BUSINESS LEASE AGREEMENT
THIS BUSINESS LEASE AGREEMENT ("Agreement" or the "Lease"), shall be effective
as of May 25, 2004 and is made by and between 1614718 Ontario Inc. ("Lessee")
and 1485684 Ontario Limited ("Lessor").
RECITALS
A. Lessor is the owner and operator of that certain nightclub styled The
Sequel (the "Business") located at 00 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx (the
"Premises").
X. Xxxxxx is the lessee of the Business premises ("Premises") and owns or
leases all equipment except leased equipment described in Schedule "B"
("Equipment") and holds all licenses and other rights necessary to conduct the
business operations of the Business (collectively the "Business Assets").
C. Lessee now desires to lease the right to operate the Business and to use
the Business Assets for that purpose and Lessor desires to lease the operations
of the Business to Lessee, all in accordance with the terms and conditions of
this Agreement.
AGREEMENTS
In consideration of the mutual covenants and agreements herein contained, the
parties agree as follows:
1. Recitals.
The recitals set forth in the forepart of this document are incorporated into
this agreement as though fully set forth in this paragraph number 1.
2. Lease.
Lessor hereby leases to Lessee the business operations of the Business and the
right to use the Business Assets for that purpose. Lessee's rights shall
include without limitation the right to possess the Business premises, use all
Business Assets including all licenses and the right to all proceeds of the
business operations subject to Lessee's obligation to make payments to Lessor or
to any third party as set forth herein.
3. Term.
Except as otherwise provided in this Lease, the term of this Lease shall be for
a period of five (5) years, commencing on April 1, 2004 and ending on March 31,
2009, unless sooner terminated pursuant to any provision hereof. In Lessee's
sole discretion, the term may be extended for one additional five (5) year term,
subject to the entering into of the new premises lease and subject to the early
cancellation rights of the Premises Lessor (being Cheong Family Holdings Ltd.
or its successors in title) under the New Premises Lease. All results of
operations of the Business and the proceeds thereof shall accrue to Lessee as of
April 1, 2004. The foregoing notwithstanding, it is understood that the term of
this Agreement has been crafted generally to match the term of the existing
premises lease between the Lessor and the owner of the Premises. The existing
Premises lease is in the process of being replaced by a new premises lease (the
"New Premises Lease") at the present time and its term may run a few months
longer than the term of this
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Agreement. If the term of the new Premises lease
is in fact longer than the term of this Agreement, the term of this Agreement
shall be adjusted to match the term of the New Premises Lease.
4. Rent.
Lessee shall pay to Lessor as rent for the right to operate the Business and to
use the Business assets for that purpose, $5,500.00 CDN per month plus Goods and
Services Tax (GST). The parties agree that Lessee has heretofore paid the
deposit amount and the rent due under this section for the months from the
inception of this Agreement through and including the month of June, 2004. From
the date of the signing of this Agreement, rent shall be due commencing with a
payment to be made on July 1, 2004. Rent payments under this section shall then
be due on the first day of each month thereafter.
5. Deposit.
Lessee shall deposit with Lessor the sum of Eleven Thousand Dollars
CDN($11,000.00 CDN). Said sum shall be held by Lessor as security for the
faithful performance by Lessee of all the terms, covenants, and conditions of
this Lease to be kept and performed by Lessee during the term hereof. If Lessee
defaults with respect to any provision of this lease, including, but not limited
to the provisions relating to the payment of rent, Lessor may (but shall not be
required to) use, apply or retain all or any part of this security deposit for
the payment of any rent or any other sum in default, or for the payment of any
amount which Lessor may spend or become obligated to spend by reason of Lessee's
default, or to compensate Lessor for any other loss or damage which Lessor may
suffer by reason of Lessee's default. If Lessee shall fully and faithfully
perform every provision of this Lease to be performed by it, the security
deposit or any balance thereof shall be returned to Lessee at the expiration of
the Lease term.
6. Utilities.
Lessee shall pay prior to delinquency for all water, gas, heat, light, power,
telephone, sewage, air conditioning and ventilating, scavenger, janitorial,
landscaping and all other materials and utilities supplied to the Premises.
7. Administration of Lessor corporation.
In connection with the operation of the Business, the Lessee shall perform
certain administrative functions in connection with the maintenance of 1485684
Ontario Limited, the Lessor corporation. It is agreed that Lessee shall have
the right but not the obligation to perform such functions and to keep the
Lessor corporation in good standing with all applicable governmental
authorities. Any fees paid by Lessee for such purposes shall be reimbursed to
Lessee by Lessor.
8. Use.
The Premises shall be used and occupied by Lessee for only the purpose of
operating the Business and for no other purposes whatsoever without obtaining
the prior written consent of Lessor. Lessee shall not allow the Premises to be
used for any unlawful or objectionable purpose, nor shall Lessee cause, maintain
or permit any nuisance in, on or about the Premises. Lessee shall not commit or
suffer to be committed any waste in or
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upon the Premises. The Lessee agrees to
comply strictly with the terms of the existing Premises Lease and the New
Premises Lease relating to the permitted use of the Premises.
9. Condition of Premises and Equipment.
By execution of this Lease, Lessee shall be deemed to have accepted the Premises
and the Equipment in the condition existing as of the date of execution. Upon
termination of the Lease, the Premises and the Equipment shall be returned to
Lessor in substantially the same condition as existed upon the date this Lease
was executed, normal wear and tear excepted. Notwithstanding anything to the
contrary in this Agreement, Lessee shall not be liable for the structural
integrity or structural needs of the Premises and shall not be liable to the
Lessor with respect to the maintenance, repair or replacement of the Premises
for anything that the Lessor is not liable for under the existing Premises Lease
or the New Premises Lease. Lessee shall not make alterations to the Premises
without Lessor's prior written consent and Premises Lessor's prior written
consent. The Lessee acknowledges and agrees that to the extent any renovations
are required to the Premises in order to comply with the terms of the New
Premises Lease, all such renovations shall be completed by the Lessee at its
sole cost and expense. To the extent the Lessee requires new or additional
equipment, trade fixtures or other improvements in order to operate the
Business, the same shall be acquired or completed by the Lessee at its sole
expense.
10. Maintenance of Equipment.
The Lessee shall maintain at the Lessee's cost, the equipment in good repair and
operating condition, allowing for reasonable wear and tear. Such costs shall
include labor, material, parts, and similar items.
11. Liquor License.
Pursuant to the requirements of Alcohol and Gaming Commission of Ontario (AGCO),
the Liquor License which constitutes part of the Business Assets will be
transferred to Lessee for the sum of $1.00. Transfer of the license is strictly
to satisfy the requirements of the AGCO, the transfer does not constitute a sale
of the Liquor License and will be transferred back to Lessor at the end of the
Lease or in the event of a default by Lessee. Lessee agrees to pay or make
payment arrangements with the Ontario Minister of Finance any and all Provincial
Sales Tax (PST) accrued and outstanding to the date of this Agreement. Lessee
further agrees to make such payment or payment arrangements as soon as possible
after the date of this Agreement as to comply with the requirements of the AGCO
related to the transfer of the Liquor License. The Lessee additional agrees to
pay all costs in respect of the application fees for transfer of the Liquor
License. Lessee will ensure that the transfer of the Liquor License has been
submitted and in process with the AGCO before the renewal date of the existing
Liquor License held by the Lessor.
12. Representations and Warranties of Lessor.
- Lessor represents that to the best of its knowledge the Liquor License is
currently in full force and effect and not subject to suspension, restriction or
any disciplinary actions by the Alcohol and Gaming Commission of Ontario (AGCO)
and that there are no liens,
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pledges, assignments, transfers or other
encumbrances against the License, except for Permitted Encumbrances.
- Lessor represents it has all right and title to the Equipment as set forth
on Exhibit A, subject to the Permitted Encumbrances.
- The Business has all of the licenses, approvals and permits required for
the active, daily operation of the Business.
- To the best of its knowledge all obligations under the existing lease of
the Premises with respect to the lessee thereof are currently met in full
including without limitation being strictly current on the payment of rent for
the Premises.
- To the best of its knowledge all income taxes and all Goods and Services
Tax (GST) resulting from the operation of the Business that have accrued for any
period prior to the signing date of this Agreement either have been paid or will
be paid by Lessor.
- No Business Assets will be sold or transferred during the term of this
Agreement.
- All persons or entities having a security interest in any of the Business
Assets are set forth on Exhibit C, together with a description of the security
interest (the "Permitted Encumbrances").
- Lessor will satisfy all payments owed to creditors that have security
interests in the Business Assets.
- This Agreement does not violate any other agreement or business
arrangement to which the Lessor is a party or which involves any of the Business
Assets.
..
13. Representations and Warranties of Lessee.
Lessee has the right to enter into this Agreement and no transactions
contemplated under this Agreement will violate any agreement to which Lessee is
a party.
14. Disputes.
Any dispute arising under this Agreement shall be resolved by binding
arbitration conducted in Toronto, Ontario under the rules of the Ontario
Arbitration Association with the prevailing party entitled to reimbursement of
reasonable attorney's fees and costs.
15. Assignment of Leases.
All leases that are now existing to which the Business Assets are subject shall
be assigned to Lessee where possible. If an assignment is not possible, Lessor
shall continue to make the requisite lease payments which payments shall be
reimbursed to Lessor by Lessee. All leases of Business Assets are set forth on
Exhibit B.
16. Assignment of Premises Lease.
Lessor shall assign its interest in the existing Premises lease and the New
Premises Lease (once it is finalized) to Lessee or Lessee shall be added as an
additional lessee to the existing Premises Lease and the New Premises Lease, and
Lessee shall thereupon fulfill all of Lessors obligations under the existing
Premises Lease and the New Premises Lease including the payment of rent. The
Lessee acknowledges receipt of a signed copy of the existing Premises Lease as
well as of the most recent draft of the New Premises lease. Lessor agrees that
is will not finalize the New Premises Lease without the prior written approval
of the Lessee. Lessor agrees to use its best efforts to finalize the New
Premises Lease as early as possible in the term of this Agreement and Lessee
agrees that this
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Agreement shall remain in full force and effect during the
Lessor's efforts of executing a New Premises Lease.
17. Assignment of Business Name and Liquor License.
Lessor shall assign its interest in the use of the business name "Sequel" and
the Liquor License of the Lessor for the consideration of $1.00.
18. Due Diligence.
Notwithstanding anything to the contrary in this Agreement, Lessee shall have
two weeks after the signing hereof to conduct its due diligence with respect to
the Premises, the Business Assets and anything else material to this Agreement.
Lessor agrees to cooperate fully with such review. This Agreement shall not
become binding until after the due diligence period and Lessee issues its
statement in writing that it accepts the Premises and the Business Assets. In
addition, this Agreement shall not be binding upon Lessee until the following
conditions are met:
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- The liquor license is successfully transferred to Lessee.
- A non-compete agreement is entered into between Livestar Entertainment
Group, Inc. and Xxxxxxxx Xxxx.
19. Surrender of Premises.
Except as provided herein, on the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same condition
as when received, ordinary wear and tear excepted, clean and free of debris.
Lessee shall repair any damage to the Premises occasioned by the installation or
removal of Lessee's trade fixtures, furnishings and equipment. Notwithstanding
anything to the contrary otherwise stated in this Lease, Lessee shall leave the
air lines, power panels, electrical distributions systems, lighting fixtures,
space heaters, air conditioning, plumbing and fencing on the Premises in good
operating condition.
20. Liability Insurance.
Lessee shall, at Lessee's expense, obtain and keep in force during the term of
this Lease a policy of comprehensive public liability insurance insuring Lessor
and Lessee against any liability arising out of the ownership, use, occupancy or
maintenance of the Premises and all area appurtenant thereto. The limit of said
insurance shall not, however, limit the liability of the Lessee hereunder.
Lessee may carry said insurance under a blanket policy, providing, however, said
insurance by Lessee shall have a Lessor's protective liability endorsement
attached thereto. If Lessee shall fail to procure and maintain said insurance,
Lessor may, but shall not be required to, procure and maintain same, but at the
expense of the Lessee.
21. Payments in Behalf of Lessor.
It is acknowledged by the parties that in performance of the transactions
contemplated by this Agreement and with respect to the operation of the Business
generally, Lessor may have certain payment obligations from the date of this
Agreement that are necessary for
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the well being of the Business, excluding any
debts and obligations that are the responsibility of the Lessee under any other
provision of this Agreement. In the event any such obligations are not paid by
the Lessor when due, the Lessee shall have the option but not the duty of paying
such obligations in behalf of the Lessor. At the sole discretion of the Lessee
any payments that are not accounted for by the Lessee as expenses of the Lessee
the Lessor shall then repay the Lessee as per one the following actions, taken
solely by the Lessee; a) a promissory note with terms acceptable by the Lessee
or; b) within 30 days of written demand upon the Lessor.
22. Legal Expense Payments in Behalf of Lessor.
Lessee agrees to reimburse Lessor for legal costs incurred by Lessor in
connection with the transactions contemplated by this Agreement, including the
finalization of the New Premises Lease.
23. Payments of Ordinary Trade Payables.
Lessee agrees to take responsibility for the payment of any and all ordinary
trade debts and equipment lease obligations of the Business incurred or accrued
to the date of this Agreement.
24. Abatement of Rent.
If the premises are partially destroyed or damaged and Lessor or Lessee repairs
them pursuant to this Lease, the rent payable under Section 4 hereof for the
period during which such damage and repair continues shall be abated in
proportion to the extent to which Lessee's use of the Premises is impaired.
Except for abatement of rent, if any, Lessee shall have no claim against Lessor
for any damage suffered by reason of any such damage, destruction, repair or
restoration.
25. Liens.
Lessee shall keep the Premises and the property in which the Premises are
situated free from any liens arising out of any work performed, materials
furnished or obligations incurred by Lessee.
26. Assignment and Subletting.
Lessee shall not mortgage, pledge, hypothecate or encumber this Lease or any
interest therein. Lessee shall not assign this Lease or sublet, or suffer any
other person (the agents and servants of Lessee excepted) to occupy or use, the
Premises, or any part thereof, or any right or privilege appurtenant thereto
without the prior written consent of Lessor and Premises Lessor first had and
obtained, which consent shall not be unreasonably withheld. Lessor's or Premises
Lessor's consent to one assignment or subletting shall not be deemed to be a
consent to any subsequent assignment or subletting, nor shall Lessor's or
Premises Lessor's consent release Lessee from any of its obligations under this
Lease unless such consent expressly so provides.
27. Holding Over.
If Lessee remains in possession of the Premises or any part thereof after the
expiration of the term hereof, such occupancy shall be a tenancy from month to
month and a rental in
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the amount equal to 105% of the last monthly rental as per
Section 4 of this Lease, plus all other charges payable hereunder, and upon all
the terms hereof applicable to a month to month tenancy.
28. Authority of Parties.
Each individual executing this lease on behalf of a corporation represents and
warrants that he is duly authorized to execute and deliver this Lease on behalf
of said corporation, in accordance with a duly adopted resolution of the board
of directors of said corporation or in accordance with the by-laws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms.
29. Default.
The occurrence of any one or more of the following events shall constitute a
default and breach of the Lease by Lessee.
(A) The vacating or abandonment of the Premises by Lessee.
(B) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by the
Lessee, where such failure shall continue for a period of thirty (30) days after
written notice thereof by Lessor to Lessee; provided, however, that if the
nature of Lessee's default is such that more than thirty (30) days are
reasonable required for its cure, then Lessee shall not be deemed to be in
default if Lessee commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion.
30. Remedies in Default.
In the event of any material default or breach by Lessee, Lessor may at any time
thereafter, with or without notice or demand and without limiting Lessor in the
exercise of a right or remedy which Lessor may have by reason of such default or
breach:
(A) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor.
(B) Maintain Lessee's right to possession, in which case this Lease
shall continue in effect whether or not Lessee shall have abandoned the
Premises. In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder.
31. General Provisions.
Waiver. The waiver by Lessor of any term, covenant or condition herein
contained shall not be deemed to be a waiver of such term, covenant or condition
on any subsequent breach of the same or any other term, covenant or condition
herein contained. The subsequent acceptance of rent hereunder by Lessor shall
not be deemed to be a waiver of any preceding breach by Lessee of any term,
covenant or condition of this Lease, other
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than the failure of the Lessee to pay
the particular rental so accepted, regardless of Lessor's knowledge of such
preceding breach at the time of the acceptance of such rent.
Notices. All notices and demands which may or are to be required or permitted
to be given by either party to the other hereunder shall be in writing and shall
be hand delivered or shall be sent by mail, postage prepaid.
Headings. The headings of this Lease are not a part of this Lease and
shall have no effect upon the construction or interpretation of any
part hereof.
Successors and Assigns.The covenants and conditions herein contained, subject to
the provisions as to assignment, apply to and bind the heirs, successors,
executors, administrators and assigns of the parties thereto.
Quiet Possession. Upon Lessee paying the rent reserved hereunder and observing
and performing all of the covenants, conditions and provisions on Lessee's part
to be observed and performed hereunder, Lessee shall have quiet possession of
the Premises for the entire term hereof, subject to all the provisions of this
Lease.
Separability. Any provision of this Lease which shall prove to be invalid, void
or illegal shall in no way affect, impair or invalidate any other provision
hereof and such other provision shall remain in full force and effect.
Governing Law. This Agreement and the relationship between the parties hereto
will be governed by and construed in accordance with the laws of the Province of
Ontario.
Counterparts and Facsimile Signatures. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, including any duly executed facsimile or photocopy from facsimile
copies, but all of which shall constitute one and the same Agreement which shall
be binding upon all parties hereto not signatories to the same counterpart.
Further Assurances. The parties agree that each will enter into and execute
other agreements and/or documents and take other actions as reasonably necessary
to implement the transactions contemplated by this Agreement.
The parties hereto have executed this Lease on the date specified immediately
adjacent to their respective signatures.
"LESSOR"
1485684 Ontario Limited
By: /s/ Xxxxxxxx Xxxx Dated: May 25, 2004
---------------------------
Title: President
"LESSEE"
1614718 Ontario Inc.
By: /s/ Xxx Xxxxxxx Dated: May 25, 2004
----------------------------
Title: President
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EXHBITS
A. List of Equipment Assets
B. List of Rented or Leased Equipment
C. List of Persons/Entities with Security Interest in Business Assets
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