<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES
EXCHANGE ACT OF 1934
HOMELIFE, INC.
-------------------------------
(Name of Small Business Issuer in its charter)
Nevada 33-0680443
- -------------------------------- --------------------------------
(State or Other Jurisdiction (IRS Employer Identification No.)
of Incorporation or Organization)
4100 Newport Place, Suite 730
Newport Beach CA 92660
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(949) 660-1919
----------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
None None
------------ ------------
------------ ------------
Securities to be registered pursuant to section 12(g) of the Act:
Common Stock, $.001 par value
-----------------------------
(Title of Class)
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
A. BUSINESS DEVELOPMENT
1. FORM AND YEAR OF ORGANIZATION
HomeLife, Inc. ("HomeLife") was incorporated in 1995 under the laws of
the state of Nevada. The terms "HomeLife" or the "Company" shall refer to
HomeLife, Inc. and all of its controlled subsidiary corporations. The company
provides a broad range of services to its franchisees, licensees and consumers
in the real estate marketplace. HomeLife utilizes both its proprietary
"SuperSystem" marketing system and business combinations and acquisitions to
grow as a real estate services company.
2. ANY BANKRUPTCY, RECEIVERSHIP OR SIMILAR PROCEEDING.
Not Applicable.
3. ANY MATERIAL RECLASSIFICATION, MERGER, CONSOLIDATION,
OR PURCHASE OR SALE OF A SIGNIFICANT AMOUNT OF ASSETS NOT IN THE ORDINARY COURSE
OF BUSINESS.
The company's growth is largely attributable to business combinations
and acquisitions. The company was initially incorporated in 1995 for the purpose
of merging with Management Dynamics, Inc. a publicly owned New Jersey
corporation. Upon completing this merger, in November 1995, HomeLife purchased
100% of the issued and outstanding shares and partnership interests respectively
of HomeLife Realty Services, Inc. and HomeLife Realty U.S. Limited Partnership
(California) in exchange for HomeLife common and preferred shares of the
company. At the time of this acquisition, these companies were operating
approximately 60 real estate franchises.
In August 1996, HomeLife Realty Services acquired 93% and 83%
respectively of the outstanding stock of Michigan based Red Carpet Keim and
Guardian Home Warranty Company. With this acquisition, the Company acquired an
additional approximately 60 franchise offices. Guardian Home Warranty changed
its name to MaxAmerica Home Warranty in March 1999.
In November 1996, the Company incorporated FamilyLife Realty Services,
Inc. in Michigan as a wholly owned subsidiary .
In January 1997, FamilyLife Realty Services, Inc. acquired the assets
of Salt Lake City based franchisor, S&S Acquisition Corp. This acquisition
included: (a) the trademarks "Red Carpet" and "National Real Estate Services";
(b) the licensing agreements of Red Carpet Real Estate Services and National
Real Estate Services, adding approximately 58 real estate brokerage offices to
the Company's offices; and (c) real estate computer technology entitled House by
Mouse and Virtual Assistant. House by Mouse is an internet based software system
which real estate professionals and consumers may utilize to identify
residential real estate listings according to geographical and other profile
data, obtained by the Company's real estate offices. Virtual Assistant is an
internet based system utilized by HomeLife's agents to create marketing
brochures and other literature.
In August of 1997, the Company acquired the real estate operations and
licensing agreements and trademarks of Network Real Estate, Inc., including its
12 Northern California real estate brokerage offices and its "high-end" luxury
division of "International Estates," a Network Real Estate, Inc. trade name.
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In November 1997, HomeLife incorporated MaxAmerica Financial Services,
Inc. MaxAmerica Financial Services, Inc. provides mortgage financing services to
the Company's real estate customers. MaxAmerica Financial Services acts 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.
Mortgage Capital Resources is not affiliated with the Company.
In February 1998, the company acquired Builders Realty. Builders Realty
is a two office residential real estate company located in Calgary, Alberta,
Canada. Builders Realty changed its name to HomeLife Builders Realty 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.
In August 1998, the Company incorporated HomeLife Properties, Inc. as a
Nevada corporation to function as a buyer and seller of real property. This
company currently has no operations and is a wholly owned subsidiary of
HomeLife.
In September 1998, the company acquired the investment banking firm of
Aspen, Benson & May, LLC. Aspen, Benson & May currently has no operations and
the Company does not anticipate operating through this subsidiary during at
least the next 12 months.
In January of 1999, the Company's HomeLife Builder's Realty subsidiary
purchased the assets and business of HomeLife Higher Standards, a real estate
brokerage firm in Calgary, Alberta, Canada.
As a consequence of the foregoing, the company presently operates
through the following:
- WHOLLY-OWNED SUBSIDIARIES
HomeLife Realty Services, Inc., FamilyLife Realty Services, Inc.,
MaxAmerica Financial Services, Inc., Red Carpet Broker Network,
Inc., National Sellers Network, Inc., HomeLife Builders Realty
(Calgary) Ltd, Aspen Benson & May Investment Bankers LLC.,
Homelife California Realty, Inc. and Homelife Properties, Inc.
- MAJORITY-OWNED SUBSIDIARIES
The Keim Group Ltd. and MaxAmerica Home Warranty Company - 93%
and 83% respectively.
B. BUSINESS OF ISSUER.
The company offers consumer-oriented real estate brokerage and
finance services through subsidiaries and franchises. It presently operates in
eight states in the United States and the province of Alberta, Canada.
1. PRINCIPAL PRODUCTS AND SERVICES AND THEIR MARKET
A. SERVICES AND LOCATIONS
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
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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 offers the following real estate services through its
various subsidiaries.
- MORTGAGE FINANCING - through its subsidiary, Mortgage Financial
Services.
- RETAIL REAL ESTATE SERVICES - The company owns and operates a
full service retail real estate brokerage through its subsidiary
Builders Realty, Ltd.
- HOME WARRANTY - HomeLife provides home warranty coverage through
its subsidiary MaxAmerica Home Warranty Company. Home warrant
coverage is typically obtained by purchasers of homes to insure
against the failure of certain appliances and other fixtures
associated with the acquired home.
B. FRANCHISE AND LICENSING OPERATIONS
HomeLife operates its real estate services through franchises and
licensees. Franchises are operated in the following states: Arizona, California,
Connecticut, Florida, Michigan, Nevada, South Carolina, and Texas and govern the
relationships of approximately 180 offices. The franchise relationship is
governed by the franchise offering circular applicable to the state in which the
franchisee operates and according to the terms and conditions of the
"Participating Independent Broker Franchise Agreement".
Franchises are granted to licensed brokers to operate under the
business system and plan developed by HomeLife and to use one of the following
HomeLife trademarks for such operations: HomeLife, HomeLife (Words & Design),
HomeLife Realty Services and HomeLife Realty and such other and substitute trade
names, trademarks, service marks, graphics and logotypes as may from time to
time be designated by HomeLife. These franchises are operated under the
"Participating Independent Broker Franchise Agreement". The terms of the
franchise agreements vary depending upon the market in which the franchisee
operates. However, the typical initial franchise fee is $9,500 with each
additional office's initial fee being $5,000. From time to time, HomeLife offers
incentive or bonus plans to attract new franchise members. These programs may
directly or indirectly decrease initial franchise fees of those franchisees
entitled to such bonuses or incentives.
The Franchise Agreement also requires the payment of "Other Fees".
These fees include monthly franchise fees on a fixed fee or percentage of gross
revenues basis, royalty fees and advertising contributions. Other fees also
include transfer fees, training fees, interest on overdue accounts, fees related
to accounting and bookkeeping system materials, and renewal fees. There are also
fees that may be incurred under special circumstances such as indemnification
responsibilities, insurance costs, costs of enforcing the franchise agreements
and audit costs.
In addition to the above fees, the franchisee has certain obligations
under the Franchise Agreement including but not limited to compliance with
standards and policies set forth in operating manuals, territorial development
and sales quotas, initial and on-going training and certain advertising and
participation requirements. In exchange for the franchisee's obligations and
fees, HomeLife provides training programs, the use of its marketing system, its
business system and plan, on-going education, advertising and general support to
its franchisees.
HomeLife also operates its business through licensing of the HomeLife
trademarks. According to the terms of the standard licensing agreement,
licensees are obligated to pay a membership fee to HomeLife's Red Carpet Real
Estate Services in exchange for the right to use certain trademarks and service
marks and to operate its business under the Red Carpet trade name to HomeLife,
and HomeLife is obligated to provide these licensees with the right to use its
proprietary trademarks and service marks.
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2. DISTRIBUTION METHODS
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
the door knocking to obtain real estate listings and potential buyers. The
SuperSystem is made available to the Company's corporately owned and franchised
brokerage offices. The elimination of cold calling and door knocking 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.
Management believes that the real estate market is growing rapidly.
HomeLife's business plan includes focusing upon the acquisition of three types
of real estate brokerage firms:
- the continuing acquisition of real estate brokerage companies with
2 to 20 offices,
- real estate companies who are financially weak and lack a good
marketing system, and
- real estate companies without strong name brand recognition, which
could utilize the existing trademarks of HomeLife.
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 share in
its office locations.
3. STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR
SERVICE
In the past twelve months HomeLife, has established websites to enhance
the operations of its business. The MaxAmerica Home Warranty website markets
home warranty policies to residents of Michigan. The MaxAmerica Financial
Services' website generates leads for mortgage loans nationally, and HomeLife's
Shopping website sells retail merchandise through referrals to over 200 stores.
4. COMPETITION
HomeLife 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 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 services similar to the services
provided by HomeLife. 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.
Management 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.
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5. SOURCES AND AVAILABILITY OF RAW MATERIALS
The Company is not dependent on any raw materials. As a service
business, it relies primarily on the efforts of its employees and agents to
generate sales. All software which comprises a material component of its
services is developed through various outside contractors.
6. DEPENDENCE ON ONE OR FEW MAJOR CUSTOMERS
The company offers its services primarily to consumers in the various
regional markets where it maintains a presence, I.E. individual home owners,
purchasers and buyers. As a consequence, its business activities are primarily
transactional in nature and not dependent upon long-term relationships with
customers. Further, as a retail-based business, its customer base is broad and
diverse.
7. PATENTS, TRADEMARKS, LICENSES AND FRANCHISES
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. The Company licenses exclusive rights, from
Jerome's Magic World, to use its exclusively developed animated characters for
its real estate service business for a period of eight years commencing October
30, 1995 and ending October 30, 2003. Thereafter, the license is automatically
renewable for additional eight year periods at the fair market value. These
characters include Jerome the Gnome, Crok `N Roll, The Waz, King D Lish and Rock
Head.
The Company licenses the following trademarks from HomeLife Securities,
Inc.: "Blueprint to Selling Your Home," "Blueprint to Buying a Home," "Family
Life HR," "Family HomeLife Realty Services," "Family HomeLife Realty Services"
(words only), "Focus 20/20" (words and design), "Higher Standards" (words only),
"HomeLife" (words only), "HOMELIFE" (words and design), "HomeLife Higher
Standards" (words and design), "HomeLife Realty Services," and "It's What
Everyone's Looking For" (words only). These marks are licensed for a period of
eight years at no cost to the company. The license commenced on October 30, 1995
and expires on October 30, 2003. Thereafter, the license may be renewed at fair
market value for additional eight year periods.
HomeLife has developed Community Market Super System-TM-, a lead
generating, community based marketing system that eliminates cold calling and
door knocking used by traditional realtors. The system was developed over
several years and test marketed successfully in 80 real estate offices in
Southern California. The marketing system involves use of the fictional
character "Jerome the Gnome" and an accompanying cash sweepstakes. "Jerome the
Gnome" acts as HomeLife's goodwill ambassador to promote the HomeLife name at
community events by asking clients to list personal information and real estate
needs. Through Jerome, the Company interacts with families, schools, businesses,
hospitals and non-profit organizations, helping them meet their needs, spreading
goodwill and promoting HomeLife as the "Family Values Company". Thousands of
buyer and seller leads are generated for our affiliates, who in turn offer
customers the opportunity to buy, sell, or re-finance their home or property.
Jerome's activities are focused toward community locations such as shopping
malls, parks, plazas, etc. Jerome is a children friendly mascot, a "child
magnet" who appeals to children.
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8. NEED FOR GOVERNMENT APPROVAL.
The company's franchise operations are subject to various state laws
and regulations concerning the disclosure obligations of franchisors and other
aspects of the relationship between franchisor and franchisee. In addition, all
personnel who provide real estate brokerage and/or mortgage services are
generally required to be licensed by the states and/or provinces in which such
services are performed. Otherwise, no government approval is required for any of
the company's current operations.
9. EFFECT OF ANY EXISTING OR PROPOSED GOVERNMENT
APPROVAL.
As noted (a) the company is required to comply with state laws
governing franchise operations, and (b) the company's professional staff is
required to be licensed by state real estate authorities. Otherwise, except for
normal government regulation that any business encounters, the company's
business is not affected by any government regulations.
10. RESEARCH AND DEVELOPMENT COSTS
HomeLife has no research or development costs outside of the expense of
developing software for its internet applications, which are expensed in the
year they occur.
11. COST AND EFFECTS OF COMPLIANCE WITH ENVIRONMENT LAWS
AND REGULATIONS.
The company is not involved in a business which involves the use of
materials in a manufacturing stage where such materials are likely to result in
the violation of any existing environmental rules and/or regulations. Further,
the company does not own any real property which would lead to liability as a
land owner. Therefore, the company does not anticipate that there will be any
costs associated with the compliance of environmental laws and regulations.
12. EMPLOYEES
As of the date of this registration statement, HomeLife employs 13
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 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
The Company has experienced 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 MaxAmerica Home Warranty
Company (Michigan) adding 60 real estate offices and a home warranty company in
Michigan. In 1997, the company purchased certain 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. On September 15,
1998, the company purchased the stock of the investment banking firm of Aspen,
Benson and May, LLC for common stock.
From time to time, the company has entered into strategic alliances
with various companies in order to explore the cross-marketing of their services
to customers of the company or its franchises. To date, these strategic
alliances have not included any funding agreements or other liabilities on the
part of the company. Since the end of its last fiscal
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year, HomeLife has formed strategic alliances with Home Value Check, LLC, and
Mortgage Capital Resources. Home Value Check provides Internet based
appraisals for lenders and consumers of the Company's services. Mortgage
Capital Resource provides loan processing and underwriting for MaxAmerica,
the real estate mortgage brokerage subsidiary of HomeLife.
Management believes the growth fueled by these acquisitions and
combinations will continue to fuel growth 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.
A. PLAN OF OPERATIONS
HomeLife's business plan is to acquire regional real estate companies
throughout North America. The newly acquired companies have the choice of
retaining their regional identities, or changing their name to a HomeLife brand.
This allows the companies to enjoy the benefits of its regional identity while
at the same time getting the support of a publicly traded national real estate
company. HomeLife also intends to introduce mortgage banking as a service to
agents and brokers. The Company intends to enter into the business by way of
merger, acquisition, joint venture or strategic alliance. It also intends to
provide a variety of ancillary real estate related products and services to the
industry over the next five years. Such services will include, but not be
limited to the following: title & escrow into other areas such as an internet
shopping mall. While the Company has currently implemented some of these plans,
there is no assurance that the Company will complete all of these plans or that
it will continue providing such services. This will allow affiliated companies
and their agents with real estate operating systems which include products and
services directly related to real estate productivity with emphasis on
marketing, training and technology. It also provides services which place
significance on quantity discount purchasing for agents and brokers for
marketing materials, technology products, advertising, etc. The negotiation of
quantity purchasing power will help to reduce the broker's cost and offset
franchise fees.
B. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of HomeLife's
financial condition and results of operations. Detailed information is contained
in the financial statements included with this document. This section contains
forward-looking statements that involve risks and uncertainties, such as
statements of the company's plans, objectives, expectations and intentions. The
cautionary statements made in this document should be read as being applicable
to all related forward-looking statements wherever they appear in this document.
The following table sets forth, for the period indicated, selected financial
information for the Company.
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HOMELIFE, INC. AND SUBSIDIARIES - SELECTED FINANCIAL DATA
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
August 31, 1999 May 31, 1999
--------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash $ 333,464 327,637
Marketable Securities 194,875 194,875
Accounts receivable net 163,675 168,033
Notes receivable net 235,500 235,500
Prepaid expenses & deposits 74,978 78,159
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1,002,492 1,004,204
Notes Receivable LTP 130,801 130,801
Property & Equipment 468,284 480,993
Goodwill 656,902 661,273
Cash held in trust 472,910 342,317
Other long term assets 687,363 702,203
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Total assets 3,418,752 3,321,791
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Bank indebtedness $ - 16,960
Accounts payable 457,169 459,662
Advances from stockholders 143,472 143,472
Notes payable 10,000 10,000
Reserve for warranty 51,500 51,500
Dividends payable 4,170 4,170
Deferred revenue 197,080 197,080
----------- -----------
863,391 882,844
Deferred revenue 206,149 206,149
Trust liabilities 472,910 342,317
Minority interest 46,246 43,378
----------- -----------
Total liabilities 1,588,696 1,474,688
----------- -----------
Stockholders' Equity
Capital Stock 1,043,288 1,043,288
Additional Paid in Capital 2,846,093 2,846,093
Deficit (2,059,325) (2,042,278)
----------- -----------
1,830,056 1,847,103
Total liabilities & 3,418,752 3,321,791
Stockholders' equity
=========== ===========
</TABLE>
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CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three months ended Three months ended
August 31, 1999 August 31, 1998
--------------- ---------------
(unaudited) (unaudited)
<S> <C> <C>
SALES
Royalty & franchise fees $ 211,402 $ 221,060
Warranty sales 84,372 75,327
Real estate sales commissions 582,638 1,738,351
Other income 137,841 20,254
----------- -----------
Total sales 1,016,253 2,054,992
COST OF
SALES
Cost of sales 631,026 1,665,688
----------- -----------
Gross profit 385,227 389,304
----------- -----------
EXPENSES
Salaries & fringe benefits 159,553 147,783
General & administrative 177,770 216,784
Occupancy 42,280 41,566
Financial 51,783
Amortization 19,803 51,304
----------- -----------
Total expenses 399,406 509,219
----------- -----------
Net income (loss) before (14,179) (119,915)
minority interest
Minority interest 2,868 1,875
----------- -----------
Net income (loss) before income (17,047) (121,790)
tax provision
Income tax provision
Preferred dividends 780 780
----------- -----------
Net income (loss) applicable to $ (17,827) $ (122,570)
common
=========== ===========
Basic loss per common share (0.004) (0.025)
Fully diluted loss per common share (0.003) (0.019)
</TABLE>
YEAR ENDING MAY 31, 1999 COMPARED TO THE YEAR ENDING MAY 31, 1998.
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REVENUES. The Company generated gross sales of $4,049,964 for the year
ending May 31, 1999 compared to gross sales of $1,915,398 for the year ending
May 31, 1998. This significant increase in revenue of $2,134,566 was primarily
due to real estate commission from Builders Realty which was acquired late in
1998.
COST OF SALES. Cost of sales for the year ending May 31, 1999 was
$2,791,997 compared to $805,542 for the year ending May 31, 1998. This increase
of $1,986,455 was primarily due to the increase in sales commissions paid to
agents of Builders Realty as a result of higher real estate commissions
generated.
SALARIES AND FRINGE BENEFITS. Salaries and fringe benefits for the year
ending May 31, 1999 were $680,481 for the year ending May 31, 1999 compared to
558,506 for the year ending May 31, 1998. This increase of $121,975 was
primarily the result of paying salaries to employees of Builders Realty for a
full year in 1999, versus paying salaries for a partial year in 1998
GENERAL AND ADMINISTRATIVE. General and administrative costs for the
year ending May 31, 1999 were $867,136 for the year ending May 31, 1999 versus
$398,052 for the year ending May 31, 1998. This increase of $409,084 was
primarily due to an increase in the use of outside consultants and increase in
computer expenses.
OCCUPANCY. Occupancy for the year ending May 31, 1999 was $166,263
compared to $108,559 for the year ending May 31, 1998. This increase of $57,704
was primarily the result of rent paid for a full year in 1999 versus paying rent
for a partial year in 1998.
FINANCIAL. Financial costs for the year ending May 31, 1999 were
$207,131 compared to $67,806 for the year ending May 31, 1998. This increase of
$139,325 was the result of a loss on a marketable investment, a write down of
inventory, and a loss on currency conversions.
AMORTIZATION. Amortization of intangibles for the year ending May 31,
1999 was $205,214 for the year ending May 31, 1999 compared to $194,112 for the
year ending May 31, 1998. This increase of $11,102 was a primarily a result of
amortizing the cost of the purchase of Builders Realty for a full year in 1999
versus amortizing the cost for a partial year in 1998.
MINORITY INTEREST. The reduction in net income due to minority interest
was $7,498 in the year ending May 31, 1999 versus $9,177 for the year ending May
31, 1998. This decrease of $1,679 was due to lower revenues for the Keim Group,
partially offset by higher revenues from MaxAmerica Home Warranty.
PREFERRED DIVIDENDS. Preferred Dividends were $3,120 in the year ending
May 31, 1999 versus $13,000 for the year ending May 31, 1998. This decrease of
$9,880 was due to the conversion of preferred stock into common stock.
QUARTER ENDING AUGUST 31, 1999 COMPARED TO THE QUARTER ENDING AUGUST 31, 1998.
REVENUES. The Company generated gross sales of $1,016,253 for the
quarter ending August 31. 1999 versus $2,054,992 for the quarter ending August
31, 1998. This decrease of $1,038,739 is primarily due to a decrease in real
estate commissions earned in 1999.
COST OF SALES. Cost of sales for the quarter ending August 31, 1999 was
$631,026 compared to $1,665,688 for the quarter ending August 31, 1998. This
decrease of $1,034,662 was primarily due to the decrease in sales commissions
paid to agents of Builders Realty as a result of lower real estate commissions
generated.
SALARIES & FRINGE BENEFITS. Salary and fringe benefits for the quarter
ending August 31, 1999 was $159,553 compared to $147,783 for the quarter ending
August 31, 1998. This decrease of $11,750 was primarily the result of an
independent contractor becoming an employee of the Company.
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GENERAL AND ADMINISTRATIVE. General and administrative expenses were
$177,770 for the quarter ending August 31, 1999 compared to $216,784 for the
quarter ending August 31, 1998. This decrease of $39,014 was primarily the
result of outside services in 1998 that did not reoccur in 1999.
OCCUPANCY. Occupancy for the quarter ending August 31, 1999 was $42,280
compared to $41,566 for the quarter ending August 31, 1998. This increase of
$714 was due to an escalation in an ongoing lease at one office location.
FINANCIAL. Financial expenses were $0 for the quarter ending August 31,
1999 versus $51,783 for the quarter ending August 31, 1998. This decrease of
$51,783 was due to loss on investments, write down on inventory, and loss on
currency conversions that occurred in 1998 but did not occur in 1999.
AMORTIZATION. Amortization expenses were $19,803 for the quarter ending
August 31, 1999 versus $51,304 for the quarter ending August 31, 1998. This
decrease of $31,501 was primarily due to assets that became fully amortized
during the quarter ending August 31, 1998.
MINORITY INTEREST. The decrease in net income due to minority interest
was $2,868 in the quarter ending August 31, 1999 compared to $1,875 for the
quarter ending August 31, 1998. This increase of $993 was due to higher revenues
for the Keim Group and MaxAmerica Home Warranty.
PREFERRED DIVIDENDS. Preferred dividends were $780 for both the
quarters ending August 31, 1999 and August 31, 1998.
ITEM 3. DESCRIPTION OF PROPERTY
The company leases a 2,630 square foot office in Newport Beach,
California. The lease term expires in June, 2001. The company is obligated on
leases for its other premises located in Troy, Michigan, which expires in
January, 2002 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.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the company's common stock, as of the date hereof for (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, and
(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>
NAME NUMBER OF SHARES PERCENTAGE
BENEFICIALLY
OWNED(1)
<S> <C> <C>
Andrew Cimerman 2,500,000 52.04%
Lawrence Horwitz 0 0%
F. Bryson Farrill 50,000 *
Terry Lyles, Ph.D 50,000 *
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C>
Gabrielle Jeans 15,000 *
Charles Goodson 0 0%
William Slivka 0 0%
Cede & Co. 1,290,837 26.87%
P.O. Box 222
Bowling Green Station
New York, NY
Brinx Capital 200,000 4.16%
All officers and directors as
a group (7 persons) 2,615,000 54.43%
</TABLE>
*Less than 1%
- ----------
(1) Except as otherwise indicated, the company believes that the beneficial
owners of common stock listed above, 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. The beneficial owner of Brinx Capital, Inc. is James Briscoll.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The directors and officers of the company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Andrew Cimerman 51 President and Director
Terry A. Lyles, Ph.D. 40 Director
F. Bryson Farrill 71 Director
Gabrielle Jeans 48 Vice President
Charles Goodson 43 Vice President
William Slivka 50 Chief Financial Officer
</TABLE>
ANDREW CIMERMAN, 51, 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 30 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.
13
<PAGE>
TERRY A. LYLES, PH.D, 40, 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, 71, 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
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, 48, 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, 44, 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.
WILLIAM SLIVKA, 50, CHIEF FINANCIAL OFFICER has been with the company since
September 1998. Mr. Slivka has 20 years experience in the securities and
investment banking industry. He has earned an MBA and a MS degrees from the
Pennsylvania State University. He is a certified financial planner and a
licensed real estate broker.
14
<PAGE>
ITEM 6. 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 Stock Securities
Awards Underlying
Options (1)
----------------------------------------- --------- ------------ ------------ ------------------ -------------------
<S> <C> <C> <C> <C> <C>
Andrew Cimerman, President 1999 $20,000 $-0- -0- -0-
----------------------------------------- --------- ------------ ------------ ------------------ -------------------
Gabrielle Jeans, Vice President 1999 $72,000-(1) $-0- -0- 30,000
----------------------------------------- --------- ------------ ------------ ------------------ -------------------
Charles Goodson, Vice President 1999 $72,000 $-0- -0- -0-
----------------------------------------- --------- ------------ ------------ ------------------ -------------------
William Slivka 1999 $60,000 $-0-
----------------------------------------- --------- ------------ ------------ ------------------ -------------------
----------------------------------------- --------- ------------ ------------ ------------------ -------------------
All Officers as a Group (4 persons) 1999 $209,000 $-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.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
A. 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 $5.00 per share.
Ms. Jeans' options are also fully vested and exercisable.
The following table describes the above options:
<TABLE>
<CAPTION>
- ------------------------------------ ----------------------- ------------------------- -------------- --------------
Number of securities Percent of total Exercise on Expiration
Name underlying options options granted to base price Date
employees in last ($/share)
fiscal year(1)
- ------------------------------------ ----------------------- ------------------------- -------------- --------------
<S> <C> <C> <C> <C>
F. Bryson Farrill, Director 50,000 0% $3.00 None
- ------------------------------------ ----------------------- ------------------------- -------------- --------------
Terry Lyles, Ph.D., Director 50,000 0% $3.00 None
- ------------------------------------ ----------------------- ------------------------- -------------- --------------
Gabrielle Jeans, Vice President 30,000 0% $5.00 None
- ------------------------------------ ----------------------- ------------------------- -------------- --------------
Total 130,000 0% -- --
- ------------------------------------ ----------------------- ------------------------- -------------- --------------
</TABLE>
(1) No options were granted to employees in the last fiscal year.
15
<PAGE>
B. CERTAIN RELATIONSHIPS
Mr. Cimerman is President and majority shareholder of HomeLife Cimerman
Real Estate Ltd. HomeLife Cimerman Real Estate Ltd.'s business activities
consist of real estate sales in Toronto, Canada. The activities of HomeLife
Cimerman Real Estate Ltd. are managed by the on-site management. These
activities do not demand a large portion of Mr. Cimerman's time and effort. Any
corporate opportunities that would be available to both the Company and to
HomeLife Cimerman Real Estate Ltd. is presented to HomeLife's Board of Directors
for consideration and for approval by a disinterested majority of the Board of
Directors.
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. 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 eight year term expiring in October
2003, at no cost to the Company. Thereafter it is renewable for additional eight
year terms at the fair market value. Mr. Cimerman is sole shareholder and
President of HomeLife Securities, Inc. HomeLife Securities, Inc. licenses
certain "HomeLife" trademarks and service marks to the Company. The term of the
licensing agreement is eight years commencing October 1995 at no cost to the
Company. Thereafter, the license is renewable for additional eight year terms at
the fair market value.
Mr. Cimerman is President and majority shareholder of Simcoe Fox
Developments. Simcoe Fox Developments' business activities consist of holding
real estate investment property. The activities of Simcoe Fox Developments does
not demand a large portion of Mr. Cimerman's time and effort, and any corporate
opportunities that would be available to both the company and to Simcoe Fox
Developments is presented to HomeLife's Board of Directors for consideration and
for approval by a disinterested majority of the Board of Directors.
ITEM 8. DESCRIPTION OF REGISTRANT'S SECURITIES.
The authorized capital stock of the company consists of 20,000,000
shares of common stock, $.001 par value, 100,000 shares of convertible Class A
preferred stock, 2,000 shares of Class AA preferred stock and 100,000 shares of
Class AAA preferred stock. 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 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 hereof, there are 4,803,932 shares of common stock,
200,000 warrants to purchase common stock and 130,000 options to purchase common
stock issued and outstanding. After the conversion of the issued and outstanding
preferred stock there would be 5,978,039 shares of common stock 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 Part II, Item 1 C, "Dividends"). 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
16
<PAGE>
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.
17
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS' COMMON
EQUITY AND OTHER STOCKHOLDERS MATTERS
A. MARKET INFORMATION
The Company's common stock is traded in the over-the-counter bulletin
board under the symbol HMLF.
The following table sets forth the high and low bid prices for the
Company's common stock for fiscal years 1998 and 1999 (ended May 31), and for
the quarter ended August 31, 1999, by quarter. The prices below reflect
inter-dealer quotations, without retail mark-up, mark-down or commissions and
may not represent actual transactions:
<TABLE>
<CAPTION>
Low High
Quarter ended Bid Bid
-----------------------------------------------------------
<S> <C> <C>
8/31/97 1.30 4.15
11/30/97 2.80 4.75
2/28/98 1.80 5.50
5/31/98 1.30 2.00
8/31/98 1.25 2.85
11/30/98 .31 1.45
2/28/99 .31 .66
5/31/99 .32 .57
8/31/99 .31 .42
</TABLE>
B. HOLDERS
As of October 26, 1999, there were approximately 1,011 holders of
Company Common Stock, as reported by the Company's transfer agent.
C. DIVIDENDS
The Company has not paid any dividends on its Common Stock. The Company
currently intends to retain any earnings for use in its business, and therefore
does not anticipate paying cash dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS.
The company is currently involved in one lawsuit.
The lawsuit 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.
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 believes that there are no other material litigation matters
pending or threatened against the company.
18
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
HomeLife, engaged the accounting firm of Schwartz Levitsky Feldman llp
as their accountant in May 1999. The previous accounting firm was Biller,
Firth-Smith & Archibald. The change in accounting firms was primarily due to the
illness, and incapacitation of a partner at the predecessor firm.
ITEM 4. 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. 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.
In November 1995, the company issued 81,595 shares of its common stock
to 98 non-U.S. investors in consideration of payment of $326,380. 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 44,636 shares of its common stock
to 38 investors for payment of $178,544. Less than 35 of these investors were
nonaccredited investors within the meaning of Regulation D. 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 June 1996, the company issued 21,998 shares of common stock for
$22,895 to an individual investor 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 117,233 shares of common stock for
$101,155 to non-U.S. resident investors pursuant to Regulation S 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 and Regulation S of the Act as transactions involving non-U.S.
investors.
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
19
<PAGE>
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 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 September 1998, the company issued shares of common stock to Aspen
Benson and May, LLC in exchange for the membership interests of that company.
This transaction was exempt from the registration provision of the Act by virtue
of section 4(2) of the Act, as transactions by an issuer not involving a public
offering.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Nevada Revised Statutes and the Company's Bylaws authorize
indemnification of a director, officer, employee or agent of the company against
expenses incurred by him or her in connection with any action, suit, or
proceeding to which such person is named a party by reason of having acted or
served in such capacity, except for liabilities arising from such person's own
misconduct or negligence in performance of duty. In addition, even a director,
officer, employee or agent of the company who was found liable for misconduct or
negligence in the performance of duty may obtain such indemnification if, in
view of all the circumstances in the case, a court of competent jurisdiction
determines such person is fairly and reasonably entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers, or persons controlling the company pursuant
to the foregoing provisions, the company has been informed that in the opinion
of the Commission, such indemnification is against public policy as expressed in
the Act and is therefore unenforceable.
PART F/S
FINANCIAL STATEMENTS
The following financial statements are included herein:
- - Audited Financial Statements for Fiscal Years ended May 31, 1998 and 1999.
- - Unaudited Financial Statements as of and for the quarter ended August 31,
1999.
20
<PAGE>
PART III
ITEM 1 AND
ITEM 2. INDEX TO EXHIBITS AND DESCRIPTION OF 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
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 Lease Agreement dated January 15, 1999 for the office located in
Newport Beach, California
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 property 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 Agreement
and Trademarks, dated June 12, 1998
10.10 Stock Purchase Agreement, dated July 23, 1998
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 Form of Participating Independent Broker Franchise Agreement
10.18 Form of Broker Membership Agreement
10.19 Stock Purchase Agreement, dated September 10, 1998
10.20 Employment Agreement between HomeLife, Inc. and Andrew Cimerman
10.21 Trademark License Agreement between HomeLife, Inc. and Jerome's Magic
World, Inc.
10.22 HomeLife Higher Standards Asset Purchase Agreement, dated January 20,
1999
10.23 Acquisition Agreement between Bright Financial Corporation and
MaxAmerica Financial Services, Inc.
21 List of Subsidiaries
</TABLE>
21
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
HOMELIFE, INC.
By: Andrew Cimerman
Andrew Cimerman
Its: President
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Andrew Cimerman President, Director October 29, 1999
- ---------------------
Andrew Cimerman
/s/ William Slivka Chief Financial Officer, Director October 29, 1999
- -------------------
William Slivka
</TABLE>
22
<PAGE>
HOMELIFE, INC.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MAY 31, 1999 AND MAY 31, 1998
TOGETHER WITH REPORT OF INDEPENDENT AUDITORS
TABLE OF CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors
Consolidated Balance Sheets F-1
Consolidated Statements of Operations F-3
Consolidated Statements of Cash Flows F-4
Consolidated Statements of Stockholders' Equity F-5
Notes to Consolidated Financial Statements F-6 - F-27
</TABLE>
<PAGE>
SCHWARTZ LEVITSKY FELDMAN LLP
CHARTERED ACCOUNTANTS
TORONTO, MONTREAL, OTTAWA
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Homelife, Inc.
We have audited the accompanying consolidated balance sheet of
Homelife, Inc. as of May 31, 1999 and the related consolidated
statements of operations, cash flows and changes in stockholders'
equity for the year then ended. These financial statements are the
responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates 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. as of May 31, 1999 and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted
accounting principles in the United States of America.
The consolidated balance sheet of Homelife, Inc. as of May 31, 1998
and the related consolidated statements of income, cash flows and
changes in stockholders' equity for each of the years ended May 31,
1998 and 1997, before the prior period adjustments disclosed in note
16, were audited by other independent auditors. Their reports, dated
June 29, 1998 and September 9, 1997 respectively, were without
reservations.
Toronto, Ontario
August 13, 1999 Chartered Accountants
1167 Caledonia Road
Toronto, Ontario M6A 2X1
Tel: 416 785 5353
Fax: 416 785 5663
<PAGE>
HOMELIFE, INC.
Consolidated Balance Sheets
As at May 31, 1999 and 1998
(Amounts expressed in U.S. dollars)
<TABLE>
<CAPTION>
1999 1998
(restated
see note 16)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash 327,637 223,723
Marketable securities, at fair value 194,875 -
Accounts receivable (note 3) 168,033 231,710
Notes receivable (note 4) 235,500 480,859
Prepaid expenses and deposits (note 5) 78,159 290,881
-----------------------------
1,004,204 1,227,173
NOTES RECEIVABLE (note 4) 130,801 430,301
PROPERTY AND EQUIPMENT (note 6) 480,993 554,654
GOODWILL (note 7) 661,273 678,755
OTHER ASSETS (note 8) 702,203 730,125
CASH HELD IN TRUST (note 9) 342,317 489,014
-----------------------------
3,321,791 4,110,022
-----------------------------
-----------------------------
</TABLE>
APPROVED ON BEHALF OF THE BOARD
Director
Director
F-1
<PAGE>
HOMELIFE, INC.
Consolidated Balance Sheets
As at May 31, 1999 and 1998
(Amounts expressed in U.S. dollars)
<TABLE>
<CAPTION>
1999 1998
(restated
see note 16)
$ $
LIABILITIES
CURRENT LIABILITIES
<S> <C> <C>
Bank indebtedness (note 10) 16,960 -
Accounts payable (note 11) 459,662 224,668
Advances from stockholder (note 12) 143,472 330,376
Note payable (note 13) 10,000 10,000
Reserve for warranty 51,500 43,900
Dividends payable 4,170 10,980
Deferred revenue 197,080 55,580
-----------------------------
882,844 675,504
DEFERRED REVENUE 206,149 244,420
TRUST LIABILITY (note 9) 342,317 489,014
MINORITY INTEREST 43,378 35,880
-----------------------------
1,474,688 1,444,818
-----------------------------
STOCKHOLDERS' EQUITY
CAPITAL STOCK (note 14) 1,043,288 1,166,481
ADDITIONAL PAID IN CAPITAL (note 14) 2,846,093 2,662,125
DEFICIT (2,042,278) (1,163,402)
-----------------------------
1,847,103 2,665,204
-----------------------------
3,321,791 4,110,022
-----------------------------
-----------------------------
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
F-2
<PAGE>
HOMELIFE, INC.
Consolidated Statements of Operations
For the years ended May 31,
(Amounts expressed in U.S. dollars)
<TABLE>
<CAPTION>
1999 1998 1997
(restated (restated
see note 16) see note 16)
$ $ $
REVENUE
<S> <C> <C> <C>
Royalty and franchise fees 782,174 914,946 726,101
Warranty fees 124,192 208,322 206,877
Mortgage financing fees 199,451 - -
Real estate brokerage 2,632,251 647,279 -
Other income 311,896 144,851 -
------------------------------------------------
4,049,964 1,915,398 932,978
COST OF SALES 2,791,997 805,542 932,978
------------------------------------------------
1,257,967 1,109,856 932,978
------------------------------------------------
EXPENSES
Salaries and fringe benefits 680,481 558,506 20,000
General and administrative 867,136 398,052 742,579
Occupancy 166,263 108,559 283,334
Financial 207,131 67,806 -
Amortization 205,214 194,112 193,728
------------------------------------------------
2,126,225 1,327,035 1,239,641
------------------------------------------------
LOSS BEFORE MINORITY INTEREST (868,258) (217,179) (306,663)
Minority interest (7,498) (9,177) (16,099)
------------------------------------------------
LOSS BEFORE INCOME TAX RECOVERY (875,756) (226,356) (322,762)
Income tax recovery (note 15) - - -
------------------------------------------------
NET LOSS (875,756) (226,356) (322,762)
Preferred dividends (3,120) (13,000) -
------------------------------------------------
NET LOSS APPLICABLE TO COMMON
SHARES (878,876) (239,356) (322,762)
------------------------------------------------
------------------------------------------------
Loss before preferred dividends per
common shares (0.18) (0.06) (0.09)
Preferred dividends per common share 0.00 0.00 0.00
------------------------------------------------
BASIC LOSS PER COMMON SHARE (0.18) (0.06) (0.09)
------------------------------------------------
------------------------------------------------
FULLY DILUTED LOSS PER COMMON
SHARE (0.18) (0.06) (0.09)
------------------------------------------------
------------------------------------------------
</TABLE>
F-3
<PAGE>
HOMELIFE, INC.
Consolidated Statements of Cash Flows
For the years ended May 31, 1999, 1998 and 1997
(Amounts expressed in U.S. dollars)
<TABLE>
<CAPTION>
1999 1998 1997
(restated (restated
see note 16) see note 16)
$ $ $
<S> <C> <C> <C>
CASH FLOWS FROM OPERATION ACTIVITIES
Net loss (878,876) (239,356) (322,762)
Adjustments to reconcile net loss to net cash used
in operation activities
Depreciation and amortization 205,214 194,112 193,728
Minority interest 7,498 9,177 26,703
Changes in assets and liabilities
Decrease (increase) in accounts and other receivable 63,677 395,449 (17,547)
Decrease (increase) in notes receivables 544,859 (711,160) (197,500)
Decrease (increase) in prepaid expenses 212,722 (172,023) 130,274
Increase in accounts payable 234,994 59,080 144,943
Increase (decrease) in reserve for warranty 7,600 (10,100) 54,000
Increase in deferred revenue 103,229 300,000 -
----------------------------------------------
500,917 (174,821) 11,839
----------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (54,145) (156,752) (663,216)
Purchases of intellectual assets (32,004) (149,458) (595,000)
Purchases (sales) of marketable securities (194,875) - 120,000
Increase in goodwill - (104,572) -
----------------------------------------------
(281,024) (410,782) (1,138,216)
----------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in bank indebtedness 16,960 (4,478) 4,478
Decrease (increase) in notes payable - (9,792) 19,792
Increase (decrease) in advances from stockholder (186,904) 180,332 148,044
Increase (decrease) in common stock issuance (123,193) 162,560 235
Increase in treasury stock issuance - - 74,500
Increase in additional paid in capital 183,968 237,321 983,745
Increase (decrease) in dividends payable (6,810) 10,980 -
----------------------------------------------
(115,979) 576,923 1,230,794
----------------------------------------------
NET INCREASE (DECREASE) IN CASH 103,914 (8,680) 104,417
Cash, beginning of year 223,723 232,403 127,986
----------------------------------------------
CASH, END OF YEAR 327,637 223,723 232,403
----------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Interest paid 254 3,004 3,980
----------------------------------------------
----------------------------------------------
Income taxes paid - 5,089 12,810
----------------------------------------------
----------------------------------------------
</TABLE>
F-4
<PAGE>
HOMELIFE, INC.
Consolidated Statements of Stockholders Equity
For the years ended May 31, 1999, 1998 and 1997
(Amounts expressed in U.S. dollars)
<TABLE>
<CAPTION>
Class A Class AA
Common Stock Preference Stock - 6% Preferred Stock - 8%
Shares Amount Shares Amount Shares Amount
(restated
see note 16)
$ $ $
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MAY 31, 1996 - as originally
reported 3,685,785 3,685 10,000 1,000,000 - -
Adjustments (note 16) - - - - - -
Compensation (note 16) - - - - - -
----------------------------------------------------------------------------
BALANCE, MAY 31, 1996 3,685,785 3,685 10,000 1,000,000 - -
Issuance of common stock 235,000 235 - - - -
Sale of treasury stock (notes 14 and 16) - - - - - -
Stock issue expenses (notes 14 and 16) - - - - - -
Compensation and licensing
arrangement (note 16) - - - - - -
Net loss - - - - - -
----------------------------------------------------------------------------
BALANCE, MAY 31, 1997 3,920,785 3,920 10,000 1,000,000 - -
Issuance of common stock (note 14 and 16) 576,690 61 - - - -
Issuance of preferred stock (note 14) - - - - 325 162,500
Compensation and licensing
arrangement (note 16) - - - - - -
Net loss - - - - - -
----------------------------------------------------------------------------
BALANCE, MAY 31, 1998 4,497,475 3,981 10,000 1,000,000 325 162,500
Issuance of common stock (note 14) 66,750 67 - - - -
Compensation and licensing
arrangement (note 16) - - - - - -
Conversion of preferred stock
to common stock (note 14) 239,707 240 - - (247) (123,500)
Net loss - - - - - -
----------------------------------------------------------------------------
BALANCE, MAY 31, 1999 4,803,932 4,288 10,000 1,000,000 78 39,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------
<CAPTION>
Paid in Accumulated Treasury Stock
Capital Deficit Shares Amount
(restated (restated
see note 16) see note 16)
$ $ $
<S> <C> <C> <C> <C>
BALANCE, MAY 31, 1996 - as originally
reported 1,400,339 (582,172) 630,500 (74,500)
Adjustments (note 16) - (9,112) - -
Compensation (note 16) 10,000 (10,000) - -
------------------------------------------------------------
BALANCE, MAY 31, 1996 1,410,339 (601,284) 630,500 (74,500)
Issuance of common stock 684,465 - - -
Sale of treasury stock (notes 14 and 16) 545,000 - (630,500) 74,500
Stock issue expenses (notes 14 and 16) (245,000) - - -
Compensation and licensing
arrangement (note 16) 30,000 - - -
Net loss - (322,762) - -
------------------------------------------------------------
BALANCE, MAY 31, 1997 2,424,804 (924,046) - -
Issuance of common stock (note 14 and 16) 207,321 - - -
Issuance of preferred stock (note 14) - - - -
Compensation and licensing
arrangement (note 16) 30,000 - - -
Net loss - (239,356) - -
------------------------------------------------------------
BALANCE, MAY 31, 1998 2,662,125 (1,163,402) - -
Issuance of common stock (note 14) 30,708 - - -
Compensation and licensing
arrangement (note 16) 30,000 - - -
Conversion of preferred stock
to common stock (note 14) 123,260 - - -
Net loss - (878,876) - -
------------------------------------------------------------
BALANCE, MAY 31, 1999 2,846,093 (2,042,278) - -
------------------------------------------------------------
------------------------------------------------------------
</TABLE>
F-5
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
1. BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION
These financial statements consolidate, using the purchase method, the
accounts of the company and its subsidiaries listed below:
a) Wholly-owned subsidiaries
HomeLife Realty Services, Inc., FamilyLife Realty Services, Inc.,
MaxAmerica Financial Services, Inc., Red Carpet Broker Network,
Inc., National Sellers Network, Inc., Builders Realty (Calgary) Ltd,
Aspen Benson & May Investment Bankers LLC., Homelife California
Realty, Inc. and Homelife Properties, Inc.
b) Majority-owned subsidiaries
The Keim Group Ltd. and MaxAmerica Home Warranty Company - 93 1/3%
and 82.72% respectively.
On consolidation, all material intercompany accounts have been
eliminated. Consolidation commenced with the effective dates of
acquisition of the operations of the subsidiary companies and these
financial statements include the financial results of the
subsidiaries to May 31, 1999 and 1998 and 1997.
Business acquisitions by the company since June 1, 1997 were as follows:
a) Effective on August 20, 1997, the company acquired the real estate
operations, including the licencing agreements and trademarks, of
Network Real Estate, Inc., a real estate broker, for $100,000 as
follows:
<TABLE>
<S> <C>
Cash $ 10,000
Note payable, 8%, due October 25, 1997 (see note 13) 10,000
160 Class AA convertible, redeemable preferred shares of the company
carrying 8% cumulative dividend; convertible after 12 months from
date of issue (see note 14) 80,000
-------------
$ 100,000
-------------
-------------
</TABLE>
The company had the option of buying back the Class AA Preferred
shares at $5 per share prior to August 20, 1998 but did not exercise
the option.
The assets acquired were recorded as trademarks and will be
amortized over 20 years on a straight-line basis
F-6
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
1. BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION (cont'd)
b) On February 27, 1998, the company acquired all issued shares of
Builders Realty (Calgary) Ltd., a Canadian real estate broker, for
$316,080 as follows:
<TABLE>
<S> <C>
Cash $ 158,040
36,000 Common shares of the company 158,040
---------------
$ 316,080
---------------
---------------
</TABLE>
The company agreed to issue additional common shares to stockholders
should the market price per common share be less than $5 after 12
months from date of issue, so that the market value of total common
shares issued for this acquisition would be $158,040. (see notes 14
and 17)
The assets acquired were recorded as follows:
<TABLE>
<S> <C>
Net tangible current assets $ 25,900
Goodwill 290,180
---------------
$ 316,080
---------------
---------------
</TABLE>
The goodwill will be amortized over 40 years on a straight-line line
basis.
c) On September 15, 1998, the company purchased all the issued shares
of an inactive holding company, Aspen Benson and May Investment
Bankers LLC., for common stock in the amount of $77,500 to be issued
in January 2000. At the time of purchase, Aspen Benson and May
Investment Bankers LLC. had negligible assets and revenue.
Effectively, the acquisition allowed the company to pay the vendor a
salary of $77,500 from September 10, 1998 to December 31, 1999 by
the issuance of the company's common stock.
The company has recorded a salary expense of $45,000 to May 31,
1999, with the corresponding liability to be satisfied by the
issuance of common stock in January 2000.
F-7
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
1. BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION (cont'd)
d) On January 20, 1999, Builders Realty (Calgary) Ltd. purchased the
real estate brokerage business including licensing agreements and
trademarks of HomeLife Higher Standards operating in Calgary,
Alberta, Canada, for $42,061 cash in fourteen monthly instalments of
$2,714 and a final payment of $4,065.
The assets acquired were recorded as follows:
<TABLE>
<S> <C>
Trademarks $ 42,061
---------------
---------------
</TABLE>
These trademarks will be amortized over 20 years on a straight-line
basis.
e) During the fiscal year May 31, 1998, the company acquired, by cash
of $5,000 in total, all issued shares of several newly incorporated
companies. These new companies 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, Homelife Properties, Inc. which will be a real estate
holding company and Red Carpet Broker Network, Inc. and National
Sellers Network, Inc., which will be licensing real estate
brokerages.
Business acquisitions by the company prior to June 1, 1997 were as follows:
a) Prior to June 1, 1997, the company acquired the following:
The net assets of Homelife U. S. Partnership, a real estate
operation, for $1,000,000.
All the issued shares of Homelife Realty Services, Inc., a real
estate peration, for $250,000.
93 1/3% and 82.72% respectively of the issued common shares of The
Keim Group, Ltd. and Guardian Home Warranty Company (subsequently
re-named MaxAmerica Home Warranty Company), real estate and home
warranty operations, for $766,250.
The net assets of S & S Acquisition Corp. a real estate operation,
for $400,000.
All the issued shares of Familylife Realty Services, Inc., a newly
incorporated company to engage in real estate operations, for $1,000.
The acquisitions (i) and (ii) were entities owned by a company
controlled by the president of Homelife, Inc.
F-8
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
1. BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION (cont'd)
b) The combined assets acquired were as follows:
<TABLE>
<S> <C>
Current assets $ 162,000
Note receivable 494,899
Prepaid printed advertising materials 320,000
Property and equipment 369,696
Goodwill 409,142
Trademarks and franchise rights 661,513
---------------
$ 2,417,250
---------------
---------------
</TABLE>
The combined consideration given was as follows:
<TABLE>
<S> <C>
Cash $ 583,893
10,000 Class A Preferred shares - par value of $100 1,000,000
2,616,662 Common shares -
- par value of $0.001 2,617
- paid in capital 830,740
Warrant (see note 14) -
---------------
$ 2,417,250
---------------
---------------
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
i) Principal Activities
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:
a) 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.
b) The company is a mortgage financing services provider through its
subsidiary, MaxAmerica Financial Services, Inc.
The company owns and operate a full service retail real estate
brokerage through its subsidiary, Builders Realty (Calgary) Ltd.
F-9
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
i) Principal Activities (cont'd)
c) The company owns and operate a full service retail real estate
brokerage through its subsidiary, Builders Realty (Calgary) Ltd.
d) The company is a provider of home warranty coverage through its
subsidiary, Guardian Home Warranty Company.
ii) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, amounts due to banks
and any other highly liquid investments purchased with a maturity of
three months or less. The carrying amount approximates fair value
because of the short maturity of those instruments.
iii) Other Financial Instruments
The carrying amount of the company's other financial instruments
approximates fair value because of the short maturity of these
instruments or the current nature of interest rates borne by these
instruments.
iv) Long-term Financial Instruments
The fair value of each of the company's long-term financial assets
and debt instruments is based on the amount of future cash flows
associated with each instrument discounted using an estimate of what
the company's current borrowing rate for similar instruments of
comparable maturity would be.
v) Amortization of Property and Equipment
Amortization of property and equipment is provided over 7 years
using the straight-line method.
vi) Goodwill
Goodwill is the excess of cost over the value of tangible assets
acquired. It is amortized on the straight-line basis over 40 years.
vii) Amortization of Other Assets
Amortization of other assets is on a straight-line basis over their
estimated useful lives as follows:
Trademarks and franchise rights 20 years
Organization costs 5 years
F-10
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
viii) Impairment
The company's policy is to record an impairment loss against the
balance of a long-lived asset in the period when it is determined
that the carrying amount of the asset may not be recoverable. This
determination is based on an evaluation of such factors as the
occurrence of a significant event, a significant change in the
environment in which the business assets operate or if the expected
future non-discounted cash flows of the business was determined to
be less than the carrying value of the assets. If impairment is
deemed to exist, the assets will be written down to fair value.
Management also evaluates events and circumstances to determine
whether revised estimates of useful lives is warranted. As of May
31, 1999, management expects its long-lived assets to be fully
recoverable.
ix) Revenue Recognition
Income from the sale of franchises is recognized over a 5-year
period. Master franchise agreement fees are recognized over 10 years
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
over the term of the contract which is usually 12 months;
anticipated obligations under these warranty have been recorded as
reserve for warranty and are based on past experience. Real estate
brokerage income is recognized at the close of escrow. Loan fees are
recognized as income on the signing of the mortgage financing
agreements with customers. Revenue received or receivable which is
not recognized as income is recorded on the balance sheet as
deferred revenue.
x) Income taxes
The company accounts for income tax under the provisions of
Statement of Financial Accounting Standards No. 109, which requires
recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the
financial statements or tax returns. Deferred income taxes are
provided using the liability method. Under the liability method,
deferred income taxes are recognized for all significant temporary
differences between the tax and financial statement bases of assets
and liabilities. In addition, the company is required to record all
deferred tax assets, including future tax benefits of capital losses
carried forward, and to record a "valuation allowance" for any
deferred tax assets where it is more likely than not that the asset
will not be realized.
xi) Stock-Based Compensation
In December 1995, SFAS No. 123, Accounting for Stock-Based
Compensation, was issued. It introduced the use of a fair
value-based method of accounting for stock-based compensation. It
encourages, but does not require, companies to recognize
compensation expense for stock-based compensation to employees based
on the new fair value accounting rules. Companies that choose not to
adopt the new rules will continue to apply the existing accounting
rules contained in Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees. However, SFAS No. 123
requires companies that choose not to adopt the new fair value
accounting rules to disclose pro forma net income and earnings per
share under the new method. SFAS No. 123 is effective for financial
statements for fiscal years beginning after December 15, 1995. The
company has adopted the disclosure provisions of SFAS No. 123.
F-11
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
xii) Foreign Currency Translation
Builders Realty (Calgary) Ltd., a wholly-owned subsidiary, maintains
its books and records in Canadian dollars. Foreign currency
transactions are translated using the temporal method. Under this
method, all monetary items are translated into Canadian funds at the
rate of exchange prevailing at balance sheet date. Non-monetary
items are translated at historical rates. Income and expenses are
translated at the rate in affect on the transaction dates.
Transaction gain and losses are included in the determination of
earnings for the year.
The translation of the financial statements of this wholly-owned
subsidiary from Canadian dollars into United States dollars is
performed for the convenience of the reader. Balance sheet accounts
are translated using closing exchange rates in affect at the balance
sheet date and income and expenses accounts are translated using an
average exchange rate prevailing during each reporting period. No
representation is made that the Canadian dollar amounts could have
been or could be, converted rates. Adjustments resulting from the
translation are included in the determination of earnings for the
year.
xiii) Net Income (loss) and Fully Diluted Net Income (loss) Per Weighted
Average Common Stock
Net income (loss) per common stock is computed by dividing net
income (loss) for the year by the weighted average number of common
stock outstanding during the year.
Fully diluted net income (loss) per common stock is computed by
dividing net income (loss) for the year by the weighted average
number of common stock outstanding during the year, assuming, except
where the result would be anti-dilutive, that all convertible
preferred shares were converted, the contingent common stock were
issued, the warrant was exercised and the stock options granted were
exercised (see note 14).
xiv) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principals in the United States of America
requires management to make estimates and assumptions that affect
certain reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
F-12
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
3. ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
1999 1998
$ $
<S> <C> <C>
Accounts receivable 195,523 251,625
Less: Allowance for doubtful accounts (27,490) (19,915)
----------------------------
Accounts receivable, net 168,033 231,710
----------------------------
----------------------------
</TABLE>
4. NOTES RECEIVABLE
<TABLE>
<CAPTION>
1999 1998
$ $
<S> <C> <C>
Notes receivable at May 31, 1999 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
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. In 1999, the company received marketable securities valued
at $300,000 as payment. - 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. In 1999, the company
received marketable securities valued at $74,500 as payment. - 74,500
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 12, 2000 200,000 200,000
Note receivable arising from the sale of a master franchise
agreement. Note is unsecured and non-interest bearing. 155,801 155,801
Notes receivable from existing franchises for franchise fees.
These notes are unsecured, non-interest bearing and payable
in installments over one year 10,500 18,859
366,301 911,160
----------------------------
Less: Current portion 235,500 480,859
----------------------------
130,801 430,301
----------------------------
----------------------------
</TABLE>
F-13
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
5. PREPAID EXPENSES AND DEPOSITS
<TABLE>
<CAPTION>
1999 1998
(restated
see note 16)
$ $
<S> <C> <C>
Promotional materials and supplies 50,120 251,625
Prepaid expenses 13,451 30,195
Deposits 14,588 9,061
----------------------------
78,159 290,881
----------------------------
----------------------------
</TABLE>
6. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
1999 1998
(restated
see note 16)
$ $
<S> <C> <C>
Furniture and fixtures 277,579 275,811
Computer equipment 625,599 582,492
Leasehold improvements 9,270 -
Automobile 19,865 19,865
----------------------------
Cost 932,313 878,168
----------------------------
----------------------------
Less: Accumulated amortization
Furniture and fixtures 157,606 118,205
Computer equipment 272,525 190,262
Leasehold improvements 1,324 -
Automobile 19,865 15,047
----------------------------
451,320 323,514
----------------------------
Net book value 480,993 554,654
----------------------------
----------------------------
</TABLE>
Amortization for the year amounted to $127,806 ($125,452 in 1998).
F-14
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
7. GOODWILL
<TABLE>
<CAPTION>
1999 1998
(restated
see note 16)
$ $
<S> <C> <C>
Cost 699,322 699,322
Less: Accumulated amortization 38,049 20,567
---------------------------
661,273 678,755
---------------------------
---------------------------
</TABLE>
Amortization for the year amounted to $17,482 ($12,043 in 1998).
8. OTHER ASSETS
<TABLE>
<CAPTION>
1999 1998
$ $
<S> <C> <C>
Trademarks and franchise rights 761,513 761,513
Organization costs 106,462 74,458
---------------------------
Cost 867,975 835,971
---------------------------
Less: Accumulated amortization
Trademarks and franchise rights 108,265 69,713
Organization costs 57,507 36,133
---------------------------
165,772 105,846
---------------------------
Net book value 702,203 730,125
---------------------------
---------------------------
</TABLE>
Amortization for the year amounted to $59,926 ($56,617 in 1998).
9. CASH HELD IN TRUST AND TRUST LIABILITY
Cash held in trust are deposits received in connection with the opening
of escrow accounts for the sale of real estate. The deposits are
recorded as trust liabilities and are refunded when the real estate is
sold or the escrow is closed according to the terms of the escrow
agreement.
F-15
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
10. BANK INDEBTEDNESS
As at December 31, 1998, the company's available line of credit under
the bank loan agreement amounted to $33,920 (CDN$50,000). The operating
credit facility bears interest at the bank's prime lending rate plus 2%
per annum with interest payable monthly. As security, the company has
provided a general assignment of book debts, a general security
agreement constituting a first charge over all present and future
personal property of the company, a subordination agreement with respect
to amounts owed by the borrower to the shareholders of $33,920
(CDN$50,000), and a guarantee by the major shareholder of the company of
$33,920 (CDN$50,000).
11. ACCOUNTS PAYABLE
<TABLE>
<CAPTION>
1999 1998
(restated
note 16)
$ $
<S> <C> <C>
Trade payable 377,375 100,485
Accrued expenses 82,287 124,183
---------------------------
459,662 224,668
---------------------------
---------------------------
</TABLE>
12. ADVANCES FROM STOCKHOLDER
The advances are from a majority stockholder and are non-interest
bearing, are without specific terms of repayment and are not expected to
repaid before June 1, 2000. Had the advances been valued at the current
value of cash flows at the company's current rate of borrowing, the
advances would be valued at $164,125 in 1999 and $342,811 in 1998.
Interest of $8,218 would have been inputed for 1999, $10,152 for 1998
and $2,283 for 1997.
13. NOTE PAYABLE
The note payable bears interest at 8% and has been overdue since October
25, 1997.
F-16
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
14. CAPITAL STOCK
a) Authorized
100,000 Class A Preference shares of no par
value, 6% non cumulative dividend, voting,
convertible to common shares at the option of the
shareholder at a price equal to the face value of
the Class A shares. Each Class A Preferred share
carries 1,000 votes as compared with 1 vote for
each common share
2,000 Class AA preferred shares of $500 par
value, 8% cumulative dividend, non-voting,
redeemable at face value by the company,
convertible after 12 months from the date of
issuance, at the option of the shareholder, to
common shares at a price equal to the 125% of the
face value of the Class AA shares as compared
with the market price of the common stock.
10,000,000 Common shares of $0.001 par value
Issued
<TABLE>
<CAPTION>
1999 1998
(restated
see note 16)
$ $
<S> <C> <C>
10,000 Class A Preferred shares 1,000,000 1,000,000
78 Class AA Preferred shares (325 - 1998) 39,000 162,500
4,803,932 Common shares (4,497,475 - 1998) 4,288 3,981
------------------------------
1,043,288 1,166,481
------------------------------
------------------------------
</TABLE>
F-17
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
14. CAPITAL STOCK (cont'd)
b) Shares issued during the years ended in May 31, 1999 and 1998 were as
follows:
<TABLE>
<CAPTION>
Capital Paid in
Number stock capital
(restated (restated
see note 16) see note 16)
$ $
<S> <C> <C> <C>
i) Class AA Preferred shares
On August 20, 1997, 160 Class AA Preferred shares
were issued to acquire the business
of Network Real estate, Inc. (see note 1) 160 80,000 -
During the year ended May 31, 1998, 165 Class
AA Preferred shares were issued for cash 165 82,500 -
---------------------------------------------
325 162,500 -
---------------------------------------------
---------------------------------------------
On October 7, 1998, 247 class AA Preferred
shares were converted to 239,707 common
shares at their face value (247) (123,500) -
---------------------------------------------
---------------------------------------------
ii) Common shares
On February 27, 1998, the company
issued 36,000 common shares for $158,040
to acquire the issued shares of Builders
Realty (Calgary) Ltd. (see note 1) 36,000 36 158,004
During the year ended May 31, 1998,
25,690 common shares were issued in
consideration of services rendered 25,690 25 49,317
During the year ended May 31, 1998, 250,000
common shares were issued for promissory
notes, non-interest bearing, payable on December 31,
2000, totaling $485,000 250,000 250 484,750
During the year ended May 31, 1998, 265,000 common
shares were issued for promissory notes,
non-interest bearing, payable on December 31,
2000, totaling $250,000 265,000 265 249,735
</TABLE>
F-18
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
14. CAPITAL STOCK (cont'd)
ii) Common shares (cont'd)
<TABLE>
<CAPTION>
Capital Paid in
Number stock capital
(restated (restated
see note 16) see note 16)
$ $
<S> <C> <C> <C>
Subscriptions receivable - (515) (734,485)
---------------------------------------------
576,690 61 207,321
---------------------------------------------
---------------------------------------------
During the year ended May 31, 1999, 7,250 common
shares were issued in accordance with the agreement
for the acquisition of Keim and MaxAmerica
(note 1) 7,250 7 (7)
During the year ended May 31, 1999,
10,000 common shares were issued
in consideration for services rendered 10,000 10 8,490
During the year ended May 31, 1999.
49,500 Common shares were issued.
The fair market value of the shares at
the time of issue was $22,275 49,500 50 22,225
---------------------------------------------
66,750 67 30,708
---------------------------------------------
---------------------------------------------
On October 7, 1998, the company issued 239,707
common shares for $123,500 on the conversion of 247
Class AA preferred shares 239,707 240 123,260
---------------------------------------------
---------------------------------------------
</TABLE>
On October 8, 1999, the promissory note receivable in the amount of
$250,000 was exchanged for 100,000 shares of Pioneer Growth Corp. The
company may re-acquire its shares in exchange of the shares of Pioneer
Growth Corp. during the 12 months subsequent to October 8, 1999.
c) Contingent shares to be issued
In the purchase agreement for the acquisition of Builders Realty
(Calgary) Ltd., the Company issued common stock as part of the purchase
price (see note 1). The value of the common stock issued was set at $5
per share which was substantially higher than the current market value.
The company agreed that if the actual market value of the stock did not
reach $5 per share within one year, the stockholders of Builders Realty
(Calgary) Ltd., would be issued either additional common shares of
Homelife, Inc. or cash to complete the transaction (see note 17).
F-19
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
14. CAPITAL STOCK (cont'd)
d) Warrant
On January 16, 1997, the company granted a warrant to S & S Acquisition
Corp. as part of the consideration for the acquisition of its assets.
The warrant entitles S & S Acquisition Corp. to acquire, from January
31, 1998 to January 31, 2002, up to 200,000 common shares of the company
at $6 per share. The number of common shares and the price per share are
adjusted proportionately with the increase in the number of common
shares issued by the Company. As the market value of the common share of
the company was significantly lower than $6 per share, no value was
assigned to the warrant by the company.
e) Stock options
On September 18, 1998, the board of directors of the company adopted a
stock option plan (the "plan") for its directors, employees, and
consultants with an authorized number of shares of common stock of the
company which may be granted under the plan of up to one million shares.
The terms of the options were to be determined by the president of the
company, subject to the approval by the shareholders.
f) Treasury stock
During the year ended May 31, 1997, the company transferred 630,500
treasury common shares to Ward Enterprises, Inc. for the following;
<TABLE>
<CAPTION>
No. of Amount
Share $
<S> <C> <C>
Consulting for stock issues 250,000 245,000
Shares of HOA - -
Notes receivable 380,500 374,500
--------------------------
630,500 619,500
--------------------------
--------------------------
</TABLE>
The gain on the sale of treasury stock of $545,000 has been reflected in
paid in capital. The consulting fees have been charged against paid in
capital as they were paid to help the company negotiate and issue new
capital stock.
g) Outstanding common shares
The transfer agent reflects a total of 4,878,932 common shares
outstanding, 75,000 of which are held by MaxAmerica Financial Services,
Inc., a wholly-owned subsidiary. The investment and share capital have
been eliminated on consolidation.
F-20
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
14. CAPITAL STOCK (cont'd)
h) Stock option plan
As at May 31, 1999. options to various directors of the company to
acquire 140,000 common stock had been granted under the stock option
plan with the following terms:
100,000 common shares at $3 per share
30,000 common shares at $5 per share
10,000 common shares at $1 per share, expiring July 10, 1999.
As the exercise prices were higher than the market values on the dates
of the grant, no compensation expenses were recorded by the Company.
i) Earnings per share
The fully diluted earnings per share does not consider the convertible
preferred shares, the stock options and the issuance and the contingent
common stock as the result would be anti-dilutive
15. INCOME TAXES
<TABLE>
<CAPTION>
1999 1998 1997
(restated (restated
see note 16) see note 16)
$ $ $
<S> <C> <C> <C>
a) Current - - -
Deferred - - -
---------------------------------------------
- - -
---------------------------------------------
---------------------------------------------
b) The components of deferred income taxes are comprised
as follows:
Losses carried-forward 436,000 185,000 71,000
Valuation allowance (436,000) (185,000) (71,000)
---------------------------------------------
- - -
---------------------------------------------
---------------------------------------------
</TABLE>
c) At May 31, 1999. the company had non-capital losses available for
carry-forward of approximately $1,280,000. These losses expire after May
31, 2006.
F-21
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
16. PRIOR PERIOD ADJUSTMENTS
The following indicates the impact on the prior years' consolidated
statements of operations of the following prior period adjustments:
<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
a) In the year ended May 31, 1998, the company recognized as net franchise
fees income, the sale of a Germany Area Franchise for $155,801. As the
company's franchise agreement is for 10 years, this income should have been
recognized over 10 years. The company recorded a prior period adjustment to
franchise fees income of $140,000 in 1999.
140,000 -
b) In the year ended May 31, 1998, the company also recognized as franchise
fees income, the sale of an Illinois, USA franchise for $200,000. As the
franchise agreement is for 5 years, this income should have been recognized
over 5 years. The company recorded a prior period adjustment to franchise
fees income of $160,000 in 1999. 160,000 -
c) In the year ended May 31, 1997, the company recognized
a gain n sale of investments of $180,000 on the sale of the
company's investment in HOA Property Management for
$300,000 in the form of a note receivable from Ward
Enterprises, Inc. During the same period, the company
also sold 630,500 treasury common stock for a note of
$74,500 from Ward Enterprises, Inc. The financial statements
have been adjusted to reflect a loss on the sale of HOA
shares of $120,000 and a related increase in paid in
capital of $300,000 - 300,000
d) In prior years, the company did not amortize, goodwill based on the value
and estimated lives of these assets. In 1999, the company recorded a prior
period adjustment in the form of a charge to amortization of $11,494 2,970 8,524
e) In 1996, the company acquired printed advertising materials of $320,000 as
part of a business acquisition. The company has been amortizing these
prepaid expenditures over a period of 6 to 7 years. In 1999, the company
recognized that these advertising materials should have been amortized over
3 years from acquisition and recorded a prior period adjustment in the form
of a charge to advertising of $123,112.
$9,112 has been charged to 1996 57,000 57,000
F-22
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
16. PRIOR PERIOD ADJUSTMENTS (cont'd)
1998 1997
$ $
f) Prior to June 1, 1998, the company failed to reflect proper
compensation for services provided by its president.
In 1999, the directors of company determined that the
value of the annual compensation for the services
rendered should be $20,000. The company recorded
$50,000 for services rendered from December 1, 1995 to
May 31, 1998 as a prior period adjustment in 1999 and a
corresponding increase in paid in capital. $10,000 has been
charged to 1996
20,000 20,000
g) The company did not reflect the annual cost of the licensing arrangement
with Jerome' s Magic World, Inc., a company controlled by the president of
the company, commencing in 1997. In 1999, the company determined the annual
value of the license would be $10,000 and recorded $20,000 for
licensing expenses for 1997 and 1998. 10,000 10,000
h) In 1998, the company failed to record the issuance of 25,600
common shares for services rendered. 49,317 -
i) Income tax provisions for 1998 and 1997 were adjusted
accordingly to reflect the prior period adjustments listed above (73,000) (16,000)
----------------------------
366,287 379,524
----------------------------
----------------------------
</TABLE>
Other prior period adjustments that have no impact on prior year'
consolidated statements of operations are as follows:
j) During the year ended May 31, 1997, the company transferred 630,500
treasury common shares to Ward Enterprises, Inc. (see note 14 (f)) and
recorded $74,500 in stockholders' equity. As the fair value of the
transaction should have been $619,500, the difference of $545,000 was
adjusted to paid in capital. Also, as 250,000 of the 630,500 treasury
common shares transferred were for consulting services relating to stock
issuance by the company, $245,000 was charged to paid in capital.
F-23
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
16. PRIOR PERIOD ADJUSTMENTS (cont'd)
k) During the year ended May 31, 1998, the company issued 576,690 common
shares and recorded $576 in common stock and $158,004 in paid in
capital. As the fair value of these common shares issued should have
been $942,382, an adjustment for additional paid in capital of $783,802
was recorded. However, as subscriptions receivable for 515,000 of these
common shares issued were still outstanding, adjustments to common stock
of $515 and to paid in capital of $734,485 were also recorded. (see note
14 (b)(ii))
l) During the year ended May 31, 1998. the company also issued 300,000
common shares for subscriptions receivable of $750,000. The company
recorded $300 in common stock and $749,700 in paid in capital for this
issuance. As these subscriptions were subsequently cancelled after May
31, 1998, the company cancelled the recorded amounts accordingly.
17. CONTINGENT LIABILITIES
The Company is involved in a lawsuit with National Real Estate Services
of Illinois, Inc., where the company alleges that National Real Estate
has breached its master franchise agreement. National has filed a cross
complaint that the company has breached its master franchise agreement
by not providing services, and has asked for actual damages of three
million dollars and punitive damages of ten million dollars. In
management's opinion, this matter will not have a material effect on the
financial position of the company.
The company is involved in a lawsuit with the sellers of Builders Realty
(Calgary) Ltd. to reduce the purchase price paid for Builders Realty
(Calgary) Ltd. The sellers of Builders Realty (Calgary) Ltd. have filed
a counter lawsuit for damages of $20,352 (Cdn$30,000). In management's
opinion, this matter will not have a material affect on the financial
position of the company.
18. COMPREHENSIVE INCOME
The company has adopted statement of financial accounting standards No.
130 "Reporting Comprehensive Income" as of January 1, 1998 which
requires new standards for reporting and display of comprehensive income
and its components in the financial statements. However, it does nor
affect net income or total stockholders' equity. The components of
comprehensive income are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
$ $ $
<S> <C> <C> <C>
Net loss (875,756) (226,356) (322,762)
Other comprehensive income - - -
----------------------------------------------
Comprehensive loss (875,756) (226,356) (322,762)
----------------------------------------------
----------------------------------------------
F-24
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
19. SEGMENTED INFORMATION
a) Revenue by Geographic Area
1999 1998 1997
$ $ $
United States of America 1,220,069 1,227,505 932,978
Canada 2,829,895 687,893 -
----------------------------------------------
4,049,964 1,915,398 932,978
----------------------------------------------
----------------------------------------------
</TABLE>
b) Net loss by Geographic Area
<TABLE>
<CAPTION>
1999 1998 1997
$ $ $
<S> <C> <C> <C>
United States of America (802,685) (231,153) (322,762)
Canada (73,071) 4,797 -
----------------------------------------------
(875,756) (226,356) (322,762)
----------------------------------------------
----------------------------------------------
c) Identifiable Assets by Geographic Area
1999 1998
$ $
United States of America 2,832,768 3,553,672
Canada 489,023 556,350
-----------------------------
3,321,791 4,110,022
-----------------------------
-----------------------------
</TABLE>
F-25
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
19. SEGMENTED INFORMATION (cont'd)
d) Revenue by industry
<TABLE>
<CAPTION>
1999 1998 1997
$ $ $
<S> <C> <C> <C>
Real Estate Franchise 782,174 976,403 726,101
Real Estate Brokerage 2,632,251 687,893 -
Mortgage Financing 199,451 26,260 -
Home Warranty 124,192 210,902 206,877
Other 311,896 13,940 -
---------------------------------------------
Total 4,049,964 1,915,398 932,978
---------------------------------------------
---------------------------------------------
e) Net loss by industry
1999 1998 1997
$ $ $
Real Estate Franchise (818,505) (156,909) (325,570)
Real Estate Brokerage (73,071) 4,794 -
Mortgage Financing (114) (37,000) -
Home Warranty 26,461 (30,683) 2,808
Other (10,527) (6,558) -
---------------------------------------------
Total (875,756) (226,356) (322,762)
---------------------------------------------
---------------------------------------------
</TABLE>
f) Identifiable assets by industry
<TABLE>
<CAPTION>
1999 1998
$ $
<S> <C> <C>
Real Estate Franchise 2,316,525 3,399,137
Real Estate Brokerage 489,023 556,350
Mortgage Financing 151,624 1,803
Home Warranty 344,630 141,865
Other 19,989 10,867
-----------------------------
Total 3,321,791 4,110,022
-----------------------------
-----------------------------
</TABLE>
F-26
<PAGE>
HOMELIFE, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in U.S. dollars)
May 31, 1999
20. COMMITMENTS
The company has operating leases for premises which extend through
August 31, 2002. Future minimum rental payments as of May 31, 1999 under
the operating lease agreements are as follows:
<TABLE>
<S> <C>
2000 $ 167,333
2001 168,083
2002 122,817
2003 19,920
------------------
$ 478,153
------------------
------------------
</TABLE>
21. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition,
similar problems may arise in some systems which use certain dates in
1999 to represent something other than a date. The effects of the Year
2000 Issue may be experienced before, on, or after January 1, 2000, and,
if not addressed, the impact on operations and financial reporting may
range from minor errors to significant systems failure which could
affect a company's ability to conduct normal business operations. It is
not possible to be certain that all aspects of the Year 2000 Issue
affecting the company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
22. SUBSEQUENT EVENTS
On July 22, 1999 the Board of Directors of the company approved the
authorization of 100,000 shares of Class AAA preferred stock, which is
not entitled to any dividend, with a face value of $500 per share, and
is convertible into one-hundred shares of common stock per one share of
preferred stock after a period of three years from the date of issue.
On August 12, 1999 the Company, signed a letter of intent to purchase
60% of the stock of Bright Financial Corporation for 1,200 shares of
Class AAA Preferred Stock Valued at $600,000.
23. FINANCIAL STATEMENT PRESENTATION
Certain reclassifications of 1998 and 1997 amounts have been made in
order to facilitate comparison with the current year.
F-27
<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:
Name Address
Robert L. Cashman 2164 North Glassell Street
Orange, California 92665
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:
Name Address
---- -------
Robert L. Cashman 2164 North Glassell Street
Orange, California 92665
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>
<S> <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
1
<PAGE>
than twenty (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
2
<PAGE>
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.
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.
3
<PAGE>
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.
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
4
<PAGE>
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.
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.
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
5
<PAGE>
shares in the 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."
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
2
<PAGE>
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 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
3
<PAGE>
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.
(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 Stock The shares are convertible have the following registration
rights. The Company is obligated to register the shares of Common Stock into
which the 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
2
<PAGE>
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 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
3
<PAGE>
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 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:
-------------------
<PAGE>
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
1.01 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 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;
1
<PAGE>
the cost of service contracts with independent contractors in respect of the
maintenance, operation, and repair of the Lands and the Building;
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
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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 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.
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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.
(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 4 8.9 5%,
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
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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 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
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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, 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
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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.
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
canceled 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
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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.
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
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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.
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.
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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 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,
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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, 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.
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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.
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
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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 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,
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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 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
14
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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 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 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, 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
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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>
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
<PAGE>
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
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contractors in respect of the maintenance, operation and repair of the Lands
and the Building;
(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
AExtended 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.
2
<PAGE>
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.
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3.07 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 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
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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 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 canceled 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
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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 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
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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 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
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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 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) daysafter 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 acopy 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
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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 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
(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
LEASE AGREEMENT FOR PROPERTY LOCATED AT
755 W. BIG BEAVER, SUITE 139, TROY, MICHIGAN 48084
<PAGE>
LEASE , 1998
TENANT: Name: THE KEIM GROUP, LTD., a Michigan corporation
Mailing Address: 755 W. Big Beaver Road, Troy, MI 48084
LANDLORD: Name: JOHN M. SAYLOR
Mail Address: 189 E. Big Beaver, Troy, MI 48083
PREMISES: Suite No. 209 & 211 in the Office Building at 189
East Big Beaver Road, Troy, Oakland County, Michigan, in accordance with the
floor plan attached as EXHIBIT A, containing 3,077 square feet of Rentable Floor
Area, which includes 35.51% of the Rentable Floor Area of the Building.
TERM: Begins: January 1, 1999 Ends: January 31, 2002
BASIC MONTHLY
RENT: Months: 2-37: $4,089.85
SECURITY
DEPOSIT: $4,089.85 Paid: January 1, 1999
ADDITIONAL USE: None
(IF ANY)
TAX BASE EXPENSE
RATE: $_______ BASE RATE: (See Article 8)
1. LEASE
John M. Saylor (Landlord), in consideration of the rents to be paid and the
undertakings to be performed by the above named Tenant, leases to Tenant the
above described Premises for the above stated Term, together with the
non-exclusive right to use the parking areas and other common areas which may be
designated by Landlord from time to time for use in connection with the
Premises, in common with others entitled to use the same. Tenant, upon paying
the rent and performing its obligations under this Lease, may peacefully and
quietly enjoy the Premises during the Term, subject to the provisions of this
Lease.
2. RENT
Tenant hires the Premises for the stated Term and agrees to pay the stated Basic
Monthly Rent in advance on the first day of each month during the Term, and
Additional Rent as hereinafter provided, without demand, setoff or deduction,
and to perform the undertakings herein set forth. Rent shall be paid at such
place as Landlord may designate from time to time.
3. USE
Tenant may use and occupy the Premises for office purposes and for the
Additional Use stated above, if any, and for no other purpose without the prior
written consent of Landlord. Tenant, its employees and invitees, shall comply
with all laws, ordinances and regulations of all public authorities relating to
the Premises and the use and occupancy thereof. Tenant, its employees and
invitees, shall comply with the Regulations set forth in EXHIBIT B attached, as
the same may be reasonably modified by landlord from time to time, and with such
other and further reasonable regulations as Landlord may make from time to time.
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4. CONDITION OF PREMISES
Landlord will, prior to commencement of the Term, install in the Premises the
improvements shown on EXHIBIT A and specified in the Supplement to EXHIBIT C and
such Supplement. Landlord shall have no other obligation to make any repairs or
to remodel the Premises and, if no construction is provided in the Supplement to
EXHIBIT C, Tenant accepts the Premises in their condition at the execution of
this Lease. See Rider - Paragraph 1.
5. POSSESSION
Landlord shall have no liability to Tenant if Landlord shall be unable to
deliver possession of the Premises on the date of the commencement of the term
of this Lease by reason of the holding over of the prior occupancy, or by reason
of delay in completion of the building of which the Premises are a part or in
completing, repairing or remodeling the Premises for Tenant's occupancy if such
is provided herein, or for any other cause beyond the reasonable control of
Landlord, but in such event, the term and rent shall not commence until
possession of the Premises is tendered to Tenant and the expiration of the term
shall be extended accordingly; provided that if possession is not tendered to
Tenant within 180 days after the stated commencement date, other than by reason
of delays caused by Tenant, Tenant may terminate this Lease by notice to
Landlord within 10 days thereafter. If delay in tender of possession is caused
by Tenant, Tenant shall pay Basic Monthly Rent for the period of such delay. If
Tenant shall occupy the Premises prior to the date of the commencement of the
term with consent of Landlord, such occupancy shall be subject to all of the
terms and conditions of this Lease, including payment of rent and all other
charges. Tenant shall, from time to time, within 10 days after request by
Landlord, execute and deliver to Landlord a certificate confirming this Lease,
the status thereof and of the Premises and Tenants occupancy thereof, in such
form and with respect to such other matters as Landlord may reasonably request.
Tenant shall not be entitled to withhold such certificate on the basis of any
claimed default by Landlord hereunder. Notwithstanding any other provision
herein, if the term has not commenced on or before 3 years from the date of this
Lease, this Lease shall thereupon terminate and neither party shall have any
liability to the other hereunder.
6. UTILITIES AND SERVICES
Landlord shall furnish to the Premises, without charge to Tenant except as
hereinafter provided: (a) janitor service daily except on Saturdays, Sundays and
holidays; (b) hot and cold water for ordinary office purposes in public toilet
rooms if not within the Premises; and (c) heat and air conditioning to maintain
a comfortable temperature and electricity for purposes of illumination and
operation of normal office equipment (excluding computers and other equipment
requiring large amounts of electricity) between the hours of 8:00 AM and 6:00 PM
Monday through Friday and from 8:00 AM to 1:00 PM on Saturday. If Tenant
requires heat, air conditioning or electricity during other hours, or
electricity or air conditioning for the operation of computers or other
equipment requiring large quantities of electricity or air conditioning, Tenant
shall give Landlord reasonable advance notice and shall pay the reasonable
charges of Landlord for the same. All work and materials required to provide any
such additional electric power or heating, ventilating or air conditioning
facilities shall also be paid by Tenant. If Tenant generates greater quantities
of refuse than normal for general office occupancy, Tenant shall pay the
reasonable charges of Landlord for removal of such excess. Landlord shall have
no liability to Tenant, its employees or invitees and there shall be no
abatement of rent by reason of any failure to furnish any utility or service, if
not due to the negligence of Landlord.
7. MAINTENANCE AND ALTERATIONS
Tenant shall keep the Premises in good repair and at the expiration of the terms
shall yield and deliver up the same in like condition as when taken, reasonable
use and wear thereof excepted. Tenant shall not make any alterations to the
Premises (including fastening any floor covering) without Landlord's prior
written consent and then only by such contractors as may then be employed by
Landlord. All alterations and additions may by either Landlord or Tenant,
including any floor covering fastened to the floor by nails or adhesive, shall
be the property of Landlord and shall
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remain upon the Premises at the termination of this Lease, except that Tenant
may remove all movable office furniture and equipment installed by Tenant,
and Tenant shall remove such other alterations and additions installed by
Tenant as Landlord may direct. Tenant shall, at Tenant's expense, repair any
damage to the Premises caused by the installation or removal of such
furniture, fixtures, alterations or additions so removed and shall restore
the Premises. If Tenant fails to remove all of Tenant's property and the
property of others in the possession of Tenant from the Premises at the
termination of this Lease, Landlord may remove and dispose of such property
in any manner without liability therefor, and Tenant shall pay all charges
for such removal and disposal upon demand by Landlord. Tenant shall indemnify
and hold harmless Landlord for any claim by other persons with respect to
such property.
8. ADDITIONAL RENT
Tenant shall pay Additional Rent, as follows:
A. If the Real Estate Taxes with respect to the land and building of
which the leased Premises are a part (including all adjoining parking and other
areas apportioned to the building by Landlord) for any calendar year of the term
shall exceed the Tax Base Amount, Tenant shall pay to Landlord Tenant's Portion
of such excess. For the purposes hereof:
(1) "Real Estate Taxes" shall be all (a) ad valorem real
property taxes and assessments (including installments of special assessments
required to be paid during the calendar year); and (b) all other taxes and other
charges imposed by the State of Michigan or any subdivision thereof which: (i)
are enacted after the date of this Lease or, if previously enacted, are
increased in any manner after the date of this Lease (but only to the extent of
such increase); (ii) are in replacement of or in addition to all or any part of
ad valorem taxes as sources of revenue, and (iii) are based on whole or in part
upon the land and building of which the Premises are a part or any interest
therein or the ownership or operation thereof, or the rents, profits or other
income therefrom, including, without limitation, income, single business,
franchise, excise, license, privilege, sales, use, and occupancy taxes.
(2) The "Tax Base Amount" shall be the amount obtained by
multiplying the stated Tax Base Rate by the number of square feet of Rentable
Floor Area in the building of which the Premises are a part.
(3) "Tenant's Portion" shall be the percentage (as stated at
the heading of this Lease) that the Rentable Floor Area of the leased Premises
bears to the Rentable Floor Area of the building of which the leased Premises
are a part. If the term of this Lease begins or ends other than at the beginning
or ending of a calendar year, Tenant's Portion for the initial or final part of
a calendar year, as the case may be, shall be adjusted in proportion to the
number of days of the term which are included in such calendar year.
(4) "Rentable Floor Area" shall be the gross floor area of the
building, or of the leased Premises, as the case may be, excluding all areas
designated by Landlord on the standard building floor plan for public access or
the building operations, such as:
(a) Building lobbies and entries
(b) Stairways, duct shafts and elevator shafts
(c) The standard building corridor areas
(d) Toilet rooms
(e) Utilities and maintenance rooms whether
or not any such areas are actually included within any leased premises,
including the Premises under this Lease.
B. If Operating Expense with respect to the building of which the
leased Premises are a part (including all adjoining parking and other areas
apportioned to the building by Landlord) for any calendar year of the term shall
exceed the Expense Base Amount, Tenant shall pay to Landlord Tenant's Portion
(as defined in paragraph 8 A 3) of such excess. For the purpose hereof:
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(1) "Operating Expense" shall be all amounts paid by Landlord
or which Landlord shall be obligated to pay in connection with the ownership,
management and operation of such building areas, except (a) Real Estate Taxes as
defined in Paragraph 8 A1, (b) cost of capital improvements, (c) building
depreciation, (d) mortgage interest and principal payment and (e) real estate
brokers' commissions paid with respect to leasing of premises. If the building
of which the leased Premises are a part is not fully occupied for any calendar
year, those Operating Expenses which vary depending upon the extent of building
occupancy shall be allocated to the occupied portions and Tenant's Portion shall
be adjusted accordingly. If an average of 95% or more of the Rentable Floor Area
(as defined in Paragraph 8 A (4) of the building of which the leased Premises
are a part is occupied during any calendar year, those Operating Expenses which
are fixed and do not vary depending upon the extent of building occupancy shall
be allocated to the occupied portions and Tenant's Portion shall be adjusted
accordingly.
(2) The "Expense Base Amount" shall be the amount obtained by
multiplying the stated Expense Base Rate by the number of square feet of
Rentable Floor Area in the building of which the Premises are a part.
C. On the first day of each month, Tenant shall pay to Landlord an
amount equal to one-twelfth (1/12th) of the estimated Additional Rent for the
then current year, based on the then current rates of operating expenses and
taxes. On request, Landlord shall deliver to Tenant a statement setting forth a
computation of such estimated Additional Rent.
D. With reasonable promptness after the end of each calendar year, or
after any termination or expiration of this Lease, Landlord shall deliver to
Tenant a statement for the Additional Rent payable by Tenant with respect to
such calendar year, together with a statement of the computation thereof. If
Additional Rent is due Landlord for such calendar year, Tenant shall, within 10
days following delivery of such statement, pay to Landlord the amount of such
Additional Rent for such calendar year, less the portion thereof, if any,
already paid on the estimated basis. If the amount theretofore paid hereunder
for any calendar year shall exceed the amount determined in Landlord's annual
statement, the excess shall be credited on the installments of Additional Rent
next maturing. If Landlord shall receive a refund on account of any amount for
which Tenant has been charged, Tenant shall be credited for the net received by
Landlord after deduction of all expenses in connection therewith.
9. ASSIGNMENT AND SUBLETTING
Tenant may not assign this Lease or any interest therein or sublet the Premises
or any part hereof, without the proper written consent of Landlord, which
consent shall not be unreasonably withheld. Tenant shall also have the right to
assign this lease to a new entity to be formed. In the event Landlord shall so
consent, Tenant shall remain liable for all of its obligations under this Lease.
10. MORTGAGE
This Lease, at the option of the Landlord, shall be subordinate or superior to
any present or future mortgage of the building of which the Premises are a part.
The holder of any first mortgage may also elect to have this Lease prior or
subordinate to its mortgage. If in connection with obtaining financing for the
Office Building the proposed lender shall request reasonable modifications of
this Lease as a condition of such financing. Tenant shall not unreasonably
withhold or delay its agreement to such modifications, provided that such
modifications do not materially increase the obligations, or materially and
adversely affect the rights of Tenant under this Lease. Tenant shall attorn to
any purchaser of the Premises at foreclosure sale as Landlord under this Lease
subject to all of the terms and conditions of this Lease. Tenant shall, from
time to time, within 10 days after request by Landlord, execute and deliver to
Landlord a non-disturbance and attornment agreement which confirms the foregoing
in such form as Landlord may reasonably request.
11. ACCESS
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Landlord shall have the right to enter upon the Premises at any reasonable time
for the making of inspections, repairs, or alterations as Landlord may deem
necessary, to exhibit the Premises to others, and for any purpose related to the
safety, protection, operation, or improvement of the building.
12. FIRE
If the Premises are damaged or destroyed by fire or other casualty insured under
standard fire and extended coverage insurance, Landlord shall repair and restore
the same with reasonable dispatch. The obligation of Landlord to restore is
limited to the work required to be performed by Landlord under EXHIBIT C. Rent
shall abate pro rata in proportion to the extent of untenantability until the
Premises shall be restored to a tenantable condition. Notwithstanding any other
provision herein, if damage to the building of which the leased Premises are a
part is so extensive that the same cannot reasonably be repaired within 180
days, or if Landlord elects not to restore the building to its form prior to the
damage, Landlord may terminate this Lease by notice in writing to Tenant. If the
leased Premises are not restored to a tenantable condition within 180 days,
other than by reason of causes beyond the reasonable control of Landlord, Tenant
may terminate this Lease by notice in writing to Landlord within 15 days after
the expiration of the 180 day period. Neither Landlord or Tenant nor their
respective employees shall have any liability to the other by reason of any loss
or damage, however caused and without regard to negligence or fault, to the
extent that the same is reimbursed by insurance held by the injured party under
a policy or policies which permit this waiver.
13. EMINENT DOMAIN
If all of the Premises or the use and occupancy thereof are taken under the
power of eminent domain, this Lease shall terminate at the time of such taking.
If any portion of the building of which the Premises are a part or the use and
occupancy thereof shall be taken under the power of eminent domain, Landlord
may, at Landlord's option, at any time after the entry of the verdict or order
for such taking, terminate this Lease by not less than 30 days' notice in
writing to Tenant. If 20% or more of the Premises shall be taken and the
remainder is unsuitable for Tenant's purposes, Tenant may terminate this Lease
by notice in writing to Landlord within 30 days after the taking and, in such
event, Tenant shall vacate within 30 days after such termination; if Tenant does
not terminate, rent shall be reduced in proportion to the area of the Premises
taken. All damages and compensation awarded for any taking under the power of
eminent domain shall belong to and be the property of Landlord whether such
damage or compensation be awarded for the leasehold of the fee or other interest
of Landlord or Tenant in the Premises.
14. INDEMNITY AND LIABILITY INSURANCE
a) Tenant shall indemnify Landlord from all liability for damages to
person or property in, on or from the Premises from any cause whatsoever other
than the negligent or wrongful act of Landlord, and from all liability by reason
of any negligent or wrongful act of Tenant. Tenant shall procure and keep in
effect during the term comprehensive public liability and property damage
insurance naming Landlord and Tenant as insureds, with limits of not less than
$1,000,000 for damages resulting to one person, $1,000,000 for damages resulting
from any one occurrence, and $200,000 for damage to property resulting from one
occurrence. Tenant shall deliver policies of such insurance or certificates
thereof to Landlord, which shall provide that the same may not be cancelled
without not less than 30 days prior written notice to Landlord.
b) Landlord covenants to hold Tenant harmless from and against, and
indemnify Tenant, except in the event of negligence of Tenant, its agents,
employees or invitees, with respect to all claims and all costs, expenses and
liabilities incurred in connection with such claims, including any action or
proceeding brought thereon, arising from or as a result of any accident, injury,
death, loss or damage whatsoever to any person or to the property of any person,
as shall occur in the common areas of the building in which the Premises are
located.
15. DAMAGE
Landlord shall have no liability for any loss or damage that may be occasioned
by or through the acts or omissions of
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others, including persons occupying other premises in the building. Landlord
shall have no liability for any loss or damage from water leakage from any
source, or from leakage, overflow, stoppage or backing up of other condition
of any facilities or utilities, or from fire, explosion or any other
casualty, or for any loss or damage from any other cause whatsoever,
including theft.
16. HOLDING OVER
In the event Tenant holds over after the expiration of the term of this Lease,
the tenancy shall thereafter be from month-to-month, on the same terms and
conditions as are herein set forth, in the absence of a written agreement to the
contrary, except that the Basic Monthly Rent shall be 125% of the amount stated
at the heading of this Lease.
17. DELINQUENCY
If Tenant shall default in any payment or expenditure other than rent required
to be paid or expended by Tenant under the terms hereof, Landlord may at
Landlord's option make such payment or expenditure, in which event the amount
thereof shall be payable as additional rental to Landlord by Tenant on the next
ensuing rent date together with interest at 10% per annum from the date of such
payment or expenditure by Landlord, and on default in such payment Landlord
shall have the same remedies as on default in payment of rent.
18. BANKRUPTCY
If the tenancy shall be taken in execution or by other processes of law, or if
Tenant shall file a petition in bankruptcy or insolvency, or if Tenant shall
file a petition or any pleading seeking reorganization or any relief as a debtor
under any present or future bankruptcy or similar law, or if Tenant shall be
declared bankrupt or insolvent, or if a receiver shall be appointed for Tenant's
property, or if an assignment shall be made of Tenant's property for the benefit
of creditors, Tenant shall be in default under this Lease, and, to the extent
permitted by applicable law, Landlord shall be entitled to exercise any or all
remedies set forth in Paragraph 19 of this Lease. This Lease shall be deemed to
have been rejected and terminated unless the trustee or Tenant assumes this
Lease within 60 days after the filing of a proceeding under Chapter 7 of the
Federal Bankruptcy Code or within 120 days after the filing of a petition under
Chapters 11 or 13 of the Code. Tenant acknowledges that, in entering into this
Lease, Landlord relied upon a determination that Tenant would be able to perform
its obligations under this Lease and that the character of Tenant's occupancy
and use of the Premises would be compatible with the character of the building
and the other tenants thereof. Therefore, no election by a trustee or Tenant to
assume this Lease shall be effective unless the trustee or Tenant cures, or
gives adequate assurance of a prompt cure of, any existing default, compensates
or gives adequate assurance of compensation for any pecuniary loss incurred by
Landlord arising out of any default of Tenant, and gives adequate assurance of
future performance under this Lease, including but not limited to a reasonable
security deposit as determined by Landlord. This Lease may only be assigned by
the trustee or Tenant if Landlord acknowledges in writing that the intended
assignee's use of the Premises will be compatible with the character of the
building and the other tenants thereof, and that the assignee has provided
adequate assurance of future performance of all of the terms and conditions of
this Lease, including but not limited to the submission of satisfactory current,
audited financial statements.
19. DEFAULT
If Tenant shall default in the payment of rent or other amounts, or in the
performance of any other obligation of Tenant hereunder and such default shall
continue for 10 days after written notice to Tenant, or if any of the events
recited in Paragraph 18 shall occur, Landlord may, in addition to all other
remedies permitted by law; (a) terminate this Lease by notice to Tenant and
recover Landlord's damages from Tenant; (b) with or without terminating this
Lease, reenter and repossess the Premises and Tenant and each and every
occupancy remove and put out, preserving its right of damages. In addition to
all other damages provided by law, Tenant shall pay Landlord the expense
incurred in obtaining possession of the Premises and all expenses incurred in
and about reletting the same and, if Landlord relets the Premises, each month
the excess of the amounts payable by Tenant hereunder over the amounts actually
received by Landlord
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on account of such month from such reletting.
20. DELINQUENCY CHARGES
If Tenant fails to make any payment due to Landlord under this Lease within ten
(10) days after the due date thereof, Tenant shall pay to Landlord a delinquency
charge in the amount of One Hundred Dollars ($100.00) to reimburse landlord for
its administrative expenses resulting from the late payment. Any delinquency
charge shall be payable on the eleventh (11th) day following the due date for
the payment to which any charge is applicable. The payment of any delinquency
charge shall not excuse or cure any default by Tenant under this Lease.
21. SECURITY DEPOSIT
Landlord shall hold the amount recited above as a security deposit, if any, as
security for the performance of all of the obligations of Tenant under this
Lease. Landlord shall not be obligated to apply the security deposit upon any
rent or other damages and Landlord's right to terminate this Lease and to
possession of the Premises in the event of default shall not be affected by the
fact that Landlord holds such security. landlord may at any time apply the
security upon damages theretofore suffered and may retain the security to apply
upon such damages as may accrue thereafter. If the security deposit is not
applied to the payment of rent of damages, the same shall be returned to Tenant
upon expiration of the Lease and when Tenant shall have vacated the Premises and
delivered possession to landlord in the condition required hereby. Landlord
shall not be obligated to keep the security deposit as a separate fund, but may
mingle the same with Landlord's funds, and no interest shall accrue thereon.
Tenant agrees not to look to the holder of a first mortgage of the building of
which the Premises are a part, as mortgagee, mortgagee in possession, or
successor in title to the property, for accountability for any security deposit
required by the Landlord hereinunder unless said sums have actually been
received by said mortgagee as security for the Tenant's performance of this
Lease.
22. NOTICES
All notices provided herein shall be in writing. Any notice to Tenant may abe
served at 17187 N. Laurel Park Drive, Suite 165, Livonia, Michigan 48152,
Attention: Kris Shaiani, Controller, by hand delivery or by mailing by
first-class mail, postage prepaid, addressed to the Premises, unless a different
mailing address shall have been designated by written notice received by
Landlord. Any notice to Landlord shall be served by depositing the same in the
mail, certified mail, return receipt requested, with postage prepaid, addressed
to the address at which rent is paid hereunder.
23. RELOCATION
Landlord may, at its election, relocate Tenant in other comparable space in the
building upon not less than 30 day's prior written notice to Tenant. Landlord
shall pay the cost of moving and tenant improvements and normal out-of-pocket
costs associated with such relocation to the new space. If Tenant does not wish
to accept such relocation, Tenant may object thereto by written notice to
Landlord within 10 days after the notice from Landlord. In the event Tenant so
objects, Landlord may rescind the notice of intention to relocate Tenant, or may
reaffirm such intention, in which latter event Tenant may terminate this Lease
by notice to Landlord within 10 days after notice of Landlord's reaffirmation
and, in the event, Tenant shall vacate within 30 days thereafter.
24. NAME
Landlord reserves the right to change the name or street address of the building
or the suite number of the Premises.
25. MISCELLANEOUS
This Lease shall enure to the benefit of the successors and assigns of Landlord
and shall be binding upon the permitted successors and assigns of Tenant. In the
event Landlord shall convey the building to any other person, Landlord may
assign this Lease to the grantee and pay the Security Deposit to the grantee and
thereupon Landlord shall be relieved
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from all obligations under this Lease. The rights and remedies provided
therein shall be cumulative and shall not be exclusive of any other rights or
remedies or any rights or remedies provided by law.
26. HAZARDOUS MATERIAL
(a) The Tenant shall not cause or permit any "Hazardous Material" to be
brought upon, kept or used in or above the leased premises by the Tenant, its
agents, employees, contractors or invitees, except for such limited amounts of
"Hazardous Material" that is reasonably necessary for the operation of a general
business office. "Hazardous Material" means (i) any "hazardous waste" as defined
by the Resource Conservation and Recovery Act of 1976, as amended from time to
time and regulations promulgated thereunder, (ii) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended from time to time and regulations promulgated thereunder
or the Superfund Amendments and Reauthorization Act of 1986; (iii) any oil or
petroleum products, and their by-products; and (iv) any substance that is or
becomes regulated by any federal, state or local governmental authority;
(b) Any Hazardous Material permitted on the leased premises as provided
in the immediately preceding subparagraph (a), and all containers therefor shall
be used, kept, stored and disposed of in a manner that complies with all
federal, state and local laws or regulations applicable to such Hazardous
Material.
(c) The Tenant hereby agrees that it shall be fully liable for all
costs and expenses related to the use, storage and disposal of Hazardous
Material kept on the leased premises by the Tenant, and the Tenant shall give
immediate notice to the Landlord of any violation or potential violation of the
provisions of this paragraph. The Tenant shall defend, indemnify and hold
harmless the Landlord and its agents from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs, or expenses
(including without limitation, attorneys' and consultants' fees, court costs and
litigation expenses) of whatever kind or nature known or unknown, contingent or
otherwise, arising out of or in any way related to (i) the presence, disposal,
release, or threatened release of any such Hazardous Material that is on, from
or affecting the soil, water, vegetation, buildings, personal property, persons
animals or otherwise; (ii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to that Hazardous
Material; (iii) any lawsuit brought or threatened, settlement reached, or
government order relating to that Hazardous Material or (iv) any violation of
any laws applicable thereto. The provisions of this paragraph shall be in
addition to any other obligations and liabilities the Tenant may have to the
Landlord at law or in equity and shall survive the transaction contemplated
herein and shall survive the termination of this Lease.
27. RIDERS
Additional provisions of this Lease may be set forth in the Riders attached, if
any, and signed by the parties hereto.
IN WITNESS WHEREOF, the parties have executed these presents as of the day and
year first above written.
LANDLORD: TENANT:
John M. Saylor ACRO Service Corp., a Michigan corporation
BY: /s/ John M. Saylor BY:
-------------------------- ----------------------------------------
John M. Saylor
ITS: ITS:
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EXHIBIT B
REGULATIONS
Tenant shall comply with, and shall not permit any violation of the following
Regulations as the same may be reasonably amended by Landlord from time to time:
1. The common or public areas of the building and grounds shall not be
obstructed or used for any purpose other than ingress and egress to and from the
Premises. Parking areas shall be used only for transient parking by tenants,
their employees and invitees, and shall not be for stored vehicles or for
parking large commercial or recreational vehicles.
2. Nothing shall be attached to the interior or exterior of the building outside
the Premises without the prior written consent of Landlord. Standard building
drapes shall be used in such windows as shall be designated by Landlord. No
other drapes, curtains, blinds, shades, or screens or other object shall be
attached to or hung in, or used in connection with, any window or door of the
Premises without the prior written consent of Landlord. No article shall be
placed on any window sill.
3. No sign or other representation shall be placed outside any part of the
Premises, or inside the Premises if the same will be visible from outside the
Premises, without the prior written consent of Landlord. Landlord will provide
one standard tenant identification at Tenant's entrance and one in the building
directories.
4. Landlord has the right to control access to the building and refuse
admittance to the building during such hours as Landlord may determine and on
Saturdays, Sundays and holidays, to any person or persons without satisfactory
identification or a pass issued by a tenant.
5. All deliveries and removals of furniture, equipment or other bulky items must
take place after notice to Landlord during such hours and in such manner as
Landlord may determine from time to time. Tenant shall be responsible for all
damage or injury resulting from the delivery or removal of all articles into or
out of the Premises.
6. No load shall be placed on the floor of the Premises in excess of the limits
which may be established by Landlord or in any place not approved by Landlord.
Tenant's equipment shall be placed and operated only in such locations as shall
be approved by Landlord.
7. No article deemed hazardous on account of fire or having other dangerous
properties or any explosive shall be brought into the building or Premises. No
bicycles, vehicles, or animals of any kind shall be brought into or kept in or
about the building or the Premises.
8. No marking, painting, drilling, boring, cutting or defacing of the Premises
or the building will be permitted without the prior written consent of Landlord
and as it may direct. Nothing shall be attached to the floor by adhesive without
the written permission of Landlord. Clear plastic protective floor mats shall be
maintained over all carpeted areas under desk, chairs and casters.
9. No electric or other wires shall be brought into the Premises and the
electrical system and light fixtures in the building and the Premises shall not
be disturbed without Landlord's written permission specifying the manner in
which same may be done. Only such electrical fixtures and equipment may be used
as shall be approved by Landlord.
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EXHIBIT B
(Continued)
10. The toilets and other plumbing fixtures shall not be used for any purpose
other than those for which they are designed, and no sweepings, rubbish or other
similar substance shall be deposited therein.
11. No noise, vibration or odor shall be produced upon or from the Premise which
is observable outside the Premises. No cooking shall be done or permitted on the
Premises. Nothing shall be thrown out of the doors or windows or down the
passageways.
12. The Premises shall not be used or permitted to be used for lodging of
sleeping or for the possession, sale or furnishing or liquor or narcotics. No
tenant shall engage or pay any employees on the Premises except those actually
working for such tenant on such Premises, nor advertise for laborers giving an
address at the Premises.
13. Canvassing, soliciting, and peddling in the building is prohibited, and each
tenant shall cooperate to prevent the same. No vending machine shall be operated
in building by any tenant.
14. Landlord is not responsible for mail chutes or for any damage or delay which
may arise from the use thereof. Landlord will not be responsible for lost or
stolen property.
15. Upon closing the Premises at any time all doors shall be locked and all
windows shall be closed. No additional locks or bolts of any kind shall be
placed upon any of the doors or windows not shall any changes be made in
existing locks or the mechanism thereof. Upon the termination of occupancy, all
keys of offices and restrooms shall be returned to Landlord and, in the event of
the loss of any keys furnished by Landlord, the tenant shall pay to Landlord the
cost thereof. Landlord may retain a pass key to the Premises and shall be
allowed admittance thereto at all reasonable times.
16. The requirements of tenants will be attended to only upon application at the
office of the building. Landlord's employees shall not perform any work outside
of their regular duties, unless under special instruction from Landlord.
LANDLORD: TENANT:
John M. Saylor ACRO Service Corp., a Michigan corporation
BY: /s/ John M. Saylor BY:
-------------------------- -----------------------------------------
John M. Saylor
ITS: ITS:
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EXHIBIT C
LEASEHOLD IMPROVEMENTS
A. Landlord will, prior to commencement of the term, install in the Premises the
improvements shown on EXHIBIT A and specified in the Supplement to this EXHIBIT
C, if any.
B. The Standard Basic Leasehold Improvements stated in the Supplement will be
installed by Landlord without charge to Tenant, if specified. All other work and
materials, including all revisions requested by Tenant after Tenant's approval
of EXHIBIT A and the Supplement ( or after approval of the complete plans and
specifications if such are not stated on EXHIBIT A and the Supplement), shall be
paid by Tenant. If Tenant's equipment or operations require electric power or
heating, ventilating or air conditioning facilities in excess of those provided
by the standard building equipment, including, by way of example only,
facilities for computer rooms, projection rooms or conference rooms, the work
and materials required to provide the additional capacity shall be paid by
Tenant.
C. Unless otherwise provided in the Supplement, Tenant shall pay one-half of the
estimated amount for additional work and materials to be provided in accordance
with Paragraph B upon the execution of this Lease and the balance forthwith when
billed by Landlord upon substantial completion of the work or upon Tenant's
occupancy of the Premises whichever shall first occur.
D. If complete plans and specifications for the work are not stated on EXHIBIT A
and the Supplement:
(1) Tenant shall furnish Landlord with all information necessary for
preparation of such plans and specifications, including partitioning and
electrical and telephone requirements not later than .
(2) Within 10 days after submission of complete plans and
specifications to Tenant, Tenant shall approve the same or furnish its requested
revisions to landlord.
John M. Saylor ACRO Service Corp., a Michigan corporation
BY: /s/ John M. Saylor BY:
-------------------------- -----------------------------------------
John M. Saylor
ITS: ITS:
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EXHIBIT "C" SUPPLEMENT
TENANT'S STANDARD BASIC LEASEHOLD IMPROVEMENT ALLOWANCES
1. PARTITIONING
Vinyl covered drywall panels. Allowance of one (1) linear foot per 20 sq.ft. of
leased area (i.e. 5% of leased sq.ft.). Party walls between individual tenants
and partitions which divide hallways from the leased premises will be provided
by Landlord and are not part of the allowance. Cost of walls above this
allowance is $40.00 per lineal feet. Lineal Footage is figured thru door
openings.
2. DOORS
Landlord provides one standard solid core entrance door and glass sidelight per
suite. Interior offices: flush panel, solid core, oak, full height with metal
frame. Landlord shall provide one interior office door per 25 lineal feet of
wall. Cost of door opening over allowance is $512.00.
3. ELECTRICAL OUTLETS
One duplex electrical outlet for every 200 sq. ft. of rentable area. Outlets
required over this allowance are at a cost of $86.00.
4. TELEPHONE OUTLETS
One telephone outlet for every 250 sq. ft. of rentable area. Outlets required
over this allowance are at a cost of $135.00.
5. ELECTRICAL SWITCHES
One single pole light switch shall be provided per 500 sq. ft. of rentable area.
Switches required over this allowance are $76.00.
6. LIGHTING
2'x4' recessed fluorescent fixtures (or equivalent) with acrylic Prismatic lens
and 3-40 watt lamps installed in all office areas to be provided at a ratio of
one (1) fixture per 80 sq. ft. of rentable area. Cost of fixtures above this
allowance is $135.00.
If tenant elects to substitute special lighting or incandescent fixtures in lieu
of fluorescent, tenant shall pay for the cost of the fixture and its
installation, and will also pay for light bulb replacement.
7. CEILING
5' x 5' aluminum grid system (white finish) installed prior to construction of
all partitions. Pattern established by basic building plans. Lay-in boards shall
be Building Standard. Ceiling heights established by basic building plans.
8. FLOOR COVERING
Carpeting will be provided throughout the demised premises except for areas
where vinyl asbestos floor tile to equivalent may be desired by Tenant. Tenant
shall select carpeting from building standard samples. Vinyl base will be
provided.
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EXHIBIT "C" SUPPLEMENT
TENANT'S STANDARD BASIC LEASEHOLD IMPROVEMENT ALLOWANCES
(Continued)
9. DRAPERY
All exterior windows will be provided with building standard blinds.
10. SOUND INSULATION
Insulation will be provided in all corridor and demising walls. Insulation
required in other walls will be at a cost of $6.90 per linear foot.
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EXHIBIT D
JANITORIAL SERVICE
DAILY SERVICES: (Five time per week)
1. Empty waste baskets.
2. Empty and clean ash trays, including ones in public areas.
3. Dust desk tops which are clear of working papers.
4. Sweep or vacuum entire floors area - public and private.
5. Toilet Rooms:
(a) Empty all waste receptacles.
(b) Sweep and wet mop floors.
(c) Clean and disinfect all fixtures and clean mirrors and shelves.
(d) Refill towel and soap dispensers and toilet paper.
6. Clean and disinfect drinking fountains and water coolers.
7. Damp mop public vending areas. Damp wipe vending machines.
WEEKLY SERVICES:
1. Damp mop floors, stairways, lobbies and corridors.
2. Machine buff reception area, lunchroom and aisles.
3. Dust tops of file cabinets, ledges and baseboards, and heat conductors.
4. Wash and disinfect all ceramic tile; toilet partitioning, fixtures and
waste receptacles in toilet rooms. Refill deodorant containers.
5. Remove smudges and scuff marks from all painted surfaces and glass
office partitions wherever possible public and private areas. Spot clean hall
carpeting.
6. Police parking areas for rubbish and trash.
MONTHLY SERVICES:
1. Strip, wax and polish floors in reception area, lunchroom and aisles.
2. Dust all drapes.
3. Wash entrance door glass and all glass office partitions.
4. Wash outside and inside building entry mats.
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EXHIBIT D
(Continued)
QUARTERLY SERVICES:
1. Strip and rewax entire floor area with wax or floor treatment.
2. Wash first floor windows. (Upper floor windows shall be washed at 4
months intervals).
3. Wash air diffusers and vents.
SEASONAL SERVICES:
1. Snow removal from concrete walks as necessary.
2. Snow plowing of the parking lots at each snowfall in excess of 1".
3. Lawn cutting service of green areas as required.
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RIDER TO LEASE
ADDRESS: 189 East Big Beaver, Troy, Michigan
LANDLORD: John M. Saylor
TENANT: ACRO Service Corp., a Michigan corporation
1. CONDITION OF PREMISES:
Landlord and Tenant agree that Tenant shall take the space on an "as is" basis
except Landlord, at Landlord's sole cost and expense, shall paint the walls and
clean the carpet.
2. Robert L. Badgero, Associate Broker, Signature Associates, hereby discloses
that he is acting solely on behalf of the Landlord. Brokerage commission shall
be split 50/50 between Signature Associate and Schostak Bros.
WITNESSES: LANDLORD: JOHN M. SAYLOR
BY: /s/ John M. Saylor
-----------------------
ITS:
--------------------------------
TENANT: ACRO SERVICE CORP.,
a Michigan corporation
BY:
ITS:
<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:_______________________________
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
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<S> <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
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
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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, 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
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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 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;
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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, 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.
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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 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
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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 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
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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
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
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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 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.
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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 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 9
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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.
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
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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;
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
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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.
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
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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 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:
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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;
(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. 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),
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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.
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").
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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
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
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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.
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 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
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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) (ii) 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.
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
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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 after 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 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
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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.
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.
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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.
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
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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 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
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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. PROVIDE (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 CIRCUIT
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.
1. FIRE SPRINKLERS
1. Drops and heads from existing distribution.
2. Adjustable heads.
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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
pile 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.
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).
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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 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
5
<PAGE>
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.
1. 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 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
6
<PAGE>
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 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
7
<PAGE>
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
8
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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
fromDemised 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 DemisedPremises 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.
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
1
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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 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
2
<PAGE>
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 squarefoot
</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:
<TABLE>
<S> <C>
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
</TABLE>
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.
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
<PAGE>
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 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
<PAGE>
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. Section 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 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.
<PAGE>
(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.
IN WITNESS WHEREOF, the parties hereto have respectively executed
this Second Addendum as of the date first written above.
<PAGE>
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
(I.E., 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 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.
<PAGE>
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 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.
<PAGE>
(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:
ADVENT REALTY LIMITED PARTNERSHIP 11, a Delaware limited partnership
By: ADVENT REALTY GP 11 LIMITED PARTNERSHIP, a
Delaware limited partnership
Its: General Partner
<PAGE>
By: ADVENT REALTY, INC., a Delaware corporation
Its: General Partner
By:
--------------------------------------------------------
Michael A. Ruane, Chairman*
OR
By: /s/ ARTHUR I. SEGEL
--------------------------------------------------------
Arthur L. 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 L. 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.
1
<PAGE>
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
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Builders. Builders does not have outstanding any bonds, debentures, notes or
other indebtedness the holders of 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.
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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.
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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
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of the Closing to occur on or before such date.
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
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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.
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.
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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
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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 81,000
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
<PAGE>
1.2(b) and 1.3.
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 ABILITY 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.
5.3 NOTICE AND DEFENSE. If a HomeLife Indemnified Party or
Shareholder Indemnified Party seeking
<PAGE>
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;
(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;
<PAGE>
(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 VII
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 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.
<PAGE>
(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.
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
<PAGE>
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 SEVERABILITY. 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
/s/ Kenneth R. Duetsch /s/ Sharon A. Duetsch
- ----------------------------- ---------------------------------------
<PAGE>
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.
7.2 CONDITIONS TO SELLER'S OBLIGATION TO CLOSE. The obligation of Seller to
close hereunder shall be subject
<PAGE>
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
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
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
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
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
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
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
M033- HOUGHTON LAKE, MI
RED CARPET KEIM HOUGHTON LAKE
1411 WEST HOUGHTON LAKE D., ZL 4
HOUGHTON LAKE, MI 48629
(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
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
M063- SAULT SAINT MARIE, MI
RED CARPET KEIM NORTHLAND INC.
1514 ASHMUN
SAULT ST. MARIE, MI 49783
(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
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
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
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, and unless other arrangements are made, MCR
shall be solely responsible for the first $1,500.00 of loss in settling such
<PAGE>
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, damage, claim, liability, cost and expenses, including attorney fees
actually incurred, relating to or arising out of either
<PAGE>
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), (f), (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:
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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;
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(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;
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(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.
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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
4100 Newport Place Suite 730
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.
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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
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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;
(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
<PAGE>
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.
SECTION 4.1 AUTHORIZATION: BINDING AGREEMENT. Buyer has the requisite
corporate power and authority to execute
<PAGE>
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.
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
<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>
<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.
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
<PAGE>
EXHIBIT 10.17
FORM OF PARTICIPATING INDEPENDENT
BROKER FRANCHISE AGREEMENT
<PAGE>
HOMELIFE REALTY SERVICES, INC.
(A Member of the International HomeLife Network)
PARTICIPATING INDEPENDENT BROKER FRANCHISE AGREEMENT
(For Use In The State Of California Only)
This Agreement is made this _____ day of __________, 19___, between HOMELIFE
REALTY SERVICES, INC., a Delaware corporation ("HOMELIFE"), with head office
address at 4100 Newport Place, Suite 730, Newport Beach, California, 92660,
and __________________________________________________ (the "PARTICIPATING
INDEPENDENT BROKER") with head office address situated at ____________________
______________________________________________________________________________.
RECITALS:
1. HomeLife and its Affiliates have developed a business plan (the "Plan")
for the establishment and operation of real estate brokerage offices
operating with a uniform business format, methods, and designs, including
methods for obtaining listing for properties, for soliciting prospective
buyers of properties, for selling, buying, or leasing properties, and for
providing referral through its National and International Referral Service,
Pursuant to the Plan, independent real estate brokers can maintain
independence of operation while obtaining many of the benefits available to
an international network.
2. Participating Independent Brokers who are authorized to operate under the
Plan and the services they offer under the Plan are identified by the
trademarks and service marks listed in Part I of Schedule "A" attached hereto
and by such other additional or substitute trade names, trademarks, service
marks, symbols, graphics and logotypes as the HomeLife companies may develop
and designate for use from time to time (collectively, the "Marks"). HomeLife
has the right to grant franchises to operate under the Plan and the Marks in
the United States.
3. The Participating Independent Broker is currently engaged in, or desires
to be engaged in, the real estate brokerage business and wishes to utilize
the Plan and operate under the Marks. HomeLife is willing to grant the
Participating Independent Broker the right to do so subject to the terms of
this Agreement.
Therefore, HomeLife and the Participating Independent Broker agree
as follows:
ARTICLE 1.00 - GRANT AND TERM
1.01 Subject to the provisions of this Agreement, HomeLife grants to the
Participating Independent Broker a non-exclusive or exclusive franchise as
set forth in Schedule "E", to operate a real estate brokerage business (the
"Business") using the Plan and the Marks . The term of the franchise is five
(5), seven (7), Ten (10) years, commencing on the date that this Agreement is
signed by HomeLife (each such year being herein called a contract year).
1.02 (a) The Business will be located at the office described in Part II
of Schedule "A" annexed hereto (the "Office").
(b) The Participating Independent Broker may relocate the Office to
another location within the same general market area, provided that the
Participating Independent Broker first obtains the written approval of
HomeLife as to the exact location of the proposed relocated office, which
approval shall not be unreasonably withheld.
(c) The Office shall at all times be under the supervision of a
person who is duly qualified under the provisions of all applicable laws of
the state in which the Office is located. The Participating Independent
Broker agrees to keep HomeLife informed at all times of the identity of the
Office Manager and shall cause such Manager to devote his full time and
attention to the Business being conducted from such Office.
1
<PAGE>
1.03 (a) If at any time, and from time to time, during the term of this
Agreement the Participating Independent Broker should establish any
additional office from which the Business will be conducted, then, unless
such office was established by reason of a relocation as provided for in
Article 1.02 hereof, the Participating Independent Broker shall enter into a
new franchise agreement upon the terms and conditions then in effect for a
new franchisee, save and except for the license fee, which shall be Five
Thousand ($ 5,000.00) Dollars for each additional office.
(b) The right to open such additional office shall be subject to the
prior written approval of HomeLife, which approval will not be unreasonably
withheld.
1.04 The Participating Independent Broker may renew the franchise granted to
it for one renewal term of five (5), seven (7), ten (10) further contract
years provided that: (i) the Participating Independent Broker gives at least
six (6) months prior written notice of its intent to renew to HomeLife; (ii)
the Participating Independent Broker has complied with all of its obligations
under this Agreement throughout the initial term; and, (iii) the
Participating Independent Broker signs HomeLife's then-current form of
Participating Independent Broker Agreement for the State of California (which
may contain different business and financial terms from this Agreement) and
pays to HomeLife a renewal fee of Five Hundred ($500.00) Dollars.
ARTICLE 2.00 - OBLIGATIONS OF HOMELIFE
HomeLife agrees that, so long as this Agreement remains in force:
2.01 HomeLife will continue to develop public recognition of its identity and
maximize public awareness of HomeLife and its participating independent
brokers by means of advertising and promotional campaigns in accordance with
Article 6.00.
2.02 At no charge to the Participating Independent Broker, HomeLife will
provide advice and consultation with representatives of HomeLife with respect
to the Plan, including advice and guidance regarding recruiting, community
marketing, selling, financial and office management techniques, and such
other operational procedures as HomeLife may from time to time develop for
use in connection with the Plan.
2.03 In order to provide efficient administrative and professional services
to the customers of all participating independent brokers, HomeLife will
operate, in accordance with procedures specified by HomeLife from time to
time, a National and International Referral Service. The National and
International Referral will maintain a toll free telephone number in order to
facilitate the participation of the Participating Independent Broker in the
service. HomeLife reserves the right to charge a reasonable fee for the
Referral Service.
2.04 (a) HomeLife will make available to the Participating Independent
Broker equipment, supplies, selling, promotional and marketing materials,
including sales kits and point of sale promotional materials, and other
materials used in connection with the Business. The Participating Independent
Broker may purchase such materials from HomeLife, or, from any source
approved in writing by HomeLife. The Participating Independent Broker shall
not alter, amend or modify such materials without the prior written consent
of HomeLife. HomeLife will, from time to time, provide to the Participating
Independent Broker a list of approved suppliers.
(b) The Participating Independent Broker may make such purchases
from non-approved suppliers provided that the quality standards established
by HomeLife are maintained at all times. If the Participating Independent
Broker, with the written approval of HomeLife, desires to make such purchases
from non-approved suppliers, the Participating Independent Broker shall, upon
request, provide HomeLife with descriptions and specifications or samples for
examination and testing to ensure that the products and materials meet the
quality standards established by HomeLife.
2.05 HomeLife will, from time to time, make available to the Participating
Independent Broker, at the Broker's own expense, the opportunity to place
advertisements in HomeLife's advertising section of those publications in the
Participating Independent Broker's regional area in which HomeLife runs
advertisements. The cost of running the
2
<PAGE>
HomeLife advertising section will be borne proportionately by all HomeLife
offices running advertisements in the section, based on the ratio of the
number and length of advertisements placed by each Participating Independent
Broker to the total number and length of advertisements appearing in
HomeLife's advertising section. The Participating Independent Broker will be
billed directly by the publication, and shall make prompt payment to such
publication.
2.06 HomeLife will maintain an ongoing basic training program for sales
representatives and introductory management training courses. HomeLife will
not charge tuition, a course fee, or similar fee, for such training but
reserves the right to charge a reasonable fee for training manuals and
materials. The Participating Independent Broker will be responsible for all
other costs incurred in attending such training, including transportation,
lodging, and meals. The Participating Independent Broker may at its option
enroll any or all of its employees in such programs. Basic training will take
place at such locations as HomeLife may from time to time designate.
Over and above the basic training provided by HomeLife, HomeLife may:
(i) engage, at its option, the services, programs, staff and
materials provided by one or more nationally or internationally recognized
sales training organizations; and
(ii) engage and utilize the programs, staff and facilities of
recognized colleges, universities, accredited educational and professional
institutions, to provide additional advanced training to the Participating
Independent Broker's sales representatives and management. If the
Participating Independent Broker chooses to avail itself of the foregoing
programs, it shall be responsible for the payment of such tuition, course
fees and related costs as may be billed to it by HomeLife for its
participation in these programs and for the costs incurred to attend such
programs, including transportation, lodging, and meals.
2.07 HomeLife may, from time to time, make available to its Participating
Independent Brokers annual national or international conventions,
motivational seminars, pre-licensing programs, advanced IC & I training
programs, computer workshops, and so forth, and various regional or national
newspapers or magazines. In the event the Participating Independent Broker,
at its option, chooses to participate in, or subscribe to, the foregoing
programs and publications, it shall be responsible for the payment of such
reasonable charges as may be established in advance and billed by HomeLife.
2.08 On request of the Participating Independent Broker, HomeLife will, at a
reasonable cost, supply the Participating Independent Broker with a standard
accounting and bookkeeping system for use in the Business. However, the
Participating Independent Broker need not purchase or use such accounting and
bookkeeping system. In addition, HomeLife will provide its management and
business planning system to the Participating Independent Brokers.
2.09 If, during the term of this Agreement, any securities of HomeLife, or
any successor of HomeLife, are proposed to be distributed by way of public
offering, then HomeLife will, subject to applicable law and to the
requirements of the underwriters, use its best efforts to reserve and
allocate a portion of the securities to allow for the purchase thereof by
HomeLife's participating independent brokers. The Participating Independent
Broker, if not then in default under this Agreement or a subsequent renewal
agreement will be entitled to subscribe for a pro rata share of such
allocated portion of shares in accordance with the terms of HomeLife's public
offer, based on the ratio of the number of Offices then owned and operated by
the Participating Independent Broker to the total number of Offices then
owned and operated by HomeLife and all its non-defaulting participating
independent brokers.
2.10 The Participating Independent Broker agrees that HomeLife may appoint an
agent or area representative for a geographic area in which the Business is
located and may delegate to such agent or area representative the performance
of any or all of HomeLife's obligations to the Participating Independent
Broker under this Agreement. The delegation of these obligations will not,
however, relieve HomeLife of its obligations under this Agreement. HomeLife
will notify the Participating Independent Broker in writing of the identity
of any agent or area representative to whom such obligations are delegated
and the scope of the obligations to be performed by such agent or area
representative.
ARTICLE 3.00 OBLIGATIONS OF THE PARTICIPATING INDEPENDENT BROKER
3
<PAGE>
The Participating Independent Broker agrees that, so long as this
Agreement remains in force:
3.01 It will ensure that, subject only to applicable law, all signs used in
the conduct of the Business conform to the specifications as established from
time to time by HomeLife as to size, location, construction, art work,
lettering, color, content and overall appearance. The Participating
Independent Broker shall display, at its Office premises, a sign indicating
that the Marks are trade marks of HomeLife and that the Participating
Independent Broker is a franchisee of HomeLife. All stationery, advertising
material, or similar documents, utilizing the marks shall clearly indicate
that the Office is independently owned and operated pursuant to a franchise
from HomeLife.
3.02 It shall be a corporation and shall operate throughout the term of this
Agreement as a corporation. The Participating Independent Broker shall at all
times maintain its corporate registration in good standing in the state of
its incorporation and shall be fully qualified to do business in all
jurisdictions in which it operates the Business. The Participating
Independent Broker shall amend its corporate charter to change its name to
one which incorporates the name "HomeLife..." or such other Mark as HomeLife
may designate. The Participating Independent Broker shall only use its full
registered name in the conduct of the Business, which is approved in writing
by HomeLife, and will not change its name without the prior written consent
of HomeLife. For the purposes of ensuring compliance with Article 7.02(a),
the Participating Independent Broker shall, within thirty (30) business days
following any request in writing by HomeLife sign and deliver to HomeLife,
undated, but otherwise in form suitable for registration, articles or
certificates of amendment under the laws of the jurisdiction of its
incorporation, changing its name to one not utilizing the Marks or any part
thereof.
3.03 It will secure and maintain in good standing all required licenses,
permits and certificates relating to the operation of the Business,
including, without limitation, all registrations and licenses required to be
maintained under applicable state law regulating the real estate and business
brokerage industries. It will operate the Business in compliance with all
applicable federal, state, and municipal laws, ordinances, and regulations,
in compliance with the by-laws and Code of Ethics of any local Board of
Realtors, and otherwise in compliance with the highest ethical standards of
the real estate industry.
3.04 It will not engage in any business or advertising practice, or any other
conduct which may be injurious to, or in conflict with, the Business,
HomeLife, the Plan, or to the goodwill associated with the Marks and will
immediately cease all use of any advertising and/or promotion which is at any
time disapproved by HomeLife. All advertising and/or promotion by the
Participating Independent Broker will be completely factual and will conform
to the highest ethical standards of advertising. The Participating
Independent Broker will actively promote the HomeLife name in its local
market area. The Participating Independent Broker will submit any proposed
advertising or promotional material to HomeLife and will obtain HomeLife's
written approval prior to the use thereof by the Participating Independent
Broker. It is expressly understood that HomeLife shall not, by virtue of its
approval of any proposed advertising or promotional material, assume any
responsibility for the contents thereof.
3.05 The Participating Independent Broker acknowledges that the National and
International Referral service is an integral part of the Plan and is
necessary to assure superior client services and to permit all participating
independent brokers to realize the capabilities and benefits which result
from participating in a national and international real estate organization,
and therefore, the Participating Independent Broker will process all
referrals through the National and International Referral Service.
3.06 It will maintain with reputable insurers, at its own expense, insurance
coverage of such type and in such amounts as HomeLife may reasonably specify
from time to time in writing. Such insurance shall fully protect HomeLife (as
an additional named insured) and the Participating Independent Broker against
loss or damage, including property damage and any liability occurring in
conjunction with the operation of the Office and the Business. HomeLife
reserves the right to require the Participating Independent Broker to obtain
errors and omissions and professional liability insurance naming HomeLife and
its Affiliates and their respective officers and directors as additional
insured. This provision shall not limit the Participating Independent
Broker's right to obtain such insurance on its own behalf or in amounts and
coverage's which exceed those which may be required by HomeLife. If the
Participating Independent
4
<PAGE>
Broker fails to maintain any required insurance or fails to pay any insurance
premiums, HomeLife may, at its option, obtain such insurance or pay such
premiums on behalf of and for the account of the Participating Independent
Broker, and the Participating Independent Broker agrees to reimburse HomeLife
upon demand for all amounts so paid. HomeLife will not be liable to the
Participating Independent Broker, in whole or in part, for any claims arising
out of the Participating Independent Broker's errors or omissions or
professional liability, irrespective of any insurance which the Participating
Independent Broker may have obtained. The indemnification provisions of
Article 9.01 of this Agreement shall apply to any claims against HomeLife
involving alleged errors or omissions or professional liability by the
Participating Independent Broker.
3.07 It will comply, within a reasonable time period, and in any event not
later than thirty (30) days from the date of receipt thereof from HomeLife,
with the requirements of all written memoranda from time to time issued by
HomeLife for use by its Participating Independent Brokers, setting forth the
guidelines to be used in updating, modifying or improving the operation of
the Business. The Participating Independent Broker agrees that HomeLife shall
have the right , from time to time, to add to, modify or otherwise change the
Plan, including, without limitation, the adoption and use of new or
substituted trade marks, service marks, trade names, graphics and logotypes
(any such tradenames, trademarks, service marks, graphics and logotypes being
included in the meaning of "Marks"), new products or services and new
techniques, and the Participating Independent Broker agrees to implement and
use all such additions and changes at its own cost, unless otherwise
specified by HomeLife.
3.08 Upon written notice from HomeLife, the Participating Independent Broker
shall direct any duties and obligations due to HomeLife under this Agreement
to the agent or area representative designated by HomeLife pursuant to
Article 2.10 of this Agreement. Such duties and obligations may include the
Participating Independent Broker's obligations under Article 3.00 and the
payment of the service fees and advertising contributions provided for in
Articles 4.02, parts of 1 and 2 of Schedule "B", parts of 1 and 2 of Schedule
"C", and 6.02 of this Agreement.
ARTICLE 4.00 - FEES AND REPORTS
4.01 The Participating Independent Broker agrees to pay to HomeLife, a
franchise fee in the amount of TWELVE THOUSAND FIVE HUNDRED Dollars
($ 12,500.00 ), which fee will be deemed fully earned and non-refundable. See
Schedule D for payment arrangements.
4.02 The Participating Independent Broker shall pay to HomeLife a monthly
royalty fee and a monthly advertising contribution as follows:
(i) The amount of the monthly royalty fee and the monthly
advertising contribution shall be determined in accordance with the tables in
Parts 1 and 2 of Schedule "B", Parts 1 and 2 of Schedule AC . If the term of
this Agreement starts other than on the first day of a month then the amount
of the fee and contribution for the first month shall be reduced
proportionately, as necessary, to account for the number of days during the
month that this Agreement is in effect.
As provided in the table in Part 1 of Schedule "B", Part 1 of Schedule "C",
the monthly fee is never less than $375.00
(ii) At any time and from time to time after the first contract
year, HomeLife shall have the right to increase any of the amounts in
Schedule "B" and Schedule "C" (including the $375.00 minimum fee), provided
that such increase shall be applied to all Participating Independent Brokers
whose Franchise Agreements have been in force for at least twelve (12)
calendar months at the time of increase. This right shall not be exercised
more frequently than semi-annually, and any increase shall not exceed 2% of
the monthly service fee and advertising contribution being paid at the time
of the increase. Schedule "B" and Schedule "C" shall be deemed to be
automatically amended to reflect the increased amounts.
4.03 All amounts due and owing to the franchisor under the terms of the
agreement and as per attached schedules and addendum's, including, without
limiting the generality of the foregoing:
(a) initial franchise fees;
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(b) $375.00, minimum, monthly fees (W/FIXED DOLLAR OPTION);
(c) 3.5% Royalty Fees up to $1,000,000.00 in Gross Commission Income and 1%
Royalty Fees thereafter (W/PERCENTAGE OF GROSS OPTION);
(d) $375.00 Monthly Minimum Fee(W/PERCENTAGE OF GROSS OPTION);
(e) $375.00, minimum, monthly fees (W/FIXED MONTHLY ROYALTY FEES OPTION);
(f) Advertising contribution of $25.00 per representative, for first 20
representatives, and $2.00 per representative (over 20) thereafter (W/FIXED
DOLLAR OPTION);
(g) 1/2% advertising contribution (W/PERCENTAGE OF GROSS OPTION);
Gross Commission Income (GCI), $125.00 between $100,001.00-$150,000.00
in GCI, $150.00 between $150,001.00-200,000.00 in GCI, $175.00 between
$200,001.00-$300,000.00 in GCI, $200.00 between $300,001.00-$450,000.00 in GCI,
$225.00 between $450,001.00-$600,000.00 in GCI, $250.00 between
$600,001.00-$750,000.00 in GCI, $275.00 between $750,001.00-$900,000.00, $300.00
between $900,001.00-$1,050,000.00 in GCI, and a minimum monthly advertising
contribution of $400.00 thereafter (W/FIXED MONTHLY ROYALTY FEES OPTION);
(i) all legal fees and expenses and other collection fees and expenses
incurred by the franchisor in collecting such amounts,
(j) monthly fee of $90.00 per representative for first 45 and $10.00 per
representative thereafter (over 45) (W/FIXED DOLLAR OPTION);
(k) monthly fees of $375.00 for up to $50,000.00 in Gross Commission
Income (GCI), $550.00 between $50,001.00 -$100,000.00 in GCI, $600.00 between
$100,001.00-$150,000.00 in GCI, $650.00 between $150,001.00-$200,000.00 in GCI,
$950.00 between $200,001.00-$300,000.00 in GCI, $1,400.00 between
$300,001.00-$450,000.00 in GCI, $1,800.00 between $450,001.00-$600,000.00 in
GCI, $2,400.00 between $600,001.00-$750,000.00 in GCI, $3,000.00 between
$750,001.00-$900,000.00, $3,600.00 between $900,001.00-$1,050,000.00 in GCI, and
a minimum monthly fee of $4,000.00 thereafter (W/FIXED MONTHLY ROYALTY FEES
OPTION);
will bear interest as follows:
Account overdue less than 30 days: no interest
30 days and over:1.5% per month
(l) AUDIT-INSPECTIONS: The PARTICIPATING INDEPENDENT BROKER
SHALL permit HOMELIFE at any time during normal business hours to inspect and
audit the business books and records of the PARTICIPATING INDEPENDENT BROKER,
including without limitation, bookkeeping and accounting records, deposit
receipts, financial statement and tax returns. The PARTICIPATING INDEPENDENT
BROKER shall fully cooperate with, representatives of HOMELIFE and
independent accountants hired by HOMELIFE to conduct any such inspection or
audit. If any such inspection or audit disclosures that the PARTICIPATING
INDEPENDENT BROKER has underpaid the Royalty fee and the Advertising
contribution, as set forth in Section 2.0 and Section 3.0 herein by more than
5%, the PARTICIPATING INDEPENDENT BROKER shall forthwith pay HOMELIFE the
amount of such underpayment, together with all fees, costs and expenses
incurred by HOMELIFE in such inspection and in the collection of such
underpaid amounts, and together with interest of 1.5% per month.
4.04 The Participating Independent Broker shall report to HomeLife on ongoing
basis the name of each sales representative at the time that each is hired or
terminated.
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ARTICLE 5.00 - PROPRIETARY MARKS
5.01 The Participating Independent Broker agrees, with respect to its use of
the Marks to:
(a) Use only the Marks designated by HomeLife, and use them only in
the manner authorized and permitted by HomeLife;
(b) Use the Marks only for the purposes of the Business and only for
the Office authorized thereunder, or in advertising for the Business
conducted by such Office;
(c) Operate and advertise the Business only under such trademark
symbol as is designated by HomeLife, except as otherwise agreed to in writing
by HomeLife, which designation shall include, without prefix, the names
"HOMELIFE" and "HomeLife (name of Participating Independent Broker)";
(d) Operate and advertise the Business and identify itself as the
owner of the Business in conjunction with any use of the Marks, including,
but not limited to, advertisements, signs, forms, and contracts, as well as
use at such conspicuous locations at the Office of the Business as HomeLife
may, in writing, designate. The identification shall be in the form which
specifies the Participating Independent Broker's corporate or legal name,
together with the term "Independently Owned and Operated", or such other
identification as shall be approved by HomeLife;
(e) Execute any documents deemed necessary by HomeLife or its
counsel to obtain protection for the Marks or to maintain their continued
validity and enforceability;
(f) Not directly or indirectly contest the validity of the Marks or
HomeLife's right to use and license others to use the Marks;
(g) Promptly notify HomeLife if litigation involving the Marks is
instituted or threatened against the Participating Independent Broker, and
cooperate fully with HomeLife and its affiliates in defending or settling
such litigation.
5.02 The Plan and Marks were developed by HomeLife Realty Services Inc., a
Canadian Corporation, (affiliate) and licensing rights for the United States
are owned by HomeLife, Inc. an Nevada Corporation ("The Parent"). The use of
the Marks by the Participating Independent Broker pursuant to this Agreement
does not expressly or impliedly give it any ownership interest or other
interest in or to the Marks, except the non-exclusive franchise granted by
this Agreement. Any and all goodwill arising from the Participating
Independent Broker's use of the Marks in its Business will inure solely and
exclusively to the benefit of HomeLife, and upon expiration or termination of
this Agreement, no monetary amount will be assigned or attributable to any
goodwill associated with its use of the Plan or the Marks. The right granted
hereunder to the Participating Independent Broker to use the Marks is
nonexclusive. HomeLife has and retains the rights, among others, (i) to
license others to use the Marks, in addition to those licenses already
granted to existing franchisees; (ii) to develop and establish other plans
and systems using the same or similar Marks, or any other proprietary marks
and to grant licenses or franchises thereto without providing any rights
therein to the Participating Independent Broker. HomeLife reserves the right
to substitute different Marks for use in identifying the Plan and the
businesses operating pursuant to the Plan if the Marks can no longer be used
in the United States, or if HomeLife, in its sole discretion, determines that
substitution of different Marks will be beneficial to the Plan.
ARTICLE 6.00 - ADVERTISING FUND
6.01 a) All advertising contributions made by the participating independent
brokers of HomeLife will be administratively segregated on the books and
records of HomeLife to form an advertising fund (the " Advertising Fund"),
although such contributions may be deposited into HomeLife's general
operating account and may be commingled with HomeLife's general operating
funds. The determination of the allocation of the Fund between advertising
and promotional campaigns shall be solely within the discretion of HomeLife.
The Advertising Fund will be utilized by HomeLife to formulate, develop,
produce and conduct advertising and promotional programs which may cover
television and radio commercials, billboards, busboards, commercial prints,
merchandising materials, special promotions, and similar advertising and
promotional materials (collectively the "Advertising Programs") for the
benefit of HomeLife and all of its participating independent brokers. The
Participating Independent Broker acknowledges that the Advertising Programs
are intended to maximize general public recognition and acceptance of
HomeLife for the benefit of HomeLife and all of its participating independent
brokers, and HomeLife undertakes no obligation to ensure that any
participating independent broker benefits directly or pro rata from the
placement or conduct of the Advertising
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Programs. All costs and expenses incurred by HomeLife in formulating,
developing, producing and conducting the Advertising Programs will be paid
from the Advertising Fund. In addition, HomeLife will be entitled to be
reimbursed from the Advertising Fund for its administrative and overhead
expenses incurred in connection with the Advertising Programs and the
administration of the Advertising Fund, to a maximum of twenty (20%) per cent
of the total annual contributions made by all participating independent
brokers to the Advertising Fund. Upon request, HomeLife will make available
to the Participating Independent Broker a certificate from its auditors
certifying the Fund has been administered in accordance with the terms
hereof. HomeLife may delegate its responsibilities in connection with the
Advertising Programs to persons of its own choosing, including persons not
dealing at arm's length with HomeLife. Any such person will be entitled to
receive a fee payable out of the Advertising Fund, in respect of the services
rendered in formulating, developing, producing and conducting the Advertising
Programs, in such amount as HomeLife determines, provided that the fees so
paid are competitive with fees generally being charged by advertising
agencies in the market area in question for services of a comparable nature.
b) The Participating Independent Broker acknowledges that in view of
the fact that HomeLife charges low advertising contribution fees, the
participating independent brokers should invest directly their advertising
money to promote themselves in the community where they transact their
business.
6.02 The parties hereto acknowledge and recognize that special and unique
opportunities for state, regional, national, and international advertising
programs such as the World Series, Super Bowl, special magazine editions, and
so forth, may from time to time arise for which the costs are not otherwise
contemplated by Article 6.01 of this Agreement. The Participating Independent
Broker agrees that, in the event such opportunities do arise, upon approval
of two thirds (66.7%) of all participating independent brokers that would
benefit from such an opportunity, a special advertising assessment may be
levied against all participating independent brokers beneficially affected,
which assessment will be paid in addition to the payments required under
Article 4.02(b),(d) or (e). The Participating Independent Broker will pay his
proportionate share of the special advertising assessment, which shall become
due and payable within fifteen (15) days after receipt by the Participating
Independent Broker of the invoice for such special assessment.
ARTICLE 7.00 - TERMINATION
7.01 HomeLife may terminate this Agreement (except for the provisions of
Articles 7.02 and 12.01, which shall continue in full force and effect) at
any time, effective immediately upon receipt by the Participating Independent
Broker of Notice of Termination if (a) the Participating Independent Broker
should default in the payment of any amounts required to be paid by it to
HomeLife under this Agreement and fails to cure such default within fifteen
(15) days of receipt of notice of default from HomeLife; (b) the
Participating Independent Broker defaults in the performance of any of its
other obligations under this Agreement and fails to cure such default within
thirty (30) days of receiving notice of default from HomeLife; (c) the
Participating Independent Broker becomes insolvent or makes an assignment for
the benefit of creditors, or a petition is filed against, and consented to,
or the Participating Independent Broker is adjudicated a bankrupt or
insolvent, or a bill in equity or other proceedings for the appointment of a
receiver or other custodian of the Participating Independent Broker or its
Business or assets is filed and consented to by the Participating Independent
Broker, or a receiver or other custodian (permanent or temporary) of the
Participating Independent Broker's assets or property or any part thereof is
appointed by a court of competent jurisdiction, or a proceeding for a new
composition with creditors under any state or federal law is instituted by or
against the Participating Independent Broker; (d) the license or registration
(under the applicable state laws governing real estate and business brokers)
of either the Participating Independent Broker or the manager of the Office
is terminated or expires; or (e) the Participating Independent Broker ceases,
or takes any steps to cease, the operation of the Business. (f) HomeLife may
terminate this agreement (except for the provisions of Articles 7.02 and
12.01, which shall continue in full force and effect) at any time subsequent
to a thirty (30) day notice provided to Participating Independent Broker by
HomeLife, effective immediately upon receipt by the Participating Independent
Broker of Notice of Termination thereafter if (a) the Participating
Independent Broker fails to produce more than four (4) sales per month for
six (6) consecutive months following a hundred and twenty (120) day Notice to
Cure provided to Participating Independent Broker by HomeLife.
7.02 Upon the expiration or termination of this Agreement for any reason, the
Participating Independent Broker shall immediately: (a) discontinue its use of
the Marks in any manner and not thereafter use the Marks or any other trade
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name, trademark, service mark, graphics, or logotype confusingly similar to
the Marks, and, without limiting the generality of the foregoing, the
Participating Independent Broker shall, within seven (7) days of the date of
termination or expiration of this Agreement, change its name to one which
does not include the Marks or any part thereof, and shall not thereafter
identify itself to the public as a former franchisee of HomeLife; (b) return
to HomeLife all copies of any memoranda, bulletins, and advertising matter
pertaining to the Business and all materials bearing the Marks that are in
the possession of the Participating Independent Broker or its employees or
agents; (c) return to HomeLife any costume of characters in Jerome's Magic
World, including but not limited to any Jerome costume or Crock >n Roll
costume, subject to reimbursement of the fair market value of such costume at
the time of return by HomeLife to Participating Independent Broker; (d) pay
all amounts then owing by the Participating Independent Broker to HomeLife
and its affiliates, agents, or independent representatives under this
Agreement; and, (e) indemnify HomeLife against all losses, damages, costs and
expenses incurred by HomeLife as a result of any claim made by a third person
arising out of or in connection with the Business.
7.03 To the extent that the above provisions of this Article 7.00 regarding
termination are inconsistent with the requirements of the California
Franchise Relations Act, the termination provisions of this Article 7.00 are
superseded by the Act's requirements and shall have no force or effect.
ARTICLE 8.00 - TRADE SECRETS AND NONCOMPETITION
8.01 PARTICIPATING INDEPENDENT BROKER may operate, manage or own an interest
in another franchised HOMELIFE real estate brokerage office.
8.02 To protect HOMELIFE trade secrets and the consideration due HOMELIFE
under this Agreement, PARTICIPATING INDEPENDENT BROKER agrees to the
following restrictions:
(a) PARTICIPATING INDEPENDENT BROKER will not operate, manage, have
any ownership interest, directly or indirectly, in any other franchisor's or
independent real estate brokerage office or related business (requiring a
real estate license, business brokers' license, auctioneer's license or
securities broker/dealer license) located within one hundred (100) miles of
California. Indirect interests and activities include, but are not limited
to, acting as an officer or director, or becoming a partner or shareholder,
employee, consultant or sales associate;
(b) If PARTICIPATING INDEPENDENT BROKER is a partnership, this
restriction applies to each partner. If a corporation is a partner, the
restriction applies to the officers, directors, and any shareholder who owns
ten (10%) percent or more of the corporation's securities;
(c) If PARTICIPATING INDEPENDENT BROKER is a corporation, this
restriction applies to the officers, directors, and any shareholder who owns
ten (10%) percent or more of the corporation's securities;
(d) PARTICIPATING INDEPENDENT BROKER will not sell, lease, rent,
sublet, or allow the use of its business when under contract at existing
location to anyone that will operate, manage, have any ownership interest,
directly or indirectly, in any other franchisor's or independent real estate
brokerage office or related business (requiring a real estate license,
business brokers' license, auctioneer's license or securities broker/dealer
license) within a two (2) mile radius of Participating Independent Broker's
office. Indirect interests and activities include, but are not limited to,
acting as an officer or director, or becoming a partner or shareholder,
employee, consultant or sales associate;
8.03 HOMELIFE may give its prior written consent to waive all or part of the
restrictions in Section 8.02 of this Agreement. Any consent may include
reasonable conditions to protect the HOMELIFE trade secrets and HOMELIFE'S
consideration.
ARTICLE 9.00 - CONFIDENTIAL INFORMATION
9.01 Participating Independent Broker shall not, during the term of this
Agreement or thereafter, communicate, divulge or use for the benefit of any
other person, persons, partnership, association or corporation any
confidential information, knowledge or know-how concerning the methods of
operation of the Plan or under the Marks licensed hereunder that may be
communicated to Participating Independent Broker or of which they are
appraised in connection
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with the operation of the Plan and under the Marks under the terms of this
Agreement. Participating Independent Broker shall divulge such confidential
information only to such of Participating Independent Broker's employees and
agents as must have access to it in order to conduct the Business. Any and
all information, knowledge, know-how and techniques used in or related to the
Plan or under the Marks that HomeLife communicates, in writing or otherwise
to Participating Independent Broker including, but not limited to, the House
by Mouse system software, the Virtual Assistant system software, plans and
specifications, marketing information and strategies, site evaluation and
selection techniques, information related to the finances, operating results
and expiration dates and license agreements between HomeLife and
Participating Independent Broker, and such other information HomeLife
designates as confidential, shall be deemed confidential for purposes of this
agreement. Participating Independent Broker shall not at ant time without
HomeLife's prior written consent, copy, duplicate, record or otherwise
reproduce such materials or information, in whole or in part, nor otherwise
make the same available to any unauthorized person. This covenant shall be
perpetually binding upon Participating Independent Broker.
9.02 If Participating Independent Broker or any management or personnel of
Participating Independent Broker develops any new concept, process,
literature, or improvement in the operation or promotion of the Business on
information provided to them by HomeLife or otherwise developed for the use
of the Plan or Marks, Participating Independent Broker agrees to promptly
notify HomeLife and provide HomeLife with all necessary information
concerning same, without compensation. Participating Independent Broker
acknowledge that any such concept, process, literature, or improvement shall
become the property of HomeLife and HomeLife may utilize or disclose such
information to other licensees as it determines to be appropriate. If,
however, Participating Independent Broker or any management or personnel of
Participating Independent Broker develops any new concept, process,
literature, or improvement in the operation or promotion of the Business
independently, not based on or related to any information provided to them by
HomeLife or otherwise developed for use in the Plan, such concept, process,
or improvement shall remain the property of Participating Independent Broker.
Participating Independent Broker shall provide HomeLife with all necessary
information concerning same, and HomeLife may utilize or disclose such
information to other licensees as it determines to be appropriate.
9.03 Participating Independent Broker acknowledges that any failure to comply
with the requirements set forth in this Section 9.00 shall constitute a
material event of default under Section 7.__ and will cause HomeLife
irreparable injury for which no adequate remedy at law may be available, and
Participating Independent Broker accordingly agrees to the issuance of an
injunction(s) prohibiting any conduct by Participating Independent Broker in
violation of the terms of this Section 9.00. Participating Independent Broker
agrees to pay all expenses (including court costs and reasonable attorneys'
fees) incurred by HomeLife in enforcing this Section 9.00 (including
obtaining specific performance, injunctive relief, or any other equitable or
other remedy available to HomeLife for any violation of the requirements of
this Section 9.00).
ARTICLE 10.00 - ASSIGNMENT
10.01 This Agreement is personal to the Participating Independent Broker and
may not be assigned by the Participating Independent Broker, nor may the
assets or shares of the Business be transferred or encumbered, or diluted by
reorganization, transfer, issuance of securities, or otherwise, without in
each case obtaining the prior written consent of HomeLife, which consent will
not be unreasonably withheld. HomeLife may, however, in its sole discretion,
require any, or all, of the following as conditions of its consent: (a) that
the assignee be able to satisfy HomeLife's educational, managerial, and
business standards; satisfactory qualifications regarding moral character,
business reputation, and credit rating; meet requirements for aptitude and
ability to conduct the Business; and have satisfactory financial and capital
resources; (b) that the Participating Independent Broker not be in default of
any provision of this Agreement; (c) that the Participating Independent
Broker execute a mutual general release (exclusive of the obligations
referred to in subparagraph (f), below), in a form prescribed by HomeLife,
excluding only such claims as the Participating Independent Broker may have
under the California Franchise Investment Law or the California Franchise
Relations Act; (d) that the assignee sign HomeLife's then current form of
Participating Independent Broker Franchise Agreement (which may contain
different business and financial terms from this Agreement), for a term
ending upon the expiration
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of this Agreement. The Participating Independent Broker shall pay a transfer
fee of Five Hundred ($500.00) Dollars; (e) that there are satisfactory
personal guarantees for the performance of the assignee's obligations under
the Participating Independent Broker Franchise Agreement; (f) that the
Participating Independent Broker remain liable for all of the obligations to
HomeLife in connection with the Business prior to the effective date of the
assignment, and execute any and all instruments reasonably requested by
HomeLife to evidence such liability; and (g) that the Participating
Independent Broker represent and warrant to HomeLife and the assignee that it
has complied with all laws and regulations in connection with the assignment,
including, without limitation, any applicable bulk sales law.
10.02 HomeLife may assign all or any part of its rights under this Agreement,
provided that any transferee shall agree in writing to assume all obligations
undertaken by HomeLife in this Agreement relating to the rights assigned.
Upon such assignment and assumption, HomeLife shall be under no further
obligation with respect to the matters assigned, but shall continue to be
liable for any breaches of this Agreement by it prior to the effective date
of assignment.
ARTICLE 11.00 - MEDIATION AND ARBITRATION
11.01 MEDIATION.
THE PARTIES AGREE TO SUBMIT ANY CLAIM, CONTROVERSY OR DISPUTE
ARISING OUT OF OR RELATING TO THIS AGREEMENT (AND EXHIBITS) OR THE
RELATIONSHIP CREATED BY SUCH AGREEMENT TO NON-BINDING MEDIATION PRIOR TO
FILING SUCH CLAIM, CONTROVERSY OR DISPUTE IN A COURT. THE MEDIATION SHALL BE
CONDUCTED THROUGH EITHER AN INDIVIDUAL MEDIATOR OR A MEDIATOR APPOINTED BY A
MEDIATION SERVICES ORGANIZATION OR BODY, EXPERIENCED IN THE MEDIATION OF
RESIDENTIAL OR COMMERCIAL REAL ESTATE DISPUTES, AGREED UPON BY THE PARTIES
AND, FAILING SUCH AGREEMENT WITHIN A REASONABLE PERIOD OF TIME AFTER EITHER
PARTY HAS NOTIFIED THE OTHER OF ITS DESIRE TO SEEK MEDIATION OF ANY CLAIM,
CONTROVERSY OR DISPUTE (NOT TO EXCEED (15) DAYS), THROUGH THE AMERICAN
ARBITRATION ASSOCIATION IN ACCORDANCE WITH ITS RULES GOVERNING MEDIATION, AT
HOMELIFE'S CORPORATE HEADQUARTERS IN NEWPORT BEACH, CALIFORNIA. THE COSTS AND
EXPENSES OF MEDIATION, INCLUDING COMPENSATION AND EXPENSES OF THE MEDIATOR,
SHALL BE BORNE BY THE PARTIES EQUALLY. IF THE PARTIES ARE UNABLE TO RESOLVE
THE CLAIM, CONTROVERSY OR DISPUTE WITHIN NINETY (90) DAYS AFTER THE MEDIATOR
HAS BEEN APPOINTED, THEN THE DISPUTE SHALL AUTOMATICALLY BE REFERRED TO
ARBITRATION UNDER SECTION 11.02 BELOW, UNLESS THE CLAIM, CONTROVERSY OR
DISPUTE IS EXCLUDED FROM ARBITRATION UNDER SECTION 11.02(c) BELOW.
NOTWITHSTANDING THE FOREGOING, THE PARTIES MAY BRING AN ACTION (1) FOR MONIES
OWED, (2) FOR INJUNCTIVE OR OTHER EXTRAORDINARY RELIEF, OR (3) INVOLVING THE
POSSESSION OR DISPOSITION OF, OR OTHER RELIEF RELATING TO, REAL PROPERTY IN A
COURT HAVING JURISDICTION AND IN ACCORDANCE WITH SECTION 11.02(f) BELOW,
WITHOUT SUBMITTING SUCH ACTION TO MEDIATION.
11.02 ARBITRATION.
(a) EXCEPT AS PROVIDED IN THIS AGREEMENT, HOMELIFE AND PARTICIPATING
INDEPENDENT BROKER AGREE THAT ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT
OF OR RELATING TO PARTICIPATING INDEPENDENT BROKER'S OPERATION OF THE MARKET
CENTER UNDER THIS AGREEMENT (AND EXHIBITS) INCLUDING, BUT NOT LIMITED TO,
THOSE OCCURRING SUBSEQUENT TO THE TERMINATION OR EXPIRATION OF THIS
AGREEMENT, THAT CANNOT BE AMICABLY SETTLED AMONG THE PARTIES OR THROUGH
MEDIATION SHALL, EXCEPT AS SPECIFICALLY SET FORTH HEREIN AND IN SECTION 11.02
(c), BE REFERRED TO ARBITRATION IN ACCORDANCE WITH THE RULES OF ARBITRATION
OF THE AMERICAN ARBITRATION ASSOCIATION, AS AMENDED. IF SUCH RULES ARE IN ANY
WAY CONTRARY TO OR IN CONFLICT WITH THIS AGREEMENT, THE TERMS OF THIS
AGREEMENT SHALL CONTROL. ONLY CLAIMS, CONTROVERSIES OR DISPUTES INVOLVING
PARTICIPATING INDEPENDENT BROKER AND NO CLAIMS FOR OR ON
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BEHALF OF ANY OTHER FRANCHISEE OR SUPPLIER MAY BE BROUGHT BY PARTICIPATING
INDEPENDENT BROKER HEREUNDER.
(b) HOMELIFE AND PARTICIPATING INDEPENDENT BROKER SHALL EACH SELECT
ONE ARBITRATOR. IF THE PARTY UPON WHOM THE DEMAND FOR ARBITRATION IS SERVED
FAILS TO SELECT AN ARBITRATOR WITHIN FIFTEEN (15) DAYS AFTER THE RECEIPT OF
THE DEMAND FOR ARBITRATION, THEN THE ARBITRATOR SO DESIGNATED BY THE PARTY
REQUESTING ARBITRATION SHALL ACT AS THE SOLE ARBITRATOR TO RESOLVE THE
CONTROVERSY AT HAND. THE TWO ARBITRATORS DESIGNATED BY THE PARTIES SHALL
SELECT A THIRD ARBITRATOR. IF THE TWO ARBITRATORS DESIGNATED BY THE PARTIES
FAIL TO SELECT A THIRD ARBITRATOR WITHIN FIFTEEN (15) DAYS, THE THIRD
ARBITRATOR SHALL BE SELECTED BY THE AMERICAN ARBITRATION ASSOCIATION OR ANY
SUCCESSOR THERETO, UPON APPLICATION BY EITHER PARTY. ALL OF THE ARBITRATORS
SHALL BE EXPERIENCED IN THE ARBITRATION OF RESIDENTIAL OR COMMERCIAL REAL
ESTATE DISPUTES. THE ARBITRATION SHALL TAKE PLACE AT HOMELIFE'S CORPORATE
HEADQUARTERS IN NEWPORT BEACH, CALIFORNIA. THE AWARD OF THE ARBITRATORS SHALL
BE FINAL AND JUDGMENT UPON THE AWARD RENDERED IN ARBITRATION MAY BE ENTERED
IN ANY COURT HAVING JURISDICTION THEREOF. THE COSTS AND EXPENSES OF
ARBITRATION, INCLUDING COMPENSATION AND EXPENSES OF THE ARBITRATORS, SHALL BE
BORNE BY THE PARTIES AS THE ARBITRATORS DETERMINE.
(c) NOTWITHSTANDING THE ABOVE, THE FOLLOWING SHALL NOT BE SUBJECT TO
ARBITRATION:
(1) DISPUTES AND CONTROVERSIES ARISING FROM THE SHERMAN ACT, THE CLAYTON
ACT OR ANY OTHER FEDERAL OR STATE ANTITRUST LAW;
(2) DISPUTES AND CONTROVERSIES BASED UPON OR ARISING UNDER THE LANHAM
ACT, AS NOW OR HEREAFTER AMENDED, RELATING TO OWNERSHIP OR VALIDITY OF THE
TRADEMARKS;
(3) DISPUTES AND CONTROVERSIES BASED UPON THE NONPAYMENT OF MONEY BY
PARTICIPATING INDEPENDENT BROKER HEREIN, UNLESS HOMELIFE, AT ITS OPTION,
ELECTS TO SUBMIT SUCH MATTER TO ARBITRATION; AND
(4) DISPUTES AND CONTROVERSIES RELATING TO ACTIONS TO OBTAIN POSSESSION
OF THE PREMISES OF THE MARKET CENTER UNDER LEASE OR SUBLEASE.
(d) IF HOMELIFE SHALL DESIRE TO SEEK SPECIFIC PERFORMANCE OR OTHER
EXTRAORDINARY RELIEF INCLUDING, BUT NOT LIMITED TO, INJUNCTIVE RELIEF UNDER
THIS AGREEMENT AND ANY AMENDMENTS THERETO THEN ANY SUCH ACTION SHALL NOT BE
SUBJECT TO ARBITRATION AND HOMELIFE SHALL HAVE THE RIGHT TO BRING SUCH ACTION
AS DESCRIBED IN SECTION 11.02(f).
(e) IN PROCEEDING WITH ARBITRATION AND IN MAKING DETERMINATIONS
HEREUNDER, THE ARBITRATORS SHALL NOT EXTEND, MODIFY OR SUSPEND ANY TERMS OF
THIS AGREEMENT OR THE REASONABLE STANDARDS OF BUSINESS PERFORMANCE AND
OPERATION ESTABLISHED BY HOMELIFE IN GOOD FAITH. NOTICE OF OR REQUEST TO OR
DEMAND FOR ARBITRATION SHALL NOT STAY, POSTPONE OR RESCIND THE EFFECTIVENESS
OF ANY TERMINATION OF THIS AGREEMENT.
EXCEPT AS STATED ABOVE, WITH RESPECT TO ALL CLAIMS SET FORTH ABOVE IN
SECTION 11.02(c) AND (d) OR WHICH, AS A MATTER OF LAW OR
PUBLIC POLICY CANNOT BE SUBMITTED TO ARBITRATION,
PARTICIPATING INDEPENDENT BROKER AND THE
12
<PAGE>
CONTROLLING PRINCIPALS HEREBY IRREVOCABLY SUBMIT THEMSELVES TO
THE JURISDICTION OF THE STATE COURTS OF ORANGE COUNTY,
CALIFORNIA AND THE NINTH DISTRICT FEDERAL COURT. PARTICIPATING
INDEPENDENT BROKER AND THE CONTROLLING PRINCIPALS HEREBY WAIVE
ALL QUESTIONS OF PERSONAL JURISDICTION FOR THE PURPOSE OF
CARRYING OUT THIS PROVISION. PARTICIPATING INDEPENDENT BROKER
AND THE CONTROLLING PRINCIPALS HEREBY IRREVOCABLY AGREE THAT
SERVICE OF PROCESS MAY BE MADE UPON ANY OF THEM IN ANY
PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE
RELATIONSHIP CREATED BY THIS AGREEMENT BY ANY MEANS ALLOWED BY
CALIFORNIA OR FEDERAL LAW. PARTICIPATING INDEPENDENT BROKER
AND THE CONTROLLING PRINCIPALS FURTHER AGREE THAT VENUE FOR
ANY LEGAL PROCEEDING RELATING TO OR ARISING OUT OF THIS
AGREEMENT SHALL BE ORANGE COUNTY, CALIFORNIA; PROVIDED,
HOWEVER, WITH RESPECT TO ANY ACTION (1) FOR MONIES OWED, (2)
FOR INJUNCTIVE OR OTHER EXTRAORDINARY RELIEF OR (3) INVOLVING
POSSESSION OR DISPOSITION OF, OR OTHER RELIEF RELATING TO ,
REAL PROPERTY, HOMELIFE MY BRING SUCH ACTION IN ANY STATE OR
FEDERAL DISTRICT COURT WHICH HAS JURISDICTION. WITH RESPECT TO
ALL CLAIMS, CONTROVERSIES, DISPUTES, OR ACTIONS, THIS
AGREEMENT SHALL BE INTERPRETED AND CONSTRUED UNDER CALIFORNIA
LAW (EXCEPT FOR CALIFORNIA CHOICE OF LAW RULES).
11.03 GENERAL.
(a) No right or remedy conferred upon or reserved to HomeLife or
Participating Independent Broker by this Agreement is intended to be, nor
shall be deemed, exclusive of any other right or remedy herein or by law or
equity provided or permitted, but each shall be cumulative of every other
right or remedy.
(b) Nothing herein contained shall bar HomeLife's right to obtain
injunctive relief against threatened conduct that will cause it loss or
damages, under the usual equity rules, including the applicable rules for
obtaining restraining orders and preliminary injunctions.
(c) Participating Independent Broker and HomeLife acknowledge that
the parties' agreement regarding applicable state law and forum set forth in
Sections 11.01 and 11.02 above provide each of the parties with the mutual
benefit of uniform interpretation of this Agreement and any dispute arising
out of the parties' relationship hereto. Each of Participating Independent
Broker and HomeLife further acknowledge the receipt and sufficiency of mutual
consideration for such benefit.
(d) Participating Independent Broker and HomeLife acknowledge that
the execution of this Agreement occurred in California and further
acknowledge that the performance of certain obligations of Participating
Independent Broker arising under this agreement, including but not limited to
the payment of monies due hereunder and the satisfaction of certain training
requirements of HomeLife, shall occur in California.
ARTICLE 12.00 - GENERAL
12.01 The Participating Independent Broker understands and agrees that
nothing in this Agreement authorizes it to make any contract, agreement,
warranty or representation on behalf of HomeLife, its Affiliates, agents or
area representatives or to incur any debt or other obligation in the name of
HomeLife, its Affiliates, agents or area
13
<PAGE>
representatives. HomeLife and its Affiliates, agents and area representatives
will in no event assume liability for, or be deemed liable hereunder, as a
result of any such action. Furthermore, neither HomeLife nor its Affiliates,
agents or area representatives will be liable by reason of any act, error or
omission of the Participating Independent Broker in its conduct of the
Business or for any claim or judgment arising therefrom against the
Participating Independent Broker or HomeLife or its Affiliates, agents or
area representatives. The Participating Independent Broker shall indemnify
and hold HomeLife, its Affiliates, agents and area representatives and their
respective officers, directors, stockholders and employees harmless against
any and all claims arising directly or indirectly from, as a result of or in
connection with the Participating Independent Broker's operation of the
Business, as well as the costs, including attorney's fees, of defending
against them.
12.02 The parties are independent contractors and the Participating
Independent Broker has no authority to bind HomeLife, or any person or
corporation with whom HomeLife may at any time or times enter into an
association for the provision of products, benefits or services to the
Participating Independent Broker in any manner whatsoever; or, to assume any
obligation, express or implied, for or on behalf of, or in the name of,
HomeLife. This Agreement shall not be construed to constitute the
Participating Independent Broker as a partner, joint venture, agent, employee
or representative of HomeLife for any purpose. The Participating Independent
Broker agrees to use its own name in obtaining and signing contracts and in
making purchases, so that the transaction clearly indicates that it is acting
on its own behalf and not on behalf of HomeLife.
12.03 If any provision of this Agreement is invalid, illegal, or incapable of
being enforced by reason of any rule of law or public policy, such provision
shall be severed from this Agreement. All provisions of this Agreement are
severable, and this Agreement shall be interpreted and enforced as if all
completely invalid or unenforceable provisions were not contained herein, and
partially valid and enforceable provisions shall be enforced to the extent
that they are valid and enforceable. If any applicable and binding law or the
public policy of any jurisdiction requires a greater prior notice of
termination or refusal to renew this Agreement than is required hereunder, or
the taking of some other action not required hereunder, or if under
applicable and binding law or the public policy of any jurisdiction any
provision of this Agreement or any specification, standard or operating
procedure prescribed by HomeLife is invalid or unenforceable, the prior
notice or other actions required by such law or rule shall be substituted for
the notice requirements hereof, and such invalid or unenforceable
specification, standard, or operating procedure shall be modified to the
extent required to be valid and enforceable. Such modifications to this
Agreement shall be effective only in such jurisdiction and shall be enforced
as originally made and entered into in all other jurisdictions. All other
provisions of this Agreement shall nevertheless remain in full force and
effect. No provision of this Agreement shall be deemed to be dependent upon
any other provision, unless expressly so stated in this Agreement.
12.04 HomeLife may by written instrument unilaterally waive any obligation
of, or restriction upon, the Participating Independent Broker under this
Agreement. No acceptance by HomeLife of any payment by the Participating
Independent Broker and no failure, refusal or neglect of HomeLife to exercise
any right under this Agreement or to insist upon full compliance by the
Participating Independent Broker of its obligations under this Agreement will
constitute a waiver of any provisions of this Agreement. The Participating
Independent Broker agrees that it will not, on the grounds of alleged
non-performance by HomeLife of any of its obligations under this Agreement,
withhold payment of any monthly service fee, advertising contribution, or
other amount due to HomeLife under the terms of this Agreement.
12.05 All notices, requests, demands, or other communications ("Notices")
required or permitted to be given by one party to the other shall be given by
prepaid registered or certified mail, return receipt requested, or by such
other method as provides written evidence or receipt, including confirmed
delivery fax addressed to the other party, or personally delivered to the
other party, at the address for it set forth on the first page of this
Agreement or at such other address as may be given by one party to the other
in writing from time to time.
12.06 This Agreement, including its Schedules, constitutes the entire
Agreement between the parties with respect to the matters herein and
supersedes all previous Agreements and understandings between the parties.
THE PARTICIPATING INDEPENDENT BROKER ACKNOWLEDGES THAT HOMELIFE HAS MADE NO
14
<PAGE>
REPRESENTATIONS, WARRANTIES, PROMISES OR INDUCEMENTS, DIRECT OR INDIRECT,
EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE CONCERNING THIS AGREEMENT, THE
BUSINESS, OR CONCERNING ANY OTHER MATTER, EXCEPT AS EXPRESSLY SET OUT IN THIS
AGREEMENT.
12.07 THE PARTICIPATING INDEPENDENT BROKER ACKNOWLEDGES THAT HE HAS RECEIVED
THE SIGNING COPIES OF THIS AGREEMENT AT LEAST FIVE (5) BUSINESS DAYS PRIOR TO
THE DATE ON WHICH HE ACTUALLY SIGNED THIS AGREEMENT.
12.08 THE PARTICIPATING INDEPENDENT BROKER ACKNOWLEDGES THAT IT RECEIVED THE
DISCLOSURE DOCUMENT REQUIRED BY THE FEDERAL TRADE COMMISSIONS' TRADE
REGULATION RULE ON FRANCHISING AT LEAST TEN (10) BUSINESS DAYS PRIOR TO THE
DATE ON WHICH THIS AGREEMENT WAS EXECUTED.
15
<PAGE>
GUARANTY
Each undersigned Guarantor (hereinafter "Guarantor"), jointly and severally,
covenants, promises and agrees to pay or cause to be paid all monies which
become payable by PARTICIPATING INDEPENDENT BROKER under this Agreement. Each
Guarantor adopts each and every covenant to be performed by PARTICIPATING
INDEPENDENT PROGRAM and agrees with HOMELIFE to perform and observe all such
covenants. HOMELIFE entering into this Agreement with PARTICIPATING
INDEPENDENT BROKER constitutes consideration for this Guaranty. The receipt
and sufficiency of this consideration is acknowledged by the signature of the
Guarantor.
WITNESS:
Individual Guarantor
-------------------------
Name (Typed or Printed)
- ------------------------------- ------------------------------------
Signature
- ------------------------------- ------------------------------------
Name (Typed or Printed)
- ------------------------------- ------------------------------------
Signature
------------------------------------
Name (Typed or Printed)
- ------------------------------- ------------------------------------
Signature
DATED THIS DAY OF , 199 .
--------------- --------------------------------- -----
HOMELIFE REALTY SERVICES, INC.
By:
--------------------------------
- ------------------------------------
Witness
Title:
-----------------------------
16
<PAGE>
DATED THIS DAY OF , 199 .
---------------- --------------------------------- -----
PARTICIPATING INDEPENDENT BROKER
By:
- ------------------------------ -----------------------------------
Witness
Title:
--------------------------------
By:
- ------------------------------ -----------------------------------
Witness
Title:
--------------------------------
By:
- ------------------------------ -----------------------------------
Witness
Title:
--------------------------------
By:
- ------------------------------ -----------------------------------
Witness
Title:
--------------------------------
17
<PAGE>
ACCEPTANCE
HOMELIFE REALTY SERVICES, INC., a Delaware corporation
By:
-----------------------------------------------------
Title:
---------------------------------------------------
Dated:
---------------------------------------------------
18
<PAGE>
SCHEDULE "A" TO FRANCHISE AGREEMENT
PART I - MARKS
<TABLE>
<CAPTION>
Application Application Registration
Trademark Number Date Number & Date
- --------- ------ ---- -------------
<S> <C> <C> <C>
HOMELIFE 628161 11/03/86 1,499,886
08/09/88
HOMELIFE (Design) 610000 07/17/86 1,622,830
11/13/90
HOMELIFE REALTY SERVICES 73/628165 11/03/86 1,622,832
11/13/90
IT'S WHAT EVERYONE'S
LOOKING FOR 74/029587 02/16/90 1,689,472
05/19/92
BLUEPRINT TO BUYING
REAL ESTATE 74/085456 08/06/90 Pending
BLUEPRINT TO BUYING
A HOME 74/162913 05/02/91 1,790,657
08/31/93
BLUEPRINT TO CORPORATE
RELOCATION 74/085493 08/03/90 Pending
BLUEPRINT TO SELLING
REAL ESTATE 74/085457 08/06/90 Pending
BLUEPRINT TO SELLING
YOUR HOME 74/162839 05/02/91 1,798,139
10/12/93
FOCUS 20/20 74/085458 08/06/90 Pending
FOCUS 20/20 AND DESIGN 74/085454 08/06/90 1,693,490
06/09/92
FAMILY HOMELIFE REALTY
SERVICES 810079 06/29/89 1,642,990
FAMILY HOMELIFE REALTY
SERVICES AND DESIGN 810077 06/29/89 1,629,423
12/25/90
FAMILY LIFE HR AND DESIGN 610003 07/17/86 1,460,306
10/06/87
GNOMELIFE 74/133566 01/25/91 1,746,039
01/12/93
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Application Application Registration
Trademark Number Date Number & Date
- --------- ------ ---- -------------
<S> <C> <C> <C>
GNOMELIFE AND DESIGN 74/133567 01/25/91 1,746,040
01/12/93
JEROME 74/133564 01/25/91 1,705,378
08/04/92
JEROME AND DESIGN 74/133572 01/25/91 1,751,527
02/09/93
JEROME THE GNOME 74/133565 01/25/91 1,751,526
02/09/93
HIGHER STANDARDS
AND DESIGN 74/248921 02/24/92 1,754,192
02/23/93
</TABLE>
PART II - LOCATION OF OFFICE
Address:
----------------------------------------
----------------------------------------
City:
----------------------------------------
State: California
Zip Code:
----------------------------------------
Tel. #:
----------------------------------------
Fax #:
----------------------------------------
The Franchisee shall be open and operating not later than _________________.
20
<PAGE>
SCHEDULE "B" TO FRANCHISE AGREEMENT
ROYALTY FEES AND ADVERTISING CONTRIBUTIONS
FIXED DOLLAR OPTION
PART 1: MONTHLY ROYALTY FEES
<TABLE>
<CAPTION>
Service Fee per Number of Representatives
Representative* Licensed in the Month
--------------- -------------------------
<S> <C>
$90.00 each First 45
$10.00 for each additional More than 45
over the 45
</TABLE>
* A minimum fee of $375.00 is payable if the fee calculated in accordance
with the table would be less than $375.00 for the month.
PART 2: MONTHLY ADVERTISING CONTRIBUTIONS
<TABLE>
<CAPTION>
Advertising Contribution Number of Representatives
Representative Licensed in the Month
-------------- ---------------------
<S> <C>
$25.00 each First 20
$2.00 for each additional over the 20 More than 20
</TABLE>
The minimum fee of $375.00 is payable if the fee calculated in accordance
with the table would be less than $375.00 for the month.
Payment of Monthly Royalty Fee, in the amount of $
___________________________________ per month, and the Monthly Contribution
to the Advertising Fund, in the amount of $_________________ per month shall
commence on ___________________________, and shall continue thereafter in
accordance with the terms of this Agreement and the Schedules thereto.
21
<PAGE>
SCHEDULE "C" TO FRANCHISE AGREEMENT
ROYALTY FEES AND ADVERTISING CONTRIBUTIONS
FIXED MONTHLY ROYALTY FEES OPTION
PART 1: MONTHLY ROYALTY FEES (FIXED)
The Fixed Royalty Fees are a fixed monthly payment based upon the
previous years Gross Commission Income (GCI) per franchised location as
calculated below. These fees will be due on the first day of the month.
Payments received after the tenth of the month will be deemed late, and
assessed interest in accordance with the maximum permitted by usury laws. Any
late payment will bear interest from the date due until paid.
<TABLE>
<CAPTION>
Level GCI Monthly Fee Yearly
Total
<S> <C> <C> <C>
1 $ 0 - 50,000 $ 375 $ 4,500
2 $ 50,001 - 100,000 $ 550 $ 6,600
3 $ 100,001 - 150,000 $ 600 $ 7,200
4 $ 150,001 - 200,000 $ 650 $ 7,800
5 $ 200,001 - 300,000 $ 950 $11,400
6 $ 300,001 - 450,000 $1,400 $16,800
7 $ 450,001 - 600,000 $1,800 $21,600
8 $ 600,001 - 750,000 $2,400 $28,800
9 $ 750,001 - 900,000 $3,000 $36,000
10 $ 900,001 - 1,050,000 $3,600 $43,200
11 $ 1,050,001 & Over $4,000 $48,000
</TABLE>
PART 2: FIXED ADVERTISING FEES
The Fixed Advertising Fees are a fixed monthly payment based upon the
previous years Gross Commission Income (GCI) per franchised location as
calculated below. These fees will be due on the first day of the month.
Payments received after the tenth of the month will be deemed late, and
assessed interest in accordance with the maximum permitted by usury laws. Any
late payment will bear interest from the date until paid.
<TABLE>
<CAPTION>
Level GCI Monthly Fee Yearly
Total
<S> <C> <C> <C>
1 $ 0 - 50,000 $ 100.00 $ 1,200
2 $ 50,001 - 100,000 $ 100.00 $ 1,200
3 $ 100,001 - 150,000 $ 125.00 $ 1,500
4 $ 150,001 - 200,000 $ 150.00 $ 1,800
5 $ 200,001 - 300,000 $ 175.00 $ 2,100
6 $ 300,001 - 450,000 $ 200.00 $ 2,400
7 $ 450,001 - 600,000 $ 225.00 $ 2,700
8 $ 600,001 - 750,000 $ 250.00 $ 3,000
9 $ 750,001 - 900,000 $ 275.00 $ 3,300
10 $ 900,001 - 1,050,000 $ 300.00 $ 3,600
11 $1,050,001 & Over $ 400.00 $ 4,200
</TABLE>
Payment of Monthly Royalty Fee, in the amount of $ _____________per month,
and the Monthly Contribution to the Advertising Fund, in the amount of
$______________ per month shall commence on ___________________, and shall
continue thereafter in accordance with the terms of this Agreement and the
Schedules thereto.
22
<PAGE>
SCHEDULE "D" TO FRANCHISE AGREEMENT
AMOUNT OF INITIAL FRANCHISE FEE: $12,500.00
Payment of the Initial Franchise Fee, in the amount of $ ____________ was be
paid in full in cash/check (No. __________________).
OR
Payment of the Initial Franchise Fee, in the amount of $________________ will
be paid _______________ according to the following schedule and shall
commence on,______________________ and shall continue thereafter in accordance
with the terms of this Agreement and the Schedules thereto.
Interest rate is 8 (%) percent.
PAYMENT UPON SIGNING: $ ___________________________________
Date second installment is due: _________ Amount of second Installment: $_______
Date third installment is due: _________ Amount of third Installment: $_______
Date fourth installment is due: _________ Amount of fourth Installment: $_______
Date fifth installment is due: _________ Amount of fifth Installment: $_______
23
<PAGE>
SCHEDULE "E" TO FRANCHISE AGREEMENT
EXCLUSIVE AREA OR TERRITORY
The Franchisor may grant to the Franchisee an exclusive geographic
area in which no other HomeLife franchise office shall be located without the
expressed consent of the Franchisee. However, the exclusive area will not
apply to, or exclude the establishment and operation of a "Target Market
Location Franchise." Notwithstanding the prior granting of any exclusivity to
any Franchisee, the Franchisor or designee, shall have the right to place a
"Target Market Location Franchise" within any pre-existing exclusive area
only after offering the Franchisee who owns that exclusive area the First
Right of Refusal to purchase the "Target Market Location Franchise." The
First Right of Refusal must be exercised within thirty (30) days of written
notice given by the Franchisor to the Franchisee. Franchisee's failure to
exercise the First Right of Refusal within the above thirty (30) days shall
automatically allow Franchisor the right to grant the "Target Market Location
Franchise" to another Franchisee.
A "Target Market Location Franchise," or a Franchisee employing less
than 19 sales representatives will not be granted, or be entitled to, any
exclusive area or territory. A Franchisee may elect not to be granted an
exclusive area or territory.
The size of the exclusive area or territory shall be the distance
specified in the following table measured from the Franchisee's approved
location. The exclusive area or territory is contingent upon the Franchisee
maintaining the required number of sales representatives specified in the
table below.
MINIMUM EXCLUSIVITY TABLE
<TABLE>
<CAPTION>
Number of Sales Exclusive Area, Within
Representatives Following Distance
Employed by From Franchisee's
Franchisee Location
---------- ----------------------
<S> <C>
1 - 18 No exclusive area
19 - 28 1/4 mile
29 - 39 1/2 mile
40 or more 1 mile
</TABLE>
The Franchisor has the right to configure the above distance from
Franchisee's location by way of different shapes of boundaries, which may
vary, but will be to the satisfaction of the Franchisee. The exclusive area
will be granted for six months, commencing from the date of the agreement. To
maintain this exclusivity for the balance of the Franchise Agreement, the
Franchisee must maintain the minimum number of sales representatives
required. If after six months, due to a decrease in sales representatives,
Franchisee falls below minimum exclusivity standards for the size of the
designated area, the Franchisee shall have an additional six months upon
receipt of written notice by Franchisor to bring sales representatives to
minimum exclusivity standards. Upon failure to meet these minimum exclusivity
standards, Franchisor may elect, at its sole discretion, to decrease or
eliminate the exclusive area or territory in accordance with the Minimum
Exclusivity Table.
THE FRANCHISEE ACKNOWLEDGES, UNDERSTANDS, AND ACCEPTS THAT THE
FRANCHISOR CAN NOT CONTROL NOR PROJECT THE NUMBER OF SALES AGENTS WITHIN ANY
FRANCHISE OFFICE REGARDLESS OF THE SIZE OF THE AREA OR TERRITORY.
The initial exclusive area shall be detailed in Schedule "E"
Exclusive Boundary Description, and will follow the spirit of the Minimum
Exclusivity Table.
Notwithstanding the above terms and conditions for an Exclusive Area
or Territory, Franchisor has the right to grant different size exclusive
territory in a rural and non-metropolitan area and to Franchisees with more
than one office, which will be outlined for the Franchisee in Schedule "E"
Exclusive Area Boundary Description.
24
<PAGE>
SCHEDULE "E" TO FRANCHISE AGREEMENT
EXCLUSIVE AREA BOUNDARY DESCRIPTION
25
<PAGE>
EXHIBIT 10.18
FORM OF BROKER MEMBERSHIP AGREEMENT
<PAGE>
[GRAPHIC OMITTED] BROKER MEMBERSHIP AGREEMENT
This Agreement, dated, _________________is between Red Carpet Real
Estate Service, ("Red Carpet") and ________________________________,
("Broker") dba, ________________________________________, ("The Business"),
Broker's State of Registration ____,
Address:__________________________________________________________
__________________________________, Telephone number:
________________________________.
Red Carpet has been established for the purpose of developing a unique
membership of real estate brokerage businesses under the name "Red Carpet
Real Estate Service ("The Membership").
B. Broker is a fully licensed and registered real estate broker in good
standing with the State listed above, and has conducted real estate business
for no less than two years, as described in Broker Membership Application.
C. Broker has applied to join the Membership and participate in the
Membership under the terms and conditions contained in this Agreement. in
consideration of the following mutual promises, the parties agree that:
1. ADMISSION. (a) Red Carpet admits Broker into the Membership and
authorizes Broker to operate the Business using the trade name Red Carpet
Real Estate Service Membership . (When using Red Carpet Real Estate Service
Membership as part of its trade name, Red Carpet Real Estate Service
Membership may only be followed by Broker's DBA Name).
(b) Red Carpet authorizes the Business to use Red Carpet 's
trademarks and service marks and participate in the Membership's programs and
other benefits so long as Broker remains in good standing under this
Agreement. Broker acknowledges that Red Carpet, at its discretion, may modify
its programs from time to time as necessary.
2. TERMS: The term of this Agreement is five years, beginning
___________________________. This Agreement may be renewed for an additional
five year term under the terms available at the time of renewal if Broker
gives written notice of renewal to Red Carpet at least ninety (90) days prior
to the end of its initial term, is in good standing at such time, sends with
its notice a renewal fee of $500.00, and signs the Red Carpet Membership
Agreement in effect at the time of renewal.
(a) Broker agrees to pay Red Carpet upon signing this
Agreement a non-refundable Membership Fee of $1,500.00.
(b) Broker also agrees to pay Red Carpet monthly
dues of $100.00 for the Broker and $40.00 for each additional Associate. An
Associate is defined as any licensed broker, salesperson or assistant who is
affiliated, directly or indirectly, with Broker, and/or who uses the marks or
programs of Red Carpet in any way. Within 5 days after an Associate becomes
affiliated with the Business, Broker must give written notice of such
affiliation to Red Carpet . Failure to report such affiliation within the 5
day period shall be considered a material default of this Agreement, and
Broker agrees to pay Red Carpet $250.00 per month for any and all new
Associates from the date of affiliation with Broker until Red Carpet receives
written notice hereunder. So long as Broker follows the reporting
requirements outlined in this Section, dues for a new Associate will commence
on the first month following the second full month of affiliation..
(c) Broker agrees to pay the dues each month and
authorizes Red Carpet to make a direct transfer of the dues from Broker's
bank account or designated credit card between the 20th and 25th day of each
month. Broker will sign the Authorization attached to this Agreement as
Schedule A and take any additional action that may be required by Broker's
bank to set up and maintain direct transfer bank authorization. Broker will
maintain sufficient funds in the designated bank account or sufficient credit
limits with the designated credit card at all times to allow timely honoring
of each transfer. No payments may be made from Broker's trust accounts.
(d) If any payment of dues is not received by Red
Carpet when due, Broker will pay a late payment fee for the additional
collection costs and pay interest on the delinquent amount at the highest rate
permitted by law until paid in full. The amount of the late payment fee will
be $25.00 if the full delinquent amount and late payment fee are received by
Red Carpet on or before the first day of the month following the date payment
was due, or $100.00 if received thereafter.
(e) Red Carpet, from time to time, intends to
offer additional services over and above those services included in the
Membership which may require additional fees. These services will be optional
and are not required to participate in the Membership.
Broker herein agrees to pay the sum of $100.00 on each closed
transaction unit to Red Carpet as a service fee. The fee shall become due and
payable immediately upon the closing of each closed unit. From this fee the
1
<PAGE>
Broker shall be reimbursed 30% of the fees collected for Red Carpet Real
Estate Service name and trademark promotion). Broker shall be entitled to
reimbursement only for months when Broker's closed units exceed four.
Reimbursements shall be made quarterly upon submission of advertising copy
accompanied by a paid invoice.
Broker shall be invoiced annually a fee of $295.00 for computer
services. Such fee is due and payable upon receipt of invoice.
3. GOOD STANDING: "Good Standing" means that Broker is current
with all payments owed to Red Carpet or its affiliates, remains fully
licensed and registered as set forth above in section C2(b), has not been
convicted of a felony and is in full compliance with Section 6(b) below and
all other requirements of this Agreement. Broker warrants that the Broker's
license submitted with Broker's Membership Application is in full force and
effect. Broker agrees to notify Red Carpet immediately of any suspension or
revocation of such license and to deliver to Red Carpet, immediately after
each license renewal, a true and correct copy of the renewed license.
4. USAGE OF MARKS: Broker agrees to use the Marks only in the ways
designated by Red Carpet. Broker will never use the Marks in a way which may
be in bad taste or inconsistent with the high quality reputation of the
Membership and its public image or tend to bring disparagement, ridicule, or
scorn upon the Marks, the Membership or its goodwill. Broker agrees that all
goodwill associated with the Marks and the Membership belong exclusively to
Red Carpet . Broker will never, during the term of this Agreement or
thereafter, directly or indirectly contest the validity, ownership or use of
the Marks by the Membership or the rights of Red Carpet to the Marks. Broker
acknowledges that the authority to use the Marks set forth in this Agreement
is not exclusive and that Red Carpet may grant similar authority or license
at its sole discretion to other brokers within and outside the trade area
covered by Broker. Broker further acknowledges that an affiliate of Red
Carpet has granted and will continue to grant franchise licenses for the
operation of franchised businesses under the name "Red Carpet Real Estate
Service" and agrees to cooperate with such franchisees and not interfere with
their business interests.
5. RELATIONSHIP. Broker is not and will not represent or hold
itself out as being an agent, legal representative, joint venturer, partner,
employee or servant of Red Carpet for any purpose. Broker is not authorized
to make any statement or to create any obligation, expressed or implied, on
behalf of Red Carpet or the Membership. Broker agrees to identify itself as
an independently owned and operated business when using any of Red Carpet's
trademarks or service marks. The parties intend that the relationship between
them is defined as an exemption by the Federal Trade Commission's Trade
Regulation Franchise Rule, 16 CFR 436.2(a)(3)(i),(h). Broker agrees that it
is not relying on Red Carpet or its expertise to operate the Business
successfully or make it profitable, or for significant assistance in its
methods of operation, including but not limited to, its business
organization, management, marketing plan, promotional activities, or business
affairs.
6. INDEMNIFICATION: (a) Broker will indemnify Red Carpet, its
parent and affiliates and its and their officers, directors, employees,
agents, affiliates, successors and assigns from and against any and all
claims in any way related to the operation of the Business or the property
where the business is operated and any and all fees (including reasonable
attorneys' fees), costs and other expenses incurred by or on behalf of Red
Carpet in the investigation of or defense against any such claim.
(b) Broker agrees to obtain within thirty (30) days after
the date of this Agreement and will continue to maintain in full force and
effect throughout the term of this Agreement, an insurance policy or policies
(the "Insurance") with the following protections: (i) General liability
insurance insuring the Business and its primary owners and managers against
any claims, losses or liabilities arising out of or in connection with the
operation of the Business and the ownership of property used in the Business
with minimum coverage of $200,000 per person, $500,000 per incident, and
$50,000 property damage; (ii) Errors and omissions coverage against any
customer claims, with minimum coverage of $1,000,000; and (iii) Vehicle
liability insurance for all vehicles used in the business with minimum
coverage of $100,000 per person and $300,000 per accident for bodily injury,
and $50,000 for property damage. Broker agrees to report all transactions to
its Errors and Omissions insurance provider as required by such policy.
Failure to report each and every transaction as required by such policy shall
be considered a material default of this Agreement. Broker agrees that Red
Carpet shall be named as an additional insured on the Insurance. Broker
agrees that it will not use the Marks until such insurance has been obtained
and Red Carpet has received a true and correct copy thereof as well as a
certificate of insurance showing compliance with the requirements of this
Agreement, stating that the insurance will not be canceled or altered without
at least thirty days (30) days prior written notice to Red Carpet.
(c) If Red Carpet has not received the above within thirty
(30) days after the date hereof, this Agreement shall be automatically
canceled, and a failure to maintain such insurance is a material default of
this Agreement. The Insurance must be written by a responsible insurance
company or companies satisfactory to Red Carpet. If Red Carpet fails to
enforce this requirement for whatever reason, it shall not be deemed in any
way to have waived its rights under this Section.
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7. PERSONAL CONTRACT. Broker agrees that a the primary reason that
Red Carpet is admitting Broker to the Membership is the personal confidence
it has in Broker and its management. No person will succeed to any of
Broker's rights under this Agreement by virtue of any voluntary or
involuntary proceeding in bankruptcy, receivership, attachment, execution,
assignment tor the benefit of creditors, other legal process or transfer not
expressly authorized by Red Carpet . Any attempt by Broker to transfer any of
its rights or interest under this Agreement without Red Carpet's
authorization will constitute a material breach of this Agreement, in which
case Red Carpet may terminate this Agreement immediately upon written notice
to Broker. Red Carpet will not be bound by an attempted transfer, by law or
otherwise, of any part or all of this Agreement unless Broker has received
Red Carpet 's prior written consent, which will not be unreasonably withheld.
Broker will pay Red Carpet a transfer fee of $1,000.00 with its request for a
consent to transfer, and must be in good standing at the time of such
request. In considering a request for transfer, Red Carpet will consider
qualifications, apparent ability and credit standing of the proposed
transferee as if he or she were a prospective direct purchaser of a
membership in the Membership.
8. COVENANT Broker expressly agrees during the term hereof: (a) to
maintain its good standing at all times, (b) to comply with the reporting
requirements of Sections 2(b), 3 and 6(b) of this Agreement, 6(c) to provide
full, true and accurate information as necessary, to maintain in full force
and effect the Insurance required by Section 6(b) above, and (d) to provide
at the Business at all times service which meets Red Carpet 's service
requirements as set forth from time to time in writing and sent to Broker.
Broker's failure to maintain any of its obligations under this Section 8
shall be considered a material default of its obligations hereunder.
9. Red Carpet may terminate this Agreement in full following thirty
(30) days written notice unless Broker has cured such default or failure
within such thirty day period. The parties agree that in such event, actual
damages to Red Carpet would be extremely difficult to ascertain, and
consequently broker agrees to pay Red Carpet as liquidated damages all dues
which would otherwise be required to be paid to Red Carpet during the six (6)
months following termination in addition to any payments due hereunder.
(b) Broker may terminate this Agreement without cause by
giving written notice to Red Carpet in the first six (6) months prior to
termination or by including with such notice full payment of all dues which
would be due hereunder during such six (6) month period, in which case the
termination shall be effective upon receipt of the notice and payment by Red
Carpet. In each case, Broker must be and remain current in all amounts
otherwise due under this Agreement for such notice to be effective.
(c) This Agreement will be automatically and immediately
terminated if a petition for bankruptcy, an arrangement for the benefit of
creditors or a petition for reorganization is filed by or against Broker, or
if Broker will make any assignment for the benefit of creditors, or if a
Receiver or Trustee is appointed for the Business, unless remedied to Red
Carpet's satisfaction within twenty (20) days.
(d) When this Agreement expires or terminates for any
reason, Broker must immediately discontinue the use of the Marks and return
all items bearing the Marks to Red Carpet, and remove all of the Marks from
the Business to Red Carpet 's satisfaction.
10. CONFIDENTIALITY: (a) Broker agrees that Red Carpet is the owner
of all rights in and to the system employed by the Membership, and that such
system contains trade secrets which are revealed to Broker in strictest
confidence. Broker agrees not to disclose, duplicate, license, sell or reveal
any portion of any confidential documents within the system to any other
person, except an employee or Associate of Broker required by his or her work
to be familiar with such information. Broker agrees to keep and respect all
confidential information received from Red Carpet, to obtain from each of
the Business's Associates an agreement to keep and respect all such
confidences and to be responsible for its compliance with such agreements.
(b) Neither Broker nor any Associate will, directly or
indirectly, engage in or have any interest whatsoever in any Similar Business
or provide services to a Similar Business without Red Carpet's prior written
consent. A "Similar Business" is any business which primarily involves
assisting in the sale of real property for a fee or commission.
(c) Broker agrees that any violation of this Section 10
would result in irreparable injury to Red Carpet and the Membership and that
Red Carpet would be without an adequate remedy at law. In the event of a
breach or threatened breach of this Section 10, Red Carpet will not be
required to prove actual or threatened damage in order to obtain a temporary
or permanent injunction or a decree for specific performance of these terms.
Red Carpet shall also be entitled to any other remedies which it may have at
law or in equity. Each of these covenants will be construed as independent of
each other and of any other provision of this Agreement. If all or any
opinion of this Section 10 is held unenforceable by a court having valid
jurisdiction in a final decision between the parties hereto and from which no
appeal has or may be taken, Broker expressly agrees to be bound by the
remaining portion of this Section.
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11. TRADEMARK INFRINGEMENT. If Broker refuses to comply with a
written notice of termination sent by Red Carpet and a court later upholds
such termination of this Agreement, any operation of the Business by Broker
using the Marks from and after the date of termination stated in such notice
will constitute trademark infringement by Broker, and Broker will be liable
to Red Carpet for damages resulting from such infringement, including,
without limitation, any profits made by Broker.
12. ARBITRATION: Except as set forth in this Section 12, any dispute
between the parties which involves this Agreement and cannot be resolved by
the parties themselves must be submitted to binding arbitration in accordance
with the rules of the American Arbitration Association applicable to
commercial arbitrations. Such arbitration will be held within the county
where Red Carpet executive headquarters are located ("the Home County"), and
judgment upon the decision of the arbitrator may be entered in any court
having jurisdiction over the matter. However, arbitration will not be used
for any dispute which involves Broker's continued usage of any of the Marks
or any issue involving injunctive relief against Broker, all of which issues
will be submitted initially to a court within the Home County. The parties
expressly consent to personal jurisdiction in the Home County as set forth
above and agree that such courts will have exclusive jurisdiction over any
such issues not subject to arbitration.
13. MISCELLANEOUS. (a) The expiration or earlier termination of this
Agreement will not discharge or release a party from any liability or
obligation then accrued or any liability or obligation continuing beyond or
arising out of the expiration or earlier termination of this Agreement,
including without limitation the indemnification requirement contained in
this Agreement. Whenever the consent of a party is sought or required
hereunder, such consent will not be unreasonably withheld. If any pan of this
Agreement is for any reason declared invalid, unenforceable or impaired in
any way the validity of the remaining paragraphs will not be affected
thereby, and such remaining portions will remain in full force and effect as
if this Agreement had been executed with such invalid opinion eliminated. It
is hereby declared the intention of the parties that they would have executed
the remaining portion of this Agreement without including therein any such
portions which might be declared invalid.
(b) If either party initiates any legal proceeding which
involves issues arising out of this Agreement, the prevailing party in such
action will be paid its reasonable attorneys' fees and costs by the other
party. The parties agree that the law of the state where the Business is
located will apply to the construction and enforcement of this Agreement and
govern all questions which arise with reference hereto.
(c) The headings inserted in this Agreement are for
reference purposes only and will not affect the construction of this
Agreement or limit the generality of any of its provisions. This Agreement
and the documents referred to herein constitute the entire agreement between
the parties and supersede and cancel any and all prior and contemporaneous
agreements, understandings, representations, inducements and statements, oral
or written, of the parties in connection with the subject matter hereof.
Except as expressly authorized herein, no amendment or modification of this
Agreement will be binding unless executed in writing by both parties. A
facsimile of a signed copy of this Agreement will be accepted as if it were a
signed original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
"Member Broker"
- --------------------------------------
Name of Company
By: By
----------------------------------- ---------------------------------
By
-----------------------------------
RED CARPET REAL ESTATE SERVICE
"Red Carpet"
By:
-----------------------------------
Authorized Officer
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This contract is not valid until signed by an Officer of Red Carpet Real Estate
Service
GUARANTY
Each undersigned Guarantor, jointly and severally, covenants,
promises to pay or cause to be paid all monies which become payable by Member
licensee under this Agreement Each Guarantor adopts each and every covenant
to be preformed by Member License and agrees with Licensor and Red Carpet
Real Estate Service to perform and observe all such covenants. Licensor
entering into this Agreement with Licensee constitutes consideration for this
Guaranty. The receipt an sufficiency of this consideration is acknowledged by
the signature of each Guarantor.
- ----------------------------------- ---------------------------------------
Name (Typed or Printed) Name (Typed or Printed)
WITNESS:
- ----------------------------------- ---------------------------------------
Signature Signature
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EXHIBIT 10.19
STOCK PURCHASE AGREEMENT
DATED SEPTEMBER 10, 1998
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of September 10, 1998, by
and between Aspen, Benson & May Investment Bankers LLC., a limited liability
corporation organized under the laws of the California ("LLC"), and HomeLife
Inc., a corporation organized under the laws of the State of Nevada ("HMLF").
LLC shareholders (collectively, the "Shareholders") desire to sell their
stock. LLC and its Shareholders may sometimes be collectively referred to
herein as "Shareholders" or "Selling Parties." HMLF is often referred to as
"Buyer."
RECITALS
A. Shareholders are the holders of all the outstanding shares of
equity securities of LLC (the "Shares").
B. Outstanding equity securities of LLC are 10,000 common shares as
of September 1, 1998.
C. 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 THERE FORE, in consideration of the mutual benefits to be
derived from this Agreement, the parties represent, warrant, and LLC as
follows:
AGREEMENT
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, LLC will become a wholly-owned
subsidiary of Buyer.
1.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for
all LLC Shares shall be considered the number of common shares of HomeLife,
Inc. according to the following formula:
a) Number of shares equal to total salary ( as defined in
1.2 (b)) divided by the average of the last closing bid price of the common
stock of HomeLife, Inc. as reported by the National Association of Securities
Dealers automated System (NASDAQ) on the last trading day of each month for
the period from September 1998 through December 1999.
b) Total Salary equal to an annual salary of $60,000 for
the period from September 10, 1998 through December 31, 1999, equal to 15 1/2
months, or $77,500.
1.3 PAYMENT OF PURCHASE PRICE. Calculation of purchase price shall
be done on January 3, 2000. Buyer's stock agent shall then notify
Shareholders that their HMLF stock has been entered into the transfer agent's
books and that certificates for such shares will be mailed, by certified
mail, within five (5) days from the transfer agent's office via certified
mail, to such addresses as Shareholders shall instruct.
SECTION 2. THE CLOSING
2.1 TIME AND PLACE. The Closing of the transaction contemplated by
this Agreement (the "Closing") shall occur at a time, date and place as the
parties hereto shall designate in writing. The Closing shall occur no later
than September 15, 1998.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES. LLC and its
Shareholders, jointly and severally, represent, warrant, and LLC as follows:
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3.1 ORGANIZATION AND STANDING OF LLC. LLC is a corporation duly
organized, validly existing, and in good standing under all laws of the
California and has full power and authority to carry on the business of LLC
as now conducted. LLC 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 LLC's
financial condition or results of operations.
3.2 AUTHORITY; CAPITALIZATION.
(a) The execution, delivery and performance of this
Agreement by LLC and the consummation by LLC of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
action on the part of LLC. 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 (100%) of the. issued and outstanding shares of LLC's equity
securities. All of the Shares, preferred, common or otherwise, have been duly
and validly issued, are fully paid and non-assessable, 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 LLC which provide for the
purchase, issuance, encumbrance or transfer of any additional shares of the
capital stock of LLC nor are there any outstanding securities granted or
issued by LLC that are convertible into any shares of the equity securities
of LLC. LLC does not have outstanding any bonds, debentures, notes or other
indebtedness the holders of which have the right to vote (or convertible or
exercisable into securities having the right to vote) with holders of LLC's
capital stock on any matter.
3.3 EFFECT OF AGREEMENT.
(a) 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. LLC 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.
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 LITIGATION. There is no litigation, actions, investigations,
arbitration, or other proceedings currently pending or threatened to which
LLC is, or will likely be, a party. LLC is not subject to any outstanding
order, writ, injunction, or decree of any court, government, governmental
authority or agency, or arbitration against it or affecting or relating to
its assets or business which could have a material adverse effect on such
assets or business.
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:
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4.1 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.
4.2 ORDERLY SALE OF SHARES. Shareholders agree that collectively
that Shareholders will not sell, transfer, or dispose of more than twenty
thousand (20000) shares within any 90 day period. Shareholders further agree
that Buyer will be first offered such shares for purchase, and in the event
that Buyer does not desire to purchase same, will allow Buyer to assist
appropriately in the orderly marketing, placement, re-registration, or sale
of such stock.
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 creditor's 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
other, (i) violate any provision of law, statute, rule, or regulation to
which Buyer may be subject; (ii) violate any judgment, order writ, or decree
of any court or other tribunal or any agency applicable to Buyer or its
properties; 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 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.
5.5 LISTING. The shares of common stock of Buyer are currently
traded on NASDAQ's Over-the-counter Bulletin Board. Buyer makes no
representations or warranties regarding obtaining a listing of its securities
on any other stock exchange.
SECTION 6. CERTAIN COVENANTS AND AGREEMENTS.
6.1 CONDUCT OF LLC PRIOR TO CLOSING. From the date hereof and until
the Closing Date, LLC shall:
(a) Operate its business only in the usual and ordinary
course and consistent with LLC's current practice, and not purchase, sell,
lease, transfer, encumber or dispose of any assets except in the ordinary
course of business and with notice of same to Buyer; and
(b) Use its best efforts to preserve LLC's present
organization and goodwill intact, including the present business
relationships and goodwill with customers, suppliers, and other who have
dealings with LLC; and
(c) Pay all costs, expenses, liabilities, and capital
expenditures of LLC relating to its business in the ordinary course when due;
and
(d) Provide Buyer and its employees, counsel, accountants, and
advisors with full access
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upon reasonable notice during normal business hours to all of the properties,
personnel, financial and operating data, books, contract, and records of LLC
in connection with Buyer's review of LLC 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 LLC's business and assets.
6.2 NONCOMPETE AGREEMENT. Subject to the terms and conditions of the
attached Work for Hire Agreement (Exhibit A), 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 than one (1%) percent 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/her name by, or be connected in any manner with any business activity
within the United States which is competitive with any aspect of the business
of LLC so long as LLC carries on such business, whether under its current
name or otherwise. 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
this paragraph because, taken together, they cover too extensive a geographic
area, it is intended that those of such covenants which, if eliminated, would
permit the court to enforce the remaining separate covenants to be enforced
in such proceeding, and 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 herein 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 CONTINUED RELATIONSHIP. William Slivka agrees to associate with
LLC, or its successor or assigns, for the period of September 10, 1998
through December 31, 1999 in accordance with and upon the terms and
conditions stated in a mutually agreeable Work for Hire Agreement, attached
to this Agreement as Appendix C and incorporated herein by reference. During
the term of such Work for Hire Agreement, William Slivka shall have office
locations suitable to their duties in San Rafael California or such other
locations as deemed necessary.
SECTION 7. INDEMNIFICATION.
7.1 BUYER'S INDEMNIFICATION. Buyer shall indemnify, defend and hold
harmless the Shareholders and LLC, 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 arises, results from or
relates to:
(a) the operation of LLC's business or corporation on or
after the Closing
(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 LLC'S INDEMNIFICATION. LLC 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
related to:
(a) The operation of the business of LLC in which the
principal events giving rise thereto substantially occurred prior to the
Closing or which result from or arise out of any action or inaction prior to
the Closing of the Shareholders, LLC or any director, officer, employee,
agent, representative or subcontractor of LLC; and
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(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 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 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 LLC and the Shareholders 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. 1 (a) and (b) have been
satisfied or waived;
(d) Buyer shall have completed a due diligence examination
relating to LLC, 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 LLC notice of its satisfaction; and
(e) There shall have occurred no material adverse change in
the business or financial condition of LLC from that disclosed in the
Financial Report 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; and
(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.
5
<PAGE>
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: (i) by mutual consent of Buyer and Selling Parties, or
(ii) by Buyer or Selling Parties if the conditions set for in Section 8 shall
not have been satisfied on or prior to Closing, or (iii) by Buyer if Buyer is
not satisfied in its sole discretion with the results of the due diligence
investigation, or (iv) 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
material and adversely affect the benefits to be derived by Buyer from the
transaction contemplated hereby, or (v) by Buyer and Selling Parties if the
Closing shall not have been consummated on or before September 12, 1998 (or
agreed upon extensions thereto), 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.
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 become (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 the 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, 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 facsimile, 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: Mr. Andrew Cimerman, Chairman
6
<PAGE>
If to LLC, to the following: Aspen, Benson, & May Investment Bankers, LLC
125 Larkspur Avenue Suite 202
San Rafael, California 94901
Attention: William Slivka
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 and all other costs. Specifically, if this transaction does
not close, without the fault of either party, then expenses of each party
shall be their own costs.
9.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of California, 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. At his/her 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 other-wise 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.
9.8 HEADING. 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 the
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 or LLC
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 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.
9.14 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
7
<PAGE>
order to effectuate the purposes of this Agreement and to consummate the
transactions contemplated hereby.
9.15 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.
10. BOARD OF DIRECTOR'S APPROVAL. This agreement is subject to the
approval of the Board of Director's of HomeLife, Inc.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of the date first written above.
Aspen, Benson & May Investment Bankers, LLC
a California limited Liability Corporation
By: /s/ William Slivka
------------------------------------------
William Slivka
HomeLife, Inc., a Nevada Corporation
By: /s/ Andrew Cimerman
---------------------------------
Andrew Cimerman
8
<PAGE>
EXHIBIT 10.20
EMPLOYMENT AGREEMENT BETWEEN
HOMELIFE, INC. AND ANDREW CIMERMAN
<PAGE>
EMPLOYMENT AGREEMENT
This employment agreement (the "Agreement") is made effective as of
October 25, 1995 (the "Effective Date"), by and between HomeLife, Inc. (the
"Employer") with head offices located at 4100 Newport Place, Suite 730,
Newport Beach, CA 92660 and Andrew Cimerman (the "Employee").
Recitals
WHEREAS the Employer is desirous of employing the Employee upon the
following terms and conditions;
AND WHEREAS the Employee has agreed to enter into the employment of
the Employer and for other good and valuable consideration, the parties
hereto agree as follows;
AGREEMENT
A. EMPLOYMENT OF EMPLOYEE
1. TERM OF AGREEMENT. This relationship shall be established for a
period of give (5) years, with option for a additional five year period at
the sole option of the Employee. Nothing precludes Employer or Employee from
extending or modifying this Agreement subsequently in a mutually agreeable
contract, signed by those parties at a future date.
2. RUNNING THE BUSINESS. The Employee acknowledges that his primary
responsibility is the running of the Business. The Employee shall receive
directions from and carry out the instructions of the Board of Directors.
3. DIRECTION OF THE BOARD OF DIRECTORS. The Employee shall abide by the
decisions and take direction from the Board of Directors.
B. EMPLOYMENT PRACTICES
1. INDEMNIFICATION. The Employee shall indemnify and save the Employer
harmless from and against all losses, costs, charges, damages and expenses
which the Employer may at any time sustain or suffer on account of the
misconduct, negligence, misrepresentation, dishonesty or default of the
Employee.
2. EMPLOYEE LIABILITY. Where, under the terms of this Agreement, the
Employee shall have no liability to the Employer beyond those incurred in the
his normal course of work.
C. VACATION SICKNESS
1. VACATION. The Employee shall be entitled to such vacation as he
determines.
2. SICKNESS. If the Employee shall be entitled to such sick days as he
determines.
D. REMUNERATION
1. REMUNERATION. The Employee shall be paid remunerated according to
Schedule A.
2. INCURRING EXPENSES. The Employer herein agrees and acknowledges that
the Employee will incur expenses directly relating to the performance of his
duties, ie: motor vehicle, cellular telephone, pager entertainment, personal
computer and home office, and herein agrees to reimburse the Employee for
these expenses.
1
<PAGE>
E. TERMINATION
1. TERMINATION OF EMPLOYEE. Employee may not terminate this Agreement
without cause. Employee may terminate this Agreement immediately with cause.
For purposes of this Agreement, "cause" for termination by Employee shall be:
(a) a breach by Employer of any material covenant or obligation hereunder,
not cured after sixty (60) day notice to Employer; (b) the voluntary or
involuntary dissolution of Employer; or (c) any merger or consolidation in
which Employer is not the surviving or resulting corporation.
2. TERMINATION BY EMPLOYER. Employer may not terminate this Agreement
without cause. Employer may terminate this Agreement for cause at any time
without notice. For purposes of this Agreement, the term "cause" shall be:
(a) any felonious conduct or material fraud by Employee in connection with
Employer or otherwise; (b) any embezzlement or misappropriation of funds or
property of Employer by Employee; (c) any material of or material failure to
perform any covenant or obligation under this Agreement; (d) gross negligence
by Employee; (e) the consistent refusal by Employee to perform his material
duties and obligations hereunder; or (f) Employee's willful and intentional
misconduct in the performance of his material duties and obligations, in each
case after written thirty (30) notice to Employee specifying the cause for
termination, and in the case of the causes described in (c) and (e) above,
the passage of not less than thirty (30) days after receipt of such notice,
during which time shall have the right to respond to Employer's notice and
cure the breach of other event giving rise to the termination. In the event
that Employee is able to cure, this Agreement shall continue in full force
and effect. The termination of a particular Employee shall not necessarily
have any impact on other Employees in compliance with this Agreement.
3. CLAIM FOR DAMAGES. Upon any termination of the Employee in
accordance with the terms of this Agreement, the Employee shall have no claim
against the Employer for damages or otherwise and the Employer has no further
obligation or liability to the Employee except to pay him for such services
as may have been performed up to the date of termination of this Agreement as
provided herein to be paid within two (2) weeks together with unearned
vacation pay and severance pay in accordance with the Employment Standards
Act.
4. RETURN OF INFORMATION. On the day of the termination of the
Employee's employment, the Employee shall return to the Employer all copies
of any forms or sales literature or other information acquired by or loaned
to the Employee while employed by the Employer.
F. GENERAL
1. TERMINATION OF ORAL AGREEMENTS. Any and all previous agreements,
written or oral, between the parties hereto or on their behalf relating to
the employment of the Employee by the Employer are hereby terminated and
canceled and each of the parties hereto hereby releases and forever
discharges the other party hereto of and from all manner of actions, causes
of action, claims and demands whatsoever under or in respect of any such
agreement.
2. NOTICE. Any notice, Payment or other delivery to be given or made
hereunder shall be sufficiently made if in writing and mailed by prepaid
registered post or delivered to the party to whom it is addressed as follows:
If the Employer:
HomeLife, Inc.
4100 Newport Place, Suite 730
Newport Beach, CA 92660
If the Employer:
Any notice, payment or delivery so given or made shall be deemed to have been
given or made on the day of delivery or, if mailed, on the second business
day following the date of mailing.
3. ENTIRE AGREEMENT. The Employer and the Employee agree that this is
the entire Agreement (together with Schedules A hereto) between the parties
hereto and there are no other terms, conditions, representations, collateral
2
<PAGE>
agreements or otherwise relating to the same.
4. SEVERABILITY. In the event that any covenant, provision or term of
this Agreement is determined by any competent tribunal to be void or
unenforceable in whole or in part, then the Agreement shall not fail but the
covenant, provision or term shall be deemed to be severable from the
remainder of this Agreement which shall remain and continue in full force and
effect.
5. INTERPRETATION. The headings set forth in this Agreement are for
convenience of reference only and shall not effect the interpretation hereof.
6. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the law of the State of California int he United States of
America, and shall be treated in all respects as a California contract.
7. ENURE OF BENEFITS. The provisions hereof, where the context permits,
shall enure to the benefit of and be binding upon the heirs, executors,
administrators, and legal personal representatives of the Employee and the
successors and assigns of the Employer respectively.
When the context so requires or permits the masculine gender should be read
as if the feminine were expressed.
8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts by Employees, each of which shall be deemed an original, but all
of which together constitute one and the same instrument.
9. MODIFICATION. No change, modification, addition, or amendment to
this Agreement shall be valid unless in a writing signed by all the parties
hereto.
10. SEVERABILITY. In 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 Agreement is invalid or unenforceable, but that by limiting such
provision it would become valid and enforceable, then such provision shall be
deemed to be written, construed, and enforced as so limited.
11. REPRESENTATION. Due tot he complexities of this Agreement,
Employees have been advised to seek the services of competent
solicitor/attorney counsel; and the signing of this Agreement and each of
them.
12. ATTORNEY'S FEES. Except as otherwise provided herein, if a dispute
should arise between the parties, including but not limited to arbitration,
the prevailing party shall be reimbursed by the non-prevailing party for all
reasonable expenses incurred in resolving such dispute, including reasonable
attorney's fees exclusive of such amount of attorney's fees as shall be a
premium for result or for risk of loss under a contingency fee arrangement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement on
the ____ day of ______________ 1995.
Employee Employer
/s/ Andrew Cimerman /s/ Andrew Cimerman
- ---------------------------- ----------------------------
Andrew Cimerman HomeLife, Inc.
3
<PAGE>
APPENDIX A
The Employer shall remunerate the Employee according to the following schedule.
1) If the bid price for the common stock of HomeLife, Inc. is above $4.00
per share every trading day for a period of 3 calendar months, the Employee
shall receive a salary of $100,000 per year paid semi-monthly.
2) If a bid price for the common stock of HomeLife, Inc. is above $5.00 per
share every trading day for a period of 3 calendar months, the Employee shall
receive a salary of $200.00 per year paid semi-monthly.
3) If the bid price for the common stock of HomeLife, Inc. is above $6.00
per share every trading day for a period of 3 calendar months, the Employee
shall receive a salary of $300,000 per year paid semi-monthly.
4) The Board of Directors can award a bonus to the Employee at any time at
its own discretion.
5) In addition to Salary, Employee shall receive fringe benefits
commensurate with the amount of the salary.
4
<PAGE>
EXHIBIT 10.21
TRADEMARK LICENSING AGREEMENT BETWEEN
HOMELIFE, INC. AND JEROME'S MAGIC WORLD, INC.
<PAGE>
TRADEMARK LICENSING AGREEMENT
This trademark licensing agreement is between HomeLife, Inc. ("HomeLife")
4100 Newport Place, Suite 730, Newport Beach, CA 92660, and Jerome's Magic
World, Inc. ("Jerome") 4100 Newport Place, Suite 730, Newport Beach, CA 92660.
WHEREAS HomeLife wishes to license certain trademarks from by
Jerome, and Jerome agrees to license certain trademarks to HomeLife, Jerome
states the terms under which it is willing to license the trademarks to
HomeLife.
TERMS OF THE LICENSING AGREEMENT
1) The trademarks to be licensed are "King D List", "Crok 'N Roll", "Waz",
"Jerome". "Rockhead", "Jerome the Gnome", "Ralph the Elf and Gerome the
Gnome", "GnomeLife", "GnomeLife HL", and "Jerome HL".
2) The term of this agreement shall be for the eight years commencing on
the date of this agreement.
3) There shall be no cost to HomeLife for the licensing of these
trademarks during the term of this agreement. Thereafter, Jerome may
renew the license at the fair market value, to be determined by
HomeLife and Jerome.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement on the 30th
day of October 1995.
HomeLife, Inc. Jerome's Magic World, Inc.
/s/ Andrew Cimerman /s/ Andrew Cimerman
- ---------------------------- ----------------------------
Andrew Cimerman Andrew Cimerman
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated January 20TH, 1999, by and between
HomeLife Higher Standards, an Alberta Corporation (hereinafter referred to as
"Seller"), and HomeLife Builders Realty, Inc. an Alberta Corporation
(hereinafter referred to as "Buyer").
RECITALS
Seller maintains a real estate office in the City of Calgary, Province
of Alberta Seller operates this office pursuant to an Area Franchise
Agreement, allowing Seller to conduct business as a licensed franchised
office. Seller desires to sell certain assets to Buyer and to cease Sellers
real estate brokerage operation at this location.
Buyer maintains a real estate office in the City of Calgary, Province of
Alberta Buyer operates this office as a licensed franchised real estate
office. Buyer wishes to purchase certain of Seller's assets to enhance
Buyer's business operations and office size.
NOW THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement, both Seller and Buyer represent, warrant, and agree as
follows:
1. PURCHASE AND SALE. At Closing, Seller will sell and assign all
right, title, and contractual interest of Seller in and to the
following assets of Seller"
"All Seller's rights to it's sales agents and brokers related
to any contractual employment or independent contractor
agreements existent between itself and such personnel."
<PAGE>
2. TRANSFER OF LICENSES. At Closing, Seller will resign as "Agent of
record" for its sales personnel, and will endorse and recommend to
its personnel that they accept as new "Agent of record" Buyer's
"Agent of record".
3. BUYER'S MANAGEMENT. Buyer represents that Buyer will hire Ms.
Elaine Tudor in a position entitled "Assistant Manager" at a salary
of $2000.00 CDN per month, with mutually agreed upon goals and work
duties.
4. ASSUMPTION OF LIABILITIES. Except as hereinafter expressly
provided, Buyer shall assume no liabilities or obligations related
to the Assets purchased or for Seller's business; it being
expressly acknowledged and agreed between Seller's and Buyer that
all such liabilities and obligation, shall be and remain Seller's
own liability and obligation. Notwithstanding the foregoing
limitation, Buyer agrees to assume at the Closing, Seller's "going
forward" obligation under and in accordance with the Employment
Contracts which are assigned to Buyer as of the Closing date.
These contracts and agreements, when reaffirmed and ratified by and
between each sales agent and Buyer's "Agent of Record" shall
collectively be considered "Buyer's Assumed Liabilities." All
Seller's representations shall survive closing. It is also
understood that Buyer cannot change existing contracts.
5. PURCHASE PRICE. The purchase price for the Assets shall consist of
a series of 15 installment payments, (a schedule of which is
attached and hereby incorporated into this Agreement by reference)
representing a total sum of $62,000.00 CDN; subject to certain
terms and conditions, and payable in a series of installments
without additional interest charges. Payments first
<PAGE>
become due that latter of thirty (30) days after Closing or
3-15-99. Payments are to be made monthly by the 15th of each
succeeding month, for 14 months at $4,000.00 CDN and a fifteenth
payment of $6,000.00 CDN, whith a five day late grace period.
Buyer shall have the right for prepayment at any time without
notice, or penalty charge.
6. SELLER'S WARRANTIES.
A. Seller represents that as of the date of this Agreement,
that Seller maintains a licensed personnel force of 39
licensed sales personnel. Seller shall provide a
comprehensive roster of its agents, including names, home
addresses, telephone numbers, payment programs, and gross
and net sales commission earned for the year 1998 and 1999
year-to-date, as well as copies of all employment contracts
and agreements at least five (5) days prior to Closing.
B. Seller represents and guarantees that no less than 25 of its
licensed sales personnel will immediately accept employment
by Buyer and transfer their licenses to Buyer's organization
for a guaranteed minimum period of no less than 48 hours.
It is understood that all licenses will be transferred and
business cards and signs will be prepared prior to
announcement.
C. That Seller will reduce the Purchase Price of the Assets by
a total of $3000.00 CDN for each shortage of licensed agents
under the minimum total of 25. It is understood that this
will not change the $4000.00 CDN monthly fees being paid.
However, the amount owed by Buyer will be reduced
accordingly.
D. That Seller will use its best efforts and influence to aid
Buyer in presenting and promoting Buyer's capabilities and
organization.
E. Seller shall transfer all of its current listings to Buyer
as of the day following Closing Date.
F. Seller may not change any of Seller's personnel pay
agreements from the date of signing this Agreement to the
Closing Date.
G. Seller is responsible for crediting sales personnel for
required new business cards to switch over to Buyer's
organization, to a maximum of $60.00 (all-inclusive) per
salesperson.
H. Seller shall at all times remain solely responsible for the
shutdown and termination of it's sales office.
I. Seller shall provide to Buyer at least five (5) days prior
to Closing, a summary of it's gross sales for 1998; which
summary shall disclose all sales splits between Seller and
Seller's sales personnel (including all related management
fees and expenses) and Seller's gross revenue figures for
the year of 1998.
<PAGE>
7. BUYER'S WARRANTIES.
A. Buyer shall be responsible for providing adequate "For
Sale" signs to switch over a Buyer's organization.
B. Buyer shall be responsible for any license transfer fees
required by any Provincial licensing agency required of the
transferring sales personnel.
8. THE CLOSING DATE. The closing of the transaction 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 February 15, 1999. This agreement is subject to all
documentation and contracts being finalized to the Sellers approval
on or before February 1, 1999. Unless notice of disapproval is
provided Buyer on or before February 1, 1999, this condition shall
be deemed waived. For the first month, the salesperson's monthly
office fees and franchise fees will be waived to ensure that there
is additional motivation for them to move over.
9. LITIGATION OR DISPUTES WITH SALES PERSONNEL. Seller shall disclose
all litigation or proceedings either pending or threatened against
or relating to Seller's company or business dealings in any
judicial, quasi-judicial, or administrative forum; further, Seller
does not know or have reasonable grounds to know any basis for any
such action without exception.
10. SELLER CONDUCT OF BUSINESS PENDING CLOSING DATE. Seller will not
increase or offer to increase the compensation payable by Seller to
any employee or agent, nor will any bonus payment or arrangement be
made by Seller to or with any of its management, employees,
independent contractors, or sales agents or personnel.
<PAGE>
11. AUTHORITY OF BUYER'S BOARD OF DIRECTORS. Buyer shall submit an
xecuted copy of this Agreement to its Board of Directors for
pproval. Acceptance of this Agreement is expressly conditional
upon ajority approval of such Board. Unless notice of disapproval
is rovided Seller on or before February 1, 1999, this condition
shall be eemed waived.
12. AMENDMENT. This Agreement shall not be amended, altered, or
terminated except by a writing executed by both Buyer and Seller.
13. GOVERNING LAW. This Agreement shall be governed in all respect and
at all times by the laws of the Province of Alberta.
IN WITNESS WHEREOF, authorized representatives of Buyer and Seller have
executed and delivered this Agreement as of the date first above written.
For Seller, HomeLife Higher Standards
By:_____________________________
Print Name:______________________
Its:_____________________________
For Buyer, HomeLife Builders Realty, Inc.
By:_____________________________
Print Name:______________________
Its:_____________________________
<PAGE>
SCHEDULE OF PAYMENTS
PER JANUARY________, 1999 ASSET PURCHASE AGREEMENT
BETWEEN HOMELIFE HIGHER STANDARDS AND HOMELIFE BUILDES REATLY, INC.
<TABLE>
<CAPTION>
PAYMENT AMOUNT DUE DATE
<S> <C> <C>
(1) $4000.00
(2) $4000.00
(3) $4000.00
(4) $4000.00
(5) $4000.00
(6) $4000.00
(7) $4000.00
(8) $4000.00
(9) $4000.00
(10) $4000.00
(11) $4000.00
(12) $4000.00
(13) $4000.00
(14) $4000.00.
(15) $6000.00
TOTALS: $62000.00
</TABLE>
<PAGE>
EXHIBIT 10.23
ACQUISITION AGREEMENT
BY AND BETWEEN
BRIGHT FINANCIAL CORPORATION
AND
MAXAMERICA FINANCIAL SERVICES, INC.
<PAGE>
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT ("Agreement"), dated as of August _____ 1999, is by
and between Bright Financial Corporation ("BRIGHT") Thomas Jarboe ("Jarboe"), an
Individual, Kemper Elliot ("Elliot") an individual, and MaxAmerica Financial
Services, Inc., a California corporation ("MAXAMERICA"). Jarboe and Elliot will
sometimes be referred to collectively as "Shareholders."
RECITALS
A. Shareholders own 100% of the issued and outstanding capital stock of
BRIGHT (the "Bright Shares").
B. Upon the terms and conditions set forth below, Shareholders desire to
sell to MAXAMERICA, and MAXAMERICA is willing to purchase from Shareholders, 60%
of the BRIGHT Shares, such that following such transaction, BRIGHT will be a
subsidiary of MAXAMERICA.
C. MAXAMERICA is a wholly owned subsidiary of HomeLife, Inc. a Nevada
corporation ("HomeLife").
D BRIGHT is doing business as Vintage Funding, Inc and Best Mortgage.
The operations of both dba's shall be included in this acquisition.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
ARTICLE I
SALE AND ISSUANCE OF SHARES AND OTHER TERMS
1.1 PURCHASE PRICE. The purchase price shall be $600,000, paid for with
one-thousand-two-hundred (1,200) shares of Class AAA Preferred Stock of
HomeLife, Inc. These shares of Class AAA Preferred Stock shall have a face value
of $500 per share and be convertible into one-hundred-twenty-thousand (120,000)
shares of the common stock of HomeLife, Inc. after a period of 36 months form
the date of issue.
1.2 GUARANTEE OF VALUE. After conversion of the Class AA Preferred Stock
to common stock, HomeLIfe, Inc. will guarantee the value of the common shares at
a price of five dollars ($5.00) per share. If the market price per share of
HomeLIfe, Inc.'s common stock is less than five dollars ($5.00) per share upon
the sale of the stock by Shareholders, HomeLife, Inc. shall promptly issue to
Shareholders such additional shares of HomeLife Inc.'s common stock which
together with the initial shares shall have an aggregate market value equal to
five dollars ($5.00) times the amount of the initial shares.
1.3 CONVERSION OF PREFERRED STOCK. The value of each share of HomeLife,
Inc.'s common stock, for the purposes of conversion as described in paragraphs
1.1 and 1.2, shall be the average of the bid and ask price for the thirty days
prior to conversion.
1.4 ORDERLY SALE OF SHARES. After conversion of Preferred Stock to Common
Stock, Shareholders agree that collectively that Shareholders will not sell,
transfer, or dispose of more than twenty thousand (15,000) shares of common
stock within any 30 day period. Shareholders further agree that Buyer will be
first offered such shares for purchase, and in the event that Buyer does not
desire to purchase same, will allow Buyer to assist appropriately in the orderly
marketing, placement, re-registration, or sale of such stock.
1.5 CONVEYANCE OF BRIGHT SHARES. At Closing of this Agreement,
Shareholders will sell, assign, transfer and convey their respective right,
title and interest in 3,000 Bright Shares to MAXAMERICA, and MAXAMERICA shall
acquire 3,000 Bright Shares from the Shareholders. These 3,000 Bright Shares
represent 60% of the outstanding and issued shares of BRIGHT as of the date of
this Agreement.
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1.6 GUARANTEE OF PROFITS. Shareholders will guarantee that the net profit
of BRIGHT will be a minimum of $70,000 per year for the next three years. If the
net profit is less than $70,000 per year in any year for the next three years,
the purchase price will be reduced and recalculated according to the following
formula: ($600,000 / 3 x net profit / $70,000) for each year in which the net
profit is less than $70,000.
1.7 EMPLOYMENT AGREEMENT. MAXAMERICA will enter into employment agreement
with Jarboe and Elliot in the form attached hereto as Exhibit "B" ("Employment
Agreement").
1.8 EXCLUSIVE GEOGRAPHICAL RIGHTS. BRIGHT shall the exclusive right of
first refusal to underwrite any mortgage loan referred to MAXAMERICA from its
franchise operations or any other source in Southern California, defined as the
area south of San Luis Obisbo, California. MAXAMERICA and HomeLife, Inc., or any
of its subsidiary companies, agree not to purchase a loan brokerage company in
Southern California without the express written permission of Shareholders.
1.9 RIGHT OF FIRST REFUSAL. MAXAMERICA shall be offered the fight of first
refusal to purchase any or all of the remaining common stock of BRIGHT if this
stock is offered for sale by Shareholders to any third party.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS - Except as
disclosed in a document referring specifically to the representations and
warranties in this Agreement that identifies by section number the section and
subsection to which such disclosure relates and is delivered by Shareholders to
MAXAMERICA prior to the execution of this Agreement Exhibit "C" (the "BRIGHT
Disclosure Schedule"), the Shareholders each represent and warrant to
MAXAMERICA, as of the date hereof and as of the Closing, as follows:
2.1.1 ORGANIZATION. STANDING. POWER. BRIGHT is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. It has all requisite corporate power, franchises, licenses, permits
and authority to own its properties and assets and to carry on its business as
it has been and is being conducted. BRIGHT is duly qualified and in good
standing to do business in each jurisdiction in which a failure to so qualify
would have a Material Adverse Effect (as defined below) on BRIGHT. For purposes
of this Agreement, the term "Material Adverse Effect" means any change or effect
that, individually or when taken together with all other such changes or effects
which have occurred prior to the date of determination of the occurrence of the
Material Adverse Effect, is or is reasonably likely to be materially adverse to
the business, assets (including intangible assets), financial condition or
results of operations of the entity.
2.1.2 AUTHORITY. Shareholders have all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by Shareholders of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of Shareholders, including the approval of
the Board of Directors of BRIGHT. This Agreement has been duly executed and
delivered by Shareholders and constitutes a valid and binding obligation of the
Shareholders enforceable in accordance with its terms, except that such
enforceability may be subject to (i) bankruptcy, insolvency, reorganization or
other similar laws relating to enforcement of creditors' rights generally, and
(ii) general equitable principles. Subject to the satisfaction of the conditions
set forth in Article 3 below, the execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby will not,
conflict with or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or the creation of a lien, pledge, security interest, charge or other
encumbrance on any assets of BRIGHT or any Shareholder (any such conflict,
violation, default, right, loss or creation being referred to herein as a
"Violation") pursuant to (i) any provision of the organization documents of any
Shareholder, or (ii) any loan or credit agreement, note, bond, mortgage,
indenture, contract, lease, or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to or Shareholders' respective
properties or assets, other than, in the case of (ii), any such Violation which
individually or in the aggregate would not have a Material Adverse Effect on
Shareholders.
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2.1.3 CAPITALIZATION OF BRIGHT.
(a) The authorized equity securities of BRIGHT consists of
one-hundred-thousand (100,000) authorized shares and five-thousand (5,000)
issued and outstanding shares of BRIGHT common stock The issued and
outstanding shares of which are held by the Shareholders in the amounts as
specified on the BRIGHT Disclosure Schedule.
(b) All of the issued and outstanding Bright Shares have been duly and
validly issued, are fully paid and non-assessable, and were issued in accordance
with the registration or qualification provisions of the Securities Act of 1933,
as amended (the "Securities Act"), and any relevant state securities laws or
pursuant to valid exemptions therefrom. The Bright Shares are free of
restrictions on transfer other than restrictions on transfer as set forth in the
BRIGHT Disclosure Schedule and under applicable state and federal securities
laws.
(c) Except as set forth on the BRIGHT Disclosure Schedule, there are
no options, warrants, rights, calls, commitments, plans, contracts or other
agreements of any character granted or issued by BRIGHT which provide for the
purchase, issuance or transfer of any additional shares of the capital stock of
BRIGHT nor are there any outstanding securities granted or issued by BRIGHT that
are convertible into any shares of the equity securities of BRIGHT, and none is
authorized. BRIGHT does not have outstanding any bonds, debentures, notes or
other indebtedness the holders of which have the right to vote (or convertible
or exercisable into securities having the right to vote) with holders of BRIGHT
capital stock on any matter.
(d) Except as set forth on the BRIGHT Disclosure Schedule, BRIGHT is
not a party or subject to any agreement or understanding, and, to the best of
BRIGHT's knowledge, there is no agreement or understanding between any persons
and/or entities, which affects or relates to the voting or giving of written
consents with respect to any security or by a director of BRIGHT.
(e) Except as set forth on the BRIGHT Disclosure Schedule, BRIGHT has
not granted or agreed to grant any registration rights, including piggyback
rights, to any person or entity.
2.1.4 NO DEFAULTS. BRIGHT is not, and has not received notice that it
would be with the passage of time, in default or violation of any term,
condition or provision of (i) the Articles of Incorporation or Bylaws of BRIGHT,
(ii) any judgment, decree or order applicable to BRIGHT, or (iii) any loan or
credit agreement, note, bond, mortgage, indenture, contract, agreement, lease,
license, or other instrument to which BRIGHT is now a party or by which it or
any of its properties or assets may be bound, except for defaults and violations
which, individually or in the aggregate, would not have a Material Adverse
Effect on BRIGHT.
2.1.5 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of or registration, qualification, designation, declaration or
filing with or exemption by (collectively "Consents"), any court, administrative
agency or commission or other federal, state or local governmental authority or
instrumentality, whether domestic or foreign (each a "Governmental Entity"), is
required by or with respect to BRIGHT in connection with the execution and
delivery of this Agreement or the consummation by BRIGHT of the transactions
contemplated hereby, except for such Consents which if not obtained or made
would not have a Material Adverse Effect on BRIGHT or the transactions
contemplated by this Agreement.
2.1.6 FINANCIAL STATEMENTS. BRIGHT has furnished MAXAMERICA with a
true and complete copy of its audited financial statements for the period ending
December 31, 1998 (the "BRIGHT Financial Statements"), which comply as to form
in all material respects with all applicable accounting requirements with
respect thereto and have been prepared internally and fairly present the
financial position of BRIGHT as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
audited statements, to normal, recurring audit adjustments not material in scope
or amount). There has been no change in BRIGHT's accounting policies or the
methods of making accounting estimates or changes in estimates that are material
to BRIGHT Financial Statements, except as described in the notes thereto. BRIGHT
will also provide to MAXAMERICA a HUD (Department of Housing and Urban
Development) audit for the period ending December 31, 1998 and December 31,
1997.
2.1.7 ABSENCE OF UNDISCLOSED LIABILITIES. BRIGHT has no liabilities or
obligations (whether absolute, accrued or contingent) except (i) liabilities
that are accrued or reserved against in the BRIGHT Financial
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Statements as of December 31, 1998 or reflected in the notes thereto or (ii)
additional liabilities reserved against since December 31, 1998 that have
arisen in the ordinary course of business; are accrued or reserved against on
the books and records of BRIGHT; and amount in the aggregate to less than
$10,000.
2.1.8 ABSENCE OF CHANGES. Since December 31, 1998 and until closing of
this agreement, BRIGHT has conducted its business in the ordinary course and
there has not been: (i) any Material Adverse Effect on the business, financial
condition, liabilities, or assets of BRIGHT or any development or combination of
developments of which management of BRIGHT has knowledge which is reasonably
likely to result in such an effect; (ii) any damage, destruction or loss,
whether or not covered by insurance, having a Material Adverse Effect on BRIGHT;
(iii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock, or property) with respect to the capital
stock of BRIGHT; (iv) any increase or change in the compensation or benefits
payable or to become payable by BRIGHT to any of its employees, except in the
ordinary course of business consistent with past practice; (v) any sale, lease,
assignment, disposition, or abandonment of a material amount of property of
BRIGHT, except in the ordinary course of business; (vi) any increase or
modification in any bonus, pension, insurance or other employee benefit plan,
payment or arrangement made to, for, or with any of its employees; (vii) the
granting of stock options, restricted stock awards, stock bonuses, stock
appreciation rights and similar equity based awards; (viii) any resignation or
termination of employment of any officer of BRIGHT; and BRIGHT, to the best of
its knowledge, does not know of the impending resignation or termination of
employment of any such officer; (ix) any merger or consolidation with another
entity, or acquisition of assets from another entity except in the ordinary
course of business; (x) any loan or advance by BRIGHT to any person or entity,
or guaranty by BRIGHT of any loan or advance; (xi) any amendment or termination
of any contract, agreement, or license to which BRIGHT is a party, except in the
ordinary course of business; (xii) any mortgage, pledge, or other encumbrance of
any asset of BRIGHT; (xiii) any waiver or release of any right or claim of
BRIGHT, except in the ordinary course of business; (xiv) any write off as
uncollectible any note or account receivable or portion thereof-, or (xv) any
agreement by BRIGHT to do any of the things described in this Section.
2.1.9 PATENTS AND TRADEMARKS. BRIGHT has sufficient title and
ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights and processes (collectively,
"Intellectual Property"), if any, necessary for its business as now conducted
without any conflict with or infringement of the rights of others. The
Intellectual Property owned by BRIGHT is listed in the BRIGHT Disclosure
Schedule. There are no outstanding options, licenses, or agreements of any
kind relating to the Intellectual Property, nor is BRIGHT bound by or a party
to any options, licenses or agreements of any kind with respect to the
Intellectual Property of any other person or entity. BRIGHT has not received
any communications alleging that BRIGHT has violated or, by conducting its
business as proposed, would violate any of the Intellectual Property of any
other person or entity. BRIGHT is not aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order
of any court or administrative agency, that would interfere with the use of
his or her best efforts to promote the interests of BRIGHT or that would
conflict with BRIGHT's business as proposed to be conducted. Neither the
execution or delivery of this Agreement, nor the carrying on of BRIGHT's
business by the employees of BRIGHT, nor the conduct of BRIGHT's business as
proposed, will, to the best of BRIGHT's knowledge, conflict with or result in
a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of such employees
is now obligated. BRIGHT does not believe it is or will be necessary to
utilize any inventions of any of its employees (or people it currently
intends to hire) made prior to their employment by BRIGHT.
2.1.10 EMPLOYEE BENEFIT PLANS. All employee benefit plans (including
without limitation all plans which authorize the granting of stock options,
restricted stock, stock bonuses or other equity based awards) covering active,
former or returned employees of BRIGHT are listed in the BRIGHT Disclosure
Schedule.
2.1.11 OTHER PERSONAL PROPERTY. The books and records of BRIGHT
contain a complete and accurate description, and specify the location, of all
trucks, automobiles, machinery, equipment, furniture, supplies and other
tangible personal property owned by, in the possession of, or used by BRIGHT in
connection with its business. Except as set forth in the BRIGHT Disclosure
Schedule, no personal property used by BRIGHT in connection with its business is
held under any lease, security agreement, conditional sales contract, or other
title retention or security arrangement.
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2.1.12 MAJOR CONTRACTS. Except as otherwise disclosed in the BRIGHT
Disclosure Schedule, BRIGHT is not a party or subject to:
(a) Any union contract, or any employment contract or arrangement
providing for future compensation, written or oral, with any officer,
consultant, director or employee which is not terminable by BRIGHT on 30 days'
notice or less without penalty or obligations to make payments related to such
termination;
(b) Any joint venture contract, partnership agreement or arrangement
or any other agreement which has involved or is expected to involve a sharing of
revenues with other persons or a joint development of products with other
persons;
(c) Any production, distribution, sales, franchise, marketing or
license agreement or arrangement by which products or services of BRIGHT are
developed, sold or distributed;
(d) Any material agreement, license, franchise, permit, indenture or
authorization which has not been terminated or performed in its entirety and not
renewed which may be, by its terms, accelerated, terminated, impaired or
adversely affected by reason of the execution of this Agreement, or the
consummation of the transactions contemplated hereby or thereby;
(e) Any material agreement, contract or commitment that requires the
consent of another person for BRIGHT; to enter into or consummate the
transactions contemplated by this Agreement;
(f) Any contract containing covenants purporting to materially limit
BRIGHT' freedom to compete in any line of business in any geographic area.
2.1.13 LEASES IN EFFECT. All real property leases and subleases and
any amendments or modifications thereof (each a "Lease" and, collectively, the
"Leases") as to which BRIGHT is a party are listed in the BRIGHT Disclosure
Schedule and are valid, in full force and effect and enforceable, and there are
no existing defaults on the part of BRIGHT, and BRIGHT has not received nor
given notice of default or claimed default with respect to any Lease, nor is
there any event that with notice or lapse of time, or both, would constitute a
default thereunder. Except as set forth on the BRIGHT Disclosure Schedule, no
consent is required from any party under any Lease in connection with the
completion of the transactions contemplated by this Agreement, and BRIGHT has
not received notice that any party to any Lease intends to cancel, terminate, or
refuse to renew the same or to exercise any option or other right thereunder,
except where the failure to receive such consent, or where such cancellation,
termination or refusal, would not have a Material Adverse Effect on BRIGHT.
2.1.14 TAXES. Except as set forth elsewhere in this Agreement or in
the BRIGHT; Disclosure.
(a) All taxes, assessments, fees, penalties, interest and other
governmental charges with respect to BRIGHT which have become due and payable as
of the date of Closing will be paid in full or adequately reserved against by
BRIGHT, and all taxes, assessments, fees, penalties, interest and other
governmental charges which have become due and payable subsequent to the date of
Closing have been paid in full or adequately reserved against on its books of
account and such books are sufficient for the payment of all unpaid federal,
state, local, foreign and other taxes, fees and assessments (including without
limitation, income, property, sales, use, franchise, capital stock, excise,
added value, employees' income withholding, social security and unemployment
taxes), and all interest and penalties thereon with respect to the periods then
ended and for all periods prior thereto;
(b) There are no agreements, waivers or other arrangements providing
for an extension of time with respect to the assessment of any tax or deficiency
against BRIGHT, nor are there any actions, suits, proceedings, investigations or
claims now pending against BRIGHT in respect of any tax or assessment, or any
matters under discussion with any federal, state, local or foreign authority
relating to any taxes or assessments, or any claims for additional taxes or
assessments asserted by any such authority; and
(c) There are no liens for taxes upon the assets of BRIGHT except for
taxes that are not yet payable. BRIGHT has withheld all taxes required to be
withheld in respect of wages, salaries and other payments to all employees,
officers and directors and timely paid all such amounts withheld to the proper
taxing authority.
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2.1.15 DISPUTES AND LITIGATION. Except as disclosed in the BRIGHT
Disclosure Schedule, there is no suit, claim, action, litigation, or proceeding
pending or, to the knowledge of BRIGHT, threatened against or affecting BRIGHT
or any of its properties, assets or business or to which BRIGHT is a party, in
any court or before any arbitrator of any kind or before or by any Governmental
Entity, which would, if adversely determined, individually or in the aggregate,
have a Material Adverse Effect on BRIGHT, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against BRIGHT having, or which, insofar as reasonably can be foreseen, in the
future could have, any such effect. To the knowledge of BRIGHT, there is no
investigation pending or threatened against BRIGHT before any foreign, federal,
state, municipal or other governmental department, commission, board, bureau,
agency, instrumentality or other Governmental Entity.
2.1.16 COMPLIANCE WITH LAWS. Except as set forth in the BRIGHT
Disclosure Schedule, BRIGHT's business is not being conducted in violation of,
or in a manner which could cause liability under any applicable law, rule or
regulation, judgment, decree or order of any Governmental Entity, except for any
violations or practices, which, individually or in the aggregate, have not had
and will not have a Material Adverse Effect on BRIGHT. BRIGHT has all
franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which could
materially and adversely affect the business, properties, prospects, or
financial condition of BRIGHT, and the believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as it
is planned to be conducted. BRIGHT is not in default in any material respect
under any of such franchises, permits, licenses or other similar authority. A
true and complete list of all such franchises, permits, and licenses held by
BRIGHT is set forth in the BRIGHT Disclosure Schedule.
2.1.17 RELATED PARTY TRANSACTIONS. No employee, officer, or director
of BRIGHT or member of his or her immediate family is indebted to BRIGHT, nor is
BRIGHT indebted (or committed to make loans or extend or guarantee credit) to
any of them except as disclosed in the BRIGHT Disclosure Schedule. To the best
of BRIGHT's knowledge, none of such persons has any direct or indirect ownership
interest in any firm or corporation with which BRIGHT; is affiliated or with
which BRIGHT has a business relationship, or any firm or corporation that
competes with BRIGHT, except that employees, officers or directors of BRIGHT and
members of their immediate families may own stock in publicly traded companies
that may compete with BRIGHT. To BRIGHT's knowledge, no member of the immediate
family of any officer or director of BRIGHT is directly or indirectly interested
in any material contract with BRIGHT.
2.1.18 INSURANCE. The BRIGHT Disclosure Schedule sets forth a true and
complete list of all insurance policies maintained by BRIGHT concerning its
business and properties. BRIGHT has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow it to replace any of its properties that might
be damaged or destroyed.
2.1.19 MINUTE BOOKS. The minute books of BRIGHT provided to MAXAMERICA
contain a complete summary of all meetings of directors and shareholders since
the time of incorporation and reflect all transactions referred to in such
minutes accurately in all material respects.
2.1.20 DISCLOSURE. No representation or warranty made by BRIGHT in
this Agreement, nor any document, written information, statement, financial
statement, certificate or exhibit prepared and furnished or to be prepared and
furnished by BRIGHT or their representatives pursuant hereto or in connection
with the transactions contemplated hereby, when taken together, contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements or facts contained herein or therein not misleading in
light of the circumstances under which they were furnished.
2.1.21 RELIANCE. The foregoing representations and warranties are made
by BRIGHT with the knowledge and expectation that MAXAMERICA is placing reliance
thereon.
2.2 REPRESENTATIONS AND WARRANTIES OF MAXAMERICA. Except as disclosed
in a document referring specifically to the representations and warranties in
this Agreement that identifies by section number the section and subsection to
which such disclosure relates and is delivered by MAXAMERICA to Shareholders
prior to the execution of this Agreement as shown in Exhibit "C" (the
"MAXAMERICA Disclosure Schedule"), MAXAMERICA represents and warrants to
Shareholders, as of the date hereof and as of the Closing, as follows:
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2.2.1 ORGANIZATION. STANDING. POWER. MAXAMERICA is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. It has all requisite corporate power, franchises, licenses, permits
and authority to own its properties and assets and to carry on its business as
it has been and is being conducted. MAXAMERICA is duly qualified and in good
standing to do business in each jurisdiction in which it operates.
2.2.2 AUTHORITY. MAXAMERICA has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by MAXAMERICA of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of MAXAMERICA,
including the approval of the Board of Directors and the stockholders of
MAXAMERICA. This Agreement has been duly executed and delivered by MAXAMERICA
and constitutes a valid and binding obligation of MAXAMERICA enforceable in
accordance with its terms, except that such enforceability may be subject to (i)
bankruptcy, insolvency, reorganization or other similar laws relating to
enforcement of creditors' rights generally, and (ii) general equitable
principles. Subject to the satisfaction of the conditions set forth in Article
3, the execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated hereby will not, conflict with or result in any
Violation pursuant to (i) any provision of the Articles of Incorporation or
Bylaws of MAXAMERICA or (ii) any loan or credit agreement, note, bond, mortgage,
indenture, contract, lease, or other agreement or instrument, pen-nit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to MAXAMERICA or its properties or
assets, other than, in the case of (ii), any such Violation which individually
or in the aggregate would not have a Material Adverse Effect on MAXAMERICA.
2.2.3 CAPITALIZATION OF MAXAMERICA.
(a) The authorized equity securities of MAXAMERICA consists of
1,000,000 shares of MAXAMERICA common stock, par value $.001, of which 10,000
are issued and outstanding as of May 31, 1999.
(b) All of the issued and outstanding shares of MAXAMERICA capital
stock have been duly and validly issued, are fully paid and non-assessable, and
were issued in accordance with the registration or qualification provisions of
the Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom. The MAXAMERICA Shares are free of restrictions on transfer
other than restrictions on transfer as set forth in the MAXAMERICA Disclosure
Schedule and under applicable state and federal securities laws.
(c) Except as set forth on the MAXAMERICA Disclosure Schedule, there
are no options, warrants, rights, calls, commitments, plans, contracts or other
agreements of any character granted or issued by MAXAMERICA which provide for
the purchase, issuance or transfer of any additional shares of the capital stock
of MAXAMERICA nor are there any outstanding securities granted or issued by
MAXAMERICA that are convertible into any shares of the equity securities of
MAXAMERICA, and none is authorized. MAXAMERICA does not have outstanding any
bonds, debentures, notes or other indebtedness the holders of which have the
right to vote (or convertible or exercisable into securities having the right to
vote) with holders of MAXAMERICA capital stock on any matter.
(d) Except as set forth on the MAXAMERICA Disclosure Schedule,
MAXAMERICA is not a party or subject to any agreement or understanding, and, to
the best of MAXAMERICA's knowledge, there is no agreement or understanding
between any persons and/or entities, which affects or relates to the voting or
giving of written consents with respect to any security or by a director of
MAXAMERICA.
(e) Except as set forth on the MAXAMERICA Disclosure Schedule,
MAXAMERICA has not granted or agreed to grant any registration rights, including
piggyback rights, to any person or entity.
2.2.4 NO DEFAULTS. MAXAMERICA is not, and has not received notice that
it would be with the passage of time, in default or violation of any term,
condition or provision of (i) the Articles of Incorporation or Bylaws of
MAXAMERICA, (ii) any judgment, decree or order applicable to MAXAMERICA, or
(iii) any loan or credit agreement, note, bond, mortgage, indenture, contract,
agreement, lease, license, or other instrument to which MAXAMERICA is now a
party or by which it or any of its properties or assets may be bound, except for
defaults and violations which, individually or in the aggregate, would not have
a Material Adverse Effect on MAXAMERICA.
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2.2.5 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of or registration, qualification, designation, declaration or
filing with or exemption by (collectively "Consents"), any court, administrative
agency or commission or other federal, state or local governmental authority or
instrumentality, whether domestic or foreign (each a "Governmental Entity"), is
required by or with respect to MAXAMERICA in connection with the execution and
delivery of this Agreement or the consummation by MAXAMERICA of the transactions
contemplated hereby, except for such Consents which if not obtained or made
would not have a Material Adverse Effect on MAXAMERICA or the transactions
contemplated by this Agreement.
2.2.6 FINANCIAL STATEMENTS. MAXAMERICA has furnished BRIGHT with a
true and complete copy of its audited financial statements for the period ending
May 30, 1998 (the "MAXAMERICA Financial Statements"), which comply as to form in
all material respects with all applicable accounting requirements with respect
thereto and have been prepared internally and fairly present the financial
position of MAXAMERICA as at the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of audited
statements, to normal, recurring audit adjustments not material in scope or
amount). There has been no change in MAXAMERICA's accounting policies or the
methods of making accounting estimates or changes in estimates that are material
to MAXAMERICA Financial Statements, except as described in the notes thereto.
2.2.7 ABSENCE OF UNDISCLOSED LIABILITIES. MAXAMERICA has no
liabilities or obligations (whether absolute, accrued or contingent) except (i)
liabilities that are accrued or reserved against in the MAXAMERICA Financial
Statements as of May 30, 1998, or reflected in the notes thereto or (ii)
additional liabilities reserved against since May 30, 1998 that have arisen in
the ordinary course of business; are accrued or reserved against on the books
and records of MAXAMERICA; and amount in the aggregate to less than $25,000.
2.2.8 PATENTS AND TRADEMARKS. MAXAMERICA has sufficient title and
ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights and processes (collectively,
"Intellectual Property") necessary for its business as now conducted without any
conflict with or infringement of the rights of others. The Intellectual Property
owned by MAXAMERICA is listed in the MAXAMERICA Disclosure Schedule. There are
no outstanding options, licenses, or agreements of any kind relating to the
Intellectual Property, nor is MAXAMERICA bound by or a party to any options,
licenses or agreements of any kind with respect to the Intellectual Property of
any other person or entity. MAXAMERICA has not received any communications
alleging that MAXAMERICA has violated or, by conducting its business as
proposed, would violate any of the Intellectual Property of any other person or
entity. MAXAMERICA is not aware that any of its employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of MAXAMERICA or that would conflict with
MAXAMERICA's business as proposed to be conducted. Neither the execution or
delivery of this Agreement, nor the carrying on of MAXAMERICA's business by the
employees of MAXAMERICA, nor the conduct of MAXAMERICA's business as proposed,
will, to the best of MAXAMERICA's knowledge, conflict with or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such employees is now
obligated. MAXAMERICA does not believe it is or will be necessary to utilize any
inventions of any of its employees (or people it currently intends to hire) made
prior to their employment by MAXAMERICA.
2.2.9 EMPLOYEE BENEFIT PLANS. All employee benefit plans (including
without limitation all plans which authorize the granting of stock options,
restricted stock, stock bonuses or other equity based awards) covering active,
former or returned employees of MAXAMERICA are listed in the MAXAMERICA
Disclosure Schedule.
2.2.10 MAJOR CONTRACTS. Except as otherwise disclosed in the
MAXAMERICA Disclosure Schedule, MAXAMERICA is not a party or subject to:
(a) Any union contract, or any employment contract or arrangement
providing for future compensation, written or oral, with any officer,
consultant, director or employee which is not terminable by MAXAMERICA on 30
days' notice or less without penalty or obligations to make payments related to
such termination;
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(b) Any joint venture contract, partnership agreement or arrangement
or any other agreement which has involved or is expected to involve a sharing of
revenues with other persons or a joint development of products with other
persons;
(c) Any production, distribution, sales, franchise, marketing or
license agreement or arrangement by which products or services of MAXAMERICA are
developed, sold or distributed;
(d) Any material agreement, license, franchise, permit, indenture or
authorization which has not been terminated or performed in its entirety and not
renewed which may be, by its terms, accelerated, terminated, impaired or
adversely affected by reason of the execution of this Agreement, or the
consummation of the transactions contemplated hereby or thereby;
(e) Any material agreement, contract or commitment that requires the
consent of another person for MAXAMERICA to enter into or consummate the
transactions contemplated by this Agreement;
(f) Any contract containing covenants purporting to materially limit
MAXAMERICA's freedom to compete in any line of business in any geographic area.
2.2.11 LEASES IN EFFECT . All Leases as to which MAXAMERICA is a party
are listed in the MAXAMERICA Disclosure Schedule and are valid, in full force
and effect and enforceable, and there are no existing defaults on the part of
MAXAMERICA, and MAXAMERICA has not received nor given notice of default or
claimed default with respect to any Lease, nor is there any event that with
notice or lapse of time, or both, would constitute a default thereunder. Except
as set forth on the MAXAMERICA Disclosure Schedule, no consent is required from
any party under any Lease in connection with the completion of the transactions
contemplated by this Agreement, and MAXAMERICA has not received notice that any
party to any Lease intends to cancel, terminate, or refuse to renew the same or
to exercise any option or other right thereunder, except where the failure to
receive such consent, or where such cancellation, termination or refusal, would
not have a Material Adverse Effect on MAXAMERICA.
2.2.12 TAXES. Except as set forth elsewhere in this Agreement or in
the MAXAMERICA Disclosure.
(a) All taxes, assessments, fees, penalties, interest and other
governmental charges with respect to MAXAMERICA which have become due and
payable as of the date of Closing have been paid in full or adequately reserved
against by MAXAMERICA, and all taxes, assessments, fees, penalties, interest and
other governmental charges which have become due and payable subsequent to the
date of Closing have been paid in full or adequately reserved against on its
books of account and such books are sufficient for the payment of all unpaid
federal, state, local, foreign and other taxes, fees and assessments (including
without limitation, income, property, sales, use, franchise, capital stock,
excise, added value, employees' income withholding, social security and
unemployment taxes), and all interest and penalties thereon with respect to the
periods then ended and for all periods prior thereto;
(b) There are no agreements, waivers or other arrangements providing
for an extension of time with respect to the assessment of any tax or deficiency
against MAXAMERICA, nor are there any actions, suits, proceedings,
investigations or claims now pending against MAXAMERICA in respect of any tax or
assessment, or any matters under discussion with any federal, state, local or
foreign authority relating to any taxes or assessments, or any claims for
additional taxes or assessments asserted by any such authority; and
(c) There are no liens for taxes upon the assets of MAXAMERICA except
for taxes that are not yet payable. MAXAMERICA has withheld all taxes required
to be withheld in respect of wages, salaries and other payments to all
employees, officers and directors and timely paid all such amounts withheld to
the proper taxing authority.
2.2.13 DISPUTES AND LITIGATION. Except as disclosed in the MAXAMERICA
Disclosure Schedule, there is no suit, claim, action, litigation, or proceeding
pending or, to the knowledge of MAXAMERICA, threatened against or affecting
MAXAMERICA or any of its properties, assets or business or to which MAXAMERICA
is a party, in any court or before any arbitrator of any kind or before or by
any Governmental Entity, which would, if adversely determined, individually or
in the aggregate, have a Material Adverse Effect on MAXAMERICA, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against
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MAXAMERICA having, or which, insofar as reasonably can be foreseen, in the
future could have, any such effect. To the knowledge of MAXAMERICA, there is
no investigation pending or threatened against MAXAMERICA before any foreign,
federal, state, municipal or other governmental department, commission,
board, bureau, agency, instrumentality or other Governmental Entity.
2.2.14 COMPLIANCE WITH LAWS. Except as set forth in the MAXAMERICA
Disclosure Schedule, MAXAMERICA's business is not being conducted in violation
of, or in a manner which could cause liability under any applicable law, rule or
regulation, judgment, decree or order of any Governmental Entity, except for any
violations or practices, which, individually or in the aggregate, have not had
and will not have a Material Adverse Effect on MAXAMERICA. MAXAMERICA has all
franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which could
materially and adversely affect the business, properties, prospects, or
financial condition of MAXAMERICA, and the believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as it
is planned to be conducted. MAXAMERICA is not in default in any material respect
under any of such franchises, permits, licenses or other similar authority. A
true and complete list of all such franchises, permits, and licenses held by
MAXAMERICA is set forth in the MAXAMERICA Disclosure Schedule.
2.2.15 INSURANCE. The MAXAMERICA Disclosure Schedule sets forth a true
and complete list of all insurance policies maintained by MAXAMERICA concerning
its business and properties. MAXAMERICA has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.
2.2.16 MINUTE BOOKS. The minute books of MAXAMERICA provided to BRIGHT
contain a complete summary of all meetings of directors and shareholders since
the time of incorporation and reflect all transactions referred to in such
minutes accurately in all material respects.
2.2.17 DISCLOSURE. No representation or warranty made by MAXAMERICA in
this Agreement, nor any document, written information, statement, financial
statement, certificate or exhibit prepared and furnished or to be prepared and
furnished by MAXAMERICA or their representatives pursuant hereto or in
connection with the transactions contemplated hereby, when taken together,
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements or facts contained herein or therein not
misleading in light of the circumstances under which they were furnished.
2.2.18 RELIANCE. The foregoing representations and warranties are made
by MAXAMERICA with the knowledge and expectation that MAXAMERICA is placing
reliance thereon.
ARTICLE 3
CONDITIONS PRECEDENT
3.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations of
each party hereunder shall be subject to the satisfaction prior to or at the
Closing of 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.
(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.
3.2 CONDITIONS TO SHAREHOLDERS' OBLIGATIONS. The respective obligations of
the Shareholders shall be subject to the satisfaction prior to or at the Closing
of the following conditions unless waived by the Shareholders:
(a) REPRESENTATIONS AND WARRANTIES OF MAXAMERICA. The representations
and warranties of MAXAMERICA set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing as though made on
and as of the Closing, except: (i) as otherwise contemplated by this Agreement,
or (ii) in
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respects that do not have a Material Adverse Effect on MAXAMERICA or on the
benefits of the transactions provided for in this Agreement. Shareholders
shall have received a certificate signed on behalf of MAXAMERICA by the chief
executive officer and the chief financial officer of MAXAMERICA to such
effect on the Closing.
(b) PERFORMANCE OF OBLIGATIONS OF MAXAMERICA. MAXAMERICA shall have
performed all agreements and covenants required to be performed by it under this
Agreement prior to the Closing, except for breaches that do not have a Material
Adverse Effect on MAXAMERICA or on the benefits of the transactions provided for
in this Agreement. Shareholders shall have received a certificate signed on
behalf of MAXAMERICA by the chief executive officer of MAXAMERICA to such effect
on the Closing.
(c) GOVERNMENTAL APPROVALS. All Consents of Governmental Entities
legally required by BRIGHT for the transactions contemplated by this Agreement
shall have been filed, occurred, or been obtained, other than such Consents, the
failure of which to obtain would not have a Material Adverse Effect on the
consummation of the transactions contemplated by this Agreement.
(d) CONSENTS OF OTHER THIRD PARTIES. MAXAMERICA shall have received
and delivered to Shareholders all requisite consents and approvals of all
lenders, lessors, and other third parties whose consent or approval is required
in order for MAXAMERICA to consummate the transactions contemplated by this
Agreement, or in order to permit the continuation after the Closing of the
business activities of MAXAMERICA in the manner such business is presently
carried on by MAXAMERICA.
(e) MATERIAL ADVERSE CHANGE. Since the date hereof and through
Closing, there shall not have occurred any change, occurrence or circumstance in
MAXAMERICA having or reasonably likely to have, individually or in the
aggregate, in the reasonable judgment of Shareholders, Material Adverse Effect
on MAXAMERICA.
(f) FINANCING. The Shareholders shall have obtained a loan sufficient
to pay off the existing federal and state tax liabilities of BRIGHT.
3.3 CONDITIONS TO MAXAMERICA'S OBLIGATIONS. The obligations of MAXAMERICA
shall be subject to the satisfaction prior to or at the Closing of the following
conditions unless waived by MAXAMERICA:
(a) REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. The
representations and warranties of Shareholders set forth in this Agreement shall
be true and correct as of the date of this Agreement and as of the Closing as
though made on and as of the Closing, except: (i) as otherwise contemplated by
this Agreement, or (ii) in respects that do not have a Material Adverse Effect
on Shareholders or on the benefits of the transactions provided for in this
Agreement. MAXAMERICA shall have received a certificate signed by or on behalf
of Shareholders to such effect on the Closing.
(b) PERFORMANCE OF OBLIGATIONS OF SHAREHOLDERS. Shareholders shall
have performed all agreements and covenants required to be performed by it under
this Agreement prior to the Closing, except for breaches that do not have a
Material Adverse Effect on Shareholders or on the benefits of the transactions
provided for in this Agreement. MAXAMERICA shall have received a certificate
signed by or on behalf of Shareholders to such effect on the Closing.
(c) GOVERNMENTAL APPROVALS. All Consents of Governmental Entities
legally required by BRIGHT for the transactions contemplated by this Agreement
shall have been filed, occurred, or been obtained, other than such Consents, the
failure of which to obtain would not have a Material Adverse Effect on the
consummation of the transactions contemplated by this Agreement.
(d) CONSENTS OF OTHER THIRD PARTIES. Shareholders shall have received
and delivered to MAXAMERICA all requisite consents and approvals of all lenders,
lessors, and other third parties whose consent or approval is required in order
for Shareholders to consummate the transactions contemplated by this Agreement,
or in order to permit the continuation after the Closing of the business
activities of BRIGHT in the manner such business is presently carried on by
BRIGHT.
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(e) MATERIAL ADVERSE CHANGE. Since the date hereof and through
Closing, there shall not have occurred any change, occurrence or circumstance in
BRIGHT; having or reasonably likely to have, individually or in the aggregate,
in the reasonable judgment of MAXAMERICA, a Material Adverse Effect on BRIGHT.
(f) NO LIENS. The assets of BRIGHT shall be free and clear from any
material liens or encumbrances, except for the liens encumbering certain real
property owned by BRIGHT as disclosed in the BRIGHT Disclosure Schedule.
(g) OPERATION OF BRIGHT. In the thirty (30) days prior to Closing, the
operations of BRIGHT shall have generated no net losses.
(h) EQUITY. BRIGHT shall have equity in its assets and properties,
including without limitation, real property and furniture, fixtures and
equipment, equal to or greater than $300,000 as reflected in BRIGHT's Financial
Statements.
(i) NO DEBT. BRIGHT shall have no material debt, liabilities or
obligations except those that have arisen in the ordinary course of business, or
as disclosed in the BRIGHT Disclosure Schedule.
ARTICLE 4
CONVENANTS
4.1 CONFIDENTIALITY. Each party hereto will hold and will cause its
consultants and advisors to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all documents and information concerning
the other party furnished it by such other party or its representatives in
connection with the transactions contemplated by this Agreement (except to the
extent that such information can be shown to have been (i) previously known by
the party to which it was furnished, (ii) in the public domain through no fault
of such party, or (iii) later lawfully acquired from other sources by the party
to which it was furnished), and each party will not release or disclose such
information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors in connection with this
Agreement. Each party shall be deemed to have satisfied its obligations to hold
confidential information concerning or supplied by the other party if it
exercises the same care as it takes to preserve confidentiality for its own
similar information. In the event of termination of this Agreement, each party
shall use its best efforts to return to the other party all documents and copies
thereof received from the other party that contain information subject to the
confidentiality requirements of this Section. Notwithstanding the foregoing, the
Shareholders acknowledge and agree that following Closing, MAXAMERICA will be
issuing a press release regarding the closing of the transactions contemplated
hereunder.
4.2 FURTHER ASSURANCES. Each party agrees that upon the request of any
other they will, from time to time, without further consideration, execute and
deliver to such other all such instruments and documents of further assurance or
otherwise, wand will do any and all such acts and things as may be reasonable
required, to carry out the obligations of such party hereunder and to consummate
the transactions contemplate hereby.
ARTICLE 5
THE CLOSING
5.1 TIME AND PLACE. The purchase and sale of BRIGHT Shares shall take
place at the offices of MAXAMERICA, 4100 Newport Place, Suite 730, Newport
Beach, CA 92660, on or before September 30, 1999, or at such other time and
place as the parties mutually agree upon in writing (which time and place are
hereafter referred to as the "Closing").
5.2 DELIVERIES BY MAXAMERICA. MAXAMERICA shall make the following
Deliveries:
(a) At Closing, to Shareholders, an Employment Agreement.
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(b) At Closing, to Shareholders, a certificate executed by MAXAMERICA
certifying that all MAXAMERICA'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;
(c) At Closing, to Shareholders, certified resolutions of the Board of
Directors and shareholders of MAXAMERICA, in form satisfactory to counsel for
Shareholders, authorizing the execution and performance of this Agreement; and
5.3 DELIVERIES BY SHAREHOLDERS. At Closing, Shareholders shall make the
following deliveries to MAXAMERICA:
(a) A certificate or certificates representing the BRIGHT Shares, duly
endorsed by Shareholders for transfer or accompanied by an assignment of the
BRIGHT Shares duly executed by Shareholders in form reasonably satisfactory to
counsel for MAXAMERICA;
(b) The Employment Agreement, each duly executed by the appropriate
Shareholder;
(c) A certificate executed by Shareholders certifying that the
Shareholders' 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;
(d) Certified resolutions of the Board of Directors and Shareholders
of BRIGHT, in a form satisfactory to counsel for MAXAMERICA, authorizing the
execution and performance of this Agreement; and
(e) The stock books, stock ledgers, minute books, corporate seals, and
all other corporate
5.4 BOARD OF DIRECTORS CONSENT. This Agreement is contingent on the
unanimous written consent of HomeLife's Board of Directors to approve this
agreement, and consent to the issuing of its common shares to Shareholders under
the terms of this Agreement.
ARTICLE 6
INDEMNIFICATION
6.1 SHAREHOLDERS' INDEMNITY.
(a) Upon receipt of notice thereof, Shareholders shall, jointly and
severally, indemnify, defend, and hold harmless MAXAMERICA from any and all
claims, demands, liabilities, damages, deficiencies, losses, obligations, costs
and expenses, including attorney fees and any costs of investigation that
MAXAMERICA shall incur or suffer, that arise, result from or relate to (i) any
breach of, or failure by Shareholders to perform, any of their representations,
warranties, covenants, or agreements in this Agreement or in any schedule,
certificate, exhibit, or other instrument furnished or to be furnished by
Shareholders under this Agreement, and (ii) the employment of any of BRIGHT'
employees, including the employee set forth in the BRIGHT Disclosure Schedule,
which is in violation of any law, regulation, or ordinance of any Governmental
Entity.
(b) MAXAMERICA shall notify promptly Shareholders of the existence of
any claim, demand or other matter to which Shareholders' indemnification
obligations would apply, and shall give them a reasonable opportunity to defend
the same at their own expense and with counsel of their own selection, provided
that MAXAMERICA shall at all times also have the right to fully participate in
the defense. If Shareholders, within a reasonable time after this notice, fails
to defend, MAXAMERICA shall have the right, but not the obligation, to undertake
the defense of, and, with the written consent of the Shareholders, to compromise
or settle the claim the claim or other matter on behalf, for the account, and at
the risk, of Shareholders.
6.2 MAXAMERICA'S INDEMNITY.
(a) Upon receipt of notice thereof, MAXAMERICA shall indemnify,
defend, and hold harmless Shareholders from any and all claims, demands,
liabilities, damages, deficiencies, losses, obligations, costs and
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expenses, including attorney fees and any costs of investigation that
Shareholders shall incur or suffer, that arise, result from or relate to any
breach of, or failure by MAXAMERICA to perform, any of its representations,
warranties, covenants, or agreements in this Agreement or in any schedule,
certificate, exhibit, or other instrument furnished or to be furnished by
MAXAMERICA under this Agreement.
(b) Shareholders shall notify promptly MAXAMERICA of the existence of
any claim, demand or other matter to which MAXAMERICA's indemnification
obligations would apply, and shall give it a reasonable opportunity to defend
the same at its own expense and with counsel of its own selection, provided that
Shareholders shall at all times also have the right to fully participate in the
defense. If MAXAMERICA, within a reasonable time after this notice, fails to
defend, Shareholders shall have the right, but not the obligation, to undertake
the defense of, and, with the written consent of MAXAMERICA, to compromise or
settle the claim or other matter on behalf, for the account, and at the risk, of
MAXAMERICA.
ARTICLE 7
DEFAULT, AMENDMENT AND WAIVER
7.1 DEFAULT. Upon a breach or default under this Agreement by any of the
parties (following the cure period provided herein), the non-defaulting party
shall have all rights and remedies given hereunder or now or hereafter existing
at law or in equity or by statute or otherwise. Notwithstanding the foregoing,
in the event of a breach or default by any party hereto in the observance or in
the timely performance of any of its obligations hereunder which is not waived
by the non-defaulting party, such defaulting party shall have the right to cure
such default within fifteen (15) days after receipt of notice in writing of such
breach or default.
7.2 WAIVER AND AMENDMENT. Any term, provision, covenant, representation,
warranty or condition of this Agreement may be waived, but only by a written
instrument signed by the party entitled to the benefits thereof. The failure or
delay of any party at any time or times to require performance of any provision
hereof or to exercise its rights with respect to any provision hereof shall in
no manner operate as a waiver of or affect such party's right at a later time to
enforce the same. No waiver by any party of any condition, or of the breach of
any term, provision, covenant, representation or warranty contained in this
Agreement, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or waiver of any
other condition or of the breach of any other term, provision, covenant,
representation or warranty. No modification or amendment of this Agreement shall
be valid and binding unless it be in writing and signed by all parties hereto.
ARTICLE 8
MISCELLANEOUS
8.1 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, each of the parties hereto shall bear all taxes of any nature
(including, without limitation, income, franchise, transfer and sales taxes) and
all fees and expenses relating to or arising from its compliance with the
various provisions of this Agreement and such party's covenants to be performed
hereunder, and except as otherwise specifically provided for herein, each of the
parties hereto agrees to pay all of its own expenses (including, without
limitation, attorneys and accountants' fees and printing expenses) incurred in
connection with this Agreement, the transactions contemplated hereby, the
negotiations leading to the same and the preparations made for carrying the same
into effect, and all such taxes, fees and expenses of the parties hereto shall
be paid prior to Closing.
8.2 NOTICES. Any notice, request, instruction or other document required
by the terms of this Agreement, or deemed by any of the parties hereto to be
desirable, to be given to any other party hereto shall be in writing and shall
be given by prepaid telegram or delivered or mailed by registered or certified
mail, postage prepaid, with return receipt requested, to the following
addresses:
TO BRIGHT FINANCIAL CORPORATION:
BRIGHT Financial Corporation
20401 Valley Blvd. Suite 204
Walnut, CA 91789
Attn: Mr. Thomas Jarboe
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TO MAXAMERICA:
MAXAMERICA, Inc.
4100 Newport Place, Suite 730
Newport Beach, CA 92660
Attn: Mr. Andrew Cimerman
The persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid. If notice is given by delivery in accordance with the
provisions of this Section, said notice shall be conclusively deemed given at
the time of such delivery. If notice is given by mail in accordance with the
provisions of this Section, such notice shall be conclusively deemed given
forty-eight (48) hours after deposit thereof in the United States mail. If
notice is given by telegraph in accordance with the provisions of this Section,
such notice shall be conclusively deemed given at the time that the telegraphic
agency shall confirm delivery thereof to the addressee.
8.3 ENTIRE AGREEMENT. This Agreement, together with the Schedule and
exhibits hereto, sets forth the entire agreement and understanding of the
parties hereto with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings related to the
subject matter hereof. No understanding, promise, inducement, statement of
intention, representation, warranty, covenant or condition, written or oral,
express or implied, whether by statute or otherwise, has been made by any party
hereto which is not embodied in this Agreement, or in the schedules or exhibits
hereto or the written statements, certificates, or other documents delivered
pursuant hereto or in connection with the transactions contemplated hereby, and
no party hereto shall be bound by or liable for any alleged understanding,
promise, inducement, statement, representation, warranty, covenant or condition
not so set forth.
8.4 SURVIVAL OF REPRESENTATIONS. All statements of fact (including
financial statements) contained in the Schedule, the exhibits, the certificates
or any other instrument delivered by or on behalf of the parties hereto, or in
connection with the transactions contemplated hereby, shall be deemed
representations and warranties by the respective party hereunder. All
representation, warranties agreements and covenants hereunder shall survive the
Closing and remain effective regardless of any investigation or audit at any
time made by or on behalf of the parties or of any information a party may have
in respect hereto. Consummation of the transactions contemplated hereby shall
not be deemed or construed to be a waiver of any right or remedy possessed by
any party hereto, notwithstanding that such party knew or should have known at
the time of Closing that such right or remedy existed.
8.5 INCORPORATED BY REFERENCE. The schedules, 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.
8.6 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.
8.7 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.
8.8 FINDERS' AND RELATED FEES. Each of the parties hereto is responsible
for, and shall indemnify the other against, any claim by any third party to a
fee, commission, bonus or other remuneration arising by reason of any services
alleged to have been rendered to or at the instance of said party to this
Agreement with respect to this Agreement or to any of the transactions
contemplated hereby.
8.9 GOVERNING LAW. This Agreement has been negotiated and executed in the
State of California and shall be construed and enforced in accordance with the
laws of such state.
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8.10 FORUM. Each of the parties hereto agrees that any action or suit which
may be brought by any party hereto against any other party hereto in connection
with this Agreement or the transactions contemplated hereby may be brought only
in a federal or state court in Orange County, California.
8.11 BINDING EFFECT AND ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, legal representatives and assigns.
8.12 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. In making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
BRIGHT FINANCIAL CORPORATION
a California corporation
By ______________________________
Name: ___________________________
Its: ____________________________
SHAREHOLDERS
_________________________________
Thomas Jarboe
_________________________________
Kemper Elliot
MAXAMERICA, INC.
A California Corporation
By ______________________________
Name: ___________________________
Its: ____________________________
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EXHIBIT A
ACTION BY UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS OF
HOMELIFE, INC.
A Nevada Corporation
The undersigned constituting the entire Board of Director of HOMELIFE, Inc.
a Nevada corporation (the "Corporation"), in accordance with code section 78.315
of the Nevada Revised Statutes, without the formality of convening a meeting, do
hereby consent to and adopt the following resolutions.
ACQUISITION OF BRIGHT FINANCIAL CORPORATION
WHEREAS, the President of the Corporation has been in discussions with the
principals of BRIGHT Financial Corporation about the purchase of stock in their
company in consideration of the common stock of HomeLife, and;
WHEREAS, the Shareholders of BRIGHT Mortgage Corporation have agreed to
sell their shares to MAXAMERICA Financial Services, Inc.
NOW, THEREFORE IT IS HEREBY RESOLVED, that the President of the Corporation
will have the approval of the Board of Directors to sell sufficient shares of
the common stock of the Corporation to satisfy the terms of the Acquisition
Agreement between BRIGHT Financial Corporation and MAXAMERICA Financial Services
dated ______, 1999.
The undersigned constituting all of the Directors of the Corporations, by
affixing their signature below do hereby approve the resolution set forth above.
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IN WITNESS WHEREOF, the undersigned Directors constituting all of the
Directors of the Corporation have executed this Unanimous Written Consent in
Lieu of Meeting as of this ______ day of August, 1999.
___________________
Andrew Cimerman
____________________
Robert L. Cashman
____________________
Terry A. Lyles
____________________
F. Bryson Farrill
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EXHIBIT B
EMPLOYMENT AGREEMENT
21
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EXHIBIT C
BRIGHT DISCLOSURE SCHEDULE
The items set forth below are exceptions to the representations and warranties
of Shareholders set forth in Section 2.1 of this Agreement. Any matter set forth
herein as an exception to a section of the Agreement shall be deemed to
constitute and exception to all other applicable sections of this Agreement.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in this Agreement.
Section Exception
2.1.1 Organization. Standing. Power.
2.1.2 Authority
2.1.3 Capitalization of BRIGHT
2.1.4 No Defaults
2.1.5 Governmental Consents
2.1.6 Financial Statements
2.1.7 Absence of Undisclosed Liabilities
2.1.8 Absence of Changes
2.1.9 Patents and Trademarks
2.1.10 Employee Benefit Plans
2.1.11 Other Personal Property
2.1.12 Major Contracts
2.1.13 Leases in Effect
2.1.14 Taxes
2.1.15 Disputes and Litigation
2.1.16 Compliance with Laws
2.1.17 Related Party Transactions
2.1.18 Insurance
2.1.19 Minute Books
2.1.20 Disclosure
2.1.21 Reliance
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EXHIBIT D
MAXAMERICA DISCLOSURE SCHEDULE
The items set forth below are exceptions to the representations and warranties
of Shareholders set forth in Section 2.1 of this Agreement. Any matter set forth
herein as an exception to a section of the Agreement shall be deemed to
constitute and exception to all other applicable sections of this Agreement.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in this Agreement.
Section Exception
2.2.1 Organization. Standing. Power.
2.2.2 Authority
2.2.3 Capitalization of MAXAMERICA
2.2.4 No Defaults
2.2.5 Governmental Consents
2.2.6 Financial Statements
2.2.7 Absence of Undisclosed Liabilities
2.2.8 Patents and Trademarks
2.2.9 Employee Benefit Plans
2.2.10 Major Contracts
2.2.11 Leases in Effect
2.2.12 Taxes
2.2.13 Disputes and Litigation
2.2.14 Compliance with Laws
2.2.15 Insurance
2.2.16 Minute Books
2.2.17 Disclosure
2.2.18 Reliance
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LIST OF SUBSIDIARIES
WHOLLY-OWNED SUBSIDIARIES
HomeLife Realty Services, Inc.
FamilyLife Realty Services, Inc.
MaxAmerica Financial Services, Inc.
Red Carpet Broker Network, Inc
National Sellers Network, Inc.
Builders Realty (Calgary) Ltd.
Aspen Benson & May Investment Bankers LLC.,
HomeLife California Realty, Inc.
HomeLife Properties, Inc.
MAJORITY-OWNED SUBSIDIARIES
The Keim Group Ltd.- 93 1/3%
MaxAmerica Home Warranty Company 82.72%
