Confirming Copy of
Filing April 15, 1996
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1995
Commission File No. 0-23258
HOLLYWOOD TRENZ, INC.
(Name of Small Business Issuer in its Charter)
Delaware 59-2839130
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3471 North Federal Highway, Suite 501, Fort Lauderdale, Florida 33306
(Address of principal executive offices)
Issuer's telephone number: (954) 568-0433
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock,
$.0001 par value
Indicate by check mark whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
Issuer's revenues for most recent fiscal year: $0
The aggregate market value of the voting stock held by non-affiliates of
the issuer was approximately $5,009,437. The aggregate market value was based
upon the mean between the closing bid and asked price for the Common Shares as
reported by the OTC Bulletin Board as of April 4, 1996.
Number of Shares outstanding of each of the issuer's classes of common
equity, as of April 4, 1996: 21,915,544
DOCUMENTS INCORPORATED BY REFERENCE:
Exhibits.
<PAGE>
INDEX
Page
PART I
ITEM 1. BUSINESS 1
ITEM 2. PROPERTIES 8
ITEM 3. LEGAL PROCEEDINGS 8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 9
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS 10
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 13
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 13
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT 13
ITEM 10. EXECUTIVE COMPENSATION 14
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 15
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 16
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K 17
<PAGE>
PART I
ITEM 1. BUSINESS
General
Hollywood Trenz, Inc. (the "Company") was incorporated in Delaware on
August 25, 1987 under the name Dimension Capital, Inc. for the purposes of
investigating and acquiring business opportunities. In September, 1989 the
Company sold 12,500 Units to the public for $3.00 per Unit. Each Unit consisted
of one share of Common Stock and warrants to purchase additional shares of
Common Stock of the Company. In April, 1993 the Company acquired all of the
outstanding common stock of Interstate Finance and Trust Co., Inc., an Iowa
corporation ("Interstate"), in exchange for a number of shares of the Company's
Common Stock equal to 85% of the total number of shares of Common Stock issued
and outstanding after the transaction, and the name of the Company was changed
to Hollywood Trenz, Inc.
Subsequent to the acquisition of Interstate, the principal business of the
Company has been the development of Hollywood Trenz family entertainment
centers. From January 1994 through March, 1995, the Company operated one
Hollywood Trenz retail store located in Sarasota, Florida. The Company is
currently engaged in efforts to acquire sites and financing to develop family
entertainment centers. The Company, through Interstate, was previously involved
in the development of residential and commercial real estate, but these
activities have been discontinued.
Hollywood Trenz Family Entertainment Centers
Until March 1995, the Company operated one Hollywood Trenz retail store in
Sarasota, Florida. The 3,000 square-foot store was operated primarily as a
prototype for the retail component of the Company's family entertainment center
concept, featuring movie and entertainment-related licensed merchandise. It was
not anticipated that the store would generate significant cash flows, if any,
and its operations were terminated in March, 1995 in order to concentrate on
development of the Company's entertainment centers. The Company's retail
merchandising will consist of a mix of gifts, accessories, and apparel for
children and adults. The merchandise will be supplied by vendors who are
licensed to manufacture and sell items featuring trademarked characters or
properties of Disney, Warner Bros., Turner Entertainment and other well-known
entertainment companies. The Company maintains relationships with hundreds of
suppliers who will provide merchandise for its retail operations. Management of
the Company believes that alternative sources are available if its current
suppliers were unable to provide adequate quantities of merchandise.
The Company proposes to develop a series of Hollywood Trenz Family
Entertainment Centers which will combine an interactive Hollywood theme
restaurant, innovative retail, state-of-the-art entertainment areas and a
Hollywood Kiddz Fantasy Park.
1
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Interactive Hollywood Theme Restaurant
At the heart of each Hollywood Trenz family entertainment center is an
interactive restaurant that embodies the theme Hollywood Past, Present and
Future. Walls and table tops will display authentic movie and entertainment
memorabilia that will be offered for sale via catalogs placed on each table.
Throughout the restaurant video screens will display movie and entertainment
images from Hollywood Past, Present and Future. 3-D images, animatronics,
Pepper's Ghost and live actors will appear on the interactive stage in the
restaurant. Hollywood Trenz customers will be transported into the adventure,
romance and glamour of Hollywood. Interactive T.V. games, including trivial
pursuits, football, baseball and hockey will be available in the bar area.
Quality food will be served for lunch and dinner with entrees priced from $7.95
to $15.95. Full alcoholic beverage service will be available in the dining room
and in the bar area.
Retail
In the retail area, Hollywood Trenz logo merchandise will be sold along with
Hollywood and entertainment memorabilia, including celebrity autographed
pictures, animated art cells, props from movie sets, garments from movie
wardrobes, authentic musical instruments used by well known artists and the
latest in licensed entertainment merchandise from current and past movie hits
such as Batman Forever, Pocahontas and Mighty Morphin Power Rangers.
Laser Tag
Step into a medieval world in which you and your friends are knights of the
round table but in a future time and place where your lances are lasers and the
dragons are animatronic cyborgs. In a briefing session you are instructed on the
art of combat in this futuristic universe. In the vesting room you receive your
laser and vest. Now you are prepared to enter the field of medieval combat in
the year 3010.
The arena is an awesome presence, forbidding and menacing. A mist hangs in the
air and the air pulses with the heavy beat of heart-pounding sounds from a
maniacal assemblage of other worldly musicians. Passage ways lead to ramps that
lead to doors that open to secret passageways that lead to the opposing knights'
castles. The medieval theme is carried forward in all aspects of the arena and
the animatronic dragons and gargoyles. There is even the sword in the stone with
a special prize to the knight who is able to extract the sword from the stone by
striking the handle of Excaliber with his laser beam and thus fulfilling the
legend.
The object of the combat is to score points while defending yourself and your
castle from attack. Knights are grouped into three teams of up to ten members,
identified by the color of the flashing lights on their electronic vests-green,
red or yellow. A typical play experience is 30 minutes including the briefing on
rules and strategy, a stop in the vesting room to pick up a laser and vest
displaying targets on the shoulders, chest and back, and typically, 15 minutes
of intense competition in the arena. Points are scored by hitting the opposing
teams' targets and deactivating their castles, while avoiding being hit by a
beam from an electronic Sentinel, programmed to shoot randomly. Reload stations
for replenishing ammunition make it possible for all knights to stay in the game
for the entire session.
2
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Hollywood Trenz lasers and vests are the most technologically advanced equipment
available in the industry. Knights always know if they've been hit or scored
points because, when a target is hit, the chest pack in the vest vibrates,
sounds a "power down" alarm and emits a flash of white light. The scoring
knight's ID number and team are displayed on the chest pack, and scores are
stored instantly for automatic downloading to the main computer. When the combat
is over, in a debriefing session, knights receive personalized score sheets
detailing all aspects of their performance, how their team fared against the
other teams, how many times they hit each opposing knight and how many times
each opposing knight hit them. The winning team is then knighted and presented
with an award thus becoming Knights of King Arthur's Round Table.
Hollywood Kiddz Fantasy Park
Enter a world of children's delights: theme park rides like at the big amusement
parks only smaller to fit a child's perspective; bumper cars sized to a child's
proportions; soft play, Big Brik, Mega Blok and Lego building block areas
featured by current children's play centers; arcade redemption machines where
prizes can be won; an interactive computer learning center that will challenge
and intrigue children of all ages; and birthday party rooms for pizza, soft
drinks, ice cream and opening presents. What better place for a birthday party
than Hollywood Trenz? Kids can experience the fun and excitement of mini-theme
park rides and bumper cars and then have their own room for a memorable birthday
experience.
Parents may share the play experience with their children or they may leave them
with qualified care givers and enjoy Laser Tag, the arcades or a fine meal in
the Hollywood Trenz restaurant confident that their children will be well cared
for and have a great time. Parents may also drop their children off and leave
the center for up to four (4) hours. Parents and children will be given matching
wrist bands and the parents will be given pagers so that parental contact can be
made at any time.
Arcades
These are not the arcades of twenty or even ten years ago. The arcade areas will
contain the latest in arcade and virtual reality games from leaders in the
industry, including Sega, Atari, Namco and Midway. The traditional pin ball,
skeeball and pool tables will be there, but the real excitement is generated by
the sophisticated computer games made possible by the mega leaps in computer
technology of the last ten years.
3
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Compete with your friends in the multiple car race that pits driver against
driver and drivers against progressively more difficult race courses. Try your
hand at hitting wide receivers over blitzing linebackers at the high school,
college and pro levels. As the suave super spy blast away at the bad guys as
they come at you from all sides of the wharf while timing your reloads to take
maximum advantage of the logistics. Shoot baskets and pile up coupons to take
home mementos of your sharpshooting prowess. Hollywood Trenz will strive to be
on the cutting edge of innovation in arcade attractions.
Security
Security will be provided by Hollywood Trenz security personnel and by a
uniformed policeman from the local police department. With the wholesome family
atmosphere of Hollywood Trenz, we do not anticipate having security problems but
the presence of security personnel will add to the sense of safety that is an
integral part of the Hollywood Trenz experience.
Phoenix and Denver Centers
Hollywood Trenz, Inc. has begun construction of its first family entertainment
center in 29,725 square feet of leased space at 2710 West Bell Road, Suite 1150,
Phoenix, Arizona. The Company has executed a lease for its second center in
Denver, Colorado. The Denver site is a 36,500 square foot building at 5022 S.
Jellison Way. The Company anticipates opening the Phoenix center in the second
quarter of 1996 and the Denver center in the summer of 1996. Hollywood Trenz is
also seeking locations for its centers in Dallas, Ft. Lauderdale and Atlanta.
4
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Disposition of Interests in Other Companies
International Standards Group, Ltd. During November, 1994 the Company
entered into written agreements to sell its shares of International Standards
Group, Ltd. for $200,000 in cash and an oral agreement whereby the purchaser
would provide additional equity funding for one of the Company's family
entertainment centers. The purchaser paid the $200,000 but refused to provide
the equity funding. The transaction was not completed and the Company instructed
the escrow agent that the securities should not be transferred to the purchaser
because it believed that the purchaser had violated the terms of the agreements.
During June, 1995 the parties settled their dispute by agreeing to liquidate
these securities and to distribute the proceeds as follows:
A) The first $210,000 received to the purchaser;
B) The next $50,000 to the Company;
C) The next $50,000 to the purchaser; and
D) The balance received would be split equally between the Company
and the purchaser.
The Company received $341,450 in proceeds and recognized a loss of $59,191 in
1995 related to the disposition.
Interstate Finance and Trust Co., Inc. On September 25, 1995, the Company
transferred all of the issued and outstanding stock of Interstate Finance and
Trust Co., Inc. ("Interstate") to Edward R. Showalter, Chairman, President,
Chief Executive Officer and a Director of the Company. Interstate owns a
portfolio of defaulted FDIC and RTC loans and real estate in Melbourne, Florida,
Pompano Beach, Florida and Cocoa Beach, Florida. The portfolio is the subject of
a dispute between Interstate and the former owners of the portfolio. The
mortgages on the real estate are in default and foreclosure actions are pending.
No consideration was given by Mr. Showalter for the transfer. The total assets
and liabilities of Interstate at the disposition date were $3,798,604 and
$4,071,195, respectively. The Company realized a gain of $172,591 related to the
disposition.
Advanced Media, Inc. On December 7, 1995, the Company transferred and
assigned to Advanced Media, Inc. ("AMI") 1,000,000 shares of common stock, par
value $.0001 per share, of AMI in exchange for the transfer and assignment by
AMI to the Company of 150,000 shares of common stock, par value $.0001 per
share, of the Company pursuant to a Reciprocal Stock Exchange Agreement dated
November 29, 1995 between the Company and AMI. The Company recognized a gain of
$190,000 in 1995 related to the disposition.
Conectisys Corporation On February 28 , 1996, the Company transferred and
assigned to Conectisys Corporation (formerly BDR Industries, Inc.) 300,000
shares of common stock, no par value, of Conectisys Corporation in exchange for
the transfer and assignment by Conectisys Corporation to the Company of 600,000
shares of common stock, par value $.0001 per share, of the Company pursuant to a
Letter Agreement dated February 8, 1996 between the Company and Conectisys
Corporation. The Company recognized a loss of $1,200,000 in 1995 related to the
disposition.
5
<PAGE>
Competition
With regard to its proposed entertainment center operations, the Company
will compete with several established entities which have also adopted
entertainment related themes, such as Planet Hollywood, Hard Rock Cafe, The
Cheese Cake Factory, the Harley Davidson Cafe, Boomer's, Dave & Buster's, and
others. In addition, several large entertainment companies, including Disney,
Warner Bros., Turner and Blockbuster are also engaged in developing competing
attractions. The Company's competitors in the children's entertainment/education
market include Discovery Zone and others. However, with its plan to combine its
retail concept with its restaurant and entertainment center concepts, the
Company hopes to distinguish itself from its competition by serving a greater
variety of interests in the entertainment field all at a single location.
Government Regulation
The Company's existing and proposed operations are subject to various
federal, state and local laws and regulations.
With regard to its proposed entertainment center operations, the restaurant
operations will be subject to licensing and regulation by a number of
governmental authorities, which may include alcoholic beverage control, health,
safety, and fire agencies in the states or municipalities in which the centers
are located. Difficulties in obtaining or failures to obtain the required
licenses or approvals could delay or prevent the development of a new restaurant
in a particular area.
The Company anticipates that approximately 18% of each restaurant's
revenues will be attributable to the sale of alcoholic beverages. Alcoholic
beverage control regulations require restaurants to apply to a state authority
and, in certain locations, county or municipal authorities for a license or
permit to sell alcoholic beverages on the premises and to provide services for
extended hours and on Sundays. Typically, licenses must be renewed annually and
may be revoked or suspended for cause at any time. Alcoholic beverage control
regulations relate to numerous aspects of daily operation of restaurants,
including minimum age of patrons and employees, hours of operation, advertising,
wholesale purchasing, inventory control and handling, storage and dispensing of
alcoholic beverages. The failure of an entertainment center to obtain or retain
liquor or food service licenses would adversely affect the center's operations.
In addition, the Company may be subject in certain states to "dram-shop"
statutes, which generally provide that a person injured by an intoxicated person
may seek to recover damages from an establishment which wrongfully served
alcoholic beverages to the intoxicated person. The Company's existing
comprehensive general liability insurance includes liquor liability coverage.
The Company's family entertainment center operations will also be subject
to federal and state minimum wage laws governing such matters as working
conditions, overtime and tip credits. Significant numbers of the Company's food
service and preparation personnel will be paid at rates related to the federal
minimum wage and, accordingly, further increases in the minimum wage could
increase the Company's labor costs.
6
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The Americans With Disabilities Act prohibits discrimination in employment
and public accommodations on the basis of disability. Under the act, the Company
could be required to expend funds to modify its entertainment centers to provide
service to, or make reasonable accommodation for the employment of or patronage
by disabled persons.
Insurance
The Company currently carries commercial liability insurance aggregating
$1,000,000 per occurrence. Coverage includes but is not limited to premises and
operations, broad form property damage and other customary perils. The Company
believes that it carries adequate insurance coverage for its current business
activities, but proposes to acquire additional coverage as its operations
expand. However, there can be no assurance that such coverage will prove to be
adequate or will continue to be available to the Company, and in the event that
such coverage proves to be inadequate, such event may have a material adverse
effect on the financial condition or results of operations of the Company.
7
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ITEM 2. PROPERTIES
During 1995 the Company entered into leases for its first two family
entertainment centers.
The Company is leasing 29,725 square feet in the Bell Canyon Pavilions
shopping center at 2710 West Bell Road, Phoenix, Arizona from an unaffiliated
third party. Bell Canyon Pavilions is located at the northwest corner of I-17
and Bell Road. The lease provides for an initial term of five years with two
five year options and monthly rent, CAM and rental tax of $27,980.13 per month.
The Company is leasing a 36,500 square foot building for its second family
entertainment center at 5022 S. Jellison Way, Denver, Colorado from an
unaffiliated third party. The lease provides for an initial term of ten years
with three five year options and monthly rent of $14, 447.92 in lease years one
and two, $15,208.33 in lease year three, $15,968.75 in lease year four,
$16,729.17 in lease year five and annual increases during lease years six
through ten based upon increases in the Consumer Price Index.
The Company leases its executive offices, which consist of two suites
aggregating approximately 2,640 square feet, in Fort Lauderdale, Florida. These
facilities are leased from an unaffiliated third party on a month-to-month basis
under two separate leases having an aggregate monthly rental of $3,415.
During 1995, the Company leased office space at 6312 S. Fiddler's Green
Circle, Suite 440N, in Englewood, Colorado. The office, consisting of 942 square
feet, was leased on a month-to-month basis at the rate of $1,500 per month. In
February, 1996 The Company moved its Denver office to the building in which its
second family entertainment center will be located.
Management deems these office facilities to be adequate for the foreseeable
future.
During 1994, the Company opened its first retail outlet, which consisted of
3,000 square feet of space located in Sarasota, Florida. The space was leased at
the rate of $4,327 per month. Operations at this outlet were discontinued in
March 1995 in order to focus on the development of the Company's entertainment
centers. The Company is currently a party to litigation regarding the
termination of the Company's lease for this location. See "ITEM 3. LEGAL
PROCEEDINGS."
ITEM 3. LEGAL PROCEEDINGS
In litigation arising out of the closing of the Sarasota retail store in
March 1995 a judgment was entered against the Company and Mr. Showalter in favor
of Ezon Investment Company, as landlord, in the amount of $81,682.99. Pursuant
to an Indemnity Agreement, stock belonging to Mr. Showalter is being liquidated
to discharge this indebtedness. Also in connection with the closing of the
Sarasota store a stipulated judgment was entered against the Company and Mr.
Showalter in favor of The Lincoln National Life Insurance Company, successor
landlord to Ezon Investment Company, the remaining balance on which is
$24,743.85. Mr. Showalter has agreed to pay this amount.
8
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A judgment in the amount of $72,954.72 was entered against the Company and
Mr. Showalter in favor of a partnership controlled by W.B. Allen in litigation
involving property owned by Interstate Finance and Trust Co., Inc. in Broward
County, Florida. In related litigation pending in Fairfax County, Virginia a
default has been entered against the Company and Mr. Showalter and a hearing on
damages is pending. The Company and Mr. Showalter intend to vigorously protest
the entry of default and vigorously contest the claim for damages.
During 1994, the Company was advised by the Securities and Exchange
Commission (the "Commission") that the Commission had commenced a formal
investigation into certain financial records and reports filed by the Company
after its acquisition of Interstate in April, 1993. Pursuant to this
investigation, the Commission has subpoenaed certain of the Company's records.
Management of the Company believes that the Company has fully complied with the
Commission's requirements during the investigation, and management intends to
fully cooperate with the Commission. Currently, because the Commission does not
comment on the status of pending investigations, management of the Company is
unable to estimate how much longer the investigation may continue.
In July of 1995, the Company entered into a contract with Kraus-Anderson
Construction Company to provide preconstruction services, and construction
services, with respect to the tenant improvements for the Hollywood Trenz family
entertainment center in Phoenix, Arizona. Disputes arose in the business
relationship with respect to inadequacy of the services by Kraus-Anderson and
the substantial expenses that were being incurred as reflected on Kraus-Anderson
pay applications. These pay applications were not supported by the appropriate
detail and backup as required by the contact.
Kraus-Anderson billed the Company in excess of $270,000.00 for services
allegedly rendered. The Company has not paid any amounts to Kraus-Anderson and
has asserted a counterclaim against Kraus-Anderson for delay damages. It further
defends on the basis that many of the items that were billed by Kraus-Anderson
are either (1) not an item of cost that can be billed pursuant to the contract;
(2) were not services rendered to the Company; or (3) were services provided,
but for which the Company received no benefit.
This dispute is currently in arbitration before the American Arbitration
Association. It is too early in the dispute to be able to form any reasonable
judgment as to the potential outcome of this dispute. The Company intends to
aggressively defend the claim by Kraus-Anderson and to pursue its counterclaim
within the context of the arbitration.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the year
ended December 31, 1995.
9
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's $.0001 par value Common Stock ("Common Stock"), is currently
traded in the over-the-counter market under the symbol "HTNZ" and has been
quoted on the OTC Bulletin Board since September 18, 1993. Prior to that date,
there had been no public trading market for the Company's Common Stock.
The following table sets forth the quarterly high and low bid quotations,
as reported by the NQB Non-NASDAQ Price Report for the two most recent fiscal
years. These quotations reflect interdealer prices, without retail mark-up,
mark-down or commission, and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
1995 1994
--------------------------- ---------------------
Period High Low High Low
<S> <C> <C> <C> <C>
1st Quarter (1/1 - 3/31) 4 3/4 1 15/16 1/8
2nd Quarter (4/1 - 6/30) 3 3/4 1/32 1 9/16 1/4
3rd Quarter (7/1 - 9/30) 13/16 1/16 1 1/32 1/8
4th Quarter (10/1-12/31) .44 .02 13/16 1/8
</TABLE>
- ---------------------------
The Company's outstanding shares of Common Stock were reverse split,
1-for-10, effective October 14, 1994. Following the split, the high and low bid
quotations were 4 and 1/4, respectively.
- ----------------------------
As of December 31, 1995, there were approximately 253 record holders of the
Company's Common Stock. The Company has never declared or paid any cash
dividends on its Common Stock and does not currently intend to do so in the
foreseeable future.
10
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is engaged in the development, construction and operation of family
entertainment centers. To date the Company has had no revenues from the
operation of family entertainment centers. The Company's fiscal year end is
December 31. Unless otherwise noted, references to fiscal 1995 and 1994 relate
to the fiscal years ended December 31, 1995 and December 31, 1994.
OVERVIEW
As a new entrant into the family entertainment center business the Company has
experienced difficulty in obtaining financing for its centers. The first center
is under construction in Phoenix, Arizona and construction will begin imminently
on the Company's second center in Denver, Colorado.
Results of Operations
The following table sets forth, for the fiscal years ended December 31, 1995 and
December 31, 1994, certain items from the Company's Consolidated Statements of
Operations.
1995 1994
---- ----
Revenues $ -- $ 83,919
Expenses 11,938,485 4,396,666
------------- ------------
Net loss from Operations (11,938,485) (4,312,747)
Other income (expense) ( 1,003,817) (2,420,967)
Net loss $ (12,942,302) $(6,733,714)
------------- ------------
Weighted average number
of common shares
outstanding 9,650,075 1,292,251
-------------
Net Loss per share $ (1.34) $ (5.21)
-------------- -------------
The Company's activities during fiscal 1995 consisted of arranging financing for
its family entertainment centers, reviewing potential sites, negotiating leases,
obtaining approvals and permits, arranging for purchases of equipment and
construction of its Phoenix center.
11
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Comparison of 1995 to 1994
The Company had no revenues in fiscal 1995 as compared to $83,919 in revenues
for fiscal 1994 that were derived principally from the operation of the
Company's retail store that was closed in March, 1995. General and
administrative expenses increased for the year as the result of the issuance of
stock for consulting services ($8,965,000), the recognition of a loss on the
abandonment of the proposed family entertainment center on Fiddler's Green in
Denver, Colorado ($1,206,000), the recognition of theretofore unrealized losses
on the disposition of marketable securities ($1,069,000) and other expenses of
$1,767,000.
Capital Resources & Sources of Liquidity
The Company's primary cash requirements are for operating expenses, primarily
labor and general and administrative expenses, and for the costs of locating and
leasing sites, constructing tenant improvements and equipping and operating its
family entertainment centers. In fiscal 1995 the Company issued 772,162 shares
of its common stock for cash aggregating $1,247,277 pursuant to private
placements. Also in fiscal 1995 the Company received $341,450 in proceeds from
the disposition of its shares of International Standards Group, Ltd. In fiscal
1994 the Company received $1,821,269 in cash pursuant to the exercise of stock
options related to S-8 registration statements. The Company also expended
$252,012 on the Phoenix center in fiscal 1995. In 1996 the Company expects to
generate significant cash flows from operations of its Phoenix and Denver family
entertainment centers. During January, 1996 the Company began offering through a
private placement 60 units at $10,000 per unit. Each unit consists of 50,000
shares of the Company's common stock and a royalty payment of .2% of the total
revenues of the Phoenix center for the first 18 months of its operation.
New Accounting Standards
There were no new accounting standards that materially affected the Company
during fiscal 1995.
12
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ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See index beginning on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements with the Company's independent accountant
during the Company's two most recent fiscal years regarding matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Position
---- --- --------
Edward R. Showalter 44 Chairman of the Board, Chief Executive
Officer, President and Director
Robert E. Burton, Jr. 54 Vice Chairman, Chief Operating Officer,
Secretary and Director
Gregory D. Smith 43 Director
Members of the Board of Directors serve until the next annual meeting of
stockholders and until their successors are duly elected and qualified, unless
earlier removed as provided in the Bylaws of the Company. Executive officers
serve at the pleasure of the Board of Directors.
Edward R. Showalter. Mr. Showalter has been Chairman of the Board, Chief
Executive Officer, President and a Director of the Company since April, 1993,
when the Company acquired all of the issued and outstanding stock of Interstate
Finance and Trust Co. ("Interstate"). Prior to joining the Company, Mr.
Showalter had been the president, director and sole shareholder of Interstate
since April, 1992. From January, 1989 to April, 1992, Mr. Showalter was involved
in building and designing retail stores for American Movie Retail, Inc. of Fort
Lauderdale, Florida.
Robert E. Burton, Jr.,. Mr. Burton has been Vice Chairman, Chief Operating
Officer and a director of the Company since July, 1993. Prior to joining the
Company, Mr. Burton had been vice president and associate general counsel of the
Resolution Trust Corporation since January 1991. From 1977 to January, 1991, Mr.
Burton was a partner in the Cleveland and Columbus, Ohio offices of the law firm
of Squire Sanders & Dempsey
Gregory D. Smith. Mr. Smith has been the owner and chief executive officer
of The Aero Group Companies, specializing in aircraft charter, leasing, sales,
maintenance and management since 1976.
13
<PAGE>
Compliance with Section 16(a) of the Exchange Act
Under Section 16(a) of the Securities Exchange of 1934 (the "Exchange
Act"), the Company's directors, executive officers and any persons holding more
than ten percent of the Company's Common Stock are required to report their
ownership of the Company's Common Stock and any changes in that ownership to the
Securities and Exchange Commission. Based upon the Company's review of the
reports on Forms 3, 4 and 5, as well as all amendments to such reports furnished
to the Company during the year ended December 31, 1995, all Section 16(a) filing
requirements applicable to the Company's directors, executive officers and
holders of greater than ten percent of its Common Stock were complied with,
except that Mr. Edward R. Showalter was late in filing two Forms 4 and Mr. Smith
was late in filing one Form 4.
ITEM 10. EXECUTIVE COMPENSATION
The following tables set forth all compensation paid to executive officers
of the Company for the year ended December 31, 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION
Annual Compensation Long Term Compensation
--------------------------------------- ------------------------------------
Name and Other Annual Restricted LTIP All Other
Principal Position Year Salary Bonus Compensation Stock Awards Options/SARs Payouts Compensation
- ------------------ ---- ------ ----- ------------ ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Edward R. Showalter 1995 $-0- $ -0- $ -0- $225,000 $ -0- $ -0- $ 25,000 1
Chief Executive Officer 1994 -0- -0- -0- -0- 8,500,000 -0- $114,000 1
and President
Robert E. Burton, Jr 1995 156,000 -0- -0- 28,125 -0- -0- -0-
Vice Chairman, 1994 156,000 -0- -0- -0- 4,000,000 -0- 3,400 2
Chief Operating Officer
and Secretary
</TABLE>
- -------------
1 Includes amounts paid for reimbursement of living expenses and other
expenses incurred on behalf of the Company. (See "Employment Agreements")
2 Includes compensation paid to Mr. Burton for rental of his personal
residence. (See "Employment Agreement")
Employment Agreements
At December 31, 1995, the Company had not entered into employment
agreements with its officers, directors or employees. Pursuant to arrangements
between the Company and Mr. Showalter, Mr. Showalter did not receive salary, but
was reimbursed for certain living expenses and other expenses incurred by him on
behalf of the Company.
Pursuant to arrangements with Mr. Burton, he was entitled to receive a
salary of $3,000 per week and to be reimbursed for rental of his residence at
the rate of approximately $3,400 per month during 1993 and 1994. Due to the
Company's limited capital resources, the Company was unable to reimburse Mr.
Burton for all of the rental expense incurred by him during the year ended
December 31, 1994, and the unpaid portion of this reimbursement has been treated
as a cash advance by Mr. Burton to the Company. (See "ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.")
14
<PAGE>
Compensation of Directors
Directors of the Company who are not officers are entitled to receive a fee
of $1,000 per meeting attended.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At December 31, 1995, the Company had issued 20,775,544 shares of Common
Stock, the only class of voting securities outstanding. In addition, options to
acquire an additional 13,850,000 shares of Common Stock, at an exercise price of
$1.00 per share, were also outstanding. The following tabulates holdings of
Common Stock of the Company by each person who holds of record or is known by
management of the Company to own beneficially more than 5% of the Common Stock
outstanding, and, in addition, by all directors and officers of the Company
individually and as a group. The shareholders listed below have sole voting and
investment power, except as otherwise noted.
Number Percent
Name and Address Of Shares of Voting Securities
- ---------------- ---------- --------------------
Edward R. Showalter 1,2 10,839,058 35.9%
3471 North Federal Highway
Fort Lauderdale, Florida 33306
Robert E. Burton, Jr. 1,3 4,690,000 18.6%
3471 North Federal Highway
Fort Lauderdale, Florida 33306
Gregory D. Smith 1 211,111 1.0%
1575 W. Commercial Blvd.
Fort Lauderdale, Florida 33309
All Directors and Officers 2,3 15,740,169 45.5%
as a group (3 persons)
- -----------
1 Officer or Director
2 Includes 9,400,000 shares underlying stock options which are
immediately exercisable at an exercise price of $1.00 per share, and
assumes exercise of such options.
3 Includes 4,450,000 shares underlying stock options which are
immediately exercisable at an exercise price of $1.00 per share, and
assumes exercise of such options.
15
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1993, 1994 and 1995 Robert E. Burton, Jr., the Vice Chairman, Chief
Operating Officer and a director of the Company, made net advances of cash to
the Company which aggregated $194,722 as of December 31, 1995. A portion of
these advances consist of unpaid compensation due Mr. Burton pursuant to his
compensation arrangements with the Company. The advances are non-interest
bearing and are due upon demand by Mr. Burton.
On June 16, 1995, the Company authorized the issuance of 1,200,000
restricted shares of Common Stock to Mr. Showalter for personal services to the
Company and his personal guarantee of a lease obligation of the Company.
On June 16, 1995, the Company authorized the issuance of 150,000 restricted
shares of Common Stock to Mr. Burton for personal services to the Company.
On June 16, 1995, the Company authorized the issuance of 150,000 restricted
shares of Common Stock to Mr. Smith for his personal guarantee of a lease
obligation of the Company.
16
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
-----
Independent Auditor's Report F - 2
Consolidated Balance Sheet as of December 31, 1995 F - 3
Consolidated Statements of Operations for the
Years ended December 31, 1994 and 1995, and
for the period from Inception to December 31, 1995 F - 4
Consolidated Statement of Stockholders'
Equity for the period from Inception through
December 31, 1995 F - 5
Consolidated Statements of Cash Flows for the
Years ended December 31, 1994 and 1995, and
for the period from Inception to December 31, 1995 F - 7
Notes to Financial Statements F - 9
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Hollywood Trenz, Inc.
We have audited the accompanying balance sheet of Hollywood Trenz, Inc. (a
development stage Company) as of December 31, 1995, and the related statements
of operations, stockholders' equity, and cash flows for each of the two years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hollywood Trenz, Inc. (a
development stage Company) as of December 31, 1995, and the results of its
operations, and its cash flows for each of the two years then ended in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 11 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 11. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Winter, Scheifley & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
March 15, 1996
F-2
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
December 31, 1995
ASSETS
Current assets:
Total current assets $ -
Property, plant and equipment,
at cost:
Furniture and equipment 22,368
Less: accumulated depreciation 10,148
------------
12,220
Other assets:
Investments 252,012
Marketable securities 1,050,000
------------
$ 1,314,232
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and payroll taxes payable $ 1,277,227
Due to officer 194,722
------------
Total current liabilities 1,471,949
Commitments and contingencies
Stockholders' equity:
Common stock, $.0001 par value,
80,000,000 shares authorized,
20,775,544 shares issued and
outstanding 2,078
Paid in capital 19,946,940
Common stock subscriptions 60,521
Deficit accumulated during the
development stage (20,167,256)
-----------
(157,717)
$ 1,314,232
===========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
For the Year Ended December 31, 1995 and 1994, and
Inception (April 23, 1992) to December 31, 1995
Year Ended Year Ended Inception to
December 31, December 31, December 31,
1995 1994 1995
------------ ------------ ------------
Revenue $ -- $ 83,919 $ 348,579
Costs and expenses:
Cost of sales -- 104,243 104,243
General and Administrative 11,938,485 4,292,423 16,945,180
------------ ------------ ------------
11,938,485 4,396,666 17,049,423
Net loss from operations (11,938,485) (4,312,747) (16,700,844)
Other income and (expense)
Loss on abandonment of
fixed assets (107,217) -- (107,217)
Gain on the disposition of
subsidiary company 172,591 -- 172,591
Realized gain (loss) on
marketable securities (1,069,191) (2,170,674) (3,239,865)
Interest expense -- (250,293) (291,921)
------------ ------------ ------------
(1,003,817) (2,420,967) (3,466,412)
Net loss $(12,942,302) $(6,733,714) $(20,167,256)
============ ============ ============
Per share information:
Weighted average number
of common shares
outstanding 9,650,075 1,292,251 4,278,761
============ ============ ============
Net loss per share $ (1.34) $ (5.21) $ (4.71)
============ ============ ============
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
<TABLE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Consolidated Statement of Changes in Stockholders' Equity
For the Period From April 23, 1992, (Inception) through
December 31, 1995
<CAPTION>
Deficit
Accumulated
During the Common
Paid in Development Stock
Common Stock Capital Stage Subscriptions
------------------------ -------- ------------- -------------
Shares Amount
------ ------
<S> <C> <C> <C> <C> <C>
Shares issued for the net
assets of Interstate
Finance & Trust Co., Inc.
at $.04 per share 510,000 $ 51 $ 22,116 $ -- $ --
Net loss for the period (45)
--------- ------ ----------- ---------- ----------
Balance December 31, 1992 510,000 51 22,116 (45) --
Shares issued for
reorganization 91,963 9 2,800
Shares issued for services,
at $.001 per share 91,555 9 83
Shares issued for the
acquisition of investment at
$.001 per share 1,000
Shares issued for cash at
$6.00 per share 4,168 1 24,999
Shares issued for cash at
$17.50 per share 10,000 1 174,999
Net loss for the year (491,195) --
--------- ------ ----------- ---------- ----------
Balance December 31, 1993 708,686 $ 71 $ 224,997 (491,240) --
Shares issued for services
at $4.38 per share 4,000 17,500
Shares issued for services
at $4.22 per share 8,000 5 202,507
Shares issued for services
at $2.82 per share 40,000 4 112,516
Shares issued for services
at $2.03 per share 10,000 1 20,319
Shares issued for services
at $1.63 per share 22,187 2 36,052
Shares issued for the
acquisition of investment
at $1.00 per share 310,257 31 3,102,534
Shares for services pursuant
to S-8's at $.375 to $.75
per share 685,854 69 1,723,205
Cash received pursuant to
S-8 options 1,821,269
Shares issued for cash at
$2.13 per share 47,111 5 99,995
Officers contribution to
capital 100,000
Shares returned (280)
Net loss for the year (6,733,714) --
--------- ------ --------- ---------- ----------
Balance December 31, 1994 1,875,815 188 7,460,894 (7,224,954) --
Shares issued for
at $1.57 per share 571,538 57 899,964
Shares issued for cash
at $1. 200,624 20 347,236
F-5
</TABLE>
<PAGE>
<TABLE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Consolidated Statement of Changes in Stockholders' Equity
For the Period From April 23, 1992, (Inception) through
December 31, 1995
(Continued)
<CAPTION>
Deficit
Accumulated
During the Common
Paid in Development Stock
Common Stock Capital Stage Subscriptions
------------------------ -------- -------------- -------------
Shares Amount
------ ------
<S> <C> <C> <C> <C> <C>
Shares issued for services
at $.59 per share 100,000 10 59,365
Shares issued for services
at $.10 per share 20,000 2 1,874
Shares issued for services
at $.28 per share 1,350,000 135 379,553
Shares issued for services
at $.33 per share 150,000 15 49,208
Shares issued pursuant to
S-8 at $1.18 per share 300,000 30 356,220
Shares issued pursuant to
S-8 at $3.00 per share 800,000 80 2,399,920
Shares issued pursuant to
S-8 at $.19 per share 600,000 60 112,440
Shares issued pursuant to
S-8 at $.56 per share 1,800,000 180 1,012,320
Shares issued pursuant to
S-8 at $.37 per share 3,000,000 300 1,124,700
Shares issued pursuant to
S-8 at $.41 per share 3,357,567 336 1,363,843
Shares issued pursuant to
S-8 at $.31 per share 1,675,000 168 523,270
Shares issued pursuant to
S-8 at $.35 per share 4,525,000 452 1,581,282
Cancellation of shares (150,000) (15)
Shares issued for the
acquisition of investment
at $3.75 per share 600,000 60 2,249,940
Adjustment related to the
disposition of subsidiary 24,911
Common stock subscriptions 60,521
Net loss for the year (12,942,302)
---------- --------- ----------- ------------ -------
Balance December 31, 1995 20,775,544 $ 2,078 $19,946,940 $(20,167,256) $60,521
========== ========= =========== ============ =======
The accompanying notes are an integral part of the financial statements.
F-6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Hollywood Trenz, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1995, and 1994 and
the Period From Inception (April 23, 1992) to December 31, 1995
Year Ended Year Ended Inception to
December 31, December 31, December 31,
1995 1994 1995
------------ ------------ -------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss $(12,942,302) $(6,733,714) $(20,167,256)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 5,673 35,699 44,032
Write off of investment in
entertainment facility 1,206,374 -- 1,206,374
Gain on subsidiary disposition (172,591) -- (172,591)
Issuance of common stock for services
and reorganization 8,990,739 2,112,134 11,128,453
Realized loss on marketable
securities 1,069,191 2,170,674 3,239,865
Return of marketable securities 721,250 -- 721,250
Loss on abandonment of fixed assets 107,217 -- 107,217
Changes in assets and liabilities:
Prepaid interest -- 67,500 --
Inventory 22,809 30,902 --
Increase in other receivables -- 23,000 --
Increase in deposits -- 50,000 --
Other assets -- 295 --
Accounts and taxes payable (216,913) 1,050,562 1,177,227
------------ ------------ ------------
Total adjustments 11,733,749 5,540,766 17,451,827
Net cash provided by (used in),
operations (1,208,553) (1,192,948) (2,715,429)
------------ ------------ ------------
Cash flows from investing activities:
Investment in entertainment facility (252,012) (1,108,304) (1,270,316)
Disposition of marketable securities 341,450 -- 341,450
Deposit received for the sale of
marketable securities (200,000) 200,000 --
Acquisition of fixed assets -- (85,718) (163,469)
------------ ------------ ------------
Net cash provided by (used in)
investing activities (110,562) (904,022) (1,092,335)
------------ ------------ ------------
Cash flows from financing activities:
Officers contribution to capital -- 100,000 100,000
Net cash realized from the acquisition
of real property with mortgages -- -- 84,441
Increase in due to shareholder 10,782 76,225 194,722
Proceeds from the issuance of common
shares and subscriptions 1,307,798 1,921,269 3,428,601
------------ ------------ ------------
Net cash provided by (used in)
financing activities 1,318,580 2,097,494 3,807,764
------------ ------------ ------------
Net increase (decrease) in cash and
cash equivalents (535) 524 --
Beginning cash and cash equivalents 535 11 --
------------ ------------ ------------
Ending cash and cash equivalents $ -- $ 535 $ --
============ ============ ============
F-7
</TABLE>
<PAGE>
<TABLE>
Hollywood Trenz, Inc.
Consolidated Statements of Cash Flows
For the Year Ended December 31, 1995 and 1994, and
the Period From Inception (April 23, 1992) to December 31, 1995
(Continued)
<CAPTION>
Year Ended Year Ended Inception to
December 31, December 31, December 31,
1995 1994 1995
------------ ----------- -------------
<S> <C> <C> <C>
Non-cash investing and financing activities:
Issuance of common stock for
acquisition $ -- $ -- $ 2,809
Acquisition of real property with
mortgages and notes $ -- $ 100,000 $3,553,530
Acquisition of marketable
securities with common stock $2,250,000 $3,102,565 $5,352,565
Supplemental cash flow information:
Cash paid for: Income taxes $ -- $ -- $ --
Interest $ -- $ -- $ 90,500
The accompanying notes are an integral part of the financial statements.
F-8
</TABLE>
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Notes To Financial Statements
Note 1. ORGANIZATION
The Company was incorporated during August, 1987, in the State of Delaware.
During April, 1993 the Company completed a reorganization with Interstate
Finance & Trust Co., Inc. an Iowa corporation organized during April, 1992. The
Company's intended activities include the construction and operation of family
entertainment facilities. The Company is currently in the development stage and
has chosen December 31, as a year end.
SIGNIFICANT ACCOUNTING POLICIES
Fixed assets:
The company depreciates its Property and equipment utilizing the straight line
method over periods of five to seven years.
Net loss per share:
The net loss per share is computed by dividing the net loss for the period by
the weighted average number of common shares outstanding for the period. Common
stock equivalents are excluded from the computation as their effect would be
anti-dilutive.
Cash and cash equivalents:
Cash and cash equivalents consist of cash and other highly liquid debt
instruments with an original maturity of less than three months.
Estimates:
The preparation of the Company's financial statements requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Capitalized interest:
The Company follows a policy of capitalizing interest costs as a component of
property being developed as entertainment facilities.
F-9
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Notes To Financial Statements
(Continued)
Note 2. DISPOSITION OF SUBSIDIARY
During September, 1995 The Company transferred all of the issued and outstanding
common stock in a wholly owned subsidiary Interstate Finance Trust Company, Inc.
(Interstate) to its president for no consideration.
The assets and liabilities of Interstate consisted of the following at the
disposition date.
Investments in real property $ 3,798,604
Mortgages payable (3,537,971)
Accounts payable and taxes payable (533,224)
-----------
Net liabilities $ (272,591)
===========
The assets of Interstate were subject to mortgages which are in default
foreclosure proceedings are pending. The Company recognized a gain on this
disposition of $172,591 during 1995 which includes the $100,000 accrual
described below.
The Company does not believe that it is liable for the above liabilities of
Interstate and has not accrued these amounts on its books. The Company has
accrued $100,000 which represents an outstanding judgment plus costs against the
Company related to Interstate. Should the Company be found to be liable for any
of the obligations of Interstate in the future it will charge these amounts to
operations at that time.
Note 3. INVESTMENTS
Denver project
The Company had attempted to construct a family entertainment center located in
the Denver, Colorado area. Pursuant to this project the Company had capitalized
costs aggregating $1,206,374 related to the facility through June, 1995. During
December, 1995 the Company abandoned its efforts to complete the project and
charged the $1,206,374 to operations.
Phoenix project
During June, 1995 the Company entered into a 5 year lease for space to construct
a family entertainment center (see Note 8). Pursuant to this project the Company
has capitalized $252,012 in costs related to the project through December, 1995.
Should the project not be completed the Company will charge any capitalized
costs to operations at the time the determination is made not to complete the
project.
F-10
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Notes To Financial Statements
(Continued)
Note 4. MARKETABLE SECURITIES
Previously the Company had accounted for its investments in marketable
securities under the provisions of FAS 115. The provisions of this pronouncement
apply to all marketable securities where the fair value of the securities are
readily determinable and do not apply to restricted common stock except if the
holder of the stock has the power by contract or otherwise to cause the
restriction to terminate within one year. The common shares held by the Company
are restricted pursuant to Rule 144 however, the Company had obtained from each
of the companies whose common stock it held rights to register these securities
within a one year period of the receipt of the securities at its expense. The
securities held by the Company were classified as available for sale at December
31, 1994. Under this pronouncement changes in the fair value of the securities
are adjusted to a valuation reserve included in stockholders' equity unless the
decline is other than temporary in which case the decline in value is reflected
in the Company's statement of operations as realized losses on marketable
securities.
Upon the expiration of the registration rights related to marketable securities
held by the Company the Company records these investments pursuant to FAS 12
which values marketable securities at the lower of cost or market.
During June, 1994 the Company issued 310,257 shares of its restricted common
stock with registration rights in exchange for 1,000,000 common shares of
Advanced Media, Inc. (AMI) and 641,026 common shares of International Standards
Group, Ltd. (ISG). These common shares were valued by the Company at the bid
price of its common stock on the issue date of $10.00 per share.
During March, 1995 the Company issued 600,000 shares of its restricted common
stock for 300,000 shares of BDR Industries, Inc. (BDR) common stock. These
common shares were valued by the Company at the bid price of its common stock on
the issue date of $3.75 per share.
During November, 1994 and subsequently amended the Company entered into written
agreements to sell its ISG investment. The Company received proceeds of $341,450
related to the sale of these securities during 1995, and recorded realized
losses of $59,191 during 1995 and $1,201,924 during 1994 related to the
disposition of these securities.
F-11
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Notes To Financial Statements
(Continued)
Note 4. MARKETABLE SECURITIES (Continued)
During November, 1995 the Company entered into an agreement to return the
1,000,000 common shares of AMI in exchange for the return of the 150,000 shares
of its common stock issued in the exchange. The Company recognized a gain on the
disposition of these securities of $190,000 during 1995 which resulted from an
adjustment in the valuation allowance for marketable securities of $281,250 that
had been previously recorded. The Company had also recorded a realized loss of
$968,750 during 1994.
During February, 1996 the Company entered into an agreement to return the
300,000 common shares of BDR in exchange for the return of the 600,000 shares of
its common stock issued in the exchange. At December 31, 1995 the Company valued
the BDR common stock at 50% of the bid price of BDR common stock ($3.50 per
share) or an aggregate of $1,050,000. The Company recognized a loss related to
these securities of $1,200,000 in 1995.
Note 5. RELATED PARTY TRANSACTIONS
Through 1995, an officer made net non-interest bearing advances to the Company
which aggregated $194,722 at December 31, 1995.
During August, 1994 an officer of the Company contributed $100,000 to the
Company's capital.
Note 6. INCOME TAXES
Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they relate.
Deferred taxes arising from temporary differences that are not related to an
asset or liability are classified as current or non-current depending on the
periods in which the temporary differences are expected to reverse. The deferred
tax asset resulting from the assumed use of the operating loss carryforward
described below is fully reserved.
The Company currently has net operating loss carryforwards aggregating
approximately $20,000,000 which expire beginning in 2007.
Note 7. STOCKHOLDERS' EQUITY
During the year ended December 31, 1992 the Company issued 510,000 shares of its
common stock in exchange for the net assets of Interstate Finance & Trust Co.,
Inc. which consisted of loan portfolios valued at $22,167.
During the year ended December 31, 1993 the Company issued common shares as
follows:
91,963 shares of its common stock related to a reorganization with
Dimension Group, Inc.
F-12
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Notes To Financial Statements
(Continued)
Note 7. STOCKHOLDERS' EQUITY (Continued)
During April, 1993, prior to the date when an active market and bid price
existed for the Company's common shares the Company issued 91,555 shares of its
common stock to employees and other related individuals as bonuses for their
services. These shares were valued at $92.
During March, 1993, prior to the date when an active market and bid price
existed for the Company's common shares the Company issued 1,000 shares of its
common stock as part of the purchase price for real property. These shares had
nominal value.
During October, 1993 the Company filed a Form S-8 registration statement
registering 100,000 common shares underlying 100,000 options entitling the
holders to purchase the Company's common shares at $6.00 per share. These
options were granted to certain of the Company's consultants pursuant to
consulting agreements. During 1993 4,168 of these options had been exercised
with proceeds to the Company of $25,000 and 4,168 common shares issued.
During November, 1993 the Company filed a Form S-8 registration statement
registering 250,000 common shares underlying 25,000 options entitling the holder
to purchase the Company's common shares at $17.50 per share. These options were
granted to a consultant of the Company pursuant to a consulting agreement. As of
December 31, 1993 10,000 of these options had been exercised with proceeds to
the Company of $175,000 and 10,000 common shares issued. During 1994 110,854 of
these options were exercised with 110,854 common shares issued. The proceeds to
the Company are included in the 1994 total proceeds described below.
During the year ended December 31, 1994 the Company issued shares of its common
stock as follows:
During May, 1994 the Company issued 4,000 shares of its common stock for
services valued at $17,500.
During June, 1994 the Company issued 310,257 shares of its common stock in
exchange for marketable securities valued at $3,102,565 (see Note 3).
During June, 1994 an individual returned 280 shares of the Company's common
stock. These shares had nominal value.
During July, 1994 the Company issued 48,000 shares of its common stock for
services valued at $202,512.
F-13
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Notes To Financial Statements
(Continued)
Note 7. STOCKHOLDERS' EQUITY (Continued)
During August, 1994 the Company issued 40,000 shares of its common stock
for services valued at $112,520.
During September, 1994 the Company issued 10,000 shares of its common stock
for services valued at $20,320.
During October, 1994 the Company issued 22,187 shares of its common stock
for services valued at $36,054.
During May, 1994 the Company filed a Form S-8 registration statement registering
135,000 common shares underlying 135,000 options entitling the holders to
purchase the Company's common shares at $6.00 per share. These options were
granted to certain of the Company's consultants pursuant to consulting
agreements. As of December 31, 1994 these options had been exercised and paid
for. The proceeds to the Company related to the exercise of these options are
included in the 1994 total proceeds described below.
During August, 1994 an officer of the Company surrendered 100,000 shares of
common stock to the Company. In addition, the Company filed a Form S-8
registration statement registering 100,000 common shares underlying 100,000
options entitling the holder to purchase the Company's common shares at $1.00
per share. These options were granted to the above officer. As of December 31,
1994 these options had been exercised and paid for. The proceeds to the Company
related to the exercise of these options are included in the 1994 total proceeds
described below.
During September, 1994 the Company filed a Form S-8 registration statement
registering 120,000 common shares. These shares were issued to one of the
Company's consultants pursuant to a consulting agreement. These shares were
valued at $450,000.
During November, 1994 the Company filed a Form S-8 registration statement
registering 320,000 common shares. These shares were issued to certain of the
Company's consultants pursuant to consulting agreements. These shares were
valued at $560,000.
During the year ended December 31, 1994 the Company received $1,821,269 in cash
pursuant to the exercise of the options related to the 1994 and 1993 S-8
registration statements described above.
The options granted pursuant to the May, 1994 S-8 were granted at a price which
was less than the then current bid price of the Company's common stock and the
Company recorded $202,500 in consulting expense related to these options. In
addition, certain of the consultants who received common stock pursuant to this
S-8 registration statement held 58,364 of these shares for which the Company had
not received the option exercise price and the Company has recorded $510,774 in
consulting expense related to these shares.
F-14
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Notes To Financial Statements
(Continued)
Note 7. STOCKHOLDERS' EQUITY (Continued)
During September, 1994 the Company began offering through a private placement
330 units consisting of common stock of the Company and a participation in the
gross sales of the Company's proposed entertainment center to be located in
Colorado. For each $10,000 unit purchased the purchaser will receive a number of
shares equal to $10,600 divided by 75% of the closing bid price of the Company's
common stock on the date the subscription is received by the Company. In
addition the purchaser will receive a participation equal to .0152% of the gross
sales of the proposed Colorado center for the first six years of its operation.
The Company sold 10 units for $100,000 and issued 47,111 shares of its common
stock through December 31, 1994. The Denver, Colorado project was abandoned in
1995 (see Note 3).
During the period from January to March, 1995 the Company issued 571,538 shares
of its common stock for cash aggregating $900,021 pursuant to a private
placement.
During the period from April to June, 1995 the Company issued 200,624 shares of
its common for cash aggregating $347,256 pursuant to a private placement.
During July, 1995 the Company issued 1,500,000 shares of its common stock for
services valued at $428,911 to affiliates. The value of these shares has been
charged to operations during 1995.
During January, 1995 the Company filed a Form S-8 registration statement
registering 300,000 common shares. These shares were issued to certain of the
Company's consultants pursuant to consulting agreements. The value of these
shares of $356,250 was charged to operations during 1995. In addition, the
Company issued 100,000 shares of restricted common stock for services. These
shares were valued at $59,375.
During April and May, 1995 the Company filed Form S-8 registration statements
registering 1,400,000 common shares. These shares were issued to certain of the
Company's consultants pursuant to consulting agreements. The value of these
shares of $2,512,500 has been charged to operations during 1995. In addition,
the Company issued 20,000 shares of restricted common stock for services. These
shares were valued at $1,876.
During July, 1995 the Company filed a Form S-8 registration statement
registering 1,800,000 common shares. These shares were issued to a certain
consultant of the Company pursuant to a consulting agreement. The value of these
shares of $1,012,500 has been charged to operations during 1995.
F-15
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Notes To Financial Statements
(Continued)
Note 7. STOCKHOLDERS' EQUITY (Continued)
During September, 1995 the Company filed a Form S-8 registration statement
registering 3,000,000 common shares. These shares were issued to a certain
affiliate of the Company pursuant to a consulting agreement. The value of these
shares of $1,125,000 has been charged to operations during 1995.
During September, 1995 the Company filed a Form S-8 registration statement
registering 3,357,567 common shares. These shares were issued to certain of the
Company's consultants pursuant to consulting agreements. The value of these
shares of $1,364,179 has been charged to operations during 1995.
During October, 1995 the Company filed Form S-8 registration statements
registering 6,200,000 common shares. These shares were issued to certain of the
Company's consultants pursuant to consulting agreements. The value of these
shares of $2,105,172 has been charged to operations 1995.
During the periods covered by these financial statements the Company issued
shares of its common stock without registration under the Securities Act of
1933. Although the Company believes that the sales did not involve a public
offering of its securities and that the Company did comply with the "safe
Harbor" exemptions from registration under section 4(2), it could still be
liable for rescission of these sales if such exemptions were found not to apply.
Note 8. OPERATING LEASES
The Company currently leases its offices on a month to month basis for a monthly
rental of $3,415. The Company also leases a facility in Phoenix, Arizona in
which it is constructing an entertainment facility pursuant to a five year lease
expiring during June, 2000 with certain renewal options, at a monthly rental of
$27,980. In addition, the Company is leasing a facility in Jefferson County,
Colorado in which it will attempt to construct an entertainment facility
pursuant to ten year lease expiring during December, 2005 with certain renewal
options, at a monthly rental ranging from $14,448 in 1996 to $16,730 in 2000.
Subsequent to the year 2000 the landlord may increase the rent based upon the
consumer price index.
Rent expense was $117,620 and $18,700 for the years ended December 31, 1995 and
1994.
Future minimum rentals are as follows:
Year ended December 31, 1996: $ 509,136
1997: $ 509,136
1998: $ 518,260
1999: $ 527,385
2000: $ 368,630
Thereafter: $1,003,750
The Jefferson County, Colorado lease may be terminated at the option of the
Company if it does not obtain a building permit, liquor license and drop off
child care license on or before June 15, 1996.
F-16
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Notes To Financial Statements
(Continued)
Note 9. STOCK OPTIONS
During 1994 the Company issued options to purchase 13,850,000 restricted common
shares exercisable at $1 per share for a period of eight years to certain
officers.
Note 10. COMMITMENTS AND CONTINGENCIES
The Securities and Exchange Commission (SEC) is conducting a formal
investigation into the Company's financial records. In this regard the SEC has
issued a subpoena for certain of the Company's records. The Company has
cooperated and will continue to cooperate fully with the SEC.
The Company is the defendant in several lawsuits for which it believes it has
made adequate accruals in the financial statements to cover losses that it can
reasonably estimate.
Note 11. BASIS OF PRESENTATION
The accompanying financial statements have been prepared on a "going concern"
basis which contemplates the realization of assets and the liquidation of
liabilities in the ordinary course of business.
The Company has incurred operating losses during the years ended December 31,
1995, and 1994, aggregating $12,842,302 and $6,733,714, and since inception of
$20,067,256 and has negative working capital of $1,371,949 at December 31, 1995.
During the periods presented the Company has not generated positive cash flow
from operations and there can be no assurance that the trend will not continue.
Profitable operations are dependent upon, among other factors, the Company's
ability to obtain equity or debt financing and the Company's ability to finance,
manage, and construct entertainment facilities.
The Company is unable to project a level of revenue which would allow a reversal
of its history of operating losses in the near future. In this regard the
Company has undertaken the raising of additional debt and equity capital and is
attempting to finance and construct a family entertainment center in the
Phoenix, Arizona area. The Company's continued operations are dependent upon
obtaining financing.
F-17
<PAGE>
Hollywood Trenz, Inc.
(A Development Stage Company)
Notes To Financial Statements
(Continued)
Note 12. SUBSEQUENT EVENT
During January, 1996 the Company began offering through a private placement 60
units at $10,000 per unit. Each unit consists of 50,000 shares of the Company's
common stock and a royalty payment of .2% of the total revenues for a period of
18 months from the commencement of operations from the proposed entertainment
facility located in Phoenix, Arizona (see Note 3). At December 31, 1995 the
Company had received a deposit of $60,521 related to the purchase of these units
which is classified as a stock subscription at December 31, 1995.
F-18
<PAGE>
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) & (2) Financial Statements and Schedules. See Index to Financial
Statements beginning on page F-1.
(3) Exhibits. The following documents are filed herewith or incorporated
herein by reference as exhibits.
Exhibit Description
3.1 Certificate of Incorporation, as amended 1
3.2 Amended and Restated Bylaws 1
10.1 Agreement and Plan of Reorganization dated April 9, 1993 relating to the
combination of the Registrant with Interstate Finance & Trust Co., Inc. 2
10.2 Stock Option Agreement dated April 30, 1993 between the Company and
Edward R. Showalter. 3
10.3 Stock Option Agreement dated April 30, 1993 between the Registrant and
Robert E. Burton, Jr. 3
10.4 Stock Option Agreement dated November 1, 1993 between the Company and
Edward R. Showalter. 3
10.5 Stock Option Agreement dated November 1, 1993 between the Company and
Robert E. Burton, Jr. 3
10.6 Stock Option Agreement dated January 5, 1994 between the Company and
Edward R. Showalter. 3
10.7 Stock Option Agreement dated January 5, 1994 between the Company and
Robert E. Burton, Jr. 3
10.9 Real Estate Contract dated May 16, 1994, as amended, regarding purchase
and sale of 9.08 acres located in Arapahoe County, Colorado. 4
10.10 Stock Purchase Agreement, dated June 28, 1994 between the Company and
Gnomon Investments, Ltd. 5
10.11 Stock Purchase Agreement dated June 28, 1994 between the Company and
Advanced Media, Inc. 5
17
<PAGE>
10.12 Stock Option Agreement dated November 28, 1994 between the Company and
Edward R. Showalter. 4
10.13 Stock Option agreement dated November 28, 1994 between the Company and
Robert E. Burton, Jr. 4
10.14 Agreement between the Company and BDR Industries, Inc. dated
March 23, 1995. 4
10.15* Lease Agreement dated June 27, 1995, First Addendum, Second Addendum and
Third Addendum between First American Title Insurance Company Trust #4551
and the Company relating to Suites 1150 and 1180, Bell Canyon Pavilions,
2710 West Bell Road, Phoenix, Arizona 85023.
10.16* Lease Agreement dated December 29, 1995 between Anthony A. Petrarca and
the Company relating to 5022 S. Jellison Way, Denver, Colorado 80123.
10.17 Stock Sale Agreement dated September 25, 1995 between the Company and
Edward R. Showalter relating to the deposition of the stock of Interstate
Finance and Trust Co., Inc. 6
10.18 Reciprocal Stock Exchange Agreement dated November 29, 1995 between the
Company and Advanced Media, Inc. ("AMI") relating to the disposition of
1,000,000 shares of AMI. 7
10.19 Letter Agreement dated February 8, 1996 between the Company and
Conectisys Corporation relating to the deposition of 300,000 shares of
ConectisysCorporation. 8
- --------------
1 Incorporated by reference to the Company's Registration Statement on
Form 8-A dated January 18, 1994.
2 Incorporated by reference to the Company's form 8-K dated May 4, 1993.
3 Incorporated by reference to the Company's Form 10-K for the year
ended December 31, 1993.
4 Incorporated by reference to the Company's Form 10-K for the year
ended December 31, 1994.
5 Incorporated by reference to the Company's Form 8-K dated July 30, 1994.
6 Incorporated by reference to the Company's Form 8-K dated September
25, 1995.
18
<PAGE>
7 Incorporated by reference to the Company's Form 8-K dated December 7,
1995.
8 Incorporated by reference to the Company's Form 8-K dated February 28,
1996.
*Filed herewith.
(b) Reports on Form 8-K. The following reports on Form 8-K were filed
during the fourth quarter of 1995:
(1) Form 8-K dated September 25, 1995 to report the
disposition of all of the issued and outstanding stock of
Interstate Finance and Trust Co., Inc.
(2) Form 8-K dated December 7, 1995 to report the disposition
of 1,000,000 shares of common stock of Advanced Media, Inc.
19
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
HOLLYWOOD TRENZ , INC.
By: /s/ Edward R. Showalter
--------------------------------------
Edward R. Showalter, Chairman, Chief
Executive and Financial Officer,
President and Director
Date: April 12, 1996
--------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Chairman of the Board,
/s/ Edward R. Showalter Chief Executive Officer, Date: April 12, 1996
- ------------------------ President and Director --------------
Edward R. Showalter
Vice Chairman, Chief
/s/ Robert E. Burton, Jr. Operating Officer, Date: April 12, 1996
- ------------------------- Secretary and Director --------------
Robert E. Burton, Jr.
/s/ Gregory D. Smith Director Date: April 12, 1996
- ------------------------- --------------
Gregory D. Smith
20
<PAGE>
INDEX OF EXHIBITS FILED
WITH FORM 10-KSB OF
HOLLYWOOD TRENZ, INC.
Exhibit Description
- ------- -----------
10.15 Lease Agreement dated June 27, 1995, First Addendum, Second Addendum
and Third Addendum between First American Title Insurance Company
Trust #4551 and the Company relating to Suites 1150 and 1180,
Bell Canyon Pavilions, 2710 West Bell Road, Phoenix, Arizona 85023.
10.16 Lease Agreement dated December 29, 1995 between Anthony A. Petrarca
and the Company relating to 5022 S. Jellison Way, Denver, Colorado
80123.
21
G.T.T. INCORPORATED
SHOPPING CENTER LEASE
For valuable consideration, the receipt of which is hereby acknowledged, and in
consideration of the rents and covenants hereinafter set forth, Landlord hereby
leases and demises to Tenant, and Tenant hereby leases and takes from Landlord
the "Demised Premises", described hereinafter, on the terms and conditions set
forth in the Fundamental Lease Provisions, Articles I through LV, set forth
hereinafter and the attached Exhibits "A" through "D", all of which cumulatively
are the Lease Agreement.
FUNDAMENTAL LEASE PROVISIONS
A. Date: This 27TH day of JUNE 1995
B. Landlord: FIRST AMERICAN TITLE INSURANCE COMPANY TRUST #4551
C. Tenant: HTNZ LASER. INC., AN ARIZONA CORPORATION
Tenant's Tradename: HOLLYWOOD TRENZ/ULTRAZONE
D. Use of Premises: INTERACTIVE ENTERTAINMENT RESTAURANT, LAZER TAG ARENA,
THEMED, AND A THEMED ARCADE
E. Center Name, Space Number and Address of Demised Premises:
BELL CANYON PAVILIONS
2710 WEST BELL ROAD. SUITE 1150. PHOENIX, ARIZONA 85023
F. Floor Area: The approximate floor dimensions of the Demised Premises are as
follows:
APPROXIMATELY 13,196 SQUARE FEET
G. Term: The term of this Lease shall be for a period of FIVE ( 5 ) years, and
NO ( 0 ) months, commencing on the date the Certificate of Occupancy is
issued (commencement date), but no later than November 1, 1995, and
terminating on the date five (5) years thereafter.
H. Rental: Rental shall consist of the following:
1. Minimum Monthly Rental during the initial year hereof shall be
SEVEN-THOUSAND SIX-HUNDRED NINETY-SEVEN AND 67/100 DOLLARS ($7,697.67)
plus applicable taxes, adjustments and other amounts pursuant to the
terms and provisions of the Lease Agreement; to commence January 1, 1996,
and
2. The guaranteed minimum monthly rental during the original term and any
subsequent option period, shall be subject to an annual increase based on
the Consumer Price Index published by the United States Dept. of Labor,
Bureau of Labor Statistics, Washington D.C. 20212, whichever is less.
See Paragraph 4.2 of the Lease. Not to exceed Three and One-Half Percent
(3.5%)
3. A Security Deposit of NO ($-0-) payable to:
See Addendum, Section 2, Deposit
4. Attached hereto is an Addendum which constitutes a part of this Lease
Agreement.
I. Real Estate Commissions or Brokers:
----------------------------------------
J. Landlord's address for Rental Payments and Notices:
2200 EAST RIVER ROAD, SUITE 111, TUCSON, AZ 85718
Telephone Number (602) 299-4554
K. Tenant's Address for Notices: Same as home address
Telephone Number (305) 568-0433
Tenant's Home Address: 3471 North Federal Highway, Ft. Lauderdale, Florida
33306 Telephone Number (305) 568-0433
L. Lease Guarantors: Edward R. Showalter, Individually and Personally and
Robert E. Burton, Individually & Personally and, Gregory D. Smith,
Individually & Personally
See Exhibit "C" (Guarantee of Lease).
LANDLORD: TENANT:
FIRST AMERICAN TITLE INSURANCE HTNZ LASER, INC. AN ARIZONA CORPORATION
COMPANY #4551 DBA: HOLLYWOOD TRENZ/ULTRAZONE
By /S/ ROBERT P. MORRIS By /S/ ROBERT E. BURTON
--------------------------- -----------------------------------
ROBERT P. MORRIS, AGENT Its
By /S/ EDWARD R. SHOWALTER
-----------------------------------
Its
By /S/ GREGORY D. SMITH
-----------------------------------
Its
Date 6/27/95 Date June 17, 1995
-------------------------- ----------------------------------
<PAGE>
TABLE OF CONTENTS
Fundamental Lease Provisions .........................................
Table of Contents ....................................................
Article I Use ................................................
Article 11 Premises ...........................................
Article 111 Term ...............................................
Article IV Rental .............................................
Article V Real Estate Taxes and Rental Taxes..................
Article Vl Personal Property Taxes.............................
Article Vll Construction .......................................
Article VlIl Common Areas, Parking Facilities and General Welfare
Article IX Uses Prohibited ....................................
Article X Alterations and Fixtures............................
Article XI Maintenance and Repair .............................
Article XII Compliance with Laws................................
Article XIII Insurances and Indemnity............................
Article XIV Free from Liens ....................................
Article XV Abandonment ........................................
Article XVI Signs, Store Fronts and Auctions....................
Article XVII Utilities ..........................................
Article XVIII Entry and Inspection................................
Article XIX Damage and Destruction of Premises..................
Article XX Assignment and Subletting...........................
Article XXI Default ............................................
Article XXII Insolvency of Tenant................................
Article XXIII Surrender of Lease..................................
Article XXIV Sale of Premises by Landlord........................
Article XXV Hours of Business ..................................
Article XXVI Attorney Fees ......................................
Article XXVII Payment by Check....................................
Article XXVIII Security Deposit ...................................
Article XXIX Barriers ...........................................
Article XXX Holding Over .......................................
Article XXXI Time of the Essence.................................
Article XXXII Floor Load .........................................
Article XXXIII Eminent Domain .....................................
Article XXXIV Garbage, Nuisance and Receiving.....................
Article XXXV Nonliability for Certain Damages....................
Article XXXVI Picket Lines .......................................
Article XXXVII Waivers ............................................
Article XXXVIII Real Estate Commissions.............................
Article XXXIX Lease in Fact a Sublease ...........................
Article XL Acceptance of Premises..............................
Article XLI Estoppel Statement (Certificate)....................
Article XLII Rules and Regulations...............................
Article XLIII Competition ........................................
Article XLIV Notices ............................................
Article XLV Successors in Interest..............................
Article XLVI Tenant's Performance................................
Article XLVII Force Majeure ......................................
Article XLVIII Partial Invalidity .................................
Article XLIX Marginal Captions...................................
Article L Subordination, Attornment...........................
Article LI Recordation ........................................
Article LII Sale of Merchandise in Public Areas.................
Article LIII Relationship of Parties.............................
Article LIV Revision of Exhibit "A".............................
Article LV No Oral Agreements..................................
SIGNATURES ....................................................
EXHIBITS:
Exhibit "A" Shopping Center Map ................................
Exhibit "B" Sign Criteria ......................................
Exhibit "C" Guarantee ..........................................
<PAGE>
EXHIBIT A
SITE PLAN
BELL CANYON PAVILIONS
PHOENIX, ARIZONA
[GRAPHIC OMITTED]
[GRAPHIC CONSISTS OF BELL CANYON PAVILIONS
LEASING SITE PLAN]
<PAGE>
THIS LEASE is made and entered into on the day and year as set forth in
Paragraph A of the Fundamental Lease Provisions, by and between the Landlord as
delineated in Paragraph B of the Fundamental Lease Provisions and Tenant(s) as
delineated in Paragraph C of the Fundamental Lease Provisions. Said Tenant(s) is
executing the Lease Agreement, jointly and severally, as without regard to
number or gender.
WITNESSETH:
ARTICLE I - USE
1.1 Landlord hereby leases to Tenant and Tenant hereby hires from Landlord
those certain premises, with appurtenances described as hereinafter set forth,
for the purpose and use of conducting therein the business set forth in
Paragraph D of the Fundamental Lease Provisions, and for no other purpose
whatsoever without the prior written consent of the Landlord.
ARTICLE II - PREMISES
2.1 The premises leased to Tenant, together with appurtenances, are
hereinafter referred to as the "demised premises" and are situated at the
address, city and County in the State of Arizona as set forth in Paragraph E of
the Fundamental Lease Provisions. The demised premises are situated in a portion
of the Shopping Center as shown on the plat, marked Exhibit "A", and are
crosshatched on the plat marked Exhibit .'A-1." Said Exhibits "A" and "A-1" are
attached hereto and by this reference incorporated herein. Tenant acknowledges
that said Exhibits "A" and "A-1" are tentative and subject to change by Landlord
in Landlords sole discretion, so long as such changes do not materially alter
the size or utility of the premises. The demised premises shall have an
approximate floor area as set forth in Paragraph F of the Fundamental Lease
Provisions.
Said floor area measurements are from the center of common walls and
separation partitions and from the exterior of outer walls. Use of exterior
walls, roof, the area beneath the demised premises (if the demised premises do
not include a basement), as well as the right to install, maintain, use, repair
and replace pipes, ducts, conduits and wires leading through the demised
premises and serving other parts of the Shopping Center, are reserved
exclusively to Landlord.
ARTICLE III - TERM
3.1 The term of this Lease shall be for the period set forth in Paragraph G
of the Fundamental Lease Provisions, plus any fractional portion of a month
hereinafter set forth. The term of this Lease, and Tenant's obligation to pay
rent, shall commence on the date and year set forth in Paragraph G of the
Fundamental Lease Provisions. If there is not a precise commencement date, then
the term of this Lease and Tenant's obligation to pay rent shall commence on the
earlier of the following dates: (a) the date which is thirty (30) days after the
Landlord, or Landlord's supervising architect, notifies the Tenant that the
demised premises are ready for occupancy; or (b) the date on which Tenant shall
open the demised premises for business to the public. If the expiration of the
said thirty (30) day period does not occur on the first day of a calendar month,
or the Tenant shall have opened the demised premises for business to the public
on a day other than the first day of such month, then the term hereunder shall
commence on the date the demised premises are ready for occupancy or the day on
which Tenant shall open the demised premises for business, whichever shall first
occur, and the fractional portion of such month shall be added to the fixed term
hereinabove set forth. In that event, however, the Tenant shall pay rent for the
fractional portion of such month on a per diem basis (calculated on the basis of
a thirty-day month) until the first day of the month when the term hereunder
commences; and thereafter the minimum rent shall be paid in equal monthly
installments of the first day of each and every month in advance, as hereinafter
provided. If there is not a precise commencement date in the Fundamental Lease
Provisions, then as soon as the commencement date has been determined, as
provided herein, an Addendum to this Lease will be signed by Landlord and Tenant
setting forth the actual commencement and expiration dates of the Lease term and
certifying that Tenant is in occupancy and that this Lease is in full force and
effect.
3.2 Landlord and Tenant hereby agree that if the demised premises are not
substantially completed, and possession delivered to Tenant on or before two (2)
years from the date of execution of this Lease, then this Lease shall be deemed
null and void, have no further force or effect, and any security deposit made
herewith shall be promptly returned to Tenant and the parties shall have no
further obligation each to the other.
ARTICLE IV - RENTAL
4.1 Guaranteed Minimum Monthly Rental. Tenant shall pay to Landlord during
the term of this Lease, as Minimum Monthly Rental for the demised premises the
sums as set forth in Paragraph H-1 of the Fundamental Lease Provisions per
month, which sums shall be paid in advance on the first day of each calendar
month throughout the term of this Lease. Said rental shall commence on the
commencement of the term of this Lease as set forth in the Fundamental Lease
Provisions and Article III hereof with proration of rentals for any partial
calendar month of the term. All rental to be paid by Tenant to Landlord shall be
in lawful money of the United States of America and shall be paid without
deduction or offset, prior notice or demand, at Landlord's office as designated
herein, or at such other place or places as may be designated in writing from
time to time by Landlord. The due date of Guaranteed Minimum Monthly Rental is
the first day of each calendar month. Guaranteed Minimum Monthly Rental not
actually received by Landlord within seven (7) days of its due date is in
default. Guaranteed Minimum Monthly Rental in default shall be subject to an
additional charge of five percent (5%) per month on the unpaid balance thereof,
as a late charge. (Any portion of a month shall be deemed a whole month in
calculating any late charge throughout this Lease Agreement.) In addition,
Tenant agrees to pay a $25.00 service charge on checks returned by Tenant's bank
marked "insufficient funds." Landlord hereby acknowledges from Tenant the sum
set forth in Paragraph H-3 of the Fundamental Lease Provisions to be held by
Landlord without liability for interest thereon, as a deposit to secure the
performance by Tenant of all the terms, covenants and conditions of this Lease
to be performed on Tenant's part and to remedy any defaults thereof by Tenant,
including but not limited to timely payment of Minimum Monthly Rental, increases
thereto, real and personal property taxes, insurance, common area maintenance
charges, repairing damage to the demised premises and to clean and restore the
demised premises on termination of this Lease.
4.2 Annual Increases. The Minimum Monthly Rent to be paid by Tenant during
the term of the original lease and any option period thereafter shall be
increased on an annual basis as follows:
(a) Landlord shall have the right, in its sole discretion, to choose
the Consumer Price Index for All Urban Consumers (All Items Indexes) (1982- 84 =
100) or similar formula or table published by the United States Bureau of Labor
Statistics (the "Index") to be used in adjusting the Minimum Monthly Rent.
(b) The Index for the month in which this Lease Term commences ("Base
Month") shall be compared with the same calendar month for each subsequent year
of the Lease Term ("Adjustment Month").
(c) The Minimum Monthly Rent payable during each subsequent year shall
be the sum of (i) the Minimum Monthly Rent payable during the year immediately
preceding the Adjustment Month plus (ii) that same amount multiplied by a
fraction, the numerator of which is the amount by which the Adjustment Month
Index exceeds the immediately preceding Adjustment Month Index and the
denominator of which is the immediately preceding Adjustment Month Index.
Notwithstanding the foregoing, the Minimum Monthly Rent shall be increased by no
more than three arid one-half percent to 5%, of the Minimum Monthly Rent savable
daring
(d) During the Adjustment Month and continuing until such time as the
Index for the Adjustment Month is published, Landlord shall be entitled to
estimate the Index for the Adjustment Month and shall have the right to use such
estimate to adjust the MInimum Monthly Rent in accordance with this Lease. At
such time as the Index for the Adjustment Month is published, the Minimum
MOnthly Rental shall be adjusted in accordance with such Index and Landlord
shall determine whether its estimate of the Index resulted in Tenant overpaying
or under paying the Minimum Monthly Rent during the period such estimate was
being used. In the event Tenant has overpaid the Minimum Monthly Rent, Landlord
shall credit Tenant with the amount of such overpayment on the next monthly
installment of rent. In the event Tenant has underpaid the Minimum Monthly Rent,
Tenant shall pay all additional amounts due within fifteen (15) days after
written notice from Landlord that such additional amounts are due. If Landlord
elects not to estimate the Index for the Adjustment Month, at such time as the
Index for the Adjustment Month is published, Tenant shall pay any underpayment
of Minimum Monthly Rent with the next installment of Minimum Monthly Rent
becoming due.
(e) If the official base of the Index changes from the base upon which
the Base Month Index is computed, such Index shall thereafter be adjusted to the
base upon which said Base Month Index is determined before the computation
indicated above is made. If the United States Bureau of Labor Statistics at
anytime hereafter discontinues publication of a Consumer Price Index or similar
formula or table, a comparable index, formula or table generally accepted and
employed by the real estate profession shall be used, as determined by Landlord.
The due date of Annual Increases is the first day of each calendar
month as it becomes effective. Annual Increases not actually received by
Landlord within seven (7) days of their due date are in default. Annual
Increases in default shall be subject to an additional charge of five percent
(5%) per month on the unpaid balance thereof as a late charge.
4.3 Additional Rental and Impounds. In addition to the Guaranteed Minimum
Monthly Rental and the Annual Percentage Increases hereinabove agreed to be paid
by Tenant, said Tenant shall pay to Landlord, at the time and in the manner
herein specified, additional rent as follows:
(a) Real estate taxes and rental taxes as set forth in Article V of this
Lease;
(b) Personal property taxes as set forth in Article Vl of this Lease;
(c) Parking and Common Area expenses, as set forth in Article VlIl of this
Lease;
(d) Building repair and maintenance expenses, as set forth in Article XI of
this Lease;
(e) Insurance and extended coverage costs, as set forth in this Article and
in Article XlIl of this Lease
(f) Utilities, as set forth in Article XVII of this Lease; and
(g) A supervisory/management fee to Landlord for the services provided
hereunder not to exceed fifteen percent (15%) of the total of the amounts
payable pursuant to Article IV, items 4.3(a) through 4.3(f), of this Lease.
Tenant is obligated under this Lease to reimburse Landlord as additional
rental for Tenant's share of certain costs and expenses, which include real
estate taxes, rental taxes, business taxes, Parking and Common Area expenses,
personal property taxes, building repair and maintenance expenses, fire and
liability insurance expenses, utilities and a management fee. It is agreed that
rather than bill and collect said additional rental after the increases are
incurred, Landlord may estimate Tenant's share of said costs and expenses,
excluding building repair and maintenance expenses for a period of not more than
twelve (12) months in advance, and may collect and impound Tenant's estimated
share in advance, on a monthly basis. On or before April 1st of each year (or as
soon thereafter as reasonably possible), Landlord shall provide to Tenant a
reconciliation of any of Tenant's accounts which are impounded for the twelve
(1Z) month period ending the preceding December 31st. Said reconciliation shall
set forth in reasonable detail the costs and expenses paid by Landlord and shall
include a computation as to Tenant's pro rata share. If Tenant has paid more
than Tenant's share of said costs and expenses in payments of impounds, Landlord
shall accompany said reconciliation with a refund of the overpayment. In the
event of an underpayment, Tenant shall pay to Landlord the amount of said
underpayment within ten (10) days after the date of mailing of the statement of
reconciliation (due date). Tenant's payment of the amount of said underpayment
is in default if not received by Landlord within ten (10) days of the due date.
The amount of said underpayment in default shall be subject to an additional
charge of five percent (5%) per month on the unpaid balance thereof as a late
charge. Failure of Landlord to provide said reconciliation on or before April
1st of each year will not waive any of Landlord's rights hereunder but will
extend Landlord's overpayment date and/or Tenant's underpayment date by a period
of time equal to that between April 1st and the date the reconciliation is
received by Tenant.
If Landlord elects to impound any of the above costs and expenses, except
for building repairs and maintenance expenses, as set forth in Article XI,
Tenant's estimated share of said costs and expenses shall be payable as
additional rental on a monthly basis. The impounded costs and expenses are due
as additional rental on the first (1st) day of the month and if not actually
received by Landlord within seven (7) days of their due date are in default.
Impound amounts which are in default are subject to an additional charge of five
percent (5%) per month on the unpaid balance thereof as a late charge.
If any rental or additional rental set forth hereunder is not paid on or
before the due date on two (2) or more separate occasions in any calendar year,
then at Landlord's sole option, Landlord may demand thereafter that all rental
and additional rentals be paid quarterly in advance. Nothing shall be construed
herein as requiring Landlord to accept any rental or additional rental if
rendered after the due date.
ARTICLE V - REAL ESTATE TAXES AND RENTAL TAXES
5.1 In addition to all the rentals herein reserved, the Tenant shall pay to
Landlord an amount equal to the annual real estate taxes and assessments levied
upon and assessed against the demised premises for each year of the term of this
Lease, together with a pro rata share of taxes and assessments on the parking
and common areas of the Shopping Center. If the demised premises are not
separately assessed, together with a pro rata share of taxes and assessments on
the parking and common areas, then the applicable taxes and assessments on the
demised premises shall be determined by the ratio that the gross floor area of
the demised premises (including second floors, if any), bears to the total floor
area (including second floors, if any), of the building or buildings which
include the demised premises and for which a separate assessment is made as such
taxes are assessed in that separate tax parcel. If such separate assessment does
not reflect the pro rata share of the parking and common area based upon the
ratio of building to parking and common area shown on Exhibit "A" (attached
hereto and by this reference incorporated herein as though set forth in full),
Landlord shall make an appropriate adjustment to reflect the pro rata share of
the taxes paid by Landlord and to be reimbursed by Tenant for the use of the
demised premises.
5.2 Any such tax for the years in which this Lease commences and/or ends
shall be apportioned and adjusted. Any assessment for the years in which this
Lease commences and/or ends which may be levied against or upon the demised
premises and which, under the laws then in force, may be evidenced by
improvement or other bonds, or may be paid in annual installments, shall be
apportioned. Tenant shall have no obligation to continue such payments accruing
after the termination of this Lease.
5.3 The term "real estate taxes" as used herein shall be deemed to mean all
taxes imposed upon the real property and permanent improvements, constituting
the demised premises and all assessments levied against said demised premises,
but shall not include personal income taxes, inheritance taxes, or franchise
taxes levied against Landlord, but not directly against said property, even
though such taxes shall become a lien against said property.
5.4 Tenant shall pay as additional rental to Landlord any and all excise
privilege and other taxes other than net income I and estate taxes levied or
assessed by any federal, state or local authority upon the rent received by
Landlord herein. I Tenant shall be responsible for any tax imposed upon Landlord
by any governmental authority (referred to herein as "rental taxes") which is
based or measured in whole or in part by amounts charged or received by Landlord
from Tenant under this Lease.
5.5 Said taxes as additional rental are due ten (10) days after the date of
mailing (due date) of a statement therefor, and are in default if not actually
received by Landlord within ten (10) days of the due date. Additional rental in
default shall be subject to an additional charge of five percent (5%) per month
on the unpaid balance thereof as a late charge.
5.6 If at any time during the term of this Lease, under the laws of the
State of Arizona, or any political subdivision thereof, a tax or excise on rents
or other tax (except income tax), however described, is levied or assessed
against Landlord on account of the rental expressly reserved hereunder, such tax
or excise on rents or other taxes shall be deemed to constitute real estate
taxes on the improvements on the demise premises for the purpose of this Article
V.
5.7 Tenant shall also pay ad additional rental Tenant's prorata share of
any attorneys' fees and costs incurred in the protest and/or appeal of any real
estate or other taxes attributable to the Shopping Center and the premises.
ARTICLE Vl - PERSONAL PROPERTY TAXES
6.1 During the term hereof, Tenant shall pay prior to delinquency all taxes
assessed against and levied upon fixtures, furnishings, equipment and all other
personal property of Tenant contained in the demised premises and, when
possible, Tenant shall cause said fixtures, furnishings, equipment and other
personal property to be assessed and billed separately from the real property of
Landlord. If any or all of Tenant's fixtures, furnishings, equipment and other
personal property shall be assessed and taxed with Landlord's real property,
Tenant shall pay as additional rental to Landlord Tenant's share of such taxes
within ten (10) days after written demand by Landlord to Tenant setting forth
the amount of such taxes applicable to Tenant's property. Landlord will estimate
the amount of such taxes next due and impound as additional rental from Tenant
on a monthly basis Tenant's estimated obligation as set forth hereinabove.
ARTICLE Vll - CONSTRUCTION
7.1 Landlord agrees that it will, at Landlord's sole cost and expense,
after the execution of this Lease, commence and pursue to completion the
construction of the improvements to be erected by Landlord to the extent shown
on Exhibit "B" "attached hereto and by this reference incorporated herein as
though set forth in full). Except for the construction of improvements listed on
Exhibit "B", as Landlord's responsibility, Tenant shall be solely responsible
for the cost of all improvements to the demised premises, including any and all
permit fees, utility connections and charges, license fees or other fees or
charges with reference to the use and improvement of the demised premises by
Tenant and the operation of Tenant's business on the demised premises. Except as
specifically delineated on Exhibit "B" as Landlord's responsibility for Tenant
improvements, Tenant agrees and does hereby accept the premises in its "as is"
condition, on the date of the execution of this Lease.
ARTICLE VIII - COMMON AREAS. PARKING FACILITIES AND GENERAL WELFARE
8.1 Common Areas of the Shopping Center are those areas which are not
demised to any Tenants individually, but which are available to Tenant and
others for their non-exclusive use for such purposes as ingress and egress,
roadways, sidewalks, parking and landscaping. Landlord covenants that the common
and parking areas of the Shopping Center of which the demised premises are a
part shall be available for the non-exclusive use of Tenant during the full term
of this Lease, or any extension of the term hereof.
8.2 Prior to the date of Tenant's occupation of the demised premises,
Landlord shall cause substantially all of said common and parking areas to be
graded, black-topped, lighted and appropriately marked and landscaped at no
expense to Tenant and shall cause the same to be maintained in good condition
and repair during the entire term hereof.
8.3 Landlord shall keep (or cause to be kept by others if Landlord is not
responsible for management of the Shopping Center), said automobile parking and
common areas in a neat, clean and orderly condition, properly lighted and
landscaped, and shall repair any damage to the facilities thereof, but all
expenses in connection with said automobile parking and common areas shall be
charged and prorated in the manner hereinafter set forth. Landlord's Common Area
Operating Expenses ("Operating Expenses") are intended to be inclusive of all
costs of operating, owning, managing, and maintaining the common area
(specifically excluding, however, Landlord's principal and interest payments on
its obligations secured by mortgages, deeds of trust, or other security
instruments which constitute liens upon the Shopping Center or its constituent
parts or machinery or equipment, rents payable by Landlord to any ground lessor
of all or any part of the Shopping Center, and Landlord's general income taxes,
inheritance taxes, or estate taxes) and may include but shall not be limited to:
(i) all utility expense not separately metered to and paid by Tenants; (ii) all
costs and expenses of repairing, operating, and maintaining any heating,
ventilating or air conditioning system and equipment and component parts for the
common area or any portion thereof, including the cost of all utilities required
in the operation thereof; (iii) all taxes, assessments, and other impositions
and charges which may create a statutory lien upon the Shopping Center, the
equipment or personal property used in the operation, ownership, management, or
maintenance of the Shopping Center common area, or the premises, which are
assessed, levied or imposed during the term of this Lease, and any tax, levy or
license fee measured by the rent payable by Tenant under this Lease, or any
obligation incurred by Landlord to any governmental entity as a result of its
ownership of the premises any interest in this Lease, or the Shopping Center,
whether or not such obligation is otherwise imposed on Landlord or Tenant; (iv)
all of Landlord's costs and expenses in maintaining hazard, liability, and rent
loss insurance procured under the provisions of this Lease and such other
insurance as Landlord deems to be appropriate for the common area; (v) all costs
and expenses of maintenance, repair, and replacement of common area lighting,
pavement, parking area, striping, signing, seasonal decorations, sidewalks,
music service, traffic control structures, curbs, gutters, landscaping,
sprinkling systems, storm drainage systems, any utility systems, and electrical
and mechanical components and equipment; (vi) all costs and expenses of
maintenance, repair, painting, repainting, and replacement of the common area
structures and their component or operative parts and finishes, including
floors, ceilings, fences, walls, roofs, skylights and windows; (vii) all costs
and expenses of gardening and other landscaping upkeep; (viii) all costs and
expenses for fire protection, sprinkling systems, communications systems, fire
hydrant charges, water services, gas services, sanitation and sewer services,
snow removal, trash and rubbish collection and removal services, facilities, and
devices; (ix) depreciation on machinery and equipment used in any maintenance
activity or in the provision of any service; (x) all costs and expenses of
janitorial, sweeping, or their services for cleaning any of the common area or
any component part; (xi) the cost of all supplies; (xii) all sales or use taxes
incurred in connection with any other Operating Expense activity, purchase, or
use; (xiii) all costs incurred in promotion and advertising of the Shopping
Center; (xiv) all costs and expenses incurred for wages, compensation, benefits,
insurance premiums, withholding, social security, and unemployment contributions
or exactions for personnel employed to provide any operating, management, or
maintenance service, (xv) fees for required licenses and permits; (xvi) fees and
charges for professional management of the Shopping Center; (xvii) the fees and
expenses incurred for accounting, inspection, consulting, and legal services
pertaining to the management, owning, operating, or maintenance of the common
area; (xviii) reasonable reserves for operating Expenses, deficiencies and for
replacements; (xix) any capital improvement or structural repairs to effect
other Operating Expense savings, or required by any change in the laws,
ordinances, rules, regulations or orders of any governmental or
quasi-governmental authority having jurisdiction over the common area, the costs
of which shall be amortized in accordance with applicable governmental
regulations, or, at Landlord's election, over the useful life of the capital
improvements or structural repair; and (xx) any other cost or expense reasonably
incurred in the operation, ownership, management, and maintenance of the common
area, or otherwise stated to be an Operating Expense by other provisions of this
Lease.
If various parcels within the Shopping Center are or shall become
separately managed, Landlord shall be responsible for maintaining only parcels
of which the demised premises are a part and other parcels Landlord is charged
with maintaining.
8.4 Landlord shall send to Tenant an annual statement itemizing, in
reasonable detail, the total Parking and Common Area Expenses, and Tenant shall
pay as Additional Rental to Landlord Tenant's share of such expenses. Tenant's
pro rata share shall be determined by the ratio that the number of square feet
of gross floor area in the demised premises bears to the total number of square
feet of gross floor area of all buildings in the Shopping Center which have been
completed as of the commencement of the billing period. If the Shopping Center
of which the demise premises are a part consists of more than one subdivided
parcel, Landlord may elect to determine Tenant's pro rate share of Parking and
Common Area Expenses based upon the ratio that the number of square feet of
gross floor area in the demised premises bears to the total number of square
feet of the gross floor area of all building which have been completed as of the
commencement of the billing period in the subdivided parcel in which the demised
premises are a part multiplied by the pro rata share of the Parking and Common
Area Expenses for such subdivided parcel. There shall be an appropriate
adjustment of Tenant's share of the expenses as of the commencement and
expiration of the term of this Lease. The term "gross floor area" shall mean
ground floor area and second floor area, if any, with measurements from the
outside of exterior walls and from the center of interior walls. Said Additional
Rental is due ten (10) days after the date of mailing (due date) of the
statement therefor and is in default if not actually received by Landlord within
the ten (10) days after the due date. Additional Rental in default shall be
subject to an additional charge of five percent (5%) per month on the unpaid
balance as a late charge.
8.5 Tenant, for the use and benefit of Tenant, Tenant's agents, employees,
customers, licensees and subtenants, shall have the nonexclusive right in common
with Landlord, and other present and future owners, tenants and their agents,
employees, customers, licensees and subtenants, to use said Parking and Common
Areas during the entire term of this Lease, or any extension thereof, for
ingress and egress, roadway, sidewalk and automobile parking; provided, however,
Tenant and Tenant's employees shall park their automobiles in those areas
designated for employee parking, or at Landlord's written request shall park
their automobiles outside of the Shopping Center, provided all other tenants
within the Shopping Center are required to do the same.
8.6 Tenant, in the use of said Parking and Common Areas, agrees to comply
with such reasonable rules and regulations as Landlord may adopt from time to
time for the orderly and proper operation of said Common and Parking Areas.
However, in no event shall Tenant permit, allow or place any type of circulars
or ads on vehicles parking in the common and parking areas. Tenant shall not use
any common area, including the space directly adjacent to the demised premises,
for sales or displays.
8.7 Tenant shall, at Tenant's sole expense, arrange for the collection of
Tenant's trash on a daily basis, unless Landlord elects to provide trash
collection as a part of the Parking and Common Area, and has so advised Tenant
in writing, and Tenant has written authorization from Landlord to use the trash
container. Under no circumstances shall Tenant permit trash to accumulate beyond
a daily basis.
8.8 Notwithstanding anything contained herein to the contrary, any
condemnation or other taking by any public authority or sale in lieu of
condemnation of any or all of such Parking or Common Areas shall not constitute
a violation of this Lease. Landlord reserves the right at all times to change
the dimensions and location of the Parking and Common Areas including, but not
limited to, entrances, exits traffic lanes and the boundaries and locations of
such parking area or areas. In addition, Landlord reserves the right at ail
times to change the dimensions, identity and type of any building improvements
within the Shopping Center subject to no restrictions whatsoever. This Lease
shall be subordinate to any agreement existing as of the date of this Lease or
subsequently placed upon the real property of which the demised premises are a
part, which Agreement provides for Reciprocal Easements and Restrictions
pertaining to the Parking and Common Areas, and in the event of conflict between
the provisions of such Agreement(s) and this Lease the provisions of said
Agreement(s) shall prevail.
ARTICLE IX - USES PROHIBITED
9.1 Tenant shall not use or permit said demised premises, or any part
thereof, to be used for any purpose or purposes other than the purpose or
purposes for which said demised premises are hereby leased; and no use shall be
made or permitted to be made of said demised premises, nor acts done, which will
increase the existing rate of insurance upon the building of which said demised
premises may be located (once said rate is established), or cause a cancellation
of any insurance policy covering said building or any part thereof. Tenant shall
not sell or permit to be kept, used or sold in or about said demised premises
any article which may be prohibited by standard form of fire insurance policies.
Tenant shall, at Tenant's sole cost, comply with any and all requirements
pertaining to the use of said demised premises of any insurance organization or
company necessary for the maintenance of reasonable fire and public liability
insurance covering said building and appurtenances. If Tenant's use of the
demised premises, recited in Paragraph D of the Fundamental Lease Provisions and
Article I hereof, results in a rate increase for the building of which the
demised premises are a part, Tenant shall pay annually on the anniversary date
of this Lease, as additional rent and without proration, a sum equal to that of
the additional premium occasioned by said rate increase.
ARTICLE X - ALTERATIONS AND FIXTURES
l0.l Tenant shall not make or suffer to be made any alterations of the
demised premises, or any part thereof without the prior written consent of
Landlord and the prior receipt by Landlord of a copy of Tenant's building permit
and plans. Any additions to or alterations of said premises, except movable
furniture and trade fixtures, shall become at once a part of the realty and
belong to Landlord or, at Landlord's option, Tenant will remove any said
additionns, alterations or trade fixtures and restore the premises at Tenant's
sole cost and expense to the condition received by Tenant as of the commencement
date of this Lease. Any such alterations shall be in conformance with the
requirements of all municipal, state and federal authorities.
Tenant agrees to promptly fixturize the store in a manner comparable to a
store of similar nature.
Tenant is solely responsible for all costs associated with any additions or
alterations to the demised premises performed by or for Tenant, including any
and all permit fees, license fees, utility charges or other fees or charges,
except those costs expressly agreed to be paid by Landlord under the terms of
this Lease.
ARTICLE XI - MAINTENANCE AND REPAIR
11.1 Tenant shall, subject to Landlord's obligations as hereinafter
provided, at all times during the term hereof, and at Tenant's sole cost and
expense, keep, maintain and repair the building and other improvements upon the
demised premises in good and sanitary order and condition (except as hereinafter
provided) including, without limitation, painting, the maintenance and repair of
any store front, doors, window casements, plate glass replacement if cracked or
broken, glazing heating and air conditioning systems, plumbing, pipes, electric
wiring and conduits. Tenant hereby waives all rights to make repairs at the
expense of Landlord, and Tenant hereby waives all rights provided for by the
provisions of the Arizona Revised Statutes. By entering into the demised
premises, Tenant hereby accepts said demised premises as being in good and
sanitary order, condition and repair, and Tenant agrees on the last day of said
term, or sooner termination of the Lease to surrender the demised premises with
appurtenances, in the same condition as when received, reasonable use and wear
thereof excepted. Tenant shall periodically sweep and clean the sidewalks
adjacent to the demised premises, as and when needed. If any maintenance or
repairs required to be made by Tenant hereunder are not made within ten (10)
days after written notice delivered to Tenant, Landlord may at Landlord's option
make such maintenance or repairs without liability to Tenant for any loss or
damage which may result to Tenant's stock or business by reason of same. Tenant
shall pay to Landlord upon demand as additional rental hereunder the cost of
same plus interest at the rate of five percent (5%) per month from the date of
payment by Landlord until repaid by Tenant, as a late charge.
11.2 Landlord shall, subject to Tenant's reimbursement as herein provided,
maintain in good repair the exterior walls, roof and sidewalks. Tenant agrees
that it will not permit or authorize any person to go onto the roof of the
building of which the demised premises are a part without the prior written
consent of Landlord. Said consent will be given only upon Landlord's
satisfaction that any repairs necessitated as a result of Tenant's action will
be made by Tenant, at Tenant's expense, and will be made in such a manner so as
not to invalidate any guarantee relating to said roof. Landlord shall not be
required to make any repairs to the exterior walls, roof and sidewalks unless
and until Tenant has notified Landlord in writing of the need of such repairs
and Landlord shall have had a reasonable period of time thereafter to commence
and complete said repairs. Landlord may at Landlord's sole discretion arrange
for a maintenance contract of all roof structures, the cost of which shall be
Tenant's responsibility as to Tenant's pro rata share thereof. Tenant shall pay,
as Additional Rental to Landlord, Tenant's pro rata share of the cost of said
repairs and maintenance incurred by Landlord. Said pro rata share shall be
determined according to the area of the demised premises including second floor
or mezzanine, if any, as it relates to the total leasable area of the building
which contains the demised premises. Said Additional Rental is due ten (10) days
after the date of mailing (due date) of the statement therefor, and is in
default if not received by Landlord within ten (10) days of the due date.
Additional Rental in default shall be subject to an additional charge of five
percent (5%) per month on the unpaid balance as a late charge.
11.3 With regard to the heating and air conditioning system, Landlord may
require Tenant to obtain and maintain (and furnish evidence thereof to Landlord)
a maintenance contract from a certified air conditioning maintenance firm, which
contract shall provide for periodic inspection and servicing in accordance with
generally accepted standards of maintenance in the County in which the demised
premises are situated. In the alternative, Landlord may provide said
maintenance, but all of the expenses in connection with the maintenance of said
heating and air conditioning system shall be charged and prorated to Tenant.
Tenant's pro rata share to be paid pursuant to this provision shall be
calculated pursuant to the same ratio as hereinabove defined in Article VIII,
Paragraph 8.4.
ARTICLE XII - COMPLIANCE WITH LAWS
12.1 Tenant shall, at Tenant's sole cost and expense, comply with all of
the requirements of all municipal, state and federal authorities now in force or
which may hereafter be in force pertaining to the use of said premises, and
shall faithfully observe in said use all municipal ordinances and state and
federal statutes now in force or which shall hereinafter be in force. The
judgment of any court of competent jurisdiction or the admission of Tenant in
any action or proceeding against Tenant, whether Landlord be a party thereto or
not, that Tenant has violated any such order or statute in said use shall be
conclusive of that fact as between the Landlord and Tenant. Unless otherwise
stated, Tenant is responsible for obtaining and conforming to the requirements
of any and all business licenses and/or building permits.
12.2 Tenant shall not commit or suffer to be committed any waste upon the
demised premises or any act, nuisance or other thing which may disturb the quiet
enjoyment of Landlord or any other Tenant or Business Invitees in the Shopping
Center in which the demised premises may be located.
ARTICLE XIII - INSURANCES AND INDEMNITY
13.1 Tenant as a material part of the consideration to be rendered to
Landlord under this Lease, hereby waives all claims against Landlord for damages
to fixtures, goods, wares and merchandise in, upon, or about said demised
premises and for injuries to persons in or about said demised premises from any
cause arising at any time; and Tenant will hold Landlord exempt and harmless
from any damage or injury to any person, or the fixtures, goods, wares, and
merchandise of any person, arising from the use of the demised premises by
Tenant or from the failure of Tenant to keep the demised premises in good
condition and repair as herein provided. Tenant hereby waives all claims against
Landlord for damage to fixtures, goods, wares and merchandise in, upon or about
said demised premises and for injuries to persons in or about said demised
premises resulting from the operation of a motor vehicle. Tenant holds Landlord
exempt and harmless from any damage or injury to any person, or the fixtures,
goods, wares, and merchandise of any person, resulting from the operation of an
automobile.
13.2 (a) During the term of this Lease, unless Landlord in writing requires
otherwise as provided herein, Tenant shall at Tenant's sole cost and expense
(but for the mutual benefit of Landlord and Tenant), maintain comprehensive
public liability insurance, including contractual liability specifically
including the hold harmless provisions contained in this Lease, and a
cross-liability clause against claims for personal injury, death or property
damage occurring in, upon or about the demised premises and on any sidewalks
directly adjacent to the demised premises. The limitation of liability of such
insurance shall not be less than Five Hundred Thousand and No/100 Dollars
($500,000.00) with respect to injury or death to one person, and not less than
One Million and No/100 Dollars (%1,000,000.00) with respect to any one accident,
and not less than One Hundred Thousand and No/100 Dollars ($100,000.00) with
respect to property damage. Such insurance shall be carried with companies
satisfactory to Landlord, and Tenant shall obtain a written obligation on the
part of each insurance company to notify Landlord at least twenty (20) days
prior to cancellation of such insurance. All such policies of insurance shall
name Landlord as an additional insured and shall provide that it is primary
insurance to and noncontributing with any other insurance available to Landlord.
Such policies of insurance or copies thereof (or at Landlord's option a valid
certificate of insurance) shall be delivered to Landlord prior to commencement
of Tenant's occupancy hereunder, and renewals thereof as required shall be
delivered to Landlord at least thirty (30) days prior to the expiration of the
respective policy terms. If Tenant should fail to comply with the foregoing
requirements relating to insurance, Landlord may in Landlord's sole discretion
obtain such insurance and Tenant shall pay to Landlord on demand as additional
rent hereunder the premium cost thereof plus interest at the rate of five
percent (5%) per month from the date of payment by Landlord until repaid by
Tenant, as a late charge.
(b) In the alternative, and only upon precise written notice by
Landlord, said Landlord may elect to provide the insurance, but the total cost
and expense thereof shall be charged and prorated to Tenant; in such event
Tenant agrees to pay as additional rental, within ten (10) days' written demand
by Landlord, Tenant's pro rata share of said insurance cost. Tenant's pro rata
share shall be computed as the ratio that the number of square feet of gross
floor area in the demised premises bears to the number of square feet of the
gross floor area of all Landlord's buildings in the Shopping Center. If the
insurance premium is based upon total retail sales, then Tenant's share shall be
computed as the ratio that Tenant's total retail sales bears to the total retail
sales of all tenants in the Shopping Center.
13.3 (a) During the term of this Lease, Tenant shall, unless Landlord in
writing requires otherwise as provided herein at Tenant's sole cost and expense,
insure and keep the demised premises insured against loss or damage by fire,
maintaining extended coverage and multiple perils insurance for not less than
one hundred percent (100X) of its full replacement value, such insurance to be
made payable in case of loss solely to Landlord, the proceeds of which will be
utilized in the manner specified in Article XIX hereof. Such insurance shall be
carried with companies satisfactory to Landlord, and Tenant shall obtain a
written obligation on the part of each insurance company to notify Landlord at
least twenty (20) days prior to cancellation of such insurance. All such
policies of insurance shall be issued in the name of Tenant and Landlord and for
the mutual and joint benefit and protection of the parties, and such policies of
insurance shall be delivered to Landlord prior to commencement of Tenant's
occupancy hereunder and renewals thereof as required shall be delivered to
Landlord at least thirty (30) days prior to the expiration of the respective
policy terms. If Tenant should fail to comply with the foregoing requirements
relating to insurance, Landlord may obtain such insurance and Tenant shall pay
to Landlord on demand as additional rent hereunder the premium cost thereof plus
interest at the rate of five percent (5%) per month from the date of payment by
Landlord until repaid by Tenant, as a late charge.
(b) In the alternative, at option of Landlord, and only upon
Landlord's written instruction, said insurance coverage for the demised premises
will be incorporated in the policies of fire and extended coverage insurance
that Landlord places on all or part of the remaining portion of the premises,
and Tenant agrees to pay, as additional rent within ten (10) days of written
demand by Landlord, Tenant's pro rata share of said insurance cost. Tenant's pro
rata shake to be paid shall be computed as the ratio that the Tenant's total
gross building floor area (as that term is defined in Article Vl11, Paragraph
8.4) bears to the total gross building floor area so insured.
13.4 During the lease term, Tenant shall maintain in full force on all of
Tenant's fixtures, equipment, exterior signs and leasehold improvements in or
appurtenant to the demised premises a policy or policies of fire insurance with
an extended coverage endorsement for not less than ninety percent (90%) of their
insurable value. All of the provisions of Paragraph 13.3 hereof shall apply
hereto, except that all of the proceeds of such policy, although paid to
Landlord, shall be used for the repair or replacement of the fixture(s) so
insured.
13.5 If the specified use herein permits food preparation and sales as a
restaurant or food take-out service or similar use, Tenant shall install and
maintain at Tenant's sole cost and expense any fire protective systems in grill,
deep fry and cooking areas which are required by Landlord or city, county or
state fire ordinances, and such systems shall qualify for full fire protective
credits allowed by the fire insurance rating and/or regulatory bodies in whose
jurisdiction the demised premises are located.
ARTICLE XIV - FREE FROM LIENS
14.1 Tenant shall keep the demised premises and the property in which the
demised premises are situated completely free and clear from any liens arising
out of any work performed, material furnished, or obligation incurred by Tenant.
ARTICLE XV - ABANDONMENT
15.1 Tenant shall neither vacate nor abandon the demised premised at any
time during the term of this Lease. If Tenant shall abandon, vacate or surrender
the demised premises or be dispossessed by process of law or otherwise, any
personal property belonging to Tenant and left on the demised premises shall be
deemed to be abandoned, at the option of Landlord, except such property as may
be mortgaged to Landlord. Except when caused by construction or remodeling on
the demised premises, a period of five (5) consecutive days during which the
demised premises are not regularly open for business shall be deemed an
abandonment for purposes of this Lease, without regard to whether Tenant is or
is not in default in the payment of rent.
ARTICLE XVI - SIGNS, STORE FRONTS AND AUCTIONS
16.1 Tenant shall not without Landlord's prior written consent: make any
changes to or paint the store front; install any exterior lighting, decorations
or paintings; erect or install any signs, window or door lettering, placards,
decorations or advertising media of any type which can be viewed from the
exterior of the demised premises. All signs, decorations and advertising media
shall conform in all respects to the sign criteria established by Landlord for
the Shopping Center from time to time in the exercise of Landlord's sole
discretion, and shall be subject to the prior written approval of Landlord as to
construction, method of attachment, size, shape, height, lighting, color and
general appearance and use. Anything to the contrary in this Lease
notwithstanding, Tenant shall not affix any sign to the roof of any building in
the demised premises.
16.2 Tenant agrees to furnish and install, at Tenant's own expense, all
signs, conforming to the Landlord's sign criteria and construction drawings
which shall be provided to Tenant upon Tenant's written request. Exhibit "B" is
attached hereto and by this reference incorporated herein as though set forth in
full. Said signs are to be in place no later than thirty (30) days following the
date Tenant opens for business. Landlord shall provide power to the sign
locations. Tenant shall submit five t5) copies of drawings of signs and receive
Landlord's written approval prior to the ordering or placement of any sign. All
expenses in connection with the maintenance and operation of such signs shall be
paid for by Tenant.
16.3 Tenant shall keep Tenant's signs, exterior lighting and display
windows lit during those hours that Landlord in Landlord's sole discretion may
reasonably require.
16.4 Tenant shall not conduct or permit to be conducted any going out of
business sale or any sale by auction in, upon, or from the demised premises,
whether said auction be voluntary, involuntary, pursuant to any assessment for
the payment of creditors or pursuant to any bankruptcy or other solvency
proceeding.
16.5 The Tenant may not display or sell merchandise, or allow grocery carts
or other similar devices within the control of Tenant to be stored or to remain
outside the defined exterior walls and permanent doorways of any building in the
demised premises. Tenant further agrees not to install any exterior lighting,
amplifier or similar devices or use in or about the demised premises any
advertising medium which may be heard or seen outside any building in the
demised premises, such as flashing lights, searchlights, loudspeakers,
phonographs or radio broadcasts.
16.6 Tenant shall not without Landlord's prior written consent display or
sell merchandise outside the defined exterior walls and permanent doorways of
the demised premises.
ARTICLE XVII - UTILITIES
17.1 Tenant shall pay before delinquent all charges for water, gas, heat,
electric power, telephone service and all other services of utilities, including
any additional connection, or other fees required to be paid as the result of
Tenant's use of the demised premises. If any utility is not separately metered,
Tenant agrees to reimburse Landlord for the cost of said service as additional
rental. Said additional rental is due ten (10) days after the date of mailing
(due date) of the statement therefor, and is in default if not received by
Landlord within ten (10) days after the due date. Additional rental in default
shall be subject to an additional charge of five percent (5%) per month on the
unpaid balance as a late charge. Landlord may estimate the amount of said
service of utilities which are not separately metered and collect and impound as
additional rental from Tenant on a monthly basis, the amount of Tenant's pro
rata share to be determined pursuant to the formula set forth in Article Vl11,
Paragraph 8.4 hereof.
17.2 If Tenant fails to pay any utility charges as set forth herein and
Landlord is held liable therefor by the utility company, then such nonpayment by
Tenant shall be deemed a material breach of this Lease and an event of default
under this Lease. Notwithstanding any other provisions of this Lease, upon
service of a written notice by Landlord to Tenant of such event of default for
failure to pay such utility charges and Tenant's failure to cure said default
within three (3) days of the service of said notice, Landlord may terminate this
Lease.
17.3 As to any of the utilities set forth in Paragraph 17.1 hereof or
furnished by the Landlord pursuant to Article XVII hereof, it is expressly
agreed that they are rendered only under an express contract created by this
Lease and that the Landlord may at any time discontinue furnishing any such
services without obligation to Tenant other than to connect the demised premises
to the public utility, if any, furnishing such services. Landlord shall not be
liable to Tenant for any interruption whatsoever in utility services.
ARTICLE XVIII - ENTRY AND INSPECTION
18.1 Tenant shall permit Landlord and Landlord's agents to enter into and
upon the demised premises at all reasonable times for the purpose of inspecting
the same, or for the purpose of maintaining the building in which said demised
premises are situated, or for the purpose of making repairs, alterations or
additions to any other portion of said building, including the erection and
maintenance of such scaffolding, canopy, fences and props as may be required, or
for the purpose of posting notices of nonliability for alterations, additions or
repairs or for the purpose of placing upon the property in which the demised
premises are located any usual or ordinary "For Sale' signs. Landlord shall be
permitted to do any of the above without any rebate of rent and without any
liability to Tenant for any loss of occupation or quiet enjoyment of the demised
premises thereby occasioned. Tenant shall permit Landlord, at any time within
sixty (60) days prior to the expiration of this Lease, to place upon said
demised premises any usual or ordinary "For Lease" signs and during such sixty
(60) day period Landlord or Landlord's agents may during normal business hours
enter upon said demised premises and exhibit same to prospective tenants.
18.2 Upon request, Tenant shall provide Landlord with a key to the premises
for purposes of emergency entry by Landlord or Landlord's agents. Use of this
key is to be restricted to emergency situations or as permitted by Tenant under
the provisions hereof.
ARTICLE XIX - DAMAGE AND DESTRUCTION OF PREMISES
19.1 In the event of the partial destruction of the demised premises or if
the said demised premises are declared unsafe or unfit for occupancy by any
authorized public authority for any reason other than Tenant's act, use or
occupation, which declaration requires repairs to said demised premises or the
building of which the demised premises is a part, then Landlord may in
Landlord's discretion make said repairs provided Tenant gives to Landlord thirty
(30) days written notice of the necessity therefor. No such partial destruction
(including any destruction necessary in order to make repairs required by any
declaration made by any public authority) shall in any wise annul or void this
Lease except that Tenant shall be entitled to a proportionate reduction to be
based upon the extent to which the making of such repairs shall interfere with
the business carried on by Tenant. However, if during the last twenty-five
percent (25%) of the term of this Lease the demised premises were damaged as a
result of fire or any other insured casualty to an extent in excess of
twenty-five percent (25%) of its then replacement cost (excluding foundations),
Landlord may within thirty (30) days following the date such damage occurs
terminate this Lease by written notice to Tenant. If Landlord, however, elects
to make said repairs, and provided Landlord uses due diligence in making said
repairs this Lease shall continue in full force and effect and the Guaranteed
Minimum Rental shall be proportionately reduced as hereinabove provided. If
Landlord elects to terminate this Lease, all rentals shall be prorated between
Landlord and Tenant as of the date of such destruction.
19.2 The foregoing to the contrary notwithstanding, if the building of
which the demised premises is a part is damaged or destroyed at any time during
the term hereof to an extent of more than twenty-five percent (25%) of its then
replacement cost (excluding foundations) as a result of a casualty not insured
against, Landlord may within thirty (30) days following the date of such
destruction terminate this Lease upon written notice to Tenant. If Landlord does
not elect to so terminate because of said uninsured casualty, Landlord shall
promptly rebuild and repair said building, and Tenant's rental obligation shall
be proportionately reduced as hereinabove provided.
19.3 Landlord's obligation to rebuild and repair under this Article XIX
shall be limited to restoring the demised premises to substantially the
condition in which they existed prior to such casualty, exclusive of any
alterations, additions, improvements, fixtures and equipment installed by
Tenant, or by Landlord at the expense of Tenant (whether or not technical title
may be in Landlord by terms of this Lease or otherwise), all of which shall be
restored by Tenant at Tenant's sole cost and expense.
19.4 Each party hereto waives the entire right of recovery each may have
against the other, their officers and employees, on account of loss or damage,
including consequential loss, to the demised premises and property in and about
the demised premises arising from any cause which could be insured against by
fire and extended coverage insurance whether or not such insurance is in force.
If such insurance is now in force, or is hereafter acquired, each party agrees
to notify its insurance carrier that it has waived its entire right of recovery
against the other as aforesaid including right of subrogation by said insurer.
19.5 In respect to any partial destruction (including any destruction
necessary in order to make repairs required by any such declaration of any
authorized public authority) which Landlord is obligated to repair or may elect
to repair under the terms of this Article XIX, Tenant waives any statutory right
it may have to cancel this Lease as a result of such destruction.
ARTICLE XX - ASSIGNMENT AND SUBLETTING
20.1 Tenant shall not assign this Lease, or any interest therein, and shall
not sublet the demised premises or any part thereof, or any right or privilege
appurtenant thereto or permit any other person (the agents and servants of
Tenant excepted) to occupy or use the demised premises, or any portion thereof,
without first obtaining the written consent of Landlord. Consent by Landlord to
one assignment, subletting, occupation or use by another person shall not be
deemed to be a consent to any subsequent assignment, subletting, occupation or
use by another person. Consent to an assignment shall not release the original
named Tenant from liability for the continued performance of the terms and
provisions on the part of Tenant to be kept and performed, unless Landlord
specifically and in writing releases the original named Tenant from said
liability. All assignment and sublettings shall be strictly subject to the terms
of this Lease. Any assignment or subletting without the prior written consent of
Landlord shall be void and shall, at the option of the Landlord, terminate this
Lease. Neither this Lease nor any interest therein is assignable, as to the
interest of Tenant, by operation of law, without the prior written consent of
Landlord. No assignment approval by Landlord shall mean approval of a use not
specifically set forth herein. Any differing of use or extension of use by
Tenant or an assignee will, at the option of the Landlord, terminate this Lease.
Landlord shall be entitled to any and all rentals, monies, or other
considerations (on all assignments or sublettings) in excess of Tenant's rental
amounts hereunder. Any cost incurred by the Landlord in connection with said
assignment or subletting shall be paid by Tenant. In Landlord's sole discretion,
upon Tenant's request for an assignment or subletting of the demised premises,
Landlord may terminate the Lease and enter into a new Lease Agreement with any
said assignee or subtenant. Shares in HTNZ Laser, Inc. will be sold to
investors.
ARTICLE XXI - DEFAULT
21.1 Any of the following shall constitute a default under the terms of
this Lease:
(a) The default in the payment of any installment of rent or any other
sum or payment anywhere in this Lease herein specified to be paid by Tenant and
the continuation of such default for five (5) days;
(b) Default, partial or otherwise, under the provisions of Articles
XV, XVI, XX, XXII, XXV and XXVIII herein upon three (3) days' written notice of
said default.
(c) The default in the observance or performance of any of the
Tenant's covenants, agreements or obligations hereunder, other than those
described in paragraph 21.1 (a) and (b) above, if such default shall not be
cured within thirty (30) days after Landlord shall have given Tenant written
notice specifying such default or defaults or in the case of a default which
cannot be cured with due diligence within a period of thirty (30) days after
Tenant is given such written notice, if Tenant shall not have begun proceedings
to cure the same, or if Tenant shall not prosecute the curing of such default as
rapidly as possible under the circumstances.
21.2 In the case of such default or defaults described in paragraph 21.1
above, then Landlord, besides other rights or remedies Landlord may have, shall
have the immediate right of re-entry without notice to Tenant, and may change
all locks to prohibit Tenant's access, and remove all persons and property from
the premises; and such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of Tenant.
21.3 Should Landlord elect to re-enter, as herein provided, or should
Landlord take possession pursuant to legal proceedings or pursuant to any notice
provided for by Law, Landlord may either terminate this Lease or may from time
to time, without terminating this Lease, re-let said premises or any part
thereof for such term or terms (which may be for a term extending beyond the
term of this Lease) and at such rental or rentals and upon such other terms and
conditions as Landlord in Landlord's sole discretion may deem advisable, with
the right to make alterations and repairs to said premises.
21.4 Upon such re-letting:
(a) Tenant shall be immediately liable to pay to Landlord, in addition
to any indebtedness other than rent due hereunder, the costs and expenses of
such re-letting and of such alteration and repair incurred by Landlord and shall
pay monthly the amount, if any, by which the rent reserved in this Lease for the
period of such re-letting (up to but not beyond the term of this Lease) exceeds
the amount agreed to be paid as rent for the demised premises for such period of
such reletting; or
(b) At the option of Landlord, rents received by Landlord from such
re-letting shall be applied as follows: first, to the payment of any
indebtedness, other than rent, due hereunder from Tenant to Landlord; second, to
the payment of any costs and expenses of such re-letting and of such alterations
and repairs; third, to the payment of rent due and unpaid hereunder; and the
residue, if any, shall be held by Landlord and applied in payment of future rent
as the same may become due and payable hereunder. If Tenant has been credited
with any rent to be received by such re-letting under option (a) and such rent
shall not be promptly paid to Landlord by the new Tenant, or if such rentals
received from re-letting under option (b) during any month be less than that to
be paid during the month by Tenant hereunder, Tenant shall pay any such
deficiency to Landlord. Such deficiency shall be calculated and paid monthly.
21.5 No such re-entry or taking possession of said premises by Landlord
shall be construed as an election on Landlord's part to terminate this Lease
unless a written notice of such intention, specifically stating that Landlord
elects to terminate, be given to Tenant, or unless the termination thereof be
decreed by a court of competent jurisdiction.
21.6 In the event of any such default by Tenant, then in addition to any
other remedies available to Landlord at law or in equity, Landlord shall have
the immediate option to terminate this Lease and all rights of Tenant hereunder
by giving written notice of such intention to terminate. In the event that
Landlord shall elect to so terminate this Lease, then Landlord may recover from
Tenant:
(a) The worth at the time of award of any unpaid rent which had been
earned at the time of such termination; plow
(b) The worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of award
exceeds the amount of such rental loss Tenant proves could have been reasonably
avoided; Plus
(c) Any other amount necessary to compensate Landlord for all the
detriment approximately caused by Tenant's failure to perform Tenant's
obligations under this Lease or which in the ordinary course of things would be
likely or result therefrom; and
(d) At Landlord's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable state
law.
The term "rent" or "rental payment" as used herein, shall be deemed to be
and to mean the rental, rental adjustment payments and all other sums required
to be paid by Tenant pursuant to the terms of this Lease. In determining the
rent, exclusive of such items as real property taxes, insurance, maintenance
fees and related items, which would be payable by Tenant hereunder, subsequent
to default, the annual rent for each year of the unexpired term shall be equal
to the greater of the guaranteed minimum annual rent set forth in Article IV as
adjusted by any other Article or paragraph of this Lease or the average minimum
and percentage rents paid by Tenant from the commencement of the term to the
time of default, or during the preceding three t3) full years, whichever period
is shorter.
As used in subparagraphs (a) and (b) above, the "worth at the time of
award" is computed by allowing interest at the rate of fifteen percent (15%) per
annum. As used in subparagraph (c) above, the "worth at the time of award" is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).
Tenant acknowledges that Landlord has executed this Lease in reliance on
the financial information furnished by Tenant to Landlord as to Tenant's
financial condition. If it is determined at any time subsequent to the date of
this Lease that any of the financial information furnished by Tenant is
substantially untrue or inaccurate, Tenant shall be deemed to be in default
under this Lease, which default shall not be subject to cure and which shall
entitle Landlord to exercise all remedies reserved by Landlord under this Lease
or otherwise available to Landlord by law.
In the event of a default of any rental payment or other payment due under
this Lease, Landlord may, in Landlords notice to Tenant of such default, require
that the Tenant's payment to cure the default be in cash, cashier's check,
and/or certified check. Landlord and Tenant agree that should Landlord so elect
to require payment by cash, cashier's check or certified check in Landlord's
notice to Tenant, a tender of money to cure the default which is not in the form
requested by Landlord shall be deemed a failure to cure the default. Nothing in
this Article shall in any way diminish or be construed as waiving any of
Landlord's other remedies as provided elsewhere in this Lease, or by law or in
equity.
ARTICLE XXII - INSOLVENCY OF TENANT
22.1 Tenant agrees that if all or substantially all of Tenant's assets are
placed in the hands of a receiver or trustee, and if such receivership or
trusteeship continues for a period of ten (10) days, or should Tenant make an
assignment for the benefit of creditors, or be adjudicated a bankrupt, or should
Tenant institute any proceedings under any state or federal bankruptcy act
wherein Tenant seeks to be adjudicated a bankrupt, or seeks to be discharged of
Tenant's debts, or should any involuntary proceeding be filed against Tenant
under such bankruptcy laws and Tenant consents thereto or acquiesces therein by
pleading or default, then Tenant shall be in default under this Lease. However,
this Lease or any interest in and to the demised premises shall not become an
asset in any of such proceedings and in any of such events, and in addition to
any and all rights or remedies of Landlord hereunder or as provided by law, it
shall be lawful for Landlord at Landlord's option to declare the term hereof
ended and to re-enter the demised premises and take possession thereof and
remove all persons therefrom, and Tenant and anyone claiming under Tenant shall
have no further claim therein or hereunder.
ARTICLE XXIII - SURRENDER OF LEASE
23.1 The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall not work a merger and shall, at the option of
Landlord, terminate all or any existing subleases or subtenancies, or may, at
the option of the Landlord, operate as an assignment to Landlord of any or all
of such subleases or subtenancies.
ARTICLE XXIV - SALE OF PREMISES BY LANDLORD
24.1 In the event of any sale of the demised premises by Landlord, Landlord
shall be and is hereby entirely freed and relieved of all liability under any
and all of Landlord's covenants and obligations contained in or derived from
this Lease arising out of any act, occurrence or omission occurring after the
consummation of such sale; and the purchaser, at such sale or any subsequent
sale of the demised premises, shall be deemed, without any further agreement
between the parties or their successors in interest or between the parties and
any such purchaser, to have assumed and agreed to carry out any and all of the
covenants and obligations of the Landlord under this Lease. Any security given
by Tenant to secure performance of Tenant's obligations hereunder may be
assigned and transferred by Landlord to such purchaser.
ARTICLE XXV - HOURS OF BUSINESS
25.1 Tenant shall continuously during the term of this Lease operate the
Tenant's business in the demised premises a minimum of fifty (50) hours per
week, and shall keep the demised premises open for business and cause Tenant's
business to be conducted therein during the usual business hours of each and
every business day as is customary for businesses of like character in the City
in which the demised premises are located to be open for business; provided,
however, that this provision shall not apply if the demised premises should be:
(a) closed and the business of Tenant temporarily discontinued therein on
account of causes beyond the reasonable control of Tenant, (b) closed for not
more than three (3) days out of respect to the memory of any deceased officer or
employee of Tenant, or the relative of any such officer or employee; (c) closed
because of construction or remodeling; or (d) closed because off partial or
total destruction or declaration of the premises being unsafe or unfit for
occupancy. Tenant shall keep the demised premises adequately stocked with
merchandise and with sufficient sales personnel to care for the patronage, and
shall conduct said business in accordance with sound business practices.
25.2 In the event of breach by the Tenant of any of the conditions
contained in this Article, the Landlord shall have, in addition to any and all
remedies herein provided, the right at its option to collect not only the
Guaranteed Minimum Rental hereinabove provided, but additional rent at the rate
of one thirtieth (1/30) of the minimum monthly rent herein provided for each and
every day that the Tenant shall fail to conduct its business as herein provided.
ARTICLE XXVI - ATTORNEYS FEES
26.1 If Landlord is involuntarily made a party defendant to any litigation
concerning this Lease or the demised premises by any reason or any act or
omission of Tenant, then Tenant shall defend and hold harmless Landlord from all
liabilities by reason thereof, including reasonable attorney fees and all costs
incurred by Landlord in such litigation. If Landlord finds it necessary to
retain an attorney in connection with the default by Tenant in any of the
agreements or covenants contained ! in this Lease, Tenant shall pay reasonable
attorney fees to said attorney. If either Landlord or Tenant, or their
successors and assigns, shall commence any legal proceedings either in court or
by arbitration against the other with respect to the enforcement or
interpretation of any of the terms and conditions of this Lease, the
non-prevailing party therein shall pay to the other all expenses of said
litigation, including any reasonable fees as may be fixed by the court or
arbitrator having jurisdiction over the matter. The parties hereto agree that
the Superior Court, State of Arizona, is the proper venue and jurisdiction for
litigation of, or performance under any matters relating to this Lease, and
service mailed to the address of Tenant set forth in this Lease shall be
adequate service for such litigation, and Tenant hereby agrees and accepts said
service at same, as though personally served.
ARTICLE XXVII - PAYMENT BY CHECK
27.1 If any rent or other monetary payment due under the terms of this
Lease is made by check wherein the payor is other than the Tenant herein,
acceptance thereof shall in no way constitute acceptance by Landlord of any
assignment or subletting. Any assignment or subletting must comply with the
conditions of Article XX of this Lease.
ARTICLE XXVIII - SECURITY DEPOSIT
28.1 Tenant, contemporaneously with the execution of this Lease, has
deposited with Landlord the security deposit delineated in paragraph H-3 of the
Fundamental Lease Provisions hereof, receipt of which is hereby acknowledged by
Landlord said deposit being given to secure the faithful performance by Tenant
of all of the terms, covenants and conditions of this Lease by Tenant to be kept
and performed during the term hereof. Tenant agrees that if Tenant shall fail to
pay the rent herein reserved promptly when due, said deposit may, at the option
of Landlord (but Landlord shall not be required to), be applied to any rent due
and unpaid, and if Tenant violates any of the other terms, covenants and
conditions of this Lease, said deposit shall be applied to any damages suffered
by Landlord as a result of Tenant's default to the extent of the amount of the
damages suffered.
The security deposit shall be held by Landlord for Tenant, without interest
thereon, owed or payable to Tenant, but the claim of Tenant to such payment or
deposit shall be prior to the claim of any creditor of Landlord except a Trustee
in Bankruptcy. Landlord may claim from such deposit only such amounts as are
reasonably necessary to remedy Tenant's defaults in payment of rent, to repair
damages to the premises caused by Tenant or to clean such premises upon
termination of the tenancy. Any remaining portion of such deposit shall be
returned to Tenant no later than thirty (30) days after termination of tenancy.
Nothing contained in this Article XXVIII shall in any way diminish or be
construed as waiving any of Landlord's other remedies as provided in Article XXI
hereof, or by law or equity. Should the entire security deposit, or any portion
thereof, be appropriated and applied by Landlord for the payment of overdue rent
or other sums due and payable to Landlord by Tenant hereunder, then Tenant
shall, on the written demand of Landlord, forthwith remit to Landlord a
sufficient amount in cash to restore said security deposit to its original
amount, and Tenant's failure to do so within fifteen (15) days after the date of
such statement of demand shall constitute a material breach of this Lease.
Should Tenant comply with all of the terms, covenants and conditions of this
Lease and promptly pay all of the rental herein provided for as it falls due,
and all other sums payable by Tenant to Landlord hereunder, said security
deposit shall be returned in full to Tenant at the end of the term of this
Lease, or upon the earlier termination of this Lease pursuant to the provisions
hereof, except in the event the demised premises are sold as a result of the
exercise of any power of sale under any mortgage or deed of trust, in which
event this Lease shall be automatically amended to delete any reference to this
Article XXVI11, and Tenant shall be entitled to reimbursement of Tenant's
security deposit from the party then holding said deposit.
ARTICLE XXIX - BARRIERS
29.1 Tenant shall not be permitted to construct, maintain or permit any
barriers of any nature whatsoever upon the demised premises. The purpose of this
paragraph is to ensure that the demised premises remain an integral part of the
entire Shopping Center and that there be an unfettered flow off traffic and use
of parking areas in the entire Shopping Center.
ARTICLE XXX - HOLDING OVER
30.1 Any holding over after the expiration of the term of this Lease, with
the consent of Landlord, shall be construed to be a tenancy from month to month,
cancelable upon thirty (30) days written notice, and at a rental of one hundred
fifty percent (150%) of the total rental as existed during the last year of the
term hereof, and further upon the terms and conditions as existed other than
rental during the last year of the term hereof.
ARTICLE XXXI - TIME OF THE ESSENCE
31.1 Time is of the essence in this Lease.
ARTICLE XXXII - FLOOR
32.1 The Tenant shall not place a load upon any floor of the premises
exceeding the floor load per square foot area which said floor was designed to
carry and which is allowed by law. Tenant shall be solely responsible for the
placement of any loads, and if any question whatsoever exists as to the
placement of a load (and on all second stories, if any) Tenant shall request
from Landlord in writing the actual maximum floor load per square foot designed
by Landlord's architect, and Landlord shall provide such load information, which
under no circumstances will Tenant exceed. Landlord reserves the right to
approve and prescribe the weight and position of all safes which might be placed
so as to distribute the weight of the same effectively and evenly. Business
machines and mechanical equipment shall be placed and maintained by Tenant at
Tenant's expense in settings sufficient, in Landlord's judgment, to absorb and
prevent vibration, noise and annoyance to Landlord or other tenants in the
Shopping Center.
ARTICLE XXXIII - EMINENT DOMAIN
33.1 If any part of the demised premises shall be taken or condemned or is
transferred in lieu thereof for any public or quasi-public use, and a part
thereof remains which is reasonably susceptible of occupation hereunder for the
use or uses provided for herein, this Lease shall, as to the part so taken,
terminate as of the date title shall vest in the condemning authority, and the
rent payable hereunder shall be adjusted so that the Tenant shall be required to
pay for the remainder of the term only such portion of the rent as the value of
the demised premises retained bears to the value of the entire demised premises
at the date of condemnation; but in such event Landlord shall have the option to
terminate this Lease as of the date when title to the part so condemned vests in
the condemning authority. If all the demised premises, or such part thereof be
taken or condemned or is transferred in lieu thereof so that there does not
remain a portion reasonably susceptible for occupation hereunder for the use or
uses provided for herein, this Lease shall terminate as of the date title shall
vest in the condemning authority. If a part, or all of the demised premises be
taken or condemned or is transferred in lieu thereof, all compensation awarded
upon such transfer, condemnation or taking shall go to the Landlord and the
Tenant shall have no claim thereto. The Tenant hereby irrevocably assigns and
transfers to the Landlord any right to compensation or damage to which the
Tenant may become entitled during the term hereof by reason of the transfer,
condemnation or taking of all or a part of the demised premises.
33.2 If any part of the Parking or Common Area, as defined in Article V111,
should be taken for any public or quasi-public use under any governmental law,
ordinance or regulation, or by right of eminent domain, or by private purchase
in lieu thereof, this Lease shall not terminate, nor shall the rent payable
hereunder be reduced, nor shall Tenant be entitled to any part of the award made
therefor except that Tenant may, at Tenant's option, terminate this Lease if as
a result of such action the total gross building floor area of all buildings
within the Shopping Center should exceed fifty percent (50%) of the total
remaining ground level of the whole Shopping Center plus any additional parking
area provided by Landlord in reasonable proximity to the Shopping Center.
ARTICLE XXXIV - GARBAGE. NUISANCE AND RECEIVING
34.1 Tenant shall take good care of the demised premises and keep the same
free from waste or nuisance at all times. Tenant shall keep the demised
premises, including show windows, signs, sidewalks, passageways, serviceways and
loading areas adjacent to the demised premises, neat, clean and free from dirt
and rubbish at all times. Tenant shall store all trash and garbage in suitable
receptacles within the demised premises or at such other place in the Shopping
Center that Landlord may designate. Tenant shall remove Tenant's garbage and
waste from the Shopping Center daily or, at the option of the Landlord, Landlord
may arrange for such removal, in which event the assessment for such garbage
collection will be treated in the same manner as assessments for other utilities
provided under Article XVII hereof. Receiving and delivery of goods and
merchandise and the preparation and removal of garbage and trash shall be done
only at such times, in the areas, and through the entrances designated for such
purpose by Landlord. These functions shall be subject to such regulations as
Landlord may from time to time deem advisable for the proper operation of the
demised premises and/or the Shopping Center. Tenant shall neither operate an
incinerator nor burn trash or garbage within the Shopping Center area.
ARTICLE XXXV - NONLIABILITY FOR CERTAIN DAMAGE
35.1 Landlord shall not be liable to Tenant for any death of or injury to
any person or persons, or damage to property caused by the demised premises
becoming out of repair, or by gas, water, steam, electricity, or oil leaking or
escaping into the demised premises, except where due to Landlord's willful
failure to make repairs required to be made hereunder, after the expiration of a
reasonable time after written notice to Landlord of the need for such repairs.
Landlord shall not be liable to Tenant for any loss or damage of any kind
whether occasioned by or through the acts or omissions of other tenants of the
Shopping Center or of any other persons whatsoever, excepting only willful
misconduct, or negligent acts or omissions of Landlord or Landlord's duly
authorized agents or employees in the course and scope of their employment.
ARTICLE XXXVI - PICKET LINES
36.1 Tenant covenants to do all in its power to prevent the establishment
of a picket line on, about or near the Shopping Center (informational or
otherwise) evidencing a labor dispute directly or indirectly involving Tenant
and/or Tenant's operations, products, merchandise or services whether on the
demised premises or elsewhere; and, if such a picket line is established and is
not permanently removed within twenty-four (24) hours, regardless of the reasons
for nonremoval, Landlord shall have the right to terminate this Lease effective
twenty-four (24) hours after delivery of notice to that effect, unless the
picket line is permanently removed prior to expiration of the notice period.
ARTICLE XXXVII - WAIVERS
37.1 One or more waivers of any covenant, term or condition of this Lease
by either party hereto shall not be construed as a waiver of a subsequent breach
of the same covenant, term or condition. The consent or approval by either party
hereto or of any act by the other party requiring such consent or approval shall
not be deemed to waive or render unnecessary consent to or approval of any
subsequent similar act.
ARTICLE XXXVIII - REAL ESTATE COMMISSIONS
38.1 Tenant warrants that it has not had any dealings with any realtor,
broker or agent, in connection with the negotiation of this Lease. Tenant agrees
to pay and to hold Landlord harmless from any cost, expense, or liability for
any compensation, commission, or charges claimed by any realtor, broker, or
agent, other than those named in the Fundamental Lease Provisions, with respect
to this Lease or the negotiation of this Lease.
ARTICLE XXXIX - LEASE IN FACT A SUBLEASE
39.1 If this Lease is in fact or becomes a sublease, Tenant accepts this
Lease subject to all of the terms and conditions of the underlying Lease or
Master Lease under which Landlord holds the Shopping Center as Lessee, a copy of
which Lease shall be made available to Tenant for Tenant's inspection. Tenant
covenants that it will do no act or thing which would constitute a violation of
Landlords obligations under such underlying Lease; and, to the extent this Lease
may conflict with the terms and conditions of the underlying Lease, those terms
and conditions shall control. If the underlying Lease is terminated for any
reason, this Lease will likewise terminate simultaneously.
ARTICLE XL - ACCEPTANCE OF PREMISES
40.1 Tenant's act of taking possession of the demised premises shall be
deemed to be an acknowledgement that the demised premises are either constructed
in accordance with the plans and specifications agreed to by the parties
pursuant to this Lease Agreement and that the same comply fully with Landlord's
covenants and obligations hereunder or that Tenant accepts the same in "as is"
condition.
ARTICLE XLI - ESTOPPEL STATEMENT (CERTIFICATE)
41.1 Tenant shall, at any and all times, and from time to time within
fifteen (15) days prior request by Landlord, execute acknowledge and deliver to
Landlord a statement in writing certifying that this Lease is unmodified and in
full force and effect or if there have been modifications, that the same is in
full force and effect as modified, stating the modifications and the cites to
which the fixed rent and any other charges have been paid in advance. It is
intended that any such statement delivered pursuant to this subparagraph may be
relied upon by any prospective assignee, purchaser or encumbrances of the
demised premises. Said statement shall be in a form as provided by Landlord.
Tenant hereby irrevocably constitutes and appoints Landlord as Tenant's
attorney-in-fact to execute (and to deliver to any third party) any documents
hereinabove required to be executed by Tenant, for and on behalf of Tenant, if
Tenant shall have failed to do so fifteen (15) days after the request therefor
by Landlord.
ARTICLE XLII - RULES AND REGULATIONS
42.1 Tenant shall comply with all reasonable rules and regulations made by
Landlord from time to time for the overall operation of the Shopping Center of
which the demised premises are a part.
ARTICLE XLIII - COMPETITION
43.1 During the term of this Lease, Tenant shall not directly or indirectly
engage in any similar or competing business within a driving radius of three (3)
miles from the outside boundary of the Shopping Center of which the demised
premises are a part.
ARTICLE XLIV - NOTICES
44.1 Wherever in this Lease it shall be required or permitted that notice
and/or demand be given or served by either party to this Lease to or on the
other, such notice and/or demand shall be deemed to have been duly given or
served, whether actually received or not, forty-eight (48) hours after being
deposited in the United States Mail, postage prepaid, by Certified Mail, Return
Receipt Requested, addressed as set forth in Paragraphs J and K of the
Fundamental Lease Provisions.
ARTICLE XLV - SUCCESSORS IN INTEREST
45.1 The covenants herein contained shall, subject to the provisions as to
assignment, apply to and bind the heirs successors, executors, administrators
and assigns of all the parties hereto. All of the Tenants hereto shall be
jointly and severally liable hereunder.
ARTICLE XLVI - TENANT'S PERFORMANCE
46.1 If Tenant shall fail within any time limits which may be provided
herein to complete any work or perform any other requirement provided to be
performed by Tenant prior to the commencement hereof, or if Tenant shall cause a
delay in the completion of any work, Landlord shall send Tenant written notice
of said default, and if said default is not corrected within ~ten (10) days
thereafter, Landlord shall have the option of terminating this Lease by a
written notice of termination, and I upon forwarding of said notice this Lease
shall cease and terminate. Landlord shall be entitled to retain as liquidated
damages all deposits made hereunder and such improvements as Tenant may have
annexed to the realty that cannot be removed without damage thereto.
ARTICLE XLVII - FORCE MAJEURE
47.1 If either party hereto shall be delayed or prevented from the
performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor troubles, inability to procure materials, restrictive
governmental laws or regulations or other cause without fault and beyond the
control of the party obligated (financial inability excepted), performance of
such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the
period of such delay; provided, however, nothing contained in this Article XLVII
shall excuse Tenant from the prompt payment of any rental or other charge
required of Tenant hereunder.
ARTICLE XLVIII - PARTIAL INVALIDITY
48.1 If any term, covenant, condition or provision of this Lease is held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the provisions hereof shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby.
ARTICLE XLIX - MARGINAL CAPTIONS
49.1 The various headings and numbers herein, the grouping of the
provisions of this Lease into separate articles and paragraphs are for the
purpose of convenience only and shall not be considered a part hereof.
ARTICLE L - SUBORDINATION, ATTORNMENT
50.1 This Lease, at Landlord's option, shall be subordinate to the lien of
any deed of trust or mortgage previously or subsequently placed upon the real
property of which the demised premises are a part, and to any and all advances
made on the security thereof, and to all renewals, modifications,
consolidations, replacements and extensions thereof; provided, however, that as
to the lien of any such deed of trust or mortgage, Tenant's right to quiet
possession of the premises shall not be disturbed if Tenant is not in default
and so long as Tenant shall pay the rent and observe end perform all of the
provisions of this Lease, unless this Lease is otherwise terminated pursuant to
its terms.
If any mortgagee, trustee or ground lessor shall elect to have this Lease
prior to the lien of its mortgage, deed of trust or ground lease, and shall give
written notice thereof to Tenant, the Lease shall be deemed prior to such
mortgage, deed of trust or ground lease, whether this Lease is dated prior or
subsequent to the date of said mortgage, deed of trust or ground lease or the
date of recording thereof.
If any proceedings are brought for foreclosure, or in the event of the
exercise of the power of sale under any mortgage or deed of trust made by
Landlord covering the demised premises, Tenant shall attorn to the purchaser
upon any such foreclosure or sale and recognize such purchaser as Landlord under
this Lease.
If upon any sale, assignment or hypothecation of the demised premises or
the land thereunder by Landlord, or at any other time, an estoppel certificate,
and/or financial statement and/or assignment of rights shall be requested of
Tenant, Tenant agrees, within ten (10) days thereafter, to deliver such
financial statement and to deliver such estoppel certificate (in recordable
form) addressed to any such proposed mortgagee or purchaser or to Landlord
certifying the requested information including, among other things, the dates of
commencement and termination of this Lease, the amounts of security deposits,
that this Lease is in full force and effect (if such be the case) and that there
are no differences, offsets or defaults of Landlord, or noting such differences,
offsets or defaults as actually exist. Tenant shall be liable for any loss or
liability resulting from any incorrect information certified, and such mortgagee
and purchaser shall have the right to rely on such estopped certificate and
financial statement. Tenant shall in the same manner acknowledge and execute any
assignment of rights to receive as required by any mortgagee of Landlord.
Should Tenant fail to provide such estoppel certificate, financial
statement or assignment of rights within ten (10) days of the service on Tenant
of a request therefor, then it is agreed between the parties hereto that
Landlord may suffer substantial damage as a result of Tenant's failure and,
therefore, Tenant shall pay to Landlord daily Additional Rental, in addition to
all other rental due under this Lease, in an amount equal to one-thirtieth
(1/30) of the Guaranteed Minimum Monthly Rental (as set forth in Article IV) for
each day commencing on the eleventh (11th) day after service of the request for
such estoppel certificate, financial statement or assignment of rights until the
same is provided to Landlord, its mortgagee or purchaser. Said daily Additional
Rental shall be due and payable daily for each day commencing on the eleventh
(11th) day following the service of such request, and in default three (3) days
after each such daily due date.
ARTICLE LI - RECORDATION
51.1 Neither Landlord nor Tenant shall record this Lease Agreement without
the prior written consent of the other. However, either party may record a short
form Memorandum hereof, but only in a form as approved by Landlord in writing
prior to recording.
ARTICLE LII - SALE OF MERCHANDISE IN PUBLIC AREAS
52.1 Without the written consent of Landlord Tenant shall not peddle,
advertise or sell any merchandise or services of any kind whatsoever in the
Public Areas, sidewalks or Common Areas of the Shopping Center.
ARTICLE LIII - RELATIONSHIP OF PARTIES
53.1 Nothing contained within this Lease shall be deemed or construed to
effect a partnership or joint venture relationship between Landlord and Tenant,
it being specifically acknowledged that the sole and exclusive relationship
between the parties is that of Landlord and Tenant.
ARTICLE LIV - REVISION OF EXHIBIT "A"
54.1 It is understood and agreed that the site plan attached hereto as
Exhibits "A" and "A-1" are preliminary and that prior to the commencement of the
term hereof Landlord may revise said site plan and change the site of Tenant's
demised premises. In the event of such a change, and if it is of a material
nature in Landlord's discretion, Landlord or Tenant may cancel this Lease upon
notice to the other, in which event any security deposit or prepaid rent paid by
Tenant shall be refunded to Tenant, and neither party shall thereafter have any
further obligations to each other respecting this Lease. It is further
understood that after the commencement of the term hereof, Landlord may modify
the site plan without Tenant's consent, so long as such modification does not
unreasonably affect the use of Tenant's demised premises.
ARTICLE LV - NO ORAL AGREEMENTS
55.1 This Lease covers in full each and every agreement of every kind and
of every nature whatsoever between the parties, their respective agents, and
representatives hereto concerning this Lease, and all preliminary negotiations
and agreements including letters, and correspondence of whatsoever kind or
nature merged herein. There are no oral agreements or implied covenants, except
as specifically set forth in this Lease, or the exhibits attached hereto and by
this reference incorporated herein. This Lease may be modified only by written
agreement signed by both parties.
IN WITNESS WHEREOF, the parties have duly executed the Fundamental Lease
Provisions, this Lease Agreement together with the herein referred to Exhibits
which are attached hereto, the day and year first above written.
LANDLORD: TENANT:
FIRST AMERICAN TITLE HTNZ LASER, INC. AN ARIZONA CORPORATION
INSURANCE COMPANY TRUST #4551 DBA: HOLLYWOOD TRENZ/ULTRAZONE
By /S/ROBERT P. MORRISON By /S/ EDWARD A. SHOWALTER
---------------------------- -------------------------------------
ROBERT P. MORRISON, AGENT
Date 6/27/95 Date June 27, 1995
------------------------- ------------------------------------
STATE OF )
)
County of )
SUBSCRIBED AND SWORN to before me this day of , 199 ,
by------------------------,--------------------------------- and
- --------------------------- .
My Commission Expires:
- ------------------------ ---------------------------------
Notary Public
<PAGE>
ADDENDUM TO THAT CERTAIN LEASE DATED June 27, 1995
BETWEEN FIRST AMERICAN TITLE INSURANCE COMPANY TRUST #4551 AS LANDLORD
AND HTNZ, AN ARIZONA CORPORATION
DBA: HOLLYWOOD TRENZ/ULTRAZONE AS TENANT
IT IS UNDERSTOOD AND AGREED that the above-mentioned Lease shall be amended
to read as follows:
1) Tenant's pro rata share of operating expenses, as outlined in Article
4.3, Items A-G, in the Lease Agreement shall be 4.27879% currently estimated at
$3,145.05 per month to be reconciled annually.
2) Deposit: Upon signing of Lease, Lessee agrees to pay Lessor TWENTY-TWO
THOUSAND FIVE-HUNDRED EIGHTY-FIVE AND 38/100 DOLLARS ($22,585.38). Said amount
represents first and last month's rent broken down as follows:
First Month - $7,697.67-rent; $3,145.05-estimated common area maintenance;
$449.97-rental tax (currently @ 4.15%), totaling $11,29Z.69.
Last Month - $7,697.67-rent, $3,145.05-estimated common area maintenance;
$449.97-rental tax, totaling $11,292.69
3) Options: Tenant may elect to, and Landlord agrees to the exercise of two
(2) five year options, providing Tenant exercises these options in writing
ninety (90) days prior to the expiration of the then current term, and providing
that Tenant is not then in default.
4) Except as herein modified, all of the terms and conditions of said Lease
shall remain in full force and effect.
LANDLORD: TENANT:
FIRST AMERICAN TITLE INSURANCE HTNZ LASER, INC., AN ARIZONA CORPORATION
COMPANY TRUST #4551 DBA: HOLLYWOOD TRENZ/ULTRAZONE
By /S/ ROBERT P. MORRISON By /S/ EDWARD R. SHOWALTER
---------------------------- -------------------------------------
ROBERT P. MORRISON, AGENT EDWARD R. SHOWALTER, PRESIDENT
By /S/ GREGORY D. SMITH
-------------------------------------
GREGORY D. SMITH, VICE-PRESIDENT
Date 6/27/95 Date June 27, 1995
--------------------------- -----------------------------------
STATE OF )
)
County of )
SUBSCRIBED AND SWORN to before me this day of , 199 , by
- -------------------------, -----------------------,and -----------------------.
My Commission Expire:
- -------------------------------- ---------------------------------------
Notary Public
<PAGE>
EXHIBIT B
SIGN CRITERIA
BELL CANYON PAVILIONS
Phoenix, Arizona
GENERAL
The purpose of this statement of Sign Criteria is to inform Tenants of the
framework within which the Landlord will review and approve all signs to be
erected in the Showing Center by tenants. Specific limits or requirements are
stated herein. Nothing hereinafter stated shall be construed as limiting
Landlord's right to require modifications to signs prior to its approving them
or to modify these criteria at Its sole discretion.
SIGNS ON FASCIAS
1. Number of Signs:
A. One (1) permitted per store, except as further describe.
B. When a store Is at the intersection of two outside storefront wells,
Landlord will permit one sign on each facade. No signs will be permitted on any
back wall except those outlined in Section V herein.
2. Location of Signs:
Identification confined to Tenant's leased frontage within the neutral
strips separating two tenants. All signs to be located on building fascia as
determined by Landlord.
3. Mounting of Signs:
A. All signs shall be constructed and mounted so that all fasteners,
hangers, brackets, transformers, light leaks and wiring will be concealed from
public view.
B. All fasteners will be on non-corrosive material such as aluminum,
stainless steel or cadmium plated so as to not strain the fascia. All holes and
fasteners will be fully covered with silicone caulk to aid in rust prevention
and avoid water penetration through the fascia. The proper number and size of
fasteners will be used to support each individual letter but care will be taken
during Installation to minimize damage to the fascia.
4. Size of Signs:
Except as otherwise specifically limited here, the size of signs and
letters shall not exceed the following limits:
A. Maximum length of sign: 75% of storefront width
B. Maximum height of letters: 20" maximum height
C. Minimum height of sign: Vertical dimensions to be at least 12" in
height
D. Depth of letters: 6" from back of letter to letter face
5. Sign Text:
Text shall be limited to Tenant's trade name as set forth In Section 6.5.
6. Types of Slogans Permitted:
A. Individual letters.
B. Script "signatures" without background, customarily used at Tenant's
other places of business.
C. Individual "cut out" block letters, provided the over-all sign
Installation does not, in Landlord's opinion, constitute a box sign.
7. Materials and Colors of Sign Letters:
A. Letter faces to be of 3/16" acrylite plexiglass: White #015-2; Red
#209-0; or Blue #605-0.
B. Letters to be made of minimum .040 aluminum backs and returns with a
painted finish of Pittsburg Paint's DITZLER Delstar semi-gloss paint (#33406)
trimmed with one (1" inch gold jewelite trim around the plexiglass edge. All
aluminum surface inside letters will be painted white.
8. Types of Illuminatlon:
A. All signs on canopy fascia must be lighted. Letters must be internally
illuminated (with translucent faces and with light sources completely
concealed).
B. Letters to be internally illuminated with 4500 H.0. Voltarc brand white
15 mm neon tubing and 30 M. A. transformers. Neon Colors: Fluorescent blue neon
with blue #605-0; clear red neon with red @309-0; white neon to be used with
white #015-2.
9. Specific Prohibitions:
The following are specifically prohibited:
A. Raceway mounted signs.
B. Interior and exterior flashing, rotating and/or moving signs.
C. Interior and exterior neon and/or other exposed light sources of any
description whatsoever.
D. Light leaks of any kind.
E. Illuminated sign panels or sign backgrounds.
F. Box signs.
G. Portable signs located within one (1) mile of the Shopping Center.
H. Visible sign company names.
I. Decals on door or show window glass (unless required by code or approved
by Landlord.)
10. Drawings to be Submitted:
FOUR (4) complete sets of sign drawings must be submitted to the Landlord
for approval BEFORE fabrication. Tenant's sign drawings must include the
following:
A. Elevation view of sign (drawing to accurate scale) with dimensions of
height of letters and length of sign.
B. Notation of the specific manufacturer, sizes and colors of the lens and
letter; materials and the neon tubing and transformers.
C. Cross-sectlon view through sign letter showing materials and the
dimensioned projection of the face of the letter from the face of the wall
surface.
D. Scale drawing of location of sign on fascia. The Landlord shall initial
sign drawings submitted by Tenant indicating Landlord's approval provided such
drawings conform to the criteria specified herein and shall not be responsible
for the cost of refabricatlon of signs fabricated, ordered or constructed, that
do not conform to such sign criteria or are not specifically approved in writing
by Landlord.
11. Storefront Signs or Lettering:
A. No signs or lettering shall be painted on or attached to the glass of
storefronts, windows or doors, except as herein specified.
1) Neat lettering, consisting of letters not exceeding 1-1/2" in height,
may be placed on the Inside of the window adjacent to the front door
for the purpose of identification and information such as store hours
and emergency phone numbers.
2) Lettering shall be confined to an area not exceeding 18" x 18".
B. No signs such as billboards, sales, specials, etc., can be attached to
Interior or exterior face or storefront, windows or doors except as approved by
Landlord in writing.
12. Loading Door Signs:
No signs or lettering shall be painted directly on service doors, but
stores having rear service doors on loading courts or service corridors shall
provide a standard sign for these doors, consisting of Tenant's trade name in
1-1/2" white Helvetica vinyl letters centered on the door on a vertical line 5'
above the bottom of the door. No other type or design of sign is permitted.
13. Miscellaneous Signs:
A. Any and all signs which, in Landlord's opinion, are not covered by the
requirements set forth above shall be reviewed on their individual merits.
B. There shall be no exterior free-standing or pylon sign other than those
which landlord may elect to have erected to properly display the name of the
shopping center. in Landlord's opinion. are not covered by the requirements set
forth above
14. Added Information:
A. Electrical conduit and make-up box to the signs will be installed by
Landlord as part of the Tenant Finish Allowance.
B. Electrical service, wiring and time clock to be paid by Tenant.
C. Monthly electrical service to be paid by Tenant.
<PAGE>
EXHIBIT "C"
GUARANTEE
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantee, warranty and assure to Landlord, its
successors and assigns, without limitation and as and for their own obligation,
the full, complete and prompt performance of each and all of the obligations,
covenants and agreements of Tenant contained in or undertaken by, or imposed
upon Tenant pursuant to the terms of the Lease Agreement, including any
amendments, addenda or modifications thereto, whether material or otherwise, and
whether made after the execution of the Lease Agreement and of this Guaranty.
Guarantors further unconditionally and irrevocably authorize the Lessor to enter
into modifications and revisions of the Lease Agreement, renewals and extensions
of any such instruments, and to take and hold security for the leasehold
obligations, to subordinate, compromise, or release any security, upon such
terms and conditions as Lessor may elect, without giving notice to any Guarantor
or obtaining any consent of any Guarantor. Each Guarantor's obligations under
this Guaranty are independent of those of the Tenant and independent of those
other Guarantors. Lessor may bring a separate action against any one or more
Guarantors without first proceeding against the Tenant or any other person or
any security held by Lessor and without pursuing any other remedy. Lessor's
rights under this Guaranty will not be exhausted by any action by Lessor until
all of the indebtedness due under the Lease Agreement has been fully paid and
performed. Each Guarantor waives all statutes of limitations as a defense to any
action brought against any Guarantor to the fullest extent permitted by law, any
defense based upon legal disability of the Tenant, presentment, demand, protest
and notice of any kind and each Guarantor assumes full responsibility or keeping
fully informed of the financial condition of Tenant and all other; circumstances
affecting each Guarantor and the Tenant's ability to perform its obligations to
Lessor, and agrees that Lessor receives about the Tenant's financial condition
or the financial condition or circumstances of any Guarantor, bearing on the
ability to perform of any of them.
Guarantors further hereby unconditionally and irrevocably covenant until
discharged to indemnify, defend, exonerate, and hold harmless Landlord for any
loss, damage or cost of any kind or nature whatsoever, including attorney's
fees, expert fees, and costs resulting from any breach or failure of performance
on the part of Tenant with respect to any and all obligations of Tenant pursuant
to the Lease Agreement.
IN WITNESS WHEREOF, the undersigned Guarantors have executed this Guarantee
this Guarantee this 27 day of June, 1995.
/S/ EDWARD R. SHOWALTER /S/ ROBERT E. BURTON, JR.
- ------------------------------------ -------------------------------------
GUARANTOR EDWARD R. SHOWALTER DATE GUARANTOR ROBERT E. BURTON, JR., DATE
AN UNMARRIED MAN, INDIVIDUALLY & PERSONALLY
INDIVIDUALLY & PERSONALLY
/S/ GREGORY D. SMITH
- ------------------------------------
GUARANTOR GREGORY D. SMITH, DATE
AN UNMARRIED MAN,
INDIVIDUALLY & PERSONALLY
STATE OF )
)
County of )
SUBSCRIBED AND SWORN to before me this ------ day of ------------, 199----,
by
- ------------------,--------------------,---------------------,-----------------,
and ---------------------.
--------------------------------------------
Notary Public
My Commission Expires:
- ---------------------
<PAGE>
Attachment 9
LEASE ADDENDUM
THIS AGREEMENT is entered into this 27th day of June, 1996 by Ultrazone
Franchising, Inc., a corporation organized under the laws of the State of Nevada
with its offices at 2555 Maryland Parkway, Las Vegas, Nevada 89109 ("UFI");
First American Title Insurance Company Trust #4551, with its principal office at
- ------------------ ("Lessor"); and HTNZ Laser, Inc., with its principal offices
at 3471 North Federal Highway, Ft. Lauderdale, Florida 33306 ("Lessee").
RECITALS:
Lessor has agreed to lease to Lessee premises located at 2710 West Bell
Road, Suite 1150, Phoenix, Arizona for use by Lessee as a ULTRAZONE business
("Franchised Business") operated under UFI's systems and proprietary marks under
a written Franchise Agreement dated ------------- between UFI and Lessee as
Franchisee ("Franchise Agreement");
B. Under the terms of the Franchise Agreement, all right, title and
interest in the lease and this Agreement ("Lease") must be assigned to UFI, if
UFI in its sole and absolute right exercises its option to purchase the assets
of the Franchised Business or otherwise to assume the Lease on an occurrence of
default or termination or expiration and nonrenewal of the Lease or default or
termination or expiration of the franchise;
C It is the intent of the parties to provide UFI with the opportunity to
preserve the leased premises as a Franchised Business In case of any default or
termination or expiration of the Lease or franchise and to assure Lessor that if
UFI exercises this right under this Agreement, any defaults of Lessee under the
Lease will be cured by UFI before it takes possession of the leased premises;
and
D. Lessee and UFl wish to preserve their rights under the Franchise
Agreement as to the leased premises, including UFI's right to enter and/or take
possession of the premises to enforce UFI's rights on Lessee's default under the
Lease or the Franchise Agreement.
In consideration of the recitals above and of the terms below, the parties
agree:
1. Default of Lessee under Lease. Lessor will give UFI notice of any
default or termination of the Lease concurrently with giving notice to Lessee.
If Lessee fails to cure any default within the period provided in the Lease,
Lessor will give UFI immediate written notice of the failure to cure and Lessor
will offer to UFI] and UFI will have the sole and absolute right (but not the
obligation), either to cure the default and preserve Lessee's interest in the
premises and in the Lease, or to accept an assignment of the Lease or a new
lease containing the same terms and conditions of the Lease, whichever UFI
elects. If UFI elects lo continue the use of the premises under an assignment of
the Lease or a new lease, it will so notify Lessor in writing within thirty (30)
days after it has received written notice from Lessor specifying the default(s)
Lessee has failed to cure within the period specified in the Lease. On receipt
of that notice from UFI Lessor will promptly execute and deliver to UFI an
assignment of the Lease or a new lease, whichever UFI requests, and win promptly
deliver to UFI possession of the premises, free and clear of any rights of
Lessee or any third party. UFI, before taking possession of the premises, will
cure the default(s) specified by Lessor in its notice to UFI and will execute
and deliver to Lessor its acceptance of the assignment of Lease or of the new
lease, as the case may be.
2. Repurchase. Termination or Expiration of Franchise. If UFI repurchases
the franchise from Lessee, or if the franchise between UFI and Lessee expires or
is terminated for any reason during the term or any extension of the Lease,
Lessee, on the written request of UFI will assign to UFI all of its right, title
and interest in the Lease. If UFI elects to accept the assignment of the Lease
from Lessee, it will give Lessee and Lessor written notice of its election to
acquire the leasehold interest. Lessor consents to the assignment of the Lease
from Lessee to UFI, subject to Lessee's and/or UFI's curing any default(s) of
Lessee under the Lease before UFI takes possession of the premises.
Alternatively, in case of repurchase, expiration or termination of the
franchise, UFI may elect to enter into a new lease with Lessor containing the
same terms and conditions as the Lease. On Lessor's receipt of written notice
from UFI advising Lessor that UFI elects to cuter into a new lease, Lessor will
execute and deliver the new lease to UFI for its acceptance. Lessor and Lessee
will deliver possession of the premises to UFI, free and clear of all rights of
Lessee or third parties, subject to UFI curing any default(s) of Lessee under
the Lease and executing an acceptance of the assignment of Lease or the new
lease, as the case may be. If UFI does not accept assignment of the Lease or a
new lease after repurchase, termination or expiration of the franchise, or if
UFI determines that it must enter the leased premises to enforce any of its
rights under the Franchise Agreement, Lessor consents to UFI's or its agent's
entry onto the leased premises to enforce UFI's rights under the Franchise
Agreement, including the removal of signs, materials, fixtures, equipment and
other items identifying Lessee with UFI or belonging to UFI. Lessor agrees that,
in exercising these rights, UFI will not be guilty of trespass or any other tort
as to Lessor. UFI agrees to repair any damage to the leased premises caused by
its entry and activity on the premises.
3. Relationship to Franchise Agreement. Lessor acknowledges that the Lease
and/or any new or amended lease executed by the parties will be subject to and
not inconsistent with the Franchise Agreement. For example, Lessor must permit
UFl's entry onto the leased premises for the purpose of enforcing UFI's rights
under the Franchise Agreement or for routine visits.
4. Use or Assignment of Premises. The parties agree that the leased
premises must only be used for the operation of the Franchised Business
restaurant and arcade and that Lessee may not sublease or assign all or any part
of its occupancy rights without UFI's prior written approval.
5. Obligations of UFI. The parties acknowledge that the Lease does not
create any rights against or obligations of UFI unless specifically stated in
this Lease Addendum.
6. Display of Marks. Lessor agrees that Lessee and/or UFI may display Ups
and/or its licensees marks according to UFI's specifications in the
Confidential Operations Manual provided to Lessee under the Franchise Agreement,
as modified from time to time by UFI in its sole and absolute right, subject to
the provisions of applicable law and community standards.
27. Right to Information. Lessor agrees to provide to UFI, on request,
sales and other information regarding the Franchised Business or the Lease,
including arty formation finished to Lessor by Lessee.
8. Delivery of Lease: UFI's Prior Written Approval. Lessor and Lessee agree
to deliver the Lease in executed form to UFI within 5 days after execution, and
acknowledge that the Lease is subject to UFI's execution and prior written
approval
9. Waiver. Failure of UFI to enforce or exercise any of its rights under
this Agreement will not constitute a waiver of those rights or a waiver of any
subsequent enforcement or exercise of its rights under this Agreement.
10. Execution of Documents. The parties agree to execute all documents or
agreements and to take all action as may be necessary or desirable to effectuate
the terms of this Agreement.
11. Amendment of Lease. Lessor and Lessee agree not to amend, modify or
waive the terms of the Lease in any respect without the prior written consent of
UFI.
12. Amendment of Agreement. This Agreement may be amended only in writing
signed by all parties.
13. Vacation of Premises. Lessee agrees to peaceably and promptly vacate
the premises and to remove its personal property on the repurchase, termination
or expiration of the franchise or on Lessee's failure to timely cure defaults
under the Lease. Any property not so removed within 10 days after Lessee vacates
the premises hill be deemed abandoned.
14. Delivery of Possession, If it becomes necessary for Lessor to pursue
legal action to evict Lessee in order to deliver possession of the premises to
UFI, UFI will, at the written request of Lessor, pay into escrow amounts
necessary to cure any default(s) by Lessee, pending delivery of the premises to
UFI If Lessor is tenable to deliver the premises to UFI within six (6) months
from the date UFI notifies Lessor of its election to continue the use of the
premises, UFI will have the right at any time to withdraw its election to
acquire a leasehold interest in the premises, at which time all amounts
deposited by UFI in escrow plus interest earned will be returned immediately to
UFI. UFI will not be required to cure defaults and/or begin paying rent until
delivery to it of possession of the premises, free and clear of any of Lesser's
rights or the rights of away third parties.
15. Lessee's Liability. Lessee will remain liable for all of its
obligations under the Lease regardless of the assignment of the Lease to UFI or
the execution of a new lease between UFI and Lessor, and UFI will be entitled to
recover from Lessee all amounts it has paid to Lessor to cure any default(s) by
Lessee under the Lease.
16. Notices. All notices will be mailed by certified mad to the addresses
described in this Agreement or to such other addresses as the parties may, by
written notice, designate.
17. Binding Effect. This Agreement will be binding on the parries, their
heirs, executors, successors, assigns and legal representatives.
18. Severability. If any provision of this Agreement or any part is
declared invalid by any court of competent jurisdiction, the am will not affect
the validity of this Agreement and the remainder of this Agreement vriI1 remain
in effect according to the terms of the remaining provisions or parts of
provisions of this Agreement.
19. Remedies. The rights and remedies created under this Agreement will be
deemed cumulative and no one of the rights or remedies will be exclusive at law
or in equity of the rights and remedies which UFI may have under this Agreement
or any other agreement to which UFI and Lessee are parties.
20. Attorney's Fees. If any action is instituted by any party to enforce
any provision of this Agreement, the prevailing party will be entitled to
recover all attorney's fees and costs incurred in the action.
21. Construction. This Agreement will be governed by and interpreted under
the laws of the State of Nevada.
Each of the undersigned agrees to the terms of this Agreement, effective
the day and year first above written.
WITNESS
FIRST AMERICAN TITLE INSURANCE
COMPANY TRUST #4551
/S/ GREGORY D. SMITH By /S/ ROBERT P. MORRISON ????
- ----------------------------- ---------------------------------------
LESSOR
HTNZ LASER, INC.
/S/ ROBERT E. BURTON, JR. By ROBERT R. SHOWALTER
- ------------------------------ ---------------------------------------
LESSEE President
ATTEST ULTRAZONE FRANCHISING, INC.
- ------------------------------ ---------------------------------------
By-------------------------------------
<PAGE>
Robert Morrison Incorporated
07/20/95
GTT, INC.
2200 EAST RIVER ROAD SUITE 111 TUCSON, ARIZONA 85718
(602) 299~4554
ADDENDUM TO THAT CERTAIN LEASE DATED JUNE 27, 1995
BETWEEN FIRST AMERICAN TITLE INSURANCE COMPANY TRUST #4551 AS LANDLORD
AND HTNZ, AN AR120NA CORPORATION
DBA: HOLLYWOOD TRENZ/ULTRAZONE
AS TENANT
IT IS UNDERSTOOD AND AGREED that the abovE-mentioned Lease shall be amended to
read as follows:
1) Floor space of leased premises of a approximately 13,196 square feet, as
noted in the Lease Agreement, shall be increased by approximately 10,986 square
feet, making a total leased space of approximately 24,182 square feet.
2) Tenant's pro rata share of operating expenses, as outlined In Article
4.3, Items A-G, in the Lease Agreement shall be 7.8410% currently estimated at
$5,763.36 per month to be reconciled annually.
3) Rental: Rental commencing January 1, 1996 shaft be amended as follows:
Base Rent: $14,106.17
Monthly CAM Amt: 5,763.38(Estimated)
4.15% Rental Tax: 824.59
----------
Total Due: $20,694.14
4) Tenant Improvements: Tenant agrees to Install two bathrooms in Suite
1180 and will insure that these bathrooms meet ADA standards.
5) Deposit: Upon signing of Addendum, Lessee agrees to pay Lessor EIGHTEEN
THOUSAND EIGHT HUNDRED TWO AND 88/100 (S18,802.88). Said amount represents
additional first and last months rent broken down as follows:
First Month $6,408.50-rent; $2,618.33-estimsted common area maintenance;
$374.61-rental tax (currently @ 4.15%), totaling $9,401.44.
Last Month - $6,408.50-rent; $2,618.33-estimated common area maintenance;
$374.61-rental tax, totally $9,401.44.
6) Except as herein modified, all of the terms and conditions of said Lease
shall remain In full force and effect.
LANDLORD: TENANT:
FIRST AMERICAN TITLE INSURANCE HTNZ LASER, INC., AN ARIZONA CORPORATION
COMPANY TRUST #4551 DBA: HOLLYWOOD TRENZ/ULTRAZONE
By /S/ ROBERT P. MORRISON By /S/ EDWARD R. SHOWALTER
- ---------------------------------- ----------------------------------------
ROBERT P. MORRISON, AGENT Edward R. Showalter, President
By /S/ GREGORY D. SMITH
----------------------------------------
Gregory D. Smith, Vice President
Date 8/21/95 Date JULY 28, 1995
------------------------------- ------------------------------------
STATE OF )
)
County of )
SUBSCRIBED AND SWORN to before me this ------ day of ------------, 199----,
by
- ------------------,--------------------,---------------------,-----------------,
and ---------------------.
--------------------------------------------
Notary Public
My Commission Expires:
- ---------------------
<PAGE>
Robert Morrison Incorporated
GTT, INC.
2200 EAST RIVER ROAD SUITE 111 TUCSON. ARIZONA 85718
(602)299-4554
09/19/95
ADDENDUM TO THAT CERTAIN LEASE DATED JUNE Z7, 1995
BETWEEN FIRST AMERICAN TITLE INSURANCE COMPANY TRUST #4551 AS LANDLORD
AND HTNZ LASER, INC., AN ARIZONA CORPORATION
DBA: HOLLYWOOD TRENZ/ULTRAZONE AS TENANT
IT IS UNDERSTOOD AND AGREED that the above-mentioned Lease shall be amended
to read as follows:
1) Floor space of leased premises of approximately 24,182 square feet, as
noted in the Lease Agreement, as amended, shall be increased by approximately
8,514 square feet, making a total leased space of approximately 32,696 square
feet.
2) Tenant's pro rata share of operating expenses, as outlined in Article
4.3, Items A-G, in the Lease Agreement shall be 10.6016% currently estimated at
$7,792.55 per month to be reconciled annually.
3) Rental: Rental commencing January 1, 1996 shall be amended as follows:
Base Rent:
Base Rent: $19,072.67
Monthly CAM Amt: 7,792.55 (Estimated)
4.15% Rental Tax: 1,114.91
----------
Total Due: $27.980.13
4) Deposit: Upon signing of Addendum, Lessee agrees to pay Lessor FOURTEEN
THOUSAND FIVE HUNDRED SEVENTY-ONE AND 98/100 ($14,571.90). Said amount
represents additional first and last month's rent broken down as follows:
First Month - $4,966.50-rent; $2,029.17-estimated common area maintenance;
$290.32-rental tax (currently @ 4.15%), totaling $7,285,99.
Last Month - $4,966.50-rent; $2,029.17-estimated common area maintenance;
$290.32-rental tax, totaling $7,285.99.
5) Except as herein modified, all of the terms and conditions of said Lease
shall remain in full force and effect.
LANDLORD: TENANT:
FIRST AMERICAN TITLE INSURANCE HTNZ LASER, INC., AN ARIZONA CORPORATION
COMPANY TRUST #4551 DBA: HOLLYWOOD TRENZ/ULTRAZONE
By /S/ ROBERT P. MORRISON By /S/ EDWARD R. SHOWALTER
- ---------------------------------- ----------------------------------------
ROBERT P. MORRISON, AGENT Edward R. Showalter, President
By /S/ GREGORY D. SMITH
----------------------------------------
Gregory D. Smith, Vice President
Date Date
------------------------------- ------------------------------------
STATE OF )
)
County of )
SUBSCRIBED AND SWORN to before me this ------ day of ------------, 199----,
by
- ------------------,--------------------,---------------------,-----------------,
and ---------------------.
--------------------------------------------
Notary Public
My Commission Expires:
- ---------------------
LEASE AGREEMENT
FROM: ANTHONY A. PETRARCA "LANDLORD"
HOLLYWOOD TRENZ, INC., a Delaware corporation "TENANT"
ADDRESS: 5022 S. Jellison Way
Denver, CO
<PAGE>
INDEX
PAGE
SECTION 1. LEASED PREMISES
SECTION 2. TERM
SECTION 3. RENTAL COMMENCEMENT DATE
SECTION 4. LEASE YEAR
SECTION 5. RENT
Minimum Rent
Percentage Rent
Late Payments
Accord & Satisfaction
SECTION 6. ADDITlONAL CHARGES
Real Estate Taxes & Assessments
Municipal, County, Stale or Federal Taxes
Rental
Insurance
Operating Expenses
SECTION 7. UTILITIES AND TRASH REMOVAL
SECTION 8. CONSTRUCTION/DELIVERY
Landlord's Work
Delivery of Leased Premises
Tenant's Construction
License to Enter Leased Premises
SECTION 9. PARKING, INGRESS/EGRESS
SECTION 10. TENANT'S USE OF LEASED PREMISES
Use
Hours of Operation
Off-Site Activities
SECTION 11. TENANT'S COVENANTS WITH RESPECT TO OCCUPANCY
SECTION 12. REPAIRS, ALTERATIONS, MECHANIC'S LIENS
Repairs
Alterations or Improvements by Tenant
Removal of Improvements
SECTION 13. INDEMNITY AND INSURANCE
Indemnification by Tenant
Public Liability Insurance
Landlord's Liability
Fire & Extended Coverage Insurance
Mutual Waiver of Subrogation
SECTION 14. UNIFORM COMMERCIAL CODE
SECTION 15. ABANDONMENT
SECTION 16. DAMAGE AND DESTRUCTION
SECTION 17. ASSIGNING AND SUBLETTING
SECTION 18. EMINENT DOMAIN
SECTION 19. DEFAULT BY TENANT
SECTION 20. SECURITY DEPOSIT
SECTION 21. NOTICES AND PAYMENTS
SECTION 22. MORTGAGE SUBORDINATION
SECTION 23. CERTIFICATES OF LEASE INFORMATION
SECTION 24. QUIET ENJOYMENT
SECTION 25. LIABILITY OF LANDLORD
SECTION 26. MISCELLANEOUS PROVISIONS
Waiver
Surrender & Holding Over
Transfer of Landlord's Inhered
Landlord's Lien
Consumer Price Index
Option to Extend
Brokers Commissions
Successors & Assigns
Joint & Several Liability
Entire Agreement
Attorney's Fees
Interpretation
Authority of Tenant
Memorandum of Lease
LANDLORD'S and TENANT'S ACKNOWLEDGMENT
EXHIBIT "A"
EXHIBIT "B" [INTENTIONALLY OMITTED]
EXHIBIT "C" [INTENTIONALLY OMITTED]
<PAGE>
THIS LEASE, executed this Day of 29th day of December, 1995, by and between
ANTHONY A. PETRARCA (hereinafter referred to as "Landlords"), with a mailing
address c/o Riverview Management Company, 1765 Merriman Road, Akron, Ohio 44313,
and HOLLYWOOD TRENZ, INC, a Delaware corporation (hereinafter referred to as
"Tenant"), with offices at 3471 North Federal Highway, Ft. Lauderdale, Florida
33306.
WITNESSETH
SECTION 1. LEASED PREMISES
Landlord hereby leases to Tenant and Tenant leases from Landlord, on the
terms, covenants and conditions set forth herein, the "Leased Premises" as shown
on Exhibit "A," attached hereto and made a part hereof, such space being a
one-story free-standing building containing approximately 36,500 square feet.
Landlord reserves to itself the roof arid exterior walls of the Leased
Premises and further reserves the right to place, maintain, repair, arid
replace utility lines, pipes, ducts, conduits, wires, tunneling and the lice,
in, over, under, upon and through the Leased Premises as may be reasonably
necessary or advisable for the servicing of the Leased Premises in locations
which will not materially interfere with Tenant's use of the Leased Premises.
SECTION 2. TERM
The term of this Lease shad be for a period of ten (10) fun Lease Years and
the Partial Lease Year defined hereinbelow commencing on the date Landlord
delivers the Leased Premises to Tenant (hereinafter referred to as the "Lease
Commencement Date"), unless sooner terminated under the conditions hereinafter
set forth.
Notwithstanding anything in the foregoing to the contrary, if Tenant has
not obtained a building permit, liquor license, and drop-off child care license
on or before June 15, 1996, Tenant may thereafter terminate this Lease, by
written notice to Landlord within thirty (30) days thereafter, and the security
deposit shall be promptly refunded to Tenant. If Tenant does not so terminate
within said thirty (30) days, Tenant shad have been deemed to waive such right
and this Lease shall remain in full force and effect for the term hereof, unless
sooner terminated by the terms of this Lease. Tenant agrees to diligently pursue
obtaining all such permits and licenses in good faith, and shall submit to
Landlord, with such written notice, evidence satisfactory to Landlord that
Tenant's applications for such permits and/or licenses have been denied by the
appropriate governmental authority having jurisdiction.
Notwithstanding anything in the foregoing to the contrary, Landlord may
terminate this Lease, in his sole and absolute discretion, at any time after
April 15, 1996, and prior to the date Tenant takes sole and exclusive possession
of the Leased Premises, with the work it needs to open for business in the
Leased Premises substantially completed (including, but not limited to,
obtaining all permits and licenses necessary or desired for the operation of its
business in the Leased Premises), by giving thirty (30) days written notice to
Tenant, if Landlord has a bona fide third party non-contingent (but for
termination of this Lease) lease executed with a substitute tenant for an or any
portion of the Leased Premises, or a bona fide third party sales agreement for
the sale of the property known as S022 S. Jellison Way, Denver, Colorado, which
includes the Leased Premises. Tenant may nullify such election by giving written
notice to Landlord within thirty (30) days following the date of Landlord's
notice, confirming that Tenant shall not terminate the Lease as permitted
hereinabove, that Tenant has waived any right to so terminate this Lease, and
that the Rental Commencement Date shall occur as set forth in Section 3
hereinafter.
Upon determination of the Lease Commencement Date, Landlord and Tenant
shall, upon the request of either party, confirm in writing the Lease and Rental
Commencement Dates and the date of expiration of the term of this Lease.
SECTION 3. RENTAL COMMENCEMENT DATE
The date upon which Tenant shall be obligated to commence hence the payment
of Minimum Rent shall be known as the "Rental Commencement Date" and shall occur
on the earlier of the date Tenant opens for business in the Leased Premises or
August 15, 1996.
SECTION 4. LEASE YEAR
"Lease Year" shall mean a period of twelve (12) consecutive fun calendar
months. The first Lease Year shall begin on the Rental Commencement Date, if the
date occurs on the first day of a calendar month; otherwise, the first Lease
Year shall begin on the first day of the first calendar month after the Rental
Commencement Date. Each succeeding Lease Year shall begin on the anniversary of
the first Lease Year. "Partial Lease Year" shall mean that period commencing on
the Lease Commencement Date and ending on the first day of the first Lease Year.
SECTION 5. RENT
(a) Minimum Rent: Tenant shall pay landlord, at the address set forth
hereinabove, or at such other place as Landlord may from time to time
direct, as Minimum Rent. for the Leased Premises during the term of
this Lease, without any deduction, abatement or setoff, the sum of:
LEASE YEARS 1 & 2: One Hundred Seventy-Three Thousand Three Hundred
Seventy-Five and No/100 Dollars ($173,375.00), per Lease Year, payable
in equal monthly installments of Fourteen Thousand Four Hundred
Forty-Seven and 92/100 Dollars ($14,447.92), in advance, on the first
day of each calendar month.
LEASE YEAR 3: One Hundred Eighty-Two Thousand Five Hundred and No/100
Dollars ($182,500.00), per Lease Year, payable in equal monthly
installments of Fifteen Thousand Two Hundred Eight and 33/100 Dollars
($15,208.33), in advance, on the first day of each calendar month.
LEASE YEAR 4: One Hundred Ninty-One Thousand Six Hundred Twenty-Five
and No/100 Dollars ($191,625.00), per Lease Year, payable in equal
monthly installments of Fifteen Thousand Nine Hundred Sixty-Eight and
75/100 Dollars ($15,968.75), in advance, on the first day of each
calendar month.
LEASE YEAR 5: Two Hundred Thousand Seven Hundred Fifty and No/100
Dollars ($200,750.00), per Lease Year, payable in equal monthly
installments of Sixteen Thousand Seven Hundred Twenty-Nine and 17/100
Dollars ($16,729.17), in advance, on the first day of each calendar
month.
LEASE YEARS 6 - 10: Increased annually by the Consumer Price Index in
the manner set forth in Section 26(e) hereof.
Minimum Rent and other amounts to 'he paid by Tenant pursuant to
Sections 5 and 6 hereof shall 'be prorated on a per diem basis for any
partial month of the term of this Lease.
(b) Percentage Rent [INTENTIONALLY DELETED]
(c) Late Payment: If the monthly Minimum Rent and Additional Charges, or
any part thereof, are not paid by the fifth (5th)day of any month,
then there shall be an additional daily rent of Ten Dollars ($10.00)
for each day until such monthly payments and late payments are paid in
full.
(d) Accord & Satisfaction: No payment by Tenant or receipt by Landlord of
a lesser amount than the rental or other charges herein stipulated
shall be deemed to be other than on account of the earliest stipulated
rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord
and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy provided for in this Lease or
available under law or in equity.
SECTION 6. ADDITIONAL CHARGES
Commencing with the Lease Commencement Date, Tenant shall also pay the
following charges (hereinafter referred to as "Additional Charges"), which shall
be considered as additional rent for purposes of default:
(a) Real Estate Taxes & Assessments: For each calendar year or part
thereof during the term of this Lease, Tenant shall pay all real
estate taxes and assessments levied and assessed against the Leased
Premises and the real property upon which the Leased Premises is
situated.
Said real estate taxes and assessments shall be paid by Tenant to
Landlord in equal monthly installments on the first day of each
calendar month during the term of this Lease. Said charges shall be
based upon Landlord's estimate of the real estate taxes and
assessments for the calendar year. The amount due for an partial
calendar years shall be prorated on a per diem basis.
Subsequent to the end of each calendar year, Landlord shall furnish
Tenant with a statement of the actual amount Tenant paid Landlord for
such real estate taxes and assessments during the prechilling calendar
year. Within fifteen (15) days after receipt of said statement by
Tenant, Tenant shall pay to Warlord any deficiency due Landlord. Any
surplus paid by Tenant shall be credited against the next ensuing
installment of Landlord's estimate for such real estate taxes and
assessments.
(b) Municipal, County, State or Federal Taxes: Tenant shall pay an taxes
assessed against any leasehold interest of Tenant on any fixtures,
furnishings, equipment, stock-in-trade, or other personal property of
any kind owned, installed or wed in or on the Leased Premises.
(c) Rental Taxes: Should any governmental taxing authority levy, assess,
or impose any tax, excise or assessment (other than income or
franchise tax) upon or against the rentals payable by Tenant to
Landlord, either by way of substitution for or in addition to any
existing tax on land and buildings or otherwise, Tenant shall pay any
such tax, excise or assessment thereof.
(d) Insurance: Tenant agrees to reimburse Landlord for the total cost of
premiums for Landlord's insurance coverages on the Leased Premises.
Said insurance reimbursements shall be paid by Tenant to Landlord in
equal monthly installments on the first day of each calendar month
during the term of this Lease. Said charges shall be based upon
Landlord's estimated costs for the insurance premiums for the calendar
year. The amount due for all partial calendar years shall be prorated
on a per diem basis.
Subsequent to the end of each calendar year, Landlord shall furnish
Tenant with a statement of the actual amount of Tenant's insurance
reimbursements for the preceding calendar year. Within fifteen (15)
days after receipt of said statement by Tenant, Tenant shall pay to
Landlord any deficiency due Landlord. Any surplus paid by Tenant shall
be credited against the next ensuing installment of Landlord's
estimate for such insurance premiums.
(e) Operating Expenses: Tenant agrees to repair, replace and maintain all
portions of the real property upon which the Leased Premises is
situated, including, but not limited to, all costs and expenses of
every kind and nature for operating, managing, equipping, policing and
protecting, lighting, providing sanitation, sewer and other services
for, insuring, repairing, replacing and maintaining such real property
and all other facilities used in the maintenance or operation of the
Leased Premises. Such costs and expenses shall include, but shall not
be limited to, the cost of: illumination and maintenance of signs;
refuge disposal; water, gas, sewage, electricity and other utilities
(without limitation), including any and all usage, service, hook up,
connection, availability and/or standby fees or charges pertaining to
same; snow removal; maintenance and operation of any temporary or
permanent utility; management fees; compliance with rules, regulations
and orders of governmental authorities pertaining to air pollution
control, including the cost of monitoring air quality; cleaning,
lighting, striping armor landscaping pavement, curbs, gutters,
sidewalks, drainage and irrigation ditches, conduits, and pipes
located on or adjacent to said real property; premiums for liability,
casualty, and property insurance; personal property taxes; licensing
fees and taxes; audit fees and expenses; supplies; depreciation of
maintenance equipment used in the operation or maintenance of said
real property; total compensation nod benefits (including premiums for
workmen's compensation and other insurance) paid to or on behalf of
employees involved in the performance of the work specified in this
Subsection.
SECTION 7. UTILITIES AND TRASH REMOVAL
(a) Landlord shall provide necessary water lines, sanitary sewer service
and electric conductors stubbed into the Leased Premises.
(b) Tenant shall provide, at its own cost, all necessary facilities within
the Leased Premises. Landlord shall not be responsible for providing
any meters or other devices for the measurement of utilities supplied
to the Leased Premises. Where necessary, Tenant shall make application
for and arrange for the installation of all such meters or other
devices.
(c) Landlord shall not be liable to Tenant in damages or otherwise if any
one or more of said utility services or obligations hereunder is
interrupted or terminated because of necessary repairs, installations,
contraction and expansion, Tenant's non payment of utility charges
due, or any other cause Landlord's control. No such interruption or
termination of utility service shall relieve Tenant from any of its
obligations under this Lease.
(d) Commencing with the date on which Landlord delivers the Leased
Premises to Tenant, Tenant shall pay for gas, if the same is available
to the Leased Premises, electric current and all other utilities
required for the proper operation of Tenant's business.
(e) Tenant shall pay all water rents, all charges resulting from any
sprinkler system and sewer charges charged against the Leased
Premises.
(f) Commencing on the date on which Landlord delivers the Leased Premises
to Tenant, Tenant shall pay for all costs relating to refuse removal
required for the proper operation of Tenant's business. Tenant shall
contract directly with a reputable refuse removal contractor approved
by Landlord and shall facilitate said refuse removal pursuant to
regulations and procedures promulgated by Landlord. The aforementioned
approvals, regulations and procedures shall be reasonable within the
context of a first class business operated in a professional manner.
SECTION 8. CONSTRUCTION/DELIVERY
(a) Landlord's Work: Landlord agrees to deliver and Tenant agrees to
accept the Leased Premises in As isle condition, except that the
heating, air conditioning, electrical and plumbing systems shall be in
good working order and repair upon delivery of the Leased Premises by
Landlord to Tenant.
(b) Delivery of Leased Premises: Landlord agrees to deliver the Leased
Premises to Tenant on or before December I5, 1995, subject to delays
caused by acts of God, government or public enemy, or any other cause
beyond the control of Landlord. Under no circumstances shall Landlord
be liable for any delay or failure to deliver the Leased Premises to
Tenant.
(c) Tenant's Construction: Tenant shall, at its own expense, perform all
work and supply all installation described in Tenant's plans and
specifications as submitted per Section 8(c) hereof, including, but
not limited to furniture, furnishings, special equipment and other
items necessary for the completion of the Leased Premises and the
proper operation of Tenant's business. All items furnished by Tenant
shall be new and, if affixed to the Leased Premises, shall be free and
clear of any lien or security interest. Tenant shall not undertake any
construction, nor shall Tenant install any equipment other than trade
futures and personal property, without first obtaining Landlord's
written approval of plans and specifications therefor, which plans and
specifications shall be submitted to Landlord at least five (5) days
prior to commencing such work for Landlord's approval, and Landlord
shall approve, disapprove, or make suggested changes to such plans and
specifications within five (S) days after Landlord's receipt of same.
Thereafter, no materiel changes shall be made in Tenant's plans and
specifications without the consent of Landlord. The approval by
Landlord of such plans and specifications shall not constitute the
assumption of any liability on the part of Landlord for their accuracy
or their conformity with all requirements of any statute, law,
ordinance, rule, regulation, or other governmental promulgation, and
Tenant shall be solely responsible for the same. Tenant shall pay to
Landlord, upon demand, any additional cost incurred by Landlord as a
result of changes requested by Tenant and approved by Landlord. Tenant
shall not commence any work until Tenant delivers to Landlord a
policy[ies] of public liability and property damage insurance naming
Landlord as an insured, in limits and with companies acceptable to
Landlord, a building permit from the applicable governing authority
regarding said work, and a construction schedule identifying when key
elements of the work will be completed, including final completion.
Within thirty (30) days following execution of this Lease, Tenant
shall meet with the appropriate governmental authority responsible for
issuing building permits and shall begin the process of obtaining
approval of its plans and specitfications for the improvements to the
Leased Premises Promptly upon receipt of a building permit, Tenant
shall commence construction and shall complete construction within one
hundred and twenty (120) days after receipt of the building permit,
subject only to delays enumberated in Section 8(b) above.
(d) License to Enter Leased Premises: Landlord may, prior to its delivery
of the Leased Premises, make the Leased Premises available to Tenant
for its work and installations, at Tenant's sole risk, so long as such
work and installations do not interfere with the construction of the
Leased Premises or other building improvements by Landlord. Tenant
shall perform all of its obligations under this Lease (except its
obligations to pay rent and other charges) from the date the Leased
Premises are so made available to Tenant.
SECTION 9. PARKING, INGRESS/EGRESS
The real property upon which the Leased Premises is situated is not
included within the Leased Premises, but Landlord hereby grants as a revocable
license to Tenant and Tenant's customers and invitees the privilege to use said
real property for parking and ingress to and egress from the Leased Premises.
Such license shall include the right to use the parking areas, roadways,
pedestrian sidewalks, loading docks, delivery areas, landscaped areas, and all
other improvements thereon, as the same are presently constructed. Tenant shall
have no right to alter, change, re-configure, or modify in any way whatsoever
such improvements as presently constructed. Landlord hereby reserves the
following rights with respect to said real property, provided Tenant's use and
operation of the Leased Premises is not materially affected thereby:
(a) to establish reasonable rules and regulations for the use thereof;
(b) to use or permit the use by third parties;
(c) to close or restrict the use of all or any portion of said real
property as Landlord may deem necessary; and
(d) to change the layout of such real property, including the right to
reasonably add to or subtract from their shape and size, whether by
the addition of building improvements or otherwise.
SECTION 10. TENANT'S USE OF LEASED PREMISES
(a) Use: Tenant, and no one else, shall use the Leased Premises, and such
use shall be limited to the following: A family entertainment center,
including family~style restaurant, interactive game areas, amusement
rides, children's play area, children's drop-off care facility, party
rooms, and similar uses consistent with the description in business
plans and marketing materials prodded to Landlord by Tenant.
(b) Hours of Operation: Tenant agrees to open its store for business,
fully fixtured, stocked and staffed on or before the Rental
Commencement Date, and thereafter to continuously keep the Leased
Premises fully fixtured, stocked and staffed, and to continuously
conduct business in 1009 of the Leased Premises, during normal
business hours.
(c) Off-Site Activities: Tenant shall not endorse, sponsor, sell, offer
for sale, promote, allow, permit or otherwise participate or engage in
any program or activity, whether promotional or otherwise, wherein
prospective or actual customers, patrons or any third parties shall
use the real property upon which the Leased Premises is situated or
any portion thereof, including the parking areas, for activities which
are not conducted on the Leased Premises and/or that involve the
transportation of actual or prospective customers, patrons, or any
third parties from the Leased Premises to any other location. This
prohibition shall be deemed to specifically include, but shall not be
limited to, activities commonly referred to as Gambling junkets. or as
the same are otherwise do involving the use of the parking areas on a
temporary and/or permanent basis.
SECTION 11. TENANT'S COVENANTS WITH RESPECT TO OCCUPANCY
Tenant agrees to:
(a) occupy the Leased Premises in a safe and careful manner and in
compliance with all applicable laws, rules, ordinances, regulations
and order of any governmental bodies, and without committing or
permitting waste;
(b) neither do nor suffer anything to be done or kept in or about the
Leased Premises which contravenes Landlord's insurance policies or
increases the premiums therefor;
(c) keep its show or display windows, canopy and electric signs lighted
until 9:30 P.M., local time, of each day or until a time thirty (30)
minutes after the close of each business day, whichever is later;
(d) permit no reproduction of sound which is audible outside the Leased
Premises, nor permit odors to be unreasonably dispelled from the
Leased Premises;
(e) place no signs (other that a Coming Soon. sign during Tenant's
construction activities on the Leased Premises, which sign shall be
subject to Landlord's prior approval, which approval shall not be
unreasonably withheld) or lettering on the exterior of the Leased
Premises or on the interior surface of any windows of the Leased
Premises, including, but not limited to, pennants, cardboard or poster
board signs, search lights, balloons, barkers, or other temporary
advertising media, without the prior written consent of Landlord, and
maintain in good repair and promptly remove and repair any damage
caused by any such permitted signs;
(f) place no merchandise, sign or other thing in the vestibule or entry of
the Leased Premises or on the sideways or other areas adjacent thereto
or elsewhere on the exterior of the Leased Premises;
(g) keep any refuse in proper containers in the interior of the Leased
Premises until the same is removed, and permit no refuse to accumulate
around the exterior of the Leased Premises;
(h) promptly load and unload only from the rear of the Leased Premises;
(i) conduct no auction, fire or going out of business sale without the
prior written consent of Landlord;
(j) permit Landlord free access to the Leased Premises at an reasonable
times to examine the same or to make alterations or repairs to the
Leased Premises that Landlord may deem necessary for the safety or
preservation thereof;
(k) adequately heat and cool the Leased Premises;
(l) cause or permit no lien upon the Leased Premises or the real property
upon which the Leased Premises is situated and suffer no matter or
thing whereby the estate, right, and interest of Landlord in the
Leased Premises or the real property upon which the Leased Premises is
situated, or any part of either, might be impaired;
(m) solicit no business in the parking areas, nor distribute handbills or
other advertising matter to customers nor place same in or on
automobiles in the parking areas;
(n) prevent the Leased Premises or the real property upon which the Leased
Premises is situated from being used in any way which would injure the
reputation of Landlord or which may be a nuisance, annoyance, or
inconvenience, or which could cause damage to the surrounding
community;
(o) participate with and assist Landlord and comply with an of the terms,
conditions, restrictions, regulations and requirements of any
governmental authority as the same relate to the Leased Premises or
the real property upon which the Leased Premises is situated, or the
use of the same, including, but not limited to, all permits now issued
or as are hereafter issued, amended or modified;
(p) comply with all reasonable rules and regulations which Landlord may
from time to time establish for the use and care of the Lessed
Premises and the real property upon which the Leased Premises is
situated.
SECTION 12. REPAIRS, ALTERATIONS, MECHANIC'S LIENS
(a) Repairs: Tenant shall keep the entire Leased Premises and every part
thereof (except roof and structural portions thereof, for which
Landlord shall be responsible) in good condition and repair,
including, but not limited to, floor, ceiling, walls, and all
fixtures, facilities or equipment contained therein, including, but
not limited to, the heating, air conditioning, electrical, plumbing
and sewer systems, the exterior doors, window frames, and an portions
of the store front area, and shall make any replacements thereof, and
of ad broken and cracked glass which may become necessary during the
term of this Lease. Prior to undertaking the aforementioned repairs,
Tenant shall notify Landlord of said repairs and the methodology to be
used in effecting the repairs. Landlord shad have the right to approve
said methodology and such approval shad not be unreasonably withheld,
conditioned or delayed. If Tenant refuses or neglects to commence or
complete repairs promptly and adequately, Landlord may make or
complete said repairs and Tenant shad pay the cost thereof to
Landlord. All sums so paid by Landlord and all costs and expenses so
incurred shall accrue interest at the higher of Twelve Percent (12%)
or the maximum amount permitted under applicable law, from their due
date until paid, said interest to be so much additional rent under
this Lease and shad be paid to Landlord by Tenant upon demand.
(b) Alterations or Improvements by Tenant: Tenant shall not, without
Landlord's prior written consent, make nor permit to be made, any
alterations, additions, or improvements in or to the Leased Premises
or the real property upon which the Leased Premises is situated, which
shad include, but not be limited to, roof penetrations or attachments
of any kind. Tenant shall promptly pay any and an contractors,
subcontractors, materialmen and all others performing any work or
supplying any materials in or to the Leased Premises, whether pursuant
to this Section or any other Section of this Lease, so that no
mechanic's or materialmen's liens shall attach against the Leased
Premises or the real property upon which the Leased Premises is
situated. Tenant shad indemnify and hold Landlord harmless from any
costs, expense (including attorney be - ), damages, clams or other
liability incurred by Landlord as a result of Tenant's failure to
comply with the provisions of this Section.
(c) Remodel of Improvements: All items of Landlord's construction, all
heating and air conditioning equipment, and all alterations and other
improvements shall be the property of Landlord and shall not be
removed from the Leased Premises. All trade fixtures, furniture,
furnishings and signs installed in the Leased Promises by Tenant and
paid for by Tenant, unless they have been so affixed that they have
become part of the Leased Premises, shall remain the property of
Tenant and may be removed upon the expiration of the term of this
Lease, provided that:
(1) Tenant repairs any damage caused by such removal; and
(2) Tenant has fully performed all of the covenants and
agreements to be performed by Tenant, and no payments are due or
will thereafter become due from Tenant to Landlord under the
provisions of this Lease.
If Tenant fails to remove such items from the Leased Premises prior to
the expiration or earlier termination of this Lease, all such trade
fixtures, furniture, furnishings and signs shall become the property
of Landlord unless Landlord elects to require their removal, in which
cave Tenant shall promptly remove same and restore the Leased Premises
to its prior condition.
SECTION 13. INDEMNITY AND INSURANCE
(a) Indemnification by Tenant: Tenant shall indemnify and bow Landlord
harmless from and against all loss, cost, expense and liability
whatsoever (including Landlord's cost of defending against the
foregoing, such cost to include attorney fees) resulting or occurring
by reason of Tenant's construction, use, or occupancy of the Leased
Premises and all rights incidental thereto.
(b) Public Liability Insurance: Tenant, at its own expense, shall provide
and keep in force with companies acceptable to Landlord, public
liability insurance covering the Leased Premises and Tenant's use
thereof, with a combined, single-limit bodily injury and property
damage minimum of $1,000,000, and to deposit said policy[ies]) (or
certificates) with Landlord prior to the date of any use or occupancy
of the Leased Premises by Tenant. Such policy or policies shall name
Landlord, Tenant, and such other parties as Landlord may from time to
time notify Tenant in writing, as insureds and shall bear endorsements
to the effect the insurer agrees to notify Landlord not less than
thirty (30) days in advance of any cancellation or modification
thereof.
(c) Landlord's Liability: Landlord shall not be liable for any:
(1) damage to Tenant's property located in the Leased Premises or
personal injury to Tenant, its employees or agents, or any third
parties, regardless of the cause of such damage;
(2) acts or omissions of third parties; nor
(3) condition of the Leased Premises whatsoever, unless Landlord is
responsible for the repair thereof and has failed to make such
repair after notice from Tenant of the need therefor, and
expiration of a reasonable time for the making of such repair.
(d) Fire & Extended Coverage Insurance: Landlord agrees to carry policies
insuring the improvements on the Leased Premises against fire and such
other perils as are normally covered by extended coverage endorsements
in the county where the Leased Premises is located, in an amount equal
to at least Eighty Percent (80%) of the insurable value of such
improvements, together with insurance against such other risks
(including loss of rent) and in such amounts as Landlord deems
appropriate. Landlord agrees to pay the f re and extended coverage
insurance subject to Section 6 of this Lease.
(e) Mutual Waiver of Subrogation: To the extent permitted by law and
provided the same does not invalidate or diminish any insurance
required to be carried hereunder, Landlord and Tenant each agree to
cause to be included in their respective policies of fire and extended
coverage insurance the agreement of the issuer thereof that said
policies shall not be invalidated by a waiver of claim by the insured
against a Landlord or Tenant, as the case may be, and each will
furnish evidence thereof to the other. In addition to any other waiver
herein, Landlord and Tenant each hereby waive any claim against the
other for any property loss resulting from any cause, including the
negligence of the other, to the extent of the insurance proceeds
available their. All property insurance policies carried by either
party covering the Leased Premises, including but not limited to
contents, fire, and casualty insurance, shall to the extent permitted
by law expressly waive any right on the part of the insurer against
the other party. The parties hereto agree that their policies will
include such waiver clause or endorsement so long as the same shall be
obtainable without extra cost, or if extra shall be charged therefor,
so long as the other party pays such extra cost. If cost shall be
chargeable therefor, each party shall advise the other of the amount
of extra cost, and the other party, at its election, may pay the same,
but shall not be obligated to do so. The failure of any insurance
policy to include such waiver clause or endorsement shall not affect
the validity of this Lease.
SECTION 14. UNIFORM COMMERCIAL CODE INTENTIONALLY DELETED]
SECTION 15. ABANDONMENT
Tenant shall not vacate nor abandon the Leased Premises at any time during
the term of this Lease, nor permit the Leased Premises to run unoccupied for a
period longer than forty-five (45) consecutive days during the term of this
Lease. If Tenant shall abandon, vacate or surrender the Leased Premises, or be
dispossessed by process of law or otherwise, any personal property belonging to
Tenant and left on the Leased Premises shall, at the option of Landlord, be
deemed abandoned and available to Landlord to use or sell to offset rental
amounts due and payable. Should the Leased Premises be presumed to be vacated or
abandoned, Landlord has the right, without being held as trespassing, to enter
the Lead Premises for any purpose connected with the management, operation and
leasing of the Leased Premises for any purpose connected with the management,
operation and leasing of the Leased Premises.
SECTION 16. DAMAGE AND DESTRUCTION
If the Leased Premises are damaged by any peril covered by standard
policies of fire and extended coverage insurance to an extent which is less than
Twenty-Five Percent (25%) of the cost of replacement (as determined by
Landlord's insurer) of the Leased Premises, the damages shall, except as
hereinafter provided, promptly be repaired by Landlord, at Landlord's expense,
but in no event shall Landlord be required to repair or replace Tenant's stock
in trade, trade fixtures, furniture, furnishings, equipment, personal property,
or leasehold improvements. If
(a) the Leased Premises are damaged by any cause to the extent of
Twenty-Five Percent (25%) or more of the cost of replacement of the
Leased Premises, or
(b) any damage by any cause to the Leased Premises occurs during the last
two (2) years of the term of this Lease,
Landlord may elect either to repair or rebuild the Leased Premises or to
terminate this Lease upon giving notice of such election in writing to Tenant
within ninety (90) days after the event causing the damage.
If the casualty, repairing, or rebuilding shall render the Leased Premises
untenantable, in whole or in part, a proportionate abatement of Minimum Rent
shall be allowed until the date Landlord completes the repairs or rebuilding. If
Landlord is required or elects to repair the Leased Premises, Tenant shall
repair or replace its stock in trade, trade fixtures, furniture, furnishings,
equipment and personal property in a manner and to at least a condition equal to
that prior to its damage or destruction, and the proceeds of all insurance
carried by Tenant shall be held in trust by Tenant for the purpose of such
repair or replacement.
SERMON 17. ASSIGNING AND SUBLETTING
Tenant shall not voluntarily or involuntarily convey, assign, mortgage,
encumber or otherwise transfer this Lease or any interest hereunder, nor shall
Tenant allow any transfer hereof or any lien upon Tenant's interest hereunder by
operation of law or otherwise, nor shall Tenant sublet the Leased Premises or
any part thereof, or permit the use or occupancy of the Leased Premises or any
part thereof by any person or entity other than Tenant, without the prior
written consent of Landlord. If Landlord consents to any of the foregoing, the
same shall not he binding upon Landlord until Tenet executes a document agreeing
to remain liable under the terms of this Lease, and Tenant's assignee, subtenant
or other occupant executes an agreement acceptable to Landlord whereby such
assignee, subtenant or other occupant agrees to comply with all the terms,
provisions and conditions of the Lease and to be bound to Landlord for the
performance thereof as if such assignee, subtenant or other occupant originally
executed this Lease.
Prior to any request for consent by Tenant to do any of the above-mentioned
regarding any part or the whole of the Leased Premises, Tent shall, by written
notice and without charge of any kind, offer the return of the Leased Premises
to Landlord. Landlord, within sixty (60) days of receipt of said written notice,
shall have the option to reject said offer or to accept the return of the Leased
Premises without further liability upon Tenant as to the terms of this Lease.
Any consent by Landlord shall not constitute a waiver of the necessity for
such consent to any subsequent assignment, sublease, conveyance, mortgage,
encumbrance or other transfer of this Lease or any interest hereunder, or as
allowing any transfer hereof or any lien upon Tenant's interest hereunder by
operation of law or otherwise, or as permitting the use or occupancy of the
Leased Premises or any part thereof by any person or entity other than Tenant,
nor does it constitute a waiver of Landlord's right to accept the Leased
Premises as set forth hereinabove.
If Tenant assumes this Lease and proposes to assign the same pursuant to
the provisions of the United States Bankruptcy Code to any person or entity who
shall have made a bona fide offer to accept an assignment of this Lease on terms
acceptable to Tenant, then notice of such proposed assignment shall be given to
Landlord by Tenant no later than twenty (20) days after receipt by Tenant, but
in any event no later than ten (10) days prior to the date that Tenant shall
make application to a court of competent jurisdiction for authority and approval
to enter into such assignment and assumption. Such notice shall set forth (a)
the name address of such person, (b) all of the terms and conditions of such
offer, and (c) adequate assurance of future performance by such person under the
Lease, including, without limitation, the assurance referred to in Section
365(b) (3) of the Bankruptcy Code. Landlord shall have the prior right and
option, to be exercised by notice to Tenant given at any time prior to the
effective date of such proposed assignment, to accept an assignment of this
Lease upon the same terms and conditions and for the same consideration, if any,
as the bona fide offer made by such person, less any brokerage commissions which
would otherwise be payable by Tenant out of the consideration to be paid by such
other person in connection with the assignment of this Lease.
The term "adequate assurance of future performance" as used in this Lease
shall mean that any proposed assignee shall, among other things, (a) deposit
with Landlord on the assumption of this Lease an amp equal to six (6) times the
monthly fixed Minimum Rent installment then applicable as security for the
faithful performance and observance by such assignee of the tempts and
obligations of this Lease, (b) if and to the extent available, furnish Landlord
with financial statements of such assignee for the prior three (3) fiscal years,
as finally determined after an audit and certified as correct by a certified
public accountant, which financial statements shall show a net worth of an
amount equal to or greater than thirty-six (36) times the monthly fixed Minimum
Rent then applicable, and (c) provide such other information or take such action
as Landlord, in its reasonable judgment, shall deter nine is necessary to
provide adequate assurance of the performance by such assignee of its
obligations under this Lease.
SECTION 18. EMINENT DOMAIN
In the event the Leased Premises or the real property on which the Leased
Premises is situated, or any part of either, shall be taken or condemned, either
permanently or temporarily, for any public or quasi-public use or purpose by any
authority in appropriation proceedings or by any right of eminent domain, the
entire compensation award therefor, including, but not limited to, all damages
as compensation for diminution in value of the leasehold, reversion and fee,
shall belong to Landlord without any deduction therefrom for any present or
future estate of Tenant, and Tenant hereby assigns to Landlord all its right,
title and interest to such award. However, Tenant shall have the right to
recover from the condemning authority, but not from Landlord, such compensation
as may be separately awarded to Tenant on account of interruption of Tenant's
business and for moving and relocation expenses. In the event of a taking under
the power of eminent domain of more than Twenty-Five Percent (25%) of the Leased
Premises, either Landlord or Tenant shall have the right to terminate this Lease
by notice in writing given within ninety (90) days after the condemning
authority takes possession, in which event all rents and other charges shall be
pro rated as of the date of such termination.
In the event of a taking of any portion of the Leased Premises not
resulting in a termination of this Lease, Landlord shall use so much of the
proceeds of Landlord's award for the Leased Premises as is required therefor to
restore the Leased Premises to a complete architectural unit and this Lease
shall continue in effect with respect to the balance of the Leased Premises with
a reduction of Minimum Rent in proportion to the portion of the Leased Premises
taken.
SECTION 19. DEFAULT BY TENANT
If Tent fails to pay Minimum Rent or Additional Charges within five (5)
days from the due date or fails to remedy any default other than the payment of
rent or charges within ten (10) days after written notice from Landlord (unless
such default cannot be remedied within the 10 day period and Tenant commences to
remedy such default within the 10-day period and diligently pursues correction
thereof, in which event the remedy time shall be extended to the time reasonably
required therefor); or if a receiver of any property of Tenant on the Leased
Premises is appointed or Tenant's interest in the Leased Premises is levied upon
by legal process and Tenant fails within thirty (30) days to cause the vacation
of such appointment, levy or adjudication; or if Tenant files a voluntary
petition in bankruptcy, disposes of all or substantially all of its assets in
bulk, or maces an assignment for the benefit of its creditors, then Earl in any
such instance, without further notice to Tenant, the following rights and/or
remedies shall accrue to Landlord:
(a) Landlord may enter into the Leased Premises or any part thereof with
or without notice or process of law, and expel Tenant or any person
occupying the same using such force as may be necessary and relet the
Leased Premises for Tenant's account; and/or
(b) Landlord may enter upon the Leased Premises and terminate this Lease,
in which event the obligations of Landlord hereunder shall cease
without prejudice, however, to the right of Landlord to recover from
Tenant any sums due Landlord for rent or otherwise to the date of such
entry, and any sums due Landlord for rent or otherwise, as they accrue
after the date of such entry, but subject to Landlord's duty to
mitigate its damages; and/or
(c) Landlord may enter upon the Leased Premises without terminating this
Lease and may relet them in its own name for the account of Tenant for
the remainder of the term at the highest rate then obtainable and
recover from Tenant any deficiency, as it accrues, for the balance of
the term between the amount for which the Leased Premises were relet,
less expense of reletting (including broker and attorney's fees), and
the rent provided hereunder; and/or
(d) If Landlord submeters electric current, gas or water to the Leased
Premises, Landlord may, without notice to Tenant, cease furnishing
such electric current, gas, or water
If Tenant at any time shall fail to pay any taxes, assessments, or liens,
or fails to make any payment or perform any act required by this Lease to be
made or performed by it, Landlord, without waiving or releasing Tenant from any
obligation or default under this Lease, may (but shall be under no obligation
to) at any time thereafter make such payment or perform such act for the account
of and at the expense of Tenant. All ) sums so paid by Landlord and all
costs and expenses so incurred shall accrue interest at the higher of Twelve
Percent (12 %) or the maximum amount permitted under applicable law, from their
due date until paid, said interest to be so much additional rent under this
Lease and shall be paid to Landlord by Tenant upon demand.
All rights and remedies of Landlord herein enumerated shall be cumulative,
and may be exercised by Landlord in the alternative, but none shall exclude any
other available to Landlord at law or in equity. No failure of Landlord to
enforce rights or remedies upon default of Tenant shall prejudice or affect the
rights of Landlord upon any subsequent or similar default.
SECTION 20. SECURITY DEPOSIT
To secure the faithful performance by Tenant of the covenants, conditions
and agreements set forth in this Lease to be performed by it, Tenant has
deposited with Landlord the sum of Fourteen Thousand Four Hundred Forty-Seven
and 92/100 Dollars ($14,447.92) on the understanding that:
(a) Landlord shall not be obligated to but may apply such deposit or any
portion thereof to the curing of any default that may exist, without
prejudice to any other remedy or remedies which Landlord may have on
account thereof, and upon such application Tenant shall pay Landlord
on demand the amount so applied which shall be added to the security
deposit so the same will be restored to its original amount;
(b) Should the Leased Premises and/or the real property upon which the
Leased Premises is situated be transferred by Landlord, the security
deposit or any balance thereof may be turned over to Landlord's
successor or transferee for such application or return;
(c) Landlord or its successors shall not be obligated to hold the security
deposit as a separate fund, but may co-mingle it with other funds;
(d) In no event shall Landlord be obligated to apply the security deposit
against amounts due during or on account of the final month of the
term;
(e) If Tenant defaults under this Lease more than two (2) times in any
twelve (12) month period, irrespective of whether or not such default
is cured, then the security deposit shall, within ten (10) days
following demand by Landlord, be increased by Tenant to an amount
equal to the sum of Thirty Thousand and No/100 Dollars ($30,000.00);
and
(f) If Tenant shall faithfully perform all of the covenants and agreements
in this Lease contained on the part of Tenant to be performed, the
security deposit, or any then remaining balance thereof, shall be
returned to Tenant without interest within thirty (30) days after the
expiration of the term hereof, as extended by any optical periods.
Notwithstanding anything aforementioned to the contrary, Tenant hereby
agrees not to look to the mortgagee, as mortgagee, mortgagee in possession, or
successor in title to the property, for accountability for any security deposit
required by Landlord hereinunder, unless said sums have actually been received
by said mortgagee as security for Tenant's performance of this Lease.
SECTION 21. NOTICES AND PAYMENTS
Any notice, communication, request, reply or advice given hereunder by or
on behalf of either party to the other shall be in writing and may be effected
by personal delivery, certified mail, postage prepaid with return receipt
requested, or by Federal Express, Airborne, or other reputable national
overnight delivery service. Any such notice, communication, request, reply, or
advice shall be addressed to Landlord or Tenant, as the case may be, at the
addresses hereinabove specified, or at such other address as may be specified
from time to time by notice in the manner set forth hereto. Payment of Minimum
Rent and Additional Charges shall be deemed to have occurred on the date
actually received. Notices delivered personally shall be deemed given on actual
receipt, mailed notices shall be deemed given three (3) days after mailing, and
overnight delivery shall be deemed given the following regular delivery day.
SECTION 22. MORTGAGE SUBORDINATION
Upon written request or notice by Landlord, concurred in by any mortgagee
or trustee of the Leased Premises and/or the real property upon which the Leased
Premises is situated or by any person, firm or corporation intending to become
such a mortgagee or trustee, Tenant agrees to subordinate its rights under this
Lease to the liens of any mortgages or deeds of trust that may hereafter be
placed upon the Leased Premises and/or the real property upon which the Leased
Premises is situated and to any and all advances to be made thereunder, and to
the interest thereon and all renewals, replacements and extensions thereof,
provided the mortgagee or trustee named in said mortgages or deeds of trust
shall agree to recognize this Lease in the event of foreclosure if Tenant is not
in default. Tenant also agrees that any mortgagee or trustee may elect to have
this Lease prior to the lien of its mortgage or deed of trust, and upon
notification by such mortgagee or trustee to Tenant to that effect, this Lease
shall be deemed prior in lien to the said mortgage or deed of trust, whether
this Lease is dated prior to or subsequent to the date of said mortgage or trust
deed. Tenant agrees that, upon the request of Landlord, any mortgagee, or any
trustee named in such mortgages or trust deeds, it shall execute and deliver
whatever instruments may be required for such purposes to carry out the intent
of this Section.
SECTION 23. CERTIFICATES OF LEASE INFORMATION
At any time and from time to time, Tenant agrees to execute and deliver to
Landlord, for the benefit of such persons as Landlord requests, a statement in
writing satisfactory to Landlord certifying any information pertaining to, or
arising out of this Lease, provided such facts are true and ascertainable. In
the event that Tenant fails to respond to any such request within fifteen (15)
days, Landlord shall be deemed to constitute Tenant's attorney-in-fact for the
sole and limited purpose of executing such statement.
SECTION 24. QUIET ENJOYMENT
Landlord hereby covenants and agrees that if Tenant shall perform all the
covenants and agreements herein stipulated to be performed on Tenant's part,
Tenant shall at all times during the continuance hereof have the peaceable and
quiet enjoyment and possession of the Leased Premises without any manner of let
or hindrance from Landlord or any person or persons lawfully claiming the Leased
Premises.
SECTION 25. LIABILITY OF LANDLORD
If Landlord shall fail to perform any covenant, term or condition of this
Lease upon Landlord's part to be performed and, as a consequence of such
default, Tenant shall recover a money judgment against Landlord, such judgment
shall be satisfied only out of the proceeds of sale received upon execution of
such judgment and levy thereon against the right, title and interest of Landlord
in the Leased Premises as the same may then be encumbered, and neither Landlord,
nor if Landlord be a partnership, any of the partners comprising such
partnership, shall be liable for any deficiency. It is understood that in no
event shall Tenant have any right to levy execution against any property of
Landlord other than its interest in the Leased Premises as hereinbefore
expressly provided. In the event of the sale or other transfer of Landlord's
right, title and interest in the Leased Premises, Landlord shall be released
from all liability and obligations hereunder.
SECTION 26. MISCELLANEOUS PROVISIONS
(a) Waiver: No waiver of any condition or loyal right or remedy of
Landlord, under this Lease, or at law or in equity, shall be implied
by the failure or delay of Warlord in exercising any such right or
remedy, or to declare a forfeiture, or for any other reason, and no
waiver of any condition or covenant, or right or remedy, shall be
valid unless it be in writing signed by Landlord. A waiver in any one
circumstance shall not he doomed to be a waiver for the future in
similar circumstances.
(b) Surrender & Holding Over: Tenant shall deliver up and surrender to
Landlord possession of the Leased Premises upon the expiration of the
term of this Lease, or its termination in any way, in as good
condition and repair as the same shall be at the commencement of said
term (damage by fire and other perils covered by standard fire and
extended coverage insurance and ordinary wear and tear only excepted).
Should Tenant remain in possession of the Leased Premises after any
termination of this Lease, no tenancy or interest in the Leased
Premises shall result therefrom but such holding over shall be subject
to immediate eviction and removal, and Tenant shall, upon demand, pay
to Landlord, as liquidated damages, a sum equal to double the Minimum
Rent as specified herein for any period during which Tenant shall hold
the Leased Premises after the stipulated term of this Lease may have
terminated.
(c) Transfer of Landlord's Interest: Landlord shall be liable under this
Lease only while the owner of the Leased Premises, and if Landlord
should sell or otherwise transfer Landlord's interest in the Leased
Premises upon an undertaking by the purchaser or transferee to be
responsible for all of the covenants and undertakings of Landlord,
Tenant agrees that Landlord shall thereafter have no Liability to
Tenant under this Lease or any modification or amendment thereof,
except for such liabilities which might have accrued prior to the date
of such sale or transfer of Landlord's interest.
(d) Landlord's Lien: [INTENTIONALLY DELETED]
(e) Consumer Price Index: If provided in this Lease, an increase in rent
shall be based on the "All Items Component of the Consumer Price Index
U.S. City Average for Urban Wage Earners and Clerical Workers (1982-84
= 100)," as published by the Bureau of Statistics of the United States
Department of Labor. The "Base Period". shall be the month in which
the Rental Commencement Date occurs. The Base Period remains the same
throughout the Lease and all extensions. The Current Period. shall he
the first month of the period for which an increase is provided. Said
rent or charge shall then be increased (but never decreased) by the
percentage increase from the Base Period to the Current Period. If
such Index is discontinued, a comparable index, if published by a
reasonable financial authority and approved by Landlord, shall be used
for making such a computation. In no event shall any one CPI increase
required pursuant to the terms of this Lease exceed Three Percent
(3%).
(f) Option to Extend: If Tenant has fully complied with all provisions of
this Lease, Tenant may extend the term of this Lease for three (3)
additional term[s] of five (5) Lease Years, by giving written notice
to Landlord at least one hundred eighty (180) days prior to the
expiration of the then-current term hereof, upon the same terms and
provisions hereof, except as to Minimum Rent. Minimum Rent shall be
computed annually at the beginning of each Lease Year by the increase
in the Consumer Price Index, as provided in Section 26(e) hereof.
(g) Brokers Commissions: Tenant represents and warrants that there are no
claims for brokerage commissions or finders fees through Tenant in
connection with the execution of this Lease other than Riverview
Management Company, dba Riverview Realty, and Fuller and Company,
whose commission Landlord has agreed to pay pursuant to separate
agreement, and Tenant agrees to indemnify Landlord against and hold it
harmless from all liabilities arising from any such claim, including
the cost of attorney fees.
(h) Successors & Assigns: This Lease inures to the benefit of and shall be
binding upon the parties, their heirs, successors, assigns and legal
representatives, subject only to the provisions restricting assignment
and subleasing. In no event shall any assignment by, from, through, or
under Tenant in violation of the provisions of this Lease shall vest
in any such heirs, successors, assigns and legal representatives.
(i) Joint & Several Liability: [INTENTIONALLY DELETED]
(j) Entire Agreement: This Lease contains the entire agreement of the
parties and cannot be amended or modified except by written agreement.
Tenant expressly acknowledges that no representations have been made
by Landlord or anyone representing Landlord or acting on its behalf to
Tenant that have not been reduced to writing and inserted into this
Lease. Tenant hereby expressly waives the right to assert that any
such oral representation was made by Landlord or on his behalf.
(k) Attorney's Fees: Except as expressly set forth in this Lease, each
party shall bear the cost of its own attorney's fees in the event of
litigation between the parties. Notwithstanding the foregoing,
however, in the event either party institutes litigation against the
other, and such litigation is resolved in favor of the party not
instituting the same, the party instituting the litigation shall
reimburse the party not instituting the litigation for an attorney's
fees, costs, and expenses incurred in such litigation. This paragraph
shall not apply in any action commenced by Landlord against Tenant
under Section 19 of this Lease, in which case Tenant is responsible
for Landlord's attorneys fees.
(1) Interpretation: The language in an parts of this Lease shall in all
cases be construed according to its fair meaning and not strictly for
or against either Landlord or Tenant, and the construction of this
Lease and any of its various provisions shall be unaffected by any
argument or claim, whether or not justified, that it has been
prepared, wholly or in substantial part, by or on behalf of Landlord.
The section headings are inserted only as a matter of convenience and
for reference purposes and in no way define, limit or describe the
scope or intent of this Lease nor in any way affect this Lease.
(m) Authority of Tenant: If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and
warrants that he or she is duly authorized to execute and deliver this
Lease on behalf of said corporation, in accordance with the bylaws and
pursuant to a duly enacted resolution of said corporation, and that
this Lease is binding upon said corporation.
(n) Memorandum of Lease: Neither party shall record this Lease, but the
parties hereto agree to execute a Memorandum of Lease, in recordable
form, upon Landlord's request. In no event shall said Memorandum of
Lease set forth the rental or other charges payable by Tenant under
this Lease, but may set forth any other information Landlord
reasonably requires or desires, including, but not limited to, the
legal description of the Leased Premises and the Entire Premises, the
commencement and termination dates of the term of this Lease, and any
renewal rights. In the event Tenant records this Lease, in violation
of this provision, Landlord may, at its option, terminate this Lease
and this Lease shall be of no further force and effect. All terms,
provisions, and conditions contained in this Lease and not recited in
a Memorandum of Lease shall be kept strictly confidential, and Tenant
agrees not to disclose any such term, provision or condition to any
other party, except only Tenant's employees, lenders, attorneys, and
accountants, on a need-to-know basis.
IN WITNESS WHEREOF, the parties hereto have set their hands to duplicates
hereof, the day and year first written above.
Signed in the Presence of "LANDLORD":
/S/ BETH E.OSBORN /S/ ANTHONY A. PETRARCA
- -------------------------------- -------------------------------------
ANTHONY A. PETRARCA
/S/ ALAN W. SPONSELLER
- --------------------------------
"TENANT"
HOLLYWOOD TRENZ, INC.
/S/ WENDY J. STERNENSKY By: /S/ EDWARD R. SHOWALTER
- -------------------------------- ------------------------------------
Edward R. Showalter
/S/ DEBORAH P. DAHLKVIST Its Chairman, President & CEO
- --------------------------------
LANDLORD'S ACKNOWLEDGEMENT
STATE OF OHIO )
) SS
COUNTY OF SUMMIT )
BEFORE ME, a Notary Public in and for said County and State, did personally
appear the above named ANTHONY A. PETRARCA, who acknowledged that he did sign
the foregoing with full authority herein and that the same is his free act and
deed.
IN WITNESS WHEREOF, I have hereunto set my hand and seal at Akron, Ohio,
this 29th day of December, 1995.
/S/ IRENE A. FORSHEY
------------------------------------
NOTARY PUBLIC
Notary Public, State of Ohio
My Commission Expires November 4, 1999
TENANT'S ACKNOWLEDGEMENT
STATE OF FLORIDA )
) SS
COUNTY OF BROWARD )
BEFORE ME, a Notary Public, in and for said County and State, did
personally appear the above named HOLLYWOOD TRENZ, INC., by Edward R. Showalter,
its Chairman, President & CEO, who acknowledged that he/she did sign the
foregoing and that the same is his/her free act and deed and the free act and
deed of the corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal at Ft.
Lauderdale, Florida, this 12th day of December, 1995.
/S/ ROBERT E. BURTON JR.
-------------------------------------
NOTARY PUBLIC
My Commission CC509911
Expires Nov. 14, 1999
<PAGE>
EXHIBIT "A"
Being a one-story, free-standing building, containing approximately 36,500
s.f., situated on the following property:
Lot 6, Towne Center Subdivision, exemption survey no. 1 recorded April 4,
1984, under Reception No. 84030264, County of Jefferson, State of Colorado.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 1,050,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 22,368
<DEPRECIATION> 10,148
<TOTAL-ASSETS> 1,314,232
<CURRENT-LIABILITIES> 1,471,949
<BONDS> 0
0
0
<COMMON> 2,078
<OTHER-SE> 20,007,461
<TOTAL-LIABILITY-AND-EQUITY> 1,314,232
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,938,485
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,942,302)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,942,302)
<EPS-PRIMARY> (1.34)
<EPS-DILUTED> (1.34)
</TABLE>
