U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------------------
FORM 10-QSB
(mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-19196
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CELEBRITY ENTERTAINMENT, INC.
(Name of Small Business Issuer in its Charter)
Delaware 11-2880337
(State of or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
214 Brazilian Avenue, Suite 400, Palm Beach, Florida 33480 561/659-3832
(Address of principal executive offices. Issuer's telephone number.)
-----------------------------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the issuer was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YES [X]
NO [ ]
The number of shares outstanding of the issuer's Common Stock, $ 0.0001 par
value, as of August 14, 1998 was 262,690.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
CELEBRITY ENTERTAINMENT, INC.
FORM 10-QSB
For the Quarter Ended June 30, 1998
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Balance Sheet
Statement of Operations
Statement of Cash Flows
Statement of Stockholders Equity
Notes to Financial Statements
Item 2. Management s Discussion and Analysis
PART II. OTHER INFORMATION
Item 2. Changes in Securities
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Celebrity Entertainment, Inc.and Subsidiary
Consolidated Balance Sheet
June 30, 1998
(Unaudited)
Assets
Current assets:
Cash $ 47,661
Accounts receivable 27,534
Prepaid expenses 5,000
Total current assets 80,195
Property and equipment, net 2,952,340
Other assets:
Deposit 895
Note receivable - related party 686,112
Accrued interest receivable - related party 25,832
Investment in warrants - related party 29,200
Investment in oil and gas lease,
net of allowance for impairment of $465,000 1,251,221
Total assets $ 5,025,795
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 245,677
Accrued expenses 246,204
Notes payable - related parties 887,103
Note payable - affiliate 67,836
Notes payable - debenture settlements 886,665
Accrued interest 308,418
Convertible debentures payable 1,640,000
Total current liabilities 4,281,903
Long-term debt, net of current portion 625,000
Stockholders' equity:
Preferred stock, $0.01 par value: 2,000,000 shares authorized
Designated as Class A 8% convertible:
1,525,000 shares designated; 1,064,000 shares issued
($5,320,000 total liquidation preference) 10,640
Common stock, $0.0001 par value: 25,000,000 shares authorized;
262,690 shares issued 26
Additional paid-in capital 18,312,117
Accumulated deficit (17,733,091)
Less treasury stock, 10,100 shares common
and 475,000 shares preferred, at cost (500,000)
Unrealized gain on investment 29,200
Total stockholders' equity 118,892
Total liabilities and stockholders' equity $ 5,025,795
See accompanying notes to financial statements.
<TABLE>
Celebrity Entertainment, Inc., and Subsidiary
Consolidated Statement of Operations
For the Six Months Ended June 30, 1998 and 1997
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Resort operations $ 43,360 $ 37,185 $ 140,355 $ 124,127
Oil and gas 23,427 - 23,427 -
Total revenues 66,787 37,185 163,782 124,127
Selling, general & administrative 380,615 560,618 654,414 1,179,111
Operating profit (loss) (313,828) ( 523,433) ( 490,632) (1,051,763)
Other income (expenses):
Interest income 14,570 1,486 26,823 7,993
Forgiveness of debt - 3,221 9,897 3,221
Interest expense (135,270) ( 12,731) ( 175,310) ( 22,170)
Loss on disposition of stock ( 4,982) - ( 4,982) -
Total other income (expenses) (125,682) ( 8,024) ( 143,572) ( 14,177)
Net loss $ (439,510) $(531,457) $( 634,204) $(1,065,940)
Basic and diluted loss per share:
Loss before extraordinary item $ ( 2.28) $ ( 1.86) $ ( 3.66) $ ( 3.73)
Extraordinary income - - 0.04 -
Net loss $ ( 2.28) $ ( 1.86) $ ( 3.62) $ ( 3.73)
See accompanying notes to the financial statements.
</TABLE>
Celebrity Entertainment, Inc. and Subsidiary
Consolidated Statement of Cash Flows
Unaudited
<TABLE>
Six months ended June 30, 1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net loss $( 634,204) $(1,065,940)
Adjustments to reconcile net loss to net
cash used for operating activities: -
Depreciation and amortization 57,954 64,656
Forgiveness of debt ( 9,897) -
Loss on disposition of stock 4,982 -
Stock issued in payment of finder's fee for debt - 78,680
Stock issued in payment of consulting fees - 63,702
Change in current assets and liabilities:
(Increase) decrease in:
Accounts receivable 4,531 -
Prepaid expenses ( 5,000) -
Deposits ( 895) -
Prepaid expenses and accounts receivable - 224,426
Accrued interest receivable ( 25,832) -
Increase (decrease) in:
Accounts payable and accrued expenses ( 42,618) 672,981
Deferred membership revenues - 4,625
Accrued interest payable 113,147 -
Net cash provided by (used in)
operating activities ( 537,832) 43,130
Cash flows from investing activities:
Purchase of property and equipment (1,644) ( 8,706)
Investment in joint venture - ( 30,752)
Advances on note receivable - related party (213,612) -
Net cash used in investing activities (215,256) ( 39,458)
Cash flows from financing activities:
Payments of long-term debt ( 182,279) ( 9,676)
Proceeds from notes 1,281,402 -
Payoff of mortgage note ( 419,910) -
Net cash provided by (used in) financing activities 679,213 ( 9,676)
Decrease in cash and cash equivalents ( 73,875) ( 6,204)
Cash and cash equivalents, beginning of period 121,536 444,510
Cash and cash equivalents, end of period $ 47,661 $ 438,306
Supplemental disclosure of cash paid for:
Interest $ 76,736 $ 22,170
Income taxes - -
See accompanying notes to financial statements.
</TABLE>
<TABLE>
Celebrity Entertainment, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Treasury Stock
Preferred Stock Common Stock Common Preferred
Shares Amount Shares Amount Shares Shares Amount
Balance, January 1, 1998 1,064,000 $ 10,640 262,690 $ 26 10,100 475,000 $ 500,000
Net loss - - - - - - -
Balance at June 30, 1998 1,064,000 $ 10,640 262,690 $ 26 10,100 475,000 $ 500,000
</TABLE>
<TABLE>
<S> <C> <C> <C>
Additional
Paid in Accumulated Unrealized Gain
Capital Deficit On Investment
Balance, January 1, 1998 $18,312,117 $ (17,098,887) $29,200
Net loss - ( 634,204) -
Balance at June 30, 1998 $18,312,117 $ (17,733,091) $29,200
See accompanying notes to the financial statements.
</TABLE>
CELEBRITY ENTERTAINMENT, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying financial statements have been prepared by the Company without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, these financial statements include
all adjustments necessary to present fairly the financial position of the
Company as of June 30, 1998 and the results of operations and cash flows for the
three-month period and for the six month period ended June 30, 1998 and 1997.
The Company's results of operations during the first six months of the Company's
fiscal year are not necessarily indicative of the results to be expected for the
full fiscal year. The financial statements included in this report should be
read in conjunction with the financial statements and notes thereto in the
Company's 1997 Form 10-KSB.
The Company's wholly-owned subsidiary manages the development of an oil and gas
lease in Texas. Operations of the subsidiary began during the second quarter of
1998 and, accordingly, the Company is presenting consolidated financial
statements including the assets, liabilities and results of operations of the
subsidiary.
2. Basic and Diluted Loss Per Common Share
Basic and diluted loss per common share is computed using the weighted average
number of shares outstanding during each period. Common stock equivalents have
not been included since the effect of such inclusion would be antidilutive.
The following table sets forth the computation of basic and diluted loss per
share for the three months ended June 30, 1998 and 1997:
1998 1997
Loss before extraordinary item $( 644,101) $( 534,483)
Preferred dividends ( 316,576) ( 316,576)
Loss to common shareholders
before extraordinary income ( 960,677) ( 851,059)
Extraordinary income - forgiveness of debt 9,897 -
Net loss to common shareholders $( 950,780) $( 851,059)
Weighted average common shares outstanding 262,690 340,690
Basic and diluted loss per share:
Loss per share before extraordinary income $( 3.66) $( 2.03)
Extraordinary income .04 -
Net loss $( 3.62) $( 2.03)
3. Property and equipment
Property and equipment as of June 30, 1998 consisted of the following:
Land $ 670,780
Buildings and improvements 2,885,593
Equipment 157,804
Furniture and fixtures 61,888
Total property and equipment, cost 3,776,065
Less: accumulated depreciation and amortization ( 823,725)
Total property and equipment, net $ 2,952,340
Item 2. Management's Discussion and Analysis
FORWARD-LOOKING STATEMENTS
Statements contained in this Form 10-QSB regarding the Company's future
prospects or profitability constitute forward-looking statements and as such,
must be considered with caution and with the understanding that various factors
could cause actual results to differ materially from those in such
forward-looking statements. Such factors include but are not limited to (i) the
inability of the Company to complete a business combination or acquisition as
anticipated, (ii) the securing of financing sufficient to fund such business
combination, acquisition, settlement of outstanding debt and litigation, or the
expansion of the Resort, and/or (iii) change in operating results provided by
the Resort or any newly-acquired operations due to economic or competitive
conditions or otherwise.
General
The Company is principally engaged in the development, ownership,
marketing and operation of a destination resort community and fishing camp
located on Orange Lake near Ocala, Florida. The Company is also engaged in
the development of an oil and gas lease in Texas.
On August 4, 1998, the SEC issued expanded requirements for disclosure
regarding the international computer programming problems whereby certain
computer programs will not be able to properly recognize the date in the year
2000. Management believes the Company has no material exposure from the year
2000 problem. The Company's management information systems advisor reports that
because the Company's system was originally designed to be unaffected by year
2000 problem, the Company has no exposure to the problem within its own system.
The Company has consulted major vendors and suppliers whose non-compliance with
correction of the problem could cause material damage to the Company and has
determined that such vendors and suppliers have plans in place that will
circumvent year 2000 problems that could affect the Company.
Results of Operations
Six-month Period Ended June 30, 1998 Compared to Six-month Period Ended
June 30, 1997:
Revenues for the six-month period ended June 30, 1998 amounted to
$163,782 compared to $124,127 for the six-month period ended June 30, 1997,
reflecting an increase of $39,655. Revenues are comprised of resort memberships
paid in full, dues and resort operations together with subsidiary operations.
The increase in revenues reflected for the six-month period ended June 30, 1998
is a result of improved marketing and use of the Company's resort facilities
combined with revenues from the Company's oil and gas subsidiary.
Selling, general and administrative expenses were $654,414 for the six
months ended June 30, 1998 compared to $1,179,111 for the six-month period
ended June 30, 1997, representing a decrease of $524,697. The decrease
is due principally to expenses related to consulting activities in connection
with business acquisitions in the prior-year period.
During the six-month period ended June 30, 1998, $175,310 in interest
expense was charged to operations compared to $22,170 charged to interest
expense for the six-month period ended June 30, 1997, reflecting an increase of
$153,140. The increase is due principally to the amounts paid pursuant to notes
issued in connection with settlements of liabilities related to convertible
securities of the Company issued in 1996.
Net loss for the six-month period ended June 30, 1998 was $634,204, which
represents a decrease in loss of $431,736 compared to the net loss of $1,065,940
for the prior-year period. The decrease is due principally to reduction of
expenses related to consulting activities in connection with business
acquisitions in the prior-year period.
Liquidity and Capital Resources
Liquidity and capital resources are hereinafter discussed in three broad
categories: operating activities, investing activities and financing
activities.
Operating Activities
The revised marketing and sales approach, initiated in 1995 in response to
changing interests of the public away from memberships in favor of destination
and special interest resort amenities, has resulted in an increase in cash flows
from operations for the current year, which trend is expected to continue in
future years.
Cash decreased $73,875 to $47,661 at June 30, 1998 from $121,536 at
December 31, 1997. Net cash used for operating activities was $537,832 during
the six-month period ended June 30, 1998 compared to cash provided by operating
activities of $43,130 during the six-month period ended June 30, 1997. The
change in cash used for operating activities resulted primarily from a reduction
in net loss, reduction of accounts receivable and increase in accrued interest
payable.
Investing Activities
During the six-month period ended June 30, 1998, there was
$215,256 used for investing activities, compared with $39,458 used for investing
activities during the three-month period ended June 30, 1997. The increase was
primarily due to increased advances on a note receivable - related party.
Financing Activities
During the three-month period ended June 30, 1998, net cash provided by
financing activities was $679,213, representing an increase of $688,889 over net
cash used in financing activities of $9,676 during the six-month period ended
June 30, 1997. The increase is a result primarily of the proceeds derived from
a note issued to a related party.
During the second quarter of 1998 the Company completed the refinancing of
the resort property which prevented the foreclosure sale that had been scheduled
for April 28, 1998. The Company is currently negotiating for additional
financing to improve the resort facilities as well as a possible sale of the
resort property. The Company continues to seek the acquisition of additional
business activities in order to increase operating revenues.
Income from the resort is seasonal and on an annual basis the Company is
required to seek additional financing in order to pay long-term debt obligations
and the resort's ongoing operations, including payroll, creditors and taxes.
Income from the resort operations is not sufficient to sustain the Company's
operations. Consequently, the Company has been experiencing a liquidity problem
and must obtain financing in addition to expected revenues from operations in
order to pay its past due obligations and meet its current obligations as they
come due.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit Index
Exhibit 10.1 Promissory Note in the original principal amount of $350,000
payable to Roger and Carole Martin, Trustees, et al., dated
April 28, 1998.
Exhibit 10.2 Mortgage in favor of Roger and Carole Martin, Trustees, et al.,
dated April 28, 1998.
Exhibit 10.3 Joint Venture Agreement with Brad H. Muller dated April 28,
1998.
Exhibit 10.4 Second Mortgage in favor of Brad H. Muller dated April 28, 1998.
(b) Reports on Form 8-K.
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: August 19, 1998
CELEBRITY ENTERTAINMENT, INC.
By: /s/ J. William Metzger
J. William Metzger
Executive Vice President
EXHIBIT 10.1
PROMISSORY NOTE
$350,000.00 April 28, 1998
FOR VALUE RECEIVED, the undersigned, CELEBRITY ENTERTAINMENT, INC. (E.I.N.
11-2880337), a corporation authorized and existing under the laws of the state
of Delaware whose offices are located at 214 Brazilian Avenue, Palm Beach,
Florida 33480 (hereinafter referred to as the "Maker"), hereby agrees and
promises to pay to the order of ROGER MARTIN AND CAROLE MARTIN, CO-TRUSTEES OF
THE ROGER MARTIN REAL ESTATE EMPLOYEES' PROFIT SHARING PLAN & TRUST as to
78.57143% ("Martin") and RENO R. OUELLETTE as to 21.42857% ("Ouellette")
(hereinafter Martin and Ouellette are referred to collectively as the "Payees"),
the principal sum of U.S. THREE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS
($350,000.00) in lawful money of the United States of America (the "Principal
Amount"), together with interest thereon at a fixed rate of FIFTEEN AND
00/100THS PERCENT (15.00%) per annum, which shall be due and payable in the
following manner:
interest only calculated from the date hereof and payable monthly,
commencing June 1, 1998 and continuing on the same day of each month
thereafter for a period not exceeding five (5) years from the date hereof
with Maker's equal payments of FOUR TH0USAND THREE HUNDRED SEVENTY-FIVE
AND 00/100THS DOLLARS ($4,375.00), at which time the entire unpaid
Principal Amount of THREE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS
($350,000.00) and any unpaid interest thereon shall be paid in full on
April 28, 2003.
Maker has granted Payees a security interest in certain collateral,
including, but not limited to, real property collateral described in that
certain valid, subsisting Mortgage Deed, security Agreement And Absolute
Assignment Of Rents ("Mortgage") of even date herewith, recorded or to be
recorded in the county in which the real property described in the Mortgage is
located, and by this reference is incorporated herein. This Note shall not be
subordinated to the claims of any secured or unsecured creditor of the Maker.
The monthly payment may, in Payees' sole discretion, include an escrow for
taxes equal to one-twelfth (1/12) of the annual taxes on the real property
subject to the Mortgage.
The Principal Amount and interest shall be payable in lawful money of the
United States of America as follows:
To Martin, as to 78.57143%:
Roger Martin and Carole Martin, Cc-Trustees
749 N.E. 74th Street
Boca Raton, Florida 33487
To Ouellette, as to 21.42857%:
Reno R. Ouellette
P.O. Box 10
Fort Kent Mills, Maine 04744
or at such place as may hereafter be designated by written notice from the
Payees to the Maker hereof.
Makers may prepay all. but not part, of the Principal Amount at any time
after the date hereof, upon thirty (30) days prior written notice thereof to
Payees, and subject to a prepayment penalty equal to: three percent (3.00%) of
the Principal Amount if paid on or before April 28, 2001; two percent (2.00%) of
the Principal Amount if paid after April 28, 2001 and on or before April 29,
2002; and one percent (1.00%) of the Principal Amount if paid after April 28,
2002 and before April 28, 2003.
If any monthly interest payments are not timely made, Maker shall also pay
to Payees a late charge equal to ten percent (10%) of each payment past due for
ten (10) or more days. The Maker shall pay any and all late charges promptly but
only once on each late payment. If any monthly interest payments are not timely
made, Maker shall also pay to Payees interest at the maximum interest rate
allowed by Florida law on each payment past due commencing with the eleventh
(11th) day after the due date and continuing for so long as such payment remains
unpaid. Makers shall pay $25.00 for each payment check returned to the Payees
for insufficient funds. Acceptance by Payees of any late payment without an
accompanying late charge or interest thereon shall not be deemed a waiver of
Payees' right to collect such late charge or interest or to collect a late
charge or interest for any subsequent late payment received.
All monies received from any source for application toward the payment of
the obligations shall be applied to accrued interest and then to the Principal
Amount. Any prepayment shall include accrued interest and all other sums then
due. If a Default occurs, monies may be applied to the Obligations in any manner
or order deemed appropriate by the Payees. If any payment received by Payees
under this Note is rescinded, avoided or for any reason returned by Payees
because of any adverse claim or threatened action, the returned payment shall
remain payable as an obligation of all persons liable under this Note an though
such payment had not been made. The term "obligations" used in this Note refers
to any and all obligations under this Note other than the payment of the
Principal Amount or the interest thereon.
Mortgagor shall be in default under this Note upon the happening of any
one or more of the following events, circumstances, conditions, or obligations
("Event of Default"): (i) the failure by Maker to pay within fifteen (15) days
of the date they severally become due, all and singular the payments of
principal and interest and other sums of money payable by virtue of the Note, or
any renewal or extension thereof; (ii) the failure of performance of the
obligations under this mate or to abide by any other provision of the loan
documents, and such failure shall continue for thirty (30) consecutive days
after written notice from Payees; (iii) a warranty or representation made or
deemed made or furnished Payees in connection with the loan evidenced by this
Note proves materially false, or if of a continuing nature, becomes materially
false; (iv) the failure of Maker to obtain and maintain required insurance(s);
(iv) without prior written consent of Payees, a material alteration in the kind
or type of Maker's business; (v) the filing of a petition in bankruptcy or for
reorganization under the Bankruptcy Code, or any similar bankruptcy or
insolvency federal or state statute or law, by or against Maker, or the filing
of any involuntary petition, and any such filing is not discharged within thirty
(30) days after its filing; (vi) the appointment of a receiver or trustee for
any of Maker's property filed by or against maker inclusive of this Note, and
which is not dismissed within thirty (30) days, or if a receiver or trustee of
any property of Maker or is appointed and is not discharged within thirty (30)
days, or if Maker makes a general assignment or transfer for the benefit of
creditors, or the insolvency of the Maker; (vii) the filing of any action or
proceeding commenced by any person other than Payees to which action or
proceeding Payees are made a party or which it shall become necessary to defend
or uphold the lien of the Mortgage, and such action or proceeding is not
dismissed within thirty (30) days; (viii) the institution of a foreclosure
proceeding on any mortgage inferior to the Mortgage, or the institution of a
foreclosure proceeding on any lien of any kind encumbering the Mortgaged
Property, and such proceeding is not dismissed within thirty (30) days; (ix) the
assignment by the Maker of the rents of the Property under the Mortgage, or any
part thereof without the prior written express consent of the Payees; or (x) the
allowance by the Maker of the Mortgaged Property to become subject to the lion
of any mortgage in connection with which payments on account of the indebtedness
secured hereby are to be made directly or indirectly by or through the
Mortgages/Payees.
Upon the occurrence of an Event Of Default, as herein defined, Payees may,
at their sole discretion and at any time thereafter, take the following actions
immediately and without notice: (i) accelerate maturity of this Note and the
entire amount of principal and interest hereby secured together with all other
Obligations under the Note, all of which shall be immediately due and payable;
(ii) exercise its right of set-off, or to foreclose its security interest or
lien, or to apply for the appointment of a receiver; (iii) institute proceedings
for foreclosure of the mortgage; or (iv) exercise any other rights and remedies
under the Note, the Mortgage, or as provided by law or equity.
Maker shall pay all of Payees' reasonable expenses actually incurred to
enforce or collect any of the obligations, including, without limitation,
reasonable arbitration, paralegals', attorneys', accountants', and experts, fees
and expenses, whether incurred without the commencement of a suit, in any trial,
or administrative proceeding, or in any appellate or bankruptcy proceeding.
Maker shall reimburse Payees fully within thirty (30) days of Payees' making any
payment(s) for such costs and expenses together with interest at the maximum
interest rate allowed by Florida law.
The total liability under this Note for payments in the nature of interest
shall not exceed the limits imposed by the usury laws applicable hereto from
time to time. In no event shall these limits become less than the limits
presently authorized. Notwithstanding any provision herein, if for any reason
the effective interest should exceed the maximum lawful interest, the effective
interest shall be deemed reduced to, and shall be, such maximum lawful interest,
and (i) the amount which would be excessive interest shall be deemed applied to
the reduction of the Principal Amount and not to the payment of interest, and
(ii) if the loan evidenced by this Note has been or in thereby paid in full, the
excess shall be returned to the party paying same, such application to the
Principal Amount or the refunding of excess to be a complete settlement and
acquittance thereof.
Maker hereby waives demand for payment, protest, presentment for payment,
notice of dishonor, notice of protest, notice of intention to accelerate
maturity, notice of acceleration of maturity, all other notices of any kind,
diligence in bringing suit against any party, resort to collateral and
impairment of collateral, and hereby consents that the time for payment of all
or any part of the Principal Amount, and of the interest hereon, may be extended
from time to time by Payees without notice, and that any such extension shall
not discharge or otherwise impair the obligation represented by this Note.
Unless applicable law requires a different method, any notice that must be
given to the Maker under this Note shall be given by mailing it by first class
mail to the Maker at the address indicated above. Any notice that must be given
to the Payees under this Promissory Note shall be given by mailing it by first
class mail to the Payees at the addresses indicated above to which payments must
be made.
This Note shall inure to the benefit of and be binding upon the parties
and their respective heirs, legal representatives, successors and assigns. No
waivers, amendments or modifications of this Note or the Mortgage shall be valid
unless in writing and signed by the Payees. Payees' interest in and rights under
this Note are freely assignable, in whole or in part. Maker shall not assign its
rights and interest hereunder without the prior written consent of the Payees,
and any attempt by Maker to assign without Payees' prior written consent is null
and void. Any assignment shall not release Maker from the Obligations. This Note
and the Mortgage shall be governed by and construed under the laws of Florida.
If any provision of this Note or the Mortgage shall be prohibited or invalid
under applicable law, such provision shall be ineffective by only to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note or the mortgage. The term
"person" shall mean any individual, person or entity. Each Maker is jointly and
severally obligated under this Note.
Maker and Payees agree that they shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute. The term "Dispute" shall mean any demand
of any party hereto, whether made before or after institution of any judicial
proceeding, any dispute, claim or controversy arising out of, connected with or
relating to this Note and the Mortgage between or among parties to this Note.
IN WITNESS WHEREOF, the Maker, by and through its duly authorized officer,
has executed and delivered this Note on this 28th day of April, 1998.
CELEBRITY ENTERTAINMENT, INC.,
a Delaware Corporation, Maker
/s/ (SEAL)
By: J. William Metzger
Its: Executive Vice-President
EXHIBIT 10.2
MORTGAGE DEED, SECURITY AGREEMENT AND
ABSOLUTE ASSIGNMENT OF RENTS
THIS IS A BALLOON MORTGAGE AND THE FINAL PRINCIPAL PAYMENT OR THE PRINCIPAL
BALANCE DUE UPON MATURITY IS $350,000.00, TOGETHER WITH ACCRUED INTEREST, IF
ANY, AND ALL ADVANCEMENTS MADE BY THE MORTGAGEE UNDER THE TERMS OF THIS
MORTGAGE.
THIS MORTGAGE DEED, SECURITY AGREEMENT AND ABSOLUTE ASSIGNMENT OF RENTS
("Mortgage"), executed this 28th day of April, 1998, between CELEBRITY
ENTERTAINMENT, INC. (E.I.N. 11-2880337), a corporation authorized and existing
under the laws of the State of Delaware whose offices are located at 214
Brazilian Avenue, Palm Beach, Florida 33460 (hereinafter referred to as the
"Mortgagor") , which term as used in every instance shall include the
Mortgagor's heirs, executors, administrators, successors, legal representatives
and assigns, either voluntary by act of the parties, or involuntary by operation
of law, and shall denote the single and/or plural, and the masculine and/or
feminine, and natural and/or artificial person, whenever and wherever the
context so requires or admits, Party of the First Part, and ROGER MARTIN AND
CAROLE MARTIN, CO-TRUSTEES OF THE ROGER MARTIN REAL ESTATE EMPLOYEES' PROFIT
SHARING PLAN & TRUST as to $275,000.00 whose address is 749 NE 74th Street, Boca
Raton, Florida 33487, and RENO R. OUELLETTE as to $75,000.00 whose address is
P.O. Box 10, Fort Kent Mills, Maine 04744 (hereinafter referred to collectively
as the "Mortgagee"), which term as used in every instance shall include the
Mortgagee's heirs, executors, administrators, successors, legal representatives
and assigns, either voluntary by act of the parties, or involuntary by operation
of law, and shall denote the single and/or plural, and the masculine and/or
feminine, and natural and/or artificial person, whenever and wherever the
context so requires or admits, Party of the Second Part.
To secure payment and performance of obligations (collectively the
"Obligations") under the Promissory Note (the "Note") dated April 28, 1998, in
the amount of $350,000.00, made by Mortgagor payable to Mortgagee, this
Mortgage, all other indebtedness of Mortgagor to Mortgagee whenever borrowed or
incurred, and any renewals, extensions, novations, or modifications of the
foregoing, in consideration of those promises and for other divers, good and
valuable considerations, Mortgagor does grant, bargain, sell, alienate, remise,
release, convey and confirm unto the Mortgagee, in fee simple, all of that
certain real estate of which the Mortgagor is now seized and possessed and in
actual possession in the County of Marion, State of Florida described in EXHIBIT
A attached hereto and made a part hereof (hereinafter referred to as the
Mortgaged Property);
TOGETHER WITH ALL AND SINGULAR: all leasehold estate, and all right, title
and interest of Mortgagor in and to all leases or subleases covering such land
now or hereafter existing including. without limitation, all cash or security
deposits or advance rentals; (ii) all right, title and interest of Mortgagor in
and to all options to purchase or lease such land or any interest therein, and
any greater estate in such land owned or hereafter acquired by Mortgagor; (iii)
all easements, streets, alleys, rights-of-way and rights used in connection
therewith or as a means of access thereto, and all tenements, hereditaments and
appurtenances thereof and thereto, and all water rights; (iv) all buildings,
structures and improvements now or hereafter erected thereon; (v) all furniture,
furnishings and fixtures and any replacements thereof now or hereafter affixed
to such land, and all gas, steam, electric, water and other heating, cooking,
refrigerating, lighting, plumbing, ventilating, irrigating and power systems,
appliances, fixtures and appurtenances, including air-conditioning ducts,
machinery and equipment, which are now or may hereafter pertain to or be used
with, in or on said premises, even though they may be either detached or
detachable, and all building improvement and construction materials, supplies
and equipment hereafter delivered to such land contemplating affixation thereon,
(vi) all awards and proceeds of condemnation for such land and any improvements
thereon or any part thereof to which Mortgagor is entitled, and all proceeds,
including return premiums and choses in action arising under any insurance
policies maintained with respect to all or any part of the foregoing; (vii) all
rents, issues and profits of such land and improvements accruing and to accrue
from said premises, and all the estate, right, title and interest of every
nature whatsoever of the Mortgagor in and to the same, as well in law as in
equity, and all claims and demands whatsoever of said Mortgagor in and to the
name, and every part and parcel thereof; and (viii) all proceeds, products
replacements, additions, substitutions, renewals, accessions and reversions of
any of the foregoing items. All of the real and personal property and property
rights hereby conveyed are referred to individually and collectively as the
"Property."
To HAVE AND TO HOLD the Property, and all the estate, right, title and
interest, in law and in equity, together with the tenements, hereditaments and
appurtenances, and every part thereof of Mortgagor in and to the Property unto
Mortgagee and its successors and assigns, in fee simple, forever.
AND THE SAID MORTGAGOR does hereby agree, warrant, covenant and represent
that Mortgagor, at the time of the ensealing and delivery of these presents, is
indefeasibly seized of said land in fee simple; that said Mortgagor has full
power and lawful right to convey said land in fee simple as aforesaid; that it
shall be lawful for the Mortgagor at all times peaceably and quietly to enter
upon, hold, occupy and enjoy said land and every part thereof, and the
appurtenances; that said land, and every part thereof, is free and clear of all
other and former liens, assessments, changes, judgments, taxes, tax titles
and/or certificates, and encumbrances of every kind and nature; that said
Mortgagor does fully warrant the title to said land and every part therefor and
will forever defend the same against the lawful claims of all person whosoever.
PROVIDED ALWAYS and this Mortgage is on the express condition that if
Mortgagor shall pay or cause to be paid the sum of money mentioned in the Note
in the manner ail therein specified, and the interest thereon as the same shall
become due, and all obligations thereunder shall be paid and performed.
according to the true intent and meaning thereof, and shall pay all other sums
provided to be paid by this Mortgage, and shall perform, abide by and comply
with all the covenants and agreements herein contained, then this Mortgage and
the estate hereby created shall cease and determine and be null, void and
canceled of record.
AND MORTGAGOR, for himself and his heirs, legal representatives,
successors and assigns, hereby agrees, covenants and represents to and with
Mortgagee, and his legal representatives, successors and assigns, as follows:
1. To pay within fifteen (15) days of the date they severally become due, all
and singular the payments of principal and interest and other sums of money
payable by virtue of the Note, or any renewal or extension thereof, and by
virtue of the Mortgage.
2. To pay all and singular taxes, assessments, levies, liabilities, obligations
and encumbrances of any nature on the Property, each and every, within the time
specified in Paragraph 6 below, and if the same shall not be properly paid
Mortgagee may, at any time, either before or after delinquency, pay the same
without waiving or affecting the option to foreclose, or any right hereunder and
every payment so made shall bear interest from the date thereof at the highest
rate per annum allowed by law.
3. To keep the buildings and improvements now standing or hereafter erected upon
the Mortgaged Property and any and all apparatus, fixtures and appurtenances now
or hereafter in or attached to said buildings or improvements, insured against
loss or damage by fire, windstorm, flood and such other hazards as Mortgagee
may, from time to time, require for the highest insurable value so that
Mortgagee's interest is not subject to co-insurance, and all insurance policies
shall be held by and shall be for the benefit of and first payable in case of
loss to Mortgagee, and that at least fifteen (15) days before the expiration of
each such policy a new and sufficient policy to take the place of the one so
expired shall be delivered to Mortgagee; Mortgagor hereby assigns to Mortgagee
all monies recoverable under each such policy, and agrees that in the event of a
loss the amount collected under any policy of insurance on said property may, at
the option of Mortgagee, be applied by Mortgagee upon any indebtedness and/or
obligation secured hereby and in such order as Mortgagee may determine; or said
amount, or any portion thereof, may, at the option of Mortgagee, either be used
in replacing, repairing or restoring the improvements partially or totally
destroyed to a condition satisfactory to Mortgagee, or be released to Mortgagor,
in either of which events Mortgagee shall not be obligated to see the proper
application thereof, nor shall the amount so released or used be deemed a
payment of any indebtedness secured hereby; nor shall any of the above be
considered a waiver or an impairment of the equity, lien, or right under or by
virtue of this Mortgage, and Mortgagee may place and pay for such insurance or
any part thereof, without waiving or affecting the option to foreclose or any
right hereunder, and each such payment shall bear interest from the due date at
the highest rate per annum allowed by law.
4. To permit, commit, or suffer no waste, impairment, abandonment, or
deterioration of said Property, or any part thereof, and to permit nothing to be
done to said premises that may in any way weaken or impair the security under
this Mortgage; and upon the failure of Mortgagor to keep the building and
personal property on the Mortgaged Property in good condition or repair,
mortgagee may demand the immediate repair of the Mortgaged Property, or an
increase in the amount of security, and Mortgagor shall timely comply with said
demand of Mortgagee.
5. To perform, comply with and abide by each and every of the covenants,
agreements and conditions of the Note and of this Mortgage.
6. To deliver to Mortgagee, on or before February 1st of each year, tax receipts
evidencing the payment of all lawfully imposed taxes upon the Property for the
preceding calendar year, to deliver to Mortgagee receipts evidencing the payment
of all liens for public improvements within 90 days after the same shall become
due and payable, and to pay or discharge within 90 days after due date, or in
any way resulting from the mortgage indebtedness secured by this Mortgage.
7. To keep the Mortgaged Property in first class repair and in as good condition
as they now are and to permit Mortgagee to enter upon and view the Mortgaged
Property. The Mortgaged Property shall not be altered or remodeled without the
written consent of Mortgagee or assigns. In case of breach of this condition,
the parties so doing or Mortgagor shall be liable to Mortgagee or assigns for
any damage done or impairment of the Mortgaged Property. This Mortgage lien
extends to any building now situate or which may hereafter be situate or located
on the Mortgaged Property and materials composing said buildings, whether
attached or detached or to the real estate herein; and in case of the removal of
any buildings now located on the Mortgaged Property or which may hereafter he
located thereon, or the material composing the same during the terms of this
Mortgage to some other premises the lien of this Mortgage shall remain and be
enforceable against said buildings or material wherever same may be moved or
relocated.
8. To pay all and singular the costs, charges and expenses, including attorneys,
fees reasonably incurred or paid at any time by Mortgagee, because of the
failure of mortgagor to perform, comply with and abide by each and every
stipulation, agreement, condition and covenant of the Note and this Mortgage, or
either, and every such payment by Mortgagee shall bear interest at the highest
rate per annum allowed by law from date of such payment until reimbursed by
Mortgagor. In the event Mortgagor neglects to pay any assessments, costs, fees,
etc. to keep the mortgage timely, then Mortgagee shall have the option to pay
and shall be reimbursed by Mortgagor within thirty (30) days of such payment
together with interest thereon from date of payment until paid at the highest
rate per annum allowed by law.
9. That if any action or proceeding shall be commenced by any person other than
the holder of this mortgage (except an action to foreclose this Mortgage, or to
collect the debt secured thereby) to which action or proceeding the holder of
this Mortgage is made a party or in which it shall become necessary to defend or
uphold the lien of this Mortgage, all sums paid by the holder of this Mortgage
for the expense of any litigation to prosecute or defend the rights and liens
created by this Mortgage (including reasonable attorneys, fees) shall be paid by
Mortgagor, together with interest thereon, at the highest rate per annum allowed
by law, and any such sum and the interest thereon, shall be a claim upon said
premises and shall be deemed to be secured by this Mortgage. The sums paid by or
incurred by the holder hereof in accordance with the terms of this paragraph
shall be paid by Mortgagor unto Mortgagee within 30 days and the failure or
omission of Mortgagor so to do shall entitle the Mortgagee to add such sums to
the principal indebtedness of this Mortgage and the Note it secures.
10. That in case suit shall be instituted in any competent court to foreclose
this Mortgage, Mortgagee shall be entitled as a matter of right, and without
regard to the value of the Property, or solvency or insolvency of the parties,
and without notice, to the appointment of some suitable person as receiver of
and for all and singular the Property and the income profits thereof, such
receiver to have the usual powers and duties of receivers in such cases,
including the right to enter upon, receive, recover and take complete possession
of the Property and the rents, income and profits thereof which shall be applied
by such receiver according to law and under the direction of the court making
such appointment.
11. If foreclosure proceedings should be instituted on any mortgage inferior to
this Mortgage, or if any foreclosure proceedings are instituted on any lien of
any kind encumbering the Property, Mortgagee may, at its option, immediately or
thereafter, declare this Mortgage and indebtedness secured hereby, due and
payable. If there is any mortgage or lien superior to this Mortgage, then
failure to pay the note or Mortgage when due and in accordance with its terms or
failure to abide by the terms of the Mortgage, shall be deemed a breach of this
Mortgage and Mortgagee, at its option, may immediately or thereafter declare
this Mortgage the indebtedness hereby secured, due and payable. Any modification
of any Mortgage superior to this Mortgage or waiver of any principal or interest
payments on any note or Mortgage superior to this Mortgage, shall be deemed a
breach of the terms and covenants of this Mortgage and Mortgagee hereby may, at
its option, declare this Mortgage and the indebtedness secured hereby, due and
payable.
12. Mortgagor hereby absolutely assigns and transfers to Mortgages all the
leases, rents, issues and profits of the Property (collectively, the "Rents") .
So long as no Default exists, Mortgagee gives to and confers upon Mortgagor the
license and authority to collect the Rents and to demand, receive and enforce
payment, give receipts, releases and satisfactions, and sue in the name of
Mortgagor for all the Rents. Mortgagor represents there has been no prior
assignment of leases or Rents, and agrees not to further assign such leases or
Rents. Upon any occurrence of an Event Of Default as defined herein, Mortgagee
may, without notice, by agent or by a receiver appointed by a court, and without
regard to the adequacy of any security for the obligations, revoke and cancel
the license and authority of Mortgagor to collect Rents, and (i) enter upon and
take possession of the Property, (ii) notify tenants, subtenants and any
property manager to pay Rents to Mortgagee or its designee, and upon receipt of
such notice such persons are authorized and directed to make payment as
specified in the notice and disregard any contrary direction or instruction by
Mortgagor, and (iii) in its own name, sue for or otherwise collect Rents,
including those post due, and apply Rents, less costs and expenses of operation
and collection, including attorneys fees, to the Obligations under the Note in
such order and manner as Mortgagee may determine in its sole discretion.
Mortgagee's exercise of any one or more of the foregoing rights shall not cure
or waive any Event of Default or notice of Event of Default hereunder. Mortgagor
shall not assign the rents of the Mortgaged Property or any part thereof without
the prior express written consent of Mortgagee.
13. Mortgagor hereby waives all right of homestead exemption in the Property and
agrees that this Mortgage and the Note shall be construed according to the laws
of the State of Florida.
14. That any and all awards hereafter to be made by an authority in the exercise
of the power of eminent domain, or any municipal, county, state or federal
authorities to the present and all subsequent owners of the premises covered by
this Mortgage, including any award or awards whether for a taking of title to,
possession of, or any interest in, the Mortgaged Property or any part thereof
and any award or awards received for damages sustained by the Mortgaged Property
or any part thereof, or for any change or changes of grade of streets affecting
the Mortgaged Property, are hereby assigned to Mortgagee; and the Mortgage, at
its option, is hereby authorized, directed and empowered to collect and receive
the proceeds of any such award or awards from the authorities making the same
and to give proper receipt and acquittance thereof, and to apply the same toward
the payment of the amount owing on account of the Note and Mortgage,
notwithstanding the fact that the amount owing on account of the Note and
Mortgage may not be then due and payable; and Mortgagor hereby covenants and
agrees to and with Mortgagee, upon request by Mortgagee, to make, execute and
deliver any and all assignments and other instruments sufficient for the purpose
of assigning the aforesaid award or awards to Mortgagee free, clear and
discharged of any and all encumbrances of any kind or nature whatsoever.
15. Mortgagor will exhibit to Mortgagee written receipts establishing the
payment of any sums required to be paid under any superior Mortgage or other
lien obligation, not later than five (5) days prior to the time that
acceleration of such superior mortgage or lien should be declared for non-
payment thereof.
16. Any Abstract of Title covering the Mortgaged Property shall belong to and
remain in the possession of Mortgagee during the lien of this Mortgage.
17. That it is the intent hereof to secure payment of the Note and the
Obligations thereunder, whether the entire amount shall have been advanced to
Mortgagor at the date hereof, or at a later date, and to secure any other amount
or amounts that may be added to the mortgage indebtedness under the terms of
this instrument. The total amount of indebtedness secured hereby may decrease or
increase from time to time, but the total unpaid balance so secured at any one
time shall not exceed the principal sum of Three Hundred Fifty Thousand and
00/100 ($350,000.00). plus interest thereon and any disbursements made for the
payment of taxes, levies of insurance on the property covered by the lien of
this Mortgage, with interest thereon. This Mortgage shall secure any and all
additional or future monies which may be advanced by Mortgagee to the Mortgagor
after the date hereof, which future advances of money, if made, shall be
evidenced by a note or notes executed by Mortgagor to Mortgagee bearing such
rate of interest and with such maturity as shall be determined from time to
time, but any and all such future advances secured by this Mortgage shall be
made no more than five (5) years after the date hereof. Nothing herein contained
shall be deemed an obligation on the part of Mortgagee to make any future
advances.
18. Mortgagor shall, within five (5) days of a written demand by Mortgagee,
execute in such form as shall be required by Mortgagee, an estoppel certificate
and waiver of defenses, duly acknowledged, setting forth the amount of principal
and interest unpaid hereunder and the general status of this Mortgage.
19. It is specifically agreed that time is of the essence in this Mortgage and
that no waiver of any obligation hereunder or of the obligation secured hereby
shall at any time hereafter be held to be a waiver of the terms of the Note or
Mortgage.
20. if required by Mortgagee as further security for the payment of the
Obligations under the Note, Mortgagor stipulates, covenants and agrees that in
addition to the principal and interest installments to be paid under the terms
of the Note, Mortgagor shall pay to Mortgagee at the time and place of payment
of the installment payments, a sum of money equal to the pro rata part of annual
taxes and assessments and premium or premiums of fire and other hazard
insurance, next due an estimated by Mortgagee, which payments shall be held by
Mortgagee to apply in payment of said taxes and assessments and fire and hazard
insurance premiums.
21. In the Event Of Default hereunder which can be cured by the payment of
money, Mortgagee shall have the right at any time and without waiving or
affecting its option to foreclose or any other rights hereunder, to pay such
sums of money as may be necessary or required to cure the Event Of Default, and
all sums so paid shall forthwith, upon demand thereof, together with interest
thereon at the highest rate per annum allowed by law, and any and all costs,
charges, abstract fees, attorneys' fees and other expenses incurred or expended
in connection with the said payment, be due and payable from Mortgagor to
Mortgagee, and this Mortgage shall stand as security therefor, and any sums so
paid shall be deemed an indebtedness in addition to the indebtedness hereby
secured.
22. Mortgagor acknowledges that the continuous ownership of the Mortgaged
Property by Mortgagor is of a material nature to the transaction and the making
of the loan evidenced by the Note and secured by this Mortgage. Therefore,
Mortgagor agrees that in the event of any transfer of all or substantially all
of the secured premises, without the written approval of Mortgagee, howsoever
evidenced or occasioned. then, at the option of Mortgagee, the entire unpaid
principal balance under the Note, together with accrued interest shall
immediately become due and payable. Mortgagor shall not, without the prior
written consent of Mortgagee, sell, transfer or convey the right to manage or
control the operation of the Mortgaged Property. Mortgagor shall not allow the
Mortgaged Property at any time to be or become subject to the lien of any
Mortgage in connection with which payments on account of the indebtedness
secured hereby are to be made directly or indirectly by or through Mortgagee
thereunder, regardless of whether or not payment of the indebtedness secured
hereby is assumed by such Mortgagee.
23. A) Mortgagor represents, warrants and covenants that, other than as
disclosed in the Phase I Environmental Site Assessment Report prepared by Empire
Environmental, Inc., and dated September 16, 1997, Mortgagor has not used
Hazardous Materials (as defined hereinafter) on, from, or affecting the
Mortgaged Property in any manner which violates Federal, state or local laws,
ordinances, rules, regulations, or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials, and that to the best of Mortgagor's knowledge,
no prior owner of the Mortgaged Property or any tenant, subtenant, prior tenant
or prior subtenant have used Hazardous Materials on, from or affecting the
Mortgaged property in any manner which violates Federal, State or local laws,
ordinances, rules, regulations or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials. Mortgagor shall keep or cause the Mortgaged
Property to be kept free of Hazardous Materials. Without limiting the foregoing,
Mortgagor shall not cause or permit the Mortgaged Property to be used to
generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process Hazardous Materials, except in compliance with all
applicable Federal, State and local laws or regulations, nor shall Mortgagor
cause or permit, as a result of any intentional or unintentional act or omission
on the part of Mortgagor or any tenant or subtenant, a release of Hazardous
Materials onto the Mortgaged Property or onto any other property. Mortgagor
shall comply with and ensure compliance by all tenants and subtenants with all
applicable Federal, State and local laws, ordinances, rules and regulations,
whenever and by whomever triggered, and shall obtain and comply with, and ensure
that all tenants and subtenants obtain and comply with, any and all approvals,
registrations or permits required thereunder. Mortgagor shall (A) conduct and
complete all investigations, studies, sampling and testing and all remedial,
removal and other actions necessary to clean up and remove all Hazardous
Materials on, from or affecting the Mortgaged Property (i) in accordance with
all applicable Federal, State and local laws, ordinances, rules, regulations,
and policies, (ii) to the satisfaction of Mortgagee, and (iii) in according with
the orders and directives of all Federal, State and local governmental
authorities, and (B) defend, indemnify and bold harmless Mortgagee, its
employees, agents, officers, and directors, from and against any claims,
demands. penalties, fines, liabilities, settlements, damages, costs or expenses
of whatever kind or nature, known or unknown, contingent or otherwise, arising
our of, or in any way related to, (i) the presence, disposal, release or
threatened release of any Hazardous materials which are on, from or affecting
the soil, water, vegetation, buildings, personal property, persona, animals or
otherwise; (ii) any personal injury (including wrongful death) or property
damage (real or personal arising out of or related to such Hazardous Materials;
(iii) any lawsuit brought or threatened, settlement reached, or government order
relating to such Hazardous Materials, and/or (iv) any violation of laws, orders,
regulations, requirements or demands of government authorities, or any policies
or requirements of Mortgagee, which are based upon or in any way related to such
hazardous material, including, without limitation, attorney and consultant fees,
investigation and laboratory fees, court costs and litigation expenses. In the
event this Mortgage is foreclosed, or Mortgagor tenders a deed in lieu of
foreclosure, Mortgagor shall deliver the Mortgaged Property to Mortgagee free of
any and all Hazardous Materials so that the conditions of the Mortgaged Property
shall conform with all applicable Federal, state and local laws, ordinances,
rules or regulations affecting the Mortgaged Property. For purposes of this
Section, "Hazardous Materials" includes, without limit, any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or related materials defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Sections 1901 at seq.), the Resource Conservation and
Recovery Act, as amended (42 U.S.C. Sections 9601, et seq.) and in the
regulations adopted and publications promulgated pursuant thereto, or any other
Federal, state or local environmental law, ordinance, rule or regulation. The
provisions of this Section shall be in addition to any and all other obligations
and liabilities Mortgagor may have to Mortgagee at common law, and shall survive
the transactions contemplated herein.
B) Mortgagee, at Mortgagee's sole option, may obtain at any time during
the terms of this mortgage, at Mortgagor's expense, a report from a reputable
environmental consultant of Mortgagee's choice as to whether the Mortgaged
Property and the improvements had been or are being used for the handling,
storage, transportation or disposal of hazardous or toxic materials. In the
event Mortgagee requests such a report and said report indicates such past or
present use, handling, storage, transportation or disposal, Mortgagee may
require that all violations of law with respect to hazardous or toxic materials
be immediately corrected and/or that Mortgagor obtain all necessary
environmental permits before Mortgagee shall fund any initial or subsequent
advances under this Mortgage at Mortgagee's sole option. The failure of
Mortgagor to correct any violation of law (including without limitation the
cleanup of any environmental degradation) with respect to hazardous or toxic
materials shall constitute an Event of Default hereunder.
24. This is a First Mortgage and Mortgagor agrees not to create or permit the
creation of any other Mortgage, charge, lien or encumbrance against the
Mortgaged Property or any portion thereof, without obtaining the written consent
of Mortgagee. Notwithstanding the foregoing, Mortgagee hereby consents to the
issuance by Mortgagor of one or more subordinated mortgages encumbering the
Mortgaged Property and securing one or more promissory notes in a total amount
not to exceed $650,000.00, provided that all parties thereto execute, record and
deliver to Mortgagee a subordination agreement in a form acceptable to
Mortgagee. Mortgagors agree that a violation of this covenant shall constitute
an Event of Default hereunder and shall cause the Note to immediately become due
and payable in full.
25. Mortgagor and Mortgagee agree that this Mortgage shall constitute a Security
Agreement within the meaning of the Uniform Commercial Code (hereinafter in this
paragraph referred to as the "Code") with respect to any Property, which
Property may not be deemed to form a part of the real property described in this
Mortgage or may not constitute a "fixture" (within the meaning of Section 9-313
of the Code) and all replacements of such Property, substitutions for such
Property, additions to such Property and the proceeds thereof (all of said
Property described above, and the replacements, substitutions and additions
thereto and the proceeds thereof being hereinafter collectively referred to as
the "Collateral"), and that a first and continuing security interest in and to
the collateral is hereby granted to Mortgagee, and the Collateral and all right,
title and interest of Mortgagor therein are hereby assigned to Mortgagee, all to
secure payment of the Note and to secure performance by Mortgagor of the terms,
covenants and provisions hereof. Upon occurrence of at Event Of Default as
defined under this Mortgage, the Note, or any other indebtedness or obligation
secured by this Mortgage, Mortgagee, pursuant to the appropriate provisions of
the Code, shall have the right, in addition to all other rights, to proceed with
respect to such personal property in accordance with its rights and remedies of
a Secured Party under the Code. The parties agree that, in the event Mortgagee
shall elect to proceed with respect to the personal property Collateral
separately from the real property, five (5) days written notice of the sale of
such collateral shall be reasonable notice. The reasonable expenses of retaking,
holding, preparing for sale, selling and the like incurred by Mortgagee, shall
include, but not be limited to, reasonable attorneys' fees and legal expenses
incurred by Mortgagee. Mortgagor shall, from time to time, on request of
Mortgagee, deliver to Mortgagee an inventory of such collateral in reasonable
detail. Mortgagor covenants and represents that all Collateral now is, and that
all replacements thereof, substitutions therefor or additions thereto, unless
Mortgagee otherwise consents, will be free and clear of all other liens,
encumbrances and security interests.
26. Mortgagor will provide current financial year end and quarterly financial
statements to Mortgagee in conformity with Generally Accepted Accounting
Principles applied on a consistent basis during the term of this Mortgage,
within 45 days of the end of each fiscal quarter and within 90 days of the
fiscal year end. Individual Mortgagors will provide mortgagee with a personal
financial statement, including income tax information and the most recently
filed tax returns within 90 days of the fiscal year end of Mortgagor. All
financial statements will be provided to Mortgagee in such format and on such
forms that comply with Mortgagor's filing requirements with the Securities and
Exchange Commission. In submitting said financial statements to Mortgagee,
Mortgagor or an authorized officer of Mortgagor will certify continuing
compliance with all representations, warranties and covenants contained herein,
and will also certify that Mortgagor is not in violation or in default under the
terms and conditions contained in this Mortgage.
27. Mortgagor hereby agrees knowingly, voluntarily and intentionally to the full
extent permitted by law, that in case of an Event Of Default hereunder, neither
Mortgagor, nor anyone claiming through or under it, shall or will set up, claim
or seek to take advantage of any stay under the bankruptcy laws, in order to
prevent or hinder the enforcement or foreclosure of this Mortgage, or the
absolute sale of the Property hereby conveyed to the final and absolute putting
into possession thereof, immediately after such sale.
28. Upon the occurrence of an Event Of Default hereunder, Mortgagee may at Its
sole discretion and at any time thereafter, take the following actions
immediately and without notice:
a. accelerate maturity of the Note and the entire amount of principal and
interest hereby secured together with all other Obligations under the Note, all
of which shall be immediately due and payable;
b. exercise its right of set-off, or to foreclose its security interest or
lien on the Collateral, or to apply for the appointment of a receiver;
c. institute proceedings for foreclosure of this Mortgage as herein
provided; or
d. exercise any other rights and remedies under the Note, the Mortgage, or
as provided by law or equity.
29. Mortgagor shall be in default under this Mortgage upon the happening of any
one or more of the following events, circumstances, conditions, or obligations
("Event Of Default"):
a. the failure by Mortgagor to pay within fifteen (15) days of the date
they severally become due, all and singular the payments of principal and
interest and other sums of money payable by virtue of the Note, or any renewal
or extension thereof,
b. the failure of Mortgagor to abide by any other provision hereunder, and
such failure shall continue for thirty (30) consecutive days after written
notice from Mortgagee;
c. The failure of Mortgagor to obtain and maintain insurance(s) required
under Paragraph 3 hereinabove;
d. The filing of a petition in bankruptcy or for reorganization under the
Bankruptcy Code, or any similar bankruptcy or insolvency federal or state
statute or law, by or against Mortgagor, or the filing of any involuntary
petition, and such filing is not discharged within thirty (30) days after its
filing;
e. the appointment of a receiver or trustee for any of the Property filed
by or against Mortgagor inclusive of the indebtedness secured by this Mortgage,
and which is not dismissed within thirty (30) days, or if a receiver or trustee
of any property of Mortgagor is appointed and is not discharged within thirty
(30) days, or If Mortgagor makes a general assignment or transfer for the
benefit of creditors, or the insolvency of the Mortgagor;
f. the filing of any action or proceeding commenced by any person other
than Mortgagee to which action or proceeding Mortgagee is made a party or which
it shall become necessary to defend or uphold the lien of this Mortgage, and
such action or proceeding is not dismissed within thirty (30) days;
g. the institution of a foreclosure proceeding an any mortgage inferior to
this Mortgage, or the institution of a foreclosure proceeding on any lien of any
kind encumbering the Property, and such proceeding is not dismissed within
thirty (30) days;
h. the assignment by Mortgagor of the rents of the Mortgaged Property, or
any part thereof without the prior written express consent of Mortgagee; or
i. the allowance by Mortgagor of the Mortgaged Property to become subject
to the lien of any mortgage in connection with which payments on account of the
indebtedness secured hereby are to be made directly or indirectly by or through
Mortgagee.
30. Mortgagor may prepay all, but not part, of the amounts due under the Note,
at any time after the date hereof, upon thirty (30) days prior written notice
thereof to Mortgagee/ Payees, and subject to a prepayment penalty equal to:
three percent (3.00%) of the Principal Amount if paid on or before April 29,
2001; two percent (2.00%) of the Principal Amount if paid after April 28, 2001
and on or before April 28, 2002; and one percent (1.00%) of the Principal Amount
if paid after April 28, 2002 and before April 28, 2003.
(THE NEXT PAGE IS THE SIGNATURE PAGE)
MORTGAGOR AND MORTGAGEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS INSTRUMENT, THE
NOTE, AND ANY OTHER AGREEMENTS CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OR EITHER PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE MORTGAGEE EXTENDING CREDIT TO MORTGAGOR.
IN WITNESS WHEREOF, the undersigned Mortgagor has hereunto set hand and
seal the day and year first aforesaid.
THIS IS A BALLOON MORTGAGE AND THE FINAL PRINCIPAL PAYMENT OR THE
PRINCIPAL BALANCE DUE UPON MATURITY IS $350,000.00, TOGETHER WITH ACCRUED
INTEREST, IF ANY, AND ALL ADVANCEMENTS MADE MY MORTGAGEE UNDER THE TERMS OF THIS
MORTGAGE.
CELEBRITY ENTERTAINMENT, INC.,
a Delaware Corporation, Mortgagor
/s/ /s/ (SEAL)
Witness Signature By: J. William Metzger
Vicki A. Kulg Its: Executive vice-President
(print name)
/s/
Witness Signature
Lisa S. Boros
Witness (print name)
STATE OF FLORIDA
COUNTY OF PALM BEACH
The foregoing instrument was acknowledged before me this 28th day of April,
1998, by J. William Metzger, Executive Vice-President of Celebrity
Entertainment, Inc. a Delaware corporation, who is personally known to me or has
produced [ ] as identification.
/s/
Kelly L. Hofmann
Notary Public, State of Florida
Commission No. CC 534043
My Commission Expires 4/1/00
EXHIBIT 10.3
JOINT VENTURE AGREEMENT
This Joint Venture Agreement is made on this 28th day of April, 1998 by
and between Celebrity Entertainment, Inc. ("Celebrity") and Brad H. Muller
("Muller").
R E C I T A L S:
A. Celebrity owns a fish camp and RV park located in Marion County,
Florida on Orange Lake consisting of approximately 110 acres, which is more
fully described on Exhibit "A" hereto.
B. A Final Summary Judgment of Foreclosure, has been entered against
Celebrity in the Circuit Court for the Fifth Judicial Circuit, in and for Marion
County in Case No. 97-3930-CAC. A copy of this Final Summary Judgment is annexed
hereto as Exhibit "B."
C. A public foreclosure sale will be held on April 28, 1998 at 11:00 A.M.
to the highest bidder for cash, at the Marion County Courthouse, 110 N.W. First
Avenue, Ocala, FL 34478 in accordance with Section 45.031, Florida Statutes.
D. Celebrity has been unable to pay off or refinance the judgment amount
of in excess of $425,000, pay past due real estate taxes, and, in fact, has only
been able to obtain a first mortgage of $350,000 against the property.
E. Muller and Celebrity desire to enter into this Joint Venture in an
effort to forestall the foreclosure and to save the real property for the
benefit of Celebrity and the Joint Venture and if the foreclosure is not stopped
and the property saved, Celebrity's economic viability is severely threatened.
THEREFORE, in consideration of Ten ($10.00) Dollars and the joint and
mutual promises set forth herein, the parties do hereby agree as follows:
1. Name of Venture: The name of this Joint Venture shall be the Lake
Orange Venture.
2. Title to Property: Celebrity shall continue to hold title to the
property on behalf of the Joint Venture. However, Muller shall be entitled to
file a Memorandum of Joint Venture in the public records of Marion County, FL to
evidence the Joint Venture's interest in the real property.
3. Celebrity Contribution: Celebrity shall contribute the property to the
Joint Venture subject to a first mortgage loan in favor of the Roger Martin
Real Estate Employees' Profit Sharing Plan and Trust and Reno R. Ouellette in a
Principal amount not to exceed $350,000.
Celebrity shall execute a notice that it will take no future advances or
further advances on this loan. As its further contribution. Celebrity agrees to
pay all interest or other charges on this mortgage in a timely fashion and to
keep the real estate taxes on the Joint Venture property current at all times
hereinafter. Additionally. Celebrity shall pay all amounts necessary to continue
the operation of the fish camp and RV park through its sale the event there is a
fall in cash flow from operations. By virtue of the execution of this Agreement,
Celebrity shall deemed to have contributed and does hereby contribute the real
property described herein to Joint Venture.
4. Muller Contribution: Muller does hereby contribute to the Joint Venture
$275,000 cash. It is agreed that the $275,000 contributed by Muller shall be
returned within 6 weeks as preferential distribution in accordance with the
terms hereof.
5. Additional Contributions: Muller shall not be required to make any
additional contributions to the Joint Venture. Celebrity agrees to contribute,
obtain the contribution of funds necessary to make the preferential
distributions in a timely fashion to secure the contribution of funds to make
the preferential distribution, Celebrity shall deliver or obtain delivery to the
Joint Venture 200,000 shares of Princeton Media Group ("Princeton") common
shares which are freely trading for the purpose of the sale of these shares to
pay the preferential distribution described herein in the event the
contributions to pay the preferential distributions are not otherwise made.
These shares shall be delivered to the Joint Venture's counsel to be placed in
escrow and to be disposed of to make the preferential distributions described
below, if necessary, and shall be the subject of an escrow agreement
satisfactory in the sole discretion of Muller. The stock shall be delivered and
an Escrow Agreement executed by all parties no later than 5.00 P.M., Friday, May
1,1998.
6. Preferential Distribution: Muller shall receive a preferential
distribution from the Joint Venture to return his capital investment on the
following schedule:
A. $100,000 by May 8, 1998,
B. $50,000 by May 15, 1998,
C. $50,000 by May 22, 1998,
D. $50,000 by May 29, 1998, and
E. $25,000 by June 5, 1998.
It is the parties' intention that Muller shall have his initial contribution
back in full by June 5, 1998 and at the time of the execution of this Agreement
Celebrity shall deliver to Muller a second mortgage on the property for the
purpose of securing the return of capital and the preferential distributions
described above. Further, Muller shall have a security interest and pledge in
the escrowed shares to secure return of the preferential distribution described
in this paragraph.
7. Sale of the Real Property: The Joint Venturers agree that the property
shall be immediately placed for sale, with the listing price being $1.5MM. In
the event existing purchasers conclude a signed written contract with sufficient
earnest money, within 2 weeks, then the parties shall evaluate and select one of
the contracts for execution. If no satisfactory binding contract
from existing Purchasers can be obtained, then and in such event, a mutually
agreeable brokerage firm shall be selected on terms and conditions agreed by the
parties to market the property. It is the stated purpose of this Joint Venture,
to save the property from foreclosure and to sell the property as expeditiously
as is practical and reasonable.
8. Operation of the Joint Venture: The parties shall mutually agree on all
matters concerning the operation of the Joint Venture and its underlying real
estate, provided that Celebrity shall perform all obligations required
hereunder. No Joint Venturer shall take any action concerning the Joint Venture
without the consent of the other Joint Venturer.
9. Default by Celebrity: The parties acknowledge that upon payment of the
$275,000, Muller has fully performed his obligations hereunder. In the event
that Celebrity's shall default in any of the following ways, Muller shall be
immediately entitled to take over the operation of the Joint Venture, the Joint
Venture real estate, shall have sole right to make all determinations concerning
the Joint Venture and the sale of the Joint Venture real estate. In addition,
Muller shall have the tight to demand that the escrow agent sell the Princeton
stock, or shall be entitled to foreclose his second mortgage so as to obtain the
return of his initial contribution. The escrow is subject to Celebrity's
counsel's review and approval. The following items shall constitute a default by
Celebrity:
A. Failure to deliver a second mortgage and no future advance agreement by
5:00 P.M. April 28,1998.
B. Failure to deliver Princeton stock to a mutually agreed escrow agent
under the terms of the Escrow Agreement by 5:00 P.M. May 1, 1998.
C. Failure to make any payment of interest or principal due on the first
mortgage, or any default under the terms of the first mortgage.
D. Failure to make any payment to return Muller's initial contribution on
the terms described herein.
E. Failure to pay real estate taxes or make any other contribution
necessary to maintain the operation of the fish camp and RV park.
F. Any other default by Celebrity under the terms hereof.
G. Any default under the terms of the second mortgage delivered in
connection herewith.
10. Conditions Precedent: Muller shall not be required to contribute the
$275,000 unless and until Muller's counsel has obtained confirmation that the
first mortgage advance of $350,000 has been closed and funds disbursed and the
Final Judgement obtained by Amsouth has been satisfied and no foreclosure sale
held.
11. Attorneys' Fees: From the $275,000 contributed by Muller, $25,000
shall be withheld and paid to Domenic L. Massari, III to cover all costs
associated with the preparation, recordation or documentation of the parties'
agreements as described herein and for monitoring of legal matters on behalf of
Muller during the term of this Joint Venture. The parties acknowledge that
Domenic L. Massari, III has acted solely as counsel for Muller and not
represented of attempted to represent any other party or person in this Joint
Venture transaction.
12. Distribution of Proceeds: At the time of a sale or other disposition
of the real estate that is the subject of this Joint Venture, proceeds shall be
distributed in the following order of priority:
First, Payment of any outstanding real estate taxes and the cost of
closing the transaction through the date of closing.
Second, Payoff of the first mortgage.
Third, Payment of any remaining preferential distribution, if any,
required to be made to Muller pursuant to the terms hereof.
Fourth, Reimbursement to Celebrity for any interest payments made on
the first mortgage, after the date hereof, and any payments made by Celebrity to
cover any shortfalls in the operation of the fish camp and RV park, made after
the date hereof.
Fifth, $250,000 payable to Muller as his Joint Venture profit share
distribution.
Sixth, The balance of all proceeds shall be payable to Celebrity as
its Joint Venture profit share distribution.
13. Celebrity's Shares: Because Muller has agreed to cap his profits
distribution at $250,000, Muller shall also be entitled to receive not less then
$150,000 worth of Celebrity's common stock, free and clear of any claims and
liens. This stock shall be delivered within 30 days after the commencement of
trading in Celebrity's stock on any recognized exchange. The parties
hereto shall agree on the exact structure or issuance of Muller's stock in
accordance with this paragraph by May 29, 1998. 1
14. Termination: This Joint Venture shall be deemed terminated, ended and
wound down upon the sale of the real estate and the distribution of proceeds in
accordance herewith.
15. Non Partition: The parties agree that they will neither seek, nor
argue for partition of the real property or the Joint Venture and that the sale
of the property and all distributions shall be the sole remedy of any Joint
Venturer, all such sales and distributions to be made in accordance with the
terms hereof.
16. Entire Agreement: The parties acknowledge that this Agreement
constitutes the entire agreement between the parties and that no other or
further prior, oral or written agreements shall bind the parties and all such
prior, oral or written agreements are hereby merged into this Agreement. The
parties further agree that their Joint Venture and the terms thereof shall be
governed by applicable Florida law and that the venue for any legal action by or
between the parties shall be in the Circuit Court for Hillsborough County,
Florida and that the parties do hereby waive any right to bring an action in any
other venue and that the domicile of the Joint Venture shall be at 601 S.
Fremont Avenue, Tampa. FL 33606. Because this is a commercial real estate Joint
Venture, the parties do hereby waive any right to a jury trial and agree that
any disputes that become the subject of litigation shall be tried by a Circuit
Judge sitting as judge and trier of the facts.
Signed, sealed and delivered
in the presence of
/s/ CELEBRITY ENTERTAINMENT, INC.
Mark L. Nowak
Printed Name /s/
J. William Metzger, Executive
Vice President
/s/
Seth I. Cohen /s/
Printed Name Brad H. Muller
Printed Name
EXHIBIT 10.4
SECOND MORTGAGE
THIS MORTGAGE is given on April 28, 1998 by Celebrity Entertainment, Inc.
whose address is 214 Brazilian Avenue, Suite 400, Palm Beach, FL 33480 (herein
"Mortgagor") to Brad H. Muller, whose address is 464 Meadow Lark Drive,
Sarasota, FL 34236 ("Mortgagee").
Mortgagor and Mortgagee have entered into a Joint Venture Agreement
contemporaneously herewith. Pursuant to that Agreement, Mortgagee is entitled to
a preferential distribution of $275,000 by June 5, 1998, certain stock being
issued, as well as other performances. This Mortgage is granted by Mortgagor to
secure performance of all obligations of Mortgagor to Mortgagee including, but
not limited to payment of the preferential distribution and all other
performances due to Mortgagee under the terms of the Joint Venture Agreement. To
secure these performances, Mortgagor does hereby mortgage, grant and convey to
Mortgagee the following property located in Marion County, Florida:
See Exhibit "A"
Together with all improvements now or hereafter erected on the property
and all easements and appurtenances thereto, and all machinery, apparatus,
equipment and fixtures now or hereafter a part of the property, as well as all
water, sewer, utility, streets, roads, walkways or other structural elements
thereto, as well as all replacements or additions thereto. All of the foregoing
is referred to in this Mortgage as the "Property".
Mortgagor covenants that Mortgagor is lawfully seized of the estate
hereby conveyed and has the right to mortgage, grant and convey the Property and
the Property is unencumbered except for that First Mortgage in a principal
amount not to exceed $350,000 in favor of Roger Martin Real Estate Employees'
Profit Sharing Plan and Trust and Reno R. Ouelette ("First Mortgage"), such
easements, governmental matters, assessments, subdivision or deed restrictions
of record. Mortgagor warrants and will defend generally the title of the
Property against all claims and demands, subject to the matters set forth above.
Mortgagor covenants and agree as follows:
1. Mortgagor shall promptly perform or cause to be performed all
obligations of Mortgagor under the Joint Venture Agreement and Mortgagor agrees
to timely make all payments due on the First Mortgage and accompanying
Promissory Note and to timely perform all obligations called for under the First
Mortgage.
2. Mortgagor will fully and completely comply with all terms and
conditions of this Mortgage.
3. Mortgagor will pay all taxes due on the Property by escrow if
required by the first mortgage, or otherwise prior to March 30th of each year.
4. Mortgagor will keep the improvements now existing or hereafter
erected on the Property insured against loss by fire, hazards, included within
the term "extended coverage" and any other hazards, including food, floods or
flooding, for which Mortgagee requires insurance. This insurance shall be
maintained in amounts and for periods Mortgagee requires, provided that such
coverage shall not exceed or duplicate the coverage required by the first
mortgagee, except that it shall be in an amount equal to the full value of the
improvements. All insurance policies and any renewals thereof shall be
acceptable to Mortgagee and shall include a standard mortgage clause and shall
name Mortgagee as a loss payee. If Mortgagor fails to maintain insurance
coverage as described in this paragraph, then Mortgagee, at Mortgagor's cost,
shall have the right to obtain full coverage or single interest coverage on the
Property.
5. Mortgagor shall maintain the Property in good condition, shall
comply with all ordinances or regulations applicable to the Property and shall
not destroy, damage or impair the Property, allow the Property to deteriorate,
or commit waste on the Property. Mortgagor shall be in default if any forfeiture
action or proceeding, whether civil or criminal, is begun that, in Mortgagee's
judgment, could result in forfeiture of the Property or otherwise materially
impair the lien created by this Mortgage.
6. If Mortgagor fails to perform the covenants and agreements contained
in this Mortgage or if there is a legal proceeding that may significantly affect
Mortgagee's rights in the Property (such as a proceeding in foreclosure,
bankruptcy probate, for condemnation or forfeiture or to enforce laws or
regulations), then Mortgages may, but is not required to, do and pay for
whatever is necessary to protect the value of the Property and Mortgagee's
rights in the Property. Mortgagee's actions may include paying any sums secured
by a lien which has priority over the Mortgage, appearing in Court, paying
reasonable attorneys' fees and entering on the Property to make repairs. Any
amounts expended or disbursed by Mortgagee under this paragraph shall become
additional debt of Mortgagor secured by this Mortgage and shall bear interest
from the date of disbursement at the maximum rate allowed by law.
7. Mortgagee or its agent may make reasonable entries upon and
inspections on the Property. Mortgagee shall give Mortgagor notice at the time
of or prior to inspection specifying reasonable cause for the inspection.
8. The proceeds for any award or claim for damages, direct or
consequential, in connection with any condemnation or other taking of any part
of the Property, or for conveyance in lieu of condemnation are hereby assigned
to Mortgagee as additional security for performance of the obligations hereunder
and to the extent any such proceeds shall come into existence, they shall be
paid to Mortgagee to be held in escrow until all performances, obligations and
liabilities secured hereby have been satisfied in full.
10. Mortgagor shall not lease the Property, or any parcel thereof, to any
person or entity other than Mortgagor, except rentals of rooms or spaces in the
ordinary course of business but shall take no advance payments for more than two
months rent. Further, Mortgagor does hereby assign to Mortgagee all rents,
profits, income, issues and revenues of the Property and each parcel thereof as
further security under this Mortgage. Mortgagor acknowledges and agrees that in
the event of default, Mortgagee shall have the immediate right to directly
collect all rents, profits, issues, income and revenues of the Property and each
parcel thereof and that Mortgagor will take no action or attempt to interfere
with this direct collection, and that in addition to this right, Mortgagee shall
have all rights under any Florida Statutes concerning assignment of rents,
including but not limited to the provisions of Fla. Stat. Section 697.07 as
amended from time to time.
11. Annually, but not later than May 1st of each year after the execution
hereof, Mortgagor shall deliver to Mortgagee, evidence that all real estate
taxes for the prior year have been paid in full, that no special assessments
have been made against the Property, that no environmental claims or assessments
have been made against the Property and the status of any lease of the
Property. In addition, Mortgagor shall simultaneously deliver financial
statements and tax returns for Mortgagor for the prior year and for all months
through the date of delivery of the financial statements. Further, if at any
time any law suit or claim of any type of nature is made against Mortgagor which
claim is an amount in excess of $5,000, or in the event that any actions
brought, including but not limited to actions brought by the Department of
Professional Regulation, or the subject of any 30-day letter or similar demand
for payment of Federal, State or local taxes, within 10 days after receipt of
such notice, claim a lawsuit or proceeding, Mortgagor shall deliver to Mortgagee
a copy of all documents pertaining to such matters. Mortgagor agrees that the
failure to comply with the provisions of this section shall not constitute
technical defaults, but rather shall be considered as material and the
equivalent of monetary defaults hereunder.
12. Extension of the time for payment or modification of the due date of
the sum secured by this Mortgage granted by Mortgagee to Mortgagor or any
successor in interest to Mortgagor shall not operate to release the liability of
Mortgagor. Any forbearance by Mortgagee in exercising any right or remedy on one
or more than one occasion shall not be a waiver or preclude the exercise of any
right or remedy.
13. If all or any part of the Property or any interest is sold or
transferred, directly or indirectly, without Mortgagee's prior written consent,
this Mortgage shall be in default and Mortgagee shall be entitled to treat all
possible obligations or liabilities that may be due under the agreements
referenced above to be due and commence foreclosure and other appropriate
actions hereunder.
14. Mortgagor shall, by not cause or permit the presence,
use, disposal, storage or release of any hazardous substances on
the Property. Mortgagor shall not do, nor allow anyone else to
do anything affecting the Property that is in violation of any
environmental law. Mortgagor has made due inquiry and investigation into the
present condition of the Property, and hereby acknowledge and represent that no
condition exists on the Property in violation of any Environmental Law,
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Florida Resource Recovery and
Management Act and the Pollution Spill Prevention and Control
Act. Further, Mortgagor does hereby specifically represent that
the Property does not and has never contained asbestos, PCBs or
other toxic materials, nor has been the location or subject of
any underground storage tanks, radioactive elements or any other
hazardous substance. Mortgagor represent that there is no civil,
criminal or administrative suit, demand or claim, hearing, notice, demand
letter, notice of violation, investigation or proceeding pending or threatened
against the Mortgagor relating in any way to any Environmental Law, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder. Mortgagor, and each of them, jointly and
severally, hereby agree to indemnify, reimburse, defend and hold harmless
Mortgagee, its officers, directors or other agents and assigns, from and against
all demands, claims, civil or criminal actions or causes of action, liens,
assessments, civil or criminal penalties or fines, losses, damages, liabilities,
obligations, costs, disbursements, expenses or fees of any kind or nature
(including without limitation, cleanup costs, attorneys', paralegals',
consultants' or experts' fees and disbursements and costs of litigation) which
at any time may be imposed, incurred or asserted, expended or awarded by or
against Mortgagee as a result of any environmental condition on the Property now
or in the future or the inaccuracy of any warranty made by Mortgagor pursuant to
this paragraph. Mortgagor agrees that any damages or liabilities incurred by
Mortgagee by virtue of any environmental problem associated with the Property or
owed pursuant to this indemnification shall be secured by this Mortgage.
15. Mortgagor shall be in default on this Mortgage if any of the following
events occur and remain uncured after five (5) days written notice from
Mortgagee to Mortgagor:
a. Mortgagor shall fail to pay any obligations, liabilities or
other amounts due under the terms of the First Mortgage or shall fail to observe
or perform any obligations or terms of the First Mortgage, or shall be in
default under the First Mortgage or any documents executed in connection
therewith.
b. Mortgagor shall default or fail to timely perform
Mortgagor's obligations to Mortgagee under the terms of the Joint
Venture Agreement dated April 28, 1998 between Mortgagor and
Mortgagee or shall attempt to grant or grants any junior lien on
the Property or attempt to sell or sells all or any part of the
Property.
c. J. William Metzger shall cease to be the Executive Vice
President or a higher ranking officer of Mortgagor, or shall be removed from his
day-to-day operational responsibilities for any reason.
d. Mortgagor shall default under any warranty or covenant of
Mortgagor contained in this Mortgage.
e. Any federal or state tax lien, claim of lien for labor and
materials, junior mortgage or junior lien, judgment of more than $5,000,
regulatory decision or other Court Order that affects, the licensing or
operation of Celebrity Fish Camp and RV Park, or any transfer or attempted
transfer of any portion of the business assets of Celebrity Fish Camp and RV
Park, the Property or any rights in connection therewith, or any effort is made
to lease or grant any other license or similar rights in the Property without
Mortgagee's written consent.
16. In the event of occurrence of a default as described in Paragraph 15,
or under the Agreement, then and in such event, Mortgagee shall be entitled to
immediately demand performance of all obligations due under the Joint Venture
Agreement whether or not such obligations and performances were yet due under
the terms of the Joint Venture Agreement or related documents. In the event of a
default, Mortgagee shall be entitled to exercise all rights available to a
mortgagee under Florida law separately or cumulatively, including but not
limited to the right to seek foreclosure of the Property and obtain a judgment
on the Joint Venture Agreement or do both independently or simultaneously and
Mortgagor shall not assert that the independent or simultaneous prosecution of
any and all remedies allowed under applicable law or hereunder shall constitute
an election or bar to the assertion of any such remedy.
17. After default, in the discretion of Mortgagee, Mortgagee will have the
absolute right to seek and obtain appointment of a receiver for the Property and
the business operated thereon and each or either parcel thereof. Mortgagee shall
be entitled to the appointment of a receiver as a matter of right regardless of
the value of the Property or either parcel thereof and without regard to the
solvency or payment ability of Mortgagor. Mortgagee may exercise this right in
any Court having jurisdiction, without notice and Mortgagor agrees that it shall
raise no defense or otherwise interfere with the appointment of a receiver and
that such receiver shall be vested with such duties and powers to the fullest
extent allowed by applicable law. In addition, Mortgagor agrees that any
receiver appointed shall have the right to advertise the Property for sale, rent
either or all of the Property or take such other action as will cause the
Property to generate revenues including but not limited to removal of the
existing tenants or occupants and replacement with tenants and occupants paying
or capable of paying amounts in excess of those paid by the then current tenants
or occupants.
18. If Mortgagee employs an attorney to enforce or protect its rights
hereunder or its rights in the Property, then and in such event, Mortgagor
agrees to pay and fully and completely indemnify Mortgagee for all costs and
expenses incurred by Mortgagee in connection therewith including reasonable
attorneys' fees and legal assistants fees for services rendered prior to
litigation and during all trial, appellate, bankruptcy court or other
proceedings.
19. Mortgagor agrees that time is of the essence in connection with the
performance owed Mortgages hereunder.
20. The Mortgagor, knowingly and voluntarily, WAIVES THE RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING FOR THE PURSUIT, ASSERTION OR RESOLUTION OF
ANY CLAIM OR DEFENSE THAT HAS BEEN ASSERTED OR MAY EVER BE ASSERTED OR
ASSERTABLE BY MORTGAGOR UNDER THE AGREEMENT, ADDENDUM, COVENANT, GUARANTEE OR
OTHER PURCHASE DOCUMENTS AND MORTGAGE OR UNDER ANY LAW OR THEORY
GOVERNING THE RELATIONSHIP OF THE PARTIES. THIS WAIVER OF JURY TRIAL SHALL
EXTEND TO ALL MATTERS BETWEEN THE PARTIES AND SHALL BE UNCONDITIONAL AND
ABSOLUTE. IN THE EVENT THAT ANY COLLATERAL MATTER IS JUDICIALLY DETERMINED TO BE
OUTSIDE THE SCOPE OF THIS WAIVER OF JURY TRIAL OR IF THIS WAIVER OF JURY TRIAL
IS DETERMINED TO BE UNENFORCEABLE IN ANY DEGREE, THEN THIS WAIVER OF JURY TRIAL
SHALL BE AUTOMATICALLY MODIFIED TO ENCOMPASS SUCH MATTERS SO THAT NO MATTER
INVOLVING MORTGAGOR AND MORTGAGEE SHALL BE SUSCEPTIBLE TO TRIAL BY JURY.
IN WITNESS WHEREOF, Celebrity Entertainment, Inc. accepts and agrees to
the terms of this Mortgage and sets its hands and seals to this Mortgage on this
28th day of April, 1998.
Signed, sealed and
delivered in the presence of:
Celebrity Entertainment, Inc.
/s/ /s/
J. William Metzger
Executive Vice President
"Mortgagor"
STATE OF FLORIDA
COUNTY OF PALM BEACH
BEFORE ME the undersigned authority, personally appeared J.
William Metzger, Executive Vice President of Celebrity
Entertainment, Inc. who is authorized to conduct the business of
the corporation and who is personally known to me or who has
produced a valid Drivers License as identification, and who
executed the foregoing for the purposes stated therein and who
did take an oath on this 28th day of April, 1998.
/s/
NOTARY PUBLIC, State of Florida at
Large
My Commission expires:12/28/01
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS INCLUDED IN FORM 10-QSB AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 17,911
<SECURITIES> 0
<RECEIVABLES> 2,458
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,369
<PP&E> 3,775,673
<DEPRECIATION> 795,028
<TOTAL-ASSETS> 4,961,151
<CURRENT-LIABILITIES> 4,402,749
<BONDS> 0
10,640
0
<COMMON> 26
<OTHER-SE> (17,293,581)
<TOTAL-LIABILITY-AND-EQUITY> 4,961,151
<SALES> 96,995
<TOTAL-REVENUES> 96,995
<CGS> 0
<TOTAL-COSTS> 273,799
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (27,787)
<INCOME-PRETAX> (204,591)
<INCOME-TAX> (204,591)
<INCOME-CONTINUING> (204,591)
<DISCONTINUED> 0
<EXTRAORDINARY> 9,897
<CHANGES> 0
<NET-INCOME> (194,694)
<EPS-PRIMARY> (1.34)
<EPS-DILUTED> (1.34)
</TABLE>
