANCE.......................................................14
9.5 WAIVER OF SUBROGATION..........................................................................14
ARTICLE X OPTION TO PURCHASE........................................................................14
------------------
ARTICLE XI MAINTENANCE AND REPAIR OF PREMISES........................................................15
----------------------------------
11.1 TENANT'S MAINTENANCE OBLIGATIONS...............................................................15
11.2 ANTENNAE/LIGHTS................................................................................16
11.3 LANDLORD'S CURE................................................................................16
ARTICLE XII ALTERATIONS AND ADDITIONS.................................................................16
-------------------------
12.1 ALTERATIONS....................................................................................16
12.2 CONSTRUCTION OF ALTERATIONS....................................................................17
12.3 TITLE TO ALTERATIONS...........................................................................18
12.4 SIGNS..........................................................................................18
ARTICLE XIII TENANT'S PROPERTY.........................................................................18
-----------------
13.1 TENANT'S PROPERTY..............................................................................18
13.2 SURRENDER OF PREMISES..........................................................................18
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C> <C>
ARTICLE XIV DAMAGE AND DESTRUCTION.....................................................................19
----------------------
14.1 LANDLORD'S DUTY OF REPAIR......................................................................19
14.2 REPAIRS BY LANDLORD............................................................................19
14.3 TERMINATION OF LEASE...........................................................................20
ARTICLE XV EMINENT DOMAIN.............................................................................20
--------------
15.1 TOTAL OR SUBSTANTIAL TAKING....................................................................20
15.2 PARTIAL TAKING.................................................................................20
15.3 AWARD .........................................................................................21
ARTICLE XVI INDEMNIFICATION............................................................................21
---------------
ARTICLE XVII DEFAULTS AND REMEDIES......................................................................22
---------------------
17.1 EVENTS OF DEFAULT..............................................................................22
A. Failure to Make Payment....................................................................22
B. Failure in Environmental Compliance........................................................22
C. Failure to Perform Other Covenants.........................................................22
D. Bankruptcy Related.........................................................................22
17.2 REMEDIES.......................................................................................23
A. Terminate Lease............................................................................23
B. Reenter Premises...........................................................................23
C. Maintain Lease; Relet Premises.............................................................23
D. Performance by Landlord....................................................................24
E. Receiver on Behalf of Landlord.............................................................24
F. Bankruptcy and Insolvency..................................................................24
17.3 INTEREST ON PAST DUE OBLIGATIONS...............................................................25
17.4 WAIVER OF REDEMPTION...........................................................................25
17.5 LANDLORD'S DEFAULT.............................................................................26
17.6 LANDLORD'S RIGHT TO PERFORM....................................................................26
ARTICLE XVIII SUBORDINATION AND ATTORNMENT...............................................................26
----------------------------
18.1 SUBORDINATION..................................................................................26
18.2 ATTORNMENT.....................................................................................27
18.3 ESTOPPEL CERTIFICATE...........................................................................27
18.4 RIGHTS OF LANDLORD'S LENDER AND LANDLORD'S PURCHASER...........................................27
18.5 LIMITATION OF LIABILITY........................................................................28
ARTICLE XIX FORCE MAJEURE..............................................................................28
-------------
ARTICLE XX ASSIGNMENT AND SUBLETTING..................................................................28
-------------------------
20.1 LANDLORD'S CONSENT.............................................................................28
20.2 REQUEST FOR TRANSFER...........................................................................30
20.3 LANDLORD'S RIGHTS..............................................................................30
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C> <C>
ARTICLE XXI NOTICES....................................................................................31
-------
ARTICLE XXII AUTHORITY..................................................................................32
---------
ARTICLE XXIII QUIET ENJOYMENT............................................................................32
---------------
ARTICLE XXIV ARBITRATION................................................................................32
-----------
ARTICLE XXV INTERPRETATION AND APPLICATION.............................................................33
------------------------------
25.1 GOVERNING LAW..................................................................................33
25.2 COMPLETE AGREEMENT.............................................................................33
25.3 AMENDMENT......................................................................................33
25.4 NO PARTNERSHIP.................................................................................33
25.5 NO MERGER......................................................................................33
25.6 SEVERABILITY...................................................................................33
25.7 CAPTIONS.......................................................................................34
25.8 WORDS .........................................................................................34
25.9 EXHIBITS.......................................................................................34
25.10 NO THIRD PARTY BENEFICIARIES...................................................................34
ARTICLE XXVI MISCELLANEOUS..............................................................................34
-------------
26.1 TIME ..........................................................................................34
26.2 SUCCESSORS.....................................................................................34
26.3 RECORDATION....................................................................................34
26.4 NO RECOURSE....................................................................................34
26.5 BROKERS........................................................................................34
26.6 NO LIGHT, AIR OR VIEW EASEMENT.................................................................35
26.7 ATTORNEYS' FEES................................................................................35
26.8 WAIVER.........................................................................................35
26.9 WAIVER OF TRIAL BY JURY........................................................................35
26.10 SUBMISSION OF LEASE............................................................................35
Exhibit "A" - Land Description
Exhibit "B" - Memorandum of Lease
Exhibit "C" - Tenant's Estoppel Certificate
</TABLE>
iv
<PAGE>
LEASE
THIS LEASE ("Lease") by and between Landlord and Tenant is entered
into as of the date set forth in Article I and shall be effective and binding
upon the parties hereto as of the date of execution hereof.
In consideration of the leasing of the Premises and the rent
reserved herein, and of the terms, covenants, conditions, and agreements set
forth below, the sufficiency of which are hereby acknowledged, Landlord and
Tenant hereby agree as follows:
ARTICLE I
BASIC LEASE PROVISIONS
1.1 DATE OF LEASE: July 27, 1999
1.2 LANDLORD: Joan H. Travis, an individual
1.3 TENANT: Colorado Business Bank, N.A.,
a national banking association
1.4 BUILDING: Address: 1275 Tremont
Denver, Colorado 80202
The building ("Building") situated upon that
certain real property ("Land"), more particularly
described in Exhibit "A", attached hereto. The
-----------
parties hereto acknowledge that the Building is
approximately Twenty-one Hundred (2100) rentable
square feet.
1.5 PREMISES: The Premises consists of the Building and the
Land, including all of the parking spaces
("Parking Spaces") currently located on the Land.
The Premises are being leased to Tenant on a pure
net basis, except as specifically set forth in
Section 7.6 hereof.
1.6 TERM: The term ("Term") of this Lease shall commence on
August 2, 1999 and shall expire on August 31,
2014.
1.7 RENT The Rent Commencement Date shall be
COMMENCEMENT September 1, 1999.
DATE:
1.
<PAGE>
1.8 BASE RENT: Subject to the terms and conditions of this
Lease, during the period commencing on the Rent
Commencement Date and ending on August 31, 2004,
Tenant covenants and agrees to pay to Landlord
monthly rent for the Premises ("Base Rent") equal
to Two Thousand Five Hundred and No/100 Dollars
($2,500.00).
1.9 BASE RENT ADJUSTMENT: Commencing on September 1, 2004, and ending on
August 31, 2009, the Base Rent for the Premises
shall be increased to Three Thousand and No/100
Dollars ($3,000.00) per month. Commencing on
September 1, 2009, and ending on August 31, 2014,
the Base Rent for the Premises shall be increased
to Three Thousand Five Hundred and No/100 Dollars
($3,500.00) per month.
1.10 ADDITIONAL RENT: "Additional Rent" shall be the amount equal to
all Operating Costs, Real Property Taxes and
Landlord's Insurance, as defined in Sections 5.4,
------------
5.5 and 5.7 hereof. Additional Rent shall be paid
--- ---
when due as provided herein.
1.11 USE OF PREMISES: The Premises shall be used as a branch bank. The
Premises shall be used solely for the use stated
above and for no other use or purpose without the
prior express written consent of Landlord, which
consent shall not be unreasonably withheld.
1.12 PREPAID RENT: Tenant shall pay to Landlord, with Tenant's
delivery to Landlord of four (4) executed Leases,
the Base Rent due for the second (2nd) month of
the Term.
1.13 BROKER: Frederick Ross Company for Landlord ("Landlord's
Broker"). St. Charles Town Company for Tenant
("Tenant's Broker").
1.14 ADDRESSES FOR
NOTICES AND
REPORTS:
LANDLORD: Mrs. Joan H. Travis
-------- 3420 South Clayton Boulevard
Englewood, Colorado 80110
with a copy to:
Brobeck, Phleger & Harrison LLP
550 South Hope Street, Suite 2100
Los Angeles, CA 90071-2604
Attention: Marcia Z. Gordon, Esq.
2.
<PAGE>
TENANT: Colorado Business Bank
------ 821 17th Street
Denver, Colorado 80202
Attention: President
and
Senn Lewis & Visciano, P.C.
1801 California Street, Suite 4300
Denver, Colorado 80202-2804
Attention: Fredric J. Lewis, Esq.
1.15 ADDRESS FOR
PAYMENTS:
LANDLORD: Mrs. Joan H. Travis
-------- 3420 South Clayton Boulevard
Englewood, Colorado 80110
1.16 PARKING: Subject to the terms and conditions set forth in
Section 7.3 hereof, Tenant and Tenant's employees
-----------
and invitees (but not Parking Licensees, as
defined in Section 20.1 hereof) shall have the
------------
right to use at no cost to Tenant for the Term,
the Parking Spaces located on the Land.
This Article I is intended to supplement and/or summarize the
provisions set forth in the balance of this Lease. If there is any conflict
between any provisions contained in this Article I and the balance of this
Lease, the balance of this Lease shall control.
ARTICLE II
PREMISES
--------
2.1 BUILDING. The "Building" is situated upon that certain Land
described in Exhibit "A" attached hereto.
-----------
2.2 PREMISES. Landlord leases to Tenant and Tenant hires from
Landlord the Premises for the Term and pursuant to all of the terms, covenants
and conditions contained herein.
2.3 EASEMENT. Landlord reserves to itself the right, from time to
time, to grant such easements, rights-of-way and dedications affecting all or
any part of the Land as Landlord deems necessary or desirable, including
changing the property lines of Land and granting rights-of-way and rights of
ingress and egress and similar rights over, across, and upon the Land; provided,
however, that such rights shall not unreasonably interfere with Tenant's use of
the Premises. Tenant shall execute, acknowledge and deliver to Landlord any
documents
3.
<PAGE>
which Landlord determines are necessary to effectuate the purposes of this
Section within ten (10) days after Landlord's written request.
ARTICLE III
TERM
----
3.1 TERM. The Term of the Lease shall commence on the Term
Commencement Date and shall expire on August 31, 2014 ("Expiration Date"),
unless sooner terminated in accordance with this Lease Upon the request of
either party, the other party shall execute a "Memorandum of Lease", in the form
attached hereto as Exhibit "B".
-----------
3.2 HOLDING OVER. In the absence of a written agreement to the
contrary, any holding over after the end of the Term, with the consent of
Landlord, shall be construed to be a tenancy from month-to-month, and shall be
terminable upon thirty (30) days written notice given by either Landlord or
Tenant. The rent for any such month-to-month tenancy shall be in an amount equal
to the greater of (i) one hundred thirty-five percent (135%) of the Base Rent
for the last month of the Term, or (ii) the fair market value, as reasonably
determined by Landlord, of the Premises for the first month of the
month-to-month tenancy. Base Rent may be increased each month during such
month-to-month tenancy. All other terms of this Lease shall apply to any such
month-to-month tenancy. In addition to paying Landlord the increased Base Rent
and in the event that such holding over is without the consent of Landlord,
Tenant shall defend, indemnify and hold Landlord harmless from and against all
claims, liability, damages, costs or expenses, including reasonable attorneys'
fees and the costs of defending the same, incurred by Landlord and arising
directly or indirectly from Tenant's failure to timely surrender the Premises,
including (a) any rent payable by or any loss, cost, or damages, including lost
profits, claimed by, any prospective tenant of the Premises, and (b) Landlord's
damages as a result of such prospective tenant's rescinding or refusing to enter
into the prospective lease of the Premises because of or related to Tenant's
failure to timely surrender the Premises.
ARTICLE IV
POSSESSION
----------
4.1 CONDITION OF PREMISES Landlord leases to Tenant and Tenant
hires from Landlord the Premises for the Term in its "AS-IS" condition. Tenant
represents, warrants and covenants that Landlord has made no express, implied or
other representations of any kind in connection with soil, improvements, or
physical conditions on the Premises, Building and Land or affecting the
Premises, Building and Land and that Tenant has relied solely on Tenant's own
inspection and examination of such items, except as expressly set forth herein.
Tenant understands, acknowledges and hereby expressly assumes the risk that the
Premises, Building and Land may be subject to earthquake, fire, floods, erosion
and high water table, and dangerous, toxic, or hazardous underground or surface
soil or water conditions or materials, and other occurrences or conditions that
may alter the condition or affect its suitability for any proposed use or
intended use by Tenant. Tenant understands, acknowledges and hereby expressly
assumes the risk that the utilities currently provided to the Premises are
adequate for
4.
<PAGE>
Tenant's proposed use or intended use. Landlord shall have no responsibility or
liability with respect to any such occurrence or condition. The terms and
conditions set forth herein are the result of arm's-length bargaining between
parties familiar with transactions of this kind. The Base Rent, and the terms
and conditions set forth herein, reflect the fact that Tenant shall have the
benefit of, and is relying upon, no statements, representations, or warranties
whatsoever made by or enforceable directly or indirectly against Landlord
relating to the condition, operations, dimensions, descriptions, soil condition,
environmental condition, suitability, or any other attribute or matter of or
relating to the Premises, Building or Land but that Tenant is relying solely
upon its own investigation of the same. Tenant acknowledges that: (a) Landlord
has provided Tenant with a full opportunity to inspect the Premises, including,
but not limited to, the opportunity to conduct such tests and audits of the
Premises as Tenant has deemed necessary in connection with the lease of the
Premises; (b) Tenant acknowledges that some asbestos is located on the Premises
and that Tenant shall be responsible for the cost of removing such asbestos, if
Tenant elects, in Tenant's sole and absolute discretion, to do so; and (c)
Tenant acknowledges that Tenant shall be responsible for the cost of repair and
replacement of the roof of the Building located on the Premises. Landlord hereby
represents and warrants that: (a) except as documented by Tenant's inspectors
during Tenant's inspections of the Premises, Landlord has not received any
written notice of any current violations of any federal, state or local laws,
including all zoning laws and ordinances, and all regulations, codes and
requirements (collectively, "Regulations") concerning the noncompliance of the
Property with such Regulations; and (b) Landlord does not have any written
reports, opinions, or work product of surveyors, architects, soil engineers,
environmental specialists, engineers or governmental authorities with respect to
the Premises in Landlord's possession which have not been delivered to Tenant.
4.2 DELIVERY OF POSSESSION. Landlord shall deliver the Premises to
Tenant on the Term Commencement Date. To facilitate such delivery, Landlord has
given the key to the Premises to Landlord's Broker who is authorized to deliver
said keys to Tenant on the Term Commencement Date.
4.3 TENANT'S WAIVER. Tenant expressly waives all implied warranties
regarding the Premises or Building, including implied warranties of
merchantability and fitness, if any. Tenant hereby waives all rights under
Colorado law, as amended or recodified from time to time, with respect to
Landlord's obligations for tenantability of the Premises and/or Tenant's right
to make repairs at the expense of Landlord.
ARTICLE V
RENT
----
5.1 GENERAL PROVISIONS. As used herein, "rent" shall mean "Base
Rent" and "Additional Rent", all as hereinafter defined. Unless provided herein
to the contrary, Tenant shall pay all rent to Landlord in advance on or before
the first day of each month of the Term at the address provided in Section 1.15
------------
hereof, commencing upon the Rent Commencement Date and until the Expiration
Date. All rent shall be paid to Landlord in lawful money of the United States of
America, without demand therefor, and without deduction, offset or abatement of
any kind, except as may be expressly provided for hereafter. Rent for any
partial
5.
<PAGE>
month, shall be prorated on the basis of actual days elapsed. The Premises are
being leased to Tenant on a pure net basis, except as specifically set forth in
Section 7.6 hereof. At Tenant's request, Landlord shall cooperate with Tenant to
- -----------
arrange for monthly automatic deposits to Landlord's account of Base Rent and
Additional Rent.
5.2 BASE RENT. Tenant shall pay all sums specified in Section 1.8,
-----------
as adjusted pursuant to Sections 1.9 of this Lease, as "Base Rent", to Landlord
------------
in advance on or before the first day of each month as the gross, guaranteed
rent ("Base Rent"), from the Rent Commencement Date until the Expiration Date
pursuant to the terms of this Lease.
5.3 ADDITIONAL RENT. All amounts which Tenant is required to pay to
Landlord under this Lease, except for Base Rent, shall be treated as "Additional
Rent", and shall be paid when due as provided herein. Additional Rent shall
include, but not be limited to, all costs of all utilities, maintenance,
repairs, replacements and services provided or required to the Premises, unless
Tenant is billed for such utilities, maintenance and repairs directly by the
provider of such services, Real Property Taxes and Personal Property Taxes.
5.4 OPERATING EXPENSES. Tenant shall pay any and all Operating
Expenses related to the Premises. "Operating Expenses" shall include all costs
and expenses incurred by Landlord in owning, operating, managing and repairing
the Building and the Land, including, but not limited to, all costs and expenses
of: (i) Landlord's Insurance, whether or not required by any Landlord's Lender;
(ii) pest control, cleaning of exterior windows, cleaning, sweeping, striping,
painting, resurfacing, repaving, disposing of refuse, inspecting, planting and
landscaping for the Premises; (iii) providing janitorial services for the
Premises; (iv) providing security, including but not limited to, electronic
intrusion and fire control devices, card key access systems, guards and any
attendant costs of such guards and telephonic alert system devices; (v)
complying with all Rules and Regulations, as defined in Section 7.2 hereof, and
-----------
any requirements of Landlord's Lender, including but not limited to,
improvements or changes required by any current or future Regulations or
Landlord's Lender; (vi) fees for permits and licenses; (vii) court costs; (viii)
replacing, repairing and maintaining foundations, floors, carpeting, walls,
hallways, roofs, stairways, signage for the Building, gutters, downspouts,
building service, electrical, mechanical, plumbing, heating, air conditioning
and ventilating equipment and systems, sidewalks, landscaping, drainage,
equipment, fixtures, including all labor and materials costs and equipment
rental fees, and any other capital improvements; (ix) utilities furnished to the
Premises, including air conditioning, electricity, lighting, steam, heating,
mechanical, elevator service (if any), and ventilation; (x) capital improvement
and operating and expense reserves if Tenant fails to maintain the Premises
pursuant to the terms of this Lease; and (xi) any other expenses of any kind
whatsoever which would reasonably or customarily be included in managing,
operating, maintaining and repairing office buildings in the location in which
the Building is situated. If Tenant fails to maintain the Premises pursuant to
the terms of this Lease, Landlord may establish reasonable reserves for
maintaining the Building and on the Land, and for the repair and replacement of
improvements in the Building and the Land and may include the reserves as
Operating Expenses, provided that when the reserves are actually used, the
expenditure of the reserves shall not be considered Operating Expenses. With
respect to any Operating Expenses paid directly by Landlord and reimbursable to
Landlord by Tenant, Tenant shall have the right to review such Operating
Expenses within twenty (20) days
6.
<PAGE>
of Landlord's written request for reimbursement. Within ten (10) days following
the expiration of such twenty (20) day review period, Tenant shall pay such
amount owed to Landlord.
5.5 REAL ESTATE TAXES. "Real Estate Taxes" shall include all real
estate taxes, and all assessments (whether general, special, ordinary or
extraordinary), possessory interest, improvement bonds, license fees, commercial
rental taxes, sewer and water rents and other levies, fees and charges of every
kind imposed by any authority having the direct or indirect power to so tax,
levy or assess (including, without limitation, any charges, assessments, or
levies imposed by any city, state or federal government, or any school, water,
agricultural, sanitary, fire, street, drainage or other improvement or special
assessment district) which: (i) relate in any way to the Building and/or the
Premises, to its operation, or to the possession, ownership, occupancy, use,
repair, restoration or construction of the Building and/or the Premises, or any
part thereof, or to the services provided Tenant, or to Landlord's gross
receipts or revenues from the Building and/or the Premises, or to Landlord's
legal or equitable interest in the Building and/or the Premises; (ii) are
imposed by reassessment, are added to a tax or charge or otherwise as a result
of (a) construction of improvements, (b) a transfer, either partial or total, of
Landlord's interest in or the beneficial ownership of the Building and/or the
Premises, or (c) this transaction, this Lease, the leasehold created hereby, or
any modifications or transfer of this Lease; (iii) is interest on installment
payments of Real Estate Taxes; (iv) is any cost and/or fee (including without
limit attorneys' and appraisers' fees and court costs) incurred by Landlord in
calculating, contesting or negotiating Real Estate Taxes; (v) are levied on,
assessed against, or measured by, either gross or net amounts paid or discharged
by Tenant; (vi) related in any way to the sewer service for the Building; and/or
(vii) all sales, use, occupancy or documentary transfer taxes which may be
imposed upon Landlord or Tenant resulting from or related to the acquisition,
leasing, subleasing, sale, assignment or use of the Building and/or the Premises
or any portion thereof. Throughout the Term, Real Estate Taxes shall also
include any tax, fee, levy, assessment or charge that is in addition to or in
substitution for (whether partially or totally) any tax, fee, levy, assessment
or charge that is included within the definition of "Real Estate Taxes" as set
forth above.
Provided Tenant is not then in default or would be with notice or
the passage of time, or both, and Landlord elects not to contest the validity,
applicability and/or amount of Real Estate Taxes, Landlord hereby grants Tenant
a revocable license to contest the validity, applicability, and/or amount of any
Real Estate Taxes by appropriate proceedings. Tenant shall pay all costs of such
contest and shall have the right to retain any recoveries except for any costs
incurred by Landlord in assisting Tenant with such contest. Landlord shall have
the right to negotiate or contest any Real Estate Taxes and shall advise Tenant
of Landlord's decision not to contest the validity, applicability and/or amount
of Real Estate Taxes.
5.6 PAYMENT OF OPERATING EXPENSES AND REAL ESTATE TAXES.
A. Payment of Operating Expenses. Tenant shall pay all
-----------------------------
Operating Expenses directly to the provider of such costs, services and
utilities. Any contracts between such providers of costs, utilities and services
and Tenant shall be obligations of Tenant and shall not obligate Landlord unless
Landlord otherwise agrees in writing, and a copy of all such contracts shall be
delivered to Landlord within thirty (30) days of full execution thereof.
7.
<PAGE>
B. Real Property Taxes; Personal Property Taxes. Tenant shall
--------------------------------------------
pay directly (with a copy of any correspondence and the payment check to
Landlord), five (5) days prior to delinquency, (i) all Real Estate Taxes, and
(ii) any and all taxes and assessments levied or assessed during the Term upon
or against (a) Tenant's Property, furniture, equipment, and any other personal
property installed or located in the Premises and (b) all Alterations, as
defined in Section 12.1 hereof, including all additions, betterments, or
------------
improvements of whatever kind or nature made by Tenant to the Premises, that are
separately assessed or cause the assessment for the Premises to be greater than
it would have been with standard tenant improvements and no Alterations.
Whenever possible, Tenant shall cause Tenant's Property and all such other
property to be assessed and billed separately from the real property of
Landlord. If any governmental authority requires a tax to be paid by Tenant, but
collected by Landlord for and on behalf of such governmental authority, then
Tenant shall pay, at the election of Landlord, one-half (1/2) or one-twelfth
(1/12th) of the annual amount of such tax to Landlord semi-annually or monthly,
as the case may require, in advance with the Base Rent payment.
5.7 PROPERTY INSURANCE MAINTAINED BY LANDLORD. During the Term,
"Landlord's Insurance" shall include the cost of Landlord's "all risks" property
insurance on the Building and the Premises and on the fixtures and equipment
located therein and owned by Landlord, including plate glass insurance. "All
risks" property insurance shall mean, if Landlord does not separately insure the
Building and the Premises and/or the fixtures and equipment therein and owned by
Landlord, insurance against loss or damage by fire, vandalism, malicious
mischief and such other casualties as are included in extended coverage,
including earthquake and flood coverage, in an amount equal to up to one hundred
percent (100%) of the full replacement cost thereof (including foundations and
excavations), with an inflation rider and rental loss insurance, at Landlord's
option, in an amount equal to up to twelve (12) months' rent. If Landlord elects
to separately insure Tenant and so notifies Tenant, Tenant shall, within ten
(10) days after Tenant receives Landlord's written demand therefor, reimburse
Landlord in full for the total cost of such insurance on the Premises as
calculated by Landlord, without regard to any deductible amount or retention
amount in the event of loss, whether or not Landlord shall choose to maintain a
deductible amount or a retention amount. Landlord shall have no obligation to
insure Tenant's Property (as defined in Section 13.1 of this Lease). The cost of
any such insurance and any deductible amount or retention amount in the event of
loss, whether or not Landlord shall choose to maintain a deductible amount or
retention amount for its own account, shall be billed to Tenant as Additional
Rent. Notwithstanding the foregoing, Colorado Business Bank, N.A., and its
Affiliate shall have the right, upon written notice to Landlord, to carry all of
such Landlord's Insurance on Landlord's behalf through Tenant's blanket coverage
and to pay all premiums therefor directly to the insurer, provided such insurer
meets the requirements of Section 9.1 hereof; and in such case, Tenant shall
-----------
provide Landlord with proof of coverage and payment, as provided in Article IV
----------
below.
ARTICLE VI
SECURITY DEPOSIT
----------------
6.1 SECURITY DEPOSIT. As of the Term Commencement Date, Tenant
shall not be obligated to deposit with Landlord an amount equal to one month's
Base Rent ("Security Deposit"). If Tenant fails on three (3) occasions during
the Term to timely pay rent
8.
<PAGE>
on or before the due date as provided herein, then Tenant shall deposit with
Landlord the Security Deposit within five (5) days of Landlord's written demand
therefor. Landlord shall hold the Security Deposit as security for Tenant's
faithful performance of all the terms, covenants, and conditions of this Lease
and to compensate Landlord for any other expenses, loss or damage that Landlord
may suffer because of Tenant's default. Landlord shall not be required to keep
the Security Deposit separate from Landlord's general funds. Landlord shall have
the right to commingle the Security Deposit with Landlord's general funds and to
retain any and all interest and earnings on the Security Deposit. Tenant shall
not be entitled to any interest on the Security Deposit.
6.2 USE OF SECURITY DEPOSIT. If Tenant breaches or fails to perform
any of Tenant's obligations under this Lease, Landlord shall have the right, but
not the obligation, to use or retain all or any part of the Security Deposit to
cure the breach or failure of performance, and to compensate Landlord for any
damages sustained by Landlord, including but not limited to payment of: (i)
delinquent rent; (ii) interest on delinquent rent; (iii) late charges on
delinquent rent; (iv) the cost of performing any of Tenant's obligations under
this Lease; (v) the cost of repairing damages to the Premises; (vi) the cost of
cleaning, maintaining, repairing, restoring or reletting the Premises; (vii)
attorneys' and accountants' fees and disbursements and court costs; (viii)
brokerage commissions and finders' fees; and, (ix) interest on any and all of
the above at Remedy Rate (defined in Section 17.3 hereof) from the date due
------------
until paid; provided, however, that retention of all or any part of the Security
Deposit shall not affect Tenant's obligations under this Lease or Landlord's
other rights and remedies provided at law, in equity, or under this Lease. If
any portion of the Security Deposit is used or required as provided for in this
Section, then within five (5) days after written demand by Landlord, Tenant
shall deposit with Landlord sufficient cash to restore the Security Deposit to
its original amount or establish the Security Deposit. Tenant's failure to make
this deposit shall be a default under this Lease.
6.3 REFUND AND TRANSFER. If Tenant shall have fully and faithfully
performed all of Tenant's obligations under this Lease (or upon the earlier
termination without Tenant's fault) and after Landlord has inspected the
Premises, has cleaned and repaired any damage, and has received invoices for
such repair or cleaning costs, if any, then Landlord shall return the Security
Deposit or any balance thereof, if any, to Tenant. Landlord may transfer the
Security Deposit, if any, or that portion remaining after any deduction, to
Landlord's successor-in-interest and shall upon such transfer be discharged from
any further liability with respect to such Security Deposit.
ARTICLE VII
USE OF THE PREMISES
-------------------
7.1 TENANT'S USE OF THE PREMISES. Landlord hereby grants to Tenant,
for the Term, subject to the terms of this Lease, an exclusive right to use the
Premises. Notwithstanding the foregoing, Tenant's right to use the Land is
limited solely to: (a) the ingress and egress of customers, invitees, directors,
officers, employees and licensees of Tenant, to and from the Building; and the
public streets adjacent to the Building, for both vehicular and pedestrian
traffic and for the parking of vehicles in accordance with Section 7.3 hereof;
-----------
9.
<PAGE>
(b) landscaping; (c) placement of Tenant's signage, subject to Section 12.4
------------
hereof; and (d) Alterations approved by Landlord in accordance with Section 12.1
------------
hereof. Landlord hereby acknowledges its approval to Tenant's installation of a
drive-through facility on the Premises; provided, however, Tenant complies with
Article XII hereof.
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7.2 COMPLIANCE WITH LANDLORD'S RULES AND REGULATIONS. Landlord may,
from time to time, establish reasonable rules and regulations ("Rules and
Regulations") for the management, safety, care and cleanliness of the Building
and the Premises. Tenant, together with all other persons entering or occupying
the Premises at Tenant's request or with Tenant's permission, including but not
limited to Tenant's invitees and customers, shall comply with the Rules and
Regulations and any violation thereof shall be a default under this Lease by
Tenant. Landlord reserves the right to amend the Rules and Regulations at any
time and from time to time and shall give Tenant at least ten (10) days' notice
of any amendment.
7.3 PARKING. Tenant shall only have the right to use the Land for
parking for its employees, agents, contractors, subcontractors or invitees (but
not Parking Licensees unless Landlord has approved such Parking Licensees). Upon
request of Landlord, Tenant shall supply Landlord with a list of license numbers
for vehicles used by its employees, agents, contractors or subcontractors.
Tenant shall not have the right to sublet or assign its right to use the Parking
Spaces except as provided in Article XX hereof.
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7.4 PERMITTED USE. Tenant shall use the Premises solely for the Use
of the Premises specified in Section 1.11 hereof from the date possession of the
------------
Premises is delivered to Tenant until the Expiration Date. No other use shall be
permitted without the prior express written consent of Landlord, which consent
may be withheld in Landlord's sole discretion.
7.5 COMPLIANCE WITH LAWS; NUISANCE. Tenant shall, at its sole
expense and at all times, comply fully with (i) all federal, state and local
laws, including all zoning laws and ordinances, and all regulations, codes,
requirements, public and private land use restrictions rules and orders
(individually and collectively, "Regulations") that apply to the Premises or
Tenant's use or occupancy thereof, including but not limited to the obligation
to alter, maintain, repair or restore the Premises in compliance and conformity
with all such Regulations, and (ii) any and all requirements and recommendations
of any insurance organization or company necessary for the maintenance of
reasonable fire and public liability insurance covering the Premises. Tenant
shall neither store, use or sell any article in or about the Premises, nor
permit any act, that would cause the premiums for insurance to increase or cause
a cancellation of any policy upon the Premises. Tenant shall not occupy, suffer
or permit the Premises or any part thereof to be used for any illegal, immoral
or dangerous purpose, or in any other way contrary to the law or the rules or
regulations of any public authority. Tenant shall not commit, or suffer to be
committed, any waste upon the Premises, or any public or private nuisance, or
any other act or thing which may disturb the quiet enjoyment of any neighbors of
the Premises. Tenant shall not conduct or permit to be conducted any sale by
auction in, upon or on the Premises.
10.
<PAGE>
7.6 ENVIRONMENTAL COMPLIANCE. Tenant represents, warrants, and
covenants to Landlord that Tenant shall at no time use or permit the Premises to
be used in violation of any Regulations, including any Regulations which relate
to or govern Hazardous Materials and/or the environmental conditions in, on,
under or about the Premises, including, but not limited to, air quality, soil
and surface and subsurface water conditions (individually and collectively,
"Environmental Regulations"). Tenant shall assume sole and full responsibility
for, and shall remedy at its sole cost and expense: (a) all such violations that
occur after the date of this Lease by Tenant or Tenant's successors, assigns,
licensees, invitees, officers, directors, employees, agents and partners; and
(b) the removal of any asbestos or asbestos-containing material located on the
Premises prior to the date of this Lease that Tenant elects to remove. Tenant
shall at no time use, generate, release, store, treat, dispose of, or otherwise
deposit, in, on, under or about the Premises, any hazardous or toxic substances,
wastes or related materials ("Hazardous Materials") or permit or allow any third
party to do so, without Landlord's express, prior, written consent and Tenant's
compliance, at Tenant's sole cost and expense, with all Environmental
Regulations. Tenant may use chemicals and other materials that are normal and
customary to its business for general office use and in customary quantities by
tenants of office buildings in the County where the Premises are located. Tenant
shall pay or reimburse Landlord for any costs or expenses incurred by Landlord,
including reasonable attorneys', engineers', consultants' and other experts'
fees and disbursements incurred or payable to determine, review, approve,
consent to or monitor the requirements for Tenant's compliance with
Environmental Regulations. Landlord's election to conduct such inspections shall
not be construed as approval of Tenant's use of the Premises or any activities
conducted thereon, and shall in no way constitute an assumption by Landlord of
any responsibility whatsoever of Tenant's use of the Premises or Hazardous
Materials. For the purposes of this Section, Hazardous Materials shall include,
but not be limited to, asbestos, asbestos-containing matter, and the group of
organic compounds known as polychlorinated biphenyls, as well as substances
defined as "hazardous substances" or "toxic substances" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq; ("CERCLA"); the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1802; the Resource Conservation Recovery Act of 1976, 42
U.S.C. Section 6901, et seq. ("RCRA"); those substances identified in
regulations, orders, and publications adopted pursuant to Colorado law as
"hazardous wastes" and/or "hazardous substances" which now exist or which may be
enacted or become effective after the date of this Lease; all as the foregoing
may be amended or recodified from time to time. Tenant shall provide Landlord
with written notification, immediately upon the discovery or notice or
reasonable grounds to suspect, by Tenant, its successors, assigns, licensees,
invitees, employees, officers, directors, agents, partners and/or any other
third party, that any provision of this Section has not been strictly complied
with. It shall be an Event of Default under this Lease, entitling Landlord to
exercise any of its rights and remedies under this Lease, if any provision of
this Section is not strictly complied with at all times.
7.7 LANDLORD'S RIGHT OF ENTRY. Landlord, at reasonable times and
with prior written notice to Tenant, may go into the Premises without any
liability whatsoever for the purposes of: (i) performing all of Landlord's
obligations under this Lease; (ii) inspecting the Premises; (iii) inspecting the
performance by Tenant of the terms and conditions hereof; (iv) showing the
Premises to prospective tenants, purchasers, or mortgagees; and (v) posting
notices
11.
<PAGE>
for the protection of Landlord on the Premises. Except following an Event of
Default, Landlord shall make such entry or inspection accompanied by a
representative of Tenant.
ARTICLE VIII
UTILITIES
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8.1 TENANT'S OBLIGATIONS. Subject to Rules and Regulations from
time to time established by Landlord, Tenant shall obtain at Tenant's sole cost
and expense: (i) heating, air conditioning and ventilation in amounts required,
in Tenant's reasonable judgment, for the use and occupancy of the Building and
the Premises; and (ii) electric current in amounts required for normal lighting
fixtures, outdoor lighting on the Land and Tenant's use of the Premises. Tenant
shall provide, at Tenant's sole cost and expense, janitorial service five (5)
days per week to the Building and the Land, generally consistent with that
furnished in other office buildings in the area in which the Building is
located. Landlord makes no representation with respect to the adequacy or
fitness of the air conditioning or ventilation equipment in the Building to
maintain temperatures which may be required for, or because of, any equipment of
Tenant and Landlord shall have no liability for loss or damage in connection
therewith. Landlord makes no representation with respect to the adequacy of the
telecommunication equipment and Landlord shall have no liability for loss of
failure of such telecommunication equipment.
8.2 LIMITATION ON LANDLORD LIABILITY. Landlord shall not be liable
for any failure of any services or utilities, and Tenant shall not be entitled
to any damages nor shall such failure relieve Tenant of the obligations to pay
the full rent reserved hereunder or constitute to be construed as a constructive
or other eviction of Tenant. In the event any governmental entity promulgates or
revises any statutes, ordinance or building, fire or other code or imposes
mandatory controls or guidelines on Landlord relating to the use or conservation
of energy, water, gas, light or electricity or the reduction of automobile or
other emissions or the provision of any other utility or service provided to the
Premises or in the event Landlord is required or elects to make alterations to
the Building or Land or any portion thereof, in order to comply with such
mandatory controls or guidelines, Landlord may, in its sole discretion, comply
with such mandatory controls or guidelines or make such alterations to the
Premises or portion thereof and charge Tenant for such compliance or, at
Landlord's option, Landlord may require Tenant to comply directly with such
controls or guidelines and provide Landlord with written proof of such
compliance. Such compliance and the making of such alterations shall in no event
entitle Tenant to any damages, relieve Tenant of the obligation to pay the full
rent reserved hereunder or constitute or be construed as a constructive or other
eviction of Tenant.
8.3 ALTERNATIVE TELEPHONE OR TELECOMMUNICATIONS PROVIDER.
A. No Expense. In the event that Tenant wishes to utilize the
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services of a telephone or telecommunications provider whose equipment is not
servicing the Building as of the date of Tenant's execution of this Lease
("Provider'), such Provider shall be permitted to install its lines or other
equipment within the Building; provided, however, Landlord shall incur
12.
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no expense whatsoever with respect to any aspect of Provider's provision of its
services, including without limitation, the costs of installation, materials,
and service.
B. Provider's Good Standing. The Provider shall be licensed in
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the State of Colorado.
C. Tenant Responsible for Service Interruptions. Tenant agrees
--------------------------------------------
that to the extent service by Provider is 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 expense to obtain
substitute service.
D. No Third Party Rights. The provisions of this clause may be
---------------------
enforced solely by the Tenant and Landlord, and are not for the benefit of any
other party, specifically, without limitation, no Provider shall be deemed a
third party beneficiary of the Lease.
ARTICLE IX
INSURANCE
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9.1 GENERAL INSURANCE. Tenant shall, at its sole cost and expense,
maintain in effect from and after the Term Commencement Date and continuously
thereafter until the Expiration Date, the policies of insurance required under
this Article. All policies that Tenant is required or elects to obtain under
this Lease shall be issued by companies licensed to do business in Colorado with
a general policyholder's rating of not less than "A" and a financing rating of
not less than Class "X", as rated by the most current available "Bests"
Insurance Reports. On or before the Term Commencement Date, Tenant shall furnish
Landlord with evidence acceptable to Landlord that (i) the policies (or a binder
thereof) required pursuant to this Article are in effect and (ii) Landlord shall
be notified by the carrier in writing thirty (30) days prior to cancellation,
material change, or non-renewal of such insurance. The policies that Tenant is
required or elects to obtain pursuant to this Lease shall name Landlord and,
upon Landlord's request, any Landlord's Lender, as additional insureds and shall
be primary policies, unaffected by any insurance or self-insurance Landlord may
have. If Tenant carries any of the insurance required hereunder in the form of a
blanket policy covering various liabilities to Tenant and its subsidiaries,
controlling or affiliated corporations, any certificate required hereunder shall
make specific reference to the Premises. Upon the reasonable requests of
Landlord from time to time, Tenant shall increase the limits of the policies
that Tenant is required or elects to obtain under this Lease and shall purchase
and keep in force policies of such other types of insurance as required by any
Regulation. If Tenant fails to procure and maintain, throughout the Term, the
policies of insurance required by this Lease, then Tenant shall be solely liable
for any loss or cost resulting from such failure, and, in addition, Landlord
shall have the rights and remedies specified in Article XVII hereof.
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9.2 COMMERCIAL GENERAL LIABILITY INSURANCE. Tenant shall obtain and
keep in force throughout the Term, a policy or policies of commercial general
liability insurance covering the Premises and Tenant's business (or that of any
subtenant, licensee, or concessionaire, if permitted under Article XX) in
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amounts not less than a combined single limit
13.
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of Three Million and No/100 Dollars ($3,000,000.00) per occurrence and in the
aggregate for bodily injury, personal injury, death and property damage
liability. All of such insurance shall be primary and noncontributing with any
insurance which may be carried by Landlord and shall contain a provision that
Landlord, although named as an additional insured, shall nevertheless be
entitled to recover under the policy for any loss, injury, or damage to
Landlord, its agents and employees, or the property of such persons by reason of
the negligence of Tenant. All such insurance shall specifically insure Tenant's
performance of Tenant's indemnity obligations under this Lease. The adequacy of
the limits afforded by the liability and property damage insurance shall be
subject to review by Landlord from time to time, and, if it appears in such a
review that a prudent businessperson in the area operating a similar business to
that operated by Tenant on the Premises would increase the limits of its
liability insurance, Tenant shall effect such increases within thirty (30) days
after receipt of notice from Landlord.
9.3 WORKERS' COMPENSATION INSURANCE. If the nature of Tenant's
business is such as to place any or all of its employees, contractors,
subcontractors or agents under the coverage of local workers' compensation or
similar statutes, Tenant shall keep in force workers' compensation or similar
insurance affording statutory coverage and containing statutory limits. If
Landlord is required to obtain workers' compensation or similar insurance in
connection with Landlord's ownership, operation, or leasing of the Premises or
the performance of Landlord's obligations under the Lease, the cost of any such
workers' compensation or similar insurance shall be borne solely by Landlord.
9.4 PROPERTY AND EXTENDED COVERAGE INSURANCE. Tenant shall keep in
force an "all risks" property insurance policy, with vandalism and malicious
mischief endorsements, covering one hundred percent (100%) of the replacement
cost of Tenant's Property, with an inflation rider or endorsement attached
thereto and twelve (12) months' business interruption insurance rider or
endorsement attached thereto which shall include any business interruption
caused by the lack of telecommunication services to the Premises.
9.5 WAIVER OF SUBROGATION. Notwithstanding anything to the contrary
contained herein, Landlord and Tenant hereby waive any rights each may have
against the other on account of any loss or damage occasioned to Landlord or
Tenant, their respective property, the Premises or its contents, arising from
any risk covered by the insurance required hereunder. The parties each, on
behalf of their respective insurance companies insuring the property of either
Landlord or Tenant against any such loss, waive any right of subrogation that it
may have against Landlord or Tenant, as the case may be. The foregoing waivers
of subrogation shall be operative only so long as available without invalidating
either Landlord's or Tenant's policy of insurance.
ARTICLE X
OPTION TO PURCHASE
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During the Term of the Lease and provided that Tenant is not then
in default or would be with notice or passage of time, or both, and if Landlord
elects, in Landlord's sole and absolute discretion, to sell the Premises,
Landlord shall be obligated, on a one-time basis only, to
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first offer to Tenant or Tenant's Affiliate, but not any Transferee (as defined
in Section 20.2 hereof), the right to purchase the Premises, based on the terms
------------
and conditions set forth in Landlord's notice ("Landlord's Notice"). Landlord's
Notice shall set forth the purchase price based on the Fair Market Value of the
Premises determined by an independent, unaffiliated real estate appraiser,
selected by Landlord, with a membership in the American Appraisal Institute, or
its successor organization ("MAI Appraiser") and at least five (5) years full
time experience appraising office building properties in the downtown area of
Denver County. The "Fair Market Value" shall mean the purchase price for the
Premises based upon a purchase by a third party of real property of comparable
size, location and quality located in Denver County, Colorado. If Tenant fails
to accept Landlord's offer to purchase the Premises on the terms and conditions
set forth in Landlord's Notice within thirty (30) days of Tenant's receipt of
Landlord's Notice, then Landlord shall not have any further obligation to sell
the Premises to Tenant and Landlord shall have the right to negotiate and/or
sell the Premises to any third party on any terms and conditions agreed upon by
Landlord and such third party. If Tenant accepts Landlord's offer to purchase,
Landlord and Tenant shall enter into a purchase and sale agreement drafted by
Landlord's attorneys based on the terms and conditions set forth in Landlord's
Notice.
ARTICLE XI
MAINTENANCE AND REPAIR OF PREMISES
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11.1 TENANT'S MAINTENANCE OBLIGATIONS. Tenant, at Tenant's sole
expense, shall maintain all portions of the Building, Tenant's Property,
and all other portions of the Premises in first-class order and in neat,
clean and sanitary condition and repair, including any necessary repairs
and replacements to any portion of the Premises, except for such repairs
as may be required because of the willful misconduct of Landlord.
Tenant's obligations shall include, but not be limited to, the
following: (i) repairing and maintaining the walls, foundation,
structural support columns running through the Building; (ii) repairing
and replacing the roof of the Building; (iii) repairing and replacing
the plumbing, heating, ventilation, air conditioning, electrical,
sprinkler, telecommunications risers, equipment, panels and cabling, and
other systems and installations serving the Premises; (iv) repairing and
maintaining its parking facilities and outdoor lighting fixtures serving
the Premises, and any additional parking structure and landscaping which
may be located on the Land; (v) promptly replacing any broken doors,
windows and any cracked or broken glass in the Premises with
replacements of like kind and quality; (vi) painting, redecorating, and
renovating the interior of the Premises and Tenant's Property; (vii)
removing any trash on a regular basis from the Premises; (viii)
maintaining, repairing and replacing, as applicable, light fixtures,
light bulbs, ballasts, door closures, door locks, plumbing stoppages,
pest control, carpeting, wall covering, window treatments; (ix) keeping
all mechanical and electronic equipment, systems and apparatus installed
by Tenant free of vibration and noise which may be transmitted beyond
the Premises; (x) maintaining Tenant's signs permitted by this Lease in
first-class order, condition and repair; and (xi) maintaining a contract
for snow removal and sand disbursement (if necessary). If Tenant or its
agents, employees, contractors or subcontractors cause any damage to the
Premises including, but not limited to,
15.
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damage to or blockage of the water, sewer, HVAC, or electrical systems,
then Tenant shall promptly repair any such damage.
Landlord makes no representations or warranties concerning the
ability of Landlord, its employees, agents, contractors or subcontractors to
maintain the Building and the Premises in a secure fashion. Landlord shall not
incur any liability to Tenant, its employees, agents, customers or invitees as a
result of any failure of any security system installed on the Building and the
Land or any security procedure instituted at the Premises.
11.2 ANTENNAE/LIGHTS. Tenant shall not erect, construct, place or
permit any television, radio, or other electronic towers, aerials, antennae,
satellite dishes or devices of broadcast or reception or other means of
communication on the Premises or Building without Landlord's prior written
consent, which consent may not be unreasonably withheld.
11.3 LANDLORD'S CURE. If Tenant fails to commence any of Tenant's
obligations listed in Section 11.1 hereof within ten (10) days after receipt of
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Landlord's written demand to perform such obligations, or fails to adequately
complete the performance of such obligations within a reasonable time after
commencement, then Landlord may, but is not obligated to, perform such
obligations without liability to Tenant for any loss to Tenant's stock or
business that might arise by reason thereof. Tenant shall reimburse Landlord on
demand in an amount equal to the cost incurred by Landlord in the performance of
such obligations, plus interest as set forth in Section 17.6 hereof.
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ARTICLE XII
ALTERATIONS AND ADDITIONS
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12.1 ALTERATIONS. Tenant shall not make (i) any alterations,
improvements, additions, or utility installations, including without limit,
altering the carpeting, hallway entry doors, floor or window coverings, locks,
air lines, power panels, electrical distribution systems, lighting fixtures,
space heaters, air conditioning or plumbing in, on, or about the Premises or
(ii) any other change or alteration to the Premises (individually and
collectively, "Alterations") without Landlord's express, prior, written consent,
which consent shall not be unreasonably withheld. Notwithstanding the foregoing,
if such Alterations are not structural in nature and the total cost of such
Alterations in one (1) year is less than Twenty-five Thousand and No/100 Dollars
($25,000.00), then Tenant shall not be obligated to obtain Landlord's consent.
If Tenant makes or commences any Alterations without the prior written approval
of Landlord, Landlord shall have the right to require that Tenant remove any or
all of such Alterations at Tenant's sole expense and shall also have the right
to declare Tenant in default and to terminate this Lease. Any Alterations shall,
at all times comply fully with all applicable federal, state and municipal laws,
ordinances, regulations, codes and other governmental requirements now or
hereafter in force and Tenant shall, at Tenant's sole cost and expense, and take
all necessary actions now or hereafter to ensure such compliance that is
required by any such governmental requirement as a result of any Alteration.
Tenant shall provide Landlord with a written request for approval
and proposed, detailed plans for any Alterations that Tenant would like to make.
Landlord shall have the right
16.
<PAGE>
to condition its consent upon Tenant's: (i) obtaining a building permit and
complying with all Regulations for the Alterations from appropriate governmental
agencies; (ii) furnishing a copy of such building permit and evidence of such
compliance to Landlord prior to the commencement of such work; (iii) complying
with all the conditions of such building permit and all Regulations; (iv)
providing Landlord with plans and specifications for the Alterations for
Landlord's prior written approval; (v) providing Landlord with a copy of the
construction contract, construction schedule, trade payment breakdown and list
of subcontractors and suppliers for Landlord's prior written approval; (vi)
filing the final plans and specifications and final construction contract in the
County Recorder's office where the Premises are located to insure Landlord
against any liability for mechanics' and materialmen's liens and stop notice
claims, and requiring Tenant to obtain a bond to insure completion of the work;
(vii) providing Landlord with written notice prior to commencing any such work;
and (viii) requiring any contractors used by Tenant carry a commercial general
liability insurance policy in amounts not less than a combined limit of One
Million and No/100 Dollars ($1,000,000.00) per occurrence for bodily injury,
personal injury, death and property damage liability. Landlord may require proof
of such insurance and bond prior to allowing Tenant to commence any Alterations.
Landlord's approval of the plans, specifications and working drawings for any
Alterations shall create no responsibility or liability on the part of Landlord
for their completeness, design sufficiency or compliance with all laws, rules
and regulations of governmental agencies or authorities. Landlord shall not be
liable for any damage, loss, or prejudice suffered or claimed by Tenant, its
agents or any other person or entity on account of: (a) the approval or
disapproval of any plans, contracts, bonds, contractors, sureties or matters;
(b) the construction of any Alterations or performance of any work, whether or
not pursuant to approved plans; (c) the improvement of or alteration or
modification to any portion of the Premises; or, (d) the enforcement or failure
to enforce any of the covenants, conditions and restrictions contained in this
Lease. Landlord's approval of Tenant's plans, or requirement that Tenant modify
Tenant's plans, shall not be deemed Landlord's express or implicit covenant or
warranty that such plans are safe or comply with any or all Regulations. Tenant
shall pay or reimburse Landlord for any costs or expenses incurred by Landlord,
including reasonable attorneys', engineers', contractors' and other consultants'
fees and disbursements incurred or payable to determine, review, approve,
consent to Tenant's plans and specifications and to or monitor Tenant's
Alterations.
12.2 CONSTRUCTION OF ALTERATIONS. Tenant shall pay when due all
claims for labor or materials furnished or alleged to have been furnished to or
for Tenant at, on, or for use in the Premises. Tenant shall keep the Building
and the Premises free and clear of all mechanics' liens and all other liens.
Tenant shall give Landlord immediate written notice of any lien filed against
the Premises, related to or arising from work performed by or for the Tenant.
Tenant shall give Landlord not less than ten (10) days' prior written notice of
the commencement of any Alterations to the Premises, and Landlord shall have the
right to post notices of nonresponsibility in or upon the Premises as provided
by law. If Tenant shall in good faith contest the validity of any such lien,
claim or demand, then Tenant, at its sole expense, shall defend, indemnify and
hold Tenant and Landlord harmless against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Tenant, Landlord, the Premises or the Building. In addition,
Landlord shall have the right to require that Tenant pay Landlord's attorneys'
fees and disbursements, court costs and other costs in defending any such action
if Landlord is named as a party to any such action, if the lien encumbers any
portion or interest in the Premises and/or if Landlord elects to defend any
17.
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such action or lien. Tenant shall execute and deliver to Landlord a valid notice
of completion of any Alterations in accordance with Colorado law, as amended or
recodified from time to time ("Tenant's Certificate of Completion") in
recordable form. Landlord shall have the right to record or cause Tenant to
record Tenant's Certificate of Completion in the Official Records of the County
Recorder's Office of the County in which the Premises are located.
12.3 TITLE TO ALTERATIONS. Subject to Section 13.1 hereof, any and
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all Alterations which may be made in or upon the Premises shall become the
property of Landlord and remain upon and be surrendered with the Premises at the
expiration of the Term without compensation to Tenant unless Landlord requires
that Tenant remove the Alterations pursuant to Section 13.2 hereof.
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12.4 SIGNS. Tenant shall be permitted to place, erect or maintain
or cause to be placed, erected or maintained on or to any exterior door, wall,
window or the roof of the Building, or on or to the glass of any window or door
of the Premises or Building, or on or to any sidewalk or other location within
the Premises, or within any window space in the Building, or within any entrance
to the Premises, any sign, decal, placard, banner, awning, decoration, flashing,
moving or hanging lights, lettering, advertising Tenant's name or concerning
Tenant's banking business; provided, however, such signs comply with all
applicable law. If Tenant places or causes to be placed or maintained any sign
which is not in compliance with the foregoing, Landlord or Landlord's
representative may remove the same at Tenant's sole cost and expense and without
notice or liability and without such removal constituting a breach of this Lease
or entitling Tenant to claim damages on account thereof. Tenant shall repair, at
its sole cost and expense, any damage to the Premises or Building caused by the
erection, maintenance or removal of any sign, awning, decoration or other
attachment. On the Expiration Date or on the sooner termination of the Lease,
Tenant shall remove all of Tenant's signs and/or sign casings, unless otherwise
requested by Landlord. All signs and sign casings to be removed by Tenant shall
be removed at Tenant's sole cost and expense; provided, however, Tenant shall
repair, to the reasonable satisfaction of Landlord, any damage to the Premises
caused by the removal.
ARTICLE XIII
TENANT'S PROPERTY
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13.1 TENANT'S PROPERTY. All trade fixtures, goods, inventory,
merchandise, stock, supplies, decorative light fixtures, and movable equipment
owned by Tenant and installed in the Premises at Tenant's sole cost and which
may be removed without material damage to the Premises ("Tenant's Property")
shall remain the property of Tenant during the Term. Except as provided to the
contrary in Section 12.3 hereof, Tenant's Property shall be removable from time
------------
to time and at the expiration of the Term or earlier termination thereof,
provided that Tenant shall repair, to the reasonable satisfaction of Landlord,
any damage to the Premises or Building caused by the removal of Tenant's
Property.
13.2 SURRENDER OF PREMISES. On the Expiration Date or on the sooner
termination of this Lease, Tenant shall peaceably surrender the Premises in
accordance with the terms of this Section and in good order, condition and
repair, broom-clean, excepting only
18.
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reasonable wear and tear and fire and other unavoidable casualty which Landlord
is required to repair hereunder. The provisions of this Section shall survive
termination of this Lease. Notwithstanding any other provision hereof, Tenant
shall not remove all or any part of any Alterations involving masonry, poured
concrete, hard surface bonded or adhesively affixed flooring, plumbing,
switches, transformers, floor covering, wall covering, ceiling material, fixed
partitions, and installed lighting equipment (whether or not the same are
Tenant's Property) designated by Landlord; except if removal of the lighting
equipment serving the Premises would render the Premises out of compliance with
applicable law. Unless otherwise requested by Landlord, Landlord and Tenant
hereby acknowledge that it shall be reasonable for Landlord to require Tenant:
(a) to remove any drive-up lane installed by Tenant; (b) following the removal
of the drive-up lane, repave and restripe the asphalt as part of Tenant's
surrender obligations; and (c) replace any drive-up or walk-up window or
automatic teller machine with material matching the interior and exterior walls
surrounding the removed improvement. Tenant shall repair any damage to the
Premises caused by such removal. Such items shall remain upon and be surrendered
with the Premises as a part thereof, without disturbance, molestation or injury,
and without charge, at the expiration or termination of this Lease and shall
then become the property of Landlord. Tenant shall promptly surrender all keys
for the Premises and all keycards to Landlord at the place then fixed for notice
to Landlord and shall inform Landlord of the combinations on any locks and safes
on the Premises.
ARTICLE XIV
DAMAGE AND DESTRUCTION
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14.1 LANDLORD'S DUTY OF REPAIR. Except as expressly provided
herein, Landlord shall not be required to repair the Premises or Building in the
event of any total or partial damage or destruction thereof. If the Premises or
Building is totally or partially damaged or destroyed by any cause insured
against by Landlord under the policy of insurance described in Section 5.7
-----------
hereof ("all risks" property insurance), then unless the Lease is terminated
pursuant to Section 14.3 hereof, Landlord shall repair such damage to the extent
------------
the available insurance proceeds received by Landlord cover the costs of such
repair. If the insurance proceeds are insufficient to restore such damage or
destruction, Landlord shall have the right to terminate this Lease upon ten (10)
days' written notice to Tenant unless Tenant agrees in writing to reimburse
Landlord for all insufficiencies.
14.2 REPAIRS BY LANDLORD. If Landlord is required to repair under
Section 14.1 above or if Landlord need not repair but nevertheless elects to
- ------------
make such repairs, Landlord shall give written notice to Tenant of Landlord's
decision to repair within thirty (30) days after the determination of the amount
of insurance proceeds available for any such restoration. To the extent the
policy of insurance described in Section 5.7 hereof provides Landlord with
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insurance proceeds for rental loss, rent shall be proportionately abated, based
upon the extent to which the damage and making of repairs unreasonably
interferes with Tenant's business, but only to the extent Landlord actually
receives such insurance proceeds while repairs are being made. Notwithstanding
anything to the contrary contained herein, unless Landlord actually receives
proceeds under any insurance policy for rental loss, there shall be no rent
abatement if the Premises are unusable due to damage or destruction caused by or
related to the fault or negligence of Tenant, or its employees, agents,
contractors or subcontractors. Tenant
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acknowledges that Landlord shall have the right, in connection with Landlord's
repair obligations under Section 14.1 hereof, to take any portion of the HVAC
------------
system out of service temporarily for the purpose of servicing, repairing,
maintaining, removing or replacing any portion of the HVAC system. In no event
shall Tenant assert a claim of constructive eviction or a breach of the covenant
of quiet enjoyment, or be entitled to an abatement of rent because of such
activities.
14.3 TERMINATION OF LEASE. Landlord may elect to cancel and
terminate this Lease by providing Tenant with written notice of such election
after the occurrence of any one of the following conditions: (i) if within
thirty (30) days after the damage or destruction, Landlord does not deliver
written notice to Tenant of Landlord's election to restore any damage or
destruction to the Premises that cannot be repaired within sixty (60) days after
the occurrence of such damage in the reasonable judgment of Landlord (based upon
the time necessary to obtain all governmental approvals and all labor, materials
and supplies to make such repairs); (ii) the Premises are damaged from any cause
to the extent of at least thirty-three and one-third percent (33-1/3%) of the
replacement cost thereof; (iii) the Building is totally destroyed; or, (iv) at
the time of any damage or destruction from any cause to the Premises, the amount
of Base Rent remaining due hereunder for the balance of the Term is less than
Landlord's reasonable estimate of the cost of repairing such damage. The Lease
shall be deemed automatically terminated effective upon the expiration of thirty
(30) days after the delivery of the written notice of Landlord's election to
Tenant. If the Lease is so terminated, neither party shall have any further
obligation to the other, except for Tenant's obligation to pay rent and other
charges which are accrued and unpaid as of the termination date and other
provisions that survive the termination of this Lease. Notwithstanding the
foregoing, Landlord shall not have the right to cancel and terminate the Lease
as provided herein if the insurance proceeds payable on account of such damage
or destruction, together with any funds made available by Tenant and delivered
to Landlord, at its sole option, for such purpose, are sufficient to rebuild the
Premises, at no cost to Landlord, and Landlord receives all rent payable
hereunder during such period of rebuilding.
ARTICLE XV
EMINENT DOMAIN
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15.1 TOTAL OR SUBSTANTIAL TAKING. If all of the Premises or the
Building is taken under the power of Eminent Domain or such a substantial
portion thereof is so taken that reasonable restoration will not result in the
Premises being reasonably suitable for the conduct of Tenant's business with
adequate parking and access, this Lease shall terminate on the date that Tenant
is required to yield possession to the condemning authority, or on the date that
the possession of the Premises or the Building or part thereof is taken,
whichever is later. The term "Eminent Domain" shall include the exercise of any
governmental power of condemnation or taking and any private sale or other
transfer in lieu of or under threat of condemnation.
15.2 PARTIAL TAKING. If there is a partial taking of the Premises
or the Building, Landlord shall give Tenant written notice thereof, and if,
after restoration of any improvements, the Premises would not be reasonably
suitable for Tenant's continued occupancy and conduct of its business, Tenant
may elect to terminate this Lease or affirm the Lease by
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delivering written notice to Landlord within thirty (30) days after any such
partial taking. Tenant's failure to give Landlord a notice of termination within
said thirty (30) day period shall be deemed to be Tenant's affirmation of the
Lease. If Tenant elects to affirm the Lease, then: (i) the Lease shall terminate
as to the part taken as of the date of transfer of possession; (ii) Base Rent
shall be reduced in the same proportion as the square footage of the portion of
the Building taken bears to the square footage of the Building as specified in
Section 1.4 hereof; and, (iii) Landlord shall, at Tenant's cost and expense,
- -----------
make all necessary repairs or alterations to the Premises required to restore
the Premises to useful condition. During such repair or restoration, rent shall
be abated proportionately as set forth above. Tenant hereby waives any statutory
rights of termination which may arise by reason of any taking of the Premises
under the power of Eminent Domain.
15.3 AWARD. Tenant hereby renounces any interest in, and assigns to
Landlord, any award made in any Eminent Domain proceeding for any such Eminent
Domain, provided that Landlord shall have no interest in or be assigned any
award made to Tenant for the taking of Tenant's Property or for Tenant's
relocation expenses. Tenant hereby specifically waives any right it may have to
any compensation award representing the excess of the market value, immediately
before the taking, of Tenant's leasehold interest in the portion of the Premises
taken over the rent attributable thereto under the terms of this Lease.
ARTICLE XVI
INDEMNIFICATION
---------------
Except for any loss or damage caused by gross negligence or willful
misconduct which Landlord or its agent is personally determined by the judgment
of a court of competent jurisdiction (sustained on appeal, if any) to have
committed, from and after the execution hereof, Tenant shall protect, defend,
indemnify, and hold Landlord harmless from and against any and all losses,
damages (whether actual, punitive or otherwise), liabilities, actions, causes of
action (whether legal, equitable or administrative), claims, judgments, costs,
and expenses, including attorneys' fees and disbursements, and court costs which
Landlord may suffer or incur as a direct or indirect consequence of: (i)
Tenant's failure to perform any of Tenant's obligations as and when required by
this Lease, including, without limit, any failure, at any time, of any
representation or warranty of Tenant to be true and correct, and any failure by
Tenant to satisfy any Lease condition; (ii) any claim or cause of action of any
kind by any person or entity to the effect that Landlord is in any way
responsible or liable for any act or omission by Tenant, its agents, employees,
contractors or subcontractors, whether on account of any theory of derivative
liability or otherwise; (iii) any act or omission by Tenant, any contractor,
subcontractor or material supplier, engineer, architect or other person or
entity located on the Premises at the time of such act or omission, except
Landlord, with respect to the Premises or the Building; (iv) any claim or cause
of action of any kind by any person or entity relating to the condition of or
operations conducted on the Premises which would have the effect of denying
Landlord the full benefit or protection of any provision of this Lease; and/or
(v) the existence or creation of any Alterations or Tenant's Property (whether
or not the same has been approved of by Landlord). Landlord's rights of
indemnity shall not be directly or indirectly limited, prejudiced, impaired or
eliminated in any way by any finding or allegation that Landlord's conduct is
active, passive or subject to any other classification or that Landlord is
directly or indirectly responsible under any
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theory of any kind, character or nature for any act or omission by Tenant or any
other person or entity, except Landlord. Tenant shall employ counsel reasonably
satisfactory to Landlord, or at Landlord's option, Landlord may retain its own
counsel, at the expense of Tenant, to prosecute, negotiate and defend any such
claim, action or cause of action. Landlord shall have the right to compromise or
settle any such claim, action, or cause of action without admitting actual
liability; provided, however, Landlord obtains Tenant's consent to such
compromise or settlement which consent shall not be unreasonably withheld,
conditioned or delayed. Tenant shall pay any indebtedness arising under said
indemnity to Landlord immediately upon demand by Landlord together with interest
thereon, at the Remedy Rate, from the date such indebtedness arises until paid.
Tenant's duty to indemnify Landlord shall survive the termination or expiration
of this Lease.
ARTICLE XVII
DEFAULTS AND REMEDIES
---------------------
17.1 EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an event of default ("Event of Default") and a material
breach of this Lease on the part of Tenant:
A. Failure to Make Payment. Tenant's failure to pay any rent or
-----------------------
other sums due hereunder on the date when such payment is due, where such
failure continues for ten (10) days after such payment is due, or Tenant's
failure on three (3) occasions during any twelve (12) month period to timely pay
rent on or before the due date as provided for herein (even though subsequently
cured).
B. Failure in Environmental Compliance. Tenant's breach of, or
-----------------------------------
Tenant's failure to perform any act necessary to prevent the breach of, any
covenant contained in Section 7.6 hereof, or the inaccuracy, incompleteness or
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untruth of any of Tenant's representations and warranties contained in Section
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7.6 hereof.
- ---
C. Failure to Perform Other Covenants. Tenant's breach or
----------------------------------
failure to perform any of Tenant's other covenants, agreements or obligations
hereunder, where such breach or failure continues for thirty (30) days after
service of written notice to Tenant to cure any such breach or failure except if
a different notice or cure period or no notice or cure period is specified in
another provision of this Lease, including but limited to the Events of Default
specified in Subsections 17.1(A), 17.1(B) and 17.1(D) hereof.
------------------- ------- -------
D. Bankruptcy Related. The making of a general assignment for
------------------
the benefit of creditors by Tenant, or the filing of a voluntary or involuntary
petition by or against Tenant under the Bankruptcy Reform Act, as amended or
recodified from time to time, or any other law relating to bankruptcy,
insolvency, or other relief of debtors, or the appointment of a receiver to take
possession of all or substantially all of Tenant's assets or the Premises or the
leasehold created by this Lease or the attachment, execution or other judicial
seizure of substantially all of Tenant's assets or the Premises or the leasehold
created by this Lease and in the case of an involuntarily filed petition, such
petition is not discharged within sixty (60) days
22.
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after the date of commencement, or Tenant's failure to generally pay Tenant's
debts as such debts become due.
17.2 REMEDIES. Upon the occurrence of an Event of Default by Tenant
as set forth in Section 17.1 above, Landlord shall have the following rights and
------------
remedies, in addition to any and all other rights and remedies available to
Landlord at law or in equity.
A. Terminate Lease. Landlord shall have the right to terminate
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this Lease and all rights of Tenant hereunder by giving written notice to
Tenant. If the Lease is so terminated, then Landlord may recover from Tenant:
(i) the worth at the time of award of any unpaid rent that had been earned at
the time of such termination; plus (ii) the worth at the time of award of the
amount by which the unpaid rent which would have been earned from the time of
such termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the Term
after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; plus (iv) any other amount necessary to
compensate Landlord for all the actual and consequential damages proximately
caused by Tenant's failure to perform Tenant's obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom; and
(v) at Landlord's election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable Colorado law. As
used in Subsections (A)(i) and (ii) above, the "worth at the time of award" is
computed by allowing interest at the Remedy Rate. As used in Subsection (A)(iii)
above, the "worth at the time of award" is computed by discounting such amount
at the discount rate of the Federal Reserve Bank of Kansas City at the time of
award plus one percent (1%). All amounts owing under this Subsection which are
not paid when due shall bear interest at the Remedy Rate from the date owing
until paid and such interest shall be compounded monthly.
B. Reenter Premises. Landlord shall also have the right, with
----------------
or without terminating this Lease, to reenter the Premises and to remove all
persons and Tenant's Property from the Premises and store the Tenant's Property
in a public warehouse or elsewhere at the cost of and for the account of Tenant;
provided, however, such right of reentry is preceded by applicable legal
proceedings, if any, required by Colorado law.
C. Maintain Lease; Relet Premises. Unless Landlord elects to
------------------------------
terminate this Lease as provided in Subsection 17.2(A) above, Landlord may from
------------------
time to time, without terminating this Lease, either recover all rent as it
becomes due or relet the Premises or any part thereof for such term or terms and
at such rental or rentals and upon such other terms and conditions as Landlord
in its sole discretion may deem advisable, with the right to clean and to make
alterations and repairs to the Premises at Tenant's sole expense; provided,
however, such rights are exercised in order to mitigate damages as required by
applicable law.
If Landlord elects to relet as provided herein, then rent received by
Landlord from such reletting shall be applied at Landlord's option: first, to
the payment of any indebtedness other than rent due hereunder from Tenant to
Landlord; second, to the payment of any cost of such reletting (including
attorneys' fees, court costs and brokerage commissions); third, to the payment
of the cost of any cleaning, alterations and repairs to the Premises; fourth, to
the payment of rent due and unpaid hereunder; and the balance, if any, shall be
applied in payment
23.
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of future rent as the same may become due and payable hereunder. If the portion
of such rentals received from such reletting during any month which is applied
to the payment of rent under the reletting lease is less than the rent payable
during that month by Tenant hereunder, then Tenant shall pay any such deficiency
to Landlord immediately upon demand by Landlord. Such deficiency shall be
calculated monthly and Tenant shall pay such deficiency monthly. Tenant shall
also pay to Landlord, upon Landlord's demand, the costs and expenses incurred by
Landlord in such reletting, including attorneys' fees, court costs and brokerage
commissions and in making any alterations and repairs to the Premises.
No reentry, acts of maintenance or preservation, efforts to relet,
or taking possession of the Premises by Landlord or the appointment of a
receiver upon initiative of the Landlord to protect the Landlord's interest
under the Lease shall be construed as an election to terminate this Lease unless
an express written notice of such intention is delivered to Tenant or unless the
termination thereof is decreed by a court of competent jurisdiction.
Notwithstanding any reletting of the Premises without termination of this Lease
by Landlord, Landlord may at any time after such reletting elect to terminate
this Lease, in which case, Landlord shall have all the rights and remedies
provided by law or equity or this Lease upon termination.
D. Performance by Landlord. If Tenant breaches or fails to
-----------------------
perform any of Tenant's obligations under this Lease and the breach or failure
continues for thirty (30) days (or such shorter time period as may be specified
otherwise in this Lease) after Landlord gives Tenant written notice of the
breach or failure, Landlord, without thereby waiving or curing such may, but
shall not be obligated to, perform any such obligation for the account and at
the expense of Tenant. Landlord may also perform any such obligation without
notice in case of an emergency.
E. Receiver on Behalf of Landlord. If, at the instance of
------------------------------
Landlord in any action arising under this Lease, a receiver ("Receiver") shall
be appointed to take possession of the Premises or to collect the rents derived
therefrom, then the receiver may, if it shall be necessary or convenient in
order to collect such rents, conduct the business of Tenant (except if Tenant or
Tenant's Affiliate is operating a bank on the Premises) then being carried on in
the Premises, and may take possession of any Tenant's Property and other
personal property and records used in Tenant's business and use the same in
conducting such business, without compensation to Tenant for such use. Neither
application for nor the appointment of a receiver shall be construed as an
election by Landlord to terminate this Lease, unless express written notice of
such election is given to Tenant.
F. Bankruptcy and Insolvency. In the event of the filing or
-------------------------
commencement of any proceeding by or against Tenant under the Federal Bankruptcy
Code (as the same may be amended or recodified from time to time) that is not
dismissed within sixty (60) days from the filing of such proceeding, the
Trustee, receiver or Tenant, as a debtor in possession, subject to court
approval, shall not have the right to assume this Lease or to assign this Lease
or to pledge or hypothecate this Lease for security unless and until all of the
following conditions are first satisfied: (i) any defaults by Tenant under this
Lease are cured or Landlord is provided "adequate assurance" that such defaults
will be promptly cured; (ii) Landlord is compensated, or "adequate assurance" is
provided to Landlord that Landlord will be promptly compensated, for any actual
pecuniary loss to Landlord resulting from any and all defaults by
24.
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Tenant under the Lease; and (iii) Landlord is provided "adequate assurance" of
future performance of all of the covenants, agreements and obligations of Tenant
under the terms of this Lease.
For the purposes of this Subsection, "adequate assurance" of future
performance of the terms and provisions of this Lease, shall include adequate
assurance: (a) of the source of rent and other consideration due under this
Lease, and in the case of an assignment, that the financial condition and
operating performance of the proposed assignee and its guarantors, if any, shall
be similar to the financial condition and operating performance of the
debtor-Tenant as of the Term Commencement Date, as reasonably adjusted for
inflation; (b) that assumption or assignment of this Lease is subject to all the
provisions of this Lease; and (c) of the performance of any other requirement
hereafter imposed by any Regulation or which landlords or courts are hereafter
authorized or permitted by law to impose on such an assumption, assignment,
pledge or hypothecation.
In any case under any chapter of the Federal Bankruptcy Code (as
the same may be amended or recodified from time to time), the Trustee, Receiver
or Tenant, as debtor in possession, shall timely perform all the obligations of
the debtor-Tenant arising under this Lease from and after any order for relief
until this Lease is assumed or rejected. This paragraph shall not affect the
trustee's or debtor-Tenant's obligations under any other paragraph of this
Subsection, and acceptance of performance under this paragraph by Landlord shall
not constitute a waiver or relinquishment of Landlord's rights under this Lease.
The failure by the Trustee in any case under any chapter of the
Bankruptcy Code to assume or reject this Lease sixty (60) days after the order
for relief or within such additional time as the Court, for cause, within such
sixty (60) day period shall fix, shall be deemed a rejection, and the Trustee
shall immediately surrender the Premises to Landlord. This Lease may not be
assumed if it has expired before commencement of any bankruptcy proceeding. The
Trustee, Receiver, or Tenant, as a debtor in possession, acting in accordance
with the provisions of this Subsection, shall not under any circumstances
require Landlord to provide services or supplies incidental to this Lease before
any assumption of this Lease, unless Landlord shall be compensated under the
terms of this Lease for any services and supplies provided under the Lease prior
to such assumption.
17.3 INTEREST ON PAST DUE OBLIGATIONS. Any and all amounts not
paid to Landlord when due, including but not limited to rent, late charges and
interest shall bear interest, compounded monthly from the date due until paid at
Bank of America's or its successor's "Reference Rate" plus one percent (1%) per
annum ("Remedy Rate"). Bank of America's or its successor's "Reference Rate" is
a base rate of interest that is announced from time to time within Bank of
America for those obligations making reference thereto. Payment of such interest
shall not excuse or cure any default by Tenant under this Lease and shall not
affect any rights and remedies provided to Landlord in this Lease or at law or
in equity, all of which shall be cumulative.
17.4 WAIVER OF REDEMPTION. Tenant hereby expressly waives any and
all rights of redemption granted by or under any present or future laws in the
event of Tenant being evicted or dispossessed for any cause, or in the event of
Landlord obtaining possession of
25.
<PAGE>
the Premises by reason of the violation by Tenant of any of the covenants and
conditions of this Lease or otherwise. The rights given to Landlord herein are
in addition to any rights that may be given to Landlord by any statute or
otherwise.
17.5 LANDLORD'S DEFAULT. Landlord shall in no event be charged with
default in the performance of any of its obligations hereunder unless and until
Landlord shall have failed to perform such obligations within thirty (30) days
(or such additional time as is reasonably necessary to correct any such failure)
after receipt of written notice by Landlord from Tenant properly specifying
which obligations Landlord has failed to perform and which provision of the
Lease obligates Landlord to perform such obligations. It is expressly understood
and agreed that any money judgment against Landlord resulting from any default
or other claim arising under this Lease shall be satisfied only out of the
rents, issues, profits and other income ("income") actually received from the
Premises or the Premises itself. No other real, personal or mixed property of
Landlord, wherever situated, shall be subject to levy on any such judgment
obtained against Landlord. If such income or the value of the Premises is
insufficient for the payment of such judgment, Tenant shall not institute any
further action, suit, claim or demand, in law or in equity, against Landlord for
or on the account of such deficiency. Tenant hereby waives, to the fullest
extent waivable under law, any right to satisfy said money judgment against
Landlord except as herein limited.
17.6 LANDLORD'S RIGHT TO PERFORM. Upon Tenant's failure to perform
any obligation of Tenant hereunder, including, without limitation, payment of
Tenant's insurance premiums and charges of contractors who have supplied
materials or labor to the Premises, Landlord shall have the right to perform
such obligations of Tenant on behalf of Tenant and/or to make payment on behalf
of Tenant to such parties. Tenant shall reimburse Landlord the reasonable cost
of Landlord's performing such obligations on Tenant's behalf, including, without
limitation, reimbursement of any amounts that may be expended by Landlord and
Landlord's reasonable attorneys' fees, plus interest from the date of any
expenditure of sums at the Remedy Rate.
ARTICLE XVIII
SUBORDINATION AND ATTORNMENT
----------------------------
18.1 SUBORDINATION. At Landlord's option, this Lease is and shall
be subordinate to any ground lease, mortgage, deed of trust and/or any other
hypothecation or security document and advances and obligations thereunder now
or hereafter placed upon the Land, the Building or the Premises, and any
renewals, modifications, consolidations, replacements, and extensions thereof
(individually and collectively, "Deed of Trust"), provided Tenant's right to
quiet possession under this Lease shall not be disturbed so long as Tenant is
not in default, or with notice or passage of time or both would not be in
default, under the terms, covenants, conditions and provisions of this Lease.
Tenant's obligation to subordinate this Lease to any future mortgage or other
interest shall be conditioned upon Tenant's receipt of a non-disturbance
agreement in a form reasonably satisfactory to Tenant, from such party
requesting subordination. Landlord and Landlord's Lender substantially to the
effect that no steps or proceedings taken by reason of Landlord's default under
such mortgage or encumbrance shall terminate this Lease nor shall Tenant be
named a defendant in any proceeding for foreclosure or
26.
<PAGE>
such mortgage or be disturbed by virtue of such steps or proceedings, so long as
Tenant is not in default or with notice of passage of time or both would not be
in default. Such subordination shall be effective upon notice from Landlord to
Tenant without any further act of Tenant. Upon the request of Landlord, Tenant
shall, from time to time, execute and deliver any documents or instruments that
may be required by Landlord or the mortgagee, beneficiary, ground lessor or
lender ("Landlord's Lender") under any such Deed of Trust, to effectuate any
subordination, provided that any such Landlord's Lender agrees not to disturb
Tenant's right to quiet possession under this Lease so long as Tenant is not in
default, or with notice or passage of time or both would not be in default,
under the terms, covenants, conditions and provisions of this Lease by executing
a subordination, nondisturbance and attornment agreement. If Tenant fails to
execute and deliver any such documents or instruments, Tenant irrevocably
constitutes and appoints Landlord as Tenant's special attorney-in-fact, coupled
with an interest, to execute and deliver any such documents or instruments. If
Landlord's Lender elects to have this Lease prior to the lien of its Deed of
Trust, and gives written notice to Tenant of such election, this Lease shall be
deemed prior to such Deed of Trust regardless of the respective dates of
execution, delivery and recordation of this Lease and any such Deed of Trust.
18.2 ATTORNMENT. Tenant hereby attorns to and shall recognize the
Landlord's Lender as Tenant's landlord under this Lease and shall promptly
execute and deliver any instrument that Landlord may require to evidence such
attornment, provided such Landlord's Lender agrees not to disturb Tenant's
rights under this Lease so long as Tenant is not in default or with notice or
passage of time or both would not be in default, under the terms, covenants,
conditions and provisions of this Lease by executing a subordination,
nondisturbance and attornment agreement. Tenant hereby irrevocably appoints
Landlord as Tenant's attorney-in-fact, coupled with an interest, to execute,
acknowledge and deliver the instrument of attornment on behalf of Tenant.
18.3 ESTOPPEL CERTIFICATE. Upon the request of the Landlord or
Tenant at any time and from time to time, Landlord or Tenant shall execute,
acknowledge, and deliver to the other party, no later than fifteen (15) days
after any request therefor, an estoppel certificate ("Estoppel Certificate")
substantially in the form of Exhibit "C", attached hereto. Any such statement
-----------
may be conclusively relied upon by the party requesting the Estoppel
Certificate. Failure to deliver the Estoppel Certificate within fifteen (15)
days of such request shall be conclusive upon Tenant or Landlord, as applicable,
that: (i) this Lease is in full force and effect; (ii) there are no uncured
defaults in Landlord's or Tenant's performance; and (iii) not more than one
month's Base Rent has been paid in advance. Tenant hereby irrevocably appoints
Landlord as its attorney-in-fact, which agency is coupled with an interest, to
execute any such Estoppel Certificate upon Tenant's failure to do so within such
fifteen (15) day period.
18.4 RIGHTS OF LANDLORD'S LENDER AND LANDLORD'S PURCHASER. If any
Landlord's Lender or any purchaser of Landlord's interest in the Building or
Land ("Landlord's Purchaser") requires a modification of this Lease at any time,
Tenant shall, at Landlord's request, promptly execute and deliver to Landlord
instruments effecting the modifications that the Landlord's Lender or Landlord's
Purchaser reasonably requires, provided that such modifications do not increase
the rent, reduce the size of the Premises, increase the Term of the Lease or
otherwise adversely affect in any material respect any of Tenant's rights under
this Lease. If Landlord's Lender or Landlord's Purchaser has given
27.
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prior written notice to Tenant that it is the Landlord's Lender or Landlord's
Purchaser and such notice includes the address at which notices to such
Landlord's Lender or Landlord's Purchaser are to be sent, then Tenant shall give
Landlord's Lender or Landlord's Purchaser, as the case may be, written notice
simultaneously with any notice given to Landlord to correct any failure of
Landlord to perform any of Landlord's obligations. Landlord's Lender and
Landlord's Purchaser shall have the right after receipt of said written notice
to correct or remedy such failure within a reasonable period of time.
18.5 LIMITATION OF LIABILITY. Whenever Landlord (or any successor
landlord) conveys its interest in the Land, the Building or the Premises,
Landlord (or any successor landlord) shall be automatically released from the
further performance of covenants on the part of Landlord herein contained, and
from any and all further liability, obligations, costs and expenses, demands,
causes of action, claims or judgments arising from or growing out of, or
connected with this Lease accruing after the effective date of said release. The
effective date of said release shall be the date the assignee executes an
assumption of such an assignment whereby the assignee expressly agrees to assume
all of Landlord's obligations, duties, responsibilities and liabilities with
respect to this Lease. If requested, Tenant shall execute a form of release and
such other documentation as may reasonably be required to further effect the
provisions of this Section. In the event of such a transfer, the covenants and
agreements of Landlord shall thereafter be binding upon the transferee of
Landlord's interest.
ARTICLE XIX
FORCE MAJEURE
-------------
If either party hereto shall be delayed in or prevented from the
performance of any act required hereunder by reason of acts of God, labor
troubles, inability to procure materials, restrictive Regulations, inclement
weather, acts of the public enemy, riot, insurrection, boycotts, strikes or such
other causes without fault and beyond the control of the party obligated
(financial inability excepted), performance of such act shall be excused for the
period of the delay and the period for the performance of any such act shall be
extended for a period equivalent to the period of such delay; provided, however,
nothing in this Section shall delay the Rent Commencement Date or excuse Tenant
from the prompt payment of any rent or other charge required of Tenant
hereunder, except as may be expressly provided elsewhere in this Lease.
ARTICLE XX
ASSIGNMENT AND SUBLETTING
-------------------------
20.1 LANDLORD'S CONSENT. Tenant shall not voluntarily,
involuntarily or by operation of law assign, transfer, mortgage, sublet,
hypothecate or otherwise transfer or encumber (individually or collectively,
"Transfer") all or any part of Tenant's interest in this Lease or in the
Premises, without first obtaining Landlord's express written consent, which
consent shall not be unreasonably withheld or delayed. No consent to any
Transfer shall constitute a waiver of the provisions of this Section.
Notwithstanding the foregoing, Tenant may, upon thirty (30) days'
prior written notice to, but without the consent of Landlord, assign or sublet
this Lease to an Affiliate (as
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defined herein); provided, however, that each of the following conditions is met
in the event of any such assignment or subletting: (1) prior to an assignment,
Tenant furnishes to Landlord an assumption agreement, in form and substance
reasonably satisfactory to Landlord, executed by the assignee and in which the
assignee assumes and agrees to comply with and perform all of the terms and
conditions of this Lease; (2) notwithstanding any assignment or subletting, all
of the terms and conditions of this Lease shall continue unmodified (except to
the extent such terms and conditions previously have been modified), shall
remain in full force and effect, and, with respect to an assignment, shall be
applicable to the assignee to the same extent as if the assignee were the
original Tenant hereunder; (3) notwithstanding any assignment or subletting,
Tenant shall be and remain primarily liable, not merely as a surety, for the
payment of rental and all other amounts reserved in this Lease and for the
performance of all of the provisions, covenants and conditions set forth in this
Lease on Tenant's part to be kept and performed unless the assignee has a net
worth in excess of Ten Million and No/100 Dollars ($10,000,000.00) during the
Term and Twenty Million and No/100 Dollars ($20,000,000.00) during the remainder
of the Term, each as determined in accordance with generally accepted principles
in which case Tenant shall be relieved of all further covenants and agreements
as to the effective date of the assignment; (4) Tenant or the assignee of Tenant
cures any existing default or breach by Tenant under this Lease; and (5) Tenant
pays Landlord up to One Thousand and No/100 Dollars ($1,000.00) as reimbursement
for Landlord's actual attorney's fees to review the assignment agreement. For
purposes of this Section, an "Affiliate" of Tenant is defined as any successor
in interest to Colorado Business Bankshares, Inc. or Colorado Business Bank,
N.A. (by reason of sale or merger) or any entity of which at least fifty percent
(50%) of the ownership is owned, directly or indirectly through a subsidiary of,
or by, Colorado Business Bankshares, Inc., or any such successor.
Landlord and Tenant agree (by way of example and without
limitation) that it shall be reasonable for Landlord to withhold its consent to
a Transfer if any of the following situations exist or may exist: (i) the
proposed Transferee's (as defined below) use of the Premises conflicts with the
"Use of Premises" as set forth in Section 1.11; (ii) in Landlord's reasonable
------------
business judgment, the proposed Transferee lacks sufficient business reputation
or experience to operate a successful business of the type and quality permitted
under this Lease; (iii) Tenant is in default pursuant to this Lease; (iv) in
Landlord's reasonable business judgment, the present net worth of the proposed
Transferee is less than the greater of: (a) Tenant's net worth as of the date of
this Lease, or (b) Tenant's net worth at the date of Tenant's request for
consent; (v) the proposed Transferee has been involved in bona fide negotiations
with Landlord for space in the Building within the preceding twelve (12) months;
(vi) the rent for the sublease or assignment is less than the fair market value
for comparable space at the time of such sublease or assignment, as determined
by Landlord; (vii) the sublease or assignment will result in more than two (2)
occupants within the Premises, including Tenant and all subtenants; and/or
(viii) the proposed subtenant or assignee is either a government (or subdivision
or agency thereof) or an occupant of the Building. Notwithstanding the
foregoing, Tenant shall have the right to license ("Parking License") to a third
party ("Parking Licensee") a portion or all of the Land for parking purposes
only; provided, however, Tenant obtains Landlord's prior written consent to the
terms and conditions of the license, which consent shall not be unreasonably
withheld or delayed. If Landlord consents to a license of a portion or of all of
the Land for parking purposes only, Landlord and Tenant shall share on an equal
basis the consideration paid by such Parking Licensee for such parking rights.
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Any attempted or purported Transfer without Landlord's prior
written consent if such consent is required shall be void and of no force or
effect, and shall not confer any estate or benefit on anyone. A consent to one
(1) Transfer by Landlord shall not be deemed to be a consent to any subsequent
Transfer to any other party.
20.2 REQUEST FOR TRANSFER. Tenant shall give Landlord at least
sixty (60) days' or twenty (20) days' notice (in the case of a Parking License)
prior written notice of any requested Transfer and of the proposed terms of such
Transfer ("Transfer Notice"), including but not limited to: (i) the name and
legal composition of the proposed assignee, sublessee, encumbrancer or
transferee ("Transferee"), or the Parking Licensee; (ii) the proposed
Transferee's financial statement(s) for the prior three (3) years, prepared in
accordance with generally accepted accounting principles consistently applied;
(iii) the portion of the Premises Tenant proposes to Transfer (including square
footage and location or license); (iv) such other information as Landlord may
reasonably require; and, (v) the nature of the proposed Transferee's business to
be carried on in the Premises and shall, in addition, pay Landlord One Thousand
and No/100 Dollars ($1,000.00) as reimbursement for Landlord's attorneys' fees
and administrative costs in reviewing the terms of the proposed Transfer. The
foregoing terms shall be in sufficient detail to enable Landlord to evaluate the
proposed Transfer or Parking License and the prospective Transferee or Parking
Licensee. Within thirty (30) days after receipt of the Transfer Notice or ten
(10) days (in the case of a Parking License), Landlord shall either approve or
disapprove of such Transfer or Parking License; provided, however, that Landlord
shall be deemed to have disapproved the Transfer Notice if Landlord has not sent
Tenant written notice of Landlord's approval within such thirty (30) day period
or within such ten (10) day period in the case of a Parking License. Tenant
shall immediately notify Landlord of any modification to the proposed terms of
such Transfer or Parking License. Tenant shall also provide to Landlord copies
of the fully executed documents pertaining to the Transfer or Parking License
after the Transfer or Parking License has become effective.
20.3 LANDLORD'S RIGHTS. Upon receipt of the Transfer Notice
pursuant to Section 20.2 hereof, Landlord shall have the right to: (i) withhold
------------
its consent to such Transfer, as permitted pursuant to Section 20.1 above; (ii)
------------
except in the case of a Parking License, terminate the Lease as it relates to
the portion of the Premises described in the Transfer Notice and recapture such
portion of the Premises, effective automatically as of the date of dispatch of a
notice of termination from Landlord to Tenant, which notice may be sent at any
time within thirty (30) days following Landlord's refusal to consent to the
Transfer; (iii) except in the case of a Parking License, sublease itself the
portion of the Premises Tenant proposes to sublease, or any portion thereof upon
the terms and conditions set forth in the proposed sublease (except as set forth
below), or upon such other terms and conditions set forth that Landlord may
reasonably request; (iv) except in the case of a Parking License, take an
assignment of the leasehold estate Tenant proposes to assign or any portion
thereof; or (v) except in the case of a Parking License, impose any of the
following as conditions to Landlord's consent (a) that the Base Rent be
increased to the fair market rental as determined by Landlord, (b) that Landlord
may require Tenant to pay to Landlord all consideration paid by the Transferee
to Tenant in excess of the Base Rent (for purposes of this Section
"consideration" shall include, without limitation, all monies or other economic
consideration of any kind, if such sums are related to Tenant's interest in this
Lease, the Premises or any improvements thereon, including but not limited to,
bonus money, and payments (in excess of book value thereof) for Tenant's assets,
accounts, good will,
30.
<PAGE>
general intangibles, Tenant's personal property, and any capital stock or other
equity ownership of Tenant); provided, however, Tenant will not be obligated to
pay Landlord any portion of appreciated consideration until Tenant has recovered
any costs Tenant has reasonably incurred in connection with the Transfer,
and/or, (c) that either Tenant or the proposed Transferee cure, on or before the
proposed effective date of such Transfer, any and all uncured defaults
hereunder, provided, however, in no event shall Landlord's failure to condition
its consent upon such cure be deemed to be a waiver of any such default or of
Landlord's rights and remedies under this Lease or under law or in equity in
regard thereto. If Landlord has elected to impose such a cure as a condition to
its consent and such condition is not satisfied by the effective date of the
Transfer, then the Transfer shall be voidable at Landlord's option. If Landlord
elects to exercise its right to terminate the Lease and recapture the Premises,
Tenant shall have the right to withdraw Tenant's Transfer Notice; provided,
however, Tenant delivers such notice to Landlord within fifteen (15) days of the
date of Landlord's notice to Tenant notifying Tenant of Landlord's election to
recapture the Premises. If Landlord elects to sublease or take an assignment
from Tenant as described in subsections (iii) and (iv) above, the rent payable
by Landlord shall be the lower of the rent set forth in Tenant's Transfer Notice
or the rent payable by Tenant under this Lease at the time of the assignment or
sublease (or a proportionate amount thereof, representing the portion of the
Premises subject to the assignment or sublease, if less than the entire Premises
is subject to the assignment or sublease). Landlord shall also have the right to
condition Landlord's consent to any Transfer upon Tenant's and the Transferee's
executing a written assumption agreement, in a form approved by Landlord. The
assumption agreement shall require the Transferee to expressly assume all
obligations of Tenant under this Lease and shall require Tenant and Transferee
to be and remain jointly and severally liable for the performance of all
conditions, covenants, and obligations under this Lease from the effective date
of the Transfer of Tenant's interest in this Lease. Regardless of Landlord's
consent to any Transfer, except with respect to a Transfer to Tenant's
Affiliate, no Transfer shall release Tenant of Tenant's obligation or alter the
primary liability of Tenant to pay rent and to perform all other obligations to
be performed by Tenant hereunder. The acceptance of rent by Landlord from any
Transferee shall not be deemed to be a waiver by Landlord of any provision of
this Article. These rights are in addition to Landlord's right to withhold its
consent to any Transfer, and may be exercised by Landlord in its sole discretion
without limiting Landlord in the exercise of any other right or remedy at law or
in equity which Landlord may have by reason of such Transfer. In the event of
default by any Transferee, Landlord may proceed directly against Tenant without
the necessity of exhausting remedies against said Transferee. Tenant expressly
agrees that the provisions of this Article XX are not unreasonable standards or
----------
conditions for the purposes of Colorado law, as amended or recodified from time
to time.
ARTICLE XXI
NOTICES
-------
All notices, information, requests or replies ("Notice") required
or permitted to be given hereunder shall be given in writing and shall be given
or served either personally or by depositing the same by United States
registered or certified mail postage prepaid, addressed to the addresses of
Tenant and Landlord specified as "Addresses for Notices and Reports" in Section
1.14, or at such other place as either Landlord or Tenant may, from time to time
designate in a written notice by registered, overnight or certified mail given
to the other. Notice
31.
<PAGE>
shall be deemed sufficiently served upon the earlier of receipt or five (5) days
after the date of the mailing thereof.
ARTICLE XXII
AUTHORITY
---------
If Tenant is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of said entity. If Tenant is a corporation, trust or
partnership, Tenant shall, simultaneously with execution of this Lease, deliver
to Landlord written evidence of such authority satisfactory to Landlord.
ARTICLE XXIII
QUIET ENJOYMENT
---------------
Tenant, upon substantial keeping, observing and performing all of
the covenants and agreements of this Lease on its part to be kept, observed, and
performed, shall lawfully and quietly hold, occupy and enjoy the Premises during
the Term of this Lease.
ARTICLE XXIV
ARBITRATION
-----------
All disputes, suits, actions or other proceedings with respect to
the subject matter, interpretation or enforcement of this Lease, except for any
Event of Default or dispute regarding the payment of rent for which Landlord
shall be entitled to its remedies under Article XVII, shall be decided by
------------
arbitration before a single neutral arbitrator having at least ten (10) years'
experience in the documentation of commercial real property leaseholds in the
State of Colorado or the resolution of disputes with respect thereto.
Alternatively, the arbitrator may be a retired judge of the Colorado District
Court or a retired justice of the Colorado Court of Appeal. Except as otherwise
provided herein, the arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, but
without regard to any portions thereof which require administration by such
association.
Any party may initiate the arbitration proceeding by delivering a
written notice of demand for arbitration to the other party. Within thirty (30)
days after the responding party's receipt of the claimant's written notice of
demand for arbitration, the parties shall attempt to select a qualified
arbitrator who is acceptable to all parties. If the parties are unable to agree
upon an arbitrator within the thirty (30) days provided herein, either party may
request that the American Arbitration Association appoint the arbitrator in
accordance with its Commercial Arbitration Rules. The provisions of Colorado
Statutes 13-22-201 through 223 (Uniform Arbitration Act) or its successor
Sections are incorporated in and made a part of this Agreement with respect to
any arbitration conducted in accordance with this Article. Depositions may be
taken and discovery may be obtained in any arbitration conducted pursuant to
this Article in accordance with the provisions of Colorado law. Arbitration
hearing(s) shall be conducted in Denver County, Colorado, unless the parties
otherwise agree in writing. Any relevant evidence,
32
<PAGE>
including hearsay, shall be admitted by the arbitrator if it is the sort of
evidence upon which responsible persons are accustomed to rely on in the conduct
of serious affairs, regardless of the admissibility of such evidence in a court
of law; however, the arbitrator shall apply Colorado law relating to privileges
and work product.
In rendering his or her award, the arbitrator shall set forth the
reasons for his or her decision. Judgment on the arbitration award may be
entered in any court having jurisdiction thereof. Each party shall pay an equal
share of the arbitrator's fees and all of his or her own costs and expenses,
except as otherwise provided herein.
ARTICLE XXV
INTERPRETATION AND APPLICATION
------------------------------
25.1 GOVERNING LAW. This Lease shall be construed in accordance
with and governed by the statutes, decisions, and other laws of the State of
Colorado. Landlord and Tenant hereby consent to the personal jurisdiction of any
State or federal court located in the county in which the Premises are located
and the service of process by any means authorized by any such State or federal
court.
25.2 COMPLETE AGREEMENT. This Lease contains all terms, covenants,
conditions, warranties and agreements of the parties relating in any manner to
the rental, use and occupancy of the Premises. No prior agreements or
understanding pertaining to the same shall be valid or of any force or effect.
Both Landlord and Tenant acknowledge and agree that this Lease was extensively
negotiated by both parties hereto, and that this Lease shall not be construed
against either Landlord or Tenant.
25.3 AMENDMENT. This Lease may not be amended, altered or modified
in any way except in writing signed by the parties hereto.
25.4 NO PARTNERSHIP. It is agreed that nothing contained in this
Lease shall be deemed or construed as creating a partnership or joint venture
between Landlord and Tenant or between Landlord and any other party, or cause
Landlord to be responsible in any way for the debts or obligations of Tenant or
any other party.
25.5 NO MERGER. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work as a merger, but shall,
at the option of Landlord, either terminate all or any existing subleases or
subtenancies, or operate as an assignment to Landlord of any or all such
subleases or subtenancies.
25.6 SEVERABILITY. If any provision of this Lease or application
thereof to any person or circumstances shall to any extent be invalid, the
remainder of this Lease (including the application of such provision to persons
or circumstances other than those to which it is held invalid) shall not be
affected thereby, and each provision of this Lease shall be valid and enforced
to the fullest extent permitted by law.
33
<PAGE>
25.7 CAPTIONS. The captions of the Articles and Sections hereof
are for convenience only and are not a part of this Lease and do not in any way
limit or amplify the terms and provisions of this Lease.
25.8 WORDS. The words "Landlord" and "Tenant", as used herein,
shall include the plural as well as the singular. Words used in the neuter
gender include the masculine and feminine. If there is more than one Tenant, the
obligations imposed upon Tenant hereunder shall be joint and several.
25.9 EXHIBITS. Exhibits "A", "B", and "C", and all other exhibits,
------------ --- -------
if any, and any schedules or riders attached to this Lease are incorporated
herein by this reference and made a part hereof, and any reference in the body
of the Lease or in the exhibits, schedules, or riders to the "Lease" shall mean
this Lease, together with all exhibits, schedules and riders.
25.10 NO THIRD PARTY BENEFICIARIES. This Lease is entered into by
Landlord and Tenant for the sole benefit of Landlord and Tenant. There are no
third party beneficiaries to this Lease.
ARTICLE XXVI
MISCELLANEOUS
-------------
26.1 TIME. Time is of the essence hereof.
26.2 SUCCESSORS. Subject to the restrictions on Transfer contained
in Article XX hereof, all the terms, covenants and conditions hereof shall be
----------
binding upon and inure to the benefit of the executors, administrators,
transferees, successors and assigns of the parties hereto.
26.3 RECORDATION. Each party shall have the right in its absolute
discretion to record a memorandum of this Lease, in the form attached hereto as
Exhibit "B" and, upon the requesting party's request, the other party shall
- -----------
execute and have acknowledged the same for recordation, and the requesting party
shall pay all required documentary transfer taxes in connection therewith.
26.4 NO RECOURSE. The obligations of the Landlord or Tenant under
this Lease shall be without recourse to of any partner, officer, trustee,
beneficiary, shareholder, director, unitholder or employee of Landlord or Tenant
or to any of their respective assets. The sole recourse of Tenant for any
obligation of the Landlord under this Lease shall be limited to the income and
profits from the Premises and the Premises itself.
26.5 BROKERS. Landlord and Tenant represent and warrant to each
other that no person or entity other than Landlord's Broker and Tenant's Broker
can properly claim a right to a real estate commission, any finder's fee or
broker's fee, commission or payment of any kind whatsoever. Landlord shall pay a
real estate commission to Landlord's Broker who in turn shall pay Tenant's
Broker, which payments shall be made pursuant to separate agreements. Except as
provided herein, Landlord and Tenant shall defend, indemnify and hold the other
harmless from and against any and all claims, demands, costs, expenses or
liabilities related to or
34
<PAGE>
connected with any broker's or finder's fee, commission or payment of any kind
asserted by any person or entity by reason of any dealings or actions of the
indemnifying party.
26.6 NO LIGHT, AIR OR VIEW EASEMENT. No diminution or shutting off
of light, air, or view by any structure which may be erected on property near or
adjacent to the Premises or Building shall in any way affect this Lease or
impose any liability upon Landlord.
26.7 ATTORNEYS' FEES. Should either party commence an action or
arbitration against the other for declaratory relief or to enforce any
obligation hereunder, the prevailing party, as determined by the trier of fact,
shall be entitled to recover its costs, reasonable attorneys' fees and
disbursements and court costs from the other, whether or not such action is
pursued to judgment.
26.8 WAIVER. No waiver of any Event of Default or breach of any
covenant by either party hereunder shall be implied from any omission by either
party to take action on account of such default if such default persists or is
repeated. Landlord's acceptance of any payment of rent which is less than that
required to be paid by Tenant shall be deemed to have been received only on
account of the obligation for which it is paid and shall not be deemed an accord
and satisfaction, notwithstanding any provisions to the contrary asserted by
Tenant, written on any check or contained in any transmittal letter. 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 or covenant hereof, other
than the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
provided in this Lease. An express waiver must be in writing and signed by a
person with the power to contractually bind Tenant or Landlord. An express
waiver shall affect only the default specified in the waiver, and only for the
time and to the extent expressly stated. Waivers by either party of any
covenant, term, or condition contained herein shall not be construed as a waiver
of any subsequent breach of the same covenant, term, or condition.
26.9 WAIVER OF TRIAL BY JURY. Tenant and Landlord hereby waive any
and all rights that each may have under applicable law to trial by jury with
respect to any dispute arising directly or indirectly in connection with this
Lease or the Premises.
26.10 SUBMISSION OF LEASE. The submission of this document for
examination and negotiation does not constitute an offer to lease, or a
reservation of, or option for leasing the Premises. This document shall become
effective and binding only upon execution and delivery hereof by Landlord. No
act or omission of any employee or agent of Landlord or of Landlord's broker or
managing agent shall alter, change, or modify any of the provisions hereof.
LANDLORD AND TENANT HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND
EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW
THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT
THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND
35
<PAGE>
EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANT WITH RESPECT TO THE
PREMISES.
IN WITNESS WHEREOF, the parties hereto have executed this Lease or,
as the case may be, have caused their officers thereunto duly authorized to
execute this Lease, in duplicate, the day and year first above written.
"LANDLORD": "TENANT":
COLORADO BUSINESS BANK, N.A.,
/s/ Joan H. Travis a national banking association
- ---------------------------------------
JOAN H. TRAVIS
By: /s/ Virginia K. Berkeley
------------------------
Its: President
36
<PAGE>
EXHIBIT "A"
(Land Description)
Exhibit "A" to Lease by and between Joan H. Travis, an individual,
-----------
as Landlord, and Colorado Business Bank, N.A., a national banking association,
as Tenant, dated as of July 27, 1999.
The Land is located in the County of Denver, State of Colorado, and
is legally described as follows:
Lots 30-32 inclusive, Block 199, East Denver, and all of that part
of Outlot 2 adjoining Lot 30, Writer's First Addition
EXHIBIT "A"
37
<PAGE>
EXHIBIT "B"
(Memorandum of Lease)
Exhibit "B" to Lease by and between Joan H. Travis, an individual
-----------
as Landlord, and Colorado Business Bank, N.A., a national banking association,
as Tenant, dated as of July 27, 1999.
MEMORANDUM OF LEASE
This MEMORANDUM OF LEASE is made as July 27, 1999, by Joan H.
Travis, an individual ("Landlord") and Colorado Business Bank, N.A., a national
banking association, ("Tenant"). Landlord and Tenant agree to and acknowledge
the following matters:
1. Landlord hereby leases to Tenant and Tenant hereby accepts such
lease from Landlord of the Premises located at 1275 Tremont, Denver, Colorado
80202, subject to the terms and conditions of that certain lease by and between
Landlord and Tenant dated July 27, 1999.
2. All terms defined in the Lease shall have the same meaning when
used in this Memorandum of Lease.
3. The Term Commencement Date is August 2, 1999, and the
Expiration Date of the Lease is August 31, 2014.
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Memorandum of Lease as of the day and year first above written.
"TENANT": "LANDLORD":
COLORADO BUSINESS BANK, N.A.,
a national banking association
/s/ Joan H. Travis
--------------------------------------
JOAN H. TRAVIS
By: /s/ Virginia K. Berkeley
------------------------
Its: President
---------
By:
------------------------------
Its:
---------------------
EXHIBIT "B"
(Page 1 of 1)
38
<PAGE>
EXHIBIT "C"
(Tenant's Estoppel Certificate)
Exhibit "C" to Lease by and between Joan H. Travis, an individual,
-----------
as Landlord, and Colorado Business Bank, N.A., a national banking association,
as Tenant, dated as of July 27, 1999.
ESTOPPEL CERTIFICATE
The undersigned, [___________________] as [Tenant or Landlord]
under that certain Lease ("Lease") by and between Joan H. Travis, an individual,
as "Landlord", and Colorado Business Bank, N.A., a national banking association,
dated as of July 27, 1999, hereby certifies, as of the date hereof, as follows
(with the understanding that the _____________________ of the Property,
____________________ will rely on this Estoppel Certificate):
1. The Term Commencement Date is August 2, 1999, and the Lease
Expiration Date is August 31, 2014.
2. The Base Rent is currently $____________. No rents have been
prepaid and no concessions (e.g., free rent, etc.) have been given to Tenant by
Landlord, other than as provided in the Lease. Rent has been paid through
________________.
3. The attached Lease (including all exhibits) is in full force
and effect and has not been assigned, modified, supplemented or amended in any
way, except as follows (copies of which are attached): ________________________
____________________________. The Lease, as affected by those changes set forth
in the preceding sentence, represents the entire agreement between the parties
as to the Premises.
4. All conditions of the Lease to be performed by Landlord and
necessary to the enforceability of the Lease have been satisfied. There are no
(i) uncured defaults by Landlord under the Lease or (ii) defenses or offsets
against the enforcement of the Lease by Landlord, and Tenant knows of no events
or conditions, which with the passage of time or notice or both, would
constitute a default by Landlord or entitle Tenant to a defense or offset under
the Lease, except as follows: __________________________________________________
________________________________________________________________________________
5. Tenant is not in any respect in default under the Lease and has
not assigned, transferred or hypothecated the Lease or any interest therein or
subleased all or any portion of the Premises, except as permitted by the terms
of the Lease.
EXHIBIT "C"
(Page 1 of 2)
39
<PAGE>
6. There has been no use, storage or disposal of any hazardous or
toxic materials or wastes (including, without limitation, asbestos) in, on, or
about the Premises nor are there any environmental problems affecting the
Premises.
Dated: ______________, _______
"[ ]":
EXHIBIT "C"
(Page 2 of 2)
40
<PAGE>
EXHIBIT 10.31
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the 12th
day of April, 1999, by and between Colorado Business Bankshares, Inc., a
Colorado corporation ("Company"), and Randal Garman ("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 (a) President of the Rockies branch
(Edwards, CO) 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 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 consultant 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;
1
<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 Sixty Thousand Dollars ($60,000.00) 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 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.
(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.
--------------------
2
<PAGE>
(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.
(ii) 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 seet forth in
Paragraph 4(c) hereof.
(iii) 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.
3
<PAGE>
(v) Termination Upon Change of Control. If a Change of Control occurs, 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
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 (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.
4
<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.
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
5
<PAGE>
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 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, 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,
6
<PAGE>
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 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 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.
7
<PAGE>
(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 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.
8
<PAGE>
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
(ii) If to Employee, addressed to:
Randal Garman
P. O. Box 3624
Vail, CO 81658
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.
COLORADOBUSINESS
BANKSHARES,
INC.
/s/ Randal Garman By: /s/ Steven Bangert
- --------------------------- ------------------------
Steven Bangert,
Chief Executive Officer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> SEP-30-1999 SEP-30-1998
<CASH> 25,102,000 18,417,000
<INT-BEARING-DEPOSITS> 0 11,000
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 95,540,000 66,838,000
<INVESTMENTS-CARRYING> 7,841,000 10,509,000
<INVESTMENTS-MARKET> (1,264,000) 178,000
<LOANS> 307,618,000 210,507,000
<ALLOWANCE> 4,195,000 3,108,000
<TOTAL-ASSETS> 449,323,000 328,414,000
<DEPOSITS> 332,933,000 245,224,000
<SHORT-TERM> 74,313,000 37,650,000
<LIABILITIES-OTHER> 1,291,000 2,196,000
<LONG-TERM> 1,466,000 7,190,000
0 0
0 0
<COMMON> 67,000 67,000
<OTHER-SE> 39,253,000 36,087,000
<TOTAL-LIABILITIES-AND-EQUITY> 449,323,000 328,414,000
<INTEREST-LOAN> 18,264,000 14,435,000
<INTEREST-INVEST> 4,773,000 2,993,000
<INTEREST-OTHER> 4,000 1,000
<INTEREST-TOTAL> 23,041,000 17,429,000
<INTEREST-DEPOSIT> 6,036,000 5,122,000
<INTEREST-EXPENSE> 8,185,000 6,411,000
<INTEREST-INCOME-NET> 14,856,000 11,018,000
<LOAN-LOSSES> 1,006,000 964,000
<SECURITIES-GAINS> 44,000 113,000
<EXPENSE-OTHER> 11,664,000 9,621,000
<INCOME-PRETAX> 5,539,000 3,570,000
<INCOME-PRE-EXTRAORDINARY> 3,422,000 2,139,000
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,422,000 2,139,000
<EPS-BASIC> 0.51 0.37
<EPS-DILUTED> 0.50 0.35
<YIELD-ACTUAL> 5.31 5.73
<LOANS-NON> 493,000 323,000
<LOANS-PAST> 45,000 277,000
<LOANS-TROUBLED> 0 339,000
<LOANS-PROBLEM> 2,413,000 3,175,000
<ALLOWANCE-OPEN> 3,271,000 2,248,000
<CHARGE-OFFS> 85,000 174,000
<RECOVERIES> 3,000 70,000
<ALLOWANCE-CLOSE> 4,195,000 3,108,000
<ALLOWANCE-DOMESTIC> 4,195,000 3,108,000
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 2,061,000 2,293,000
</TABLE>
