U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-SB
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b) or 12(g) of
the Securities Act of 1934
Java Group, Inc.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
Delaware 11-2987370
------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
404-999 Canada Place
Vancouver, British Columbia, Canada V6C 3E2
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(604) 641-1362
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(Issuer's Telephone Number)
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Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which to be so Registered Each Class is to be Registered ------------------- ----------------------------- Not applicable Not applicable ------------------- ----------------------------- |
Securities to be registered under Section 12(g) of the Act:
TABLE OF CONTENTS
Page
----
PART I
Item 1. Description of Business. . . . . . . . . . . . . . . . . . . 1
Item 2. Plan of Operation. . . . . . . . . . . . . . . . . . . . . . 6
Item 3. Description of Property. . . . . . . . . . . . . . . . . . . 7
Item 4. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 5. Directors, Executive Officers, Promoters and Control
Persons. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 6. Executive Compensation . . . . . . . . . . . . . . . . . . . 9
Item 7. Certain Relationships and Related Transactions . . . . . . . 9
Item 8. Description of Securities. . . . . . . . . . . . . . . . . . 9
PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Stockholder Matters . . . . . . . . . . . 10
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 11
Item 3. Changes in and Disagreements With Accountants. . . . . . . . 11
Item 4. Recent Sales of Unregistered Securities. . . . . . . . . . . 11
Item 5. Indemnification of Directors and Officers. . . . . . . . . . 12
PART F/S Financial Statements and Exhibits. . . . . . . . . . . . . . 13
PART III
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . . . . . . 13
Item 2. Description of Exhibits. . . . . . . . . . . . . . . . . . . 13
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Item 1. DESCRIPTION OF BUSINESS
GENERAL
Java Group, Inc. (the "Company") was incorporated under the laws of the State of Delaware on May 25, 1989 under the name Montrose Ventures, Inc. (which was changed to Java Group, Inc. on August 25, 1993). The Company's principal executive offices are located at 404-999 Canada Place, Vancouver, British Columbia, Canada V6C 3E2, and its telephone number is (604) 641-1362. As used herein, the term "Company" means Java Group, Inc. and 464431 B.C. Ltd., a wholly-owned Canadian subsidiary of the Company.
From inception through August 1993, the Company did not operate any business, and its principal activity was seeking a merger with a publicly-held corporation which had an active business operation. Effective June 29, 1993, Avon Funding, Incorporated ("Avon"), a Delaware corporation, merged with and into the Company, with the Company being the surviving corporation. In the merger, which was consummated in connection with a proposed financing that never occurred, the stockholders of Avon received 400,000 shares of the Company's common stock, par value $.0001 per share (the "Common Stock"), which represented approximately 14% of the Company's issued and outstanding Common Stock, in exchange for their shares of Avon.
On August 25, 1993, a change of control in the management and ownership of the Company occurred and the Company developed a business plan to develop retail coffee houses using the Java Girl name and logo, marks owned by T.A.B.S. Enterprises Ltd., an unaffiliated third party ("TABS"). The concept for the coffee houses was developed principally by Robert P. Gillingham, currently the President and principal stockholder of the Company, and John Williams, a former director and shareholder of the Company, who in July 1993, prior to acquiring control of the Company, entered into a license and management agreement with Java Girl Coffee Ltd. ("J.G. Coffee"), an affiliate and predecessor of TABS (the "Management Agreement"), in which Messrs. Gillingham and Williams were granted the right to establish coffee houses worldwide using the Java Girl name and logo, and TABS had the right to manage and operate the coffee houses.
At the time the parties entered into the Management Agreement, TABS owned one Java Girl coffee house located at the Renaissance Hotel in Vancouver, British Columbia, Canada. The store was closed in or about December 1993 in connection with a dispute with the landlord. At approximately the same time, a predecessor of TABS opened a Java Girl coffee house at Lougheed Mall in Vancouver, Canada which operated for approximately eighteen months. The Company had no ownership or other interest
in this location, other than an option to acquire a 50% interest, which option was not exercised.
In December 1993, the Company and TABS opened a Java Girl coffee house in the lobby of the Richmond Inn Hotel in Richmond, British Columbia, Canada. The Company and TABS each have a 50% joint venture interest in this location.
Mr. Klaus Henck, the President and a principal stockholder of TABS and the operator of the first Java Girl coffee house, has extensive experience in the retail operations of the food and beverage industry. The Company relies on the experience and services of Mr. Henck to a large degree.
LICENSE AND DEVELOPMENT AGREEMENT
In May 1994, Messrs. Gillingham and Williams assigned to the Company all of their rights as owner under the Management Agreement pursuant to a license and development agreement between the Company and TABS (the "License and Development Agreement"). TABS has developed and licenses to the Company a system for the operation of Java Girl coffee houses utilizing certain standards, specifications, methods and systems in connection with the distribution, marketing and sale of coffee products.
Pursuant to the License and Development Agreement, TABS granted the Company the right to select and lease locations for Java Girl coffee houses. TABS is responsible for the construction and supervision of the development of the location, including any leasehold improvements. TABS is required to expend not less than five percent (5%) and not more than twenty percent (20%) of the total development costs. The Company is responsible for the balance of the development costs. The Company and TABS will be joint venturers in the ownership of each coffee house, with respective ownership interests equal to the percentage of each venturer's contribution to the total development costs. TABS is obligated to use its best efforts to limit the construction costs of each coffee house to $65,000. The payment of any excess development costs above $65,000 shall be the responsibility of the Company, unless TABS desires to increase its ownership interest in the coffee house. In such case, TABS and the Company will be responsible for the percentage of the excess costs equal to their respective joint venture interest. Under the License and Development Agreement, the Company is obligated to pay TABS a monthly licensing fee equal to five percent (5%) of the gross sales of each coffee house. However, in lieu of the payment to TABS of a five percent (5%) management fee under the Management Agreement, the Company granted to TABS a five-year option to purchase 2,000,000 shares of the Company's capital stock at a price of $.10 per share until May 20, 1999.
The Company has the option to renew the term of each license with respect to a Java Girl coffee house for a renewal term equal to the renewal term of the lease at the location, without payment of any renewal fee. The Company must provide TABS with not less than six months' written notice prior to the expiration of the initial term. If, during the term of the license period, either the Company or TABS obtains a bona fide offer to sell the whole or any part of its interest in a coffee house, the party receiving the offer ("Offeror") shall give the other party ("Offeree") prompt written notice thereof, together with a copy of the offer. The Offeree will have 30 working days to exercise the option upon the same terms and conditions.
At any time during the term of the license period, either party may offer to purchase the whole or any part of the other party's interest in the coffee house, including, but not limited to, the leasehold interests.
PRODUCTS
The Java Girl concept is based on using only 100% Arabica beans grown at high altitudes and imported from locations in which the finest beans are grown. Costa Rica, Guinea, Colombia, Kenya and Java are the primary coffee producing regions which grow premium green beans that meet the Company's specifications. These beans are then fresh roasted to create the Company's Supreme Blends and Espresso brands. The use of the correct grind for each type of coffee and purified water assures superior and consistent quality. The Company intends to roast and grind its coffee on the premises at the store location or use small local roasters to maintain a proper edge on the taste. The ground product is then placed into the modern valve bag to maintain the essential freshness. The brewing process is performed in state of the art equipment made from stainless steel and vacuum containers with glass inserts to safeguard the coffee from breaking and losing its flavor.
RETAIL STORES
The first coffee house of the Company, located in North Vancouver, Canada, opened in February 1995 and closed in June 1995. The Company owned a 49% limited partnership interest in the location and contributed approximately $88,000 to the development costs of the location. The Company closed the coffee house due to losses from operations which the Company believes were attributable to the lack of sufficient pedestrian traffic in the area.
In July 1995, the Company began operations at a new Java Girl coffee house located at 500 West Broadway, Vancouver,
British Columbia, Canada. The Company owns an 80% joint venture interest and TABS is the owner of the remaining 20% interest.
The Company also owns a 50% joint venture interest in the coffee house located at the Richmond Inn Hotel, with TABS owning the balance of the 50% interest. The two locations feature gourmet coffee, sandwiches, and freshly- baked muffins and cookies. "Fruit Koolers," which are iced drinks prepared from Torani fruit syrups, blended with ice and topped with soda water and fresh fruit, are also available. The decor of the coffee houses is green in color with brown cabinets. The furniture, fixtures and equipment are similar at each store and seating is available at tables and countertops. The design will generally not change from location to location but will be customized to the size of the store.
EXPANSION STRATEGY
The Company will seek to open Java Girl coffee houses in high-traffic locations in suburban malls and downtown areas as well as other suburban settings. The Company's current strategy is to open Java Girl coffee houses in Germany. The headquarters for the German operation are in Chemnitz, Germany where the Company intends to open its first German coffee house during Spring 1996. The Company has entered into preliminary discussions with certain national and regional breweries in Germany to finance the development costs of new sites through loans having terms of 3-5 years which are secured by the furniture, fixtures and equipment at the location. As a condition to the loan and in accordance with standard practice by German breweries, the Company will be obligated to sell the breweries' beer in the coffee house on an exclusive basis and the breweries will have the right to approve each location. The breweries will only enter into such arrangements on a location by location basis. Based solely on oral expressions of interest by German breweries, the Company hopes to operate up to ten new coffee houses in Germany over the next twelve months. There is no assurance that any arrangements will be entered into between the Company and one or more of the German breweries. Furthermore, although one national brewery has orally indicated that it will finance up to 75% of the cost of the furniture, fixtures and equipment at a certain new location, all of the material terms have not been finalized and there can be no assurance an arrangement with such brewery will be reached, or that any such arrangement will be on terms favorable to the Company. The terms of the financing will vary based on the brewery and the size and location of the coffee house.
In Germany, the Company believes that the Java Girl coffee houses that are financed in part by the breweries will occupy approximately 1,200 to 1,800 square feet, depending upon
location. The Company will target breakfast and lunch as primary meal periods. Other coffee houses located outside of Germany are anticipated to be smaller, ranging from 500 to 1,200 square feet. The proposed site in Chemnitz, Germany consists of approximately 500 square feet with 25 seats and is located in a marketplace setting. Coffee will be the focal point of each site, with the counter and back-bar having a designer display of glass containers filled with a variety of Arabica blends built into the self-contained unit. The configuration is believed to optimize potential gourmet coffee sales despite the fact that the six most popular blends historically account for the majority of sales. The ambiance will emphasize the aroma of the coffee, comfortable seating and relaxing decor.
There is no assurance that the Company's expansion strategy into Germany will be successful.
COMPETITION
The Company's coffee beverages compete directly against all restaurant and beverage outlets that serve coffee and a growing number of coffee and espresso stands, carts and stores. Many competitors have established reputations and substantially greater resources than the Company. The Company believes that its customers choose among retailers primarily on the basis of quality and convenience. In addition, the Company competes for whole bean coffee sales with franchise operators and locally-owned specialty coffee stores. Since the gourmet segment of the industry is still in its infancy, the Company believes there is substantial opportunity to develop the business on an international basis. However, there is no assurance that the Company will be successful in expanding its operations or that other companies with greater financial, marketing, and/or other resources than the Company will not enter the market in competition with the Company.
EMPLOYEES
The Company currently employs 2 full-time salespersons at the coffee houses, the President and 10 support staff. The President of the Company has not drawn a salary to date and does not intend to do so until the Company is profitable. None of the Company's employees are represented by a labor union. The Company has experienced no work stoppages and believes that its employee relations are good.
PRODUCT SUPPLY
Presently, the Company does not have any commitments, arrangements or agreements for the purchase of its coffee
requirements. The Company, therefore, is subject to the risks associated with the increases in coffee prices.
Item 2. PLAN OF OPERATION
In February 1996, the Company raised net proceeds of approximately $465,000 in an offering under Section 504 of Regulation D promulgated under the Securities Act of 1933. The Company believes that such proceeds are sufficient to implement its business plan of operating up to 10 coffee houses in Germany during the next twelve months. Such belief, however, is based on its ability to receive debt financing of up to 75% of the cost of the furniture, fixtures and equipment per location from German breweries. During the next two years the Company would also like to open coffee houses outside of Germany, particularly in Atlanta, Georgia and in California, where no such debt financing will be available. The opening of such coffee houses is subject to the Company obtaining financing in either public offerings, private placements or limited partnerships.
Currently, the Company's principal use of cash is for expenses related to raising capital, marketing its program and opening coffee houses in Germany. Although significant cash expenditures will be required for each new coffee house, the Company anticipates that financing of not less than 75% of the cost of furniture, fixtures and equipment will be provided by the German breweries. In the event such financing is not obtained, the Company may be required to change its business plan and either seek to establish lower cost units in the United States or Canada and/or seek to raise capital through debt or equity financing.
During the fiscal years ended December 31, 1994 and 1995 the Company did not have any revenues. Its 50% ownership interest in the Java Girl coffee house located in the Richmond Inn and its 49% limited partnership interest in the North Vancouver location, which was closed, are accounted for on the equity method because both ownership interests are joint venture interests in unincorporated joint ventures. In order for the Company to recognize revenues, the ownership of the coffee houses must be in an incorporated entity with the Company in control of more than a 50% interest. The Company did not have any revenues during such two-year period from the Java Girl coffee house located at 500 West Broadway, Vancouver, Canada (80% interest) because operations at the store did not commence until July 1995.
The average monthly sales at the two operating coffee houses were approximately $5,000 at each location during the fiscal year ended June 30, 1995.
During the fiscal year ended December 31, 1995, unaffiliated third parties loaned the Company approximately $290,000. The loan proceeds are being used for working capital purposes. The loans are unsecured and non-interest bearing. The Company has received an oral indication of interest to retire the indebtedness upon the condition that the Company become a reporting company in accordance with the requirements of the Securities Act of 1934.
The Company expects to increase the number of its employees as new coffee houses commence operations.
Item 3. DESCRIPTION OF PROPERTY
The Company's executive offices occupy approximately 500 square feet of office space in Vancouver, British Columbia, Canada, under a month-to-month lease which provides for rent of approximately $1,600 per month (including receptionist and secretarial services). These facilities are adequate for the Company's purposes. In the event additional space is required, the Company believes it will be readily available.
The Company presently operates two retail coffee houses in Vancouver, British Columbia, Canada. The Java Girl stores are located in leased premises. In December 1993, the Company opened its first store (in which the Company owns a fifty percent (50%) joint venture interest) in the lobby at the Richmond Inn Hotel, 7551 Westminster Highway, Richmond, British Columbia, Canada. The premises contains approximately 200 square feet. The lease term expires December 31, 1996 with an option to renew by the Company for an additional three years. The rent payable under the lease agreement is 50% of net sales of the business at the premises, but not less than a guaranteed minimum of approximately $365 per month.
The second store (in which the Company owns an eighty percent (80%) joint venture interest), located at 500 West Broadway, was opened in July 1995 and consists of approximately 840 square feet. The rental is approximately $2,100 per month. The lease expires July 31, 1999, with an option to renew for an additional five years.
The Company is in the process of completing the negotiations of the terms for a lease in Chemnitz, Germany. The coffee house will be located in a central Chemnitz marketplace and consist of approximately 500 square feet. It is expected to open in May, 1996. The lease term is three years with a renewal option for an additional five-year term, and the rental is approximately $2,100 per month.
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 15, 1996,
relating to the beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to be the beneficial owner of more than five percent
of the Company's outstanding Common Stock, (ii) each of the Company's directors,
(iii) the Company's Chief Executive Officer, and (iv) all officers and directors
of the Company as a group.
Name and Address of Amount of Percent of Beneficial Owner Beneficial Ownership Class - ------------------- -------------------- --------- Robert P. Gillingham 1,750,000 26.6% 404-999 Canada Place Vancouver, British Columbia, Canada V6C 3E2 Ray Suutari 0 0 833 Edistel Crescent Mississauga, Ontario, Canada L5H 1P5 Greg Lampert 0 0 King International Group West 7th St. Los Angeles, California 90017 TABS Enterprises Ltd. 2,000,000(1) 23.3% 2754 Sylvan Place Coquitlam, British Columbia Canada All directors and officers 1,750,000 26.6% as a group (3 people) |
(1) Comprised of currently exercisable warrants to purchase 2,000,000 shares for $.10 per share, which shares are deemed to be outstanding for purposes of calculating the percentage ownership of TABS, but not for purposes of calculating any other person's percentage ownership.
Item 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Name Age Position with the Company - ---- --- ------------------------- Robert P. Gillingham 49 President and Director Ray Suutari 64 Secretary and Director Greg Lampert 39 Director |
ROBERT P. GILLINGHAM. President of the Company since 1993. From 1990 to 1993, Mr. Gillingham was a self-employed consultant. For five years prior thereto he served as President of Golden Crown Resources Ltd. He is a chartered account.
RAY SUUTARI. Secretary of the Company. For more than the past five years, Mr. Suutari has served as a lecturer, consultant, and Assistant Professor, Wilfrid Laurier University, Waterloo, Ontario School of Business and Economics.
GREG LAMPERT. For more than the past five years, Mr. Lampert has served as Managing Partner of King International Asset Group, a company involved in the identification and implementation of new business ventures in the Japanese market.
Item 6. EXECUTIVE COMPENSATION
None of the executive officers or directors of the Company receives a salary or other compensation from the Company. Mr. Gillingham, the President and Chief Executive Officer of the Company, does not intend to request any compensation unless and until the Company is profitable. In the future, the Company intends to pay fees and grant stock options to its non-employee directors.
The Company does not currently have any stock option plans or long- term incentive compensation plans. In addition, the Company does not award stock appreciation rights, restricted stock awards or long-term incentive plan pay-outs.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time, Mr. Gillingham, the controlling shareholder and President of the Company, has made unsecured, non-interest bearing loans to the Company as needed for working capital purposes. As of April 15, 1996, Mr. Gillingham has made loans of approximately $56,500. The repayment of such amount has been postponed until after June 30, 1996, unless an equity financing is completed.
Item 8. DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 50,000,000 shares of Common Stock, par value $.0001 per share, of which 6,390,000 are presently issued and outstanding. Each share of Common Stock is entitled to one vote on all matters to be voted on by stockholders, including the election of directors. At each election for directors, every stockholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by them for as many persons
as there are directors to be elected and for whose election they have a right to vote.
COMMON STOCK
Subject to preferential rights with respect to any outstanding Preferred Stock, none of which is presently issued and outstanding, 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. 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 satisfaction of preferential rights and have no rights to convert their Common Stock into any other securities. All shares of Common Stock have equal, non-cumulative voting rights, and have no preference, exchange, preemptive or redemption rights. The outstanding shares of Common Stock are fully paid and nonassessable.
PART II
Item 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Until April 4, 1994, there was no established trading market for the Company's Common Stock. On that date, the Company's Common Stock was cleared for trading under the symbol JVGI, on the electronic bulletin board maintained by NASDAQ. The high and low bid quotations per share published by The NASDAQ Stock Market, Inc. for the quarterly periods indicated are set forth below:
Fiscal Year High Low ----------- ---- --- 1994 ---- Fourth Quarter............... No trading activity 1995 ---- First Quarter................ No trading activity Second Quarter............... 1.125 0.4375 Third Quarter................ 0.9375 0.50 Fourth Quarter............... 0.8125 0.1875 |
1996 ---- First Quarter................ 0.6875 0.1875 Second Quarter............... 0.6875 0.3125 Third Quarter................ 1.50 0.34375 |
The over-the-counter market quotations set forth in the foregoing table reflect inter-dealer prices, without retail markup, markdown or commission, and may not necessarily represent actual transactions.
As of April 8, 1996, the Company had 161 holders of record of its shares of Common Stock.
The Company has not paid any cash dividends and does not anticipate that it will pay any cash dividends on its Common Stock in the foreseeable future. Payment of dividends is within the discretion of the Company's Board of Directors and will depend, among other factors, upon the Company's earnings, financial condition and capital requirements.
Item 2. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings which could have a material adverse effect on its business.
Item 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Item 4. RECENT SALES OF UNREGISTERED SECURITIES
On June 29, 1993, Avon, a Delaware corporation, merged into the Company, with the Company being the surviving corporation. In the merger, which was consummated in connection with a proposed financing that never occurred, the stockholders of Avon received an aggregate of 400,000 shares of the Company's Common Stock (250,000 shares of which were issued to Patrick Brooks, the former President of the Company) in exchange for their shares of Avon. The transactions were exempt from the registration requirements of the Securities Act of 1933, as amended, by reason of Section 4(2) thereof.
On August 25, 1993, the Company sold 2,000,000 shares of its Common Stock to a total of two persons at a price of $0.01 per share for an aggregate cash consideration of $20,000. Of the 2,000,000 shares, Robert P. Gillingham, President and principal stockholder of the Company, purchased 1,500,000 shares for cash consideration of $15,000, and John Williams purchased 500,000
shares for cash consideration of $5,000. The transactions were exempt from the registration requirements of the Securities Act of 1933, as amended, by reason of Section 4(2) thereof.
On February 28, 1996, the Company sold 1,000,000 units (the "Units") to a total of eight persons, at a price of $0.50 per Unit, each Unit consisting of one (1) share of the Company's Common Stock and one (1) Common Stock purchase warrant (the "Warrants"), which entitles the holder to purchase one (1) share of the Company's Common Stock at a price of $0.50 during the term commencing on February 28, 1996 and expiring February 28, 1997. The aggregate consideration to the Company for the securities sold was $500,000. The offering was consummated pursuant to Section 504 of Regulation D under the Securities Act of 1933.
Item 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, subject to various exceptions and limitations, the Company may indemnify its directors or officers if such director or officer is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the Company by reason of the fact that he is or was a director or officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation) against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, except, in the case of an action by or in the right of the Company to procure a judgment in its favor, as to any matter which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty. The Company shall indemnify its directors or officers to the extent that they have been successful on the merits or otherwise in defense of any such action, suit or proceeding, or in the defense of any claim, issue or matter therein, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. In addition, Delaware law permits a corporation to limit or eliminate the liability of a director to the corporation and its shareholders for negligent breaches of such directors' fiduciary duties in certain circumstances.
Article Tenth of the Certificate of Incorporation of the Company provides that the Company shall indemnify its directors and officers to the fullest extent permitted by Section 145 of
the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, or by any successor thereto, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section. Such right to indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. The indemnification provided for herein shall not be deemed exclusive of any other rights of which those seeking indemnification may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors or otherwise.
PART F/S
Please see the Consolidated Financial Statements appearing on F-1 to F-12. The index to the Consolidated Financial Statements appears on page 15.
PART III
Item 1. INDEX TO EXHIBITS
See Index to Exhibits.
Item 2. DESCRIPTION OF EXHIBITS
Exhibit
No. Description
-------- ------------
2.(a) Registrant's Amended and Restated Certificate of
Incorporation
(b) Registrant's By-Laws
3. Specimen Common Stock Certificate
6.(a) Licensing and Development Agreement dated May 30, 1994
between T.A.B.S. Enterprises Ltd. and Java Group, Inc. and
464431 B.C. Ltd.
(b) Form of Lease dated November 1, 1993 between Richmond Inn
Hotel Ltd. and Java Girl Coffee Ltd. and Klaus J. Henck
(c) Lease dated July 8, 1994 between Yorkson Investment Company
Ltd. and Java Group, Inc.
12. Additional Exhibits
(a) Consent of Elliot Tulk Pryce Anderson
21. Subsidiaries of the Registrant
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
JAVA GROUP, INC.
By: /s/ Robert P. Gillingham
--------------------------
Robert P. Gillingham,
President
Dated: April 30, 1996
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INDEX TO FINANCIAL STATEMENTS
Report of Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . F-1
Consolidated Balance Sheet at June 30, 1995 and 1994 . . . . . . . . . . . . F-2
Consolidated Statement of Operations Accumulated from
May 25, 1989 (Inception) to June 30, 1995 and the years ended
June 30, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statement of Stockholders' Equity Accumulated from
May 25, 1989 (Inception) to June 30, 1995 . . . . . . . . . . . . . . . F-4
Consolidated Statement of Cash Flows from May 25, 1989 (Inception)
to June 30, 1995 and the years ended June 30, 1995 and 1994 . . . . . . F-5
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . F-6
to
F-8
Consolidated Balance Sheet at December 31, 1995 and 1994 . . . . . . . . . . F-9
(unaudited)
Consolidated Statement of Operations Accumulated from May 25, 1989
(Inception) to December 31, 1995 and the six months ended
December 31, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . .F-10
(unaudited)
Consolidated Statement of Stockholders' Equity
Accumulated from May 25, 1989 (Inception) to December 31, 1995. . . . .F-11
(unaudited)
Consolidated Statement of Cash Flows Accumulated from May 25, 1989
(Inception) to December 31, 1995 and the six months ended
December 31, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . .F-12
(unaudited)
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[Letterhead]
INDEPENDENT AUDITOR'S REPORT
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Shareholders and Board of Directors
We have audited the accompanying consolidated balance sheet of Java Group, Inc. (A Development Stage Company) as of June 30, 1995 and 1994 and the related consolidated statements of operations, stockholders' equity and cash flows for the years ended June 30, 1995 and 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Java Group, Inc. (A Development Stage Company) as of June 30, 1995 and 1994 and the results of its operations and its cash flows for the years ended June 30, 1995 and 1994 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not generated profitable operations since inception. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plan in regard to these matters are also discussed in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ ELLIOTT, TULK, PRYCE, ANDERSON
CHARTERED ACCOUNTANTS
Vancouver, B.C., Canada
November 3, 1995
|
Java Group, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
June 30, 1995 and 1994
(Expressed in U.S. Dollars)
1995 1994 $ $
ASSETS
Current Assets
Cash - 5,318
Loans receivable - 5,500
Prepaid expenses 3,437 1,975
-------- --------
3,437 12,793
Long Term Investment in Coffee Houses (Note 5) 68,879 15,315
-------- --------
72,316 28,108
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable 24,152 9,029
Loans payable - demand (Note 7) 316,690 42,003
-------- --------
340,842 51,032
Officer's Loan (Note 5) 1,412 34,182
-------- --------
342,254 85,214
-------- --------
Stockholders' Deficit
Common Stock (Note 9), 50,000,000 common shares
authorized, par value $0.0001 per share,
4,900,000 shares issued, 140,000 of which
are owned by the treasury and 4,760,000
shares are outstanding 490 490
Paid in Capital, subscriptions for stock paid
for in excess of par value 46,800 46,800
Deficit Accumulated During the Development Stage (317,228) (104,396)
-------- --------
(269,938) (57,106)
-------- --------
72,316 28,108
-------- --------
-------- --------
|
Commitments (Note 10)
Java Group, Inc.
(A Development Stage Company)
Consolidated Statement of Operations
Accumulated from May 25, 1989 (Inception) to June 30, 1995
and the years ended June 30, 1995 and 1994
(Expressed in U.S. Dollars)
Accumulated 1995 1994
$ $ $
Revenue - - -
-------- --------- ---------
Expenses
Accounting and legal 50,786 37,369 13,417
Advertising 10,356 10,356 -
Amortization 750 - 120
Bank charges 1,123 925 198
Consulting 3,690 - 3,690
Foreign exchange 676 676 -
Interest 2,500 2,500 -
Investor relations 70,839 52,318 18,521
Office, rent and telephone 85,673 58,517 27,156
Transfer agent 4,346 4,346 -
Travel and promotion 27,860 20,500 7,360
-------- --------- ---------
(258,599) (187,507) (70,462)
-------- --------- ---------
Losses and Other Income
Settlement of debt for no cost (Note 7) 46,607 46,607 -
Other assets written-off (26,540) - (26,540)
Coffee house losses - ongoing operations (21,563) (14,799) (6,764)
- discontinued operations (46,417) (46,417) -
Investment in Limited Partnership written
down to net realizable value (10,716) (10,716) -
-------- --------- ---------
(58,629) (25,325) (33,304)
-------- --------- ---------
Net Loss (317,228) (212,832) (103,766)
-------- --------- ---------
-------- --------- ---------
Net Loss Per Share (0.05) (0.02)
--------- ---------
--------- ---------
Weighted Average Shares Outstanding (Note 9) 4,760,000 4,900,000
--------- ---------
--------- ---------
|
Java Group, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
Accumulated from May 25, 1989 (Inception) to June 30, 1995
(Expressed in U.S. Dollars)
Deficit Accumulated
Issued Common Paid-In During the
Shares Stock Capital Development Stage
# $ $ $
Issuance of common stock 2,250,000 225 2,025
Net loss for the period (105)
---------- --- ------ --------
Balance, December 31, 1989 2,250,000 225 2,025 (105)
Issuance of common stock 250,000 25 24,975
Net loss for the period (150)
---------- --- ------ --------
Balance, December 31, 1990 2,500,000 250 27,000 (255)
Net loss for the period (150)
---------- --- ------ --------
Balance, December 31, 1991 2,500,000 250 27,000 (405)
Net loss for the period (150)
---------- --- ------ --------
Balance, December 31, 1992 2,500,000 250 27,000 (555)
Merger with Avon Funding, Inc. 400,000 40
Net loss for the period (75)
---------- --- ------ --------
Balance, June 30, 1993 2,900,000 290 27,000 (630)
Issuance of common stock 2,000,000 200 19,800
Net loss for the period (103,766)
---------- --- ------ --------
Balance, June 30, 1994 4,900,000 490 46,800 (104,396)
Net loss for the period (212,832)
---------- --- ------ --------
Balance, June 30, 1995 *4,900,000 490 46,800 (317,228)
---------- --- ------ --------
---------- --- ------ --------
|
* 140,000 shares previously issued are owned by the treasury and are not outstanding (See Note 9).
Java Group, Inc.
(A Development Stage Company)
Consolidated Statement of Cash Flows
Accumulated from May 25, 1989 (Inception) to June 30, 1995
and the years ended June 30, 1995 and 1994
(Expressed in U.S. Dollars)
Accumulated 1995 1994
$ $ $
Cash Flows to Operating Activities
Net loss (317,228) (212,832) (103,766)
Adjustments to reconcile net loss to cash
Amortization 750 - 120
Development costs written-off 26,540 - 26,540
Coffee house losses 78,696 71,932 6,764
Cash provided by (used in) changes in
operating assets and liabilities
Increase in prepaid expenses (3,437) (1,462) (1,975)
Increase in accounts payable 24,152 15,123 9,029
-------- -------- -------
Net Cash Used by Operating Activities (190,527) (127,239) (63,288)
-------- -------- -------
Cash Flows to Investing Activities
Increase in other assets (27,290) - -
Increase in coffee house investments (147,575) (125,496) (22,079)
-------- -------- -------
Net Cash Used by Investing Activities (174,865) (125,496) (22,079)
-------- -------- -------
Cash Flows to Financing Activities
Increase in shares issued - cash 490 - 200
Increase in paid in capital - cash 46,800 - 19,800
Increase (decrease) in loans from an officer 1,412 (32,770) 34,182
Increase in loans from others 316,690 274,687 42,003
Increase (decrease) in loans to others - 5,500 (5,500)
-------- -------- -------
Net Cash Provided by Financing Activities 365,392 247,417 90,685
-------- -------- -------
Increase (decrease) in cash - (5,318) 5,318
Cash - beginning of period - 5,318 -
-------- -------- -------
Cash - end of period - - 5,318
-------- -------- -------
-------- -------- -------
Non-cash Financing Activity - - -
-------- -------- -------
-------- -------- -------
|
Java Group, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the years ended June 30, 1995 and 1994
(Expressed in U.S. Dollars)
1. Date of Incorporation
The Company is a development stage company which was incorporated under the Laws of the State of Delaware on May 25, 1989.
2. Nature and Continuance of Business
Until August, 1993 the Company's business purpose was to create a publicly held corporate vehicle suitable for merging with a privately held corporation desirous of being publicly traded without affecting a securities offering of its own. On August 25, 1993, a change of control occurred in the company and a business plan was introduced to develop coffee houses. The Company's name was changed to Java Group, Inc.
These consolidated financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has suffered start-up losses and has not generated profitable operations since inception. The Company's activities are in the development stage and additional costs for the development of coffee houses must be incurred. There is substantial doubt as to the Company's ability to continue as a going concern, as the continuation of the Company as a going concern is dependent on its ability to obtain financing for the development of its coffee houses and/or the attainment of profitable operations. Management plans to raise capital through private placements.
3. Consolidated Financial Statements These consolidated financial statements include the accounts of the Company and its wholly owned Canadian subsidiary, 464431 B.C. Ltd. ("BC"), which owns the Canadian assets (comprised of coffee houses).
4. Summary of Significant Accounting Policies
a) Coffee house investments
Coffee house investments are in the form of two unincorporated joint ventures and a limited partnership and are accounted for utilizing the equity method.
b) Foreign exchange
Gains or losses arising from transactions denominated in a currency other than the U.S. are recognized in the statement of operations.
c) Cash and cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less at the time of issuance to be cash equivalents.
d) Tax accounting
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not.
5. Long Term Investment in Coffee Houses
Long term investment represent two joint ventures and a limited partnership in the development of coffee houses in British Columbia, Canada (see Note 6 - Licensing Agreement).
1995 1994
$ $
Richmond (50% Joint Venture interest)
Contributions 25,007 16,029
Less accumulated share of loss (50%) (21,563) (6,764)
------- ------
3,444 9,265
------- ------
Vancouver (80% Joint Venture interest)
Contributions (no operations) 34,739 1,464
------- ------
North Vancouver Limited Partnership (49% interest)
Contributions 87,829 4,586
Loss from discontinued operations (46,417) -
Coffee house equipment received (30,696) -
Write-down to net realizable value (10,716) -
------- ------
- 4,586
------- ------
Coffee house equipment in storage 30,696 -
------- ------
68,879 15,315
------- ------
------- ------
6. Licensing Agreement
|
By licensing and development agreement dated May 10, 1994, the Company, and its wholly-owned subsidiary 464431 B.C. Ltd., entered into an agreement with T.A.B.S. Enterprises Ltd. ("TABS") (pursuant to assignment of rights under agreement dated July 27, 1993 between the president, a former director and Java Girl Coffee Ltd.) Under the agreement, the Company has the option to specify locations that it has secured, by lease or other arrangement, for coffee houses for which TABS thereby grants a license to use the Java Girl name and its systems for the operation of each such coffee house. TABS agrees to supervise the development and operations of the coffee house, and is required to fund not less than 5% and not more than 20% of all development costs of such coffee house. Each coffee house will represent a joint venture. Under the agreement, TABS receives a 5 year stock option for 2 million shares in the capital stock of Java Group, Inc. at a price of $0.10 per share expiring May 20, 1999 (in lieu of a 5% gross sales management fee under the original agreement) and is entitled to a licensing fee equal to 5% of gross sales from each such coffee house.
7. Loans Payable
Non-directors have advanced $316,690 by way of unsecured, non-interest bearing loans. During the year a loan for $46,607 was settled at no cost and included in the determination of net income. A 10% bonus was payable on a $25,000 loan on July 4, 1994. The loan and bonus payment have been paid during the year.
8. Shareholder's Loan
The amount due to the controlling shareholder and President of the Company is unsecured, non-interest bearing and has been postponed until after June 30, 1996, unless a major equity financing has been completed.
9. Common Stock
a) Stock option
A stock option was granted to TABS to acquire 2,000,000 shares exercisable at $0.10 per share expiring May 20, 1999 (see Note 6).
b) Treasury shares
During fiscal 1995, the Company acquired 140,000 of its issued and outstanding common stock at no cost. These shares are owned by the treasury and issued, but not outstanding.
10. Commitments
a) The Company is jointly liable for royalty commitments pursuant to a licensing agreement (See Note 6).
b) The Company is jointly liable for long term premises lease payments to March 31, 1997 at $2,000 per month.
11. Tax Losses
The Company has $218,000 in net operating losses to carryover to future
years expiring as follows:
$
2009 78,000
2010 140,000
and $26,540 in capital losses to carryover expiring in 2000.
Java Group, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
December 31, 1995 and 1994
(Expressed in U.S. Dollars)
1995 1994 $ $
ASSETS
Current Assets
Cash - 22,131
Loans receivable - 4,000
Prepaid expenses 13,438 1,975
-------- --------
13,438 28,106
Long Term Investment in Coffee Houses 96,626 58,779
-------- --------
110,064 86,885
-------- --------
-------- --------
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Bank indebtedness 81 -
Accounts payable 21,706 761
Loans payable - demand 361,790 251,105
-------- --------
383,577 251,866
Officer's Loan 58,317 5,890
-------- --------
441,894 257,756
-------- --------
Stockholders' Deficit
Common Stock, 50,000,000 common shares
authorized, par value $0.0001 per share,
4,900,000 shares issued, 140,000 of which
are owned by the treasury and 4,760,000
shares are outstanding 490 490
Paid in Capital, subscriptions for stock paid
for in excess of par value 46,800 46,800
Deficit Accumulated During the Development Stage (379,120) (218,161)
-------- --------
(331,830) (170,871)
-------- --------
110,064 86,885
-------- --------
-------- --------
|
Java Group, Inc.
(A Development Stage Company)
Consolidated Statement of Operations
Accumulated from May 25, 1989 (Inception) to December 31, 1995
and the six months ended December 31, 1995 and 1994
(Expressed in U.S. Dollars)
Accumulated 1995 1994
$ $ $
Revenue - - -
-------- --------- ---------
Expenses
Accounting and legal 55,786 5,000 20,971
Advertising 13,370 3,014 9,982
Amortization 750 - -
Bank charges and interest 3,885 262 2,930
Consulting 5,166 1,476 -
Foreign exchange (401) (1,077) -
Investor relations 82,163 11,324 31,550
Office, rent and telephone 111,028 25,355 35,036
Transfer agent 5,349 1,003 171
Travel and promotion 33,257 5,397 6,539
-------- --------- ---------
(310,353) (51,754) (107,179)
-------- --------- ---------
Losses and Other Income
Settlement of debt for no cost 46,607 - -
Other assets written-off (26,540) - -
Coffee house losses - ongoing operations (31,701) (10,138) (6,586)
- discontinued operations (46,417) - -
Investment in Limited Partnership written
down to net realizable value (10,716) - -
-------- --------- ---------
(68,767) (10,138) (6,586)
-------- --------- ---------
Net Loss (379,120) (61,892) (113,765)
-------- --------- ---------
-------- --------- ---------
Net Loss Per Share (.01) (.02)
--------- ---------
--------- ---------
Weighted Average Shares Outstanding 4,760,000 4,900,000
--------- ---------
--------- ---------
|
Java Group, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
Accumulated from May 25, 1989 (Inception) to December 31, 1995
(Expressed in U.S. Dollars)
Deficit Accumulated
Issued Common Paid-In During the
Shares Stock Capital Development Stage
# $ $ $
Issuance of common stock 2,250,000 225 2,025
Net loss for the period (105)
--------- --- ------ --------
Balance, December 31, 1989 2,250,000 225 2,025 (105)
Issuance of common stock 250,000 25 24,975
Net loss for the year (150)
--------- --- ------ --------
Balance, December 31, 1990 2,500,000 250 27,000 (255)
Net loss for the year (150)
--------- --- ------ --------
Balance, December 31, 1991 2,500,000 250 27,000 (405)
Net loss for the year (150)
--------- --- ------ --------
Balance, December 31, 1992 2,500,000 250 27,000 (555)
Merger with Avon Funding, Inc. 400,000 40
Net loss for the period (75)
--------- --- ------ --------
Balance, June 30, 1993 2,900,000 290 27,000 (630)
Issuance of common stock 2,000,000 200 19,800
Net loss for the year (103,766)
--------- --- ------ --------
Balance, June 30, 1994 4,900,000 490 46,800 (104,396)
Net loss for the year (212,832)
--------- --- ------ --------
Balance, June 30, 1995 *4,900,000 490 46,800 (317,228)
Net loss for the period (61,892)
--------- --- ------ --------
Balance, December 31, 1995 4,900,000 490 46,800 (379,120)
--------- --- ------ --------
--------- --- ------ --------
|
* 140,000 shares previously issued are owned by the treasury and are not outstanding.
Java Group, Inc.
(A Development Stage Company)
Consolidated Statement of Cash Flows
Accumulated from May 25, 1989 (Inception) to December 31, 1995
and the six months ended December 31, 1995 and 1994
(Expressed in U.S. Dollars)
Accumulated 1995 1994
$ $ $
Cash Flows to Operating Activities
Net loss (379,120) (61,892) (113,765)
Adjustments to reconcile net loss to cash
Amortization 750 - -
Development costs written-off 26,540 - -
Coffee house losses 88,834 10,138 6,586
Cash provided by (used in) changes in
operating assets and liabilities
Increase in prepaid expenses (13,438) (10,001) -
Increase (decrease) in accounts
payable 21,706 (2,446) (8,268)
-------- ------- --------
Net Cash Used by Operating Activities (254,728) (64,201) (115,447)
-------- ------- --------
Cash Flows to Investing Activities
Increase in other assets (27,290) - -
Increase in coffee house investments (185,460) (37,885) (50,050)
-------- ------- --------
Net Cash Used by Investing Activities (212,750) (37,885) (50,050)
-------- ------- --------
Cash Flows to Financing Activities
Increase in shares issued - cash 490 - -
Increase in paid in capital - cash 46,800 - -
Increase (decrease) in loans from an officer 58,317 56,905 (28,292)
Increase in loans from others 361,790 45,100 210,602
-------- ------- --------
Net Cash Provided by Financing Activities 467,397 102,005 182,310
-------- ------- --------
Decrease in cash (81) (81) 16,813
Cash - beginning of period - - 5,318
-------- ------- --------
Cash - end of period (81) (81) 22,131
-------- ------- --------
-------- ------- --------
Non-cash Financing Activity - - -
-------- ------- --------
-------- ------- --------
|
EXHIBIT INDEX
Exhibit
No. Description
-------- ------------
2.(a) Registrant's Amended and Restated Certificate of
Incorporation
(b) Registrant's By-Laws
3. Specimen Common Stock Certificate
6.(a) Licensing and Development Agreement dated May 30, 1994
between T.A.B.S. Enterprises Ltd. and Java Group, Inc. and
464431 B.C. Ltd.
(b) Form of Lease dated November 1, 1993 between Richmond Inn
Hotel Ltd. and Java Girl Coffee Ltd. and Klaus J. Henck
(c) Lease dated July 8, 1994 between Yorkson Investment Company
Ltd. and Java Group, Inc.
12. Additional Exhibits
(a) Consent of Elliot Tulk Pryce Anderson
21. Subsidiaries of the Registrant
|
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
JAVA GROUP, INC.
The undersigned, being the President and Secretary of Java Group, Inc., a corporation organized and existing under laws of the State of Delaware (the "Corporation"), do hereby certify as follows:
FIRST: That, the name of the Corporation is Java Group, Inc. and that the name under which the Corporation was originally incorporated is Montrose Ventures, Inc., and the date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was May 25, 1989.
SECOND: That, the Corporation previously amended its Certificate of Incorporation by filing a Certificate of Amendment with the Secretary of State of Delaware on September 9, 1993.
THIRD: The Certificate of Incorporation is hereby amended by striking out Articles 1, 2, 3, 4, 5, 6, 7 and 8, and by substituting in lieu thereof new Articles 1, 2, 3, 4, 5, 6, 7, 8 and 9 which are set forth in the Amended and Restated Certificate of Incorporation hereinafter provided for.
FOURTH: The provisions of the Certificate of Incorporation of the Corporation as heretofore amended and/or supplemented, and as herein amended, are hereby restated and integrated into the single instrument which is hereinafter set forth, and which is entitled Amended and Restated Certificate of Incorporation of Java Group, Inc. without any further amendments other than the amendments herein certified and without any discrepancy between the provisions of the Certificate of Incorporation as heretofore amended and supplemented and the provisions of the said single instrument hereinafter set forth.
FIFTH: The amendments and the restatement of the Certificate of Incorporation set forth herein have been duly adopted by unanimous written consent of the Board of Directors and by vote of a majority of the outstanding stock entitled to vote thereon at a meeting held in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware.
That, the text of the Certificate of Incorporation is hereby amended and restated to read as herein set forth in full:
FIRST: The name of the corporation is Java Group, Inc. (the
"Corporation").
SECOND: The address, including street, number, city, and county, of
|
the registered office of the Corporation in the State of Delaware is 9 East Loockerman Street, City of Dover, County of Kent, Zip Code 19901; and the name of the registered agent of the Corporation in the State of Delaware at such address is the National Corporate Research, Ltd.
THIRD: The nature of the business and of the purposes to be conducted and promoted by the Corporation are to conduct any lawful business, to promote any lawful purpose, and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
FOURTH: The aggregate number of shares of all classes of stock which the Corporation shall have authority to issue is FIFTY-FIVE MILLION (55,000,000), of which FIFTY MILLION (50,000,000) shares shall be Common Stock, par value $.0001 per share ("Common Stock"), and FIVE MILLION (5,000,000) shares shall be Preferred Stock, par value $.0001 per share.
No stockholder shall have any preemptive right to subscribe to or purchase any issue of stock or other securities of the Corporation, or any treasury stock or other treasury securities.
The power, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights are as follows:
A. COMMON STOCK. Subject to the provisions of any series of Preferred Stock which may at the time be outstanding, the holders of shares of Common Stock shall be entitled to receive, when and as declared by the Board of Directors out of any funds legally available for the purpose, such dividends as may be declared from time to time by the Board of Directors. In the event of the liquidation of the Corporation, or upon distribution of its assets, after the payment in full or the setting apart for payment of such preferential amounts, if any, as the holders of shares of Preferred Stock at the time outstanding shall be entitled, the remaining assets of the Corporation available for payment and distribution to holders of shares of Common Stock shall, subject to any participating or
similar rights of shares of Preferred Stock at the time outstanding, be distributed ratably among the holders of shares of Common Stock at the time outstanding. All shares of Common Stock shall have equal, non-cumulative voting rights, and shall have no preference, conversion, exchange, preemptive or redemption rights.
B. PREFERRED STOCK
(a) The Preferred Stock may be issued from time to time in one or more series, each of which shall be distinctively designated, shall rank equally and shall be identical in all respects except as otherwise provided in subsection (b) of this Article FOURTH.
(b) Authority is hereby vested in the Board of Directors to issue from time to time the Preferred Stock of any series and to state in the resolution or resolutions providing for the issuance of shares of any series the voting powers, if any, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions of such series to the full extent now or hereafter permitted by the law of the State of Delaware in respect of the matters set forth in the following clauses (i) to (viii) inclusive:
(i) the number of shares to constitute such series, and the distinctive designations thereof;
(ii) the voting powers, full or limited, if any, of such series;
(iii) the rate of dividends payable on shares of such series, the conditions on which and the times when such dividends are payable, the preference to, or the relation to, the payment of the dividends payable on any other class, classes or series of stock, whether cumulative or non-cumulative and, if cumulative, the date from which dividends on shares of such series shall be cumulative;
(iv) the redemption price or prices, if any, and the terms and conditions on which shares of such series shall be redeemable;
(v) the requirement of any sinking fund or funds to be applied to the purchase or redemption of shares of such series and, if so, the amount of such fund or funds and the manner of application;
(vi) the rights of shares of such series upon the liquidation, dissolution or winding up of, or upon any distribution of the assets of, the Corporation;
(vii) the rights, if any, of the holders of shares of such series to convert such shares into, or to exchange such shares for, shares of any other class, classes or series of stock and the price or prices or the rates of exchange and the adjustments at which such shares shall be convertible or exchangeable, and any other terms and conditions of such conversion or exchange;
(viii) any other preferences and relative, participating, optional or other special rights of shares of such series, and qualifications, limitations or restrictions including, without limitation, any restriction on an increase in the number of shares of any series theretofore authorized and any qualifications, limitations or restrictions of rights or powers to which shares of any future series shall be subject.
C. CERTIFICATES OF DESIGNATIONS. Before the Corporation shall issue any shares of Preferred Stock of any series, a certificate setting forth the resolution or resolutions of the Board of Directors, fixing the voting powers, designations, preferences and rights of such series, the qualifications, limitations or restrictions thereof, and the number of shares of Preferred Stock of such series authorized by the Board of Directors, shall be signed, attested to, filed, and recorded pursuant to Section 103 of the General Corporation Law of Delaware. Unless otherwise provided in any such resolution or resolutions, the holders of the series so authorized shall have no voting rights and shall have no conversion, exchange, preemptive or redemption rights. Unless otherwise provided in any such resolution or resolutions, the number of shares of Preferred Stock of the series authorized by such resolutions may be increased (but not above the total number of shares of Preferred Stock of such series) or decreased (but not below the number of shares of Preferred Stock of such series then outstanding) by a certificate setting forth a resolution or resolutions adopted by the Board of Directors, authorizing such increase or decrease, signed, attested to, filed, and recorded pursuant to Section 103 of the General Corporation Law of Delaware. Unless otherwise provided in the resolution or resolutions creating such series, the number of shares of Preferred Stock specified in any such decrease shall be restored to the status of authorized but unissued shares of Preferred Stock (without designation as to series).
FIFTH: (a) The number of directors shall be not less than three nor more than twelve, the exact number to be determined from time to time by the Board of Directors.
(b) Directors shall be elected by a plurality of the votes cast by the holders of shares entitled to vote in the election of the directors.
(c) Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of stockholders by or at
the direction of the Board of Directors or by any stockholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section. Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 60 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such stockholder's notice shall set forth (a)
as to each person whom the stockholder proposes to nominate for election or re-
election as a director, (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the Corporation which are
beneficially owned by such person, and (iv) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities and Exchange Act of 1934, as amended
(including without limitation such persons' written consent to being named in
the proxy statement as a nominee and to serving as a director if elected); and
(b) as to the stockholder giving the notice (i) the name and address, as they
appear on the Corporation's books, of such stockholder and (ii) the class and
number of shares of the Corporation which are beneficially owned by such
stockholder. At the request of the Board of Directors any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
of the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth in this Section. The Chairman of
the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedures, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.
(d) Notwithstanding any other provision hereof or of the By-Laws of the Corporation, and notwithstanding the fact that some lesser percentage may be specified by law, any director or all the directors of the Corporation may be removed at any time, but only for cause and only by (1) a vote of the holders of 66-2/3% of the shares represented at a meeting of the stockholders at which a quorum is present or (2) a vote of 66-2/3% of the members of the Board of Directors. With respect to removal of any director by action of the Board of Directors, the Board shall have the power, by a similar vote, to suspend any director pending a final determination that cause exists for removal.
(e) This Article FIFTH can be amended only by a vote of the holders of 66-2/3% of the shares represented at a meeting of stockholders at which a quorum is present and which was called, inter alia, for such purpose.
SIXTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:
(a) The Board of Directors shall have power without the assent or vote of the stockholders:
(i) to fix and vary the number of shares to be reserved for any proper purposes; to authorize and cause to be executed mortgages and liens upon all or any part of the property of the Corporation; to determine the use and disposition of any surplus or net profits; and to fix the times for the declaration and payment of dividends; and
(ii) to determine from time to time whether, and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Corporation (other than the stock ledger) or any of them, shall be open to the inspection of the stockholders.
(b) The directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or any meeting of the stockholders called for the purpose of considering any such act
or contract, and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the stock of the Corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and binding upon the Corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the Corporation, whether or not the contract or act would otherwise be open to legal attack, abuse of directors' interest, or for any other reason.
(c) In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the statutes of the State of Delaware, of this certificate, and to any by-laws from time to time made by the stockholders; provided, however, that no by-laws so made shall invalidate any prior act of the directors which would have been valid if such by-law had not been made.
SEVENTH: The Corporation is to have perpetual existence.
EIGHTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the Corporation.
NINTH: The power to make, alter or repeal the By-Laws of the Corporation, and to adopt any new By-Law, shall be vested in the Board of Directors.
TENTH: The Corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, or by any successor thereto, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section. Such right to indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. The indemnification provided for herein shall not be deemed exclusive of any other rights of which those seeking indemnification may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors or otherwise.
ELEVENTH: The personal liability of the directors of the
Corporation is hereby eliminated to the fullest extent permitted by paragraph
(7) of subsection (b) of Section 102 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented.
IN WITNESS WHEREOF, JAVA GROUP, INC. has caused its corporate seal to be hereunto affixed and this Certificate to be signed by Rob Gillingham, its President, and attested by Ray Suutari, its Secretary, this 18th day of April, 1996.
JAVA GROUP, INC.
By: /s/ Rob Gillingham
--------------------------
Rob Gillingham, President
[Seal]
ATTEST:
/s/ Ray Suutari
- ----------------------
Ray Suutari, Secretary
|
BY-LAWS
OF
JAVA GROUP, INC.
ARTICLE 1
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office shall be established and maintained at the office of National Corporate Research, Ltd., in the City of Dover, in the County of Kent, in the State of Delaware, and said corporation shall be the registered agent of this corporation in charge thereof unless and until a successor registered agent is appointed by the Board of Directors.
SECTION 2. OTHER OFFICES. The corporation may have other offices, either within or without the State of Delaware, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the election of Directors and for such other business as may be stated in the notice of the meeting, shall be held on such date as the Board of Directors, by resolution, may designate, at such place, either within or without the State of Delaware, as the Board of Directors, by resolution, shall determine and as set forth in the notice of the meeting.
At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and they may transact such other corporate business as shall be stated in the notice of the meeting or as may properly come before the meeting in accordance with these By-laws.
SECTION 2. VOTING. Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these By-Laws shall be entitled to one vote in person or by proxy, for each share of stock held by such stockholder which has voting power upon the matter in question, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and only as long as it is coupled with an interest sufficient in law to support an irrevocable power. The vote for Directors and the vote upon any question before the meeting, shall be by ballot. With respect to the election of Directors, a plurality of the votes cast at a meeting shall be sufficient to elect. All other matters or questions shall, unless otherwise provided by law, by the Certificate of Incorporation or by these By-laws, be decided by the affirmative vote of the holders of a majority of the outstanding shares of stock present in person or by proxy at the meeting and entitled to vote on such matter or question.
A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
SECTION 3. QUORUM. Except as otherwise required by law, by the Certificate of Incorporation or by these By-Laws, the holders, represented in person or by proxy at any duly called meeting of shareholders, of shares representing a majority of the total of the number of shares of stock issued and outstanding and entitled to vote at such meeting shall constitute a quorum for the transaction of business at such meeting. In case a quorum shall not be present at any meeting, the holders of a majority of the shares entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite number of shares entitled to vote shall be present. At any such adjourned meeting at which the requisite number of shares entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof.
SECTION 4. SPECIAL MEETINGS. Special meetings of the shareholders of the corporation shall be called by the Secretary of the corporation (A) at the request of the Chairman of the Board of Directors or the President of the corporation or (B) at the request of a majority of the entire Board of Directors. Special meetings may be held at such place within or without the State of Delaware, as designated in the notice of meeting.
SECTION 5. NOTICE OF MEETINGS. Written notice, stating the place, date and time of any meeting of stockholders, and the general purpose or purposes of the business to be considered, shall be given to each stockholder entitled to vote thereat at his address as it appears on the records of the corporation, not less than 10 nor more than 60 days before the date of the meeting. No business other than that stated in the notice shall be transacted at any special meeting without the unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ADVANCE NOTICE OF STOCKHOLDER BUSINESS. Notwithstanding
any other provision of these By-Laws, for business to be properly brought before
an annual or special meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the Secretary of the corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation, not less than 60 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder proposes to bring
before the meeting (a) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting,
(b) the name and address, as they appear on the corporation's books, of the
stockholder proposing such business, (c) the class and number of shares of the
corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding anything
in these By-Laws to the contrary, no business shall be conducted at any meeting
except in accordance with the procedures set forth in this Article II, SECTION
6. The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section and if he should so determine,
he shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted.
SECTION 7. ORGANIZATION OF MEETINGS. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in his absence by the President, or in his absence by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting.
SECTION 8. ACTION WITHOUT MEETING. Unless otherwise provided by the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM; ADVANCE NOTIFICATION OF STOCKHOLDER NOMINATIONS. The Board of Directors shall consist of one or more members. Subject to any provision set forth in the corporation's Certificate of Incorporation, the number of Directors shall be as designated by resolution adopted by the Directors. The Directors shall be elected at the annual meeting of the stockholders and each Director shall be elected to serve until his successor shall be elected and shall qualify or until his earlier resignation or removal. Directors need not be stockholders.
Only persons who are nominated in accordance with the procedures set forth in this ARTICLE III, SECTION 1 shall be eligible for election as Directors. Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of stockholders by or at the direction of the Board of Directors or by any stockholder of the corporation entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a Director, (i) the name, age, business address
and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the Corporation which are beneficially owned by such person, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such persons' written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the corporation's books, of such stockholder and (ii) the class and number of shares of the corporation which are beneficially owned by such stockholder. At the request of the Board of Directors any person nominated by the Board of Directors for election as a Director shall furnish to the Secretary of the corporation that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a Director of the corporation unless nominated in accordance with the procedures set forth in this Section. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the By-Laws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.
SECTION 2. RESIGNATIONS. Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective.
SECTION 3. REMOVAL. Notwithstanding any other provision hereof or of the Certificate of Incorporation, and notwithstanding the fact that some lesser percentage may be specified by law, any director or all the directors of the Corporation may be removed at any time, but only for cause and only by (1) a vote of the holders of 66-2/3% of the shares represented at a meeting of the stockholders at which a quorum is present or (2) a vote of 66-2/3% of the members of the Board of Directors. With respect to the removal of any director by action of the Board of Directors, the Board shall have the power, by a similar vote, to suspend any director pending a final determination that cause exists for removal.
SECTION 4. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Vacancies and newly created directorships occurring on the Board of Directors may be filled by a vote of the remaining directors (although less than a quorum) and the Directors thus chosen shall hold office until the next annual election and until their
successors are elected and qualify, or, if the Directors are divided into classes, until the next election of the class for which such Directors shall have been chosen and until their successors are elected and qualify.
SECTION 5. POWERS. The Board of Directors shall exercise all of the powers of the corporation except such as are by law, or by the Certificate of Incorporation of the corporation or by these By-Laws conferred upon or reserved to the stockholders. If a quorum is present at any meeting, all action permitted or required to be taken shall be taken by a vote of a majority of those present, unless a different vote is specified by law, the Certificate of Incorporation or these By-Laws.
SECTION 6. COMMITTEES. The Board of Directors may, by resolution or resolutions passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the Directors of the corporation. The board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board of Directors, or in these By-Laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the By-Laws of the corporation; and, unless the resolution, these By-Laws, or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock.
SECTION 7. MEETINGS. The newly elected Directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, after their appointment by the incorporator(s) of the corporation or after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent in writing of all the Directors.
Regular meetings of the Directors may be held without notice at such places and times as shall be determined from time to time by resolution of the Directors.
Special meetings of the board may be called by the President or by the Secretary on the written request of any two Directors on at least two day's written notice or one days' notice by telephone, telecopy, telex or telegram to each Director and shall be held at such place or places as may be determined by the Directors, or as shall be stated in the call of the meeting. All notices shall be given to the Directors at their business or home addresses.
Any waiver or notice of meeting need not specify the purposes of the meeting.
Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
SECTION 8. QUORUM. A majority of the Directors shall constitute a quorum for the transaction of business. If at any meeting of the board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned.
SECTION 9. COMPENSATION. Directors shall not receive any stated salary for their services as Directors or as members of committees, except as otherwise provided by a resolution adopted by the Board of Directors. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 10. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the board, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation shall be a President, a Secretary, and a Treasurer, all of whom shall be elected by the Board of Directors and who shall hold office until their successors are elected and qualified or until their earlier resignation, death or removal. In addition, the Board of Directors may elect a Chairman, one or more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation need be Directors. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting. More than two offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such term and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.
SECTION 3. ELECTION. The President, Treasurer and Secretary shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Other officers may be appointed by the Board of Directors at such meeting or at any other meeting.
SECTION 4. RESIGNATION AND REMOVAL. Any officer may resign by delivering his written resignation to the corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
The Board of Directors, or a committee duly authorized to do so, may remove any officer with or without cause. Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise, unless such compensation is expressly provided in a duly authorized written agreement with the corporation.
SECTION 5. VACANCIES. The Board of Directors may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled for such period as it may determine any offices other than those of President, Treasurer and Secretary. Each such successor shall hold office for the unexpired term of his predecessor and until his successor is elected and qualified, or until his earlier death, resignation or removal.
SECTION 6. CHAIRMAN. The Chairman of the Board of Directors, if one be elected, shall be the chief executive officer of the corporation and preside at all meetings of the Board of Directors and the shareholders and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors.
SECTION 7. PRESIDENT. The President shall be the chief operating officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. In the absence or non-election of the Chairman of the Board of Directors, and if the President is a member of the Board of Directors, he shall preside at all meetings of the Board of Directors, and shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some other manner, he shall execute bonds, mortgages and other contracts on behalf of the corporation, and shall cause the seal to be affixed to any instrument requiring it and when so affixed the seal shall be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer.
SECTION 8. VICE-PRESIDENT. Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the Directors.
SECTION 9. TREASURER. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositaries as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond for the faithful discharge of his duties in such amount and with such surety as the board shall prescribe.
SECTION 10. SECRETARY. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and Directors, and all other notices required by law or by these By-Laws, and in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the President, or by the Directors, or stockholders, upon whose requisition the meeting is called as provided in these
By-Laws. He shall record all the proceedings of the meetings of the corporation and of the Directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the Directors or the President. He shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it, when authorized by the Directors or the President, and attest the same.
SECTION 11. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the Directors.
ARTICLE V
STOCK
SECTION 1. CERTIFICATES OF STOCK. Certificates of stock, signed by the Chairman or Vice Chairman of the Board of Directors, if they be elected, President or Vice-President, and the Treasurer or an Assistant Treasurer, or Secretary or an Assistant Secretary, shall be issued to each stockholder certifying the number of shares owned by him in the corporation. Any of or all the signatures may be facsimiles.
SECTION 2. LOST CERTIFICATES. A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the Directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss or destruction of any such certificate, or the issuance of any such new certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the Directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS. Subject to the provisions of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor, at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the Directors from time to time in their discretion deem proper for working capital or as a reserve fund to need contingencies or for equalizing dividends or for such other purposes as the Directors shall deem conducive to the interests of the corporation.
ARTICLE VI
MISCELLANEOUS
SECTION 1. SEAL. The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words "CORPORATE SEAL DELAWARE". An alternate corporate seal shall contain the words "CORPORATE SEAL". Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
SECTION 2. FISCAL YEAR. The fiscal year of the corporation shall be determined by resolution of the Board of Directors.
SECTION 3. CHECKS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer of officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors.
SECTION 4. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing
the same in the United States mail, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meeting except as otherwise provided by Statute.
Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the corporation or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice or such person's duly authorized attorney or by telegraph, cable or other available method, whether before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-Laws adopted by the affirmative vote of the holders of a majority of the outstanding stock at any regular meeting of the stockholders or special meeting called for the purpose, or by the affirmative vote of a majority of the entire Board of Directors at any regular or special meeting of the Board, provided, however, that if any stockholder or Director, as the case may be, should object to the consideration of any proposed amendment, the proposal may not be voted upon unless notice of the proposed amendment was given at least ten (10) days prior to the meeting at which such objecting stockholder or Director is entitled to vote. Any amendment, modification, repeal or addition to these By-Laws adopted by the Board of Directors may be amended or repealed by the stockholders. The Board is without authority to amend this Article VI.
NUMBER SHARES
JG
JAVA GROUP, INC.
SEE REVERSE FOR
CERTAIN DEFINITIONS
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
BULLETIN BOARD: JVGI COMMON STOCK CUSIP 471888 10 7
THIS CERTIFIES THAT:
IS OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF $.0001 PAR VALUE EACH OF
transferable on the books of the Corporation in person or by attorney upon
surrender of this certificate duly endorsed or assigned. This certificate and
the shares represented hereby are subject to the laws of the State of Delaware,
and to the Certificate of Incorporation and Bylaws of the Corporation, as now or
hereafter amended. This certificate is not valid until countersigned by the
Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
DATED: COUNTERSIGNED:
OLDE MONMOUTH STOCK TRANSFER CO., INC.
23 CLARIDGE DRIVE, MIDDLETOWN, NJ 07748
TRANSFER AGENT
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BY:
JAVA GROUP, INC.
CORPORATE SEAL 1989 DELAWARE
SECRETARY PRESIDENT
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT ACT - _______Custodian_______
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _______
in common (State)
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Additional abbreviations may also be used though not in the above list.
For Value Received __________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
/ /
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
__________________________________________________________________________Shares
of the stock represented by the within Certificate and do hereby irrevocably constitute and appoint ________________________________________________ Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.
Dated_________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER
THE CORPORATION WILL FURNISH TO ANY STOCKHOLDER, UPON REQUEST AND WITHOUT CHARGE, A FULL STATEMENT OF THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF THE SHARES OF EACH CLASS AND SERIES AUTHORIZED TO BE ISSUED, SO FAR AS THE SAME HAVE BEEN DETERMINED, AND OF THE AUTHORITY, IF ANY, OF THE BOARD TO DIVIDE THE SHARES INTO CLASSES OR SERIES AND TO DETERMINE AND CHANGE THE RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF ANY CLASS OR SERIES. SUCH REQUEST MAY BE MADE TO THE SECRETARY OF THE CORPORATION OR TO THE TRANSFER AGENT NAMED ON THIS CERTIFICATE.
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF A NATIONAL OR REGIONAL OR OTHER RECOGNIZED STOCK EXCHANGE IN CONFORMANCE WITH A SIGNATURE GUARANTEE MEDALLION PROGRAM.
THIS AGREEMENT made the 30th day of May, 1994.
BETWEEN:
T.A.B.S ENTERPRISES LTD., a corporation incorporated under the laws of the Province of British Columbia (No. 460010)
("T.A.B.S")
OF THE FIRST PART
AND:
JAVA GROUP, INC., an extra-provincial corporation registered under the laws of the Province of British Columbia (No. A-37910)
and
464431 B.C. LTD., a corporation registered under the laws of the Province of British Columbia. 464431 B.C. LTD. is a wholly owned subsidiary of the Java Group, Inc.
(collectively and individually, the "Java Group")
OF THE SECOND PART
WHEREAS:
(A) T.A.B.S is the owner of various trade marks, service marks and trade names including "T.A.B.S" and "Java Girl", and related names and marks (the "Marks");
(B) T.A.B.S is presently engaged in the business of operating coffee retail stores for the distribution and sale of coffee products and related products under the names "T.A.B.S", "Java Girl" or related names (collectively, the "Coffee Houses") and, in connection therewith, the use of the Marks;
(C) T.A.B.S has developed a system for the operation of Coffee Houses utilizing certain standards, specifications, methods, procedures, techniques, processes, management systems, formats, identification schemes and proprietary marks and information in the distribution, marketing and sale of coffee products (the "System"), all of which may be changed, improved and further developed from time to time by T.A.B.S;
(D) The distinguishing characteristics of the System include, without limitation, the Marks together with such other trade marks, trade names, service marks, logos, signs, slogans and copyrights as T.A.B.S now or may hereafter adopt and designate
for use in connection with the System;
(E) T.A.B.S has established an excellent reputation with the public as to the quality of the products and services available at Coffee Houses, which excellent reputation and goodwill has been and continues to be a unique benefit to T.A.B.S and its licensees;
(F) The Java Group is a public company desirous of funding the development and owning the Coffee Houses and wishes to rely upon the expertise of T.A.B.S in sourcing, developing and operating the Coffee Houses.
(G) T.A.B.S and Java Group recognize an agreement between Java Girl Coffee Ltd., John Williams and Rob Gillingham dated July 27, 1993 (the "Java Girl Agreement"). Under Section 1.7 of the Agreement, Williams and Gillingham have the right to reassign this Agreement once. The Agreement was reassigned to the Java Group, Inc. The agreement called for a management fee of 5% of gross sales and a licensing fee of 5% of gross sales payable to Java Girl Coffee Ltd. In lieu of the 5% management fee, T.A.B.S. is granted a stock option for 2,000,000 shares in the capital stock of Java Group, Inc. which can be exercised at $0.10 per share.
NOW, THEREFORE, in consideration of one ($1.00) dollar, the premises and of the mutual covenants and agreements herein contained (the receipt and sufficiency of all of which is hereby acknowledged) the parties hereby mutually agree as follows:
1. INTERPRETATION
In this Agreement and in any supplement or amendment hereto, the following terms shall have the following meanings:
a. "Coffee Houses" - means the Coffee Houses to be licensed by T.A.B.S and funded by the Java Group pursuant to the provisions of this Agreement.
b. "Gross Sales" - means the entire amount of the actual sales price, whether for cash, credit or otherwise, of all sales of goods and services in respect of the Coffee Houses, and all other receipts whatsoever from all business conducted upon or originating from the Coffee Houses.
2. OPTION AND RIGHT OF FIRST REFUSAL
a. GRANT AND TERM
(i) Subject to the provisions of this Agreement, T.A.B.S. hereby grants to the Java Group an option (the "Option") to license the Marks and
the System from T.A.B.S. for use at any Coffee House location which has been approved of by T.A.B.S. and the Java Group. The term of the license shall end upon the expiration of the term of the lease of the Coffee House location for which a license of the Marks and System has been sought and shall commence on the date of the exercise of the option (the "Term").
(ii) T.A.B.S. also hereby grants to the Java Group a right of first refusal (the "Right of First Refusal") to exercise the Option.
b. EXERCISE OF OPTION
The Java Group may exercise the Option in respect of a Coffee location at any time by giving written notification to T.A.B.S. Upon the receipt of such notice and subject to the obligations of T.A.B.S set forth in this Agreement, the Java Group shall be responsible for the development and associated costs and licensing fees of T.A.B.S of the Coffee House location described in Paragraphs 3 and 4.
c. EXERCISE OF RIGHT OF FIRST REFUSAL
T.A.B.S. agrees that in the event it receives an offer with respect to the licensing of the Marks and System for a particular Coffee House location or on its own initiative decides to develop a particular location as a Coffee House it shall transmit such information to the Java Group in writing. The Java Group shall have a period of 30 working days thereafter in order to elect in writing as to whether it wishes to exercise the Option. T.A.B.S. notification shall contain reasonable details as to the terms of any offer which has been received by T.A.B.S. The failure of the Java Group to notify within the following 30 business days shall be deemed to be a waiver of the Right of First Refusal. In the event of an actual waiver or deemed waiver T.A.B.S. shall be free to enter into an agreement on terms materially the same as those which were offered to the Java Group.
3. DEVELOPMENT OF THE COFFEE HOUSES
The development of any given Coffee House shall proceed in the following manner:
a. The Java Group shall secure a Coffee House location by lease agreement or other arrangement in which the Java Group shall be named as the lessee. Upon entering into the lease agreement, the Java Group will exercise the option.
b. As agent for Java Group, T.A.B.S. shall be
responsible for the contracting and supervision of the development of the Coffee House location, including any leasehold improvements.
c. T.A.B.S. shall be responsible for a minimum of 5% of the development costs and may invest at T.A.B.S.' discretion up to a maximum of 20% of the development costs. The Java Group shall be responsible for the remainder of all development costs.
T.A.B.S. shall have a joint venture interest in the ownership, profits and losses of the Coffee House in consideration of its participation in the development costs, the percentage of which shall equal the proportion of its contribution towards the development costs out of the total development cost of the Coffee House (the "Joint Venture Percentage"). The balance of the ownership, profits and losses shall exclusively belong to the Java Group.
d. T.A.B.S. shall use its best efforts to build the Coffee House in the most efficient and cost-effective manner and shall endeavor to limit the development costs to $65,000 USD.
e. The payment of any development costs exceeding $65,000 USD (the "Excess Costs") shall be the responsibility of the Java Group, except in the event that T.A.B.S. holds an ownership interest in the Coffee House, in which case T.A.B.S. shall be responsible for that percentage of the Excess Costs equal to its Joint Venture Percentage and the Java Group shall be responsible for the remainder of the Excess Costs.
f. The commencement of any work relating to the Excess Costs shall require the prior written consent from the Java Group.
4. OPERATIONAL FEES
The Java Group shall pay T.A.B.S. the following monthly licensing fee for each Coffee House the Java Group owns or joint ventures:
(a) a licensing fee of 5% of gross sales.
5. STOCK OPTION
In lieu of a 5% management fee which had been previously granted under the Java Girl Agreement, T.A.B.S. is granted a 5 year
stock option for 2,000,000 shares in the capital stock of the Java Group, Inc., the terms of which are set out in the form of the stock option agreement set out in Schedule "A".
6. RENEWAL OF LICENSE
If the Java Group has complied with all of the terms and conditions of this Agreement, the Java Group shall have the option to renew the term of any license it holds for a renewal term equal to the renewal term of the lease of the location for which the license is sought. Such renewal shall be without payment of any renewal fee or development costs but shall be subject to the following terms and conditions:
a. The Java Group shall give T.A.B.S. written notice of its desire to renew its license to continue as a licensee of the System and Marks not less than 6 months prior to the expiration of the Term.
b. The terms and conditions of this Agreement shall remain in force during such renewal term or until this Agreement is otherwise terminated or modified.
7. OPERATION OF COFFEE HOUSES
In the initial start-up phase, T.A.B.S. as agent for Java Group shall coordinate:
(i) the compliance with all mandatory specifications, standards, operating procedures and policy manuals from time to time agreed upon between T.A.B.S. and Java Group relating to the operation of the Coffee Houses, including, without limitation
A. quality, quantity, type and selection of goods and services offered,
B. safety, maintenance, cleanliness, function and appearance of the Coffee Houses and its fixtures, equipment, inventory and signs,
C. general appearance of employees of the Coffee Houses,
D. hours during which the Coffee Houses shall be open for business,
E. use and retention of standard forms,
F. use and illumination of signs, posters,
displays, standard formats and similar items,
G. use of the System and Marks,
provided that all such specifications, standards and operating procedures are reasonable and consistent with the requirements of any lease and all applicable laws, by-laws and regulations.
8. INFRINGEMENT OF MARKS
T.A.B.S. shall indemnify the Java Group against and reimburse the Java Group for all damages for which the Java Group is held liable in any proceeding arising out of the use of any of the Marks in compliance with this Agreement, unless Java waives the privilege of collecting damages. In the case of a successful defense for a damage claim against Java, the Java Group will absorb legal costs.
9. OPTION TO PURCHASE
If during the Term, one party (the "Offeror") obtains a bona fide offer to acquire the whole or any part of its interest in any Coffee House, (the "Offer"), the Offeror shall promptly give written notice thereof to other party (the "Offeree") together with a true copy of the Offer (the "Notice"). On receipt of such Notice, the Offeree shall have 30 working days within which to exercise the option of purchasing the property forming the subject matter thereof upon the same terms and conditions as those set out in the Offer.
At any time during the Term, either party may offer to purchase the whole or any part of the other party's interest in any Coffee House, including but not limited to leasehold interests, on such terms and conditions as are mutually acceptable to the parties of this Agreement, subject to the approval of any applicable regulatory authorities.
10. GENERAL CONTRACT PROVISIONS
a. LAW APPLICABLE
This Agreement is and shall be deemed to be a contract made in and pursuant to the laws of British Columbia and, except to the extent of any inconsistency with any foreign laws applicable to a particular Coffee House location, for all purposes shall be governed, construed and enforced in accordance with the laws of British Columbia and the applicable laws of the Federal Parliament of Canada. The parties hereby irrevocably attorn to the jurisdiction of the Courts of British Columbia.
b. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties and supersedes all previous agreements and understandings between the parties in any way relating to the subject matter hereof, including but not limited to a certain agreement between Java Girl Coffee Ltd., John Williams and Rob Gillingham dated July 27, 1993, which agreement is deemed to be void ab initio.
c. SEVERABILITY OF CLAUSES
If any covenant or other provision of this Agreement is invalid, illegal or incapable of being enforced by reason of any rule or law or public policy such covenant or other provision shall be severed; all other conditions and provisions of this Agreement shall, nevertheless, remain in full force and effect and no covenant or provision shall be deemed dependent upon any other covenant or provision unless so expressed herein.
d. TIME OF ESSENCE
Time shall be of the essence in the performance of this Agreement and of each and every part hereof.
e. NOTICES
All notices, requests, demands or other communications (collectively "Notices") by the terms hereof required or permitted to be given by one party to another shall be given in writing by personal delivery, telecopied or by registered mail, postage prepaid, addressed to the other parties or delivered to such other party as follows:
(a) to the Java Group at: 409 - 999 Canada Place
Vancouver, BC
V6C 3E2
Facsimile: 604-641-1214
(b) to T.A.B.S. at: 205 - 2773 Barnet Highway
Coquitlam, BC
V3B 1C2
Facsimile: 604-941-3888
or at such other address as may be given by one of them to the other in writing from time to time.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto on the day and year first above given.
THE CORPORATE SEAL OF )
T.A.B.S. ENTERPRISES )
LTD. was hereunto )
affixed in the ) C/S
presence of: )
)
)
/s/ Klaus Henck )
- -------------------- )
Authorized Signatory )
Name: Klaus Henck, )
President
THE CORPORATE SEAL OF )
JAVA GROUP, INC. was )
hereunto affixed in )
the presence of: ) C/S
)
)
/s/ Rob Gillingham )
- -------------------- )
Authorized Signatory )
Name: Rob Gillingham )
THE CORPORATE SEAL OF )
464431 B.C. LTD. was )
hereunto affixed in )
the presence of: ) C/S
)
)
/s/ Rob Gillingham )
- -------------------- )
Authorized Signatory )
Name: Rob Gillingham )
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STOCK OPTION AGREEMENT
This Stock Option Agreement ("the Agreement") is made and entered into as of the May 30, 1994 by and between T.A.B.S. ENTERPRISES LTD. ("Optionee") and JAVA GROUP, INC. ("Java") for and in consideration of the mutual covenants and agreements hereinafter set forth:
Whereas T.A.B.S. and Java Group recognize an agreement between Java Girl Coffee Ltd., John Williams and Rob Gillingham dated July 27, 1993 under Section 1.7 of the Agreement, Williams and Gillingham have the right to reassign this agreement once. The Agreement was reassigned to the Java Group, Inc. The Agreement called for a management fee of 5 percent of gross sales and a licensing fee of 5 percent of gross sales payable to Java Girl Coffee Ltd. In lieu of the 5% management fee T.A.B.S. is granted a stock option for 2 million shares which can be exercised at $.10 a share.
1. GRANT AND EXERCISE OF OPTION.
a. Subject to the terms and conditions of this Agreement, Java hereby grants Optionee the option, from and after the date hereof until five years from the date, to purchase 2,000,000 shares (the "Shares") of common stock, no par value per share, ("Common Stock") of Java Group, Inc. (the "Company") at an exercise price, subject to adjustment hereunder, (the "Exercise Price") of $. 10 per Share (the "Option")
b. Upon receipt by Java Group, Inc. of a notice of exercise of the Option by Optionee, together with certified funds in the amount of the Exercise Price, The Transfer Agent shall cause (i) certificates representing the Shares exercised to be delivered to Optionee and (ii) the Exercise Price to be delivered to Java Group, Inc. The Option may be exercised in accordance with this Section 1 as to all or any portion of the Shares subject to the Option from time to time during the term of the Option, subject, however, to the provisions of Section 8 hereof.
2. REPRESENTATIONS AND WARRANTIES OF OPTIONEE. Optionee hereby represents and warrants to Java Group, Inc. as follows, each of which representation and warranty is material and is being relied upon by Java Group, Inc. and each of which is true at and as of the date hereof:
a. Optionee understands that the Option and the Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), or under applicable state securities laws.
b. Optionee is acquiring the Option solely for its own account, for investment purposes only and not with the intention of, or a view toward, the resale, transfer or further distribution thereof in whole or in part.
3. RIGHTS OF OPTION HOLDER. Optionee shall not, by virtue hereof, be entitled to any of the rights of a shareholder in the Company, either at law or in equity; PROVIDED, HOWEVER, that in the event any certificate or certificates representing Shares of Common Stock are issued to Optionee upon exercise of the Option, then Optionee shall, for all purposes, be deemed to have become the holder of record of such Shares of Common Stock on the date on which this Option was exercised and payment of the Exercise Price was made, irrespective of the date of delivery of such share certificate or certificates. The rights of Optionee under this Option are limited to those expressed herein, and Optionee, by its acceptance hereof, consents to and agrees to be bound by and comply with all of the provisions of this Option, including, without limitation, all of the obligations imposed upon Optionee by Section 6 hereof.
4. REPRESENTATIONS AND WARRANTIES OF JAVA GROUP, INC. Java hereby represents and warrants to Optionee as follows, each of which representation and warranty is material and is being relied upon by Optionee and each of which is true at and as of the date hereof:
All Shares of Common Stock delivered into the Transfer Agent are duly and validly issued, fully paid and non-assessable and free from all stamp taxes, liens and charges with respect to the purchase thereof.
5. TAXES, FEES AND EXPENSES. Java Group, Inc. shall pay equally all transfer taxes (but not income taxes, if any) with respect to the grant of the Option and/or the issue and transfer of Shares of Common Stock pursuant to the exercise of the Option, and all other fees and expenses necessarily incurred by Java Group, Inc. in connection therewith, and will from time to time use its best efforts to comply with all laws and regulations which, in the opinion of counsel for Java Group, Inc. shall be applicable thereto.
6. TRANSFER OF OPTION OR OPTION STOCK.
a. Optionee and any transferee of the Option or Shares of Common Stock issuable upon the exercise of the Option (such shares are hereinafter referred to as "Option Stock") agree that if any distribution of the Option or any of the Option Stock is proposed to be made by them otherwise than by delivery of a prospectus meeting the requirements of Section 10 of the Securities Act of 1993, as amended, or the rules and regulations promulgated thereunder (such Act and rules and regulations being hereinafter
called the "Act"), such action shall be taken only after submission to Java Group, Inc. of an opinion of counsel, reasonably satisfactory in form and substance to Java Group, Inc.'s counsel, to the effect that the proposed distribution will not be in violation of the Act or applicable state law.
b. It shall be a condition to the transfer of the Option or any part thereof or Option Stock that any transferee deliver to Java Group, Inc. his or its written agreement to accept and be bound by all of the terms and conditions of this Agreement.
7. ADJUSTMENT TO EXERCISE PRICE AND NUMBER OF OPTION SHARES. The number and kind of securities purchasable upon the exercise of the Option and the Exercise Price shall be subject to adjustment from time to time upon the happening of certain events, as hereinafter provided.
a. MECHANICAL ADJUSTMENTS. The number of Shares purchasable upon the exercise of the Option and the Exercise Price shall be subject to adjustment as follows:
(i) In case the Company shall (A) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock, (B) subdivide its outstanding shares of Common Stock, (C) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (D) issue by reclassification of its shares of Common Stock other securities of the Company, the number of Shares purchasable upon exercise of the Option immediately prior thereto shall be adjusted so that the Optionee shall be entitled to receive the kind and number of Shares or other securities of the Company which it would have owned or have been entitled to receive after the happening of any of the events described above, had the Option been exercised immediately prior to the happening of such event or any record date with respect thereto. An adjustment made pursuant to this paragraph (i) shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.
(ii) No adjustment in the number of Shares purchasable hereunder shall be required unless such adjustment would require an increase or decrease of at least one percent (1 %) in the number of Shares purchasable upon the exercise of the Option; PROVIDED, HOWEVER, that any adjustments which by reason of this paragraph (ii) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest one-thousandth (1/1000) of a share.
(iii) Whenever the number of Shares purchasable upon the exercise of the Option is adjusted pursuant to Section 7(a)(i) hereof, the Exercise Price payable upon exercise of the
Option shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Shares purchasable upon the exercise of the Option immediately prior to such adjustment, and of which the denominator shall be the number of Shares so purchasable immediately thereafter.
(iv) For the purpose of this Section 7(a), the term "shares of Common Stock" shall mean (A) the class of stock designated as the common stock of the Company at the date of this Agreement or (B) any other class of stock resulting from successive changes or reclassification of such shares consisting solely of changes in par value, or from par value to no par value, or no par value to par value. In the event that at any time, as a result of an adjustment made pursuant to paragraph (i) above, Optionee shall become entitled to purchase any securities of Company other than shares of Common Stock, thereafter the number of such other shares so purchasable upon exercise of the Option and the Exercise Price of such securities shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein respect to the Shares.
b. NOTICE OF ADJUSTMENT. Whenever the number of Shares purchasable upon the exercise of the Option or the Exercise Price of such Shares is adjusted, as herein provided, Java Group, Inc. shall promptly mail by first class mail, postage prepaid, to the Optionee and Transfer Agent notice of such adjustment or adjustments setting forth (A) the number of Shares purchasable upon the exercise of the Option and the Exercise Price of such Option Shares after such adjustment and (C) the computation by which such adjustment was made. Such notice shall be conclusive evidence of the correctness of such adjustment.
c. NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Section 8 (a) hereof, no adjustment in respect of any dividends shall be made during the term of an Option or upon the exercise of the Option.
8. FRACTIONAL SHARES. Java Group, Inc. shall not be required to issue any fraction of a Share upon the exercise of the Option. If any fractional interest in a Share shall be deliverable upon the exercise of the Option, Java Group, Inc. shall make an adjustment therefor in cash equal to such fraction.
9. LEGENDS ON STOCK CERTIFICATE. Until the Company files an appropriate registration statement pursuant to the Act with respect to the Shares of Option Stock each certificate representing such Shares of Option Stock shall be endorsed on its face with the following legends or their equivalent:
Neither the option pursuant to which the shares represented by this certificate are issued nor said shares have
been registered under the Securities Act of 1933, as amended (the "Act"). The shares may not be transferred or sold unless there is a current registration statement in effect covering the shares or Java Group, Inc. is furnished with an opinion of counsel to the holder of the shares that an exemption from registration under said Act is available.
A copy of this Agreement shall be delivered to the Secretary of the Company, to be kept at the Company's principal office and shown by the Secretary to any person inquiring about inquiring about in connection with the proposed transfer of the shares covered by the Option.
10. NOTICES. All notices, requests, demands and other communications called for or contemplated hereunder shall be in writing, and shall be addressed to the Parties, their successors in interests or their assignees at the following addresses or such other addresses as the Parties may designate:
If to Java Group, Inc. 404 - 999 Canada Place
Vancouver, B.C.
V6C 3E2
If to the Optionee: 205 - 2773 Barnet Highway
Coquitlam, B.C.
V3B 1C2
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Any such notice shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, certified, and deposited, postage and registry or certification fees prepaid, in a post office or branch post office regularly maintained by the United States Postal Service. It shall be the obligation of Optionee and its transferee holding Option Stock to provide the Secretary of Java Group, Inc., by letter mailed as provided hereinabove, with written notice of its correct mailing address.
11. INVALID PROVISIONS. In the event that any provisions of this Agreement is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability shall not be construed as rendering any other provisions contained herein invalid or unenforceable, and all such other provisions shall be given full force and effect to the same extent as though the invalid or unenforceable provision were not contained herein.
12. APPLICABLE LAW This Agreement shall be governed by and construed in accordance with the laws of British Columbia.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, oral and written, between the Parties with respect to the subject matter hereof.
14. HEADINGS. The section and other headings contained in this Agreement are for reference purposes only and shall not be deemed to be part of this Agreement or to affect the meaning or interpretation of this Agreement.
15. AMENDMENTS. This Agreement may not be modified or changed except by an instrument or instruments in writing signed by the Party or Parties against whom enforcement of any such modification or amendment is sought.
16. SUCCESSORS AND ASSIGNS. This Agreement and the rights powers and duties set forth herein shall, except as otherwise set forth herein, bind and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the Parties.
17. FURTHER ASSURANCES. Each party agrees to perform any further acts and execute and deliver any documents which may be reasonably necessary to carry out the provisions and effectuate the purpose of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of___________________________________.
T.A.B.S. ENTERPRISES LTD.
By: /s/ Klaus Henck
----------------------
Klaus Henck, President
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JAVA GROUP, INC.
By: /s/ Rob Gillingham
----------------------
Rob Gillingham,
President
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS
1.01 Defined Terms
ARTICLE II STRUCTURE OF DOCUMENT AND INTERPRETATION
2.01 Schedules
2.02 Number and Gender
2.03 Headings and Captions
2.04 Obligations as Covenants
2.05 Entire Agreement
2.06 Governing Law
ARTICLE III PREMISES, TERM, RENT AND ADDITIONAL RENT
3.01 The Premises
3.02 Term
3.03 Rent
3.04 Deposit
ARTICLE IV ELECTRICAL COSTS
4.01 Allocation of Electrical Costs and Other Utilities and Services
ARTICLE V COVENANT TO PAY RENT
5.01 The Covenant
ARTICLE VI USE OF PREMISES
6.01 Purpose of Use
6.02 Conduct of Business
6.03 Monthly Sales Data
6.04 Landlord not Obligated to Purchase Goods and Services
6.05 Hours of Operation
ARTICLE VII USE OF COMMON AREAS AND FACILITIES
7.01 Non-exclusive Use
7.02 Management and Control by Landlord
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ARTICLE VIII REPAIR
8.01 Repair by the Landlord
8.02 Repair by the Tenant
8.03 Abatement of Rent
8.04 Termination in Event of Damage
8.05 Certificate of Architect
ARTICLE IX UTILITIES AND SERVICES - PREMISES
9.01 Responsibility for Utilities and Services
9.02 Tenant not to Overload Utility and Service Facilities
ARTICLE X SUBORDINATION, ATTORNMENT AND
STATUS STATEMENT BY TENANT
10.01 Subordination and Attornment
10.02 Status Statement
ARTICLE XI INSURANCE AND INDEMNITY
11.01 Insurance
11.02 Comprehensive General Liability Insurance
11.03 The Insureds
11.04 Landlord's Insurance
11.05 Increase in Landlord's Insurance Premiums
11.06 Cancellation of Insurance
11.07 Indemnification of the Landlord
11.08 Loss and Damage
ARTICLE XII ASSIGNMENT AND SUBLETTING
12.01 Consent Required
12.02 Conditions of Consent
ARTICLE XIII WASTE AND GOVERNMENTAL REGULATIONS
13.01 Waste or Nuisance
13.02 Governmental and Insurance Underwriter's Regulations
ARTICLE XIV ACCEPTANCE OF PREMISES
14.01 Acceptance of Premises
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ARTICLE XV SIGNS, FIXTURES AND ALTERATIONS 15.01 Installation and Changes by Tenant 15.02 Removal of Installations and Restoration by Tenant 15.03 Not to Overload Floors 15.04 Tenant to Discharge all Liens 15.05 Tenant's Signs, Awnings and Canopies ARTICLE XVI DEFAULT OF TENANT 16.0-1 Right to Re-Enter 16.02 Bankruptcy of Tenant 16.03 Landlord may Perform Tenant's Obligations 16.04 Right to Relet 16.05 Legal Expenses 16.06 Interest on Overdue monies 16.07 Waiver of Distress ARTICLE XVII REMEDIES OF LANDLORD AND WAIVER 17.01 Remedies of Landlord Cumulative 17-02 Waiver ARTICLE XVIII ACCESS BY LANDLORD 18.01 Right to Entry 18.02 Excavation ARTICLE XIX ASSIGNMENT BY LANDLORD 19.01 Assignment 19.01 Effect of Assignment ARTICLE XX RULES AND REGULATIONS 20.01 Rules and Regulations ARTICLE XXI LANDLORD'S COVENANTS AND OBLIGATIONS 21.01 Taxes 21.02 Quiet Enjoyment |
ARTICLE XXII OVERHOLDING 22.01 No Tacit Renewal ARTICLE XXIII GUARANTEE 23.01 Guarantee ARTICLE XXIV RENEWAL 24.01 Option to Renew ARTICLE XXV MISCELLANEOUS 25.01 Accord and Satisfaction 25.02 No Partnership 25.03 Unavoidable Delay 25.04 Partial Invalidity 25.05 Joint and Several Liability 25.06 Demolition 25.07 Registration 25.08 Notice 25.09 Amendment in writing 25.10 Successors and Assigns SCHEDULES SCHEDULE "A" - DESCRIPTION OF LAND SCHEDULE "B" - PLAN OF BUILDING AND OUTLINE OF PREMISES SCHEDULE SCHEDULE "C" - CERTAIN RULES AND REGULATIONS OF THE LANDLORD SCHEDULE "D" - RENT |
THIS IS A LEASE made in duplicate as of the first day of
November, Nineteen hundred and ninety-three
IN PURSUANCE OF THE LAND TRANSFER FORM ACT PART II
BETWEEN:
RICHMOND INN HOTEL LTD. a body corporate duly incorporated under the laws of British Columbia, having an address at 7551 Westminster Highway, Richmond, British Columbia (Incorporation No. 359288)
(hereinafter called the "Landlord")
OF THE FIRST PART;
AND:
JAVA GIRL COFFEE LTD., a body corporate duly incorporated under the laws of British Columbia, having an address at 2773 Barnet Highway, Coquitlam, British Columbia
(hereinafter called the "Tenant")
OF THE SECOND PART;
AND:
Klaus J. Henck, Astor Management, business person, of 6741 Baker Road, Delta, British Columbia
(hereinafter called the "Guarantor")
OF THE THIRD PART;
ARTICLE I
DEFINITIONS
1.01 DEFINED TERMS
In this Lease:
"Architect" means the architect qualified to practice and practicing
in the Province of British Columbia from time to time named by the
Landlord;
"Building" means collectively the Land and all buildings, structures,
facilities and other improvements erected or to be erected on the
Land;
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"Common Area and Facilities" means those parts of the Building not
part of the premises set aside by the Landlord for leasing to tenants
of the Building including but not limited to exterior walls, roofs,
entrances to and exits from the Building, loading docks and areas,
storage rooms, delivery passages, elevators, retaining walls,
stairways, washrooms, and all general signs, improvements, fixtures,
facilities, equipment and installations which the Landlord reasonably
provides or designates from time to time for the general use by or for
the benefit of the Tenant, its officers, employees, agents and other
invitee in common with other tenants of the Landlord and others
designated by the Landlord in the manner and for the purposes
permitted by this Lease;
"Land" means the Land described in Schedule "A";
"Lease Year" means the calendar year excepting that:
(a) the first Lease Year during the Term begins on the first day
of the Term and ends on the last day of the calendar year in
which the first day of the Term occurs, and may be a period
less than twelve (12) consecutive calendar months,
(b) the last Lease Year during the Term begins on the first day of
the calendar year during which the last day of the Term occurs
and ends on the last day of the Term, and may be a period less
than twelve (12) consecutive calendar months;
"Mortgage" means a mortgage or charge (including a deed of trust and
mortgage securing bonds and all other indentures supplemental thereto)
of the reversion immediately expectant on the Term, and includes all
renewals, modifications, consolidations, replacements and extensions
thereof;
"Mortgagee" means the mortgagee or trustee for bondholders, as the
case may be, named in a Mortgage;
"Premises" means the premises leased to the Tenant by this Lease and
described in Section 3.01;
"Rentable Area" in the case of premises occupying a whole floor means
the area expressed in square feet, as determined and certified by the
Architect, or the floor, measured from the glass line of exterior
glazing and shall include corridors, elevator lobbies, washrooms,
electrical and telephone closets, janitor's closets and other closets
within and exclusively serving that floor, but shall not
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include mechanical equipment areas, the lobby and entrances on the ground floor, stairs (unless installed for the exclusive benefit of a tenant), elevator shafts, flues, stacks, pipe shafts or vertical ducts or the wall enclosing them;
"Rentable Area" in the case of premises occupying less than a whole floor means the area expressed in square feet, as determined and certified by the Architect, of the Demised Premises, measured from the glass line of exterior glazing to the Demised Premises side of corridor walls and to the center line of partitions separating the Demised Premises from adjoining premises, to which shall be added a portion of the area of the corridors, elevator lobbies, washrooms, electrical and telephone closets, janitor's closets and other closets within and exclusively serving that floor, but shall not include mechanical equipment areas, the lobby and entrances on the ground floor, stairs (unless installed for the exclusive benefit of a tenant), elevator shafts, flues, stacks, pipe shafts, or vertical ducts, or the wall enclosing them;
"Term" means the term of this Lease as stipulated in Section 3.02.
ARTICLE II
STRUCTURE OF DOCUMENT AND INTERPRETATION
2.01 SCHEDULES
The Schedules to this document are a part of this Lease and consist
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of:
SCHEDULE "A" - Description of Land,
SCHEDULE "B" - Plan of Building and Outline of Premises, and
SCHEDULE "C" - Certain Rules and Regulations of the Landlord
SCHEDULE "D" - Rent
2.02 NUMBER AND GENDER
The necessary grammatical changes required to make the provisions of
this Lease apply in the plural sense where the Tenant comprises more
than one entity and to corporations, associations, partnerships, or
individuals, males or females, in all cases will be assumed as though
in each case fully expressed.
2.03 HEADINGS AND CAPTIONS
The table of contents, article numbers, article headings,
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section numbers and section headings are inserted for convenience of
reference only and are not to be considered when interpreting this
Lease.
2.04 OBLIGATIONS AS COVENANTS
Each obligation of the Landlord or the Tenant expressed in this Lease,
even though not expressed as a covenant, is considered to be a
covenant for all purposes.
2.05 ENTIRE AGREEMENT
This Lease contains all the representations, warranties, covenants,
agreements, conditions and understandings between the Landlord and the
Tenant concerning the Premises or the subject matter of this Lease.
2.06 GOVERNING LAW
This Lease shall be interpreted under and is governed by the laws of
the Province of British Columbia.
ARTICLE III
PREMISES, TERM AND RENT
3.01 THE PREMISES
The Landlord hereby demises and leases to the Tenant for the Term the
premises containing approximately two hundred (200) square feet, the
boundaries and location of which are shown outlined in red on the plan
attached as Schedule "B", excepting the exterior faces of all
adjoining, corridor and outside walls and excepting the roof (the
"Premises").
3.02 TERM
The term of this Lease is three (3) years beginning on January 1, 1994
and terminating on December 31, 1996.
3.03 RENT
The Tenant will pay to the Landlord, at the office of the Landlord or
at such other place in Canada as the Landlord designates from time to
time in writing, in lawful money of Canada and without deduction or
set-off:
one half of the net sales of the business (projected financial
figures form Schedule "D"), but not less than a guaranteed
$500.00 minimum payment each and
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every month regardless of the net sales of the business
payable in advance on the first day of each and every month during the
Term.
3.04 DEPOSIT
The Landlord hereby acknowledges receipt from the Tenant of a deposit
in the amount of two thousand two hundred, thirty-five dollars and
sixty-six cents ($2,235.66) which shall be applied to the payment or
partial payment of the last two months of rent becoming due hereunder,
and may form one half of the last two month's net sales.
ARTICLE IV
ELECTRICAL COSTS
4.01 ALLOCATION OF ELECTRICAL COSTS
AND OTHER UTILITIES AND SERVICES
If the electrical consumption of the Tenant on the Premises is not
separately metered by British Columbia Hydro and Power Authority, or
if the consumption by the Tenant of any other utility or service, the
Landlord will cause a calculation of electrical or such other costs
attributable to the Premises to be made in accordance with good
engineering practices, which will be the basis of the Landlord's
invoices. In the event of a dispute as to the amount included in such
calculation, a certificate of an independent engineer chosen by the
mutual agreement of the Landlord and the Tenant (whose fees will be
borne equally by the Landlord and the Tenant) verifying the electrical
costs for the period covered by the certificate will be conclusive.
ARTICLE V
COVENANT TO PAY RENT
5.01 THE COVENANT
The Tenant covenants to pay rent and all other costs and charges as
herein provided.
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ARTICLE VI
USE OF PREMISES
6.01 PURPOSE OF USE
The Premises will be used for the limited purpose of operating a
Coffee Stand under the business name JAVA GIRL COFFEE LTD. and the
Tenant will not use the Premises or permit them to be used for any
other purpose. This use of the Premises is not exclusive and the
Landlord, or any affiliated or related company of the Landlord, may
sell any product or provide any service sold or provided by the
Tenant. The Tenant acknowledges that it will not operate, or utilize,
any vending machines in respect of the business carried out on the
Premises.
6.02 CONDUCT OF BUSINESS
The Tenant will conduct its business in and use the whole of the
Premises continuously throughout the Term in an up-to-date, first
class and reputable manner befitting the Building.
6.03 MONTHLY SALES DATA
On or prior to the fifteenth day of each calendar month during the
Term, the Tenant shall provide to the Landlord monthly sales data
concerning the prior calendar month setting out the sum (without
duplication) of the selling price of all goods sold, the rent received
or due and receivable for all goods leased, the charges for all
services rendered, and the receipts and receivables from all other
business conducted on or from the Premises by the Tenant.
6.04 LANDLORD NOT OBLIGATED TO PURCHASE GOODS AND SERVICES
The Tenant acknowledges that the Landlord is not obligated to purchase
any goods or services from the Tenant.
6.05 HOURS OF OPERATION
The Tenant covenants that the hours of operation in respect of the
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business carried on in the Premises will be as follows:
(a) Monday - Saturday: 6:00 a.m. to 6:00 p.m.
(b) Sunday: 7:00 a.m. to 6:00 p.m.
ARTICLE VII
USE OF COMMON AREAS AND FACILITIES
7.01 NON-EXCLUSIVE USE
The Tenant, its officers, employees, customers and other invitees, in
common with others designated by the Landlord or otherwise entitled,
have the use and benefit of the Common Areas and Facilities for the
purposes from time to time permitted, approved or designated by the
Landlord, subject to the management and control of the Common Areas
and Facilities by the Landlord.
7.02 MANAGEMENT AND CONTROL BY LANDLORD
The Landlord has the exclusive right to manage and control the
Building and from time to time to establish, modify and enforce
reasonable regulations regarding the use, maintenance and operation of
the Common Areas and Facilities, and the rules and regulations in all
respects will be Observed and performed by the Tenant, its officers,
employees, customers and other invitees.
ARTICLE VIII
REPAIR
8.01 REPAIR BY THE LANDLORD
The Landlord will keep in a good and substantial state of repair, to
the existing standards of the Premises, the structural elements of the
Premises, including but not limited to the foundations, roofs,
exterior wall (excluding the store front to the Premises) , structural
sub-floors, bearing walls, columns, beams and other structural
elements thereof, and the systems provided for bringing utilities to
the Premises. For greater certainty, the Landlord is not and will not
be obligated to provide, construct or pay for any improvements or
equipment required by the Tenant to carry out its business.
8.02 REPAIR BY THE TENANT
The Tenant will:
(a) keep in good and substantial state of repair to the standards
of a first class Building, but subject to Section 8.01 and
Section 8.03, the Premises including all leasehold
improvements, all equipment utilized by the Tenant in carrying
on its business,
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all utilities and all heating, air conditioning and
ventilating equipment and/or modifications installed by the
Tenant therein, but with the exception of structural elements
of the Premises,
(b) permit the Landlord to enter and view the state of repair upon
reasonable notice, and will repair as required by clause (a)
according to notice in writing and will leave the Premises in
a good and substantial state of repair to the standards of a
first class building,
subject only to the exceptions referred to in clause (a), and
(c) if part of the Building including the Common Areas and
Facilities becomes in disrepair, is damaged or destroyed
through the negligence of the Tenant or its officers,
employees, customers or other invitees, reimburse the Landlord
the cost of repairs or promptly upon demand except to the
extent that the Landlord is indemnified by insurance.
8.03 ABATEMENT OF RENT
If there is damage to the Premises or damage to the Building which
prevents access to the Premises or the supply of services essential to
the Premises and if the damage is such that the Premises or a
substantial part of the Premises is rendered not reasonably capable of
use by the Tenant for the conduct of its business for a period of time
commencing from the date of such damage and exceeding ten (10) days:
(a) unless the damage was caused by the negligence of the Tenant
or an assignee, subtenant, licensee or other person conducting
business on or from the Premises or an officer, employee,
customer or other invitee of any of them, the fixed minimum
rent payable under Section 3.03 for the period beginning upon
the occurrence of the damage until at least a substantial part
of the Premises is again reasonably capable of use and
occupancy for the purpose aforesaid will abate in the
proportion that the area of the part of the Premises rendered
not reasonably capable of use by the Tenant for the conduct of
its business bears to the Rentable Area of the Premises,
provided however that the abatement of rent provided herein
shall not exceed the amount of the rental income insurance
proceeds payable to the Landlord for the period; and
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(b) unless this Lease is terminated under Section 8.04, the
Landlord or the Tenant or both, as the case may be
(according.to the nature of the damage and their respective
obligations to repair under Sections 8.01 and 8.02), will
repair the damage with all reasonable diligence, but any
abatement of rent to which the Tenant is entitled under this
section will not extend beyond the date by which in the
reasonable opinion of the Landlord the Tenant should have
completed its repairs with all reasonable diligence.
8.04 TERMINATION IN EVENT OF DAMAGE
(1) The Landlord by written notice to the Tenant given within sixty (60)
days of the occurrence of damage to the Building, may terminate this
Lease if:
(a) the Building is damaged by any cause and in the reasonable
opinion of the Architect either cannot be repaired or rebuilt
with reasonable diligence within one hundred and eighty (180)
days after the occurrence of the damage or cost of repairing
or rebuilding it would exceed by more than one hundred
thousand dollars ($100,000.00) the proceeds of the Landlord is
insurance available for the purpose, or
(b) if the Premises are damaged by any cause and the damage is
such that the Premises or a substantial part of the Premises
is rendered not reasonably capable of use by the Tenant for
the conduct of its business and in the reasonable opinion of
the Architect cannot be repaired or rebuilt with reasonable
diligence by six (6) months before the end of the Term.
(2) If this Lease is terminated under subsection (1) , neither the
Landlord nor the Tenant will be bound to repair as provided in
Sections 8.01 and 8.02, and the Tenant will deliver up possession of
the Premises to the Landlord with reasonable speed but in any event
within thirty (30) days after the giving of the notice of termination,
and all rent will be apportioned and paid to the date upon which
possession is delivered up, subject to any abatement to which the
Tenant may be entitled under Section 8.03, but otherwise the Landlord
or the Tenant or both, as the case may be (according to the nature of
the damage and the respective obligations to repair) under Sections
8.01 and 8.02 will repair the damage with all reasonable diligence.
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8.05 CERTIFICATE OF ARCHITECT
If the Premises or the Building is damaged and there is a doubt as to
whether the Premises or the Building can be repaired or rebuilt within
one hundred and eighty (180) days or by six (6) months.before the end
of the Term or as to the cost of repairing or rebuilding the Building
or as to whether the Premises or a substantial part of the Premises is
rendered not reasonably capable of use by the Tenant for the conduct
of its business or once again has become capable of such use, the
doubt will be settled by the Architect and his certificate will be
conclusive.
ARTICLE IX
UTILITIES AND SERVICES - PREMISES
9.01 RESPONSIBILITY FOR UTILITIES AND SERVICES
The Tenant is solely responsible for and will promptly pay all charges
for water, gas, electricity, janitor service, window cleaning, and any
other utility or service used.on the Premises. The Landlord will not
be liable to the Tenant in damages or otherwise for any interruption
or failure in the supply of utilities or services to the Premises.
9.02 TENANT NOT TO OVERLOAD UTILITY AND SERVICE FACILITIES
The Tenant will not install equipment that will exceed or overload the
capacity of utility facilities and agrees that if equipment installed
by the Tenant requires additional facilities, they will be installed
at the Tenant's expense in accordance with plans and specifications
approved by the Landlord prior to installation.
ARTICLE X
SUBORDINATION, ATTORNMENT AND
STATUS STATEMENT BY TENANT
10.01 SUBORDINATION AND ATTORNMENT
This Lease is subordinate to every mortgage that now affects the Land.
The Tenant will subordinate this Lease to every mortgage that
hereafter affects the Land and execute promptly a document in
confirmation of the subordination if requested by the Landlord in
which the Tenant also will agree with the mortgagee that if the
mortgagee becomes a mortgagee in possession or takes
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action to realize the security of the mortgage the Tenant will attorn
to the mortgagee as a tenant upon all terms of this Lease, but only if
the mortgagee agrees in writing to accept the attornment and permit
the Tenant to continue in occupation of the Premises until this Lease
is terminated by the passage of time or by action taken because of a
default of the Tenant.
10.02 STATUS STATEMENT
At any time or times at reasonable intervals within fifteen (15) days
after a written request by the Landlord the Tenant will execute,
acknowledge and deliver to the Landlord or such assignee or mortgagee
as the Landlord designates, a certificate setting out:
(a) that this Lease is unmodified and in force and effect and in
accordance with its terms (or if there have been
modifications, that this Lease is in force and effect as
modified, and identifying the modification agreement, or if
this Lease is not in force and effect, that it is not),
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(b) the date to which rental has been paid under this Lease,
(c) whether or not there is an existing default by the Tenant in the payment of rent or any other sum of money under this Lease, and whether or not the Tenant has knowledge of any other existing default by either party under this Lease with respect to which notice of default has been served, and if there is such a default, specifying its nature and extent,
(d) whether or not there are any set-offs, defences or counterclaims against the enforcement of the obligations to be performed by the Tenant under this Lease; and
(e) such further facts, warranties, representations or statements as are reasonably required by a prospective lender to or purchaser from the Landlord.
ARTICLE XI
INSURANCE AND INDEMNITY
11.01 INSURANCE
The Tenant will take out and keep in force throughout the Term and
during such other time as the Tenant occupies the Premises or part
thereof to fully protect the interest of both the Landlord and the
Tenant all risk direct damage insurance upon the Premises to its full
insurable value on a replacement cost basis and on its merchandise,
stock-in-trade, its furniture, plate glass fixtures and improvements
and all parts of the Premises which the Tenant is obligated to keep in
repair under Section 8.02 to the full replacement value thereof, and
broad boiler insurance on any boilers in the Premises. The Tenant
will take out and maintain other insurance in amounts and upon terms
reasonable for a prudent tenant to provide, as determined by the
Landlord and its insurance advisers or its Mortgagee. If the nature
of the Tenant's operation is such as to place all or any of its
employees under the coverage of local workmen's compensation or
similar statutes, the Tenant will also keep in force, at its expense,
so long as this Lease remains in effect, workmen's compensation or
similar insurance affording statutory coverage and containing
statutory limits.
11.02 COMPREHENSIVE GENERAL LIABILITY INSURANCE
The Tenant will take out and keep in force throughout the Term
comprehensive general liability insurance against claims for personal
injury, death or property damage or loss arising out of all operations
of the Tenant and subtenants and other persons conducting business on
or from the Premises, indemnifying and protecting the Landlord and the
Tenant to a limit of two million dollars ($2,000,000.00) inclusive, or
such additional amount as would be carried by a prudent owner.
11.03 THE INSUREDS
Each insurance policy referred to in Sections 11.01 and 11.02 will
name the Landlord and the persons, firms or corporations designated by
the Landlord as additional named insureds as their interest may
appear, will contain if available and as appropriate a waiver of
rights of subrogation against the Landlord and the Tenant or a cross-
liability clause protecting the Landlord and other insureds designated
by it against claims by the Tenant as if the Landlord and other
insureds designated by it were separately insured, and protecting the
Tenant against
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claims by the Landlord and other insureds designated by it as if the
Tenant were separately insured, and will contain a clause that the
insurer will not cancel or change or refuse to renew the insurance
without first giving the Landlord thirty (30) days' prior written
notice. All policies of insurance will be with insurers acceptable to
the Landlord and in a form satisfactory to the Landlord acting
reasonably, and the Tenant will see that there is delivered to the
Landlord copies or certificates of the policies. If the Tenant fails
to take out or keep in force any policy of insurance referred to in
Sections 11.01 and 11.02, the Landlord may do so and pay the premium,
and in that event the Tenant will pay to the Landlord the amount so
paid as premium plus ten per cent (10%) for overhead as additional
rent and it will be due and payable on the first day of the month
following the payment by the Landlord.
11.04 LANDLORD'S INSURANCE
The Landlord will take out and keep in force throughout the Term all
risks direct damage insurance on the buildings and improvements
comprised in the Building, but which may exclude foundations and the
improvements upon which the Tenant is obliged to take out insurance
under Section 11.01, with responsible insurance companies and in an
amount such as would be carried by a prudent owner, and the cost of
the insurance will be included in Operating Costs. Each insurance
policy ref erred to in this section will contain, if available, a
waiver of the right of subrogation against the Tenant to the extent
only of that part of a claim against the Tenant in excess of the
amount of comprehensive general liability insurance which the Tenant
is required to take out and keep in force.
11.05 INCREASE IN LANDLORD'S INSURANCE PREMIUMS
(1) The Tenant agrees that nothing will be done, omitted to be done, kept,
or used on or from the Premises that may contravene any of the
Landlord's policies insuring any part of the Building or which will
prevent the Landlord from procuring policies with companies acceptable
to the Landlord. The Tenant will pay all increases in premium s for
all risks direct damage insurance, and broad boiler insurance,
including repair or replacement and rental income coverages and such
other insurance as is customary for prudent owners of property similar
to the Building to carry against loss of or damage to the Building or
liability arising therefrom that may be charged during the Term for
insurance carried by the Landlord insuring any part of the Building,
resulting from the type of
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merchandise sold on or from the Premises or anything done or kept
thereon or any use to which they may be put, whether or not the
Landlord has consented to them. In determining whether increased
premiums are the result of the use of the Premises a schedule issued
by the organization making the insurance rate on the Premises showing
the various components of the rate will be conclusive evidence of the
several items and charges which make up the fire insurance rate on the
Premises. The Landlord's insurance must cover the Tenant's permitted
use.
(2) If the occupancy or use of the Premises causes an increase of premium
for any of the policies insuring the Premises or any part of the
Building above the rate for the least hazardous type of use or
occupancy legally permitted in the Premises, the Tenant will pay the
amount of the increase. The Tenant will also pay in that event any
additional premium for rental income insurance carried by the Landlord
for its protection against rent loss through an insured risk. Bills
for the increases and additional payments may be rendered by the
Landlord to the Tenant when the Landlord elects, and will be due and
payable by the Tenant within thirty (30) days, and the amount thereof
will be paid as additional rent.
11.06 CANCELLATION OF INSURANCE
If an insurance policy upon part of the Building is cancelled or
threatened by the insurer to be cancelled, or the coverage thereunder
reduced or threatened to be reduced by the insurer because of the use
and occupation of the Premises, and if the Tenant fails to remedy the
condition giving rise to cancellation, threatened cancellation,
reduction or threatened reduction of coverage within forty-eight (48)
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hours after notice thereof by the Landlord, the Landlord may either:
(a) re-enter the Premises, whereupon Article XVII will apply, or
(b) enter the Premises and remedy the condition giving rise to the cancellation or reduction or threatened cancellation or reduction, and the Tenant will pay to the Landlord the cost thereof on demand as additional rent, and the Landlord will not be liable for damage or injury caused to property. of the Tenant or others located on the Premises as a result of the entry.
11.07 INDEMNIFICATION OF THE LANDLORD
Except to the extent that the loss of life, personal injury or damage
to property referred to in this sentence is caused by the negligence
of the Landlord is another person for whose negligence the Landlord is
responsible in law, the Tenant will indemnify the Landlord and save it
harmless from and against any and all claims, actions, damages,
liability and expenses, in connection with loss of life, personal
injury or damage to property arising from any occurrence on the
Premises or the occupancy or use of the Premises or occasioned wholly
or in part by an act or omission of the Tenant, its officers,
employees, agents, customers, contractors or other invitees, licensees
or concessionaires or by anyone permitted by the Tenant to be on the
Premises. In case the Landlord, without actual fault on its part or
on the part of those for whom the Landlord is responsible at law, is
made a party to litigation begun by or against the Tenant, excepting a
bona fide action by the Tenant against the Landlord, the Tenant will
protect and hold the Landlord harmless and will pay all costs,
expenses and reasonable legal fees incurred or paid by the Landlord in
connection with the litigation.
11.08 LOSS AND DAMAGE
Unless caused by the negligence of the Landlord or another person f or
whose negligence the Landlord is responsible in law, the Landlord is
not liable for the death of or injury to the Tenant or others on the
Premises, or for the loss of or damage to property of the Tenant or
others by theft or otherwise. Without limiting the generality of the
foregoing, the Landlord is not liable for death, injury, loss or
damage of or to persons or property resulting from fire, explosion,
falling plaster, steam, gas, electricity, water, rain or snow or leaks
from any part of the Premises or from the pipes, appliances or
plumbing works or from the roof, street or sub-surface or from any
other place or by dampness or by other cause of any kind. The
Landlord is not liable for death, injury, loss or damage caused by
other tenants or occupants or other persons on the Premises or in any
other part of the Building, resulting from construction, alteration or
repair. The Tenant agrees that there is no promise, representation,
or undertaking by or binding upon the Landlord with respect to
alterations, remodelling or decoration of or installation of equipment
or fixtures in the Premises except such, if any, as is expressly
contained or referred to in this Lease, and that unless an express
provision provides for completion of the
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alteration, remodelling, decoration or installation after the Tenant's
taking occupancy of the Premises, the taking of occupancy, subject
always to the provisions of Section 15.01, constitutes conclusive
evidence as against the Tenant that the alterations, remodelling or
decoration or installation of equipment or fixtures has been
satisfactorily completed. The certificate of the Architect that the
Landlord has fulfilled its obligations in respect of the Premises binds
the parties in any event. All property of the Tenant kept or stored on
the Premises will be kept or stored at the risk of the Tenant only and
the Tenant will hold the Landlord harmless from all claims arising out
of damage to it, including subrogation claims by the Tenant's insurers,
except to the extent of negligence or omissions by the Landlord.
ARTICLE XII
ASSIGNMENT AND SUBLETTING
12.01 CONSENT REQUIRED
The Tenant will not, and will not permit a subtenant to, assign this
Lease in whole or in part, or sublet all or part of the Premises, or
mortgage or encumber this Lease or the Premises or part thereof, and
will not permit the occupation or use of all or any part thereof by
others without the prior written consent of the Landlord in each case,
which consent may be withheld by the Landlord in its absolute
discretion, provided however that the Landlord may, upon application
being made by the Tenant for the Landlord's approval of such an
assignment or subletting, terminate this Lease.
The consent by the Landlord to an assignment or subletting will not
constitute a waiver of its consent to a subsequent assignment or
subletting. This prohibition against assignment or subletting
includes a prohibition against an assignment or subletting by
operation of law. If this Lease is assigned, or if all or part of the
Premises is sublet or occupied by anybody other than the Tenant, in
any case without the consent of the Landlord when required, the
Landlord may collect rent from the assignee, subtenant or occupant,
and apply the net amount collected to the rent herein reserved, but no
such assignment, sublease, occupancy or collection will be considered
a waiver of this covenant, or the acceptance of the subtenant or
occupant as Tenant. Despite an assignment the Tenant remains fully
liable under this Lease. An assignment of this Lease if consented to
by the Landlord will be prepared by the Landlord or its
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solicitors, and all legal costs of its preparation will be paid by the
Tenant.
12.02 CONDITIONS OF CONSENT
If the Tenant requires or receives consent under Section 12.01, the
consent will be subject to the condition that the fixed rent payable
by the assignee, subtenant or occupant will be not less than the
average total annual rent paid by the Tenant for the three (3) Lease
Years immediately preceding the assignment, subletting or other grant
of a right to occupy or use (or since the first day of the Term if the
Tenant at the time of the assignment,, subletting or grant of a right
to occupy or use has occupied the Premises for less than three (3)
years), with all the other terms, covenants and conditions of this
Lease to remain the same. Where the sublease or the grant of a right
to occupy or use relates to a part only of the Premises the foregoing
references to rent will be adjusted in proportion to the area of the
part used in the calculation of Rentable Area of the Premises.
ARTICLE XIII
WASTE AND GOVERNMENTAL REGULATIONS
13.01 WASTE OR NUISANCE
The Tenant will not commit or permit to be committed waste upon the
Premises or a nuisance or other thing that may disturb the quiet
enjoyment of any other tenant in the Building or of any person within
five hundred feet (500') of the boundary of the Building, whether or
not the nuisance arises out of the use of the Premises by the Tenant
for a purpose permitted by this Lease.
13.02 GOVERNMENTAL AND INSURANCE UNDERWRITERS' REGULATIONS
The Tenant, at the Tenant's cost, will comply with the applicable
requirements of all municipal, provincial, federal and other
governmental authorities now in force or which may hereafter be in
force pertaining to the Tenant's occupancy or use of the Premises and
will observe with respect to occupancy and use of the Premises all
municipal by-laws and provincial and federal statutes and regulations
now in force or which may hereafter be in force, and will comply with
all regulations made by fire insurance underwriters. The Tenant
grants the Landlord the right to enter the Premises at any time or
times with as little interference with the conduct of the Tenant's
business as is reasonably possible, to enable the Landlord
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to comply with any municipal by-law or provincial statute now or in
the future applicable to the Premises, whether or not the application
of such by-law or statute to the Premises results from an act or
omission of the Landlord or another person for whose act or omission
the Landlord is responsible.
ARTICLE XIV
ACCEPTANCE OF PREMISES
14.01 ACCEPTANCE OF PREMISES
The Tenant will be considered for all purposes to have accepted the
Premises in their existing condition and the Landlord will not have
any obligation to the Tenant for defects or faults excepting:
(a) latent defects which cannot be discovered on a reasonable
examination, and
(b) defects or faults in structural elements relating to the
Premises not caused by the Tenant's acts or omissions.
If a dispute occurs as to whether or not a defect or fault exists, the
decision of the Architect will be final and binding upon both parties.
ARTICLE XV
SIGNS, FIXTURES AND ALTERATIONS
15.01 INSTALLATION AND CHANGES BY TENANT
All fixtures installed by the Tenant will be of first class quality.
The Tenant will not make or cause to be made any change, decoration,
addition or improvement or cut or drill into, nail or otherwise
attach, secure or install any floor covering, interior or exterior
lighting, or mechanical or electrical system or fixture, or plumbing
fixture to any part of the Premises or hang from or affix anything to
the ceiling without first obtaining the Landlord's written approval.
The Tenant will present to the Landlord plans and specifications for
the work at the time approval is sought and the work will be done by
contractors or other workers or tradesmen approved by the Landlord and
in good and workmanlike manner with first class materials. The Tenant
will not make any change to the structural elements of the Premises.
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15.02 REMOVAL OF INSTALLATIONS AND RESTORATION BY TENANT
All alterations, decorations, additions and improvements made by the
Tenant or made by the Landlord on the Tenant's behalf become on
affixation the property of the Landlord. No alteration, decoration,
addition or improvement will be removed from the Premises before the
end of the Term without prior consent in writing from the Landlord.
Upon termination of this Lease the alterations, decorations, additions
and fixed improvements will remain in the property of the Landlord as
part of the reversion, but the Tenant will remove all or some of the
alterations, decorations, additions and fixed improvements if and to
the extent requested by the Landlord, and restore the Premises as
provided in Section 8.02 (b) Every installation, removal or
restoration by the Tenant of its trade fixtures will be done at the
sole expense of the Tenant and the Tenant promptly will make good or
reimburse the Landlord the cost of making good all damage to
structural elements relating to the Premises or to the heating,
ventilating, air conditioning, plumbing, electrical or other
mechanical systems in the Building caused thereby.
15.03 NOT TO OVERLOAD FLOORS
The Tenant will not bring upon the Premises any machinery, equipment
or things that by reason of its weight, size or use in the opinion of
the Architect might damage the Premises and will not at any time
overload the floors of the Premises. If overloading occurs and damage
ensues the Tenant forthwith will repair the damage or pay to the
Landlord the cost of making it good.
15.04 TENANT TO DISCHARGE ALL LIENS
The Tenant promptly will pay all its contractors and material men and
do all things necessary to minimize the possibility of a lien
attaching to the Premises or to any other part of the Building and
should a claim for lien be registered, the Tenant will cause it to be
discharged at the Tenant's expense within seven (7) days after it is
brought to the attention of the Tenant.
15.05 TENANT'S SIGNS, AWNINGS AND CANOPIES
The Tenant will not place or permit to be placed or maintained on the
roof or ceiling or on any exterior or interior door, wall or window of
the sign, awning, canopy, declaration, lettering, advertising matter
or other thing of any kind and will not place or maintain any
decoration,
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lettering or advertising matter on the glass or any window or door of
the Premises without first obtaining the written consent, which such
consent may be unreasonably withheld.
ARTICLE XVI
DEFAULT OF TENANT
16.01 RIGHT TO RE-ENTER
If the Tenant fails to pay rent that is in arrears within five (5)
days after notice from the Landlord that it is in arrears, or to
observe or perform any other of the terms, conditions or covenants of
this Lease to be observed or performed by the Tenant, and such default
continues for a period of seven (7) days after notice thereof by the
Landlord, or if the Tenant or an agent of the Tenant falsifies a
report required to be furnished to the Landlord pursuant to this
Lease, or if re-entry is permitted under other terms of this Lease,
the Landlord in addition to any other right or remedy it may have will
have the right of immediate reentry and may remove all persons and
property from the Premises and the property may be removed and stored
in a public warehouse or elsewhere at the cost of and for the account
of the Tenant, all without service of further notice or resort to
legal process and without being considered guilty of trespass or
becoming liable for loss or damage occasioned thereby.
16.02 BANKRUPTCY
If:
(a) any of the goods and chattels of the Tenant on the Premises at
any time during the Term are seized or taken in execution or
attachment by a creditor of the Tenant,
(b) the Tenant or a guarantor or indemnifier of this Lease makes
an assignment for the benefit of creditors or a bulk sale from
the Premises other than a bulk sale to an assignee or
sublessee pursuant to an assignment or sublease which under
section 12.01 was consented to or did not require a consent,
(c) a receiver-manager is appointed to control the conduct of the
business on or from the Premises,
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(d) the Tenant becomes bankrupt or insolvent or takes the benefit
of an Act now or hereafter in force for bankrupt or insolvent
debtors,
(e) an order is made for the winding-up of the Tenant,
(f) the Premises, without the written consent of the Landlord,
become and remain vacant for a period of ten (10) days or are
used by any other persons than those entitled to use them
under the terms of this Lease, or
(g) the Tenant, without the written consent of the Landlord,
abandons or attempts to abandon the Premises or sells or
disposes of its goods or chattels or removes any of them from
the Premises so that there would not in the event of
abandonment, sale or disposal be sufficient goods on the
Premises subject to distress or satisfy all rentals due or
accruing due hereunder,
the then current month's rent and the next ensuing three (3) months'
rent immediately will become due and payable as accelerated rent and
the Landlord may reenter and take possession of the Premises as though
the Tenant or the servants of the Tenant or any other occupant of the
Premises were holding over after the expiration of the Term, and the
Lease, at the option of the Landlord, forthwith will become forfeited
and determined. In every one of the cases above mentioned the
accelerated rent may be recovered by the Landlord in the same manner
as rent reserved and in arrears and the option will be considered to
have been exercised if the Landlord or its agents give notice to that
effect to the Tenant.
16.03 LANDLORD MAY PERFORM TENANT'S OBLIGATIONS
If the Tenant fails to perform an obligation of Tenant under this
Lease the Landlord may perform the obligation and for that purpose may
enter upon not less than five (5) days prior notice without notice to
the Tenant or without notice in the case of an emergency and do such
things upon or in respect of the Premises as the Landlord considers
necessary. The Tenant will pay as additional rent all expenses
incurred by or on behalf of the Landlord under this section plus ten
per cent (10%) for overhead upon presentation of a bill therefor. The
Landlord will not be liable to the Tenant for loss or damage resulting
from such action by the Landlord unless caused by the negligence of
the Landlord or another person for whose negligence the Landlord is
responsible in law.
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16.04 RIGHT TO RELET
If the Landlord re-enters as herein provided, it may either terminate
this Lease or it may from time to time without terminating the
Tenant's obligations under this Lease, make alterations and repairs
considered by the Landlord necessary to facilitate a reletting, and
relet the Premises or any part thereof as agent of the Tenant for such
term or terms and at such rental or rentals and Upon such other terms
and conditions as the Landlord in its reasonable discretion considers
advisable. Upon each reletting all rent and other monies received by
the Landlord from the reletting will be applied, first to the payment
of indebtedness other than rent due hereunder from the Tenant to the
Landlord, secondly to the payment of costs and expenses Of the
reletting including brokerage fees and solicitor's fees and costs of
the alterations and repairs, and third to the payment of rent due and
unpaid hereunder. The residue, if any, will be held by the Landlord
and applied in payment of future rent as it becomes due and payable.
If the rent received from the reletting during a month is less than
the rent to be paid during that month by the Tenant, the Tenant will
pay the deficiency to the Landlord. The deficiency will be calculated
and paid monthly. No re-entry by the Landlord will be construed as an
election on its part to terminate this Lease unless a written notice
of that intention is given to the Tenant. Despite a reletting without
termination, the Landlord may elect at any time to terminate this
Lease for a previous breach. If the Landlord terminates this Lease
for any breach, in addition to other remedies it may recover from the
Tenant all damages it incurs by reason of the breach including the
cost of recovering the Premises, reasonable legal fees and the worth
at the time of termination of the excess, if any, of the amount of
rent and charges equivalent to rent reserved in this Lease for the
remainder of the Term over the then reasonable rental value of the
Premises for the remainder of the Term, all of which amounts
immediately will be due and payable by the Tenant to the Landlord. In
determining the rent which would be payable by the Tenant after
default, the annual rent for each year of unexpired Term will be equal
to the average fixed rent paid or payable by the Tenant from the
beginning of the Term to the time of default, or during the preceding
three (3) full calendar years, whichever period is shorter. In any of
the events referred to in Sections 16.01, 16.02 and 16.03, in addition
to all other rights, including the rights referred to in this section
and Section 16.01, the full amount of the current month's rent, and
all other payments required to be made monthly and the next three
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(3) months rent immediately will become due and payable, and the
Landlord may immediately distrain for it, together with arrears then
unpaid.
16.05 LEGAL EXPENSES
If the Landlord brings an action against the Tenant arising from an
alleged breach of a covenant or condition in the Lease to be complied
with by the Tenant and the court establishes that the Tenant is in
breach of the covenant or condition, the Tenant will pay to the
Landlord all expenses incurred by the Landlord in the action including
reasonable legal fees.
16.06 INTEREST ON OVERDUE MONIES
All overdue monies payable to the Landlord by the Tenant on any
account whatsoever shall bear interest at the rate of eighteen percent
(18%) per annum.
16.07 WAIVER OF DISTRESS
The Tenant covenants with the Landlord that in consideration of the
making of this Lease, none of the goods and chattels of the Tenant on
the Premises is exempt from levy by distress for rent in arrears, and
that upon a claim being made for exemption by the Tenant or on
distress being made by the Landlord, this section may be pleaded as an
estoppel against the Tenant in an action brought to test the right to
levy upon goods named as exempted.
ARTICLE XVII
REMEDIES OF LANDLORD AND WAIVER
17.01 REMEDIES OF LANDLORD CUMULATIVE
No exercise of a specific right or remedy by the Landlord or by the
Tenant preclude it from or prejudices it in exercising another right
or pursuing another remedy or maintaining an action to which it may
otherwise be entitled either at law or in equity.
17.02 WAIVER
The waiver by the Landlord or the Tenant of a breach of a term,
covenant or condition of this Lease will not be considered to be a
waiver of a subsequent breach of the term, covenant or condition or
another term, covenant or condition. The subsequent acceptance of
rent by the
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Landlord will not be considered to be a waiver of a preceding breach
by the Tenant of a term, covenant or condition of this Lease,
regardless of the Landlord's knowledge of the preceding breach at the
time of acceptance of the rent. No covenant, term or condition of
this Lease will be considered to have been waived by the Landlord or
by the Tenant unless the waiver is in writing signed by the Landlord
or by the Tenant, as the case may be.
ARTICLE XVIII
ACCESS BY LANDLORD
18.01 RIGHT OF ENTRY
The Landlord and its agents may enter the Premises at all reasonable
times to examine them and show them to a prospective purchaser, lessee
or mortgagee. The Landlord may make alterations, additions and
adjustments to and changes of location of the pipes, conduits, wiring,
ducts and other installations of any kind in the Premises where
necessary to serve another part of the Building, and the Landlord may
take all material required therefor onto the Premises without
constituting an eviction of the Tenant in whole or in part. During
the six (6) months prior to the expiration of the Term the Landlord
may place upon the Premises the usual notice "For Rent" which the
Tenant will permit to remain without interference. If the Tenant is
not present to open and permit entry into the Premises when for proper
reason entry is necessary or permissible, the Landlord or its agents
may enter by a master key. Nothing in this section, however, imposes
upon the Landlord an obligation, responsibility or liability for the
care, maintenance or repair of the Premises or any part thereof except
as specifically provided in this Lease.
18.02 EXCAVATION
If an excavation is made or is authorized to be made upon land
adjacent to the Premises, the Tenant will give to the person making
the excavation permission to enter the Premises for the purpose of
doing work that the Landlord considers necessary in order to preserve
from injury or damage the wall of the building of which the Tenant
forms a part, or to support the same by foundations, without any claim
for damages or indemnification against the Landlord or diminution or
abatement of rent unless the damages were Caused by the negligence of
the Landlord or another person for whose negligence the Landlord is
responsible in law.
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ARTICLE XIX
ASSIGNMENT BY LANDLORD
19.01 ASSIGNMENT
The Landlord may assign its interest in this Lease.
19.02 EFFECT OF ASSIGNMENT
If the Landlord sells an interest in the Building or in this Lease, to
the extent that the purchaser or assignee is responsible for
compliance with the covenants and obligations of the Landlord
hereunder, the Landlord without further written agreement will be
relieved of liability under its covenants and obligations.
ARTICLE XX
RULES AND REGULATIONS
20.01 RULES AND REGULATIONS
All rules and regulations and modifications made under Section 7.02
become a part of this Lease and bind the Tenant. The Tenant will
comply with the rules and regulations and modifications. Notice of
rules and regulations and modifications, if any, will be given to the
Tenant by the Landlord. No rule or regulation or modification will
contradict, any provisions of this Lease. The Tenant acknowledges
receipt of certain rules and regulations attached hereto as Schedule
"C".
ARTICLE XXI
LANDLORD'S COVENANTS AND OBLIGATIONS
21.01 TAXES
The Landlord will pay all real property taxes (including local
improvement taxes) that may be assessed by a lawful authority against
the Building and against the Common Areas and Facilities.
21.02 QUIET ENJOYMENT
Subject to the provisions of this Lease the Landlord covenants with
the Tenant for quiet enjoyment.
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ARTICLE XXII
OVERHOLDING
22.01 NO TACIT RENEWAL
If the Tenant remains in possession of the Premises after the end of
the Term and without the execution and delivery of a new lease or a
written renewal or extension of this Lease,, there is no tacit or
other renewal of this Lease, and the Tenant will be considered to be
occupying the Premises as a Tenant from month to month at a monthly
rental payable in advance on the first day of each month equal to the
sum of twice the monthly instalment of fixed minimum rent payable for
the last month of the Term and otherwise upon the terms and conditions
set forth in this Lease, so far as applicable.
ARTICLE XXIII
GUARANTEE
23.0l GUARANTEE
In consideration of the sum of TWO ($2.00) DOLLARS now paid by the
Landlord to the Guarantor (receipt whereof by the Guarantor being
hereby acknowledged), and to induce the Landlord to execute and
deliver this lease, the Guarantor hereby covenants with the Landlord
that the Tenant shall duly perform and observe each and every covenant
and obligation in this Lease on the part of the Tenant to be observed
and performed the payment of rent and all additional charges agreed to
be paid or payable by the Tenant under this Lease at the times and in
the manner herein specified, this guarantee and covenant of the
Guarantor being given upon the following terms:
(a) The liability of the Guarantor to the Landlord shall be for
all Purposes as if the Guarantor was primarily liable under
this Lease, and not liable as a surety for the obligations of
the Tenant, and the Landlord shall not be obliged to resort to
or exhaust any recourse which it may have against the Tenant
or any other person before being entitled to claim against the
Guarantor;
(b) no dealings between the Landlord and the Tenant of whatsoever
kind, whether with or without notice to the Guarantor, shall
exonerate or relieve the Guarantor in whole or in part from
the obligation hereinbefore set forth, and in particular,
without limiting the generality of the foregoing, the
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Landlord may modify or amend this Lease, grant any indulgence,
release, postponement or extension of time, waive any covenant
or provision of this Lease or any obligation of the Tenant,
take or release any securities or other guarantees for
performance by the Tenant, and otherwise deal with the Tenant,
this Lease, and any other person, firm or corporation as the
Landlord may see fit without affecting, lessening or limiting
in any way the liability of the Guarantor hereunder;
(c) upon demand therefor, the Guarantor shall make payment to the
Landlord of any sums properly payable by the Tenant to the
Landlord pursuant to the terms hereof, and shall upon demand
perform any other obligation of the Tenant which the Tenant
has failed to perform;
(d) no assignment of this Lease, no sub-lease of the demised
premises, and no other dealings with this Lease, the Tenant,
or the demised premises, whether with or without the consent
of the Landlord, shall in any way effect, lessen or limit the
liability of the Guarantor hereunder.
ARTICLE XXIV
OPTION TO RENEW
24.01 OPTION TO RENEW
Provided that:
(d) the Tenant pays the rental and other sums payable hereunder
and performs each and every one of the covenants, provisions
and agreements herein contained on the part of the Tenant to
be paid and performed punctually and in accordance with the
provisions of this Lease;
(e) The Tenant has not assigned this Lease or sublet or permitted
a change in occupancy of the Premises; and
then the Tenant shall have the option of renewing this Lease by notice
in writing given to the Landlord not later than ninety days prior to
the expiry of the Term for an additional term of three years on the
same terms and conditions set forth in this Lease, save and except:
(i) that any renewals of this Lease shall be limited to one in
number;
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(ii) the fixed rental to be paid during the renewal term shall not
be less than the fixed rent paid during the last twelve month
period of the Term and shall be settled by agreement between
the Landlord and the Tenant, or if they fail to agree within
three months prior to the expiration of the Term, then the
fixed rental shall be the then fair market rental value for
unimproved space of comparable size, quality and location to
that of the Premises, determined by an arbitrator appointed
under the Commercial Arbitration Act, S.B.C. 1986, c.3 (as
such legislation may be amended from time to time), whose
decision shall be final and binding upon the Landlord and the
Tenant. The cost of such arbitration shall be borne by the
Landlord and Tenant equally.
ARTICLE XXIV
MISCELLANEOUS
25.01 ACCORD AND SATISFACTION
No payment by the Tenant or receipt by the Landlord of a lesser amount
than rent herein stipulated will be considered to be other than on
account of the earliest stipulated rent, nor will an endorsement or
statement on a cheque or in a letter accompanying a cheque or payment
as rent be considered to be an accord or satisfaction, and the
Landlord may accept a cheque or payment without prejudice to the
Landlord's right to recover the balance of the rent or to pursue any
other remedy.
25.02 NO PARTNERSHIP
The Landlord does not in any way or for any purpose become a partner
of or joint venturer or a member of a joint enterprise with the
Tenant. The provisions of this Lease relating to percentage rent are
solely to provide a method of computing rent and neither the method of
computing rent nor any other provision of this Lease creates a
relationship between the parties other than that of Landlord or
Tenant.
25.03 UNAVOIDABLE DELAY
If there is an Unavoidable Delay in the performance of an act or
compliance with a covenant or condition, performance or compliance
during the period of the Unavoidable Delay will be excused and the
period for the performance or compliance will be extended for a period
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equal to the period of the Unavoidable Delay.
25.04 PARTIAL INVALIDITY
If a term, covenant or condition of this Lease or the application
thereof to any person or circumstance is held to any extent invalid or
unenforceable, the remainder of this Lease or the application of the
term, covenant or condition to persons or circumstances other than
those as to which it is held invalid or unenforceable will not be
affected.
25.05 JOINT AND SEVERAL LIABILITY
If two or more individuals, corporations, partnerships or other
business associations (or a combination of two or more) are the
Tenant, the liability of each individual, corporation, partnership or
other business association to pay rent and perform all other
obligations hereunder is joint and several. If the Tenant is a
partnership or other business association the members of which are by
virtue of statute or general law subject to personal liability, the
liability of each member is joint and several.
25.06 DEMOLITION
If the Landlord desires to demolish the improvements on the Land
comprising the Premises the Landlord can, on 6 months prior written
notice, require the Tenant to deliver up vacant possession of the
Premises to the Landlord on the expiration of such 6 month notice
period in which event rent and other changes payable hereunder shall
be adjusted up to the date on which the Tenant is required to and does
so deliver vacant possession of the Premises to the Landlord.
25.07 REGISTRATION
The Tenant shall not register this Lease.
25.08 NOTICE
A notice, demand, requests statement or other evidence required or
permitted to be given under this Lease must be written and will be
sufficiently given if delivered in person to the Landlord, the Tenant
or the Guarantor, or to an officer of the Landlord, the Tenant or of
the Guarantor, as the case may be, or mailed in the Province of
British Columbia by registered mail addressed:
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(a) if to the Landlord, as follows:
Richmond Inn Hotel Ltd.
7551 Westminster Highway
Richmond, B.C.
V6X 1A3
Attention: Mhedi Khimji
(b) if to the Tenant, as follows:
Java Girl Coffee Ltd.
2773 Barnet Highway
Coquitlam B.C.
V3B 1C2
Attention: Klaus J. Henck
(c) if to the Guarantor, as follows:
Mr. Klaus J. Henck
6741 Baker Road
Delta B.C. V4E 2T8
A notice, demand, request, statement or other instrument mailed as
aforesaid will be considered to have been given to the party to which
it is addressed on the fifth business day following the date of
mailing. In the event of interruptions in the normal postal service a
notice will be deemed received when actually received by the party to
whom it is addressed.
A party at any time may give notice to the other party of a change of
its address, and after the giving of the notice the address therein
specified will be considered to be the address of the party which gave
the notice.
25.09 AMENDMENT IN WRITING
No alteration, amendment, change or addition to this Lease will bind
the Landlord or the Tenant unless the same is in writing and signed by
the parties hereto.
25.10 SUCCESSORS AND ASSIGNS
This Lease binds and benefits the parties and their respective heirs,
executors, administrators' successors and assigns. No rights,
however, benefit an assignee of the Tenant unless under Section 12.01
the Assignment was consented to or did not require a consent.
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IN WITNESS WHEREOF the parties have executed these presents on the day
|
and year first above written.
LANDLORD:
The Corporate Seal of RICHMOND )
INN HOTEL LTD. was hereunto )
affixed in the presence of: )
)
)
)
- ------------------------------ )
Authorized Signatory ) c/s
)
)
- ------------------------------ )
Authorized Signatory )
TENANT:
The Corporate Seal of JAVA GIRL )
COFFEE, LTD. was hereto )
affixed in the presence of: )
)
)
- ------------------------------ )
Authorized Signatory ) c/s
)
- ------------------------------ )
Authorized Signatory )
GUARANTOR:
SIGNED, SEALED AND DELIVERED by )
KLAUS J. HENCK in the presence of:)
)
)
- ------------------------------ )
Name )
)
)
- ------------------------------ ) -----------------------
Address )
)
)
- ------------------------------ )
)
)
- ------------------------------ )
Occupation )
|
SCHEDULE "A"
DESCRIPTION OF LAND
Municipality of Richmond
Parcel Identifier: 015-676-692
Lot I
Section 5
Block 4 North
Range 6 West
New Westminster District
Plan 84515
SCHEDULE "C"
CERTAIN RULES AND REGULATIONS OF THE LANDLORD
No Tenant, nor its officers, employees, customers or invitees, may go into restricted areas of the hotel (eg. kitchens, behind bars, front desk, etc.).
Employees of the Tenant will follow all hotel employee rules and regulations.
All employees of the Tenant will conduct themselves in a professional manner.
All garbage and waste being the result of the Tenant carrying on business in the Premises shall not be put in view of the public (hotel corridors) and sidewalks adjacent to the Premises are to be kept clean at all times. Garbage and waste will be properly disposed of as per Landlord's instructions from time to time.
SCHEDULE "D"
JAVA GIRL F/C = 12 MONTH 1993/94
LOCATION: RICHMOND INN
DATE: SEP. 1993 KH
F/C F/C FORCAST AVERAGE
3 MONTH RATIO % 12 MONTH DAY
SALES LIQ. COFFEE 28,250 83.33% 117,000 $325.00
SALES BAKED GOODS 5,850 16.67% 23,400 $65.00
TOTAL SALES 35,100 100.00% 140,400 $390.00
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COST OF SALES
LIQUIT COFFEE 6,523 22.30% 26,091 $72.47
BAKED GOODS 2,048 35.00% 8,190 $22.75
TOTAL COST SALES 8,570 24.42% 34,281 $95.23
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LABOR/BFTS 12,960 36.92% 51,840 $144.00
G.O.P. 13,570 38.66% 54,279 $150.78
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OPERATING EXP.
ROYALTIES 1,755 5.00% 7,020 $19.50
ACCOUNTING 900 2.56% 3,600 $10.00
MANAGEMENT FEE 1,755 5.00% 7,020 $19.50
OCCUPANCY COST 0 0.00% 0 $0.00
MISCELLANEOUS 1,053 3.00% 4,212 $11.70
TOTAL OPERATING EXP 5,463 15.56% 21,852 $60.70
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EARNINGS BEFORE 8,107 23.10% 32,427 $90.08
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INVESTMENT YEAR # 1 YEAR # 2 YEAR # 3 TOTAL
$15,000 3 YEARS
RETURN ON INVESTMENT
CAPITAL 5,000 5,000 5,000 15,000
INTEREST CAPITAL 12% 1,800 1,200 600 3,600
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PROFIT BEFORE DISTRIB. 25,627 26,227 26,827 78,681
FRANCHISEE 50% 12,814 13,114 13,414 39,341
LANDLORD 50% 12,814 13,114 13,414 39,341
YEAR # 4 YEAR # 5 TOTAL
5 YEARS
PROFIT BEFORE DISTRIB. 32,427 32,427 143,535
FRANCHISEE 50% 16,214 16,214 71,768
LANDLORD 16,214 16,214 71,768
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PROJECTIONS ARE BASED ON 1993 DOLLARS/NO INFLATION.
THIS AGREEMENT made this 8th day of July, 1994
BETWEEN: YORKSON INVESTMENT COMPANY LTD., a company duly incorporated
under the Laws of the Province of British Columbia, and having an
office c/o
#15 - 5763 OAK STREET, VANCOUVER, B.C., V6M 2V7
(hereinafter called the "Landlord")
OF THE FIRST PART
AND: JAVA GROUP INC.
#404 - 999 Canada Place, Vancouver, B.C.,
Canada. V6E 3E2
(hereinafter called the "Tenant")
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OF THE SECOND PART
W H E R E A S :
A. The Landlord is the registered owner of that certain parcel or tract of land and premises situate, lying and being in the City of Vancouver, in the province of British Columbia, and known and described as:
CITY OF VANCOUVER
PARCEL IDENTIFIER 005-324-084
LOT A, BLOCK 360
DISTRICT LOT 526, PLAN 21010
upon which is situate the building (as hereinafter defined);
B. The Landlord and Tenant are desirous of entering into a lease of the Demised Premises (as hereinafter defined);
NOW THEREFORE WITNESSETH THIS AGREEMENT that in consideration of the mutual covenants, agreements, representations and warranties and further in consideration of the payment by the Tenant to the Landlord of the rents hereinafter provided, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 The terms defined in this Article shall for all purposes of this Lease or other instruments supplemental hereto, have the meanings herein specified, unless the context expressly or by necessary implication otherwise requires:
(a) "Basic Rent" means the rent described in paragraph 5.01 hereof;
(b) "Building" means the building situate on the Land, and includes any additions, alterations, or extensions thereto;
(c) "Building Equipment" means all machinery, boiler, plumbing, wiring, heating, air-conditioning and lighting and other equipment which is an integral part of the Building, if any, other than Tenant's Equipment;
(d) "Common Areas" means those areas that are designated by the Landlord as Common Areas (which designation may be changed from time to time) including, without limitation the roof, exterior weather walls, exterior and interior structural elements and bearing walls in the buildings and improvements comprising the building, pedestrian sidewalks, exterior landscaped areas, parking areas, roadways, sidewalks, all enclosed malls, courts and arcades, public hallways, open malls, service corridors, stairways, escalators, ramps, moving sidewalks and elevators and other transportation equipment and systems, interior landscaped areas, public washrooms, electrical, telephone, meter, valve, mechanical, mail, storage and janitor rooms and galleries, fire prevention, security and communications systems, general signs, columns, pipes, electrical, plumbing, drainage, mechanical and all other installations or services located therein or related thereto as well as the structures housing the same, truck courts, common loading areas and driveways.
(e) "Common Area Maintenance Cost" means the total, without duplication of the expenses incurred by,the Landlord for operating, maintaining, repairing and replacing the common facilities and common areas of the building and shall, without limiting the generality of the foregoing include the aggregate of:
(i) the costs of repairs, maintenance and such replacements to the Common Areas and the Common Facilities as are properly chargeable in accordance with sound accounting practice to operating expenses as distinguished from capital replacement or improvement;
(ii) depreciation, at rates determined by the Landlord, but not to exceed the maximum permitted to the Landlord under the provisions of the INCOME TAX ACT, CANADA, from time to time, or any legislation substituted therefor, on equipment and machinery employed in operating, maintaining, repairing and replacing the Common facilities or Common areas;
(iii) premiums paid by the Landlord for public liability insurance and for insurance against insurable hazards in respect of the Common areas and Common facilities of the building;
(iv) the expense for gardening and landscaping, line painting, rental of signs and equipment, lighting, sanitary control, the removal of snow, and parking areas cleaning;
(v) wages paid for maintenance and operating personnel, including payments for workers compensation, unemployment insurance, vacation pay, Canada Pension Plan contributions and fringe benefits whether statutory or otherwise;
(vi) the cost of uniforms and equipment furnished to such personnel;
(vii) the portion of municipal tax costs which may be reasonably allocated to the Common Areas and Common Facilities;
(viii) the cost of electrical power furnished to the Common Areas and Common Facilities;
(ix) that portion of the cost of heating, ventilating and air-conditioning which may be reasonably allocated to the Common areas and Common facilities; and
(x) an administrative fee equal to fifteen (15%) per cent of the total expenses incurred by the Landlord under this clause.
(f) "Common Facilities" means the electrical, music and public address systems, heating, ventilating, air- conditioning, plumbing and drainage equipment
and installations and any enclosures constructed therefor, fountains, customer service stairways, escalators, ramps, moving sidewalks, elevators, signs, lamp standards, public washroom facilities and parking deck and all other facilities which are provided or designated (which designation may be-changed from time to time by the Landlord and which are located within the building.)
(g) "Cost of Heating, Ventilating and Air-Conditioning" means the total, without duplication of the expenses incurred by the Landlord for operating, maintaining, repairing and replacing the heating plant, and shall without limiting the generality of the foregoing including the aggregate of:
(i) the amount expended by the Landlord for fuel, water, electricity and additives for the heating plant;
(ii) the telephone expense with respect to the telephone installation in the heating plant;
(iii) the total annual costs to boiler and pressure vessels, insurance coverage paid by the Landlord for insurance;
(iv) wages paid to maintenance and operating personnel in the heating plant, including payments for Workers Compensation, Unemployment Insurance, vacation pay, Canada Pension Plan contributions and other fringe benefits whether statutory or otherwise;
(v) the costs of uniforms and equipment furnished to such personnel;
(vi) the costs of repairs, maintenance and such replacements to the heating plant as are properly chargeable, in accordance with sound accounting practice to operating expenses, as distinguished to capital replacements or improvements;
(vii) depreciation, at rates determined by the Landlord but not in excess of the maximum permitted to the Landlord under the provisions of the INCOME TAX ACT, CANADA,
from time to time, or any legislation substituted therefor on the capital cost of facilities in the heating plant, and any capital replacements thereto;
(viii) the portion of municipal tax costs from municipal taxes which may be reasonably allocated to the heating plan;
(ix) an administrative fee equal to fifteen (15%) per cent of the total expenses incurred by the Landlord under this clause.
(h) "Costs of Insurance" means the annual cost to the Landlord to take out public liability insurance and rental insurance in respect of the Building and building comprising the Building and to insure the improvements comprising the Building against damages from Insurable Hazards to such limits as the Landlord may from time to time determine but not in excess of the replacement cost of the buildings comprising the Building.
(i) "Demised Premises" means all that Portion of the Building which is outlined in red on Schedule "A" attached hereto and more particularly referred to as #102 - 500 WEST BROADWAY, VANCOUVER, B.C. consisting of approximately 839 square feet;
(j) "Land" means that parcel or tract of land and premises legally described in Recital "A" hereof;
(k) "Lease" means this instrument as originally executed and delivered or, if amended, or supplemented or renewed, as so amended, or supplemented or renewed;
(l) "Tenant's Equipment" means all personal property, fixtures, apparatus, machinery and equipment, other than Building Equipment, owned by the Tenant and used or intended for use in connection with the operation of the business of the Tenant and whether installed prior to the commencement of the Term of the Lease or at any time and from time to time during the Term of the Lease;
(m) "Tenant's Proportionate Share" with respect to any amount means the ratio that the net rentable area of the Demised Premises bears to the net rentable commercial area of the whole of the building of which the Demised Premises form a part;
(n) "Term of Lease" means the term of years described in paragraph 3.01 hereof;
(o) "Realty Taxes" means all real estate taxes, assessments, rates and charges and other governmental impositions general or special, ordinary or extraordinary, foreseen or unforeseen, of every kind, including, without limitation, assessments for local or public improvements and school taxes which may at any time during the term of the Lease be imposed, assessed or levied in respect of the Land and/or in respect of the improvements from time to time thereon, including any cost or expense by way of legal fees, appraiser's fees or fees of a similar nature incurred by the Landlord in conducting any appeal in respect of any such taxes, rates, charges or impositions, all such amounts to be adjusted to exclude any portion thereof payable for periods outside the Term of Lease;
(p) "Structural Repairs" means repairs necessary from time to time to the foundations, supports, beams, exterior roof and bearing walls of the Building, painting exterior walls, landscaping and replacement of Common Area fixtures, provided that if any dispute shall arise between the Landlord and Tenant as to whether any given repairs are or are not Structural Repairs then the matter shall be resolved by binding arbitration under the ARBITRATION ACT (British Columbia) decided by a single arbitrator who shall be a duly qualified Civil Engineer named by the Landlord and the Tenant and the decision of such arbitrator shall be conclusive and binding upon the parties hereto;
(q) "Term" means five years and 24 days.
(r) "Commencement Date" means July 8th 1994.
(s) "Termination Date" means July 31st, 1999.
ARTICLE 2 - GRANT OF LEASE
2.1 The Landlord hereby demises and leases upon the Tenant and the Tenant hereby takes and rents the Demised Premises all on the terms and conditions herein contained;
2.2 In addition to the lease herein of the Demised Premises, the Landlord hereby grants to the Tenant and the Tenant's invitees, agents and servants, in common with the
Landlord and all other persons authorized by the Landlord from time to time, a license to use the Common Areas for the purpose of gaining access to the Demised Premises and better using the same, provided that nothing herein shall in any way restrict the Landlord from entering, maintaining, altering or changing the Common Areas, or from altering or adding to the Building as long as the Tenant is able to gain access to the Demised Premises;
ARTICLE 3 - TERM OF LEASE
3.1 This Lease shall be for a term of five years and 24 days (the "term") commencing on the 8th day of July ___, 1994 (the "Commencement Date") and ending on the 31st of July ___, 1999 (the "termination date");
ARTICLE 4 - TO OPERATE DURING THE TERM
4.1 The Tenant will not during the term vacate the leased premises either in whole or in part (whether actually or constructively) but will:
(a) conduct its business in the entire Demised Premises;
(b) remain open for business during customary business days and hours for such business, and for such further days or additional hours as required by the landlord (unless prevented by federal, provincial or municipal or any other governmental authority);
(c) remain closed for business at the expiration of business hours in each and every day of the week, unless in the Tenant's opinion for reasons of medical need, it is necessary that the same be open;
(d) actively carry on in the Demised Premises, the type of business for which the Demised Premises are leased to the tenant;
ARTICLE 5 - RENT
5.1 The Tenant shall pay during the term of this Lease the total Basic Rent of ONE HUNDRED AND SIX THOUSAND TWO HUNDRED FIFTY-FOUR DOLLARS AND EIGHTEEN CENTS ($106,254.18), payable as follows:
(a) First month from JULY 8th, 1994 TO JULY 31st, 1994; ONE
THOUSAND THREE HUNDRED SEVENTY-NINE DOLLARS AND EIGHTEEN
CENTS ($1,379.18)
(b) Basic Rent of ONE HUNDRED AND FOUR THOUSAND EIGHT HUNDRED AND SEVENTY FIVE DOLLARS ($104,875.00) in equal monthly installments of ONE THOUSAND SEVEN HUNDRED FORTY-SEVEN DOLLARS AND CENTS NINETY TWO ($1,747.92) each on the first day of each and every month thereafter.
and the first of such monthly installments, or a pro-rated portion thereof in the event this Lease is effective other than on the 1st day of a month, shall be paid on the Commencement Date of this Lease, and subsequent installments shall be paid on the 1st day of each and every month during the Term hereby demised;
5.2 (a) The Landlord acknowledges receipt of a deposit of
$5,480.64, which is to be applied to payment of Gross
Rent plus G.S.T. for the First and Last month's of the
Term of this Lease.
(b) The Landlord hereby agrees that there will be no Basic
Rent payable by the Tenant for the period from April
21st, 1994 to July 7th, 1994, provided however that
during the aforesaid period the Tenant shall be liable
for payment of Additional Rent as set forth hereunder;
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5.3 The rent reserved hereunto shall be paid in Canadian funds to the Landlord at its address for notice herein unless another place of payment is designated by the Landlord to the Tenant in writing, and the Tenant shall deliver postdated checks to the Landlord on the first day of each quarter year of the Term of Lease for the payments of rental to fall due in the months in such quarter year;
5.4 This Lease shall be a net lease, and the rental provided to be paid to the Landlord hereunder shall be net to the Landlord, and shall yield to the Landlord the entire such rental during the full term of this Lease without abatement, deduction or set-off of any nature whatsoever and all costs, expenses, rates, taxes, charges and obligations of every kind and nature whatsoever relating to the Demised Premises, whether or not herein referred to and whether or not of a kind now existing or within the contemplation of the parties hereto, shall be paid by the Tenant excepting only any Landlord's Corporation Capital Tax, income tax or taxes other than business tax imposed or levied by any authority whatever on the income received by the Landlord from the Demised Premises;
5.5 Any money payable by the Tenant to the Landlord in addition to the Basic Rent shall be deemed to be rent. All monies payable by the Tenant to the Landlord pursuant to this Lease shall bear interest at the rate of 2% per month from the date of default.
ARTICLE 6 - ADDITIONAL RENT
6.1 The Tenant shall pay to the Landlord as additional rent to the Landlord in each year of the Term of Lease, within ten (10) days after demand the Tenant's Proportionate Share of:
(a) Realty Taxes and Goods and Services Tax (GST), if applicable, imposed or levied on the Basic Rent and Additional Rent.
(b) all taxes, license fees, duties, rates assessments or imposts of whatsoever nature levied by any authority whatsoever in respect of the Land and Building as shall be attributable to the business or property of the Tenant, or to any thing or things erected or placed in, upon or under, or fixed to, the Demised Premises by or with the consent or permission of the Tenant during the term of this Lease, including all fixtures, machines, equipment and other things of any nature or description not the property of the Landlord or which may be lawfully removed by the Tenant;
(c) the total cost of all local improvement and utility charges, if any, and all charges for water, gas, electric light, heat and power, ventilating and air- conditioning, telephone, or other similar service used, rendered or supplied upon or in connection with the Demised Premises throughout the Term of Lease and all charges or costs in respect of removal of garbage from the Demised Premises or incineration thereof, or other disposal thereof, and the Tenant will indemnify and save the Landlord harmless against and from any liability or damages on any such account;
(d) All actual out of pocket operating costs and expenses incurred by the Landlord in connection with the operation, maintenance or repair (except Structural Repairs) of the Land, Building and Demised Premises during the Term of Lease and in accord with general commercial standards for a building of the age, locale and character of the Building, including, without limiting the
generality of the foregoing, Tenant's Proportionate
Share of the cost of:
(i) any and all fuel for heating, ventilating and air-conditioning purposes and any and all electricity used throughout the Building;
(ii) any and all water and sewer charges;
(iii) any and all labor and wages, including employee benefits and Workers' Compensation, and other payments, whether required by law or made voluntarily, made to janitors, caretakers, supervisory personnel and other employees of the Landlord for the care, security, maintenance, cleaning or operation of the Building and Land and the total charges of any independent service contractors employed in the care, security, maintenance, cleaning or operation of the Building and Land;
(iv) any and all supplies used in connection with the Building and Land, including without limitation those supplies the necessity of which is occasioned by everyday wear and tear;
(v) gardening and landscaping, maintenance of parking areas and driveways, removal of snow and garbage removal and scavenging charges;
(vi) cost of insurance obtained pursuant to paragraph 8.01 of this Lease;
(vii) rental of equipment and common signs;
(viii) the cost of repairs and maintenance of or to the Common Areas and Common facilities;
(ix) any management fees paid by the Landlord;
(x) the addition of fixtures, equipment, etc.; which by their nature require periodic repair or replacement;
(xi) the cost of improvements intended primarily to reduce other operating costs;
(xii) the cost of heating ventilating and air- conditioning;
6.2 The Tenant covenants to pay the Tenant's taxes and any and all fees or amounts payable by the Tenant other than to the Landlord, in connection with the Tenant's business in or occupation of the Demised Premises;
6.3 The Tenant may take advantage of any provisions of law whereby Realty Taxes or any other amounts payable by the Tenant including amounts payable other than to or through the Landlord may be paid by installments or deferred for some portion of the fiscal period to which they relate, provided that no fine, penalty or cost is thereby incurred and the Tenant shall pay any fine, penalty, interest and expense arising from any failure by the Tenant to pay any such amount when due and further provided that the Landlord shall be at liberty to pay any such amount (after 10 days written notice to the Tenant of its intention so to do) and may add to the next ensuing instalment of rent the amounts so paid including penalties, charges and interest in connection therewith;
6.4 The Tenant shall have the right to contest at the Tenant's sole expense the amount of validity of any Realty Taxes or other amounts imposed in respect of the Demised Premises but nothing herein contained shall be deemed to relieve the Tenant of its obligation to pay such Realty Taxes or other amounts or to authorize the Tenant to defer payment of such Realty Taxes, unless such deferment is lawful and the Landlord consents in writing to such deferment;
6.5 If the Tenant is contesting in good faith the amount or validity or any Realty Taxes or any other assessment or impost and has complied with the provisions of this Article and if it becomes necessary for the Landlord to join in or consent to such proceedings the Landlord shall join or consent as required but the Tenant shall indemnify the Landlord against all expense arising therefrom;
6.6 Notwithstanding the provisions of this Article, at any time during the Term of Lease the Landlord may by notice in writing require the Tenant to pay and the Tenant shall pay to the Landlord, on each date following such notice upon which installments on account of Basic Rent are payable, such amount or amounts, which shall not bear interest, as the Landlord may from time to time estimate as being necessary to provide to the Landlord sufficient funds to pay Realty Taxes, and all insurance premiums or other amounts next to become due and payable, and if the Realty Taxes, insurance premiums or other amounts actually charged or payable in any fiscal period shall exceed the amount or amounts paid by the Tenant for such fiscal period, the Tenant
shall pay to the Landlord forthwith on demand the amount required to make up the deficiency, and any overpayment made by the Tenant in such fiscal period shall forthwith upon determination be returned without interest by the Landlord to the Tenant;
6.7 The Tenant shall upon demand by the Landlord provide to the Landlord proof, in such form as the Landlord may reasonably require, that the Tenant has paid when due any and all payments required hereunder to be made by the Tenant other than to the Landlord;
6.8 The Landlord shall upon demand by the Tenant provide to the Tenant proof, in such form as the Tenant may reasonably require, of the amount and payment of any of the items set out in paragraph 6.01;
ARTICLE 7 - TENANT'S EQUIPMENT
7.1 At any time and from time to time during the Term of Lease, the Tenant may install, maintain and replace in the Demised Premises, any Tenant's Equipment as the Tenant, in its sole discretion, may desire and, notwithstanding the fact that the Tenant's Equipment shall nevertheless be and remain at all times the property of the Tenant;
7.2 The Tenant may not permanently remove any material part of the Tenant's Equipment at any time during the Term of Lease without the written consent of the Landlord which shall not be unreasonably withheld;
7.3 The Tenant shall be responsible for and will repair all or any damage to any part of the Demised Premises, including structural portions thereof, caused by installation or removal of any of the Tenant's Equipment, fixtures, alterations, or improvements, and shall restore the Demised Premises to the same condition as they were in at the commencement of Term of Lease;
7.4 Any of the Tenant's Equipment remaining in the Demised Premises at the termination of this Lease may be removed and stored by the Landlord, who shall thereupon have the first and paramount lien against the said Tenant's Equipment and the Landlord shall not be required to release possession thereof until payment to the Landlord of the cost of removal and storage of the Tenant's Equipment and if the Tenant fails to pay such cost within 10 days of demand in writing by the Landlord, the Landlord shall have the right to sell the same and may apply the proceeds firstly in payment of the costs of such removal, storage and sale and secondly to the Tenant's account;
7.5 The Landlord shall not be responsible for any loss or damage occurring to the Tenant's Equipment, save and except for loss or damage caused by the wilful neglect of the Landlord or persons for whom in law the Landlord is responsible;
ARTICLE 8 - INSURANCE
8.1 The Landlord, acting reasonably and as a prudent owner of the Land and Building may obtain at the expense of the Tenant to the extent of the Tenant's Proportionate Share such insurance for the benefit of the Landlord as the Landlord from time to time considers useful, expedient or beneficial, including, without limitation, any or all of the following:
(a) a broad form of insurance against all risks of loss or damage to all property owned by the Landlord relative to the Land and Building, including coverage for fire, flood and earthquake, or any other form of loss;
(b) insurance against all explosion, rupture or failure of boilers, pressure vessels, air-conditioning equipment and miscellaneous electrical apparatus on blanket basis with broad form cover, including repair and replacement;
(c) insurance against loss of insurable gross rentals attributable to all perils insured against by prudent landlords, including loss of all rents receivable from tenants in the Building in accordance with the provisions of their leases including all rents thereunder and all other charges payable as additional rent thereunder, in such amount or amounts as the Landlord or its mortgagees from time to time requires;
(d) insurance against third party liability hazards including exposure to personal injury, bodily injury and property damage on an occurrence basis, including insurance of all contractual obligations, and covering also actions of all employees, other persons, sub- contractors and agents while working on behalf the Landlord;
(e) insurance against any other form or forms of loss that the Landlord or its mortgagees reasonably requires from time to time for like properties similarly situated and for amounts against which a prudent landlord would insure itself; and
notwithstanding any contribution by the Tenant to insurance premiums as provided for on this Lease, no insurable interest is conferred upon the Tenant under policies carried by the Landlord, the Landlord shall in no way be accountable to the Tenant regarding the use of any insurance proceeds arising from any claim, and the Landlord shall not be obliged on account of such contributions to apply such proceeds to the repair or restoration of that which was insured and it is hereby declared and agreed that if the Tenant may desire to receive indemnity by-way of insurance for any property, work or thing whatever, the Tenant shall insure same for its own account and shall not look to the Landlord for reimbursement or recovery in the event of loss or damage from any case, whether or not the Landlord has insured same and recovered therefor;
8.2 The Tenant shall, during the Term of Lease, at its sole cost and expense, take out and keep in full force and effect, in the name of and with losses payable to the Tenant, the Landlord and if required by the Landlord, the Landlord's mortgagees, the following:
(a) PROPERTY INSURANCE, which shall include coverage on property of every description and kind owned by the Tenant or for which the Tenant is responsible or legally liable pursuant to the terms of this Lease, or which is installed by or on behalf of the Tenant, including Tenant's Equipment, in an amount at least equal in the opinion of the Landlord to the full insurable value thereof calculated on a replacement cost basis without deduction for depreciation and without co-insurance requirements and the perils insured against shall include fire and water damage and a form of broad all- risk coverage and such additional perils as are normally insured against in the circumstances by prudent tenants, and as any mortgagee having a security interest in the Building reasonably requires, or as the Landlord, from time to time, demands;
(b) PLATE GLASS INSURANCE, which shall include coverage for plate glass or other glass that has been broken or removed during the Term of Lease, such insurance to be placed in an amount at least equal in the opinion of the Landlord to the full insurable value thereof calculated on a replacement cost basis, without deduction for depreciation and without co-insurance requirements;
(c) PUBLIC LIABILITY INSURANCE applying to all operations of the Tenant and which shall include bodily injury liability, products liability, contractual liability, contingent liability, non-owned automobile liability and Tenants' legal liability with respect to the occupancy by the Tenant of the Demised Premises, such policy to be written on a comprehensive basis with limits of not less than $1,000,000.00 per occurrence (or such higher limits as the Landlord or its mortgagees require from time to time) and with a cross liability clause;
(d) ANY OTHER FORM OR FORMS of insurance in such amounts and against such perils as the Landlord or the Landlord's mortgagees reasonably require from time to time;
and all policies shall contain an undertaking by the insurers to notify the Landlord and its mortgagees in writing not less than thirty (30) days prior to any material change in terms, cancellation or other termination thereof;
8.3 All property damage policies written on behalf of the Tenant shall contain a waiver of any subrogation rights which the Tenant's insurers may have against the Landlord and against those for whom the Landlord is, in law, responsible, whether any such damage is caused by the act, omission or negligence of the Landlord or by those for whom the Landlord is in law responsible and the Tenant hereby releases and agrees to hold harmless the Landlord from all liability for any loss or damage to or suffered by the Tenant or its property or improvements, by oversight, fault or any other cause whatsoever;
8.4 All policies shall be taken out with insurers acceptable to the Landlord and on policies in form satisfactory from time to time to the Landlord and the Tenant shall deliver certificates of insurance or, if required by the Landlord or its mortgagees, certified copies of each such insurance policy to the Landlord as soon as practicable after the placing of the same;
8.5 If the Tenant fails to take out or to keep in force any such insurance referred to in this Article 8, or should any such insurance be reasonably disapproved by either the Landlord or its mortgagees and the Tenant does not obtain, reinstate or replace insurance, as the case may be, within forty-eight (48) hours after written notice by the Landlord or its mortgagees do not approve of such insurance, (such notice of disapproval to include the reasons therefor), the Landlord shall have the right, but not the obligation, to effect such insurance at the sole cost of the Tenant and all outlays by the Landlord
shall be immediately payable by the Tenant to the Landlord as additional rent hereunder and shall be due on the first day of the next month following payment thereof by the Landlord, in addition to without prejudice to any other rights and remedies of the Landlord under this Lease;
8.6 The Tenant will not keep, use, sell or offer for sale in or upon the Demised Premises any article which may be prohibited by the fire insurance policy in force from time to time covering the Land and Building, and further if the Tenant's occupancy of, or conduct of business in, the Demised Premises, whether or not the Landlord has consented to the same, causes any increase in premiums for the insurance carried from time to time by the Landlord with respect to the Land and Building, the Tenant shall pay the full amount of any such increase in premiums as additional rent within ten (10) days after bills for such additional premiums are rendered by the Landlord;
ARTICLE 9 - REPAIRS
9.1 The Tenant covenants with the Landlord that:
(a) The Tenant shall at all times during the Term at its own cost and expense:
(i) repair, maintain and keep the Demised Premises in good order and repairs, as a careful owner would do; and
(ii) repair, maintain and keep all equipment and fixtures in the Demised Premises in good order and repair and replace the same when necessary, as a careful owner would do, including, without limitations, the floor, exterior and interior door, exterior store fronts, windows, plate glass, glass partitions, heating, ventilating, air-conditioning, plumbing, sprinkler, mechanical and electrical equipment and fixtures (including all the parts, wiring and pipes thereof) within the Demised Premises, and any improvements now or hereafter made to the Demised Premises, reasonable wear and tear and repairs for which the Landlord is responsible only excepted provided however that if such repairs by the Landlord are required as a result of the act or omission of the Tenant, its servants, agents or employees, the Tenant shall pay to the Landlord, on demand, the costs of such repairs or
Additional Rental) and the Tenant covenants to perform such maintenance, to effect such repairs and replacements and to decorate at its own cost and expense as and when necessary or reasonably required so to do by the Landlord;
9.2 The Tenant shall, when necessary and, whether upon receipt of notice from the Landlord or not, effect and pay for such maintenance, repairs, replacements or decoration as may be the responsibility of the Tenant under the foregoing paragraph provided that no maintenance, repairs, or replacements to the structure, any perimeter wall, the store front, the sprinkler system system, the heating, ventilating, air-conditioning, plumbing, electrical or mechanical equipment or the concrete floor shall be made without the prior written consent of the Landlord, and in so doing shall use contractors or other workmen designated or approved by the Landlord in writing, such approval not to be unreasonably withheld or delayed.
ARTICLE 10 - STRUCTURAL DEFECTS
10.1 The Landlord shall be responsible to make good and repair any damage caused to the Demised Premises by reason of a structural defect in the building in which the Demised Premises are located, or damage caused by negligence of the Landlord, its servants or agents.
10.2 The Landlord shall cause proper maintenance of all Common Areas, at the Tenant's cost to the extent of the Tenant's Proportionate Share;
ARTICLE 11 - CHANGES, ALTERATIONS AND ADDITIONS
11.1 Hereafter and at any time and from time to the Term of Lease, the Tenant shall have the right, expense, to make such changes and alterations in or Demised Premises as the Tenant shall deem necessary in connection with the requirements of its business structural change or alteration shall be undertaken until detailed plans and specifications therefor and a list of the contractors or tradesmen who the Tenant proposes to hire for the work have first been furnished to and approved by and consented to in writing by the Landlord, which approval and consent shall not be unreasonably withheld;
11.2 The Tenant shall be responsible for procuring and paying for all required municipal and other governmental permits and authorizations of the various municipal departments and government divisions having jurisdiction necessary or advisable in connection with any changes made pursuant to this Article provided that the Landlord will, at the Tenant's expense, join in
application for such permits and authorizations whenever such action is necessary;
11.3 All work done in connection with any change or alteration shall be done promptly and in good and workmanlike manner, and in compliance with the valid and applicable building and zoning laws and with all other valid laws, ordinances, orders, rules, regulations and requirements of all federal, provincial and municipal governments, and the appropriate departments, commissions, boards and officers thereof, and in accordance with the orders, rules and regulations of the Canadian Fire Underwriters Association, or any other body hereafter constituted exercising similar functions; the cost of any such change or alteration shall be paid or secured so that the Demised Premises shall at all times be free of liens for labor and materials supplied, or claimed to have been supplied to the Demised Premises;
11.4 All alterations or additions to the existing improvements, other than Tenant's Equipment, shall upon attachment to the Demised Premises, be deemed a part thereof, and title thereto shall immediately vest in the Landlord without any liability on its part to pay for the same provided that the Landlord may elect to require the Tenant to remove at the expiration of this Lease all or any part of any improvement installed by or on behalf of the Tenant, in which case such removal shall be done by the Tenant forthwith, at the Tenant's expense, as well as all other repairs necessitated by such removal, failing which the Landlord may carry out the same at the Tenant's expense and without liability for damage to the improvement so removed;
ARTICLE 12 - DAMAGE OR DESTRUCTION
12.1 In case the Demised Premises are damaged or destroyed by any peril or hazard covered by or recoverable from insurance maintained by the Landlord under Article 8 then the Landlord shall immediately select a reputable contractor and if such contractor:
(a) is of the opinion that the damage or destruction is capable of repair with reasonable diligence within ninety (90) days of the date of the damage then the Landlord shall deliver notice of its intention to rebuild or repair and shall repair the damage with reasonable diligence, or
(b) is of the opinion that the damage or destruction is not capable of repair with reasonable diligence within ninety (90) days of the date of the damage, then the Landlord shall either elect to repair
such damage or destruction and shall then repair the same with reasonable diligence, or either the Landlord or Tenant may elect to terminate this Lease;
12.2 If this Lease is not terminated by reason of such damage or destruction and if such damage or destruction is such as to render the Demised Premises wholly unfit for occupancy then the rent to be paid by the Tenant hereunder shall abate in whole, or in proportion to the unoccupiable portion of the Demised Premises, as the case may be, until the Landlord delivers a notice to the Tenant that the repairs have been substantially completed at which time all rent payable by the Tenant hereunder shall recommence;
12.3 If the Landlord herein does not give the Tenant notice of its intention to either repair such damage or destruction or to terminate this Lease within thirty (30) days of the damage or destruction then the Tenant may by notice in writing delivered to the Landlord terminate this Lease or require the Landlord to repair the damage or destruction;
12.4 In case the Demised Premises are damaged or destroyed by any peril or hazard not covered by or recoverable from insurance maintained by the Landlord under Article 8 then the Landlord shall either elect to repair such damage or destruction and shall then repair the same with reasonable diligence or shall elect to terminate this Lease;
12.5 If the Landlord shall elect under any provision of the Article not to repair and as a result this Lease determines, the Tenant shall cause all insurance proceeds payable in respect of damages to the Demised Premises to be paid in accordance with the provisions of the policy of insurance;
ARTICLE 13 - USE OF DEMISED PREMISES
13.1 The Tenant shall use the Demised Premises only for the operation as a Retail Coffee House under the name of JAVA GIRL and for no other purposes without the written consent of the Landlord;
13.2 During the Term of Lease, the Tenant in the use, occupation, alteration or repair of the Demised Premises, or any property used in connection therewith, shall comply with the requirements of every applicable valid law, ordinance, rule or regulation and with the orders, rules and regulations of The Canadian Fire Underwriters Association, or any other body hereafter constituted exercising similar functions, and with the requirements of all policies of public liability, fire and the
kinds of insurance at the time in force with respect to the Demised Premises or any part thereof;
13.3 The Tenant covenants and agrees that it will carry on its business on the Demised Premises continuously during the Term of Lease;
ARTICLE 14 - CERTAIN RIGHTS AND DUTIES OF LANDLORD
14.1 The Tenant will permit the Landlord and authorized representatives of the Landlord to enter into the Demised Premises at any time in case of emergency and at all reasonable times upon reasonable notice during usual business hours for the purpose of inspecting the same and of ascertaining whether the Tenant has failed or neglected to perform any act which it is required to perform under the provisions of this Lease, and also the Landlord shall be permitted to enter as aforesaid for the purpose of making any necessary repairs to the Demised Premises and performing any work therein, which the Tenant has failed to do, that may be necessary to comply with any valid law, ordinance, rules or regulations of The Canadian Fire Underwriters, or of any public authority, or any similar body, or to comply with the requirements of insurance policies then in force with respect to the Demised Premises, provided that nothing herein shall imply with any duty upon the part of the Landlord to do or to pay for any work which under any provision of this Lease the Tenant may be required to perform, and the performance thereof by the Landlord in the event the Tenant does not perform the same after demand shall not constitute a waiver of the Tenant's default in failing to perform the same.
14.2 The Tenant upon paying the Basic Rent and all other charges here in provided for, and observing and keeping the covenants, agreements and conditions of this lease on its part to be kept, shall lawfully and quietly enjoy, hold, occupy, control and manage the Demised Premises during the Term of Lease without hindrance or molestation of the Landlord, or any person or persons claiming under the Landlord, save as expressly provided by this Lease;
ARTICLE 15 - CONDITIONAL LIMITATIONS, DEFAULT PROVISIONS
15.1 In case the Term of this Lease or any of the goods and chattels of the Tenant shall be at any time seized in execution or attachment by a creditor of the Tenant or the Tenant shall make any assignment for the benefit of creditors or any bulk sale or become bankrupt or insolvent or take the benefit of any Act now or hereafter in force for bankrupt or insolvent debtors, or, if the Tenant is a corporation and any order shall be made for the winding- up of the Tenant, or other termination of the corporate existence of Tenant or a Receiver or Receiver-Manager
is appointed for the Tenant under any Debenture or other security or by Court Order or otherwise, then in any such case this Lease shall at the option of the Landlord immediately cease and terminate and the Term of Lease shall immediately become forfeited and void and the then current month's rent and the next ensuing three (3) month's rent shall immediately become due and be paid and the Landlord may, without notice, re-enter and take possession of the Demised Premises as though the tenant or other occupant or occupants of the Demised Premises was or were holding over after the expiration of the Term of Lease without any whatsoever;
15.2 If, during the Term of Lease, or any renewal thereof, the Tenant shall make default in the payment of any rent due under this Lease, and such default shall continue for ten (10) days after notice thereof by the Landlord, this Lease shall cease and come to an end on the date specified in the said notice, which date shall not be less than ten (10) days after the delivery of such notice, and Tenant will then quit and surrender the Demised Premises to the Landlord;
15.3 If, during the Term of Lease or any renewal thereof the Tenant shall not observe, perform or keep any of the other covenants in this Lease and such default shall continue for ten (10) days after written notice thereof by the Landlord to the Tenant, or if the Tenant fails to proceed promptly and with all due diligence to cure such default after the service of notice by the Landlord of such default, then and in any such case, unless the default upon which said notice was based has been cured in the meantime this Lease shall cease and come to an end on the day specified in the said notice, which date shall not be less that ten (10) days after delivery of such notice, and the Tenant will then quit and surrender the Demised Premises to the Landlord, provided that in the event of a default which is capable of being cured but which cannot with due diligence be cured within a period of ten (10) days, the ten (10) day period shall be extended for such time as shall allow the Tenant proceeding promptly and with all due diligence a reasonable opportunity to cure such default;
15.4 All costs, charges and expenses incurred by the Landlord in recovering or enforcing payment of monies owing hereunder or in enforcing the terms and conditions of this Lease, whether or not any default be cured within the time allowed, including the costs of the Landlord as between solicitor and own client on a lump sum basis, expenses of taking possession of the Demised Premises and realizing upon goods and chattels of the Tenant, shall be paid by the Tenant and such sums shall be deemed to be rent payable under this Lease;
15.5 No remedy conferred upon or reserved to the Landlord herein or by law or otherwise shall be considered exclusive of any other remedy, but the same shall be cumulative with and in addition to every other remedy available to the Landlord, and all such remedies may be exercised concurrently as well as individually from time to time, and as often as the Landlord shall deem fit;
ARTICLE 16 - DISTRESS
16.1 The Tenant waives and renounces the benefit of any present or future statute taking away or limiting the Landlord's right of distress, and covenants and agrees that notwithstanding any such statute none of the goods and chattels of the Tenant on the Demised Premises at any time during the Term of Lease shall be exempt from levy by distress for rent in arrears;
ARTICLE 17 - VOIDANCE OF LEASE, VACANT OR IMPROPER USE
17.1 It is hereby further declared and agreed between the Landlord and Tenant that in the case the said Premises or any part thereof become and remain vacant and unoccupied for the period of fifteen (15) days, or be used by any other person or persons, or for any other purpose than as above provided, without the written consent of the Landlord, this Lease shall, at the option of the Landlord, cease and be void and the Term of Lease shall expire and be at an end, anything hereinbefore to the contrary notwithstanding, and the then current month's rent and an additional one month's rent shall thereupon become immediately due and payable and the Landlord may re-enter and take possession of the Demised Premises as though the Tenant or other occupant or occupants of the Demised Premises, was or were holding over after the expiration of the Term of Lease, and the balance of the Term of Lease shall be forfeit; or in such case instead of determining this Lease as aforesaid and re-entering upon the Demised Premises, the Landlord may take possession of the Demised Premises or any part or parts thereof, and let and manage the same and grant any lease or leases thereof upon such terms as to the Landlord may appear to be reasonable, and demand, collect, receive and distrain for all rental which shall become payable in respect thereof, and apply the said rental after deducting all expenses incurred in connection with the Demised Premises and in the collection of the said rent, including reasonable commission for the collection thereof and the management of the Demised Premises, upon the rent hereby reserved, and the Landlord, and every agent acting for the Landlord from time to time shall, in so acting, be the agent of the Tenant who alone shall be responsible for their acts and the Landlord shall not be accountable for any monies except those actually received, notwithstanding any act, neglect, omission or default, of any such agent acting as aforesaid;
ARTICLE 18 - WATER AND GAS DAMAGE
18.1 The Landlord shall not be liable for any damage to any property at any time upon the Demised Premises arising from gas, steam, water, rain or snow, which may leak into, issue or flow from any part of the said Building, or from the gas, water, steam or drainage pipes or plumbing works of the same, or from any other place or quarter, or for any damage caused by or attributable to the condition or arrangement of,any electric or other wires in the Building;
ARTICLE 19 - WATER
19.1 The Landlord agrees to supply normal water consumed on the Demised Premises and the cost of such supply will be borne by the Tenant in its Proportionate Share, but in the event of any abnormal consumption of water, either by reason of the character of the business carried on by the Tenant, or by the use of mechanical or other contrivances, the Tenant consents to the installation of a water meter at his own expense, if necessary, and further agrees to pay for the excess water consumption on the Demised Premises over and above his Proportionate Share;
ARTICLE 20 - SIGNS
20.1 It is further agreed by and between the Landlord and the Tenant that no sign, advertisement or notice shall be inscribed, painted or affixed by the Tenant on any part of the outside or inside of the Building whatever, unless of such manner, color, size and style and in such places upon or in the building as shall be consented to in writing by the Landlord and furthermore, the Tenant, on ceasing to be the Tenant of the Demised Premises, will, before removing his goods and fixtures from the Demised Premises, cause any sign as aforesaid to be removed or obliterated at his own expense and in a workmanlike manner to the satisfaction of the Landlord;
ARTICLE 21 - ILLUMINATION OF DISPLAY WINDOWS
21.1 The Tenant shall keep the display windows of the Demised Premises suitably illuminated during the business hours of the Building as such hours may be determined from time to time by the Landlord and during such other reasonable hours as the Landlord may determine;
21.2 The Tenant will not carry on or perform or suffer or permit to be carried on, performed or suffered on the Demised Premises any business practice of act or engage in any activity which may be deemed a nuisance or a menace or which in any way may injure the Building.
ARTICLE 22 - NO ABATEMENT OF RENT
22.1 There shall be no abatement from or reduction of the rent due hereunder, nor shall the Tenant be entitled to damages, losses, costs or disbursements from the Landlord during the term hereby created on, caused by or on account of fire (except pursuant to Article 12 where total damage or destruction shall occur), water, sprinkler systems, partial or temporary failure or stoppage of heat, light, elevator, live steam or plumbing service in or to the Demised Premises or in or to the Building, whether due to acts of God, strikes, accidents, the making of alterations, repairs, renewals, improvements, structural changes to the Demised Premises or to the Buildings, or the equipment or systems supplying the said services, or from any cause whatsoever; provided that the said failure or stoppage shall be remedied within a reasonable time;
ARTICLE 23 - RIGHT TO SHOW PREMISES
23.1 The Tenant will permit the Landlord to exhibit the Demised Premises during the last six (6) months of the term to any prospective tenant and will permit all persons having written authority from the Landlord to view the Demised Premises at all reasonable hours;
ARTICLE 24 - ASSIGNMENT, SUBLETTING, PARTING WITH POSSESSION
24.1 The Tenant shall not assign this Lease or sublet or part with possession of all or part of the Demised Premises without the prior written consent of the Landlord, provided however, such consent to any assignment or subletting shall not relieve the Tenant from its obligations for the payment of rent and for the full and faithful observance and performance of the covenants, terms and conditions herein contained;
ARTICLE 25 - LANDLORD'S RIGHTS
25.1 Provided further and notwithstanding anything hereinbefore set forth:
(a) If at the time of any proposed assignment or subletting, and from time to time, the Tenant proposes to assign this Lease or sublet the Demised Premises, the Tenant shall send to the Landlord a notice setting forth the name and address of the proposed assignee or subtenant and such information as to the nature of its business and its financial responsibility and standing as the Landlord may reasonably require, and all the terms and conditions of the proposed assignment or sublease. Within fourteen (14) days from the
submission of such notice by the Tenant, the Landlord may elect to terminate this Lease by giving to the Tenant a notice of intention to do so, fixing a date of termination not sooner than the date the subtenant or assignee proposes to occupy the Demised Premises or if such date is less than three (3) months next following the giving of such notice of termination by the Landlord, not later than three (3) months next following the giving of such notice of termination by the Landlord, and the Tenant shall deliver up vacant possession of the Demised Premises on such date of termination and the Lease shall terminate and come to an end and adjustments shall be made in rent, taxes and other charges payable by any party under this Lease. If the Landlord shall have failed to elect to terminate this Lease pursuant to the foregoing, the provisions of Article 24 shall apply to such assignment or subletting;
(b) The Tenant shall have the right without the consent of the Landlord to assign this Lease to a company incorporated or to be incorporated by the Tenant, provided that the Tenant owns or beneficially controls all of the issued and outstanding shares in the capital of the company. Such assignment shall, however, not relieve the Tenant from its obligations for the payment of rent and for the full and faithful observance and performance of the covenants, terms and conditions herein contained;
(c) No assignment of this Lease shall be valid unless within the (10) days after the execution hereof, the Tenant shall deliver to the Landlord:
(i) a duplicate original of such assignment duly executed by the Tenant, and
(ii) an instrument duly executed by the assignee, in form satisfactory to the Landlord wherein such assignee shall assume the Tenant's obligations for the payment of rent and for the full and faithful observance and performance of the covenants, terms and conditions herein contained.
ARTICLE 26 - PAYMENT OF LANDLORD'S EXPENSES
26.1 If at any time an action is brought for recovery of possession of the Demised Premises, or the recovery of Rental or any part thereof, or because of a breach by act or omission of any other covenant herein contained on the part of the Tenant, and a breach is established, the Tenant shall pay to the Landlord all expenses incurred by the Landlord in the enforcement of its rights and remedies hereunder.
ARTICLE 27 - LANDLORD'S RIGHT TO RELET
IN CASE OF VACANCY
27.1 In case the Demised Premises shall be deserted or vacated, the Landlord shall have the right, if it thinks fit, to enter the same, as the agent of the Tenant either by force or otherwise without being liable to any prosecution therefor, and to relet the Demised Premises as the agent and at the risk of the said Tenant and to receive the Rental therefor.
ARTICLE 28 - TRANSFERS OF SHARES OF TENANT
28.1 If the Tenant is a corporation or if this lease is assigned as aforesaid with or without the consent of the Landlord to a corporation, and if any time during the Term of Lease any part or all of the corporate shares or voting rights of shareholders shall be transferred by sale, assignment, bequest, inheritance, trust, operation of law or other disposition, or treasury shares by issued so as to result in a change in the control of said corporation by reason of ownership of greater than fifty (50%) percent of the voting shares of the corporation or otherwise, then and so often as such a change of control shall occur, the Tenant shall notify the Landlord in writing of such changes and the Landlord shall have the right to terminate this Lease and the Term of Lease at any time after such change of control by giving the Tenant sixty (60) days prior written notice of such termination. This Article 28.01 shall not apply to the Tenant if on and from the date of this Lease the control of the Tenant is represented by shares listed on a recognized security exchange.
ARTICLE 29 - SHARE RECORDS
29.1 The Tenant shall, upon request of the Landlord, make available to the Landlord from time to time for inspection or copying or both, all books and records of the Tenant which, alone or with other data, show the applicability or inapplicability of Article 28.01. If any shareholder of the Tenant shall, upon request of the Landlord, fail or refuse to furnish to the Landlord any data verified by the Affidavit of such shareholder or other credible person, which data alone or with other data
show the applicability or inapplicability of Article 28.01, then the Landlord may terminate this lease on sixty (60) days notice as aforesaid.
ARTICLE 30 - RULES AND REGULATIONS
30.1 The Tenant and its clerks, servants and agents will at all times during the occupancy of the Demised Premises observe and conform to such reasonable rules and regulations as shall and may be made from time to time by the Landlord and any such rules and regulations so made shall be deemed to be incorporated in and form part of this Lease;
ARTICLE 31 - INDEMNIFICATION OF LANDLORD
31.1 The Tenant shall indemnify the Landlord and save it harmless from and against any and all loss (including loss of rentals payable by the Tenant pursuant to this Lease), claims, actions, damages, liability and expense in connection with loss of life, personal injury or damage to property arising from any occurrence in, upon or at the Demised Premises, or the occupancy or use by the Tenant of the Demised Premises or any part thereof, or occasioned wholly or in part by any act or omission of the Tenant, its agents, contractors, employees, servants, licensees, concessionaires or invitees, or by anyone permitted to be on the Demised Premises by the Tenant. In case the Landlord shall, without fault on its part, be made a party to any litigation commenced by or against the Tenant, or by reason of any act or omission of the Tenant, its agents, contractors, employees, servants, licensees, concessionaires or invitees, or by anyone permitted to be on the premises by the Tenant, then the Tenant shall protect and hold the Landlord harmless and shall pay all costs, expenses and reasonable legal fees incurred or paid by the Landlord in connection with such litigation.
ARTICLE 32 - NAME OF BUILDING
32.1 The Tenant shall not refer to the Building by any name other than that designated from time to time by the Landlord nor use such name for any purpose other than that of the business address of the Tenant, provided that the Tenant may use the municipal number of the Building assigned to it by the Landlord instead of the name of the Building;
ARTICLE 33 - ACCEPTANCE OF PREMISES
33.1 The Tenant shall examine the Demised Premises before taking possession hereunder and unless the Tenant furnishes the Landlord with a notice in writing specifying any defect in the construction of the Demised Premises or otherwise within ten (10) days after such taking of possession, the Tenant shall
conclusively be deemed to have examined the Demised Premises and to have found them in order, and such taking of possession without giving the notice aforesaid within such ten (10) days shall be conclusive evidence as against the Tenant that at the commencement date the Demised Premises were in good order and satisfactory condition, subject only to latent defects, if any. The Tenant agrees that there is no promise, representation or undertaking by or binding upon the Landlord with respect to any alteration, remodelling or redecoration of or installation of equipment or fixtures in the Demised Premises, except such, if any as are expressly set forth in this Lease.
ARTICLE 34 - RIGHT OF TERMINATION
34.1 The Tenant further covenants and agrees that on the Landlord's becoming entitled to re-enter upon the Demised Premises under any of the provisions of this Lease, the Landlord in addition to all other rights shall have the right to determine forthwith this Lease and the Term of Lease by giving notice in writing addressed to the Tenant of its intention to do so and thereupon rent shall be computed apportioned and paid in full to the date of such determination of this Lease, and any other payment for which the Tenant is liable under this Lease shall be paid and the Tenant shall forthwith deliver up possession of the Demised Premises to the Landlord and the Landlord may re-enter and take possession of the same;
ARTICLE 35 - OVERHOLDING
35.1 If the Tenant shall continue to occupy the Demised Premises after the expiration of this Lease or without the consent of the Landlord and without any further written agreement, the Tenant shall be a monthly tenant at double the rent herein reserved, pro rated in relation to the periods of time during which the Tenant is an overholding tenant, and on the terms and conditions herein set out except as to length of tenancy;
ARTICLE 36 - DIRECTORY BOARD
36.1 INTENTIANALLY OMITTED.
ARTICLE 37 - ACCRUAL OF RENT
37.1 Rent shall be considered as annual and accruing from day to day, and where it becomes necessary for any reason to calculate such rent for an irregular period of less than one year, an appropriate apportionment and adjustment shall be made. Where the calculation of any additional rental is not made until after the termination of this Lease, the obligation of the Tenant to pay such additional rental shall survive the termination of
this Lease and such amounts shall be payable by the Tenant upon demand by the Landlord;
ARTICLE 38 - TRANSFER BY LANDLORD
38.1 In the event of a sale, transfer or lease by the Landlord of the Building or a portion thereof containing the Demised Premises or the assignment by the Landlord of this Lease or any interest of the Landlord hereunder, the Landlord shall, without further written agreement, to the extent that such purchaser, transferee or lessee has become bound by the covenants and obligations of the Landlord hereunder, be freed, released and relieved of all liability or obligations under this Lease;
ARTICLE 39 - LAWS OF PROVINCE APPLY
39.1 This Lease shall be deemed to have been made in and shall be construed in accordance with the laws of the Province of British Columbia;
ARTICLE 40 - LEASE ENTIRE AGREEMENT
40.1 The Tenant acknowledges that there are no covenants, representations, warranties, agreements or conditions, expressed or implied, collateral or otherwise, forming part of or in any way affecting or relating to this lease or the Demised Premises, save as expressly set out in this Lease and that this Lease, including the Schedules attached and the Rules and Regulations, constitutes the entire agreement between the Landlord and the Tenant and may not be modified except as herein explicitly provided or except by subsequent agreement in writing of equal formality hereto executed by the Landlord and the Tenant and the Covenantor, if any. Notwithstanding the foregoing the Tenant shall remain liable to pay for those improvements in the Demised Premises which have been made by the Landlord for or on behalf of the Tenant and which are in excess of the work otherwise required to be done by the Landlord, and the Landlord's fee for supervision and overhead;
ARTICLE 41 - REGISTRATION
41.1 The Tenant covenants and agrees that the Landlord shall not be obliged to execute or deliver this Lease in form registerable under the Land Title Act or any other statute in pari materia therewith and that any requirement to produce plans acceptable to the Vancouver Land Title Office shall be at the cost and the sole responsibility of the Tenant;
ARTICLE 42 - INTERPRETATION
42.1 Unless the context otherwise requires, the word "Landlord" wherever it is used herein shall be construed to include and shall mean the Landlord, its successors and/or assigns, and the word "Tenant" shall be construed to include and shall mean the Tenant, and the executors, administrators successors and/or assigns of the Tenant and when there are two or more tenants, or two or more persons bound by the Tenant's covenants herein contained, their obligations hereunder shall be joint and several; the word "Tenant" and the personal pronoun "it" relating thereto and used therewith shall be read and construed as "Tenants", and "his", "her", "its" or "their" respectively, as the number and gender of the party or parties referred to each require and the number of the verb agreeing therewith shall be construed and agree with the said word or pronoun so substituted. Time shall be of the essence in respect hereunder;
ARTICLE 43 - SEVERABLE
43.1 The Landlord and the Tenant agree that all of the provisions of this Lease are to be construed as covenants and agreements as though the words importing such covenants and agreements were used in each separate provision hereof. Should any provision or provisions of this Lease be illegal or not enforceable, it or they shall be considered separate and severable from this Lease and its remaining provisions shall remain in force and be binding upon the parties hereto as though the said provision or provisions had never been included;
ARTICLE 44 - CAPTIONS
44.1 The captions appearing within the body of this- Lease have been inserted as a matter of convenience and for reference only and in no way define, limit or enlarge the scope or meaning of this Lease or of any provision hereof;
ARTICLE 45 - MISCELLANEOUS COVENANTS
45.1 During the Term of Lease, or any renewal thereof, the Tenant shall not suffer or permit any builders' or other liens or encumbrances for work, labor, services or material to be filed against or attached to the Demised Premises or any portion thereof, and if any such lien or encumbrance be filed or registered, the Tenant shall procure discharge of the same within twenty (20) days after the same has come to its notice or attention; provided that if the Tenant in good faith desires to contest the amount or validity of any claim for which a lien is registered and so notified the Landlord, and if the Tenant shall have deposited with the Landlord or paid into Court in any action
with respect to such lien the amount claimed plus a reasonable amount for costs, the Tenant may thereupon defer payment of such claim or discharge of such lien for such period as is reasonably necessary to determine the claim, provided that neither the Demised Premises nor the Tenant's leasehold interest hereunder may be allowed to become liable to forfeiture or sale by reason or such deferment;
45.2 Subject to the provisions of Article 15 hereof, upon termination of this Lease for any reason whatever, except upon the sale of the said Lands and the Buildings by the Landlord to the Tenant, the Tenant shall surrender to the Landlord the Demised Premises and all Building Equipment upon the Demised Premises, together with all alteration and replacements and additions thereof (except the Tenant's Equipment) in good order, condition and repair;
45.3 The Landlord shall have the right to transfer Title to the Demised Premises at any time or assign its interest under this Lease Agreement;
45.4 In the event the Tenant enters into any sublease the Tenant shall not collect rental from the sublessee more than one month in advance of the due date thereof;
45.5
45.6 It is agreed by and between the parties hereto that the Landlord may mortgage the Demised Premises, the said mortgage to be registered in priority to this Lease, and the Tenant covenants and agrees to execute postponements of any encumbrances it may place upon the Title to the Demised Premises to protect its interest under the Lease for the purpose of allowing any such mortgagee to have priority over any encumbrance the Tenant may register as aforesaid and it is further agreed that the Landlord may assign the rents hereunder to such mortgagee and notice to that effect, signed by the Landlord, shall be sufficient authority for the Tenant to pay the rent, or such portion thereof as is assigned to the mortgagee and the receipt of the mortgagee shall be a full and adequate discharge to the Tenant for such payment;
45.7 The failure of either party to insist upon strict performance of any covenant or condition contained in this Lease or to exercise any right or option hereunder shall not be construed as a waiver or relinquishment for the future of any such covenant, condition, right or option; the acceptance of any rent from or the performance of any obligation hereunder by a person other than the Tenant shall not be construed as an admission by the Landlord of any right, title or interest or such
person as a sublessee, assignee, transferee or otherwise in the place and stead of the Tenant;
45.8 Any notice required or permitted to be given shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed by prepaid mail as follows:
TO THE LANDLORD: c/o P.F.C. MANAGEMENT CO. LTD.,
#15 - 5763 OAK STREET,
VANCOUVER, B.C., V6M 2V7
TO THE TENANT: JAVA GROUP INC.
#404 - 999 Canada Place
Vancouver, B.C., V6E 3E2
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TO THE COVENANTOR:
or to such other address as the respective parties may in writing advise and any such notice shall be deemed to have been given and received, if delivered when delivered, and if mailed, forty-eight (48) hours following the mailing thereof in British Columbia, Saturdays, Sundays, holidays and days during interruption of ordinary mail services excepted;
45.9 The Tenant hereby accepts this Lease subject to the conditions, restrictions and covenants herein set forth and implied;
45.10 This Lease may be executed in several counterparts, each of which shall be deemed an original and which together shall constitute one and the same instrument;
45.11 Wherever the singular or masculine or neuter are used in this Lease, the same shall be construed to include the plural, neuter, feminine or body corporate where the context so requires, or where necessary to have application to a party hereto and this Lease shall be read with all necessary grammatical and terminological changes thereby rendered necessary;
45.12 This Lease and the covenants and agreements herein contained shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, legal personal representatives, successors and permitted assignees and sublessees;
45.13 Time shall be of the essence of this Lease and each provision
hereof;
45.14 INTENTIONALLY OMITTED.
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45.15 Nothing herein contained shall be construed as creating the
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relationship of principal and agent, or of partners or joint venturers between the parties hereto, the only relationship being that of Landlord and Tenant;
45.16 No debris, garbage, trash or refuse shall be placed or left or be permitted to be placed or left in, on or upon any part of the Common Areas outside of the Demised Premises, but shall be deposited by the Tenant in areas and at times in a manner specifically designated by the Landlord from time to time; should any of the items herein mentioned be of a perishable nature, the same shall be kept in a properly refrigerated area provided at its cost by the Tenant; should there be costs for removal of said items additional to the removal service provided by the City of Vancouver or any independent disposal services should the City of Vancouver or such independent disposal service charge additional costs for such service, then the Tenant shall pay those costs;
ARTICLE 45A LETTER OF CREDIT
The Tenant agrees to provide an unconditional and irrevocable bank letter of credit for Six Thousand Dollars ($6,000.00) to the Landlord for the Full Term of the Lease. In the event the Tenant defaults with respect to any of the terms and conditions of this Lease, the Landlord may terminate this Lease Agreement and draw against such Letter of Credit on account of damages and not penalty without prejudice to any other remedy.
ARTICLE 46 - OPTION TO RENEW
46.1 The "Tenant", provided it is not in default hereunder shall have the option of renewing this-Lease for ONE (1) further term of FIVE (5) years, all terms of the renewal lease to be the same as this Lease with the exception of this option to renew which shall be deleted, and with the further exception of the amount of rent to be paid. This option to renew shall be exercised by the Tenant serving written notice exercising the option upon the Landlord in the manner for serving written notice provided in this Lease. Notice of intention to exercise such option shall be given by the Tenant to the Landlord six (6) months prior to the expiration of the term hereunder.
46.2 Should the Tenant serve written notice exercising the option in the previous sub-clause, the Landlord- and Tenant shall negotiate with the aim of agreeing on the amount of rent to be paid during the FIRST (1st) FIVE (5) year option term. Should the Landlord and Tenant be unable to reach an agreement, either party may submit the question of what would be a proper market value for the rent to be paid during the FIVE (5) option years of the Lease to arbitration pursuant to the Arbitration Act of British Columbia. Until such time as the parties agree to a
renewal rental amount or until an arbitrator renders a decision following an arbitration, the Tenant shall pay rent equal to the rent payable during the last year of the Lease prior to renewal plus fifteen (15%) percent.
* INDEMNITY CLAUSE COMES OUT IF NO COVENANTOR
ARTICLE 47 - INDEMNITY
47.1 In consideration of the Landlord entering into this Lease and of other good and valuable consideration (the receipt and sufficiency of which are acknowledged by the Covenantor), the Covenantor covenants and agrees with the Landlord as follows:
(a) the Covenantor will at all times and from time to time indemnify and keep indemnified and save harmless from any and all losses, costs, damages and expenses and costs of all distresses, actions, proceedings, claims and demands incurred or made by the Landlord if, during the Term of Lease, the Landlord does not receive rent and all other moneys from time to time payable by the Tenant pursuant to any provision of the Lease for such period which, if the Lease were in full force and effect and good standing, would be payable under the Lease;
(b) if the Tenant makes any default, whether in payment when due of any rent or other moneys payable under the Lease or in duly performing, observing or fulfilling any other obligation of the Tenant under the Lease, the Covenantor will forthwith upon the demand of the Landlord pay to the Landlord any rent or other moneys due and all damages that may arise consequent upon the default by the Tenant in payment thereof or in the due performing, observing and fulfilling of any such obligation;
(c) the Covenantor will be bound with the Tenant to the Landlord for the performance of the Tenant's obligations under the Lease, and the liability of each will be that of a direct and primary obligor and as an indemnifier and not merely that of a surety;
(d) if the Tenant makes default under the Lease, the Landlord may proceed against the Covenantor as if it were the Tenant, without waiving any of its rights against the Tenant, and without any requirement that the Landlord shall first have
proceeded against the Tenant or had recourse to or any security, guarantee or other indemnity or covenant or any other recourse of remedy of the Landlord in respect of such default by the Tenant;
(e) the obligations of the Covenantor and rights of the Landlord hereunder will not be affected or in any way prejudiced or impaired by any neglect or forbearance of the Landlord in enforcing performance by the Tenant of any of its obligations under the Lease, or by any delays by the Landlord in enforcing any of such obligations, or by granting by the Landlord to the Tenant of any extension or extensions of time, or by any waivers by the Landlord of any of the Tenant's obligations (except insofar as any particular default shall have been expressly waived), or by any assigning or subletting or other dealings by the Tenant with the Lease or the premises whether with or without the consent or privity of the Landlord, or by any want of notice to the Covenantor or by any dealings between the Landlord and the Tenant with or without notice to the Covenantor whereby the obligations and rights respectively of either or both of the Landlord and the Tenant under the Lease are amended or modified, or by any other act or failure to act by the Landlord which would release, discharge or affect the obligations of the Covenantor if they were mere sureties, and with the intent that this indemnity given by the Covenantor will not be released, discharged or affected or the rights of the Landlord hereunder in any way impaired until such time as all of the obligations of the Tenant under the Lease, now existing or to arise at any time in the future, have been fully performed and satisfied;
(f) the obligations of the Covenantor hereunder will not be released, discharged or affected by the bankruptcy or insolvency of the Tenant or of any other Covenantor or guarantor or any disclaimer by any trustee in bankruptcy of the Tenant, or by the Tenant ceasing to exist (whether by winding-up, forfeiture, cancellation or surrender of charter, or any other circumstance) or by any event terminating the Lease including a termination effected by the Landlord under any provision of Article 15 of of the Lease (except a termination occurring pursuant to Article 12) and if a termination shall occur under any provision of
Article 15 of the Lease the Landlord shall have the option to require the Covenantor to enter into a lease of the premises as a tenant upon the same terms as the Lease for the then unexpired residue of the expressed term of the Lease;
(g) the Covenantor's obligations hereunder may be assigned by the Landlord, and will benefit and be enforceable by the successors and assigns of the Landlord;
ARTICLE 48 - EXPROPRIATION
48.1 In the event the Demised Premises or any part thereof shall be expropriated or otherwise taken by virtue of any like power, the rights, duties and obligations of the Landlord and Tenant arising from the apportionment between the Landlord and the Tenant of the compensation or damages which may be awarded shall be determined, if they cannot agree, by arbitration under the provisions of the COMMERCIAL ARBITRATION ACT of the Province of British Columbia, or such similar statute as may be enforced if the said COMMERCIAL ARBITRATION ACT shall have been repealed, taking into consideration the quantity and value of the Land or Lands and Buildings taken, the extent of the injury thereby caused to the Buildings, the cost of restoring the Buildings and the value of the Buildings restored, the unexpired portion of the Term of Lease and all other facts and circumstances which the arbitrator may deem material, and with full power and authority to determine amongst other things as they deem just and equitable, any one or more of the following matters:
(a) that the Landlord on any such partial taking shall at its own expense repair, restore, rebuild or reconstruct the Building;
(b) that such damage or compensation shall be apportioned between the Landlord and the Tenant or be paid to either one of them;
(c) that the whole or any part of the rent shall be abated from the time of the taking thenceforth or for any lesser time;
(d) that the Lease shall be otherwise modified; or
(e) that the Lease shall determine;
and to award and direct specific performance of any one or more of the said or other matters, which they shall determine to the end that the right, duties and obligations of the Parties having due regard to their respective interests as set forth in this
Lease shall be fully, justly, equitably and finally determined upon all facts and circumstances as they shall then exist;
ARTICLE 49 - ESTOPPEL CERTIFICATE
49.1 The Tenant covenants with the Landlord to provide upon the request of the Landlord an estoppel certificate binding upon the Tenant, confirming:
(a) that the Tenant has accepted possession of the Demised Premises and that installments of rent hereunder are then due and payable from month to month;
(b) whether or not the Landlord has carried out its obligations hereunder;
(c) that the Lease constitutes the entire agreement in relation to use and occupation of the Demised premises between the Tenant and the Landlord, and;
(d) such other matters as the Landlord may reasonably require;
IN WITNESS WHEREOF that parties hereto have hereunto set their hands and seals and affixed their respective corporate seals, duly attested by their proper officers authorized in that behalf, all as of the day and year first above written.
SIGNED, SEALED AND DELIVERED
by the Landlord in the
presence of:
/S/
- -------------------------------- ----------------------------
YORKSON INVESTMENT CO.
Authorized Signatory
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SIGNED, SEALED AND DELIVERED
by the Tenant in the presence of:
/S/
- -------------------------------- ----------------------------
JAVA GROUP INC.
Authorized Signatory
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SIGNED, SEALED & DELIVERED
by the Covenantor in the
presence of:
MAP OF PREMISES
SCHEDULE A
Preamble
1. Definitions 1
2. Grant of Lease 6
3. Term of Lease 7
4. To Operate during the term 7
5. Rent 7
6. Additional Rent 9
7. Tenant's Equipment 12
8. Insurance 13
9. Repairs 16
10. Structural Defects 17
11. Changes, Alterations and Additions 17
12. Damage or Destruction 18
13. Use of the Demised Premises 19
14. Certain Rights and Duties of 20 the Landlord
15. Conditional Limitations, 20 Default Provisions
16. Distress 22
17. Voidance of Lease 22 Vacant or Improper Use
18. Water and Gas Damage 23
19. Water 23
20. Signs 23
21. Illumination of Display Windows 23
22. No Abatement of Rent 24
23. Right to Show Premises 24
24. Assignment, Subletting, Parting with Possession 24
25. Landlord's Rights 24
26. Payment of Landlord's Expenses 26
27. Landlord's Right to Let in Case 26 of Vacancy
28. Transfer of Shares of Tenant 26
29. Share Records 26
30. Rules and Regulations 27
31. Indemnification of Landlord 27
32. Name of Building 27
33. Acceptance of Premises 27
34. Right of Termination 28
35. Overholding 28
36. Directory Board 28
37. Accrual of Rent 28
38. Transfer by Landlord 29
39. Laws of Province Apply 29
40. Lease Entire Agreement 29
41. Registration 29
42. Interpretation 30
43. Severable 30
44. Captions 30
45. Miscellaneous Covenants 30
45A. Letter of Credit 33
46. Option to Renew 33
47. Indemnity 34
48. Expropriation 36
49. Estoppel Certificate 37
Signatures 37
Schedule "A" Demised Premises 38
[Letterhead]
May 7, 1996
Board of Directors
Java Group, Inc.
404-999 Canada Place
Vancouver, B.C. V6C 3E2
Dear Ladies and Gentlemen:
Re: Java Group, Inc.
We consent to the use of our report dated November 3, 1995 on the financial statements of Java Group, Inc., as of June 30, 1995 and 1994 in the Form 10-SB filing.
Yours truly,
ELLIOTT, TULK, PRYCE, ANDERSON
/s/ Don M. Prest Don M. Prest, C.A. Partner |
Encl.
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Name of Subsidiary Jurisdiction of Incorporation - ------------------ ----------------------------- 464431 B.C. Ltd. British Columbia, Canada |