AGREEMENT OF LEASE
(WITH PURCHASE OPTION)
AND STOCK PURCHASE AGREEMENT
THIS AGREEMENT OF LEASE (WITH PURCHASE OPTION) AND STOCK PURCHASE
AGREEMENT is made as of March 1, 1997 between Xxxxxx X. Xxxxxxxxx, Xxxxxx X.
Xxxxxxxxx and Xxxxxxxxxxx X. Xxxxxxxxx (together, the "Owners"), Xx Xxxxxxx On
Stage, Ltd., a Pennsylvania corporation, having an office at 00 Xxxx 0xx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxx 00000 ("Onstage"), and Planet Entertainment Corporation, a
Delaware corporation, having an office at 000 Xxxxxxx 00, Xxxxxxxxxx, Xxx Xxxxxx
00000 ("Planet").
RECITALS
A. Owners own the plot of land and building situated thereon known as
00 Xxxx 0xx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000 (said building hereinafter
called the "Building" and the Building, together with said plot of land
hereinafter called the "Premises").
B. Owners own all the outstanding shares of stock of Onstage.
C. Planet desires to lease the Premises from Owners, to obtain an
option to purchase the Premises and to acquire all the outstanding shares of
stock of Onstage. Owners are willing to lease the Premises to Planet, to grant
to Planet an option to purchase the Premises and to sell to Planet all the
outstanding shares of stock of Onstage, upon the terms set forth herein.
WITNESSETH:
1. LEASE.
(a) PREMISES, TERM. Owners hereby leases to Planet and Planet hereby
hires from Owners the Premises, for a term to commence on March 1, 1997 and to
end on February 28, 2002 (the "Initial Term"), and, at the election of Planet,
for a Renewal Term as hereinafter defined, unless the Initial Term or Renewal
Term, as the case may be, shall sooner end pursuant to any of the terms or
conditions of this Lease or pursuant to law, at the Rent as hereinafter defined.
Planet shall have the right to extend the Initial Term for a second five-year
period (the "Renewal Term") by giving notice to Owners to that effect not less
than 60 nor more than 120 days prior to the expiration of the Initial Term.
Where the context requires, "Term" as used herein shall mean the Initial Term
together with the Extended Term, if any.
(b) RENT. "Rent" during the Initial Term shall mean the sum of:
(i) the debt service on the mortgage held by Wilmington Savings
Fund Society on the Premises (hereinafter called the "WSFS Mortgage");
(ii) the debt service on the mortgage held by Xxxxxxx Redevelopment
Authority on the Premises (hereinafter called the "CRA Mortgage");
(iii) the real estate taxes (the "Taxes") imposed upon the
Premises; and
(iv) the ordinary and necessary expenses of the operation of the
business of The Sound Spa presently conducted on the Premises (the
"Business"), including but not limited to charges for electricity,
water, telephone, cleaning and trash removal, security system, and
customary commercial casualty and liability insurance,
as and to the extent that the same shall accrue from and after the commencement
of the Term. Planet shall not be obligated to pay any of the foregoing items
comprising Rent that shall have accrued prior to the commencement of the Term.
"Rent" during the Extended Term shall be at the market rate prevailing
at the time of the election by Planet to extend the Term
"Debt service" on a Mortgage shall mean the regularly scheduled monthly
payments of principal and interest but shall not include any "balloon" payments
of principal at maturity or otherwise, nor any acceleration of principal
pursuant to the terms of said Mortgage or otherwise.
(c) PAYMENT OF RENT. Planet shall pay the portion of the Rent
constituting the debt service on the WSFS Mortgage and the CRA Mortgage
(together the "Mortgages") directly to the respective mortgagees as the same
become due during the Initial Term, excluding, however, any acceleration of the
principal thereof pursuant to the terms of either such Mortgage or otherwise.
Planet shall pay (directly to the taxing authority) the portion of the Rent
constituting the Taxes as and when the same become due and payable, provided
that all Taxes assessed prior to but payable in whole or in installments after
the date hereof, and all Taxes assessed during the Initial Term but payable in
whole or in installments after the Initial Term, shall be adjusted and prorated
so that Owners shall pay their prorated share for the period prior to and for
the period subsequent to the Initial Term and Planet shall pay its prorated
share for the Initial Term of this Lease. Planet will deliver to Owners or
Owners' representative Planet's checks in payment of its Rent obligations
hereunder, and Owners or Owners' representative shall forward such checks to the
respective payees.
(d) USE, OCCUPANCY, ALTERATIONS. Planet shall use and occupy the
Building in the conduct of the Business and any related business use permitted
by law. Planet shall be entitled to make any alterations, installations,
improvements, additions or other physical changes in or to the Building
(11ereinafter called "Alterations") without Owners' prior consent, provided such
Alterations are nonstructural and do not affect the Building's mechanical
systems.
(e) SUBORDINATION; OTHER LIENS. Owners represents that, except for (1)
the Mortgages and (2) a lease of a portion of the premises to Attic Studios,
which lease expires on March 31, 1997, there are no mortgages, trust indentures
or leases affecting the Premises to which this Lease is or would be subject or
subordinate. Owners agree not to enter into any such additional mortgage, trust
indenture or lease which would rank superior in right to the interest of Planet
under this Lease. Planet is not obligated to attorn to either of the mortgagees
on the Mortgages, and in the event that either such Mortgage shall be foreclosed
at any time prior to the expiration of this Lease, Planet may in its discretion
terminate this Lease forthwith, whereupon Planet shall have no further
obligation to Owners hereunder. Owners further covenant that they will not
extend the term of either Mortgage; increase the amount of indebtedness secured
by either Mortgage; or take or omit to take any act, which act or omission would
cause either Mortgage to be in default or otherwise permit either mortgagee to
accelerate the maturity thereof.
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(f) DESTRUCTION OF PREMISES; EMINENT DOMAIN. If the Building shall be
damaged by fire or other casualty, the damages shall be repaired by and at the
expense of Owners and the Rent until such repairs shall be made shall be reduced
in the proportion which the area of the part of the Building which is not usable
by Planet bears to the total area of the Building. Notwithstanding the
foregoing, if the Building is totally damaged or is rendered wholly
untenantable, or if the Building shall be so damaged by fire or other casualty
that, in Planet's opinion, substantial alteration, demolition, or reconstruction
of the Building shall be required (whether or not the Building shall have been
totally damaged or rendered untenantable), then in any of such events, Planet at
its option, may, not later than thirty (30) days following the damage, give
Owners a notice in writing terminating this Lease. If Planet elects to terminate
this Lease, the Term shall expire upon the fifth (5th) day after such notice is
given, and Planet shall vacate the Building and surrender the same to Owners. If
Planet shall not be in default under this Lease, then upon the termination of
this Lease under the conditions provided for in the next preceding sentence,
Planet's liability for Rent shall cease as of the day following such damage. If
the whole or any part of the Premises or the Building shall be acquired or
condemned for any public or quasi-public use or purpose, this Lease and the Term
shall end as of the date of the vesting of title.
(g) QUIET ENJOYMENT. Owners covenant and agree with Planet that upon
Planet paying the Rent and observing and performing all the other terms,
covenants and conditions, on Planet's part to be observed and performed, Planet
may peaceably and quietly enjoy the Premises subject, nevertheless, to the terms
and conditions of this Lease.
(h) END OF TERM. Upon the expiration of the Initial Term (if not
extended), or, if the Initial Term is extended, upon the expiration of the
Extended Term, Planet shall quit and surrender to Owners the Premises in good
order and condition, ordinary wear and tear excepted, and Planet shall be
entitled to remove all its property from the Premises.
(i) SUBLEASE. Planet may assign this Lease (and the Option granted in
Section 4) or sublet all or portions of the Premises for the remainder of the
Term with the approval of Owners, which approval Owners shall not unreasonably
withhold, provided that the business or occupation of the assignee or subtenant
is not extra-hazardous, disreputable or illegal, and provided further that
Planet shall remain primarily liable for the payment of the Rent and for the
performance of all the other terms of this Lease required to be performed by
Planet.
3. OPERATION OF BUSINESS; PURCHASE OF EQUIPMENT.
(a) In consideration of the payment of Rent as provided herein, Planet
shall, during the Term, be entitled to operate the Business heretofore conducted
under the name of The Sound Spa, and to receive all the revenues and other
income from the Business.
(b) Xxxxxx X. Xxxxxxxxx (the "Executive") shall be employed by Planet
pursuant to an employment contract substantially in the form of Exhibit A to be
entered into contemporaneously herewith.
(c) The Executive represents that he has heretofore incurred expenses
on behalf of the Business which have been paid by his personal credit card, and
that said expenses do not exceed $21,000 in the aggregate, which amount shall
be treated by the parties as a loan by the Executive to the Business. Planet
agrees during the Term to service said loan at the minimum monthly payment
required by the terms of the credit card contract, reserving the right in
Planet's discretion
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to pay down the loan in one or more payments. The Executive agrees not to incur
any additional charges on said credit card, except charges for which the
Executive would be entitled to reimbursement under the provisions of his
employment contract.
(d) Planet hereby agrees to issue to Owners 100,000 shares of common
stock of Planet, in exchange for all of the outstanding shares of stock of
Onstage, which exchange of shares is intended by the parties to be a tax-free
exchange. Such shares shall be issued as shown in Exhibit B.
4. OPTION TO PURCHASE. Owners hereby grant to Planet an option,
exercisable at any time during the Term of the Lease granted hereunder (the
"Option"), to purchase the Premises upon the following terms and conditions:
(a) The Option may be exercised so long as Planet is not in default in
payment of Rent or under any other terms of the Lease granted in Section 1
above.
(b) The purchase price for the Premises shall be ten dollars ($10.00)
and the assumption or discharge by Planet of the obligations of Owners on the
Mortgages, which assumption shall be evidenced by either (i) the recognition of
Planet and the release of Owners as obligor on the Mortgages, (ii) the
refinancing of the Mortgages with Planet as obligor thereon, or (iii) the
extinguishment by Planet of the Mortgages.
(c) The Option may be exercised by written notice to Owners setting
forth the date and time at which the closing (the "Closing") of the purchase
pursuant to the Option shall occur, which date shall be not less than 30 nor
more than 60 days after the giving of such notice. Such purchase shall take
place at the offices of Owners' attorneys.
(d) Owners shall deliver or cause to be delivered to Planet or Planet's
agent, not less than 5 days prior to the Closing, a title commitment for an
owner's title insurance policy issued by a nationally recognized title insurance
company in the amount of principal balance of the Mortgages, covering title to
the Premises on or after the date hereof, showing title in Owners subject only
to (1) the general exceptions contained in the policy, (2) the title exceptions
set forth in Section 4(h) below, and (3) title exceptions pertaining to liens or
encumbrances of a definite or ascertainable amount which may be removed by the
payment of money at or prior to Closing and which Owners shall so remove at
their expense (all of which are herein referred to as the "Permitted
Exceptions"). The title commitment shall be conclusive evidence of good title as
therein shown as to all matters insured by the policy, subject only to the
exceptions as therein stated. Owners also shall furnish Planet an affidavit of
title in customary form covering the date of closing and showing title in Owners
subject only to the Permitted Exceptions in foregoing items (2) and (3) and
unpermitted exceptions, if any, as to which the title insurer commits to extend
insurance in the manner specified in Section 4(e) below.
(e) If the title commitment discloses unpermitted exceptions, Owners
shall have 30 days from the date of delivery thereof to have the exceptions
removed from the commitment or to have the title insurer commit to insure
against loss or damage that may be occasioned by such exceptions, and, in such
event, the time of closing shall be 35 days after delivery of the commitment or
the time specified in Section 4(c) above, whichever is later. If Owners fail to
have the exceptions removed, or in the alternative, to obtain the commitment for
title insurance specified in the preceding sentence as to such exceptions,
within the specified time, Planet may elect, upon
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notice to Owners within 10 days after the expiration of the 30-day period, to
rescind the exercise of the Option and cancel the purchase of the Premises, and
may terminate the Lease granted herein, whereupon this Agreement shall become
null and void without further actions of the parties.
(f) As a condition to Closing, Planet may require Owners to produce
evidence satisfactory to Planet's attorney that there does not exist any
condition on the Premises which would expose Planet to any liability under any
federal, state or local laws, regulations or ordinances pertaining to air and
water pollution, waste management, pesticides, radiation, noise or other similar
environmental matter.
(g) At the Closing existing assignable insurance policies, if any,
shall then be assigned to Planet. Owners shall pay the amount of any stamp
imposed by State law on the transfer of the title, and shall furnish any
declaration signed by Owners or Owners' agent or meet other requirements as
established by any local ordinance with regard to a transfer or transaction tax,
which tax shall be paid by Owners.
(h) At the Closing Owners shall convey to Planet title to the Premises
by a recordable full warranty deed subject only to (1) covenants, conditions and
restrictions of record, (2) private, public and utility easements and roads and
highways, if any, (3) party wall rights and agreements, if any, (4) special
taxes and assessments for improvements not yet completed, (5) the Mortgages, and
(6) general taxes for the current year.
5. UNWIND PROVISIONS. (a) In the event that Planet shall be in default for
90 days in payment of any Rent hereunder, Owners may give notice to Planet of
such default, demanding that Planet cure the default or defaults specified in
such notice. If Planet shall fail to cure said default or defaults within 10
days of such notice, Owners may at any time thereafter terminate the provisions
of this Agreement, whereupon, in consideration of Owners delivering to Planet
the 100,000 shares of stock of Planet issued to Owners pursuant to Section 3(d)
above, Planet shall deliver to Owners all the outstanding shares of stock of
Onstage and/or all the Business Property (as hereinafter defined), and this
Agreement shall terminate.
(b) In the event that (i) Owners are prevented from delivering
possession of the Premises to Planet, or (ii) if Planet is prevented from
occupying the Premises and enjoying the privileges of the Lease, other than
through Planet's default hereunder, or (iii) Owners shall renegotiate or
refinance either of the Mortgages without the written consent of Planet, then
Planet may at any time thereafter terminate the provisions of this Agreement,
whereupon, in consideration of Planet delivering to Owners all the outstanding
shares of stock of Onstage and/or all the Business Property, Owners shall
deliver to Planet the 100,000 shares of stock of Planet issued to Owners
pursuant to Section 3(d) above, and this Agreement shall terminate.
(c) Upon any such termination pursuant to Section 5(a) or 5(b), the
obligation of Planet to pay Rent and to service the credit card debt set forth
in Section 3(c) shall cease, the Option granted in Section 4 shall terminate,
and the parties shall have no further liability to one another hereunder.
6. REPRESENTATIONS OF OWNERS AND ONSTAGE. Owners and Onstage hereby
jointly and severally represent and warrant to Planet as follows:
(a) Onstage is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Pennsylvania. Owners own all the
outstanding shares of stock of Onstage
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free and clear of all liens and encumbrances. All such shares are fully paid
and non-assessable. There are no outstanding subscriptions, options, warrants,
rights, preemptive rights or other contracts, commitments, understandings and
arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement obligating Onstage to issue or
sell any share of capital stock of Onstage or to grant, extend or enter into any
option or other similar right with respect thereto.
(b) Onstage owns all the furniture, fixtures, equipment, customer
lists, inventory, supplies and all other property used in the Business (herein
called the "Business Property"), free and clear of all liens and encumbrances. A
schedule of the Business Property is attached as Exhibit C.
(c) Since the date of the most recent financial statements of Onstage
furnished to Planet, there has not been any material adverse change in the
business, financial condition or operations of Onstage. As of February 28, 1997,
Onstage recapitalized all its outstanding liabilities (including all mortgages,
notes and bonds payable, and obligations owing to shareholders) into paid-in or
capital surplus. As of said date, Onstage had no liabilities outstanding,
contingent or otherwise, including liabilities under guarantees or endorsements.
(d) No action, litigation, arbitration or claim is pending against
Owners or against Onstage or any of its assets which seeks to delay or prevent
the consummation of the transactions contemplated hereby, nor is there any
order, writ, judgment, injunction, decree, determination or award which would
have such effect; and there are no actions pending or, to the best knowledge of
Owners or Onstage, threatened against Owners or against Onstage or any of its
assets before any court, arbitrator or administrator, governmental or regulatory
authority or body.
(e) Onstage has filed all tax and information returns required to be
filed by it on or before the date hereof with the appropriate authorities for
income, withholding, social security, unemployment insurance, sales and other
taxes, and has paid all taxes reflected on such returns. All real property taxes
on the Premises have been paid to date.
(f) The execution and delivery of this Agreement by Owners and Onstage
do not require any consent, approval or authorization of or other action by, or
filing with or notification to, any governmental or regulatory authority, or
either mortgagee on the Mortgages.
(g) Owners will not renegotiate or refinance either of the Mortgages
without the written consent of Planet.
7. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof, supersedes all existing
agreements between the parties concerning such subject matter, and may be
modified only by a written instrument duly executed by each party.
8. WAIVER; SUCCESSORS AND ASSIGNS. Any waiver by any party of a breach of
any provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement. This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
permitted assigns. This Agreement shall not be assigned by any party without the
prior written consent of the other parties, which consent shall not be
unreasonably withheld.
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9. NOTICE. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt, to the party to whom it
is to be given at the address of such party set forth at the beginning of this
Agreement (or to such other address as the party shall have furnished in
accordance with the provisions of this Section 9). Notice to the estate of any
party shall be sufficient if addressed to such party as provided in this Section
9. Any notice or other communication given by certified mail shall be deemed
given at the time of certification thereof, except for a notice changing a
party's address which shall be deemed given at the time of receipt thereof.
10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Pennsylvania, without giving effect to conflict of laws.
11. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transaction contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any such provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first written above.
OWNERS: PLANET ENTERTAINMENT
CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxx
----------------------------- ------------------------------
Xxxxxx X. Xxxxxxxxx Name: Xxxxxxx Xxxxxxxxx
Title: Executive VP
/s XXXXXX X. XXXXXXXXX
-----------------------------
Xxxxxx X. Xxxxxxxxx XX XXXXXXX ON STAGE, LTD.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Pres.
-----------------------------
Xxxxxxxxxxx X. Xxxxxxxxx
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