-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ks2wxGwvByGQprjwietO89FRZEivlvljgKPRrIfdQ+IaUJBcyF254zHiW/ILbgsp 74DJXVIY3AUt6q1dAIu3xg== 0000950137-06-002718.txt : 20060308 0000950137-06-002718.hdr.sgml : 20060308 20060308092430 ACCESSION NUMBER: 0000950137-06-002718 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060308 DATE AS OF CHANGE: 20060308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEST BANCORPORATION INC CENTRAL INDEX KEY: 0001166928 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 421230603 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-49677 FILM NUMBER: 06671750 BUSINESS ADDRESS: STREET 1: 1601 22ND ST CITY: WEST DES MOINES STATE: IA ZIP: 50266 BUSINESS PHONE: 5152222309 MAIL ADDRESS: STREET 1: 1601 22ND ST CITY: WEST DES MOINES STATE: IA ZIP: 50266 10-K 1 c02561e10vk.txt ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2005 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 0-49677 WEST BANCORPORATION, INC. ------------------------- (Exact name of registrant as specified in its charter) IOWA 42 - 1230603 ---- ------------ (State of incorporation (I.R.S. Employer Identification No.) or organization) 1601 22nd STREET, WEST DES MOINES, IOWA 50266 - --------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (515)222-2300 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, NO PAR VALUE -------------------------- (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [X] No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [ ] Yes [X] No 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. [X] Yes [ ] No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ]. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). [ ] Yes [X] No The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2005, was approximately $305,688,000. Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the most recent practicable date, February 16, 2006. 16,701,843 shares Common Stock, no par value DOCUMENTS INCORPORATED BY REFERENCE The Appendix to the Proxy Statement for the 2005 calendar year, which was filed on March 7, 2006, is incorporated by reference into Part I, Part II and Part IV hereof to the extent indicated in such Parts. The definitive proxy statement of West Bancorporation, Inc., which was filed on March 7, 2006, is incorporated by reference into Part III hereof to the extent indicated in such Part. 2 TABLE OF CONTENTS
PAGE PART I ITEM 1. BUSINESS................................................................. 4 ITEM 1A. RISK FACTORS............................................................. 12 ITEM 1B. UNRESOLVED STAFF COMMENTS................................................ 13 ITEM 2. PROPERTIES............................................................... 13 ITEM 3. LEGAL PROCEEDINGS........................................................ 14 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................... 14 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASERS OF EQUITY SECURITIES............................... 14 ITEM 6. SELECTED FINANCIAL DATA.................................................. 14 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................................................... 14 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK............... 15 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.............................. 15 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE..................................................... 15 ITEM 9A. CONTROLS AND PROCEDURES.................................................. 15 ITEM 9B OTHER INFORMATION........................................................ 15 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT....................... 16 ITEM 11. EXECUTIVE COMPENSATION................................................... 18 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.......................................... 18 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................... 18 ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES................................... 18 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES............................... 19
3 PART I ITEM 1. BUSINESS GENERAL West Bancorporation, Inc. (the "Company") is an Iowa corporation and bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Company owns 100 percent of the stock of one state banking subsidiary and two registered investment advisory firms, as described below. All of the Company's banking operations are conducted in the State of Iowa and primarily within the Des Moines and Iowa City, Iowa metropolitan areas. The Company's registered investment advisory firms' operations are conducted primarily in the Des Moines and Cedar Rapids, Iowa metropolitan areas, but they also have clients throughout the United States. The Company does not engage in any material business activities apart from its ownership of its banking and investment advisory subsidiaries. The principal executive offices of the Company are located at 1601 22nd Street, West Des Moines, Iowa 50266 and its telephone number is (515) 222-2300. The Company's website address is www.westbankiowa.com. The Company was organized and incorporated on May 22, 1984, under the laws of the State of Iowa to serve as a holding company for its principal banking subsidiary, West Bank (sometimes referred to as the "Bank") whose main office is located in West Des Moines, Iowa. The principal sources of Company revenue are derived from West Bank: (1) interest and fees earned on loans made; (2) service charges on deposit accounts; and (3) interest on fixed income securities. West Bank's lending activities consist primarily of short-term and medium-term commercial and real estate loans, business operating loans and lines of credit, equipment loans, vehicle loans, personal loans and lines of credit, home improvement loans, and conventional and secondary market mortgage loan origination. West Bank also offers a variety of demand, savings and time deposits, merchant credit card processing, safe deposit boxes, wire transfers, debit cards, direct deposit of payroll and social security checks, automated teller machine access, trust services and correspondent bank services. The Company's investment advisory subsidiary WB Capital Management Inc. was formed on October 1, 2003. At that time, WB Capital Management Inc. purchased the assets of VMF Capital, L.L.C., a registered investment advisor. The subsidiary is operating as VMF Capital. The Company's investment advisory subsidiary Investors Management Group, Ltd. ("IMG") was acquired on December 30, 2005, from AMCORE Financial, Inc. IMG's focus on managing fixed income assets complements and adds to the investment advisory services offered through VMF Capital. Information regarding the Company's operating segments appearing on pages 58 through 59 of the Company's Appendix to the Proxy Statement, which was filed on March 7, 2006, is incorporated herein by reference. BANKING SUBSIDIARY West Bank, West Des Moines, Iowa. West Bank is a state chartered commercial bank insured by the Federal Deposit Insurance Corporation ("FDIC"), organized in 1893. The Bank became a wholly owned subsidiary of the Company in 1984. On July 18, 2003, the Bank purchased the assets and assumed certain liabilities of Hawkeye State Bank in Iowa City, Iowa. Assets acquired in the transaction totaled approximately $129 million at two offices in Iowa City. In December 2004, the bank opened an additional office in Coralville, which is in the Iowa City metropolitan area. West Bank provides full-service banking to businesses and residents primarily in the Des Moines and Iowa City metropolitan areas as well as correspondent services to banking organizations primarily located in Iowa. It provides a variety of products and services designed to meet the needs of the markets it serves. It has an experienced staff of bank officers who have spent the majority of their banking careers with West Bank and local financial service organizations, and who emphasize long-term customer relationships. West Bank conducts business out of eight full-service offices within the Des Moines metropolitan area and three full-service offices in the Iowa City metropolitan area. As of December 31, 2005, West Bank had capital of $95,806,000. West Bank had net income of $19,670,000 in 2005, $18,908,000 in 2004 and $17,783,000 in 2003. The Bank's total assets as of December 31, 2005, 2004, and 2003 were $1,224,010,000, $1,139,372,000, and $997,097,000, respectively. 4 INVESTMENT ADVISOR SUBSIDIARIES WB Capital Management Inc. (d/b/a VMF Capital), Clive, Iowa. VMF Capital is a registered investment advisor regulated by the Securities and Exchange Commission providing portfolio management services to individual investors, retirement plans, corporations, foundations and endowments. The subsidiary specializes in domestic equity and fixed income strategies and also provides customized strategies to meet specific investment objectives of clients. As of December 31, 2005, VMF Capital had approximately $800 million in assets under management. For the years ended December 31, 2005, and 2004 net income was $400,000 and $55,000, respectively, and for the three-month period ended December 31, 2003, VMF Capital had a net loss of $87,000. Investors Management Group, Ltd. ("IMG"), West Des Moines, Iowa. IMG is a registered investment advisor regulated by the Securities and Exchange Commission providing portfolio management services to insurance companies, banks, political subdivisions, mutual funds, associations, other organizations and individual investors. The subsidiary specializes in fixed income portfolios. As of December 31, 2005, IMG had approximately $4 billion in assets under management. IMG was acquired on December 30, 2005, and, therefore, no operating results for IMG are included in the Company's consolidated financial statements for 2005. BUSINESS STRATEGY AND OPERATIONS The Company is a bank holding company serving primarily the Des Moines and Iowa City metropolitan areas. As previously discussed, during 2003, the Bank grew through the acquisition of two offices in Iowa City. In 2004 and 2005, growth resulted from expanding existing relationships, new customer relationships, and opening a new office late in 2004. The Company's business strategy is to emphasize strong personal and business relationships, and to provide products and services that meet the needs of its customers. The Company emphasizes strong cost controls while striving to achieve return on equity and net income goals. To accomplish these goals, West Bank focuses on small to medium size businesses that traditionally wish to develop an exclusive relationship with a single bank. West Bank has the size to give the personal attention required by business owners, in addition to the credit expertise to help businesses meet their goals. West Bank offers a full range of deposit services that are typically available in most financial institutions, including checking accounts, savings accounts, money market accounts and time certificates of deposit. One major goal of the Bank's product mix is to keep the product offerings as simple as possible, both in terms of the number of products and the features and benefits of the individual services. The transaction accounts and time certificates are tailored to the marketplace at competitive rates. In addition, the Bank offers retirement accounts such as Individual Retirement Accounts. The FDIC insures all deposit accounts up to the maximum amount. The Bank solicits these accounts from small-to-medium sized businesses and from individuals who live and/or work within its market area. Occasionally, one particular customer may have balances in short-term deposits that represent approximately 15 percent of the Bank's total deposits. The Company does not believe that the loss of deposits of any one customer or of a few customers would have an adverse effect on the Bank's operation or erode its core deposit base. Loans are provided to creditworthy borrowers regardless of their race, color, national origin or ancestry, religion, sex, age, marital status, sexual orientation, disability, veteran status, receipt of public assistance, or any other basis prohibited by law. West Bank intends to fulfill this commitment while maintaining prudent credit standards. In the course of fulfilling this obligation to meet the credit needs of the marketplace it serves, West Bank will consider each credit application without regard to the fact that the applicant may reside in a low to moderate income neighborhood, or to the geographic location of the residence, property, or business within the market area. The Bank provides quality financial products and services such as telephone and internet banking and trust services that meet the banking needs of its customers and its market place. The loan programs and acceptance of certain loans may vary from time to time depending on the funds available and regulations governing the banking industry. West Bank offers all basic types of credit to its marketplace, including commercial, real estate, and consumer loans. The types of loans within these categories are as follows: Commercial Loans. Commercial loans are typically made to sole proprietors, partnerships, corporations and other business entities such as municipalities and individuals, where the loan is to be used primarily for business purposes. These loans are typically secured by assets owned by the borrower and often involve personal guarantees given by the owners of the business. The types of loans that West Bank offers include financing guaranteed under Small Business Administration programs, operating and working capital loans, loans to finance equipment and other capital purchases, commercial real estate loans, business lines of credit, term loans, loans to professionals, and letters of credit. 5 Consumer Loans. Consumer loans are typically available to finance home improvements and consumer purchases. These loans are made on either a secured or an unsecured basis. The types of loans that West Bank offers include loans to finance automobiles, trucks, boats and recreational vehicles, personal loans and lines of credit, home equity lines of credit, home improvement and rehabilitation loans, and residential real estate loans. Other types of credit programs, such as loans to nonprofit organizations and to public entities for community development, also are available. West Bank offers trust services typically found in a commercial bank with trust powers, including the administration of estates, conservatorships, personal and corporate trusts, and agency accounts. West Bank also earns fees from the origination of residential mortgages that are sold in the secondary real estate market without retaining the mortgage servicing rights. The Bank offers traditional banking services, such as safe deposit boxes, wire transfers, direct deposit of payroll and social security checks, automated teller machine access, and automatic drafts (ACH) for various accounts. West Bank offers correspondent bank services to community banks located primarily in Iowa. These services include the buying and selling of federal funds as well as purchases and sales of loan participations. CREDIT MANAGEMENT The Company strives to achieve sound credit risk management by establishing uniform credit policies and underwriting criteria for West Bank's loan portfolio. The Bank diversifies the types of loans offered and is subject to regular credit examinations by regulators, annual external loan audits, internal loan reviews and an internal annual review of large loans. The Bank attempts to identify potential problem loans early, charge off loans promptly and maintain an adequate allowance for loan losses. The Bank has established credit guidelines for the lending activities that include guidelines relating to the more commonly requested loan types, as follows: Commercial Real Estate Loans - Commercial real estate loans are normally based on loan-to-appraisal value ratios of not more than 75 percent and are secured by a first priority lien position. Loans are typically subject to interest rate adjustments no less frequently than seven years from origination, with a maximum amortization period of 30 years. Projections and cash flows that demonstrate ability to service debt within the amortization period are required. Property and casualty insurance is required to protect the Bank's collateral interests. A major risk factor for the Bank's commercial real estate loan portfolio, as well as the other loan types described below, is the geographic concentration in the Des Moines and Iowa City metropolitan areas. Loans are generally guaranteed by the principal(s). Commercial Operating Lines - These loans are made to businesses with normal terms up to twelve months. The credit needs are generally seasonal with the source of repayment coming from the entity's normal business cycle. Cash flow reviews are completed to establish the ability to service the debt within the terms of the loan. A first priority lien on the general assets of the business normally secures these types of loans. Loan-to-value limits vary and are dependent upon the nature and type of the underlying collateral and the financial strength of the borrower. Loans are generally guaranteed by the principal(s). Commercial Term Loans - These loans are made to businesses to finance equipment and other capital expenditures. Terms are generally the lesser of seven years or the useful life of the asset. Term loans are normally secured by the asset being financed and are often additionally secured with the general assets of the business. Loan-to-value is generally a maximum of 75 percent of the cost or value of the assets. Loans are normally guaranteed by the principal(s). Construction Loans - Construction loans on commercial real estate are normally based on a loan-to-appraisal value ratio of not more than 75 percent and are secured by a first priority lien position. Loan payments typically consist of interest only for a term of 1-1/2 to 2 years. The interest rate is usually variable, based on the prime rate. Residential construction loans are generally for a term not to exceed one year based on a loan-to-appraisal value ratio of not more than 80 percent and are secured by a first priority lien position. Interest is normally paid monthly or quarterly based on a variable rate tied to prime. Residential First Mortgage Loans - Proceeds of these loans are used to buy or refinance the purchase of residential real estate with the loan secured by a first lien on the real estate. Most of the residential mortgage loans originated by the Bank during the past year have been sold (including servicing rights) in the secondary mortgage market due to the higher interest rate risk inherent in the 15 and 30 year fixed rate terms consumers prefer. Loans that are originated and not sold in the secondary market generally have higher interest rates and have rate adjustment periods normally no longer than seven years. The maximum amortization of first mortgage residential real estate loans is 30 years. The loan-to-value ratios normally do not exceed 80 percent. Property insurance is required on all loans to protect the Bank's collateral position. 6 Home Equity Term Loans - These loans are normally for home improvement or other consumer purposes and are secured by a junior mortgage on residential real estate. The loan-to-value ratios normally do not exceed 90 percent. Home Equity Lines of Credit - The Bank offers a home equity line of credit with a maximum term of 120 months. These loans are secured by a junior mortgage on residential real estate and normally do not exceed a loan-to-value ratio of 90 percent with the interest adjusted quarterly. Consumer Loans - Consumer loans are normally made under the following guidelines: automobiles - loans on new and used automobiles generally will not exceed 80 and 75 percent of the value, respectively; recreational vehicles and boats - 75 percent of value; modular home loans have a maximum term of 180 months with the loan-to-value ratio generally not exceeding 80 percent. Each of these loans is secured by a first priority lien on the assets and requires insurance to protect the Bank's collateral position. The term for unsecured loans generally does not exceed 24 months. EMPLOYEES At December 31, 2005, the Bank had a total of 140 full-time equivalent employees, VMF Capital had 18 full-time equivalent employees, IMG had 25 full-time equivalent employees and the Company had no employees. Full-time equivalents represent the number of people a business would employ if all of its employees were employed on a full-time basis. It is calculated by dividing the total number of hours worked by all full- and part-time employees by the number of hours a full-time individual would work for a given period of time. Employees are provided with a comprehensive program of benefits, including comprehensive medical and dental plans, long-term and short-term disability coverage, and a profit sharing plan with both 401(k) and employee stock ownership features. Management considers its relations with employees to be satisfactory. Unions represent none of the employees. MARKET AREA The Company operates one commercial bank with eight locations throughout the Des Moines, Iowa metropolitan area and three locations in the Iowa City, Iowa metropolitan area. West Bank's primary business includes providing business and retail banking services and lending. West Bank's main office is located in West Des Moines, Iowa, one of the fastest growing communities in Iowa. The population of the Des Moines metropolitan area is nearly 500,000. Des Moines is the capital of Iowa. Major employers are the State of Iowa, Principal Financial Group, Pioneer Hi-Bred International, Inc., Wells Fargo, Central Iowa Hospital Corporation, Mercy Hospital Medical Center, Hy-Vee Food Stores, Inc., and the Des Moines Independent School District. The Company also operates two investment advisory subsidiaries. VMF Capital with offices in West Des Moines and Cedar Rapids, Iowa has customers throughout Iowa and the United States. The Company acquired IMG with headquarters in West Des Moines, Iowa on December 30, 2005. COMPETITION The geographic market area served by West Bank is highly competitive with respect to both loans and deposits. The Bank competes principally with other commercial banks, savings and loans associations, credit unions, mortgage companies, finance divisions of auto companies, and other service providers. Some of these competitors are local, while others are statewide or nationwide. The major commercial bank competitors include Bankers Trust Company, NA, a local banking organization; a regional bank: Bank of the West (formerly Commercial Federal Bank); and several nationwide banks: Wells Fargo Bank, Bank of America and U.S. Bank, NA. Among the advantages such larger banks offer are their ability to finance extensive advertising campaigns and to allocate their investment assets to geographic regions of higher yield and demand. Such banks offer certain services that are not offered directly by West Bank, but that may be offered through correspondent banking institutions. These larger banking organizations have much higher legal lending limits than West Bank and thus are better able to finance large regional, national, and global commercial customers. In order to compete, to the fullest extent possible, with the other financial institutions in its primary trade area, West Bank uses the flexibility that is accorded by its independent status. This includes an emphasis on specialized services, local promotional activities, and personal contacts by the Bank's officers, directors, and employees. In particular, the Bank competes for deposits principally by offering depositors a variety of deposit programs, convenient office locations and hours and other personalized services. West Bank competes for loans primarily by offering competitive interest rates, experienced lending personnel with local decision-making authority and quality products and services. 7 Pursuant to the FDIC's Summary of Deposits, as of June 30, 2005, there were 32 other banks and savings and loan associations within Polk County, Iowa, where eight of the Bank's offices are located. West Bank ranked 4th based on total deposits of all offices in Polk County. As of June 30, 2005, there were 14 other banks and savings and loan associations within Johnson County, Iowa, where three offices are located in the Iowa City area. West Bank, ranked 4th based on total deposits of all offices in Johnson County. For the entire state, West Bank, ranked 7th in terms of deposit size. The Bank also competes with the financial markets for funds. Yields on corporate and government debt securities and commercial paper affect the ability of commercial banks to attract and hold deposits. Commercial banks also compete for funds with money market instruments and similar investment vehicles offered by competitors including brokerage firms, insurance companies, credit card issuers, and retailers such as Sears. Money market funds offered by these types of organizations have provided substantial competition for deposits. This trend will likely continue in the future. The Company anticipates bank competition will continue to change significantly over the next several years as more banks, including the major regional and nationwide banks, continue to consolidate. Smaller community banks continue to move their charters or open branches in larger metropolitan areas in an attempt to capture market share in a more diverse and growing economic environment. Credit unions, because of their income tax advantage, will continue to show substantial growth. SUPERVISION AND REGULATION The following discussion generally refers to certain statutes and regulations affecting the banking industry. These references provide brief summaries and, therefore, do not purport to be complete and are qualified in their entirety by reference to those statutes and regulations. In addition, due to the numerous statutes and regulations that apply to and regulate the operation of the banking industry, many are not referenced below. The Company and West Bank are subject to extensive federal and state regulation and supervision. Regulation and supervision of financial institutions is primarily intended to protect depositors and the FDIC rather than shareholders of the Company. The laws and regulations affecting banks and bank holding companies have changed significantly over recent years, particularly with the passage of the Financial Services Modernization Act and the USA Patriot Act of 2001. There is reason to expect that similar changes will continue in the future. Any change in applicable laws, regulations, or regulatory policies may have a material effect on the business, operations, and prospects of the Company. The Company is unable to predict the nature or the extent of the effects on its business and earnings that any fiscal or monetary policies or new federal or state legislation may have in the future. The Company The Company is a bank holding company by virtue of its ownership of West Bank, and is registered as such with the Board of Governors of the Federal Reserve System (the "Federal Reserve"). The Company is subject to regulation under the Bank Holding Company Act of 1956, as amended (the "BHCA"), which subjects the Company and the Bank to supervision and examination by the Federal Reserve. Under the BHCA, the Company files with the Federal Reserve quarterly and annual reports of its operations and such additional information as the Federal Reserve may require. Source of Strength to the Bank. The Federal Reserve takes the position that a bank holding company is required to serve as a source of financial strength to its subsidiary bank and may not conduct its operations in an unsafe or unsound manner. In addition, it is the Federal Reserve's position that in serving as a source of strength to its subsidiary bank, a bank holding company should use available resources to provide adequate capital funds to its subsidiary bank during periods of financial stress or adversity. It should also maintain the financial flexibility and capacity to obtain additional resources for providing assistance to its subsidiary bank. A bank holding company's failure to meet its obligations to serve as a source of strength to its subsidiary bank will generally be considered by the Federal Reserve to be an unsafe and unsound banking practice, a violation of the Federal Reserve's regulations, or both. Federal Reserve Approval. Bank holding companies must obtain the approval of the Federal Reserve before they: (1) acquire direct or indirect ownership or control of any voting stock of any bank if, after such acquisition, they would own or control, directly or indirectly, more than 5 percent of the voting stock of such bank; (2) merge or consolidate with another bank holding company; or (3) acquire substantially all of the assets of any additional banks. 8 Non-Banking Activities. With certain exceptions, the BHCA also prohibits bank holding companies from acquiring direct or indirect ownership or control of voting stock in any company other than a bank or bank holding company unless the Federal Reserve finds the company's business to be incidental to the business of banking. When making this determination, the Federal Reserve in part considers whether allowing a bank holding company to engage in those activities would offer advantages to the public that would outweigh possible adverse effects. The Company obtained approval of the Federal Reserve to form VMF Capital in 2003 and to acquire IMG in 2005. A bank holding company may engage in permissible non-banking activities on a de novo basis, if the holding company meets certain criteria and notifies the Federal Reserve within ten (10) business days after the activity has commenced. Under the Financial Services Modernization Act, an eligible bank holding company may elect (with the approval of the Federal Reserve) to become a "financial holding company." Financial holding companies are permitted to engage in certain financial activities through affiliates that had previously been prohibited activities for bank holding companies. Such financial activities include securities and insurance underwriting and merchant banking. At this time, the Company has not elected to become a financial holding company, but may choose to do so at some time in the future. Control Transactions. The Change in Bank Control Act of 1978, as amended, requires a person or group of persons acquiring "control" of a bank holding company to provide the Federal Reserve with at least 60 days prior written notice of the proposed acquisition. Following receipt of this notice, the Federal Reserve has 60 days to issue a notice disapproving the proposed acquisition, but the Federal Reserve may extend this time period for up to another 30 days. An acquisition may be completed before the disapproval period expires if the Federal Reserve issues written notice of its intent not to disapprove the action. Under a rebuttable presumption established by the Federal Reserve, the acquisition of 10 percent or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, would constitute the acquisition of control. In addition, any "company" would be required to obtain the approval of the Federal Reserve under the BHCA before acquiring 25 percent (or 5 percent if the "company" is a bank holding company) or more of the outstanding shares of the Company, or otherwise obtain control of the Company. Affiliate Transactions. The Company, West Bank, VMF Capital and IMG are deemed affiliates within the meaning of the Federal Reserve Act, and transactions between affiliates are subject to certain restrictions. Generally, the Federal Reserve Act: (1) limits the extent to which the financial institution or its subsidiaries may engage in "covered transactions" with an affiliate; and (2) requires all transactions with an affiliate, whether or not "covered transactions," to be on terms substantially the same, or at least as favorable to the institution or subsidiary, as those provided to a non-affiliate. The term "covered transaction" includes the making of loans, purchase of assets, issuance of guarantees, and similar transactions. State Law on Acquisitions. Iowa law permits bank holding companies to make acquisitions throughout the state. However, Iowa currently has a deposit concentration limit of 15 percent on the amount of deposits in the state that any one banking organization can control and continue to acquire banks or bank deposits (by acquisitions), which applies to all depository institutions doing business in Iowa. Banking Subsidiaries Applicable federal and state statutes and regulations governing a bank's operations relate, among other matters, to capital adequacy requirements, required reserves against deposits, investments, loans, legal lending limits, certain interest rates payable, mergers and consolidations, borrowings, issuance of securities, payment of dividends, establishment of branches, and dealings with affiliated persons. West Bank is a state bank subject to primary federal regulation and supervision by the Federal Deposit Insurance Corporation (the "FDIC") and the Iowa Division of Banking. The federal laws applicable to the Bank regulate, among other things, the scope of its business, its investments, its reserves against deposits, the timing of the availability of deposited funds, and the nature and amount of and collateral for loans. The laws and regulations governing the Bank generally have been promulgated to protect depositors and the deposit insurance fund of the FDIC and not to protect stockholders of such institutions or their holding companies. The FDIC has authority to prohibit banks under its supervision from engaging in what it considers to be unsafe and unsound practices in conducting business. The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") requires federal banking regulators to adopt regulations or guidelines in a number of areas to ensure bank safety and soundness, including internal controls, credit underwriting, asset growth, earnings, management compensation, and ratios of classified assets to capital. FDICIA also contains provisions that are intended to change independent auditing requirements, restrict the activities of state-chartered insured banks, amend various consumer banking laws, limit the ability of "undercapitalized banks" to borrow from the Federal Reserve's discount window, require regulators to perform periodic on-site bank examinations, and set standards for real estate lending. Borrowing Limitations. West Bank is subject to limitations on the aggregate amount of loans that it can make to any one borrower, including related entities. Subject to numerous exceptions based on the type of loans and collateral, applicable statutes and regulations generally limit loans to one borrower to 15 percent of total equity and reserves. West Bank is in compliance with applicable loans to one borrower requirements. 9 FDIC Insurance. Generally, customer deposit accounts in banks are insured by the FDIC for up to a maximum amount of $100,000. The FDIC has adopted a risk-based insurance assessment system under which depository institutions contribute funds to the FDIC insurance fund based on their risk classification. The FDIC may terminate the deposit insurance of any insured depository institution if it determines after an administrative hearing that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law. Capital Adequacy Requirements. The Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency ("OCC") (collectively, the "Agencies") have adopted risk-based capital guidelines for banks and bank holding companies that are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies and account for off-balance sheet items. Failure to achieve and maintain adequate capital levels may give rise to supervisory action through the issuance of a capital directive to ensure the maintenance of required capital levels. West Bank is in compliance with applicable regulatory capital level requirements. The current guidelines require all federally regulated banks to maintain a minimum risk-based total capital ratio equal to 8 percent, of which at least 4 percent must be Tier 1 capital. Tier 1 capital includes common shareholders' equity, qualifying perpetual preferred stock and minority interests in equity accounts of consolidated subsidiaries, but excludes goodwill and most other intangibles and the allowance for loan and lease losses. Tier 2 capital includes the excess of any preferred stock not included in Tier 1 capital, mandatory convertible securities, hybrid capital instruments, subordinated debt and intermediate term preferred stock, and general reserve for loan and lease losses up to 1.25 percent of risk weighted assets. West Bank has not received any notice indicating that it will be subject to higher capital requirements. Under these guidelines, bank assets are given risk weights of 0 percent, 20 percent, 50 percent or 100 percent. Most loans are assigned to the 100 percent risk category, except first mortgage loans fully secured by residential property and, under certain circumstances, residential construction loans (both carry a 50 percent rating). Most investment securities are assigned to the 20 percent category, except for municipal or state revenue bonds (which have a 50 percent rating) and direct obligations of or obligations guaranteed by the United States Treasury or United States government agencies (which have a 0 percent rating). The Agencies have also implemented a leverage ratio, which is equal to Tier 1 capital as a percentage of average total assets less intangibles, to be used as a supplement to the risk based guidelines. The principal objective of the leverage ratio is to limit the maximum degree to which a bank may leverage its equity capital base. The minimum required leverage ratio for top rated institutions is 3 percent, but most institutions are required to maintain an additional cushion of at least 100 to 200 basis points. Any institution operating at or near the 3 percent level is expected to be a strong banking organization without any supervisory, financial, or operational weaknesses or deficiencies. Any institution experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions, well above the minimum levels. Prompt Corrective Action. Regulations adopted by the Agencies impose even more stringent capital requirements. The FDIC and other Agencies must take certain "prompt corrective action" when a bank fails to meet capital requirements. The regulations establish and define five capital levels: (1) "well-capitalized", (2) "adequately capitalized", (3) "undercapitalized", (4) "significantly undercapitalized", and (5) "critically undercapitalized". Increasingly severe restrictions are imposed on the payment of dividends and management fees, asset growth and other aspects of the operations of institutions that fall below the category of being "adequately capitalized". Undercapitalized institutions are required to develop and implement capital plans acceptable to the appropriate federal regulatory agency. Such plans must require that any company that controls the undercapitalized institution must provide certain guarantees that the institution will comply with the plan until it is adequately capitalized. As of the date of this Annual Report on Form 10-K, neither the Company nor West Bank was subject to any regulatory order, agreement, or directive to meet and maintain a specific capital level for any capital measure. Furthermore, as of that same date, West Bank was categorized as "well-capitalized" under regulatory prompt corrective action provisions. Restrictions on Dividends. Dividends paid to the Company by West Bank are the major source of Company cash flow. Various federal and state statutory provisions limit the amount of dividends banking subsidiaries are permitted to pay to their holding companies without regulatory approval. Federal Reserve policy further limits the circumstances under which bank holding companies may declare dividends. For example, a bank holding company should not continue its existing rate of cash dividends on its common stock unless its net income is sufficient to fully fund each dividend and its prospective rate of earnings retention appears consistent with its capital needs, asset quality, and overall financial condition. In addition, the Federal Reserve and the FDIC have issued policy statements providing that insured banks and bank holding companies should generally pay dividends only out of current operating earnings. Federal and state banking regulators may also restrict the payment of dividends by order. 10 West Bank, as a state chartered bank, is restricted under Iowa law to paying dividends only out of its undivided profits. Additionally, the payment of dividends by West Bank is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and West Bank is generally prohibited from paying any dividends if, following payment thereof, the bank would be undercapitalized. As of December 31, 2005, approximately $2.5 million was available to be paid as dividends by West Bank to the Company without prior regulatory approval. Reserves Against Deposits. The Federal Reserve requires all depository institutions to maintain reserves against their transaction accounts (primarily checking accounts) and non-personal time deposits. Generally, reserves of 3 percent must be maintained against total transaction accounts of $48,300,000 or less (subject to an exemption not in excess of the first $7,800,000 of transaction accounts). A reserve of $1,215,000 plus 10 percent of amounts in excess of $48,300,000 must be maintained in the event total transaction accounts exceed $48,300,000. The balances maintained to meet the reserve requirements imposed by the Federal Reserve may be used to satisfy applicable liquidity requirements. Because required reserves must be maintained in the form of vault cash or a non-interest bearing account at a Federal Reserve Bank, the effect of this reserve requirement is to reduce the earning assets of West Bank. Bank Offices. Iowa laws regulating the establishment of bank offices were changed in 2004 to provide the Company with more flexibility in establishing additional offices of West Bank. Effective July 1, 2004, the geographical restrictions on bank office locations were repealed. Also effective July 1, 2004, Iowa law restricting the ability of a bank to establish a de novo office within the limits of a municipal corporation where there was already an established state or national bank or bank office was repealed. Nonbanking Subsidiaries VMF Capital and IMG are under the jurisdiction of the Investment Advisors Act of 1940 and are regulated by the Securities and Exchange Commission ("SEC"). Both companies have filed Form ADV with the SEC. Investment advisers are heavily regulated by the SEC. The SEC has recently promulgated several proposed as well as final rules pertaining to corporate governance and compliance matters with which VMF Capital and IMG will be required to comply. Regulatory Developments In 1999, the Financial Services Modernization Act was enacted which: (1) repealed historical restrictions on preventing banks from affiliating with securities firms; (2) broadened the activities that may be conducted by bank subsidiaries of holding companies; and (3) provided an enhanced framework for protecting the privacy of consumers' information. In addition, bank holding companies may be owned, controlled or acquired by any company engaged in financially related activities, as long as such company meets regulatory requirements. To the extent that this legislation permits banks to affiliate with financial services companies, the banking industry may experience further consolidation, although the impact of this legislation on the Company and West Bank is unknown. In 2001, the USA Patriot Act of 2001 was enacted in response to the September 11, 2001, terrorist attacks in New York, Pennsylvania and Washington, D.C. The Patriot Act is intended to strengthen U.S. law enforcements' and the intelligence communities' abilities to work together to combat terrorism. The Patriot Act contains, among other things, anti-money laundering and financial transparency laws and imposes various regulations, including standards for verifying client identification at account opening, and rules to promote cooperation among financial institutions, regulators and law enforcement in identifying parties that may be involved in terrorism or money laundering. Included in the Patriot Act are requirements for financial institutions to establish anti-money laundering programs that include: (1) internal policies, procedures and controls; (2) designation of an anti-money laundering compliance officer; (3) ongoing employee training programs; and (4) an independent audit function to test the anti-money laundering program. The Bank's policies and procedures have been updated to meet the requirements of the USA Patriot Act. On February 8, 2006, the Budget Reconciliation Bill, which contained deposit insurance reform provisions, was signed into law. Under the legislation, the Bank Insurance Fund and the Savings Association Insurance Fund will be merged; the $100,000 of depositor insurance limitation will be indexed to inflation, would be increased to $250,000 for retirement accounts, and will be subject to increase every five years. In addition the Bill eliminates the existing trigger for increases of deposit insurance premiums, and in its place the FDIC will be able to set the fund's reserve ratio in a range between 1.15 and 1.50 percent of insured deposits. The provisions of the Bill require that final regulations be issued no later than 270 days after enactment of the law, and have an effective date not later than 90 days following publication of the rules in the Federal Register. 11 Regulatory Enforcement Authority The enforcement powers available to federal and state banking regulators are substantial and include, among other things, the ability to assess civil monetary penalties, to issue cease-and-desist or removal orders and to initiate injunctive actions against banking organizations and institution-affiliated parties, as defined. In general, enforcement actions must be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions, or inactions, may provide the basis for enforcement action, including misleading or untimely reports filed with regulatory authorities. Applicable law also requires public disclosure on final enforcement actions by the federal banking agencies. National Monetary Policies In addition to being affected by general economic conditions, the earnings and growth of West Bank are affected by the regulatory authorities' policies, including the Federal Reserve. An important function of the Federal Reserve is to regulate the money supply, credit conditions, and interest rates. Among the instruments used to implement these objectives are open market operations in U.S. Government securities, changes in reserve requirements against bank deposits, and the Federal Reserve Discount Rate, which is the rate charged banks borrowing from the Federal Reserve Bank. These instruments are used in varying combinations to influence overall growth and distribution of credit, bank loans, investments, and deposits, and their use may also affect interest rates charged on loans or paid on deposits. The monetary policies of the Federal Reserve have had a material impact on the operating results of commercial banks in the past and are expected to do so in the future. ITEM 1A. RISK FACTORS West Bancorporation's business is conducted through its three wholly owned subsidiaries: West Bank, VMF Capital and IMG. In 2005, West Bank generated over 98% of West Bancorporation's net income. The most substantial risks for the Company's stock, therefore, involve West Bank. The largest component of West Bank's 2005 income was interest received on loans. The next largest component was interest paid to West Bank on investment securities, Federal funds, and short-term investments. The Company believes the following are the most significant risk factors for the next year. West Bancorporation is also subject to other risks, both known and unknown. The reader, therefore, should consider all other information contained in this Form 10-K and in the Appendix to our Proxy Statement, which was filed on March 7, 2006. All of that information is incorporated herein by this reference. West Bank Loan Portfolio At December 31, 2005, West Bank's loan portfolio included $753,975,000 of commercial real estate loans, commercial lines of credit, commercial term loans, and construction or land development loans. These loans made up 86.8 percent of the bank's entire loan portfolio. These types of loans typically have greater credit risks than one- to four-family residential mortgages or consumer loans because repayment depends in significant part on the successful business operations of the borrowers. Our commercial loans also typically include larger loan balances to single borrowers or groups of related borrowers than do residential mortgages or consumer loans. In addition, commercial real estate, construction, and real estate development loans may be more negatively affected than residential mortgage loans by adverse developments in the real estate markets or the general economy. If the economy turns downward, commercial borrowers may not be able to repay their loans and the value of their collateral may decrease. Commercial loans also involve some additional risk because they generally are not fully repaid over the loan period and usually require a large payoff at maturity. A borrower's ability to make the maturity payment typically depends on being able to either refinance the loan or make timely and profitable sales of the underlying property or business collateral. The typical West Bank borrower is a small or medium sized privately-owned business that usually has fewer resources and less ability to sustain losses over time than larger or publicly-owned businesses. In addition, collateral securing small business loans may be more likely to depreciate over time or be difficult to liquidate. The review and monitoring process by West Bank's directors, officers and staff cannot avoid all these risks. West Bank's management makes various business assumptions and judgments about the collectibility of all of its loans. Despite its underwriting and review policies, West Bank may experience loan losses that could have a material adverse effect on its profits. If West Bank's current allowance for loan losses is found to be insufficient to cover actual loan losses, an increase in the allowance would be necessary. West Bank may need to significantly increase the provision for loan losses if one or more large loans become delinquent or if the percentage of its commercial real estate, construction, land development, and commercial loans continues to grow. In addition, West Bank's regulators periodically review the loan portfolio and may require increases in its provision for loan losses or loan charge-offs. Increases in the bank's allowance for loan losses would decrease West Bank's net income. West Bank's management cannot be sure that it's monitoring procedures and policies will successfully avoid certain lending risks or that West Bank's present allowance for loan losses will be adequate to cover actual future losses. 12 Unlike regional and national banks that are more geographically diversified, West Bank provides banking and financial services to customers primarily in the Des Moines and Iowa City, Iowa, metropolitan areas. The local economic conditions in the market areas we serve have a significant impact on the type of loans underwritten by West Bank, the ability of the borrowers to repay these loans, and the value of the collateral securing these loans. A significant decline in general economic conditions in our limited market areas caused by factors beyond West Bank's control could affect the local economic conditions and adversely affect West Bancorporation's financial condition and profits. Interest rates West Bancorporation's net income is also affected by interest rate risks. Interest rate risks are the possibilities that changes in market interest rates may adversely affect West Bank's earnings and capital. Increases or decreases in interest rates and the relationship between long-term and short-term rates are both factors of interest rate risks. Net interest income is the largest component of the Company's net income. Net interest income is the difference between interest earned (income) and interest paid (expense). Interest is earned on loans made to customers and on investment securities in the investment portfolio. Interest is paid on customers' deposit accounts and funds borrowed from other sources. The amounts of interest earned and interest paid are the result of interest rates and the dollar balances of loans, investments, deposits and borrowings outstanding. Interest rates on loans and investments may not change at the same time and in the same magnitude as interest rates on deposits and borrowings. Various factors affect the interest rates associated with loans and investments, such as the credit rating of the borrower and the term of the loan or investment. Generally the longer the term of the loan or investment, the higher the interest rate. Interest rates on investment securities are generally fixed for the term of the investment. Interest rates on loans can be fixed for the term of the loan or variable and change when there is a change in an associated index, such as the prime rate. Interest rates on deposit accounts such as savings and money market accounts generally change over time based upon changes in market interest rates. Interest rates on certificates of deposit are usually fixed for the term of the certificate. Interest rates associated with borrowings can be either fixed or variable. Net interest income is also affected by the volume of loans, investments, deposits and borrowings that are maturing, the dollar amounts of new loan and deposit accounts being opened, and the amounts of early loan payoffs for any given period. These events affect the amount of dollars that may be reinvested as interest rates change. Interest rates associated with loans, investments, deposits and borrowings seldom move at the same time or in the same magnitude. The ultimate impact on net interest income over time will depend upon the direction and significance of changes in market interest rates as well as the dollar amounts of loans, investments, deposits and borrowings subject to the changes in market interest rates. ITEM 1B. UNRESOLVED STAFF COMMENTS The registrant has no information to be disclosed under this item. ITEM 2. PROPERTIES The Company's office is housed in the main office of West Bank located at 1601 22nd Street in West Des Moines, Iowa. The space is leased and consists of approximately 1,700 square feet with annual rent of $21,000. West Bank's main office is also located in the leased facility at 1601 22nd Street in West Des Moines. The Bank rents approximately 18,600 square feet and pays annual rent of approximately $404,000 for a full-service banking location that includes drive-up facilities and one automated teller machine. The bank also leases buildings and space for six other locations located within the Des Moines metropolitan area and one location in the Iowa City metropolitan area. These offices are full-service banking locations, with five of these offices having drive-up facilities and all six locations having automated teller machines. Annual lease payments for these seven offices total approximately $462,000. The Bank owns one other full-service banking location in Des Moines and two full service banking locations in Iowa City. These locations also include drive-up facilities and automatic teller machines. VMF Capital has leased offices in Clive and Cedar Rapids, Iowa. Annual lease payments for these offices totaled approximately $108,000 for the year ended December 31, 2005. IMG occupies leased office space in West Des Moines, Iowa. Annual lease payments for 2006 will total approximately $396,000 for this facility. In February 2006, the Clive office of VMF Capital relocated to the IMG location in West Des Moines. A search is underway to sublease the Clive office space. 13 ITEM 3. LEGAL PROCEEDINGS West Bank from time to time is a party to various legal actions arising in the normal course of business. The Company believes that there is no threatened or pending proceeding against the Company, West Bank, VMF Capital or IMG, which, if determined adversely, would have a material adverse effect on the business or financial position of the Company, West Bank, VMF Capital, or IMG. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this report. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASERS OF EQUITY SECURITIES The information appearing on page 64 of the Corporation's Appendix to the Proxy Statement, which was filed on March 7, 2006, is incorporated herein by reference. There were 313 holders of record of the Company's no par value common stock as of February 16, 2006, and an estimated 800 additional beneficial holders whose stock was held in street name by brokerage houses. The closing price of the Company's common stock was $19.02 on February 16, 2006. In April 2005, the Company's Board of Directors authorized the buy-back of the Company's common stock for a period of twelve months, in an amount not to exceed $5 million. Since that authorization, no shares have been purchased. In April 2005, shareholders approved the West Bancorporation, Inc. Restricted Stock Compensation Plan. The plan provides awards to be made until March 1, 2015, with a maximum of 300,000 shares purchased in the open market to be issued as awards, subject to certain restrictions. The Compensation Committee of the Company's Board of Directors administers the Plan. As of December 31, 2005, no awards had been granted. The Company increased dividends to common shareholders in 2005 to $.64 per share, a 2.4 percent increase over $.625 for 2004 (adjusted for the 5 percent common stock dividend). Dividend declarations are evaluated and determined by the Board of Directors on a quarterly basis. The ability of the Company to continue to pay such dividends will depend primarily upon the earnings of West Bank and its ability to pay dividends to the Company. It is anticipated the Company will continue to pay dividends on a regular basis in the future. The ability of West Bank to pay dividends is governed by various statutes. West Bank, as a state bank, is restricted to paying dividends only out of undivided profits. These statutes provide that no bank shall declare or pay any dividends in an amount greater than its retained earnings, without approval from governing regulatory bodies. In addition, applicable bank regulatory authorities have the power to require any bank to suspend the payment of any and all dividends until the bank shall have complied with all requirements that may have been imposed by such authorities. ITEM 6. SELECTED FINANCIAL DATA The information appearing on page 3 of the Company's Appendix to the Proxy Statement, which was filed on March 7, 2006, is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information appearing on pages 4 through 25 of the Company's Appendix to the Proxy Statement, which was filed on March 7, 2006, is incorporated herein by reference. 14 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information appearing on pages 22 through 24 of the Company's Appendix to the Proxy Statement, which was filed on March 7, 2006, is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information appearing on pages 26 through 63 of the Company's Appendix to the Proxy Statement, which was filed on March 7, 2006, is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Within the two years prior to the date of the most recent financial statements, there have been no changes in or disagreements with accountants of the Company. ITEM 9A. CONTROLS AND PROCEDURES As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rule 240.13a-15(e)). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's current disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Management's annual report on internal control over financial reporting appears on page 29 of the Company's Appendix to the Proxy Statement, which was filed on March 7, 2006, and is incorporated herein by reference. The attestation report of the Company's registered public accounting firm on management's assessment of the Company's internal control over financial reporting appears on pages 27 and 28 of the Company's Appendix to the Proxy Statement, which was filed on March 7, 2006, and is incorporated herein by reference. There were no changes in the Company's internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. ITEM 9B. OTHER INFORMATION The registrant has no information to be disclosed under this item. 15 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth summary information about the directors and executive officers of the Company and certain executive officers of West Bank, WB Capital Management Inc., and Investors Management Group, Ltd.
Position with Company, West Bank, Name Age WB Capital Management Inc. or Investors Management Group, Ltd. - -------------------- --- -------------------------------------------------------------- Frank W. Berlin 60 Director of Company and Bank Steven G. Chapman 54 Director of Company and Bank Michael A. Coppola 49 Director of Company and Bank Orville E. Crowley 79 Director of Company George D. Milligan 49 Director of Company and Bank Robert G. Pulver 58 Director of Company and Bank Thomas E. Stanberry 51 Chairman, President and Chief Executive Officer of Company; Chairman and Chief Executive Officer of Bank; Chairman of WB Capital Management Inc. and Investors Management Group, Ltd. Jack G. Wahlig 73 Director of Company and Bank Connie Wimer 73 Director of Company and Bank Joyce A. Chapman 61 Vice President of Company; Director and Executive Vice President of Bank; Director of WB Capital Management Inc. and Investors Management Group, Ltd. Scott D. Eltjes 40 Director and Head of WB Capital Management Inc.; Director of Investors Management Group, Ltd. Douglas R. Gulling 52 Executive Vice President and Chief Financial Officer of Company; Director and Chief Financial Officer of Bank; Director and Treasurer of WB Capital Management Inc.; Director and Treasurer of Investors Management Group, Ltd. Jeffrey D. Lorenzen 40 Director and President of Investors Management Group, Ltd. Director of WB Capital Management, Inc. Sharen K. Surber 61 Executive Vice President of Bank Brad L. Winterbottom 49 Vice President of Company; Director and President of of Bank; Director of WB Capital Management Inc. and Investors Management Group, Ltd.
During 2005, and until the Annual Shareholders' Meeting on April 20, 2006, the Board of Directors was and will be comprised of nine (9) members. Subsequent to the annual meeting, the majority of the Board will continue to be "independent" pursuant to NASD Rule 4350(c)(1). Directors are elected at each annual meeting of shareholders to hold office until the next annual meeting of shareholders after their election and until their successor shall be elected and shall qualify or until their earlier resignation, removal from office, death, or incapacity. The shareholders may at any time remove any director, with or without cause, by majority vote of the outstanding shares and elect a successor to fill the vacancy. The executive officers of the Company are elected on an annual basis by the Board of Directors of the Company. An executive officer may be removed by the Board of Directors whenever in its judgment the best interests of the Company will be served thereby. 16 The principal occupation or business and experience of the directors, nominees for director, and executive officers of the Company and certain executive officers of West Bank, WB Capital Management Inc. and Investors Management Group, Ltd. for the past five years are set forth below: FRANK W. BERLIN is president of Frank W. Berlin & Associates, an insurance broker. Mr. Berlin has served as a director of the Company and the Bank since 1995. STEVEN G. CHAPMAN is chairman, president and chief executive officer of ITAGroup, Inc., a performance marketing group headquartered in West Des Moines, Iowa. He has served as a director of the Company since 1994 and the Bank since 1993. MICHAEL A. COPPOLA is president of Coppola Enterprises, Inc. a fully integrated real estate development and management company. He has been a director of the Company and the Bank since 1996. ORVILLE E. CROWLEY is president and chief operating officer of Linden Lane Farms Company, a family farm corporation involved in growing row crops in Madison and Warren counties in Iowa. Mr. Crowley has been a director of the Company since 1984. GEORGE D. MILLIGAN is president of The Graham Group, Inc., a Des Moines, Iowa based real estate development and investment company. He has served as a director of the Company since 2005 and the Bank since 1994. ROBERT G. PULVER is president and chief executive officer of All State Industries, Inc., an industrial rubber products manufacturer. He has been a director of the Company since 1984 and the Bank since 1981. THOMAS E. STANBERRY joined the Company in March 2003 as chairman, president and chief executive officer. Effective January 1, 2005, he became chairman and chief executive officer of the Bank. He has been a director of the Bank since May 2003, of VMF Capital since October 2003, and of IMG since January 2006. From 1989 until February 2003, Mr. Stanberry served in a variety of capacities for U.S. Bancorp Piper Jaffray, most recently as a Managing Director in its Fixed Income Capital Markets division. JACK G. WAHLIG is president of Integrus Financial, L.C. He is a retired partner from the certified public accounting firm, McGladrey & Pullen, LLP. Mr. Wahlig has been a director of the Company since 2001 and the Bank since 1997. CONNIE WIMER is owner/publisher of Business Publications Corporation and retired November 1, 2001, as president of Iowa Title Company. She has been a director of the Company and the Bank since 1985. JOYCE A. CHAPMAN is vice president of the Company. She has served as executive vice president-administration of the Bank since 2001. Prior to that time she was senior vice president-administration. Ms. Chapman has been a director of the Bank since 1975 and served as a director of the Company from 1984 until February 2002. She has been a director of VMF Capital since October 2003 and a director of IMG since January 2006. She has been with the Bank since 1971. SCOTT D. ELTJES was named a member of the Company's executive management team and head of VMF Capital effective January 2005. He has been a managing director of VMF Capital since October 2003 and a director of IMG since January 2006. From May 1999 until October 2003, he was a managing partner of VMF Capital L.L.C., from which the Company purchased certain assets and liabilities to form WB Capital Management Inc. DOUGLAS R. GULLING joined the Company in November 2001 as chief financial officer and was elected chief financial officer of the Bank in February 2002. He has been a director and treasurer of VMF Capital since October 2003 and of IMG since January 2006. He was elected executive vice president of the Company in April 2004. In May 2005 he was elected to the Board of Directors of West Bank. From 1996 until 2001, Mr. Gulling served as senior vice president and corporate controller of Brenton Bank in Des Moines, Iowa. JEFFREY D. LORENZEN was named a member of the Company's executive management team effective February 15, 2006. He has been President of IMG since April 2005 and Chief Investment Officer since March 2003. From August 2000 until October 2003 he served as IMG's Supervising Fixed Income Manager. He has been a director of IMG since March 2001. SHAREN K. SURBER is executive vice president-operations of the Bank and has served in that capacity since 2001. Prior to that time she was senior vice president-operations. She has been with the bank since 1975, serving in a variety of capacities including cashier and human resource director. BRAD L. WINTERBOTTOM is vice president of the Company and president of the Bank and has served as a director and president of the Bank since 2000. He has been a director of VMF Capital since October 2003 and of IMG since January 2006. He was executive vice president - credit from 1998 to 2000. Prior to that time he was senior vice president - credit of the Bank. He joined the Bank in 1992. 17 Identification of Audit Committee and Audit Committee Financial Expert The information for this matter as required pursuant to Item 401 of Regulation S-K can be found at page 5 in the Company's definitive Proxy Statement, which was filed on March 7, 2006, and is incorporated herein by reference. Shareholder Recommendations for Nominees to the Board of Directors The information for this matter as required pursuant to Item 401 of Regulation S-K can be found at pages 13 and 14 in the Company's definitive Proxy Statement, which was filed on March 7, 2006, and is incorporated herein by reference. Section 16(a) Beneficial Ownership Reporting Compliance The information for this matter as required pursuant to Item 405 of Regulation S-K can be found at page 3 in the Company's definitive Proxy Statement, which was filed on March 7, 2006, and is incorporated herein by reference. Code of Ethics The Company has adopted a code of conduct which applies to all directors, officers, and employees, including the chairman, president and chief executive officer, the executive vice president and chief financial officer and the controller. A copy of the code of conduct is available in the investor relations section of the Company's website at www.westbankiowa.com. ITEM 11. EXECUTIVE COMPENSATION The information for this matter as required pursuant to Item 402 of Regulation S-K can be found at pages 7 through 11 in the Company's definitive Proxy Statement, which was filed on March 7, 2006, and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information for this matter as required pursuant to Item 201(d) and Item 403 of Regulation S-K can be found at pages 2 and 3 in the Company's definitive Proxy Statement, which was filed on March 7, 2006, and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information for this matter as required pursuant to Item 404 of Regulation S-K can be found at page 10 in the Company's definitive Proxy Statement, which was filed on March 7, 2006, and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information for this matter as required pursuant to Item 9(e) of Schedule 14A can be found at pages 12 through 13 in the Company's definitive Proxy Statement, which was filed on March 7, 2006, and is incorporated herein by reference. 18 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following exhibits and financial statement schedules of the Company are filed as part of this report: (a) 1. Financial Statements See the financial statements on pages 26 through 63 of the Company's Appendix to the Proxy Statement, which was filed on March 7, 2006, and which is incorporated herein by reference. 2. Financial Statement Schedules All schedules are omitted because they are not applicable, not required or because the required information is included in the consolidated financial statements or notes thereto. 3. Exhibits (not covered by independent registered public accounting firms' report). 3.1 Restated Articles of Incorporation of the Company(1) 3.2 By-laws of the Company(1) 10.1 Lease for Main Bank Facility(1) 10.2 Supplemental Agreement to Lease for Main Bank Facility(1) 10.3 Short-term Lease related to Main Bank Facility(1) 10.4 Assignment(1) 10.5 Lease Modification Agreement No. 1 for Main Bank Facility(1) 10.6 Memorandum of Real Estate Contract(1) 10.7 Affidavit(1) 10.8 Addendum to Lease for Main Bank Facility(1) 10.9 Data Processing Contract(1) 10.10 Employment Contract(1) 10.11 No document 10.12 Data Processing Contract Amendment(2) 10.13 Purchase and Assumption Agreement between West Des Moines State Bank and Hawkeye State Bank(3) 10.14 Employment Agreement effective March 1, 2003, which was consummated in the first quarter of 2004(4) 10.15 The Employee Savings and Stock Ownership Plan, as amended(5) 10.16 Amendment to Lease Agreement(6) 10.17 Employment Agreement(6) 10.18 Consulting Agreement(8) 10.19 West Bancorporation, Inc. Restricted Stock Compensation Plan(7) 10.20 Employment Agreement between Investors Management Group and Jeff Lorenzen(9) 10.21 The Appendix to the Proxy Statement for West Bancorporation, Inc. for the 2005 calendar year(10) 21 Subsidiaries 31.1 Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (1) Incorporated herein by reference to the related exhibit filed with the Form 10 on March 11, 2002. (2) Incorporated herein by reference to the related exhibit filed with the Form 10-K on March 26, 2003. (3) Incorporated herein by reference to the related exhibit filed with the Form 10-Q on May 15, 2003. (4) Incorporated herein by reference to the related exhibit filed with the Form 10-K on February 26, 2004. (5) Incorporated herein by reference to the related exhibit filed with the Form S-8 on October 29, 2004. (6) Incorporated herein by reference to the related exhibit filed with the Form 10-K on March 3, 2005. (7) Incorporated herein by reference to the definitive proxy statement 14A which was filed on March 10, 2005. (8) Incorporated herein by reference to the related exhibit filed with the Form 10-Q on May 6, 2005. (9) Incorporated herein by reference to the related exhibit filed with the Form 8-K on February 22, 2006. (10) Incorporated herein by reference to the definitive proxy statement 14A which was filed on March 7, 2006. The Company will furnish to any person, upon request, and upon payment of a fee of $.50 per page, a copy of any exhibit. Requests for copies of exhibits should be directed to Chief Financial Officer, West Bancorporation, Inc., 1601 22nd Street, West Des Moines, Iowa 50266. 19 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. WEST BANCORPORATION, INC. (Registrant) March 8, 2006 By: /s/ Thomas E. Stanberry ----------------------------------- Thomas E. Stanberry Chairman, President and Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 8, 2006 By: /s/ Thomas E. Stanberry ----------------------------------- Thomas E. Stanberry Chairman, President and Chief Executive Officer (Principal Executive Officer) March 8, 2006 By: /s/ Douglas R. Gulling ----------------------------------- Douglas R. Gulling Executive Vice President and Chief Financial Officer (Principal Accounting Officer) BOARD OF DIRECTORS March 8, 2006 By: /s/ Frank W. Berlin ----------------------------------- Frank W. Berlin March 8, 2006 By: /s/ Steven G. Chapman ----------------------------------- Steven G. Chapman March 8, 2006 By: /s/ Michael A. Coppola ----------------------------------- Michael A. Coppola March 8, 2006 By: /s/ Orville E. Crowley ----------------------------------- Orville E. Crowley March 8, 2006 By: /s/ George D. Milligan ----------------------------------- George D. Milligan March 8, 2006 By: /s/ Robert G. Pulver ----------------------------------- Robert G. Pulver March 8, 2006 By: /s/ Jack G. Wahlig ----------------------------------- Jack G. Wahlig March 8, 2006 By: /s/ Connie Wimer ----------------------------------- Connie Wimer 20 EXHIBIT INDEX The following exhibits are filed herewith:
Exhibit No. Description - ----------- -------------------------------------------------------------------------------------------- 10.21 Assignment and Assumption of Lease and Consent to Assignment 21 Subsidiaries 31.1 Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002
EX-10.21 2 c02561exv10w21.txt ASSIGNMENT AND ASSUMPTION OF LEASE AND CONSENT TO ASSIGNMENT EXHIBIT 10.21 ASSIGNMENT AND ASSUMPTION OF LEASE AND CONSENT TO ASSIGNMENT THIS ASSIGNMENT AND ASSUMPTION OF LEASE AND CONSENT TO ASSIGNMENT (hereinafter the "Assignment") is made and entered into on this 7th day of November, 2005, by and among AmCore Financial, Inc., ("Assignor"), West Bancorporation, Inc., ("Assignee"), and Magnum Property Partners No. 1, L.L.C., ("Landlord"). RECITALS WHEREAS, Assignor and Landlord entered into a Lease dated the 24th day of July, 2002, (hereinafter the "Lease"), for certain premises consisting of approximately 24,410 rentable square feet ("Premises") on the 2nd floor of the Century II office building, located at 1415 South 28th Street, West Des Moines, Iowa (the "Building"), the current term of which Lease expires on the 31st day of October, 2010; and WHEREAS, Assignor and Assignee desire that all Assignor's right, title, and interest under the Lease be assigned to Assignee subject to the terms and conditions set forth herein and with the consent of Landlord. NOW, THEREFORE, the parties, in consideration of the premises and the mutual covenants herein contained, intending to be legally bound hereby, agree: 1) Effective on or about December 31, 2005 (the "Effective Date") Assignor assigns to Assignee its successors and assigns, all right, title, and interest of Assignor under the Lease. 2) Assignor represents and warrants to Assignee that as of the Effective Date: (a) Assignor and, to the best of Assignor's knowledge, Landlord have complied with and fulfilled all terms and conditions of the Lease and the Lease is in full force and effect; (b) Excepting normal wear and tear, the Premises are in at least as good condition as on the commencement date of this Lease, including all equipment and facilities within the Premises, which shall include, but not be limited to, electrical, plumbing and heating, and air conditioning systems; (c) Assignor has no knowledge of, nor has it been put on notice of, any failure of the Premises to be in compliance with any applicable governmental statutes, laws, rules, orders, regulations, and ordinances; (d) All of Assignor's covenants in the Lease have been observed. 3) On and after the Effective Date, Assignee shall comply with all of the covenants, terms, conditions, and obligations of Assignor under the Lease, and Assignee shall indemnify, defend and hold Assignor harmless from and against any and all claims, liabilities, demands, judgments, damages or expenses of any kind or nature, including, without limitation, reasonable attorney's fees, arising out of or in any way connected with any default under the Lease by Assignee occurring on or after the Effective Date. 4) Annual Base Rent and Direct Expenses shall be prorated between the parties for the remainder of the current calendar year after the Effective Date, based upon the number of days each of the parties hereto is in possession of the Premises. 5) Assignee shall use the Premises solely for the purposes as stated in the Lease. 6) On and after the Effective Date, all notices, consents, requests, approvals, instructions, and other communications provided for or permitted under the Lease to be sent to Assignor, shall be sent to Assignee in writing and delivered by registered or certified mail, first class postage prepaid, return receipt requested, and addressed to the attention of the Assignee at the Premises. 7) In the event that this transaction between AMCORE Financial and West Bancorporation does not take place, this agreement shall be considered null and void and AMCORE shall remain responsible for the lease. The terms and conditions of this Assignment shall be binding upon and inure to the benefit of the parties and their respective heirs, successors, and assigns. ASSIGNOR: AMCORE FINANCIAL, INC. By: /s/ James Waddell ----------------------------------- Its: Executive Vice President ASSIGNEE WEST BANCORPORATION, INC. By: /s/ Thomas E. Stanberry ----------------------------------- Its: Chairman & CEO LANDLORD: MAGNUM PROPERTY PARTNERS NO. 1, L.L.C. A NEBRASKA LIMITED LIABILITY COMPANY By: Magnum Resources, Inc, a Wyoming corporation, Its Manager By: /s/ Kelly A. Walters ----------------------------------- Name: Kelly A. Walters Title: Senior Vice President CENTURY I & II OFFICE BUILDINGS (2700 WESTOWN PARKWAY, WEST DES MOINES, IOWA) OFFICE LEASE MAGNUM PROPERTY PARTNERS NO. 1, L.L.C., A NEBRASKA LIMITED LIABILITY COMPANY LANDLORD AND AMCORE FINANCIAL, INC. TENANT OFFICE LEASE THIS OFFICE LEASE (the "Lease") is made and entered into by and between Magnum Property Partners No. 1, L.L.C., a Nebraska limited liability company ("Landlord"), and AmCore Financial, Inc. ("Tenant"), as of this 24th day of July, 2002 (the "Effective Date"). Landlord and Tenant specifically agree as follows: ARTICLE I - DEFINED TERMS AND BASIC TERMS The terms listed below shall have the following meanings throughout this Lease: (a) Landlord: Magnum Property Partners No. 1, L.L.C., c/o Magnum Resources, Inc. 11422 Miracle Hills Drive Suite 400 Omaha, Nebraska 68154 (b) Landlord's Agent: Magnum Resources, Inc (c) Tenant: AmCore Financial, Inc. 501 7th Street Rockford IL, 61104 Attn: Facilities Office (d) Complex: Century I & II Office Buildings 2700 Westown Parkway West Des Moines, Iowa (e) Building: Century II (f) Premises: That portion of the 2nd floor, Suite 200 of the Century II Office Building as more particularly shown on the floor plan attached as Exhibit "A" (g) Rentable Area of Building: approximately 97,664 square feet (h) Rentable Area of Premises: approximately 24,410 square feet Initial Premises: 17,498 square feet First Expansion Premises: 3,591 square feet Second Expansion Premises: 3,321 square feet (i) Premises Delivery Dates: The Premises Delivery Dates for the Initial Premises, First Expansion Premises and Second Expansion Premises are as set forth below, except as the same can be modified pursuant to the terms of this Lease Initial Premises: October 15, 2002 First Expansion Premises: November 1, 2004 Second Expansion Premises: November 1, 2006 (j) Term Commencement Date: November 1, 2002 (k) Term: Eight (8) years (l) Expiration Date: October 31, 2010 (m) First Expansion Date: The date Tenant takes possession of the First Expansion Premises but in no event later than November 1, 2004 (n) Second Expansion Date: The date Tenant takes possession of the Second Expansion Premises but in no event later than November 1, 2006 (o) Annual Base Rent Prior to $306,215.00 $17.50 psf First Expansion Date (p) Monthly Base Rent Prior to First Expansion Date $ 25,517.92 (q) Annual Base Rent After First Expansion Date and Prior to Second Expansion Date $369,057.50 $17.50 psf (r) Monthly Base Rent After First Expansion Date and Prior to Second Expansion Date $ 30,754.80 (s) Annual Base Rent After First Expansion Date and Second Expansion Date: $427,175.00 $17.50 psf (t) Monthly Base Rent After First Expansion Date and Second Expansion Date $ 35,597.92 (u) Tenant's Proportionate Share: (i) 17.9166% prior to the First Expansion Date; and (ii) 21.5935% from and after the First Expansion Date and prior to the Second Expansion Date; and (iii) 24.9939% from and after the Second Expansion Date (v) Base Year: 2002 (w) Rent Commencement Dates Initial Premises: November 1, 2002 First Expansion Premises: First Expansion Date Second Expansion Premises: Second Expansion Date (x) Security Deposit: $0.00 (y) Use: General Office Use (z) Tenant Improvements See Section 10.01 (aa) Tenant's Address for AmCore Financial Inc. Notices: 501 7th Street Rockford IL, 61104 Attn: Facilities Office (ab) Landlord's Address for Magnum Property Partners No. 1, L.L.C. Notices: C/O Magnum Resources, Inc 11422 Miracle Hills Drive Suite 400 Omaha, Nebraska 68154 (ac) Tenant's Broker: None Certain other defined terms are defined when they first appear within the body of this Lease. ARTICLE II - PREMISES Section 2.01. Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises, for the Term and subject to the agreements, conditions and provisions contained in this Lease to each and all of which Landlord and Tenant hereby mutually agree. Section 2.02. Rentable Area. The Rentable Area of the Premises and the Rentable Area of the Building shall mean the amounts as set forth in Article I. During the Term and after alterations or changes to the Premises or Building, Landlord shall have the right to redetermine the Rentable Area of the Premises, and the Rentable Area of the Building so long as such redetermination does not change the amount due for Base Rent or Tenant's Proportionate Share of Direct Expenses hereunder. Any re-measurement of the Building or the Premises shall be completed in a manner consistent with the standards set forth by Building Owner Manager's Association ("BOMA"). Section 2.03. Common Areas. "Common Areas" shall mean any lobby, plaza and sidewalk areas, any surface parking areas and other similar areas of general access and the areas on individual floors in the Building devoted to corridors, fire vestibules, elevators, foyers, lobbies, electric and telephone closets, stairways, rest rooms, mechanical rooms, janitor's closets, and other similar facilities and shall also mean those areas of the Building devoted to mechanical and service rooms and levels servicing the Building and basement, mezzanine and penthouse service facilities. Section 2.04 Expansion Space. Tenant shall have the right to occupy the First Expansion Space or the Second Expansion Space at any time after the Term Commencement Date, subject to the following provisions. (a) First Expansion Space: In the event Tenant uses all or any portion of the First Expansion Space at any time after the Term Commencement Date but prior to the First Expansion Date for storage purposes only, Tenant shall pay Landlord Base Rent for the First Expansion Space at the rate of $7.00 per rentable square foot. In the event Tenant uses all or any portion of the First Expansion Space at any time after the Term Commencement Date but prior to the First Expansion Date for business operation purposes, Tenant shall pay Landlord Monthly Base Rent as set forth in Article I, subparagraph I and Tenant's Proportionate Share shall be increased to the amount set forth in Article I, subparagraph (u) (ii). The payment of Monthly Base Rent and Adjustment Rent for the First Expansion Premises shall commence on the date Tenant shall commence using the First Expansion Premises for business operation purposes, but in no event later than the First Expansion Date, and shall continue through the Expiration Date of the Lease. (b) Second Expansion Space: In the event Tenant uses all or any portion of the Second Expansion Space at any time after the Term Commencement Date but prior to the Second Expansion Date for storage purposes only, Tenant shall pay Landlord Base Rent for the Second Expansion Space at the rate of $7.00 per rentable square foot. In the event Tenant uses all or any portion of the Second Expansion Space at any time after the Term Commencement Date but prior to the Second Expansion Date for business operation purposes Tenant shall pay Landlord Monthly Base Rent as set forth in Article I, subparagraph (t) and Tenant's Proportionate Share shall be increased to the amount set forth in Article I, subparagraph (u) (ii). The payment of Monthly Base Rent and Adjustment Rent for the Second Expansion Premises shall commence on the date Tenant shall commence using the Second Expansion Premises for business operation purposes, but in no event later than the Second Expansion Date, and shall continue through the Expiration Date of the Lease. ARTICLE III - TERM Section 3.01. Initial Term. Upon the Premises Delivery Date and prior to the occurrence of the Term Commencement Date, the terms and provisions hereof shall be fully binding upon Landlord and Tenant. If Landlord is unable to tender possession of the Premises to Tenant on or before the Premises Delivery Date, the Term Commencement Date shall be extended one day for each day of such delay and the Expiration Date shall be extended to end on the last day of the eighth consecutive full lease year as said term "Lease Year" is hereinafter defined. In the event Landlord is unable to deliver possession of the Premises due to delays caused by the acts or omissions of Tenant said Term Commencement Date and Rent Commencement Date shall not be extended as set forth herein. In the event Landlord is unable to deliver possession of the Initial Premises within sixty (60) days after the Premises Delivery Date for the Initial Premises, then Tenant may terminate this Lease. Except as set forth above, no failure to tender possession of the Initial Premises to Tenant on or before the Premises Delivery Date for the Initial Premises shall in any way affect any other obligations of Tenant hereunder. Tenant's acceptance of possession of the Premises upon Landlord's tender thereof shall constitute Tenant's acknowledgment that the Premises are in good order and satisfactory condition; provided, if there are any improvements to be constructed by Landlord within the Premises pursuant to Section 10.01, Tenant may provide to Landlord at the time of tender of possession, and Tenant's possession shall be subject to, a written punch-list for any such incomplete or unfinished improvements. Section 3.02. Lease Year Defined. The term "Lease Year" as used herein shall mean a period of twelve (12) consecutive full calendar months. The first Lease Year shall begin on the Term Commencement Date if the Term Commencement Date shall occur on the first day of a calendar month; if not, then the first Lease Year shall commence upon the first day of the calendar month next following the Term Commencement Date. Each succeeding Lease Year shall commence upon the anniversary date of the first Lease Year. Section 3.03. Option Term. (a) Subject to the conditions set forth in subparagraph (b) below, Tenant is granted two (2) options to renew this Lease for additional renewal periods of four (4) years each. The "First Renewal Term" shall commence on the date following the Expiration Date of the Initial Term and shall extend for a period of four (4) years. The "Second Renewal Term" shall commence on the date following the Expiration Date of the First Renewal Term and shall extend for a period of four (4) years. Said options to renew this Lease shall be on the same terms, conditions, provisions and covenants as are set forth herein, except as specifically set forth hereinafter: (i) Annual Base Rent during the First Renewal Term shall be $463,790.00 ($19.00 per rentable square foot). The Monthly Base Rent during the First Renewal Term shall be $38,649.17. The Base Year shall remain the same for the First Renewal Term. (ii)Annual Base Rent during the Second Renewal Term shall be $488,200.00 ($20.00 per rentable square foot). The Monthly Base Rent during the Second Renewal Term shall be $40,683.33. The Base Year shall remain the same for the Second Renewal Term. (b) The renewal terms set forth herein shall be conditioned upon and subject to each of the following: (i) Tenant shall notify Landlord in writing of Tenant's exercise of the First Renewal Term no earlier than twelve (12) months and no later than six (6) months prior to the expiration of the Initial Term and shall notify Landlord in writing of Tenant's exercise of the Second Renewal Term no earlier than twelve (12) months and no later than six (6) months prior to the expiration of the First Renewal Term; (ii) at the time Landlord receives Tenant's notice as provided in subparagraph (b)(i) above and at the scheduled commencement of the renewal term no Event of Default shall exist under this Lease. (c) This options to renew shall be deemed personal to Tenant named herein and may not be exercised by any permitted assignee or subtenant hereunder, except an Affiliate of Tenant as set forth in Section 12.01. (d) Landlord shall have no obligation to improve or perform any work on or to the Premises or otherwise provide or contribute any tenant improvement allowance as a result of the exercise of Tenant's options to renew. Section 3.04. Termination Option. (a) Tenant shall have an option (the "Termination Option") to terminate the Lease effective as of the last day of the fifth year of the Term of this Lease (the "Termination Date"). The Termination Option is granted subject to the following terms and conditions: (i) Tenant shall give Landlord written notice of Tenant's election to exercise the Termination Option and of the applicable Termination Date, which notice is given not later than nine (9) months prior to such Termination Date; (ii) no Event of Default has occurred under the Lease either on the date that Tenant exercises the Termination Option or on the Termination Date; and (iii) Tenant shall pay to Landlord, concurrently with Tenant's exercise of the Termination Option, a lease termination fee of an amount equal to (1) the unamortized brokerage fees paid in connection with the execution of this Lease, plus (2) the unamortized cost of the Initial Improvements as set forth in Section 10.01 of this Lease, plus (3) nine (9) months Base Monthly Rent (the "Fee"). (b) If Tenant timely and properly exercises the Termination Option, then: (i) the Lease shall terminate effective as of the Termination Date and Rent shall be paid through the Termination Date (in addition to payment by Tenant of the Fee); and (ii) Tenant shall surrender and vacate the Premises and deliver possession thereof to Landlord on or before the Termination Date in the condition required pursuant to the Lease. (c) The Termination Option shall automatically terminate and become null and void upon the earlier to occur of (i) the termination of Tenant's right to possession of all or any part of the Premises pursuant to the terms of the Lease; (ii) the assignment of the Lease by Tenant, in whole or in part, except to an Affiliate as defined in Section 12.01; (iii) the sublease by Tenant of all or any part of the Premises, except to an Affiliate as defined in Section 12.01; or (iv) the failure of Tenant to timely or properly exercise the Termination Option. ARTICLE IV - BASE RENT Section 4.01. Base Rent. Tenant shall pay to Landlord for the use of the Premises (in addition to the Adjustment Rent as described in Article VI below) an Annual Base Rent in an amount specified in Article I, payable without notice or demand in equal monthly installments in advance, beginning on the Term Commencement Date and on the first day of each calendar month thereafter during the Term in the amount of the Monthly Base Rent specified in Article I; provided, however, that so long as no Event of Default occurs, Tenant shall not be obligated to make any payments of Monthly Base Rent until the later of: a) Rent Commencement Date specified in Article I; or b) the date Landlord delivers possession of the Initial Premises, at which time Tenant's obligation to pay Monthly Base Rent shall commence. Section 4.02. Payment. All payments required to be made by Tenant under this Lease shall be in lawful money of the United States of America and shall be made without any set off, deduction or counterclaim whatsoever and shall be made payable to and delivered to Landlord at the office of Landlord or such other place as Landlord may designate. Notwithstanding the foregoing, Landlord, in its sole discretion, may require all payments made by Tenant under this Lease to be made through a debit payment entry or other electronic transfer directly to a demand deposit account designated by Landlord. Section 4.03. Partial Months. If the Rent Commencement Date is a day other than the first day of a calendar month or if the Term expires or is terminated on a day other than the last day of a calendar month, then the Monthly Base Rent for such fractional months shall be prorated on the basis of the number of days elapsed in the subject month. ARTICLE V - DIRECT EXPENSES AND TAXES Section 5.01. Definition of Direct Expenses. "Direct Expenses" as used herein shall include all costs, charges, expenses and disbursements of every kind, nature and character incurred in the course of ownership, management, administration, operation, repair, replacement, security and maintenance of the Building, the Premises, the Common Areas, the areas adjacent thereto, and all related improvements and appurtenances thereto, including, without limitation: (a) Wages, salaries and other compensation, expenses, benefits, and other sums payable, as well as any adjustment thereto, for employees, independent contractors and agents of Landlord. (b) Costs and payments of service, maintenance, repair, replacement and inspection for the following: landscaping, lawns, trees, shrubbery, janitorial, windows, window cleaning, rubbish removal, exterminating, Parking Areas and drives, elevator, escalator, life and safety, security, plumbing, telecommunication, electrical and mechanical equipment (including, but not limited to HVAC) or installations and the costs of purchasing or renting all such additional mechanical installations and equipment, service contacts, painting, exterior waterproofing and caulking, wall covering, carpeting, bathroom repairs and modernization, building identification signs (except those relating to a specific tenant), roof maintenance, repair and replacement, equipment, supplies, tools, materials and uniforms. (c) Premiums and other charges for insurance, including without limitation, all risk, earthquake, public liability, property damage and workers' compensation insurance, cost of insurance deductibles and charges, and such other insurance coverage in such amounts as Landlord, in its sole discretion, shall elect to maintain. (d) Costs of electricity, water, gas, steam, sewer and other utility services. (e) Sales, use and excise taxes on goods and services purchased or furnished by Landlord. (f) License, permit, testing and inspection costs and fees. (g) Attorneys', accountants' and consultants' fees. (h) Fees for local civic organizations and dues for professional and trade associations, including without limitation, any amount paid to local civic groups for the betterment of the neighborhood in which the Complex is located. (i) Fees for management and accounting services and costs incidental thereto, whether provided by an independent management company, Landlord, or an affiliate of Landlord. Said management fee shall not exceed an amount equal to the management fees customarily charged in the Des Moines, Iowa suburban market. (j) The costs of any improvements, equipment or devices installed or paid for by Landlord in order to conform with any laws, rules, regulations or requirements of any governmental or quasi-governmental authority having jurisdiction or of the Board of Fire Underwriters or similar insurance body. (k) The costs of any improvements (including improvements required by law), equipment or devices installed or paid for by Landlord and reasonably intended to effect a labor saving, energy saving measure or to effect other economies in the operation or maintenance of the Complex. Such costs shall be amortized over the shorter of the useful life of the improvements, or the period over which the labor or energy saving costs equal the improvement cost. In addition such costs shall not exceed the savings achieved from such improvements. (l) "Direct Expenses" shall not include: expenses for repairs, replacements, and general maintenance paid by proceeds from insurance or by Tenant or other third parties; alterations attributable solely to Tenants of the Building other than Tenant; principal and interest payments made by Landlord on mortgages on the Building; depreciation; and leasing commissions. Direct Expenses shall specifically exclude the following: 1. Advertising or real estate broker's commissions; 2. Leasing commissions, attorney's fees, costs and disbursements and other expenses incurred in connection with negotiations or disputes with tenants, or prospective tenants; 3. Expenses incurred in renovating or otherwise improving or decorating, painting or redecorating space for tenants; 4. Except as set forth in Section 5.01 subparagraphs (j) and (k) of this Lease, any expenses that are considered to be capital expenses shall be excluded from Direct Expenses. Capital expenses are more specifically defined as (a) costs incurred in connection with the original construction of the Building or with any major changes to same, including but not limited to, additions or deletions of corridor extensions, renovations and improvements of the common areas beyond the costs caused by normal wear and tear and upgrades or replacements of major Building systems; (b) costs of correcting defects (including latent defects), including any allowances for same, in the construction of the Building or its related facilities; (c) costs incurred in renovating or otherwise improving, designing, redesigning, decorating or redecorating space for tenants or other occupants in the Building or other space leased or held for lease in the Building. 5. Overhead and profit increment paid to subsidiaries or affiliates of Landlord for services on or to the real property, to the extent only that the costs of such services exceed competitive costs of such services were they not so rendered by a subsidiary or affiliate; 6. Interests on debt or amortization payments on any mortgage or mortgages, and rental under any ground or underlying leases or lease; 7. Cost of refinancing any present or future mortgage 8. Costs and expenses incurred by Landlord to remove, enclose or encapsulate any asbestos or hazardous materials or wastes which were not brought onto the Premises by Tenant; 9. Attorneys' fees and disbursements and other costs in connection with any judgment, settlement or arbitration resulting from any tort liability on the part of Landlord and the amount of such settlement or judgment; 10. Charitable and political contributions made by Landlord; 11. Salaries of employees above the level of building superintendent or an equivalent position; 12. Any costs, fines or penalties incurred due to violations by Landlord of any governmental rule or authority. (m) "Prime Rate" shall mean the base rate (or its equivalent) of interest announced publicly in New York, New York from time to time by Citibank, N.A. (or if Citibank, N.A. ceases to exist, the largest bank headquartered in the State of New York), but in no event in excess of the maximum rate of interest permitted by law. Section 5.02. Taxes. "Taxes" as used herein shall include all taxes, assessments and charges (including costs and expenses (including without limitation, legal fees and disbursements) of contesting the amount or validity thereof by appropriate administrative or legal proceedings) levied upon or with respect to the Building or any personal property of Landlord, or Landlord's interest in the Building or such personal property, including without limitation, all real property taxes and general and special assessments; charges, fees, levies or assessments for transit, housing, police, fire or other governmental services or purported benefits to the Building; service payments in lieu of taxes; and any tax, fee or excise on the act of entering into this Lease or any other lease of space in the Building, on the use or occupancy of the Building or any part thereof, or on the rent payable under any lease or in connection with the business of renting space in the Building, which may now or hereafter be levied or assessed against Landlord by the United States of America, the State of Iowa, or any political subdivision, public corporation, district or other political or public entity, and any other tax, fee or other excise, however described, that may be levied or assessed as a substitute for, or as an addition to (in whole or in part) any other property taxes, whether or not now customary or in the contemplation of the parties on the date of this Lease. If the Building is taxed to the Landlord as a larger parcel, Landlord may allocate such tax among all the Buildings. Section 5.03. Additional Taxes. In addition to the Monthly Base Rent, Adjustment Rent and other charges to be paid by Tenant hereunder, Tenant shall reimburse Landlord upon demand for any and all taxes, surcharges, levies, assessments, fees and charges payable by Landlord, whether or not now customary or within the contemplation of the parties hereto: (a) upon, measured by or reasonably attributable to the cost or value of Tenant's equipment, furniture, fixtures and other personal property located in the Premises, or the cost or value of any leasehold improvements, regardless of whether title to such improvements shall be in Tenant or Landlord; (b) upon, or measured by, any rent or other amounts payable hereunder, including, without limitation, any gross income tax, gross receipts tax or excise tax levied by the City of West Des Moines, State of Iowa, the federal government of the United States or any other governmental body with respect to the receipt of such rent or other amounts; (c) upon, or with respect to, the possession, leasing, operation, management, maintenance, alteration, repair, restoration, use or occupancy by Tenant of the Premises or any portion thereof; or (d) upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises. Notwithstanding anything contained in this Article to the contrary, Taxes shall not include any federal and state taxes on income, capital stock, succession, transfer, franchise, gift, estate or inheritance taxes; provided, however, if at any time during the Term, a tax or excise on income is levied or assessed by any governmental entity, in lieu of or as a substitute for, in whole or in part, real estate taxes or other ad valorem taxes, such tax shall constitute and be included in Taxes. ARTICLE VI - ADJUSTMENT RENT Section 6.01. Adjustment Rent. Tenant shall pay to Landlord (in addition to the Annual Base Rent, as described in Article IV above) an amount equal to Tenant's Proportionate Share of (a) the increase in Direct Expenses for any calendar year over the Direct Expenses for the Base Year, and (b) the increase in Taxes for any calendar year over the Taxes for the Base Year (collectively the "Adjustment Rent"). Prior to each calendar year, Landlord shall estimate the amount of Adjustment Rent due for such year, and Tenant shall pay Landlord one-twelfth (1/12th) of such estimate on the first day of each month during such year with Tenant's payment of the Monthly Base Rent. Such estimate may be revised by Landlord not more than once per calendar year. After the end of each calendar year, Landlord shall deliver to Tenant a report setting forth the actual Direct Expenses and Taxes for such calendar year and a statement in the amount of Adjustment Rent that Tenant has paid and is payable for such year. Within thirty (30) days after receipt of such report, Tenant shall pay to Landlord the amount of Adjustment Rent due for such calendar year minus any payments of estimated Adjustment Rent made by Tenant for such year. If Tenant's estimated payments of Adjustment Rent exceed the amount due Landlord for such calendar year, Landlord shall, provided Tenant is not then in default hereunder beyond any applicable grace and notice periods, apply such excess as a credit against Tenant's other payment obligations under this Lease or promptly refund such excess to Tenant if the Term has already expired, in either case without interest to Tenant. In the event Landlord shall fail to give Tenant an estimate of Adjustment Rent prior to the beginning of any calendar year, Tenant shall continue to pay Adjustment Rent at the rate for the previous calendar year until Landlord delivers such estimate. Notwithstanding the foregoing, Landlord's obligation to credit Tenant's account pursuant to this Section 6.01 shall be conditional upon Tenant having first paid all of its monthly installments toward Tenant's Share of the estimated Direct Expenses and Taxes pursuant to this Section. Section 6.02. Occupancy. If during all or any portion of any year (including the Base Year) the Building is not at least ninety-five percent (95%) rented and occupied, Landlord shall make an appropriate adjustment of Direct Expenses and Taxes for such year to determine the Direct Expenses and Taxes that would have been paid or incurred by Landlord had the Building been at least ninety-five percent (95%) rented and occupied for the entire year and the amount so determined shall be deemed to be the Direct Expenses and Taxes for such year. Notwithstanding the foregoing, (a) only those components of Direct Expenses that are affected by variations in occupancy levels in the Building shall be adjusted pursuant to this clause, and (b) the Direct Expenses collected from tenants shall never exceed the actual costs incurred by Landlord for the Direct Expenses Section 6.03. Review. Tenant shall have the right, at its cost, upon reasonable prior written notice to Landlord, to inspect Landlord's accounting records relative to Direct Expenses and Taxes during normal business hours at Landlord's offices in Omaha, Nebraska, at any time within ninety (90) days following the furnishing to Tenant of the annual statement of Adjustment Rent; and, unless Tenant shall take written exception to any item in any such statement within such ninety (90) day period, such statement shall be considered as final and accepted by Tenant. Section 6.04. Survival. In the event of the termination of this Lease prior to any determination of Adjustment Rent, Tenant's agreement to pay any such sums and Landlord's obligation to refund any such sums shall survive the termination of this Lease. ARTICLE VII - SECURITY DEPOSIT This Article has been intentionally omitted. ARTICLE VIII - USE Section 8.01. General. The Premises shall be used only for the Use specified in Article I and for no other use or purpose. Section 8.02. No Nuisance or Waste. Tenant shall not do or permit anything to be done in, or about the Premises which will in any way obstruct or interfere with the rights of Landlord and other tenants or occupants or invitees of the Building or injure or annoy them or use or allow the Premises to be used for any improper, immoral or objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance in, on, or about the Building or the Premises. Tenant shall not commit or suffer the commission of any waste in, on, or about the Building or the Premises. Section 8.03. No Illegal Use. Tenant shall not use the Premises or permit anything to be done in or about the Premises which will in any way conflict with any law, statute, ordinance, or governmental rule or regulation now in force or which may hereafter be enacted or promulgated or which conflicts with any certificate of occupancy for the Building or is prohibited by the Rules and Regulations attached hereto as Exhibit "B" (the "Rules and Regulations"). Tenant shall not do or permit anything to be done in or about the Premises or bring or keep anything therein which will in any way increase the rate of applicable insurance upon the Building or any of its contents, and Tenant shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental rules, regulations, and requirements now in force or which may hereafter be in force, and with the requirements of any Board of Fire Underwriters or other similar body now or hereafter constituted relating to or affecting Tenant's use or occupancy of the Premises. Section 8.04. Alterations to Common Areas. If changes or alterations are made by Landlord to any portion of the Building, including, without limitation, the Common Areas, Landlord shall not thereby be subject to any liability nor shall Tenant be entitled to any compensation or any reduction or abatement of rent and such changes or alterations shall not be deemed to be a constructive or actual eviction or a breach of Landlord's covenant of quiet enjoyment. In the event of any such changes or alterations, Landlord agrees to use reasonable good faith efforts to avoid unreasonable interference with Tenant's use of the Premises. Section 8.05. Hazardous Substances. In the event Tenant knows, or has reasonable cause to believe, that any release by Tenant of a hazardous substance has come to be located on, within or beneath the Premises or the Building, Tenant shall give written notice of such condition to Landlord and Tenant shall comply with all statutes, laws, ordinances, rules, regulations and orders of governmental authorities with respect to any such hazardous substances. ARTICLE IX - SERVICES AND UTILITIES Section 9.01. General. During the Term Landlord shall: (a) Operate or cause the operation of the heating, ventilating and air conditioning ("HVAC") system serving the Premises from 8:00 a.m. to 7:30 p.m., Monday through Friday (Saturday from 8:00 a.m. to 1:00 p.m.), except for state and national holidays which are customarily observed in the West Des Moines, Iowa metropolitan area ("Ordinary Business Hours") at temperatures reasonably determined by Landlord to be consistent with other comparable office buildings in the West Des Moines, Iowa metropolitan area, subject to any governmental, municipal or public utility rules or regulations. Any HVAC provided by Landlord to Tenant during other than Ordinary Business Hours shall be furnished only upon the prior request of Tenant delivered before 5:00 p.m. on the preceding business day and Tenant shall pay Landlord's then customary charges for such services. Tenant shall also be responsible for and shall pay Landlord any additional costs (including, without limitation, the costs of installation of additional HVAC equipment, if required by Landlord) incurred because of the failure of the HVAC system to perform its function due to (i) arrangement of partitioning in the Premises or changes or alterations thereto, or (ii) from occupancy of the Premises exceeding one person per two hundred (200) square feet of Rentable Area, or (iii) from failure of Tenant after notice from Landlord to keep all HVAC vents within the Premises free of obstruction. Tenant at all times agrees to cooperate fully with Landlord and to abide by the reasonable regulations and requirements which Landlord may prescribe for the proper functioning and protection of the HVAC system. Landlord, its contractors and agents throughout the Term, shall have free access to any and all mechanical installations of Landlord or Tenant, including, but not limited to, air-cooling, fan, ventilating and machine rooms and electrical and telephone closets; and Tenant agrees there shall be no construction of partitions or other obstructions which may interfere with Landlord's free access thereto, or interfere with the moving of Landlord's equipment to and from the enclosures containing such installations. Tenant further agrees that neither Tenant, nor its agents, employees or contractors shall at any time enter the said enclosures or tamper with, adjust or touch or otherwise in any manner affect such mechanical installations. (b) Subject to any governmental, municipal or public utility rules or regulations and to the Rules and Regulations, furnish electricity for normal lighting and fractional horsepower office machines, the cost of which shall be included in Direct Expenses. Tenant shall not, without the prior written consent of Landlord, use any apparatus or device in the Premises which will in any way increase the amount of electricity used above that usually furnished or supplied for the use of the Premises as general office space; nor connect any apparatus or device with electric current lines except through existing electrical outlets in the Premises. If Tenant desires to use electric current in excess of that usually furnished or supplied for the use of the Premises as general office space, Tenant shall request the same from Landlord in writing. If such request is granted, Landlord may cause an electrical current meter to be installed in the Premises to measure the amount of electric current consumed. Tenant agrees to pay promptly upon demand therefor from Landlord, the cost of any such meter and of the installation, maintenance and repair thereof, and the charges for all electric current consumed as shown by said meters in excess of the amount consumed in connection with the use of the Premises as general office space, at the rates charged for such services by the utility furnishing the same, plus any additional expense incurred in keeping account of the electric current so consumed. If a separate meter is not installed, Tenant agrees to pay the cost for such excess electric current as established by an estimate of the amount of such excess use made by a utility company or electrical engineer selected by Landlord. (c) Provide access to water in the lavatories in the Building and operate, maintain, clean, light, heat, ventilate and/or air condition as applicable those portions of the Common Areas available for tenant usage. Tenant waives all claims against Landlord for losses due to theft or burglary, or for damages done by unauthorized persons in the Building. (d) Provide such janitorial service as Landlord deems appropriate, subject to access being granted to the person or persons employed or retained by Landlord to perform such work. A description of the services currently provided by Landlord is attached to this Lease as Exhibit "D." Landlord maintains the right to change or amend such services at any time during the term of this Lease, provided that Landlord does not materially change the scope of work. Section 9.02. Supplementary Services. Tenant shall pay Landlord, at the charges established by Landlord from time to time, for all supplementary services requested by Tenant and provided by Landlord or its agents, which charges shall be payable by Tenant within ten (10) days after receipt of Landlord's invoice. Such supplementary services may include, without limitation, maintenance, repair, janitorial, cleaning, HVAC and other services in addition to those described in section 9.01 above or otherwise provided during hours other than Ordinary Business Hours. Section 9.03. Interruption of Access, Use or Services. Landlord shall not be liable for any failure to provide access to the Premises, to assure the beneficial use of the Premises or to furnish any services or utilities when such failure is caused by natural occurrences, riots, civil disturbances, insurrection, war, court order, public enemy, accidents, breakage, repairs, strikes, lockouts, other labor disputes, the making of repairs, alterations or improvements to the Premises or the Building, the inability to obtain an adequate supply of fuel, gas, steam, water, electricity, labor or other supplies or by any other condition beyond Landlord's reasonable control, and Tenant shall not be entitled to any damages resulting from such failure, nor shall such failure relieve Tenant of the obligation to pay all sums due hereunder or constitute or be construed as a constructive or other eviction of Tenant. If any governmental entity promulgates or revises any statute, ordinance or building, fire or other code, or imposes mandatory or voluntary controls or guidelines on Landlord or the Building or any part thereof, relating to the use or conservation of energy, water, gas, steam, light or electricity or the provision of any other utility or service provided with respect to this Lease, or if Landlord is required or elects to make alterations to the Building in order to comply with such mandatory or voluntary controls or guidelines, Landlord may, in its sole discretion, comply with such mandatory or voluntary controls or guidelines, or make such alterations to the Building. Neither such compliance nor the making of such alterations shall in any event entitle Tenant to any damages, relieve Tenant of the obligation to pay any of the sums due hereunder, or constitute or be construed as a constructive or other eviction of Tenant. ARTICLE X - ALTERATIONS Section 10.01 Initial Improvements Landlord or its agents shall construct the initial improvements to configure the Premises as shown on Tenant's floor plan, attached hereto as Exhibit "A," using Building standard materials (the "Initial Improvements"). The architectural plans and specifications for the Initial Improvements shall be prepared by Landlord's architect and shall be mutually approved by Landlord and Tenant. Tenant shall fully cooperate with Landlord in constructing the Initial Improvements. Notwithstanding the foregoing to the contrary, any changes requested or made in the Initial Improvements ("Change Orders") shall be at Tenant's sole cost and expense. No Change Orders will be made without the prior written consent of Landlord after written request therefor by Tenant. Landlord shall be not obligated to incorporate such Change Orders into the Initial Improvements until Tenant shall have paid Landlord's reasonable estimate of the cost of such Change Order. Section 10.02. Alterations. Tenant shall not make or suffer to be made any future alterations, additions or improvements (collectively "Alterations") in, on or to the Premises or any part thereof without the prior written consent of Landlord, which consent will not be unreasonably withheld; provided, however, Landlord may withhold its consent in its sole discretion if any proposed Alterations may adversely affect the structure or safety of the Building, the electrical, plumbing, HVAC, mechanical or life safety systems of the Building. When applying for any such consent, Tenant shall comply with the requirements of Exhibit "C". If Landlord consents to the making of any Alterations, the same shall be made by Tenant at Tenant's sole cost and expense or, if Landlord and Tenant so agree, by Landlord at Tenant's sole cost and expense. Tenant's Initial Improvements and any subsequent Alterations shall be the property of Tenant. ARTICLE XI - REPAIRS No representations, except as contained herein, have been made to Tenant respecting the condition of the Premises or the Building, and the acceptance of possession of the Premises by Tenant shall be conclusive evidence as against Tenant that the Premises are now in a tenantable and good condition. Tenant shall take good care of the Premises and shall make all repairs as and when necessary in order to preserve the Premises in good working order and condition. In addition, Tenant shall reimburse Landlord, within ten (10) days after demand, for the cost of any and all structural or nonstructural repairs, replacements or maintenance necessitated or occasioned by the acts, omissions or negligence of Tenant or any person claiming through or under Tenant, or any of their servants, employees, contractors, agents, visitors or licensees, or by the use or occupancy or manner of use or occupancy of the Premises by Tenant or any such person. Landlord shall not be liable for, and there shall be no abatement of rent with respect to any injury to or interference with Tenant's business arising from any repairs, maintenance, alteration or improvement in or to any portion of the Premises, the Common Areas or the Building or in or to the fixtures, appurtenances or equipment therein. Tenant hereby waives all right to make repairs at Landlord's expense under any statute or common law and instead, all improvements, repairs and/or maintenance expenses incurred with respect to the Premises shall be at the expense of Tenant, and shall be considered as part of the consideration for leasing the Premises. All damages or injury done to the Premises by Tenant or by any person who may be in or upon the Premises with Tenant's consent or at Tenant's invitation, shall be repaired with material of equal or better quality than the then existing installation of Building Standard materials and Tenant shall, at the termination of this Lease, surrender the Premises to Landlord in as good condition and repair as when accepted by Tenant, reasonable wear and tear excepted. ARTICLE XII - ASSIGNMENT AND SUBLETTING Section 12.01. General. Tenant shall not, without the prior written consent of Landlord: (a) assign, mortgage, pledge, encumber or otherwise transfer this Lease, the term or estate hereby granted, or any interest hereunder; (b) permit the Premises or any part thereof to be utilized by anyone other than Tenant (whether as concessionaire, franchisee, licensee, permittee or otherwise); or (c) except as hereinafter provided, sublet or offer or advertise for subletting the Premises or any part thereof. Subject to the provisions of this Lease and this Article, Landlord shall not withhold its consent to a proposed assignment or sublease so long as no Event of Default (as hereinafter defined) then exists, the use of the Premises by the proposed assignee or sublessee would be permitted under Section 8.01 hereof, and the proposed assignee or sublessee is of good business reputation and of sound financial condition, as solely determined by Landlord. Tenant acknowledges, however, that one or more existing or future mortgagees of a Mortgage (as hereinafter defined) affecting the Premises may have the right to approve any such assignment, sublease or other transfer, before Tenant may carry it out, and that, whenever such is the case, Landlord shall withhold its consent to the assignment, sublease or other transfer if any such mortgagee withholds its consent thereto. Any assignment, mortgage, pledge, encumbrance, transfer or sublease without Landlord's consent shall be voidable and, at Landlord's election, shall constitute an Event of Default. The acceptance of any Monthly Base Rent or other payments by Landlord from a proposed transferee shall not constitute consent to such assignment or sublease by Landlord or a recognition of any transferee, or a waiver by Landlord of any failure of Tenant or such other transferor to comply with the provisions of this Article XII. Notwithstanding the foregoing, Tenant may at any time assign this lease or sublet all or a portion of the Premises to an Affiliate of Tenant (as defined herein) without the consent of Landlord and without triggering any recapture right of Landlord. As used herein "Affiliate" shall mean any corporation, partnership or other business entity which controls, is controlled by or is under common control with Tenant or which acquires substantially all of the assets or stock of Tenant or which survives a merger with Tenant. No such assignment or subletting shall release or discharge Tenant from its obligations under the lease. Section 12.02. Notice and Procedure. If at any time during the Term, Tenant desires to assign or sublet all or any part of the Premises, then at least thirty (30) days, but not more than one hundred twenty (120) days, prior to the date when Tenant desires the assignment or subletting to be effective (the "Transfer Date"), Tenant shall give Landlord a notice (the "Transfer Notice") which shall set forth the name, address and business of the proposed assignee or sublessee, information (including financial statements and references) concerning the character of the proposed assignee or sublessee, a detailed description of the space proposed to be assigned or sublet, which must be a single, self-contained unit of not less than 1,000 rentable square feet (the "Space"), any rights of the proposed assignee or sublessee to use Tenant's improvements and the like, the Transfer Date, the proposed use for the Space, the term and the fixed rent and/or other consideration and all other material terms and conditions of the proposed assignment or subletting, all in such detail as Landlord may reasonably require. If Landlord requests additional detail, the Transfer Notice shall not be deemed to have been received until Landlord receives such additional detail. Landlord shall have the option, exercisable by giving notice to Tenant at any time within twenty (20) days after Landlord's receipt of the Transfer Notice, in the case of an assignment or sublease, to terminate this Lease as to the Space as of the date (the "Termination Date") set forth in Landlord's notice, in which event Tenant shall be relieved of all further obligations hereunder as to the Space as of the Termination Date. No failure of Landlord to exercise such option with respect to the Space shall be deemed to be Landlord's consent to the assignment or subletting of all or any portion of the Space. If Landlord does not exercise such option, Tenant shall be free to assign or sublet the Space to any entity or person upon receipt of Landlord's prior written consent, but only if Tenant's proposed assignment or sublease complies with the terms and provisions of this Article XII and each of the following conditions: (a) no Event of Default then exists under this Lease; (b) the assignment or sublease shall be on the same terms set forth in the Transfer Notice given to Landlord; (c) no assignment or sublease shall be valid, and no assignee or sublessee shall take possession of the Space, until an executed counterpart of the assignment or sublease has been delivered to Landlord; (d) no assignee or sublessee shall have a right further to assign or sublet; (e) any proposed subletting would not result in more than two subleases of portions of the Premises being in effect at any one time during the Term; (f) the Monthly Base Rent (adjusted on a rentable square foot basis) shall be at or higher than the Monthly Base Rent then being agreed upon by Landlord on new leases in the Building for comparable size space for comparable terms and Tenant shall not grant greater concessions to the assignee or sublessee than is then being offered by Landlord (adjusted on a rentable square foot basis) to new tenants leasing a comparable amount of space for a comparable period of time; (g) no assignee or sublessee shall be an existing tenant of the Building; (h) no assignee or sublessee shall be a governmental entity or otherwise immune from the jurisdiction of the courts of the State of Iowa; and (i) fifty percent (50%) of any sums or other economic consideration received by Tenant as a result of such assignment or subletting (except reasonable leasing commissions) whether denominated rent or otherwise, which exceed, in the aggregate, the total sums which Tenant is obligated to pay Landlord under this Lease (prorated as to any sublease to reflect obligations allocable to that portion of the Premises subject to such sublease) shall be payable monthly to Landlord as additional rent under this Lease, without affecting or reducing any other obligation of Tenant hereunder. Section 12.03. Continuing Liability of Tenant. Regardless of Landlord's consent, no subletting or assignment shall release Tenant's obligation or alter the primary liability of Tenant, unless Landlord agrees otherwise in its sole and absolute discretion. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. If any assignee of Tenant or any successor of Tenant defaults in the performance of any of the terms hereof, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against such assignee or successor. Landlord may consent to subsequent assignments or subletting of this Lease or amendments or modifications to this Lease with assignees of Tenant, without notifying Tenant, or any successor of Tenant, and without obtaining its or their consent thereto, and such action shall not relieve Tenant of its liability under this Lease. If Tenant assigns this Lease, or sublets all or a portion of the Premises, or requests the consent of Landlord to any assignment or subletting, or if Tenant requests the consent of Landlord for any act that Tenant proposes to do, then Tenant shall pay Landlord's reasonable processing fee and reimburse Landlord for all reasonable attorneys' fees incurred in connection therewith. Section 12.04. Bankruptcy. If a petition is filed by or against Tenant for relief under Title 11 of the United States Code, as amended (the "Bankruptcy Code"), and Tenant (including for purposes of this Section 12.04 Tenant's successor in bankruptcy, whether a trustee or Tenant as debtor in possession) assumes and proposes to assign, or proposes to assume and assign, this Lease pursuant to the provisions of the Bankruptcy Code to any person or entity who has made or accepted a bona fide offer to accept an assignment of this Lease on terms acceptable to Tenant, then notice of the proposed assignment setting forth (a) the name and address of the proposed assignee, (b) all of the terms and conditions of the offer and proposed assignment, and (c) the adequate assurance to be furnished by the proposed assignee of its future performance under the Lease, shall be given to Landlord by Tenant no later than twenty (20) days after Tenant has made or received such offer, but in no event later than ten (10) days prior to the date on which Tenant applies to a court of competent jurisdiction for authority and approval to enter into the proposed assignment. Landlord shall have the prior right and option, to be exercised by notice to Tenant given at any time prior to the date on which the court order authorizing such assignment becomes final and nonappealable, to receive an assignment of this Lease upon the same terms and conditions, and for the same consideration, if any, as the proposed assignee, less any brokerage commissions which may otherwise be payable out of the consideration to be paid by the proposed assignee for the assignment of this Lease. If this Lease is assigned pursuant to the provisions of the Bankruptcy Code, Landlord: (i) may require from the assignee a deposit or other security for the performance of its obligations under the Lease in an amount substantially the same as would have been required by Landlord upon the initial leasing to a tenant similar to the assignee; and (ii) shall receive, as additional rent, the sums and economic consideration described in Section 12.02. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed, without further act or documentation, to have assumed all of the Tenant's obligations arising under this Lease on and after the date of such assignment. Any such assignee shall, upon demand, execute and deliver to Landlord an instrument confirming such assumption. No provision of this Lease shall be deemed a waiver of Landlord's rights or remedies under the Bankruptcy Code to oppose any assumption and/or assignment of this Lease, to require a timely performance of Tenant's obligations under this Lease, or to regain possession of the Premises if this Lease has neither been assumed nor rejected within sixty (60) days after the date of the order for relief or within such additional time as a court of competent jurisdiction may have fixed. Notwithstanding anything in this Lease to the contrary, all amounts payable by Tenant to or on behalf of Landlord under this Lease, whether or not expressly denominated as rent, shall constitute rent for the purposes of Section 502(b)(6) of the Bankruptcy Code. Section 12.05. Limitation on Remedies. Tenant shall not be entitled to make, nor shall Tenant make, any claim, and Tenant by this Section 12.05 waives any claim, for money damages (nor shall Tenant claim any money damages by way of set off, counterclaim or defense) based upon any claim or assertion by Tenant that Landlord has unreasonably withheld or unreasonably delayed its consent or approval to a proposed assignment or subletting as provided for in this Article. Tenant's sole and exclusive remedy shall be an action or proceeding to enforce any such provision, or for specific performance, injunctive relief or declaratory judgment. Section 12.06. Ownership Information. Upon Landlord's request from time to time, Tenant shall promptly provide Landlord with a statement certified by the Tenant's chief operating officer, which shall provide the following information: (1) the state in which Tenant is incorporated; (2) the location of Tenant's principal place of business; (3) information regarding a material change in the corporate structure of Tenant, including, without limitation, a merger or consolidation; and (3) any other information regarding Tenant's ownership interest that Landlord reasonably requests. ARTICLE XIII - INDEMNIFICATION Section 13.01. Waiver of Liability. Neither Landlord nor any of the Parties (as hereinafter defined) nor any Superior Lessor (as hereinafter defined) or mortgagee of any Mortgage (collectively the "Indemnitees") shall be liable or responsible in any way for, and Tenant hereby waives all claims against the Indemnitees with respect to or arising out of any death or any injury of any nature whatsoever that may be suffered or sustained by Tenant or any employee, licensee, invitee, guest, agent or customer of Tenant or any other person, from any causes whatsoever, or for any loss or damage or injury to any property outside or within the Premises belonging to Tenant or its employees, agents, customers, licensees, invitees, guests or any other person other than by reason of the gross negligence or willful misconduct of the Indemnitees, their employees or agents. Without limiting the generality of the foregoing, none of the Indemnitees shall be liable for any damage or damages of any nature whatsoever to persons or property caused by explosion, fire, theft or breakage, by sprinkler, drainage or plumbing systems, by failure for any cause to supply adequate drainage, by the interruption of any public utility or service, by steam, gas, water, rain or other substances leaking, issuing or flowing into any part of the Premises, by natural occurrence, acts of the public enemy, riot, strike, insurrection, war, court order, requisition or order of governmental body or authority, or for any damage or inconvenience which may arise through repair, maintenance or alteration of any part of the Building, or by anything done or omitted to be done by any tenant, occupant or person in the Building. Neither Landlord's Agent nor any partners comprising Landlord, nor any shareholders, directors or officers of Landlord or Landlord's Agent (collectively the "Parties") shall be liable for the performance of Landlord's obligations under this Lease. Tenant shall look solely to Landlord to enforce Landlord's obligations hereunder and shall not seek any damages against any of the Parties. The liability of Landlord for Landlord's obligations under this Lease shall not exceed and shall be limited to Landlord's interest in the Building and Tenant shall not look to the property or assets of any of the Parties in seeking either to enforce Landlord's obligations under this Lease or to satisfy a judgment for Landlord's failure to perform such obligations. Section 13.02. Indemnity. (a) Tenant shall hold the Indemnitees harmless and defend the Indemnitees from and against any and all losses, damages, claims, or liability for any damage to any property or injury, illness or death of any person: (a) occurring in, on, or about the Premises, or any part thereof, arising at any time and from any cause whatsoever other than solely by reason of the gross negligence or willful misconduct of the Indemnitees, their employees or agents; and (b) occurring in, on, or about any part of the Building or the areas adjacent thereto other than the Premises, when such damage, injury, illness or death shall be caused in whole or in part by the negligence or willful misconduct of Tenant, its agents, servants, employees, invitees or licensees. The provisions of this Article shall survive the termination of this Lease with respect to any damage, injury, illness or death occurring prior to such termination. References herein to the Indemnitees shall include their respective agents and employees. (b) Landlord shall hold the Tenant harmless and defend the Tenant from and against any and all losses, damages, claims, or liability for any damage to any property or injury, illness or death of any person: (a) occurring in, on, or about the Building or the areas adjacent thereto other than the Premises, or any part thereof, arising at any time and from any cause whatsoever other than solely by reason of the gross negligence or willful misconduct of the Tenant, their employees or agents; and (b) occurring in, on, or about any part of the Premises, when such damage, injury, illness or death shall be caused in whole or in part by the negligence or willful misconduct of Landlord, its agents, servants, employees, invitees or licensees. The provisions of this Article shall survive the termination of this Lease with respect to any damage, injury, illness or death occurring prior to such termination. References herein to the Tenant shall include their respective agents and employees. ARTICLE XIV - DESTRUCTION OR DAMAGE In the event of a fire or other casualty in the Premises, Tenant shall immediately give notice thereof to Landlord. The following provisions shall apply to fire or other casualty occurring in the Premises and/or the Building: (a) If the damage is limited solely to the Premises and the Premises can be made tenantable with all damage substantially repaired within five (5) months from the date of damage or destruction, then Landlord shall be obligated to rebuild the same and shall proceed diligently to do so; provided, however, that Landlord shall have no obligation to repair or restore the initial Improvements or Alterations in the Premises (whether installed by Tenant or by Landlord) except to the extent that Landlord has received insurance proceeds from either Landlord's or Tenant's casualty insurer sufficient for such purposes and for all other restoration and repair purposes or unless Tenant pays all costs and expenses related to the reconstruction of uninsured or underinsured Initial Improvements or Alterations. (b) If portions of the Building outside the boundaries of the Premises are damaged or destroyed (whether or not the Premises are also damaged or destroyed) and the Premises and the Building can both be made tenantable with all damage substantially repaired within nine (9) months from the date of damage or destruction, and provided that Landlord determines that it is economically feasible, Landlord shall be obligated to do so; provided, however, that Landlord shall have no obligation to repair or restore Initial Improvements or Alterations in the Premises except to the extent that Landlord has received insurance proceeds from either Landlord's or Tenant's casualty insurer sufficient for such purposes and for all other restoration and repair purposes or unless Tenant pays all costs and expenses related to the reconstruction of uninsured or underinsured Initial Improvements or Alterations. (c) If neither clause (a) nor (b) above applies, Landlord shall notify Tenant within sixty (60) days after the date such damage or destruction is adjusted by Landlord and Landlord's casualty insurer and either Tenant or Landlord may terminate this Lease within thirty (30) days after the date of such notice. (d) During any period when the Premises, as a result of destruction or damage, are unusable and are actually unused by Tenant, Monthly Base Rent shall abate proportionately until such time as the Premises are made tenantable. There shall be no abatement of Monthly Base Rent attributable to the time period following the repair of damage to the Premises by the Landlord where the Premises would have been otherwise reasonably deemed available for Tenant's occupancy, except for reconstruction of the Initial Improvements or Alterations where such reconstruction did not or has not occurred because of the failure of Tenant to pay to Landlord, or cause to be paid to Landlord, prior to the commencement of the anticipated repairs and reconstruction, an amount sufficient to pay for the cost of the anticipated repair and/or reconstruction or because of any other delays caused by Tenant. (e) The proceeds from any insurance paid by reason of damage to or destruction of the Building or any part thereof, insured by Landlord, shall belong to and be paid to Landlord subject to the rights of any Superior Lessor or any mortgagee of any Mortgage which constitutes an encumbrance. (f) Notwithstanding anything contained in this Article XIV, Landlord shall have no obligation to rebuild the Premises or the Building in the event any Superior Lessor or any mortgagee of any Mortgage shall retain, and not make available to Landlord, the proceeds from any insurance or in the event the damage or destruction of the Premises or the Building occurs during the last year of the Term (excluding any unexercised options, if applicable). ARTICLE XV - WAIVER OF SUBROGATION Tenant and Landlord agree that insurance required to be carried by either of them against loss or damage by fire or other casualty shall contain a clause whereby the insurer waives its rights to subrogation against the other party, its agents, officers and employees for any loss or damage to its property or to the property of others covered by insurance. ARTICLE XVI - RULES AND REGULATIONS Tenant shall faithfully observe and comply with the Rules and Regulations and, after notice thereof, all reasonable modifications thereof and additions thereto from time to time promulgated in writing by Landlord, all of which are hereby incorporated herein by this reference. Landlord shall not be responsible to Tenant for the nonperformance by any other tenant or occupant of the Building or Building of any of the Rules and Regulations. ARTICLE XVII - ENTRY BY LANDLORD Section 17.01. Entry to the Premises. Landlord, its agents, contractors or employees may enter the Premises to: (a) inspect the same; (b) exhibit the same to Superior Lessors, prospective purchasers, lenders or, during the last six (6) months of the Term, tenants; (c) determine whether Tenant is complying with all of its obligations hereunder; (d) supply janitorial service and any other service to be provided by Landlord to Tenant hereunder or to any other tenant of the Building; (e) post notices of nonresponsibility; and (f) make repairs required of Landlord under the terms hereof for which Landlord deems necessary or desirable or to make repairs to any adjoining space or utility services or to make repairs, alterations or improvements to any other portion of the Building; provided, however, that all such work shall be done so as to cause as little interference to Tenant as reasonably possible. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned by such entry. Landlord shall at all times have and retain a key with which to unlock all of the doors in, on or about the Premises (excluding Tenant's vaults, safes and similar areas agreed upon in writing by Tenant and Landlord). Landlord shall have the right to use any and all means which Landlord may deem proper to open such doors in an emergency in order to obtain entry to the Premises, and no entry to the Premises obtained by Landlord by any of such means shall under any circumstance be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises or an eviction, actual or constructive, of Tenant from the Premises, or any portion thereof. Section 17.02. Alterations to Building. Landlord shall have the right from time to time to alter the Building and, without the same constituting an actual or constructive eviction and without incurring any liability to Tenant therefor, to change the arrangement or location of entrances or passageways, doors and doorways, and corridors, elevators, stairs, toilets or other public parts of the Building and to change the name, number or designation by which the Building or the Complex is commonly known, provided any such change does not (a) unreasonably reduce, interfere with or deprive Tenant of access to the Building or Premises or (b) reduce the Rentable Area (except by a de minimis amount) of the Premises. All parts (except surfaces facing the interior of the Premises) of all walls, windows and doors bounding the Premises (including exterior Building walls, exterior core corridor walls, exterior doors and entrances), all balconies, terraces and roofs adjacent to the Premises, all space in or adjacent to the Premises used for shafts, stacks, stairways, chutes, pipes, conduits, ducts, fan rooms, heating, air cooling, plumbing and other mechanical facilities, service closets and other Building facilities are not part of the Premises, and Landlord shall have the use thereof, as well as access thereto through the Premises for the purposes of operation, maintenance, alteration and repair. ARTICLE XVIII - DEFAULT Section 18.01. Events of Default. In addition to any other event specified in this Lease as an event of default, the occurrence of any one or more of the following events (each, an "Event of Default") shall constitute a breach of this Lease by Tenant: (a) failure by Tenant to pay any Monthly Base Rent or Adjustment Rent as the same becomes due and payable if such failure continues for more than ten (10) days after written notice thereof from Landlord; (b) failure by Tenant to pay any other sum when and as the same becomes due and payable if such failure continues for more than ten (10) days after written notice thereof from Landlord; (c) failure by Tenant to perform or observe any other obligations of Tenant hereunder, or to comply with the Rules and Regulations, if such failure continues for more than twenty (20) days after written notice thereof from Landlord (unless such failure cannot reasonably be cured within such twenty (20) day period and Tenant shall within such period commence and diligently pursue the curing of such failure); (d) the making by Tenant of a general assignment for the benefit of creditors, or the admission of its inability to pay its debts as they become due or the filing of a petition, case or proceeding in bankruptcy, or the adjudication of Tenant bankrupt or insolvent, or the filing of a petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, or the filing of an answer admitting or failing reasonably to contest the material allegations of a petition filed against it in any such proceeding, or the seeking or consenting to or acquiescence in the appointment of any trustee, receiver or liquidator of Tenant or any material part of its properties; (e) if within ninety (90) days after the commencement of any proceeding against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such proceeding shall not have been dismissed, or if, within ninety (90) days after the appointment without the consent or acquiescence of Tenant, of any trustee, receiver or liquidator of Tenant or of any material part of its properties, such appointment shall not have been vacated; or (f) if this Lease or any estate of Tenant hereunder shall be levied upon under any attachment or execution and such attachment or execution is not vacated within ten (10) days. Section 18.02. Landlord's Remedies. (a) Upon the occurrence of an Event of Default, Landlord may elect to terminate this Lease, or, without terminating this Lease, terminate Tenant's right to possession of the Premises. Upon any such termination, Tenant shall immediately surrender and vacate the Premises and deliver possession thereof to Landlord. Tenant grants to Landlord the right to enter and repossess the Premises and to expel Tenant and any others who may be occupying the Premises and to remove any and all property therefrom, without being deemed in any manner guilty of trespass and without relinquishing Landlord's rights to rent or any other right given to Landlord hereunder or by operation of law. (b) If Landlord terminates Tenant's right to possession of the Premises without terminating this Lease, Landlord may relet the Premises or any part thereof. In such case, Landlord may first lease Landlord's other available space and shall not be required to accept any tenant offered by Tenant or to observe any instructions given by Tenant about such reletting. Tenant shall reimburse Landlord for the costs and expenses of reletting the Premises including, but not limited to, all brokerage, advertising, legal, alteration and other expenses incurred to secure a new tenant for the Premises. In addition, if the consideration collected by Landlord upon any such reletting, after payment of the expenses of reletting the Premises which have not been reimbursed by Tenant, is insufficient to pay monthly the full amount of the Rent (as hereinafter defined), Tenant shall pay to Landlord the amount of each monthly deficiency as it becomes due. If such consideration is greater than the amount necessary to pay the full amount of the Rent, the full amount of such excess shall be retained by Landlord and shall in no event be payable to Tenant. (c) If Landlord terminates this Lease, Landlord may recover from Tenant and Tenant shall pay to Landlord, on demand, as and for liquidated and final damages, an accelerated lump sum amount equal to the amount by which the aggregate amount of Rent owing from the date of such termination through the Expiration Date plus the aggregate expenses of reletting the Premises, exceeds the fair rental value of the Premises for the same period (after deducting from such fair rental value the time needed to relet the Premises and the amount of concessions which would normally be given to a new tenant), both discounted to present value using a discount rate of four percent (4%) per annum. Section 18.03. Rent Computation. For purposes of computing the rent which would have accrued from the date of termination through the Expiration Date, Rent shall consist of the sum of: (a) the total Monthly Base Rent for the balance of the Term; plus (b) recapture of the prorated portion (over the initial Term) of any construction allowance, lease commission or fee paid by Landlord to Tenant or on Tenant's behalf (or to Tenant or any affiliate of Tenant), or any free rent period (granted to Tenant or any affiliate of Tenant) or other fees that were left unpaid by Tenant or any affiliate of Tenant; plus (c) the Adjustment Rent for the balance of the Term. For purposes of computing Direct Expenses the Direct Expenses for the calendar year of the default and each future calendar year in the Term shall be assumed to be equal to the Direct Expenses for the calendar year prior to the year in which default occurs compounded at a rate equal to the mean average rate of inflation for the three (3) calendar years preceding the calendar year of the default, as determined by using the United States Department of Labor, Bureau of Labor Statistics Consumer Price Index (All Urban Consumers, All Items, 1982-84=100). If such index is discontinued or revised, the average rate of inflation shall be determined by reference to the index designated as the successor or substitute index by the government of the United States. Section 18.04. Interest. Every installment of rent and every other payment due hereunder from Tenant to Landlord not paid within ten (10) days of the date when due shall bear interest at the rate of four percent (4%) over the Prime Rate, or at the highest rate legally permitted, whichever is less, from the date that the same became due and payable until paid, whether or not demand be made therefor. Section 18.05. Late Charges. Tenant acknowledges that late payment by Tenant to Landlord of Monthly Base Rent or Adjustment Rent will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impracticable to fix. Such costs include, without limitation, processing and accounting charges, and late charges that may be imposed on Landlord by the terms of any note secured by an encumbrance covering the Premises. Therefore, if any installment of Monthly Base Rent or Adjustment Rent due from Tenant is not received by Landlord within ten (10) days of the date when due, Tenant shall pay Landlord a late charge equal to ten percent (10%) of such delinquent amount. The parties agree that this late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of such late payment by Tenant. Acceptance of any late charge shall not constitute a waiver of Tenant's default with respect to the overdue amount, or prevent Landlord from exercising any of the other rights and remedies available to Landlord. Section 18.06. Lease Continues Until Termination. Even though Tenant has breached this Lease and abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not terminate this Lease under Section 18.02 and Landlord may enforce all its rights and remedies under this Lease, including the right to recover the Rent as it becomes due under this Lease. Acts of maintenance or preservation or efforts to relet the Premises or the appointment of a receiver upon initiative of Landlord to protect Landlord's interest under this Lease shall not constitute a termination of Tenant's right to possession. Section 18.07. Remedies Cumulative. The remedies provided for in this Lease are in addition to any other remedies available to Landlord at law or in equity by statute or otherwise. Section 18.08. Waiver of Redemption. Tenant hereby waives, for itself and all persons claiming by and under Tenant, all rights and privileges which it might have under any present or future law to redeem the Premises or to continue the Lease after being disposed or ejected from the Premises. ARTICLE XIX - LANDLORD'S RIGHT TO CURE DEFAULTS All agreements and provisions to be performed by Tenant under any of the terms of this Lease shall be at Tenant's sole cost and expense. If Tenant shall fail to perform any of its obligations hereunder, then Landlord may, but shall not be obligated so to do, and without waiving or releasing Tenant from any obligations, perform any such obligations on Tenant's behalf. All sums so paid by Landlord and all costs incurred by Landlord in performing Tenant's obligations shall be deemed additional rent hereunder and shall be paid to Landlord on demand. ARTICLE XX - ATTORNEYS' FEES In the event of any action or proceeding brought by either party against the other under this Lease, the prevailing party shall be entitled to recover court costs and the fees of its attorneys in such action or proceeding (whether at the administrative, trial or appellate levels) to the extent permitted by law. ARTICLE XXI - HOLDING OVER If Tenant shall remain in possession after the expiration or sooner termination of this Lease with Landlord's consent (which Landlord may withhold in its sole and absolute discretion), all of the terms, covenants and agreements hereof shall continue to apply and bind Tenant so long as Tenant shall remain in possession insofar as the same are applicable; provided, however, the Monthly Base Rent shall be one hundred fifty percent (150%) of the Monthly Base Rent payable for the last month of the Term, prorated on a daily basis for each day that Tenant remains in possession. Tenant shall indemnify Landlord and Landlord's Agent against any and all claims, losses and liabilities for damages resulting from failure to surrender possession, including, without limitation, any claims made by any succeeding tenant. If Tenant remains in possession with Landlord's written consent, such tenancy shall be from month to month, terminable by either party on not less than thirty (30) days written notice. ARTICLE XXII - WAIVER The failure of Landlord to exercise its rights in connection with any breach or violation of any term, covenant or condition herein contained or in the Rules and Regulations shall not be deemed to be a waiver of such term, covenant or condition or any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. ARTICLE XXIII - EMINENT DOMAIN Section 23.01. Taking of Premises. If all or any part of the Premises shall be taken by any public or quasi public authority as a result of the exercise of the power of eminent domain, this Lease shall terminate as to the part so taken as of the date of taking, and, in the case of a partial taking, either Landlord or Tenant shall have the right to terminate this Lease as to the balance of the Premises by written notice to the other within thirty (30) days after the date of such taking; provided, however, that a condition to the exercise by Tenant of such right to terminate shall be that the portion of the Premises taken shall, in Landlord's judgment, be of such extent and nature as substantially to handicap, impede and impair Tenant's use of the balance of the Premises. If a material part of the Common Areas or the Building is condemned or taken or if substantial alteration or reconstruction of the Building shall, in Landlord's sole opinion, be necessary or desirable as a result of such condemnation or taking, Landlord may terminate this Lease by written notice to Tenant within thirty (30) days after the date of taking. Section 23.02. Condemnation Award. In the event of any taking, Landlord shall be entitled to any and all compensation, damages, income, rent, awards, and any interest therein whatsoever which may be paid or made in connection therewith, and Tenant shall have no claim against Landlord for the value of any unexpired term of this Lease or otherwise. In the event of a partial taking of the Premises which does not result in a termination of this Lease, the Monthly Base Rent thereafter to be paid shall be equitably reduced by Landlord. Section 23.03. Temporary Taking. If all of the Premises shall be condemned or taken for governmental occupancy for a period of more than twelve (12) months, this Lease shall terminate as of the date of taking and Landlord shall be entitled to any and all compensation, damages, income, rent and awards in connection therewith. If all or any part of the Premises shall be taken by any public or quasi-public authority on a temporary basis for a period of twelve (12) months or less, this Lease shall remain in full force and effect. Tenant's rent hereunder shall be abated for the period of the temporary taking and Landlord shall be entitled to any and all compensation, damages, income, rent, awards and interest in connection therewith. ARTICLE XXIV - SALE BY LANDLORD In the event of a sale or conveyance by Landlord of the Building, the same shall operate to release Landlord from any future liability upon any of the agreements, obligations covenants or conditions, express or implied, herein contained in favor of Tenant, and in such event Tenant agrees to look solely to the successor in interest of Landlord in and to this Lease. In addition, Tenant's right of recovery as to any pre-existing agreements, obligations, covenants or conditions, express or implied, herein contained in favor of Tenant shall be expressly limited to the net cash proceeds of sale actually received by Landlord, if any. This Lease shall not be affected by any such sale, however, and Tenant agrees to attorn to the purchaser or assignee, such attornment to be effective and self-operative without the execution of any further instruments on the part of any of the parties to this Lease. ARTICLE XXV - SUBORDINATION Section 25.01. Subordination of this Lease. Unless Landlord or any lender holding a lien which affects the Premises elects otherwise, this Lease shall be subject and subordinated at all times to: (a) all ground or underlying leases which now or hereafter may affect the Building (a "Superior Lease"), and (b) the lien of all mortgages and deeds of trust (a "Mortgage") in any amount or amounts whatsoever now or hereafter placed on or against the Building, on or against Landlord's interest or estate therein, and on or against all such ground or underlying leases, all without the necessity of having further instruments executed on the part of Tenant to effectuate such subordination. Notwithstanding the foregoing: (i) in the event of termination for any reason whatsoever of any such Superior Lease, Tenant shall, if requested, attorn to the landlord of any such Superior Lease (the "Superior Lessor"), or, if requested, enter into a new lease for the balance of the original or extended Term then remaining, upon the same terms and provisions as are contained in this Lease; (ii) in the event of a foreclosure of any such Mortgage or of any other action or proceeding for the enforcement thereof, or of any sale thereunder, or the giving of any deed in lieu of such foreclosure, Tenant shall, if requested, attorn to the purchaser at such foreclosure sale or other action or proceeding, or to the grantee under any such deed given in lieu of foreclosure, or, if requested, enter into a new lease with such successor to Landlord's interest for the balance of the original or extended Term then remaining upon the same terms and provisions as are in this Lease contained (it being understood, however, that no such successor to Landlord's interest shall be bound by any payment of rent or any other charges under this Lease, other than security deposits, made more than one (1) month in advance, or by any amendment to or modification of this Lease made without such successor's consent); and (iii) Tenant agrees to execute and deliver upon demand such further instruments evidencing such subordination of this Lease to such deed, to such Superior Leases, and to the lien of any such Mortgages as may reasonably be required by Landlord. Tenant shall from time to time on request from Landlord execute and deliver any documents or instruments that may be required by any lender to effectuate any subordination. If Tenant fails to execute and deliver any documents or instruments, Tenant irrevocably constitutes and appoints Landlord as Tenant's special attorney in fact to execute and deliver such documents or instruments. Section 25.02. Subordination of Mortgage. Notwithstanding anything to the contrary set forth above, any mortgagee under any Mortgage may at any time subordinate its Mortgage to this Lease in whole or in part, without any need to obtain Tenant's consent, by execution of a written document subordinating such Mortgage to this Lease to the extent set forth in such document and thereupon this Lease shall be deemed prior to such Mortgage to the extent set forth in such document without regard to their respective dates of execution, delivery and/or recording. In that event, to the extent set forth in such document, such Mortgage shall have the same rights with respect to this Lease as would have existed if this Lease had been executed, and a memorandum thereof, recorded prior to the execution, delivery and recording of the Mortgage. ARTICLE XXVI - NO MERGER The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger unless Landlord shall elect otherwise. ARTICLE XXVII - SURRENDER OF PREMISES At the end of the Term or upon sooner termination of this Lease, Tenant shall peaceably deliver up to Landlord possession of the Premises, together with Initial Improvements and Alterations, by whomsoever made, in the same condition as received, or first installed, reasonable wear and tear excepted. Tenant may, upon the termination of this Lease, remove all movable partitions of less than full height from floor to ceiling, as well as other trade fixtures installed by Tenant, repairing any damage caused by such removal. Property not so removed shall be deemed abandoned by Tenant and title to the same shall thereupon pass to Landlord. Notwithstanding the foregoing, Tenant, at its cost, shall remove any or all improvements or alterations designated by Landlord at the time of installation of such improvements or alterations. Tenant shall, at the sole expense of Tenant, remove all cabling which has been installed by or on account of the Tenant. ARTICLE XXVIII - ESTOPPEL CERTIFICATE At any time and from time to time, but in no event on less than ten (10) days prior written request by Landlord, Tenant shall execute, acknowledge and deliver to Landlord, promptly upon request, a certificate certifying: (a) that Tenant has accepted the Premises (or, if Tenant has not done so, that Tenant has not accepted the Premises, and specifying the reasons therefor); (b) the commencement and expiration dates of this Lease; (c) whether there are then existing any defaults by Landlord in the performance of its obligations under this Lease (and, if so, specifying the same) (d) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the date and nature of each modification); (e) the capacity of the person executing such certificate, and that such person is duly authorized to execute the same on behalf of Tenant; (f) the date, if any, to which rent and other sums payable hereunder have been paid; (g) that Tenant is not in default under the Lease nor does any event exist which, with the passage of time or the giving of notice or both would constitute an Event of Default (except as to defaults specified in the certificate); (h) the amount of any security deposit and prepaid rent; and (i) such other matters as may be reasonably requested by Landlord. Any such certificate may be relied upon by any prospective purchaser, mortgagee or beneficiary under any Mortgage affecting the Building. If Tenant fails to deliver the executed certificate within ten (10) days after receipt thereof by Tenant, Tenant irrevocably constitutes and appoints Landlord as its special attorney in fact to execute and deliver the certificate to any third party. ARTICLE XXIX - NO LIGHT, AIR OR VIEW EASEMENT Any diminution or shutting off of light, air or view by any structure which is now or may hereafter be erected on lands adjacent to the Building shall in no way affect this Lease or impose any liability on Landlord. Noise, dust or vibration or other incidents to new construction of improvements on lands adjacent to the Building, whether or not owned by Landlord, shall in no way affect this Lease or impose any liability on Landlord. ARTICLE XXX - NOTICES All notices or other communications which are required or permitted herein shall be in writing and sufficient if delivered personally, sent by prepaid air courier, or sent by registered or certified mail, postage prepaid, return receipt requested, at the addresses set forth in Article I or at such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such communication shall be deemed to have been given when delivered if delivered personally, on the business day after dispatch if sent by air courier, or on the third business day after posting if sent by mail. ARTICLE XXXI - RELOCATION OF PREMISES Landlord shall have the option to relocate Tenant to alternative space in the Building, which alternative space shall be of comparable size to or larger than the Premises. Landlord shall give Tenant not less than ninety (90) days prior written notice of such relocation, which notice shall include the date on which Tenant shall be required to relocate or move and a description of the space to which Tenant will be relocated. Landlord shall pay all out-of-pocket costs and expenses of relocating Tenant (including the cost of preparing such comparable space for occupancy). However, if Tenant is relocated prior to occupancy and construction of the Initial Improvements, Landlord shall only be required to pay the costs otherwise agreed to be paid by Landlord under this Lease for construction of improvements to the Premises, if any, plus costs and expenses incident to changes in the Initial Improvements as a result of such relocation in excess of those which would have been borne by Tenant if there had been no relocation. In the event of such relocation, such alternative space shall for all purposes be deemed the Premises hereunder and this Lease shall continue in full force and effect without any change in the other terms or condition hereof. ARTICLE XXXII - SUCCESSORS All the terms, covenants, and conditions hereof shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors, and assigns of the parties hereto, provided that nothing in this Article XXXII shall be deemed to permit any assignment, subletting, occupancy or use by Tenant contrary to the provision of Article XII. ARTICLE XXXIII - INSURANCE Section 33.01. Liability Insurance. Tenant shall obtain and keep in full force a policy of commercial general liability and property damage insurance (including automobile, personal injury, broad form contractual liability and broad form property damage) under which Tenant is named as the insured and Landlord, Landlord's Agent and any Superior Lessors and mortgagees of Mortgages (whose names shall have been furnished to Tenant) are named as additional insureds and under which the insurer agrees to indemnify and hold the Landlord, Landlord's Agent and all applicable Superior Lessors and mortgagees harmless from and against all cost, expense and/or liability arising out of or based upon the indemnification obligations of this Lease. The minimum limits of liability shall be a combined single limit with respect to each occurrence of not less than One Million Dollars ($1,000,000). The policy shall contain a cross liability endorsement and shall be primary coverage for Tenant and Landlord for any liability arising out of Tenant's and Tenant's employees' use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall provide that it is primary insurance and not "excess over" or contributory with any other valid, existing and applicable insurance in force for or on behalf of Landlord. The policy shall not eliminate cross-liability and shall contain a severability of interest clause. Not more frequently than once each year, if, in the opinion of Landlord's lender or of the insurance consultant retained by Landlord, the amount of public liability and property damage insurance coverage at that time is not adequate, Tenant shall increase the insurance coverage as required by either Landlord's lender or Landlord's insurance consultant. Section 33.02. Tenant's Property Insurance. Tenant at its cost shall maintain on all of its personal property, Initial Improvements (whether constructed by Landlord or Tenant), and Alterations, in, on, or about the Premises, a special cause of loss form insurance policy with theft, to the extent of at least full replacement value without any deduction for depreciation. The proceeds from any such policy shall be used by Tenant for the replacement of such personal property or the restoration of such Initial Improvements or Alterations. The "full replacement value" of the improvements to be insured shall be determined by the company issuing the insurance policy at the time the policy is initially obtained. Not less frequently than once every three (3) years, Landlord shall have the right to notify Tenant that it elects to have the replacement value redetermined by an insurance company or insurance consultant. The redetermination shall be made promptly and in accordance with the rules and practices of the Board of Fire Underwriters, or a like board recognized and generally accepted by the insurance company, and each party shall be promptly notified of the results by the company. The insurance policy shall be adjusted according to the redetermination. Section 33.03. Worker's Compensation Insurance. Tenant shall maintain Worker's Compensation and Employer's Liability insurance as required by law. Section 33.04. Other Coverage. Tenant, at its cost, shall maintain such other insurance as Landlord may reasonably require from time to time. Section 33.05. Insurance Criteria. All the insurance required under this Lease shall: (a) be issued by an insurance company with an A.M. Best Rating of A- or better; (b) be issued as a primary policy; (c) contain an endorsement requiring thirty (30) days' written notice from the insurance company to both parties and to Landlord's lender before cancellation or change in the coverage, scope, or amount of any policy; and (d) with respect to property loss or damage by fire or other casualty, a waiver of subrogation must be obtained, as required by Article XV. Section 33.06. Evidence of Coverage. A duplicate original policy, or a certificate of the policy with the actual policy attached, together with evidence of payment of premiums, shall be deposited with Landlord on the Term Commencement Date. ARTICLE XXXIV - SIGNAGE Landlord may maintain in the lobby of the Building a directory containing the names of Tenant and other tenants of the Building. If so maintained by Landlord, Tenant shall be entitled, at no additional cost, to initially list on such directory its name and that of its employees and permitted subtenants as Tenant desires, provided, the number of names so listed shall be in the same proportion to all names listed on such directory as the Rentable Area of the Premises bears to the Rentable Area of all tenants who are included in the directory. If Tenant requests Landlord to make any revisions or substitutions to the names initially included within any lobby directory, Landlord shall be entitled to charge Tenant, on a nondiscriminatory basis, its standard reprogramming or relettering fee. Tenant shall be permitted, at the sole expense of Tenant, to erect signage on the Building. A drawing of Tenant's proposed signage for the Building is attached hereto as Exhibit "E." Tenant shall submit a complete set of plans and specifications regarding the location, size and method of attachment of the sign to the Building prior to installation of such signage. Approval of such signage shall also be subject to approval by local governing authorities. By execution of this lease Landlord approves attached signage copy. ARTICLE XXXV - PARKING Tenant, together with Tenant's employees, agents and invitees, shall have the non-exclusive right to utilize on a first come, first serve basis those parking areas for the Building (the "Parking Areas) on a prorata basis. Tenant shall at all times comply with (and the provisions hereof shall be expressly subject to) all applicable ordinances, rules, regulations, codes, laws, statutes and requirements of all federal, state, county and municipal governmental bodies or their subdivisions regarding the use of the Parking Areas. Landlord reserves the right to adopt, modify and enforce reasonable rules governing the use of the Parking Areas from time to time. Landlord may refuse to permit any person who violates any such rules to park in the Parking Areas, and any violation of the rules shall subject the car to removal, at such person's expense from the Parking Areas. Landlord shall have no liability whatsoever for any damage to property or any other items located in the Parking Areas, nor for any personal injuries or death arising out of any matter relating to the Parking Areas, and in all events, Tenant agrees to look to its insurance carrier for payment of any losses sustained in connection with any use of the Parking Areas. Landlord reserves the right to assign a reasonable number of specific spaces for visitors, small cars, handicapped persons and for other tenants, guests of tenants or other parties designated by Landlord, and Tenant shall not park in any such assigned or reserved spaces. Landlord also reserves the right to close all or any portion of the Parking Areas in order to make repairs or perform maintenance services, or to alter, modify, restripe or renovate the Parking Areas, or if required by casualty, strike, condemnation, act of God, governmental law or requirement or other reason beyond Landlord's reasonable control. ARTICLE XXXVI - MISCELLANEOUS Section 36.01. Captions. The captions and headings of the Articles and Sections in this Lease are for convenience only and shall not in any way limit or be deemed to construe or intercece the terms and provisions hereof. Section 36.02. Time of Essence. Time is of the essence of this Lease and of all provisions hereof, except in respect to the delivery of possession of the Premises. Section 36.03. Number and Genders; Joint and Several Liability. The words "Landlord" and "Tenant," as used herein, shall include the plural as well as the singular. Words used in the masculine gender include the feminine and neuter. If there be more than one Landlord or Tenant or if Tenant is a partnership, the respective obligations hereunder imposed upon Landlord, Tenant and the general partners of Tenant, as the case may be, shall be joint and several. Section 36.04. Governing Law. This Lease shall be construed and enforced in accordance with the laws of the State of Iowa. Section 36.05. Cumulative Remedies. It is understood and agreed that the remedies herein given to Landlord shall be cumulative, and the exercise of any one remedy by Landlord shall not be to the exclusion of any other remedy. Section 36.06. Entire Agreement. The terms of this Lease are intended by the parties as a final expression of their agreement with respect to such terms as are included in this Lease and may not be contradicted by evidence of any prior or contemporaneous agreement. The parties further intend that this Lease constitutes the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial proceedings, if any, involving this Lease. Section 36.07. Invalidity. If any 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 provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and be enforced to the full extent permitted by law. Section 36.08. Authority. If Tenant signs as a corporation or a partnership, each of the persons executing this Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly authorized and existing entity, that Tenant has and is qualified to do business in Iowa, that Tenant has full right and authority to enter into this Lease, and that each and both of the persons signing on behalf of Tenant are authorized to do so. Upon Landlord's request, Tenant shall provide Landlord with evidence reasonably satisfactory to Landlord confirming the foregoing covenants and warranties. Section 36.09. Offer. The submission and negotiation of this Lease shall not be deemed an offer to enter into a lease by Landlord, but the solicitation of such an offer by Tenant and Landlord's acceptance of this Lease shall be evidenced only by Landlord signing and delivering this Lease to Tenant. Section 36.10. No Representations or Warranties. Neither Landlord nor Landlord's agents or attorneys have made any representations or warranties with respect to the Premises, the Building or this Lease, except as expressly set forth herein, and no rights, easements or licenses are or shall be acquired by Tenant by implication or otherwise. Section 36.11. Brokers. Tenant and Landlord each represent to the other that it has dealt with no broker in connection with this Lease, other than Landlord's Agent and Tenant's Broker, and each shall hold the other harmless from and against any and all liability, loss, damage, expense, claim, action, demand, suit or obligation arising out of or relating to a breach of such representation. Section 36.12. Amendments. This Lease may not be altered, changed, or amended except by an instrument signed by both parties hereto. Section 36.13. Proration. Any proration required hereunder shall, unless expressly provided otherwise herein, be done on the basis of a three hundred sixty (360) day year and/or a thirty (30) day month. Section 36.14. Waiver of Jury Trial. Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties to this Lease against the other on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises, or any other claims (except claims for personal injury or property damage). Section 36.15. No Recordation. Neither Landlord nor Tenant shall record this Lease or any short form or memorandum thereof. Section 36.16. Liens. Tenant shall be responsible for the satisfaction or payment of any liens for any provider of work, labor, material or services claiming by, through or under Tenant. Tenant shall also indemnify, hold harmless and defend Landlord against any such liens, including the reasonable fees of Landlord's attorneys. Such liens shall be discharged by Tenant within thirty (30) days after notice of filing thereof by bonding, payment or otherwise, provided that Tenant may contest, in good faith and by appropriate proceedings any such liens. IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the dates set forth below and this Lease shall be effective as of the date first written above. LANDLORD: Magnum Property Partners No. 1, L.L.C. a Nebraska limited liability company By: MR No. 7, L.L.C., a Nebraska limited liability company Managing Member of Magnum Property Partners No. 1, L.L.C. By: Magnum Resources, Inc, a Nebraska corporation, Managing Member of MR No. 7, L.L.C. By: /s/ Kelly A. Walters ------------------------------------------ Name: Kelly A. Walters Title: Senior Vice President TENANT: AmCore Financial, Inc. By: /s/ Donald H. Hanna ------------------------------------------ Name: Donald H. Hanna Title: Senior Vice President EX-21 3 c02561exv21.txt SUBSIDIARIES . . . EXHIBIT 21 SUBSIDIARIES
Name Operating Name Ownership % State of Incorporation - ----------------------------------- ----------------------------------- ----------- ---------------------- West Bank West Bank 100% Iowa WB Capital Management Inc. VMF Capital 100% Iowa West Bancorporation Capital Trust I West Bancorporation Capital Trust I 100% Delaware Investors Management Group, Ltd. IMG 100% Iowa
EX-31.1 4 c02561exv31w1.txt 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER EXHIBIT 31.1 Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 I, Thomas E. Stanberry, certify that: 1. I have reviewed this annual report on Form 10-K of West Bancorporation, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. March 8, 2006 /s/ Thomas E. Stanberry -------------------------- Thomas E. Stanberry Chairman, President and Chief Executive Officer EX-31.2 5 c02561exv31w2.txt 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER EXHIBIT 31.2 Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 I, Douglas R. Gulling, certify that: 1. I have reviewed this annual report on Form 10-K of West Bancorporation, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. March 8, 2006 /s/ Douglas R. Gulling ------------------------------------- Douglas R. Gulling Executive Vice President and Chief Financial Officer EX-32.1 6 c02561exv32w1.txt 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER EXHIBIT 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the annual report of West Bancorporation, Inc. on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas E. Stanberry, Chairman, President and Chief Executive Officer of West Bancorporation, Inc., certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of West Bancorporation, Inc. March 8, 2006 /s/ Thomas E. Stanberry - --------------------------- Thomas E. Stanberry Chairman, President and Chief Executive Officer EX-32.2 7 c02561exv32w2.txt 906 CERTIFICATION OF CHIEF FINANCIAL OFFICER EXHIBIT 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the annual report of West Bancorporation, Inc. on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Douglas R. Gulling, Executive Vice President and Chief Financial Officer of West Bancorporation, Inc., certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of West Bancorporation, Inc. March 8, 2006 /s/ Douglas R. Gulling - ------------------------- Douglas R. Gulling Executive Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----