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REGISTRATION NO.
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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HOMELIFE, INC.
(Name of small business issuer in its charter)
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NEVADA 6531 33-0680443
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of incorporation Industrial Classification Identification No.)
or organization) Code Number)
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4100 Newport Place, Suite 730 4100 Newport Place, Suite 730
Newport Beach, CA 92660 Newport Beach, CA 92660
Phone: (949) 660-1919 Phone: (949) 660-1919
Facsimile: (949) 660-1910 Facsimile: (949) 660-1910
(Address and telephone number of (Address of principal place of business)
principal executive office)
Kelly H. Swanson
1200 S. Eastern Avenue
Las Vegas, NV 89104
Phone: (702) 382-0005
Facsimile: (702) 382-9452
(Name, address and telephone number of agent for service)
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COPIES TO:
Lawrence W. Horwitz, Esq.
Horwitz & Beam
Two Venture Plaza, Suite 350
Irvine, CA 92618
Phone: (949) 453-0300
Facsimile: (949) 453-9416
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Approximate Date of Proposed Sale to the Public.
From time to time after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933 (the "Securities Act"), please
check the following box and list the Securities Act registration number of the
earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /x/
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF SECURITIES NUMBER OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED SHARES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
REGISTERED PER SHARE(1) PRICE(1)(2) FEE
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Shares of Common Stock, $.001 par 10,000,000 $.53 $5,300,000 $1,563.50
value ("Common Stock")
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(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) based on the average of the high and low prices of the
Common Stock reported on the over the counter/bulletin board within 5
business days prior to the date of filing this Registration Statement.
(2) The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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HOMELIFE, INC.
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulations S-B
Showing Location in the Prospectus
of Information Required by Items of Form SB-2
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<CAPTION>
Form SB-2 Item Number and Caption Prospectus
<S> <C> <C>
1. Forepart of Registration Statement and Outside Front Cover Facing Page of Registration Statement: Outside Front Cover
Page of Prospectus............................................. Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus........ Available Information; Incorporation of Certain Documents by
Reference; Table of Contents
3. Summary Information; Risk Factors.............................. Prospectus Summary; Risk Factors
4. Use of Proceeds................................................ Prospectus Summary; Use of Proceeds
5. Determination of Offering Price................................ Outside Front Cover Page of Prospectus; Plan of Distribution
6. Dilution....................................................... Dilution
7. Selling Security Holders....................................... Not Applicable
8. Plan of Distribution........................................... Plan of Distribution
9. Legal Proceedings.............................................. Litigation
10. Directors, Executive Officers, Promoters and Control Persons... Management; Principal Stockholders
11. Security Ownership of Certain Beneficial Owners and
Management..................................................... Management; Principal Stockholders
12. Description of Securities to be Registered..................... Description of Securities
13. Interests of Named Experts and Counsel......................... Not Applicable
14. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities..................................... Indemnification of Directors and Officers
15. Organization Within Last Five Years............................ Prospectus Summary; Business of the Company
16. Description of Business........................................ Business of the Company
17. Management's Discussion and Analysis of Plan of Operation...... Management's Discussion and Analysis of Financial Condition
and Results of Operations
18. Description of Property........................................ Business of the Company (Properties)
19. Certain Relationships and Related Transactions................. Certain Transactions (Conflicts of Interest)
20. Market for Common Equity and Related Stockholder Matters....... Risk Factors; Description of Securities
21. Executive Compensation......................................... Management (Executive Compensation)
22. Consolidated Financial Statements.............................. Consolidated Financial Statements
23. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure............................ Not Applicable
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PROSPECTUS
SUBJECT TO COMPLETION, DATED October 21, 1998
HOMELIFE, INC.
10,000,000 SHARES OF COMMON STOCK
This Prospectus relates to 10,000,000 shares (the "Shares" or
"Securities") of common stock, $.001 par value (the "Common Stock") of
HomeLife, Inc., a Nevada corporation ("the Company"), which may be offered
from time to time on terms to be determined at the time of offering. The
Common Stock may be offered at prices and on terms to be set forth in one or
more supplements to this Prospectus (each a "Prospectus Supplement").
The specific terms of the Shares in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include the initial public offering price. The applicable Prospectus
Supplement will also contain information about any listing on a securities
exchange of the Shares covered by such Prospectus Supplement.
Additionally, 1,134,482 Shares of the 10,000,000 Shares being registered
herein may be used to convert Preferred Shares of the Company ("Preferred
Stock") to Common Stock of the Company pursuant to conversion rights granted
to the holders of Preferred Stock of the Company (the "Preferred
Shareholders"). The Company will not receive any of the proceeds from the
conversion of the Convertible Preferred Stock by the Preferred Shareholders.
All expenses incurred in registering the Convertible Preferred Stock are
being borne by the Company, but all selling and other expenses incurred by
the Preferred Shareholders will be borne by the Preferred Shareholders. See
"Description of Securities -- Preferred Shares."
The Convertible Preferred Stock has been acquired by the Preferred
Shareholders from the Company in private transactions and are "restricted
securities" under the Securities Act of 1933, as amended (the "Act"), prior
to their conversion hereunder. This Prospectus has been prepared in part for
the purpose of registering the Common Stock into which the Convertible
Preferred Stock is convertible to allow for future resales by the Preferred
Shareholders to the public without restriction simultaneously with and upon
the same terms and conditions as the Shares registered hereby subject to
lock-up provisions by the underwriters and agreed to by the Preferred
Shareholders. To the knowledge of the Company, the Preferred Shareholders
have made no arrangement with any brokerage firm for the sale of the
Convertible Preferred Stock.
The Company's Common Stock is currently traded on the over the
counter/bulletin board under the symbol HMLF.
The Securities may be offered directly or through agents designated from
time to time by the Company or to or through underwriters or dealers. If any
agents or underwriters are involved in the sale of any of the Securities,
their names, and any applicable purchase price, fee, commission or discount
arrangement between or among them, will be set forth, or will be calculable
from the information set forth, in any accompanying Prospectus Supplement.
No Securities may be sold by the Company through agents, underwriters or
dealers without delivery of a Prospectus Supplement describing the method and
terms of the offering of such Securities. See "Plan of Distribution."
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THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 4.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS OCTOBER 21, 1998
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE
CONSOLIDATED FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING
ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE SPECIFICALLY REFERENCED, ALL
REFERENCES TO DOLLAR AMOUNTS REFER TO UNITED STATES DOLLARS.
THE COMPANY
Incorporated in 1995, HomeLife, Inc., a Nevada corporation, (the "Company"
or "HomeLife") is a real estate services franchisor and licensor. HomeLife
utilizes both its proprietary "SuperSystem" marketing system and its business
combinations and acquisitions to fuel development as a fast growing real estate
services company.
The Company maintains its corporate office in Newport Beach, California,
and maintains regional offices in Troy, Michigan and Calgary, Alberta, Canada.
HomeLife operates through various subsidiaries and companies servicing its
franchised tradenames. Through its subsidiary, HomeLife Realty Services, Inc.,
the Company, services approximately 50 real estate offices in the State of
California. Through Red Carpet Keim, the Company services approximately 60 real
estate offices in the State of Michigan and through its tradenames, Red Carpet
Real Estate Services, Network Real Estate, and National Real Estate Service,
services approximately 70 real estate offices in various states. In addition
to the above, the Company operates both direct real estate sales and mortgage
lending through its subsidiary, Builders Realty Ltd., in Calgary, Alberta,
Canada and home warranties through its majority-owned subsidiary, Guardian Home
Warranty.
The Company's growth is largely attributable to business combinations
and acquisitions. The Company was initially incorporated in 1995 for the
purpose of combining with Management Dynamics, Inc. a publicly owned New
Jersey corporation. In November 1995, the Company purchased HomeLife Realty
Services, Inc. and HomeLife Realty U.S. Limited Partnership (California) in
exchange for common and preferred shares of the Company. In August, 1996,
HomeLife Realty Services acquired the Michigan based Red Carpet Keim Group of
companies. With this acquisition, the Company acquired approximately 60 real
estate offices, 95% of the outstanding stock of Red Carpet Keim and 80% of
the outstanding stock of Guardian Home Warranty Company all located in the
state of Michigan.
In January 1997, the Company acquired the assets of Salt Lake City based
franchisor and licensor, S&S Acquisition Corp. This acquisition included the
tradenames of Red Carpet Real Estate Services and National Real Estate Service,
adding approximately 58 real estate offices. The Company also acquired the real
estate computer technology of House by Mouse and Virtual Assistant. With this
technology, the Company has been able to enhance Internet communication giving
agents the capability of accessing marketing, advertising and general office
materials and licensed products over the Internet. In July 1997, the Company
acquired the licensing agreements and trademarks of Network Real Estate, Inc.
("Network"), its 12 Northern California offices and its "high-end" luxury
division of "International Estates." This acquisition provides a platform for
growth in Northern California.
In February 1998, the Company acquired Builders Realty Ltd. ("Builders").
Builders is a two office retail real estate and mortgage loan company located in
Calgary, Alberta, Canada. Builders has retained its name and operates as a
wholly owned subsidiary of HomeLife.
The Company's niche in the market is maintained through the development of
its proprietary marketing system. This "SuperSystem" replaces the outdated
marketing methods of cold calling or door knocking to obtain real estate
listings and potential buyers. The elimination of these methods has attracted
two types of franchisees, franchisees new to operating a franchise, and those
who terminated other franchise agreements with competitors to become a
franchisee of the Company.
As of the date hereof, the Company had: 4,823,725 Common shares issued and
outstanding, which does not include 200,000 warrants to purchase Common Shares
and 140,000 options to purchase Common Shares; 10,000 Class A Preferred Shares
issued and outstanding; and, 325 Class AA Preferred Shares issued and
outstanding. Assuming all
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the Preferred Stock are converted and all shares registered hereunder are
sold, the Company will have 14,823,725 shares of Common Stock outstanding
after the Offering.
For the fiscal year ending May 31, 1998, the Company had gross sales of
$2,001,036. The Company's net income from operations at May 31, 1998 was
$139,931. As of the quarter ending August 31, 1998, the Company had gross sales
of $2,054,992. The Company's net income from operations for the quarter was
$38,471. Continued revenue generation by the Company's franchisees, licensees
and real estate brokerage operations, and the continued successful acquisitions
of franchisors together with the implementation of the Company's marketing plan
are necessary for the Company to continue generating operating revenues.
The Company was incorporated under the laws of the State of Nevada on
October 9, 1995. The address of the Company's principal executive offices is:
4100 Newport Place, Suite 730, Newport Beach, CA 92660. The Company's telephone
number is (949) 660-1919.
THE OFFERING
Securities Offered by
the Company................. A total of 10,000,000 shares of Common Stock of
the Company which may be offered from time to time
on terms to be determined at the time of offering.
The Common Stock may be offered at prices and on
terms to be set forth in one or more supplements
to this Prospectus. Of these, 1,134,482 shares of
Common Stock are being registered herein to permit
current Preferred Shareholders to convert their
Preferred Stock to Common Stock.
Offering Price
Common Stock............. To be determined at the time of the Offering.
Common Stock Outstanding.... 4,823,725 Shares as of the date hereof, not
including 200,000 warrants to purchase Common
Stock and 140,000 options to purchase Common
Stock; 6,298,207 shares if all of the Preferred
Stock is converted to Common Stock. See
"Description of Securities."
OTC/BB Symbol Common Stock.. HMLF
Use of Proceeds............. The Company will not receive any cash proceeds as
a result of this offering.
Risk Factors................ The securities offered hereby involve a high
degree of risk and immediate substantial dilution.
See "Risk Factors."
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SELECTED FINANCIAL DATA
The following table presents selected historical financial data for the
Company derived from the Company's Financial Statements. The historical
financial data are qualified in their entirety by reference to, and should be
read in conjunction with, the Financial Statements and notes thereto of the
Company, which are incorporated by reference into this Prospectus. The
following data should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Financial Statements of the Company and the notes thereto included elsewhere
in this Prospectus.
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<CAPTION>
Three Months Ended Year Ended
August 31 May 31
1998 1997 1998 1997
-------------------------------- ---------------------------------
(unaudited) (audited) (audited) (audited)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross sales $ 2,054,992 $ 317,981 $ 2,001,036 $ 981,938
Selling, general &
administrative expenses (2,011,569) (339,331) (1,990,286) (1,144,117)
Other --- --- 211,358 251,040
Minority interest in subsidiaries (4,952) --- (9,177) (16,099)
Income tax provision --- $ --- (73,000) $ (16,000)
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Net income $ 38,471 $ 21,350 $ 139,931 $ 56,762
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Net income per share $ .008 $ --- $ .029 $ .014
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<CAPTION>
August 31, 1998 August 31, 1997 May 31, 1998 May 31, 1997
--------------- --------------- ------------- -------------
(audited) (audited) (audited) (audited)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash $ 313,788 $ 225,554 $ 223,723 $ 232,403
Cash in Trust 273,028 -- 489,014 --
Other assets 4,264,527 2,775,246 4,281,891 2,767,517
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Total Assets $ 4,851,343 $ 3,000,800 $ 4,994,628 $ 2,999,920
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----------- ----------- ------------ ------------
Total liabilities $ 1,051,546 $ 428,835 $ 1,233,302 $ 436,605
Stock & additional paid in
capital 4,159,805 3,118,725 4,159,805 3,088,725
Accumulated deficit (360,008) (546,760) (398,479) (525,410)
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Total liabilities & stockholders
equity $ 4,851,343 $ 3,000,800 $ 4,994,628 $ 2,999,920
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3
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RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK AND SHOULD ONLY BE MADE BY PERSONS WHO CAN AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD CONSIDER
CAREFULLY THE FOLLOWING FACTORS, IN ADDITION TO THE OTHER INFORMATION CONCERNING
THE COMPANY AND ITS BUSINESS CONTAINED IN THIS PROSPECTUS, BEFORE PURCHASING THE
SECURITIES. SECURITIES MAY ONLY BE PURCHASED UPON THE TERMS, PRICE AND OTHER
CONDITIONS OF THE OFFERING ARE SET FORTH IN A PROSPECTUS SUPPLEMENT.
LIMITED OPERATING HISTORY. The Company began operations in 1995 by the
acquisition of the HomeLife Realty Services, Inc. and HomeLife Realty U.S.
Limited Partnership (California). The Company's success is dependent upon the
successful development and marketing of its franchises, the revenues
generated by its franchises and the continued expansion and acquisition of
franchises and franchisors, as to which there is no assurance. Unanticipated
problems, expenses, and delays are frequently encountered in establishing a
new business. These include, but are not limited to, competition, the need to
develop franchise support capabilities and market expertise, market
acceptance, and sales and marketing. The failure of the Company to meet any
of these conditions would have a materially adverse effect upon the Company
and may force the Company to reduce or curtail operations. No assurance can
be given that the Company can or will continue to operate profitably. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "The Company--Marketing" and "--Competition."
FUTURE CAPITAL NEEDS COULD RESULT IN DILUTION TO INVESTORS; ADDITIONAL
FINANCING COULD BE UNAVAILABLE OR HAVE UNFAVORABLE TERMS. The Company's future
capital requirements will depend on many factors, including cash flow from
operations, progress in expanding the number of franchises, the success of
acquisitions and expansions, the real estate market and the Company's ability to
provide services to its franchise base. Although the Company currently has no
specific plans or arrangements for financing and no commitments for future
financing, it may be necessary to raise additional funds through equity or debt
financings. Any equity financings could result in dilution to the Company's
then-existing stockholders. Sources of debt financing may result in higher
interest expense. Any financing, if available, may be on terms unfavorable to
the Company. If adequate funds are not obtained, the Company may be required to
reduce or curtail operations. The Company anticipates that its existing capital
resources will be adequate to satisfy its operating expenses and capital
requirements for at least 12 months. However, such estimates may prove to be
inaccurate. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business of the Company" and Financial Statements.
ECONOMIC CONDITIONS AND THE REAL ESTATE MARKET. As with other
businesses, the Company's results may be adversely affected by unfavorable
local, regional or national economic conditions affecting disposable consumer
income and the ability or willingness of consumers to purchase or sell their
residential properties. There can be no assurance that consumer spending
will not decline in response to economic conditions, thereby adversely
affecting the Company's growth, net sales, and profitability.
COMPETITION. The Company competes with many other established real
estate franchisors. Many of these companies have greater capital, marketing
and other resources than the Company. There can be no assurance that these
or other entities will not develop competitive marketing methods or acquire
franchises in more geographical markets. than the Company. There can be no
assurance that the Company will successfully differentiate itself from its
competitors or that the market will consider the Company's services to be
superior to or more appealing than those of its competitors. Market entry by
any significant competitor may have an adverse effect on the Company's sales
and profitability. See "Business of the Company--Competition."
DIFFICULTY OF PLANNED EXPANSION; MANAGEMENT OF GROWTH. The Company has
expanded its operations rapidly, and it plans to continue to further expand
its level of operations. The Company's operating results will be adversely
affected if net sales do not increase sufficiently to compensate for the
increase in operating expenses caused by this expansion. In addition, the
Company's planned expansion of operations may cause significant strain on the
Company's management, technical, financial, and other resources. To manage
its growth effectively, the Company must continue to improve and expand its
existing resources and management information systems and must attract,
train, and motivate
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qualified managers, employees and franchisees. There can be no assurance,
however, that the Company will successfully achieve these goals. If the
Company is unable to manage growth effectively, its operating results will be
adversely affected.
DEPENDENCE UPON KEY PERSONNEL. The Company's success depends, to a
significant extent, upon a number of key employees. The loss of services of one
or more of these employees could have a material adverse effect on the business
of the Company. The Company has not entered into employment agreements with its
key officers. Competition for such personnel is intense. There can be no
assurance that the Company will be successful in attracting and retaining such
personnel. The Company has "key person" life insurance on its President, Andrew
Cimerman, only. The Company does not have "key person" life insurance on any
other of its key employees. See "Management."
POTENTIAL CONFLICTS OF INTEREST BETWEEN THE COMPANY AND ITS OFFICERS,
DIRECTORS, AND SHAREHOLDERS. Mr. Andrew Cimerman, President and Director of
the Company, currently operates Realty World America, Inc. Realty World
America, Inc. is a real estate services franchise and licensing company.
While Mr. Cimerman does not believe such operations will present a conflict
of interest, this relationship could result in a conflict of interest for the
Company. Mr. Cimerman also owns and operates Jerome's Magic World, Inc.,
which has a licensing arrangement with the Company. This arrangement
provides the Company with the right to use its characters in its business at
no cost to the Company. In addition to the above, the Company's officers and
directors are or may become, in their individual capacities, officers,
directors, controlling shareholders or partners of other entities engaged in
a variety of businesses which may in the future have various transactions
with the Company. Thus, potential conflicts of interest exist, including
among other things, conflicts with respect to the time, effort, and corporate
opportunities involved in participation with such other business entities and
transactions. Each officer and director of the Company may engage in
business opportunities outside the Company. An officer or director may
continue any business activity in which such officer or director engaged
prior to joining the Company. The officers and directors of the Company are
aware of the fact that they owe a fiduciary duty to the Company not to
withhold any corporate opportunity from the Company which may arise because
of their association with the Company. See "Certain Transactions --
Conflicts of Interest," and "Principal Shareholders."
LACK OF DIVIDENDS. The Company has never paid any cash dividends on its
Common Stock and does not anticipate paying any cash dividends in the future.
The Company has paid dividends to the Class AA Preferred Shareholders in the
amount of $4,550 paid through August 31, 1998. Other than the requirement to
pay the Class AA Preferred Shareholders, the Company currently intends to retain
future earnings, if any, to fund the development and growth of its business.
See "Dividend Policy."
DILUTION. Purchasers of shares of Common Stock in the an Offering of these
shares will experience immediate dilution from the initial public offering
price. The shares being registered hereunder will represent, upon completion of
the offering of all the shares registered hereunder, 67.58% of the total shares
of Common Stock outstanding. See "Dilution."
POSSIBLE VOLATILITY OF SHARE PRICE. The offering price of the Securities
may be determined by negotiations between the Company and the underwriter used
in an offering and may not necessarily be related to the Company's existing
market price, asset value, net worth, or other established criteria of value.
Additionally, potential investors should be aware that the securities of the
Company may have been sold at a substantial discount to the public offering
price.
RISKS RELATING TO LOW-PRICE STOCKS. The Company's Common Stock is
currently traded on the Over-the-Counter Bulletin Board ("OTC/BB"). As a
result, an investor could find it more difficult to dispose of, or to obtain
accurate quotations as to, the market value of the Company's securities as
compared to securities which are traded on the Nasdaq trading market or on an
exchange. In addition, trading in the Securities would be covered by Rules
15g-1 through 15g-100 promulgated under the Securities Exchange Act of 1934
for non-Nasdaq and non-exchange listed securities. Under this rule,
broker-dealers who recommend such securities must satisfy burdensome sales
practice requirements, including a requirement that they make an
individualized written suitability determination for the
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purchaser and receive the purchaser's written consent prior to the
transaction. The Securities Enforcement and Penny Stock Reform Act of 1990
(the "Reform Act") also requires additional disclosure in connection with any
trades involving a stock defined as a "penny stock" (generally, according to
recent regulations adopted by the Commission, any equity security that has a
market price of less than $5.00 per share, subject to certain exceptions),
including the delivery, prior to any penny stock transaction, of a disclosure
schedule explaining the penny stock market and the risks associated
therewith, the requirement that a broker-dealer must provide the customer
with current bid and offer quotations for the penny stock, the compensation
of the broker-dealer and its salesperson in the transaction, and monthly
account statements showing the market value of each penny stock held in the
customer's account. The regulations governing low-priced or penny stocks
could limit the ability of broker-dealers to sell the Company's securities
and thus the ability of the purchasers of this Offering to sell their
securities in the secondary market.
REQUIREMENTS OF CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION. The
Common Stock to be offered from time to time hereunder must be qualified for
sale or exempt therefrom under applicable state securities laws. There can
be no assurance, however, that the Company will be successful in maintaining
a current registration statement. After a registration statement becomes
effective, it may require updating by the filing of a post-effective
amendment. A post-effective amendment is required: (i) any time after nine
months subsequent to the effective date when any information contained in the
prospectus is over sixteen months old; (ii) when facts or events have
occurred which represent a fundamental change in the information contained in
the registration statement; or (iii) when any material change occurs in the
information relating to the plan of distribution of the securities registered
by such registration statement. The Company anticipates that this
Registration Statement will remain effective for at least nine months
following the date of this Prospectus, assuming a post-effective amendment is
not filed by the Company. The Company will be prevented from issuing shares
of Common Stock until such time as it files a Prospectus Supplement setting
forth the price and other terms of the Offerings.
SAFE HARBOR
This Prospectus contains statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act. Such
statements appear in a number of places in this Prospectus and include
statements regarding the intent, belief, or current expectations of the Company,
its directors, or its executive officers with respect to, among other things:
(i) trends affecting the Company's financial condition or results of operations;
(ii) the Company's business and growth strategies; and (iii) the use of the
proceeds to the Company of this Offering. Prospective investors are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statements as a
result of various factors. Important factors that could cause such differences
are identified under "Risk Factors" above.
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DILUTION
Dilution is the difference between the public offering price per share for
the Common Stock offered herein, and the net tangible book value per share of
the Common Stock immediately after its purchase. The Company's net tangible
book value per share is calculated by subtracting the Company's total
liabilities from its total assets less any intangible assets, and then dividing
by the number of shares then outstanding.
Assuming all the Preferred Shares are converted and all shares
registered hereunder are sold, the Company will have 14,823,725 shares
outstanding. The post offering pro forma net tangible book value of the
Company, cannot be determined without determining the net proceeds from the
Offering. However, there is a likelihood that the proceeds raised may
result in dilution to investors in the Offerings of the Shares registered
herein. Net tangible book value per share may increase to the benefit of
present shareholders.
USE OF PROCEEDS
The Company will not immediately receive any cash proceeds as a result of
this Offering. Any proceeds and the use of such proceeds to be raised from time
to time will be the subject of a Prospectus Supplement. However, the Company
anticipates that it will continue to use proceeds from any offering for the
development and training of its real estate brokers, marketing to new realty
offices in an effort to have them become franchisees of the Company, expanding
the services available to the public from the Company, and acquiring other real
estate franchisors.
The allocation of net proceeds which will be set forth in any Prospectus
Supplement will be estimates based upon the Company's plans and upon certain
assumptions regarding the progress of development of its business, the real
estate market, changing competitive conditions, the ongoing evaluation and
determination of the commercial potential of the Company's services and the
Company's ability to enter into agreements to acquire or merge with other
companies. If any of these factors change, the Company may reallocate some
of the net proceeds amongst various categories of use. The Company believes
that current resources will be sufficient to fund working capital and capital
requirements for at least 12 months from the date of this Prospectus.
DIVIDEND POLICY
The Company has never paid any cash dividends on its Common Stock and
does not anticipate paying any cash dividends in the future. The Class AA
Preferred Shares are entitled to receive dividends accruing at the rate of
eight percent per year on each share from the date of issuance through the
date of conversion (the "Coupon Dividends"). These Coupon Dividends are
payable quarterly. Any Coupon Dividend on the Class AA Preferred Shares
which has accrued but which, for any reason whatsoever, has not been declared
or has been declared but has not been timely paid, shall be deemed in arrears
and shall accumulate until paid. The Company has paid $4,550.00 in Coupon
Dividends as of the date of this Prospectus. Other than the requirements of
the Class AA Preferred Shares, the Company currently intends to retain future
earnings, if any, to fund the development and growth of its business.
7
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
August 31, 1998.
<TABLE>
<CAPTION>
August 31, 1998
---------------
(unaudited)
<S> <C>
DEBT:
Accounts Payable $146,753
Notes Payable 15,208
Loan payable, stockholder 323,084
Accrued expenses 107,084
Reserve for warranties 50,600
Dividends Payable 9,780
Income Tax Payable 85,177
Trust Liability 273,028
Minority Interest 40,832
----------
Total debt: $1,051,546
----------
----------
STOCKHOLDERS' EQUITY:
Common Stock, $.001 par value
10,000,000 shares authorized
4,823,725 shares issued and
outstanding $4,824
Class A Convertible Preferred Stock,
$100 par value
6% non-cumulative
100,000 shares authorized
10,000 issued and outstanding 1,000,000
Class AA Convertible Preferred Stock,
$500 par value
8% cumulative
2,000 shares authorized
325 issued and outstanding 162,500
Additional paid-in capital 2,992,481
Accumulated deficit (360,008)
----------
Total stockholders' equity: $3,799,797
----------
----------
</TABLE>
8
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data is qualified by reference to, and
should be read in conjunction with, the Financial Statements, related Notes
to Financial Statements and Report of Independent Public Accountants, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained elsewhere herein. The following tables summarize
certain selected financial data of the Company for the year ended May 31,
1998 (audited), and the year ended May 31, 1997 (audited) and for the three
months ended August 31, 1998 (unaudited) and August 31, 1997 (audited). The
data has been derived from Financial Statements included elsewhere in this
Prospectus that were audited by Biller, Firth-Smith and Archibald, Certified
Public Accountants. No dividends have been paid on Common Stock for any of
the periods presented.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
August 31 May 31
1998 1997 1998 1997
------------------------------- --------------------------------
(unaudited) (audited) (audited) (audited)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Gross sales $ 2,054,992 $ 317,981 $ 2,001,036 $ 981,938
Selling, General & administrative (2,011,569) (339,331) (1,990,286) (1,144,117)
expenses
Other --- --- 211,358 251,040
Minority interest in subsidiaries (4,952) --- (9,177) (16,099)
Income tax provision --- $ --- (73,000) $ (16,000)
----------- ----------- ------------ ------------
Net income $ 38,471 $ 21,350 $ 139,931 $ 56,762
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
Net income per share $ .008 $ --- $ .029 $ .014
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
<CAPTION>
August 31, 1998 August 31, 1997 May 31, 1998 May 31, 1997
--------------- --------------- ------------ ------------
(audited) (audited) (audited) (audited)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash $ 313,788 $ 225,554 $ 223,723 $ 232,403
Cash in Trust 273,028 -- 489,014 --
Other assets 4,264,527 2,775,246 4,281,891 2,767,517
----------- ----------- ------------ ------------
Total Assets $ 4,851,343 $3,000,800 $ 4,994,628 $ 2,999,920
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
Total liabilities $ 1,051,546 $ 428,835 $ 1,233,302 $ 436,605
Stock & additional paid in 4,159,805 3,118,725 4,159,805 3,088,725
capital
Accumulated deficit (360,008) (546,760) (398,479) (525,410)
----------- ----------- ------------ ------------
Total liabilities & stockholders
equity $ 4,851,343 $3,000,800 $ 4,994,628 $ 2,999,920
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</TABLE>
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company was incorporated in Nevada on October 9, 1995 to acquire
Management Dynamics, Inc., a publicly owned New Jersey corporation. In
November, 1995, the Company concluded the purchase of HomeLife Reality
Services, Inc. and HomeLife Realty U.S. Limited Partnership (California)
launching its real estate services business.
The Company has experienced significant growth primarily through its
acquisitions of and combinations with various other companies. This includes
the acquisition in August 1996 of the Keim Group of Companies and Guardian
Home Warranty Company (Michigan) adding 60 real estate offices and a home
warranty company in Michigan. In 1997, the Company purchased the assets of
S&S Acquisition Corp. providing the Company with Red Carpet Real Estate
Services and National Real Estate Service adding 58 real estate offices. The
acquisition of the real estate computer technology of House by Mouse and
Virtual Assistant provided the Company with the ability to enhance its
Internet communication services to its franchises. In July 1997, the Company
acquired the licensing agreements, trademarks and franchise offices of
Network Real Estate, Inc. This acquisition provided the Company with an
additional 12 offices in Northern California and access to the "high-end"
luxury division of "International Estates". In February 1998, the Company
acquired Builders Realty Ltd. providing access to the Alberta, Canada market
in both retail real estate and mortgage loans. Management believes the
growth fueled by these acquisitions and combinations will continue to fuel
growth in the remainder of 1998 and in 1999. However, certain key factors
that are necessary in maintaining and exceeding the current growth rates are
as follows:
- Acquiring national recognition by acquiring regional franchises;
- Targeting high achieving-high market share regional brokerage houses;
- Continually updating its marketing techniques; and
- Improving services available to its franchises
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
financial information for the Company:
<TABLE>
<CAPTION>
Three Months Ended Year Ended
August 31 May 31
1998 1997 1998 1997
---------------------------- --------------------------------
(audited) (audited) (audited) (audited)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross sales $ 2,054,992 $ 317,981 $ 2,001,036 $ 981,938
Selling, general & administrative
expenses (2,011,569) (339,331) (1,990,286) (1,144,117)
Other --- --- 211,358 251,040
Minority interest in subsidiaries (4,952) --- (9,177) (16,099)
Income tax provision --- $ --- (73,000) (16,000)
----------- ---------- ------------ -----------
Net income $ 38,471 $ 21,350 $ 139,931 $ 56,762
----------- ---------- ------------ -----------
----------- ---------- ------------ -----------
Net income per share $ .008 $ --- $ .029 $ .014
----------- ---------- ------------ -----------
----------- ---------- ------------ -----------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
August 31, 1998 August 31, 1998 May 31, 1998 May 31, 1997
--------------- --------------- ------------ ------------
(audited) (audited) (audited) (audited)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash $ 313,788 $ 225,554 $ 223,723 $ 232,403
Cash in Trust 273,028 -- 489,014 --
Other assets 4,264,527 2,775,246 4,281,891 2,767,517
--------- ---------- ---------- ---------
Total Assets $4,851,343 $3,000,800 $4,994,628 $2,999,920
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------
Total liabilities $1,051,546 $ 428,835 $1,233,302 $ 436,605
Stock & additional paid in capital 4,159,805 3,118,725 4,159,805 3,088,725
Accumulated deficit (360,008) (546,760) (398,479) (525,410)
--------- ---------- ---------- ---------
Total liabilities & stockholders
equity $4,851,343 $3,000,800 $4,994,628 $2,999,920
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------
</TABLE>
THREE MONTHS ENDED AUGUST 31, 1998 (UNAUDITED) AS COMPARED TO THE THREE
MONTHS ENDED AUGUST 31, 1997 (AUDITED).
REVENUES. The Company generated gross sales of $2,054,992 for the three
months ended August 31, 1998 compared to gross sales of $317,981 for the
three months ended August 31, 1997. The significant increase in revenues of
$1,737,011 was primarily the result of Builders.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. General and
administrative expenses for the three months ended August 31, 1998 were
$2,011,569 compared to $339,331 for the three months ended August 31, 1997.
The increase of $1,672,238 for the three months ended August 31, 1998 was
primarily a result of Builders.
INTEREST INCOME. Interest income for the three months ended August 31,
1998 was $10,314 compared to $54 for the three months ended August 31, 1997.
The increase of $10,260 is interest income attributable to Builders.
NET INCOME. Net income for the three months ended August 31, 1998 was
$38,471 compared to a net loss of $21,350 for the three months ended August
31, 1997. The increase in the net income of $59,821 for the three months
ended August 31, 1998 was a result of Builders.
YEAR ENDED MAY 31, 1998 (AUDITED) COMPARED TO THE YEAR ENDED MAY 31,
1997 (AUDITED).
REVENUES. The Company generated gross sales of $2,001,036 for the year
ended May 31, 1998 compared to gross sales of $981,938 for the year ended May
31, 1997. The significant increase in revenues of $1,019,098 was primarily
the result of the acquisition of Builders.
GENERAL, AND ADMINISTRATIVE EXPENSES. General and administrative
expenses for the year ended May 31, 1998 were $1,990,286 compared to
$1,144,177 for the year ended May 31, 1997. The increase of $846,109 for the
year ended May 31, 1998 was primarily a result of the acquisition of Builders.
GAIN ON SALE OF INVESTMENTS. Gain on the sale of investments for the
year ended May 31, 1998 was zero compared to $180,000 for the year ended May
31, 1997. In 1997, the Company sold its shareholdings of HOA Property
Management Company for a gain of $180,000.
11
<PAGE>
SALE OF FRANCHISES. The income from the sale of franchises for the year
ending May 31, 1998 was $200,000 compared to zero for May 31, 1997. This
difference of $200,000 is due to the sale of a Master Franchise to a German
investment company.
FORGIVENESS OF DEBT. The income from debt forgiveness for the year
ending May 31, 1998 was zero compared to $69,375 for May 31, 1997. This
difference is due to the forgiveness of debt by Keim Group Ltd. shareholders
as a condition of the acquisition of Keim Group Ltd. by the Company.
INTEREST INCOME. Interest income for the year ended May 31, 1998 was
$14,362 compared to $5,645 for the year ended May 31, 1997. The increase of
$8,717 is interest income attributable to Builders.
NET INCOME. Net income for the year ended May 31, 1998 was $139,931
compared to a net income of $56,762 for the year ended May 31, 1997. The
increase in the net income of $83,169 for the year ended May 31, 1998 was a
result of the acquisition of Builders.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has primarily funded its capital
requirements through equity infusions, officer loans and the results of
operations.
The acquisition of franchises has provided the Company with an income
stream and the Company believes that the Shares to be registered herein, and
to be offered from time to time pursuant to the terms of a Prospectus
Supplement, can be utilized as a source of financing goals of the Company.
BUSINESS OF THE COMPANY
GENERAL
Incorporated in 1995, HomeLife, Inc., a Nevada corporation, (the
"Company" or "HomeLife") is a real estate services franchisor. HomeLife
utilizes both its proprietary "SuperSystem" marketing system and its business
combinations and acquisitions to fuel development as a fast growing real
estate services company.
The Company maintains its corporate office in Newport Beach, California,
and maintains regional offices in Troy, Michigan and Calgary, Alberta,
Canada. HomeLife operates through various subsidiaries and companies
servicing its franchised tradenames. Through its subsidiary, HomeLife Realty
Services, Inc., the Company, services approximately 50 real estate offices in
the State of California. Through Red Carpet Keim, the Company services
approximately 60 real estate offices in the State of Michigan and through its
tradenames, Red Carpet Real Estate Services, Network Real Estate and National
Real Estate Service, services approximately 70 real estate offices in various
states. In addition to the above, the Company operates both direct real
estate sales and mortgage lending through its subsidiary, Builders Realty
Ltd. ("Builders"), in Calgary, Alberta, Canada and home warranties through
its majority-owned subsidiary, Guardian Home Warranty.
The Company's growth is largely attributable to business combinations
and acquisitions. The Company was initially incorporated in 1995 for the
purpose of combining with Management Dynamics, Inc. a publicly owned New
Jersey corporation. In November 1995, the Company purchased HomeLife Realty
Services, Inc. and HomeLife Realty U.S. Limited Partnership (California) in
exchange for common and preferred shares of the Company. In August 1996,
HomeLife Realty Services acquired the Michigan based Red Carpet Keim Group of
companies. With this acquisition, the Company acquired approximately 60
franchise offices, 95% of the outstanding stock of Red Carpet Keim, and 80%
of the outstanding stock of Guardian Home Warranty Company all located in the
state of Michigan.
12
<PAGE>
In November 1996, the Company incorporated FamilyLife Realty Services,
Inc. in Michigan for the purpose of purchasing the assets of S&S Acquisition
Corp. and to function as a franchisor for the Red Carpet and National Real
Estate Service tradenames which S&S Acquisition Corp owned. FamilyLife
Realty Services, Inc. became a wholly owned subsidiary of the Company.
In January 1997, the FamilyLife Realty Services, Inc. acquired the
assets of Salt Lake City based franchisor, S&S Acquisition Corp. This
acquisition included the tradenames "Red Carpet" and "National Real Estate
Services", and the licensing agreements of Red Carpet Real Estate Services
and National Real Estate Service, adding approximately 58 real estate
offices. The Company also acquired the real estate computer technology of
House by Mouse and Virtual Assistant. With this technology, the Company has
been able to enhance Internet communication giving agents the capability of
accessing marketing, advertising and general office materials and licensed
products over the Internet. In July 1997, acquired the licensing agreements
and trademarks of Network Real Estate, Inc., its 12 Northern California
offices and its "high-end" luxury division of "International Estates," a
Network Real Estate, Inc. trade name. This acquisition provides a platform
for growth in Northern California.
In November 1997, the Company incorporated MaxAmerica Financial
Services, Inc. MaxAmerica Financial Services, Inc. will provide mortgage
financing services to the Company's real estate customers. MaxAmerica
Financial Services will act as a mortgage brokerage while funding and
processing the loans through Mortgage Capital Resource. MaxAmerica Financial
Services, Inc. has a Loan Purchase Agreement with Mortgage Capital Resource
wherein Mortgage Capital Resource agrees to process and fund loans for
MaxAmerica Financial Services, Inc.
In February 1998, the Company acquired Builders. Builders is a two
office retail real estate and mortgage loan company located in Calgary,
Alberta, Canada. Builders has retained its name and operates as a wholly
owned subsidiary of HomeLife, Inc.
In April 1998, the Company incorporated National Sellers Network, Inc.,
as a Nevada corporation, to function as a real estate licensing company for
the National Real Estate Service trade name. National Sellers Network, Inc.
is a wholly owned subsidiary of the Company. Also in April 1998, the Company
incorporated Red Carpet Broker Network, Inc., as a Nevada corporation, to
function as a real estate licensing company for the Red Carpet Real Estate
Services trade name. Red Carpet Real Estate Services, Inc. is also a wholly
owned subsidiary of the Company.
Finally, in August 1998, the Company incorporated HomeLife Properties,
Inc. as a Nevada corporation to function as a buyer and seller of real
property.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
13
<PAGE>
The following is an organizational chart of the Company's subsidiaries:
<TABLE>
<CAPTION>
<S> <C>
HomeLife, Inc. (Nevada)
November, 1995
|
|
|
HomeLife Realty Services, Inc. (Delaware)----------|
May 1996 |
|
|----------Red Carpet Keim (Michigan)
| August 1996
|----------Guardian Home Warranty Company(Michigan)
| August 1996
|
FamilyLife Realty Services, Inc. (Michigan)--------|
November 1996 |
|
|----------MaxAmerica Financial Services, Inc.(California)
| October 1997
|----------HomeLife California Realty, Inc.(California)
| October 1997
|
Builders Realty Ltd. (Canada)----------------------|
February 1998 |
|
|----------National Sellers Network, Inc.(Nevada)
| April 1998
|----------Red Carpet Broker Network, Inc.(Nevada)
| April 1998
|
HomeLife Properties, Inc. (Nevada)-----------------|
August 1998
</TABLE>
The Company's niche in the market is maintained through the development
of its proprietary marketing system. This community based marketing system,
called the "SuperSystem" replaces the outdated marketing methods of cold
calling and door knocking to obtain real estate listings and potential
buyers. The elimination of these methods has attracted two types of
franchisees, franchisees new to operating a franchise and those who
terminated other franchise agreements with the Company's competitors to
become a franchisee of the Company.
As of the date hereof, the Company had: 4,823,725 Common Shares; 200,000
warrants to purchase Common Stock; 140,000 options to purchase Common Stock,
10,000 Class A Preferred Shares; and, 325 Class AA Preferred Shares issued
and outstanding. Assuming all the Preferred Shares are converted and all
shares registered hereunder are sold, the Company will have 14,823,725 shares
of Common Stock outstanding after the Offering.
As of May 31, 1998, the Company had gross sales of $2,001,036. The
Company's net income from operations at May 31, 1998 was $139,931. As of the
quarter ending August 31, 1998, the Company had a total sale income of
$2,054,992. The Company's net income from operations for the quarter was
$38,471. Continued revenue generations by the Company's franchisees, and the
continued successful acquisitions of franchisors together with the
implementation of the Company's marketing plan are necessary for the Company
to continue generating substantial operating revenues.
14
<PAGE>
The Company was incorporated under the laws of the State of Nevada on
October 9, 1995.
OVERVIEW OF THE COMPANY'S MARKETS
Management believes that the real estate market is growing rapidly.
HomeLife's target market includes (a) franchise operations with 5 to 50
offices, (b) realtors who are financially weak and lack a good marketing
system, and (c) realtors without strong name brand recognition.
HomeLife's customer generating, community based marketing system
"SuperSystem" eliminates the outdated marketing methods of cold-calling and
door knocking used by traditional realtors. This combination of marketing
system, computer technology, real estate services and training provides the
Company's agents with thousands of customer leads.
In addition to this proprietary system, the acquisition by the Company
of companies with both recognizable tradenames, such as Red Carpet, and
existing franchise locations has enabled the Company to gain immediate market
recognition. This strategy, in management's view, will increase the
Company's market share.
COMPETITION
The Company faces competition from numerous companies, some of which are
more established, benefit from greater market recognition, have greater
financial and marketing resources, and a broader geographical base than the
Company. The Company's products compete on the basis of certain factors,
including most importantly, the ability to generate leads without
cold-calling and door knocking.
The real estate franchise industry is large and composed of many other
companies. Companies such as Century 21, Prudential, Coldwell Banker, Better
Homes and Gardens, ERA, and RE/Max, provide similar services as the Company,
Such competition may diminish the Company's market share or its ability to
gain entry into certain markets, and may consequently have a material adverse
effect on the Company.
COMPETITIVE ADVANTAGES
Management of the Company believes that the Company has the following
advantages over its competition:
- - A unique lead generating system provided to its franchisees.
- - Lower cost of the Company's products to franchisees and the increased
benefit realized from the placement of its advertising dollars.
- - Consistent use and acquisition of new technology to provide its services to
its franchisees.
EMPLOYEES
As of the date of this Prospectus, the Company employs 16 full-time
employees. The Company hires independent contractors on an "as needed" basis
only. The Company has no collective bargaining agreements with its
employees. The Company believes that its employee relationships are
satisfactory. The Company has approximately 180 franchise offices with an
estimated 2,600 agents. The Company plans on hiring additional staff in the
immediate future and in the long term, as needed, based on its growth rate.
15
<PAGE>
PROPERTIES
The Company leases a 2,630 square foot office in Newport Beach,
California. The lease term expires in June, 2001. The Company also is
obligated on leases for its other premises located in Troy, Michigan, which
expires in December, 1998, and for two Builders Realty offices located in
Calgary, Alberta, Canada. The Builders leases expire in October, 2001 and
August, 2002. Annual lease payments exclusive of property taxes and
insurance for all locations through 2002 is $433,494.
The Company owns more than 40 copyrights on unique marketing concepts
which include printed materials for buying and selling property, and point of
sale and sales follow up techniques. Further, the Company has exclusive
rights, granted by Jerome's Magic World, Inc. at no cost to the Company, to
use its exclusively developed animated characters for its real estate service
business. These characters include Jerome the Gnome, Crok 'N Roll, The Waz,
King D Lish and Rock Head.
LITIGATION
The Company is currently involved in three lawsuits.
The first lawsuit entitled National Real Estate Service of Illinois,
Inc. v. HomeLife, Inc., FamilyLife Realty Services, National Real Estate
Service, Realty World America, Inc. and Andrew Cimerman was filed in the
Illinois state court on April 24, 1998 (the "Illinois Action"). In this
action, the plaintiff, National Real Estate Service of Illinois, Inc. alleges
that the defendants breached the master franchise agreement by failing to
provide the services to the franchisees as required therein. In this action,
the plaintiffs request an award of actual damages of $3,000,000 and punitive
damages of $10,000,000.
Prior to the suit being served on the defendants, FamilyLife Realty
Services filed a suit in the United States District Court, Central District
of California, Southern Division, Case No. SACV 98-398 GLT (EEX), entitled
FamilyLife Realty Services, Inc. v. National Real Estate Service of Illinois,
Inc. formerly known as Red Carpet Corporation of Illinois (the "California
Action"). This lawsuit alleges that National Real Estate Service of
Illinois, Inc. breached the master franchise agreement by failing to open and
operate 120 real estate offices in its region resulting in a loss of revenue
to FamilyLife Realty Services of $540,000.00.
The defendants in the Illinois Action transferred the case to the United
States District Court in Illinois and are currently seeking to have the case
transferred to the United States District Court, Central District, Southern
Division. The motion to transfer has been fully briefed and is awaiting a
decision by the Illinois judge. If the case is transferred it is anticipated
that the California Action and the Illinois Action with be consolidated. The
Company intends to vigorously defend the Illinois Action and vigorously
pursue the California Action. The Company adamantly denies the allegations
contained in the Illinois Action. The ultimate resolution of this matter is
not ascertainable at this time. In management's opinion, this matter will
not have a material effect on the financial position of the Company.
The second lawsuit is a trademark infringement action filed by Guardian
Life Insurance Company v. Guardian Home Warranty in Michigan. The Plaintiff
alleges that Guardian Home Warranty is infringing on its rights to use the
name "Guardian." The Company does not believe that the Plaintiff has
exclusive rights to use the "Guardian" name. The Company intends to
vigorously defend this action. The ultimate resolution of this matter is not
ascertainable at this time. In management's opinion, this matter will not
have a material effect on the financial position of the Company.
The final action is entitled Bivans v. Coldwell Banker Prestige Realty,
Inc., et. al and was commenced on April 16, 1998 in Michigan. The plaintiff
alleges discrimination by a franchisee, Coldwell Banker Prestige Realty. The
facts of the case arose prior to the acquisition by the Company of Red Carpet
Keim, and the defendant, Coldwell Banker Prestige Realty, ceased to be a Red
Carpet Keim franchisee prior to the acquisition of Red Carpet Keim by the
Company. The Company believes Red Carpet Keim has been named erroneously,
but has not yet secured a dismissal. The Company has been assured by
plaintiff's counsel that it does not intend to pursue the action against the
Company.
16
<PAGE>
However, should the plaintiff pursue remedies against the Company, the
Company plans to secure a dismissal and failing that to defend this action
vigorously. Management does not believe that this action will have a material
impact on the financial position of the Company.
Management of the Company believes that there are no other litigation
matters pending or threatened against the Company.
17
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and officers of the Company as of the date of this
Prospectus are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Andrew Cimerman 50 President and Director
Robert L. Cashman 66 Secretary, Treasurer and Director
Terry A. Lyles, Ph.D. 39 Director
F. Bryson Farrill 70 Director
Gabrielle Jeans 47 Vice President
Charles Goodson 43 Vice President
</TABLE>
The number of directors is set at a minimum of 1 and a maximum of 5.
The Board of Directors presently consists of 4 directors. Each of the
Company's directors hold office until their respective successors are elected
at the next annual meeting of shareholders. Vacancies in the Board of
Directors are filled by a majority vote of the remaining directors or by a
shareholder vote called expressly for such purpose.
ANDREW CIMERMAN, 50, PRESIDENT AND DIRECTOR, has held the positions of
Director and President since April 1996. For 7 years prior thereto, he was
the founder and majority shareholder of HomeLife Securities, Inc. and its
wholly owned subsidiary HomeLife Realty Services, Inc. Mr. Cimerman is the
founder, President and majority shareholder of: Simcoe Fox Developments,
Ltd., a private development company located in Toronto, Ontario, Canada;
HomeLife Cimerman Real Estate Ltd., a Toronto based real estate company;
Jerome's Magic World, Inc., the owner of certain animated characters; and,
majority shareholder and President of Realty World America, Inc. Mr.
Cimerman brings over 29 years of real estate service experience to the
Company, and is a strong and committed leader focused on the growth and
success of the Company.
ROBERT L. CASHMAN, 66, SECRETARY, TREASURER AND DIRECTOR, has been with the
Company since its inception in October 1995. Mr. Cashman has acted as the
President and majority owner of The Charleston Group, a business consulting
and investment banking firm since January 1, 1993. Mr. Cashman has acted as
the Chairman of the Orange County, California, Airport Commission, operators
of John Wayne Airport since March 1, 1998. He earned a B.S. degree in
Business Administration from the University of California, Los Angeles.
TERRY A. LYLES, PH.D, 39, DIRECTOR joined the Company as a director in August
1997. Dr. Lyles is a national and international speaker and trainer to
professional athletes, Fortune 500 Companies, schools, universities and
public audiences. Dr. Lyles' program is to reach people around the world
with the message of "balance and excellence." For the past 15 years, Dr.
Lyles has traveled across the United States and around the world conveying
this profound message of "Life Accountability" and "A Better You." Dr.
Lyles' has conducted a weekly radio program "A Better You" since May 1, 1994,
which is currently heard by over 1 million people in 65 nations. Dr. Lyles
holds a Ph.D degree in Psychology from Wayne State University in Detroit,
Michigan.
F. BRYSON FARRILL, 70, DIRECTOR joined the Company as a director in February
1997. Mr. Farrill has been in the securities industry for the past 32 years.
Mr. Farrill has held various senior positions, including that of President
and
18
<PAGE>
Chairman of McLeod, Young, Weir International, an investment dealer in
Toronto, Canada. He was also the Chairman of Scotia McLeod (USA) Inc. for
eleven years. Mr. Farrill's broad experience is not only utilized in the
United States and Canada but has served to direct the expansion of McLeod,
Young, Weir Ltd. into Europe and Asia through an extensive network of branch
offices.
GABRIELLE JEANS, 47, VICE PRESIDENT, has been employed by the Company, or its
subsidiary companies since August 1992. She has been employed by the
subsidiary, HomeLife Realty Services, Inc. as Director of Sales and training.
She brings over 22 years of experience in the realty industry to the Company
including the invaluable experience of owning and managing her own real
estate brokerage firm with over 100 agents.
CHARLES GOODSON, 43, VICE PRESIDENT has been employed by the Company, or its
subsidiary companies since March 1992. Mr. Goodson had 15 years of
commercial banking experience prior to joining HomeLife Realty Services. He
is a licensed realtor. Mr. Goodson earned his B.S. degree in Business
Administration from California State University, Northridge.
EXECUTIVE COMPENSATION
The following officers of the Company receive the following annual cash
salaries and other compensation:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Name and Principal Position Year Annual Bonus Awards
Salary ---------------------------
Restricted Securities
Stock Awards Underlying
Options (1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Andrew Cimerman, President 1998 $-0- $-0- -0- -0-
- --------------------------------------------------------------------------------------------------
Robert Cashman, Secretary, Treasurer 1998 $-0- $-0- -0- -0-
- --------------------------------------------------------------------------------------------------
Gabrielle Jeans, Vice President 1998 $72,000 $-0- -0- 30,000
- --------------------------------------------------------------------------------------------------
Charles Goodson, Vice President 1998 $72,000 $-0- -0- -0-
- --------------------------------------------------------------------------------------------------
All Officers as a Group (4 persons) 1998 $144,000 $-0- -0- 30,000
- --------------------------------------------------------------------------------------------------
- ---------------------------------
</TABLE>
(1) Ms. Jeans has an option to purchase 30,000 shares of the Company's common
stock. These options are fully vested and may be exercised at the price of
$5.00 per share.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The laws of the State of Nevada and the Company's Bylaws provide for
indemnification of the Company's directors for liabilities and expenses that
they may incur in such capacities. In general, directors and officers are
indemnified with respect to actions taken in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action or proceeding, actions that
the indemnitee had no reasonable cause to believe were unlawful.
The Company has been advised that in the opinion of the Securities and
Exchange Commission, indemnification for liabilities arising under the
Securities Act is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
19
<PAGE>
EMPLOYMENT AND RELATED AGREEMENTS
STOCK OPTIONS
While the Company has not enacted a formal stock option plan for its
directors and senior executives, the Company has granted certain directors
and officers options to purchase Common Stock of the Company. Board of
Directors members, Mr. F. Bryson Farrill and Dr. Terry Lyles, were granted
options to purchase 50,000 shares of Common Stock of the Company each. The
exercise price of the option is $3.00 per share. These options are fully
vested and exercisable. Vice President, Gabrielle Jeans, has been granted an
option to purchase 30,000 shares of Common Stock at the exercise price of
$5.00 per share. Ms. Jeans' options are also fully vested and exercisable.
Former director, Edmond Lani, was granted, on July 10, 1996, a three
year option to purchase 10,000 shares of the Company's Common Stock at the
option price of $1.00 per share. Although Mr. Lani is no longer a director
of the Company, his option will not expire according to terms until July 9,
1999.
EMPLOYMENT AGREEMENTS
The Company does not currently have employment agreements with its
employees. The Company does require its franchisees to enter into a
franchise agreement with the Company.
CERTAIN TRANSACTIONS
The President and majority shareholder of the Company, Andrew Cimerman
is the sole shareholder and President of Realty World America, Inc. Realty
World America, Inc. is a real estate services company providing services to
franchises. Mr. Cimerman, concurrently with the operations of the Company,
continues to operate Realty World America, Inc. Any transactions undertaken
by Mr. Cimerman on behalf of Realty World America, Inc. which may constitute
a corporate opportunity are first presented to the Company's board of
directors for approval by a disinterested majority.
Mr. Cimerman is also the sole shareholder of Jerome's Magic World, Inc.
the owner of certain characters licensed to the Company. The license of
these characters to the Company is for an indefinite term and at no cost to
the Company.
CONFLICTS OF INTEREST
Other than as described herein, the Company is not expected to have
significant dealings with affiliates. However, if there are such dealings,
the terms of such transactions will be no less favorable to the Company than
would have been obtained from an unaffiliated third party in similar
transactions. All future transactions with affiliates will be on terms no
less favorable than could be obtained from unaffiliated third parties, and
will be approved by a majority of the disinterested directors.
A director of the Company owes fiduciary duties to the Company which may
conflict with other interests. The Company has not entered into any
noncompete, confidentiality, or similar agreements with its directors. The
fiduciary duties that directors owe to a Company include the duty not to
withhold from the Company, or appropriate, any corporate opportunity which
the Company may be able to exploit, the duty not to use for their personal
benefit or the benefit of any other individual or entity any information not
generally known which they acquire through their association with the
Company, and in short, the duty to deal fairly with the Company. The
Company's current directors intend to submit to the Company any potential
business they become aware of which may constitute a corporate opportunity to
the Company.
20
<PAGE>
The Company's officers and directors are or may become, in their
individual capacities, officers, directors, controlling shareholders or
partners of other entities engaged in a variety of businesses which may in
the future have various transactions with the Company. Thus, potential
conflicts of interest exist, including among other things, conflicts with
respect to the time, effort, and corporate opportunities involved in
participation with such other business entities and transactions. Each
officer and director of the Company may engage in business opportunities
outside the Company. An officer or director may continue any business
activity in which such officer or director engaged prior to joining the
Company. As mentioned above, the officers and directors of the Company are
aware of the fact that they owe a fiduciary duty to the Company not to
withhold any corporate opportunity from the Company which may arise because
of their association with the Company. The Company's policy is that all
transactions between the Company and any affiliates be on terms no less
favorable to the Company than could be obtained from unaffiliated third
parties.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of the date hereof (i) each
stockholder known by the Company to be the beneficial owner of more than five
percent of the outstanding Common Stock, (ii) each director of the Company,
(iii) each officer of the Company, and (iv) all directors and officers as a
group. Unless otherwise indicated, the address for each stockholder is 4100
Newport Place, Suite 730, Newport Beach, CA 92660
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
PERCENTAGE BENEFICIALLY OWNED(1)
----------------------------------------
AFTER THE
CONVERSION OF AFTER THE
NUMBER OF BEFORE PREFERRED MAXIMUM
NAME SHARES OFFERING SHARES ONLY OFFERING(2)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Andrew Cimerman 3,500,000 (3) 51.83% (3) 55.6%(3) 23.61%
- -------------------------------------------------------------------------------------------
Robert L. Cashman 121,250 2.51% 1.93% *
- -------------------------------------------------------------------------------------------
F. Bryson Farrill 50,000(4) 1.04% * *
- -------------------------------------------------------------------------------------------
Terry Lyles, Ph.D 50,000(4) 1.04% * *
- -------------------------------------------------------------------------------------------
Gabrielle Jeans 45,000(4) * * *
- -------------------------------------------------------------------------------------------
Charles Goodson -0- 0% 0% 0%
- -------------------------------------------------------------------------------------------
Brinx Capital, Inc. 250,000 5.18% 3.99% 1.69%
108 Banstock Drive
Willowdale, Ontario, Canada
- -------------------------------------------------------------------------------------------
Cede & Co. 479,428 9.94% 7.61% 3.23%
P.O. Box 222
Bowling Green Station
New York, NY
- -------------------------------------------------------------------------------------------
Ward Enterprises 316,000 6.55% 5.02% 2.13%
384 Sanctuary Court
Henderson, NV
- -------------------------------------------------------------------------------------------
All officers and directors as a 3,766,250 57.35% 59.8% 25.41%
group (6 persons)
- -------------------------------------------------------------------------------------------
</TABLE>
*Less than 1%
- -------------
21
<PAGE>
(1) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed below, based on information furnished by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect
to securities. Shares of Common Stock subject to options or warrants
currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person holding
such options or warrants, but are not deemed outstanding for purposes of
computing the percentage of any other person.
(2) Assumes the sale of all shares which are the subject of this Registration
Statement although the stock will be sold from time to time pursuant to the
terms and prices set forth in a Prospectus supplement.
(3) Mr. Cimerman is the owner of 2,500,000 shares of Common Stock and the owner
of 10,000 shares of convertible Preferred Stock Class A. This Preferred
Stock may be converted into 1,000,000 shares of Common Stock.
(4) Includes options to purchase shares of Common Stock. Mr. Farrill and Dr.
Lyles have been granted options to purchase up to 50,000 shares of Common
Stock each at the exercise price of $3.00 per share. These options are
fully vested. Ms. Jeans has been granted options to purchase up to
30,000 shares of Common Stock of the Company at the exercise price of
$5.00 per share.
PLAN OF DISTRIBUTION
The Shares will be offered and sold from time to time by the Company except
for those shares which are used to convert Preferred Stock of the Preferred
Shareholders. The Company will not receive any of the proceeds from the sale of
the Shares by the Selling Shareholders pursuant to this Prospectus. The Company
will pay all of the expenses of the registration of the Shares, but shall not
pay any commissions, discounts, and fees of underwriters, dealers, or agents.
Preferred Shareholders have the right to convert their shares to Common
Stock of the Company. Further, the Company is obligated to register sufficient
shares of Common Stock into which the Preferred Stock will be converted. There
are currently 10,325 shares of Preferred Stock issued and outstanding which may
be converted to up to 1,134,482 shares of Common Stock. The Preferred
Shareholders are entitled to sell their shares of Common Stock simultaneously
with and on the same terms and conditions imposed upon the Company.
The Preferred Shareholders and any broker-dealers acting in connection with
the sale of the Shares hereunder may be deemed to be "underwriters' within the
meaning of Section 2(11) of the Act, and any commissions received by them and
any profit realized by them on the resale of Shares as principals may be deemed
underwriting compensation under the Act.
Under the Exchange Act and the regulations thereunder, any person engaged
in a distribution of the Shares offered by this Prospectus may not
simultaneously engage in market making activities with respect to the Common
Stock of the Company during the applicable "cooling off" periods prior to the
commencement of such distribution. In addition, and without limiting the
foregoing, the Preferred Shareholders will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M, which provisions may limit the timing of purchases and
sales of Common Stock by the Preferred Shareholders.
Preferred Shareholders may also use Rule 144 under the Act to sell the
Shares if they meet the criteria and conform to the requirements of such Rule.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 10,000,000 shares
of Common Stock, $.001 par value, 100,000 shares of convertible Class A
Preferred Stock and 2,000 shares of Class AA Preferred Stock. The Company is
attaching as an exhibit to the Registration Statement Amended and Restated
Articles of Incorporation increasing the number of authorized shares of Common
Stock to 20,000,000. The Company's Transfer Agent is Oxford Transfer &
Registrar, 317 S.W. Alder, Suite 1120, Portland, Oregon, 97204.
The following summary of certain terms of the Company's securities does not
purport to be complete and is subject to, and qualified in its entirety by, the
provisions of the Company's Articles of Incorporation and Bylaws, which
22
<PAGE>
are included as exhibits to the Registration Statement of which this
Prospectus is a part, and the provisions of applicable law.
COMMON STOCK
As of the date of this Prospectus, there are 4,823,725 shares of Common
Stock, 200,000 warrants to purchase Common Stock and 140,000 options to
purchase Common Stock issued and outstanding. After the conversion of the
issued and outstanding Preferred Stock there would be 6,271,957 shares of
Common Stock issued and outstanding. After the completion of the Offering of
all shares referred to herein, 14,823,725 shares of Common Stock will be
issued and outstanding. Holders of Common Stock are entitled to one vote for
each share held of record on all matters submitted to a vote of the
stockholders. At all elections of directors of the Company, each holder of
stock possessing voting power is entitled to as many votes as equal to the
number of his or her shares of stock subject to preferences that may be
applicable to any then outstanding Preferred Stock, holders of Common Stock
are entitled to receive ratably such dividends as may be declared by the
Board of Directors out of funds legally available therefor. See "Dividend
Policy." In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference of any
then outstanding Preferred Stock. Holders of Common Stock have no right to
convert their Common Stock into any other securities. The Common Stock has
no preemptive or other subscription rights. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding
shares of Common Stock are, and the Common Stock to be outstanding upon
completion of this Offering will be, duly authorized, validly issued, fully
paid and nonassessable.
PREFERRED SHARES
CLASS A CONVERTIBLE PREFERRED SHARES
The Company created a series of preferred stock consisting of 100,000
authorized shares, of which 10,000 shares are issued and outstanding, and
designated as the "Class A Preferred Stock," having the voting powers,
preferences, relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth below.
Each share of Class A Preferred Stock has a face value of $100.00 (the "Face
Value").
The holders of shares of Class A Preferred Stock are entitled to receive,
when and as declared by the Board of Directors out of any funds at the time
legally available therefor, dividends accruing at the rate of six per cent (6%)
of the Face Value per year from the date of issuance through the date of
conversion (the "Coupon Dividend'), as well as dividends paid with respect to
each share of Common Stock for each share of Class A Preferred Stock at the same
time and on a parity with dividends paid on each share of Common Stock (the
"Common Dividend") less any Coupon Dividend paid for any such period. Each
share of Class A Preferred Stock ranks on a parity with each other share of
Class A Preferred Stock with respect to dividends. Dividend payments are paid
quarterly. Any Coupon Dividend which has accrued, but which for any reason
whatsoever, (a) has not been declared, or (b) has been declared but has not been
timely paid, shall not be deemed in arrears and shall not accumulate.
In the event of any liquidation, dissolution or winding up of the Company,
either voluntary or involuntary, subject to the rights of series of Preferred
Stock that may from time to time come into existence, the holders of Class A
Preferred Stock are entitled to receive, pari passu among them, but prior and in
preference to any distribution of any of the assets of the Company to the
holders of Common Stock by reason of their ownership thereof, an amount per
share equal to the sum of (A) the Face Value of each outstanding share of Class
A Preferred Stock, and (B) an amount equal to declared but unpaid and accrued
dividends on such share.
The Company may redeem the Class A Preferred Stock at a redemption price
equal to the Face Value per share. The holders of the Class A Preferred Stock
shall have the right to convert each share of Class A Preferred Stock to Common
Stock, at the option of the holder thereof, at any time after the date of
issuance of such share. Each Class A Preferred Stock shall be converted to
Common Stock at a price equal to the Face Value.
23
<PAGE>
The Company is obligated to register the shares of Common Stock into which
the Preferred Stock is convertible in any subsequent registration statement
filed with the Securities and Exchange Commission, so that holders for such
Common Stock shall be entitled to sell the same, simultaneously with, and upon
the terms and conditions as the securities sold for the account of the Company
pursuant to any such registration statement, subject to such lock-up provisions
as may be proposed by the underwriter and agreed by the holders.
The Class A Preferred Stock has been granted voting rights wherein the
Class A Preferred Stock is entitled to vote on such matters as the Common Stock
may vote, and are entitled to cast 1,000 votes per Class A Preferred Share. No
sinking fund has or will be established to provide for dividends or the
repurchase of the Class A Preferred Stock.
CLASS AA CONVERTIBLE PREFERRED SHARES.
The Company created a series of Preferred Stock consisting of 2,000 shares
and designated as the "Class AA Preferred Stock," having the voting powers,
preferences, relative participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth below.
Each share of Class AA Preferred Stock has a face value of $500.00 (the "Face
Value"). There are currently 325 shares of Class AA Preferred Stock issued and
outstanding.
The holders of shares of Class AA Preferred Stock (collectively, "Holders",
each a "Holder"), are entitled to receive when and as declared by the Board of
Directors out of any funds at the time legally available therefor dividends
accruing at the rate of eight per cent (8.0%) of the Face Value per year from
the date of issuance through the date of conversion (the "Coupon Dividend"), as
well as dividends paid with respect to each share of Common Stock for each share
of Class AA Preferred Stock at the same time and on a parity with dividends
paid on each share of Common Stock (the "Common Dividend") less any Coupon
Dividend paid for any such period. Each share of Class AA Preferred Stock ranks
on a parity with each other share of Class AA Preferred Stock with respect to
dividends. Dividend payments to the holders of shares of Class AA Preferred
Stock are payable quarterly. Any Coupon Dividend on the Class AA Preferred
Stock which has accrued but which, for any reason whatsoever, (a) has not been
declared, or (b) has been declared but has not been timely paid, is deemed in
arrears and shall accumulate until paid.
The Company may, at its option, at any time redeem, any or all shares of
the Class AA Preferred Stock at a redemption price equal to the Face Value per
share; provided, however, that no such redemption is permitted unless all
dividends which have accrued or accumulated on all outstanding shares of the
Class A Preferred Stock have been or are simultaneously declared and paid in
full.
In the event of any liquidation, dissolution or winding up of the Company,
subject to the rights of series of Preferred Stock that may from time to time
come into existence and subject to the rights, preferences and priorities of the
Holders of shares of Class A Preferred Stock, the Holders of Class AA Preferred
Stock are entitled to receive, pari passu among them, but prior and in
preference to any distribution of any of the assets of the Company to the
holders of Common Stock by reason of their ownership thereof, an amount per
share equal to the sum of (A) the Face Value for each outstanding share of Class
AA Preferred Stock and (B) an amount equal to declared but unpaid and accrued
dividends on such share. If, upon the occurrence of such event the assets and
funds thus distributed among the Holders of the Class AA Preferred Stock shall
be insufficient to permit the payment to such Holders of the full aforesaid
preferential amounts, then the entire assets and funds of the Company, legally
available for distribution, shall be distributed ratably among the Holders of
the Class AA Preferred Stock, in accordance with the priorities set forth.
Subject to the redemption rights, each Class AA Preferred Share is
automatically converted to Common Stock of the Company at the twelve (12) month
anniversary of the date of the issuance of such Class AA Preferred Share (the
"Conversion Date"). The number of shares of Common Stock into which each Class
AA Preferred Share will convert is determined by dividing the Face Value per
share by eighty per cent (80%) of the Market Price of the Common Stock of the
Company. The "Market Price" of the Common Stock of the Company shall equal the
average of the last quote closing bid price as reported by the National
Association of Securities Dealers Automated System (NASDAQ) for the thirty
(30)-day period ending ten (10) days prior to the Conversion Date.
24
<PAGE>
The Company is obligated to register the shares of Common Stock into which
the Preferred Shares are convertible, in any subsequent registration statement
filed by the Company with the Securities and Exchange Commission, so that
Holders of such Common Stock is entitled to sell the same simultaneously with
and upon the terms and conditions as the securities sold for the account of the
Company, pursuant to any such registration statement, and subject to such
lock-up provisions as may be proposed by the underwriter and agreed by the
Holders.
WARRANTS
As of the date of this Prospectus, there are 200,000 warrants outstanding.
S&S Acquisition Corp. holds warrants to purchase up to 200,000 shares of Common
Stock of the Company at the price of $6.00 per share. These warrants were
issued by the Company pursuant to the acquisition agreement by and between the
Company and S&S Acquisition Corp. dated January 16, 1997. The term of the
Warrants is three years from the date of issuance.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, the Company will have outstanding
14,823,725 shares of Common Stock. The Shares will be offered from time to time
at the price and terms set forth in the Prospectus Supplement.
Of the Common Stock outstanding prior to this offering, 3,759,616 were
issued and sold by the Company in private transactions in reliance on an
exemption from registration. Accordingly, such shares are "restricted shares"
within the meaning of Rule 144 and cannot be resold without registration, except
in reliance on Rule 144 or another applicable exemption from registration.
1,037,859 of the Common Stock outstanding prior to this offering were issued in
the exchange transaction with Management Dynamics, Inc. following Management
Dynamic's 1 to 4 reverse stock split. These shares are registered and trading
pursuant to that transaction.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are required to be aggregated), including any affiliate of the
Company, who beneficially owns "restricted shares" for a period of at least one
year is entitled to sell within any three-month period, shares equal in number
to the greater of (i) 1% of the then outstanding shares of Common Stock, or (ii)
the average weekly trading volume of the Common Stock during the four calendar
weeks preceding the filing of the required notice of sale with the Securities
and Exchange Commission. The seller also must comply with the notice and manner
of sale requirements of Rule 144, and there must be current public information
available about the Company. In addition, any person (or persons whose shares
are aggregated) who is not, at the time of the sale, nor during the preceding
three months, an affiliate of the Company, and who has beneficially owned
restricted shares for at least two years, can sell such shares under Rule 144
without regard to notice, manner of sale, public information or the volume
limitations described above.
UNDERWRITING
The Company has not presently entered into an underwriting agreement. The
terms of any underwriting agreement, and the identification of the underwriter,
shall be the subject of a Prospectus Supplement.
LEGAL ADVISORS
The validity of the securities offered hereby will be passed upon for the
Company by Horwitz & Beam, Irvine, California.
25
<PAGE>
EXPERTS
The Financial Statements of the Company included herein and elsewhere in
the registration statement, have been included herein and in the registration
statement in reliance on the report of Biller, Firth-Smith & Archibald,
Certified Public Accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company is not presently subject to the reporting requirements of the
Securities Exchange Act of 1934. The Company has filed with the Securities and
Exchange Commission (the "Commission") a Registration Statement on Form SB-2
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act")
with respect to the securities offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, omits certain information
contained in the Registration Statement on file with the Commission pursuant to
the Securities Act and the rules and regulations of the Commission thereunder.
The Registration Statement, including the exhibits thereto, may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Copies of such material
may be obtained by mail at prescribed rates from the Public Reference Branch of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 or free of
charge at the Commission's website of www.sec.gov in the EDGAR database.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.
26
<PAGE>
HomeLife, Inc. & Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
August 31, 1998 May 31, 1998
--------------- ------------
(unaudited)
<S> <C> <C>
Assets
------
Cash $ 313,788 223,723
Cash in trust 273,028 489,014
Accounts receivable net 214,411 231,710
Notes receivable net 529,159 911,160
Stock subscription receivable 750,000 750,000
Inventory 119,599 162,737
Prepaid expenses & deposits 79,651 39,256
Investment 375,000 --
Property & equipment net 567,509 554,654
Investment in trademarks & other intellectual assets net 1,629,198 1,632,374
------------------------
Total assets $ 4,851,343 4,994,628
------------------------
------------------------
Liabilities and Stockholders' Equity
------------------------------------
Accounts payable $ 146,753 103,792
Accrued expenses 107,084 124,183
Reserve for warranties 50,600 43,900
Trust liability 273,028 489,014
Dividends payable 9,780 10,980
Advances from stockholder 323,084 323,084
Notes payable 15,208 17,292
Income tax payable 85,177 85,177
Minority interest 40,832 35,880
------------------------
Total liabilities 1,051,546 1,233,302
------------------------
Stockholders' Equity
Common stock - authorized 10,000,000 shares, par value $.001, 4,824 4,797
issued and outstanding 4,823,725 & 4,797,475 shares respectively
Preferred stock - authorized 100,000 shares class A, par value 1,000,000 1,000,000
$100, issued and outstanding 10,000 shares
Preferred stock - authorized 2,000 shares class AA, par value 162,500 162,500
$500, issued and outstanding 325 shares
Additional Paid in Capital 2,992,481 2,992,508
Accumulated Deficit (360,008) (398,479)
------------------------
Total Stockholders' equity 3,799,797 3,761,326
------------------------
Total liabilities & Stockholders' equity $ 4,851,343 4,994,628
------------------------
------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of this statement
<PAGE>
HomeLife, Inc. & Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three months ended Three months ended
August 31, 1998 August 31, 1997
--------------- ---------------
(unaudited) (unaudited)
<S> <C> <C>
Sales
-----
Royalty & franchise fees $ 221,060 252,637
Warranty sales 75,327 58,309
Real estate sales commissions 1,738,351 --
Other income 20,254 7,035
-------------------------------
Total sales 2,054,992 317,981
Cost of Sales
-------------
Cost of sales 1,665,688 62,088
-------------------------------
Gross profit 389,304 255,893
-------------------------------
Expenses
--------
Salaries & fringe benefits 142,783 102,943
Occupancy 53,088 25,672
General & administrative 150,010 148,628
-------------------------------
Total expenses 345,881 277,243
-------------------------------
Net income (loss) before minority interest 43,423 (21,350)
Minority interest 4,952 --
-------------------------------
Net income (loss) before income tax provision 38,471 (21,350)
Income tax provision -- --
-------------------------------
Net income (loss) after income tax provision $ 38,471 (21,350)
-------------------------------
-------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of this statement
<PAGE>
HomeLife, Inc. & Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three months ended Three months ended
August 31, 1998 August 31, 1997
------------------ ------------------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities
Net Income (loss) $ 38,471 (21,350)
Adjustments to reconcile net income (loss) to net
cash used in operating activities
Depreciation and amortization 15,983 7,022
Gain on sale of investment -- 180,000
Minority interest 4,952 --
Changes in assets & liabilities
Accounts receivable 17,299 197,307
Notes receivables 382,001 (536,500)
Inventory 43,138 (165,179)
Prepaid expenses & deposits (40,395) 28,163
Accounts payable 42,961 (8,972)
Reserve for warranties 6,700 51,200
Income tax payable -- 14,400
-----------------------------------
Net cash used in operating activities 511,110 (253,909)
Cash flows from investing activities
Sale of treasury stock -- 74,500
Investment in Equity Capital (375,000) --
Sale of investment in HOA -- 120,000
Purchase of fixed assets (40,247) (423,897)
Investment in intellectual assets (2,514) (107,109)
-----------------------------------
Net cash used in investing activities (417,761) (336,506)
Cash flows from financing activities
Line of credit -- 4,478
Advances from stockholder -- 25,044
Notes payable (2,084) 39,189
Common stock issuance -- 497,603
Preferred stock issuance -- 30,000
Dividend on preferred stock (1,200) --
-----------------------------------
Net cash provided by financing activities (3,284) 596,314
Net increase (decrease) in cash 90,065 5,899
Cash at beginning of period 223,723 219,655
-----------------------------------
Cash at end of period $ 313,788 225,554
-----------------------------------
-----------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest expense 1,776 456
Tax expense 5,654 12,755
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of this statement
<PAGE>
HomeLife, Inc. & Subsidiaries
Notes to Consolidated Financial Statements
1. DESCRIPTION & ORGANIZATION OF BUSINESS
HomeLife, Inc. together with its subsidiaries is a leading provider of
services to the real estate and mortgage loan industries. The Company engages
in the following activities:
FRANCHISING
The Company franchises full service real estate brokerage offices and
provides operational and administrative services to its franchisees under the
names, HomeLife Realty Services, National Real Estate Service, Red Carpet
Real Estate Services, Red Carpet Keim, Network Real Estate and International
Estates.
MORTGAGE FINANCING
The Company is a mortgage financing services provider through its subsidiary,
MaxAmerica Financial Services.
RETAIL REAL ESTATE BROKERAGE SERVICES
The Company owns and operates a full service retail real estate brokerage
through its subsidiary Builders Realty LTD.
HOME WARRANTY
The Company is a provider of home warranty coverage through its subsidiary,
Guardian Home Warranty Company.
RELOCATION
The Company provides relocation services through its Freeway Relocation
Services affiliate
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the parent
corporation, HomeLife, Inc. and its wholly owned subsidiaries, HomeLife
Realty Services, Inc., FamilyLife Realty Services, Inc., MaxAmerica Financial
Services, Inc., HomeLife California Realty, Inc., Red Carpet Broker Network,
Inc., National Sellers Network, Inc., Builders Realty LTD, and majority owned
The Keim Group Ltd and Guardian Home Warranty Company. During the
consolidation, all intercompany transactions and balances were eliminated.
The financial statements of the Company's Canadian subsidiary, Builders
Realty Ltd, were translated into U.S. dollars at period-end exchange rates.
RECOGNITION OF REVENUE
Income from the sale of franchises is recorded on the franchise contract
agreement date. Royalty income stemming from the gross commissions on the
sales of real estate by the franchise offices is recognized at the date of
receipt. This is due to the complexity of attempting to forecast the actual
closing date of the properties. Warranty income is recognized when the
warranty contract is signed by the customer.
<PAGE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts of assets and liabilities and
disclosures of contingent assets and amounts of revenue and expenses during
the reporting period. Actual results could differ from these estimates.
RESERVE FOR WARRANTIES
Guardian Home Warranty Company, a subsidiary of HomeLife, Inc. accrues a
reserve for warranty claims based on gross premium income.
INVENTORY
Inventory is valued at the lower of cost or market. Inventory consists
entirely of promotional materials.
DEPRECIATION AND AMORTIZATION
Property and equipment are stated at cost. Depreciation is computed using
straight-line over the useful lives of the assets. Amortization of intangible
assets is computed using a useful life between fifteen and forty years.
<TABLE>
<CAPTION>
August 31, May 31,
1998 1998
----------- ----------
<S> <C> <C>
3. NOTES RECEIVABLE.
Notes receivable at August 31, 1998 consisted of the following:
Note receivable from HomeLife Securities, Inc., unsecured, non-interest
bearing. Payment in full was extended to December 31, 1998. $ 162,000 162,000
Note receivable from Ward Enterprises sold to Equity Capital Group for stock in
that company. See note 6 to the consolidated financial statements -- 374,500
Note receivable arising from the sale of a franchise agreement. Note is
unsecured and non-interest bearing. The note is discounted at a rate of 6% and
is payable in annual installments due through the year 2003. 155,801 155,801
Note receivable arising from the sale of an existing franchise agreement. The
note is unsecured and bears interest at a rate of 3% per year. The note is
payable on demand after April 13, 1999. 192,499 200,000
Notes receivable from existing franchises for franchise fees. These notes are
unsecured, non-interest bearing and payable in installments over one year. 18,859 18,859
----------- ----------
$ 529,159 911,160
----------- ----------
----------- ----------
4. STOCK SUBSCRIPTION RECEIVABLE
On May 15, 1998, the Company entered into an agreement to sell 300,000 shares
of the Company's common stock in exchange for cash. The exchange is anticipated
to take place prior to year-end. $ 750,000 750,000
----------- ----------
----------- ----------
<PAGE>
<CAPTION>
August 31, May 31,
1998 1998
----------- ----------
<S> <C> <C>
5. INVENTORY
Inventory consisted of posters, brochures, video and cassette tapes. $ 119,599 162,737
----------- ----------
----------- ----------
6. INVESTMENT
Effective June 30, 1998, the Company sold the notes receivable from Ward
Enterprises totaling $374,500 to Equity Capital Group, Inc. for 75,000
shares of common stock in that company. The stock is valued at $375,000.
A major stockholder of HomeLife, Inc. is also a stockholder in Equity
Capital Group, Inc. $ 375,000 --
----------- ----------
----------- ----------
7. PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
Furniture & fixtures $ 277,902 275,811
Computers and equipment 600,868 582,492
Automobile 19,865 19,865
----------- ----------
898,635 878,168
Less: accumulated depreciation (331,126) (323,514)
----------- ----------
$ 567,509 554,654
----------- ----------
----------- ----------
8. INVESTMENT IN TRADEMARKS AND OTHER INTELLECTUAL ASSETS
Investments in trademarks and other intellectual assets are
summarized as follows:
Goodwill $ 829,172 837,759
Trademarks 670,000 670,000
Franchise rights 150,000 150,000
Organization costs 76,888 74,458
----------- ----------
1,726,060 1,732,217
Less: accumulated amortization (96,862) (99,843)
----------- ----------
$ 1,629,198 1,632,374
----------- ----------
----------- ----------
9. DEPOSITS
As of August 31, 1997, the Company has deposits outstanding
for lease agreements on their premises. $ 9,060 9,060
----------- ----------
----------- ----------
10. NOTES PAYABLE
Note payable, bank, secured by a certificate of deposit with monthly
payments of $1042 plus interest at 9.5% due 1999 future maturities
are as follows: $ 15,208 17,292
----------- ----------
----------- ----------
1998 $ 10,000 10,000
1999 5,208 7,292
----------- ----------
$ 15,208 17,292
----------- ----------
----------- ----------
</TABLE>
<PAGE>
11. RELATED PARTY TRANSACTIONS
The Company has received a promissory note in the amount of $162,000 U.S.
Dollars from HomeLife Securities, Inc. (a Canadian corporation). HomeLife
Securities, Inc. is 100% owned by a stockholder of HomeLife, Inc. The
promissory note arose from the acquisition of HomeLife Realty U.S.
Partnership from HomeLife Securities, Inc., a 99% owner of the now terminated
partnership. The note was due December 31, 1997 and has been extended for one
year to December 31, 1998.
In order to finance the purchase of the majority owned subsidiaries, The Keim
Group and Guardian Home Warranty Company, a major stockholder advanced
$130,432 to the Company. The advancement is non-interest bearing and due on
demand.
In order to finance the purchase of the Canadian corporation, Builders
Realty, a major stockholder advanced $158,040 USD to the Company. The
advancement is non-interest bearing and due on demand.
12. CONTINGENT LIABILITIES
In the purchase agreements for The Keim Group, Guardian Home Warranty
Company, and Builders Realty, the Company issued stock as part of the
purchase price. The value of the stock issued was set at $5.00 per share
which was substantially over the current market value. The Company agreed
that if the actual market value of the stock did not reach $5.00 per share
within two years, for the stockholders of The Keim Group and Guardian Home
Warranty Company and within one year for the stockholders of Builders Realty,
each stockholder would be issued either additional shares of HomeLife, Inc.
stock or cash to complete the transaction.
The agreement for the stock subscription receivable provides for additional
stock to be issued. The terms are for one year from the date of the
agreement, the stock subscriber has the option to acquire up to 400,000
additional shares of common stock at $3.00 per share.
<PAGE>
HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
WITH
REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
MAY 31, 1998 AND 1997
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent auditor's report 1
Financial statements
Consolidated balance sheets 2
Consolidated statements of operations 3
Consolidated statements of stockholder's equity 4
Consolidated statements of cash flows 5-6
Notes to consolidated financial statements 7-13
Independent accountant's report on additional information 14
Supporting schedule of general and administrative expenses 15
</TABLE>
<PAGE>
[LETTERHEAD]
To the Board of Directors and
Stockholders of HomeLife Inc.
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheet of
HomeLife Inc. and subsidiaries as of May 31, 1998 and 1997, and the
related consolidated statements of income, stockholders equity and
cash flows for the two years ended May 31, 1998, 1997 and five
months and year ended May 31, 1996 in accordance with Statements on
Standards for Accounting and Review Services issued by the American
Institute of Certified Public Accountants. All information included
in these financial statements is the representation of the
management of HomeLife, Inc.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
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
HomeLife, Inc and subsidiaries as of May 31, 1998 and 1997 and the
results of its operations and its cash flows for the two years
ended May 31, 1998, 1997 and five months and year ended May 31,
1996 in conformity with generally accepted accounting principles.
/s/ Biller, Frith-Smith & Archibald
Tarzana, California
June 29, 1998
<PAGE>
2
HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 31,
ASSETS 1998 1997
---- ----
<S> <C> <C>
Cash $ 223,723 $ 232,403
Cash in trust 489,014 --
Accounts receivable, trade, less allowance for
doubtful accounts of $25,803 & $6,021 respectively 197,543 90,659
Other receivables 34,167 200,000
Inventory 162,737 165,179
Notes receivable 911,160 536,500
Stock subscription receivable 750,000 --
Prepaid expenses 30,196 10,731
Property and equipment, at cost, net of accumulated
depreciation of $323,514 & $194,143 respectively 554,654 527,273
Investment in trademarks and other intellectual
assets, net of accumulated amortization
of $99,843 & $59,668 respectively 1,632,374 1,228,115
Deposits 9,060 9,060
------------- -------------
$ 4,994,628 2,999,920
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 103,792 $ 125,877
Accrued expenses 124,183 41,311
Reserve for warranties 43,900 54,000
Revolving line of credit -- 4,478
Dividends payable 10,980 --
Income tax payable 85,177 14,400
Advances from stockholder 323,084 150,044
Trust liability 489,014 --
Notes payable 17,292 19,792
Minority interest 35,880 26,703
STOCKHOLDERS' EQUITY
Common stock, par value of $.001
Authorized--10,000,000 shares
Issued and outstanding--4,797,475 & 3,920,785
shares respectively 4,797 3,921
Convertible preferred stock 6% non-cumulative:
Authorized--100,000 shares, issued and outstanding--10,000 1,000,000 1,000,000
Convertible preferred stock 8% cumulative:
Authorized--2,000 shares, issued and outstanding--325 162,500 --
Additional paid in capital 2,992,508 2,084,804
Accumulated deficit (398,479) (525,410)
------------- -------------
$ 4,994,628 $ 2,999,920
------------- -------------
------------- -------------
</TABLE>
The accompanying independent auditor's report and notes are an integral part of
these financial statements
<PAGE>
3
HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FIVE MONTHS
YEAR ENDED YEAR ENDED AND YEAR ENDED
MAY 31, 1998 MAY 31, 1997 MAY 31, 1996
------------ ------------ --------------
<S> <C> <C> <C>
Gross sales $ 2,001,036 $ 981,938 $ 5,139
General & administrative (1,990,286) (1,144,117) (10,844)
------------ ------------- -----------
Gross profit (loss) $ 10,750 $ (162,179) $ (5,705)
OTHER INCOME (EXPENSES)
Sale of franchises 200,000 -- --
Gain on sale of investments -- 180,000 --
Interest expense (3,004) (3,980) --
Forgiveness of debt -- 69,375 --
Interest income 14,362 5,645 --
------------ ------------- -----------
211,358 251,040 --
------------ ------------- -----------
Consolidated net income
before minority interest $ 222,108 $ 88,861 $ (5,705)
Minority interest in subsidiaries (9,177) (16,099) --
Consolidated income before income
tax provision 212,931 72,762 (5,705)
Income tax provision (73,000) (16,000) --
------------ ------------- -----------
Consolidated net income (loss) $ 139,931 $ 56,762 $ (5,705)
------------ ------------- -----------
------------ ------------- -----------
</TABLE>
The accompanying independent auditor's report and notes are an integral part of
these financial statements
<PAGE>
4
HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
YEAR ENDED MAY 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
Common Stock Preferred Stock-6% Preferred Stock-8% Treasury Stock
Shares Amount Shares Amount Shares Amount Shares Amount
--------- ------ ------ ---------- ------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, May 31, 1995 1,037,859 $1,038 - $ - - $ - 630,500 $(74,500)
Issuance of Common Stock 2,647,926 2,648
Issuance of Preferred Stock 10,000 1,000,000
Net Loss
--------- ------ ------ ---------- --- -------- -------- --------
Balance, May 31, 1996 3,685,785 3,686 10,000 1,000,000 - - 630,500 (74,500)
Issuance of Common Stock 235,000 235
Sale of Treasury stock (630,500) 74,500
Net Income
--------- ------ ------ ---------- --- -------- -------- --------
Balance, May 31, 1997 3,920,785 3,921 10,000 1,000,000 - - - -
Issuance of Common Stock 876,690 876
Issuance of Preferred Stock 325 162,500
Issuance of Preferred
Stock dividend
Net Income
--------- ------ ------ ---------- --- -------- -------- --------
Balance, May 31, 1998 4,797,475 $4,797 10,000 $1,000,000 325 $162,500 - $ -
--------- ------ ------ ---------- --- -------- -------- --------
--------- ------ ------ ---------- --- -------- -------- --------
<CAPTION>
Additional
Paid-in Accumulated
Capital Deficit
---------- -----------
<S> <C> <C>
Balance, May 31, 1995 $ 562,949 $(576,467)
Issuance of Common Stock 837,390
Issuance of Preferred Stock
Net Loss (5,705)
---------- ---------
Balance, May 31, 1996 1,400,339 (582,172)
Issuance of Common Stock 684,465
Sale of Treasury stock
Net Income 56,762
---------- ---------
Balance, May 31, 1997 2,084,804 (525,410)
Issuance of Common Stock 907,704
Issuance of Preferred Stock
Issuance of Preferred
Stock dividend (13,000)
Net Income 139,931
---------- ---------
Balance, May 31, 1998 $2,992,508 $(398,479)
---------- ---------
---------- ---------
</TABLE>
The accompanying independent auditor's report and notes are an integral part
of these financial statements
<PAGE>
5
HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Five months
Year ended Year ended and year ended
May 31, 1998 May 31, 1997 May 31, 1996
------------ ------------ --------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ 139,931 $ 56,762 $ (5,705)
Adjustments to reconcile net loss to net cash used
in operating activities
Depreciation and amortization 68,755 82,286 -
Gain on sale of investment - (180,000) -
Minority interest 9,177 26,703 -
Changes in assets & liabilities
Accounts receivable (106,884) 226,448 -
Notes & other receivables (208,827) (468,810) (92,700)
Inventory 2,442 (35,815) -
Stock subscription receivable (750,000) - -
Prepaid expenses (19,465) (2,571) -
Deposits - 110,940 (120,000)
Accounts payable (22,085) 116,542 (35,000)
Reserve for warranties (10,100) 54,000 -
Income tax payable 70,777 14,400 -
---------- --------- ---------
Net cash used in operating activities (826,279) 885 (253,405)
Cash flows from investing activities
Treasury stock - 74,500 -
Sale of investment - 300,000 -
Purchase of fixed assets (29,336) (189,668) -
Investment in intellectual assets (388,187) (354,882) -
Investment in marketable securities - - (120,000)
---------- --------- ---------
Net cash used in investing activities (417,523) (170,050) (120,000)
Cash flows from financing activites
Proceed from line of credit (4,478) 4,478 -
Proceed from stockholder 155,428 150,044 -
Proceeds from loan payable 15,112 17,792 -
Proceeds from common stock issuance 908,580 101,268 125,610
Proceeds from preferred stock issuance 162,500 - 4,048
Payment of dividend on preferred stock (2,020) - -
---------- --------- ---------
Net cash provided by financing activities 1,235,122 273,582 129,658
Net increase (decrease) in cash (8,680) 104,417 (243,747)
Cash at beginning of period 232,403 127,986 371,733
---------- --------- ---------
Cash at end of period $ 223,723 $ 232,403 $ 127,986
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest expense $ 3,004 $ 3,980 -
Income tax expense $ 5,089 $ 12,810 -
</TABLE>
The accompanying independent auditor's report and notes are an integral part
of these financial statements
<PAGE>
6
HOMELIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NON-CASH INVESTING AND FINANCIAL ACTIVITIES
During fiscal year end May 31, 1996, the Company acquired $1,047,597 in
assets (net of cash) and assumed $51,645 in liabilities of HomeLife U.S.
Partnership in exchange for 10,000 shares of preferred stock at a par value
of $100.
During fiscal year end May 31, 1996, the Company acquired $269,614 in assets
(net of cash) and assumed $22,199 in liabilities of HomeLife Realty Services,
Inc. in exchange for 2,500,000 shares of common stock at a value of $250,000.
During fiscal year end May 31, 1996, the Company issued 112,528 additional
shares of common stock at a par value of $.001 to compensate for the stock
subscription deposits received on November 30, 1995.
During fiscal year end May 31, 1997, the Company acquired $350,000 in fixed
assets from S&S Acquisition Corporation in exchange for 70,000 shares of
common stock.
During fiscal year end May 31, 1997, the Company issued 46,662 shares of
common stock at a value of $233,310 as part of the purchase price for The
Keim Group, LTD. and Guardian Home Warranty Company.
During fiscal year end May 31, 1997, the Company sold its investment of
30,000 shares of HOA Property Management Company stock and its treasury stock
of 630,500 shares, for a note in the amount of $375,000.
During fiscal year end May 31, 1998, the Company issued 160 shares of
preferred stock valued at $80,000 in exchange for the licensing agreements
and trademarks of Network Real Estate, Inc.
During the fiscal year end May 31, 1998, the Company acquired $65,227 in
assets (net of cash) of Builders Realty, LTD. in exchange for 36,000 shares
of common stock at a value of $158,040.
The accompanying independent auditor's report and notes are an integral
part of these financial statements
<PAGE>
7
HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
HomeLife, Inc. together with its subsidiaries is a leading provider of
services to the real estate and mortgage loan industries. The Company
engages in the following activities:
FRANCHISING
The Company franchises full service real estate brokerage offices and
provides operational and administrative services to its franchisees under
the names, Homelife Reality Services, National Real Estate Service, Red
Carpet Real Estate Services, Red Carpet Keim, Network Real Estate and
International Estates.
MORTGAGE FINANCING
The Company is a mortgage financing services provider through its
subsidiary, MaxAmerica Financial Services.
RETAIL REAL ESTATE BROKERAGE SERVICES
The Company owns and operates a full service retail real estate brokerage
through its subsidiary, Builders Realty LTD.
HOME WARRANTY
The Company is a provider of home warranty coverage through its
subsidiary, Guardian Home Warranty Company.
RELOCATION
The Company provides relocation services through its Freeway Relocation
Services affiliate.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Company was incorporated on October 9, 1995 under the laws of the
state of Nevada. The Company completed a combination under the pooling of
interest method with Management Dynamics, Inc., whose year-end was
December. The surviving corporation, Homelife, Inc., elected to adopt a
May fiscal year-end. On May 30, 1996, the Company acquired 100% of the
stock of HomeLife Realty Services, Inc. and a 99% interest in HomeLife
Realty U.S., L.P.
Effective September 1, 1996, the Company purchased a majority interest in
The Keim Group LTD and Guardian Home Warranty Company. The Company
purchased 95% of the outstanding stock from the stockholders of The Keim
Group LTD and 79.5% of the outstanding stock of Guardian Home Warranty
Company in exchange for cash and HomeLife Inc. common stock.
<PAGE>
8
HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In addition, the Company set up a new corporation, FamilyLife Realty
Services, Inc. during the fiscal year end May 31, 1997, as a franchisor
for additional real estate brokerage offices franchised during the year.
FamilyLife Reality Services, Inc. had no activity during the fiscal year
end May 31, 1998.
On January 16, 1997, the Company acquired the assets of S&S Acquisition
Corporation which consisted of existing franchised real estate offices
and trademarks. The transaction was for cash and Homelife, Inc. common
stock and was valued at $400,000.
During the current fiscal year, the Company set up several new
corporations. The new corporations include MaxAmerica Financial Services,
Inc. which will be originating real estate loans, Homelife California
Realty, Inc. which will be a full service real estate operation, Red
Carpet Broker Network and National Sellers Network, Inc., which will be
licensing real estate brokerages.
On July 12, 1997, the Company purchased the existing franchised real
estate offices and trademarks of Network Real Estate for cash and
preferred stock. The total transaction was valued at $100,000.
On February 27, 1998, the Company acquired all the stock of Builders
Realty LTD, a Canadian Corporation, by issuing 36,000 shares of common
stock and cash of $158,040 USD. The total transaction was valued at
$316,080 USD.
PRINCIPLES OF CONSOLIDATION
During the fiscal year May 31, 1998, the Company consolidated its wholly
owned and majority owned subsidiaries under the purchase method of
accounting for business combinations. The consolidated financial
statements include the accounts of the parent corporation, HomeLife, Inc.
and its wholly owned subsidiaries, HomeLife Realty Services, Inc.,
FamilyLife Realty Services, Inc., MaxAmerica Financial Services, Inc.,
HomeLife California Realty, Inc., Red Carpet Broker Network, Inc.,
National Sellers Network, Inc., Builders Realty LTD, and majority owned
The Keim Group LTD and Guardian Home Warranty Company. During the
consolidation, all intercompany transactions and balances were
eliminated. The financial statements of the Company's Canadian
Subsidiary, Builders Realty LTD, were translated into U.S. dollars at
year end exchange rates.
RECOGNITION OF REVENUE
Income from the sale of franchises is recorded on the franchise contract
agreement date. Royalty income stemming from the gross commissions on the
sales of real estate by the franchise offices is recognized at the date
of receipt. This is due to the complexity of attempting to forecast the
actual closing date of the properties. Warranty income is recognized
when the warranty contract is signed by the customer.
<PAGE>
9
HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts of assets and
liabilities and disclosures of contingent assets and amounts of revenue
and expenses during the reporting period. Actual results could differ
from these estimates.
RESERVE FOR WARRANTIES
Guardian Home Warranty Company, a subsidiary of Homelife, Inc. accrues a
reserve for warranty claims based on gross premium income.
INVENTORY
Inventory is valued at the lower of cost or market. Inventory consists
entirely of promotional materials.
DEPRECIATION AND AMORTIZATION
Property and equipment are stated at cost. Depreciation is computed using
straight-line over the useful lives of the assets. Amortization of
intangible assets is computed using a useful life between fifteen and
forty years.
3. ACCOUNTS RECEIVABLE-OTHER
On August 9, 1995, the Company accepted a quit claim deed on a commercial
building as security on the sale of an area franchise. The purchase price
for the area franchise was $200,000. This transaction was voided during
fiscal year-end 1998 and resulted in a write-off of the $200,000 in
franchise fee income.
During the fiscal year ending May 31, 1998, the Company did carry for
short periods, advances to employees when related to company business in
the amount of $34,167.
4. NOTES RECEIVABLE
<TABLE>
<CAPTION>
May 31,
1998 1997
---- ----
<S> <C> <C>
Notes receivable at May 31, 1998
consisted of the following:
Note receivable from Homelife Securities, Inc.
unsecured, non-interest bearing. Payment in full was
extended from December 31, 1997 to June 30, 1998 $ 162,000 $ 162,000
</TABLE>
<PAGE>
10
HOMELIFE, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. NOTES RECEIVABLE (CONTINUED)
<TABLE>
<CAPTION>
May 31,
1998 1997
---- ----
<S> <C> <C>
Notes receivable at May 31, 1998 consisted of the
following:
Note receivable from Ward Enterprises, Inc., unsecured,
non-interest bearing, and payable in $100,000
increments at April 1, 1998, July 1, 1998 and December
31, 1998. These note payments were extended by ninety
days during 1998. 300,000 300,000
Note receivable from Ward Enterprises, Inc., unsecured,
non-interest bearing, and payable on December 31, 1997.
This note was extended to June 30, 1998. 74,500 74,500
Note receivable arising from the sale of a franchise
agreement. Note is unsecured and non-interest bearing.
The note is discounted at a rate of 6% and is payable
in annual installments due through the year 2003. 155,801 -
Note receivable arising from the sale of an existing
franchise agreement. The note is unsecured and bears
interest at a rate of 3% per year. The note is payable
on demand after April 13, 1999. 200,000 -
Notes receivable from existing franchises for franchise
fees. These notes are unsecured, non-interest bearing
and payable in installments over one year. 18,859 -
---------- ----------
$ 911,160 $ 536,500
---------- ----------
---------- ----------
</TABLE>
5. STOCK SUBSCRIPTION RECEIVABLE
On May 15, 1998, the Company entered into an agreement
to sell 300,000 shares of the Company's common stock
in exchange for cash of $750,000. The exchange is
anticipated to take place within 90 days from the date of the
agreement.
<PAGE>
11
HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. INVENTORY
<TABLE>
<CAPTION>
May 31,
1998 1997
---- ----
<S> <C> <C>
Inventory at May 31, 1998 and 1997, consisted of posters,
brochures, video and cassette tapes. $ 162,737 $ 165,179
---------- ----------
---------- ----------
</TABLE>
7. PROPERTY AND EQUIPMENT
Property and equipment are summarized
as follows:
<TABLE>
<S> <C> <C>
Furniture & fixtures $ 275,811 $ 160,964
Computers and equipment 582,492 540,587
Automobile 19,865 19,865
---------- ----------
878,168 721,416
Less: accumulated depreciation (323,514) (194,143)
---------- ----------
$ 554,654 $ 527,273
---------- ----------
---------- ----------
</TABLE>
Depreciation expense totaled $34,632 for the year ended May 31, 1998.
8. INVESTMENT IN TRADEMARKS AND OTHER INTELLECTUAL ASSETS
Investments in trademarks and other intellectual assets are
summarized as follows:
<TABLE>
<S> <C> <C>
Goodwill $ 837,759 $ 561,510
Trademarks 670,000 570,000
Franchise rights 150,000 150,000
Organization costs 74,458 25,000
---------- ----------
1,732,217 1,306,510
Less: accumulated amortization (99,843) (78,395)
---------- ----------
$1,632,374 $1,228,115
---------- ----------
---------- ----------
</TABLE>
Amortization expense totaled $34,123 for the year ended May 31, 1998.
9. DEPOSITS
As of May 31, 1997, the Company has deposits outstanding of $9,060
for the lease agreements on their premises.
<PAGE>
12
HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. NOTES PAYABLE
<TABLE>
<CAPTION>
May 31,
1998 1997
---------- ----------
<S> <C> <C>
Note payable, bank, secured by
a certificate of deposit with
monthly payments of $1042 plus
interest at 9.5% due 1999 $ 17,292 $ 19,792
---------- ----------
---------- ----------
</TABLE>
Future maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Year ending May 31,
-------------------
<S> <C> <C>
1998 $ 10,000 $ 12,500
1999 7,292 7,292
---------- ----------
$ 17,292 $ 19,792
---------- ----------
---------- ----------
</TABLE>
11. INCOME TAXES
The components of the provision for income taxes for
May 31, 1998 are as follows:
<TABLE>
<CAPTION>
Federal States Total
------- ------ -----
<S> <C> <C> <C>
Current $ 61,000 $ 23,000 $ 84,000
Less: Benefit from net operating loss
carry forward 11,000 - 11,000
---------- ---------- ----------
$ 50,000 $ 23,000 $ 73,000
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
12. COMMITMENTS
The Company is obligated under long-term, noncapitalized
operating leases for its premises which expire December
31, 1998, June 30, 2001. October 31, 2001 and August
31, 2002. Annual lease payments, exclusive of property taxes
and insurance are summarized as follows:
<TABLE>
<CAPTION>
Year ending May 31,
-------------------
<S> <C>
1999 $ 142,182
2000 124,649
2001 125,074
2002 41,589
----------
$ 433,494
----------
----------
</TABLE>
<PAGE>
13
HOMELIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. RELATED PARTY TRANSACTIONS
The Company has received a promissory note in the amount of $162,000 U.S
Dollars from Homelife Securities, Inc. (a Canadian corporation). Homelife
Securities, Inc. is 100% owned by a stockholder of Homelife, Inc. The
promissory note arose from the acquisition of Homelife Realty U.S Partnership
from Homelife Securities, Inc., a 99% owner of the now terminated
partnership. The note was due December 31, 1997 and has been extended for one
year to December 31, 1998.
In order to finance the purchase of the majority owned subsidiaries, The Keim
Group LTD, and Guardian Home Warranty Company, a major stockholder advanced
$130,432 to Homelife, Inc. The advance is non-interest bearing and due on
demand.
In order to purchase the Canadian Corporation, Builders Realty, LTD, a major
stockholder advanced $158,040 USD to the Company. The advancement is
non-interest bearing and due on demand.
14. CONTINGENT LIABILITIES
In the purchase agreements for The Keim Group, LTD, Guardian Home Warranty
Company, and Builders Realty, LTD, the Company issued stock as part of the
purchase price. The value of the stock issued was set at $5.00 per share
which was substantially over the current market value. The Company agreed
that if the actual market value of the stock did not reach $5.00 per share
within two years, for the stockholders of The Keim Group LTD and Guardian
Home Warranty Company and within one year for the stockholders of Builders
Realty, LTD, each stockholder would be issued either additional shares of
HomeLife, Inc. stock or cash to complete the transaction.
The agreement for the stock subscription receivable provides for additional
stock to be issued. The terms are for one year from the date of the
agreement, the stock subscriber has the option to acquire up to 400,000
additional shares of common stock at $3.00 per share.
15. SUBSEQUENT EVENTS
Effective June 30, 1998, the Company sold the two notes receivable from Ward
Enterprises totaling $374,500 to Equity Capital Group, Inc. for 75,000 shares
of common stock in that company. The transaction will be valued at $375,000.
A major stockholder of HomeLife, Inc. is also a stockholder in Equity Capital
Group, Inc.
<PAGE>
Board of Directors
HomeLife, Inc. and Subsidiaries
INDEPENDENT ACCOUNTANT'S REPORT ON ADDITIONAL INFORMATION
- ---------------------------------------------------------
Our report on our audit of the consolidated financial statements of HomeLife,
Inc. for the years ended May 31, 1998 and 1997 and five months and year ended
May 31, 1996 appears on page one. That audit was made for the purpose of
forming an opinion on the consolidated financial statements taken as a whole.
The supporting schedule of general and administrative expenses is presented
for purposes of additional analysis and is not a required part of the
consolidated financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the consolidated financial statements taken as a whole.
Tarzana, California
June 29, 1998
<PAGE>
HOMELIFE, INC. AND SUBSIDIARIES
SUPPORTING SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
<TABLE>
<CAPTION>
Five months
Year ended Year ended and year ended
May 31, 1998 May 31, 1997 May 31, 1996
------------ ------------ ------------
<S> <C> <C> <C>
Accounting $ 43,660 $ 54,007 -
Advertising 21,113 34,166 -
Agent fees 2,952 11,863 -
Amortization 34,123 50,195 -
Artwork & Production 3,642 8,366 -
Automobile 18,256 35,693 -
Bad debt - 14,008 -
Realtor Commissions 645,303 - -
Computer 37,038 - -
Consulting - 130,357 -
Conversion 31,580 11,500 -
Depreciation 34,632 32,091 -
Dues & subscriptions 8,695 3,891 -
Employee welfare 21,719 13,857 -
Entertainment and meals 4,079 5,188 -
Equipment rental 3,998 20,223 -
Inspection fees 38,078 29,655 -
Insurance 6,528 7,008 -
Licenses fees & permits 3,909 3,800 5,716
Office 39,572 29,728 128
Outside service 164,075 1,897 -
Payroll taxes 62,895 54,246 -
Postage 16,303 13,745 -
Printing 21,700 24,276 -
Professional fees 4,678 33,639 5,000
Promotion 31,122 8,353 -
Rent 108,559 98,193 -
Repairs & maintenance 6,769 7,980 -
Salaries 404,575 241,573 -
Taxes and licenses 5,089 12,810 -
Telephone 56,913 45,576 -
Training 12,682 17,877 -
Travel 24,224 26,113 -
Utilities 4,019 - -
Warranty claims 67,806 62,243 -
------------ ------------ ------------
$ 1,990,286 $ 1,144,117 $ 10,844
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF. THE SHARES REFERRED TO HEREIN SHALL ONLY BE OFFERED UPON THE TERMS,
PRICE, AND CONDITIONS SET FORTH IN A SUPPLEMENT PROSPECTUS FILED FROM TIME TO
TIME.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary 1
Risk Factors 4
Dilution 7
Use of Proceeds 7
Dividend Policy 7
Capitalization 8
Selected Financial Data 9
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Business of the Company 12
Management 18
Employment and Related Agreements 20
Certain Transactions 20
Principal Stockholders 21
Plan of Distribution 22
Description of Securities 22
Shares Eligible for Future Sale 25
Underwriting 25
Legal Advisors 25
Experts 26
Additional Information 26
Index to Financial Statements F-1
</TABLE>
--------------------------
10,000,000 SHARES OF COMMON STOCK
HOMELIFE, INC.
----------
PROSPECTUS
----------
--------------------------
OCTOBER 21, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
HOMELIFE, INC.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The laws of the State of Nevada and the Company's Bylaws provide for
indemnification of the Company's directors for liabilities and expenses that
they may incur in such capacities. In general, directors and officers are
indemnified with respect to actions taken in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action or proceeding, actions that
the indemnitee had no reasonable cause to believe were unlawful.
The Company has been advised that in the opinion of the Securities and
Exchange Commission, indemnification for liabilities arising under the
Securities Act is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In October 1995, the Company issued 1,037,859 shares of Common Stock to
Stockholders of Management Dynamics, Inc. as consideration for the
acquisition of Management Dynamics, Inc.
In November 1995, the Company issued 81,692 shares of its Common Stock
to 98 non-U.S. investors in consideration of payment of $326,768. This
transaction was exempt from the registration provisions of the Act by virtue
of Regulation S of the Act, as transactions by an issuer not involving any
public offering and including non-U.S. residents.
In January 1996, the Company issued 44,236 shares of its Common Stock to
38 investors for payment of $176,944. This transaction was exempt from the
registration provisions of the Act by virtue of Section 4(2) of the Act and
Rule 504 of Regulation D, as transactions by an issuer not involving any
public offering.
In May 1996, 2,500,000 shares of Common Stock and 10,000 shares of Class
A Preferred Stock was issued to Andrew Cimerman for the acquisition of
HomeLife Realty Services, Inc. and HomeLife Realty Services, US Limited
Partnership. This transaction was exempt from the registration provisions of
the Act by virtue of Section 4(2) of the Act as transactions by an issuer not
involving any public offering.
Also in May 1996, 21,250 shares of Common Stock were issued for
consideration of $85,000 to The Charleston Group. This transaction was exempt
from registration pursuant to Rule 504 of Regulation D of the Act as
transactions by an issuer not involving any public offering.
In August 1996, 46,662 shares of Common Stock were issued to the
Stockholders of Keim Group Ltd. for the acquisition of Keim Group Ltd. This
transaction was exempt from the registration provisions of the Act by virtue
of Section 4(2) of the Act, as transactions by an issuer not involving a
public offering.
In January 1997, 70,000 shares of Common Stock were issued to S&S
Acquisition Corp. for the acquisition of the assets of S&S Acquisition Corp.
This transaction was exempt from the registration provisions of the Act by
virtue of Section 4(2) of the Act, as transactions by an issuer not involving
a public offering.
In March 1997, the Company issued 13,933 shares of Common Stock for
$24,999 to non-U.S. resident investors pursuant to Regulation S of the Act.
This transaction was exempt from the registration provisions of the Act
II-1
<PAGE>
by virtue of Section 4(2) of the Act, as transactions by an issuer not
involving a public offering and Regulation S of the Act as transactions
involving non-U.S. investors.
In June 1996, the Company issued 21,998 shares of Common Stock for
$22,895 to an individual investor and fractional shares to Management
Dynamics' former shareholders pursuant to Rule 504 of Regulation D of the Act
as transactions by an issuer not involving any public offering.
In July 1997, the Company issued 160 shares of Class AA Preferred Stock
for the acquisition of tradenames and licensing agreements of Network Real
Estate, Inc. This transaction was exempt from the registration provisions of
the Act by virtue of Section 4(2) of the Act, as transactions by an issuer
not involving a public offering.
In August 1997, the Company issued 165 shares of Class AA Preferred
Stock for $162,500 to 33 investors in a private offering pursuant to
Regulation D of the Act. This transaction was exempt from the registration
provisions of the Act by virtue of Section 4(2) of the Act, as transactions
by an issuer not involving a public offering.
In September 1997, the Company issued 645,095 shares of Common Stock to
83 investors who invested a total of $829,890 pursuant to Rule 504 of
Regulation D of the Act. This transaction was exempt from the registration
provisions of the Act by virtue of Section 4(2) of the Act, as transactions
by an issuer not involving a public offering.
In February 1998, the Company issued 36,000 shares of Common Stock to
stockholders of Builders Realty Ltd. for the acquisition of Builders Realty
Ltd. This transaction was exempt from the registration provisions of the Act
by virtue of Section 4(2) of the Act, as transactions by an issuer not
involving a public offering.
In May 1998, the Company issued 300,000 shares of Common Stock to
non-U.S. investors pursuant to Regulation S of the Act. These shares are in
an escrow account in Vancouver, British Columbia, Canada pending delivery of
the full consideration of $750,000. This transaction is exempt from
registration provisions by virtue of section 4(2) of the Act, as transactions
by an issuer not involving a public offering.
ITEM 27. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
-------
<S> <C>
3.1 Articles of Incorporation of HomeLife, Inc., a Nevada corporation,
dated October 9, 1995
3.2 Certificate of Amendment of Articles of Incorporation of HomeLife,
Inc., a Nevada corporation, dated July 2, 1997
3.3 Certificate of Amendment of Articles of Incorporation of HomeLife
Inc., a Nevada corporation, dated September 1, 1998
3.4 Bylaws of HomeLife, Inc., dated October 10, 1995
4.1 Certificate of Designated Class A Preferred Stock
4.2 Certificate of Designated Class AA Preferred Stock
5 Opinion of Horwitz & Beam
10.1 Lease Agreement dated November 1, 1996 for the office located in
Calgary, Alberta, Canada
10.2 Lease Agreement dated September 1, 1997 for the office located in
Airdrie, Alberta, Canada
10.3 Sublease Agreement dated October 1, 1996 for the office located in
Troy, Michigan
10.4 Lease Agreement dated April 12, 1990 for the office located in
Newport Beach, California
10.5 First Addendum to Lease dated April 12, 1990 for the office
located in Newport Beach, California
10.6 Second Addendum to Lease dated July 8, 1993 for the property
located in Newport Beach, California
10.7 Third Addendum to Lease dated July 17, 1996 for the property
located in Newport Beach, California
10.8 Builder's Realty Stock Purchase Agreement dated February 27, 1998
10.9 Agreement for Purchase of Network Real Estate, Inc. Licensing
Agreements and Trademarks dated June 12, 1998
10.10 Stock Purchase Agreement dated July 23, 1998
II-2
<PAGE>
10.11 Asset Purchase Agreement dated January 16, 1997
10.12 Option Agreement dated July 10, 1996
10.13 Asset Purchase Agreement dated April 13, 1998
10.14 Loan Purchase Agreement dated July 7, 1998
10.15 Agreement and Plan of Acquisition dated April 15, 1996
10.16 Agreement and Plan of Acquisition dated April 15, 1996
10.17 Agreement with Western Pacific Investment Corp. dated June 10,
1998
24 Consent of Biller, Firth-Smith & Archibald, Certified Public
Accountants
28 Specimen of Common Stock Certificate of HomeLife, Inc.
</TABLE>
ITEM 27. UNDERTAKINGS
The undersigned registrant hereby undertakes to:
(1) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the Company pursuant to the foregoing provisions,
or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(2) File, during any period in which it offers or sells securities, a
post effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and
(iii) Include any additional or changed material information on the plan of
distribution.
For determining liability under the Securities, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Newport Beach, State of California on October 16, 1998.
HOMELIFE, INC.
BY: /s/ ANDREW CIMERMAN
-------------------------------------
ANDREW CIMERMAN, PRESIDENT
POWER OF ATTORNEY
Each person whose signature appears appoints Andrew Cimerman, in the
alternative, as his agents and attorneys-in-fact, with full power of
substitution to execute for him and in his name, in any and all capacities,
all amendments (including post-effective amendments) to this Registration
Statement to which this power of attorney is attached. In accordance with the
requirements of the Securities Act of 1933, this Registration Statement was
signed by the following persons in the capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Andrew Cimerman President October 16, 1698
- -----------------------------
Andrew Cimerman
/s/ Robert L. Cashman Secretary, Treasurer, Director October 16, 1998
- -----------------------------
Robert L. Cashman
/s/ Terry A. Lyles, Ph.D. Director October 16, 1998
- -----------------------------
Terry A. Lyles, Ph.D.
/s/ F. Bryson Farrill Director October 16, 1998
- -----------------------------
F. Bryson Farrill
/s/ Gabrielle Jeans Vice-President October 16, 1998
- -----------------------------
Gabrielle Jeans
/s/ Charles Goodson Vice-President October 16, 6998
- -----------------------------
Charles Goodson
</TABLE>
II-4
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION OF
HOMELIFE, INC., A NEVADA CORPORATION
DATED OCTOBER 9, 1995
<PAGE>
ARTICLES OF INCORPORATION
OF
HOMELIFE, INC.
ARTICLE I
The complete name of the Corporation is to be:
HomeLife, Inc.
ARTICLE II
The purpose of this Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the general corporation laws of
Nevada.
ARTICLE III
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the general corporation laws of
Nevada.
ARTICLE IV
This Corporation shall have the authority to issue 2 classes of capital
stock the total of which shall be 5,100,000 shares. The classification and par
value of 5,000,000 shares shall be common voting stock having a par value of
$.001 each share, each share shall be entitled to the same dividend,
liquidation, and voting rights; the classification and par value of 100,000
shares shall be preferred stock with no par value each share. Said preferred
stock may be issued from time to time in one or more classes or series with such
dividend rates, voting rights, rights of conversion, rights upon dissolution or
liquidation, and with such designations or restrictions thereof as shall be
determined by resolution adopted by the Board of Directors at the time such
stock is issued without further approval of the shareholders.
ARTICLE V
The members of the governing board of this Corporation shall be styled
directors and the number thereof at the inception of this Corporation shall be
one (1). Directors need not be Shareholders of this Corporation, nor residents
of the State of Nevada. The number of Directors may from time to time be
increased or decreased in such manner as shall be provided for by the By-laws of
the Corporation.
The name and post office address of the first Board of Directors who shall
hold office until his successor is duly elected, is as follows:
<TABLE>
<CAPTION>
Name Address
<S> <C>
Robert L. Cashman 2164 North Glassell Street
Orange, California 92665
</TABLE>
ARTICLE VI
The Capital stock of this Corporation, after the amount of the subscription
price has been paid in, shall never be assessable, or assessed to pay debts of
this Corporation.
<PAGE>
ARTICLE VII
The name and address of the Incorporator signing these Articles of
Incorporation is as follows:
<TABLE>
<CAPTION>
Name Address
<S> <C>
Robert L. Cashman 2164 North Glassell Street
Orange, California 92665
</TABLE>
ARTICLE VIII
The period of duration of this Corporation shall be perpetual unless
otherwise amended by the Shareholders.
ARTICLE IX
The Directors shall have the power to make and to alter or amend the
By-Laws; to fix the amount to be reserved as working capital and to authorize
and cause to be executed mortgages and liens, without limit as to amount, upon
the property and franchise of this Corporation.
With the consent in writing, and pursuant to a vote of the majority of the
holders of the capital stock issued and outstanding, the Directors shall have
the authority to dispose of, in any manner, the whole property of this
Corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this Corporation, or any of them shall be open to the inspection of the
Shareholders; and no shareholder shall have any right of inspection of any
account, book, or document of this Corporation, except as conferred by the law
or By-Laws or by resolution of the Shareholders.
The Shareholders and Directors shall have the power to hold meetings and
keep the books, documents and papers of this Corporation, except as conferred by
the law or By-Laws or by resolution of the Shareholders.
The Shareholders and Directors shall have the power to hold meetings and
keep the books, documents and papers of the Corporation outside of the State of
Nevada, at such places as may be from time to time designated by the By-Laws or
by resolution of the Shareholders and Directors, except as otherwise required by
the laws of Nevada.
It is the intention that the objects, purposes, and powers specified in
Article III, be nowise limited or restricted by reference to, or inference from
the terms of any other clause or Article on this Certificate of Incorporation,
but that the object, purpose, and powers specified in Article III and each of
the clauses or Articles of this Charter shall be regarded as independent
objects, purposes, and powers.
ARTICLE X
After the formation of this Corporation, each Shareholder shall be entitled
to purchase and/or subscribe for the number of shares of this Corporation which
may hereafter be authorized and issued for money. Each Shareholder shall have
the same rights as any individual to purchase said stock, but shall not have any
pre-emptive rights as that term is defined under NRS 78.265.
IN WITNESS WHEREOF, I, the undersigned constituting the sole incorporator and
intended Shareholder, being less than three Shareholders, for the purpose of
forming a Corporation under the laws of the State of Nevada, do make, file and
record these Articles of Incorporation, and do certify that the facts herein are
true and I have accordingly hereunto set my hand this 26th day of September,
1995.
/s/ Robert L. Cashman
--------------------------------
Robert L. Cashman, Incorporator
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On this 26th day of September, 1995, before me, a Notary Public in and for
said County and State, personally appeared Robert L. Cashman, known to me to be
the person whose name is subscribed to the foregoing instrument, who duly
acknowledged to me that he executed the same for the purpose therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in said
County and State this 26th day of September, 1995.
/s/ W.E. Wilson, Jr.
--------------------------------
Notary Public
(Seal)
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
HOMELIFE, INC.
DATED JULY 2, 1997
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
FOR
HOMELIFE, INC.
Andrew Cimerman and Robert Cashman each hereby certify that:
1. He is the President and Secretary, respectively, of HomeLife, Inc., a
Nevada corporation.
2. Article IV of the Articles of Incorporation of this Corporation are
amended and restated in its entirety to read as follows:
ARTICLE IV
This Corporation is authorized to issue two classes of capital stock,
designated respectively "Common Stock" and "Preferred Stock." The
total number of shares of Common Stock which this Corporation is
authorized to issue is Ten Million (10,000,000) shares with a par
value of $0.001 per share. Each share of Common Stock shall be
entitled to the same dividend, liquidation, and voting rights as all
other shares of Common Stock. The total number of shares of Preferred
Stock which this Corporation is authorized to issue is One Hundred
Thousand (100,000) shares with no par value. Such Preferred Stock may
be issued from time to time in one or more classes or series with such
dividend rates, voting rights, rights of conversion, rights upon
dissolution or liquidation, and with such designations, preferences,
limitations, restrictions and rights as shall be determined by
resolution adopted by the Board of Directors of the Corporation.
3. Except as expressly amended by the foregoing Amendment, the Articles
of Incorporation of this Corporation remain in full force and effect.
4. The foregoing Amendment of the Articles of Incorporation has been duly
approved by the board of directors.
5. The foregoing Amendment of the Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 78.390
of the Nevada Revised Statutes.
The undersigned further declare under the penalty of perjury under the laws
of the State of Nevada that the matters set forth in this certificate are true
and correct of their own knowledge.
Dated: July 2, 1997 /s/ Andrew Cimerman
--------------------------------------
Andrew Cimerman, President
/s/ Robert Cashman
--------------------------------------
Robert Cashman, Secretary
1
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On this 6th day of September, 1997, before me, the undersigned Notary
Public, personally appeared Andrew Cimerman, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within Instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Richard W. Levy
-------------------------------
Notary Public
(Seal)
STATE OF CALIFORNIA )
)ss.
COUNTY OF ORANGE )
On this 6th day of September, 1997, before me, the undersigned Notary
Public, personally appeared Robert Cashman, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within Instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on
the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Richard W. Levy
-------------------------------
Notary Public
(Seal)
2
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
HOMELIFE, INC.
DATED SEPTEMBER 1, 1998
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
FOR
HOMELIFE, INC.
a Nevada corporation
Andrew Cimerman and Robert Cashman each hereby certify that:
1. He is the President and Secretary, respectively, of HOMELIFE, INC., a
Nevada corporation.
2. Article IV of the Articles of Incorporation of this Corporation are
amended and restated in its entirety to read as follows:
ARTICLE IV
This Corporation is authorized to issue two classes of capital stock,
designated respectively "Common Stock" and "Preferred Stock" The total number of
shares of Common Stock which this Corporation is authorized to issue is Twenty
Million (20,000,000) shares with a par value of $0.001 per share. Each share of
Common Stock shall be entitled to the same dividend, liquidation, and voting
rights as all other shares of Common Stock. The total number of shares of
Preferred Stock which this Corporation is authorized to issue is One Hundred
Thousand (100,000) shares with no par value. Such Preferred Stock may be issued
from time to time in one or more classes or series with such dividend rates,
voting rights, rights of conversion, rights upon dissolution or liquidation, and
with such designations, preferences, limitations, restrictions and rights as
shall be determined by resolution adopted by the Board of Directors of the
Corporation.
3. Except as expressly amended by the foregoing Amendment, the Articles
of Incorporation of this Corporation remain in full force and effect.
4. The foregoing Amendment of the Articles of Incorporation has been duly
approved by the board of directors.
5. The foregoing Amendment of the Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 78.390
of the Nevada Revised Statutes.
The undersigned further declare under the penalty of perjury under the laws
of the State of Nevada that the matters set forth in this certificate are true
and correct of their own knowledge.
Dated: September 11, 1998 /s/ Andrew Cimerman
-----------------------------------
Andrew Cimerman, President
/s/ Robert Cashman
-----------------------------------
Robert Cashman, Secretary
1
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On this 14th day of September, 1998, before me, the undersigned Notary
Public, personally appeared Andrew Cimerman, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within Instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ DC Sweet
-----------------------------------
Notary Public
(Seal)
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On this 8th day of September, 1998, before me, the undersigned Notary
Public, personally appeared Robert L. Cashman, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within Instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Karen J. Fowler
-----------------------------------
Notary Public
(Seal)
2
<PAGE>
EXHIBIT 3.4
BYLAWS OF HOMELIFE, INC.
DATED OCTOBER 10, 1995
<PAGE>
BYLAWS
OF
HOMELIFE, INC.
A NEVADA CORPORATION
<PAGE>
INDEX
BYLAWS OF
HOMELIFE, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I - OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II - STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1. ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2. SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
3. PLACE OF MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
4. NOTICE OF MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
5. CLOSING OF TRANSFER BOOK OR FIXING OF RECORD DATE. . . . . . . . . . . . .1
6. VOTING LIST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
7. QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
8. PROXIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
9. VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
10. ORDER OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
a. Roll Call . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
b. Proof of notice of meeting or waiver of notice. . . . . . . . . . . .2
c. Reading of minutes of preceding meeting . . . . . . . . . . . . . . .2
d. Reports of Officers . . . . . . . . . . . . . . . . . . . . . . . . .2
e. Reports of Committees . . . . . . . . . . . . . . . . . . . . . . . .2
f. Election of Directors . . . . . . . . . . . . . . . . . . . . . . . .2
g. Unfinished Business . . . . . . . . . . . . . . . . . . . . . . . . .2
h. New Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
11. INFORMAL ACTION BY STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . .2
ARTICLE III - BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . .3
1. GENERAL POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2. NUMBER, TENURE AND QUALIFICATIONS. . . . . . . . . . . . . . . . . . . . .3
3. REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
4. SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
5. NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
6. QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
7. MANNER OF ACTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. . . . . . . . . . . . . . . . .3
9. REMOVAL OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . .3
10. RESIGNATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
11. COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
12. EXECUTIVE AND OTHER COMMITTEES . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE IV - OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
1. NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2. ELECTION AND TERM OF OFFICE. . . . . . . . . . . . . . . . . . . . . . . .4
3. REMOVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4. VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
5. PRESIDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
6. CHAIRMAN OF THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . .4
7. SECRETARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
8. TREASURER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
9. SALARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE V - STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
<PAGE>
1. CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2. NEW CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3. RESTRICTIONS OF TRANSFER . . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE VI - CONTRACTS, LOANS, CHECKS, AND DEPOSITS. . . . . . . . . . . . . . . . .5
1. CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2. LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3. CHECKS, DRAFTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4. DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE VII - FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE VIII - DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE IX - SEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE X - WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE XI - AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
</TABLE>
<PAGE>
BYLAWS
OF
HOMELIFE, INC.
A NEVADA CORPORATION
ARTICLE I - OFFICES
The principal office of the corporation in the State of Nevada shall be
located at 1200 S. Eastern Avenue, in the city of Las Vegas, county of Clark.
The corporation may have such other offices, either within or without the State
of incorporation as the board of directors may designate or as the business of
the corporation may from time to time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING. The annual meeting of the stockholders shall be held on
the 2nd Tuesday of August in each year, beginning with the year 1996 at the hour
of 1 o'clock P.M. local time for the purpose of the election of directors and
for the transaction of such other business as may come before the meeting. If
the day fixed for the annual meeting shall be a legal holiday such meeting shall
be held on the next succeeding business day.
2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by the president
or by a director, and shall be called by the president at the request of the
holders of not less than fifty one (51) percent of all the outstanding shares of
the corporation entitled to vote at the meeting.
3. PLACE OF MEETING. The directors may designate any place, either within or
without the state unless otherwise prescribed by statute, as the place of
meeting for any annual meeting or for any special meeting called by the
directors. A waiver of notice signed by all stockholders entitled to vote at a
meeting may designate any place, either within or without the state unless
otherwise prescribed by statute, as the place for holding such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the corporation.
4. NOTICE OF MEETING. Written or printed notice stating the place, day and
hour of the meeting and, in the case of a special meeting is called, shall be
delivered not less than ten (10) days nor more than twenty (20) days before the
date of the meeting, either personally or by mail, by the direction of the
president, or secretary, or the director calling the meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or stockholders entitled to receive
payment of any dividend, or in order to make a determination of stockholders for
any other proper purpose, the directors of the corporation may provide that the
stock transfer books shall be closed for a stated period but not to exceed, in
any case twenty (20) days. If the stock transfer books be closed for the
purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least twenty (20)
immediately preceding such meeting. In lieu of closing the stock transfer
books, the directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than twenty
1
<PAGE>
(20) days and, in case of a meeting of stockholders, such date in any case to be
not less than ten (10) days prior to the date on which the particular action
requiring such determination of stockholders entitled to notice of or to vote at
a meeting of stockholders, or stockholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed ro the date on which
the resolution of the directors declaring such dividend is adopted, as the case
may be, shall be the record date for such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof.
6. VOTING LIST. The officer or agent having charge of the stock transfer
books for the shares of the corporation shall make, at least ten (10) days
before each meeting of stockholders, a complete list of stockholders entitled to
vote at such meeting, or any adjournment thereof arranged in alphabetical order,
with the address of and the number of shares held by each, which list, for a
period of the (10) days prior to such meeting, shall be kept on file at the
principal office of the corporation and shall be subject to inspection by any
stockholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any stockholder during the whole time of the meeting. The
original transfer book shall be prima facie evidence as to who are the
stockholders entitled to examine such list or transfer books or to vote at the
meeting of stockholders.
7. QUORUM. At any meeting of stockholders fifty one (51) percent of the
outstanding shares of the corporation entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of stockholders. If less than
said number of the outstanding shares are represented at a meeting, a majority
of the outstanding shares so represented may adjourn the meeting from time to
time without further notice. At such adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which might have been
transacted at the meeting originally noticed. The stockholders present at duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
8. PROXIES. At all meetings of the stockholders, a stockholder may vote by
proxy executed in writing by the stockholder or by his duly authorized attorney
in fact. Such proxy shall be filed with the secretary of the corporation before
or at the time of the meeting.
9. VOTING. Each shareholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these bylaws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled to
vote held by such shareholder. Upon the demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of Nevada.
10. ORDER OF BUSINESS. The order of business at all meetings of the
stockholders, shall be as follows:
a. Roll Call.
b. Proof of notice of meeting or waiver of notice.
c. Reading of minutes of preceding meeting.
d. Reports of Officers.
e. Reports of Committees.
f. Election of Directors,
g. Unfinished Business.
h. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS. Unless otherwise provided by law, any
action required to be taken at a meeting of the stockholder, or any other action
which may be taken at a meeting of the stockholders, may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the stockholders entitled to vote with respect to the subject
matter thereof.
2
<PAGE>
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS. The business and affairs of the corporation shall be
managed by its board of directors. The directors shall in all cases act as a
board, and they may adopt such rules and regulations for the conduct of their
meetings and the management of the corporation, as they may deem proper. not
inconsistent with these by-laws and the laws of the State of Nevada.
2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of the
corporation shall be a minimum of one (1) and a maximum of five (5). Each
director shall hold office until the next annual meeting of stockholders and
until his successor shall have been elected and qualified.
3. REGULAR MEETINGS. A regular meeting of the directors, shall be held
without other notice than this by-law immediately after, and at the same place
as, the annual meeting of stockholders. The directors may provide, by
resolution, the time and place for holding of additional regular meetings
without other notice than such resolution.
4. SPECIAL MEETINGS. Special meetings of the directors may be called by or at
the request of the president or any two directors. The person or persons
authorized to call special meetings of the directors may fix the place for
holding any special meeting of the directors called by them.
5. NOTICE. Notice of any special meeting shall be given at least one day
previously thereto by written notice delivered personally, or by telegram or
mailed to each director at his business address. If mailed, such notice shall
be deemed to be delivered when deposited in the United States mail so addressed,
with postage thereon prepaid. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
6. QUORUM. At a meeting of the directors fifty (50) percent shall constitute
a quorum for the transaction of business, but if less than said number is
present at a meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice.
7. MANNER OF ACTING. The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly created directorships
resulting from an increase in the number of directors and vacancies occurring on
the board for any reason except the removal of directors without cause may be
filled by a vote of the majority of the directors then in office, although less
than a quorum exists. Vacancies occurring by reason of the removal of directors
without cause shall be filled by vote of the stockholders. A director elected
to fill a vacancy caused by resignation, death or removal shall be elected to
hold office for the unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS. Any or all of the directors may be removed for cause
by vote of the stockholders or by action of the board. Directors may be removed
without cause only by vote of the stockholders.
10. RESIGNATION. A director may resign at any time by giving written notice to
the board, the present or the secretary of the corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt thereof
by the board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION. No compensation shall be paid to directors, as such, for
their services, but by resolution of the board a fixed sum and expenses for
actual attendance at each regular or special meeting of the board may be
authorized. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3
<PAGE>
12. EXECUTIVE AND OTHER COMMITTEES. The board, by resolution, may designate
from among its members an executive committee and other committees, each
consisting of one (1) or more directors. Each such committee shall serve at the
pleasure of the board.
ARTICLE IV - OFFICERS
1. NUMBER. The officers of the corporation shall be the president, a
secretary and a treasurer, each of whom shall be elected by the directors. Such
other officers and assistant officers as may be deemed necessary may be elected
or appointed by the directors.
2. ELECTION AND TERM OF OFFICE. The officers of the corporation to be elected
by the directors shall be elected annually at the first meeting of the directors
held after each annual meeting of the stockholders. Each officer shall hold
office until his successor shall have been duly elected an shall have qualified
or until his death or until he shall resign or shall have been removed in the
manner hereinafter provided.
3. REMOVAL. Any officer or agent elected or appointed by the directors may be
removed by the directors whenever in their judgment the best interest of the
corporation would be served thereby, but such removal shall be without prejudice
to contract rights, if any, of the person so removed.
4. VACANCIES. A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
5. PRESIDENT. The president shall be the principal executive officer of the
corporation and, subject to the control of the directors, shall in general
supervise and control all of the business and affairs of the corporation. He
shall, when present, preside at all meetings of the stockholders and of the
directors. He may sign, with the secretary or any property officer of the
corporation thereunto authorized by the directors, certificates for shares of
the corporation, any deeds, mortgages, bonds, contracts, or other instruments
which the directors have authorized to be executed, except in cases where the
directors or by these by-laws to some other officer or agent of the corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incident to the office of present and such other duties
as may be prescribed by the directors from time to time.
6. CHAIRMAN OR THE BOARD. In the absence of the present or in the event of
his death, inability or refusal to act, the chairman of the board of directors
shall assume the duties of the present, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. The
chairman of the board of directors shall perform such other duties as from time
to time may be assigned to him by the directors.
7. SECRETARY. The secretary shall keep the minutes of the stockholders'
and of the directors' meetings in one or more books provided for that
purpose, see that all notices are duly given in accordance with the
provisions of these by-laws or as required, be custodian of the corporate
records and of the seal of the corporation and keep a register of the post
office address of each stockholder which shall be furnished to the secretary
by such stockholder, have general charge of the stock transfer books of the
corporation and in general preform all the duties incident to the office of
secretary and such other duties as from time to time may be assigned to him
by the president or by the directors.
8. TREASURER. If required by the directors, the treasurer shall give a bond
for the faithful discharge of his duties in such sum and with such surety or
sureties as the directors shall determine. He shall have charge and custody of
and be responsible for all funds and securities of the corporation; receive and
give receipts for monies due and payable to the corporation from any source
whatsoever, and deposit all such money in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
4
<PAGE>
9. SALARIES. The salaries of the officers shall be fixed from time to time by
the directors and no officer shall be prevented from receiving such salary by
reason of fact that he is also a director of the corporation.
ARTICLE V - STOCK
1. CERTIFICATES. The shares of stock shall be represented by consecutively
numbered certificates signed in the name of the Corporation by its President or
Vice President and the Secretary or an Assistant Secretary, and shall be sealed
with he seal of the Corporation, or with a facsimile thereof. The signatures of
the Corporation's officers on such certificates may also be facsimiles if the
certificate is countersigned by a transfer agent, or registered by a registrar
other than the Corporation itself or an employee of the Corporation. In case
any officer who has signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be an officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of its issue. Certificate of stock shall be in such
form consistent with law as shall be prescribed by the Board of Directors. No
certificate shall be issued until the shares represented thereby are fully paid.
2. NEW CERTIFICATES. No new certificates evidencing shares shall be issued
unless the older certificate or certificates in lieu of which the new
certificates is issued, shall be surrendered for cancellation, except as
provided in paragraph 2 of this Article V.
3. RESTRICTION OF TRANSFER. No certificate shall be issued or re-issued
without a restriction of transferability clearly imprinted thereupon unless
registered as required by law or an exemption from registration is available.
ARTICLE VI - CONTRACTS, LOANS, CHECKS, AND DEPOSITS
1. CONTRACTS. The directors may authorize any officer or officers, agent or
agents, to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the corporation, and such authority may be general or
confined to specific instances.
2. LOANS. No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the directors. Such authority may be general or confined to
specific instances.
3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation, shall be signed by such officer or officers, agent or agents of the
corporation and in such manner as shall from time to time be determined by
resolution of the directors.
4. DEPOSITS. All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositaries as the directors may select.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of June each
year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares int eh manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal."
5
<PAGE>
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these bylaws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be
adopted by a vote of the stockholders representing a majority of all the shares
issued and outstanding, at any annual stockholders' meeting or at any special
stockholders' meeting when the proposed amendment has been set out in the notice
of such meeting.
Read and approved by the founder of this corporation:
/s/ Robert L. Cashman Date: 10/10/95
---------------------
Robert L. Cashman
/s/ Georgia Cashman Date: 10/10/95
---------------------
Georgia Cashman
/s/ Karen Fowler Date: 10/10/95
---------------------
Karen Fowler
6
<PAGE>
EXHIBIT 4.1
FORM OF CERTIFICATE OF DESIGNATION
CLASS A PREFERRED STOCK
<PAGE>
CERTIFICATE OF DESIGNATION
(Class A Preferred Stock)
ANDREW CIMERMAN and ROBERT CASHMAN each certify that he is the President
and Secretary, respectively, of HOMELIFE, INC., a Nevada corporation
(hereinafter referred to as the "Corporation" or the "Company"); that, pursuant
to the Corporation's Articles of Incorporation, and Nevada General Corporation
Law, the Board of Directors of the Corporation adopted the following resolutions
as of _____________, 199__; at which point none of the Class A Preferred Stock
had been issued.
1. CREATION AND DESIGNATION OF CLASS A PREFERRED STOCK. As of
_____________, 199_, the Company created a series of preferred stock consisting
of 10,000 shares and designated as the "Class A Preferred Stock," having the
voting powers, preferences, relative, participating, optional and other special
rights and the qualifications, limitations and restrictions thereof that are set
forth below. Each share of Class A Preferred Stock has a face value of $______
per share (the "Face Value").
2. DIVIDEND PROVISIONS. The holders of shares of Class A Preferred
Stock (collectively, "Holders", each a "Holder") shall be entitled to receive,
when and as declared by the Board of Directors out of any funds at the time
legally available therefor, dividends accruing at the rate of _______ percent
(_____%) of the Face Value per year from the date of issuance through the date
of conversion (the "Coupon Dividend"), as well as dividends paid with respect to
each share of common stock for each share of Class A Preferred Stock at the
same time and on a parity with dividends paid on each share of common stock (the
"Common Dividend") less any Coupon Dividend paid for any such period. Each
share of Class A Preferred Stock shall rank on a parity with each other share
of Class A Preferred Stock with respect to dividends. Dividend payments to the
Holders of shares of Class A Preferred Stock shall be payable quarterly, in
cash by delivery of a check to each entitled Holder's address which is
registered with the Secretary of the Company. Any Coupon Dividend on the Class
A Preferred Stock which has accrued pursuant to this Section 2 but which, for
any reason whatsoever, (a) has not been declared, or (b) has been declared but
has not been timely paid, shall be deemed in arrears and shall accumulate until
paid.
3. REDEMPTION. The Holder has the right to require the Company to redeem
the shares of Class A Preferred Stock (the "Right of Redemption"). Shares of
Class A Preferred Stock shall be redeemable, in whole or in part, by the Holder,
at any time within one (1) year after the date such shares were issued to
Holder, upon thirty (30) calendar days written notice (the "Redemption Notice")
to the Company, at a redemption price equal to the Face Value per share. For
purposes of establishing the date of the Redemption Notice, the date of the
Redemption Notice shall be deemed the date of the post-mark, by prepaid mail, of
the Holder's notice of its intention to redeem the shares of Class A Preferred
Stock as addressed to the Company, at the Company's principal place of business.
The redemption of the shares shall be subject to any reasonable procedures the
Company establishes in connection with the redemption.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, subject to the rights of series of
Preferred Stock that may from time to time come into existence, the Holders of
Class A Preferred Stock shall be entitled to receive, pari passu among them, but
prior and in preference to any distribution of any of the assets of the Company
to the holders of Common Stock by reason of their ownership thereof, an amount
per share equal to the sum of (A) the Face Value of each outstanding share of
Class A Preferred Stock, and (B) an amount equal to declared but unpaid and
accrued dividends on such share. If upon the occurrence of such event, the
assets and funds thus distributed among the Holders of the Class A Preferred
Stock shall be insufficient to permit the payment to such Holders of the full
aforesaid preferential amounts, then the entire assets and funds of the Company
legally available for distribution shall be distributed ratably among the
Holders of the Class A Preferred Stock in accordance with the priorities set
forth herein and in proportion to the preferential amount each such holder is
otherwise entitled to receive.
1
<PAGE>
(b) After the distributions described in subsection (a) above have
been paid, subject to the rights of series of Preferred Stock which may from
time to time come into existence, the remaining assets of the Company available
for distribution to shareholders shall be distributed among the Holders of Class
A Preferred Stock and the holders of Common Stock pro rata based on the number
of shares of Common Stock held by each (as if all such shares of Class A
Preferred Stock had been converted to Common Stock).
(c) (i) For purposes of this Section 4, a liquidation, dissolution
or winding up of the Company shall be deemed to be occasioned by, or to include,
(A) the acquisition of the Company by another entity by means of any transaction
or series of related transactions (including, without limitation, any
reorganization, merger or consolidation, but excluding any merger affected
exclusively for the purpose of changing the domicile of the Company); or (B) a
sale of all or substantially all of the assets of the Company; UNLESS the
Company's shareholders of record as constituted immediately prior to such
acquisition or sale will, immediately after such acquisition or sale (by virtue
of securities issued as consideration for the Company's acquisition or sale or
otherwise) hold at least fifty percent (50%) of the voting power of the
surviving or acquiring entity.
(ii) In any of such events, if the consideration received by the
Company is other than cash, its value will be deemed its fair market value. Any
securities shall be valued as follows:
(A) Securities not subject to investment letter or other
similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or through
NASDAQ National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange over the 30-day period ending
three (3) days prior to the closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the 30-day period ending three (3) days prior to the
closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as determined by the Board of Directors.
(B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as determined by the Board of Directors.
(iii) In the event the requirements of this subsection 4(c) are
not complied with, the Company shall forthwith either:
(A) cause such closing to be postponed until such time as
the requirements of this Section 4 have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the Holders of the Class A Preferred Stock shall
revert to and be the same as such rights, preferences and privileges of such
series existing immediately prior to the date of the first notice referred to in
subsection 4(c)(iv) hereof.
(iv) The Company shall give each holder of record of Class A
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such Holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 4, and the Company shall thereafter
2
<PAGE>
give such Holders prompt notice of any material changes. The transaction
shall in no event take place sooner than twenty (20) days after the Company
has given the first notice provided for herein or sooner than ten (10) days
after the Company has given notice of any material changes provided for
herein; provided, however, that such periods may be shortened upon the
written consent of the Holders of Class A Preferred Stock that are entitled
to such notice rights or similar notice rights and that represent at least a
majority of the voting power of all then outstanding shares of such Class A
Preferred Stock.
5. CONVERSION. Subject to the Right of Redemption as provided above, the
Holders of the Class A Preferred Stock shall have conversion rights as follows:
(a) RIGHT TO CONVERT. Each share of Class A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Company or any transfer agent for
such stock, into one (1) share of the Company's Common Stock.
(b) MECHANICS OF CONVERSION. Before any holder of Class A Preferred
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Company or of any transfer agent for the Class A Preferred
Stock, and shall give written notice to the Company at its principal corporate
office, of the election to convert the same and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. The Company shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Class A Preferred Stock, or to the
nominee or nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as aforesaid.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Class A Preferred
Stock to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of such date.
If the conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, the conversion may, at the
option of any holder tendering Class A Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Common Stock upon conversion of the Class A Preferred Stock shall not be deemed
to have converted such Class A Preferred Stock until immediately prior to the
closing of such sale of securities.
(c) NOTICES OF RECORD DATE. In the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall mail to
each holder of Class A Preferred Stock, at least twenty (20) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
(d) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Class A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Class A Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Class A Preferred
Stock, in addition to such other remedies as shall be available to the holder of
such Preferred Stock, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval on any necessary amendment to this Certificate of
Designation.
3
<PAGE>
(e) NOTICES. Any notice required by the provisions of this Section 5
to be given to the Holders of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Company.
6. REGISTRATION RIGHTS. All Common Shares into which the Class A
Preferred Shares are convertible have the following registration rights. The
Company is obligated to register the shares of Common Stock into which the
Preferred Shares are convertible in any subsequent registration statement filed
by the Company with the Securities and Exchange Commission, so that holders of
such Common Stock shall be entitled to sell the same simultaneously with and
upon the terms and conditions as the securities sold for the account of the
Company are being sold pursuant to any such registration statement, subject to
such lock-up provisions as may be proposed by the underwriter and agreed to by
the Holders.
7. MISCELLANEOUS PROVISIONS. The Class A Preferred Shares have no
voting rights and no sinking fund has or will be established to provide for
dividends or the repurchase of the Class A Preferred Shares.
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
of Class A Preferred Stock to be duly executed by its President and attested to
by its Secretary and has caused its corporate seal to be affixed hereto, this
____ day of _____________, 1997.
--------------------------------
Andrew Cimerman, President
--------------------------------
Robert Cashman, Secretary
State of California }
}
County of Orange }
On __________________, 1997, before me, _______________________, personally
appeared ANDREW CIMERMAN, personally known to me or proved to me on the basis of
satisfactory evidence, to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument, the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal
------------------------------------------
(Signature of Notary Public)
Commission Expires:
-------------------
4
<PAGE>
EXHIBIT 4.2
FORM OF CERTIFICATE OF DESIGNATION
CLASS AA PREFERRED STOCK
<PAGE>
CERTIFICATE OF DESIGNATION
(Class AA Preferred Stock)
ANDREW CIMERMAN and ROBERT CASHMAN each certify that he is the President
and Secretary, respectively, of HOMELIFE, INC., a Nevada corporation
(hereinafter referred to as the "Corporation" or the "Company"); that, pursuant
to the Corporation's Articles of Incorporation, and Nevada General Corporation
Law, the Board of Directors of the Corporation adopted the following resolutions
as of July 2, 1997; at which point none of the Class AA Preferred Stock had been
issued.
1. CREATION AND DESIGNATION OF CLASS AA PREFERRED STOCK. As of July 2,
1997, the Company created a series of preferred stock consisting of 2,000 shares
and designated as the "Class AA Preferred Stock," having the voting powers,
preferences, relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth below.
Each share of Class AA Preferred Stock has a face value of $500.00 per share
(the "Face Value").
2. DIVIDEND PROVISIONS. The holders of shares of Class AA Preferred
Stock (collectively, "Holders", each a "Holder") shall be entitled to receive,
when and as declared by the Board of Directors out of any funds at the time
legally available therefor, dividends accruing at the rate of eight percent
(8.0%) of the Face Value per year from the date of issuance through the date of
conversion (the "Coupon Dividend"), as well as dividends paid with respect to
each share of common stock for each share of Class AA Preferred Stock at the
same time and on a parity with dividends paid on each share of common stock (the
"Common Dividend") less any Coupon Dividend paid for any such period. Each
share of Class AA Preferred Stock shall rank on a parity with each other share
of Class AA Preferred Stock with respect to dividends. Dividend payments to the
Holders of shares of Class AA Preferred Stock shall be payable quarterly, in
cash by delivery of a check to each entitled Holder's address which is
registered with the Secretary of the Company. Any Coupon Dividend on the Class
AA Preferred Stock which has accrued pursuant to this Section 2 but which, for
any reason whatsoever, (a) has not been declared, or (b) has been declared but
has not been timely paid, shall be deemed in arrears and shall accumulate until
paid.
3. REDEMPTION. The Company may, at its option, at any time redeem any or
all shares of the Class AA Preferred Stock in cash at a redemption price equal
to the Face Value per share; provided, however, that no such redemption shall be
permitted unless all dividends which have accrued or accumulated on all
outstanding shares of the Class A Preferred Stock have been or are
simultaneously declared and paid in full. The Company shall give notice of each
such redemption to each Holder of the Class AA Preferred Stock at least ten (10)
days before the redemption date and, if there is more than one Holder and less
than all of the shares are to be redeemed, shall allocate the number of shares
to be redeemed among all the Holders of the Class AA Preferred Stock in
proportion, as nearly as practicable, to the number of shares held by each
Holder.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, subject to the rights of series of
Preferred Stock that may from time to time come into existence and subject to
the rights, preferences and priorities of the holders of shares of Class A
Preferred Stock, the Holders of Class AA Preferred Stock shall be entitled to
receive, pari passu among them, but prior and in preference to any distribution
of any of the assets of the Company to the holders of Common Stock by reason of
their ownership thereof, an amount per share equal to the sum of (A) the Face
Value for each outstanding share of Class AA Preferred Stock and (B) an amount
equal to declared but unpaid and accrued dividends on such share. If upon the
occurrence of such event, the assets and funds thus distributed among the
Holders of the Class AA Preferred Stock shall be insufficient to permit the
payment to such Holders of the full aforesaid preferential amounts, then the
entire assets and funds of the Company legally available for distribution shall
be distributed ratably among the Holders of the Class AA Preferred Stock in
accordance with the priorities set forth herein and in proportion to the
preferential amount each such holder is otherwise entitled to receive.
1
<PAGE>
(b) After the distributions described in subsection (a) above have
been paid, subject to the rights of series of Preferred Stock which may from
time to time come into existence and subject to the rights, preferences and
priorities of the holders of shares of Class A Preferred Stock, the remaining
assets of the Company available for distribution to shareholders shall be
distributed among the Holders of Class AA Preferred Stock and the holders of
Common Stock pro rata based on the number of shares of Common Stock held by each
(as if all such shares of Class AA Preferred Stock had been converted to Common
Stock).
(c) (i) For purposes of this Section 4, a liquidation, dissolution
or winding up of the Company shall be deemed to be occasioned by, or to include,
(A) the acquisition of the Company by another entity by means of any transaction
or series of related transactions (including, without limitation, any
reorganization, merger or consolidation, but excluding any merger affected
exclusively for the purpose of changing the domicile of the Company); or (B) a
sale of all or substantially all of the assets of the Company; UNLESS the
Company's shareholders of record as constituted immediately prior to such
acquisition or sale will, immediately after such acquisition or sale (by virtue
of securities issued as consideration for the Company's acquisition or sale or
otherwise) hold at least fifty percent (50%) of the voting power of the
surviving or acquiring entity.
(ii) In any of such events, if the consideration received by the
Company is other than cash, its value will be deemed its fair market value. Any
securities shall be valued as follows:
(A) Securities not subject to investment letter or other
similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or through
NASDAQ National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange over the 30-day period ending
three (3) days prior to the closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the 30-day period ending three (3) days prior to the
closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as determined by the Board of Directors.
(B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as determined by the Board of Directors.
(iii) In the event the requirements of this subsection 4(c) are
not complied with, the Company shall forthwith either:
(A) cause such closing to be postponed until such time as
the requirements of this Section 4 have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the Holders of the Class AA Preferred Stock shall
revert to and be the same as such rights, preferences and privileges of such
series existing immediately prior to the date of the first notice referred to in
subsection 4(c)(iv) hereof.
(iv) The Company shall give each holder of record of Class AA
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such Holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 4, and the Company shall thereafter
2
<PAGE>
give such Holders prompt notice of any material changes. The transaction
shall in no event take place sooner than twenty (20) days after the Company
has given the first notice provided for herein or sooner than ten (10) days
after the Company has given notice of any material changes provided for
herein; provided, however, that such periods may be shortened upon the
written consent of the Holders of Class AA Preferred Stock that are entitled
to such notice rights or similar notice rights and that represent at least a
majority of the voting power of all then outstanding shares of such Class AA
Preferred Stock.
5. CONVERSION. Subject to the redemption rights as provided in Section 3
above, the Holders of the Class AA Preferred Stock shall have conversion rights
as follows:
(a) RIGHT TO CONVERT. Each Class AA Preferred Share will be
automatically converted to Common Stock of the Company at the twelve (12)-month
anniversary of the date of the issuance of such Class A Preferred Share (the
"Conversion Date"). The number of shares of Common Stock into which each Class
AA Preferred Share will convert shall be determined by dividing the Face Value
per share by eighty percent (80%) of the Market Price of the Common Stock of the
Company. The "Market Price" of the Common Stock of the Company shall equal the
average of the last quoted closing bid price as reported by the National
Association of Securities Dealers Automated Quotation System (NASDAQ) for the
thirty (30)-day period ending ten (10) days prior to the Conversion Date.
(b) MECHANICS OF CONVERSION. Before any holder of Class AA Preferred
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Company or of any transfer agent for the Class AA Preferred
Stock, and shall give written notice to the Company at its principal corporate
office, of the election to convert the same and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. The Company shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Class AA Preferred Stock, or to the
nominee or nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as aforesaid.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Class AA Preferred
Stock to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of such date.
If the conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, the conversion may, at the
option of any holder tendering Class AA Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Common Stock upon conversion of the Class AA Preferred Stock shall not be deemed
to have converted such Class AA Preferred Stock until immediately prior to the
closing of such sale of securities.
(c) NO FRACTIONAL SHARES. No fractional shares shall be issued upon
the conversion of any share or shares of the Class AA Preferred Stock, and the
number of shares of Common Stock to be issued shall be rounded to the nearest
whole share. Whether or not fractional shares are issuable upon such conversion
shall be determined on the basis of the total number of shares of Class AA
Preferred Stock the holder is at the time converting into Common Stock and the
number of shares of Common Stock issuable upon such aggregate conversion.
(d) NOTICES OF RECORD DATE. In the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall mail to
each holder of Class AA Preferred Stock, at least twenty (20) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
(e) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Class AA Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Class AA Preferred Stock; and if at
3
<PAGE>
any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding shares of
the Class AA Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Preferred Stock, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without
limitation, engaging in best efforts to obtain the requisite shareholder
approval on any necessary amendment to this Certificate of Designation.
(f) NOTICES. Any notice required by the provisions of this Section 5
to be given to the Holders of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Company.
6. REGISTRATION RIGHTS. All Common Shares into which the Class AA
Preferred Shares are convertible have the following registration rights. The
Company is obligated to register the shares of Common Stock into which the
Preferred Shares are convertible in any subsequent registration statement filed
by the Company with the Securities and Exchange Commission, so that holders of
such Common Stock shall be entitled to sell the same simultaneously with and
upon the terms and conditions as the securities sold for the account of the
Company are being sold pursuant to any such registration statement, subject to
such lock-up provisions as may be proposed by the underwriter and agreed to by
the Holders.
7. MISCELLANEOUS PROVISIONS. The Class AA Preferred Shares have no
voting rights and no sinking fund has or will be established to provide for
dividends or the repurchase of the Class AA Preferred Shares.
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
of Class AA Preferred Stock to be duly executed by its President and attested to
by its Secretary and has caused its corporate seal to be affixed hereto, this
____ day of _____________, 1997.
--------------------------------
Andrew Cimerman, President
--------------------------------
Robert Cashman
State of California }
}
County of Orange }
On __________________, 1997, before me, _______________________, personally
appeared ANDREW CIMERMAN, personally known to me or proved to me on the basis of
satisfactory evidence, to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument, the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal
----------------------------------------
(Signature of Notary Public)
Commission Expires:
----------------
4
<PAGE>
EXHIBIT 5
OPINION OF HORWITZ & BEAM
<PAGE>
LAW OFFICES OF
HORWITZ & BEAM
TWO VENTURE PLAZA
SUITE 350
IRVINE, CALIFORNIA 92618
(949) 453-0300
(310) 842-8574
FAX: (949) 453-9416
Gregory B. Beam, Esq. Ralph R. Loyd, Esq.
Lawrence W. Horwitz, Esq. Patti L.W. McGlasson, Esq.
Lawrence M. Cron, Esq. Bernard C. Jasper, Esq.
Lynne Bolduc, Esq. K. William Pergande, Esq.
Malea M. Farsai, Esq. John Y. Igarashi, Esq.
October 21, 1998
HOMELIFE, INC.
Ladies and Gentlemen:
This office represents HomeLife, Inc., a Nevada corporation (the
"Registrant") in connection with the Registrant's Registration Statement on
Form SB-2 under the Securities Act of 1933 (the "Registration Statement"),
which relates to the shelf registration of up to 10,000,000 Shares of Common
Stock (the "Registered Securities") pursuant to the terms, conditions and
price contained in supplements to the Registration Statement and Prospectus
(the "Prospectus Supplement") to be dated from time to time after the
effective date of the Registration Statement. In connection with our
representation, we have examined such documents and undertaken such further
inquiry as we consider necessary for rendering the opinion hereinafter set
forth.
Based upon the foregoing, and upon the filing of the Prospectus
Supplement, it is our opinion that the Registered Securities, when sold as
set forth in the Registration Statement, will be legally issued, fully paid
and nonassessable.
We acknowledge that we are referred to under the heading "Legal Advisor"
in the Prospectus which is a part of the Registration Statement, and we
hereby consent to such use of our name in such Registration Statement and to
the filing of this opinion as Exhibit 5 to the Registration Statement and
with such state regulatory agencies in such states as may require such filing
in connection with the registration of the Registered Securities for offer
and sale in such states.
HORWITZ & BEAM
/s/ Horwitz & Beam
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EXHIBIT 10.1
LEASE AGREEMENT BY AND BETWEEN
KENSINGTON VILLAGE HOLDINGS, LTD. AND
BUILDER'S REALTY (CALGARY LTD.) DATED
OCTOBER 31, 1996 FOR THE PROPERTY LOCATED AT
1982 KENSINGTON ROAD N.W., CALGARY, ALBERTA
<PAGE>
STANDARD LEASE
BETWEEN
KENSINGTON VILLAGE
HOLDINGS LTD.
(Lessor)
AND
BUILDERS REALTY (CALGARY) LTD.
(Lessee)
FOR 1982 KENSINGTON ROAD N.W
NOV. 1, 1996 - OCT. 31, 2001
<PAGE>
THIS LEASE MADE AS OF THIS 31 DAY of October, 1996.
BETWEEN: KENSINGTON VILLAGE HOLDINGS LTD. a duly chartered company under the
laws of ALBERTA having its head office at 1982 KENSINGTON ROAD N.W., CALGARY,
ALBERTA (herein called the "Landlord")
AND: BUILDERS REALTY (CALGARY) LTD. a duly chartered company under the laws
of ALBERTA having its head office at 1982 KENSINGTON RD. N.W. CALGARY herein
called the "Tenant")
(herein called the "Covenantor")
WITNESSETH that in consideration of the mutual covenants, conditions and
agreements herein contained, the Landlord, Tenant, and Covenantor do agree as
follows:
ARTICLE ONE
DEFINITIONS
1.01DEFINITIONS. In this Lease, unless there is something in the context
inconsistent therewith, the Landlord and Tenant agree that:
(a)"Commencement Date" means the 1st day of NOVEMBER, 1996.
(b)"Building" means that certain building or buildings (and improvements
therein and thereon) situated on the Lands and outlined in green in Schedule
"A".
(c)"Common Area" means those areas of the Lands and the Building that are
designated (which designation may be changed from time to time) by the
Landlord as common areas set aside by the Landlord for the common use of the
Tenant, its licensees, and invitees, in common with others entitled to the
use of such areas in the manner and for the purposes permitted by this Lease.
The Common Area includes, without limitation, parking areas, roadways,
sidewalks, loading areas, and landscaped areas and improvements thereon, the
exterior walls, roof, foundations of the Building, and all other fixtures,
fittings, or structural members of the Building which are not included within
the Premises or other premises forming a part of the Building which are
leased to tenants thereof.
(d)"Common Costs" means the total, without duplication, of the costs incurred
by the Landlord for the continued management, operation, maintenance, and
repair of the Lands and the Building, including, without limitation, the
following:
i. the cost of repairs, maintenance of, and such replacements to the
Common Area as are properly chargeable in accordance with generally accepted
accounting principles to operating expenses as distinguished from capital
replacements or improvements;
ii. the cost of Common Area landscaping and gardening, line repainting,
rental of signs and equipment, lighting, security protection, sanitary
control, refuse removal, removal of snow and ice, painting, window cleaning,
and otherwise maintaining the Common Area of the Building;
The cost of wages paid for maintenance and operating personnel, including,
without limitation, payments for Workers' compensation, Unemployment
Insurance, vacation pay, Canada Pension Plan, and other fringe benefits,
whether or otherwise, but to extent only that such wages are directly
attributable to the maintenance , operation, and repair of the Lands and the
Building;
the cost of service contracts with independent contractors in respect of the
maintenance, operation, and repair of the Lands and the Building;
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the costs of operating, maintaining, repairing, and replacing plumbing,
electrical, heating, water, sewer, and other utility systems and services in
respect of the Lands and the Building;
the cost of insurance against loss or damage to the Lands and the Building by
fire and other perils generally included in so called "Extended Coverage
Endorsement" and such other perils which in the reasonable opinion of the
Landlord should be insured against, but to limits not exceeding the
replacement cost thereof; no representations, covenants, warranties,
guarantees, promises, or agreements (verbal or otherwise) with the Tenant
other than those contained in this lease; that no agreement collateral
hereto will be binding upon the Landlord unless made in writing and signed by
the Landlord; and, that this Lease constitutes the entire agreement between
the Landlord and Tenant.
19.08 NOTICES. Any notice, request, or demand herein provided or permitted to
be given hereunder shall be sufficiently given if personally served or mailed
by registered mail as follows:
(a) to the Landlord: 1982 KENSINGTON ROAD N.W., CALGARY, ALBERTA
(b) to the Tenant: 1982 KENSINGTON ROAD N.W., CALGARY, ALBERTA
Any notice mailed as aforesaid shall for the purposes of this Lease be
presumed to have been given three (3) business days following the day on
which such notice is mailed as aforesaid. Any party may at any time give
notice in writing to the others of any change of address, and after the
giving of such notice the address therein specified will be deemed to be the
address of such party for the purpose of giving notices hereunder.
19.09 TIME OF ESSENCE. Time will be of the essence of this Lease.
19.10 SIGNING OF LEASES. The Landlord will not be deemed to have made an
offer to the Tenant by furnishing to the Tenant a copy of this Lease with
particulars inserted; and, notwithstanding that installments of rent may be
received by the Landlord when this lease is received by it for signature to
contractual or other rights will exist or be created between the Landlord and
Tenant until such time as all parties to this Lease have executed the same.
19.11 RELATIONSHIP. Nothing herein contained will at any time create or be
construed as creating a joint venture, partnership, or relationship between
the parties other than that of Landlord and Tenant.
19.12 GOVERNING LAW. This Lease will be construed and governed by the laws of
the Province of Alberta.
19.13 GENDER. Words in the singular will include the plural, and words in the
plural will include the singular, and words in the masculine gender will
include feminine and neuter genders where the context so requires.
19.14 COVENANTOR'S CLAUSE. In consideration of the grant of this Lease by the
Landlord and, as a condition thereof, the Covenantor hereby covenants with
and guarantees to the Landlord the performance and observance of all of the
covenants and agreements of the Tenant to be performed or observed by the
Tenant hereunder, including the payment of Basic Rent and Additional Rent on
the days and at the times and in the manner specified in this Lease and, that
if any default be made by the Tenant, whether in payment of Basic Rent or
Additional Rent or in compliance with its obligations hereunder, the
Covenantor will forthwith indemnify the Landlord on demand for any such
default. The Covenantor further covenants with the Landlord that the
Covenantor is jointly and severally bound amount themselves and with the
Tenant for the fulfillment of all obligations of the Tenant under the Lease,
and the Bankruptcy or other act of the Tenant which might or could operate as
a release of the Tenant of &II of its obligations hereunder, shall not
release or discharge the Covenantor from its covenants herein. In the
enforcement of its rights hereunder the Landlord may proceed against the
Covenantor as if the Covenantor was named Tenant hereunder. The Covenantor
hereby gives any rights to require the Landlord to proceed against the Tenant
or to proceed against or exhaust any security held from the Tenant or to
pursue any other remedy whatsoever which may be available to the Landlord
before proceeding against the Covenantor. No neglect or forbearance of the
Landlord in endeavoring to enforce observance of the Lease or obtain
indemnification as set forth herein, no extension of time which may be given
by the Landlord from time to time to the
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Tenant, and no other act or failure to act by the Landlord shall release,
discharge, or in any way reduce the obligation of the Covenantor under the
covenants contained herein. In the event of termination of the Lease other
than by surrender accepted by the Landlord or in the event of disclaimer of
the Lease pursuant to any stature, at the option of the Landlord the
Covenantor shall execute a new lease of the Premises demised by the Lease
between and Landlord as landlord and Covenantor as tenant for a term equal in
duration to the residue of the Term of the Lease remaining unexpired at the
date of such termination or such disclaimer. Such lease shall contain the
like Landlord's and Tenant's obligations respectively and the like covenants,
provisions, conditions, and agreement in all respects (including the
provision for re-entry) as are contained in the Lease.
19.15 JOINT AND SEVERAL LIABILITY. If two or more individuals, corporations,
partnerships, or other business associations, or any combination of two or
more thereof sign this Lease as Tenant, the liability of each such
individual, corporation, partnership, or other business association to pay
rent and perform all other obligations under this Lease will be deemed to be
joint and several. If the Tenant named in this Lease is partnership of other
business association, the members of which by law are subject to personal
liability, the liability of each such member shall be deemed to be joint in
several.
19.16 SPECIAL CLAUSES.
(a) OPTION TO RENEW. If the tenant shall have promptly paid the rent when
due hereunder, and shall have observed and performed the Tenant's covenants
herein, and shall, after the First day of JUNE, 2001, but on or before the
First day of JULY, 2001 by writing to the Landlord has given notice of its
desire to have the term of this Lease renewed, the Tenant shall have the term
of this Lease renewed for a period of five (5) years upon the conditions
herein set forth, except the right to renew, and except as to the Basic
Annual Rent during the renewal term which shall be mutually agreed upon
vii. the cost of public liability insurance against damage or loss
by reason (or on account of) bodily injuries to or the death of any person or
the destruction of or damage to the property of any person occurring on or
about the Lands and Building to such limits as the Landlord may from time to
time reasonably determine;
viii. the cost of rental insurance not to exceed one year's rent
from the Lands and the Building against loss of income to the Landlord in the
event of damage or destruction to the Lands, the Building, or any part of
either by reason of fire or other peril;
ix. the cost of insurance against other forms of loss or other
risk that the Landlord reasonably requires from time to time and which might
reasonably be obtained for like properties similarly situated and for amount
against which a prudent Landlord would insure itself;
x. the cost of real property taxes, rates, duties, and
assessments that may be levied, rated, charged, or assessed against the Lands
and the Building, including, without limitation, all local improvement rates
and charges, frontage taxes, water, school, hospital, and other taxes and
assessments, both general and special, rates, levies, and impositions,
general or specific, ordinary or extraordinary, foreseen or unforeseen, now
imposed, assessed, or levied or which may hereafter be imposed, assessed, or
levied by any federal, provincial, municipal, regional, school or other
statutory authority during the Term for municipal, school or other purposes
in respect of the Lands and the Building; and,
xi. the cost of supplying electricity, water, sewer services,
natural gas or other fuel, or utility services to the Lands or the Building.
Common Costs shall not include any cost aforesaid incurred by, on
behalf of, or at the request of, an individual tenant or tenants and
resulting in a benefit to such individual tenant or tenants which is not of
general application to all tenants of the Lands. Common Costs shall be
determined in accordance with generally accepted accounting principles
consistently applied.
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(e)"Gross Rent" means the aggregate of basic rent referred to in Article 3.01
hereof and Additional Rent for Common Costs referred to in Article 3.03
hereof.
(f)"Lands" means the parcel or parcels of land together with the fixtures and
appurtenances thereto as more particularly described in SCHEDULE "B" hereto.
(g)"Premises" means that portion of the Building more particularly shown and
outlined in red on Schedule "A" hereto.
(h)"Proportionate Share" means for the purposes of this Lease 48.95%,
provided that in the event of any alteration or addition to the Building or
the Lands resulting in a greater or lesser rentable area, the Landlord may,
from time to time, cause redetermination of the area of the Premises or the
area of all or any part of the rentable area of the Building by a qualified
quantity surveyor and, thereafter, upon notice to the Tenant. "Proportionate
Share" shall thereafter mean that proportion expressed as a fraction, the
numerator or which is the area of the Premises in square meters and the
denominator of which is the aggregate of all rentable area of the Building in
square meters and any certification thereof by a qualified quantity surveyor
shall be conclusive and binding thereafter on the parties hereto.
ARTICLE TWO
DEMISE AND TERM
2.01 DEMISE. The Landlord, in consideration of the rents, covenants,
agreements and conditions herein to be paid, observed, and performed by the
Tenants, does hereby demise and lease to the Tenant the Premises.
2.02 TERM. Subject to the terms and conditions of this Lease as hereinafter
set forth, the Tenant shall have and hold the Premises for the term of 5
years and 0 months (herein called the "Term") from and including the
Commencement Date, being, the 1st day of November, 1996, to and ending on the
31 day of October, 2001.
ARTICLE THREE
RENT, TAXES, AND OTHER CHARGES
3.01 BASIC RENT. The Tenant shall pay to the Landlord monthly in advance a
rental of $4,750 payable in lawful money of Canada (herein referred to as the
"Basic Rent") and all additional rental as hereinafter provided, commencing
on the Commencement Date and thereafter on the first day of each and every
month of the Term of this Lease without any deduction, defalcation, or
abatement save as herein expressly provided. Rental rates as established on
# 19.16 (B).
3.02 PREPAID RENT. The Landlord acknowledges receipt from the Tenant of the sum
of $4,750 to be applied toward the last 1 months' rent of the Term granted
hereunder.
3.03 ADDITIONAL RENT FOR COMMON COSTS. The Tenant shall pay to the Landlord
as additional rent the Tenant's Proportionate Share of Common Costs in
addition to the Basic Rent hereinbefore provided. The Tenant's Proportionate
Share of Common Costs for the portion of the Term commencing on the
Commencement Date and ending December 31 of the year of the Commencement Date
is estimated to be ($1,583 per month) and the Tenant shall pay such amount to
the Landlord in lawful money of Canada in equal monthly installments in
advance commencing on the Commencement Date and thereafter on each day fixed
for the payment of Basic Rent to and including the first day of December in
the year of the Commencement Date. Prior to commencement of each ensuing
calendar year of the Term, the Landlord shall deliver to the Tenant a
statement setting forth the Landlord's reasonable estimate of the Tenant's
Proportionate Share of Common Costs for such ensuing calendar year and
thereafter during such calendar year the Tenant shall pay to the Landlord
monthly in advance on each day fixed for the payment of Basic Rent an amount
equal to one-twelfth of the Tenant's Proportionate Share of Common Costs,
provided that in the calendar year in which the
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Term expires the Tenant's Proportionate Share of Common Costs in respect of
the calendar year shall be paid proportionately by equal monthly installments
over the remainder of the term.
3.04 REPORTING ON TENANT'S PROPORTIONATE SHARE OF COMMON COSTS. As soon as
reasonably practical following the end of the period for which such estimate
payments of Tenant's Proportionate Share of Common Costs have been made, the
Landlord will furnish to the Tenant a statement showing the actual amount of
Tenant's Proportionate Share of Common Costs setting forth in reasonable
detail Common Costs incurred by the Landlord during such period and the
Landlord and the Tenant covenant and agree each with the other that if an
overpayment of Tenant's Proportionate Share of Common Costs has been made by
the Tenant, the Landlord will credit such amount to the Proportionate Share
of Common Costs for the ensuing period and, if there is no ensuing period,
such amount shall be paid to the Tenant, and if an amount remains owing to
the Landlord in respect of the Tenant's Proportionate share of Common Costs,
the Tenant will forthwith pay such amount to the Landlord. The Tenant and the
Landlord covenant and agree each with the other that the covenants contained
in the Article 3.04 shall survive notwithstanding termination or expiration
of this Lease.
3.05 ADDITIONAL RENT FOR MANAGEMENT. The Tenant shall pay to the Landlord as
additional rent monthly in advance at the time fixed for payment of Basic
Rent a sum which is 5% of the monthly Gross Rent referred to in 1.01(e)
hereof as a management fee to the Landlord for the management services of the
Landlord. Same is estimated to be $__________________ per month for the
balance of the calendar year of the year of the year of the Commencement Date.
3.06 RECOVERY OF ADDITIONAL RENT. The Tenant's Proportionate Share of
Common Costs, the management fee hereinbefore referred to, and any other sum
expressed to be payable to the Landlord hereunder as additional rent (herein
collectively referred to as "Additional Rent") shall be recoverable by the
Landlord from the Tenant in the same manner as Basic Rent reserved and in
arrears under the terms hereof.
3.07 INTEREST ON AMOUNTS IN ARREARS. When Basic Rent or any Additional Rent
(including interest thereon, if any) payable hereunder by the Tenant to the
Landlord is in arrears, the same shall bear interest at the rate of PRIME +
3% per centum per annum and such interest shall be and is agreed to be due
and payable on demand as additional rent reserved hereunder.
3.08 TENANT'S TAXES AND OTHER CHARGES. The Tenant will pay, as and when due,
to the authority to which same are owing:
(a) all taxes, licenses, rates, duties, and assessments imposed,
assessed, or levied by any lawful authority during the Term and relating to
the business carried on in and the use and occupancy of the Premises by the
Tenant (and every subtenant and licensee) and relating to personal property
and all business and trade fixtures and other improvements owned or installed
by or on behalf of the Tenant in, on, or affixed to the Premises, whether any
such taxes, licenses, rates, duties, and assessments are payable by law by
the Tenant o by the Landlord and whether or not same are allocated separately
in respect of the Premises; and,
(b) all charges, rates, and assessments imposed, assessed or levied by
any lawful authority during the Term of electricity, light, heat, power,
water, telephone, and utilities of whatsoever nature of kind (including works
and services in connection therewith) used in or supplied to the Premises.
Upon request by the Landlord, the Tenant will deliver promptly to the
Landlord, for inspection, receipts for payment of all charges payable by the
Tenant pursuant to the Article 3.08 which were due and payable up to one
month prior to such request, and will furnish to the Landlord, upon request,
evidence of payments before the 31st day of January in each covering payments
for the preceding year.
3.09 NET LEASE. The Tenant will well and truly pay to the Landlord all Basic
Rent and Additional Rent required to be paid by the Tenant pursuant to this
Lease without any deduction, defalcation, abatement, or set-off whatsoever,
it being the intention of this Lease that all expenses, costs, payments, and
outgoings incurred in respect of the Premises,
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the Lands, and the Building (unless otherwise expressly stipulated herein to
the contrary) will be borne by the Tenant and other tenants, and that rent
will be absolutely net to the Landlord.
3.10 IRREGULAR PERIODS. If, for any reason, it becomes necessary to
calculate Basic Rent or Additional Rent for irregular periods, an appropriate
pro rata adjustment will be made on a daily basis in order to compute such
rent for such irregular periods as at the date of termination of the Term.
3.11 DISPUTE AS TO COSTS. In the event of any dispute as to the amount of
any monies to be paid by the Tenant pursuant to this Lease, the certificate
of an independent chartered accountant appointed by the Landlord, determining
such amount, will be final and binding on the Landlord and Tenant.
3.12 POST-DATED CHEQUES. The Tenant agrees to deliver to the Landlord upon
occupancy pursuant to this Lease a series of post-dated cheques to cover the
monthly installments of Gross Rent and Additional Rent for management
hereinbefore reserved for the period ending December 31 in the year of the
Commencement Date and thereafter prior to January 1 in each year of the Term
a series of post-dated cheques to cover the monthly installments of Gross
Rent and Additional Rent for Management for each ensuring calendar year or
portion thereof of the Term of this Lease.
ARTICLE FOUR
QUALITY OF THE PREMISES AND USE OF THE PREMISES
4.01 EXAMINATION OF PREMISES. The Tenant will examine the Premises prior to
commencement of the Term, and the taking of possession of the Premises will
be conclusive evidence as against the Tenant that, at the time thereof, the
Premises were in good and satisfactory condition, except for latent defects.
4.02 POSSESSION AND USE OF PREMISES. The Tenant will take possession of the
Premises on the Commencement Date. The Tenant will not use or permit the
Premises or any part thereof to be used for any purpose other than real
estate offices without the prior written consent of the Landlord, whose
consent will not be unreasonably withheld.
4.03 NO NUISANCE, OVERLOADING, OR WASTE. The Tenant will not, at any time
during the Term, carry on or permit to be carried on, in the Premises or
elsewhere in the Building anything which is noxious or offensive, and will
not do or permit to be done anything whatsoever any time during the Term upon
the Premises or elsewhere in the Building which would annoy, disturb, or
cause nuisance or damage to the occupiers or owners of Lands and Premises
adjoining or in the vicinity of the Premises. The Tenant will not permit any
overloading of the floor of the Premises or elsewhere in the Building and
will not place thereon any heavy object without the prior written consent of
the Landlord. The Tenant will not cause any waste or damage to the Premises.
4.04 SIGNS. The Tenant will not erect, paint, display, place, affix or
maintain, or permit to be erected, painted displayed, placed, affixed or
maintained, any sign, decoration, pictures, lettering, or advertising matter
of any nature or kind whatsoever, either on the exterior walls of the
Premises or on the Building or Common Area (including, without limitation, in
or on any windows or anywhere in the interior of the Premises which is
visible from the outside) without first obtaining the Landlord's written
consent in each instance, such consent not to be unreasonably withheld. The
Tenant shall, at its cost, acquire all requisite municipal or other
governmental permit which may be required to erect or maintain any such
approved sign or advertisement, and the Tenant also agrees that any sign or
advertisement that is placed or fixed to the exterior or any outside part of
the Lands and Building shall be maintained in a proper state of repair and
that it will indemnify and hold harmless the Landlord for all personal
injuries, property damage, or loss caused from the placing or fixing of any
such sign or advertisements. Any such approved sign or advertisement is
agreed to be a trade or Tenant's fixture, and subject to the provisions of
Article 9.04 hereof.
4.05 DELIVERIES AND LOADING. The Tenant will permit deliveries to the
Premises, and loading and unloading is to be done only through the loading
areas and only in accordance with such rules as the Landlord may from time to
time reasonably prescribe.
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4.06 WINDOWS. The Tenant will cause the windows of the Premises to be
suitably screened and will not permit storage inside of Premises to be
visible through such windows.
4.07 NOT TO AFFECT LANDLORD'S INSURANCES. The Tenant will not do, permit to
be done, or omit to do, on the Premises or elsewhere in the Building anything
which will directly or indirectly cause the rate of insurance upon the Lands
and improvements thereon or any part thereof or the Landlord's liability
insurance in respect thereof to be increased. If any insurance rate is
thereby increased, the Tenant will not store or permit to be stored upon the
Premises anything of a dangerous, inflammable or explosive nature or anything
which would have the effect of increasing the Landlord's insurance costs or
of leading to the cancellation of insurance. If any insurance policy is
cancelled by an insurer by reason of the use and occupation of the Premises
by the Tenant or by an assignee, sub-tenant, or anyone permitted by the
Tenant to be on the Premises, then the Landlord may, at is option, terminate
this Lease upon fifteen (15) days' written notice, and, thereupon rent and
any other payments for which the Tenant is liable under this Lease will be
apportioned and paid in full to the date of expiration of such notice, and
the Tenant will immediately deliver up vacant possession of the Premises to
the Landlord and the Landlord may re-enter and take possession of same and,
at its option, and at the expense of the Tenant, may rectify the situation
causing such cancellation.
4.08 PREVENTING CANCELLATION. The Landlord, its Employees, or agents may at
any time enter upon the Premises to remove any article or remedy any
condition, which, in the opinion of the Landlord reasonably arrived at, would
be likely to lead to cancellation of any policy of insurance. Such entry by
the Landlord will not be deemed to be re-entry nor a trespass.
ARTICLE FIVE
ASSIGNING, SUB-LETTING, AND ENCUMBERING
5.01 ASSIGNING AND SUB-LETTING BY TENANT. That the Tenant shall not assign
this Lease, nor assign, sub-let, part with, or share possession or occupation
of the Premises or any part thereof without the prior written consent of the
Landlord, which consent shall not be unreasonably or arbitrarily withheld,
provided that neither ail assignment of the Lease, nor a sub-letting, parting
with, or sharing with possession or occupation of the Premises, nor the
Landlord's consent thereto, shall relieve the Tenant from the covenants and
agreements herein contained, the Landlord may as a condition of any such
consent require the assignee, sublessee, licensee, or occupant to covenant
with the Landlord for the due and faithful performance and observance of the
terms of this Lease, including this clause. Notwithstanding the foregoing,
any request for the Landlord's consent to an assignment or sub-letting or
parting with or sharing possession or occupation of the Premises shall be
accompanied by such information as to the proposed assignee, sub-tenant
licensee, or occupant's business and financial responsibility as the Landlord
may reasonably require, together with the terms of the proposed assignment,
parting with, or sharing of possession or occupation; and the Landlord shall
have the right, exercisable on its own behalf or on behalf of such party as
the Landlord may designate, to take the assignment or sub-lease or otherwise,
as the case may be, from the Tenant upon the same terms and conditions as are
set forth in this Lease and in any such case this Lease or such portion
thereof as is affected by the assignment or sub-lease or otherwise, may at
the election of the Landlord be treated as surrendered as of the effective
date of such proposed assignment. The Landlord shall have a period of thirty
(30) days in which to exercise its aforesaid rights and within which to
communicate such exercise to the Tenant, and if not so exercised, the
Landlord shall not later than such 30th day, notify the Tenant if it approves
or disapproves the assignment, sub-lease, parting with, o sharing the
possession or occupation of the Premises. And in the case of approval, the
Tenant shall have a period of sixty (60) days thereafter in which to assign,
sub-lease, part with, or share the possession or occupation of the Premises
to the party so named by the Tenant in accordance with the terms and
conditions so indicated to the Landlord in the aforesaid notice. In the event
that the Tenant does not so assign, sub-let, part with, or share possession
or occupation of the Premises within such sixty (60) day period, the
Landlord's consent to such assignment, sub-leasing, parting with, or sharing
the possession or occupation of the Premises shall be null and void, and the
Tenant shall not be permitted to assign, sub-let, part with, or share the
possession or occupation of the Premises without again conforming to all the
express provisions of the clause.
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5.02 CHANGE IN CONTROL. If the Tenant is a private corporation, any sale or
other disposition of its shares of security resulting in a change of control
of beneficial ownership of such corporation shall be deemed to be an
assignment of this Lease and subject to the provisions hereof with respect to
assignment by the Tenant.
ARTICLE SIX
COMPLIANCE WITH LAWS, BUILDER'S LIENS
6.01 COMPLIANCE WITH LAWS. The Tenant, during the Term and its own expense,
will promptly comply and will cause its employees, agents, licensees,
invites, and other persons on or about the Premises to comply with the
requirements of every applicable law, rule, bylaw, regulation, order,
direction, ordinance and standard of every competent federal, provincial,
municipal, regional, and other statutory authority in force during the Term
and concerning or affecting the condition, maintenance, use, and occupation
of the Premises and all improvement, appurtenances, equipment, machinery, and
other facilities from time to time therein, thereon, or used in connection
therewith and the making of any repairs, replacements, and alterations to
the Premises and with every applicable regulation, order, and requirement of
the Insurance Bureau of Canada or any successor body having similar functions
and of any liability or fire insurance company by which the Landlord and
Tenant or either of them may be insured at any time during the Term. And, in
doing, the Tenant, subject to Article 7 hereof, will make any necessary
alterations, repairs, additions, or deletions in, on or to the Premises,
improvements, or appurtenances or any part or parts thereof, and any
equipment, machinery, or other facilities in, on, upon, used in connection
with, or appurtenant to the Premises or any part thereof.
6.02 BUILDER'S LIENS. The Tenant will not suffer or permit any lien under
the Builders' Lien Act or like statute to be filed against title to the
Premises or Lands by reason of labour, services, or materials supplied or
claimed to have been supplied to the Tenant or anyone holding any interest
through or under the Tenant or anyone holding any interest through or under
the Tenant during the Term. If any such lien is filed, the Tenant will
procure registration of its discharge forthwith after the lien has come to
the notice of the Tenant. If the Tenant desires to contest in good faith the
amount or validity of any lien and has so notified the Landlord, and if the
Tenant has deposited with the Landlord or with a Trustee, or paid into Court
to the credit of any lien action, the amount of the lien claimed plus an
amount for costs satisfactory to the Landlord, then the Tenant may defer
payment of such lien claim for a period of time sufficient to enable the
Tenant to contest the claim with due diligence, provided always that neither
the Premises nor the Tenant's leasehold interest therein shall thereby become
liable to forfeiture or sale. The Landlord may, but will not be obliged to,
discharge any lien filed any time if, in the Landlord's judgement, the
Premises or the Tenant's interest therein becomes liable to any forfeiture or
sale, or is otherwise in jeopardy, and any amount paid by the Landlord in so
doing, together with all reasonable costs and expenses of the Landlord, will
be reimbursed to the Landlord by the Tenant forthwith on demand. Nothing
herein contained will be deemed to authorize the Tenant, or imply consent or
agreement on the part of the Landlord, to subject the Landlord's estate and
interest in the Premises to any lien.
ARTICLE SEVEN
REPAIRS, MAINTENANCE, AND ALTERATIONS
7.01 REPAIR AND MAINTENANCE. The Tenant, throughout the Term at its own
expense, will repair, maintain, and keep the Premises and all improvements,
appurtenances, and equipment therein and thereon (including, without
limitation, all electrical, heating, ventilation, sprinkler, plumbing
fixtures and equipment, and windows) in good repair and condition, as is
fitting for a comparable quality warehouse and accessory office development
and whether such repairs are structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen, excepting from such standard of repair
and maintenance damage by fire and other risks against which the Landlord is
insured, reasonable wear and tear to the extent only that such reasonable
wear and tear is not inconsistent with maintenance in good order and
condition of Premises generally, and repairs for which the Landlord is
responsible under this Lease. "Repairs" shall include replacements and
renewals, when necessary.
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7.02 INSPECTION AND EMERGENCIES. The Landlord's representatives may enter
upon the Premises at all reasonable times and during any emergency to inspect
the state of repair and maintenance.
7.03 REPAIRS BY DESIGNATED TRADESPEOPLE. The Tenant, when necessary and
whether upon receipt of notice from the Landlord or not, will effect and pay
for such maintenance and repairs for which it is responsible and, in so
doing, will use subcontractors, contractors, and tradespeople approved by the
Landlord in writing, such approval not to be unreasonably withheld.
7.04 REPAIR ACCORDING TO NOTICE. Without restricting the generality of
Article 7.01 hereof, the Tenant, promptly upon notice by the Landlord, will
make and do all repairs and maintenance for which it is responsible. If the
Tenant fails to repair or maintain with what the Landlord considers to be a
reasonable time, then the Landlord may cause such repairs and maintenance to
be undertaken (and may cause its employees and agents to enter on the
Premises for such purpose). Should the Landlord deem it necessary to
undertake any repairs or maintenance, then the Tenant will pay to the
Landlord, as a fee for supervision for carrying out the Tenant's obligations,
an amount equal to 10% of the monies expended or of the cost of repairs of
maintenance carried out by the Landlord, which amount will be in addition to
the cost of such work or monies expended.
7.05 ALTERATIONS. Notwithstanding anything to the contrary in this Lease,
the Tenant will not make to, or erect in the Premises, any installations,
alterations, additions, or partitions without having received the prior
written approval of the Landlord to the plan and specifications and any
variation or amendment thereof, which approval is not a substitute for the
approval of any relevant statutory authority. The Landlord will be entitled
to recover from the Tenant the cost of having its architects or engineers
examine such plans and specifications.
7.06 CONSTRUCTION AND ALTERATION. The Tenant will construct the
installations, alterations, additions, and partitions only in accordance with
the approved plans and specifications, in a good and workmanlike manner and
7.07 PAYMENT FOR WORK. The Tenant will pay for all expenses incurred for
labour performed upon, and materials incorporated into, the Premises for
which it is responsible as same are due.
7.08 LANDLORD'S REPAIRS. Subject to the Landlord's right, in accordance
with this Lease, to elect not to rebuilt in the event of damage or
destruction, the Landlord, throughout the Term will repair, maintain, and
keep the Common Area in good repair and condition, reasonable wear and tear
excepted.
ARTICLE EIGHT
COMMON AREA AND PARKING
8.01 PARKING. ALL PARKING IS UNASSIGNED. The parking area shall be used
for such purpose only at the sole risk of the Tenant, its servants and
agents, and provided further that the Landlord shall not be obliged to police
usage thereof. The Landlord may, but shall not be obliged to, remove or cause
removal of any motor vehicle of the Tenant, its invitees and licensees,
parked in areas other than the designated parking area and the Tenant shall
pay the costs of any such removal as Additional Rent hereunder.
8.02 STORAGE. The Tenant will not store anything of whatsoever nature of
kind on the Common Area of any parking area designated for the exclusive use
of the Tenant.
8.03 NUISANCE. The Tenant will not do anything which may injure the Common
Area or be a nuisance to any other Tenants of Premises situated on the Lands.
8.04 USE OF COMMON AREA. Subject to this Lease and to such other reasonable
rules and regulations as the Landlord may make pertaining to the use of the
Common Area, the Tenant will have for itself and its licensees and invitees, the
non-exclusive right to use the Common Area (save and except only the roof of the
Building and parking areas designated
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by the Landlord for the use of other tenants of the Building) in common with
others entitled thereto for their proper and intended purposes during normal
business hours. The Tenant acknowledges that the Common Area is subject to
the exclusive control and management of the Landlord and that the Landlord
shall be entitled, from time to time, to alter the Common Area and to make
changes and additions thereto.
ARTICLE NINE
SURRENDER OF PREMISES AND REMOVAL OF FIXTURES
9.01 SURRENDER. Upon the expiration or earlier termination of this Lease and
the Term and any period of overholding, the Tenant will surrender to the
Landlord possession of the Premises and fixtures thereon (subject to the
Article 9), all of which will become the property of the Landlord without any
claim by a compensation to the Tenant, all in good order, condition, and
repair in accordance with the Tenant's obligation to repair and maintain, and
free and clear of all encumbrances and all claims of the Tenants or of any
person claiming by or through or under the Tenants, and all the rights of the
Tenant under this Lease will terminate (but the Tenant, notwithstanding such
termination, will remain and be liable to the Landlord for any loss, damage,
expenses, or costs suffered or incurred by the Landlord by reason of any
default by the Tenant).
9.02 DOCUMENT OF SURRENDER. If this Lease and the Term are terminated for
any reason, the Tenant will deliver to the Landlord forthwith a document
surrendering this Lease in form acceptable for registration in the
appropriate Land Titles Office.
9.03 CONDITIONS OF PREMISES. Without restricting the generality of article
9.01, the Tenant, immediately before the expiration or earlier termination of
the lease will wash the floors, windows, doors, walls and woodwork of the
Premises and leave the Premises in broom clean condition.
9.04 REMOVAL OF FIXTURES. Provided that the Tenant is not in default
hereunder, of the Term, remove the Tenant may, at the expiration of the term
from the Premises all trade or Tenant s fixtures. If the Tenant damages the
Premises during such removal, the Tenant will make good such damage. In no
event will the Tenant remove from the Premises any building, plumbing,
heating, air conditioning, electrical, or ventilating plan or equipment or
other building services; save and except that the Landlord will be entitled
upon the expiration or earlier termination of the Lease to require the Tenant
to, and Tenant shall, remove its installations, alterations, additions,
partitions, fixtures, and anything in the nature of improvements made or
installed by the Tenant or by the Landlord on behalf of the Tenant to or in
the Premises, or any of the, and to make good any damage caused to the
Premises by such removal.
ARTICLE TEN
LIABILITY AND INDEMNIFICATION
10.01 NON-LIABILITY OF LANDLORD. Except for the negligence of the Landlord,
the Tenant agrees that the Landlord will not be liable or responsible in any
way for any personal injury that may be sustained by the Tenant or any
employee or customer of the Tenant, or of any other person who may be upon
the Premises or on the Common Area or sidewalks, parking areas, highways, or
loading areas adjacent thereto, or for any loss of or damage or injury to,
property belonging to or in the possession of the Tenant or any employee or
customer of the Tenant or any other person, and without limiting the
generality of the foregoing, the Landlord will not be liable or responsible
in any way for any injury, loss, or damage, to person or property caused by
smoke, steam, water, ice, rain, snow, or fumes which may leak, issue, or flow
into, through, or from the Premises or from the water sprinkler, drainage or
smoke pipes, or plumbing equipment therein or from any other place or quarter
or cause by a attributable to the condition or arrangement of any electrical
or other wiring or the air conditioning equipment, or for any matter or thing
of whatsoever nature of kind arising from the Tenant's use and occupation of
the Premises or otherwise.
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10.02 INDEMNIFICATION. The Tenant will indemnify, and save harmless and
Landlord from the against any and all liabilities, damages, costs, expenses,
causes of action, actions, claims, suits, and judgments which the Landlord
may incur or suffer or be put to by reason of or in connection with or
arising from:
a) any breach, violation, or non-performance by the Tenant of any
covenant, condition, or agreement set forth in this Lease;
b) any damage to property of the Tenant, any sub-tenant, licensee, and
all persons claiming through or under the Tenant or any sub-tenant or
licensee, or any of the, or damage to any other property howsoever occasioned
by the condition, use, occupation, or maintenance of the premises;
(c) any injury to any person, including death, resulting any time
therefrom occurring in or about the Premises and Lands;
(d) any wrongful act or neglect of the Tenant, its invitees, and
licensees, in and about the Premises and Lands; and,
(e) any matters referred to in Article 11.01 hereof.
10.03 SURVIVAL OF INDEMNIFICATION. Such indemnification will survive any
termination of this Lease, anything in this Lease to the contrary
notwithstanding.
ARTICLE ELEVEN
INSURANCE
11.01 TENANT'S INSURANCE. The Tenant will purchase and keep in force
throughout the term:
(a) fire insurance with extended coverage endorsement (including
sprinkler leakage) covering all leasehold improvements made to or installed
in the Premises by or on behalf of the Tenant in an amount equal to the full
replacement value;
(b) fire insurance with extended coverage endorsement (including
sprinkler leakage) covering all the contents of the Premises, whether owned
by the Tenant or for which the Tenant is responsible, in an amount at least
equal to the actual cash value; and,
(c) comprehensive general liability insurance (including without
limitation, tenant's fire, legal liability, and contractual liability to
cover the responsibilities assumed under Article 10.02 hereof) with a cross
liability clause and otherwise in amounts and on terms acceptable to the
Landlord.
11.02 POLICIES. The Tenant will effect all policies with insurers, and upon
terms and in amounts, satisfactory to the Landlord. The Tenant will furnish
to the Landlord copies of all policies, or insurance certificates in lieu
thereof, and will provide written notice of the continuation of such policies
not less than ten (10) days prior to their respective expiry dates. The
Tenant will pay the premium for each policy. If the Tenant fails to purchase
or keep in force such insurance, the Landlord may effect such insurance, the
cost thereof being recoverable from the Tenant forthwith on demand as
Additional Rent hereunder.
11.03 LANDLORD AS INSURED. The Tenant will cause each of its policies to
contain an undertaking by the insurer(s) to notify the Landlord at least
thirty (30) days prior to cancellation or any other change material to the
Landlord's interests. The liability policy will include the Landlord as an
additional named insured with a cross-liability clause.
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11.04 SUBROGATION. The Landlord and Tenant will each cause any insurance
policy obtained by it pursuant to this Lease to contain a waiver of
subrogation clause in favour of the Landlord or Tenant, as the case may be.
11.05 LANDLORD TO INSURE. The Landlord throughout the Term will carry
insurance against fire and other perils as described in the definition of
Common Costs.
ARTICLE TWELVE
DAMAGE OR DESTRUCTION
12.01 DAMAGE TO PREMISES. If and whenever the Premises are destroyed or
damaged by fire or other casualty against which the Landlord is insured, so
as to be totally unfit for occupancy, rent will abate until the Premises are
repaired or rebuilt. If and whenever the Premises are damaged by fire or
other casualty against which the Landlord is insured and the damage is such
that the Premises can be partially used, then until such damage is repaired,
rent will abate by the same proportion as the area of the part of the
Premises rendered unfit for occupancy is of the whole of the Premises. The
Landlord, with reasonable diligence, will repair and restore the Premises
unless the Tenant is obliged to repair hereunder or unless this Lease is
terminated pursuant to Article 12.02 hereof.
12.02 TERMINATION. If the Premises are damaged or destroyed by any cause
whatsoever, and if, in the opinion of the Landlord reasonably arrived at, the
Premises cannot be rebuilt or made fit for the purposes of Tenant within
ninety (90) days of the damage or destruction, the Landlord at its option may
terminate this Lease by giving to the Tenant, with thirty (30) days after
such damage or destruction, notice of termination, and thereupon Basic Rent
and Additional Rent will be apportioned and paid to the date of the damage or
destruction and the Tenant will immediately deliver up possession of the
Premises to the Landlord.
12.03 DAMAGE TO BUILDING. If the Building in which the Premises are situated
is damaged or destroyed by any cause whatsoever (irrespective of whether the
Premises are damaged or destroyed) and if, in the opinion of the Landlord
reasonably arrived at, the Building cannot be rebuilt or made fit the
purposes of the affected Tenants within one hundred eighty (180) days of the
damage or destruction, the Landlord, at its option, may terminate this Lease
by giving to the Tenant, within thirty (30) days of such damage or
destruction, notice of termination requiring vacant possession of the
Premises sixty (60) days after delivery of such notice and thereupon Basic
Rent and Additional Rent will be apportioned and paid to the date on which
vacant possession is required and Tenant will deliver up possession of the
Premises to the Landlord in accordance with such notice.
ARTICLE THIRTEEN
QUIET ENJOYMENT
13.01 QUIET ENJOYMENT. If the Tenant duly and regularly pays the rent and
complies with its obligations under this Lease, the Tenant will be entitled
to (and shall and may ) peaceably possess and enjoy the Premises during the
Term without any interruption or disturbance from the Landlord or any person
or persons claiming by, through, or under the Landlord.
ARTICLE FOURTEEN
PERFORMANCE OF TENANT'S COVENANTS, DEFAULT, AND BANKRUPTCY
14.01 LANDLORD MAY PERFORM COVENANTS. If the Tenant is in default of any of
its covenants and agreements herein, then the Landlord, without limiting any
other remedy which it may have, will have the right to remedy any such
default, and for such purpose may at any time enter upon the Premises. No
entry for such purpose will be deemed to cause a forfeiture or termination of
this Lease. In order to cure such default, the Landlord may do such without
things as are necessary to cure the default and such things as may be
incidental thereto (including limitation, the right to make repairs
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and to expend monies). The Tenant will reimburse the Landlord forthwith upon
demand as Additional Rent hereunder the aggregate of all expenses incurred by
the Landlord in remedying any such default. The Landlord will be under no
obligation to remedy any default of the Tenant, and will not incur any
liability to the Tenant for any action or omission in the course of its
remedying or attempting to remedy any such default unless such act amounts to
intentional misconduct or gross negligence on the part of the Landlord.
14.02 RIGHTS OF TERMINATION. If and whenever:
(a) the Premises become vacant or remain unoccupied for five (5) days
or more or are not used for the purpose herein permitted;
(b) any rent or Additional Rent remains unpaid after any of the days on
which the same ought to have been paid and following ten (10) days' notice of
non-payment by the Landlord to the Tenant;
(c) there is a breach of any of the Tenant's obligations hereunder (other
than as set out in the other clauses of this Article) which is not cured within
fifteen (15) days after delivery of notice by the Landlord to the Tenant
specifying such breach, PROVIDED THAT if any default of the Tenant can only be
cured by the performance of work or the furnishing of materials, and if such
work cannot reasonably be completed or such materials reasonably obtained and
utilized within said fifteen (15) days, such default will not be deemed to
continue if the Tenant proceeds promptly with such work as may be necessary to
cure the default and continued diligently to complete such work;
(d) the Term or any goods and chattels on the Premises are at any time
seized or taken in execution or attachment;
(e) a receiver, guardian, trustee in bankruptcy, or any other similar
officer is appointed to take charge of all or any substantial part of the
Tenant's property by a court of competent jurisdiction;
(f) a petition is filed for the reorganization of the Tenant under any
provision of the Bankruptcy Act or any law of Canada or any Province thereof
or of the jurisdiction in which the Tenant is incorporated relating to
bankruptcy or insolvency then in force;
(g) the Tenant becomes insolvent;
(h) the Tenant files a petition for such reorganization or for
arrangements under any provision of the Bankruptcy Act or any law of Canada
or any Province thereof or of the jurisdiction in which the Tenant is
incorporated relating to bankruptcy or insolvency then in force and providing
a plan for a debtor to settle, satisfy, or to extend the time for the payment
of debts;
(i) if any application, petition, certificate, or order is made or
granted for the winding up or dissolution of the Tenant, voluntarily or
otherwise;
(j) the Tenant assigns, sub-lets, or parts with possession of the
Premises without the Landlord's consent as required herein;
then in any of the said cases (and notwithstanding any prior waiver of breach
of covenant), the Landlord, at its option, may (and without prejudice to any
other right or remedy it may then have or be entitled to) cancel this Lease,
whereupon this Lease will terminate and the Term will expire and be ended and
the then current month's rent and the next ensuring three months' Basic Rent
and all Additional Rent for the then current year (to be reckoned on the rate
for the next preceding year in case the rate for the then current year has
not been fixed) shall thereupon become immediately due and payable, and the
Term, at the option of the Landlord, will be forfeited and the Landlord may
immediately distrain for all such rent as well as any arrears then unpaid and
the Landlord lawfully may immediately or at any time thereafter and without
notice or any form of legal process re-enter upon the premises or any part
thereof in the name of the whole
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and repossess the same, and expel the Tenant and those claiming through or
under it, and remove its or their effects (forcibly if necessary) without
being deemed guilty of any manner of trespass and without prejudice to any
remedies which might otherwise be used for arrears of rent or preceding
breach of covenant.
14.03 WAIVER WITH RESPECT TO RE-ENTRY. The Tenant waives any requirement that
notice of the Landlord's intention to re-enter be served or that the Landlord
commence legal proceedings in order to re-enter.
14.04 WAIVER OF BENEFIT OF LEGISLATION AND SEIZURE. The Tenant irrevocably
waives and renounces the benefit of any present or future law taking away or
diminishing the Landlord's privilege on the property of the Tenant and right
of distress and agrees with the Landlord, notwithstanding any such law, that
the Landlord may seize and sell all the Tenant's goods and property, whether
within the Premises or not, and apply the proceeds of such sale upon rent and
all other amounts outstanding hereunder and upon the cost of the seizure and
sale in the same manner as might have been done if such law had not been
passed. The Tenant further agrees that if it leaves the Premises leaving any
Basic Rent or Additional Rent or other amounts to be paid hereunder unpaid,
the Landlord, in addition to any remedy otherwise provided at law or in
equity, may seize and sell the goods and chattels of the Tenant at any place
to which the Tenant or any other person may have removed them, in the same
manner as if such goods and chattels have remained on the Premises.
14.05 REMEDIES OF LANDLORD ARE CUMULATIVE. The remedies of the Landlord in
this Lease are cumulative and are in addition to any remedies of the Landlord
at law or in equity. No remedy will be deemed to be exclusive and the
Landlord may from time to time have recourse to one or more of all the
available remedies specified herein or at law or in equity.
ARTICLE FIFTEEN
IMPOSSIBILITY OF PERFORMANCE
15.01 NON-PERFORMANCE BY LANDLORD. Whenever the Landlord is unable to
fulfill any obligation hereunder in respect of the provision of any service,
utility, work, or repairs by reason of being unable to obtain the materials,
goods, equipment, service utility, or labour required to enable it to fulfill
such obligation or by reason of any law or regulation or by reason of any
other cause beyond its reasonable control, the Landlord will be entitled to
extend the time for fulfillment of such obligation by a time equal to the
duration of the delay or restriction. The Tenant will not be entitled to any
compensation for any inconvenience, nuisance, or discomfort thereby
occasioned, or to cancel this Lease.
ARTICLE SIXTEEN
REGULATIONS
16.01 REGULATION. The Tenant and its employees, agents, contractors,
licensees, and invitees will be bound by all such reasonable regulations as
the Landlord may from time to time make of which written notice is given to
the Tenant. All such regulations will be deemed to be incorporated into and
form part of this Lease.
ARTICLE SEVENTEEN
OVERHOLDING
17.01 OVERHOLDING. If the Tenant remain possession of the Premises after the
expiration of this Lease and without the execution and delivery of a new
lease, the Landlord may re-enter and take possession of the Premises and
remove the Tenant therefrom and the Landlord may use such force as if may
deem necessary for the purchase without being liable in respect thereof or
for any loss or damage occasioned thereby, PROVIDED THAT while the Tenant
remains in possession after the expiration of this Lease, the tenancy, in the
absence of written agreement, will be from month to month only at a rent per
month equal to 1.25 times the Gross Rent and Additional Rent for management
payable in
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respect of the month immediately preceding expiration of the Lease payable in
advance on the first day of each month and shall be subject to all terms of
the lease, except that the tenancy will be from month to month only and a
tenancy from year to year will not be created by implication of law.
ARTICLE EIGHTEEN
INSPECTION, SALE, AND LEASE
18.01 SIGN. The Landlord may from time to time place upon the premises a
notice of reasonable dimensions and reasonably placed so as not to interfere
with the business of the Tenant stating that the Lands are for sale, and
during the last six months of the Term may similarly place a sign stating
that the Premises are to be let.
18.02 INSPECTION. The Landlord or its representatives may exhibit the
Premises at reasonable times to prospective tenants during the last six
months of the Term and may also exhibit the Premises at reasonable times for
the purposes of the Landlord's own financing and for prospective purchasers.
ARTICLE NINETEEN
MISCELLANEOUS
19.01 WAIVER. No waiver of any default will be binding unless acknowledged
in writing by the Landlord.
19.02 CONDONING. Any condoning, excusing, or overlooking by the Landlord of
any default will not operate as a waiver of the Landlord's rights hereunder
in respect of any subsequent default.
19.03 SUBORDINATION. This Lease at the request of the Landlord will be
subject, subordinate, and postponed to all mortgages (including any deed of
trust and mortgage securing bonds and all indentures supplemental thereto)
which may now or hereafter charge or affect the Premises and to all renewals,
modifications, consolidations, replacements, and extensions of such
mortgages, to the intent that such mortgages and all renewals, modifications,
consolidations, replacements, and extensions thereof will have priority over
this Lease notwithstanding the respective dates of execution or registration
thereof. The Tenant agrees to execute promptly and document in confirmation
of such subordination, postponement, and priority which the Landlord may
request and if the Tenant does not so execute such document within ten (10)
days after demand in writing, the Tenant does hereby make, constitute, and
irrevocably appoint the Landlord as his attorney-in-fact writing, and in his
name, place, and stead so to do.
19.04 ACKNOWLEDGMENT BY THE TENANT. The Tenant will execute promptly, when
requested by the Landlord, a certificate in favour of any prospective
mortgagee or purchaser of the Landlord certifying the status of this Lease,
any modifications or breaches of this Lease, and the status of the rent
account, all with the intent that any such acknowledgement or certificate may
be relied upon by any party to whom it is directed.
19.05 SEVERABILITY. If any provision of this Lease is illegal, invalid, or
unenforceable at law, it will be deemed to be severed form this Lease and the
remaining provisions will nevertheless continue to be in full force and
effect.
19.06 HEADINGS. All headings in this Lease are inserted for convenience of
reference only and will not affect the construction and interpretation of
this Lease.
19.07 REPRESENTATIONS AND ENTIRE AGREEMENT. The Tenant acknowledges and
agrees that the Landlord has made the arbitrator already named shall proceed
and his award fixing the basic annual rental for the renewal term shall be
final.
<TABLE>
<CAPTION>
b) RENT SCHEDULE COMMENCE TERMINATION PER SQ. FT. ANNUALLY MONTHLY
------------- -------- ----------- ----------- -------- -------
<S> <C> <C> <C> <C> <C>
Sept 1/97 August 31/2001 10.30 $57,000.00 $4,750.00
</TABLE>
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b) GOODS AND SERVICES TAX (GST).
This lessee shall pay Goods and Services Tax relating to the Demised
Premises.
c) Lessor not to lease premises in the building to N.A.
19.18 ENURING EFFECT. This Lease and everything herein contained will enure
to the benefit of and be binding upon the parties hereto and each of their
respective heirs, executors, administrators, successors, and permitted
assigns.
IN WITNESS WHEREOF of the parties hereto have executed this Lease as of the
day and year first above written.
(LANDLORD)
KENSINGTON VILLAGE HOLDINGS LTD.
Per: /s/ Cec Avery
--------------------------------------
CEC AVERY - President
/s/ Joyce Travis
--------------------------------------
JOYCE TRAVIS - Secretary/Treasurer
(TENANT)
BUILDERS REALTY (CALGARY) LTD.
Per: /s/ Cec Avery
--------------------------------------
CEC AVERY - President
/s/ Joyce Travis
--------------------------------------
JOYCE TRAVIS - Secretary/Treasurer
16
<PAGE>
EXHIBIT 10.2
LEASE AGREEMENT BY AND BETWEEN
KENSINGTON VILLAGE HOLDINGS LTD. AND
BUILDER'S REALTY (CALGARY) LTD. DATED
JUNE 2, 1997 FOR THE PROPERTY LOCATED AT
129 BOWERS STREET, AIRDRIE, ALBERTA, CANADA
<PAGE>
STANDARD LEASE
BETWEEN
KENSINGTON VILLAGE HOLDINGS LTD
LESSOR
AND
BUILDERS REALTY (CALGARY) LTD.
LESSEE
FOR 129 BOWERS STREET
AIRDRIE, ALBERTA
SEPTEMBER 1, 1997 TO AUGUST 31, 2002
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THIS LEASE MADE AS OF THIS 2ND DAY OF JUNE 1997.
BETWEEN: KENSINGTON VILLAGE HOLDINGS LTD., a duly chartered company under the
laws of ALBERTA having its head office at 1982 KENSINGTON ROAD N.W.,CALGARY
(herein called the "Landlord")
AND: BUILDERS REALTY(CALGARY)LTD. a duly chartered company under the laws of
ALBERTA having its head office at 1982 KENSINGTON ROAD N.W..CALGARY (herein
called the "Tenant")
AND:
(herein called the "Covenantor")
WITNESSETH that in consideration of the mutual covenants, conditions
and agreements the Landlord, Tenant and Covenantor and agree as follows:
ARTICLE ONE
DEFINITIONS
herein contained,
1.01 DEFINITIONS. In this Lease, unless there is something in the context
inconsistent therewith, the Landlord and Tenant agree that:
(a) "Commencement Date" means the 1st day of SEPTEMBER 1997.
(b) "Building" means that certain building or buildings (and
improvements therein and thereon) situate on the Lands and outlined in red on
SCHEDULE "A";
(c) "Common Area" means those areas of the Lands and the Building that
are designated (which designation may be changed from time to time) by the
Landlord as common areas set aside by the Landlord for the common use of the
Tenant, its licensees and invitees, in common with others entitled to the use of
such areas in the manner and for the purposes permitted by this Lease. The
Common Area includes, without limitation, parking areas, roadways, side walks,
loading areas and landscaped areas and improvements thereon, the exterior walls,
roof and foundations of the Building and all other fixtures, fittings or
structural members of the Building which are not included within the Premises or
other premises forming a part of the Building which are leased to tenants
thereof.
(d) "Common Costs" means the total, without duplication, of the costs
incurred by the Landlord for the continued management, operation, maintenance
and repair of the Lands and the Building including, without limitation, the
following:
(i) the cost of repairs, maintenance of and such replacements to
the Common Area as are properly chargeable in accordance with generally accepted
accounting principles to operating expenses as distinguished from capital
replacements or improvements;
(ii) the cost of Common Area landscaping and gardening, line
repainting, rental of signs and equipment, lighting, security protection,
sanitary control, refuse removal, removal of snow and ice, and painting, window
cleaning and otherwise maintaining the Common Area of the Building;
(iii) The cost of wages paid for maintenance and operating
personnel, including, without limitation, payments for workers' compensation,
unemployment insurance, vacation pay, Canada Pension Plan and other fringe
benefits whether statutory or otherwise but to the extent only that such wages
are directly attributable to the maintenance, operation and repair of the Lands
and the Building; the cost of service contracts with independent contractors in
respect of the maintenance, operation and repair of the Lands and the Building;
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(iv) the cost of operating, maintaining, repairing and
replacing plumbing, electrical, heating, water, sewer and other utility
systems and services in respect of the Lands and the Building;
(v) the cost of insurance against loss or damage to the Lands
and the Building by fire and other perils generally included in so called
"Extended Coverage Endorsement" and such other perils which in the reasonable
opinion of the Landlords should be insured against, but to limits not
exceeding the replacement cost thereof;
(vi) the cost of public liability insurance against damage or
loss by reason (or on account of) bodily injuries to or the death of any
person or the destruction of or damage to the property of any person
occurring on or about the Lands and Building to such limits as the landlord
may from time to time reasonably determine;
(viii) the cost of rental insurance not to exceed one years rent
from the Lands and the Building against loss of income to the Landlord in the
event of damage or destruction to the Lands, the Building or any part of
either by reason of fire or other peril;
(ix) the cost of insurance against other forms of loss or other
risk that the landlord reasonably requires from time to time and which might
reasonably be obtained for like properties similarly situated and for amount
against which a prudent landlord would insure itself;
(x) the cost of supplying electricity, water, sewer services,
natural gas, or other fuel or utility services to the Lands or the Building;
Common Costs shall not include any cost aforesaid incurred by, or on
behalf of, or at the request of, an individual tenant or tenants and
resulting in a benefit to such individual tenant or tenants which is not of
general application to all tenants of the Lands. Common Costs shall be
determined in accordance with generally accepted accounting principles
consistently applied.
(e) "Gross Rent" means the aggregate of basic rent referred to in
Article 3.01 hereof and Additional Rent for Common Costs referred to in
Article 3.03 hereof.
(f) "Lands" means the parcel or parcels of land together with the
fixtures and appurtenances thereto as more particularly described in SCHEDULE
"B"hereto, N.A.
(g) "Premises" means that portion of the Building more particularly
shown and outlined in red on SCHEDULE "A" hereto.
(h) "Proportionate Share" means for the purposes of this Lease 36.66%,
provided that in the event of any alteration or addition to the Building or
the Lands resulting in a greater or lesser rentable area the Landlord may,
from time to time, cause redetermination of the area of the Premises or the
area of all or any part of the rentable area of the Building by a qualified
quantity surveyor and, thereafter, upon notice to the Tenant "Proportionate
Share" shall thereafter mean that proportion expressed as a fraction, the
numerator or which is the area of the Premises in square meters and the
denominator of which is the aggregate of all rentable area of the Building in
square meters and any certification thereof by a qualified quantity surveyor
shall be conclusive and binding thereafter on the parties hereto.
ARTICLE TWO
DEMISE AND TERM
2.01 DEMISE. The Landlord, in consideration of the rents, covenants,
agreements and conditions herein to be paid, observed and performed by the
Tenants, does hereby demise and lease to the Tenant the Premises.
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2.02 TERM. Subject to the terms and conditions of this Lease as hereinafter
set forth, the Tenant shall have and hold the Premises for the term of 5
years (herein called the "Term") from and including the Commencement Date,
being, the 1st day of SEPTEMBER 1997, to and ending on the 31st day of AUGUST
2002.
ARTICLE THREE
RENT, TAXES AND OTHER CHARGES
3.01 BASIC RENT. The Tenant shall pay to the Landlord monthly in advance a
rental of $ 1,106.25 payable in lawful money of Canada (herein referred to as
the "Basic Rent"') and all additional rental as hereinafter provided,
commencing on the Commencement Date and thereafter on the first day of each
and every month of the Term of this Lease without any deduction, defalcation
or abatement save as herein expressly provided.
3.02 PREPAID RENT. The Landlord acknowledges receipt from the Tenant of the
sum of $ 2,212.50 to be applied toward the last 1 months' rent of the Lease
granted hereunder.
3.03 ADDITIONAL RENT FOR COMMON COSTS. The Tenant shall pay to the Landlord
as additional rent the Tenant's Proportionate Share of Common Costs in
addition to the Basic Rent hereinbefore provided. The Tenant's Proportionate
Share of Common Costs for the portion of the Term commencing on the
Commencement Date and ending December 31 of the year of the Commencement Date
is estimated to be $7,586.66 ($632.21 per month) and the Tenant shall pay
such amount to the Landlord in lawful money of Canada in equal monthly
installments in advance commencing on the Commencement Date and thereafter on
each day fixed for the payment of Basic Rent to and including the first day
of December in the year of the Commencement Date. Prior to commencement of
each ensuing calendar year of the Term, the Landlord shall deliver to the
Tenant a statement setting forth the Landlord's reasonable estimate of the
Tenant's Proportionate Share of Common Costs for such ensuing calendar year
and thereafter during such calendar year the Tenant shall pay to the Landlord
monthly in advance on each date fixed for the payment of Basic Rent and
amount equal to one twelfth of the Tenant's Proportionate Share of Common
Costs, provided that in the calendar year in which the Term expires the
Tenant's Proportionate Share of Common Costs in respect of the calendar year
shall be paid proportionately by equal monthly installments over the
remainder of the term.
3.04 REPORTING ON TENANT'S PROPORTIONATE SHARE OF COMMON COSTS. As soon as
reasonably practical following the end of the period for which such estimate
payments of Tenant's Proportionate Share of Common Costs have been made, the
Landlord will furnish to the Tenant a statement showing the actual amount of
Tenant's Proportionate Share of Common Costs settling forth in reasonable
detail Common Costs incurred by the Landlord during such period and the
Landlord and the Tenant covenant and agree each with the other that if an
overpayment of the Tenant's Proportionate Share of Common Costs has been made
by the Tenant, the Landlord will credit such amount to the Proportionate
Share of Common Costs for the ensuing period and, if there is no ensuing
period, such amount shall be paid to the Tenant, and if an amount remains
owing to the Landlord in respect of the Tenant's Proportionate share of
Common Costs, the Tenant will forth with pay such amount to the Landlord.
The Tenant and the Landlord covenant and agree each with the other that the
covenants contained in the Article 3.04 shall survive notwithstanding
termination of expiration of this Lease.
3.05 RECOVERY OF ADDITIONAL RENT. The Tenant's Proportionate Share of Common
Costs, the management fee hereinbefore referred to and any other sum
expressed to be payable to the Landlord hereunder as additional rent (herein
collectively referred to as "Additional Rent") shall be recoverable by the
Landlord from the Tenant in the same manner as Basic Rent reserved and in
arrears under the terms hereof.
3.06 INTEREST ON AMOUNTS IN ARREARS. When Basic Rent or any Additional
Rent(including interest thereon, of any) payable hereunder by the Tenant to
the Landlord is in arrears, the same shall bear interest at the rate of PRIME
+ 3% per centum per annum and such interest shall be and is agreed to be due
and payable on demand as additional rent reserved hereunder.
3.07 TENANT'S TAXES AND OTHER CHARGES. The Tenant will pay, as and when due,
to the authority to which same are owing:
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(a) all taxes, licenses, rates, duties and assessments imposed,
assessed or levied by any lawful authority during the Term and relating to
the business carried on in and the use and occupancy of the Premises by
the Tenant (and every subtenant and licensee) and relating to personal
property and all business and trade fixtures and other improvements owned
or installed by or on behalf of the Tenant in, on or affixed to the
Premises, whether any such taxes, licenses, rates, duties and assessments
are payable by law by the Tenant or by the Landlord and whether or not
same are allocated separately in respect of the Premises;
3.08 NET LEASE. The Tenant will well and truly pay to the Landlord all
Basic Rent and Additional Rent required to be paid by the Tenant pursuant to
this Lease without and deduction, defalcation, abatement, or set-off
whatsoever, it being the intention of this Lease that all expenses, costs,
payments, and outgoings incurred in respect of the Premises, the Lands and
the Building (unless otherwise expressly stipulated herein to the contrary)
will be borne by the Tenant and other tenants, and, that rent will be
absolutely net to the Landlord.
Upon request by the Landlord, the Tenant will deliver promptly to the
landlord, for inspection, receipts for payment of all charges payable by the
Tenant pursuant to the Article 3.08 with were due and payable up to one month
prior to such request, and will furnish to the landlord, upon request,
evidence of payment before 31st day of January in each covering payments for
the preceding year.
3.09 IRREGULAR PERIODS. If, for any reason, it becomes necessary to
calculate Basic Rent or Additional Rent for irregular periods an appropriate
pro rata adjustment will be made on a daily basis in order to compute such
rent for such irregular periods as a the date of termination of the Term.
3.10 DISPUTE AS TO COSTS In the event of any dispute as to the amount of any
monies to be paid by the Tenant pursuant to this Lease, the certificate of an
independent chartered accountant appointed by the Landlord, determining such
amount, will be final and binding on the Landlord and Tenant.
3.11 POST-DATE CHEQUES. The Tenant agrees to deliver to the Landlord upon
occupancy pursuant to this Lease a series of post-dated cheques to cover the
monthly installments of Gross Rent and Additional Rent for management
hereinbefore reserved for the period ending December 31 in the year of the
Commencement Date and thereafter prior to January 1 in each year of the Term
a series of post-dated cheques to cover the monthly installments of Gross
Rent for Management for Each ensuring calendar year or portion thereof of the
Term of this Lease.
ARTICLE FOUR
QUALITY OF THE PREMISES AND USE OF THE PREMISES
4.01 EXAMINATION OF PREMISES. The Tenant will examine the Premises prior to
commencement of the Term and the taking of possession of the Premises will be
conclusive evidence as against the Tenant that, at the time thereof, the
Premises were in good and satisfactory condition, except for latent defects.
4.02 POSSESSION AND USE OF PREMISES. The Tenant will take possession of the
Premises on the Commencement Date. The Tenant will not use of permit the
Premises or any part thereof to be used for any purpose other than REAL
ESTATE OFFICES without the prior written consent of the Landlord, which
consent will not be unreasonably withheld.
4.03 NO NUISANCE, OVERLOADING OR WASTE. The Tenant will not, at any time
during the Term, carry on or permit to be carried on, in the Premises or
elsewhere in the Building anything which is noxious or offensive and, will
not do or permit to be done anything whatsoever any time during the Term upon
the Premises or elsewhere, in the Building which would annoy or disturb or
cause nuisance or damage to the occupiers or owners of lands and premises
adjoining or in the vicinity of the Premises. The Tenant will not permit any
overloading of the floor of the Premises or elsewhere in the Building and
will not place thereon any heavy object without the prior written consent of
the Landlord. The Tenant will not cause any waste or damage to the Premises.
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4.04 SIGNS. The Tenant will not erect, paint, display, place, affix or
maintain, or permit to be erected, painted displayed, placed, affixed or
maintained, any sign, decoration, pictures, lettering or advertising matter
of any nature or kind, whatsoever either on the exterior walls of the
Premises or on the Building or Common Area (including, without limitation, in
or on any windows or anywhere in the interior of the premises which is
visible from the outside) without first obtaining the Landlord's written
consent in each instance, such consent not to be unreasonably withheld. The
Tenant shall, at its cost, acquire all requisite municipal or other
governmental permit which may be required to erect or maintain any such
approved sign or advertisement and the Tenant 'also agrees that any sign or
advertisement of placed or fixed to the exterior or any outside part of the
Lands and building shall be maintained in a proper state of repair and that
it will indemnify and hold harmless and Landlord for all personal injuries or
property damage or loss caused from the placing or fixing of any such sign or
advertisements. Any such approved sign or advertisement is agreed to be a
trade or Tenant's fixture and subject to the provisions of Article 9.04
hereof.
4.05 DELIVERIES AND LOADING. The Tenant will permit deliveries to the
Premises arid loading and unloading to be done only through the designated
loading areas and only in accordance with such rules as the Landlord may from
time to time reasonably prescribe.
4.06 WINDOWS. The Tenant will cause the windows of the Premises to be
suitably screened and will not permit storage inside of Premises to be
visible through such windows.
4.07 NOT TO AFFECT LANDLORD'S INSURANCES. The Tenant will not do or permit
to be done, or omit to do, on the Premises or elsewhere in the Building
anything which will directly or indirectly cause the rate of insurance upon
the Lands and improvements thereon or any part thereof or the Landlord's
liability insurance in respect thereof to be increased. If any insurance rate
is thereby increased the Tenant will not store or permit to be stored upon
the Premises anything of a dangerous, inflammable or explosive nature or
anything which would have the effect of increasing the Landlord's insurance
costs or of leading to the cancellation of insurance. If any insurance policy
is cancelled by an insurer by reason of the use and occupation of the
Premises by the Tenant or by an assignee, sub-tenant or anyone permitted by
the Tenant to be on the Premises, then the Landlord may, at is option,
terminate this Lease upon fifteen (15) days' written notice, and, thereupon
rent and any other payments for which the Tenant is liable under this Lease
will be apportioned and paid in full to the date of expiration of such
notice, and the Tenant will immediately deliver up vacant possession of the
Premises to the landlord and the Landlord may re-enter and take possession of
same and, at its option, and at the expense of the Tenant, may rectify the
situation causing such cancellation.
4.08 PREVENTING CANCELLATION. The Landlord, its employees, or agents, may
at any time enter upon the Premises to remove any article or remedy any
condition which, in the opinion of the Landlord reasonable arrived at, would
be likely to lead to cancellation of any policy of insurance. Such entry by
the Landlord will not be deemed to be a re-entry nor a trespass.
ARTICLE FIVE
ASSIGNING, SUBLETTING AND ENCUMBERING
5.01 ASSIGNING AND SUB-LETTING BY TENANT. That the Tenant shall not assign
this Lease, nor assign, sub-let, part with or share possession or occupation
of the Premises or any part thereof without he prior written consent of the
Landlord, which consent shall not be unreasonably or arbitrarily withheld,
provided that neither an assignment of (lie Lease, nor sub-letting, parting
with or sharing with possession or occupation of the Premises, nor the
Landlord's consent thereto, shall relieve the Tenant from the covenants and
agreements herein contained, the Landlord may as a condition of any such
consent require the assignee, sub-lessee, licensee or occupant to covenant
with the Landlord for the due and faithful performance and observance of the
terms of this Lease, including this clause, Notwithstanding the foregoing,
any request for the Landlord's consent to an assignment or sub-letting or
parting with or sharing possession or occupation of the Premises shall be
accompanied by such information, as to the proposed assignee, sub-tenant
licensee, or occupant's business and financial responsibility as the Landlord
may reasonably require, together with the terms of the proposed assignment,
parting with or sharing of possession or occupation; and the Landlord shall
have the right, exercisable of) its own behalf or on behalf of such party as
the Landlord may designate, to take the assignment or
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sub-lease or other wise, as the case may be, from the Tenant upon the same
terms and conditions as are set forth in this Lease and in any such case this
Lease or such portion thereof as is affected by the assignment or sub-lease
or otherwise, may at the election of the Landlord be treated as surrendered
as of the effective date of such proposed assignment. The Landlord shall have
a period of thirty (30) days in which to exercise its aforesaid rights and
within which to communicate such exercise to the Tenant and if not so
exercised, the Landlord shall not late than such 30th day, notify the Tenant
if it approves or disapproves the assignment, sub-lease, parting with or
sharing the possession or occupation of the Premises and in the case of
approval the Tenant shall have a period of sixty (60) days thereafter in
which to assign, sub-lease, part with or share the possession or occupation
of the Premises to the party so named by the Tenant in accordance with the
terms and conditions so indicated to the landlord in the aforesaid notice. In
the event that the Tenant does not so assign, sub-let or part with or share
possession or occupation of the Premises within such sixty (60) day period,
the Landlord's consent to such assignment, sub-leasing, parting with or
sharing the possession or occupation of the Premises shall be null and void,
and the Tenant shall not be permitted to assign, sub-let part with or share
the possession or occupation of the Premises without again conforming to all
the express provisions of the clause.
5.02 CHANGE IN CONTROL. If the Tenant is a private corporation, any sale or
other disposition of its shares of security resulting in a change of control
of beneficial ownership of such corporation shall be deemed to be an
assignment of this Lease and subject to the provisions hereof with respect to
assignment by the Tenant.
ARTICLE SIX
COMPLIANCE WITH LAWS, BUILDER'S LIENS
6.01 COMPLIANCE WITH LAWS. The Tenant, during the Term and its own expense,
will promptly comply, and will cause its employees, agents, licensees,
invites. and other persons on or about the Premises to comply with the
requirements of every applicable law, rule, by-law, regulation, order,
direction, ordinance and standard of every competent federal, provincial,
municipal, regional and other statutory authority in force during the Term
and concerning or affecting the condition, maintenance, use and occupation of
the Premises and all improvement, appurtenances, equipment, machinery and
other facilities from time to time therein, thereon or used in connection
therewith and the making of any repairs, replacements and alterations to the
Premises and with every applicable regulation, order and requirement of the
Insurance Bureau of Canada or any successor body having similar functions and
of any liability or fire insurance company by which the Landlord and Tenant
or either of them may be insured at any time during the Term, and, in so
doing, the Tenant, subject to Article 7 hereof, will make any necessary
alterations, repairs, additions or deletions in, on or to the Premises,
improvements or appurtenances or any part or parts thereof, and any
equipment, machinery or other facilities in, on, upon, used in connection
with or appurtenant to the Premises or any part thereof,
6.02 BUILDER'S LIENS. The Tenant will not suffer or permit any lien under
the Builders' Lien Act or like statute be filed against title to the Premises
or lands by reason of labour, services or materials supplied or claimed to
have been supplied to the Tenant or anyone holding any interest through or
under the Tenant or anyone holding any interest through or under the Tenant
during the Term. If any such lien is filed, the Tenant will procure
registration of its discharge forthwith after the lien has come to the notice
of the Tenant. If the Tenant desires to contest in good faith the amount or
validity of any lien and has so notified the Landlord, and if the Tenant has
deposited with the Landlord or with a trustee, or paid into Court to the
credit of any lien action, the amount of the lien claimed plus an amount for
costs satisfactory to the Landlord, then the Tenant may defer payment of such
lien claim for a period of time sufficient to enable the Tenant to contest
the claim with due diligence, provided always that neither the Premises nor
the Tenant's leasehold interest therein shall thereby become liable to
forfeiture or sale. The Landlord may, but will not be obliged to, discharge
any lien filed any time if in the Landlord's judgement the Premises or the
Tenant's interest therein becomes liable to any forfeiture or sale or is
otherwise in jeopardy, and any amount paid by the Landlord in so doing,
together will all reasonable costs and expenses of the Landlord, will be
reimbursed to the Landlord by the Tenant forthwith on demand. Nothing herein
contained will be deemed to authorize the Tenant, or imply consent or
agreement on the part of the Landlord, to subject the Landlord's estate and
interest in the Premises to any lien.
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ARTICLE SEVEN
REPAIRS, MAINTENANCE AND ALTERATIONS
7.01 REPAIR AND MAINTENANCE. The Tenant, throughout the Term at its own
expense, will repair, maintain and keep the Premises and all improvement,.
appurtenances and equipment therein and thereon (including, without
limitation, all electrical, heating, ventilation, sprinkler, and plumbing
fixtures and equipment, and windows) in good repair and condition, as is
fitting for a comparable quality warehouse and accessory office development
and whether such repairs are structural or non-structural, ordinary or extra
ordinary, foreseen or unforeseen, excepting from such standard of repair and
maintenance damage by fire and other risks against which the Landlord is
insured, reasonable wear and (car to the extent only that such reasonable
wear and tear is not inconsistent with maintenance in good order and
condition of Premises generally, and repairs for which the landlord is
responsible under this lease. "Repairs" shall include replacements and
renewals when necessary.
7.02 INSPECTION AND EMERGENCIES. The Landlord's representatives may enter
upon the Premises at all reasonable times and during and emergency to inspect
the state of repair and maintenance.
7.03 REPAIRS BY DESIGNATED TRADESPEOPLE. The Tenant, when necessary and
whether upon receipt of notice from the Landlord or not, will effect and pay
for such maintenance and repairs for which it is responsible and in so doing
will use subcontractors, contractors and tradespeople approved by the
Landlord in writing, such approval not to be unreasonably withheld.
7.04 REPAIR ACCORDING TO NOTICE. Without restricting the generality of
Article 7.01 hereof, the Tenant, promptly upon notice by the Landlord, will
make and do all repairs and maintenance for which it is responsible. If the
Tenant fails to repair or maintain with what the Landlord considers to be a
reasonable time, then the Landlord may cause such repairs and maintenance to
be undertaken (and may cause its employees and agents to enter on the
Premises for such purpose). Should the Landlord deem it necessary to
undertake any repairs or maintenance, then the Tenant will pay to the
Landlord as a fee for supervision for carrying out the Tenant's obligations
an amount equal to 10 % of the monies expended or of the cost of repairs of
maintenance carried out by the Landlord, which amount will be in addition to
the cost of such work, or monies expended.
7.05 ALTERATIONS. Notwithstanding anything to the contrary in this Lease,
the Tenant will not make to, or erect in the Premises, any installation,
alterations, additions or partitions without having received the prior
written approval of the Landlord to the plan and specifications and any
variation or amendment thereof, which approval is not a substitute for the
approval of any relevant statutory authority. The Landlord will be entitled
to recover from the Tenant the cost of having its architects or engineers
examine such plans and specifications.
7.06 CONSTRUCTION AND ALTERATION. The Tenant will construct the
installations, alterations, additions and partitions only in accordance with
the approved plans and specifications and in a good and workmanlike manner
and will proceed diligently to completion. All such construction will be done
only by contractors, sub-contractors and tradespeople approved in writing by
the Landlord, such approval not to be unreasonably withheld.
7.07 PAYMENT FOR WORK. The Tenant will pay for all expenses incurred for
labour performed upon, and materials incorporated into, the Premises for
which it is responsible as same are due.
7.08 LANDLORD'S REPAIRS. Subject to the Landlord's right, in accordance
with this Lease, to elect not to rebuild in the event of damage or
destruction, the Landlord, throughout the Term will repair, maintain and keep
the Common Area in good repair and condition, reasonable wear and tear
excepted.
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ARTICLE EIGHT
COMMON AREA AND PARKING
8.01 PARKING. ALL PARKING IS UNASSIGNED. The parking area shall be used for
such purpose only at the sole risk of the Tenant, its servants and agents,
and provided further that the Landlord shall not be obliged to police usage
thereof. The Landlord may, but shall not be obliged to, remove or cause
removal of any motor vehicle of the Tenant, it invitees and licensees, parked
in areas other than the designated parking area and the Tenant shall pay the
costs of any such removal as Additional Rent hereunder.
8.02 STORAGE. The Tenant will not store anything of whatsoever nature of
kind on the Common Area of any parking area designated for the exclusive use
of the Tenant.
8.03 NUISANCE. The Tenant will not do anything which may injure the Common
Area or be a nuisance to any other Tenants of Premises situate on the Lands.
8.04 USE OF COMMON AREA. Subject to this Lease and to such other reasonable
rules and regulations as the Landlord may make pertaining to the use of the
Common Area, the Tenant will have for itself and its licensees and invitees,
the non-exclusive right to use the Common Area (save and except only the roof
of the Building and parking areas designated by the Landlord for the use of
other tenants of the Building) in common with others entitled thereto for
their proper and intended purposes during normal business hours. The Tenant
acknowledges that the Common Area is subject to the exclusive control and
management of the Landlord and that the Landlord shall be entitled, from time
to time, to alter the Common Area and to make changes and additions thereto.
ARTICLE NINE
SURRENDER OF PREMISES AND REMOVAL OF FIXTURES
9.01 SURRENDER. Upon the expiration or earlier termination of this Lease
and the Term and any period of' overholding, the Tenant will surrender to the
Landlord possession of the Premises and fixtures thereon (subject to the
Article 9), all of which will become the property of the Landlord without any
claim by a compensation to the Tenant, all in good order, condition and
repair in accordance with the Tenant's obligation to repair and maintain, and
free and clear of all encumbrances and all claims of the Tenants or of any
person claiming by or through or under the Tenants, and all the rights of the
Tenant under this Lease will terminate (but the Tenant, notwithstanding such
termination, will remain and be liable to the Landlord for any loss, damage,
expenses or costs suffered or incurred by the Landlord by reason of any
default by the Tenant).
9.02 DOCUMENT OF SURRENDER. If this Lease and the Term are terminated for
any reason, the Tenant will deliver to the Landlord forthwith a document
surrendering this Lease in form acceptable for registration in the
appropriate Land Titles Office.
9.03 CONDITIONS OF PREMISES. Without restricting the generality of article
9.01, the Tenant, immediately before the expiration or earlier termination of
the lease will wash the floors, windows, doors, walls and woodwork of the
Premises and leave the Premises in broom clean condition.
9.04 REMOVAL OF FIXTURES. Provided that the Tenant is not in default
hereunder, the Tenant may, at the expiration of the term, remove from the
Premises all trade or Tenant's fixtures. If the Tenant damages the premises
during such removal the Tenant will make good such damage. In no event will
the Tenant remove from the Premises any building or any plumbing, heating,
air conditioning, electrical. or ventilating plan or equipment or other
building services; save and except that the Landlord will be entitled upon
the expiration or earlier termination of the Lease to require the Tenant to,
and Tenant shall, remove its installations, alterations, additions,
partitions and fixtures and anything in the nature of improvements made or
installed by the Tenant or by the Landlord on behalf of the Tenant to or in
the Premises, or any of the, and to make good any damage caused to the
Premises by such removal.
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ARTICLE TEN
LIABILITY AND INDEMNIFICATION
10.01 NON-LIABILITY OF LANDLORD. Except for the negligence of the Landlord,
the Tenant agrees that the Landlord will not be liable or responsible in any
way for the any personal injury that may be sustained by the Tenant or any
employee or customer of the Tenant, or of any other person who may be upon
the Premises or on the Common Area or side walks, parking areas, highways or
loading areas adjacent thereto, or for any loss of or damage or injury to,
property belonging to or in the possession of the Tenant or any employee or
customer of the Tenant or any other person, and without limiting the
generality of the foregoing, the Landlord will not be liable or responsible
in any way for any injury, loss or damage, to person or property caused by
smoke, steam, water, ice, rain, snow or fumes which may leak, issue or flow
into, through or from the Premises or from the water sprinkler, drainage or
smoke pipes or plumbing equipment therein or from any other place or quarter
or cause by a attributable to the condition or arrangement of any electrical
or other wiring or the air conditioning equipment, or, for any matter or
thing of whatsoever nature of kind arising from the Tenant's use and
occupation of the Premises or otherwise.
10.02 INDEMNIFICATION. The Tenant will indemnify and save harmless and
Landlord from the against any and all liabilities, damages, costs, expenses,
causes of action, actions, claims, suits and judgments which the Landlord may
incur or suffer or be put to by reason of or in connection with or arising
from:
(a) any breach, violation or non-performance by the Tenant of any
covenant, condition or agreement set forth in this Lease;
(b) any damage to property of the Tenant, any sub-tenant,
licensee, and all persons claiming through or under the
Tenant or any sub-tenant or licensee, or any of the, or
damage to any other property howsoever occasioned by the
condition by the condition , use, occupation or maintenance
of the premises;
(c) any injury to any person, including death resulting any time
therefrom occurring in or about the Premises and Lands;
(d) any wrongful act or neglect of the Tenant, its invitees and
licensees, in and about the Premises and Lands,
(e) any matters referred to in Article 11.01 hereof.
10.03 SURVIVAL OF INDEMNIFICATION. Such indemnification will survive any
termination of this Lease, anything in this Lease to the contrary
notwithstanding.
ARTICLE ELEVEN
INSURANCE
11.01 TENANT'S INSURANCE. The Tenant will purchase and keep in force throughout
the term:
(a) fire insurance with extended coverage endorsement (including
sprinkler leakage) covering all leasehold improvements made to or
installed in the Premises by or on behalf of the Tenant in an amount
equal to the full replacement value;
(b) fire insurance with extended coverage endorsement (including
sprinkler leakage) covering all the contents of the Premises whether
owned b the Tenant or for which the Tenant is responsible in an
amount at least equal to the actual cash value;
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(c) comprehensive general liability insurance (including without
limitation, tenant's fire, legal liability and contractual liability
to cover the responsibilities assumed under Article 10.02 hereof)
with a cross-liability clause and otherwise in amounts and on terms
acceptable to the Landlord.
11.02 POLICIES. The Tenant will effect all policies with insurers, and upon
terms and in amounts, satisfactory to the Landlord. The Tenant will furnish
to the landlord copies of all policies, or insurance certificates in lieu
thereof, and will provide written notice of the continuation of such policies
not less than ten (10) days prior to their respective expiry dates. The
Tenant will pay the premium for each policy. If the Tenant fails to purchase
or keep in force such insurance the Landlord may effect such insurance, the
cost thereof being recoverable from the Tenant forthwith on demand as
Additional Rent hereunder.
11.03 LANDLORD AS INSURED. The Tenant will cause each of its policies to
contain an undertaking by the insurer(s) to notify the Landlord at least
thirty (3) days prior to cancellation or any other change material to the
landlord's interests. The liability policy will include the Landlord as an
additional named insured with a cross-liability clause.
11.04 SUBROGATION. The Landlord and Tenant will each cause any insurance
policy obtained by it pursuant to this Lease to contain a waiver of
subrogation clause in favor of the Landlord or Tenant, as the case may be.
11.05 LANDLORD TO INSURE. The Landlord' throughout the Term will carry
insurance against fire and other perils as described in the definition of
Common Costs.
ARTICLE TWELVE
DAMAGE OR DESTRUCTION
12.01 DAMAGE TO PREMISES. If an whenever the Premises are destroyed or
damaged by fire or other casualty against which the Landlord is insured, so
as to be totally unfit for occupancy, rent will abate until the Premises are
repaired or rebuilt. If and whenever the Premises are damaged by fire or
other casualty against which the Landlord is insured and the damage is such
that the Premises can be partially used, then until such damage is repaired,
rent will abate by the same proportion as the area of the part of the
Premises rendered unfit for occupancy is of the whole of the Premises. The
Landlord, with reasonable diligence, will repair and restore the Premises
unless the Tenant is obliged to repair hereunder or unless this Lease is
terminated pursuant to Article 12.02 hereof.
12.02 TERMINATION. If the Premises are damaged or destroyed by any cause
whatsoever, and if, in the opinion of' the Landlord reasonably arrived at,
the Premises cannot be rebuilt or made fit for the purposes of Tenant within
ninety (90) days of the damage or destruction, the Landlord at its option may
terminate this Lease by giving to the Tenant, with thirty (3) days after such
damage or destruction, notice of termination, and thereupon Basic Rent and
Additional Rent will be apportioned and paid to the date of the damage or
destruction and the Tenant will immediately deliver up possession of the
Premises to the Landlord.
12.03 DAMAGE TO BUILDING. If the Building in which the Premises are situated
is damaged or destroyed by any cause whatsoever (irrespective of whether the
Premises are damaged or destroyed) and if, in the opinion of the Landlord
reasonably arrived at, the Building cannot be rebuilt or made fit the
purposes of the affected Tenants within on hundred and eighty (180) days of
the dame or destruction, the Landlord, at its option, may terminate this
Lease by giving to the Tenant, within thirty (30) days of such damage or
destruction, notice of termination requiring a vacant possession of the
Premises sixty (60) days after delivery of such notice and thereupon Basic
Rent and Additional Rent will be apportioned and paid to the date on which
vacant possession is required and Tenant will deliver up possession of the
Premises to the Landlord in accordance with such notice.
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ARTICLE THIRTEEN
QUIET ENJOYMENT
13.01 QUIET ENJOYMENT. If the Tenant duly and regularly pays the rent and
complies with its obligations under this Lease, the Tenant will be entitled
to (and shall and may) peaceably possess and enjoy the Premises during the
Term without any interruption or disturbance from the Landlord or any person
or persons claiming by, through or under the Landlord.
ARTICLE FOURTEEN
PERFORMANCE OF TENANTS COVENANTS, DEFAULT AND BANKRUPTCY
14.01 LANDLORD MAY PERFORM COVENANTS. If the Tenant, is in default of any of
its covenants and agreements herein, then the Landlord, without limiting any
other remedy which it may have, will have the right to remedy and such
default and for such purpose may at any time enter upon the Premises. No
entry for such purpose will be deemed to cause a forfeiture or termination of
this Lease. In order to cure such default, the Landlord may do such things as
are necessary to cure the default and such things as may be incidental
thereto, (including without limitation, the right to make repairs and to
expend monies). The Tenant will reimburse the Landlord forthwith upon demand
as Additional Rent hereunder the aggregate of all expenses incurred by the
Landlord in remedying any such default. The Landlord will be under no
obligation to remedy any default of the Tenant, and will not incur any
liability to the Tenant for any action or omission in the course of its
remedying or attempting to remedy any such default unless such act amounts to
intentional misconduct or gross negligence on the part of the landlord.
14.02 RIGHTS OF TERMINATION. If and whenever:
(a) the Premises become vacant or remain unoccupied for five (5) days or
more or are not used for the purpose herein permitted;
(b) any rent or Additional Rent remains unpaid after any of the days on which
the same ought to have been paid and following ten (10) days' notice of
non-payment by the Landlord to the Tenant;
(c) there is a breach of any of the Tenant's obligations hereunder (other than
as set out in the other clauses of this Article) which is not cured within
fifteen (15) days after delivery of notice by the Landlord to the Tenant
specifying such breach PROVIDED THAT if any default of the Tenant can only
be cured by the performance of work or the furnishing of materials,. and
if such work cannot reasonably be completed or such materials reasonably
obtained and utilized within said fifteen (15) days, such default will not
be deemed to continue if the Tenant proceeds promptly with such work as
may be necessary to cure the default and continued diligently to complete
such work;
(d) the Term or any goods and chattels on the Premises are at any time seized
or taken in execution or attachment;
(e) a receiver, guardian, trustee in bankruptcy or any other similar
officer is appointed to take charge of all or any substantial part
of the tenant's property by a court of competent jurisdiction;
(f) a petition is filed for the re-organization of the Tenant under any
provision of the Bankruptcy Act or any law of Canada or any province
thereof or of the jurisdiction in which the Tenant is incorporated
relating to bankruptcy or insolvency then in force;
(g) the Tenant becomes insolvent;
(h) the Tenant files a petition for such re-organization or for
arrangements under any provision of the Bankruptcy Act or any law of
Canada or any province thereof or of the jurisdiction in which the
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Tenant is incorporated relating to bankruptcy or insolvency then in
force and providing a plan for a debtor to settle, satisfy or to
extend the time for the payment of debts;
(i) if any application or petition or certificate or order is made or
granted for the winding up or dissolution of the Tenant, voluntarily or
otherwise;
the Tenant assigns, sub-lets or parts with possession of the Premises without
the Landlord's consent as required herein;
then in any of the said cases, (and withstanding any prior waiver of breach
of covenant) the Landlord, at its option may (and without prejudice to any
other right or remedy it may then have or be entitled to) cancel this Lease,
whereupon this Lease will terminate and the Term will expire and be ended and
then current month's rent and the next ensuring three months' Basic Rent and
all Additional Rent for the then current year (to be reckoned on the rate for
the next preceding year in case the rate for the then current year has not
been fixed) shall thereupon become immediately due and payable and the Term,
at the option of the Landlord, will be forfeited, and the Landlord may
immediately distrain for all such rent as well as any arrears then unpaid and
the Landlord lawfully may immediately or at any time thereafter and without
notice or any form of legal process re-enter upon the premises or any part
thereof in the name of the whole and re-possess the same, and expel the
Tenant and those claiming through or under it and remove its or their effects
(forcibly if necessary) without being deemed guilty of any manner of
trespass, and without prejudice to any remedies which might otherwise be used
for arrears of rent or preceding breach of covenant.
14.03 WAIVER WITH RESPECT TO RE-ENTRY. The Tenant waives any requirement that
notice of the Landlord's intention) to re-enter be served or that the
Landlord commence legal proceedings in order to re-enter.
14.04 WAIVER OF BENEFIT OF LEGISLATION AND SEIZURE. The Tenant irrevocably
waives and renounces the benefit of any present or future law taking away or
diminishing the Landlord's privilege on the property of the Tenant and right
of' distress and agrees with the Landlord, notwithstanding any such law, that
the Landlord may seize and sell all the Tenant's goods and property, whether
within the Premises or not and apply the proceeds of such sale upon rent and
all other amounts outstanding hereunder and upon the cost of the seizure and
sale in the same manner as might have been done if such law had not been
passed. The Tenant further agrees that if it leaves the Premises leaving any
Basic Rent or Additional Rent or other amounts to be paid hereunder unpaid,
the Landlord, in addition to any remedy otherwise provided at law or in
equity, may seize and sell the goods and chattels of the Tenant at any place
to which the Tenant or any other person may have removed them, in the same
manner as if such goods and chattels have remained on the Premises.
14.05 REMEDIES OF LANDLORD ARE CUMULATIVE. The remedies of the Landlord in
this Lease are cumulative and are in addition to any remedies of the Landlord
at law or in equity. No remedy will be deemed to be exclusive and the
Landlord may from time to time have recourse to one or more of all the
available remedies specified herein or at law or in equity.
ARTICLE FIFTEEN
IMPOSSIBILITY OF PERFORMANCE
15.01 NON-PERFORMANCE BY LANDLORD. Whenever the Landlord is unable to fulfill
any obligation hereunder in respect of the provision of any service, utility,
work or repairs by reason of being unable to obtain the materials, goods,
equipment, service utility or labour required to enable it to fulfill such
obligation or by reason of any law or regulation or by reason of any other
cause beyond its reasonable control, the Landlord will be entitled to extend
the time for fulfillment of such obligation by a time equal to the duration
of the delay or restriction. The Tenant will not be entitled to any
compensation for any inconvenience, nuisance or discomfort thereby
occasioned, or to cancel this Lease.
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ARTICLE SIXTEEN
REGULATIONS
16.01 REGULATION. The Tenant and its employees, agents, contractors,
licensees and invitees will be bound by all such reasonable regulations as
the Landlord may from time to time make of which written notice is given to
the Tenant. All such regulations will be deemed to be incorporated into and
form part of this Lease.
ARTICLE SEVENTEEN
OVERHOLDING
17.01 OVERHOLDING. If the Tenant remains in possession of the Premises after
the expiration of this Lease and without the execution and delivery of a new
lease, the Landlord may re-enter and take possession of the Premises and
remove the Tenant therefrom and the Landlord may use such force as it may
deem necessary for the purpose without being liable in respect thereof or for
any loss or damage occasioned thereby; PROVIDED THAT while the Tenant
remains in possession after the expiration of this Lease, the tenancy, tin
the absence of written agreement, will be from month to month only at a rent
per month equal to 1.25 times the Gross Rent and Additional Rent for
management payable in respect of the month immediately preceding expiration
of this Lease payable in advance on the 1st day of each month and shall be
subject to all terms of the lease, except that the tenancy will be from month
to month only and a tenancy from year to year will not be created by
implication of law.
ARTICLE EIGHTEEN
INSPECTION, SALE AND LEASE
18.01 SIGN. The Landlord may from time to time place upon the premises a
notice of reasonable dimensions and reasonably placed so as not to interfere
with the business of the Tenant stating that the Lands are for sale, and
during the last six months of the Term may similarly place a sign stating
that the Premises are to be let.
18.02 INSPECTION. The Landlord or its representatives may exhibit the
Premises at reasonable times to prospective tenants during the last six
months of the Term and may also exhibit the Premises at reasonable times for
the purposes of the Landlord's own financing and for prospective purchasers.
ARTICLE NINETEEN
MISCELLANEOUS
19.01 WAIVER. No waiver of any default will be binding unless acknowledge in
writing by the Landlord.
19.02 CONDONING. Any condoning, excusing or overlooking by the Landlord of
any default will not operate waiver of the Landlord's rights hereunder in
respect of any subsequent default.
19.03 SUBORDINATION. This Lease at the request of the Landlord will be
subject, subordinate and postponed to all mortgages (including any deed of
trust and mortgage securing bonds and all indentures supplemental thereto)
which may now or hereafter charge or affect the Premises and to all renewals,
modifications, consolidations, replacements and extensions of such mortgages,
to the intent that such mortgages and all renewals, modifications,
consolidations, replacements and extensions thereof will have priority over
this Lease notwithstanding the respective dates of execution or registration
thereof. The Tenant agrees to execute promptly and document in confirmation
of such subordination, postponement and priority which the Landlord may
request and if the Tenant does not so execute such document within ten(10)
days after demand in writing, the Tenant does hereby make, constitute and
irrevocably appoint the Landlord as his attorney-in-fact and in his name,
place and stead so to do.
19.04 ACKNOWLEDGMENT BY THE TENANT. The Tenant will execute promptly, when
requested by the Landlord, a certificate in favor of any prospective
mortgagee or purchaser of the Landlord certifying the status of this Lease,
any
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modifications or breaches of this Lease, and the status of the rent account,
all with the intent that any such acknowledgment or certificate may be relied
upon by any party to whom it is directed.
19.05 SEVERABILITY. If any provision of this Lease is illegal or invalid or
unenforceable at law it will be deemed TO be severed from this Lease and the
remaining provisions will nevertheless continue to be in full force and
effect.
19.06 HEADINGS. All headings in this Lease are inserted for convenience of
reference only and will not affect the construction and interpretation of
this Lease.
19.07 REPRESENTATIONS AND ENTIRE AGREEMENT. The Tenant acknowledges and
agrees that the Landlord has made no representations, covenants, warranties,
guarantees, promises or agreements (verbal or otherwise) with the Tenant
other than those contained in this Lease; that no agreement collateral hereto
will be binding upon the Landlord unless made in writing and signed by the
Landlord; and, that this Lease constitutes the entire agreement between the
Landlord and Tenant.
19.08 NOTICES. Any notice, request or demand herein provided or permitted to
be given hereunder, shall be sufficiently given if personally served or
mailed by registered mail as follows:
(a) to the Landlord: 1982 KENSINGTON ROAD N.W..CALGARY, ALBERTA
(b) to the Tenant: 1982 KENSINGTON ROAD N.W. CALGARY ALBERTA
Any notice mailed as aforesaid shall for the purposes of this Lease be
presumed to have been given three (3) business days following the day on
which such notice is mailed as aforesaid. Any party may at any time given
notice in writing to the others of any change of address, and after the
giving of such notice the address therein specified will be deemed to be the
address of such party for the purpose of giving notices hereunder.
19.09 TIME OF ESSENCE. Time will be of the essence of this Lease.
19.10 SIGNING OF LEASES. The Landlord will not be deemed to have made an
offer to the Tenant by furnishing to the Tenant a copy of this
Lease with particulars inserted; and, notwithstanding that installments of
rent may be received by the Landlord when this lease is received by it for
signature to contractual or other rights will exist or be created between the
Landlord and Tenant until such time as all parties to this Lease have
executed the same.
19.11 RELATIONSHIP. Nothing herein contained will at any time create or be
construed as creating a joint venture, partnership or relationship between
the parties other than that of Landlord and Tenant.
19.12 GOVERNING LAW. This Lease will be construed and governed by the laws
of the Province of Alberta.
19.13 GENDER. Words in the singular will include the plural and words in the
plural will include the singular and words in the masculine gender will
include feminine and neuter genders where the context so requires.
19.14 COVENANTOR'S CLAUSE. In consideration of the grant of this Lease by
the landlord and, as a condition thereof, the Covenantor hereby covenants
with and guarantees to the Landlord the performance and observance of all of
the covenants and agreements of the Tenant to be performed or observed by the
Tenant hereunder, including the payment of Basic Rent and Additional Rent on
the days and at the times and in the manner specified in this Lease might or
could operate as a release of the Tenant of A of its obligations hereunder
shall not release or discharge the Covenantor from its covenants herein. In
the enforcement of its fights hereunder the Landlord may proceed against the
Covenantor as if the Covenantor was named Tenant hereunder. The Covenantor
hereby waives any rights to require the Landlord to proceed against the
Tenant or to proceed against or exhaust any security held from the Tenant or
to pursue any other remedy whatsoever which may be available to the Landlord
before proceeding against the Covenantor. No neglect or forbearance of the
Landlord in endeavoring to enforce observance of the Lease or obtain
indemnification as set forth
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herein, no extension of time which may be given by the Landlord from time to
time to the Tenant and no other act or failure to act by the Landlord shall
release, discharge or in any way reduce the obligation of the Covenantor
under the covenants contained herein. In the event of termination of the
Lease other than by surrender accepted by the Landlord, or in the event of
disclaimer of the Lease pursuant to any stature, at the option of the
Landlord the Covenantor shall execute a new lease of the Premises demised by
the Lease between and Landlord as landlord and Covenantor as tenant for a
term equal in duration to the residue of the Term of the Lease remaining
unexpired at the date of such termination or such disclaimer. Such lease
shall contain the like Landlord's and Tenant's obligations respectively and
the like covenants, provision, conditions and agreement in all respects
(including the provision for re-entry) as are contained in the lease.
19.15 JOINT AND SEVERAL LIABILITY. If two or more individuals, corporations,
partnerships or other business associations, or any combination of two or
more thereof sign this Lease as Tenant, the liability of each such
individual, corporation, partnership or other business association to pay
rent and perform all other obligations under this Lease will be deemed to be
joint and several. If the Tenant named in this Lease is partnership of other
business association, the members of which by law are subject to personal
liability, the liability of each such member shall be deemed to be joint and
several.
19.16 SPECIAL CLAUSES.
A. OPTION TO RENEW. If the Tenant shall have promptly paid the rent
when due hereunder, and shall have observed and performed the Tenant's
covenants herein, and shall, after the 1st day of JUNE 2002, but on or before
the 1st day of JULY 2002, by writing to the landlord have given notice of its
desire to have the term of this Lease renewed, the Tenant shall have the term
of this Lease renewed for a period of FIVE(5) years upon the conditions
herein set forth, except the right to renew, and except as to the basic
annual rent during the renewal term which shall be mutually agreed upon by
the Landlord and the Tenant. In the event the Landlord and the Tenant fail to
agree on the rental to apply for the renewal term within thirty days of the
expiration of the initial term of this Lease, then either party may submit
the determination of the rental to a board of three arbitrators being
licensed real estate agents having a minimum of FIVE (5) years experience in
industrial leasing, one of which arbitrators shall be named by the Landlord,
one of which arbitrators shall be named by the Tenant, the third arbitrator
to be selected by the arbitrators named by the Landlord and the Tenant. The
three arbitrators shall determine the rental for the renewal term with
reference to the ten current rental rates for similar premises in the City of
AIRDRIE but the basic annual rent during the renewal term of the Lease, shall
not be less than that received during the primary term of this Lease, and the
decision of the three arbitrators or a majority of them shall be binding on
the Landlord and the Tenant. The provisions of the Alberta Arbitration Act
shall apply and the costs of arbitration shall be borne equally by the
Landlord and the Tenant. If either party shall neglect or refuse to name its
arbitrator within three (3) weeks from the submission to arbitration in
accordance with this clause, the arbitrator already named shall proceed and
his award fixing the basic annual rental for the renewal term shall be final.
A further 5 year term will be granted as above.
(LANDLORD)
KENSINGTON VILLAGE HOLDINGS LTD.
Per: /s/ Cec Avery
---------------------------------------
CEC AVERY - President
/s/ Joyce Travis
---------------------------------------
JOYCE TRAVIS - Secretary/Treasurer
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(TENANT)
BUILDERS REALTY (CALGARY) LTD.
Per: /s/ Cec Avery
---------------------------------------
CEC AVERY - President
/s/ Joyce Travis
---------------------------------------
JOYCE TRAVIS - Secretary/Treasurer
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EXHIBIT 10.3
SUBLEASE BY AND BETWEEN NEWS PUBLISHING CO. AND
MECH., CORP AND KEIM GROUP LIMITED DATED
DATED OCTOBER 1, 1996 FOR THE PROPERTY LOCATED AT
755 W. BIG BEAVER, SUITE 139, TROY, MICHIGAN 48084
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SUBLEASE
THIS SUBLEASE made this 11th day of Sept. 1996, between Business News
Publishing Co. and Mech., Corp. (Sublessor) whose address is 755 West Big Beaver
Suite. 1000, Troy MI 48084 and Sublessee) whose address is Keim Group Limited, a
Michigan Corp.
DEMISED PREMISES
Sublessor in consideration of the rents to be paid and the terms and
conditions to be performed by Sublessee, does hereby sublease to Sublessee,
premises in the City of Troy, Oakland County Michigan, more particularly
described as Suite 139, Containing approximately 3650 square feet which is
agreed to be ____% of the total rentable area of ____, located on the 13th floor
of the building at 755 W. Big Beaver as shown on the floor plan attached here to
as Exhibit A, together with the right to use the parking and common facilities
of the building in which the demised premises are located.
TERM
The term of this Sublease shall be for a period of 27 months commencing
Oct. 1, 1996 (the Commencement Date) to expire Sublessor fails to deliver the
demised premises on the commencement date because the demised premises are not
then ready for occupancy, or any other cause beyond Sublessor's control.
Sublessor shall not be liable to Sublessee for any damages and the commencement
date shall be postponed until such time as the demised premises are ready for
occupancy.
RENT
Sublease shall pay to the Sublessor as rent for the demised premises during
the term of the Sublease the sum of Eighty-six Thousand four Hundred ($86400.00)
Dollars, payable in advance, in monthly installments of Thirty-two hundred
($3200.00) Dollars, upon the first day of each and every month; provided,
however that if the term shall commence on a day other than the first day of a
calendar month or shall end on a day other than the last day of a calendar
month, the rental for such first or last fractional month shall be such
proportion of the monthly rental as the number of days in such fractional month
bears to the total number of days in the calendar month and provided further.
Sublessor hereby acknowledges receipt of 3 months.
ASSIGNMENT/SUBLETTING
Sublessee may not assign this Sublease in whole or in part or sublet the
demised premises without the prior written consent of the Sublessor and the
Landlord, which consent shall not be unreasonably withheld or delayed.
MASTER LEASE
5.01 This Sublease shall be subordinate to the Lease dated Jan 1, 1989
between WRC Properties as "Landlord" and Business News Published as "Tenant",
hereinafter referred to as the "Master Lease," a coy of which is attached hereto
and incorporated herein.
5.02 Except as set forth in this Sublease, the obligations of Sublessor and
Sublessee to each other and the terms condition and provisions of this Sublease
shall be deemed to be those set forth in the Master Lease, and for such purpose,
the terms "Landlord", Tenant" and "Lease" as used in the Master Lease shall be
deemed to mean Sublessor, Sublessee, and Sublease respectively. In the event of
any conflict between the Sublease and the Master Lease, the terms, conditions
and provisions of this Sublease shall prevail.
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5.03 During the term of this Sublease. Sublessee does hereby expressly
assume and agree to perform each and every obligation of Sublessor under the
Master Lease, pertaining to the sublet premises Sublease shall hold Sublessor
free and harmless of and from all liability judgement, costs, damages, claims or
demands, including attorney fees, existing out of Sublessee's failure to comply
with or perform Sublessee's obligations
ALTERATIONS
Sublessee agrees it will make no alterations to the premises without the
written consent of the Sublessor and the Landlord. Upon written approval, any
work approved shall be preformed according to tall applicable building and fee
codes and Sublessee shall be responsible for obtaining all governmental
approvals.
CARE OF DEMISED PREMISES
Throughout the term of this Sublease agrees to keep and maintain the
demised premises in good and sanitary order, and repair, and shall on the last
day of the term hereof, surrender the demised premises to Sublessor in
substantially as good condition as when received, normal ear and tear excepted.
NOTICES
All notices which may be required to be given under this Sublease or Master
Lease shall be in writing. All notices shall be sent by United State certified
or registered mail, postage prepaid, return receipt requested, and addressed to
the following addresses or to such other addresses as the parties may designate.
The time of giving of any such notice shall be deemed to be when such notice is
mailed.
SECURITY DEPOSIT
As security for the faithful performance by Sublessee of all of the terms
and conditions to be preformed, Sublessee has this day deposited with Sublessor
the sum of ___________$________ Dollars, which shall be returned to Sublessee,
without interest upon the expiration date of this Sublease, provided that
Sublessee has fully and faithfully performed. Sublessor shall have the right
(but not the obligation) to apply any part of said deposit to cure any default
of Sublessee and if Sublessor does so. Sublessee shall upon demand deposit with
Sublessor the amount so applied so that Sublessor shall not be obligated to keep
such security deposit as a separate fund but may mix such security deposit with
Sublessor's own funds.
ADDITIONAL CONDITIONS
Sublessor agrees to pay electricity for the demised suite until Oct. 31,
1996.
IN WITNESS WHEREOF, the parities hereto have hereunto set their hands as of
the day and year first above written.
WITNESSES: SUBLESSOR:
2
<PAGE>
CONSENT TO OFFICE BUILDING SUBLEASE
This Consent to Office Building Sublease (the "Consent") is entered into
this 11th day of September 1196 between WRC Properties (Landlord), Business News
Publishing (Tenant") and Keim Group Limited ("Subtenant").
RECITALS
Tenant and Landlord previously entered into a lease dated Jan 1, 1989, (the
"Lease") for Suite 1390 (the "Premises") Top of Troy (the "Building") located at
7545 W. Big Beaver Michigan (the "Project").
Tenant and Subtenant desire to enter in to a sublease agreement (the
"Sublease"), which is attached hereto as Exhibit "A" pursuant to which Subtenant
would sublease a portion of the Premises from Tenant for a tem commencing Oct.
1, 1996 and ending on Dec 31, 1998 (the "Sublease Term") which is at least one
day less than them of the Lease.
Landlord is willing to consent to the Sublease on the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties agree as follows:
Nothing contained in this Consent shall be construed to (I) modify, waive,
impair or affect any of the covenant, agreements, terms, provisions, or
conditions contained in the Lease (except as herein expressly provided), (ii)
waive any breach thereof or any right of Landlord against any person or entity
liable or responsible for the performance thereof, or (iii) enlarge or increase
Landlord's obligations under the Lease, and all covenants, agreement, terms,
provisions, and conditions of the Lease are hereby mutually declared to be in
full force and effect.
Tenant and Subtenant hereby represent, warrant, and covenant to Landlord
that the rent, other sums, and other consideration due or be paid by Subtenant
and/or its affiliates to Tenant and/or its affiliates in connection with the
Sublease are less, on a per square foot basis, that the rent and other sums dies
Landlord for the remaining term of the Lease.
Conditioned upon the truth ad continuing truth of the representations and
warranties set forth in Section 2, Landlord consents to the Sublease to the
extent that the Sublease is not inconsistent with all of the terms and
conditions of the Lease. However, in no event shall the Landlord's consent to
the Sublease relieve Tenant from any of Tenant's covenants and agreements under
the Lease.
Subtenant represents and warrants to Landlord that Subtenant has received a
copy of, has read, and is familiar with terms of the Lease. Tenant does hereby
unconditionally guarantee to Landlord the performance by Subtenant of all its
obligations under the Sublease and the payment of all rent and other sums which
may be due pursuant to the terms of the Sublease. Tenant and Subtenant agree
that Landlord may, at its option and in its discretion, treat a default under
the Lease to be a default under the Sublease and a default under the Sublease to
be a default under the Lease.
1. Tenant and Subtenant agree that the Sublease will not be amended or
modified in any way without receiving the prior written consent of Landlord.
2. Subtenant agrees that if Tenant is in default under the Lease and
Landlord delivers written notice thereof to Subtenant at the address sent forth
in the Sublease, Subtenant shall thereafter make all payments owning under the
Sublease to Landlord, who shall apply such payments against Tenant's obligations
under the Lease. Furthermore, if the Lease terminates prior to the term of the
Sublease, at the election and upon the written demand of Landlord, the sublease
shall continue in full force and effect, and Landlord will recognize the
Sublease and right of Subtenant thereunder and will thereby establish direct
privity of estate and contract between Landlord and Subtenant with the same
force and effect as though the Sublease has been directly made between Landlord
and Subtenant with the same force and effect, and Landlord will recognize the
Sublease and right of Subtenant thereunder and will thereby establish direct
privity of estate and contract between Landlord and Subtenant with the same
force and effect as though the Sublease
<PAGE>
have been directly made between Landlord and Subtenant: provided, however,
that Landlord shall not be required to respect any amendment to the Sublease
not previously approved by Landlord in writing.
IN WITNESS WHEREOF, the parties hereto have signed this agreement on the
date set forth above.
<TABLE>
<S> <C> <C>
Tenant: Subtenant: Landlord:
Business News Publishing Keim Group Limited WRC Properties
</TABLE>
<PAGE>
EXHIBIT 10.4
LEASE BY AND BETWEEN NEWPORT PLACE ASSOCIATES
AND HOMELIFE REALTY SERVICES, INC. DATED
APRIL 12, 1990 FOR THE PROPERTY LOCATED AT
4100 NEWPORT PLACE, SUITE 730, NEWPORT BEACH, CALIFORNIA 92660
<PAGE>
- -----------------------------------------------------------------------------
4100 NEWPORT PLACE
- -----------------------------------------------------------------------------
LANDLORD:
NEWPORT PLACE ASSOCIATES,
A California Limited Partnership
TENANT:
HOMELIFE REALTY SERVICES, INC.,
A Delaware Corporation
DATE OF LEASE: April 12, 1990
<PAGE>
OFFICE LEASE
In consideration of the rents and covenants hereinafter set forth, the Landlord
named in Article B of Section I hereby Leases to the Tenant named in Article C
of Section 1, and Tenant hereby hires from Landlord, the Demised Premises
described in Article F of Section I of this Lease upon the conditions set forth
below, and it is agreed that each of the terms, covenants, provisions and
agreements hereinafter specified shall be a condition.
SECTION I-LEASE TERMS
ARTICLE
A. Date of Lease: April 12, 1990
B. Landlord: Newport Place Associates, a California Limited Partnership
C. Tenant: HomeLife Realty Services, Inc., a Delaware Corporation
D. Trade Name (if any):_________________________________________
E. Guarantor (if any):_________________________________________
F. Demised Premises (Section 11, Article 1): Suite 730, encompassing
approximately 2,605 rentable square feet on the seventh floor in the building
and parcel of Land ("Building") known as 4100 Newport Place more particularly
described in Exhibit C and Located in the City of Newport Beach, State of
California.
G. Lease Term (Section 11, Article 1): Thirty-six (36) months. Commencement
Date: July 1, 1990 Expiration Date: June 30, 1993
H. Base Annual Rent (Section ii, Article 1):____________________________________
Monthly Installments:_____________________________________
Periodic Rent Increase Date: See Section II, Article 38
I. Use of Premises (Section 11, Article 2): General office.
J. Address for Notice to Landlord (Section 11, Article 27):
Newport Place Associates, c/o McLachlan Investment Company
4141 MacArthur Boulevard Suite 100
Newport Beach, CA 92660
K. Base Taxes and Operating Costs Amount (Section II, Article 28): See Section
II, Article 39.
L. Number of Parking Spaces (Section 11, Article 1): 10
M. Tenant's Share of Any Increase Over Base Taxes and Operating Costs Amount
(Section II, Article 28): 1.38%, Rentable Area of Building: 189,031; Rentable
Area of Demised Premises: 2,605.
N. Security Deposit (Section 11, Article 30): $5,860.00
0. Broker(s) (Section II, Article 35): Broker(s) (Section 11, Article 35):
Coldwell Banker - Welch
Address: 4040 MacArthur Boulevard
Newport Beach, CA 92660
License No.:________________________
Cooperating Broker:____________________
Address:_______________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
- ------- ----
<S> <C> <C>
1. Demised Premises, Term, Rent, Late Charges.. . . . . . . . . 4
2. Occupancy. . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Assignment, Mortgage, Subletting ... . . . . . . . . . . . . 5
4. Alternations . . . . . . . . . . . . . . . . . . . . . . . . 6
5. Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. Requirements of Law, Insurance . . . . . . . . . . . . . . . 7
7. Subordination, Ground Leases, Mortgages . . . . . . . . . . 7
8. Rules and Regulations. . . . . . . . . . . . . . . . . . . . 8
9. Liability and Indemnification . . . . . . . . . . . . . . . 8
10. Damage or Destruction and Mutual Waiver of Subrogation . . . 9
11. Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . 9
12. Services . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. Access to Premises .. . . . . . . . . . . . . . . . . . . . 10
14. Tenant's Insurance . . . . . . . . . . . . . . . . . . . . . 10
15. Certificates of Occupancy. . . . . . . . . . . . . . . . . . 11
16. Life-Safety Systems .. . . . . . . . . . . . . . . . . . . . 11
17. Bankruptcy ... . . . . . . . . . . . . . . . . . . . . . . . 11
18. Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
19. Fees and Expenses .. . . . . . . . . . . . . . . . . . . . . 13
20. No Representatives by Landlord ... . . . . . . . . . . . . . 13
21. End of Term . . . . . . . . . . . . . . . . . . . . . . . . 13
22. Quite Possession . . . . . . . . . . . . . . . . . . . . . . 13
23. Landlord's Work and Failure to Give Possession . . . . . . . 14
24. Termination, No Waiver, No Oral Change ... . . . . . . . . . 14
25. Waiver of Trial by Jury . . . . . . . . . . . . . . . . . . 14
26. Inability of Perform ... . . . . . . . . . . . . . . . . . . 14
27. Bills and Notices .. . . . . . . . . . . . . . . . . . . . . 15
28. Increase of Taxes and Operating Costs . . . . . . . . . . . 15
29. Food, Beverages and Odors .. . . . . . . . . . . . . . . . . 16
30. Security . . . . . . . . . . . . . . . . . . . . . . . . . 17
31. Care of Floor and Window Coverings . . . . . . . . . . . . . 17
32. Marginal Notes . . . . . . . . . . . . . . . . . . . . . . . 17
33. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 17
34. Landlord's Approval . . . . . . . . . . . . . . . . . . . . 17
35. Brokerage .. . . . . . . . . . . . . . . . . . . . . . . . . 17
36. Binding Effect ... . . . . . . . . . . . . . . . . . . . . . 17
37. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
Exhibit A -Floor Plan
Exhibit B -Work Letter and Construction Agreement
Exhibit C -Legal Description
Exhibit D -Rules and Regulations
<PAGE>
GENERAL LEASE PROVISIONS
DEMISED PREMISES, TERM, RENT, LATE CHARGES
DEMISED PREMISES
1.1 Upon and subject to the terms, covenants and conditions hereinafter set
forth, Landlord hereby Leases to Tenant and Tenant hereby hires from Landlord
the Demised Premises comprising the area substantially as shown on the floor
plan or plans that have been signed by Landlord and Tenant and that are attached
hereto as Exhibit A.
1.2 Tenant shall have the right, for the benefit of Tenant and its
employees, suppliers, shippers, customers and invitees, to the non-exclusive use
of all areas and facilities outside the Demised Premises and within the exterior
boundary Line of the Park that are provided and designed by Landlord from time
to time for the general non-exclusive use of Landlord, Tenant and the other
tenants of the Park and their respective employees, suppliers, shippers,
customers and invitees, including parking areas, Loading and unloading areas,
drives, walkways, roadways, trash areas and Landscaped areas (herein called
"Common Areas").
1.3 Tenant shall have the right for the benefit of Tenant and its
employees, customers and invitees, to the use of the number of Parking Spaces
specified in the Lease Terms on those portions of the Common Areas designated
for parking by Landlord from time to time. Such spaces shall be used by all
tenants of the Park on an unassigned basis.
1.4 Landlord shall, at all times during the term of this Lease, have the
sole and exclusive control of the parking facility. Landlord may at any time and
from time to time during the term hereof exclude and restrain any person from
use or occupancy thereof who is not a tenant or occupant of the Master Premises
or an invitee of a tenant or occupant. Landlord shall at all times have the
right and/or privilege of determining the nature and extent of the parking
facility, whether surface, underground or multiple deck, and of making such
changes therein as Landlord may at any time or from time to time deem desirable,
including the location and relocation of driveway entrances, exits, parking
spaces and the direction and flow of traffic.
1.5 Tenant acknowledges that the premises are part of a phased
master-planned development. As development progresses, Landlord may from time to
time relocate all or any portion of the parking facilities to within a
reasonable walking distance from the Master Premises. Subject to such charges as
Landlord may impose, if Landlord charges for parking, Tenant and Tenant's
invitees may use the parking facility on a nonexclusive, non-reserved basis
together with Landlord, other tenants and occupants of the Master Premises, and
their respective invitees. Tenant shall not cause or permit any obstruction to
the free and clear usage of the parking facility. Landlord shall have the right
to adopt and enforce rules and regulations for the parking facility. Landlord
may, in Landlord's absolute discretion, establish a system of parking charges.
Tenant shall observe and obey such rules and regulations as Landlord may adopt
in connection with any such system. Any governmental charges, surcharges, or
other monetary obligations which may be imposed in connection with parking
privileges appurtenant to this Lease or with the operation of the parking
facility shall be included as property taxes. Landlord shall have no Liability
to Tenant, nor shall Tenant's obligations under this Lease be in any way excused
or modified, if Tenant's parking privileges under this Lease or elsewhere in the
Master Premises are impaired by reason of any moratorium, initiative,
referendum, statute, regulation, or other governmental decree or action.
Term
1.6 The Demised Premises are teased for the Term to commence on the
Commencement Date and end on the Expiration Date, unless the Term shall sooner
terminate as hereinafter provided.
Rent
1.7 Tenant shall pay to Landlord during the term the Base Annual Rent,
which sum shall be payable by Tenant in equal consecutive Monthly Installments
on or before the first day of each month, in advance at the address specified
1
<PAGE>
for Landlord in the Lease Terms, or such other place as Landlord shall
designate, without any prior demand therefor and without any abatement,
deduction or setoff whatsoever. If the Commencement Date should occur on a day
other than the first day of a calendar month, or the Expiration Date should
occur on a day other than the last day of a calendar month, then the rental for
such fractional month shall be prorated on a daily basis based upon a thirty
(30) day calendar month. In addition to the Base Annual Rent, Tenant shall pay
the amount of any rental adjustments and additional payments as and when
hereinafter provided in this Lease.
LATE CHARGES
1.8 Tenant hereby acknowledges that Late payment by Tenant to Landlord of
rent and other Sums due hereunder will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges and Late charges which may be imposed on Landlord by the
terms of any mortgage or trust deed covering the Premises. Accordingly, if any
installment of rent, or any other sum due from Tenant, shall not be received
within 10 days after such amount shall be due, Tenant shall pay to Landlord, in
addition to the interest provided in Section 1.10, a late charge equal to ten
percent (10%) of such overdue amount. The parties agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of late payment by Tenant. Acceptance of such Late charge by Landlord
shall in no way constitute a waiver of Tenant's default with respect to such
overdue amount nor prevent Landlord from exercising any other right or remedy of
Landlord resulting from such late payment.
1.10 Notwithstanding any other provision of this Lease, any installment of
Base Annual Rent or additional charges not paid to Landlord when due hereunder,
shall bear interest from the date due or from the date of expenditure by
Landlord for the account of Tenant, until the same have been fully paid, at a
rate (the "Default Rate") that is equal to the Lesser of (i) two percent (2%)
above the rate of interest established by Bank of America N.T.&S.A. at its San
Francisco headquarters for 90-day unsecured Loans to corporate borrowers with
the highest credit standing, adjusted monthly on the first day of each month,
such adjustment to be effective for the following month, and (ii) the highest
rate permitted by Law. The payment of such interest shall not constitute a
waiver of any default by Tenant hereunder.
1.11 The Basic Annual Rent has been established in contemplation that (i)
Tenant will occupy the Demised Premises for the entire Term and (ii) in the
event of an assignment of the Lease, Landlord and Tenant have agreed that
Landlord shall have the rights provided in Section 3.3 to terminate the Lease in
Lieu of consenting to such assignment. Tenant expressly acknowledges and agrees
that this Section 1.11 was a material inducement to Landlord in establishing the
Base Annual Rent in the amount herein provided and that Landlord has relied on
this covenant and agreement in executing this Lease.
OCCUPANCY
2.1 Tenant shall use and occupy Demised Premises for the purpose set forth
in Article I of Section I and for no other purpose. The character of the
occupancy of Demised Premises, as restricted by this Article and as further
restricted by Articles 3 and 15 and any of the Rules and Regulations attached to
this Lease, or hereafter adopted, is an additional consideration and inducement
for the granting of this Lease.
2.2 The manner in which the Common Areas are maintained and operated and
the expenditures therefor shall be at the sole discretion of Landlord, and the
use of such areas and facilities shall be subject to such Rules and Regulations,
including without Limitation the provisions of any covenants, conditions and
restrictions affecting the Park, as Landlord shall make from time to time.
Landlord shall not be responsible for the nonperformance of any such Rules and
Regulations or covenants, conditions and restrictions by any other tenant or
occupant of the Park.
2.3 The purpose of the attached Exhibit A is only to show the approximate
Location of the Demised Premises in the Bui Wing, and such Exhibit A is not
meant to constitute an agreement as to the specific Location of the Common Areas
or the elements thereof or of the access ways to the Demised Premises or the
Park. Landlord hereby reserves the right, at any time and from time to time, to
(a) make alterations in or additions to the Park and the Common Areas,
2
<PAGE>
including without Limitation, constructing new buildings, changes in the
Location, size, shape and number of driveways, entrances, parking spaces,
parking areas, Loading and unloading areas, Landscaped areas and walkways,
(b) close temporarily any of the Common Areas for maintenance purposes as
Long as reasonable access to the Demised Premises remains available, (c)
designate property outside the Park to be part of the Common Areas, (d) use
the Common Areas while engaged in making alterations in or additions or
repairs to the Park, and (a) change the arrangement and Location of entrances
or passageways, corridors, stairs, toilets and other public parts of the
Building. Tenant agrees that no diminution of Light, air or view by any
structure that may be erected in the Park after the Lease Date shall entitle
Tenant to any reduction of Base Annual Rent or result in any liability of
Landlord to Tenant.
2.4 Landlord reserves the right, from time to time, to grant such
easements, rights and dedications as Landlord deems necessary or desirable, and
to cause the recordation of parcel maps and covenants, conditions and
restrictions affecting the Park, as Long as such easements, rights, dedications,
maps and covenants, conditions and restrictions do not unreasonably interfere
with the use of the Demised Premises by Tenant. At Landlord's request, Tenant
shall join in the execution of any of the aforementioned documents. The Building
and the Park may be known by any name that Landlord may choose, which name may
be changed from time to time in Landlord's sole discretion.
2.5 The parking spaces to be provided to Tenant pursuant to Article L of
Section I shall be used for parking only by vehicles no larger than full-sized
passenger automobiles or pick-up trucks. Tenant shall not permit or allow any
vehicles that belong to or are controlled by Tenant or Tenant's employees,
suppliers, shippers, customers or invitees to be Loaded or parked in areas other
than those designated by Landlord for such activities. If Tenant permits or
allows any of the prohibited activities described in this Section 2.5, Landlord
shall have the right, in addition to all other rights and remedies that it may
have under this lease, to remove or tow away the vehicle involved without prior
notice to Tenant and the cost thereof shall be paid to Landlord within ten (10)
days after notice from Landlord to Tenant.
ASSIGNMENT, MORTGAGE, SUBLETTING
3.1 Neither Tenant, nor Tenant's legal representatives, successors or
assigns, shall assign, mortgage or encumber this Lease or sublet use
occupy, or permit Demised Premises or any part thereof to be used or
occupied by others, and any assignment, mortgage, encumbrance, sublease or
permission shall be voidable, at the option of Landlord and, at the further
option of Landlord, shall terminate this Lease. If this Lease be assigned,
or if Demised Premises or any part thereof be sublet or occupied by any
party other than Tenant, Landlord may, after default by Tenant, collect
rent from the assignee, subtenant or occupant and apply the net amount
collect to the recent herein reserved, but no such assignment, subletting,
occupancy or collection shall deemed a waiver of this covenant, or the
acceptance of the assignee, subtenant or occupant as Tenant, or a release
of Tenant from the further performance by Tenant of the obligations on the
part of Tenant herein contained. Any sale or other transfer, including
transfer by consolidation, merger or reorganization, of a majority of the
voting stock of Tenant, if Tenant is a corporation, or any sale or other
transfer of a majority of the partnership interests in Tenant, if Tenant is
a partnership, shall be an Assignment for purpose of this Article 3. As
used in this Section 3.1, the term "Tenant" shall also mean any entity that
has guaranteed Tenant's obligations under this Lease, and the prohibition
hereof shall be applicable to any sales or transfers of the stock or
partnership interests of said guarantor.
3.2 Notwithstanding any contrary provision of the foregoing, but subject
to the last paragraph of this Article, Tenant may assign this Lease upon the
following express conditions:
A. That the proposed assignee shall be subject to the prior written
consent of Landlord, which consent will not be unreasonably withheld but,
without Limiting the generality of the foregoing, it shall be reasonable for
Landlord to deny such consent if:
(1) the use to be made of Demised Premises by the proposed
assignee is (a) not generally consistent with the character and nature of all
other tenancies in the Building, or (b) a use which conflicts with any so-called
"exclusive" then in favor of, or for any use which is the same as that stated in
any percentage Lease to, another
3
<PAGE>
tenant of the Building or the Park, or (c) a use which would be prohibited by
any other portion of this Lease (including but not Limited to any Rules and
Regulations then in effect); or
(2) the character, moral stability, reputation and financial
responsibility of the proposed assignee are not satisfactory to Landlord or in
any event not at Least equal to those which were possessed by Tenant as of the
date of execution of this Lease;
That Tenant shall pay to Landlord Landlord's then standard
processing fee and shall reimburse Landlord for all reasonable
attorney's fees incurred by Landlord in connection therewith, the sum
of which shall not exceed five thousand dollars ($5,000), whether or
not such proposed assignment is consented to by Landlord;
C. That the proposed assignee shall execute an agreement pursuant to
which it shall be agreed to perform faithfully and be bound by all of the terms,
covenants, conditions, provisions and agreements of this Lease;
D. That an executed duplicate original of said assignment and
assumption agreement, on Landlord's then standard form, shall be delivered to
Landlord within five (5) days after the execution thereof, and that such
assignment shall not be binding upon Landlord until the delivery thereof to
Landlord and the execution and delivery of Landlord's consent thereto; and
E. That the consent by Landlord to an assignment shall not in any ways
be construed to relieve Tenant or the assignee from obtaining the express
consent in writing of Landlord to any further assignment or to release Tenant
from any Liability whether past, present or future under this Lease or to
release Tenant from any Liability under this Lease because of Landlord's failure
to give notice of default under or in respect of any of the terms, covenants,
conditions, provisions or agreements of this Lease.
3.3 Notwithstanding the foregoing provisions of this Article 3, it is
expressly agreed and understood that Landlord shall have the option to terminate
this Lease rather than approve the assignment hereof. Tenant understands and
acknowledges that such option is a material inducement for Landlord's agreeing
to lease the Demised Premises to Tenant upon the terms and conditions herein set
forth.
ALTERATIONS
4.1 Tenant shall make no alterations, decorations, additions or
improvements in or to Demised Premises without Landlord's prior written consent,
and then only by contractors or mechanics approved in advance in writing by
Landlord and only upon such conditions as Landlord may impose. Tenant shall
submit such information as Landlord shall require, including, without Limitation
(i) plans and specifications, 00 evidence of insurance coverage in such types
and amounts and from such insurers as Landlord deems satisfactory, and (M) all
permits and Licenses required in connection with such work. ALL such work shall
be done at Tenant's sole cost and expense at such times and in such manner as
Landlord may from time to time designate. ALL work done by Tenant shall be
performed in full compliance with all Laws, rules, orders, ordinances,
directions, regulations and requirements of all governmental agencies, offices,
departments, bureaus and boards having jurisdiction, and in full compliance with
the rules, orders, directions, regulations and requirements of the Insurance
Services Office and of any similar body. Before commencing any work, Tenant
shall (a) give Landlord at Least fifteen (15) days' written notice of the
proposed commencement of such work in order to give Landlord an opportunity to
prepare, post and record such notice as may be permitted by Law to protect
Landlord from having its interest in Demised Premises or the Building made
subject to a mechanic's Lien, and (b) shall secure, at Tenant's own cost and
expense, a completion and Lien indemnity bond, satisfactory to Landlord, for
said work. Any mechanic's Lien filed against Demised Premises or against the
Building or the Land upon which the Building is Located or any of the areas used
in connection with the operation of the Building for work claimed to have been
done for, or materials claimed to have been furnished to Tenant, shall be
discharged by Tenant, by bond or otherwise, within ten (10) days after the
filing thereof, at the cost and expense of Tenant. All alterations, decorations,
additions, or improvements upon Demised Premises, made by either party,
including without Limiting the generality of the foregoing, all paneling,
4
<PAGE>
partitions, railings, mezzanine floors, galleries and the like, shall, unless
Landlord elects otherwise [which election shall be made by giving a notice
pursuant to the provisions of Article 27 not less than three (3) days prior to
the expiration or other termination of this Lease or any renewal or extension
thereof], become the property of Landlord, and shall remain upon, and be
surrendered with Demised Premises, as a part thereof, at the end of the Term. If
Tenant shall remove any property from Demised Premises, Tenant shall repair or,
at Landlord's option, shall pay to Landlord the cost of repairing any damage
arising from such removal. Tenant shall not install any machine or equipment
which causes noise, heat, cold or vibration to be transmitted to the structure
of the building without Landlord's prior written consent, which consent may be
conditioned on such terms as Landlord may require.
Repairs
5.1 Tenant shall take good care of Demised Premises and fixtures therein
and, subject to the provisions of Article 4 hereof, shall, except for ordinary
wear and tear, make all repairs in and about Demised Premises necessary to
preserve them in food order and condition, which repairs shall be in quality and
class equal to the original work. Landlord, however, shall repair the Building
plumbing, heating, ventilating or air conditioning and electrical systems and
make structural repairs within Demised Premises arising from ordinary wear and
tear or through causes over which Tenant has no control, except as otherwise
provided in this Lease. Landlord may repair, at the expense of Tenant, all
damage or injury to Demised Premises, or to the Building and Landlord may
repair, at the expense of Tenant, all damage or injury to Demised Premises, or
to the Building and its fixtures, appurtenances or equipment or to any of the
areas used in connection with the operation of the Building, done by Tenant or
Tenant's agents, servants, employees, contractors, visitors or Licensees or
caused by moving property of Tenant in or out of the Building, or by
installation or removal of furniture or other property, or resulting from fire,
heating, ventilating or air conditioning unit or system, short circuits,
overflow or Leakage of water, steam, gas, sewer gas, sewage or odors, or by
frost or by bursting or Leaking of pipes or plumbing works, or gas, or from any
other cause, due to the carelessness, negligence, or improper conduct of Tenant
or Tenant's agents, servants, employees, contractors, visitors or Licensees.
Landlord shall have the right to replace, at the expense of Tenant, any and all
plate and other glass damaged or broken from any cause whatsoever in or about
Demised Premises unless caused by or due to the sole negligence of Landlord,
Landlord's agents, servants or employees. Except as provided in Article 10
hereof, there shall be no allowance to Tenant for a diminution of rental value,
and no Liability on the part of Landlord by reason of inconvenience, annoyance
or injury to business arising from the making of, or the failure to make, any
repairs, alterations, decorations, additions or improvements in or to any
portion of the Building or any of the areas used in connection with the
operation thereof, or Demised Premises, or in or to fixtures, appurtenances or
equipment, or by reason of the act or neglect of Tenant or any other tenant or
occupant of the Building; and in no event shall Landlord be responsible for any
consequential damages arising or alleged to have arisen from any of the
foregoing matters except those arising as a result of Landlord's gross
negligence or willful misconduct. Tenant hereby waives all rights under the
provisions of Sections 1932, 1933, 1941 and 1942 of the Civil Code of the State
of California and all rights under any Law in existence during the Term of this
Lease authorizing a tenant to make repairs at the expense of a Landlord or to
terminate a Lease upon the complete or partial destruction of the teased
premises.
REQUIREMENTS OF LAW, INSURANCE
6.1 Tenant, at Tenant's expense, shall comply with all Laws, rules, orders,
ordinances, directions, regulations and requirements of federal, state, county
and municipal authorities pertaining to Tenant's use of Demised Premises and
with the recorded covenants, conditions and restrictions affecting the Park, and
with any direction of any public officer or officers, pursuant to Law, which
shall impose any duty upon Landlord or Tenant with respect to the use or
occupation of Demised Premises, and shall not do or permit to be done, any act
or thing upon Demised Premises, which will invalidate or be in conflict with any
insurance policy covering the Building or any of the areas used in connection
with the operation thereof or its fixtures, appurtenances or equipment or the
property located therein, and shall not do or permit to be done, any act or
thing upon Demised Premises, which will invalidate or be in conflict with any
insurance policy covering the Building or any of the areas used in connection
with the operation thereof or its fixtures, appurtenances or equipment or the
property Located therein, and shall not do or permit to be done, any act or
thing upon Demised Premises which shall or might subject Landlord to any
Liability or responsibility for injury to any person or persons or to any
property by reason of any business or operation being carried on upon Demised
Premises or for any
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other reason, and Tenant hereby indemnifies Landlord against any such
Liability or responsibility. Tenant shall not place a Load upon any floor of
Demised Premises exceeding the floor Load per square foot area which such
floor was designed to carry and which is allowed by Law. Business machines
and mechanical equipment shall be placed and maintained by Tenant at Tenant's
expense in settings sufficient in Landlord's judgment to absorb and prevent
vibration, noise and annoyance.
INSURANCE
6.2 Tenant shall comply with all rules, orders, directions, regulations and
requirements of the Insurance Services Office or any other similar body, and
shall not do, or permit anything to be done, in or upon Demised Premises, or
bring or keep anything therein, which shall increase the rates of any insurance
on the Building or any of the areas used in connection with the operation
thereof or its fixtures, appurtenances or equipment or on property Located
therein. If, by reason of failure of Tenant to comply with the provisions of
this Article, any insurance rate shall at any time be higher than it otherwise
would be, then Tenant shall reimburse Landlord for that part of all such
premiums thereafter paid by Landlord which shall have been charged because of
such violation by Tenant, and shall make such reimbursement upon the first day
of the month following such outlay by Landlord. in any action or proceeding
wherein Landlord and Tenant are parties, a schedule or "make-up" of rate for the
Building or Demised Premises issued by the Insurance Services office, or other
body making insurance rates for the Building or Demised Premises, shall be
conclusive evidence of the facts therein stated and of the several items and
charges in the insurance rate then applicable to Demised Premises.
SUBORDINATION, GROUND LEASES, MORTGAGE
SUBORDINATION
7.1 This Lease is subject and subordinate to 0) all ground or underlying
Leases, mortgages and deeds of trust which now affect the real property of which
Demised Premises forms a part or affect the ground or underlying Leases, (ii)
all renewals, modifications, consolidations, replacements and extensions
thereof, and (M) any ground or underlying Leases, mortgages, or deeds of trust
which may hereafter affect the rest property of which Demised Premises forms a
part or affect the ground or underlying Leases, without the necessity of
executing any instrument to effectuate such subordination. Notwithstanding the
preceding sentence, Tenant, or Tenant's successors- in- interest, wit( execute
and deliver upon the demand of Landlord any and all instruments desired by
Landlord evidencing such subordination in the manner requested by Landlord.
Landlord is hereby irrevocably appointed and authorized as agent and
attorney-in-fact of Tenant to execute and deliver all such subordination
instruments in the event Tenant fails to execute and deliver said instruments
within five (5) days after written request therefor.
GROUND LEASES
7.2 Tenant agrees that, at the option of the Landlord under any ground
lease now or hereafter affecting the real property of which Demised Premises
forms a part, Tenant shall attorn to said Landlord in the event of the
termination or cancellation of such ground lease and if requested by said
Landlord, enter into a new lease with said Landlord (or a successor ground
lessee designated by said Landlord) for the balance of the term then remaining
hereunder upon the same terms and conditions as those herein provided.
Mortgage
7.3 In the event of foreclosure or exercise of power of sale under any
mortgage or deed of trust now or hereafter affecting the real property of
which Demised Premises forms a part, the holder of any such mortgage or deed
of trust (or purchases at any sale pursuant thereto) shall have the option
(I) supplementing this Article, to require Tenant to attorn to such holder or
purchaser, an d to enter into a new lease with such holder or purchaser, and
to enter into a new lease with such holder or purchaser (as Landlord) for the
balance of the term then remaining
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hereunder upon the same terms and conditions as those herein provided, or
(ii) notwithstanding this Article, to elect that this Lease become or remain,
as the case may be, superior to said mortgage or deed of trust.
7.4 Tenant shall, upon request by any such holder or purchaser, execute and
deliver any and all instruments desired by such holder or purchaser evidencing
the superiority of this Lease to any said mortgage or deed of trust.
7.5 In the event that Landlord or any such holder at any time requests that
this Article contains different language to the same general effect, Tenant
agrees to promptly execute and deliver an amendment of this Lease memorializing
the same.
RULES AND REGULATIONS
8.1 Tenant and Tenant's agents, servants, employees, contractors, visitors
and Licensees shall observe faithfully and comply strictly with the rules and
regulations attached hereto and made a part hereof, and such other and further
reasonable rules and regulations as Landlord or Landlord's agents may from time
to time adopt. Notice of any additional rules or regulations shall be given in
such manner as Landlord may elect. Landlord shall not be liable to Tenant for
violation of any of said Rules and Regulations, or the breach of any term,
covenant, condition, provision or agreement in any Lease, by any other tenant or
other party in the Building or in the Park.
LIABILITY AND INDEMNIFICATION
9.1 Tenant agrees to indemnify Landlord against and save Landlord harmless
from any and all loss, cost, Liability, damage and expense, including, without
Limitation, penalties, fines and counsel fees, incurred in connection with or
arising from any cause whatsoever in, on or about the Demised Premises,
including, without Limiting the generality of the foregoing, (i) any default by
Tenant in the observance or performance of any of the terms, covenants or
conditions of this Lease on Tenant's part to be observed or performed, (H) the
use or occupancy, or manner of use or occupancy, of the Demised Premises by
Tenant or any person claiming through or under Tenant, or of the employees,
suppliers, shippers, customers or invitees of Tenant or any such other person,
in, on or about the Demised Premises, the Building or the Park, whether prior
to, during, or after the expiration of, the Term including, without (imitation,
any act, omission or negligence in the making or performing of any alterations.
Tenant further agrees to indemnify Landlord, Landlord's agents, and the Lessor
or Lessors under all ground or underlying Leases, against and hold them harmless
from any and all loss, cost, liability, damage and expense including, without
Limitation, counsel fees, incurred in connection with or arising from any claims
by any persons by reason of injury to persons or damage to property occasioned
by any use, occupancy, condition, occurrence, happening, act, omission or
negligence referred to in the preceding sentence.
9.2 Landlord shall not be responsible for or Liable to Tenant for any Loss
or damage that may be occasioned by or through the acts or omissions of persons
occupying adjoining premises or any part of the premises adjacent to or
connected with the Demised Premises or any part of the Building or Park or for
any Loss or damage resulting to Tenant or its property from burst, stopped or
Leaking water, gas, sewer or steam pipes or for any damage to or Loss of
property within the Demised Premises from any causes whatsoever, including
Latent defects in the Building, the Park, or Demised Premises or theft, except
for loss or damage caused by Landlord's gross negligence or willful misconduct.
9.3 Except where a longer or shorter period is specifically provided for in
this Lease for a particular expenditure, Tenant shall pay to Landlord, within
ten (10) days after delivery by Landlord to Tenant of bills or statements
therefor: (i) sums equal to all expenditures made and monetary obligations
incurred by Landlord including, without Limitation, expenditures made and
obligations incurred for reasonable counsel fees, in connection with the
remedying by Landlord of Tenant's defaults; (H) sums equal to all losses, costs,
liabilities, damages and expenses referred to in Section 9.1; and (iii) sums
equal to all expenditures made and monetary obligations incurred by Landlord,
including without Limitation, expenditures made and obligations incurred for
reasonable counsel fees, in collecting or attempting to collect the Base Annual
Rent, any additional charges or any other sum of money accruing under this Lease
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or in enforcing or attempting to enforce any rights of Landlord under this Lease
or pursuant to law. Tenant's obligations under this Article 9 shall survive the
expiration or sooner termination of the Term.
DAMAGE OR DESTRUCTION AND MUTUAL WAIVER OF SUBROGATION
10.1 If Demised Premises shall be partially damaged by fire or other cause
without the fault or neglect of Tenant, Tenant's agents, servants, employees,
contractors, visitors or Licensees, the damages shall be repaired by and at the
expense of Landlord and the Base Annual Rent until such repairs shall be made
shall be apportioned according to the part of Demised Premises which is
tenantable or used by Tenant. If such partial damage is due to the fault or
neglect of Tenant or Tenant's agents, servants, employees, contractors, visitors
or Licensees, there shall be no apportionment or abatement of Base Annual Rent,
unless Landlord is reimbursed for such abatement of Base Annual Rent or
additional charges pursuant to any rental insurance policies that Landlord may,
in its sole discretion, elect to carry. No Liability shall accrue for reasonable
delay which may arise by reason of adjustment of insurance on the part of
Landlord or Tenant, for reasonable delay on account of "Labor troubles," or any
other cause beyond Landlord's control. If Demised Premises are totally damaged
or are rendered wholly untenantable by fire or other cause, and Landlord shall
decide not to restore or rebuild the same, or if the Building shall, in
Landlord's sole judgment, be so damaged that Landlord shall decide to demolish
it or to rebuild it, then in any of such events Landlord may, within ninety (90)
days after such fire or other cause, give Tenant notice of such decision, and
thereupon the term of this Lease shall expire by lapse of time upon the third
day after such notice is given, and Tenant shall vacate Demised Premises and
surrender the same to Landlord.
10.2 Notwithstanding anything contained in this Article 10 to the contrary,
in no event shall Landlord be required to spend for any repair, replacement or
reconstruction of the Demised Premises or the Building an amount greater that
the insurance proceeds actually received by Landlord as a result of the fire or
other casualty causing such loss, damage or destruction.
10.3 The provisions of this Lease, including this Article 10, constitute an
express agreement between Landlord and Tenant with respect to any and all damage
to, or destruction of, all or any part of the Demised Premises, the Building or
any other portion of the Park, and any stature or regulation of the State of
California, including, without limitation, Sections 1932(2) and 1933(4) of the
California Civil Code, with respect to any rights or obligations concerning
damage or destruction in any absence of an express agreement between the
parties, and any similar statute or regulation, now or hereafter in effect,
shall have no application to this Lease or to any damage to or destruction of
all or any part of the Demised Premises, the Building or any other portion of
the Park.
10.4 Notwithstanding the provisions of this Article, Landlord waives any
and at L rights of recovery against Tenant for or arising out of damage to or
destruction of the Building or Demised Premises, from causes then included under
standard fire and extended coverage insurance policies or endorsements, whether
or not such damage or destruction shall have been caused by the negligence of
Tenant, its agents, servants, employees, contractors, visitors or Licensees, but
only to the extent that Landlord's insurance policies then in force permit such
waiver and only to the extent of insurance proceeds actually received by
Landlord for such damage or destruction. Tenant waives any and all rights of
recovery against Landlord for or arising out of damage to or destruction of any
property of Tenant, from causes then included under standard fire and extended
coverage insurance policies or endorsements, whether or not caused by the
negligence of Landlord, its agents, servants, employees, contractors, visitors
or Licensees, but only to the extent that Tenant's insurance policies then in
force permit such waiver. Landlord and Tenant represent that their present
insurance policies now in force permit such waiver.
10.5 If at any time during the term of this Lease either party shall give
no Less than five (5) days prior notice to the other certifying that any
insurance carrier which shall have issued any such policy covering any of the
property above mentioned shall refuse to consent to the aforesaid waiver of
subrogation, or if such carrier shall consent to such waiver only upon the
payment of an additional premium (and such additional premium is not paid by the
other party hereto), or such carrier shall revoke a consent previously given or
shall cancel or threaten to cancel any policy previously issued and then in
force and effect, because of such waiver of subrogation, then, in any of such
events, the
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waiver in this Article shall thereupon be of no further force and effect as
to the Loss, damage or destruction covered by such policy; provided, however,
that if at any time thereafter such consent shall be obtained therefor
without an additional premium from any existing or substitute insurance
carrier, the waiver hereinabove provided for shall again become effective.
EMINENT DOMAIN
11.1 If the whole or any part of Demised Premises shall be taken or
condemned for all or any portion of the Term by any competent authority for any
public or quasi-public use or purpose, or transferred by agreement in connection
with such public or quasi-public use or purpose with or without any condemnation
action or proceeding being instituted, then, and in either such event, the Term
of this Lease shall, at the option of the Landlord, terminate as of the date
when the possession of the part so taken shall be required for such use or
purpose, and without apportionment of the award, such that the entire award is
paid to Landlord. The then current rental, however, shall in any such case be
apportioned. Tenant hereby expressly assigns to Landlord any award which may be
made in any taking or condemnation as therein provided, together with any and
all rights of Tenant now or hereafter arising in or to the same or any part
thereof.
11.2 Nothing contained herein shall be deemed to give Landlord any interest
in, or to require Tenant to assign to Landlord, any award made to Tenant
specifically for its relocation expenses, the taking of personal property and
fixtures belonging to Tenant, or the interruption of or damage to Tenant's
business if such award is made separately to Tenant and not as part of the
damages recoverable by Landlord.
11.3 If all or any portion of the Demised Premises is condemned or
otherwise taken for public or quasi-public use for a Limited period of time,
this Lease shall remain in full force and effect and Tenant shall continue to
perform all terms, conditions and covenants of this Lease. Tenant shall be
entitled to receive the entire award made in connection with any such temporary
condemnation or other taking.
11.4 Landlord may, without any obligation to Tenant, agree to sell and/or
convey to the condemnor the Demised Premises, the Building, the Park or any
portion thereof sought by the condemnor, free from this Lease and the rights of
Tenant hereunder, without first requiring that any action or proceeding be
instituted or, if instituted, pursued to a judgment.
SERVICES
ELEVATORS, HEATING, VENTILATING, AIR CONDITIONING, ELECTRICITY, WATER, AND
CLEANING
12.1 Landlord shall:
A. Provide automatic elevator facilities on usual business days and have
one elevator available at all other times;
B. On usual business days (and at other times for a reasonable additional
charge to be fixed by Landlord) ventilate Demised Premises and furnish heating
or air conditioning when in the judgment of Landlord it may be required for the
comfortable occupancy of Demised Premises. Tenant agrees to keep and cause to be
kept closed all doors from Demised Premises and the windows in Demised Premises,
and Tenant agrees to cooperate fully at all times with Landlord and to abide by
all regulations and requirements which Landlord may prescribe for the proper
functioning and protection of the heating, ventilating and air conditioning
system. Tenant shall not install or use in Demised Premises any equipment which
would generate heat so as to adversely affect the heating, ventilating and air
conditioning system. Landlord, throughout the term of this Lease, shall have
free access to any and all mechanical installations of Landlord or Tenant,
including, but not limited to, air conditioning, fan, ventilating and machine
rooms, telephone rooms and electrical closets. Tenant agrees that there shall be
no construction of partitions or other obstructions which might interfere with
Landlord's free access thereto, or interfere with the moving of Landlord's
equipment to or from the
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enclosures containing said installations. Tenant further agrees that neither
Tenant, nor its agents, servants, employees, contractor, visitors or
licensees shall at any time enter the said enclosures o tamper with, adjust,
touch or otherwise in any manner affect Landlord's said mechanical
installations;
C. Provide electricity for "Landlord's Standard" lighting and normal
office business machine (not including computers or electronic data processing
or ancillary equipment) purposes only. Tenant agrees not to use any apparatus or
device in, or upon, or about Demised Premises which may in any way increase the
amount of such electricity usually furnished or supplied to said premises and
Tenant further agrees not to connect any apparatus or device to the wires,
conduits or pipes, or other means by which such electricity is supplied, for the
purpose of using additional or unusual amounts of electricity, without the prior
written consent of Landlord. If Tenant uses the same to excess or follows a
regular practice of using electricity beyond the usual business hours on normal
business days, Landlord shall have the right to estimate from time to time (both
retroactively and prospectively) the amount that Tenant should pay on account
thereof, and Tenant, after notice by Landlord of such estimate or revised
estimate, agrees to pay such amount on the first day of each calendar month
thereafter or, if such estimate be made during the last month of the term or
after its expiration, promptly upon demand by Landlord. At all times Tenant's
use of electric current shall never exceed the capacity of the feeders to the
Building or the risers or wiring installation. Tenant shall not install or use
or permit the installation or use in Demised Premises, of any computer or
electronic data processing or ancillary equipment or any other electrical
apparatus designed to operate on electrical current in excess of 110 volts and 5
amps per machine, without the prior written consent of Landlord;
D. Furnish water for drinking and lavatory purposes only, but if Tenant
requires, uses or consumes water for any purpose in addition to ordinary
drinking and Lavatory purposes, of which fact Tenant constitutes Landlord to be
the sole judge, Landlord may install a water meter and thereby measure Tenant's
water consumption for all purposes. Tenant shall pay Landlord for the cost of
the meter and the cost of the installation thereof and throughout the duration
of Tenant's occupancy Tenant shall keep said meter and installation equipment in
good working order and repair at Tenant's own cost and expense, in default of
which Landlord may cause such meter and equipment to be replaced or repaired and
collect the cost thereof from Tenant. Tenant agrees to pay for water consumed,
as shown on said meter, as and when bills are rendered and on default in making
such payment Landlord may pay such charges and collect the same from Tenant; and
E. Cause Demised Premises to be kept clean, provided the same are used
exclusively as ordinary desk-type offices and are kept reasonably in order by
Tenant, and, if to be kept clean by Tenant, no one other than persons approved
in advance in writing by Landlord shall be permitted to enter Demised Premises
for such premises. If Demised Premises or any part thereof is not used
exclusively as ordinary desk-type offices, same shall be kept clean and in order
by Tenant, at Tenant's expense, and to the satisfaction of Landlord, and by
persons approved in advance in writing by Landlord. Tenant shall pay to Landlord
the cost of removal of any of Tenant's refuse and rubbish, to the extent that
the same exceeds the refuse and rubbish usually attendant upon the use of
Demised Premises exclusively as ordinary desk-type offices.
12.2 Tenant shall at all times maintain at its own cost and expense all
plumbing facilities and equipment attached thereto within Demised Premises in
good order, condition and repair to the satisfaction of Landlord. Tenant hereby
indemnifies Landlord against any and all claims, Liabilities, losses, damages,
costs and expenses whatsoever (including, but not Limited to, attorneys' fees
and expenses) whether suffered by Landlord or other occupants or persons in the
Building, the Park or any of the areas used in connection with the operation
thereof arising out of the matters referred to in this subsection, unless caused
by or due to the sole negligence of Landlord, Landlord's agents, servants or
employees. Landlord shall not be obligated to clean or provide supplies for any
such plumbing facilities or equipment attached thereto, and if the rooms in
which any such facilities or equipment are Located require cleaning in excess of
that normally provided by Landlord for ordinary desk-type office space, Tenant
shall, at Tenant's expense, cause any such excess cleaning to be performed only
by a contractor approved in advance in writing by Landlord. Landlord hereby
reserves the right, without Limiting the generality of the foregoing, to require
that any such cleaning be performed by Landlord's regular cleaning contractor
for the Bui Wing. Nothing herein contained shall be construed to confer upon
Tenant the right to install any plumbing facilities without the prior written
consent of Landlord.
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12.3 Landlord reserves the right to stop service of the elevator, plumbing,
heating, ventilating, air conditioning and electric or other mechanical systems,
or cleaning services when necessary, without any offset in rent, by reason of
accident or emergency or for inspection, repairs, alterations, decorations,
additions or improvements, which in the judgment of Landlord are desirable or
necessary to be made, until same shall have been completed, and shall have no
responsibility or liability for failure to supply any of such services in such
instance. However, in the even a service is stopped such that Tenant cannot
reasonably conduct its business for a period exceeding ten (10) business days,
Tenant's rent shall abate until such service is restored and Tenant can conduct
business in the Demised Premises.
ACCESS TO PREMISES
13.1 Tenant shall permit Landlord to use and maintain pipes and conduits in
and through Demised Premises. Landlord and Landlord's agents shall have the
right to enter Demised Premises at all times, to examine the same and to clean
and make such repairs, alterations, decorations, additions and improvements as
Landlord may deem necessary or desirable, and Landlord shall be allowed to take
all material into and upon Demised Premises that may be required therefor
without the same constituting an eviction of Tenant in whole or in part, and
subject to the provisions of Article 10, the Base Annual Rent reserved shall in
no wise abate white said repairs, alterations, decorations, additions or
improvements are being made, by reason of inconvenience, annoyance or injury to
the business of Tenant because of the prosecution of any such work, or
otherwise. Landlord and Landlord's agents are expressly granted permission to
show Demised Premises at any reasonable time to prospective tenants, mortgagees,
purchasers, Lessees of the Building and other persons with a business interest
therein. If, during the last month of the Term, Tenant shall have removed all or
substantially all of Tenant's property therefrom, Landlord may immediately enter
and alter, renovate and redecorate Demised Premises, without elimination or
abatement of rent or other compensation, and such acts shall have no effect upon
this Lease.
If Tenant shall not be personally present to open and permit an entry into
Demised Premises, at any time, when for any reason an entry therein shall be
necessary or permissible hereunder, Landlord or Landlord's agents may enter the
same by a master key, or may forcibly enter the same, without rendering Landlord
or such agents liable therefor (I during such entry Landlord or Landlord's
agents shall accord reasonable care to Tenant's property therefrom, Landlord may
immediately enter and alter, renovate and redecorate Demised Premises, without
elimination or abatement of rent or other compensation, and such acts shall have
no effect upon this Lease.
If Tenant shall not be personally present to open and permit an entry into
Demised Premises, a any time, when for any reason an entry therein shall be
necessary or permissible hereunder, Landlord or Landlord's agents may enter the
same by a master key, or may forcibly enter the same, without rendering Landlord
or such agents liable therefor (if during such entry Landlord or Landlord's
agents shall accord reasonable care to Tenant's property), and without in any
manner affecting the obligations, terms, covenants, conditions, provisions or
agreement of this Lease. Nothing herein contained, however, shall be deemed or
construed to impose upon Landlord any obligation, responsibility or liability
whatsoever, for the care, supervision or repair of the Park or the Building or
any part thereof, other than an otherwise provided in this Lease.
TENANT'S INSURANCE
14.1 Tenant shall carry at its expense and maintain in force during the
Term the following insurance:
A. Comprehensive General Liability Insurance (including protective
Liability coverage on operations of independent contractors engaged in
construction and also blanket contractual Liability insurance) on an
"occurrence", basis for the benefit of Tenant and Landlord as named insured
against claims for "personal injury" liability including without Limitation
bodily injury, death or property damage Liability with a Limit of not Less than
One Million Dollars ($1,000,000) in the event of "personal injury" to any number
of persons or of damages to property arising out of any one "occurrence"; such
insurance may be furnished under a "primary" policy and an "umbrella" policy,
provided that it is primary insurance and not excess over or contributory with
any insurance in force for Landlord;
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B. Insurance against Loss or damage by fire and such other risks and
hazards as are insurable under present and future standard forms of fire and
extended coverage insurance policies, to the personal property, furniture,
furnishings and fixtures belonging to Tenant Located in the Demised Premises for
not less than 100% of the actual replacement value thereof. Such insurance shall
provide for a waiver of the insurer's right of subrogation against Landlord; and
C. Such other insurance as may be required by Landlord in connection
with the Demised Premises or Tenant's activities in the Park.
14.2 All such insurance shall name Landlord as additional insured, shall be
effected under policies issued by insurers, shall be in forms and for amounts
approved by Landlord and shall provide that Landlord shall receive thirty (30)
days' written notice from the insurer prior to any cancellation or change of
coverage.
14.3 Tenant shall deliver policies of such insurance or certificates
thereof to Landlord on or before the Commencement Date, and thereafter at Least
thirty (30) days before the expiration dates of expiring policies; and, in the
event Tenant shall fail to procure such insurance, or to deliver such policies
or certificates, Landlord may, at its option, procure same for the account of
Tenant, and the cost thereof shall be paid to Landlord as additional charges
within ten (10) days after delivery to Tenant of bills therefor. Nothing
contained in this Article 14 shall be construed as a Limitation of Tenant's
Liability hereunder.
CERTIFICATES OF OCCUPANCY
15.1 Tenant shall not at any time use or occupy Demised Premises in
violation of the certificates of occupancy issued for the Building or the
Demised Premises and in the event that any department of the city or county in
which the Building is Located, or the State of California, shall hereafter at
any time contend or declare that Demised Premises are used for a purpose which
is in violation of such certificate or certificates of occupancy, Tenant shall,
upon five (5) days' notice from Landlord or any governmental agency immediately
discontinue such use of Demised Premises. Failure by Tenant to discontinue such
use after such notice shall be considered a default under this Lease and
Landlord shall have the right to terminate this Lease immediately, and in
addition thereto shall have the right to exercise any and all rights and
privileges and remedies given to Landlord by and pursuant to the provisions of
Article 18 hereof. The statement in this Lease of the nature of the business to
be conducted by Tenant in Demised Premises shall not be deemed or construed to
constitute a representation or guaranty by Landlord that such business is Lawful
or permissible or will continue to be Lawful or permissible under any
certificate of occupancy issued for the Bui Wing, or otherwise permitted by Law.
LIFE-SAFETY SYSTEMS
16.1 If there now is or shall be installed in the Building a sprinkler
system, heat or smoke detection system or any other so-called Life-safety system
and any such system or any of its appliances shall be damaged or injured or not
in proper working order by reason of any act or omission of Tenant, Tenant's
agents, servants, employees, contractors, visitors or Licensees, Tenant shall
forthwith restore the same to good working condition; and if the Insurance
Services office or any other similar body or any bureau, department or official
of the state, county or city government, or any governmental authority having
jurisdiction, require or recommend that any changes, modifications, alterations,
or additional equipment be made or supplied in or to any such system by reason
of Tenant's business, or the Location of partitions, trade fixtures, or other
contents of Demised Premises, or if any such changes, modifications, alterations
or additional equipment become necessary to prevent the imposition of a penalty
or charge against the full allowance for any such system in the insurance rate
as fixed by said office, or by any insurance company, Tenant shall, at Tenant's
expense, promptly make and supply such changes, modifications, alterations or
additional equipment.
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BANKRUPTCY
17.1 PRIOR TO TERM. If at any time prior to the date herein fixed as the
commencement of the Term of this Lease there shall be filed by or against Tenant
in any court pursuant to any statute either of the Unites States or of any state
a petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee or conservator of all or a portion of
Tenant's property, or if Tenant makes an assignment for the benefit of
creditors, this Lease shall ipso facto be canceled and terminated and in such
event neither Tenant nor any person claiming through or under Tenant or by
virtue of any statute or by an order of any court shall be entitled to
possession of Demised Premises and Landlord, in addition to the other rights and
remedies given by subsection 17.3 hereof or by virtue of any other provision in
this Lease contained or by virtue of any statute or rule of law, may retain as
damages any rent, security, deposit or moneys received by it from Tenant or
others on behalf of Tenant.
17.2 DURING TERM. If at the date fixed as the commencement of the Term of
this Lease or if at any time during the Term there shall be filed by or against
Tenant in any court pursuant to any statute either of the United States or of
any state a petition in bankruptcy or insolvency or for reorganization or for
the appointment of a receiver of trustee or conservator of all or a portion of
Tenant's property, or if Tenant makes an assignment for the benefit of
creditors, this Lease, at the option of Landlord exercised within a reasonable
time after notice of the happening of any one or more of such events, may be
canceled and terminated and in such event neither Tenant nor any person claiming
through or under Tenant or by virtue of any statute or of an order of any court
shall en entitled to possession or to remain in possession of Demised Premises
but shall forthwith quit and surrender Demised Premises, and Landlord, in
addition to the other rights and remedies granted by subsection 17.3 hereof or
by virtue of any other provision in this Lease contained or by virtue of any
stature or rule of law, may retain as damages any rent, security, deposit or
moneys received by it from Tenant or others on behalf of Tenant.
17.3 MEASURE OF DAMAGES. In the event of the termination of this Lease
pursuant to subsections 17.1 and 17.2 of this Article, Landlord shall be
entitled to the same rights and remedies as those set forth in subsections 18.4
and 18.5 and in Article 21 of this Lease.
17.4 In the event of the occurrence of any of those events specified in
this Article, if Landlord shall not choose to exercise, or by Law shall not be
able to exercise, its rights hereunder to terminate this Lease upon the
occurrence of such events, then, in addition to any other rights of Landlord
hereunder or by taw, (i) Landlord shall not be obligated to provide Tenant with
any of the services specified in Article 12, unless Landlord has received
compensation in advance for such services, and the parties agree that Landlord's
estimate of the compensation required with respect to such services shall
control, and (ii) neither Tenant, as debtor in-possession, nor any trustee or
other person (hereinafter collectively called the "Assuming Tenant") shall be
entitled to assume this Lease unless, on or before the date of such assumption,
the Assuming Tenant (a) cures, or provides adequate assurance that the latter
will promptly cure, any existing default under this Lease, (b) compensates, or
provides adequate assurance that the Assuming Tenant will promptly compensate,
Landlord for any pecuniary toss (including, without Limitation, attorneys' fees
and disbursements) resulting from such default, and (c) provides adequate
assurance of future performance under this Lease, it being covenanted and agreed
by the parties that, for such purposes, any cure or compensation shall be
effected by the immediate payment of any monetary default or any required
compensation, or the immediate correction or bonding of any nonmonetary default;
any "adequate assurance" of such cure or compensation shall be effected by the
establishment of an escrow fund for the amount at issue or by bonding and
"adequate assurance" of future performance shall be effected by the
establishment of an escrow fund for the amount at issue or by bonding, it being
covenanted and agreed by Landlord and Tenant that the foregoing provision was a
material part of the consideration for this Lease.
DEFAULT
18.1 It shall, at Landlord's option, be deemed a breach of this Lease if
0) Tenant defaults (a) in the making of any payments of money pursuant to this
Lease, or (b) in fulfilling any other term, covenant, condition, provision or
agreement of this Lease if said default under this clause (b) continues to exist
at the expiration of ten (10) days after notice thereof given by Landlord to
Tenant or (ii) Demised Premises becomes vacant or deserted or (iii) Tenant shall
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cease to occupy Demised Premises or shall remove substantially all of
Tenant's furniture therefrom or (iv) Tenant shall fail to move into or take
possession of Demised Premises within fifteen (15) days after the
commencement of the Term or (v) any execution or attachment shall be issued
against Tenant or any of Tenant's property or (vi) Demised Premises shall be
taken or occupied or attempted to be taken or occupied by someone other than
Tenant or (vii) Tenant shall default with respect to any other Lease between
(a) Landlord and Tenant, or (b) any parent company or subsidiary company or
affiliate or agent of Landlord, and Tenant or (viii) Tenant assigns or
otherwise transfers substantially all of the assets used in connection with
the business conducted in Demised Premises. Notwithstanding the above, if
Tenant's default is non-monetary in nature, and is not a breach of Article 3
or Article 17, Tenant shall not be in breach of this Lease if Tenant
immediately commences to cure the default after notice thereof given by
Landlord to Tenant and Tenant diligently and continuously prosecutes the cure
to completion.
18.2 In the event that Landlord elects, pursuant to subsection 18.1 of
this Article, to declare a breach of this Lease, then Landlord shall have the
right to give Tenant five (5) days, notice of intention to end the Term of
this Lease and thereupon, at the expiration of said five (5) days, the Term
of this Lease shall expire as fully and completely as if that day were the
day herein definitely fixed for the expiration of the Term hereof and Tenant
shall then quit and surrender Demised Premises to Landlord, but Tenant shall
remain liable as hereinafter provided. if Tenant fails to so quit and
surrender Demised Promises as aforesaid, Landlord shall have the right,
without notice, to re-enter Demised Premises either by force or otherwise and
dispossess Tenant and the Legal representatives of Tenant and all other
occupants of Demised Premises by unlawful detainer or other summary
proceedings, or otherwise, and remove their effects and regain possession of
Demised Premises (but Landlord shall not be obligated to effect such removal)
and Tenant hereby waives service of notice of intention to re-enter or to
institute Legal proceedings to that end.
18.3 In the event of any breach of this Lease by Tenant (and regardless of
whether or not Tenant has abandoned Demised Premises), this Lease shall not
terminate unless Landlord, at Landlord's option, elects at any time when Tenant
is in breach of this Lease to terminate Tenant's right to possession as provided
in subsection 18.2 of this Article or, at Landlord's further option, by the
giving of any notice (including but not Limited to any notice preliminary or
prerequisite to the bringing of Legal proceedings in unlawful detainer)
terminates Tenant's right to possession. For so long as this Lease continues in
effect, Landlord may enforce all of Landlord's rights and remedies under this
Lease, including the right to recover all rent as it becomes due hereunder. For
the purposes of this subsection, the following shall not constitute termination
of Tenant's right to possession: (i) acts of maintenance or preservation of
efforts to relet Demised Premises, or (ii) the appointment of a receiver upon
initiative of Landlord to protect Landlord's interest under this Lease.
18.4 In the event of termination of this Lease or termination of Tenant's
right to possession (as a result of Tenant's breach of this Lease or pursuant to
Article 17), Landlord shall have:
A. The right to remove any and all persons and property from Demised
Premises, with or without legal process, and pursuant to such rights and
remedies as the Laws of the State of California shall then provide or permit,
but Landlord shall not be obligated to effect such removal. Said property may,
at Landlord's option, be stored or otherwise dealt with as provided within this
Lease or as such Laws may then provide or permit, including but not Limited to
the right of Landlord to sell or otherwise dispose of the same or to store the
same, or any part thereof, in a warehouse or elsewhere at the expense and risk
of and for the account of Tenant.
B. The rights and remedies provided by California Civil Code Section
1951.2 to recover from Tenant upon termination of the Lease:
(1) the worth at the time of award of the unpaid rent and other
charges which had been earned at the time of termination;
(2) the worth at the time of award of the amount by which the
unpaid rent and other charge which would have been earned after termination
until the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided;
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(3) subject to Subdivision (c) of the California Civil Code
Section 1951.2, the worth at the time of award of the amount by which the unpaid
rent and other charges for the balance of the Term after the time of award
exceeds the amount of rental loss that Tenant proves could be reasonably
avoided; and
(4) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be Likely to
result therefrom. The "worth" at the time of award of the amounts referred to in
clauses (1) and (2) of this subsection shall be computed by allowing interest at
the default rate. The worth at the time of the award of the amount referred to
in clause (3) of this Section shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent 0%).
C. The rights and remedies provided by California Civil Code Section
1951.4, which allows Landlord to continue this Lease in effect and to enforce
all of its rights and remedies under this Lease, including the right to recover
rent and additional charges as they become due, for as Long as Landlord does not
terminate Tenant's right to possession; provided, however, if Landlord elects to
exercise its remedies described in this subsection and Landlord does not
terminate this Lease, and if Tenant requests Landlord's consent to an assignment
of this Lease or a sublease of the Demised Premises at such time as Tenant is in
default, Landlord shall not unreasonably withhold its consent to such assignment
or sublease.
D. To enforce, to the extent permitted by the Laws of the State of
California then in force and effect, any other rights or remedies set forth in
this Lease or otherwise applicable hereto by operation of Law or contract.
18.5 In the event of a breach or threatened breach by Tenant of any of the
terms, covenants, conditions, provisions or agreements of this Lease, Landlord
shall additionally have the right of any remedy available to Landlord, at law or
in equity injunction and Tenant agrees to pay the premium for any bond required
in connection with such injunction. Mention in this Lease of any particular
remedy shall not preclude Landlord from any other remedy, at law or in equity.
18.6 Tenant hereby expressly waives any and all rights of redemption
granted by or under any present or future Law in the event of Tenant's being
evicted or dispossessed for any cause, or in the event of Landlord's obtaining
possession of Demised Premises, by reason of the violation by Tenant of any of
the terms, covenants, conditions, provisions or agreements of this Lease, or
otherwise.
FEES AND EXPENSES
19.1 If Tenant shall default in the performance of any obligation on
Tenant's part to be performed under this Lease, Landlord may immediately, or at
any time thereafter, without notice, perform the same for the account of Tenant.
If Landlord at any time is compelled to pay or elects to pay any sum of money or
do any act which will require the payment of any sum of money including but not
Limited to employment of attorneys or incurring of costs), by reason of failure
of Tenant to comply with any term, covenant, condition, provision or agreement
hereof, or, if Landlord is compelled to incur or elects to incur any expense
(including but not Limited to reasonable attorneys' fees in instituting,
prosecuting or defending any action or proceeding, whether or not such action or
proceeding proceeds to judgment) by reason of any default of Tenant hereunder,
the sum or sums so paid or incurred by Landlord with interest at the Default
Rate shall be due from Tenant to Landlord promptly upon demand by Landlord.
NO REPRESENTATIONS BY LANDLORD
20.1 Neither Landlord nor Landlord's agents have made any representations
or promises with respect to the Park, Building or Demised Premises except as
herein expressly set forth. The taking of possession of Demised Premises by
Tenant shall be conclusive evidence, as against Tenant, that Tenant accepts the
same in its then "as is" condition and that Demised Premises, the Building and
the Park were in good and satisfactory condition at the time such possession was
so taken.
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END OF TERM
21.1 Upon the expiration or other termination of the Term, Tenant shall
quit and surrender to Landlord Demised Premises, broom clean, in as good order,
condition and repair as it now is or may hereafter be placed, ordinary wear
excepted. Tenant shall remove all property of Tenant, as directed by Landlord.
Any property left on Demised Premises at the expiration or other termination of
this Lease, or after the happenings of any of the events of default set forth in
Article 18, may, at the option of Landlord, either be deemed abandoned or be
placed in storage at a public warehouse in the name of and for the account of
and at the expense and risk of Tenant or otherwise disposed of by Landlord in
the manner provided by Law. Tenant expressly releases Landlord of and from any
and all claims and Liability for damage to or destruction or Loss of property
left by Tenant upon Demised Premises at the expiration of other termination of
this Lease and Tenant hereby indemnifies Landlord against any and all claims and
Liability with respect thereto. If Tenant holds over after the Term with the
consent of Landlord, express or implied, such tenancy shall be from month to
month only and shall not be a renewal hereof, and Tenant shall pay the rent and
all the other charges at the same rate as herein provided and also comply with
all of the terms, covenants, conditions, provisions and agreements of this Lease
for the time during which Tenant holds over. If Tenant holds over after the Term
without the consent of Landlord and shall fail to vacate Demised Premises after
the expiration or sooner termination of this Lease for any cause or after
Tenant's right to occupy same ceases, thereafter, and notwithstanding anything
to the contrary contained elsewhere in this Lease, Tenant shall be liable to
Landlord for the use and occupancy of Demised Premises in an amount agreed to be
one hundred twenty-five percent (125%) of the monthly installments of Base
Annual Rent, and all the other changes as provided in this Lease for the last
month of the Term. If Demised Premises are not surrendered at the end of the
Term, Tenant shall be additionally responsible to Landlord for all damage
(including but not limited to the loss of rent) which Landlord shall suffer by
reason thereof, and Tenant hereby indemnifies Landlord against all claims made
by any succeeding tenant against Landlord, resulting from delay by Landlord in
delivering possession of Demised Premises to such succeeding tenant. Tenant's
obligation to observe or perform all of the terms, covenants, conditions,
provisions and agreements of this Article shall survive the expiration or other
termination of this Lease.
QUIET POSSESSION
22.1 Landlord covenants and agrees with Tenant that upon Tenant's paying
Base Annual Rent and all other charges and observing and performing all of the
terms, covenants, conditions, provisions and agreements of this Lease on
Tenant's part to be observed or performed, Tenant shall have quiet possession of
the premises hereby demised for the Term subject, however, to the terms of this
Lease and of any ground Leases, underlying Leases, mortgages and deeds of trust
affecting all or any portion of the Building or any of the areas used in
connection with the operation of the Building.
LANDLORD'S WORK AND FAILURE TO GIVE POSSESSION
23.1 TENANT INSTALLATIONS PRIOR TO THE COMMENCEMENT DATE. Landlord will
perform the work and make the installations in the Demised Premises
substantially as set forth in the Work Letter attached hereto as Exhibit B (the
"Landlord's Work").
23.2 If Landlord shall be unable to give possession of Demised Premises on
the Commencement Date by reason of the fact that Demised Premises are Located in
a building being constructed and which has not been sufficiently completed to
make Demised Premises ready for occupancy or by reason of the fact that a
certificate of occupancy has not been procured or for any other reason, or if
the Building is not in course of construction and Landlord is unable to give
possession of Demised Premises on the date of the commencement of the Term
hereof by reason of the holding over of any tenant or tenants or for any other
reason, or if Landlord's Work is not completed, any such delay resulting
therefrom shall be deemed excused and Landlord shall not be subject to any
liability for the failure to give possession on said date. Under such
circumstances the rent reserved and covenanted to be paid herein shall not
commence until possession of Demised Premises is given or Demised Premises is
available for occupancy by Tenant, as fixed in a notice
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given by Landlord to Tenant, unless such delay is the fault of Tenant. No
such failure to give possession on the date of the commencement of the term
shall in any wise affect or impair the validity of this Lease or the
obligations of Tenant hereunder, nor shall the same be construed in any way
to extend the Expiration Date. If permission is given to Tenant to enter into
the possession of Demised Premises or to occupy premises other than Demised
Premises prior to the date specified as the commencement of the Term, such
occupancy shall be deemed to be under all the terms, covenants, conditions,
provisions, and agreements of this Lease, including without Limitation Tenant
hereby agreeing to pay Base Annual Rent and other charges at the same rate as
though the term of this Lease and commenced. Notwithstanding the above, In
the event that Landlord is unable to give possession of the Demised Premises
as of sixty (60) days after the Commencement Date (subject to an additional
thirty (30) days for delays caused by force majeure) and said delay is not
caused by Tenant, then Tenant shall have the option to terminate this Lease
prior to taking possession of the Demised Premises.
TERMINATION, NO WAIVER, NO ORAL CHANGE
24.1 In the event that this Lease terminates for any reason (including
but not Limited to termination by Landlord) prior to its natural expiration
date, such termination wilt effect the termination of any and all agreements
for the extension of this Lease (whether expressed in an option, exercised or
not, or collateral document or otherwise); any right herein contained on the
part of Landlord to terminate this Lease shall continue during any extension
hereof; any option on the part of Tenant herein contained for an extension
hereof shall not be deemed to give Tenant any option for a further extension
beyond the first extended term. Interruption or curtailment of any services
shall not constitute a constructive or partial eviction or entitle Tenant to
any abatement of rent or any compensation (including but not Limited to
compensation for annoyance, inconvenience or injury to business). No act or
thing done by Landlord or Landlord's agents during the Term shall be deemed
an acceptance of a surrender of Demised Premises, and no agreement to accept
such surrender shall be valid unless in writing signed by Landlord. No
employee of Landlord or of Landlord's agents shall have any power to accept
the keys of said premises prior to the termination of this Lease. The failure
of Landlord to seek redress for violation of, or to insist upon the strict
performance of any term, covenant, condition, provision or agreement of this
Lease, or any of the Rules and Regulations attached to this Lease or
hereafter adopted by Landlord, shall not prevent a subsequent act, which
would have originally constituted a violation, from having all the force and
effect of an original violation. The receipt by Landlord of rent with
knowledge of the breach of any term, covenant, condition, provision or
agreement of this Lease, shall not be deemed a waiver of such breach. The
failure of Landlord to enforce any of the Rules and Regulations attached to
this Lease, or hereafter adopted, against Tenant or any other tenant in the
Building or in the park shall not be deemed a waiver of any such Rule and
Regulation. No provision of this Lease shall be deemed to have been waived by
Landlord, unless such waiver be in writing signed by Landlord. No payment by
Tenant or receipt by Landlord of a Lesser amount than the Monthly Installment
shall be deemed to be other than on account of the earliest stipulated rent,
nor shall any endorsement or statement on any check or any Letter
accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice
to Landlord's right to recover the balance of such rent or pursue any other
remedy in this Lease provided. This Lease contains the entire agreement
between the parties, and recites the entire consideration given and accepted
by the parties. Any agreement hereafter made shall be ineffective to change,
modify, waive or discharge it in whole or in part unless such agreement is in
writing and signed by the party against whom enforcement of the change,
modification, waiver or discharge is sought.
WAIVER OF TRIAL BY JURY
25.1 The respective parties hereto hereby waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other on any matter whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant, Tenant's
use or occupancy of Demised Premises, or any claim of injury or damage, or
the enforcement of any remedy under any statute, emergency or otherwise.
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INABILITY TO PERFORM
26.1 This Lease and the obligation of the Tenant to pay rent hereunder
and to keep, observe and perform all of the other terms, covenants,
conditions, provisions and agreements of this Lease on the part of Tenant to
be kept, observed or performed shall in no wise be affected, impaired or
excused because landlord is unable to fulfill any of its obligations under
this Lease or to supply, or is delayed or curtailed in supplying any service
expressly or impliedly to be supplied or its unable to make, or is delayed or
curtailed in making, any repairs, alterations, decorations, additions or
improvements, or is unable to supply, or is delayed or curtailed in
supplying, any cause beyond Landlord's reasonable control, including, but not
limited to, acts of Go, strike or labor troubles, fuel or energy shortages,
governmental preemption or curtailment in connection with a national
emergency or in connection with any rule, order, guideline or regulation of
any department or governmental agency or by reason of the conditions of
supply and demand which have been or are affected by a war or other
emergency. Any such prevention, delay or curtailment shall be deemed excused
and Landlord shall not be subject to any liability resulting therefrom.
Notwithstanding the foregoing, in the event Landlord is unable to fulfill
obligations under this Lease, and Landlord's inability to perform prohibits
Tenant from reasonably conduct its business in the Demised Premises, then: 1)
If Landlord's inability to perform continues for a period exceeding ten (10)
business days, rent shall abate until Tenant can reasonably conduct its
business in the Demised Premises, and 2) If Landlord's inability to perform
continues for a period exceeding ninety (90) days, Tenant shall have the
option of terminating the Lease. Tenant waives and releases its right to
terminate this Lease under Section 1932(1) of the California Civil Code or
under any similar law or statue now or hereafter in effect.
26.2 Landlord shall not be deemed to be in default in the performance
of any obligation required to be performed by it hereunder unless and until
it has failed to perform such obligation within thirty (30)days after written
notice by Tenant to Landlord specifying the nature of Landlord's failure to
perform such obligation; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it shall
commence such performance within such thirty (30) day period and thereafter
shall prosecute the same to completion. ALL rights to cure provided to
Landlord under this Section 26.2 shall also be accorded to any mortgagee or
beneficiary under a deed of trust encumbering the Building or the Park.
Landlord shall not be Liable for any injury or damage to persons or property
resulting from Loss, theft, fire, explosion, falling plaster, cessation or
variation or shortage or interruption of services or utilities, steam, gas,
electricity, earthquake, acts of God, rain or water or dampness from any
source or any other cause whatsoever. Without Limiting the generality of the
foregoing, in no event shall Landlord business interruptions or other
consequential damages, except for damages arising from Landlord's gross
negligence or willful misconduct.
BILLS AND NOTICES
27.1 Except as otherwise in this Lease provided, a bill, statement,
consent, notice or communication which Landlord may desire or be required to
give to Tenant, shall be deemed sufficiently given or rendered if in writing,
delivered to Tenant personally or sent by registered or certified mail
addressed to Tenant at the Building or at the Last known residence address or
business address of Tenant or Left at Demised Premises addressed to Tenant,
and the time of the rendition of such bill or statement and of the giving of
such consent, notice or communication shall be deemed to be the time when the
same is delivered to Tenant, mailed, or Left at Demised Premises as herein
provided. Any notice, request, demand or communication by Tenant to Landlord
must be in writing and served by registered or certified mail (postage fully
prepaid), addressed to Landlord, at the address set forth in Article J of
Section 1, or at such other address as Landlord shall designate by notice
given as herein provided, and the time of the giving of such notice, request,
demand or communication shall be deemed to be the time when the same is
mailed as herein provided. If Tenant is notified of the identity and address
of Landlord's mortgagee or beneficiary under a deed of trust, or ground or
underlying Lessor, Tenant shall give such party notice of any default by
Landlord hereunder by registered or certified mail and such party shall have
a reasonable opportunity to cure such default before Tenant's exercising any
remedy available to it.
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INCREASE OF TAXES AND OPERATING COSTS
28.1 If, in any Computation Year during the term of this Lease Taxes (as
hereinafter defined) and Operating Costs (as hereinafter defined) shall be
increased above the amount of Base Taxes and Operating Costs Amount specified
in Article K of Section I of this Lease, the Base Annual Rent shall be
increased by Tenant's Share specified in Article M of Section I of this Lease
of the amount of any such increase in Taxes and Operating Costs, subject to a
maximum increase in the sum of taxes plus Operating Cost of ten percent (10%)
in any Computation Year when compared with the immediately proceeding
Computation Year.
28.2 Definitions.
A. "Computation Year" shall mean each twelve (12) consecutive month
period commencing January 1 of each year during the Term, provided that
Landlord, upon notice to Tenant, may change the Computation Year from time
to time to any other twelve (12) consecutive month period and, in the event
of any such change, Tenant's share of Taxes and Operating Costs shall be
equitably adjusted for the Computation Years involved in any such change.
B. Tenant's Share has been computed by dividing the Rentable Area of
the Demised Premises by the total Rentable Area of the Building and, in the
event that either the Rentable Area of the Demised Premises or the total
Rentable Area of the Building is changed, Tenant's Share will be
appropriately adjusted by Landlord, which adjustment shall be conclusive
and binding on Tenant and, as to the Computation Year in which such change
occurs, for purposes of this Article 28, Tenant's Share shall be determined
on the basis of the number of days during such Computation Year at each
such percentage.
C. "Taxes" shall mean taxes and assessments upon or with respect to
the Building and the areas used in connection with the operation of the
Building imposed by Federal, State or Local governments or governmental
assessment districts, but shall not include income, franchise, capital
stock, estate, or inheritance taxes, but shall include gross receipts
taxes, special assessments and other business taxes. If, because of any
change in the method of taxation of real estate, any tax or assessment is
imposed upon Landlord or upon the owner of the Land and/or the Building
and/or the areas used in connection with the operation of the Building or
upon or with respect to the Park and/or the Building and/or the areas used
in connection with the operation of the Building or the rents or income
therefrom, in substitution for or in lieu of any tax or assessment which
would otherwise be a real estate tax or assessment subject matter, or with
respect to any subject matter which was during fiscal year 1998-90 the
subject of a real estate tax or assessment, such other tax or assessment
shall be deemed to be included in Taxes. Taxes shall also include legal
fees, costs and disbursements incurred in connection with proceedings to
contest or reduced Taxes. If any Taxes are specially assessed by reason of
the occupancy or activities of on or more tenants and not the occupancy or
activities of the tenants as a whole, such taxes shall be allocated by
Landlord to the Tenant or Tenants whose occupancy or activities brought
about such assessment. In case there shall be a reduction of the assessed
valuation for any tax year which affects the Taxes in any year or which a
rent adjustment shall have been made, the rent adjustment shall be
recalculated on the basis of the revised assessed valuation and Landlord
will credit against the rent next becoming due from Tenant such sums as
may be due to Tenant by reason of the recalculation, Less the expenses
incurred in effecting such reduction. In no event shall the amount of any
such credit be in excess of the amount of rent increase actually paid to
Landlord by Tenant for the period covered by such credit as a result of an
increase in Taxes.
D . "Operating Costs" shall mean the aggregate amount of (1) wage and
Labor costs applicable to the persons engaged in the management, operation,
maintenance, overhaul or repair of the Building and the Park and the areas
used in connection with the operation of the Building and the Park whether
they be employed by Landlord or by an independent contractor with whom
Landlord shall have contracted or may contract for such services; any
increase or decrease in the hours of employment or the number of paid
holidays or vacation days, social security taxes, unemployment insurance
taxes and the cost (if any) of providing disability, hospitalization,
medical, welfare, pension, retirement or other benefits applicable with
respect to such
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employees, shall correspondingly affect the wage and Labor costs; and (2)
cost of utilities; fuel; building supplies and materials; service and
management contract; water and sewer charges; janitorial services;
security; Labor; parking expenses, utilities surcharges, or any other
costs Levied, assessed or imposed by, or at the direction of, or
resulting from statutes or regulations or interpretations thereof,
promulgated by any federal, state, regional, municipal or Local
government authority in connection with the use or occupancy of the
Building and the Park, or the parking facilities serving the Building;
costs incurred in the management of the Building; Building management
office rental; a management fee; air-conditioning; waste disposal;
heating; ventilating; elevator maintenance; supplies; materials;
equipment; tools; repair and maintenance of the structural portions of
the Building, including the plumbing, heating, ventilating,
air-conditioning and electrical systems installed or furnished by
Landlord; and maintenance, costs, and upkeep of all parking and common
areas, rental of personal property used in maintenance and management;
costs and expenses of gardening and landscaping; maintenance of signs;
personal property taxes Levied on or attributable to personal property
used in connection with the entire Building, including the Common Areas;
and costs and expenses of repairs, resurfacing, repairing, maintenance,
painting, Lighting, cleaning, refuse removal, security and similar items;
appropriate reserves; and the Common Area maintenance charge obligation
allocated to the Building and the Park including Tenant's allocable share
of Association Fees, if applicable in the future and assessments for the
maintenance of the Park and the Common areas, and for any increase in (i)
the rent payable under any ground Lease now or hereafter affecting the
real property of which Demised Premises forms a part or (ii) the interest
payable with respect to any permanent financing now or hereafter
affecting the Building which increase results not from a refinancing but
solely from a provision for such increase in the applicable loan
documents; and (iii) alterations to the Building or the Park or the areas
used in connection with the operation of the Building for Life-safety
systems or energy conservation or to effect economies in operations and
maintenance of the Building or the Park, or other capital improvements or
replacements (together with all costs, and interest thereon at a rate
equal to two percent (2%) over the annual prime rate of interest
announced publicly by Bank of America N.T.&S.A. at its San Francisco
Headquarters from time to time [but in no event in excess of the maximum
rate of interest permitted by Law,] incurred in connection with any such
alterations or other capital improvements or replacements) all amortized
over their useful Life except that any such costs (and the interest
thereon) incurred in connection with alterations or replacements for
energy conservation may be amortized at a yearly rate equal to the
savings realized during such period as a result of such alteration or
replacement, and (iv) the cost of fire, extended coverage, boiler,
sprinkler, disaster, public Liability, property damage, rent, earthquake
and other insurance and the deductible portion of any insured Loss
otherwise covered by such insurance, and (v) the cost of legal,
accounting, consulting fees and permits, certificates and Licenses
required in connection with the Building or the Park, and (vi) such other
items as are now or hereafter customarily included in the cost of
managing, operating, maintaining, overhauling and repairing the Building,
the Park and the areas used in connection with the operation of the
Building in accordance with now or hereafter accepted accounting or
management principles or practices.
28.3 STATEMENTS FOR TENANTS AND PAYMENTS. Tenant shall pay to Landlord
as additional charges one twelfth (1/12) of Tenant's Share of the increase in
Taxes and Operating Costs for each Computation Year, in advance, in an amount
estimated by Landlord and billed by Landlord to Tenant; provided that
Landlord shall have the right initially to determine monthly estimates and to
revise such estimate from time to time. With reasonable promptness after
Landlord has received the tax bills and other operating cost support for any
Computation Year, Landlord shall furnish Tenant with a statement (herein
called "Landlord's Statement") showing a comparison of the Base Taxes and
Operating Costs Amount to the amount of Taxes and Operating Costs for such
Computation Year, and Tenant's Share of the increase in Taxes and Operating
Costs. If the actual increase in Taxes and Operating Costs for such
Computation Year exceed the estimated Taxes and operating Costs paid by
Tenant for such Computation Year, Tenant shall pay to Landlord the difference
between the amount paid by Tenant and the actual increase in Taxes and
Operating Costs within fifteen (15) days after the receipt of Landlord's
Statement, and if the total amount paid by Tenant for any such Computation
Year shall exceed the actual increase in Taxes and Operating Costs for such
Computation Year, such excess shall be credited against the next installments
of Taxes and Operating Costs due from Tenant to Landlord hereunder.
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28.4 ADJUSTMENT FOR PARTIAL YEARS. If the Commencement Date shall occur
on a date other than the first day of a Computation Year, Tenant's Share of
Taxes and Operating Costs for the Computation Year in which the Commencement
Date occurs shall be in the proportion that the number of days from and
including the Commencement Date to and including the Last day of the
Computation Year in which bears to 365. Similarly, if the Expiration Date
shall occur on a date other than the Last day of a Computation Year, Tenant's
Share of Taxes and Operating Costs for the Computation Year in which the
Expiration Date occurs shall be in the proportion that the number of days
from and including the first day of the Computation Year in which the
Expiration Date occurs shall be in the proportion that the number of days
from and including the first day of the Computation Year in which the
Expiration Date occurs to and including the Expiration Date bears to 365.
Notwithstanding the forgoing, Landlord may, pending the determination of the
amount of Taxes and Operating Costs for such partial Computation year,
furnish Tenant with statements of estimated increases in Taxes and in
Operating Costs, and Tenant's Share of each thereof for such partial
Computation year. Within fifteen (15) days after receipt of such estimated
statement, Tenant shall remit to Landlord, as Additional Charges, the amount
of Tenant's Share of such Taxes and Operating Costs. After such Taxes and
Operating Costs have been finally determined and Landlord's Statement has
been furnished to Tenant pursuant to this Article, and if there shall have
been an underpayment of Tenant's Share of Taxes and Operating Costs, Tenant
shall remit the amount of such underpayment to Landlord shall remit the
amount of any such overpayment to Tenant within fifteen (15) days after the
issuance of such statements.
28.5 OCCUPANCY AND FRACTIONAL YEAR. For purposes of comparison to Base
Taxes and Operating Costs, there shall be added to the actual Taxes and
Operating Costs for any period during which the Building is less than 95%
occupied those additional expenses (of the type set forth in Paragraph B of
Subsection 28.2 of this Article) which Landlord determines it would have so
incurred had the building been 95% occupied during any such period.
Furthermore, for purposes of comparison to Base Taxes and Operating Costs, in
any comparative statement covering Less than a full Computation Year there
shall be added to the actual Taxes and Operating Costs for the period covered
by the comparative statement those additional expenses (of the type set forth
in this Article) which Landlord determines it would have so incurred had the
Building been 95% occupied during full Computation Year.
FOODS, BEVERAGES AND ODORS
29.1 Tenant shall not prepare any food nor do any cooking, conduct any
restaurant, Luncheonette or cafeteria for the sale or service of food or
beverages to its employees or to others, or cause or permit any odors of
cooking or other processes, or any unusual or objectionable odors to emanate
from Demised Premises. Tenant shall not install or permit the installation or
use of any vending machine or permit the delivery of any food or beverage to
Demised Premises except by such persons and in such manner as are approved in
advance in writing by Landlord.
SECURITY
30.1 Tenant has deposited with Landlord the sum specified in Article N
of Section 1 as security for the faithful performance and observance by
Tenant of all of the terms, covenants, conditions, provisions and agreements
of this Lease. Tenant shall not be entitled to interest on such security
deposit and Landlord shall not be obligated to hold such deposit as a
separate fund, but may commingle it with other funds. In the event Tenant
defaults in respect of any of the terms, covenants, conditions, provisions or
agreements of this Lease, including but not Limited to, the payment of rent
or other sums due hereunder, Landlord may use, apply or retain the whole or
any part of the security so deposited to the extent required for the payment
of any rent or another sums as to which Tenant is in default or for any sum
which Landlord may expend or may be required to expend by reason of Tenant's
default in respect of any of the terms, covenants, conditions, provisions or
agreements of this Lease, including, but not Limited to, any damages or
deficiency in the reletting of Demised Premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Landlord, Tenant, on demand by Landlord, will forthwith replenish the
security or any portion thereof so used or applied by Landlord. In the event
that Tenant shall fully and faithfully comply with all of the terms,
covenants, conditions, provisions and agreements of this Leases, the
security, without interest, shall be returned to Tenant within thirty
(30) days promptly after the date fixed as the end of this Lease but only
after delivery of entire possession of Demised Premises to Landlord. In the
event of a sate of the Land and/or Building or Leasing of the land
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and/or the entire Building, or the sale of such leasehold, Landlord shall
have the right in accordance with California Civil Code Section 1950.7 1) to
return the security to Lessee, or 2) to transfer the security to the
transferee or Lessee and Landlord shall thereupon be released by Tenant from
all Liability for the return of such security; and in the event of such
transfer of security Tenant shall Look to the new Landlord solely for the
return of said security; and the provisions hereof shall apply to every
transfer or assignment made of the security to a new Landlord. Tenant shall
not assign or encumber or attempt to assign or encumber the security
deposited herein and neither Landlord nor it s successors or assigns shall be
bound by any such agreement, encumbrance nor by any purported transfer
thereof by operation of Law. In the event of the termination of any ground
Lease or foreclosure of any fee or leasehold mortgage or deed of trust (of
conveyance in lieu thereof) now or hereafter affecting the real property of
which Demised Premises forms a part, Tenant shall Look to the new Landlord
for the return of said security only if said security is actually transferred
to said new Landlord.
CARE OF FLOOR AND WINDOW COVERINGS
31.1 Supplementing Articles 5 and 21, Tenant shall take good care of
any and all floor and window coverings installed at any time in any portion
of Demised Premises, and Tenant shall make, as and when needed, all repairs
in and to the said coverings and shampoo and/or clean any of said coverings
as necessary (if in excess of normal janitorial maintenance) to preserve them
in good order, condition and appearance by persons approved by the Landlord.
Upon the expiration or other termination of the Term of this Lease, Tenant
shall surrender the said coverings to Landlord in as good order, condition
and repair as they were upon the installation thereof, ordinary wear
excepted. Supplementing Article 12, Landlord shall vacuum any carpets
periodically.
MARGINAL NOTES
32.1 The marginal notes and headings are inserted only as a matter of
convenience and for reference and in no way define, Limit or describe the
scope or intent of this Lease nor do they in any way affect this Lease.
DEFINITIONS
33.1 The term "office," or "OFFICES," wherever used in this Lease, shall
not be construed to mean premises used as a store or stores, for the sate,
display or storage at any time, of goods, wares or merchandise of any kind,
or as a shop, or for manufacturing or for any purpose contrary to Rule and
Regulation No. 14. The term "Landlord" as used in this Lease means only the
owner or the mortgagee in possession or grantee in possession under a deed of
trust, or the owner of the Lease of the Building for the time being, so that
in the event of any sate or sales of said Land and/or Building or of said
Lease, or in the event of a Lease of said Land and/or Building, the same
Landlord shall be and hereby is entirety freed and relieved of all covenants
and obligations of Landlord hereunder, and it shall be deemed and construed
without further agreement between the parties or their successors-in-interest
or between the parties and the purchaser or the lessee of the Building has
assumed and agreed to carry out any and all covenants and obligations of
Landlord hereunder. The words "re-enter" and "re-entry" as used in this
Lease are not restricted to their technical legal meanings.
LANDLORD'S APPROVAL
34.1 The review, approval, inspection or examination by Landlord of any
item to be reviewed, approved, inspected or examined by Landlord under the
terms of this Lease or the Exhibits attached hereto shall not constitute the
assumption of any responsibility by Landlord for either the accuracy or
sufficiency or any such item or the quality or suitability of such item for
its intended use. Any such review, approval, inspection or examination by
Landlord is for the sole purpose of protecting Landlord's interests in the
Building and the Park and under this Lease, and no third parties, including,
without limitation Tenant or any person or entity claiming through or under
Tenant, or the contractors, agents, servants, employees, visitors or
licensees of Tenant or any such person or entity, shall have any rights
hereunder.
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BROKERAGE
35.1 Tenant represents and warrants that the broker or brokers
specified in Article 0 of Section 1 was (were) the sole broker or brokers who
negotiated and brought about the consummation of this Lease, and that no
discussions or negotiations were had with any other broker concerning the
Leasing of the Demised Premises. Based on the foregoing representation and
warranty, Landlord has agreed to pay any and all commission or compensation
due to said broker or brokers in connection with the consummation of this
Lease. Tenant agreed to indemnify and defend Landlord against and hold
Landlord harmless from any claims of brokerage commissions arising out of any
discussions or negotiations allegedly had by Tenant with any other broker.
BINDING EFFECT
36.1 All of the terms, conditions, provisions and agreements of this
Lease shall be deemed to be covenants. The covenants contained in this Lease
shall bind and inure to the benefit of Landlord and Tenant and their
respective Legal representatives and successors, and, except as otherwise
provided in this Lease, their assigns.
MISCELLANEOUS
37.1 This Lease is offered to Tenant for signature by Tenant and this
Lease shall not be binding upon Landlord unless and until such time as
Landlord shall have executed and delivered the same.
37.2 Tenant shall not at any time prior to or during the term hereof,
either directly or indirectly, use any contractors, Labor or materials whose
use would create any difficulty with other contractors or labor engaged by
Tenant or by Landlord or by others in the construction, main tenancy or
operation of Demised Premises or the Building or the Park.
37.3 If a partnership or more than one Legal person is at any time
Tenant, 0) each partner and each legal person is jointly and severally liable
for the keeping, observing and performing of all of the terms, covenants,
conditions, provisions and agreements of this Lease to be kept, observed or
performed by Tenant, and 00 by term "Tenant" as used in this Lease shall mean
and include each of them jointly and severally and the act of or notice from,
or notice or refund to, or the signature of, any one or more of them, with
respect to this Lease, including but not Limited to, any renewal, extension,
expiration, termination or modification of this Lease, shall be binding upon
each and all of the persons executing this Lease as Tenant with the same
force and effect as if each and all of them had so acted or so given or
received such notice or refund or so signed.
37.4 In addition to the Base Annual Rent and other charges to be paid
by Tenant hereunder, Tenant shall reimburse Landlord, upon demand, for any
and all taxes payable by Landlord (other than net income taxes) whether or
not now customary or within the contemplation of the parties hereto: M upon,
allocable to, or measured by the rent payable hereunder, including without
Limitation, any gross receipts tax or excise tax Levied by any governmental
or taxing body with respect to the receipt of such rent; or (ii) upon or with
respect to the possession, Leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of Demised Premises or any
portion thereof; or (iii) upon the measured value of Tenant's personal
property located in Demised Premises or in any storeroom, garage or any other
place in Demised Premises or the Building or the Park, of the areas used in
connection with the operation of the Building, it being the intention of the
Landlord and Tenant that, to the extent possible, such personal property
taxes shall be billed to and paid directly by Tenant; or (iv) upon this
transaction, Taxes paid by Tenant pursuant to this Subsection 37.4 shall not
be included in any computation pursuant to Article 28.
37.5 This Lease shall be governed by and construed in accordance with
California Law
37.6 In the event any term, covenant, condition, provision or agreement
herein contained is held to be invalid or void by any court of competent
jurisdiction, the invalidity of any such term, covenant, condition, provision
or agreement shall in no way affect any other term, covenant, condition,
provision or agreement herein contained.
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37.7 Landlord shall not be obligated to provide or maintain any
security patrol or security system. However, if Landlord elects to provide
such patrol or system, the cost thereof shall be included in Operating Costs
as defined in Article 28. Landlord shall not be responsible for the quality
of any such patrol or system which may be provided hereunder or for damage or
injury to Tenant, its employees, invitees or others due to the failure,
action or inaction of such patrol or system, except for damage or injury
arising out of Landlord's gross negligence or willful misconduct.
37.8 Any basement storage space or other storage space at any time
demised to Tenant hereunder shall be used exclusively for storage.
Notwithstanding any other provision of this Lease to the contrary, (i) only
such ventilation and heating will be furnished by Landlord as will, in
Landlord's judgement, be adequate for use of said space for storage, (ii) no
cleaning, water or air conditioning will be furnished therefor, and (iii)
only such electricity will be furnished thereto as will, in Landlord's
judgement, be adequate to Light said space as storage space.
37.9 Time is of the essence with respect to the performance of each and
every provision of this Lease to be performed by Tenant.
37.10 Neither this Lease, nor any notice or memorandum regarding the
terms hereof, shall be recorded by Tenant. Any such unauthorized recording
shall give Landlord the right to declare a breach of this Lease and pursue
the remedies provided herein. Tenant agrees to execute and acknowledge, at
the request of Landlord a short form of this Lease in recordable form.
37.11 If the name of Tenant or any successor or assign shall be changed
during the term of this Lease, such party shall promptly notify Landlord
thereof, which notice shall be accompanied by a certified copy of the
document effecting such change of name.
37.12 Tenant shall at any time and from time to time upon not less than
ten (10) days' prior notice from Landlord execute, acknowledge and deliver to
Landlord a statement in writing certifying to those facts for which
certification has been requested by Landlord or any current or prospective
purchaser, mortgagee (or beneficiary under a deed of trust) or underlying
Lessor, including without limitation (i) that this Lease is unmodified and in
full force and effect (or, if modified, adequately identifying such
modification and certifying that this Lease, as so modified, is in full force
and effect) and (ii) the dates to which the Base Annual Rent, additional
payments and other charges are paid and (M) whether or not there is any
default by Landlord or Tenant in the performance of any term, covenant,
condition, provision or agreement contained in this Lease and further whether
or not there are any setoffs, defenses or counterclaims against enforcement
of the obligations to be performed under this Lease and, if there are,
specifying each such default, setoff, defense or counterclaim. Any such
statement may be conclusively relied upon on by any prospective purchaser or
Lessee or encumbrancer of Demised Premises or of all or any portion of the
Building or the Park. Tenant's failure to deliver such statement within such
time shall be deemed a statement that this Lease is in full force and effect,
without modification except as may be represented by Landlord, that there are
no uncured defaults in Landlord's performance, and that not more than one
month's Base Annual Rent has been paid in advance.
37.13 If, at any time during the Term of this Lease, the holder of
Landlord's interest hereunder is a partnership or joint venture, Tenant
agrees to Look only to the assets of such partnership or joint venture and
not to the partners of joint ventures personally with respect to any
obligation or payments due or which may become due from Landlord hereunder. A
deficit in the capital account of any partner or joint venture shall not be
considered an asset of such partnership or joint venture.
37.14 The rights of Tenant hereunder in and to the Common Area shall at
all times be subject to the rights of the Landlord and other tenants of
Landlord who use the same in common with Tenant, and it shall be the duty of
Tenant to keep all of the Common Areas free and clear of any obstructions
created or permitted by Tenant or resulting from Tenant's operation and to
permit the use of any of the Common Areas only for normal parking and ingress
and
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egress by the invitees of Tenant and from the Building. If, in the opinion of
Landlord, unauthorized persons are using the Common Areas by reason of the
presence of Tenant in Demised Premises, Tenant, upon demand of Landlord,
shall correct such situation by appropriate action or proceedings against all
such unauthorized persons. Nothing herein shall affect the right of Landlord
at any time to remove any such unauthorized persons from said areas or to
prevent the use of any of said areas by unauthorized persons.
37.15 If, as a result of any governmental rule or regulation, Landlord
imposes a curtailment of services or equipment in the Park, Demised Premises
or the Building, Tenant shall comply therewith and shall be Liable to
Landlord for any surcharge imposed for any violation by Tenant.
37.16 If Tenant is at any time in default in the payment of any sum of
money pursuant to the terms, covenants, conditions, provisions or agreements
of this Lease or pursuant to any order now or hereafter placed by Tenant with
Landlord (including without Limitation charges for any materials or services
or construction work furnished to Tenant by Landlord) with respect to Demised
Premises over and above or in addition to or in lieu of the Base Annual Rent
(or any installment thereof), Landlord shall have all the remedies as in the
case of default by Tenant in the payment of an installment of the Base Annual
Rent.
37.17 If Tenant signs as a corporation or a partnership, each of the
persons executing this Lease on behalf of Tenant does hereby covenant and
warrant that Tenant is a duty authorized and existing entity, that Tenant has
and is qualified to do business in California, that Tenant has full right and
authority to enter into this Lease, and that each and every person signing on
behalf of Tenant is authorized to do so. Upon Landlord's request, Tenant
shall provide Landlord with evidence satisfactory to Landlord confirming the
foregoing covenants and warranties.
37.18 In the event that either Landlord or Tenant fails to perform any
of its obligations under this Lease or in the event a dispute arises
concerning the meaning or interpretation of any provision of this Lease, the
basis of the dispute shall be settled by judicial proceedings and the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other party in
enforcing or establishing its rights hereunder, including without Limitation,
court costs and attorneys' fees.
Any rider or exhibit annexed hereto is made a part hereof.
IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this
Lease as of the day and year first above written.
LANDLORD: Newport Place Associates,
a California Limited Partnership
By: MIC Newport Place,
a California Limited Partnership
Its: General Partner
By: /s/ David W. Miller
----------------------------------------
David W. Miller, general partner
TENANT: HomeLife Realty Services, Inc.,
A Delaware Corporation
By: /s/ John Corner
----------------------------------------
John Corner
Its: Executive Vice President/General Manager
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EXHIBIT A
GENERAL NOTES;
1 ALL FURNITURE ON PLAN BY TENANT U.N.O.
2. CEILING GRID AND TILE TO BE BUILDING STANDARD.
3. PAINT TO BE BUILDING. STANDARD THROUGHOUT, EXCEPT ROOM 710.
4, BUILDING STANDARD CARPET AND STRAIGHT BASE THROUGHOUT, EXCEPT ROOM 702.
NOTES AND LEGEND
PROVIDE OPENING FOR NEW BUILDING STANDARD SUITE ENTRY DOOR/FRAME ASSEMBLY.
INCANDESCENT WALL WASHERS (ALLOWANCE OF 9).
BUILDING STANDARD FULL HEIGHT 18" WIDE SIDELIGHT,
PROVIDE BUILDING STANDARD PLASTIC LAMINATE COUNTER (5'-0') WITH DRAWERS, SINK,
AND DISPOSAL.
PROVIDE BUILDING STANDARD PLASTIC LAMINATE UPPERS (8'-0-) WITH ADJUSTABLE
SHELVES.
PROVIDE BUILDING STANDARD PLASTIC LAMINATE COUNTER (APPROX. 8'-0-) ASSEMBLY AT
Y-O"A.F.F. ROVIDE (2) GROMMETS
PROVIDE METAL BACKING WITHIN WALL CAVITY. (ROOM 702 SIDE) FOR EXTRA SUPPORT FOR
COUNTER.
PROVIDE BUILDING STANDARD INTERIOR DOOR/FRAME ASSEMBLY.
POLYOLEFIN WALLCOVERING ON ALL WALLS. ROOM 710.
BUILDING STANDARD VINYL COMPOSITION TILE WITH COVE BASE. ROOM 702.
LEGEND
EXISTING PARTITION TO RENWN
NEW PARTITION
I-HOUR RATED DEMISING PARTITION
DUPLEX OUTLET I
DUPLEX OUTLET - SEPARATE CIRCUT
TELEPHONE OUTLET
<PAGE>
EXHIBIT B
WORK LETTER AND CONSTRUCTION AGREEMENT
This agreement supplements the Lease dated April 12, 1990, executed
concurrently herewith by Newport Place Associates as Landlord and HomeLife
Realty Services, Inc. as Tenant.
1 . Tenant shall devote such time as may be necessary to enable Landlord
to complete and obtain Tenant's written approval, and approval by appropriate
government authorities by May 14, 1990 of the final Layout and plans for
Tenant's premises, using Landlord's Standard Installation, including, among
other things, the Location of standard partitions, doors, Light fixtures,
electrical outlets, telephone outlets and other standard installations
required by Tenant, as well as wall finishes and floor coverings.
Construction drawings, satisfactory to Landlord, for special installation
shall be furnished by Tenant, who shall be responsible for the design,
function and maintenance of such special improvements.
2. Landlord's Standard Installations, not to exceed the following,
shall be supplied and installed in Tenant's premises, other than storage
space, at Landlord's expense. For the purposes of this section, the square
footage is agreed to be 2,287 square feet. Landlord shall construct, at its
cost, the following Building Standard items of work. The modifications to
said items shall be at Tenant's cost. Said improvements shall generally be in
accordance with the following specifications as to quality and materials:
COMMON CORRIDOR
A. CORRIDOR PARTITION (STAB TO STAB)
1. 3-5/8" 25-gauge metal studs, 24" on center, with seismic bracing as
required.
2. 5/8" Type "X" drywall, one (1) Layer each side of studs.
3. Partition taped smooth and sanded from floor to ceiling to receive
paint or wall covering.
4. All straight-line terminations to existing building surfaces.
B. CORRIDOR CEILING (DRYWALL LID)
1. Corridor finish ceiling to be 6'-0", wide non-rated drywall Lid
with single Layer 5/8", Type "X" drywall. Taped smooth to receive paint.
Seismic bracing as required.
2. 2-1/2", 25-gauge metal studs, 24" on center, with seismic bracing as
required.
3. Framing for recessed Light fixtures and HVAC penetrations is
included.
4. Ceiling height 9'-0" above concrete floor.
5. paint "Ameritone", 190H (NIC).
C. ALTERNATE CORRIDOR CEILING
1. Corridor finish ceiling to be 6'0", wide drywall Lid of
horizontal shaft assembly approximately 2-1/2" thick, 1" shaft wall Liner
inserted in minimum 25-gauge C-H studs, 24" on center with single Layer
5/8" Type "X" drywall. Taped smooth to receive paint. Seismic bracing as
required.
D. CORRIDOR LIGHT FIXTURE
1. 2' x 2' (finish drywall) housing type.
2. Warm white fluorescent U-tubes, two (2) each, #F40/WW/U/3/WM, as
manufactured by G.E
3. Lithonia 9 Cell, 3" Deep 277V, energy saving ballasts.
4. Earthquake clips and wire.
5. No supply or return air capability.
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E. EXIT SIGNS (SELF ILLUMINATED)
1 . Isolite - black faced with green Letters.
F. CARPET AND BASE
To be determined.
G. WALLCOVERING
1. "Maharam" vertical surfaces, TEK wall.
2. Color #01 Misty.
H. FIRE SPRINKLERS
1. Drop heads from existing distribution.
2. Adjustable heads, centered in corridor.
3. Concealed heads with flush sensor place, custom color, Phantom Model
PH-1 decorative sprinkler by Star Sprinkler Corporation. Custom color to match
Ameritone 190 H on sensor plate.
TENANT AREA
DEMISING PARTITION
1. 2-1/2" 25-gauge metal studs, 24" on center, with seismic bracing as
required.
2. 5/8" Type "X" drywall, one (1) layer each side of studs.
3. Height from floor stab to under side of ceiling grid.
4. Partition taped smooth from floor to ceiling and sanded to
receive paint or wallcovering.
5. Partition cavity insulation Owens Corning "Noise Barrier" 2-1/2"
R-11 batts. Ceiling insulation to occur 4'-0" each side of partition
and to be Owens Corning "Sono Batts" F.S. 25 foil face (up), 3-1/2"
R-11.
6. Stagger and caulk around electrical outlet and other boxes, caulk
around conduit and other through-the-wall penetrations.
7. Straight tine termination at building column only. Sound seated
gasket closure at mullion termination. No screwing into mullions allowed.
8. Secure bottom channel with 1/4", shot pins at 4'-0" on center and 6"
from corner.
9. Lateral bracing, 25-gauge ASTM C 645 material, to be attached to the
partition with #8 sheet metal screws at 8'-0" on center. The brace is to be
placed at an angle of 45 degrees to the horizontal plane ceiling.
B. WAINSCOAT
1. Remove existing drywall as required for electrical work. Reinstall
and tape smooth from floor to windowsill. If no electrical work is
required, tape smooth from floor to window silt.
C. INTERIOR PARTITION
1. 2-1/2" 25-gauge metal studs, 24" on center, with seismic bracing unless
otherwise noted.
2. 5/8" Type "X" drywall, one (1) Layer each side of studs.
3. Height from floor stab to ceiling grid 9'-0".
4. Partition taped smooth and sanded to receive paint or
wallcovering.
5. "L" metal at termination of partition at ceiling.
6. Straight-line termination at building columns. Sound seated
gasket closure at mullion termination.
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D. AREA DEMISING PARTITION (100 OCCUPANTS/10,000 SF)
1. 3-5/8", 25-gauge metal studs, 24", on center, from floor to
structure above, with seismic bracing as required.
2. 5/8" Type "X" drywall, one (1) Layer each side of studs (slab to
stab).
3. Partition taped smooth and sanded from floor to ceiling to receive
paint or wallcovering. Fire tape from ceiling to stab above.
4. Straight Line termination at building columns and existing watts.
Sound seated gasket closure at mullion termination (Detail 36). No
screwing into mullions allowed.
E. CORRIDOR
1. All doors shall be 3'-0'' x 9'-0" plain slice Honduras mahogany
x 1-3/4". Doors to be solid core flush premium grade with matching hardwood
edges, prefinish to match building standard sample. 20-minute fire-rated with
rating Label attached to hinge side of door (balance match pairs as occurs).
2. 3' -0" x 9' -0" x 3-3/4" throat. Aluminum doorframe by "Advanced
Architectural Frames" 20-minute fire-rated with attached to hinge side
of frame, painted finish. Color to be black.
"Schlage #69453-03A mortise Lockset, same finish both sides, US32
polished stainless steel 4011 A.F.F. to center Line of Lever.
4-1/2", x 4-1/2", Ball Bearing hinges BO-1279 ("Stanley", "Soss", and
"McKinney" are acceptable alternates). Butt hinges, two (2)
pair. Finish to match Lever.
5. "Norton #8501 (or approved equal) parallel arm door closer. Finish to
be aluminum. "Quality" #331 floor stop for doors without thresholds. Finish
to match Lever.
F. INTERIOR DOOR
1. 3'-0", x 9'-0", x 1-3/4" solid core flush premium grade plain slice
Honduras mahogany with matching hardwood edges, prefinished to match
building standard sample.
2. 3'-0" x 9'-0" x 3-3/4" factory painted aluminum frame by "Advanced
Architectural Frames", painted finish. Color to be black.
3. "Schlage" #L9010-03A Latchset as specified, same finish both sides,
US 32 polished stainless steel, 4011 A.F.F. to center tine of Lever (see
Detail 8).
4. 4-1/2" x 4-1/2", butt hinges, 2 pair. Same finish as Lever.
5. Quality #331 floor stop - same finish as Lever.
G. LIGHT FIXTURES
1. 2' x 4' Ultraline (slot grid) housing-type throughout Tenant premises.
2. Warm white fluorescent tubes, three (3) Lamps, as manufactured by G.E.,
#F4/WW/RSWM, 34-watt.
3. Lithonia "Paralux" 2PM3GB340-18-d-2T7-ES, 18-cell, 3", deep cell,
return air slots, 277V, energy-saving batlasts.
4. Earthquake clips and wire.
Acoustic Ceiling
1. "Chicago Metallic" Ultraline intermediate duty, 1/8" reveal in steel
grid with white reveal, throughout Tenant premises.
2. Partition attachment clips.
3. Tile, "Celotex" Cashmere 2' x 2' x 3/4" Cirrus edge. Must specify 40-4
STC.
4. Ceiling height 9'-0" above concrete slab, Floors 2 through 9.
I. FIRE SPRINKLERS
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1. Drops and heads from existing distribution.
2. Adjustable heads.
3. Semi-recessed heads, Model "H" 1/2" orifice with white enamel trim, by
Central
4. Sprinkler corporation. Locate in center of ceiling tile.
J. PAINT
1. Minimum two (2) coats of flat Latex paint to cover.
2. Building standard color.
K. CARPET
1. "MacArthur" Design Weave Tempest 11 3202 Zeftron Nylon, 1/10 gauge, cut
pi Le over 3/8", Barony pad.
L. BASE
1. 2-1/2", rubber straight base, color varies with carpet selection.
M. WINDOW COVERINGS
1. Mini-blinds, "Levelor", color "Misty" #818.
2. Sized to fit within each pane of glass within mullion.
3 . To be installed per manufacturer's recommendations.
N. ELECTRICAL WALL OUTLET
1. Leviton #16342-I, self-grounding or equal, duplex receptacle.
2. Color to be Ivory.
3. 11OV, 20-amp, non-dedicated wall mount, standard.
4. Mounted vertically 1211 A.F.F. to center of outlet.
5. Quadriplex 4S junction box with duplex outlet converter plate at
secretariat and office Locations.
O. TITLE 24 SWITCH
1. Leviton Decora #5601, double switched where applicable, color Ivory.
2. Switches paired in double gang box to meet Title 24 requirements.
3. Height 4011 A.F.F. to center Line of switch (Detail 8).
P. LIGHT CONTROL SYSTEM AT LANDLORDS DISCRETION
1. Light control sensor 277-volt
Light-o-Matic
a. Wall mounted at offices.
b. Ceiling mounted at open areas.
2. Teflon wire, control relay, and transformer.
3. All lighting may, at Landlord's option, be controlled through the
building's central energy management system.
Q. TELEPHONE WATT OUTLET
1. Single gang box in wall vertically mounted.
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2. 3/4" metal conduit from outlet box stub-up conduit and putt wire to
7-1/2" above ceiling. Plenum rated cable or conduit to telephone
backboard by Tenant.
3. Cover plate by telephone company, match other plates (ivory).
4. Outlet height at 12" A.F.F. to center Line of outlet (Detail 8).
R . HVAC
1. 2' x 2' Supply air registers, perforated face diffuser.
2. 2' x 2' return air grilles, perforated face diffuser.
3. Thermostats Located per zone requirements. 60" A.F.F. to center
Line. Center above light switches where appropriate.
4. The HVAC distribution and energy management system as typically
designed by Landlord's engineer to meet normal HVAC requirements
will be Tenant allowance. All Tenant requests or requirements
adding additional zones, 24-hour conditioning, exhaust fans,
etc., will be Tenant over-standard work.
3. Tenant's Premises
A. Tenant may require work different from or in addition to Landlord's
Standard Installations. In such event, any architectural, mechanical,
electrical and structural engineering drawings, plans and specifications
required shall be prepared by Landlord's architect, space designer or
engineer at Tenant's expense and shall subject to the approval of Landlord.
If Tenant selects interior finish items such as wall paint, covering,
fixtures and carpeting other than Landlord's Standard Installations, Tenant
shall notify Landlord of all such selections in writing. All interior
decorating items and services selected by Tenant in excess of Landlord's
Standard Installations, shall be provided by Tenant at Tenant's sole cost and
expense. Whether, and the extent to which, any of Tenant's requirements
constitute non-building standard work or otherwise exceed Landlord's Standard
Installations, shall be determined by Landlord's architect, space designer,
or engineer, which determination shall be conclusive.
B. Promptly upon completion of such plans (including revisions),
Landlord shall notify Tenant in writing of the costs to Tenant for quantities
in excess of Landlord's Standard Installations, as described in Paragraph 2
above. Tenant shall sign the working drawings within the time set forth in
Paragraph I above, give Landlord authorization to complete the Premises in
accordance with such Layout and plans, and shall accompany said authorization
with a check made out to Landlord in the amount of Tenant's cost for the
authorized excess of Landlord's standards. Tenant may, in such authorization,
delete any or all of such items of extra cost. If such written authorization
and check are not received by Landlord, Landlord shall not be obligated to
commence work on Tenant's Premises, and Tenant shall be chargeable with any
delay in the completion of the Premises resulting therefrom.
C. If the completion of Landlord's work in Tenant's Premises is delayed
by Tenant's failure to comply with the foregoing provisions, or by Tenant's
requirement of materials or installations different from Landlord's Standard
Installations, or by changes in the work ordered by Tenant or by extra work
ordered by Tenant, or because Tenant chooses to have additional work
performed by Landlord, then the rent shall commence to accrue on the
Commencement Date as specified in Article G of Section 1 of said Lease. Under
no circumstances shall Landlord be chargeable with any delay because of
non-building standard work.
D. Landlord shall be required to complete Landlord's Standard
Installations in the Premises for Tenant at the expiration of six (6) weeks
after the delivery to Landlord of Tenant's signed working drawings and
receipt of approval of said drawings by the appropriate government
authorities. If such signed and approved working drawings are not received by
the Landlord at Least six (6) weeks prior to the Commencement Date specified
in Article G of section 1 of said Lease, then the rent shall commence to
accrue on said Commencement Date.
E. If Tenant shall request any change, addition or alteration in
approved working drawings, Landlord shall promptly give Tenant a written
estimate of the cost of engineering and design services to prepare working
drawings in
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accordance with such request and the time delay expected because of such
request. if Tenant, in writing, approves such written estimate, Landlord
shall have working drawings prepared and Tenant shall promptly reimburse
Landlord for the cost thereof. Promptly upon the completion of such working
drawings, Landlord shall notify Tenant in writing of the cost, which will be
chargeable to Tenant by reason of such change, addition or deletion. Tenant
shall, within three (3) business days, notify Landlord in writing whether it
desires to proceed with such change, addition or deletion, and in the absence
of such written authorization. Tenant shall be chargeable with any delay in
the completion of the Premises resulting therefrom and rent shall commence to
accrue as set forth in Paragraph 2 above.
F. In the event Tenant requests that any portion of the work to be
performed by Landlord be delayed, Tenant shall pay all costs and any expenses
occasioned by such delay including, without limitation, any costs and
expenses attributable to increases in Labor or materials.
G. If plans and specifications for Tenant's Premises construction shall
require Landlord's Standard Installation(s) in quantities greater than
provided in this Construction Agreement, reasonable substitution may be made
of any standard item(s) listed, with any other standard items(s) so Listed,
provided that it is specifically understood and agreed that if such
substitution shall result in a total cost exceeding Landlord's budget for
improvements of Tenant's Premises, Tenant shall pay to Landlord the amount of
such additional cost as provided in Paragraph 3B above.
H. It is specifically acknowledged that portions of the Building and
common areas may not be completed on or prior to the Commencement Date,
without Liability of Landlord to Tenant, and without any abatement or
reduction in rent.
I. Without Limiting the generality of Articles 4 and 23 of the Lease,
any and all Tenant improvements shall at once become and remain the property
of Landlord.
J. If Tenant requests to perform any alterations, additions or
improvements (the "Work") and Landlord consents to such requests, the
following terms and conditions shall apply to all such Work:
(1) All costs and expenses in connection with or arising out of the
performance of the Work shall be borne by Tenant and all payments therefore
shall be made by Tenant promptly as they become due. At no time shall Tenant
do or permit anything to be done whereby the Building or the land upon which
it is located may be subjected to any mechanic's or other Liens or
encumbrances arising out of the Work. Tenant shall notify Landlord in writing
not Less than ten (10) days prior to the commencement of any Work in order to
afford Landlord an opportunity to post and record appropriate notices of
non-responsibility with reference to the Work. Prior to the commencement of
any Work, and from time to time whenever requested by Landlord, Tenant will
deliver to Landlord waivers of mechanic's Liens duty executed by all
contractors and all Laborers or material persons concerned with said Work. At
any time so requested by Landlord, Tenant will, at Tenant's expense, and as
Landlord requires, provide and furnish to Landlord either (a) surety company
bond(s), or (b) court order(s) discharging Lien, or (c) such other form of
protection satisfactory to Landlord against any Liens or encumbrances which
may be filed.
(2) All materials and processes used in the performance of the Work
shall conform to the standards and Rules and Regulations of the Building and
Tenant hereby assures Landlord that each of Tenant's contractors is or will
be entirely familiar with such requirements prior to commencement of any
Work. No Work shall proceed without the submission of detailed plans and
specifications for such requirements prior to commencement of any work. No
Work shall proceed without the submission of detailed plans and
specifications for such Work for approval by Landlord. Once Tenant has
commenced the Work, Tenant will promptly, diligently and continuously pursue
the same to successful completion in full compliance with the approved plans
and specifications.
(3) Tenant will perform all Work in a safe and Lawful manner using only
contractors approved by Landlord. Tenant shall at its sole expense comply with
all applicable Laws and all regulations and requirements of municipal or other
governmental bodies exercising authority over the building or the work and this
compliance shall include the filing of plans and other documents as required and
the procuring of all required Licenses or permits. Copies of all filed
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documents and all permits and Licenses shall be provided to Landlord for
Landlord's approval. Any Work not acceptable to the Department of Building
and Safety, or not reasonably satisfactory to Landlord, shall be promptly
replaced at Tenant's expense. Notwithstanding any failure by Landlord to
object to any such Work, Landlord shall have no responsibility therefore.
Tenant shall notify Landlord in writing not Less than ten (10) days prior to
the commencement of any Work as to name, telephone number and responsible
party for each and every contractor and/or subcontractor who is about to
commence Work.
(4) Tenant hereby indemnifies and agrees to defend and hold Landlord
harmless from and against any and all suits, claims, actions, losses, costs
or expenses (including claims for Worker's Compensation) of any nature
whatsoever together with attorneys' fees for counsel of Landlord's choice
arising out of or in connection with the Work or the performance of the Work
(including but not Limited to claims for breach of warranty, personal injury
or property damage). Landlord shall have the right in Landlord's sole and
exclusive discretion, to settle, compromise, or otherwise dispose of any and
all suits, claims, and actions.
(5) No Work shall proceed without Worker's Compensation and public
Liability insurance and property damage insurance, at (in amounts and with
companies and on forms satisfactory to Landlord and, if Landlord shall so
request, naming Landlord as additional insured. Not Less than thirty (30)
days before commencing the Work, certificates of such insurance shall be
furnished to Landlord or, if requested, the original policies thereof shall
be submitted for Landlord's approval. ALL such policies shall provide that
thirty (30) days, notice must be given to Landlord before terminating or
cancellation. In addition, no Work shall proceed without Tenant's contractor
providing payment and performance bond(s) satisfactory to Landlord.
(6) Landlord shall have no responsibility for the Work and Tenant will
remedy at Tenant's own expense and be responsible for any and all defects in
all such Work that may appear during or after the completion thereof whether
the same shall affect the premises in particular or any parts of the Building
in general. Tenant shall reimburse Landlord for any extra expense incurred by
Landlord by reason of faulty work done by Tenant or Tenant's contractors, by
reason of delays caused by such Work, or by reason of inadequate cleanup.
(7) If the performance of the Work shall require that additional
services or facilities (including but not Limited to extra elevator services,
hoisting, cleanup or other cleaning services, trash removal, field
supervision, or ordering of materials) be provided, Tenant shall pay Landlord
a reasonable charge therefore together with twenty percent (20%) for
Landlord's supervision and overhead. If Tenant employs Landlord at Tenant's
expense to perform any portion of the Work and thereafter elects to itself
(through a subcontractor selected by Tenant but approved by Landlord) perform
any component of such portion (including, but without Limiting the generality
of the foregoing, finishes or overstandard items), then Tenant shall pay
Landlord ten percent (10%) of such subcontractor's total bill as and for
Landlord's supervision and overhead.
(8) All of Tenant's contractors, subcontractors, employees, servants and
agents must work in harmony with and shall not interfere with any labor
employed by Landlord, or Landlord's contractors or by any other tenant or its
contractors.
(9) All Work performed by Tenant or Tenant's contractors shall be
scheduled through Landlord and shall be performed on weekdays, Monday through
Friday, or other times which Landlord specifies. Any Work to be performed at
other times or in adjacent tenant's areas shall be pursued only after
obtaining Landlord's express written permission and shall be done only if an
agent of employee of Landlord is present; Tenant will reimburse Landlord for
the expense of any such employee or agent.
(10) All core drilling, concrete cutting, demolition of partitions or
removal of rubbish, shall be done between the hours of 7:00 p.m. and 6:00
a.m., or other times which Landlord specifies.
(11) If any shut down of plumbing, electrical, or air conditioning
equipment becomes necessary, Tenant shall notify Landlord and Landlord will
determine when such shutdown may be made. Any such shut down shall be done
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only if agent or employee of Landlord is present. Tenant will reimburse
Landlord for the expense of any such employee or agent.
(12) Any noise complaints by tenants of adjacent areas are to be
remedied immediately or alteration operations are to cease until said noise
is abated.
(13) Tenant or Tenant's contractors will in no event be allowed to
install plumbing, mechanical, electrical wiring or fixtures, acoustical or
integrated ceilings, unless prior written approval is obtained from Landlord.
In addition to the foregoing, at I data processing and other special
electrical equipment shall be installed only under the supervision of
Landlord or Landlord's electrical contractor.
(14) Notwithstanding Paragraph (13), Tenant agrees to be entirety
responsible for the maintenance or the balancing of any heating, ventilating
or air conditioning system installed by Tenant and/or maintenance of the
electrical or plumbing Work installed by Tenant and/or maintenance of
lighting fixtures, partitions, doors, hardware or any other installations
made by Tenant. Such maintenance shall be performed only by a contractor or
contractors approved in writing in advance by Landlord.
(15) Any hardware, light fixtures or any heating, ventilating or air
conditioning installations (the "Installations" ) installed in the premises
which Tenant permanently removes, shall be stored by Tenant where directed by
Landlord. No such removal may be made unless shown on the plans and
specifications approved by Landlord. Tenant agrees, at Tenant's expense, to
reinstall any or all such installations at the expiration of the Term should
Landlord so require.
(16) Landlord expressly reserves the right to revoke consent upon notice
to Tenant in the event of a breach of any of the terms or conditions herein,
in which case all Work shall immediately cease to the extent directed by
Landlord in such notice.
(17) Nothing herein contained shall be construed as (a) constituting
Tenant as Landlord's agent for any purpose whatsoever or (b) a waiver by
Landlord of any of the terms or provisions of the Lease. Any default by
Tenant with respect to any portion of this Exhibit "B" Construction Agreement
shall, at Landlord's option, be deemed a breach of the Lease as to which
Landlord shall have all the rights and remedies as in the case of a breach of
said Lease.
HOMELIFE REALTY SERVICES, INC.,
a Delaware Corporation
By: /s/ Jon Corner
---------------------------------------
Jon Corner
Its: Executive Vice President/General Manager
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EXHIBIT C
LEGAL DESCRIPTION
Parcel 1 of Parcel Map No. 88-174 in the City of Newport Beach, County of
Orange, State of California, as per Map recorded on October 31, 1988 in Book
238, Pages 5 and 6 of Parcel Maps, Records of Orange County, California.
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
1. No sidewalks, entrance, passages, courts, elevators, vestibules,
stairways, corridors or halts shall be obstructed or encumbered by
Tenant or used for any purpose other than ingress and egress to and from
Demised Premises or the Building and if Demised Premises is situated on
the ground floor of the Building. Tenant shall further, at Tenant's own
expense, keep the sidewalks and curb directly in front of Demised
Premises clean and free from rubbish.
2. No awning or other projection shall be attached to the outside waits or
windows of the Building without the prior written consent of Landlord.
No curtains, blinds, shades, drapes or screens shall be attached to or
hung in, or used in connection with any window or door of Demised
Premises, without the prior written consent of Landlord. Such awnings,
projections, curtains, blinds, shades, drapes, screens and other
fixtures must be of a quality, type, design, color, material and general
appearance approved by Landlord, and shall be attached in the manner
approved by Landlord. All electrical fixtures hung in offices or spaces
along the perimeter of Demised Premises must be fluorescent, of a
quality, type, design, bulb color, size and general appearance approved
by Landlord.
3. No sign, advertisement, notice or other Lettering shall be exhibited,
inscribed, painted or affixed by Tenant on any part of the outside or
inside of Demised Premises or of the Building, without the prior written
consent of Landlord. In the event of the violation of the foregoing by
Tenant, Landlord may remove same without any liability, and may charge
the expense incurred by such removal to Tenant. Interior signs on doors
and directory tablet shall be inscribed, painted or affixed for Tenant
by Landlord at the expense of Tenant, and shall be of a quality,
quantity, type, design, color, size, style, composition, material,
Location and general appearance acceptable to Landlord.
4. The sashes, sash doors, skylights, windows, and doors that reflect or
admit Light or air into the halls, passageways or other public pieces in
the Building shall not be covered or obstructed by Tenant, nor shall any
bottles, parcels, or other articles be pieced on the window sills, or in
the public portions of the Building.
5. No show cases or other articles shall be put in front of or affixed to
any part of the exterior of the Building, nor placed in public portions
thereof without the prior written consent of Landlord.
6. The water and wash closets and other plumbing fixtures shall not be used
for any purpose other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown therein.
ALL damages resulting from any misuse of the fixtures shall be borne by
Tenant to the extent that Tenant or Tenant's agents, servants,
employees, contractors, visitors or Licensees shall have caused the same.
7. Tenant shall not mark, paint, drill into or in any way deface any part
of Demised Premises or the Building. No boring, cutting or stringing of
wires shall be permitted, except with the prior written consent of
Landlord, and as Landlord may direct.
8. No animal or bird of any kind shall be brought into or kept in or about
Demised Premises or the Bui Wing.
9. Prior to leaving Demised Premises for the day Tenant shall draw or lower
window covering and extinguish all Lights.
10. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of the Bui Wing or
neighboring buildings or premises or those having business with them.
Tenant shall not throw anything out of the doors, windows or skylights
or down the passageways.
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11. Neither Tenant nor any of Tenant's agents, servants, employees,
contractors, visitors or Licensees shall at any time bring or keep upon
Demised Premises any inflammable, combustible, or explosive fluid,
chemical or substance.
12. No additional Locks, bolts or mail slots of any kind shall be placed
upon any of the doors or windows by Tenant, nor shall any change be made
in existing Locks or the mechanism thereof. Tenant must, upon the
termination of the tenancy, restore to Landlord all keys of stores,
offices and toilet rooms, either furnished to, or otherwise procured by
Tenant, and in the event of the Loss of any keys so furnished, Tenant
shall pay to Landlord the cost thereof.
13. All removals, or the carrying in or out of any safes, freight,
furniture, fixtures, bulky matter or heavy equipment of any description
must take place during the hours which Landlord or its agent may
determine from time to time. Landlord reserves the right to prescribe
the weights and position of all safes, which must be placed upon
two-inch thick plank strips to distribute the weight. The moving of
safes, freight, furniture, fixtures, bulky matter or heavy equipment of
any kind must be made upon previous notice to the Superintendent of the
Building and in a manner and at times prescribed by him, and the persons
employed by Tenant for such work are subject to Landlord's prior
approval. Landlord reserves the right to inspect all safes, freight or
other bulky articles to be brought into the Building and to exclude from
the Building all safes, freight or other bulky articles which violate
any of these Rules and Regulations or the Lease of which these Rules and
Regulations are a part.
14. Tenants shall not occupy or permit any portion of Demised Premises to be
occupied as an office that is not generally consistent with the character and
nature of all other tenancies in the Building, or is (a) for an employment
agency, in public stenographer or typist, a labor union office, a physician's
or dentist's office, a dance or music studio, a school, a beauty salon or
barber shop, the business of photographic or multilith or multigraph
reproductions or offset printing (not precluding using any part of demised
premises for photographic, mutilith or multigraph reproductions solely in
connection with Tenant's own business and/or activities), a restaurant or
bar, an establishment for the sale of confectionery or soda or beverages or
sandwiches or ice cream or baked goods, an establishment for the preparation
or dispensing or consumption of food or beverages (of any kind) in manner
whatsoever, or as a news or cigar stand, or as a radio or television or
recording studio, theater or exhibition halt, for manufacturing, for the
storage of merchandise or for the sale of merchandise, goods or property of
any kind at auction, or for Lodging, steeping or for any immoral purpose, or
for any business which would tend to generate a Large amount of foot traffic
in or about the Building or the Land upon which it is Located, or any of the
areas used in the operation of the Building, including but not Limited to any
use (i) for a banking, trust company, depository, guarantee, or safe deposit
business, (ii) as a savings bank, or as savings and loan association, or as a
Loan company, (iii) for the sale of travelers checks, money orders, drafts,
foreign exchange or Letters of credit or for the receipt of money for
transmission, (iv) as a stock broker's or dealer's office or for the
underwriting of securities, or, (v) a government office or foreign embassy or
consulate, or (vi) tourist or travel bureau, or (b) a use which conflicts
with any so-called "exclusive" then in favor of, or is for any use the same
as that stated in any percentage Lease to, another tenant of the Building or
the Park, or (c) a use which would be prohibited by any other portion of this
Lease (including but not Limited to any Rules and Regulations then in effect)
or in violation of Law. Tenant shall not engage or pay any employees on
Demised Premises, except those actually working for Tenant on Demised
Premises nor shall Tenant advertise for Laborers giving an address at Demised
Premises.
15. Landlord shall have the right to prohibit any advertising or business
conducted by Tenant referring to the Building or the Park, which, in
Landlord's opinion, tends to impair the reputation of the Building or its
desirability as a first class building for offices, or the Park, and upon
notice from Landlord, Tenant shall refrain from or discontinue such
advertising.
16. Landlord reserves the right to exclude from the Building between the hours
of 6:00 p.m. and 8:00 a.m. on all days, and at all hours on Saturdays, Sundays
and Legal holidays, all persons who do not present a pass or equivalent
identification to the Building issued by Landlord. Landlord may furnish passes
or equivalent to Tenant so that Tenant
2
<PAGE>
may validate and issue same. Tenant shall safeguard said passes and shall be
responsible for all acts of persons in or about the Building who possess a
pass issued to Tenant.
17. Tenant's contractors shall, while in the Building or elsewhere in the
Park, be subject to and under the control and direction of the Superintendent
of the Building (but not as agent or servant of said Superintendent of
Landlord).
18. If Demised Premises is or becomes infested with vermin as a result of
the use or any misuse or neglect of Demised Premises by Tenant, its agents,
servants, employees, contractors, visitors or licensees, Tenant shall
forthwith at Tenant's expense cause the same to be exterminated from time to
time to the satisfaction of Landlord and shall employ such licensed
exterminators and shall be approved in writing in advance by Landlord.
19. The requirements of Tenant will be attended to only upon application at
the office of the Building. Building personnel shall not perform any work or
do anything outside of their regular duties, unless under special
instructions from the office of the Landlord.
20. Canvassing, soliciting and peddling in the Building or in the Park are
prohibited and Tenant shall cooperate to prevent the same.
21. No water cooler, air conditioning unit or system or other apparatus
shall be installed or used by Tenant without the written consent of Landlord.
22. There shall not be used in any space, or in the public halls, plaza
areas or lobbies of the Building, or elsewhere in the Park, either by Tenant
or by jobbers or others, in the delivery or receipt of merchandise, any hand
trucks or dollies, except those equipped with rubber tires and side guards.
If Tenant, in Landlord's judgement, has an excess amount of receiving or
shipping of merchandise each day, then Landlord may require Tenant to ship or
receive said merchandise on an after-hours basis.
23. Tenant, Tenant's agents, servants, employees, contractors, Licensees or
visitors shall not park any vehicles in any driveways, service area or
entrances, or areas posted "No Parking," or in any areas designated as
visitor areas.
24. Tenant shall install and maintain, at Tenant's sole cost and expense, as
adequate visibly marked (at all times property operational) fire extinguisher
next to any duplicating or photocopying machine or similar heat producing
equipment, which may or may not contain combustible material, in Demised
Premises.
25. Tenant shall keep its window coverings closed during any period of the
day when the sun is shining directly on the windows of Demised Premises.
26. Tenant shall not use the name of the Building for any purpose other than
as the address of the business to be conducted by Tenant in Demised Premises,
nor shall Tenant use any picture of the Building in its advertising,
stationary or in another manner without the prior written permission of
Landlord. Landlord expressly reserves the right at any time to change said
name without in any manner being Liable to Tenant therefor.
3
<PAGE>
EXHIBIT 10.5
FIRST ADDENDUM TO LEASE BY AND BETWEEN
NEWPORT PLACE ASSOCIATES AND HOMELIFE REALTY SERVICES
DATED APRIL 12, 1990 FOR THE PROPERTY LOCATED AT
4100 NEWPORT PLACE, SUITE 730, NEWPORT BEACH, CALIFORNIA 92660
<PAGE>
FIRST ADDENDUM TO LEASE
This Addendum to Lease dated April 12, 1990 by and between HomeLife Realty
Services, Inc., a Delaware corporation ("Tenant") and Newport Place Associates,
a California Limited partnership ("Landlord") shall modify said Lease as
follows;
38. Rent. Tenant shall pay the Base Annual Rent, in the manner provided for in
Section 2 - Article 1.7, in accordance with the following schedule:
<TABLE>
<CAPTION>
Period Monthly Base-Rental Payment
-------------- -------------------
<S> <C>
Months 1-12 $2.15 per rentable square foot
Months 13-24 $2.20 per rentable square foot
Months 25-36 $2.25 per rentable square foot
</TABLE>
During months one (1) through six- (6) rent shall be paid at a rate of $0.00 per
rentable square foot per month, and during months seven (7) through twelve (12)
rent shall be paid at a rate of $1.15 per rentable square foot per month. The
balance of the monthly rent due ($2.15 - $0.00 = $2.15 and $2.15 -$1.15 = $1.00)
shall not be paid but shall accrue and shall be forgiven on June 30, 1993,
provided that there has been no prior termination of this Lease, and that Tenant
is not then in default hereunder.
For purposes of this Section 38, the term 'termination' shall not include a
termination following destruction under Section 10.1, a termination following
condemnation under Section 11.1, or a termination following a request by Tenant
that Landlord consent to an assignment of this Lease under Sections 1.11 and/or
3.3.
39. BASE YEAR EXPENSES. The Base Year for computing the Base Amount for
Operating Expense and Taxes shall the first twelve (12) months of Tenant's
occupancy. A completed building projected to 95% occupancy shall be utilized for
computing expenses.
40. TENANT IMPROVEMENTS. Landlord will construct, at Landlord's expense, the
improvements described on the space plan prepared by Tsutsumida Tienken
Partnership attached hereto as Exhibit "A".
41. PARKING. Tenant will be allocated four (4) parking spaces per each one
thousand (1,000) square feet if rentable area.
Tenant's parking spaces will be unreserved, in common spaces. Tenant shall pay a
monthly charge for the parking spaces in accordance with the following schedule:
Months 1-18 $1.00 per unreserved space per month
Months 19-24 $10.00 per unreserved space per month
Months 25-36 $30.00 per unreserved space per month
42. OPTION TO EXTEND. Provided Tenant has not been in default of any of its
obligations under the Lease Agreement, or any addenda or amendments to the Lease
Agreement, Tenant shall have the option to extend the Lease Term for an
additional three (3) years. Tenant shall notify Landlord, by certified mail, of
its election to exercise its option to extend, at lease one hundred eight (180)
days prior to the expiration of the primary Lease term.
RENT DURING OPTION TO EXTEND. Monthly installments of Base Annual Rent for
the option period shall be in accordance with the then prevailing market
rates, terms, and conditions, but in no event Less than the rental rate
being paid by Tenant in the third year of the Lease term.
43. HOURS OF OPERATION. Standard hours of operation for building services wilt
be 8:00 a.m. to 5:30 p.m. on weekdays, and 9:00 a.m. to 12:00 p.m. on Saturdays
(if requested in advance) excluding holidays. The standard hours of operation
will be subject to change if required by governmental action.
<PAGE>
44. AFTER-HOURS H.V.A.C. Air conditioning services requested during
non-standard hours (including all holidays) will be billed to Tenant at
thirty-five dollars ($35.00) per hour, which charge is subject to increase
only in proportion to increases in electrical utility charges.
45. JOHN WAYNE AIRPORT. Tenant acknowledges the City of Newport Beach's policy
regarding John Wayne Airport:
a. The John Wayne Airport will not be able to provide adequate air service
for business establishments which rely on such service;
b. The City of Newport Beach wilt continue to oppose additional
commercial area service expansions at the John Wayne Airport;
c. Tenant will not actively oppose any action taken by the City of Newport
Beach to Limit jet air service at John Wayne Airport.
46. TRANSPORTATION DEMAND MANAGEMENT (TDM) PROGRAM. Tenant acknowledges the
City of Newport Beach requirement that Tenant shall participate in a city
approved Transportation Demand Management (TDM) Program. The program is to be
developed, coordinated, and implemented by Landlord. Tenant shall participate in
the TDM program which shall, at a minimum, include the following:
a. A program coordinator which shall be an employee of the Landlord. The
program coordinator shall have the specific assignment of developing,
coordinating and overseeing the program. Each Tenant with 50 or more
on-site employees shall designate one management employee to serve as
a contact for the tenants and employees and program coordinator.
b. A goal to reduce by 25% or more, the a.m. and p.m. peak hour trip
generation rates, the reduction to be based upon a comparison with
standard city rates.
c. METHODS: The TDM program shall identify, at a minimum, the following
methods for reducing peak hour trip generation rates, and each Lease for each
Tenant shall obligate the Tenant to use one or more of the following methods in
implementing the TDM program:
FLEX-TIME. May consist of assigned staggered hours or may allow employees
to select their own hours if acceptable to the Tenant's needs and
results in desired trip reductions. Flex-time also includes four day
or other alternate work weeks.
PUBLIC TRANSPORTATION. Each Tenant shall be required to participate in the
Orange County Transit District ridesharing computer match program.
Public Transit route information shall be made available in the lobby
of the building or any other accessible public place.
CARPOOLING. This method utilizes vehicles already owned by employees for
ridesharing.
VANPOOLING. This method is similar to carpooling except that it usually
includes the purchase of a Large, comfortable vehicle. This method can
be supported with information on vehicle acquisition and financing,
and may include financial assistance or the provision of vehicles.
The city shall have the right to require the Landlord, or the Landlord's
successor-in-interest, to modify the TDM Program, establishing a level of
participation of Tenants in each method of the program, in the event a 25%
reduction in peak hour trip generation has not been achieved during any
reporting period.
HAZARDOUS MATERIALS. Tenant shall not use the Demised Premises or permit
anything to be done in or about the Demised Premises which will in any way
conflict with any Law, statute, ordinance or governmental rule or
regulation now in force or which may hereafter be enacted or promulgated,
including, but not Limited to, Laws regulating the generation, use, storage
or transportation of any material or substance ("Hazardous Materials")
which is (a) defined as a "hazardous waste," "extremely hazardous waste" or
"restricted hazardous waste" under Sections
<PAGE>
25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the
California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous
Waste Control Law); (b) defined as a "hazardous substance" under Section
25316 of the California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter-Presley-Tanner Hazardous Substance Account Act); (c) defined
as a "hazardous material," "hazardous substance" or "hazardous waste" under
Section 25501 of the California Health and Safety Code, Division 20,
Chapter 6.95, "Hazardous Substance" under Section 25281 of the California
Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of
Hazardous Substances); (d) petroleum; (e) asbestos; (f) polychlorinated
byphenyls; (g) Listed under Article 9 or defined as "hazardous" or
"extremely hazardous" pursuant to Article 11 of Title 22 of the California
Administrative Code, Division 4, Chapter 20; (h) designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.
Section 1251 ET SEQ. (33 U.S.C. Section 1321) or listed pursuant to
Section 307 of the Clean Water Act (33 U.S.C. Section 6903); (i) defined
as a "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 ET SEQ. (42 U.S.C. Section 9601); (1) defined as a "hazardous
waste" pursuant to the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 ET SEQ. (42 U.S.C. S 6901); or (1) found to be a pollutant,
contaminant, hazardous waste or hazardous substance in any reported
decision of a federal or California state court, or which may give rise to
liability under any federal or California common law theory based on
nuisance or strict liability. Tenant shall not use or store in the Demised
Premises any Hazardous Materials other than materials or substances
normally associated with an office environment and in not greater than
necessary quantities to allow for reasonable office use.
Tenant hereby agrees to defend, indemnify and hold Landlord, its agents and
employees, harmless from and against any and all liability, claims, damage,
penalties, actions, demands or expenses of any kind or nature, including,
without Limitation, damage to any property and injury (including death) to
any person, arising from any Hazardous Materials used or stored on the
Demised Premises; excluding, however, any such Liability arising from the
acts of Landlord. This obligation to indemnify shall include reasonable
attorneys' fees and investigation costs and all other reasonable costs,
expenses and Liabilities incurred by Landlord or its counsel from the first
notice that any claim or demand is to be made or may be made.
LANDLORD: NEWPORT PLACE ASSOCIATES,
a California Limited Partnership
By: MIC Newport Place, a California Limited Partnership
Its: General Partner
By: /s/ David W. Miller
------------------------------
David W. Miller, General Partner
TENANT: HOMELIFE REALTY SERVICES, INC.
A Delaware Corporation
By: /s/ John Conner
------------------------------
John Conner
Its: Executive Vice President/General Manager
<PAGE>
EXHIBIT 10.6
SECOND ADDENDUM TO LEASE BY AND BETWEEN
ADVENT REALTY LIMITED PARTNERSHIP AND
HOMELIFE REALTY SERVICES DATED JULY 8, 1993
FOR THE PROPERTY LOCATED AT
4100 NEWPORT PLACE, SUITE 730, NEWPORT BEACH, CALIFORNIA 92660
<PAGE>
SECOND ADDENDUM TO LEASE
THIS SECOND ADDENDUM TO LEASE (this "Second Addendum") is entered into
this 8th day of JULY 1993 by and between ADVENT REALTY LIMITED PARTNERSHIP
II, a Delaware limited partnership, ("Landlord") and HomeLife Realty
Services, Inc., a Delaware corporation, ("Tenant").
RECITALS
A. Landlord and Tenant have entered into that certain Office Lease (the
"Lease") dated as of April 12, 1990 as amended by that certain First Addendum
To Lease of even date, therewith (the "First Addendum"), with respect to
space in the building known as 4100 Newport Place, Newport Beach, California.
B. Landlord and Tenant now desire to renew and extend the terms of the
Lease and First Addendum and amend by this writing those terms and conditions
as herein provided.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and agreed, Landlord and Tenant agree as follows:
1. DEFINED TERMS. All capitalized terms used but not defined in this
Second Addendum shall have the meanings ascribed to such terms in the Lease
and First Addendum. All references in the Lease, the First Addendum and this
Second Addendum shall mean the Lease and First Addendum as amended by this
Second Addendum.
2. TERM. The term of the Lease is hereby renewed and extended to cover
the period commencing July 8, 1993 and terminating June 30th, 1996.
3. PREMISES (Section II, Article 1), Suite 730, encompassing
approximately 2,630 rentable square feet on the seventh floor in the Building.
4. BASE ANNUAL RENTAL. Commencing July 1, 1993 and thereafter during the
Term, as extended by this Second Addendum, the Annual Base Rent shall be the
amount of Forty-Nine Thousand Nine Hundred Twenty Two Dollars and Sixteen
Cents ($49,922.16), payable by Tenant in equal consecutive Monthly
Installments commencing July 1, 1993 and thereafter during the Term, in the
amount of Four-Thousand One Hundred Sixty Dollars and Eighteen Cents
($4,160.18).
5. ABATEMENT OF RENT. Landlord hereby agrees to conditionally waive
Fifty Percent (50%) of the Base Rent due under this Second Addendum for the
months of July, August, September, October, November and December, 1993. The
Fifty Percent (50%) abatement equals Two Thousand Eighty Dollars and Nine
Cents ($2,080.09) for each of the aforementioned six months. In the event
Tenant commits a default, as defined in section 18 of the Lease, Base Rent
coming due thereafter shall not be waived, and all Base Rent that Landlord
conditionally waived in the past shall be immediately due and payable by
Tenant to Landlord without notice or demand from Landlord. If the Lease
expires, as modified by this Second Addendum, in accordance with its terms,
and does not terminate as a result of a default by Tenant, Landlord agrees to
permanently waive the Base Rent has conditionally waived.
6. TERMINATION OF LEASE. Subject to the faithful performance of the
Lease, Landlord hereby grants to Tenant the option to terminate this Lease
upon all of the following conditions:
(a) Tenant shall give to Landlord written notice of its election to
terminate this Lease at least one hundred eighty (180) days prior to the
termination date, time being of the essence, however, said notification to
Landlord shall be no sooner than the expiration of the eighteenth (18th)
month of the Lease, as modified by this Second Addendum.
(b) As a condition to the effectiveness of this option, Tenant
shall pay to Landlord on or before the termination date an amount (the
"Termination Payment") equal to the portion of the unamortized Broker's
commission and Tenant Improvement construction costs paid by Landlord as a
part of this renewal. The Broker's commission on
<PAGE>
this Second Addendum is Two-Thousand Seven Hundred Forty Five Dollars and
Seventy-Two Cents ($2,745.72). The Tenant Improvement construction costs will
be determined and delineated once all costs have been compiled.
(c) This option, granted to Tenant is personal to the original
Tenant and may be exercised only by the original Tenant while occupying the
entire premises and may not be exercised or be assigned, voluntarily or
involuntarily, by or to any person or entity other than Tenant, including,
without limitation, any permitted transferee as defined in section 3 of the
Lease. The option herein granted to Tenant is not assignable separate or
apart from this Lease, nor may this option be separated from the Lease in any
manner, either by reservation or otherwise. If at any time this option is
exercisable by Tenant, the Lease has been assigned, or a sublease exists as
to any portion of the Premises, this option shall be deemed null and void and
neither Tenant nor any assignee or subtenant shall have the right to exercise
the option.
7. BASE YEAR. The Base Year for computing the Base Amount for Operating
Expenses and Taxes shall equal the amount of operating Expenses and Taxes
actually incurred in calendar year 1993, as appropriately adjusted to reflect
a completed Building with ninety-five percent (95%) occupancy.
8. TENANT IMPROVEMENTS/AS-IS CONDITION. Landlord and Tenant agree that
Tenant is accepting the Premises in an "as-is" condition, based upon the
attached space plan. However, Landlord at its sole cost and expense will
remove an existing wall contiguous to the existing conference room and to
patch the carpeting where the wall once existed, as shown on the attached
space plan, to allow for an enlargement of the conference room.
9. PARKING. During the Term of this extension and renewal, Tenant shall
have the right to use four (4) unreserved parking spaces at no charge to
Tenant. Until such time as Landlord installs parking equipment and controls,
including parking gates in the parking structure adjacent to the Building,
Tenant's visitors shall be entitled to use the visitor parking areas free of
charge. Once Landlord has installed parking equipment in the parking
structure, Tenant and/or Tenant's visitors shall pay Landlord's prevailing
rates for visitor parking.
10. SECURITY DEPOSIT. Landlord hereby acknowledges that Tenant has a
Security Deposit held by Landlord in the amount of Five-Thousand Eight
Hundred Sixty Dollars ($5,860.00).
11. SHARING OF BROKER'S COMMISSION. Landlord hereby agrees to share the
Broker's commission in the amount of Two-Thousand Seven Hundred Forty Five
Dollars and Seventy-Two Cents based on the following split: Fifty-Percent
(50%) payable to Tenant and Fifty-Percent (50%) payable to Davis Partners
Incorporated, subject to Tenant holding a current and valid California Real
Estate Broker's License and providing Landlord with evidence of the same.
12. NOTICES AND ADDITIONAL NOTICES.
(a) The Address for Notice to Landlord referred to in Section II,
Article 27 of the Lease is hereby replaced with the following:
Advent Realty Limited Partnership II
c/o Davis Partners Incorporated
4100 Newport Place Suite 280
Newport Beach, CA 92660
(b) This section is hereby further amended to provide that a copy
of each notice sent to Landlord under the Lease shall also be delivered, in
the same manner and at the same time as it is delivered to Landlord, to Davis
Partners Incorporated, 1420 Bristol Street North, Suite 100, Newport Beach,
California, 92660, Attention: Mr. James 0. Buckingham.
13. FULL FORCE AND EFFECT. Except as amended hereby, Landlord and Tenant
hereby acknowledge and agree that the Lease is in full force and effect in
accordance with its terms, and that neither Landlord or Tenant are in default
thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have respectively executed this
Second Addendum as of the date first written above.
LANDLORD:
Advent Realty Limited Partnership HomeLife Realty Services, Inc., II, a Delaware
limited partnership a Delaware corporation
By: Advent Realty GP II Limited
Partnership, a Delaware Limited Partnership
Its General Partner
By: Advent Realty, Inc.
A Delaware Corporation
Its: General Partner
By: /s/ Michael A. Ruane
---------------------------------------------
Michael A. Ruane, Chairman
Tenant:
HomeLife Realty Services, Inc.,
a Delaware Corporation
By: /s/ Andrew Cimerman
---------------------------------------------
Andrew Cimerman
Its: President
- ---------------------------------
*It is the intention of the parties hereto that this agreement will be executed
on behalf of Landlord by either Michael A. Arthur I. Segel and that the
signatures of both Michael A. Ruane and Arthur I. Segel will not be required.
<PAGE>
EXHIBIT 10.7
THIRD ADDENDUM TO LEASE BY AND BETWEEN
ADVENT REALTY LIMITED PARTNERSHIP AND
HOMELIFE REALTY SERVICES DATED JULY 8, 1993
FOR THE PROPERTY LOCATED AT
4100 NEWPORT PLACE, SUITE 730, NEWPORT BEACH, CALIFORNIA 92660
<PAGE>
THIRD ADDENDUM TO LEASE
This Addendum to Lease dated July 17, 1996 shall modify that certain
lease (hereinafter referred to as the "Lease") by and between Advent Realty
Limited Partnership 11, successor in interest to Newport Place Associates
(hereinafter referred to as "Landlord"), and HomeLife Realty Services, Inc.,
a Delaware corporation (hereinafter referred to as "Tenant", for the Premises
located at 4100 Newport Place, Suite 730, Newport Beach, California 92660.
The Lease is amended s follows:
1. The term of said Lease is extended for a period of five (5) years
commencing July 1, 1996 and terminating on June 30, 2001.
2. The monthly rental payable by Tenant to Landlord shall be per the
following schedule:
7/1/96 through 6/30/98 $3,945.00 per month
7/1/98 through 6/30/99 $4,142.25 per month
7/l/99 through 6/30/00 $4,349.36 per month
7/1/00 through 6/30/01$4,566.83 per month
3. Landlord to waive 1993, 1994, 1995 and January through June 1996
operating expenses in the total sum of $6,937.00 sum of $6,937.00.
4. Landlord to waive 1993, 1994, 1995 and January through June 1996
operating expenses in the total Landlord to paint interior corridor walls of
Tenant's suite per the proposal attached as Exhibit A.
5. Landlord hereby grants to Tenant the option to extend the term of
the Lease for one (1) five (5)year period (the "Extension Option") commencing
when the lease term expires upon each and all of the following terms and
conditions:
a) Tenant shall give to Landlord on a date which is prior to the
date that the option period would commence (if exercised) by at least
one hundred eighty (180) days and not more than two hundred seventy
(270) days, a written notice of the exercise of the option to extend
the Lease for said additional term, time being of the essence. Such
notice shall be given in accordance with the provisions of the Lease.
If said notification of the exercise of said option is not so given
and received, this option shall automatically expire.
b) The provisions of the Lease apply to this option.
c) All of the terms and conditions of the Lease except where
specifically modified by this
d) The Base Rent payable during the option term shall be the Market
Rate on the date the option term commences.
e) The term "Market Rate" shall mean the annual amount per rentable
square foot that a willing, comparable renewal tenant would pay and a
willing, comparable Landlord of a similar high-rise Class-A building
would accept at arm's length for similar space, giving appropriate
consideration to the following matters: (i) annual rental rates per
rentable square foot; (ii) the type of escalation clauses (including,
but without limitation, operating expense, real estate taxes, and CPI)
and the extent of liability under the escalation clauses (LE., whether
determined on a "net lease" basis or by increases over a particular
base year or base dollar amount); (iii) rent abatement provisions
reflecting free rent and/or no rent during the lease term; (iv) length
of lease term; (v) size and location of premises being leased; and
(vi) other generally applicable terms and conditions of tenancy for
similar space; provided, however, Tenant shall not be entitled to any
tenant improvement or refurbishment allowance. The Market Rate may
also designate periodic rental increases, a new Base Year and similar
economic adjustments. The Market Rate shall be the Market Rate in
effect as of the beginning
<PAGE>
of the option period, even though the determination may be made in
advance of that date, and the parties may use recent trends in
rental rates in determining the proper Market Rate as of the
beginning of the option period.
f) If Tenant exercises the Extension Option, Landlord shall
determine the Market Rate by using its good faith judgment. Landlord
shall provide Tenant with written notice of such amount within fifteen
(15) days after Tenant exercises its Extension Option. TENANT shall
have fifteen (15) days ("Tenant's Review Period") after receipt of
Landlord's notice of the new rental within which to accept such
rental. In the event Tenant fails to accept in writing such rental
proposal by Landlord, then such proposal shall be deemed rejected, and
Landlord and Tenant shall attempt to agree upon such Market Rate,
using their best good faith efforts. If Landlord and Tenant fail to
reach agreement within fifteen (15) days following Tenant's Review
Period ("Outside Agreement Date"), then each party shall place in a
separate sealed envelope their final proposal as to the Market Rate,
and such determination shall be submitted to arbitration in accordance
with subsections (i) through (v) below. In the event that Landlord
fails to timely generate the initial notice of Landlord's opinion of
the Market Rate, then Tenant may commence such negotiations by
providing the initial notice, in which event Landlord shall have
fifteen (15) days ("Landlord's Review Period") after receipt of
Tenant's notice of the new rental within which to accept such rental.
In the event Landlord fails to accept in writing such rental proposed
by Tenant, then such proposal shall be deemed rejected, and Landlord
and Tenant shall attempt in good faith to agree upon such Market Rate,
using their best good faith efforts. If Landlord and Tenant fail to
reach agreement within fifteen (15) days following Landlord's Review
Period (which shall be, in such event, the "Outside Agreement Date" in
lieu of the above definition of such date), then each party shall
place in a separate sealed envelope their final proposal as to Market
Rate, and such determination shall be submitted to arbitration in
accordance with subsections (i) through (v) below.
ARBITRATION OF DISPUTES
(i) LANDLORD AND TENANT SHALL MEET WITH EACH OTHER WITHIN FIVE
(5) BUSINESS DAYS AFTER THE OUTSIDE AGREEMENT DATE AND EXCHANGE THEIR SEALED
ENVELOPES AND THEN OPEN SUCH ENVELOPES IN EACH OTHER'S PRESENCE. IF LANDLORD
AND TENANT DO NOT MUTUALLY AGREE UPON THE MARKET RATE WITHIN ONE (1) BUSINESS
DAY OF THE EXCHANGE AND OPENING OF ENVELOPES, THEN, WITHIN TEN (10) BUSINESS
DAYS OF THE EXCHANGE AND OPENING OF ENVELOPES, LANDLORD AND TENANT SHALL
AGREE UPON AND JOINTLY APPOINT A SINGLE ARBITRATOR WHO SHALL BY PROFESSION BE
A REAL ESTATE BROKER OR AGENT WHO SHALL HAVE BEEN ACTIVE OVER THE FIVE (5)
YEAR PERIOD ENDING ON THE DATE OF SUCH APPOINTMENT IN THE LEASING OF
COMMERCIAL OFFICE BUILDINGS SIMILAR TO THE PREMISES IN THE GEOGRAPHICAL AREA
OF THE PREMISES. NEITHER LANDLORD NOR TENANT SHALL CONSULT WITH SUCH BROKER
OR AGENT AS TO HIS OR HER OPINION AS TO THE MARKET RATE PRIOR TO THE
APPOINTMENT. THE DETERMINATION OF THE ARBITRATOR SHALL BE LIMITED SOLELY TO
THE ISSUE OF WHETHER LANDLORD'S OR TENANT'S SUBMITTED MARKET RATE FOR THE
PREMISES IS THE CLOSEST TO THE ACTUAL MARKET RATE FOR THE PREMISES AS
DETERMINED BY THE ARBITRATOR, TAKING INTO ACCOUNT THE REQUIREMENTS FOR
DETERMINING MARKET RATE SET FORTH HEREIN. SUCH ARBITRATOR MAY HOLD SUCH
HEARINGS AND REQUIRE SUCH BRIEFS AS THE ARBITRATOR, IN HIS OR HER SOLE
DISCRETION, DETERMINES IS NECESSARY. IN ADDITION, LANDLORD OR TENANT MAY
SUBMIT TO THE ARBITRATOR WITH A COPY TO THE OTHER PARTY WITHIN FIVE (5)
BUSINESS DAYS AFTER THE APPOINTMENT OF THE ARBITRATOR ANY MARKET DATA AND
ADDITIONAL INFORMATION SUCH PARTY DEEMS RELEVANT TO THE DETERMINATION OF THE
MARKET RATE ("RR DATA"), AND THE OTHER PARTY MAY SUBMIT A REPLY IN WRITING
WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT OF SUCH RR DATA.
(ii) THE ARBITRATOR SHALL, WITHIN THIRTY (30) DAYS OF HIS OR
HER APPOINTMENT, REACH A DECISION AS TO WHETHER THE PARTIES SHALL USE
LANDLORD'S OR
<PAGE>
TENANT'S SUBMITTED MARKET RATE AND SHALL NOTIFY LANDLORD AND TENANT OF SUCH
DETERMINATION.
(iii) THE DECISION OF THE ARBITRATOR SHALL BE FINAL AND
BINDING UPON LANDLORD AND TENANT.
(iv) IF LANDLORD AND TENANT FAIL TO AGREE UPON AND APPOINT AN
ARBITRATOR, THEN THE APPOINTMENT OF THE ARBITRATOR SHALL BE MADE BY THE
PRESIDING JUDGE OF THE ORANGE COUNTY SUPERIOR COURT, OR, IF HE OR SHE REFUSES
TO ACT, BY ANY JUDGE HAVING JURISDICTION OVER THE PARTIES.
(v) THE COST OF THE ARBITRATION SHALL BE PAID BY LANDLORD AND
TENANT EQUALLY.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE
ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF
DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA
LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE
GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS
ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU
REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE
COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MASTERS INCLUDED IN THE ARBITRATION OF DISPUTES" PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE
GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A
COURT OR JURY TRIAL. BY INITIALIZING IN THE SPACE BELOW YOU ARE GIVING UP ANY
RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED
IN THE "ARBITRATION OF DISPUTES" PROVISION, YOU MAY BE COMPELLED TO ARBITRATE
UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT
TO THIS ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION
TO NEUTRAL ARBITRATION.
------------------------- ---------------------------
(Landlord, initials) (Tenant initials)
6. Except as explicitly set forth herein, nothing contained herein
shall be deemed or construed to modify, waive, impair or affect any of the
covenants, agreements, terms, provisions or conditions contained in the
Lease. In addition, the acceptance of rents by Landlord from Tenant or anyone
else liable under the Lease shall not be deemed saiver by Landlord of any
provisions of the Lease. The Amendment to Lease is the complete understanding
between the parties and supersedes all other prior agreements and
representations concerning its subject matter.
7. Except as explicitly set forth herein, nothing contained herein
shall be deemed or construed to modify, waive, impair or affect any of the
covenants, agreements, terms, provisions or conditions contained in the
Lease. This Amendment to Lease is the complete understanding between the
parties and supersedes all other prior agreements and representations
concerning its subject matter.
IN WITNESS WHEREOF, the parties hereto have respectively executed this Addendum.
LANDLORD:
<PAGE>
ADVENT REALTY LIMITED PARTNERSHIP 11, a Delaware limited partnership
By: ADVENT REALTY GP 11 LIMITED PARTNERSHIP, a
Delaware limited partnership
Its: General Partner
By: ADVENT REALTY, INC., a Delaware corporation
Its: General Partner
By:
-------------------------------------------
Michael A. Ruane, Chairman*
OR
By: /s/ Arthur I. Segel
-------------------------------------------
Arthur I. Segel, President*
Tenant:
HOMELIFE REALTY SERVICES, INC., a Delaware corporation
By: /s/ Andrew Cimerman
--------------------------------------
Name: Andrew Cimernan
--------------------------------------
Andrew Cimerman
(please print)
Its:
--------------------------------------
- ---------------------------------------
*It is the intention of the parties hereto that this Agreement will be executed
on behalf of Landlord by either Michael A. Ruane or Arthur 1. Segel and that the
signatures of both Michael A. Ruane and Arthur I. Segel will not be required.
<PAGE>
EXHIBIT 10.8
BUILDER'S REALTY STOCK PURCHASE AGREEMENT
DATED FEBRUARY 27, 1998
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of February 28, 1997, is by and
between BUILDERS REALTY (CALGARY) LTD., a corporation organized under the
laws of the Province of Alberta, Canada ("Builders"), HOMELIFE, INC., a
Nevada corporation ("Buyer"), and CECIL AVERY, an individual, and JOYCE
TRAVIS, an individual (collectively, the "Shareholders"). Builders and
Shareholders shall sometimes be collectively referred to herein as the
"Selling Parties."
R E C I T A L S
A. Shareholders are the holders of all of the outstanding shares of
equity securities of Builders (the "Shares").
B. Shareholders each desire to sell to Buyer, and Buyer desires to
purchase from Shareholders, all of Shareholders' right, title and interest in
and to the Shares upon the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual benefits to be derived from
this Agreement, the parties represent, warrant, and agree as follows:
A G R E E M E N T
SECTION 1. PURCHASE AND SALE OF SHARES.
1.1 PURCHASE AND SALE. At the Closing (as defined below), and upon
the terms set forth herein, Shareholders will sell, transfer, assign, convey,
grant, and deliver to Buyer, and Buyer will purchase and acquire from
Shareholders, all right, title, and interest of Shareholders in and to the
Shares, such that, following the Closing, Builders will be a wholly-owned
subsidiary of Buyer.
1.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for
the Shares shall equal $450,000 CDN and shall be comprised of the following:
(i) the sum $225,000 CDN in cash (the "Cash Portion"), and (ii) 36,000 shares
(or such other certain number of shares) of the common stock of Buyer (the
"Initial Shares"), which Initial Shares shall have an aggregate value as of
the Closing of $225,000 CDN. The Purchase Price shall be allocated among the
Shareholders in accordance with their respective percentage ownership of the
outstanding equity securities of Builders. The Purchase Price has been
calculated based on Selling Parties' representations that (i) the gross sales
income of Builders in the previous twelve months was at least $5,677,000 CDN
as reflected in the accounts in Builders' "Realcorp" accounting program,
copies of which accounts are attached hereto as Schedule 1.2, and (ii) the
net sales income of Builders for 1996 was at least $150,000 CDN, as
reflected in the accounts in Builders' "Realcorp" accounting program, copies
of which accounts are attached hereto as Schedule 1.2. If the certificate
delivered at the Closing pursuant to Section 8.1(c) below reflect less than
these amounts, both the Cash Portion and the Initial Shares of the Purchase
Price shall be proportionately reduced.
1.3 ADJUSTMENT TO PURCHASE PRICE. Shareholders acknowledge and agree
that the Initial Shares shall be subject to resale restrictions during the
twelve (12) months following the Closing. After twelve (12) months, if the
market price per share of the Initial Shares as of the date which is twelve
(12) months following the Closing is less than $5 US per share, Buyer shall
promptly issue to Shareholders, on a pro rata basis, such additional shares
of Buyer's common stock which, together with the Initial Shares
(collectively, the "HomeLife Shares"), shall have an aggregate market value,
based on the market price per share as of the date which is twelve (12)
months following the Closing, equal to $225,000 CDN.
1.4 PAYMENT OF PURCHASE PRICE. On the Closing Date, the Cash Portion
of the Purchase Price shall be paid to Shareholders by 1:00 p.m., Pacific
Standard Time, by certified or cashier's check or by such other method as
Shareholders and Buyer may agree.
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SECTION 2. THE CLOSING.
2.1 TIME AND PLACE. The closing of the transactions contemplated by
this Agreement (the "Closing") shall occur at time, date and place as the
parties hereto shall designate in writing. The Closing shall occur no later
than February 27, 1998 or no later than five (5) business days after the
conditions to closing have been satisfied or waived in writing, whichever
occurs first (the "Closing Date"); provided, however, that upon at least
three (3) business days' prior written notice to the other party, each party
may extend the Closing Date one time for up to ten (10) business days. The
date of the extended Closing shall be determined with the other party's
consent (such consent not to be unreasonably withheld), and such extended
date shall be the Closing Date.
2.2 DELIVERIES BY BUYER. At Closing, Buyer shall make the following
deliveries: (i) to each Shareholder, a certificate representing that portion
of the Initial Shares that such Shareholder is acquiring as set forth in
Section 1.2 above; and (ii) to Selling Parties, a certificate executed by
Buyer certifying that all of Buyer's representations and warranties under
this Agreement are true as of the Closing, as though each of those
representations and warranties had been made on that date, and that all
conditions set forth in Sections 8.1(a) and (b) have been satisfied or waived.
2.3 DELIVERIES BY SELLING PARTIES. At Closing, Selling Parties shall
make the following deliveries to Buyer: (i) a certificate or certificates
representing the Shares, accompanied by a Stock Power, duly executed, with
medallion guarantee, by the Shareholders in the form of attached Exhibit "A";
(ii) a certificate executed by Selling Parties, certifying that the Selling
Parties' respective representations and warranties under this Agreement are
true as of the Closing, as though each of those representations and
warranties had been made on that date, and that all conditions set forth in
Sections 8.2(a) and (b) have been satisfied or waived; and (iii) the stock
books, stock ledgers, minute books, corporate seals, and all other corporate
records and property of Builders.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES. Builders and
Shareholders, jointly and severally, represent, warrant, and agree as follows:
3.1 ORGANIZATION AND STANDING OF BUILDERS. Builders is a corporation
duly organized, validly existing, and in good standing under the laws of the
Province of Alberta and has full power and authority to carry on the business
of Builders as now conducted. Builders is duly qualified or licensed to do
business and is in good standing in the jurisdictions in which the nature of
its business conducted by it makes such qualification necessary, except where
the failure to be so qualified would not have a material adverse effect on
Builders' financial condition or results of operations.
3.2 AUTHORITY; CAPITALIZATION.
(a) The execution, delivery and performance of this Agreement by
Builders and the consummation by Builders of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
action on the part of Builders. This Agreement has been duly executed and
validly delivered by Selling Parties and is a valid and binding agreement of
Selling Parties, enforceable against them in accordance with its terms,
except as may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally.
(b) Shareholders are the lawful beneficial and record owners of
all of the issued and outstanding shares of Builders' equity securities.
All of the Shares have been duly and validly issued, are fully paid and
nonassessable, and will be conveyed hereunder free and clear of all liens,
security interests, encumbrances, pledges, restrictions, charges, demands,
and claims of any kind and nature whatsoever, whether direct or indirect or
contingent. There are no options or other agreements of any kind granted or
issued by Builders which provide for the purchase, issuance or transfer of
any additional shares of the capital stock of Builders nor are there any
outstanding securities granted or issued by Builders that are convertible
into any shares of the equity securities of Builders. Builders does not have
outstanding any bonds, debentures, notes or other indebtedness the holders of
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<PAGE>
which have the right to vote (or convertible or exercisable into securities
having the right to vote) with holders of Builders capital stock on any
matter.
3.3 TITLE TO ASSETS; EFFECT OF AGREEMENT.
(a) Builders is, and at the Closing shall be, the owner of all
of the assets as may be reflected in the Financial Reports (as defined below)
and/or are utilized as of the Closing in the operation of its business.
Builders has good and marketable title to such assets, free and clear of all
liens, charges, claims or encumbrances of any nature.
(b) The execution, delivery, and performance of this Agreement
and consummation of the transactions contemplated herein by Selling Parties
will not, with or without the giving of notice or the lapse of time, or both,
(i) violate any provision of law, statute, rule, or regulation to which
Selling Parties are subject, (ii) violate any judgment, order, writ, or
decree of any court or other tribunal or any agency applicable to Selling
Parties, or (iii) result in the breach of or conflict with any term,
covenant, condition, or provision of, or result in the creation of any lien
or encumbrance on their respective assets under, any commitments, contracts,
or other agreements or instruments to which such Selling Party is a party or
by which any of its assets is or may be bound.
3.4 LICENSES AND PERMITS. Builders possesses all material licenses
and permits necessary to conduct its business as now operated. Such licenses
and permits are valid and in full force and effect. No action or claim is
pending or threatened to revoke or terminate any such licenses or permits or
declare any of them invalid in any respect. Further, Builders shall provide
a list of all material licenses and permits on Schedule 3.4 attached herein
which shall also include a list of licenses of all real estate sales
representatives affiliated with Builders.
3.5 BROKERS AND FINDERS. No broker, finder or investment banker is
entitled to any brokerage, finders or other fee or commission payable by
Selling Parties in connection with the transactions contemplated by this
Agreement, based upon arrangements made by or on behalf of Selling Parties or
any of its affiliates.
3.6 FINANCIAL REPORTS. Builders has delivered to Buyer complete
copies of the financial reports attached as Exhibit "B" (collectively, the
"Financial Reports"). Each of the Financial Reports is true and correct and
accurately reflects the financial condition, results of operations, and
related costs and expenses of the business of Builders as of such dates and
for the periods then ended. There is no claim or asserted liability or
obligation of any kind with respect to the business or the assets of Builders
not reflected on the Financial Reports, which could have a material adverse
effect on Builders' business or assets.
3.7 LITIGATION. Schedule 3.7 sets forth a complete and accurate list
of all litigation, actions, investigations, arbitration, or other proceedings
currently pending or threatened to which Builders is a party. Builders is
not subject to any outstanding order, writ, injunction, or decree of any
court, government, governmental authority or agency, or arbitration tribunal
against it or affecting or relating to its assets or business which could
have a material adverse effect on such assets or business.
3.8 PENDING LISTING. Schedule 3.8 sets forth a complete and
accurate list of all properties for sale as listed by Builders as of 90 days
prior to the date of closing.
SECTION 4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. Each
Shareholder represents and warrants to Buyer with respect to himself or
herself, as of the date hereof and as of the Closing, as follows:
4.1 PURCHASE ENTIRELY FOR OWN ACCOUNT. Shareholder agrees that he is
acquiring the HomeLife Shares for investment purposes only and not for sale
or with a view to distribution of all or any part of such shares.
3
<PAGE>
4.2 RESTRICTED SECURITIES; REGISTRATION. Shareholder understands
that the HomeLife Shares are "restricted securities" under the Securities Act
of 1933, as amended (the "Act"), and that, under such laws and applicable
regulations, such securities may not be resold for a period of one (1) year
from the date of issuance unless registered with the United States Securities
and Exchange Commission (the "Commission") under the Act and qualified by
appropriate state securities regulators, or unless Shareholder obtains
written consent from Buyer and otherwise complies with an exemption from such
registration and qualification. Shareholder acknowledges that the
certificates delivered by Buyer representing the HomeLife Shares may provide
appropriate legends regarding the foregoing. Shareholder understands that
Buyer is under no obligation to register the HomeLife Shares on Shareholder's
behalf during the one-year trading restriction but that, subject to Rule 144
under the Act, the HomeLife Shares will become free-trading following
expiration of the one (1) year period from the date of issuance without
obtaining registration of such shares with the Commission.
4.3 INDEPENDENT INVESTIGATION. Shareholder acknowledges that, in
entering into this Agreement, Shareholder has relied on Shareholder's own
independent investigations and has not relied upon any representations or
other information (whether oral or written) from Buyer, or its officers,
directors, agents, employees or representatives regarding Buyer, its business
or financial condition. Shareholder acknowledges that he or she and his or
her advisors, if any, have, prior to entering into this Agreement, been given
information on Buyer and its business as requested.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents,
warrants, and agrees as follows:
5.1 ORGANIZATION AND STANDING OF BUYER. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Nevada and has full power and authority to carry on its business as now
conducted.
5.2 AUTHORITY OF BUYER. The execution, delivery and performance of
this Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and is a valid and binding agreement of Buyer, enforceable
against it in accordance with its terms, except as may be limited by or
subject to any bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights.
5.3 EFFECT OF AGREEMENT. The execution, delivery, and performance of
the Agreement and consummation of the transactions contemplated herein by
Buyer will not, with or without the giving of notice or the lapse of time, or
both, (a) violate any provision of law, statute, rule, or regulation to which
Buyer may be subject, (b) violate any judgment, order, writ, or decree of any
court or other tribunal or any agency applicable to Buyer or its properties,
or (c) result in the breach of or conflict with any term, covenant,
condition, or provision of, or result in the creation of any lien or
encumbrance on its assets under, any commitments, contracts, or other
agreements or instruments to which Buyer is a party or by which any of its
assets or properties is or may be bound or affected.
5.4 BROKERS AND FINDERS. No broker, finder or investment banker is
entitled to any brokerage, finder's, or other fee or commission payable by
Buyer in connection with the transactions contemplated by this Agreement,
based upon arrangements made by or on behalf of Buyer or any of its
affiliates.
5.5 LISTING. The shares of common stock of Buyer are currently
traded on the OTC Bulletin Board. Buyer makes no representations or
warranties regarding obtaining a listing of its securities on any other stock
exchange.
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SECTION 6. CERTAIN COVENANTS AND AGREEMENTS.
6.1 CONDUCT OF BUILDERS PRIOR TO CLOSING. From the date hereof and
until the Closing Date, Builders shall:
(a) Operate its business only in the usual and ordinary course
and consistent with Builders' current practice, and not purchase, sell,
lease, transfer or dispose of any assets except in the ordinary course of
business;
(b) Use its best efforts to preserve Builders' present
organization and goodwill intact, including the present business
relationships and goodwill with customers, suppliers, and others who have
dealings with Builders;
(c) Pay all costs, expenses, liabilities, and capital
expenditures of Builders relating to its business in the ordinary course when
due; and
(d) Provide Buyer and its employees, counsel, accountants, and
advisors with full access upon reasonable notice during normal business hours
to all of the properties, personnel, financial and operating data, books,
contract, and records of Builders in connection with Buyer's review of
Builders and its operations, provide such further access and information as
Buyer may reasonably request from time to time, and in general to cooperate
fully with Buyer and to assist Buyer in its due diligence investigation of
Builders' business and assets.
6.2 NONCOMPETE AGREEMENT. For a period of three (3) years following
the Closing, each Shareholder will not, individually or in concert with any
other person or entity, directly or indirectly, whether as an owner, member,
partner, officer, employee, director, trustee, stockholder (except of not
more that not percent (1%) of the outstanding stock of any company purchased
for investment purposes only), agent, manager, consultant, associate, or
otherwise, own, manage, operate, join, control, finance, organize,
participate in, work for, permit the use of his name by, or be connected in
any manner with any business activity within the United States or the
Province of Alberta, Canada which is competitive with any aspect of the
business of Builders so long as Builders carries on such business. It is
intended that the covenant contained in this paragraph shall be deemed to be
a series of separate covenants, one for each county in the United States.
Except for geographic coverage, each such separate covenant contained shall
be deemed identical in terms with the covenant contained in this paragraph.
If in any judicial proceeding, a court should refuse to enforce all of the
separate covenants deemed included in paragraph (A) because, taken together,
they cover too extensive a geographic area, it is intended that those of such
covenants which, if eliminated, would permit the remaining separate covenants
to be enforced in such proceeding, shall, for the purpose of such proceeding,
be deemed eliminated for the provisions hereof.
In the event of a breach or threatened breach of this Section, Buyer
shall be entitled to an injunction restraining such breach, without the
requirement of posting bond; but nothing here shall be construed as
prohibiting Buyer from pursuing any other remedy available to it as a result
of such breach or threatened breach.
6.3 RETAINED ASSETS. Notwithstanding anything to the contrary
contained in this Agreement, Buyer acknowledges and agrees that the Financial
Reports do not reflect Builders' ownership of certain assets, all of which
are listed on attached Schedule 6.3 and all of which shall be distributed to
and retained by the Shareholders prior to Closing, and shall not be conveyed
to Buyer hereunder.
6.4 CONTINUED RELATIONSHIP. Shareholders each agree to remain with
Builders for a period of two (2) years as a sales representative or agent
upon terms and conditions reasonably acceptable to both parties, During such
two-year period, Shareholders shall have full and exclusive use of their
present offices in Calgary, Canada and shall pay no management fees to
Builders in connection with their continued association with Builders.
5
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SECTION 7. INDEMNIFICATION.
7.1 BUYER'S INDEMNIFICATION. Buyer shall indemnify, defend and hold
harmless the Shareholders and Builders, together with its officers,
directors, agents, and affiliates (collectively, the "Selling Parties'
Indemnified Parties"), from and against any and all claims, demands, causes
of action, liabilities, damages, deficiencies, losses, obligations, costs and
expenses (including attorney fees and any costs of investigation) that a
Selling Parties' Indemnified Party shall incur or suffer that arise, result
from or relate to:
(a) the operation of Builders' business or corporation on or
after the Closing Date; and
(b) Buyer's breach of any representation or warranty or its
failure to fulfill any agreement or covenant contained in this Agreement or
any certificate, document or instrument delivered at the Closing.
7.2 BUILDERS' INDEMNIFICATION. Builders and the Shareholders,
jointly and severally, shall indemnify, defend and hold harmless Buyer and
its officers, directors, agents, and affiliates (collectively, the "Buyer's
Indemnified Parties"), from and against any and all claims, demands, causes
of action, liabilities, damages, deficiencies, losses, obligations, costs and
expenses (including attorney fees and any costs of investigation) that a
Selling Parties' Indemnified Party shall incur or suffer that arise, result
from or relate to:
(a) The operation of the business of Builders in which the
principal events giving rise thereto occurred prior to the Closing or which
result from or arise out of any action or inaction prior to the Closing of
the Shareholders, Builders or any director, officer, employee, agent,
representative or subcontractor of Builders; and
(b) Any Selling Party's breach of any representation or warranty
or a failure to fulfill any agreement or covenant contained in this
Agreement, any Schedule hereto, or any certificate, document or instrument
delivered at the Closing.
7.3 INDEMNIFICATION PROCEDURES. Each party agrees promptly to give
the other written notice of any assertion by any third party against it as to
which it may request indemnification hereunder. The indemnifying party
hereunder shall have the right, upon notice to the other within thirty (30)
days after receiving any such notice, to defend with counsel satisfactory to
the indemnified party any such their party suits, claims, or proceedings, but
the indemnified party may participate in the defense of any such suit, claim,
or proceeding at its expense. Each party agrees not to settle or compromise
any such third party suit, claim, or proceeding without the prior written
consent of the other.
SECTION 8. CONDITIONS TO CLOSING.
8.1 CONDITIONS TO BUYER'S OBLIGATION TO CLOSE. The obligation of
Buyer to close hereunder shall be subject to the following conditions:
(a) The representations and warranties of Selling Parties shall
be correct and complete in all material respects at and as of the Closing
Date as though such representations and warranties were made on and as of the
Closing Date;
(b) Selling Parties shall have performed and complied in all
material respects with the covenants, conditions and other obligations under
this Agreement which are to be performed or complied with by it on or prior
to the Closing Date;
(c) Buyer shall have received a certificate executed by Selling
Parties, reasonably satisfactory to Buyer, certifying that (i) the
representations and warranties of Builders and the Shareholders shall be
correct and complete in all material respects at and as of the Closing Date
as though such representations and
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warranties were made on and as of the Closing Date, and (ii) the conditions
specified in Sections 8.1(a) and (b) have been satisfied or waived;
(d) Buyer shall have completed a due diligence examination
relating to Builders, its business and assets, to the extent it deems
necessary and shall be satisfied with the results thereof in its sole
discretion, and shall have given Builders notice of its satisfaction; and
(e) There shall have occurred no material adverse change in the
business or financial condition of Builders from that disclosed in the
Financial Reports after taking into account seasonal adjustments.
8.2 CONDITIONS TO SELLING PARTIES' OBLIGATION TO CLOSE. The
obligation of Selling Parties to close hereunder shall be subject to the
following conditions:
(a) The representations and warranties of Buyer contained in
this Agreement shall be correct and complete in all material respects at and
as of the Closing Date as though such representations and warranties were
made on and as of the Closing Date;
(b) Buyer shall have performed and complied in all material
respects with the covenants, conditions and other obligations under this
Agreement which are to be performed or complied with by it on or prior to the
Closing Date; and
(c) Selling Parties shall have received a certificate executed
by Buyer, reasonably satisfactory to Selling Parties, certifying that (i) the
representations and warranties of Buyer shall be correct and complete in all
material respects at and as of the Closing Date as though such
representations and warranties were made on and as of the Closing Date, and
(ii) the conditions specified in Sections 8.2(a) and (b) have been satisfied
or waived.
8.3 CONDITION TO EACH PARTY'S OBLIGATION TO CLOSE. The obligations
of the parties to close hereunder shall be subject to the following
conditions:
(a) NO RESTRAINTS. No statute, rule, regulation, order, decree
or injunction shall have been enacted, entered, promulgated or enforced by
any court or governmental entity of competent jurisdiction which enjoins or
prohibits the consummation of this Agreement and shall be in effect; and
(b) LEGAL ACTION. There shall not be pending or threatened in
writing any action, proceeding or other application before any court or
governmental entity challenging or seeking to restrain or prohibit the
consummation of the transactions contemplated by this Agreement, or seeking
to obtain any material damages.
SECTION 9. MISCELLANEOUS.
9.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date (a) by mutual consent of Buyer and Selling Parties, (b)
by Buyer or Selling Parties if the conditions set forth in Section 8 shall
not have been satisfied on or prior to Closing, (c) by Buyer if Buyer is not
satisfied in its sole discretion with the results of the due diligence
investigation, (d) by Buyer if, at any time prior to the Closing, there shall
occur a material breach of any of Selling Parties' representations,
warranties, or covenants contained in this Agreement and such breach would
materially and adversely affect the benefits to be derived by Buyer from the
transactions contemplated hereby, or (e) by Buyer or Selling Parties if the
Closing shall not have been consummated on or before February 27, 1998,
provided that the right to terminate this Agreement under this section shall
not be available to any party whose breach of its representations and
warranties in this Agreement or whose failure to perform any of its covenants
and agreements under this Agreement has been the cause of or resulted in the
failure of the Closing to occur on or before such date.
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9.2 CONFIDENTIALITY AGREEMENT. Unless and until the Closing is
consummated, Selling Parties and Buyer, and their respective officers,
directors, and representatives, as the case may be (each a "Recipient"), will
keep confidential any and all information which is or has been furnished to
it by or on behalf of Selling Parties or Buyer (each a "Provider") in
connection with the transactions contemplated by this Agreement (the
"Confidential Information"), and shall use the Confidential Information
solely in connection with the transactions contemplated by this Agreement.
Recipient shall not disclose any Confidential Information to any person or
entity, except to its own accountants, attorneys, consultants, or employees
on a "need-to-know" basis in connection with the transactions contemplated by
this Agreement. All Confidential Information shall remain the property of
the Provider. If this Agreement is terminated, the Recipient shall promptly
return all Confidential Information to the Provider and either destroy any
writings prepared by or on behalf of Recipient based on Confidential
Information (and certify such destruction to the Provider) or deliver any and
all such writings to the Provider. Confidential Information does not include
information which is or becomes (but only when it becomes) generally
available to the public other than as a result of disclosure in violation of
this provision. The parties acknowledge the unique nature of the Confidential
Information and that any actual or threatened disclosure of Confidential
Information in violation of the terms of this Agreement will cause
substantial and irreparable harm to Provider. Accordingly, in the event of a
breach or threatened breach of this Agreement, Provider shall be entitled to
an injunction restraining such breach, without the requirement of posting
bond; but nothing here shall be construed as prohibiting Provider from
pursuing any other remedy available to it as a result of such breach or
threatened breach.
9.3 NOTICES. All notices, request, demands and other communications
which are required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered personally or by telecopy, or
when mailed by registered or certified mail, postage prepaid, return receipt
requested, as follows:
If to Buyer, to the following: HomeLife, Inc.
4100 Newport Place, Suite 730
Newport Beach, CA 92660
Attention: Chairman
If to Builders, to the following: Builders Realty (Calgary) Ltd.
1982 Kensington Road, N.W.
Calgary, Alberta, Canada T2N 3R5
Or to such other address as any party may designate from time to time by
written notice to the other given in the foregoing manner.
9.4 EXPENSES. Except as otherwise provided herein, each of the
parties hereto shall bear the expenses separately incurred by them in
connection herewith, including, without limitation, their respective
attorneys' fees.
9.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Province of Alberta, Canada, without
regard to principles of conflict of laws.
9.6 ENTIRE AGREEMENT; MODIFICATION. This Agreement supersedes any
and all oral or written agreements heretofore made relating to the subject
matter hereof and constitutes the entire agreement of the parties relating to
the subject matter hereof. This Agreement may not be changed or modified
except by an agreement in writing signed by Selling Parties and Buyer.
9.7 NO IMPLIED RIGHTS OR REMEDIES. Except as otherwise expressly
provided herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or to give any person, firm or corporation, other
than the parties hereto, any rights or remedies under or by reason of this
Agreement.
8
<PAGE>
9.8 HEADINGS. The headings in this Agreement are inserted for
convenience or reference only and shall not be a part of or affect the
meaning of this Agreement.
9.9 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
9.10 SUCCESSORS AND ASSIGNMENT. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns, but no party shall have the right to assign this
Agreement without the prior written consent of the other party, except that
Buyer may assign all or a portion of its rights and obligations hereunder to
any entity which controls, is controlled by, or is under common control with
Buyer. In the event of any such assignment by Buyer, Buyer shall remain
fully and primarily liable for the obligations of "Buyer" hereunder, and in
any event, the HomeLife Shares to be issued hereunder shall be shares of
common stock of HomeLife, Inc., a Nevada corporation.
9.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by the parties in this Agreement, any Schedule hereto, or
any certificate, document or instrument delivered at the Closing, shall
survive the Closing indefinitely, notwithstanding any investigation or audit
conducted by any party before or after the Closing or the decision of any
party to consummate the transactions contemplated hereby.
9.12 PUBLIC ANNOUNCEMENTS. Neither Buyer or Selling Parties Builders
shall make, issue, or release any oral or written public announcement or
statement concerning or publicly reveal the transactions under this Agreement
without first obtaining the other party's prior written approval of the
contents of such announcement or statement, except that after the Closing,
Buyer may make such announcements as it deems necessary or appropriate.
9.13 INCORPORATED BY REFERENCE. The Schedule, the exhibits and all
documents (including, without limitation, all financial statements) delivered
as part hereof or incident hereto are incorporated as a part of this
Agreement by reference.
9.14 REMEDIES CUMULATIVE. No remedy herein conferred upon the parties
is intended to be exclusive of any other remedy and each and every such
remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
9.15 EXECUTION OF ADDITIONAL DOCUMENTS. Each party hereto shall make,
execute, acknowledge and deliver such other instruments and documents, and
take all such other actions as may be reasonably required in order to
effectuate the purposes of this Agreement and to consummate the transactions
contemplated hereby.
9.16 ATTORNEYS FEES. In the event of any legal, equitable or
administrative action or proceeding brought by any party against another
party under this Agreement, the prevailing party shall be entitled to recover
the reasonable fees of its attorneys and any costs incurred in such action or
proceeding including costs of appeal, if any, in such amount that the court
or administrative body having jurisdiction over such action may award.
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
"Builders"
BUILDERS REALTY (CALGARY) LTD., registered pursuant to
the Business Corporations Act of the Province of
Alberta, Canada
By:____________________________________
Name:__________________________________
Its:___________________________________
By:____________________________________
Name:__________________________________
Its:___________________________________
"Shareholders"
/s/ Cecil Avery
---------------------------------------
CECIL AVERY
/s/ Joyce Travis
---------------------------------------
JOYCE TRAVIS
"Buyer"
HOMELIFE, INC., a Nevada corporation
By: /s/ Andrew Cimerman
-----------------------------------
Andrew Cimerman, Chairman
10
<PAGE>
Exhibit "A"
Stock Power
<PAGE>
Exhibit "B"
Financial Reports
<PAGE>
Schedule 1.2
Accounting reflecting for gross and net sales income
<PAGE>
Schedule 3.4
Licenses and Permits
<PAGE>
Schedule 3.7
List of Litigation, etc.
<PAGE>
Schedule 3.8
Pending Listing
<PAGE>
Schedule 6.3
Retained Assets
<PAGE>
EXHIBIT 10.9
AGREEMENT FOR PURCHASE OF
NETWORK REAL ESTATE, INC.
LICENSING AGREEMENTS AND TRADEMARKS DATED
JUNE 12, 1997
<PAGE>
AGREEMENT FOR PURCHASE OF
NETWORK REAL ESTATE, INC.
LICENSING AGREEMENTS AND TRADEMARKS
This agreement is made as of June 12, 1997 by and between NETWORK REAL
ESTATE, INC. and HOMELIFE, INC.
RECITALS
Whereas, HomeLife, Inc. ("H.I.") desires to purchase the licensing agreements
and trademarks of Network Real Estate, Inc. ("N.R.E")
Whereas, Network Real Estate is desirous to convey its real estate operation
including the licensing agreements and trademarks.
NOW THEREFORE; the parties agree as follows:
(1) TRANSFER OF ASSETS
Effective on or before August 20, 1997, N.R.E. will transfer and assign to
H.I. the real estate operations of N.R.E. including the trademarks and
licensing agreements. (See Exhibit A.)
(2) SALES PRICE AND TERMS
H.I. agrees to pay N.R.E. $100,000 as follows:
(A) $10,000 cash down payment upon the closing on or before August 20th,
1997, including assignment of all agreements.
(B) $10,000 promissory note @ 8% interest due and payable on or before
October, 25, 1997.
(C) $80,000 in preferred convertible redeemable shares of HI stock carrying 8%
interest which will be accrued and payable in 12 months or when redeemed.
Said stock will be guaranteed at a price of $5.00 per share when converted
after a period of twelve months. These preferred convertible shares of HI
are secured by the contracts assigned under "Exhibit A". H.I. represents
and warrants that it is duly authorized to issue these preferred
convertible shares, can be validly issued, and will be free and clear of
all preemptive rights, rights of first refusal, liens, charges, claims and
encumbrances. HomeLife has the option to buy back the shares at $5.00 per
share in twelve (12) months or any time prior to twelve months.
(4) BOARD APPROVALS
H.I. and N.R.E. are each responsible to obtain any Board of Director approval
as necessary prior to closing on or before June 25, 1997.
(5) CLOSING
Closing to be on or before August 20, 1997 at the offices of Network Real
Estate, Inc., 2121 41st Avenue, Suite # 102, Capitola, California.
(6) ENTIRE AGREEMENT
This contract constitutes the sole and only Agreement between Buyer and
Seller respecting said sale of Assets in this Agreement and correctly sets
forth the obligation of Seller and Buyer to each other as of its date. Any
agreements or representations not expressly set forth in this Agreement are
null and void.
<PAGE>
(7) NOTICES
Any and all notices or other communications required or permitted by this
Agreement or by law to be served on or given to either party hereto, Buyer
or Seller, by the other party to this Agreement shall be in writing and
should be effective only if delivered by personal service or mailed, United
States mail, postage prepaid to:
Andy Cimerman Lee Dana
HomeLife, Inc. Network Real Estate, Inc.
4100 Newport Place, Suite 730 2121 41st Avenue, Suite 102
Newport Beach, CA 92660 Capitola, CA 95010
(8) BINDING ON SUCCESSORS
Unless otherwise provided in this Agreement, each and all of the covenants,
terms, provisions, and Agreements contained herein shall be binding upon and
inure to the benefit of the successors, executors, heirs, representatives,
administrators and assigns of the parties hereto.
(9) SEVERABILITY
If any provisions of this Agreement, or the application thereof, shall for
any reason and to any extent be invalid or unenforceable, the remainder of
this Agreement shall be interpreted as best to reasonably effect the intent
of the parties hereto.
(10) AMENDMENT
Any term or provision of this Agreement may be amended only by a writing
signed by the parties to be bound thereby.
(11) ATTORNEY'S FEES
Should any action be commenced between the parties to this Agreement, the
party prevailing in the action shall be entitled, in addition to such other
relief as may be granted, to a reasonable sum as and for attorney's fees.
(12) FURTHER ASSURANCES
Each party agrees to cooperate fully with the other party and to execute such
further instruments, documents and agreements; and to give such further
written assurances, as may be reasonably requested by any other party.
(13) APPROVAL FOR STOCK ISSUANCE
Each party shall be responsible to obtain all necessary permits for the
issuance of any stock by either corporation and each party warrants that
any stock to be issued pursuant to this Agreement shall be proper and valid
stock of the respective corporation.
AMENDED
8/22/97
<PAGE>
SCHEDULE "A"
OF INTANGIBLE PERSONAL PROPERTY
1. Trademark for International Estates, registered with the Patent and
Trademark Office on November 15, 1990, Trademark Reg. No. 037769. The mark
expires on November 15, 2000.
2. NETWORK REAL ESTATE and Logo.
3. All right, title and interest in and to the intellectual property rights
involved in NETWORK REAL ESTATE, INC.
Locations:
1. 6990 Highway 9, Felton, CA 95018
2. 13127 Highway 9, Boulder Creek, CA 95066
3. 2121 41st Avenue, Suite 102A, Capitola, CA 95010
4. 222 Reservation Road, Marina, CA 93933
5. The Villa Carmel, Suite 9, Carmel, CA 93921
6. 5450 Thornwood Drive, Ste. H, San Jose, CA 95123
7. 913 Willow Street, Suite 205, San Jose, CA 95125
8. 3550 Round Barn Blvd., Santa Rosa, CA 95403
9. 4980 Appian Way, #104, El Sobrante, CA 94803
10. 167 So. Auburn Street, Grass Valley, CA 95945
11. 3948 Highway 50, So. Lake Tahoe, CA 96150
12. 2161 Feather River Blvd., Oroville, CA 95965 - Closed
13. 1511 Treat Blvd., Suite 600, Walnut Creek CA 94598 (Relocation Center) Not
a sales office
14. 2121 41st Avenue, Suite 102B, Capitola, CA 95010 (Service Center)
Trademarks:
1. International Estates
Service Mark Reg. No. 037769
Date of Registration: 11/15/90
Expires: 11/15/00
2. Network Real Estate and Logo
(14) DEPARTMENT OF REAL ESTATE APPROVAL
Each party shall be responsible to obtain all necessary Department of Real
Estate approval for the transfer of any licenses and trademarks by either
corporation and each party warrants that any transfer shall be proper and
valid according to the laws of the State of California.
(15) DEFAULT
In the event of default by H.I., N.R.E. agrees to provide H.I. with a 10 day
notice.
(16) EXECUTION
This Agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which shall together constitute one and the same
document. It shall not be necessary, in making, proof of this Agreement, to
produce or account for more than one counterpart.
<PAGE>
READ AND APPROVED:
HOMELIFE, INC.
/s/ Andrew Cimerman
- ------------------------------ --------------------------
Andrew Cimerman, CEO Date
Chairman of the Board
NETWORK REAL ESTATE, INC.
/s/ Lee J. Dana
- ------------------------------ --------------------------
Lee J. Dana , CEO Date
Chairman of the Board
<PAGE>
ADDENDUM
This Addendum is attached to and is a part of that certain Agreement for
Purchase of Network Real Estate, Inc. Licensing Agreements and Trademarks
dated July 12, 1997, (the "Agreement").
Notwithstanding anything to the contrary contained in the Agreement, the
parties, HOMELIFE, INC. and NETWORK REAL ESTATE, INC., agree that the
officers, managers, directors, and stockholders of both HOMELIFE, INC. and
NETWORK REAL ESTATE, INC. will not compete with the business of HOMELIFE, INC.
or NETWORK REAL ESTATE, INC. for a period of eighteen (18) months.
HOMELIFE, INC., NETWORK REAL ESTATE, INC.,
a Nevada corporation a California Corporation
By: /s/ Andrew Cimerman By: /s/ Lee J. Dana
------------------------- -------- ------------------------- --------
Andrew Cimerman, C.E.O. Date Lee J. Dana, C.E.O Date
<PAGE>
UNSECURED PROMISSORY NOTE
$10,000.00 Orange County, California
August 21, 1997
FOR VALUE RECEIVED, HOMELIFE, INC., a Nevada corporation ("Maker"),
promises to pay to NETWORK REAL ESTATE, INC., a California corporation, or
order ("Holder"), the principal sum of Ten Thousand and NO/100 Dollars
($10,000.00), with interest thereon following default at the rate of
eight-percent (8%) per annum until paid.
1. PAYMENTS. Payment of the principal shall be due and payable on
October 25, 1997. All payments shall be made without setoff, deduction, or
counterclaim of any kind whatsoever. Principal and interest shall be due and
payable in lawful money of the United States of America.
2. WAIVER OF PRESENTMENT, NOTICE OF DISHONOR, AND PROTEST. Presentment,
notice or dishonor, and protest are waived by all makers, sureties,
guarantors, and endorsers of this Note.
3. FORBEARANCE NOT A WAIVER. No delay or omission on the pail of Holder
in exercising any rights under this Note or under the Security Agreement or
any other security agreement given to secure this Note, on default by Maker,
shall operate as a waiver of such right or of any other right under this Note
or other agreements, for the same default or any other default. Maker and any
sureties, guarantors, and endorsers of this Note consent to all extensions
without notice for any period or periods of time and to the acceptance of
partial payments before or after maturity, and to the acceptance, release,
and substitution of security, all without prejudice to Holder. Holder shall
similarly have the right to deal in anyway, at any time, with one or more of
the foregoing parties without notice to any other party, and to grant any
such party any extensions of time for payment of any of the indebtedness, or
to grant any other indulgences or forbearances whatsoever, without notice to
any other party and without in any way affecting the personal liability of
any such party.
4. SUCCESSORS AND ASSIGNS. This Note and all of the covenants,
promises, and agreements contained in it shall be binding on and inure to the
benefit of the respective legal and personal representatives, devisees,
heirs, successors, and assigns of Maker and Holder.
5. MODIFICATION. This Note may be modified or amended only by an
agreement in writing signed by the party against whom the agreement is sought
to be enforced.
6. APPLICABLE Law. This Note will be governed by and construed in
accordance with California law.
<PAGE>
7. ATTORNEYS' FEES. Maker agrees to pay the following costs, expenses,
and attorneys' fees paid or incurred by Holder, or adjudged by a court:
Reasonable costs of collection, costs, and expenses, and attorneys' fees paid
or incurred in connection with the collection or enforcement of this Note,
whether or not suit is filed. In the event of any legal, equitable or
administrative action or proceeding brought by either party against the other
party under this Note, the prevailing party shall be entitled to recover the
reasonable fees of its attorneys and any costs incurred in such action or
proceeding including costs of appeal, if any, in such amount that the court
or administrative body having jurisdiction over such action may award.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
HOMELIFE, INC.,
a Nevada corporation
By: Andrew Cimerman
------------------------------------
Its:
------------------------------------
<PAGE>
ASSIGNMENT OF INTANGIBLE PROPERTY
This ASSIGNMENT OF INTANGIBLE PROPERTY ("Assignment") is made on
August 21, 1997, by NETWORK REAL ESTATE, INC., a California corporation
("Transferor"), in favor of HOMELIFE, INC. a Nevada corporation
("Transferee").
For value received, the receipt and sufficiency of which are hereby
acknowledged, Transferor hereby sells, assigns, transfers, conveys and
delivers to Transferee, absolutely and not as security, all of his present
and future right, title and interest in and to the following intangible
personal property (collectively, the "Personal Property"):
To the extent that they are assignable or transferable, any and all
formulas, know-how, trade secrets, proprietary, product registrations,
franchises, trademarks, trade names, copyrights, service marks, other trade
rights and other intangible assets, together with all rights to and
applications, licenses and franchises for, any of the foregoing, relating
to the production, manufacture and distribution of absorbent materials and
products, including, without limitation, those listed on attached
Schedule "A," incorporated herein by this reference.
Transferor represents and warrants that Transferor has good and
marketable title to the Personal Property free and clear of all mortgages,
security interests, pledges, conditions, liens and encumbrances of any
nature. Transferor covenants, at Transferor's sole cost and expense, to
defend Transferee's title to the Personal Property against all claims and
demands of all persons or entities whomsoever which may have accrued as of
the date of this Assignment other than those stated above.
EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE PERSONAL PROPERTY IS BEING
CONVEYED HEREUNDER "AS IS" AND "WHERE IS" AS OF THE DATE OF THIS ASSIGNMENT,
WITHOUT ANY REPRESENTATION OR WARRANTY WHATSOEVER.
Transferor will, upon request from Transferee, without further
consideration, execute, acknowledge and deliver or cause to be executed,
acknowledged and delivered all such further documents necessary or proper to
effect the sale, assignment, transfer, conveyance and delivery of the
Personal Property to Transferee.
"TRANSFEROR"
NETWORK REAL ESTATE, INC.
By:
------------------------------------
Its:
------------------------------------
<PAGE>
EXHIBIT 10.10
STOCK PURCHASE AGREEMENT BY AND BETWEEN
THE KEIM GROUP, LTD. AND HOMELIFE, INC.
DATED JULY 23, 1996
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT "), dated the 23rd day of
July, 1996, among the undersigned shareholders (collectively, the "Keim
SHAREHOLDERS", and, individually, a "Keim SHAREHOLDER") of The Keim Group, Ltd.
("KEIM"), a Michigan corporation having its principal office at
29201 Telegraph Rd., Suite 410, Southfield, Michigan 48034, the undersigned
shareholders (collectively, the "GUARDIAN SHAREHOLDERS", and, individually, a
"Guardian SHAREHOLDER") of Guardian Home Warranty Corp. ("GUARDIAN"), a
Michigan corporation having its principal office at 29201 Telegraph Road,
Suite 410, Southfield, Michigan 48034, and HomeLife, Inc. ("HOMELIFE"), a
Nevada corporation having its principal office at 4100 Newport Place, Suite 730,
Newport Beach, California 92660.
The Keim Shareholders own the issued and outstanding shares of the
common stock of Keim set forth next to their respective names on EXHIBIT A-1
(the "KEIM ,SHARES"). The Guardian Shareholders own the issued and
outstanding shares of the common stock of Guardian set forth next to their
respective names on EXHIBIT A-2 (the "GUARDIAN Shares"). The Keim Shares and
the Guardian Shares are collectively referred to as the "Shares". The Keim
Shareholders and the Guardian Shareholders are collectively referred to as
the "SHAREHOLDERS" and, individually, as a "SHAREHOLDER".
HomeLife desires to purchase from the Keim Shareholders, and the Keim
Shareholders desire to sell to HomeLife, all of the Keim Shares for the
purchase price set forth in Article I and upon the terms set forth below.
HomeLife further desires to purchase certain additional shares of the common
stock of Guardian, and the Guardian Shareholders desire to undertake to
perform such actions as are necessary to issue such shares. The Keim
Shareholders further desire to terminate the Shareholders' Stock Purchase
Agreement (as amended from time to time, the "KEIM SHAREHOLDERS AGREEMENT")
dated March 11, 1993, among Keim and the Keim Shareholders a party thereto.
The Guardian Shareholders further desire to terminate the Shareholders' Stock
Purchase Agreement (as amended from time to time, the "GUARDIAN SHAREHOLDERS
AGREEMENT ") dated September 8, 1993, among Guardian and the Guardian
Shareholders a party thereto.
In consideration of the mutual covenants, agreements, representations
and warranties herein contained, and intending, to be legally bound, HomeLife
and the Shareholders agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 COMMITMENT TO SELL. In reliance upon HomeLife's representations and
warranties contained herein, and upon the terms set forth in this Agreement,
on the Closing Date (as defined below), the Shareholders shall sell, assign
and deliver to HomeLife the Shares.
1.2 COMMITMENT TO PURCHASE.
(a) In reliance upon the Shareholders' representations and
warranties contained herein, and upon the terms set forth in this Agreement,
on the Closing Date, HomeLife shall purchase the Shares from the Shareholders
and, in full consideration therefor, shall pay to the Shareholders the
Purchase Price (AS defined below).
(b) The Purchase Price for 100% of the outstanding common stock of
Keim shall consist of the sum of $500,000 (as adjusted as set forth below,
the "CASH PORTION ") and 60,000 shares of HomeLife's common stock (the
"Initial Shares" and, collectively with the Cash Portion and as adjusted, the
"PURCHASE PRICE"), with an intended aggregate value of $800,000. The Cash
Portion shall be increased by $11,290.32 for every Keim franchise office over
65 existing in Michigan on the Closing Date; the Cash Portion shall be
decreased by $11,290.32 for every Keim. franchise office in Michigan less
than 65 on the Closing Date.
(c) The Purchase Price was established based on 8 1, 000 shares of
Keim. common stock being sold to HomeLife hereunder, constituting 100% of the
issued and outstanding shares of Keim, and shall be appropriately adjusted to
the extent that the Keim Shares comprise less than 100% of the issued and
outstanding shares of Keim. Thus, the Purchase Price allocated to each share
of Keim. common stock shall consist of Six and 17/100 Dollars ($6.17) plus
seventy-four one-hundredths (.74) of one share of the Initial Shares, all
subject to adjustment as described in Sections 1.2(b) and 1.3.
<PAGE>
1.3 ADJUSTMENT TO PURCHASE PRICE. (a) If the average closing price of
HomeLife's common stock for the ninety (90) trading days following such stock
being approved for trading on a national securities trading service, with an
average daily trading volume of five hundred (500) shares (the "CLOSING
PRICE"), is not at least $5.00 per share, HomeLife shall promptly issue to
each Keim Shareholder, at such Shareholder's option, either (i) additional
shares of HomeLife's common stock sufficient to provide each Keim.
Shareholder with shares of HomeLife's common stock (including the Initial
Shares), valued at the Closing Price, worth an amount equal to the product of
their portion of the Initial Shares multiplied by $5.00 per share (the
"Initial Share Value"), or (ii) cash (the "CASH PAYMENT") which, together
with the Initial Shares held by such Shareholder, valued at the Closing,
Price, will have an aggregate value equal to the Initial Share Value, and the
Purchase Price shall be so adjusted. If the Closing Price cannot be
calculated due to the stock failing to trade at the required volume, HomeLife
and the Keim Shareholders shall establish a mutually acceptable method of
valuing the HomeLife common stock and, promptly thereafter, make the
adjustment, if necessary, set forth in the prior sentence.
(b) Andrew Cimerman guarantees the prompt payment by HomeLife of the
Cash Payment, if any, required to be made under Section 1.3(a).
1.4 PAYMENT OF PURCHASE PRICE. The Cash Portion of the Purchase Price
be paid as follows:
(a) At the Closing, HomeLife shall contribute to Keim. an amount
equal to $120,000 in addition to the deposit paid by HomeLife to Keim in May,
1996 in the amount of $120,000 (the "DEPOSIT "), for a total of $240,000 (the
principal amount of all shareholder loans then owed by Keim to the Keim
Shareholders (the "KEIM SHAREHOLDER LOANS")), in return for Keim issuing
19,000 shares of its common stock to HomeLife. The Keim Shareholders shall
cause Keim to declare the Keim. Shareholder Loans to be due and payable, and
shall repay all outstanding principal and accrued interest on the Keim.
Shareholder Loans by certified or cashier's check or by such other method as
the Keim Shareholders and HomeLife may agree. No further interest shall
accrue on the Keim Shareholder Loans from and after the Closing Date.
(b) At the Closing, HomeLife shall contribute to Guardian an amount
equal to $47,017.26 (the principal amount of all shareholder loans then owed
by Guardian to the Guardian Shareholders (the "GUARDIAN SHAREHOLDER LOANS"),
in return for Guardian issuing 34,000 shares of its common stock to HomeLife.
The Guardian Shareholders shall cause Guardian to declare the Guardian
Shareholder Loans to be due and payable, and shall repay all outstanding
principal and accrued interest on the Guardian Shareholder Loans by certified
or cashier's check or by such other method as the Guardian Shareholders and
HomeLife may agree. No further interest shall accrue on the Guardian
Shareholder Loans from and after the Closing Date.
(c) Each Keim Shareholder who also owns Guardian Shares shall
receive $11,965.32 for all Keim Shares held by such Keim Shareholder. Each
Keim Shareholder who does not own Guardian Shares shall receive $9,572.26 for
all Keim Shares held by such Keim. Shareholder. Such amounts shall be paid to
the Keim. Shareholders by Noon, Detroit, Michigan, time on the Closing Date
by certified or cashier's check or by such other method as the Keim
Shareholders and HomeLife may agree.
(d) The Initial Shares shall be delivered to the Keim Shareholders
at the Closing, registered in the names set forth on EXHIBIT A-1. with each
Keim Shareholder receiving the number of shares of HomeLife's common stock
determined in accordance with Section 1.2(c).
1.5 THE CLOSING. The closing (the "CLOSING") will take place at
10:00 a.m., Detroit, Michigan, time on August 19, 1996, or at such other time
as the parties may agree, but in no event later than the Termination Date (as
defined in Section 8. 1). The Closing shall occur at the office of Dickinson,
Wright, Moon, Van Dusen & Freeman, 500 Woodward Avenue, 40th Floor, Detroit,
Michigan 48226, upon fulfillment of all the conditions set forth in Article VI
which have not been waived by HomeLife, and all the conditions set forth in
Article VII which have not been waived by the Shareholders. The date on which
the Closing is held is referred to as the "CLOSING DATE".
<PAGE>
1.6 EXECUTING AGREEMENT BY SHAREHOLDERS. As set forth in Section 9.8,
this Agreement may be executed in counterparts. Upon executing this
Agreement, each Shareholder shall deliver into escrow all certificates
representing Keim Shares and Guardian Shares (if any) being sold hereunder,
duly endorsed in blank for transfer or accompanied by duly executed
assignments separate from certificate, to Dickinson, Wright, Moon, Van Dusen &
Freeman (the "Firm"). The Firm shall hold such certificates in escrow pending
the Closing, at which time such certificates and associated assignments shall
be delivered to HomeLife in accordance with this Agreement. If the Closing
does not occur and this Agreement is terminated, the Firm shall return such
certificates and associated assignments to the respective Shareholders.
ARTICLE II
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES
The Shareholders, jointly and severally (except for Section 2.4, as to
which each Shareholder severally represents and warrants), represent and
warrant to HomeLife that:
2.1 ORGANIZATION AND GOOD STANDING. Each of Keim and Guardian is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Michigan, and has full power and authority to own its
properties and to carry on its business as now conducted.
2.2 CHARTER AND BYLAWS. (a) EXHIBIT B-1. contains true, correct and
complete copies of the Articles of Incorporation, certified as of a recent
date by the Michigan Secretary of State, and of the Bylaws of Keim, as
amended through and including the date of this Agreement, certified as of the
date hereof by the Secretary of Keim.
(b) EXHIBIT B-2 contains true, correct and complete copies of the
Articles of Incorporation, certified as of a recent date by the Michigan
Secretary of State, and of the Bylaws of Guardian, as amended through and
including the date of this Agreement, certified as of the date hereof by the
Secretary of Guardian.
2.3 CAPITALIZATION. (a) The authorized capital stock of Keim consists
of 100,000 shares of common stock, $1.00 par value, of which 90,000 shares
are validly issued and outstanding, and of which 81,000 shares shall be
validly issued and outstanding at Closing. All of the Keim Shares are
validly issued, fully paid and nonassessable. There are no dividends owing or
dividends which have been declared but not paid with respect to the Keim
Shares. Keim does not have any subsidiaries and does not own any interest in
any other person.
(b) The authorized capital stock of Guardian consists of 60,000
shares of common stock, $1.00 par value, of which 9,500 shares are validly
issued and outstanding, and of which 8,500 shares shall be validly issued and
outstanding at Closing. All of the Guardian Shares are validly issued, fully
paid and nonassessable. There are no dividends owing or dividends which have
been declared but not paid with respect to the Guardian Shares. Guardian does
not have any subsidiaries and does not own any interest in any other person.
2.4 TITLE AND AUTHORITY, INVESTMENT REPRESENTATION.
(a) Each Keim Shareholder is the absolute owner of the Keim Shares,
in the respective amounts set forth opposite each such Keim Shareholder's
name under "Number of Shares Owned" on EXHIBIT A-1 of this Agreement, free,
clear and discharged of and from any and all liens or other encumbrances, and
each Keim Shareholder has full right, power and authority to execute and
deliver this Agreement and to perform his, her or its respective obligations
under this Agreement. Upon delivery of all of the Keim Shares owned by the
Keim Shareholders at the Closing, duly endorsed for transfer, HomeLife will
be the absolute owner of all the Keim Shares so delivered, free and clear of
and from any and all liens and encumbrances. This Agreement is the legal,
valid and binding obligation of each Keim Shareholder and is enforceable in
accordance with its terms, except as the enforcement of this Agreement may be
limited by laws of general application relating to bankruptcy, insolvency and
the relief of debtors.
(b) Each Guardian Shareholder is the absolute owner of the Guardian
Shares, in the respective amounts set forth opposite each such Guardian
Shareholder's name under "Number of Shares Owned" on EXHIBIT A-2 of this
Agreement, free, clear and discharged of and from any and all liens or other
encumbrances, and each Guardian
<PAGE>
Shareholder has full right, power and authority to execute and deliver this
Agreement and to perform his, her or its respective obligations under this
Agreement. Upon delivery of all of the Guardian Shares owned and transferred
hereunder by the Guardian Shareholder at the Closing, duly endorsed for
transfer, HomeLife will be the absolute owner of all the Guardian Shares so
delivered, free and clear of and from any and all liens and encumbrances.
This Agreement is the legal, valid and binding obligation of each Guardian
Shareholder and is enforceable in accordance with its terms, except as the
enforcement of this Agreement may be limited by laws of general application
relating to bankruptcy, insolvency and the relief of debtors.
(c) Each Shareholder is acquiring the common stock of HomeLife
included within its portion of the Purchase Price for investment and not with
a view to, or for resale in connection with, any distribution of such shares.
Each Shareholder's residence address7 is-as set forth next to its name on
EXHIBIT A-1 AND Exhibit A-2.
2.5 NO COMMITMENT TO ISSUE CAPITAL STOCK OR RIGHTS TO ACQUIRE CAPITAL
STOCK. Except as set forth in Section 1.4, and except as described in
Schedule 2.5, none of the Shareholders nor either of Keim or Guardian has
entered into any contract or agreement or made any commitment to purchase,
redeem, sell or otherwise transfer or issue any shares of either Keim's or
Guardian's capital stock, nor are there any outstanding options,
subscriptions, warrants, conversion rights or similar rights of any kind
convertible into any shares of Keim's or Guardian's capital stock.
2.6 ABILITY TO CARRY OUT AGREEMENT. Except for the Keim Shareholders
Agreement and the Guardian Shareholders Agreement (which are addressed under
Section 4.4 and 4.5, respectively), the execution and delivery of this
Agreement and the performance by the Shareholders of their respective
obligations hereunder will not conflict with, violate or result in any breach
of or constitute a default under any provisions of the Articles of
Incorporation or Bylaws of either of Keim or Guardian, or of any mortgage,
lease, contract, franchise agreement, license, permit, instrument, order,
judgment, law, regulation or any other restriction to which either Keim. or
Guardian is a party or by which either Keim or Guardian is bound. No consent
of any governmental authority or other third party is required to be obtained
by either Keim. or Guardian in connection with the Shareholders' execution,
delivery or performance of this Agreement.
2.7 FINANCIAL STATEMENTS.
(a) Keim's balance sheet as of the end of, and related statements of
income, retained earnings and cash flow for, the fiscal year ended December 31,
1995 (the "FINANCIAL STATEMENT Date"), compiled by Post, Smythe, Lutz and
Ziel (the "ACCOUNTANTS"), are referred to herein as the "Keim FINANCIAL
STATEMENTS". The Keim Financial Statements (i) present fairly, in all
material respects, the financial position of Keim at the Financial Statement
Date, and (ii) were prepared in conformity with generally accepted accounting
principles in a manner consistent with Keim's historic accounting practice
applied on a consistent basis, except as otherwise indicated.
(b) Keim's balance sheet as of May 31, 1996, and related statements
of income, retained earnings and cash flow for the five months ended May 31,
1996, are attached as Exhibit C-1 and are referred to herein as the "KEIM
INTERIM FINANCIAL STATEMENTS". The Keim. Interim Financial Statements
(i) present fairly, in all material respects, the financial position of Keim
at May 31, 1996, and (ii) were prepared in conformity with generally accepted
accounting principles in a manner consistent with Keim's historic accounting
practice applied on a consistent basis, subject to year-end closing
adjustments.
(c) Guardian's balance sheet as of the end of, and related
statements of income, retained earnings and cash flow for, the fiscal year
ended the Financial Statement Date, compiled by the Accountants, are referred
to herein as the "Guardian FINANCIAL STATEMENTS", and collectively with the
Keim Financial Statements, as the "FINANCIAL STATEMENTS". The Guardian
Financial Statements (i) present fairly, in all material respects, the
financial position of Guardian at the Financial Statement Date, and (ii) were
prepared in conformity with generally accepted accounting principles in a
manner consistent with Guardian's historic accounting practice applied on a
consistent basis, except as otherwise indicated.
(d) Guardian's balance sheet as of May 31, 1996, and related
statements of income, retained earnings and cash flow for the five months
ended May 31, 1996, are attached as Exhibit C-2 and are referred to herein as
the "GUARDIAN INTERIM FINANCIAL STATEMENTS". The Guardian Interim Financial
Statements (i) present fairly, in all material
<PAGE>
respects, the financial position of Guardian at May 31, 1996, and (ii) were
prepared in conformity with generally accepted accounting principles in a
manner consistent with Guardian's historic accounting practice applied on a
consistent basis, subject to year-end closing adjustments.
2.8 UNREPORTED AND CONTINGENT LIABILITIES. Except (a) as set forth in
the Financial Statements, (b) for liabilities of a type reflected on the
Financial Statements or that have arisen in the ordinary course of business
following the Financial Statement Date, (c) for customary obligations and
liabilities arising under contracts, leases and purchase orders made by
either Keim or Guardian in the ordinary course of its business, and (d) the
liabilities set forth on Schedule 2.8, neither Keim. nor Guardian has any
material liabilities or obligations, whether accrued, absolute, fixed, known
or unknown, contingent or otherwise, existing, arising out of or relating to
any transaction entered into, or state of facts existing, on or prior to the
date of this Agreement.
2.9 LICENSES AND PERMITS. Each of Keim. and Guardian possesses all
material licenses or permits necessary to conduct its respective business as
now operated. Such licenses and permits are valid and in full force and
effect. No action or claim is pending, or, to the knowledge of any
Shareholder, threatened, to revoke or terminate any such licenses or permits
or declare any of them invalid in any respect.
2.10 LITIGATION. Except as set forth on Schedule 2.10, there is not
pending against either of Keim or Guardian, or, to the knowledge of any
Shareholder, threatened against either of Keim or Guardian, any claim,
action, suit, arbitration proceeding, governmental proceeding or
investigation or other proceeding of any character, including without
limitation any proceeding by any franchisee of Keim.
2.11 COMPLIANCE WITH LAWS GENERALLY. Each of Keim. and Guardian has
substantially complied with all laws, rules, regulations and ordinances
materially affecting its respective business. Except for laws, rules,
regulations or ordinances that are or are to be of general applicability,
there are no existing or, to the knowledge of the Shareholders, proposed
laws, rules, regulations or ordinances of such a nature as could be
reasonably expected to materially adversely affect the continued conduct of
either of Keim's or Guardian's businesses in the manner presently conducted.
2.12 TRADEMARKS, ETC. (a) Attached hereto as Exhibit D-1 is a list of
all copyrights, trade names and material trademarks and trade secrets as to
which Keim claims an ownership interest or as to which Keim is a licensee or
licensor (the "KEIM INTELLECTUAL PROPERTY"). Keim has good and marketable
title to or possesses adequate licenses or other valid rights to use the Keim
Intellectual Property, free and clear of all liens, charges, claims and other
encumbrances, subject only to such encumbrances of record and such other
imperfections of title, encumbrances and encroachments which in the aggregate
do not materially impair the value of such Keim Intellectual Property or
materially impair Keim's operations, PROVIDED, HOWEVER, that Keim's right to
use the "Red Carpet" trademark and related trademarks, trade names, service
marks, logos, advertising and commercial symbols (collectively, the "Red
Carpet Marks") is governed by an Agreement dated May 7, 1996 (the "S&S
Agreement"), among S&S Acquisition Corporation (" S&S "), National Real
Estate Services (a division of S&S), and Keim, under which Keim's right to
use the Red Carpet Marks expires on June 30, 2012, and is further subject to
the right of the person or persons identified in Section 5.7 of the S&S
Agreement to use the Red Carpet Marks in St. Joseph, Michigan. To the
knowledge of the Keim Shareholders, the use of the Keim Intellectual Property
does not misappropriate, infringe upon or conflict with any patent,
copyright, trade name, trade secret or trademark of any third party. No party
has filed a claim (or, to the knowledge of any Keim Shareholder, threatened
to file a claim) against Keim alleging that it has violated, infringed on or
otherwise improperly used the intellectual property rights of such party and
Keim has not violated or infringed any trademark, trade name, service mark,
service name, copyright or trade secret held by others.
(b) Attached hereto as Exhibit D-2 is a list of all copyrights,
trade names and material trademarks and trade secrets as to which Guardian
claims an ownership interest or as to which Guardian is a licensee or
licensor (the "GUARDIAN INTELLECTUAL PROPERTY "). Guardian has good and
marketable title to or possesses adequate licenses or other valid rights to
use the Guardian Intellectual Property, free and clear of all liens, charges,
claims and other encumbrances, subject only to such encumbrances of record
and such other imperfections of title, encumbrances and encroachments which
in the aggregate do not materially impair the value of such Guardian
Intellectual Property or materially impair Guardian's operations. Except as
set forth in Schedule 2.12(b), to the knowledge of the Guardian Shareholders,
the use of the Guardian Intellectual Property does not misappropriate,
infringe upon or conflict with any patent, copyright, trade
<PAGE>
name, trade secret or trademark of any third party, and no party has filed a
claim (or, to the knowledge of any Guardian Shareholder, threatened to file a
claim) against Guardian alleging that it has violated, infringed on or
otherwise improperly used the intellectual property rights of such party and
Guardian has not violated or infringed any trademark, trade name, service
mark, service name, copyright or trade secret held by others.
(c) HomeLife acknowledges that Guardian's use of the term "Guardian"
as part of its corporate name and trade name is being challenged, as
described on Schedule 2.12(b). HomeLife nevertheless desires to complete this
transaction, and accepts that Guardian may not be permitted to use such term
in its corporate name and trade name and that Guardian's corporate name and
trade name may have to be changed at some time.
2.13 REPRESENTATIONS AND WARRANTIES AS OF THE CLOSING DATE. Each of the
representations and warranties made by the Shareholders hereunder shall be
deemed to have been made again on and as of the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOMELIFE
HomeLife represents and warrants to the Shareholders that:
3.1 CORPORATE ORGANIZATION. HomeLife is a corporation validly existing
and in good standing under the laws of Nevada.
3.2 AUTHORIZATION AND APPROVAL OF AGREEMENT. HomeLife has all requisite
corporate power and authority to enter into this Agreement, and to perform
the obligations required to be performed by it thereunder. All corporate
proceedings required by HomeLife's charter documents or otherwise required by
law for the execution and delivery of this Agreement and for the consummation
of the transactions provided for therein have been duly taken. This Agreement
has been duly and validly executed and delivered by HomeLife and is
enforceable against HomeLife in accordance with its terms, except as the
enforceability may be limited by laws of general application relating to
bankruptcy, insolvency and debtors' relief, and by the general principles of
equity.
3.3 ABILI1Y TO CARRY OUT AGREEMENT. The execution and delivery of this
Agreement by HomeLife and the performance by HomeLife of its obligations
thereunder will not conflict with, violate or result in any breach of or
constitute a default under any provisions of HomeLife's Articles of
Incorporation or Bylaws, or of any of the provisions of any material
mortgage, lease, contract, franchise agreement, license, permit, instrument,
order, judgment, law, regulation or any other restriction of any kind or
character to which HomeLife is a party or by which it is bound. No consent of
any governmental authority or other third party is required to be obtained on
the part of HomeLife in connection with HomeLife's execution, delivery or
performance of this Agreement.
3.4 INVESTMENT REPRESENTATION. HomeLife is acquiring the Shares for
investment and not with a view to, or for resale in connection with, any
distribution of the Shares.
3.5 REPRESENTATIONS AND WARRANTIES AS OF CLOSING DATE. Each of the
representations and warranties made by HomeLife hereunder shall be deemed to
have been made again on and as of the Closing Date.
ARTICLE IV
COVENANTS
4.1 AFFIRMATIVE COVENANTS OF HOMELIFE. HomeLife covenants and agrees
that, following the Closing:
(a) It shall permit each Keim. franchisee to determine for itself,
subject to its existing contractual obligations, whether to remain a Red
Carpet Keim agency or to become a HomeLife agency, subject to the Keim
franchisees satisfying and continuing to satisfy the respective franchisor's
eligibility standards. Those Keim franchisees which elect to remain a Red
Carpet Keim. agency may do so during the remaining term of their respective
existing written contracts with Keim, including any options which they may
exercise, and thereafter with the express written consent of HomeLife, which
consent shall not be unreasonably withheld. The intended operating format of
HomeLife
<PAGE>
shall be in accordance with Schedule 4.1(a). Subject to satisfying HomeLife's
eligibility standards, any Keim franchisee which elects to remain a Red
Carpet Keim agency may convert to a HomeLife agency upon completing all
appropriate documentation as reasonably required by HomeLife and paying a
transfer fee of Two Dollars ($2.00).
(b) In order to provide stability in the operations of Keim and
Guardian and to assist in complying with state and Federal Securities laws,
the HomeLife shares being issued as part of the Purchase Price will be
restricted securities and the certificates representing such shares will
contain an appropriate legend. If, at any time after one year from the
Closing Date, any Shareholder desires to sell or otherwise transfer its
HomeLife shares received hereunder within the United States, HomeLife will,
at its expense and as expeditiously as reasonably possible, use its best
efforts to cause such shares to be duly registered or exempted from
registration under any appropriate state or Federal securities law.
(c) HomeLife shall vote its Guardian common stock in favor of a
nominee or nominees to the Guardian Board of Directors submitted by the
Guardian Shareholders to hold not more than twenty percent (20 %), but not
fewer than one (1), of the seats on the Guardian Board of Directors for so
long as Guardian Shareholders retain their common stock of Guardian following
the Closing. The Guardian nominees shall be submitted to HomeLife in a
certificate signed by Guardian Shareholders holding at least 75 % of the
Guardian common stock then held by the Guardian Shareholders, and shall meet
all reasonable qualification requirements for Board membership established
under Guardian's bylaws and applicable law.
4.2 AFFIRMATIVE COVENANTS OF SHAREHOLDERS.
(a) Each of the Shareholders covenants and agrees that from the date
of this Agreement to the Closing Date, it shall use its best efforts in its
capacity as a shareholder to cause each of Keim and Guardian to, and shall
not individually take any action which would not permit each of Keim and
Guardian to:
(i) carry on its business in a manner consistent with prior practice
and only in the usual and ordinary course, and use its best efforts to
preserve its business organization intact and conserve the good will and
relationships of its franchisees, customers, suppliers and others having
business relations with it;
(ii) duly and timely file or cause to be filed all reports and
returns required to be filed with any governmental body, agency or authority
and promptly pay or cause to be paid when due all taxes, assessments and
governmental charges, including interest and penalties levied or assessed,
unless diligently contested in good faith by appropriate proceedings; and
(iii) maintain in full force and effect all existing policies of
insurance except for replacements or renewals in the ordinary course of
business.
4.3 NEGATIVE COVENANTS OF THE SHAREHOLDERS.
(a) Each of the Shareholders covenants and agrees that from the date
of this Agreement to the Closing Date, it shall not permit either of Keim. or
Guardian to:
(i) amend its charter documents;
(ii) authorize for issuance, issue or deliver any additional shares
of its capital stock or securities convertible into or exchangeable for
shares of its capital stock, or issue or grant any right, option or other
commitment for the issuance of shares of its capital stock or of such
securities, or split, combine or reclassify any shares of its capital stock,
except for the shares of Keim. and Guardian to be issued to HomeLife on the
Closing Date in accordance with Section 1.4, and except for those shares
described on Schedule 2.5;
(iii) declare or pay any dividends or other distributions of any
kind to any Shareholder or directly or indirectly purchase, retire or redeem
or otherwise acquire from any Shareholder any shares of its capital stock or
make any payment of principal on any of the Shareholder Loans, except for
those shares described on Schedule 2.5;
<PAGE>
(iv) incur any liability, commitment or obligation, except
unsecured current and trade liabilities and other unsecured liabilities
incurred in the ordinary course of business, and except as permitted under
Section 9.1;
(v) borrow, or agree to borrow, any funds;
(vi) sell, transfer or otherwise dispose of assets, except for the
sale or disposition of obsolete or damaged tangible personal property and
except for the sale of inventory and other assets in the ordinary course of
business; or
(vii) mortgage, pledge or encumber any of its assets or guaranty the
obligations of any party.
(b) Each of the Keim Shareholders covenants for itself only that,
from the date hereof until the Closing Date, it shall not enter into
discussions with any third party with regard to the possible sale of Keim,
nor disclose any information regarding this Agreement or the transactions
contemplated hereby without HomeLife's prior approval. Each of the Guardian
Shareholders covenants for itself only that, from the date hereof until the
Closing Date, it shall not enter into discussions with any third party with
regard to the possible sale of Guardian, nor disclose any information
regarding this Agreement or the transactions contemplated hereby without
HomeLife's prior approval.
4.4 TERMINATION OF KEIM SHAREHOLDERS AGREEMENT. The Keim Shareholders,
representing two-thirds (2/3) or more of the shares of Keim set forth in
Schedule "A" to the Keim. Shareholders Agreement, and acting in accordance
with Section 12.A of the Keim Shareholders -Agreement, hereby terminate the
Keim. Shareholders Agreement, PROVIDED, HOWEVER, that this termination is
contingent upon the Closing occurring and shall only be effective if and at
the time that the Closing occurs.
4.5 TERMINATION OF GUARDIAN SHAREHOLDERS AGREEMENT. The Guardian
Shareholders, representing two-thirds (2/3) or more of the shares of Guardian
set forth in Schedule "A" to the Guardian Shareholders Agreement, and acting
in accordance with Section 12.A of the Guardian Shareholders Agreement,
hereby terminate the Guardian Shareholders Agreement, PROVIDED, HOWEVER, that
this termination is contingent upon the Closing, occurring, and shall only be
effective if and at the time that the Closing occurs.
4.6 GRANT OF IRREVOCABLE PROXY. From and after the Closing, each Keim.
Shareholder hereby grants to HomeLife an irrevocable proxy to act on its
behalf in connection with any matters which thereafter come before the
shareholders of Keim. The Keim Shareholders, representing two-thirds (2/3) or
more of the shares of Keim, hereby amend Article III, Section 3 of the Bylaws
of Keim to delete the word "notarized" from the first sentence thereof,
PROVIDED, however, that this amendment is contingent upon the Closing
occurring and shall only be effective if and at the time that the Closing
occurs.
ARTICLE V
INDEMNIFICATION
5.1 INDEMNIFICATION BY SHAREHOLDERS. From and after the Closing, the
Shareholders shall indemnify, defend and hold HomeLife and its permitted
successors and assigns (a "HOMELIFE INDEMNIFIED PARTY" or, collectively,
"HOMELIFE INDEMNIFIED PARTIES") harmless from and against all losses,
damages, liabilities or expenses (including., reasonable attorneys' fees and
expenses) ("LOSS" or "LOSSES") suffered by a HomeLife Indemnified Party that
result, directly or indirectly, from any breach of a representation and
warranty contained in Article II, but each Shareholder shall be liable
hereunder only to the extent of its pro rata share of any Loss.
5.2 INDEMNIFICATION BY HOMELIFE. From and after the Closing, HomeLife,
Keim and Guardian, jointly and severally, shall indemnify, defend and hold
the Shareholders and their respective permitted successors and assigns (a
"SHAREHOLDER INDEMNIFIED PARTIES" or, collectively, "SHAREHOLDER INDEMNIFIED
PARTIES") harmless from and against all Losses (as defined in Section 5. 1)
that result, directly or indirectly, from (i) any breach of a representation
and warranty contained in Article III.
<PAGE>
5.3 NOTICE AND DEFENSE. If a HomeLife Indemnified Party or Shareholder
Indemnified Party seeking indemnification (the "INDEMNIFIED PARTY") desires
to make a claim against a party for indemnification (the "INDEMNIFYING
PARTY") under this Article V, the Indemnified Party will, within thirty (30)
days after the Indemnified Party becomes aware of a claim by notice or
knowledge, notify the Indemnifying Party in writing of any claim or demand as
to which the Indemnified Party is entitled to claim indemnification, the
section under this Agreement with respect to which such claim is being made
and, to the extent known, the amount and circumstances surrounding such
claim. In the event the claim is a third party claim against an Indemnified
Party or involves a claim by or liability involving a governmental authority,
the Indemnifying Party shall have the right to employ counsel of its choice
to defend any such claim or demand.
5.4 LIMITATION ON LOSSES. Notwithstanding anything herein to the
contrary, the terms "Loss" and "Losses" shall not include any indirect,
consequential or punitive damages or liabilities incurred by any Indemnified
Party, and shall be calculated after considering all tax effects, insurance
proceeds, and other benefits received or receivable by the Indemnified Party.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF HOMELIFE
6.1 CONDITIONS PRECEDENT. HomeLife's obligation to purchase the Keim
Shares under this Agreement is subject to the fulfillment on or before the
Closing Date of each of the following conditions:
(a) MINIMUM NUMBER OF SHARES. The Keim Shares to be sold by the Keim
Shareholders hereunder and deposited under Section 1.6 shall constitute 80%
of the issued and outstanding, common stock of Keim held by the Keim
Shareholders (exclusive of any shares issued to HomeLife under Section 1.4).
Notwithstanding the foregoing, HomeLife reserves the right to proceed with
purchasing the Keim Shares under this Agreement if the Keim Shares to be sold
by the Keim. Shareholders constitute at least 67 % of the issued and
outstanding common stock of Keim (exclusive of any shares issued to HomeLife
under Section 1.4).
(b) REPRESENTATIONS, WARRANTIES, AND COVENANTS. The representations
and warranties of the Shareholders set forth herein shall be accurate in all
material respects on and as of the Closing Date to the same extent as if made
on and as of such date, and each Shareholder shall have complied in all
material respects with or performed in all material respects all agreements,
covenants and conditions on its part to be performed or complied with on or
prior to the Closing Date.
(c) LEGAL ACTIONS. No suit, action or other proceeding by any third
party shall be pending -before any court or governmental body, agency or
authority seeking to restrain or prohibit, or to obtain damages or other
relief in connection with, this Agreement or the consummation of the
transactions contemplated hereby or which is likely to materially adversely
affect the value of the assets or business of either of Keim or Guardian.
(d) CONSENTS. HomeLife shall have received duly executed copies of
any consents relating to the consummation of the transactions contemplated by
this Agreement that are required by any governmental body, agency or
authority.
(e) DELIVERIES. There shall have been delivered to HomeLife:
Notes (if any);
(i) Certificates representing the Keim. Shares, duly endorsed
for transfer to HomeLife or accompanied by a duly executed stock power;
(ii) Certificates representing the Guardian Shares, duly
endorsed for transfer to HomeLife or accompanied by a duly executed stock
power;
<PAGE>
(iii) A certificate, signed by the Executive Vice President of
Keim, certifying as to the number of franchise offices operating under the
Keim name within Michigan as of the Closing Date;
(iv) The Keim Shareholder Notes and the Guardian
Shareholder
(v) A cross-receipt, signed by each of the Shareholders,
evidencing that such Shareholder has received all consideration to be
delivered to it hereunder at the time of the Closing; and
(vi) Such other items as HomeLife may reasonably request.
(f) NO ADVERSE MATERIAL CHANGE. There shall have occurred no
material adverse chance in the business or financial condition of Keim and
Guardian from that disclosed in the Keim Interim Financial Statements and the
Guardian Interim Financial Statements, respectively.
(g) STOCK REDEMPTIONS. The redemption of the Keim and
Guardian common stock held by Alger and Joanne Butts and James and Dyan
Boudreau shall have been completed under the terms disclosed to HomeLife.
ARTICLE V11
CONDITIONS PRECEDENT TO OBLIGATIONS OF SHAREHOLDERS
7.1 CONDITIONS PRECEDENT. The duty of the Shareholders to sell their
respective Shares under this Agreement is subject to the fulfillment, on or
before the Closing Date, of each of the following conditions:
(a) REPRESENTATIONS, WARRANTIES, AND COVENANTS. The representations
and warranties made by HomeLife herein shall be accurate in all material
respects on and as of the Closing Date to the same extent as if made on and
as of such date and HomeLife shall have complied in all material respects
with or performed in all material respects all agreements, covenants and
conditions on its part to be performed or complied with on or prior to the
Closing Date.
(b) LEGAL ACTIONS. No suit, action or other proceeding by any third
party shall be pending before any court or governmental agency seeking to
restrain or prohibit, or to obtain damages or other relief in connection
with, this Agreement or the consummation of the transactions contemplated
hereby.
(c) DELIVERIES. HomeLife shall have delivered to the Shareholders
(or to Keim or Guardian, in accordance with Section 1.4):
(i) The Cash Portion and the Initial Shares;
(ii) A certificate by the Secretary of HomeLife as to the due
adoption by the Board of Directors of HomeLife of the required corporate
resolutions authorizing the execution, delivery and performance of this
Agreement by HomeLife and the consummation of the transactions contemplated
thereby; and (v) A cross-receipt, signed by HomeLife in favor of each
Shareholder, evidencing that HomeLife has received from such Shareholder all
consideration to be delivered to it hereunder at the time of the Closing.
(d) STOCK REDEMPTIONS. The redemption of the Keim. and Guardian
common stock held by Alger and Joanne Butts and James and Dyan Boudreau shall
have been completed under the terms disclosed to HomeLife.
ARTICLE VIII
TERMINATION
8.1 TERMINATION.
(a) This Agreement and the transactions contemplated herein may be
terminated and abandoned at any time prior to the Closing Date by the mutual
consent of HomeLife and the Shareholders or independently by
<PAGE>
HomeLife or the Shareholders if the Closing has not occurred by September 30,
1996 (the "TERMINATION DATE"), and the party terminating this Agreement is
not in breach of the terms of this Agreement.
(b) This Agreement may be terminated by the Shareholders if, at any
time prior to the Closing, there shall occur a material breach of any of the
representations, warranties or covenants of HomeLife contained herein.
(c) This Agreement may be terminated by HomeLife if, at any time
prior to the Closing, there shall occur a material breach of any of the
representations, warranties or covenants of the Shareholders contained herein.
(d) In the case of termination of this Agreement under either
subsection (a) or subsection (c) above, Keim. shall immediately return to
HomeLife in full the Deposit in the amount of $120,000, without interest.
8.2 EFFECT OF TERMINATION. Upon the termination of this Agreement under
the provisions set forth above, no party hereto shall have any obligation to
any other party thereafter arising out of this Agreement; PROVIDED, HOWEVER,
that (a) if any Shareholder fails or refuses to tender full performance of
its obligations under this Agreement other than due to a failure of a
condition set forth in Article VII and as a result thereof HomeLife
terminates this Agreement, HomeLife shall be entitled to exercise and pursue
all legal or equitable rights or remedies which it may have against such
Shareholder by reason of any breach of this Agreement by the Shareholders;
and (b) if HomeLife fails or refuses to tender full performance of its
obligations under this Agreement other than a failure of a condition set
forth in Article VI and as a result thereof any Shareholder terminates this
Agreement, such Shareholder shall be entitled to exercise and pursue all
legal or equitable rights or remedies which it may have against HomeLife by
reason of any breach of this Agreement by HomeLife.
ARTICLE IX
MISCELLANEOUS
9.1 EXPENSES. The Shareholders, on the one hand, and HomeLife, on the
other hand, shall each pay their own expenses in connection with the
negotiations leading up to and the preparation of this Agreement and the
consummation of the transactions provided for herein, including without
limitation fees and expenses of their respective legal counsel, accountants
and other outside experts retained by it to conduct due diligence, PROVIDED,
HOWEVER, that the Shareholders may cause Keim. and Guardian to pay legal
fees, not exceeding $25,000 in the aggregate, incurred by Keim. or Guardian
in connection with this transaction.
9.2 SURVIVAL. The representations made by the Shareholders in Article II
shall survive for a period of two years after the Closing Date, and the
representations made by HomeLife in Article III shall survive for a period of
two years after the Closing Date, PROVIDED, HOWEVER, that any representation
made by HomeLife herein regarding the HomeLife common stock shall survive for
a period of three years after the Closing Date.
9.3 BENEFITS AND BURDENS; ASSIGNMENT. This Agreement shall inure to the
benefit of and shall be binding upon the Shareholders and HomeLife, and the
respective successors and permitted assigns of the Shareholders and HomeLife;
PROVIDED, HOWEVER, that this Agreement may only be assigned by HomeLife to an
affiliate entity, and in such event HomeLife shall not be released from its
obligations hereunder.
9.4 AMENDMENT. This Agreement may be amended only by an instrument in
writing signed by the Shareholders and by HomeLife.
9.5 NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing
(including telecommunications) and shall be deemed to have been duly given
upon receipt if personally delivered or sent by (i) telecopy or other wire
transmission with request for assurance of receipt; or (ii) Federal Express
or other overnight air express and receipted for by the recipient or an agent
of the recipient; or (iii) by United States Postal Service, postage prepaid.
All notices delivered to a party to this Agreement shall be sent to the
addresses set forth in the first paragraph of this Agreement or on EXHIBIT
A-1 or EXHIBIT A-2, or to such other address or to such other person or
persons designated in writing by such party or counsel, as the case may be.
<PAGE>
9.6 ENTIRE UNDERSTANDING. This Agreement and all Exhibits referred to
herein represent the entire understanding of the parties with respect to the
subject matter herein and supersedes all correspondence, memoranda,
conversations or other communications with respect thereto.
9.7 HEADINGS. The section headings in this Agreement are intended
solely for convenience and shall be given no effect in the construction and
interpretation hereof.
9.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument, and, when signed by
all of the parties hereto, shall become legally binding on such parties
effective as of the date set forth at the beginning of this Agreement.
9.9 GOVERNING LAW. This Agreement shall be governed by and interpreted
under the laws of the State of Michigan applicable to contracts made and to
be performed entirely within such State and without giving effect to the
choice of law principles of such State.
9.10 SEVERABI1ITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
9.11 TIME. Time is of the essence under this Agreement.
IN WITNESS WHEREOF, the parties have executed or causes to be executed
this Agreement effective as of the day and year first above written.
HOMELIFE, INC.
By: /s/ Andrew Cimerman
-------------------------------------
Andrew Cimerman
Its: Chairman
/s/ Alice J. Suit
-----------------------------------------
Alice J. Suit
/s/ William C. Suit /s/ Daniel L. Scrimger
- ------------------------------------ -----------------------------------------
William C. Suit Daniel L. Scrimger
/s/ Linda C. Rock /s/ Thomas E. Isbell
- ------------------------------------ -----------------------------------------
Linda C. Rock Thomas E. Isbell
/s/ James R. Goulding /s/ Dennis M. Nabor
- ------------------------------------ -----------------------------------------
James R. Goulding Dennis M. Nabor
/s/ Diane A. Nabor /s/ Edward Martin
- ------------------------------------ -----------------------------------------
Diane A. Nabor Edward Martin
/s/ Robert W. Garchow /s/ Lynn D. Keep
- ------------------------------------ -----------------------------------------
Robert W. Garchow Lynn D. Keep
/s/ Steven J. Gootlieb /s/ Catherine M. Reid
- ------------------------------------ -----------------------------------------
Steven J. Gootlieb Catherine M. Reid
<PAGE>
/s/ Kenneth R. Duetsch /s/ Sharon A. Duetsch
- ------------------------------------ -----------------------------------------
Kenneth R. Duetsch Sharon A. Duetsch
/s/ Richard W. Andrew /s/ Sharon K. Andrews
- ------------------------------------ -----------------------------------------
Richard W. Andrew Sharon K. Andrew
/s/ D. Willard Tipton /s/ Virginia M. Tipton
- ------------------------------------ -----------------------------------------
D. Willard Tipton Virginia M. Tipton
/s/ Judith Walker /s/ William G. Knoop, Jr.
- ------------------------------------ -----------------------------------------
Judith Walker William G. Knoop, Jr.
/s/ Martin J. Leavitt /s/ Judith Brant
- ------------------------------------ -----------------------------------------
Martin J. Leavitt Judith Brant
/s/ Betty Walker /s/ Richard P. Richardson, Jr.
- ------------------------------------ -----------------------------------------
Betty Walker Richard P. Richardson, Jr.
/s/ Louise Herrgott /s/ Robert Herrgott
- ------------------------------------ -----------------------------------------
Louise Herrgott Robert Herrgott
/s/ Philip V. Lang /s/ Mary Ellen Lewis-Lang
- ------------------------------------ -----------------------------------------
Philip V. Lang, as Co-trustee Mary Ellen Lewis-Lang, as Co-trustee
For the purpose of assuming his guarantee obligation under Section 1.3(b)
/s/ Andrew Cimerman
- ------------------------------------
Andrew Cimerman
<PAGE>
EXHIBIT 10.11
ASSET PURCHASE AGREEMENT BY AND BETWEEN
S&S ACQUISITION CORP. AND FAMILY LIFE REALTY SERVICES, INC.
DATED JANUARY 16, 1997
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of January 16, 1997, between S & S
Acquisition Corp., a New Jersey corporation ("SELLER"), and FamilyLife Realty
Services, Inc., a Michigan corporation ("BUYER").
PRELIMINARY STATEMENT
Seller is a franchisor selling master regional franchises and real
estate franchises under the names and related trademarks "National Real
Estate Service" and "Red Carpet". The franchises permit the use of a
proprietary system developed by Seller which assists individuals and
businesses in buying and selling real estate (the "BUSINESS").
Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, all of Seller's right, title and interest in and to certain assets of
Seller relating to or in connection with the Business as specifically set
forth herein.
NOW THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement, the parties represent, warrant, and agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS.
1.1 PURCHASE AND SALE. At the Closing (as defined below), and upon the
terms set forth herein, Seller will sell, transfer, assign, convey, grant,
and deliver to Buyer, and Buyer will purchase and acquire from Seller, all
right, title, and interest of Seller in and to the following assets of
Seller, which are all Seller's assets (other than cash or cash equivalents
except as set forth in subparagraphs (c) and (d) below) used in conducting
the Business (collectively, the "ASSETS"), free and clear of all liabilities,
obligations, liens, encumbrances or charges, other than as expressly set
forth herein:
(a) all Seller's rights under existing franchise agreements
relating to the Business, each of which is listed on SCHEDULE 1.1(a)(i), and
the leases, contracts and agreements to which Seller is a party or by which
its assets may be bound which expressly or implicitly relate to the Business
and which Buyer agrees to assume, each of which is listed on SCHEDULE 1.1(a)(ii)
(collectively, the "CONTRACTS");
(b) all trademarks, service marks, copyrights, logos and
designations used by Seller in connection with the Business and listed on
SCHEDULE 1.1(b), and all trademark and copyright applications and
registrations therefor and the goodwill related thereto (collectively, the
"INTANGIBLE PROPERTY");
(c) cash representing the amount of net earnings received by
Seller from operating the Business from the date hereof until the Closing
Date (as defined below);
(d) the trade and other accounts receivable for continuing fee and
royalty accounts receivable owed to Seller under the franchise agreements and
unpaid as of the Closing (collectively, the "RECEIVABLES"), including without
limitation those Receivables listed on SCHEDULE 1.1(d);
(e) all computer equipment used by Seller in connection with the
Business and all computer software used by Seller in connection with the
Business, excluding the workstations used by Meredith Price and Diana
Karrenberg, and including without limitation the hardware and software listed
on SCHEDULE 1.1(e), PROVIDED, HOWEVER, that Buyer shall provide Seller with a
copy of and grants, and Seller shall receive, a perpetual, non-exclusive,
royalty-free license to use the computer software in connection with
performing Seller's obligations under that certain Services Agreement dated
February 1, 1997, between Seller and Realty Information Systems, Inc., which
license Seller can transfer to American Pacific Financial Group.
(f) all permits, approvals, certifications, authorizations, and
licenses from, and notices and filings with federal, state, and local
governmental authorities relating to the Business and the Contracts, to the
extent they are transferable on the Closing Date; and
<PAGE>
(g) all financial and other business records and information
relating to the Business or any of the Assets, including without limitation
all Contracts and other agreements and all Uniform Franchise Offering
Circulars and other disclosure documents.
1.2 ASSUMPTION OF LIABILITIES. Except as hereinafter expressly
provided, Buyer shall assume no liabilities or obligations relating to the
Assets or the Business, it being expressly acknowledged and agreed by the
parties that all such liabilities and obligations, whether now existing or
arising in the future, fixed or contingent, known or unknown, shall be and
remain Seller's liabilities and obligations. Notwithstanding the foregoing,
Buyer agrees to assume at the Closing (a) Seller's obligations under and in
accordance with the Contracts which arise in the ordinary course of business
on or after the Closing Date, and (b) an obligation of approximately $30,000
asserted by National Real Estate Services of Illinois, Inc., against Seller
((a) and (b), collectively, the "ASSUMED LIABILITIES").
1.3 PURCHASE PRICE. The purchase price for the Assets shall consist of
the sum of $50,000 (the "CASH PORTION"), the Warrant (as defined below), and
70,000 shares of the common stock of HomeLife, Inc. ("HOMELIFE"), a Nevada
corporation (the "INITIAL SHARES", with an intended aggregate value as of the
Closing of approximately $400,000. The Initial Shares, as adjusted pursuant
to Section 1.4(a), collectively with the Warrant and the Cash Portion, are
referred to herein as the "PURCHASE PRICE".
1.4 ADJUSTMENT TO PURCHASE PRICE; REGISTRATION RIGHTS. (a) If the
average closing price of HomeLife's common stock for the ten trading days
prior to the date Seller gives notice of its request for registration under
Section 1.4(b) (the "CLOSING PRICE" is not at least $5.00 per share, Buyer
shall cause HomeLife to promptly issue to Seller additional shares of
HomeLife's common stock sufficient to provide Seller with an aggregate number
of shares of HomeLife's common stock (including the Initial Shares, the
"HOMELIFE SHARES"), valued at the Closing Price, worth an amount equal to the
Initial Shares multiplied by $5.00 per share, and the Purchase Price shall be
so adjusted.
(b) In order to provide stability in the operations of Buyer
and HomeLife, and to assist in complying with state and Federal securities
laws, the HomeLife Shares being issued as part of the Purchase Price will be
restricted securities and the certificates representing the Shares will
contain an appropriate legend. If, at any time during the period from twelve
months following the Closing Date until twenty months following the Closing
Date, Seller desires to sell or otherwise transfer any portion of the
HomeLife Shares within the United States, it shall provide written
notification of such desire, and Buyer shall cause HomeLife to cause the
identified HomeLife Shares to be duly registered or exempted from
registration under any appropriate state and Federal securities laws at
HomeLife's expense and as expeditiously as reasonably possible, and further,
at Seller's written request, to assist Seller in selling or otherwise
transferring such HomeLife Shares.
1.5 PAYMENT OF PURCHASE PRICE. On the Closing Date, the Cash Portion of
the Purchase Price, less the deposit of $25,000 previously delivered to
Seller (the "DEPOSIT"), shall be paid to Seller by 2:00 p.m., Newport Beach,
California, time, by certified or cashier's check or by such other method as
Seller and Buyer may agree. The Initial Shares and the Warrant shall be
delivered to Seller at the Closing, registered in Seller's name.
1.6 WARRANTS. The "WARRANT" means the Warrant to Purchase common Stock
to be issued by Buyer substantially in the form attached as EXHIBIT 1,
evidencing warrants to purchase up to 200,000 shares of the common stock of
HomeLife.
SECTION 2. THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall occur at the offices of Dickinson, Wright,
Moon, Van Dusen & Freeman, 500 Woodward Ave., 40TH Floor, Detroit, Michigan
48226, or such other place as the parties hereto shall designate in writing.
The Closing shall occur on the date as agreed to by Buyer and Seller (the
"CLOSING DATE"), which date shall occur no later than March 1, 1997.
Notwithstanding the Closing Date, the transactions evidenced by this
Agreement shall be deemed effective as of January 16, 1997 (the "EFFECTIVE
DATE"), and each party agrees to take all such actions as may be deemed by
Buyer to be required or reasonably necessary to provide Buyer with the
benefits of the transactions as of such date.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents,
warrants, and agrees as follows:
<PAGE>
3.1 ORGANIZATION AND STANDING OF SELLER. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of New Jersey and has full power and authority to carry on the Business as
now conducted and to own or lease its assets and properties as now owned or
leased. Seller is duly qualified or licensed to do business as a foreign
corporation and is in good standing in the jurisdictions in which the nature
of the Business conducted by it, or its ownership or leasing of properties,
makes such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on Seller's financial
condition or results of operations.
3.2 AUTHORITY OF SELLER. The execution, delivery and performance of
this Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Seller. This Agreement has been duly executed
and validly delivered by Seller and is a valid and binding agreement of
Seller, enforceable against it in accordance with its terms, except as may be
limited by or subject to any bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally.
3.3 TITLE TO ASSETS; EFFECT OF AGREEMENT. (a) Seller is, and at the
Closing shall be, the owner of the Assets and shall sell and transfer to
Buyer at the Closing good and marketable title to the Assets, free and clear
of all liens, charges, claims, or encumbrances of any nature. Seller does not
warrant or represent that SCHEDULE 1.1(a)(i) contains a complete and accurate
description of all existing franchise agreements relating to the Business.
SCHEDULE 1.1(b) contains a complete and accurate description of all
Intellectual Property presently used or useful in the Business.
(b) The execution, delivery, and performance of this Agreement and
consummation of the transactions contemplated herein by Seller will not, with
or without the giving of notice or the lapse of time, or both, (i) violate
any provision of law, statute, rule, or regulation to which Seller is
subject, (ii) violate any judgment, order, writ, or decree of any court or
other tribunal or any agency applicable to Seller, or (iii) result in the
breach of or conflict with any term, covenant, condition, or provision of, or
result in the creation of any lien or encumbrance on the Assets under, or
result in the modification or termination of, or constitute a default under,
Seller's Certificate of Incorporation or Bylaws, or any commitments,
contracts, or other agreements or instruments to which Seller is a party or
by which any of the Assets is or may be bound.
3.4 BROKERS AND FINDERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission payable by
Seller in connection with the transactions contemplated by this Agreement,
based upon arrangements made by or on behalf of Seller or any of its
affiliates.
3.5 TRADEMARKS AND COPYRIGHTS. SCHEDULE 1.1(b) is a complete and
accurate list of all registrations issued and all applications pending for
all Intellectual Property used by Seller in the Business. Except for the
license contained in the Agreement dated May 7, 1996, between Seller and The
Keim Group, Ltd., and except as otherwise set forth in SCHEDULE 3.5, Seller
has not licensed, sublicensed, assigned or otherwise conveyed the Intellectual
Property, or any right, title or interest therein, to any other person.
3.6 LITIGATION. SCHEDULE 3.6 sets forth a complete and accurate list of
all litigation, actions, investigations, arbitrations, or other proceedings
currently pending or threatened to which Seller is a party. Seller is not
subject to any outstanding order, writ, injunction, or decree of any court,
government, governmental authority or agency, or arbitration tribunal against
it or affecting or relating to the Assets or the Business which could have a
material adverse effect on the Assets or the Business.
3.7 INVESTMENT REPRESENTATIONS. Seller is acquiring the HomeLife Shares
and the Warrant (collectively, the "HOMELIFE SECURITIES"), which constitute a
portion of the Purchase Price, for investment and not with a view to, or for
resale in connection with, any distribution of such securities except in
compliance with applicable state and Federal law. Seller's headquarters
address is 102 West 500 South, Suite 405, Salt Lake City, Utah 84101. Seller
acknowledges that the HomeLife Securities will not be registered under the
Securities Act of 1933, as amended, or any state securities laws, based on
exemptions from such laws, and that the HomeLife Securities may not be sold
or otherwise transferred without registration under or exemption from the
provisions of applicable securities laws, and that a legend to that effect
will be placed on the certificates evidencing these securities.
<PAGE>
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents,
warrants, and agrees as follows:
4.1 ORGANIZATION AND STANDING OF BUYER. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Michigan and has full power and authority to carry on its business as now
conducted and to own or lease its assets and properties as now owned or leased.
4.2 AUTHORITY OF BUYER. The execution, delivery and performance of
this Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action on the part of Buyer and all necessary actions required to be taken
under Buyer's Articles of Incorporation and Bylaws have been taken. This
Agreement has been duly executed and delivered by Buyer and is a valid and
binding agreement of Buyer, enforceable against it in accordance with its
terms, except as may be limited by or subject to any bankruptcy insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights.
4.3 EFFECT OF AGREEMENT. The execution, delivery, and performance of
this Agreement and consummation of the transactions contemplated herein by
Buyer will not, with or. without the giving of notice or the lapse of time,
or both, (a) violate any provision of law, statute, rule, or regulation to
which Buyer may be subject, (b) violate any judgment, order, writ, or decree
of any court or other tribunal or any agency applicable to Buyer or its
properties, or (c) result in the breach of or conflict with any term,
covenant, condition, or provision of, or result in the creation of any lien
or encumbrance on its assets under, or result in the modification or
termination of, or constitute a default under, Buyer's Articles of
Incorporation or Bylaws, or any commitments, contracts, or other agreements
or instruments to which Buyer is a party or by which any of its assets or
properties is or may be bound or affected.
4.4 BROKERS AND FINDERS. No broker, finder or investment banker is
entitled to any brokerage, finder's, or other fee or commission payable by
Buyer in connection with the transactions contemplated by this Agreement,
based upon arrangements made by or on behalf of Buyer or any of its affiliates.
SECTION 5. CERTAIN COVENANTS AND AGREEMENTS.
5.1 CONDUCT OF SELLER PRIOR TO CLOSING. From the date hereof and until
the Closing Date, Seller shall:
(a) not purchase, sell, lease, transfer or dispose of any of the
Assets;
(b) use its best efforts to preserve Seller's present organization
and goodwill intact, including the present business relationships and goodwill
with customers, suppliers, and others having dealings with the Business;
(c) pay all costs, expenses, liabilities, and capital expenditures
of Seller relating to the Business in the ordinary course when due other than
the Assumed Liabilities; and
(d) provide Buyer and its employees, counsel, accountants, and
advisors with full access upon reasonable notice during normal business hours
to all of the properties, personnel, financial and operating data, books,
contracts, and records of Seller relating to the Assets in connection with
reviewing Seller and its operations, provide such further access and
information as Buyer may reasonably request from time to time, and in general
to cooperate fully with Buyer and to assist Buyer in its review and
investigation of the Business and the Assets.
5.2 CONSENTS TO ASSIGNMENT. Seller shall use all reasonable efforts to
obtain, at its expense, all consents and approvals necessary to assign the
Contracts to Buyer at the Closing. Seller shall not be required to assign any
Contract if a required consent is not obtained, and Buyer shall not be
required to assume any such Contract.
SECTION 6. INDEMNIFICATION.
6.1 BUYER'S INDEMNIFICATION. Buyer shall indemnify and harmless Seller
and its officers, directors, agents, and affiliates from and against:
the Assumed Liabilities;
<PAGE>
(b) any and all losses and liabilities of any kind whatsoever
incurred by Buyer in the operation of the Business on or
after the Effective Date; and
(c) any and all losses and liabilities of any kind whatsoever
incurred by Seller resulting from any breach of a representation or warranty
made by Buyer in this Agreement.
6.2 SELLER'S INDEMNIFICATION. Seller shall indemnify and hold
harmless Buyer and its officers, directors, agents, and affiliates from and
against:
(a) any and all liabilities and obligations of Seller of any
nature whatsoever, except for the Assumed, Liabilities;
(b) any and all actions, suits, claims, or legal, administrative,
arbitration, governmental, or other proceedings or
investigations (collectively, "ACTIONS") that relate to Seller
or the Business and in which the principal events giving rise
thereto occurred prior to the Effective Date or which result
from or arise out of any action or inaction prior to the
Effective Date of Seller or any director, officer, employee,
agent, representative or subcontractor of Seller, except for
the Assumed Liabilities, and PROVIDED that the indemnity
contained in this subparagraph shall not extend to any events
occurring after the Effective Date or any action or inaction
of Buyer or any director, officer, employee, agent,
representative or subcontractor of Buyer; and any and all
losses and liabilities of any kind whatsoever incurred by
Buyer resulting from any breach of a representation or
warranty made by Seller in this Agreement.
6.3 INDEMNIFICATION PROCEDURES. Each party agrees promptly to give the
other written notice of any assertion by any third party against it as to
which it may request indemnification hereunder. The indemnifying party
hereunder shall have the right, upon notice to the other within 30 days after
receiving any such notice, to defend with counsel satisfactory to the
indemnified party any such third party suits, claims, or proceedings, but the
indemnified party may participate in the defense of any such suit, claim, or
proceeding at its expense. Each party agrees not to settle or compromise any
such third party suit, claim, or proceeding without the prior written consent
of the other.
SECTION 7. CONDITIONS TO CLOSING.
7.1 CONDITIONS TO BUYER'S OBLIGATION TO CLOSE. The obligation to close
hereunder shall be subject to the following conditions:
(a) The representations and warranties of Seller shall be correct
and complete in all material respects at and as of the Closing Date as though
such representations and warranties were made on and as of the Closing Date;
(b) Seller shall have performed and complied in all material
respects with the covenants, conditions and other obligations under this
Agreement which are to be performed or complied with by it on or prior to the
Closing Date;
(c) Buyer shall have received a certificate executed by an officer
of Seller, reasonably satisfactory to Buyer, certifying that the conditions
specified in Sections 7.1(a) and (b) have been satisfied; and
(d) Buyer shall have determined that the term for Seller's
franchise agreement with National Real Estate Services of Illinois, Inc.,
relating to its offices in the Chicago area does not expire before January
16, 2007;
(e) Seller shall have delivered to Buyer all such assignments,
bills of sale, licenses, and other instruments of transfer as reasonably
requested by Buyer and any consents required to evidence or effect the sale,
assignment, transfer, and delivery to Buyer of the Assets as provided herein.
<PAGE>
7.2 CONDITIONS TO SELLER'S OBLIGATION TO CLOSE. The obligation of
Seller to close hereunder shall be subject to the following conditions:
(a) The representations and warranties of Buyer contained in this
Agreement shall be correct and complete in all material respects at and as of
the Closing Date as though such representations and warranties were made on
and as of the Closing Date;
(b) Buyer shall have performed and complied in all material
respects with the covenants, conditions and other obligations under this
Agreement which are to be performed or complied with by it on or prior to the
Closing Date;
(c) Seller shall have received a certificate executed by an
officer of Buyer, reasonably satisfactory to Seller, certifying that the
conditions specified in Sections 7.2(a) and (b) have been satisfied;
(d) Seller shall have received from Buyer one or more written
instruments of assumption satisfactory to Seller and its counsel to effect or
evidence the assumption by Buyer of the Assumed Liabilities; and
(e) Seller shall have received from Buyer the Purchase Price in
accordance with Section 1.4.
7.3 CONDITION TO EACH PARTY'S OBLIGATIONS TO CLOSE. The obligations of
the parties to close hereunder shall be subject to the following condition:
No action, suit or proceeding before any court or any governmental
or regulatory authority shall have been commenced, no investigation by any
governmental or regulatory authority shall have been commenced, and no
action, investigation, suit or proceeding shall have been threatened, against
Seller or Buyer or any of their respective affiliates, officers or directors,
seeking to restrain, prevent or change the transactions contemplated hereby,
questioning the validity or legality of any of such transactions, or seeking
damages in connection with any such transactions.
SECTION 8. MISCELLANEOUS.
8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date (a) by mutual consent of Buyer and Seller, (b) by
Buyer if, at any time prior to the Closing, there shall occur, a material
breach of any of Seller's representations, warranties, or covenants contained
in this Agreement and such breach would materially and adversely affect the
benefits to be derived by Buyer from the transactions contemplated hereby,
(c) by Seller if, at any time prior to the Closing, there shall occur a
material breach of any of Buyer's or HomeLife's representations, warranties,
or covenants contained in this Agreement or the attached Acknowledgment and
such breach would materially and adversely affect the benefits to be derived
by Seller from the transactions contemplated hereby, or (d) by Buyer or
Seller if the Closing shall not have been consummated on or before March 1,
1997, PROVIDED that the right to terminate this Agreement under this section
shall not be available to any party whose breach of its representations and
warranties in this Agreement or whose failure to perform any of its covenants
and agreements under this Agreement has been the cause of or resulted in the
failure of the Closing to occur on or before such date. Upon any termination
hereunder, other than a termination under subsection (c) above, Seller shall
immediately return to Buyer the Deposit (presently $25,000) then held by
Seller, without interest.
8.2 CONFIDENTIALITY AGREEMENT. Unless and until the Closing
is consummated, Buyer, Seller, and their respective officers, directors and
representatives, as the case may be (each a "RECIPIENT"), will keep
confidential any and all information which is or has been furnished to it by
or on behalf of Seller or Buyer (each a "Provider") in connection with the
transactions contemplated by this Agreement (the "CONFIDENTIAL INFORMATION"),
and shall use the Confidential Information solely in connection with the
transactions contemplated by this Agreement. If this Agreement is terminated,
the Recipient shall promptly return all Confidential Information to the
Provider and either destroy any writings prepared by or on behalf of
Recipient based on Confidential Information (and certify such destruction to
the Provider) or deliver any and all such writings to the Provider.
Confidential Information does not include information which is or becomes
(but only when it becomes) generally available to the public other than as a
result of disclosure in violation of this provision.
<PAGE>
8.3 NOTICE. All notices, requests, demands and other
communications which are required or permitted hereunder shall be in writing
and shall be deemed to have been duly given when delivered personally or by
telecopy, or when mailed by registered or certified mail, postage prepaid,
return receipt requested, as follows:
If to Buyer, to the following:
FamilyLife Realty Services, Inc.
4100 Newport Place, Suite 730
Newport Beach, CA 92660
Attention: Chairman
If to Seller, to the following:
S & S Acquisition Corp.
102 West 500 South, Suite 405
Salt Lake City, UT 84101
Attention: Meredith Price
or to such other address as any party may designate from time to time by
written notice to the other given in the foregoing manner.
8.4 EXPENSES. Seller and Buyer shall bear equally any transfer, sales,
use, and similar taxes levied, assessed, or payable in connection with the
sale, assignments, other transfers and/or uses made in connection with this
Agreement. Subject to the foregoing, and except as otherwise provided herein,
each of the parties hereto shall bear the expenses separately incurred by
them in connection herewith.
8.5 BULK SALES. Buyer waives compliance with the provisions of any
applicable bulk sales laws or similar laws, including without limitation any
notice requirements to state tax authorities, and Seller agrees to indemnify
Buyer and hold Buyer harmless against all claims by creditors of Seller or
state tax authorities by reason of Buyer's noncompliance with such provisions.
8.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan, without regard to
principles of conflict of laws.
8.7 ENTIRE AGREEMENT; MODIFICATION. This Agreement supersedes any and
all oral or written agreements heretofore made relating to the subject matter
hereof and constitutes the entire agreement of the parties relating to the
subject matter hereof. This Agreement may not be changed or modified except
by an agreement in writing signed by Seller and Buyer.
8.8 NO IMPLIED RIGHTS OR REMEDIES. Except as otherwise expressly
provided herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or to give any person, firm or corporation, other
than the parties hereto, any rights or remedies under or by reason of this
Agreement.
8.9 HEADINGS. The headings in this Agreement are inserted for
convenience of reference only and shall not be a part of or affect the
meaning of this Agreement.
8.10 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.11 SUCCESSORS AND ASSIGNMENT. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns, but no party shall have the right to assign this
Agreement without the prior written consent of the other party, except that
Buyer may assign all or a portion of its rights and obligations hereunder to
any entity which controls, is controlled by, or is under common control with
Buyer.
<PAGE>
8.12 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND OBLIGATIONS. All
representations and warranties made by the parties in this Agreement, any
Schedule hereto, or any certificate, document or instrument delivered at the
Closing, shall survive the Closing indefinitely, notwithstanding any
investigation or audit conducted by any party before or after the Closing or
the decision of any party to consummate the transactions contemplated hereby.
All rights and obligations of the parties contained in this Agreement shall
survive the Closing indefinitely, including without limitation the
obligations contained in Sections 1.1(e), 1.4, 6.1, 6.2, 6.3, 8.2. 8.3. 8.4.
8.5, 8.11, and 8.13.
8.13 PUBLIC ANNOUNCEMENTS. Neither of Buyer or Seller shall make,
issue, or release any oral or written public announcement or statement
concerning or publicly reveal the transactions under this Agreement without
first obtaining the other party's prior written approval of the contents of
such announcement or statement, except that, after the Closing, Buyer may
make such announcements as it deems necessary or appropriate.
IN WITNESS WHEREOF, the parties have executed and d Agreement as of the
date first written above.
S & S Acquisition Corp.
By: /s/ Meredith Price
----------------------------------
Meredith Price
Its: President
FamilyLife Realty Services, Inc.,
By: /s/ Andrew Cimerman
----------------------------------
Andrew Cimerman
Its: Chairman
ACKNOWLEDGMENT
HomeLife, Inc., a Nevada corporation ("HOMELIFE"), executes this
Acknowledgment to acknowledge and accept the obligations imposed upon it
under Sections 1.3 and 1.4 of the above Asset Purchase Agreement (the
"Agreement"), and to represent and warrant to Seller that the HomeLife Shares
to be issued to Seller under Sections 1.3 and 1.4(a), and the shares of
HomeLife's common stock to be issued under the Warrant, upon such issuance in
accordance with the Agreement and the Warrant, will be issued for full and
fair consideration under the circumstances and will be duly authorized,
validly issued, fully paid, and non-assessable. Terms used but not defined in
this Acknowledgment shall have the meanings ascribed thereto in the Agreement.
Executed as of the date first set forth above.
HomeLife, Inc.
By: /s/ Andrew Cimerman
------------------------------
Andrew Cimerman
Its: Chairman
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
<TABLE>
<S> <C>
Schedule 1.1(a)(i) List of Franchise Agreements
Schedule 1.1(a)(ii) List of Other Assumed Contracts
Schedule 1.1(b) List of Trademarks
Schedule 1.1(c) Receivables
Schedule 1.1(d) Computer Hardware and Software
Schedule 3.6 Litigation
</TABLE>
EXHIBITS
Exhibit I Warrant to Purchase Common Stock
<PAGE>
Schedule 1.1(a)(i)
NATIONAL REAL ESTATE SERVICE
OFFICE DIRECTORY - JANUARY 20, 1997
CORPORATE HEADQUARTERS
102 West 500 South, Suite 600, P.O. Box 45828,
Salt Lake City, UT 84145-0828
(801)355-0888 (800)355-0744 (800)654-7653 Fax: (801)521-6018
ADMINISTRATION
President: Meredith Price
Chief Administrative Officer: Diana Karrenberg
Chief Executive Officer: Chris Papineau
Director of Computer Operations: Hugh Dolden
DIRECT QUESTIONS TO THE FOLLOWING:
Administrative: Diana Karrenberg
Accounts Receivable: Robin Brown
Accounts Payable: Diana Karrenberg
Address/Phone Updates: Lyndee Fonnesbeck/Robin Brown
Computer Support: Hugh Dolden/Lyndee Fonnesbeck
Order Tracking & Listing Entry: Lyndee Fonnesbeck
<PAGE>
ARIZONA
AZ02- FLAGSTAFF, AZ
NATIONAL THE FLAGSTAFF
CONNECTION
604 NORTH BEAVER STREET
FLAGSTAFF, AZ 86001
(520)526-3737/ FAX:556-0292
BROKER/MANAGER WANDA QUAYLE
AZ03- GLENDALE, AZ
NATIONAL SCHOFIELD
6611 - 7 WEST PEORIA AVENUE
GLENDALE, AZ 85302
(602)878-7808/ FAX:878-1204
BROKER W.T. "SCHO" SCHOFIELD
AZ04- KINGMAN, AZ
NATIONAL JEAN WHITE REALTY
3001 E. ANDY DEVINE
KINGMAN, AZ 86401
(520)753-5507/ FAX:753-1958
BROKER JEAN WHITE
AZ06- MESA
NATIONAL LOWE & ASSOCIATES
240 W. MAIN STREET
MESA, AZ 85201
(602)833-8871/ FAX:833-8873
BROKER RICHARD W. LOWE
MANAGER ROSALIE LOWE
AZ07- PHOENIX, AZ
NATIONAL ADVANTAGE
3518 - D WEST CACTUS ROAD
PHOENIX, AZ 85029
(602)978-1002/ FAX:978-2835
BROKER JAMES L. HART
AZ08- PHOENIX, AZ
NATIONAL CAMELPEAKS
4545 NORTH 36TH STREET, 111
PHOENTX, AZ 85018
(602)957-3300/ FAX:957-9533
BROKER PEGGY YUNGHAH
AZ10- PHOENIX, AZ
NATIONAL WESTERN VISTAS
10540 W. INDIAN SCHOOL, SUITE I A
PHOENTX, AZ 85037
(602)877-9400/ FAX:877-9463
BROKER SHERRIFAGEN
AZ112- PRESCOTT, AZ
ALL AMERICAN INVESTMENTS
222 W. GURLEY STREET
PRESCOTT, AZ 86301
(520)778-2000/ FAX:778-4505
BROKER JAMES T. PURVIS
AZ18- SCOTTSDALE, AZ
NRS SIGMA GROUP
7950 E. ACOMA, SUITE 300
SCOTTSDALE, AZ 85260
(602)991-1460/ FAX:661-8171
BROKER/OWNER ANTJE PETERSON
AM- TUCSON, AZ
NATIONAL WRIGHT REALTY, INC.
8505 E. 22ND STREET
TUCSON, AZ 85710
(520)886-5541/ FAX:885-6567
(800)484-4051 (EXT0831)
BROKER WILLIE WRIGHT, JR
CALIFORNIA
C044- BENICIA, CA
NATIONAL PREMIUM PROPERTIES
506 CAPITOL DRIVE
BENICIA, CA 94510
(707)745-4000/ FAX:745-4595
BROKER/OWNER SANDY PALMIN
C507- CHULA VISTA, CA
NATIONAL GERI HUSTON & ASSOC.
680 TELEGRAPH CANYON RD.,
SUITE 101
CHULA VISTA, CA 91910
(619)421-1185/ FAX:421-1188
BROKER GERI HUSTON
C004- CONCORD, CA
RED CARPET BALDWIN & ASSOC.
5053 CLAYTON ROAD
CONCORD, CA 94521
(510)825-8100/ FAX:825-8183
BROKER ROBERT L. (BOB) BALDWIN
C524- LA CRESCENTA, CA
NATIONAL REAL ESTATE
PAGLIUS0, INC.
2606 FOOTHILL BLVD.
LA CRESCENTA, CA 91214
(818)248-8071/ FAX:248-8177
BROKER LESTER C. PAGLIUSO
<PAGE>
C529- LOMPOC, CA
NATIONAL SHUMER REAL ESTATE
1000 EAST OCEAN AVENUE
LOMPOC, CA 93436
(805)736-7539/ FAX:735-8294
BROKER BRUCE SHUMER
C530- LONG BEACH, CA
RED CARPET COASTAL PROPERTIES
2155 BELLFLOWER BOULEVARD
LONG BEACH, CA 95336
(310)597-2481/ FAX:597-8759
BROKER DOROTHY A. CHERNEY
C03- MANTECA, CA
NATIONAL PAPWORTH PROPERTIES
204 N. SHERMAN AVENUE
MANTECA, CA 95336
(209)823-4722/ FAX:823-4727
BROKER/OWNER
CHRISTINE PAPWORTH
C032- SAN JOSE, CA
RED CARPET CAPITOL
311 -E NORTH CAPITOL AVENUE
SAN JOSE, CA 95133
(408)259-9433
BROKER WILLIAM A. WELCH
C554- SOUTHGATE, CA
RED CARPET MARGARITA MACHORRO
3333 TWEEDY BOULEVARD
SOUTH GATE, CA 90280
(213)564-1706/ FAX:564-0821
BROKER MARGARITA 0. MACHORRO
C052- TAHOE CITY, CA
NATIONAL TAHOE TIMBERLINE
505 WEST LAKE BOULEVARD
TAHOE CITY, CA 96145
(916)581-0183/ FAX:581-5322
BROKER MARY H. GIBSON
C565- WEST COVINA, CA
RED CARPET EASTWOOD REALTY, INC.
341 N. AZUSA AVENUE
WEST COVINA, CA 91791
(818)858-0600/ FAX:966-8899
BROKER DAMON PETTA
MANAGER CARL PETTA
SA MICHAEL MCCASLAND
C567- WHITTIER, CA
SOUTHLAND PROPERTIES
16256 E.
WHITTIER BOULEVARD
WHITTIER, CA 90603
(310)943-6783/ FAX:943-0423
BROKER VIRGINIA VANIMAANEN
C038- WOODLAND, CA
NATIONAL TOWN & VALLEY PROPERTIES
428 FIRST STREET, SUITE 102
WOODLAND, CA 95695
(916)662-5404/ FAX:662-2457
BROKER KATHY E. AUKES
C569- WRIGHTWOOD, CA
NATIONAL COUNTRY LIFE REALTY
6050 PARK DRIVE, P.O. BOX 2820
WRIGHTWOOD, CA 92397
(619)249-5000/FAX:249-6223
BROKERS MARILYN WELLS &
PAM MORTIMER
COLORADO
CL02- DURANGO, CO
NATIONAL P.B.S. REALTY
2971 MAIN AVENUE
DURANGO, CO 81391
(970)247-1234/ FAX:259-61 11
(800)247-0090
BROKER LEROY GENE PEARCEY
FLORIDA
FL03- FORT WALTON BEACH, FL
NATIONAL HALLMARK REALTY SERVICE, INC.
327 - A RACETRACK ROAD, N.W.
FT. WALTON BEACH, FL 32548
(904)863-3191/ FAX:863-2980
BROKER KERRY KELLY
SA BARBARA KELLY
FL05- KISSIMMEE, FL
LUND GALLERY OF HOMES, INC.
1520 N. BERMUDA AVENUE
KISSIMMEE, FL 34741
(407)846-7000/ FAX:846-9044
BROKER CARLEEN C. LUND
<PAGE>
ILLINOIS
IL01- ALGONQUIN, IL
NATIONAL KRISTENSEN REALTY SERVICES
114 SO. MAIN STREET
ALGONQUIN, IL 60102
(847)658-8664/ FAX:658-1897
BROKER CARL E. KRISTENSEN
11-55- ANTIOCH, IL
NATIONAL LANDMARK GROUP
562 HIDDEN CREEK DRIVE
ANTIOCH, IL 60002
(847)838-0130/ FAX:
BROKER GREGORY A. MILLER
IL03- ARLINGTON HEIGHTS, IL
NATIONAL SUNRISE RF-ALTY1325 E.
DAVIS STREET
ARLINGTON HEIGHTS, IL 60005
(847)870-1990/ FAX:870-5289
BROKER JAMES S. REGAN, I I I
IL57- ARLINGTON HEIGHTS, IL
NATIONAL REAL STAR
14 SOUTH DRYDEN
ARLINGTON HEIGHTS, IL 60004
(847)398-4300/ FAX:
BROKER/MANAGER
GREGORY A. SMITH
IL51- CHICAGO, IL
NATIONAL GOLDBERG & PERL844 W.
ARMITAGE AVENUE
CHICAGO, IL 60614
(312)477-9700/ FAX:549-1956
BROKER KENNETH GOLDBERG
IL60- CHICAGO, IL
NATIONAL PROFESSIONALS R.E.
6430 NORTH CENTRAL AVENUE, SUITE C
CHICAGO, IL 60646
(312)631-7300/ FAX: 631-6309
BROKER/MANAGER
JUDITH A. GOLNICK
IL15- DES PLAINES, IL
NATIONAL DIMASO REALTY, INC.
932 LEE STREET
DES PLAINES, IL 60016
(847)390-8282/ FAX:390-0518
BROKER VITO L. DIMASO
IL59- BUFFALO GROVE, IL
NATIONAL REAL STAR
123 MCHENRY ROAD
BUFFALO GROVE, IL 60089
(847)459-5600/ FAX: 459-3499
ILL 1 - CAROL STREAM, IL
NATIONAL VILLAGE REALTY
200 N. GARY AVENUE
CAROL STREAM, IL 60188
*(708)665-8030
FAX COM SERVICE (708)665-8176
BROKERS GORDON JOHNSON,
RORY HANSEN
IL43- CHICAGO, IL
NATIONAL ROSEN REALTY
5788 N. LINCOLN
CHICAGO, IL 60659
(312)334-0889/ FAX:334-8694
BROKER RANDY ROSEN
IL45- CHICAGO, IL
PROFESSIONALS REAL ESTATE
6430 N. CENTRAL AVENUE
CHICAGO, IL 60646
(312)631-7300/ FAX:631-6309
BROKER CHARLENE
CARUSO-BARTELS
IL42- ELGIN, IL
NATIONAL STATE STREET REALTORS
523 NORTH STATE STREET
ELGIN, IL 60123
(847)695-7299/ FAX:695-7399
BROKER RICHARD C. HODGES
IL16- ELK GROVE, IL
NATIONAL RMH AMERICAN HERITAGE INC.
25 W. TURNER AVENUE
ELK GROVE VILLAGE, IL 60007
(847)363-6030/ FAX:364-6010
BROKER FRANK RAMLJAK
IL49- EVERGREEN PARK, IL
NATIONAL FIRST WORLD REALTY, INC.
9443 S. KEDZIE AVE
EVERGREEN PARK, IL 60805
(708)422-2995 BROKER RICK BOOKER
<PAGE>
IL20- HOFFMAN ESTATES, IL
NATIONAL REAL STAR
2260 W. HIGGINS ROAD
HOFFMAN ESTATES, IL 60195
(847)843-0001/ FAX:843-1215
BROKER JOSEPH A. CARUSO
MANAGER INGER PERRINO
IL21- LIBERTYVILLE, IL
NATIONAL KEPHART/OTT REALTORS, INC.
411 S. MILWAUKEE AVENUE
LIBERTYVILLE, IL 60048
(847)549-8400/ FAX:549-9006
BROKER STEVEN R. KEPHART
IL08- LINCOLNSHIRE, IL
NATIONAL HOMESOURCE REAL
ESTATE SERVICE
16595 EASTON, SUITE 2A
LINCOLNSHIRE, IL 60069
(847)883-8300/ FAX:883-8351
PRESIDENT STEVEN A. NATHANSON
IL50- MCHENRY, IL
NATIONAL STEDMAN'S REAL ESTATE
MARKET PLACE, LTD.
2404 W. JOHNSBURG ROAD
MCHENRY, IL 60050
(815)385-0611/ FAX:385-0587
BROKER GUY STEDMAN
IL22- NEW LENOX, IL
NATIONAL ADVANTAGE, INC.
328 E. LINCOLN HIGHWAY
NEW LENOX, IL 60451
(815)485-0304/ FAX:485-0311
BROKER ELEANOR D. NASTEPNIAK
IL52- NORTHFIELD, IL
NATIONAL REALTY NETWORK
ONE NORTHFIELD PLAZA, SUITE 300
NORTHFIELD, IL 60093
(847)446-0540/ FAX:441-1885
BROKER EDWARD M. VARDON
IL23- OAK LAWN, IL
NATIONAL CONTEMPO REALTY, INC.
10945 SO. CICERO AVENUE
OAK LAWN, IL 60453
'(708)636-0101 / FAX:636-9388
BROKER MARY KAY O'SHEA-ELLIS
IL56- PALATINE, IL
NATIONAL REAL STAR
1915 SOUTH PLUM GROVE ROAD
PALATINE, IL 60067
(847)934-2300/ FAX:
BROKER/MANAGER WILLIAM C.
DALBEC
IL61-ROCKFORD, IL
NATIONAL TURNKEY REAL ESTATE
110 ALPINE RD., SUITE 107
ROCKFORD, IL 61108
(815)231-7157/FAX: (815)231-71
BROKER HILDE A. BER
Z01 1- SCHAUMBURG, IL
NATIONAL REAL ESTATE SERVICE OF IL., INC.
REGIONAL OFFICE
1375 SCHAUMBURG ROAD, #330
SCHAUMURG, IL 60194
(847)352-5000/ FAX:524-0298
REGIONAL VICE PRESIDENT JERRY
CLINNIN, PRESIDENT JOSEPH A. CARUSO
11-32- SCHAUMBURG, IL
DUVALICARUSO, REALTORS
922 W. IRVING PARK ROAD
SCHAUMBURG, IL 60172
(847)529-9891/ FAX:351-8625
BROKER JOSEPH A. CARUSO
11-33- SCHAUMBURG, IL
NATIONAL REAL STAR
33 S. ROSELLE ROAD, SUITE A
SCHAUMBURG, IL 60193
(847)529-0001/ FAX:529-3519
BROKER JOSEPH A. CARUSO
11-38- SCHAUMBURG, IL
DUVAUCARUSO, REALTORS
ADMINISTRATIVE BRANCH
1375 E. SCHAUMBURG RD., SUITE 330
SCHAUMBURG, IL 60194
(847)529-0007/ FAX:529-0298
MANAGER BARBARA LARSEN
<PAGE>
11-44- SCHAUMBURG, IL
DUVAUCARUSO, REALTORS
33 S. ROSELLE ROAD, SUITE B
SCHAUMBURG, IL 60193
(847)529-1040/ FAX:529-3519
BROKER JOSEPH A. CARUSO
11-58- SCHAUMBURG, IL
NATIONAL REAL STAR
1491 WEST SCHAUMBURG ROAD
SCHAUMBURG, IL 60194
(847)307-6868/ FAX:
BROKER/ MANAGER DAN HUNTZICKER
11-48- WESTMONT, IL
NATIONAL THURM REALTY, INC.
34 N. CASS AVENUE
WESTMONT, IL 60559
- -(708)971-8181 / FAX:971-21 10
BROKER KIMBERLY THURM
11-37- WILMETTE, IL
NATIONAL NORTH SHORE PREMIER
PROPERTIES
724 - 12TH STREET
WILMETTE, IL 60091
(847)251 -1111 / FAX:251-1221
BROKER BETH BOWDEN
INDIANA
INOO- CROWN POINT, IN
NATIONAL MILLER REALTY, INC.
102 NORTH INDIANA AVENUE
CROWN POINT, IN 46307
(219)663-2400/ FAX:663-2406
BROKER ALLEN T. MILLER
IN08- MERRIVILLE, IN
NATIONAL TRI-COUNTY REALTY, INC.
145 E. 61STSTREET
MERRIVILLE, IN 46410
(219)980-2102/ FAX:980-0000
BROKER BILL PUTZ
IN02- MICHIGAN CITY, IN
NATIONAL REALTY SERVICES OF
LAPORTE COUNTY, INC.
7421 JOHNSON ROAD
MICHIGAN CITY, IN 46360
(219)255-1899/ FAX:879-531 0
BROKER GERALD GREENWALD
IN09- MISHAWAKA, IN
NATIONAL B.L. REALTY
3618 GRAPE ROAD, SUITE A
MISHAWAKA, IN 46545
(219)255-1899/ FAX:258-0186
MANAGER MARYJ. BOOTH
IN10- MISHAWAKA, IN
NATIONAL B.L. REALTY
3618 GRAPE ROAD, SUITE B
MISHAWAKA, IN 46545
(219)255-1899/ FAX:258-0186
MANAGER MARY J. BOOTH
IN03- MUNSTER, IN
NATIONAL CARE REALTY
8202 CALLIMET AVENUE
MUNSTER, IN 46321
(219)836-5412/ FAX:836-4080
BROKER BHARAT (BOB) SHAH
IN04- SCHERERVILLE, IN
NATIONAL CARE REALTY
2315 WICKER AVENUE,
(U.S. HIGHWAY 41)
SCHERERVILLE, IN 46375
(219)865-0865/ FAX:865-0868
BROKER BHARAT SHAH
IN07- VALPARAISO, IN
NATIONAL NORTHWEST INDIANA REALTY, INC.
390 W. U.S. HIGHWAY 6, SUITE 10
VALPARAISO, IN 46383
(219)762-0442/ FAX:763-2881
BROKER LARRY GERHART
OWNER THOMAS J. GLANCY
IN06- WANATAH, IN
NATIONAL S & W REALTY
10027 WEST U.S. 30 - P.O. BOX 331
WANATAH, IN 46390
(219)733-2589/ FAX:733-2303
BROKERS VERNON SEXTON,
EARL WERNER
MICHIGAN
MOOO- ALGONAC, MI
RED CARPET KEIM R J SMITH, INC.
4181 M-29 HIGHWAY
ALGONAC, MI 48001
(810)794-5544
BROKER JOSEPH C. FOURNI
<PAGE>
M001- ALLEN PARK, MI
RED CARPET KEIM VIKING, INC.
17415 ECORSE ROAD
ALLEN PARK, MI 46101
(313)386-4400
BROKER RICHARD RICHARDSON
M086- ANN ARBOR, MI
RED CARPET KEIM BROOKSHIRE
3123 OAK VALLEY DRIVE
ANN ARBOR, MI 48103
JEFF BROOKSHIRE
M002- ATLANTE, MI
RED CARPET KEIM FERGUSON ASSOCIATES
FAST STATE BOX 84
ATLANTE, MI 49709
(517)785-3309
BROKER ROBERT FERGUSON
M003- BEAVERTON, MI
RED CARPET KEIM LAKE FOREST
1239 EAST ESTEY ROAD
BEAVERTON, MI 48612
(517)435-7755
JOE T. PERRAS
M004- BELLEVILLE, MI
RED CARPET KEIM PROP. UNLIMITED, INC.
P.O. BOX 592, 8380 BELLEVILLE ROAD
BELLEVILLE, MI 48111
(313)697-0099
BROKER ANGELA NETTRO
M005- BIRMINGHAM, MI
RED CARPET KEIM BIRMINGHAM
1955 SOUTH WOODWARD
BIRMINGHAM, MI 48011
(810)645-5800
BROKER ALGER BUTTS
M006- BRIGHTON, MI
RED CARPET KEIM ELGEN REALTORS
401 EAST GRAND RIVER
BRIGHTON, MI 48116
(313)227-5000
EUGENE P. GUTIERREZ
M007- BROWN CITY, MI
RED CARPET KEIM DYNAMIC, INC.
P.O. BOX 165, 4128 EASTMAIN
BROWN CITY, MI 48416
(810)346-2700
BROKER RICK TANK
M008- CADILLAC, MI
RED CARPET KEIM ACCENT R.E.
P.O. BOX 966
CADILLAC, MI 49601
(616)775-1314
BROKER LINDA L. TUTTLE
M010- COLEMAN, MI
RED CARPET KEIM ANYTIME
116 WEST RAILWAY, BOX 368
COLEMAN, MI 48618
(517)465-1122
BROKER LILIAN L. DOWD
M011- DAVIDSON, MI
RED CARPET KEIM ACTION GROUP
223 NORTH STATE
DAVIDSON, MI 48423
(810)653-0600
BROKER KENNETH DUETSCH
M012- DEARBORN, MI
RED CARPET KEIM DEARBORN INC.
22735 MICHIGAN AVENUE
DEARBORN, MI 48124
(313)565-0450
BROKER WILLIAM G. KNOOP, JR.
M013- DEARBORN HEIGHTS, MI
RED CARPET KEIM PLUS, INC.
27366 WEST WARREN
DEARBORN HEIGHTS, MI 48127
(313)277-7070
BROKER ALBERT RICE
M014- DETROIT, MI
RED CARPET KEIM CHESBRAND
12740 EAST SEVEN MILE
DETROIT, MI 48205
(313)834-7550
CHESTER GODLEWSKI
015- DETROIT, MI
RED CARPET KEIM METRO DETROIT
18438 MORANG
DETROIT, MI 48205 (313)526-3990
GORDON RECK
<PAGE>
M016- DETROIT, MI
RED CARPET KEIM TEAM ONE
15715 EAST WARREN
DETROIT, MI 48224
(313)885-6630
R013ERT HUGHES
M017- DETROIT, MI
RED CARPET KEIM UNITY, INC.
19480 LIVERNOIS
DETROIT, MI 48221
(313)862-2400
WILLIE MERRIWEATHER
M018- EAST DETROIT, MI
RED CARPET KEIM ACE R/E, INC.
23043 GRATIOT
EAST DETROIT, MI 48021
(313)779-0200
JAMES E. WROBEL
M019- FARMINGTON, MI
RED CARPET KEIM MIDWEST, INC.
31715 GRAND RIVER
FARMINGTON, MI 48330
(313)477-0880
TOM ISBELL
M020- FARMINGTON HILL, MI
RED CARPET KEIM MAPLE WEST, INC.
28592 ORANGE LAKE ROAD
FARMINGTON HILL, MI 48018
(313) 533-5888
LEO FITZPATRICK
M021- FENTON, MI
RED CARPET KEIM ACTION GROUP 11
435 NORTH LEROY
FENTON, MI 48430
(313)629-2211
JUDY BRANT
M023- FLUSHING, MI
RED CARPET KEIM EQUITY, INC.
111 SOUTH SEYMOUR
FLUSHING, MI 48433
(313)733-5400
LLOYD BREWER
M033- HOUGHTON LAKE, MI
RED CARPET KEIM HOUGHTON LAKE
1411 WEST HOUGHTON LAKE D., ZL 4
HOUGHTON LAKE, MI 48629
M024- GARDEN CITY, MI
RED CARPET KEIM WILL TIPTON RE
32515 FORD ROAD
GARDEN CITY, MI 48135
(313)733-5400
WILLTIPTON
M025- GROSSE ILE, MI
RED CARPET KEIM`VIKING INC.
8922 MACOMB
GROSSE ILE. MI 48138
(313)675-2290
M027- GROSSE PT. WOODS, MI
RED CARPET KEIM SHOREWOOD R/E
20439 MACK AVENUE
GROSSE PT. WOODS, MI 48236
(313)886-8710
PHILLIP PATANIS
M028- HARPER WOODS, MI
RED CARPET KEIM WOODS, INC.
20052 KELLY
HARPER WOODS, MI 48225
(313)371-4010
GEORGE TERRENCE BESSER
M03O- HIGHLAND, MI
RED CARPET KEIM MECK REALTY, INC.
101 EAST LIVINGSTON ROAD
HIGHLAND, MI 48357
(313)887-7575
PAUL MECK IENBORG
M031- HOLLY, MI
RED CARPET KEIM LEE HYDE, INC.
3064 GRANGE HALL
HOLLY, MI 48442
(313)629-1520
LEE HYDE
M032- HOLT, MI
RED CARPET KEIM G/K, INC.
4525 WILLOUGHBY
HOLT, MI 48842
(517)694-1121
ROBERT GARCHOW
(517)366-5344
FRED E. BOWMAN
<PAGE>
M034- INDIAN RIVER, MI
RED CARPET KEIM A. SMITH
P.O. BOX 430, ANDREWS PLAZA
INDIAN RIVER, MI 49749
(616)238-9338
RICHARD W. ANDREW
M035- INKSTER, MI
RED CARPET KEIM WILL COOPERATE
3767 INKSTER ROAD
INKSTER, MI 48141
(313)274-3141
ERNESTINE WILLIAMS
M036- KALASKA, MI
RED CARPET KEIM NORTHERN PROP.
317 MAPLE
KALKASKA, MI 49646
(616)258-9300
GEORGE T. BESSER
M038- LAPEER, MI
RED CARPET KEIM DAN SCRIMGER
858 SOUTH MAIN STREET
LAPEER, MI 48446
(313)664-1811
DAN SCRIMGE
M084- LATHRUP VILLAGE, MI
RED CARPET KEIM SUPERIOR
27340 SOUTHFIELD ROAD
LATHRUP VILLAGE, MI 48076
(313)559-7470
PHILLIP LANG
M039- LEWISTON, MI
RED CARPET KEIM FERGUSON
ASSOCIATES
P.O. BOX 775, OLSEN STREET
LEWISTON, MI 49756
(517)789-2651
M040- LEXINGTON, MI
RED CARPET KEIM JACQUES & ASSOCIATES
5790 MAIN
LEXINGTON, MI 46450
(313)359-7316
GARYJACQUES
M041- LINCOLN PARK, MI
RED CARPET KEIM VIKING, INC.
3125 FORT
LINCOLN PARK, MI 48146
(313)388-7305 DON SEELOF
M047- MACOMB, MI
RED CARPET KEIM HENDERSON & ASSOCIATES
45245 ROMEO PLANK, #A
MACOMB, ML 48044
(313)263-4540
PAUL HENDERSON
M043- MARLETTE, MI
RED CARPET KEIM DYNAMIC, INC.
2734 NORTH VAN DYKE, BOX 216
MARLETTE, MI 48453
(517)635-7417
RICK TANK
M044- MILFORD, MI
RED CARPET KEIM PROFESSIONALS
436 NORTH MAIN STREET
MILFORD, MI 48381
(313)685-1522
PAUL GANGNIER
M045- MIO, MI
RED CARPET KEIM DETRICH R/E
P.O. BOX 128, 408 SOUTH MORENCI
MIO, MI 48647
(517)826-6100
NORMAN L. DETRICH
M046- MOUNT CLEMENS, MI
RED CARPET KEIM GATES
36755 GRATIOT
W. CLEMENS, MI 48043
(313)491-3570
RANDALL E. GATES
M048- MOUNT CLEMENS, MI
RED CARPET KEIM MACOMB R/E
40060 HAYES
MT. CLEMENS, MI 48044
(313)75"880
DENNIS N. NABOR
MA049- NEW BALTIMORE, MI
RED CARPET KEIM HEWITT, INC.
30538 TWENTY-THREE MILE ROAD
NEW BALTIMORE, ML 48047
(313)949-5590 JACOB HEWITT, JR.
M050- NOVI, MI
RED CARPET KEIM C. MASON INC.
43390 10 MILE ROAD
NOVI, MI 48050
(313)344-1800
CAROL MASON
<PAGE>
M051- OKEMOS, MI
RED CARPET KEIM CEDAR REALTY
2567 JOLLY ROAD
OKEMOS, MI 48864
(517)349-4990
JAMES GOULDING
M052- ONAWAY, MI
RED CARPET KEIM ONAWAY
BLACK LAKE
P.O. BOX 731
ONAWAY, MI 49765
(517)733-8563
RICHARD W. ANDREW
M053- OXFORD, MI
RED CARPET KEIM ORION/OXFORD
766 SOUTH LAPEER
OXFORD, MI 48051
(313)628-4869
LOUISE HERFIGOTT
M054- PLYMOUTH MI
RED CARPET KEIM 9OUTH, INC.
1115 SOUTH MAIN
PLYMOUTH, MI 48170
(313)453-0012
RICHARD RANDAZZO
M055- PORT HURON, MI
RED CARPET KEIM METRO R.E. CO.
3061 COMMERCE DRIVE, #5
PORT HURON, MI 48060
(313)385-3000
PAUL MARTIN
M056- REDFORD, MI
RED CARPET KEIM DOYLE & ASSOC.
14358 SARASOTA
REDFORD, MI 48239
(313)937-0777
JOHN T. DOYLE
M057- RICHMOND, MI
RED CARPET KEIM EDGINGTON ASSOC.
6880 MAIN
RICHMOND, MI 48062
(313)727-2737
DAVE EDGINGTON
M063- SAULT SAINT MARIE, MI
RED CARPET KEIM NORTHLAND INC.
1514 ASHMUN
SAULT ST. MARIE, MI 49783
M0IG- ROSEVILLE, MI
RED CARPET KEIM JASON R.E.
28445 UTICA ROAD
ROSEVILLE, MI 48066
(313)771-4000
GARY C. DAY
M060- ROSEVILLE, MI
RED CARPET KEIM MCHUGH & ASSOC.
30401 UTICA ROAD
ROSEVILLE, MI 48066
(313)778-8200
EDWARD A. (TONY) MCHUGH
M058- ROSCOMMON, MI
RED CARPET KEIM E. STAR, INC.
639 WEST HIGGINS LAKE/ZONE
ROSCOMMON, MI 48653
(517)821-8585
DONALD J. PARKER
M067- SAINT CLAIRE SHORES, MI
RED CARPET KEIM SHOWPLACE HOME
26800 HARPER
ST. CLAIRE SHORES, MI 48081
(313)777-9700
GARY MILLER
M068- SAINT CLAIRE SHORES, MI
RED CARPET KELM AMERICAN HERITAGE, INC.
29050 HARPER
ST. CLAIRE SHORES, MI 48081
(313)445-1200
EDWARD T. HARRIS
M069- SAINT HELEN, MI
RED CARPET KEIM DUNBAR-BELL
1727 NORTH M-76
ST. HELEN, MI 48656
(517)389-3312
PAULINEJENNEMAN
M062- SANDUSKY, MI
RED CARPET KEIM DYNAMIC, INC.
14 NORTH MORSE
SANDUSKY,ML 48471
(313)648-3700
RICK TANK
(906)635-1558
DONNA M. BERGFALK
<PAGE>
M085- SOMERSET CENTER, MI
RED CARPET KEIM SANTI REALTY
12370 EAST CHICAGO ROAD
SOMERSET CENTER, MI 49282
JAMES D. SANTI
M064- SOUTHFIELD, MI
RED CARPET KEIM WALKER &
ASSOCIATES
22110 WEST 10 MILE ROAD
SOUTHFIELD, MI 48034
(313)354-1500
JUDY WALKER
Z013- SOUTHFIELD, MI
RED CARPET KEIM- REGIONAL OFFICE
29201 TELEGRAPH, SUITE 410
SOUTHFIELD, MI 48034
(810)799-9300/ FAX:799-9905
JOHN KAVANAGH
M065- SOUTHGATE, MI
RED CARPET KEIM VIKING INC.
14160 PENNSYLVANIA
SOUTHGATE, MI 48195
(313)285-7000
RICHARD RICHARDSON
M070- STANDISH, MI
RED CARPET KEIM DUNBAR-BELL
430 SOUTH HURON
STANDISH, MI 48658
(517)846-6949
BARBARA CRISTOFERO
M071- STERLING HEIGHTS, MI
RED CARPET KEIM TABBI & ASSOC.
3603 EAST FOURTEEN MILE
STERLING HEIGHTS, MI 48077
(313)977-3333 RICHARD TABBI, JR.
M072- TAYLOR, MI
RED CARPET KEIM VIKING INC.
22347 GODDARD
TAYLOR, MI 48180
(313~287-4660
M073- TRENTON, MI
RED CARPET KEIM VIKING INC.
16061 VREELAND
TRENTON, MI 48183
(313)676-9000
RALPH MANGENO
M075- TROY, MI
RED CARPET KEIM CONCIERGE
290 TOWN CENTER DRIVE
TROY, MI 48084
(313)689-4600
STEVEN J. GOTTLIEB
M077- WARREN, ML
RED CARPET KEIM EAST, INC
28673 HOOVER
WARREN, MI 48093
(313)751-5500
CHARLES D. KRISFALUSI
M1078- WATERFORD, MI
RED CARPET KEIM HAVILAND, INC.
3650 DDAE HIGHWAY
WATERFORD, MI 48329
(313)673-1291
M079- WEST BLOOMFIELD, ML
RED CARPET KEIM ASSOCIATES, INC.
5635 WEST MAPLE ROAD
WEST BLOOMFIELD, MI 48322
(313)855-9100
JAMES E. BOUDREAU
M080- WEST BRANCH, MI
RED CARPET KEIM DUNBAR-BELL
2814 COOK ROAD
WEST BRANCH, MI 48661
(517)345-3730
WILLIAM E. BELL
M081- WESTLAND, MI
RED CARPET KEIM WESTLAND INC.
505 EAST WAYNE ROAD
WESTLAND, MI 48185
(313)729-2500
EDWARD MARTLN
M082- YPSILANTI, MI
RED CARPET KEIM BROOKSHIRE
3150 PACKARD
YPSILANTI, MI 48197
(313)434-3500
DAVID HAMILTON
NEVADA
<PAGE>
NV04- CARSON CITY, NV
NATIONAL BEST SELLERS
503 N. DIVISION STREET
CARSON CITY, NV 89703
(702)883-8500/ FAX:882-6932
OWNER JENNY BACIGALUPI
SA CLAUDIA DOSSEY
NV01- LAS VEGAS, NV
ABOUT REAL ESTATE
735 NORTH NEWS BOULEVARD
LAS VEGAS, NV 89110
(702)453-48041 FAX:459-1798
BROKER TERI KELLERER
NV06- LAS VEGAS, NV
LAS VEGAS REALTY, INC.
601 S. RANCHO DRIVE
BUILDING D, SUITE 34
LAS VEGAS, NV 89106
(702)386-6122/ FAX:384-6025
BROKER BERNIE MOGSTAD
NV12- LAS VEGAS, NV
NATIONAL SUNRISE REALTY
450 N. NELLIS, BOX 190
LAS VEGAS, NV 89110
(702)459-7300/ FAX:459-1392
BROKER ALAN CUTLER
SC07- SUMTER, SC
NATIONAL CAROLINA REALTY OF SUMTER, INC.
1240 ALICE DRIVE
SUMTER, SC 29153
(803)469-8900/ FAX:469-7000
BROKER JOYCE D. SHORTER
MANAGER TOMMIE R. SHORTER, JR.
SA LYNN SHORTER
NV13- LAS VEGAS, NV
NATIONAL REAL ESTATE RESOURCES
1750 S. RAINBOW BLVD., SUITE 18
LAS VEGAS, NV 89102
(702)877-6868/ FAX:877-1891
(800)665-0603
BROKER/OWNER CHRIS SCARCELLI
NV14-LAS VEGAS, NV
NATIONAL RESIDENTIAL GROUP
3650 S. DECATUR BLVD. SUITE 33
LAS VEGAS, NIV 89103
(702) 871-4188/FAX:871-1974
BROKER RICHARD KRIEGER
NV15-LAS VEGAS, NV
YOUR REAL ESTATE CO.
3416 E. LAKE MEAD #8
N. LAS VEGAS, NV 89030
(702) 399-4449/FAX: 399-3039
BROKER THOMAS LISIEWSK
NV17-LAS VEGAS, NV
LAS VEGAS FIRST REALTY
3000 W. CHARLESTON #2
LAS VEGAS, NV 89102
(702)259-9155/FAX:259-6131
BROKER VIRGINIA JONES
NV19-LAS VEGAS, NV
PACIFIC INTERNATIONAL PROPERTIES
2660 S. RAINBOW BLVD., #B-102
LAS VEGAS, NV 89102
(702)365-7999/FAX:368-1642
BROKER RON MACKO
SOUTH CAROLINA
SC10- SIMPSONVILLE, SC
SHOWMAN REAL ESTATE
632 NORTH MAIN STREET
SIMPSONVILLE, NC 29681
(803)963-8123/ FAX:967-2764
BROKER JIM WRIGHT
TEXAS
TX03- BAYTOWN, TX
RED CARPET OPRYCHEK & ASSOC.
608 PARK STREET
BAYTOWN, TX 77520
(713)427-1711/ FAX:420-3901
BROKER CAROLE W. OPRYSHEK
<PAGE>
TX10- KILLEEN, TX
CHARLES BRADLEY & COMPANY
904C N. FORT HOOD STREET
KILLEEN, TX 76541
(817)526-7534/ FAX:526-7538
BROKER CHARLES BRADLEY
TX13- SAN ANTONIO, TX
NATIONAL TERRI SCHULTZ & ASSOCIATES
2427 THOUSAND OAKS
SAN ANTONIO, TX 78232
(210)494-5221/ FAX:494-41 11
BROKER TERRILYN F. SCHULTZ
UTAH
UT01- SALT LAKE CITY, UT
SECURITY NATIONAL REALTY
OFFERING THE HELP-U-SELL SYSTEM
3455 SOUTH WEST TEMPLE
SALT LAKE CITY, LIT 84115
(801)484-9995
BROKER MIKE LARSEN
WASHINGTON
WA03- POINT ROBERTS, WA
NATIONAL MOUNTAIN SOUND PROPERTIES
1385 GULF RD
POINT ROBERTS, WA 98281
(360)945-1011 / FAX:945-1012
BROKER FRANK NEY
MANAGER PAUL RUSK
WISCONSIN
11-53- MANITOWISH WATERS, WL
NATIONAL ADVANTAGE, NSP, INC.
P.O. BOX 362, WEST
139 MANRROWISH WATERS, WI
54545 (715)543-8900/ FAX:543-8917
BROKER DICK PAVLOV
<PAGE>
SCHEDULE 1.1(a)(ii)
LIST OF ASSIGNED CONTRACTS
N/A
<PAGE>
SCHEDULE 1. 1 (b)
LIST OF TRADEMARKS
UNITED STATES REGISTRATIONS
<TABLE>
<CAPTION>
MARK REG. NO. REGISTRATION DATE
- ---- --------- -----------------
<S> <C> <C>
National Real Estate Service 1,469,561 12/15/1987
National Real Estate Service 1,843,168 7/5/1994
</TABLE>
UNITED STATES APPLICATIONS
<TABLE>
<CAPTION>
MARK SERIAL NO. FILING DATE
- ---- ---------- -----------
<S> <C> <C>
National Listing System 74/329,076 11/6/1992
National Listing Service 74/419,545 7/28/1993
NLS 74/419,416 7/28/1993
House by Mouse 74/431,804 9/1/1993
House by Mouse 74/431,508 9/1/1993
Homework is What We Do Best 74/526,488 5/19/1994
</TABLE>
UNITED STATES REGISTRATIONS
<TABLE>
<CAPTION>
MARK REG. NO. REGISTRATION DATE
- ---- -------- -----------------
<S> <C> <C>
Homework is What We Do Best 1,488,805 5/17/1988
FEMCO 1,405,228 8/12/1986
Wall to Wall Protection Plan 1,129,040 1/8/1980
Wall to Wall 1,138,913 8/19/1980
Red Carpet and Design 1,087,827 3/21/1978
Design Only 1,087,826 3/21/1978
Red Carpet 1,077,113 11/8/1977
Red Carpet 1,003,533 1/28/1975
</TABLE>
<PAGE>
SCHEDULE 1.1(d)
COMPUTER HARDWARE AND SOFTWARE
5 H-P Vectra personal computers, Model VE 4/66
and associated software
<PAGE>
SECTION 3.6
S & S ACQUISITION
In April 1994, S & S Acquisition Corp. was named as a defendant in a
lawsuit filed in the Court of Queens Bench of Alberta, Judicial district of
Edmonton, Canada, Case Number 9403-07235, entitled 475878 ALBERTA LTD. V. S &
S ACQUISITION CORP., ET. AL. Plaintiff is the former Master Regional
Franchisee for the Province of Alberta. S & S Acquisition Corp. terminated
the franchise in July 1993 for breach of the Franchise Agreement. In the
statement of claim, the plaintiff seeks an interim and permanent injunction
against S & S Acquisition Corp. from carrying on any activities in the
Province of Alberta which are the same or similar to the rights granted to
the plaintiff in the Master Regional Franchise Agreement, an injunction
restraining S & S Acquisition Corp. from entering into any agreement with
defendant Showcase Marketing Services, Inc. for the rights to the Master
Regional Franchise for the Province of Alberta, a declaration that the Master
Regional Franchise Agreement of Alberta was not validly terminated and
damages for alleged breach of contract. The Court denied the plaintiffs
application for an interim injunction. S & S Acquisition Corp. is currently
defending the lawsuit.
In May 1995, S & S filed a lawsuit in the State of Utah's Third Judicial
District Court in Salt Lake County entitled S & S ACQUISITION CORP. VS. NRS
BLOCK BROS REALTY LTD., NATIONAL REAL ESTATE SERVICES, INC., AND RONALD N.
DIXON, Case Number 950903798CN. NRS Block Bros. is the parent company of
National Real Estate Service, Inc., and Ron Dixon is an individual who owns a
controlling interest in NRS Block Bros. In the Complaint, S & S alleges
breach of contract, fraud, and contractual interference. S & S seeks judgment
against the Defendants for all general and consequential damages sustained by
S & S in an amount to be determined at court but not less than $250,000, plus
attorneys' fees and costs. S & S also seeks judgment against NRS and National
for enforcement of the Agreements, and enjoining NRS and National from
contacting S & S's franchisees without S & S's prior consent, making any
disparaging statements against S & S, interfering with S & S's relations with
its franchisees. In July of 1996, S & S prevailed on a Motion for Summary
Judgement. However, an Amended Complaint was filed ten days later. Counsel
for NRS has indicated they wish to settle the matter and have asked for an
accounting between the companies regarding the various claims with the intent
of establishing final settlement figures.
In May 1995, S & S was named as defendant in a lawsuit filed in the
United States District Court's Central Division, Utah District, Case Number
2:95CV 501B. entitled NATIONAL REAL ESTATE SERVICE, INC., VS, S & S
ACQUISITION CORPORATION . As stated in Item I of this offering circular. S &
S acquired the assets of National Real Estate Service, Inc. effective
December 1994. Shortly after that date, the Plaintiff and S & S signed a
Support Service Agreement in which National Real Estate Service, Inc. agreed
to provide certain services to the U.S. National Real Estate Service
franchises. In the Complaint, the plaintiff seeks to terminate the Asset
Purchase Agreement and Service Agreement, alleging that S & S has materially
breached the Agreements. The plaintiff also seeks a full accounting and award
of damages, a request for reconveyance and injunctive relief, costs, and
attorneys' fees. S & S denies the allegations and is currently defending the
lawsuit.
In May 1995, S & S was named as defendant in a lawsuit field in the 15th
Judicial Circuit Court of Palm Beach County, Florida, Case Number CL95-3421
Al, entitled MERLE ANN PHILLIPS, KEVIN CLARKE PHIILIPS, AND MEYER KORMAN VS.
S & S ACQUISITION CORPORATION, AS SUCCESSOR TO NATIONAL REAL ESTATE SERVICE,.
INC. The Plaintiff is the National Real Estate Service Area Franchisor for
Florida. In the Complaint and Demand for Jury Trial, the plaintiff seeks a
preliminary and mandatory injunction and a permanent mandatory injunction
ordering S & S to cease and desist from combining the National Real Estate
Service program with any other competing national real estate franchise
system, and from permitting any competing area franchisor within the State of
Florida to sell real estate franchise offices. The plaintiff also requests
the court to order S & S to provide all services set forth in the Area
Franchisor Agreement, and to order S & S to remit all payments due to the
Plaintiffs under the Area Franchise Agreement. The Plaintiff also seeks
costs, attorneys' fees, and all other relief provided by the Court. S & S is
currently defending the lawsuit.
<PAGE>
EXHIBIT I
THE SECURITIES REPRESENTED BY AND ISSUABLE UNDER THIS CERTIFICATE MAY NOT BE
OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"), AND ALL APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN OPINION
OF SECURITIES COUNSEL FOR THE COMPANY THAT AN EXEMPTION FROM REGISTRATION
UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS IS AVAILABLE THEREFOR.
NOT EXERCISABLE
PRIOR TO THE STRIKE DATE
OR AFTER 5:00 P.M., NEWPORT BEACH, CALIFORNIA, TIME,
ON THE EXPIRATION DATE
HOMELIFE, INC.
WARRANT TO PURCHASE COMMON STOCK
This is to certify that, FOR VALUE RECEIVED, S & S ACQUISITION CORP., a
New Jersey corporation ("holder"), is entitled, subject to the terms of this
Warrant, to purchase from HOMELIFE, INC., a Nevada corporation (the
"Company"), at any time or times during business hours on a day on which
banking institutions are authorized to conduct business in the City of
Newport Beach, California, on or after January 31, 1998 (the "Strike Date"),
but not after 5:00 p.m., Newport Beach, California, time, on January 31, 2002
(the "Expiration Date"), TWO HUNDRED THOUSAND (200,000) fully paid and
nonassessable shares of the Common Stock of the Company (the "Common Stock"),
at an initial purchase price of SIX AND 00/100 DOLLARS ($6.00) per share in
lawful money of the United States. The number of shares of Common Stock to be
received upon the exercise of this Warrant and the price to be paid for a
share of Common Stock may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise, as adjusted
from time to time, are hereinafter sometimes referred to as "Warrant Shares"
and the exercise price for a share of Common Stock in effect at any time and
as adjusted from time to time is hereinafter sometimes referred to as the
"Purchase Price".
(a) EXERCISE OF WARRANT. In case the holder of this Warrant shall
exercise all or any part of the purchase right evidenced by this Warrant, the
holder shall surrender this Warrant on the Purchase Date with the Form of
Exercise at the end hereof duly executed by the holder, to the Company at the
principal office of the Company, accompanied by payment of the Purchase Price
for the number of shares specified in such Form of Exercise, together with
any applicable federal and state tax relating to such exercise. This Warrant
may be exercised only in whole.
(b) DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable after
any exercise of this Warrant and payment of the sum payable upon such
exercise, and in any event within 10 days thereafter, the Company, at its
expense, will cause to be issued in the name of and delivered to the holder
of this Warrant, or in the name of a permitted transferee as such holder may
direct, a certificate or certificates for the number of fully paid and
nonassessable Warrant Shares (or other securities or property to which such
holder shall be entitled upon such exercise), plus, in lieu of any fractional
Warrant Shares to which such holder would otherwise be entitled, cash equal
to such fraction multiplied by the then-current fair market value ("Market
Value") of one full Warrant Share. The Market Value shall be the Closing
Price (as hereinafter defined) for one full share of Common Stock on the
business day immediately preceding the day of exercise. As used herein, the
term "Closing Price" shall mean the last sale price regular way or, in case
no sale takes place on such day, the average of the closing bid and asked
prices regular way, in either case on the principal national securities
exchange on which the Common Stock of the Company is listed or admitted to
trading, or if not listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices on such day as
reported on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), or if not reported on NASDAQ, as furnished by
the National Quotation Bureau, Inc., or a similar reporting organization. All
calculations with respect to the Closing Price shall be made to the nearest
cent. Issuance and delivery of the Warrant Shares deliverable on the due
exercise of this Warrant may be postponed by the Company and its transfer
agent during any period, not exceeding thirty days, for which the transfer
books of the Company for the Common Stock are closed
<PAGE>
between (1) the record date set by the Board of Directors for the
determination of shareholders entitled to vote at or to receive notice of any
shareholders' meeting, or entitled to receive payment of any dividends or to
any allotment of rights or to exercise rights in respect of any change,
conversion or exchange of capital stock, and (2) the date of such meeting of
shareholders, the date for the payment of such dividends, the date for such
allotment of rights, or the date when any such change or conversion or
exchange of capital stock shall go into effect, as the case may be.
(c) EXCHANGE AND TRANSFER OF WARRANT. Upon surrender for exchange of
this Warrant (in negotiable form, if not surrendered by the holder named on
the face hereof) to the Company and payment of any applicable federal and
state taxes, the Company, at its expense, will issue and deliver new Warrants
of like tenor, calling in the aggregate for the same number of Warrant
Shares, in the denomination or denominations requested to or on the order of
such holder and in the name of such holder or as such holder may direct.
Until this Warrant is transferred on the books of the Company, the Company
may treat the registered holder of this Warrant as absolute owner for all
purposes without being affected by any notice to the contrary. This Warrant
may not be sold, transferred, assigned, or hypothecated other than to a
directly or indirectly wholly-owned subsidiary of the holder, or to the
shareholders of the holder upon the holder's liquidation.
(d) ANTIDILUTION PROVISIONS.
(1) ADJUSTMENT OF NUMBER OF SHARES. The number of Warrant Shares
to be received upon the exercise of this Warrant and the Purchase Price per
share to be paid shall be subject to adjustment from time to time as follows:
(A) DIVIDENDS, RECLASSIFICATIONS, ETC. In case, prior to the
expiration of this Warrant by exercise or by its terms, the Company shall at
any time issue Common Stock as a stock dividend or other distribution, or
subdivide the number of outstanding shares of Common Stock into a greater
number of shares, then, in either of such cases, the Purchase Price per share
of the Warrant Shares purchasable pursuant to this Warrant in effect at the
time of such action shall be proportionately reduced and the number of
Warrant Shares at that time purchasable pursuant to this Warrant shall be
proportionately increased; and conversely, in the event the Company shall
contract the number of outstanding shares of Common Stock by combining such
shares into a smaller number of shares, then, in such case, the Purchase
Price per share of the Warrant Shares purchasable pursuant to this Warrant in
effect at the time of such action shall be proportionately increased and the
number of Warrant Shares at that time purchasable pursuant to this Warrant
shall be proportionately decreased. If the Company shall, at any time during
the life of this Warrant, declare a dividend payable in cash on its Common
Stock and shall at substantially the same time offer to the holders of its
Common Stock a right to purchase new Common Stock from the proceeds of such
dividend or for an amount substantially equal to the dividend, all shares of
Common Stock so issued shall, for the purpose of this Warrant, be deemed to
have been issued as a stock dividend. Any dividend paid or distributed upon
the Common Stock in shares of any other class of securities convertible into
Common Stock shall be treated as a dividend paid in Common Stock to the
extent that Common Stock is issuable upon the conversion thereof.
(B) NO ADJUSTMENT FOR SMALL AMOUNTS. The Company shall not
be required to give effect to any adjustment in the Purchase Price unless and
until the net effect of one or more adjustments, determined as provided
above, shall have required a change of the Purchase Price by at least one
percent (1%) of such Purchase Price; provided, however, that any adjustments
which by reason of this Section (d)(1) are not required to be made shall be
carried forward and taken into account (together with any other adjustments
so carried forward) in any subsequent adjustment. All calculations made under
this Section (d)(1) shall be made to the nearest one cent ($.01) or to the
nearest one-hundredth (1/100) of a share, as the case may be, but in no event
shall the Company be obligated to issue fractional shares upon the exercise
of this Warrant.
(2) COMMON STOCK DEFINED. Whenever reference is made in this
Section (d) to the issue or sale of shares of Common Stock, the term "Common
Stock" shall mean the Common Stock of the Company of the class authorized as
of the date hereof and any other class of stock ranking on a parity with such
Common Stock. However, subject to the provisions of Section (e) hereof,
shares issuable upon exercise of this Warrant shall include only shares of
the class designated as Common Stock of the Company as of the date hereof.
<PAGE>
(e) RECLASSIFICATION, REORGANIZATION, MERGER, ETC. In case, prior to
the expiration of this Warrant by exercise or by its terms, of any capital
reorganization, recapitalization, reclassification or other change of the
outstanding shares of Common Stock of the Company (other than as provided for
in Section (d)(1)(A) hereof), or in case of any consolidation, merger or
share exchange of the Company with or into any other corporation (other than
a merger or share exchange with a subsidiary in which the Company is the
continuing corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding Common Stock), or in
case of any sale or conveyance to any other corporation of all or
substantially all of the properties and assets of the Company, then, and in
each such case, the Company shall cause effective provision to be made so
that the holder of this Warrant shall have the right to receive, upon the
exercise of this Warrant as provided herein, upon the consummation of such
reorganization, recapitalization, reclassification, consolidation, merger,
share exchange, sale or conveyance, the kind and amount of shares of stock or
other securities or property receivable upon such reorganization,
recapitalization, reclassification, consolidation, merger, share exchange,
sale or conveyance by a holder of the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such
reorganization, recapitalization, reclassification, consolidation, merger,
share exchange, sale, or conveyance. Any such provision shall include
provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Warrant. A copy of such
provision shall be furnished to the holder(s) of Warrants within 10 days
after execution of the appropriate agreement pertaining to same and, in any
event, prior to any consolidation, merger, share exchange, sale or conveyance
subject to the provisions of this Section (e). The foregoing provisions of
this Section (e) shall similarly apply to successive capital reorganizations,
recapitalizations, reclassifications and changes of shares of Common Stock
and to successive consolidations, mergers, share exchanges, sales or
conveyances.
(f) DETERMINATION OF ADJUSTED PURCHASE PRICE. Upon the occurrence of
each event requiring an adjustment of the Purchase Price and of the number of
Warrant Shares purchasable pursuant to this Warrant in accordance with, and
as required by, the terms of this Warrant, the Company shall send written
notice thereof to the holder(s) of this Warrant, which notice shall state the
Purchase Price resulting from such adjustment, and any increase or decrease
in the number of Warrant Shares to be acquired upon exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based. Such notice shall be conclusive and
shall be binding upon such holder unless contested by such holder by written
notice to the Company within 10 days after receipt thereof by such holder.
(g) NOTICE TO WARRANT HOLDERS. In case, prior to the expiration of
this Warrant by exercise or by its terms:
(1) The Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend payable
otherwise than in cash at an established annual or quarterly rate, or any
other distribution in respect of the Common Stock (including cash in an
amount other than at an established annual or quarterly rate), pursuant to,
without limitation, any spinoff, split-off or distribution of the Company's
assets; or
(2) The Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to subscribe for or purchase any
shares of any class or to receive any other rights; or
(3) Of any classification, reclassification, or other reorganization of
the capital stock of the Company, consolidation, merger, or share exchange of
the Company with or into another corporation or conveyance of all or
substantially all of the assets of the Company; or
(4) Of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then, and in any such case, the Company shall mail to the holder of this
Warrant, at least 10 days prior to such record date, a notice stating the
date or expected date on which a record is to be taken for the purpose of
such dividend, distribution, or rights, or the date on which such
classification, reclassification, reorganization, consolidation, merger,
share exchange, conveyance, dissolution, liquidation or winding up is to take
place, as the case-may be.
(h) LIQUIDATION AND DISSOLUTION. In case the Company, at any time
while this Warrant or any part hereof shall remain unexpired or unexercised,
shall sell all or substantially all of its property or dissolve, liquidate or
wind up its affairs, the holder of this Warrant may thereafter receive upon
exercise hereof in lieu of each share of Common Stock
<PAGE>
of the Company which such holder would have been entitled to receive, the
same kind and amount of any securities or assets as may be issuable,
distributable or payable upon any such sale, dissolution, liquidation or
winding up with respect to each share of Common Stock of the Company.
(i) RESERVATION OF SHARES. The Company will reserve and have at all
times available sufficient Shares deliverable against the due exercise of
this Warrant to satisfy the rights and privileges contained herein.
(j) EXPIRATION. The right to exercise this Warrant shall expire after
5:00 pm., Murrieta, California, time, on the Expiration Date, and, except as
otherwise expressly provided herein, no rights herein given to the holder of
this Warrant shall exist thereafter.
(k) WARRANT HOLDER NOT DEEMED A SHAREHOLDER. No holder, as such, of
this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained
in this Warrant be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any organization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance of record to the holder of this
Warrant of the Shares which he is then entitled to receive upon the due
exercise of this Warrant.
(1) NO LIMITATION ON CORPORATE ACTION. No provisions of this Warrant
and no right or option granted or conferred hereunder shall in any way limit,
affect or abridge the exercise by the Company of any of its corporate rights
or powers to recapitalize, amend its Articles of Incorporation, reorganize,
consolidate or merge with or into another corporation, or to transfer all or
any part of its property or assets, or the exercise of any other of its
corporate rights and powers.
(m) NOTICES. All communications hereunder shall be in writing and
shall be deemed duly given when delivered personally or three days after
being mailed by first class mail, postage prepaid, properly addressed, if to
the Company, HomeLife, Inc., at 4100 Newport Place, Suite 730, Newport Beach,
California 92660, Attention: Chairman, or if to the holder hereof, S & S
Acquisition Corp., 102 West 500 South, Suite 600, Salt Lake City, Utah 84101
Attention: Meredith Price. The Company or the holder hereof may change such
address at any time or times by notice hereunder to the other.
(n) GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
principles of conflicts of laws.
Dated: January 16, 1997
HOMELIFE, INC.
By: /s/ Andrew Cimerman
-----------------------
Andrew Cimerman
Its: Chairman
<PAGE>
EXHIBIT 10.12
OPTION AGREEMENT DATED
JULY 10, 1996
<PAGE>
HOMELIFE
OPTION AGREEMENT
ISSUED JULY 10, 1996
Mr. Edmond Lani is hereby granted a three (3) year option to purchase ten
thousand (10,000) shares of the Company's investment shares at the option
price of one ($1.00) dollar per share. Said option is not transferable
without prior written approval of the board of directors.
/s/ Andrew Cimerman
- -------------------------------------
Andrew Cimerman, President
/s/ Robert L. Cashman
- -------------------------------------
Robert L. Cashman, Secretary
<PAGE>
EXHIBIT 10.13
ASSET PURCHASE AGREEMENT BY AND BETWEEN
FAMILY LIFE REALTY SERVICES, INC. AND
CREDITON, INC. DATED APRIL 13, 1998
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated April 13, 1998, between FamilyLife Realty
Services, Inc., a Michigan corporation ("Seller"), and Crediton Inc., a
Provincial Ontario corporation ("Buyer").
PRELIMINARY STATEMENT
Seller is a franchisor selling master regional franchises and real
estate franchises under various names, including "National Real Estate
Service". Seller presently has under contract a Master Franchisee (National
Real Estate Services headquartered in Schaumburg, Illinois) which has a
particular territory which includes portions of Illinois, Wisconsin and
Indiana. This particular Master Franchisee has voiced complaints regarding
Seller's level of service and marketing materials and has demanded
confidential information that Seller is not required (nor does Seller desire)
to disclose to this Master Franchisee. Seller wishes to avoid any disputes
and desires to sell all rights and interests to this Master Franchisee
(hereafter "National") to Buyer. Buyer is a skilled buyer of assets and
intends to buy for its own undisclosed purposes as an investment. Buyer will
purchase all rights of and obligations of Seller as to this Master Franchisee
and this particular region.
NOW THEREFORE, in consideration of the mutual benefits to be derived from
this Agreement, the parties represent, warrant, and agree as follows:
1. PURCHASE AND SALE. At Closing, Seller will sell and assign all right,
title, and interest of Seller in and to the following assets of Seller:
"All Seller's rights under existing franchise agreements related to the
Master Franchise Agreement between it and National Real Estate Services of
Schaumburg, IL".
Buyer agrees to accept much assets and agrees to assume Seller's obligations
under these franchise agreements. Copies of all applicable franchise
agreements are attached hereto for inspection and incorporated herein by
reference (hereafter collectively, the "Contracts").
2. LICENSE- Seller will license to Buyer for $1.00 CDN access to its
proprietary computer software and hardware for the purposes of continuing the
Virtual Reality computer program for National for a period of up to six
months following the Closing, so long as National agrees to a mutual release
and waiver of liabilities so as to remove the cloud of litigation.
3. ASSUMPTION OF LIABILITIES. Except as hereinafter expressly provided,
Buyer shall assume no liabilities or obligations related to the Assets or the
Business, it being expressly acknowledged and agreed by the parties that all
such liabilities and obligations. shall be and remain Seller's liabilities
and obligations. Notwithstanding the foregoing, Buyer agrees to assume at the
Closing, Seller's obligations under and in accordance with the Contracts
which arise on or after the Closing Date (collectively, the "Assumed
Liabilities"). Nothing in this Agreement or otherwise shall preclude Buyer
from contesting in good faith the terms of the Assumed Liabilities or any
rights it has under the Contracts.
4. PURCHASE PRICE. The purchase price for the Assets shall consist of a
Promissory Note with a face value of $200,000 payable upon demand at any
time following one year from the date of this Agreement, and having a stated
interest rate. of three percent (3 %) per annum, interest payable monthly on
the 15th day of the month, in arrears.
5. THE CLOSING The closing of the transactions contemplated by this
Agreement (the "Closing") shall occur at such place as Seller shall designate
in writing, The Closing shall take place on or before May 14, 1998 or this
Agreement shall become null and void.
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of the date first written above.
Buyer: Crediton Inc.
By: /s/ Mei W. Tsui
-------------------------------
Name: Mei W. Tsui
Its: President
Seller: FamilyLife Realty Services, Inc.
By: /s/ Andrew W. Cimerman
-------------------------------
Name: Andrew Cimerman
Its: Chairman
<PAGE>
LICENSE AGREEMENT
This License Agreement ("Agreement") is made effective as of April 13th, 1998
by and HomeLife Inc. ("HMLF") of 4100 Newport Place, Suite 730, Newport
Beach, California, USA 92660 and Crediton, Inc. ("Crediton") of 939 Lawrence
Avenue, East, PO #47596, Don Mills, Ontario, Canada M3C 3S7.
In the Agreement, the party who is granting the right to use the
licensed property will be referred to as "HMLF", and the party who is
receiving the right to use the licensed property will be referred to as
The parties agree as follows:
1. GRANT OF LICENSE. HMLF owns use of HomeLife's computer system and
software, specifically the Virtual Assistant program and related and
integrated software ("Virtual Assistant software and related"). In
accordance with this Agreement, HMLF grants Crediton a time-limited
non-exclusive license to use the Virtual Assistant software and related. HMLF
retains all title to and all title to and ownership of the Virtual Assistant
software and related.
2. PAYMENT OF ROYALTY. Crediton will pay to HMLF a royalty fee which
shall be calculated as follows: One dollar ($1.00 CDN) for a six month term
ending six months from the date of this Agreement, and expressly subject to
the condition that a mutual release of past contractual liability be executed
between HMLF and National Real Estate Service, a Master Franchisee which has
been sold by HMLF to Crediton. The royalty fee shall be paid at the time of
the signing of this Agreement.
3. MODIFICATIONS. Crediton may not modify or change the Virtual
Assistant software and related in any manner, and maintains a simple access
to and use right in the software and related.
4. DEFAULTS. If Crediton fails to abide by the obligations of this
Agreement, including the refusal of National Real Estate Service to provide a
mutually acceptable contractual release of liability, HMLF shall have the
option to cancel this Agreement by providing five (5) days written notice to
Crediton. Crediton shall have the option of preventing the termination of
this Agreement by taking corrective action that cures the default, if this is
possible.
5. ARBITRATION. All disputes under this Agreement that cannot be
resolved by the parties shall have be submitted to arbitration under the
rules and regulations of the American Arbitration Association in a
California forum. Either party may invoke this paragraph after providing 30
days written notice to other party. All costs of arbitration shall be
divided equally between the parties, without regard to which party prevails.
Any award may be enforced by a Court of law.
6. TRANSFER OF RIGHTS. This Agreement shall be binding on any successors
of the parties. Neither party shall have the right to assign its interests
in this Agreement to any other party, unless the prior written consent of the
other party is obtained.
7. TERMINATION. This Agreement may be terminated by either parry by
providing thirty (30) days written notice to the other party. In any event,
this Agreement shall terminate automatically six months after the date first
above written.
8. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties and there are no other promises or conditions in any other agreement
whether oral or written. This Agreement supersedes any prior written or oral
agreements between the parties.
9. AMENDMENT. This Agreement may be modified or amended, only if the
amendment is made in writing and is signed by both parties.
10. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision of
this
<PAGE>
Agreement invalid or unenforceable, but that by limiting such provision it
would become valid or enforceable, then such provision shall be deemed to be
written, construed, and enforced as so limited.
11. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce
any provision of this Agreement shall not be construed as a waiver or
limitation of that party's right to subsequently enforce and compel strict
compliance with every provision of this Agreement.
12. APPLICABLE LAW. This Agreement shall be governed by the laws of the
Province of Ontario, Canada. Venue is agreed upon as Toronto, Canada.
Licensor
HomeLife Inc. ("HMLF")
By: /s/ Andrew Cimerman
----------------------------
Name: Andrew Cimerman
Title: Chairman of the Board
Licensee:
Crediton Inc.("Crediton")
By: /s/ Mei W. Tsui
----------------------------
Name: Mei W. Tsui
Title: President
<PAGE>
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned promises to pay to FamilyLife Realty
Services, Inc., a Michigan corporation, the amount of Two Hundred Thousand
($200,000) Dollars in U.S. Funds. The terms of this note are as follows:
(i) This note is delivered pursuant to the terms of a certain Asset
Purchase Agreement made as of the 1st day of April, 1998.
(ii) The note is payable upon demand at any time following one year from
the date of this Agreement, and having a stated interest of three percent
(3%) per annum, interest payable monthly on the 15th day of the month, in
arrears.
DATED the 13th day of April, 1998.
Crediton Inc.
By: /s/ Mei W. Tsui
-------------------------
Name: Mei W. Tsui, President
<PAGE>
EXHIBIT 10.14
LOAN PURCHASE AGREEMENT BY AND BETWEEN
MORTGAGE CAPITAL RESOURCE CORP. AND
MAXAMERICA FINANCIAL SERVICES, INC.
DATED JULY 7, 1998
<PAGE>
LOAN PURCHASE AGREEMENT
THIS AGREEMENT is entered into by and between MORTGAGE CAPITAL RESOURCE
CORPORATION, a California corporation ("MCR"), and MAXAMERICA FINANCIAL
SERVICES, INC., a California corporation ("MaxAmerica"), and recites as follows:
RECITALS
WHEREAS, MaxAmerica is in the business of originating real estate mortgage
loans ("Loans"); and
WHEREAS, MCR conducts its business as a mortgage company; and,
WHEREAS, MaxAmerica desires to act as a correspondent to MCR and sell Loans
and completed loan packages to MCR for funding on terms and conditions provided
herein,
NOW THEREFORE, it is agreed as follows:
1. MaxAmerica agrees, acknowledges and warrants that prior to conducting
business with MCR under this Agreement it will meet all of the requirements of
the Federal Housing Administration ("FHA") and the Veterans Administration
("VA"), and shall meet and comply with all local ordinances and state laws where
Loans are originated and all regulations of RESPA and all ECOA notices.
2. MCR agrees to establish a processing company in accordance with HUD
guidelines for a minimum of one (1) year. MaxAmerica shall submit all Loans
originated by or through it to MCR for underwriting review and funding and will
comply with all MCR guidelines and MCR investor guidelines, including all
credit, income, property and personal information on and of borrowers and to
perform all other services that may be required by generally accepted standards
and practices followed within the mortgage banking industry to complete a loan
package for underwriting submission to MCR. Upon receipt of a completed loan
package, MCR shall cause its underwriters to perform the normal and customary
underwriting review and evaluation of each loan package and the information
contained therein. Providing that the information within each loan package meets
applicable underwriting guidelines and requirements, and provided, further, that
MCR has a loan program under which the loan can be funded, MCR will fund the
loan and take all other actions which may be required by applicable contracts or
guidelines to insure, ship and service each such loan. For any loans for which
MCR does not have a program under which the loan can be funded or is not
otherwise approved for such funding, MaxAmerica may broker the loan to a lender
who is able to fund such loan consistent with the borrower's request.
3. MCR shall be paid an underwriting fee of $1,000.00 for each loan
funded as provided herein, which shall be paid through and upon close of the
escrow or other transaction through which the loan is funded.
4. (a) MCR and MaxAmerica shall establish an account at a federally
insured banking institution and shall each deposit the sum of $ 100.00 per loan
funded under this Agreement as a loss reserve account. Withdrawals from said
loss reserve account shall
Require the signature of a representative of MCR and of MaxAmerica. Funding
shall continue up to a point where there is $200,000.00 in the account, at which
time, upon the request of either party, funding in the account will be suspended
until the account falls below $100,000.00, at which time funding will
recommence. At termination of this Agreement, and after utilization of the
account as provided in Section 4(b) set forth below, or in the event of the
mutual agreement of the parties to terminate the account, all remaining funds in
the account shall be divided one-half to MCR and one-half to MaxAmerica.
(b) In the event any entity to whom MCR has sold a loan funded under
this Agreement, or to any such entity's successor or assignee, demands that
MCR repurchase such loan or claims a loss or damages as a result of acquiring
such loan ("Claim"), MCR shall notify MaxAmerica within thirty (30) days of
receiving notice of such Claim,
<PAGE>
and unless other arrangements are made, MCR shall be solely responsible for
the first $1,500.00 of loss in settling such Claim, and then the loss reserve
account shall be utilized to settle the remaining portion of such Claim.
(c) In the event the loan loss reserve account should be insufficient to
cover the costs, damages, liabilities and claims referred to in section 4(b)
above, then MCR shall indemnify and hold MaxAmerica harmless from all claims. At
any time after the expiration of one year from the date of executing this
Agreement, upon thirty (30) days' notice in writing from MCR, MCR shall have the
right to terminate this Agreement, and MCR shall indemnify and hold MaxAmerica
harmless from all claims upon termination of this Agreement as provided in this
Section 4(c). Whether or not said action or proceeding goes to final judgment,
in addition to any other relief to which it or they may be entitled, and shall
include any post-judgment attorneys fees incurred, any attorneys fees incurred
by the prevailing party on appeal, and by the prevailing party for any
post-judgment motion proceedings or hearings, and any and all attorneys fees
incurred in any and all efforts by the prevailing party to collect its judgment.
6. Except as provided herein to the contrary, this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their respective
legal representatives, successors and assigns.
7. This Agreement may be executed in one or more counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same agreement.
8. The parties hereto agree to execute and file and to join in the
execution and filing of any and all agreements, consents or other documents
reasonably necessary to effect the consummation of the transaction contemplated
hereby, as either party hereto may reasonably require.
9. This Agreement shall be construed and governed in accordance with the
laws of the State of California.
10. The section and other headings contained in this Agreement are for
reference purposes only and will not affect the interpretation or meaning of
this Agreement.
11. All notices under this Agreement shall be in writing and shall be
delivered by personal service, facsimile transmission (with customary electronic
confirmation of delivery), or by certified or registered mail, postage prepaid,
return receipt requested, to the parties. Any written notice to any of the
parties required or permitted hereunder shall be deemed to have been duly given
on the date of service if served personally or if served by facsimile
transmission (with confirmation of receipt), or seventy-two (72) hours after the
mailing. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given as provided hereunder
shall be deemed to be receipt of the notice, demand or request sent. Notices to
the parties shall be addressed as indicated below, or to such other addresses as
the parties may designate in writing from time to time.
12. In the event that any of the provisions, or portions thereof, of this
Agreement are held to be unenforceable or invalid by any court of competent
jurisdiction, the validity and enforceability of the remaining provisions, or
portions thereof, shall not be affected thereby.
13. All representations, warranties, covenants, agreements and indemnities
contained in this Agreement shall survive the effective date, and shall survive
a breach of any of the provisions hereof.
14. Nothing contained in this Agreement or in connection with the
relationship between MaxAmerica and MCR shall create or be deemed to create any
partnership, joint venture, agency or employment relationship between MaxAmerica
and MCR. MaxAmerica shall be exclusively responsible for its own costs and
expenses in connection with MaxAmerica's business, loan origination and the
processing of Loan.
15. MaxAmerica and MCR agree not to reveal any confidential information
about the other without the written consent of the other party.
16. Both parties shall indemnify and hold both parties, their directors,
officers, agents, employees and successors and assigns harmless from and against
and shall reimburse the prevailing party with respect to any loss,
<PAGE>
damage, claim, liability, cost and expenses, including attorney fees actually
incurred, relating to or arising out of either party's breach of or failure
to perform any obligation under this Agreement.
17. The term "mortgage" as used herein shall mean a deed of trust or any
other instrument used under the laws of any state in which real property is used
as security for a loan funded or to be funded under the terms of this Agreement.
18. This Agreement shall be effective upon execution and shall remain in
effect for five (5) years, subject to Section 19, below.
19. (a) This Agreement shall not be effective until this Agreement is
approved by the Board of directors of HomeLife, Inc. and written notice there of
has been provided to MCR.
(b) MaxAmerica shall have the right to terminate the Agreement in the
event there is more than a 50 percent change in ownership of the shares of MCR
during the term of this Agreement.
(c) MaxAmerica shall have the right to terminate this Agreement in
the event there is more than a 20 percent change in ownership of the shares of
HomeLife, Inc. during the term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
17th day of July, 1998, and intending to be legally bound as of the date hereof,
each of the undersigned parties has caused this Agreement to be duly executed
and delivered.
MORTGAGE CAPITAL RESOURCE CORPORATION,
A California corporation
By: /s/ Kenneth C. Ketner
------------------------------------
Its: Chief Operating Officer
MAXAMERICA FINANCIAL SERVICES, INC.
a California corporation
By: /s/ Andrew Cimerman
------------------------------------
Its: President
<PAGE>
ADDENDUM TO THE LOAN
PURCHASE AGREEMENT
This compensation agreement is attached to that certain LOAN PURCHASE AGREEMENT
dated July 7, 1998 between MORTGAGE CAPITAL RESOURCE ("MCR") and MAXAMERICA
FINANCIAL SERVICES, INC ("MAXAMERICA"), and is incorporated into and made a part
of the said LOAN PURCHASE AGREEMENT, as an addition to and not a substitution
for or modification of the LOAN PURCHASE AGREEMENT.
MCR AND MAXAMERICA AGREE THAT MCR SHALL PAY MAXAMERICA A SERVICING RELEASE FEE
AS FOLLOWS:
<TABLE>
<S> <C>
- - FHA 30-Year Fixed Rate Loan 2.02
- - FHA 15-Year Fixed Rate Loan 1.70
- - VA 30-Year Fixed Rate Loan 1.70
- - VA 15 -Year Fixed Rate Loan 1.50
- - Fannie Mae/Freddie Mac 30-Year Fixed Rate Loan 0.75
</TABLE>
AGREED TO THIS 17TH DAY OF JULY, 1998 WITH AND BETWEEN:
/s/ Kenneth C. Ketner /s/ Andrew Cimerman
- ----------------------------- -----------------------------
Kenneth C. Ketner, CEO MaxAmerica Financial
Mortgage Capital Resource
<PAGE>
EXHIBIT 10.15
AGREEMENT AND PLAN OF ACQUISITION BY AND BETWEEN
HOMELIFE SECURITIES, INC. AND HOMELIFE, INC.
DATED APRIL 15, 1996 FOR HOMELIFE REALTY SERVICES, INC.
<PAGE>
AGREEMENT AND PLAN
OF ACQUISITION
AGREEMENT AND PLAN OF ACQUISITION by and between HomeLife Securities, Inc., a
Canadian corporation (here-in-after sometimes referred to as "Seller") and
HomeLife, Inc., a Nevada corporation (here-in-after sometimes referred to as
"Buyer").
WHEREAS, the Boards of Directors of Seller, and Buyer deem it advisable for the
mutual benefit of Seller and Buyer and their respective shareholders that the
assets of Seller be acquired by Buyer (the "Acquisition"), and have approved
this Agreement and Plan of Acquisition (the Agreement");
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and for the purpose of setting
forth certain terms and conditions of the Acquisition, and the method of
carrying the same into effect, Seller and Buyer agree as follows:
ARTICLE I
ACQUISITION AND ORGANIZATION
SECTION 1.0 AGREEMENT TO BUY AND SELL. Seller agrees to sell to Buyer for two
million five hundred thousand (2,500,000) shares of Buyer's common stock, all.
of the stock ownership of HomeLife Reality Services, Inc. a Delaware Corporation
(here-in-after sometimes referred. to as "HRS"), and Buyer agrees to issue to
Seller two million five hundred thousand (2,500,000) shares of Buyer's common
stock, for said ownership.
SECTION 1.1 THE ACQUISITION. As of April 15, 1996 (the "Closing Date"),
subject to the terms and conditions hereof, Seller shall transfer, to Buyer, one
hundred percent (1000%) ownership of HRS.
SECTION 1.3 EFFECT OF ACQUISITION. The parties agree to the following
provisions with respect to the
Acquisitions contemplated herein:
(a) Corporate Organization. The separate corporate existences of Buyer and
Seller shall continue following the Acquisition. Each Constituent Corporation
shall continue to be responsible for its respective liabilities and obligations.
(b) Closing Date. Said Acquisition shall be consummated and the closing of
this Agreement shall occur immediately upon the signing of this Agreement by the
parties (the "Closing Date"). The Closing shall take place at the, corporate
offices of Buyer.
ARTICLE 2
THE ACQUISITION
SECTION 2.1 ISSUANCE OF SHARES IN THE ACQUISITION. At the Closing, Buyer shall
issue to Seller two million five hundred thousand (2,500,000) shares of Buyer's
common stock in exchange for all of the issued and outstanding shares of
HomeLife Reality Services, Inc. a Delaware corporation.
SECTION 2.2 FURTHER TRANSFER OF STOCK. The shares to be issued by Buyer under
2.1 (a) above shall be issued as investment shares and transfer of such shares
shall be restricted as required by State and Federal Securities law.
SECTION 2.3 TRANSFER OF STOCK CERTIFICATES. Seller shall deliver to buyer at
the time of signing of this Agreement properly endorsed stock certificate(s)
transferring the ownership of HRS to buyer. Buyer upon receipt of said
certificate(s) shall instruct it's. stock transfer agent and registrar to issue
to seller two million five hundred thousand (2,500,000) shares of Buyer's common
stock.
1
<PAGE>
ARTICLE 3
ADDITIONAL AGREEMENTS
SECTION 3.0 CONDUCT OF BUSINESS PENDING ACQUISITION. Unless and until this
Agreement has been terminated in accordance with its terms, neither Buyer or
Seller will solicit or encourage, directly or indirectly, any inquiries or
proposals to acquire any shares of the capital stock or any significant portion
of the total assets of Buyer.
SECTION 3.1 REASONABLE EFFORTS. Subject to the terms and conditions hereof, each
of the parties hereto agree to use any and all reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary to satisfy the other conditions of Closing set forth herein.
SECTION 3.2 CONDUCT OF BUSINESS PENDING ACQUISITIONS OF ASSETS. Buyer covenants
and agrees that, prior to the Closing Date, unless Seller shall otherwise agree
in writing and except as contemplated by this Agreement:
(a) the business of Buyer shall be conducted only in the ordinary and usual
course and consistent with past practices, and shall not purchase or sell (or
enter into any agreement to purchase or sell) any properties of assets or make
any other changes in the operations of Buyer taken as a whole;
(b) Buyer shall not (i) amend its Articles of Incorporation or By-Laws,
(H) change the number of authorized or outstanding shares of its capital stock
(except as set forth Section 2. 1 (a) hereof), or (iii) declare, set Aside or
pay any dividend or other distribution of payment in cash, stock or property in
respect of the shares;
(c) Buyer shall not issue or pledge any shares of; or rights of any kind to
acquire any shares of, the Capital stock of Buyer, (ii) incur any indebtedness
other than in the ordinary course of business, (ii) acquire directly or
indirectly by redemption or otherwise any shares of the capital stock of Buyer
of any class or (iv) enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(d) Buyer shall use its best efforts to pre-serve intact the business
organization of Buyer, to keep available the services of their current officers
and key employees, and to preserve the good will of those having business
relationships with them;
(e) Buyer will not (i) increase the compensation payable or to become
payable by it to any of its officers or directors, (ii) make any payment or
provision with respect to any bonus, profit sharing, stock option, stock
purchase, employee stock ownership, pension, retirement, deferred compensation,
employment or other payment plan, agreement or arrangement for the benefit of
their employees, (iii) grant any stock options or stock appreciation tights or
permit the exercise of such rights is subject to the discretion of Buyer,
(iv) make any change in the compensation to be received by any officer of Buyer,
or adopt, or amend to increase compensation or benefits payable under, any
collective bargain bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment termination, severance or other
plan, agreement, trust, fund or arrangement for the benefit of employees,
(v) enter into any agreement with respect to termination or severance pay, or
any employment agreement or other contract or arrangement with any officer or
director or employee of Buyer with respect to the performance of personal
services that is not terminable without liability by it in thirty days' notice
or less (vi) increase benefits payable under its current severance or
termination pay agreements or policies or (vii) make any loan or advance to, or
enter into any written contract, lease or commitment with, any officer or
director of Buyer;
(f) Buyer shall not assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual, firm or corporation or
make any loans or advances to any individual, firm or corporation;
(g) Buyer shall not make any investment of a capital nature either by
purchase of stock or securities, contributions to capital, property transfers or
otherwise, or by the purchase of any property or assets or any other individual,
firm or corporation;
2
<PAGE>
(h) Buyer shall not reduce its cash or short term investments or their
equivalent, other than to meet cash needs arising in the ordinary course of
business, consistent with past practices, or in performing its obligations under
this Agreement; and
(i) Buyer shall not enter into an agreement to do any of the things
described in clauses (a), (b), (c), (e), (9, (g) and (h).
SECTION 3-3 ACCESS AND INFORMATION. Buyer and Seller shall provide each to the
other: (a) Buyer shall afford to Seller and its accountants, counsel and other
representatives full access, during normal business hours throughout the period
prior to the Closing Date, to all of the properties, books, contracts,
commitments and records (including but not limited to tax returns) of Buyer and,
during such period, Buyer shall furnish promptly to Seller (i) a copy of each
report, schedule and other document filed or received by it pursuant to the
requirements of federal or state securities laws, and (ii) all other information
concerning the business, properties and personnel of Buyer that may reasonably
be requested. In the event of the termination of this Agreement, Buyer will, and
will cause its representative to, deliver to Seller all documents, work papers
and other material, and all copies thereof, obtained by it or on its behalf from
Seller as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof, and will hold in confidence all
confidential information, and will not use any such confidential information,
until such time as such information is otherwise publicly available or as it is
advised by counsel that any such information or document is required by law to
be disclosed. If this Agreement is terminated, Buyer will promptly deliver to
Seller all documents so obtained by it.
(b) Seller shall afford to Buyer and its accountants, counsel and other
representatives full access, during normal business hours throughout the period
prior to the Closing Date, to all of the books and records, (including but not
limited to tax returns) pertaining to the company being Acquired by Buyer,
during such period, Seller shall furnish promptly to Buyer (i) a copy of each
report, schedule and other document filed or received by it pursuant to the
requirements of federal or state securities laws, and requested by Buyer. In the
event of the termination of this Agreement, Seller will, and will cause its
representative to, deliver to Buyer all documents, work papers and other
material, and all copies thereof, obtained by it or on its behalf from Buyer as
a result of this Agreement or in connection herewith, whether so obtained before
or after the execution hereof, and will hold in confidence all confidential
information, and will not use any such confidential information, until such time
as such information is otherwise publicly available or as it is advised by
counsel that any such information or document is required by law to be
disclosed. If this Agreement is terminated, Seller will deliver to Buyer all
documents so obtained by it.
SECTION 3.4 NOTICE OF ACTIONS AND PROCEEDINGS . Buyer shall promptly notify
Seller, and Seller shall promptly notify Buyer of any claims, actions,
proceedings or investigations commenced or, to the best of its knowledge,
threatened, involving or affecting Buyer or Seller or any of their property or
assets, of, to the best of its knowledge, against any employee; consultant
director, officer or shareholder, in his, her or its capacity as such, of Buyer
or Seller which, if pending on the date hereof would have been required to have
been disclosed in writing pursuant to Section 4.2(d) hereof or which relates to
the consummation of the Acquisition or the transactions contemplated hereby.
SECTION 3.5 NOTIFICATION OF OTHER CERTAIN MATTERS. Buyer shall give prompt
notice to Seller and Seller shall give prompt notice to Buyer, of any notice of,
or other communication relating to, a default or event which, with notice-or
lapse of time or both, would become a default, received by Buyer or Seller
subsequent to the date of this Agreement and prior to the Closing Date, under
any agreement, indenture or instrument material to the financial condition,
properties, business or results of operations of Buyer or Seller taken as a
whole to which Buyer or Seller is a party or is subject;
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER
Buyer, represents and warrants to, and agrees with Seller as follows:
3
<PAGE>
SECTION 4.0 ORGANIZATION AND GOOD STANDING. Buyer is a duly incorporated and
validly existing corporation in good standing, under the laws of Nevada, with
all requisite power and authority (corporate and other) to own its properties
and conduct its business.
SECTION 4.1 AUTHORIZATION: BINDING AGREEMENT. Buyer has the requisite corporate
power and authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by Buyer and constitutes a valid and binding
agreement of Buyer in accordance with its terms.
SECTION 4.2 CAPITALIZATION. The authorized capital stock of Buyer consists of
five million (5,000,000) shares of common stock, par value $.001 per share, One
hundred thousand (100,000) shares of preferred stock, no par value, which may be
issued by the board of directors as one (1) or more classes. Prior to the
issuance of the stock authorized by this Agreement there were as of March 31,
1996 one million thirty seven thousand one hundred ninety (1,037,190) common
shares authorized to be issued. There were no preferred shares Issued. As of the
date here of only one million thirty seven thousand nine hundred fifty nine
(1,037,959) common shares have actually been issued by the Buyer's transfer
agent and registrar due to a delay by buyer. All of the authorized to be and
outstanding share of the capital stock of Buyer are fully paid and
nonassessable. Buyer is not aware of any voting trust, voting agreements or
similar understanding. Buyer does not have any options, subscriptions or other
rights, Agreements or commitments, which either: (a) obligates Buyer to issue,
sell or transfer any shares of the capital stock of Buyer or (b) restricts the
issuance of or otherwise relates to the shares of its common stock.
SECTION 4.3 LITIGATION. As of the date hereof there are no claims, actions,
proceedings, or investigations pending or, to the best knowledge of Buyer,
threatened against Buyer or to the best of Buyer's knowledge, pending or
threatened against any subsidiary company, partnership, employee, consultant,
director, officer or shareholder, in his or its capacity as such, before any
court or governmental or regulatory authority or body which, if decided
adversely, could materially and adversely affect the financial condition,
business, prospects or operations of Buyer or it's subsidiaries or
partnership(s). As of the date hereof, neither Buyer nor any of its property is
subject to any order, judgement, injunction or decree, which materially and
adversely affects the financial condition, business, prospects or operations of
Buyer.
SECTION 4.4 FINANCIAL STATEMENTS AND REPORTS. Buyer has provided Seller with
true and complete copies of financial statements prepared. by an independent
Certified Public Accountant in accordance with generally accepted accounting
principles applied on a consistent basis (except as otherwise noted in such
statements) and present fairly the financial position, results of operations and
changes in financial position of holdings being acquired.
SECTION 4.4 ABSENCE OF BEACH. The execution, delivery and performance by Buyer
of this Agreement, and the performance by Buyer of its obligations hereunder, do
not (i) conflict with or result in a breach of any of the provisions of its
articles of incorporation or by-laws: I
(a) Buyer shall have performed in all material respects their agreements
contained in this Agreement required to be performed on or prior to the Closing
Date including those specified in Section 4.4 herein;
(b) Buyer's representations and warranties set forth in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
as if made on and as of such date, except as contemplated or permitted by this
Agreement,
(c) Seller shall have delivered to Buyer copies of resolutions duly adopted
by its Board of Directors approving the execution and delivery of this
Agreement, such resolutions being certified by the Secretary;
(d) No action or preceding before any court or governmental or regulatory
authority or body, United States, federal or state or foreign, shall have been
instituted (and be pending) or threatened by any governmental authority, which
seeks to prevent or delay the consummation of the Acquisition or which
challenges any of the terms or provisions of this Agreement;
4
<PAGE>
(e) No order issued by any United States federal or state or foreign
governmental or regulatory authority or body of by any court of competent
jurisdiction nor any statute, rule, regulation or executive order promulgated or
enacted by any The United States federal state or foreign governmental authority
which prevents the consummation of the Acquisition shall be in effect;
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER
Seller, represents and warrants to, and agrees with Buyer as follows:
SECTION 5.0 ORGANIZATION AND GOOD STANDING. Seller is a duly incorporated and
validly existing corporation in good standing under the laws of Canada, with all
requisite power and authority (corporate and other) to own its properties and
conduct its businesses.
SECTION 5.1 AUTHORIZATION: BINDING AGREEMENT. Seller has the requisite
corporate power and authority to execute and deliver this Agreement. This
Agreement has-been duly and validly authorized, executed and delivered by Seller
and constitutes a valid and binding agreement of Seller in accordance with its
terms.
SECTION 5.2 ABSENCE OF BREACH. The execution, delivery and performance by
Seller of this Agreement, and the performance by Seller of its obligations
hereunder do not (i) conflict with or result in a breach of any of the
provisions of its articles of incorporation or by-laws, (ii) subject to
obtaining the governmental and other consents referred to in Section 5.4 hereof,
contravene any law, rule or regulation of any province or of Canada or any
political subdivision thereof or therein, or any order, writ, judgement,
injunction, decree, determination or award currently in effect, which, singly or
in the aggregate, would have a material adverse effect on Seller, (iii) conflict
in any respect with or result shall be subject to the fulfillment at or prior to
the Closing Date of the following conditions any one or more of which may effect
the company HLR being sold to Buyer.
ARTICLE 6
CONDITIONS
SECTION 6.0 CONDITIONS TO EACH PARTY'S 0BLIGATION TO EFFECT THE ACQUISITION.
The respective, obligations of each party to effect the Acquisition shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) this Agreement and the transactions contemplated hereby having been
approved and adopted at or prior to the Closing Date by the requisite vote of
the board of directors of each party;
(b) no preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States or Canada
preventing the consummation of the Acquisition shall be in effect.
SECTION 6.1 CONDITIONS OF OBLIGATION TO BUYER TO EFFECT ACQUISITION. The
obligations of Buyer to effect the Acquisition shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions any one
of which may be waived by Buyer:
(a) Seller shall have performed in all material respects their agreements
contained in this Agreement required to be performed on or prior to the Closing
Date including those specified in Section 6.5 herein;
(b) Sellers, representations and warranties set forth in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
as if made on and as of such date, except as contemplated or permitted by this
Agreement;
(c) Seller shall have delivered a certificate of its President or its
Chairman of the Board to the effect set forth in paragraphs (a) and (b) of this.
Section 6.2;
5
<PAGE>
(d) Seller shall have delivered to Buyer copies of resolutions duly adopted
by its Board of Directors approving the execution and delivery of this
Agreement, such resolutions being certified by the Secretary;
SECTION 6.3 CONDITIONS TO THE OBLIGATION OF SELLER TO EFFECT THE ACQUISITION.
The obligation of' Seller to effect the Acquisition shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions, any one
or more of which may be waived by Seller:
(a) Seller shall- have performed in all material respects on or prior to
the Closing Date;
(b) The representations and warranties of buyer set forth in this
Agreement shall be true and correct in a material respects on and as of Closing
Date as if made on and as of such date, except as contemplated or permitted by
this Agreement;
(c) Except to the extent such consent are not required at Closing Date,
Seller shall received the consents or exemptions, or made the filings, as the
case may be, which were referred to in Section 5.4;
(d) Buyer shall have delivered a certificate of its President to the effect
set forth in paragraphs (a) and (b) of this Section 6.3;
(e) Buyer shall have delivered to Seller copies of resolutions duly adopted
by the Board of Directors of the Company approving the execution and delivery of
this Agreement such resolutions being certified by the Secretary of the Company;
(f) No action or proceeding before any court or governmental or regulatory
authority or body, United States federal or state or foreign, shall have been
instituted (and be pending or threatened) by any government or governmental
authority, which seeks to prevent or delay the consummation of the Acquisition
or which challenges any of the terms or provisions of this Agreement;
(g) No order issued by the United States federal or state or foreign
governmental or regulatory authority or body, or by any court of competent
jurisdiction nor any statute, rule regulation, or executive order promulgated or
enacted by any United States.
ARTICLE 7
TERMINATION
SECTION 7.0 BOARD ACTION. This Agreement may be terminated at any time by mutual
consent of the Boards of Directors of Seller and Buyer.
SECTION 7.1 CERTAIN DATES. In the event the Acquisition shall not have become
effective on or before April 15, 1996, this Agreement may be terminated by
either party upon written notice, whether before, or after approval of the
Acquisition thereof by the board of directors of Buyer. This Agreement shall
terminate automatically if the Acquisition has not been consummated by April 15,
1996,
SECTION 7.2 EFFECT OF TERMINATION . In the event of the termination of this
Agreement this Agreement shall thereafter become void and have no effect and no
party hereto shall have any liability to any other party hereto or its
shareholders or directors or officers in respect thereof, except for the
obligations of the parties hereto in Section 8.1 hereof.
6
<PAGE>
ARTICLE 8
GENERAL AGREEMENTS
SECTION 8.0 COOPERATION. Each of the parties hereto shall cooperate with the
other in every reasonable way in carrying out the transactions contemplated
herein, and in delivering all documents and instruments deemed reasonably
necessary or useful by counsel for any party hereto.
SECTION 8.1 COSTS. All costs and expenses incurred in connection with this
Agreement and the transactions. contemplated hereby shall. be the sole
responsibility of Buyer.
SECTION 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties in this Agreement or in any instrument or certificate delivered
pursuant to this Agreement delivered on or prior to the Closing Date shall
survive the consummation of the Acquisition.
SECTION 8.3 NOTICES. All notices and other communications hereunder shall. be in
writing and shall be deemed to have been duly given If delivered by messenger,
transmitted by fax or telegram or mailed by registered or certified mail,
postage prepaid, as follows:
(a) If to Seller, to: Andrew Cimerman
HomeLife Securities, Inc.
1167 Caledonia Road
Toronto, Ontario M6A 2X1 Canada
(b) If to Buyer, to: Robert L. Cashman
HomeLife, Inc
4 100 Newport Place Suite 73 0
Newport Beach, CA 92660
The date of any such notice shall be the date hand delivered or otherwise
transmitted or mailed.
SECTION 8.4 AMENDMENT. This Agreement (including the documents and instruments
referred to herein or therein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof, (b) is not
intended to confer upon any other person any rights or remedies hereunder, and
(c) shall not be assigned by operation of law or otherwise. This Agreement may
be amended or modified in whole or in part to the extent permitted by California
law at any time, by an agreement in writing executed to do so by the Board of
Directors of Seller and Buyer.
SECTION 8.5 WAIVE. At any time prior to the Closing Date, the parties hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representation and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
or waiver signed on behalf of such party.
SECTION 8.6 BROKER. Seller and Buyer represent and warrant that no broker
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with this transaction.
SECTION 8.7 PUBLICITY. So long as this agreement is in effect the parties
hereto shall not issue or cause the publication of any press release or other
announcement with respect to this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld or delayed where such
release or-announcement is required by applicable law.
7
<PAGE>
SECTION 8.8 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of and is enforceable by the respective successors and
assigns of the parties hereto.
SECTION 8. 10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
IN WITNESS WHEREOF the parties have executed this Agreement by their duly
authorized officers as of the 1st day of April, 1996.
Buyer: HomeLife, Inc.
Attest:
By: /s/ Andrew Cimerman
------------------------------------
Andrew Cimerman, President
/s/ Robert L. Cashman
- -------------------------------
Robert L. Cashman, Secretary
Seller: HomeLife Securities, Inc.
Attest:
By: /s/ Andrew Cimerman
------------------------------------
Andrew Cimerman, President
/s/ Gabrielle Jeans
- -------------------------------
Gabrielle Jeans, Secretary
8
<PAGE>
EXHIBIT 10.16
AGREEMENT AND PLAN OF ACQUISITION FOR
HOMELIFE U.S. PARTNERSHIP BY AND BETWEEN
HOMELIFE, INC. AND HOMELIFE SECURITIES, INC.
DATED APRIL 15, 1996
<PAGE>
AGREEMENT AND PLAN
OF ACQUISITION
AGREEMENT AND PLAN OF ACQUISITION by and between HomeLife Securities, Inc., a
Canadian corporation (here-in-after sometimes referred to as "Seller") and
HomeLife, Inc., a Nevada corporation (here-in-after sometimes referred to as
"Buyer").
WHEREAS, the Boards of Directors of Seller and Buyer deem it advisable for the
mutual benefit of Seller and Buyer and their respective shareholders that the
assets of Seller be acquired by Buyer (the "Acquisition"), and have approved
this Agreement and Plan of Acquisition (the Agreement");
NOW THEREFORE, in consideration of the mutual covenants, agreements.,
representations and warranties contained herein, and for the purpose of setting
forth certain terms and conditions of the Acquisition, and the method of
carrying the same into effect, Seller and Buyer agree as follows:
ARTICLE I
ACQUISITION AND ORGANIZATION
SECTION 1.0 AGREEMENT TO BUY AND SELL. Seller agrees to sell to Buyer for ten
thousand (10,000) shares of Buyer's one hundred dollar ($100.) fixed interest 6%
non-cumulative, non-voting convertible preferred shares, convertible into one
million (1,000,000) shares of Buyers common stock (the "Stock"), all Sellers
interest in and to HomeLife U. S, Partnership, (here-in-after sometimes referred
to as "HLP").
SECTION 1.1 THE ACQUISITION. As of April 15, 1996 (the "Closing Date"),
subject to the terms and conditions hereof, Seller shall transfer, to Buyer, one
hundred percent (100%) ownership of HLP.
SECTION 1.3 EFFECT OF ACQUISITION. The parties agree to the following provisions
with respect to the Acquisitions contemplated herein:
(a) Corporate Organization. The separate corporate existences of Buyer
and Seller shall continue following the Acquisition, Each Constituent
Corporation shall continue to be responsible for its respective liabilities and
obligations.
(b) Closing Date. Said Acquisition shall be consummated and the
closing of this Agreement shall occur immediately upon the signing of this
Agreement by the parties (the "Closing Date"). The Closing shall take place at
the corporate offices of Buyer.
ARTICLE 2
THE ACQUISITION
SECTION 2.1 ISSUANCE OF SHARES IN THE ACQUISITION. At the Closing, Buyer shall
Issue to Seller ten thousand (10,000) shares of Buyer's one hundred dollar
($100.) fixed interest 6% non-cumulative, convertible preferred shares,
convertible into one million (1,000,000) shares of Buyers common stock in
exchange for all of the Seller's interest in and, to HomeLife U.S. Partnership,
a California partnership.
SECTION 2.2 FURTHER TRANSFER OF STOCK. The shares to be issued by Buyer under
2.1 (a) above shall be issued as investment shares and transfer of such shares
shall be restricted as required by State and Federal Securities law.
SECTION 2.3 TRANSFER OF PARTNERSHIP. Seller shall deliver to buyer at the time
of signing of this Agreement properly endorsed partnership document(s)
transferring the ownership of HLP to buyer. Buyer upon receipt of said
document(s) shall instruct it's stock transfer agent and registrar to issue to
seller ten thousand (10,000) shares of Buyers one hundred dollar ($100.) fixed
interest 6% non-cumulative, non-voting, convertible preferred shares,
convertible into one million (1,000,000) shares of Buyers common stock.
<PAGE>
ARTICLE 3
ADDITIONAL AGREEMENTS
SECTION 3.0 CONDUCT OF BUSINESS PENDING ACQUISITION. Unless and until this
Agreement has been terminated in accordance with its terms, neither Buyer or
Seller will solicit or encourage, directly or indirectly, any inquiries or
proposals, to acquire any shares of the capital stock or any significant portion
of the total assets of Buyer.
SECTION 3.1 REASONABLE EFFORTS. Subject to the terms and conditions hereof,
each of the parties hereto agree to use any and all reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary to satisfy the other conditions of Closing set forth herein.
SECTION 3.2 CONDUCT OF BUSINESS BY BUYER PENDING ACQUISITION OF ASSETS. Buyer
covenants and agrees that, prior to the Closing Date, unless Seller shall
otherwise agree in writing and except as contemplated by this Agreement;
(a) the business of Buyer shall be conducted only in the ordinary and usual
course and consistent with past practices, and shall not purchase or sell (or
enter into any agreement to purchase or sell) any properties or assets or make
any other changes in the operations of Buyer taken as a whole;
(b) Buyer shall not (i) amend its Articles of Incorporation or By-Laws,
(ii) change the number of authorized or outstanding shares of its capital stock
(except as set forth Section 2. 1 (a) hereof), or (iii) declare, set aside or
pay any dividend or other distribution or payment in cash, stock or property in
respect of the shares;
(c) Buyer shall not issue or pledge any shares of, or rights of any kind to
acquire any shares of, the capital stock of Buyer, (ii) incur any indebtedness
other than in the ordinary course of business, (iii) acquire directly or
indirectly by redemption or otherwise any shares of the capital stock of Buyer
of any class or (iv) enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(d) Buyer shall use its best efforts to preserve intact the business
organization of Buyer, to keep available the services of their current officers
and key employees, and to preserve the good will of those having business
relationships with them;
(e) Buyer will not (i) increase the compensation payable or to become
payable by it to any of its officers or directors, (ii) make any payment or
provision with respect to any bonus, profit sharing, stock option, stock
purchase, employee stock ownership, pension, retirement, deferred compensation,
employment or other payment plan, agreement or arrangement for the benefit of
their employees, (iii) grant any stock options or stock appreciation rights or
permit the exercise of such rights is subject to the discretion of Buyer,
(iv) make any change in the compensation to be received by any officer of Buyer,
or adopt, or amend to increase compensation or benefits payable under, any
collective bargaining, bonus, profit sharing, compensation, stock option,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement trust, fund or arrangement for the benefit of
employees, (v) enter into any agreement with respect to termination or severance
pay, or any employment agreement or other contract or arrangement with any
officer or director or employee of Buyer with respect to the performance of
personal services that is not terminable without liability by it in thirty days'
notice or less, (vi) increase benefits payable under its current severance or
termination pay agreements or policies or (vii) make any loan or advance to, or
enter into any written contract, lease or commitment with, any officer or
director of Buyer;
(f) Buyer shall not assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual, firm or corporation
or make any loans or advances to any individual, firm or corporation;
(g) Buyer shall not make any investment of a capital nature either by
purchase of stock or securities, contributions to capital, property transfers or
otherwise, or by the purchase of any property or assets or any other individual,
firm or corporation;
<PAGE>
(h) Buyer shall not reduce its cash or short term investments or their
equivalent, other than to meet cash needs arising in the ordinary course of
business, consistent with past practices, or in performing its obligations under
this Agreement; and
(i) Buyer shall not enter into an agreement to do any of the things
described in clauses above.
SECTION 3.3 ACCESS AND INFORMATION. Buyer and Seller shall provide each to the
other: (a) Buyer shall afford to Seller and its accountants, counsel and other
representatives fall access, during normal business hours throughout the period
prior to the Closing Date, to all of the properties, books, contracts,
commitments and records (including but not limited to tax returns) of Buyer and,
during such period, Buyer shall furnish promptly to Seller (i) a copy of each
report, schedule and other document filed or received by it pursuant to the
requirements of federal or state securities laws, and (ii) all other information
concerning the business, properties and personnel of Buyer that may reasonably
be requested. In the event of the termination of this Agreement Buyer will, and
will cause its representative to, deliver to Seller all documents, work papers
and other material, and all copies thereof, obtained by it or on its behalf from
Seller as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof and will hold in confidence all
confidential information, and will not use any such confidential information,
until such time as such information is otherwise publicly available or as it is
advised by counsel that any such information or document is required by law to
be disclosed. If this Agreement is terminated, Buyer will promptly deliver to
Seller all documents so obtained by it.
(b) Seller shall afford to Buyer and its accountants, counsel and other
representatives full access, during normal business hours throughout the period
prior to the Closing Date, to all of the books and records, (including but not
limited to tax returns) pertaining to the company being Acquired by Buyer,
during such period, Seller shall furnish promptly to Buyer (i) a copy of each
report, schedule and other document filed or received by it pursuant to the
requirements of federal or sate securities laws, and requested by Buyer. In the
event of the termination of this Agreement, Seller will, and will cause its
representative to, deliver to Buyer an documents, work, papers and other
material, and all copies thereof obtained by it or on its behalf from Buyer as a
result of this Agreement or in connection herewith, whether so obtained before
or after the execution hereof, and will hold in confidence all confidential
information, and will not use any such confidential information, until such time
as such information is otherwise publicly available or as it is advised by
counsel that any such information or document is required by law to be
disclosed. If this Agreement is terminated, Seller will deliver to Buyer all
documents so obtained by it.
SECTION 3.4 NOTICE OF ACTIONS AND PROCEEDINGS. Buyer shall promptly notify
Seller, and, Seller shall, promptly notify Buyer of any claims) actions,
proceedings or investigations commenced on to the best of its knowledge,
threatened, involving or affecting Buyer or Seller or any of their property or
assets, or, to the best of its knowledge, against any employee, consultant,
director, officer or shareholder, in his, her or its capacity as suck of Buyer
or Seller which, if pending on the date hereof, would have been required to have
been disclosed in writing pursuant to Section 4.2(d) hereof or which relates to
the consummation of the Acquisition or the transactions contemplated hereby.
SECTION 3.5 NOTIFICATION OF OTHER CERTAIN MATTERS. Buyer shall give prompt
notice to Seller and Seller shall give prompt notice to Buyer, of any notice of,
or other communication relating to, a default or event which, with notice or
lapse of time, or both, would become a default, received by Buyer or Seller
subsequent to the date of this Agreement and prior to the Closing Date, under
any agreement, indenture or instrument material to the financial condition,
properties, business or results of operations of Buyer or Seller taken as a
whole to which Buyer or Seller is a party or is subject;
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER
Buyer, represents and warrants to, and agrees with Seller as follows:
SECTI0N 4.0 ORGANIZATION AND GOOD STANDING. Buyer is a duly incorporated and
validly existing corporation in good standing under the laws of Nevada, with all
requisite power and authority (corporate and other) to own its properties and
conduct its business.
<PAGE>
SECTION 4.1 AUTHORIZATION: BINDING AGREEMENT. Buyer has the requisite corporate
power and authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by Buyer and constitutes a valid and binding
agreement of Buyer in accordance with its terms.
SECTION 4.2 CAPITALIZATION. The authorized capital stock of Buyer consists of
five million (5,000,000) shares of common stock, par value $.001 per share; One
hundred thousand (100,000) shares of preferred stock no par value, which may be
issued by the board of directors as one (1) or more classes. Prior to the
issuance of the stock authorized by this Agreement there were as of March 31,
1996 Three million thirty seven thousand one hundred ninety (3,037,190) common
shares authorized to be issued. There were no preferred shares Issued. As of the
date here of only one million thirty seven thousand nine (1,037,959) common
shares have actually been issued by the Buyer's transfer agent and registrar due
to a delay by buyer. All of the authorized to be and outstanding shares of the
capital stock of Buyer are fully paid and nonassessable. Buyer is not aware of
any voting trust, agreements or similar understanding. Buyer does not have any
options, subscriptions or other rights, Agreements or commitments, which either:
(a) obligates Buyer to issue, sell or transfer any shares of the capital stock
of Buyer or (b) restricts the issuance of or otherwise relates to the shares of
its common stock.
SECTION 4.3 LITIGATION. As of the date hereof there are no claims actions,
proceedings, or investigations pending or, to the best knowledge of Buyer,
threatened against Buyer or to the best of Buyer's knowledge, pending or
threatened against any subsidiary company, partnership, employee, consultant,
director, officer or shareholder, in his or its capacity as suck before any
court or governmental or regulatory authority or body which, if decided
adversely, could materially and adversely affect the financial condition,
business, prospects or operations of Buyer or it's subsidiaries or
partnership(s). As of the date hereof, neither Buyer nor any of its property is
subject to any order, judgement, injunction or decree, which materially and
adversely affects the financial condition, business, prospects or operations of
Buyer.
SECTION 4.4 FINANCIAL STATEMENTS AND REPORT . Buyer has provided Seller with
true and complete copies of financial statements prepared by an independent
Certified Public Accountant in accordance with generally accepted accounting
principles applied on a consistent basis (except as otherwise noted in such
statements) and present fairly the financial position, results of operations and
changes in financial position of holdings being acquired.
SECTION 4.4 ABSENCE OF BREACH. The execution, delivery and performance by Buyer
of this Agreement, and the performance by Buyer of its obligations hereunder, do
not (i) conflict with or result in a breach of any of the provisions of its
articles of incorporation or by-laws:
(a) Buyer shall have performed in all material respects their agreements
contained in this Agreement required to be performed on or prior to the Closing
Date including those specified in Section 4.4 herein;
(b) Buyer's representations and warranties set forth in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
as if made on and as of such date, except as contemplated or permitted by this
Agreement;
(c) Seller shall have delivered to Buyer copies of resolutions duly adopted
by its Board of Directors approving the execution and delivery of this
Agreement, such resolutions being certified by the Secretary;
(d) No action or preceding before any court or governmental or regulatory
authority or body, United States, federal or state or foreign, shall have been
instituted (and be pending) or threatened by any governmental authority, which
seeks to prevent or delay the consummation of the Acquisition or which
challenges any of the terms or provisions of this Agreement;
(e) No order issued by any United States federal or state or foreign
governmental or regulatory authority or body of by any court of competent
jurisdiction nor any statute, rule, regulation or executive order promulgated or
enacted by any United States federal or state or foreign governmental authority
which prevents the consummation of the Acquisition shall be in effect.
<PAGE>
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER
Seller, represents and warrants to, and agrees with Buyer as follows:
SECTION 5.0 ORGANIZATION AND GOOD STANDING . Seller is a duly incorporated and
validly existing corporation in good standing under the laws of Canada, with all
requisite power and authority (corporate.. and other) to own its properties and
conduct its businesses.
SECTION 5.1 AUTHORIZATION: BINDING AGREEMENT. Seller has the requisite power
and authority to execute and deliver this Agreement, This Agreement has been
duly and validly authorized, executed and delivered by Seller and constitutes a
valid and binding agreement of Seller in accordance with its terms.
SECTION 5.2 ABSENCE OF BREACH . The execution, delivery and performance by
Seller of this Agreement, and the performance by Seller of its obligations
hereunder, do not (i) conflict with or result in a breach of any of the
provisions of its articles of incorporation or by-laws, (ii) subject to
obtaining the governmental and other consents referred to in Section 5.4 hereof,
contravene any law, rule or regulation of any province or of Canada or any
political subdivision thereof or therein, or any order, writ, judgement,
injunction, decree, determination or award currently in effect, which, singly or
in the aggregate, would have a material adverse effect on Seller, (iii) conflict
in any respect with or result shall be subject to the fulfillment at or prior to
the Closing Date of the following conditions any one or more of which may effect
the partnership HLP being sold to Buyer.
ARTICLE 6
CONDITIONS
SECTION 6.0 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE ACQUISITION. -
The respective obligations of each party to effect the Acquisition shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) this Agreement and the transactions contemplated hereby having been
approved and adopted at or prior to the Closing Date by the requisite vote of
the board of directors of each party;
(b) no preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States or Canada
preventing the consummation of the Acquisition shall be in effect.
SECTION 6.1 CONDITIONS TO OBLIGATION TO BUYER TO EFFECT ACQUISITION. The
obligations of Buyer to effect the Acquisition shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions any one
of which may be waived by Buyer:
(a) Seller shall have performed in all material respects their agreements
contained in this Agreement required to be performed on or prior to the Closing
Date including those specified in Section 6.5 herein;
(b) Seller's representations and warranties set forth in this Agreement
shall be true and correct in all material respects on and as of the, Closing
Date as if made on and as of such date, except as contemplated or permitted by
this Agreement;
(c) Seller shall have delivered a certificate of its President or its
Chairman of the Board to the effect set forth in paragraphs (a) and (b) of this
Section 6.2;
(d) Seller shall have delivered to Buyer copies of resolutions duly adopted
by its Board of Directors approving the execution and delivery of this
Agreement, such resolutions being certified by the Secretary.
SECTION 6.3 CONDITIONS TO THE OBLIGATION OF SELLER TO EFFECT THE ACQUISITION.
The obligation of Seller to effect the Acquisition shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions, any one
or more of which may be waived by Seller:
<PAGE>
(a) Seller shall have performed in all material respects on or prior to the
Closing Date;
(b) The representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material respects on and as of
Closing Date as if made on and as of such date, except as contemplated or
permitted by this Agreement;
(c) Except to the extent such consent are not required at Closing Date,
Seller shall received the consents or exemptions, or made the filings, as the
case may be, which were referred to in Section 5.4;
(d) Buyer shall have delivered a certificate of its President to the effect
set forth in paragraphs (a) and (b) of this Section 6,3;
(e) Buyer shall have delivered to Seller copies of resolutions duly adopted
by the Board of Directors of the Company approving the execution and delivery of
this Agreement such resolutions being certified by the Secretary of the Company;
(f) No action or proceeding before any court or governmental or regulatory
authority or body, United States federal or state or foreign, shall have been
instituted (and be pending or threatened) by any government or governmental
authority, which seeks to prevent or delay the consummation of the Acquisition
or which challenges any of the terms or provisions of this Agreement;
(g) No order issued by the United States federal or state or foreign
governmental or regulatory authority or body, or by any court of competent
jurisdiction nor any statute, rule, regulation, or executive order promulgated
or enacted by any United States.
ARTICLE 7
TERMINATION
SECTION 7.0 BOARD ACTION. This Agreement may be terminated at any time by mutual
consent of the Boards of Directors of Seller and Buyer.
SECTION 7.1 CERTAIN DATES. In the event the Acquisition shall not have become
effective on or before April 15, 1996, this Agreement may be terminated by
either party upon written notice, whether before or after approval of the
Acquisition thereof by the boards of directors. This Agreement shall terminate
automatically if the Acquisition has not been consummated by April 15, 1996.
SECTION 7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement, this Agreement shall thereafter become void and have no effect and no
party hereto shall have any liability to any other party hereto or its
shareholders or directors or officers in respect thereof except for the
obligations of the parties hereto in Section 8.1 hereof.
ARTICLE 8
GENERAL AGREEMENTS
SECTION 8.0 COOPERATION. Each of the parties hereto shall cooperate with the
other in every reasonable way in carrying out the transactions contemplated
herein, and in delivering all documents and instruments deemed reasonably
necessary or useful by counsel for any party hereto.
SECTION 8.1 COSTS. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be the sole
responsibility of Buyer.
SECTION 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties in this Agreement or in any instrument or certificate delivered
pursuant to this Agreement delivered on or prior to the Closing Date shall
survive the consummation of the Acquisition.
<PAGE>
SECTION 8.3 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by messenger,
transmitted by fax or telegram or mailed by registered or certified mail,
postage prepaid, as follows:
(a) If to Seller, to: (b) If to Buyer, to:
Andrew Cimerman Robert L, Cashman
HomeLife Securities, Inc. HomeLife, Inc
1167 Caledonia Road 4100 Newport Place, Suite 730
Toronto, Ontario M6A 2XI Canada Newport Beach, California 92660
The date of any such notice shall be the date hand delivered or otherwise
transmitted or mailed.
SECTION 8.4 AMENDMENT. This Agreement (including the documents and instruments
referred to herein or therein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof, (b) is not
intended to confer upon any other person any rights or remedies hereunder, and
(c) shall not be assigned by operation of law or otherwise. This Agreement may
be amended or modified in whole or in part to the extent permitted by California
law at any time, by an agreement in writing executed to do so by the Board of
Directors of Seller and Buyer.
SECTION 8.5 WAIVE. At any time prior to the Closing Date, the parties hereto
may (a) extend the time for the performance of any of the obligations, or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representation and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
or waiver signed on behalf of such party.
SECTION 8.6 BROKERS. Seller and Buyer represent and warrant that no broker,
finder or investment banker is entitled to any brokerage, finders or other fee
or commission in connection with this transaction.
SECTION 8.7 PUBLICITY . So long as this agreement is in effect, the parties
hereto shall not Issue or cause the publication of any press release or other
announcement with respect to this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld or delayed where such
release or announcement is required by applicable law.
SECTION 8.8 HEADINGS The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION 8.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of and is enforceable by the respective successors and
assigns of the parties hereto.
SECTION 8.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
IN WITNESS WHEREOF the parties have executed this Agreement by their duly
authorized officers as of the 1st day of April, 1996.
<TABLE>
<CAPTION>
<S> <C>
Buyer: HomeLife, Inc.
Attest:
/s/ ANDREW CIMERMAN
-----------------------------------
By: Andrew Cimerman, President
/s/ Robert L. Cashman
- -----------------------------------
Robert L. Cashman, Secretary Seller: HomeLife Securities, Inc.
Attest:
/s/ Andrew Cimerman
-----------------------------------
By: Andrew Cimerman, President
/s/ Gabrielle Jeans
- -----------------------------------
Gabrielle Jeans, Secretary
</TABLE>
<PAGE>
AMENDMENT I
This amendment attaches to and becomes part of an agreement dated April 1, 1996
between HomeLife Securities Inc. and HomeLife Inc.
SCHEDULE OF ASSETS PURCHASED AND AGREED VALUE
<TABLE>
<CAPTION>
<S> <C>
Cash $ 4,048
Accounts Receivable 320,377
Prepaid Expenses 8,160
Furniture & Equipment Net of
Accumulated Depreciation 19,696
Printed Advertising Materials
including Art Work
(64 Different Item at 5,000 each) 320,000
Inventory of Procedure Materials,Signs,
Supplies "Jerome The Gnome"
& "Crok'n Roll" Costumes 129,364
HomeLife Trademark
(Registered in all states and some
foreign countries) 250,000
Less: Liabilities
Accounts Payable 46,255
Accrued Expenses 3,390
Cimerman 2,000
----------
Total - $1,000,000
----------
</TABLE>
IN WITNESS WHEREOF the parties have executed this Agreement by their duly
authorized officers as of the 1st day of April, 1996.
<TABLE>
<CAPTION>
<S> <C>
Buyer: HomeLife, Inc.
Attest:
/s/ Andrew Cimerman
-----------------------------------
By: Andrew Cimerman, President
/s/ Robert L. Cashman
- -----------------------------------
Robert L. Cashman, Secretary
Seller: HomeLife Securities, Inc.
Attest:
/s/ Andrew Cimerman
-----------------------------------
By: Andrew Cimerman, President
/s/ Gabrielle Jeans
- -----------------------------------
Gabrielle Jeans, Secretary
</TABLE>
<PAGE>
EXHIBIT 10.17
AGREEMENT WITH
WESTERN PACIFIC INVESTMENT CORP.
DATED JUNE 10, 1998
<PAGE>
WESTERN PACIFIC INVESTMENT CORP.
5843 Hempstead Drive
Agoura Hills, CA 91301
Voice (818) 706-2836 - Fax (818) 706-0138 - E-mail [email protected]
Stanley B. Weiner, President
June 10, 1998
Andrew Cimerman
Chairman of the Board and Chief Executive Officer
HomeLife, Inc.
4100 Newport Place, Suite 730
Newport Beach, CA 92660
Dear Mr. Cimerman:
I have met with you on three occasions during the last month. You have
transmitted much information to me at each meeting. That information is
partially contained in the due diligence file summarizing the current status
of HomeLife, Inc. that I presented to you. As this is a rapidly evolving
company, we have chosen to capture it at one moment in time.
You have expressed to me many needs, desires, requirements, hopes, and plans.
Some of these lend themselves more easily than others to the skills,
resources, contacts, and funds I have at my disposal. I am attempting herein
to logically and rationally formulate a plan for marshaling our joint assets
so that we may bets work together for our substantial mutual benefit.
You have established a real estate brokerage franchise company of
considerable scope and breadth. It is now your desire to expand the existing
operation through acquisition of similar and related companies. This
includes acquiring additional real estate brokerage companies, a mortgage
company, a property management company, and various types of real property to
be owned, operated, and marketed by HomeLife, Inc.
HomeLife, Inc. lacks the necessary capital to carry out its plans. It is
also not in the best possible position to tarde stock for assets due to the
depressed price of its shares. Therefore, you have asked Western Pacific
Investment Corp. to assist you in the improvement of your current position.
Western Pacific Investment Corp. will undertake to work with HomeLife, Inc.
on the following terms and conditions:
I. Stock.
A. Strategy.
1. Reduce available supply of free trading stock.
2. Provide better support for stock through a more active market.
3. enhance shareholder value.
4. Acquire new assets for company.
B. Tactics.
1. Develop investor and financial relations programs to enhance the
value of the stock.
2. Locate and contract with new and superior market makers.
<PAGE>
3. Assist in the acquisition of new real estate brokerage firms.
4. Negotiate and obtain real property in exchange for stock or a
combination of stock and cash.
5. Bring in new shareholders with greater available capital.
C. Compensation.
1. Western Pacific Investment Corp.'s compensation for the foregoing
shall be measured by the volume and trading price for HomeLife,
Inc. stock on the open market. The objective shall be an average
of 5,000 shares per day and a trading price of $4.00 per share;
to the extent this level is achieved during the 90-day period
following the effective date of this agreement and sustained for
60 days, Western Pacific Investment Corp. shall receive 100,000
shares of one-year restricted stock of HomeLife, Inc. HomeLife,
Inc. shall have the right to request and receive all
documentation evidencing the efforts of Western Pacific
Investment Corp. in this regard.
2. Procuring new market makers for the stock and other efforts to
increase the stock price should be done on a fee basis, such fee
to be finalized at the time we commence negotiating with new
market makers.
3. Setting up an investor relations department for HomeLife, Inc. --
if that is your desire -- would be on a regular salary basis
since it is an ongoing responsibility. Such salary to be
determined prior to its inception.
II. Private Placement Memorandum.
A. Strategy.
1. HomeLife, Inc. can solve a part of its capital needs by private
placement of its securities, to be done on as agreed on a need
basis only.
B. Tactics.
1. A $500,000 to $750,000 private placement of the company's
discounted restricted shares is needed for the company's
expansion plans. This would be done on the basis of a 20% to 40%
discount from the current price of the company's stock. It would
involve stock with a 12-month restriction on sale.
C. Compensation.
1. This Capital will be provided on a need basis; terms to be agreed
upon at the time the decision is made to raise funds.
III. Real Estate.
A. Strategy.
1. The main focus would be to obtain real estate assets in exchange
for stock or a combination of stock and cash.
2. Scenarios for merger, acquisitions, or purchase should be
established.
<PAGE>
B. Tactics.
1. Develop tax proforma to elicit tax free exchanges or estate
planning solutions.
2. Develop program to demonstrate liquidity and superior capital
gains.
3. Develop contact program and advertising to attract those
prospects.
4. Negotiate terms of exchange.
5. Sell property acquired in exchange.
C. Compensation.
1. For properties acquired in exchange for stock, 20% of equity paid
over 2 year ends in the form of one-year restricted stock.
2. For sales of acquired real property, 3% commission.
IV. Acquisition of Real Estate Brokerage Company or Mortgage Company.
A. Strategy.
1. HomeLife, Inc. can best grow and prosper by acquisition.
2. Value added services can be derived by making its real estate
brokers also mortgage brokers.
B. Tactics.
1. Acquire existing real estate or mortgage brokerage companies.
2. Locate and negotiate potential acquisitions.
3. Arrange additional capital needed for acquisitions.
C. Compensation.
1. Location of prospects to be on fee basis.
2. Closing of an acquisition to be paid on same basis as purchase of
real property. Commission to be based on value added to company.
V. Warehouse Account for Mortgage Company.
A. Strategy.
1. It is better to be a mortgage banker than mortgage broker.
2. To be a banker you must have reserves.
B. Tactics.
1. To obtain a $5,000,000 mortgage warehousing line to facilitate
underwriting of properties.
<PAGE>
2. Obtain a lender or reserve account sufficient to satisfy needs of
HomeLife, Inc.
C. Compensation.
1. For obtaining $5,000,000 warehousing line, 50,000 shares of
one-year restricted stock.
2. For raising a reserve fund, if necessary, on a fee basis.
VI. Real Estate Syndication.
A. Strategy.
1. This is an excellent time to purchase real estate assets.
2. HomeLife, Inc. can purchase real estate assets with capital
raised from investor groups.
B. Tactics.
1. Set up investment department for HomeLife, Inc.
2. Raise capital through the use of limited partnership or limited
liability companies.
3. Make use of HomeLife, Inc. sales force to raise capital.
4. Create Reverse R.E.I.T. to acquire property.
5. Set up property management company to manage property.
C. Compensation.
1. For administrative tasks on a fee basis.
2. For real estate syndication activities, a fee based on time
needed plus additional stock based on 20% of value added.
Andrew, as you can see by this by no means exhaustive list, there are many
things to be explored. This list is not complete, final, or definitive, but
it does represent a place from which to start. However, without a specific
agreement, I cannot be confident in being paid for my efforts nor can you be
confident in what I will produce. Based on both your and my previous bad
experiences, I believe that we must have very clear ideas, objectives, and
goals at the inception of our relationship. Included in that agreement must
be clear formulas for compensation so that there will be no disputes in the
future. These are things that cannot be left to the vagaries of memory,
intervening events, or caprice.
We have also agreed that if we are called upon to act as a consultant, with
regard to deals already in the pipeline, that we will determine all fees in
advance. At that time we will amend this agreement.
I am prepared to go forward on the basis we have previously discussed. This
attempt to memorialize our oral understanding is subject to further
refinement after you return. However, by affixing your signature below and
that of the necessary directors, you thereby agree that the terms and
conditions listed above represent the present agreement between Western
Pacific Investment Corp., and HomeLife, Inc.
This agreement will be binding on both parties and shall be governed by the
Laws of the State of California. This agreement will become effective when
signed by the parties on June 10, 1998 and is subject to the approval of
HomeLife, Inc.'s Board of Directors.
<PAGE>
This agreement is accepted, agreed to, and approved by the signatures
appearing below.
/s/ Stanley Weiner /s/ Andrew Cimerman
- ------------------------------------ ----------------------------------------
Stanley Weiner, President Andrew Cimerman, Chairman of the Board,
and CEO, HomeLife, Inc.
6-10-98 6-10-98
- ------------------------------------ ----------------------------------------
Date Date
<PAGE>
EXHIBIT 24
CONSENT OF BILLER, FIRTH-SMITH & ARCHIBALD
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
CONSENT OF BILLER, FIRTH-SMITH & ARCHIBALD.
CERTIFIED PUBLIC ACCOUNTANTS
The undersigned independent certified public accounting firm hereby
consents to the inclusion of its report on the financial statements of
HomeLife, Inc. for the years ending May 31, 1997 and May 31, 1998, and to the
reference to it as experts in accounting and auditing relating to said
financial statements, in the Registration Statement for HomeLife, Inc.
/s/Biller, Firth-Smith & Archibald
- ------------------------------------
BILLER, FIRTH-SMITH & ARCHIBALD
Certified Public Accountants
18321 Ventura Blvd., Suite 600
Tarzana, California
Dated: September 1, 1998
<PAGE>
EXHIBIT 28
SPECIMEN OF COMMON STOCK CERTIFICATE
OF HOMELIFE, INC.
<PAGE>
SPECIMEN
HOMELIFE, INC.
AUTHORIZED: 5,000,000 SHARES COMMON STOCK
$.001 PAR VALUE EACH
This Certifies that ___________________________________________ is the
registered holder of __________________________________________________________
Shares of the above named Corporation, transferable only on the books of the
Corporation by the holder hereof in person or by Attorney upon surrender of this
Corporation properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized offers and its Corporate Seal to be hereunder
affixed this _______ day of _______________ A.D. __________.
_______________________________ ________________________________
Secretary President
