<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 March 31, 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 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 80202
Denver, CO (Zip Code)
(Address of principal executive offices)
(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,
outstanding as of May 10, 1999.
================================================================================
<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 6
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 12
SIGNATURES 12
<PAGE>
PART I - FINANCIAL INFORMATION
COLORADO BUSINESS BANKSHARES, INC.
Consolidated Condensed Balance Sheets
March 31, 1999 (unaudited) and December. 31, 1998
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 10,220,000 $ 20,058,000
Federal funds sold 15,300,000 --
------------ ------------
Total cash and cash equivalents 25,520,000 20,058,000
------------ ------------
Investment securities available for sale (cost of $85,542,000 (unaudited) and
$95,994,000, respectively) 85,871,000 96,463,000
Investment securities held to maturity (fair value of $8,677,000 (unaudited) and
$9,481,000, respectively) 8,560,000 9,370,000
Other investments 2,135,000 2,104,000
------------ ------------
Total investments 96,566,000 107,937,000
------------ ------------
Loans and leases, net 243,888,000 223,279,000
Excess of cost over fair value of net assets acquired, net 4,572,000 4,682,000
Investment in operating leases 3,952,000 4,180,000
Premises and equipment, net 2,974,000 2,884,000
Accrued interest receivable 1,778,000 1,597,000
Deferred income taxes 969,000 934,000
Other 951,000 999,000
------------ ------------
TOTAL ASSETS $381,170,000 $366,550,000
============ ============
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $ 91,004,000 $ 95,169,000
NOW and money market 107,526,000 101,455,000
Savings 7,558,000 6,931,000
Certificates of deposit 81,106,000 69,473,000
------------ ------------
Total deposits 287,194,000 273,028,000
Federal funds purchased -- 3,500,000
Securities sold under agreements to repurchase 36,454,000 24,956,000
Other liabilities 2,193,000 1,774,000
Advances from the Federal Home Loan Bank 17,120,000 26,120,000
Note payable 118,000 --
------------ ------------
Total liabilities 343,079,000 329,378,000
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 7,979,000 6,972,000
Accumulated other comprehensive income, net of income tax
of $122,000 (unaudited) and $172,000, respectively 206,000 294,000
------------ ------------
Total shareholders' equity 38,091,000 37,172,000
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $381,170,000 $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
For the three months ended March 31, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------
1999 1998
----------- -----------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans and leases $ 5,384,000 $ 4,368,000
Interest on investments 1,531,000 1,009,000
----------- -----------
Total interest income 6,915,000 5,377,000
INTEREST EXPENSE:
Interest on deposits 1,746,000 1,657,000
Interest on short-term borrowings & FHLB advances 650,000 202,000
Interest on note payable - 159,000
----------- -----------
Total interest expense 2,396,000 2,018,000
NET INTEREST INCOME BEFORE PROVISION FOR
LOAN AND LEASE LOSSES 4,519,000 3,359,000
Provision for loan and lease losses 303,000 351,000
NET INTEREST INCOME AFTER PROVISION FOR
LOAN AND LEASE LOSSES 4,216,000 3,008,000
----------- -----------
OTHER INCOME:
Service charges 256,000 228,000
Operating lease income 587,000 706,000
Other income 275,000 71,000
----------- -----------
Total other income 1,118,000 1,005,000
----------- -----------
OTHER EXPENSE:
Salaries and employee benefits 1,938,000 1,579,000
Occupancy expenses, premises and equipment 581,000 344,000
Depreciation on leases 496,000 468,000
Amortization of intangibles 110,000 109,000
Other 582,000 515,000
----------- -----------
Total other expense 3,707,000 3,015,000
----------- -----------
INCOME BEFORE INCOME TAXES 1,627,000 998,000
Provision for income taxes 620,000 411,000
----------- -----------
NET INCOME $ 1,007,000 $ 587,000
=========== ===========
UNREALIZED (DEPRECIATION) APPRECIATION ON
AVAILABLE FOR SALE SECURITIES, net of tax (88,000) 43,000
----------- -----------
COMPREHENSIVE INCOME $ 919,000 $ 630,000
=========== ===========
EARNINGS PER SHARE:
Basic $ 0.15 $ 0.11
=========== ===========
Diluted $ 0.15 $ 0.10
=========== ===========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
COLORADO BUSINESS BANKSHARES, INC.
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1999 1998
----------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,007,000 $ 587,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Net amortization on securities 77,000 61,000
Depreciation and amortization 833,000 713,000
Provision for loan and lease losses 303,000 351,000
Deferred income taxes 18,000 (107,000)
Loss (gain) on sale of premises and equipment (28,000) -
Changes in:
Accrued interest receivable (181,000) 86,000
Other assets 48,000 105,000
Accrued interest and other liabilities 419,000 269,000
----------- ---------
Net cash provided by operating activities 2,496,000 2,065,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net change in other investments (31,000) -
Purchase of available for sale securities (10,000,000) (2,970,000)
Proceeds from maturities of held to maturity securities 1,071,000 1,611,000
Proceeds from maturities and sale of available for
sale securities 20,112,000 3,066,000
Loan and lease originations and repayments, net (21,249,000) (16,025,000)
Purchase of premises and equipment (317,000) (954,000)
Proceeds from sale of premises and equipment 98,000 1,000
----------- ---------
Net cash used in investing activities (10,316,000) (15,271,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand, NOW, money market,
and savings accounts $ 2,533,000 $ 1,325,000
Net increase (decrease) in certificates of deposit 11,633,000 (1,788,000)
Net (decrease) increase in federal funds purchased (3,500,000) 5,000,000
Net increase in securities sold under agreements
to repurchase 11,498,000 3,061,000
Advances from (payments to) the Federal Home Loan Bank (9,000,000) -
Change in notes payable 118,000 -
Dividends paid on preferred stock - (40,000)
Proceeds from options exercised - 400,000
----------- ---------
Net cash provided by financing activities 13,282,000 7,958,000
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 5,462,000 (5,248,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 20,058,000 27,775,000
----------- ---------
CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 25,520,000 $ 22,527,000
============ ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
Colorado Business Bankshares, Inc. and Subsidiary
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 three months ended March 31, 1999 are not necessarily indicative
of the results that may be expected for the 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
March 31,
-------------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
Net income $ 1,007,000 $ 587,000
Less: Preferred stock dividends - 40,000
------------------- ----------------
Income available to common shareholders $ 1,007,000 $ 547,000
------------------- ----------------
Weighted average shares outstanding -
basic earnings per share 6,673,481 4,941,990
Effect of dilutive securities - stock options 190,822 278,541
------------------- ----------------
Weighted average shares outstanding -
diluted earnings per share 6,864,303 5,220,531
=================== ================
</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
2000. The adoption of SFAS No. 133 is not expected to have a material effect on
the consolidated financial statements.
4. Segments
The Company's principal activities include Commercial Banking and
Equipment Leasing. Commercial banking 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.
The financial information for each business segment reflect those which
are specifically identifiable or which are 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 the Equipment Leasing activity, are charged
generally at rates available to and transacted with unaffiliated customers.
Results of operation and selected financial information by operating segment are
as follows:
Quarter Ended March 31,
-----------------------
1999 1998
-----------------------
(Dollars in thousands)
Total interest income:
Commercial Banking $ 6,923 $ 5,437
Equipment Leasing 287 214
All other 6 2
Elimination's (301) (276)
--------- ---------
Consolidated $ 6,915 $ 5,377
========= =========
Total interest expense:
Commercial Banking $ 2,392 $ 1,861
Equipment Leasing 306 276
All other - 159
Elimination's (302) (278)
--------- ---------
Consolidated $ 2,396 $ 2,018
========= =========
Other noninterest income:
Commercial Banking $ 485 $ 340
Equipment Leasing 632 723
All other 1,240 877
Elimination's (1,239) (935)
--------- ---------
Consolidated $ 1,118 $ 1,005
========= =========
Net Income:
Commercial Banking $ 1,058 $ 761
Equipment Leasing (13) 41
All other 1,007 586
Elimination's (1,045) (801)
---------- ---------
Consolidated $ 1,007 $ 587
========== =========
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Net earnings available to common shareholders were $1,007,000 for the
quarter ended March 31, 1999 compared with $547,000 for the quarter ended March
31, 1998, an increase of 84%. Earnings per share on a fully diluted basis for
the first quarter were $0.15, versus $0.10 for the same period a year ago, an
increase of 50%.
On an operating basis, before the amortization of goodwill, consolidated
net income for the three month periods was $1,117,000 and $696,000 in 1999 and
1998, respectively, or $0.16 and $0.13 per diluted share, respectively. Return
of average tangible assets was 1.23% in the first quarter of 1999 compared with
1.09% in the first quarter of 1998. Return of average common shareholders'
equity was 10.82% for the quarter ended March 31, 1999, versus 12.98% for the
quarter ended March 31, 1998.
Consolidated Condensed Balance Sheets
The Company's total assets increased by $14.6 million to $381.2 million
as of March 31, 1999, from $366.6 as of December 31, 1998. A healthy Colorado
economy continues to fuel the Company's strong loan growth, particularly in the
Boulder, Denver, and West Metro markets. In the first three months of 1999, the
loan and lease portfolio (net) increased by $20.6 million, from $223.3 million
at December 31, 1998 to $243.9 million as of March 31, 1999. Investment
securities were $96.6 million as of March 31, 1999 compared to $107.9 million as
of December 31, 1998. The decrease in the investment portfolio was the result of
the Company utilizing funding resources to support stronger than anticipated
loan demand, versus investment purchases.
Deposits increased by $14.2 million to $287.2 million as of March 31,
1999, from $273.0 million as of December 31, 1998. Noninterest-bearing deposits
decreased by $4.2 million, and interest-bearing deposits increased by $18.4
million. Low cost demand deposits comprised 32% of total deposits as of March
31, 1999. Federal funds purchased and securities sold under agreements to
repurchase increased by $8.0 million in the first three months of 1999.
6
<PAGE>
Results of Operations
Net Interest Income
Net interest income before provision for loan and lease losses was $4.5
million for the quarter ended March 31, 1999, an increase of $1.1 million or 32%
compared with the quarter ended March 31, 1998. The net interest margin was
5.35% for the quarter ended March 31, 1999, down from 5.66% for the quarter
ended March 31, 1998. This decline corresponds with industry-wide pressures on
the net interest margin, and resulted primarily from a higher portion of fixed
rate real-estate term loans versus commercial loans in the portfolio, as well as
a lower weighting of noninterest bearing demand accounts in the deposit mix.
Growth of the Company's average earning assets helped mitigate the margin
compression. Average earning assets increased by 44% to $342.4 million for the
first quarter, 1999, from $237.3 million for the first quarter, 1998.
Provision and Allowance for Loan Losses
The provision for loan and lease losses decreased by $48,000 to $303,000
for the three months ended March 31, 1999, from $351,000 for the three months
ended March 31, 1998. The decrease relates to the Company's sustained credit
quality. Key indicators of asset quality have remained positive, while average
outstanding loan amounts have increased to $237.8 million for the first quarter,
1999, from $173.5 million for the first quarter, 1998.
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, among other things, such factors as 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 loans which 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. As of March 31, 1999, the allowance for loan losses amounted to
$3.5 million, or 1.41% of total loans and leases. The following table presents,
for the periods indicated, an analysis of the allowance for loan and lease
losses and other related data.
7
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended Year Ended
March 31, December 31,
1999 1998
-------------- ---------------
<S> <C> <C>
(Dollars in thousands)
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 20 32
Direct financing leases - 4
---------------- ---------------
Total charge-offs 79 236
---------------- ---------------
Recoveries:
Commercial 3 66
Real estate -- mortgage - -
Real estate -- construction - -
Consumer - 5
Direct financing leases - -
---------------- ---------------
Total recoveries 3 71
---------------- ---------------
Net charge-offs (76) (165)
Provisions for loan and lease losses
charged to operations 303 1,188
---------------- ---------------
Balance of allowance for loan and lease
losses at end of period $ 3,498 $ 3,271
================ ===============
Ratio of net charge-offs to average
loans and leases ( .03%) ( .08%)
Average loans and leases outstanding during
the period $ 237,830 $ 197,851
================ ===============
</TABLE>
Noninterest Income
Total noninterest income increased by $113,000 to $1,118,000 for the
three months ended March 31, 1999, from $1,005,000 for the three months ended
March 31, 1998. The increase was primarily attributable to increases in deposit
service charges, trust fees, and a one-time gain of $44,000 ($28,000 after tax)
resulting from the sale of a U.S. Treasury security. Offsetting the total
increase in noninterest income was a decline in operating lease rentals of
$119,000.
8
<PAGE>
Noninterest Expense
Total noninterest expense increased by $692,000 to $3,707,000 for the
three months ended March 31, 1999, from $3,015,000 for the three months ended
March 31, 1998. However, the efficiency ratio before goodwill decreased to 65%
for quarter ended March 31, 1999 from 67% for the comparable period in 1998.
The increase in noninterest expense was primarily attributed to
personnel and occupancy expenses necessary to accommodate the Company's growth.
As their operations expanded, costs increased, quarter over quarter, for the
West Metro location and the Community Trust Division established in the first
quarter of 1998. The data processing system conversion, completed in the second
quarter of 1998, as well as other on-going technological upgrades also
contributed to a higher level of noninterest expense. In addition, the Company
opened its sixth location in the Denver Technological Center in September of
1998.
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 $514,000 as of March 31, 1999, compared
with $467,000 as of December 31, 1998 and $1,236,000 as of March 31, 1998. The
following table presents information regarding nonperforming assets as of the
dates indicated:
<TABLE>
<CAPTION>
Quarter Ended Year Ended Quarter Ended
March 31, December 31, March 31,
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 $ - $ 4 $ -
Nonaccrual loans and leases 514 125 441
Restructured loans and leases - 338 795
---------------- --------------- ----------------
Total nonperforming loans and leases 514 467 1,236
Real estate acquired by foreclosure - - -
---------------- --------------- ----------------
Total nonperforming assets $ 514 $ 467 $ 1,236
================ =============== ================
Allowance for loan and lease losses $ 3,498 $ 3,271 $ 2,630
================ =============== ================
Ratio of nonperforming assets to total assets 0.13% 0.13% 0.45%
Ratio of nonperforming loans and leases to total loans and leases 0.21% 0.21% 0.68%
Ratio of allowance for loan and lease losses to total loans and
leases 1.41% 1.44% 1.45%
Ratio of allowance for loan and lease losses to nonperforming loans
and leases 680.54% 700.43% 212.78%
</TABLE>
9
<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 allow the
Company to meet its own cash flow needs. 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. Company
borrowings may be used on a short-term basis to compensate for reductions in
other sources of funds (such as deposit inflows at less than projected levels).
Company borrowings may also be used on a longer term basis to support expanded
lending activities and to match the maturity or repricing intervals of assets.
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. We have
determined that we will have to modify or replace portions of our information
processing systems so that those systems will properly utilize dates beyond
December 31, 1999. We plan to complete the modifications and replacements
necessary to correct those 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 is well underway with its "Year 2000
Program" efforts. The Company has a Year 2000 Committee that oversees issues
relating to its Year 2000 Program. In June 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 is expected to be completed by the end of second
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. The Company expects, but
cannot guarantee, that all of these third party servicers will be compliant
during the second quarter of 1999. Validation of these third-party provided
systems is expected to be completed during the second quarter of 1999. 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.
10
<PAGE>
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 $586,000 has been incurred
through March 31, 1999, including approximately $364,000 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.
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 will be tested prior to 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.
11
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.28 Lease Agreement between Edwards Interchange II, LLC and Colorado
Business Bank, National Association
10.29 Office Lease between Bank One, Colorado, N.A., as Trustee for the
Frank G. Jamison Trust, dated September 2, 1956 and Colorado
Business Bank, N.A.
27.1 Financial Data Schedule as of March 31, 1999.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31,
1999.
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: May 14, 1999 By: /s/ Steven Bangert
------------ ----------------------------------------------------
Steven Bangert, Chief Executive Officer and Chairman
Date: May 14, 1999 By: /s/ Richard J. Dalton
------------ ----------------------------------------------------
Richard J. Dalton, Executive Vice President and
Chief Financial Officer
12
<PAGE>
EXHIBIT 10.28
LEASE AGREEMENT
NORTHSTAR CENTER
EDWARDS, COLORADO
TABLE OF CONTENTS
-----------------
Paragraph Page
- --------- ----
<TABLE>
<CAPTION>
<S> <C> <C>
1. LEASE SUMMARY OF BUSINESS TERMS . . . . . . . . . . . . . . . 3
2. PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . 8
7. USE OF THE PREMISES . . . . . . . . . . . . . . . . . . . . . 8
8. TENANT IMPROVEMENTS, MAINTENANCE, REPAIRS AND ALTERATIONS . . 11
9. COMMON AREA . . . . . . . . . . . . . . . . . . . . . . . . . 14
10. COMMON AREA CHARGES . . . . . . . . . . . . . . . . . . . . . 15
11. INSURANCE, INDEMNITY . . . . . . . . . . . . . . . . . . . . 15
12. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . 19
15. DAMAGE AND DESTRUCTION . . . . . . . . . . . . . . . . . . . 20
16. DEFAULTS; REMEDIES . . . . . . . . . . . . . . . . . . . . . 24
17. SURRENDER OF PREMISES; TREATMENT OF LESSEE'S ALTERATIONS
AT EXPIRATION OF LEASE . . . . . . . . . . . . . . . . . . . 28
</TABLE>
0
<PAGE>
<TABLE>
<S> <C> <C>
18. LESSOR'S LIEN . . . . . . . . . . . . . . . . . . . . . . . 29
19. EMINENT DOMAIN; CONDEMNATION . . . . . . . . . . . . . . . . 29
20. ESTOPPEL CERTIFICATE . . . . . . . . . . . . . . . . . . . . 30
21. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . 31
22. SIGNS, DISPLAYS AND OTHER ADVERTISING MEDIA . . . . . . . . 32
23. QUIET POSSESSION . . . . . . . . . . . . . . . . . . . . . . 33
24. COVENANTS AND CONDITIONS . . . . . . . . . . . . . . . . . . 33
25. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
26. ATTORNEY'S FEES AND WAIVER OF RIGHT OF JURY . . . . . . . . 34
27. LESSOR'S ACCESS . . . . . . . . . . . . . . . . . . . . . . 34
28. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 35
29. AUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 35
30. OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 35
31. MULTIPLE TENANT BUILDING . . . . . . . . . . . . . . . . . . 37
32. SECURITY MEASURES . . . . . . . . . . . . . . . . . . . . . 37
33. EASEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 37
34. PERSONAL GUARANTY . . . . . . . . . . . . . . . . . . . . . 37
35. HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . 38
36. CUMULATIVE REMEDIES . . . . . . . . . . . . . . . . . . . . 38
37. LESSOR'S LIABILITY . . . . . . . . . . . . . . . . . . . . . 38
38. BINDING EFFECT; CHOICE OF LAW . . . . . . . . . . . . . . . 38
39. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . 39
40. INTEREST IN PAST DUE OBLIGATIONS . . . . . . . . . . . . . . 39
</TABLE>
1
<PAGE>
<TABLE>
<S> <C> <C>
41. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS . . . . . . . 39
42. PERFORMANCE UNDER PROTEST . . . . . . . . . . . . . . . . . 39
43. AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . 40
44. CONFLICT . . . . . . . . . . . . . . . . . . . . . . . . . 40
45. REAL ESTATE BROKER'S FEE . . . . . . . . . . . . . . . . . . 40
46. ENVIRONMENTAL CONDITIONS AND INDEMNITIES . . . . . . . . . . 40
47. TIME OF THE ESSENCE . . . . . . . . . . . . . . . . . . . . 41
SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
<TABLE>
<S> <C>
EXHIBIT "A" (LEGAL DESCRIPTION) . . . . . . . . . . . . . . . . . . 43
EXHIBIT "B" (LESSEE'S SIGNAGE) . . . . . . . . . . . . . . . . . . 44
EXHIBIT "C" (OPTION TO RENEW) . . . . . . . . . . . . . . . . . . . 45
EXHIBIT "D" (CORPORATE RESOLUTION) . . . . . . . . . . . . . . . . 46
EXHIBIT "E" (BROKER AGREEMENT) . . . . . . . . . . . . . . . . . . 47
EXHIBIT "F" (PURCHASE OPTION AGREEMENT) . . . . . . . . . . . . . . 48
EXHIBIT "G" (PROPERTY) . . . . . . . . . . . . . . . . . . . . . . 49
EXHIBIT "H" (CONTRACT FOR SALE) . . . . . . . . . . . . . . . . . . 50
</TABLE>
2
<PAGE>
LEASE SUMMARY OF THE BUSINESS TERMS
-----------------------------------
This paragraph 1 represents a Lease Summary of the Business Terms of this
Lease.
1.1. Date of Execution: April 8, 1999
1.2. Parties:
(a) Lessor: Edwards Interchange II, LLC
(Notices): P.O. Box 468, Avon, CO 81620
Telephone Number: (970)926.8733
(b) Lessee: Colorado Business Bank National Association
Trade Name:
Address (Premises): B-201 & B202, Northstar Center, 439 Edwards Access
Road, Edwards, CO 81632
Address (Notices): 821 17th St. Denver, CO 80202
Attention: Jonathan C. Lorenz, President
Telephone Number: (303)312-3479
(c) Guarantor: NA
1.3 Premises:
(a) Project/Building: Northstar Center, Building B
(b) Unit Description: B201 & B202 consisting of 2320 sqft gros
(c) Lessees Prorata Share of Common Costs: 27.49% upper level
12.41% entire Bldg
1.4 Term:
(a) Initial Term: Five (5) Years
(b) Estimated Date of Delivery of Possession: April 9, 1999
(c) Lease Commencement date: April 9, 1999
(d) Lease Expiration date: Five years from Lease Commencement Date.
3
<PAGE>
1.5 Rent:
(a) Base Monthly Rent: $4,350 1st Year ($22.50/sqft)
(b) Rent Commencement Date: June 1, 1999
(c) Base Index
(d) Rent Adjustment: Refer to Section 5.2 Hereof.
(e) Prepaid Rent: $3,635 ($4350 - $715 as described below)
1.6 Options to Renew: Two (2) Five Year Options to Renew
1.7 Security Deposit: $8,700.00
1.8 Use of Premises: Bank
1.9 Tenant Improvements: Responsibility of Lessee.
Lessee shall receive a Tenant Improvement
Allowance of $10,715 ($5/sqft) payable to
Lessee from Lessor as a reduction in monthly
---------
rent as follows:
Rent Before Reduction = $4,350
June 1999 rent = $3635
July 1999 through & including
April 2000 = $3350.
Lessee shall be permitted by Lessor to make
minor alterations to the exterior of the
premises to allow for an ATM machine and
a night deposits drop. Lessee shall present
all plans for said alterations to Lessor for
Lessor's written approval prior to
commencement of said alterations.
1.10 Brokerage Firm:
C
(a) Lessor's Broker: Christopher Denton Real Estate, Inc
(b) Lessee s Broker: Christopher Denton Real Estate, Inc
4
<PAGE>
2. PARTIES.
2.1 This Lease, dated (for reference purposes only), April 8, 1999, is
made by and between Edwards Interchange Limited Liability CO.,LLC,
(herein called Lessor) and Colorado Business Bank National
Association, (herein called Lessee). Lessor and Lessee are further
described in Paragraph 1.2, the Lease Summary of Business Terms.
3. PREMISES.
3.1 Leased Premises. Lessor hereby Leases to Lessee and Lessee leases
---------------
from Lessor, the "Leased Premises' described in Paragraph 1.3 of the
Lease Summary of Business Terms.
3.2 Building Project. The Premises are located in a multi-tenant
----------------
commercial facility described in Paragraph 1.3, "the Project", which
is the real property including the land and all improvements thereon,
described in Exhibit "A".
4. TERM.
4.1 The Initial Term shall be for the period stated in the Lease Summary
of Business Terms unless terminated pursuant to any provisions hereof.
The term "Lease Year" as used herein means each successive period of
twelve (12) calendar months beginning on the date of commencement of
this Lease (the "commencement Date") and ending on each successive
anniversary of such Commencement Date.
5
<PAGE>
5. RENT.
5.1 Rent. The Lessee agrees to pay the Lessor a fixed minimum annual
----
rental for each Lease Year during the term of the Lease, which rent is
specified in Paragraph 1.5.(a) in the Lease Summary of Business Terms.
This minimum rental is payable in equal monthly installments due on
the first day of each calendar month during the term hereof without
prior demand.
5.2 Rental increases - Initial Term. Commencing on the first anniversary
--------------------------------
date of the commencement date of this Lease and annually thereafter
during the term of this Lease, the minimum annual rental shall be
adjusted upward the amount of four (4%) percent.
- (A) Rental increases - Option Period(s). For the first year of the
---------------------------------------------------------------
Option Period rents shall be determined at market value for like
----------------------------------------------------------------
kind commercial spaces in Edwards, CO., but shall not be less
-------------------------------------------------------------
than the previous year's rent. Commencing on the first
-------------------------------
anniversary date of the commencement date of the Option Period
and annually thereafter, the minimal annual rental shall be
adjusted upward, based on increases (if any) in the cost of
living during the preceding year using the "Consumer Price Index"
and more particularly described in the Paragraph 5.3. Said annual
-----------
increases shall not be less than 3% nor greater than 8%.
--------------------------------------------------------
5.3 Consumer Price. "Price Index shall mean the Consumer Price Index All
--------------
Urban Consumers (CPIU)-U.S. City Average, or a successor or substitute
index published or authorized by the United States Department of
Labor, Bureau of Labor Statistics. The "Base Index" for this Lease
shall be as stated in Paragraph 1.5(c), in the Lease Summary of
Business Terms.
5.4 Adjustment Formula. The following formula shall be used for
------------------
determining the adjustment, if any, in the fixed minimum annual rent:
6
<PAGE>
Current Index Number = "Price Index" for the month immediately
- -------------------- -
Base Index Number preceding the adjustment date"
-------------------------------------
"Price Index" for the first month of the previous year
5.5 Computing Increases.
-------------------
(a) As promptly as practicable after the commencement of the first
adjustment year, and thereafter as promptly as practicable after
the first year of each succeeding adjustment year Lessor shall
compute the increase if any in the cost of living for the year
immediately preceding said adjustment year. Such computation
shall be made by use of current and base index numbers provided
for each adjustment year as set forth in Paragraph 1 5(d) in the
Lease Summary of Business Terms, and Paragraph 5.4 above.
(b) In computing increases for each adjustment year the current index
number shall be divided by the base index number. From the
quotient thereof, there shall be subtracted the integer I and any
resulting positive number shall be deemed to be the percentage of
increase of cost of living; The percentage of increase in the
cost of living shall be multiplied by the minimum annual rental
including increases for the year preceding the adjustment year
for which the increase is being computed Not withstanding the
calculation set forth herein, the rental amount payable
hereinafter shall never decrease.
5.6 Notification of rental increase. The Lessor shall, within a
-------------------------------
reasonable period of time after obtaining the appropriate data
necessary for computing such increases, give the Lessee notice of any
increase so determined. Lessee shall, within thirty (30) days after
the receipt of such notice, notify the Lessor of any error in the
calculations and upon such notification, Lessor shall correct such
error. However, nothing herein shall be construed to extend the time
as provided in Paragraph 5.1 above when rents as determined by Lessor
are due and payable by Lessee.
5.7 Minimum Rent. Minimum annual rent for each adjustment year together
------------
with increases calculated in accordance with Paragraph 5.4 through 5.6
of this Paragraph 5, shall be due and payable to the Lessor in equal
monthly installments due on the first day of each calendar month of
each adjustment year (retroactive payments then due being payable
within
7
<PAGE>
thirty (30) days after giving notice thereof by Lessor to Lessee at
the address set forth in the Lease Summary of Business Terms.
5.8 Publication of Consumer Price Index. If publication of the pertinent
-----------------------------------
Consumer Price Index shall be discontinued, the parties hereto shall
hereafter accept comparable statistics on the cost of living for the
average of all U.S. cities, all items, as the same shall be computed
and published by an agency of the United States or by a responsible
financial periodical of recognized authority shall to be selected by
the parties hereto. In the event of (1) use of comparable statistics
in place of the Consumer Price Index as above mentioned, or (2)
publication of the index figures at other than bi-monthly intervals,
there shall be made in the method of computation above provided
revision as the circumstances may require to carry out the intent of
this Article.
5.9 Additional Rent. Any monetary obligation of Lessee to Lessor under
----------------
the terms of this Lease shall be deemed to be additional rent.
6. SECURITY DEPOSIT.
6.1 Security Deposit. As security for Lessee's faithful performances of
----------------
Lessee's obligations Lessee shall deposit with Lessor upon execution
hereof the sum as stated in Paragraph 1.7 of the Summary of Lease
Business Terms. If Lessee fails to pay rent or other charges
hereunder, or otherwise defaults with respect to any provisions of
this Lease. Lessor may use, apply or retain all or any portion of
said deposit for the payment of any rent or other charge in default or
for the payment of any other sum to which Lessor may become obligated
by reason of Lessee's default or to compensate Lessor for any loss or
damage which Lessor may suffer thereby. If Lessor uses or applies all
or any portion of said deposit, Lessee shall within ten (10) days
after written demand thereof deposit cash with Lessor in an amount
sufficient to restore said deposit to the full amount herein above
stated and Lessee's failure to do so shall be a material breach of
this Lease. If the monthly rent shall, from time to time, increase
during the term of the Lease, Lessee shall thereupon deposit with the
Lessor additional security deposit so that the amount of security
deposit held by Lessor shall at all times bear the same proportion to
current rent as the original security deposit bears to the original
monthly rent set forth in Paragraph 1.7, Lease Summary of Business
Terms. Lessor shall not be required to keep said deposit separate
from its general accounts. If
8
<PAGE>
Lessor performs all of Lessee's obligations hereunder, said deposit,
or so much thereof as has not theretofore been applied by Lessor,
shall be returned, without payment of interest or other increment for
its use, to Lessee (or, at Lessor's option, to the last assignee, if
any, of Lessee's interest hereunder) at the expiration of the term
hereof, and after Lessee has vacated the Premises. No trust
relationship is created herein between Lessor and Lessee with respect
to said Security Deposit.
7. USE OF THE PREMISES.
7.1 Use. The Premises shall be used and occupied for the Use as stated in
---
Paragraph 1.8, of the Summary of Business Terms attached hereto and
made apart hereof by this reference and any other use which is
reasonably comparable and approved by Lessor in writing and for no
other purpose.
7.2 Compliance with Law.
-------------------
(a) Lessor warrants to Lessee that the Premises, in the state
existing on the date that the Lease term commences, but without
regard to the use for which Lessee will use the Premises, does
not violate any covenants or restrictions of record, or any
applicable building-code, regulation or ordinance in effect on
such Lease term commencement date Lessee shall comply with all
laws, ordinances, orders, and regulations affecting the Premises
and the cleanliness, safety and use of the same, including
installation of additional facilities as required for the conduct
and continuance of Lessee's business on the Premises. In the
event it is determined that this warranty has been violated, then
it shall be the obligation of the Lessor to promptly, at Lessor's
sole cost and expense, rectify any such violation. The warranty
contained in this Paragraph 8.2 shall be of no force or effect
if, prior to the date of this Lease, Lessee was the owner or
occupant of the Premises, and, in such event, Lessee shall
correct any such violation at Lessee's sole cost.
(b) Except as provided in Paragraph 8.2(a) Lessee shall not use or
occupy or permit the Premises or any part thereof to be used or
occupied for any unlawful or illegal business use or purposes
deemed by the Lessor to be disreputable or hazardous, nor in such
manner as to constitute a nuisance of any kind, or in violation
of any present or future laws, rules requirements, orders,
directions, ordinances or regulations affecting the Premises or
regulations of the United States of America, State of Colorado,
County of Eagle, or other
9
<PAGE>
municipal, governmental or lawful authority whatsoever Lessor
shall not create waste or a nuisance which shall lend to disturb
other tenants.
7.3 No Insurance Rate Increase. Lessee shall not do or permit anything lo
--------------------------
be done in or about the Leased Premises or bring anything therein
which will in any way increase the rate of fire or liability insurance
upon the Building wherein the Premises are situated Lessee shall, at
its sole cost and expense, comply with any and all requirements
pertaining to the Premises of any insurance company necessary for the
maintenance of reasonable fire and public liability insurance covering
the Leased Premises.
7.4 Auctions. No auction for fire or bankruptcy sales may be conducted on
--------
the Premises without Lessor's prior written consent.
7.5 Maintain Premises. Lessee covenants that it will exercise the highest
-----------------
duty of care to maintain the Leased Premises in a clean condition.
7.6 Acts of Lessee. Lessee shall not perform any act or carry on any
--------------
practices which may injure the Building of which the Premises are a
part or be a menace to other tenants in said Building or Project.
Lessee shall not permit excessive noise, noxious or offensive odors to
exist in and around the leased premises.
7.7 Preparation and Acceptance of the Premises.
------------------------------------------
(a) Lessor shall construct, at its own expense, the Building and the
Premises according to the plans and specifications ("Plans and
Specifications") attached to and made a part of this Lease by
reference and approved by the Lessor and the Lessee. All
licenses, permits, and the like shall be obtained at Lessor's
expense and the Premises shall be constructed in compliance with
all applicable building codes and municipal and state and Federal
laws and regulations Lessor shall substantially complete the
Premises on or before the Commencement Date. The Premises shall
be deemed to have substantially completed when all of the
following shall have occurred: (i) when the Premises has been
entirely completed in accordance with the Plans and
Specifications except for minor items such as touching-up and
finishing, the completion of which will not unreasonably
interfere with Lessee's normal business operations on the
Premises; (ii) A temporary or permanent certificate of occupancy
authorizing use of the Premises by Lessee shall have been issued
by the appropriate governmental authorities, (iii) Lessor
10
<PAGE>
shall have sent Lessee written notice at Lessee's address that
all of the foregoing have occurred. The taking possession of the
Premises by Lessee shall be conclusive evidence against Lessee
that the Premises were in good and satisfactory condition when
possession was taken. Entry into the Premises by Lessee solely
for the purpose of performing Lessee's work in finishing the
Premises shall be deemed taking possession of the Premises by
Lessee, but shall not be the Lease Commencement Date.
7.8 A breach of any of the terms or conditions contained in this Paragraph
7 shall constitute a material breach of this Lease.
8. TENANT IMPROVEMENTS, MAINTENANCE, REPAIRS AND ALTERATIONS.
8.1 Tenant Improvements. Lessee shall be responsible for all Tenant
-------------------
Improvements including fixtures, interior finishing, and interior
demising wall, provided Lessor shall supply exterior (perimeter)
walls. Lessor shall supply appropriate HVAC-system, electrical,
telephone, television and electrical panels, gas, water and sewer
stubbed to the Premises Lessor must approve all tenant improvements,
submitted in writing by Lessee, prior to installation.
8.2 Lessor's Obligations. Subject to the provisions of Paragraphs 7, 8.3
--------------------
and 10 and except for damage caused by any negligent or intentional
act or omission of Lessee, Lessee's agents employees or invitees in
which event Lessee shall repair the damage, Lessor shall keep in good
order, condition and repair the foundations, exterior walls and
exterior roof of the Premises and common area of the Property, herein
referred to as capital improvements Lessor shall not be required to
maintain the interior surface of exterior walls, windows, doors
skylights or plate glass of the Premises.
8.3 Lessee's Obligations. Subject to the provisions of Paragraphs 1.3(c),
--------------------
7, 8.2 & 10, Lessee, at Lessee's expense, shall keep in good order,
condition and repair the Premises and every part thereof including,
without limiting the generality of the foregoing, all plumbing,
heating, air-conditioning systems (Lessee shall procure and maintain,
at Lessee's expense, a ventilating and air conditioning system
maintenance contract), electrical and lighting facilities and
equipment within the Premises, fixtures, interior walls and interior
surface of exterior walls, ceilings, windows, doors, plate glass and
skylights, located within the Premises. Lessee shall be responsible
to pay to Lessor its
11
<PAGE>
pro-rata share of the cost to maintain all of the common area,
landscaping, snow removal, driveways, parking lots, fences, signs,
except for Tenant signs, located in the Project, and as specified in
Paragraphs 1.3(c) and 10 below and all sidewalks adjacent to the
Lessee's Premises. If Lessee fails to perform Lessee's obligations
under this Paragraph 8.3 or under any other paragraph of this Lease,
Lessor may at Lessor's option enter upon the Premises after ten (10)
days prior written notice to Lessee (except in the case of emergency,
in which no notice shall be required), perform such obligations on
Lessee's behalf and put the Premises in good order, condition and
repair, and the cost thereof together with interest thereon at the
rate of 18% per annum shall be due and payable as additional rent to
Lessor together with Lessee's next rental installment.
8.4 Installation, Alterations and Additions.
---------------------------------------
(a) Lessee shall not, without Lessor's prior written consent make any
installations, alterations, improvements, additions or Utility
Installations, in or about the Premises, except for nonstructural
alterations not exceeding Two Thousand Five Hundred dollars
($2,500.00) during any one calendar year. Lessee shall make no
change or alteration to the exterior of the Premises nor to any
of the buildings or structures located in the Project, without
Lessor's prior written consent. If Lessor shall give its
consent, the consent shall be deemed conditioned upon Lessee
acquiring a permit to do so from appropriate governmental
agencies, the furnishing of a copy thereof to Lessor prior to the
commencement of the work and the compliance by Lessee of all
conditions of said permit in a prompt and expeditious manner. As
used in this Paragraph 8.4, the term "Utility Installation" shall
mean carpeting, window coverings, air lines, power panels,
electrical distribution systems, lighting fixtures, space
heaters, air conditioning, heating, and plumbing. Lessor may
require that Lessee remove any or all of said alterations
improvements, additions or Utility Installations, performed by
Lessee, at the expiration of the term, and restore the Premises
to their prior condition. Lessor may require Lessee to provide
Lessor, at Lessee's sole cost and expense, a lien and completion
bond in any amount equal to one and one-half (1 1/2) times the
estimated cost of such improvements, to insure Lessor against any
liability for mechanics and materialmen's liens and to insure
completion of the work. Should Lessee make any alterations,
improvements, additions or utility installations without the
prior approval of Lessor,
12
<PAGE>
Lessor may require that Lessee remove any or all of the same.
8.5 Mechanics/Materialman's Liens. Lessee shall pay, when due all claims
-----------------------------
for labor or materials furnished or alleged to have been furnished to
or for Lessee at or for use in the Premises, which claims are or may
be secured by any mechanics' or materialmans' lien against the
Premises or the Project or any interest thereon. Lessee shall give
Lessor not less than ten (10) days notice prior to the commencement of
any work in the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises or Project as
provided by law. If Lessee shall, in good faith, contest the validity
or any such lien, claim or demand, then Lessee shall, at its sole
expense defend itself and Lessor against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before
the enforcement thereof against the Lessor, the Premises or the
Project, upon the condition that if Lessor shall require, Lessee shall
furnish to Lessor a surety bond satisfactory to Lessor in an amount
equal to such contested lien claim or demand indemnifying Lessor
against liability for the same and holding the Premises free from the
effect of such lien or claim. Should Lessee make any alterations,
improvements, additions or Utility Installations without the prior
written approval of Lessor, Lessor may require that Lessee remove any
or all of the same.
8.6 Removal of Tenant Improvements. On the last day of the term hereof or
------------------------------
on any sooner termination, Lessee shall surrender the Premises to
Lessor in the same condition received, ordinary wear and tear
excepted, clean and free of debris. Upon termination of the Lease
term, all Lessor and Lessee installed tenant improvements shall become
a part of the Premise which Lessee shall not remove unless said
improvements are Lessee's trade fixtures, furnishing and equipment, in
which case Lessee shall repair any damage to the Premises occasioned
by the installation and removal of its trade fixtures.
Notwithstanding anything to the contrary otherwise stated in this
Lease, Lessee shall leave power and telephone panels, electrical,
telephone and television distribution systems, lighting fixtures,
heating and air-conditioning systems, plumbing in good operating
condition.
8.7 Emergency. In the event of an emergency, and the Premises require
---------
immediate emergency work, Lessee may perform emergency work to the
capital improvements necessary to protect property or life as long as
said emergency work does not exceed two thousand five hundred dollars
($2,500.00). Lessee shall make all reasonable efforts to notify
Lessor of
13
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the emergency but in no case shall Lessee notify Lessor more than one
(1) business day from the date of emergency.
8.8 Reimbursement. Lessor shall reimburse Lessee for the expenses of any
-------------
repairs or emergency work performed which the Lessee may be required
to make which are occasioned by the acts or negligence of Lessor, its
agents, employees, invitees or licensees, and Lessee shall reimburse
Lessor for the expense of any repair which Lessor may be required to
make which are occasioned by the acts or negligence of Lessee, its
agent, employees, invitees or licensees: provided, however, that the
responsible party must be given notice of the maintenance or repair
item and a reasonable time to repair the same before the other party
shall be entitled to perform the necessary maintenance or repair.
8.9 Lessor Liability. Per this Paragraph 8, Lessor shall not be liable to
----------------
Lessee or to any other person whatsoever for any damage arising from
the leakage, obstruction, interruption, failure or discontinuance of
all or any part of any utility or utility system in or about the
Premises or the Building, or from water being upon or coming through
the roof or vents, due to causes other than negligence of Lessor, nor
for any damage arising from any acts or negligence of co-tenants or
other occupants of the Building or adjacent property, or the public.
9. COMMON AREA.
9.1 Common Area Use. Subject to the terms and conditions of this Lease
---------------
and such rules and regulations as Lessor may from time to time
prescribe, Lessee and Lessee's employees, invitees, and customers
shall, in common with other occupants of the Project and their
respective employees, invitees, and customers and others entitled to
the use thereof, have the nonexclusive right to use the access roads,
parking areas, arcades and facilities provided and designated by
Lessor for the general use and convenience of the occupants of the
Project which areas and facilities are referred to herein as "Common
Area". This right shall terminate upon the termination of this Lease.
Lessor reserves the right from time to time to make changes to the
shape, size location amount and extent of the Common Area, provided
however, that such changes do not adversely affect Lessee's ability to
conduct his business in the Premises. Lessor further reserves the
right to promulgate such rules and regulations relating to the use of
the Common Area, and any parts thereof, as may be reasonably
appropriate for the best interest of the occupants of the Parcel. The
rules and
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regulations shall be binding upon Lessee upon delivery of a copy of
them to Lessee and Lessee shall abide by them and cooperate in their
observance. Such rules and regulations may be amended by Lessor from
time to time, with or without advance notice, and all amendments shall
be effective upon delivery of a copy to Lessee. Lessor shall not
permit the parking of Lessee's vehicles or trucks or the vehicles or
trucks of Lessee's suppliers or others in any portion of the Common
Area that are not designated by Lessor for such use by Lessee. Lessee
shall not abandon any inoperative vehicles or equipment on any portion
of the Common Area. Lessee shall make no alterations, improvements or
additions to the Common Area.
9.2 Maintenance of Common Area. Lessor shall operate, manage, maintain
--------------------------
and repair the Common Area in good order, condition and repair. The
manner in which the Common Area shall be maintained shall be at the
discretion of Lessor and expenditures for such maintenance shall be
reasonable. The cost of such repair, maintenance, operation and
management, including without limitation, maintenance and repair of
landscaping, irrigation systems, paving, sidewalks, fences, interior
walk ways, fences and lighting, shall be a Common Area Charge and
Lessee shall pay its prorata share of such costs as specified in
Paragraph 1.3(c) and provided in Paragraph 10 below.
10. COMMON AREA CHARGES.
10.1 Lessee shall pay to Lessor, as additional rent, as defined in
Paragraph 5.7, upon demand but not more often than once each calendar
month, an amount equal to that percentage or prorata share of the
Common Area charges as stipulated in Paragraph 1.3(c) of the Lease
Summary of Business Terms.
11. INSURANCE; INDEMNITY.
11.1 Liability Insurance - Lessee. Lessee shall at Lessee's expense,
----------------------------
obtain and keep in force during the term of this Lease a policy of
Combined Single Limit Bodily Injury and Property Damage Insurance,
written by one or more responsible insurance companies licensed to do
business in the State of Colorado, insuring Lessee and Lessor against
any liability arising out of the use, occupancy or maintenance of the
Premises and all other areas appurtenant thereto. Such insurance
shall be in an amount not less than one million dollar ($1,000,000.00)
-------------------------------------------------------
per occurrence. The policy shall insure performance by Lessee of the
--------------
indemnity provisions of this Section 11. The limits of said insurance
15
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shall not, however, limit the liability of Lessee hereunder. Lessor
shall be a named additional insured.
11.2 Property Insurance - Lessee Property. Lessee shall at Lessee's
------------------------------------
expense, obtain and keep in force during the term of this lease a
policy of fire insurance covering loss or damage to the Premises, its
tenant improvements, furniture, fixtures and equipment in the Premises
with the extent of at least 80% of their insurable value, the proceeds
of which will, so long as the Lease is in effect, be used for the
repair or replacement of the properties so insured. It is understood
that the Lessor shall have no interest in such insurance, and will
sign all documents necessary and proper in connection with the
settlement of any claim or loss by Lessee. Lessor shall be a named
additional insured.
11.3 Lessor's Fire, Extended Coverage and Liability.
----------------------------------------------
(a) Lessor shall pay for the cost of fire and extended coverage insurance
covering the Building and Project against loss or damage by fire and
by other risks now or hereafter embraced by "extended coverage" in the
amount of the full insurable value of the Building. Lessor, at
Lessor's expense, shall also maintain in full force during the lease
term comprehensive general liability with respect to the Building
covering bodily injury, death and damage to the property of others.
(b) For each Lease Year Lessee shall pay Lessee's prorata share of the
premiums for the above described insurance coverage, which amount
shall be payable in equal monthly installments due on the same day as
the minimum monthly rental payments are due hereunder without prior
notice. As promptly as possible following receipt by Lessor of its
annual insurance premium notice for the Building and/or Project, a
copy of the same shall be sent to the Lessee together with a statement
of any increase in Lessee future pro rata share which may be
necessitated by said premium notice for the Building and/or Project.
Lessee shall commence paying any such increased share on the day the
next minimum monthly rental payment is due hereunder.
11.4 Insurance Policies. Lessee shall deliver to Lessor copies of
------------------
policies of liability insurance required under Paragraph 11.1 or
certificates evidencing the existence and amounts of such insurance.
No such policy shall be cancelable or subject to reduction of coverage
or other modification except after thirty (30) days prior written
notice to Lessor. Lessee shall, at least thirty (30) days prior to
the expiration of such policies, furnish Lessor with
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<PAGE>
renewals or "binders" thereof, or Lessor may order such insurance and
charge the cost thereof to Lessee, which amount shall be payable by
Lessee upon demand. Lessee shall not do or permit to be done anything
which shall invalidate the insurance policies referred to in Section
11.
11.5 Waiver of Subrogation. Lessee and Lessor shall each hereby release
---------------------
and relieve the other, and waive their entire right of recovery
against the other for loss or damage arising out of or incident to the
perils insured against under Section 11, which perils occur in, on or
about the Premises, whether due to the negligence of Lessor or Lessee
or their agents, employees, contractors and/or invitees Lessee and
Lessor shall upon obtaining the policies of insurance required
hereunder, give notice to the insurance carrier or carriers that the
foregoing mutual waiver of subrogation is contained in this Lease.
11.6 Indemnity. Lessee shall indemnify and hold harmless Lessor from and
---------
against any and all claims arising from Lessee's use of the Premises,
or from the conduct of Lessee's business or from any activity, work or
things done, permitted or suffered by Lessee in or about the Premises
or elsewhere and shall further indemnify and hold harmless Lessor from
and against any and all claims arising from any breach or default in
the performance of any obligation of Lessee's to be performed under
the terms of this Lease, or arising from any act, omission or
negligence of the Lessee, or any of Lessee's agents, contractors or
employees and from and against all costs, attorney's fees and
liabilities incurred in the defense of any such claim or action or
proceeding brought thereon, and in case any action or proceeding be
brought against Lessor by reason of any such claim, Lessee upon
notice from Lessor shall defend the same at Lessee's expense by
counsel satisfactory to Lessor and Lessor shall cooperate with Lessee
in such defense. Lessee, as a material part of the consideration to
Lessor. hereby assumes all risk of damage to property or injury to
persons, in, upon or about the Premise arising from any cause,
provided however, that Lessor shall not be liable for any claims or
damage to property, or injury to persons in or about the Premises or
the Project arising from the acts omissions or negligence of the
Lessor, his agents, employees or invitees . Lessee's obligation to
indemnify the Lessor as provided above shall be limited to the sum
that exceeds the amount of insurance proceeds, if any, received from
Lessor's insurance carrier in payment of the Claim.
11.7 Exemption of Lessor from Liability. Lessee hereby agrees that Lessor
----------------------------------
shall not be liable for injury to Lessee's business or any loss of
income therefrom or for damage to the goods, wares, merchandise or
other property of Lessee, Lessee's employees, invites customers, or
any other person
17
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in or about the Premises or the Project, nor shall Lessor be liable
for injury to the person of Lessee, Lessee's employees, invitees,
agents or contractors, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water, rain, snow or other
Acts of God or from the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether
the said damage or injury results from conditions arising upon
Premises, the Project or upon other portions of the building of which
the Premises are a part, or from other sources or places.
Notwithstanding the foregoing, Lessor shall be liable for such injury,
loss or damage as set forth above if the same is caused by the act
omission or negligence of the Lessor, his agents, employees or
invitees. Lessor shall not be liable for any damages arising from any
act or negligence of any other tenant, occupant or user, if any, of
the Project or Building in which the Premises are located.
12. TAXES.
12.1 Lessor's Payment of Real Property Tax. Lessor shall pay the real
-------------------------------------
property tax as applicable to the Premises and the Project as defined
in Paragraph 12.3. However, Lessee shall pay to Lessor Lessee's pro
rata share of all real estate taxes, assessments and other
governmental levies and charges, general and special, which are
assessed or imposed upon the underlying real property, the Building or
any part thereof, or become payable during the term of the Lease.
12.2 Definition of "Real Property Tax". As used herein, the term "real
---------------------------------
property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee,
commercial rental tax, improvement bond or bonds, levy or tax (other
than inheritance, personal income or estate taxes) imposed on the
Premises or Project by any authority having the direct or indirect
power to tax, including any city, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage or other
improvement district thereof, as against any legal or equitable
interest of Lessor in the Premises or in the real property of which
the Premises are a part. The term "real property tax" shall also
include any tax, fee, levy, assessment or charge (i) in substitution
of, partially or totally, any tax, fee, levy assessment or charge
hereinabove included within the definition of "real property tax", or
(ii) the nature of which was included within the definition of "real
property tax", or (iii) which
18
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is imposed by reason of this transaction, any modifications or changes
hereto, or any transfers hereof.
12.3 Lessee's Pro-rata Share. Payment of Lessee's prorata share of the
-----------------------
taxes as stated in Paragraphs 12.1 and 12.2, shall be payable by
Lessee within thirty (30) days after receipt of Lessor's written
statement accompanied by the statement from Eagle County, Colorado,
setting forth the amount of the taxes being charged to the Lessee.
12.4 Personal Property Taxes.
-----------------------
(a) Lessee shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, equipment and all other personal
property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishing,
equipment and all other personal property to be assessed and
billed separately from the real property of Lessor.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes
attributable to Lessee within ten (10) days after receipt of
written statement setting forth the taxes applicable to Lessee's
property supported by the appropriate tax statement from the
taxing authority.
13. UTILITIES.
13.1 Lessee's Utilities. Lessee shall provide and pay for all electrical,
------------------
television, telephone, gas separately metered to the Premises. Upon
written notice thereof, supported by appropriate invoices, Lessee
shall pay Lessee's prorata share of common gas, electricity, and sewer
and water costs associated with the operation of the Building and the
Project as additional rent payable in equal monthly installments due
on the same day as the minimum monthly rent
13.2 With regard to all utilities, it is mutually agreed that Lessor shall
not be liable in damages or otherwise for any interruption or failure
thereof when such interruption or failure is not due to the negligence
of Lessor.
13.3 Lessee's Facilities. Lessee further agrees that Lessee will not
-------------------
install any equipment which will exceed or overload the capacity of
any Utility Facility and that if any equipment installed by Lessee
shall require additional Utility
19
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Facilities, the same shall be installed and maintained at Lessee's
expense in accordance with the plans and specifications which have
received prior written approval by Lessor. Such approval shall not be
unreasonably denied.
14. ASSIGNMENT AND SUBLETTING.
14.1 Lessor's Consent Required. Except as provided herein, Lessee shall
-------------------------
not assign this Lease nor any interest herein, or encumber, mortgage
or hypothecate this Lease or any interest herein, or permit the use of
the Premises by any person or persons other than Lessee, or sublet the
Premises in whole or in part without the Lessor's prior written
consent, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, Lessee shall have the absolute right to
assign this Lease to any corporation in which Lessee owns not less
than 50% of the stock or any Limited Liability Company, Partnership or
Limited Partnership in which Lessee has not less than a 50% interest.
If Lessee is a corporation, any sale or other transfer of the stock of
such corporation which results in the present shareholders therein
owning less than 50% of the stock thereof shall be deemed an
assignment of this Lease, requiring the prior written consent of
Lessor. Lessor shall respond to Lessee's request for consent
hereunder in a timely manner and any attempted assignment, transfer,
mortgage, encumbrance or subletting without such consent shall be null
and void and without force or effect and shall constitute a breach of
this Lease. Any assignee must acknowledge in writing compliance with
all exclusive uses in the Building. For purposes of this section, a
tenant shall be viewed as an acceptable tenant for either sublet or
assignment, if such tenant shall meet the business and financial
standards of any previous and/or existing tenants.
14.2 Release of Lessee. Upon Lessor's consent, an assignment shall
-----------------
release the Lessee of Lessee's obligation to pay the rent and to
perform all obligations to be performed by Lessee hereunder After an
assignment, all such obligations shall become the responsibility of
the Assignee. Consent to one assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting.
14.3 Attorney's Fees. In the event Lessee shall assign or sublet the
---------------
Premises or request the consent of Lessor for what Lessee proposes to
do, then Lessee shall pay Lessor's reasonable attorneys fees incurred
in connection therewith, such attorney's fees shall not be less than
Three Hundred Fifty Dollars ($350.00) for each such request.
20
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15. DAMAGE AND DESTRUCTION.
15.1 Definitions.
-----------
(a) "Premises Partial Damages" "Premises Partial Damages" shall
--------------------------
herein mean damage or destruction to the Premises to the extent
that the cost of repair is less than fifty percent (50%) of the
fair market value of the Premises immediately prior to such
damage or destruction. "Premises Building Partial Destruction"
shall mean damage or destruction to the building of which the
Premises are a part to the extent that the cost of repair is less
than fifty percent (50%) or more of the Fair Market Value, as
defined in Paragraph 15.1(d) below, of such building as a whole
immediately prior to such damage or destruction.
(b) "Premises Total Destruction". "Premises Total Destruction" shall
----------------------------
mean damage or destruction to the Premises to the extent that the
cost of repair is fifty (50%) or more of the fair market value of
the Premises immediately prior to such damage or destruction
"Premises Building Total Destruction" shall mean damage or
destruction to the Building of which the Premises are a part to
the extent that the cost of repair is fifty percent (50%) or more
of the fair market value, as defined in Paragraph 15.1(d) below
of such building as a whole immediately prior to such damage or
destruction.
(c) "Insurance Loss". Insurance Loss" shall herein mean damage or
----------------
destruction which was caused by an event required to be covered
by the insurance described in Paragraph 11.
(d) "Fair Market Value". In order to determine the Fair Market Value
-------------------
the parties shall meet and endeavor to agree upon the Fair Market
Value of the Premises. In determining the Fair Market Value for
the Premises, the Premises shall be compared only to buildings of
similar quality and size with similar improvements in the
Avon/Edwards, Colorado area. If within fifteen (15) days after
said meeting, the parties cannot agree upon the Fair Market Value
of the Premises, the parties shall submit the matter to binding
appraisal in accordance with the following procedure. Within
thirty (30) day after the date of the first meeting, the parties
shall either (a) jointly appoint an appraiser for this purpose or
(b) failing this joint action, separately designate a
disinterested appraiser. No person shall appoint or designate an
appraiser unless
21
<PAGE>
the appraiser has at least five (5) years experience in
appraising major commercial properties in the Avon/Edwards area
and is a member of a recognized society of real estate
appraisers. If the two (2) appraisers, thus appointed, cannot
reach agreement on the question presented within thirty (30) days
after their appointment, then the appraisers thus appointed shall
appoint a third (3rd) disinterested appraiser having like
qualifications. If within twenty (20) days after the appointment
of the third (3rd) appraiser, a majority of the appraisers cannot
reach agreement on the question presented, then the appraisal
furthest from the median of the three (3) appraisals shall be
disregarded and the mean average of the remaining two (2) shall
be used to determine the question presented and shall be binding
and conclusive. Each party shall pay the fees and expenses of the
appraiser appointed by it and shall share equally the fees and
expenses of the third (3rd) appraiser. If the two (2) appraisers
appointed by the parties cannot agree on the appointment of the
third (3rd) appraiser, they or either of them shall give notice
of such failure to agree to the parties and if the parties fail
to agree upon the selection of such third (3rd) appraiser within
ten (10) days after the appraisers appointed by the parties give
such notice, then either of the parties upon notice to the other
party, may request such appointment by the American Arbitration
Association, or on its failure, refusal or inability to act may
apply for such appointment to the Presiding Judge of the District
Court of Eagle County, Colorado.
15.2 Partial Damage - Insured Loss. Subject to the provisions of
-----------------------------
Paragraphs 15.4, 15.5 and 15.6, if any time during the term of this
Lease there is damage which is an Insured Loss and which falls into
the classification of Premises Partial Damage or Premises Building
Partial Damage, then Lessor shall, at Lessor's sole cost repair such
damage, but not Lessee's fixtures, equipment or tenant improvements,
as soon as reasonably possible and this Lease shall continue in full
force and effect.
15.3 Partial Damage - Uninsured Loss. Subject to the provisions of
-------------------------------
Paragraphs 15.4, 15.5, 15.6, if any time during the term of this Lease
there is damage which is not an Insured Loss and which falls within
the classification of Premises Partial Damage or Premises Building
Partial Damage, unless caused by a negligent or willful act of Lessee
(in which event Lessee shall make the repairs at Lessee's expense),
Lessor may at Lessor's option either (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which case this Lease
shall continue in full force and effect, or
22
<PAGE>
(ii) give written notice to Lessee within in thirty (30) days after
the date of the occurrence of such damage of Lessor's intention to
cancel and terminate this Lease, as of the date of the occurrence of
such damage. In the event Lessor elects to give such notice of
Lessor's intention to cancel and terminate this Lease, Lessee shall
have the right within ten (10) days after the receipt of such notice
to give written notice to Lessor of Lessee's intention to repair such
damage at Lessee's expense, without reimbursement from Lessor, in
which event this Lease shall continue in full force and effect, and
Lessee shall proceed to make such repairs as soon as reasonably
possible. If Lessee does not give such notice within such ten (10) day
period this Lease shall be canceled and terminated as of the date of
the occurrence of such damage.
15.4 Total Destruction. If at any time during the term of this Lease
-----------------
there is damage, whether or not an Insured Loss, (including
destruction required by any authorized public authority), which falls
into the classification of Premises Total Destruction or Premise
Building Total Destruction, the Lease shall automatically terminate as
of the date of the total destruction.
15.5 Damage Near End of Term.
-----------------------
(a) If at any time during the last six (6) months of the term of this
Lease there is damage, whether or not an Insured Loss, which
falls within the classification of Premises Partial Damage,
Lessor or Lessee may cancel and terminate this Lease as of the
date of occurrence of such damage by giving written notice to the
other of their election to do so within thirty (30) days after
the date of occurrence of such damage.
(b) Notwithstanding Paragraph 15.5(a), in the event that Lessee has
an option to extend and renew this Lease, and the time within
which said option may be exercised has not yet expired, Lessee
shall exercise such option, if it is to be exercised at all, no
later than twenty (20) days after the occurrence of an Insured
Loss falling within the classification of Premises Partial Damage
during the last six (6) months of the term of the Lease. If
Lessee duly exercises such option during said twenty (20) day
period, Lessor shall at Lessor's expense, repair such damage as
soon as reasonably possible and this Lease shall continue in full
force and effect. If Lessee fails to exercise such option during
said twenty (20) day period, then Lessor may at Lessor's option
terminate and cancel this Lease as of the expiration of said
twenty (20) day period by giving
23
<PAGE>
written notice to Lessee of Lessor's election to do so within ten
(10) days after the expiration of said twenty (20) day period,
notwithstanding any term or provision in the grant of option to
the contrary.
15.6 Abatement of Rent; Lessee's Remedies.
------------------------------------
(a) In the event of damage described in Paragraphs 15.2 or 15.3, and
Lessor or Lessee repairs or restores the Premises pursuant to the
provision of this Section 15, there shall be a reduction of the
rent and all Common Area Charges and Taxes payable hereunder
equal to the proportion that the portion of the rentable area
rendered untenable by the damage bears to the rentable area
before the damage, from the date of the occurrence of the damage
until the date when the repairs which Lessor is obligated to make
are completed sufficiently to enable Lessee to operate his
business in the Premises. Except for such abatement of the Rent,
Lessee shall have no claim against Lessor for any damage suffered
by reason of any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Section 15 and shall not commenced
such repair or restoration within ninety (90) days after such
obligations shall accrue, Lessee may at Lessee's option cancel
and terminate this Lease by giving Lessor written notice of
Lessee's election to do so at any time prior to the commencement
of such repair or restoration. In such event this Lease shall
terminate as of the date of such notice.
15.7 Termination - Advance Payments. Upon termination of this Lease
------------------------------
pursuant to this Paragraph 15, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of
Lessee's security deposit as has not theretofore been applied by
Lessor.
16. DEFAULTS; REMEDIES.
16.1 Default. The occurrence of any one or more of the following events
-------
shall constitute a material default and breach of the Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
24
<PAGE>
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due,
where such failure shall continue for a period of three days
after written notice thereof from Lessor to Lessee. In the event
that Lessor serves Lessee with a Notice to Pay Rent or Quit
pursuant to applicable Unlawful Detainer statutes such Notice to
Pay Rent or Quit shall also constitute the notice required by
this subparagraph.
(c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or
performed by Lessee, other than described in Paragraph 16.1(b)
above, where such failure shall continue for a period of thirty
(30) days after written notice thereof from Lessor to Lessee:
provided, however, that if the nature of Lessee's default is such
that more than thirty (30) days are reasonably required for its
cure, then Lessee shall not be deemed to be in default if Lessee
commenced such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion.
(d) (i) The making by Lessee of any general arrangement or assignment
for the benefit of creditors; (ii) Lessee becomes a "debtor" as
defined in 11 U.S.C., Section 101 or any successor statue thereto
(unless, in the case or a petition filed against Lessee, the same
is dismissed within sixty (60) days); (iii) the appointment of a
trustee or receiver to take possession or substantially all of
Lessee's assets located at the Premises or of Lessee's interest
in this Lease, where possession is not restored to Lessee within
thirty (30) days: or (iv) the attachment, execution or other
judicial seizure of substantially all of Lessee's assets located
at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days Provided,
however, in the event that any provision of this Paragraph
16.1(d) is contrary to any applicable law, such provisions shall
be of no force or effect.
(e) The discovery by Lessor that any financial statement given to
Lessor, by Lessee, an assignee of Lessee, any subtenant of
Lessee, any successor in interest of Lessee or any guarantor of
Lessee's obligations hereunder, and any of them, was materially
false.
16.2 Remedies. In the event of any such material default or breach by
--------
Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the
25
<PAGE>
exercise of any right or remedy which Lessor may have by reason of
such default or breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, and Lessee shall immediately surrender possession
of the Premises to Lessor. In such event Lessor shall be
entitled to recover from Lessee all damages incurred by Lessor by
reason of Lessee's default including, but not limited to, the
cost of recovering possession of the Premises, reasonable
attorney's fees, and any real estate commission actually paid and
the unpaid rent for the balance of the term after the time of
such award exceeds the amount of such rental loss for the same
period that Lessee proves could be reasonably avoided.
(b) Maintain Lessee's, right to possession in which case this Lease
shall continue in effect whether or not Lessee shall have vacated
or abandoned the Premises. In such event Lessor shall be
entitled to enforce all of Lessor's rights and remedies under
this Lease, including the right to recover the rent as it becomes
due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws of judicial decisions of the state wherein the
Premises are located unpaid installments or rent and other unpaid
monetary obligations of Lessee under the terms of this Lease
shall bear interest from the date due at the rate of 12% per
annum.
16.3 Lessee's Belongings. Should Lessee be disposed of the Premises by
-------------------
operation of law or otherwise, any personal property belonging to
Lessee left on the Premises shall, at the Lessor's sole option, be
deemed to be abandoned to the Lessor, or Lessor may store such
property in Lessee's name and at Lessee's expense without notice to
Lessee or Lessor may dispose of the property and Lessee shall be
responsible for reimbursing Lessor for any costs incurred for such
disposal.
16.4 Default by Lessor. Lessor shall not be in default unless Lessor
-----------------
fails to perform obligations required or Lessor within a reasonable
time, but in no event later than thirty (30) days after written notice
by Lessee to Lessor and the holder of any first mortgage or deed of
trust covering the Premises whose name and address shall have
theretofore been furnished to Lessee in writing, specifying wherein
Lessor failed to perform such obligation; provided, however, that if
the nature of Lessor's obligation is such that more that
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thirty (30) days are required for performance then Lessor shall not be
in default if Lessor commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
16.5 Late Charges. Lessee hereby acknowledges that late payment by
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Lessees to Lessor for rent and other sums due hereunder will cause
Lessor to incur costs not contemplated by the Lease, the exact amount
of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges,
and late charges which may be imposed on Lessor by the terms of any
mortgage or trust deed covering the Premises. Accordingly, if any
installation of rent or any other sum due from Lessee shall not be
received by Lessor or Lessor's designee within ten (10) days after
such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall pay to Lessor a late charge equal to ten percent
(10%) of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Lessor
will incur by reason for late payment by Lessee. Acceptance of such
late charge by Lessor shall in no event constitute a waiver of
Lessee's default with respect to such overdue amount, nor prevent
Lessor from exercising any of the rights and remedies granted
hereunder. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) consecutive installments of
rent, then rent shall automatically become due and payable quarterly
in advance, rather than monthly, notwithstanding Paragraph 5 or any
other provision of this Lease to the contrary.
16.6 Impounds. In the event that a late charge is payable hereunder,
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whether or not collected, for three (3) installments of rent of any
other monetary obligations of Lessee under the terms of this Lease,
Lessee shall pay to Lessor, if Lessor shall so request, in addition to
any other payments required under this Lease, a monthly advance
installment, payable at the same time as the monthly rent, as
estimated by Lessor, for real property taxes and insurance expenses on
the Premises which are payable by Lessee under the terms of this
Lease. A fund shall be established to insure payment when due, before
delinquency, of any or all such real property taxes and insurance
premiums. Any estimated payments shall be subject to adjustment as
soon as the actual Taxes and other estimated amounts for that calendar
year can be determined by Lessor, and Lessor shall provide Lessee with
a reasonably detailed statement of any such adjustment. If the amount
of Taxes and other estimated amounts exceeds the sum previously paid
by Lessee pursuant this Paragraph 16.6, as earlier estimated, then
within 30 days after receiving Lessors
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Statement, Lessee shall pay the deficiency to Lessor. If Lessor's
statement indicates that Lessor has received more than the amount of
Taxes and other estimated payments actually owed by Lessee, Lessor
shall apply the excess first to reduce the amount payable by Lessee
for Taxes and Common Area Charges. Lessor shall return the balance, if
any, to Lessee, or at Lessor's option, Lessor may apply such excess to
any unsatisfied obligation of Lessee. All monies paid to Lessor under
this Paragraph 16.6, may be intermingled with other monies of Lessor
and shall not bear interest.
16.7 Termination due to Default by Lessee.
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(a) No such termination of this Lease shall relieve the Lessee's
liability and obligations under this Lease, and such liability
and obligations shall survive any such termination. In the event
of any such termination, the Lessee shall pay to the Lessor the
rent required to be paid by the Lessee up to the time of such
termination, and thereafter the Lessee, until the end of what
would have been the term of this Lease in the absence of such
termination, shall be liable to the Lessor for, and shall pay to
the Lessor as and for liquidated and agreed damages for the
Lessee's default, the following (i) the equivalent of the amount
of the rent which would be payable under this Lease by the Lessee
if the Lease were still in effect, less (ii) the net proceeds of
any reletting effected pursuant to the provisions of Paragraph
16.1, after deducting all of the Lessor's expenses, all
reasonable repossession costs, brokerage commissions, legal
expenses, attorneys' fees, cost and expenses of preparation for
such reletting.
(b) Upon the termination of this Lease, pursuant to any of the above
paragraphs, the Lessee shall peacefully surrender the Premises to
the Lessor, and the Lessor upon or at any time after such
termination, may without further notice reenter the Premises and
repossess it by force, summary proceedings, ejectment or
otherwise, and may dispossess the Lessee and remove the Lessee
and all other persons and property from the Premises, and may
have, hold an enjoy the Premises and the right to receive all
rental incomes therefrom.
(c) At any time after such termination, the Lessor may relet the
Premises or any part thereof, in the name of the Lessor or
otherwise for such term (which may be greater or less than the
period which would otherwise have constituted the balance of the
term of this Lease) and on such conditions as the Lessor, in the
Lessor's
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absolute discretion, may determine and may collect and receive
the rents therefor. The Lessor shall in no way be responsible or
liable for any failure to collect any rent due upon such
reletting, but Lessor shall be required to use his good faith
effort to collect such rent.
17. SURRENDER OF PREMISES; TREATMENT OF LESSEE'S ALTERATIONS AT EXPIRATION OF
LEASE.
17.1 All alterations, additions, improvements, partitions, flooring,
carpeting or fixtures and plumbing fixtures which may be made or
installed by either of the parties upon the Premises and which in any
way or manner are attached to the floors, walls windows, or ceilings
(excepting coolers, compressors, cash registers, computers or other
mechanical equipment installed by Lessee) shall be the property of the
Lessor upon the expiration or other termination of this Lease, unless
Lessor shall elect otherwise. In the event the Lessor shall so elect,
such alterations, installations, additions or improvements made by
Lessee upon the Premises, as the Lessor shall so elect, shall be
removed by the Lessee and Lessee shall restore the Premises to its
original condition at the commencement hereof, normal wear and tear
excepted, at its own cost and expense prior to the expiration or
termination of the term hereof; or if the Lessee fails to do so
Lessor, in addition to all of its other rights and remedies hereunder,
may do so at the Lessee's expense. Also, at the expiration or other
termination of the Lease term, Lessee shall remove all of his moveable
trade fixtures which shall not be property of the Lessor under the
foregoing provisions of this Section 17. The Lessee's obligations to
perform the covenants contained in this Paragraph of this Lease shall
survive the expiration or other termination of this Lease.
18. LESSOR'S LIEN.
18.1 The parties expressly understand and agree that in order to secure
payment of any such sums becoming due at any time to Lessor hereunder
and to secure the proper performance of this Lease by Lessee, Lessor
hereby has a security interest in and first lien upon all of the
tenant improvements and fixtures owned by the Lessee (or to the extent
Lessee has any other interest herein) which Lessee shall hereafter
place or permit to be placed in, upon or about the Premises. Lessee
hereby agrees to give Lessor a security interest in the subject tenant
improvements and fixtures and agrees to execute, upon receipt of
written request therefor from the
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Lessor, at any time during the term hereof, a Financing Statement
evidencing said security interest to be filed and recorded in the
manner provided by law. In the event of default by Lessee under this
Lease, the Lessor shall have a right to all of the subject tenant
improvements, personal property and fixtures as if Lessor were a
creditor under the Colorado Uniform Commercial Code. In addition, in
the event of a default by Lessee under this Lease, the Lessee
authorizes the Lessor to enter upon the Premises and to sell (and to
remove, if necessary) the tenant improvements and fixtures which are
the subject of this lien. Such action by Lessor shall not be deemed a
breach of the Lease. Lessee agrees to pay the reasonable attorney's
fees incurred by the Lessor in the event the Lessor must foreclose
upon the security interest and first lien granted by Lessee herein.
Notwithstanding the preceding, Lessor agrees to subordinate its
security interest and lien granted hereunder to any purchase money
mortgages or liens, other Lessor security interests and/or line of
credit security interests covering any fixtures or inventory of Lessee
in the Premises.
19. EMINENT DOMAIN; CONDEMNATION.
19.1 If the Premises or any portion thereof are taken under the power of
eminent domain, or sold under the threat of the exercise of said power
(all of which are therein are called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs. If more
than ten percent (10%) of the floor area of the building or the
Premises, or more than twenty-five percent (25%) of the land area of
the Project which is not occupied by any building, is taken by
condemnation, Lessee may at Lessee's option, to be exercised in
writing only within thirty (30) days after Lessor shall have given
Lessee written notice of such taking (or in the absence of such
notice, within thirty (30) days after the condemning authority shall
have taken possession) terminate this Lease as of the date the
condemning authority takes such possession. If Lessee does not
terminate the Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises
remaining, except that the rent shall be reduced in the proportion
that the floor area of the Building or Premises taken bears to the
total floor area of the Building or Premises, as the case may be. No
reduction of rent shall occur if the only area taken is that which
does not have a building located thereon, provided however, that the
taking of such area does not interfere with Lessee's conduct of
business on the Premises. Any reward for the taking of all or any
part of the Premises or Project under the power of eminent domain or
any payment made under threat
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of the exercise of such power shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of
the leasehold or for the taking of the fee, or as severance damages;
provided, however, that Lessee shall be entitled to any award for loss
of business, damage to Lessee's trade fixtures, Lessee's removable
personal property, depreciation to, and cost of removal of stock and
fixtures. In the event that this Lease is not terminated by reason of
such condemnation, Lessor shall to the extent of severance damages
received by Lessor in connection with such condemnation, repair any
damage to the Premises caused by such condemnation except to the
extent that Lessee has been reimbursed therefore by the condemning
authority. Lessee shall pay any amount in excess of such severance
damages required to complete such repair.
19.2 Lessor and Lessee agree to execute and deliver to the other all
instruments that may be required to effectuate the provision of this
Section 19.
20. ESTOPPEL CERTIFICATE.
20.1 Lessee shall at any time upon not less than ten (10) days' written
notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) setting forth the commencement of the Lease
term, and the rent provided under the Lease, it being intended that
such statement pursuant to this Paragraph 20, may be relied upon by
any purchaser, mortgagee, or assignee of any mortgagee of the Premises
or Building (ii) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in
full force and effect) and the date to which the rent and other
charges are paid in advance, if any, and (iii) acknowledging that
there are not, to Lessee's knowledge, any non cured defaults on the
part of Lessor thereunder, or specifying such defaults if any are
claimed. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer of the Premises.
20.2 At Lessor's option, Lessee's failure to deliver such statement within
such time shall be a material breach of this Lease or shall be
conclusive upon Lessee (i) that this Lease is in full force and
effect, without modification except as may be represented by Lessor,
(ii) that there are no non cured defaults in Lessor's performance and
(iii) that not more than one (1) month's rent has been paid in
advance.
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20.3 If Lessor desires to finance, refinance or sell the Premises, the
Project, or any part thereof, Lessee hereby agrees to deliver to any
lender or purchaser designated by Lessor, within ten (10) days written
notice from Lessor, such financial statements of Lessee as may be
reasonably required by such lender or purchaser. Such statements
shall include the past three years financial statements of Lessee.
All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the
purposes herein set forth.
21. SUBORDINATION.
21.1 This Lease, at Lessor's option, shall be subordinate to any ground
Lease, mortgage, deed of trust, or any other hypothecation or security
now or hereafter placed upon the real property of which the Premises
are a part and to any and all advances made on the security thereof
and to all renewals, modifications, consolidations replacements and
extensions thereof. Notwithstanding such subordination, Lessee's
right to quiet possession of the Premises shall not be disturbed if
Lessee is not in default and so long as Lessee shall pay the rent and
observe and perform all of the provisions of this Lease, unless this
Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to subordinate this
Lease to the lien of its mortgage, deed of trust or ground lease, and
shall give written notice thereof to Lessee, this Lease shall be
deemed prior to such mortgage, deed of trust, or ground lease, whether
this Lease is dated prior or subsequent to the date of said mortgage,
deed of trust or ground lease or the date of recording thereof.
21.2 Lessee agrees to execute any documents required to effectuate any
attornment, a subordination or make this Lease prior to the lien of
any mortgage, deed of trust or ground lease, as the case may be.
Lessee's failure to execute such documents written ten (10) days
written demand shall constitute a material default by Lessee
hereunder, or at Lessor's option Lessor shall execute such documents
on behalf of Lessee as Lessee's attorney in fact. Lessee does hereby
make, constitute and irrevocably appoint Lessor as Lessee's attorney-
in-fact and Lessee's name place and stead to execute such documents in
accordance with this Paragraph 21.
21.3 Lessee's refusal to execute any documents required to effectuate any
attornment shall entitle the Lessor to at once terminate the Lease.
Lessee agrees not to record or
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file this Lease or any memorandum thereof in the real estate records
affecting the Building in which the Premises are located. Any such
recording in violation hereof shall be considered a slander of
Lessor's title and breach of this entire Lease. This covenant shall
survive the preceding. With respect to each Mortgage that encumbers
the Project on the date of this Lease, Lessor agrees that Lessor will
obtain from each Mortgagee a "non-disturbance agreement", in the form
of Exhibit "G", attached hereto and incorporated herein by reference.
With respect to any other Mortgagee that may encumber the Property
after the date of this Lease, the subordination by Lessee of Lessee's
rights under this Lease shall be conditioned upon Lessor's obtaining a
"non-disturbance agreement" substantially in the form of Exhibit "G".
22. SIGNS, DISPLAYS AND OTHER ADVERTISING MEDIA.
22.1 Lessee's signs. Lessee shall be entitled to exterior signs as set
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forth on Exhibit "B" attached hereto.
22.2 Sign approvals. Lessee shall not erect or install any other exterior
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or interior window or door signs, advertising media, window or door
lettering, or placards (herein referred to as Signs) without Lessor's
written consent. Lessee agrees to install at least one exterior Sign
which shall be in strict conformance with Lessor's Sign criteria as to
design, material, colors, location, size and style of lettering. The
cost shall be the Lessee's sole expense. Lessee shall not install any
exterior lighting, decoration, painting, awning or make any changes to
the exterior of the Premises without Lessor's written consent,
provided however, that Lessee shall have the right to install a
reasonable number of exterior lights sufficient to provide security
for Lessee and his employees. Under no circumstances shall Lessee
place any Sign on any roof of the Premises or Project. There shall be
no newspaper sales dispensers or other vending machines on the
exterior of the Premises, unless approved in writing by Lessor. In
the event Lessor has approved said newspaper sale dispensers, such
approval may be revoked at any time by Lessor without prior notice to
Lessee. All Signs must comply with the rules and regulations of the
jurisdiction in which the Premises resides, the county of Eagle or the
P.U.D. regulations.
22.3 Lessor's Signs. Lessor may at any time place on or about the
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Premises, Building or Project any ordinary "For Sale" signs and Lessor
may at any time during the last one hundred twenty (120) days of the
term hereof place on or about the Premises, Building or Project and
"For Lease" sign or place
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in any normal real estate publication any ordinary "For Lease"
advertising as the case may be, all without rebate of rent or
liability to Lessee.
23. QUIET POSSESSION.
23.1 Upon Lessee paying rent For the Premises, and observing and
performing all of the covenants and provisions on Lessee's part To be
observed and performed, and as long as Lessee is not in default
hereunder, Lessee shall have quiet possession of the Premises for the
entire term, any renewal or extension hereof subject to the provisions
of this Lease. The individuals executing this Lease on behalf of the
Lessor represent and warrant to Lessee that they are dully authorized
and legally capable of executing the Lease on behalf of Lessor, and
that such execution is binding upon all parties holding an ownership
interest in the Project. Lessor warrants and agrees to defend the
title to the Premises and the Project.
24. COVENANTS AND CONDITIONS.
24.1 Each provision of this Lease performable by Lessee shall be deemed
both a covenant and a condition. In the event the Project is affected
by separate Covenants, Conditions and Restrictions ("CC&R"s) this
Lease shall be subject to said CC&Rs.
24.2 Each term and each provision of this Lease shall be construed as, and
shall have the same force and effect as though made in the form of a
covenant.
25. WAIVER.
25.1 One or more waivers of any covenant or condition by Lessor shall not
be construed as a waiver of a subsequent breach of the same or any other
covenant or condition, and the consent or approval by Lessor to or of any
act by Lessee requiring Lessor's consent, or approval shall not be deemed
to waive or render unnecessary Lessor's consent or approval to or of any
subsequent similar act by Lessee. The subsequent acceptance of rent
hereunder by Lessor shall not constitute a waiver of any preceding breach
by Lessee or any term, covenant or condition of this Lease other than the
failure of Lessee to pay the particular rental so accepted, regardless of
Lessor's
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knowledge of such preceding breach at the time of acceptance of such rent.
No waiver of any provision of this Lease shall be effective unless it is in
writing and signed by the Lessor.
26. ATTORNEY'S FEES
26.1 Attorney's Fees. If either Party brings an action to enforce the
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terms hereof or declare rights hereunder, including any indemnities
herein contained, the prevailing party in any such action, on trial or
appeal, shall be entitled in such litigation, action or proceeding to
recover as part of any judgment, award or other relief, its reasonable
attorney's fees and costs incurred, to be paid by the losing party as
fixed by the court.
27. LESSOR'S ACCESS.
27.1 Lessor and Lessor's agents shall have the right to enter the Premises
after giving reasonable notice to the Lessee (and in emergencies, at
all times) for the purpose of inspecting the same, showing the same to
prospective purchasers, lenders, or lessees, and making such
alteration, repairs, improvements or additions to the Premises or to
the Building or Project in which the Premises are located, as the
Lessor may deem necessary or desirable. Lessor shall disturb the
conduct of Lessee's business in the Premises the minimum amount
necessary to accomplish the Lessor's purpose for entering the Premises
27.2 "For Lease" signs. In accordance with this Paragraph 27, and
-----------------
Paragraph 22.3, Lessee agrees that Lessor has the right, after
reasonable notice to the Lessee, to enter upon the Premises, for a
period commencing one hundred twenty (120) days prior to the end of
the Lease term, for the purpose of exhibiting the Premises for lease,
to prospective tenants, and to post any usual "For Lease" signs upon
the Premises.
28. NOTICES.
28.1 Any notice required or permitted to be given hereunder shall either
be (i) hand delivered, (ii) given by certified mail directed to the
address of Lessor or Lessee set forth herein (iii) given by overnight
courier directed to the address of Lessor or Lessee set forth herein
(iv) by facsimile transmission to the number set forth herein. All
notices so given shall be considered effective, (i) if hand delivered
when received, (ii) if by certified mail, three days after
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deposit, certified mail postage prepaid, with the United States Postal
Service, (iii) if by overnight courier, one day after deposit with
overnight courier company or, (iv) if by facsimile transmission, upon
receipt of a machine generated confirmation of a complete transaction
of all pages. Either Party may change the address or facsimile number
to which future notices shall be sent by notice given in accordance
with this section.
29. AUCTIONS.
29.1 Lessee shall not conduct nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises, Building
or the common areas without first having obtained Lessor's prior
written consent. Notwithstanding anything to the contrary in this
Lease, Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to grant such consent.
30. OPTIONS.
30.1 Definition. As used in this Paragraph 30.1 the word "Option" shall
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mean the right or option to extend the base term of this Lease or to
renew this Lease as set forth in Paragraph 1.6 in the Lease Summary of
Business Terms and in Exhibit "C" attached hereto.
30.2 Options Personal. Each Option granted to Lessee in this Lease are
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personal to Lessee and may not be exercised or be assigned,
voluntarily or involuntarily, by or to any person or entity other than
Lessee, provided, however, the Option may be excised by or assigned to
any Lessee Affiliate defined in Paragraph 16.1 of this Lease or so
granted, in writing, by Lessor. The Options herein granted to Lessee
are not assignable separate and apart from this Lease.
30.3 Multiple Options. In the event that Lessee has any multiple options
----------------
to extend or renew this Lease a later option cannot be exercised
unless the prior option to extend or renew this Lease has been so
exercised.
30.4 Effect of Default on Options.
----------------------------
(a) Lessee shall have no right to exercise an Option notwithstanding
any provisions in the grant of Option to the contrary (i) during
the time commencing from the date Lessor gives to Lessee a notice
of default pursuant to Paragraph 16 and continuing until the
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default alleged in said notice of default is cured, or (ii)
during the period of time commencing on the date after a monetary
obligation to Lessor is due from Lessee and unpaid (without any
necessity for notice thereof to Lessee) continuing until the
obligation is paid, or (iii) at any time after an event of
default described in Paragraph 16, without any necessity of
Lessor to give notice of such default to Lessee.
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding
Lessee's due and timely exercise of the Option, if, after such
exercise and during the term of this Lease, (i) Lessee fails to
pay to Lessor a monetary obligation of Lessee for a period of
thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii)
Lessee fails to commence to cure a default specified in Paragraph
16.1(c) within thirty (30) days after the date that Lessor gives
notice to Lessee of such default and/or Lessee fails thereafter
to diligently prosecute said cure to completion or (iii) Lessee
commits a default described in Paragraph 16.1(a), 16.1(d) or
16.1(e) (without any necessity of Lessor to give notice of such
default to Lessee).
30.5 Extension Notification. Providing this Lease is in good standing,
----------------------
Lessee is not in default and has complied with Section 30 of this
Lease, Lessee may exercise its option to extend the Lease Term, by
giving Lessor written notice of Lessee's intent to extend the Lease,
herein referred to as Extension Notification. The Extension
Notification date shall be at least ninety (90) days prior to the end
of the then current Lease term or option period and in the event
Lessee extends the Lease, all of the terms and conditions shall remain
the same, except that the extended Lease term and rent shall be as
stated Paragraph 1.6, the Lease Summary of Business Terms and Exhibit
"F' attached hereto.
31. MULTIPLE TENANT BUILDING.
31.1 In the event that the Premises are part of a larger building or group
of buildings then Lessee agrees that it will abide by, keep and
observe all reasonable rules and regulations which Lessor may make
from time to time for the management, safety, care and cleanliness of
the Building and grounds, the parking of vehicles and the preservation
of good order therein as well as for the convenience of other
occupants
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and tenants of the buildings of the Project. The violations of any
such rules and regulations shall be deemed a material breach of this
Lease by Lessee.
32. SECURITY MEASURES.
32.1 Lessee hereby acknowledges that the rental payable to Lessor
hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to
provide the same. Lessee assumes all responsibility for the
protection of Lessee, its agents and invitees from acts of third
parties. In the event the Lessor, in its sole discretion, determines
that a guard service is necessary, Lessee shall pay as Additional
Rent, its prorata share of said expense.
33. EASEMENTS.
33.1 Lessor reserves to itself the right, from time to time, to grant such
easements, rights and dedications that Lessor deems necessary or
desirable, and to cause the recordation of Parcel Maps and
restrictions, so long as such easements, rights, dedications, Maps and
restrictions do not unreasonably interfere with the use of the
Premises by Lessee. Lessee shall sign any of the aforementioned
documents within ten (10) days of Lessor's written request and failure
to do so shall constitute a material breach of this Lease.
34. PERSONAL GUARANTY.
34.1 As stated in Paragraph 1.2(c), the Summary of Lease Business Terms,
the shareholders of the Lessee, if Lessee is a corporation, or the
members of the Lessee, if Lessee is a LLC, shall execute the Guaranty
attached hereto, marked as Exhibit "D".
34.2 In the event there is a guarantor of this Lease, said guarantor shall
have the same obligation as Lessee under this Lease.
35. HOLDING OVER.
35.1 If Lessee, with Lessor's consent, remains in possession of the
Premises or any part thereof after the expiration of the
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term hereof, such occupancy shall be a tenancy from month to month
upon all the provisions of this Lease pertaining to the obligations of
Lessee, except that the monthly rental shall be at a rate of one and
one-half (1 1/2) times the last monthly rental paid by Lessee. All
options and rights of first refusal, if any, granted under the terms
of this Lease shall be deemed terminated and be of no further effect
during said month to month tenancy.
36. CUMULATIVE REMEDIES.
36.1 No remedy or election hereunder shall be deemed exclusive but shall,
wherever possible be cumulative with all other remedies at law or in
equity.
37. LESSOR'S LIABILITY.
37.1 The term "Lessor" as used herein shall mean only the owner or owners
at the time in question of the fee title or a Lessee's interest in a
ground Lease of the Project, and in the event of any transfer of such
title or interest, Lessor herein named (and in the case of any
subsequent transfers then the grantor) shall be relieved from and
after the date of such transfer of all liability as respect to
Lessor's obligations thereafter to be performed, provided that any
funds in the hands of Lessor or the grantor at the time of such
transfer, in which Lessee has an interest, shall be delivered to the
grantee. The obligations contained in this Lease to be performed by
Lessor shall, subject as aforesaid, be binding on Lessor's successors
and assigns, only during their respective periods of ownership.
38. BINDING EFFECT; CHOICE OF LAW.
38.1 Subject to any provision hereof restricting assignment or subletting
by Lessee and subject to the provisions of Section 37, this Lease
shall bind the parties, their heirs, personal representatives,
successors and assigns. This Lease shall be governed by the laws of
the State of Colorado, and any litigation concerning this Lease
between the parties hereto shall be initiated in the county in which
the Project is located.
39. SEVERABILITY.
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39.1 The invalidity of any provision of this Lease, as determined by a
court of competent jurisdiction, shall in no way affect the validity
of any other provision hereof.
40. INTEREST IN PAST - DUE OBLIGATIONS.
40.1 Except as expressly herein provided, any amount due to Lessor not
paid when due shall bear interest at the rate of twelve percent (12%).
Payment of such interest shall not excuse or cure any default by
Lessee under this Lease provided, however, that interest shall not be
payable on late charges incurred by Lessee nor on any amounts upon
which late charges are paid by Lessee.
41. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS.
41.1 This Lease, the Lease Summary of Business Terms, and Exhibits
attached hereto, contain all agreements of the parties with respect to
any matter mentioned herein. No prior agreement or understanding
pertaining to any such matter shall be effective. This Lease may be
modified in writing only, signed by the parties in interest at the
time of modification. Except as otherwise stated in this Lease,
Lessee hereby acknowledges that neither the real estate broker nor any
cooperating broker on this transaction nor the Lessor or any employee
or agents of any of said persons has made any oral or written
warranties or representations to Lessee relative to the condition or
use by Lessee of the Premises or the Project and Lessee acknowledges
that Lessee assumes all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and
the compliance thereof with all applicable laws and regulations in
effect during the term of this Lease except as otherwise specifically
stated in this Lease.
42. PERFORMANCE UNDER PROTEST.
44.1 If at any time a dispute shall arise as to any amount or sum of money
to be paid by one party to the other under the provisions hereof, the
party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall
not be regarded as a voluntary payment, and there shall survive the
right on the part of said party to institute suit for recovery of such
sum. If it shall be adjudged that there was no legal obligation on
the part of said party to pay such sums or any part thereof, said
party shall be entitled to recover such sum or so much thereof as it
was not legally required to pay under the provisions in this Lease.
40
<PAGE>
43. AUTHORITY.
45.1 If Lessee 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 Lessee is a
corporation, trust or partnership, Lessee shall, within thirty (30)
days after execution of this Lease, deliver to Lessor evidence of such
authority satisfactory to Lessor.
44. CONFLICT.
44.1 Any conflict between the printed provision of this Lease and the
typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
45. REAL ESTATE BROKER'S FEE.
45.1 Except as provided in Paragraph 1.10, the Lease Summary of Business
Terms and Exhibit "E", attached hereto, each party warrants and
represents to the other that no commission, finders fee or the like is
owed as a result of this Lease. If a claim is made for a commission,
finder's fee or the like, the party allegedly creating the obligation
shall indemnify and hold harmless the other party to this Lease. This
indemnification shall be given the broadest possible interpretation in
favor of the party being indemnified and shall include, but not be
limited to, attorney's fees, court costs, settlements, compromises,
judgments, awards or the like.
46. ENVIRONMENTAL CONDITIONS AND INDEMNITIES.
46.1 Lessee shall use due care in storing, treating, processing and
otherwise handling any hazardous or toxic substances, material or
waste on the Premises and shall conduct its operations in, on and
about the Premises to prevent any leakage, spillage, contamination of
the soil, water or air or pollution by Lessee, its agents,
contractors, employees or invitees from occurring in or on the
Premises. Lessee shall promptly notify Lessor of any governmental
proceeding, clean up requirement or other enforcement action involving
the Premises. Lessor shall have reasonable access to the Premises in
the event of any such governmental action in
41
<PAGE>
order to inspect the site and monitor any and all steps taken by
Lessee or any other person to stop and/or clean up the contamination.
Should any leakage, spillage, contamination of the soil, water or air,
or pollution of any type occur in or on the Premises, or arise out of,
result from or in any way be connected or associated with Lessee's
operation or any other activities conducted by Lessee, its agents,
contractors, employees or invitees, or any trespassers on the
Premises, Lessee at its sole cost and expense, shall immediately clean
the Premises of any and all such contamination, of whatever nature,
caused or exacerbated by Lessee, its agents, contractors, employees or
invitees, or any trespassers on the Premises, or otherwise occurring
during the term of the Lease in accordance with all existing law.
Should Lessee fail in any way to satisfy any of these obligations,
Lessor may (but shall not be obligated to), without waiving such
breach of said obligations, enter upon the Premises and perform
Lessee's obligations under this Lease and Sublease/Assignment for the
account and at the sole cost and expense of Lessee. Lessee shall
promptly pay Lessor for all costs of such performance upon receipt of
a bill therefor. Lessee shall be solely responsible for and shall
promptly and fully reimburse, indemnify and hold harmless Lessor and
any successors to Lessor's interest in the chain of title to the
Premises, for any fines, penalties, costs, claims, demands, causes of
action, damages, including all foreseeable or unforeseeable
consequential damages, lawsuits, charges, assessments, impositions,
expenses (including reasonable attorney's fees and costs) and
liabilities arising out of, resulting from or in any way connected or
associated with any loss, injury, or damage to Lessor or any property
of Lessor or any other person, or for any injury to or death of any
person whatsoever occurring which has arisen out of, resulted from or
in any way was connected or associated with any leakage, spillage,
contamination of soil, water or air or pollution of any type occurring
in or on the Premises during the term of the Lease or Option
Period(s), and including, without limitation, the cost of any required
or necessary repair, clean up, or detoxification.
47. TIME OF THE ESSENCE.
47.1 Time is of the essence under this Lease.
LESSOR AND LESSEE 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
42
<PAGE>
LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF
LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
SHOULD ANY PROVISION of this Lease violate any Federal, State or Local law or
ordinance, that provision shall be deemed amended to so comply with such law or
ordinance, and shall be construed in a manner so as to comply. This lease shall
be binding on the parties, their personal representatives, successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
LESSEE:
Colorado Business Bankshares, Inc.
/s/ Jonathan C. Lorenz 04/12/99
________________________________________ --------
Jonathan C. Lorenz, President Date
LESSOR:
EDWARDS INTERCHANGE II, LLC
By: /s/ Scott Hovey 04/14/99
------------------------------------- --------
Scott Hovey Date
43
<PAGE>
EXHIBIT "A"
-----------
PROJECT LEGAL DESCRIPTION
-------------------------
NORTHSTAR CENTER, located in the Sections 4 & 5, Township 5 South, Range 82 West
of the 6th P.M., Eagle County, Colorado, also known as, Northstar Center, 0439
Edwards Spur Road, Edwards, Colorado.
UNIT LEGAL DESCRIPTION
----------------------
Unit B-201 & B202, Northstar Center, 439 Edwards Access Road, Edwards, CO.
44
<PAGE>
EXHIBIT "B"
-----------
LESSEE'S SIGNAGE
----------------
Lessee signage shall be in accordance with the Northstar Center Planned Unit
Development Guide, recorded with Eagle County, Eagle, Colorado.
Lessee shall submit to Lessor the signage submittal package(s) prior to
application to Eagle County, and once approved it shall become part of this
Lease Agreement
Lessee shall be permitted to install up to, but not more than, two (2) exterior
signs, in any of the designated spots for B201 and B202.
45
<PAGE>
EXHIBIT "C"
-----------
OPTION TO RENEW
---------------
Lessee shall have the option to extend the term of this Lease for Two (2) Five
Year Terms. The Option Period shall commence immediately upon the expiration of
the Initial Term of the Lease and be subject to all terms and conditions set
forth in the Lease Agreement.
46
<PAGE>
EXHIBIT "D"
-----------
CORPORATE RESOLUTION
Lessee shall deliver to Lessor the "Corporate Resolution" authorizing Jonathan
C. Lorenz, President, to enter into, execute, and obligate Colorado Business
Bankshares, Inc., to said Lease Agreement.
/s/ Jonathan C. Lorenz Date: 04/09/99
__________________________ --------
Jonathan C. Lorenz
President
47
<PAGE>
EXHIBIT "E"
-----------
BROKER AGREEMENT
----------------
Real Estate Brokerage: It is understood that Lessor shall be responsible for
- ----------------------
paying all real estate brokerage commissions to Christopher Denton Real Estate,
Inc., for it's services in this transaction as set forth in the Lease Listing
Agreement between Lessor and Christopher Denton Real Estate, Inc.
48
<PAGE>
EXHIBIT 10.29
This document is a LEASE between LANDLORD and TENANT dated as of the Contract
Date. It consists of this SUMMARY PAGE, the attached STANDARD PROVISIONS, a
SCHEDULE OF DEFINED TERMS, and any other Attachments expressly identified on
this cover page. It WITNESSES that LANDLORD demises to TENANT, and TENANT leases
from LANDLORD, the Premises for the term, at the rent, and upon the other
conditions contained in this document.
SUMMARY PAGE
LANDLORD: Bank One, Colorado, N-AL, as Trustee for the Frank G. Jamison Trust,
dated September 2, 1956 ("Bank One, N.A.")
LANDLORD'S ADDRESS: 4201 E. Yale Avenue, Denver, CO 90222
-----------------------------------------
PHONE: 303-244-4197
-------------
FAX: 303-756-6971
-------------
CONTACT: Julie Florez
-------------
SEND PAYMENTS TO: Bank One, Arizona, N. A., National Real Property Operations,
P 0 Box 29519, Phoenix, AZ 85038
TENANT: Colorado Business Bank. N.A.
----------------------------
TENANTS NOTICE ADDRESS: 1900 Fifteenth Street, Boulder, Colorado 80302
----------------------------------------------
PHONE: (303) 413-6005
--------------
FAX: (303) 786-9701
--------------
TENANT'S BILLING ADDRESS: 1900 Fifteenth Street, Boulder, Colorado 80302
----------------------------------------------
DATES:
CONTRACT DATE: March 5, 1999
------------------------------------------------------------
COMMENCEMENT DATE: March 5, 1999 BASIC RENT COMMENCEMENT DATE: April 1, 1999
EXPIRATION DATE: March 31, 2004
RENEWAL OPTION NOTICE DATE: 180 days prior to expiration
RENEWAL OPTION PERIOD(S): Two (2) of five (5) years each
(See Exhibit F - "Renewal Options" if this section applies)
SPACE OPTION NOTIFICATION DATE: n/a
PREMISES: Two buildings are on site: (1) 2550 N. Broadway, Boulder, CO
(containing 2,060 square feet), which is the leased premises and
(2) 2520-2524 N. Broadway, Boulder, CO (containing 4,051 square
feet), which is not the leased premises.
APPROXIMATE SQUARE FOOTAGE: 2060
APPROXIMATE BUILDING SQUARE FOOTAGE: 2060
PERCENT OF-BUILDING: 100% of 2550 N. Broadway
OPTION/RIGHT OF FIRST REFUSAL SQUARE FOOTAGE (if applicable): n/a
LEASED PREMISES ADDRESS: 2550 N. Broadway, Boulder, CO
LEGAL DESCRIPTION: (If Required) the buildings are located on Lots 1, 2, 3 and
4, Block 4, NORTH BOULDER, part of the City of
Boulder, together with one-half of the vacated
alley to the South of said Lots, Boulder
County, Colorado (the "Property")
PERMITTED USE: Bank premises
RENTAL AMOUNTS:
BASIC RENT: $6,000 as increased annually, payable monthly/quarterly/yearly.
-------
(underline one)
SECURITY DEPOSIT: $6,000.00 DEPOSIT DATE: Contract Date
--------- -----------------
LATE CHARGE AMOUNT: 5% per day/week/fixed. (underline one)
-----
THERE IS/IS NOT (underline one) an increase of 3.0% annually during the initial
--
term (See Exhibit F for Basic Rent increases during the renewal terms)
PERCENT RENT AMOUNT: n/a % OVER $ n/a OF GROSS SALES
--- ----
(See Exhibit G - "Percentage of Rent/Sales Report" if this section applies)
<PAGE>
REIMBURSEMENTS: (See Exhibit D - "Expense Reimbursement" if this section
applies)
ATTACHMENTS TO LEASE:
(Check if attached)
Schedule of Defined Terms (Exhibit A)
Rules & Regulations (Exhibit B)
Expense Reimbursement (Exhibit D)
Renewal Options (Exhibit F)
Tenant Work Letter (Exhibit 1)
<PAGE>
CONTENTS
Summary Page 1-2
Contents 3-4
Standard Provisions
Part A. Property and Possession
A.1 Premises 5
A.2 Common Areas 5
A-3 Preparation 5
A-4 Delay 5
A-5 Remedies 5
A.6 Term 5
A-7 Compliance 5
A.8 Use 6
A-9 Quiet Enjoyment 6
A-10 Surrender 6
Part B. Monetary Obligations
B.1 Basic Rent 6
B.2 Additional Rent 6
B.3 Payment 6
B.4 Interest 6
B.5 Late Charge 6
B.6 Security Deposit 7
B.7 Application 7
B.8 CPI Increase 7
B.9 Payment 7
B.10 Determination 7
B.11 TENANT Expense Indemnity 7
Part C. Installations
C.1 Fixtures 8
C.2 Alterations 8
C.3 TENANT Work 8
C.4 Conditions 8
C.5 Signs 9
Part D. Repair and Restoration
D.1 LANDLORD'S Obligations 9
D.2 TENANTS Obligations 9
D.3 Taking 10
D.4 Proceeds 10
Part E. General Covenants
E.1 Services 10
E.2 Regulations 10
E.3 Entry 10
E.4 Indemnity 10
E.5 Liens Generally 11
E.6 Mechanics Liens 11
E.7 Insurance Required 11
E.8 Assignment 11
E.9 Documentation 12
E.10 Reorganization 12
E.11 Waste 12
Part F. Default and Remedies
F.1 Events of Default 12
F.2 Remedies 13
F.3 Equitable Remedies 14
F.4 Waiver 14
F.5 LANDLORD'S Default 14
F.6 Holding Over 14
F.7 Abandoned Property 14
F.8 Costs 15
Part G. Miscellaneous
G.1 LANDLORD 15
<PAGE>
CONTENTS (Cont.)
G.2 Consent 15
G.3 Notices 15
G.4 Certificates 15
G.5 Effect 16
G.6 Interpretation 16
G.7 Severability 16
G.8 Acceptance 16
G.9 Fiduciary Capacity 16
Signature Page 16
Attachments
Schedule of Defined Terms A1-A2
Rules and Regulations B1-B2
Guarantee of Lease C1
Expense Reimbursement D1-D2
Construction of Improvement E1
Renewal Options F1-F2
Percentage Rent/Sales Report G1
Right of First Refusal For Additional Space H1
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
STANDARD PROVISIONS
PART A. PROPERTY AND POSSESSION
A.1 Premises. The Premises will be finished, renovated, or redecorated by
LANDLORD only if a "Construction of Improvements Exhibit" is attached and only
as stated expressly in such attachment. Any dimensions on any attached layout
are approximate unless labeled "exact". If there is no identified Construction
of Improvements, the Premises are demised "as is", in which case TENANT has
inspected them and the Property and determined to TENANT'S satisfaction that the
Premises and the Property are free of any defects, obvious or hidden, and
otherwise suitable for TENANT'S occupancy for the Permitted Use. The "Rentable
square footage" identified in this document are used only to determine TENANT'S
Proportionate Share of the Property's direct operating expenses, not the actual
dimensions of the Premises or the Property. Upon commencement of this Lease the
HVAC systems servicing the Premises shall be in good working condition and
repair, reasonable wear and tear excepted. Tenant hereby acknowledges that the
HVAC systems are in good working condition and repair unless written notice
specifically identifying any material defect in the TWAC systems is delivered by
Tenant to Landlord within (30) days from the date of occupancy, In which event
Landlord shall repair any material defects as soon as Is reasonably practicable.
A.2 Common Areas. This demise includes a non-exclusive license to use, in
common with other tenants of the Property and other persons authorized by
LANDLORD, all of the property's common areas, as they from time to time exist,
for their respective intended purposes during the term of this Lease. Exclusive
use rights for any common areas are separately negotiated and must be set forth
in any "Special Provision" attached. LANDLORD may grant such exclusive use
rights to other tenants of the Property, and also may establish such casements,
restrictions, and other encumbrances upon the common areas as LANDLORD considers
appropriate, so long as the common areas, taken as a whole and in LANDLORD'S
reasonable determination, are sufficient for their intended purposes.
A.3 Preparation. If the Premises are not occupied by any existing tenant,
Tenant has a right of entry to the Premises before the Commencement Date to
prepare them for TENANT'S occupancy, at TENANT'S risk, so long as (i) LANDLORD
is notified in advance of each entry, and if applicable, (ii) no such entry will
delay or otherwise interfere with LANDLORD'S preparing the Premises for TENANT'S
occupancy.
A.4 Delay. If LANDLORD cannot deliver possession, other than the ATM
Facility, by the stated Commencement Date for any reason not caused by TENANT,
the Basic Rent Commencement Date will be extended for a reasonable time to
permit LANDLORD to deliver possession as required by this document, so long as
LANDLORD proceeds In good faith and with reasonable diligence. Illustrative
reasons for delay include the failure of any existing tenant to surrender the
Premises as required by such tenant's lease, actual or economic unavailability
of materials, labor activities, adverse weather, and acts of any sovereign,
including inspection delays. The Expiration Date is not extended by any
extension of the Basic Rent Commencement Date. LANDLORD will use its good faith
efforts to cause the owner of the ATM machine and accessory equipment
(collectively "ATM Personal Property") to remove the ATM Personal Property from
the Premises by April 1, 1999. TENANT shall cooperate with the owner of the ATM
Personal Property in order to facilitate its removal. Prior to April 1, 1999 or
the earlier removal of the ATM Personal Property, TENANT shall provide the owner
of the ATM Personal Property with access to the Premises for servicing of the
ATM Personal Property, upon 24-hours prior notice.
A.5 Remedies. TENANT'S exclusive remedy for any reasonable delay is to abate
any rent for the period of delay. If LANDLORD cannot deliver possession within a
reasonable time after the Commencement Date, or if LANDLORD cannot deliver
possession of the ATM Facility within a reasonable time after April 1, 1999,
TENANT'S exclusive remedy is to terminate this transaction, without liability,
or Tenant may commence an eviction proceeding at Tenant's sole cost and expense
to have the ATM removed an the condition that the Landlord shall have no
liability to Tenant in connection with the FED proceeding. Tenant shall
Indemnify and hold harmless Landlord from and against any loss of liability
Including reasonable attorney's fees and costs, arising from or related to such
FED proceeding. Upon any such termination, TENANT has a reasonable right of
entry for not more than ten (10) working days in which to remove any property
TENANT has installed in the Premises and restore any damage to the Property
resulting from such removal. Any Security Deposit received by LANDLORD then will
be returned to TENANT without interest; and all rights and liabilities under
this document then will terminate. LANDLORD is not liable for any consequential
damages, such as rent for substitute premises or lost profits. TENANT has no
right of abatement or termination for any delays caused by TENANT.
A.6 Term. The term of this demise begins an the Commencement Date and ends
at midnight on the Expiration Date, unless sooner terminated as provided in this
document or unless extended as provided in an option period if such is included
in this document or any attachment thereto. As used in this document, the "term
of this Lease" or "term of this demise" each mean the period between the
Commencement Date and either the Expiration Date or any earlier termination
date.
A.7 Compliance. Suitability of the Premises for the Permitted Use, and
conformity of the Permitted Use to any zoning and other legal requirements, at
all times are at TENANT'S risk. If because of any legal requirement, the
Permitted Use requires any renovations to the Property that LANDLORD otherwise
is not required to make, or will
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
result in the loss of any nonconforming status applicable to the Property.
LANDLORD may elect to terminate this Lease before the Commencement Date, any
Security Deposit received by LANDLORD will be returned to TENANT without
interest, and all rights and liabilities arising under this document then will
terminate. After the Commencement Date, TENANT will not make, permit, or suffer
any use, activity, alteration, or improvement of or to the Premises. on or about
the Property, that, under any legal requirement, will require any renovations,
alterations, or improvements by LANDLORD to any of the Property, or result in
the loss of any such nonconforming status.
A.8 Use and Operations. TENANT will use the Premises only for the Permitted
Use and reasonably related activities. No outside sales or storage (including
vehicle storage) is or are permitted. TENANT will comply with. and will not
violate, any legal requirement applicable to TENANT'S use of the Premises.
TENANT will not make, permit, or suffer any use, activity, or condition on or
about the Premises or the Property that (i) is a hazard, unreasonable
disturbance, or actionable nuisance to any person, including any other tenant of
the Property. or (ii) may expose or subject LANDLORD to any liability to any
person, or (iii) results in any unreasonable emissions of smoke, fumes, noise,
radioactivity, microwaves, or other pollutants.
Tenant shall open for business in the Premises by no later than May 1,
1999 and, except as herein expressly provided for to the contrary, shall
thereafter continuously remain open to the public and conduct its business from
the Premises, during the term of this Lease and any Renewal Option period.
Without limiting the foregoing, the Tenant acknowledges that a material
Inducement to the Landlord's agreement to enter Into this Lease Is Tenant's
agreement to operate a drive-through banking facility from the Premises on a
continuous basis, thereby maintaining such use as a grandfathered use under
applicable laws and regulations. Provided Tenant Is not in default under Its
obligations under this Lease, Tenant, at its option, may terminate this Lease in
the event a subsequent change In applicable laws or regulations prohibits the
use of the Premises as a drive-through banking facility.
A.9 Quiet Enjoyment. So long as no Event of Default occurs and is
continuing, LANDLORD warrants, subject to Part A.4 above concerning the ATM
Facility, that TENANT throughout the term of this Lease will have exclusive
possession of the Premises, without any let, eviction, or other interference by
LANDLORD, or any persons claiming by, through, or under LANDLORD, including any
mortgagee of LANDLORD'S interest in the Property.
A.10 Surrender. Upon the expiration or any earlier termination of this
demise, TENANT will surrender the Premises peaceably to LANDLORD in a sound,
safe, sanitary, serviceable, reasonable attractive, and "broom clean" condition,
and otherwise in substantially the same condition as received, subject only to
(i) the effects of any casualty that TENANT is not required to restore by this
document, (ii) any installations complying with the requirements of this
document, and (iii) deterioration from reasonable use. Except as expressly
provided otherwise in this document for any termination of this Lease because of
any casualty, TENANT'S failure to surrender the Premises as required by this
paragraph is an immediate Event of Default.
PART B. MONETARY OBLIGATIONS
B.1 Basic Rent. The Basic Rent is paid in monthly installments by good and
sufficient funds, in advance and without demand, deduction, or offset. The first
installment is due by the Basic Rent Commencement Date. The next installments
are due on the first day of each month after the Basic Rent Commencement Date
throughout the term of this Lease. If the Basic Rent Commencement Date,
Expiration Date, or any earlier termination date does not fall on the first or
last day of a calendar month, then the installment for each such month is
prorated on a daily basis. All rent is paid at LANDLORD'S stated address or as
otherwise designated by LANDLORD in writing.
B.2 Additional Rent. TENANT also will pay, and otherwise discharge, when due
(i) to the persons respectively entitled to receive them any amounts,
liabilities, or obligations that TENANT assumes or agrees to pay or discharge
under any provision of this document, together with any added interest,
penalties, costs, and expenses, and (ii) to or as directed by LANDLORD, any
expenses, interest and other amounts that may become payable to LANDLORD as
provided in this document or any attachments thereto. Except for any interest
and any Liquidated Damages payable upon LANDLORD'S termination of this Lease
after an Event of Default, the foregoing items, including any Actual Damages,
for remedial purposes are rent and are called "Additional Rent". For such
purposes, the term "rent", as used in this document, means both the Basic Rent
and any Additional Rent as all of TENANT'S obligations under this document are
mutual and dependent covenants. Without limitation, LANDLORD has the same rights
and remedies with respect to any Additional Rent as for the Basic Rent. Any
Additional Rent is prorated as of the Commencement Date and the Expiration Date,
or any earlier termination date, unless this document expressly provides
otherwise.
B.3 Payment. All payments to LANDLORD are received only when collected in
legal tender of the United States of America. Any such payment not made by legal
tender is received subject to collection. If any such payment is not so
collected, it is not "made" "paid" or "received" for any purpose, including
accrual of any interest. What commonly are called "Immediately available funds"
are equivalent to legal tender.
B.4 Interest. Any payment to LANDLORD not received within fifteen (15) days
after It is due bears Interest, from its original due date through the date
received by LANDLORD in legal tender, at die lesser of (i) the annual rate of
18%, calculated on the basis of a 365-day year for the number of days actually
outstanding, or (ii) the maximum annual rate permitted by any applicable usury
law of the state where the Property is situated. Any advances properly made, or
costs or expenses properly paid, by LANDLORD after any Event of Default bear
such
<PAGE>
BANK ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
interest from the respective dates of advance or payment, as the case may be, if
not reimbursed within 15 days after demand.
B.5 Late Charge. LANDLORD may impose a late charge, due on demand, of not
more than five percent of any installment of Basic Rent that is not received
within five (5) days after it is due. Any such late charge is in lieu of
interest on such installment, but it otherwise is in addition to, and does not
waive, limit. or otherwise impair, any other right or remedy of LANDLORD.
B.6 Security Deposit. TENANT will pay the Security Deposit to LANDLORD by
the Deposit Date, or LANDLORD may (i) terminate this transaction without
liability, or (ii) suspend any required finish or renovation, without extending
the Commencement Date. The Security Deposit is held by LANDLORD solely as
security for TENANT'S performing TENANT'S obligations under this document and
not as advance rent or any measure of LANDLORD'S damages for any Event of
Default. Any interest or investment earnings on the Security Deposit are
LANDLORD'S property. Any monies paid to LANDLORD before the Commencement Date
dud exceed the stated amount of the Security Deposit and are intended to be
applied to the Basic Rent will be held as part of the Security Deposit, and not
prepaid rent, until they actually are applied, to the extent sufficient, to the
installments of Basic Rent as they respectively come due.
B.7 Application. If an Event of Default occurs and is continuing, LANDLORD,
without waiving, limiting, or otherwise impairing any other right or remedy, may
apply the Security Deposit to any expenses, damages, or liabilities incurred by
LANDLORD. If LANDLORD does not elect to terminate this Lease for such Event of
Default, TENANT upon demand will restore the Security Deposit to its original
amount. So long as TENANT performs all of TENANT'S obligations under this
document, LANDLORD will account for the Security Deposit and pay to TENANT any
remaining balance within thirty (30) days after the expiration or any earlier
termination of this Lease. If any late charge is not paid on demand, it may be
deducted from the Security Deposit without notice.
B.8 Basic Rent Increase. Commencing on April 1, 2000 and on each anniversary
date thereafter through and including April 1, 2003, the Basic Rent due and
payable on said anniversary date and for the ensuing eleven (11) monthly
installments shall be in the following amounts:
Date Amount
---- ------
April 1, 2000 $6,180.00
April 1, 2001 $6,365.40
April 1, 2002 $6,556.36
April 1, 2003 $6,753.05
B.9 Reserved.
B.10 Determination. As used in this document, "direct operating expenses":
(a) Included Expenses. Means any costs and expenses actually,
reasonably, and properly incurred by LANDLORD for operating and maintaining the
Property. It includes (i) repairs; (ii) building and landscape maintenance
(including any project signs, parkways, and medians on, adjoining, or serving
the Property); (iii) Common Utilities not separately metered or otherwise
charged to a particular tenant; (iv) legal and accounting fees; and (v)
renovations or other alterations required to conform the Property to any legal
requirements or insurance requirements together with an administrative fee to
LANDLORD equal to ten percent (100/6) of the total costs for common area
maintenance.
(b) Excluded Expenses. Excludes all of the following: (i) debt service
and other payments with respect to any loan; (ii) LANDLORD'S state and federal
income taxes; (iii) depreciation and other non-cash items; (iv) installation of
capital improvements, which include any property having a useful life of more
than five years at the time of installation; (v) leasing commissions,
architectural fees, and other direct expenses incurred to procure particular
tenants for the Property, including improvements, equipment, fixtures, and other
items installed to the requirements of a particular tenant; (vi) any costs of
any restoration that individually exceed the commercially reasonable deductible
amounts for the insurance coverage applicable to the Property; and (vil) any
costs Incurred in connection with the removal of wastes and hazardous substances
(as defined In Section E.11 below) from the Premises unless caused by Tenant in
which event Tenant shall be responsible for such removal as provided for in
Section E.11 of this Lease.
B.11 Tenant Expense Indemnity. Unless specified otherwise in this document,
or any Exhibit thereto, Tenant will pay when due, and indemnify LANDLORD
against, any costs, expenses, losses, or liabilities with respect to any of the
following:
(a) Utilities. Any electrical water, sewer, storm sewer, flood control,
telecommunications, natural gas, refuse collection, and other utilities
furnished to the Premises.
(b) Increase. Any increase in taxes, insurance premiums, and other
direct operating expenses for the Property that directly are attributable to any
use, activity, or installation by TENANT or with respect to the Premises.
Illustrative items include any property tax increase attributable to any
leasehold improvements made by TENANT, insurance charges for any extra hazardous
use of the Premises made by TENANT, charges for Common Utilities resulting from
abnormal consumption or use by TENANT, and increased maintenance costs for any
of the Property's common areas resulting from TENANT'S overuse.
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BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
(c) Damage. Any costs of restoring any damage to the Property, including the
Common Utility systems. caused by TENANT or any person subject to TENANT'S right
of control or actual control.
(d) TENANT Taxes. Any taxes assessed with respect to (i) any of TENANT'S
personal property, tangible or intangible, including any of TENANTS inventory
and equipment; (ii) TENANT'S exercise of any taxable privilege on, from or with
respect to the Premises; (iii) occupational license, franchise, or other fees
payable with respect to any activity conducted by TENANT on or from the
Premises; and (iv) the rent, except LANDLORD'S state and federal income taxes.
(e) TENANT Work. Any charges for labor, services, or materials performed,
rendered, or delivered, as the case may be, pursuant to a contract with TENANT
(express or implied, written or oral) for maintaining, restoring, or improving
the Premises, or any item fabricated by TENANT on the Premises.
(f) Liens. Any lien, or claim of lien, asserted against any interest in the
Property by, through, under, or against TENANT.
(g) Violations. Any fines or other penalties, and any charges or other
costs, incurred by LANDLORD because of TENANT'S violation of any legal
requirement, including (i) any building, safety, or other code violation; (ii)
TENANT'S failure to maintain adequate workmen's compensation or insurance
required with respect to TENANT'S activities conducted on or from the Premises;
and (iii) TENANT'S failure to comply with any zoning or other legal requirement
applicable to TENANTS use or the Premises, including the Permitted Use. TENANT'S
liability under this subparagraph includes both the costs of correcting any
violation of any legal requirement and any costs incurred by LANDLORD in
defending, compromising, or discharging any enforcement proceeding instituted
against LANDLORD or the Property, or both, because of any such violation.
Any payments to LANDLORD under this Section B.11 are due on demand.
B.12 Auditing of CAM Charges. Tenant, at Tenant's cost and expense, may audit
Landlord's Common Area Maintenance Charges In order to verify their accuracy
provided that: (i) Tenant shall have 30 days upon receipt of Landlord's annual
CAM reconciliation to request In writing an audit for the preceding year, (ii)
such audit will be conducted only during regular business hours at the office
where Landlord maintains Common Charge Maintenance Charge expense records and
only after Tenant gives Landlord fourteen (14) days notice. Tenant shall deliver
to Landlord a copy of the results of such audit within fifteen (15) days of its
receipt by Tenant. No audit shall be conducted at any time that Tenant is in
default of any of the terms of the Lease. No subtenant shall have any right to
conduct an audit and no assignee shall conduct an audit for any period during
which such assignee was not in possession of the Premises. If such audit
discloses that the previous year's charges actually billed to Tenant are more
than the amount which should have been billed to Tenant, then Landlord shall
credit the amount of such excess against Tenant's next accruing payments of
Additional Rents and/or Basic Rent, or if such credit is unavailable or
insufficient, Landlord shall promptly reimburse Tenant for such remaining
excess.
PART C. INSTALLATIONS
C.1 Fixtures. TENANT may install within the interior of the Premises such
fixtures, equipment, and other personal property as are necessary, convenient,
or desirable for conducting TENANT'S normal business operation, so long as each
such installation complies with all express requirements of the Part C and
LANDLORD is notified in advance of any installation that will be attached to the
Property. So long as no Event of Default is continuing, TENANT may remove any of
TENANT'S property from the Premises. TENANT will remove all such property, and
restore any resulting damage to the Property, upon the expiration or any earlier
termination of this Lease. TENANT'S failure to remove such property and restore
the Property is an immediate Event of Default. Any of TENANT'S property
remaining on the Promises at any such expiration or earlier termination will
become LANDLORD'S property, at LANDLORD'S option; or LANDLORD may elect to
remove any such property, and restore any resulting damage to the Property, at
TENANT'S expense.
C.2 Alterations. TENANT may not install any interior alterations or
improvements to the Premises without LANDLORD'S advance written consent, which
will not be unreasonable withheld or delayed so long as (i) the fair rental
value of the Property will not be materially diminished; (ii) LANDLORD'S direct
operating expenses for the Property will not be increased; (iii) TENANT agrees
to remove such installation and restore the Property upon the expiration or any
earlier termination of the Lease, if requested by LANDLORD; (iv) TENANT
furnishes such plans, specifications, and samples as LANDLORD reasonably may
require; (v) the work will not result in any picketing or other labor activities
on or about the Property or any labor conflicts with any work conducted by
LANDLORD, or any affiliate of LANDLORD, within the project containing the
Property; and (vi) TENANT otherwise complies with all applicable requirements of
the Part C, including but not limited to, building code requirements, legal
requirements, OSHA standards and ADA regulations. Any such installation is a
leasehold improvement, to become LANDLORD'S property upon the expiration or any
earlier termination of this Lease, unless LANDLORD elects otherwise. Any
exterior or structural alterations are prohibited, as are any alterations to any
demising wall. Notwithstanding anything herein to the contrary, any alterations
by the Tenant which will cost less than Five Thousand Dollars ($5,000.00) shall
not require the prior consent of the Landlord; provided, however, If such
alterations are to the exterior of the improvements, structural in nature, to
demising wells, or involve roof penetrations, the Landlord's prior written
consent shall be necessary regardless of the cost of the alterations.
C.3 TENANT's Work. Any fixture, alteration, or other installation made by
TENANT within or affecting the Premises, including any sign or display must be
completed with reasonable diligence and in a workmanlike manner
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BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
consistent with accepted industry practices, any applicable legal requirements
and insurance requirements, and such standards as LANDLORD may establish for the
Property. No such installation may affect adversely the structural integrity of
the Property, the usefulness of any of its utility, mechanical, and other
systems, or the usefulness of any demising wall. TENANT must protect the
Property from damage by water, vandalism, and other casualty resulting from or
occurring during the course of, any such installation. LANDLORD summarily may
remove any installation begun or made in violation of the express requirements
of this document, without waiving, limiting, or otherwise impairing any other
right or remedy.
C.4 Conditions. As a Condition precedent to any installation by TENANT,
LANDLORD may require that TENANT first furnish proof of adequate insurance
coverage, protecting the Property, LANDLORD, and the installation, and adequate
security for any of the following: (i) restoring any damage to the Property
resulting from such installation; (ii) payment of any claims for labor,
services, or materials furnished, rendered, or delivered in connection with such
installation; (iii) completing such installation in compliance with any
applicable legal requirements, insurance requirements, and any plans and
specifications approved by LANDLORD; and (iv) if applicable, removing such
installation, and restoring the Property, upon the expiration or any earlier
termination of this Lease.
C.5 Signs. Any sign or display visible from the exterior of the Property
must be approved by both the appropriate city and/or county governing agencies
and LANDLORD in advance, which approval will be given only if and so long as any
such sign or display strictly conforms to LANDLORD'S signage plan for the
Property and local authority's sign ordinances. Landlord shall deliver said
approval or disapproval within 10 business days. TENANT at all times will be
permitted one entrance identification sign, if it complies with such plan; but
any other signage rights for the Property are separately negotiated and must be
set forth in any "Special Provisions" attached.
C.6 Tenant Work Letter. Subject to the terms and conditions of the Lease,
including, without limitation, this Part C, TENANT may complete the work
described in Tenant's Work Letter attached hereto as Exhibit I.
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BANC ONE INVESTMENT MANAGEMENT
COMMERCIAL LEASE AGREEMENT
PART D. REPAIR AND RESTORATION
D.1 LANDLORD'S Obligations. LANDLORD maintains the roof, foundation,
demising walls, and exterior walls of the Premises in a structurally sound,
watertight, and reasonable attractive condition. "Walls" excludes windows,
glass, plate glass doors, custom storefronts, and entry areas. LANDLORD also
maintains the Property's (i) Common Utility systems, and other systems that do
not serve the Premises exclusively, in a serviceable condition, and (ii) the
roof, exterior walk, grounds, and common areas in a usable, sound, and
reasonably attractive condition. In the event that there is a casualty or taking
which does not terminate this Lease, Landlord, as and when necessary, shall (i)
restore the Property's roof, foundation, exterior walls, common systems, and
common areas, and (ii) restore (but not maintain) any Improvements, equipment
and installations within or serving the Premises, except those installed by
Tenant or by Landlord for Tenant's account. Reasonable advance notice is an
absolute condition precedent to LANDLORD'S duty to maintain or restore.
LANDLORD'S liability for any unjustified failure to maintain or restore the
Premises or the Property, as required by this paragraph, is limited to the costs
of performing such maintenance or restoration, as LANDLORD is not liable for any
consequential loss or damage.
D.2 TENANT'S Obligations. Except for work that expressly is LANDLORD'S
responsibility under the previous paragraph. TENANT (i) maintains the Premises,
including any leasehold improvements, fixtures, equipment, and other
installations, in a structurally sound, watertight, and reasonably attractive
condition, and (ii) restores the Premises and any leasehold improvements,
fixtures, equipment, and other installations, as when necessary. Unless this
demise is terminated because of any casualty or taking, as expressly provided
for in this document, TENANT promptly will undertake any required maintenance or
restoration and pursue it diligently and continuously to completion. The
conditions applicable to TENANT'S installations apply to any such work that
requires any substantial construction activities on or about the Premises. If
TENANT has not repaired any of the following items within ten (10) days,
LANDLORD may contract and pay for said repairs and bid back TENANT for same.
TENANT'S maintenance and restoration include:
(a) Interior. Floor coverings, wall coverings (including painted
surfaces), finished ceilings, and termite and pest extermination.
(b) Systems. All plumbing, electrical and mechanical equipment,
fixtures, and systems serving the Premises exclusively, including any exterior
lighting serving the Premises exclusively, including HVAC (heating, ventilation
and air conditioning) system repair and replacement. Within thirty (30) days
after the Commencement Date, TENANT must enter into and deliver to LANDLORD, a
regularly scheduled preventative maintenance and service contract for any HVAC
systems serving the Premises exclusively. The contractor and terms of service
must be reasonably acceptable to LANDLORD. TENANT must maintain such contract in
force and will furnish evidence of periodic inspection and servicing to LANDLORD
on a timely basis.
(c) Damage. Restoring any damage to the Property caused by TENANT, or
any person subject to TENANT'S right of control or actual control, resulting
from TENANT'S occupancy.
(d) Entries. Windows, glass, plate glass, doors, custom storefronts, and
entries, including any loading doors and related equipment, fixtures, and
appurtenances, such as dockboards and bumpers.
(e) Debris. Removal from the Property of trash, debris, and materials
accumulated in connection with any activity of TENANT on or about the Premises.
(f) The TENANT agrees to install at TENANTS expense any and all
equipment, appliance or special construction as may be required by the City of
Boulder for safety or fire protection.
(g) In the event the TENANT desires to landscape, TENANT must first have
written permission from LANDLORD. All landscaping, of any kind, and maintenance
of that landscaping shall be at the TENANT'S expense.
(h) All waste material of any kind must be kept in acceptable containers
and disposed at TENANT'S expense. Waste materials of any kind must not be
permitted to blow onto adjoining properties, nor placed near any buildings.
D.3 Taking. If as a result of any taking, the Premises no longer can be used
for TENANT'S normal business operations, as conducted immediately before the
taking, and TENANT so certifies in good faith to LANDLORD, then TENANT may elect
to terminate this Lease and surrender possession as otherwise required by this
document, without further liability, and effective as of the date of the taking,
or TENANTS surrender of possession, whichever is later. LANDLORD also may
terminate this Lease if, as a result of any taking, LANDLORD determines that the
continued operation of the Property is not economically feasible and so
certifies to TENANT in good faith. In all other events, this Lease will continue
notwithstanding any taking.
D.4 Proceeds. TENANT has no claim right, title, or Interest in or to any
proceeds of any physical damage, business interruption, or rental loss insurance
maintained by LANDLORD with respect to the Property. TENANT has no right or
remedy with respect to any proceeds payable in connection with any taking
affecting the Property, except TENANT may recover any items of consequential
damage, such as business interruption and relocation expense, that may be
awarded separately from, and which do not reduce, the award for the Property.
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BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
PART E. GENERAL COVENANTS
E.1 Services. TENANT will obtain, pay for, and indemnify LANDLORD with
respect to any electrical, natural gas, climate control, janitorial, refuse
collection, security, telecommunications, and other services required for the
Premises. LANDLORD furnishes only the Common Utilities. LANDLORD is not
responsible for any unintentional interruption of any services; and LANDLORD may
interrupt such services as required for repairs, inspections, construction
activities, and other legitimate business purposes. LANDLORD does not
contemplate furnishing manned or other special security systems for the
Property. TENANT solely is responsible for any security systems required by the
nature of TENANT'S business and will indemnify LANDLORD against any claims
because of any failure to such systems. LANDLORD is not required to furnish
exterior illumination for the Property.
E.2 Regulations. LANDLORD from time to time may establish, change, and
enforce uniform commercially reasonable rules and regulations with respect to
the Property and any activities conducted on or about the Property. Without
limitation, LANDLORD may regulate the time and place of deliveries to and from
the Property, the use of the Property's parking and other common areas, and such
other matters as LANDLORD determines are necessary, convenient, or desirable to
maintain the Property as a first class facility. TENANT will comply with all
rules and regulations within ten (10) days after notice, unless LANDLORD permits
a longer time in which to achieve compliance. TENANT"S willful failure to comply
is an immediate Event of Default.
E.3 Entry. LANDLORD has a reasonable right of entry during Tenant's normal
business hours and after prior notice to Tenant to the Premises for any lawful
purpose, including inspections, maintenance, restoration, and removal of any
installation made in violation of the express requirements of this document.
LANDLORD may enter the Premises during normal business hours for construction
activities relating to maintenance, restoration, and renovation of the Property.
LANDLORD also may so enter to exhibit the Premises to actual or prospective
purchasers, mortgagees, and tenants. Tenant shall at all times supply to
Landlord the names and phone numbers of persons who can provide 24 hour access
to the Premises to Landlord in the event of an emergency so that Landlord can
enter the Premises during non-business hours in the event of an emergency.
E.4 Indemnity. LANDLORD is not liable for any damage, injury, or death of or
to any person or property unless deliberately caused by LANDLORD. TENANT will
indemnify LANDLORD with respect to:
(a) Injury. Any injury or damage to, or the death or destruction of, any
person or property arising from or in connection with TENANTS possession, use,
installation, maintenance, restoration, alteration, or improvement of the
Premises, or any activity conducted, or condition created, upon or from the
Premises, by TENANT during the term of this Lease.
(b) Violations. Any violation, or alleged violation, by TENANT of any
provision of this document, any legal requirement, or any insurance requirement
during the term of this Lease.
(c) Contest. Any claim, proceeding, or contest by TENANT in connection
with any insurance proceeds or settlement, or any award for taking.
TENANT will defend any action, suit, or proceeding brought against
LANDLORD or the Property because of any such occurrence. TENANT'S obligations
under this paragraph survive the expiration or any earlier termination of this
agreement as to claims based upon any occurrence, or condition created by
TENANT, before the termination date. Nothing in this document requires TENANT to
indemnify LANDLORD with respect to any willful or intentional acts of LANDLORD,
or of LANDLORD'S agents, employees, or contractors who are not subject to
TENANT'S right of control or actual control. As used in this paragraph, "TENANT"
includes persons acting for or on behalf of TENANT, or subject to TENANT's right
of control or actual control.
E.5 Liens Generally. TENANT will not create, or permit to be created or to
remain, and will discharge, any lien, encumbrance, or adverse claim to or
against the Property, LANDLORD or the rent that arises, or is asserted to arise,
by, through, under, or against TENANT. Without limitation, TENANT will transfer
any such lien, encumbrance, or claim to substitute security in the manner
permitted by applicable law upon demand. If TENANT fails to make any such
transfer, LANDLORD, without waiving, limiting, or otherwise impairing any other
right or remedy, may make it at TENANTS expense.
E.6 Mechanics Liens. Any lien for any labor, services, or materials
performed, rendered, or delivered to the Property pursuant to a contract with
tenants, or any Person other than LANDLORD, is limited to the interest in the
Property, if any, of the person contracting for such labor, services, or
materials, as the case may be. LANDLORD'S interest in the Property is not
subject to any lien or claim of lien for any such labor, services, or materials.
TENANT has no power to authorize or contract on LANDLORD'S behalf for any such
work or otherwise to subject LANDLORD or LANDLORD'S interest in the Property to
any claim relating to any such work. TENANT will comply with any applicable
requirements of any Mechanics Lien Law with respect to any work by TENANT that
is or may be subject to its provisions.
E.7 Insurance Required. Without limiting, and as security for, TENANT'S
Indemnity contained in this document, TENANT will, (unless otherwise maintained
by LANDLORD and nonetheless subject to TENANTS reimbursement obligations
hereunder) obtain general Liability insurance and the LANDLORD shall be so named
as an additional insured in any such policies with respect to the Premises in
commercially reasonable amounts equaling or exceeding one million dollars
($1,000,000). TENANT also will maintain (i) workmen's compensation insurance in
the amount of TENANT'S full statutory liability, if any, and (ii) physical
damage insurance with respect to any
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BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
improvements, equipment, fixtures, and other installations TENANT is obligated
to restore by the express provisions of this document. As and when required by
LANDLORD for any installation, maintenance, or restoration by TENANT pursuant to
the express provisions of this document, TENANT also will maintain physical
damage insurance with respect to such work or installation, or both, as the case
may be. TENANT shall not carry any stock of goods or do anything in or about the
demised premises which will in any way tend to increase the insurance rates on
said premises. TENANT agrees to pay additional rent equal to any increase in
fire insurance premiums that may be charged during the term of this Lease on the
amount of insurance carried by LANDLORD on said total premises where such
increase results from the business carried on by TENANT on the demised premises,
whether or not LANDLORD has contented to the same. TENANT shall not install any
electrical equipment that overloads the wiring, panels, etc., in the demised
premises. TENANT shall make at his own expense whatever changes are necessary
and to comply with the requirements of the Insurance Underwriters or the
governmental authorities having jurisdiction.
E.8 Assignment. TENANT may not mortgage, pledge, or otherwise encumber its
interest in the Property, this Lease, any sublease of the Premises, or any
subtenants. Any such mortgage, pledge, or encumbrance is voidable, at LANDLORD'S
option, and an immediate Event of Default. TENANT may sublease the Premises or
assign TENANT'S interest in this document only with LANDLORD'S advance written
consent in each instance, which consent will not be unreasonably withheld or
delayed only under the following conditions:
(a) Subordination. Any sublease or assignment expressly is subject to
the provisions of this document.
(b) Prepayments. No sublease permits the subtenant to pay rent in
advance for a period of more than one month.
(c) Impairment. No such sublease or assignment alters, diminishes, or
impairs any of TENANT'S obligations under this document, or any rights or
remedies of LANDLORD.
(d) Business. Each such sublease or assignment is to an entity that will
conduct a business on or from the Premises that is substantially the same as, or
reasonably related or incidental to, TENANTS business, and will not increase the
use of any of the Property's common areas.
(e) Rent. Any increased rent, or consideration in lieu of rent, is paid
to LANDLORD.
Notwithstanding LANDLORD'S consent to any sublease or assignment, all of
TENANT'S obligations under this document continue as the obligations of a
principal, and not a guarantor or surety, to the same extent as though no such
sublease had been made.
E.9 Documentation. Simultaneously with any permitted assignment, the
assignee must deliver to LANDLORD a written assumption of TENANTS obligations
under this document reasonably satisfactory to LANDLORD. Simultaneously with any
permitted sublease, the subtenant must acknowledge by a written instrument
reasonably satisfactory to LANDLORD that such sublease in all respects is
subject and subordinate to the terms and provisions of this document.
E.10 Reorganization. A transfer of TENANTS interest in this Lease by merger,
consolidation, other reorganization, or acquisition of all or substantially all
of TENANTS assets or stock is an "assignment" within the operation of this
document, except that LANDLORDS advance consent is not required so long as the
transferee (i) has at least equivalent net worth to that of TENANT immediately
before the transfer, and (ii) delivers the written assumption required by the
previous paragraph simultaneously with such transfer, and (iii) complies with
the requirements of Subparagraph (d) of the paragraph labeled "Assignment".
E.11 Waste. The TENANT agrees that it will not use or permit to be used any
part of the premises for the generation, treatment, storage or disposal of
hazardous waste, as defined in the Resource Conservation and Recovery Act, or
the disposal of petroleum or any hazardous substance, as defined in the
Comprehensive Environmental Response Compensation and Liability Act (both of
which are hereinafter referred to as the "Acts") in material violation of the
Acts, and provided that, if such use has been approved by LANDLORD, TENANT shall
then have in place, at all times during the term of this Lease, a reasonable
program or contract with a third party for the storage and removal of any such
wastes. Prior to the termination of this Lease, TENANT shall remove all such
wastes from the premises which were generated by TENANT or its subtenants or
assignees during the term of this Lease. In addition the TENANT shall remove all
such wastes if so directed by any federal, state or local governmental or
regulatory body. TENANT shall remove such wastes from any adjacent property upon
which such wastes and hazardous substances generated by the TENANT during the
term of this Lease may be located. TENANT shall not be responsible for and shall
not be required to remove any such wastes and hazardous substances which were
not generated by TENANT. TENANT will deliver to the LANDLORD within a reasonable
period of time (i) copies of any documents received from the United States
Environmental Protection Agency and/or any state, county or municipal
environmental or health agency concerning the TENANT'S operations upon the
demise premises; and (ii) copies of any documents submitted by the TENANT to the
United States Environmental Protection Agency and/or any state, county or
municipal environmental or health agency concerning its operations on the
demised premises. The terms of this Section shall survive the termination of
this Lease.
PART F. DEFAULT AND REMEDIES
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BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
F.1 Events of Default. Any of the following is an "Event of Default" under the
Lease:
(a) Basic Rent. TENANT fails to pay any installment of Basic Rent, together
with any applicable rent tax and estimated expense payment required by this
document, within fifteen (15) days after it is due, without notice or demand.
(b) Other Monetary. TENANT fails to pay any other sum of money required by
this document within fifteen (15) days after demand,
(c) General. TENANT fails to comply with any of TENANTS other obligations
under this document within thirty (30) days after demand.
(d) Bankruptcy. TENANT files a petition in bankruptcy, or for a
reorganization, arrangement liquidation, or other relief pursuant to the
National Bankruptcy Act or any law, federal or state, now or hereafter in
effect, or files any other application seeking the benefit of any such law, or
makes an assignment for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due, or suspends payment of its
obligations, or takes any action to further any of the foregoing; or TENANT
consents to the appointment of a receiver, trustee, liquidator, or other similar
official of TENANT or the Premises, or both; or a petition, answer, or other
application proposing an adjudication of TENANT as a bankrupt, or TENANT'S
reorganization, arrangement, liquidation, or other relief pursuant to the
National Bankruptcy Act or any similar law, federal or state, now or hereafter
in effect, is filed in, and approved by, any judicial or administrative tribunal
of competent jurisdiction order is not vacated or stayed within sixty (60) days
from entry; or TENANT consents to the filing of any such application, or fails
to deny its material allegations in a timely manner; or the occurrence of any of
the events described in this subparagraph with respect to any assignee of TENANT
or any guarantor of any of TENANT`S obligations under this document.
(e) Process. Execution or other process, judicial or administrative, issues
by, through, under, or against TENANT with respect to TENANTS interest in this
Lease or the Property, or both, and, within ten (10) days thereafter, is not
stayed, released, satisfied, or discharged, or provision made for its discharge
according to its terms; or any such stay thereafter is vacated, released, or
discharged for any reason, including affirmance on appeal, and such process then
is not ten (10) days thereafter released, satisfied, or discharged, or provision
made for its discharge according to its terms.
(f) Encumbrances. Any federal, state, or local tax lien, or any claim of
lien for labor, services, or materials, or any other lien, encumbrance, or
adverse claim of any nature whatsoever, including a lis pendens or other notice
of pendency, is recorded, filed, or asserted against or with respect to the
Property or the rent by, through, under, or against TENANT, or otherwise relates
to an obligation that TENANT is required to perform under this document, and is
not removed by payment or transferred to substitute security within ten (10)
days after demand.
(g) Transfer. Any transfer of TENANTS interest in this Lease, or the
Property, except in compliance with the requirements of this document including
any transfer by operation of law.
(h) Abandonment. TENANT ceases or suspends normal business operations within
the Premises for a document period of more than thirty days, except for any
period required for restoration after any casualty.
(i) Other. Any event occurs that expressly is an "immediate Event of
Default" under any provision of this document.
As used in this document a "default" is any event that. with the passage of time
or the giving of notice, or both, may become an "Event of Default" under this
Section.
F.2 Remedies. If an Event of Default occurs, LANDLORD immediately may exercise
any of the following rights and remedies, without notice or demand, in addition
to any other rights or remedies, and in such order as LANDLORD may elect:
(a) Advances. Advance such monies, and take such other action, for TENANTS
account as reasonably may be required to cure or mitigate any default or Event
of Default. Any such advance, and any cost or expense so incurred, bears
interest as provided in this document.
(b) Re-entry. Terminate TENANT'S right to possession of the Premises,
without terminating this demise or TENANT'S liability under this document and
re-enter the Premises by lawful procedure for TENANTS account. If LANDLORD
elects such re-entry, LANDLORD will attempt in good faith to relet the Premises
for TENANTS account, for such rent and upon such other terms and conditions as
LANDLORD considers appropriate to reduce TENANT'S liability and minimize
LANDLORD'S damage. LANDLORD is privileged to make installations, removals,
maintenance, redecorating, renovations, and restoration to the Premises for such
purpose. None of the foregoing actions waive, limit, or otherwise impair any
other right or remedy of LANDLORD, unless LANDLORD elects to terminate this
demise in writing. TENANT instead will remain liable for any rent, interest,
Actual Damages, and any difference between (i) the proceeds of any reletting,
and (ii) the amounts LANDLORD would have received had TENANT fully performed
TENANTS obligations under this document through the Expiration Date. At any time
during such re-entry or reletting, LANDLORD may elect to terminate this demise
by written notice, as provided in the following subparagraph. TENANT has no
claim to, and LANDLORD is not obligated to
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
account to TENANT for, any surplus proceeds that may result from any reletting.
Any proceeds of any reletting reduces TENANT'S liability only if, as, when, and
to the extent actually received by LANDLORD. No notice to, or approval by,
TENANT is required for any action pursuant to this subparagraph, nor is LANDLORD
obligated to account to TENANT for any such action that is undertaken in good
faith.
(c) Termination. Terminate this demise and re-enter and repossess the
Promises by lawful procedure and for LANDLORDS account. The term and estate
granted by this document, together with any other right, title, or interest of
TENANT in or to the Premises, the Property, and the proceeds of any reletting
then will terminate. No such termination waives, limits, or otherwise impairs
any right or remedy to collect from TENANT any rent, interest, and Actual
Damages that are accrued and unpaid at the termination, nor any Liquidated
Damages that may be payable.
(d) Liquidated Damages. Collect, as "Liquidated Damages" for the
termination of this demise an amount equivalent to the difference between (i)
the total unpaid Basic Rent and reasonably determinable Additional Rent, for
the period between the termination of this demise and the Expiration Date, and
(ii) the fair rental value of the Promises at termination for the same period.
The foregoing amounts will be discounted to present worth at the annual rate of
40%. No Liquidated Damages are payable if, at termination, LANDLORD has a
binding agreement to relet the Premises for LANDLORD'S account through the
Expiration Date at the same or greater Basic Rent and reasonably determinable
Additional Rent as then in effect under this document.
(e) Actual Damages. Recover, as "Actual Damages", any costs and expenses
properly incurred by LANDLORD for terminating this demise, or TENANTS right to
possession, as the case may be, including any leasing commissions remaining
payable in connection with this demise, the prorated balance of any prepaid
leasing commissions with respect to this demise, and other professional
compensation, costs, and expenses, as provided below in this document. Because
LANDLORD agrees to minimize LANDLORD'S damage unless LANDLORD elects to
terminate this demise, such items, together with any other costs and expenses
actually incurred by LANDLORD for repossessing the Premises, terminating this
demise, and renovating, redecorating, protecting, maintaining, restoring, and
reletting the Premises, as the case may be, are damages, due on demand, and bear
interest as provided in this document.
(f) Security. Apply the Security Deposit and any other property securing
TENANT'S obligations under this document to LANDLORD'S losses in such order as
LANDLORD elects. LANDLORD must account for such application only as and when the
full extent of LANDLORD'S damage is known, or the security is exhausted,
whichever occurs first.
(g) Fixtures. Enforce in any lawful manner the benefit of LANDLORD'S lien
upon, or a security interest in, any fixtures, equipment, inventory, and other
tangible property of TENANT then situated upon or about the Premises. TENANT
grants LANDLORD the benefit of a LANDLORD'S lien upon. and a security interest
in, all tangible property of TENANT from time to time situation upon the
Promises, as security for TENANT'S performance of TENANTS obligations under this
document. The foregoing lien and security interest are subject and subordinate
to any single purchase money security interest properly perfected in such
property at or before its delivery or installation to the Premises; but LANDLORD
has no duty to the holder of any such prior security interest, except to permit
such holder to remove such property from the Premises within fifteen (15) days
after written demand and upon payment of the costs of any restoration of the
Property required by such removal. This subparagraph does not apply to any of
TENANTS leasehold improvements or other property that expressly may become
LANDLORD'S property upon the expiration or earlier termination of this Lease, if
LANDLORD so elects.
Nothing in this document limits or prejudices any right or remedy of LANDLORD,
in any bankruptcy, reorganization, or insolvency proceeding, administrative or
judicial, to prove for and obtain an amount equal to the maximum that may be
allowed in connection with such proceeding. No right or remedy of LANDLORD is
exclusive of any other right or remedy; and every right and remedy is cumulative
to any other right or remedy otherwise available. To the maximum extent
permitted by law, TENANT and any guarantors each waive the benefit of any
homestead or other exemption laws with respect to the enforcement and collection
of TENANT'S obligations under this document.
F.3 Equitable Remedies. LANDLORD is entitled, if otherwise appropriate, to (i)
injunctive or other equitable or declaratory relief in case of any violation, or
any attempted or threatened violation, of any provision of this document; (ii)
an order compelling the observance or performance of any such provision; and
(iii) one or more accountings of TENANTS obligations under this document.
F.4 Waiver. No waiver of any right or remedy is effective against LANDLORD
unless made in writing and signed by LANDLORD. Without limitation, (i)
LANDLORD'S acceptance of any rent with knowledge of any default or Event of
Default is not, by itself, a waiver of such default or Event of Default; and
(ii) no attempted surrender of the Premises, by delivery of a key or otherwise,
waives, limits, or otherwise impairs any right or remedy of LANDLORD unless
LANDLORD so agrees in writing.
F.5 LANDLORD'S Default. LANDLORD is not in default under this document unless
LANDLORD fails to perform any required obligation within 30 days after written
demand, specifying the exact nature of the obligation that LANDLORD allegedly
has failed to perform. If the nature of LANDLORD'S obligation is such that more
than thirty (30) days reasonably is required for performance, then LANDLORD will
not be in default if LANDLORD promptly begins performance within such 30-day
period and pursues it diligently and continuously to completion.
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
F.6 Holding Over. If TENANT remains in possession of the Premises after the
expiration or any earlier termination of the Lease with LANDLORD'S permission,
such continued possession is not by itself an extension or renewal of the term
of this Lease, but a statutory tenancy at will from month to month, at the rent
and otherwise subject to the provisions of this document, except to the extent
the parties mutually agree otherwise at the time. If TENANT so remains in
possession without LANDLORD'S permission, then such continued possession is a
tenancy at sufferance at twice the Basic Rent then in effect, prorated on a
daily basis until TENANT surrenders possession as required by this document.
F.7 Abandoned Property: If LANDLORD re-enters the Premises, whether at the
expiration or any earlier termination of this Lease or after an Event of
Default, LANDLORD'S sole duty with respect to any property of TENANT left on or
about the Property, or otherwise within LANDLORD'S possession, custody, or
control as a result of this Lease, is not to damage it intentionally; and
LANDLORD need exercise only slight care with respect to the custody of such
property.
(a) TENANT Delivery. If TENANT at the time otherwise fully has performed
all of TENANTS obligations, LANDLORD must hold such property and deliver it to
TENANT, if claimed within thirty (30) days. LANDLORD may condition such
delivery upon TENANT'S reimbursing LANDLORD for any reasonable costs of moving,
storing, or protecting such property.
(b) Unclaimed. If any such property is not so claimed within such thirty
(30) day period, LANDLORD may proceed to dispose of it in any manner that
LANDLORD may elect, including converting it to LANDLORD'S own use or benefit,
without any liability on the part of the LANDLORD.
(c) Other. LANDLORD also may deliver any such property to any person who
appears to be its rightful owner or claimant. If any conflicting claims are
asserted with respect to any such property, LANDLORD may deliver it to any
claimant who (i) reimburses LANDLORD for any expenses incurred for moving,
protecting, or storing such property, and (ii) either removes it from the
Property or assumes all further liability for any costs of storage.
This paragraph does not apply to any Security Deposit or any leasehold
improvements, fixtures, installations, or other property that, pursuant to any
provision of this document, become LANDLORDS property upon the expiration or any
earlier termination of this Lease. LANDLORD has no duty to notify TENANT of, nor
any liability or duty to account for, any action taken by LANDLORD pursuant to
this paragraph.
F.8 Costs. If LANDLORD reasonably employs any attorneys, appraisers,
architects, brokers, engineers, or other professionals with respect to any
default by TENANT, TENANT upon demand will pay, or reimburse LANDLORD for, as
the case may be, all reasonable compensation for such professionals so employed,
regardless of whether suit or other proceeding is instituted and, if instituted,
for any arbitration, administrative. trial, appellate. and other proceedings.
TENANT also will pay (i) any other costs of collection incurred, and (ii) any
costs and reasonable professional fees that otherwise may be sustained or
incurred by LANDLORD for any arbitration, administrative, trial, appellate, or
other proceedings involving the collection, enforcement, validity, or
interpretation of this document or any use, activity, or installation of TENANT.
PART G. MISCELLANEOUS
G.1 LANDLORD. "LANDLORD" means the person who from time to time holds the
reversion in the Property. Upon any transfer of the reversion, each LANDLORD is
relieved from any further liability under or with respect to this document.
Unless expressly agreed otherwise in writing, no successor LANDLORD is (i)
liable to TENANT for any act, omission, or default of any prior LANDLORD, (ii)
subject to, or otherwise bound by, any offsets, claims, or defenses that TENANT
may have against any prior LANDLORD, or (iii) except to the extent actually
received, liable for any Security Deposit or any rents prepaid to any prior
LANDLORD for any period exceeding one mouth. No LANDLORD is liable for any
consequential loss or damage to TENANT for any default under this document,
including any failure to maintain or restore the Property, or any other event,
except for acts or emissions deliberately taken by that LANDLORD to inflict such
loss or damage upon TENANT.
G.2 Consent. Wherever this document provides that LANDLORDS consent to, or
approval of, a certain act or omission will not be unreasonably withheld or
delayed under certain specified circumstances, such consent nevertheless may be
withheld arbitrarily in all other circumstances not expressly stated, without
reference to any standard of commercial or other reasonableness, in LANDLORD'S
sole, subjective discretion, as the conditions for such consent are separately
negotiated and must be set forth in any "Special Provisions" attached.
G.3 Notices. Any notice or demand that must or may be given or made in
connection with this demise must be made or confirmed in writing. Unless receipt
expressly is required, any notice or demand is deemed given, delivered. or made,
as the case may be, when mailed by express mail, or by certified or registered
mail, return receipt requested, in any event with sufficient postage affixed, to
the addresses stated in this document. Such addresses may be changed by notice
pursuant to this paragraph; but notice of change of address is effective only
upon receipt. Notice or demand also may be given or made by private courier,
telecommunications, or other service that offers reliable proof of expeditious
delivery; but any such notice is effective only upon actual delivery at the
required address.
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
G.4 Certificates. As and when from time to time requested, each party within
ten (10) days will execute and deliver, or cause to be executed and delivered,
to or as directed by the other party, such estoppel certificates with respect to
such matters relating to this demise as reasonably may be required. Without
limitation, any such document may require any of the following certifications:
(a) Entire Agreement. This document contains the entire agreement of
LANDLORD and TENANT With respect to the leasing, improvement, use, possession,
and occupancy of the Property and is in full force and effect according to its
original terms or, if there have been any amendments, identifying them
(b) Default. Neither LANDLORD nor TENANT is in default in Performing their
respective obligations under this document, or, if there are any defaults known
to the party delivering such certificate, identifying them.
(c) Proceedings. Neither LANDLORD nor TENANT, as the case may be, knows of
any proceedings, judicial or administrative, that are pending or threatened with
respect to either party or the Property that, if adversely determined, "will
prevent or impair either party's ability to perform its respective obligations
under this document, or, if any such proceedings are known, identifying them.
(d) Performance. The date through which any rent has been paid, the date
the next installment of Basic Rent is due, the amount of any Additional Rent
then due, and a description of any security that LANDLORD then may hold for
TENANTS performance of any of its obligations under this Lease.
G.5 Effect. Except as expressly stated otherwise, the provisions of this
document bind, and are for the benefit of, each person executing this document
as LANDLORD or TENANT and their respective heirs, successors, and assigns. If
more than one person executes as TENANT, their obligations are joint and
several. This document and any identified attachments contain the entire
agreement of the parties; and any previous or contemporaneous agreements are
merged into this document and superseded by its delivery. No waiver of any
provision of this document is effective unless made in writing, signed by the
party to be charged; and no such waiver is a waiver of any future event, or any
other provision, unless it expressly so provides. This document otherwise may be
changed only by a writing signed by LANDLORD and TENANT.
G.6 Interpretation. LANDLORD and TENANT participated equally in preparing this
document, and it may not be more strictly interpreted against any party because
of such participation. Headings are for indexing and may not be used to
interpret any substantive provisions. Unless the context expressly or
necessarily requires otherwise: (i) each provision of this document applies from
time to time and at any time; (ii) any right or remedy may be exercised from
time to time and at any time, in whole or in part, as often as the party
entitled to exercise it considers necessary, convenient, desirable, or
expedient; (iii) each use of the singular includes the plural and vice versa,
unless the foregoing produces a logically or legally impossible result; (iv) any
action required or permitted by this document is at the expense of the party
required or permitted to take it; (v) terms such as "Property" and "Premises"
are used in the same sense as if the words "all or any applicable part of'
immediately preceded each use of such terms; (vi) any terms defined on the
attached "Schedule of Defined Term" and the cover page to this document have
their respective defined meanings; and (vii) each use of the "Property" includes
the Premises.
G.7 Severability. The provisions of this document should be interpreted to
avoid internal inconsistencies, conflicting results, or invalidity. If any
provision of this document, or, its application, is invalid under any law
applicable to this demise, such provision is severable, at LANDLORD'S option.
This document otherwise will be interpreted to place LANDLORD in the same
financial position LANDLORD would have occupied had each TENANT'S obligations
under this document been fully performed for the full term of this Lease.
G.9 Acceptance. This document is effective only when executed and delivered by
LANDLORD and TENANT. Until then, it is an irrevocable offer by the party who has
signed it until fifteen (15) days after the Contract Date. TENANT promptly upon
demand will furnish LANDLORD with a corporate resolution, proof of authorization
by partners, or other appropriate documentation evidencing TENANTS signatory
authorization.
G.9 Fiduciary Capacity. This Lease is being executed by Bank, One, NA in its
fiduciary capacity, not individually and Bank One, NA shall have no liability in
its individual capacity on any agreement, warranty or indemnity contained
herein. All liability of said fiduciary as LANDLORD shall be limited solely to
the assets of such Trust at the time any such liability may be established. The
provisions of this paragraph shall survive the term of this lease or any option
periods.
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
To WITNESS the foregoing, this document has been executed and delivered,
effective as of the Contract Date.
LANDLORD: TENANT:
Bank One, Colorado, N.A. as Trustee Colorado Business Bank, N.A.
for the Frank G. Jamison Trust dated
September 2, 1956 ----------------------------
By: /s/ Julie A. Florez By: /s/ Charles E. Holmes
------------------------- -----------------------
Name: Julie A. Florez Name: Charles E. Holmes
------------------------- -----------------------
Its: Vice President Its: President
------------------------- -----------------------
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
EXHIBIT "A"
SCHEDULE OF DEFINED TERMS
(a) "any" means "any and all".
(b) "ATM Facility" means the existing ATM improvements which are part of the
Premises.
(c) "Building and Buildings" mean respectively or collectively, as
applicable, the buildings commonly known as 2520-2524 and 2550 N. Broadway,
Boulder, Colorado, which are located upon the Property.
(d) "casualty" means (i) fire, wind, flood, and other acts of God (ii)
theft, vandalism, and other criminal or civilly actionable acts or omissions of
any third person, (iii) riot, civil commotion, and other acts of any public
enemy, (iv) expropriation and other paramount acts of any sovereign not
amounting to a taking, and (v) any occurrence of undeterminable or undetermined
origin.
(e) "damage" means damage, injury, destruction, or devaluation to or of
property, in any applicable combination, including that caused by, or otherwise
resulting from, any casualty or taking. "Damage" does not include ordinary wear
and tear and deterioration resulting from the reasonable and ordinary use of any
property for its intended purposes.
(f) "days" means consecutive calendar days, unless the expiration of any
time period measured in days falls on a Saturday, Sunday, or legal holiday at
the place where performance must be tendered, when such expiration automatically
will be extended to the next day that is not a Saturday, Sunday, or legal
holiday.
(g) "execute" means, in referring to a written instrument, to sign, seal,
attest, certify, acknowledge, or subscribe, in any applicable combination, as
necessary or appropriate to validate, perfect, or authenticate the instrument
delivered, in any applicable combination.
(h) "include" and "including" each are without limitation.
(i) "indemnity" means the indemnitor will defend, indemnify, and hold the
indemnities harmless against any claims, losses, or liabilities asserted against
the indemnitee by, or Incurred by the indemnities to, any person because of any
matters covered by the indemnity. The scope of any indemnity includes any costs
and expenses, including reasonable attorneys' fees, incurred in defending any
indemnified claim, or in enforcing the indemnity, or both.
(j) "install" and "installation" respectively mean, in referring to tangible
property, to construct, place, erect, plant, fabricate, attach, and otherwise
install, in any applicable combination, and construction, erection, placing,
planting, fabrication, attachment, and other installation, in any applicable
combination.
(k) "insurance requirements" means any valid terms of any insurance policy
covering or applicable to the Property, any valid requirements of the issuer of
any such policy, and any valid orders, rules, regulations, and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions applicable to or affecting the Property, or its use
or condition.
(l) "interpret" and "interpretation" respectively mean, in referring to a
written instrument to interpret, construe, apply, or enforce its provisions, in
any applicable combination, and the interpretation, construction, application,
or enforcement of such provisions, in any applicable combination.
(m) "legal requirements" means (i) any valid laws, statutes, codes,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions, and requirements of, and
agreements with, any sovereign, and (ii) any valid requirements of any
instrument applicable to the Property that is recorded on the Contract Date or
otherwise permitted by this document.
(n) "maintain" and "maintenance" respectively mean, in referring to
property, to operate, use, repair, service, protect, inspect, maintain, renew,
and replace, in any applicable combination, and operation, use, repair,
servicing, protection, inspection, maintenance, renewal, and replacement, in
any applicable combination.
(o) "may not" and other negative forms of the verb "may" each are prohibit
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
EXHIBIT "A"
SCHEDULE OF DEFINED TERMS (Cont.)
(p) "Premises" means those certain improvements, consisting of that certain
Building, containing 2,060 square feet, commonly known as 2550 N. Broadway,
Boulder, CO, located upon the Property.
(q) "Property" means Lots 1, 2, 3 and 4, Block 4, NORTH BOULDER, a part of
the City of Boulder, together with one-half of the vacated alley to die South of
said Lots. Boulder County, Colorado
(r) "person" means any natural person or artificial entity having legal
capacity, other than the parties to this document.
(s) "record" or "recorded" means filed for record in the public records of
the county where the Property is situated, or such other place as from time to
time provides Constructive notice of instruments affecting title to the
Property.
(t) "restore" and "restoration" respectively mean, in REFERRING to any
damage to property, to repair, replace, reconstruct, substitute, and otherwise
restore, as nearly as practicable, the property damaged, and any other property
affected by the damage, to the same or better class, character, value, and
utility as existed before the damage, and repair, replacement, reconstruction,
substitution, and other restoration in the foregoing manner, all in any
applicable combination.
(u) "right or remedy", "rights and remedies", and similar expressions each
mean any rights, powers, privileges, immunities, remedies, elections, or options
expressly provided or otherwise available and not expressly precluded.
(v) "sovereign" means any duty constituted government or any authorized
agency, officer, or instrumentality of any such government, or any other person
duty authorized to exercise sovereign powers, including (i) the United States of
America, or any of its agencies, officers, or instrumentality's; or (ii) the
state where the property is situated, or any of its agencies, officers,
municipalities, or political subdivisions; or (iii) any officer, agency, or
instrumentality of any such municipality or political subdivision; (iv) any
utility or other person duly authorized to exercise the power of eminent domain,
or (v) any agency duly authorized to exercise the police power on behalf of any
duly constituted government.
(W) "taking" means any condemnation, requisitioning, conversion, or other
taking or acquisition of property pursuant to, or in lieu of, the exercise of
the power of eminent domain, or any damage to property caused by any sovereign
and amounting to a taking.
(X) unless" means "unless and until".
(Y) will" and "must" each are mandatory.
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
EXHIBIT "B"
RULES AND REGULATIONS
1. TENANT shall not obstruct or impede the use of the Common Areas by others
nor use the Common Areas for other than their intended purposes.
2. TENANT shall lock the Leased Premises and shut off water faucets, lights
and electrical equipment and appliances located in the Leased Promises before
leaving the Leased Premises each day.
3. All deliveries and shipments shall be made only at TENANTS loading dock(s)
or other areas designated by LANDLORD.
4. TENANT shall place garbage and refuse only in trash containers approved by
LANDLORD. Such containers shall be kept either inside the Leased Premises or
outside the Leased Premises in such areas as are from time to time designated by
LANDLORD. The LANDLORD shall approve the trash collection and disposal service
which will be utilized to empty and haul away such garbage and refuse and the
times and days of the week such containers shall be emptied. TENANT shall pay
for the cost of the containers and the periodic trash collection and disposal
charges.
5. No aerials, satellite dishes or antennae shall be placed by Tenant on or
about the Leased Premises without Landlord's prior written consent, which
consent shall not be unreasonably withheld. In no event may Tenant place
aerials, satellite dishes or antennae on or about the Leased Premises except
those which are used solely by the Tenant in the conduct of its business.
6. TENANT shall not engage in any activity nor utilize any machinery or
apparatus which shall be heard or seen outside the Leased Premises.
7. TENANT shall not use the plumbing facilities serving the Leased Premises
for the disposal of refuse or any other improper use. TENANT shall, at its sole
cost and expense, repair any damage to such plumbing caused by any such misuse.
8. No animals or birds shall be allowed in or about the Leased Premises.
9. TENANT shall not store any personal property outside the Leased Premises.
10. LANDLORD shall provide TENANT with two (2) sets of keys to the Leased
Premises. TENANT may obtain additional keys to the Leased Premises at TENANTS
cost. TENANT shall provide only its authorized agents and employees with copies
of such keys. Upon termination of the Lease TENANT shall return all keys to
LANDLORD.
11. TENANT shall not burn or incinerate trash, refuse or any other items in or
outside the Leased Premises.
12. LANDLORD shall not be responsible for any loss, theft or disappearance of
personal property from the Leased Premises.
13. TENANT shall not alter nor add locks or bolts on doors providing ingress
and egress to the Leased Premises except as may be necessary in connection with
the operation of the Tenant's business, including, but not limited to, bank
security systems.
14. TENANT shall not allow anyone to reside or sleep in the Leased Premises.
15. TENANT shall park only in those areas designated by LANDLORD, TENANT shall
comply with all directional and other signs posted in the parking areas and
shall use only one (1) parking stall per vehicle. TENANT shall not park mobile
homes, trailers or similar vehicles in the common parking areas. No vehicle
shall be parked overnight in the common parking areas nor shall any inoperable
vehicle be allowed to remain in the common parking areas. Any vehicle which is
parked in the common parking areas by TENANT in violation of these Rules and
Regulations may be towed away at TENANTS expense. Tenant shall have the
exclusive right to park in the four (4) parking spaces located closest to the
Premises; provided, however, that Landlord shall have the right to designate
said parking spaces as being non-exclusive parking spaces, in the event the
Property would be a non-conforming use if the said parking spaces are exclusive
parking spaces for Tenant.
16. TENANT shall not cover all or any part of any window or door of the
Building without obtaining the prior written approval of LANDLORD.
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
EXHIBIT "B"
RULES AND REGULATIONS (Cont.)
17. TENANT shall not conduct or permit to be conducted any auction or similar
sale on or about the Leased Premises.
These Rules and Regulations and any amendments hereto are intended to supplement
the terms and provisions of the Lease and where possible shall be applied and
interpreted in a manner which is consistent with the terms and provisions of the
Lease. In the event of a conflict between the Lease and these Rules and
Regulations, or any amendments thereto, the Lease shall govern. If TENANT fails
to fully comply with these Rules and Regulations, LANDLORD may, in its sole
discretion and without waiving any other right or remedy, undertake such actions
on behalf of TENANT as LANDLORD determines are necessary to cause TENANT to full
comply with these Rules and Regulations. All costs, expenses and fees expended
by LANDLORD to insure full compliance with these Rules and Regulations shall
constitute Additional Rent under the Lease and be immediately due and payable by
the TENANT upon demand and shall bear interest at the rate of fifteen percent
(15%) per annum until paid.
Landlord: Tenant:
/s/ Julie A. Florez /s/ Charles E. Holmes, President
- ------------------------- ------------------------------------
Vice President
- -------------------------
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
EXHIBIT "D"
Expense Reimbursement
PROPERTY ADDRESS OR DESCRIPTION: 2550 N. Broadway, Boulder, CO
DATE OF LEASE: March 5, 1999
-------------
1. Expense Reimbursement
Tenant shall pay the Landlord, as additional rent hereunder, a portion of the
following expenses, as defined hereinafter, incurred, levied or assessed for or
against the Premises and/or the Property: [Check those that are to apply. Boxes
not checked to not apply.]
[X] Ad Valorem Taxes
[X] Insurance Premiums
[X] Common Area Maintenance Charges (CAM)
[X] Operating Expenses
[X] Premises Landscape Repair and Maintenance
[X] Parking Lot Repair and Maintenance
(herein collectively called "Reimbursement")
2. Expense Reimbursement Limitations
The amount of Tenant's Reimbursement obligation as to the respective expenses
set forth above shall be determined by the method designated as applicable to
such expense in this Section 2: [Check the applicable boxes]
<TABLE>
<CAPTION>
Method Expense
------ -------
<S> <C>
[_] Base Year/Expense Stop Adjustment Common Area Maintenance Charges
[X] Pro Rata Adjustment (CAM) and Operating Expenses
[_] Fixed Amount Adjustment Ad Valorem Taxes
[X] Ad Valorem Tax Percentage Share Insurance Premiums
[X] Direct Insurance Premium Pass-Through Premises Landscape Repair and
[X] Direct Landscape Repair and Maintenance Maintenance Pass-Through
Parking Lot Repair and Maintenance
[X] Parking Lot Repair and Maintenance
Percentage Share
</TABLE>
The calculation for each of said methods is not forth under Section 4
below.
3. Expense Reimbursement Payments
Commencing upon the Commencement Data and on the first day of each month
thereafter during the term of this Lease and during any extension of this Lease,
Tenant agrees to pay Landlord one-twelfth (1/12) of the Expense Reimbursements
estimated by Landlord to be due for the applicable calendar year, based on the
previous year's actual expenses. At least thirty (30) days prior to each January
1 during the term of this Lease and during any extension of this Lease, Landlord
shall provide Tenant with Landlord's estimate of Expense Reimbursements for the
ensuing calendar year and the monthly amount which shall be payable commencing
on January 1 and continuing an the first day of each month for such year. As
soon as reasonably practicable after the end of the calendar year. Landlord
shall provide to Tenant with a compilation in reasonable detail, showing the
actual costs and expenses incurred by Landlord in the ownership, operation and
maintenance of the Property. If such compilation discloses that the actual
Expanse Reimbursements due to Landlord for the previous year exceeded the
estimated Expense Reimbursements paid by the Tenant, the Tenant shall pay such
deficiency to Landlord within thirty (30) days of Tenant's receipt of such
compilation. If such compilation discloses that the actual Expense
Reimbursements due to Landlord for the previous year were less that the
estimated Expense Reimbursements paid by the Tenant the Tenant shall be entitled
to a credit for the amount of such excess payments against subsequently accruing
monthly Expense Reimbursements payments to the full extent of such excess. If
such credit is insufficient to fully reimburse the Tenant, any remaining amount
due to the Tenant shall be paid to Tenant by Landlord within thirty (30) days of
Tenant's receipt of such compilation.
D-1
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
4. Definitions
A. Ad Valorem Taxes: All general real estate taxes, general and special
assessments, parking surcharges, rent taxes, and other similar governmental
charges levied against the Property for each calendar year.
B. Insurance premiums: All insurance premiums attributable to the Property,
including, but not limited to, premiums for fire, casualty, and extended
coverage, liability coverage, and loss of rents coverage.
C. Common Area Maintenance Charges: All costs of ownership, operation, and
maintenance of the common area, Including but not limited to, those costs for
security, lighting, painting, cleaning, leasing, inspecting and repairing which
may be incurred by Landlord, in its discretion. Including a reasonable allowance
for Landlord's overhead and management The term "common area" Is defined as that
part of the Property intended for the common use of all tenants, including, but
nor limited to, the parking areas (to the extent not Included in Parking Lot
Repair and Maintenance), landscaping (to the extent not included in Premises
Landscape Repair and Maintenance), loading areas, sidewalks, malls, promenades
(enclosed or otherwise), public rest rooms, meeting rooms, corridors, and curbs.
Common area maintenance shall not include depreciation an Landlord's original
investment, cost of tenant improvements, real estate brokers' fees, and interest
or depreciation an capital investments.
D. Operating Expenses: All costs of management, operation, and maintenance of
the Property, including, but not limited to, wages, salaries, janitorial
services, maintenance, repairs, and costs of utilities. Operating expenses shall
not include depreciation on Landlord original investment, cost of tenant
improvements, real estate brokers' fees, and interest or depreciation on
capital Investments.
E. Premises landscape Repair and Maintenance: All costs and expenses of
landscape repair, maintenance and replacement with respect to landscape
immediately adjacent to or specifically benefitting the Premises.
F. Parking Lot Repair and Maintenance: All costs and expenses of repair,
maintenance and resurfacing of the parking lot upon the Property, restriping of
the parking lot and snow removal from the parking lot.
G. Base Year/Expense Stop Adjustment: Reserved.
H. Pro Rata Adjustment: Tenant shall Pay to Landlord of Landlord's Insurance
premiums, ad valorem taxes, common area maintenance charges, and/or operating
expenses for any calendar year during the term hereof and during any extension
of this lease. Tenant's pro rata share of such amount shall be based on the
square footage contained in the Promises in proportion to the square footage of
the leasable area of the Property.
I. Fixed Amount Adjustment: Reserved.
J. Ad Valorem Tax Percentage Share: Tenant shall pay to Landlord 50% of all Ad
Valorem Taxes in respect to the Property and the Buildings thereon for any
calendar year during the term hereof and during any extensions of this lease.
K. District Insurance Premium Pass-Through: For so long an and to the extent
Landlord Separately insures and/or carries insurance in respect to the promises,
the Tenant shall pay to Landlord the total amount of Landlord's insurance
premiums upon and/or in respect to the Premises for any calendar year during the
term hereof and during any extension of this lease. To the extent the Landlord
does not separately insure and/or carry insurance in respect to the Premises.
Tenant shall pay to Landlord its pro rate share of Landlord's Insurance
premiums. as otherwise provided for tinder the Pro Rata Adjustment above.
L. Direct Landscape Repair and Maintenance Pass-Through: Tenant shall pay
to Landlord all costs and expenses incurred by Landlord in connection with
Premises Landscape Repair and Maintenance.
M. Parking Lot Repair and Maintenance Percentage Share: Tenant shall pay to
Landlord 66% of all Parking Lot Repair and Maintenance costs and expenses for
any calendar year during the term hereof and during any extensions of this
lease.
INITIALS: LANDLORD: /s/ JF INITIALS: TENANT: /s/ CH
---------- ------------
---------- ------------
D-2
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
EXHIBIT "F"
Renewal Options
PROPERTY ADDRESS OR DESCRIPTION: 2550 N. Broadway. Boulder. CO
DATE OF LEASE: March 5, 1999
-------------
1. Options to Extend Term
Landlord hereby grants to Tenant two (2) option(s) [the "Option(s)"] to
extend the Lease Term far additional term(s) of five (5) years each [the
"Extension(s)"], on the same terms, conditions and covenants set forth
in the Lease Agreement except as provided below. Each Option shall be
examined only by written notice delivered to the Landlord at least one
hundred and eighty (180) days before the expiration of the Lease Term or
the preceding Extension of the Lease Term. If Tenant fails to deliver
Landlord written notice of the exercise of an Option within the
prescribed time period, such Option and any succeeding Options shall
lapse, and there shall be no further right to extend the Lease Term.
Each Option shall be exercisable by Tenant on the express condition that
at the time of the exercise, and at all times prior to the commencement
of such Extension(s), Tenant shall not be in default under any of the
provisions of this Lease. The foregoing Option(s) may be exercised by
any permitted assignee or subtenant.
2. Calculation Of Rent
The Basic Rent during the Extension(s) shall be determined by the
applicable method not forth below: [INDICATED BY CHECKING THE
APPROPRIATE BOX UPON EXECUTION OF THE LEASE AGREEMENT]
[_] (a) Consumer Price Index Adjustment
[X] (b) Fair Rental Value Adjustment for the second Extension
[X] (c) Fixed Rental adjustment for the first Extension
A. Consumer Price Index Adjustment Reserved.
B. Fair Rental Value Adjustment
The Basic Rent shall be Increased on the first day of the particular
Extension to the "Fair Rental Value" of the Premises, determined in the
following manner:
(1) If the Landlord and Tenant have not been able agree on the Fair
Rental Value Adjustment to the date the option is required to be exercised, the
basic rent for the Extension shall be determined as follows: Within ten (10)
days following the exercise of the Option, Landlord and Tenant shall endeavor in
good faith to agree upon a single appraiser. If Landlord and Tenant are unable
to agree upon a single appraiser within said ten (10) day period, each shall
then, by written notice to the other, given within ten (10) days after said ten
(10) day period, appoint one appraiser. Within ten (10) days after the two
appraisers are appointed, they shall appoint a third appraiser. If either
Landlord or Tenant fails to appoint its appraiser within the prescribed time
period, the single appraiser appointed shall determine the Fair Rental Value of
the Premises. Subject to Tenant's obligation under the second subparagraph of
paragraph (2) below, each party shall bear the cost of the appraiser appointed
by it and the parties shall share equally the cost of the third appraiser.
(2) The "Fair Rental value" of the Premises shall mean the price,
but not less than $7,828.64 per month, that a ready and willing tenant would pay
as of the commencement of the Extension as monthly rent, including annual
escalations of such rent, to a ready and willing landlord of demised premise
comparable to the Promises if such property were exposed for lease an the open
market for a reasonable period of time and takes into account all of the
purposes for which such property may be used and not just the use proposed to be
made of the Promises by Tenant. The Fair Rental Value of the Premises shall be
the average of the two of the three appraisals which are closest in amount, and
the third appraisal shall be disregarded. In no event shall the rent be reduced
by reason of such commutation. If the Fair Rental Value in not determined prior
to the commencement of the Extension, then Tenant shall continue to pay to
Landlord the basic rent applicable to the Premises immediately prior to such
Extension (that is,
F-1
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
$7.928.64 per month) until the Fair Rental Value In determined and when it is
determined, Tenant shall Pay to Landlord within ten (10) days after receipt of
such notice the difference between the basic rent actually paid by Tenant to
Landlord and the new basic rent determined hereunder.
Notwithstanding the Provisions Of the previous paragraph and
provided the Fair Rental Value has not been previously determined to the
satisfaction of Tenant may rescind its exercise of the second Option by written
notice, which shall be delivered to the Landlord by no later than the date which
is one hundred and twenty (120) days Prior to the expiration of the first
Extension. In the event of such rescission, the second Option shall be deemed to
have lapsed as though never exercised; provided, however, Tenant shall pay the
costs of all appraisers and shall hold the Landlord harmless from any costs or
expense of such appraisers. If the Tenant does not timely rescind its exercise
of the second Option, the Fair Rental Value an determined by the appraiser(s)
shall be binding upon the parties.
C. Fixed Adjustments
The Basic Rent shall be increased to the following amounts on the
following dates:
Date Amount
---- ------
April 1, 2004 $6,955.64
April 1, 2005 $7,164.31
April 1, 2006 $7,379.24
April 1, 2007 $7,600.62
April 1, 2008 $7,828.64
INITIALS: LANDLORD: /s/ JF INITIALS: TENANT: /s/ CH
-------------------- --------------------
-------------------- --------------------
F-2
<PAGE>
BANC ONE INVESTMENT MANAGEMENT GROUP
COMMERCIAL LEASE AGREEMENT
EXHIBIT "I" Tenant Work Letter
The Tenant's work shall be subject to the Landlord's prior approval required
under the Lease. The following shall consist of those items that the Tenant may
request approval from Landlord.
1. Remodeling the interior of the premises which includes painting, replacing
floor coverings, and possible replacement of light fixtures and of other decor
and fixtures.
2. At the Tenant's option, painting the exterior of the premises.
3. Replacing the present sign face plates with the Tenant's signage in the
existing sign boxes.
<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> MAR-31-1999 MAR-31-1998
<CASH> 10,126,000 21,020,000
<INT-BEARING-DEPOSITS> 94,000 7,000
<FED-FUNDS-SOLD> 15,300,000 1,500,000
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 88,006,000 41,699,000
<INVESTMENTS-CARRYING> 8,560,000 13,166,000
<INVESTMENTS-MARKET> 329,000 221,000
<LOANS> 247,386,000 181,841,000
<ALLOWANCE> 3,498,000 2,630,000
<TOTAL-ASSETS> 381,170,000 272,916,000
<DEPOSITS> 287,194,000 220,595,000
<SHORT-TERM> 37,434,000 21,085,000
<LIABILITIES-OTHER> 2,193,000 2,061,000
<LONG-TERM> 16,258,000 10,760,000
0 0
0 1,500,000
<COMMON> 67,000 51,000
<OTHER-SE> 38,024,000 16,864,000
<TOTAL-LIABILITIES-AND-EQUITY> 381,170,000 272,916,000
<INTEREST-LOAN> 5,384,000 4,368,000
<INTEREST-INVEST> 1,531,000 1,009,000
<INTEREST-OTHER> 0 0
<INTEREST-TOTAL> 6,915,000 5,377,000
<INTEREST-DEPOSIT> 1,746,000 1,657,000
<INTEREST-EXPENSE> 2,396,000 2,018,000
<INTEREST-INCOME-NET> 4,519,000 3,359,000
<LOAN-LOSSES> 303,000 351,000
<SECURITIES-GAINS> 44,000 0
<EXPENSE-OTHER> 3,707,000 3,015,000
<INCOME-PRETAX> 1,627,000 998,000
<INCOME-PRE-EXTRAORDINARY> 1,007,000 587,000
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,007,000 587,000
<EPS-PRIMARY> 0.15 0.11
<EPS-DILUTED> 0.15 0.10
<YIELD-ACTUAL> 5.35 5.66
<LOANS-NON> 514,000 441,000
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 795,000
<LOANS-PROBLEM> 6,899,000 1,472,000
<ALLOWANCE-OPEN> 3,271,000 2,248,000
<CHARGE-OFFS> 79,000 20,000
<RECOVERIES> 3,000 51,000
<ALLOWANCE-CLOSE> 3,498,000 2,630,000
<ALLOWANCE-DOMESTIC> 3,498,000 2,630,000
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 2,102,000 743,000
</TABLE>
