FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM____________ TO ____________.
COMMISSION FILE NUMBER: 0-16234
CENTURY BANCSHARES, INC.
------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 52-1489098
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1275 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D. C. 20004
-----------------------
(Address of Principal Executive Offices)
(Zip Code)
(202) 496-4100
--------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (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 registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _____
At October 26, 2000, there were 2,742,998 shares of the registrant's Common
Stock, par value $1.00 per share, outstanding.
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
For The Quarter Ended September 30, 2000
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risks 21
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 23
Exhibit Index 24
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Financial Information
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
CENTURY BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
September 30, 2000, and December 31, 1999
<TABLE>
<CAPTION>
September 30,
2000 December 31,
(Unaudited) 1999
-------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash and due from banks $ 7,958,113 $ 9,222,005
Federal funds sold 12,500,487 11,015,000
Interest bearing deposits in other banks 4,165,989 19,667,075
Investment securities available-for-sale, at fair value 47,958,312 16,495,049
Investment securities held-to-maturity, at amortized cost,
fair value of $20,687,770 and $5,837,867 at September
30, 2000 and December 31, 1999, respectively 20,419,135 5,966,403
Loans, net of unearned income 179,683,842 138,076,486
Less: allowance for credit losses (1,666,665) (1,518,911)
------------- --------------
Loans, net 178,017,177 136,557,575
Leasehold improvements, furniture, and equipment, net 2,278,314 1,372,267
Accrued interest receivable 1,821,615 1,034,270
Loans held for sale 2,793,750 439,600
Deposit premium, net 5,123,980 1,675,813
Net deferred taxes 723,617 767,893
Other assets 1,023,671 595,948
------------- ---------------
Total Assets $ 284,784,160 $ 204,808,898
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing $ 41,647,060 $ 36,571,508
Interest-bearing 173,893,043 117,328,222
------------- -------------
Total deposits 215,540,103 153,899,730
Federal funds purchased and securities sold under
agreements to repurchase 20,095,605 6,358,654
Long term debt:
Federal Home Loan Bank Advances 20,642,261 11,301,355
Preferred securities of subsidiary trust 8,800,000 -
Other borrowings 573,217 15,598,868
Other liabilities 2,045,786 1,982,184
------------- -------------
Total Liabilities 267,696,972 189,140,791
------------- -------------
Stockholders' Equity:
Common stock, $1 par value; 10,000,000 shares authorized;
2,885,998 and 2,858,402 shares issued at September
30, 2000 and December 31, 1999, respectively 2,885,998 2,858,402
Additional paid in capital 13,802,686 13,700,452
Retained earnings 1,245,968 -
Treasury stock, at cost, 143,000 and 136,500 shares at
September 30, 2000 and December 31, 1999, respectively (828,806) (789,863)
Other comprehensive income (loss), net of tax effect (18,658) (100,884)
------------- -------------
Total Stockholders' Equity 17,087,188 15,668,107
Commitments and contingencies
------------- -------------
Total Liabilities and Stockholders' Equity $ 284,784,160 $ 204,808,898
------------- -------------
See accompanying condensed notes to consolidated financial statements (unaudited).
</TABLE>
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<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
CENTURY BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Operations (Unaudited)
Three and Nine Months Ended September 30, 2000 and 1999
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
-------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $3,862,071 $2,872,897 $10,477,855 $8,383,654
Interest on federal funds sold 142,831 60,611 516,731 177,200
Interest on deposits in other banks 97,055 171,048 399,560 442,539
Interest on securities available-for-sale 552,327 166,590 1,083,734 392,023
Interest on securities held-to-maturity 354,218 52,138 680,966 123,800
-------------- ---------------- ----------------- ----------------
Total interest income 5,008,502 3,323,284 13,158,846 9,519,216
Interest expense:
Interest on deposits:
Savings accounts 226,607 212,386 615,490 639,513
NOW accounts 46,739 53,936 147,987 169,158
Money market accounts 248,221 150,291 696,631 478,312
Certificates under $100,000 509,554 383,924 1,203,921 1,047,254
Certificates $100,000 and over 501,706 264,614 1,231,426 726,511
-------------- ---------------- ----------------- ----------------
Total interest on deposits 1,532,827 1,065,151 3,895,455 3,060,748
-------------- ---------------- ----------------- ----------------
Interest on borrowings 842,493 218,695 1,774,365 534,034
-------------- ---------------- ----------------- ----------------
Total interest expense 2,375,320 1,283,846 5,669,820 3,594,782
-------------- ---------------- ----------------- ----------------
Net interest income 2,633,182 2,039,438 7,489,026 5,924,434
Provision for credit losses 275,000 110,000 655,000 435,000
-------------- ---------------- ----------------- ----------------
Net interest income after provision for credit losses 2,358,182 1,929,438 6,834,026 5,489,434
Noninterest income:
Service charges on deposit accounts 248,846 162,846 691,502 491,470
Other operating income 308,102 248,226 912,810 755,608
-------------- ---------------- ----------------- ----------------
-------------- ---------------- ----------------- ----------------
Total noninterest income 556,948 411,072 1,604,312 1,247,078
-------------- ---------------- ----------------- ----------------
-------------- ---------------- ----------------- ----------------
Noninterest expense:
Salaries and employee benefits 917,082 721,985 2,514,659 2,106,431
Occupancy and equipment expense 256,985 194,077 732,203 614,629
Professional fees 230,722 175,077 727,887 523,275
Depreciation and amortization 127,013 112,735 353,544 340,181
Amortization of deposit premiums 87,182 47,385 202,386 142,153
Data processing 342,805 295,024 1,035,666 840,510
Communications 111,399 86,859 305,273 256,787
Federal deposit insurance premiums 8,999 4,365 23,691 13,021
Other operating expenses 257,409 182,741 625,375 564,945
-------------- ---------------- ----------------- ----------------
Total noninterest expense 2,339,596 1,820,248 6,520,684 5,401,932
-------------- ---------------- ----------------- ----------------
Income before income tax expense 575,534 520,262 1,917,654 1,334,580
Income tax expense 150,927 197,699 670,725 507,576
-------------- ---------------- ----------------- ----------------
Net income $424,607 $322,563 $1,246,929 $ 827,004
-------------- ---------------- ----------------- ----------------
Basic income per common share $ 0.16 $ 0.11 $ 0.46 $ 0.29
Diluted income per common share 0.15 0.11 0.45 0.29
Weighted average common shares outstanding 2,737,705 2,804,679 2,729,180 2,833,113
Diluted weighted average common shares outstanding 2,766,314 2,832,251 2,751,698 2,860,925
See accompanying condensed notes to consolidated financial statements (unaudited).
</TABLE>
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<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
CENTURY BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Unaudited)
Nine Months Ended September 30, 2000 and 1999
Other
Common Additional Treasury Comprehensive Total
Stock Paid in Retained Stock, Income (Loss), Stockholders'
$1.00 par Capital Earnings at cost net of tax effect Equity
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 $ 2,858,402 $ 13,700,452 $ - $(789,863) $ (100,884) $ 15,668,107
Comprehensive income:
Net income 1,246,929 1,246,929
Unrealized gain on
Investment securities,
net of tax effect 82,226 82,226
----------------------------------- ------------- ---------------- -------------- --------------- ------------------ ---------------
Comprehensive income 1,246,929 82,226 1,329,155
Purchase of treasury stock, at
cost, 6,500 shares (38,943) (38,943)
Exercise of common stock
options - 27,596 shares 27,596 102,234 (961) 128,869
----------------------------------- ------------- ---------------- -------------- --------------- ------------------ ---------------
Balance, September 30, 2000 $ 2,885,998 $ 13,802,686 $1,245,968 $ (828,806) $ (18,658) $ 17,087,188
----------------------------------- ------------- ---------------- -------------- --------------- ------------------ ---------------
Other
Common Additional Treasury Comprehensive Total
Stock Paid in Retained Stock, Income (Loss), Stockholders'
$1.00 par Capital Earnings at cost net of tax effect Equity
Balance, December 31, 1998 $ 2,574,219 $ 12,343,631 $392,384 $ - $ 6,440 $ 15,316,674
Comprehensive income:
Net income 827,004 827,004
Unrealized loss on
Investment securities,
net of tax effect (100,521) (100,521)
----------------------------------- ------------- ---------------- -------------- --------------- ------------------ ---------------
Comprehensive income 827,004 (100,521) 726,483
Stock dividend,129,173 shares 129,173 645,865 (775,800) (762)
Purchase of treasury stock, at
cost, 130,000 shares (789,863) (789,863)
Exercise of common stock
options - 18,698 shares 18,698 42,062 60,760
----------------------------------- ------------- ---------------- -------------- --------------- ------------------ ---------------
----------------------------------- ------------- ---------------- -------------- --------------- ------------------ ---------------
Balance, September 30, 1999 $ 2,722,090 $ 13,031,558 $443,588 $ (789,863) $ (94,081) $ 15,313,292
----------------------------------- ------------- ---------------- -------------- --------------- ------------------ ---------------
See accompanying condensed notes to consolidated financial statements(unaudited).
</TABLE>
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<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
CENTURY BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 2000 and 1999
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,246,929 $ 827,004
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of premises and equipment 353,544 340,181
Amortization of deposit premiums 202,386 142,153
Provision for credit losses 655,000 435,000
Increase in accrued interest receivable (787,345) (184,249)
Increase in other assets (206,163) (328,915)
Decrease in other liabilities 63,602 9,813
-------------------- --------------------
Total adjustments 281,024 413,983
-------------------- --------------------
-------------------- --------------------
Net cash provided by operating activities 1,527,953 1,240,987
-------------------- --------------------
-------------------- --------------------
Cash flows from investing activities:
Net increase in loans (38,729,605) (16,416,372)
Net increase in loans held for sale (2,354,150) -
Net decrease (increase) in interest bearing deposits
in other banks 15,501,086 (23,480,704)
Purchases of securities available-for-sale (42,615,076) (8,291,000)
Purchases of securities held-to-maturity (14,578,971) (2,000,000)
Repayments and maturities of securities available-for-sale 6,377,809 735,981
Repayments and maturities of securities held-to-maturity 126,239 441,693
Proceeds from sales of securities available-for-sale 4,900,506 -
Net purchase of leasehold improvements, furniture
and equipment (259,241) (196,523)
Acquisition of deposits, net of assets acquired 45,034,156 -
-------------------- --------------------
-------------------- --------------------
Net cash used in investing activities (26,597,247) (49,206,925)
-------------------- --------------------
-------------------- --------------------
Cash flows from financing activities:
Net decrease in demand, savings, NOW and
money market deposit accounts (149,485) (1,651,234)
Net increase in certificates of deposit 8,762,242 12,855,087
Net increase in customer repurchase accounts 13,736,951 6,436,750
Net decrease in other borrowings (15,025,651) (36,760)
Net proceeds from issuance of long-term debt 10,000,000 33,000,000
Net proceeds from issuance of preferred securities of
subsidiary trust 8,536,000 -
Repayment of long-term debt (659,094) (658,257)
Purchase of treasury stock (38,943) (789,863)
Net proceeds from issuance of common stock 128,869 59,998
-------------------- --------------------
Net cash provided by financing activities 25,290,889 49,215,721
-------------------- --------------------
Net increase in cash and cash equivalents 221,595 1,249,783
Cash and cash equivalents, beginning of period 20,237,005 13,235,733
-------------------- --------------------
Cash and cash equivalents, end of period $20,458,600 $14,485,516
-------------------- --------------------
Supplemental disclosures of cash flow information:
Interest paid on deposits and borrowings $5,389,178 $3,487,632
Income taxes paid 780,066 600,000
See accompanying condensed notes to consolidated financial statements (unaudited).
</TABLE>
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<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) Basis of Presentation
In the opinion of management the unaudited consolidated financial
statements as of September 30, 2000, and for the three and nine months ended
September 30, 2000 and 1999 contain all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position and
results of operations of Century Bancshares, Inc. (the "Company") as of such
dates and for such periods. The unaudited consolidated financial statements
should be read in conjunction with the Consolidated Financial Statements of the
Company and the Notes thereto appearing in the Company's 1999 Annual Report on
Form 10-K filed with the Securities and Exchange Commission. The results of
operations for the nine months ended September 30, 2000 are not necessarily
indicative of the results of operations that may be expected for the year ending
December 31, 2000 or any future periods. Certain prior period balances have been
reclassified to conform with the current period.
(2) Acquisition Activities
In October 1999, the Company completed the purchase and assumption of
the deposits and certain other liabilities of the branch of One Valley Bancorp
located at 18116 Triangle Shopping Plaza, Dumfries, Virginia (the "Dumfries
Branch"). As part of the transaction, the Company assumed approximately $9.4
million of deposit liabilities of the Dumfries Branch, purchased approximately
$6.0 million of mortgage loans, $300 thousand of equipment and other assets and
recorded $328 thousand of intangible assets.
On August 25, 2000, the Company assumed $51.8 million of deposit
liabilities, purchased $3.4 million of mortgage loans and $1.0 million of fixed
assets, and recorded $3.5 million of intangible assets related to the purchase
of the Reston Branch of Resource Bank located in Fairfax County, Virginia (the
"Reston Branch"). In connection with the transaction, the Company also assumed
the lease for the branch location at 1498 North Point Village Center in Reston,
Virginia. The Reston Branch premises consist of approximately 2,600 square feet,
which are under lease through 2013, with additional options to renew for two
successive terms of five years each.
On October 11, 2000, the Company announced it had reached a definitive
agreement to acquire all the outstanding stock of GrandBanc, Inc., (OTC: GDBC)
in a stock-for-stock exchange. The exchange ratio is fixed at 0.3318 shares of
the Company's common stock for each share of GrandBanc, Inc. common stock,
making the overall value of the transaction approximately $8.8 million. The
transaction, which is expected to accounted for as a pooling of interests, is
subject to regulatory and shareholder approvals and is projected to close in the
first quarter of 2001. GrandBanc, Inc., which had $114 million in total assets
at June 30, 2000, is the parent holding company of GrandBank, a Maryland
chartered commercial bank headquartered in Rockville, Maryland; which operates
four banking offices in Montgomery County, Maryland and one banking office in
Arlington County, Virginia.
(3) Investment Securities
Investment securities available-for-sale, and their contractual
maturities, at September 30, 2000 and December 31, 1999 are summarized as
follows:
<TABLE>
<CAPTION>
Amortized Gross Unrealized Gross Unrealized
September 30, 2000 Cost Gains Losses Fair Value
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Obligations of U.S. government agencies:
Within one year $ 15,743,265 $ - $ 55,344 $ 15,687,921
After one, but within five years 24,318,932 138,135 124,836 24,332,231
After five, but within ten years 4,589,790 38,900 - 4,628,690
After ten years 383,296 - 9,208 374,088
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
Total obligations of U.S. government agencies 45,035,283 177,035 189,388 45,022,930
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
Collateralized mortgage obligations 415,472 - 16,351 399,121
Federal Reserve Bank stock 387,200 - - 387,200
Federal Home Loan Bank stock 1,044,900 - - 1,044,900
Atlantic Central Bankers Bank stock 30,000 - - 30,000
Other 1,074,161 - - 1,074,161
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
Total investment securities available-for-sale 47,987,016 $177,035 $205,739 $47,958,312
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
</TABLE>
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<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(3) Investment Securities, continued
<TABLE>
<CAPTION>
Amortized Gross Unrealized Gross Unrealized
December 31, 1999 Cost Gains Losses Fair Value
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Obligations of U.S. government agencies:
Within one year $1,999,974 $ - $ 612 $1,999,362
After one, but within five years 11,241,574 - 129,979 11,111,595
After ten years 427,851 301 12,946 415,206
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
Total obligations of U.S. government agencies 13,669,399 301 143,537 13,526,163
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
Collateral mortgage obligations 477,644 - 11,970 465,674
Federal Reserve Bank stock 311,350 - - 311,350
Federal Home Loan Bank stock 1,317,700 - - 1,317,700
Other 874,162 - - 874,162
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
Total investment securities available-for-sale $16,650,255 $301 $155,507 $16,495,049
-------------------------------------------------- ----------------- ------------------- ------------------- -----------------
</TABLE>
Expected maturities may differ from contractual maturities of
mortgage-backed securities and collateralized mortgage obligations because
borrowers have the right to prepay their obligations at any time.
As a member of the Federal Reserve and Federal Home Loan Bank systems,
Century National Bank is required to hold shares of stock in the Federal Reserve
Bank of Richmond and the Federal Home Loan Bank of Atlanta. In March 2000,
Century National Bank became a member of the Atlantic Central Bankers Bank and
purchased $30,000 of its stock. Those shares, which have no stated maturity, are
carried at cost since no active trading market exists.
Investment securities totaling $37,481,973 and $10,401,128 at September
30, 2000 and 1999, respectively, were pledged to secure FHLBA borrowings, public
deposits, customer repurchase accounts, and other borrowings. Investment
securities available for sale were sold for gross proceeds of $4.9 million in
2000 resulting in no gain or loss. No investment securities were sold during
1999.
Investment securities held-to-maturity at September 30, 2000 and
December 31,1999 are summarized as follows:
<TABLE>
<CAPTION>
Amortized Gross Unrealized Gross Unrealized
September 30, 2000 Cost Gains Losses Fair Value
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Obligations of U.S. government agencies:
After one, but within five years $ 5,999,278 $ - $77,750 $ 5,921,528
After ten years 1,828,346 - 79,352 1,748,994
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
Total obligations of U.S. government agencies 7,827,624 - 157,102 7,670,522
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
Obligations of states and political subdivisions:
After five but within ten years 845,850 47,711 - 893,561
After ten years 7,425,682 347,393 29,435 7,743,640
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
Total obligations of states and political subdivisions 8,271,532 395,104 29,435 8,637,201
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
Corporate bonds 4,319,979 67,740 7,672 4,380,047
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
Total investment securities held-to-maturity $20,419,135 $462,844 $194,209 $20,687,770
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
Amortized Gross Unrealized Gross Unrealized
December 31, 1999 Cost Gains Losses Fair Value
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
Obligations of U.S. government agencies:
Within one year $3,999,138 $ - $37,572 $3,961,566
After ten years 1,967,265 260 91,224 1,876,301
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
Total investment securities held-to-maturity $5,966,403 $260 $128,796 $5,837,867
------------------------------------------------------- ----------------- -------------------- ------------------- ----------------
</TABLE>
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<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(4) Income per Common Share
Basic income per common share is calculated by dividing net income by
the weighted-average common shares outstanding. Diluted income per common share
is calculated by dividing net income by the sum of weighted-average common
shares and potentially dilutive common shares. On February 18, 2000, the Company
declared a 5% stock dividend payable on April 17, 2000, to common stock
shareholders of record as of March 15, 2000, resulting in the issuance of
136,152 shares and a proportionate increase in the number of shares of common
stock issuable upon the exercise of stock options outstanding. The effect of the
April 17, 2000, stock dividend was recognized retroactively in the stockholders'
equity accounts in the consolidated statements of financial condition as of
December 31, 1999. On April 14, 1999, the Company declared a 5% stock dividend
payable on May 28, 1999, to common stock shareholders of record as of April 28,
1999, resulting in the issuance of 129,173 shares and a proportionate increase
in the number of shares of common stock issuable upon the exercise of stock
options outstanding. Weighted-average shares outstanding and all share and per
share data have been restated for the effect of these stock dividends.
In accordance with SFAS No. 128, the calculation of basic income per
common share and diluted income per common share is detailed below:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------------- --------------------------------
September 30, September 30,
-------------------------------- --------------------------------
2000 1999 2000 1999
------------------ ------------- --------------- ----------------
<S> <C> <C> <C> <C>
Basic Income Per Common Share:
Net income $ 424,607 $ 322,563 $ 1,246,929 $ 827,004
Weighted average common shares outstanding 2,737,705 2,804,679 2,729,180 2,833,113
------------------ ------------- --------------- ----------------
------------------ ------------- --------------- ----------------
Basic income per common share $0.16 $0.11 $0.46 $0.29
------------------ ------------- --------------- ----------------
------------------ ------------- --------------- ----------------
Diluted Income Per Common Share:
Net income $ 424,607 $ 322,563 $1,246,929 $ 827,004
Weighted average common shares outstanding 2,737,705 2,804,679 2,729,180 2,833,113
Dilutive effect of stock options 28,609 27,572 22,518 27,812
------------------ ------------- --------------- ----------------
Diluted weighted average
common shares outstanding 2,766,314 2,832,251 2,751,698 2,860,925
------------------ ------------- --------------- ----------------
------------------ ------------- --------------- ----------------
Diluted income per common share $0.15 $0.11 $0.45 $0.29
------------------ ------------- --------------- ----------------
</TABLE>
(5) New Financial Accounting Standards
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," was issued. SFAS 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure these instruments at fair value. In certain circumstances a
derivative may be specifically designed as a hedge of the exposure to changes in
the fair values of a recognized asset or liability or an unrecognized firm
commitment, the exposure to variable cash flows of a forecasted transaction, or
the exposure to fluctuations in foreign currency. SFAS No. 133 will be effective
for all periods beginning after June 15, 2000. Earlier application is permitted,
but the statement shall not be applied retroactively to financial statements of
prior periods. In June 2000, SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities," was issued to amend SFAS No. 133 to
address a limited number of issues related to implementation of SFAS 133. The
implementation of SFAS No. 133, as amended, is not expected to have a material
impact on the Company's consolidated financial statements.
-7-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Century Bancshares, Inc., a Delaware corporation ("Company"), and a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended ("BHCA"), was incorporated and organized in 1985. The Company began
active operations in 1986 with the acquisition of its subsidiary, Century
National Bank ("Bank"), a full service bank which opened for business in 1982.
The Bank provides a broad line of financial products and services to small and
middle market businesses and individuals in the greater Washington, DC
metropolitan area. With the addition of a new branch in Reston, Virginia, in
August 2000, Century currently operates seven full-service banking offices - two
in downtown Washington, four in Northern Virginia and one in Bethesda, Maryland
- a loan production office in Rockville, Maryland and an insurance agency at the
following locations:
International Square Branch (Main office of bank) - 1875 Eye Street, NW,
Washington, DC 20006 Pennsylvania Avenue Branch (Executive offices of Company) -
1275 Pennsylvania Avenue, NW, Washington, DC 20004 McLean Branch - 6832 Old
Dominion Drive, McLean, Virginia 22101 Tysons Corner Branch - 8251 Greensboro
Drive, McLean, Virginia 22102 Bethesda Branch - 7625 Wisconsin Avenue, Bethesda,
Maryland 20814 Dumfries Branch - 18116 Triangle Shopping Plaza, Dumfries,
Virginia 22026 (Acquired October 1999) Century Insurance Agency, LLC - Bank
subsidiary headquartered in Dumfries Branch (Established August 1999) Rockville
(Loan production office) - 1680 E. Gude Drive, Rockville, MD 20851 (Opened
February 2000) Reston Branch - 1498 North Point Village Center, Reston, Virginia
20194 (Acquired August 2000)
The Company's principal executive offices are located at 1275
Pennsylvania Avenue, NW, Washington, DC 20004, and the phone number at that
address is (202) 496-4100.
On October 11, 2000, the Company announced it had reached a definitive
agreement to acquire all the outstanding stock of GrandBanc, Inc., (OTC: GDBC)
in a stock-for-stock exchange. The exchange ratio is fixed at 0.3318 shares of
the Company's common stock for each share of GrandBanc, Inc. common stock,
making the overall value of the transaction approximately $8.8 million. The
transaction, which is expected to be accounted for as a pooling of interests, is
subject to regulatory and shareholder approvals and is projected to be close in
the first quarter of 2001. GrandBanc, Inc., which had $114 million in total
assets at June 30, 2000, is the parent holding company of GrandBank, a Maryland
chartered commercial bank headquartered in Rockville, Maryland which operates
four banking offices in Montgomery County, Maryland and one banking office in
Arlington County, Virginia.
The Company derives substantially all of its revenue and income from
the operation of the Bank, which provides a full range of commercial and
consumer banking services to small and middle market businesses and individuals
in the Washington, DC metropolitan area. As of September 30, 2000, the Company
had total assets of $284.8 million, total deposits of $215.5 million, and
stockholders' equity of $17.1 million. At September 30, 2000, there were
approximately 1,000 shareholders of the Company's common stock, par value $1.00
per share ("Common Stock").
Items 2 and 3 of this report contain certain forward-looking statements
regarding future financial condition and results of operations and the Company's
business operations. The words "may," "intend," "will," "believe," "expect,"
"estimate," "anticipate," "predict" and similar expressions, the negatives of
those words and other variations on those words or comparable terminology, are
intended to identify forward-looking statements. Such statements involve risks,
uncertainties and assumptions and, although the Company believes that such
assumptions are reasonable, it can give no assurance that its expectations
regarding these matters will be achieved. Our actual results may differ
materially from what we expect. The important factors that could cause actual
results to differ materially from the forward-looking statements include,
without limitation, the factors discussed in the Company's Form 10-K for the
year ended December 31, 1999 under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" as well as the
following factors: general economic conditions in the Washington, DC
metropolitan area; changes in interest rates; changes in asset quality; the
effect on the Company of the extensive scheme of regulation by several federal
agencies; the departure of certain key executives; delayed effects of the year
2000 problem; and competition from other providers of financial services. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, such actual outcomes may vary materially from those
indicated.
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Net Income
For the three months ended September 30, 2000, the Company's net income
was $425 thousand, or $0.15 per diluted share, compared with $323 thousand for
the three months ended September 30, 1999, or $0.11 per diluted share. The 32%
increase in net income was primarily attributable to a $594 thousand increase in
net interest income resulting from a 43% increase in average earning assets, and
a $146 thousand increase in noninterest income, which were partially offset by a
$519 thousand increase in noninterest expense and a $165 thousand increase in
provision for credit losses. Return on average assets was 0.68% in the third
quarter of 2000 compared with 0.74% for the same period in 1999. Return on
average stockholders' equity was 10.00% for the three months ended September 30,
2000, compared with 8.25% for the same period in 1999. The ratio of
stockholders' equity to total assets was 6.00% at September 30, 2000 compared
with 7.61% at September 30, 1999.
For the nine months ended September 30, 2000, the Company's net income
was $1.247 million, or $0.45 per diluted share, compared with $827 thousand for
the nine months ended September 30, 1999, or $0.29 per diluted share. The 51%
increase in net income was primarily attributable to a $1.565 million increase
in net interest income resulting from a 33% increase in average earning assets,
and a $357 thousand increase in noninterest income, which were partially offset
by a $1.119 million increase in noninterest expense and a $220 thousand increase
in provision for credit losses. Return on average assets was 0.76% for the nine
months ended September 30, 2000 compared with 0.67% for the same period in 1999.
Return on average stockholders' equity was 10.14% for the nine months ended
September 30, 2000, compared with 7.11% for the same period in 1999. The ratio
of stockholders' equity to total assets was 6.00% at September 30, 2000 compared
with 7.61% at September 30, 1999.
Net Interest Income
For the quarter ended September 30, 2000, net interest income, on a
fully taxable-equivalent basis, was $2.696 million compared with $2.039 million
for the quarter ended September 30, 1999, an increase of $657 thousand, or 32%.
The increase in net interest income between the periods was primarily the result
of a 43% increase in average earning assets partially offset by a 35 basis point
reduction in the net interest margin to 4.64% for the third quarter of 2000 from
4.99% for the same period in 1999. While the yield on average earning assets
increased 59 basis points, the average rate paid on interest-bearing liabilities
increased 97 basis points. Although average earning assets increased
significantly, the increase was about equally distributed between higher
yielding loans and lower yielding earning assets. The average cost of funds
registered a steeper increase, in part due to competitive pressures, a customer
preference for higher-rate money market accounts and time deposits, and to a
greater degree, an increase in wholesale funding and the impact of the trust
preferred issuance in late March 2000 (See "Preferred Securities of Subsidiary
Trust").
For the nine months ended September 30, 2000, net interest income, on a
fully taxable-equivalent basis, was $7.566 million compared with $5.924 million
for the same period last year, an increase of $1.642 million, or 28%. The
increase in net interest income between the periods was primarily the result of
a 33% increase in average earning assets partially offset by a 22 basis point
reduction in the net interest margin to 4.90% for the nine months ended
September 30, 2000 from 5.12% for the same period in 1999. While the yield on
average earning assets increased 34 basis points, the average rate paid on
interest-bearing liabilities increased 60 basis points. Average earning assets
increased significantly, but the increase was about equally distributed between
higher yielding loans and lower yielding investment securities and federal funds
sold. The average cost of funds, however, reflected a steeper increase, in part
due to competitive pressures, a customer preference for higher-rate money market
accounts and time deposits, and to a greater degree, an increase in wholesale
funding and the impact of the trust preferred issuance in late March 2000 (See
"Preferred Securities of Subsidiary Trust").
The following tables set forth the average yields and rates for
interest earned and paid for significant categories of interest earning assets
and interest bearing liabilities, and their average balances, for the three and
nine month periods ended September 30, 2000 and 1999.
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Net Interest Income, continued
AVERAGE BALANCES AND INTEREST YIELDS/RATES
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended September 30,
-----------------------------------------------------------------------------
------------------------------------- ---------------------------------------
2000 1999
------------------------------------- ---------------------------------------
------------- ----------- ----------- ------------ ------------- ------------
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------- ----------- ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest-Earning Assets
Loans, net (1) $161,847 $3,862 9.49% $128,388 $2,873 8.88%
Investment securities (2)(3) 54,283 969 7.10 15,380 219 5.65
Federal funds sold 8,688 143 6.55 4,714 60 5.05
Interest bearing deposits
with other banks 6,344 97 6.08 13,483 171 5.03
------------- ----------- ------------ -------------
Total interest-earning assets 231,162 5,071 8.73% 161,965 3,323 8.14%
(3)
Cash and due from banks 7,668 6,680
Other assets 8,741 3,600
------------- ------------
Total Assets $247,571 $172,245
------------- ------------
Interest-Bearing Liabilities Interest-Bearing Deposits:
NOW accounts $ 22,920 $ 47 0.82% $ 19,368 $ 54 1.11%
Savings accounts 20,925 227 4.32 19,990 212 4.21
Money market accounts 26,989 248 3.66 19,362 150 3.07
Time deposits 68,053 1,011 5.91 51,035 649 5.05
Borrowings and
notes payable 49,403 842 6.78 15,994 219 5.43
------------- ----------- ------------ -------------
Total interest-bearing
liabilities 188,290 2,375 5.02% 125,749 1,284 4.05%
Non-interest bearing deposits 40,067 29,520
Other liabilities 2,325 1,448
------------- ------------
Total liabilities 230,681 156,717
Stockholders' equity 16,890 15,528
------------- ------------
Total liabilities and
stockholders' equity $247,571 $172,245
------------- ------------
----------- -------------
Net interest income and spread $2,696 3.71% $2,039 4.09%
----------- -------------
Net interest margin (3) 4.64% 4.99%
</TABLE>
(1) Non-accrual loan balances are included in the calculation of Average
Balances - Loans, Net. Interest income on non-accrual loan balances is included
in interest income to the extent that it has been collected.
(2) Average balance and average rate for investment securities are computed
based on book value of securities held-to-maturity and amortized cost basis of
securities available-for-sale.
(3) Interest and yield on obligations of state and political subdivisions
included in investment securities are computed on a taxable-equivalent basis
using a federal tax rate of 34%.
-10-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Net Interest Income, continued
AVERAGE BALANCES AND INTEREST YIELDS/RATES
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-----------------------------------------------------------------------------
------------------------------------- ---------------------------------------
2000 1999
------------------------------------- ---------------------------------------
------------- ----------- ----------- ------------ ------------- ------------
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------- ----------- ----------- ------------ ------------- ------------
Interest-Earning Assets
<S> <C> <C> <C> <C> <C> <C>
Loans, net (1) $149,971 $10,478 9.33% $125,629 $8,384 8.92%
Investment securities (2)(3) 36,242 1,841 6.79 12,291 516 5.61
Federal funds sold 11,136 517 6.20 4,766 177 4.97
Interest bearing deposits
with other banks 8,974 400 5.95 11,902 442 4.97
------------- ----------- ------------ -------------
Total interest-earning assets 206,323 13,236 8.57% 154,588 9,519 8.23%
(3)
Cash and due from banks 7,842 6,660
Other assets 5,702 3,593
------------- ------------
Total Assets $219,868 $164,841
------------- ------------
Interest-Bearing Liabilities Interest-Bearing Deposits:
NOW accounts $ 22,489 $ 148 0.88% $ 19,314 $ 169 1.17%
Savings accounts 19,776 616 4.16 20,284 640 4.22
Money market accounts 26,505 697 3.51 20,538 478 3.11
Time deposits 59,638 2,435 5.45 46,238 1,774 5.13
Borrowings and
notes payable 34,977 1,774 6.78 12,533 534 5.70
------------- ----------- ------------ -------------
Total interest-bearing
liabilities 163,385 5,670 4.64% 118,907 3,595 4.04%
Non-interest bearing deposits 37,439 28,801
Other liabilities 2,614 1,588
------------- ------------
Total liabilities 203,438 149,296
Stockholders' equity 16,430 15,545
------------- ------------
Total liabilities and
stockholders' equity $219,868 $164,841
------------- ------------
----------- -------------
Net interest income and spread $7,566 3.93% $5,924 4.19%
----------- -------------
Net interest margin (3) 4.90% 5.12%
</TABLE>
(1) Non-accrual loan balances are included in the calculation of Average
Balances - Loans, Net. Interest income on non-accrual loan balances is included
in interest income to the extent that it has been collected.
(2) Average balance and average rate for investment securities are computed
based on book value of securities held-to-maturity and amortized cost basis of
securities available-for-sale.
(3) Interest and yield on obligations of state and political subdivisions
included in investment securities are computed on a taxable-equivalent basis
using a federal tax rate of 34%.
-11-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Noninterest Income
Noninterest income was $557 thousand in the third quarter of 2000, a
$146 thousand, or 36% increase when compared with the same quarter of 1999,
which was $411 thousand (see table below). The increase between the periods was
primarily due to increases in deposit service charges (53%) resulting from
higher volumes, coupled with service charge fee increases implemented early in
the second quarter of 2000. Increased volumes also resulted in a $29 thousand,
or 15%, increase in credit card and merchant fees in the third quarter of 2000
compared with the same period last year. Mortgage loan origination fees
increased by 40% when compared with same quarter of 1999.
NONINTEREST INCOME
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended September 30,
---------------------------------------------------------------
2000 1999 $ Change % Change
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Service charges on deposit accounts $ 248,846 $162,846 $ 86,000 52.8 %
Credit card and merchant fees 216,694 188,095 28,599 15.2
Mortgage loan origination fees 37,212 26,673 10,539 39.5
Commission and other fee income 50,970 31,872 19,098 59.9
Other income 3,226 1,586 1,640 103.4
--------------- --------------- --------------- ---------------
Total noninterest income $ 556,948 $411,072 $ 145,876 35.5 %
--------------- --------------- --------------- ---------------
</TABLE>
Noninterest income was $1.6 million in the first nine months of 2000, a
$357 thousand increase when compared with the same period of 1999, which was
$1.247 million (see table below). The increase between the periods was primarily
due to increases in deposit service charges, credit card and merchant fees, and
ATM fees (included in commission and other fee income) caused by increased
volumes. The growth in service charges on deposit accounts was also influenced
by service charge fee increases implemented in April 2000.
<TABLE>
<CAPTION>
NONINTEREST INCOME
(Dollars in Thousands)
Nine Months Ended September 30,
---------------------------------------------------------------
2000 1999 $ Change % Change
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Service charges on deposit accounts $ 691,502 $ 491,470 $ 200,032 40.7 %
Credit card and merchant fees 678,275 562,712 115,563 20.5
Mortgage loan origination fees 70,969 60,430 10,539 17.4
Commission and other fee income 147,717 112,056 35,661 31.8
Other income 15,849 20,410 (4,561) (22.3)
--------------- --------------- --------------- ---------------
Total noninterest income $ 1,604,312 $ 1,247,078 $ 357,234 28.6 %
--------------- --------------- --------------- ---------------
</TABLE>
Noninterest Expense
Noninterest expense was $2.3 million in the third quarter of 2000, an increase
of $519 thousand, or 29%, when compared with the same period in 1999 when total
noninterest expense was $1.8 million. The increase in noninterest expense
included a $56 thousand, or 32%, increase in professional fees principally due
to higher consulting fees related to information systems technology and
noninterest income improvement initiatives. An increase in infrastructure
coinciding with the acquisition of the Reston Branch in August 2000, the
Dumfries Branch in October 1999 and the establishment of a loan production
office in February 2000 was accompanied by increases in several noninterest
expense categories including salaries and benefits, which increased $195
thousand, or 27%; deposit premium expense which increased $40 thousand, or 84%;
occupancy and equipment expense which increased $63 thousand, or 32%;
communications expenses which increased $25 thousand, or 28%; and other expenses
which increased $75 thousand, or 41%.
-12-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
The following table sets forth the various categories of, and changes
in, noninterest expense for the three months ended September 30, 2000 and 1999:
NONINTEREST EXPENSE
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended September 30,
---------------------------------------------------------------
2000 1999 $ Change % Change
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Salaries and employee benefits $917,082 $ 721,985 $ 195,097 27.0 %
Occupancy and equipment expense 256,985 194,077 62,908 32.4
Professional fees 230,722 175,077 55,645 31.8
Data processing 342,805 295,024 47,781 16.2
Depreciation and amortization 127,013 112,735 14,278 12.7
Amortization of deposit premiums 87,182 47,385 39,797 84.0
Communications 111,399 86,859 24,540 28.3
Federal deposit insurance premiums 8,999 4,365 4,634 106.2
Other expenses 257,409 182,741 74,668 40.9
--------------- --------------- --------------- --------------
Total noninterest expense $2,339,596 $1,820,248 $519,348 28.5 %
--------------- --------------- --------------- --------------
</TABLE>
Noninterest expense was $6.5 million in the first nine months of 2000,
an increase of $1.119 million, or 21%, when compared with the first nine months
of 1999 when total noninterest expense was $5.4 million. The increase in
noninterest expense included a $205 thousand, or 39%, increase in professional
fees primarily due to legal fees incurred associated with the trust preferred
issuance and higher consulting fees related to information systems technology.
An increase in infrastructure coinciding with the Company's expansion activities
was accompanied by increases in several noninterest expense categories including
salaries and benefits, which increased by $408 thousand, or 19%; occupancy and
equipment which increased by $118 thousand, or 19%; data processing which
increased $195 thousand, or 23%; and communications which increased by $48
thousand, or 19%.
The following table sets forth the various categories of, and changes
in, noninterest expense for the nine months ended September 30, 2000 and 1999:
NONINTEREST EXPENSE
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------------------------------------
2000 1999 $ Change % Change
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Salaries and employee benefits $2,514,659 $2,106,431 $408,228 19.4 %
Occupancy and equipment expense 732,203 614,629 117,574 19.1
Professional fees 727,887 523,275 204,612 39.1
Data processing 1,035,666 840,510 195,156 23.2
Depreciation and amortization 353,544 340,181 13,363 3.9
Amortization of deposit premiums 202,386 142,153 60,233 42.4
Communications 305,273 256,787 48,486 18.9
Federal deposit insurance premiums 23,691 13,021 10,670 81.9
Other expenses 625,375 564,945 60,430 10.7
--------------- --------------- --------------- --------------
Total noninterest expense $6,520,684 $5,401,932 $1,118,752 20.7 %
--------------- --------------- --------------- --------------
</TABLE>
-13-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Investments
The Company's investment portfolio of $68.4 million as of September 30,
2000 consisted mostly of U.S. Government Agency obligations supplemented by
municipals and corporate bonds. This represented an increase of $45.9 million,
or 204%, compared with the investment portfolio total of $22.5 million at
December 31, 1999. The increase during the first nine months of 2000 was
reflective of the execution of $10 million in wholesale leveraging transactions,
the investment of the proceeds from the trust preferred issuance and the
investment of a portion of the proceeds from the Reston Branch purchase. (see
Note 2-- "Acquisition Activities" and Note 3--"Investment Securities" and
"Preferred Securities of Subsidiary Trust").
Loans
The Company presently is, and in the future expects to remain, a middle
market banking organization serving professionals and businesses with interests
in and around the Washington, DC metropolitan area. Most of the Company's loan
portfolio is collateralized by first mortgages on commercial or residential real
estate or home equity lines of credit on residential real estate. The loan
portfolio increased $41.6 million, or 30%, since December 31, 1999 due to strong
demand. As of September 30, 2000 and 1999, approximately $129.5 million, or 72%
and $85.8 million, or 65%, respectively, of the Company's total loan portfolio
consisted of loans secured by real estate. As of September 30, 2000 and 1999,
1-to-4 family residential mortgage loans and home equity lines of credit
represented $44.2 million, or 25%, and $34.6 million, or 26%, respectively, of
the Company's total loan portfolio. Given the localized nature of the Company's
lending activities, the primary risk factor affecting the portfolio as a whole
is the health of the local economy and its effects on the value of local real
estate. The Company mitigates this risk by maintaining strong underwriting
guidelines.
The following table sets forth the composition of the Company's loan
portfolio by type of loan on the dates indicated:
LOAN PORTFOLIO ANALYSIS
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
------------------------------ ---------------
-------------- --------------- ---------------
2000 1999 1999
-------------- --------------- ---------------
-------------- --------------- ---------------
<S> <C> <C> <C>
Aggregate Principal Amount
Type of loan:
1-4 family residential mortgage $30,445 $25,541 $24,926
Home equity loans 13,803 9,074 9,724
Multifamily residential 2,202 2,441 2,635
Construction 8,856 4,559 4,425
Commercial real estate 74,185 44,153 48,242
Commercial loans 39,496 34,615 37,585
Installment and credit card loans 10,257 10,748 10,175
Other loans 468 564 437
-------------- --------------- ---------------
Gross loans 179,712 131,695 138,149
Less: unearned income and deferred costs 28 47 73
-------------- --------------- ---------------
Total loans, net of unearned $179,684 $131,648 $138,076
-------------- --------------- ---------------
Percentage of Loan Portfolio
Type of loan:
1-4 family residential mortgage 16.9% 19.4% 18.1%
Home equity loans 7.7 6.9 7.0
Multifamily residential 1.2 1.8 1.9
Construction 4.9 3.5 3.2
Commercial real estate 41.3 33.5 34.9
Commercial loans 22.0 26.3 27.2
Installment and credit card loans 5.7 8.2 7.4
Other loans 0.3 0.4 0.3
-------------- --------------- ---------------
Gross loans 100.0% 100.0% 100.0%
-------------- --------------- ---------------
</TABLE>
-14-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Asset Quality
In originating loans, the Company recognizes that credit losses will be
experienced and the risk of loss will vary with, among other things, general
economic conditions, the type of loan being made, the creditworthiness of the
borrower over the term of the loan and, in the case of a collateralized loan,
the quality of the collateral for such loan. The Company maintains an allowance
for credit losses based upon, among other things, such factors as historical
experience, the volume and type of lending conducted by the Company, the amount
of nonperforming assets, regulatory policies, generally accepted accounting
principles, general economic conditions, and other factors related to the
collectibility of loans in the Company's portfolios. 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 that are contractually past due and after considering the net
realizable value of the collateral for the loan.
Management actively monitors the Company's asset quality in a
continuing effort to charge off loans against the allowance for credit losses
when appropriate and to provide specific loss allowances when necessary.
Although management believes it uses the best information available to make
determinations with respect to the allowance for credit losses, future
adjustments may be necessary if actual economic conditions and other assumptions
differ from those used in making the initial determinations. At September 30,
2000, the allowance for credit losses was $1.7 million, or 0.93% of total loans
compared with $1.4 million, or 1.03% of total loans as of September 30, 1999.
The combined effect of substantial loan growth and the utilization of specific
reserves associated with nonperfoming loan balances charged-off during the
quarter resulted in an overall decline in the ratio of allowance for credit
losses to total loans. However, management believes the allowance at September
30, 2000 is adequate to absorb estimated probable credit losses based on the
evaluation factors described above. The allowance for credit losses as a
percentage of nonperforming loans was 142% at September 30, 2000, compared to
178% at September 30, 1999.
Total nonperforming loans were $1.2 million at September 30, 2000,
compared with $760 thousand at September 30, 1999. At September 30, 2000, most
of the non-accrual loan balances ($995 thousand of $1.043 million) consisted of
two borrowing relationships. The Company has accelerated collection efforts with
regard to these borrowing relationships. The remaining balances of the loans
represented by these two relationships are, in the opinion of the Company, well
secured by first liens on real property within the Company's market area.
Provisions for credit losses are charged to income to bring the total
allowance for credit losses to a level deemed appropriate by management, based
on the factors identified above. The provision for credit losses during the
first nine months of 2000 was $655 thousand compared with $435 thousand for the
same period last year, an increase of $220 thousand, or 51%. The increase in the
provision is reflective of the 30% growth in loans outstanding in the past
twelve months, coupled with an increase in net charge-offs. Net charge-offs for
the nine months ended September 30, 2000 were $507 thousand compared with $212
thousand for the same period last year. These trends, taken into consideration
with other factors in the Company's internal analysis of the valuation allowance
for credit loss, have led to increased reserve requirements and a resulting
provision expense to maintain the allowance at a level deemed appropriate by
management of the Company (see table on the following page).
-15-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Nonperforming Loans
The following table sets forth certain information with respect to the
Company's non-accrual loans, other real estate owned and accruing loans which
are contractually past due 90 days or more as to principal or interest, for the
periods indicated:
<TABLE>
<CAPTION>
NONPERFORMING ASSETS
(Dollars in Thousands)
September 30, December 31,
------------------------ ---------------
---------------
2000 1999 1999
----------- ------------ ---------------
<S> <C> <C> <C>
Non-accrual loans $1,043 $693 $515
Accruing past due 90 days or more 134 67 -
----------- ------------ ---------------
Total nonperforming loans 1,177 760 515
Other real estate owned - - -
----------- ------------ ---------------
Total nonperforming assets $1,177 $760 $515
----------- ------------ ---------------
Nonperforming assets to total assets 0.41% 0.38% 0.37%
Nonperforming loans to total loans 0.66% 0.58% 0.25%
</TABLE>
Allowance for Credit Losses
The Company maintains an allowance for credit losses based upon, among
other things, such factors as historical experience, the volume and type of
lending conducted by the Company, the amount of nonperforming assets, regulatory
policies, generally accepted accounting principles, general economic conditions,
and other factors related to the collectibility of loans in the Company's
portfolio. Although management believes it uses the best information available
to make determinations with respect to the allowance for credit losses, future
adjustments may be necessary if such factors and conditions differ from the
assumptions used in making the initial determinations. Based upon criteria
consistently applied during the periods, the Company's allowance for credit
losses was $1.7 million or, 0.93% of total loans as of September 30, 2000.
-16-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Allowance for Credit Losses, continued
The following table sets forth an analysis of the Company's allowance
for credit losses for the periods indicated:
<TABLE>
<CAPTION>
ALLOWANCE FOR CREDIT LOSSES
(Dollars in Thousands)
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------------ -----------------------------------------
2000 1999 2000 1999
----------------- ------------------ -------------------- --------------------
<S> <C> <C> <C> <C>
Average net loans outstanding $161,847 $128,388 $149,971 $125,629
Loans outstanding at period-end 179,684 131,648 179,684 131,648
Total nonperforming loans 1,177 760 1,177 760
----------------- ------------------ -------------------- --------------------
Beginning balance of allowance $1,743 $1,409 $1,519 $1,128
Loans charged-off:
Commercial loans 315 119 476 156
Installment and credit card loans 39 52 61 72
----------------- ------------------ -------------------- --------------------
Total loans charged off 354 171 537 228
Recoveries of previous charge-offs:
1-4 family residential mortgage 1 1 3 4
Commercial loans - - 20 -
Installment and credit card loans 2 2 7 12
----------------- ------------------ -------------------- --------------------
Total recoveries 3 3 30 16
----------------- ------------------ -------------------- --------------------
Net loans charged-off 351 168 507 212
Provision for credit losses 275 110 655 435
----------------- ------------------ -------------------- --------------------
Balance at end of period $1,667 $1,351 $1,667 $1,351
----------------- ------------------ -------------------- --------------------
Net charge-offs to average loans (annualized) 0.86% 0.52% 0.47% 0.23%
Allowance as % of total loans 0.93% 1.03% 0.93% 1.03%
Nonperforming loans as % of total loans 0.66% 0.58% 0.66% 0.58%
Allowance as % of nonperforming loans 142% 178% 142% 178%
</TABLE>
-17-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Deposits
The Company's total deposits at September 30, 2000, were $215.5
million, an increase of $78.1 million, or 56.8%, over the balance at September
30, 1999, and an increase of $61.6 million, or 40.1% compared with 1999's
year-end balance. These increases include the effect of the Reston Branch
purchase in August 2000. Total average deposits were $165.8 million for the nine
months ended September 30, 2000, an increase of $30.7 million, or 23%, compared
with the first nine months of 1999. The Company views deposit growth as a
significant challenge in its effort to increase its asset size. Thus, the
Company is focusing on its branching program with increased emphasis on
commercial accounts, and the offering of more competitive interest rates and
products to stimulate deposit growth. This strategy has and will continue to
result in a relatively higher cost of funds in addition to lower fee income as
many of these commercial customers may utilize accounts with lower transaction
costs and have a lower number of transactions than retail customers.
The following table sets forth the average balances and weighted
average rates for the Company's categories of deposits for the periods
indicated:
<TABLE>
<CAPTION>
AVERAGE DEPOSITS
(Dollars In Thousands)
Nine Months Ended September 30,
-----------------------------------------------------------------------------
------------------------------------ -- -------------------------------------
2000 1999
------------------------------------ -- -------------------------------------
Weighted Weighted
Average Average % of Average Average % of
Balance Rate Total Balance Rate Total
----------- ------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-Bearing Deposits $37,439 0.00% 22.6% $28,801 0.00% 21.3%
Interest-Bearing Deposits:
NOW accounts 22,489 0.88 13.5 19,314 1.17 14.3
Savings accounts 19,776 4.16 11.9 20,284 4.22 15.0
Money market accounts 26,505 3.51 16.0 20,538 3.11 15.2
Time deposits 59,638 5.45 36.0 46,238 5.13 34.2
----------- ----------- ------------ -----------
Total $165,847 100.0% $135,175 100.0%
----------- ----------- ------------ -----------
Weighted Average Rate 3.14% 3.03%
------------ ------------
</TABLE>
Preferred Securities of Subsidiary Trust
Transaction Structure
During the first quarter of 2000, the Company formed a new, wholly
owned statutory business trust, Century Capital Trust I (the "Trust"), which
issued $8.8 million of capital securities (the "Capital Securities") to a third
party. The Trust invested the proceeds in an equivalent amount of junior
subordinated debt securities of the Company bearing an interest rate equal to
the rate on the Capital Securities. These debt securities, which are the only
assets of the Trust, are subordinate and junior in right of payment to all
present and future senior indebtedness (as defined in the indenture) and certain
other financial obligations of the Company. The Company has fully and
unconditionally guaranteed the Trust's obligations under the Capital Securities.
For financial reporting purposes, the Trust is treated as a subsidiary
of the Company and consolidated in the corporate financial statements. The
Capital Securities are presented as a separate category of long-term debt on the
Condensed Consolidated Statement of Financial Condition entitled " Preferred
Securities of Subsidiary Trust." The Capital Securities are not included as a
component of stockholders' equity in the Condensed Consolidated Statement of
Financial Condition. For regulatory purposes, however, the Federal Reserve Board
treats the Capital Securities as Tier I or Tier 2 capital.
-18-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Preferred Securities of Subsidiary Trust, continued
The Capital Securities pay cash distributions semiannually at an annual
rate of 10.875% of the liquidation preference. Distributions to the holders of
the Capital Securities are included in interest expense, within the category
entitled "Interest on borrowings." Under the provisions of the subordinated
debt, the Company has the right to defer payment of interest on the subordinated
debt at any time, or from time to time, for periods not exceeding five years. If
interest payments on the subordinated debt are deferred, the distributions on
the Capital Securities are also deferred. Interest on the subordinated debt is
cumulative.
Subject to the prior approval of the Federal Reserve Board, the Capital
Securities, the assets of the Trust, and the common securities issued by the
Trust are redeemable at the option of the Company in whole or in part on or
after March 8, 2010, or at any time, in whole but not in part, from the date of
issuance, upon the occurrence of certain events.
Impact on Financial Condition and Results of Operations
The treatment of the Capital Securities as Tier I or Tier 2 capital, in
addition to the ability to deduct the expense of the junior subordinated debt
securities for federal income tax purposes, provided the Company with a
cost-effective method of raising capital to support continued expansion
activities in the Washington, DC metropolitan area through the establishment
and/or acquisition of additional branch offices and possible corporate
acquisitions.
The Company received net proceeds of $8.536 million from the issuance
of the Capital Securities. As of September 30, 2000, the Company had invested
$7.5 million of those proceeds in common stock and subordinated debt of its
subsidiary, Century National Bank (the "Bank"). Such investment increased the
Bank's capital position in support of the Bank's loan growth and its acquisition
of the Reston Branch. The remaining $1.036 million of net proceeds from the
Capital Securities was held in cash at the holding company level as of September
30, 2000.
Taking the underwriting discount into account, the Capital Securities
have an effective interest cost to the Company of 11.1% per annum. To mitigate
the negative impact of this interest cost on the Company's consolidated net
income, the Bank invested $8.465 million of its liquid assets in a diversified
portfolio of investment-grade corporate and municipal obligations with a
weighted-average taxable-equivalent yield of 9.11%. Additionally, the Bank
entered into two wholesale leveraging transactions in which it borrowed a total
of $10 million at a weighted-average cost of 6.44 % and invested the proceeds in
federal agency and municipal obligations with a weighted-average
taxable-equivalent yield of 7.99%.
From a financial ratio standpoint, these transactions, incrementally,
had a negative impact on the Company's return on assets and net interest margin
for the three-month and nine-month periods ended September, 2000 in comparison
to the same periods last year because the transactions reduced
taxable-equivalent net interest income while increasing the level of earning
assets.
Capital Resources
Total stockholders' equity at September 30, 2000, was $17.1 million, an
increase of $1.4 million compared with total stockholders' equity of $15.7
million at December 31, 1999. Stockholders' equity was increased during the
first nine months of 2000 by net income of $1.247 million; $129 thousand
received from the exercise of stock options; and $82 thousand in unrealized
gains on investment securities available for sale, net of the tax effect; and
was reduced by $39 thousand paid to acquire treasury stock.
The Office of the Comptroller of the Currency has established certain
minimum risk-based capital standards that apply to national banks, and the
Company is subject to certain capital requirements imposed on bank holding
companies by the Federal Reserve Board. At September 30, 2000, Century National
Bank exceeded all applicable regulatory capital
-19-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Capital Resources, Continued
requirements for classification as a "well capitalized" bank, and the Company
satisfied all applicable regulatory requirements imposed on it by the Federal
Reserve Board.
At September 30, 2000, the Company's risk based capital ratios for Tier
I Capital to risk weighted assets, Total Capital to risk weighted assets, and
Tier 1 Capital to average assets were 8.82%, 11.20% and 7.29%, respectively.
Year 2000 Compliance
Transition and Ongoing Plans. The Company experienced no failures in
any system or product upon the date change from December 31, 1999 to January 1,
2000. Although many of the critical dates have passed, some experts predict that
Year 2000 related failures could occur throughout the year. Accordingly, the
Company's project team will continue to monitor the Company's systems and
attempt to identify any potential problems during the course of the year. In
addition, the Company will continue to monitor the Year 2000 compliance of the
third parties with which the Company transacts business. The Company continues
to maintain its contingency plans with respect to Year 2000 related issues and
believes that if its own systems should fail, it could temporarily convert to a
manual systems for mission critical business functions.
Liquidity
The Company's Asset/Liability Management Policy is intended to maintain
adequate liquidity for the Company and thereby enhance its ability to raise
funds to support asset growth, meet deposit withdrawals and lending needs,
maintain reserve requirements and otherwise sustain operations. The Company
accomplishes this primarily through management of the maturities of its
interest-earning assets and interest-bearing liabilities. The Company believes
that its present liquidity position is adequate to meet its current and future
needs.
Asset liquidity is provided by cash and assets which are readily
marketable, or which can be pledged, or which will mature in the near future.
The asset liquidity of the Bank is maintained in the form of vault cash, demand
deposits with commercial banks, federal funds sold, interest-bearing deposits
with other financial institutions, short-term investment securities, other
investment securities available-for-sale, and short-term loans. The Company has
defined "cash and cash equivalents" as those amounts included in cash and due
from banks and federal funds sold. At September 30, 2000, the Company had cash
and cash equivalents of $20.5 million, a slight increase when compared with the
$20.2 million at December 31, 1999.
Liability liquidity is provided by access to core funding sources,
principally customers' deposit accounts in the Company's market area. As a
member of the Federal Home Loan Bank of Atlanta ("FHLBA"), the Company is able
to borrow up to 20% of its assets, on a short-term or long-term basis, secured
by a blanket pledge of its 1-to-4-family residential mortgage loans, investment
securities, and other collateral. The Company also has lines of credit from
larger correspondent banks to borrow excess reserves on an overnight basis
(known as "federal funds purchased") in the amount of $5.7 million, and to
borrow on a secured basis ("repurchase agreements") in the amount of $5.0
million. At September 30, 2000, the Company had no outstanding federal funds
purchased, and $20.1 million in customer repurchase agreements. Also at
September 30, 2000, the Company was utilizing $20.6 million of available FHLBA
credit in the form of fixed-rate ($17.6 million) and variable-rate ($3.0
million) advances with an average cost of 6.25%. The Company utilizes fixed rate
term credit advances from the FHLBA to fund fixed-rate real estate loans and
investments of comparable terms and maturities.
The Company had cash on hand of $1.6 million at the holding company
level at September 30, 2000. The Company anticipates using these funds as
working capital available to support the future growth of the franchise as well
as to pay normal operating expenses and dividends on the Capital Securities (see
"Preferred Securities of Subsidiary Trust"). Working capital is further
augmented by dividends available from the Bank, subject to certain regulatory
restrictions generally applicable to national banks.
-20-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's principal market risk exposure is to interest rates.
Net interest income, which constitutes the principal source of income
for the Company, represents the difference between interest income on
interest-earning assets and interest expense on interest-bearing liabilities.
The difference between the Company's interest-rate sensitive assets and
interest-rate sensitive liabilities for a specified time frame is referred to as
an interest sensitive "gap." Interest rate sensitivity reflects the potential
effect on net interest income of a movement in interest rates. A financial
institution is considered to be asset sensitive, or having a positive gap, when
the amount of its interest-earning assets maturing or repricing exceeds the
amount of its interest-bearing liabilities also maturing or repricing within
that time period. Conversely, a financial institution is considered to be
liability sensitive, or having a negative gap, when the amount of its
interest-bearing liabilities maturing or repricing exceeds the amount of its
interest-earning assets within the same time period. During a period of rising
(falling) interest rates, a positive gap would tend to increase (decrease) net
interest income, while a negative gap would tend to decrease (increase) net
interest income.
Management seeks to maintain a balanced interest rate risk position to
protect its net interest margin from market fluctuations. Toward this end, the
Company has a Finance Committee which reviews, on a regular basis, the maturity
and repricing of the assets and liabilities of the Company. The Finance
Committee has adopted the objective of achieving and maintaining a one-year
cumulative GAP, as a percent of total assets, of between plus 10% and minus 10%.
In addition, potential changes in net interest income under various interest
rate scenarios are monitored. On a consolidated basis, the Company's one-year
cumulative gap was a negative 4.1% of total assets at September 30, 2000.
Market risk is the risk of loss from adverse changes in market prices
and rates, arising primarily from interest rate risk in the Company's
portfolios, which can significantly impact the Company's profitability. The
Finance Committee has adopted the objective that an immediate increase or
decrease of 200 basis points in market interest rates should not result in a
change of more than 10% (plus or minus) in the Company's projected net interest
income over the next twelve months, and not more than 20% (plus or minus) in
projected net income over such period. At September 30, 2000, the forecasted
impact of an immediate increase (or decrease) of 200 basis points would have
resulted in an increase (or decrease) in net interest income over a twelve month
period of 0.75% and (3.33%), respectively, and an increase (or decrease) in net
income over a twelve month period of 2.87% and (12.75%), respectively. Due to
the impact of certain assets acquired and liabilities assumed with the Reston
Branch purchase in August 2000 and the resultant utilization of the proceeds
from the transaction in a combination of loans and investments, some minor
shifts in the magnitude and direction of forecasted net interest income changes
has been noted in comparison to the forecasted results as of June 30, 2000;
however, all forecasted simulations are well within policy guidelines.
Since there are limitations inherent in any methodology used to
estimate the exposure to changes in market interest rates, the analysis included
herein is not intended to be a forecast of the actual effect of a change in
market interest rates on the Company. The analysis is based on the Company's
assets and liabilities as of September 30, 2000 and does not contemplate any
actions the Company might undertake in response to changes in market interest
rates, which could change the anticipated results.
-21-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed with this report:
Exhibit 10.1 Lease Agreement between Reston North Point Village Limited
Partnership, Lessor, and Eastern American Bank, F.S.B.,
assumed by Century National Bank, August 25, 2000.
Exhibit 11 Computation of Earnings Per Share for the three-and nine-month
periods ended September 30, 2000.
Exhibit 27 Financial Data Schedule, September 30, 2000.
(b) Reports on Form 8-K.
A current report on Form 8-K was filed on September 8, 2000, regarding
the consummation of the purchase of certain assets and assumption of certain
deposits and other liabilities of the Reston Branch of Resource Bank.
A current report on Form 8-K was filed on October 12, 2000 announcing the
signing of a definitive agreement whereby the Company will acquire
GrandBanc, Inc. in a stock-for-stock exchange.
-22-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
For Quarter Ended September 30, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY BANCSHARES, INC.
Date: November 8, 2000 By: /s/ JOSEPH S. BRACEWELL
-----------------------
Joseph S. Bracewell
Chairman of the Board, President and
Chief Executive Officer
Date: November 8, 2000 By: /s/ DALE G. PHELPS
-----------------------
Dale G. Phelps
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
-23-
<PAGE>
CENTURY BANCSHARES, INC.
EXHIBIT INDEX
September 30, 2000
The following exhibits are filed within this report.
Exhibit
Number Description
------ -----------
10.1 Lease Agreement between Reston North Point Village Limited
Partnership, Lessor, and Eastern American Bank, F.S.B.,
assumed by Century National Bank, August 25, 2000.
11 Computation of Earnings Per Share for the three- and nine-month
periods ended September 30, 2000.
27 Financial Data Schedule, September 30, 2000.
-24-
<PAGE>
EXHIBIT 10.1
LEASE AGREEMENT
BETWEEN
RESTON NORTH POINT VILLAGE LIMITED PARTNERSHIP, LESSOR
AND
EASTERN AMERICAN BANK, F.S.B., LESSEE
DATED: July 19,1993
1. TERM
2. MINIMUM RENTAL
3. AUTHORITY/SUBORDINATION/NONDISTURBANCE/ATTORNMENT
4. ADDITIONAL RENTS
5. COMMON AREA MAINTENANCE AND COMMON AREAS
6. ALTERATIONS AND CONSTRUCTION
7. SIGNS AND ADVERTISING
8. END OF TERM/REMOVAL OF PROPERTY/RESTORATION
9. DEFAULT
10. LIENS
11. REMEDIES
12. INSURANCE AND INDEMNITY
13. DAMAGE AND DESTRUCTION
14. REPAIRS, MAINTENANCE, AND LESSOR'S ACCESS
15. CONDEMNATION
16. USE AND OPERATION OF THE LEASED PREMISES
17. SUBLEASE/ASSIGNMENT
18. LESSOR REPRESENTATIONS
19. NOTICE
20. WAIVER, OMISSION
21. HOLDOVER
22. ENTIRE AGREEMENT
23. MARKETING FUND
24. TIME IS OF THE ESSENCE
25. RENEWAL TERMS
26. ENVIRONMENTAL
27. ADA - NOTICE INDEMNIFICATION
28. BANKRUPTCY AND INSOLVENCY
29. TITLE: SALE OF LEASED PREMISES BY LESSOR
30. MISCELLANEOUS PROVISIONS
<PAGE>
LEASE
THIS LEASE made this 19th day of July 1993, by and between RESTON NORTH
POINT VILIAGE LIMITED PARTNERSHIP (herein called "Lessor") and EASTERN AMERICAN
BANK, F.S.B., a Virginia corporation (herein called "Lessee"), provides that
Lessor does hereby lease and demise to Lessee the following described real
estate and any improvements located thereon described later herein, together
with the non-exclusive right to use the Common Areas (defined below) and
nonexclusive easements for parking and for ingress to and egress from the Leased
Premises by the employees, customers and invitees of Lessee, over and on any
driveways, parking lots and walkways presently existing or to be constructed on
Lessor's property surrounding the Leased Premises and known as North Point
Village Center, Reston, Virginia, as later herein described:
The "Leased Premises" or "Premises" refers to approximately 28,000 square feet
of land area to permit the construction of a bank office of up to 2,500 square
feet of usable, interior building area excluding any canopy area, outlined in
red on Exhibit A-1 and A-2, which is part of that certain shopping center
("Shopping Center" or the "Center") which Lessor intends to construct or cause
to be constructed presently known as North Point Village Center, located or to
be located at the intersection of Lake Newport Road and Reston Parkway, Reston,
Virginia. Lessee acknowledges that the portion of the Leased Premises depicted
on Exhibit A-1 and outside of Lessee's Building Improvement Area (hereinafter
defined) will form a part of the Common Area (as herein defined) of the Shopping
Center.
REFERENCE PROVISIONS, DEFINITIONS AND EXHIBITS
As used in the Lease, the following terms shall have the meanings set
forth below:
Common Areas: means those portions of the Shopping Center, whether
owned or leased by Lessor made available, for the common use and enjoyment of
Lessee and other occupants or users of the Shopping Center. Common Areas shall
include any improvements, equipment, areas and/or spaces for the non-exclusive,
common and joint use which have, from time to time (as the same may be enlarged,
reduced, replaced, increased, removed or otherwise altered by Lessor without
material reduction or diminution), been designated by Lessor for common use by
or for the benefit of all occupants of the Shopping Center.
The Common Areas shall include, without limitation, Lessee's Common
Improvement Area and any other area used for parking, access roads, driveways,
entrances and exits, retaining walls not otherwise maintained by a lessee,
landscaped areas, truck serviceways, loading docks, ramps and sidewalks, comfort
bus stops, park and ride facilities, and first aid stations, utilities and
related utility lines and meters (including those serving the Leased Premises
but not on the Leased Premises, management offices, the offices used by the
various Reston Community Groups and Merchants' Association offices (but not in
excess of three thousand (3,000) square feet) , public washrooms, parcel pick-up
stations, on-site signs identifying or advertising the Shopping Center and any
maintenance buildings and equipment rooms presently located or hereafter
constructed in the Shopping Center, provided that except as specified in this
Lease nothing herein shall be understood as requiring Lessor to at any time
construct any or all of the foregoing improvements or facilities in the Shopping
Center.
Any portions of the Shopping Center so included within common use, and
any portion thereof not theretofore included within Common Areas shall be
included when so designated by Lessor for common use. Notwithstanding the above,
the roof, exterior walls, and those areas within the Shopping Center which house
mechanical, electrical or other equipment or are otherwise determined at any
time by Lessor to be used in operating and maintaining the Shopping Center shall
be reserved for Lessor's exclusive use.
Common Area Charges: means all of the reasonable costs and expenses
which are incurred by Lessor in connection with the operation and maintenance of
the Common Areas, including, but not limited to, costs incurred for operating,
equipping, cleaning, painting, repairing, replacing and maintaining the Shopping
Center and the Common Areas, including, but not limited to, those areas of the
Shopping Center which house mechanical, electrical or other equipment serving
the Shopping Center as a whole or are otherwise determined from time to time by
Lessor to be used in operating or maintaining the Shopping Center. "Common Area
Charges" include, but are not limited to, any premiums, fees and other charges,
including insurance maintained by Lessor with respect to the Shopping Center,
the cost of maintaining, repairing, and replacing and repaving (when necessary)
the Common Areas; removing snow, ice, and debris from the roadways and parking
areas; maintaining and repairing or repainting (when necessary) directional
signs, pavement markings, and parking lot striping; repairing and replacing
(when necessary) outdoor lighting facilities; cutting fertilizing and watering
the grass and otherwise caring for and replanting (when necessary) all shrubbery
and landscape areas; maintaining and monitoring sprinkler system (when
necessary) to provide fire protection; providing such security as Lessor, in its
sole discretion deems advisable; operating, maintaining, repairing and replacing
ducts, conduits, fire protection systems, roofs, storm and sanitary drainage
systems and other utility systems, on and off-site traffic regulation and
control signs and devices, and compliance with all laws and regulations;
seasonal decorations; all replacement and improvements of or to the Common Areas
including, without limitation, floors, escalators, elevators, and similar
facilities; machinery and equipment; all license and permit fees and any and all
<PAGE>
parking surcharges; music program services and loudspeaker systems; all costs
and expenses relating to the employment of personnel (to the extent such
personnel are on-site at the Shopping Center and their duties relate directly to
the operation of the Shopping Center), including, without limitation, the
salaries, benefits and insurance costs of such personnel; all utility costs
relating to the Common Areas; and Lessor's administrative charge in an amount
equal to fifteen percent (15%) of the total of all other Common Area Charges.
"Common Area Charges" do not include Taxes; payments of principal and interest
or rent by Lessor on any mortgages or ground leases; allowances for depreciation
or cost recovery; items for which other lessees are responsible for under their
respective leases; leasing commissions or other costs of procuring or retaining
tenants; legal and accounting fees (other than fees relating directly to the
Common Areas or the operation of the Shopping Center); capitalized improvements
which are required to be capitalized under standard accounting principles for
federal tax purposes; the cost of any tenant build-out for other lessees of the
Shopping Center; compensation for officers and executive level personnel of
Lessor; costs resulting from the negligence of Lessor or its employees, agents,
or contractors; costs which are or should be covered by insurance required to be
maintained by Lessor hereunder; costs relating to defense of title to the
Shopping Center; the costs of Lessor's violation of any law or regulation;
increased insurance costs not caused by Lessee; penalties, costs and interest
caused by any late payment of Taxes; costs of any structural repairs to the
Common Areas or the Shopping Center; costs for which Lessor is reimbursed
directly by other lessees or other persons; depreciation or amortization of the
improvements erected upon the Shopping Center and the Common Areas; repairs or
rebuilding necessitated by condemnation; and cost of goods and services provided
by persons related to or affiliated with Lessor, to the extent such costs
materially exceed those which Lessor would have paid had those goods and
services been provided by person unrelated to Lessor, costs relating to the
operation of Lessor separate and apart from the shopping Century and costs
associated with the maintaining any mechanical systems serving only the non-pad
retail stores. Lessee shall have the right, once per Lease Year, to audit the
Lessor's books and records as it pertains to the common Area Charges for the
Shopping Center on ten (10) business days prior written notice. In the event
that the results of such audit indicate that Common Areas Charges were actually
less than as set forth in Lessor's Actual Common Area Statement (as described in
Section 5(c) hereof), Lessor shall promptly upon demand refund the difference
between the amounts previously paid by Lessee toward Common Area Charges and
Lessee's Actual Common Area Statement exceed actual Common Area Charges by more
than five percent (5%), Lessor shall promptly upon demand (i) reimburse Lessee
for the costs of its audit, and (ii) pay Lessee a penalty equal to five percent
(5%) of the excess.
Lessee's Control Area. "Lessee's Control Area" means that portion of
the Shopping Center cross-hatched in green on Exhibit A-2.
Design Review Board of the Reston Association: For purposes of this
Lease, the "Design Review Board", which hereinafter may be referred to as "DRB",
shall mean and refer to that board of the Reston Association given authority
under the declaration of covenants for the town of Reston, Virginia, to review
and approve all development therein.
Floor Area. Unless otherwise specifically set forth in this Lease,
"Floor Area" when used with respect to Lessee's Building or when used with
respect to any other space in the Shopping Center (or the entire Shopping
Center), shall mean the actual number of leasable square feet as shown on the
"as built" plans prepared by Lessor's or Lessee's architect as the case may be.
The floor Area of the Shopping Center shall specifically exclude: (i)
mezzanines, and (ii) all warehouse or storage areas, management offices, meter
rooms, and community offices used by the Reston community. Floor Area shall be
measured to the exterior face of all exterior walls.
Interest: Unless otherwise specified, a rate per annum equal to one (1)
percentage point above the prime rate, published in The Wall Street Journal (or
if more than one rate is published, the average prime rate). Interest shall
change on and as of each day on which a change in the prime rate occurs. If
accrual or payment of such interest rate is unlawful, then Interest shall be
equal to the maximum lawful rate.
Lease Year: If the Term Commencement Date occurs on the first day of a
calendar month, the period beginning on the Term Commencement Date and
terminating on the last day of the twelfth full calendar month thereafter and
each succeeding period of twelve (12) full calendar months during the Term. If
the Term Commencement Date does not occur on the first day of a calendar month,
then the period beginning on the first day of the next succeeding calendar month
and terminating on the last day of the succeeding calendar month and terminating
on the first day of the twelfth full calendar month thereafter, and each
succeeding period of twelve (12) full calendar months during the Term.
Partial Lease Year: Any period during the Term which is less than a
full Lease Year.
Lessee's Common Improvement Area. Any reference in this Lease and
Exhibits to Lessee's Common Improvement Area shall mean and refer to that
portion of the Leased Premises outside of Lessee's Building Improvement Area
(hereinafter defined). Such Common Improvement Area is outlined in yellow on
attached Exhibit A-1.
<PAGE>
Lessee's Common Area Improvements. Any reference in this Lease and
Exhibits to Lessee's Common Area Improvements shall mean and refer to those
improvements required of Lessee herein in Lessee's Common Improvement Area.
Lessee's Building Improvement Area. Any reference in this Lease and
Exhibits to Lessee's Building Improvement Area shall mean and refer to that
portion of the Leased Premises on which Lessee is to construct its Building
Improvements (hereinafter defined). Lessee's Building Improvement Area is
outlined in blue on attached Exhibit A-1.
Lessee's Building Improvements Any reference in the lease and Exhibits
to Lessee's Building Improvements shall mean and refer to those improvements
required of Lessee herein within Lessee's Building Improvement Area including
Lessee's Building (hereinafter defined).
Lessee's Building. Any reference in this Lease and Exhibits to Lessee's
Building shall mean and refer to that building referred to in Exhibit B and
required by this Lease and Exhibits to be built by Lessee within Lessee's
Building Improvement Area from which lessee shall conduct its business operation
during the Term.
On-Site and Off-Site Improvement Expense. Lessor shall be responsible
for constructing all necessary improvements to the Common Areas of the Shopping
Center (exclusive of Lessee's Common Area Improvements in Lessee's Common
Improvement Area which are Lessee's sole responsibility), including, but not
limited to, all paving, lighting, striping, and landscaping. Lessee shall be
responsible for constructing all of Lessee's Common Area Improvements as set
forth in Exhibit B.
Permitted Use: The Permitted Use for the Leased Premises shall be for
the operation of a bank with triple drive through facility, and related uses
offering banking and related financial services; and for no other purpose or
purposes whatsoever. Lessee agrees to open as an Eastern American Bank.
Person: An individual, firm, partnership, association, corporation,
or any other entity.
Rent: All sums payable by Lessee to Lessor under the Lease.
Schedules and Exhibits: The schedules and exhibits listed below are
attached to the Lease and are hereby incorporated in and made a part of the
Lease.
Exhibit A Legal Description of Shopping Center
Exhibit A-1 Leased Premises
Exhibit A-2 Shopping Center Site Plan
Exhibit D Lessor and Lessee Improvements
Exhibit C Signage Criteria
Exhibit C-1 Lessee's Corporate Graphics
Exhibit D Rules and Regulations
Exhibit E Intentionally Deleted
Exhibit F Certificate of Delivery of Possession
Exhibit G Estoppel Certificate
Exhibit H Non-Disturbance Agreement
1. TERM.
(a) Initial Term - The Initial Term of the Lease shall be twenty (20)
years, beginning at 12:01 AM on the Term Commencement Date and ending at 11:59
PM, on a date twenty (20) years after the first day of the first full month
following the Term Commencement Date. (See paragraph 25 for Renewal Terms).
(b) Term Commencement Date: The earlier of (a) the date Lessee
initially opens the Leased Premises for business to the public, or (b) one
hundred and fifty (150) days after the last to occur of the following dates (i)
the date upon which Lessor delivers the Leased Premises to Tenant in accordance
herewith including completion of paved driveways from Leased Premises to Reston
Parkway or (ii) the date Lessee is obligated to commence construction in
accordance with Exhibit B, II (E).
Notwithstanding the above, if despite Lessee's diligent efforts in
cooperation with Lessor's architect it is unable to obtain a building permit for
Lessee's Building Improvements within the time periods set forth in Exhibit B
hereof then the Term Commencement Date shall be extended one (1) day for each
day that Lessee is unable to obtain the building permit up to a maximum of sixty
(60) days. If Lessee is unable to obtain the building permit within the
<PAGE>
aforesaid sixty (60) day period, then either Lessor or Lessee shall have right
to terminate this Lease whereupon they shall be relieved of all further
obligations hereunder (other than that which expressly survives Lease
termination).
(d) Condition precedent - The obligations of Lessee under this Lease
are subject to, as a condition precedent, the issuance by the Virginia State
Corporation Commission and the Federal Reserve Board or the Office of Thrift
Supervision of a certificate authorizing the establishment by Lessee of a branch
drive-in bank an the Leased Premises within four (4) months. Lessee covenants
that it will make prompt application to the applicable governmental agency and
that it will use its diligent efforts to pursue such application. Lessee agrees
to notify Lessor promptly when and if the certificate referred to in this
Subparagraph has been issued. In the event that such certificate or conditions
are not issued or satisfied within four (4) months after the date hereof, Lessor
or Lessee shall have the option to terminate all obligations of the parties
under this Lease by written notice of termination sent to the other party within
thirty (30) days thereafter.
(e) Dates documented - A Certificate of Delivery of Possession, in the
form attached hereto as Exhibit F, will be executed by the parties setting forth
the Term Commencement Date after the Term Commencement Date has been
established.
2. MINIMUM RENT:
------------
(a) Amount - The Minimum Rent during the initial year of the Lease term
from the Term Commencement Date to the last day of the first Lease Year shall be
$96,000.00 per year, payable in equal monthly installments of $8,000.00.
Minimum Rent for each Lease Year two (2) through twenty (20) shall be
the Minimum Rent then in effect at the end of the previous Lease Year increased
on each anniversary of the Term Commencement Date by the greater of i)
seventy-five percent (75%) of the increase, if any, in the Consumer Price Index,
for all Urban consumers (CPI-U) - Washington D.C., MD, VA, Selected areas, All
Items (1981-84 = 100) published by the Bureau of Labor statistics over the prior
twelve (12) month period or ii) four percent (4%) of the then current Minimum
Rent.
(b) Timing of payment - Rent, as set forth herein, shall be due and
payable in advance in equal monthly installments by Lessee to Lessor on the
first (lst) day of each calendar month beginning on the Term Commencement Date,
without prior demand therefor and without any counterclaim, offset or deduction
whatsoever at its address designated in Section 19(b) hereof or such other place
as the Lessor may otherwise specify in writing from time to time. The foregoing
notwithstanding Tenant shall have no obligation to pay Minimum Rent for the
first one hundred and five days (105) after the Term Commencement Date.
(c) Late charge - In addition to constituting a default under the
Lease, and in addition to Lessor's other rights and remedies for such default,
if Lessee shall fail to make any payment of Rent within ten (10) days after such
payment is due, Lessee shall pay to Lessor, as a late charge, an amount equal to
four percent (4%) of such late payment. Such payment shall not excuse or waive
the late payment of Rent.
(d) Nature of payment - Any payment by Lessee of a lesser amount than
that due hereunder shall be treated as a payment on account. In the event that
any check for a lesser amount than that due bears an endorsement or statement,
or is accompanied by a letter stating, that such lesser amount constitutes
"payment in full" (or terms of similar import), Lessor's acceptance thereof
shall not be an accord and satisfaction, and such statement shall be given no
effect. Lessor may accept any such check without prejudice to any rights or
remedies which Lessor may have against Lessee. All other sums of money or
charges required to be paid by Lessee under this Lease, including but not
limited to, Minimum Rent, Lessee's share of Common Area Expenses and Taxes and
any other payment due shall be deemed Rent, Lessee shall pay Rent as and when
due hereunder, irrespective of whether said sums or charges be designated as
Rent. If any such amount or charge is not paid when due hereunder, it shall
nevertheless be collectible with the next installment of Minimum Rent, or other
Rent next falling due pursuant to this Lease. However, nothing contained herein
shall be deemed to suspend or delay the time for payment of any amount which
becomes due and payable hereunder, or to limit any remedy to which Lessor may be
entitled as a result of Lessee's failure timely to pay Rent.
(e) Partial period - For any portion of a calendar month included at
the beginning or end of the Term, Lessee shall pay in advance, at the beginning
of such portion, 1/30th of each monthly installment of Rent (including, without
limitation, Minimum Rent, Tax Estimates, Operating Costs Estimates, and
Marketing Fund Dues) payable with respect to such portion for each day included
in such portion.
3. AUTHORITY/SUBORDINATION/NONDISTURBANCE/ATTORNMENT
(a) Authority - The Lessor represents and warrants that it has entered
into a contract with a general contractor to construct the Shopping Center in
substantial conformance with the configuration set forth in Exhibit A-3. Lessor
<PAGE>
shall have the unilateral right to assign this Lease to an entity or entities
formed to own, develop and operate the Shopping Center after the date hereof
without Lessee's consent. Lessee agrees to accept any assignee as the Lessor
hereof and to attorn in every respect to such assignee as if the original Lessor
hereunder. In the event that Lessor sells the Shopping Center prior to the
opening of the supermarket anchoring the center, Lessor shall promptly notify
Lessee in writing of such sale and Lessee shall have the right for ten days
thereafter to terminate and cancel this lease.
(b) Subordination. Lessee's rights under this Lease are subordinate to:
(i) all present and future ground or underlying leases involving all or any part
of the Shopping Center; and (ii) any easement, license, lien, mortgage, deed of
trust or other financing or security instrument now or hereafter affecting the
Shopping Center or any portion thereof; (those documents referred to in (i) and
(ii) above hereinafter referred to as a "Mortgage" and the person or persons
having the benefit of same being referred to as a "Mortgagee". Provided Lessee
shall have received a non-disturbance agreement attached as Exhibit H from the
holder of such mortgage, Lessee's subordination provided in this Section (b) is
self-operative and no further instrument of subordination shall be required. In
confirmation of any subordination referred to in this Section, Lessee shall
promptly execute and acknowledge, without expense or charge to Lessor or
Mortgagee, the Non-Disturbance Agreement set forth in Exhibit H.
(b) Attornment. If any person shall succeed to all or part of Lessor's
interest in the Leased Premises, whether by purchase, foreclosure, deed in lieu
of foreclosure, power of sale, termination of lease or other-wise,-Lessee shall,
without charge, attorn to such successor-in-interest upon written request.
(c) Quiet Enjoyment. Lessor covenants that it has full right, power and
authority to enter into this Lease and that Lessee, upon performing all of
Lessee's obligations under this Lease, shall peaceably and quietly have, hold
and enjoy the Leased Premises during the Initial Term and any Renewal Term's
without hindrance, ejection or molestation by any person lawfully claiming by,
through or under Lessor, subject, however, to all Mortgages, encumbrances,
easements, and matters of record to which this Lease is or may become subject.
(d) Estoppel Certificate. Lessee shall promptly, upon thirty (30) days
written notice and without charge or cost to Lessor, certify by written
instrument substantially in the form attached hereto as Exhibit G, which written
instrument Lessee shall duly execute and deliver to Lessor or any other person
designated by Lessor, to the extent true,: (i) that this Lease is unmodified and
in full force and effect (or if there has been a modification, that the same is
in full force and effect as modified, and stating the modification); (ii) the
dates, if any, to which the Rent due under this Lease has been paid; (iii)
whether to Lessee's knowledge, Lessor has failed to perform, any covenant, term
or condition under this Lease, and the nature of Lessor's failure, if any; (iv)
that there are no defenses or offsets thereto and (v) such other relevant
reasonable information as Lessor may request. Any such statement or certificate
delivered by or on behalf of Lessee pursuant to this section may be relied upon
by any prospective purchaser, assignee, or mortgagee of the Shopping Center, the
Leased Premises, or any portion thereof, and Lessee agrees to be bound by the
information contained therein.
4. ADDITIONAL RENTS:
----------------
(a) Taxes as Additional Rent - In addition to the rent herein provided,
Lessee shall pay its share, as set forth in Subparagraph (c) below, of all Taxes
which are assessed or imposed on the Shopping Center within thirty (30) days
after billing from Lessor which shall be deemed to be Additional Rent. The term
"Taxes" means all governmental, real estate taxes, fees and charges, assessments
(including extraordinary or special assessments) imposed upon the ownership and
occupancy of the Shopping Center, and costs and fees (not to exceed any
recovery) incurred by Lessor in any tax contest, appeal and negotiation with the
governmental authorities, "Taxes" include, but are not limited to, school,
sewer, and water taxes, fees and charges. Taxes excludes Fairfax County B.P.O.L.
taxes and any other taxes or license fees based upon rents or gross receipts of
the Shopping Center. Lessee shall have the right to protest the overall assessed
value of the Shopping Center and to file an appeal on behalf of Lessor as to
such value. Lessee shall have the right to prosecute such assessed value and to
receive its pro-rata refund of any tax payments returned to Lessor as a result
thereof.
(b) Miscellaneous - Nothing in this Lease shall require Lessee to pay
any estate, inheritance, succession, capital levy, or transfer tax of Lessor or
any income, profits, revenue tax, license tax, or any other tax, assessment,
charge, or levy upon the rent payable by Lessee under this Lease provided,
however, that, if at any time during the Term, by change in method of taxation
or otherwise, there shall be levied, assessed or imposed in lieu of, or as a
substitute for the whole or any part of the Taxes now levied, assessed or
imposed on all or any part of the Shopping Center, (i) a tax, assessment, levy,
imposition or charge based on the rents received therefrom, whether or not
wholly or partially as a capital levy or otherwise, (ii) a tax or license fee
measured by the rents received by Lessor from the Shopping Center or any portion
thereof, (iii) a tax or license fee imposed upon Lessor which is otherwise
measured by or based in whole or in part upon the Shopping Center or any portion
thereof, or (iv) any other tax, levy, imposition, charge or license fee however
described or imposed, then all such charges shall be computed as if the amount
hereof so payable were the amount which would be due if the Shopping Center were
the only property of Lessor subject thereto and included as Taxes for the
purpose of computing the Tax Rent.
<PAGE>
(c) Lessee's share - Lessee's share of Taxes ("Tax Rent") for each Tax
Year shall be an amount equal to one hundred and twenty percent (120%) of the
product derived by multiplying the amount of such Taxes by a fraction ("Lessee's
Proportionate Share"), the numerator of which shall be the Floor Area of
Lessee's Building and the denominator of which shall be the Floor Area of the
Shopping Center. Upon completion of the Leased Premises and the Shopping Center,
the Lessor and Lessee shall execute an agreement setting forth Lessee's
Proportionate Share which shall thereafter be used for purposes of calculating
Tax Rent and Lessee's share of Common Area Charges.
(d) Payment of Lessee's share - Tax Rent shall be paid by Lessee in
equal monthly installments (the "Tax Installment") as are reasonably determined
by Lessor from time to time from the most recent tax bill for the Shopping
Center, with the first installment being due on the Rent Commencement Date and
each succeeding installment being due on the first day of each calendar month
thereafter. The initial monthly Tax Installment shall be in the amount of Three
Hundred Dollars ($300.00). All succeeding installments shall be in such amount
until notice of change is received from Lessor. Subsequent to the end of each
Tax Year, Lessor shall send to Lessee a statement together with the County Tax
bill (the "Tax Statement") setting forth the amount of the Tax Rent for the Tax
Year or Partial Tax Year in question and the aggregate amount of the Tax
Installments which have been paid by Lessee for such period together with
interest thereon from the date each installment shall have been received at the
passbook rate then offered by Lessor's primary banking facility. In the event
that the total of the Tax Installments actually paid by Lessee for any Tax Year
or portion of a Tax Year or Partial Tax Year is less than the amount of the Tax
Rent for such period, Lessee shall remit the difference to Lessor within twenty
(20) days after receipt of the Tax Statement. In the event that the total of the
Tax Installments actually paid by Lessee for such Tax Year is in excess of the
Tax Rent for such period, Lessor shall credit the difference toward the Tax
Installment payment(s) next due. If any tax payable by Lessor to which Lessee
has contributed is retroactively decreased, Lessee shall receive its
proportionate share of the net refund.
(e) "Tax Year" Defined - The term "Tax Year" means a twelve (12) month
period established by Lessor as the year for purposes of computing Tax Rent. The
Tax Year may or may not coincide with the period designated as the tax year by
the taxing authorities having jurisdiction over the Shopping Center. The term
"Partial Tax Year" shall mean a period less than twelve (12) months utilized by
Lessor at the commencement and end of Lessee's Term to incorporate Lessee's Tax
Rent within the Tax Year established by Lessor for the entire Shopping Center.
(f) Taxes on Lessee's Personal Property - Lessee shall be responsible
for the payment of any governmental tax, charge and fee concerning Lessee's
personal property including, but not limited to, Lessee's trade fixtures, Rent,
inventory and its interest in this Lease. Lessee shall pay all of the foregoing
before it becomes delinquent. Lessee shall deliver a duplicate receipt to Lessor
within five (5) days after such payment of tax. If any taxing authority requires
that any tax described in this Section 4 be paid by Lessee but collected by
Lessor and forwarded to such taxing authority, then the same shall be paid by
Lessee to Lessor at such times as such taxing authority shall require.
5. COMMON AREA MAINTENANCE AND COMMON AREAS:
----------------------------------------
(a) Payment as Additional Rent - Starting with the Term Commencement
Date and continuing throughout the Term of this Lease, Lessee shall pay Lessor,
in advance as hereinafter described and as Additional Rent, Lessee's share of
all common Area Charges for each full or partial calendar year (the "Operating
Costs Year") during the Term such share shall be an amount equal to one hundred
and twenty percent (120%) of the product derived by multiplying the amount of
all Common Area Charges by the fraction described in Section 4(c) above as
"Lessee's Proportionate Share".
(b) Statement - On or before the Term Commencement Date, on or before
the end of each and every Lease Year, and at such other time(s) as is deemed
desirable by Lessor in it sole discretion, Lessor shall forward to Lessee a
"Common Area Charges Statement", which shall contain Lessor's estimate of the
Common Area Charges for the next succeeding operating period, and a statement of
Lessee's Proportionate Share thereof. At no time shall Lesser increase Lessee's
monthly estimate unless such estimate shall have been in effect for twelve
months.
(c) Monthly payment - Each month during the Initial Term and any
Renewal Terms of this Lease, along with each monthly installment of Minimum
Rent, beginning with the Term Commencement Date, Lessee shall pay to Lessor, in
advance, an amount equal to one-twelfth (1/12) of Lessee's Proportionate Share
of the estimated Common Area Charges as set forth in the then latest Common Area
Charge Statement. At no time shall Lessor increase Lessee's monthly estimate
unless the then existing monthly estimate shall have been in effect for twelve
(12) months. If the Commencement Date is a day other than the first day of a
calendar month, then the amount of Common Area Charges due for the first month
and the last month of the Term shall be pro rated on the basis of a thirty
(30)-day month. As soon as practicable near the end of each and every calendar
year, Lessor shall submit to Lessee an "Actual Common Area Charges Statement"
prepared by Lessor showing what the Common Area charges for the then preceding
Lease Year actually were, along with all relevant backup documentation. With the
next monthly installment of Minimum Rent due after Lessee's receipt of such
<PAGE>
Actual Common Area Charges Statement, Lessee shall pay Lessor or Lessor shall
credit Lessee, as the case may be, the difference between Lessee's Proportionate
share of the actual common Area Charges for said Lease Year as shown on said
Statement and the total of all Common Area charges paid by Lessee to Lessor for
said Lease Year.
(d) Control of Parking and Common Area - Lessor shall have general
possession and control of the entire Common Area. Lessor shall maintain
available parking for Lessee's customers in accordance with Fairfax Code;
provided, however, Lessor shall at all times have the right and privilege of
determining and changing the nature and extent of the automobile parking and the
Common Area, whether the same shall be surface, underground, or multiple decks,
and of modifying the plot plan of the Shopping Center as required for any
expansion or modification thereof as it deems desirable and in the best interest
of all persons using the Shopping Center and the Common Area, including the
location and relocation of driveways, entrances, exits, automobile parking
spaces, the direction and flow of traffic, installation of prohibited areas,
landscaped areas, and all other facilities thereof provided, however, Lessor
shall have no right to materially and adversely change the Common Area within
Lessee's Control Area except as otherwise provided herein, without Lessee's
approval which shall not be unreasonably withheld or delayed. The foregoing
notwithstanding, in no event shall Lessor reduce the number of parking spaces in
the segregated parking area upon the Leased Premises. The Lessor agrees that it
will make no changes to the Shopping Center or to the Common Areas that
materially adversely obstructs visibility from or materially adversely affects
access to and from Reston Parkway.
If, in Lessor's opinion, unauthorized persons having no business with
the bank and causing a disruption to the Shopping Center are using the Leased
Premises or Lessee's Control Area, or any portion thereof, by reason of Lessee's
occupancy of the Leased Premises, or with Lessee's acquiescence, Lessee, upon
demand by Lessor, shall take all steps Lessee deems reasonably necessary
(including, without limitation, initiating appropriate proceedings) to remove
said persons from the Common Area and to restrict their further use of same.
Nothing herein shall affect Lessor's right at any time to remove such
unauthorized persons from the Common Area or to restrain their use of any
portion of said area.
(e) Employee and Service Parking - Lessee shall not at any time park or
permit the parking of trucks, in any portion of the Leased Premises for two
consecutive nights or anywhere in the Common Areas not designated by Lessor for
such use, if any.
(f) On-Site and Off-Site Improvement Expense - Lessor shall be
responsible for constructing all necessary improvements to the Common Areas of
the Shopping Center (exclusive of Lessee's Common Area Improvements in Lessee's
Common Improvement Area which are Lessee's sole responsibility), including, but
not limited to, all paving, lighting, striping, and landscaping.
(g) Lessee utility charges - Lessee shall pay, as and when the same
become due and payable, all charges for water, sewer, electricity, gas, heat,
steam, hot and/or chilled water, air conditioning, ventilation, lighting
systems, telephone service and other utilities supplied to the Leased Premises
(the "Utility Charges").
(h) Discontinuance and Interruption of Service - Lessor shall not be
liable to Lessee in damages or otherwise for the quality, quantity, failure,
unavailability or disruption of any utility service and the same shall not
constitute a termination of this Lease, constitute an actual or constructive
eviction of Lessee, or entitle Lessee to an abatement of Rent. The foregoing
notwithstanding, in the event that any utility service is disrupted or
unavailable for more than two consecutive business days due to Lessor's or its
agent's, manager's or contractor's negligent or intentional acts and Lessee is
not open for business to the public, minimum Rent shall equitably abate until
such disruption or unavailability ceases; in the event that any utility service
is unavailable for more than one month due to Lessor's or its agents, managers,
or contractor's negligent or intentional acts, and Lessee is not open for
business to the public Lessee shall be entitled to terminate this Lease for a
period of five (5) days thereafter on written notice to Landlord.
6. ALTERATIONS AND CONSTRUCTION:
----------------------------
(a) Interior non-structural - Lessor agrees that Lessee may, in
accordance with the procedure hereinafter set forth, at its own expense and upon
prior written notice to Lessor of its intention to do so, from time to time
during the Term, make alterations, additions and changes in and to the interior
of Lessee's Building (except any alterations, additions, or changes of a
structural nature) as it may find necessary or convenient for the operation of
its business provided that the value of the Leased Premises shall not be
diminished thereby, and further provided that no alterations, additions or
changes costing in excess of Twenty Thousand Dollars ($20,000) may be made
without first giving Lessor written notice thereof thirty (30) days prior to the
commencement of construction. Furthermore, Lessee shall provide Lessor with "as
built" plans-within thirty (30) days after the date on which such alteration,
addition, or change is substantially completed.
<PAGE>
(b) Exterior - In addition, no alterations, additions or changes shall
be made to the facade or the exterior walls or roof of Lessee's Building, except
as expressly provided herein, without first obtaining Lessor's written consent
(which may be given in Lessor's sole but reasonable discretion) and that of the
Design Review Board and local governmental authorities. Lessor shall not
withhold its approval of any exterior materials that are similar to the
materials then on the Shopping Center. Lessee shall be solely responsible for
any and all damage resulting from any violations of the provisions of this
Section 6(b).
(c) Approval - All alterations, additions, or changes to the Lessee's
Building Improvements which require Lessor's approval shall be made under the
supervision of a licensed architect, licensed general contractor, or licensed
structural engineer in accordance with detailed plans and specifications with
respect thereto, approved in writing by Lessor before the commencement of work.
All such proposed improvements shall be architecturally compatible to the
remainder of the Shopping Center, and shall not increase the size or height of
Lessee's Building, provided however, Lessee shall have the right to increase the
size of Lessee's building up to one thousand square feet (1,000 sq. ft.) if it
a) obtains the approval of Lessor, which such approval shall not be unreasonable
withheld; and the approval of Fairfax County and the Design Review Board; b)
such increase does not affect the overall parking requirements of the Shopping
Center and can be accommodated within Lessee's Leased Premises and c) the design
of such increase remains consistent with the architectural design of Lessee's
Building.
(d) Approval - Lessee shall furnish Lessor with at least thirty (30)
days prior written notice prior to commencing any alteration, addition, or
change requiring Lessor's approval, and Lessor shall have the right to enter the
Leased Premises to record or post notices of non-responsibility in or on the
Leased Premises as provided by law.
(e) Standard of work - All work with respect to any alteration,
addition, or change made by Lessee must be performed in a good and workmanlike
manner, the Lessee shall be responsible for compliance with the Americans with
Disabilities Act ("ADA") in making any alterations, and Lessee shall diligently
complete same. The Leased Premises shall at all times be a complete unit, except
during the period of work. Prior to the commencement of such work, Lessee shall
deliver to Lessor a copy of the building permit with respect thereto. Upon
completion of any alteration, addition, or change to Lessee's Building
Improvements, Lessee shall file for record in the office of the County Recorder
of the county in which the Leased Premises is located, a Notice of Completion as
permitted by law. Upon termination of Lessee's leasehold estate, subject only to
Article 8 below, all alterations, additions or changes made during the Term
shall be deemed improvements, shall become a part of the Lessee's Building
Improvements and shall not be removed by Lessee. All such changes, alterations,
and improvements shall be performed and completed strictly in accordance with
the laws and ordinances relating thereto, and in such a manner as not to impede
access to Lessee's Building of any other lessee or occupancy of the Shopping
Center.
(f) Refinish - Lessee shall refinish the non-brick areas of the
exterior of Lessee's Building no less than once every seven (7) years in
accordance with plans reasonably approved by Lessor, the Design Review Board,
and local governmental authorities in writing prior to such refinishing. Lessor
shall have the right to approve or disapprove such plans in its reasonable
discretion if the total cost of such refinishing exceeds Thirty Thousand Dollars
($30,000.00). In addition, provided Lessee's trim is stained and not painted
originally and the stain color is substantially similar to the original stain
chosen for the Shopping Center, Lessee agrees to re-stain Lessee's non-brick
areas of its Building on an "as needed basis" to keep the appearance in
conformance with the balance of the Shopping Center as reasonably determined by
the Lessor. Should Lessor desire to change the color of such stain, Lessee shall
have the right to disapprove of such stain for Lessee's Building in its sole
discretion. In the event Lessee approves, Lessee agrees to re-stain its
non-brick areas of its Building at its sole cost in accordance herewith.
Notwithstanding Section 6 (f) hereof, if Lessee fails to (i) refinish
the non-brick areas of the exterior or (ii) commence to refinish and diligently
and in good faith seeks to conform to the requirements of this Section 6 (f)
within sixty (60) days of Lessors notice, and thereby reasonably perform its
obligations under this Article 6, Lessor may, but shall not be required to,
enter upon the Leased Premises after ten (10) days written notice to Lessee and
without cure by Lessee and perform such refurbishing of the exterior area only
on Lessee's behalf, in which event the cost thereof, together with interest
thereon at the maximum rate then allowable by law (or if there be no maximum,
then at ten percent (10%) per annum), plus an overhead charge of fifteen percent
(15%) shall become due and payable as additional rent to Lessor, together with
the Minimum Rent or other payment or charge next falling due hereunder. Lessor
shall incur no liability for any loss or damage that may accrue to Lessee, or
Lessee's Building Improvements or Lessee's Building under this Section 6, except
if caused by Lessor's willful and malicious act. Under no circumstances is
Lessor permitted to enter the interior of the Lessee's Building to perform work
without Lessee's written permission.
(g) Modification of Site Plan and Lessee's Control Area - Except as
otherwise provided herein, Lessee acknowledges that the Site Plan set forth on
Exhibit A-2 hereto is attached for reference purposes only and that Lessor
expressly reserves the right, at any time in the future, (i) to expand, remodel,
alter or modify the Shopping Center, including, without limitation, changing the
shape, size, location, number and extent of the improvements located in the
Shopping center and (ii) to eliminate, in its sole discretion, existing
improvements or construct new improvements in the future, and may change
existing access to and from all improvements and on areas of the Shopping
<PAGE>
Center; provided, however, that without the Lessee's prior approval, Lessor
shall not make any material alteration or modification to the Leased Premises
and Lessee's Control Area, unless required by governmental authority, and then
only if Lessor has exercised its appeals to prevent such change. If the entire
access to the Leased Premises is restricted by governmental authority for a
period extending beyond fifteen (15) days the Lessee may on ninety (90) days
prior written notice terminate this Lease. Lessee acknowledges that such
expansion, alteration, remodeling, or modification may cause inconvenience to
Lessee and Lessee's customers and patrons, including, without limitation, the
erection of barricades, storage of construction materials, noise, relocation of
parking areas and roadways, the presence of workmen and large equipment, and
other nuisances typically associated with construction.
(h) Lessor's Right to Alter Utilities - Lessor reserves and shall at
all times have the right at its own cost and without causing the interruption of
service during business hours or in any manner so as to affect security, to
alter any and all utilities, and the equipment relating thereto, serving the
Shopping Center. Lessee shall execute and deliver to Lessor without delay such
documentation as may be required to effect such alteration.
(i) Condition of Leased Premises - By taking possession of the Leased
Premises, Lessee acknowledges that it has, subject to Lessor's work required
here under Exhibit B. hereto, (i) inspected the Leased Premises; (ii) accepted
the Leased Premises "AS IS," with no representation or warranty by Lessor as to
the condition or suitability of the Leased Premises or of the Shopping Center
for Lessee's purpose except as otherwise set forth herein; and (iii) agreed that
Lessor has no obligation to improve or repair the Leased Premises, or the
Shopping Center, unless said obligation is specifically set forth in this Lease.
(j) Lessor's Construction Responsibilities - Lessor shall have no
obligation whatsoever to construct Lessee's Building Improvements or Lessee's
Common Area Improvements, but shall only be obligated to complete such
construction as is set forth in Exhibit "B" hereto.
(k) Changes to Shopping Center - Provided Lessee's Building shall have
been open to the general public for at least seven years. In the event that
Lessor renovates or remodels the front exterior of the Leased Premises or the
Shopping Center, Lessee agrees at its sole risk and expense to: (i) upon request
of Lessor, remove its then existing signage to facilitate the remodeling work;
(ii) upon direction of Lessor, re-install signage as is appropriate under the
new criteria and consistent with such exterior remodeling; (iii) replace
Lessee's storefront if such replacements are part of Lessor's renovation plans
and (iv) otherwise cooperate with Lessor to facilitate such renovation and
remodeling. Lessee consents to the performance of all work deemed appropriate by
Lessor to accomplish any of the foregoing. And to any inconvenience caused
thereby.
7. SIGNS AND ADVERTISING:
---------------------
(a) Signs - prior to the date that Lessee opens the Leased Premises for
business, Lessee shall use its best efforts to install, at its sole cost,
sign(s) required pursuant to the Signage criteria attached as Exhibit C. Lessee
shall also install. professionally lettered signs on its service doors per
Exhibit C, if applicable. All sign permits which are required for any such signs
shall be obtained and paid for by Lessee. Lessee shall submit to Lessor
reasonably detailed drawings of all proposed signs for review and approval by
Lessor prior to installation or utilization of the signs. Without limiting the
foregoing, Lessor agrees that Lessee may install two (2) building mounted signs,
one (1) free standing sign, and one (1) ATM sign all as set forth on Exhibit C-1
and Lessor hereby approves the corporate graphic standards attached as Exhibit
C-1 provided such standards are permitted by statute, ordinance, and the Design
Review Board.
Notwithstanding anything in this Section 7 to the contrary, Lessor
shall not unreasonably withhold, condition or delay its consent to any request
by Lessee to install, erect, or place additional temporary signage
(professionally made) on the interior or exterior of Lessee's Building.
(b) Storefront window - Lessee shall not place on the exterior of the
Leased Premises, on the door, window or roof thereof, in any display window
space on the storefront glass, or within five (5) feet behind the storefront of
the Leased Premises if visible from the Common Areas, any sign, placard,
decoration, lettering, advertising matter or descriptive material provided,
however, Lessee shall be permitted to display signs and placards within such
five (5) foot area, but not affixed to the glass, in the manner and location
required by the FDIC. In all events, hand lettered signs, flashing signs, moving
signs, or credit card signs visible from the Common Areas are prohibited. Lessor
shall have the right, without notice to Lessee and at Lessee's sole risk and
expense, to remove any items displayed or affixed in or to the Leased Premises
which Lessor, local governmental authorities, or Reston Land Corporation
determines to be in violation of the provisions of this Section 7(b). All signs
installed by Lessee shall be insured by Lessee, and shall be maintained by
Lessee at all times in first class condition, operating order and repair. Lessee
shall commence to repair any of Lessee's signs which have been damaged within
ten (10) days after such damage occurs. Lessee shall perform such other
maintenance to its signs and canopies as Lessor shall reasonably request. In the
event Lessee fails to repair any of its signs as specified above, Lessor, after
written notice to Lessee shall have the right to make such reasonable repairs as
Lessor deems necessary at Lessee's sole cost and expense.
(c) No Auctions. Lessee shall not conduct or permit the conduct of any
sale by auction or distress sale of any kind in, upon, or from the Leased
Premises, whether said auction or distress sale be voluntary, involuntary,
pursuant to an assignment for the benefit of creditors or pursuant to any
bankruptcy or other insolvency, proceeding.
8. END OF TERM/REMOVAL OF PROPERTY/RESTORATION:
-------------------------------------------
(a) End of Term - Upon the expiration or sooner termination of the Term,
Lessee shall quit and surrender to Lessor the Leased Premises, broom-clean,
in good order and condition, ordinary wear and tear excepted; and shall
surrender to Lessor all keys to or for the Leased Premises, along with any
combinations or keys to vaults then remaining on the Leased Premises.
All present and future alterations, additions or improvements made to the Leased
Premises (excluding exterior signage) and the HVAC system (the "Leasehold
Improvements") shall be deemed to be the property of Lessor and upon Lessee's
vacation or abandonment of the Leased Premises, unless Lessor directs otherwise,
shall remain upon and be surrendered with the Leased Premises in good order,
condition and repair. All movable goods, inventory, office furniture, and other
movable personal property belonging to Lessee set forth in Section 8(b) which
are installed, stored, or kept in the Leased Premises by Lessee and are not
permanently affixed to the Leased Premises, shall remain Lessee's property
("Lessee's Property") and may be removed by Lessee at any time prior to the 30th
day following the termination of the Lease provided that: Lessee shall repair
any damage to the Leased Premises or the Shopping Center caused by the removal
of any of Lessee's Property. Notwithstanding the foregoing, Lessee shall have
the right to remove all of its trade fixtures and movable furniture from the
Leased Premises.
(b) Removal of Lessee's Property - Should Lessee fail to remove the
items described in subparagraph (a) above said items then they shall be
considered as abandoned and shall become the property of Lessor. Until thirty
(30) days after the expiration or sooner termination of this Lease, title
to any fixtures, equipment or improvements installed by the Lessee on the
Leased Premises shall remain solely in the Lessee. In addition, Lessee
may (but shall have no obligation to) at any time during the term of this
Lease or within thirty (30)days after termination, remove from the Leased
Premises all materials, equipment and fixtures of every sort or nature,
including, but not limited to vaults, vault doors and entrances, alarm systems,
camera systems, drive-in windows, all drive-in teller equipment and counters,
safety deposit boxes, automatic teller machines (ATMs) night depositories,
vault lockers, kitchen units and all signs, provided that such property is
removed without substantial damage to the Leased Premises. No damage shall be
considered substantial if it can be promptly corrected by restoration to the
condition before the installation of such property, if so requested by Lessor.
Such property not removed within thirty (30) days from the date of the lease
termination date shall become the property of Lessor unless delay is caused by
acts beyond the control of Lessee. Lessee shall have no obligation to remove or
demolish Lessee's Building Improvements.
(c) Showing of Leased Premise - Provided that Lessee has not exercised
its renewal rights set forth in Section 25, Lessor shall have the right to enter
upon the Leased Premises after reasonable advance notice for purposes of showing
the Leased Premises to prospective lessees during the last three (3) months of
the Term provided same is during normal business hours and Lessor is accompanied
by an employee of Lessee.
9. DEFAULT:
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(a) Lessee Default - Any one or more of the following events shall
constitute a default (each, a "Default") by Lessee under this Lease: if
(1)there shall be a continuing failure by Lessee in any payment when
due of Minimum Rent or any Additional Rent for more than ten (10) days after
written notice of such failure by the Lessor;
(2) Lessee shall breach or fail in the observance or performance of
any of the terms, conditions or covenants of this Lease to be observed or
performed by Lessee, other than those involving the payment of money or failure
to continuously operate the Leased Premises as required, and such is not cured
within thirty (30) days after written notice of such default by Lessor (but if a
default under this Subsection 9(b) is of such a nature that it cannot be
corrected within thirty (30) days, Lessee shall have a reasonable time to cure
such default if Lessee commences the correction within ten (10) days after it
has received notice specifying the default and proceeds diligently to correct
such default, in which case this Lease shall remain in full force and effect);
(3) Lessee shall vacate, abandon or cease to continuously operate the
Leased Premises as required;
(4) Lessee's Transfer of this Lease except as expressly provided in
Article 17 hereof unless approved by Lessor; or (5) Lessee's failure to move
into or take possession of the Leased Premises within sixty (60) days after the
Term Commencement Date unless such failure is caused by a party's inability to
perform as set forth, herein.
(b) Remedies - Upon the occurrence of any event described in Section
9 (a) above, Lessor shall have all the rights and remedies provided in this
Lease, in addition to all other remedies available under the Lease or provided
at law or in equity.
(c) Summary proceedings - It shall be lawful for Lessor, by summary
proceedings or any other action or proceeding, to terminate the Lease or
to terminate Lessee's right to possession without terminating the Lease
(as Lessor may elect), and to enter upon the Leased Premises or any part
thereof (under authority of such legal action, and without a breach of the
peace) and expel Lessee or any persons or entities occupying the Leased
Premises, and to repossess and enjoy the Leased Premises. If this Lease or
Lessee's right to possession under this Lease shall at any time be terminated
under the terms and conditions of this Section 9, or in any other way, Lessee
hereby covenants and agrees to immediately surrender and deliver the Leased
Premises peaceably to Lessor.
(d) Lessor's right to cure - Lessor may also perform, on behalf and
at the expense of Lessee, any obligation of Lessee under the Lease which
Lessee has failed to perform, the cost of which shall be deemed additional Rent
and shall be payable by Lessee to Lessor upon demand, along with an
administrative fee equal to five percent (5%) of such cost to cover Lessor's
overhead in connection therewith; provided however, that Lessor may not enter
the Leased Premises to effectuate such cure without prior notice to Lessee and
unless accompanied by an employee of Lessee. In performing any obligations of
Lessee, Lessor shall incur no liability for any loss or damage that may accrue
to Lessee, the Leased Premises or Lessee's Property by reason thereof, except if
caused by Lessor's willful and malicious act. The performance by Lessor of any
such obligation shall not constitute a release or waiver of any of Lessee's
obligations under this Lease.
(e) Reletting - Upon termination of this Lease or the termination of
Lessee's right to possession under this Lease, or both, as the case may be,
Lessor may at any time and from time to time relet the Leased Premises (or any
part thereof)for the account of Lessee or otherwise, at such rentals and upon
such terms and conditions as Lessor shall deem appropriate. Lessor shall
receive and collect the rents therefor, applying the same first to the payment
of such expenses as Lessor may have incurred in recovering possession of the
Leased Premises, including, without limitation, legal expenses and attorneys'
fees, and for placing the same in good order and condition and preparing or
altering the same for re-rental, and expenses, commissions and charges paid,
assumed or incurred by or on behalf of Lessor in connection with the reletting
of the Leased Premises, and then to the fulfillment of the covenants of Lessee
under the Lease. Any such reletting may be for the remainder of the Term or for
a longer or shorter period, as Lessor elects. In any such case, whether or not
the Leased Premises or any part thereof be relet, Lessee shall pay to Lessor the
Rent and all other sums payable up to termination of the Lease or Lessee's right
to possession under the Lease. Thereafter, Lessee covenants and agrees to pay
Lessor until the end of the Term of this Lease the equivalent of the amount of
all the Rent and all other sums reserved herein required to be paid by Lessee
less the net avails of such reletting, if any, and the same shall be due and
payable by Lessee to Lessor on the dates such Rent and other sums above
specified are due. Any reletting by Lessor shall not be construed as an election
on the part of Lessor to terminate this Lease unless a notice of such intention
is given by Lessor to Lessee. Notwithstanding any reletting without termination
of this Lease, Lessor may at any time thereafter elect to terminate this Lease.
In any event, Lessor shall not be liable for, nor shall Lessee's obligations
hereunder be diminished by reason of, any failure by Lessor to relet the Leased
Premises or any failure by Lessor to collect any sums due upon such reletting.
In the event of a Lessee default and subsequent repossession of the Leased
Premises, Lessor shall use its reasonable efforts to relet the Leased Premises.
Such reletting to be on such terms and conditions as, Lessor shall agree in its
reasonable business judgement.
(f) Lessors Default - Lessor shall be in default if it fails or refuses to
perform any provision of this Lease that it is obligated to perform and such
failure continues for thirty (30) days after written notice thereof from Lessee
detailing such failure. Notwithstanding the foregoing, if Lessor cannot
reasonably cure such default within thirty (30) days Lessor shall not be in
default hereunder so long as Lessor commences to cure the default within such
thirty (30) day period and thereafter diligently and in good faith pursues such
cure to completion.
If Lessor is in default hereunder, and as a consequence Lessee recovers a
money judgment against Lessor, such judgment shall be satisfied only out of the
proceeds of sale received on execution of the judgment and levy against the
right, title, and interest of Lessor in the Shopping Center, and out of rent or
other income from such real property receivable by Lessor or out of the
consideration received by Lessor from the sale or other disposition of all or
any part of Lessor's right, title, and interest in the Shopping Center. Neither
Lessor, nor any agent, officer, director, partner, or employee of Lessor shall
be personally liable for any portion of such a judgment. Notwithstanding the
foregoing limitation on recovery, Lessor agrees to be liable for up to fifty
thousand $50,000 dollars above it's equity in the Shopping Center in the
aggregate over the Initial Term and any Renewal Terms.
(g) Mutual Waiver - Lessor and Lessee shall not be deemed to have waived
any provision of this Lease, including breach of any term, covenant, or
condition herein contained, unless the same has been specifically waived by such
Lessor or Lessee in a writing executed by an authorized officer. Any waiver of
a breach shall not be deemed to be a waiver of any subsequent breach of the
same or any other term, covenant or condition herein contained. Lessor's
or Lessee's subsequent payment or acceptance of any payment hereunder
(including partial payment of past-due Rent) shall not be deemed a waiver of
any preceding breach of any term, covenant, or condition of this Lease,
regardless of Lessor's or Lessee's knowledge of such preceding breach at the
time it accepts such payment.
(h) Rights of redemption and jury trial waived - Lessor and Lessee hereby
waives any and all rights of redemption and all rights to relief from
forfeiture granted by or under any present or future laws. To the fullest extent
permitted by law, Lessor and Lessee waives the right to a trial by jury.
10. LIENS:
Lessee covenants that no mechanic's lien, other lien of any kind, or recordation
which shall impair Lessor's title to the Shopping Center shall be allowed
against the Shopping Center as a result of Lessee's improvements to the Leased
Premises. Lessee agrees to promptly pay all sums due and payable on account of
any labor performed or materials supplied to the Leased Premises upon which any
lien may be legally asserted against the Leased Premises, limited to the
Lessee's improvements thereon. If, because of any act or omission of Lessee, any
mechanic's lien or other lien, or other charge for the payment of money shall be
filed against any portion of the Leased Premises or Shopping Center, Lessee
shall, at its own cost and expense, cause the same to be discharged of record or
bonded within fifteen (15) days after written notice from Lessor to Lessee of
the filing thereof; and Lessee shall indemnify and save harmless Lessor against
and from all costs, liabilities, suits, penalties, claims and demands, including
reasonable counsel fees, resulting therefrom. If Lessee fails to discharge or
bond any such lien, Lessor, in addition to all other rights or remedies provided
in this Lease, may bond said lien or claim (or pay off said lien or claim if it
cannot with reasonable effort be bonded) without inquiring into the validity
thereof and all expenses incurred by Lessor in so discharging said lien,
including reasonable attorney's fees, shall be paid by Lessee to Lessor as
additional rent on five (5) days demand.
11. REMEDIES
The rights and remedies granted to Lessor and Lessee by the provisions of this
Lease shall be cumulative with any other rights and remedies now or hereafter
granted by law, except if specifically waived elsewhere in this Lease.
12. INSURANCE AND INDEMNITY:
-----------------------
a) Lessee's Insurance.
(1) From and after the date of delivery of the Leased Premises from
Lessor to Lessee and continuing throughout the Term of this Lease, Lessee shall
carry and maintain, at its sole cost and expense, the following types of
insurance, in the amounts specified and in the form hereinafter provided for:
(i) Commercial General Liability - Commercial General Liability
Insurance (CAL)covering the Leased Premises and Lessee's use thereof against
claims for bodily injury or death, personal injury and property damage occurring
upon, in or about the Leased Premises regardless of when or the cause of such
claims may be made. Such insurance may, provided that the coverage afforded
Lessor and any designees of Lessor shall not be reduced or otherwise adversely
affected, include any umbrella or excess liability insurance which may be
carried by the Lessee and shall have limits of not less than Two Million Dollars
($2,000,000.00)for bodily injury to or death of any number of persons arising
out of any one occurrence and Two Million Dollars ($2,000,000.00)for property
damage arising out of any one occurrence, or a combined single limit of at
least Two Million Dollars($2,000,000.00) may be provided in lieu of split limits
provided, however, in no event shall, the minimum policy limit set forth herein
be deemed to limit Lessee's liability under this Lease.
(ii) Worker's Compensation - Statutory Workers' Compensation Insurance
to comply with the applicable laws of the state in which the Shopping Center
is located and Employer's Liability Insurance with limits of not less than Two
Hundred Thousand Dollars ($200,000.00) for bodily injury by accident or disease.
(iii) Physical damage and All Risk - Physical Damage Insurance Subject
to a Special Causes of Loss Form covering all leasehold improvements, so called
"All Risk" Physical Damage Insurance covering but not limited to Lessee's
Building Improvements, Lessee's trade fixtures, including interior and exterior
signs, and all other property, merchandise and personal property from time to
time in, or about the Leased Premises, and all leasehold improvements to the
Leased Premises specifically including any heating and cooling facilities
serving the Leased Premises which may be located outside the Leased Premises
provided that Lessee shall have the option to self insure for plate glass.
Coverage shall also include Fire Legal Liability in an amount at least equal to
the product of Fifty-five dollars,($55.00) multiplied by the Floor Area of the
Leased Premises. The limits of Lessee's Insurance shall in no event limit
Lessee's liability under the Lease, at law, or in equity.
Such "All Risks" policy shall cover any risks included in the
classification "All Risk", including but not limited to insurance against
vandalism and sprinkler leakage, and shall be written for at least the full
replacement cost value covering all of Lessee's Property in the Leased Premises
and all Lessees Building Improvements installed in the Leased Premises.
With respect to such leasehold improvements, Lessee may, a its sole option,
elect to retain the risk of loss through a self insurance program, in lieu of
purchasing such physical damage insurance so long as it maintains a tangible net
worth of not less than Forty Million Dollars ($40,000,000.00). Such insurance:
(i) shall be written on a replacement cost basis in an amount at least equal to
the then replacement cost of the insured property including demolition cost, but
excluding foundations; and (ii) shall provide extended coverage against perils
that are covered under standard insurance industry practices within the
classification of all risk insurance, including, but not limited to loss or
damage from fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke, domestic water damage,
collapse, sprinkler leakage, vandalism, malicious mischief, earthquake and
flood. Lessee's obligation to provide insurance pursuant to this Subparagraph 12
shall apply to all improvements and fixtures, notwithstanding that some or all
of such improvements and fixtures may have been installed by Lessee, Lessor, a
prior lessee or any other party at any time before or after the delivery of the
Leased Premises to Lessee
(v) The proceeds from the policies Lessee is required to maintain
pursuant to this Section 12 (a)(i) and (iii) shall be used solely for the
repair or replacement of the property damaged or destroyed unless this Lease
shall cease and terminate under the provisions of Section 13 (b) hereof. The
proceeds from the policy Lessee is required to maintain for repair or
replacement of the Improvements pursuant to this Section shall be disbursed in
accordance with Section 13(a) hereof. No policy for Lessee's insurance shall
provide for a deductible amount which exceeds Fifty Thousand Dollars
($50,000.00).
(2) Best rating - All policies of insurance provided for shall be issued by
insurance companies having at least an A-rating in the most currently available
"Best's" Key Rating Guide and authorized to do business in the state in which
the Shopping Center is located, Each and every such policy:
(i) Shall be issued in the name of Lessee and include the Lessor as
additional insured and any other parties in interest from time to time
designated in writing by notice from Lessor to Lessee;
(ii) Shall (or a certificate thereof shall) be delivered, to Lessor
and any such other parties in interest not later than the date of delivery of
possession of the Leased Premises to Lessee and thereafter at least thirty (30)
days prior to the expiation of each such policy, and, as often as any such
policy shall expire or terminate, renewal or additional policies shall be
procured and maintained by Lessee in like manner and or like extent, and each
certificate shall indicate specifically the form on which the policy is written
(occurrence or claims made), the policy deductible and limits of insurance and
that the insurer has waived any rights of subrogation it would otherwise have
against Lessor;
(iii) Shall contain a provision that any misrepresentation or breach
of the policy conditions by one insured shall not invalidate coverage for any
other insured;
(iv) Shall contain a provision that the insurer will give to Lessor
and such other parties in interest at least thirty (30)days notice in writing in
advance of the insurer's intention to cancel, refuse to renew or otherwise
terminate the policy, or materially alter any terms or conditions of the policy;
(v) Shall be written as a primary policy which does not contribute to
and is not in excess of coverage which Lessor may carry, notwithstanding the
requirement that Lessor be named as an additional insured and regardless of any
other insurance that Lessor may elect to obtain;
(vi) Any insurance required to be provided by Lessee pursuant to this
Lease may be provided by blanket insurance covering the Leased Premises and
other locations of Lessee, provided such blanket insurance complies with all the
other requirements of this Lease with respect to the insurance involved. If
Lessee fails to have a duplicate original or certificate of insurance on deposit
with Lessor, then Lessor, after written notice to Lessee and 10 day's
opportunity to cure, shall have the right to acquire such insurance, and Lessee
shall be obligated to pay Lessor the amount of the premium applicable thereto
within five (5) days following notice from Lessor. Lessee's failure to make such
payment to Lessor may be treated by Lessor as a default in the payment of Rent.
(3) Lessee shall not keep or do anything in the Leased Premises which will
(i)result in an increase in the rate of property or any other insurance on the
Shopping Center, (ii) violate the terms of any insurance coverage on the
Shopping Center carried by Lessor or any other Lessee; (iii) prevent Lessor from
obtaining such policies of insurance acceptable to Lessor or any Mortgagee of
the Shopping Center; (iv) contravene the rules, regulations and recommendations
of Lessor's insurers, loss prevention consultants, safety engineers, the Fire
Insurance Rating Organization or any similar body having jurisdiction over the
Leased Premises, or the National Board of Fire Underwriters. In the event of the
occurrence of any event set forth herein, Lessee shall pay to Lessor upon demand
the amount of any increase in any such insurance premium. In determining the
cause of any increase in insurance premiums, the schedule or rate of the
organization issuing the insurance or rating procedures of Lessor's insurer
shall be conclusive evidence of the items and charges which comprise the
insurance rates and premiums on such property.
(b) Shopping Center Insurance.
(1) Subject to reimbursement by Lessee as herein provided, Lessor
shall maintain in effect at all times during the term of this Lease the
following types of insurance coverage for the Shopping Center, in the amounts
specified and in the form hereinafter provided for:
(i) Comprehensive General Public Liability Insurance covering
the Common Areas against claims for bodily injury or death, personal injury and
property damage occurring upon, in or about the Leased Premises and Common
Areas, such insurance to afford protection to the limit of not less than Two
Million Dollars ($2,000,000.00) in respect to injury or death to any number of
persons arising out of any one occurrence and such insurance against property
damage to afford protection to the limit of not less than one Million Dollars
($1,000,000.00) in respect to any one occurrence of property damage, or a
combined single limit of Two Million Dollars ($2,000,000.00).
(ii) All Risk Property Damage Insurance covering any portion of
the Shopping Center not otherwise insured by any other tenant, including
exterior walls, downspouts, gutter and roof, and (at Lessor's option excluding
all improvements and fixtures required to be insured by Lessee, by the Lease),
in an amount not less than eighty percent(80%)of full replacement cost(exclusive
of the cost of excavations, foundations, and footings) providing protection
against perils that are covered under standard insurance industry practices
within the classification of all risk insurance, including, but not limited
to loss or damage from fire, lightning, windstorm, hail, explosion, riot, riot
attending a strike, civil commotion, aircraft, vehicles, smoke, domestic
water damage, collapse, sprinkler damage, vandalism, malicious mischief, earth-
quake and flood,and such other risks as Lessor may from time to time determine
and with any such deductibles as Lessor may from time to time determine.
Such insurance shall at times be an amount of not less than Two Million
Dollars ($2,000,000) combined single-limit liability for personal and bodily
injury and property damage. Lessor shall, upon the request of Lessee, provide
Lessee with a certificate of such insurance coverage from an insurer licensed to
do business within the state in which the Leased Premises is located, and which
insurer is rated A or better in Best's Insurance Guide.
(2) Any insurance obtained by Lessor may be maintained by means of a
policy or policies of blanket insurance,covering additional items or locations
or under a plan of self-insurance. Lessor may maintain, at its option, from time
to time, such other additional insurance coverage as Lessor may deem appropriate
for the Shopping Center.
(3) Lessor's insurance cost for maintaining the insurance coverage
referred to in this Section 12 (b) shall be a Common Area Expense.
(c) Indemnity by Lessee - Lessee shall indemnify, defend and hold Lessor,
Lessor's lessors, its partners, officers, shareholders, trustees, principals,
agents, property managers, employees and any Mortgagee(s)(collectively, the
"Indemnitees") harmless from and against all liabilities, obligations, damages,
penalties, claims, costs, charges and expenses, including, without limitation,
reasonable architects' and attorneys' fees, which may be imposed upon, incurred
by, or asserted against any of the Indemnitees and arising, directly or
indirectly, out of or in connection with the use or occupancy of the Leased
Premises or the Shopping Center by Lessee, its agents, servants, employees,
invitees within the Leased Premises, and/or contractors except to the extent any
such liability or obligation or other herein described matter results from the
negligence or other tortious act of Lessor or any other of the Indemnities. In
case any action or proceeding is brought against any of the Indemnitees by
reason of any of the foregoing, Lessee shall, at Lessee's sole cost and expense,
resist or defend such action or proceeding by counsel approved by Lessor.
(d) Waiver of Subrogation - Each of the parties hereto mutually
releases the other from liability, and waives all right of recovery against the
other, for any loss of or damage to the property of each (including the Leased
Premises, its contents, and the Shopping Center), property of others for which
either of the parties hereto is liable, or may become liable, or as to which
either may have assumed liability, property of others in the actual or
constructive custody of either of the parties hereto, including earnings derived
therefrom, to the extent the harmed party receives proceeds of insurance,
regardless of the cause of such loss or damage even though it results from some
act or negligence of a party hereto, its agents or representatives; provided,
however, that this provision shall be inapplicable if it would have the effect,
but only to the extent that it would have the effect, of invalidating any
insurance coverage of Lessor and Lessee, whether such coverage is now or
hereafter in existence. The foregoing notwithstanding, Lessee and Lessor shall
use reasonable efforts to obtain insurance policies that permit a waiver of
subrogation as set forth in this paragraph.
(e) Lessor Not Responsible for Acts of Others - Except to the extent such
Indemnitees shall have been negligent, to the maximum extent permitted by law,
the Indemnitees shall not be liable for, and Lessee waives all claims for, loss
or damage to Lessee's business or injury or damage to person or property
sustained by Lessee, or any person claiming by, through or under Lessee,
resulting from any accident or occurrence in, on, or about the Leased Premises
or the building of which it is a part, or any other part of the Shopping Center,
including, without limitation, claims for loss, theft, injury or damage
resulting from: (i) any equipment or appurtenances becoming out of repair; (ii)
wind or weather; (iii) any defect in or failure to operate any sprinkler, HVAC
equipment, electric wiring, gas, water or steam pipe, stair, railing or walk;
(iv) broken glass; (v) the backing up of any sewer pipe or downspout; (vi) the
escape of steam or water; (vii) water, snow or ice being upon the Shopping
center or coming into the Leased Premises; (viii) the falling of any fixture,
plaster, tile, stucco or other material; (ix) any act, omission or negligence of
other lessees, licensees or any other persons, or occupants of the Shopping
Center or adjoining or contiguous buildings, owners of adjacent or contiguous
property, or the public, or (x) any other cause of any nature. To the maximum
extent permitted by law, Lessee agrees to use the Leased Premises and the Common
Areas at Lessee's own risk.
(f) Arbitration - Intentionally Deleted.
13. DAMAGE AND DESTRUCTION:
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(a) Obligation to Rebuild - In the event any Lessee's Building Improvements
or Lessee's Common Area Improvements on or forming part of the Leased Premises
are damaged or destroyed, partially or totally, from any cause whatsoever at any
time during the first (1st) thirteen (13) years during the Term of this Lease,
Lessee shall, at its own cost and expense, immediately restore and repair the
damaged or destroyed portion of such to their condition immediately prior to
said damage or destruction. Lessee's obligation to repair, restore, and
reconstruct the improvements shall apply whether such casualty occurs while
under construction or after they have been completed. The proceeds of (i) any
Casualty Policy required to be carried by Lessee under Section 12 ("Casualty
Policy") or (ii) if Lessee is self insured, one hundred percent (100%) to the
Estimated Cost to repair the damage or replace the Building Improvements, shall
be payable to Lessee to be held for reconstruction. The proceeds, if any, of the
Casualty Policy or self insurance shall be made available by Lessee to effect
such repair and reconstruction as is necessary; provided, however, the disbursal
of such proceeds from escrow to Lessee may must be subject to the delivery to
Lessor of a lien and completion bond sufficient to insure completion of the
repair and restoration and to insure against mechanic's or materialmen's liens
arising out of such repair and reconstruction, all of which conditions shall be
satisfied at Lessee's sole cost and expense. In addition, in the event that the
insurance proceeds are insufficient to cover the costs of repair. Lessee shall
provide the funds necessary to fully repair, restore, and reconstruct Lessee's
Building Improvements and Lessee's Common Area Improvements.
(b) Limited Right of Termination - Except as hereinafter provided, the
provisions of this Lease shall be unaffected by the damage or destruction of the
Lessee's Building Improvements and Common Area Improvements, or any portion
thereof, after the execution date hereof or at any time during the Term. Lessee
hereby waives any right to terminate this Lease under any statute or law now or
thereafter in effect and agrees that its obligations hereunder, including the
obligation to pay minimum Rent and other charges, shall continue throughout the
term notwithstanding damage to or the destruction of the Lessee's Building
Improvements and Common Area Improvements. Without otherwise limiting the
foregoing, if the Lessee's Building Improvements, or a portion thereof, are
damaged or destroyed by fire, storm, or other casualty during the last
eighty-four (84) months of the Term, whether or not such casualty is covered by
the Casualty Policy, either Lessee or Lessor may, at their option, terminate
this Lease as of the date of the occurrence of such casualty by giving written
notice to the other of their election to do so within ninety (90) days following
the occurrence of such casualty, in which case the insurance proceeds shall be
paid directly to Lessor in sufficient amount to completely demolish the
improvements, clear and stabilize the Leased Premises. If either party fails to
provide notice to the other within such ninety (90) day period, Lessee and
Lessor shall be deemed to have waived the right of termination set forth herein.
14. REPAIRS, MAINTENANCE, AND LESSOR'S ACCESS
(a) Repairs by Lessor - Subject to the terms of this Lease, Lessor shall
make all repairs to the Common Areas and to the buildings composing the Shopping
Center (excluding, however, any repairs Lessee is obligated to undertake to
Lessee's Building Improvements within Lessee's Building Improvement Area). In
the event any such repairs are necessitated by any act or negligence of Lessee,
its agents, employees, assigns, contractors or invitees, Lessee shall reimburse
to Lessor the reasonable cost incurred in completing such repairs.
(b) Repairs and Maintenance by Lessee.
(1) Lessee shall throughout the Term, at its sole cost and expense,
maintain Lessee's Building Improvements within Lessee's Building Improvement
Area, and Lessee's Property in good order, condition and repair. Lessee shall
not cause or permit any waste, damage or injury to the Leased Premises or the
Shopping Center. The parties intend that except for damage caused by Lessor's
negligence or intentional acts, Lessor shall have no obligation whatsoever to
repair or maintain the Improvements whether structural or nonstructural,
all of which obligations are intended to be performed by Lessee under this
Section 14. Lessee expressly waives the right to make repairs at Lessor's
expense under any law, statute or ordinance now or hereafter in effect.
If Lessee fails to reasonably perform its obligations under this
Section 14, Lessor may, but shall not be required to, enter upon the exterior of
the Leased Premises only after ten (10) days' written notice to Lessee and
without cure by Lessee during such period (except in the case of emergency, in
which event no notice shall be required) and performing such maintenance or
repairs on the exterior only on Lessee's behalf, in which event the cost
thereof, together with interest thereon at the maximum rate then allowable by
law (or if there be no maximum, then at ten percent (10%) per annum), plus an
overhead charge of fifteen percent (15%) shall become due and payable as
additional rent to Lessor, together with the Minimum Rent or other payment or
charge next falling due hereunder.
(2) Lessee's obligations shall include, without limitation, repairing,
maintaining, cleaning, painting, decorating, and making replacements to items
such as the following located within the Leased Premises, including, but not
limited to: floors and floor coverings; walls and wall coverings; ceilings;
roofs; exterior surfaces and elements; utility meters; pipes and conduits;
fixtures; HVAC equipment and systems which exclusively serve Lessee's Building
Improvements; plumbing, electrical and other mechanical systems exclusively
serving Lessee's Building; landscaping; sprinkler equipment and other equipment
within Lessee's Building; the store front(s); security grilles or similar
enclosures; locks and closing devices; window sashes, casements and frames;
glass; drive isles, service areas used exclusively by Lessee, canopies extending
from Lessee's Building or otherwise serving exclusively Lessee's Building; doors
and door frames.
(3) Lessee, at its sole cost and expense, shall install and maintain
fire extinguishers and other fire protection devices as may be required by any
governmental agency having jurisdiction over, or by the underwriters issuing
insurance for the Shopping Center. Lessee, at its sole cost and expense, agrees
to routine inspections of fire protection devices by contractors acceptable to
Lessor. If any bureau, department, or official of the Federal, state or local
government of the jurisdiction in which the Shopping Center is located requires
or recommends the installation, modification, or alteration of the sprinkler
system, or other equipment, by reason of Lessee's business, or the location of
any partitions, trade fixtures, or other contents of the Leased Premises, or for
any other reason, or if any such sprinkler system or change thereof becomes
necessary to prevent the imposition of any penalty or charge against the full
allowance for a sprinkler system in fire insurance rates for the Shopping
Center, then Lessee, at Lessee's sole cost and expense, shall promptly install
such sprinkler system or changes therein.
(4) Lessee shall keep the service areas, sidewalks, and loading docks
or bays within the Leased Premises free from ice and snow and shall not permit
the accumulation of garbage, trash or other waste.
(c) Inspections, Access and Emergency Repairs by Lessor - Lessee shall
permit Lessor to enter all parts of Lessee's Building during Store Hours to
inspect the same after reasonable advance notice. In the event of an emergency,
Lessor may enter Lessee's Building at any time and make such inspection and
repairs as Lessor deems necessary, at the risk and for the account of Lessee.
15. CONDEMNATION:
(a) Condemnation of Entire Leased Premises - In the event that the entire
Leased Premises shall, be appropriated or taken under the power of eminent
domain by any public or quasi-public authority, Lessee's estate shall
automatically terminate as of the date when Lessee is actually required to yield
possession, and Lessee shall thereupon be released from all liability thereafter
accruing under this Lease.
(b)Condemnation of a Portion of the Leased Premises. In the event that a
portion of the Leased Premises is taken under the power of eminent domain and
because of such taking the conduct of Lessee's business on the Leased Premises
would be prevented or impaired, Lessee shall be entitled either (i) to terminate
this Lease as of the date of such taking or (ii) to remain in possession of
the portion of the Leased Premises not so appropriated; provided, however,
that Lessee shall give Lessor written notice of its election within sixty (60)
days of its receipt of notice of the appropriation or taking. If Lessee fails to
give notice to Lessor within such sixty (60) day period, Lessee shall be deemed
to have elected to remain in possession; or if the portion of the Leased
Premises so appropriated shall not be so extensive as to prevent or sub-
stantially impair the operation of Lessee's business therein, then, to the
extent reasonably possible, Lessee shall, at Lessee's sole cost and expense,
promptly restore the remainder of the Leased Premises to its condition
immediately prior to appropriation, and this Lease shall remain in full force
and effect as to the unappropriated portion of the Leased Premises, subject to
abatement of the Minimum Rent as provided in Section 15(d), below and equitable
adjustment of Lessee's Proportionate Share. Both Lessor and Lessee waive any
right under statue or law now in effect or herafter enacted, to petition a court
to terminate this Lease in the event of a partial taking of the Leased Premises.
For purposes of this Section, an appropriation or taking shall be
deemed to prevent or impair the operation of Lessee's business on the Leased
Premises only in the event that: (i) any of the gross interior floor area of
Lessee's Building is taken or appropriated; (ii) such appropriation permanently
prevents vehicular access to the Leased Premises by Lessee's customers and
patrons; (iii) twenty-five percent (25%) or more of the parking spaces on the
Leased Premises are taken or appropriated and Lessor is unable to provide Lessee
replacement spaces on an exclusive basis within two hundred feet (200') of the
Leased Premises or (iv) such appropriation permanently prevents vehicular access
to Lessee's drive-through teller lanes.
(c) Lessee's Obligation to Restore -In the event that less than all of the
Leased Premises are appropriated, and provided that Lessee is required or has
elected, or is deemed to have elected, to remain in possession of the Leased
Premises in accordance with Section 15(b), above, Lessee shall, at Lessee's sole
cost and expense, promptly restore the unappropriated portion of the Leased
Premises and Improvement to a condition comparable to that of the Improvements
before appropriation. All work performed by Lessee pursuant to this Section 15
shall be accomplished under the supervision of a licensed architect or licensed
structural engineer in accordance with detailed plans and specifications which
have been approved in writing by Lessor prior to the commencement of such work
and that conform, to the extent possible, with the Final Plans (as defined in
Exhibit B hereto). Further, all such work shall be performed in a good and
workmanlike manner and diligently prosecuted to completion.
(d) Abatement of Minimum Rent.If any portion of Lessee's Building or
Tenant's parking on the Leased Premises shall be appropriated under power of
eminent domain, this Lease shall remain in full force and effect until the date
when Lessee is required to yield possession of the appropriated portion of
Lessee's Building to the condemning authority. Subsequently, the Minimum Rent
shall be reduced in the same proportion as the number of square feet of Floor
Area within the Lessee's Building so taken or reduced by 2% for each parking
space so appropriated, and all other charges based upon the Floor Area of
Lessee's Building shall be similarly adjusted. The abatement of Minimum Rent and
other charges provided for in this Section 15(d) and the right of termination
provided for in Section 15(b), above, shall constitute Lessee's sole remedies
in the event of any partial taking, and the entire award, if any, payable with
respect to such taking shall be divided between Lessor and Lessee as their
interests appear under the award. Both Lessor and Lessee waive any right under
statute or law now in effect or hereafter enacted, to petition a court to
terminate this Lease in the event of a partial taking of the Leased Premises.
(e) Apportionment of Award.
(1) In the event of an appropriation of the entire Leased Premises,
the condemnation award or settlement,including, but not limited to compensation,
damages, and interest, if any, made with respect to the appropriation shall be
apportioned as follows; (i) if the award contains an apportionment separately
stating the award relating to Lessee's Building Improvements, then such
separately stated awards shall be payable to Lessee and Lessor, respectively;
and (ii) if the award does not contain such an apportionment, then Lessor shall
reasonably apportion the award between them.
(2) Lessor shall give written notice of such apportionment to Lessee
within twenty (20) days of Lessor's receipt of such award. Lessee shall have
ten (10)days thereafter to disapprove Lessor's apportionment, then Lessor
shall reasonably apportion the award between them. Lessor shall give written
notice of such apportionment to Lessee within twenty (20) days of Lessor's
receipt of such award. Lessee shall have ten (10) days thereafter to
disapprove Lessor's apportionment by giving written notice thereof to Lessor.
(f) Arbitration -If Lessor and Lessee cannot mutually agree upon the
apportionment of the award between them within thirty (30) days after Lessor's
receipt of Lessee's disapproval, the issue of the apportionment of the award
shall be arbitrated in accordance with the Rules of the American Arbitration
Association. Other than as set forth herein, Lessee shall have no claim to any
condemnation award or settlement and hereby irrevocably assigns and Transfers to
Lessor any right Lessee may have to such award or payment. Lessee may seek an
award from the condemning authority in an independent action for the taking of
trade fixtures and equipment owned by Lessee, for the expense of removing and
relocating such trade fixtures and equipment, and for goodwill.
(g) Appropriation for Temporary Use - In the event of a temporary
appropriation of all or any portion of the Leased Premises, this Lease shall not
terminate and Lessee shall continue to observe all of its obligations hereunder
as if such appropriation had not occurred, except as hereinafter provided and to
the extent that it may be prevented from so doing pursuant to the terms of the
order of the condemning authority. Upon such an appropriation, effective on the
date Lessee is required to yield possession of the appropriated portion of the
Lessee's Building to the condemning authority, the Minimum Rent and other
charges shall be reduced in accordance with the formula set forth in Section
15(d), above. The abatement of Minimum Rent and other charges provided for in
this Section 15 shall constitute Lessee's sole remedy, in the event of a
temporary taking, and the entire award, if any, payable with respect to such
taking shall be divided between Lessor and Lessee as their interests appear
under the award. An appropriation which continues, or will continue, for ninety
(90) days or more shall be deemed permanent.
(h) Waiver. The parties waive such rights of Lease termination as may be
granted them in the event of condemnation by the laws of the Commonwealth of
Virginia, it being their agreement that the rights of termination set forth in
this Lease shall be exclusive.
16. USE AND OPERATION OF THE LEASED PREMISES:
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(a) Opening and operation - Lessee shall (i)open the Leased Premises for
business on the Term Commencement Date; and except as otherwise hereinafter set
forth (ii) conduct its business in the Leased Premises in a manner consistent
with reasonable business standards and banking practices; and (iii) operate one
hundred percent (100%) of the Leased Premises continuously and uninterruptedly
during the minimum hours set forth in Section 16(d) during the entire Term in
accordance with the terms of this Lease. Lessee shall utilize for storage and
office space only those areas indicated for such use on Lessee's plans approved
by Lessor. In the event Giant Foods, Inc. discontinues the operation of a
supermarket at North Point Village Center and such anchor space formerly
occupied by Giant shall remain vacant for fifteen (15) full calendar months
without the re-opening of another regionally operated supermarket similar to
Giant, including but not limited to Safeway, Shoppers Food Warehouse, Weis
Markets, Magruders, or other regional retail tenant of comparable customer
traffic and size then in that event, Lessee shall have the right for, thirty
days, thereafter, to terminate this Lease with Lessor effective ninety (90) days
thereafter.
(b) Violation - If Lessee violates any provision of this Section 16 then,
in addition to all other rights and remedies provided in the Lease, Lessor shall
have the right to mandatory injunctive relief. Lessor shall also have the right
to collect upon demand, in addition to other Rent, liquidated damages in an
amount equal to one hundred twenty-five percent (125%) of the Minimum Rent per
day for each and every day that such violation shall continue. Payment of such
sums are intended to be only a partial and temporary remedy for Lessor during
the continuance of such violation, and therefore shall not relieve Lessee of any
obligation under the Lease, excuse any such default or waive Lessor's other
remedies therefor. Specifically, such payments shall not prevent Lessor from
obtaining mandatory injunctive relief against such violation.
(c) Use -Lessee shall use the teased Premises solely for the Permitted Use
and for no other purpose. Lessee shall operate its business in the Leased
Premises solely under the Lessee Trade Name of Eastern American Bank F.S.B. and
under no other name except as permitted in Article 17 hereto.
(d) Hours - Lessee shall conduct its business in the Leased Premises
continuously during the Store Hours. As used herein, "Store Hours" shall be, at
a minimum, those hours established for a majority of the Eastern American Bank
locations serving Northern Virginia. Notwithstanding the above, the Leased
Premises may be closed temporarily during bank holidays reasonable periods of
alteration, repair, restoration and renovation or as a result of snow and ice,
natural disaster, riot, interruption of utilities, strikes or labor shortages or
for other similar causes beyond Lessee's control. Moreover, if Lessee shall
determine to discontinue the operation of the Leased Premises as a banking
facility by reason of either (i) corporate merger and/or acquisition resulting
in overlapping branches within two (2) miles or (ii) federal or state regulatory
requirement, then Lessee shall notify Lessor ninety (90) days in advance of its
desire to "go dark" and discontinue the operation of the Leased Premises as a
bank. In the event Lessee does in fact "go dark" in accordance herewith and
remains dark for a period of one hundred twenty (120) days, Lessor shall have
the right, but not the obligation so long as Lessee has not re-opened as a bank,
to terminate and cancel this Lease by giving Lessee written notice thereof and
thereby succeed to all of Lessee's ownership, right and title to Lessee's
Building Improvements, Lessee's Common Area Improvements and the Leased
Premises.
(e) Lessee's and Lessor's compliance with Laws and Regulations. From and
after the date hereof and during the entire Term, Lessee shall, at Lessee's
sole cost and expense as it relates to the Leased Premises and Lessor as it
relates to the Common Areas, promptly comply with all applicable statutes,
ordinances, rules, regulations, orders, restrictions and requirements relating
to the use, occupancy, maintenance, or operation of such respective areas
whether now or hereafter in effect.
(f) Rules and Regulations. Lessee and its employees, agents, and licensees
agree to comply with the Rules and Regulations attached hereto as Exhibit "D,"
as the same may be reasonably amended from time to time, with notice to Lessee
o any other Rules and Regulations adopted changed, or reasonably modified by
Lessor from time to time hereafter. Lessor shall not be liable to Lessee for the
failure of any other tenant to observe or comply with the Rules and Regulations.
To the extent that Lessor adopts or amends any Rules and Regulations after the
Term Commencement Date, Lessee shall be obligated to comply with any such new or
amended Rules and Regulations, if and only if, (i) such Rules and Regulation
apply to all tenants of the Shopping Center (other than Giant Foods); (ii)
Lessor enforces such new or amended Rules and Regulations non-discriminately;
and (iii) the new or amended Rules and Regulations do not materially adversely
impact Lessee's ability to conduct its business in the manner conducted prior to
the adoption of the new or amended Rules and Regulations. Lessor shall not be
responsible to Lessee for the failure of any other Lessee or occupant to observe
or comply with the Rules and Regulations, or with any other rules and
regulations Lessor may put into effect during the Term, but Lessor shall use
reasonable efforts to enforce compliance with same.
(g) Prohibited Uses. Lessee shall not commit or suffer to be committed
any nuisance or other act or thing to be done in or about the Leased Premises or
the Shopping Center which will in any manner whatsoever unreasonably obstruct or
interfere with the rights of other tenants or patrons of the Shopping Center or
injure or annoy them; nor shall Lessee allow the Leased Premises to be used for
any improper, immoral, unlawful or other objectionable purpose. Lessor
acknowledges that the operation of Lessee's business will generate significant
automobile and pedestrian traffic and such shall not constitute a nuisance or
prohibited activity under this Lease. Lessee will not be allowed to install any
pay telephones in or around the Leased Premises.
17. SUBLEASE/ASSIGNMENT
(a) Prohibition on Transfer - Except as otherwise set forth in this Lease,
Lessee shall not, and shall not have the power to do any of the following (each
and all of which shall hereinafter be individually and collectively referred to
as "Transfer"):
1. Assign, encumber, or otherwise convey this Lease;
2. Sublet the Leased Premises, or any portion thereof:
3. Permit any person or entity other than Lessee to use or occupy the
Leased Premises, or any portion thereof;
4. If Lessee is a partnership, permit a withdrawal or change, voluntary,
involuntary, or by operation of law, of any partner or the dissolution of the
partnership; or
5. If Lessee is a corporation (whose stock is not traded through an
exchange or over the counter), permit any dissolution, merger, consolidation
or other reorganization on of Lessee, or the sale or other Transfer of a
controlling percentage of the capital stock of Lessee, or the sale of more
than an aggregate of, 25% of the value of the assets of Lessee. As used herein,
the term "controlling percentage means the ownership of, and the right to vote,
stock possessing more than an aggregate of 25% of the total combined voting
power of all classes of Lessee's capital stock issued, outstanding and entitled
to vote for the election of directors.
(b) Lessee's Rights to Transfer to Related Parties. Notwithstanding
Section 17 (a), above and so long as Lessee has opened and is operating as an
Eastern American Bank at the Leased Premises and is not in default hereunder,
Lessee may, without the consent of the Lessor, but subject to all of the terms,
covenants and conditions of this Lease, including the Permitted Use Transfer
this Lease or its rights hereunder to the Leased Premises, in whole, to (a) any
wholly owned subsidiary or operating corporation owned and controlled by Lessee,
any parent or holding corporation or similar affiliate of Lessee under Lessee's
ownership or (b) a successor company which acquires all or substantially all of
Lessee's assets or into which Lessee has merged provided (i) except in the event
of a merger no such Transfer shall be deemed to release Lessee from its
obligations hereunder from continuing liability hereunder; (ii) any transferee
must expressly assume in writing all of the obligations of Lessee under the
Lease; and (iii) the transferee has not defaulted elsewhere under its leases
within the previous twelve (12) months; (iv) after any Transfer of the Leased
Premises must thereafter for the balance of the Term, as extended, continue to
be operated under the Permitted Use authorized herein, and (v) has a post
transaction net worth of Ten Million Dollars ($10,000,000.00).
(c) Lessee's Right to Transfer to Unrelated Parties. Notwithstanding
Section 17(a)above, and so long as Lessee has opened and is operating as an
Eastern American at the Leased Premises and is not in default hereunder, Lessee
may without the consent of Lessor, but subject to all of the terms, covenants
and conditions of this Lease, Transfer this Lease or its rights hereunder to
another bank or other financial institution for use as a bank, provided however,
that said Transfer shall be subject to the following conditions:
1. Such transferee shall be then operating twenty (20) or more
locations in the Washington, D.C. area (including the District of Columbia and
all Maryland and Virginia Counties adjacent thereto and not be in default under
any agreements associated therewith;
2. Such transferee has been approved in writing by the appropriate
governmental regulatory entities to the extent required by law;
3. Lessee must provide notice and a representation that the above
conditions have been met to Lessor fifteen (15) days before the effective date
of such Transfer.
4. Lessee shall not be released from any liability under the Lease
(unless such Transferee has met the net worth test set forth in paragraph 5
below in which case Lessee shall be so released); and any transferee must
expressly assume all of the obligations of "Lessee" under the Lease.
5. Such Transferee has a post transaction net worth of Ten Million
Dollars ($10,000,000.00).
(d) Transfer to a Use other than a bank. The parties acknowledge that
because of the unique position that the freestanding pad comprising the Leased
Premises enjoys, it is of primary importance to the Shopping Center's appearance
or success that the facility remain open during the term of the Lease and be
operated in a first class manner as set forth in this Lease. Yet both parties
acknowledge Lessee's desire to have some flexibility in the face of changes yet
unknown in the banking industry. Therefore, if after the eleventh (11th) Lease
Year of operation as a bank, Lessee or its successor wishes to discontinue the
operation of the banking facility then Lessee shall give Lessor twelve (12)
months prior written notice of such desire with a detailed an explanation of the
reasons therefor thereof and thereafter diligently and in good faith seek out
other alternative qualified banks of the type described in Article 17 (c) during
said twelve (12) month period. At the expiration of such twelve (12) month
period, Lessor then shall have the obligation to in good faith seek to relet the
space to another freestanding user other than a qualified bank. Such alternative
user shall be of the type typically found in comparable first class Shopping
Centers in the Northern Virginia area a that time, shall have no less than
twenty (20) locations operating in the Washington, D.C. area, shall have a net
worth in excess of Fifteen Million Dollars ($15,000,000.00) shall not conflict
with a then existing user in the Shopping Center and shall not use more parking
spaces than Lessee shall have utilized on the Leased Premises. Upon securing
such alternative pad user, Lessee may Transfer the remaining primary term of
it's lease but no options to the alternative user, and shall remain liable under
the terms of the Lease for the balance of the primary term of the Lease only.
Rental proceeds above the Lessee's Minimum Rent, if any, shall be split
twenty-five percent (25%) to Lessee, seventy-five percent (75%) to Lessor.
Notwithstanding the above, Lessor shall have the right for One Hundred Fifty
(150) days after receipt of such notice to terminate all of Lessee's right's in
the Lease in which event Lessee shall be released from liability hereunder. Any
and all remodeling of Lessee's Building Improvements shall require Lessor's,
Design Review Board, and local government approvals prior to the commencement of
such work.
(e) Lessee's Request to Transfer. Lessee agrees to the following as part
of any requested Transfer:
1.To reimburse Lessor for such reasonable expenses, including attorneys
fees as Lessor may incur in connection with any requested Transfer. Lessee shall
be obligated to reimburse such expenses irrespective of whether the Transfer is
ultimately consummated;
2. The proposed transferee or sublessee shall execute an agreement
pursuant to which it shall agree to perform faithfully and be bound by all of
the terms, covenants, conditions, provisions and agreements of this Lease;
3. An executed duplicate original of said assumption agreement, on
Lessor's then standard form, shall be delivered to Lessor within five(5)days
after the execution thereof, and that such agreement shall not be binding upon
Lessor until the delivery thereof to Lessor and the execution and delivery of
Lessor's consent hereto which shall not be unreasonably withheld; and
4. The rent shall be payable to Lessor by the proposed transferee or
sublessee and shall be at least equal to the rent then in effect between Lessee
and Lessor,if any. Lessor shall suffer no loss or detornment whatsoever in the
event it receives and retains any direct payment from an transferee or subLessee
hereunder.
(f) Limited Effect of Transfer. In the event that Lessor consents to any
requested Transfer:
1. Such Transfer shall in no way relieve Lessee of its obligations
hereunder except as otherwise provided herein; and
2. Such consent shall in no way waive or affect Lessor's right to
disapprove any further requested Transfer and/or sublet of this Lease where
applicable.
(g) Void Transfers -
1. Any purported Transfer which is not in strict compliance with the
provisions of this Section 17 shall be of no force or effect. Lessor shall have
no obligation to pay any fees,commissions or amounts with respect to any
Transfer unless Lessor shall agree in writing to such obligation.
2. Any Transfer requiring Lessor's written consent but performed with-
out Lessor's written consent shall not be binding upon Lessor, and shall confer
no rights upon any third person. Each such unpermitted Transfer shall, without
notice or grace period of any kind, constitute a default by Lessee under this
Lease. The acceptance by Lessor of the payment of Rent following any Transfer
prohibited by this Section 17 shall not be deemed to be a consent by Lessor to
any such Transfer, an acceptance of the Transferee as a Lessee, a release of
Lessee from the performance of any covenants herein contained, or a waiver by
Lessor of any remedy of Lessor under this Lease, although amounts actually
received shall be credited by Lessor against Lessee's Rent obligations. Consent
by Lessor to any one Transfer shall not constitute a waiver of the requirement
for consent to any other Transfer. No reference in this Lease to transferees,
concessionaires, sublessee or licensees shall be deemed to be a consent by
Lessor to the occupancy of the Leased Premises by any such transferee,
concessionaire, subLessee or licensee.
18. LESSOR REPRESENTATIONS
Lessor represents and warrants to Lessee that:
(a) It has the power and authority to execute and deliver the Lease and to
carry out and perform all covenants to be performed by it hereunder;
(b) Subject to governmental requirements or other Sections in this Lease,at
all times Lessor shall not obstruct Lessee's means of ingress and egress to the
Leased Premises from all abutting streets, travel lanes, roads and highways,
temporary obstructions for normal maintenance and repairs excepted, except as
specifically provided in this Lease; and
(c) Subject to governmental requirements or other Sections in this Lease,
the Leased Premises shall at all times be treated as if it were an integrated
part of the Shopping Center and no action shall be taken to impair or impede the
Leased Premises from appearing to be a part of said center.
(d) A site plan has been approved by Fairfax County and Reston's Design
Review Board [and the State of Virginia (if required to develop the site)] for
public access to, including proper right and left turn vehicular ingress and
egress to and from, the Shopping Center from Lake Newport Road and Reston Park-
way and Lessor has the full right, title and authority as of this date to demise
to Lessee access to and from said roadways by vehicle without interference or
interruption which access shall not be denied by Lessor;
(e) The Shopping Center has, and the Leased Premises will have,
access to electric, water, telephone and sewer service from the public utilities
supplying same to the city of Reston. Seller has obtained all approvals
necessary from the appropriate governmental agencies and utility companies for
such services to be provided to the Shopping Center upon application and
requests for service.
19. NOTICE:
(a) Notice - Whenever any demand, request, approval, consent or notice
("Notice") shall or may be given by one party to the other, Notice shall be
addressed to the parties at their respective addresses as set forth in Section
19(b) and delivered by (i) hand, (ii) a nationally recognized overnight express
courier, or (iii) registered or certified mail return receipt requested. The
date of actual receipt shall be deemed the date of service of Notice.
(b) Addresses - Any notice under this Lease must be in writing to the last
address of the party to which the notice is to be given, as designated by such
party in writing. The address designated by Lessee is:
Eastern American Bank.
208 Elden Street, Suite 200
Herndon, Virginia 22070
Attention: James Miller, President
The address designated by Lessor is:
For Rent Payments:
NORTH POINT VILLAGE CENTER
c/o Lerner Corporation, Managing Agent
11501 Huff Court
North Bethesda, Maryland 20895-1094
Attention: Accounts Receivable
For Notice Addresses to Lessor at:
NORTH POINT VILLAGE CENTER
c/o Lerner Corporation, Managing Agent
11501 Huff Court
North Bethesda, Maryland 20895-1094
Attention: Legal Department/Theodore N. Lerner
And to Lender in the event of a Lessor default giving rise to Lessee's
right to terminate if any:
PNC Bank
National Association
ATTN: Commercial Real Estate Loan Administration
5th Ave. & Wood St., 19th Floor
Pittsburgh, Pennsylvania 15265
(c) Delivery - in the event an addressee refuses to accept delivery,
however, then Notice shall be deemed to have been served on either (i) the date
hand delivery is refused, (ii)the next business day after dispatch in the case
of delivery by overnight courier, or (iii) three (3) business days after mailing
the notice in the case of registered or certified mail. Either party may, at any
time, change its Notice address by giving the other party Notice, in accordance
with the above, stating the change and setting forth the new address.
(d) Mortgagee -If any Mortgagee shall notify Lessee that it is the holder
of a Mortgage affecting the Leased Premises, no Notice thereafter sent by Lessee
to Lessor shall be effective unless and until a copy of the same shall also be
sent to such Mortgagee in the manner prescribed in this Section 19 and to such
address as such Mortgagee shall designate.
20. WAIVER, OMISSION:
----------------
Failure of Lessor or Lessee to complain of any act or omission on the
part of the other, no matter how long the same shall continue, shall not be
deemed to be a waiver by said party of any rights hereunder. No waiver at any
time, express or implied, of any breach of any provision of this Lease shall be
deemed a waiver of a breach of any other provision of this Lease or a consent to
any subsequent breach of the same or any other provision.
21. HOLDOVER:
--------
Subject to the provisions of Section 8 regarding removal of Lessee's
property, if the Lessee shall occupy the Leased Premises after the expiration of
this Lease, Lessor shall have the benefit of all provisions of law respecting
the speedy recovery of possession of the Leased Premises (whether by summary
proceedings or otherwise) to the same extent as if statutory notice had been
given. In the event of such holdover, such occupancy shall be construed as a
tenancy-at-will, and Lessee shall be subject to all of the terms, covenants, and
conditions of the Lease, except that the Minimum Rent for each day that Lessee
holds over ("Holdover Minimum Rent") shall be in an amount equal to one and
one-fourth (1?) times the Minimum Rent payable in the last Lease Year divided by
three hundred sixty-five (365).
22. ENTIRE AGREEMENT:
----------------
This Lease constitutes the entire agreement between Lessor and Lessee relating
to the matters mentioned herein, and as a complete and exclusive statement of
the terms thereof, all prior negotiations, considerations and representations
between the parties (oral or written) having been incorporated herein and
superseded hereby. No course of prior dealings between the parties or their
officers, employees, agents or affiliates shall be relevant or admissible to
supplement, explain or vary any of the terms of this Lease. No representations,
understandings, agreements, warranties or promises with respect to the Leased
Premises or the building or Shopping Center of which they are a part or with
respect to past, present or future tenancies, rents, expenses, operations, or
any other matter have been made or relied upon in the making of this Lease,
other than those specifically set forth herein. This Lease may only be modified,
or a term thereof waived, by a writing signed by an authorized officer of Lessor
and by Lessee. It shall be governed by the laws of Virginia in all matters
including, without limitation, its validity, construction, interpretation, and
performance, and it shall be binding upon and inure to the benefit of the
successors, transfers, guardians, heirs, and personal representatives of the
parties.
23. MARKETING FUND:
--------------
Lessor shall have the right and option to form a Marketing Fund (the "Marketing
Fund"). Lessee shall contribute to the Marketing Fund as Additional Rent the
annual amount of fifty cents ($.50) per square foot of Floor Area of Lessee's
Building, in twelve (12) equal monthly installments on the first day of each
calendar month throughout the Term (hereinafter "Marketing Fund Dues"). The
Marketing Fund Dues shall be increased following the close of the first Lease
Year in and for which they are paid, and at the close of each Lease Year
thereafter, to be an amount equal to the Marketing Fund Dues payable in the
preceding Lease Year, increased by five percent (5%). The Marketing Fund Dues
shall be used by Lessor to pay all costs and expenses associated with the
formulation and carrying out of programs for the promotion of the Shopping
Center. In addition, Lessor may use up to 20% of the Marketing Fund Dues to
defray the cost of administration of the Marketing Fund, including, without
limitation, the salary and related costs and benefits of a director and related
administrative personnel, and rent allocable to any management office within the
Shopping Center devoted to use by such personnel. Lessee shall comply with all
other reasonable rules and regulations established by Lessor in connection with
the Marketing Fund.
Lessee shall contribute to the Marketing Fund, as an initial assessment for
advertising and promotional activities, an amount equal to One Dollar ($1.00)
per square foot of Floor Area of Lessee's Building, due upon Lessee's execution
of this Lease. The Lessee shall have the right upon fifteen (15) days prior
written notice, one per Lease Year, to review the books and records of Lessor as
it pertains to the Marketing Fund.
24. TIME IS OF THE ESSENCE: Time is of the essence of this Lease and all
of its terms, provisions, and conditions.
25. RENEWAL TERMS:
Lessee shall have the option, to be exercised as herein provided to extend
the Term of this Lease for two (2) successive terms of five(5)years each("Option
Periods" following the Initial Term, provided there is no monetary or
non-monetary default in the performance of any condition in this lease as to
which a notice of default has been given to Lessee and that remains uncured.
Notwithstanding the foregoing provision, in the case of any non-monetary default
which can with due diligence be cured before ninety (90) days preceding the
Termination Date of the Initial Term or Option Period as the case may be, if
Lessee shall have proceeded promptly after the service of the notice of default
with due diligence to cure such default, Lessee may nevertheless exercise such
option and shall be entitled to such Option Period so long Lessee as continues
to diligently complete such cure and such cure shall be effected within one
hundred twenty (120) days of such default.
Said Option Periods are expressly conditioned upon Lessor's receipt of
Lessee's timely written notice to Lessor of its intent to exercise such Option
Period at least twelve (12) months prior to the expiration of the Initial Term
or then current Option Period.
All terms and conditions contained in the Lease shall apply during the
Option Periods except that the Minimum Rent shall be the greater of:(i) the then
prevailing fair market value for use of the Leased Premises during the Renewal
Term (hereinafter referred to as the "Fair Rental Value"), taking into
consideration bona fide third-party offers and then current rental rates in the
area for comparable facilities similarly situated and excluding tenant fix up
allowances rent abatements and other concessions, unless, Lessee shall benefit
from same during the applicable Option Period; or (ii) an amount equal to the
Minimum Rent payable in the preceding Lease Year. Once established such Minimum
Rent shall increase on the anniversary date of the Term Commencement Date in the
manner and method set forth in Section 2(a).
Within thirty (30) days after receipt of Lessee's written notice of its
intention to exercise the option hereunder, Lessor shall serve Lessee with
written notice of the proposed Fair Rental Value and the basis therefor. If and
only if, the Fair Rental Value is the method for determining the Option Period
Minimum Rent and the parties fail to so agree on the Fair Rental Value then, in
such event, such Fair Rental Value shall be determined by the mutual agreement
of two retail real estate brokers knowledgeable of the subject matter. Each
party shall select one broker within five days of request to do so by the other
party and said brokers shall make their determination within ten days
thereafter. In no event shall such Fair Rental Value be less than the Minimum
Rent payable in the preceding year.
All terms and conditions contained in the Lease shall apply during the
Option Periods. In the event Lessee elects to exercise Option Periods One or
Two, Lessee agrees to continue the remodeling requirements of Section 6 of the
Lease.
26. ENVIRONMENTAL:
-------------
(a) Lessor Representations and Warranties - Lessor warrants that as of the
date it delivers possession of the Leased Premises to Lessee, and to the best of
Lessor's knowledge, there is not present on the property any Hazardous materials
(including asbestos but excluding naturally occurring varying levels of Radon)
and that the property is not now being used for the handling, storage,
treatment, transportation or disposal of Hazardous materials. In the event that
Lessor is held to be in breach of this warranty Lessor agrees to indemnify,
defend, and hold the Lessee harmless from and against any loss, including
without limitation, attorney's fees incurred by the Lessee as the result of such
presence or content, handling, storage, transportation, treatment or disposal of
Hazardous materials or hazardous substances, (including asbestos but excluding
naturally occurring varying levels of Radon). The representatives and warranties
contained in this paragraph 26 (a) shall survive the termination of this Lease
and discharge of Lessor's other obligations hereunder.
(b) Lessee's Representations and Warranties - Lessee hereby represents and
warrants as of the date hereof as follows:
(1) Lessee its agents, contractors or invitees shall not engage in or
permit any operations or activities upon, or any use or occupancy of the Leased
Premises, or any portion thereof, for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use, generation, release discharge,
refining, dumping or disposal of any Hazardous Materials (whether accidental or
intentional) on, under, in or about the Leased Premises.
(2) Lessee shall obtain any or all permits, licenses and other
authorizations which may be required under all Environmental Requirements,
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of any Hazardous Materials. Lessee shall further
comply with all terms and conditions of any such required permits, licenses and
authorizations, and shall also be in compliance with all other Environmental
Requirements.
(3) Lessee its agents, contractors, or invitees shall not construct,
place, deposit, store, dispose of nor locate on the Leased Premises, any
poly-chlorinated bi-phenyls (PCBs) nor transformers, capacitors, ballasts, or
other equipment which contains dielectric fluid containing PCBs, or any asbestos
or asbestos-containing materials or any insulation material containing urea
formaldehyde or any radon gas.
(4) The above representations and warranties contained in this Section
shall survive the termination of this Lease and the discharge of Lessee's other
obligations hereunder.
(c) Definitions - For the purposes of this Lease, the following terms shall
have the following meanings:
(1)"Hazardous Materials" means any substance whether solid, liquid or
gaseous in nature:
(i) the presence of which requires investigation or remediation
under any Environmental Requirements, or
(ii) which is or becomes defined as a "hazardous waste" or
"hazardous substance" or "pollutant" or "contaminant" under any federal,
state or local statute, regulation, rule, or ordinance or amendments thereto
now in force or hereafter enacted including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.) as modified by the Superfund Amendments and Re-
authorization Act of 1986 or the Resource Conservation and Recovery Act
(42 U.S.C Section 6901 et seq.); or
(iii) which is toxic, explosive, corrosive, flammable,infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is or becomes
regulated by any governmental authority, agency, department, commission, board,
agency or instrumentality of the United States, any State of the United States,
or any political subdivision thereof; or
(iv) the presence of which on the Leased Premises poses or
threatens to pose a hazard to the Leased Premises or the health or safety of
persons an or about the Leased Premises, or
(v) without limitation which contains gasoline, diesel fuel or
other petroleum hydrocarbons or volatile organic compounds; or
(vi) without limitation which contains poly-chlorinated
bi-phenyls (PCBs) or asbestos or asbestos-containing materials or urea
formaldehyde foam insulation or petroleum products or lead based paints; or
(vi) without limitation radon gas other than that which is
naturally occurring in varying levels.
(vii) any materials present on the land or in the improvements
which have been shown to have significant adverse effects on human health or
which are subject to regulation under the Toxic Substances Control Act,
applicable state law, or any other applicable federal, state or local laws
now in force or hereafter enacted relating to toxic substances.
(2) "Environmental Damages" means all claims, judgments, damages
(including without limitation, punitive damages), losses, penalties, fines,
liabilities (including strict liability), encumbrances, liens, costs,
expenses of investigation and defense of any claim, whether or not such
is ultimately defeated, and of any settlement or judgment of whatever
kind or nature, contingent or otherwise, matured or unmatured, foreseeable
or unforeseeable, including without limitation reasonable attorneys' fees
and disbursements and consultants' fees, any of which are incurred at any time
as a result of either the Lessee's or the Lessor's causing directly or
indirectly any Hazardous Material to enter upon, about,or beneath the Leased
Premises or migrating or threatening to migrate from the Leased Premises, or the
existence of a violation by Lessee or Lessor of Environmental Requirements
pertaining to the Leased Premises and including, without limitation:
(i) damages for personal injury, or injury to the Leased Premises
or natural resources occurring upon or off of the Leased Premises, foreseeable
or unforeseeable, including, without limitation, lost profits, consequential
damages, the cost of demolition and rebuilding of any improvements on the Leased
Premises, interest and penalties including but not limited to claims brought by
or on behalf of employees of Lessee, with respect to which Lessee waives, for
the benefit of Lessor only, any immunity to which it may be entitled under any
industrial or worker's compensation laws;
(ii) diminution in the value of Shopping Center or any part thereof,
and damages for the loss of or restriction on the use of or adverse impact on
the marketing of rentable or usable space or of any amenity of the Shopping
Center;
(iii) fees incurred for the services of attorneys, consultants,
contractors, experts, laboratories and all other costs incurred in
connection with the investigation, cleanup or remediation of such Hazardous
Materials or violation of Environmental Requirements including but not limited
to, the performance of any cleanup, remedial, removal, abatement, containment,
closure, restoration or monitoring work required by any federal, state or local
governmental agency or political subdivision, or reasonably necessary to restore
the Leased Premises to the condition existing prior to the introduction by
Lessor or Lessee of Hazardous Materials upon, about or beneath the Leased
Premises in accordance with the standard of remediation imposed by applicable
law or otherwise expended in connection with such conditions, and including
without limitation any attorneys' fees, costs and expenses incurred by Lessor
in enforcing this Lease or collecting any sums due hereunder; and
(iv) liability to any person or entity to indemnify such person or
entity for costs expended in connection with items referenced in Subparagraph
(iii) hereof.
(3) "Environmental Requirements" means all applicable present and
future statutes, regulations, rules, ordinances, codes, licenses, permits,
orders, approvals, plans, authorizations, and similar items, of all
governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgment and orders relating to the protection of human health or the
environment, including, without limitation:
(i) all requirements, including but not limited to those
pertaining to reporting, licensing, permitting, investigation and remediation
of emissions,discharges, releases or threatened releases of Hazardous Materials,
into the air, surface water, ground water or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials; and
(ii) all requirements pertaining to the protection of the health and
safety of employees or the public.
(d) Indemnification. Lessee agrees to indemnify, reimburse, defend,
exonerate, pay and hold harmless:(a) Lessor, its affiliates and any other person
or entity which holds or which may hereafter have an interest in the Lease and
the Leased Premises, or either of them; and (b) the directors, officers,
partners, shareholders, employees, and agents, of Lessor any other person or
entity which have or which may hereafter hold an interest in the Lease
and the Leased Premises, or either of them, from and against any and all
Environmental Damages arising from the presence of Hazardous Materials, upon,
about or beneath the Leased Premises caused directly by Lessee, or arising in
any manner whatsoever out of the violation by Lessee of any Environmental
Requirements pertaining to the Leased Premises and the activities thereon,
or the breach by Lessee of any warranty or covenant or the inaccuracy of any
representation of Lessee contained in this Lease. Provided that in no event
shall Lessee indemnify Lessor under this paragraph 26 (d) for conditions
which existed or arose prior to Lessee taking possession of the Leased Premises
or which were caused by Lessor.
(e) De Minimis Substances. Nothing contained in this Section 26 shall be
deemed to prevent Lessee's use of Hazardous Materials contained in cleaning
fluids and in printer and photocopier toners typically used in offices.
27. ADA - NOTICE INDEMNIFICATION:
Lessor shall be solely responsible for "ADA" compliance for the Common
Areas of the Shopping Center exclusive of Lessee's Common Area Improvements,
Lessee's Building Improvements and the Leased Premises. Any alterations, remount
of barriers or other modifications which are required to be made shall be the
sole responsibility and at the expense of Lessor if outside the Leased Premises
or Lessee if inside the Leased Premises. Lessor shall indemnify and hold Lessee
harmless for any loss, damages or attorney's fees incurred due to a violation or
non-compliance under the Americans with Disabilities Act for work done to the
Common Areas if outside the Leased Premises or by Lessee if such work is
required inside the Leased Premises.
Both Lessor and Lessee shall put the other party on written notice
when any violations of the Americans with Disabilities Act have been
alleged or threatened by any third party or suit has been filed by any third
party. Said written notice shall take place within ten (10) days of the
allegations or threat or service of the suit, and shall be sent by first
class mail to the notice address as indicated in Section 19.
28. BANKRUPTCY AND INSOLVENCY
(a) Bankruptcy Terminates Lease. As a primary inducement for Lessor's
entering into this Lease, Lessor and Lessee agree that in the event any of the
following shall occur, and not be discharged, dismissed, or otherwise set
aside within sixty (60) days thereafter, this Lease shall automatically
terminate and neither this Lease nor any interest herein, nor any interest
in or to the Leased Premises shall become an asset of, to, or in any of
the below-mentioned proceedings, nor be passed, transferred, or conveyed to
any party whatsoever,whether by operation of law or by judicial order or
otherwise:
(1) Should Lessee institute any proceedings under the Bankruptcy Act
(Title 11 of the United States Code), as the same may be amended from time to
time, or any successor statutes, or under any other act relating to the subject
of insolvency or bankruptcy, whether in such proceeding Lessee seeks to be
adjudicated a bankrupt, or to be discharged of its debts or to effect a plan to
liquidation, composition or reorganization; or
(2)Should any involuntary proceeding be filed against Lessee under
any such bankruptcy laws; or
(3) Should Lessee become insolvent or be adjudicated a bankrupt in any
court of competent jurisdiction, or should a receiver or trustee of Lessee's
Leased Premises be appointed, or should Lessee make a general assignment
for the benefit of creditors; or
(4) Should there occur the attachment, execution, or other judicial
seizure of substantially all of Lessee's assets located at the Leased Premises,
or if a writ of attachment is executed on this Lease; or
(5) Should this Lease, or any interest herein or to the Leased
Premises, otherwise by operation of law devolve or pass to any person or
persons other than Lessee.
Notwithstanding this Section, this Lease shall not automatically terminate if
Lessee is not otherwise in default under this Lease, including the obligation to
pay rent.
(b) Waiver.The acceptance of rent at any time from time to time by Lessor
from Lessee as debtor in possession or from any Transfer as set forth in Section
24.01 above, shall not preclude Lessor from exercising its rights hereunder at
any time thereafter.
29. TITLE: SALE OF LEASED PREMISES BY LESSOR
(a) Title. This Lease, subject to Lessee's right of non-disturbance
and quiet enjoyment, shall be subject and subordinate to the following:
(1) Any covenants, conditions, restrictions, any rights of way,
and any other matters or documents of record pertaining to the Shopping Center
or the Leased Premises; and
(2) Any easements for utilities or ingress and egress or
easements, covenants, conditions and restrictions which now or hereafter may be
placed of record by Lessor for purposes of the common benefit of the occupants
of the Shopping Center, provided that any such easement, covenants, conditions
and restrictions shall neither preclude Lessee from operating its business nor
materially hinder access to the Leased Premises. Lessee agrees to execute such
documents requested by Lessor to subordinate its interest hereunder to such
easements, as they may be amended and supplemented from time to time.
Lessee agrees that it, and all persons in possession or holding under it, will
comply with the terms of the documents and matters of record set forth above.
(b) Sale of Leased Premises By Lessor. If Lessor shall sell, transfer, or
exchange its interest in the Shopping Center or the Leased Premises after the
date hereof, then, provided that Lessor's assignee or grantee shall assume
Lessor's obligations under this Lease, Lessor shall be released and discharged
from any and all obligations and responsibilities under this Lease, express or
implied, accruing after the effective date of such sale, Transfer, or exchange.
Lessee shall receive notice of any such transfer in writing.
30. MISCELLANEOUS PROVISIONS
(a) Recording - A memorandum of Lease set forth on Exhibit H may
be recorded by either party in the land records of Fairfax County.
(b) Interest - If (i) Lessee fails to make any payment under this Lease
when due, (ii) Lessor performs any obligation of Lessee under this Lease, or
(iii) Lessor incurs any costs or expenses as a result of Lessee's Default under
this Lease, then Lessee shall pay, upon demand, Interest from the date such
payment was due or from the date Lessor incurs such costs or expenses relating
to the performance of any such obligation or Lessee's default, as the case may
be, plus the payment due under (i), or the amount of such costs and expenses
incurred under (ii) or (iii), and Lessor's administrative costs in connection
therewith regardless of whether or not otherwise expressly provided for in this
Lease.
(c) Legal Expenses. If any action or proceeding is commenced in which
Lessor or Lessee is made a party by reason of being the Lessor or Lessee under
this Lease, or if Lessor or Lessee shall deem it necessary to engage attorneys
or institute any suit against Lessee or Lessor in connection with the
enforcement of Lessor's or Lessee's rights under this Lease, the violation of
any term of this Lease, the declaration of Lessor's or Lessee's rights
hereunder, or the protection of Lessor's or Lessee's interests under this lease,
the non-prevailing party in such action shall reimburse the other for its
expenses incurred as a result thereof including, without limitation, court costs
and reasonable attorneys' fees.
The provisions of this Section shall survive the expiration or earlier
termination of this Lease and apply to any action or proceeding instituted for
the purpose of recovering possession of the Leased Premises following such
termination or expiration.
(d) Successors and Transfers - This Lease and the covenants and
conditions herein contained shall inure to the benefit of and be binding upon
Lessor and Lessee, and their respective permitted successors and Transfers. Upon
any sale or other Transfer by Lessor of its interest in the Leased Premises,
Lessor shall be relieved of any obligations under this Lease occurring
subsequent to such sale or other Transfer.
(e) Limitation on Right of Recovery Against Lessor. It is specifically
understood and agreed that there shall be no personal liability of any
shareholder, partner, director, trustee, officer, employee, representative, or
agent of Lessor, in respect to any of the covenants, conditions or provisions of
this Lease. In the event of a breach or default by Lessor of any of its
obligations under this Lease, Lessee shall look solely to the equity of the
Lessor in the Shopping Center for the satisfaction of Lessee's remedies.
Accordingly Lessee hereby agrees to look solely to Lessor's equity in the
Shopping Center for the satisfaction of any claim arising from this Lease and
shall not seek to impose personal liability on any shareholder, trustee,
partner, officer, employee, representative or agent of Lessor. A similar
limitation on liability shall be inserted in each document executed by Lessor
pursuant to this Lease. The foregoing notwithstanding the Lessor agrees to be
liable for up to fifty thousand ($50,000) additional dollars above its equity in
the Shopping Center.
(f) Security Deposit. The Lessee agrees that it shall simultaneously
with the execution of this Lease, deposit with Lessor, as a Security Deposit for
the payment of all Minimum Rent and other additional rent and the performance of
Lessee's other obligations under the Lease, an irrevocable automatically
renewable letter of credit from a bank reasonably acceptable to Lessor, in a
form acceptable to Counsel for Lessor, in an amount equal to $200,000.00. Lessor
shall reimburse Lessee for one-half of all fees charged by the issuer of such
letter of credit.
If Lessee defaults in the payment of Minimum Rent or additional rent after
applicable notice and cure periods payable under the terms of the Lease, or
defaults in the performance or observance of any other obligation on its part to
be performed or observed under the terms of the Lease after applicable notice
and cure periods, inclusive of an obligation on the part of Lessee to replace
any expiring letter of credit thirty (30) days before the expiration thereof,
Lessor may draw down the entire amount of the letter of credit and apply all or
a portion of the sum so obtained to the payment of Minimum Rent and additional
rent in default, or any damages or other money arrearage and/or the damages and
costs incurred by Lessor in rectifying any default or to any amount to which
Lessor may be then or thereafter entitled under the Lease or simply to convert
said Letter of Credit cash to hold as cash security deposit and tenant shall
thereafter promptly restore the Security Deposit to the required amount
specified herein. Any such action shall not be construed as a limitation of
Lessor's right to invoke any other remedy available under the Lease or at law or
in equity for breach of the Lease, or to collect the full amount of damages
owing by Lessee on account of such breach. If by reason of Lessee's default
under the Lease, Lessor terminates the lease, either before or after the
commencement of the Initial Term or re-enters the Leased Premises, Lessor may
retain the Security Deposit as liquidated damages, applying it against the
damages which it suffers but without waiving its rights to recovery against
additional damages to where it may be entitled or applying it to the monthly
installments of Rent hereunder in inverse order of accrual.
Notwithstanding the foregoing, Tenant may, after the fifth (5th) anniversary of
the Term Commencement Date, replace such amount with an amount which represents
eighty percent (80%) of the original face amount of such letter of credit. Said
face amount may be further reduced on each subsequent anniversary of the Term
Commencement Date to sixty percent (60%) of such original amount on the sixth
(6th) anniversary, forty percent (40%) of such original amount on the seventh
(7th) anniversary and twenty percent (20%) of such original amount on the eighth
anniversary thereof. As of the ninth (9th) anniversary of the Rent Commencement
Date there shall be no Security Deposit required.
(g) Severability - If any term or provision of this Lease, or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be valid and be enforced to the fullest
extent permitted by law.
(h) Joint and Several Liability - If two or more individuals,
corporations, partnerships or other persons (or any combination of two or more
thereof) shall sign this Lease as Lessee, the liability of each such individual,
corporation, partnership or other persons to pay the Rent and perform all other
obligations hereunder shall be deemed to be joint and several, and all notices,
payments and agreements given or made by, with or to any one of such
individuals, corporations, partnerships or other persons shall be deemed to have
been given or made by, with or to all of them. In like manner, if Lessee shall
be a partnership or other legal entity, the members of which are, by virtue of
any applicable law or regulation, subject to personal liability, the liability
of each such member shall be joint and several.
(i) Broker's Commission - Lessor and Lessee warrant and represent to
each other that no broker, finder or agent has acted for or on their behalf in
connection with the negotiation, execution or procurement of this Lease. Lessee
and Lessor agree to indemnify and hold each other harmless from and against all
liabilities, obligations, and damages arising, directly or indirectly, out of or
in connection with a claim from a broker, finder or agent with respect to this
Lease or the negotiation thereof, including costs and attorneys' fees incurred
in the defense of any claim for compensation.
(j) Irrevocable Offer, No Option. The submission of this Lease by
Lessor to Lessee for examination shall not constitute a reservation of or option
for the Leased Premises. This Lease shall become effective only upon execution
thereof by both parties and delivery thereof to Lessee.
(k) Inability to Perform. If Lessor is delayed or prevented from
performing any of its obligations under this Lease by reason of strike, labor
troubles, or any cause whatsoever beyond Lessor's control, the period of such
delay or such prevention shall be deemed added to the time herein provided for
the performance of any such obligation by Lessor. Such inability to perform
shall not apply to the payment of Minimum Rent, Additional Rent, Common Area
charges, Taxes, Insurance, or Marketing Fund payments or other amounts due to
Lessor under this Lease.
(l) Survival. Notwithstanding anything to the contrary contained in
this Lease, the expiration of the Term of this Lease, whether by lapse of time
or otherwise, shall not relieve Lessee from its obligations accruing prior to
the expiration of the Term.
(m) Corporate Lessees. If Lessee is a corporation, the person(s)
executing this Lease on behalf of Lessee hereby covenant(s) and warrant(s) that:
Lessee is a duly formed corporation qualified to do business in the state in
which the Shopping Center is located; Lessee will remain qualified to do
business in said state throughout the Term; and such persons are duly authorized
by such corporation to execute and deliver this Lease on behalf of the
corporation.
(n) Relationship of Parties. This Lease shall not create any
relationship between the parties other than that of Lessor and Lessee.
(o) Other Lessees. Lessor reserves the absolute right to effect other
tenancies in the Shopping Center as Lessor shall determine in the exercise of
its sole business judgment. Lessee does not rely on the fact, nor does Lessor
represent, that any specific Lessee or type of Lessee shall occupy or continue
to occupy any space in the Shopping Center during the Term.
(p) Rule Against Perpetuities and Delivery of Possession. If Lessor
shall be unable to deliver possession of the Leased Premises as required herein,
by reasons outside of Lessor's Control, Lessor shall not be subject to any
liability for failure to deliver possession; under such circumstances, the
Minimum Rent and all other Rent shall be abated until delivery of possession or
until such later date after the actual possession date provided for in the
Lease, and such failure to deliver possession shall in any other manner affect
the validity of this Lease or the obligations of Lessee hereunder.
Notwithstanding anything to the contrary in the Lease, if Lessor does not
complete the work described in Exhibit B or otherwise fails to deliver
possession of the Leased Promises within eight (8) months of the date hereof for
reasons reasonably beyond the control of Lessor and not caused by Lessee, then
the Lease shall, at the option of Lessor or Lessee, become void and both parties
shall be relieved of all obligations; moreover, if the Term shall not have
commenced within three (3) years of the date hereof for any reason, then the
Lease shall automatically become void and both parties hereto shall be relieved
of all obligations.
(q) Restriction on Leasing. The Lessor agrees that, provided Lessee is
not in default hereunder, it shall not lease any space in the area of the
Shopping Center cross hatched in blue on attached Exhibit A-2 to another state
or federally chartered depository institution.
IN WITNESS WHEREOF, the parties hereto intending to be legally bound
hereby have executed this Lease under their respective hands and seals as of the
day and year first above written.
ATTEST: LESSOR:
RESTON NORTH POINT VILLAGE
LIMITED PARTNERSHIP, a District of
Columbia limited partnership, by its
general partner, PLANDEN CORPOR-
ATION, a Maryland corporation
_____________________ By: ___________________________
Theodore N. Lerner Name: Mark D. Lerner
Title: Vice President Date:
ATTEST: LESSEE:
EASTERN AMERICAN BANK, F.S.B.
a Virginia corporation
_____________________ By:___________________________
[corporate seal] Name:_________________________
Title: President
Date: June 4, 1993
<PAGE>
COUNTY OF MONTGOMERY
STATE OF MARYLAND
I hereby certify that on this 19th day of July, 1992, before me, a
Notary Public, in and for the State of Maryland, personally appeared Mark D.
Lerner, Vice-President of PLANDEN CORPORATION, a Maryland corporation, and on
behalf of said corporation did acknowledge the foregoing Lease, including the
attached Addendum, if any, to be the act and deed of said body corporate.
Witness my hand and notarial seal.
---------------------------
Notary Public
My commission expires 4/1/96
******************************************************
COUNTY OF FAIRFAX
STATE OF VIRGINIA
I hereby certify that on this 4th day of June, 1993, before me, the
subscriber, a Notary Public, in and for the State and County aforesaid,
personally appeared James M. Miller, President of Eastern American Bank, F.S.B.,
a _____________ corporation, and on behalf of said corporation did acknowledge
the foregoing Lease, including the attached Addendum, if any, to be the act and
deed of said body corporate.
Witness my hand and notarial seal.
----------------------------
Notary Public
<PAGE>
EXHIBIT A
Commitment No. 92-4986 File No. 92-4986
ALL THAT certain tract or parcel of land lying and being situate in Fairfax
County, Virginia, and more particularly described as follows:
All of Block One (1), Section Fifty-Seven (57) RESTON, as the same appears duly
dedicated, platted and recorded in Deed Book 7882 at Page 1727 among the land
records of Fairfax County, Virginia, and further described by metes and bounds
as follows:
Beginning at the southeasterly corner of Parcel A, Block 1, Section 55,
Reston (recorded in Deed Book 6729 at Page 277), said point also being on the
westerly right-of-way line of Reston Parkway, Route 602 (previously dedicated
and recorded in Deed Book 5646 at page 1843, Deed Book 6086 at page 1487, and in
Deed Book 6894 at page 154);
thence departing Parcel A, and running with westerly right-of-way line of
Reston Parkway, the following courses and distances:
S 00* 51' 52" E 57.97 feet to a point of curvature;
with an arc of a curve to the right whose radius is 1,005.96 feet and whose
chord bearing and distance are S 20* 44' 41" W 740.94 feet respectively, an arc
distance of 758.81 feet to a point of reverse curvature;
with the arc of a curve to the left whose radius is 1,096.74 feet and whose
chord bearing and distance are S 33* 54' 31" W 322.16 feet respectively, an arc
distance of 323.32 feet to a point of tangency;
S 25* 27' 47" W 100.46 feet to a point of curvature;
with the arc of a curve to the right whose radius is 25.00 feet and whose
chord bearing and distance are S 70* 25' 05" W 35.33 feet respectively, an arc
distance of 39.23 feet to a point of tangency, said point also being on the
northerly right-of-way line of Lake Newport Road, Route 6396 (previously
dedicated and recorded in Deed Book 6160 at page 464);
thence departing Reston Parkway, and running with the northerly right-of-way
line of Lake Newport Road, the following courses and distances:
N 64* 37' W 395.79 feet to a point of curvature;
with the arc of a curve to the left whose radius is 669.50 feet and whose
chord bearing and distance are N 68* 22' 58" W 87.71 feet respectively, an arc
distance of 87.77 feet to a point:
N 02* 23' 09" E 12.44 feet to a point, said point also being the
southeasterly corner of Block 2, Section 57, Reston (recorded in Deed Book 6334
at page 68);
thence departing Lake Newport Road and Block 2, and running through Parcel 2,
Reston (recorded in Deed Book 4926 at page 299 et seq), the following courses
and distances:
with the arc of a curve to the right whose radius is 681.50 feet and whose
chord bearing and distance are S 70* 16' 48" E 50.84 feet respectively, an arc
distance of 50.86 feet to a point:
N 21* ` 52' 28" E 60.71 feet to a point of curvature;
with the arc of a curve to the left whose radius is 100.00 feet and whose
chord bearing and distance are N 09* 16' 41" E 43.56 feet respectively, an arc
distance of 43.91 feet to a point of tangency:
N 03* 18' 06" W 181.67 feet to a point of curvature;
with the arc of a curve to the left whose radius is 175.00 feet and whose
chord bearing and distance are N 26* 29' 20" W 137.81 feet respectively, an arc
distance of 141.64 feet to a point of reverse curvature;
with the arc of a curve to the right whose radius is 125.00 feet and whose
chord bearing .and distance are N 46* 36' 27" W 13.38 feet respectively, an arc
distance of 13.39 feet to a point;
N 46* 27' 42" E 15.50 feet to a point;
with the arc of a curve to the right whose radius is 109.50 feet and whose
chord bearing and distance are N 12* 32' 10" E 181.72 feet respectively, an arc
distance of 214.33 feet to a point of tangency;
N 68* 36' 39" E 69.91 feet to a point of curvature;
with the arc of a curve to the left whose radius is 140.50 feet and whose
chord bearing and distance are N 54*16' 35" E 69.57 feet respectively, an arc
distance of 70.30 feet to a point of tangency;
N 39* 56' 30" E 190.64 feet to a point;
N 02* 52' 40" W 27.33 feet to a point;
N 28* 05' 18" E 186.90 feet to a point on the southerly line of Lot 23, Block
1, Section 55, Reston (recorded in Deed Book 6729 at page 277);
thence running with the southerly line of Lot 23, the same course continued
with Lot 22, Block 1, Section 55, Reston, S 67* 16' 00' E 50.00 feet to a point
on the southerly line of Lot 22;
thence continuing with the southerly line of Lot 22, the same course
continued with Lots 21, 20 and 19, Block 1, Section 55, Reston, S 8O* 52' 56" E
246.11 feet to a point on the southerly line of Lot 19;
thence continuing with the southerly line of Lot 19, the same course
continued with Lots 18, 17, 16 and Parcel A, Block 1, Section 55, Reston, S 85*
17' 57", E 291.16 feet to the point of beginning.
Containing 747.533 square feet or 17.16101 acres. more or less. Less and except
Parcel 1C not owned by Landlord.
AND BEING a portion of the same property conveyed to Reston Land Corporation, a
Delaware corporation, by deed from Gulf Reston, Inc., a Delaware corporation,
dated July 12, 1978 and recorded July 12 1978 in Deed Book 4926 at page 302
among the land records of Fairfax County, Virginia.
This Commitment Valid Only When Schedule B Attached
<PAGE>
CHICAGO TITLE INSURANCE COMPANY
Commitment No. 92-4986 File No. 92-4986
SCHEDULE B - SECTION 1
The following are the requirements to be complied with:
1. Instrument(s) creating the estate or interest to be insured must be
approved, executed, delivered and filed for record.
a) DEED in proper form from Reston Land Corporation, a Delaware
corporation, to Lerner Enterprises Limited Partnership, shown in Schedule A as
the proposed insured under the Owner's Policy to be issued, vesting fee simple
title in said purchaser.
b) DEED OF TRUST in proper form from the purchaser to Trustees to be
designated securing the indebtedness in favor of the Proposed Insured under the
Loan Policy to be issued.
2. Provide the following information for Reston Land Corporation: a current
Certificate of Good Standing from its state of incorporation; b) a corporate
resolution authorizing the sale and conveyance of the subject property upon the
terms contemplated hereunder; c) proper corporate authority for any signatory
executing the documents required herein on behalf of said corporation
3. Provide the following information for Lerner Enterprises Limited
Partnership: a)satisfactory evidence that the execution and delivery of the
required document(s) set forth above is pursuant to, and in accordance with,the
valid operative terms and conditions of the partnership agreement and
certificate; b) proper statutory certificate has been filed in the Office of
the Virginia State Corporation Commission.
4. Pay the agreed amounts for the interest in the land and/or the mortgage
to be insured to, or for the account of, the grantors and/or mortgagors.
5. Pay all premiums, fees and charges for the policy(ies) to be issued.
6. Pay all taxes, charges and assessments, levied and assessed against the
subject premises, which are now due and payable.
NOTE: Taxes have been paid through the year 1991.
7. You must provide satisfactory evidence (such as lien waivers from all
laborers, suppliers or providers of services) that any improvements, repairs
and/or alterations to the premises have been completed and fully paid for, or,
in the alternative, that no labor, material or services have been performed or
provided for an improvement to the subject premises within the statutory time
period within which a lien could be filed. Note: The Owner's Affidavit required
below will satisfy this requirement if no labor, material or services have been
performed or provided within the statutory time when a mechanic's lien can be
filed.
8. The record owner(s) of the property to be insured must execute the Company's
Owner/Seller Affidavit in order for the final policy(ies) to provide extended
coverage to the insured(s). The final policy(ies) will be subject to any matters
shown on said affidavit unless removed to the satisfaction of the Company.
9. Provide a current satisfactory survey and inspection report in
accordance with A.L.T.A. standards of the premises if survey coverage is to be
extended to any insured hereunder. The policy(ies) are subject to all matters
shown thereon.
<PAGE>
CHICAGO TITLE INSURANCE COMPANY
Commitment No. 92-4986 File No.: 92-4986
SCHEDULE B - SECTION II
Schedule B of the policy or policies to be issued will contain
exceptions to the following matters unless the same are disposed of to the
satisfaction of the Company:
1. Defects, liens, encumbrances, adverse claims or other matters, if
any, created, first appearing in the public records or attaching subsequent to
the effective date hereof but prior to the date the proposed insured acquires
for value of record the estate or interest or mortgage thereon covered by this
commitment.
2. Rights or claims of parties in possession not shown by the public
records.
3. Encroachments, overlaps, overhangs, violated restrictive covenants
and conditions, deficiencies in quantity of land, boundary line disputes, and
any other matters which would be disclosed by an accurate current survey and
inspection of the premises.
4. Easements or claims of easements not shown by the public
records.
5. Any lien, or right to a lien, for services, labor or material
heretofore or hereafter furnished, imposed by law, and not shown by the public
records.
6. Taxes, special assessments, and/or public charges (including
assessments by any county, municipality, metropolitan district or commission)
which are not shown as existing liens by the public records, or which have been
levied or assessed but are not yet due and payable.
7. Taxes subsequent to those for the year 1991, a lien not yet
due and payable, and in addition thereto, any and all supplemental taxes.
8. Restrictions, terms and conditions as set forth in Deed Book 2431 at
page 319, amended in Deed Book 2502 at page 373, in Deed Book 2750 at page 130,
in Deed Book 5947 at page 1127, and in Deed Book 6072 at page 69.
9. Maintenance assessments per Article II of aforesaid
restrictions.
10.Reservation of easements for installation and maintenance of
underground utilities, supply and transmission lines, and drainage facilities as
set forth in aforesaid restrictions and noted on recorded plat of subdivision.
11.Declaration of Protective Covenants recorded in Deed Book 2842 at
page 210, re-recorded in Deed Book 2845 at page 517.
12.Deed of Easement and Assignment to Reston Transmission Company
recorded in Deed Book 3268 at page 113.
13.Reston Land/Warner Agreement recorded in Deed Book 5254 at page 764.
14.Easement granted Virginia Electric and Power Company by instrument
recorded in Deed Book 856 at page 52.
<PAGE>
[Graphic Omitted]
<PAGE>
EXHIBIT B
CONSTRUCTION AND ACCEPTANCE OF THE LEASED PREMISES
This Exhibit B forms a part of that certain Ground Lease (the "Lease")
for Leased Premises in North Point Village Center, Reston Virginia, entered into
between North Point Village Limited Partnership ("Lessor") , and EASTERN
AMERICAN BANK, F.S.B. a Virginia corporation ("Lessee").
All capitalized Terms used in this Exhibit B but not defined herein,
shall have the same meaning as they do in the Lease.
I. LESSEE'S PRELIMINARY ANALYSIS
A. Lessee's Approval of Title. Lessee's obligations hereunder shall be
contingent upon Lessee's review and approval of a current preliminary report
(the "Preliminary Report") concerning the Shopping Center within thirty (30)
days of Lessee's receipt of same, together with legible copies of documents
evidencing the exceptions shown thereon. In the event that Lessee fails to
furnish Lessor with written notice disapproving the Preliminary Report within
such thirty (30) day period,Lessee shall be conclusively deemed to have
approved. If Lessee furnishes Lessor with written notice reasonably disapproving
any matter set forth in the Preliminary Report which would preclude the Lessee
from reasonably building and operating Lessee's Building Improvements for the
within said thirty (30) day period, Lessor shall have thirty (30) days in which
to cure any reasonably objectionable matter contained therein. If Lessor does
not cure the objection within thirty (30) days, this Lease shall automatically
terminate and except for such liability as may theretofore have accrued, Lessor
and Lessee shall thereafter be discharged from any further liability hereunder.
B. Lessee's Approval of Environmental Report and Soils Report. Lessor
shall deliver to Lessee the currently available Level I Environmental Report for
the Shopping Center and a soils report to include the Leased Premises prepared
by qualified and licensed environmental consultants and engineers and, if,
recommended by the Level I report a Level II Environmental Report by the same
firm. Lessee shall have the right to terminate within ten (10) business days
after receipt of such reports in its reasonable discretion if such report shows
a problem with regard to the Leased Premises.
C. Lessee's Approval of Zoning. Lessee shall have thirty (30) days
following the date hereof to investigate whether its intended use of the Leased
Premises and Lessee's Building Improvements will comply with applicable zoning
and building codes. Lessee may terminate this Lease within said thirty (30) day
period in the event the Permitted Use does not comply with applicable zoning and
building codes.
II. CONSTRUCTION OF LESSEE'S BUILDING IMPROVEMENTS AND LESSEE'S COMMON
AREA IMPROVEMENTS WITHIN THE LEASED PREMISES.
Lessee is required to construct within Lessee's Building Improvement
Area, that certain single-story building in accordance herewith consisting of
approximately two thousand five hundred (2,500) square feet of Floor Area to be
constructed in the approximate location identified as "Pad E" on the preliminary
plot plan attached hereto as Exhibit A-2 and more particularly outlined on
Exhibit A-1, as well as the drive-thru, all fixtures, fences, utility
installations, loading and trash collection areas, ground cover, landscaping,
and artistic and ornamental components of any of the above. All materials used
in any of Lessee's Building Improvements, general design and identification
signage shall be prior approved in writing by Lessor, and will be
architecturally compatible with the Shopping Center. All site layout, design and
material selections for Lessee's Building Improvements and Lessee's Common Area
Improvements shall be subject to all governmental and Design Review Board
approvals as well, which Lessee agrees in good faith to comply with.
Lessee shall be responsible for constructing all Common Area
improvements in Lessee's Common Improvement Area including without limitation
all improvements associated with parking, access roads, driveways, entrances and
exits, retaining walls, landscaping, paving, striping, curbing, drainage,
lighting, signage, and any other improvement established for the general use
convenience and benefit of all occupants and customers of the Center. Lessee's
Common Area Improvements shall conform in all respects to the specifications
established or to be established by Lessor for work performed in the Common
Areas of the Center.
A. Preparation of Preliminary Plans and Specifications.
----------------------------------------------------
Within thirty (30) days after the execution date of this Lease, Lessee
shall prepare and deliver to Lessor and the necessary approval bodies within
Reston (i.e., Design Review Board) for their approval copies of Lessee's
elevation studies of the proposed Lessee Building, plus preliminary site plans
and specifications and building sections, if available (collectively
"Preliminary Plans") for the construction of the Lessee's Building improvements
and Lessee's Common Area Improvements. In addition, Lessor shall be sent a
certificate of the person or persons who prepared them certifying that the
Lessee has fully paid for the Preliminary Plans or waiving payment and any right
to a lien for preparing them, and permitting Lessor to use the plans without
payment for purposes relevant to and consistent with the Lease.
The Preliminary Plans (i) shall designate the exact location of
Lessee's Building Improvements and Lessee Common Area Improvements on the Leased
Premises, (ii) shall indicate the exact dimensions of Lessee's Building, and
(iii) shall contain details of the construction of Lessee's Building
Improvements and Lessee's Common Area Improvements, including, without
limitation, drainage plans, utilities, sewer and service connections, paving,
lighting, curbs and gutters, storm drains, landscaping, design and location of
all proposed signage, drive-thru and trash enclosure, and any and all other
improvements required by any governmental authority or the Design Review Board
of Reston in connection with Lessee's Permitted Use at the Leased Premises. In
the event that Lessee fails to deliver the Preliminary Plans to Lessor within
the thirty (30) day period provided herein, Lessor shall have the right to
terminate this Lease upon notice to Lessee.
Within twenty (20) days after its receipt of the Preliminary Plans,
Lessor shall approve same or deliver to Lessee its specific objections to the
Preliminary Plans, together with Lessor's proposed solution to each objection.
If the parties are unable to resolve Lessor's objections to the Preliminary
Plans within twenty (20) days after Lessee has received notice of such
objections, either party may terminate this Lease by giving notice to the other
not later than ten (10) days after expiration of said twenty (20)day period. The
Lessor shall have no right to unreasonably object to Tenant's Preliminary Plans
if they are consistent with the design of the Shopping Center and the previously
approved pad site buildings.
If Lessor fails to either approve or disapprove the Preliminary Plans
within the twenty (20) day period provided herein, Lessor shall be deemed to
have disapproved the Preliminary Plans unless Lessee sends Lessor a Second
written request for approval which if not responded to if five days shall
qualify as an approval. The Preliminary Plans, when approved by Lessor, shall
supersede any and all previous plans and specifications to the extent
inconsistencies and all other agreements, understandings, representations and
warranties concerning the Lessee's Building improvements and Lessee's Common
Area Improvements.
B. Preparation of Final Construction Documents and Specifications.
Within ten (10) days as it relates to Lessee's site plan and within forty five
(45) days as it relates to Lessee's Building Improvements, after Lessor and
DRB's approval of the Preliminary Plans, Lessee shall submit to Fairfax County
for approval and proceed with due diligence, at its own expense, to obtain any
and all necessary permits, conditional use permits, variances, etc. required
from governmental authorities, for the construction of the aforementioned
improvements and the operation of Lessee's business. Within two hundred ten
(210) days after the Preliminary Plans have been approved, Lessee shall prepare
and deliver to Lessor three (3) blueline copies of and one set of sepias of the
final construction documents and specifications based on the Preliminary Plans
(as approved by Lessor) relating to construction of the Lessee's Building
Improvements and Lessee's Common Area Improvements, which have been marked to
indicate that they have been approved by all appropriate governmental agencies
(the "Final Plans") (including those agencies required to obtain a building
permit). Each party shall initial and date a copy of the Final Plans. In the
event Lessee has not submitted its final plans to Fairfax County within
forty-five (45) days after Lessor and DRB's approval, Lessor may terminate this
Lease upon giving Lessee ten (10) days written notice and opportunity to cure.
In the event that Lessee fails to deliver the Final Plans within the two hundred
ten (210) day period provided herein, Lessor (or Lessee in the event site plan
or building permit approval is denied by applicable authorities) may terminate
this Lease by giving notice to Lessee; provided, however, such two hundred ten
(210) day period shall be extended for a period equal to the period of any
procedural delays caused solely by the applicable governmental authorities as
set forth in Section l(b).
C. Submission of Construction Documents to Lessor. No later than
twenty (20) days after the Approval of the Final Plans set forth in Section B
above, Lessee shall submit each of the following items to Lessor for approval:
(1) A proposed construction agreement, reasonably satisfactory
to Lessor, between Lessee and a general contractor for construction of the
Lessee's Building Improvements and Lessee's Common Area Improvements, which
agreement shall permit Lessor, at its option, to assume Lessee's rights under
the agreement in the event that Lessee defaults; provided that if Lessor
so-elects to assume Lessee's rights under such Agreement, Lessee shall not be
relieved of any further liability hereunder;
(2) The proposed contractor's financial statement which shall
show the contractor's net worth of at least two times great than the amount of
the proposed construction contract.
(3) A written warranty reasonably satisfactory to Lessor to be
executed by the proposed contractor in favor of Lessor which provides that the
Improvements shall be free from defective workmanship and materials for a period
of one (1) year. from the date the notice of completion is recorded.
(4) Written approval from a financial institution, if any,
that shall have made the commitment to finance the construction of the
Improvements.
By written notice given within ten (10) days following Lessee's
delivery, of the last of items C(1) through (4), above (the "Construction
Matters"), Lessor shall reasonably approve the Construction Matters, or deliver
to Lessee its specific objections regarding such matters, together with proposed
solutions to each reasonable objection. Should Lessor fail to either approve or
disapprove the Construction Matters within the ten (10) day approval period
provided herein, Lessor shall be deemed to have disapproved such matters unless
Lessee sends Lessor a second written request for approval which if not.
responded to in five days shall qualify as an approval; In the event that the
parties are unable to resolve Lessor's objections to the Construction Matters
within thirty (30) days following Lessee's receipt of Lessor's objections, then
either party may terminate this Lease by giving notice to the other party within
five (5) days after expiration of said thirty (30) day period or agree thereto.
Lessor shall have no right to object to the Construction Matters by reason of
their being Consistent with Subparagraphs 1-4 above
Upon approval of the Construction Matters, Lessee and/or Lessee's
contractor, as the case may be, shall deliver to Lessor, in the form approved by
Lessor in accordance with this Section C, signed originals of the documents
referred to in items C(l) through (3). Construction of the Improvements shall
not commence until all such documents have been delivered to Lessor.
D. Lessee's Notice of Intent to Commence Construction. At any time
before commencement of construction of the Lessee's Building Improvements or
Lessee's Common Area Improvements or the delivery of any materials to the Leased
Premises, Lessee shall give Lessor written or oral notice of its intention to
commence work, which notice, subject to the other provisions of this Exhibit B,
shall be given no less than ten (10) day prior to the commencement of such
activities after the Lessor. The notice shall specify the date an which
construction is intended to commence, and Lessor shall have the right to enter
the Leased Premises to post and maintain notices of non-responsibility in
accordance with applicable law. Lessor shall also have the right at all
reasonable times to inspect the Leased Premises and Improvements and monitor the
progress of the construction thereon.
E. Lessee's Obligation to Construct the Leased Premises. Upon Lessor's
delivery to Lessee of the building pad as required by Section III of this
Exhibit B, hereinbelow and immediately after the later to occur of (i)
satisfaction of the last of the conditions set forth in Sections D and C above,
or (ii) one hundred eighty (180) days after execution of the Lease, Lessee shall
commence construction of the Lessee's Building Improvements and Lessee's Common
Area Improvements and shall use best efforts to complete such construction
within five (5) months after commencement, provided that the time for completion
shall be extended for such period or periods as Lessee is prevented from
completing construction by delays which are beyond its control, including
without limitation strikes, lock-outs, inability to obtain necessary materials,
acts of God, and the like. Lessee shall perform all work in a good and
workmanlike manner, shall construct the Improvements in accordance with the
Final Plans, and shall comply with all applicable governmental permits, laws,
ordinances, and regulations relating to such construction. At all reasonable
times during construction of the Improvements and upon completion, Lessor and
Lessor's architect shall have access to the Improvements for purposes of
inspection.
F. Change Orders. Prior to the commencement of work with respect to any
material change order effecting the exterior of Lessee's Building, Lessee shall
obtain Lessor's written consent to such change order, provided that Lessor shall
respond to any written change order request within five (5) business days of its
receipt of same and shall not unreasonably withhold such consent.
Notwithstanding the foregoing, Lessee shall not be required to obtain Lessor's
consent before commencing work with respect to any change order which is ordered
by an applicable governmental authority and which will not affect the exterior
appearance of the Improvements or result in more than a minor deviation from the
Final Plans.
G. Notice of Completion. During the progress of the construction and
upon completion thereof, Lessee shall file or cause to be filed such notices,
including, without limitation, a notice of completion, as are permitted or
required to be filed pursuant to applicable law. Lessee hereby appoints Lessor
as Lessee's attorney-in-fact to file such notices in the event Lessee fails to
so do.
H. Completion. Upon completion of construction of the
Improvements, Lessee shall, at Lessee's sole cost and expense, furnish Lessor
with each of the following:
(1) So-called as-built plans which accurately detail all
changes to or deviations from the Final Plans made during the course of
construction;
(2) A certificate of occupancy, or any equivalent permit
or certificate which may be required or issued by any governmental body in
connection with the use of the Improvements; and
I. Lessee shall be responsible for all construction costs related to
Lessee's Building Improvements and Lessee's Common Area Improvements except to
the extent such costs are attributable to changes in the Final Plans requested
by the Lessor. which costs shall include, but not be limited to all costs
relating to landscaping, hardscaping, fixtures, lighting, paving, fences,
utility connections and meters, and loading and refuse removal areas, which are
immediately adjacent to Lessee's Building; all costs associated with
architecture and engineering services necessary to construct such improvements;
and all costs of any and all necessary city, state or local governmental
permits, licenses, or assessments related to the improvements. Lessee shall pay
for all trade fixtures, equipment, furniture and furnishings placed at or
installed in the improvements.
III. LESSOR'S OBLIGATION TO CONSTRUCT.
--------------------------------
Lessor's only construction obligations for the Leased Premises under
this Lease consist of the following:
Except as otherwise set forth herein Lessee hereby accepts the Leased
Premises "as is" in its condition existing as of the date hereof. Except as set
forth herein Lessee acknowledges that neither Lessor, nor any agent or
representative of Lessor, has made any representation or warranty with respect
to the condition of the Leased Premises or the suitability of the Leased
Premises for the uses contemplated herein, and that Lessee has entered into this
Lease based solely upon its own investigation and inspection of the Leased
Premises and the Shopping Center. Lessor does not represent, and Lessee does not
rely on the fact that any specific lessee or lessees will occupy space in the
Shopping Center during the Term.
Notwithstanding the foregoing, Lessor shall, in accordance with this
Section III bring water and, sanitary sewer to a mutually agreeable location
within five (5) feet of the Leased Premises. The Lessee shall file an
application for and arrange for the installation of, gas, electrical, and
telephone facilities for the Tenant's Building Improvements. In no event shall
Lessor be required to pay any connection service fees, security deposits, or any
other fee, Cost or charge imposed by any utility or governmental authority in
Connection with the installation and use of such utility services on the Leased
Premises;
Lessor warrants that the Site Plan depicts the Shopping Center as is
currently contemplated by Lessor to be built. Such site plan is subject to
approval by the Design Review Board and all applicable governmental agencies
prior to construction. In the event Lessor, after diligent efforts, is unable to
obtain approval for Lessee's Leased Premises as configured from all relevant
authorities, this Lease shall automatically be null and void. The boundaries of
such site plan are accurately delineated thereon.
A. Lessor shall deliver the Leased Premises to Lessee consistent with
Lessee's approved site plan dated May 18, 1983, for the Leased Premises graded
to within 2/10ths of a foot of finish grade compacted to ninety-five percent
(95%) compaction. Lessee's obligation to construct the Building Improvements and
Common Area Improvements within the time period set forth herein is conditioned
upon Lessor's timely delivery of the graded building pad to the Lessee. The time
line for Lessee's construction shall be extended one (1) day for each day Lessor
is delayed in delivering such pad. Written notice from Lessor signifying that it
has completed its required work for delivery of the Leased Premises shall
constitute delivery thereof for purposes hereunder.
B. Lessor shall not voluntarily introduce landscaping other than low
shrubbery (such landscaping will not obstruct from view the Lessee's Building
Improvements) into the area bordering, the Leased Premises, (outlined in red in
Exhibits Al and A2). This provision is subject to modification only pursuant to
Reston Design Review Board and/or Fairfax County landscaping requirements.
IV. LESSEE'S OBLIGATIONS DURING CONSTRUCTION
A. Insurance. From the date on which Lessee commences its
construction activities hereunder until the Rent Commencement Date, Lessee shall
maintain in effect the following insurance:
(1) "All Risk" Completed Value Non-reporting Form or in such
other form reasonably acceptable to Lessor and Lessee, in the amount of the
greater of (i) the total bid for the construction of the Improvements or (ii)
the total estimated cost of completion of the Improvements, and naming Lessor as
additional insureds. In addition, Lessee shall maintain a comprehensive General
Liability insurance policy, naming Lessor as additional insureds, covering any
liability arising out of or connected with the ownership, use construction, or
occupancy of the Improvements in an amount equal to Two Million Dollars
($2,000,000) combined single limit; and
(2) Any and all other insurance required pursuant to Article
12 of the Lease. Lessee shall furnish satisfactory proof to Lessor of such
insurance coverage prior to commencement of construction.
B. Nuisance. Lessee shall perform the construction of the Improvements
in a manner that minimizes noise, dust, and disruption to the other lessees of
the Shopping Center. Lessor shall designate an area at the Shopping Center for
storage of construction materials, trailers, tools and equipment and for parking
for any and all persons connected in any way with the construction of the
Improvements, including but not limited to, materialmen, workers,
subcontractors, contractors, and laborers. Lessee shall not use any area at the
Shopping Center for such purposes except as designated by Lessor. Lessee
acknowledges that the area designated by Lessor may hot be immediately adjacent
to the Building Area and understands the inconvenience that may be caused by
such designation.
C. Parking Lot. Lessee shall not damage, demolish, destroy, or
otherwise harm any portion of the existing parking at the Shopping Center
adjacent to the Leased Premises without the prior written consent of Lessor,
which consent may contain conditions and restrictions to which Lessee shall
adhere. In the event that Lessor approves any such action by Lessee, Lessee, at
its sole cost and expense, shall at the earliest possible date restore the
parking facilities so damaged to their condition immediately prior to the
commencement of construction of the Improvements.
D. Barricades and Fences. Lessee shall cause to be constructed such
barricades and fences as Lessor may reasonably deem necessary for the safety and
security of the Shopping Center, its lessees, and their employees, agents,- and
patrons. Lessor may require such barricades and fences be painted in an
aesthetically pleasing manner. Lessee shall not construct any such barricade or
fence without the prior written consent of Lessor. All requests by Lessee for
construction of a barricade or fence shall be in writing and shall specify the
exact location of the barricade or fence.
<PAGE>
EXHIBIT C
SIGN REGULATIONS
These criteria are established from time to time by Lessor for the
Purpose of assuring an outstanding Shopping Center. Conformance will be strictly
enforced, - and any installed nonconforming or unapproved signs must be brought
into conformance prior to opening and at the expense of Lessee.
1. General Requirements:
A. In accordance with the requirements outlined in Exhibit B, Lessee
shall submit to Lessor for prior approval, three (3) copies of the Lessee's sign
manufacturer shop drawings, including a cross-section and letter height of the
sign to be installed.
B. All permits for signs and their installation shall be obtained
and paid for by the Lessee.
C. Lessee will be required to purchase and install the facade
sign and rear door sign at Lessee's sole cost and expense.
D. Maximum height of facade signage. to be thirty inches (30").
E. All signs must be approved by Lessor, Fairfax County, and Design
Review Board prior to fabrication, provided, however, Landlord shall enterpore
no objection to Lessee's use of its standard color Hunter Green presently
utilized at its Herndon location.
F. Lessee to install electrical conduit to facade for the store-
front sign. Lessee is responsible for installation of electrical power to the
facade. Lessee is responsible for final connection of sign.
G. The operation of the storefront sign will be placed on a timer
controlled by the Lessor.
2. Sign Designs:
A. Individual lighted channel letters per Lessor's criteria will be
placed on the facade above the curb and shall be made up of individual letters
with a maximum height of thirty inches (30"). Rear sign will be in style and
size as determined by Lessor.
3. Storefront Sign Specifications:
A. All letters constructed with 60 ma transformers and PK
housings, for UL approval.
B. Trim cap, returns and backing to be constructed of .040
aluminum.
C. All letters to be lighted by 2 rows of 13-15 mm white 6500
neon.
D. All letters to have 1" trim cap molding; letters to have
custom painted trimcaps and side returns painted per Lessor's standards.
E. All letters to have 1/8" plexiglass faces. Color to be per
Lessor's standards.
F. Letter style shall be at Lessee's option subject to Lessor's
prior approval..
G. Copy of Lessee's sign shall not include the product sold except as
part of the Lessee's Trade Name and shall contain no advertising devises,
slogans or other trademark or service marks.
4. Service Door Signage:
A. Lessees having a non-customer door for receiving merchandise
will be responsible for the installation of one service door sign with Lessee's
Trade Name as per Lessor's criteria.
5. Restrictions:
A. Signs shall only be located as per the attached design exhibit
B. Lessees shall only be permitted to install and have the two(2)
signs described in this Exhibit C.
C. Manufacturer's decals, credit card acceptance, hours of business,
telephone numbers, burglar alarm tape, and contacts, "sale" signs, etc., are not
permitted on the exterior glass or entrance doors. Hours of operation may be
permitted, provided, however, such signage is limited to two (2) square feet in
size and is located in the lower portion of the window next to the door, mounted
on plexiglass and hung behind the storefront glass by fishing line or thin wire.
D. Advertising devices such as attraction boards, televisions, posters,
banners and flags will not be permitted unless authorized in the Lease. This
provision is not intended to preclude televisions within the Leased Premises for
the purpose of providing entertainment and information to Lessee's customers.
E. Painted, flashing, animated, audible, revolving or other signs
that create the illusion of animation are not permitted which are visible from
the exterior of Lessee's Building.
F. Exposed bulb signs are not permitted.
G. No exposed junction boxes, lamps, tubing, conduits, raceways
or neon crossovers of any type are permitted.
H. Additional interior signage will be professionally made and in
keeping with other banking institution appearances. Interior neon signs (other
than the Trade Name or neon "Open" signs) are encouraged, provided they meet
with the Lessor's criteria and prior approval.
6. In the event Lessee's sign color (Hunter Green) is disapproved by the Design
Review Board and all appeals thereto exhausted, Lesser shall have five (5) days
in which to terminate this Lease an written notice to Lessor.
7. Lessee shall have the right to install one (1) monument sign in the event
such sign is permitted by the Design Review Board for the pad sites at the
Shopping Center.
<PAGE>
EXHIBIT D
NORTH POINT VILLAGE CENTER
RULES AND REGULATIONS
As an inducement to Lessor to enter into this Lease, Lessee expressly
covenants and agrees, at all times during the Term, and at such other times as
Lessee occupies the Leased Premises or any part thereof, to comply, at its own
cost and expense, with the following:
1. Any handling of freight for any purpose, or deliveries to or from
the Leased Premises, shall be made in a manner which is consistent with good
Shopping Center practice and only at such tines, in such areas, and through such
entrances and exits as are from time to time designated for such purposes by
Lessee Any truck or machine used for handling freight or making deliveries in
the Leased Premises or in the Shopping Center shall have rubber wheels only.
2. All garbage and other refuse shall be kept inside the Leased
Premises in the type of container specified by Lessor until such time as it is
to be collected. All garbage shall be prepared for collection, and collected in
the manner and at the times and places specified by Lessor. If Lessor elects to
furnish or designate any service for the removal of garbage and other refuse,
Lessee shall use such service. Lessee shall not be obligated to pay more for
such service than the prevailing competitive rates charged by reputable,
independent trash removal contractors for equal service on a direct and
individual basis. If furnished or billed by or through Lessor, Lessee shall pay
for such service monthly as additional Rent. Lessor may also provide trash
compactors for compacting Lessee's trash and add the cost thereof to Common Area
Charges. If Lessor does not provide such service, Lessee shall be solely
responsible for contracting for the removal of all garbage and other refuse from
the Leased Premises and shall pay promptly all charges therefor.
3. Lessee shall not (i) suffer, allow or permit any vibration, noise,
odor or flashing or unreasonably bright light to emanate from the Leased
Premises or from any machine or other installation located therein, or otherwise
suffer, allow or permit the same to constitute a nuisance to or interference
with the safety, comfort or convenience of Lessor or of any other occupant or
user of the Shopping Center; (ii) paint or cause to be displayed, painted or
placed, any handbills, bumper stickers or other advertising devices on any
vehicle(s) parked in the parking area(s)of the Shopping Center, whether
belonging to Lessee, its employee(s), or any other person(s); (iii) solicit
business, distribute, or cause to be distributed, in the Common Areas, any
handbills, promotional materials or other advertising; (iv) conduct or permit
any other activities in the Leased Premises that might constitute a public or
private nuisance; (v) permit the parking of any vehicles or the placement of any
displays, trash receptacles or other items, so as to interfere with the use of
any driveway, fire lane, corridor, walkway, parking area, mall or any other
Common Area; or (vi) use or occupy the Leased Premises or do or permit anything
to be done therein which in any manner might cause injury or damage in or about
the Shopping Center, or (vii) use or occupy the Leased Premises in any manner
which is unreasonably annoying to other lessees in the Shopping Center unless
directly occasioned by the proper conduct of Lessee's business in the Leased
Premises.
4. Lessee shall use, and allow to be used, the plumbing within the
Leased Premises and the Shopping Center only for the purpose for which it is
designed. Lessee shall be solely responsible for any breakage, stoppage or
damage resulting from its violation of this provision, and shall pay any costs
associated therewith to Lessor upon demand as additional Rent.
5. Lessee shall contract for and utilize termite and pest extermination
services for the Leased Premises as, and with such contractor as, Lessor may
from time to time designate. Lessee shall not be obligated to pay more for such
service than the prevailing competitive rate charged by reputable, independent
contractors. If Lessor does not designate such contractor, Lessee may employ a
reputable contractor of its choosing, subject to Lessor's prior written consent.
6. Lessee shall install and maintain at all times a display of
merchandise in the display windows (if any) of the Leased Premises and shall
keep such display windows well lighted during all Shopping Center business hours
and for at least one (1) hour thereafter. Lessee shall also keep the display
windows lighted during such other hours as Lessor may from time to time
designate. All articles, and the arrangement, style, color and general
appearance thereof shall be in keeping with the character and standards of the
Shopping Center as determined by Lessor.
7. Lessee shall participate in any window cleaning program that may be
established by Lessor. Lessee shall not be obligated to pay more for its
participation in such window cleaning program than the prevailing competitive
rate charged by reputable independent window cleaning contractors for equal
service on a direct and individual basis.
8. If Lessee undertakes any construction activities which causes any
work stoppage, picketing, labor disruption or dispute, so as to interfere with
the Lessor's construction activity at the Shopping Center, Lessee shall, upon
request from Lessor, immediately suspend any construction work being performed
in the Leased Premises giving rise to such labor problems, until such time as
Lessor has completed its construction activity and notified Lessee that Lessee's
construction may resume. Lessee shall have no claim for damages of any nature
against Lessor for such suspension nor shall the Term Commencement Date be
extended as a result thereof.
9. Lessee shall promptly obtain all permits, including occupancy
permits, for the Leased Premises or its use thereof. Lessee shall pay before
delinquency all license and permit fees, and other charges of a similar nature,
for the conduct of any business in, or any use of, the Leased Premises.
10. Lessee may use the Shopping Center name and logo and include the
Lessee Trade Name and the address and identity of Lessee's business in the
Leased Premises in all advertisements made by Lessee in any manner and in any
medium.
11. Lessee shall not conduct or permit to be conducted any auction,
fire, "going out of business" or similar type of sale (whether real or
fictitious) from the Leased Premises; provided, however that this provision
shall not restrict the absolute freedom (as between Lessor and Lessee) of Lessee
to determine its own selling prices nor shall it preclude periodic, seasonal,
promotional or clearance sales held in the ordinary course of business. Lessee
shall not place any unauthorized signage inside or outside of the Leased
Premises.
12. Lessee shall not place a load on any floor in the Shopping Center
which exceeds the load which it was designed to carry, or which may result in
improper weight distribution on such floors.
13. Lessee shall not install, operate or maintain in the Leased
Premises or in any area of the Shopping Center any electrical equipment which
does not bear the Underwriters Laboratories seal of approval, or which would
overload the electrical system or any part thereof beyond its capacity for
proper, efficient and safe operation as determined by Lessor.
14. To the extent required by Lessor, or any environmental or other
law, rule, regulation, guideline or order, Lessee shall provide sound barriers
for all mechanical systems serving the Leased Premises.
15. Lessee shall not store, display, sell, or distribute any alcoholic
beverages or any dangerous materials, flammable materials, explosives, or
weapons in the Leased Premises, or conduct any unsafe activities therein.
16. Lessee shall not sell, distribute, display or offer for sale any
item which, in Lessor's good faith judgment, is inconsistent with the quality of
operation of the Shopping Center, or may tend to injure or detract from the
moral character or image of the Shopping Center within the community. Without
limiting the generality of the foregoing, Lessee shall not sell, distribute,
display or offer for sale any paraphernalia commonly employed in the use or
ingestion of illicit drugs, or any x-rated, pornographic, lewd, or so-called
adult" newspaper, book, magazine, film, picture, video tape, video disk, game,
toy, or clothing, unless permitted pursuant to Section 16, or other
representation or merchandise of any kind.
17. Lessee shall comply with and shall cause the Leased Premises to
comply with all statutes, laws, rules, orders, regulations and ordinances
affecting the Leased Premises (including, without limitation, environmental,
health, safety, cleanliness, occupational and use regulations), including the
orders or recommendations of any insurance underwriters, safety engineers, and
loss prevention consultants as may from time to time be consulted by Lessor. In
no event shall Lessee use the Leased Premises for purposes which are prohibited
by zoning or similar laws or regulations, or covenants, conditions or
restrictions of record.
18. Lessee shall not operate or permit to be operated in the Leased
Premises any coin or token operated vending machine or similar device including,
without limitation, telephones, lockers, toilets, scales, amusement devices and
machines for the sale of beverages, foods, candy, cigarettes or other goods.
19. No radio or television aerial or other device may be erected by
Lessee on the roof or on any exterior wall of the Leased Premises, or the
building in which the Leased Premises are located, without Lessor's prior
written consent. Any aerial or other device installed without such written
consent shall be subject to removal by or at the direction of Lessor at Lessee's
sole risk and expense, at any time without notice.
20. Lessee shall comply with all other reasonable rules and regulations
from time to time established by Lessor which apply generally to all other
stores in Lessee's building.
21. Lessor agrees that Lessee may employ armed guards to patrol
the Leased Premises.
<PAGE>
EXHIBIT F
CERTIFICATE OF DELIVERY OF POSSESSION
This Exhibit is attached to and made a part of that certain lease
agreement (the "Lease"), by North Point Village Limited Partnership ("Lessor")
and EASTERN AMERICAN BANK F.S.B. ("Lessee"). The Certificate to be executed by
Lessor and Lessee pursuant to Section ___ of the Lease shall provide as follows:
The parties confirm the following:
1. Lessor has completed its obligations pursuant to Exhibit B of
the Lease and Lessee accepts possession of the Leased Premises as of the ____
day of _________, 19__.
2. The Initial Term as defined in the Lease shall expire on the
____ day of ____________, 19__.
ATTEST: LESSOR:
NORTH POINT VILLAGE LIMITED
PARTNERSHIP by its general partner
PLANDEN CORPORATION, a Virginia
Corporation
_________________________ By:_____________________________
[corporate seal] Name: Mark D. Lerner
Title: Vice President
Date:____________________________
ATTEST: LESSEE:
EASTERN AMERICAN BANK, F.S.B.
a Virginia corporation
_________________________ By:______________________________
[corporate seal] Name:____________________________
Title:_____________________________
Date:_____________________________
<PAGE>
Exhibit "G"
DO NOT EDIT OR AMEND THIS DOCUMENT
Standard Form X-1
Revised 1/4/90
ESTOPPEL CERTIFICATE
________________________________ (the "Tenant"), intending to be
legally bound, hereby certifies as follows:
1. Exhibit A attached hereto is a full, true and complete copy of that
certain lease (the "Lease"), dated as of ___________, 19__, between
____________________ ("Landlord") and Tenant.
2. The Lease is in full force and effect and has not been modified or
amended, and no option, if any, to extend the term of the Lease or to expand or
contract the area demised thereby has been exercised.
3. [WHEN APPLICABLE: Tenant has accepted possession of the premises
demised by the Lease and acknowledges that all alterations and improvements to
be made on the part of the Landlord have been completed to Tenant's
satisfaction, and all other inducements provided by Landlord to Tenant with
respect to the Lease have been fulfilled, including the expiration of any
no-rent or reduced-rent periods.]
4. The Tenant has not assigned its interest in the Lease or
sublet any portion of the premises demised thereby.
5. To the best of Tenant's knowledge and belief, Landlord is not
in default under any of Landlord's obligations under the Lease.
6. Tenant has no right of offset or defense against any rent or
other obligation due or to become due under the Lease.
7. The Lease was duly authorized by Tenant and constitutes the
valid and binding obligation of Tenant, enforceable in accordance with its
provisions.
8. [WHEN APPLICABLE: Tenant is currently Paying rent under the
Lease and, with the exception of the current month's rent, Tenant has not
prepaid any sums payable by Tenant under the Lease.]
Tenant understand and acknowledges that this Certificate is being
delivered and for the benefit of, and may be relied upon, by Landlord and by
purchasers and mortgagees of Landlord's interest in the premises demised by the
Lease.
IN WITNESS WHEREOF, Tenant has executed this Certificate as of the ____
date of _______________________, 199__.
ATTEST: _______________________________
_______________________ By:____________________________
Title:___________________ Title:___________________________
[Corporate Seal]
<PAGE>
Exhibit 11
CENTURY BANCSHARES, Inc.
Computation of Earnings Per Common Share
September 30, 2000
<TABLE>
<CAPTION>
CENTURY BANCSHARES, INC.
Computation of Earnings Per Common Share
Three and Nine Months Ended September 30, 2000
Three Months Ended Nine Months Ended
-------------------------------- --------------------------------
September 30, September 30,
-------------------------------- --------------------------------
2000 1999 2000 1999
------------------ ------------- --------------- ----------------
<S> <C> <C> <C> <C>
Basic Income Per Common Share:
Net income $ 424,607 $ 322,563 $1,246,929 $ 827,004
Weighted average common shares outstanding 2,737,705 2,804,679 2,729,180 2,833,113
------------------ ------------- --------------- ----------------
------------------ ------------- --------------- ----------------
Basic income per common share $0.16 $0.11 $0.46 $0.29
------------------ ------------- --------------- ----------------
------------------ ------------- --------------- ----------------
Diluted Income Per Common Share:
Net income $ 424,607 $ 322,563 $1,246,929 $ 827,004
Weighted average common shares outstanding 2,737,705 2,804,679 2,729,180 2,833,113
Dilutive effect of stock options 28,609 27,572 22,518 27,812
------------------ ------------- --------------- ----------------
Diluted weighted average
Common shares outstanding 2,766,314 2,832,251 2,751,698 2,860,925
------------------ ------------- --------------- ----------------
------------------ ------------- --------------- ----------------
Diluted income per common share $0.15 $0.11 $0.45 $0.29
------------------ ------------- --------------- ----------------
</TABLE>
<PAGE>
