Current Report Filing (8-k)

Share Name	Share Symbol	Market	Type
Pulse Evolution Corporation (CE)	USOTC:PLFX	OTCMarkets	Common Stock

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 30, 2014

PULSE EVOLUTION CORPORATION

(Exact name of registrant as specified in its charter)

Nevada		333-190431		47-1336692
(State or other jurisdiction of incorporation)		(Commission File No.)		(IRS Employer Identification No.)

10521 SW Village Center Drive, Suite 201, Port St. Lucie, FL		34987
(Address of principal executive offices)		(Zip Code)

(772) 345-4100

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Forward-Looking Statements

This report contains forward-looking statements and information so that investors can better understand our future prospects and make informed investment decisions. This report and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results. Factors that could cause our actual results of operations and financial condition to differ materially are discussed in greater detail under Risk Factors section of this report.

We caution that the factors described herein and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Item 2.01 - Completion of Acquisition or Disposition of Assets.

The Share Exchange Agreement

As previously disclosed, on September 26, 2014, we entered into a share exchange agreement (the “Share Exchange Agreement”) with Pulse Entertainment and its shareholders, some of whom are officers and directors of our company, pursuant to which we agreed to issue up to 58,362,708 shares of our unregistered common stock, $0.001 par value (the “Common Stock”), net of certain share cancellations, to the shareholders of Pulse Entertainment holding 21,535,252 shares of its issued and outstanding common stock (the “Share Exchange”), such shares representing 100% of the issued and outstanding common stock of Pulse Entertainment. Upon completion of the closing, Pulse Entertainment will become a subsidiary of our company.

On September 30, 2014, we completed the initial closing under the Share Exchange Agreement pursuant to which we agreed to issue 35,827,309 shares of our unregistered Common Stock, net of cancellations, to the shareholders of Pulse Entertainment in exchange for 17,466,383 shares of its common stock. As part of the Share Exchange, certain of our shareholders who are also shareholders of Pulse Entertainment agreed to cancel 60,910,113 shares of our common stock issuable to them in connection with the Share Exchange. Upon completion of the initial closing, Pulse Entertainment became a subsidiary of our company in which we own an 81.11% interest. We plan to complete the acquisition of an additional 4,068,869 shares of Pulse Entertainment common stock pursuant to the Share Exchange Agreement by issuing 22,535,399 shares of our common stock no later than October 31, 2014. Upon completion of this part of the acquisition, Pulse Entertainment will become our wholly owned subsidiary and our pro-forma shares of Common Stock outstanding giving effect to the acquisition of Pulse Entertainment is expected to be approximately 140,194,115.

Pulse Entertainment is a creatively driven, digital production and intellectual property company established to produce specialized, high-impact applications of computer-generated human likeness for utilization in entertainment, life sciences, education and telecommunication. See “Business – Description of Pulse Entertainment Business.” Following the closing of the Share Exchange Agreement, we intend to continue Pulse Entertainment’s historical businesses and proposed businesses and have abandoned our prior business plan to develop a mobile software food recipe app.

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Accounting Treatment of the Merger

For financial reporting purposes, the Share Exchange represents a “reverse merger” rather than a business combination and Pulse Entertainment is deemed to be the accounting acquirer in the transaction. The Share Exchange is being accounted for as a reverse-merger and recapitalization. Pulse Entertainment is the acquirer for financial reporting purposes and Pulse Evolution Corporation is the acquired company. Consequently, the assets and liabilities and the operations that will be reflected in the historical financial statements prior to the Share Exchange will be those of Pulse Entertainment and will be recorded at the historical cost basis of Pulse Entertainment, and the consolidated financial statements after completion of the Share Exchange will include the assets and liabilities of our company and Pulse Entertainment, and the historical operations of Pulse Entertainment and the combined operations with our company from the initial closing date under the Share Exchange Agreement.

The foregoing description of the Share Exchange Agreement does not purport to be complete and is qualified in its entirety by the Share Exchange Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 which is incorporated herein by reference.

FORM 10 INFORMATION

Prior to the Share Exchange, we were a public reporting “shell company,” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder (“Exchange Act”). Accordingly, pursuant to the requirements of Item 2.01(f) of Form 8-K, set forth below is the information that would be required if we were filing a general form for registration of securities on Form 10 under the Exchange Act for our common stock, which is the only class of our securities subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act upon consummation of the Share Exchange.

BUSINESS

Description of Pulse Entertainment Business

Pulse Entertainment is a creatively driven, digital production and intellectual property company, established to produce specialized, high-impact applications of computer-generated human likeness for utilization in entertainment, life sciences, education and telecommunication. Founded by leading producers of photorealistic digital humans, Pulse Entertainment develops “virtual humans” for live and holographic concerts, advertising, feature films, branded content, medical applications and training. Pulse Entertainment’s business model is focused on participation in intellectual property through the development, production and ownership of entertainment properties which will feature globally recognized animated virtual performers and through multi-year revenue-share relationships with living celebrities and late celebrity estates. In late 2013, Pulse Entertainment entered into a multi-year agreement with the estate of Michael Jackson to produce a photo-realistic digital likeness of the late celebrity and to participate in a share of revenues that could be realized through performances of the ‘Virtual Michael Jackson’ in diverse entertainment and media applications. Pulse Entertainment plans to continue this aspect of its business with production of a photo-realistic digital likeness of the late Elvis Presley under the terms of an August 2014 agreement between Pulse Evolution and the principal owner of rights related to the estate of the late celebrity Elvis Presley. See “Business - Pulse Evolution’s Corporate History - Elvis Presley Visual Rights Partner Agreement.”

Pulse Entertainment produced a computer-generated and animated human likeness of the late popular entertainer Michael Jackson that appeared in a live performance at the Billboard Music Awards on May 18, 2014. The virtual performance of Michael contributed to the award show’s highest television viewership in 13 years and an 11-year high in advertising in the demographic of viewers age 18 to 49. This production reached approximately 11 million television viewers during the initial ABC network broadcast, followed by more than 51 million online views through YouTube and Vevo and generated more than 2,400 news articles and an estimated 98 billion internet impressions for the Michael Jackson hologram and more than 300 million internet impressions estimated for Pulse Entertainment and members of its management.

Pulse Entertainment’s management team includes pioneers in the creation and presentation of advanced computer generated imagery, photo-realistic human animation, and holographic virtual performances. They are also accomplished filmmakers and storytellers, who have produced and exploited entertainment media consumed by audiences around the world for more than 20 years. Their works have been recognized with numerous film industry awards and nominations, including Academy Awards® for Best Visual Effects issued by the Academy of Motion Picture Arts and Sciences and similar awards issued by the Visual Effects Society. Pulse Entertainment’s executives, visual effects supervisors and digital artists have contributed materially to the visual imagery of more than 50 major motion pictures and film properties including such notable films as Lord of the Rings, Transformers, Pirates of the Caribbean, Tron: Legacy, and The Curious Case of Benjamin Button.

Origins of the Virtual Performance Industry

The application of high-end visual effects and animation technology has, historically, been limited to feature films and television programming. The market for these services have been highly competitive domestically and, more importantly, internationally. Profit margins within this industry have been severely challenged by offshore competition and the interests of the most talented and accomplished visual effects artists, many of whom are in North America, have been adversely impacted by the lack of profitable business models that rely on such creativity and technology.

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In 2012, a leading visual effects company then under the leadership of Mr. Textor produced a computer-generated digital likeness of the late rapper Tupac Shakur who was projected onstage, performing at the Coachella Valley Music Festival, in a holographic-like manner, using a century old projection technique known as a ‘Pepper’s Ghost’ illusion. Following the live production, millions of viewers around the world witnessed this unique performance signaling the emergence of a new entertainment medium. Referred to by many as the ‘virtual performance’ industry, the creation of computer generated digital likenesses of living and late celebrities represents significant new revenue opportunities for celebrities, celebrity estates and related owners of intellectual property. Importantly, the industry also represents an attractive opportunity to maximize the value of North American leadership in visual effects creativity and technology through business models that extend beyond legacy short-term thin-margin services models, aligning instead with long-term intellectual property participation utilizing this new medium. While there have been a number of low visibility virtual performance productions, members of Pulse Entertainment’s team have been responsible for two globally watched virtual performances that have defined an emerging form of entertainment we call the Virtual Performance Industry.

Pulse Entertainment intends to further develop this emerging, globally relevant virtual performance industry in part because of Pulse Entertainment’s founders’ leadership in ground-breaking performances of photo-realistic digital humans in films, such as Tron: Legacy and The Curious Case of Benjamin Button, and in Live Music concerts, such as the 2012 Coachella Valley Music Festival, which featured the digital resurrection and holographic performance of late rapper Tupac Shakur and Pulse Entertainment’s digital resurrection and holographic performance of the late pop performer Michael Jackson at the 2014 Billboard Music Awards ceremony in May 2014.

The Business

Pulse Entertainment plans to leverage the expertise of its management and their relationships to develop, produce and exploit entertainment media in three distinct and complementary marketing groups: Pulse Productions, The Head Shop, and On-Point. Each group discussed below will focus on distinct opportunities that represent entertainment industry market areas that Pulse Entertainment believes offers the greatest opportunity for growth:

PULSE PRODUCTIONS – IP Investments – will become the investment and services marketing group that focuses on the production of high quality photo-realistic, digital likeness performances. Pulse Entertainment will seek to represent the world’s Top Tier celebrities and late celebrities in live holographic performances in venues around the world, and then seek to exploit the resulting production in all media and markets worldwide. Pulse Entertainment expects to derive revenues within this group from two key activities: 1) the production of computer-generated celebrity productions (we refer to this as “CG Celebrity Builds,”) and 2) the presentation of virtual celebrities on the variety of screens and stages such as live concerts, Broadway-style theatrical productions, television commercials, political events and advertising, short-form content and interactive internet and mobile applications (we refer to the expected revenues from this aspect of Pulse Entertainment’s business as “Usage Fees and Ticket Sales”). Sources of revenues are expected to be generated by 1) the creative and technical production of digital humans, 2) a share of box office receipts associated with the performances, and 3) royalties and production revenues from the exploitation of digital likeness assets in a broad range of media, including television, internet and mobile entertainment applications. While Pulse Entertainment intends to fund a portion of its production costs from internal sources, Pulse Entertainment anticipates that a large portion of these costs will be funded by third parties, including affiliated production companies, associated celebrity estates, corporate sponsors and other entertainment finance vehicles. Pulse Entertainment does not, however, currently have any such funding or financing arrangements in place.

In a limited number of situations, relating to the most globally recognized and demanded Top Tier celebrities, Pulse Entertainment will seek to partner with the associated estates, invest in the development of the digital likeness assets and secure either digital asset ownership or long-term revenue sharing agreements.

Pulse Entertainment has completed its first production in this group with the highly acclaimed digital resurrection and holographic performance of the late pop performer Michael Jackson at the 2014 Billboard Music Awards ceremony in May 2014.

THE HEAD SHOP – Computer Graphic (CG) Services – a services-only marketing group that intends to focus on the production of photo-realistic, digital likeness performers, representing high impact celebrities and world figures whose associated celebrity estates can be enhanced by digital likeness appearances. In addition to celebrity performers, Pulse Entertainment intends to offer to create animated human heads, fictional or otherwise, for use in feature films, commercials, branded entertainment and theme parks that require high visual fidelity and realistic digital head or human animation imagery. Sources of revenue are expected from 1) the technical production of digital humans as requested by prospective client feature film studios, celebrity estates, third-party production companies and advertising agencies, and 2) the occasional participation in box office receipts associated with the performances of digital celebrities who become Pulse Entertainment’s clients.

ON-POINT – Branded Entertainment – a marketing group that intends to resell or license virtual performance productions that acquires the rights to and digital human production capabilities to top corporations and advertising agencies, enabling brands to exploit photo-realistic, digital likeness celebrities. Prospective customers are expected to include major studios and mini-studios, television networks, wireless providers, and media agencies representing national and international brands, high-profile celebrities and the managers of their estates.

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Revenue from this group is expected from sponsorship fees, digital likeness usage fees and co-production contributions from corporate clients and advertising agencies that stand to benefit from the use of Pulse Entertainment’s prospective digital celebrities in television commercials, live concerts and other forms of entertainment media that would be a part of an advertisers overall branding strategy.

Applications of ‘Virtual Performers’

After the appearance of the virtual Tupac Shakur at the Coachella Valley Music Festival in 2012, Pulse Entertainment’s founders saw the opportunities for similar live ‘holographic’ concert performances of recognizable late celebrities that cater to their enduring fan base. The overwhelming audience reception and reviews of this performance lead us to produce the late Michael Jackson performance at the 2014 Billboard Music Awards. Celebrity estates and creative producers who engage us to produce holographic celebrity performances are now able to visualize the opportunity to create a new revenue stream from the digital re-creation of their intellectual property. Furthermore, Pulse Entertainment is able to digitally re-create all new performances in any entertainment or telecommunications medium. On stage, in film or in digital media, the creative discussion of virtual performance has now expanded to create revenue opportunities across a broad range of applications. In addition to Pulse Entertainment’s continuing relationship with the estate of Michael Jackson, Pulse Entertainment is in discussions with leading celebrity estates and interested customers to use computer generated human characters in applications such as live music concerts, Broadway-style theatrical productions, celebrity-focused tourist experiences, mobile device entertainment and commercial advertising.

Prospective Customers

Prospective customers of computer-generated virtual performers span the entirety of the coveted “four-quadrant movie” audience – that is, they are male and female, over and under 25 years of age. While younger audiences are proven early adopters of emerging entertainment and technology, virtual performers also provide opportunities for older audiences to address their pent-up demand for entertainers who are now deceased. For this reason, Pulse Entertainment’s initial focus will be to create compelling content for audiences around the globe, regardless of their age or the entertainment medium.

Now, more than ever, the creative producer can use an ever expanding set of technology tools to create entertaining shows and performances that, in a world of digital distribution, has the potential to reach any corner in the world with the push of a button.

Pulse Entertainment’s management team is forming relationships with prospective customers, and will continue to leverage its experience and network in the entertainment industry to build a clientele that includes content companies like Warner Brothers Studio, live performance companies like Caesars Entertainment, talent agencies like the Creative Arts Agency, and media agencies like Media Vest USA.

Financing and Co-Production Arrangements

Pulse Entertainment expects to undertake the initial stages of the human animation and holographic-like production process ourselves. At some point prior to or during the initial portions of the actual production stage of a digital likeness performance production, Pulse Entertainment plans to enter into a co-production arrangement with third-party producer partners for the remaining portions of the production, which Pulse Entertainment expects will provide for shared responsibility for financing of production costs, co-ownership and co-branding of the digital likeness performances produced, and an allocation of the profits of each production and any related merchandise and other ancillary products. Other than Pulse Entertainment’s agreement with the estate of Michael Jackson, Pulse Entertainment has not yet entered into any co-production arrangements with respect to any of its current or prospective digital likeness performance projects. In addition, Pulse Entertainment will look to take advantage of opportunities to limit its financial exposure to any individual project by utilizing third party sources of capital to finance a substantial portion of the costs of such productions. Such financing sources may include, among others, motion picture studios, private domestic and foreign capital partners, institutional lenders, production subsidies, incentives and credits and other industry-specific sources of capital.

Work and Accolades of Pulse Entertainment’s Team

Pulse Entertainment’s team represents a combination of artists and executives who have come together to form a unique company that specializes in character creation and human animation. Many of Pulse Entertainment’s employees have worked, often in leadership roles, with talented artists, at accomplished companies, delivering visually stunning characters and visual effects sequences. Pulse Entertainment’s creative leadership team is anchored by individuals who are recognized within the entertainment industry for their leadership of large-scale feature films and for the development of memorable, award-winning animated characters, resulting in numerous industry awards for creative and technical excellence, including one Academy Award® nomination for Best Visual Effects in a feature film, The Chronicles of Narnia: The Lion, the Witch and the Wardrobe (2005);

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Pulse Entertainment’s Executive Chairman, John Textor, has significant experience in the delivery of high-end visual effects and character animation, having served as both Chairman and Chief Executive Officer of a leading visual effects company which, during his tenure, produced visual effects and character animation for 25 major feature films and numerous creative projects, resulting in the multiple industry awards, recognizing the company and, principally, its artists, including:

	●	Academy Award® for Best Visual Effects in a feature film, The Curious Case of Benjamin Button (2009);

	●	BAFTA Award (British Academy Awards) for Best Visual Effects in a feature film, The Curious Case of Benjamin Button (2009);

	●	Titanium Lion Award from the Cannes Lions International Festival of Creativity for “Virtual 2Pac” (2012), the virtual performance of a virtual Tupac Shakur at the Coachella Valley Music Festival;

	●	Two Academy Award® nominations for Best Visual Effects in a feature film, Real Steel (2012) and Transformers: Dark of the Moon (2012)

Collectively, Pulse Entertainment’s executives, visual effects supervisors and digital artists have contributed materially to numerous large-scale feature films, including 2012, 47 Ronin, The A-Team, Back to the Future Part II, Batman Forever, Blades of Glory, The Chronicles of Narnia: The Lion, the Witch and the Wardrobe, The Curious Case of Benjamin Button, Ender’s Game, Final Fantasy: The Spirits Within, Flags of Our Fathers, Forrest Gump, G.I. Joe: The Rise of the Cobra, Girl with the Dragon Tattoo, The Golden Compass, Green Lantern, Harry Potter and the Sorcerer’s Stone, The Hitcher, Hulk, I am Legend, I Robot, Jack the Giant Killer, Jurassic Park, Letters from Iwo Jima, The Lord of the Rings: Two Towers, The Matrix Reloaded, Meet the Robinsons, Men in Black II, The Mummy: Tomb of the Dragon, My Super Ex-Girlfriend, The Nativity Story, Pearl Harbor, Percy Jackson & the Olympians: The Lightning Thief, Pirates of the Caribbean: At World’s End, Pirates of the Caribbean: Dean Man’s Chest, The Polar Express, Rango, Real Steel, Rock of Ages, The Seeker: The Dark is Rising, The Smurfs, Speed Racer, Star Trek, Star Wars: Episode III - Revenge of the Sith, Terminator 2: Judgment Day, The Texas Chainsaw Massacre: The Beginning, Thor, Transformers, Transformers: Dark of the Moon, Transformers: Revenge of the Fallen, TRON: Legacy, War of the Worlds, The Watch, We Own the Night, X-Men 2, X-Men: First Class, and Zodiac.

Live Virtual Performances of Animated Human Characters

	●	A selection of significant live virtual performances members of Pulse Entertainment’s team have taken part in include: Virtual 2Pac - a digital resurrection and holograph-like performance of the late rapper Tupac Shakur in front of a live audience at the Coachella Valley Music Festival in 2012. The event was seen by more than 100 million viewers over YouTube in the weeks to follow, inspiring a dramatic rise in Tupac music downloads, the re-appearance of Tupac in Billboard’s Top Album charts and demand across the worldwide press for the digital return of many other late celebrities;

	●	The Michael Jackson Experience at the Billboard Music Awards - a digital resurrection of Michael Jackson, performing a new posthumously released song, ‘Slave to the Rhythm’, along with roughly two dozen virtual projection dancers, live dancers and live band members, in a large-scale holographic-like performance in front of a live audience at the globally broadcast 2014 Billboard Music Awards show. The event was seen by more than 11 million television viewers, 40 million viewers over YouTube and Vevo, resulting in 2,400 news articles and roughly 98 billion internet impressions.

Keys to Success – Pulse Production Segment

Pulse Entertainment has positioned itself to deliver the most visually stunning, globally recognized human animation and holographic performances in the entertainment industry, in essence, benefitting from the revolution in virtual performance business space that its founders helped start. The following are some of the key reasons:

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Global Interest in a New Form of Entertainment: Inspired by the ground-breaking performances of photo-realistic digital humans in films, such as Tron: Legacy and The Curious Case of Benjamin Button, and in Live Music concerts, such as the 2012 Coachella Valley Music Festival which featured the return of late rapper Tupac Shakur as a ‘holographic’ performer and the 2014 Billboard Music Awards ceremony which featured the return of the late pop star Michael Jackson, audiences and venue operators (even politicians) around the globe have made clear their interest in the digital resurrection of late celebrities and people of historical significance;

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	●	Expected Demand is Far in Excess of Industry Capacity: The demand for Pulse Entertainment’s human animation and holographic projection platform is expected to be strong in every major country around the world. Managers of celebrity estates have shown interest in reviving properties, boosting licensing fees and developing all-new sources of revenue. The emergence of digital resurrection and photo-realistic human animation are expected to lead to demand within the world of politics, theme parks, professional sports, religion and education. There are only a limited number of people and companies in the world who have a proven ability to produce a photo-realistic, believable digital human. Pulse Entertainment believes that there is not enough production capability and capacity to meet demand for the foreseeable future;

	●	Globally Recognized Leaders and Innovators: Pulse Entertainment’s founders are recognized for their leadership of ground-breaking human animation and holographic performance projects, making Pulse Entertainment a top choice of prospective customers and partners who will want a company whose proven production capabilities in human animation are of the highest quality in the world;

	●	Strategic Focus on Rights Acquisition: Pulse Entertainment’s key management’s reputation for leadership in human animation is expected position us to be a solution of choice for the world’s leading celebrity properties in the early stages of this new industry. It will be Pulse Entertainment’s focus to leverage Pulse Entertainment’s early leadership position effectively to secure long-term partnerships, production joint ventures and ‘digital likeness’ rights with Pulse Entertainment’s celebrity property owners as a strategy to establish Pulse Entertainment as a long-term leader in the industry as technologies evolve and competition matures.

Keys to Success – Human Animation Group

Pulse Entertainment believes that it is uniquely qualified to compete successfully in the human animation and head-replacement segment, the large number of opportunities that do not require live ‘holographic’ projection, due to the following reasons:

	●	One of a Kind Company: Pulse Entertainment’s principals believe Pulse Entertainment is the only company in the entertainment visual effects or simulation industries exclusively focused on photo-realistic human animation, and ‘head replacement’, thereby positioning ourselves as an obvious choice for a large market of customers and partners that are accustomed to awarding multi-million dollar contracts for human animation projects. Specialization in this industry is expected to provide early adopter leadership positioning, and with it expected high margins and meaningful research and development benefits, for the foreseeable future;

	●	‘New Real Estate’ in the exploitation of likeness rights: While the value of likeness rights is well-established, the concept of ‘digital likeness’ or ‘virtual likeness’ has only recently been discovered by a large market of celebrity properties that can use Pulse Entertainment’s innovative methodology to transform those rights for future exploitation. Simply stated, every living celebrity, and every celebrity estate, should be as concerned with their likeness in polygons and computer generated imagery as they are in photographic stills and in film. Pulse Entertainment intends to develop a business model as the developer and clearinghouse, with royalty participation, for the largest possible inventory of celebrity digital likeness assets;

	●	Opportunity for Multiple Streams of Revenue as re-usable digital humans can be licensed to applications in concerts, theatre, film and television, advertising, video games, education and simulation (military and surgical).

Producer Participation and Residuals

Through the Pulse Productions group, Pulse Entertainment is actively engaged in discussions with venue operators, concert promoters, Broadway theatrical producers, celebrity performers and celebrity estates. In addition, Pulse Entertainment is in the early stages of show development, to establish Pulse Entertainment as a producer and owner of diverse entertainment properties. While this has long been a difficult challenge for pure services companies in the visual effects arena, Pulse Entertainment will seek to leverage important core competencies to achieve producer or ownership participation.

Roles have been Reversed: Producers in the matured film industry have a clear idea of what they want and they often look to visual effects companies for little more than a straightforward execution of their producer/director vision. In the emerging world of virtual performances, producers are just learning what is possible and they are looking to us, not just for execution, but for creative vision. There is always a moment when a ‘show is born’ and, historically, this did not happen in the offices of the post-production vendors. Now, because this emerging landscape of virtual performances has been conceived, developed and implemented first within the visual effects environment (under the leadership of key management of Pulse Entertainment), the visual effects ‘vendor’ has now become the ‘producer’.

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Technology drives the Performance: The ‘producer’ role of our company is expected to become even more established as a production moves from creative development to execution, principally because what once was a human acting performance, directed by a filmmaker or theatrical director, has now become human animation that is the product of a proprietary technology pipeline, visual effects supervision and a team of digital artists.

‘What they Don’t Know’ – Realistic human animation is truly among the most difficult technical challenges in all of entertainment. While filmmakers and theatrical producers may have developed an understanding of visual effects for feature films, only a limited number of people who possess the necessary skills to execute this kind of work and, importantly, there are even fewer that understand the processes and the costs involved. Quite a departure from the overall visual effects industry, this gives us the opportunity to establish pricing and structure in a vacuum, while demand far exceeds industry capacity. Ownership and producer participation are, therefore, achievable even in connection with the most high-profile celebrity properties.

Based on these factors, Pulse Entertainment believes it is better positioned to become a producer and retain an ownership participation interest in the virtual performance productions it creates for its clients.

Intellectual Property

Pulse Entertainment also relies on a combination of copyright and trade secret laws in the United States and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our trade secrets, proprietary methodologies and our brand. Pulse Entertainment also enters into confidentiality and invention assignment agreements with our employees and consultants and confidentiality agreements with other third parties and it rigorously control access to our work and methods.

Despite our efforts, the steps Pulse Entertainment has taken to protect its proprietary rights may not be adequate to preclude misappropriation of its proprietary information or infringement of its intellectual property rights, and its ability to police such misappropriation or infringement is uncertain, particularly in countries outside of the United States.

Marketing Strategy to Secure Revenues and Co-Productions

Pulse Evolution intends to achieve sales growth with lower marketing expense by way of two distinct advantages, the uniqueness of our offerings as pioneers of a significant emerging industry and the close relationships, forged over many years, with the small number of large studios, important venues and globally recognized late celebrities that have dominated the entertainment industry.

Services. Marketing for our services will include:

	●	Direct telephone outreach to a targeted group of large studios that have a high level of comfort with our principals; and

	●	Direct telephone outreach to a targeted group of leading producers and directors that have a high level of comfort with our principals.

Productions. Marketing for our production will include:

	●	Align with the most important venue owners and operators in the leading performance markets around the globe, to assure potential production partners and celebrities that Pulse Entertainment offers unmatched access to the largest audiences

	●	Actively promote Pulse Entertainment’s ability to attract the leading talent in facial animation, head replacement and overall human effects, as necessary to convince celebrities and celebrity estates of superior quality in digital likeness

	●	Communicate all of the above through consistent, high-volume public relations efforts to fully establish and maintain Pulse Entertainment’s reputation as pioneer and market leader in the global press

	●	Immediate, and on-going, outreach to the agents and managers of leading celebrity estates, asserting the above, to assert that the company is the obvious (if not the only) choice as a partner in the exploitation of the new industry of virtual performance and digital resurrection

	●	Leverage the success from early celebrity appearances to catalyze tremendous demand from venues seeking this new form of entertainment.

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Intellectual Property

Pulse Entertainment also plans to promote itself as the ideal partner for celebrity estates and owners of likeness rights by focusing on the following strategies to achieve ownership of intellectual property or long-term license rights related to music and digital likeness:

	●	Advancement of Legal Standards: Pulse Entertainment plans to continue working with entertainment counsel to establish the standards, legal definitions and preferred language relating to ‘Digital Likeness Rights’, a concept that our principals have introduced into an industry wide discussion as a result of their pioneering leadership in virtual performances. The advancement of this topic not only positions the company as a market leader in a new form of entertainment, but the creation of new ‘rights real estate’ which Pulse Entertainment believes will enable the company to secure multiple long-term digital likeness licenses (with leading celebrity estates) well before future competitors have even focused on the existence of such rights.

	●	Actionable Production Proposals: Communication with managers and agents regarding specific virtual performance ideas (concerts, shows, etc.) as a way to accelerate the discussion of rights and the successful licensing of such rights to the company. In short, celebrity estates want royalty revenues from these break-through new performances and the company is one of the only options they have to move forward. Pulse Entertainment believes that this position can be leveraged to secure long-term digital likeness rights of the major celebrity properties before competitors enter the field.

	●	Offer to Invest: As it is clear that most celebrity estates are interested in royalty inflows, Pulse Entertainment will offer to invest in the construction of 3D models and the assets supportive of digital likeness as a means to achieve long-term license rights. Pulse Entertainment believes there are multiple sources of capital, possibly a company affiliated side fund that will help to develop these assets.

Pulse Entertainment’s intellectual property strategies will be to obtain digital likeness rights for the leading celebrity estates prior to its competitors who are not prepared to enter the market. Most managers, agents and attorneys for celebrity estates have not thought deeply and specifically about this new category of rights exploitation. Pulse Entertainment is generating the interest celebrity managers, agents and attorneys who are not aware of this new category of rights exploitation that have the potential for new revenue streams. Pulse Entertainment believes that securing these intellectual property rights early on will give it a competitive advantage in the market.

Competition

Pulse Entertainment has positioned itself as a producer of high-impact applications of computer-generated human likeness for utilization in entertainment, life sciences, education and telecommunication. Pulse Entertainment’s competition in the general visual effects services market includes Industrial Light and Magic (purchased by Disney), Sony Pictures Imageworks Inc., Weta Digital Ltd., Rhythm & Hues Inc. and Framestore CFC, as well as many smaller firms that specialize in visual effects. Many of these producers are larger than Pulse Entertainment is and have greater financial resources than Pulse Entertainment. Pulse Entertainment believes it can compete effectively with its competitors focusing on highly specialized and complex human animation that continues to be performed by only a few competitors and is rewarded by healthy profit margins. There is no assurance, however, that Pulse Entertainment’s ability to market its productions and services successfully will not be impacted by competition that now exists or may later develop.

Employees

As of September 30, 2014, Pulse Entertainment employed 40 full and part-time employees. We believe that our employee and labor relations are good. We are currently not a party to any collective bargaining agreements.

Property

Our corporate headquarters are located at 10521 SW Village Center Drive, Suite 201, Port St. Lucie, Florida where we occupy approximately 7,200 square feet pursuant to a lease that expires in February 2015. We have an option to extend this lease for a one year period.

Government Regulation

Pulse Entertainment is not currently subject to direct federal, state or local regulations, other than regulations applicable to businesses generally.

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Pulse Evolution’s Corporate History

Pulse Evolution Corporation was incorporated on May 31, 2013 under the laws of the State of Nevada under the name QurApps, Inc. We changed our name to Pulse Evolution Corporation effective May 8, 2014 to better reflect our plans to produce specialized, high-impact applications of computer-generated human likeness for utilization in entertainment, life sciences, education and telecommunication.

On May 31, 2013 (inception) the Company issued 6,000,000 shares of common stock to Alon Nigri our former Chief Executive Officer and former sole director for cash of $18,000.

During the month of February 2014, we sold 1,380,004 shares of our common stock at $0.03 per share to various investors for cash of $42,600 pursuant to our Registration Statement on Form S-1 declared effective by the SEC on October 7, 2013.

On May 15, 2014, Alon Nigri, our controlling stockholder at the time, former Chief Executive Officer and former sole director (the “Seller”), entered into and closed on a Share Purchase Agreement (the “Agreement”) with, Tradition Studios IP Acquisition LLC, (Alternative) 2 Holding AG, and Scenic Loop Holding, LLC (each a “Purchaser” and collectively, the “Purchasers”) whereby the Purchasers purchased from the Seller a total of 5,361,260 shares of our common stock for an aggregate of $107,225, representing approximately 80.68% of our issued and outstanding shares of common stock. The Purchasers own or control as a group, Pulse Entertainment.

On May 16, 2014, we signed a letter of intent to exchange at least a majority of our unissued shares of common stock for 100% of the outstanding common stock of Pulse Entertainment, a related party.

Effective on June 23, 2014, the Company amended and restated its articles of incorporation filed with the Secretary of State of the State of Nevada in order to effectuate an increase in the number of authorized shares of common stock, par value $0.001 per share, from 75,000,000 to 300,000,000, increase the authorized blank check preferred stock to 100,000,000 shares and effectuate a 1 for 10 forward stock split of our issued and outstanding common stock (the “Forward Stock Split”). As a result of the Forward Stock Split, every 1 share of our pre-Forward Split common stock was increased and reclassified into 10 shares of our common stock. All references to shares of our common stock in this report on Form 10-K refers to the number of shares of common stock after giving effect to the Forward Stock Split (unless otherwise indicated).

Beginning on July 15, 2014, and continuing through September 26, 2014, we entered into securities purchase agreements (the “Securities Purchase Agreements”) with six investors who are unrelated parties to us whereby they agreed to purchase an aggregate of 4,855,000 shares of our Common Stock at prices ranging from $0.40 per share to $1.00 per share, for a total purchase price of $2,225,000. The Securities Purchase Agreements provide piggyback registration rights for the Common Stock acquired by the investors in the event that we register any of our Common Stock under the Securities Act of 1933, as amended (the “Securities Act”) for sale to the public for cash in an underwritten offering, if the applicable registration form being used by us will permit such registration. We are not required to register the Common Stock if registration is effected by us on behalf of another shareholder that is exercising registration rights that prohibit registration of other securities or the Common Stock has already been registered.

Elvis Presley Visual Rights Partner Agreement. Under the terms of the partner agreement (the “Partner Agreement”) we entered into with ABG EPE IP, LLC (“ABG”) effective as of August 1, 2014, we agreed to develop for ABG entertainment projects (the “Project” or “Projects”) to utilize a realistic computer-generated image of Elvis Presley (“Virtual Elvis”). The likeness will be used to create entertainment and branding revenue opportunities for us, generated from holographic performances in live shows and commercials. ABG holds the likeness, appearance, and publicity rights of Elvis Presley (“IP Rights”). Under the terms of the Partner Agreement, ABG has granted us exclusive rights to develop Projects, during the first nine months of the agreement, whereby we have agreed to create and make presentations to third parties (the “Target” or “Targets”) regarding the commercial and live use of the Projects including rights to license the IP Rights from ABG in connection with such use and enter into development agreements with us for the production and financing of the Projects.

Under the terms of the Partner Agreement, ABG has granted us a limited and nonexclusive worldwide license to the IP Rights, to use, copy, modify, and create the Projects (the “Company License Rights”). We will retain ownership over the technology, materials, and media used in the performance of the Projects, which is separable from the IP Rights (“Company Materials”). ABG may use the Company Materials on a perpetual, irrevocable, assignable, sub-licensable worldwide basis if ABG pays us certain royalties. ABG has the right to approve all elements of the Virtual Elvis Projects we develop including any advertising elements which we are required to submit to them for approval. We agreed to pay an upfront royalty to ABG and certain minimum annual royalties for each year during the term of the Partner Agreement based on revenues derived from live and non-live events from Virtual Elvis Projects. We are entitled to an IP Royalty from ABG based on revenues generated from live and non-live events produced under the agreements with Targets. In addition, we agreed to pay ABG a royalty for any transactions with a Target based on revenues.

On September 26, 2014, we entered into a share exchange agreement (the “Share Exchange Agreement”) with Pulse Entertainment shareholders, some of whom are officers and directors of our company, pursuant to which we agreed to issue up to 58,362,708 shares of our Common Stock, net of certain share cancellations, to the shareholders of Pulse Entertainment holding 21,535,252 shares of its issued and outstanding common stock, such shares representing 100% of the issued and outstanding common stock of Pulse Entertainment. The closing date must occur on or before October 31, 2014 and is conditioned upon certain, limited customary representations and warranties, the approval of the holders of not less than 51% of the Pulse Entertainment common stock and Pulse Entertainment’s completion of an audit of its June 30, 2014 financial statements.

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RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this report before making a decision to invest in our common stock. If any of the following risks and uncertainties develop into actual events, our business, results of operations and financial condition could be adversely affected. In those cases, the trading price of our common stock could decline and you may lose all or part of your investment.

Risks Related to Our Business

Because we have a limited operating history, we may not be able to successfully manage our business or achieve profitability.

Pulse Entertainment was recently formed in October 2013, and only completed one production featuring a digital version of Michael Jackson in May 2014 and as a result has a limited operating history upon which a potential investor can evaluate our prospects and the potential value of our common stock. The likelihood of our success must be considered in light of the expenses, complications and delays frequently encountered in connection with the establishment and expansion of a new business and the competitive environment in which we will operate. As of June 30, 2014, we have incurred losses of $8,323,412, and may never reach profitability. No additional relevant operating history exists upon which an evaluation of our performance can be made. Our performance must be considered in light of the risks, expenses and difficulties frequently encountered in establishing new products and markets in the evolving, highly competitive human animation industry. If we cannot successfully manage our business, we may not be able to generate future profits and may not be able to support our operations.

The human animation industry is highly competitive and if we are unable to compete successfully, our business will be harmed.

The human animation industry, although in its infancy, is expected to be an intensely competitive sector of the entertainment industry. Multiple entities, including human animation companies, digital content production companies and animation studios are expected to enter this segment of the entertainment industry to provide human animation services for the same clients or cross platform advertising projects, and certain of these entities have greater financial, creative and managerial resources than we do. In addition, large major digital likeness performance studios may develop or acquire the capability to provide such services in house. Moreover, we believe foreign competitors and competitors with operations or subcontractors in countries such as South Korea, China and India may become an increasing source of competition, due largely to their access to low-cost, high-skilled labor. If we are unable to compete successfully against current or future competitors in the human animation industry, our expected revenues, margins and market share could be adversely affected, any of which could significantly harm our business.

Our success depends on certain key personnel.

Our performance to date has been and will continue to be largely dependent on the talents, efforts and performance of our senior management and key technical personnel, particularly John C. Textor and Frank Patterson, who generally have significant experience with our company and substantial relationships and reputations within the entertainment industry. Certain of our executive officers and top production executives will enter into employment and noncompetition agreements. However, while it is customary in the entertainment industry to use employment agreements as a method of retaining the services of key executive personnel, these agreements do not guarantee us the continued services of such employees. In addition, we do not currently have an employment agreement with many of our key creative, technical and engineering personnel other than Messrs. Textor or Patterson. The loss of our executive officers or our other key personnel, particularly with little or no notice, could cause delays on projects and could have an adverse impact on our client and industry relationships, our business, operating results or financial condition.

We rely on highly skilled and qualified personnel, and if we are unable to continue to attract and retain such qualified personnel it will adversely affect our businesses.

Our success depends to a significant extent on our ability to identify, attract, hire, train and retain qualified creative, technical and managerial personnel. We expect competition for personnel with the specialized creative and technical skills needed to create our products and provide our services will continue to intensify as our competitors build or expand in-house digital likeness and animation capabilities. We plan to hire individuals on a project-by-project basis, and individuals who work on one or more projects for us may not be available to work on future projects. If we have difficulty identifying, attracting, hiring, training and retaining such qualified personnel, or incur significant costs in order to do so, our business and financial results could be negatively impacted.

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We intend to co-produce or invest in digital likeness performances, which involve substantial financial risk.

As part of our growth strategy, we may co-produce or invest in digital likeness performances that require a substantial capital investment. We cannot predict the financial success of any such performance because the revenue derived from a performance depends primarily upon its acceptance by the public, which cannot be accurately predicted. The financial success of a digital likeness performance also depends upon the public’s acceptance of competing live performances, the availability of alternative forms of entertainment and leisure time activities, piracy and unauthorized copying and distribution of celebrities featured in our performances, general economic conditions, and other tangible and intangible factors, none of which can be predicted with certainty.

We expect to co-produce or invest in a limited number of such performances per year as part of our growth strategy. However, we have only produced the Michael Jackson performance and do not have any agreements to produce others other than the agreement Pulse Evolution entered into with ABG EPE IP, LLC (“ABG”) to develop entertainment projects utilizing a computer-generated image of Elvis Presley. In addition, the commercial failure of just one performance could have a material adverse effect on our results of operations.

We may not be able to implement our strategies of entering into the digital likeness performance production business effectively or at all.

A key feature of our growth strategy is to establish our company as a creator, producer and marketer of live concerts, Broadway-style theatrical productions, television commercials, political events and advertising, short-form content and interactive internet and mobile applications digital likeness performances and advertising. This strategy requires us to leverage the talents of our key artistic personnel, their experience with digital likeness and animation production and our proprietary rights]. As a company, however, we have only completed one digital likeness performance. Entry into the digital likeness performance business presents significant challenges and subjects our business to significant risks, including those risks set forth below. The inability to successfully manage these challenges could adversely affect our potential success in the digital likeness production business. Such failure would significantly limit our ability to grow our business and could deplete our working capital and limit our ability to pursue our other planned businesses.

Our successful entry into the digital likeness performance business faces various risks and challenges, including:

	●	the success of our digital likeness performance business will be primarily dependent on audience acceptance of our performances, which is extremely difficult to predict;

	●	only a relatively few “hit” performances are expected to account for a significant portion of total revenue and any failure by us to produce “hit” digital performances could cause revenue generated from our proposed digital likeness production business to fall below expectations;

	●	the production and marketing of digital likeness performance is capital-intensive and our capacity to generate cash from our performances may be insufficient to meet our anticipated capital requirements;

	●	delays and increased expenditures due to creative problems, technical difficulties, talent availability, accidents, natural disasters or other events beyond the control of the production companies;

	●	the entrance of additional digital likeness producers, which may result in increased competition for digital likeness audiences and for talented computer graphics animators and technical staff;

	●	the costs of producing and marketing digital likeness performances may increase in the future, which may make it more difficult for a performance to generate a profit or compete against live performances;

	●	a strike by one or more of the labor unions or similar groups that provide personnel essential to the production of digital likeness performances could delay or halt our proposed digital likeness performance production activities;

	●	we have limited experience producing digital likeness performances and the strain on our personnel from the effort required to produce such digital likeness performances and the time required for creative development of future digital likeness performances may hinder our ability to consistently release digital likeness performances; and

	●	the profitability of a digital likeness performance depends in large part on the availability of one or more capable producers who are able to arrange for appropriate advertising and promotion, proper performance dates and bookings in venues and any decision by those producers not to show or promote one of the digital likeness performances which we may produce or to promote competitors’ digital likeness performances to a greater extent than they promote ours, or our inability to enter into profitable distribution arrangements with such producers, could have an adverse effect on our proposed digital likeness production business.

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A substantial part of our business relies upon the success and popularity of digital likeness performances. If other forms of entertainment prove to be more attractive to consumers than digital likeness performances, our growth and operating results could be harmed.

A substantial part of our business will rely on the popularity of digital likeness performances of top tier and late celebrities. If other forms of digital likeness performances, or other entertainment with which digital likeness performances compete for consumers’ leisure time and disposable income, such as live performances, television, concerts, amusement parks and sporting events, become more popular than digital likeness performances, our business and operating results could be harmed.

Acquisitions we pursue in our industry and related industries could result in operating difficulties, dilution to our shareholders and other consequences harmful to our business.

As part of our growth strategy, we may selectively pursue strategic acquisitions in our industry and related industries. We may not be able to consummate such acquisitions, which could adversely impact our growth. If we do consummate acquisitions, integrating an acquired company, business or technology may result in unforeseen operating difficulties and expenditures, including:

	●	increased expenses due to transaction and integration costs;

	●	potential liabilities of the acquired businesses;

	●	potential adverse tax and accounting effects of the acquisitions;

	●	diversion of capital and other resources from our existing businesses;

	●	diversion of our management’s attention during the acquisition process and any transition periods;

	●	loss of key employees of the acquired businesses following the acquisition; and

	●	inaccurate budgets and projected financial statements due to inaccurate valuation assessments of the acquired businesses.

Foreign acquisitions also involve unique risks related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries.

Our evaluations of potential acquisitions may not accurately assess the value or prospects of acquisition candidates and the anticipated benefits from our future acquisitions may not materialize. In addition, future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, including our common stock, the incurrence of debt, contingent liabilities or amortization expenses, or write-offs of goodwill, any of which could harm our financial condition.

Interruption or failure of our information technology systems could impair our ability to effectively and timely provide our services and products, which could damage our reputation and have an adverse impact on our operating results.

Our future success is significantly dependent on our ability to provide digital likeness production services that consistently meet our client’s product development schedules. We rely on our contractors and their software applications, hardware and other information technology and communications systems for the development and provision of our digital likeness services and will depend on such technologies for production of our prospective digital likeness performances. Our systems are vulnerable to damage or interruption from earthquakes, hurricanes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses or other attempts to harm our systems, and similar events. Our facilities are located in areas with a high risk of hurricanes and are also subject to break-ins, sabotage and intentional acts of vandalism. Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster or other unanticipated problems at our Port St. Lucie, Florida facilities could result in lengthy interruptions in our projects and our ability to deliver services. An error or defect in the software, a failure in the hardware, and a failure of our backup facilities could delay our delivery of products and services and could result in significantly increased production costs, hinder our ability to retain and attract clients and damage our brand if clients believe we are unreliable. Given our reliance on our industry relationships, it could also result in a decrease in our prospective revenues and otherwise adversely affect our business and operating results.

We cannot predict the effect that rapid technological change may have on our business or industry.

The entertainment industry in general and the digital likeness segments thereof in particular, are rapidly evolving, primarily due to technological developments. The rapid growth of technology and shifting consumer tastes prevent us from being able to accurately predict the overall effect that technological growth may have on our potential revenue and profitability. Furthermore, because we are required to provide advanced digital imagery products to continue to win business we must ensure that our production environment integrates the latest tools and techniques developed in the industry. This requires us to either develop these capabilities by acquiring or developing our own proprietary software and other intellectual property rights, which can result in substantial research and development costs and substantial capital expenditures for new equipment, or to purchase third-party licenses, which can result in significant expenditures. In the event we seek to obtain third-party licenses, we cannot guarantee that they will be available or, once obtained, will continue to be available on commercially reasonable terms, or at all. If we are unable to develop and effectively market new technologies that adequately or competitively address the needs of changes in our industry, it could have an adverse effect on our business and growth prospects.

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Our revenue may be adversely affected if we fail to protect our proprietary rights or fail to enhance or develop new technology.

We depend on our proprietary rights to develop and produce certain of our products and provide certain of our services. We rely on a combination of copyright and trade secret protection and non-disclosure agreements to establish and protect our proprietary rights. The efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete.

We generally enter into non-disclosure or license agreements with our employees, consultants and vendors, and generally control access to and distribution of our technology and other proprietary information. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use our proprietary information, without authorization, or to develop similar or superior proprietary rights independently. The steps we take may not prevent misappropriation of our proprietary rights, and our non-disclosure and license agreements may not be enforceable.

In addition, we may be required to litigate in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and diversion of resources and could have an adverse effect on our business and/or our operating results.

Third-party technology licenses may not continue to be available to us in the future.

We also rely on certain technology that we license from third parties, including software. These third-party technology licenses may not in the future be available to us on commercially reasonable terms, or at all. The loss of any of these technology licenses could result in delays in performance of work until we identify, license and integrate equivalent technology, and we may not be able to identify, or license any such equivalent technology in a timely manner or at all. Any resulting delays in a performance could damage our reputation and result in a decrease in our revenues during the period of delay, either of which could materially adversely affect our business, operating results and/or financial condition.

Others may assert intellectual property infringement claims against us.

Companies in the digital likeness segment of the entertainment industry are subject to the possibility of claims that their products, services or techniques misappropriate or infringe the intellectual property rights of third parties. Infringement or misappropriation claims (or claims for indemnification resulting from such claims) against us may be asserted or prosecuted, regardless of their merit, and any such assertions or prosecutions may adversely affect our business and/or our operating results. We are currently a defendant in a lawsuit claiming that we misappropriated the Musion Eyeliner technology and related patents licensed by Hologram USA, Inc. by using their projection illusion system to project our creation of a digital likeness of Michael Jackson that was performed at the Billboard Music Awards on May 18, 2014. See “Legal Proceedings” included in this report. While this lawsuit does not allege that the creation and production of visual effects or human animation imagery infringed on the plaintiffs’ proprietary rights and irrespective of the validity or the successful assertion of such claims, we would incur significant costs and diversion of resources relating to the defense of such claims, which could have an adverse effect on our business and/or our operating results. If any claims or actions are asserted against us, we may seek to obtain a license of a third-party’s intellectual property rights; however, under such circumstances such a license may not be available on reasonable terms or at all.

We could be adversely affected by strikes or other union job actions.

Our digital likeness projects generally utilize performers, directors, and choreographers who are members of the Screen Actors Guild-American Federation of Television and Radio Artists, Directors Guild of America, and Stage Directors and Choreographers Society, respectively, pursuant to industry-wide collective bargaining agreements. Many projects also employ members of a number of other unions, including, among others, the International Alliance of Theatrical and Stage Employees. A strike by one or more of the unions or guilds that provide personnel essential to the production of our projects could delay or halt our prospective production activities, which could materially adversely affect our business, operating results and/or financial condition.

Our agreement to manage the creation of a digital likeness of Michael Jackson and participate in certain future revenues allows the counter party discretion in approving future uses of the work we created.

We are a party to an agreement with Optimum Productions, an entity owned by the estate of Michael Jackson, which gives us the right to manage the creation of a digital likeness of Michael Jackson and participate in certain future revenues for a period of five years. While this agreement contains an agreement that defines the parties rights to participate in future revenues derived from the digital likenesses of Michael Jackson we created, Optimum Productions retains the right to approve all future uses of the Michael Jackson likeness. The failure of Optimum Productions to allow us the right to use these intellectual property rights in the future could have a material adverse effect on our business, financial condition and results of operations.

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We need additional financing to fund acquisitions and our operations which we may not be able to obtain on acceptable terms. Additional capital raising efforts in future periods may be dilutive to our then current shareholders or result in increased interest expense in future periods.

We will need to raise additional working capital to fund our plans to invest in development and acquisition of the digital likeness assets. Our future capital requirements depend on a number of factors, including the number of performances we undertake and our ability to manage the growth of our business and our ability to control our expenses. Also, if we raise additional capital through the issuance of debt, this will result in increased interest expense. If we raise additional capital through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders may experience significant dilution. As we will generally not be required to obtain the consent of our shareholders before entering into acquisition transactions, shareholders are dependent upon the judgment of our management in determining the number of, and characteristics of, stock issued as consideration in an acquisition. In addition, new securities may contain certain rights, preferences or privileges that are senior to those of our common stock. We cannot assure you that we will be able to raise the working capital as needed in the future on terms acceptable to us, if at all. If we do not raise capital as needed, we will be unable to operate our business or fully implement our digital likeness development and acquisition expansion strategy.

The inability to successfully manage the growth of our business may have an adverse effect on our operating results.

We expect to experience growth in the number of employees and the scope of our operations. Such growth will result in increased responsibilities for our management. If our management is unable to successfully manage expenses in a manner that allows us to both improve operations and at the same time pursue potential market opportunities, the growth of our business could be adversely impacted, which may, in turn, negatively affect our operating results or financial condition. In addition, we believe that a critical contributor to our success has been our creative culture. As we attempt to grow and alter our business to focus increasingly on the creation, production and marketing of visual imagery, and as we experience change in response to the requirements of being a public company, we may find it difficult to maintain important aspects of our corporate culture, which could negatively affect our future success.

Changes in U.S., regional or global economic conditions could adversely affect our profitability.

A decline in economic conditions in the United States or in other regions of the world could lead to a decrease in discretionary consumer spending, which in turn could adversely affect demand for digital likeness performances and box office revenue. In addition, an increase in price levels generally, or in price levels in a particular sector such as the energy sector, could result in a shift in consumer demand away from entertainment products such as digital likeness performances. Such events could cause a decrease in the demand for the digital likeness services we offer as well as for the digital likeness performances we propose to produce, either of which would have an adverse effect on our profitability and operating results.

Risks Related to Our Common Stock

There currently is only a minimal public market for our common stock. Failure to develop or maintain a trading market could negatively affect the value of our common stock and make it difficult or impossible for you to sell your shares.

There currently is only a minimal public market for shares of our common stock and an active market may never develop. Our common stock is quoted on the OTC Pink tier operated by the OTC Market’s Group, Inc. under the symbol “PLFX”. We may not ever be able to satisfy the listing requirements for our common stock to be listed on any stock exchange, including the trading platforms of the NASDAQ Stock Market which are often more widely-traded and liquid markets. Some, but not all, of the factors which may delay or prevent the listing of our common stock on a more widely-traded and liquid market include the following: our stockholders’ equity may be insufficient; the market value of our outstanding securities may be too low; our net income from operations may be too low; our common stock may not be sufficiently widely held; we may not be able to secure market makers for our common stock; and we may fail to meet the rules and requirements mandated by, any of the several exchanges and markets to have our common stock listed.

The market price for our common stock is particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, limited operating history and lack of profits which could lead to wide fluctuations in our share price and may result in substantial losses to you.

The market for our common stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common stock are sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common stock are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or “risky” investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products and services. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time, including as to whether our common stock will sustain their current market prices, or as to what effect that the sale of shares or the availability of common stock for sale at any time will have on the prevailing market price.

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The application of the “penny stock” rules could adversely affect the market price of our common stock and increase your transaction costs to sell those shares.

The SEC has adopted rule 3a51-1 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires:

	●	that a broker or dealer approve a person’s account for transactions in penny stocks, and

	●	the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:

	●	obtain financial information and investment experience objectives of the person, and

	●	make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:

	●	sets forth the basis on which the broker or dealer made the suitability determination, and

	●	that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

The application of Rule 144 creates some investment risk to potential investors; for example, existing shareholders may be able to rely on Rule 144 to sell some of their holdings, driving down the price of the shares you purchased.

The SEC adopted amendments to Rule 144 which became effective on February 15, 2008 that apply to securities acquired both before and after that date. Under these amendments, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell their securities provided that: (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding a sale, (ii) we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale and (iii) if the sale occurs prior to satisfaction of a one-year holding period, we provide current information at the time of sale.

Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or at any time during the three months preceding a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:

	●	1% of the total number of securities of the same class then outstanding (80,306 shares of common stock as of the date of this Report); or

	●	the average weekly trading volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale;

provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale. Such sales by affiliates must also comply with the manner of sale, current public information and notice provisions of Rule 144.

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A limited number of our shareholders own a large percentage of our stock, which will allow them to exercise significant influence over matters subject to shareholder approval.

Our executive officers, directors and their affiliated entities will beneficially own or control approximately 57% of the outstanding shares of our common stock. Accordingly, these executive officers, directors and their affiliated entities, acting as a group, will have substantial influence over the outcome of corporate actions requiring shareholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transaction. These shareholders may also delay or prevent a change of control or otherwise discourage a potential acquirer from attempting to obtain control of us, even if such a change of control would benefit our other shareholders. This significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.

We do not pay dividends on our common stock.

We have not paid any dividends on our common stock and do not anticipate paying dividends in the foreseeable future. We plan to retain earnings, if any, to finance the development and expansion of our business.

FINANCIAL INFORMATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operation for the period from October 10, 2013 (date of inception) through June 30, 2014, should be read in conjunction with the financial statements and the notes to those statements that are included in this report.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Overview

Pulse Entertainment Corporation (“Pulse Entertainment” or the “Company”) is a creatively driven, digital production and intellectual property company, established to produce specialized, high-impact applications of computer-generated human likeness for utilization in entertainment, life sciences, education and telecommunication. Founded by leading producers of photorealistic digital humans, Pulse Entertainment develops “virtual humans” for live and holographic concerts, advertising, feature films, branded content, medical applications and training.

Pulse Entertainment was incorporated in Delaware on October 10, 2013. The fiscal year end is June 30.

During the first month of operation, Pulse Entertainment entered into a multi-year contract with the Michael Jackson Estate to produce a computer-generated and animated human likeness of the late popular entertainer Michael Jackson. This agreement provides for a revenue share related to the use of the likeness in any and all media. On May 18, 2014, the likeness appeared in a live performance of the Michael Jackson song “Slave to the Rhythm” at the Billboard Music Awards, a performance that was produced by Pulse Entertainment and aired on American Broadcasting Company to a television broadcast audience.

Pulse Entertainment’s wholly-owned subsidiary The Kopp Initiative, LLC was incorporated in Florida on January 20, 2014. It was formed to obtain certain talent and performers for the virtual Michael Jackson performance.

Plan of Operations and Liquidity

The cash balance is $1,539,719 as of June 30, 2014. At June 30, 2014 we had working capital of $726,842.

Pulse Entertainment has, since its inception in October of 2013, been highly dependent on raising capital to fund its start up and growth strategies. To date, Pulse Entertainment has raised capital from the sales of its common stock without restrictive covenants from institutional investors and strategic partners (See Note 6 – Capitalization) and advances from Pulse Evolution Corporation, a related party (“Pulse Evolution”) (See Note 8 – Subsequent Events). In addition, Pulse Evolution has raised additional capital to finance execution of its complimentary business plan from sales of its unregistered common stock. On September 30, 2014, Pulse Entertainment and Pulse Evolution completed an initial closing under the terms of a share exchange agreement they entered into whereby Pulse Entertainment became a subsidiary of Pulse Evolution.

Pulse Entertainment’s core business is the acquisition from estates and other rights holders of certain intellectual property rights to create virtual celebrities, and the right to present, and license to others to present, those virtual performers in live, and a variety of live-virtual and commercial formats.

In execution of its business plan, Pulse Entertainment has chosen to pursue a model whereby it provides virtual performers for appearances and collects royalties when Pulse Entertainment has an ownership interest in the intellectual property rights for the virtual performer (the “Talent Model”). Under the Talent Model, Pulse Entertainment may permit other producers to create performances that make use of virtual performers created by Pulse Entertainment.

Pulse Entertainment is also exploring and developing opportunities to act as a producer of events (the “Producer Model”), thereby enabling Pulse Entertainment to exert significant creative and technological control over the performance productions, and to capture significantly greater portions of the realizable economic value created by the virtual performance.

Pulse Entertainment may in the future execute its business plan using a blend of the Talent and Producer Models. Under both models, Pulse Entertainment expects to earn services revenues on all digital construction, animation, and production services that it provides, plus royalties when the work involves intellectual property rights held by Pulse Entertainment. Under both models, Pulse Entertainment has significant discretion to determine to what extent the creative and production resources, which are primarily labor costs, are engaged on an as-needed basis for each project or production (“Contract Talent”), and to what extent Pulse Entertainment carries a concentration of creative and production resources in-house (“In-House Talent”).

While execution of the Producer Model enables Pulse Entertainment to capture more of the value created by the virtual performers, it also requires Pulse Entertainment to raise significant amounts of production capital, which is similar to project financed equity or non-recourse debt into production subsidiaries. Executing this model with In-house Talent gives Pulse Entertainment certain strategic advantages and flexibility in the development of new concepts and application of new technologies, yet it also requires a higher employee headcount and the related operating overhead.

CASH REQUIREMENTS

Our Company’s ability to fund our operations and meet our obligations on a timely basis is dependent on our ability to match our available financial resources to our operating model (Talent vs. Producer) and our execution strategy (Contract Talent vs. In-House Talent). The decisions Pulse Entertainment makes with regard to operating model and execution strategy drive the level of capital required and the level of its financial obligations.

If Pulse Entertainment is unable to generate cash flow from operations and successfully raise sufficient additional capital through future debt and equity financings or strategic and collaborative ventures with potential partners, Pulse Entertainment would likely have to reduce its dependence on In-House Talent and limit many, if not all, of its activities as a producer.

Pulse Entertainment has analyzed its liquidity requirements and has determined that it has sufficient liquidity to execute its business plan under the Talent Model for the next 12 months.

Results of Operations

The following analysis on results of operations was based primarily on the financial statements, footnotes and related information for the period identified below and should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. The results discussed below are for the year ended June 30, 2014 and the period from October 10, 2013 (inception) through June 30, 2014.

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We had operating revenues of $1,451,534 from the date of inception on October 10, 2013 through June 30, 2014. Our digital build, animation and production service costs totaled $5,591,110 from the date of inception on October 10, 2013 through June 30, 2014. The revenue and cost of production resulted from one production services contract entered into in early 2014 with the Michael Jackson Estate. We plan to enter into future similar contracts with the estates of other deceased celebrities and historical figures.

From the date of inception on October 10, 2013 through June 30, 2014, we incurred operating expenses of $4,183,836. Expenses consist of $2,021,704 of consulting fees and costs, $504,705 of professional fees, $954,855 for payroll related costs and $702,572 of other general and administrative expenses.

For the date of inception on October 10, 2013 through June 30, 2014, we incurred net losses of $8,323,412.

Liquidity and Capital Resources

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. At June 30, 2014, we had a cash balance of $1,539,719. At June 30, 2014, we had working capital of $726,842.

Net cash used in operating activities was $6,167,016 from the date of inception on October 10, 2013 through June 30, 2014. The cash used in operating activities resulted from cash uses in the virtual Michael Jackson performance as described previously.

Net cash used in investing activities was $9,805 from the date of inception on October 10, 2013 through June 30, 2014 resulted from purchases of fixed assets.

Net cash provided by financing activities was $7,711,540 from the date of inception on October 10, 2013 through June 30, 2014 resulted from sales of our common stock.

We do not currently have any contractual restrictions on our ability to incur debt and, accordingly we could incur significant amounts of indebtedness to finance operations. Any such indebtedness could contain covenants which would restrict our operations.

As of June 30, 2014 we had total current liabilities of $1,017,575 primarily related to professional fees.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements including arrangements that would affect liquidity, capital resources, market risk support and credit risk support or other benefits.

Critical Accounting Policies

We prepare our financial statements in conformity with GAAP. The preparation of the financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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Critical accounting policies are those we believe are both most important to the portrayal of our financial condition and results, and require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. We believe the following policies to be the most critical in understanding the judgments that are involved in preparing our financial statements.

Revenue Recognition

The Company entered into a production services contract in 2014 with the Michael Jackson Estate and plans to enter into future similar contracts with the estates of other deceased celebrities and historical figures that provide revenues based on certain production services Revenue is recognized on a straight-line basis over each contract period, as defined in each agreement. As the production services are rendered, revenue is recognized.

Cash

Our cash consists of funds deposit in bank accounts and funds deposited our law firm’s trust account.

Production Costs

Production costs consist primarily of amounts due to third-party providers that the Company uses to help create and deliver the Company’s digital and live performance productions. Under the percentage-of-completion contract accounting method, Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 605-35, when the current estimates using the percentage of completion method for determining total contract revenues costs indicate a loss, a provision for the entire loss on the contract should be recognized.

Income Taxes

We use the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

At October 3, 2014, we had 117,658,716 shares of our common stock issued and outstanding. The following table sets forth information known to us as of October 3, 2014 relating to the beneficial ownership of shares of our voting securities by:

	●	each person who is known by us to be the beneficial owner of more than 5% of our outstanding voting stock;

	●	each director;

	●	each named executive officer; and

	●	all named executive officers and directors as a group.

Unless otherwise indicated, the business address of each person listed is in care of Pulse Evolution Corporation, 10521 SW Village Center Drive, Suite 201 Port St. Lucie, FL 34987. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.

Effective on June 23, 2014, the Company amended and restated its articles of incorporation filed with the Secretary of State of the State of Nevada in order to effectuate an increase in the number of authorized shares of common stock, par value $0.001 per share, from 75,000,000 to 300,000,000, increase the authorized blank check preferred stock to 100,000,000 shares and effectuate a 1 for 10 forward stock split of our issued and outstanding common stock (the “Forward Stock Split”). As a result of the Forward Stock Split, every 1 share of our pre-Forward Split common stock was increased and reclassified into 10 shares of our common stock. All references to shares of our common stock in the following table and elsewhere in this report on Form 10-K refers to the number of shares of common stock after giving effect to the Forward Stock Split (unless otherwise indicated).

	Amount and Nature of Beneficial Ownership⁽¹⁾		Percentage of Class
Executive Officers and Directors
John Textor⁽²⁾		33,806,955		28.7	%
Rene Eichenberger⁽³⁾		12,461,607		10.6	%
Frank Patterson⁽⁴⁾		12,461,607		10.6	%
William Krueger⁽⁵⁾		2,769,246		2.4	%
Jim Berney⁽⁶⁾		5,538,492		4.7	%
All officers and directors a a group (5 group)		67,037,907		57.0	%

5% Shareholders
Michael Mortell⁽⁷⁾		9,980,930		8.5	%
Enrique Steiger⁽⁸⁾		6,461,570		5.5	%
Greg Centineo⁽⁹⁾		6,467,109		5.5	%

	(1)	Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the shares. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of our Common Stock held by them. Applicable percentage ownership is based on 117,658,716 shares of our Common Stock outstanding as of October 3, 2014.

	(2)	Consists of 33,806,955 shares of our Common Stock owned by Tradition Studios Acquisition IP LLC (“Tradition Studios”). The managing member of Tradition Studios Acquisition IP LLC is Mr. Textor who holds voting and investment power over the shares of our Common Stock owned by Tradition Studios.

	(3)	Consists of 12,461,607 shares of our Common Stock owned by (Alternative)2 Holdings AG (“(Alternative)2”). The managing member of (Alternative)2 is Mr. Eichenberger who holds voting and investment power over the securities owned by this entity.

	(4)	Consists of 12,461,607 shares of our Common Stock owned by Scenic Loop Holdings, Inc. an entity owned and controlled by Mr. Patterson who holds voting and investment power over the shares of our Common Stock owned by this entity.

	(5)	Consists of 2,769,246 shares of our Common Stock owned directly by Mr. Krueger.

	(6)	Consists of 5,538,492 shares of our Common Stock owned directly by Mr. Berney.

	(7)	Mr. Michael Mortell holds voting and investment power over the shares of our Common Stock owned by various.entities Mr. Mortell’s address is 73 SW Flagler Avenue Stuart, FL 34994.

	(8)	Consists of 6,461,570 shares of our Common Stock owned directly by Mr. Steiger.

	(9)	Consists of 6,467,109 shares of our Common Stock owned directly by Mr. Centineo.

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DIRECTORS AND EXECUTIVE OFFICERS

In connection with the change of control of the Company described in Item 5.01 of this Current Report on Form 8-K, we have appointed the following individuals to serve as our executive officers and directors:

Name	Age	Positions and Offices to be Held
John Textor	50	Chairman of the Board of Directors
Rene Eichenberger	54	Vice-Chairman of the Board of Directors
Frank Patterson	53	Chief Executive Officer and Director
Jim Berney	48	President and Head of Studio Production
William Krueger	55	Executive Vice President and Chief Financial Officer

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. There are no agreements with respect to the election of Directors. Our Board of Directors appoints officers annually and each Executive Officer serves at the discretion of our Board of Directors.

John Textor has been Chairman of our Board of Directors since May 2014 and the Chairman of the Board of Directors of Pulse Entertainment since founding this company in October, 2013. Mr. Textor is an active, full-time resource to the Chief Executive Officer and the President-Head of Studio. He will be principally responsible for special projects, strategic partnerships, rights acquisition, venue partnerships and relationships with major media companies. Mr. Textor is currently active in the development of entertainment properties across a broad spectrum of venues and technology platforms. In addition to his leadership in the extended uses of photo-realistic, digital humans, he is also currently a Producer of Art Story, an original animated feature film currently being developed by Disney veteran filmmaker Aaron Blaise. He was also Producer and Executive Producer of Ender’s Game, a science fiction fantasy film released in November 2013. Mr. Textor was previously Chairman and CEO of Digital Domain Productions and Chairman and CEO of its parent company, Digital Domain Media Group, having led its acquisition and restructuring from May 2006 to August 2012. Together the companies were responsible for the visual effects of more than 80 large scale feature films, 25 of which were completed during Mr. Textor’s leadership, including such films as Transformers, Flags of our Fathers, Tron: Legacy, Real Steel and Pirates of the Caribbean at World’s End. During Mr. Textor’s leadership, Digital Domain was re-established as a market leader in visual effects, winning multiple Academy Awards, Clio advertising awards and, importantly, being recognized as the first visual effects company to deliver a believable digital human actor in The Curious Case of Benjamin Button. This achievement, known as the ‘Holy Grail of Animation’, earned the company a 2009 Academy Award for Achievement in Visual Effects. The hour long performance of the company’s digital actor was so convincing to audiences and the Academy voters that the film also received an Academy Award for Best Make-up, though the character performance was entirely digital. Other highlights during Mr. Textor’s tenure included the break-through introduction of a digital Tupac Shakur at the Coachella Valley Music festival in 2012, the consummation of a joint venture for the digital resurrection of Elvis Presley, the creation of a first of its kind, dual-enrollment Bachelor’s program with Florida State University, completion of a $100 million joint venture agreement with the sovereign media authority of Abu Dhabi and the transformation of Digital Domain into a film production company with the co-production of Ender’s Game.

As the Chairman of the Board of Directors of our company, Mr. Textor brings our board his considerable experience in the strategic planning and growth of entertainment properties and companies and qualifies him to continue to serve as a director or our company.

René P. Eichenberger has served as the Executive Vice Chairman of our company since May 2014 and has been the Executive Vice Chairman of Pulse Entertainment Corp. since October 2013. He is also the Chairman of (Alternative)2 Holding AG, a private equity company based in Zurich, Switzerland since 2005 and the Vice Chairman at Acron AG, an international real estate investment firm headquartered in Zurich, since 2013. From 2011 to 2013, Mr. Eichenberger served as a member of the strategic advisory council of the ClearSky Power and Technology Fund, a venture fund sponsored by Nextera/FPL, a leading clean energy company in North America, and he served on the advisory board of Sterling Partners, a $6 billion private equity firm with offices in Baltimore, Chicago and Miami. Starting his career as an attorney in Switzerland, Dr. Eichenberger served as General Counsel of Jet Aviation from 1991 to 1998, which under his tenure relocated its worldwide headquarters from Zurich to West Palm Beach, Florida and was subsequently positioned as the global leader in general aviation and successfully sold to a private equity fund. In 1998, Mr. Eichenberger founded Crossbow Ventures, a venture capital firm located in West Palm Beach. In 2004, he sold Crossbow to Horizon21 in Switzerland and subsequently served as CEO of Horizon21 Private Equity, which grew to over $3 billion in assets under management. Mr. Eichenberger is the former Chairman of the Swiss-American Chamber of Commerce in Florida and served on the board of directors of a number of privately-held companies in North America and Europe. Mr. Eichenberger holds a Ph.D. in law from the University of Zurich and is a graduate of the Venture Capital Institute and of the Executive Program at Stanford University, Graduate School of Business. Mr. Eichenberger’s experience in corporate governance, corporate finance, mergers and acquisitions and business development, as well as his leadership role and board performance, has led our board to conclude that he should continue to serve as a director.

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As the Executive Vice Chairman of our company, Mr. Eichenberger brings our board his considerable experience in the strategic planning and growth of companies and qualifies him to continue to serve as a director or our company.

Frank Patterson. Mr. Patterson has served as Pulse Entertainment’s Chief Executive Officer since December, 2013 and as Pulse Evolution’s Chief Executive Officer since May 2014. He has served on the faculty of three top-ranked U.S. film schools including the position of dean of the Florida State University College of Motion Picture Arts, a position he currently holds and has held since July 2003. Previously, he was on the faculty of Chapman University from January 2001 through June 2003, the University of Texas from July 1999 through December 2000, and Florida State University from January 1990 through December 1999. Mr. Patterson is a 25-year veteran of the entertainment industry who has produced, written and directed feature films, commercials, and a variety of media content for some of the leading agencies in the nation. He most recently produced the Virtual Michael Jackson show on the 2014 Billboard Music Awards, which aired on the ABC Network and widely viewed on YouTube. Throughout his career, Mr. Patterson has founded several media production companies that produced film library assets and profited from the marketing and sale of motion picture intellectual property in domestic and international markets, including The Houston Cinema Group, Inc. (1988-92), Envisage Media Group, Inc. (1993-99), and Red Hills Motion Picture Releasing Company, LLC (7/2010-2/2011). Mr. Patterson is a highly regarded educator, who was named by “The Hollywood Reporter” one of the nation’s top mentors to a generation of Hollywood filmmakers. Mr. Patterson earned a Bachelor of Arts from the Film & Media Division at Baylor University in 1985 and a Master of Arts from the Film & Media Division at Baylor University in 1987.

As the Chief Executive Officer of our company, Mr. Patterson brings our board his considerable experience in the entertainment industry and growth of companies and qualifies him to continue to serve as a director or our company.

Jim Berney. Prior to joining our company in May 2014 as our President and Head of Studio Production, Mr. Berney has been Head of Studio production at Pulse Entertainment since October 2013 and was Head of Studio at Digital Domain in august 2012. He was previously an Academy Award^®-nominated visual effects supervisor at Sony Pictures Imageworks from August 2008 until June 2012, ultimately becoming responsible for creative supervision and direction for all artists at Sony’s Albuquerque visual effects studio. In addition to his regular supervisory responsibilities on projects, he served as General Manager for the first two years of the facility’s infancy. As visual effects supervisor, Mr. Berney worked on numerous notable films including Green Lantern, I Am Legend, and The Chronicles of Narnia, for which he was nominated for an Academy Award for Outstanding Visual Effects. Previously, Mr. Berney was the visual effects supervisor for Sony Imageworks from October 1995 until August 2008 and had worked on films including The Matrix Reloaded, The Matrix Revolutions, The Lord of the Rings: The Two Towers, and Harry Potter and the Sorcerer’s Stone. Jim also served as CG supervisor for Hollow Man (2000 Academy Award^® nominee, Best Visual Effects). He received his Master’s degree in Computer Science from California Polytechnic, San Luis Obispo, specializing in the research and development of a new global illumination paradigm. He holds two undergraduate degrees in Computer Science and Economics from the University of California, Irvine, focusing in A.I. research. Berney also studied computer architectures at the Royal Institute of Technology, Stockholm, Sweden.

William Krueger. Mr. Krueger was appointed as our Chief Financial Officer on October 1, 2014. Prior to joining our company, Mr. Krueger was the Executive Vice President and Chief Financial Officer of Pulse Entertainment since May 2014. Prior to joining Pulse Entertainment, Mr. Krueger was the Managing Director, International, with Pritchett LP from September 2013 to April 2014. Pritchett LP is a leading publisher, consulting and training firm in the areas of merger integration, organizational change, culture and business process optimization. From December 2009 through August 2014, Mr. Krueger worked in Asia, Europe and the U.S. as a senior advisor and interim executive for international companies facing strategic business development and financing challenges. From March 2002 until December 2009, Mr. Krueger was based in Beijing and Hong Kong as Chairman and CEO of Xin De Capital Group, a financial advisory and principal investment group active in real estate, water, power, telecoms, media, professional services and on-line services in the Greater China market. Prior to forming Xin De Capital Group, Mr. Krueger was the CFO, and later CEO and Member of its Board of Directors, of Xin De Telecom International Ventures Co, Ltd. from April 1996 to April 2002. Xin De Telecom was a Siemens joint venture with T-Mobil and China International Trust and Investment Corporation. During this period, Mr. Krueger was responsible for raising and managing $200 million invested in the start-up of China Unicom’s GSM mobile telecom networks, and providing network operation support services. In addition, Mr. Krueger was responsible for negotiating agreements between China Unicom and its joint venture partners that was an integral step in China Unicom’s initial public offering in 2000. From 1986 to 1996 Mr. Krueger was engaged in financial and operations management and investment banking in Munich Germany and New York. Mr. Krueger studied music and theater at Northwestern University where he received a Bachelor of Science degree in 1981. Mr. Krueger earned a Masters in Business Administration with a major in Finance from Kellogg School of Management at Northwestern University in 1986.

Committee of our Board of Directors

Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.

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We have not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by Board of Directors as a whole. Because we have only three directors, none of whom are independent, we believe that the establishment of these committees would be more form over substance.

We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our Board.

None of our directors is an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:

	●	understands generally U.S. GAAP and financial statements,

	●	is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,

	●	has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,

	●	understands internal controls over financial reporting, and

	●	understands audit committee functions.

PULSE EVOLUTION EXECUTIVE COMPENSATION

The following table sets forth certain compensation information for: (i) Pulse Evolution’s principal executive officer or other individual serving in a similar capacity during fiscal 2014; (ii) our two most highly compensated executive officers other than our principal executive officer who were serving as executive officers at June 30, 2014 whose compensation exceed $100,000; and (iii) up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at June 30, 2014. Compensation information is shown for the fiscal years ended June 30, 2014 and 2013:

Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($) *		Option Awards ($) *		All Other Compensation ($)		Total ($)

Alon Nigri⁽¹⁾		2014		-0-		-0-		-0-		-0-		-0-		-0-
		2013		-0-		-0-		-0-		-0-		-0-		-0-
Frank Patterson⁽²⁾		2014		-0-		-0-		-0-		-0-		-0-		-0-

(1) Mr. Nigri resigned as our Chief Executive Officer on May 15, 2014.

(2) Mr. Patterson was appointed as our Chief Executive Officer on May 15, 2014.

PULSE ENTERTAINMENT COMPENSATION

The following table sets forth certain compensation information for: (i) Pulse Entertainment’s principal executive officer or other individual serving in a similar capacity during the fiscal year ended June 30, 2014; (ii) Pulse Entertainment’s two most highly compensated executive officers other than its principal executive officer who were serving as executive officers at June 30, 2014 whose compensation exceed $100,000; and (iii) up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at June 30, 2014. Compensation information is shown for the period October 10, 2013 (inception) to June 30, 2014.

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Name and Principal Position	Year		Salary ($)			Bonus ($)		Stock Awards ($) *		Option Awards ($) *		All Other Compensation ($)		Total ($)

John Textor, Executive Chairman⁽¹⁾		2014		165,154	⁽¹⁾		234,602		-0-		-0-		-0-		399,756
Frank Patterson, Chief Executive Officer ⁽²⁾		2014		165,154	⁽²⁾		96,974		-0-		-0-		-0-		261,128
Rene Eichenberger, Vice Chairman⁽³⁾				125,154			135,974		-0-		-0-		-0-		261,128

(1) Mr. Textor was appointed as our Executive Chairman on October 10, 2013. Bonus includes $234,603 paid to New Ventures, Inc. which provided personal consulting services of Mr. Textor to Pulse Entertainment.

(2) Mr. Patterson was appointed as Pulse Evolution’s Chief Executive Officer on October 10, 2013. Bonus includes $95,974 paid to New Ventures, Inc. which provided personal consulting services of Mr. Patterson to Pulse Entertainment.

(3) Mr. Eichenberger was appointed as Pulse Evolution’s Vice Chairman of the Board of Directors on October 10, 2013. Bonus includes $95,974 paid to New Ventures, Inc. and $40,000 paid to Alternative2 AG which provided personal consulting services of Mr. Eichenberger to Pulse Entertainment.

Employment Arrangements with Executive Officers

John Textor. Pulse Entertainment has agreed to employ Mr. Textor as its Executive Chairman on an at-will basis. Mr. Textor will be paid an annual base salary of $350,000 plus a performance-based cash bonus as determined by the Company’s Board of Directors from time to time. In addition, Mr. Textor is also entitled to health and welfare benefits as may be in effect at the Company’s discretion from time to time and reimbursement of out of pocket expenses for travel and business expenses in connection with his duties.

Rene Eichenberger. Pulse Entertainment has agreed to employ Mr. Eichenberger as its Executive Chairman on an at-will basis. Mr. Eichenberger will be paid an annual base salary of $350,000 plus a performance-based cash bonus as determined by the Company’s Board of Directors from time to time. In addition, Mr. Eichenberger is also entitled to health and welfare benefits as may be in effect at the Company’s discretion from time to time and reimbursement of out of pocket expenses for travel and business expenses in connection with his duties.

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Frank Patterson. Pulse Entertainment has agreed to employ Mr. Patterson as its Chief Executive Officer on an at-will basis. Mr. Patterson will be paid an annual base salary of $350,000 plus a performance-based cash bonus as determined by the Company’s Board of Directors from time to time. In addition, Mr. Patterson is also entitled to health and welfare benefits as may be in effect at the Company’s discretion from time to time and reimbursement of out of pocket expenses for travel and business expenses in connection with his duties.

James Berney. Pulse Entertainment has agreed to employ Mr. Berney as its President and Head of Studio on an at-will basis. Mr. Berney will be paid an annual base salary of $350,000 plus a performance-based cash bonus as determined by the Company’s Board of Directors from time to time. In addition, Mr. Berney is also entitled to health and welfare benefits as may be in effect at the Company’s discretion from time to time and reimbursement of out of pocket expenses for travel and business expenses in connection with his duties.

William Krueger. Pulse Entertainment has agreed to employ Mr. Krueger as its Chief Financial Officer on an at-will basis. Mr. Krueger will be paid an annual base salary of $240,000 plus a performance-based cash bonus as determined by the Company’s Board of Directors from time to time. In addition, Mr. Krueger is also entitled to health and welfare benefits as may be in effect at the Company’s discretion from time to time and reimbursement of out of pocket expenses for travel and business expenses in connection with his duties. In addition, Pulse Evolution entered into a Consulting Services Agreement with Mr. Krueger effective as of July 1, 2014 to provide financial, organizational and commercial matters consulting services to our company. The term of the agreement is for a period of 10 months. We agreed to pay Mr. Krueger $90,000 in cash and issue 2,769,246 shares of unregistered Common Stock subject to certain events of forfeiture if Mr. Krueger terminates his employment during the term of the agreement without good reason as provided for in the agreement.

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Compensation of Directors

John Textor. In addition to Mr. Textor’s compensation as Executive Chairman discussed above, we have paid Mr. Textor $50,000 to serve in his role on the Board of Directors of the Company as Executive Chairman of the Board for the fiscal year ending June 30, 2015.

Rene Eichenberger. In addition to Mr. Eichenberger’s compensation as Vice Chairman discussed above, we have paid Mr. Eichenberger $25,000 to serve in his role on the Board of Directors of the Company as Vice Chairman of the Board for the fiscal year ending June 30, 2015.

Frank Patterson. In addition to Mr. Patterson’s compensation as Chief Executive Officer discussed above, we have paid Mr. Patterson $25,000 to serve in his role on the Board of Directors of the Company as Executive Chairman of the Board for the fiscal year ending June 30, 2015.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On May 15, 2014, Alon Nigri, our controlling stockholder at the time, former Chief Executive Officer and former sole director (the “Seller”), entered into and closed on a Share Purchase Agreement (the “Agreement”) with, Tradition Studios IP Acquisition LLC, (Alternative)2 Holding AG, and Scenic Loop Holding, LLC (each a “Purchaser” and collectively, the “Purchasers”) whereby the Purchasers purchased from the Seller a total of 5,361,260 shares of our common stock for an aggregate of $107,225, representing approximately 80.68% of our issued and outstanding shares of common stock. The Purchasers own or control as a group, Pulse Entertainment.

During October 2013, the Executive Chairman of the Company entered into an agreement with the Company to loan $5,000 for seed financing. As of June 30, 2014, the Company has repaid the loan in full and there is no balance outstanding.

In March 2014, the Company incurred approximately $3,000 of expenses on behalf of Art Story LLC and has recorded a receivable in other current assets as of June 30, 2014. The Executive Chairman of the Board of the Company has a controlling interest in Art Story, LLC.

Pursuant to the terms of the Share Exchange Agreement pursuant to which we agreed to issue 96,737,422 shares of our unregistered Common stock to the shareholders of Pulse Entertainment, a related party in exchange for 17,466,383 shares of common stock of Pulse Entertainment, certain of our shareholders who are also shareholders of Pulse Entertainment and are executive officers or directors have agreed to cancel 60,910,113 shares of our common stock issuable to them in connection with the exchange resulting in net shares issued in connection with such exchange of 35,827,309.

LEGAL PROCEEDINGS

On May 29, 2014, Hologram USA, Inc., Musion Das Hologram Limited and Uwe Maass (the “Plaintiffs”) filed an amended complaint in the U.S. District Court for the District of Nevada (Case No. 2:14-cv-00772-GMN-NJK). The complaint alleges that Plaintiffs own, or control, certain patents related to the projection illusion technique, historically known as “Pepper’s Ghost.” The Plaintiffs further allege that Pulse Evolution Corporation, Pulse Entertainment Corporation, John Textor, Dick Clark Productions, Inc., John Branca and John McClain, as executors of the Estate of Michael J. Jackson, MJJ Productions, Inc. Musion Events, Ltd. Musion 3D, Ltd., William James Rock and Ian Christopher O’Connell (collectively, the “Defendants”) infringed on the Plaintiffs’ patent rights by using the Plaintiffs’ projection illusion system to project the visual imagery developed and conceived by our company in connection with the a musical performance at the 2014 Billboard Music Awards in Las Vegas Nevada featuring an image of the late Michael Jackson. The Plaintiffs have not alleged that our core business, the production of visual effects or human animation imagery infringes their intellectual property rights. The complaint sought an order of the Court temporarily and permanently enjoining the Defendants from carrying out the Michael Jackson performance, a judgment for infringement, damages, attorneys’ fees and costs. The Plaintiffs’ Emergency Motion for Temporary Restraining Order filed in connection with its May 15, 2014 complaint was denied on May 16, 2014 as the Court found that the Plaintiffs’ failed to establish that they are likely to succeed on the merits of their patent infringement claims and that they are likely to suffer irreparable harm.

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We believe that our claims and defenses in this case are substantial because the visual imagery we develop and conceive is distinct from the Plaintiffs’ projection system allowing us to use a variety of projection systems in our productions. Litigation is, however, inherently unpredictable. The outcome of this lawsuit is subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss is complex. Consequently, we are unable to estimate the range of reasonably possible loss. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but the assessment process relies heavily on estimates and assumptions that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions.

We are involved from time to time in routine litigation arising in the ordinary course of conducting our business. In the opinion of management, no pending routine litigation will have a material adverse effect on our financial condition, results of operations or cash flows.

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the OTC Pink Tier of the OTC Markets Group and has been thinly traded under the symbol “PLFX”. On September 30, 2014, the closing sale price for our common stock was $2.10 on the OTC Pink. Our stock has been thinly traded since approval of our quotation on the OTC Markets Group by the Financial Industry Regulatory Authority (“FINRA”). There can be no assurance that a liquid market for our common stock will ever develop.

As of October 3, 2014, there were approximately 57 record holders, an unknown number of additional holders whose stock is held in “street name” and 117,658,716 shares of our common stock issued and outstanding.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

Please see Item 3.02 - “Unregistered Sales of Equity Securities” of this Current Report.

DESCRIPTION OF SECURITIES

Our authorized capital stock consists of 400,000,000 shares, of which 300,000,000 shares are common stock, par value $0.001 per share and 100,000,000 shares are preferred stock. As of October 3, 2014, there were 117,658,716 shares of our common stock outstanding.

Common Stock

Subject to certain limitations discussed below, holders of common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. Subject to certain limitations discussed below, holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. Our amended and restated articles of incorporation include a mechanism to better maintain an accurate registry of the beneficial owners of record of our capital stock and to determine such beneficial ownership for purposes of receiving dividends when and if declared and for voting on matters that come before shareholders for a vote. In order to achieve this, if a stockholder does not certify to us that their common stock is not being used in a stock loan transaction, we may suspend a stockholder’s right to vote the common stock and receive dividends during the quarterly period of time in which a stockholder’s common stock is being used in a stock loan transaction. In the event of our liquidation, dissolution or winding up, subject to the preferences of any shares of preferred stock which may then be authorized and outstanding, each outstanding share entitles its holder to participate in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock.

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Holders of common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions for the common stock. The rights of the holders of common stock are subject to any rights that may be fixed for holders of preferred stock, when and if any preferred stock is authorized and issued. All outstanding shares of common stock are duly authorized, validly issued, fully paid and non-assessable.

Preferred Stock

We are authorized to issue 100,000,000 shares of “blank check” preferred stock, par value $0.001 per share, in one or more series, subject to any limitations prescribed by law, without further vote or action by the stockholders. Each such series of preferred stock shall have such number of shares, designations, preferences, voting powers, qualifications, and special or relative rights or privileges as shall be determined by the Company’s board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Pursuant to our Amended and Restated Articles of Incorporation and By-laws, we are obligated to indemnify and hold harmless to the fullest extent permitted by Nevada law any person who was or is a party or is threatened to be made a party or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, or by or in the right of our company to procure a judgment in our favor (a “Proceeding”), by reason of the fact that such person is or was a director, officer, employee or agent of our company, or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity, including serving with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of our company; provided, however, with respect to a Proceeding involving the right of our company to procure judgment in its favor, such indemnification shall only cover expenses (including attorney fees) and shall only be made if such person acted in good faith and in a manner such person reasonably believed to be in the best interests of our company and shall not be made with respect to any Proceeding as to which such person has been adjudged to be liable to us unless and only to the extent that the Court of Chancery of the State of Nevada or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court deems proper. We are required to indemnify a person in connection with a Proceeding (or part thereof) initiated by such person only if the Proceeding (or part thereof) was authorized by our Board of Directors.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to our directors or officers pursuant to the foregoing provisions, we have been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in said Act and is, therefore, unenforceable.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the U.S. Securities and Exchange Commission (the “SEC”), located on 100 F Street NE, Washington, D.C. 20549, Current Reports on Form 8-K, Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, and other reports, statements and information as required under the Securities Exchange Act of 1934, as amended.

The reports, statements and other information that we have filed with the SEC may be read and copied at the Commission’s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

The SEC maintains a web site (HTTP://WWW.SEC.GOV.) that contains the registration statements, reports, proxy and information statements and other information regarding registrants that file electronically with the SEC such as us. You may access our SEC filings electronically at this SEC website. These SEC filings are also available to the public from commercial document retrieval services.

Item 3.02 Unregistered Sales of Equity Securities.

Under the Share Exchange Agreement described in Item 2.01 of this report, we exchanged 96,737,422 shares of our common stock for 17,466,383 shares of common stock of Pulse Entertainment Corporation representing 81.11% of its issued and outstanding common stock after giving effect to the cancellation of 60,910,113 shares of our common stock issued in connection with the Exchange.

In the issuances of our common stock, the recipients were accredited investors and the issuances were exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)(2) and Regulation S of that act.

Item 5.01 Changes in Control of Registrant.

The information set forth in Item 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 5.01.

Except as described herein, there were no arrangements or understandings among members of both the former and new control groups and their associates with respect to the election of directors or other matters.

As required to be disclosed by Regulation S-K Item 403(c), there are no arrangements, known to the Company, including any pledge by any person of securities of the Company or any of its parents, the operation of which may at a subsequent date result in a change in control of the Company.

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On September 30, 2014, the Company appointed William Krueger as its Executive Vice President and Chief Financial Officer. The information set forth in Item 2.01 – “Directors and Executive Officers” and “Pulse Entertainment Compensation” of this Current Report on Form 8-K is incorporated by reference into this Item 5.02.

Item 5.06 Change in Shell Company Status.

As a result of the consummation of the transactions described in Item 2.01 of this Current Report on Form 8-K, we are no longer a shell company as that term is defined in Rule 405 of the Securities Act of 1933, as amended, and Rule 12b-2 of the Exchange Act of 1934, as amended.

Item 9.01 Financial Statements and Exhibits

(a)	Financial statements of business acquired. The Audited Financial Statements of Pulse Entertainment Corporation for the period October 10, 2013 (inception) to June 30, 2014 are included in this report as Exhibit 99.1 and are incorporated herein by reference.

(b)	Pro forma financial information. The unaudited pro forma balance sheet as of June 30, 2014 and unaudited pro forma statements of operations for the period October 10, 2013 (inception) to June 30, 2014 to give effect to the acquisition of Pulse Entertainment Corporation are filed as Exhibits 99.2 to this current report and are incorporated herein by reference.

(c)	Shell company transactions. Included in this report as Exhibit 99.1 is the audited financial statements of Pulse Entertainment Corporation for the period October 10, 2013 (inception) to June 30, 2014 and are incorporated herein by reference.

(d) Exhibits

Exhibit		Description

2.1		Share Exchange Agreement among Pulse Evolution Corporation and Pulse Entertainment Corporation dated September 25, 2014 (Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed on September 26, 2014).
3.1		Articles of Incorporation of QurApps, Inc. as filed on May 31, 2013 with the Nevada Secretary of State (Incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S-1 filed on August 7, 2013 (SEC File No. 333-190431)).
3.2		Bylaws of the Registrant (Incorporated by reference to Exhibit 3.2 of the Registration Statement on Form S-1 filed on August 7, 2013 (SEC File No. 333-190431)).
3.3		Amendment to Articles of Incorporation of QurApps, Inc. as filed on May 8, 2014 with the Nevada Secretary of State (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on May 16, 2014 (SEC File No. 333-190431)).
3.4		Amended and Restated Articles of Incorporation of Pulse Evolution Corporation as filed on May 22, 2014 with the Nevada Secretary of State (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on June 30, 2014).
10.1*		Lease Agreement between Pulse Entertainment Corporation and Inland Diversified Port St. Lucie Square, LLC dated March 1, 2014.
10.2*		Asset Transfer and Assignment Agreement between Pulse Entertainment Corporation and Tradition Studios I.P. Acquisition Inc. dated April 4, 2014.
10.3		Form of Share Purchase Agreement between Alon Nigri and certain purchasers (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on May 16, 2014).
10.4+		Consulting Services Agreement between Pulse Evolution Corporation and William P. Krueger dated as of July 1, 2014.
10.5		Partner Agreement between ABG EPE IP, LLC and Pulse Evolution Corporation effective as of August 1, 2014 (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on September 26, 2014).**
10.6		Form of Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on September 26, 2014).
21.1*		Subsidiaries of the Registrant.
99.1*		Audited Financial Statements of Pulse Entertainment Corporation for the period October 10, 2013 (inception) to June 30, 2014.
99.2*		The unaudited pro forma balance sheet as of June 30, 2014 and unaudited pro forma statements of operations for the period October 10, 2013 (inception) to June 30, 2014.

* Filed herewith.

+ Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	PULSE EVOLUTION CORPORATION

Date: October 7, 2014	By:	/S/ Frank Patterson
		Frank Patterson, Chief Executive Officer

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SHOPPING CENTER

LEASE AGREEMENT

FOR

PULSE ENTERTAINMENT CORPORATION

TENANT

TRADITION VILLAGE

SHOPPING CENTER

SHOPPING CENTER LEASE AGREEMENT

TABLE OF CONTENTS

ARTICLE I - ABSTRACT OF LEASE	3

ARTICLE II - SHOPPING CENTER AND PREMISES	4

ARTICLE III - LEASE TERM AND POSSESSION OF PREMISES	5

ARTICLE IV - RENT AND OTHER TENANT CONTRIBUTIONS	6

ARTICLE V - SECURITY	10

ARTICLE VI - CONSTRUCTION, ALTERATIONS, MAINTENANCE AND REPAIRS	11

ARTICLE VII - USE OF PREMISES	14

ARTICLE VIII - LIABILITY INSURANCE AND INDEMNIFICATION	17

ARTICLE IX - LOSS, DESTRUCTION OR TAKING OF PREMISES	19

ARTICLE X - ASSIGNMENT, SUBLETTING, MORTGAGING AND SUBORDINATION	20

ARTICLE XI - DEFAULT AND REMEDIES FOR DEFAULT	21

ARTICLE XII - GENERAL PROVISIONS	23

EXHIBITS

EXHIBIT A -	Site Plan of Shopping Center and Depiction of Location of Premises
EXHIBIT B -	Minimum Rent
EXHIBIT C-1 -	Landlord’s Work
EXHIBIT C-2 -	Tenant’s Work
EXHIBIT C-3 -	Space Plan
EXHIBIT D -	Sign Criteria for Shopping Center
EXHIBIT E -	~~Guaranty~~ Intentionally Deleted
EXHIBIT F-1 -	Prohibited Uses
EXHIBIT F-2 -	Shopping Center Exclusives and Restrictions
EXHIBIT G -	Rules and Regulations
EXHIBIT H -	Sample Certificate of Insurance
EXHIBIT I -	Office Furniture Inventory
RIDER

SHOPPING CENTER LEASE AGREEMENT

ARTICLE I - ABSTRACT OF LEASE

Date of Lease: This Shopping Center Lease Agreement (the “Lease”) is entered into by the undersigned parties on this 17 of March, 2014.

1.1 PARTIES.

A.	LANDLORD:

	Name:	Inland Diversified Real Estate	Phone:	(630) 218-8000
		Services LLC, a Delaware	Rent Payment:	Inland Diversified Real
		limited liability company,	(Location)	Estate Services LLC
		as managing agent for the owner		Bldg #65007
		of the Shopping Center		P.O. Box 74900
	Address:	2901 Butterfield Road		Cleveland, OH 44194-4900
	(for notices)	Oak Brook, Illinois 60523

B.	OWNER:

	Name:	Inland Diversified Port St. Lucie	Phone:	(630) 218-8000
		Square, L.L.C., a Delaware limited
		liability company
	Address:	2901 Butterfield Road
	(for notices)	Oak Brook, Illinois 60523

C.	TENANT:

	Name:	Pulse Entertainment	Phone:	(772) 545-4200
	(and Status)	Corporation, a Delaware	Store Name:	Pulse Entertainment
		Corporation	(Trade Name)
	Address:	c/o Eavenson Lunsford & Owens
	(for notices)	2000 PGA Blvd., Suite 3200
		Palm Beach Gardens, FL 33408

D.	GUARANTOR:

	Name:	None	Phone:	N/A

	Address:

1.2 PROPERTY.

A.	SHOPPING CENTER:

	Name:	Tradition Village	Description: Site Plan showing the layout
	Location:	10400 SW Village Center Drive,	of Shopping Center (and approximate
	(include county)	Port St. Lucie, St. Lucie County,	location of Premises) is attached as Exhibit
		FL, 34987	A.

B.	PREMISES:

	Space No.:	(Unit # 28)	Description: Approximately 7,200 square
	Address:	10521 SW Village Center Drive	feet of gross floor area as outlined on
		Suite 201, Port St. Lucie, FL	the Site Plan attached as Exhibit A.
		34987

1.3 TERM OF LEASE.

	A.	The term (the “Term”) of this Lease shall be for a period commencing on the date of Landlord’s delivery of possession of the Premises to Tenant with Landlord’s Work “substantially completed” (as defined and described in Section 6.2 below)(the “Commencement Date”), and ending and expiring on the last day of the month which is One (1) year after the Rent Commencement Date (the “Termination Date”), unless sooner terminated or extended as provided in this Lease. Unless otherwise set forth in the Lease, the Rent Commencement Date shall be the Commencement Date.

	B.	Extended Term: One (1) option of One (1) year, as provided in Section 3.1 below.

1.4 RENT AND OTHER TENANT CONTRIBUTIONS.

	A.	Minimum Rent shall be: See Exhibit B

	B.	Additional Rent as more specifically defined in Section 4.3A shall include Tenant’s Proportionate Share of Operating Expenses, Real Estate Taxes and Insurance (as such terms are defined and described in Section 4.3 below), with an annual adjustment as provided in Section 4.3C. Tenant’s initial estimated share of Operating Expenses is $5.85 per square foot per year or $42,120.00 annually ($3,510.00 monthly) with an annual adjustment (as provided in Section 4.3C) and Tenant’s initial estimated share of Real Estate Taxes as defined in Section 4.3B(3) is $4.15 per square foot per year or $29,880.00 annually ($2,490.00 monthly) with an annual adjustment Section 4.3C). These estimates are based on the best available information at the time this Lease was prepared and do not include any anticipated annual adjustments. If it is determined by Landlord, in Landlord’s reasonable judgment, that its estimates are incorrect, it may adjust Tenant’s estimated payments at any time during the term.

	C.	~~Percentage Rent shall be ____% of Tenant’s Gross Receipts (as defined in Section 4.2) in excess of Minimum Rent for any calendar year calculated and payable on a monthly basis.~~

	D.	The term “Rent” shall include Minimum Rent, Additional Rent~~, Percentage Rent~~ and all other amounts payable by Tenant pursuant to the terms of this Lease.

	E.	Notwithstanding anything in this Lease to the contrary, Rent for the first month (“Initial Rent”) for $11,917.35 (includes applicable sales tax) and the security deposit described in Section 1.5 below shall be paid to Landlord upon execution of the Lease by Tenant. The Initial Rent shall be applied toward the first month that Rent is due pursuant to Section 4.1 and Exhibit B.

1.5 SECURITY DEPOSIT. $11,917.35 (includes applicable sales tax) (Section 5.1).

1.6 CONSTRUCTION, ALTERATIONS, MAINTENANCE, AND REPAIRS.

	A.	Initial Construction by Landlord (Section 6.2): X None. (See Exhibit C-1.)

	B.	Initial Construction by Tenant (Sections 6.4 and 6.7): __X None. (See Exhibit C-2.)

	C.	Sign criteria (Section 6.5) are attached as Exhibit D.

1.7 USE OF PREMISES. Tenant shall use the Premises for only the operation of a general office use and digital animation and for no other purposes whatsoever. Tenant shall operate the Premises throughout the Term under Tenant’s trade name, Pulse Entertainment (“Tenant’s Trade Name”), and no other trade name without Landlord’s prior written consent. Tenant’s use shall be subject to the Prohibited Uses as set forth in Exhibit F-1 and the Shopping Center Exclusives and Restrictions as set forth in Exhibit F-2.

1.8 RESTRICTED AREA. All area located within three (3) miles (measured in a straight line in all directions from the outside property lines of the Shopping Center) of the Shopping Center.

1.9 ANTICIPATED TENANT OPENING DATE: March 1, 2014 (“Opening Date”)

1.10 ABSTRACT OF VARIABLE PROVISIONS AND STANDARD PROVISIONS. The previous provisions of this Article I will be referred to as the “Abstract of Lease” and the provisions of the remaining Articles of this Lease will be referred to as the “Standard Provisions.” Wherever in the Standard Provisions or elsewhere the parties, effective date, premises, rent, charges or other variable terms are defined or referred to, they shall be those identified in the Abstract of Lease above and the exhibits to this Lease. In the event of any conflict between the terms of the Abstract of Lease and the Standard Provisions, the terms of the Abstract of Lease shall supersede and prevail. The Standard Provisions may, however, add detail or clarification to the summary provisions described in the Abstract of Lease.

ARTICLE II - SHOPPING CENTER AND PREMISES

2.1 SHOPPING CENTER. The Premises are part of a shopping center which is depicted substantially in accordance with a site plan (“Site Plan”) as outlined in the attached Exhibit A. The Building shall mean the building located at 10521 SW Village Center Drive, Port St. Lucie, FL 34987. The purpose of the Site Plan attached is to show the general configuration of the Shopping Center and the approximate location of the Premises. Landlord reserves the right to change the size, layout and location of any buildings or common areas, parking and other facilities shown on Exhibit A as well as reduce or expand the size of the Shopping Center. The term “Shopping Center” herein shall be deemed to mean the entire development owned by Landlord from time to time, including any and all existing and proposed structures (whether reflected in Exhibit A or hereafter incorporated in the Shopping Center during the term or any extension thereof), parking facilities, common facilities, and the like to be built on the property shown on said Exhibit A as the same may from time to time be increased by the addition of other land, together with structures and the like thereon which may from time to time be included by Landlord in the development.

2.2 PREMISES.

A. DESCRIPTION. Landlord on behalf of and as agent for the owner of the Shopping Center hereby leases to Tenant and Tenant leases and accepts subject to the terms and conditions of this Lease, the Premises. The square footage of the Premises shall be the square footage set forth in Section 1.2.B above. If the floor area of the Premises, or the Shopping Center shall be more or less than the estimated square footage set forth in Section 1.2 of the Abstract of the Lease, neither the Minimum Rent nor calculation of Tenant’s Proportionate Share hereunder shall be affected. Under no circumstances shall Landlord or Tenant be entitled to any rent credits or other credits past, present and future for an error in the square footage calculation.

B. EXCEPTION AND RESERVATION. Landlord reserves and excepts from the Premises the roof and exterior walls of the building or buildings of which the Premises are a part, and further reserves the right to construct additional floors on the building of which the Premises are a part and the right in, over and upon the Premises as may be reasonably necessary or advisable for the servicing of the Premises or of other portions of the Shopping Center.

C. SUBSTITUTE PREMISES. After the date hereof, Landlord may substitute for the Premises other space (hereinafter called “Substitute Premises”) in the Shopping Center. Insofar as reasonably possible, the Substitute Premises shall have a comparable square foot area and a configuration substantially similar to the Premises. Tenant agrees that all of the obligations of this Lease, including the payment of Minimum Rent, will continue despite Tenant’s relocation to the Substitute Premises. Upon substantial completion of the Substitute Premises, this Lease will apply to the Substitute Premises as if it had been the space originally described in the Lease. Landlord shall use commercially reasonable efforts to minimize any period when the Premises shall be closed to the public as a result of relocation. Provided that Tenant shall be unable to conduct any business at the Shopping Center solely due to such relocation, all Rent shall abate from the date the Premises are closed until the date the Substitute Premises are open for business. Tenant agrees to use all reasonable efforts to open for business in the Substitute Premises as quickly as is reasonably possible under the circumstances, and in all events within thirty (30) days after Landlord delivers possession of the Substitute Premises to Tenant. Landlord hereby agrees to pay the reasonable cost of relocation such as equipment moving and installation costs. Landlord shall not, however, be liable or responsible in any way for damages, loss of business, income or profits or injuries suffered by Tenant pursuant to a relocation in accordance with this provision including, but limited to, loss of goodwill, business, or profits.

2.3 COMMON AREA. Tenant along with its Lease of the Premises receives the non-exclusive right to use, in common with others, the Common Areas of the Shopping Center. The term “Common Areas” herein shall include all common corridors, elevator foyers, restrooms, vending areas and lobby area within the building wherein the Premises are located, all service roads, loading facilities, sidewalks, automobile parking areas, driveways, footways and other facilities designed for common use, as may be installed by Landlord as hereinafter provided, and of such other and further facilities as may be provided or designated from time to time by Landlord for common use, subject, however, to the terms and conditions of this Lease and to reasonable rules and regulations for the use thereof, as prescribed from time to time by Landlord.

ARTICLE III - LEASE TERM

AND POSSESSION OF PREMISES

3.1 TERM.

A. INITIAL TERM. The Term of this Lease shall be as set forth in Section 1.3 above. Notwithstanding the foregoing, this Lease and all of the obligations of Landlord and Tenant set forth herein are binding and shall be in full force and effect from and after the date of their mutual execution of this Lease, and this Lease shall not be deemed a contract to make a lease. Tenant shall be responsible for the payment of any and all utilities servicing the Premises from and after the date that Landlord delivers the Premises to Tenant. Landlord and Tenant agree that if the Term shall not have commenced on or before the first (1^st) anniversary of the date of this Lease, then Landlord and Tenant each shall have the right to terminate this Lease by delivering notice thereof to the other party prior to such commencement.

If this Lease is executed before any portion of the Premises becomes vacant or otherwise available and ready for occupancy, or if any present tenant or occupant of any portion of the Premises holds over and Landlord is unsuccessful in acquiring possession of such portion of the Premises prior to the Commencement Date, Landlord shall not be deemed to be in default hereunder nor in any way liable to Tenant and Tenant agrees to accept possession of such portion of the Premises at such time that Landlord is able to tender the same. Upon its determination of the Commencement Date, the Termination Date and the Rent Commencement Date, Landlord will notify Tenant of same and such dates shall be binding on Landlord and Tenant for all purposes under this Lease.

B. EXTENDED TERM. Provided that Tenant is not in default hereunder, both at the time of exercise of the option as well as at the time of commencement of any Extended Term hereinafter defined, or has not been in default during the 365 days immediately preceding the Termination Date, and provided, further, that this Lease has not been terminated during the initial Term or a prior Extended Term, Tenant shall have the number of options to extend the Term for the number of years each as set forth in Section 1.3.B. above, immediately following the then current term and subject to all of the terms, conditions, covenants and provisions of this Lease (“Extended Term”). Tenant shall exercise its extension rights hereunder in each instance by delivery to Landlord of written notice no earlier than ~~two hundred and seventy (270)~~ one hundred and eighty (180) days and no later than ~~one hundred and eighty (180)~~ ninety (90) days prior to the expiration of the then current term. Except to the extent expressly otherwise set forth herein, nothing contained in this Lease shall be construed as granting any rights to extend the Term beyond the Termination Date. In the event Tenant is in default either at the time it exercises its rights to extend or at the intended commencement date of such Extended Term, then all of Tenant’s extension rights described in this Section shall terminate automatically. The rights set forth herein to extend the Term of this Lease are personal and reserved to the original Tenant and may not be exercised by any successor or assign of the original Tenant. For the purposes of this Lease, the “Term” shall include any “Extended Term.”

3.2 QUIET ENJOYMENT. Landlord agrees that, if the Rent and any other additional charges are being paid in the manner and at the time prescribed and the covenants and obligations of Tenant are being all and singularly kept, fulfilled and performed, Tenant shall lawfully and peaceably have, hold, possess, use and occupy and enjoy the Premises so long as this Lease remains in force without hindrance, disturbance or molestation from Landlord, subject to the specific provisions of this Lease. The loss or reduction of Tenant’s light, air or view will not be deemed a disturbance of Tenant’s occupancy of the Premises nor will it reduce Tenant’s obligations under this Lease or create any liability of Landlord to Tenant.

3.3 SURRENDER OF PREMISES.

A. OBLIGATIONS UPON SURRENDER. Upon any termination of this Lease or termination of Tenant’s right to possession of the Premises, whether by lapse of time, cancellation or termination, forfeiture, or otherwise, Tenant shall immediately surrender possession of the Premises and all buildings and improvements on the same to Landlord in “broom clean” condition and good and tenantable repair, reasonable wear and damage from fire or other casualty or peril excepted, and shall surrender all keys and security codes for the Premises to Landlord at the place then fixed for the payment of Minimum Rent and shall inform Landlord of all security codes, combinations of locks, safes and vaults, if any, in the Premises.

B. RIGHT TO REMOVE. At any time during the ten (10) days before the Termination Date of this Lease, Tenant, if not in default hereunder at such time, shall have the right to remove, at Tenant’s sole cost and expense, and at the end of the Term or termination of Tenant’s right to possession of the Premises, if directed to do so by Landlord, shall remove, at Tenant’s sole cost and expense, from the Premises all furniture, furnishings, signs, and equipment then installed or in place in, on or about the Premises provided, however, Tenant shall make all repairs, at Tenant’s sole cost and expense, to the Premises required because of such removal and to restore the Premises to good order, repair and condition all within such ten (10) day period. If any of such property shall remain on the Premises after the end of the Term, at the option of Landlord, such property shall be and become the property of Landlord without any claim therein of Tenant. Landlord may direct Tenant to remove and repair such property, in which case Tenant agrees to do so, at Tenant’s sole cost and expense, and to reimburse Landlord as Additional Rent for any expense of removal in the event Tenant shall fail to remove such property if and when directed. Tenant hereby grants Landlord the absolute right to dispose of any property remaining on the Premises following Tenant’s failure to remove same in any manner as Landlord determines in its sole discretion without liability therefor to Tenant and at Tenant’s sole cost and expense.

3.4 HOLDING OVER. Any holding over after the expiration of the Term of this Lease or Tenant’s right to possession of the Premises, without the consent of Landlord, shall be construed to be a tenancy from month to month, cancelable by either Landlord or Tenant upon thirty (30) days’ written notice, and at Minimum Rent equal to two hundred percent (200% ) of the total Minimum Rent as existed during the last year of the term hereof for each month or partial month of holding over, and further upon all of the terms and conditions (including, without limitation, the obligation to pay Additional Rent) as existed other than payment of Minimum Rent during the last year of the term hereof. Such holding over by Tenant, and Landlord’s collection of any Rent therefor, shall not serve as permission for Tenant’s continued occupancy of the Premises nor serve to extend the Term. Tenant shall also indemnify, defend and hold Landlord harmless from and against all claims and damages, consequential as well as direct, sustained by reason of Tenant’s holding over. The provisions of this Section 3.4 shall not be deemed to be a waiver of Landlord’s right of reentry or right to regain possession by actions at law or in equity or any other rights under this Lease, and any receipt of payment of holdover Rent by Landlord shall not be deemed a consent by Landlord to Tenant’s remaining in possession or be construed as creating or renewing any lease term or right of tenancy except as elected by Landlord as set forth above.

ARTICLE IV - RENT AND

OTHER TENANT CONTRIBUTIONS

4.1 MINIMUM RENT. Commencing on and as of the Rent Commencement Date, Tenant shall pay to Landlord the minimum annual rent (hereinafter referred to as “Minimum Rent”) set forth in the Abstract of Lease, payable in advance in equal monthly installments on or before the first day of each calendar month, without prior demand therefor and without offset. The first payment date for Minimum Rent shall, if the Rent Commencement Date is other than the first day of a month, include Minimum Rent for the fractional month on a per diem basis (calculated on the basis of the number of days in that particular month); and thereafter the Minimum Rent shall be paid in equal monthly installments in advance on or before the first day of each calendar month during the Term of this Lease.

4.2 ~~PERCENTAGE RENT.~~

A. PAYMENT OF PERCENTAGE RENT. Commencing upon receipt by Tenant of Gross Receipts in any calendar year in excess of the Minimum Rent for such calendar year, Tenant shall pay (on a monthly basis as provided for herein),in addition to the Minimum Rent for such calendar year, to Landlord, at the time and in the manner herein specified, percentage rent (hereinafter referred to as “Percentage Rent”) in an amount obtained by multiplying Tenant’s Gross Receipts for any calendar month by the percentage set forth in Section 1.4 C of the Abstract of Lease and subtracting the Minimum Rent paid by Tenant in such calendar month. In no event shall the calculation of Percentage Rent reduce the amount of Minimum Rent payable to Landlord.

B. GROSS RECEIPTS. The term “Gross Receipts” as used herein is hereby defined to mean gross receipts and sales from all business conducted upon or from the Premises, whether such receipts be obtained at the Premises or elsewhere, and whether such business be conducted by Tenant or by any licensees, concessionaires or tenants of Tenant, and whether such receipts be evidenced by cash, check, credit, charge account, exchange or otherwise, and shall include, but not be limited to, the amounts received from the sale of goods, wares, fixtures and merchandise and for services rendered, including the amount of all orders taken, received or filled at the Premises, whether such orders be filled from the Premises or elsewhere, together with any interest charged to customers on all such amounts. If any one or more departments or other divisions of Tenant’s business shall be sublet by Tenant or conducted by any person, firm or corporation other than Tenant, there shall be included in Gross Receipts for the purpose of fixing the Percentage Rent payable hereunder all the Gross Receipts of such departments or divisions whether such receipts be obtained at the Premises or elsewhere in the same manner and with the same effect as if the business or sales of such departments and divisions of Tenant’s business had been conducted by Tenant itself. Gross Receipts shall also be meant to include any rents collected by Tenant from sublessees, licensees, or concessionaires. Also included in the term Gross Receipts will be all internet or mail order sales in the general geographical area of the Shopping Center by Tenant or a parent, subsidiary or affiliate of Tenant of products normally sold in the Premises by Tenant. Gross Receipts shall not include sales of merchandise for which cash has been refunded, or allowances made on merchandise claimed to be defective or unsatisfactory, provided they shall have been previously included in Gross Receipts; and there shall be deducted from Gross Receipts the sales price of merchandise returned by customers for exchange, provided that the sales price of the merchandise delivered to the customer in exchange shall be included in Gross Receipts. Gross Receipts shall not include the amount of any sales or use tax levied directly on sales and collected from customers and paid by Tenant, provided that specific record is made at the time of each sale of the amount of such sales or use tax and the amount thereof is separately charged to the customer. No franchise or capital stock tax and no income or similar tax based upon income or profits as such and no Gross Receipts tax shall be deducted from Gross Receipts. If Tenant’s goods, wares, merchandise or fixtures are moved off Premises for sale, such sale shall be deemed to have occurred at the Premises.

C. MONTHLY STATEMENT AND PAYMENT. Within thirty (30) days after the end of each calendar month during the Term of this Lease, Tenant shall submit to Landlord an accurate, unaudited, written statement signed by Tenant or on its behalf by a duly authorized officer or representative, showing the full amount of Tenant’s Gross Receipts from the Premises during such month and shall pay to Landlord within such thirty (30)-day period the Percentage Rent, if any, with respect to such month. If Tenant fails to report Gross Receipts within the timeframe stated above, Landlord may, at Landlord’s option, collect as Additional Rent, One Hundred and 00/100 Dollars ($100.00) per incident of violation.

D. SALES TAX REPORTS. Upon the request of Landlord, Tenant shall provide copies to Landlord of all State and local sales and use tax reports filed by Tenant at the time these reports are filed with the appropriate agencies.

E. ANNUAL STATEMENT AND ADJUSTMENT. Within thirty (30) days after each calendar year end, Tenant shall submit to Landlord a statement certified as correct by Tenant, a principal officer of Tenant, or by a certified public accountant, which shall set forth by calendar month the total Gross Receipts of Tenant and of each subtenant, licensee and concessionaire with respect to the preceding calendar year. Upon request, Tenant shall give Landlord the total gross sales and an itemization of each of the permitted deductions herein, to arrive at the total Gross Receipts. If the total of the monthly Percentage Rent payments made during the preceding year is less than Percentage Rent payments for such calendar year as set forth above, then Tenant shall pay such deficiency to Landlord at the time of submitting the year end statement; and if the total such monthly payments exceeds the said amount payable, then Landlord shall credit such excess toward the Minimum Rent owed by Tenant as the same becomes due or, upon termination of the Lease, shall refund any such excess payments to Tenant.

F. BUSINESS RECORDS. The business of Tenant and of any sublessee, licensee, licensee or concessionaire upon the Premises shall be operated so that a duplicate sales slip, invoice or cash register receipt, serially numbered, shall be issued with each sale or transaction, whether for cash, credit or exchange. Tenant shall keep at all times during the Term hereof, at the Premises or at the general office of the Tenant, full, complete and accurate books of account and records in accordance with accepted accounting practices with respect to all operations of the business to be conducted in or from the Premises including the recording of Gross Receipts and the receipt of all merchandise into and the delivery of all merchandise from the Premises during the Term hereof, and shall retain such books and records, as well as all contracts, vouchers, checks, inventory records, and other documents and papers in any way relating to the operation of such business, for at least three (3) years from the end of the lease year to which they are applicable, or, if any audit is required or a controversy should arise between the parties hereto regarding the Rent payable hereunder, until such audit or controversy is terminated.

G. RIGHT TO AUDIT. Landlord shall have the right, but not more than once during any twelve-month period, unless Tenant fails to report Gross Receipts for six (6) consecutive months, to make independent examinations or audits of all of Tenant’s books, records and accounts which pertain to or show Gross Receipts, or to have same made by an accountant or certified public accountants designated by Landlord. Such audits shall be limited to the determination of the Gross Receipts as defined herein and shall be conducted at Tenant’s home office during normal business hours and after reasonable prior notice. If the examination or audit shows that there has been a deficiency in the payment of Percentage Rent, Additional Rent or Minimum Rent, Tenant shall immediately pay to Landlord the deficiency together with interest at the rate of ten percent (10%) per annum from the date the payment should have been made. If, as a result of any audit of Tenant’s records it is determined that Gross Receipts are understated by more than 3%, then Tenant shall also pay the reasonable cost and expenses incurred in connection with such audit. If Tenant shall fail to prepare and deliver any statement of Gross Receipts, required hereunder, within the time provided, then in addition to the remedies available to Landlord under Section 11.2, Landlord may have a certified public accountant, selected by Landlord, audit Tenant’s records and prepare such statements which shall be conclusive on Tenant and Tenant shall pay the expenses of such an audit and preparation of such statements and the Percentage Rent so determined, together with the interest at the rate of ten percent (10%) per annum from the date the payment should have been made. Any information gained from statements as herein provided or any examination or audit shall be confidential and shall not be disclosed except to carry out the purposes hereof, provided, however, that Landlord may disclose the contents of any such statements and/or audit in connection with any financing arrangements or assignment of Landlord’s interest in the Premises or with any litigation with Tenant regarding Gross Receipts or Percentage Rent.

4.3 TENANT’S SHARE OF COMMON AREA AND SHOPPING CENTER EXPENSES.

A. MONTHLY PAYMENT OF ESTIMATED CHARGE. For each year of the Term hereof, Tenant shall pay to Landlord, as additional rent (“Additional Rent”), Tenant’s proportionate share (“Proportionate Share”) of: (i) all costs of operation and maintenance of the Common Areas (“Operating Expenses”); (ii) all real estate taxes levied and assessed against the Shopping Center including the Common Areas (“Real Estate Taxes”); (iii) all insurance coverage upon the Shopping Center and its operations (“Insurance”); and (iv) Landlord’s administrative fees (“Administrative Fee”). As and for Tenant’s Proportionate Share, as hereinafter defined, set forth in the Abstract of Lease, such amount shall be payable as Additional Rent in equal monthly installments at the same times as Minimum Rent is payable hereunder, without demand and without any deduction or setoff whatsoever. Landlord may, at its sole option, adjust Tenant’s monthly payments of estimated charges if Landlord, in its reasonable judgment, determines the estimated charges are incorrect.

B. DEFINITIONS. For the purpose of this Section:

(1) “Tenant’s Proportionate Share” shall be a percentage equal to the rentable square footage of the Premises divided by the total square footage of all rentable floor space in the Shopping Center from time to time; provided, however, that Landlord may exclude from such rentable floor space in the Shopping Center, at Landlord’s option, any portions of the Shopping Center: (i) not occupied or open for business during all or any portion of the subject year, (ii) leased to or used by other parties as major tenants (tenants occupying greater than ten percent (10%) of the Shopping Center), theaters, restaurants, storage areas, or premises in separate buildings, where such parties are not required to pay a full pro rata share of Operating Expenses or Real Estate Taxes, as the case may be, pursuant to a lease or other agreement with Landlord, and (iii) with respect to Real Estate Taxes, areas of the Shopping Center for which separate real estate tax bills are received and which are the sole responsibility of separate parties pursuant to a lease or other agreement with Landlord; provided, Landlord shall also deduct from Operating Expenses (after computing Landlord’s Administrative Fee (as defined in clause (4) below)) or Real Estate Taxes, as the case may be, all amounts received from such excluded parties for Operating Expenses or Real Estate Taxes; provided, Landlord shall also deduct from Real Estate Taxes all amounts received from such excluded parties for Real Estate Taxes. If the Shopping Center shall be a part of or shall include a group of buildings or structures collectively owned or managed by Landlord or its affiliates, or shall include any space used for office, medical, dental or other non-retail purposes, Landlord may determine separately and allocate Real Estate Taxes or Operating Expenses between such buildings and structures and the parcels on which they are located, and between the retail and non-retail areas of the Shopping Center, in accordance with sound accounting and management principles, in which event Tenant’s Proportionate Share shall be based on the ratio for which Landlord separately determines such Real Estate Taxes or Operating Expenses, subject to the adjustments set forth above.

(2) Operating Expenses shall include all expenditures incurred by or on behalf of Landlord in operating, maintaining, repairing or replacing the Shopping Center and Common Areas, including, without limitation, exterior walls and other structural elements of the Shopping Center, the cost of all of Landlord’s gardening and landscaping, assessments, repairs, preventive maintenance, any association fees, repainting including restriping or repaving of parking lot and access ways, repairing or replacing any streets, curbs or parking lots, roof repairs and replacement, updating and maintenance and replacement of directory signs, rental of signs and equipment, lighting, sanitary control, cleaning, sweeping, removal of ice, snow, trash, rubbish, garbage and other refuse, janitorial services, elevator repair and maintenance, repair or replacement of awnings, depreciation over a period not exceeding sixty (60) months of machinery, equipment and other assets used in the operation and maintenance of the Shopping Center, repair or replacement of on-site water lines, sanitary sewer lines, storm water lines, gas lines and electrical lines and equipment serving the Shopping Center, all costs, charges and expenses incurred by Landlord in connection with any change of any company providing utility services including without limitation repair, installation and service costs associated therewith, the cost of police, fire protection, security and traffic control services, Landlord’s management fees, all Landlord’s insurance relating to the common facilities or the Shopping Center as a whole or the operations thereon including, but not limited to, casualty insurance, flood insurance, rent loss insurance, fire insurance and extended coverage as well as general liability insurance, umbrella liability insurance, bodily injury, public liability, property damage liability, automobile insurance, sign insurance, and any other insurance carried by Landlord in limits selected by Landlord, reasonable reserves for anticipated expenditures, costs incurred by Landlord under any operating and easement agreements or other similar agreement of record and the cost of all personnel required to supervise, implement and accomplish all of the foregoing. Notwithstanding the foregoing, the following shall not constitute Operating Expenses: (a) Real Estate Taxes; (b) interest, points and fees on debt or amortization on or for any mortgage or similar security instrument (a “Security Instrument”) encumbering the Shopping Center, and all principal, escrow deposits and other sums paid on or in respect to any indebtedness (whether or not secured by a Security Instrument), and all costs incurred in connection with any financing, refinancing or syndication of the Shopping Center; (c) costs of capital improvements and any other expenditures that, under generally accepted accounting principles (“GAAP”), should be capitalized, except that Operating Expenses shall include the cost during the Term, as reasonably amortized by Landlord in accordance with GAAP, of any capital improvement; (d) costs of improvements to, or alterations of, space leased to or available for lease to any tenant; (e) costs of repairing or restoring any portion of the Shopping Center damaged by a fire or other casualty, except to the extent that such costs constitute expenses (as opposed to capital expenditures) under GAAP and do not exceed the amount of the deductible under the policy of casualty insurance maintained (or required to be maintained) by Landlord, or are not covered or paid for by insurance proceeds; (f) costs of repairs, alterations or replacements required as the result of the exercise of any right of eminent domain or conveyance in lieu thereof, except to the extent that such costs constitute expenses (as opposed to capital expenditures) under GAAP and are not part of the condemnation award payable to Landlord with respect thereto; (g) costs and expenses incurred in connection with leasing space in or procuring tenants for the Shopping Center, including, without limitation, leasing commissions and advertising expenses, and legal and other professional fees; (h) court costs and legal fees incurred to enforce the obligations of tenants under leases of portions of the Shopping Center, or resulting from the violation by Landlord of the terms and conditions of any lease; (i) costs of correcting defects in the initial construction of the Shopping Center, provided that this shall not exclude the cost of normal repair and maintenance expected with respect to the construction materials and equipment installed in the Shopping Center; (j) wages, salaries, compensation and benefits of any employees above the level of property manager; and (k) fines, interest, charges, penalties, damages and other costs incurred by Landlord by reason of any default (or claim of default) or late payment by it under any lease or other contract or instrument (regardless of whether or not the payment itself is allowed to be included in Operating Expenses), including, without limitation, any legal and other professional fees paid or incurred in connection therewith;

(3) Real Estate Taxes shall include all taxes, assessments and other governmental charges, general and special, ordinary and extraordinary, of any kind and nature whatsoever, including, but not limited to, assessments for public improvements or benefits, which shall during the Term hereof be paid, assessed, levied, imposed upon or become due and payable and Landlord’s reasonable expense in obtaining any refund or reduction of Real Estate Taxes, subject only to the following:

(a) Franchise, estate, inheritance, succession, capital levy, transfer, federal and state income and excess profit taxes imposed upon Landlord shall be excluded; and

(b) If at any time during the Term of this Lease and notwithstanding clause (3)(a) above, a tax or excise on rents or other tax, however described, is levied or assessed against Landlord on account of the rent expressly reserved hereunder, as a substitute in whole or in part for taxes assessed or imposed on land and buildings or on land or buildings, such tax or excise on rents or other tax shall be included within the definition of real estate taxes, but only to the extent of the amount thereof which is lawfully assessed or imposed as a direct result of Landlord’s ownership of this Lease or of the Rent accruing under this Lease;

(4) Landlord’s Administrative Fee shall be an amount which is not to exceed fifteen percent (15%) of the aggregate of the sum of items B (2) and (3) hereinabove

C. ANNUAL STATEMENT AND ADJUSTMENT. After the end of each calendar year, and following receipt of billings for Real Estate Taxes and Insurance, Landlord shall supply Tenant with a summary of all costs and expenditures as enumerated above and a determination of Tenant’s Proportionate Share thereof. In the event the amount billed to Tenant shall be less than its Proportionate Share, the same shall be paid as Additional Rent within ten (10) days after notice of such determination. In the event the amount billed to Tenant exceeds its Proportionate Share, then such excess shall be applied to the next Minimum Rent coming due, until fully exhausted (provided, that if such excess is determined after the Termination Date, then, provided and subject to the condition that Tenant shall not be in default of this Lease, such excess shall be refunded to Tenant). Said summary shall also contain a determination by Landlord of the monthly sum to be paid by Tenant during the succeeding months of the lease year, if an adjustment is required, which determination shall be based in part on the expenses for the preceding year modified by any known increases in the cost of said services. Failure of Landlord to provide notice of under or overpayment shall not constitute or a default by Landlord under this Lease and will not waive any of Landlord’s rights to collect such payments or Tenant’s obligations hereunder including, but not limited to, Tenant’s obligations to pay its Proportionate Share of all costs and expenditures, but will extend each party’s rights until the date notice is given.

D. BOOKS AND RECORDS. Landlord shall maintain complete and accurate books and records of all Operating Expenses paid or incurred by Landlord and all payments of Operating Expenses received from Tenant. Such books and records shall be kept at a location in the continental United States known to Tenant, and Tenant or auditors selected by Tenant shall have the right, within ninety (90) days of the initial billing, with a minimum of ten (10) days’ prior notice, to inspect and audit such books and records at any time during normal business hours, at Tenant’s sole cost and expense. Unless Tenant objects to Landlord’s billing, within ninety (90) days of the initial billing, Landlord’s calculation of Operating Expenses shall be final and binding on Tenant. If Tenant objects to Landlord’s billing, the Landlord and Tenant shall, in good faith, attempt to resolve any such objections.

4.4 RENT PAYMENT PROCEDURES.

A. PAYMENT LOCATION. Tenant shall, without prior notice or demand and without any setoff or deduction whatsoever, pay all Minimum Rent, Additional Rent~~, Percentage Rent~~ and other charges and render all statements herein prescribed at the Landlord’s address or other office specifically provided in the Abstract of Lease or to such other person or corporation, and at such other place as may be designated by Landlord in writing from time to time.

B. TAXES ON RENT. Tenant shall further pay to Landlord any and all excise, privilege, sales, rental and other taxes, levied or assessed by any governmental authority upon or measured by the Rent reserved to Landlord under the provisions of this Lease. Such tax shall be paid by Tenant whether or not it comprises a portion of any Real Estate Taxes or real property tax bills. Tenant agrees to pay the applicable Florida sales tax on Minimum Rent and Additional Rent, which is subject to change.

C. INTEREST AND LATE CHARGES. Tenant covenants and agrees that all sums to be paid under this Lease, if not paid when due, shall bear interest on the unpaid portion thereof at the per annum rate equal to the lesser of eighteen percent (18%) or the maximum rate permitted by law from the date when due but not in excess of the highest legal rates. Tenant further agrees that for each calendar month, that the Rent is not paid to Landlord within ten (10) days of the due date as provided herein above, Tenant shall promptly pay to Landlord a late fee equal to the greater of $150.00 or ten (10%) percent of the monthly Rent. If Landlord shall pay any monies, or incur any expenses in correction of any violation of any covenant of Tenant herein set forth, the amounts so paid or incurred shall, at Landlord’s option and on notice to Tenant, be considered Additional Rent payable by Tenant with the first installment of Minimum Rent thereafter to become due and payable, and may be collected or enforced as by law provided with respect to Rent. Tenant shall pay to Landlord Fifty and no/100 ($50.00) dollars for each of Tenant’s checks returned to Landlord unpaid by Tenant’s bank.

4.5 TAXES AND ASSESSMENTS ON TENANT’S PROPERTY. Tenant shall be responsible for and shall pay before delinquency all taxes assessed against the leasehold interest or personal property of any kind owned or placed in, upon or about the Premises by Tenant. Tenant hereby agrees to protect and hold harmless Landlord and the Premises from all liability for Tenant’s share of any and all such taxes, assessments and charges together with any interest, penalties or other charges thereby imposed, and from any sale or other proceedings to enforce payment thereof, and to pay all such taxes, assessments and charges before same become a lien on the Premises. If any tax lien is threatened by any governmental entity, agency or authority, or in the event of the filing of a notice of any such lien, Tenant will promptly pay same and take steps immediately to have same removed. If the lien is not removed within twenty (20) days from the date of written notice from Landlord, Landlord shall have the right, at Landlord’s option, to cause the same to be discharged by record of payment, deposit, bond or order of a court of competent jurisdiction or otherwise, or to pay any portion thereof and of the amounts so paid, including attorneys’ fees and expenses connected therewith, together with interest on all of the foregoing at the per annum rate equal to the lesser of eighteen percent (18%) or the maximum rate permitted by law, shall be Additional Rent due from Tenant to Landlord and shall be paid to Landlord immediately upon rendition to Tenant of a bill.

4.6 UTILITIES CONSUMED ON THE PREMISES. In addition to all payments of Minimum Rent and Additional Rent herein specified, Tenant shall be responsible for and shall pay for all utilities used, or consumed in or upon the Premises, and all sewer charges, as and when the charges therefor shall become due and payable. Commencing on the date Landlord notifies Tenant that the Premises are ready for occupancy, Tenant shall make all appropriate applications to the local utility companies and pay all required deposits for meters and service for all utilities commencing with the delivery of possession of the Premises as provided in Section 6.2. Landlord at its option may control the provider of electrical service to the Premises. If permitted by Law, Landlord shall have the right at any time and from time to time during the Term to either contract for service from a different company or companies providing electricity service (each such company shall hereinafter be referred to as an “Alternate Service Provider”) or continue to contract for service from the present provider of electric service (“Electric Service Provider”). Tenant shall cooperate with Landlord, the Electric Service Provider and any Alternate Service Provider at all times and, as reasonably necessary, shall allow Landlord, Electric Service Provider, and any Alternate Service Provider reasonable access to the Shopping Center’s electric lines, feeders, risers, wiring, and any other machinery within the Premises.

Landlord shall in no way be liable or responsible for any loss, damage (direct, indirect or consequential), or expense that Tenant may sustain or incur by reason of any change, failure, interference, disruption, or defect in the supply or character of the electric energy furnished to the Premises, or if the quantity or character of the electric energy supplied by the Electric Service Provider or any Alternate Service Provider is no longer available or suitable for Tenant’s requirements, and no such change, failure, defect, unavailability, or unsuitability shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under the Lease.

In the event any utility or utility services (such as water or sewage disposal) are not separately metered or assessed to Tenant or are otherwise furnished to Tenant for which Landlord is billed directly or for which a lien could be filed against the Premises or any portion thereof, Tenant shall at Landlord’s request pay the cost thereof as Additional Rent to Landlord (or any proration of such cost attributable to the Premises as determined by Landlord in Landlord’s sole and absolute discretion) as and when the charges thereof become due and payable; otherwise, Tenant shall deliver original receipt bills to Landlord not less than 30 days before the same are due and payable without interest or penalty together with full payment for same. In no event shall Landlord be liable for any interruption or failure in the supply of any utilities to the Premises.

~~4.7 SHOPPING CENTER PROMOTIONS.~~ Tenant agrees to participate in, and pay a fee equal to $1.00 per square foot per year for its pro rata share of, all promotions and marketing activities relating to the Shopping Center as a whole, including, without limitation, cooperative advertising employed in connection with such promotions. Tenant shall include the name and location of the Shopping Center in all advertising done by Tenant for its business at the Premises.

4.8 INDEPENDENT COVENANTS. Tenant’s covenants to make payments pursuant to this Lease including, but not limited to, Minimum Rent, Additional Rent ~~and Percentage Rent~~ are independent covenants and, except as expressly set forth in this Lease, are not subject to setoff, deduction, reduction, abatement or suspension of any kind during the Term including any extension thereof.

ARTICLE V – SECURITY

5.1 SECURITY DEPOSIT. When delivered to Landlord upon execution of this Lease, the Security Deposit shall remain on deposit with Landlord during the Term of this Lease and any extensions thereof as security for the payment of Rent and the full and faithful performance by Tenant of the covenants and conditions of this Lease. In the event of any default, the Security Deposit shall be retained by Landlord and may be applied toward damages arising from such default. Said deposit shall not be construed as liquidated damages. Upon yielding of the Premises at the termination of this Lease and in compliance with the terms and provisions of this Lease, and provided no default has occurred, the Security Deposit shall be returned to the Tenant. No interest shall be payable on the Security Deposit. Should Landlord convey its interest under this Lease, the Security Deposit, or the part or portion thereof not previously applied, shall be turned over to Landlord’s grantees or assignees; and Tenant hereby releases Landlord from any liability with respect to the Security Deposit and Tenant agrees to look solely to such grantee or assignee for the return of the Security Deposit and this provision shall also apply to subsequent grantees or assignees. Should the entire Security Deposit, or any portion thereof, be appropriated and applied by Landlord for the payment of unpaid Minimum Rent, Additional Rent or other sums due and payable to Landlord by Tenant, then Tenant shall, upon written demand by Landlord, remit to Landlord a sufficient amount in cash to restore the Security Deposit to the original sum deposited, and Tenant’s failure to do so shall constitute a breach of this Lease for nonpayment of Rent.

5.2 SECURITY AGREEMENT. As additional security for Tenant’s covenants and obligations under this Lease, Tenant hereby grants to Landlord a security interest in Tenant’s furniture, fixtures, equipment and inventory, together with all accessions thereto. Landlord shall have the right to file or record any appropriate financing statements to perfect its lien on such furniture, fixtures, equipment and inventory. If requested by Landlord for clarification purposes, Tenant shall provide a security agreement separate and apart from this Lease. Upon the occurrence of any event of default as defined in this Lease, Landlord shall have all rights with respect to the above named collateral granted a secured party pursuant to the Uniform Commercial Code or other applicable statutes. Except by the written consent of the Landlord, Tenant shall not execute or deliver any security interest in any furnishings, trade fixtures, equipment, machinery, or other property placed upon the Premises at any time other than that granted Landlord herein.

5.3 SECURITY IN ADDITION TO OTHER REMEDIES. The security given Landlord in this Article shall not limit, replace or obviate the remedies of Landlord upon a default by Tenant as described at Article XI below.

ARTICLE VI - CONSTRUCTION,

ALTERATIONS, MAINTENANCE AND REPAIRS

6.1 CONDITION OF THE PREMISES. Except for any initial construction set forth on Exhibit C-1 and Landlord’s duty to repair as provided in Section 6.3, Tenant hereby accepts the Premises “as is” without any representation, warranty or expectation as to the condition of the Premises, and Landlord makes no other representation or warranty of any kind, express or implied, with respect to the Premises, Shopping Center or the Lease (without limitation, Landlord makes no representation or warranty as to the habitability, fitness or suitability of the Premises or the Shopping Center for a particular purpose, or relating to the requirements, timelines or costs of permits, licenses or governmental approvals needed for Tenant’s operations, which shall be Tenant’s sole responsibility, or relating to the cost or availability of insurance required to be obtained by Tenant under this Lease; all of which Tenant has had an opportunity to investigate prior to the execution of this Lease). It is agreed that by accepting possession of the Premises, Tenant acknowledges (i) Landlord’s full and final completion of Landlord’s Work as set forth in Exhibit C attached hereto and made a part hereof, (ii) Landlord’s construction and delivery of the Premises to Tenant in the condition called for hereunder, and (iii) that the Premises were in good and satisfactory condition as of the time of such taking, subject, however, in all events, to Punch List Items (as defined in Section 6.2 below).

6.2 INITIAL CONSTRUCTION BY LANDLORD. The responsibility for performance and payment for the initial construction of improvements on and in connection with the Premises, if any, is set forth in Exhibit C-1 attached hereto and made a part hereof, and except as expressly set forth herein, Landlord is under no responsibility to make any changes to the Premises or the Shopping Center, make any representations, perform any act or service, or provide Tenant with any permits, certificates, drawings, or other materials or information as a requirement of delivery. Landlord shall use commercially reasonable efforts to substantially complete such construction in a timely manner, provided that in the event such substantial construction is delayed or hindered by strikes, casualties, fires, injunctions, inability to secure materials, restraints of law, actions of the elements, or any other causes beyond the reasonable control of Landlord, or by any acts or omissions of Tenant, then the construction period shall be extended to the extent of such delays.

Landlord’s Work shall be deemed to be “substantially completed” for all purposes under this Lease if and when the Landlord’s Work has been completed, except for minor, finish-out and so-called punch list items (collectively, “Punch List Items”) in substantial compliance with the plans and specifications therefor. Notwithstanding the foregoing, the Premises shall be deemed to have been “substantially completed” upon Landlord’s delivery of possession thereof to Tenant, unless Tenant, within ten (10) days after receipt of such possession, notifies Landlord in writing that the Premises have not been “substantially complete” and the specific, detailed reasons therefor. Tenant agrees that, within ten (10) days after Landlord’s delivery of the Premises to Tenant, Tenant shall inspect the Premises with Landlord or its representative and execute Landlord’s standard punch list (“Punch List”) which shall identify any uncompleted portions of Landlord’s Work agreed to by Landlord and Tenant. If Landlord and Tenant are unable to agree upon the work to be included in the Punch List, the dispute shall be submitted to an architect selected by Landlord for resolution, whose decision as to the work to be included in the Punch List shall be final and binding on the parties. All costs and expenses incurred in connection with the resolution of any such dispute shall be shared equally by Landlord and Tenant. Tenant further agrees that at the request of Landlord from time to time thereafter, Tenant shall promptly furnish to Landlord a revised Punch List reflecting the completion of any prior Punch List Items. If Tenant fails to conduct such inspection or execute the Punch List, Landlord is authorized to complete and sign the Punch List on behalf of Tenant, which as so completed shall be binding upon Tenant.

Tenant, its agents, servants and contractors, prior to the delivery of possession of the Premises, shall have the right to enter upon the Premises, for the purpose of taking measurements or making Tenant’s improvements therein, but for no other purposes; provided, however, that such entry shall not interfere with or obstruct the progress of the work being done by Landlord and further provided Tenant has first delivered evidence of liability insurance in amounts as are required by the terms of this Lease.

6.3 LANDLORD’S DUTY TO REPAIR. Landlord shall, subject to Tenant’s reimbursement as provided in Section 4.3, maintain in good repair the exterior walls, roof, and sidewalks located on the Shopping Center, Common Areas, mechanical systems (excluding HVAC), electrical, plumbing and fire/life safety system located in the Common Areas of the Building systems, exterior windows of the Building, and elevators serving the Building. Tenant will maintain an elevator maintenance contract for the elevator which exclusively serves the Premises and Tenant shall be responsible for Fifty Percent (50%) any repairs and maintenance of such elevator. Upon receipt of an invoice from Landlord for any such repairs and maintenance, Tenant agrees to reimburse Landlord Fifty Percent (50%) within thirty (30) days following receipt of such invoice. Tenant agrees that it will not permit or authorize any person to go onto the roof of the building of which the Premises are a part without the prior written consent of Landlord. 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 its sole discretion arrange for a maintenance contract of all roof structures, the cost of which shall be Tenant’s responsibility as to Tenant’s Proportionate Share thereof. Tenant shall pay, as Additional Rent to Landlord, its Proportionate Share of the cost of said repairs and maintenance incurred by Landlord.

6.4 TENANT’S ALTERATIONS AND IMPROVEMENTS TO PREMISES. Tenant shall not make or cause to be made any alterations, additions or improvements to the building, or install or cause to be installed any interior signs, floor covering, exterior lighting, plumbing fixtures, shades or awnings, radio or television antennae, loud speakers, sound amplifiers or similar devices, or make any changes to the storefront or exterior of the building without first obtaining Landlord’s written approval and consent. Tenant shall present to the Landlord plans and specifications for such work at the time approval is sought. Such approval shall not be deemed Landlord’s requirement that such work be done or that Landlord is a party to any contract for such work. No additions, alterations, changes or improvements shall be made which will weaken the structural strength, lessen the value of, or change the architectural appearance of any building or other construction. Landlord may condition its approval of any additions or alterations by Tenant on the requirement that Tenant or its contractor secure and bear the cost of a labor and materials payment bond for the amount of the proposed construction reflecting Landlord as an obligee. All building materials and fixtures installed by Tenant shall be new or completely reconditioned. At Landlord’s sole option, Tenant, at its sole cost and expense, shall, in connection with completion of its work, deliver copy of invoices lien waivers from the general contractors, all subcontractors and suppliers in such forms as provided by Landlord to Tenant upon request and a date down of the Landlord’s title policy, insuring no construction related exceptions including, but not limited to mechanic’s liens, resulting from work completed by or on behalf of Tenant. Prior to commencement of any work, Tenant shall provide certificates of insurance for worker’s compensation and liability insurance relating to such work in all amounts as are required by Landlord and naming Landlord, Landlord’s mortgagee and such other parties as are designated by Landlord, as additional insured parties. All alterations, improvements, additions and fixtures made or installed by Tenant as aforesaid shall remain upon the Premises at the expiration or earlier termination of this Lease and shall become the property of Landlord, unless Landlord shall, prior to the expiration or termination of this Lease, have given written notice to Tenant to remove the same, in which event Tenant shall remove the same and restore the Premises to the same good order and condition in which it was at the commencement of this Lease. Should Tenant fail so to do, Landlord may do so, collecting, at Landlord’s option, the cost and expense thereof from the Tenant as Additional Rent, together with a fee of Five Hundred and No/100 Dollars ($500.00) for the administrative costs thereof.

6.5 SIGNS. Tenant shall not place, alter, exhibit, inscribe, point, or affix any sign, awning, canopy, advertisement, notice or other lettering on any part of the outside of the Premises or of the building of which the Premises is a part, or inside the Premises if visible from the outside, without first obtaining the Landlord’s written approval thereof; and Tenant further agrees to maintain such sign, awning, canopy, decoration, advertising matter, lettering, etc., as may be approved in good condition and repair at all times, and repair all damage to the Premises that is caused by the installation, maintenance or removal of such signs, lettering, etc. All signs shall comply with the sign criteria provided by Landlord in Exhibit D and the Tradition Master Sign Program dated June 19, 2008 provided to Tenant, and Tenant shall be obligated to install at least one sign in conformance with, as well as any additional signs required by, such sign criteria. All tenant signs shall, at Tenant’s cost, comply with applicable laws, codes, ordinances, rules and regulations. If directed by Landlord, Tenant, at its sole cost, shall remove all signs upon the termination of the Lease and will repair all damage caused by such removal.

6.6 FURNITURE, TRADE FIXTURES AND EQUIPMENT. Tenant shall not cut or drill into, or secure any trade fixture, apparatus or equipment of any kind to any part of the Premises without first obtaining the written consent of Landlord. All furnishings, trade fixtures, equipment, and machines installed by Tenant in the Premises shall be new or completely reconditioned and remain the property of Tenant subject to Landlord’s security interest as defined in Section 5.2 above and shall be removable by Tenant subject to Landlord’s security interest as defined in Section 5.2 above at the expiration or earlier termination of this Lease or any renewal or extension thereof, provided that in the event of such removal Tenant shall promptly restore the Premises to their original order and condition. Any such equipment not removed at or prior to such termination shall, at Landlord’s option, be and become the property of Landlord. If any personal property is leased or otherwise owned by a third party, Tenant shall provide Landlord with the identity of the owner in sufficient detail for Landlord to be able to communicate with such owner.

6.7 INITIAL INSTALLATION AND IMPROVEMENTS BY TENANT. Tenant, prior to commencing any work in, at or upon the Premises, shall submit to Landlord for Landlord’s prior written approval: (i) complete architectural, electrical and mechanical plans and specifications covering all work which Tenant proposes to do in the Premises, including the installation of any fixtures therein, whether such work is to be done by Tenant or by others, (ii) sworn statements from Tenant and its general contractor, including the names, addresses and copies of contracts for all contractors and materials suppliers; (iii) all necessary permits evidencing compliance with all applicable governmental rules, regulations and requirements and payment of all impact, usage or other fees; (iv) certificates of insurance in form and amounts required by Landlord, naming Landlord, Landlord’s mortgagee and such other parties, as designated by Landlord, as additional insureds; and (v) all other documents and information as Landlord may reasonably request in connection with such work. All plans and specifications shall be prepared in such detail as is required by the applicable governmental jurisdiction in which the Shopping Center is located and, if such applicable governmental jurisdiction does not require submittal of such plans and specifications, then in such detail as Landlord reasonably requires and Tenant agrees not to commence work upon any portion of the Premises until Landlord has approved such plans and specifications in writing. Landlord agrees to act with reasonable promptness with respect to the approval or non-approval of such plans and specifications. Any changes in said plans or specifications must be similarly approved, in writing, by Landlord.

Upon receiving possession of the Premises from Landlord, Tenant, at its sole expense, shall with due diligence proceed to commence work on these initial improvements and alterations to the Premises and to install such furnishings, trade fixtures and equipment and to perform such other work as shall be necessary or appropriate in order to prepare the Premises for the opening of business. In the event that Tenant does not open the Premises for the conduct of its business on or before the Tenant Opening Date, such shall be considered to be a Tenant default and will be governed by the provisions of Section 11.1 (5). Landlord, in addition to all other remedies hereunder as provided in Section 11.2, shall also have the right to terminate this Lease by giving Tenant notice of such termination, whereupon this Lease shall be terminated unless within seven (7) days of the giving of said written notice of termination, Tenant shall have opened the Premises for the conduct of its business.

All of Tenant’s work and installations shall be done in a first-class, workmanlike manner using qualified labor and high quality material and in compliance with all laws, rules, regulations and orders of all governmental authorities having jurisdiction thereof and free of liens and claims for liens. Tenant’s work shall be conducted so as not to interfere with other work in progress in the Premises or the Shopping Center or with other tenants’ business and, in the performance of Tenant’s work, Tenant shall engage and employ only such labor as will not cause any conflict or controversy with any labor organization representing trades performing work for Landlord or others in the Shopping Center, or any part thereof, including the Premises. At Landlord’s sole option, Tenant at its sole cost and expense, shall, in connection with the completion of its work, deliver a general contractor’s affidavit, copies of invoices, lien waivers from the general contractor, all subcontractors and suppliers in such forms as provided by Landlord to Tenant upon request and a date down of Landlord’s title policy, insuring no construction related exceptions including, but not limited to mechanic’s liens, or lien exceptions resulting from work completed by or on behalf of Tenant.

Tenant shall, at Tenant’s own expense, promptly remove from the Premises and the Shopping Center area all trash and debris which may accumulate in connection with Tenant’s work in the Premises. Tenant, prior to delivery of possession, shall with the prior consent of Landlord be permitted to install fixtures and equipment. Any work done by Tenant prior to delivery of possession of the Premises shall be done in a manner as will not interfere with the progress of the work by Landlord of completing construction and Landlord shall have no liability or responsibility for loss of, or any damage to fixtures, equipment or other property of Tenant so installed or placed on the Premises.

Tenant will obtain, at its sole cost, a certificate of occupancy or similar approval and deliver a copy thereof to Landlord upon completion of Tenant’s work.

6.8 MECHANIC’S LIENS. If Tenant makes any alterations or improvements in the Premises, Tenant must pay for same when made. Nothing in the Lease shall be construed to authorize Tenant or anyone dealing with or under Tenant, to charge the rents of the Premises, or the property of which the Premises form a part, or the interest of Landlord in the estate of the Premises, or any person under and through whom Landlord has acquired its interest in the estate of the Premises, with a mechanic’s lien or encumbrance of any kind, and under no circumstances shall Tenant be construed to be the agent, employee or representative of Landlord in the making of any such alterations or improvements to the Premises. If a mechanic’s or materialmen’s lien is threatened by any contractor or supplier, or in the event of the filing of a notice of any such lien, Tenant will promptly pay same and take steps immediately to have same removed. If the lien is not removed within ten (10) days from the date of written notice from Landlord, Landlord shall have the right at Landlord’s option to cause the same to be discharged by record of payment, deposit, bond or order of a court of competent jurisdiction or otherwise, or to pay any portion thereof and of the amounts so paid, including attorneys’ fees and expenses connected therewith, together with interest on all of the foregoing at the per annum rate equal to the lesser of eighteen percent (18%) or the maximum rate permitted by law, shall be Additional Rent due from Tenant to Landlord and shall be paid to Landlord immediately upon rendition to Tenant of bill. Tenant will indemnify, defend and hold harmless Landlord from and against all loss, claims, damages, costs or expenses suffered by Landlord by reason of any repairs, installations or improvements made by Tenant. Tenant will provide insurance certificates from all contractors performing Tenant’s work in form and substance as is required by Tenant under this Lease.

No mechanics’ or materialmens’ liens or mortgages, deeds of trust, or other liens of any character whatsoever created or suffered by Tenant shall in any way, or to any extent, affect the interest or rights of Landlord in any buildings or other improvements on the Premises, or attach to or affect Landlord’s title to or rights in the Premises including, but not limited to, Landlord’s reversionary interest or other estate or interest of Landlord in the Premises. Tenant shall notify all contractors constructing such improvements or supplying labor and/or materials that no mechanics’ lien filed by Tenant’s contractors shall extend to Landlord’s interest in the Premises or the Shopping Center, in accordance with Section 713.10, Florida Statutes.

6.9 TENANT’S DUTY TO REPAIR AND MAINTAIN PREMISES. Tenant, at its sole cost and expense, shall keep and maintain in good order, condition and repair (including any such replacement, periodic painting, and restoration as is required for that purpose) the Premises and every part thereof and any and all appurtenances hereto located, including, but without limitation, the exterior and interior portion of all doors, door checks, ~~windows, plate glass, store front~~, all plumbing and sewage facilities within the Premises including free flow up to the main sewer line, fixtures, heating and air conditioning and electrical systems (whether or not located in the Premises), sprinkler systems, walls, floors and ceilings (including (i) any damage to the walls, floors, ceilings or the other areas of the Premises or (ii) any mold or mildew condition on the walls, floors, ceilings or the other areas of the Premises, caused by or resulting from moisture on or about the Premises), motors applicable to the Premises, and all alterations, improvements and installations made by Tenant under the terms of this Lease and any exhibits thereto, as herein provided; any repairs required to be made in the Premises due to burglary of the Premises or other illegal acts on the Premises or any damage to the Premises caused by a strike involving the Tenant or its employees.

Tenant shall maintain and bear the expense of the light fixtures and bulbs, any sprinkler system, air-conditioning units and filters, janitorial services, interior pest control, and the like. In the event that any governmental regulations or insurance company insuring the Shopping Center or the Premises, from time to time, shall require modifications including, but not limited to, emergency lighting to be installed in the Premises, the installation and the maintenance of the same, including providing of battery power, shall be the responsibility of Tenant. Tenant will not cause or permit accumulation of any debris or extraneous matter on the roof of the Premises and will be responsible for any damage caused to the roof by any acts of the Tenant, its agents, servants, employees or contractors of any type or nature.

At all times during the Term, Tenant, at its sole cost and expense, shall maintain a maintenance contract in effect with a licensed competent contractor for the consistent periodic (which shall be at least quarterly, or more frequently if required by any manufacturer’s warranty) inspection and maintenance of all heating, ventilation and air conditioning (“HVAC”) systems located on or for the use of the Premises. If the permitted use of the Premises is as a restaurant or other prepared food provider, Tenant will install a grease trap prior to opening for business. Tenant, at its sole cost and expense, shall maintain in effect at all times during the term of the Lease (or so long as the use of the Premises includes a restaurant or other food provider) a grease trap maintenance contract for the consistent and periodic inspection and maintenance of all grease traps located on or which service the Premises. All HVAC and grease trap maintenance contracts will be entered into with responsible, experienced providers. Tenant is obligated to provide copies of all such maintenance contracts to Landlord on an annual basis.

If Tenant refuses or neglects to commence and to complete repairs or maintenance required herein promptly and adequately, Landlord may, but shall not be required to, make and complete said repairs and Tenant shall be liable for the cost thereof to Landlord as Additional Rent. Except to the extent otherwise expressly provided in Section 6.3 above, or Sections 9.1 or 9.2 below, Landlord shall not be obligated to repair, replace, maintain or alter the Premises, and Tenant waives all laws in contravention thereof.

ARTICLE VII - USE OF PREMISES

7.1 TENANT’S USE OF THE PREMISES. Tenant shall use and occupy the Premises only for those permitted uses reflected in Section 1.7 of the Abstract of Lease and for no other purpose without Landlord’ s prior written consent. Additionally, Tenant shall not violate in any manner (a) the exclusive use rights granted by Landlord to other tenants in the Shopping Center when Tenant has received written notice of such exclusive use rights, (b) any use restriction or prohibition contained in any document of record of which Tenant has been provided a copy, or (c) any of the Prohibited Uses set forth in Exhibit F-1or the Shopping Center Exclusives and Restrictions as set forth in Exhibit F-2 attached hereto and made a part hereof. If any conflict shall develop between Tenant and any other tenant of the Shopping Center regarding any provisions in this Lease or in leases to other tenants in the Shopping Center, Landlord shall be the sole arbitrator of such conflict. Landlord’s decision shall be binding on Tenant and Landlord shall incur no liability to Tenant as a result of any such determination made by Landlord hereunder. If Landlord permits a deviation from any provision of this Lease, the permission, to be effective, must be in writing and Landlord in its sole discretion may withhold or revoke such permission. Failure of Landlord to enforce any provision in this Lease or in leases to any other tenant in the Shopping Center shall be at Landlord’s sole discretion and Landlord shall incur no liability to Tenant as a result of any determination made by Landlord. Furthermore, if Tenant’s use of the Premises or any improvement constructed by Tenant in, at or upon the Premises or the Shopping Center causes the imposition of any impact fees against any portion of the Shopping Center, then Tenant shall pay such fees prior to delinquency.

Notwithstanding anything contained in this Lease to the contrary, neither Tenant nor any person, firm, or corporation directly or indirectly affiliated with Tenant nor Tenant’s franchisers, subsidiaries, parents, partners or shareholders (in a closely held corporation) shall conduct or operate, within the Restricted Area during the Term, any commercial establishment for the same or a similar use as the permitted use described in Section 1.7 of the Abstract of Lease. Nothing contained in this Lease is intended to (or shall) limit or restrict the Landlord and its affiliates, successors and/or assigns or any other tenant and their successors and/or assigns from engaging in one or more types of retail businesses. Tenant will at all-time be the operator and manager of the Premises. Any attempt to use a management contract, concession agreement or any other arrangement whereby the operation of the business of the Premises will be other than by Tenant shall constitute a violation of this Lease.

7.2 USE OF COMMON AREAS. All facilities furnished by Landlord in the Shopping Center and designated for the general use, in common, of occupants of the Shopping Center, including Tenant hereunder, their officers, agents, employees and customers, including, but not limited to, parking areas, streets, sidewalks, canopies, roadways, loading platforms, washrooms, shelters, ramps, landscaped areas and other similar facilities, shall at all times be subject to the exclusive control and management of Landlord. Landlord shall have the right from time to time to change the area, level, location and arrangement of such parking areas and other facilities above referred to; and make all rules and regulations pertaining to and necessary for the proper operation and maintenance of the common facilities. Tenant hereunder and any other subtenants and licensees shall comply with all rules and regulations made by Landlord pertaining to the operation and maintenance of said common facilities, including, but not limited to, such reasonable requirements pertaining to sanitation, handling of trash and debris, loading and unloading of trucks and other vehicles, and safety and security against fires, theft, vandalism, personal injury and other hazards. The parking area shall be limited to parking for customers and employees of tenants of the Shopping Center, Landlord and any other parties permitted by Landlord from time to time, and Tenant and its employees may not park in any portion of the parking area, except that portion thereof, if any, designated or which may hereafter be designated as “Employees’ Parking Area.” Landlord retains the right to grant exclusive parking rights to portions of the Shopping Center to other tenants of the Shopping Center. Landlord shall have the exclusive right at any and all times to close any portion of the common areas for the purpose of making repairs, changes or additions thereto and may change the size, area or arrangement of the parking areas or the lighting thereof within or adjacent to the existing areas and may enter into agreements with adjacent owners for cross-easements for parking, ingress or egress.

7.3 CONDUCT OF TENANT’S OPERATIONS.

A. Subject to inability by reason of strikes or labor disputes or unavailability of goods or other reasons beyond Tenant’s reasonable control, Tenant shall, at all times during the Term, carry at all times in the Premises a stock of merchandise of such size, character and quality as shall be reasonably designed to produce the maximum return to Landlord and Tenant. Tenant shall, at all times during the Term, conduct its business in the Premises a minimum time period from 10:00 A.M. to 9:00 P.M. on Mondays through Saturdays and from ll:00 A.M. to 5:00 P.M. on Sundays (except for state and federal designated holidays), and shall continuously and uninterruptedly occupy the Premises and operate the store throughout the Term for the use permitted by this Lease in an efficient, professional and first-class manner and maintaining a full staff of trained, experienced and qualified employees. Tenant shall be liable to Landlord for any and all suits, damages, liabilities, losses (including loss or diminution of rents or profits), costs and expenses (including, without limitation, court costs and reasonable attorneys’ fees) paid, suffered or incurred by Landlord as a result of Tenant’s failure to comply with its obligations under this subsection A. Nothing contained in this subsection A is intended to or shall restrict or limit any other remedies available under this Lease, at law and in equity for Tenant’s failure to comply with its obligations hereunder.

B. At all times throughout the Term, and without limitation of Tenant’s other obligations set forth in this Lease, Tenant shall:

(1) comply with any and all requirements of any of the constituted public authorities, and with the terms of any State or Federal law, statute or local ordinance or regulation applicable to Tenant for its use, safety, cleanliness or occupation of the Premises including, but not limited to, the requirements of any applicable permitting or licensing authorities (including payment of such costs), the requirements of the Americans with Disabilities Act and requirements of any insurer of the Shopping Center or the Premises, and shall defend and hold Landlord harmless from penalties, liens, costs, expenses or damages resulting from Tenant’s failure to do so.

(2) Give to Landlord prompt written notice of any accident, fire damage or environmental condition occurring on or to the Premises or of any leaks, moisture buildup on or about the Premises.

(3) Load and unload goods at such times in the areas and through such entrance as may be designated for such purposes by Landlord. Such trailers or trucks shall not be permitted to remain parked overnight in any area of the Shopping Center, whether loaded or unloaded.

(4) Comply with all reasonable rules and regulations of Landlord in effect at the time of the execution of this Lease or at any time or times, and from time to time, promulgated by Landlord, which Landlord in its sole discretion shall deem necessary in connection with the Premises, the building of which the Premises are a part, or the Shopping Center. Landlord agrees that it shall not enforce any such rules and regulations in an arbitrary and capricious manner.

(5) Tenant shall maintain complete and attractive display windows in the Premises. Tenant shall keep all display windows clean and shall keep the same illuminated during normal business hours and at such other times as Landlord may from time to time reasonably require.

(6) Tenant shall not commit or permit any waste upon the Premises nor shall Tenant perform any act or carry on any practice which may injure the Premises, any other space in the Shopping Center or any other tenant or occupant of the Shopping Center, or cause any offensive odor, noise or vibration, or constitute a nuisance or menace to any other occupant or other persons in the Shopping Center, and in no event shall any offensive noises be emitted from the Premises.

(7) Tenant shall keep trash and refuse in covered trash receptacles authorized by Landlord, which trash receptacles shall be kept within the Premises at all times, and in no event stored outside of the Premises. Tenant shall cause such trash and refuse to be removed from the Premises in the manner, at such times, and in such areas as Landlord may designate for such purpose. If Landlord provides for trash removal by a contractor, Tenant shall use such contractor for its trash removal and pay when due all charges assessed in connection with such trash removal at the rates established therefor. Tenant shall ensure that no trash, garbage and refuse accumulate.

(8) Tenant will at its expense (a) keep the inside and outside of all glass in the doors and windows of the Premises clean; (b) keep all the walls and interior and exterior store surfaces of the Premises clean, dry and free from mold and mildew; (c) replace promptly any cracked or broken glass of the Premises with glass of like kind and quality; (d) maintain the Premises in a clean, orderly and sanitary condition and free of insect, rodents, vermin and other pests; (e) keep all mechanical apparatus free of vibration and noise which may be transmitted beyond the Premises; and (f) conduct its business in all respects in a manner consistent with the quality and standards of operation of the Shopping Center and in a dignified manner and in accordance with high standards of store operation.

(9) Tenant agrees that neither it nor anyone taking under through it shall operate nor cause or permit to be operated from or at the Premises a catalogue, Internet, mail order or an “800-type” phone-order facility, or a wholesale, discount, outlet, “warehouse,” “dollar-type” or unit price store. In regard to the use and occupancy of the Premises and the Common Areas of the Shopping Center, Tenant will not: (i) place or maintain any merchandise, trash, debris, refuse or other articles in any vestibule or entry of the Premises, on the footwalks or corridors adjacent thereto or elsewhere on the exterior of the Premises; (ii) use or permit the use of any objectionable advertising medium such as, without limitation, loudspeakers, public address systems, sound amplifiers, or the reception of radio, television or other media broadcasts which is in any manner audible or visible outside of the Premises; (iii) permit undue accumulations of or burn garbage, trash, rubbish or other debris within or without the Premises; (iv) cause or permit objectionable odors in Landlord’s reasonable opinion to emanate or to be dispelled from the Premises; (v) cause water to accumulate, pool or cause leaks into adjacent premises, (vi) solicit business in any area of the Shopping Center outside the Premises; (vii) distribute handbills or other matter in any area of the Shopping Center outside the Premises; (viii) receive or ship articles of any kind outside the designated loading areas for the Premises; (ix) use any plaza, exterior areas, corridor, sidewalk, or any other area of the Shopping Center adjacent to or near the Premises for the sale or display of any merchandise or for any other business use, occupation or undertaking; (x) conduct or permit to be conducted any auction, sidewalk sale, distress sale, fire sale, going out-of-business sale, or the like; (xi) use or permit the use of any portion of the Premises for any unlawful purpose or for any activity of a type which is not generally considered appropriate for high-caliber, urban, shopping areas conducted in accordance with good and generally accepted standards of operation; (xii) place a load upon any floor that exceeds the floor load that the floor was designed to carry; or (xiii) deface, damage or demolish any sign, light standard or fixtures, landscaping material or other improvement or property in any areas of the Shopping Center outside the Premises.

(10) Tenant shall not do, or suffer to be done, any act, matter or thing objectionable to the fire insurance companies whereby the fire insurance or any other insurance now in force or hereafter to be placed on the Premises or any part thereof, or on the building of which the Premises may be a part, shall become void or suspended, or whereby the same shall be rated as a more hazardous risk than at the date when Tenant receives possession hereunder. In case of a breach of this covenant, in addition to all other remedies of Landlord hereunder, Tenant agrees to pay to Landlord as Additional Rent any and all increase or increases of premiums on insurance carried by Landlord on the Premises, the Shopping Center or any part thereof, caused in any way by the occupancy of Tenant.

7.4 RIGHTS RESERVED BY LANDLORD. All of the following rights are reserved by Landlord, each of which Landlord may (but without obligation to) exercise without notice or liability to Tenant. The exercise of such rights by Landlord shall not be deemed an eviction, disturbance or disruption of Tenant’s use or possession of the Premises.

A. EASEMENTS. Landlord expressly reserves all rights in and with respect to the land hereby leased not inconsistent with Tenant’s use of the Premises as provided in the Lease, including (without in any way limiting the generality of the foregoing) the rights of Landlord to establish common areas and grant parking easements to others and to enter upon the Premises and to grant, in Landlord’s sole discretion, easements to others (even before the establishment of common areas) for the purpose of installing, using, maintaining, renewing and replacing such overhead or underground water, gas, sewer and other pipe lines, and telephone, electric, and power lines, cables and conduits.

B. INSPECTION, REPAIR AND INSTALLATION. Landlord reserves the right to, at all reasonable times, by itself or its duly authorized agents, employees and contractors to go upon and inspect the Premises and every part thereof, to enforce or carry out the provisions of this Lease, at its option to make repairs, alterations and additions to the Premises or the building of which the Premises are a part, to perform any defaulted obligation of Tenant or for any other proper purposes. Landlord also reserves the right to install or place upon, or affix to the roof and exterior walls of the Premises, equipment, signs, displays, antenna, cables and any other object or structure of any kind, provided the same shall not materially impair the structural integrity of the building or interfere with Tenant’s occupancy.

C. PRESENTATION FOR SALE OR LEASE. At all times during the Term and Extended Term (if exercised), Landlord hereby reserves the right ~~during normal business hours~~ to enter the Premises and to exhibit the same for purposes of sale, lease or mortgage, and, ~~during the last twelve (12) months of the term of this Lease,~~ to exhibit the same to any prospective tenant, and to display a “For Sale” sign at any time, and also after notice from either party of their intention to terminate this Lease, ~~or at any time within twelve (12) months prior to the expiration of this Lease~~, a “For Rent” sign, a “For Sale” sign, or both, as Landlord shall require, except on doors leading into the Premises.

7.5 HAZARDOUS MATERIALS.

A. HAZARDOUS MATERIALS. Tenant shall comply with all environmental laws relating to Hazardous Materials (as hereinafter defined) affecting the Premises, the Shopping Center and the improvements thereon, and the business conducted thereon by Tenant, or any activity or condition on or in the Premises. As used herein, the term “Hazardous Material” means any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, and which is stored, used, disposed of or released in violation of any law, rule, regulation or order of any local governmental authority, the state in which the Premises is located or the United States Government. Without limiting the generality of the foregoing, Tenant shall not cause or permit any Hazardous Material to be brought upon, kept, or used in or about the Premises or the Shopping Center by itself or its agents, employees, contractors or invitees without the prior written consent of Landlord. If Tenant breaches the obligations stated in the preceding sentence, or if the presence of Hazardous Material on the Premises caused or permitted by Tenant results in contamination of the Premises, the Shopping Center or any adjacent property, then Tenant shall indemnify, defend and hold Landlord harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities or losses, including, without limitation, diminution in value of the Premises, the Shopping Center, and/or adjacent property, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises, the Shopping Center, and/or adjacent property, damages arising from any adverse impact on occupying or marketing of the Premises, the Shopping Center, and/or adjacent property, and sums paid in settlement of claims, attorneys’ fees, consultant fees and expert fees which arise during or after the term or extended term of this Lease as a result of such contamination. This indemnification includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision because of Hazardous Material present in the soil or ground water on or under the Premises, the Shopping Center, and/or adjacent property. Without limiting the foregoing, if the presence of any Hazardous Material on the Premises or Shopping Center caused or permitted by Tenant results in any contamination of the Premises, the Shopping Center, and/or adjacent property, Tenant shall promptly take all actions at its sole expense as are necessary to return the Premises, the Shopping Center, and/or adjacent property to the condition existing prior to the introduction of any such Hazardous Material to the Premises, the Shopping Center, and/or adjacent property; provided that Landlord’s approval of such actions shall first be obtained, which approval shall not be unreasonably withheld so long as such actions are in accordance with all applicable laws and governmental requirements and would not potentially have any material adverse long-term or short-term effect on the Premises, the Shopping Center, and/or adjacent property.

B. INSPECTION. Landlord shall have the right, but not the duty, to inspect the Premises at any time to determine whether Tenant is complying with the requirements of this Section 7.5. If Tenant is not in compliance with the requirements of this Section 7.5, Landlord shall have the right, but not the obligation, to immediately enter upon the Premises to remedy any condition which is in violation of the terms of this Lease or caused by Tenant’s failure to comply with the requirements of this Lease. Landlord shall use reasonable efforts to minimize interference with Tenant’s business as a result of any such entry by Landlord. The provisions of this Section 7.5 shall survive the expiration or earlier termination of this Lease and Tenant’s surrender of the Premises to Landlord.

ARTICLE VIII - LIABILITY INSURANCE AND INDEMNIFICATION

8.1 ALLOCATION OF RISKS AND INSURANCE.

A. OPERATION OF SHOPPING CENTER AND COMMON FACILITIES. Landlord bears the risk of and may insure, as practical or required by a lender of Landlord, the operation of the Shopping Center as a whole or the common facilities. Such insurance may include, but is not limited to, general liability, umbrella liability, bodily injury, public liability, property damage liability, automobile insurance, sign insurance and the like in limits selected by Landlord. Tenant shall pay to Landlord its Proportionate Share of such insurance as provided in Section 4.3 above.

B. PREMISES AND SHOPPING CENTER. Landlord bears the risk of and shall keep the buildings and improvements forming at any time a part of the Premises insured against loss or damage by fire, with extended coverage and vandalism and malicious mischief endorsement or their equivalents, in such insurance companies as Landlord shall select and in amounts not less than eighty percent (80%) of the replacement cost of the building and structures insured with loss payable thereunder to Landlord and to any authorized encumbrances of Landlord (with standard mortgagee loss payable clause) in accordance with their respective interests. Landlord may also maintain rent insurance equal to at least one year’s Rent. If the Lease is canceled for any reason or if Tenant has committed an event of default which has not been cured, all insurance proceeds shall be paid and retained by Landlord, subject to the rights of any authorized encumbrances of Landlord. Tenant shall pay to Landlord its Proportionate Share of such Insurance as provided in Section 4.3 above. Tenant agrees not to keep upon the Premises any articles or goods which may be prohibited by the standard form of fire insurance policy. It is agreed between the parties that in the event the insurance rates applicable to fire and extended coverage insurance covering the within Premises shall be increased by reason of any use of the Premises made by the Tenant, then Tenant shall pay to Landlord such increase in Insurance as shall be occasioned by said use.

C. PROPERTY OF TENANT. Tenant agrees that all property owned by it in, on, or about the Premises shall be at the sole risk and hazard of the Tenant. Landlord shall not, regardless of fault, be liable or responsible for any loss of or damage to Tenant, or anyone claiming under or through Tenant, or otherwise, whether caused by or resulting from a peril required to be insured hereunder, or from water, steam, gas, leakage, plumbing, electricity or electrical apparatus, pipe or apparatus of any kind, the elements or other similar or dissimilar causes, and whether or not originating in the Premises or elsewhere.

[PLEASE CAREFULLY REVIEW LANDLORD’S INSURANCE REQUIREMENTS BELOW WITH YOUR INSURANCE BROKER/AGENT. TENANT MUST HAVE PROPER/CORRECT CERTIFICATE OF INSURANCE BEFORE POSSESSION OF THE PREMISES CAN BE TENDERED BY LANDLORD.]

D. OPERATIONS OF TENANT. All operations conducted by Tenant shall be at Tenant’s sole risk. In addition, Tenant shall procure insurance for its operations as specified in the Abstract of Lease and as follows:

(1) Liability Insurance: Tenant shall keep in force and at its own expense Commercial General Liability (CGL) insurance, which shall be on a primary and non-contributory basis, naming as Additional Insured parties, Landlord, Landlord’s property management company, and any mortgagees designated by Landlord, with coverage for premises/operations, personal and advertising injury, products/completed operations and contractual liability with single limits of liability of not less than $1,000,000 for bodily injury and property damage per Occurrence, $2,000,000 for bodily injury and property damage for General Aggregate, and Fire Legal Liability insurance in amounts sufficient to cover the replacement costs of the Premises and loss of use thereof.

~~(2) Plate Glass Insurance: Tenant shall keep and maintain in force during the Term hereof, plate glass insurance upon windows and doors in the Premises.~~

(3) Dram Shop/Liquor Liability Insurance: In the event that at any time during the Term of the Lease or any extension or renewal thereof, drugs, prescription drugs, beer, wines or other alcoholic liquors or beverages are sold or given away upon or from the Premises (it being understood and agreed, however, the foregoing provision shall not authorize the use of the Premises for such purposes without the express written consent of the Landlord being set forth otherwise in this Lease), Tenant shall, at its sole expense, obtain, maintain, and keep in force, adequate Dram Shop/Liquor Liability insurance protecting both Tenant and Landlord in connection therewith with policy as required, from time to time, under the laws of the state in which the Premises are located and with a minimum coverage of the greater of (a) $1,000,000 per occurrence or (b) the amount required by the laws of the state where the Premises are located. In the event Tenant shall fail to procure such insurance, then sales of the foregoing products shall be suspended immediately until such coverage is again in force.

(4) Physical Damage Insurance including, but not limited to, fire, sprinkler leakage, vandalism and all other risks of direct physical loss as insured against under special broad form coverage endorsement for the full replacement cost of all additions, improvements and alterations to the Premises and providing that Landlord and any other parties designated by Landlord from time to time are loss payees or additional insureds as their interests may appear, and covering all furniture, trade fixtures, equipment, machinery, movable partitions, wall and floor coverings, inventory, merchandise and all other items of Tenant’s property on the Premises and any alterations to the Premises made by Tenant. Such insurance shall be written on an “all risks” of physical loss or damage basis, for the full replacement cost value of the covered items and in amounts that meet any coinsurance clause of the policies of insurance and with deductibles no greater than $10,000. In the event of a loss, the proceeds of such insurance shall be used for the repair or replacement of the property insured.

(5) Worker’s Compensation Insurance covering all employees, agents and contractors of Tenant performing work in, on, or with respect to the Premises, in amounts not less than those required by applicable law.

(6) Employers liability insurance covering all employees, agents and contractors of Tenant performing work in, on or with respect to the Premises, in amounts not less than $500,000 for each accident and $500,000 for diseases. $500,000 for disease – Each Employee, and $500,000 for Disease-Policy Limit.

(7) Extra expense and business interruption insurance including loss of rents for periods and with limits not less than twelve (12) months of Minimum Rent and Additional Rent, naming Landlord as loss payee.

(8) Automobile Insurance on a primary and non-contributory basis covering all owned, non-owned and hired automobiles with limits of liability of not less than $1,000,000 for bodily injury to any one person, and $1,000,000 for property damage for each accident.

(9) Umbrella or Excess Liability coverage in amounts not less than $5,000,000 in excess of the CGL insurance required in D (1) hereinabove.

(10) Any such other types, coverages and amounts of insurance (including increases to the foregoing) as may be required from time to time by landlords of real estate properties similar to the Shopping Center (in size, age, tenant mix, etc.) in the metropolitan area where the Premises is located.

E. REQUIREMENTS OF ALL POLICIES. All insurance policies required of Tenant in this Lease shall name as additional insured Landlord (and upon request, any other party named by Landlord) and shall contain an express waiver of any right of subrogation against Landlord and other named additional insured designated by Landlord. Said policies shall be in Class “A” companies authorized to write such coverage in the state in which the Premises are located and shall be acceptable to Landlord and/or its lender (which shall be named as an additional insured if requested in writing). Tenant will further deposit the policy or policies of such insurance or certificates thereof (on Acord forms - the form attached hereto as Exhibit H and made a part hereof) with Landlord with evidence of payment of premium at all times commencing with the date Tenant first enters upon the Premises for any purpose. Each policy shall provide against cancellation without thirty (30) days prior written notice to the named insureds. The deductibles on all such insurance will be in amounts acceptable to Landlord. Tenant will pay all deductible amounts under all such insurance policies.

F. FAILURE TO PROCURE INSURANCE. In the event Tenant shall fail to procure insurance required under this Article and fail to maintain the same in force continuously during the Term, Landlord shall be entitled to procure the same and Tenant shall immediately reimburse Landlord for such premium expense.

G. Waiver of Subrogation. Without limiting the generality of any other waivers of claims contained in this Lease, Landlord and Tenant hereby waive any and all claims and rights of recovery against the other and their respective officers, directors, employees, agents and representatives for any loss or damage to their respective properties or interests (including business interruption and rent loss), to the extent such loss or damage is insured against, or required to be insured against pursuant to the terms of this Lease, by Landlord or Tenant (as applicable) pursuant to this Article VIII, regardless of fault or negligence and regardless of the amount of insurance proceeds actually collected or collectible under any insurance policies in effect, and Landlord and Tenant each represent and warrant to the other that all such policies permit such waiver and contain, and will contain, enforceable waiver of subrogation endorsements. Nothing contained herein shall serve as a waiver for any deductible or self-insured risk. In addition, Landlord and Tenant agree that in the event of any loss or damage to their respective properties or interests (including business interruptions or loss), the party suffering the loss shall resort to its insurance coverage prior to asserting any claim or demand against the party causing the loss.

8.2 INDEMNIFICATION AND WAIVER OF CLAIMS.

A. INDEMNIFICATION. Subject to Landlord’s waiver contained in Section 8.1G above, Tenant shall indemnify and defend Landlord and hold it harmless from and against any and all claims, actions, damages, liability and expense including, without limitation, court costs and reasonable attorneys’ fees suffered, paid or incurred by Landlord (1) in connection with loss of life, personal injury and/or damage to or theft or misappropriation or loss of property occurring in or about, or arising from or out of, the Premises and adjacent sidewalks and loading platforms or areas or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, invitees, customers or employees unless such claim, action, damage, liability or expense is the result of the intentional and willful misconduct or the gross negligence of Landlord, or (2) from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed under this Lease. Subject to the waivers contained in Section 8.1G above and subsection B below, Landlord shall indemnify and defend Tenant and hold it harmless from and against any and all claims, actions, damages, liability and expense including, without limitation, court costs and reasonable attorneys’ fees suffered, paid or incurred by Tenant in connection with loss of life, personal injury and/or damage to or theft or misappropriation or loss of property occurring in or about, or arising from or out of, the Shopping Center (other than the Premises) caused by the intentional and willful misconduct or gross negligence of Landlord, its agents or employees unless such claim, action, damage, liability or expense is the result of any act or omission of Tenant, its agents, contractors, invitees, customers or employees.

B. WAIVER OF CLAIMS. Landlord and Landlord’s agents, employees and contractors shall not be liable for, and Tenant hereby releases all claims for, damage or injury to person and property or theft or loss of use of property and loss of business sustained by Tenant or any person claiming through Tenant resulting from any theft, fire, accident, occurrence, injury or condition in or upon the Premises or building of which they shall be a part, including, but not limited to, such claims for damage resulting from: (i) any defect in or failure of plumbing, heating or air-conditioning equipment, sprinkler, electric wiring or installation thereof, water pipes, stairs, railings or walks; (ii) any equipment or appurtenances becoming out of repair; (iii) the bursting, leaking or running of any tank, washstand, water closet, waste pipe, drain, sprinkler or any other pipe or tank in, upon of about such building or Premises; (iv) the backing up or overflow of any sewer pipe drain, retention pond, storm water drainage or downspout; (v) the escape of gas, steam or hot water; (vi) water, snow or ice being upon or coming through the roof or any other place upon or near such building or Premises or otherwise; (vii) the falling of any fixture, plaster or stucco; (viii) broken glass; and (ix) any act or omission of co-tenants or other occupants of said building or of adjoining or contiguous property or buildings including their employees, licensees and invitees. In the event the Premises or its contents are damaged or destroyed by fire or other insured casualty, the rights, if any, of either party hereto against the other with respect to such damage or destruction are waived, and all policies of fire and/or extended coverage or other insurance covering the Premises or its contents shall contain a clause or endorsement providing in substance that the insurance shall not be prejudiced if the insureds have waived the right of recovery from any person or persons prior to the date and time of loss or damage, if any.

ARTICLE IX - LOSS, DESTRUCTION OR

TAKING OF PREMISES OR SHOPPING CENTER

9.1 FIRE OR OTHER CASUALTY. Tenant shall give to Landlord prompt written notice of any accident, fire or damage occurring on or to the Premises. Thereupon, Landlord’s obligation concerning the repair or reconstruction of the Premises will be as follows:

A. PARTIAL DESTRUCTION OF PREMISES. If the Premises shall be damaged by the elements or other casualty or by fire, not due to Tenant’s intentional acts or negligence, but are not thereby rendered untenantable in whole or in part, Landlord shall promptly after receipt of insurance proceeds cause such damage to be repaired, and the Rent shall not be abated. If by reason of any such occurrence, the Premises shall be rendered untenantable only in part, Landlord shall promptly after receipt of insurance proceeds cause the damage to be repaired and the Rent meanwhile shall be abated proportionately as to the portion of the Premises and only for the time such Premises are rendered untenantable.

B. SUBSTANTIAL DESTRUCTION OF PREMISES. If the Premises shall be rendered wholly untenantable by reason of such occurrence (i.e., destruction of 25% or more), and Tenant actually shall not be operating in any portion of the Premises, then Landlord shall promptly after receipt of insurance proceeds cause such damage to be repaired, and the Rent shall meanwhile be abated in whole, provided, however, that Landlord shall have the right, to be exercised by notice in writing delivered to Tenant within sixty (60) days from and after said occurrence, to elect not to reconstruct the destroyed Premises, and in such event this Lease and the tenancy hereby created shall cease as of the date of the said occurrence, the Rent to be adjusted as of such date. If Landlord shall not have completed such repairs within one (1) year after the occurrence of such fire or other casualty, then Tenant shall have the right to terminate this Lease by delivering notice thereof to Landlord prior to such completion.

C. DESTRUCTION OF SHOPPING CENTER. If the Shopping Center shall be damaged by the elements or other casualty or by fire, not due to Tenant’s negligence and which damage does not render the Premises untenantable in whole or in part, Landlord shall promptly after receipt of insurance proceeds cause such damage to be repaired and the Rent shall not be abated. If the Shopping Center or any premises (other than the Premises) located thereon suffers damage or destruction of a substantial nature (i.e., destruction of 10% or more of the Shopping Center), which damage or destruction does not render the Premises untenantable in whole or in part, Landlord shall after receipt of insurance proceeds cause such damage to be repaired and the Rent shall not be abated; provided, however, that Landlord shall have the right to be exercised by notice in writing to be delivered to Tenant within sixty (60) days from and after such occurrence to elect not to reconstruct the destroyed portion of the Shopping Center, and in such event this Lease and the tenancy hereby created shall cease as of the date of the occurrence, the Rent to be adjusted as of such date.

9.2 CONDEMNATION.

A. AWARD. If title to all or any portion of the Premises is taken by a public or quasi-public authority under any statute or by right of eminent domain of any governmental body, whether such loss or damage results from condemnation of part or all of the Premises or any portion of the parking area or service entrances and exits, Tenant shall not be entitled to participate or receive any part of the damages or award except where said award shall provide for moving or other reimbursable expenses for the Tenant under applicable statute in which event the latter sum shall be received by Tenant, and except that portion of any award allocated to the taking of Tenant’s trade fixtures, equipment and personal property, or to a loss of business by Tenant. None of the awards or payments to Landlord shall be subject to any diminution or apportionment on behalf of Tenant or otherwise.

B. SUBSTANTIAL OR MATERIAL TAKING OF PREMISES. Should any power of eminent domain be exercised after Tenant is in possession, such exercise shall not void or impair this Lease unless the amount of the Premises so taken is such as to substantially and materially impair the usefulness of the Premises for the purpose for which the same are hereby demised, in which event either party may cancel this Lease by notice to the other within sixty (60) days after possession is taken, and the Rent herein provided shall abate as of the date possession is taken by the condemning authority.

C. PARTIAL TAKING OF PREMISES. If a portion of the Premises shall be taken as herein provided for public improvements or otherwise under the exercise of the right of eminent domain and the Premises shall continue to be reasonably suitable for the use which is herein authorized, then the Rent herein provided shall be reduced from the date of such taking in direct proportion to the reduction in usefulness of the Premises and the Lease shall continue in full force and effect.

D. If a portion of the Shopping Center shall be taken as herein provided for public improvements or otherwise under the exercise of the right of eminent domain, such exercise shall not void or impair the Lease unless the amount of the Shopping Center so taken, in Landlord’s sole and absolute discretion, is such to substantially or materially impair the usefulness of the Shopping Center, in which event Landlord may cancel this Lease by notice to Tenant within sixty (60) days after possession is taken, the Rent to be adjusted as of such date.

ARTICLE X - ASSIGNMENT,

SUBLETTING, MORTGAGING AND SUBORDINATION

10.1 ASSIGNMENT AND SUBLETTING BY TENANT. Tenant may not and shall not assign this Lease, in whole or in part, nor sublet all or any part of the Premises, nor license concessions or lease departments therein, nor pledge or encumber by mortgage or other instruments any interest in this Lease (each individually and collectively referred to in this Section as a “Transfer”) without first obtaining the consent of Landlord, which consent Landlord may withhold in its sole and absolute discretion. This prohibition includes, without limitation, any subletting or assignment which would otherwise occur by operation of law, merger, consolidation, reorganization, transfer or other change of Tenant’s corporate, partnership or proprietary structure. Consent by Landlord to any transfer shall not constitute a waiver of the requirement for such consent to any subsequent Transfer. The acceptance of any Rent by Landlord from any alleged assignee or subtenant shall not constitute approval of the assignment or sublease of this Lease by the Landlord, and the consent by Landlord to one assignment or subletting of the Premises shall not constitute a waiver of Landlord’s rights hereunder. Tenant shall pay to Landlord a Transfer Fee of $2,000.00 for such written consent. In the event of any such assignment, subletting, licensing or granting of a concession made with the prior written consent of the Landlord as aforesaid, Tenant will nevertheless remain primarily liable for the performance of all the terms, conditions, and covenants of this Lease. Any Transfer shall be by agreement in a form and content acceptable to Landlord, and shall specify and require that each Transferee of this Lease by acceptance of any Transfer shall assume, be bound by, and be obligated to perform the terms and conditions of its sublessor and assignor under this Lease. A condition of such Transfer is the agreement of the parties that Landlord shall receive the full and complete Rent payment of the Transferee even though such payments may be in excess of the original Rent between Landlord and Tenant. It is the intent and understanding of the parties to this Lease that Tenant shall not receive any monetary benefit, in excess of the actual Rent obligation of Tenant, as agreed between the original Tenant and Landlord, through a Transfer to a third party. In the event of default of Tenant, Landlord at Landlord’s sole option may succeed to the position of Tenant as to any subtenant or licensee of Tenant.

10.2 ASSIGNMENT AND MORTGAGING BY LANDLORD.

A. TRANSFER BY LANDLORD. The owner of the Premises shall only remain liable for the Landlord’s obligations pursuant to the terms and limitations set forth in this Lease during its ownership of the Premises. So long as all sums held on Tenant’s behalf in trust or escrow by Landlord are paid over to any purchaser of the Premises, Landlord and the owner of the Premises shall be and are hereby relieved of all covenants and obligations of Landlord hereunder after the date of sale of said Premises, and it shall be construed without further agreement between the parties that the purchaser has assumed and agreed to carry out any and all covenants and obligations of Landlord hereunder from the date of such sale.

B. SUBORDINATION. This Lease is subordinate to any and all leases, mortgages or deeds of trust hereinafter placed upon the Shopping Center, now or in the future, or any part thereof, and to all future modifications, consolidations, replacements, extensions and renewals of, and all amendments and supplements to said leases, mortgages or deeds of trust. Notwithstanding such subordination, as aforesaid, this Lease, except as otherwise hereinafter provided including, but not limited to, an event of default by Tenant, shall not terminate or be divested by foreclosure or other default proceedings under said leases, mortgages, deeds of trust, or obligations secured thereby, and Tenant shall attorn to and recognize the landlord, mortgagee, trustee, beneficiary or the purchaser at the foreclosure sale in the event of such foreclosure or other default proceeding, as Landlord for the balance of the Term of this Lease, subject to all of the terms and provisions hereof. The provisions of this paragraph shall be self-operative, but Tenant acknowledges and agrees that as a material consideration inducing Landlord to enter into this Lease, Tenant shall acknowledge same by executing and delivering to Landlord, on demand at any time or times, any and all instruments in order to subordinate this Lease and Tenant’s rights hereunder, as aforesaid. Notwithstanding the foregoing, any such mortgagee, beneficiary, purchaser or lessor may elect to give the rights and interests of Tenant under this Lease (excluding rights in and to insurance proceeds and condemnation awards) priority over the lien of its mortgage or deed of trust or the estate of its lease, as the case may be. In the event of such election and upon the mortgagee, beneficiary or lessor notifying Tenant of such election, the rights and interests of Tenant shall be deemed superior to and to have priority over the lien of said mortgage or deed of trust or the estate of such lease, as the case may be, whether this Lease is dated prior to or subsequent to the date of such mortgage, deed of trust or lease. In such event, Tenant shall execute and deliver whatever instruments may be required by such mortgagee, beneficiary or lessor to confirm such superiority on the form customarily used by such party. In the event of any act or omission by Landlord which would give Tenant the right to damages from Landlord or the right to terminate this Lease, Tenant will not sue for such damages nor exercise any such right to terminate until (i) it shall have given written notice of the act or omission to Landlord and to the holder(s) of the indebtedness or other obligations secured by any mortgage or deed of trust affecting the Premises or of any ground or underlying lease, if the name and address of such holder(s) have been furnished to Tenant, and (ii) a reasonable period of time, in light both of the time required to effect a remedy and of the impact of the act or omission on Tenant’s business operations at the Premises, for remedying the act or omission has elapsed following the giving of the notice (which shall in no event be deemed any less than thirty (30) days), during which time Landlord and such holder(s), or either of them, and their agents or employees, will be entitled to enter upon the Premises and do therein whatever may be necessary to remedy the act or omission.

C. ESTOPPEL AND SUBORDINATION DOCUMENTS. Tenant acknowledges and agrees that as a material consideration inducing Landlord to enter into this Lease, Tenant agrees to execute, acknowledge and deliver any and all documents required to effectuate the provisions of this Section within seven (7) days after request thereof by Landlord. In the event that upon any sale, assignment, lease, mortgage or hypothecation of the Premises and/or the land thereunder by Landlord, a statement shall be required by Tenant, Tenant agrees to deliver and cause Guarantor to deliver in recordable form an Estoppel Certificate (if such be the case) that this Lease and Guaranty, as applicable, is in full force and effect and there are no defenses or offsets or Landlord defaults thereto, or stating those claimed by Tenant, the dates to which Rent or other sums have been paid in advance, and any other such certifications of Lease terms as may reasonably be required and such specific subordination agreement on Lender’s form as may reasonably be required by Lender, it being intended that any such statements delivered pursuant to this Section may be relied upon by any prospective purchaser, mortgagee, assignee or beneficiary. Tenant hereby grants Landlord a power of attorney to execute any document in the name of Tenant in the event Tenant fails to execute, acknowledge and deliver any document required to effectuate the provisions of this Section within seven (7) days after request therefor by Landlord.

D. FINANCIAL STATEMENTS AND SALES FIGURES. Tenant acknowledges and agrees that as a material consideration inducing Landlord to enter into this Lease, Tenant shall, upon request from Landlord, provide a copy of Tenant’s latest available financial statements ~~and year-to-date sales figures~~, certified by Tenant as being true and correct. Tenant agrees to provide such statements within ten (10) days of Landlord’s reasonable request. In addition, within sixty (60) days after Tenant’s year end, and fifteen (15) days after each calendar quarter, Tenant shall deliver to Landlord monthly sales figures, certified by Tenant as being true and correct, for the prior year and/or quarter, as the case may be.

E. LENDER APPROVAL. If Landlord deems it necessary or appropriate it may submit this Lease to its mortgagee for approval. In such event this Lease and all of Landlord’s covenants and obligations hereunder are expressly contingent upon a formal, approval by such mortgagee. Landlord shall inform Tenant not later than thirty (30) calendar days after Landlord’s execution of the Lease whether or not the mortgagee has approved or disapproved the Lease. If the mortgagee disapproves the Lease it shall be deemed void and of no further force or effect.

ARTICLE XI - DEFAULT AND REMEDIES FOR DEFAULT

11.1 TENANT EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an event of default by Tenant hereunder:

(1) The filing of a petition by or against Tenant or any Guarantor for adjudication as a bankrupt or insolvent, or for its reorganization or for the appointment of a receiver or trustee of Tenant’s property; an assignment by Tenant for the benefit of creditors or the taking of possession of the property of Tenant by any governmental officer or agency pursuant to statutory authority for the dissolution or liquidation of Tenant.

(2) Failure of Tenant to pay when due any installment of Rent hereunder or any other sum herein required to be paid by Tenant, and the continuance of such nonpayment for five (5) days after such installment is due.

(3) Abandonment, vacation or misuse of the Premises by Tenant.

(4) Tenant fails to observe or perform any of the covenants with respect to a Transfer.

(5) Tenant’s failure to perform any other covenant or condition of this Lease within twenty (20) days after written notice and demand from Landlord.

11.2 REMEDIES OF LANDLORD FOR DEFAULT BY TENANT. Upon the occurrence of an event of default, Landlord shall have the right, then or at any time thereafter, and while such event of default shall continue, and in addition to and not in lieu of any other remedies, relief or rights available to Landlord at law or equity or contained in this Lease, to do any of the following:

(1) Landlord by itself or its authorized agents may cure the default and charge Tenant for the costs of such cure, which charge shall be due and payable as Rent under this Lease immediately upon written notice to Tenant.

(2) Landlord may enforce every provision of the Lease in accordance with its terms including, but not limited to enforcement of the payment of Rent provisions by a suit or suits in equity or at law. In furtherance thereof, Landlord shall have the right to obtain reports on Tenant’s (and any other party responsible for Tenant’s performance) credit worthiness from the three (3) major credit reporting agencies or any other credit agency customarily used by Landlord, and Tenant hereby consents thereto.

(3) Landlord may (a) exercise its rights as secured party under its security agreement with Tenant as provided in Section 5.2 above; (b) apply all or part of the Security Deposit to the default of Tenant; or (c) exercise its rights under the Guaranty.

(4) Landlord shall have the right to terminate the Tenant’s right of possession of the Premises without terminating this Lease and, therefore, to reenter the Premises to assume and take possession of the whole or any part thereof, and to remove all persons or personal property by direct or summary action, or in a different type of suit or proceeding, by force or otherwise, without being deemed liable of trespass or other actionable wrong by reason thereof, and without being liable for the damages therefor or in connection therewith, and, after demand made therefor, Tenant or anyone in possession claiming under Tenant shall be deemed guilty of unlawful detainer and subject to such summary judgment or other action as may be provided by law. Additionally, Landlord may with or without terminating the Lease relet the Premises as the agent for and in the name of the Tenant, at any rental readily acceptable, applying the proceeds first to reimburse Landlord for all costs of enforcement of this Lease including attorneys’ fees and court costs, if any, second, to costs to re-rent the Premises including, but not limited to, tenant improvement costs and leasing commissions, third, to reimburse Landlord for Landlord’s entire cost and expense in preparing the Premises for Tenant’s occupancy, fourth, to the payment of such Rent as same comes due, and, fifth, toward the fulfillment of the other covenants and agreements of Tenant herein contained. Tenant shall not be entitled to any residual amount remaining after payment of all of the foregoing sums. Tenant hereby agrees that if Landlord shall recover or take possession of said Premises as aforesaid, and be unable to relet and rent the same so as to realize a sum equal to the Minimum Rent and Additional Rent hereby provided, Tenant shall pay to Landlord any loss or difference of Minimum Rent and Additional Rent for the remainder of the Term. Landlord may, but is not required to, assign this Lease to Guarantor, if any, in the name of and on behalf of Tenant or may enter into a new lease with Guarantor on the same terms as this Lease or upon different terms. Tenant acknowledges that Landlord has been granted Tenant’s power of attorney coupled with an interest in order to effectuate Landlord’s rights hereunder in the event that Tenant fails or refuses to do so within five (5) days of notice from Landlord.

(5) Landlord, irrespective of the date on which its right of reentry shall have accrued or be exercised, shall have the right, whether for rent or possession or otherwise, to terminate this Lease and the tenancy hereby created. Except to the extent required by applicable law, Landlord is under no affirmative duty to maximize the rent collected from any replacement tenant or otherwise mitigate Landlord’s damages and Tenant waives any legal or equitable right or defense that Landlord mitigate its damages. This right to terminate is exercisable by a written notice to Tenant, which written notice may be part of a notice of default previously delivered to Tenant, and, as such, may be conditioned upon Tenant’s failure to cure the default and the event of default. The termination may be made effective as of the event of default, or thereafter, and, if not otherwise specified, will be deemed to be effective immediately. Upon such termination, Landlord shall be entitled to and may take immediate possession of the Premises, any other notice or demand being hereby waived. Such termination does not, however, release Tenant from liability for Rent then overdue or remaining under the Lease but shall, if permitted by the laws of the state where the Premises are located, operate to accelerate the entire balance of the Term Rent and additional charges due over the entire Lease Term, which shall become immediately due and payable by Tenant, along with all overdue Rent and charges.

If Landlord terminates this Lease as provided above, Landlord shall be entitled to recover from Tenant all damages and other sums which Landlord is entitled to recover under any provision of this Lease or at law or in equity or otherwise, including, but not limited to, all of the accrued Minimum Rent and Additional Rent for the period up to and including such Termination Date, as well as all other additional sums payable by Tenant or for which Tenant is liable or in respect of which Tenant has agreed to indemnify Landlord under any of the provisions of this Lease which may be then owing and unpaid and all costs and expenses, including without limitation, court costs and reasonable attorneys’ fees incurred by Landlord in the enforcement of its rights and remedies hereunder and, in addition, any damages provable by Landlord as a matter of law including, without limitation, an amount equal to the then present value (using a discount rate of five percent (5%)) of the excess of the Minimum Rent and Additional Rent provided to be paid for the remainder of the Term over the fair market rental value of the Premises (determined at the date of termination of this Lease by Landlord in Landlord’s reasonable discretion) after deduction of all anticipated expenses of reletting. In the alternative, Landlord shall have the right, at Landlords option, from time to time, to recover from Tenant, and Tenant shall remain liable for all Minimum Rent, Additional Rent and other amounts due and owing under this Lease, plus (x) damages equal to all other sums which would have accrued under this Lease after the date of termination had it not been terminated, such damages to be due and payable as such sums would have become due, less (y) such amounts as Landlord may receive from reletting, if any, after first paying all costs of such reletting, including, without limitation, brokerage commissions and the costs of reasonable repairs, alterations, additions and redecorations, and the expenses of re-entry. The net amounts of rent from any re-letting collected remaining after such expenses shall operate only as an off-setting credit against the amount due hereafter with any excess or residue belonging to Landlord solely. Should the fair market rental value of the Premises after deduction of all anticipated expenses of reletting exceed the Minimum Rent and Additional Rent provided to be paid by Tenant for the remainder of the Term, Landlord shall not be obligated to pay to Tenant any part of such excess or to credit any part of such excess against any other sums or damages for which Tenant may be liable to Landlord.

(6) Tenant shall reimburse and pay to Landlord all costs and expenses of Landlord in connection with Landlord’s enforcement of its rights and remedies hereunder, including court costs and reasonable attorneys’ fees all of which shall be deemed Additional Rent.

(7) Tenant shall reimburse and pay to Landlord all costs and expenses of Landlord in connection with Landlord’s preparation of the Premises for Tenant’s occupancy including, but not limited to, Landlord’s Work all of which shall be deemed Additional Rent.

(8) Landlord shall have the right to pursue any and all other rights and remedies available at law and in equity.

(9) To the extent required by applicable law, Landlord shall use commercially reasonable efforts to mitigate the damages it suffers as a result of Tenant’s default under this Lease; provided, however, that Tenant agrees that (i) Landlord will have satisfied its obligation to mitigate damages if Landlord endeavors, in good faith, to re-lease the Premises, (ii) Landlord will not be required to give preference to the Premises over other vacant space in the Shopping Center or any other property owned or controlled by Landlord or any affiliates thereof, (iii) Landlord may reject any prospective tenant who, in Landlord’s reasonable discretion, is disreputable, whose business does not enhance the Shopping Center, who does not have sufficient business experience, or who lacks the financial ability to perform the tenant’s obligations under Landlord’s then current form Lease, (iv) under no circumstances shall Landlord be required or obligated to relet or attempt to relet the Premises for any period of time beyond the then applicable Termination Date, and (v) Landlord may reject any offer to lease the Premises at a rate which is less than the rate being charged for comparable space in the Shopping Center or on terms that are less favorable than those contained in this Lease or which (in Landlord’s reasonable discretion) is not in the best interests of the Shopping Center.

11.3 NON-WAIVER OF REMEDIES.

A. It is expressly agreed that neither the taking of possession of the Premises nor the institution of any proceedings by way of unlawful detainer, ejection, dispossessory, eviction, quiet title, or otherwise, to secure possession of said Premises, nor the reentry by Landlord with or without the institution of such proceedings, nor the issuance of a writ of possession, nor the re-renting or subletting of said Premises, shall operate to relieve Tenant of its obligations to pay Rent and other amounts due hereunder, or operate to terminate this Lease in whole or in part, nor of itself constitute an exercise of Landlord’s option to do so, but only by the giving of the written notice specifically specifying termination shall such termination be effected.

B. Acts of maintenance or preservation or efforts to relet the Premises, or the appointment of a receiver upon the initiation of the Landlord to protect the Landlord’s interest under this Lease, shall not constitute a termination of the Lease.

C. Waiver by Landlord of any default, breach or failure of Tenant under this Lease shall not be construed as a waiver of any subsequent or different default, breach or failure. In case of a breach by Tenant of any of the covenants or undertakings of Tenant, Landlord nevertheless may accept from Tenant any full or partial payments hereunder without in any way waiving Landlord’s right to exercise the remedies hereinbefore provided for by reason of any other breach or lapse which was in existence at the time such payment or payments were accepted by Landlord. Following any default by Tenant, Landlord may apply any payment to any Rent then owing, or damages, cost and fees in the manner it chooses in its sole discretion.

D. The specific remedies to which Landlord may resort under the terms of this Lease are cumulative and are not intended to be exclusive of any other remedies or means of redress to which they may be lawfully entitled in case of any breach or threatened breach by either of them or of any provisions of this Lease.

11.4 DEFAULTS BY LANDLORD. If Landlord fails to perform any of Landlord’s obligations under this Lease, which failure continues for more than thirty (30) days after Tenant’s delivery of written notice to Landlord specifying such failure, or if such failure is of a nature to require more than thirty (30) days for remedy and continues beyond the time reasonably necessary to cure (and Landlord has not undertaken procedures to cure the failure within such thirty (30) day period and diligently pursued such efforts to complete such cure), Tenant may, in addition to any other remedy available at law or in equity, after a second written notice to Landlord and Landlord’s failure to cure within ten (10) business days after receipt of such second written notice, at its option, incur any expense necessary to perform the obligation of Landlord specified in such notice and invoice Landlord for the cost thereof. In no event shall Tenant withhold, deduct or offset any expense or claim from the payment of Rent.

ARTICLE XII - GENERAL PROVISIONS

12.1 BROKERS. Tenant warrants that it has employed no broker who has or may have a legitimate claim to a commission arising of Tenant’s acceptance of this Lease. Any obligations or potential obligations for commission to any brokers who have a claim arising out of the actions of Tenant are the sole obligation of Tenant. Should a claim be made upon Landlord or the Premises by any brokers who in Landlord’s discretion Landlord determines to have legitimate claim for commission arising out of this transaction, whether such claim is ultimately upheld or not, Landlord may, but shall not be obligated to, discharge the claim either by paying the amount claimed to be due or by any other means. Tenant shall reimburse and pay to Landlord on demand any amount so paid by Landlord and all costs and expenses, including reasonable attorneys’ fees incurred by Landlord in connection therewith, together with interest thereon at the per annum rate equal to the lesser of eighteen percent (18%) or the maximum rate permitted by law from the respective date of Landlord’s notice to Tenant of the making of the payment or of the incurring of the cost and expense, including such attorneys’ fees. Any commission or other compensation due brokers employed by Landlord shall be the sole responsibility of Landlord.

12.2 NO PARTNERSHIP. Notwithstanding any other express or implied provision of this Lease, it is understood that Landlord does not in any way claim to be or propose a partnership or joint venture with Tenant in the conduct of Tenant’s business.

12.3 SUCCESSORS AND ASSIGNS. All rights, obligations and liabilities herein given to, or imposed upon, the respective parties hereto shall extend to and bind the several and respective heirs, executors, administrators, successors, sublessees and assigns of said parties, subject to the provisions of Article X and except to the extent otherwise provided in this Lease, provided, however, that the liability of Landlord hereunder and any successor in interest and title to the Premises shall be limited to his or its interest in the Shopping Center, and no other assets of the Landlord other than his or its interest in the Shopping Center shall be affected by reason of any liability which said Landlord or successor in interest may have under this Lease. If there shall be more than one Tenant, they shall all be bound jointly and severally by the terms, covenants and agreements herein and the word “Tenant” shall be deemed and taken to mean each and every person or party mentioned as a Tenant herein, be the same one or more; and if there shall be more than one Tenant, any notice required or permitted by the terms of this Lease may be given by or to any one thereof and shall have the same force and effect as if given by or to all thereof.

12.4 NOTICES. Wherever in this Lease it shall be required or permitted that notice or demand be given or served by either party to this Lease to or on the other, such notice or demand shall not be deemed to have been duly given or served unless made in writing and either personally delivered or forwarded by Certified Mail, Return Receipt Requested, postage prepaid, nationally-recognized overnight courier service or personal delivery to the address for each party provided in the Abstract of Lease. Such addresses may be changed from time to time by either party by serving notices as above provided. While Tenant is in possession of the Premises, notices to the Tenant may also be delivered or forwarded by Certified Mail to the Premises. Notice shall be deemed given when delivered (or upon refusal of acceptance of delivery), if given by personal delivery, otherwise one (1) business day following delivery to a nationally-recognized overnight courier service or three (3) business days following deposit in the United States mail.

12.5 SCOPE AND INTERPRETATION OF THIS AGREEMENT.

A. ENTIRE AGREEMENT. This Lease shall be considered to be the only agreement between the parties hereto pertaining to the Premises. It is understood that there are no oral agreements between the parties hereto affecting this Lease, and this Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, letters of intent, agreements and understandings, written or oral, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none shall be used to interpret or construe this Lease. All negotiations and oral agreements acceptable to Landlord and Tenant have been merged into and are included in this Lease.

B. ARTICLE HEADINGS AND CAPTIONS. The headings or captions of Articles in this Lease are for convenience and reference only and they in no way define, limit, or describe the scope or intent of this Lease or the provisions of such Articles.

C. GENDER AND INTERPRETATION OF TERMS AND PROVISIONS. As used in this Lease and whenever required by the context thereof, each number, either singular or plural, shall include all numbers, and each gender shall include all genders. Landlord and Tenant, as used in this Lease, or in any other instrument referred to in or made a part of this Lease, shall likewise include both singular and plural, a corporation, limited liability company, partnership, individual or person acting in any fiduciary capacity as executor, administrator, trustee, or in any other representative capacity. All covenants herein contained on the part of Tenant shall be joint and several.

D. TIME OF ESSENCE. Time is hereby expressly declared to be of the essence of this Lease and of each and every covenant, term, condition and provision hereof.

E. IMPARTIAL CONSTRUCTION. The language in all parts of this Lease shall be in all cases construed as a whole according to its fair meaning and not strictly for nor against either Landlord or Tenant.

F. GOVERNING LAW. The laws of the State in which the Premises are located shall govern the validity and enforceability of this Lease. Jurisdiction and venue shall be deemed valid and appropriate in the county and state where the Shopping Center is located.

G. PARTIAL INVALIDITY. If any term, covenant or condition of this Lease or the application thereof to any person or circumstance shall to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby and each term, covenant or condition of this Lease shall be valid and be enforced to the fullest extent permitted by law.

H. AMENDMENT. Oral agreements that modify or are in conflict with any of the terms of this Lease shall be without force and effect. All amendments must be in writing executed by the parties or their respective successors in interest.

I. TENANT’S CONFLICTS. Tenant hereby covenants, warrants and represents that by executing this Lease and by the operation of the Premises under this Lease, it is not violating, has not violated and will not be violating any restrictive covenant or agreement contained in any other lease or contract affecting Tenant or any affiliate, associate or any other person or entity with whom or with which Tenant is related or connected financially or otherwise. Tenant hereby covenants and agrees to indemnify, defend and save harmless Landlord, any future owner of the fee or any part thereof, and any mortgagee thereof against and from all liabilities, obligations, damages, penalties, claims, costs and expenses, including attorneys’ fees, paid, suffered or incurred by them or any of them as a result of any breach of the foregoing covenant. Tenant’s liability under this covenant extends to the acts and omissions of any subtenant, and any agent, servant, employee or licensee of any subtenant of Tenant.

J. LANDLORD, OWNER OR OWNER’S BENEFICIARY OR BENEFICIARIES THEREOF. Wherever in this Lease Landlord is granted a right of consent or approval, a right of inspection, a right to add improvements to the Shopping Center, a right to designate repairs, maintenance or improvements required to be made by Tenant or changes in any plans submitted by Tenant or any other act which involved the exercise of discretion on the part of the Landlord hereunder, such right or exercise of discretion may be exercised by Landlord, owner or owner’s beneficiary or beneficiaries thereof. Any obligation set forth in this Lease of the Landlord, or any obligation of Tenant which Landlord is given the right to perform on Tenant’s behalf, shall be conclusively deemed to have been performed by owner’s beneficiary or beneficiaries thereof. Any obligation of Tenant contained in this Lease to indemnify, defend or hold Landlord harmless (or Landlord and any other party), or to maintain and pay for insurance for the benefit of Landlord (or Landlord and any other party), or to waive any claim against Landlord (or Landlord and any other party) is hereby extended so that such obligations shall run in favor of Landlord, owner and owner’s beneficiary or beneficiaries thereof. Wherever in this Lease it is acknowledged or stated that Landlord has made no representation or warranties or promises with respect to any matter, such provisions shall be deemed to acknowledge or state that neither Landlord nor owner nor owner’s beneficiary or beneficiaries thereof, nor employee of Landlord has made such representations or warranties or promises. All rights to enforce any provision of this Lease on the part of Landlord or any rights to exercise any remedies of Landlord, either specifically provided for herein or at law or equity, may be exercised by Landlord, owner or owner’s beneficiary or beneficiaries thereof, in their own name, alone or in conjunction with Landlord or any of the foregoing parties.

K. EXECUTION OF LEASE BY LANDLORD. The submission of this document for examination and negotiation does not constitute an offer to lease, or a reservation of, or option for, the Premises and this document becomes effective and binding only upon the execution and delivery hereby by Landlord and Tenant. The execution of this Lease by Tenant shall be deemed an offer by Tenant to lease the Premises from Landlord upon the terms and conditions contained in the Lease, which offer may be accepted by Landlord only by the execution of this Lease by Landlord. All negotiations, considerations, representations and understandings between Landlord and Tenant are incorporated herein and may be modified or altered only by agreement in writing between Landlord and Tenant, and no act or omission of any employee or agent of Landlord or of Landlord’s broker shall alter, change or modify any of the provisions hereof.

L. JURY WAIVER. Landlord and Tenant waive their right to trial by jury in any action, proceeding, or counterclaim brought by either of them against the other, or with respect to any issue or defense raised therein, including the right to aN advisory jury (except for personal injury and property damage), on any matters whatsoever arising ouT of, or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use and occupancy of the Premises including summary proceeding and possession actions, any emergency statutory or other statutory remedy.

M. RENTS FROM REAL PROPERTY. Landlord and Tenant hereby agree that it is their intent that all Rent and other charges payable to the Landlord under this Lease shall qualify as “rents from real property” within the meaning of Section 856(d) of the Internal Revenue Code, as amended, (the “Code”) and the Department of the U.S. Treasury Regulations promulgated thereunder (the “Regulations”). Should the Code or the Regulations, or interpretations thereof by the Internal Revenue Service contained in revenue rulings or other similar public pronouncements, be changed so that any Rent no longer so qualifies as “rent from real property” for purposes of Section 856(d) of the Code and Regulations, or any successor provision thereto, then the parties agree to execute such further instrument as may reasonably be required by the Landlord in order to give effect to the foregoing provisions of this Section.

N. INDEPENDENT COVENANTS. The covenants of Tenant to pay Rent and any and all other amounts payable by Tenant pursuant to the terms of this Lease are independent covenants, and Tenant shall not have the right to hold back, offset, or fail to pay any such amounts for default by Landlord or any other reason whatsoever.

O. BLACKLINING. The provisions of this Lease shall be construed, in all respects, without reference to any rule or canon requiring or permitting the construction of provisions of documents against the interest of the party responsible for the drafting of the same, it being the intention and agreement of the parties that this Lease be conclusively deemed to be the joint product of both parties and their counsel. Furthermore, the parties agree that this Lease may be executed with revision markings (so-called “blacklining”) appearing in the execution copy (i.e., deleted text is overstricken and newly-inserted text is underscored or in boldface); such “blacklining” shall not be accorded any significance or taken into account in any way; this Lease shall be construed for all purposes as if all overstricken text were deleted and never included in this Lease and all bold or underscored text were not bold or underscored.

12.6 RADON GAS. Radon gas is a naturally occurring radioactive gas that when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time Additional information regarding radon and radon testing may be obtained from your county public health unit.

12.7 ATTORNEYS’ FEES. In the case of the failure of either party to perform and comply with any of the covenants and conditions hereof within the time herein specified, whether suit be brought or not, the party so failing to perform and comply hereby agrees to pay to the other party hereto all costs, charges, and expenses of such collection or other enforcement of rights in any suit or otherwise, including its reasonable attorneys’ fees. The prevailing party in any litigation arising out of this Lease, including any appellate proceedings and bankruptcy proceedings, shall be entitled to the award of its reasonable attorneys’ fees and costs.

12.8 LEASE NOT RECORDABLE. Under no circumstances shall this Lease be recorded and if Tenant records this Lease in violation of the terms hereof, in addition to any other remedy available to Landlord upon Tenant’s default, Landlord shall have the option to terminate this Lease by recording a notice to such effect. If a memorandum or short form of lease is recorded, then, on the termination of this Lease, Tenant shall execute, acknowledge and deliver to Landlord an instrument in writing releasing and quit-claiming to Landlord all right, title and interest of Tenant in and to the Premises and/or the Shopping Center by reason of this Lease or otherwise.

12.9 ACCORD AND SATISFACTION. Landlord is entitled to accept, receive and cash or deposit any payment made by Tenant for any reason or purpose, or in any amount whatsoever and apply the same at Landlord’s option to any obligation of Tenant and the same shall not constitute payment of any amount owed except that to which Landlord has applied the same. No endorsement or statement on any check or letter of Tenant shall be deemed an accord and satisfaction or otherwise recognized for any purpose whatsoever. The acceptance of any such check or payment shall be without prejudice to Landlord’s right to recover any and all amounts owed by Tenant hereunder and Landlord’s right to pursue any other available remedy and shall not be deemed to constitute a waiver of any of Landlord’s rights hereunder.

12.10 NO WAIVER. No waiver of any provision of this Lease shall be implied by any failure of Landlord or Tenant to enforce any remedy on account of the violation of such provision, even if such violation be continued or repeated subsequently, and no express waiver shall affect any provision other than the one specified in such waiver and that one only for the time and in the manner specifically stated. No receipt of monies by Landlord from Tenant after the termination of this Lease shall in any way alter the length of the Term or of Tenant’s right of possession hereunder or after the giving of any notice shall reinstate, continue or extend the Term hereof or create a new tenancy or affect any notice given Tenant prior to the receipt of such monies, it being agreed that after the service of notice or the commencement or a suit for possession of the Premises or after final judgment for possession of the Premises Landlord may receive and collect any Rent due and the payment of said Rent shall not waive, affect or nullify said notice, suit or judgment. Acceptance by Landlord of less than the entire amount due and owing by Tenant shall not constitute a waiver by Landlord of its rights to further collection.

12.11 COUNTERPARTS. This Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

12.12 EXHIBITS AND SCHEDULES. All exhibits and schedules attached to this Lease are hereby incorporated by reference.

TENANT:		LANDLORD:

Pulse Entertainment Corporation, a Delaware corporation		Inland Diversified Real Estate Services LLC, a Delaware limited liability company, as managing agent for the Owner

By:	/s/ John Textor	By:	/s/ Beth McNeeley
Name:	John Textor	Name:	Beth McNeeley
Its:	Chairman	Title:	Senior Vice President
Date:	Feb 28, 2014	Date:	3-17-14

Witness #1		Witness #1

By:	/s/ Lynne Schwab	By:	/s/ Jill Verbelce
Print Name:	Lynne Schwab	Print Name:	Jill Verbelce

Witness #2		Witness #2

By:	/s/ Stuart Duffon	By:	/s/ D. Schumann
Print Name:	Stuart Duffon	Print Name:	D. Schumann

EXHIBIT A

SITE PLAN OF SHOPPING CENTER

AND DEPICTION OF LOCATION OF PREMISES

This Site Plan is presented solely for the purpose of identifying the approximate location and size of the Premises. The size or configuration of the Shopping Center, building sizes, site dimensions, access and parking areas, existing tenant locations, uses and identities are subject to change at Landlord’s discretion, except as otherwise expressly restricted in the text of the Lease.

The Premises are depicted as Unit #28 below

EXHIBIT B

MINIMUM RENT

INITIAL TERM

YEAR	MONTHLY RENT		ANNUAL RENT		ANNUAL PSF

1	$	5,190.00	$	62,280.00	$	8.65

EXTENDED TERM

YEAR	MONTHLY RENT		ANNUAL RENT		ANNUAL PSF

1	$	5,345.70	$	64,148.40	$	8.91

EXHIBIT C-1

LANDLORD’S WORK

Tenant accepts the Premises in its current “as is” condition. Landlord has made no representations or warranties as to the condition of the Premises.

EXHIBIT C-2

TENANT’S WORK

All work required to complete and place the Premises in finished condition to allow Tenant to open for business is to be done by the Tenant, at the Tenant’s expense (including the payment of all impact fees, if applicable), and in accordance with this Exhibit and the Lease to which this Exhibit is attached.

1.	Tenant’s Work. Subject to additional provisions stated in the Lease, Tenant’s work shall be any and all work required to make the Premises ready for its occupancy and use in accordance with applicable statutes, ordinances, regulations, codes, and requirements of Landlord’s fire underwriter.

2.	Drawing Submittal: The Tenant shall, before it commences Tenant’s work, and within ten (10) days of lease execution, furnish Landlord with two (2) sets of reproducible plans and specifications for all its architectural, mechanical and electrical systems. Such plans shall include the date for all electrical and cooling loads, in form approved by Landlord. Tenant’s plans and specifications shall be prepared by an architect or professional engineer licensed in the state where the Premises are located and shall bear the signature and seal thereof. Tenant shall reimburse Landlord for the cost of its review of said plans for an amount not to exceed Two Thousand and 00/100 Dollars ($2,000.00).

3.	Changes and Alterations. Landlord reserves the right to require changes in Tenant’s work when necessary by reason of code requirements, or building facility necessity, or directives of governmental authorities having jurisdiction over the Premises, or directives of Landlord’s insurance underwriters.

4.	General Provisions. All work done by Tenant shall be governed in all respects by, and be subject to, the following:

a. Tenant shall not commence Tenant’s work until Tenant has secured Landlord’s written approval of its plans and all contractors to be used in performing Tenant’s work. Landlord agrees to notify Tenant within a reasonable time in advance of the day when Tenant must commence Tenant’s work and Tenant agrees that Landlord may require Tenant to commence work, subject to such notice to commence Tenant’s work before Landlord’s work has been fully completed, provided that the Premises and the building of which the Premises are a part are completed to the extent that it is practical for Tenant to commence Tenant’s work. Tenant’s work shall be coordinated with the work being done by the Landlord and/or other tenants of Landlord to such a degree that such work will not interfere with or delay the completion of work by Landlord and/or other tenants of Landlord. The technical review of Tenant’s plans and specifications for purpose of securing Landlord’s written approval shall be performed by the Landlord’s project architect on an hourly fee basis, plus reimbursable expenses, in accordance with the terms of agreement between the Landlord and the architect, and the Tenant shall reimburse the Landlord for all such fees and expenses.

b. Tenant’s work shall be performed in a first-class workmanlike manner and shall be in good and usable condition at the date of completion thereof. Tenant shall require any party performing any such work to guarantee the same to be free from any and all defects in workmanship and materials for one (1) year from the date of completion thereof. Tenant shall also require any such party to be responsible for the replacement or repair without additional charge of any and all work done or furnished by or through such part which shall become defective within one (1) year after substantial completion of the work. The correction of such work shall include, without charge, all expenses and damages in connection with such removal, replacement or repair of any part of the work which may be damaged or disturbed thereby. All warranties or guarantees as to materials or workmanship on or with respect to Tenant’s work shall be contained in the contract or subcontract which shall be so written that such guarantees or warranties shall inure to the benefit of both Landlord and Tenant, as their respective interests appear, and can be directly enforced by either. Tenant covenants and agrees to give Landlord any assignment or other assurances necessary to affect the same.

c. Landlord shall have the right (but shall not be obligated) to perform by its own contractor or subcontractor, on behalf of and for the account of Tenant, any of Tenant’s work which Landlord determines should be so performed. Generally, such work shall be work which affects any structural or roofing components, or work of other tenants of, or the general utility systems for, the building in which the Premises are located. If Landlord so determines, it shall so notify Tenant prior to the commencement of such work. Tenant shall promptly, on demand, reimburse Landlord for all costs of planning and performing such work when and as incurred by Landlord, and for all permits in connection therewith.

d. Tenant shall obtain and convey to Landlord copies of all permits, certifications and approvals indicating compliance.

EXHIBIT C-3

TENANT’S SPACE PLAN

EXHIBIT D

SIGN CRITERIA FOR SHOPPING CENTER

Basic Criteria Governing Signs:

Tenant signs must be kept clean and in good operating condition. It is recommended that each tenant develop a maintenance program to assure that its sign(s) will always appear inviting to customers and enhance the overall appearance of the Shopping Center.

APPROVALS

	1.	Each tenant must submit its sign(s) to Landlord for review and approval prior to the filing of an application for a sign permit(s).

	2.	Each tenant shall be responsible for the costs of obtaining all permit(s) for its sign(s), and for the costs of manufacturing and installing its sign(s).

	3.	In addition to obtaining the approval of Landlord, a tenant must ensure that all of its signs are in conformance with local sign ordinances and codes.

	4.	All sign vendors and contractors must be approved by Landlord, and approved sign vendors and contractors must submit required insurance to Landlord prior to commencing any sign work at the Shopping Center.

II.	MANUFACTURING

	1.	All wiring, transformers, ballasts and other necessary equipment shall be concealed.

	2.	All work shall be done in a workmanlike manner and approved by Landlord.

	3.	The responsible tenant, at that tenant’s sole cost and expense, and to Landlord’s satisfaction and approval, shall repair any damage to the fascia.

	4.	Upon vacating its leased premises, a tenant shall remove its sign(s) and restore the fascia to its original condition. This shall be done at the tenant’s sole cost and expense, and to the satisfaction and approval of Landlord.

III.	ALLOWABLE SIGN LOCATION

	1.	One sign per tenant may be located on the fascia of the Shopping Center.

	2.	Fascia signs shall be centered with respect to the tenant’s total store frontage.

	3.	The tenant’s entire copy and graphics must be located within the boundaries of the “designated sign area,” as designated by Landlord.

IV.	ALLOWABLE SIGN STYLES

	1.	Fascia signs shall be individually formed metal channel letters and graphics.

	2.	Letters and graphics must be covered with acrylic faces.

	3.	All canopy and graphics shall be internally illuminated with neon.

	4.	Aluminum returns or sides of letters and graphics shall be Lacyral 20-313E Duranodic, or equivalent, with a 4-inch (4”) depth. Landlord must approve substitutions.

	5.	The tenant’s copy and graphics shall be mounted entirely on a raceway that matches the color of the fascia on which it is located. Landlord will specify these colors.

V.	ALLOWABLE SIGN SIZE

	1.	The length of a tenant’s sign will be limited to seventy-five percent (75%) of the tenant’s sign panel.

	2.	A tenant shall be allowed up to two (2) square feet of sign face for each linear foot of the tenant’s store frontage, but not to extend higher than the sign panel.

	3.	Letter sizes shall be as follow:

	(a)	for store fronts up to thirty feet (30’): capital letters shall be twenty-four inches (24”), and lower case letters shall be eighteen inches (18”);

	(b)	for store fronts ranging from thirty feet (30’) up to sixty feet (60’): capital letters shall be thirty inches (30”), and lower case letters shall be twenty-four inches (24”).

VI.	GENERAL REQUIREMENTS

	1.	No sign shall be placed in other than the “designated sign area,” as designated by Landlord.

	2.	No sign perpendicular to the face of any building shall be permitted.

	3.	No roof-mounted sign of any kind shall be permitted.

	4.	No flashing, moving, or audible signs or beacons shall be permitted.

	5.	No banners or flagpoles shall be permitted.

	6.	Trailer signs, portable signs or temporary signs shall not be permitted.

	7.	All transformers or electrical appurtenances shall be used.

	8.	No exposed conduit, tubing, neon tubing, conductors, transformers or electrical appurtenances shall be allowed.

	9.	Electrical service to all signs shall be provided from the Tenant’s meter, and it shall be the responsibility of each tenant to hire an electrician approved by Landlord to perform all required electrical work.

	10.	Landlord shall approve design of raceway mounting devices.

	11.	A tenant shall be responsible for repair of any damages to the building caused by the installation of its sign(s).

	12.	All signs shall be fully lighted and operational from a minimum of dusk until 2:00 a.m., Monday through Sunday (seven days a week)

EXHIBIT E

Intentionally Deleted

EXHIBIT F-1

PROHIBITED USES

Tenant shall not violate any of the following Prohibited Uses:

1.	Funeral establishment;

2.	Automobile sale, leasing, repair or display establishment or used car lot, including body repair facilities;

3.	Auction or bankruptcy sale;

4.	Pawn shop;

5.	Outdoor circus, carnival or amusement park, or other entertainment facility;

6.	Outdoor meetings;

7.	Bowling alley;

8.	Primarily pool or billiard establishment;

9.	Shooting gallery;

10.	Off-track betting (provided that state sponsored lottery tickets shall not be prohibited);

11.	Refinery;

12.	Adult bookstore or facility selling or displaying or selling access to pornographic books, literature, websites or videotapes (materials shall be considered “adult” or “pornographic” for such purpose if the same are not available for sale or rental to children under 18 years old because they explicitly deal with or depict human sexuality), massage parlor (not to include therapeutic massage clinics such as Massage Envy, Heavenly Massage, day spas or chiropractic clinics), steam bath, nude modeling, establishment with nude or semi-nude waiters, waitresses or entertainers;

13.	Any residential use, including, but not limited to living quarters, sleeping apartments or lodging rooms;

14.	Theater including, but not limited to, an X-rated theater;

15.	Auditorium, meeting hall, ballroom, school, educational facilities (including, but not limited to, beauty schools, barber colleges, reading rooms or libraries, or other place of public assembly;

16.	Unemployment agency, service or commission;

17.	Gymnasium, health club, ~~exercise~~ or dance studio;

18.	Dance hall;

19.	Cocktail lounge, bar, disco or night club;

20.	Bingo or similar games of chance, but lottery tickets and other items commonly sold in retail establishments may be sold as an incidental part of business;

21.	Video game or amusement arcade, except as an incidental part of another primary business;

22.	So called “head shop” which sells drug paraphernalia;

23.	Skating or roller rink;

24.	Car wash, car repair or car rental agency;

25.	Second hand store, auction house, or flea market, Army/Navy-type store or governmental surplus;

26.	Restaurant including, but not limited to, drive-in or drive-through restaurants; or

~~27.~~	Non-retail use (which shall not prohibit in the Shopping Center such uses commonly referred to as “quasi-retail” or “service retail” such as a travel agency, real estate office, insurance agency, accounting service, etc., so long as same do not exceed ten percent (10%) of the Leasable Square Feet of the Shopping Center);

~~28.~~	~~Any other uses which conflict with the uses of existing tenants; or~~

29.	Tenant may not install an Automatic Teller Machine in or on the Premises without the express written consent of Landlord which consent Landlord may deny in its sole discretion

EXHIBIT F-2

SHOPPING CENTER EXCLUSIVES AND RESTRICTIONS

Tenant shall not violate any of the Exclusives and Restrictions granted by Landlord to other parties and occupants of the Shopping Center as redacted below or as otherwise contained in any documents of record. Defined terms and references to sections and exhibits shall correspond to those in the respective lease or governing document.

Lease is subject to the following documents: Commercial Charter for Tradition, 11/16/04. A copy of this document has been made available to the Tenant.

Commercial Charter for Tradition, 11/16/04

Restriction:

Prohibited Uses - No portion of the Shopping Center may be used for the following uses:

(i) a title insurance business, mortgage brokerage activities, or real estate brokerage or sales activities except as may be specifically authorized by the Founder in writing;

(ii) any bookstore, novelty store, video store, peep show, movie theater or booth, massage parlor or other business or commercial establishment offering pornographic material, displays or performances as one of its principal purposes, sometimes referred to as “adult” establishments; any adult bookstore or store selling or exhibiting pornographic materials which shall include, without limitation, a store displaying for sale or exhibition books, magazines or other publications containing any combination of photographs, drawings or sketches of a sexual nature, which are not primarily scientific or educational, or a store offering for exhibition, sale or rental video cassettes or other medium capable of projecting, transmitting, or reproducing independently or in conjunction with another device, machine or equipment, an image or series of images, the content of which has been rated or advertised generally “X” or unrated by the Motion Pictures Rating Association, or any successor thereto.

Notwithstanding the foregoing provisions if this subsection (ii), the following are not prohibited: a) a store offering for sale or rental a full line of video cassettes, which may sell or rent X-rated videos, provided the number of such X-rated videos shall not exceed, in the aggregate, 5% of the total number of all video cassettes offered for sale or rental at such store, said X-rated video shall not be displayed to the general public and said X-rated videos shall be distributed from non visible areas (i.e. behind sales counter); and b) a store offering for sale, a general line of magazines and other publications, which shall be permitted to sell sex magazines provided the number of said sex magazines does not exceed, in the aggregate, 5% of the total number of all magazines and publications (excluding daily newspapers) sold at such store, one and only copy of each issue of each sex magazine shall be displayed in opaque wrapping which permits only the name and/or title of such sex magazine shall be distributed from non-visible area;

(iii) salvage yard or junk yard;

(iv) facility for the sale of paraphernalia for use with illicit drugs, a “head shop”;

(v) gambling for money facility or operation, including, but not limited to: off-track or sports betting parlor, table games such as black-jack poker slot machines, video poker/blackjack/ keno machines or similar devices; or bingo hall. Notwithstanding the foregoing, the prohibition shall not apply to governmental sponsored gambling activities, or charitable gambling activities, so long as such governmental and/or charitable gambling activities are incidental to the business operation being conducted by the Owner or tenant, or to activities which might be associated with gambling but where no money changes hands;

(vi) flea market; swap shop, pawn shop, resale store, second hand store, surplus store, consignment shop, thrift store or stores selling primarily merchandise that is used or damaged;

(vii) any use which emits a noxious, strong, unusual or offensive odor, dust, fumes, vapor, noise or sound (not including noise associated with construction activities) which can be heard or smelled outside of any building; provided, however, this provision shall not prohibit the reasonable emanation of cooking odors from any restaurants, nor shall it prohibit exterior audio speakers situated to localize sound transmission onto the Commercial Lot on which they are locate and to minimize unreasonable interference and impact on any residential areas of Tradition outside the Commercial Area;

(viii) any use which is a public or private nuisance;

(ix) any use which emits noise or sound (not including noise or sound associated with construction activities) which are objectionable due to intermittence, beat, frequency, shrillness or loudness, creates a hazardous condition, or is used, in whole or in part, as or for warehousing or the dumping of garbage or refuse;

(x) the following uses are prohibited except when shown on a site plan approved by the Founder during the period that Founder has review authority under Section 5.2(a) and thereafter by the DRC: operation of a theater of any kind; a sports or other entertainment viewing facility (whether live, film, audio/visual or video); a health spa, exercise facility, or similar type business; a car wash; a health clinic or medical rehabilitative facility; residential purposes; an automobile repair shop (mechanical or otherwise) or any business servicing motor vehicles, including without limitation, any quick lube oil change services, tire centers, or any business selling gasoline or diesel fuel at retail or wholesale;

(xi) automobile body and fender shop;

(xii) fast food restaurant incorporating a coin or token operated amusement room;

(xiii) recycling facility or stockyard;

(xiv) discotheque or dance hall; amusement arcade or game room;

(xv) industrial, factory, manufacturing or warehouse use (excluding any warehousing/manufacturing incidental to the operation of permitted retail uses hereunder;

(xvi) training or educational facility which for purposes hereof shall mean a beauty school, barber school, place of instruction, or any other activity, facility, or school program catering primarily to students or trainees as opposed to shoppers;

(xvii) sales office, showroom or storage facility for boats, automobiles or other vehicles;

(xviii) dry cleaning or laundry plant (except for an establishment which receives and dispenses items for launder and/or dry cleaning but the processing of such items is done elsewhere);

(xix) fire sale or bankruptcy sale (unless pursuant to a court order); or

(xx) dumping, disposing, incinerating or reducing of garbage, exclusive of enclosed dumpsters for the temporary storage of garbage, garbage compactors, and recycling bins for recycling of plastic, metal, glass, food and beverage containers, and paper, in each case which are regularly emptied so as to minimize offensive odors.

B. Restricted Activities. Unless expressly authorized by, and then subject to such conditions as may be imposed by, the Board of Directors of the Association, the following activities are prohibited within the Shopping Center:

(i) Parking any vehicles anywhere except in designated parking areas. Parking of trucks and other commercial vehicles where they may be seen from any public street, except when in an area so designated for such vehicles. Storage of commercial vehicles or equipment, mobile homes, recreational vehicles, golf carts, boats and other watercraft, trailers, stored vehicles, or inoperable vehicles in places other than enclosed garages or areas specifically approved for such use; provided, construction, service and delivery vehicles shall be exempt from this provision during normal business hours for such period of time as is reasonably necessary to provide service or to make a delivery to a Commercial Lot or the Common Area;

(ii) Raising, breeding, or keeping animals except that a reasonable number of dogs, cats, or other usual and common household pets may be permitted on a Commercial Lot. However, those pets which are permitted to roam free, or, in the Board’s sole discretion, make objectionable noise, endanger the health or safety of, or constitute a nuisance or inconvenience to the owners or tenants of other Commercial Lots shall be removed upon the Board’s request. If the pet owner fails to honor such request, the Board may remove the pet. Dogs shall be kept on a leash or otherwise confined in a manner acceptable to the Board whenever outside a structure. Pets shall be registered, licensed, and inoculated as required by law;

(iii) Any activity that emits foul or obnoxious odors or creates noise or other conditions that tend to disturb the peace or threaten the safety of the owners and tenants of other Commercial Lots;

(iv) Any activity that violates local, state, or federal laws or regulations; however, the Board shall have no obligation to take enforcement action in the event of a violation;

(v) Pursuit of hobbies or other activities that tend to cause an unclean, unhealthy, or untidy condition to exist outside of enclosed structures on the Commercial Lot;

(vi) Any noxious or offensive activity which in the reasonable determination of the Board tends to cause embarrassment, discomfort, annoyance, or nuisance to persons using the Common Area or to the owners or tenants of other Commercial Lots;

(vii) Outside burning of trash, leaves, debris, or other materials, except during the normal course of constructing a structure on a Commercial Lot;

(viii) Use and discharge of firecrackers and other fireworks;

(ix) Accumulation of rubbish, trash, or garbage except between regular garbage pick-ups, and then only in approved containers;

(x) Discharge of firearms; provided, the Board shall have no obligation to take action to prevent or stop such discharge;

(xi) On-site storage of fuel, except that a reasonable amount of fuel may be stored on each Commercial Lot for emergency purposes and operation of lawn mowers and similar tools or equipment, and the Association shall be permitted to store fuel for operation of maintenance vehicles, generators, and similar equipment. This provision shall not apply to any underground fuel tank authorized pursuant to Chapter 5;

(xii) Any activities which materially disturb or destroy the vegetation, wildlife, wetlands, or air quality within the Commercial Area or which use excessive amounts of water or which result in unreasonable levels of sound or light pollution;

(xiii) Any modification of anything, permanently or temporarily, on the outside portions of the Commercial Lot, whether such portion is improved or unimproved, except in strict compliance with the provisions of Chapter 4 of the Commercial Charter. This shall include, without limitation, signs; awnings; porches; railings; sports and play equipment; clotheslines; dumpsters and other trash receptacles; recycling bins; woodpiles; docks, piers, and similar structures; hedges; walls; fences and satellite dishes and antennas.

C. Prohibited Conditions. The following shall be prohibited in the Shopping Center:

(i) Plants, animals, devices, or other things of any sort whose activities or existence in any way is noxious, dangerous, unsightly, unpleasant, or of a nature as may diminish or destroy the enjoyment of the Commercial Area; and

(ii) Structures, equipment, or other items on the exterior portions of a Commercial Lot which have become rusty, dilapidated, or otherwise fallen into disrepair.

Witaya & Preeda Corporation d/b/a Sake Japanese & Thai Restaurant

Exclusive:

Landlord hereby agrees that it shall not lease space in the Village Center to a restaurant tenant selling Japanese and/or Thai Food unless the total sales of Japanese and/or Thai food is less than ten percent (10%) of such other tenant’s Gross Sales. The foregoing restriction shall not apply to (a) any tenant now or hereinafter leasing or occupying in excess of 40,000 square feet of Rentable Area in the Village Center, or (b) any existing tenant of the Village Center (or any such existing tenant’s successors, assignees or sublessees), or (c) any tenant who shall at any time replace any such existing tenant (or any such existing tenant’s successors, assignees or sublessees) whether such replacement tenant shall occupy the same or different premises in the Village Center, or (d) to any existing or future tenant or other occupant of any outparcel which may from time to time be located in or adjacent to the Village Center.

My Kristie Le & Cong Le d/b/a Tutti Frutti

Exclusive:

Provided that Tenant has not committed an event of default, and subject to the limitations set forth below, Landlord agrees that during the Term, as such Term may be extended pursuant to the provisions of the Lease, Landlord shall not, without Tenant’s reasonable consent, enter into a lease with any occupant in Tenant’s building within the Shopping Center, which shall permit such occupant to have as a primary use for its premises the following: the sale of frozen yogurt (the “Exclusive Right’).

Tenant’s Exclusive Right is subject to the following express limitations:

	A.	Existing tenants of the Shopping Center (which leases may be assigned, renewed, extended or replaced), as well as land, buildings or spaces which are not owned by Landlord, are not subject to the Exclusive Right;

	B.	The Exclusive Right shall only limit competing uses that are the primary business of competing tenants as such business is engaged in at the Shopping Center and shall not be construed as prohibiting ancillary uses or business that competing tenants do not engage in at the Shopping Center;

	C.	The Exclusive Right shall only be effective so long as and while Tenant continuously operates its exclusive business in the entire Premises (excluding temporary closures permitted under the Lease), and shall not restrict uses that Tenant does not engage in at the Shopping Center;

	D.	The Exclusive Right shall not apply to, and shall not be deemed to permit Tenant, any use otherwise prohibited by this Lease, by the prohibited uses applicable to the Shopping Center or by the exclusive uses granted to tenants at the Shopping Center prior to the date of this Lease.

	E.	Any lease of space in the Shopping Center for at least 2,000 square feet is excluded from the Exclusive Right set forth herein;

	F.	The Exclusive Right shall automatically terminate and be of no further force or effect upon the occurrence of any of the following: (i) an event of default by Tenant, (ii) the assignment or sublease by Tenant of the Premises or any part thereof (unless otherwise agreed to by Landlord in writing at the time of Tenant’s request for Landlord’s consent to such an assignment or sublease, which may be withheld in Landlord’s sole discretion), or (iii) the failure of Tenant to timely or properly exercise its rights to renew the Term as provided in Section 3. I (B) of this Lease.

Pritchards & Associates

None

Enchanted Florist and Gifts, LLC d/b/a Enchanted Florist & Gifts

EXCLUSIVE USE: Provided that Tenant has not committed an event of default, and subject to the limitations set forth below, Landlord agrees that during the Term, as such Term may be extended pursuant to the provisions of the Lease, Landlord shall not, without Tenant’s reasonable consent, enter into a lease with any occupant in Tenant’s building within the Shopping Center, which shall permit such occupant to have as a primary use for its premises the following: the sale of flower arrangements (the “Exclusive Right”).

The Sanctuary Day Spa at Tradition, Inc. d/b/a Sanctuary Day Spa

Exclusive

Landlord hereby agrees that it shall not lease space in the Village Center to a tenant who shall be authorized by its lease to carry on, as its primary principal business, the operation of a Day Spa, where “primary principal business” means that greater than fifty percent (50%) of such other tenant’s gross sales shall be derived from the sale of the services including those of a luxury day spa providing treatments such as spa manicures and pedicures, facials, waxing, chemical anti-aging peels, make-up application, massage services and body treatments, microdermabrasion treatments, all nail related services, permanent make-up, retail sales of beauty/health products, retail sales of beauty accessories, training of treatments and services, special occasion events (involving all services), and medical skincare seminars and treatments performed by a licensed physician. The foregoing restriction shall not apply to (a) any tenant now or hereinafter leasing or occupying in excess of 40,000 square feet of Rentable Area in the Village Center, or (b) any existing tenant of the Village Center (or any such existing tenant’s successors, assignees or sublessees), or (c) any tenant who shall at any time replace any such existing tenant (or any such existing tenant’s successors, assignees or sublessees) whether such replacement tenant shall occupy the same or different premises in the Village Center, or (d) to any existing or future tenant or other occupant of any outparcel which may from time to time be located in or adjacent to the Village Center.

Three Blind Mice, LLC d/b/a Kilwin’s Chocolates, Fudge & Ice Cream

Exclusive

Landlord hereby agrees that it shall not lease space in the Village Center to a tenant who shall be authorized by its lease to carry on, as its primary principal business, the operation of a specialized confection shoppe, where “primary principal business” means that greater than fifty percent (50%) of such other tenant’s gross sales shall be derived from the sale of fudge, caramel corn and apples, peanut brittle, ice cream and chocolate. The foregoing restriction shall not apply to (a) any tenant now or hereinafter leasing or occupying in excess of 40,000 square feet of Rentable Area in the Village Center, or (b) any existing tenant of the Village Center (or any such existing tenant’s successors, assignees or sublessees), or (c) any tenant who shall at any time replace any such existing tenant (or any such existing tenant’s successors, assignees or sublessees) in each case irrespective of whether such replacement tenant shall occupy the same or different premises in the Village Center, or (d) to any existing or future tenant or other occupant of any outparcel which may from time to time be located in or adjacent to the Village Center.

Home Town Cable TV, LLC d/b/a Home Town Cable Plus

Exclusive

Landlord hereby agrees that it shall not lease space in the Village Center to a tenant who shall be authorized by its lease to carry on, as its primary principal business, sales and customer service center for and retail sales of cellular telephones and cellular telephone services, cable and satellite television services, and setup boxes for cable television (the “Protected Uses”), where “primary principal business” means that greater than thirty five percent (35%) of such other tenant’s Gross Sales shall be derived from the sale and user fees for such services described above. The foregoing restriction shall not apply to (a) any tenant now or hereinafter leasing or occupying in excess of 40,000 square feet of Rentable Area in the Village Center, or (b) any existing tenant of the Village Center (or any such existing tenant’s successors, assignees or sublessees), or (c) any tenant who shall at any time replace any such existing tenant (or any such existing tenant’s successors, assignees or sublessees) in each case irrespective of whether such replacement tenant shall occupy the same or different premises in the Village Center.

Jehovah Neto d/b/a Ultimate Barbers

Exclusive Use:

Tenant’s Exclusive Right is subject to the following express limitations:

	A.	Existing tenants of the Shopping Center (which leases may be assigned, renewed, extended or replaced), as well as land, buildings or spaces which are not owned by Landlord, are not subject to the Exclusive Right;

	B.	The Exclusive Right shall not apply to the replacement of an existing use in the Shopping Center with a similar use;

	C.	The Exclusive Right shall only limit competing uses that are the primary business of competing tenants as such business is engaged in at the Shopping Center and shall not be construed as prohibiting ancillary uses or business that competing tenants do not engage in at the Shopping Center;

	D.	Exclusive Right shall only be effective so long as and while Tenant continuously operates its exclusive business in the entire Premises (excluding temporary closures permitted under the Lease), and shall not restrict uses that Tenant does not engage in at the Shopping Center;

	E.	The Exclusive Right shall not apply to, and shall not be deemed to permit Tenant, any use otherwise prohibited by this Lease, by the prohibited uses applicable to the Shopping Center or by the exclusive uses granted to tenants at the Shopping Center prior to the date of this Lease including the exclusive use of Sanctuary Day Spa.

	F.	Any lease of space in the Shopping Center for at least 2,000 square feet is excluded from the Exclusive Right set forth herein.

Worldwide Travel Adventures, Inc.

Exclusive

Provided that Tenant has not committed an event of default, and subject to the limitations set forth below, Landlord agrees that during the Term, as such Term may be extended pursuant to the provisions of the Lease, Landlord shall not, without Tenant’s reasonable consent, enter into a lease with any occupant in Tenant’s building within the Shopping Center, which shall permit such occupant to have as a primary use for its premises the following: the sale of travel tours, cruises or travel related packages (the “Exclusive Right”).

Tenant’s Exclusive Right is subject to the following express limitations:

	A.	Existing tenants of the Shopping Center (which leases may be assigned, renewed, extended or replaced), as well as land, buildings or spaces which are not owned by Landlord, are not subject to the Exclusive Right;

	B.	The Exclusive Right shall not apply to the replacement of an existing use in the Shopping Center with a similar use;

	C.	The Exclusive Right shall only limit competing uses that are the primary business of competing tenants as such business is engaged in at the Shopping Center and shall not be construed as prohibiting ancillary uses or business that competing tenants do not engage in at the Shopping Center (for purposes of this Section R-1, “ancillary uses or business uses” shall mean no more than ~~50%~~ 25% of competing tenant’s gross sales);

	D.	The Exclusive Right shall only be effective so long as and while Tenant continuously operates its exclusive business in the entire Premises (excluding temporary closures permitted under the Lease), and shall not restrict uses that Tenant does not engage in at the Shopping Center; and

	E.	The Exclusive Right shall not apply to, and shall not be deemed to permit Tenant, any use otherwise prohibited by this Lease, by the prohibited uses applicable to the Shopping Center or by the exclusive uses granted to tenants at the Shopping Center prior to the date of this Lease.

	F.	Any lease of space in the Shopping Center for at least 10,000 square feet is excluded from the Exclusive Right set forth herein.

4 J’s LLC d/b/a Johnny V’s Pizza Trattoria

Exclusive

Landlord hereby agrees that it shall not lease space in the Village Center to a tenant who shall be authorized to carry on, as its primary principal business, the operation of a pizzeria restaurant, where “primary principal business” means that greater than fifty percent (50%) of such other tenant’s gross sales shall be derived from the sale of pizza and Italian food and beverage. The foregoing restriction shall not apply to (a) any tenant now or hereinafter leasing or occupying in excess of 40,000 square feet of Rentable Area in the Village Center, or (b) any tenant now or hereinafter leasing or occupying space in the Village Center, regardless of the size of its Rentable Area, who engages in the sale of pizza and Italian food and beverage (such as “Lil’ Caesars” or “Pizza Hut” or other purveyor of pizza and Italian food and beverage within a department or other store [for example, within a ‘Target’ or other department store]) or (c) any existing or future tenant or other occupant of any outparcel which may from time to time be located in or adjacent to the Village Center.

Russo Family Tradition, LLC d/b/a Hurricane Grill & Wings

Exclusive

Landlord hereby agrees that it shall not lease space in the Village Center to a tenant who shall be authorized to carry on, as its primary principal business, the operation of a restaurant specializing in serving chicken wings, where “primary principal business” means that greater than twenty percent (20%) of such other tenant’s gross sales shall be derived from the sale of chicken wings. The foregoing restriction shall not apply to (a) any tenant now or hereinafter leasing or occupying in excess of 40,000 square feet of Rentable Area in the Village Center, or (b) any existing tenant of the Village Center (or any such existing tenant’s successors, assignees or sublessees), or (c) any tenant who shall at any time replace any such existing tenant (or any such existing tenant’s successors, assignees or sublessees) whether such replacement tenant shall occupy the same or different premises in the Village Center, or (d) to any existing or future tenant or other occupant of any outparcel which may from time to time be located in or adjacent to the Village Center.

Warren, Yazji Associates, DDS, P.A. d/b/a Regency Dental

Exclusive

Landlord hereby agrees that it shall not lease space in the Village Center to a tenant who shall be authorized to carry on, as its primary principal business, the operation of a dental and orthodontic office, where “primary principal business” means that all or a significant part of such other tenant’s gross sales shall be derived from the sale dental or orthodontic services by a licensed dentist or orthodontist. The foregoing restriction shall not apply to (a) any tenant now or hereinafter leasing or occupying in excess of 40,000 square feet of Rentable Area in the Village Center, or (b) any existing tenant of the Village Center (or any such existing tenant’s successors, assignees or sublessees), or (c) any tenant who shall at any time replace any such existing tenant (or any such existing tenant’s successors, assignees or sublessees) whether such replacement tenant shall occupy the same or different premises in the Village Center, or (d) to any existing or future tenant or other occupant of any outparcel which may from time to time be located in or adjacent to the Village Center.

Publix Super Markets, Inc. d/b/a Publix

Exclusive:

16.02 Exclusive Uses,

(a) Exclusive Uses. Landlord covenants and agrees that during the Term, Tenant shall have the exclusive right within the Shopping Center and Adjacent Property to: (i) operate a grocery supermarket, bakery, delicatessen, and fish market; (ii) sell drugs or other products which are required by law to be dispensed by a registered pharmacist; and (iii) engage in retail sales of items of food for “off-premises” consumption; provided, however, that the provisions of this subparagraph shall not operate to preclude the development of a gas station with convenience store on the Outparcel or the Shopping Center Tract.

(b) Exceptions to Exclusive Uses. The terms and provisions of Paragraph 16.02(a) of this Lease, entitled “Exclusive Uses”, to the contrary notwithstanding, occupants of the Shopping Center, as well as occupants of the Outparcels and Adjacent Property which may otherwise be restricted pursuant to the terms and provisions of Paragraphs 18.01 and 18.02 of this Lease, entitled 11 0utparcel Restrictions” and “Adjacent Property Restrictions 11 respectively, shall not be prohibited from engaging in the operation of: (i) a restaurant offering prepared ready-to-eat food items for consumption either on or off the premises; (ii) a delicatessen or sandwich shop type restaurant (but not a bakery) which offers take out service as an incidental part of its restaurant operation, provided that at least seventy percent (70%) of the Leasable Floor Area of such restaurant (exclusive of kitchen or food preparation area) is utilized for seated dining purposes; (iii) a health food store or nutrition center (provided that the Leasable Floor Area devoted to such health food store or nutrition center shall not exceed 1,600 square feet), ice cream parlor or frozen yogurt store, franchise doughnut shop (equivalent to a Dunkin’ Donut or Krispy Kreme operation), bagel shop, candy store, or a pizza pickup or delivery outlet, all of which may offer the sale of food items for consumption on or off the premises; and (iv) a combination gas station and convenience food store operation, provided that the Leasable Floor Area devoted to the sale of food and beverage products shall not exceed 1,500 square feet, however, the foregoing exception (iv) shall not permit a gas station/convenience food store that is owned by, operated by, or controlled by another grocery supermarket entity or general merchandise retailer that also operates grocery supermarkets (such as WalMart), such entity’s parent company or its subsidiaries or affiliates and which gas station and convenience store operation is identified on the premises with such grocery supermarket name or the name under which such general merchandise retailer operates grocery supermarkets within the state in which the Premises is located; (v) a video rental or sale store (similar to Blockbuster Video) which may offer the sale of items normally sold by movie theaters (i.e. popcorn or candy) for consumption off the premises; (vi) and a typical “Dollar Store” concept which may sell items, including, but not limited to food items, which are also sold by Tenant as long as the total area devoted by such Dollar Store to the sale of items which are also sold by Tenant, including, but not limited to food items, does not exceed 400 linear feet.

16.03 (b) Specific Prohibited Uses. Landlord hereby covenants and agrees that no other premises in the Shopping Center or Adjacent Property shall be used for the following “prohibited uses”: a dry cleaning plant, cinema or theater, skating rink, bowling alley, discotheque, dance hall, nightclub, amusement gallery, pool room, health spa, adult (i.e., pornographic) entertainment facility, gymnasium, massage parlor, adult (i.e., pornographic) book store, pin ball or electronic game room, a so-called “head shop”, funeral parlor, flea market, bingo parlor, cafeteria, sale, rental or lease of automobiles, trucks, other motorized vehicles, or trailers, or car wash, except for a car wash operated in conjunction with a service station. In addition, Landlord hereby covenants and agrees that no other premises in the Shopping Center or Adjacent Property located within 450 feet of the Storeroom (which distance shall be measured from the Storeroom demising wall nearest said other premises to the demising wall of said other premises nearest the Storeroom) shall be used for a day care center, or a “concept” restaurant and/or cocktail lounge of a parking intensive nature, such restaurants and/or cocktail lounges, being similar in nature to Bennigan’s, T.J. Applebee’s, Outback Steakhouse, Chili’s, Hooters, and T. G. I. Friday’s. In any event, not more than an aggregate of two (2) restaurants and/or cocktail lounges, regardless of concept or parking intensive nature, shall be located within the Shopping Center and the Outparcels combined.

Restriction:

18.01 Outparcel Restrictions. Landlord covenants and agrees that any buildings, pylon or monument signs constructed on the Outparcels shall be subject to the following restrictions: (i) no more than one building shaI1 be constructed on any Outparcel and said building sha1I accommodate only one (1) business operation therein (provided that, this restriction shall not, prohibit typical co-branding operations of the kind typically found in the State where the shopping center is located), nor shal1 it prohibit the development on an Outparcel of a gas station with a convenience store and car wash, whereby the car wash building and gasoline islands are separate from the convenience store; (ii) no building shall exceed two stories in height; (iii) no building shal1 exceed thirty-two (32) feet in height as to Outparcel 2 or thirty-five (35) feet in height as to Outparcel 1; (iv) the Leasable Floor Area of any building constructed on an outparcel shall not exceed the floor area limitation set forth on the Site P1an, provided, in any event, such Leasable Floor Area shall be further limited to the extent that the number and size of on-grade automobile parking spaces required by all applicable ru1es, regulations, ordinances, and laws can be constructed and maintained within the boundaries of such outparcel; (v) each building shall comply with all governmental rules, regulations, ordinances, and Laws; and (vi) the Outparcels or any buildings constructed thereupon shall not be used in violation of the exclusive rights granted to Tenant in Paragraph 16.02 of this Lease, nor for any of the Prohibited Uses set forth in Paragraph 16.03 of this Lease. More specifically, subject to the terms and provisions of Item (ii) of Paragraph 7.03(b) of this Lease, entitled “Parking Areas”, all such rules, regulations, ordinances, or laws relative to parking requirements shall be complied with by providing the requisite size and number of on-grade parking spaces within the boundaries of said Outparcels, without reduction in such size and number by virtue of the granting of a variance or special exception to such rules, regulations, ordinances, and laws by the governmental authority having jurisdiction thereof. Furthermore, the provisions of all applicable rules, regulations, ordinances, and laws to the contrary notwithstanding, for purposes of this Paragraph 18.01, the Leasable Floor Area of any building constructed on an Outparcel shall also be deemed to include outdoor balconies, patios, or other outdoor areas utilized for retail sales or food or beverage service (exclusive of areas utilized exclusively for drive through or walkup take-out food or beverage service, or gasoline pump areas, whether or not under canopy) .

(b) Tradition Property and MXD Property Restriction.

Landlord covenants and agrees that provided that this Lease remains in full force and effect, Tenant shall have the exclusive right to operate a grocery supermarket within the Tradition Property and the MXD Property for the first five (5) years of the Term of this Lease.

First Amendment, Paragraph 12; Article 18, Paragraph 18.02 (b) of the Lease is amended by adding the following at the end of said paragraph:

“Without prejudice as to whether or not the sale of such items constitutes a grocery supermarket which is subject to such restriction, Tenant acknowledges and agrees that Target Corporation operating for business within the Tradition Property and/or MXD Property shall not violate the foregoing restriction by selling food, grocery and other items typically sold from time to time in and from any full-line or discount department store, provided such sale of food or grocery items for off-premises consumption shall be limited to less than eight thousand (8,000) square feet (“GS Floor Area Limitation”) of Leasable Floor Area of the premises occupied by Target Corporation with non-food items. The following i terns shall not be counted for purposes of calculating the GS Floor Area Limitation: seasonal food sales (including, sales of Halloween and Christmas candy), candy/snack racks at registers, and restaurant and other food service facilities.”

Admiral Associates, Inc. d/b/a The UPS Store

Exclusive

Landlord hereby agrees that it shall not lease space in the Village Center to a tenant who shall be authorized to carry on, as its primary principal business, the operation of a retail packaging and shipping services store, where “primary principal business” means that greater than fifty percent (50%) of such other tenant’s gross sales shall be derived from the sale of retail packaging and shipping (such as UPS, USPS, DHL, Federal Express and other similar delivery services), mailbox rental, facsilimie, copying, office supplies, stamps, metered mail and printing services. The foregoing restriction shall not apply to (a) any tenant now or hereinafter leasing or occupying in excess of 40,000 square feet of Rentable Area in the Village Center, or (b) any existing tenant of the Village Center (or any such existing tenant’s successors, assignees or sublessees), or (c) any tenant who shall at any time replace any such existing tenant (or any such existing tenant’s successors, assignees or sublessees) whether such replacement tenant shall occupy the same or different premises in the Village Center, or (d) to any existing or future tenant or other occupant of any outparcel which may from time to time be located in or adjacent to the Village Center.

Komal Associates of Tradition, Inc. d/b/a The Clothes Spa

None.

Identity Hair & Nails, Inc. d/b/a Salon Identity

None.

Bagel Brothers of New York, Inc. d/b/a Bagel Brothers

None.

Dos Amigos Mexicali Restaurant

Exclusive:

Rider R-9 Landlord Covenant: Landlord hereby agrees that it shall not lease space in the Shopping Center to a tenant who shall be authorized as its primary principal business to operate a restaurant selling Mexican food, where, “primary principal business” means that greater than fifteen percent (15%) of such other tenant’s gross sales shall be derived from the operation of a restaurant selling Mexican food, Mexican cuisine or Mexican food items. including the following variations of Mexican food. cuisine and/or food items: baja Mexican style food, Mexicali style food and TexMex style food for on-premises consumption. The foregoing restriction shall not apply a TacoBell or Taco Tico national franchise with a drive through service window. Notwithstanding anything to the contrary contained in the foregoing restriction, Landlord or its affiliates shall not the lease space in Shopping Center to Moe’s Southwestern Grille, Chipotle Mexican Restaurant or Baja Fresh Cafe.

H&M Restaurants d/b/a Tin Fish

None.

Kimley-Horn and Associates, Inc.

None.

Premier Wellness Center, LLC d/b/a Premier Wellness Center

Exclusive

Landlord hereby agrees that it shall not lease space in the Developer’s Tract (excluding any outparcels) to a tenant who shall be authorized to perform chiropractic services. The foregoing restriction shall not apply to (a) any tenant now or hereinafter leasing or occupying in excess of 10,000 square feet of rentable Floor Area on the Developer’s Tract, or (b) any existing tenant on the Developer’s Tract (or any such existing tenant’s successors, assignees or sublessees).

Fishkind & Associates, Inc.

None.

McArthur Management Company

None.

Mann Research Center, LLC d/b/a Mann Research

None.

Sun Trust Bank

None.

Wachovia

None.

Town Jewelers

R-5 EXCLUSIVE USE: Provided that Tenant has not committed an event of default, and subject to the limitations set forth below, Landlord agrees that during the Term, as such Term may be extended pursuant to the provisions of the Lease, Landlord shall not, without Tenant’s reasonable consent, enter into a lease with any occupant in Tenant’s building within the Shopping Center, which shall permit such occupant to have as a primary use for its premises the following: the sale at retail of jewelry (the “Exclusive Right”).

Tenant’s Exclusive Right is subject to the following express limitations:

A.	Existing tenants of the Shopping Center (which leases may be assigned, renewed, extended or replaced), as well as land, buildings or spaces which are not owned by Landlord, are not subject to the Exclusive Right;

B.	The Exclusive Right shall not apply to the replacement of an existing use in the Shopping Center with a similar use;

C.	The Exclusive Right shall only limit competing uses that are the primary business of competing tenants as such business is engaged in at the Shopping Center and shall not be construed as prohibiting ancillary uses or business that competing tenants do not engage in at the Shopping Center;

D.	Exclusive Right shall only be effective so long as and while Tenant continuously operates its exclusive business in the entire Premises (excluding temporary closures permitted under the Lease), and shall not restrict uses that Tenant does not engage in at the Shopping Center;

E.	The Exclusive Right shall not apply to, and shall not be deemed to permit Tenant, any use otherwise prohibited by this Lease, by the prohibited uses applicable to the Shopping Center or by the exclusive uses granted to tenants at the Shopping Center prior to the date of this Lease.

F.	Any lease of space in the Shopping Center for at least 5,000 square feet is excluded from the Exclusive Right set forth herein.

EXHIBIT G

RULES AND REGULATIONS

1.	Tenant shall advise and cause its vendors to deliver all merchandise before noon on Mondays through Fridays, not at other times.

2.	All deliveries are to be made to designated service or receiving areas and Tenant shall request delivery trucks to approach their service or receiving areas by designated service routes and drives.

3.	Tractor-trailers which must be unhooked or parked must use steel plates under dolly wheels to prevent damage to the asphalt paving surface. In addition, wheel blocking must be available for use. Tractor trailers are to be removed from the loading areas after unloading. No parking or storing of such trailers will be permitted in the Shopping Center.

4.	Tenant shall not dispose of the following items in sinks or commodes: plastic products (plastic bags, straws, boxes); sanitary napkins; tea bags; cooking fats, cooking oils; any meat scraps or cutting residue; petroleum products (gasoline, naphtha, kerosene, lubricating oils); paint products (thinner, brushes); or any other time which the same are not designed to receive.

5.	Tenant shall not permit or suffer any advertising medium to be placed on exterior walls or windows, on the sidewalks or on the parking lot areas or light poles. No permission, expressed or implied, is granted to exhibit or display any banner, pennant, sign and trade or seasonal decoration of any size, style or material within the Shopping Center, outside the Premises.

6.	Tenant shall not permit or suffer the use of any advertising medium which can be heard or experienced outside of the Premises, including, without limiting the generality of the foregoing, flashing lights, searchlights, loud speakers, phonographs, radios, or television. No radio, television, or other communication antenna equipment or device is to be mounted, attached, or secured to any part of the roof, exterior surface, or anywhere outside the Premises, unless Landlord has previously given its written consent.

7.	Tenant shall not permit or suffer any portion of the Premises to be used for lodging or extended stay purposes.

8.	Tenant shall not, in or on any part of the Common Area:

	a.	Vend, peddle or solicit orders for sale or distribution of any merchandise, device, service, periodical, book, pamphlet or other matter whatsoever.

	b.	Exhibit any sign, placard, banner, notice or other written material, except for activities as approved in writing by Landlord.

	c.	Distribute any circular, booklet, handbill, placard or other material, except for activities as approved in writing by Landlord.

	d.	Solicit membership in any organization, group or association or contribution for any purpose.

	e.	Create a nuisance.

	f.	Throw, discard or deposit any paper, glass or extraneous matter of any kind except in designated receptacles, or create litter or hazards of any kind.

	g.	Deface, damage or demolish any sign, light standard or fixture, landscaping materials or other improvement within the Shopping Center, or the property of customers, business invitees or employees situated within the Shopping Center.


9.	Tenant shall not locate furnishings or cabinets adjacent to mechanical or electrical access Panels or over air-conditioning outlets so as to prevent operating personnel from servicing such units as routine or emergency access may require. Cost of moving such furnishings for Landlord’s access will be at Tenant’s cost. The lighting and air-conditioning equipment of the Shopping Center will remain in the exclusive control of the building designated personnel.

10.	Tenant shall comply with parking rules and regulations as may be posted and/or distribution from time to time.

11.	Prior written approval, which shall be at Landlord’s sole discretion, must be obtained for installation of window shades, blinds, drapes or any other window treatment of any kind whatsoever.

12.	Tenant shall keep the Premises at a temperature compatible with comfortable occupancy during business hours
	and at all times sufficiently high to prevent freezing of water in pipes and fixtures.

13.	Tenant shall keep the signs, exterior lights and display window lights of the Premises lighted each and every day of the Term during the hours designated by Landlord.

14.	No animals shall be brought into or kept in or about the Shopping Center other than as handicap aids.

15.	In the event any violation of any of the above rules and regulations continues after five (5) days following written notice to Tenant of such violation, beginning on such fifth day Tenant shall be in default of the Lease. In addition to all other remedies of Landlord provided in the Lease for Tenant’s default, Tenant shall pay liquidated damages of One Hundred Dollars ($100.00) per day for each day such violation continues.

16.	Except as otherwise provided herein, Landlord reserves the right to modify or rescind any of these rules and regulations and to make such other or further reasonable rules and regulations as it deems in its reasonable judgment shall from time to time be necessary or advisable for the operation of the Shopping Center, which rules and regulations shall be binding upon Tenant upon their notification of said further rules and regulations.

EXHIBIT H

SAMPLE CERTIFICATE OF INSURANCE

EXHIBIT I

OFFICE FURNITURE INVENTORY

RIDER

THIS RIDER IS ATTACHED TO AND IS MADE PART OF THAT CERTAIN SHOPPING CENTER

LEASE (THE “LEASE”) DATED March 17, 2014 BY AND BETWEEN

INLAND DIVERSIFIED REAL ESTATE SERVICES LLC, AS MANAGING AGENT

FOR THE OWNER OF THE SHOPPING CENTER COMMONLY KNOWN AS

TRADITION VILLAGE SHOPPING CENTER AND PULSE ENTERTAINMENT CORPORATION AS TENANT

This Rider is dated and is effective the same date as the Lease. All capitalized terms, unless expressly defined herein, shall have the same meaning as in the Lease. In the event of a conflict between the terms of the Lease and those contained in this Rider, this Rider shall prevail.

R-1 COMMERCIAL CHARTER FOR TRADITION: The developer of Tradition, a master planned community, has created a master association for the entire Tradition project in order to establish a governance structure and a flexible system of standards and procedures for the development, expansion, administration, maintenance and preservation of all of the areas within the Tradition project. It is expected that the Shopping Center will be subject to a sub-association to the master association, i.e. a commercial association, to establish similar governance-like controls including architectural review, maintenance and operational expenses. The commercial charter was recorded on November 23, 2004 in Official Records Book 2098, at Page 1697, in the public records of St. Lucie County, Florida. Tenant agrees to comply with said charter, and all standards, procedures and requirements of any such association, and any amendments thereto or replacements thereof now or hereafter in effect. The Landlord has provided the Tenant with a copy of the Commercial Charter for Tradition.

R-2 COMMUNITY DEVELOPMENT DISTRICT TAX: ONE OR MORE COMMUNITY DEVELOPMENT DISTRICTS (each a “CDD”) MAY IMPOSE AND LEVY TAXES OR ASSESSMENTS ON THE PREMISES AND SHOPPING CENTER. THESE TAXES AND ASSESSMENTS PAY THE CONSTRUCTION, OPERATION AND MAINTENANCE COSTS OR CERTAIN PUBLIC FACILITIES AND SERVICES OF THE CDD AND ARE SET ANNUALLY BY THE GOVERNING BOARD OF THE CDD. THESE TAXES AND ASSESSMENTS ARE IN ADDITION TO THE COUNTY AND LOCAL GOVERNMENTAL TAXES AND ASSESSMENTS AND ALL OTHER TAXES AND ASSESSMENTS PROVIDED FOR BY LAW, ALL OF WHICH WILL BE INCLUDED, WITHOUT DUPLICATION, IN THE ADDITIONAL RENT PAYABLE BY TENANT PURSUANT TO SECTION 4.3B AND/OR SHOPPING CENTER OPERATING COSTS PURSUANT TO SECTION 4.3 OF THIS LEASE.

R-3 COMMUNITY SYSTEMS: Tenant acknowledges that Landlord shall have the exclusive right to franchise, establish or enter into a contract for providing cable, gas, internet, telephone and other telecommunications services (or any portion of such services) to all or any part of the Shopping Center upon terms and conditions as Landlord, or its designee, may deem appropriate; provided that such service is competitive with that otherwise available in the marketplace, generally, recognizing that such service may not be the lowest rate charged, but will be competitive with the pricing for similar services in the Port St. Lucie area. Tenant agrees to comply with the terms of any agreement between Landlord and any provider of service and Tenant agrees to execute any documents and grant any easements in connection with such systems or services requested by Landlord or the provider of any of such service as may be reasonably necessary to install, construct or maintain any of the respective systems., so long as same do not materially alter or impair the use of the Leased Premises. Additionally, Tenant shall fully cooperate, subject to the location being reasonably acceptable to Tenant, so as not to interfere with its ability to use the Leased Premises for its intended use, with the provider of such services with respect to the installation of any wiring, equipment or other apparatus or device required by said provider to be placed in or near the Leased Premises and the improvements thereon, including, but not limited to providing the contemplated wiring.

R-4 RIGHT TO TerminaTE: At any time during the Term or Extended Term, Landlord may terminate the Lease with sixty (60) days’ advance written notice if Landlord procures a tenant to lease the entire floor upon which the Premises are located.

R-5 RIGHT TO EXPAND: At any time during the Term or Extended Term, provided that Landlord has not received another offer to lease space on the 2^nd floor of the Building, excluding an offer to lease the entire 2^nd floor, Tenant shall have the ongoing right to lease additional space on the 2^nd floor under the same terms and conditions as for the Premises, provided Tenant gives Landlord advanced written notice at least thirty (30) days prior to its desire to lease such additional space.

If the terms and conditions of this Rider conflict in any way with the terms and conditions of the Lease to which this Rider is attached, the terms and conditions of this Rider shall control.

TENANT:		LANDLORD:

Pulse Entertainment Corporation, a Delaware corporation		Inland Diversified Real Estate Services LLC, a Delaware limited liability company, as managing agent for the Owner

By:	/s/ John Textor	By:	/s/ Beth McNeeley
Name:	John Textor	Name:	Beth McNeeley
Its:	Chairman	Title:	Senior Vice President

Date:	Feb 28, 2014	Date:	3-17-14

Witness #1		Witness #1

By:	/s/ Lynne Schwab	By:	/s/ Jill Verbelce
Print Name:	Lynne Schwab	Print Name:	Jill Verbelce

Witness #2		Witness #2

By:	/s/ Stuart Duffon	By:	/s/ D. Schumann
Print Name:	Stuart Duffon	Print Name:	D. Schumann

ASSET TRANSFER AND ASSIGNMENT AGREEMENT

THIS Agreement entered into on this 4th day of April, 2014 to be effective as of the 10 day of October, 2013 (the “Effective Date”), by and between TRADITION STUDIOS IP ACQUISITION, LLC, a Delaware limited liability company (the “Transferor”) and PULSE ENTERTAINMENT CORP, a Delaware corporation (the “Transferee”).

Background

In an effort to accommodate the future investors in the business of the Transferor, who would require as a condition of their investment that the business be taxed as a C corporation, the Transferor caused the Transferee to be formed and then transferred its entire business as a going concern to the Transferee on the Effective Date in a transaction intended to qualify under Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”).

Agreement

NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants herein contained, the receipt and sufficiency of which are acknowledged by each Party hereto, the Parties hereto, intending to be legally bound, hereby covenant and agree with each other as follows.

ARTICLE ONE
INTERPRETATION

1.1 Definitions. Whenever used in this Agreement, unless there is something in the subject matter or context inconsistent therewith, the following words and terms shall have the respective meanings ascribed to them in this Section 1.01:

(a) Agreement - “Agreement” means this Asset Transfer and Assignment Agreement and all instruments supplemental hereto or in amendment or confirmation hereof;

(b) Assets - “Assets” means any and all assets of the transferor existing on the date of this agreement, including, without limitation, (1) cash, (2) securities, notes or other obligations of third-parties to pay money, (3) all rights pursuant to any executed contract, (4) any copyright, trademark, trade dress, patents, digital animation rights, trade secrets, or other intellectual property rights, (5) all websites and domain names, (6) all trade secrets, confidential information,

(7) business plans, strategies, and customer lists, and (8) any other asset that is or may become necessary of helpful to the operation of Transferor’s business.

(c) Tax - “Tax” shall mean any net income, alternative or add on minimum tax, advance corporation, gross income, gross receipts, sales, use, ad valorem, franchise, profits, license, value added, withholding, payroll, employment, excise, stamp or occupation tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty imposed by any governmental authority with respect thereto, and any liability for such amounts as a result either of being a member of an affiliated group or of a contractual obligation to indemnify any other entity.

-1-

1.2 Gender and Number. In this Agreement, words importing the singular include the plural and vice versa and words importing gender include all genders.

1.3 Entire Agreement. This Agreement together with the agreements and other documents to be delivered pursuant hereto, constitute the entire agreement between the Parties pertaining to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties and there are no warranties, representations or other agreements between the Parties in connection with the subject matter hereof except as specifically set forth herein and therein. No supplement, modification or amendment to this Agreement and no waiver of any provision of this Agreement shall be binding on any Party unless executed by such Party in writing. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision (whether or not similar) nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

1.4 Article and Section Headings. Article and Section headings contained herein are included solely for convenience, are not intended to be full or accurate descriptions of the content thereof and shall not be considered part of this Agreement.

1.06 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida and the federal laws of the United States applicable therein and shall be treated, in all respects, as a Florida contract.

ARTICLE TWO
TRANSFER OF ASSETS

2.01 Transfer of Assets. Transferor hereby transfers, assigns, delivers and set over all of its rights, title and interests in the Assets to the Transferee effective as of the Effective Date. Transferor has obtained consents of third parties which are necessary for the assignment of the Assets.

2.03 Further Assurances - On or after the Effective Date and without further consideration, at Transferee’s reasonable request, Transferor will execute and deliver further instruments of conveyance, assignment and transfer and will take, or cause to be taken, other actions as is reasonably required to carry out the effective conveyance, assignment and transfer to Transferee of any of the Assets. Transferee shall reimburse Transferor for any reasonable expenses he incurs in response to such requests.

ARTICLE THREE
ASSUMPTION OF LIABILITIES

3.0 Assumption of Liabilities. Transferee hereby agrees to assume any and all liabilities of the Transferor and to perform any and all contracts of the Transferor.

ARTICLE FOUR
TRANSFER OF STOCK

4.0 Transfer of Stock. Transferee has issued to Transferor, effective as of the Effective Date, 6,500,000 shares of common stock of the Transferee.

ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES

5.1 Representations and Warranties of the Transferor. The Transferor represents and warrants to the Transferee that, to the best of Transferor’s knowledge, on the date hereof and as of the Closing Date: (i) Transferor has no outstanding liabilities; (ii) Transferor has not failed to perform its obligations when due, and (iii) Transferor has all necessary power, authority and capacity to enter into this Agreement and to perform his obligations hereunder and to execute and deliver this Agreement and to consummate the transactions contemplated hereby.

5.2 Representations and Warranties of the Transferee. The Transferee hereby represents and warrants to the Transferor that, to the best of Transferee’s knowledge, on the date hereof and as of the Closing Date: (i) the Transferee is a Corporation organized and validly existing and in good standing under the laws of the state of Delaware; and (ii) the Transferee has all necessary power, authority and capacity to enter into this Agreement and to perform its obligations hereunder and the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Transferee.

-2-

ARTICLE SIX
MISCELLANEOUS

6.01 Complete Agreement. This Agreement and the instruments to be delivered hereunder constitute the complete and exclusive agreement between the parties. and they supersede all prior written and oral statements or agreements. Except as expressly provided otherwise herein, this Agreement may not be amended without the written consent of the parties hereto. Oral agreements which purport to amend this Agreement shall not be enforceable.

6.2. Applicable Law. All questions concerning the construction, validity and interpretation of this Agreement and the performance of the obligations imposed by this Agreement shall be governed by the laws of the State of Florida, without regard to conflict of laws rules.

6.3. Section Titles. The headings herein are inserted as a matter of convenience only and do not define, limit or describe the scope of this Agreement or the intent of the provisions hereof.

6.4. Binding Provisions. This Agreement is binding upon, and inures to the benefit of, the parties hereto and, as applicable, their respective heirs, executors, administrators, personal and legal representatives, successors and assigns.

6.5. Terms. Common nouns and pronouns shall be deemed to refer to the masculine, feminine, neuter, singular and plural, as the identity of the Person may in the context require.

6.6. Counterparts; Signatures Transmitted by Facsimile. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original and all of which, when taken together, constitute one and the same document. The signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart. For evidentiary purposes, signatures transmitted by facsimile will have the same effect as original signatures.

6.07 Tax Treatment. The parties hereto intend for the transactions contemplated by this Agreement to qualify as a tax-free contribution to a corporation under Section 351 of the Code.

IN WITNESS WHEREOF the Parties have duly executed this Agreement effective on the date first set forth at the beginning hereof.

TRANSFEROR:

TRADITION STUDIOS IP ACQUISITION, LLC

By:	/s/ John Textor
	John Textor, Manager

	TRANSFEREE:
	PULSE ENTERTAINMENT CORP

By:	/s/ John Textor
	John Textor, Executive Chairman

-3-

Exhibit 21.1

Pulse Evolution Corporation

Subsidiaries of the Registrant

Item	Name	State of Formation
1.	Pulse Entertainment Corporation, an 81.1% owned subsidiary of Pulse Evolution Corporation	Delaware
2.	KOPP Initiative, LLC, a wholly owned subsidiary of Pulse Entertainment Corporation	Florida

Pulse Entertainment Corporation

Table of Contents

Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheet		F-2
Consolidated Statement of Operations		F-3
Consolidated Statement of Changes in Stockholders’ Equity		F-4
Consolidated Statement of Cash Flows		F-5
Notes to Consolidated Financial Statements		F-6 - F-15

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Pulse Entertainment Corporation

We have audited the accompanying consolidated balance sheet of Pulse Entertainment Corporation and its subsidiary (the “Company”) as of June 30, 2014, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the period from October 10, 2013 (inception) to June 30, 2014. Pulse Entertainment Corporation management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made 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 Pulse Entertainment Corporation as of June 30, 2014, and the results of its operations and its cash flows for the period from October 10, 2013 (inception) to June 30, 2014 in conformity with accounting principles generally accepted in the United States of America.

/s/ Friedman LLP
Marlton, New Jersey
October 6, 2014

F-1

Pulse Entertainment Corporation

Consolidated Balance Sheet

	June 30, 2014

Assets
Current assets:
Cash and cash equivalents	$	1,539,719
Prepaid legal fees		134,675
Other prepaid expenses and other current assets		70,023
Total current assets		1,744,417
Fixed assets, net		22,886
Total assets	$	1,767,303

Liabilities and stockholders’ equity

Current liabilities:
Accounts payable and accrued expenses	$	1,017,575
Total current liabilities		1,017,575
Stockholders’ equity

Preferred stock – $0.0001 par value: 100,000,000 shares authorized and -0- shares issued and outstanding at June 30, 2014		__
Common stock – $0.0001 par value: 300,000,000 shares authorized and 21,535,252 shares issued and outstanding at June 30, 2014		2,153

Additional paid-in capital		9,224,263
Subscription receivable		(153,276	)
Accumulated deficit		(8,323,412	)
Total stockholders’ equity		749,728
Total liabilities and stockholders’ equity	$	1,767,303

See accompanying notes to the consolidated financial statements.

F-2

Pulse Entertainment Corporation

Consolidated Statement of Operations

For the period from October 10, 2013 (inception) to June 30, 2014

Revenues	$	1,451,534

Operating costs and expenses:
Digital build, animation and production services		5,591,110
Selling, general and administrative		4,183,836
Total operating expenses		9,774,946

Loss from operations		(8,323,412	)

Loss before taxes		(8,323,412	)
Provision for income taxes		-
Net loss	$	(8,323,412	)

See accompanying notes to the consolidated financial statements.

F-3

Pulse Entertainment Corporation

Consolidated Statement of Changes in Stockholders’ Equity

For the period from October 10, 2013 (inception) to June 30, 2014

	Common Stock				Additional Paid-In			Subscription			Accumulated			Total Stockholders’
	Shares		Par Value		Capital			Receivable			Deficit			Equity
Balance, October 10, 2013 (inception)		-	$	-	$	-		$	-		$	-		$	-
Issuance of Common Stock at inception		12,520,000		1,252		-			(1,252	)					-
Conversion of convertible securities		1,734,104		188		2,794,762									2,794,950
Common Stock issued for cash		4,127,696		413		5,068,201			(152,024	)					4,916,590
Common Stock issued for services		3,153,452		300		1,428,339									1,428,639
Acquisition of Tradition Studio IP						(67,039	)								(67,039	)
Net loss				-								(8,323,412	)		(8,323,412	)
Balance, June 30, 2014		21,535,252	$	2,153	$	9,224,263		$	(153,276	)	$	(8,323,412	)	$	749,728

See accompanying notes to the consolidated financial statements

F-4

Pulse Entertainment Corporation

Consolidated Statement of Cash Flows

For the period from October 10, 2013 (inception) to June 30, 2014

Cash flows from operating activities
Net loss	$	(8,323,412	)
Adjustments to reconcile net income to net cash used in operating activities
Depreciation		980
Stock issued for services		1,428,639
Changes in assets and liabilities:
Prepaid expenses and other current assets		(204,698	)
Accounts payable, accrued expenses, and other current liabilities		936,475
Net cash used in operating activities		(6,162,016	)

Cash flows from investing activities
Purchases of property and equipment		(9,805	)
Net cash used in investing activities		(9,805	)

Cash flows from financing activities
Proceeds from the sale of convertible securities, net		2,794,950
Proceeds from the sale of common stock		4,916,590
Repayment of loan from officer		(5,000	)
Proceeds from loan from officer		5,000
Net cash provided by financing activities		7,711,540

Net increase in cash and cash equivalents		1,539,719
Cash and cash equivalents at beginning of period		-
Cash and cash equivalents at end of period	$	1,539,719

Supplemental disclosure of cash flow information:

Subscription receivable	$	153,276
Contribution of fixed assets from related party	$	14,060
Assumption of liabilities from related party	$	81,100

See accompanying notes to the consolidated financial statements.

F-5

Pulse Entertainment Corporation

Notes to Consolidated Financial Statements

1. Basis of Presentation and Business Description

Business Description

Pulse Entertainment was incorporated in Delaware on October 10, 2013. The fiscal year end is June 30.

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All material intercompany accounts and transactions have been eliminated during the consolidation process.

Use of Estimates

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates based on experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

F-6

Pulse Entertainment Corporation

Notes to Consolidated Financial Statements (continued)

Liquidity

The Company has, since its inception in October of 2013, been highly dependent on raising capital to fund its start up and growth strategies. To date, the Company has raised capital from the sales of its common stock without restrictive covenants from institutional investors and strategic partners (See Note 6 – Capitalization) and advances from Pulse Evolution Corporation, a related party (“Pulse Evolution”) (See Note 8 – Subsequent Events). In addition, Pulse Evolution has raised additional capital to finance execution of its complimentary business plan from sales of its unregistered common stock. On September 30, 2014, the Company and Pulse Evolution completed an initial closing under the terms of a share exchange agreement they entered into whereby the Company became a subsidiary of Pulse Evolution.

The Company’s core business is the acquisition from estates and other rights holders of certain intellectual property rights to create virtual celebrities, and the right to present, and license to others to present, those virtual performers in live, and a variety of live-virtual and commercial formats.

In execution of its business plan, the Company has chosen to pursue a model whereby it provides virtual performers for appearances and collects royalties when the Company has an ownership interest in the intellectual property rights for the virtual performer (the “Talent Model”). Under the Talent Model, the Company may permit other producers to create performances that make use of virtual performers created by the Company.

The Company is also exploring and developing opportunities to act as a producer of events (the “Producer Model”), thereby enabling the company to exert significant creative and technological control over the performance productions, and to capture significantly greater portions of the realizable economic value created by the virtual performance.

The Company may in the future execute its business plan using a blend of the Talent and Producer Models. Under both models, the Company expects to earn services revenues on all digital construction, animation, and production services that it provides, plus royalties when the work involves intellectual property rights held by the Company. Under both models, the Company has significant discretion to determine to what extent the creative and production resources, which are primarily labor costs, are engaged on an as-needed basis for each project or production (“Contract Talent”), and to what extent the Company carries a concentration of creative and production resources in-house (“In-House Talent”).

While execution of the Producer Model enables the Company to capture more of the value created by the virtual performers, it also requires the Company to raise significant amounts of production capital, which is similar to project financed equity or non-recourse debt into production subsidiaries. Executing this model with In-house Talent gives the Company certain strategic advantages and flexibility in the development of new concepts and application of new technologies, yet it also requires a higher employee headcount and the related operating overhead.

Our Company’s ability to fund our operations and meet our obligations on a timely basis is dependent on our ability to match our available financial resources to our operating model (Talent vs. Producer) and our execution strategy (Contract Talent vs. In-House Talent). The decisions the Company makes with regard to operating model and execution strategy drive the level of capital required and the level of its financial obligations.

If the Company is unable to generate cash flow from operations and successfully raise sufficient additional capital through future debt and equity financings or strategic and collaborative ventures with potential partners, the Company would likely have to reduce its dependence on In-House Talent and limit many, if not all, of its activities as a producer.

The Company has analyzed its liquidity requirements and has determined that it has sufficient liquidity to execute its business plan under the Talent Model for the next 12 months.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. At June 30, 2014, the Company’s cash balances may exceed the current insured amounts under the Federal Deposit Insurance Corporation.

Allowance for Doubtful Accounts

The Company maintains a policy to record allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial conditions of these customers were to deteriorate and impair their ability to make payments, additional allowances may be required. No allowance for doubtful accounts was considered necessary at June 30, 2014.

Revenue Recognition

The Company entered into a production services contract in 2014 with the Michael Jackson Estate that provides revenues based on certain production services. Revenue is recognized on a straight-line basis over each contract period, as defined in each agreement. As the production services are rendered, revenue is recognized.

F-7

Pulse Entertainment Corporation

Notes to Consolidated Financial Statements (continued)

Production Costs

As of June 30, 2014 the Company’s only production services contract is with the Michael Jackson Estate. Given the Company’s ongoing revenue share interest in the virtual Michael Jackson property, the Company would normally capitalize production costs and amortize them over the estimated revenue recognition period. However, the virtual Michael Jackson created by the Company represents a new form of entertainment whose acceptance and applications are unknown. Because the timing and amount of future revenues under the contract cannot be reasonably determined or estimated at this time, the Company has elected to recognize all costs under the contract as incurred, thereby creating a loss position in the contract as of June 30, 2014.

Vendor Concentration

As of June 30, 2014, certain third-party providers used to create content through digital build, animation and production services on behalf of the Company accounted for greater than ten percent of the total costs of the Virtual Michael Jackson production. Two vendors accounted for approximately $3.9 million or 69.9% of total production costs or 38.0% and 31.9%, respectively.

The Company does not believe that the concentration of business from these vendors represent significant risk to the Company based on past experience and the availability of similar vendors in the industry.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful life of the related asset. Computers are depreciated over five years. Equipment and furniture and fixtures are depreciated over seven years.

Segment Reporting

The Company currently operates in only one segment. Its sole contract is with an entity that is located in the United States.

F-8

Pulse Entertainment Corporation

Notes to Consolidated Financial Statements (continued)

Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurements and Disclosures, establishes a three level fair value hierarchy that requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data and require the reporting entity to develop its own assumptions.

The carrying amount of receivables and accounts payable approximates fair value due to the short-term nature of these instruments.

Income Taxes

The Company utilizes the liability method of accounting for deferred income taxes. Under this method, deferred tax liabilities and assets are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. A valuation allowance is established against deferred tax assets because, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of June 30, 2014, the Company does not believe any material uncertain tax positions are present. Accordingly, interest and penalties have not been accrued due to an uncertain tax position and the fact the Company has reported tax losses since inception.

Recent Accounting Pronouncements

On May 28, 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently evaluating the impact, if any, on adopting ASU 2014-09 on the Company’s results of operations or financial condition.

F-9

Pulse Entertainment Corporation

Notes to Consolidated Financial Statements (continued)

3. Commitments and Contingencies

Operating Leases

The Company leases office space under non-cancelable operating leases with an expiration date of March 31, 2015. Rent expense for the period from inception to June 30, 2014 was approximately $77,000. Monthly lease expense is approximately $12,000 with a remaining obligation under the lease of approximately $108,000.

Advisory Agreements

On March 19, 2014, the company entered into an Investor Introduction Agreement (“the Agreement”) with an international advisory services group (“the Advisor”). The Advisor is to support the Company in its fund raising process through introductions of potential investors and to assist the Company in developing its investor relations strategy. The Agreement calls for the Advisor to be paid a success fee in cash equal to six percent of all investments introduced by the Advisor. In addition the Advisor shall be entitled to shares equal to three percent of the underlying shares issued in any such transactions. As of June 30, 2014, the Advisor had been paid approximately $330,000 in cash. Additionally the Advisor had earned 488,830 shares of common stock, of which 224,869 shares of common stock were issued. A liability has been recognized for the portion of shares not issued as of June 30, 2014 of approximately $457,000, which is recorded in accrued expenses.

On May 14, 2014, Pulse Entertainment entered into a business development advisory agreement (the “Business Development Agreement”) with a consulting firm (the “Consultant”) wherein the Consultant agreed to provide certain production and promotion services to Pulse Entertainment in exchange for consideration including cash, equity, an operating budget and production credits as specified in the Business Development Agreement. The Business Development Agreement provides for certain performance milestones and for termination by either party with 30 days’ notice. The maximum potential equity consideration is comprised of up to 200,000 stock options with an exercise price of $1.73 per share as follows:

	●	100,000 options immediately upon execution of the Agreement

	●	up to 50,000 options each quarter for the following two quarters, beginning three months from the date of the Agreement, if certain performance targets are achieved.

Because Pulse Entertainment had not yet established an equity incentive plan under which the options could have been formally granted at the time the Business Development Agreement was executed, and accordingly had not reserved shares of common stock for issuance under an equity incentive plan, there was insufficient information to determine the fair value of the option grant at the effective date of the Business Development Agreement. Therefore, Pulse Entertainment is unable to determine the fair value of the option grant on the grant date and has not recorded a liability on its books and records. Once the terms of the option agreement are defined, Pulse Entertainment will determine the fair value of the option grant and record stock based compensation expense and record a liability. When the Company adopts and approves a compensatory incentive plan, the Company will reclassify the liability to additional paid in capital.

F-10

Pulse Entertainment Corporation

Notes to Consolidated Financial Statements (continued)

Litigation Reserves

Estimated amounts for claims that are probable and can be reasonably estimated are recorded as liabilities in the consolidated balance sheets.

The likelihood of a material change in these estimated reserves would be dependent on new claims as they may arise and the expected probable favorable or unfavorable outcome of each claim. As additional information becomes available, the Company assesses the potential liability related to new claims and existing claims and revises estimates as appropriate. As new claims arise or existing claims evolve, such revisions in estimates of the potential liability could materially impact the results of operations and financial position.

The Company is involved from time to time in routine litigation arising in the ordinary course of conducting business. The Company’s management believes no pending routine litigation will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

4. Related-Party Transactions

The Company has entered into an agreement with New Venture Associates Inc. (“NVA”), a wholly owned entity of the Executive Vice Chairman of the Board of Directors of the Company. As of June 30, 2014, the Company paid $426,550 to NVA for services related to three equity funding transactions. NVA subsequently paid $234,602 to the Company’s Executive Chairman, and $95,974 to the Company’s Chief Executive Officer, for services related to the above-mentioned equity transactions.

The Company paid fees to Alternative 2 Holding AG. The Executive Vice Chairman of the Board of Directors of the Company is a beneficial owner of Alternative 2 Holding AG. As of June 30, 2014 the Company had paid $40,000 to Alternative 2 Holding AG for services provided to the Company.

The Company received services from Clematis Properties Inc. The Executive Vice Chairman of the Board of Directors of the Company is a beneficial owner of Clematis Properties, Inc. As of June 30, 2014 the Company had paid Clematis Properties $177,269 for services provided to the Company.

The Company received services from Textor Ventures Inc., a wholly owned entity of the Executive Chairman of the Board of Directors of the Company, prior to his becoming an employee of the Company. As of June 30, 2014 the Company had paid $165,154 to Textor Ventures Inc. for services provided to the Company prior to his employment.

F-11

Pulse Entertainment Corporation

Notes to Consolidated Financial Statements (continued)

The Company received consulting services from the Chief Executive Officer of the Company for services provided prior to his becoming an employee of the company. As of June 30, 2014 the Company had paid $40,000 for services provided to the Company prior to his employment from the Company.

On April 4, 2014, Pulse Entertainment Corporation entered into an Asset Transfer and Assignment Agreement (the “Transfer Agreement”) with Tradition Studios I.P. Acquisition Inc., a related party (“Tradition”) to memorialize Tradition’s October 10, 2013 contribution to Pulse Entertainment of certain property and equipment with a historical cost of approximately $14,000. As consideration for the contribution of assets, Pulse Entertainment assumed general liabilities with a historical cost of approximately $81,000, resulting in a transfer of net liabilities of approximately $67,000. Also Pulse Entertainment issued to Tradition 6,500,000 shares of its common stock. As of the effective date of the Transfer Agreement, the Executive Chairman of Pulse Entertainment had a majority control of Pulse Entertainment and also had majority control of Tradition. The transfer of assets and liabilities was considered a common control transaction in accordance with the accounting guidance in ASC Topic 605-35, Business Combinations. As such, Pulse Entertainment recorded the assets and liabilities at historical cost at the time of the transfer with a charge against equity in additional paid in capital for the net liabilities at the time of transfer.

5. Property and Equipment

Property and equipment at June 30, 2014 was as follows:

	2014			Useful Life
Computer and other equipment	$	5,207		5 years
Furniture and fixtures		18,659		7 years
		23,866
Accumulated depreciation		(980	)

Property and equipment, net	$	22,886

For the period from October 10, 2013(inception) to June 30, 2014, depreciation expense was $980.

6. Capitalization

Preferred Stock

The Company is authorized to issue 100,000,000 shares of Preferred Stock with a par value of $0.0001 per share. Subject to the Stockholders Agreement, authority is granted to the Board to fix the powers, including the voting powers, designations, preferences, and relative, participating, optional, redemption, conversion, dividend, liquidation, exchange or other special rights and qualifications, limitations or restrictions of each series of Preferred Stock.

F-12

Pulse Entertainment Corporation

Notes to Consolidated Financial Statements (continued)

Convertible Securities

On December 9, 2013, the Company entered into a Convertible Securities Purchase Agreement (the “Convertible Securities Agreement”) with a single investor wherein the Company sold 1,734,104 shares of the convertible securities at a price of $1.73 per share for total net proceeds of approximately $2.5 million (the “Investment Amount”). If a Qualified Equity Financing as defined in the Convertible Securities Agreement occurred prior to February 15, 2014, then the Investment Amount shall have automatically converted into fully paid and non-assessable shares of the Company’s Preferred Stock issued in such Qualified Equity Financing at a price per share equal to sixty percent (60%) of the price per share paid by the other purchasers of Preferred Stock. The Company did not complete a Qualified Equity Financing before February 15, 2014 and in May 2014, the holders of the Convertible Securities agreed to convert all outstanding convertible securities outstanding into 1,734,104 shares of common stock at a price per share of $1.73.

Common Stock

The Company is authorized to issue 300,000,000 shares of common stock with a par value of $.0001 per share. The voting, dividend and liquidation rights of the holders of the common stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock. Each holder of common stock is entitled to vote on all matters and is entitled to one vote for each share held. On June 30, 2014, there were 21,535,252 shares issued and outstanding.

Common Stock Issued to Service Providers

The Company has issued 3,153,452 shares of common stock to third party service providers during the period from October 2013 (inception) to June 30, 2014 in exchange for services valued at approximately $1.428 million. The Company determined the fair value of the services rendered using the most readily available information of the value of the services or the fair value of the common stock at the time the common stock was issued.

Effective, October 10, 2013, the Company issued 6,500,000 shares of its common stock pursuant to the April 4, 2014 Asset Transfer and Assignment Agreement (the “Transfer Agreement”) the Company entered into with Tradition. See “Note 4 – Related Party Transactions.”

7. Income Taxes

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax.

F-13

Pulse Entertainment Corporation

Notes to Consolidated Financial Statements (continued)

A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate is as follows:

	June 30, 2014
U.S. federal statutory income tax rate		34.0	%
State taxes, net of federal benefit		3.6
Permanent items		(0.1	)
Change in valuation allowance		(37.5	)
Effective tax rate		0.0	%

The components of the net deferred tax asset/ (liability) as of June 30, 2014 is as follows:

	June 30, 2014
Net federal operating loss carry forward	$	2,825,765
Net state operating loss carry forward		301,692
Depreciation		(392	)
Net deferred tax assets before valuation allowance		3,127,065

Valuation allowance		(3,127,065	)
Net deferred tax assets after valuation allowance	$	-

The Company has determined, based upon the weight of available evidence, that it is more likely than not that the net deferred tax asset will not be realized and, accordingly, has provided a full valuation allowance against it.

As of June 30, 2014, the Company has federal net operating loss carry forward of approximately $8,311,072 and has state net operating loss carry forward of $8,311,072. The federal and state net operating loss carry forwards will expire, if not utilized, by 2034. Utilization of the net operating loss carry forward may be subject to an annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions.

The Company is not currently under examination at the Federal and state levels. Currently only the period from October 10, 2013 (inception) to June 30, 2014 is subject to examination. At the date of the financial statements there were no known assessments.

F-14

Pulse Entertainment Corporation

Notes to Consolidated Financial Statements (continued)

8. Subsequent Events

The Company evaluated events and transactions that occurred after the balance sheet date through October 3, 2014, the date at which the financial statements were available.

On September 26, 2014, Pulse Entertainment entered into a share exchange agreement (the “Share Exchange Agreement”) with Pulse Evolution Corporation (“PLFX”) pursuant to which PLFX agreed to issue up to 119,272,816 shares of its unregistered common stock, $0.001 par value (the “Common Stock”) to the shareholders of Pulse Entertainment holding 21,535,252 shares of its issued and outstanding common stock (the “Share Exchange”), such shares representing 100% of the issued and outstanding common stock of Pulse Entertainment.

On September 30, 2014, certain shareholders of the Company exchanged common stock held by those shareholders into shares of PLFX pursuant to the Share Exchange agreement totaling 17,466,383 shares or 81.1% of the Company’s common stock. As a result of this transaction, the Company became a subsidiary of PLFX.

Subsequent to June 30, 2014 the Company has received several advances from Pulse Evolution Corporation that totaled $974,000.

Beginning on July 15, 2014, and continuing through the date hereof, Pulse Evolution has sold an aggregate of 4,855,000 shares of its common stock for a total sales price of $2,225,000. It intends to use the proceeds for working capital purposes. On a consolidated basis, Pulse Evolution and the Company have raised approximately $9.935 million since their inception.

F-15

EXPLANATORY NOTE:

The following unaudited pro forma balance sheet as of June 30, 2014 and unaudited pro forma statements of operations for the period October 10, 2013 (inception) to June 30, 2014 are based on, and should be read in conjunction with:

	●	Pulse Entertainment Corporation’s (“Pulse Entertainment”) audited financial statements for the fiscal year ended June 30, 2014;

	●	Pulse Evolution Corporation’s (“Pulse Evolution”) audited financial statements for the fiscal year ended June 30, 2014 which appear elsewhere in this report.

The pro forma financial statements give effect to the share exchange pursuant to the September 26, 2014 Share Exchange Agreement entered into among Pulse Entertainment, its shareholders and Pulse Evolution as if the transaction had taken place on the date or at the beginning of the period presented. Under the terms of the Share Exchange Agreement, Pulse Evolution exchanged 35,827,309 shares of its common stock for 17,466,383 shares of Pulse Entertainment common stock representing 81.11% of the issued and outstanding common stock of Pulse Entertainment.

The unaudited pro forma financial statements are for informational purposes only, are not indications of future performance, and should not be considered indicative of actual results that would have been achieved had the recapitalization transactions actually been consummated on the dates or at the beginning of the periods presented.

Pulse Evolution Corporation

Pro Forma Balance Sheet

June 30, 2014

	Pulse Evolution Corporation			Pulse Entertainment Corporation						Pro Forma
	June 30, 2014			June 30, 2014			Adjustments			June 30, 2014
Current assets:
Cash and cash equivalents	$	-		$	1,539,719		$	-		$	1,539,719
Prepaid legal fees		-			134,675			-			134,675
Other prepaid expenses, other current assets and fixed assets		-			92,909			-			92,909
Investment in Pulse Entertainment Corporation		-			-			-			-
Total assets		-		$	1,767,303		$	-		$	1,767,303

Liabilities and Shareholders’ Equity (Deficit)
Accounts payable and accrued liabilities		9,311		$	1,017,575		$	-		$	1,026,886
Shareholders’ equity (deficit):
Common stock		31,800			2,153			(22,990	)(1)		10,963
Additional paid in capital		28,800			9,224,263			22,990	(1)		9,247,253
								(28,800	)(1)
Subscription receivable		-			(153,276	)		-			(153,276	)
Accumulated deficit		(69,911	)		(8,323,412	)		69,911	(1)		(6,750,287	)
								1,573,125	(1)
Total shareholders’ equity ( deficit) before non-controling interest		(9,311	)		749,728			1,614,236			2,354,653
Non-controlling interest		-			-			(1,614,236	)(1)		(1,614,236	)
Total shareholders’ equity ( deficit)		(9,311	)		749,728			-			740,417
Total liabilities and shareholders’ equity (deficit)	$	-		$	1,767,303		$	-		$	1,767,303

(1) To record equity transactions as if the acquisition of Pulse Entertainment Corporation had occurred on June 30, 2014.

Pulse Evolution Corporation

Pro Forma Statement of Operations

As of June 30, 2014

										Pro Forma
	Pulse Evolution Corporation			Pulse Entertainment Corporation			Adjustments			For the Year Ended June 30, 2014
Consolidated Statements of Operations data:
Revenues	$	-		$	1,451,534		$	-		$	1,451,534
Operating costs and expenses:
Digital build, animation and production services		-			5,591,110			-			5,591,110
Selling, general and administrative		41,181			4,183,836			-			4,225,017
Research and development		20,800			-			-			20,800
Total operating expenses		61,981			9,774,946			-			9,836,927
Loss from operations		(61,981	)		(8,323,412	)		-			(8,385,393	)
Loss before income taxes		(61,981	)		(8,323,412	)		-			(8,385,393	)
Provision for income taxes		-			-			-			-
Net loss before non-controling interest		(61,981	)		(8,323,412	)		-			(8,385,393	)
Net loss attributable to non-controling interests		-			-			1,573,125	(2)		1,573,125
Net loss attributable to Pulse Evolution Corporation shareholders	$	(61,981	)	$	(8,323,412	)	$	1,573,125		$	(6,812,268	)

Weighted average number of shares outstanding:
Basic and fully diluted		105,428,307	(1)								105,428,307	(1)

Net income per share attributable to Pulse Evolution Corporation shareholders:
Basic and diluted loss per share	$	(0.0006	)							$	(0.0646	)

(1) Basic and fully diluted weighted average number of shares has been adjusted to reflect the shares outstanding as if the share exchange had been effectuated at the beginning of year.

(2) Amounts charged to non-controlling interest for Pulse Entertainment Corporation pro forma results of operations prior to the acquisition date as if the acquisition of Pulse Entertainment Corporation had occurred on June 30, 2014.

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PLFX Pulse Evolution Corporation (CE)