Exhibit 10(b) - First Amendment dated November 2, 2000 to Commercial
Lease Agreement between Registrant and Colorful Avenue Ltd. as landlord
dated September 13, 2000
FIRST AMENDMENT TO
LEASE
This First Amendment to Lease (the "First Amendment") is made and entered
into as of the 2nd day of November, 2000 (the "Effective Date"), by and
between COLORFUL AVENUE, LTD, a Colorado Limited Partnership, having a
business address of 0000 Xxxx Xxxxxxxxx Xxx., # 000, Xxxxxx, Xxxxxxxx
("Landlord") 80227 and CONCEPTS DIRECT, INC., having a business address of
0000 Xxxxxxxx Xxxxxx., Xxxxxxxx, Xxxxxxxx 00000 ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into that certain Commercial Lease
dated September 13, 2000 (the "Lease") for the demised premises containing
approximately 117,182 square feet of building space and generally known as
0000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 and more particularly known
as Xxx 0, Xxxxx 0 Xxxxxxxx Xxxxxx Xxxxxx Xx. 0, Xxxxxx of Weld, State of
Colorado (the "Premises").
WHEREAS, Landlord and Tenant now mutually desire to amend the Lease,
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00), and of the premises and the agreements contained herein,
the receipt and sufficiency of which are hereby expressly acknowledged,
Landlord and Tenant hereby agree as follows:
8. Section 2 of the Lease entitled "Term" shall be deleted in its
entirety and the following substituted in lieu thereof:
"2 TERM. The Term of this Lease shall be for a period of approximately
twenty (20) years. The delivery of possession to the Tenant shall occur on
the date of settlement (i.e. recordation and disbursement date) of that
certain "Contract To Buy And Sell Real Estate (Commercial) (New Loan)"
between Colorful Avenue, Ltd., as Buyer and Concepts Direct, Inc., as Seller
dated September 12, 2000, as amended pursuant to that certain "Agreement to
Amend/Extend Contract" dated September 28, 2000, as further amended pursuant
to that certain "Agreement to Amend/Extend Contract" dated October 31, 2000.
Tenant's responsibility to pay Rent shall commence at 12:01 a.m. on November
2, 2000 and end at 5:00 p.m., Mountain Standard Time (MST) on October 31,
2020 (the "Lease Term"). For any period covered by the terms of this Lease
that is less than one full month, any amounts due and owing by Tenant to
Landlord, including but not limited to Rent, shall be determined by multi-
plying the total monthly amount due by a fraction, the numerator of which
shall be the number of days in the month in which this Lease is in effect,
and the denominator of which shall be the total number of days in that
particular month. Sixty days prior to the expiration of the Lease Term,
Landlord shall be entitled to erect and/or install "For Rent" or "For Sale"
signs upon the Premises.
9. The following language shall be inserted in lieu of Section 5 which
contains the annotation "This paragraph has been intentionally left blank":
5. SECURITY DEPOSIT.
a. During the Lease Term, in order to assure the full and faithful
performance by the Tenant of its obligations under this Lease, Tenant shall
provide the Landlord with a Security Deposit in the amounts equal to or
equivalent to the dollar amounts set forth below and in the form of either
of the following, said form to be determined at Tenant's sole option: (a) a
Letter of Credit or (b) cash in the following amounts:
(i) Lease Term Years One (1) through Five (5) : $1,010,000.00
(ii) Lease Term: Years Six (6) through Twenty (20):
(A) $750,000.00 if Tenant has shown a profit from Core Business
(defined below) of at least $1,500,000.00 for the three
consecutive Lease Term Years Three (3), Four (4) and Five (5);
or (B) $1,010,000.00 if Tenant has not shown a profit from core
business of at least $1,500,000.00 for the three consecutive
Lease Term Years Three (3), Four (4) and Five (5), or (C) if
at any time beginning with the beginning of Lease Term Year
Six (6) and ending at the end of Lease Term Year Twenty (20),
$750,000.00 if Tenant has shown a profit from Core Business of
at least $1,500,000.00 for any three consecutive Lease Term
Years. The term "Lease Term Year" shall refer to any full year
during the Lease Term beginning on November 1 and ending on
October 30. For purposes of this Section 5, "Core Business"
shall mean Tenant's operating income as presented on the
audited financial statements of Tenant or its successors, and
as defined by standard generally accepted accounting principals
as applied in the United States of America.
(iii) Lease Term: Years Eight (8) through Twenty (20):
(A) $600,000.00 if Tenant has shown a profit from Core
Operations of at least $1,500,000.00 for the three consecutive
Lease Term Years Three (3), Four (4) and Five (5) and a profit
from Core Operations of at least $2,000,000.00 for the two
consecutive Lease Term Years Six (6) and Seven (7); or
(B) $750,000.00 if Tenant has shown a profit from Core Business
of at least $1,500,000.00 for the three consecutive Lease Term
Years Three (3), Four (4) and Five (5) and has not shown a
profit from Core Operations of at least $2,000,000.00 for the
two consecutive Lease Term Years Six (6) and Seven (7); or
(C) $1,010,000.00 if Tenant has not shown a profit from core
business of at least $1,500,000.00 for the three consecutive
Lease Term Years Three (3), Four (4) and Five (5); or (D). if
at any time beginning with the beginning of Lease Term Year
Eight (8) and ending at the end of Lease Term Year Twenty (20),
$600,000.00 if Tenant has shown a profit from Core Business of
at least $1,500,000.00 for any three consecutive Lease Term
Years and a profit from Core Business of at least $2,000,000.00
for the following two consecutive Lease Term Years.
b. Landlord and Tenant acknowledge and agree that the foregoing amounts
of the required Security Deposit may change over the course of the Lease Term.
Landlord and Tenant hereby agree to use their best efforts to negotiate in
good faith any changes proposed by the other party in order to reach a
mutually satisfactory agreement as to the amount of the Security Deposit
required by the Landlord.
c. If the Tenant's Security Deposit is reduced is accordance with the
triggering events set forth in Sections 5a(ii) and 5a(iii) above, said
Security Deposit may not be increased by the Landlord during the remainder
of the Lease Term.
d. If the Security Deposit is in the form of cash, and if the Tenant's
Security Deposit is (1) reduced in accordance with the triggering events set
forth in Sections 5a(ii) and 5a(iii), or (2) is replaced with a letter of
credit in accordance with Section 5h below, so long as Tenant is not in
default under the terms of this Lease, Landlord shall return to Tenant,
within ninety (90) business days of receipt of Tenant's written request,
any excess amount of the cash Security Deposit and accrued interest thereon
that Landlord holds (less the Operations Fee [as defined below] due to
Landlord each Lease Term Year).
e. Should Tenant elect to provide a Letter of Credit, the Letter of
Credit shall be subject to the following requirements: The Letter of Credit
must be irrevocable and in writing, issued from a national lending institution
rated "A-" or better by Standards and Poor or Xxxxx'x, or otherwise satis-
factory to Landlord. It must be signed by the issuer, and must provide that,
effective upon the date of issuance of the Letter of Credit, the issuer shall
(upon receipt of written notice signed by Landlord containing information
that Landlord (a) has notified the Tenant in writing of a default by Tenant
under this Lease, that the Tenant has been afforded all applicable notice and
cure periods in connection with such default and that such notice and cure
periods have expired and the Tenant still remains in default, or (b) within
60 days prior to the expiration of such Letter of Credit, has not received
notice from the lending institution that said Letter of Credit is being
automatically renewed or a replacement Letter of Credit is being substituted),
remit whatever amounts are specified in said notice, up to and including the
full face amount of the Letter of Credit. Landlord may charge Tenant a 1%
per year fee based on the face amount of such Letter of Credit as an admin-
istrative expense in connection to holding such Letter of Credit.
f. Should Tenant elect to provide a cash amount for the Security
Deposit, said cash Security Deposit shall be subject to the following
requirements: Any cash Security Deposit supplied to Landlord shall be
interest bearing and Landlord shall invest such Security Deposit prudently
in a reputable government insured financial institution and shall insure that
such Security Deposit earns a commercially reasonable interest rate. Land-
lord shall be entitled to deduct from the amount of interest earned on
Tenant's cash Security Deposit an amount of up to $15,000.00 for each Lease
Term Year, in order to compensate Landlord for Landlord's costs of operating
the Premises ("Operations Fee"). The exact amount of the Operations Fee must
be mutually agreed upon between Landlord and Tenant, in writing, prior to the
expiration of each Lease Term Year. Landlord, within ten (10) business days
of Tenant's written request, shall provide Tenant with a certified statement
showing the amount of interest earned on the cash Security Deposit less the
Operations Fee. During the Lease Term, if the Security Deposit is in the
form of cash, although the Operations Fee shall be considered a part of
Operating Expenses (as defined in Section 4.2 of this Lease), the Operations
Fee shall not be billed to Tenant as Additional Rent but instead, in
accordance with the foregoing, shall be deducted from any interest earned on
Tenant's cash Security Deposit. If the Security Deposit is in the form of a
Letter of Credit, Landlord shall have the right to xxxx the Tenant directly
for the Operations Fee in the same manner as Landlord bills the Tenant for
Additional Rent under this Lease.
g. If in Landlord's reasonable discretion, Tenant is in default under
the terms of this Lease, Landlord shall provide written notice to Tenant and
after the expiration of any applicable notice and cure periods, if Tenant
still remains in default, Landlord may use, apply or retain all or any part
of the cash Security Deposit for the payment of any Rent or any other sum of
money which Tenant is obligated to pay under this Lease but has not paid in
a timely manner in accordance with the terms of this Lease.
h. If Tenant shall fully and faithfully comply with all of the
provisions of this Lease, any cash Security Deposit or any balance thereof
or any portion rightfully due to Tenant and any accrued interest (less the
Operations Fee due to Landlord each Lease Term Year) thereon shall be
returned to Tenant within ninety (90) business days after the end of Lease
Term.
i. Tenant shall have the right at any time during the Lease Term, upon
ninety (90) days written notice to Landlord, to substitute the Security
Deposit with either cash or a letter of credit as the case may be.
j. By execution of this First Amendment, Landlord acknowledges receipt
of the Security Deposit from the Tenant.
10. The following language is added as Section 26.3 of the Lease.
"26.3 NOTICE RECEIPT. Any written notice due by either party under
this Lease will be deemed received by the recipient (1) once the
sender is in possession of a receipt signed by the recipient that
such notice has been hand delivered to recipient; (2) once the
sender of the notice receives evidence in the form of a signature
receipt signed by the recipient that such notice has been overnight
couriered for delivery the next day, (3) once delivered via
registered or certified mail, postage prepaid; or (4) once the
sender has delivered a facsimile transmission if a confirmation of
the transmission thereof is maintained."
11. Landlord and Tenant acknowledge that as of the Effective Date of the
Lease (September 13, 2000), the general partner of the Landlord, Colorful
Avenue, Ltd. was HWS Associates, LLC, a Colorado limited liability company.
Landlord and Tenant acknowledge that as of the Effective Date of this First
Amendment, the general partner of the Landlord, Colorful Avenue, Ltd. is HWS
Colorful, LLC, a Colorado limited liability company.
12. All of the covenants of the Lease, as amended hereby, shall be
binding upon and shall inure to the benefit of the parties hereto, their
respective heirs, representatives, successors, and assigns, to the extent
that any such transfer of interest may be allowed under the terms of the
Lease.
13. Unless otherwise indicated herein, all initial-capped terms used
herein shall have the same meanings ascribed to them in the Lease.
14. The Lease, as amended hereby, shall continue in full force and
effect under the terms, provisions and conditions thereof. All other terms,
covenants and conditions of the Lease not herein expressly modified are
hereby confirmed and ratified and remain in full force and effect.
15. This First Amendment shall not be effective and binding unless and
until fully executed by both Landlord and Tenant below.
IN WITNESS WHEREOF, the parties have caused this First Amendment to be
executed as of the day and year first above written.
LANDLORD:
COLORFUL AVENUE, LTD.,
a Colorado limited partnership,
By: HWS Colorful, LLC,
a Colorado limited liability company
Its General Partner
By: _________________________
Xxxx Xxxxxxx
Its: Member
TENANT:
CONCEPTS DIRECT, INC.,
a Delaware corporation
By: ________________________
Xxxxx X. Xxxxxx
Chief Financial Officer
