U S SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
FORM 10 - KSB
(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, 1996.
___ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from to .
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Commission File No. 0-18122
ANTENNAS AMERICA, INC.
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(Name of small business issuer in its charter)
UTAH 87-0454148
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
4860 ROBB ST., SUITE 101, WHEAT RIDGE, COLORADO 80033-2163
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(Address of principal executive offices)
303-421-4063
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(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Exchange Act:
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(None)
Securities registered pursuant to Section 12(g) of the Exchange Act:
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$.0005 par value common stock
Check whether the issuer (1) filed all reports required by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the past 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 past 90 days.
YES X NO
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Check here if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB.
[ X ]
Issuer's revenues for its most recent fiscal year: $1,975,184
As of March 31, 1997, the aggregate market value of the voting stock held by
non-affiliates of the issuer was approximately $6,715,000. This calculation is
based upon the average of the bid price ($.10) and ask price ($.15) of the stock
on March 31, 1997.
The number of shares of the Registrant's $.0005 par value common stock
outstanding as of March 24, 1997 was 73,539,422.
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PART 1
Item 1. Business.
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Business Development. Antennas America, Inc., formerly Westflag Corporation
which was formerly Westcliff Corporation (the "Company"), was organized under
the laws of the State of Utah on September 30, 1987 for the purpose of acquiring
one or more businesses. In January 1989, the Company completed its initial
public offering of 10,544,650 units at $.04 per unit resulting in net proceeds
to the Company of approximately $363,000. (The number of units and price per
unit have been adjusted to reflect the Company's one-for-four reverse split in
April 1989 that is described below). Each unit consisted of one share of common
stock, one Class A Warrant and one Class B Warrant. All the Class A and B
Warrants expired without exercise and no longer exist. In April 1989, the
Company effected a one-for-four reverse split so that each four outstanding
shares of common stock prior to the reverse split became one share after the
reverse split. Unless otherwise indicated, all references in this report to the
number of shares of the Company's common stock have been adjusted for the effect
of the one-for-four reverse split.
On April 12, 1989, the Company merged with Antennas America, Inc. a
Colorado corporation ("Antennas Colorado") that had been formed in September
1988 and that had developed an antenna design technique that would permit the
building of flat (as compared to parabolic) antenna systems. Pursuant to the
merger, Antennas Colorado was merged into the Company and all the issued and
outstanding stock of Antennas Colorado was converted into 41,951,846 shares of
the Company's common stock upon completion of the merger. The Company's name was
changed to Antennas America, Inc.
Business Of Issuer. The Company's operations consist of the design,
development, marketing and sale of a diversified line of antennas and related
wireless communication systems, including conformal and phased array antennas
and spread spectrum radio systems.
Principal Products.
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Conformal Antennas.
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A conformal antenna is one that is constructed so that it conforms
technically and physically to its product environment. The original product in
this category is the disguised decal antenna, which has been patented by the
Company and which is an alternative to the conventional wire type antenna used
for numerous applications, including Cellular, UHF, VHF, ETACS, GSM, PCS, SMR,
Passive Repeater and GPS. The antenna is approximately 3 1/2" x 3 1/2" and
typically installs on the inside of the vehicle so that it is not discernible
from the outside of the vehicle.
Several derivative products of this antenna design have been developed for
special applications and O.E.M. customers. For the fiscal year ended December
31, 1996, the patented decal antenna and other conformal derivatives of the
decal antenna accounted for approximately 90 percent of the Company's sales with
two customers' purchases of patented antenna products accounting for 65 percent
of the Company's current sales. As of March 31, 1997, based on existing orders,
and the Company's anticipated sales, the Company believes that these two
customers will represent approximately 40% percent of the Company's sales for
the fiscal year ending December 31, 1997.
The Company has designed five new conformal antenna systems, including
three off-air antennas to receive local TV broadcasts, a GPS (Global Positioning
Systems) antenna, and PCS (Personal Communications Systems) antenna. The Company
believes that these new conformal antenna systems will provide the same
advantages as the other mobile conformal antenna systems currently being
produced by the Company.
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Phased Array Antennas.
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The phased array antenna is a flat antenna that incorporates a group of
constituent antennas all of which are equidistant from the center point. This
type of antenna is typically used to receive and/or transmit data, voice and in
some cases, video from microwave transmitters or satellites. The Company is
currently developing and selling various versions of the phased array antenna to
private, commercial and governmental entities. As described below, the Company's
three primary projects for the phased array antenna are (i) the flat panel
antenna for Micron Communications, a subsidiary of Micron Technologies Inc.
("Micron"), (ii) the MMDS phased array antenna systems for the wireless cable
market, and (iii) the "off-air" antennas for satellite and other television
reception.
Flat Panel Antenna for Micron Communications. After several months of
modifications to the Company's previously developed flat antennas, the Company
has been producing, since February 1997, three flat panel antennas for
incorporation into Micron's Microstamp program. The Microstamp Program is new,
and volume through April 1997 has been light, but the Company anticipates that
this volume will increase during the second half of 1997.
MMDS Antennas For Wireless Cable. In 1995, the Company introduced three new
phased array antenna systems to the wireless cable market. Known in the industry
as MMDS (Multichannel, Multipoint Distribution System), these antenna systems
are direct competitors of cable TV and satellite TV. MMDS (wireless cable) is
similar to conventional cable with the exception that it uses a microwave
frequency to transmit the channels for home viewing. The signals can usually be
received up to 30 miles by installing a receive antenna on the subscriber's
home.
When Congress passed the 1996 Telecommunications Act, among other things,
it allowed telecommunications companies to compete directly in the video
distribution market. This allowed companies such as BellSouth, Pacific Telesis,
Bell Atlantic and Nynex to use this technology to deliver video programming to
selected major markets. Each of the above companies is now involved in the MMDS
industry and some have purchased existing and new licenses for certain marketing
areas.
The Company's MMDS antennas replace conventional grid antennas commonly
installed as the receiving antenna on customers' rooftops. The product offers
several features over conventional parabolic antennas in that it is flat, has a
higher efficiency allowing for a smaller size, and can be mounted in several
locations in the home such as windows, an eave or the chimney. Typically the
Company's phased array products perform on an equal basis to conventional
antennas with cost savings and substantial installation and maintenance savings
to the MMDS service provider. The Company did not sell any of its MMDS antennas
in 1996. This is primarily due to the industry's transition from analog
transmissions to digital transmissions. The Company's existing flat antenna
technology will operate with analog or digital equipment. It is anticipated that
the Company's MMDS antenna sales, although limited, will resume in 1997.
Off-Air Antennas For Satellite And Other TV. Home satellite television
systems recently have become extremely popular and affordable. The single
biggest drawback to the 18" home TV satellite system is that the viewer cannot
receive local TV broadcasts from the satellite system. In order to receive local
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TV broadcasts, the viewer must resort to installing outdated receive equipment
which typically includes "rabbit ears" or the conventional "yagi" roofmount
antenna. In December 1996, the Company introduced three new flat conformal
antenna systems for the digital satellite TV market. These antennas combine the
Company's conformal and phased array technology.
The Company's FREEDOM(TM) Antenna System, is a flat UHF/VHF TV antenna that
conforms to the back of the satellite dish. Designed to be inconspicuous, the
FREEDOM(TM) antenna is an ideal solution to the problem of local TV program
reception with the popular 18" dishes.
The WALLDO(TM) Antenna System is a flat UHF/VHF TV antenna, measuring 15
1/2"x 13" x 2". This antenna is designed so that it conceals the fact that an
outdoor antenna has been installed. Both antennas are omnidirectional and work
in locations where a medium gain antenna is required, which is generally within
a 25 mile radius of the local TV stations' transmitters. The Company will market
the antennas as the solution to the problem of antenna installations on rooftops
where there may be limitations due to zoning codes, covenants, or homeowner
restrictions or where there is the need for a more aesthetically pleasing
solution.
The Company will market these products as consumer electronics products.
The Company will sell them to distributors, satellite dish installers and retail
stores. The Company is currently offering two FREEDOM(TM) antennas: Freedom 1
fits most of the existing 18" dishes on the market; the Freedom 2 fits the Sony
and Philips/Magnavox dishes with production scheduled to begin on the Freedom 2
antenna in April of 1997. The Company has received much interest concerning its
FREEDOM(TM) and WALLDO(TM) antennas, and as of March 31, 1997, had a backlog of
a total of 15,000 Freedom and Walldo antennas.
Other Antennas. The Company is pursuing new business opportunities for the
conformal and phased array antennas by continuing to broaden and adapt its
existing technologies. Currently, the Company designs or manufactures antennas
varying in frequency from 27 MHz to 12 GHz. These antennas all use the Company's
flat antenna design to provide inconspicuous installation. All of the Company's
antennas are designed to be manufactured using existing design footprints. This
allows the Company to better use its engineering and technical staff, suppliers
and production staff. This also allows the Company, in some cases, to use
existing tools, dies and radomes for more than one product.
Spread Spectrum Radio.
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The Company has been working on development of a spread spectrum radio
which continues to be in the Beta testing stage. The product consists of the
Company's unique flat antenna design combined with the Company's proprietary
design of a spread spectrum radio transceiver operating at 915 MHz. Spread
spectrum radios allow for a frequency range to be more efficiently utilized and
thereby provide for many more users per channel than conventional radios. Using
the Company's flat antenna design will allow a wireless point to point
communication of data transmission for several miles. Spread spectrum products
are gaining in popularity resulting from the creation of rules permitting spread
spectrum transmitters to operate on an uncoordinated basis without requiring
individual user licenses. Before a spread spectrum radio may be marketed, the
product must be type-accepted by the Federal Communications Commission (the
"FCC"). The Company has completed all FCC testing of its spread spectrum radio
by an independent testing laboratory and has received its FCC type acceptance
identifying number which permits it to market the spread spectrum radio pursuant
to certain frequency restrictions. The spread spectrum radio can send data for
several miles, daisy chain or relay for longer distances, stores and forwards
data, and is designed to directly connect to a Hayes Modem Compatible command
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set. It is unique in that it transfers data long range, has 8 analog and 2
digital inputs which allows the units to turn devices on and off, to monitor
meters or equipment from long range, all at a competitive cost. The Company has
experienced delays with respect to the development of the spread spectrum radio.
The engineering department of the Company believes that the technical
development of the spread spectrum radio is complete. However, during the
periods of delay that the Company has experienced in the development of the
spread spectrum radio, the Company has incorporated a universal manufacturing
process for all its antennas that would have to be altered significantly at this
time in order to produce the spread spectrum radio as originally planned.
Therefore, the Company currently intends to allocate its limited available
resources to the production and marketing of its other new and existing
products. At such time that the Company initiates the production design and
marketing of the spread spectrum radio, there is no assurance that the markets
will still exist as the Company initially identified or that the Company's
radio, as designed, will be able to be produced at a competitive price.
Marketing And Distribution.
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The Company's line of mobile disguised decal antennas and off-air antennas are
marketed by the Company directly to distributors, installers and retailers of
antenna accessories. Current distribution consists of several domestic and
international distributors and approximately 150 active retail dealers. During
1996, revenues for the mobile disguised decal antenna products constituted
approximately 20 percent of the Company's total sales. The balance of the
Company's sales in 1996 were primarily to original equipment manufacturers
(O.E.M.) for the incorporation of the Company's products into or with their
respective products.
Production.
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The Company made many changes to its production operations in 1996. In
anticipation of continued growth, investments were made in personnel and
manufacturing facilities along with additional capital expenditures for
manufacturing equipment. The manufacturing of the Company's products is now more
under the control of the Company than ever before. It is anticipated that these
changes will allow the Company to be more efficient, more responsive to
customers, will lower the overall cost of production, and will better allow the
Company to take advantage of more opportunities in the wireless communications
market.
Research And Development.
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Research and development and software costs are charged to operations when
incurred and are included in operating expenses except when specifically
contracted by the Company's customers. Except for salaries of engineering
personnel involved in research and development, the Company's research and
development costs were not material in 1995 or 1996. There can be no assurance
that the Company's research and development activities will lead to the
successful introduction of new or improved products or that the Company will not
encounter delays or problems in connection therewith. The cost of completing new
technologies to satisfy minimum specification requirements, quality and delivery
expectations may exceed original estimates that could adversely affect operating
results during any financial period.
Employees.
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The Company currently has 35 full time employees including Randall P. Marx,
Chief Executive Officer and Treasurer, Kevin O. Shoemaker, Chairman of the Board
and Chief Scientist, Richard L. Anderson, Vice President of Administration, and
Bruce Morosohk, Secretary. Each of Messrs. Marx, Shoemaker, Anderson and
Morosohk is a director of the Company.
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Competition.
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The antenna and receiver industry is highly competitive, and the Company's
current and proposed products compete with products of larger companies that are
better financed, have established markets, larger sales organizations and
production capabilities. In marketing its products, the Company has encountered
competition from other companies marketing more conventional antenna systems.
Therefore, at the present time the Company's market share of the overall antenna
business is small, but is significantly greater for the non-conventional antenna
market. The Company's antenna products are designed to be unique and in some
cases are patented. The Company's products normally compete with other products
principally in the areas of price and performance. However, the Company believes
that its unique antenna products work as well as conventional products in the
same design class of products, usually sell for approximately the same price or
less than competing antennas, are easier to install, and in most cases are more
desirable, primarily due to being less conspicuous.
Government Regulations.
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The Company is subject to government regulation of its business operations in
general, and the telecommunications industry also is subject to regulation by
federal, state and local regulatory and governmental agencies. Under current
laws and the regulations regulated by the Federal Communications Commission,
there are no federal requirements for licensing antennas that only receive (and
do not transmit) signals. However, the Company is subject to FCC regulations as
they relate to spread spectrum radios. All spread spectrum radios must be FCC
type accepted in accordance with FCC rules and regulations prior to being
marketed or sold and must meet and maintain certain restrictions concerning
transmitted power, effective radiated power, processing gain and other
restrictions. The Company received its type acceptance code from the FCC in
December 1994, and therefore it is not restricted from selling the spread
spectrum radios.
Current laws and regulations are subject to change and the Company's operations
may become subject to additional regulation by governmental authorities. A
change in either statutes or rules may have a significant effect on government
regulation of the Company's business.
Patents.
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Kevin O. Shoemaker, the Company's Chief Scientist and Chairman of the Board, has
applied for and received a U.S. patent, subject to annual renewal fees, valid
through the year 2007, for microstrip antennas and multiple radiator array
antennas. This is the design the Company uses for some of its flat planar
antennas. Mr. Shoemaker also has received a U.S. patent for a serpentine planar
broadband antenna valid through the year 2011. This is the design that the
Company uses for some of its conformal antennas, including the vehicular
disguised decal antennas, local broadcast antennas and other products. Mr.
Shoemaker and Randall P. Marx, the Company's Chief Executive Officer, have
jointly applied for additional patents which include the process used to
manufacture certain of the Company's flat planar antennas and conformal
antennas, the technology required for certain of the Company's conformal
antennas to function, and the design of certain of the Company's products. Mr.
Shoemaker and Mr. Marx each has assigned to the Company all of his rights in
these and all other antennas that are developed while he is employed by the
Company. The Company seeks to protect its proprietary products, information and
technology through reliance on confidentiality provisions and, when practical,
the application of patent trademark or copyright laws. There can be no assurance
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that such applications will result in the issuance of patents, trademarks or
copyrights of the Company's products, information or technology.
Disclosure Regarding Forward-Looking Statements And Cautionary Statements
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Forward-Looking Statements. This Annual Report on Form 10-KSB includes
"forward-looking" statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than
statements of historical facts included in this Annual Report, including without
limitation statements under "ITEM 1. DESCRIPTION OF BUSINESS--Principal
Products", "Marketing And Distribution", "Production", "Research And
Development", "Competition", "Governmental Regulations" and "Patents", and "ITEM
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS", regarding the Company's financial position, business strategy, and
plans and objectives of management of the Company for future operations and
capital expenditures, and other matters, other than historical facts, are
forward-looking statements. Although the Company believes that the expectations
reflected in the forward-looking statements and the assumptions upon which the
forward-looking statements are based are reasonable, it can give no assurance
that such expectations and assumptions will prove to have been correct.
Additional statements concerning important factors that could cause actual
results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed below in the "Cautionary Statements" section and
elsewhere in this Annual Report. All written and oral forward- looking
statements attributable to the Company or persons acting on its behalf
subsequent to the date of this Annual Report are expressly qualified in their
entirety by the Cautionary Statements.
Cautionary Statements. In addition to the other information contained in
this Annual Report, the following Cautionary Statements should be considered
when evaluating the forward-looking statements contained in this Annual Report:
1. Operating History. From the date of incorporation in September 1987
through the fiscal year ended December 31, 1992, the Company incurred losses
from operations. For the fiscal years ended December 31, 1993, 1994, 1995, and
1996, respectively, the Company operated at a profit. Although the Company
believes that it will be able to continue to operate profitably as it has since
1993, there is no assurance that the operations of the Company will continue to
be profitable. See the financial statements included in Item 13 of this Annual
Report on Form 10-KSB.
2. Developments In Technology. The communications industry and particularly
the microwave and satellite communications and antenna industries are
characterized by rapidly developing technology. Changes in technology could
affect the market for the Company's products and necessitate additional
improvements and developments to the Company's products. There can be no
assurance that the Company's research and development activities will lead to
the successful introduction of new or improved products or that the Company will
not encounter delays or problems in connection therewith. The cost of completing
new technologies to satisfy minimum specification requirements, quality and
delivery expectations may exceed original estimates that could adversely affect
operating results during any financial period.
3. Patents. Kevin O. Shoemaker, the Company's Chief Scientist and Chairman
of the Board, has applied for and received a U.S. patent, subject to annual
renewal fees, valid through the year 2007, for microstrip antennas and multiple
radiator array antennas. This is the design the Company uses for some of its
flat planar antennas. Mr. Shoemaker also has received a U.S. patent for a
serpentine planar broadband antenna valid through the year 2011. This is the
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design that the Company uses for some of its conformal antennas, including the
vehicular disguised decal antennas and related products. Mr. Shoemaker and
Randall P. Marx, the Company's Chief Executive Officer, have jointly applied for
a patent for the process used to manufacture certain of the Company's flat
planar antennas. Mr. Shoemaker and Mr. Marx each has assigned to the Company all
of his rights in these and all other antennas that are developed while he is
employed by the Company. Although, when practical, the Company intends to file
for patent protection on all of the products or processes that it feels are
proprietary in nature, it may not be able to obtain patent protection for all
its products. The inability of the Company to be able to patent all of its
products or processes may be an impediment to its capability to exploit certain
expanding markets. Even with patents granted, they may not provide effective
protection against competitors.
4. Limited Financial Resources. The Company has limited financial resources
available to it, and this may restrict the Company's ability to grow. Additional
capital from sources other than the Company's cash flow may be necessary to
develop new products, and there is no assurance that such financing will be
available from any source. Management believes that it can sustain its current
business without additional funding, but it may not be able to increase the
Company's business as desired without additional funding.
5. Competition. The communications industry is highly competitive, and the
Company competes with substantially larger companies in the production and sale
of antennas. In addition, these competitors have larger sales forces and more
highly developed marketing programs as well as larger administrative staffs and
more available service personnel. The larger competitors also will have greater
financial resources available to develop and market competitive products. The
presence of these competitors may be a significant impediment to any attempts by
the Company to develop its business. The Company believes, however, that it will
have certain advantages in attempting to develop and market its products
including a more cost-effective technology, the ability to undertake smaller
projects, and the ability to respond to customer requests more quickly than some
larger competitors. There is no assurance that these conclusions will prove
correct.
6. Dependence On Major Customers. The Company has two customers that
currently account for approximately 65 percent of its sales. The loss of either
of these customers could have a material adverse effect on the Company.
7. Availability Of Labor. The Company produces and assembles its products
at its own facility and is dependent on efficient workers for this function.
There is no assurance that efficient workers will continue to be available to
the Company at a cost consistent with the Company's budget.
8. Dependence On Key Personnel. The success of the Company is largely
dependent upon the efforts of its executive management, including Randall P.
Marx, the Chief Executive Officer of the Company. The loss of the services of
any of these persons could be detrimental to the Company as there is no
assurance that the Company could replace any of them adequately at an affordable
compensation level.
9. Government Regulation. The Company is subject to government regulation
of its business operations in general. Antennas that are designed only to
receive signals are not currently subject to regulation by the FCC, but certain
of the Company's new products are subject to regulation by the FCC. There is no
assurance that subsequent changes in laws or regulations will not affect the
Company's operations.
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Item 2. Properties.
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The Company is the tenant on a three year lease which expires May 31, 1999 on
5,100 square feet of office space and 17,500 square feet of production space in
Wheat Ridge, Colorado at a cost of $13,765.49 per month. The Company is
obligated to pay for all utilities, taxes and insurance on the production space.
The Company believes that the current office and warehouse facilities are
adequate for its activities through the term of the lease. The property is in
good condition.
Item 3. Legal Proceedings.
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In August 1996, the Company entered into a distribution agreement concerning the
FREEDOM(TM) antenna with SeaSharp Products, Inc. (the "Distributor"). Part of
the obligations of the Distributor were to meet a minimum monthly sales quota.
The Distributor breached the Agreement in September 1996, and the Company
terminated the Agreement as of October 1, 1996. After the termination of the
Agreement, the Distributor claimed that the intellectual property rights of the
FREEDOM(TM) antenna belonged to the Distributor. On December 11, 1996, the
Company sought Declaratory Judgment in the District Court, Jefferson County,
Colorado, case number 96-CV-2782, as to the termination of the Agreement and to
the Distributor's claims to intellectual property rights to the antenna. The
Distributor has filed a response and counterclaim which, among other things,
claims that the Distributor allegedly developed, designed and engineered the
antenna. The case is still pending and is in its initial stages. The Company
believes that the claims concerning intellectual property are totally without
merit and that the agreement was properly terminated pursuant to its terms.
Item 4. Submission of Matters to a Vote of Security Holders.
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No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
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Trading in the Company's securities is very limited. The Company's Common Stock
is traded in the over-the-counter market through the "pink sheets" and the OTC
Bulletin Board. The Company's securities are not quoted on any established stock
exchange or on the NASDAQ stock market. Because trading in the Company's
securities is so limited, prices are highly volatile. Quotations provided below
for the past two fiscal years are the inter-dealer quotations provided by the
National Quotations Bureau, without retail markup, markdown or commission, and
do not necessarily represent actual transactions.
Common Stock
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Bid
---
High Low
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Quarter Ended
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March 31, 1995 .............. .03 .001
June 30, 1995 ............... .08 .02
September 30, 1995 .......... .05 .03
December 31, 1995 ........... .05 .01
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March 31, 1996 .............. .05 .02
June 30, 1996 ............... .24 .04
September 30, 1996 .......... .14 .03
December 31, 1996 ........... .06 .03
As of March 31, 1997, the reported bid and ask prices for the Company's common
stock were $.10 and $.15 respectively. The Company had 333 shareholders of
record as of December 31, 1996. The Company has not declared or paid any cash
dividends on its Common Stock and it is not anticipated that dividends will be
paid in the foreseeable future.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
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Liquidity and Capital Resources
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The following table sets forth certain selected financial data of the Company
for 1996 and 1995:
December 31,
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1996 1995
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Components of Working Capital (deficit)
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Cash $55,635 $ 15,911
Accounts Receivable 166,441 275,571
Inventory 195,848 162,316
Deferred Tax Asset 264,988 136,000
Other Current Assets 0 3,645
Accounts Payable (188,865) (279,743)
Notes Payable (168,689) (144,433)
Other Current Liabilities (22,934) (26,646)
Total Working Capital (deficit) 302,424 142,621
The Company has total assets of approximately $944,232 as of December 31,
1996 as compared with $887,279 as of December 31, 1995. Total liabilities are
$613,775 as of December 31, 1996 as compared with $741,892 as of December 31,
1995. The 6% increase in assets and 19% decrease in liabilities is primarily due
to $210,000 of equity funding received in 1996 and as a result of the one time
increase in the tax asset account.
The Company has a net worth of $330,457 as of December 31, 1996 as compared
with $145,387 as of December 31, 1995. This improvement results from the
increase in the tax asset account and due to $210,000 of equity funding received
in 1996, which was partially offset by a $30,000 stock repurchase. As a result
of past operations, the Company has an income tax operating loss carryforward of
$507,851. The Company has determined the likelihood of continued profitability
for the year ending December 31, 1997 and has recorded a $265,662 benefit for
net operating loss carryforward as provided for in FAS-109 that it reasonably
expects to utilize.
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The Company's ability to generate sales revenues is dependent upon its
ability to pay for research and development, materials and overhead required in
the production process. In 1993 the Company entered into an agreement with
National Factoring Services of Denver, Colorado pursuant to which the Company,
at management's discretion, can be advanced up to 80% of its approved
receivables at a cost of .17% per day or 5% for 30 days. Effective March 20,
1997, the factoring fees were reduced to a cost of 1% for every 10 days or 3%
for 30 days that the receivables are factored. The other terms of the factoring
agreement remained the same. National Factoring advances the funds on a
non-recourse basis to the Company and, upon payment received from the customer,
deducts the appropriate factoring fees, if any, together with the factored
portion of the account, and pays the non-factored amount to the Company.
Generally, the Company uses the funds to pay current suppliers, general overhead
costs, past debt, and costs associated with the development of new products.
At December 31, 1996 and as of the date of this report, the Company is
operating on a positive cash flow basis from its operations. However, due to the
growth rate expected by the Company in 1997, in lieu of utilizing a factoring
arrangement, management believes that it may be better served by a conventional
bank line of credit or by raising additional capital through the private
placement of debt or equity. The Company is currently pursuing such conventional
bank financing in an effort to better meet its projected demand and lower its
overall interest and finance costs. In the event that such a financing
arrangement cannot be reached, the Company will continue to use its existing
arrangement with National Factoring Services until such time that additional
capital is made available.
The Company's future capital requirements will depend upon many factors,
including the recruitment of key technical and management personnel, the need to
maintain adequate inventory levels to meet projected sales, the expansion of its
marketing and sales efforts, requirements of additional manufacturing equipment,
and the success of the Company's research and development efforts.
Results of Operations
---------------------
Fiscal Year Ended December 31, 1996 Compared To Fiscal Year
Ended December 31, 1995
- ------------------------------------------------------------
For the year ended December 31, 1996, the Company's total revenues were
$1,975,184 as compared with $2,029,942 for the prior year. The decrease in
revenues is attributable to a design change and resulting lower antenna cost to
the Company's largest customer, the breach of a distribution agreement by one of
the Company's former distributors, and the absence of sales of the Passive
Repeater Antenna during most of fiscal 1996 due to a sub-contractor of the
Company providing sub-standard materials for products shipped in the last
quarter of 1995 and the first quarter of 1996. The Company recalled
approximately 65,000 Passive Repeaters, which affected revenues by approximately
$175,000. The defective product has been successfully reworked and sales have
resumed in 1997.
The Company's net income decreased to $9,746 from $367,477 in 1995. This
decrease was due to the absence of the one time increase in the Tax Asset
Account in 1996 of $265,662, the recall and subsequent cost associated with the
recall and reworking of the Passive Repeater antenna in 1996, and the breach of
a distribution agreement by one of the former distributors of the Company
causing delays in the sale of inventory in 1996 that previously had been
manufactured by the Company.
The increase in selling, general and administrative expenses to $744,673 in 1996
from $639,007 in 1995 is attributable to the Company's increase in personnel in
anticipation of increased activity and revenue for fiscal 1996 and 1997, a
decrease in the outsourcing of certain production functions of the Company,
11
<PAGE>
adding production space and personnel to production and administrative
positions, and the related costs associated with these positions.
Interest expense increased by $14,001 for fiscal 1996 over fiscal 1995. The
increase is attributable to the Company's costs associated with its factoring
arrangement pursuant to which the Company factors certain of its accounts
receivable in order to pay its expenses on a timely basis and maintain increased
production levels.
Item 7. Financial Statements.
- ------- ---------------------
The Financial Statements and schedules that constitute Item 7 of this
Annual Report on Form 10-KSB are included in Item 13 below.
Item 8. Changes In and Disagreements With Accountants On Accounting and
Financial Disclosures.
- ------------------------------------------------------------------------
Not applicable.
PART III
Item 9. Directors, Executive Officers, Promoters And Control Persons:
Compliance With Section 16(a) Of the Exchange Act.
- -----------------------------------------------------------------------
The Officers and Directors of the Company are as follows:
Name Age Title
- ---- --- -----
Randall P. Marx 44 Chief Executive Officer;
Treasurer; and Director
Kevin O. Shoemaker 42 Chairman of the Board; Chief
Scientist; and Director
Bruce Morosohk 38 Secretary; and Director
Richard L. Anderson 48 Vice President and Director
Sigmund A. Balaban 55 Director
James H. Shook 58 Director
Randall P. Marx has served as Chief Executive Officer since November 1991, as a
director since May 1990, and as Treasurer since December 1994. From May 1990
until November 1991, Mr. Marx advised the Company with respect to marketing
matters. From 1989 to 1991, Mr. Marx served as a consultant to three domestic
and international electronic companies. His responsibilities consisted primarily
of administration, finance, marketing and other matters. From 1983 until 1989
Mr. Marx served as President of THT Lloyd's Inc., Lloyd's Electronics Corp. and
Lloyd's Electronics Hong Kong Ltd., international consumer electronics
companies. THT Lloyd's Inc. purchased the Lloyd's Electronics business from
12
<PAGE>
Bacardi Corp. in 1986. Prior to 1983, Mr. Marx owned a sales and marketing
company involved in the consumer electronics business.
Kevin O. Shoemaker has served as the Chairman of the Board of the Company since
the merger with Antennas Colorado in 1989. He also served as Executive Vice
President from May 1990 until November 1991 and as President from November 1991
until April 1994. Mr. Shoemaker held the positions of Chairman of the Board and
Chief Executive Officer with Antennas Colorado from its inception in 1988 until
the Merger. Mr. Shoemaker's employment prior to 1988 included serving as a
design engineer for Martin Marietta Aerospace, an aerospace defense contractor,
and as a technical specialist for Ball Aerospace Systems, an aerospace
contractor.
Bruce Morosohk has served as a director of the Company since the merger with
Antennas Colorado in 1989 and has held this position and the position of
Secretary with Antennas Colorado since its inception in 1988. He also served as
Treasurer from November 1991 to December 1994. From 1980 until 1991, Mr.
Morosohk was employed by R. Greenberg and Associates, a private film production
firm, serving as a cameraman from 1981 to 1988, as manager of the Animation
Department from 1988 to 1989, and as Director of Animation from 1989 to 1991.
Richard L. Anderson has served as a director of the Company since December 1994.
From March 1, 1995 until December 31, 1995, he served as a part-time consultant
to assist with the general operations of the Company. Effective January 1, 1996,
Mr. Anderson has served as Vice President of Administration for the Company.
From 1990 to 1995, Mr. Anderson served as an independent financial contractor
underwriting residential and commercial real estate first mortgage credit
packages. From October 1985 until March 1990, Mr. Anderson served as Senior Vice
President, Administration of Westline Mortgage Corporation, a Denver, Colorado
based mortgage loan company that was a subsidiary of Bank Western Federal
Savings. Prior to October 1985, Mr. Anderson served as Vice President, Human
Resources for Midland Federal Savings.
Sigmund A. Balaban has served as director of the Company since December 1994.
Mr. Balaban has served as Vice President, Credit of Teknika Electronics of
Fairfield, New Jersey, since 1986 and as Senior Vice President and General
Manager of Teknika Electronics since 1992. Teknika Electronics is a subsidiary
of Fujitsu General, a Japanese multiline manufacturer.
James H. Shook has been a Director of the Company since May of 1990. From May of
1990 until June of 1991, Mr. Shook also served as Chief Executive Officer,
President and Treasurer of the Company. At various times from 1973 through 1989
Mr. Shook was a business consultant to a number of companies.
Each of the Company's officers serves at the pleasure of the Company's Board of
Directors. There are no family relationships among the Company's officers and
directors except that Messrs. Shoemaker and Morosohk are brothers-in-law. The
Company's Bylaws provide that the terms of the directors are staggered so that
approximately one-third of the Board will stand for reelection in any given year
and that directors shall be elected for three year terms. Each director is
elected to serve until the annual meeting held at the end of his respective
terms or until his successor has been duly elected and qualified. It is
anticipated that staggered terms will be specified for each director elected at
the next meeting of shareholders.
Item 10. Executive Compensation.
- --------------------------------
13
<PAGE>
Summary Compensation Table.
- ---------------------------
The following table sets forth in summary form the compensation received during
each of the Company's three successive completed fiscal years ended December 31,
1996 by the Chief Executive Officer and Chairman Of The Board of the Company. No
executive officer of the Company, including the Chief Executive Officer and the
Chairman Of The Board, received total salary and bonus exceeding $100,000 during
any of the three successive fiscal years ending December 31, 1996.
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Annual Compensation Long Term Compensation
------------------------------------------------
Awards Payouts
--------------------------- ---------------
Restricted
Other Annual Stock LTIP All Other
Name and Principal Position Fiscal Salary Bonus Compensation Awards ($) Options Payouts Compensation
Year ($)(1) ($)(2) ($)(3) (#) ($)(4) ($)(5)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Randall P. Marx 1996 $75,000(6) -0- -0- -0- -0- -0- -0-
Chief Executive Officer
and a director 1995 75,000(6) $10,250 -0- -0- -0- -0- -0-
1994 48,000(6) -0- -0- 7,000,000(2) -0- -0- -0-
Kevin O. Shoemaker 1996 54,000 -0- -0- -0- -0- -0- -0-
Chairman Of The Board,
Chief Scientist, and a 1995 54,000 -0- -0- -0- -0- -0- -0-
director
1994 45,934 -0- -0- -0- -0- -0- -0-
</TABLE>
- ------------------------
(1) The dollar value of base salary (cash and non-cash) received during the
year indicated.
(2) In December 1994, the Company granted Mr. Marx, for his past services, a
stock bonus of seven million shares of the Company's restricted common
stock. The reported bid and ask prices for the Company's unrestricted
common stock on the date of grant were $.001 and $0.10, respectively.
(3) During the period covered by the Summary Compensation Table, the Company
did not pay any other annual compensation not properly categorized as
salary or bonus, including perquisites and other personal benefits,
securities or property.
(4) The Company does not have in effect any plan that is intended to serve as
incentive for performance to occur over a period longer than one fiscal
year.
(5) All other compensation received that the Company could not properly report
in any other column of the Summary Compensation Table including annual
Company contributions or other allocations to vested and unvested defined
contribution plans, and the dollar value of any insurance premiums paid by,
or on behalf of, the Company with respect to term life insurance for the
benefit of the named executive officer, and, the full dollar value of the
remainder of the premiums paid by, or on behalf of, the Company.
(6) Of the $48,000 of Mr. Marx's accrued salary for the year ended December 31,
1994, $48,000 remained unpaid as of December 31, 1996.
14
<PAGE>
Compensation Of Directors.
Through December 31, 1994, the Company had no standard or other arrangement
pursuant to which directors of the Company were compensated for any services
provided as a director or for committee participation or special assignments.
Commencing as of January 1, 1995, outside directors (i.e., those who are not
employees of the Company) will receive $250 per meeting attended for up to four
meetings per year. For meetings in excess of four meetings per year, outside
directors will receive $50 per meeting. Outside directors also will have options
to purchase 50,000 shares of common stock (with the number to be adjusted for
any reverse or forward stock splits) become exercisable for each Board of
Directors meeting attended. The options are granted to each outside director in
a group of 250,000 options (with none of them exercisable initially) at such
time or times that the outside director has no options that are not yet
exercisable. The options granted as compensation to outside directors may not be
exercised until 60 days after the Company's shareholders have approved the plan
pursuant to which these options have been and are to be issued.
Employment Contracts And Termination of Employment And Change-In Control
Arrangements.
- --------------------------------------------------------------------------------
The Company has entered into a written Employment Agreement with Randall P.
Marx, its Chief Executive Officer and Richard L. Anderson, its Vice President of
Administration. See "Item 12. Certain Relationships And Related Transactions."
The Company does not have any written employment contracts with respect to any
of its other executive officers. The Company has no compensatory plan or
arrangement that results or will result from the resignation, retirement, or any
other termination of an executive officer's employment with the Company or from
a change-in-control of the Company or a change in an executive officer's
responsibilities following a change-in-control.
Item 11. Security Ownership Of Certain Beneficial Owners And Management.
- ------------------------------------------------------------------------
The following table summarizes certain information as of March 31, 1997 with
respect to the beneficial ownership of the Company's Common Stock by the
Company's directors, by all officers and directors as a group, and by each
person known by the Company to be the owner of five percent or more of the
Company's common stock:
Name And Address Of Number Of Shares
Beneficial Owner Beneficially Owned Percent of Class
- --------------------------------------------------------------------------------
Richard L. Anderson 850,000 (1) 1.0
Antennas America Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
Sigmund A. Balaban -0- -
10 Grecian Street
Parsippany, NJ 07054
Randall P. Marx 7,040,000 (2) 9.6
Antennas America Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
15
<PAGE>
Bruce Morosohk 5,491,117 (3) 7.5
Antennas America Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
Kevin O. Shoemaker 6,434,474 (4) 8.8
Antennas America Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
Rocky Mountain Gastroenterology 4,500,000 6.1
P.C. Profit Sharing Trust
6550 West 38th Ave., Suite 300
Wheat Ridge, CO 80033
All Officers and Directors 19,815,591 27.0
as a group (five persons)
- --------------------
(1) 500,000 of these shares are owned by the Lloyd Anderson Marital Trust B
Dated June 21, 1990, for which Richard L. Anderson serves as trustee.
(2) Includes 900,000 shares owned by the Harold and Theora Marx Living Trust,
of which Mr. Marx's parents are trustees. Mr. Marx disclaims beneficial
ownership of these shares.
(3) Does not include the following shares as to which Mr. Morosohk disclaims
beneficial ownership: (a) 6,434,474 shares owned by Kevin Shoemaker, Mr.
Morosohk's brother-in-law, and (b) an aggregate of 191,780 shares owned by
Mr. Morosohk's siblings and their respective spouses.
(4) Does not include 5,491,117 shares owned by Bruce Morosohk, Mr. Shoemaker's
brother-in-law, as to which shares Mr. Shoemaker disclaims beneficial
ownership.
Item 12. Certain Relationships And Related Transactions.
- --------------------------------------------------------
Employment Agreement With Randall P. Marx. Effective January 1, 1995, the
Company entered into an employment agreement with Randall P. Marx, the Chief
Executive Officer, Treasurer, and a director of the Company. This employment
agreement is for a term of 39 months from the effective date and provides for
payment of salary at the rate of $75,000 per year. Mr. Marx also will receive a
bonus equal to five percent of the Company's pre-tax operating profits during
the period of the agreement. Pursuant to the employment agreement, Mr. Marx has
agreed not to compete with the Company for a period of two years following his
termination as an employee of the Company.
Indebtedness For Accrued Salary And Bonus To Randall P. Marx. At December
31, 1996, the Company was indebted in the amount of $94,455 to Randall P. Marx
for unpaid salary and bonus that accrued during 1994 and 1995.
Transactions With Randall P. Marx And Antennas America Distributing Co. As
of April 30, 1991, Mr. Marx and the Company agreed that Mr. Marx would form
Antennas America Distributing Co., Inc. ("AAD") to acquire the rights to
16
<PAGE>
manufacture and sell the Company's line of mobile antennas (the "AAD
Agreement"). Pursuant to the AAD Agreement, sales revenues received by AAD are
to be allocated as follows: (i) payment to AAD of all of AAD's expenses,
including all manufacturing, distribution, and operating expenses; and (ii) the
remainder to Mr. Marx to repay and be credited against amounts owed by the
Company to Mr. Marx. The AAD Agreement shall terminate, and all manufacturing
and distribution rights shall be returned to the Company, at such time as AAD
has repaid $127,000 of the Company's indebtedness to Mr. Marx under the terms of
the AAD Agreement or at such time as the Company has repaid Mr. Marx $63,000 of
its indebtedness to Mr. Marx from sources other than profits from the AAD
Agreement, provided that in either case all costs and expenses of AAD incurred
to that date also have been paid. Effective January 1, 1995, the Company
received from Mr. Marx all the outstanding stock of AAD, and the Company assumed
AAD's obligation to Mr. Marx in the amount of $30,000.
Agreements With Kevin O. Shoemaker. Effective as of March 1, 1994, the
Company entered into an Employment Agreement with Kevin O. Shoemaker, the
Chairman of the Board and Chief Scientist of the Company. The Employment
Agreement provided for a three-year term at an annual salary of not less than
$36,000 per year. Also as of March 1, 1994, the Company entered into a Stock
Contribution Agreement with Mr. Shoemaker. Pursuant to the Stock Contribution
Agreement, Mr. Shoemaker agreed to transfer an aggregate of 10,000,000 shares of
the Company's common stock to the Company. Pursuant to a third Agreement entered
into with Mr. Shoemaker effective as of March 1, 1994, the Company agreed to pay
Mr. Shoemaker an aggregate of $12,000 as full payment of all amounts owed by the
Company to Mr. Shoemaker for services performed by Mr. Shoemaker on behalf of
the Company prior to the execution of that Agreement. Also pursuant to the third
Agreement, the Company agreed to increase Mr. Shoemaker's salary pursuant to the
Employment Agreement by $8,000 per year and to provide Mr. Shoemaker with a car
allowance of $250 per month.
Effective as of July 1, 1995, the Company entered into a new Employment
Agreement with Mr. Shoemaker. This agreement replaced and superseded the prior
employment agreement described above. The new Employment Agreement originally
provided for a term expiring on March 31, 1996 and subsequently was extended
until June 30, 1996. The Employment Agreement provided for salary at a rate of
$54,000 per year.
Effective as of December 15, 1995, the Company entered into an Option
Agreement with Mr. Shoemaker pursuant to which Mr. Shoemaker granted the Company
the option to purchase an aggregate of 2,000,000 shares of the Company's common
stock held by Mr. Shoemaker at a total purchase price of $30,000. The original
exercise period was to terminate on March 31, 1996 and subsequently was extended
until June 28, 1996. The Company paid Mr. Shoemaker $2,500 for Mr. Shoemaker's
granting of the option and an additional $2,500 for the extension of the option.
The aggregate of $5,000 paid to Mr. Shoemaker was not refundable to the Company
but was to be applied towards the aggregate $30,000 purchase price for the
option shares. In connection with the Option Agreement, each of Mr. Shoemaker,
Randall P. Marx, and Bruce Morosohk agreed not to dispose of any shares of
Common Stock owned by any of them prior to December 31, 1997 without the prior
written consent of the Company. If the Company gives any of these persons
written consent to dispose of shares of Common Stock prior to December 31, 1997,
each of the other persons has the right to dispose of the same number of shares
as the party that received the written consent of the Company. In June 1996,
the Company acquired 2,000,000 shares of its common stock from Mr. Shoemaker by
paying the remainder of the $30,000 purchase price.
17
<PAGE>
Employment Agreement With Richard L. Anderson. Effective January 2, 1996,
the Company entered into an employment agreement with Richard L. Anderson, the
Vice President, Administration, and a director of the Company. This employment
agreement is for a term of 24 months from the effective date and provides for
payment of salary at the rate of $50,000 per year. Pursuant to the employment
agreement, Mr. Anderson has agreed not to compete with the Company for a period
of two years following his termination as an employee of the Company. In
connection with the employment agreement, the Company has granted Mr. Anderson
350,000 shares of the Company's common stock and an option to purchase an
additional 350,000 shares of the Company's common stock at an exercise price of
$.05 per share, which options would terminate on the earlier to occur of January
4, 1998 or 90 days following the termination of Mr. Anderson's employment with
the Company.
Stock Purchase By Lloyd Anderson Marital Trust. The Lloyd Anderson Marital
Trust B Dated June 21, 1990, for which Richard L. Anderson serves as trustee,
purchased 500,000 shares of the Company's common stock for $25,000, or $.05 per
share, in February 1995. Mr. Anderson is an officer and director of the Company.
Item 13. Exhibits And Reports On Form 8-K
- ------------------------------------------
(a) Financial Statements And Financial Statement Schedules.
Index To Financial Statements And Financial Statement Schedules.
Report Of Independent Public Accountants ....................... F-1
----------------------------------------
Consolidated Balance Sheet At December 31, 1996 ............. F-2
Consolidated Statements Of Income For The Years Ended
December 31, 1996 and 1995 .................................. F-3
Consolidated Statements Of Changes In Stockholders' Equity
For The Years Ended December 31, 1996 and 1995 ............. F-4
Consolidated Statements Of Cash Flows For The Years Ended
December 31, 1996 and 1995 ..................................F-5 - F-6
Notes To Consolidated Financial Statements ..................F-7 - F-13
- --------------------
(a)(2) Exhibits.
EXHIBIT INDEX
18
<PAGE>
Exhibit
Number Description Page No.
- ------ ----------- --------
3.1a Articles Of Incorporation of Westcliff Corporation, now known as
Antennas America, Inc. (the "Company"), are incorporated herein
by reference from the Company's Form S-18 Registration Statement
dated December 1, 1987 (File No. 33-18854-D).
3.1b Articles Of Amendment of the Company dated January 26, 1988 are
incorporated herein by reference from the Company's
Post-Effective Amendment No. 3 to From S-18 Registration
Statement dated December 5, 1989 (File No. 33-18854-D)
3.1c Articles And Agreement Of Merger between the Company and Antennas
America, Inc. a Colorado corporation, dated March 22, 1989, are
incorporated herein by reference from the Company's
Post-Effective Amendment No. 3 to Form S-18 Registration
Statement dated December 5, 1989 (File No. 33- 18854-D).
3.2 Bylaws of the Company are incorporated herein by reference from
the Company's Form S-18 Registration Statement dated December 1,
1987 (File No. 33-18854-D).
10.1a Industrial Lease dated April 20, 1989 between the Company and HK
Buildings is incorporated herein by reference from the Company's
Post-Effective Amendment No. 3 to Form S-18 Registration
Statement dated December 5, 1989 (File No. 33-18854-D).
10.1b Sublease Agreement dated May 8, 1995 between Coors Brewing
Company and the Company.*
10.1c Industrial Lease dated April 20, 1995 between the Company and
Five K Investments.
10.1d Office Lease dated May 8, 1995 between the Company and Five K
Investments.
10.1e Industrial Lease dated December 12, 1995 between the Company and
Five K Investments.
10.1f Industrial Lease dated April 29, 1996 between the Company and
Five K Investments.
10.2 Employment Agreement dated as of January 1, 1995 between the
Company and Randall P. Marx.*
10.3 Employment Agreement dated as of January 2, 1996 between the
Company and Richard L. Anderson.*
19
<PAGE>
10.4 Option Agreement dated as of December 12, 1995 between the
Company and Kevin O. Shoemaker, as amended April 10, 1996.*
27.1 Financial Data Schedule
- --------------
* Incorporated herein by reference from the Company's Form 10-KSB for the
fiscal year ended December 31, 1995.
(b) Reports On Form 8-K. During the last quarter of the fiscal year ended
December 31, 1996, the Company filed no reports on Form 8-K.
20
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Antennas America, Inc.
We have audited the consolidated balance sheet of Antennas America, Inc. as of
December 31, 1996, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the two years in the period
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the financial position of Antennas America,
Inc. as of December 31, 1995, and the results of its operations and cash flows
for each of the two years in the period then ended, in conformity with generally
accepted accounting principles.
Winter, Scheifley & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
March 4, 1997
F-1
<PAGE>
Antennas America, Inc.
Consolidated Balance Sheet
December 31, 1996
ASSETS
Current assets:
Cash $ 55,636
Accounts receivable, trade 166,411
Inventories 195,849
Prepaid expenses 33,473
-----------
Total current assets 451,369
Property and equipment, at cost, net of
accumulated depreciation of $113,337 169,984
Other assets:
Deferred tax asset, non-current 265,662
Intangible assets net of accumulated
amortization of $31,987 33,105
Deposits 24,112
-----------
$ 944,232
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable $ 200,684
Current portion of long-term debt 23,800
Accounts payable 188,965
Accrued expenses 22,934
-----------
Total current liabilities 436,383
Long-term debt 43,283
Notes payable - officer 134,109
Commitments (Note 11)
Stockholders' equity:
Common stock, $.0005 par value,
250,000,000 shares authorized,
73,189,422 shares issue and outstanding 36,595
Additional paid-in capital 801,039
Common stock subscriptions 3,500
Accumulated deficit (510,677)
-----------
Total stockholders' equity 330,457
-----------
$ 944,232
===========
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
Antennas America, Inc.
Consolidated Statements of Income
For The Years Ended December 31, 1996 and 1995
1996 1995
------ ------
Sales, net $ 1,975,184 $ 2,029,942
Cost of sales 1,223,287 1,164,026
----------- -----------
Gross profit 751,897 865,916
Selling, general and administrative expenses 744,673 639,007
----------- -----------
Income from operations 7,224 226,909
Other income and (expense):
Interest expense (58,018) (44,017)
Loss on leasehold abandonment - (1,677)
Other income 917 19,401
----------- -----------
(57,101) (26,293)
----------- -----------
Net income before income taxes
and extraordinary item (49,877) 200,616
Provision for income taxes (benefit) (10,439) (143,780)
----------- -----------
Net income before extraordinary item (39,438) 344,396
Extraordinary item:
Gain from debt cancellation net of income
taxes of $12,667 and $11,890 respectively 48,784 23,081
----------- -----------
Net income $ 9,346 $ 367,477
=========== ===========
Earnings per share:
Net income before extraordinary item $ 0.00 $ 0.01
Extraordinary item - -
----------- ------------
Net income $ 0.00 $ 0.01
=========== ===========
Weighted average shares outstanding 73,135,255 68,816,505
=========== ===========
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
Antennas America, Inc.
Consolidated Statement of Changes in Stockholders' Equity
For The Years Ended December 31, 1996 and 1995
Additional
Common Stock Paid-in Accumulated Stock
ACTIVITY Shares Amount Capital (Deficit) Subscriptions Total
-------- ------ ------ ------- --------- ------------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 61,514,422 $ 30,757 $ 499,653 $ (887,500) $ 35,000 $ (322,090)
Shares issued for:
Subscriptions 3,500,000 1,750 33,250 (35,000) -
Cash 6,125,000 3,063 83,187 86,250
Shares subscribed for cash 13,750 13,750
Net income for the year 367,477 367,477
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1995 71,139,422 35,570 616,090 (520,023) 13,750 145,387
Shares issued for:
Subscriptions 1,375,000 687 13,063 (13,750) -
Cash, net of $8,027 of costs 1,650,000 825 156,148 156,973
Exercise of warrants 1,025,000 513 44,738 45,251
Shares reacquired and cancelled (2,000,000) (1,000) (29,000) (30,000)
Shares sbuscribed for services 3,500 3,500
Net income for the year 9,346 9,346
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1996 73,189,422 $ 36,595 $ 801,039 $ (510,677) $ 3,500 $ 330,457
=========== =========== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
F-4
</TABLE>
<PAGE>
Antennas America, Inc.
Consolidated Statements of Cash Flows
For The Years Ended December 31, 1996 and 1995
1996 1995
------ ------
Net income $ 9,346 $ 367,477
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 35,467 23,765
Gain from debt cancellation (48,784) (23,081)
Interest added to note payable 14,397 -
Subscriptions for services 3,500 -
Abandonment of leasehold improvements 1,677
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 157,944 (136,230)
(Increase) decrease in inventory (33,533) (107,204)
(Increase) decrease in deferred tax asset 2,228 (131,890)
(Increase) decrease in prepaid expenses (29,828) 2,416
(Increase) decrease in other assets (2,037) (16,726)
Increase (decrease) in accounts payable and
accrued expenses (94,490) 39,358
---------- ----------
Total adjustments 4,864 (347,915)
---------- ----------
Net cash provided by operating activities 14,210 19,562
---------- ----------
Cash flows from investing activities:
Patent acquisition costs (8,996) (7,347)
Acquisition of plant and equipment (89,689) (74,429)
---------- ----------
Net cash (used in) investing activities (98,685) (81,776)
---------- ----------
Cash flows from financing activities:
Stock issued for cash 202,224 86,250
Common stock subscriptions - 13,750
Cost of share cancellation (30,000) -
Repayment of officer loans (14,745) (9,682)
Proceeds of new borrowing 36,000 -
Repayment of notes payable (69,279) (19,219)
---------- ----------
Net cash provided by (used in)
financing activities 124,200 71,099
---------- ----------
Increase (decrease) in cash 39,725 8,885
Cash and cash equivalents,
beginning of period 15,911 7,026
---------- ----------
Cash and cash equivalents,
end of period $ 55,636 $ 15,911
=========== ==========
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
Antennas America, Inc.
Consolidated Statements of Cash Flows
For The Years Ended December 31, 1996 and 1995
(Continued)
1996 1995
------ ------
Supplemental cash flow information:
Cash paid for interest $ 62,290 $ 34,652
Cash paid for income taxes $ - $ -
Non-cash investing and financing activities:
Conversion of accounts payable to notes payable $ - $ 145,059
Abandonment of leasehold improvements $ - $ 1,677
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
Antennas America, Inc.
Notes to Consolidated Financial Statements
December 31, 1996
Note 1. Organization and summary of significant accounting policies
Organization
The Company was incorporated in Colorado on September 6, 1988 and was
reorganized as a Utah corporation on April 12, 1989. The Company is engaged in
the business of manufacture and sale of antennas used for various purposes. The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary, Antennas America Distributing Company. All significant
inter-company items have been eliminated.
Inventory
Inventory, which consists primarily of raw materials, is valued at the lower of
cost or market on a first-in, first-out basis. Inventories are reviewed annually
and items considered to be slow-moving or obsolete are reduced to estimated net
realizable value. Adjustments to reduce inventories to net realizable value have
not been significant.
Property and equipment
Property and equipment are stated at cost. Depreciation is provided for using
the straight line method over estimated useful lives of five to seven years.
Depreciation expense amounted to $28,070 and $18,474 respectively during the
years ended December 31, 1996 and 1995.
Patent costs
Patent costs are stated at cost and are amortized over ten years using the
straight-line method. Amortization expense amounted to $7,397 and $5,291 for the
years ended December 31, 1996 and 1995.
Research and development
Research and development costs are charged to expense as incurred. Such costs
were not material for the years ended December 31, 1996 and 1995.
Revenue
Revenue is recorded when goods are shipped. Sales returns and allowances are
recorded after returned goods are received and inspected. The Company has
several major customers who incorporate its products into other manufactured
goods and returns therefrom have not been significant. The Company expects to
begin sales of consumer goods in 1997 and plans to provide currently for
estimated product returns arising therefrom.
Income taxes
The Company records the income tax effect of transactions in the same year that
the transactions enter into the determination of income, regardless of when the
transactions are recognized for tax purposes. Income tax credits are used to
reduce the provision for income taxes in the year in which such credits are
allowed for tax purposes.
F-7
<PAGE>
Antennas America, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 1996
Deferred taxes are provided to reflect the income tax effects of amounts
included for financial purposes in different periods than for tax purposes,
principally accelerated depreciation for income tax purposes. Such amounts have
not been significant.
Cash
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
Earnings per share
Earnings per share is computed using the weighted average number of shares
outstanding during the period.
Fair value of financial instruments
The Company's short-term financial instruments consist of cash and cash
equivalents, accounts and loans receivable, and payables and accruals. The
carrying amounts of these financial instruments approximates fair value because
of their short-term maturities. Financial instruments that potentially subject
the Company to a concentration of credit risk consist principally of cash and
accounts receivable, trade. During the year the Company did not maintain cash
deposits at financial institutions in excess of the $100,000 limit covered by
the Federal Deposit Insurance Corporation.
The Company has several major customers, (see Note 9) the loss of any one of
which could have a material negative impact upon the Company. Additionally, the
Company maintains a line of credit and a significant portion of its long-term
debt with one financial institution. The maintenance of a satisfactory
relationship with this institution is of significant importance to the Company.
The Company does not hold or issue financial instruments for trading purposes
nor does it hold or issue interest rate or leveraged derivative financial
instruments
Estimates
The preparation of the Company's financial statements requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from these
estimates. For the years ended December 31, 1996 and 1995 the Company made
estimates of the future utilization of its net operating loss carryforward.
These estimates increased net income for the year ended December 31, 1995 by
$130,000, and account for the deferred tax asset of $231,233 at the balance
sheet date.
Advertising costs
Advertising costs are charged to operations when the advertising first takes
place. Advertising costs charged to operations were $39,713 and $18,532 in 1996
and 1995, respectively.
F-8
<PAGE>
Antennas America, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 1996
Stock-based Compensation
The Company adopted Statement of Financial Accounting Standard No. 123 (FAS
123), Accounting for Stock-Based Compensation beginning with the Company's first
quarter of 1996. Upon adoption of FAS 123, the Company continued to measure
compensation expense for its stock-based employee compensation plans using the
intrinsic value method prescribed by APB No. 25, Accounting for Stock Issued to
Employees, and has provided in Note 5 pro forma disclosures of the effect on net
income and earnings per share as if the fair value- based method prescribed by
FAS 123 had been applied in measuring compensation expense.
Note 2. Accounts Receivable
Effective in 1992, the Company began factoring certain of its accounts
receivable. The factor requires a 20% reserve upon its payment to the Company.
Until the receivable is collected, the Company is charged 0.17% of the
receivable per day that it remains uncollected. The reserve is held by the
factor until the related receivable is collected at which time it is returned to
the Company net of the fee. The receivables are purchased by the factor without
recourse to the Company and the maximum charge to the Company is the 20% reserve
for any receivable not collected. To date, the Company has experienced no
material charges in excess of the initial month's fee of 5%. The Company has
charged $44,977 and $26,189 related to factor fees to operations during 1996,
and 1995, and has included $19,506 in accounts receivable related to the 20%
reserve at December 31, 1996
Note 3. Notes payable and long-term debt
Notes payable at December 31, 1996 consist of uncollateralized obligations to
individuals and vendors as follows:
Amount due vendor with interest at 8% per annum
due on January 31, 1998 $100,363
Amount due vendor with interest at 10% per annum
due on January 2, 1997 $ 79,795
Amount due individual without interest
due on demand 19,907
Other 619
--------
$200,684
Long term debt consists of the following:
Note payable to an individual for prior salary
and expenses due in monthly installments of
$1,000 without interest $ 40,164
F-9
<PAGE>
Antennas America, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 1996
Note payable for equipment purchase, due in
monthly installments of $1,161 including
interest at 9.5% per annum 26,919
--------
67,083
Less Current portion 23,800
--------
$ 43,283
Maturities of long-term debt are as follows: 1997 - $23,800, 1998 - $25,000,
1999 - $14,350, 2000 - $3,933.
Note 4. Notes payable, officers
Notes payable to officers includes unpaid advances and salary accruals due to
two of the Company's officers including Randall P. Marx, the chief executive
officer, (see Note 8) who accounts for approximately 73% of the balance owed.
The advances accrue no interest and are not expected to be repaid in the
forthcoming year.
Note 5. Stockholders' equity
During July 1993 the Company began a private placement of units consisting of
one share of restricted common stock and a warrant to purchase an additional
share of restricted common stock to a limited group of investors. During the
year ended December 31, 1995, the Company received $41,250 and issued 3,625,000
common shares related to the warrants exercised in connection with the 1993
private placement. Additionally, the Company sold 2,500,000 shares of common
stock to two individuals for cash of $45,000 and accepted $13,750 from three
others for the future issuance of 1,375,000 shares.
Effective January 1996, the Company authorized a stock bonus to one of its
officers for 350,000 shares of restricted common stock having a fair value of
$3,500. Additionally, the Company granted the officer an option to purchase
350,000 additional shares of restricted common stock at $.05 per share for a two
year period. The weighted average fair value at the date of grant for options
granted during 1996 was $.00 per option. The fair value of the options at the
date of grant was estimated using the Black-Scholes model with assumptions as
follows:
Market value $.01
Expected life 2
Interest rate 5.15%
Volatility .25%
Dividend yield 0.00%
No stock based compensation costs would be recorded by the Company as a result
of the foregoing.
F-10
<PAGE>
Antennas America, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 1996
During June and July of 1996, the Company sold 1,650,000 shares of its
restricted common stock to three individuals for cash aggregating $156,973 net
of associated costs of $8,027. Additionally during the year the Company issued
1,375,0000 shares subscribed in the prior year and issued 1,025,000 shares
pursuant to option agreements entered into in prior years.
Proceeds to the Company for the option shares amounted to $45,250 or $.044 per
share. During June 1996 the Company purchased from an officer and retired
2,000,000 shares of restricted common stock for $30,000 or $.015 per share.
Note 6. Income taxes
The Company has not recorded a liability for federal income taxes payable
currently or deferred to future periods due to the existence of substantial net
operating loss carryforward amounts available to offset taxable income.
A reconciliation of federal income taxes computed by multiplying pre tax net
income by the statutory rate of 34% to the provision for income taxes is as
follows at December 31, 1996 and 1995:
1996 1995
---- ----
Tax computed at statutory rate $ 3,935 $ 80,100
Utilization of net operating
loss carryforward:
Current usage - (80,100)
Estimated future usage - (131,890)
State income tax 579 -
Surtax exemption (2,286) -
-------- --------
Provision for income taxes (benefit) $ 2,228 $(131,890)
The Company has a net operating loss carryforward of approximately $755,900 that
will expire in years beginning in 2004 as follows:
2004 $ 252,300
2005 336,000
2006 188,000
---------
$ 776,300
The Company has determined that the likelihood of continued profitability for
the year ended December 31, 1997 and beyond is reasonably possible and has
recorded the benefit of the carryforward ($265,662) as provided for in FAS-109.
The determination of the current portion of the deferred tax asset is based upon
the Company's estimate of the expected utilization of the operating loss
carryforward during the 1997 fiscal year (if any).
F-11
<PAGE>
Antennas America, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 1996
Note 7. Legal proceedings
The Company is involved in a dispute with a former consultant regarding claimed
fees for services in excess of $50,000. The consultant has threatened to file a
lawsuit to attempt collection of the claimed amount. The Company is attempting
to negotiate a settlement of this matter for a reduced amount and it believes
that such settlement will not have a material adverse effect on its financial
statements.
Note 8. Related party transactions
As of April 30, 1991, the Company's chief executive officer, Randall P. Marx,
and the Company agreed that Mr. Marx would form Antennas America Distributing
Company (AAD), a Colorado corporation, to acquire the rights to manufacture and
sell the Company's line of Cellular Decal antennas. Sales revenues received by
AAD were to be allocated as follows: (i) payment to AAD of all of AAD's
expenses, including manufacturing, distribution and operating expenses; and (ii)
the remainder to Mr. Marx to repay indebtedness to Mr. Marx as described in Note
4. The agreement with AAD provided for termination at such time as AAD had
repaid $127,000 of the Company's indebtedness to Mr. Marx under the terms of the
agreement with Mr. Marx or at such time as the Company had repaid Mr. Marx
$63,000 of the Company's indebtedness to Mr. Marx from sources other than
revenues from the agreement with AAD and in either case, had repaid to AAD all
costs and expenses incurred to that date.
Effective January 1, 1995, Mr. Marx contributed 100% of the stock of AAD to the
Company. The net assets of AAD at that date were $1,266, which amount was
credited to additional paid in capital of the Company. The liabilities of AAD at
December 31, 1994 included $30,000 of advances made to AAD by Mr. Marx of which
$25,000 was repaid during the year ended December 31, 1995. The foregoing
financial statements at and for the year ended December 31, 1996 and 1995
include the accounts of AAD.
Note 9. Sales to major customers
The Company made sales in excess of 10% of its net sales to unrelated parties
for the year ended December 31, 1995 to three companies aggregating $1,527,754
(75%) and in 1996 to one company aggregating $1,126,312 (57%). Additionally, the
Company had open uncollateralized accounts receivable from these customers
aggregating $210,631 and $87,295 at December 31, 1995 and 1996, respectively.
F-12
<PAGE>
Antennas America, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 1996
Note 10. Gain from debt extinguishment
During the year ended December 31, 1995 the Company settled an aggregate of
$35,199 of outstanding trade accounts payable, accrued commissions, salary and
expenses for cash payments of $ 228. Additionally during the year ended December
31, 1996 the Company settled an aggregate of $61,451 of outstanding trade
accounts payable, salary and expenses without expenditure.
Note 11. Commitments
Operating leases
The Company leases its facilities under operating leases through May 15, 1998.
Minimum future rentals payable under the leases are as follows:
Year Amount
---- ------
1997 $148,376
1998 56,218
1999 12,000
--------
$216,594
Additionally, the Company rents certain equipment pursuant to short-term leasing
arrangements.
Rent expense amounted to $57,315 and $173,763 for the years ended December 31,
1995 and 1996, respectively.
F-13
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANTENNAS AMERICA, INC.
Date: April 15, 1997 By: /s/ Randall P. Marx
------------------------- -------------------------------
Randall P. Marx, Chief Executive
Officer and Principal Financial
Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date: April 15, 1997 /s/ Richard L. Anderson
---------------------- -------------------------------------
Richard L. Anderson, Director
Date:
---------------------- -------------------------------------
Sigmund A. Balaban, Director
Date: April 15, 1997 /s/ Randall P. Marx
---------------------- -------------------------------------
Randall P. Marx, Director
Date: April 15, 1997 /s/ Bruce Morosohk
----------------------- -------------------------------------
Bruce Morosohk, Director
Date: April 15, 1997 /s/ Kevin O. Shoemaker
---------------------- -------------------------------------
Kevin O. Shoemaker, Director
Date:
----------------------- -------------------------------------
James H. Shook, Director
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page No.
- ------ ----------- --------
3.1a Articles Of Incorporation of Westcliff Corporation, now known as
Antennas America, Inc. (the "Company"), are incorporated herein
by reference from the Company's Form S-18 Registration Statement
dated December 1, 1987 (File No. 33-18854-D).
3.1b Articles Of Amendment of the Company dated January 26, 1988 are
incorporated herein by reference from the Company's
Post-Effective Amendment No. 3 to From S-18 Registration
Statement dated December 5, 1989 (File No. 33-18854-D)
3.1c Articles And Agreement Of Merger between the Company and Antennas
America, Inc. a Colorado corporation, dated March 22, 1989, are
incorporated herein by reference from the Company's
Post-Effective Amendment No. 3 to Form S-18 Registration
Statement dated December 5, 1989 (File No. 33- 18854-D).
3.2 Bylaws of the Company are incorporated herein by reference from
the Company's Form S-18 Registration Statement dated December 1,
1987 (File No. 33-18854-D).
10.1a Industrial Lease dated April 20, 1989 between the Company and HK
Buildings is incorporated herein by reference from the Company's
Post-Effective Amendment No. 3 to Form S-18 Registration
Statement dated December 5, 1989 (File No. 33-18854-D).
10.1b Sublease Agreement dated May 8, 1995 between Coors Brewing
Company and the Company.*
10.1c Industrial Lease dated April 20, 1995 between the Company and
Five K Investments.
10.1d Office Lease dated May 8, 1995 between the Company and Five K
Investments.
10.1e Industrial Lease dated December 12, 1995 between the Company and
Five K Investments.
10.1f Industrial Lease dated April 29, 1996 between the Company and
Five K Investments.
10.2 Employment Agreement dated as of January 1, 1995 between the
Company and Randall P. Marx.*
10.3 Employment Agreement dated as of January 2, 1996 between the
Company and Richard L. Anderson.*
<PAGE>
10.4 Option Agreement dated as of December 12, 1995 between the
Company and Kevin O. Shoemaker, as amended April 10, 1996.*
27.1 Financial Data Schedule
- --------------
* Incorporated herein by reference from the Company's Form 10-KSB for the
fiscal year ended December 31, 1995.
INDUSTRIAL LEASE
(Gross)
1. PARTIES: This Lease, dated, for reference purposes only, April 20, 1995 is
made by and between Five K Investments, (herein called "Lessor") and Antennas
America (herein called "Lessee").
2. PREMISES: Lessor hereby leases to Lessee and Lessee leases from Lessor for
the term, at the rental, and upon all of the conditions set forth herein, that
certain real property situated in the County of Jefferson State of Colorado,
commonly known as approximately 7,500 square feet and described as 4880 Robb
Street. Units 5,6, & 11 Wheat Ridge, CO 80033. Said real property including the
land and all improvements thereon, is herein called "the Premises".
3. TERM:
3.1 Term: The term of this Lease shall be for Nine (9) months commencing on
8-15-97 and ending on 5-15-98 unless sooner terminated pursuant to any provision
hereof.
3.2 Delay in Commencement: Notwithstanding said commencement date, if for
any reason Lessor cannot deliver possession of the Premises to Lessee on said
date, Lessor shall not be subject to any liability therefore, nor shall such
failure affect the validity of this Lease or the obligations of Lessee hereunder
or extend the term hereof, but in such case Lessee shall not be obligated to pay
rent until possession of the Premises is tendered to Lessee; provided, however,
that if Lessor shall not have delivered possession of the Premises within sixty
(60) days from said commencement date, Lessee, may, at Lessee's option, by
notice in writing to Lessor within ten (10) days thereafter, cancel this Lease,
in which event the parties shall be discharged from all obligations hereunder.
If Lessee occupies the Premises prior to said commencement date, such occupancy
shall be subject to all provisions hereof, such occupancy shall not advance the
termination date, and Lessee shall pay rent for such period at the initial
monthly rates set forth below.
4. RENT: Lessee shall pay to Lessor as rent for the Premises equal monthly
payment of -0-, in advance, on the -0- day of each month of the term hereof.
Lessee shall pay Lessor upon the execution hereof -0- as rent for -0-. See rent
provision breakdown in Section 16.33 of this lease.
5. SECURITY DEPOSIT: Lessee shall deposit with Lessor upon execution hereof -0-
as security for Lessee's faithful performance of Lessee's obligations hereunder.
If Lessee fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provisions of this Lease, Lessor may use, apply or
retain all or any position of said deposit for the payment of any rent or other
charge in default or for the payment of any other sum to which Lessor may
become obligated by reason of lessee's default. Lessor shall not be required to
keep said deposit separate from its general accounts. If Lessee performs all of
Lessee's obligations hereunder, said deposit, or so much thereof as has not
theretofore been applied by Lessor, shall be returned, without payment of
interest or other increment for its use, to Lessee (or, at Lessor's option, to
the last assignees, if any, of Lessee's interest hereunder) at the expiration of
the term hereof, and after Lessee has vacated the Premises. No trust
relationship is created between Lessor and Lessee with respect to said Security
Deposit.
6. USE
6.1 Use: The Premises shall be used and occupied only for office, showroom,
storage warehouse and assembly and for no other purpose without Lessor's prior
consent not unreasonably withheld.
6.2 Condition of Premises: Lessee hereby accepts the Premises in their condition
existing as of the date of the execution hereof, and will comply with applicable
zoning, municipal, county and state laws, ordinances and regulations governing
and regulating the use of the Premises, and accepts this Lease subject thereto
all matters disclosed thereby and by any exhibits attached hereto.
7. MAINTENANCE AND ALTERATIONS:
7.1 Lessor's Obligations: Subject to the provisions of paragraphs 6.2(a) and 9
and except for damage caused by any negligent or intentional act or omission of
Lessee, Lessee's agents,
[initials]
<PAGE>
16.27 Additional Provisions:
a. There are six (6) parking spaces with these units.
b. No outside storage of any kind allowed.
c. Lessor is responsible for all outside maintenance except for snow
removal immediately outside units.
16.28 Tenant to accept space in "as is" condition, subject to general cleaning.
16.29 A late payment of 15% is due if rent is received the 10th of any month.
16.30 Exhibit "A" of Lease is a copy of Lessor's maintenance policy.
16.31 Tenant pays for Gas, Electric aud Trash Collection for this unit.
16.32 Official addresses for notification of Lessor and Lessee are as follows:
Lessor's address is:
Five K Investments
11445 West I-70 Frontage Road North
Wheat Ridge, Colorado 80033
Lessee's address is:
-------------------------------------
-------------------------------------
-------------------------------------
16.33 Rent breakdown is as follows:
8-15-97 to 5-15-98 is $6.00 psf gross or $3,750.00 per month.
16.34 Lessee will need Lessor's approval for type of antenna mounting outside
that will need to be done.
The parties hereto have executed this Lease at the place on the dates specified
immediately adjacent to their respective signatures.
If this Lease has been filled in, it has been prepared for submission to your
attorney for his approval. No representation or recommendation is made by the
real estate broker or its agents or employees as to the legal sufficiency, legal
effect, or tax consequences of this Lease or the transaction relating thereto.
Executed at: Five K Investments /s/ Harold Kunz
-----------------------------------------
1/4/94
On: 5-8-95
Address: 11445 W. 1-70 Frontage Road N.
Wheat Ridge, Colorado 80033
Executed at:
---------------------------
on:
------------------------------------ [initials]
Address: 5/10/95
-------------------------------
12
OFFICE LEASE
This lease, made this 8th day of May 1995 between Five K Investments herein
called "Landlord" and Antennas America, Inc., therein called "Tenant".
1. PREMISES
(a) Landlord hereby leases to Tenant and Tenant hereby rents from Landlord that
certain office space therein called the "Premises" shown on Exhibit "A"
attached hereto and by this reference made a part hereof. For the purposes
of this lease it is agreed that the premises have a useable area of 5,918
square feet on the 1st floor of that certain building commonly known as
4960 Robb Street, Suite 101, Wheat Ridge, Colorado 80033 therein called
"Building".
(b) Rentable Area Defined. The term "net rentable area" as used herein shall be
the sum of the Tenant's useable area plus the Tenant's pro rate share of
all common and public areas.
(1) Common Areas are those areas of the Building available for use by all
tenants and users of the Building. This includes the lobby areas, the
fire exit corridors, restrooms and service/mechanical closets.
(2) Public Areas are those public corridors that may he created from time
to time to specifically service one or several tenants. These areas
will be allocated to those tenants being serviced by these areas,
based upon each tenant's rentable area. Public areas will be added to
the tenant's usable area (1)(b)(6) below.
(3) Adjustment Factor. The Building contains 2,288 square feet of common
area which will be allocated to each tenant on a pro rate basis. This
area adjustment factor is 0.
(4) Net Rentable Area Calculations. The Tenant is leasing 5,918 square
teat of useable area plus 0 square feet of common area. The NET
RENTABLE AREA for the Tenant is 0 square feat. All rent calculations
and prorations are based upon the net rentable area assigned to this
Tenant.
(5) Pro Rate Area. The Building contains 18,104 square feat of rentable
area. The Tenant has leased 5,918 square feet of rentable area which
is 3.6 per cent of the Building's rentable area. For the purposes of
future proration calculations, the Tenant's pro rate share of the
structure is 3.6 per cent.
(6) Useable Area shall be defined as meaning from the inside of the window
line to the center line of the opposite wall. The other dimension is
from the center line of demising walls to the center line of the
opposite wall if it is a demising wall. If it is an exterior wall, the
measurement will be to the inside of the window. The only deduction
will be for floor penetrations. Support columns extending from the
outside or inside walls into the demised area will be treated as
support columns and included in the useable area.
2. TERM
The term of this Lease shall be for two (2) years and five (5) months,
commencing on the 15th day of December 1995, and ending on the 15th day of
May 1998.
3. POSSESSION.
(a) If for any reason whatsoever, Landlord cannot deliver possession of the
Premises to Tenant at the commencement of the term hereof, this lease shall
not be void or voidable, nor shall Landlord be liable to Tenant for any
loss or damage resulting therefrom, nor shall the expiration date of the
above term be in any way extended, but in that event all rent shall be
abated during the period between the commencement of said term end the time
when Landlord delivers possession.
(b) In the event that Landlord shall permit Tenant to occupy the Premises prior
to the commencement date of the term, such occupancy shall be subject to
all the provisions of this Lease. Early possession shall not advance the
termination date hereinabove provided.
4. BASE MONTHLY RENT
Tenant agrees to pay Landlord as rental for the Premises, without prior
notice or demand and without offset or credit, the sum of Five Thousand
Four Hundred Twenty Four and 83/100 Dollars ($5,424,83 ) on or before the
first day of the first full calender month of the term hereof and a like
sum on or before the first day of each and every successive calendar month
thereafter during the term hereof, except that the first month's rent shall
be paid upon the execution hereof. Rent for any period during the term
hereof which is less than one (1) month shall be prorated based on a thirty
(30) day month. All rentals payable hereunder shall be paid to Landlord in
lawful money of the United States of America constituting legal tender at
the time of payment, at the office of the Building, or to such other person
at such other place as Landlord may from time to time designate in writing.
<PAGE>
5. SECURITY DEPOSIT
Tenant has deposited with Landlord the sum of Five Thousand Four Hundred
Twenty-four and 83/100 Dollars ($5,424.83 ). Said sum (the "Security
Deposit") shall be held by Landlord as security for the faithful
performance by Tenant of all the terms, covenants and conditions of this
Lease to be kept and performed by Tenant during the term hereof. If Tenant
defaults with respect to any provision of this Lease, including, but not
limited to the provisions relating to the payment of rent, Landlord may
(but shall not be required to) use, apply or retain all or any part of the
Security Deposit for the payment of any rent or any other sum in default,
or for the payment of any amount which Landlord may spend or become
obligated to spend by reason of Tenant's default, or to compensate Landlord
for any other loss or damage which Landlord may suffer by reason of
Tenant's default. If any portion of the Security Deposit is so used or
applied, Tenant shall within five (5) days after written demand therefore,
deposit cash with Landlord in an amount sufficient to restore said deposit
to its original amount and Tenant's failure to do so shall be a material
breach of this Lease. Unless otherwise required by law, Landlord shall not
be required to keep the Security Deposit separate from its general funds,
and Tenant shall not be entitled to interest on such deposit. If Tenant
shall fully and faithfully perform every provision of this Lease to be
performed by it, the Security Deposit or any balance thereof shall be
returned to Tenant (or, at Landlord's option, to the last assignee of
Tenant's interest hereunder) at the expiration of the Lease Term. In the
event of termination of Landlord's interest in this Lease, Landlord shall
transfer said deposit to Landlord's successor in interest, and upon such
transfer and notification to Tenant thereof, Landlord shall have no further
liability in connection with such deposit.
<PAGE>
8. RENT ADJUSTMENTS
It is the purpose of this lease to fix all operating expenses for the
Landlord at 0 per square foot of rentable area herein called "Expense
Stop"). At periodic rent adjustment dates, all operating expenses will be
reviewed and, if appropriate, the amount of expenses in excess of the
Expense Stop will he pro rated to the tenants of the Building. There are
two components of the Expense Stop, one for the fixed expense of all real
estate taxes and special assessments; the other is for all other operating
expenses resulting from the operation and maintenance of the structure.
December Rent and Security Deposit are due to Five K Investments on
12-1-95.
(a) [section deleted and initialed]
[initials]
Page 1
<PAGE>
(1) In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deed
of trust made by the Landlord covering the Premises, the Tenant shall
attorn to the purchaser upon any such foreclosure or sale and
recognize such purchaser as the Landlord under this Lease.
(o) Name. Tenant shall not use the name of the Building or of the development
in which the Building is situated for any purpose other than as an address
of the business to be conducted by Tenant in the Premises.
(p) Separability. Any provision of this Lease which shall prove to he invalid,
void or illegal shall in no way affect, impair or invalidate any other
provision hereof and such other provisions shall remain in full force and
effect.
(q) Cumulative Remedies. No remedy or election hereunder shall he deemed
exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
(r) Choice of Law. This Lease shall be governed by the laws of the State in
which the Building is located.
(s) Tenant to accept space in "as is" condition.
The parties hereto have executed this Lease at the place and on the dates
specified immediately below their respective signatures.
By: /s/ Randy Max
--------------------------------
Randy Max
By: Antennas America, Inc.
-------------------------------
Address Date 5/10/95
----------------------------------
By: Five K Investment
-------------------------------
By: /s/ Harold Kunz
--------------------------------
Harold Kunz, Owner
Date: 5-8-95
If Tenant is a corporation, the authorized officers must sign on behalf of the
corporation; in that event this Lease must be executed by the President or
Vice-President and the Secretary of the Tenant, unless the by-laws or a
resolution of the board of directors shall otherwise provide, in which event the
by-laws or a certified copy of the resolution, as the case may be, must be
furnished with this Lease. Also the appropriate corporate seal must be affixed
if the Tenant is a corporation.
Page 7
INDUSTRIAL LEASE
(Gross)
1. PARTIES: This Lease, dated, for reference purposes only, December 12, 1995 is
made by and between Five K Investments (herein called "Lessor") and Antenna's
America, Inc. (herein called "Lessee").
2. PREMISES: Lessor hereby leases to Lessee and Lessee leases from Lessor for
the term, at the rental, and upon all of the conditions set forth herein, that
certain real property situated in the County of Jefferson State of Colorado,
commonly known as 4880 Robb Street, Units 1 and 2, Wheatridge, Colorado 80033
and described as Approximately 5,100 Square Feet Office and Warehouse. Said real
property including the land and all improvements thereon, is herein called "the
Premises".
3. TERM:
3.1 Term: The term of this Lease shall be for Two(2) years and one (1) year
option to renew commencing on February 15, 1996 and ending on February 14, 1998
unless sooner terminated pursuant to any provision hereof.
3.2 Delay in Commencement: Notwithstanding said commencement date, if for
any reason Lessor cannot deliver possession of the Premises to Lessee on said
date, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or the obligations of Lessee hereunder
or extend the term hereof, but in such case Lessee shall not be obligated to pay
rent until possession of the Premises is tendered to Lessee; provided, however,
that if Lessor shall not have delivered possession of the Premises within sixty
(60) days from said commencement date, Lessee may, at Lessee's option, by notice
in writing to Lessor within ten (10) days thereafter, cancel this Lease, in
which event the parties shall be discharged from all obligations hereunder. If
Lessee occupies the Premises prior to said commencement date, such occupancy
shall be subject to all provisions hereof, such occupancy shall not advance the
termination date, and Lessee shall pay rent for such period at the initial
monthly rates set forth below.
4. RENT: Lessee shall pay to Lessor as rent for the Premises equal monthly
payments of $2,337.56 , in advance, on the 1st. day of each month of the term
hereof. Lessee shall pay Lessor upon the execution hereof $1,252.20 as rent for
15 days in February (See Rent Provision breakdown in Section 16.31) Rent for any
period during the term hereof which is for less than one month shall be a pro
rata portion of the monthly installment. Rent shall be payable in lawful money
of the United States to Lessor at the address stated herein or to such other
persons or at such other places as Lessor may designate in writing.
5. SECURITY DEPOSIT: Lessee has on deposit with Lessor upon execution hereof
$2,337.56 as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or other charges due hereunder, or
otherwise defaults with respect to any provisions of this Lease, Lessor may use,
apply or retain all or any portion of said deposit for the payment of any rent
or other charge in default or for the payment of any other sum to which Lessor
may become obligated by reason of Lessee's default, or to compensate Lessor for
any loss or damage which Lessor may suffer thereby. If Lessor so uses or applies
all or any portion of said deposit, Lessee shall within ten (10) days after
written demand therefor deposit cash with Lessor in an amount sufficient to
restore said deposit to the full amount hereinabove stated and Lessee's failure
to do so shall be a material breach of this Lease. Lessor shall not be required
to keep said deposit separate from its general accounts. If Lessee performs all
of Lessee's obligations hereunder, said deposit, or so much thereof as has not
theretofore been applied by Lessor, shall be returned, without payment of
interest or other increment for its use, to Lessee (or, at Lessor's option, to
the last assignees, if any, of Lessee's interest hereunder) at the expiration of
the term hereof, and after Lessee has vacated the Premises. No trust
relationship is created herein between Lessor and Lessee with respect to said
Security deposit.
<PAGE>
6. USE:
6.1 Use: The Premises shall be used and occupied only for Office, Showroom,
Storage Warehouse and assembly and for no other purpose.
6.2 Compliance with Law:
(a) Lessor warrants to Lessee that the Premises, in its existing state, but
without regard to the use for which Lessee will use the Premises, does not
violate any applicable building code, regulation or ordinance at the time this
lease is executed. In the event it is determined that this warranty has been
violated, then it shall be the obligation of the lessor, after written notice
from Lessee, to promptly, at the Lessor's sole cost and expense, rectify any
such violation. In the event Lessee does not give to Lessor written notice of
the violation of this warranty within 1 year from the commencement of the term
of this Lease, it shall be conclusively deemed that such violation did not exist
and the correction of the same shall be the obligation of the Lessee.
(b) Except as provided in paragraph 6.2 (a), Lessee shall, at Lessee's
expense, comply promptly with all applicable statutes, ordinances, rules,
regulations, orders, restrictions of record, and requirements in effect during
the term or any part of the term hereof regulating the use by Lessee of the P.
remises. Lessee shall not use nor permit the use of the Premises in any manner
that will tend to create waste or a nuisance or, if there shall be more than one
tenant in the building containing the Premises, shall tend to disturb such other
tenants.
6.3 Condition of Premises: Except as provided in paragraph 6.2 (a) Lessee
hereby accepts the Premises in their condition existing as of the date of the
execution hereof, subject to all applicable zoning, municipal, county and state
laws, ordinances and regulations governing and regulating the use of the
Premises, and accepts this lease subject thereto and to all matters disclosed
thereby arid by any exhibits attached hereto. Lessee acknowledges that neither
lessor nor Lessor's agent has made any representation or warranty as to the
suitability of the Premises for the conduct of Lessee's business.
7. MAINTENANCE REPAIRS AND ALTERATIONS:
7.1 Lessor's Obligations: Subject to the provisions of Paragraphs 6.2(a)
and 9 and except for damage caused by any negligent or intentional act or
omission of Lessee, Lessee's agents, employees, or invitees in which event
Lessee shall repair the damage, Lessor, at Lessor's expense, shall keep in good
order, condition and repair the foundations, exterior walls and the exterior
roof of the Premises. Lessor shall not, however, be obligated to paint such
exterior, not shall Lessor be required to maintain the interior surface of
exterior walls, windows, doors or plate glass. Lessor shall have no obligation
to make repairs under this Paragraph 7.1 until a reasonable time after receipt
of written notice of the need for such repairs. Lessee expressly waives the
benefits of any statute now or hereafter in effect which would otherwise afford
Lessee the right to make repairs at Lessor's expense or to terminate this Lease
because of Lessor's failure to keep the Premises in good order, condition and
repair.
7.2 Lessee's Obligations:
(a) Subject to the provisions of Paragraph 6.2(a), 7 and 9, Lessee, at
Lessee's expense, shall keep in good order, condition and repair the Premises
and every part thereof (whether or not the damaged portion of the Premises or
the means of repairing the same are reasonably or readily accessible to Lessee)
including, without limiting the generality of the foregoing, all plumbing,
heating, air- conditioning, ventilating, electrical and lighting facilities and
equipment within the Premises, fixtures, interior walls and interior surface of
exterior walls, ceilings, windows, doors, plate glass, and skylights, located
within the Premises, and all landscaping, driveways, parking lots, fences and
signs located in the Premises and all sidewalks and parkways adjacent to the
Premises. Lessee expressly waives the benefits of any statute now or hereinafter
in effect which would otherwise afford Lessee the right to make repairs at
Lessor's expense or to terminate this Lease because of Lessor's failure to keep
the Premises in good order, condition and repair.
[initials]
<PAGE>
(b) if Lessee fails to perform Lessee's obligations under this Paragraph
7.2, Lessor may at Lessor's option enter upon the Premises after 10 days' prior
written notice to Lessee, and put the same in good order, condition and repair,
and the cost thereof together with interest thereon at the rate of 10% per annum
shall be due and payable as additional rent to Lessor together with Lessee's
next rental installment.
(c) On the last day of the term hereof, or on any sooner termination,
Lessee shall surrender the Premises to Lessor in the same condition as received,
broom clean, ordinary wear and tear excepted, Lessee shall repair any damage to
the Premises occasioned by the removal of its trade fixtures, furnishings and
equipment pursuant to Paragraph 7.3(d), which repair shall include the patching
and filling of holes and repair of structural damage.
7.3 Alterations and Additions:
(a) Lessee shall not, without Lessor's prior written consent make any
alterations, improvements, additions, or utility installations in, on or about
the Premises, except for nonstructural alterations not exceeding $1,000 in cost.
As used in this Paragraph 7.3 the term "Utility Installation" shall mean bus
ducting, power panels, wiring, fluorescent fixtures, space heaters, conduits,
airconditioning and plumbing. Lessor may require that Lessee remove any or all
of said alterations, improvements, additions or Utility Installations at the
expiration of the term, and restore the Premises to their prior condition.
Lessor may require Lessee to provide Lessor, at Lessee's sole cost and expense,
a lien and completion bond in an amount equal to one and one-half times the
estimated cost of such improvements, to insure Lessor against any liability for
mechanic's and materialmen's liens and to insure completion of the work. Should
Lessee make any alterations, improvements, additions or Utility Installations
without the prior approval of Lessor, Lessor may require that Lessee remove any
or all of such.
(b) Any alterations, improvements, additions or Utility Installations in,
or about the Premises that Lessee shall desire to make and which requires the
consent of the Lessor shall be presented to Lessor in written form, with
proposed detailed plans. If Lessor shall give its consent the consent shall be
deemed conditioned upon Lessee acquiring a permit to do so from appropriate
governmental agencies, the furnishing of a copy thereof to Lessor prior to the
commencement of the work and the compliance by Lessee of all conditions of said
permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials furnished
or alleged to have been furnished to or for Lessee at or for use in the
Premises, which claims are or may be secured by any mechanic's or materialmen's
lien against the Premises or any interest therein. Lessee shall give Lessor not
less than ten (l0) days' notice prior to the commencement of any work in the
Premises, and Lessor shall have the right to post demand, then Lessee shall, at
its sole expense defend itself and Lessor against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises, upon the condition that
if Lessor shall require, Lessee shall furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to such contested lien claim or
demand indemnifying Lessor against liability for the same and holding the
Premises free from the effect of such lien or claim. In addition, Lessor may
require Lessee to pay Lessor's attorneys fees and costs in participating in such
action if Lessor shall decide it is to its best interest to do so.
(d) Unless Lessor requires their removal, as set forth in Paragraph 7.3(a),
all alterations, improvements, additions and Utility installations (whether or
not such Utility Installations constitute trade fixtures of Lessee), which may
be made on the Premises, shall become the property of Lessor and remain upon and
be surrendered with the Premises at the expiration of the term. Notwithstanding
the provisions of this Paragraph 7.3(d), Lessee's machinery and equipment, other
than that which is affixed to the Premises so that it cannot be removed without
material damage to the Premises, shall remain the property of Lessee and may be
removed by Lessee subject to the provisions of Paragraph 7.2(c).
[initials
<PAGE>
8. INSURANCE; INDEMNITY:
8.1 Liability Insurance: Lessee shall, at Lessee's expense obtain and keep
in force during the term of this Lease a policy of Combined Single Limit, Bodily
Injury and Property Damage Insurance insuring Lessor and Lessee against and
liability arising out of the ownership, use, occupancy of maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be a combined
single limit policy in an amount not less than $500,000. The policy shall
contain cross liability endorsements and shall insure performance by Lessee of
the indemnity provisions of this Paragraph 8. The limits of said insurance shall
not, however, limit the liability of Lessee hereunder. In the event that the
Premises constitute a part of a larger property said insurance shall have a
Lessor's Protective Liability endorsement attached thereto. If Lessee shall fail
to procure and maintain said insurance Lessor may, but shall not be required to,
procure and maintain the same, but at the expense of Lessee. Not more
frequently than each 5 years, if, in the reasonable opinion of Lessor, the
amount of liability insurance required hereunder is not adequate, Lessee shall
increase said insurance coverage as required by Lessor. Provided, however, that
in no event shall the amount of the liability insurance increase be more than
fifty percent greater than the amount thereof during the preceding five years of
the term of this Lease. However, the failure of Lessor to require any additional
insurance coverage shall not be deemed to relieve Lessee from any obligations
under this Lease.
8.2 Property Insurance:
(a) Lessor shall obtain and keep in force during the term of this Lease a
policy or policies of insurance covering loss or damage to the Premises, but not
Lessee's fixtures, equipment or tenant improvements in the amount of the full
replacement value thereof, providing protection against all perils including
within the classification of fire, extended coverage, vandalism, malicious
mischief, special extended perils (all risk) but not plate glass insurance. In
addition, the Lessor shall obtain and keep in force, during the term of this
Lease, a policy of rental income insurance covering a period of six months,
with loss payable to Lessor which insurance shall also cover all real estate
taxes and insurance costs for said period. In the event that the Premises
contains sprinklers then the insurance coverage shall include sprinkler leakage.
insurance.
(b) [text deleted and initialed]
(c) [text deleted and initialed]
(d) [text deleted and initialed]
[initials]
<PAGE>
8.3 Insurance Policies: Insurance required hereunder shall be in companies
holding a "General Policyholders Rating" of B plus or better as set forth in the
most current issue of "Best Insurance Guide". Lessee shall deliver to Lessor
copies of policies of liability insurance required under Paragraph 8.1 or
certificates evidencing the existence and amounts of such insurance with loss
payable clauses satisfactory to Lessor. No such policy shall be cancellable or
subject to reduction of coverage or other modification except after ten (10)
days prior written notice of Lessor. Lessee shall, within ten (10) days prior to
the expiration of such policies, furnish Lessor with renewals or "binders"
thereof, or Lessor may order such insurance and charge the cost thereof to
Lessee, which amount shall be payable by Lessee upon demand. Lessee shall not do
or permit to be done anything which shall invalidate the insurance policies
referred to in Paragraph 8.2.
8.4 Waiver of Subrogation: Lessee and Lessor each hereby waives any and all
rights of recovery against the other, or against the officers, employees, agents
and representatives of the other, for loss of or damage to such waiving party or
its property or the property of others under its control, where such loss or
damage is insured against under any insurance policy in force at the time of
such loss or damage. Lessee and Lessor shall, upon obtaining the policies of
insurance required hereunder, give notice to the insurance carrier or carriers
that the forgoing mutual waiver of subrogation is contained in this Lease.
8.5 Indemnity: Lessee shall indemnify and hold harmless Lessor from and
against any and all claims arising from Lessee's use of the Premises, or from
the conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere and shall
further indemnify and hold harmless Lessor from and against any and all claims
arising from any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease or arising from any
negligence of the Lessee, or any of Lessee's agents, contractors, or employees,
and from and against all costs, attorney's fees, expenses and liabilities
incurred in the defense of any such claim or any action or proceeding brought
thereon; and in case any action or proceeding be brought against Lessor by
reason of any such claim, Lessee upon notice from Lessor shall defend the same
at Lessee's expense by counsel satisfactory to Lessor. Lessee, as a material
part of the consideration to Lessor, hereby assumes all risk of damage to
property or injury to persons in, upon or about the Premises arising from any
cause and Lessee hereby waives all claims in respect thereof against Lessor.
8.6 Exemption of Lessor from Liability: Lessee hereby agrees that Lessor
shall not be liable for injury to Lessee's business or any loss of income
therefrom or for damage to the goods, wares, merchandise or other property of
Lessee, Lessee's employees, invitees, customers, or any other person in or about
the Premises, nor shall Lessor be liable for injury to the person of Lessee,
Lessee's employees, agents or contractors, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water, or rain, or from
the breakage, laakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether the said damage or injury results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part or from other sources or places and regardless of whether the cause of such
damage or injury or the means of repairing the same is inaccessible to Lessee.
Lessor shall not be liable for any damages arising from any act or neglect of
any other tenant, if any, of the building in which the Premises are located.
9. DAMAGE OR DESTRUCTION:
9.1 Partial Damage-Insured: Subject to the provisions of Paragraphs 9.3 and
9.4, if the Premises are damaged and such damage was caused by a casualty
covered under an insurance policy required to be maintained pursuant to
Paragraph 8.2, Lessor shall at Lessor's expense repair such damage as soon as
reasonably possible and this Lease shall continue in full force and effect but
Lessor shall not repair or replace Lessee's fixtures, equipment or tenant
improvements.
[initials]
<PAGE>
9.2 Partial Damage-Uninsured: Subject to the provisions of Paragraphs 9.3
and 9.4, if at any time during the term hereof the Premises are damaged, except
by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs, at its expense) and such damage was caused by a casualty not covered
under an insurance policy required to be maintained by Lessor pursuant to
Paragraph 8.2, Lessor may at Lessor's option either (i) repair such damage as
soon as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage to Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence of
such damaged. In the event Lessor elects to give such notice of Lessor's
intention to cancel and terminate this Lease, Lessee shall have the right within
ten (10) days after the receipt of such notice to give written notice to Lessor
of Lessee's intention to repair such damage at Lessee's expense, without
reimbursement form Lessor, in which event this Lease shall continue in full
force and effect, and Lessee shall proceed to make such repairs as soon as
reasonably possible. If Lessee does not give such notice within such 10-day
period this Lease shall be cancelled and terminated as of the date of the
occurrence of such damage.
9.3 Total Destruction: If at any time during the term hereof the Premises
are totally destroyed from any cause whether or not covered by the insurance
required to be maintained by Lessor or not covered by the insurance required to
be maintained by Lessor pursuant to Paragraph 8.2 (including any total
destruction required by any authorized public authority) this Lease shall
automatically terminate as of the date of such total destruction.
9.4 Damage Near End of Term: If the Premises are partially destroyed or
damaged during the last six months of the term of this Lease, Lessor may at
Lessor's option cancel and terminate this Lease as of the date of occurrence of
such damage by giving written notice to Lessee of Lessor's election to do so
within 30 days after the date of occurrence of such damage.
9.5 Abatement of Rent: Lessee's Remedies:
(a) If the Premises are partially destroyed or damaged and Lessor or Lessee
repairs or restores them pursuant to the provisions of this Paragraph 9, the
rent payable hereunder for the period during which such damage, repair or
restoration continues shall be abated in proportion to the degree to which
Lessee's use of the Premises is impaired. Except for abatement of rent, if any,
Lessee shall have no claim against Lessor for any damage suffered by reason of
any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises under
the provisions of this Paragraph 9 and shall not commence such repair or
restoration within 90 days after such obligations shall accrue, Lessee may at
Lessee's option cancel and terminate this Lease by giving Lessor written notice
of Lessee's election to do so at any time prior to the commencement to such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice.
9.6 Termination - Advance Payments: Upon termination of this Lease pursuant
to this Paragraph 9, an equitable adjustment shall be made concerning advance
rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.7 Waiver: Lessee waives the provisions of any Colorado Civil Code
Sections which relate to termination of lessee when the thing leased is
destroyed and agrees that such event shall be governed by the terms of this
Lease.
10. REAL PROPERTY TAXES:
[text deleted and initialed]
[initials]
<PAGE>
10.2 Definition of "Real Property" Tax: As used herein, the term "real
property tax" shall include any form of assessment, license fee, commercial
rental tax, levy, penalty, or tax (other than inheritance or estate taxes),
imposed by any authority having the direct or indirect power to tax, including
any city, county, state or federal government,. or any school, agricultural,
lighting, drainage or other improvement district thereof, as against any legal
or equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part, as against Lessor's right to rent or other income
therefrom, or as against Lessor's business of leasing the Premises or any tax
imposed in substitution, partially or totally, or any tax previously included
within the definition of real property tax, or any additional tax, the nature of
which was previously included within the definition of real property tax.
10.3 Joint Assessment: If the premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or other information as may be reasonably
available. Lessor's reasonable determination hereof, in good faith, shall be
conclusive.
10.4 Personal Property Taxes:
(a) Lessee shall pay prior to delinquency all taxes assessed against and
levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere. When possible, Lessee
shall cause said trade fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee
within 10 days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.
11. UTILITIES:
Lessee shall pay for all gas, heat, light, power, telephone and other
utilities and services supplied to the Premises, together with any taxes
thereon. If any such services are not separately metered to Lessee, Lessee shall
pay a reasonable proportion to be determined by Lessor of all charges jointly
metered with other premises. Lessor warrants that all such utilities are
presently serving the premises.
12. ASSIGNMENT AND SUBLETTING:
12.1 Lessor's Consent Required: Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all. or any part of Lessee's interest in this Lease or in the Premises,
without Lessor's written consent, which Lessor shall not unreasonably withhold.
Any attempted assignment, transfer, mortgage, encumbrance or subletting without
such consent shall be void, and shall constitute a breach of this Lease.
12.2 Lessee Affiliate: Notwithstanding the provisions of Paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled by or
is under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, provided that said assignee assumes, in full, the
obligations of Lessee under this Lease. Any such assignment shall not, in any
way, affect or limit the liability of Lessee under the terms of this Lease even
if after such assignment or subletting the terms of this Lease are materially
changed or altered without the consent of Lessee, the consent of whom shall not
be necessary.
[initials]
<PAGE>
12.3 No Release of Lessee: Regardless of Lessor's consent, no subletting or
assignment shall release Lessee of Lessor's obligation or alter the primary
liability of Lessee to pay the rent and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of rent by lessor from any other
person shall not be deemed to be a waiver by Lessor of any provision hereof.
Consent to one assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting. In the event of default by any assignees of
Lessee or any successor of Lessee, in the performance of any of the terms
hereof, Lessor may proceed directly against Lessee without the necessity of
exhausting remedies against said assignee. Lessor may consent to subsequent
assignments or subletting of this Lease or amendments or modifications to this
Lease with assignees of Lessee, without notifying Lessee, or any successor of
Lessee, and without obtaining its or their consent thereto and such action shall
not relieve Lessee of liability under this Lease.
12.4 Attorney's Fees: In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting, or if
Lessee shall request the consent of Lessor for any act Lessee proposes to do,
then Lessee shall pay Lessor's reasonable attorney's fees incurred in connection
therewith, such attorney's fees not to exceed $250.00 for each such request.
13. DEFAULTS; REMEDIES:
13.1 Defaults: The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any other payment
required to be made by Lessee hereunder, as and when due, where such failure
shall continue for a period of three days after written notice thereof from
Lessor to Lessee.
(c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee,
other than described in paragraph (b) above, where such failure shall continue
for a period of 30 days after written notice hereof from Lessor to Lessee;
provided, however, that if the nature of Lessee's default is such that more than
30 days are reasonably required for its cure, then Lessee shall not be deemed to
be in default if Lessee commenced such cure within said 30-day period and
thereafter diligently prosecutes such cure to completion.
(d) (i) The making by Lessee of any general arrangement for the benefit of
creditors; (ii) the filing by or against Lessee of a petition to have Lessee
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Lessee, the same is dismissed within 60 days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to lessee within 30 days; or (iv) the attachment, execution or
other judicial. seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within 30 days.
(e) The discovery by lessor than any financial statement given to Lessor by
lessee, any assignee of Lessee, any sublessee of lessee, any successor in
interest of Lessee or any guarantor of Lessee's obligation hereunder, and any of
them, was materially false.
13.2 Remedies: In the event of any such material default or breach by
Lessee, lessor may at any time thereafter, with or without notice of demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Lessee shall immediately
surrender possession of the Premises to Lessor. In such event Lessor shall be
entitled to recover from Lessee all damage incurred by Lessor by reason of
Lessee's default including, but not limited to, the cost of recovering
possession of the Premises; expenses of releasing, including necessary
renovation and alteration of the Premises, reasonable attorney's fees, and any
[initials]
<PAGE>
real estate commission actually paid; the work at the time of award by the court
having jurisdiction thereof of the amount by which the unpaid rent for the
balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Lessee provides could be reasonably
avoided; that portion of the leasing commission paid by lessor pursuant to
Paragraph 15 applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease shall
continue in effect whether or not Lessee shall have abandoned the Premises. In
such event Lessor shall be entitled to enforce all of Lessor's rights and
remedies under this Lease, including the right to recover the rent as it become
due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under the
laws or judicial decisions of the State of Colorado.
13.3 Default by Lessor: Lessor shall not be in default unless Lessor fails
to perform obligations required of Lessor within a reasonable time, but in no
event later than thirty (30) days after written notice by Lessee to Lessor and
to the holder of any first mortgage or deed of trust covering the Premises whose
name and address shall have theretofore been furnished to Lessee in writing,
specifying wherein Lessor has failed to perform such obligation; provided,
however, that if the nature of Lessor's obligation is such that more than thirty
(30) days are required for performance then Lessor shall not be in default if
Lessor commences performance within such 30-day period and thereafter diligently
prosecutes the same to completion.
13.4 Late Charges: Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on the Lessor by
the terms of any mortgage or trust deed covering the Premises. Accordingly, if
any installment of rent or any other sum due from Lessee shall not be received
by Lessor or Lessor's designee within ten (10) days after such amount shall be
due, Lessee shall pay to Lessor a late charge equal to 6% of such overdue
amount. The parties agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's default with respect to such overdue amount, nor prevent Lessor from
exercising any of the other rights and remedies granted hereunder.
14. CONDEMNATION:
If the Premises or any portion thereof are taken under the power of eminent
domain, or sold under the threat of the exercise of said power (all of which are
herein called "Condemnation"), this Lease shall terminate as to the part so
taken as of the date the condemning authority takes titles or possession,
whichever first occurs. If more than 10% of the floor area of the improvements
on the premises, or more than 25 % of the land area of the Premises which is not
occupied by any improvements, is taken by condemnation, Lessee may, at Lessee's
option, to be exercised in writing only within ten (10) days after Lessor shall
have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the rent shall be reduced in the proportion
that the floor area taken bears to the total floor area of the building situated
on the Premises. Any award for the taking of all or any part of the Premises
under the power of eminent domain or any payment made under threat of the
exercise of such power shall be the property of Lessor, whether such award shall
be made as compensation for diminution in value of the leasehold or for the
taking of the fee, or as severance damages; provided, however, that Lessee shall
be entitled to any award for loss of or damage to Lessee's trade fixtures and
removable personal property. In the event that this Lease is not terminated by
reason of such condemnation, Lessor shall, to the extent of severance damages
[initials]
<PAGE>
received by Lessor in connection with such condemnation, repair any damage to
the Premises caused by such condemnation except to the extent that Lessee has
been reimbursed therefor by the condemning authority. lessee shall pay amount in
excess of such severance damages required to complete such repair.
15. BROKER'S FEE:
[Section deleted and initialed]
16. GENERAL PROVISIONS:
16.1 Estoppel Certificates:
(a) Lessee shall at any time upon not less than ten (10) days prior written
notice from Lessor execute, acknowledge and deliver to Lessor a statement in
writing (i) certifying that this lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder, or specifying such defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises.
(b) Lessee's failure to deliver such statement within such time shall be
conclusive upon Lessee (i) that this Lease is in full force and effect, without
modification except as may be represented by Lessor, (ii) that there are no
uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance or such failure may be considered by
Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance or refinance the Premises, or any part
thereof, Lessee hereby agrees to deliver to any lender designated by Lessor such
financial contracts of Lessee as may be reasonably required by such lender. Such
contracts shall include the past three years' financial history of Lessee. All
such financial history shall be received by Lessor in confidence and shall be
used only for the purposes herein set forth.
16.2 Lessor's Liability: The term "Lessor" as used herein shall mean only
the owner or owners at the time in question of the fee title or a Lessee's
interest in a ground lease of the Premises, and except as expressly provided in
Paragraph. 15, in the event of any transfer of such title or interest, Lessor
herein named (and in case of any subsequent transfers the then grantor) shall be
relieved from and after the date of such transfer of all liability as respects
Lessor's obligations thereafter to be performed, provided that any funds in the
hands of Lessor or the then grantor at the time of such transfer, in which
Lessee has an interest, shall be delivered to the grantee. The obligations
contained in this Lease to be performed by Lessor shall, subject as aforesaid,
be binding on Lessor's successors and assigns, only during their respective
periods of ownership.
16.3 Severability: The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provisions hereof.
[initials]
<PAGE>
16.4 Interest on Past-due Obligations: Except as expressly herein provided,
any amount due to Lessor not paid when due shall bear interest at 12% per annum
from the date due. Payment of such interest shall not excuse or cure any default
by Lessee under this Lease, provided, however, that interest shall not be
payable on late charges incurred by Lessee nor on any amount upon which late
charges are paid by Lessee.
16.5 Time of Essence: Time is of the essence.
16.6 Captions: Article and paragraph captions are not a part hereof.
16.7 Incorporation of Prior Agreements: Amendments: This Lease contains all
agreements of the Parties with respect to any matter mentioned herein. No prior
agreement or understanding pertaining to any such matter shall be effective.
This Lease may be modified in writing only, signed by the parties in interest at
the time of the modification. Except as otherwise state in this Lease, Lessee
hereby acknowledges that neither the real estate broker listed in Paragraph 15
hereof nor any cooperating broker on this transaction nor the Lessor or any
employees or agents of any of said persons has made any oral or written
warranties or representations to Lessee relative to the condition or use by
Lessee of said Premises and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act, the legal use and
adaptability of the Premises and the compliance thereof with all applicable laws
and regulations in effect during the term of this Lease except as otherwise
specifically stated in this lease.
16.8 Notices: Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified mail, and if
given personally or by mail, shall be deemed sufficiently given if addressed to
Lessee or to Lessor at the address noted below the signature of the respective
parties, as the case may be. Either party may by notice to the other specify a
different a address for notice purposes for Lessee that address is corporate
address listed below. A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate by notice to
Lessee.
16.9 Waivers: No waiver by Lessor of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by lessee of
the same or any other provision. Lessor's consent to or approval of any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so accepted,
regardless of lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
16.10 Recording: Lessee shall not record this Lease without Lessor's prior
written consent, and such recordation shall, at the option of Lessor, constitute
a non-curable default of Lessee hereunder. Either party shall, upon written
request of the other, execute, acknowledge and deliver to the other a short form
"memorandum" of this Lease for recording purposes.
16.11 Holding Over: If Lessee remains in possession of the Premises or any
part thereof after the expiration of the term hereof without the express written
consent of Lessor, such occupancy shall be a tenancy from month to month at a
rental in the amount of the last monthly rental plus all other charges payable
hereunder, and upon all the terms hereof applicable to a month-to- month
tenancy.
16.12 Cumulative Remedies: No remedy or election hereunder shall be deemed
exclusive, but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
[initials]
<PAGE>
16.13 Covenants and Conditions: Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
16.14 Binding Effect: Choice of Law: Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions of
Paragraph 16.2, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State of Colorado.
16.15 Subordinates:
(a) This Lease, at Lessor's option, shall be subordinate to any ground
lease, mortgage, deed of trust, or any other hypothecation for security now or
hereafter placed upon the real property of which the Premises are a part and to
any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extension thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms, if any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, whether this Lease is dated
prior or subsequent to the dateof said mortgage, deed of trust or ground lease
or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate such
subordination or to make this Lease prior to the lien of any mortgage, deed of
trust or ground lease, as the case may be, and failing to do so within ten (10)
days after written demand does hereby make, constitute and irrevocably appoint
Lessor as Lessee's attorney in fact and in Lessee's name, place and stead, to do
so.
16.16 Attorney's Fees: If either party or the broker named herein brings an
action to enforce the terms hereof or declare rights hereunder, the prevailing
party in any such action, on trial or appeal, shall be entitled to his
reasonable attorney's fees to be paid by the losing party as fixed by the court.
The provisions of this paragraph shall inure to the benefit of the broker named
herein who seeks to enforce a right hereunder.
16.17 Lessor's Access: Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting the same,
showing the same to prospective purchasers, lenders or lessees, and making such
alterations, repair, improvements or additions to the Premises or to the
building of which they are a part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises any ordinary "For Sale"
signs and Lessor may at any time during the last 120 days of the term hereof
place on or about the Premises any ordinary "For Lease" signs all without rebate
or rent or liability to Lessee.
16.18 Signs and Auctions: Lessee shall not place any sign upon the Premises
or conduct any auction thereon without Lessor's prior written consent, except
that Lessee shall have the right, without the prior permission of Lessor to
place ordinary and usual for rent or sublet signs thereon.
16.19 Merger: The voluntary or other surrender of this Lease by Lessee, or
a mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
16.20 Corporate Authority: If Lessee is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the Bylaws of said
corporation, and that this Lease is binding upon said Corporation in accordance
[initials]
<PAGE>
with its terms. If Lessee is a corporation, Lessee shall, within thirty (30)
days after execution of this Lease, deliver to Lessor a certified copy of a
resolution of the Board of Directors of said corporation authorizing or
ratifying the execution of this Lease.
16.21 Consents: Wherever in this Lease the consent of one party is required
to an act of the other party such consent shall not be unreasonably withheld.
16.22 Guarantor: In the event there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under Paragraphs 16.1 and
16.20 of this Lease.
16.23 Quiet Possession: Upon Lessee paying the fixed rent reserved
hereunder and observing and performing all of the covenants, conditions and
provisions on lessee's part to be observed and performed hereunder, Lessee shall
have quiet possession of the Premises for the entire term hereof subject to all
of the provisions of this Lease.
16.24 Options: In the event that the Lessee, under the terms of this Lease,
has any option to extend the term of this Lease, or any option to purchase the
premises, or any right of first refusal to purchase the premises or other
property of Lessor, then each of such options and rights are personal to Lessee
and may not be exercised or be assigned, voluntarily or involuntarily, by or to
any one other than Lessee except that it may be exercised by or assigned to any
of the entities described in paragraph 12.2 hereof for whom Lessee does not need
the consent of Lessor to assign this lease. In the event that Lessee hereunder
has any multiple options to extend this Lease a later option to extend the lease
cannot be exercised unless the prior option has been so exercised. No option may
be exercised at a time when the Lessee is in default under its obligations under
this Lease.
16.25 Multiple Tenant Building: In the event that the Premises are part of
a larger building or group of buildings then Lessee agrees that it will abide
by, keep and observe all reasonable rules and regulations which Lessor may make
from time to time for the management, safety, care, and cleanliness of the
building and grounds, the parking of vehicles and the preservation of good order
therein as well as for Lessee will promptly pay its prorata share, as
reasonably determined by Lessor, of any maintenance or repair of such portion of
the Premises or such portion of the property of which the premises are a part,
which are common areas or used by Lessee and other occupants thereof. The
violations of any such rules and regulations, or the failure to pay such prorata
share of costs, shall be deemed a material breach of this Lease by Lessee.
16.26 Hazardous Substances: Lessee covenants with Lessor to notify Lessor
of any and all hazardous substances (as defined below) generated or stored at
the premises, to comply with all obligations imposed by applicable law, rules,
regulations or requirements of any governmental authority upon such generation
and storage of hazardous substances, to prohibit any generation, storage, or
disposal or hazardous substances at the premises except as permitted by the
lease, to deliver promptly to Lessor true and complete copies of all notice
received by Lessee from any governmental authority with respect to the
generation, storage or disposal by Lessee of hazardous substances, to promptly
notify Lessor of any spills or accidents involving a hazardous substance, and to
permit reasonable entry onto the premises by Lessor for verification of
Lessee's compliance with this covenant. Lessee agrees to utilize only
transporters approved by the Environmental Protection Agency and State of
Colorado to deliver and remove hazardous substances from the premises. Lessee
also agrees to indemnify and defend Lessor (with legal counsel reasonably
acceptable to Lessor) from and against any costs, fees or expenses, (including,
without limitation, clean-up expenses, third party claims and environmental
impairment expenses, loss of rent, and reasonable attorneysr fees and expenses)
incurred by Lessor and in connection with Lessee's generation, storage or
disposal of hazardous substances. This indemnification by Lessee shall survive
the termination or expiration of this Lease. "Hazardous Substances' shall mean:
[initials]
<PAGE>
(1) 'Hazardous substances' as defined in the Comprehensive Environmental
Response, Compensation and Liability Act, as amended;
(2) 'PCB's' as defined in 40 C.F.R. 761, or analogous regulations promulgated
under the Toxic Substances Control Act, as amended;
(3) 'Asbestos' as defined in 29 C.F.R. 1910.1001, et seq., and analogous
regulations promulgated under the Occupational Safety and Health Act of
1970, as amended;
(4) Oil and petroleum based products;
(5) Radioactive material or waste;
(6) Biological and other medical products and waste material; and
(7) 'Hazardous wastes' as defined in Resource Conservation and Recovery Act, as
amended;
as such acts may be amended from time to time, and as such terms may be
expanded by additional legislation of a general nature.
At Landlord's option, in the 60 days prior to the termination of the
lease, Landlord may require at Tenant's expense, to provide an
environmental audit to Landlord for the premises, where Landlord has a
reasonable basis for such request.
16.27 Additional Provisions:
a. There are six (6) parking spaces with these units.
b. Lessee pays for Gas, Electric and Trash Collection.
c. Lessor will install a 3 ft. x 6'8" opening in office wall between
Units 1 & 2.
16.28 A late payment of 20% is due if rent is received after the 10th of
any month.
16.29 Rent breakdown is as follows:
February 15, 1996 to February 14, 1997 is $5.50 psf or $2,337.56 a month.
February 15, 1997 to February 14, 1998 is $5.75 psf or $2,443.75 a month.
One year option to renew lease
February 15, 1998 to February 14, 1999 is $6.00 psf or $2,550.00 a month.
16.30 HVAC: ANTENNAS AMERICA, INC. will have the heating and
air-conditioning units inspected and maintained semi- annually at their expense.
Maintenance of the units is defined as inspection of the compressors, coils,
controls and heat exchangers. Parts will include filters, belts and
miscellaneous supplies. All other expenses associated with the heating and
air-conditioning system will be at lessor's expense.
16.31 No outside storage of any type allowed.
16.32 Lessee is responsible for snow removal immediately outside this
unit.
16.33 As it related to Paragraph 9.4, both lessor and lessee will
have have equal rights
[initials]
<PAGE>
The parties hereto have executed this Lease at the place on the dates specified
immediately adjacent to their respective signatures.
If this Lease has been filled in it has been prepared for submission to your
attorney for his approval. No representation or recommendation is made by the
real estate broker or its agents or employees as to the legal sufficiency, legal
effect, or tax consequences of this Lease or the transaction relating thereto.
Executed at HK Bldgs. HK Buildings
------------------------------- -----------------------------------
on 1-8-96 By /s/ Harold Kunz
--------------------------------------- ---------------------------------
Address Harold Kunz By
---------------------------------- ---------------------------------
11445 W. I-70 Frontage Rd. North
---------------------------------- "LESSOR (Corporate Seal)
Wheat Ridge, CO 80033
----------------------------------
Executed at Antennas America, Inc.
------------------------------- -----------------------------------
on 1/5/96 By /s/ Randy Marx
--------------------------------------- ---------------------------------
Address 4880 Robb St. #101 By
---------------------------------- ---------------------------------
---------------------------------- "LESSEE" (Corporate Seal)
----------------------------------
INDUSTRIAL LEASE
(Gross)
1. PARTIES: This Lease, dated, for reference purposes only, April 29, 1996 is
made by and between Five K Investments (herein called "Lessor") and Antennas
America, Inc. (herein called "Lessee").
2. PREMISES: Lessor hereby leases to Lessee and Lessee leases from Lessor for
the term, at the rental, and upon all of the conditions set forth herein, that
certain real property situated in the County of Jefferson, State of Colorado,
commonly known as approximately 5,000 square feet and described as 4880 Robb
Street, Units 3 & 9, Wheat Ridge, Colorado 80033. Said real property including
the land and all improvements thereon, is herein called "the Premises".
3. TERM:
3.1 Term The term of this Lease shall be for three (3) years commencing on
June 1, 1996 and ending on May 31, 1999, unless sooner terminated pursuant to
any provision hereof.
3.2 Delay in Commencement: Notwithstanding said commencement date, if for
any reason Lessor cannot deliver possession of the Premises to Lessee on said
date, Lessor shall not be subject to any liability therefore, nor shall such
failure affect the validity of this Lease or the obligations of Lessee hereunder
or extend the term hereof, but in such case Lessee shall not be obligated to pay
rent until possession of the Premises is tendered to Lessee; provided, however,
that if Lessor shall not have delivered possession of the Premises within sixty
(60) days from said commencement date, Lessee, may, at Lessee's option, by
notice in writing to Lessor within ten (10) days thereafter, cancel this Lease,
in which event the parties shall be discharged from all obligations hereunder.
If Lessee occupies the Premises prior to said commencement date, such occupancy
shall be subject to all provisions hereof, such occupancy shall not advance the
termination date, and Lessee shall pay rent for such period at the initial
monthly rates set forth below.
4. RENT: Lessee shall pay to Lessor as rent for the Premises equal monthly
payment of Two Thousand Two Hundred Ninety-one and 67/100 Dollars ($2,291.67),
in advance, on the 1st day of each month of the term hereof. Lessee shall pay
Lessor upon the execution hereof $2,291.67 as rent for June. (See Rent Schedule
below.)
Annually Monthly
-------- -------
6/1/96 - 5/31/97 @ $5.50/psf $27,500.00 $2,291.67
6/1/97 - 5/31/98 @ $5.75/psf $28,750.00 $2,395.83
6/1/98 - 5/31/99 @ $6.00/psf $30,000.00 $2,500.00
----------
$86,250.00
5. SECURITY DEPOSIT: Lessee shall deposit with Lessor upon execution hereof
$2,291.67 as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or other charges due hereunder, or
otherwise defaults with respect to any provisions of this Lease, Lessor may use,
apply or retain all or any position of said deposit for the payment of any rent
or other charge in default or for the payment of any other sum to which Lessor
may become obligated by reason of lessee's default. Lessor shall not be required
to keep said deposit separate from its general accounts. If Lessee performs all
of Lessee's obligations hereunder, said deposit, or so much thereof as has not
theretofore been applied by Lessor, shall be returned, without payment of
interest or other increment for its use, to Lessee (or, at Lessor's option, to
the last assignees, if any, of Lessee's interest hereunder) at the expiration of
the term hereof, and after Lessee has vacated the Premises. No trust
relationship is created between Lessor and Lessee with respect to said Security
Deposit.
6. USE
6.1 Use: The Premises shall be used and occupied only for office, assembly,
storage and manufacturing and for no other purpose without Lessor's prior
consent not unreasonably withheld.
6.2 Condition of Premises: Lessee hereby accepts the Premises in their condition
existing as of the date of tile execution hereof, and will comply with all
applicable zoning, municipal, county and state laws, ordinances and regulations
governing and regulating the use of the Premises, and accepts this Lease subject
thereto all matters disclosed thereby and by any exhibits attached hereto.
[initials]
<PAGE>
7. MAINTENANCE AND ALTERATIONS:
7.1 Lessor's Obligations: Subject to the provisions of paragraphs 6.2(a) and 9
and except for damage caused by any negligent or intentional act or omission of
Lessee, Lessee's agents, employees, or invitees in which event Lessee shall
repair the damage, Lessor, at Lessor's expense, shall keep in good order,
condition and repair the foundations, exterior walls and the exterior roof of
tile Premises. Lessor shall not, however, be obligated to paint such exterior,
nor shall Lessor be required to maintain the interior surface of exterior walls,
windows, doors or plate glass. Lessor shall have no obligation to make repairs
under this Paragraph 7.1 until a reasonable time after receipt of written notice
of the need for such repairs. Lessor warrants building structurally sound and
mechanical and HVAC in good working order and guarantees both for first 12
months except for routine maintenance.
7.2 Lessee's Obligations:
(a) Subject to the provisions of Paragraph 6.2(a), 7 and 9, lessee, at
Lessee's expense, shall keep in good order, condition and repair the Premises
and every part thereof (whether or not the damaged portion of the Premises or
the means of repairing the same are reasonably or readily accessible to Lessee)
including, without limiting the generality of the foregoing, all plumbing,
heating, air conditioning, ventilating, electrical and lighting facilities and
equipment within the Premises, fixtures, interior walls and interior surface of
exterior walls, ceilings, windows, doors, and plate glass and skylights located
within the premises, and lease signs and side walk immediately to front of this
unit. Lessee will have heating and air conditioning units serviced a minimum of
two (2) times per year. Lessee will send a copy of service work to Lessor within
15 days after service work is completed, as long as maintenance is in compliance
with these terms. Landlord to make any repairs in excess of $100.00.
(b) If Lessee fails to perform Lessee's obligations under this Paragraph
7.2, Lessor may at Lessor's option enter upon the Premises after 10 days prior
written notice to Lessee, and put the same in good order, condition and repair
and the cost thereof together with interest thereon at the rate of 10% per annum
shall be due and payable, if not so paid, as additional rent to Lessor together
with Lessee's next rental installment.
(c) On the last day of the term hereof, or on any sooner termination,
Lessee shall surrender the Premises to Lessor in the same condition as received,
broom clean, ordinary wear, tear and casualty excepted, Lessee shall repair any
damage to the Premises occasioned by the removal of its trade fixtures,
furnishings and equipment pursuant to Paragraph 7.3(d), which repair shall
include the patching and filling of holes and repair of structural damage.
7.3 Alterations and Additions:
(a) Lessee shall not, without Lessor's prior written consent, not
unreasonably withheld, make any alterations, improvements, additions, or Utility
Installations in, or about the Premises, except for nonstructural alterations
not exceeding $1,000 in cost. As used in this Paragraph 7.3 the term "Utility
Installation" shall mean bus ducting, power panels, wiring, fluorescent
fixtures, space heaters, conduits, air conditioning and plumbing. Lessor may
require that Lessee remove any or all of said alterations, improvements,
additions or Utility Installations at the expiration of the term, and restore
the Premises to their prior condition. Lessor may require Lessee to provide
Lessor, at Lessee's sole cost and expense, a lien and completion bond in an
amount equal to one and one-half times the estimated cost of such improvements,
to insure Lessor against any liability for mechanic's and materialmen's liens
and to insure completion of the work. Should Lessee make any alterations,
improvements, additions or Utility Installations without the prior approval of
Lessor, Lessor may require that Lessee remove any or all of such.
(b) Any alterations, improvements, additions or Utility Installations in,
or about the Premises that Lessee shall desire to make and which requires the
consent of the Lessor shall be presented to Lessor in written form, with
proposed detailed plans. If Lessor shall give its consent the consent shall be
deemed conditioned upon Lessee acquiring a permit to do so from appropriate
governmental agencies, the furnishing of a copy thereof to Lessor prior to the
commencement of the work and the compliance by Lessee of all conditions of said
permit in a prompt and expeditious manner. Lessor shall not unreasonably
withhold or delay such consent.
2 [initials]
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(c) Lessee shall pay, when due, all claims for labor or materials furnished
to or for Lessee at or for use in the Premises, which claims are or may be
secured by any mechanic's or materialmen's lien against the Premises or any
interest therein. Lessee shall give Lessor not less than ten (10) days' notice
prior to the commencement of any work in the Premises, and Lessor shall have
tile right to post demand, then Lessee shall, at its sole expense defend itself
and Lessor not less than ten (10) day's notice prior to the commencement of any
work in the Premises, and Lessor shall have the right to post demand, then
Lessee shall, at its sole expense defend itself and Lessor against the same and
shall pay and satisfy any such adverse judgement that may be rendered thereon
before the enforcement thereof against the Lessor or the Premises, upon the
condition that if Lessor shall require, Lessee shall furnish to Lessor a surety
bond satisfactory to lessor in an amount equal to such contested lien claim or
demand indemnifying Lessor against liability for the same and holding the
Premises free from the effect of such lien or claim.
(d) Unless Lessor requires their removal, as set forth in Paragraph 7.3
(a), all alterations, improvements, additions and Utility Installations, which
may be made on the Premises, shall become the property of Lessor and remain upon
and be surrendered with the Premises at the expiration of the term.
Notwithstanding the provisions of this Paragraph 7.3(d), Lessee's machinery and
equipment, shall remain the property of Lessee and may be removed by Lessee
subject to the provisions of Paragraph 7.2 (c).
8. INSURANCE: INDEMNITY
8.1 Liability Insurance: Lessee shall at Lessee's expense obtain and keep in
force during the term of this Lease a policy of Combined Single Limit, Bodily
Injury and Property Damage Insurance insuring Lessor and Lessee against any
liability arising out of the Lessee's, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be a combined
single limit policy in an amount not less than $1,000,000. The policy shall
contain cross liability endorsements and shall insure performance by Lessee of
the indemnity provisions of this Paragraph 8. The limits of said insurance shall
not, however, limit the liability of Lessee hereunder. In the event that the
Premises constitute a part of a larger property said insurance shall have a
Lessor's Protective Liability endorsement attached thereto. If Lessee shall fail
to procure and maintain said insurance Lessor may, but shall not be required to,
procure and maintain the same, but at the expense of Lessee. Not more frequently
than each 5 years, if, in the reasonable opinion of Lessor, the amount of
liability insurance required hereunder is not adequate, Lessee shall increase
said insurance coverage as required by Lessor. Provided, however, that in no
event shall the amount of the liability insurance increase be more than fifty
percent greater than the amount thereof during the preceding five years of the
term of this Lease. However, the failure of Lessor to require any additional
insurance coverage shall not be deemed to relieve Lessee from any obligations
under this Lease.
8.2 Property Insurance:
(a) Lessor shall obtain and keep in force during the term of this Lease a
policy or policies of insurance covering loss or damage to the Premises, but not
Lessee's fixtures, equipment or lessee improvements in the amount of the full
replacement value thereof, providing protection against all perils including
within the classification of fire, extended coverage, vandalism, malicious
mischief, special extended perils (all risk) but not plate glass insurance. In
addition, the Lessor shall obtain and keep in force, during the term of this
Lease, a policy of rental income insurance covering a period of six months, with
loss payable to Lessor which insurance shall also cover all real. estate taxes
and insurance costs for said period. In the event the Premises contains
sprinklers, then the insurance coverage shall include sprinkler leakage
insurance.
(b)[section deleted and initialed] 4-29-96
(c) If the Premises being leased herein are part of a larger property, then
Lessee shall not be responsible for paying any increase in the property
insurance caused by the acts or omissions of any other lessee of the building of
which the Premises are a part.
(d) Lessee shall pay any such premium increases to Lessor within 30 days
after receipt of Lessee of a copy of the premium statement or other satisfactory
evidence of the amount due. If the insurance policies maintained hereunder cover
other improvements in addition to the Premises, Lessor shall also deliver to
Lessee a statement of the amount of such increase attributable to the Premises
3
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and showing in reasonable detail the manner in which such amount was computed.
If the term of this Lease shall not expire concurrently with the expiration of
the period covered by such insurance, Lessee's liability for premium increases
shall be prorated on an annual basis.
8.4 Waiver of Subrogation: Lessee and Lessor each hereby waives any and all
rights of recovery against the other, or against the officers, employees, agents
and representatives of the other, for loss of or damage to such waiving party or
its property or the property of others under its control, where such loss or
damage is required to be insured against under the terms of this Lease. Lessee
and Lessor shall, upon obtaining the policies of insurance required hereunder,
give notice to the insurance carrier or carriers that the foregoing mutual
waiver of subrogation is contained in this Lease.
8.5 Indemnity: Lessee shall indemnify and hold harmless Lessor from and against
any and all claims arising from Lessee's use of the Premises, or from the
conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere and shall
further indemnify and hold harmless Lessor from and against any and all claims
arising from any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease or arising from any
negligence of the Lessee, or any of Lessee's agents, contractors, or employees,
and from and against all costs, attorney's fees, expenses and liabilities
incurred in the defense of any such claim, Lessee upon notice from Lessor shall
defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor. Lessee, as a material part of the consideration to Lessor, hereby
assumes all risk of damage to property or injury to persons in, upon or about
the Premises arising from any cause, and Lessee hereby waives all claims in
respect thereof against Lessor.
8.6 Exemption of Lessor from Liability: Unless caused by Lessor's negligence,
Lessee hereby agrees that Lessor shall not be liable for injury to Lessee's
business or any loss of income therefrom or for damage to the goods, wares,
merchandise or other property of Lessee, Lessee's employees, invitees, customers
or any other person in or about the Premises, nor shall Lessor be liable for
injury to the person of Lessee, Lessee's employees, agents or contractors,
whether such damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction or
other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether the said
damage or injury results from conditions arising upon the Premises or upon other
portions of the building of which the Premises are a part or from other sources
or places and regardless of whether the cause of such damage or injury or the
means of repairing the same is inaccessible to Lessee. Lessor shall not be
liable for any damages arising from any act or neglect of any other lessee, if
any, of the building in which the Premises are located.
9. DAMAGE OR DESTRUCTION:
9.1 Partial Damage-Insured: Subject to the provisions of Paragraphs 9.3 and 9.4
if the Premises are damaged and such damage was caused by a casualty covered
under an insurance policy required to be maintained pursuant to Paragraph 8.2,
Lessor shall at Lessor's expense repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect but Lessor shall
not repair or replace Lessee's fixtures, equipment or lessee improvements.
9.2 Partial Damage-Uninsured: Subject to the provisions of Paragraphs 9.3 and
9.4, if at any time during the term hereof the Premises are damaged, except by a
negligent or willful act of Lessee (in which event Lessee shall make the
repairs, at its expense) and such damage was caused by a casualty not covered
under an insurance policy maintained by Lessor. Lessor may at Lessor's option
either (i) repair such force and effect, or (ii) give written notice to Lessee
within thirty (30) days after the date of the occurrence of such damage of
Lessor's intention to cancel and terminate this Lease as of the date of the
occurrence of such damage. In the event Lessor elects to give such notice of
Lessor's intention to cancel and terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give written
4 [initials]
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notice to Lessor of Lessee's intention to repair such damage at Lessee's
expense, without reimbursement from Lessor, in which event this Lease shall
continue in full force and effect, and Lessee shall proceed to make such repairs
as soon as reasonably possible. If Lessee does not give such notice within such
10-day period this Lease shall be canceled and terminated as of the date of the
occurrence of such damage, and neither party shall have further right or
obligations hereunder.
9.3 Total Destruction: If at any time during the term hereof the Premises are
totally destroyed from any cause whether or not covered by the insurance
required to be maintained by lessor pursuant to paragraph 8.2 (including any
total destruction required by any authorized public authority) this Lease shall
automatically terminate as of the date of such total destruction, and neither
party shall have further right or obligations hereunder.
9.4 Damage Near End of Term: If the Premises are partially destroyed or damaged
during the last six months of the term of this Lease and the same cannot be
repaired within 30 days thereafter, Lessor or Lessee may, at their option,
cancel and terminate this Lease as of the date of occurrence of such damage by
giving written notice to Lessee of Lessor's election to do so within 10 days
after the date of occurrence of such damage.
9.5 Abatement of Rent: Lessee's Remedies:
(a) If the Premises are partially destroyed or damaged, the rent payable
hereunder for the period during which such damage, repair or restoration
continues shall be abated in proportion to the degree to which Lessee's use of
the Premises is impaired. Except for abatement of rent, if any, Lessee shall
have no claim against Lessor for any damage suffered by reason of any such
damage, destruction, repair or restoration, unless damage caused by Lessor's
negligence.
(b) If Lessor shall be obligated to repair or restore the Premises under
the provisions of this Paragraph 9 and shall not commence such repair or
restoration within 90 days after such obligations shall accrue, Lessee may at
Lessee's option cancel and terminate this Lease by giving Lessor written notice
of Lessee's election to do so at any time prior to the commencement of such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice.
9.6 Termination-Advance Payments: Upon termination of this Lease pursuant to
this Paragraph 9, an equitable adjustment shall be made concerning advance rent
and any advance payments made by Lessee to Lessor, Lessor shall, in addition,
return to Lessee so much of Lessee's security deposit as has not theretofore
been applied by Lessor.
10.1 [Section deleted and initialed. Added "Lessor shall pay all property taxes
applicable to the Premises."] 4-29-96
10.2 Definition of "Real Property" Tax: As used herein, the term "real property
tax" shall include any form of assessment, license fee, commercial rental tax,
levy, penalty, or tax (other than inheritance or estate taxes), imposed by any
authority having the direct or indirect power to tax, including any city,
county, state or federal government, or any school, agricultural, lighting,
drainage or other improvement district thereof, as against any legal or
equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part, as against Lessor's right to rent or other income
therefrom, or as against Lessor's business of leasing the Premises or any tax
imposed in substitution, partially or totally, of any tax previously included
within the definition of real property tax, or any additional tax, the nature of
which was previously included within the definition of real property tax.
Special assessments taxes to be prorated over term of Lease on) a pro rata
basis.
10.3 Joint Assessment; If the premises are not separately assessed, Lessee's
liability shall be an equitable proportion of the real property taxes for all of
the land and improvements included within the tax parcel assessed, such
proportion to be determined by Lessor from the respective valuations assigned
it) the assessor's work sheets or other information as may be reasonably
5 [initials]
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available. Lessor's reasonable determination hereof, in good faith, shall be
conclusive.
10.4 Personal Property Taxes:
(a) Lessee shall pay prior to delinquency all taxes assessed against and
levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere. When possible, Lessee
shall cause said trade fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
(b) If any of property, Lessee shall of a written statement Lessee's said
personal property shall be assessed with Lessor's real pay Lessor the taxes
attributable to Lessee within 10 days after receipt setting forth the taxes
applicable to Lessee's property.
11. UTILITIES
Lessee shalt pay for all gas, heat, light, power, telephone and other
utilities and services supplied to the Premises, together with any taxes
thereon, if any such services are not separately metered to Lessee, Lessee shall
pay a reasonable proportion to be determined by Lessor of all charges jointly
metered with other premises. Lessor warrants that all such utilities are
presently serving the premises.
12. ASSIGNMENT AND SUBLETTING:
12.1 Lessor's Consent Required: Lessee shall not voluntarily or by operation of
law assign, transfer, mortgage, sublet, or other-wire transfer or encumber all
or any part of Lessee's interest in this Lease or in the Premises, without
Lessor's written consent, which Lessor shall not unreasonably withhold. Any
attempted assignment, transfer, mortgage, encumbrance or subletting without such
consent shall be void, and shall constitute a breach of this Lease.
12.2 Lessee Affiliate: Notwithstanding the provisions of Paragraph 12.1 hereof,
Lessee may assign or sublet the Premises, or any portion thereof, without
Lessor's consent, to any corporation which controls, is controlled by or is
under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on tile Premises, provided that said assignee assumes, in full, the
obligations of Lessee under this Lease. Any such assignment shall not, in any
way, affect or limit the liability of Lessee under the terms of this Lease even
if after such assignment or subletting the terms of this Lease are materially
changed or altered without the consent of Lessee, the consent of whom shall not
be necessary.
12.3 No Release of Lessee: Regardless of Lessor's consent, no subletting or
assignment shall release Lessee of Lessor's obligation or alter the primary
liability of Lessee to pay the rent and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of rent by lessor from any other
person shall not be deemed to be a waiver by Lessor of any provision hereof.
Consent to one assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting. In the event of default by any assignees of
Lessee or any successor of Lessee, in the performance of any of the terms
hereof, Lessor may proceed directly against Lessee without the necessity of
exhausting remedies against said assignee. Lessor may consent to subsequent
assignments or subletting of this Lease or amendments or modifications to this
Lease with assignees of Lessee, without notifying Lessee, or any successor of
Lessee, and without obtaining its or their consent thereto and such action shall
not relieve Lessee of liability under this Lease.
12.4 Attorney's Fees: In the event Lessee shall assign or sublet the Premises or
request the consent of Lessor to any assignment or subletting, or if Lessee
shall request the consent of Lessor for any act Lessee proposes to do, then
Lessee shall pay Lessor's reasonable attorney's fees incurred in) connection
therewith, such attorney's fees not to exceed $250.00 for each such request.
13. DEFAULTS: REMEDIES:
13.1 Defaults: The occurrence of any one or more of the following events shall
constitute a material default and breach of this Lease by lessee:
6 [initials]
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(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make ally payment of rent or any other payment
required to be made by Lessee hereunder, as and when due, where such failure
shall continue for a period of three days after written notice thereof from
Lessor to Lessee.
(c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee,
other than described in paragraph (b) above, where such failure shall continue
for a period of 30 days after written notice hereof from Lessor to Lessee;
provided, however, that if the nature of Lessee's default is such that more than
30 days are reasonably required for its cure, then Lessee shall not be deemed to
be in default if Lessee commenced such cure within said 30-day period and
thereafter diligently prosecutes such cure to completion.
(d) (i) The making by Lessee of any general arrangement for the benefit of
creditors; (ii) the filing by or against Lessee of a petition to have Lessee
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Lessee, the same is dismissed within 60 days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to lessee within 30 days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within 30 days.
(e) The discovery by lessor than any financial statement given to Lessor by
lessee, any assignee of Lessee, any sublessee of lessee, any successor in
interest of Lessee or any guarantor of Lessee's obligation hereunder, and any of
them, was materially false.
13.2 Remedies: In the event of any such material default or breach by Lessee,
lessor may at any time thereafter, with or without notice of demand and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such default or breach;
(a) Terminate Lessee's right to possession of the Premises by any lawful
means in which case this Lease shall terminate and Lessee shall immediately
surrender possession of the Premises to Lessor.
(b) Maintain Lessee's right to possession in which case this Lease shall
continue in effect whether or not Lessee shall have abandoned the Premises. In
such event Lessor shall be entitled to enforce all of Lessor's rights and
remedies under this Lease, including the right to recover the rent as it become
due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under the
laws or judicial decisions of the State of Colorado.
13.3 Default by Lessor; Lessor shall not be in default unless Lessor fails to
perform obligations required of Lessor within a reasonable time, but in no event
later than thirty (3) days after written notice by Lessee to Lessor provided,
however, that if the nature of Lessor's obligation is such that more than thirty
(3) days are required for performance then Lessor shall not be in default if
Lessor commences performance within such 30-day period and thereafter diligently
prosecutes the same to completion.
14. CONDEMNATION:
If the Premises or any portion thereof are taken under the power of eminent
domain, or sold under the threat of the exercise of said power (all of which are
herein called "condemnation"), this Lease shall terminate as to the part so
taken as of the date the condemning authority takes titles or possession,
whichever first occurs. If more than 10% of the floor area of the improvements
on the premises, or more than 25 % of the land area of the Premises which is not
occupied by any improvements, is taken by condemnation, Lessee may, at Lessee's
option, to be exercised in writing only within ten (10) days after Lessor shall
have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shalt have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the rent shall be reduced in the proportion
that the floor area taken bears to the total floor area of the building situated
on the Premises. Any award for the taking of all or any part of the Premises
under the power of eminent domain or any payment made under threat of the
7 [initials]
<PAGE>
exercise of such power shall be the property of Lessor, whether such award shall
be made as compensation for diminution in value of the leasehold or for the
taking of the fee, or as severance damages; provided, however, that Lessee shall
be entitled to any award for loss of or damage to Lessee's trade fixtures and
removable personal property. In the event that this Lease is not terminated by
reason of such condemnation, Lessor shall, to the extent of severance damages
received by Lessor in connection with such condemnation, repair any damage to
the Premises caused by such condemnation except to the extent that Lessee has
been reimbursed therefor by tile condemning authority. lessee shall pay amount
in excess of such severance damages required to complete such repair.
15. BROKER'S FEE:
Upon execution of this Lease by both parties, Lessor shall pay to Dunton
Industrial Co., Patricia Kunz, broker, a fee as set forth in a separate
agreement between Lessor and said broker. [Rest of Section deleted and
initialed]
16. GENERAL PROVISIONS:
16.1 Estoppel Certificates:
(a) Lessee shall at any time upon not less than ten (10) days prior written
notice from Lessor execute, acknowledge and deliver to Lessor a statement in
writing (i) certifying that this lease is unmodified and in full force and
effect (or, if modified stating that nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder, or specifying such defaults if any are claimed.
Any such statement may be conclusively retied upon by any prospective purchaser
or encumbrancer of the Premises,
(b) Lessee's failure to deliver such statement within such time shall be
conclusive upon Lessee (i) that this Lease is in full force and effect, without
modification except as may be represented by Lessor, (ii) that there are no
uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance or such failure may be considered by
Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance or refinance the Premises, or any part
thereof, Lessee hereby agrees to deliver to any lender designated by Lessor such
financial contracts of Lessee as may be reasonably required by such lender. Such
contracts shall include the past three years' financial history of Lessee. All
such financial history shall be received by lessor in confidence and shall be
used only for the purposes herein set forth.
16.12 Lessor's liability: The term "Lessor" as used herein shall mean only the
owner or owners at the time in question of the fee title or a Lessee's interest
in a ground lease of the Premises, and except as expressly provided in Paragraph
15, in the event of any transfer of such title or interest, Lessor herein named
(and in case of any subsequent transfers the then grantor) shall be relieved
from and after the date of such transfer of all liability as respects Lessor's
obligations thereafter to be performed, provided that any funds in the hands of
Lessor or the then grantor at the time of such transfer, in which Lessee has an
interest, shall be delivered to the grantee. The obligations contained in this
Lease to be performed by Lessor shall, subject as aforesaid, be binding on
Lessor's successors and assigns, only during their respective periods of
ownership.
8 [initials]
<PAGE>
16.3 Severability: The invalidity of any provision of this Lease as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provisions hereof,
16.4 Interest on Past-due Obligations: Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at 10% per annum from
the date due. Payment of such interest shall not excuse or cure any default by
Lessee under this Lease, provided,
[initials]
however, that interest shall not be payable on late charges incurred by Lessee
nor on any amount upon which late charges are paid by Lessee.
16.5 Time of Essence: Time is of the essence.
16.6 Captions: Article and paragraph captions are not a part hereof.
16.7 Incorporation of Prior Agreements: Amendments: This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
agreement or understanding pertaining to any such matter shall be effective.
16.8 Notices: Any notice required or permitted to be given hereunder shall be
in writing and may be given by personal delivery or by certified mail, and if
given personally or by mail, shall be deemed sufficiently given if addressed to
Lessee or to Lessor at the address noted below the signature of the respective
parties, as the case may be. Either party may by notice to the other specify a
different a address for notice purposes for Lessee that address is corporate
address listed below. A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate by notice to
Lessee. Notices effective upon receipt of refusal of receipt.
16.9 Waivers: No waiver by lessor of any provision hereof shall be deemed a
waiver of any other pro vision hereof or of any subsequent breach by lessee of
the same or any other provision. Lessor's consent to or approval of any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
16.10 Recording: Lessee shall not record this Lease without Lessor's prior
written consent, and such recordation shall, at the option of Lessor, constitute
a non-curable default of Lessee hereunder. Either party shall, upon written
request of the other, execute, acknowledge and deliver to the other a short form
"memorandum" of this Lease for recording purposes.
16.11 Holding Over: If Lessee remains in possession of the Premises or any part
thereof after the expiration of the term hereof without the express written
consent of Lessor, such occupancy shall be a tenancy from month to month at a
rental in the amount of the last monthly rental plus all other charges payable
hereunder, and upon all the terms hereof applicable to a month-to-month
tenancy.
16.12 Cumulative Remedies: No remedy or election hereunder shall be deemed
exclusive, but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
16.13 Covenants and Conditions: Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
16.14 Binding Effect: Choice of Law: Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions of
Paragraph 16.2, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State of Colorado.
16.15 Subordinates:
(a) This Lease, at Lessor's option, shall be subordinate to any ground
lease, mortgage, deed of trust, or any other hypothecation for security now or
9 [initials]
<PAGE>
hereafter placed upon the real property of which the Premises are a part and to
any and all advances made on the security thereof and to alt renewals,
modifications, consolidations, replacements and extension thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms, if any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, whether this Lease is
dated prior or subsequent to the date of said mortgage, deed of trust or ground
lease or the date of recording thereof.
(b) Lessee agrees to execute any documents reasonable required to
effectuate such subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be
16.16 Attorney's Fees: If either party or the broker named herein brings an
action to enforce the terms hereof or declare rights hereunder, the prevailing
party in any such action, on trial or appeal shall be entitled to his reasonable
attorney's fees to be paid by the losing party as fixed by the court. The
provisions of this paragraph shall inure to the benefit of the broker named
herein who seeks to enforce a right hereunder.
16.17 Lessor's Access: Lessor and Lessor's agents shall have the right to enter
the Premises at reasonable times for the purpose of inspecting the same, showing
the same to prospective purchasers, lenders or lessees, and making such
alterations, repair, improvements or additions to the Premises or to the
building of which they are a part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises any ordinary "For Sale"
signs and Lessor may at any time during the last 120 days of the term hereof
place on or about the Premises any ordinary "For Lease" signs all without rebate
or rent or liability to Lessee.
16.18 Signs and Auctions: Lessee shall not place any sign upon the Premises or
conduct any auction thereon without Lessor's prior written consent, except that
Lessee shall have the right, without the prior permission of Lessor to place
ordinary and usual for rent or sublet signs thereon
16.19 Merger: The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
16.20 Corporate Authority: If Lessee is a corporation, each individual executing
this Lease on behalf of said corporation represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of said corporation in
accordance with a duly adopted resolution of the Board of Directors of said
corporation or in accordance with the Bylaws of said corporation, and that this
Lease is binding upon said Corporation in accordance with its terms. If Lessee
is a corporation, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor a certified copy of a resolution of the Board of
Directors of said corporation authorizing or ratifying the execution of this
Lease.
16.21 Consents: Wherever in this Lease the consent of one party is required to
an act of the other party such consent shall not be unreasonably withheld.
16.22 Guarantor: In the event there is a guarantor of this Lease, said guarantor
shall have the same obligations as Lessee under Paragraphs 16.1 and 16.20 of
this Lease.
16.23 Quiet Possession: Upon Lessee paying the fixed rent reserved hereunder and
observing and performing all of the covenants, conditions and provisions on
lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof for the use provided in
Section 6.1 subject to all of the provisions of this Lease.
10 [initials]
<PAGE>
16.24 Options: In the event the Lessee, under the terms of this Lease has any
option to extend the term of this Lease, or any option to purchase the premises,
or any right of first refusal to purchase the premises or other property of
Lessor, then each of such options and rights are personal to Lessee and may not
be exercised or be assigned, voluntarily or involuntarily, by or to any one
other than Lessee except that it may be exercised by or assigned to any of the
entities described in Paragraph 12.2 hereof for whom Lessee does not need the
consent of Lessor to assign this Lease. In the event Lessee hereunder has any
multiple options to extend this Lease, a later option to extend the Lease cannot
be exercised unless the prior option has been so exercised, No option may be
exercised at a time when the Lessee is in default under its obligations under
this lease.
16.25 Multiple Lessee Building: In the event the Premises are part of a larger
building or group of buildings, then Lessee agrees it will by, keep and observe
all reasonable rules and regulations which Lessor may make from time to time for
the management, safety, care and cleanliness of the building and grounds, the
parking of vehicles and the preservation of good order therein as well as for
the convenience of other occupants and lessees of the building. Further, Lessee
will promptly pay its pro rata share, as reasonably determined by Lessor, of any
maintenance of repair of such portion of the Premises or such portion of the
property of which the Premises are a part, which are common areas or used by
Lessee and other occupants thereof, The violations of any such rules and
regulations, or the failure to pay such pro rata share of costs, shall be deemed
a material breach of this Lease by Lessee.
16.26 Hazardous Substances: Lessee covenants with Lessor to notify Lessor of any
and all hazardous substances (as defined below) generated or stored at the
premises, to comply with all obligations imposed by applicable law, rules,
regulations or requirements of any governmental authority upon such generation
and storage of hazardous substances, to prohibit any generation, storage, or
disposal of hazardous substances at the premises except as permitted by the
lease, to deliver promptly to Lessor true and complete copies of all notice
received by Lessee from any governmental authority with respect to the
generation, storage or disposal by Lessee of hazardous substances, to promptly
notify Lessor of any spills or accidents involving a hazardous substance, and to
permit reasonable entry onto the premises by Lessor for verification of Lessee's
compliance with this covenant. Lessee agrees to utilize only transporters
approved by the Environmental Protection Agency and State of Colorado to deliver
and remove hazardous substances from the premises. Lessee also agrees to
indemnify and defend Lessor (with legal counsel reasonably acceptable to Lessor)
from and against any costs, fees or expenses, (including, without limitation,
clean-up expenses, third party claims and environmental impairment expenses,
loss of rent, and reasonable attorneys' fees and expenses) incurred by Lessor in
connection with Lessee's generation, storage or disposal of hazardous
substances. This indemnification by Lessee shall survive the termination or
expiration of this lease. 'Hazardous substances' shall mean:
(1) 'Hazardous substances' as defined in the Comprehensive
Environmental Response, Compensation and Liability Act, as amended;
(2) 'PCB's' as defined in 40 C.F.R. 761, or analogous regulations
promulgated under the Toxic Substances Control Act, as amended;
(3) 'Asbestos' as defined in 29 C.F.R. 1910.1001, et seq., and
analogous regulations promulgated under the Occupational Safety and Health
Act of 1970, as amended;
(4) Oil and petroleum based products;
(5) Radioactive material or waste;
(6) Biological and other medical products and waste material; and
(7) 'Hazardous wastes' as defined in Resource Conservation and
Recovery Act, as amended;
as such acts may be amended from time to time, and as such terms may be
expanded by additional legislation of a general nature.
At Lessor's option, in the 60 days prior to the termination of the
lease, Lessor may require Lessee, at Lessee's expense, to provide an
environmental audit to Lessor for the premises, where Lessor has a
reasonable basis for such request.
11 [initials]
<PAGE>
16.27 Additional Provisions: If there are no additional provisions draw a line
from this point to the next printed word after the space left here. If there are
additional provisions place the same here.
a) With the exception of vehicles, no outside storage of any kind is
allowed.
b) Tenant is responsible for snow removal immediately outside this unit
within five feet (5') of building.
c) Rent received after the 10th of any month will be assessed a fifteen
percent (15%) late payment charge.
The parties hereto have executed this Lease at the place on the dates specified
immediately adjacent to their respective signatures.
If this Lease has been filled in, it has been prepared for submission to your
attorney for his approval. No representation or recommendation is made by the
real estate broker or its agents or employees as to the legal sufficiency, legal
effect, or tax consequences of this Lease or the transaction relating thereto.
Executed at: Five K Investments
------------------------------- -----------------------------------
on: By:/s/ Harold Kunz 5-3-96
--------------------------------------- --------------------------------
Address Harold Kunz By:
---------------------------------- --------------------------------
11445 W. I-70 Frontage Rd. North
---------------------------------- "LESSOR (Corporate Seal)
Wheat Ridge, CO 80033
----------------------------------
Executed at: Antennas America, Inc.
------------------------------- -----------------------------------
on: By:/s/ Richard L. Anderson
--------------------------------------- --------------------------------
Richard L. Anderson
4-29-96
Address: By:
---------------------------------- --------------------------------
---------------------------------- "LESSEE" (Corporate Seal)
----------------------------------
1/4/94
12
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0
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