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REGISTRATION NO. 333-65943
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
Amendment No. 1 to
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________
HOMELIFE, INC.
(Name of small business issuer in its charter)
_____________________
NEVADA 6531 33-0680443
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
_____________________
4100 Newport Place, Suite 730 4100 Newport Place, Suite 730
Newport Beach, CA 92660 Newport Beach, CA 92660
Phone: (949) 660-1919 Phone: (949) 660-1919
Facsimile: (949) 660-1910 Facsimile: (949) 660-1910
(Address and telephone number of (Address of principal place of business)
principal executive office)
Kelly H. Swanson
1200 S. Eastern Avenue
Las Vegas, NV 89104
Phone: (702) 382-0005
Facsimile: (702) 382-9452
(Name, address and telephone number of agent for service)
____________________________
COPIES TO:
Lawrence W. Horwitz, Esq.
Horwitz & Beam
Two Venture Plaza, Suite 350
Irvine, CA 92618
Phone: (949) 453-0300
Facsimile: (949) 453-9416
___________________
Approximate Date of Proposed Sale to the Public.
From time to time after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933 (the "Securities Act"), please
check the following box and list the Securities Act registration number of the
earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box./X/
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF SECURITIES NUMBER OF SHARES PROPOSED MAXIMUM OFFERING Proposed Maximum Aggregate AMOUNT OF
TO BE REGISTERED TO BE REGISTERED PRICE PER SHARE (1) Offering Price(1)(2) REGISTRATION FEE
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Shares of common stock, $.001 par 10,000,000 $.53 $5,300,000 $1,563.50
value ("Common Stock")
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(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) based on the average of the high and low prices of the
common stock reported on the over the counter/bulletin board within 5
business days prior to the date of filing this Registration Statement.
(2) The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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HOMELIFE, INC.
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulations S-B
Showing Location in the Prospectus
of Information Required by Items of Form SB-2
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Form SB-2 Item Number and Caption Prospectus
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1. Forepart of Registration Statement and Outside Front Cover Page Facing Page of Registration Statement: Outside Front
of Prospectus.................................................... Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus.......... Available Information; Incorporation of Certain
Documents by Reference; Table of Contents
3. Summary Information; Risk Factors................................ Prospectus Summary; Risk Factors
4. Use of Proceeds.................................................. Prospectus Summary; Use of Proceeds
5. Determination of Offering Price.................................. Outside Front Cover Page of Prospectus; Plan of Distribution
6. Dilution......................................................... Dilution
7. Selling Security Holders......................................... Not Applicable
8. Plan of Distribution............................................. Plan of Distribution
9. Legal Proceedings................................................ Litigation
10. Directors, Executive Officers, Promoters and Control Persons.... Management; Principal Stockholders
11. Security Ownership of Certain Beneficial Owners and Management.. Management; Principal Stockholders
12. Description of Securities to be Registered...................... Description of Securities
13. Interests of Named Experts and Counsel.......................... Not Applicable
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities.................. Indemnification of Directors and Officers
15. Organization Within Last Five Years............................. Prospectus Summary; Business of the Company
16. Description of Business......................................... Business of the Company
17. Management's Discussion and Analysis of Plan of Operation....... Management's Discussion and Analysis of Financial Condition
and Results of Operations
18. Description of Property......................................... Business of the Company (Properties)
19. Certain Relationships and Related Transactions.................. Certain Transactions (Conflicts of Interest)
20. Market for Common Equity and Related Stockholder Matters........ Risk Factors; Description of Securities
21. Executive Compensation.......................................... Management (Executive Compensation)
22. Consolidated Financial Statements............................... Consolidated Financial Statements
23. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure............................................ Not Applicable
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PROSPECTUS
10,000,000 SHARES OF COMMON STOCK
HOMELIFE, INC.
This Prospectus relates to 10,000,000 shares of common stock of
HomeLife, Inc., a Nevada corporation which may be offered from time to time
on terms to be determined at the time of such offering. The common stock
will be issued in connection with acquisitions, mergers or other business
combinations.
The common stock will be offered at prices and on terms contained in a
prospectus supplement.
Any supplement will include the initial public offering price.
The supplement will also contain information about any listing on a
securities exchange of the shares being offered in that supplement.
Of the 10,000,000 shares being registered 1,134,482 shares may be used
to convert preferred shares to common stock pursuant to conversion rights
granted to the holders of preferred stock.
HomeLife, Inc. is a real estate services franchisor and licensor. You
may obtain information about HomeLife, Inc. from documents we have filed with
the SEC.
The Company's common stock is currently traded on the over the
counter/bulletin board under the symbol HMLF.
THIS PROSPECTUS CONTAINS DETAILED INFORMATION REGARDING HOMELIFE, INC.
AND THE SHARES. WE ENCOURAGE YOU TO READ THIS ENTIRE DOCUMENT CAREFULLY AND
THE RISK FACTORS BEGINNING ON PAGE 5 BEFORE CONSIDERING AN INVESTMENT IN
HOMELIFE, INC.
Neither the SEC nor the state securities regulators have approved the
common stock to be issued under this Prospectus or determined if this
Prospectus is accurate or adequate. Any representation to the contrary is a
criminal offense.
__________________________________
THE DATE OF THIS PROSPECTUS IS FEBRUARY 18, 1999
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PROSPECTUS SUMMARY
WE HAVE PREPARED THIS SUMMARY TO ASSIST YOU IN YOUR REVIEW OF THIS
DOCUMENT. WE HAVE HIGHLIGHTED IN THIS SUMMARY INFORMATION WHICH WE BELIEVE
IS IMPORTANT FOR YOUR REVIEW. HOWEVER, WE HAVE NOT INCLUDED ALL OF THE
INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD CAREFULLY READ THIS
ENTIRE DOCUMENT (INCLUDING THE SPECIFIC RISKS DESCRIBED IN THE "RISK FACTORS"
SECTION BEGINNING ON PAGE 5) AND THE OTHER DOCUMENTS TO WHICH WE REFER. FOR
MORE INFORMATION ABOUT THE COMPANY, SEE "WHERE YOU CAN FIND MORE INFORMATION"
ON PAGE 32.
THE COMPANY
BACKGROUND
Incorporated in 1995, HomeLife, Inc., a Nevada corporation, is a real
estate services franchisor and licensor. HomeLife utilizes both its proprietary
"SuperSystem" marketing system and its business combinations and acquisitions to
fuel development as a fast growing real estate services company.
HomeLife, Inc. maintains its corporate office in Newport Beach, California,
and maintains regional offices in Troy, Michigan and Calgary, Alberta, Canada.
HomeLife operates through various subsidiaries and companies servicing its
franchised tradenames. Through its subsidiary, HomeLife Realty Services, Inc.,
the company services approximately 50 real estate offices in the State of
California. Through Red Carpet Keim, the company services approximately 60 real
estate offices in the State of Michigan and through its tradenames, Red Carpet
Real Estate Services, Network Real Estate, and National Real Estate Service,
services approximately 70 real estate offices in various states. In addition
to the above, HomeLife operates both direct real estate sales and mortgage
lending through its subsidiary, Builders Realty Ltd., in Calgary, Alberta,
Canada and home warranties through its majority-owned subsidiary, Guardian Home
Warranty.
BUSINESS COMBINATIONS AND ACQUISITION
HomeLife's growth is largely attributable to business combinations and
acquisitions. The company was initially incorporated in 1995 for the purpose of
combining with Management Dynamics, Inc. a publicly owned New Jersey
corporation. In November 1995, the company purchased HomeLife Realty Services,
Inc. and HomeLife Realty U.S. Limited Partnership (California) in exchange for
common and preferred shares of the company. In August, 1996, HomeLife Realty
Services acquired the Michigan based Red Carpet Keim Group of companies. With
this acquisition, HomeLife acquired approximately 60 real estate offices, 95% of
the outstanding stock of Red Carpet Keim and 80% of the outstanding stock of
Guardian Home Warranty Company all located in the state of Michigan.
In January 1997, HomeLife acquired the intangible assets, including its
licensing agreements and tradenames, from Salt Lake City based franchisor and
licensor, S&S Acquisition Corp. This acquisition included the tradenames of Red
Carpet Real Estate Services and National Real Estate Service, adding
approximately 58 real estate offices. HomeLife also acquired the real estate
computer technology of House by Mouse and Virtual Assistant. With this
technology, HomeLife has been able to enhance Internet communication giving
agents the capability of accessing marketing, advertising and general office
materials and licensed products over the Internet. In July 1997, HomeLife
acquired the licensing agreements and trademarks of Network Real Estate, Inc.,
its 12 Northern California offices and its "high-end" luxury division of
"International Estates." This acquisition provides a platform for growth in
Northern California.
In February 1998, HomeLife acquired Builders Realty Ltd. ("Builders").
Builders is a two office retail real estate and mortgage loan company located in
Calgary, Alberta, Canada. Builders has retained its name and operates as a
wholly owned subsidiary of HomeLife.
MARKETING SYSTEM
HomeLife's niche in the market is maintained through the development of its
proprietary marketing system. This "SuperSystem" replaces the outdated
marketing methods of cold calling or door knocking to obtain real estate
listings and potential buyers. The elimination of these methods has attracted
two types of franchisees: franchisees new to operating a franchise, and those
who terminated other franchise agreements with competitors to become a
franchisee of the company.
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CAPITALIZATION
As of the date of this Prospectus, HomeLife had: 5,070,434 common shares
issued and outstanding, which does not include 200,000 warrants to purchase
common shares and 140,000 options to purchase common shares; 10,000 Class A
preferred shares issued and outstanding; and, 325 Class AA preferred shares
issued and outstanding. Assuming all shares registered hereunder are sold, the
company will have 15,070,434 shares of common stock outstanding after the
offering.
REVENUES
For the fiscal year ending May 31, 1998, HomeLife had gross revenues of
$2,001,036. HomeLife's net income from operations at May 31, 1998 was $139,931.
As of the quarter ending November 30, 1998, the company had gross revenues of
$2,576,832. HomeLife's net income from operations for the quarter was $47,535.
Continued revenue generation by the company's franchisees, licensees and real
estate brokerage operations, and the continued successful acquisitions of
franchisors together with the implementation of the company's marketing plan are
necessary for the company to continue generating operating revenues.
PRINCIPAL EXECUTIVE OFFICE
HomeLife, Inc. was incorporated under the laws of the State of Nevada on
October 9, 1995. The address of the company's principal executive offices is:
4100 Newport Place, Suite 730, Newport Beach, CA 92660. The Company's telephone
number is (949) 660-1919.
THE OFFERING
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Securities Offered by
the Company. . . . . . . . . . . . . . . A total of 10,000,000 shares of
common stock of the company which
may be offered from time to time on
terms to be determined at the time
of offering for the purpose of
acquisitions, mergers or other
business combinations. The common
stock may be offered at prices and
on terms to be set forth in
prospectus supplements. Of these,
1,134,482 shares of common stock
are being registered herein to
permit current preferred
shareholders to convert their
preferred stock to common stock.
See "Description of Securities" on
page 29.
Offering Price Common Stock . . . . . . To be determined at time of the
Offering.
Common Stock Outstanding . . . . . . . . 5,070,434 shares as of the date
hereof, not including 200,000
warrants to purchase common stock
and 140,000 options to purchase
common stock; 6,204,916 shares if
all of the preferred stock is
converted to common stock. See
"Description of Securities"
beginning on page 29.
OTC/BB Symbol Common Stock . . . . . . . HMLF
Use of Proceeds. . . . . . . . . . . . . The company will not receive any
cash proceeds as a result of this
offering. However, if HomeLife were
to receive proceeds, it would use
the proceeds according to its
business plan. See "Use of
Proceeds" beginning on page 9.
Risk Factors . . . . . . . . . . . . . . The securities offered hereby
involve a high degree of risk and
immediate substantial dilution.
See "Risk Factors."" beginning on
page 5.
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SELECTED FINANCIAL DATA
The following table presents selected historical financial data for
HomeLife derived from the company's Financial Statements. The historical
financial data presented here is only a summary. You should read the
Financial Statements and notes thereto, which are incorporated by reference
into this prospectus. The following data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" beginning on page 13 and the Financial Statements of the company
and the notes thereto included elsewhere in this prospectus. You are
encouraged to read the entire financial statements and notes attached to this
prospectus.
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Three Months Ended Year Ended
November 30 May 31
1997 1998 1997 1998
---------------------------------------- -----------------------------------
(unaudited) (unaudited) (audited) (audited)
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STATEMENT OF OPERATIONS
DATA:
Royalty and franchise fees $ 521,227 $ 461,063 $ 730,672 $ 1,214,946
Warranty fees 112,353 137,938 (191,949) (208,322)
Real estate commissions --- 1,835,833 --- 6,471,279
Loan fees 31,393 --- --- ---
------------- ------------- ------------- -------------
Other income 24,009 141,998 310,357 141,847
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Total Revenues $ 688,982 $ 2,576,832 $ 1,232,978 $ 2,212,394
Salaries and fringe benefits 209,723 249,732 --- 489,189
Accounting expenses 62,720 43,660
Legal expenses 97,832 4,678
Occupancy expenses 51,421 75,772 283,334 108,599
General and administrative
expenses 140,137 320,921 700,231 538,618
Other --- --- ---
Minority interest in
subsidiaries --- 4,952 (16,099) (9,177)
Income tax provision 11,986 18,272 (16,000) (73,000)
------------- ------------- ------------- -------------
Net income $ 35,509 $ 47,535 $ 56,762 $ 126,931
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Earnings per share $ .009 $ .010 $ .014 $ .026
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Earnings per share fully
diluted $ .006 $ .009 $ $0.11 $ .020
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November 30, 1997 November 30, 1998 May 31, 1997 May 31, 1998
----------------- ----------------- -------------- -------------
(audited) (audited) (audited) (audited)
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BALANCE SHEET DATA:
Cash $ 232,492 $ 278,567 $ 232,403 $ 223,723
Cash in Trust --- 205,756 -- 489,014
Accounts receivable net 153,571 288,279 90,659 231,710
Notes receivable net 777,957 527,160 200,000 911,160
Other receivables --- --- 536,500 ---
Inventory 165,000 138,255 165,179 162,737
Prepaid expenses and
deposits 38,513 120,472 19,791 39,256
Investment --- 375,000 --- ---
Property and equipment net 511,175 571,025 527,273 554,654
Investment in trademarks
and other intellectual
assets net 1,216,740 1,646,201 1,228,115 1,632,374
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Total Assets $ 3,095,448 $ 4,150,715 $ 2,999,920 $ 4,244,628
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Total liabilities $ 358,138 $ 1,091,608 $ 436,605 $ 1,233,302
Stock & additional paid in
capital 3,226,225 4,160,051 3,088,725 4,159,805
Accumulated deficit (488,915) (350,000) (525,410) (398,479)
------------- ------------- ------------- -------------
Total liabilities &
stockholders equity $ 3,095,448 $ 4,900,715 $ 2,999,920 $ 4,244,628
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RISK FACTORS
AN INVESTMENT IN THE SHARES OFFERED IN THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK AND SHOULD ONLY BE MADE BY PERSONS WHO CAN AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. ACCORDINGLY, YOU SHOULD CONSIDER CAREFULLY THE
FOLLOWING FACTORS, IN ADDITION TO THE OTHER INFORMATION CONCERNING HOMELIFE,
INC. AND ITS BUSINESS CONTAINED IN THIS PROSPECTUS, BEFORE PURCHASING THE
SHARES. SHARES MAY ONLY BE PURCHASED ON THE TERMS, PRICE AND OTHER CONDITIONS
CONTAINED IN A PROSPECTUS SUPPLEMENT.
LIMITED OPERATING HISTORY. HomeLife began operations in 1995 by the
acquisition of the HomeLife Realty Services, Inc. and HomeLife Realty U.S.
Limited Partnership (California). Our success is dependent upon the
successful development and marketing of our franchises, the revenues
generated by the franchises and the continued expansion and acquisition of
franchises and franchisors. There is no guaranty that we will be able to
accomplish these things. Unanticipated problems, expenses, and delays are
frequently encountered in establishing a new business. Problems include, but
are not limited to, competition, the need to develop franchise support
capabilities and market expertise, market acceptance, and sales and
marketing. The failure to meet any of these conditions would have a
materially adverse effect on HomeLife and could force HomeLife to reduce or
curtail operations. No assurance can be given that we can or will continue
to operate profitably. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on page 13 and "The
Company--Competition" on page 21.
FUTURE CAPITAL NEEDS COULD RESULT IN DILUTION TO INVESTORS; ADDITIONAL
FINANCING COULD BE UNAVAILABLE OR HAVE UNFAVORABLE TERMS. HomeLife's future
capital requirements will depend on many factors, including cash flow from
operations, progress in expanding the number of franchises, the success of
acquisitions and expansions, the real estate market and our ability to
provide services to our franchise base. Although we currently have no
specific plans or arrangements for financing and no commitments for future
financing, it may be necessary to raise additional funds through equity or
debt financings. Any equity financings could result in a dilution of the
value of existing shareholders' shares. Sources of debt financing may result
in higher interest expense. Any financing, if available, may be on
unfavorable terms. If adequate funds are not obtained, we may be required to
reduce or curtail operations. We anticipate that our existing capital
resources will be adequate to satisfy our operating expenses and capital
requirements for at least 12 months. However, such estimates may prove to be
inaccurate. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" on page 13, "Business of the Company" on page 17,
and Financial Statements.
ECONOMIC CONDITIONS AND THE REAL ESTATE MARKET. As with other
businesses, HomeLife's results may be adversely affected by unfavorable
local, regional or national economic conditions affecting disposable consumer
income and the ability or willingness of consumers to purchase or sell their
residential properties. There can be no assurance that consumer spending
will not decline in response to economic conditions, thereby adversely
affecting the company's growth, net sales, and profitability.
COMPETITION. HomeLife competes with many other established real estate
franchisors. Many of these companies have greater capital, marketing and
other resources. There can be no assurance that these or other entities will
not develop competitive marketing methods or acquire franchises in more
geographical markets than HomeLife. There can be no assurance that HomeLife
will successfully differentiate itself from our competitors, or that the
market will consider HomeLife's services to be superior to or more appealing
than those of its competitors. Market entry by any significant competitor
may have an adverse effect on our sales and profitability. See "Business of
the Company--Competition" on page 21.
DIFFICULTY OF PLANNED EXPANSION; MANAGEMENT OF GROWTH. We have expanded
operations rapidly, and plan to continue to further expand our level of
operations. HomeLife's operating results will be adversely affected if net
sales do not increase sufficiently to compensate for the increase in
operating expenses caused by this expansion. In addition, our planned
expansion of operations may cause significant strain on our management,
technical, financial, and other resources. To manage our growth effectively,
we must continue to improve and expand our existing resources and management
information systems and must attract, train, and motivate qualified managers,
employees and franchisees. There can be no assurance, however, that the
company will successfully achieve these goals. If we are unable to manage
growth effectively, our operating results will be adversely affected.
5
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DEPENDENCE UPON KEY PERSONNEL. HomeLife's success depends, to a
significant extent, upon a number of key employees. The loss of services of
one or more of these employees could have a material adverse effect on the
business of the company. The company has entered into an employment
agreement with its President/Chief Executive Officer only. We have not
entered into an employment agreement with any other of our key officers.
Competition for such personnel is intense. There can be no assurance that
HomeLife will be successful in attracting and retaining such personnel.
HomeLife has "key person" life insurance on its President, Andrew Cimerman,
only. The Company does not have "key person" life insurance on any other of
its key employees. See "Management" on page 24.
POTENTIAL CONFLICTS OF INTEREST BETWEEN THE COMPANY AND ITS OFFICERS,
DIRECTORS, AND SHAREHOLDERS. Mr. Andrew Cimerman, President and Director of
the company, currently operates Realty World America, Inc. Realty World
America, Inc. is a real estate services franchise and licensing company.
While Mr. Cimerman does not believe such operations will present a conflict
of interest, this relationship could result in a conflict of interest for the
company. In order to avoid potential conflicts, all opportunities available
to Realty World which could be available to HomeLife are disclosed to the
HomeLife board for consideration and approval.
Mr. Cimerman also owns and operates Jerome's Magic World, Inc., which
has a licensing arrangement with the company. This arrangement provides the
company with the right to use its characters in its business at no cost to
the company.
Mr. Cimerman is also President and a majority shareholder of Simcoe Fox
Developments and HomeLife Cimerman Real Estate Ltd., a Toronto, Ontario
company, which holds real estate investments, and HomeLife Cimerman Real
Estate Ltd., a Toronto company, engaged in real estate sales. These
operations do not demand a substantial amount of Mr. Cimerman's time efforts
and do not conflict with the sorts of operations conducted by HomeLife.
Mr. Cimerman is President of HomeLife Securities, Inc., a Canadian
corporation. HomeLife Securities, Inc. licenses franchise trademarks to the
company at no cost.
In addition to the above, HomeLife's officers and directors are or may
become, in their individual capacities, officers, directors, controlling
shareholders or partners of other entities engaged in a variety of businesses
which may in the future have various transactions with the company. Thus,
potential conflicts of interest exist, including among other things,
conflicts with respect to the time, effort, and corporate opportunities
involved in participation with such other business entities and transactions.
Each officer and director of HomeLife may engage in business opportunities
outside the company. An officer or director may continue any business
activity in which such officer or director engaged prior to joining the
company. The officers and directors of the company are aware of the fact that
they owe a fiduciary duty to the company not to withhold any corporate
opportunity from the company which may arise because of their association
with the company. See "Certain Transactions -- Conflicts of Interest," and
"Principal Shareholders."
LACK OF DIVIDENDS. The Company has never paid any cash dividends on its
common stock and does not anticipate paying any cash dividends in the future.
The Company has paid dividends to the Class AA preferred shareholders in the
amount of $9,010 paid through November 30, 1998. Other than the requirement
to pay the Class AA preferred shareholders, the company currently intends to
retain future earnings, if any, to fund the development and growth of its
business. See "Dividend Policy" on page 9.
DILUTION. Purchasers of shares of common stock in the offering of these
shares will experience either an immediate dilution or increase from the
initial public offering price. The shares being registered hereunder will
represent, upon completion of the offering of all the shares registered
hereunder, 66.35% of the total shares of common stock outstanding. Assuming
an offering price the equivalent of the lowest market price reported of $.35,
new investors will experience a per share increase immediately following the
offering of $.02 per share. Assuming an offering price the equivalent of the
highest market price reported of $5.00 per share. New investors will
experience a per share dilution of $1.92 per share. See "Dilution" on page 8.
POSSIBLE VOLATILITY OF SHARE PRICE. The offering price of the shares
may be determined by negotiations between the company or with other companies
with whom HomeLife will merge or acquire and may not necessarily be related
to HomeLife's existing market price, asset value, net worth, or other
established criteria of value. Additionally, potential investors should be
aware that the shares of the company may have been sold privately at a
substantial discount to the public offering price.
RISKS RELATING TO LOW-PRICE STOCKS. HomeLife's company's common stock
is currently traded on the
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Over-the-Counter Bulletin Board ("OTC/BB"). As a result, an investor could
find it more difficult to dispose of, or to obtain accurate quotations of the
market value of the company's shares as compared to shares which are traded
on the Nasdaq trading market or on an exchange. In addition, trading in the
shares would be covered by Rules 15g-1 through 15g-100 promulgated under the
Securities Exchange Act of 1934 for non-Nasdaq and non-exchange listed
securities. Under this rule, broker-dealers who recommend such securities
must satisfy burdensome sales practice requirements, including a requirement
that they make an individualized written suitability determination for the
purchaser and receive the purchaser's written consent prior to the
transaction. The Securities Enforcement and Penny Stock Reform Act of 1990
also requires additional disclosure in connection with any trades involving a
stock defined as a "penny stock" (generally, according to recent regulations
adopted by the SEC, any equity security that has a market price of less than
$5.00 per share, subject to certain exceptions), including the delivery,
prior to any penny stock transaction, of a disclosure schedule explaining the
penny stock market and the risks associated therewith, the requirement that a
broker-dealer must provide the customer with current bid and
offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction, and monthly account statements
showing the market value of each penny stock held in the customer's account.
The regulations governing low-priced or penny stocks could limit the ability
of broker-dealers to sell the company's shares and thus the ability of the
purchasers of this offering to sell their shares in the secondary market.
REQUIREMENTS OF CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION. The
common stock to be offered from time to time hereunder must be qualified for
sale or exempt therefrom under applicable state securities laws. There can
be no assurance, however, that the company will be successful in maintaining
a current registration statement. After a registration statement becomes
effective, it may require updating by the filing of a post-effective
amendment. A post-effective amendment is required:
- - any time after nine months subsequent to the effective date when any
information contained in the prospectus is over sixteen months old;
- - when facts or events have occurred which represent a fundamental change in
the information contained in the registration statement; or
- - when any material change occurs in the information relating to the plan of
distribution of the securities registered by such registration statement.
HomeLife anticipates that this registration statement will remain effective
for at least nine months following the date of this Prospectus, assuming a
post-effective amendment is not filed by the company. HomeLife will be
prevented from issuing shares of common stock until it files a prospectus
supplement setting forth the price and other terms of the offerings.
CONTINGENT LIABILITIES. In purchase agreements for The Keim Group,
Guardian Home Warranty, and Builders Realty, HomeLife issued stock as part of
the purchase price. The value of the stock issued was set at $5.00 per share
which was substantially over the current market value. HomeLife agreed that
if the actual market value of the stock did not reach $5.00 per share within
two years for The Keim Group and Guardian shareholders and one year for the
Builder's shareholders, each shareholder would be issued additional shares of
HomeLife to reach this value, or cash. If the value of the shares does not
reach this $5.00 market value, further dilution of existing shareholders
would occur, and cash that could be used for other purposes could be required
to pay these groups.
7
<PAGE>
SAFE HARBOR
This prospectus contains statements that constitute "forward-looking
statements." Such statements appear in a number of places in this prospectus
and include statements regarding the intent, belief, or current expectations
of the company, its directors, or its executive officers with respect to,
among other things: (i) trends affecting the company's financial condition or
results of operations; (ii) the company's business and growth strategies; and
(iii) the use of the proceeds to the company of this Offering. You are
cautioned that any such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and that actual
results may differ materially from those projected in the forward-looking
statements as a result of various factors. Important factors that could
cause such differences are identified under "Risk Factors" above.
DILUTION
Dilution is the difference between the public offering price per share
for the common stock offered herein, and the net tangible book value per
share of the common stock immediately after its purchase. The Company's net
tangible book value per share is calculated by subtracting the company's
total liabilities from its total assets less any intangible assets, and then
dividing by the number of shares then outstanding.
The net tangible book value of HomeLife prior to any offering, based on
its November 30, 1998 financial statements, was $2,162,906 or approximately
$.43 per common share.
Assuming all the preferred shares are converted and all shares registered
hereunder are sold, the company will have 15,070,434 shares outstanding. The
post offering pro forma net tangible book value of the company, cannot be
determined without determining the net proceeds from the Offering. However,
there is a likelihood that the proceeds raised may result in dilution to
investors in the Offerings of the shares registered herein. Net tangible book
value per share may increase to the benefit of present shareholders.
The highest and lowest per share price of HomeLife's stock historically
is $.35 and $5.00 respectively. Assuming a public offering price of $.35 per
share, and an added value to the company of $3,452,931, and not taking into
consideration any expenses or costs associated with any offering, the book
value would be $.37 per share. This would result in an increase in value to
investors in this offering of $.03 per share or 5% from the offering price of
$.35 per share. Net tangible book value to present shareholders would
decrease from $.43 to $1.37 after the offering. Assuming a public offering
price of $5.00 per share, and an added value to the company of $44,327,590
and not taking into consideration any expenses or costs associated with any
offering, the book value would be $3.08 per share. This would result in
dilution to investors in this offering of $1.92 per share or 38.4% from the
offering price of $5.00 per share. Net tangible book value to present
shareholders would increase from $.43 to $3.08 after the offering.
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
------- -------
<S> <C> <C>
Initial public offering price (per share) $ .35 $ 5.00
Net tangible book value per share before $ .43 $ .43
the Offering
Increase per share attributable to payments $ (.05) $ 2.65
by new investors
Pro forma net tangible book value per share $ .37 $ 3.08
after the Offering
Dilution per share to new investors $ .02 (5%) $ 1.92 (38.4%)
</TABLE>
8
<PAGE>
USE OF PROCEEDS
HomeLife will not immediately receive any cash proceeds as a result of
this offering. Any proceeds and the use of such proceeds to be raised from
time to time will be the subject of a prospectus supplement. HomeLife
intends to issue shares from this offering solely in connection with business
combinations, acquisitions, or mergers. As such, the proceeds would most
likely be in the form of assets or shares. If the company were to realize
cash proceeds, it anticipates that it will continue to use proceeds from any
offering for, in order of preferred use, expansion of the MaxAmerica mortgage
loan financing, acquisition of real estate brokerage companies, expansion of
existing real estate franchise operations under the HomeLife and Red Carpet
names, acquiring another home warranty company, forming a joint venture with
an existing life and property insurance company, and for general and
administrative expenses.
<TABLE>
<CAPTION>
USE OF PROCEEDS MINIMUM* PERCENT MAXIMUM* PERCENT
--------------- ------- ------- --------- -------
<S> <C> <C> <C> <C>
Mortgage loan financing $1,750,000 52% $1,750,000 4%
Company owned offices $1,000,000 20% $1,000,000 2.3%
Real estate franchising $702,931 18% $750,000 1.7%
Home warranty -0- 0% $500,000 1.1%
Insurance -0- 0% $250,000 .5%
General administrative -0- 0% $750,00 1.7%
Working capital -0- 0% $750,000 88.7%
TOTALS $3,452,931 100% $44,327,590 100%
</TABLE>
* Assumes a minimum based on the lowest reported value of $.35 and a maximum
based on the highest reported value of $5.00
The allocation of net proceeds, which will be set forth in any prospectus
supplement, will be estimates based upon the company's plans and upon certain
assumptions regarding the progress of development of its business, the real
estate market, changing competitive conditions, the ongoing evaluation and
determination of the commercial potential of the company's services and the
company's ability to enter into agreements to acquire or merge with other
companies. If any of these factors change, HomeLife may reallocate some of the
net proceeds amongst various categories of use. HomeLife believes that current
resources will be sufficient to fund working capital and capital requirements
for at least 12 months from the date of this Prospectus.
DIVIDEND POLICY
HomeLife has never paid any cash dividends on its common stock and does
not anticipate paying any cash dividends in the future. The Class AA
preferred shares are entitled to receive dividends accruing at the rate of
eight percent per year on each share from the date of issuance through the
date of conversion (the "Coupon Dividends"). These Coupon Dividends are
payable quarterly. Any Coupon Dividend on the Class AA preferred shares
which has accrued but which, for any reason whatsoever, has not been declared
or has been declared but has not been timely paid, shall be deemed in arrears
and shall accumulate until paid. The Company has paid $9,010 in Coupon
Dividends as of the date of this Prospectus. Other than the requirements of
the Class AA preferred shares, the company currently intends to retain future
earnings, if any, to fund the development and growth of its business.
9
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the company as of
November 30, 1998.
<TABLE>
<CAPTION>
November, 1998
(unaudited)
---------------
<S> <C>
DEBT:
Accounts Payable $275,710
Notes Payable 10,000
Advances from stockholder 340,166
Accrued expenses 34,232
Reserve for warranties 55,100
Dividends Payable 9,010
Income Tax Payable 105,802
Trust Liability 220,756
Minority Interest 40,832
----------
Total debt: $1,091,608
----------
----------
STOCKHOLDERS' EQUITY:
Common Stock, $.001 par value
10,000,000 shares authorized
5,070,434 shares issued and outstanding $5,070
Class A Convertible Preferred Stock, $100 par value
6% non-cumulative
100,000 shares authorized
10,000 issued and outstanding
Class AA Convertible Preferred Stock, $500 par value 1,000,000
8% cumulative
2,000 shares authorized
325 issued and outstanding
Additional paid-in capital
Accumulated deficit 162,500
2,992,481
Total stockholders' equity: (350,994)
----------
$3,809,107
----------
----------
</TABLE>
10
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data is qualified by reference to a
summary of information contained in the Financial Statements, related Notes to
Financial Statements and Report of Independent Public Accountants, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained elsewhere herein. You are encouraged to read these
sections and the financial statements. The following tables summarize certain
selected financial data of the company for the year ended May 31, 1998
(audited), and the year ended May 31, 1997 (audited) and for the three months
ended November 30, 1998 (unaudited) and November 30, 1997 (unaudited). The data
has been derived from Financial Statements included elsewhere in this Prospectus
that were audited by Biller, Firth-Smith and Archibald, Certified Public
Accountants. No dividends have been paid on common stock for any of the periods
presented.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
November 30 May 31
1997 1998 1997 1998
----------- ----------- --------- ---------
(unaudited) (unaudited) (audited) (audited)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Royalty and franchise fees $521,227 461,063 $ 730,672 $1,214,946
Warranty fees 112,353 137,938 (191,949) (208,322)
Real estate commissions --- 1,835,833 --- 6,471,279
Loan fees 31,393 --- --- ---
Other income 24,009 141,998 310,357 141,847
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Total Revenues $ 688,982 $2,576,832 $1,232,978 $2,212,394
Salaries and fringe benefits 209,723 249,732 --- 489,189
Accounting expenses 62,720 43,660
Legal expenses 97,832 4,678
Occupancy expenses 51,421 75,772 283,334 108,599
General and administrative
expenses 140,137 320,921 700,231 538,618
Other --- --- ---
Minority interest in
subsidiaries --- 4,952 (16,099) (9,177)
Income tax provision 11,986 18,272 (16,000) (73,000)
---------- --------- ---------- ----------
Net income 35,509 47,535 56,762 126,931
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Earnings per share $ .009 $ .010 $ .014 $ .026
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Earnings per share fully
diluted $ .006 $ .009 $ 0.11 $ .020
---------- --------- ---------- ----------
---------- --------- ---------- ----------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
November 30, 1997 November 30, 1998 May 31, 1997 May 31, 1998
----------------- ----------------- ------------ -------------
(audited) (audited) (audited) (audited)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash $ 232,492 $ 278,567 $ 232,403 $ 223,723
Cash in Trust --- 205,756 -- 489,014
Accounts receivable net 153,571 288,279 90,659 231,710
Notes receivable net 777,957 527,160 200,000 911,160
Other receivables --- --- 536,500 ---
Inventory 165,000 138,255 165,179 162,737
Prepaid expenses and
deposits 38,513 120,472 19,791 39,256
Investment --- 375,000 --- ---
Property and equipment net 511,175 571,025 527,273 554,654
Investment in trademarks
and other intellectual
assets net 1,216,740 1,646,201 1,228,115 1,632,374
----------- ----------- ----------- -----------
Total Assets $ 3,095,448 $ 4,150,715 $ 2,999,920 $ 4,244,628
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Total liabilities $ 358,138 $ 1,091,608 $ 436,605 $ 1,233,302
Stock & additional paid in
capital 3,226,225 4,160,051 3,088,725 4,159,805
Accumulated deficit (488,915) (350,000) (525,410) (398,479)
----------- ----------- ----------- -----------
Total liabilities &
stockholders equity $ 3,095,448 $ 4,900,715 $ 2,999,920 $ 4,244,628
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
HomeLife, Inc. was incorporated in Nevada on October 9, 1995 for the
purpose of combining with Management Dynamics, Inc., a publicly owned New
Jersey corporation. In November, 1995, the company concluded the purchase of
HomeLife Reality Services, Inc. and HomeLife Realty U.S. Limited Partnership
(California) launching its real estate services business.
The company has experienced significant growth primarily through its
acquisitions of and combinations with various other companies. This includes
the acquisition in August 1996 of the Keim Group of Companies and Guardian Home
Warranty Company (Michigan) adding 60 real estate offices and a home warranty
company in Michigan. In 1997, the company purchased 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 valued at $77,500.
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 no included any funding agreements or other liabilities on the part of the
company. Since the end of the fiscal year, HomeLife has formed strategic
alliances with Home Value Check, LLC, Mortgage Capital Resources, and Western
Pacific Investment Corp. 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.
13
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
financial information for HomeLife:
<TABLE>
Three Months Ended Year Ended
November 30 May 31
-------------------------------------- ------------------------------
1997 1998 1997 1998
(unaudited) (unaudited) (audited) (audited)
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Royalty and franchise fees $ 521,227 $ 461,063 $ 730,672 $1,214,946
Warranty fees 112,353 137,938 (191,949) (208,322)
Real estate commissions --- 1,835,833 --- 6,471,279
Loan fees 31,393 --- --- ---
Other income 24,009 141,998 310,357 $ 141,847
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Total Revenues $ 688,982 $2,576,832 $1,232,978 $2,212,394
Salaries and fringe benefits 209,723 249,732 --- 489,189
Accounting expenses 62,720 43,660
Legal expenses 97,832 4,678
Occupancy expenses 51,421 75,772 283,334 108,599
General and administrative
expenses 140,137 320,921 700,231 538,618
Other --- --- ---
Minority interest in
subsidiaries --- 4,952 (16,099) (9,177)
Income tax provision 11,986 18,272 (16,000) (73,000)
----------- ----------- ---------- ----------
Net income $ 35,509 $ 47,535 $ 56,762 $ 126,931
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Earnings per share $ .009 $ .010 $ .014 $ .026
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Earnings per share fully
diluted $ .006 $ .009 $ 0.11 $ .020
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
</TABLE>
14
<PAGE>
<TABLE>
November 30, 1997 November 30, 1998 May 31, 1997 May 31, 1998
----------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
(audited) (audited) (audited) (audited)
BALANCE SHEET DATA:
Cash $ 232,492 $ 278,567 $ 232,403 $ 223,723
Cash in Trust --- 205,756 -- 489,014
Accounts receivable net 153,571 288,279 90,659 231,710
Notes receivable net 777,957 527,160 200,000 911,160
Other receivables --- --- 536,500 ---
Inventory 165,000 138,255 165,179 162,737
Prepaid expenses and
deposits 38,513 120,472 19,791 39,256
Investment --- 375,000 --- ---
Property and equipment net 511,175 571,025 527,273 554,654
Investment in trademarks
and other intellectual
assets net 1,216,740 1,646,201 1,228,115 1,632,374
----------- ---------- ----------- -----------
Total Assets $ 3,095,448 $4,150,715 $ 2,999,920 $ 4,244,628
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
Total liabilities $ 358,138 $1,091,608 $ 436,605 $ 1,233,302
Stock & additional paid in
capital 3,226,225 4,160,051 3,088,725 4,159,805
Accumulated deficit (488,915) (350,000) (525,410) (398,479)
----------- ---------- ----------- -----------
Total liabilities &
stockholders equity $ 3,095,448 $4,900,715 $ 2,999,920 $ 4,244,628
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
</TABLE>
THREE MONTHS ENDED NOVEMBER 30, 1998 (UNAUDITED) AS COMPARED TO THE THREE
MONTHS ENDED NOVEMBER 30, 1997 (AUDITED).
REVENUES. The company generated total revenues of $2,576,832 for the three
months ended November 30, 1998 compared to total revenues of $688,982 for the
three months ended November 30, 1997. The significant increase in revenues of
$1,887,850 was primarily the result of increased real estate commissions
attributable to the acquisitions of various franchises and licenses and the
up-turn of the real estate market.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for the three months ended November 30, 1998 were $320,921 compared to $140,137
for the three months ended November 30, 1997. The increase of $180,784 for the
three months ended November 30, 1998 was primarily a result of the acquisition
of franchise offices.
NET INCOME. Net income for the three months ended November 30, 1998 was
$47,535 compared to a net loss of $35,509 for the three months ended November
30, 1997. The increase in the net income of $12,026 for the three months ended
November 30, 1998 was a result of increased real estate commissions.
YEAR ENDED MAY 31, 1998 (AUDITED) COMPARED TO THE YEAR ENDED MAY 31, 1997
(AUDITED).
REVENUES. The company generated total revenue of $2,212,394 for the year
ended May 31, 1998 compared to total revenue of $1,232,978 for the year ended
May 31, 1997. The significant increase in revenues of $979,416 was primarily
the result of increased sales commission and franchise fees. These increases
were due not only to the acquisition of additional franchise offices, but to the
up-turn in the real estate market.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for the year ended May 31, 1998 were $1,184,744 compared to $1,144,177 for the
year ended May 31, 1997. The increase of $40,000 for the year ended May 31,
1998 was primarily a result of increased salary obligations.
15
<PAGE>
GAIN ON SALE OF INVESTMENTS. Gain on the sale of investments for the year
ended May 31, 1998 was zero compared to $180,000 for the year ended May 31,
1997. In 1997, the company sold its shareholdings of HOA Property Management
Company for a gain of $180,000.
SALE OF FRANCHISES. The income from the sale of franchises for the year
ending May 31, 1998 was $200,000 compared to zero for May 31, 1997. This
difference of $200,000 is due to the sale of a Master Franchise to a German
investment company.
FORGIVENESS OF DEBT. The income from debt forgiveness for the year ending
May 31, 1998 was zero compared to $69,375 for May 31, 1997. This difference is
due to the forgiveness of debt by Keim Group Ltd. shareholders as a condition of
the acquisition of Keim Group Ltd. by the company.
INTEREST INCOME. Interest income for the year ended May 31, 1998 was
$14,362 compared to $5,645 for the year ended May 31, 1997. The increase of
$8,717 is interest income attributable to Builders.
NET INCOME. Net income for the year ended May 31, 1998 was $139,931
compared to a net income of $56,762 for the year ended May 31, 1997. The
increase in the net income of $83,169 for the year ended May 31, 1998 was a
result of the acquisition of Builders.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, HomeLife has primarily funded its capital
requirements through equity infusions, officer loans and the results of
operations.
The acquisition of franchises has provided the company with an income
stream and the company believes that the shares to be registered herein, and
to be offered from time to time pursuant to the terms of a prospectus
supplement, can be utilized as a source of financing goals of the company.
YEAR 2000
The company has developed and acquired its computer systems with an
objective to be Year 2000 compliant. HomeLife has limited use of computer
software. HomeLife's computer software use is limited primarily to word
processing and accounting software. The accounting software used by
HomeLife's U.S. software is the most recent version of such software and has
been presented as Year 2000 compliant. The accounting software used in
Canada is being investigated by the Company as to its compliance. The
Company will undertake to install any available patches to bring its software
into compliance and/or acquire compliant software. However, the overall cost
of such activities is insignificant and the cost of a failure of such system
is, in management's opinion, not material to the overall profitability of the
Company.
HomeLife has assessed and continues to asses whether its information and
non-information technology systems will be effected by the Year 2000 issues.
HomeLife has investigated its third party communications suppliers such as
the telephone company and its Internet service provider and found that all
are in the process of becoming Year 2000 compliant. Based upon current
information, management believes that the necessary modifications have been
made internally to effectively continue HomeLife into the Year 2000, however,
management is continuing to monitor internal systems, and to assess the
readiness of its systems. As a contingency, HomeLife has identified other
communication suppliers who could provide the necessary service at a minimal
cost to the company, and a minimal effect on the operations of the company.
Based upon current information, HomeLife does not believe that the costs
associated with Year 2000 compliance is material for the company.
16
<PAGE>
BUSINESS OF THE COMPANY
GENERAL
Incorporated in 1995, HomeLife, Inc., a Nevada corporation, ("HomeLife") is
a real estate services franchisor. HomeLife utilizes both its proprietary
"SuperSystem" marketing system and its business combinations and acquisitions to
fuel development as a fast growing real estate services company.
The company maintains its corporate office in Newport Beach, California,
and maintains regional offices in Troy, Michigan and Calgary, Alberta, Canada.
HomeLife operates through various subsidiaries and companies servicing its
franchised tradenames. Through its subsidiary, HomeLife Realty Services, Inc.,
the company, services approximately 50 real estate offices in the State of
California. Through Red Carpet Keim, the company services approximately 60 real
estate offices in the State of Michigan and through its tradenames, Red Carpet
Real Estate Services, Network Real Estate and National Real Estate Service,
services approximately 70 real estate offices in various states. In addition
to the above, the company operates both direct real estate sales and mortgage
lending through its subsidiary, Builders Realty Ltd. ("Builders"), in Calgary,
Alberta, Canada and home warranties through its majority-owned subsidiary,
Guardian Home Warranty.
The company's growth is largely attributable to business combinations and
acquisitions. The company was initially incorporated in 1995 for the purpose of
combining with Management Dynamics, Inc. a publicly owned New Jersey
corporation. In November 1995, it purchased HomeLife Realty Services, Inc. and
HomeLife Realty U.S. Limited Partnership (California) in exchange for common and
preferred shares of the company. In August 1996, HomeLife Realty Services
acquired the Michigan based Red Carpet Keim Group of companies. With this
acquisition, the company acquired approximately 60 franchise offices, 95% of the
outstanding stock of Red Carpet Keim, and 80% of the outstanding stock of
Guardian Home Warranty Company all located in the state of Michigan.
In November 1996, the company incorporated FamilyLife Realty Services, Inc.
in Michigan for the purpose of purchasing the tradenames and licensing
agreements of S&S Acquisition Corp. and function as a franchisor for the Red
Carpet and National Real Estate Service tradenames which S&S Acquisition Corp
owned. FamilyLife Realty Services, Inc. became a wholly owned subsidiary of the
company.
In January 1997, the FamilyLife Realty Services, Inc. acquired the assets
of Salt Lake City based franchisor, S&S Acquisition Corp. This acquisition
included the tradenames "Red Carpet" and "National Real Estate Services", and
the licensing agreements of Red Carpet Real Estate Services and National Real
Estate Service, adding approximately 58 real estate offices. The company also
acquired the real estate computer technology of House by Mouse and Virtual
Assistant. With this technology, the company has been able to enhance Internet
communication giving agents the capability of accessing marketing, advertising
and general office materials and licensed products over the Internet. In July
1997, acquired the licensing agreements and trademarks of Network Real Estate,
Inc., its 12 Northern California offices and its "high-end" luxury division of
"International Estates," a Network Real Estate, Inc. trade name. This
acquisition provides a platform for growth in Northern California.
In November 1997, HomeLife incorporated MaxAmerica Financial Services,
Inc. MaxAmerica Financial Services, Inc. provide 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.
In February 1998, the company acquired Builders. Builders is a two office
retail real estate and mortgage loan company located in Calgary, Alberta,
Canada. Builders has retained its name and operates as a wholly owned
subsidiary of HomeLife, Inc.
In April 1998, the company incorporated National Sellers Network, Inc., as
a Nevada corporation, to function as a real estate licensing company for the
National Real Estate Service trade name. National Sellers Network, Inc. is a
wholly owned subsidiary of the company. Also in April 1998, the company
incorporated Red Carpet Broker Network, Inc., as a Nevada corporation, to
function as a real estate licensing company for the Red
17
<PAGE>
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.
Finally, in September 1998, the company acquired the investment banking
firm of Aspen, Benson & May, LLC.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
18
<PAGE>
The following is an organizational chart of the company's subsidiaries:
HomeLife, Inc. (Nevada)
November, 1995
HomeLife Realty Services, Inc. (Delaware)
May 1996
Red Carpet Keim (Michigan)
August 1996
Guardian Home Warranty Company
August 1996
FamilyLife Realty Services, Inc. (Michigan)
November 1996
MaxAmerica Financial Services, Inc.
(California) October 1997
HomeLife California Realty, Inc.
October 1997
Builders Realty Ltd. (Canada)
February 1998
National Sellers Network, Inc.
April 1998
Red Carpet Broker Network, Inc.
April 1998
HomeLife Properties, Inc. (Nevada)
August 1998 Aspen Benson & May, LLC (California)
September 1998
The company's niche in the market is maintained through the development of
its proprietary marketing system. This community based marketing system, called
the "SuperSystem" replaces the outdated marketing methods of cold calling and
door knocking to obtain real estate listings and potential buyers. The
elimination of these methods has attracted two types of franchisees, franchisees
new to operating a franchise and those who terminated other franchise agreements
with the company's competitors to become a franchisee of the company.
As of the date hereof, the company had: 5,070,434 common shares; 200,000
warrants to purchase common stock; 140,000 options to purchase common stock,
10,000 Class A preferred shares; and, 325 Class AA preferred shares issued and
outstanding. Assuming all the preferred shares are converted and all shares
registered hereunder are sold, the company will have 15,070,434 shares of common
stock outstanding after the offering.
HomeLife was incorporated under the laws of the State of Nevada on October
9, 1995.
OVERVIEW OF HOMELIFE'S MARKETS
Management believes that the real estate market is growing rapidly.
HomeLife's target market includes
- franchise operations with 5 to 50 offices,
19
<PAGE>
- realtors who are financially weak and lack a good marketing system, and
- realtors without strong name brand recognition.
HomeLife's customer generating, community based marketing system
"SuperSystem" eliminates the outdated marketing methods of cold-calling and door
knocking used by traditional realtors. This combination of marketing system,
computer technology, real estate services and training provides the company's
agents with thousands of customer leads.
In addition to this proprietary system, the acquisition by the company of
companies with both recognizable tradenames, such as Red Carpet, and existing
franchise locations has enabled the company to gain immediate market
recognition. This strategy, in management's view, will increase the company's
market share.
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, Illinois, Indiana, Michigan, Nevada, Ohio,
South Carolina, Texas and Utah and govern the relationships of approximately 168
offices. This number varies between 5 and 10 offices at any given time as most
franchise agreements are month to month and the number of franchisees may
fluctuate. 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 intent of such
incentives and bonus plans, if and when offered, is to provide a benefit to
the entire franchise system.
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 includes 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. The licensing agreement, called the "Broker Membership
Agreement," is used in the state of California and governs the relationships
of 180 offices. 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 licenses with the right
to use its proprietary trademarks and service marks.
20
<PAGE>
MORTGAGE FINANCING
The company provides mortgage financing services 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 Guardian
Home Warranty Company.
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 company's products compete on the basis of certain factors,
including most importantly, the ability to generate leads without
cold-calling and door knocking.
The real estate franchise industry is large and composed of many other
companies. Companies such as Century 21, Prudential, Coldwell Banker, Better
Homes and Gardens, ERA, and RE/Max, provide similar services as 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.
COMPETITIVE ADVANTAGES
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.
EMPLOYEES
As of the date of this prospectus, HomeLife employs 16 full-time
employees. The company hires independent contractors on an "as needed" basis
only. The company has no collective bargaining agreements with its
employees. The company believes that its employee relationships are
satisfactory. The company has approximately 180 franchise offices with an
estimated 2,600 agents. The company plans on hiring additional staff in the
immediate future and in the long term, as needed, based on its growth rate.
PROPERTIES
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.
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 has exclusive rights,
granted by Jerome's Magic World, Inc. at no cost to the company, to use its
exclusively developed animated characters for its real estate service
business 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.
21
<PAGE>
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.
LITIGATION
The company is currently involved in three lawsuits.
The first lawsuit entitled National Real Estate Service of Illinois,
Inc. v. HomeLife, Inc., FamilyLife Realty Services, National Real Estate
Service, Realty World America, Inc. and Andrew Cimerman was filed in the
Illinois state court on April 24, 1998 (the "Illinois Action"). In this
action, the plaintiff, National Real Estate Service of Illinois, Inc. alleges
that the defendants breached the master franchise agreement by failing to
provide the services to the franchisees as required therein. In this action,
the plaintiffs request an award of actual damages of $3,000,000 and punitive
damages of $10,000,000.
Prior to the suit being served on the defendants, FamilyLife Realty
Services filed a suit in the United States District Court, Central District
of California, Southern Division, Case No. SACV 98-398 GLT (EEX), entitled
FamilyLife Realty Services, Inc. v. National Real Estate Service of Illinois,
Inc. formerly known as Red Carpet Corporation of Illinois (the "California
Action"). This lawsuit alleges that National Real Estate Service of
Illinois, Inc. breached the master franchise agreement by failing to open and
operate 120 real estate offices in its region resulting in a loss of revenue
to FamilyLife Realty Services of $540,000.00.
The defendants in the Illinois Action transferred the case to the United
States District Court in Illinois and are currently seeking to have the case
transferred to the United States District Court, Central District, Southern
Division. The motion to transfer was denied by the Illinois judge. The
company adamantly denies the allegations contained in the Illinois Action.
The company has filed a motion for summary judgment in the Illinois Action
which is pending. The ultimate resolution of this matter is not ascertainable
at this time. However, if the motion for summary judgment is denied, the
company plans to vigorously defend this Action. The Plaintiffs in the
California Action have filed a motion for summary judgment, the company is
concluding discovery in order to oppose this motion and the company plans to
vigorously pursue this Action. In management's opinion, this matter will not
have a material effect on the financial position of the company.
The second lawsuit is a trademark infringement action filed by Guardian
Life Insurance Company v. Guardian Home Warranty in Michigan. The Plaintiff
alleges that Guardian Home Warranty is infringing on its rights to use the
name "Guardian." The company does not believe that the Plaintiff has
exclusive rights to use the "Guardian" name. The company intends to
vigorously defend this action. The ultimate resolution of this matter is not
ascertainable at this time. In management's opinion, this matter will not
have a material effect on the financial position of the company.
The final action is entitled Bivans v. Coldwell Banker Prestige Realty,
Inc., et. al and was commenced on April 16, 1998 in Michigan. The plaintiff
alleges discrimination by a franchisee, Coldwell Banker Prestige Realty. The
facts of the case arose prior to the acquisition by the company of Red Carpet
Keim, and the defendant, Coldwell Banker Prestige Realty, ceased to be a Red
Carpet Keim franchisee prior to the acquisition of Red Carpet Keim by the
company. The company believes Red Carpet Keim has been named erroneously,
but has not yet secured a dismissal. The company has been assured by
plaintiff's counsel that it does not intend to pursue the action against the
company. 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.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
22
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and officers of the company as of the date of this Prospectus
are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Andrew Cimerman 50 President and Director
Robert L. Cashman 66 Secretary, Treasurer and Director
Terry A. Lyles, Ph.D. 39 Director
F. Bryson Farrill 70 Director
Gabrielle Jeans 47 Vice President
Charles Goodson 43 Vice President
</TABLE>
The number of directors is set at a minimum of 1 and a maximum of 5. The
Board of Directors presently consists of 4 directors. Each of the company's
directors hold office until their respective successors are elected at the next
annual meeting of shareholders. Vacancies in the Board of Directors are filled
by a majority vote of the remaining directors or by a shareholder vote called
expressly for such purpose.
ANDREW CIMERMAN, 50, PRESIDENT AND DIRECTOR, has held the positions of Director
and President since April 1996. For 7 years prior thereto, he was the founder
and majority shareholder of HomeLife Securities, Inc. and its wholly owned
subsidiary HomeLife Realty Services, Inc. Mr. Cimerman is the founder,
President and majority shareholder of: Simcoe Fox Developments, Ltd., a private
development company located in Toronto, Ontario, Canada; HomeLife Cimerman Real
Estate Ltd., a Toronto based real estate company; Jerome's Magic World, Inc.,
the owner of certain animated characters; and, majority shareholder and
President of Realty World America, Inc. Mr. Cimerman brings over 29 years of
real estate service experience to the company, and is a strong and committed
leader focused on the growth and success of the company.
ROBERT L. CASHMAN, 66, SECRETARY, TREASURER AND DIRECTOR, has been with the
company since its inception in October 1995. Mr. Cashman has acted as the
President and majority owner of The Charleston Group, a business consulting and
investment banking firm since January 1, 1993. Mr. Cashman has acted as the
Chairman of the Orange County, California, Airport Commission, operators of John
Wayne Airport since March 1, 1998. He earned a B.S. degree in Business
Administration from the University of California, Los Angeles.
TERRY A. LYLES, PH.D, 39, DIRECTOR joined the company as a director in August
1997. Dr. Lyles is a national and international speaker and trainer to
professional athletes, Fortune 500 Companies, schools, universities and public
audiences. Dr. Lyles' program is to reach people around the world with the
message of "balance and excellence." For the past 15 years, Dr. Lyles has
traveled across the United States and around the world conveying this profound
message of "Life Accountability" and "A Better You." Dr. Lyles has conducted
a weekly radio program "A Better You" since May 1, 1994, which is currently
heard by over 1 million people in 65 nations. Dr. Lyles holds a Ph.D degree in
Psychology from Wayne State University in Detroit, Michigan.
F. BRYSON FARRILL, 70, DIRECTOR joined the company as a director in February
1997. Mr. Farrill has been in the securities industry for the past 32 years.
Mr. Farrill has held various senior positions, including that of President and
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
23
<PAGE>
United States and Canada but has served to direct the expansion of
McLeod, Young, Weir Ltd. into Europe and Asia through an extensive network of
branch offices.
GABRIELLE JEANS, 47, VICE PRESIDENT, has been employed by the company, or its
subsidiary companies since August 1992. She has been employed by the subsidiary,
HomeLife Realty Services, Inc. as Director of Sales and training. She brings
over 22 years of experience in the realty industry to the company including the
invaluable experience of owning and managing her own real estate brokerage firm
with over 100 agents.
CHARLES GOODSON, 43, VICE PRESIDENT has been employed by the company, or its
subsidiary companies since March 1992. Mr. Goodson had 15 years of commercial
banking experience prior to joining HomeLife Realty Services. He is a licensed
realtor. Mr. Goodson earned his B.S. degree in Business Administration from
California State University, Northridge.
EXECUTIVE COMPENSATION
The following officers of the company receive the following annual cash
salaries and other compensation:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Name and Principal Position Year Annual Bonus Awards
Salary -------------------------------
Restricted Securities
Stock Awards Underlying
Options(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Andrew Cimerman, President 1998 $-0-(2) $-0- -0- -0-
- --------------------------------------------------------------------------------------------------------------------------------
Robert Cashman, Secretary, Treasurer 1998 $-0-(2) $-0- -0- -0-
- --------------------------------------------------------------------------------------------------------------------------------
Gabrielle Jeans, Vice President 1998 $72,000 $-0- -0- 30,000
- --------------------------------------------------------------------------------------------------------------------------------
Charles Goodson, Vice President 1998 $72,000 $-0- -0- -0-
- --------------------------------------------------------------------------------------------------------------------------------
All Officers as a Group (4 persons) 1998 $144,000 $-0- -0- 30,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
____________________________________
(1) Ms. Jeans has an option to purchase 30,000 shares of the company's common
stock. These options are fully vested and may be exercised at the price of
$5.00 per share.
(2) The terms of Mr. Cimerman's compensation agreement with HomeLife requires
certain performance thresholds to be met before any compensation is paid.
To date these goals have not been met and Mr. Cimerman has not drawn a
salary from HomeLife. Mr. Cimerman has private investments which are
sufficient for his maintenance. Mr. Cimerman's substantial shareholders in
HomeLife motivate him to use his efforts to increase the value of the
company.
(3) Mr. Cashman is Secretary and Treasurer of HomeLife, Inc. These positions
do not necessarily require compensation and, Mr. Cashman's investment with
the company is minimal. Like Mr. Cimerman, Mr. Cashman has investments
sufficient for his maintenance. Also, like Mr. Cimerman, his beneficial
ownership of stock in HomeLife motivates him to use his best efforts in
these positions for the benefit of the company.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The laws of the State of Nevada and the company's Bylaws provide for
indemnification of the company's directors for liabilities and expenses that
they may incur in such capacities. In general, directors and officers are
indemnified with respect to actions taken in good faith in a manner reasonably
believed to be in, or not opposed to, the best interests of the company, and
with respect to any criminal action or proceeding, actions that the indemnitee
had no reasonable cause to believe were unlawful.
The company has been advised that in the opinion of the Securities and
Exchange Commission, indemnification for liabilities arising under the
Securities Act is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
24
<PAGE>
EMPLOYMENT AND RELATED AGREEMENTS
STOCK OPTIONS
While the company has not enacted a formal stock option plan for its
directors and senior executives, the company has granted certain directors and
officers options to purchase common stock of the company. Board of Directors
members, Mr. F. Bryson Farrill and Dr. Terry Lyles, were granted options to
purchase 50,000 shares of common stock of the company each. The exercise price
of the option is $3.00 per share. These options are fully vested and
exercisable. Vice President, Gabrielle Jeans, has been granted an option to
purchase 30,000 shares of common stock at the exercise price of $5.00 per share.
Ms. Jeans' options are also fully vested and exercisable.
Former director, Edmond Lani, was granted, on July 10, 1996, a three year
option to purchase 10,000 shares of the company's common stock at the option
price of $1.00 per share. Although Mr. Lani is no longer a director of the
company, his option will not expire according to its terms until July 9, 1999.
The following table describes the above options:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Number of securities Percent of total options Exercise on base Expiration
Name underlying options granted to employees in last price ($/share) Date
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
- ------------------------------------------------------------------------------------------------------------------------------
Edmond Lani, former Director 10,000 0% $1.00 7/9/99
- ------------------------------------------------------------------------------------------------------------------------------
Total 140,000 0% -- --
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No options were granted to employees in the last fiscal year.
EMPLOYMENT AGREEMENTS
The company has an employment agreement with Mr. Cimerman wherein Mr.
Cimerman agreed to act as President and Chief Executive Officer of the company
for a term of five years, terminating in October 2000. This agreement entitles
Mr. Cimerman to a salary only if the company reaches certain performance goals.
If the bid price of the common stock of HomeLife is above $4.00 per share, but
no more than $5.00 every day for a period of three calendar months, Cimerman
shall receive a salary of $100,000 per year paid semi-annually. If the bid
price is above $5.00 per share but no more than $6.00 per share, every day for a
period of three calendar months, Cimerman shall receive a salary of $200,000 per
year paid semi-annually. If the bid price is above $6.00 per share, Cimerman
shall receive a salary of $300,000 per year paid semi-annually. To date these
goals have not been achieved and accordingly, Mr. Cimerman has not drawn any
salary.
The company does not currently have employment agreements with any other of
its employees. The company does require its franchisees to enter into a
franchise agreement with the company.
25
<PAGE>
CERTAIN TRANSACTIONS
The President and majority shareholder of the company, Andrew Cimerman is
the sole shareholder and President of Realty World America, Inc. Realty World
America, Inc. is a real estate services company providing services to
franchises. Mr. Cimerman, concurrently with the operations of the company,
continues to operate Realty World America, Inc. Any transactions undertaken by
Mr. Cimerman on behalf of Realty World America, Inc. which may constitute a
corporate opportunity are first presented to the company's board of directors
for approval by a disinterested majority.
Mr. Cimerman is also the sole shareholder of Jerome's Magic World, Inc. the
owner of certain characters licensed to the company. The license of these
characters to the company is for a eight year term expiring in October 2003, and
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 terms 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.
CONFLICTS OF INTEREST
Other than as described herein, the company is not expected to have
significant dealings with affiliates. However, if there are such dealings, the
terms of such transactions will be no less favorable to the company than would
have been obtained from an unaffiliated third party in similar transactions.
All future transactions with affiliates will be on terms no less favorable than
could be obtained from unaffiliated third parties, and will be approved by a
majority of the disinterested directors.
A director of the company owes fiduciary duties to the company which may
conflict with other interests. The company has not entered into any
noncompete, confidentiality, or similar agreements with its directors. The
fiduciary duties that directors owe to a company include the duty not to
withhold from the company, or appropriate, any corporate opportunity which
the company may be able to exploit, the duty not to use for their personal
benefit or the benefit of any other individual or entity any information not
generally known which they acquire through their association with the
company, and in short, the duty to deal fairly with the company. The
company's current directors intend to submit to the company any potential
business they become aware of which may constitute a corporate opportunity to
the company.
The company's officers and directors are or may become, in their
individual capacities, officers, directors, controlling shareholders or
partners of other entities engaged in a variety of businesses which may in
the future have various transactions with the company. Thus, potential
conflicts of interest exist, including among other things, conflicts with
respect to the time, effort, and corporate opportunities involved in
participation with such other business entities and transactions. Each
officer and director of the company may engage in business opportunities
outside the company. An officer or director may continue any business
activity in which such officer or director engaged prior to joining the
company. As mentioned above, the officers and directors of the company are
aware of the fact that they owe a fiduciary duty to the company not to
withhold any corporate opportunity from the company which may arise because
of their association with the company. The company's policy is that all
transactions between the company and any affiliates be on terms no less
favorable to the company than could be obtained from unaffiliated third
parties.
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.
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
26
<PAGE>
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.
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,
(iii) each officer of the company, and (iv) all directors and officers as a
group. Unless otherwise indicated, the address for each stockholder is 4100
Newport Place, Suite 730, Newport Beach, CA 92660.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
PERCENTAGE BENEFICIALLY OWNED(1)
-------------------------------------------------------------------
AFTER THE CONVERSION OF AFTER THE MAXIMUM
NAME NUMBER OF SHARES BEFORE OFFERING PREFERRED SHARES ONLY OFFERING(2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Andrew Cimerman 3,500,000 (3) 49.30% (3) 55.6%(3) 23.22%
Robert L. Cashman 121,250 2.39% 1.95% *
F. Bryson Farrill 50,000(4) * * *
Terry Lyles, Ph.D 50,000(4) * * *
Gabrielle Jeans 45,000(4) * * *
Charles Goodson -0- 0% 0% 0%
Cede & Co. 479,428 9.45% 9.45% 3.18%
P.O. Box 222
Bowling Green Station
New York, NY
Ward Enterprises(1) 316,000 6.23% 5.09% 2.1%
384 Sanctuary Court
Henderson, NV
All officers and directors as a 3,766,250 54.55% 60.7% 24.99%
group (6 persons)
</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. The beneficial owner of Ward
Enterprises is Karen Fowler.
(2) Assumes the sale of all shares which are the subject of this Registration
Statement although the stock will be sold from time to time pursuant to the
terms and prices set forth in a Prospectus supplement.
(3) Mr. Cimerman is the owner of 2,500,000 shares of common stock and the owner
of 10,000 shares of convertible preferred stock Class A. This preferred
stock may be converted into 1,000,000 shares of common stock.
(4) Includes options to purchase shares of common stock. Mr. Farrill and Dr.
Lyles have been granted options to purchase up to 50,000 shares of
common stock each at the exercise price of $3.00 per share. These options
are fully vested. Ms. Jeans has been granted options to purchase up to
30,000 shares of common stock of the company at the exercise price of $5.00
per share.
27
<PAGE>
PLAN OF DISTRIBUTION
The shares will be offered and sold from time to time by the company,
except for those shares which are used to convert preferred stock of the
preferred shareholders, exclusively in business combinations, acquisitions and
mergers. The company will pay all of the expenses of the registration of the
shares, but shall not pay any commissions, discounts, and fees of underwriters,
dealers, or agents.
Preferred shareholders have the right to convert their shares to common
stock of the company. Further, the company is obligated to register sufficient
shares of common stock into which the preferred stock will be converted. There
are currently 10,325 shares of preferred stock issued and outstanding which may
be converted to up to 1,134,482 shares of common stock. The preferred
shareholders are entitled to sell their shares of common stock simultaneously
with and on the same terms and conditions imposed upon the company.
Under the Exchange Act and the regulations thereunder, any person engaged
in a distribution of the shares offered by this Prospectus may not
simultaneously engage in market making activities with respect to the common
stock of the company during the applicable "cooling off" periods prior to the
commencement of such distribution. In addition, and without limiting the
foregoing, the preferred shareholders will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M, which provisions may limit the timing of purchases and
sales of common stock by the preferred shareholders.
Preferred shareholders may also use Rule 144 under the Act to sell the
shares if they meet the criteria and conform to the requirements of such Rule.
However, at this time, there are no immediate plans to convert the preferred
stock and thus, there are currently no plans to distribute these shares by these
shareholders.
HomeLife, Inc. intends to use these shares solely as consideration for
mergers, acquisitions, or other business combinations. HomeLife, Inc. has, in
the past, issued shares in exchange for shares or tradenames of other
franchisors or franchisees. It is intended that these shares will be used
solely for that purpose.
DESCRIPTION OF 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 and 2,000 shares of Class AA 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 of this Prospectus, there are 5,070,434 shares of common
stock, 200,000 warrants to purchase common stock and 140,000 options to purchase
common stock issued and outstanding. After the conversion of the issued and
outstanding preferred stock there would be 6,204,916 shares of common stock
issued and outstanding. After the completion of the Offering of all shares
referred to herein, 15,070,434 shares of common stock will be issued and
outstanding. Holders of common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders. At all
elections of directors of the company, each holder of stock possessing voting
power is entitled to as many votes as equal to the number of his or her shares
of stock subject to preferences that may be applicable to any then outstanding
preferred stock, holders of common stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. See "Dividend Policy." In the event of a liquidation,
dissolution or winding up of the company, holders of common stock are entitled
to share ratably in all assets remaining after payment of liabilities and the
liquidation preference of any then outstanding Preferred Stock. Holders of
common stock have no right to convert their common stock into any other
securities. The common stock has no preemptive or other subscription rights.
There are no redemption or sinking fund provisions applicable to the common
stock. All outstanding shares of common
28
<PAGE>
stock are, and the common stock to be outstanding upon completion of this
Offering will be, duly authorized, validly issued, fully paid and
nonassessable.
PREFERRED SHARES
CLASS A CONVERTIBLE PREFERRED SHARES
The Company created a series of preferred stock consisting of 100,000
authorized shares, of which 10,000 shares are issued and outstanding, and
designated as the "Class A preferred stock," having the voting powers,
preferences, relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth below.
Each share of Class A preferred stock has a face value of $100.00 (the "Face
Value").
The holders of shares of Class A preferred stock are entitled to receive,
when and as declared by the Board of Directors out of any funds at the time
legally available therefor, dividends accruing at the rate of six per cent (6%)
of the Face Value per year from the date of issuance through the date of
conversion (the "Coupon Dividend'), as well as dividends paid with respect to
each share of common stock for each share of Class A preferred stock at the same
time and on a parity with dividends paid on each share of common stock (the
"Common Dividend") less any Coupon Dividend paid for any such period. Each
share of Class A preferred stock ranks on a parity with each other share of
Class A preferred stock with respect to dividends. Dividend payments are paid
quarterly. Any Coupon Dividend which has accrued, but which for any reason
whatsoever, (a) has not been declared, or (b) has been declared but has not been
timely paid, shall not be deemed in arrears and shall not accumulate.
In the event of any liquidation, dissolution or winding up of the company,
either voluntary or involuntary, subject to the rights of series of preferred
stock that may from time to time come into existence, the holders of Class A
preferred stock are entitled to receive, pari passu among them, but prior and in
preference to any distribution of any of the assets of the company to the
holders of common stock by reason of their ownership thereof, an amount per
share equal to the sum of (A) the Face Value of each outstanding share of Class
A preferred stock, and (B) an amount equal to declared but unpaid and accrued
dividends on such share.
The Company may redeem the Class A preferred stock at a redemption price
equal to the Face Value per share. The holders of the Class A preferred
stock shall have the right to convert each share of Class A preferred stock
to common stock, at the option of the holder thereof, at any time after the
date of issuance of such share. Each Class A preferred stock shall be
converted to common stock at a price equal to the Face Value.
The Company is obligated to register the shares of common stock into
which the preferred stock is convertible in any subsequent registration
statement filed with the SEC, so that holders for such common stock shall be
entitled to sell the same, simultaneously with, and upon the terms and
conditions as the securities sold for the account of the company pursuant to
any such registration statement, subject to such lock-up provisions as may be
proposed by the underwriter and agreed by the holders.
The Class A preferred stock has been granted voting rights wherein the
Class A preferred stock is entitled to vote on such matters as the common
stock may vote, and are entitled to cast 1,000 votes per Class A preferred
share. No sinking fund has or will be established to provide for dividends
or the repurchase of the Class A preferred stock.
CLASS AA CONVERTIBLE PREFERRED SHARES.
The Company created a series of preferred stock consisting of 2,000
shares and designated as the "Class AA preferred stock," having the voting
powers, preferences, relative participating, optional and other special
rights and the qualifications, limitations and restrictions thereof that are
set forth below. Each share of Class AA preferred stock has a face value of
$500.00 (the "Face Value"). There are currently 325 shares of Class AA
preferred stock issued and outstanding.
The holders of shares of Class AA preferred stock (collectively,
"Holders", each a "Holder"), are entitled to receive when and as declared by
the Board of Directors, out of any funds at the time legally available
therefor dividends accruing at the rate of eight per cent (8.0%) of the Face
Value per year from the date of issuance through
29
<PAGE>
the date of conversion (the "Coupon Dividend"), as well as dividends paid
with respect to each share of common stock for each share of Class AA
preferred stock at the same time and on a parity with dividends paid on each
share of common stock (the "Common Dividend") less any Coupon Dividend paid
for any such period. Each share of Class AA preferred stock ranks on a
parity with each other share of Class AA preferred stock with respect to
dividends. Dividend payments to the holders of shares of Class AA preferred
stock are payable quarterly. Any Coupon Dividend on the Class AA preferred
stock which has accrued but which, for any reason whatsoever, (a) has not
been declared, or (b) has been declared but has not been timely paid, is
deemed in arrears and shall accumulate until paid.
The Company may, at its option, at any time redeem, any or all shares of
the Class AA preferred stock at a redemption price equal to the Face Value
per share; provided, however, that no such redemption is permitted unless all
dividends which have accrued or accumulated on all outstanding shares of the
Class A preferred stock have been or are simultaneously declared and paid in
full.
In the event of any liquidation, dissolution or winding up of the
company, subject to the rights of series of preferred stock that may from
time to time come into existence and subject to the rights, preferences and
priorities of the Holders of shares of Class A preferred stock, the Holders
of Class AA preferred stock are entitled to receive, pari passu among them,
but prior and in preference to any distribution of any of the assets of the
company to the holders of common stock by reason of their ownership thereof,
an amount per share equal to the sum of (A) the Face Value for each
outstanding share of Class AA preferred stock and (B) an amount equal to
declared but unpaid and accrued dividends on such share. If, upon the
occurrence of such event the assets and funds thus distributed among the
Holders of the Class AA preferred stock shall be insufficient to permit the
payment to such Holders of the full aforesaid preferential amounts, then the
entire assets and funds of the company, legally available for distribution,
shall be distributed ratably among the Holders of the Class AA preferred
stock, in accordance with the priorities set forth.
Subject to the redemption rights, each Class AA preferred share is
automatically converted to common stock of the company at the twelve (12)
month anniversary of the date of the issuance of such Class AA preferred
share (the "Conversion Date"). The number of shares of common stock into
which each Class AA preferred share will convert is determined by dividing
the Face Value per share by eighty per cent (80%) of the market price of the
common stock of the company. The "Market Price" of the common stock of the
company shall equal the average of the last quote closing bid price as
reported by the National Association of Securities Dealers Automated System
(NASDAQ) for the thirty (30)-day period ending ten (10) days prior to the
Conversion Date.
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 is entitled to sell the same simultaneously with
and upon the terms and conditions as the securities sold for the account of
the company, pursuant to any such registration statement, and subject to such
lock-up provisions as may be proposed by the underwriter and agreed by the
Holders.
WARRANTS
As of the date of this Prospectus, there are 200,000 warrants
outstanding. S&S Acquisition Corp. holds warrants to purchase up to 200,000
shares of common stock of the company at the price of $6.00 per share. These
warrants were issued by the company pursuant to the acquisition agreement by
and between the company and S&S Acquisition Corp. dated January 16, 1997.
The term of the Warrants is three years from the date of issuance.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, the company will have outstanding
15,070,434 shares of common stock. The shares will be offered from time to
time at the price and terms set forth in the Prospectus Supplement.
Of the common stock outstanding prior to this offering, 4,032,575 were
issued and sold by the company in private transactions in reliance on an
exemption from registration. Accordingly, such shares are "restricted
shares" within the meaning of Rule 144 and cannot be resold without
registration, except in reliance on Rule 144 or another applicable exemption
from registration. 1,037,859 of the common stock outstanding prior to this
offering were
30
<PAGE>
issued in the exchange transaction with Management Dynamics, Inc. following
Management Dynamic's 1 to 4 reverse stock split. These shares are registered
and trading pursuant to that transaction.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are required to be aggregated), including any affiliate of the
company, who beneficially owns "restricted shares" for a period of at least
one year is entitled to sell within any three-month period, shares equal in
number to the greater of (i) 1% of the then outstanding shares of common
stock, or (ii) the average weekly trading volume of the common stock during
the four calendar weeks preceding the filing of the required notice of sale
with the Securities and Exchange Commission. The seller also must comply
with the notice and manner of sale requirements of Rule 144, and there must
be current public information available about the company. In addition, any
person (or persons whose shares are aggregated) who is not, at the time of
the sale, nor during the preceding three months, an affiliate of the company,
and who has beneficially owned restricted shares for at least two years, can
sell such shares under Rule 144 without regard to notice, manner of sale,
public information or the volume limitations described above.
UNDERWRITING
The Company has not presently entered into an underwriting agreement.
The terms of any underwriting agreement, and the identification of the
underwriter, if applicable, will be the subject of a Prospectus Supplement.
LEGAL ADVISORS
The validity of the securities offered hereby will be passed upon for
the company by Horwitz & Beam, Irvine, California.
EXPERTS
The financial statements of the company included herein and elsewhere in
the registration statement, have been included herein and in the registration
statement in reliance on the report of Biller, Firth-Smith & Archibald,
Certified Public Accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
HomeLife, Inc. (Commission File No. 333-65943) is subject to the
informational reporting requirements of the Exchange Act, and, in accordance
therewith, files reports (including Annual Reports on Form 10-KSB, Quarterly
Reports on Form 10-QSB and Current Reports on Form 8-K), proxy statements and
other information with the SEC. You may read and copy any materials filed by
HomeLife with the SEC at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the SEC. The address of the SEC's Web site is
http://www.sec.gov.
This Prospectus does not contain all the information set forth in the
Registration Statement on SB-2 and the exhibits thereto, including any
amendments thereto, of which this document is a part, and which HomeLife has
filed with the SEC under the Securities Act. Reference is made to such
Registration Statement for further information with respect to HomeLife and
the HomeLife common stock offered hereby.
Statements contained herein or incorporated herein by reference
concerning the provisions of documents are summaries of such documents and
each statement is qualified in its entirety by reference to the copy of the
applicable document if filed with the SEC or attached as an appendix hereto.
31
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS WITH RESPECT TO THE MATTERS DESCRIBED IN THIS DOCUMENT OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY HOMELIFE. THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OR AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREBY UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF HOMELIFE SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF. THE SHARES REFERRED TO HEREIN SHALL ONLY
BE OFFERED UPON THE TERMS, PRICE, AND CONDITIONS SET FORTH IN A SUPPLEMENT
PROSPECTUS FILED WITH THE SEC.
____________________________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary 1
Risk Factors 5
Dilution 8
Use of Proceeds 9
Dividend Policy 9
Capitalization 10
Selected Financial Data 11
Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
Business of the Company 17
Management 23
Employment and Related Agreements 25
Certain Transactions 26
Principal Stockholders 27
Plan of Distribution 28
Description of Securities 28
Shares Eligible for Future Sale 30
Underwriting 31
Legal Advisors 31
Experts 31
Where you can find more information 31
Index to Financial Statements F-1
</TABLE>
____________________________________
10,000,000 SHARES OF COMMON STOCK
HOMELIFE, INC.
______________
PROSPECTUS
______________
FEBRUARY 18, 1999
<PAGE>
HOMELIFE, INC.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The laws of the State of Nevada and the company's Bylaws provide for
indemnification of the company's directors for liabilities and expenses that
they may incur in such capacities. In general, directors and officers are
indemnified with respect to actions taken in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
company, and with respect to any criminal action or proceeding, actions that
the indemnitee had no reasonable cause to believe were unlawful.
The Company has been advised that in the opinion of the Securities and
Exchange Commission, indemnification for liabilities arising under the
Securities Act is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Shares will not be issued hereunder except under the terms and conditions
of a prospectus supplement. HomeLife has incurred the following expenses in
connection with the filing of this registration statement:
<TABLE>
<CAPTION>
<C> <S> <C>
a) Registration fees $1,563.50
b) Federal taxes -0-
c) State taxes and fees -0-
d) Trustee and transfer agent fees -0-
e) Costs of printing and engraving -0-
f) Legal fees $50,000*
g) Accounting fees $10,000*
h) Engineering fees -0-
i) Listing fees -0-
</TABLE>
* Estimate of fees
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In October 1995, the company issued 1,037,859 shares of common stock to
Stockholders of Management Dynamics, Inc. as consideration for the
acquisition of Management Dynamics, Inc. 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 81,692 shares of its common stock
to 98 non-U.S. investors in consideration of payment of $326,768. This
transaction was exempt from the registration provisions of the Act by virtue
of Regulation S of the Act, as transactions by an issuer not involving any
public offering and including non-U.S. residents.
In January 1996, the company issued 44,236 shares of its common stock to
38 investors for payment of $176,944. This transaction was exempt from the
registration provisions of the Act by virtue of Section 4(2) of the Act and
Rule 504 of Regulation D, as transactions by an issuer not involving any
public offering.
In May 1996, 2,500,000 shares of common stock and 10,000 shares of Class
A preferred stock was issued to Andrew Cimerman for the acquisition of
HomeLife Realty Services, Inc. and HomeLife Realty Services, US Limited
Partnership. This transaction was exempt from the registration provisions of
the Act by virtue of Section 4(2) of the Act as transactions by an issuer not
involving any public offering.
II-1
<PAGE>
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 and fractional shares to Management
Dynamics' former shareholders pursuant to Rule 504 of Regulation D of the Act
as transactions by an issuer not involving any public offering.
In August 1996, 46,662 shares of common stock were issued to the
Stockholders of Keim Group Ltd. for the acquisition of Keim Group Ltd. This
transaction was exempt from the registration provisions of the Act by virtue
of Section 4(2) of the Act, as transactions by an issuer not involving a
public offering.
In January 1997, 70,000 shares of common stock were issued to S&S
Acquisition Corp. for the acquisition of the assets of S&S Acquisition Corp.
This transaction was exempt from the registration provisions of the Act by
virtue of Section 4(2) of the Act, as transactions by an issuer not involving
a public offering.
In March 1997, the company issued 13,933 shares of common stock for
$24,999 to non-U.S. resident investors pursuant to Regulation S of the Act.
This transaction was exempt from the registration provisions of the Act 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 a private offering pursuant to
Regulation D of the Act. This transaction was exempt from the registration
provisions of the Act by virtue of Section 4(2) of the Act, as transactions
by an issuer not involving a public offering.
In September 1997, the company issued 645,095 shares of common stock to
83 investors who invested a total of $829,890 pursuant to Rule 504 of
Regulation D of the Act. This transaction was exempt from the registration
provisions of the Act by virtue of Section 4(2) of the Act, as transactions
by an issuer not involving a public offering.
In February 1998, the company issued 36,000 shares of common stock to
stockholders of Builders Realty Ltd. for the acquisition of Builders Realty
Ltd. This transaction was exempt from the registration provisions of the Act
by virtue of Section 4(2) of the Act, as transactions by an issuer not
involving a public offering.
In May 1998, the company issued 300,000 shares of common stock to
non-U.S. investors pursuant to Regulation S of the Act. These shares are in
an escrow account in Vancouver, British Columbia, Canada pending delivery of
the full consideration of $750,000. This transaction is exempt from
registration provisions by virtue of section 4(2) of the Act, as transactions
by an issuer not involving a public offering.
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.
II-2
<PAGE>
ITEM 27. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
-------
<C> <S>
3.1 Articles of Incorporation of HomeLife, Inc., a Nevada
corporation, dated October 9, 1995*
3.2 Certificate of Amendment of Articles of Incorporation of
HomeLife, Inc., a Nevada corporation, dated July 2, 1997*
3.3 Certificate of Amendment of Articles of Incorporation of HomeLife
Inc., a Nevada corporation, dated September 1, 1998*
3.4 Bylaws of HomeLife, Inc., dated October 10, 1995*
4.1 Certificate of Designated Class A Preferred Stock*
4.2 Certificate of Designated Class AA Preferred Stock*
5 Opinion of Horwitz & Beam*
10.1 Lease Agreement dated November 1, 1996 for the office located in
Calgary, Alberta, Canada*
10.2 Lease Agreement dated September 1, 1997 for the office located in
Airdrie, Alberta, Canada*
10.3 Lease Agreement dated January 15, 1999 for the office located in
Troy, Michigan
10.4 Lease Agreement dated April 12, 1990 for the office located in
Newport Beach, California*
10.5 First Addendum to Lease dated April 12, 1990 for the office
located in Newport Beach, California*
10.6 Second Addendum to Lease dated July 8, 1993 for the property
located in Newport Beach, California*
10.7 Third Addendum to Lease dated July 17, 1996 for the property
located in Newport Beach, California*
10.8 Builder's Realty Stock Purchase Agreement dated February 27, 1998*
10.9 Agreement for Purchase of Network Real Estate, Inc. Licensing
Agreements and Trademarks dated June 12, 1998*
10.10 Stock Purchase Agreement dated July 23, 1998*
10.11 Asset Purchase Agreement dated January 16, 1997*
10.12 Option Agreement dated July 10, 1996*
10.13 Asset Purchase Agreement dated April 13, 1998*
10.14 Loan Purchase Agreement dated July 7, 1998*
10.15 Agreement and Plan of Acquisition dated April 15, 1996*
10.16 Agreement and Plan of Acquisition dated April 15, 1996*
10.17 Agreement with Western Pacific Investment Corp. dated June 10, 1998*
10.18 Form of Participating Independent Broker Franchise Agreement
10.19 Form of Broker Membership Agreement
10.20 Stock Purchase Agreement dated September 10, 1998
10.21 Employment Agreement between HomeLife, Inc. and Andrew Cimerman
10.22 Trademark Licence Agreement between HomeLife, Inc. and Jerome's
Magic World, Inc.
10.23 Trademark Licensing Agreement between HomeLife, Inc. and
HomeLife Securities, Inc.
24 Consent of Biller, Firth-Smith & Archibald, Certified Public
Accountants*
28 Specimen of Common Stock Certificate of HomeLife, Inc.*
</TABLE>
ITEM 28. UNDERTAKINGS
The undersigned registrant hereby undertakes to:
(1) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the company pursuant to the foregoing provisions, or
otherwise, the company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the company will, unless in
the opinion of its counsel the matter has been settled by controlling precedent
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
(2) File, during any period in which it offers or sells securities, a post
effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in
the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
For determining liability under the Securities, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide offering.
File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Newport
Beach, State of California on February 17, 1999.
HOMELIFE, INC.
BY: /s/ ANDREW CIMERMAN
------------------------------------
ANDREW CIMERMAN, PRESIDENT
POWER OF ATTORNEY
Each person whose signature appears appoints Andrew Cimerman, in the
alternative, as his agents and attorneys-in-fact, with full power of
substitution to execute for him and in his name, in any and all capacities, all
amendments (including post-effective amendments) to this Registration Statement
to which this power of attorney is attached. In accordance with the
requirements of the Securities Act of 1933, this Registration Statement was
signed by the following persons in the capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Andrew Cimerman President February 17, 1999
- -------------------------
Andrew Cimerman
/s/ Robert L. Cashman Secretary, Treasurer, February 17, 1999
- ------------------------- Director
Robert L. Cashman
/s/ Terry A. Lyles, PH.D. Director February 17, 1999
- -------------------------
Terry A. Lyles, Ph.D.
/s/ F. Bryson Farrill Director February 17, 1999
- -------------------------
F. Bryson Farrill
/s/ Gabrielle Jeans Vice-President February 17, 1999
- -------------------------
Gabrielle Jeans
/s/ Charles Goodson Vice-President February 17, 1999
- -------------------------
Charles Goodson
</TABLE>
II-5
<PAGE>
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.
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
1
<PAGE>
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 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
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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:
(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.
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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
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
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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 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,
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<PAGE>
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 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
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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 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
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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:
8
<PAGE>
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:
10
<PAGE>
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.
LANDLORD: TENANT:
John M. Saylor ACRO Service Corp., a Michigan
corporation
BY: /s/ John M. Saylor BY:
---------------------
John M. Saylor
ITS: ITS:
11
<PAGE>
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:
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EXHIBIT 10.18
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.
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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 "C . 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
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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
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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
<TABLE>
<CAPTION>
PART I - MARKS
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>
19
<PAGE>
<TABLE>
<CAPTION>
PART I - MARKS
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
Service Fee per Number of Representatives
Representative* Licensed in the Month
--------------- --------------------------
$90.00 each First 45
$10.00 for each additional More than 45
over the 45
* 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
Advertising Contribution Number of Representatives
Representative Licensed in the Month
------------------------- -------------------------
$25.00 each First 20
$2.00 for each additional More than 20
over the 20
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.
24
<PAGE>
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.
25
<PAGE>
SCHEDULE "E" TO FRANCHISE AGREEMENT
EXCLUSIVE AREA BOUNDARY DESCRIPTION
26
<PAGE>
EXHIBIT 10.19
FORM OF BROKER MEMBERSHIP AGREEMENT
<PAGE>
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 C 2 (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.
2
<PAGE>
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 10.20
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
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(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 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.
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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
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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.
7
<PAGE>
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 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 10.21
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
10 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.
11 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.
12 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.
2
<PAGE>
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 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 10.22
TRADEMARK LICENSING AGREEMENT BETWEEN
HOMELIFE, INC. AND JEROME'S MAGIC WORLD, INC.
TRADEMARK LICENSING AGREEMENT
<PAGE>
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>
EXHIBIT 10.23
TRADEMARK LICENSING AGREEEMENT BETWEEN
HOMELIFE, INC. AND HOMELIFE SECURITIES, INC.
<PAGE>
TRADEMARK LICENSING AGREEMENT
This trademark licensing agreement is between HomeLife, Inc. ("HomeLife") 4100
Newport Place, Suite 730, Newport Beach, CA 92660, and HomeLife Securities, Inc.
("Securities") 397 Eglinton Avenue East, Toronto, Ontario, Canada, M4P 1M6.
WHEREAS HomeLife wishes to license certain trademarks from by Securities,
and Securities agrees to license certain trademarks to HomeLife, Securities
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 "Blueprint to Selling Your Home",
"Blueprint to Buying a Home", "Family Life HR", "Family HomeLife Realty
Services" (words and design), "Family HomeLife realty Services" (words
only), "Focus 20/20", "Higher Standards", "HomeLife" (words only)'
"HomeLife (words and design), "HomeLife Higher Standards", "HomeLife Realty
Service", and "It's What Everyone's Looking For".
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, Securities may renew the
license at the fair market value, to be determined by HomeLife and
Securities.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement on the 30th
day of October 1995.
HomeLife, Inc. HomeLife Securities, Inc.
/s/ Andrew Cimerman /s/ Andrew Cimerman
- ----------------------- -----------------------
Andrew Cimerman Andrew Cimerman
<PAGE>
EXHIBIT 24
CONSENT OF BILLER, FIRTH-SMITH & ARCHIBALD
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
CONSENT OF BILLER, FIRTH-SMITH & ARCHIBALD.
CERTIFIED PUBLIC ACCOUNTANTS
The undersigned independent certified public accounting firm hereby
consents to the inclusion of its report on the financial statements of
HomeLife, Inc. for the years ending May 31, 1997 and May 31, 1998, and to the
reference to it as experts in accounting and auditing relating to said
financial statements, in the Registration Statement for HomeLife, Inc.
/s/ Biller, Firth-Smith & Archibald
- -----------------------------------
BILLER, FIRTH-SMITH & ARCHIBALD
Certified Public Accountants
18321 Ventura Blvd., Suite 600
Tarzana, California
Dated: February 12, 1999
