U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
|X| Quarterly Report Pursuant to Section 13 or 15(d) of Securities
Exchange Act of 1934 (Fee Required)
For the quarterly period ended June 30, 1997
|_| Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
(No Fee Required)
For the transition period from _______ to _______.
Commission File No. 0-21851
PHARMASYSTEMS HOLDINGS CORP.
----------------------------
(Exact Name of Small Business Issuer in Its Charter)
Colorado 84-1189040
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
7350 NW 7th Street, Suite 104, Miami, Florida 33126
- --------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(305) 267-9500
--------------
(Issuer's Telephone Number, Including Area Code)
EURO-TEL, INC., 2851 South Parker Road, Suite 7520, Aurora, Colorado 80014;
September 30th
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2) has
been subject to such filing requirements for the past 90 days. Yes |X| No |_|
There were 20,000,000 shares of Common Stock outstanding as of August 15,
1997.
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
<PAGE>
PHARMASYSTEMS HOLDINGS CORP.
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PART I - FINANCIAL INFORMATION Page
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. .............3
Condensed Consolidated Balance Sheet ...........................3
Condensed Consolidated Statements of Operations ................5
Condensed Consolidated Statements of Cash Flows ................6
Notes to Condensed Consolidated Financial Statements ...........7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. ....................8
PART II - OTHER INFORMATION ............................................12
ITEM 2(C). CHANGES IN SECURITIES ................................12
ITEM 3(A). DEFAULTS UPON SENIOR SECURITIES ......................13
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS .......13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ........................15
SIGNATURES .......................................................18
2
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PHARMASYSTEMS HOLDINGS CORP.
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, DECEMBER 31,
1997 1996
- -------------------------------------------------------------------------------
ASSETS
CURRENT
Cash $ 39,671 $ 295,910
Accounts receivable, less allowance for doubtful
accounts of $8,000 and $8,000 272,273 197,172
Due from affiliates 39,328
Inventory 558,245 599,868
Prepaid expenses and other current assets 65,039 51,236
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 935,228 1,183,514
Property and equipment, net 200,418 211,336
Loan fees, less $11,264 and $8,046
accumulated amortization 1,611 4,829
Intangible assets, less $24,728 and $17,664
accumulated amortization 187,245 194,309
Non-compete agreements, less $87,500 and $62,500
accumulated amortization 62,500 87,500
Other assets 5,500 10,499
- --------------------------------------------------------------------------------
TOTAL ASSETS $ 1,392,502 $ 1,691,987
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Bank note payable $ 300,000 $ 100,000
Accounts payable 1,347,421 1,377,717
Accrued expenses and other 239,168 178,399
Due to affiliate 164,153 198,199
Current maturities of notes payable 220,000 553,179
Subordinated stockholder loan (non-interest
bearing) 37,641 57,641
- --------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 2,308,383 2,465,135
- --------------------------------------------------------------------------------
Due to stockholder 537,500 537,500
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 2,845,883 3,002,635
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3
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CAPITAL DEFICIT
Common Stock, no par value - 100,000,000 shares
authorized, 20,000,000 and 10,461,892
issued and outstanding
Additional paid-in capital 2,629,057 1,598,346
Deficit (4,082,438) (2,908,994)
- --------------------------------------------------------------------------------
TOTAL CAPITAL DEFICIT (1,453,381) (1,310,648)
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND CAPITAL DEFICIT $ 1,392,502 $ 1,691,987
================================================================================
4
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PHARMASYSTEMS HOLDINGS CORP.
================================================================================
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
------------------------- ---------------------------
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $ 2,340,428 $ 2,616,426 $ 1,160,941 $ 1,068,975
- ---------------------------------------------------------------------------------------
COST OF SALES 1,728,427 2,005,146 869,686 920,142
- ---------------------------------------------------------------------------------------
GROSS PROFIT 612,001 611,280 291,255 148,833
- ---------------------------------------------------------------------------------------
OPERATING EXPENSES
Selling, general
and administrative 1,531,569 1,312,513 646,889 342,554
Compensatory element of
common stock issuance
for services rendered 24,711 24,711
Interest 168,699 222,150 59,465 16,952
Depreciation and
amortization 60,466 50,577 30,233 29,137
- ---------------------------------------------------------------------------------------
Total operating expenses 1,785,445 1,585,220 761,298 388,643
- ---------------------------------------------------------------------------------------
NET LOSS $(1,173,444) $ (973,940) $ (470,043) $ (239,810)
=======================================================================================
Net Loss Per Share $(0.08) $(0.11) $(0.03) $(0.02)
- ---------------------------------------------------------------------------------------
Weighted Average Number
of Common Shares 13,919,019 9,132,846 14,427,180 9,784,288
- ---------------------------------------------------------------------------------------
</TABLE>
5
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PHARMASYSTEMS HOLDINGS CORP.
================================================================================
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $(1,173,444) $ (973,940) $(508,610) $(278,377)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and 60,466 50,557 30,233 29,137
amortization
Changes in operating
assets
and liabilities
Decrease (increase) in:
Accounts receivable (75,101) (24,114) (48,070) 131,683
Due from affiliates 39,328 (90,420) (194,817)
Inventories 41,623 (28,477) 26,576 (58,890)
Prepaid expenses
and other assets (13,803) 135,816 (35,615) 10,296
Increase (decrease):
Accounts payable (30,296) 14,414 111,956 285,041
Accrued expenses and 60,769 (100,085) (21,093) 136,139
other
Due to affiliates (34,046) (169,751) 4,281
Net cash (used in) provided by
operating activities (1,124,504) (440,342) 60,212
INVESTING ACTIVITIES:
Purchases of property and (6,228) (81,885) (3,825) (81,885)
equipment
Increase in other assets (4,999) (14,132) (4,999) (14,132)
Net cash used in investing (11,227) (96,017) (8,824) (96,017)
activities
FINANCING ACTIVITIES:
Net borrowings under bank 200,000 100,000
note payable
Proceeds from issuance of
notes payable 10,067
Repayments of notes payable (343,246) (776,834) (343,246) (367,802)
Proceeds from subordinated
shareholder loan 17,641 17,641
Repayments of subordinated
shareholder loan (20,000) (10,000)
Net proceeds from issuance
of common stock 1,032,671 1,695,125 597,171 411,929
Net cash provided by 879,492 1,035,932 243,925 61,768
financing activities
Net (decrease) increase in cash (256,239) (246,085) (205,241) 25,963
Cash at beginning of period 295,910 246,085 244,912 (25,963)
Cash at end of period $ 39,671 $-0- $ 39,671 $-0-
</TABLE>
6
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PHARMASYSTEMS HOLDINGS CORP.
================================================================================
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited financial statements presented in this Quarterly Report
contain the financial information and results of operation of PharmaSystems Cost
Containment Corp., a privately held company which was merged into the Registrant
on June 20, 1997. Prior to this merger transaction, the Company (then named
"Euro-Tel, Inc.") had no material assets and had conducted no operations. For a
detailed description of these relationships and transactions, a reader should
refer to the Company's Form 8-K filed on July 7, 1997 and Form 8-K/A filed on
July 14, 1997, as well as the descriptions contained elsewhere in this Quarterly
Report.
The accompanying condensed consolidated financial statements should be
read in conjunction with the Company's consolidated financial statements and
notes thereto included in the Company's 8-K/A filed on July 14, 1997.
The condensed consolidated financial statements were prepared from the
books and records of the Company without audit or verification. In the opinion
of management all adjustments which are of a normal recurring nature and
necessary to present fairly the financial position, results of operations and
cash flows for all the periods presented have been made. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted.
The results of operations for the six month period ended June 30, 1997 are
not necessarily indicative of the operating results for the full fiscal year.
The accompanying financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.
PER SHARE DATA
Net loss per common share for each period was computed by retroactively
reflecting mergers, splits and issuances of common shares. 4,997,334 shares of
common stock issued to an affiliate on June 17, 1997, which are being held in
escrow, were not included in the calculation as the conditions for such common
share's release from escrow have not been met.
INVENTORIES
Inventories at June 30, 1997 and December 31, 1996 are comprised of
finished goods.
DUE TO STOCKHOLDER
Due to Stockholder consists of a 10% note payable to a founding
stockholder which is secured by the stock of Lee's Acquisition Corporation, the
parent company of Lee's Prescription Shops, Inc. This debt originates from the
reversal of a capital contribution made in connection with the acquisition of
the retail pharmacy chain. The stockholder has deferred the principal and
interest payments on this obligation until the Company obtains sufficient
funding to begin repayment.
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS.
FORWARD LOOKING STATEMENTS AND ASSOCIATED RISKS. This Quarterly Report
contains forward-looking statements, including statements regarding, among other
things, (a) the Company's growth strategies, (b) anticipated trends in the
Company's industry and (c) the Company's future financing plans. In addition,
when used in this Quarterly Report, the words "believes," "anticipates" and
similar words are intended to identify forward-looking statements. Such
statements are based largely on the Company's expectations and are subject to a
number of risks and uncertainties, many of which are beyond the Company's
control. Actual results could differ materially from these forward-looking
statements as a result of changes in trends in the economy and the Company's
industry, reductions in the availability of financing and other factors. In
light of these risks and uncertainties, there can be no assurance that the
forward-looking statements contained in this Quarterly Report will in fact
occur. The Company does not undertake any obligation to publicly release the
results of any revisions to these forward-looking statements that may be made to
reflect any future events or circumstances.
MERGER.
On June 20, 1997, PharmaSystems Cost Containment Corp., a Florida
corporation ("PHARMASYSTEMS"), was merged (the "MERGER") into the Company. Prior
to the merger, the Company's name was Euro-Tel, Inc. ("EURO-TEL"). Euro-Tel had
no operations and had been formed for the sole purpose of merging with an
operating company such as PharmaSystems. Pursuant to that certain Agreement and
Plan of Reorganization dated June 20, 1997 (the "Merger Agreement"), Euro-Tel
acquired one hundred percent (100%) of the issued and outstanding common stock
of PharmaSystems in consideration for the issuance of 18,000,000 newly issued
shares of Euro-Tel common stock which were issued to the PharmaSystems
shareholders on a pro rata basis in accordance with their respective ownership
interests in PharmaSystems. As a result of the merger, the PharmaSystems
shareholders owned ninety percent (90%) of the issued and outstanding common
stock of Euro-Tel, assuming control from Andrew I. Telsey, with Jose L.
Rodriguez, M.D. controlling, either directly or indirectly, approximately
twenty-eight percent (28%) of the issued and outstanding common stock of
Euro-Tel after the Merger. In addition and concurrently with the Merger,
Euro-Tel (i) acquired all of the assets of PharmaSystems by operation of law
pursuant to the Merger; (ii) changed its corporate name to "PharmaSystems
Holdings Corp."; and (iii) changed its fiscal year from September 30, to
December 31. Each of these matters was duly approved by unanimous written
consent of the shareholders of Euro-Tel.
Since Euro-Tel had conducted no operations, the information contained
herein is primarily that of PharmaSystems, even though PharmaSystems was not a
public reporting company for most of the period to which this Quarterly Report
relates.
GENERAL
PharmaSystems Holdings Corp. (the "COMPANY") is engaged in the business of
selling pharmaceutical products by mail order and through retail outlets owned
and operated by Lee's Prescription Shops, Inc., a wholly owned subsidiary of
Lee's Acquisition Corporation, a wholly owned subsidiary of the Company. Lee's
Prescription Shops, Inc. owns and operates three licensed community pharmacies
in the greater Miami area. . In addition, the Company is developing home care
8
<PAGE>
respiratory and intravenous infusion services through a subsidiary of its
affiliate, Advanced Respiratory Care, Inc.
The Company has identified and focused on three principal areas,
including: (i) the development of a retail pharmacy network through Lee's
Prescription Shops, Inc.; (ii) the development of a mail order distribution
system for pharmacy products; and (iii) the creation and marketing of a private
label brand of vitamins and supplements. In addition, the Company and its
management has devoted a substantial amount of time and energy obtaining
additional capital necessary to finance the Company's operations. With the
exception of the retail pharmacies owned and operated by Lee's Prescription
Shops, Inc., the Company is a "start-up" company which is dependent on external
financing to sustain operations. The Company anticipates raising up to
$4,000,000 in additional capital through the issuance of common stock in a
private placement in the third quarter of this year. The issuance of such common
stock will dilute the percentage ownership and voting rights of existing
shareholders. No assurances can be made that the Company will successfully
complete the private offering.
The Company expects to incur substantial start-up costs which will be in
excess of the revenues generated by the Company. As a result, the Company
expects to incur substantial losses for the foreseeable future and will require
external financing to sustain future operations.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1997 and 1996
The Company's revenues decreased $276,000 or 10.6% in the six month period
ending June 30, 1997 from the comparable six month period in the prior year.
This decrease is attributable, in part, to the closing of two unprofitable
facilities, a mail order facility and Penalver Clinic, an on-site HMO pharmacy.
Both facilities had experienced losses without any foreseeable contributions to
gross profit, and the residual business is being serviced by the retail
pharmacies. In addition, the AlphaNet program, in which the Company had the
exclusive rights to distribute Prolastin, was terminated by the distributor for
lack of adequate financing and credit availability. The Company's cost of goods
sold decreased by a corresponding amount of approximately $277,000 or 13.8%. The
Company had gross profit percentages of 26.2% and 23.4% for the six month
periods ending June 30, 1997 and June 30, 1996, respectively. The higher gross
profit percentage (a 12% increase) in 1997 is attributable to more retail sales
which tend to be more profitable than mail order.
Selling, general and administrative expenses for the six month period
ending June 30, 1997 increased $219,000 (16.7%) to $1,532,000 from $1,313,000
over the comparable period in the prior year. Such costs represent 65.5% and
50.2% of gross revenues in 1997 and 1996, respectively and are attributable, in
large part, to professional fees and costs incurred by the Company in completing
the Merger on June 20, 1997.
Interest expense decreased $53,000 (24.1%) in the six month period ending
June 30, 1997 from the comparable period in the prior year due to the
satisfaction of $343,000 amount of unsecured notes payable.
9
<PAGE>
Depreciation and amortization expense increased $10,000 (19.6%) in 1997
from the 1996 level. This increase is primarily due to the increased
amortization of loan fees, intangible assets and non-compete agreements.
Total operation expenses increased $200,000 (12.6%) in 1997 from the 1996
level. This increase is primarily due to expenses incurred in the Merger. Since
the gross profit between the periods remained almost unchanged, the
aforementioned accounts for the $199,000 (20.4%) increase in the net loss of
$1,173,000 during the six months ended June 30, 1997 from $974,000 for the six
months ended June 30, 1996.
Three Months Ended June 30, 1997 and 1996
The Company's revenues increased $92,000 (8.6%) in the current three month
period from the comparable period in 1996 due to retail prices charged to former
mail order customers, uniformity of pricing between pharmacies and renewed
adheranced to collection of delivery service charge. Cost of sales decreased
$50,000 (5.4%) during the current period from the prior period resulting from
the savings gained by the change in the primary supplier and a minor shift in
the product mix to lower cost substitutes. The reduction in cost of sales as a
percentage of revenues is attributable to the product/customer mix. In the
current period all revenues were generated from the sale of pharmaceutical
products through the retail and mail order outlets and not from fees generated
from the AlphaNet program as in prior periods. The gross profit percentages were
25.1% and 13.9% for 1997 and 1996, respectively. The corresponding 11.2%
difference in gross profit representing an 80.6% increase between the comparable
three month periods is indicative of the higher profitability in the current
product/customer mix.
Selling, general and administrative expenses for the three months ended
June 30, 1997 increased $304,000 (88.6%) to $647,000 from $343,000 in 1996.
These amounts represented 55.7% and 32.1% of revenues in 1997 and 1996,
respectively. The principal reason for the increase in such expenses was due to
the professional fees incurred in the Merger.
Interest expense increased $42,000 (247.1%) in the three month period
ended June 30, 1997 resulting from the acquisition of additional financing which
tripled our note payable to the bank.
Depreciation and amortization increased $1,000 (3.5%) in 1997 from the
1996 expense and decreased as a percent of revenues from 2.7% in 1996 to 2.6% in
1997.
The previously mentioned increase in selling, general and administrative
and interest expenses are the reasons the net loss increased by $230,000 (95.8%)
to $470,000 during the three months ended June 30, 1997 from $240,000 for the
three months ended June 30, 1996.
10
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LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had a working capital deficiency of
$1,373,000 compared to a deficiency of $1,281,000 on December 31, 1996. The
deficiency is due, in part, to the operating losses incurred by the Company
during the interim period ending June 30, 1997. Such losses are the result of
incurring expenses in the development of a retail pharmacy network, establishing
and growing a mail order operation and creating and marketing its private label
brand of vitamins and natural wellness products. Additionally, the Company has
expended approximately $300,000 in connection with the Merger. The Company
believes that the Merger will assist the Company in raising additional capital
and in making future acquisitions, although no assurances can be given.
To finance its operations, the Company has raised capital in three
separate private placements, with net proceeds of approximately $3,200,000.
Additional financing will be necessary for the Company to continue operations
and to achieve its growth plans. The Company anticipates raising approximately
$4,000,000 in additional capital during the third quarter of this year through a
private placement.
The Company's business plan provides for, among other things, (i) the
private placement discussed above; (ii) increases in revenues from its retail
stores and mail order service; (iii) alternative distribution channels for its
vitamins and wellness products; (iv) the reduction of certain expenses; and (v)
alternative sources of financing and capital.
The Company anticipates that some of the proceeds generated from the
proposed private placement will be used to develop the Company's home care
business products and services such as infusion, durable medical equipment and
respiratory services. The Company believes that the home care business is
currently one of the most profitable segments of the healthcare industry.
In order to reduce expenses and thereby conserve financial resources for
carrying out the Company's business plan, the Company's President and Secretary
have voluntarily deferred for an indefinite period of time approximately sixty
seven percent (67%) and one hundred percent (100%) of their base compensation,
respectively. Each of the President and Secretary have reserved the right to (i)
not defer any additional base compensation and (ii) demand payment of any
compensation already deferred at any time without advance notice to the Company
or its shareholders.
11
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PART II
-------
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
2(C) SALES OF UNREGISTERED SECURITIES.
During April, May and June, 1997, PharmaSystems sold the following shares
of its Common Stock in private placement transactions:
PURCHASER DATE AMOUNT NUMBER OF
($) SHARES
Julian Herkowitz April, 1997 $50,000 76,246.53
Jose L. Rodgriguez April, 1997 6,000 9,147.88
Wolverton Securities Ltd. April, 1997 50,000 76,246.52
Rosina Malta April, 1997 10,000 15,248.24
Andreas Hanke April, 1997 35,000 53,371.50
Roberto & Gloria Carreras May, 1997 20,000 30,496.48
Mario & Alina Sabi May, 1997 10,000 15,248.24
Rolando Castro May, 1997 50,000 177,905.89
Marco Rodriguez May, 1997 25,000 38,117.93
Moises Simpser May, 1997 35,000 53,371.15
Francisco Maldonado June, 1997 10,000 15,248.24
Roberto Warman June, 1997 5,250 8,005.73
Alberto Miquel June, 1997 5,250 8,005.73
Jose Azaret June, 1997 10,000 15,248.24
David Brostowiski June, 1997 40,000 60,998.29
Miguel Martinez June, 1997 50,000 76,246.53
Francisco Gonzalez-Abreu June, 1997 10,000 15,248.24
Albert Nassar June, 1997 6,000 9,147.88
Jeff Farno June, 1997 5,000 7,626.79
Mario Copelenko June, 1997 5,000 7,626.79
Yolanda Mattos Barrero June, 1997 5,000 7,626.79
Jose Soto Avila June, 1997 5,000 7,626.79
Layda Mazzorana June, 1997 10,000 15,248.24
Isidro & Reyna Garcia June, 1997 5,000 7,626.79
Raul Cardenas June, 1997 8,000 12,200.72
TOTAL $470,500 819,142.15
======= ==========
All of these issuances of Common Stock were intended to be exempt from
registration as private placement transactions under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to Section 4(2) ("Section 4(2)")
promulgated thereunder.
12
<PAGE>
On June 18, 1997, PharmaSystems issued 4,997,333.66 shares of its Common
Stock to the shareholders of Advanced Respiratory Care, Inc. ("Advanced"), in
exchange for all of the outstanding common stock of Advanced. These shares were
placed into escrow and will be released if Advanced satisfies certain
performance criteria. This issuance of Common Stock was intended to be exempt
from registration as a private placement transaction under the Securities Act
pursuant to Section 4(2) promulgated thereunder.
During June, 1997, PharmaSystems issued 17,791.39 shares of Common Stock
to Julio Cesar Diaz as compensation for certain services rendered. This issuance
of Common Stock was intended to be exempt from registration as a private
placement transactions under the Securities Act pursuant to Section 4(2)
promulgated thereunder.
In connection with the Merger, Euro-Tel issued 18,000,000 shares of its
common stock to the shareholders of PharmaSystems in connection with the Merger.
This issuance of common stock was intended to be exempt from registration as a
private placement transaction under the Securities Act pursuant to Section 4(2)
promulgated thereunder.
Readers of this Quarterly Report must be aware that, for ease of
presentation and to facilitate reader understanding, all of the share amounts
contained in this section have been given in post-Merger form (i.e., giving
effect to the conversion of shares effected in the Merger).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
3(A). The Company is currently in default on the payment of principal and
interest on a loan made by a shareholder to the Company in the original
principal amount of $537,500. The shareholder has deferred the principal and
interest payments on this obligation until the Company obtains sufficient
funding to begin repayment. None of the principal amount of this obligation has
been repaid, and the accrued interest as of the date of this Quarterly Report is
approximately $60,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a)(1) EURO-TEL. Each of the matters briefly described in subpart (c)(1)
hereof were approved by unanimous written consent of the shareholders of
Euro-Tel without a shareholder meeting pursuant to applicable Colorado law.
(2) PHARMASYSTEMS. The matters briefly described in subpart (c)(2) hereof
were approved by at the annual shareholder meeting of PharmaSystems on June 9,
1997.
(b)(1) EURO-TEL. Not applicable.
(2) PHARMASYSTEMS. The following is the name of each director elected at
the PharmaSystems' annual meeting: (i) Jose L. Rodriguez, M.D.; (ii) Aurelio E.
Alonso, C.P.A.; and (iii) Antonio M. Rodriguez, M.D.
(c)(1) EURO-TEL. On June 20, 1997 and as more particularly described
elsewhere in this Quarterly Report, PharmaSystems has merged into the
predecessor of the Registrant, Euro-Tel. In connection therewith, Euro-Tel (i)
acquired all of the assets of PharmaSystems by operation of law pursuant to the
Merger; (ii) changed its corporate name to "PharmaSystems Holdings Corp."; and
(iii) changed its fiscal year from September 30, to December 31. Each of these
matters was duly approved by unanimous written consent of the shareholders of
Euro-Tel.
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(2) PHARMASYSTEMS. The shareholders of PharmaSystems duly approved the
following matters at the annual meeting by the corresponding vote:
Description of Matter
Submitted to Vote Votes For Votes Against Abstentions
- --------------------------------------------------------------------------------
Election of Directors
name in subpart (a) 10,594,798 0 0
hereof
Merger of PharmaSystems
with Euro-Tel
10,594,798 0 0
Transaction with
Advanced Respiratory
Care, Inc. 8,224,319 0 2,370,479
14
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
EXHIBIT
NO. DESCRIPTION LOCATION PAGE
2.1 Agreement and Plan of Incorporated by reference
Reorganization dated to Exhibit No. 2.1 to
June 20, 1997 Registrant's Form 8-K filed
on July 8, 1997
2.2 Plan of Merger dated Incorporated by reference
June 20, 1997 to Exhibit No. 2.2 to
Registrant's Form 8-K filed
on July 8, 1997
2.3 Articles of Merger dated Incorporated by reference
June 20, 1997 to Exhibit No. 2.3 to
Registrant's Form 8-K filed
on July 8, 1997
3.1 Amended and Restated Articles Incorporated by reference
of Incorporation of the Company Exhibit No. 2.1 to the
Registrant's Form 10-SB/A1
filed with the SEC on
February 5, 1997
3.2 By-laws of the Company Incorporated by reference
Exhibit No. 2.2 to the
Registrant's Form 10-SB/A1
filed with the SEC on
February 5, 1997
10.1 Executive Employment Agreement Provided herewith
dated June 19, 1997 by and
between the Company and
Antonio M. Rodriguez
10.2 Executive Employment Agreement Provided herewith
dated June 19, 1997 by
and between the Company and
Aurelio Alonso
10.3 Executive Employment Agreement Provided herewith
dated June 19, 1997 by and
between the Company and Jose
L. Rodriguez, M.D.
10.4 Stock Redemption Agreement Provided herewith
dated June 7, 1997 by and
between the Company, PSI
Holdings, Inc., and
Orlando Lopez-Fernandez,
Jr., M.D.
10.5 Stock Pledge Agreement dated Provided herewith
June 7, 1997 by and
between the Company and PSI
Holdings, Inc.
10.6 Stock Pledge Agreement dated Provided herewith
June 7, 1997 by and between
the Company and Orlando
Lopez-Fernandez, Jr., M.D.
10.7 Intermark Trade Centre Lease Provided herewith
Agreement dated August 1, 1995
by and between Shusho
Investment, Inc. and the
Company
15
<PAGE>
10.8 Promissory Note dated March Provided herewith
25, 1997 given by Lee's
Prescription Shops, Inc., a
wholly owned subsidiary of
Lee's Acquisition Corporation
which is a wholly owned
subsidiary of the Company, to
United National Bank in the
original amount of $300,000
10.9 Letter Agreement effective Provided herewith
June 19, 1997 by and between
Uni, Co. and the Company
10.10 Business Lease dated July 14, Provided herewith
1994 by and between Lee's
Prescription Shops, Inc., a
wholly owned subsidiary of
Lee's Acquisition Corporation,
a wholly owned subsidiary of
the Company, and 2525 Coral
Way Bldg.
10.11 Business Property Lease dated Provided herewith
October 2, 1995 by and
between LBJ Properties and
Lee's Acquisition Corporation,
a wholly owned subsidiary of
the Company
10.12 Lease Agreement dated October Provided herewith
1, 1995 by and between Sanford
I. Rakofsky, M.D. and Lee's
Prescription Shop, Inc., a
wholly owned subsidiary of
Lee's Acquisition Corporation,
a wholly owned subsidiary of
the Company
10.13 Stock Purchase Agreement dated Provided herewith
June 18, 1997 by and among
PharmaSystems Cost Containment
Corp., Jose L. Rodriguez, M.D.
and Maria Rodriguez and Carlos
M. Marin
10.14 Security Agreement dated July Provided herewith
23, 1996 by and between Lee's
Acquisition Corporation, a
wholly owned subsidiary of the
Company, and Lee's
Prescription Shops, Inc., a
wholly owned subsidiary of
Lee's Acquisition Corporation,
and Carlos M. Marin
10.15 Agreement dated July 23, 1996 Provided herewith
by and between the Company,
Lee's Acquisition Corporation,
a wholly owned subsidiary of
the Company, Lee's
Prescription Shops, Inc., a
wholly owned subsidiary of
Lee's Acquisition Corporation
and Carlos M. Marin, Jr.
10.16 Promissory Note and Security Provided herewith
Agreement dated July 23, 1996
given by the Company to Carlos
M. Marin, Jr.
27. Financial Data Schedule Provided herewith
16
<PAGE>
(B) REPORTS ON FORM 8-K.
On July 7, 1997, the Company filed Form 8-K (later amended by Form 8-K/A
filed on July 14, 1997) reporting the following items:
1. CHANGES IN CONTROL OF REGISTRANT. A change in control of the registrant
occurred on June 20, 1997 pursuant to the terms and conditions of that certain
Agreement and Plan of Reorganization (the "MERGER AGREEMENT") dated June 20,
1997 by and among Euro-Tel, Inc., a Colorado corporation ("EURO-TEL"),
PharmaSystems Cost Containment Corp., a Florida corporation ("PHARMASYSTEMS"),
Andrew I. Telsey and Darlene D. Kell which provided for the merger (the
"MERGER") of PharmaSystems with and into Euro-Tel, as the surviving entity,
pursuant to a tax-free reorganization in accordance with Section 354 and 368 of
the Internal Revenue Code of 1986, as amended. Pursuant to the Merger Agreement,
Euro-Tel acquired one hundred percent (100%) of the issued and outstanding
common stock of PharmaSystems in consideration for the issuance of 18,000,000
newly issued shares of Euro-Tel common stock which were issued to the
PharmaSystems shareholders on a pro rata basis in accordance with their
respective ownership interests in PharmaSystems. As a result of the Merger, the
PharmaSystems' shareholders, who own ninety percent (90%) of the issued and
outstanding common stock of Euro-Tel, assumed control of the registrant from
Andrew I. Telsey, with Jose L. Rodriguez, M.D. controlling, either directly or
indirectly, approximately twenty-eight percent (28%) of the issued and
outstanding common stock of the registrant. Upon completion of the Merger,
Euro-Tel assumed the Business (as defined herein) of PharmaSystems.
The foregoing is merely a summary of the Merger consummated on June 20,
1997 and does not purport to be a complete statement of the terms, conditions
and provisions thereof. For a more complete description of the merger, reference
should be made to the Agreement and Plan of Reorganization, Plan of Merger and
Articles of Merger which are attached to Form 8-K filed with the Securities and
Exchange Commission on July 8, 1997.
2. ACQUISITION OR DISPOSITION OF ASSETS. On June 20, 1997, Euro-Tel
acquired all of the assets used to operate the business of PharmaSystems by
operation of law pursuant to the Merger. PharmaSystems was primarily a holding
company for Lee's Prescription Shop, Inc., a Florida corporation and second-tier
subsidiary of PharmaSystems which owns and operates three licensed community
retail pharmacies in the greater Miami area.
3. CHANGE OF CORPORATE NAME. In accordance with the Articles of Merger
by and between Euro-Tel and PharmaSystems dated June 20, 1997, Euro-Tel's
Certificate of Incorporation was amended to reflect a change of its corporate
name to "PharmaSystems Holdings Corp."
4. CHANGE IN FISCAL YEAR. The Company has changed its fiscal year end
from September 30 in each year to December 31, to coincide with the year end
of PharmaSystems.
17
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: August 19, 1997 PHARMASYSTEMS HOLDINGS CORP.
By: /s/ Aurelio E. Alonso
---------------------
Aurelio E. Alonso
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
18
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION LOCATION PAGE
2.1 Agreement and Plan of Incorporated by reference
Reorganization dated to Exhibit No. 2.1 to
June 20, 1997 Registrant's Form 8-K filed
on July 8, 1997
2.2 Plan of Merger dated Incorporated by reference
June 20, 1997 to Exhibit No. 2.2 to
Registrant's Form 8-K filed
on July 8, 1997
2.3 Articles of Merger dated Incorporated by reference
June 20, 1997 to Exhibit No. 2.3 to
Registrant's Form 8-K filed
on July 8, 1997
3.1 Amended and Restated Articles Incorporated by reference
of Incorporation of the Company Exhibit No. 2.1 to the
Registrant's Form 10-SB/A1
filed with the SEC on
February 5, 1997
3.2 By-laws of the Company Incorporated by reference
Exhibit No. 2.2 to the
Registrant's Form 10-SB/A1
filed with the SEC on
February 5, 1997
10.1 Executive Employment Agreement Provided herewith
dated June 19, 1997 by and
between the Company and
Antonio M. Rodriguez
10.2 Executive Employment Agreement Provided herewith
dated June 19, 1997 by
and between the Company and
Aurelio Alonso
10.3 Executive Employment Agreement Provided herewith
dated June 19, 1997 by and
between the Company and Jose
L. Rodriguez, M.D.
10.4 Stock Redemption Agreement Provided herewith
dated June 7, 1997 by and
between the Company, PSI
Holdings, Inc., and
Orlando Lopez-Fernandez,
Jr., M.D.
10.5 Stock Pledge Agreement dated Provided herewith
June 7, 1997 by and
between the Company and PSI
Holdings, Inc.
10.6 Stock Pledge Agreement dated Provided herewith
June 7, 1997 by and between
the Company and Orlando
Lopez-Fernandez, Jr., M.D.
10.7 Intermark Trade Centre Lease Provided herewith
Agreement dated August 1, 1995
by and between Shusho
Investment, Inc. and the
Company
19
<PAGE>
10.8 Promissory Note dated March Provided herewith
25, 1997 given by Lee's
Prescription Shops, Inc., a
wholly owned subsidiary of
Lee's Acquisition Corporation
which is a wholly owned
subsidiary of the Company, to
United National Bank in the
original amount of $300,000
10.9 Letter Agreement effective Provided herewith
June 19, 1997 by and between
Uni, Co. and the Company
10.10 Business Lease dated July 14, Provided herewith
1994 by and between Lee's
Prescription Shops, Inc., a
wholly owned subsidiary of
Lee's Acquisition Corporation,
a wholly owned subsidiary of
the Company, and 2525 Coral
Way Bldg.
10.11 Business Property Lease dated Provided herewith
October 2, 1995 by and
between LBJ Properties and
Lee's Acquisition Corporation,
a wholly owned subsidiary of
the Company
10.12 Lease Agreement dated October Provided herewith
1, 1995 by and between Sanford
I. Rakofsky, M.D. and Lee's
Prescription Shop, Inc., a
wholly owned subsidiary of
Lee's Acquisition Corporation,
a wholly owned subsidiary of
the Company
10.13 Stock Purchase Agreement dated Provided herewith
June 18, 1997 by and among
PharmaSystems Cost Containment
Corp., Jose L. Rodriguez, M.D.
and Maria Rodriguez and Carlos
M. Marin
10.14 Security Agreement dated July Provided herewith
23, 1996 by and between Lee's
Acquisition Corporation, a
wholly owned subsidiary of the
Company, and Lee's
Prescription Shops, Inc., a
wholly owned subsidiary of
Lee's Acquisition Corporation,
and Carlos M. Marin
10.15 Agreement dated July 23, 1996 Provided herewith
by and between the Company,
Lee's Acquisition Corporation,
a wholly owned subsidiary of
the Company, Lee's
Prescription Shops, Inc., a
wholly owned subsidiary of
Lee's Acquisition Corporation
and Carlos M. Marin, Jr.
10.16 Promissory Note and Security Provided herewith
Agreement dated July 23, 1996
given by the Company to Carlos
M. Marin, Jr.
27. Financial Data Schedule Provided herewith
20
EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is made in Miami,
Florida effective as of June 19, 1997, by and between PHARMASYSTEMS COST
CONTAINMENT CORP., a Florida corporation (the "Company") and ANTONIO M.
RODRIGUEZ (the "Executive") who hereby agree as hereinafter provided.
SECTION 1. Definitions. As used herein, the following terms shall have
the meanings set forth below.
"AFFILIATE" shall have the meaning ascribed thereto by Rule 144
promulgated under the Securities Act of 1933, as amended.
"BASE COMPENSATION" shall have the meaning set forth in Section 5(a).
"BOARD OF DIRECTORS" means the incumbent directors of the Company as of
the point in time reference thereto is made in this Agreement.
"CAUSE" shall have the meaning set forth in Section 10(b).
"COMPETITIVE BUSINESS" shall have the meaning set forth in Section
9(a).
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
9(c).
"DISABILITY" of the Executive means that, as a result of the
Executive's incapacity due to physical or mental illness, the Executive shall
have been absent from his duties on a full time basis for one hundred eighty
(180) consecutive days during a consecutive twelve (12) month period, and a
physician selected by the Executive is of the opinion that (a) he is suffering
from "total disability" and (b) he will qualify for Social Security Disability
Payments and (c) the Executive is not performing his duties on a full-time basis
within thirty (30) days after written Notice of Termination (as defined herein)
is given by the Company to the Executive (which notice may be given at any time
after the end of such one hundred eighty (180) day period). (If the Executive is
prevented from performing his duties because of Disability, upon request by the
Company the Executive shall submit to an examination by a physician selected by
the Company, at the Company's expense, and the Executive shall also authorize
his personal physician to disclose to the selected physician all of the
Executive's medical records). In the event that the Executive's and the
Company's physician disagree as to whether the condition of the Executive
constitutes "total disability" then such dispute shall be resolved by an
independent physician specializing in the Executive's ailment jointly selected
by the Executive and the Company, whose determination shall, absent manifest
error, be final and binding upon the parties. Any expenses incurred by the
parties in connection with the engagement of an independent physician in
connection herewith shall be equally borne by the parties.
"EMPLOYMENT COMMENCEMENT DATE" means the effective date of this
Agreement.
"EMPLOYMENT PERIOD" means that period commencing on the Employment
Commencement Date and ending on the Employment Termination Date.
"EMPLOYMENT TERMINATION DATE" means the date the Employment Period
terminates as provided in Section 10.
<PAGE>
"FISCAL YEAR" means the fiscal year of the Company.
"INCENTIVE BONUS COMPENSATION" shall have the meaning set forth in
Section 5(b).
"NOTICE OF TERMINATION" shall have the meaning set forth in Section
10(a)(1).
"RESTRICTED PERIOD" shall have the meaning set forth in Section 9(a).
"SCHEDULED EMPLOYMENT TERMINATION DATE" means the later of (a) the day
immediately preceding the fifth anniversary of the Employment Commencement Date
or (b) such date as is specified by either the Company or the Executive in a
Notice of Termination delivered for the purpose of fixing the scheduled
Employment Termination Date.
SECTION 2. EMPLOYMENT AND TERM. The Company hereby employs the
Executive, and the Executive hereby accepts such employment by the Company, for
the purposes and upon the terms and conditions contained in this Agreement. The
term of such employment shall be for the Employment Period.
SECTION 3. EMPLOYMENT CAPACITY AND DUTIES. The Executive shall be
employed throughout the Employment Period as a Vice President of Marketing for
the Company. The Executive shall have the duties and responsibilities incumbent
with such position, subject to the direction of the Company's Board of
Directors. Nothing in this Agreement shall preclude the Executive from devoting
a reasonable amount of time and effort to civic, charitable and professional
affairs and matters.
SECTION 4. EXECUTIVE PERFORMANCE COVENANTS. The Executive accepts the
employment described in Section 3 hereto and agrees to devote his full working
time and efforts (except for absences due to illness and appropriate vacations
and as provided in Section 3) to the business and affairs of the Company and the
performance of the aforesaid duties and responsibilities.
SECTION 5. COMPENSATION. The Company shall pay to the Executive for his
services hereunder, the compensation hereinafter provided in this Section 5.
Such compensation shall be paid to the Executive at the time and in the manner
as provided below.
(a) BASE COMPENSATION. The Executive shall be paid "Base
Compensation" during the first year of the Employment Period at an annual rate
of One Hundred Four Thousand and 00/100 Dollars ($104,000) in 26 bi-monthly
equal installments. Thereafter, the Base Compensation shall be increased by the
aggregate amount of Twenty-Six Thousand and 00/100 Dollars ($26,000) on each
anniversary hereof for the duration of the Employment Period. The Base
Compensation may be increased to an amount greater than provided herein at any
time or from time to time by action of the Board of Directors or any committee
thereof. The Base Compensation shall be pro-rated for any Fiscal Year hereunder
which is less than a full Fiscal Year.
(b) INCENTIVE BONUS COMPENSATION. If the Executive, in the
Company's Board of Directors' sole discretion, fully satisfies the performance
parameters prescribed by the Company's Board of Directors for the applicable
Fiscal Year then the Executive shall be paid "Incentive Bonus Compensation" for
such Fiscal Year equal to the greater of : (a) twenty percent (20%) of the Base
Compensation in effect during such Fiscal Year; or (b) such amount as the
Company's Board of Directors or any committee thereof deems appropriate in its
sole discretion.
2
<PAGE>
SECTION 6. REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Executive for his reasonable expenses incurred in providing services to the
Company, in accordance with the Company's reimbursement policies as determined
from time to time by the Board of Directors. If there is a dispute as to the
eligibility of an expense for reimbursement in accordance with the Company's
reimbursement policies, then such expense shall be determined to be reimbursable
if approved by a majority of the Board of Directors.
SECTION 7. EMPLOYEE BENEFITS AND VACATIONS. During the Employment
Period, the Executive shall receive the benefits and enjoy the perquisites
described below:
(a) INSURANCE BENEFITS. The Company shall provide the
Executive with medical insurance, dental insurance, life insurance, health and
accident insurance and disability insurance commensurate with, and subject to,
the terms of the plans adopted by the Company for its executives (collectively
referred to as the "Insurance Benefits").
(b) VACATIONS. The Executive shall be entitled in each Fiscal
Year to a vacation of four (4) weeks (20 working days), during which time his
compensation shall be paid in full, and such holidays and other nonworking days
as are consistent with the policies of the Company for executives generally.
(c) BENEFIT PLANS. The Executive shall be entitled to
participate in all benefit plans that may be established from time to time by
the Company.
SECTION 8. COMPANY LIFE INSURANCE; MEDICAL EXAMINATIONS. At any time
during the Employment Period, the Company may, in its discretion, apply for and
procure as owner and for its own benefit, insurance on the life of the
Executive, in such amounts and in such form or forms as the Company may
determine. The Executive shall have no right to any interest in any such policy
or policies, but he shall, at the request of the Company, submit to such medical
examinations, supply such information and execute such applications, instruments
and other documents as reasonably may be required by the insurance company or
companies to whom the Company has applied for such insurance.
If requested by the Company, the Executive shall submit to at least one
medical examination during each Fiscal Year at such reasonable time and place
and by a physician or physicians determined and selected by the Company. All the
costs and expenses of said medical examination, including transportation of the
Executive to the place of examination and return, shall be paid by the Company.
The Executive shall be entitled to a copy of all reports and other
information provided to the Company in connection with any examination referred
to in this Section 8. Any failure to pass any such medical examination or to
meet any health criteria or medical standard shall not of itself be cause for
termination of the Employment Period by the Company.
SECTION 9. CERTAIN COMPANY PROTECTION PROVISIONS. The provisions set
forth below apply for the protection of the Company.
(a) NONCOMPETITION. During the Restricted Period (as
hereinafter defined), the Executive shall not directly or indirectly compete
with the Company by owning, managing, controlling or participating in the
ownership, management or control of, or be employed or engaged by or otherwise
affiliated or associated with, any Competitive Business (as defined herein) in
any location in which the Company is doing business as of the Employment
Termination Date. As used herein, the term "Restricted Period" means the
Employment Period and a period of one (1) year thereafter. As used herein, a
3
<PAGE>
"Competitive Business" is any other corporation, partnership, proprietorship,
firm, association or other business entity which is engaged in any business from
which the Company derives five percent (5%) or more of its consolidated revenues
during the twelve (12) months preceding the Employment Termination Date or in
which the Company has invested five percent (5%) or more of its total assets as
of the time in question, provided, however, that ownership by the Executive of
not more than five percent (5%) of the stock of any publicly traded company
shall not be deemed a violation of this provision.
(b) NON-INTERFERENCE. During the Restricted Period, the
Executive shall not induce or solicit any employee of the Company or any person
doing business with the Company to terminate his or her employment or business
relationship with the Company or otherwise interfere with any such relationship.
(c) CONFIDENTIALITY. The Executive agrees and acknowledges
that, by reason of the nature of his duties as an officer and employee, he will
have or may have access to and become informed of confidential and secret
information which is a competitive asset of the Company ("Confidential
Information"), including without limitation, technology, any lists of customers,
financial statistics, research data or any other statistics and plans contained
in profit plans, capital plans, critical issue plans, strategic plans or
marketing or operation plans or other trade secrets of the Company and any of
the foregoing which belong to any person or company but to which the Executive
has had access by reason of his employment relationship with the Company. The
Executive agrees faithfully to keep in strict confidence, and not, either
directly or indirectly, to make known, divulge, reveal, furnish, make available
or use (except for use in the regular course of his employment duties) any such
Confidential Information. The Executive acknowledges that all manuals,
instruction books, price lists, information and records and other information
and aids relating to the Company's business, and any and all other documents
containing Confidential Information furnished to the Executive by the Company or
otherwise acquired or developed by the Executive, shall at all times be the
property of the Company. Upon termination of the Employment Period, the
Executive shall return to the Company any such property or documents which are
in his possession, custody or control, but his obligation of confidentiality
shall survive such termination of the Employment Period until and unless any
such Confidential Information shall have become, through no fault of the
Executive, generally known to the trade. The obligations of the Executive under
this subsection are in addition to, and not in limitation or preemption of, all
other obligations of confidentiality which the Executive may have to the Company
under general legal or equitable principles.
(d) REMEDIES. It is expressly agreed by the Executive and the
Company that these provisions are reasonable for purposes of preserving for the
Company its business, goodwill and proprietary information. It is also agreed
that if any provision is found by a court having jurisdiction to be unreasonable
because of scope, area or time, then that provision shall be amended to
correspond in scope, area and time to that considered reasonable by a court and
as amended shall be enforced and the remaining provisions shall remain
effective. In the event any breach of these provisions by the Executive, the
parties recognize and acknowledge that a remedy at law will be inadequate and
the Company may suffer irreparable injury. The Executive acknowledges that the
services to be rendered by him are of a character giving them peculiar value,
the loss of which cannot be adequately compensated for in damages; accordingly
the Executive consents to injunctive and other appropriate equitable relief upon
the institution of proceedings therefor by the Company in order to protect the
Company's rights. Such relief shall be in addition to any other relief to which
the Company may be entitled at law or in equity. The provisions of Section 9(a),
9(b), 9(c) and 9(d) shall survive the termination of this Agreement.
4
<PAGE>
SECTION 10. TERMINATION OF EMPLOYMENT.
(a) NOTICE OF TERMINATION; EMPLOYMENT TERMINATION DATE.
(1) Any termination of the Executive's employment by the
Company or the Executive shall be communicated by written Notice of Termination
to the other party thereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination under the
provision so indicated. Furthermore, either the Executive or the Company may
give a Notice of Termination to the other party for the purpose of terminating
this Agreement, as such, without terminating the Executive's employment with the
Company which Notice of Termination shall have the effect of terminating this
Agreement on the Scheduled Employment Termination Date as in effect on the date
of giving such Notice of Termination.
(2) "EMPLOYMENT TERMINATION DATE" shall mean the date on
which the Employment Period and the Executive's right and obligation to perform
employment services for the Company shall terminate effective upon the first to
occur of the following, it being understood that in no event may the Employment
Period be terminated other than as the result of one of the following events:
(A) If the Executive's employment is terminated for Disability,
the date which is thirty (30) days after Notice of
Termination is given (provided that the Executive shall not
have returned to the performance of his duties on a
full-time basis during such thirty (30) day period);
(B) If the Executive's employment is terminated by the
Executive for Good Reason or otherwise by voluntary action
of the Executive (see Section 10(e)), the date specified in
the Notice of Termination, which date (except with the
written consent of the Company to the contrary) shall not
be more than thirty (30) days after the date that the
Notice of Termination is given;
(C) The death of the Executive;
(D) The Scheduled Employment Termination Date;
(E) If the Executive's employment is terminated by the Company
for Cause (see Section 10(b)(1)), the date on which a
Notice of Termination is given; provided that if within
thirty (30) days after any Notice of Termination is given
the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the
termination, the Employment Termination Date shall be the
date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding and
final arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been
perfected); and
(F) If the Executive's employment is terminated by the Company
other than for Cause, Disability or death of the Executive,
the date specified in the Notice of Termination which date
(except with the written consent of the Executive to the
contrary) shall not be more than thirty (30) days after the
date that the Notice of Termination is given.
5
<PAGE>
(b) Termination for Cause:
(1) The Company may terminate the Executive's employment and
the Employment Period for Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment hereunder only (A) if
termination shall have been the result of an act or acts of misconduct
materially injurious to the Company, monetarily or otherwise, or (B) upon the
willful and continued failure by the Executive substantially to perform his
duties with the Company (other than any such failure resulting from incapacity
due to mental or physical illness) after a demand for substantial performance is
delivered by the Board, which demand specifically identifies the manner in which
the Board believes that the Executive has not substantially performed his
duties, and such failure results in demonstrably material injury to the Company.
The Executive's employment shall in no event be considered to have been
terminated by the Company for Cause if such termination took place as the result
of (i) bad judgment or negligence, or (ii) any act or omission without intent of
gaining therefrom directly or indirectly a profit to which the Executive was not
legally entitled, or (iii) any act or omission believed in good faith to have
been in or not opposed to the interest of the Company, or (iv) any act or
omission in respect of which a determination is made that the Executive met the
applicable standard of conduct prescribed for indemnification or reimbursement
or payment of expenses under the policies and procedures of the Company or the
laws of the State of Florida, in each case as in effect at the time of such act
or omission. The Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of a majority of the Board of Directors.
(2) If the Executive's employment shall be terminated for
Cause, the Company shall pay the Executive (A) within ten (10) days of such
termination, his unpaid Base Compensation through the Employment Termination
Date at his then effective Base Compensation Rate plus (B) within ten (10) days
after issuance of the Company's audited financial statements for the Fiscal Year
in which the Employment Termination Date occurs, his pro-rata share of any
Incentive Bonus Compensation computed with respect to the Fiscal Year in which
occurs the Employment Termination Date as if such termination had not occurred.
(c) TERMINATION FOR DISABILITY. The Company may terminate the
Executive's employment because of the Disability of the Executive and thereafter
shall pay to the Executive (or his successors) (1) his unpaid Base Compensation
through the Employment Termination Date at his then effective Base Compensation
rate, plus (2) an amount equal to a pro-rata share of any Incentive Bonus
Compensation calculated through the Employment Termination Date. In addition,
the Executive shall be entitled to amounts and the benefits specified in
Paragraph (2) of Section 10(f) of this Agreement through the Employment
Termination Date, subject to applicable law.
(d) TERMINATION UPON EXECUTIVE'S DEATH. In the event of the
Executive's death, the Company shall pay to the Executive's estate (1) any
unpaid amount of Base Compensation through the date of death at his then
effective Base Compensation rate plus (2) an amount equal to the pro-rata share
of any Incentive Bonus Compensation calculated with respect to the Fiscal Year
in which the death occurs.
(e) TERMINATION OF EMPLOYMENT BY THE EXECUTIVE.
(1) The Executive may terminate his employment for Good
Reason and receive the payments and benefits specified in Section 10(f) in the
same manner as if the Company had terminated his employment. For purposes of
this Agreement, "Good Reason" will exist if any one or more of the following
occur:
6
<PAGE>
(A) Failure by the Company to honor any of its
obligations under this Agreement, including, without
limitation, its obligations under Section 3
(Employment Capacity and Duties), Section 4
(Executive Performance Covenants), Section 5
(Compensation), Section 6 (Reimbursement of
Expenses), Section 7 (Employee Benefits and
Vacations), Section 11 (Indemnification) and Section
12 (Successors and Assigns); or
(B) Any purported termination by the Company of the
Executive's employment that is not effected pursuant
to a Notice of Termination satisfying the
requirements of Section 10(a) above and, for purposes
of this Agreement, no such purported termination
shall be effective.
(C) If there is a Change in Control of the Company (as
defined below) and the employment of the Executive is
concurrently or subsequently terminated (i) by the
Company without Cause or (ii) by service of a Notice
of Termination. For the purpose of this Agreement, a
"Change in Control" of the Company has occurred when:
(x) any person (defined for the purposes of this
Section 10 to mean any Person within the meaning of
Section 13(d) of the Securities Exchange Act of 1934
as amended (the "Exchange Act")), ------------- other
than the Company or an Affiliate thereof, or an
employee benefit plan established by the Board of
Directors of the Company, acquires, directly or
indirectly, the beneficial ownership (determined
under Rule 13d-3 of the regulations promulgated by
the Securities and Exchange Commission under Section
13(d) of the Exchange Act) of securities issued by
the Company having 20% or more of the voting power of
all of the voting securities issued by the Company in
the election of directors at the meeting of the
holders of voting securities to be held for such
purpose; (y) a majority of the directors elected at
any meeting of the holders of voting securities of
the Company are persons who were not nominated for
such election by the Board of Directors of the
Company or a duly constituted committee of the Board
of Directors of the Company having authority in such
matters; or (z) the Company merges or consolidates
with or transfers substantially all of its assets to
another person or entity.
(2) The Executive shall have the right voluntarily to
terminate his employment other than for Good Reason prior to the Scheduled
Employment Termination Date, and if the Executive shall so terminate his
employment, he shall be entitled only to payment of the amounts which would be
payable under Section 10(b)(2) had he been terminated for Cause.
(f) COMPENSATION UPON TERMINATION OTHER THAN FOR CAUSE.
(1) If the Company shall terminate the Executive's
employment for any reason other than for Cause pursuant to Section 10(b),
Disability pursuant to Section 10(c) or death of the Executive pursuant to
Section 10(d), or if the Executive shall terminate his employment for Good
Reason pursuant to Section 10(e)(1) (but not a termination voluntarily by the
Executive other than for Good Reason under Section 10(e)(2)), then the Company
shall pay to the Executive the following amounts:
(A) (i) His unpaid Base Compensation through the
Employment Termination Date at his then effective
Base Compensation Rate, plus (ii) any Incentive Bonus
Compensation accrued and deferred with respect to any
previous Fiscal Year, the full amount of which shall
become immediately payable.
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(B) In addition, the Company shall pay to the Executive
promptly in a single lump sum in cash an amount equal
to 100% of the aggregate total amount which would
have been payable to Executive under Section 5 for
the entire Fiscal Year in which the Employment
Termination Date occurs as if his employment had not
been terminated (and without deduction or offset for
any amounts actually paid for such Fiscal Year on
account of Base Compensation and Incentive Bonus
Compensation, under Section 5, this Section 10 or
otherwise), and assuming for purposes of calculating
(x) the Base Compensation, 100% of the amount thereof
at the annual rate payable for such Fiscal Year
pursuant to Section 5(a) and (y) the Incentive Bonus
Compensation, the largest amount thereof accrued in
any Fiscal Year during the Employment Period.
(C) The Company shall also pay all legal fees and
expenses incurred as a result of such termination
(including all such fees and expenses, if any,
incurred in contesting or disputing any such
termination, in seeking to obtain or enforce any
right or benefit provided by this Agreement, or in
interpreting this Agreement).
(D) The Executive shall be under no obligation to seek
other employment and there shall be no offset against
any amounts due the Executive under this Agreement on
account of any remuneration attributable to any
subsequent employment that the Executive may obtain
(any amounts due under Section 10(f) are in the
nature of severance payments, or liquidated damages,
or both, and are not in the nature of a penalty).
(2) Unless the Executive is terminated for Cause, the
Company shall maintain in full force and effect, for the Executive's continued
benefit through the Scheduled Employment Terminate Date, all active and retired
Insurance Benefits and other benefit programs or arrangements in which he was
entitled to participate immediately prior to the Scheduled Employment Terminate
Date provided that continued participation is possible under the general terms
and provisions of such plans and programs. In the event that participation in
any such plan or program is barred, the Company shall arrange to provide him
with benefits substantially similar to those which he is entitled to receive
under such plans and programs.
(g) COMPENSATION UPON DISABILITY. During any period that the
Executive fails to perform his duties hereunder as a result of incapacity due to
physical or mental illness, he shall continue to receive his full Base
Compensation at the rate then in effect and his full Incentive Bonus
Compensation calculated according to the provisions of Section 5(b) all until
this Agreement is terminated pursuant to Section 10(c) hereof.
SECTION 11. INDEMNIFICATION. As an employee, officer and director of
the Company, the Executive shall be indemnified against all liabilities,
damages, fines, costs and expenses by the Company in accordance with the
indemnification provisions of the Company's Bylaws as in effect on the date
hereof, and otherwise to the fullest extent to which employees, officers and
directors of a corporation organized under the laws of Florida may be
indemnified as the same may be amended from time to time (or any subsequent
statute of similar tenor and effect), subject to the terms and conditions of
such statute.
SECTION 12. SUCCESSORS AND ASSIGNS. Except as hereinafter expressly
provided, the agreements, covenants, terms and provisions of this Agreement
shall bind the respective heirs, executors, administrators, successors and
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assigns of the parties. Specifically, and not by way of limitation of the
foregoing, the Executive shall be bound by the terms and conditions of this
Agreement to any successor assignee of the Company's rights and obligations
hereunder as a result of any merger, consolidation or sale or lease of all or
substantially all of the Company's business and assets.
If the Executive should die while any amounts are payable to him
hereunder, or if by reason of his death payments are to be made to him
hereunder, then this Agreement shall inure to the benefit of and be enforceable
by the Executive's executors, administrators, heirs, distributees, devisees and
legatees and all amounts payable hereunder shall then be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee or other
designee or, if there is no such designee, to his estate.
This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement or
any rights or obligations hereunder, except as hereinbefore provided in this
Section 12. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by his will
or by the laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this paragraph the Company shall have no
liability to pay to the purported assignee or transferee any amount so attempted
to be assigned or transferred.
As used in this Agreement, the "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as provided
for in the first paragraph of this Section 12 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.
SECTION 13. NOTICES. All notices, requests, demands, or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given upon receipt if delivered in person or by
facsimile (with confirmation of transmission), or upon the expiration of four
(4) days after the date sent, if sent by federal express (or similar overnight
courier service) to the parties at the following addresses:
(i) If to the Company:
PharmaSystems Cost Containment Corp.
7350 N.W. 7th Street, Suite 104
Miami, Florida 33126
Attn.: Aurelio Alonso, Chief Financial Officer
With a copy to:
Kirkpatrick & Lockhart LLP
Miami Center-20th Floor
201 South Biscayne Boulevard
Miami, Florida 33131
Attn.: Clayton E. Parker, Esq.
(ii) If to Executive:
Antonio M. Rodriguez
--------------------------------
--------------------------------
--------------------------------
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SECTION 14. WAIVER; REMEDIES CUMULATIVE. No waiver of any right or
option hereunder by any party shall operate as a waiver of any other right or
option, or the same right or option as respects any subsequent occasion for its
exercise, or of any legal remedy. No waiver by any party of any breach of this
Agreement or of any agreement or covenant contained herein shall be held to
constitute a waiver of any other breach or a continuation of the same breach.
All remedies provided by this Agreement are in addition to all other remedies by
it or the law provided.
SECTION 15. SEVERABILITY. If any term or other provision of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced under any rule or Law in any particular respect or
under any particular circumstances, such term or provision shall nevertheless
remain in full force and effect in all other respects and under all other
circumstances, and all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
fullest extent possible.
SECTION 16. MISCELLANEOUS. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement may not be modified, changed or amended except in a writing
signed by each of the parties hereto. This Agreement may be signed in multiple
counterparts, each of which shall be deemed an original hereof. The captions of
the several sections and subsections of this Agreement are not a part of the
context hereof, are inserted only for convenience in locating such sections and
subsections and shall be ignored in construing this Agreement.
SECTION 17. ACCEPTANCE BY FAX. This Agreement shall be accepted,
effective and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature
pages hereto.
SECTION 18. NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTAR- ILY
AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
SECTION 19. GOVERNING LAW. The validity and effect of this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Florida, without regard to principles of conflicts of laws thereof.
Any dispute, controversy or question of interpretation arising under, out of, in
connection with or in relation to this Agreement or any amendments hereof, or
any breach or default hereunder, shall be litigated in the state or Federal
courts located in Dade County, Florida. Each of the parties hereby irrevocably
submits to the jurisdiction of any state or Federal court sitting in Dade
County, Florida. Each party hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of any such action in Dade County, Florida.
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IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement on the date first above written.
ANTONIO M. RODRIGUEZ
/s/ Antonio M. Rodriguez
---------------------------------
PHARMASYSTEMS COST CONTAINMENT CORP., a Florida
corporation
By: /s/ Aurelio Alonso
------------------------------
Aurelio Alonso,
Chief Financial Officer
EXHBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is made in Miami,
Florida effective as of June 19, 1997, by and between PHARMASYSTEMS COST
CONTAINMENT CORP., a Florida corporation (the "Company") and AURELIO ALONSO (the
"Executive") who hereby agree as hereinafter provided.
SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the meanings set forth below.
"AFFILIATE" shall have the meaning ascribed thereto by Rule 144
promulgated under the Securities Act of 1933, as amended.
"BASE COMPENSATION" shall have the meaning set forth in Section 5(a).
"BOARD OF DIRECTORS" means the incumbent directors of the Company as of
the point in time reference thereto is made in this Agreement.
"CAUSE" shall have the meaning set forth in Section 10(b).
"COMPETITIVE BUSINESS" shall have the meaning set forth in Section
9(a).
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
9(c).
"DISABILITY" of the Executive means that, as a result of the
Executive's incapacity due to physical or mental illness, the Executive shall
have been absent from his duties on a full time basis for one hundred eighty
(180) consecutive days during a consecutive twelve (12) month period, and a
physician selected by the Executive is of the opinion that (a) he is suffering
from "total disability" and (b) he will qualify for Social Security Disability
Payments and (c) the Executive is not performing his duties on a full-time basis
within thirty (30) days after written Notice of Termination (as defined herein)
is given by the Company to the Executive (which notice may be given at any time
after the end of such one hundred eighty (180) day period). (If the Executive is
prevented from performing his duties because of Disability, upon request by the
Company the Executive shall submit to an examination by a physician selected by
the Company, at the Company's expense, and the Executive shall also authorize
his personal physician to disclose to the selected physician all of the
Executive's medical records). In the event that the Executive's and the
Company's physician disagree as to whether the condition of the Executive
constitutes "total disability" then such dispute shall be resolved by an
independent physician specializing in the Executive's ailment jointly selected
by the Executive and the Company, whose determination shall, absent manifest
error, be final and binding upon the parties. Any expenses incurred by the
parties in connection with the engagement of an independent physician in
connection herewith shall be equally borne by the parties.
"EMPLOYMENT COMMENCEMENT DATE" means the effective date of this
Agreement.
"EMPLOYMENT PERIOD" means that period commencing on the Employment
Commencement Date and ending on the Employment Termination Date.
"EMPLOYMENT TERMINATION DATE" means the date the Employment Period
terminates as provided in Section 10.
<PAGE>
"FISCAL YEAR" means the fiscal year of the Company.
"INCENTIVE BONUS COMPENSATION" shall have the meaning set forth in
Section 5(b).
"NOTICE OF TERMINATION" shall have the meaning set forth in Section
10(a)(1).
"RESTRICTED PERIOD" shall have the meaning set forth in Section 9(a).
"SCHEDULED EMPLOYMENT TERMINATION DATE" means the later of (a) the day
immediately preceding the fifth anniversary of the Employment Commencement Date
or (b) such date as is specified by either the Company or the Executive in a
Notice of Termination delivered for the purpose of fixing the scheduled
Employment Termination Date.
SECTION 2. EMPLOYMENT AND TERM. The Company hereby employs the
Executive, and the Executive hereby accepts such employment by the Company, for
the purposes and upon the terms and conditions contained in this Agreement. The
term of such employment shall be for the Employment Period.
SECTION 3. EMPLOYMENT CAPACITY AND DUTIES. The Executive shall be
employed throughout the Employment Period as the Chief Financial Officer of the
Company. The Executive shall have the duties and responsibilities incumbent with
the position of Chief Financial Officer of the Company, subject to the direction
of the Company's Board of Directors. However, nothing in this Agreement shall
preclude the Executive from devoting a reasonable amount of time and effort to
civic, charitable and professional affairs and matters.
SECTION 4. EXECUTIVE PERFORMANCE COVENANTS. The Executive accepts the
employment described in Section 3 hereto and agrees to devote his full working
time and efforts (except for absences due to illness and appropriate vacations
and as provided in Section 3) to the business and affairs of the Company and the
performance of the aforesaid duties and responsibilities.
SECTION 5. COMPENSATION. The Company shall pay to the Executive for his
services hereunder, the compensation hereinafter provided in this Section 5.
Such compensation shall be paid to the Executive at the time and in the manner
as provided below.
(a) BASE COMPENSATION. The Executive shall be paid "Base
Compensation" during the first year of the Employment Period at an annual rate
of One Hundred Twenty Thousand and 00/100 Dollars ($120,000) in 26 bi-monthly
equal installments. Thereafter, the Base Compensation shall be increased by the
aggregate amount of Twenty-Six Thousand and 00/100 Dollars ($26,000) on each
anniversary hereof for the duration of the Employment Period. The Base
Compensation may be increased to an amount greater than provided herein at any
time or from time to time by action of the Board of Directors or any committee
thereof. The Base Compensation shall be pro-rated for any Fiscal Year hereunder
which is less than a full Fiscal Year.
(b) INCENTIVE BONUS COMPENSATION. If the Executive, in the
Company's Board of Directors' sole discretion, fully satisfies the performance
parameters prescribed by the Company's Board of Directors for the applicable
Fiscal Year then the Executive shall be paid "Incentive Bonus Compensation" for
each Fiscal Year equal to the greater of: (a) twenty percent (20%) of the Base
Compensation in effect during such Fiscal Year; or (b) such amount as the
Company's Board of Directors or any committee thereof deems appropriate in its
sole discretion.
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SECTION 6. REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Executive for his reasonable expenses incurred in providing services to the
Company, in accordance with the Company's reimbursement policies as determined
from time to time by the Board of Directors. If there is a dispute as to the
eligibility of an expense for reimbursement in accordance with the Company's
reimbursement policies, then such expense shall be determined to be reimbursable
if approved by a majority of the Board of Directors.
SECTION 7. EMPLOYEE BENEFITS AND VACATIONS. During the Employment
Period, the Executive shall receive the benefits and enjoy the perquisites
described below:
(a) INSURANCE BENEFITS. The Company shall provide the Executive
with medical insurance, dental insurance, life insurance, health and accident
insurance and disability insurance commensurate with, and subject to, the terms
of the plans adopted by the Company for its executives (collectively referred to
as the "Insurance Benefits").
(b) VACATIONS. The Executive shall be entitled in each Fiscal
Year to a vacation of four (4) weeks (20 working days), during which time his
compensation shall be paid in full, and such holidays and other nonworking days
as are consistent with the policies of the Company for executives generally.
(c) BENEFIT PLANS. The Executive shall be entitled to
participate in all benefit plans that may be established from time to time by
the Company.
SECTION 8. COMPANY LIFE INSURANCE; MEDICAL EXAMINATIONS. At any time
during the Employment Period, the Company may, in its discretion, apply for and
procure as owner and for its own benefit, insurance on the life of the
Executive, in such amounts and in such form or forms as the Company may
determine. The Executive shall have no right to any interest in any such policy
or policies, but he shall, at the request of the Company, submit to such medical
examinations, supply such information and execute such applications, instruments
and other documents as reasonably may be required by the insurance company or
companies to whom the Company has applied for such insurance.
If requested by the Company, the Executive shall submit to at least one
medical examination during each Fiscal Year at such reasonable time and place
and by a physician or physicians determined and selected by the Company. All the
costs and expenses of said medical examination, including transportation of the
Executive to the place of examination and return, shall be paid by the Company.
The Executive shall be entitled to a copy of all reports and other
information provided to the Company in connection with any examination referred
to in this Section 8. Any failure to pass any such medical examination or to
meet any health criteria or medical standard shall not of itself be cause for
termination of the Employment Period by the Company.
SECTION 9. CERTAIN COMPANY PROTECTION PROVISIONS. The provisions set
forth below apply for the protection of the Company.
(a) NONCOMPETITION. During the Restricted Period (as hereinafter
defined), the Executive shall not directly or indirectly compete with the
Company by owning, managing, controlling or participating in the ownership,
management or control of, or be employed or engaged by or otherwise affiliated
or associated with, any Competitive Business (as defined herein) in any location
in which the Company is doing business as of the Employment Termination Date. As
used herein, the term "Restricted Period" means the Employment Period and a
period of one (1) year thereafter. As used herein, a "Competitive Business" is
any other corporation, partnership, proprietorship, firm, association or other
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<PAGE>
business entity which is engaged in any business from which the Company derives
five percent (5%) or more of its consolidated revenues during the twelve (12)
months preceding the Employment Termination Date or in which the Company has
invested five percent (5%) or more of its total assets as of the time in
question, provided, however, that ownership by the Executive of not more than
five percent (5%) of the stock of any publicly traded company shall not be
deemed a violation of this provision.
(b) NON-INTERFERENCE. During the Restricted Period, the
Executive shall not induce or solicit any employee of the Company or any person
doing business with the Company to terminate his or her employment or business
relationship with the Company or otherwise interfere with any such relationship.
(c) Confidentiality. The Executive agrees and acknowledges
that, by reason of the nature of his duties as an officer and employee, he will
have or may have access to and become informed of confidential and secret
information which is a competitive asset of the Company ("Confidential
Information"), including without limitation, technology, any lists of customers,
financial statistics, research data or any other statistics and plans contained
in profit plans, capital plans, critical issue plans, strategic plans or
marketing or operation plans or other trade secrets of the Company and any of
the foregoing which belong to any person or company but to which the Executive
has had access by reason of his employment relationship with the Company. The
Executive agrees faithfully to keep in strict confidence, and not, either
directly or indirectly, to make known, divulge, reveal, furnish, make available
or use (except for use in the regular course of his employment duties) any such
Confidential Information. The Executive acknowledges that all manuals,
instruction books, price lists, information and records and other information
and aids relating to the Company's business, and any and all other documents
containing Confidential Information furnished to the Executive by the Company or
otherwise acquired or developed by the Executive, shall at all times be the
property of the Company. Upon termination of the Employment Period, the
Executive shall return to the Company any such property or documents which are
in his possession, custody or control, but his obligation of confidentiality
shall survive such termination of the Employment Period until and unless any
such Confidential Information shall have become, through no fault of the
Executive, generally known to the trade. The obligations of the Executive under
this subsection are in addition to, and not in limitation or preemption of, all
other obligations of confidentiality which the Executive may have to the Company
under general legal or equitable principles.
(d) REMEDIES. It is expressly agreed by the Executive and the
Company that these provisions are reasonable for purposes of preserving for the
Company its business, goodwill and proprietary information. It is also agreed
that if any provision is found by a court having jurisdiction to be unreasonable
because of scope, area or time, then that provision shall be amended to
correspond in scope, area and time to that considered reasonable by a court and
as amended shall be enforced and the remaining provisions shall remain
effective. In the event any breach of these provisions by the Executive, the
parties recognize and acknowledge that a remedy at law will be inadequate and
the Company may suffer irreparable injury. The Executive acknowledges that the
services to be rendered by him are of a character giving them peculiar value,
the loss of which cannot be adequately compensated for in damages; accordingly
the Executive consents to injunctive and other appropriate equitable relief upon
the institution of proceedings therefor by the Company in order to protect the
Company's rights. Such relief shall be in addition to any other relief to which
the Company may be entitled at law or in equity. The provisions of Section 9(a),
9(b), 9(c) and 9(d) shall survive the termination of this Agreement.
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SECTION 10. TERMINATION OF EMPLOYMENT.
(A) NOTICE OF TERMINATION; EMPLOYMENT TERMINATION DATE.
(1) Any termination of the Executive's employment by the
Company or the Executive shall be communicated by written Notice of Termination
to the other party thereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination under the
provision so indicated. Furthermore, either the Executive or the Company may
give a Notice of Termination to the other party for the purpose of terminating
this Agreement, as such, without terminating the Executive's employment with the
Company which Notice of Termination shall have the effect of terminating this
Agreement on the Scheduled Employment Termination Date as in effect on the date
of giving such Notice of Termination.
(2) "Employment Termination Date" shall mean the date on
which the Employment Period and the Executive's right and obligation to perform
employment services for the Company shall terminate effective upon the first to
occur of the following, it being understood that in no event may the Employment
Period be terminated other than as the result of one of the following events:
(A) If the Executive's employment is terminated for
Disability, the date which is thirty (30) days after
Notice of Termination is given (provided that the
Executive shall not have returned to the performance of
his duties on a full-time basis during such thirty (30)
day period);
(B) If the Executive's employment is terminated by the
Executive for Good Reason or otherwise by voluntary
action of the Executive (see Section 10(e)), the date
specified in the Notice of Termination, which date
(except with the written consent of the Company to the
contrary) shall not be more than thirty (30) days after
the date that the Notice of Termination is given;
(C) The death of the Executive;
(D) The Scheduled Employment Termination Date;
(E) If the Executive's employment is terminated by the
Company for Cause (see Section 10(b)(1)), the date on
which a Notice of Termination is given; provided that if
within thirty (30) days after any Notice of Termination
is given the party receiving such Notice of Termination
notifies the other party that a dispute exists
concerning the termination, the Employment Termination
Date shall be the date on which the dispute is finally
determined, either by mutual written agreement of the
parties, by a binding and final arbitration award or by
a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected); and
(F) If the Executive's employment is terminated by the
Company other than for Cause, Disability or death of the
Executive, the date specified in the Notice of
Termination which date (except with the written consent
of the Executive to the contrary) shall not be more than
thirty (30) days after the date that the Notice of
Termination is given.
<PAGE>
(b) Termination for Cause:
(1) The Company may terminate the Executive's employment and
the Employment Period for Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment hereunder only (A) if
termination shall have been the result of an act or acts of misconduct
materially injurious to the Company, monetarily or otherwise, or (B) upon the
willful and continued failure by the Executive substantially to perform his
duties with the Company (other than any such failure resulting from incapacity
due to mental or physical illness) after a demand for substantial performance is
delivered by the Board, which demand specifically identifies the manner in which
the Board believes that the Executive has not substantially performed his
duties, and such failure results in demonstrably material injury to the Company.
The Executive's employment shall in no event be considered to have been
terminated by the Company for Cause if such termination took place as the result
of (i) bad judgment or negligence, or (ii) any act or omission without intent of
gaining therefrom directly or indirectly a profit to which the Executive was not
legally entitled, or (iii) any act or omission believed in good faith to have
been in or not opposed to the interest of the Company, or (iv) any act or
omission in respect of which a determination is made that the Executive met the
applicable standard of conduct prescribed for indemnification or reimbursement
or payment of expenses under the policies and procedures of the Company or the
laws of the State of Florida, in each case as in effect at the time of such act
or omission. The Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of a majority of the Board of Directors.
(2) If the Executive's employment shall be terminated for
Cause, the Company shall pay the Executive (A) within ten (10) days of such
termination, his unpaid Base Compensation through the Employment Termination
Date at his then effective Base Compensation Rate plus (B) within ten (10) days
after issuance of the Company's audited financial statements for the Fiscal Year
in which the Employment Termination Date occurs, his pro-rata share of any
Incentive Bonus Compensation computed with respect to the Fiscal Year in which
occurs the Employment Termination Date as if such termination had not occurred.
(c) Termination for Disability. The Company may terminate the
Executive's employment because of the Disability of the Executive and thereafter
shall pay to the Executive (or his successors) (1) his unpaid Base Compensation
through the Employment Termination Date at his then effective Base Compensation
rate, plus (2) an amount equal to a pro-rata share of any Incentive Bonus
Compensation calculated through the Employment Termination Date. In addition,
the Executive shall be entitled to amounts and the benefits specified in
Paragraph (2) of Section 10(f) of this Agreement through the Employment
Termination Date, subject to applicable law.
(d) Termination Upon Executive's Death. In the event of the
Executive's death, the Company shall pay to the Executive's estate (1) any
unpaid amount of Base Compensation through the date of death at his then
effective Base Compensation rate plus (2) an amount equal to the pro-rata share
of any Incentive Bonus Compensation calculated with respect to the Fiscal Year
in which the death occurs.
(e) Termination of Employment by the Executive.
(1) The Executive may terminate his employment for Good
Reason and receive the payments and benefits specified in Section 10(f) in the
same manner as if the Company had terminated his employment. For purposes of
this Agreement, "Good Reason" will exist if any one or more of the following
occur:
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(A) Failure by the Company to honor any of its obligations
under this Agreement, including, without limitation,
its obligations under Section 3 (Employment Capacity
and Duties), Section 4 (Executive Performance
Covenants), Section 5 (Compensation), Section 6
(Reimbursement of Expenses), Section 7 (Employee
Benefits and Vacations), Section 11 (Indemnification)
and Section 12 (Successors and Assigns); or
(B) Any purported termination by the Company of the
Executive's employment that is not effected pursuant to
a Notice of Termination satisfying the requirements of
Section 10(a) above and, for purposes of this
Agreement, no such purported termination shall be
effective.
(C) If there is a Change in Control of the Company (as
defined below) and the employment of the Executive is
concurrently or subsequently terminated (i) by the
Company without Cause or (ii) by service of a Notice of
Termination. For the purpose of this Agreement, a
"Change in Control" of the Company has occurred when:
(x) any person (defined for the purposes of this
Section 10 to mean any Person within the meaning of
Section 13(d) of the Securities Exchange Act of 1934 as
amended (the "Exchange Act")), other than the Company
or an Affiliate thereof, or an employee benefit plan
established by the Board of Directors of the Company,
acquires, directly or indirectly, the beneficial
ownership (determined under Rule 13d-3 of the
regulations promulgated by the Securities and Exchange
Commission under Section 13(d) of the Exchange Act) of
securities issued by the Company having 20% or more of
the voting power of all of the voting securities issued
by the Company in the election of directors at the
meeting of the holders of voting securities to be held
for such purpose; (y) a majority of the directors
elected at any meeting of the holders of voting
securities of the Company are persons who were not
nominated for such election by the Board of Directors
of the Company or a duly constituted committee of the
Board of Directors of the Company having authority in
such matters; or (z) the Company merges or consolidates
with or transfers substantially all of its assets to
another person or entity.
(2) The Executive shall have the right voluntarily to
terminate his employment other than for Good Reason prior to the Scheduled
Employment Termination Date, and if the Executive shall so terminate his
employment, he shall be entitled only to payment of the amounts which would be
payable under Section 10(b)(2) had he been terminated for Cause.
(f) COMPENSATION UPON TERMINATION OTHER THAN FOR CAUSE.
(1) If the Company shall terminate the Executive's
employment for any reason other than for Cause pursuant to Section 10(b),
Disability pursuant to Section 10(c) or death of the Executive pursuant to
Section 10(d), or if the Executive shall terminate his employment for Good
Reason pursuant to Section 10(e)(1) (but not a termination voluntarily by the
Executive other than for Good Reason under Section 10(e)(2)), then the Company
shall pay to the Executive the following amounts:
(A) (i) His unpaid Base Compensation through the Employment
Termination Date at his then effective Base
Compensation Rate, plus (ii) any Incentive Bonus
Compensation accrued and deferred with respect to any
previous Fiscal Year, the full amount of which shall
become immediately payable.
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(B) In addition, the Company shall pay to the Executive
promptly in a single lump sum in cash an amount equal
to one hundred percent (100%) of the aggregate total
amount which would have been payable to Executive under
Section 5 for the entire Fiscal Year in which the
Employment Termination Date occurs as if his employment
had not been terminated (and without deduction or
offset for any amounts actually paid for such Fiscal
Year on account of Base Compensation and Incentive
Bonus Compensation, under Section 5, this Section 10 or
otherwise), and assuming for purposes of calculating
(x) the Base Compensation, 100% of the amount thereof
at the annual rate payable for such Fiscal Year
pursuant to Section 5(a) and (y) the Incentive Bonus
Compensation, the largest amount thereof accrued in any
Fiscal Year during the Employment Period.
(C) The Company shall also pay all legal fees and expenses
incurred as a result of such termination (including all
such fees and expenses, if any, incurred in contesting
or disputing any such termination, in seeking to obtain
or enforce any right or benefit provided by this
Agreement, or in interpreting this Agreement).
(D) The Executive shall be under no obligation to seek
other employment and there shall be no offset against
any amounts due the Executive under this Agreement on
account of any remuneration attributable to any
subsequent employment that the Executive may obtain
(any amounts due under Section 10(f) are in the nature
of severance payments, or liquidated damages, or both,
and are not in the nature of a penalty).
(2) Unless the Executive is terminated for Cause, the
Company shall maintain in full force and effect, for the Executive's continued
benefit through the Scheduled Employment Terminate Date, all active and retired
Insurance Benefits and other benefit programs or arrangements in which he was
entitled to participate immediately prior to the Scheduled Employment Terminate
Date provided that continued participation is possible under the general terms
and provisions of such plans and programs. In the event that participation in
any such plan or program is barred, the Company shall arrange to provide him
with benefits substantially similar to those which he is entitled to receive
under such plans and programs.
(g) COMPENSATION UPON DISABILITY. During any period that the
Executive fails to perform his duties hereunder as a result of incapacity due to
physical or mental illness, he shall continue to receive his full Base
Compensation at the rate then in effect and his full Incentive Bonus
Compensation calculated according to the provisions of Section 5(b) all until
this Agreement is terminated pursuant to Section 10(c) hereof.
SECTION 11. INDEMNIFICATION. As an employee, officer and director of
the Company, the Executive shall be indemnified against all liabilities,
damages, fines, costs and expenses by the Company in accordance with the
indemnification provisions of the Company's Bylaws as in effect on the date
hereof, and otherwise to the fullest extent to which employees, officers and
directors of a corporation organized under the laws of Florida may be
indemnified as the same may be amended from time to time (or any subsequent
statute of similar tenor and effect), subject to the terms and conditions of
such statute.
SECTION 12. SUCCESSORS AND ASSIGNS. Except as hereinafter expressly
provided, the agreements, covenants, terms and provisions of this Agreement
shall bind the respective heirs, executors, administrators, successors and
assigns of the parties. Specifically, and not by way of limitation of the
foregoing, the Executive shall be bound by the terms and conditions of this
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Agreement to any successor assignee of the Company's rights and obligations
hereunder as a result of any merger, consolidation or sale or lease of all or
substantially all of the Company's business and assets.
If the Executive should die while any amounts are payable to him
hereunder, or if by reason of his death payments are to be made to him
hereunder, then this Agreement shall inure to the benefit of and be enforceable
by the Executive's executors, administrators, heirs, distributees, devisees and
legatees and all amounts payable hereunder shall then be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee or other
designee or, if there is no such designee, to his estate.
This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement or
any rights or obligations hereunder, except as hereinbefore provided in this
Section 12. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by his will
or by the laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this paragraph the Company shall have no
liability to pay to the purported assignee or transferee any amount so attempted
to be assigned or transferred.
As used in this Agreement, the "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as provided
for in the first paragraph of this Section 12 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.
SECTION 13. NOTICES. All notices, requests, demands, or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given upon receipt if delivered in person or by
facsimile (with confirmation of transmission), or upon the expiration of four
(4) days after the date sent, if sent by federal express (or similar overnight
courier service) to the parties at the following addresses:
(i) If to the Company:
PharmaSystems Cost Containment Corp.
7350 N.W. 7th Street, Suite 104
Miami, Florida 33126
Attn.: Jose M. Rodriguez, President
With a copy to:
Kirkpatrick & Lockhart LLP
Miami Center-20th Floor
201 South Biscayne Boulevard
Miami, Florida 33131
Attn.: Clayton E. Parker, Esq.
(ii) If to Executive:
Aurelio Alonso
------------------------------
------------------------------
------------------------------
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SECTION 14. WAIVER; REMEDIES CUMULATIVE. No waiver of any right or
option hereunder by any party shall operate as a waiver of any other right or
option, or the same right or option as respects any subsequent occasion for its
exercise, or of any legal remedy. No waiver by any party of any breach of this
Agreement or of any agreement or covenant contained herein shall be held to
constitute a waiver of any other breach or a continuation of the same breach.
All remedies provided by this Agreement are in addition to all other remedies by
it or the law provided.
SECTION 15. SEVERABILITY. If any term or other provision of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced under any rule or Law in any particular respect or
under any particular circumstances, such term or provision shall nevertheless
remain in full force and effect in all other respects and under all other
circumstances, and all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
fullest extent possible.
SECTION 16. MISCELLANEOUS. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement may not be modified, changed or amended except in a writing
signed by each of the parties hereto. This Agreement may be signed in multiple
counterparts, each of which shall be deemed an original hereof. The captions of
the several sections and subsections of this Agreement are not a part of the
context hereof, are inserted only for convenience in locating such sections and
subsections and shall be ignored in construing this Agreement.
SECTION 17. ACCEPTANCE BY FAX. This Agreement shall be accepted,
effective and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature
pages hereto.
SECTION 18. NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTAR- ILY
AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
SECTION 19. GOVERNING LAW. The validity and effect of this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Florida, without regard to principles of conflicts of laws thereof.
Any dispute, controversy or question of interpretation arising under, out of, in
connection with or in relation to this Agreement or any amendments hereof, or
any breach or default hereunder, shall be litigated in the state or Federal
courts located in Dade County, Florida. Each of the parties hereby irrevocably
submits to the jurisdiction of any state or Federal court sitting in Dade
County, Florida. Each party hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of any such action in Dade County, Florida.
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IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement on the date first above written.
AURELIO ALONSO
/s/ Aurelio Alonso
------------------------------------------
PHARMASYSTEMS COST CONTAINMENT CORP., a Florida
corporation
By: /s/ Jose Rodriguez, M.D.
---------------------------------------
Jose M. Rodriguez, M.D., President
11
EXHIBIT 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("AGREEMENT") is made in Miami,
Florida effective as of June 19, 1997, by and between PHARMASYSTEMS COST
CONTAINMENT CORP., a Florida corporation (the "COMPANY") and JOSE L. RODRIGUEZ,
M.D. (the "EXECUTIVE") who hereby agree as hereinafter provided.
SECTION 1. DEFINITIONS. As used herein, the following terms shall
have the meanings set forth below.
"AFFILIATE" shall have the meaning ascribed thereto by Rule 144
promulgated under the Securities Act of 1933, as amended.
"BASE COMPENSATION" shall have the meaning set forth in Section 5(a).
"BOARD OF DIRECTORS" means the incumbent directors of the Company as of
the point in time reference thereto is made in this Agreement.
"CAUSE" shall have the meaning set forth in Section 10(b).
"COMPETITIVE BUSINESS" shall have the meaning set forth in Section 9(a).
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
9(c).
"DISABILITY" of the Executive means that, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from his duties on a full time basis for one hundred eighty (180)
consecutive days during a consecutive twelve (12) month period, and a physician
selected by the Executive is of the opinion that (a) he is suffering from "total
disability" and (b) he will qualify for Social Security Disability Payments and
(c) the Executive is not performing his duties on a full-time basis within
thirty (30) days after written Notice of Termination (as defined herein) is
given by the Company to the Executive (which notice may be given at any time
after the end of such one hundred eighty (180) day period). (If the Executive is
prevented from performing his duties because of Disability, upon request by the
Company the Executive shall submit to an examination by a physician selected by
the Company, at the Company's expense, and the Executive shall also authorize
his personal physician to disclose to the selected physician all of the
Executive's medical records). In the event that the Executive's and the
Company's physician disagree as to whether the condition of the Executive
constitutes "total disability" then such dispute shall be resolved by an
independent physician specializing in the Executive's ailment jointly selected
by the Executive and the Company, whose determination shall, absent manifest
error, be final and binding upon the parties. Any expenses incurred by the
parties in connection with the engagement of an independent physician in
connection herewith shall be equally borne by the parties.
"EMPLOYMENT COMMENCEMENT DATE" means the effective date of this Agreement.
"EMPLOYMENT PERIOD" means that period commencing on the Employment
Commencement Date and ending on the Employment Termination Date.
"EMPLOYMENT TERMINATION DATE" means the date the Employment Period
terminates as provided in Section 10.
"FISCAL YEAR" means the fiscal year of the Company.
<PAGE>
"INCENTIVE BONUS COMPENSATION" shall have the meaning set forth in
Section 5(b).
"NOTICE OF TERMINATION" shall have the meaning set forth in Section
10(a)(1).
"RESTRICTED PERIOD" shall have the meaning set forth in Section 9(a).
"SCHEDULED EMPLOYMENT TERMINATION DATE" means the later of (a) the day
immediately preceding the fifth anniversary of the Employment Commencement Date
or (b) such date as is specified by either the Company or the Executive in a
Notice of Termination delivered for the purpose of fixing the scheduled
Employment Termination Date.
SECTION 2. EMPLOYMENT AND TERM. The Company hereby employs the Executive,
and the Executive hereby accepts such employment by the Company, for the
purposes and upon the terms and conditions contained in this Agreement. The term
of such employment shall be for the Employment Period.
SECTION 3. EMPLOYMENT CAPACITY AND DUTIES. The Executive shall be employed
throughout the Employment Period as the President and Chief Executive Officer of
the Company. The Executive shall have the duties and responsibilities incumbent
with the positions of President and Chief Executive Officer of the Company.
Accordingly, and not by way of limitation, as President and Chief Executive
Officer of the Company, the Executive shall superintend and manage the business
of the Company and coordinate and supervise the work of its other officers,
employ agents, professional advisors and consultants and perform all functions
of a general manager of the Company's business. However, nothing in this
Agreement shall preclude the Executive from devoting a reasonable amount of time
and effort to civic, charitable and professional affairs and matters.
SECTION 4. EXECUTIVE PERFORMANCE COVENANTS. The Executive accepts the
employment described in Section 3 hereto and agrees to devote his full working
time and efforts (except for absences due to illness and appropriate vacations
and as provided in Section 3) to the business and affairs of the Company and the
performance of the aforesaid duties and responsibilities.
SECTION 5. COMPENSATION. The Company shall pay to the Executive for
his services hereunder, the compensation hereinafter provided in this
Section 5. Such compensation shall be paid to the Executive at the time and
in the manner as provided below.
(a) BASE COMPENSATION. The Executive shall be paid "BASE
COMPENSATION" during the first year of the Employment Period at an annual rate
of Three Hundred Sixty Thousand and 00/100 Dollars ($360,000) in 26 bi-monthly
equal installments. Thereafter, the Base Compensation shall be increased by the
aggregate amount of Sixty Thousand and 00/100 Dollars ($60,000) on each
anniversary hereof for the duration of the Employment Period. The Base
Compensation may be increased to an amount greater than provided herein at any
time or from time to time by action of the Board of Directors or any committee
thereof. The Base Compensation shall be pro-rated for any Fiscal Year hereunder
which is less than a full Fiscal Year.
(b) INCENTIVE BONUS COMPENSATION. The Executive shall be paid
"INCENTIVE BONUS COMPENSATION" for each Fiscal Year for the duration of the
Employment Period an amount equal to the product of: (a) one percent (1%)
multiplied by (b) the gross revenues generated by the Company for such Fiscal
Year, plus (c) twenty percent (20%) of the Base Compensation in effect during
such Fiscal Year; or (d) such amount as the Company's Board of Directors or any
committee thereof deems appropriate in its sole discretion.
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<PAGE>
SECTION 6. REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Executive for his reasonable expenses incurred in providing services to the
Company, in accordance with the Company's reimbursement policies as determined
from time to time by the Board of Directors. If there is a dispute as to the
eligibility of an expense for reimbursement in accordance with the Company's
reimbursement policies, then such expense shall be determined to be reimbursable
if approved by a majority of the Board of Directors.
SECTION 7. EMPLOYEE BENEFITS AND VACATIONS. During the Employment Period,
the Executive shall receive the benefits and enjoy the perquisites described
below:
(a) INSURANCE BENEFITS. The Company shall provide the Executive with
medical insurance, dental insurance, life insurance, health and accident
insurance and disability insurance commensurate with, and subject to, the terms
of the plans adopted by the Company for its executives (collectively referred to
as the "INSURANCE BENEFITS").
(b) VACATIONS. The Executive shall be entitled in each Fiscal Year
to a vacation of four (4) weeks (20 working days), during which time his
compensation shall be paid in full, and such holidays and other nonworking days
as are consistent with the policies of the Company for executives generally.
(c) BENEFIT PLANS. The Executive shall be entitled to participate in
all benefit plans that may be established from time to time by the Company.
SECTION 8. COMPANY LIFE INSURANCE; MEDICAL EXAMINATIONS. At any time
during the Employment Period, the Company may, in its discretion, apply for and
procure as owner and for its own benefit, insurance on the life of the
Executive, in such amounts and in such form or forms as the Company may
determine. The Executive shall have no right to any interest in any such policy
or policies, but he shall, at the request of the Company, submit to such medical
examinations, supply such information and execute such applications, instruments
and other documents as reasonably may be required by the insurance company or
companies to whom the Company has applied for such insurance.
If requested by the Company, the Executive shall submit to at least one
medical examination during each Fiscal Year at such reasonable time and place
and by a physician or physicians determined and selected by the Company. All the
costs and expenses of said medical examination, including transportation of the
Executive to the place of examination and return, shall be paid by the Company.
The Executive shall be entitled to a copy of all reports and other
information provided to the Company in connection with any examination referred
to in this Section 8. Any failure to pass any such medical examination or to
meet any health criteria or medical standard shall not of itself be cause for
termination of the Employment Period by the Company.
SECTION 9. CERTAIN COMPANY PROTECTION PROVISIONS. The provisions set forth
below apply for the protection of the Company.
(a) NONCOMPETITION. During the Restricted Period (as hereinafter
defined), the Executive shall not directly or indirectly compete with the
Company by owning, managing, controlling or participating in the ownership,
management or control of, or be employed or engaged by or otherwise affiliated
or associated with, any Competitive Business (as defined herein) in any location
in which the Company is doing business as of the Employment Termination Date. As
used herein, the term "RESTRICTED PERIOD" means the Employment Period and a
period of one (1) year thereafter. As used herein, a "COMPETITIVE BUSINESS" is
any other corporation, partnership, proprietorship, firm, association or other
business entity which is engaged in any business from which the Company derives
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<PAGE>
five percent (5%) or more of its consolidated revenues during the twelve (12)
months preceding the Employment Termination Date or in which the Company has
invested five percent (5%) or more of its total assets as of the time in
question, PROVIDED, however, that ownership by the Executive of not more than
five percent (5%) of the stock of any publicly traded company shall not be
deemed a violation of this provision.
(b) NON-INTERFERENCE. During the Restricted Period, the Executive
shall not induce or solicit any employee of the Company or any person doing
business with the Company to terminate his or her employment or business
relationship with the Company or otherwise interfere with any such relationship.
(c) CONFIDENTIALITY. The Executive agrees and acknowledges that, by
reason of the nature of his duties as an officer and employee, he will have or
may have access to and become informed of confidential and secret information
which is a competitive asset of the Company ("CONFIDENTIAL INFORMATION"),
including without limitation, technology, any lists of customers, financial
statistics, research data or any other statistics and plans contained in profit
plans, capital plans, critical issue plans, strategic plans or marketing or
operation plans or other trade secrets of the Company and any of the foregoing
which belong to any person or company but to which the Executive has had access
by reason of his employment relationship with the Company. The Executive agrees
faithfully to keep in strict confidence, and not, either directly or indirectly,
to make known, divulge, reveal, furnish, make available or use (except for use
in the regular course of his employment duties) any such Confidential
Information. The Executive acknowledges that all manuals, instruction books,
price lists, information and records and other information and aids relating to
the Company's business, and any and all other documents containing Confidential
Information furnished to the Executive by the Company or otherwise acquired or
developed by the Executive, shall at all times be the property of the Company.
Upon termination of the Employment Period, the Executive shall return to the
Company any such property or documents which are in his possession, custody or
control, but his obligation of confidentiality shall survive such termination of
the Employment Period until and unless any such Confidential Information shall
have become, through no fault of the Executive, generally known to the trade.
The obligations of the Executive under this subsection are in addition to, and
not in limitation or preemption of, all other obligations of confidentiality
which the Executive may have to the Company under general legal or equitable
principles.
(d) REMEDIES. It is expressly agreed by the Executive and the
Company that these provisions are reasonable for purposes of preserving for the
Company its business, goodwill and proprietary information. It is also agreed
that if any provision is found by a court having jurisdiction to be unreasonable
because of scope, area or time, then that provision shall be amended to
correspond in scope, area and time to that considered reasonable by a court and
as amended shall be enforced and the remaining provisions shall remain
effective. In the event any breach of these provisions by the Executive, the
parties recognize and acknowledge that a remedy at law will be inadequate and
the Company may suffer irreparable injury. The Executive acknowledges that the
services to be rendered by him are of a character giving them peculiar value,
the loss of which cannot be adequately compensated for in damages; accordingly
the Executive consents to injunctive and other appropriate equitable relief upon
the institution of proceedings therefor by the Company in order to protect the
Company's rights. Such relief shall be in addition to any other relief to which
the Company may be entitled at law or in equity. The provisions of Section 9(a),
9(b), 9(c) and 9(d) shall survive the termination of this Agreement.
SECTION 10. TERMINATION OF EMPLOYMENT.
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(a) NOTICE OF TERMINATION; EMPLOYMENT TERMINATION DATE.
(1) Any termination of the Executive's employment by the
Company or the Executive shall be communicated by written Notice of Termination
to the other party thereto. For purposes of this Agreement, a "NOTICE OF
TERMINATION" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination under the
provision so indicated. Furthermore, either the Executive or the Company may
give a Notice of Termination to the other party for the purpose of terminating
this Agreement, as such, without terminating the Executive's employment with the
Company which Notice of Termination shall have the effect of terminating this
Agreement on the Scheduled Employment Termination Date as in effect on the date
of giving such Notice of Termination.
(2) "EMPLOYMENT TERMINATION DATE" shall mean the date on
which the Employment Period and the Executive's right and obligation to perform
employment services for the Company shall terminate effective upon the first to
occur of the following, it being understood that in no event may the Employment
Period be terminated other than as the result of one of the following events:
(A) If the Executive's employment is terminated for Disability,
the date which is thirty (30) days after Notice of Termination
is given (provided that the Executive shall not have returned
to the performance of his duties on a full-time basis during
such thirty (30) day period);
(B) If the Executive's employment is terminated by the Executive
for Good Reason or otherwise by voluntary action of the
Executive (see Section 10(e)), the date specified in the
Notice of Termination, which date (except with the written
consent of the Company to the contrary) shall not be more than
thirty (30) days after the date that the Notice of Termination
is given;
(C) The death of the Executive;
(D) The Scheduled Employment Termination Date;
(E) If the Executive's employment is terminated by the Company
for Cause (see Section 10(b)(1)), the date on which a Notice
of Termination is given; provided that if within thirty (30)
days after any Notice of Termination is given the party
receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the
Employment Termination Date shall be the date on which the
dispute is finally determined, either by mutual written
agreement of the parties, by a binding and final arbitration
award or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected); and
(F) If the Executive's employment is terminated by the Company
other than for Cause, Disability or death of the Executive,
the date specified in the Notice of Termination which date
(except with the written consent of the Executive to the
contrary) shall not be more than thirty (30) days after the
date that the Notice of Termination is given.
(b) TERMINATION FOR CAUSE:
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(1) The Company may terminate the Executive's employment and
the Employment Period for Cause. For the purposes of this Agreement, the Company
shall have "CAUSE" to terminate the Executive's employment hereunder only (A) if
termination shall have been the result of an act or acts of misconduct
materially injurious to the Company, monetarily or otherwise, or (B) upon the
willful and continued failure by the Executive substantially to perform his
duties with the Company (other than any such failure resulting from incapacity
due to mental or physical illness) after a demand for substantial performance is
delivered by the Board, which demand specifically identifies the manner in which
the Board believes that the Executive has not substantially performed his
duties, and such failure results in demonstrably material injury to the Company.
The Executive's employment shall in no event be considered to have been
terminated by the Company for Cause if such termination took place as the result
of (i) bad judgment or negligence, or (ii) any act or omission without intent of
gaining therefrom directly or indirectly a profit to which the Executive was not
legally entitled, or (iii) any act or omission believed in good faith to have
been in or not opposed to the interest of the Company, or (iv) any act or
omission in respect of which a determination is made that the Executive met the
applicable standard of conduct prescribed for indemnification or reimbursement
or payment of expenses under the policies and procedures of the Company or the
laws of the State of Florida, in each case as in effect at the time of such act
or omission. The Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of a majority of the Board of Directors.
(2) If the Executive's employment shall be terminated for
Cause, the Company shall pay the Executive (A) within ten (10) days of such
termination, his unpaid Base Compensation through the Employment Termination
Date at his then effective Base Compensation Rate plus (B) within ten (10) days
after issuance of the Company's audited financial statements for the Fiscal Year
in which the Employment Termination Date occurs, his pro-rata share of any
Incentive Bonus Compensation computed with respect to the Fiscal Year in which
occurs the Employment Termination Date as if such termination had not occurred.
(c) TERMINATION FOR DISABILITY. The Company may terminate the
Executive's employment because of the Disability of the Executive and thereafter
shall pay to the Executive (or his successors) (1) his unpaid Base Compensation
through the Employment Termination Date at his then effective Base Compensation
rate, plus (2) an amount equal to a pro-rata share of any Incentive Bonus
Compensation calculated through the Employment Termination Date. In addition,
the Executive shall be entitled to amounts and the benefits specified in
Paragraph (2) of Section 10(f) of this Agreement through the Employment
Termination Date, subject to applicable law.
(d) TERMINATION UPON EXECUTIVE'S DEATH. In the event of the
Executive's death, the Company shall pay to the Executive's estate (1) any
unpaid amount of Base Compensation through the date of death at his then
effective Base Compensation rate plus (2) an amount equal to the pro-rata share
of any Incentive Bonus Compensation calculated with respect to the Fiscal Year
in which the death occurs.
(e) TERMINATION OF EMPLOYMENT BY THE EXECUTIVE.
(1) The Executive may terminate his employment for Good
Reason and receive the payments and benefits specified in Section 10(f) in the
same manner as if the Company had terminated his employment. For purposes of
this Agreement, "GOOD REASON" will exist if any one or more of the following
occur:
(A) Failure by the Company to honor any of its obligations under
this Agreement, including, without limitation, its obligations
under Section 3 (EMPLOYMENT CAPACITY AND Duties), Section 4
(EXECUTIVE PERFORMANCE COVENANTS), Section 5 (COMPENSATION),
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<PAGE>
Section 6 (REIMBURSEMENT OF EXPENSES), Section 7 (EMPLOYEE
BENEFITS AND VACATIONS), Section 11 (INDEMNIFICATION) and
Section 12 (SUCCESSORS AND ASSIGNS); or
(B) Any purported termination by the Company of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 10(a) above
and, for purposes of this Agreement, no such purported
termination shall be effective.
(C) If there is a Change in Control of the Company (as defined
below) and the employment of the Executive is concurrently or
subsequently terminated (i) by the Company without Cause or
(ii) by service of a Notice of Termination. For the purpose of
this Agreement, a "CHANGE IN CONTROL" of the Company has
occurred when: (x) any person (defined for the purposes of
this Section 10 to mean any Person within the meaning of
Section 13(d) of the Securities Exchange Act of 1934 as
amended (the "EXCHANGE ACT")), other than the Company or an
Affiliate thereof, or an employee benefit plan established by
the Board of Directors of the Company, acquires, directly or
indirectly, the beneficial ownership (determined under Rule
13d-3 of the regulations promulgated by the Securities and
Exchange Commission under Section 13(d) of the Exchange Act)
of securities issued by the Company having 20% or more of the
voting power of all of the voting securities issued by the
Company in the election of directors at the meeting of the
holders of voting securities to be held for such purpose; (y)
a majority of the directors elected at any meeting of the
holders of voting securities of the Company are persons who
were not nominated for such election by the Board of Directors
of the Company or a duly constituted committee of the Board of
Directors of the Company having authority in such matters; or
(z) the Company merges or consolidates with or transfers
substantially all of its assets to another person or entity.
(2) The Executive shall have the right voluntarily to
terminate his employment other than for Good Reason prior to the Scheduled
Employment Termination Date, and if the Executive shall so terminate his
employment, he shall be entitled only to payment of the amounts which would be
payable under Section 10(b)(2) had he been terminated for Cause.
(f) COMPENSATION UPON TERMINATION OTHER THAN FOR CAUSE.
(1) If the Company shall terminate the Executive's employment
for any reason other than for Cause pursuant to Section 10(b), Disability
pursuant to Section 10(c) or death of the Executive pursuant to Section 10(d),
or if the Executive shall terminate his employment for Good Reason pursuant to
Section 10(e)(1) (but not a termination voluntarily by the Executive other than
for Good Reason under Section 10(e)(2)), then the Company shall pay to the
Executive the following amounts:
(A) (i) His unpaid Base Compensation through the Employment
Termination Date at his then effective Base Compensation Rate,
PLUS (ii) any Incentive Bonus Compensation accrued and
deferred with respect to any previous Fiscal Year, the full
amount of which shall become immediately payable.
(B) In addition, the Company shall pay to the Executive promptly
in a single lump sum in cash an amount equal to the product of
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<PAGE>
(i) two (2), multiplied by (ii) 100% of the aggregate total
amount which would have been payable to Executive under
Section 5 for the entire Fiscal Year in which the Employment
Termination Date occurs as if his employment had not been
terminated (and without deduction or offset for any amounts
actually paid for such Fiscal Year on account of Base
Compensation and Incentive Bonus Compensation, under Section
5, this Section 10 or otherwise), and assuming for purposes of
calculating (x) the Base Compensation, 100% of the amount
thereof at the annual rate payable for such Fiscal Year
pursuant to Section 5(a) and (y) the Incentive Bonus
Compensation, the largest amount thereof accrued in any Fiscal
Year during the Employment Period.
(C) The Company shall also pay all legal fees and expenses
incurred as a result of such termination (including all such
fees and expenses, if any, incurred in contesting or disputing
any such termination, in seeking to obtain or enforce any
right or benefit provided by this Agreement, or in
interpreting this Agreement).
(D) The Executive shall be under no obligation to seek other
employment and there shall be no offset against any amounts
due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that
the Executive may obtain (any amounts due under Section 10(f)
are in the nature of severance payments, or liquidated
damages, or both, and are not in the nature of a penalty).
(2) Unless the Executive is terminated for Cause, the Company
shall maintain in full force and effect, for the Executive's continued benefit
through the Scheduled Employment Terminate Date, all active and retired
Insurance Benefits and other benefit programs or arrangements in which he was
entitled to participate immediately prior to the Scheduled Employment Terminate
Date provided that continued participation is possible under the general terms
and provisions of such plans and programs. In the event that participation in
any such plan or program is barred, the Company shall arrange to provide him
with benefits substantially similar to those which he is entitled to receive
under such plans and programs.
(g) COMPENSATION UPON DISABILITY. During any period that the
Executive fails to perform his duties hereunder as a result of incapacity due to
physical or mental illness, he shall continue to receive his full Base
Compensation at the rate then in effect and his full Incentive Bonus
Compensation calculated according to the provisions of Section 5(b) all until
this Agreement is terminated pursuant to Section 10(c) hereof.
SECTION 11. INDEMNIFICATION. As an employee, officer and director of the
Company, the Executive shall be indemnified against all liabilities, damages,
fines, costs and expenses by the Company in accordance with the indemnification
provisions of the Company's Bylaws as in effect on the date hereof, and
otherwise to the fullest extent to which employees, officers and directors of a
corporation organized under the laws of Florida may be indemnified as the same
may be amended from time to time (or any subsequent statute of similar tenor and
effect), subject to the terms and conditions of such statute.
SECTION 12. SUCCESSORS AND ASSIGNS. Except as hereinafter expressly
provided, the agreements, covenants, terms and provisions of this Agreement
shall bind the respective heirs, executors, administrators, successors and
assigns of the parties. Specifically, and not by way of limitation of the
foregoing, the Executive shall be bound by the terms and conditions of this
Agreement to any successor assignee of the Company's rights and obligations
8
<PAGE>
hereunder as a result of any merger, consolidation or sale or lease of all or
substantially all of the Company's business and assets.
If the Executive should die while any amounts are payable to him
hereunder, or if by reason of his death payments are to be made to him
hereunder, then this Agreement shall inure to the benefit of and be enforceable
by the Executive's executors, administrators, heirs, distributees, devisees and
legatees and all amounts payable hereunder shall then be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee or other
designee or, if there is no such designee, to his estate.
This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement or
any rights or obligations hereunder, except as hereinbefore provided in this
Section 12. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by his will
or by the laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this paragraph the Company shall have no
liability to pay to the purported assignee or transferee any amount so attempted
to be assigned or transferred.
As used in this Agreement, the "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as provided
for in the first paragraph of this Section 12 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.
SECTION 13. NOTICES. All notices, requests, demands, or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given upon receipt if delivered in person or by
facsimile (with confirmation of transmission), or upon the expiration of four
(4) days after the date sent, if sent by federal express (or similar overnight
courier service) to the parties at the following addresses:
(i) If to the Company:
PharmaSystems Cost Containment Corp.
7350 N.W. 7th Street, Suite 104
Miami, Florida 33126
Attn.: Aurelio Alonso, Chief Financial Officer
With a copy to:
Kirkpatrick & Lockhart LLP
Miami Center-20th Floor
201 South Biscayne Boulevard
Miami, Florida 33131
Attn.: Clayton E. Parker, Esq.
(ii) If to Executive:
Jose L. Rodriguez, M.D.
-------------------------------------
-------------------------------------
-------------------------------------
SECTION 14. WAIVER; REMEDIES CUMULATIVE. No waiver of any right or option
hereunder by any party shall operate as a waiver of any other right or option,
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<PAGE>
or the same right or option as respects any subsequent occasion for its
exercise, or of any legal remedy. No waiver by any party of any breach of this
Agreement or of any agreement or covenant contained herein shall be held to
constitute a waiver of any other breach or a continuation of the same breach.
All remedies provided by this Agreement are in addition to all other remedies by
it or the law provided.
SECTION 15. SEVERABILITY. If any term or other provision of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal or incapable
of being enforced under any rule or Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
SECTION 16. MISCELLANEOUS. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement may not be modified, changed or amended except in a writing
signed by each of the parties hereto. This Agreement may be signed in multiple
counterparts, each of which shall be deemed an original hereof. The captions of
the several sections and subsections of this Agreement are not a part of the
context hereof, are inserted only for convenience in locating such sections and
subsections and shall be ignored in construing this Agreement.
SECTION 17. ACCEPTANCE BY FAX. This Agreement shall be accepted, effective
and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature
pages hereto.
SECTION 18. NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTAR- ILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
SECTION 19. GOVERNING LAW. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Florida, without regard to principles of conflicts of laws thereof. Any
dispute, controversy or question of interpretation arising under, out of, in
connection with or in relation to this Agreement or any amendments hereof, or
any breach or default hereunder, shall be litigated in the state or Federal
courts located in Dade County, Florida. Each of the parties hereby irrevocably
submits to the jurisdiction of any state or Federal court sitting in Dade
County, Florida. Each party hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of any such action in Dade County, Florida.
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IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement on the date first above written.
JOSE L. RODRIGUEZ, M.D.
/s/ Jose L. Rodriguez
---------------------
PHARMASYSTEMS COST CONTAINMENT
CORP.,
a Florida corporation
By: /s/ Aurelio Alonso
------------------
Aurelio Alonso,
Chief Financial Officer
EXHIBIT 10.4
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT (the "Agreement") is made and entered
into as of June 7, 1997, by and among PHARMASYSTEMS COST CONTAINMENT CORP., a
Florida corporation (the "Company"), PSI HOLDINGS, INC., a Florida corporation
("PSI") and ORLANDO LOPEZ-FERNANDEZ JR., M.D. ("Dr. Lopez-Fernandez"). PSI and
Dr. Lopez-Fernandez are sometimes collectively referred to herein as the
"Shareholders".
WHEREAS, the Company's authorized common stock (the "Common Stock")
consists of 5,000,000 shares with a ------------ $0.001 par value per share; and
WHEREAS, PSI currently owns 607,237 shares of Common Stock and Dr.
Lopez-Fernandez currently owns 100,000 shares of Common Stock; and
WHEREAS, PSI and Dr. Lopez-Fernandez have arranged for Anchor Capital
Consultants, Ltd. to purchase (the "Third Party Stock Purchase") 245,314 and
40,400 shares of Common Stock, respectively, from each of them; and
WHEREAS, after the Third Party Stock Purchase, PSI shall own 361,923
shares (the "PSI Shares") of Common Stock and Dr. Lopez-Fernandez shall own
59,600 shares (the "Lopez-Fernandez Shares") of Common Stock; and
WHEREAS, PSI wishes for the Company to redeem the PSI Shares and Dr.
Lopez-Fernandez wishes for the Company to redeem the Lopez-Fernandez Shares
(these shares are collectively referred to herein as the "Shares"), all on the
terms and conditions specified herein; and
WHEREAS, the Company wishes to redeem the Shares on the terms and
conditions specified herein; and
WHEREAS, the PSI Shares are represented by Certificate No. ___ and the
Lopez-Fernandez Shares are represented by Certificate No. ____ (collectively,
the "Certificates").
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Recitals. The recitals stated above are true and correct as of the
date hereof and are hereby incorporated by reference herein.
2. Redemption of Shares. Subject to the terms and conditions of this
Agreement, the Shareholders hereby sell, transfer, convey and assign
(collectively, the "Redemptions") all of the Shares to the Company, and the
Company hereby agrees to redeem and accept delivery of the Shares. The parties
hereto acknowledge and agree that the transactions contemplated herein shall be
treated for all purposes as a redemption of the Shares by the Company.
Notwithstanding any other provision of this Agreement, the parties hereto each
covenant and agree that no Redemption shall occur hereunder unless it is in
compliance with all applicable laws, including, without limitation, Florida
Statutes Sections 607.0631 and 607.06401.
<PAGE>
3. Consideration; Closing.
----------------------
(a) The Company shall pay a total of $1,475,330.50 (the "Redemption
Price") to the Shareholders as consideration for all of the Shares, of which
$1,266,730.50 shall be paid to PSI and $208,600.00 shall be paid to Dr.
Lopez-Fernandez.
(b) The Redemption Price shall be paid as follows:
(i) At the closing (the "Closing") of the transactions
contemplated herein, the Company shall execute promissory
notes (the "Notes") in the forms attached hereto as Exhibit
"A" and Exhibit "B" in favor of PSI and Dr.
Lopez-Fernandez, respectively.
(ii) The parties agree and acknowledge that the Company
anticipates receiving certain capital contributions (the
"Capital Contributions") as more specifically described on
Exhibit "C" hereto, and that the total amount of the
Capital Contributions is anticipated to be $3,000,000.00.
(iii) The Cash Portion (the "Cash Portion") of the Redemption
Price shall be calculated as follows:
Total Capital Cash Portion of
Contribution Amount Purchase Price
------------------- ---------------
up to $3,000,000 $ 590,132
$4,000,000 $ 737,665
$5,000,000 $ 885,198
$6,000,000 $1,032,731
$7,000,000 $1,180,264
$8,000,000 $1,323,797
$9,000,000 $1,475,330
(iv) Except as otherwise provided herein, within five (5)
business days of its receipt of any Capital Contribution
the Company shall pay 21.5% of such Capital Contribution to
PSI and 3.5% of such Capital Contribution to Dr.
Lopez-Fernandez until the Cash Portion is paid in full.
(v) If the Company is unable to pay the payments required
hereunder because of restrictions imposed by any applicable
law, including, without limitation, Florida Statutes
Sections 607.0631 and 607.06401, the amount that is unable
to be paid shall be placed in an escrow account with an
escrow agent acceptable to all parties hereto. The terms of
such escrow arrangement shall provide that these escrowed
funds shall be immediately released to the Shareholders
when the restriction imposed by applicable law no longer
prohibits such payment.
(vi) The Shareholders agree and acknowledge that there can be no
guarantee that any of the Capital Contributions will
actually be received by the Company.
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(vii) The Cash Portion shall be increased due to funds received
by the Company, if any, from an offering of its equity
securities registered under the Securities Act of 1933, as
amended. This increase in the Cash Portion shall be made as
described in Section 3(b)(iii) hereof for increases in the
Cash Portion due to additional Capital Contributions. The
Cash Portion shall not be increased due to any debt
financings (which raise funds for operational purposes) or
any private equity offerings which the Company may effect.
(viii)All amounts due hereunder (and any accrued interest
thereon) shall be payable to the Shareholders on the one
(1) year anniversary of the date of this Agreement.
(c) The Closing shall occur on or before June __, 1997.
4. Stock Pledge Agreement. The Company's obligations under the Notes
shall be secured by pledges (the "Pledges") of the applicable Shares; provided,
however, that only the number of Shares necessary to cover the Company's
then-outstanding obligations (based on a per Share value of $3.50) shall be
subject to the Pledges. As the Company pays its obligations under the Notes,
Shares shall be released from the Pledges in accordance with this Section and
Redemptions of such Shares shall be deemed to occur at the time such Shares are
released from the applicable Pledge. The Pledges shall be documented in the
Stock Pledge Agreements (the "Stock Pledge Agreements") in the forms attached
hereto as Exhibit "D." The Stock Pledge Agreements shall be executed at the
Closing.
5. Releases.
--------
(a) Each Shareholder, on behalf of itself or himself and all of its
or his heirs, assigns, successors, executors, administrators, personal
representatives, agents and beneficiaries (collectively, the "Releasors") hereby
releases and forever discharges (each, a "Shareholder's Release") the Company
and its officers, agents, employees, shareholders, directors, attorneys,
accountants, consultants, successors and assigns (collectively, the "Releasees")
of and from all claims, costs, expenses, damages any other obligations
(including legal fees and expenses), whether currently known or unknown to the
parties, and whether direct or consequential, fixed or contingent, that the
Releasors ever had, now have or hereafter may have against the Releasees or that
the Releasors may hereafter sustain by reason of any matter, cause or thing
whatsoever, arising out of or in connection with such Shareholder's ownership of
Shares, except for the obligations arising under this Agreement or the Stock
Pledge Agreements.
(b) The Company hereby releases and forever discharges (each, a
"Company Release") each Shareholder and, as applicable, its officers, agents,
employees, shareholders, directors, attorneys, accountants, consultants,
successors and assigns of and from all claims, costs, expenses, damages any
other obligations (including legal fees and expenses), whether currently known
or unknown to the parties, and whether direct or consequential, fixed or
contingent, that the Company ever had, now has or hereafter may have against
each Shareholder or that the Company may hereafter sustain by reason of any
matter, cause or thing whatsoever, arising out of or in connection with such
Shareholder's ownership of the Shares, except for the obligations arising under
this Agreement or the Stock Pledge Agreements.
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<PAGE>
(c) Notwithstanding any other provision of this Agreement, the
Shareholders' Releases and the Company Releases shall become effective upon the
payment in full of all amounts due under the Notes.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Shareholders that (a) it is duly incorporated and
presently existing under the laws of the State of Florida, (b) it has all
requisite corporate power and authority to enter into this Agreement and to
carry out and perform its obligations hereunder, and (c) the execution of this
Agreement and the Company's Stock Pledge Agreement have been duly authorized by
all requisite corporate actions and all required corporate approvals have been
obtained.
7. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
(a) Each Shareholder hereby represents and warrants to the Company
that it or he, as applicable, (i) has good title to, and has all right and
authority to transfer and deliver all of, the Shares owned by it or him to the
Company hereunder, (ii) can effectively transfer to the Company the full right,
title and interest in and to the Shares owned by it or him, free and clear of
all options, warrants, rights, liens, claims, charges and any other
encumbrances, (iii) has provided the original Certificate or Certificates
representing the Shares owned by it or him to the Company, (iv) has obtained
independent professional advice regarding the tax, accounting, legal and
financial merits and consequences of the transactions contemplated herein, (v)
and its or his advisors have made such independent investigations of the Company
as the Shareholder and his advisors deem necessary or advisable in connection
with the transactions contemplated herein, (vi) has received all information
which he and his advisors deem necessary regarding the transactions contemplated
herein, and, in connection therewith, it or he and its or his advisors have been
provided with access to all books, records and documents of the Company, (vii)
is aware of the business activities and operations of the Company and is
satisfied that there are no material facts regarding the Company or the Shares
of which it or he has not been fully informed, and (viii) has had the
opportunity to consult its or his own counsel regarding the transactions
contemplated in this Agreement.
(b) In addition to the representations and warranties contained in
Section 7(a) hereof, PSI hereby represents and warrants that (i) it is duly
incorporated and presently existing under the laws of the State of Florida, (ii)
it has all requisite corporate power and authority to enter into this Agreement
and to carry out and perform its obligations hereunder, and (iii) the execution
of this Agreement and the Stock Pledge Agreement have been duly authorized by
all requisite corporate actions and all required corporate approvals have been
obtained.
8. Conditions Precedent.
--------------------
(a) Non-Participating PSI Shareholders. The parties hereto (i)
acknowledge and agree that the PSI shareholders listed on Exhibit "E" hereto
(the "Non-Participating PSI Shareholders") do not wish to participate in the
transactions contemplated herein, and (ii) covenant and agree that, as a
condition precedent to the consummation of the transactions contemplated herein,
PSI shall have redeemed all of the PSI common stock owned by the
Non-Participating PSI Shareholders in exchange for shares of Common Stock of the
Company currently held by PSI.
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(b) THIRD PARTY STOCK PURCHASE. The consummation of the Third Party
Stock Purchase shall be a condition precedent to the consummation of the
transactions contemplated herein.
9. NOTICES. All notices required or desired to be given hereunder shall
be written and shall be given by hand delivery or recognized overnight delivery
service to the following addresses:
(a) PharmaSystems Cost Containment Corp.
7350 N.W. 7th Street
Suite #104
Miami, Florida 33126
Attention: Jose L. Rodriguez, M.D., President
(b) PSI Holdings, Inc.
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Attention: Joseph Caruncho, Esq., President
(c) Orlando Lopez-Fernandez, Jr., M.D.
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
10. CERTIFICATES. On the effective date of each Redemption, each
Shareholder shall surrender the Certificate(s) which represent(s) the Shares
which are redeemed in that Redemption. If applicable, the Company shall then
issue new certificates reflecting each Shareholder's revised ownership of Common
Stock.
11. PROXIES; RESIGNATIONS. At the Closing each Shareholder shall
execute (a) an irrevocable proxy in the form attached hereto as Exhibit "F"
(collectively, the "Proxies") to Jose L. Rodriguez, M.D., giving Dr. Rodriguez
the power to vote each Shareholder's Shares on all matters, and (b) a
resignation in the form attached hereto as Exhibit "G" pursuant to which such
Shareholder resigns as a member of the Company's Board of Directors and from all
offices held with the Company, if applicable. All of the Proxies shall be
effective immediately and shall terminate on the earlier to occur of (i) the
Redemption of all of such Shareholder's Shares, or (ii) the Termination Date.
12. EXPENSES. Each party hereto shall bear all expenses incurred by
such party in connection with this Agreement and in the consummation of the
transactions contemplated hereby.
13. ATTORNEY'S FEES. In any action or proceeding brought to enforce any
provision of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, including attorneys' fees for any appeal and costs
incurred in bringing such action or proceeding, in addition to any other
available remedy. Such party shall be deemed to have been successful if such
action or claim is concluded pursuant to (a) a court order or final judgment
which is not subject to appeal, (b) a settlement agreement or (c) a dismissal of
the principal claims.
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14. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
agreements contemplated herein constitute the entire agreement among the parties
hereto regarding the subject matter hereof, and supersede all prior agreements,
understandings and arrangements, expressed or implied, both oral and written,
among the parties hereto with respect to the subject matters hereof. This
Agreement may only be amended or modified by a written amendment signed by all
of the parties hereto.
15. GOVERNING LAW; VENUE. The Agreement shall be construed, governed
and enforced in accordance with the laws of the State of Florida without regard
to its principles of conflicts of laws. Any action or proceeding which is
brought by any party hereto for any dispute, claim, disagreement or controversy
arising directly or indirectly out of or in connection with this Agreement shall
be brought in the state or federal courts in Dade County, Florida. The parties
hereto covenant and agree that they will not challenge the selection of such
venue in any such action or proceeding for any reason, including, without
limitation, on the grounds that such venue is an inconvenient forum.
16. SUCCESSORS; PERMITTED ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and permitted assigns.
17. SEVERABILITY. The provisions of this Agreement are severable, and
the invalidity of any provision shall not affect the validity of any other
provision. If any court of competent jurisdiction determines that any provision
of this Agreement or the application thereof is unenforceable because of the
duration or scope thereof, the parties hereto acknowledge and agree that such
court shall have the power to reduce the duration and scope of such provision to
the extent necessary to make it enforceable and that this Agreement in its
reduced form shall be valid and enforceable to the full extent permitted by
applicable law.
18. NO WAIVER. No waivers of any of the terms and conditions hereof
extended by any party hereto to any other party shall be construed as a waiver
of any breach on the part of such other party, nor shall any waiver by any party
hereto of any of the terms and conditions hereof be construed as a general or
continuing waiver by such party.
19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding any
other provision of this Agreement, each Shareholder covenants and agrees that
all of the representations, warranties and covenants made hereunder, including,
without limitation, the representations and warranties made in Section 7 hereof,
shall be true and correct on the date of each Redemption of his or its Shares
hereunder and shall be deemed to be given by each Shareholder as of the date of
each such Redemption.
20. NO UNDUE DURESS. The parties hereto acknowledge and agree that all
of the terms of this Agreement were negotiated at arms' length and that this
Agreement, and all documents executed in connection herewith, were prepared and
executed without duress, undue influence or coercion of any kind exerted by, or
on behalf of, any party hereto upon any other party.
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21. CAPTIONS. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
22. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Redemption Agreement as of the date first above written.
PHARMASYSTEMS COST CONTAINMENT CORP.
By: /s/ Jose L. Rodriguez
------------------------------------
Its: President
PSI HOLDINGS, INC.
By: /s/ Joseph L. Caruncho
-------------------------------------
Its: President
/s/ Orlando Lopez-Fernandes, Jr. M.D.
---------------------------------------
ORLANDO LOPEZ-FERNANDEZ, JR., M.D.
EXHIBIT 10.5
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "AGREEMENT") is made and entered into on
June 7, 1997 by and between PHARMASYSTEMS COST CONTAINMENT CORP., a Florida
corporation (the "PLEDGOR"), and PSI HOLDINGS, INC., a Florida corporation (the
"PLEDGEE").
WHEREAS, on even date herewith, the parties hereto executed a Stock
Redemption Agreement (the "STOCK REDEMPTION AGREEMENT"), attached as Exhibit
"A" hereto;
WHEREAS, in connection with the Stock Redemption Agreement, the Pledgor
executed and delivered a Promissory Note (the "NOTE"), attached as Exhibit "B"
hereto, in favor of the Pledgee in the initial principal amount of One Million
Three Hundred Forty Six Thousand Thirty Dollars and 50/100 ($1,346,030.50); and
WHEREAS, the Pledgee conditioned its willingness to extend credit to the
Pledgor, as evidenced by the Note, upon the Pledgor's execution and delivery to
the Pledgee of this Agreement which shall secure the payment of the Pledgor's
obligations under the Note.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. RECITALS. The above recitals are true and correct and are hereby
incorporated by reference herein.
2. EFFECTIVE DATE; DURATION. The term of this Agreement shall commence on
the date first written above and shall continue in full force and effect for so
long as any of the Secured Obligations (as defined herein) exist. As used
herein, the term "SECURED OBLIGATIONS" means (a) all of the unpaid principal
amount of the Note and (b) all of the accrued and unpaid interest on the Note,
and (c) fees, or expenses incurred by Pledgee in the enforcement of the Stock
Redemption Agreement, the Note, and/or this Agreement (collectively, the
"Transaction Documents").
3. GRANT OF SECURITY INTEREST. As collateral security for the payment of
all Secured Obligations when such obligations are due and payable under the
Note, the Pledgor hereby grants to the Pledgee a security interest (the
"SECURITY INTEREST") in all of the Pledgor's rights, title and interest in and
to the Shares (as defined in the Stock Redemption Agreement). For purposes of
this Agreement, the Shares and all property rights and interests described in
this Section 3 and Sections 4, 5 and 6 hereof, and all proceeds of any of the
foregoing, are collectively referred to herein as the "COLLATERAL."
4. DIVIDENDS AND OTHER DISTRIBUTIONS. Except as provided herein or in a
Transaction Document, during the term of this Agreement and so long as no Event
of Default (as defined in any of the Transaction Documents) ("Event of Default")
has occurred, the Pledgee shall not be entitled to receive any cash dividends or
other distributions payable with respect to the Collateral. Any stock dividends
shall be delivered to Escrow Agent and treated in the manner provided in Section
6. Upon the occurrence of an Event of Default, the Pledgor shall pay all
dividends and other distributions payable with respect to the Collateral
directly to the Pledgee.
5. VOTING RIGHTS. During the term of this Agreement and so long as no
Event of Default has occurred, the Pledgee shall not have the right to exercise
any voting rights pertaining to the Collateral. Upon the occurrence of an Event
<PAGE>
of Default, the Pledgee shall be entitled, at the Pledgee's option and following
written notice from the Pledgee to the Pledgor, to exercise all voting powers
pertaining to the Collateral.
6. ADJUSTMENTS; WARRANTS, OPTIONS AND OTHER RIGHTS. If, during the term of
this Agreement, (a) any stock dividend, reclassification, readjustment or other
change is declared or made in the capital structure of the Pledgor (including,
without limitation, the issuance of additional shares of any class of stock of
the Pledgor) or (b) any subscription warrants or any other rights or options are
issued by the Pledgor in connection with the Collateral, then the Pledgee shall
have an additional security interest in all new, substituted and additional
shares and all other securities, subscription warrants, rights and options
issued by the Pledgor by reason of any such change, exercise, grant or issuance,
and all such shares, warrants, rights, options and other securities shall become
part of the Collateral and shall be immediately assigned or otherwise
transferred to the Escrow Agent (as defined in the Stock Redemption Agreement)
be held pursuant to the terms of this Agreement.
7. DEFAULT; REMEDIES. If the Pledgor defaults hereunder or under a
Transaction Document, the Pledgee shall have all of the rights and remedies
provided hereunder or under the Note and applicable law, including, without
limitation, the Uniform Commercial Code as in effect in the State of Florida.
From the proceeds of any sale of the Collateral, the Pledgee may retain all
amounts due under the Note, including the costs and expenses of any such sale,
and shall remit any balance of such proceeds to the Pledgor. If the proceeds of
any sale are insufficient to cover the amounts due under the Note, including the
costs and expenses of any such sale, the Pledgor shall remain liable to the
Pledgee for any deficiency. Pledgee may, at its option, take possession of the
Collateral upon notice to the Escrow Agent and Pledgor. In order to facilitate
the implementation of this provision, the Company shall deliver to Escrow Agent,
at Closing, signed stock powers transferring the Collateral to the Pledgee.
8. PAYMENT. Simultaneous with each payment of amounts due the Pledgee
under the Note, the Pledgee shall instruct the Escrow Agent to transfer a
portion of the Collateral to the Pledgor, having an aggregate fair market value
equal to the amount of such payment. For purposes of this Section 8, the Shares
shall be deemed to have a fair market value equal to Three and 50/100 Dollars
($3.50) per Share.
9. FURTHER ASSURANCES. The Pledgor acknowledges and agrees that it will
cooperate with the Pledgee and will execute and deliver, or cause to be executed
and delivered, such stock powers, instruments, and documents as may be
reasonably requested by the Pledgee to transfer the Collateral and any rights
with respect thereto into the Pledgee's name or the name of the Pledgee's
nominee. Notwithstanding and without limiting the generality of the foregoing,
the Pledgor shall execute and deliver to the Pledgee such financing statements
and take such additional steps as the Pledgee may reasonably request to perfect
the Pledgee's Security Interest under applicable law.
10. NOTICES. Unless otherwise provided herein, all demands, notices,
consents, requests and other communications hereunder shall be in writing and
shall be delivered in person or by overnight courier service, addressed:
<PAGE>
If to the Pledgor: PharmaSystems Cost Containment Corp.
7350 N.W. 7th Street, Suite #104
Miami, Florida 33126
Attention: Jose L. Rodriguez, M.D.,
President
If to the Pledgee: PSI Holdings, Inc.
2600 Douglas Road, Suite 501
Coral Gables, FL 33134
Attention: Joseph Caruncho, Esq., President
Any such notice shall be effective when delivered.
11. ENTIRE AGREEMENT; AMENDMENT. The Transaction Documents contain the
entire agreement between the parties hereto with respect to the subject matters
hereof and thereof and may not be amended, modified or waived except by a
writing signed by the parties hereto.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to its
principles of conflicts of laws.
13. SEVERABILITY. The provisions of this Agreement are severable. If any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof and all such other provisions shall remain in full
force and effect. In the event that any court of competent jurisdiction shall
determine that any provision of this Agreement, or the application thereof, is
unenforceable because of the duration or scope thereof, the parties hereto agree
that said court in making such determination shall have the power to reduce the
duration and scope of such provision to the extent necessary to make it
enforceable, and that this Agreement in its reduced form shall be valid and
enforceable to the full extent permitted by law.
14. WAIVER. A waiver by any party of any of the terms and conditions
hereof shall not be construed as a general waiver by such party.
15. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
16. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute a
single agreement.
17. CAPTIONS. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement, or the intent of any provision hereof.
18. ATTORNEY'S FEES. In any action or proceeding brought to enforce any
provision of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, including attorneys' fees for any appeal and costs
incurred in bringing such action or proceeding, in addition to any other
available remedy. Such party shall be deemed to have been successful if such
action or claim is concluded pursuant to (a) a court order or final judgment
which is not subject to appeal, (b) a settlement agreement or (c) a dismissal of
the principal claims.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Pledge Agreement as of the date first above written.
PHARMASYSTEMS COST CONTAINMENT CORP.
By: /s/ Jose L. Rodriguez
---------------------
Name: Jose L. Rodriguez
Its: President
PSI HOLDINGS, INC.
By: /s/ Joseph L Caruncho
---------------------
Name: Joseph L. Caruncho
Its: President
EXHIBIT 10.6
-------------
STOCK PLEDGE AGREEMENT
----------------------
THIS STOCK PLEDGE AGREEMENT (the "Agreement") is made and entered into
on June 7, 1997 by and between PHARMASYSTEMS COST CONTAINMENT CORP., a Florida
corporation (the "Pledgor"), and ORLANDO LOPEZ-FERNANDEZ, JR., M.D. (the
"Pledgee").
WHEREAS, on even date herewith, the parties hereto executed a Stock
Redemption Agreement (the "Stock Redemption Agreement"), attached as Exhibit "A"
hereto;
WHEREAS, in connection with the Stock Redemption Agreement, the Pledgor
executed and delivered a Promissory Note (the "Note"), attached as Exhibit "B"
hereto, in favor of the Pledgee in the initial principal amount of One Hundred
Four Thousand Three Hundred Dollars and 00/100 ($104,300.00); and
WHEREAS, the Pledgee conditioned its willingness to extend credit to
the Pledgor, as evidenced by the Note, upon the Pledgor's execution and delivery
to the Pledgee of this Agreement which shall secure the payment of the Pledgor's
obligations under the Note.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. RECITALS. The above recitals are true and correct and are hereby
incorporated by reference herein.
2. EFFECTIVE DATE; DURATION. The term of this Agreement shall commence
on the date first written above and shall continue in full force and effect for
so long as any of the Secured Obligations (as defined herein) exist. As used
herein, the term "Secured Obligations" means (a) all of the unpaid principal
amount of the Note and (b) all of the accrued and unpaid interest on the Note,
and (c) fees, or expenses incurred by Pledgee in the enforcement of the Stock
Redemption Agreement, the Note, and/or this Agreement (collectively, the
"Transaction Documents").
3. GRANT OF SECURITY INTEREST. As collateral security for the payment
of all Secured Obligations when such obligations are due and payable under the
Note, the Pledgor hereby grants to the Pledgee a security interest (the
"Security Interest") in all of the Pledgor's rights, title and interest in and
to the Shares (as defined in the Stock Redemption Agreement). For purposes of
this Agreement, the Shares and all property rights and interests described in
this Section 3 and Sections 4, 5 and 6 hereof, and all proceeds of any of the
foregoing, are collectively referred to herein as the "Collateral."
4. DIVIDENDS AND OTHER DISTRIBUTIONS. Except as provided herein or in a
Transaction Document, during the term of this Agreement and so long as no Event
of Default (as defined in any of the Transaction Documents) ("Event of Default")
has occurred, the Pledgee shall not be entitled to receive any cash dividends or
other distributions payable with respect to the Collateral. Any stock dividends
shall be delivered to Escrow Agent and treated in the manner provided in Section
6. Upon the occurrence of an Event of Default, the Pledgor shall pay all
dividends and other distributions payable with respect to the Collateral
directly to the Pledgee.
5. VOTING RIGHTS. During the term of this Agreement and so long as no
Event of Default has occurred, the Pledgee shall not have the right to exercise
<PAGE>
any voting rights pertaining to the Collateral. Upon the occurrence of an Event
of Default, the Pledgee shall be entitled, at the Pledgee's option and following
written notice from the Pledgee to the Pledgor, to exercise all voting powers
pertaining to the Collateral.
6. ADJUSTMENTS; WARRANTS, OPTIONS AND OTHER RIGHTS. If, during the term
of this Agreement, (a) any stock dividend, reclassification, readjustment or
other change is declared or made in the capital structure of the Pledgor
(including, without limitation, the issuance of additional shares of any class
of stock of the Pledgor) or (b) any subscription warrants or any other rights or
options are issued by the Pledgor in connection with the Collateral, then the
Pledgee shall have an additional security interest in all new, substituted and
additional shares and all other securities, subscription warrants, rights and
options issued by the Pledgor by reason of any such change, exercise, grant or
issuance, and all such shares, warrants, rights, options and other securities
shall become part of the Collateral and shall be immediately assigned or
otherwise transferred to the Escrow Agent (as defined in the Stock Redemption
Agreement) be held pursuant to the terms of this Agreement.
7. DEFAULT; REMEDIES. If the Pledgor defaults hereunder or under a
Transaction Document, the Pledgee shall have all of the rights and remedies
provided hereunder or under the Note and applicable law, including, without
limitation, the Uniform Commercial Code as in effect in the State of Florida.
From the proceeds of any sale of the Collateral, the Pledgee may retain all
amounts due under the Note, including the costs and expenses of any such sale,
and shall remit any balance of such proceeds to the Pledgor. If the proceeds of
any sale are insufficient to cover the amounts due under the Note, including the
costs and expenses of any such sale, the Pledgor shall remain liable to the
Pledgee for any deficiency. Pledgee may, at its option, take possession of the
Collateral upon notice to the Escrow Agent and Pledgor. In order to facilitate
the implementation of this provision, the Company shall deliver to Escrow Agent,
at Closing, signed stock powers transferring the Collateral to the Pledgee.
8. PAYMENT. Simultaneous with each payment of amounts due the Pledgee
under the Note, the Pledgee shall instruct the Escrow Agent to transfer a
portion of the Collateral to the Pledgor, having an aggregate fair market value
equal to the amount of such payment. For purposes of this Section 8, the Shares
shall be deemed to have a fair market value equal to Three and 50/100 Dollars
($3.50) per Share.
9. FURTHER ASSURANCES. The Pledgor acknowledges and agrees that it will
cooperate with the Pledgee and will execute and deliver, or cause to be executed
and delivered, such stock powers, instruments, and documents as may be
reasonably requested by the Pledgee to transfer the Collateral and any rights
with respect thereto into the Pledgee's name or the name of the Pledgee's
nominee. Notwithstanding and without limiting the generality of the foregoing,
the Pledgor shall execute and deliver to the Pledgee such financing statements
and take such additional steps as the Pledgee may reasonably request to perfect
the Pledgee's Security Interest under applicable law.
10. NOTICES. Unless otherwise provided herein, all demands, notices,
consents, requests and other communications hereunder shall be in writing and
shall be delivered in person or by overnight courier service, addressed:
2
<PAGE>
If to the Pledgor: PharmaSystems Cost Containment Corp.
7350 N.W. 7th Street, Suite #104
Miami, Florida 33126
Attention: Jose L. Rodriguez, M.D.,
President
If to the Pledgee: Orlando Lopez-Fernandez, Jr., M.D.
2600 Douglas Road, Suite 501
Coral Gables, FL 33134
Any such notice shall be effective when delivered.
11. ENTIRE AGREEMENT; AMENDMENT. The Transaction Documents contain the
entire agreement between the parties hereto with respect to the subject matters
hereof and thereof and may not be amended, modified or waived except by a
writing signed by the parties hereto.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to its
principles of conflicts of laws.
13. SEVERABILITY. The provisions of this Agreement are severable. If
any provision of this Agreement is held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof and all such other provisions shall remain in full
force and effect. In the event that any court of competent jurisdiction shall
determine that any provision of this Agreement, or the application thereof, is
unenforceable because of the duration or scope thereof, the parties hereto agree
that said court in making such determination shall have the power to reduce the
duration and scope of such provision to the extent necessary to make it
enforceable, and that this Agreement in its reduced form shall be valid and
enforceable to the full extent permitted by law.
14. WAIVER. A waiver by any party of any of the terms and conditions
hereof shall not be construed as a general waiver by such party.
15. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
16. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall constitute
a single agreement.
17. CAPTIONS. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement, or the intent of any provision hereof.
18. ATTORNEY'S FEES. In any action or proceeding brought to enforce any
provision of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, including attorneys' fees for any appeal and costs
incurred in bringing such action or proceeding, in addition to any other
available remedy. Such party shall be deemed to have been successful if such
action or claim is concluded pursuant to (a) a court order or final judgment
which is not subject to appeal, (b) a settlement agreement or (c) a dismissal of
the principal claims.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Pledge Agreement as of the date first above written.
PHARMASYSTEMS COST CONTAINMENT CORP.
By: /s/ Jose L. Rodriguez
--------------------------------
Name: Jose L. Rodriguez
------------------------------
Its: President
------------------------------
/s/Orlando Lopez-Fernandez, Jr., M.D.
-------------------------------------
ORLANDO LOPEZ-FERNANDEZ, JR., M.D.
EXHIBIT 10.7
INTERMARK TRADE CENTRE LEASE AGREEMENT
PARTIES:
Article 1
This lease, made and entered on this 1st day of August, 1995 between
SHUSHO INVESTMENT, INC. hereinafter called the LESSOR, and
PHARMASYSTEMS, INC. called the LESSEE.
PREMISES:
Article 2
The LESSOR, in consideration of the covenants, conditions,
agreements and stipulations of LESSEE hereinafter expressed, does
hereby demise and lease to the LESSEE, and the LESSEE does take and
hire from the LESSOR the following premises, situated in Intermark
Trade Centre, in the County of Dade and State of Florida known and
described in Exhibit A.
TERM & USE:
Article 3
To have and to hold the same for a term commencing on the
"Commencement Date" and ending on the "Expiration Date" such
premises to be used by the LESSEE for office, sales, warehouse and
services purposes and for the doing of all things necessary and
incident to the LESSEE's business.
RENT:
Article 4
In consideration of the demise and leasing of the premises aforesaid
by LESSOR, the LESSEE covenants and agrees to pay to the LESSOR at
the address stated in the LEASE SUMMARY a fixed monthly rental as
specified in the LEASE SUMMARY payable in advance of the first day
of each month during the term of the lease.
Beginning the second year of this Lease and every year thereafter,
LESSEE will pay annual Cost-of-Living increases for each year based
upon the Consumer Price Index - United States, Average for all Urban
Consumers (1982-84 = 100) All Items, herein after called the
"Consumer Price Index" published by the Bureau of Labor Statistics
of the Department of Labor. The Index number indicated in the column
of United States Average entitled "All Items" for the last full
month prior to said year shall be the "Current Index Number" and the
corresponding Index number for the "Base Index Month" stated in the
LEASE SUMMARY shall be the "Base Index Number". The increased rental
shall be determined by multiplying the "Annual Base Rental" as
specified in the LEASE SUMMARY by a fraction, the numerator of which
is the Current Index Number, and the denominator of which is to Base
Index Number. Fixed Rental as so adjusted shall be due and payable
<PAGE>
to LESSOR in equal monthly installments commencing with the month
after the month with respect to which such computation shall be
made.
ADDITIONAL RENT:
Article 5 [INTENTIONALLY OMITTED]
TAXES:
Article 6 [INTENTIONALLY OMITTED]
LATE PAYMENT:
Article 7
Any payment of fixed or additional rent not received by LESSOR
within the first 5 days of the due date shall be charged a late
penalty of ten percent (10%) of the amount due.
LESSEE MAINTENANCE:
Article 8
LESSEE acknowledges that it has received the premises in good
condition and takes the same "as is". The LESSEE, at its own
expense; agrees to keep the interior portion of the Premises in good
repair and maintenance at all times. This includes but is not
limited to the interior portion of walls and electrical, mechanical,
and plumbing systems from the point where it enters the building.
LESSOR shall give notice to LESSEE of any repairs or maintenance
required within the Premises all of which are the responsibility of
the LESSEE, and if the LESSEE does not complete the same within a
reasonable period of time, the LESSOR shall have the right, but not
the obligation, to complete such repairs or maintenance, at the
expense of the LESSEE. The air conditioning unit including
condensing unit serving the Premises shall be maintained by LESSEE.
LESSOR MAINTENANCE:
Article 9
The LESSOR hereby agrees to keep the entire exterior of the building
of which the Premises are a part in good repair and maintenance,
including all grounds, parking lots, windows, the roof, exterior
walls, and the plumbing to the point where it enters the building,
making repairs and maintenance in a prompt and reasonable fashion,
and LESSEE shall pay LESSEE's proportionate share of said repairs
and maintenance in accordance with Article 5 of this Lease unless
the need for such repairs are caused by LESSEE, its agents or
invitees, in which event the entire cost and expense of such repairs
shall be paid by the LESSEE within thirty (30) days of statement
date.
INSURANCE:
Article 10
The LESSOR shall pay fire insurance for said premises. LESSEE shall
pay to LESSOR any increase in the rate of fire insurance applicable
2
<PAGE>
to the premises resulting from risks that are not normally connected
from and with the operations contemplated by Article 3, of this
Lease. LESSEE shall provide for its own public liability insurance
and insurance for its personal property on said premises. LESSEE
shall carry public liability insurance, in amounts with companies
and on forms acceptable to LESSOR, naming both LESSOR and LESSEE as
parties insured thereby, insuring the parties against any such
claim. LESSEE shall carry rent insurance as well as business
insurance. All such policies of insurance shall provide for not less
than thirty (30) days notice to LESSOR as a condition precedent to
cancellation. Such policy shall be delivered to LESSOR. LESSEE shall
provide LESSOR with evidence of payment of renewal premiums or
replacement of policy and payment of premiums not later than ten
(10) days prior to the expiration of any such policy.
ALTERATIONS:
Article 11
The LESSEE covenants and agrees that it will make no structural
change or any alteration without the LESSOR's consent, which shall
not be reasonably withheld, and without first furnishing the LESSOR
five (5) days advance written notice outlining the proposed changes
or alterations; that it will not in any manner deface or injure said
demised premises or any part thereof; and that LESSEE will return
said premises peaceably and promptly to the LESSOR at the end of the
term of the lease, or at any previous termination thereof, in as
good condition as the same are now in, loss by fire or other hazard
and by ordinary wear and tear excepted.
All persons are hereby placed on notice that LESSEE does not have
the power to contract for any services, repairs or alterations which
can result in the filing of a lien against LESSOR's or Owner's
interest is the property. LESSEE agrees to secure the removal of any
such lien within thirty (30) days of filing. LESSOR may cause a
short-form of this Lease to be recorded in order to set forth this
provision in the public records.
FIXTURES & PERSONAL PROPERTY:
Article 12
Any trade fixtures, equipment and other property installed in or
attached to the premises by or at the expense of the LESSEE shall
remain the property of the LESSEE and the LESSOR agrees that the
LESSEE shall have the right at any time from time to time to remove
any and all of its trade fixtures, equipment and other property
which it may have stored upon or affixed to the demised premises;
provided, however, that in the event of such removal LESSEE shall
restore the premises to substantially the same condition in which
the premises were at the time LESSEE took possession, loss by fire
or other hazard and by ordinary wear and tear excepted.
3
<PAGE>
All personal property placed or moved in the premises shall be at
the risk of the LESSEE or the Owner thereof, and LESSOR shall not be
liable to LESSEE for damage to said personal property; or the
LESSEE, arising from the bursting or leaking of water pipes, roof
leakage, flood or other casualty or from any act of negligence of
LESSOR or any co-LESSEE or occupants of the building or of any other
person whomsoever.
In the event LESSEE fails to remove its removable fixtures and
equipment upon expiration of this Lease or within a reasonable time
after termination due to fire, casualty or taking, then at LESSOR's
option, it may do so and charge the same to LESSEE, or in the
alternative deem the fixtures abandoned. Any such trade fixtures,
equipment and other property not removed shall be the property of
LESSOR.
RIGHT OF ENTRY:
Article 13
LESSOR, or any of its agents, shall have the right to enter said
premises during all reasonable hours to examine the same or to make
such repairs, additions or alterations as may be deemed necessary
for the safety, comfort, or preservation thereof, or of said
building, or to exhibit said premises at any time within ninety (90)
days before the expiration of this lease. Said right of entry shall
likewise exist for the purpose of removing placards, signs,
fixtures, alterations, or additions which do not conform to this
agreement.
UTILITIES & SERVICES:
Article 14
LESSEE hereby agrees to pay any and all charges made by any public
utility company for services furnished to LESSEE on the premises
during the term of this Lease including, but not limited to, all
costs for electricity, water, sewer, air conditioning, and heat.
LESSEE agrees to furnish janitorial services for the premise's
interior.
ASSIGNING & SUBLETTING:
Article 15
LESSEE shall not, without LESSOR's prior written consent, (a)
assign, convey or mortgage this Lease or any interest under it; (b)
allow any transfer thereof or any lien upon LESSOR's interest by
operation of law; (c) sublet the Leased Premises or any part
thereof. LESSOR agrees that it will not unreasonably withhold its
consent to any assignment or sublease, provided that if LESSEE
requests LESSOR's consent to any assignment of the Lease or to a
sublease of all or a substantial portion of the Leased Premises,
LESSOR may, in lieu of granting such consent or reasonably
withholding the same, terminate this Lease, effective on the
effective date of said assignment or on the commencement date
specified in the sublease, as the case may be to which LESSOR's
consent is requested. No permitted assignment or subletting shall
relieve LESSEE of LESSEE's covenants and agreements hereunder and
4
<PAGE>
LESSEE shall continue to be liable as a principal and not as a
guarantor or surety, to the same extent as though no assignment or
subletting has been made.
FIRE:
Article 16
The parties hereto mutually agree that if the demised premises are
partially or totally destroyed or damaged by fire of other hazard,
then LESSOR shall repair and restore the demised premises as soon as
is reasonably practical to substantially the same condition in which
the demised premises were before such damage. Provided, however,
that in the event the demised premises are completely destroyed or
so badly damaged as not be usable by the LESSEE for the purposes
herein provided, then this Lease shall be terminable by either party
hereto by serving written notice upon the other. The parties agree
that any taking by public authority shall be treated as destruction
or damage by fire for purpose of this Lease.
The LESSOR and LESSEE each hereby releases the other from any and
all liability or responsibility for any loss, injury, or damage to
the premises, or its contents, caused by fire or any other casualty
or accident during the term of this agreement, even if such fire,
casualty or accident may have been caused by the negligence (but not
the willful act) of the other party or one for whom such party may
be responsible.
SURRENDER PREMISES:
Article 17
LESSEE agrees to surrender to LESSOR, at the end of the term of this
Lease or upon any cancellation of this Lease, said leased premises
in as good condition as said premises were at the beginning of the
term of this Lease, ordinary wear and tear, and damage by fire and
windstorm or other acts of God, excepted. LESSEE agrees that if
LESSEE does not surrender to LESSOR at the end of the term of this
Lease, said leased premises, then LESSEE will pay to LESSOR all
damages that LESSOR may suffer on account of LESSEE's failure to so
surrender to LESSOR possession of said leased premises, and will
indemnify and save LESSOR harmless from and against all claims made
by succeeding LESSEE of said premises against LESSOR on account of
delay of LESSOR in delivering possession of said premises to said
succeeding LESSEE so far as such delay is occasioned by failure of
LESSEE to so surrender said premises.
OBLIGATIONS OF SUCCESSORS:
Article 18
The LESSOR and the LESSEE agree that all the provisions hereof are
to be construed as covenants and agreements as though the words
imparting such covenants and agreement were used in each separate
paragraph hereof and that all the provisions hereof shall bind and
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inure to the benefit of the parties hereof, their respective heirs,
legal representatives, successors and assigns.
ATTORNEY'S FEES:
Article 19
LESSEE agrees to pay all cost and expenses of collection and
reasonable Attorney's fees on any part of said rental that may be
collected by an Attorney, suit, distress or foreclosure.
CAPTIONS:
Article 20
The captions in the left-hand margin throughout this Lease are
inserted as a matter of convenience only and in no way confine,
limit, or describe the scope of intent of any Article of this Lease.
ABANDONMENT:
Article 21
If during the term of the Lease LESSEE shall abandon, vacate, or
remove from the premises the major portion of the goods, wares,
equipment or furnishings usually kept in said premises, or shall
cease doing business in said premises or shall suffer the rent to be
in arrears, LESSOR may, at its option, cancel this Lease, in the
manner in Article 30 thereof, or LESSOR may enter said premises as
the agent of LESSEE, by force or otherwise, without being liable in
any way therefore, and re-let the premises with or without any
furniture that may be therein, as the agent of LESSEE, at such price
and upon such terms and for such duration of time as LESSOR any
determine and receive the rent therefore, applying the same to the
payment of rent due by these presents, and if the full rental herein
provided shall not be realized by LESSOR over and above the expenses
to LESSOR of such reletting, LESSEE shall pay any deficiency.
BANKRUPTCY:
Article 22
It is agreed between the parties hereto that: If LESSEE shall be
adjudicated a bankrupt or an insolvent or take the benefit of any
federal reorganization or composition proceeding or make a general
assignment or take the benefit of any insolvency law, or if LESSEE's
leasehold interest under this Lease shall be sold under any
execution or process of law, or if a trustee in bankruptcy or a
receiver be appointed or elected or had for LESSEE (whether under
Federal or State Laws) or if said premises shall be abandoned or
deserted, or if LESSEE shall fail to perform any of the covenants or
conditions of this Lease or LESSEE's part to be performed, or if
this Lease or the term thereof be transferred or passed to or
evolved upon such persons, firm, officer or corporation other than
LESSEE by death of the LESSEE, operation of law or otherwise, then
and in any such events this Lease and the term of this Lease, at
LESSOR's option, shall expire and end five days after LESSOR has
given LESSEE written notice (in the manner hereinafter provided) of
such act, condition or default and LESSEE hereby agrees immediately
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then to quit and surrender said premises to LESSOR, but this shall
not impair or affect LESSOR's right to maintain summary proceedings
for the recovery of the possession of the demised premises in all
cases provided for by law. If the term of this Lease shall be so
terminated, LESSOR may immediately or at any time thereafter
re-enter or repossess the premises and remove all persons and
property therefrom without being liable for trespass or damages.
SECURITY DEPOSIT:
Article 23
The LESSEE, concurrently with the execution of this Lease, has
deposited with the LESSOR the sum of as specified in the LEASE
SUMMARY the receipt of which is hereby acknowledged, which sum shall
be retained by the LESSOR as security deposit for the payment by the
LESSEE of the rent herein agreed to be paid and for the faithful
performance of the covenants of this Lease. If at any time the
LESSEE shall be in default of any of the provisions of this Lease,
the LESSOR shall have the right to use said deposit, or so much
thereof as may be necessary in payment of any rent in default as
aforesaid and/or in payment of any expense incurred by the LESSOR in
and about the curing of any default by said LESSEE, and/or in
payment of any damages incurred by the LESSOR by reason of such
default of the LESSEE, or at LESSOR's option, the same may be
retained by the LESSOR in liquidation of part of the damages
suffered by the LESSOR by reason of the default of the LESSEE.
Should said security deposit or any portion thereof be applied by
LESSOR to curing any default by LESSEE, LESSEE shall pay LESSOR on
demand the amount so applied which shall be added to the security
deposit so that the same may be restored to its original amount. If
LESSEE shall faithfully fulfill, keep, perform, and observe all of
the covenants, conditions and agreements in this Lease set forth and
contained on the part of the LESSEE to be fulfilled, kept performed
and observed, the sum deposited or the part or portion thereof not
previously applied shall be returned to the LESSEE without interest
no later than thirty (30) days after the expiration of the term of
this Lease or any renewal or extension thereof provided LESSEE has
vacated the Leased Premises and surrendered possession thereof to
the LESSOR at the expiration of said term or any extension or
renewal thereof as provided herein.
REGULATIONS:
Article 24
LESSEE shall promptly execute and comply with all statutes,
ordinances, rules, orders, regulations and requirements of the
Federal, State, County and City Governments, and of any and all
their Departments and Bureaus, applicable to said premises for the
correction, prevention, and abatement of nuisances or other
grievances, in, upon, or connected with said premises, during said
term, and shall also promptly comply with an execute all rules,
orders and regulations of Southeastern Underwriters Association for
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the prevention of fires, at LESSEE's own cost and expense. LESSEE
shall abide by all rules and regulations adopted by LESSOR
concerning the use and possession of the premises provided that all
such rules and regulations adopted by LESSOR concerning the use and
possession of the premises provided that all such rules and
regulations shall be generally applicable to all tenants of
INTERMARK TRADE CENTRE. Notwithstanding anything in this Lease to
the contrary, LESSEE may not bring upon the premises any noxious,
hazardous, or radioactive materials.
NOTICES:
Article 25
Wherever in this Lease it shall be required or permitted that notice
or demand be given or served by either party to this Lease to or on
the other, such notice or demand shall be given or served and shall
not be deemed to have been given or served unless in writing duly
executed and forwarded by certified mail to the addresses as
specified in the LEASE SUMMARY. Such addresses may be changed from
time to time by either party be serving notices as above provided.
CONSENT TO MORTGAGE LEASE:
Article 26
LESSEE's right shall be subject to any bona fide mortgage which now
covers said premises or which may hereafter be placed on said
premises by LESSOR, or underlying lease now or later selfoperative,
and requires nothing further. Despite that fact, LESSEE agrees, upon
request, to execute such instruments as the mortgagee or LESSOR may
require in order to effectuate the intent expressed in this
paragraph.
SIGNAGE:
Article 27
LESSEE, may, at LESSEE's expense, have a letter type sign mounted on
the front door. The lettering on the front door shall not exceed 50%
of the door glass surface. All signage must be approved in advance
by LESSOR. No signage may be installed except by a professional sign
company approved by the LESSOR and the completed, installed signage
must be approved by LESSOR. All signage must be in compliance with
the rules, regulations and sign ordinances of Dade County, Florida.
INDEMNIFY LESSOR:
Article 28
In consideration of said premises being leased to LESSEE for the
above rental, LESSEE agrees: That LESSEE, at all times, will
indemnify and keep harmless LESSOR from all losses, damage,
liabilities, and expenses, which may rise or be claimed against
LESSOR and be in favor of any person, firm or corporation, for the
death of any person and for any injuries or damages to the person or
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property of any persons, firm or corporation, consequent upon or
arising from the use or occupancy of said premises by LESSEE, or
consequent upon or arising from any acts, omissions, neglect or
fault of LESSEE (his agents, servants, employees, licensees,
customer's or invitees), or consequent upon or arising from LESSEE's
failure to comply with the aforesaid laws, statutes, ordinances, or
regulations; that LESSOR shall not be liable to LESSEE for any
damage, losses or injuries to the persons or property of LESSEE
which may be caused by the acts, neglect, omission, or fault of any
person, firm or corporation, and that LESSEE will indemnify and keep
harmless LESSOR from all damages, liabilities, losses, injuries, or
expenses which may arise or be claimed against LESSOR and be in
favor of any person, firm, or corporation for the death of any
person and for any injuries or damages to the person or property of
any person, firm, or corporation where said death, injuries or
damages arose on or about the premises.
B. LESSOR'S REMEDIES:
LESSOR may without further notice re-enter the Premises either by
force or otherwise and dispossess LESSEE by summary proceedings or
otherwise, as well as the legal representative(s) of LESSEE and/or
other occupant(s) of the Premises, and remove their effects and hold
the Premises as if this Lease had not been made, and LESSEE thereby
waives the service of notice of intention to re-enter or to
institute legal proceedings to that end; and/or All Fixed Rent and
all Additional Rent for the balance of the Term will become
immediately due there upon and be paid, together with all expenses
of every nature which LESSOR may incur such as (by way of
illustration and not limitation) those for attorney's fees,
brokerage, advertising and putting the Premises in good order or
preparing them for re-rental; and/or LESSOR may re-let the Premises
or any part or parts thereof, either in the name of LESSOR or
otherwise, for a term or terms which may at LESSOR's option be less
than or exceed the period which would otherwise have constituted the
balance of the term, and may grant concessions of free rent or
charge a higher rental than that reserved in this Lease; and/or
LESSEE or its legal representative(s) will also pay to LESSOR as
liquidated damages any deficiency between the Fixed Rent and all
Additional Rent hereby reserved and/or agreed to be paid and the net
amount, if any, of the rents collected on account of the Lease or
Leases of the Premises for each month of that period which would
otherwise have constituted the balance of the Term.
C. OTHER LESSOR RIGHTS:
The failure or refusal of LESSOR to re-let the Premises or any part
or parts thereof will not release or affect LESSEE's liability for
damages. In computing such liquidated damages there will be added to
said deficiency all expenses referred to in Clause B above. Any such
liquidated damages will be paid in monthly installments on the days
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specified in the Lease for payment of Fixed Rent and Additional Rent
and any suit brought to collect the amount of the deficiency for any
month will not prejudice in any way the rights of the LESSOR to
collect the deficiency for any subsequent month by a similar
proceeding. LESSOR, in putting the Premises in good order or
preparing the same for re-rental may, at LESSOR's option, make such
alterations, repairs, replacements and/or decorations in and to the
Premises as LESSOR, in its sole judgment, may consider advisable or
necessary, without releasing LESSEE from liability hereunder
aforesaid. LESSOR will in no event be liable in any way whatsoever
for failure to re-let the Premises, or, if the Premises are re-let,
for failure to collect the rent under such re-letting, and in no
event will LESSEE be entitled to receive the excess, if any of such
net rents collected over the sums payable by LESSEE to LESSOR
hereunder. LESSEE hereby expressly waives any and all rights of
redemption granted by or under any present or future laws.
Notwithstanding any contrary provision of this Lease, in an event of
any breach or default of LESSEE, LESSOR , at its election (and
without waiving any other rights and remedies available to it) may
bring a legal or equitable action or proceeding against LESSEE to
enforce compliance with the monetary and/or monetary provisions
hereof.
DEFAULT:
Article 29
A. EVENTS OF DEFAULT: If LESSEE vacates or abandons the Premises
prior to the expiration of the term, in contravention of the terms
and provisions of this Lease; or fails to fulfill any of the terms
or conditions of this Lease; or if any execution or attachment is
issued against LESSEE or any of LESSEE's property resulting in the
Premises or any part thereof being taken or occupied by someone
other than LESSEE; or if LESSEE or any of its successors or assigns
or any guarantor of this Lease should file any voluntary petition in
bankruptcy, reorganization or arrangement, or any assignment for the
benefit of creditors or for similar relief under any present or
future statute, law, or regulation relating to relief of debtors; or
if LESSEE or any of its successors or assigns or any Guarantor
should be adjudicated bankrupt or have an involuntary petition in
bankruptcy filed against it; or if LESSEE shall permit, allow or
suffer to exist any lien, judgment, writ, assessment, charge
attachment or execution upon LESSOR's or LESSEE's interest in this
Lease or the Premises, and/or fixtures, improvements, and furnishing
located thereon; then, LESSEE shall be deemed to have committed an
event of default.
B. LESSEE'S GRACE PERIOD AND DEFAULT: If upon Lessor's serving a
written ten (10) day notice upon LESSEE specifying the nature of
such default and upon the expiration of said ten (10) days, if such
default has not been cured or remedied or if such default is of a
nature that it cannot be completely cured or completely remedied
within said ten (10) day period and if steps have not been
diligently commenced to cure or remedy it within such ten (10) day
period and are not thereafter with reasonable diligence and in good
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faith continued to remedy or cure the default, then LESSEE shall be
in default of this Lease and LESSOR shall have remedies all provided
under this Lease and under then laws of the State of Florida.
C. REPEATED LATE PAYMENT: Regardless of the number of LESSOR's prior
acceptance of late payments and/or late charges, if LESSEE twice in
any six (6) month period that Base Rent or any Additional Rent has
not been paid when due any further late payment within such six (6)
month period will constitute a default beyond any applicable grace
period.
LESSOR'S REMEDIES FOR LESSEE'S BREACH AND/OR DEFAULT:
Article 30
A. LESSOR'S OPTIONS: If LESSEE is in default of this Lease, the
LESSOR may at its option, in addition to such other remedies as may
be available under Florida law: terminate this Lease and LESSEE's
right of possession; or terminate the LESSEE's right to possession
but not the Lease; and proceed in accordance with any and all
provisions of sub-paragraphs B and C below as LESSOR may elect and
as permitted law.
SPECIAL CLAUSES:
Article 31
1. ONE MONTH FREE RENT (JULY 1995), TO DO INSIDE CONSTRUCTION WORK
ON UNIT #103.
2. THE SALES TAX IS INCLUDED IN THESE MONTHLY RENT.
3. PROVIDING THAT LESSEE HAS FULFILLED ALL THE TERMS AND CONDITIONS
OF THIS LEASE, THE TENANT SHALL HAVE THE OPTION TO RENEW OR
EXTEND THIS LEASE FOR AN ADDITIONAL: SECOND YEAR 3% INCREASE AND
THIRD YEAR WITH A 4% INCREASE.
SIGNED AND ACKNOWLEDGED IN THE PRESENCE OF:
AS TO LESSOR: LESSOR:
By: /s/ Carlos a. Rosado
- ----------------------------------- --------------------------------------
Carlos A. Rosado
Title: Administrator
- ----------------------------------- --------------------------------------
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AS TO LESSEE: LESSEE:
PHARMASYSTEMS, INC.
By: /s/ George Fernandez
- ----------------------------------- --------------------------------------
Title:
- ----------------------------------- --------------------------------------
EXHIBIT 10.8
PROMISSORY NOTE
Early Renewal & Increased Consolidation Note Re:
$100,000.00 note dated 1-10-96
and $200,000.00 note of even date herewith Loan No. 1200474/9488-TS
Fluctuating Rate P+2%
Revolving Credit Yes
$300,000.00 March 25, 1997
Each party signing this promissory note as maker (each of whom,
together with each endorser, surety of guarantor, is hereinafter included in the
term "Obligor"), jointly and severally promises to pay to the order of UNITED
NATIONAL BANK, hereinafter called "Holder," at its office at 1399 S.W. First
Avenue, Miami, Florida 33130 (or at such other place as the Holder hereof may
designate), the sum of THREE HUNDRED THOUSAND AND NO/100 DOLLARS with interest
at two per cent per annum in excess of the "prime rate" established by the
Holder, as such rate shall change from time to time in accordance with the
credit polices of the Holder; the prime rate so established by the Holder not
necessarily being the lowest or best rate charged to its borrowers. The interest
rate to be charged hereunder will be determined based upon the applicable prime
rate as it shall change from time to time during the term of the loan evidenced
by this note. Such rate shall initially be determined on the date of funding
hereunder and thereafter on each date that the Holder shall change its prime
rate. Verification from the Holder of its prime rate applicable on a particular
date during the term of the loan evidenced by this note will be available upon
an Obligor's written request therefor. Interest on principal will accrue from
the date of funding at the rate of 1/360th of annual interest for each day that
principal is outstanding; provided, however, in no event shall interest be due
at a rate in excess of the maximum permissible legal rate. In the event the loan
evidenced by this note constitutes a consumer credit transaction as defined
under Regulation Z of Board of Governors of the Federal Reserve System, then the
maximum legal rate referred to herein shall mean 18%, determined on a 365-day
basis, unless the loan amount exceeds $500,000, in which event the maximum
permissible legal rate shall mean 25%, determined on a 365-day basis. Principal
and interest shall be payable as follows:
Interest on the principal balance outstanding
from time to time shall be paid on April 14, 1997
and on the 14th day of each month thereafter, and
on April 14, 1998 the entire outstanding principal
balance hereof, together with any accrued and unpaid
interest thereon, shall be paid.
Notwithstanding the foregoing, the entire unpaid
principal balance of this note, together will all
accrued interest, shall be due and payable on
demand at any time subsequent to July 14, 1997.
<PAGE>
All payments shall be applied first to accrued interest and then to
principal. In the event the Obligor has not drawn the entire principal sum of
this note, additional sums may be drawn up to the original principal sum hereof.
In the event the parties intend this note to evidence a revolving credit
arrangement (such intention being indicated in the appropriate space above), the
Obligors may draw the entire principal sum thereof, from time to time, and the
outstanding balance due hereunder shall accordingly increase or decrease, so
long as the aggregate outstanding principal balance shall not at any time exceed
the original principal sum hereof.
As used in this instrument, the term "Collateral" shall refer to those
items specifically scheduled in this note together with all property of each
Obligor that for any purpose, whether in trust for any Obligor or for custody,
pledge, collection or otherwise, is now or hereafter in the actual or
constructive possession of, or in transit to, the Holder in any capacity, its
correspondents or agents, and the right of set-off against all deposits and
credits of each Obligor with, and all claims of each Obligor against, the Holder
at any time existing. With respect thereto, the parties understand that the
Holder is authorized at any time without prior notice to apply such Collateral
in whole or in part, and in such order as the Holder may elect, to the payment
of or as a reserve against one or more of the Obligations (as defined in this
instrument), whether other collateral therefor is deemed adequate or not.
As used in this instrument, the term "Obligations" shall refer to the
indebtedness represented by this note and all renewals and substitutions hereof
and claims of every nature and description of the Holder against the Obligors
whether present or future, contracted with or acquired by the Holder, and
whether joint, several, absolute, contingent, matured, unmatured, liquidated,
unliquidated, or direct or indirect.
As security for payment of this note and of all the Obligors, the
Obligors jointly and severally give the Holder a continuing lien and security
interest in all of the Collateral, including without limitation any property
which may be described on the reverse side hereof or on an attached schedule;
provided, however, that in the event the Collateral includes the principal
dwelling of a consumer (as such terms are described under Regulation Z of the
Board of Governors of the Federal Reserve System), the term Obligations shall
not include borrowings subsequent hereto with respect to which Holder was
required to provide, and did not so provide, a notice of right of rescission
pursuant to applicable requirements of Regulation Z of the Board of Governors of
the Federal Reserve System.
The happening of any following events shall constitute a default
hereunder: (1) a failure of any Obligor to pay in full any installment payable
hereunder promptly when it becomes due; (2) failure of any Obligor to pay in
full when due any indebtedness, obligation, or liability to the Holder
whatsoever, or any installment thereof or interest thereon; (3) failure of any
Obligor to perform any agreement hereunder; (4) the Holder learns that any
warranty, representation, certificate or statement of any Obligor (whether
contained in this note or not) pertaining to or in connection with this note or
the loan or credit evidenced by this note, may not be true; (5) any Obligor
becomes insolvent or any insolvency proceedings (as said terms "insolvent" and
"insolvency proceedings" are defined in the Uniform Commercial Code of Florida)
are instituted or made by or against any Obligor, or application is made for the
appointment of a receiver for any Obligor or for any of the assets of any
Obligor; (6) the entry of a judgment against any Obligor; (7) the issuing of any
levy, attachment or garnishment, or the filing of any lien against any property
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of any Obligor; (8) the determination by the Holder that a material adverse
change has occurred in the financial condition of any Obligor (a) from the
conditions set forth in the most recent financial statement of such Obligor
heretofore furnished to the Holder, or (b) from the financial condition of such
Obligor as heretofore most recently disclosed to the Holder in any manner; (9)
failure to do all things necessary to preserve and maintain the value and
collectability the Collateral, including but not limited to the payment of taxes
and premiums on policies of insurance on the due date without benefit of the
grace period; (10) the assignment by any Obligor of an equity in any of the
Collateral without written consent of the Holder; (11) the death of any Obligor;
(12) the dissolution, merger, consolidation, or reorganization of any Obligor;
or (13) the actual or attempted revocation of his guaranty by an Obligor who has
guarantied Obligations hereunder not yet advanced or not yet readvanced under a
revolving credit arrangement which may be herein provided.
Upon the happening of any event of default as defined herein: (1) the
entire amount of this note remaining unpaid, less the amount of any prepaid
interest or discount and any rebates required by law, shall, at the option of
the Holder and without notice or demand, become due and payable forthwith or
thereafter. In no event and under no circumstances shall the Holder be entitled
hereunder to unaccrued or unearned interest or other charges. In the event of
default, after deducting any paid and unaccrued or paid and unearned interest
from the principal balance then due, the then unpaid balance hereof and any
accrued and unpaid interest shall bear interest from the time of such default at
the maximum legal rate permissible, and, regardless of the payment terms of the
note, all unpaid interest from the time of such default may be compounded on a
monthly basis, the first such compounding to be made 30 days after the default
and, thereafter, on the same date of each subsequent month until all Obligations
have been paid in full. In no event and under no circumstances shall there be
due hereunder, nor shall the Holder be entitled hereunder to receive at any
time, any charges not allowed or permitted by law or any interest or interest
rate in excess of the maximum allowed by law. In the event that the amount of
any charge or payment due hereunder shall create or be deemed to create an
interest charge in excess of the maximum permissible legal rate, then the charge
of any such excess amount shall be deemed unenforceable and void and its
collection shall be waived, without affecting the remainder of the Obligations
evidenced hereby, and any such excess amount which may have been paid to the
Holder shall be refunded; (2) the Holder may as its option, thereupon or
thereafter declare all other Obligations, or any of them selected by the Holder
(notwithstanding any provisions thereof), immediately due and payable without
demand or notice of any kind (but with such adjustments, if any, with respect to
any interest or other charges as may be provided for in the promissory note or
other writing evidencing such Obligation); (3) the Holder shall have and may
exercise without demand any and all of the rights and remedies granted to a
secured party upon default under the Uniform Commercial Code of Florida, or
otherwise available to the Holder (including those available under any written
instrument in addition to this note relating to any of the Obligations or any
security thereof) and, without limiting the generality of the foregoing, the
Holder shall have the right, immediately and without further action by it, to
set-off against this note all money owed by the Holder in any capacity to each
or any Obligor, whether or not due, and also to set-off against all other
Obligations of each Obligor to the Holder all money owed by the Holder in any
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<PAGE>
capacity to each or any Obligor; and the Holder shall be deemed to have
exercised such right of set-off and to have made a charge against any such money
immediately upon the occurrence of such default or other event even though such
charge is made or entered on the books of the Holder subsequent thereto.
In the event this note evidences a revolving credit arrangement,
Obligor requests and authorizes Holder, in the latter's sole discretion; (a) at
maturity, or on the business day proceeding maturity, of the loan evidenced
hereby, to increase the outstanding principal balance hereunder to the stated
original principal amount of this note; and (b) on the business day next
following such maturity, to reduce the principal balance to the amount
outstanding just prior to such maturity. Obligor agrees that any such action
which the Holder in its sole discretion shall take is done so as to exempt, in
accordance with applicable regulations or opinions of the Department of Revenue
of the State of Florida, the maturing Obligation evidenced by this note from the
imposition of documentary stamp tax with respect thereto in the event the Holder
agrees to extend the maturity of this note, and that such action by Holder shall
in no way indicate approval of a renewal of the loan evidenced by this note.
In the event that subsequent to the stated maturity hereof the Holder
makes an advance for any of the purposes provided for or permitted herein, the
provisions of this note shall be applicable with respect to such advance in all
respects as if such advance had been made prior to maturity.
In the event the Holder shall be required at any time to pay additional
documentary stamp tax, intangible tax, or other taxation with respect to any
transaction contemplated or evidenced by this note, the Obligor shall reimburse
the Holder immediately for all costs, including any interest and penalties with
respect thereto.
The Obligor hereby authorizes the Holder, at the Holder's sole
discretion, to extend the maturity of this note to a date determined by the
Holder as set forth in a written notice mailed to the Obligor at the address
shown for the Obligor in the Holder's records, provided that the interest rate
and/or payment terms remain the same or are lower than those provided for under
the original promissory note evidencing this loan.
The Obligor represents and verifies to the Holder that the statement of
financial condition of the Obligor provided to the Holder is accurate and
correct in all material respects; understands that the Holder is relying upon
this representation and verification in extending credit to the Obligor; and
agrees to provide written notification to Holder promptly upon the occurrence of
a material adverse change in Obligor's financial condition from that reflected
on the statement of Obligor's financial condition which Obligor provided to the
Holder.
With respect to any and all Obligations, the Obligors severally waive
the following (1) demand, presentment, protest, notice of dishonor, suit against
any party and all other requirements necessary to charge or hold any Obligor
liable on any Obligation; (2) any further reciept for acknowledgement of the
Collateral now or hereafter deposited or statement of indebtedness; (3) the
right to interpose any set-off or counterclaim of any nature or description in
any litigation in which the Holder and any Obligor shall be adverse parties. The
Obligors severally agree that any Obligations of any Obligor may from time to
time, in whole or in part, be renewed, extended, modified, accelerated,
4
<PAGE>
compromised, discharged or released by the Holder, and any Collateral, lien
and/or right of set-off securing any Obligations may, from time to time, in
whole or in part, be exchanged, sold, or released, all without notice to or
further reservations of rights against any Obligor and all without in any way
affecting or releasing the liablity of any Obligor. The Obligors jointly and
severally agree to pay all taxes and assesments levied on or with respect to the
Obligations, this note, and any Collateral, including but not limited to
intangible and documentary stamp taxes, and all filing fees and taxes and all
costs of collecting or securing or attempting to collect or secure any
Obligations, including attorney's fees, whether or not involving litigation
and/or appellate proceedings.
The Holder shall not by any act, delay, omission or otherwise be deemed
to have waived any of its rights or remedies, and no waiver of any kind shall be
valid, unless in writing and signed by the Holder. All rights and remedies of
the Holder under the terms of this note and under any statutes or rules of law
shall be cumulative and may be exercised successively or concurrently. The
Obligors jointly and severally agree that the holder shall be entitled to all
the rights of a holder in due course of a negotiable instrument. This note shall
be governed by and construed in accordance with the laws of the State of
Florida. Any provision of this note which may be unenforceable or invalid under
any law shall be ineffective to the extent of such unenforceability or
invalidity without affecting the enforceability or validity of any other
provision hereof. Any notice required to be given to any person shall be deemed
sufficent if mailed, postage prepaid, to such person's address as it appears on
this note, or, if none appears, to any address in the Holder's files. The Holder
shall have the right unilaterally to collect patent errors in this note and to
fill in any blank spaces herein so as to conform to the terms upon which the
loan evidenced hereby is made.
The Obligors shall be jointly and severally liable for all indebtedness
represented by this note and have subscribed their names hereto without
condition that anyone else should sign or become bound hereon and without any
other condition whatever being made. The provisions of this note are binding on
the heirs, executors, administrators, assigns and successors of each and every
Obligor and shall inure to the benefit of the Holder, its successors and
assigns. This note is executed under the seal of each of the Obligors.
This promissory note and other loan and, if appliable, collateral
documentation being executed contemporaneously herewith (collectively, the "Loan
Documentation") constitute and evidence the complete understanding between the
Holder and the Obligor. All prior and contemporaneous discussions between the
Holder and the Obligor, including al representations and promises by the Holder,
whether oral or written, are included in and merged in the Loan Documentation.
Any modification thereof hereafter whcih is not writing and signed by the Holder
and the Obligor shall be void, except that the Holder may in its sole discretion
extend the maturity of the loan evidenced by this note for a term specified in a
written notification mailed to the Obligor at its address shown on the Holder's
records. The Holder may rely on the information, instructions, or other
communications (including requests for and directions concerning loan advances)
given to the Holder by any Obligor.
Notwithstanding the fact that a default hereunder may not exist, and
without the necessity for notice to or consent of any Obligor, the Holder may
allow additions to, reductions or releases or exchanges of, or substitutions for
5
<PAGE>
the Collateral or any part thereof. Surrender of this note, upon payment or
otherwise, shall not affect the right of the Holder to retain the Collateral as
security for other obligations.
The Holder shall not be obligted to resort to any Collateral but, at
its election, may proceed to enforce any of the Obligations in default against
any or all of the Obligors.
Notwithstanding anyhting herein to the contrary, Holder agrees, by
acceptance of this Note, to forebear acceleration of the unpaid prinicipal
balance herof (a) for a period of 15 days for the failure of the Obligor to make
a payment when due hereunder, and (b) for a period of 30 days in the event of
any other default by Obligor in an Obligation hereunder. Such forbearance shall
not deny or in any way mitigate the occurence of a default, unless the Obligor,
within the applicable forbearance period, cures such default to Holder's
statisfaction, in which event the loan shall thereupon be reinstated and
restored to good standing in all respects, including the interest rate hereon,
effective as of the date of the default.
Obligor covents to and agrees with the Holder that, for so long as any
Obligations under this promissory note shall be outstanding, Holder shall be the
primary depository for the buisness accounts of Obligor. Obligor recognizes that
such covenant and agreement was an important factor and a material inducement to
the Holder in establishing the terms and conditions, including the interest
rate, of the loan evidenced by this note. If Obligor violates this covenant and
agreement, Holder may elect, upon written notice to any one Obligor mailed to
his address as shown of the Holder's records, to increase the interest rate set
forth in this note to a rate specified in such notice, which rate shall not
exceed one percent annum less than the maximum permissible legal rate, effective
from the date of such notice.
THE OBLIGOR AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER, EACH HEREBY
WAIVES (1) ALL RIGHTS TO RELY ON OR ENFORCE ANY ORAL STATEMENTS MADE PRIOR TO,
CONTEMPORANEOUSLY WITH OR SUBSEQUENT TO THE SIGNING OF THIS PROMISSORY NOTE; AND
(2) THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS PROMISSORY NOTE, OR WITH
RESPECT TO DEALINGS BETWEEN THE HOLDER AND THE OBLIGOR CONCERNING ANY COURSE OF
CONDUCT, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER TO PROVIDE CREDIT TO THE
OBLIGOR.
LEE'S PRESCRIPTION SHOPS, INC.
By: /s/ Jose L. Rodriguez, M.D.
---------------------------------------
Jose L. Rodriguez, M.D., President
Address: 2525 S.W. 3rd Avenue
Miami, Florida 33129
<PAGE>
SCHEDULE OF COLLATERAL
First security interest in all of obligor's accounts recivable, inventory,
equipment, furniture, whether now owned or existing or hereafter acquired or
arising, wheresoever located, together with any and all proceeds and/or products
thereof, more particularly described on Security Agreement executed
contempraneously herewith.
EXHIBIT 10.9
Uni, Co.
12205 S.W. 16 Terrace, #A-108
Miami, Florida 33175
(305) 226-9555 Fax: (305) 552-9792
June 19, 1997
PharmaSystems Cost Containment Corp.
7350 N.W. 7th Street, Suite #104
Miami, Florida 33126
Dear Dr. Rodriguez:
Pursuant to our prior meeting and discussion, this letter is to serve as an
affirmation of the scope, terms and conditions of our agreed upon engagement.
PharmaSystems Cost Containment Corp. (Pharma) desires to engage Uni, Co. (The
Company) to furnish Aurelio E. Alonso, CPA (AEA), to Pharma as Chief Financial
Officer to perform the usual and customary services associated with such a
position.
The term of this engagement is on a month-to-month basis cancelable with a 30
days' notice.
The fee corresponding to the above-mentioned service is $10,000.00 per month and
contemplates approximately 25 hours per week commitment of direct chargeable
hours by AEA to Pharma. The fee is payable semi-monthly with $5,000.00 due upon
your acceptance of this letter.
If you are in agreement with the foregoing, kindly execute below.
Very truly yours,
Uni, Co.
/S/Aurelio E. Alonso
- -------------------------------------
Aurelio E. Alonso
President
Agreed to and accepted this 19th day of June, 1997.
PharmaSystems Cost Containment Corp.
/S/ Jose L. Rodriguez, M.D.
- -------------------------------------
By: Jose L. Rodriguez, M.D., Chairman
EXHIBIT 10.10
-------------
2525 CORAL WAY BLDG.
3510 Coral Way, Suite 200
Miami, Florida 33145
B U S I N E S S L E A S E
- - - - - - - - - - - - -
This Agreement is entered between 2525 CORAL WAY BLDG., hereinafter called the
Lessor, and LEE'S PRESCRIPTION SHOP, INC., hereinafter called the Lessee or
Tenant, on July 14, 1994.
By this Agreement, the Lessor agrees to lease to Lessee, Suite Nos. 101 and 110,
of the 2525 Coral Way Building, located at 2525 S.W. 3rd Avenue, Miami, Florida
33129, for the term of four years, under the following terms and conditions:
Commencing on August 1, 1994, Lessee will pay to Lessor the amount of $2,400.00
per month, plus $156.00 for Florida tax on rents, for a total monthly payment of
$2,556.00, and a like sum of $2,556.00 on the first day of each and every
consecutive month until July 1, 1995. The rent for the following years, that is
from August 1, 1995, to July 1, 1998, will be subject to a yearly adjustment
based on the Consumer Price Index for All Urban Consumers (CPI-U).
The rent payments shall be made to the Lessor in advance and shall be due and
payable on the first day of each month at the office of 2525 Coral Way Bldg.,
c/o Darpel Investments, Inc., located at 3510 Coral Way, Suite 200, Miami,
Florida 33145. Unpaid checks returned from the Bank, will be subject to a $25.00
processing fee, in addition to any Bank charges. Rent payments received after
the 15th of the month will be subject to a late fee charge of $25.00. Failure to
pay the due rent and the late fee charges by the end of the month, shall
constitute a breach of contract.
Lessee hereby agrees to pay 9% Pro-Rata share portion of any increase in Real
Estate Taxes over the 1978 Real Estate Taxes, and any other assessments made to
the property by City or County authorities. There is not a security deposit on
this Lease.
This Lease may be extended at the option of the Lessee for two additional three
years periods, from and after August 1, 1998, under the same basic terms and
conditions, with the exception of the rent which shall be subject to a yearly
adjustment based on the Consumer Price Index for All Urban Consumers (CPI-U).
Base rent to be used for these periods, will be the amount of rent that was
computed for the preceding year, plus Florida sales tax on rents. These options
must be exercised by giving Lessor sixty days written notice by registered or
certified mail, prior the commencement of each term.
The Lease is not assignable or transferable, and therefore, Lessee shall have no
right to assign, or sublet the premises, or any part thereof. Lessor agrees that
leased premises are to be used for the operation of a retail pharmacy, including
<PAGE>
the sale of drugs, pharmaceuticals, supplies and all other items normally sold
in a retail drug store. Lessor further covenants that no other space in said
2525 Coral Way Bldg., shall be used for the same line of business. Under no
circumstances shall the premises be used for any illegal use or any business or
use that will violate any Building and/or Zoning regulations.
Lessee hereby agrees and understands that during the option terms of this Lease,
that is, after August 1, 1998, if the property of which the premises is part
thereof is sold, Lessee agrees to vacate the premises within six (6) months
written notification, and Lessee shall be entitled to a monetary compensation by
Lessor in the amount equivalent to three (3) months rent, excluding Florida
sales tax, at the rate that Lessee is paying at the time of notification. The
payment of said compensation shall take place within fifteen (15) days after
surrender of the premises, provided that all the terms and conditions under this
Lease have been met, and that the Lessee is not under Bankruptcy or Liquidation.
Payment of said amount shall constitute the full compensation and under no
circumstances the Lessee shall be entitled to any other compensation whatsoever.
Lessee accepts the premises in their present condition. The Lessee may, at its
own expense, remodel said premises as may be necessary for the conduct of its
business, and all alterations and decorations in the interior of the premises
covered by this Lease, shall be at the expense of Lessee, and have to be in
compliance with Building Regulations, so that there will not be any Building
and/or fire violations. All major alterations or additions, will need the
written consent of the Lessor. If permanent alterations and/or remodeling are
made by Lessee, Lessee hereby agrees to restore the premises to the original
condition, if so requested by Lessor at its sole discretion. All inside repairs,
including plumbing and electrical repairs, repairs and/or replacement of doors,
and the maintenance and/or repairs of the Store, shall be for the account of
Lessee. Lessee further agrees to properly maintain and service the existing sign
on the front of the property. Any new signs or modifications to the existing
sign will require the written approval from the Lessor.
It is agreed and understood, that Lessor does not carry any contents insurance
against fire, theft, damage, etc., and Lessee hereby agrees to provide its own
insurance at its cost and to hold Lessor harmless and not liable for any damage
in the equipment, furniture or merchandise stored on or about the premises
covered by this Agreement. All personal property placed in the premises shall be
at risk of the Lessee or owner thereof, and Lessor shall not be liable for any
damage to said personal property, or to the Lessee arising from the bursting or
leaking of water pipes, or from any act of negligence of any co-tenant or
occupants of the building or of any other person whomsoever. Lessee agrees not
to store any hazardous materials on the premises and hereby agrees to exercise
diligent care in moving merchandise and/or furniture, to prevent any damage to
the Building, including by not limited to the elevator, floors, walls, doors,
carpets, etc.
The Lessee or tenant shall promptly execute and comply with all statutes,
ordinances, rules, orders, regulations and requirements of the Federal, State
and City Government, and shall also comply with all rules and regulations of the
Southeastern Underwriters Association for the prevention of fires.
2
<PAGE>
The Lessor, or any of its agents, shall have the right to enter said premises
during all reasonable hours, to examine the same to make such repairs, additions
or alterations as may be deemed necessary for the safety, comfort, or
preservation of the Building.
Except for force majeure and interruptions for maintenance and/or repairs, the
air conditioning service will be available Monday through Friday from 7:30 a.m.
to 6:00 p.m.
Lessor shall supply electricity for normal office consumption only. It is
understood that in the event that the Lessee may require more electricity, such
additional consumption shall be at its expense. Lessor shall supply also
janitorial services five days per week.
Recent Dade County regulations required to establish a "Mandatory Waste
Recycling Program" in all commercial buildings, and Lessee hereby agrees to
fully cooperate with any existing, or to be established recycling program in
order to comply with Dade County Solid Waste Management Regulations, and if
Lessee business so required, to pay for the cost involved in complying with said
Dade County regulations.
Four (4) parking spaces are assigned to Lessee in the Building Parking Lot. It
is agreed and understood that Lessor will not be held liable in any way for
damages and/or lost due to the use of said parking spaces. It is not the
Lessor's responsibility to take care of improperly or unlawfully parked vehicles
in or about said spaces and/or access driveways. Lessee will cooperate with
Lessor in keeping visitors spaces available for visitors, and agrees to advice
and instruct his employees not to use said visitors spaces at any time
whatsoever, and to hold Lessor harmless and not liable against any claims in the
event their vehicles are towed away from the visitors and/or assigned parking
spaces in the Building Parking Lot.
The parties hereto executed this instrument for the purpose herein expressed,
the day and year above written.
Signed and witness in the presence of:
2525 CORAL WAY BLDG. LEE'S PRESCRIPTION SHOP, INC.
/s/ 2525 Coral Way Bldg. /s/ Lee's Prescription Shop, Inc.
- ----------------------------------- ---------------------------------
Lessor Lessee
Witness: Witness:
- ----------------------------------- ---------------------------------
For Lessor For Lessee
3
EXHIBIT 10.11
-------------
BUSINESS PROPERTY LEASE
-----------------------
1. PARTIES.
-------
The Lease dated for reference purposes only, as of the 2nd day of
October, 1995, is made between LBJ PROPERTIES, a Florida General Partnership,
Landlord and hereinafter referred to as "LANDLORD"; and LEE'S ACQUISITION CORP.,
INC., Tenant and hereinafter referred to as "TENANT."
2. PREMISES.
--------
Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, that certain business property space described as follows: 5898 Sunset
Drive, Miami Dade County, Florida, as outlined on the floor plan attached hereto
and made a part hereof, which the parties agree contains approximately 2,500
square feet of rentable space, hereinafter referred to as the "PREMISES" or
"DEMISED PREMISES," for the term hereinafter stated, for the rents hereinafter
reserved, all upon and subject to the terms, conditions and covenants
hereinafter reserved, all upon and subject to the terms, conditions and
covenants hereinafter proved. Any reference to this Business Property Lease
hereinafter shall be referred to as the "LEASE."
3. TERM.
----
(a) INITIAL TERM. The initial term of this Lease shall be for a period of
five (5) years, and shall commence on October 2, 1995 and terminate at
5:00 P.M. on October 2, 2000.
(b) RENEWAL TERM. Providing this Lease is in full force and effect, Tenant
shall have the option to extend the term of this Lease for the Demised
Premises at the end of the initial five (5) year term for one period of
five (5) years beyond the initial term. The notification by Tenant to
exercise this option to renew this Lease for a subsequent five (5) year
term shall be made to Landlord, in writing, not less than One Hundred
Eighty (180) days prior to the expiration of the initial term. The
extended five (5) year term shall be upon the same terms, provisions,
covenants, and conditions as are contained in this Lease, except
otherwise set forth in this Lease as to payment of periodic rent and
such other provisions in this Lease which by its terms are only
applicable to the initial term. Tenant may not effectively exercise a
renewal option at any time that there exists an event of default or fact
or circumstance which, with the passage of time or the giving of notice
or both could become an event of default.
4. RENT.
----
The rent reserved under this Lease for the initial term hereof shall be
and consist of:
(a) fixed monthly rent for the first five (5) years in the amount of
$18.00 per square foot, based on a square footage of 2,500 square feet for the
Demised Premises which shall not include Tenant's share of the proportionate
<PAGE>
expenses identified in paragraph sixteen (16), and which shall be payable in
accordance with the terms thereof. Tenant's payment for the five (5) year/60
month initial term shall be Two Hundred Twenty Five Thousand $225,000.00)
dollars payable monthly at the rate of Three Thousand Seven Hundred Fifty
($3,750.00) Dollars per month plus applicable taxes as hereinafter defined in
this paragraph at subsection (d). Tenant shall pay the first month's rent upon
execution of this Lease;
(b) fixed monthly rent shall be increased annually, on the 2nd day of
October of each consecutive year, by an amount equal to the consumer price index
or four (4%) percent whichever is less and which shall be hereinafter referred
to adjusted rent, and shall be payable, in advance, on the first day of each and
every next consecutive calendar month thereafter during the term of this Lease.
For the purpose hereof, the consumer price index shall mean the Consumer Price
Index for Urban Wage Earners and Clerical Workers (Revised Series) (CPI-W)
Miami, Florida Region, All Items (November, 1977 = 100) issued by the Bureau of
Labor Statistics of the United States Department of Labor in the Current Labor
Statistics Section of the monthly Labor Review (final publication only);
(c) fixed monthly rent for the five (5) year option extension shall be
based annually upon the adjusted rental of the previous year, which adjusted
rental shall be increased by an amount equal to the consumer price index or four
(4%) percent whichever is less, and shall be payable, in advance, on the first
day of each and every next consecutive calendar month thereafter during the
extended term of this Lease;
(d) all taxes in the nature of sales, use or similar taxes, now or
hereafter assessed or levied by any taxing authority upon the payment of fixed
rent or additional rent, as hereinafter defined, and which the Landlord is
required or permitted to collect from Tenant, payable simultaneously with the
payment of fixed rent or additional rent;
(e) additional rent consisting of all such other sums of money as shall
become due from and payable by Tenant to Landlord hereunder (for default in
payment of which Landlord shall have the same remedies as for a default in
payment of fixed rent), all to be paid to Landlord in lawful money of the United
States of America.
(f) Tenant shall have a ten (10) day grace period on all rent payable
hereunder.
5. SECURITY DEPOSIT.
----------------
Tenant, simultaneously with the execution of this Lease, has deposited
with Landlord the sum of Three Thousand Seven Hundred Fifty ($3,750.00) Dollars,
the receipt of which is hereby acknowledged (checks subject to collection),
which sum shall be retained by Landlord as security for the payment of rents by
Tenant and for Tenant's faithful performance of its obligations under this
Lease. Landlord, at Landlord's option, may, after Tenant has been provided ten
(10) days to cure any default, apply said sum or any part thereof toward the
payment of the rents and any other sum payable by Tenant under this Lease,
and/or toward the performance of each and every of Tenant's covenants under this
Lease shall thereby be discharged only pro tanto and Tenant shall remain liable
for any amounts that such sum shall be insufficient to pay. Landlord may exhaust
any or all rights and remedies against Tenant before resorting to said sum, but
nothing herein contained shall required or be deemed to required Landlord to do
2
<PAGE>
so. In the event this deposit shall not be utilized for any of such purposes,
then such deposit shall be returned by Landlord to Tenant within fifteen (15)
days after the expiration of the term of this Lease, less an amount, if any,
determined by Landlord to be reasonably necessary for the fulfillment of
Tenant's obligations that survive the term of this Lease, which amount shall be
immediately returned to Tenant upon fulfillment of such obligations. Promptly,
after five (5) days' notice of demand by Landlord, Tenant shall deposit with
Landlord such additional sum as may be necessary to replace any amounts expended
therefrom by Landlord pursuant to the provisions hereof, so that there shall
always be a security deposit with other funds and Landlord shall not be required
to pay Tenant any interest on said security deposit.
6. USE.
---
The Tenant will use and occupy the premises for a retail and wholesale
pharmacy and sundry business and for no other purpose. Any other use and
occupancy must be approved by Landlord, in advance and in writing. Such approval
will not by unreasonably withheld by Landlord.
7. NO ASSIGNMENT.
-------------
Tenant shall not either voluntarily or by operation of law assign,
transfer, mortgage, pledge, or otherwise encumber or dispose of this Lease
during the term thereof, or sublet the demised premises or any part thereof or
permit the premises to be occupied by any other person without the written
consent of Landlord first obtained in each case, and which consent shall not be
unreasonably withheld to an assignee maintaining the same use of the business
premises. Any attempted assignment, transfer, subletting, mortgage, pledge or
other disposition of this Lease or any other interest therein without such prior
written consent shall be voidable at the option of Landlord and shall constitute
a default under this Lease. If this Lease be assigned, or if the demised
premises or any part thereof be sublet or occupied by anybody other than the
Tenant, the Landlord may, at Landlord's option, after default by the Tenant,
collect rent from the assignee, subtenant or occupant and apply the net amount
collected to the rent herein reserved, but no such collection shall be deemed a
waiver of this covenant, or the acceptance of the assignee, subtenant or
occupant as Tenant or a release of the Tenant from the further observance and
performance by the Tenant of the covenants herein contained.
8. MAINTENANCE.
-----------
(a) Landlord. Landlord will keep the roof, structural bearing walls,
the HVAC system, including all duct work, and the exterior walls of the building
of the demised premises in good repair and tenantable condition, unless the need
for such maintenance and repairs are caused in part or in whole by the act,
neglect, fault, or omission of any duty by the Tenant, its agents, servants,
employees or invitees, in which case Tenant shall pay to Landlord the reasonable
cost of such maintenance and repairs. Landlord shall not be liable for any
failure to make any such repairs or to perform any maintenance unless such
3
<PAGE>
failure shall persist for thirty (30) days after written notice of the need of
such repairs or maintenance is given to Landlord by Tenant. Except as provided
in Article thirteen (13) hereof for fire and other casualty, and except for
Landlord's failure to timely repair as provided in this paragraph, there shall
be no abatement of rent and no liability of Landlord by reason of any injury to
or interference with Tenant's business arising from the making of any repairs,
alterations or improvements in or to any portion of the Building or the premises
or in or to fixtures, appurtenances and equipment therein. Tenant waives the
right to make repairs at Landlord's expense under any law, statute or ordinance
now or hereafter in effect, within the initial one hundred and thirty (30) days,
however, thereafter Tenant may make those repairs that Landlord had been
notified of in writing and failed to repair, in accordance with reasonable and
customary building standards, and reduce from the next successive payments of
rent the costs of those repairs.
(b) TENANT. Tenant will, at Tenant's sole cost and expense, keep all
other parts of the demised premises in good repair and tenantable condition
during the term of this Lease and will replace at Tenant's expenses any and all
incandescent and fluorescent lighting and ballast, any and all scratched or
broken glass or doors, and any and all overhead doors, partition walls, plumbing
and other mechanical or electrical equipment in and about said premises. Tenant
will at the termination of this Lease by lapse or time or otherwise, return said
premises to Landlord in as good condition as when received, loss by fire or
windstorm and ordinary wear excepted.
(c) ALTERATIONS. Tenant will make no material alterations, additions,
installations, substitutions, or improvements in or to the premises without the
written consent, and such consent shall not be unreasonably withheld, of the
landlord which consent shall be subject to and upon such terms and conditions as
Landlord may require and stipulate in such consent, including, without
limitation, (a) physical and spatial limitation, (b) governmental approvals, (c)
payment, (d) bonding, (e) subcontractors.
9. ACCEPTANCE OF PREMISES.
----------------------
Tenant having examined the premises is familiar with the condition
thereof and relying solely on such examination will take them in their present
condition, unless otherwise expressly agreed upon in writing. Tenant's having
taken possession of the premises shall be conclusive evidence that the premises
were in good order and satisfactory condition on the day Tenant took possession.
No promise of the Landlord to alter, remodel, or improve the premises and no
representation respecting the condition of the premises has been made by the
Landlord to the Tenant, unless contained herein or made a part hereof, and
Tenant will make no claim on account of any representations whatsoever, whether
made by any officer or other representative of Landlord or which may be
contained in any circular, or advertisement relating to the premises, unless the
same is specifically set forth in this Lease.
10. SECURITY.
--------
Tenant acknowledges that Tenant is solely responsible for the security
of persons and property both within the demised premises and immediately outside
the Premises and other common areas designated for the Tenant's use. Tenant
agrees to indemnify and hold Landlord harmless from any loss, cost or damage to
4
<PAGE>
person or property occurring on or about the premises or common areas and to the
extent practicable to purchase insurance to protect against such losses and
naming both Landlord and Tenant as parties insured thereby, insuring the parties
against any such claim.
11. INDEMNIFICATION AND INSURANCE.
-----------------------------
(a) Indemnification. Neither Landlord nor any agent or employee of
Landlord shall be liable to Tenant for any injury or damage to Tenant or to any
other persons or for damage, or loss (by theft or otherwise) of, any property of
Tenant or of any other person, irrespective of the cause of such injury,
damages, or loss, unless caused by or due to the negligence of Landlord, its
agents or employees without comparative negligence on the part of Tenant, it
being understood that no property, other than such as might normally be brought
upon or kept in the premises as an incident to the reasonable use of the
premises for the purposes herein permitted, will be brought upon or be kept in
the premises.
Tenant shall indemnify and save harmless Landlord and its agents
against and from any and all claims arising from the conduct or management of
the demised premises or of any business therein, or any work or thing whatsoever
done, or any condition created or permitted to exist (other than by Landlord for
Landlord's or Tenant's account) in or about the demised premises during the term
of this Lease or during the period of time, if any, prior to the commencement of
the term hereof that Tenant may have been given access to the demised premises,
or arising from any negligent or otherwise wrongful act or omission of Tenant or
any of its subtenants or its or their employees, agents or contractors, and all
costs, expenses and liabilities incurred in or in connection with each such
claim or action or proceeding brought thereon.
Tenant shall carry reasonable and customary public liability insurance,
in amount of One Million ($1,000,000.00) Dollars and with companies and on forms
reasonably acceptable to Landlord, naming both Landlord and Tenant as parties
insured thereby, insuring the parties against any such claim. All such policies
of insurance shall provide for not less than ten (10) days' notice to Landlord
as a condition precedent to cancellation. Such policy shall be delivered to
Landlord. Tenant shall provide Landlord with evidence of payment of renewal
premiums or replacement of policy and payment of premiums not later than ten
(10) days prior to the expiration of any such policy.
(b) INSURANCE PREMIUMS. Landlord shall at all times during the term
hereof maintain in effect a policy or policies of insurance covering the Demised
Premises, providing protection against any peril included within the
classification "Fire and Extended Coverage," and at Landlord's option, flood
insurance, insurance against sprinkler damage, vandalism, malicious mischief,
earthquake damage and abatement or loss of rent in case of said insured
casualties. Tenant shall not be obligated, responsible or liable to reimburse
Landlord throughout the term of this Lease for any costs and expenses incurred
by Landlord for such insurance.
5
<PAGE>
12. DESTRUCTION OR DAMAGE.
---------------------
In the event that the demised premises shall be destroyed or damaged or
injured by fire or other casualty during the term of this Lease, whereby all or
a part thereof shall be rendered untenantable, then Landlord shall have the
right to make such premises tenantable by repair within sixty (60) days
therefrom subject to extension for delays faced by Landlord due to adjustment of
insurance proceeds, labor trouble, governmental controls, so called Acts of God,
or any other cause beyond Landlord's reasonable control, but not to exceed
ninety (90) days. If in Landlord's sole opinion, which must be rendered within
thirty (30) days of the damage the premises are not capable of being rendered
tenantable within said time or if in fact the premises are not rendered
tenantable within said time either party shall have the option to cancel this
Lease, by written notice to the other, and in the event of such cancellation the
rental shall be paid only to the date of such fire or casualty and paid rent
refunded. During any time that the demised premises are untenantable due to
causes set forth in this paragraph, the rent or a just and fair proportion
thereof shall be abated.
No damages, compensation or claim shall be payable by Landlord for
inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the demised premises or of the building pursuant
to this paragraph. Landlord shall use its best efforts to effect such repair or
restoration promptly and in such manner as not unreasonably to interfere with
Tenant's use and occupancy.
Notwithstanding any of the following provisions of this paragraph, if
Landlord, or the lessor of any superior lease or the holder of any superior
mortgage, as defined hereinafter, is unable to collect all of the insurance
proceeds (including rent insurance proceeds) applicable to damage or destruction
of the demised premises or the building by fire or other cause, by reason of
some action or inaction on the part of Tenant or any of its employees, agents or
contractors, then, without prejudice to any other remedies which may be
available against Tenant, there shall be no abatement of Tenant's rent, but the
total amount of such rents not abated (which would otherwise have been abated)
shall not exceed the amount of the uncollected insurance proceeds.
Landlord will not carry separate insurance of any kind on Tenant's
property, and except as provided by law or by reason of its fault or its breach
of any of its obligations hereunder, shall not be obligated to repair any damage
thereto or replace the same.
13. COMPLIANCE WITH LAWS, INSURANCE.
-------------------------------
Tenant shall during the entire term of this Lease, comply with all
statutes, ordinances, rules, orders, regulations, and requirements of the
federal, State, County and City Government, and of any and all their Departments
and Bureaus, applicable to said premises, and shall also comply with all rules,
order, and regulations of the Southeastern Underwriters Association for the
prevention of fires, all at Tenant's own cost and expense. If, by reason of any
failure of Tenant to comply with the provisions of this paragraph after five (5)
days' notice to cure, the rate of fire insurance with extended coverage on the
building or equipment or other property of Landlord shall be higher than it
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otherwise would be, Tenant shall reimburse Landlord at the higher rate. Tenant
shall reimburse Landlord, within five (5) days after written demand, for that
part of the premiums for fire insurance and extended coverage paid by Landlord
because of such failure on the part of Tenant.
14. ADDITIONAL RENT - COMMON AREA MAINTENANCE.
-----------------------------------------
(a) UTILITIES. In addition to all rentals herein specified, Tenant's
proportionate share shall be fifty (50%) of all utilities, used or consumed in
or upon the Demised Premises, which shall include all electric power usage and
charges, water usage and charges, and any garbage or trash collection fee
imposed by any governmental authority, any Agency designated to collect such
garbage or trash, as and when the charges therefor shall become due and payable.
(b) REAL PROPERTY TAXES. Tenant agrees to pay to the Landlord
throughout the term of this Lease, Tenant's Proportionate Share of all real
estate taxes and all assessments which may be levied against Landlord by the
local tax authorities and other governmental agencies. Tenant's proportionate
share of real estate taxes shall be fifty (50%) percent of any increase over the
base year which shall be 1995. Tenant will pay its proportionate share of real
estate taxes after the end of each calendar year Landlord when the Landlord
delivers to Tenant a computation of the Tenant's proportionate Share for the
prior calendar year based upon the base year of 1995. Tenant shall pay said
additional rent to Landlord within thirty (30) days after Landlord presents to
Tenant its proportionate share.
For the purposes of this Lease, the term "real estate taxes" shall
include all real estate taxes, assessments, water and sewer rents (except water
meter charges and sewer rent based thereon) and other governmental impositions
and charges of every kind and nature whatsoever, extraordinary as well as
ordinary, general and special, foreseen and unforeseen, and each and every
installment thereof (including any interest on amounts which may be paid in
installments) which shall or may, during the Lease term, be levied, assessed,
imposed, become due and payable, or liens upon, or arising in connection with,
the use, occupancy or possession of or become due and payable out of, or for,
the entire demise premises or any part thereof, and all costs incurred by
Landlord in contesting or negotiating the same with governmental authority.
Tenant hereby waives any right it may have by statute or otherwise to protest
real estate taxes so long as Landlord is contesting or negotiating the same with
the governmental authority. Nothing herein contained shall be construed to
include as a tax which shall be the basis of real estate taxes, any inheritance,
estate succession, transfer gift, franchise, corporation, income or profit tax
or capital levy that is or may be imposed upon Landlord; provided, however, that
if, any time after the date hereof the methods of taxation shall be altered so
that in lieu of or as a substitute for the whole or any part of the taxes now
levied, assessed or imposed on real estate as such, there shall be levied,
assessed or imposed (a) a tax on the rents received from such real estate, or
(b) a license fee measured by the rents receivable by Landlord or any portion
thereof, or (c) a tax or license fee imposed upon Landlord which is otherwise
measured by or based in whole or part upon any portion thereof. In addition to
the foregoing, should any governmental authority acting under any existing or
future law, ordinance or regulation, levy, assess or impose a tax, excise and/or
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assessment upon or against this Lease, the execution hereof and/or the Minimum
Rent, Percentage Rent and other charges payable by Tenant to Landlord whether by
way of substitution for or in addition to any existing tax or otherwise, and
whether or not evidenced by documentary stamps or the like, Tenant shall be
responsible for and shall pay such tax, excise and/or assessment, or shall
reimbursed Landlord for the amount thereof, as the case may be, after Tenant has
received thirty (30) days' written notification.
(c) Common area maintenance (CAM) includes real estate taxes, power and
electric usage, water usage, garbage and trash removal as above stated. The
assessment as rent for any increase in real estate taxes will be based upon 1995
as the base year. Therefore, there will be no assessment of real estate taxes
included in the CAM for the year 1995. Based upon the 1994 payments of electric
charges, water charges, garbage and trash removal the CAM will be approximately
$3.80 per square foot charges as additional rent. This additional rent will be
presented to the Tenant subsequent to the end of this year and each consecutive
year hereafter for Tenant's proportionate. An accounting will be provided when
the Landlord provides the statement of additional rent to Tenant.
15. DEFAULT, LANDLORD'S REMEDIES.
----------------------------
All rights and remedies of the Landlord herein enumerated shall be
cumulative, and none shall exclude another or any other right or remedy provided
by law.
(a) If any voluntary or involuntary petition or similar pleading under
any section of any bankruptcy act shall be filed by or against Tenant, or any
voluntary or involuntary proceeding in any Court or tribunal shall be instituted
to declare Tenant insolvent or unable to pay Tenant's debts, then and in any
such event Landlord may, if Landlord so elects, but not otherwise, and with or
without notice of such election, and with or without entry or other action by
Landlord, forthwith terminate this Lease.
(b) If the Tenant defaults in the payment of rent or in the prompt and
full performance of any provisions of this Lease, or if the leasehold interest
or the Tenant's business or fixtures of Tenant are levied upon under execution
or attached by process of law, of if the Tenant makes an assignment for the
benefit of creditors, or if a receiver is appointed for any property of the
Tenant, or if the Tenant abandons the premises (abandoning shall be defined as
vacating, deserting, or surrendering the property) then and in any such event
the Landlord may, if the Landlord so elects, but not otherwise, and after three
(3) days' written notice thereof to Tenant, forthwith terminate this Lease and
Tenant's right to possession of the demised premise or terminate only Tenant's
right to possession hereunder. Whether or not Landlord so elects, Tenant agrees
to pay interest to Landlord on any past due payment of rent unless such payment
is made within ten days from the due date, at the interest rate of twelve (12%)
percent per annum.
(c) Upon any termination of this Lease, whether by lapse of time or
otherwise the Tenant shall surrender possession and vacate the premises
immediately, and deliver possession thereof to the Landlord, and hereby grants
to the Landlord full and free license to enter into and upon the premises in
such event with or without process of law to expel or remove the Tenant and any
others who may be occupying or within the premises and to remove any and all
property therefrom, using such force as may be necessary, without being deemed
in any manner guilty of trespass, eviction or forcible entry or detainer, and
without relinquishing the Landlord's rights to rent or any other right given to
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the Landlord hereunder or by operation of law. The Tenant expressly waives the
service of any demand for the payment of rent or for possession and the services
of any notice of the Landlord's election to terminate this Lease or to re-enter
the Landlord's election to terminate this Lease or to re-enter the Premises,
except as provided for in subparagraph (b) of this paragraph, and agrees that
the failure to cure any simple breach of any covenants or provisions of this
Lease within thirty (30) days after Tenant has been given written notice of said
Breach shall, of itself, without the service of any further notice or demand
whatsoever, constitute an unlawful detainer by Tenant of the premises within the
meaning of the Statutes of the State of Florida.
(d) If the Tenant abandons the premises or otherwise entitles the
Landlord so to elect, and the Landlord does elect to terminate the Tenant's
right to possession only, without terminating the Lease, the Landlord may at the
Landlord's option enter into the premises, remove the Tenant's signs and other
evidence of tenancy, and take and hold possession thereof without such entry and
possession terminating the Lease or releasing the Tenant, in whole or in part
from the Tenant's obligation to pay the rent hereunder for the full term, and in
any such case the Tenant shall pay forthwith to the Landlord a sum equal to the
entire amount of the rent reserved under paragraphs four (4) and sixteen (16) of
the Lease for the residue of the stated term plus any other sums then due
hereunder. Upon and after entry into possession without termination of the
Lease, the Landlord may, but need not, relet the premise or any part thereof for
the account of the Tenant to any person, firm or corporation other than the
Tenant for such rent, for such time and upon such terms as the Landlord in the
Landlord's sole discretion shall determine; however the Landlord shall use
reasonable commercial and community standards, nevertheless, the Landlord shall
not be required to accept any tenant offered by the Tenant or to observe any
instructions given by the Tenant about such reletting. In any such case, the
Landlord may make repairs, alterations and additions in or to the premises, and
redecorate the same to the extent deemed by the Landlord necessary or desirable
in order to restore the premises to their condition when the Tenant accepted the
premises, and the Tenant shall, upon demand, pay the cost thereof, together with
the Landlord's expenses of the reletting, including that portion of the leasing
commission paid by Landlord and applicable to the unexpired term of this Lease.
If the consideration collected by the Landlord upon any such reletting for the
Tenant's account is not sufficient to pay monthly the full amount of the rent
reserved in this Lease, together with the costs of leasing commissions actually
paid to obtain such reletting, repairs, alterations, additions, and
redecorating, Tenant agrees to pay the amount of each monthly deficiency within
five (5) days after written notification to Tenant; and if the consideration so
collected from any such reletting is more than sufficient to pay the full amount
of the rent reserved herein, together with the costs and expenses of the
Landlord, the Landlord, at the end of the stated term of Lease, shall account
for the surplus to the Tenant.
(e) Tenant hereby irrevocably appoints Landlord as agent and
attorney-in-fact of Tenant, to enter upon the premises in the event of default
by Tenant in the payment of any rent herein reserved, or in the performance of
any term, covenant or condition herein contained to be kept or performed by
Tenant, and to remove any and all furniture and personal property whatsoever
situated upon the premises. Any and all property which maybe removed from the
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premises by the Landlord pursuant to the authority of this Lease or of law to
which the Tenant is or may be entitled, may be handled, removed or stored by
Landlord at the risk, cost and expense of Tenant, and Landlord shall in no event
be responsible for the value, preservation or safekeeping thereof. Tenant shall
pay to Landlord, upon demand, all expenses incurred in such removal and all
storage charges against such property so long as the same shall be in Landlord's
possession or under landlord's control. Landlord may place such property in
storage for the account of, and at the expense of Tenant, and if Tenant fails to
pay the cost of storing such property after it has been stored for a period of
ninety (90) days or more, Landlord may sell any or all or such property in such
manner and at such time and places as Landlord in his sole discretion may deem
proper, without notice to or demand upon Tenant for the payment of any part of
such charges or the removal of any of such property and shall apply the proceeds
of such sale first to the cost and expenses of such sale, including reasonable
attorney's fees; second, to the payment of the costs and charges of storing any
property; third, to the payment of any other sums of money which may then or
thereafter be due to Landlord from Tenant under any of the terms hereof; and
fourth, the balance, if any, to Tenant. The removal and storage of Tenant's
property, as above provided, shall not constitute a waiver of Landlord's lien
thereon.
16. SUBORDINATION.
-------------
(a) AUTOMATIC SUBORDINATION. This Lease, and all rights of Tenant
hereunder, are and shall be subject and subordinate to all ground leases,
overriding leases and underlying leases affecting the demised premises now or
hereafter affect the demised premises and to each and every advance made or
hereafter to be made under such mortgages, and to all renewals, modifications,
replacements and extensions of such leases and mortgages and spreaders and
consolidations of such mortgages (which leases and mortgages are sometimes
collectively referred to herein for convenience as the "superior lease' or
"superior mortgage"). This paragraph shall be self-operative and no further
instrument of subordination shall be required to make it effective. However,
Tenant shall promptly execute and deliver any instrument reasonably requested to
evidence such subordination. Nothing contained within this paragraph shall have
the effect of altering or modifying Tenant's rights under this lease.
(b) NOTICE. Tenant agrees that in the event of any act or omission by
the Landlord which would give Tenant the right to terminate this Lease or to
claim a partial or total eviction, Tenant shall not exercise any such right
until he has notified in writing the holder of any such mortgage which at the
time shall be a lien on the demised premises or the underlying lessor, if any of
such act or omission, and shall have given such mortgages or underlying lessor
ten days opportunity to cure said breach.
(c) ATTORNMENT. If the lessor of any such lease or the holder of any
such mortgage shall succeed to the rights of Landlord under this Lease, then at
the request of such party succeeding to Landlord's rights and upon such
successor Landlord's written agreement to accept Tenant's attornment, Tenant
shall attorn to such successor Landlord and will execute such instruments as may
be necessary or appropriate to evidence such attornment. Upon such attornment,
this Lease shall continue in full force and effect as, or as if it were, a
direct lease between the successor Landlord and Tenant upon all the terms,
conditions and covenants as are set forth in this Lease and shall be applicable
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after such attornment except that the successor Landlord shall not (i) be liable
for any previous act or omission of Landlord under this Lease, (ii) be subject
to any offset, not expressly provided for in this Lease, which shall have
theretofore accrued to Tenant against Landlord and (iii) be bound by any
previous modification of this Lease, not expressly provided for in this Lease,
or by any previous prepayment of more than one month's fixed rent unless such
modification or prepayment shall have been expressly approved in writing by such
Landlord or such holder through or by reason of which the successor Landlord
shall have succeeded to the rights of Landlord under this Lease.
(d) CERTIFICATE. Tenant shall deliver to Landlord or to its mortgagee,
or auditors, or prospective purchaser, or the owner of the fee when requested by
Landlord, a certificate to the effect that this Lease is in full force and that
Lessor is not in default therein, or stating specifically any exceptions
thereto. Failure to give such a certificate within ten (10) business days after
written request shall be conclusive evidence that the Lease is in full force and
effect and Landlord is not in default, and in such event, Tenant shall be
estopped from asserting any defaults known to Tenant at that time.
17. WAIVER.
------
The failure of either the Landlord or Tenant to insist in any one or
more instances upon the strict performance of any one or more of the obligations
of this Lease, or to exercise any right or election herein contained, shall not
be construed as a waiver or relinquishment for the future of the performance of
such one or more obligations of this Lease or of the right to exercise such
election, but the same shall both continue and remain in full force and effect
with respect to any subsequent breach, act or omission.
18. WAIVER OF TRAIL BY JURY.
-----------------------
Landlord and Tenant hereby waive trial by jury in a summary proceeding
or in any action based upon nonpayment of rent or failure of Tenant to pay any
other payment defined hereunder as additional rent as required of Tenant.
However, nothing contained herein shall be deemed a waiver by Tenant or Landlord
of a trial by jury of any action, proceeding or counterclaim brought by either
of the parties hereto against the other on any matter arising out of or in any
way connected with this lease, the relationship of Landlord and Tenant, or
Tenant's use or occupancy of the premise Tenant further agrees that it shall not
interpose any counterclaim or counterclaims in any summary proceedings based on
non payment of rent.
19. RULES AND REGULATIONS.
---------------------
It is mutually agreed that all the rules and regulations included with
this instrument shall be and arc hereby made a part of this Lease, and Tenant
covenants and agrees that it and its employees, servants and agents will at all
times observe, perform and abide by said rules and regulations as they exist and
as they may be amended hereafter from time to time.
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20. LIENS.
-----
Tenant further agrees that Tenant will pay all of Tenant's contractors,
subcontractors, mechanics, laborers, materialmen and all others, and will
indemnify Landlord against all reasonable legal costs and reasonable charges,
bond premiums for release of liens, and reasonable counsel fees reasonably
incurred in the commencement or defense of any suit by the Landlord to discharge
any liens, judgments, or encumbrances against the premises caused or suffered by
Tenant. It is understood and agreed between the parties hereto that the costs
and charges above referred to shall be considered as rent due under this Lease
payable upon demand.
The Tenant shall not have any authority to create any liens for labor
or material on the Landlord's interest in the above-described property, and all
persons contracting with the Tenant for the doing of any work or the furnishing
of any materials on or to the premises, and all materialmen, contractors,
mechanics, and laborers, are hereby charged with notice that they must look to
the Tenant only to secure the payment of any bill for work done or material
furnished during the term of this Lease.
21. TRANSFER BY LANDLORD.
--------------------
In the event that the interest or estate of Landlord in the premises
shall terminate by operation of law or bona fide sale of the premises or by
execution or foreclosure sale, or for any other reason, then and in any such
event Landlord shall be released and relieved from all liability and
responsibility as to obligations to be performed by Landlord hereunder or
otherwise. In such event Landlord's successor, by acceptance of rent from Tenant
hereunder, and receipt of Tenant's security deposit shall become liable and
responsible to Tenant in respect to all such obligations of Landlord under this
Lease. However, Landlord shall not be relieved from any liability or
responsibility as to any claim that occurred prior to Landlords termination by
operation of law or bona fide sale of the premises or by execution or
foreclosure sale, or for any other reason.
22. CONDEMNATION.
------------
In the event any portion of the demised premises is taken by any
condemnation or eminent domain proceeding or should the demised premises be
conveyed in lieu of such a taking and this Lease continues in force as to any
part of the demised premises, as hereinafter provided, the base monthly rental
herein specified to be paid shall be ratably reduced according to the area of
the demised premises which is actually taken, as of the date of such taking, and
tenant shall be entitled to no other consideration by reason of such taking, and
any damages whatsoever suffered by Tenant and occasioned by such taking shall
not entitle Tenant to share to and extend in any and all income, rent, awards or
any interest therein whatsoever which may be made in connection with such a
taking and Tenant does hereby relinquish and assigns to Landlord all Tenant's
rights and equities in and to any such income, rent, awards or any interest
therein. Nothing contained herein shall interfere with any rights that tenant
may have independently against the condemning authority.
In the event of a partial taking of the building, either by
condemnation, eminent domain or conveyance in lieu thereof, Landlord or Tenant
may elect to terminate this Lease if the remaining area of the building shall
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not be reasonably sufficient for Landlord or Tenant to continue feasible and
economical operation of the remaining portion of the building, and, in the event
of a partial taking of the demised premises, Tenant may elect to terminate this
Landlord if the remaining area of the demised premises shall not be reasonably
sufficient for Tenant to continue feasible operation of its business. Either
party hereto shall give notice of such election to the other not later than
thirty (30) days after (i) notice of such taking is given by Landlord to Tenant,
or (ii) the date of the taking, whichever occurs later. Upon the giving of such
notice this Lease shall terminate on the date of service of such notice, and the
rents apportioned to the part of the demised premises so taken shall be prorated
and adjusted as of the date of the taking and the rents apportioned to the
remainder of the demised premises shall be prorated and adjusted as of such
termination date.
Should all the demised premises be so taken, this Lease shall terminate
as of the date of such a taking and in that event Tenant shall be entitled to no
damages or any consideration by reason of such taking, except the cancellation
and termination of Tenant's obligations under this Lease as of the date of said
taking.
23. PEACEFUL POSSESSION.
-------------------
So long as Tenant pays all of the fixed rent and additional rent and
charges due hereunder and performs all of Tenant's other obligations hereunder
Tenant shall peaceably and quietly have, hold and enjoy the demised premise
throughout the term of the Lease, without interference or hindrance by Landlord
or any person claiming by, through or under Landlord.
24. ACCESS, CHANGES IN BUILDING FACILITIES NAME.
-------------------------------------------
Except for the inside surfaces of all walls, windows and doors bounding
the demised premises, all of the building, including exterior building walls,
core corridor walls and doors and any core corridor entrance, any terraces or
roofs adjacent to the demised premises, and any space in or adjacent to the
demised premises used for shafts, stacks, pipes, conduits, fan rooms, ducts,
electric or other utilities, sinks or other building facilities, and the use
thereof, as well as access thereto through the demised premises for the purpose
of operation, maintenance, decoration and repair, are reserved to Landlord,
notwithstanding Tenant's obligations to maintain and repair as elsewhere set
forth herein, which obligations are not negated by Landlord's reservation and
right of access set forth herein.
Tenant shall permit Landlord to install, use and maintain pipes, ducts
and conduits within the demising walls, bearing columns and ceilings of the
demised premises.
Landlord and Landlord's agent shall have the right, upon request, to
enter or pass through the demised premises or any part thereof, at reasonable
times during reasonable hours and upon reasonable notice (i) to examine the
demised premises and to show them to the fee owners, lessors of superior leases,
holders of superior mortgages, or prospective purchasers, mortgagees or lessees
of the building as an entirety, and (ii) for the purpose of making such repairs
or changes in or to the demised premises or in or to the building or its
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facilities as may be provided for by this Lease or any may be mutually agreed
upon by the parties or as Landlord may be required to make by law in order to
repair and maintain the building or its fixtures or facilities. Landlord shall
be allowed to take all materials into and upon the demised premises that may be
required for such repairs, changes or maintenance, without liability to
Landlord. Landlord shall use best efforts to complete repairs in such a manor so
as not to unreasonably interfere with tenant's quiet enjoyment of the premises.
Landlord shall also have the right to enter on and/or pass through the demised
premises, or any part thereof, at such times as such entry shall be required by
circumstances of emergency affecting the demised premises or the building.
During the period of eighteen (18) months prior to the end of the term
hereof, Landlord may exhibit the demised premises to prospective tenants, upon
advance and proper notification to Tenant.
Landlord reserves the right, at any time after completion of the
building, without incurring any liability to Tenant therefor, to make such
changes in or to the building and the fixtures and equipment thereof, as well as
in or to the street entrances, halls, passages, elevators, loading docks and
stairways thereof, as it may deem necessary or desirable. In other than any
situation which Landlord deems it necessary to preserve, secure, or reduce
further damage, the Landlord shall provide Tenant with five (5) days' written
notice prior to commencement of said repairs to Tenant's premises.
Landlord may adopt any name for the building. Landlord reserves the
right to change the name or address of the building at any time.
25. SURRENDER, HOLDING OVER.
-----------------------
On the last day of the term of this Lease, or upon any earlier
termination of this Lease, or upon any re-entry by Landlord upon the demised
premises, Tenant shall peaceably and without notice of any sort, quit and
surrender the demised premises to Landlord in good order, condition and repair,
except for ordinary wear and tear and such damage or destruction as landlord is
required to repair or restore under the terms of this Lease, and Tenant shall
remove all of the Tenant's property therefrom. Tenant specifically agrees, that
in the event Tenant retains possession and does not so quit or surrender the
demised premises to Landlord, then Tenant shall pay to Landlord (i) all
reasonable damages that Landlord may suffer on account of Tenant's failure to so
surrender and quit the demised premises, and Tenant will indemnify and save
Landlord harmless from and against any and all claims made by any succeeding
tenant of the demised premises against Landlord on account of delay of Landlord
in delivering possession of the demised premises to said succeeding tenant to
the extent that such delay is occasioned by the failure of Tenant to so quit and
surrender said premises and (ii) rent for each month or any applicable portion
of a month of such holding over at twice the amount payable for the month
immediately preceding the termination of this Lease, during the time the Tenant
thus remains in possession. The provisions of this paragraph do not waive any of
the Landlord's rights of re-entry or any other right under the terms of this
Lease. If Tenant shall fail to surrender the premises as herein provided, no new
tenancy shall be created and Tenant shall be guilty of unlawful detainer. No
surrender of this Lease or of the premises shall be binding on the Landlord
unless acknowledged by Landlord in writing.
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26. CONSTRUCTION, APPLICABLE LAW.
----------------------------
The words "Landlord" and "Tenant" as used herein shall include the
plural as well as the singular. Words used in masculine gender include the
feminine and neuter. If there be more than one Landlord or Tenant, the
obligations imposed hereunder upon the Landlord or Tenant shall be joint and
several. The section headings or titles in this Lease are not a part hereof and
shall have no effect upon the construction or interpretation of any part hereof.
This Lease shall be construed and enforced under the laws of the State of
Florida. Should any provisions of this Lease be illegal or unenforceable under
such laws, it or they shall be considered severable and this Lease and its
conditions shall remain in force and be binding upon the parties hereto just as
though the illegal or unenforceable provisions had never been included herein.
27. BROKER.
------
Landlord and Tenant covenants, warrants and represents, each to the
other, that there were not conversations or negotiations concerning the renting
of the demised premises with any broker(s). Each party agrees to hold the other
harmless from and against, and agrees to defend at it own expense, any and all
claims for a brokerage commission arising out of any alleged conversation or
negotiations had by such party with any person.
28. NOTICES.
-------
Any notice, statement, demand or other communication required or
permitted to be made by either party to the other, pursuant to this Lease or
pursuant or any applicable law, shall be in writing and shall be deemed to have
been properly given and made if sent by registered or certified mail, return
receipt requested, addressed to the other party at the address hereinafter set
forth or at such other address as may hereafter be designated by either party by
notice to the other and shall be deemed to have been given or made on the day so
mailed. Either party may, by notice given as aforesaid, designate a different
address or addresses or notices, statements, demands or other communications
intended for it.
Notice to Landlord: LBJ PROPERTIES
11900 S.W. 72 Place
Miami, Dade County, Florida 33156
Notice to Tenant: LEE'S ACQUISITION CORP.
7350 N.W. 7th Street
Miami, Florida 33126
29. ENTIRE AGREEMENT.
----------------
The undersigned hereby acknowledges that the Lease Agreement contains
the entire agreement between the parties hereto and all previous negotiations
leading hereto, and it may be modified only by agreement in writing signed and
sealed by the Landlord and Tenant.
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IN WITNESS WHEREOF, The Landlord and Tenant have duly signed and
executed these presents at the City of Miami, Dade County, Florida on this 2nd
day of October, 1995.
Signed, Sealed and Delivered in the LANDLORD:
Presence of:
LBJ PROPERTIES, a Florida general
partnership
By: /s/ Jules Pincus
- --------------------------------- ----------------------------------
Jules Pincus, General Partner
- ---------------------------------
(As to Landlord)
TENANT:
LEE'S ACQUISITION CORP.
By: /s/ George Fernandez
- ---------------------------------- ----------------------------------
George Fernandez, President
- ----------------------------------
(As to Tenant)
ATTEST:
- ----------------------------
Secretary
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RULES AND REGULATIONS
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1. The sidewalks, entrances, passages, stairways, corridors, or halls shall not
be obstructed or encumbered by any Tenant or used for any purpose other than
ingress and egress to and from the Demised Premises.
2. No awnings or other projections shall be attached to the outside walks of the
building without the prior written consent of the Landlord. No curtains, blinds,
shades or screens shall be attached to or hung in, or used in connection with,
any window or door of the Demised Premises, without the prior written consent of
the Landlord. Such awnings, projections, curtains, blinds, shades, screens, or
other fixtures must be of a quality, type, design and color, and attached in the
manner approved by the Landlord.
3. No sign, advertisement, notice, or other lettering shall be exhibited,
inscribed, painted, or affixed by any Tenant on any part of the outside or
inside of the Demised Premises or building without the prior written consent of
the Landlord. In the event of the violation of the foregoing by any Tenant,
Landlord may remove same without any liability, and may charge the expense
incurred by such removal to the Tenant or Tenants violating this rule. Interior
signs on doors and directory table shall be inscribed, painted or affixed at the
expense of the Tenant, and shall be of a size, color, and style acceptable to
the Landlord.
4. The doors that reflect or admit light and air into the halls, passageways, or
other public places in the building shall not be covered or obstructed by any
Tenant, nor shall any parcels or other materials be placed in the doorways.
5. The water and was closets and other plumbing fixtures shall not be used for
any purposes other than those for which they were constructed and so sweepings,
rubbish, rags or other substances shall be thrown therein. All damages resulting
from any misuse of the fixtures shall be borne by the Tenant who, or whose
servants, employees, agents, visitors, or licensees, shall have caused the same.
6. No Tenant shall mark, paint, drill into, or in any way deface any part of the
demised premises or the building of which they form a part. No boring, cutting,
or stringing of wires shall be permitted, except with prior written consent of
the Landlord, and as it may direct.
7. No animals of any kind shall be maintained or kept in or about the premises,
by the Tenant. No Tenant shall cause or permit any unusual or objectionable
odors to be produced upon or permeate from the demised premises.
8. No Tenant shall make, or permit to be made, any objectionable or disturbing
noises or disturb or interfere with occupants of this neighboring buildings or
Premises or those having business with them, whether by the use of any musical
instrument, radio, unmusical noise, or in any other way. No Tenant shall throw
anything out of the doors, windows, or skylights, or down the passageways.
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9. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant, nor shall any change be made in existing locks
or the mechanism thereof, unless Landlord shall first be provided means of
access in case of emergency. Each Tenant must, upon termination of his tenancy,
restore to the Landlord all keys of offices and toilet rooms either furnished
to, or otherwise procured by, such Tenant, and in the event of the loss of any
keys so furnished, such Tenant shall pay to the Landlord the cost of thereof.
10. No Tenant shall occupy or permit any portion of the premise demised to him
to be used for manufacturing, for residential purposes or for the possession,
storage, manufacture, or sale of liquor or unlicensed narcotics.
11. The premises shall not be used for gambling, lodging or sleeping or for any
immoral or illegal purposes.
12. Canvassing, soliciting, and peddling in the building is prohibited and each
Tenant shall cooperate to prevent the same.
13. The Landlord specifically reserves the right to refuse admittance to the
building after hours, or on Sundays or on legal holidays, to any person or
persons who cannot furnish satisfactory identification, or to any person or
persons who, for any other reason in the Landlord's judgment, would be denied
access to the premise .
14. No Tenant, nor any of the Tenant's servants, employees agents, visitor, or
licensees, shall at any time bring or keep upon the demised premises any
inflammable, combustible, or explosive fluid, chemical, or substance.
15. The Landlord reserves the right to make such other and further reasonable
rules and regulations as in its judgment may from time to time be needed for the
safety, care and cleanliness of the Premises, and for the preservation of good
order therein, and any such other of further rules and regulations shall be
binding upon the parties hereto with the same force and effect as if they had
been inserted herein at the time of the execution hereof.
16. The Tenant assumes all risk of any damage to Tenant's property that may
occur by reason of water or the bursting or leaking of any pipes or waste water
about said premises or from any act of negligence of any co-tenant or occupants
of the building, or for any other person, or fire, or hurricane, or other act of
God, or from any cause whatsoever. The Landlord shall not be liable for any
water damage whatever.
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EXHIBIT 10.12
LEASE AGREEMENT
THIS AGREEMENT, entered into this First day of October, 1995, by and
between Sanford I. Rakofsky, M.D., hereinafter called the "LESSOR" and Lee's
Prescription Shop, Inc. hereinafter jointly, severally, and collectively
referred to as "LESSEE," or "TENANT."
W I T N E S S E T H:
The Lessor does hereby demise and lease unto said Lessee, and Lessee does
hereby hire and take as Tenant under and from said Lessor, the following
described space and premises hereinafter referred to as the Suites 104 and 105
in the 401 Building, 401 Coral Way, Coral Gables, Florida 33134. "Premises" as
is shown in Exhibit "A," attached hereto and made a part hereof, on the First
floor(s) in the City of Miami, Dade County, Florida, hereinafter referred to as
the Building," subject and conditioned on the provisions of this Lease.
1. TERM. Lessee to have and to hold the above described premises subject
to the provisions and conditions of the Lease, for the term of; 5 (five) years
to commence on the First day of October, 1995, and to end on the 31st day of
September, 1999, unless sooner terminated as hereinafter provided. Lessee will
have option to renew lease for an additional 3/5 year terms, under same
provisions and increases - See #34.
If the Lessor shall be unable to give possession of the demised premises
on the date of the commencement of the term hereof by reason of the holding over
of any Lessee or Lessees of for any other reasons, Lessor shall not be subject
to any liability for the failure to give possession of said date. Under such
circumstances the rent reserved and covenanted to be paid herein shall not
commence until the possession of the demised premises is given or the premises
are available for occupancy by Lessee, and no such failure to give possession on
the date of commencement the terms shall in any wise affect the validity of this
Lease, or the obligations of the Lessee hereunder nor shall the same be
construed any wise to extend the term of this Lease; or if improvements or
declarations of the demised premises of the building in which said premises are
<PAGE>
located are not completed, and abatement or diminution of the rent to be paid
hereunder shall be allowed to Lessee under such circumstances, but in no event
shall the said abatement or diminution of rent extend beyond the date of
delivery of the demised premises; provided, however, that Lessor shall not be
liable for damages if any, sustained by Tenant on account on the failure to
obtain possession.
2. RENT. Lessee hereby covenants and agrees to pay the Lessor as base
rent for the premises during the term five years hereof, the total sum of Two
Thousand Five Hundred and No/100 Dollars Per Month ($2,500.00/Per Month) + Tax,
lawful money of the United States, which Lessee covenants and agrees to pay to
Lessor at his principal office or that of its agents, or at such other place
designated in writing by Lessor, in equal monthly installments of Two Thousand
Five Hundred and N0/100 Dollars Per Month ($2,500.00 Per Month) in advance,
without demand, on the first day of each and every month during the said term
plus applicable sales tax. Based at $20.00 + Tax sq. ft. force, the annual
rental due under Section 2, of this Lease Agreement shall be increased by an
amount equal to the percentage by which the Consumer Price Index for the
Calendar month immediately preceding the month in which the Lease Year commences
exceeds the Consumer Price Index for the month in which the Base Year commences.
For purposes of this section,
(i) "Consumer Price Index" shall mean the Consumer Price Index
for "All items" (United States City Average Index) as
compiled and published by the Bureau of Labor Statistics,
United States Department of Labor. If the United States
Department of Labor should no longer compile and publish
such price index, the index for "all items" compiled and
published by any other branch or department of the Federal
Government shall be used for the purposes of this Section,
and if no such index is compiled and published by any
branch or department of the Federal Government, the
statistics reflecting cost of living increases as compiled
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by any institution or organization or individual generally
recognized as an authority by financial and insurance
institutions shall be used as a base for such adjustment.
(ii) "Base Year" shall mean the period beginning on the
commencement date, as such date is established in Section 1 of
this Agreement, and ending on the last day of the twelfth full
calendar month thereafter, and
(iii)"Lease Year" shall mean a period of twelve (12) full calendar
months commencing on the first day of the month following the
expiration of the Base Year of any anniversary thereof.
The revised annual rental payable by Tenant under this Section
3 shall be paid in equal monthly installments in accordance
with the provisions of Section 2 of this Agreement. In no way
shall the revised annual rental, as computed under this
Section 3, be less than the Base Rent provided in Section 2 of
this Agreement.
3. [INTENTIONALLY OMITTED]
4. USE AND POSSESSION. It is understood and agreed that the demised space
and premises shall be continually used and occupied by the Lessee during the
term of this Lease only for Pharmacy and for no other purposes or uses
whatsoever, Lessee will not make or permit any use of the space of premises
which, directly or indirectly, is forbidden by public law, ordinance or
government regulation or which may be dangerous to life, limb, or property. In
the event the Lessee uses the space or premises for any purposes not expressly
permitted herein, then the Lessor may terminate the Lease, or without notice to
Lessee, restrain such improper use by injunction or other legal action.
5. SERVICES TO BE FURNISHED. Lessor will furnish the following services
to Lessee: (1) elevator service; (2) electric current for normal and customary
office use; (3) water in such amount as in Lessor's absolute judgment is
necessary for lavatory and like purposes; (4) air conditioning from 8:30 a.m.
until 6:00 p.m., Monday through Friday and 8:30 a.m. until 3:00 o'clock on
Saturday at such temperatures and in such amounts as are considered by Lessor to
be standard, but Lessor shall not furnish air conditioning service on Saturday
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afternoon, Sunday and legal holidays; provided however, upon the timely request
by Lessee, Lessor shall furnish air conditioning services to the demised
premises during hours other than the foregoing at an hourly rate to be
negotiated in advance, and such rate for additional service shall be billed to
Lessee monthly. No janitorial services will be provided.
(a) The Lessee will not bring electric or plumbing into the
premises, and will not install or operate any electrical equipment or other
machinery, except light office machines (such as typewriters) without consent in
writing of the Lessor, who may condition such consent upon the payment by the
Lessee of additional rent as compensation for excess consumption of water and/or
electricity occasioned by the operating of said equipment or machinery.
** Lessor agrees to provide excess consumption of water and electricity
occasioned by the Lessee, if requested by Lessee, for the use of laboratory and
computerized equipment, plus air conditioning service on Saturday afternoon,
Sunday and legal holidays for an increase in rent.
* Additional $400.00 per month (or $100.00 per week) whichever is the
least amount.
(b) It is understood that the electricity to be supplied by Lessor
under this paragraph will not be generated by Lessor, but will be obtained from
a public utility company supplying same, and it is therefore agreed that Lessor
shall in no event be liable or responsible to Lessee for any loss, damage or
expense which Lessee may sustain or incur if either the quantity of character of
electric current shall be changed by the public utility Company nor shall Lessor
be responsible for any failure on the part of such public utility Company to
furnish an adequate or satisfactory supply of electricity or because of any
interruption of such service.
(c) Failure by Lessor to any extend to furnish, or any stoppage of,
these defined services resulting from causes beyond the control of Lessor shall
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not render Lessor liable in any respect for Damages to either person or
property, nor be construed as an eviction of Lessee, nor work an abatement of
rent, nor relieve Lessee from fulfillment of any covenant or agreement hereof.
Should any equipment or machinery break down or for any cause cease to function
properly, Lessor shall use reasonable diligence to repair the same promptly but
Lessee shall have no claim for rebate of rent or damages on account of any
interruptions in service occasioned thereby or resulting therefrom. Lessor shall
not be required to furnish any of such services during any period wherein Lessee
shall be in default in the payment of rent.
6. ASSIGNMENT OR SUBLETTING OF TENANT'S INTEREST. The Tenant's interest
in this Lease or any security deposited thereunder shall not be sold,
transferred, mortgaged, or assigned, nor shall the premises, or any part
thereof, including desk space, beret, or sublet without the written consent of
Lessor. Even though Lessor shall consent to a sale, transfer, mortgage,
assignment or sub-letting thereof, the aforesaid restrictions shall remain in
full force and effect, and no further sale, transfer, mortgage, assignment or
subletting shall be made without Lessor's consent in writing. The sale or
transfer, whether to one or more persons and whether at one or different times,
of a total or more than fifty (50%) percent of the shares of capital stock of
any corporation which is then the legal tenant under this Lease, shall be deemed
an assignment within the meaning of this section.
Consent to sublease shall not be reasonably withheld.
7. ALTERATIONS AND IMPROVEMENTS, ETC.
(a) Lessee shall make no alterations, decorations, installations,
additions or improvements in or to the demised premises without Lessor's prior
written consent. Tenant shall not cut, drill into, disfigure deface, or injure
any part of the premises; nor obstruct or permit any obstruction, alteration,
addition, improvement, decoration or installation in the premises. All
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alterations, additions, improvements, decorations, or installations (except
movable furniture and fixtures put in at the expense of Tenant and removable
without defacing or injuring the building or the premises) shall become the
property of Lessor at the termination of the term; Lessor, however, reserves the
option to require Tenant, upon demand in writing, to remove all fixtures and
additions, improvements, decorations or installations (including those not
removable without defacing or injuring the leased premises) and to restore the
premises to the same conditions as when originally leased to Tenant, reasonable
wear and tear accepted. Tenant agrees to restore the premises immediately upon
the receipt of said demand in writing at his own cost and expense and agrees in
case of his failure to do so, the Lessor may do so and collect the cost thereof
from Tenant. Any such alterations and restoration shall be made at such times
and in such manner as Lessor may designate and so as not to interfere with the
occupation, use and enjoyment of the remainder of the Building by the other
Tenants hereof.
(b) In making any alterations, decorations, additions,
installations or improvements to or in the premises, Tenant shall employ and use
only such labor, contractors, or mechanics as approved by Lessor and as shall
have the same union affiliation as the workmen of Lessor's contractor and such
as will not cause strikes or labor trouble with other employees in the building
employed by Lessor or Lessor's contractors; and all such work done by Tenant
shall be performed and installed in such a manner that the same shall comply
with all provisions of law, ordinances, and all rules and regulations of any and
all agencies and authorities having jurisdiction over the premises, and such
time and in such manner as not interfere with the progress of any work being
performed by or on account of Lessor. Notwithstanding the foregoing, it is
understood that Tenant is not obliged by Lessor to make any improvement or
improvements and in no event shall Tenant have the right to create or permit
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there to be established any lien or encumbrances of any nature against the
premises of the Building for said improvement or improvements made or contracted
for by Tenant. Any mechanic's lien filed against the premises or the building
for work claimed to have been done, or materials claimed to have been furnished
to Tenant shall be duly discharged by Tenant within ten (10) days after the
filing of the lien.
8. INSPECTIONS, EXAMINATIONS AND ENTRY. Lessor and Lessor's agents shall
have the right to enter the premises at all reasonable hours to examine the
same, and workmen may enter at any time when authorized by Lessor or Lessor's
agents to make such repairs, alterations, or improvements in the building as
Lessor may deem necessary or desirable. If during the last month of the term
Tenant shall have removed all or substantially all of the Tenant's property;
Lessor may immediately enter the premises and prepare for any future Tenant.
Furthermore, the Lessor may allow such future Tenant to occupy the premises.
These acts shall be entitled to no abatement or diminution of rent as a result
of thereof, except that in the event such future Tenant makes any payment for
the period up until the expiration of this Lease, Tenants shall be entitled to a
credit to the extent of such credit. If tenant shall not be personally present
to open and permit entry into the premises, when entry "hereunto shall be
permissible or necessary hereunder, Lessor may forcibly enter same without
rendering Lessor liable to any claim for damages and without affecting the
obligations and covenants of this Lease. Employees of Lessor and Lessor's agents
shall be permitted to enter the demised premises by pass key at all reasonable
times. The Lessor shall also have the right to enter the leased premises at all
reasonable hours for the purpose of displaying said premises to prospective
tenants within ninety (90) days prior to the termination of this Lease.
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9. RIGHT OF LESSOR TO USE ENTRANCES, ETC., AND TO CHANGE SAME. For the
purposes of making repairs alterations in any portion of the Building of which
premises for a part, Lessor may use one or more of street entrances, halls,
passage ways, and elevators of said Building, provided, however, that there be
unnecessary obstruction of the right, of entry to premises while the same are
occupied. Lessor may at time change the name or number if the Building, remodel
alter the same, or the location of any entrance thereto, or any other portion
thereof not occupied by Tenant, and the same shall not constitute a constructive
or actual, total or partial eviction.
10. TENANT TO TAKE GOOD CARE OF PREMISES. Tenant shall keep the premises
in a clean, safe and sanitary condition and shall permit no waste or injury to
occur to the premises and fixtures therein, or to any additions, alterations,
and improvements thereto. All damage caused by Tenant's negligence, or that of
his agents, servants, employees or visitors shall be repaired promptly by Tenant
as this sole cost and expense. In the event that the Tenant fails to comply with
the foregoing provisions, the Lessor shall have the option to enter the premises
and make all necessary repairs at Tenant's cost and expense, the same to be
added to and be payable with the next monthly installment of rent.
11. COMPLIANCE WITH ORDINANCES AND DIRECTIVES OF AUTHORITIES. Lessee
shall, at its own cost and expense, comply with all present or future rules,
regulations, directives, laws, ordinances, and orders of all public authorities,
and Fire Underwriters which are or may become applicable to the leased premises
and space, except as said rules pertain to any structural work or outside
repairs. Lessee waives any claim against Lessor for any expense or damages
resulting from compliance with any of the said rules, regulations, directives,
laws, ordinances or orders.
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12. RULES AND REGULATIONS. That in addition to the several covenants in
this Lease, it is mutually covenanted and agreed that the rules and regulations
appertaining to the said building and which are annexed hereto, as part hereof,
are agreed to in all of their terms, and said Lessee agrees to be bound by the
same, and also covenants to be bound by which further rules and regulations as
may be made by said Lessor from time to time, during this Lease, deemed by it to
be necessary, for the safety, cleanliness, and the economical management of the
premises, and for the preservation of good order therein. Any failure on the
part of the Lessee to comply with the terms of this Lease, or with any of said
rules and regulations now in existence as aforesaid, shall have the right to
re-enter said premises and remove Lessee therefrom and to take all necessary
steps to collect any rents due hereunder up to the time of said forfeiture or
cancellation.
13. SIGNS. The Lessee will not place any signs or advertising matter or
material on the exterior or on the interior, where possible to be seen from the
exterior, of the leased premises or of the building in which the leased premises
are located, without the prior written consent of the Lessor. Any lettering or
signs placed on the interior of said building shall be for directional purposes
only, and such signs and lettering shall be of a type, kind, character and
description to be approved by Lessor.
14. DAMAGES TO PROPERTY. It is covenanted and agreed by and between the
parties hereto that the Lessor shall not in any event, whether caused by the
Lessor's negligence or otherwise be liable for any loss, damage or injury to the
Lessee, Lessee's agents, servants, employees or visitors, or the Lessee's
property for any damage or injury caused by or from the bursting or leaking of
boilers of water, sewer or steam pipes, or air conditioning equipment, or from
the heating or plumbing fixtures, or from electric wires, equipment or fixtures,
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or from gas odors, or from the elements of from any cause whatsoever, except in
the case of the willful neglect of the Lessor.
15. SUBORDINATION AND ATTORNMENT. This Lease is subject and subordinate
to the lien of any mortgage or ground lease or deeds of trust or other
encumbrances, now or hereafter placed upon the land or Building in any amounts
whatsoever. Lessee covenants and agrees to execute and deliver such instruments
evidencing such subordination of this Lease to such liens of any such mortgages,
deeds of trust or other encumbrances, as may be required by Lessor from time to
time.
As aforedescribed, this Lease is subordinate to the lien of any existing
and/or future mortgage and any further advances, renewals, extensions or
modifications, thereof, so long as Lessee is not default under the Lease at that
time, this Lease shall continue in full force and effect as a direct and valid
Lease between the Lessee and the then owner of the fee provided, that the then
now owner shall not be liable for any previous act or omissions of Lessor or any
other party, or to be subject to any offsets against Lessor, or bound by
prepayment of more than one (1) month's rent.
16. DAMAGE BY FIRE OR OTHER CASUALTY. In the event the premises shall be
destroyed or so damaged or injured by fire or other casualty during the life of
this Lease whereby the same shall be rendered untenantable, then Lessor shall
have the right to render such premises tenantable by repairs within ninety (90)
days therefrom. If said premises are not rendered tenantable within said time,
it shall be optional with either party hereto to cancel this Lease, and in the
event of such cancellation the rent shall be paid only to the date of such fire
or casualty. The cancellation herein mentioned shall be evidenced in writing.
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During any time that the premises are untenantable due to causes set forth in
this paragraph, the rent or a Just and fair proportion thereof shall be omitted.
17. CONDEMNATION. If during the terms of this Lease the whole of the
leased premises or Building, or such portion(s) thereof as will render the
leased premises unusable for the purpose leased, be condemned or otherwise
leased or taker under the right of eminent domain by any competent authority for
public or quasi-public use or purpose or is taken by private purchase in lieu of
condemnation, then in such event, this Lease shall, at the option of Lessor,
cease and come to an end as of the date of the title in such public authority or
by private purchase, or when possession is given to such public authority,
whichever event last occurs. Upon such occurrence the rent shall be proportioned
as of such date and any prepaid rent shall be returned to Lessee. The Lessor
shall be entitled to the entire award or purchase price and the Lessee shall
have no right or claim to any part thereof.
18. ABANDONMENT. In case Tenant shall fail to take possession at the
commencement of the term, or in case the premises, or any part thereof, shall be
vacated during the term prior to the expiration of the terms of this Lease,
Lessor shall have the right to enter the premises without instituting, any
proceeding either by force or otherwise without being liable for damages
therefor, and to relet the same, or any part thereof, for the unexpired portion
of the term or longer and to collect the rent therefor, and to apply the rents
so collected to the payment of rent and all other sums payable to the Lessor.
Tenant shall in such case remain responsible to Lessor for any and all
deficiency, loss and damage suffered by Lessor.
19. RE-ENTRY, DEFAULT. The Lessee covenants that if the rent reserved by
this Lease or any part thereof shall be unpaid when due, or if the premises
shall become vacant or actually unoccupied during the term, or if the Lessee
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shall fail to perform any conditions, covenants, provisions and agreements
contained herein, or if a petition in bankruptcy shall be filed by the Lessee,
or if the Lessee dies or become mentally incompetent, of if the Lessee shall
adjusted bankrupt or insolvent by any court, or if a receiver or trustee in
bankruptcy or receiver of the property of the Lessee shall be appointed in any
suit, action or proceeding, or if the Lessee shall make an assignment for the
benefit of creditors, or if an execution shall be issued against the Lessee, or
if the Lessee's leasehold interest herein shall be levied upon, or if the
Lessee's leasehold interest herein shall buy operation of law pass to any person
other than the Lessee, then in each and every case, the Lessor may, at its
option, without notice to the Lessee or to any assignee, transferee, trustee,
receiver or other person or persons, with force or otherwise, retake and recover
possession of said premises and terminate list Lease and the term herein and
hereby granted and dismissed; or, in each and such case, the Lessor may, at its
option, without notice to the Lessee or to any assignee, transferee, trustee,
receiver or other person or persons, with force or otherwise enter said premises
and relet the same as it may see fit, without avoiding or terminating thus
lease, and for the purpose of such reletting the Lessor may such repairs,
alterations and additions, in or to set premises as the Lessor may deem
necessary for the purpose of such reletting, and if a sufficient sum shall not
be realized from such reletting, after paying the costs, expenses and charges of
such reletting, alterations and additions in and to said premises to equal the
rent hereinabove covenanted to be paid by the Lessee, then the Lessee shall pay
any deficiency arising upon demand therefore and such deficiency shall be
considered, construed and taken to be a debt provable in bankruptcy or
receivership.
20. ATTORNEYS' FEES. If the Lessee defaults in the performance of any of
the covenants of this Lease and by reason thereof, the Lessor employs the
services of an attorney to enforce performance of the covenants by the Lessee,
to evict the Lessee, to collect monies due by the Lessee, or to perform any
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service based upon said default, then in any of the said events the Lessee does
agree to pay a reasonable attorney's fee and all expenses and costs incurred by
the Lessor pertaining thereto and in enforcements of any remedy available to the
Lessor.
21. HOLDING OVER. In the event the Lessee shall withhold from the Lessor
the possession of the premises demised herein after the termination of this
lease and the term hereby demised, whether by expiration of said term or by the
election or act of either party hereto, the damages for which the Lessee shall
be liable to the Lessor for such detention shall be and hereby are liquidated at
a sum equal to double the amount of rent stipulated herein for a period equal to
the period of such detention. In the event the Lessee shall remain in possession
of said premises after the expiration and termination of this Lease for any
cause whatsoever, the Lessee shall then be considered a Tenant at will and by
difference, and no such holding or retention of possession or occupancy shall
operate as an extension or renewal of this Lease in any manner whatsoever.
22. CERTIFICATE BY TENANT. Tenant shall deliver to Lessor or to its
mortgage, auditors, or prospective purchaser or the owner of the fee, when
requested by Lessor, a certificate to the effect that this lease is in full
force and effect and that Lessor is not in default therein, or stating
specifically any exceptions thereto. Failure to give such a certificate within
two (2) weeks after written request shall be conclusive evidence that the Lease
is in full force and effect and Lessor is not in default and Tenant shall be
stopped from asserting any defaults known to him at that time.
23. INDEMNIFICATION. The Lessor shall not be liable for any damage or
injury to any person or property whether it be the person or property of the
Lessee, the Lessee's employees, agents, guests, invitees or otherwise by reason
of Lessee's occupancy and use of the leased premises or because of fire, flood,
windstorm, Acts of God or for any other reason.
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Tenant shall indemnify and save Lessor harmless, and does agree to
indemnify and save Lessor harmless, of and from all fines, claims, demands and
causes of action of every nature whatsoever arising or growing out of or in
manner connected with the occupation use of the premises Building, and every
part thereof, by Tenant and the employees, agents, servants, guests and invitees
of Tenant including without limiting the generality of the foregoing, and
claims, demands and causes of action for personal injury and/or property damage,
and said indemnification shall extend to any fines, claims, demands and causes
of actions of every nature whatsoever which may be made upon, sustained or
incurred by Lessor by reason of any breach, violation or nonperformances of any
terms, covenant or condition hereof on the part of Tenant, or by reason of any
act or omission on the part of Tenant and the employees, agents, servants,
guests or invitees of Tenant. In any such event contributory negligence on the
part of the Lessor shall not anywise affect Tenant's obligation under this
indemnification. Tenant agrees that his indemnification shall further extend to
all costs incurred by Lessor including reasonable attorneys' fees.
24. NOTICES. All notices required hereunder shall be in writing and any
notice by Lessor to Tenant shall be deemed to be duly given if either delivered
personally to Tenant or sent by registered or certified mail, addressed to
Tenant at the premises leased hereunder. Any notice by Tenant to Lessor shall be
deemed duly given if sent by registered or certified mail to Lessor at 7350 N.W.
7th Street, #104, Miami, Florida 33126 (or at such other address as may
hereafter be designated by Lessor), and also to the agent of Lessor charged with
the renting and management of the building, if any.
25. SURRENDERED AT EXPIRATION OF TERM. Tenant agrees at the expiration of
the term by lapse of time or otherwise to quit and surrender the premises hereby
demised and everything belonging to or connected therewith is as food state and
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condition as reasonable wear and use thereof will permit and to remove all
signs, advertisements and rubbish from the said premises; and Tenant hereby
expressly authorizes Lessor, as the agent of Tenant, to remove such rubbish and
make such changes and repairs as may be necessary to restore the premises to
such condition at the expense of Tenant.
26. QUIET POSSESSION AND OTHER COVENANTS. Lessor covenants that if and so
long as Tenant pays the rent and additional rent rendered by this Lease and
performs and observes all of the covenants, conditions and rules and regulations
hereof, Tenant shall quietly enjoy the demised premises subject however, to all
of the terms of this Lease. Tenant expressly agrees for himself, administrators,
personal representatives, his executors, successors and assignees that the
covenant of quiet enjoyment (expressed or implied) and all other covenants in
this Lease on the part of Lessor to be performed shall be binding upon Lessor
only so long as Lessor remains the owner of the Building of which the demised
premises form a part.
27. REMEDIES CUMULATIVE. The various rights, remedies, powers and
elections of Lessors reserved, expressed or contained in this Lease, are
cumulative and no one of them shall be deemed to be exclusive of the others or
of such other rights, remedies, powers, options or elections as are now or may
hereafter be, conferred upon Lessor by law. The failure on the part of the
Lessor to exercise promptly any rights given hereunder shall not operate to
forfeit or waive any the said rights.
28. NO WAIVER OR PERFORMANCE. No waiver by Lessor of any provision hereof
shall be deemed to have been made unless such waiver be in writing signed by
Lessor. The failure of Lessor to insist upon the strict performance of any of
the covenants or conditions of this Lease, or to exercise any option herein
conferred, shall hat be construed as wiving or relinquishing for the future any
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such covenants, conditions or option but the same shall continue and remain in
full force and effect. No act of Lessor or its agent during the term hereof
shall be deemed an acceptance of a surrender of the said promises unless made in
writing and personally subscribed by Lessor, neither shall the delivery of the
keys to the premises by Tenant to Lessor or its agent be deemed a surrender and
acceptance thereof. No payment by tenant of a Lessor amount than the monthly
rent herein stipulated shall be deemed to be other that on account of the
stipulated rent.
29. SECURITY. The Lessee, concurrently with the executive of this Lease,
has deposited with Lessor the sum of Five Thousand and No/100 ($5,000.00)
Dollars as security for the faithful performance and observance by Tenant of the
terms, provision and conditions, of this lease, it is agreed that in the event
Tenant defaults in respect of any of the terms, provision and conditions, of
this lease; it is agreed that in the event Tenant defaults in respect of any of
the terms, provisions and conditions of this Lease including, but not limited
to, the payment of rent and additional rent Lessor may use, apply or retain the
whole or any part of the security so deposited to the extent required for the
payment of any rent and additional rent or any other sum as to which Tenant is
in default or for any sum which Lessor may expend or may required to expend by
reason of Tenant's default in respect of any of the terms, covenants and
conditions of this Lease, including, but not limited to, any damages or
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deficiency in the reletting of the promises whether such deficiency occurred
before or after summary proceedings or other re-entry by Lessor. In the event
that Tenant shall fully and faithfully comply with all the terms, provisions,
covenants and conditions of this Lease, the security shall be returned to Tenant
after the date fixed as the end of the Lease and after delivery of entire
possession of the premises to the Lessor. In the event of a sale of the land and
Building of which the premises form a part, Lessor shall have the right to
transfer the security to the vendee, and Lessor shall thereupon be released by
tenant from all liability for the return of such security and Tenant agrees to
look to the new Lessor solely for the return of such security. It is agreed that
the provisions hereof shall apply to every transfer or assignment made of the
security to a new Lessor. Tenant further covenants that he will not assign or
encumber the monies deposited herein an security and that neither Lessor nor its
assigns shall be bound by any such assignment or encumbrances. Lessor shall not
be required to keep the security in a segregated account and the security may be
commingled with other fund of Lessor and in no event shall Tenant be entitled to
any interest on the security.
30. LESSEE'S INSURANCE. Lessee does hereby agree and covenant for the
term of this Lease if he maintains and pays for Public Liability Bodily Injury,
including death, insurance upon the demised space and premises to be with
companies acceptable to Lessor, said policy(ies) shall specifically reflect and
name Lessor as "additional named insured" by endorsement and which policy(ies)
shall contain a suitable clause providing for the giving of Thirty (30) days'
prior written notice to Lessor of any and all renewals or cancellations thereof.
Lessee shall furnish Lessor with a complete copy of said insurance upon request.
31. LIEN. The said Lessee hereby pledges and assigns to the Lessor all
the furniture, fixtures, good, and chattels of said Lessee, which shall or may
be brought or put on said herein may be at the to pay attorney's fees together
with all costs and charges therefore incurred or paid by the Lessor.
32. SUCCESSIONS. This Lease shall inure to and be binding upon
successors and assignees of the Lessor and the heirs, administrators,
executors, successors and assignees of the Lessor and the heirs,
administrators' executors, successors and assigns of the Lessee.
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33. AMENDMENT. It is mutually agreed that this Lease cannot be
changed, altered, modified or extended, except in writing, signed by the
Lessor's duly authorized agent with the corporate seal attached.
34. The Lessee has the right to renew this lease for an additional
three 5 year periods.
35. Lessor will invoice Lessee monthly for parking utilization, based on
stamped parking tickets, at $0.50 per ticket.
IN WITNESS WHEREOF, the respective parties have hereunto set their hands
and seals and/or affixed their corporate seals and caused these presents to be
executed by their duly authorized officers for the purpose herein expressed, the
day and year first written above.
SIGNED, SEALED AND DELIVERED IN THE
PRESENCE OF:
/s/ Sanford I. Rakofsky, M.D.
- --------------------------------------- -------------------------------------
Witness (As to Lessor) LESSOR
- ---------------------------------------
Witness (As to Lessor)
/s/ George Fernandez
- --------------------------------------- -------------------------------------
Witness (As to Lessee) LESSEE
- ---------------------------------------
Witness (As to Lessee)
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EXHIBIT 10.13
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into
as of June 18, 1997 by and among PHARMASYSTEMS COST CONTAINMENT CORP., a Florida
corporation (the "BUYER"), JOSE L. RODRIGUEZ, M.D., MARIA RODRIGUEZ and CARLOS
M. MARIN (collectively, the "SELLERS").
RECITALS:
WHEREAS, Advanced Respiratory Care, Inc., a Florida corporation (the
"COMPANY"), is currently engaged in the sale and leasing of durable medical
equipment (the "BUSINESS"); and
WHEREAS, Jose L. Rodriguez, M.D. owns 30,000 Shares (as defined herein),
Maria Rodriguez owns 10,000 Shares and Carlos Marin owns 10,000 Shares, which
together equals one hundred percent (100%) of the issued and outstanding common
stock of the Company (the "SHARES"); and
WHEREAS, the Sellers have been involved with the business operations of
the Company and have knowledge regarding the Company's business operations; and
WHEREAS, the Sellers desire to sell and Buyer desires to purchase the
Shares on the terms and subject to the provisions of this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants, agreements and recitals contained herein, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I.
THE TRANSACTION
1.1. SALE AND PURCHASE OF THE PURCHASED SHARES. Upon the terms and subject
to the conditions of this Agreement and in consideration of the Purchase Price
(as defined herein), the Sellers shall sell, assign, transfer and deliver the
Shares to Buyer, and Buyer shall purchase from Sellers and take delivery of the
Shares pursuant to the terms of Section 1.3 hereto.
1.2. PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for
the Shares shall consist solely of 936,329.58 shares (the "PSCCC SHARES") of
the $0.001 par value per share common stock of the Buyer.
1.3. SHARES ESCROWED AT CLOSING.
(a) At the Closing the PSCCC Shares (the "ESCROWED SHARES") shall be
placed in escrow with Kirkpatrick & Lockhart LLP (the "ESCROW Agent"). The terms
of this escrow shall provide that, subject to the release provisions described
in Section 1.3(b) hereto, the Escrowed Shares shall be held in escrow for one
(1) year to insure the financial performance of the Company. The form of the
Escrow Agreement is attached hereto as EXHIBIT "A."
(b) PSCCC hereby agrees to release the lesser of (i) 250,000
Escrowed Shares, or (ii) any remaining Escrowed Shares within ten (10) days
after the end of each three month period following the Closing Date (as defined
herein) during which the Company fully satisfies the performance parameters as
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prescribed by the Buyer's board of directors for the applicable period. The
Escrowed Shares shall be delivered to the Sellers by the Escrow Agent in
accordance with their ownership interest in the Company as set forth in the
recitals.
1.4. CLOSING. Provided that all applicable conditions precedent are fully
satisfied or waived by the appropriate party, the consummation of the purchase
and sale of the Shares and the other transactions contemplated hereby (the
"CLOSING") shall take place at 10:00 a.m., local time, on June __, 1997 and
shall be effective as of 11:59 p.m. local time on that date at the offices of
Kirkpatrick & Lockhart LLP, Miami Center, Suite 2000, 201 South Biscayne Blvd.,
Miami, Florida, or at such other time, date or place as the parties agree (the
"CLOSING DATE").
1.5. TERMINATION. Any party hereto may terminate this Agreement and the
transactions contemplated herein, and have no obligations or liabilities to the
other parties hereto other than the provisions of Sections 6.3, 6.10 and 6.13
hereof, which shall survive such termination, if the Closing does not occur on
or before June 30, 1997. Notwithstanding any other provision hereof, the Buyer
may, at its sole option, terminate this Agreement and the transactions
contemplated herein, and have no obligations or liabilities to the Sellers
(except for the provisions of Sections 6.3, 6.10 and 6.13 hereof), if the Buyer
is not, in its sole discretion, completely satisfied with the results of the due
diligence investigation described in Section 4.1(a) hereof.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLERS
As a material inducement to the Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, the Sellers hereby jointly and
severally represent and warrant to the Buyer as follows:
2.1. ORGANIZATION; STANDING; CORPORATE POWER. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida. The Company has the full corporate power to own or lease and
operate its properties and to carry on the Business. The Company is duly
qualified to transact business and is in good standing as a foreign corporation
in each jurisdiction identified on Schedule 2.1. Attached hereto as EXHIBIT "C"
are true and correct copies of the Company's Articles of Incorporation and
Bylaws.
2.2. POWER AND AUTHORITY. Each of the Sellers has the power, legal
capacity and authority to execute and deliver this Agreement and the other
agreements and instruments for which provision is made herein to be executed and
delivered by Sellers and to perform their obligations under this Agreement and
such other agreements and instruments to which each of them will be a party.
This Agreement and such other agreements and instruments constitute legally
valid and binding obligations of the Sellers enforceable against each of them in
accordance with their respective terms. All actions on the part of the Sellers
necessary for the authorization, execution, delivery and performance of this
Agreement by each of them will be performed on or prior to the Closing Date.
2.3. SHARES; CAPITALIZATION. The authorized capital stock of the Company
consists solely of 50,000 shares of common stock, $0.01 par value per share, of
which 50,000 shares are issued and outstanding. All of the Shares are owned of
record, legally and beneficially by the Sellers. The Shares are free and clear
of any and all security interests, liens, claims, encumbrances, and rights of
any kind or nature whatsoever (collectively, "ENCUMBRANCES"), and upon delivery
of the Shares hereunder, Buyer will acquire good and marketable title thereto,
free and clear of any and all Encumbrances. Other than voting rights, redemption
rights and such other rights conferred by the Company's charter documents and by
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applicable statutes, there exist no Securities Rights (as defined herein) with
respect to the Shares. All rights and powers to vote the Shares are held
exclusively by the Sellers. All of the Shares are validly issued, fully paid and
nonassessable, were not issued in violation of the terms of any agreement or
other understanding, and were issued in compliance with all applicable laws and
regulations. The certificates representing the Shares to be delivered to the
Escrow Agent at the Closing are, and the signatures and endorsements thereof or
stock powers relating thereto will be, valid and genuine. For the purposes of
this section, "SECURITIES RIGHTS" means, with respect to the Shares, any
options, warrants, subscription rights, conversion rights (including, without
limitation, rights associated with convertible debt), rights of first refusal,
other rights, proxies, puts, calls, demands, plans, commitments, agreements,
understandings or arrangements of any kind relating to the Shares (whether
issued or unissued) or any other securities convertible into or exchangeable for
Shares, and includes all written or unwritten contractual rights relating to the
issuance, sale, assignment, transfer, purchase, redemption, conversion,
exchange, registration or voting of the Shares and all rights conferred by the
Company's governing documents and by any applicable agreement.
2.4. SUBSIDIARIES AND INVESTMENTS. Except as otherwise listed on Schedule
2.4, the Company does not own or control (directly or indirectly) nor has the
Company ever owned or controlled (directly or indirectly) any shares of capital
stock of or other equity interest in any corporation, partnership, joint venture
or other entity.
2.5. FINANCIAL STATEMENTS. The balance sheet (the "BALANCE SHEET") of the
Company as of March 31, 1997 (the "BALANCE SHEET DATE") and the related
statements of income for the twelve month period then ended (the Balance Sheet
and the related statements of income are referred to herein as the "FINANCIAL
STATEMENTS") are set forth on Schedule 2.5. The Financial Statements accurately
present, in accordance with generally accepted accounting principles
consistently applied ("GAAP"), the financial position of the Company on the
Balance Sheet Date and the results of its operations for such twelve month
periods.
2.6. LIABILITIES AND OBLIGATIONS. The Company has no debt, obligation or
liability, absolute, fixed, contingent or otherwise, of any nature whatsoever,
whether due or to become due, including any unasserted claim, whether incurred
directly or by any predecessor thereto, and whether arising out of any act,
omission, transaction, circumstance, sale of goods or services, state of facts
or other condition, which individually or in the aggregate would have a material
adverse effect on the Company's financial condition, except (a) those reflected
or reserved against on the Balance Sheet in the amounts shown therein; and (b)
those that have arisen in the ordinary course of business of the Company after
the Balance Sheet Date through the Closing Date, none of which, individually or
in the aggregate, has had or will have a material adverse effect on the Business
or financial condition of the Company.
2.7. NO CHANGES. Since the Balance Sheet Date the Company has conducted
its business only in the ordinary course, and there has not been any change in
any applicable set of circumstances or conditions that would have a material
adverse effect on the Company's financial condition.
2.8. REAL PROPERTY. Schedule 2.8 sets forth a complete and accurate list
of all the real property owned or leased by the Company (the "REAL PROPERTY").
There are no claims, actions, suits or other proceedings pending or threatened
which involve any part of the Real Property, and the Real Property is not in
violation of any Laws (as defined herein).
2.9. TITLE. The Company has good title to all of the assets (the
"ASSETS") used in the operation of the Business, and all of such Assets are
reflected on the Balance Sheet or, under GAAP, are not required to be
reflected thereon.
2.10. CONTRACTS. Schedule 2.10 sets forth a complete and accurate list
of all the Contracts (as defined herein) of the Company. "CONTRACT" shall
mean any formal or informal agreement, whether written or unwritten, to which
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the Company is a party or by which the Company or the Shares are bound and
which by its terms obligates the Company to pay a total of more than
$10,000.00.
2.11. PERMITS. The Company holds all material permits, certificates,
licenses, franchises, privileges, approvals, registrations and authorizations
required under any applicable Law in connection with the Business (collectively,
"PERMITS"). Each Permit is in effect, and the Company is in compliance with and
has fulfilled and performed its obligations under each Permit.
2.12. LABOR RELATIONS. Except as otherwise listed on Schedule 2.12 hereto,
(a) the Company has complied in all material respects with all applicable Laws,
rules and regulations which relate to wages, hours and discrimination in
employment and no penalties could be assessed for failure to comply with any of
the foregoing; (b) no condition or state of facts or circumstances exists in
connection with or involving any of the Company's employees or former employees
which could have a material adverse effect on the Company's financial condition;
(c) the Company is not a party to any collective bargaining agreement; (d) the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not trigger any obligation on the part
of the Company to make any payment to any past or current officer, director,
employee of agent of the Company; and (e) the Company's relations with its
employees are good.
2.13. INTELLECTUAL PROPERTY RIGHTS. The name "Advanced Respiratory Care,
Inc." is valid and is not the subject of any interference, opposition,
reexamination or cancellation. No person is infringing upon, or intends to
infringe upon, this name, and the Company's use of this name is not infringing
upon the intellectual property rights of any other person.
2.14. CUSTOMERS AND SUPPLIERS. No condition or state of facts or
circumstances exists in connection with or involving the Company's customers,
former customers, suppliers or former suppliers which could have a material
adverse effect on the Company's Business or financial condition.
2.15. NO VIOLATION OF LAW; LITIGATION.
(a) The execution and delivery of this Agreement by the Sellers, the
performance by the Sellers of their respective obligations hereunder and the
consummation of the transactions contemplated hereunder will not result in (i) a
violation of any applicable law, statute, rule, regulation, writ, order,
judgment or decree (each, a "LAW") of any domestic or foreign court or
governmental, administrative or regulatory authority, agency or instrumentality
(each, a "GOVERNMENTAL AUTHORITY") applicable to the Company, the Shares or the
Sellers; or (ii) the breach of, or constitute a default under, any agreement or
instrument to which any of the Sellers is a party or by which the Sellers, the
Company, or the Shares are bound.
(b) Schedule 2.15(b) sets forth all Litigation (as defined herein)
which is pending or threatened against the Company, the Shares or the Sellers.
No Litigation is pending or threatened that seeks to prevent, delay or challenge
the consummation of the transactions contemplated by this Agreement.
"LITIGATION" means any claim, action, suit, proceeding or investigation at law
or in equity or otherwise in, before or by any Governmental Authority or before
any public or private arbitrator or arbitration board or panel.
2.16. BROKERS. The Sellers have not directly or indirectly, in connection
with this Agreement or the transactions contemplated hereby (a) employed any
broker, finder or agent; or (b) agreed to pay or incurred any obligation to pay
any broker's or finder's fee, commission or any other similar form of
compensation.
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2.17. NO CONSENTS. No consent, approval, authorization or other action by,
or filing with, any Governmental Authority (each, a "GOVERNMENTAL Approval") or
other third party is required to be obtained or made by the Sellers in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
2.18. NO CONFLICTS. The execution, delivery, performance and compliance
with the terms of this Agreement by the Sellers do not and will not, and
consummation of the transactions contemplated by this Agreement will not: (a)
result in the violation of the by-laws or any other governing documents of the
Company; (b) result in the breach of, or constitute a default under, or permit
the acceleration of any obligation under, any Contract to which the Company or
the Sellers are a party or by which the Company, the Sellers or the Shares are
bound; (c) result in the mandatory acceleration, redemption, payment or
prepayment of any material obligation of the Company or the Sellers under any
such agreement or instrument or afford the holder of any such obligation the
right to require the Company or the Sellers to purchase, redeem or otherwise
acquire, reacquire or repay any such obligation; or (d) constitute an event
which, after notice or lapse of time or both, would result in any of the
foregoing.
2.19. TAXES.
(a) The Sellers and the Company have filed when due all federal,
foreign, state and local Tax (as defined herein) returns, information returns,
reports and estimates required to be filed by the Company or on its behalf by
Sellers on or before the Closing Date. Except as described on Schedule 2.19, all
such returns, reports and estimates (i) were prepared by one of the Sellers, or
the Company, as applicable, in the manner required by all applicable Laws, (ii)
are correct and complete, and (iii) accurately reflect the Company's liability
for Taxes.
(b) The Company has paid or has, in accordance with GAAP, provided a
sufficient reserve on the Balance Sheet for the payment of all federal, foreign,
state and local Taxes with respect to all periods, or portions thereof, ending
on or prior to the Balance Sheet Date and such Taxes paid or provided for
include those for which the Company may be liable in its own right or as the
transferee of the assets of, or as successor to, any other corporation,
association, partnership, joint venture or other entity. The Company has no
liability for any Taxes not reflected on the Balance Sheet.
(c) The Company has, in compliance with the applicable provisions of
the Internal Revenue Code of 1986, as amended (the "CODE") and all other
applicable Laws, (i) withheld amounts from its employees; (ii) filed all
federal, foreign, state and local returns and reports and paid all Taxes with
respect to employee income Tax withholding and social security and unemployment
Taxes for all periods (or portions thereof) ending before the Closing Date; and
(iii) made all required deposits of Taxes.
(d) Except as set forth on Schedule 2.19, there are no examinations,
investigations or claims by any taxing authority of competent jurisdiction
pending or threatened against the Sellers or the Company, for any Taxes due
before the Closing Date, and there has been no waiver of any applicable statute
of limitations or extension of the time for the assessment of any Tax against
any of the Sellers or the Company.
(e) Neither the Company nor any of the Sellers is a party to
any Tax allocation or sharing agreement.
(f) "TAXES" or "TAX" means all net income, capital gains, gross
income, gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, intangible or windfall profit taxes, customs duties or other taxes of
any kind whatsoever applicable to the Company, together with any interest and
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any penalties, additions to tax, or additional amounts imposed with respect to
Taxes by any Governmental Authority upon the Company.
2.20. ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 2.20, in connection with
all Environmental Laws (as defined herein):
(i) neither the Company, nor any of the Sellers, have received
written notice of any claim from any Governmental Authority or any third party
that the operation of the Business of the Company violates or has violated any
applicable Environmental Laws;
(ii) neither the Company nor any of the Sellers have received
from any Governmental Authority or any third party any written request for
information seeking to determine whether, or any notification to the effect
that, the Company may be responsible for damages, investigation, removal or
remediation relating to the Release (as defined herein) or threatened Release of
any Regulated Substance (as defined herein) at any property currently or
previously owned or operated by the Company or at any other site;
(iii) the Company and the Business are in compliance in all
material respects with all applicable Environmental Laws, and the Company and
the Business have been in compliance in all material respects with all
applicable Environmental Laws.
(iv) no Regulated Substances have been or are being Released
on or to any property owned or operated by the Company, except Releases that
were specifically authorized by and made in compliance with a Governmental
Approval;
(v) no Regulated Substances have been or are being Released on
or to any property owned or operated by the Company creating an Environmental
Condition (as defined herein) on such property that under any Environmental Law
currently in effect (a) imposes or could reasonably be expected to impose
liability for removal, remediation, or other cleanup, or damages, (b) could have
a material adverse effect on the value of the property, the Company or the
Business, or (c) could result in the imposition of a lien on the property of the
Company.
(vi) no Regulated Substances are stored or located on the
properties owned or operated by the Company except for inventories of raw
materials and supplies used or to be used in the ordinary course of business of
the Company and intermediate and finished goods, each of which are managed in
compliance with applicable Environmental Laws;
(vii) there are no polychlorinated biphenyls or asbestos which
are located on, contained in, or otherwise form a part of, the assets or
properties of the Company.
(b) The Company has obtained and holds all Governmental Approvals
required under applicable Environmental Laws for the ownership, use, occupation,
and operation of the Business, the Real Property, any other properties owned or
leased by the Company and all other business activities of the Company. The
Company has made all filings, reports, registrations, or other submissions
required under Environmental Laws with respect to the ownership, use,
occupation, and operation of the Business, the Real Property or any other
properties owned or leased by the Company, and all other business activities of
the Company.
(c) All Governmental Approvals which are necessary under existing
Environmental Laws for the ownership, use, occupation, and operation of the
Business, the Real Property or any other properties owned or leased by the
Company are set forth in Schedule 2.20(c) hereto. Each of the Governmental
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Approvals set forth in Schedule 2.20(c) is in full force and effect and is
final, any fixed period for appeal or review having elapsed (other than as to
ongoing compliance or modification during the term of such Governmental Approval
as otherwise provided by law). No such Governmental Approval is subject to any
pending suit, action, inquiry, investigation, proceeding or appeal.
(d) Except as provided in Schedule 2.20(d):
(i) the Company, its Predecessors (as defined herein) have
complied with, and are in compliance with: (a) the terms and conditions of all
Governmental Approvals issued or required pursuant to any Environmental Law, and
(b) all other limitations, restrictions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any Environmental Law, or in
any notice, order, or demand letter issued, entered, promulgated, or approved
pursuant to any Environmental Law;
(ii) none of the Company, its Predecessors nor any of the
Sellers have received any notice of violation or other notification from any
Governmental Authority alleging that the Company or its Predecessors, or the
Real Property or any other property owned or leased by the Company or its
Predecessors is in violation of any Environmental Law; and
(iii) none of the Company, its Predecessors, the Real Property
or any other property owned or leased by the Company or its Predecessors are
subject to, or have been subject to, any administrative or judicial proceedings
or investigations pursuant to any Environmental Law.
(e) Except as set forth on Schedule 2.20(e), there are not now, and
there have not been previously, any underground storage tanks on or at any
property owned, leased or operated by the Company, the Sellers or its
Predecessors.
(f) None of the Company, its Predecessors, nor any of the
Sellers;
(i) disposed, discharged, or released any Regulated
Substance at;
(ii) arranged for the disposal of any Regulated Substance at;
(iii) transported any Regulated Substance to; or
(iv) owned or operated
any site or facility that is listed or proposed for listing on the National
Priority List under CERCLA, or that is listed or proposed for listing or has
otherwise been identified as a hazardous substances release site by any state
regulating authority.
(g) All sites, facilities, or other business operations at which or
with whom the Company or its Predecessors disposed or arranged for treatment or
disposal or for transportation for treatment or disposal of any Regulated
Substance are set forth in Schedule 2.20(g) hereto. All sites, facilities, or
other business operations at which the Company or its Predecessors treated or
disposed or arranged for treatment or disposal or for transportation for
treatment or disposal of such Regulated Substances held at the time of treatment
or disposal or arrangement for transportation for treatment or disposal all
Government Approvals necessary to accept, transport, and/or dispose of such
Regulated Substances, and none of such sites, facilities or other business
operation is or could reasonably be expected to be the subject of an action for
removal, remediation or other cleanup, damage to natural resources, or violation
of any Environmental Law.
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(h) For purposes of this Agreement, the following terms shall have
the following meanings:
(i) "ENVIRONMENTAL CONDITION" means the presence of a
Regulated Substance (other than a naturally-occurring substance) on or at a
property (including, but not limited to, the presence in surface water,
groundwater, soils or subsurface strata).
(ii) "ENVIRONMENTAL LAWS" means any federal, state or local
statute, law, rule, regulation, ordinance, code, or policy having the force of
law relating to protection of the environment, natural resources, or public or
employee health and safety, or relating to the production, generation, use,
storage, treatment, processing, transportation or disposal of Regulated
Substances, including, without limitation: the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 ET SEQ.; the
Superfund Amendments and Reauthorization Act, Public Law 99-499, 100 Stat. 1613;
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, ET SEQ.; the
National Environmental Policy Act, 42 U.S.C. ss. 4321; the Safe Drinking Water
Act, 42 U.S.C. ss. 300f ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. ss.
2601 ET SEQ.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
ss. 136, ET SEQ.; the Hazardous MaterialS Transportation Act, 49 U.S.C. ss.
1801; the Federal Water Pollution Control Act, 33 U.S.C. ss. 1251 ET SEQ.; the
Oil Pollution Act of 1990, 33 U.S.C. ss. 2701, ET SEQ.; the Clean Air Act, 42
U.S.C. ss. 7401 ET SEQ., The Occupational Safety and Health Act, 29 U.S.C. ss.
651 ET SEQ., and counterpart state and local laws, and regulations adopted
thereunder.
(iii) "PREDECESSOR" means a predecessor entity which has been
merged with the Company, or the predecessor owner or operator of any of the
property or assets owned or operated by the Company, where the Company is liable
(whether by reason of the contractual assumption of liabilities, indemnification
obligations or by other operation of law) for the actions or inactions of such
predecessor.
(iv) "REGULATED SUBSTANCE" means any pollutant, contaminant,
hazardous substance, hazardous material, toxic substance, toxic pollutant, solid
waste, municipal waste, industrial waste, or hazardous waste, that is defined as
such and is subject to regulation under any applicable Environmental Law.
(v) "RELEASE" means the spilling, leaking, pumping, pouring,
emitting, discharging, injecting, escaping, leaching, dumping or disposal of any
Regulated Substance into surface water, groundwater, soil, the land surface or
subsurface, or ambient air. Release does not include a release of solids or
liquids onto an impervious surface that is promptly contained and cleaned up,
and that does not come into contact with soil, stormwater, surface water or
groundwater.
2.21. EMPLOYEE BENEFIT PLANS; LABOR RELATIONS. "EMPLOYEE PLAN" means any
pension, retirement, profit-sharing, deferred compensation, bonus, severance or
other incentive plan, medical, vision, dental or other health plan, life
insurance plan or other employee benefit plan, arrangement, program or practice,
including, without limitation, any "EMPLOYEE BENEFIT plan" as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), covering any Employees ("EMPLOYEES") of the Company, and under which
Employees of the Company are eligible to participate or derive a benefit, except
any government-sponsored program or legally or governmentally required benefit.
The Company has no liability under any Employee Plan, including, without
limitation, an Employee Plan which is an "employee benefit plan" as defined in
Section 3(3) of ERISA.
2.22. LEASEHOLD PROPERTY. The Company has valid leasehold interests in all
leased personal property that is material to the conduct of the Business, and
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there is not under any related lease any default (or event that, with the giving
of notice or the passage of time or both, would constitute a default) by the
Company.
2.23. BOOKS AND RECORDS. The stock record books and other corporate
records of the Company, all of which have been made available to Buyer, are
complete and correct in all material respects and have been substantially
maintained in accordance with sound business practices and all applicable Laws.
2.24. INVESTMENT INTENT. The Sellers are acquiring the PSCCC Shares
for investment only and not with an intent to distribute them in violation of
any applicable Federal or state securities laws.
2.25. DISCLOSURE. All written information that on or prior to the Closing
Date has been made available to Buyer by the Sellers or the Company in
connection with this Agreement or the transactions contemplated hereby,
including, without limitation, the Schedules and Exhibits attached hereto, does
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make such information not materially misleading in
light of the circumstances under which such information was made.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to Sellers as follows:
3.1. ORGANIZATION; POWER AND CORPORATE AUTHORITY. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. Buyer has the power, legal capacity and corporate
authority to execute and deliver this Agreement and the other agreements and
instruments for which provision is made herein to be executed and delivered by
Buyer and to perform its obligations under this Agreement and the other
agreements and instruments to which Buyer will be a party. This Agreement and
such other agreements and instruments shall constitute valid and binding
obligations of the Buyer enforceable against the Buyer in accordance with their
respective terms. All corporate and other action on the part of the Buyer
necessary for the authorization, execution, delivery and performance by the
Buyer of this Agreement shall be performed on or prior to the Closing Date.
3.2. NO VIOLATION. Neither the execution and delivery of this Agreement by
Buyer nor the performance by Buyer of its obligations in such capacity under
this Agreement, will (a) result in the violation of the Articles of
Incorporation or Bylaws of the Buyer as in effect on the Closing Date or (b)
result in the breach of, or constitute a default under, any material agreement
or instrument to which Buyer is a party or by which Buyer is bound or constitute
an event which, after notice or lapse of time or both, would result in any of
the foregoing.
3.3. BROKERS. Buyer has not, directly or indirectly, in connection with
this Agreement or the transactions contemplated hereby (a) employed any broker,
finder or agent or (b) agreed to pay or incurred any obligation to pay any
broker's or finder's fee, any commission or any other similar form of
compensation.
ARTICLE IV.
CONDITIONS TO CLOSING
4.1. CONDITIONS TO THE OBLIGATION OF BUYER. The obligation of Buyer to
proceed with the Closing is subject to the satisfaction on or prior to the
Closing Date of all the following conditions, any one or more of which may be
waived in whole or in part by the Buyer:
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(a) The Buyer shall have conducted a full and complete due diligence
investigation of the Company and shall be satisfied, in its sole discretion,
with the results of such due diligence investigation. Notwithstanding any other
provision of this Agreement, the Sellers shall cause the Company to fully
cooperate with the Buyer and its representatives, including, without limitation,
its attorneys and accountants, in connection with this due diligence
investigation, and shall give the Buyer and such representatives full and
complete access to the Company and its books, records, properties, contracts and
other information and documents in connection therewith.
(b) The Sellers shall have complied with all of their respective
covenants and agreements contained herein, and the representations and
warranties of the Sellers contained in this Agreement shall be true on and as of
the Closing Date as if made on and as of the Closing Date.
(c) Buyer shall have received the following documents, in each case
in form and substance reasonably satisfactory to Buyer and its counsel:
(i) Certificates representing the Shares duly endorsed in
negotiable form or accompanied by stock powers duly executed in blank with all
transfer taxes, if any, paid in full.
(ii) A certificate signed by the Sellers which certifies that
the conditions specified in Section 4.1(b) hereof have been satisfied;
(iii) The minute books, stock ledgers and corporate seal of
the Company.
(iv) Specimen signature certificates signed by the Sellers.
(v) Such other agreements and documents as Buyer or its
counsel may reasonably request.
(d) No Litigation shall be pending or threatened and no order,
injunction or decree shall have been entered by any Governmental Authority
against the Sellers, the Company, the Shares or the Buyer which would prohibit,
restrict or delay consummation of the transactions contemplated by this
Agreement.
(e) All consents and approvals of third parties which are required
to consummate the transactions contemplated herein shall have been obtained and
delivered to the Buyer.
4.2. CONDITIONS TO OBLIGATIONS OF THE SELLERS. The obligation(s) of
Sellers to proceed with the Closing is subject to the satisfaction on or prior
to the Closing Date of all the following conditions, any one or more of which
may be waived in whole or in part by the Sellers:
(a) Buyer shall have complied with all of its respective covenants
and agreements contained herein, and the representations and warranties of Buyer
contained in this Agreement shall be true on and as of the Closing Date as if
made on and as of the Closing Date.
(b) The Sellers or the Escrow Agent, as applicable, shall have
received the following documents or items, in each case in form and substance
satisfactory to the Sellers, and their respective counsel:
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(i) Certificates representing the PSCCC Shares with all
transfer taxes, if any, paid in full.
(ii) A certificate signed by an authorized representative of
the Buyer which certifies that the conditions specified in Section 4.2(a) hereof
have been satisfied.
(iii) Incumbency and specimen signature certificates signed by
the officers of Buyer and certified by the Secretary of Buyer.
(iv) Such other agreements and documents as the Sellers or
their counsel may reasonably request.
ARTICLE V.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of the parties made in this Agreement shall survive the
Closing Date for a period equal to the applicable statute of limitations.
5.2. INDEMNIFICATION BY SELLERS.
(a) The Sellers shall jointly and severally indemnify, defend, and
hold Buyer, and its officers, directors, employees, and shareholders and their
respective successors and permitted assigns (each, a "BUYER'S INDEMNIFIED
PARTY"), harmless from and against all demands, suits, claims, actions or causes
of action, assessments, losses, damages, liabilities, settlements, penalties,
and forfeitures, and reasonable costs and expenses (including court costs and
any other litigation related expenses incident thereto) (each, an "INDEMNITY
LOSS") asserted against, suffered, or incurred by any Buyer's Indemnified Party
arising out of or in any way related to any misrepresentation in or breach of
the representations and warranties of the Sellers or the failure of the Sellers
to perform any of their covenants or obligations contained in this Agreement or
in any Exhibit or Schedule hereto;
(b) INDEMNIFICATION PROCEDURES:
(i) The Sellers shall be obligated to indemnify the Buyer
Indemnified Party only for those claims as to which the Buyer Indemnified Party
has given the Sellers written notice no later than two (2) years after the Buyer
Indemnified Party's discovery of the facts giving rise to any such claim. Any
written notice delivered pursuant to this clause shall set forth with
specificity the basis of the claim and an estimate of the amount thereof.
5.3. INDEMNIFICATION BY BUYER. Buyer shall indemnify, defend, and hold
each of the Sellers (and its respective successors and assigns) (each, a
"SELLERS' INDEMNIFIED PARTY"), harmless from and against any Indemnity Loss
asserted against, suffered or incurred by any Sellers' Indemnified Party arising
out of or in any way related to any misrepresentation in or breach of the
representations and warranties of Buyer or the failure of Buyer to perform any
of its covenants or obligations contained in this Agreement or in any Exhibit or
Schedule hereto.
5.4. NOTICE. If any person believes that it has suffered or incurred any
Indemnity Loss, that person shall so notify the indemnifying party promptly in
writing describing such loss or expense, the amount thereof, if known, and the
method of computation of such Indemnity Loss, all with reasonable particularity.
If any action at law, suit in equity or administrative action is instituted by
or against a third party with respect to which any person intends to claim any
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liability or expense as an Indemnity Loss under this Article V, such person
shall promptly notify the indemnifying party of such action.
5.5. DEFENSE OF CLAIMS. The indemnifying party shall have ten (10)
business days after receipt of either notice referred to in Section 5.4 hereof
to notify the indemnified party that it elects to conduct and control any legal
or administrative action or suit with respect to an indemnifiable claim. If the
indemnifying party does not give such notice, the indemnified person shall have
the right to defend, contest, settle or compromise such action or suit in the
exercise of its exclusive discretion, and the indemnifying party shall, upon
request from the indemnified person promptly pay the indemnified person in
accordance with the other terms and conditions of this Article V the amount of
any Indemnity Loss resulting from its liability to the third party claimant. If
the indemnifying party gives such notice, it shall have the right to undertake,
conduct and control, through counsel of its own choosing and its sole expense,
the conduct and settlement of such action or suit, and the indemnified person
shall cooperate with the indemnifying party in connection therewith; provided,
however, that: (i) the indemnifying party shall not thereby permit to exist any
lien, encumbrance or other adverse charge securing the claims indemnified
hereunder upon any asset of the indemnified person, (ii) the indemnifying party
shall not thereby consent to the imposition of any injunction against the
indemnified person without the written consent of the indemnified person, (iii)
the indemnifying party shall permit the indemnified person to participate in
such conduct or settlement through counsel chosen by the indemnified person, but
the fees and expenses of such counsel shall be borne by the indemnified person,
and (iv) upon a final determination of such action or suit, the indemnifying
party shall agree promptly to reimburse to the extent required under this
Article V the indemnified person for the full amount of any Indemnity Loss
resulting from such action or suit and all reasonable and related expenses
incurred by the indemnified person, except fees and expenses of counsel for the
indemnified person incurred after the assumption of the conduct and control of
such action or suit by the indemnifying party. So long as the indemnifying party
is contesting any such action in good faith, the indemnified person shall not
pay or settle any such action or suit.
5.6. COOPERATION. If requested by the indemnifying party, the indemnified
person shall cooperate with the indemnifying party and its counsel in contesting
any claim which the indemnifying party elects to contest or, if appropriate, in
making any counterclaim against the person asserting the claim, or any
cross-complaint against any person, and further agrees to take such other action
as reasonably may be requested by an indemnifying party to reduce or eliminate
any loss or expense for which the indemnifying party would have responsibility,
but the indemnifying party will reimburse the indemnified person for any
expenses incurred by it in so cooperating or acting at the request of the
indemnifying party. Notwithstanding any other provision of this Agreement, no
party hereto shall be required to cooperate under this Section 5.6 if such
cooperation would require that party to (a) incur any monetary obligation or
liability; or (b) independently commence litigation.
5.7. RIGHT TO PARTICIPATE. The indemnified person shall afford the
indemnifying party and its counsel (at the indemnifying party's own expense) the
opportunity to be present at, and to participate in, conferences with all
persons, including governmental authorities, asserting any claim against the
indemnified person or conferences with representatives of or counsel for such
persons.
5.8. PAYMENT OF LOSSES; ESCROWED SHARES AS COLLATERAL.
(a) The indemnifying party shall promptly pay to the indemnified
person in cash the amount of any Indemnity Loss to which the indemnified person
is entitled by reason of the provisions of this Agreement. Any claim for which
indemnification occurs under this Agreement shall be assigned (without recourse)
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to the indemnifying party. The parties covenant that any payment made pursuant
to this Article V will be treated by the parties on their respective tax returns
as an adjustment to the Purchase Price. All amounts recoverable by an
indemnified person shall be net of tax benefits actually received by such
indemnified person in the tax year in which the Indemnity Loss occurred.
(b) Notwithstanding any other provision hereof, the Escrowed Shares
shall secure the payment of any indemnification obligations that arise under
Section 5.2 of this Agreement subject to the terms of Section 1.3 hereof. The
Sellers agree that any such payments not promptly made in cash pursuant to
Section 5.8(a) hereof shall be made by the prompt return of an appropriate
number of the Escrowed Shares to PSCCC. The appropriate number of Escrowed
Shares shall be calculated based on a price of $3.50 for each Escrowed Share.
5.9. SUBROGATION. In the event of any payment by an indemnifying party to
an indemnified party in connection with any Indemnity Loss, the indemnifying
party shall be subrogated to and shall stand in the place of the indemnified
party as to any events or circumstances in respect of which the indemnified
party may have any right or claim against any third party relating to such event
of indemnification. The indemnified party shall cooperate with the indemnifying
party in any reasonable manner in prosecuting any subrogated claim.
5.10. LIMITATIONS ON ACTIONS. Notwithstanding anything to the contrary in
this Agreement, neither party hereto shall be liable to the other party hereto
(or any Buyer's Indemnified Party or Sellers' Indemnified Party, as applicable)
for any Indemnity Losses until the aggregate amount of such Indemnity Losses
exceeds Five Thousand Dollars ($5,000); provided, however, that once this amount
is exceeded the responsible party shall be responsible for the full payment of
all such Indemnity Losses without any deduction.
ARTICLE VI.
CERTAIN COVENANTS; MISCELLANEOUS
6.1. FURTHER ASSURANCES. The Sellers shall, from time to time after the
Closing, upon the request of Buyer, promptly execute, acknowledge and deliver
all such further deeds, assignments, transfers, conveyances, assurances and
other documents as may be required to transfer to and to vest in Buyer all
right, title and interest of the Company in and to the Shares and to protect the
right, title and interest of Buyer in and to all of the Shares.
6.2. NOTICES. Notices hereunder will be effective if delivered by
hand delivery or recognized overnight courier to the address given below:
(a) If to the Buyer:
PharmaSystems Cost Containment Corp.
7350 N.W. 7th Street, Suite 104
Miami, Florida 33126
Attention: Aurelio Alonso, Chief Financial Officer
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With a copy to:
Kirkpatrick & Lockhart LLP
Miami Center, 20th Floor
201 S. Biscayne Boulevard
Miami, Florida 33131
Attention: Robert C. White, Jr., Esq.
(b) If to Sellers:
Dr. Jose L. and Maria Rodriguez
-------------------------------
-------------------------------
-------------------------------
Carlos Marin
-------------------------------
-------------------------------
-------------------------------
All notices delivered hereunder shall be marked "PERSONAL AND CONFIDENTIAL." Any
party may change the address or number to which notices are to be addressed by
giving the other parties notice in the manner herein set forth. Any notice given
in accordance with the requirements of this Section 6.2 shall be deemed to have
been given when delivered.
6.3. PUBLIC ANNOUNCEMENTS AND RELEASES. Except to the extent required by
applicable Law, no disclosure of (a) this Agreement, the other agreements and
instruments to be executed in connection herewith, any of the provisions hereof
or thereof, or any of the transactions contemplated hereby or thereby; or (b)
any confidential information concerning the Company, shall be made by any party
hereto to any person or entity not a party hereto, and the respective employees,
directors, officers, representatives and advisors of such parties (as
applicable) who need to know such information. The parties hereto shall consult
with each other before any party issues any press release or otherwise makes any
public statements with respect to this Agreement or the transactions
contemplated hereby, and, except as may be required by Law, any such press
release or public statement shall be approved in advance by all parties.
6.4. NO REGISTRATION OR REGISTRATION RIGHTS. The Sellers each (a) hereby
acknowledge and agree that the PSCCC Shares have not been registered under the
Securities Act of 1933, as amended (the "ACT"), or the securities laws of any
state or other jurisdiction in reliance upon applicable exemptions from such
registration, and that the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby do not grant, provide or
confer any registration rights on the Sellers with regard to the PSCCC Shares,
and (b) shall not sell, transfer or assign the PSCCC Shares unless such sale,
transfer or assignment complies with the requirements of the Act and the
securities laws of such State or other jurisdiction.
6.5. GOVERNING LAW; VENUE. The validity, interpretation and performance of
this Agreement shall be determined in accordance with the laws of the State of
Florida applicable to contracts made and to be performed wholly within that
state except to the extent that federal law applies. The parties hereto agree
that any disputes, claims, disagreements, lawsuits, actions or controversies of
any type or nature whatsoever that, directly or indirectly, arise from or relate
to this Agreement, including, without limitation, claims relating to the
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inducement, construction, performance or termination of this Agreement, shall be
brought in the state and federal courts located in Dade County, Florida, and the
parties hereto agree not to challenge the selection of that venue in any such
proceeding for any reason, including, without limitation, on the grounds that
such venue is an inconvenient forum.
6.6. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one instrument.
6.7. HEADINGS; GENDER; REFERENCES. The headings, subheadings and captions
in this Agreement and in any appendix, exhibit or schedule hereto are for
reference purposes only and are not intended to affect the meaning or
interpretation of this Agreement. For purposes of this Agreement, the use of
masculine pronouns shall be deemed to include feminine and neuter pronouns, as
appropriate. References in this Agreement to sections, subsections, schedules or
exhibits are to sections, subsections, schedules or exhibits in or to this
Agreement unless otherwise stated.
6.8. SCHEDULES, EXHIBITS AND RECITALS. The schedules and exhibits
attached hereto and the recitals contained herein are hereby incorporated by
reference and made a part of this Agreement as if set forth in full herein.
6.9. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all prior negotiations, discussions, agreements, arrangements and
understandings, written or oral, relating to the subject matter of this
Agreement. No amendment or modification of, or any waiver of any provision of,
this Agreement shall be effective unless set forth in a writing signed by all
parties hereto.
6.10. ATTORNEYS' FEES. In the event any suit or other legal proceeding is
brought for the enforcement of any of the provisions of this Agreement, the
prevailing party or parties shall be entitled to recover from the other party or
parties upon final judgment on the merits, reasonable attorneys' fees including
attorneys' fees for any appeal and costs incurred in bringing such suit or
proceeding. Each party hereto shall be responsible for its own legal fees
incurred in connection with the negotiation and preparation of this Agreement,
even if this Agreement is terminated prior to the consummation of the
transactions contemplated herein.
6.11. SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES; Assignment.
This Agreement will be binding upon the parties hereto and their respective
successors and permitted assigns. Except as otherwise provided herein, this
Agreement is not intended to, and shall not be construed to, create any rights
as a third-party beneficiary or otherwise in favor of any person or entity who
is not a party to this Agreement or a successor or permitted assign of a party
to this Agreement. No party hereto shall assign this Agreement or its rights and
obligations hereunder without the other parties' prior written consent.
6.12. SEVERABILITY. If any provision of this Agreement is held to be
unenforceable, invalid or void to any extent for any reason, that provision
shall remain in force and effect to the maximum extent allowable, if any, and
the enforceability and validity of the remaining provisions of this Agreement or
other rights and obligations hereunder shall not be affected thereby.
6.13. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
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CONNECTION WITH THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING. STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR EACH PARTY'S ACCEPTANCE AND EXECUTION OF THIS AGREEMENT.
IN WITNESS WHEREOF, each of the parties hereto has caused this Stock
Purchase Agreement to be duly executed and delivered as of the date first above
written.
PHARMASYSTEMS COST CONTAINMENT CORP.
By: /s/ Jose L. Rodriguez
---------------------
Name: Jose L. Rodgriguez
Title:President
/s/ Jose L. Rodriguez, M.d.
---------------------------
Jose L. Rodriguez, M.D.
/s/ Maria Rodriguez
-----------------------------------
Maria Rodriguez
/s/ Carlos M. Marin
-----------------------------------
Carlos M. Marin
EXHIBIT 10.14
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") dated as of July 23,
1996, is from LEE'S ACQUISITION CORPORATION, a Florida corporation, and its
wholly owned subsidiary, LEE'S PRESCRIPTION SHOPS, INC., a Florida corporation
(the "Debtor"), whose mailing address is 7350 NW 7 Street, Suite 104, Miami,
Florida 33126, to CARLOS M. MARIN, JR., a resident of the State of Florida (the
"Secured Party") as Successor in Interest to Exired, S.A. de C.V., a Mexican
corporation, whose address is 7205 NW 19 Street, Suite 300, Miami, Florida
33126.
WHEREAS, Pharmasystems Cost Containment Corp., a Florida corporation
("Pharmasystems") has (i) requested a loan from the Secured Party in the
principal amount of $537,500.00 to be used for general corporate purposes,
including funding the corporate operations of the Debtor ("Loan A") and (ii)
requested that Secured Party make a loan to Healthcare Workshop, Ltd., a British
Virgin Islands corporation ("HWL") in the principal amount of $1,000,000.00 for
similar corporate purposes ("Loan B") (Loan A and Loan B are hereinafter
collectively referred to as the "Loans");
WHEREAS, in order to evidence and secure Loan A, Pharmasystems is
executing and delivering to Secured Party on this date a Promissory Note and
Security Agreement, of even date herewith (the "Note A") in the principal amount
of $537,500.00;
WHEREAS, in order to evidence and secure Loan B, HWL is executing and
delivering to Secured Party on this date a Promissory Note and Security
Agreement, of even date herewith (the "Note B") in the principal amount of
$1,000,000.00;
WHEREAS, Debtor, a wholly-owned subsidiary of Pharmasystems, is the sole
owner of all assets of the operating business commonly known as Lee's
Pharmacies, a pharmaceutical drug store chain doing business in Dade County,
Florida and owns such assets directly.
WHEREAS, the Secured Party's extension of the Loans to Pharmasystems and
HWL is critical to the continued success of Debtor and will result in immediate,
tangible benefits to Debtor;
WHEREAS, the Secured Party's agreement to extend the Loans is conditioned
on the Debtor's execution and delivery of this Agreement granting a perfected
security interest in all of its assets to Secured Party to secure the
obligations of Pharmasystems and HWL under the Notes, respectively, except with
respect to those encumbrances listed on Exhibit B attached hereto;
WHEREAS, the Debtor is willing to enter into this Agreement in order to
induce the Secured Party to make the Loans;
NOW, THEREFORE, in consideration of Loans made or to be made by the
Secured Party to Pharmasystems and HWL, and for other value received by the
<PAGE>
Debtor, and in further consideration of other financial accommodations extended
by the Secured Party to Pharmasystems or HWL or to other persons affiliated with
Debtor, the Debtor hereby grants a continuing security interest in, and assigns
to the Secured Party, the Collateral to secure payment and performance of all of
the Obligations.
Section 1. RECITALS. The foregoing recitals are true and correct and
are incorporated into this Agreement by reference.
Section 2. DEFINITIONS. Definitions in the Code apply to words and phrases
in this Security Agreement and, if Code definitions conflict, definitions in
Article 9 (Chapter 679, Florida Statutes) of the Code shall apply. In addition
to terms defined in the Code or elsewhere in this Security Agreement, the
following terms have the meanings indicated below, which meanings shall be
equally applicable to both the singular and the plural forms of such terms:
"Code" means the Uniform Commercial Code as in effect from time to time in
the State of Florida (Chapters 671 through 680, inclusive, Florida Statutes).
"Collateral" means and includes any and all of the following owned by the
Debtor in or which the Debtor has an interest, whether now owned or existing or
hereafter created or acquired:
(a) Accounts;
(b) Chattel Paper;
(c) Documents;
(d) General Intangibles;;
(e) Goods, including Equipment, Inventory and Fixtures;
(f) Instruments;
(g) all cash or non-cash proceeds of any of the foregoing,
including insurance proceeds and all products thereof;
(h) all ledger sheets, files, records, documents and instruments
including, but not limited to, computer programs, tapes and
related electronic date processing software) evidencing an
interest in or relating to the above; and
(i) any and all property of the Debtor now or hereafter
delivered to or left in or coming into the possession,
control or custody of the Secured Party, whether expressly
as collateral security or for any other purpose (including
cash, stock and other dividends, and all rights to
subscribe for securities incident to, declared, or granted
in connection with such property), and property described
in collateral receipts or other documents signed or
furnished by the Debtor, and any and all replacements of
any of the foregoing, whether or not in the possession of
the Secured Party.
2
<PAGE>
"Obligations" shall include:
(a) Note A and Note B, and any and all renewals, modifications,
amendments and replacements thereof, together with any and all other
indebtedness, obligations and liabilities of Pharmasystems or HWL to
the Secured Party now or hereafter existing, incurred or created.
(b) all other liabilities (primary, secondary, direct, contingent, sole,
joint or several), due or to become due or which may be hereafter
contracted to acquired, of Pharmasystems or HWL to the Secured
Party, whether such liabilities arise in the ordinary course of
business or not (including, without limitation, liabilities for
overdrafts and as guarantor, endorser and surety);
(c) all costs incurred by the Secured Party to obtain, preserve and
enforce this Security Agreement and the security interest created
hereunder, collect the Obligations and to maintain and preserve the
Collateral, including, without limitation, taxes, assessments,
insurance premiums, repairs, reasonable attorneys' fees and legal
expenses, rent storage costs and expense of sale; and
(d) interest on the above amounts, as agreed between the Debtor and
Secured Party, at the per annum rate of ten percent (10%).
"Receivables" shall mean all Accounts, Chattel Paper, Instruments,
Documents, General Intangibles (including, without limitation, tax refunds and
insurance proceeds) and any and all other obligations and indebtedness owed to
the Debtor from whatever source arising and whether now existing or hereafter
arising. "Receivables" shall also include any and all guarantees of Receivables
and security therefor and any and all proceeds thereof. Notwithstanding the
foregoing, the provisions of this paragraph shall not be applicable to
Receivables relating to federal and/or state funded programs such as the Florida
Medicaid Program, or otherwise, when such assignments are prohibited by law.
Section 3. LIST OF COLLATERAL. Contemporaneous with the execution hereof
the Debtor has furnished to the Secured Party a listing of the Collateral
presently owned by it; PROVIDED, HOWEVER, the Secured Party shall have a
security interest in any and all Collateral whether or not such Collateral is
described generally or specifically on such list. The Debtor warrants and agrees
that it is the owner of the Collateral free and clear of all liens and security
interest except the security interest granted by this Security Agreement or as
set forth on Exhibit B hereto (herein called "Permitted Encumbrances").
Section 4. NO OTHER SECURITY INTEREST. So long as any Obligation to the
Secured Party is outstanding, the Debtor will not without the prior written
consent of the Secured Party grant to any third party a security interest in any
of the Collateral or permit any lien or encumbrance to attach to any part of the
Collateral (except for taxes yet due and payable) or suffer or permit any levy
to be made on any part of the Collateral, or permit any financing statement
except that of Secured Party to be on file with respect thereto except with
respect to Permitted Encumbrances. The Debtor will not sell, transfer, lease or
otherwise dispose of any of the Collateral or any interest therein, or offer to
3
<PAGE>
do so or permit anything to be done to impair the value of the Collateral or the
security interest, PROVIDED, however, the Debtor may sell Inventory, and incur
debt related to the purchase of Inventory (secured or unsecured), in the
ordinary course of its business.
Section 5. REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING THE
COLLATERAL. The Debtor represents, warrants and covenants, that:
5.1 The Collateral shall be kept at the address specified above or
specified on Schedule I attached hereto. If any of the Collateral is located on
property which is not owned by the Debtor, the Debtor will, on demand of the
Secured Party, obtain landlord's waivers of liens in forms satisfactory to the
Secured Party as to each such location. The Debtor will not permit any of the
Collateral to be moved without the prior written consent of the Secured Party,
other than Collateral which may be sold as permitted under Section 4 hereof.
5.2 If any of the Equipment is attached to real property, the legal
description for said real property is attached hereto as Exhibit A and the
Debtor will, on demand of the Secured Party, furnish the Secured Party with a
disclaimer or disclaimers, signed by all persons having an interest in said real
estate at the time of such attachment, of any interest in the Equipment.
The Debtor is the record owner of the real property where the Equipment is
kept or, if the Debtor is not the record owner, the name or names of the record
owner or owners is shown on Exhibit A hereto.
5.3 The Debtor will at all times keep the Collateral insured against
loss, damage, theft, and such other risks as the Secured Party may require in
such amounts (in any event, not less than the full insurable value thereof),
with such insurance companies, under such policies, in such form and for such
periods as shall be satisfactory to the Secured Party, and each such policy
shall provide that loss thereunder and proceeds payable thereunder shall be
payable to the Secured Party under a standard mortgagee endorsement, if
available, or, if not available, as an additional loss payee (and the Secured
Party may apply any proceeds of such insurance which may be received by the
Secured Party toward payment of the Obligations whether due or not due, in such
order of application as the Secured Party may determine). Each such policy shall
provide for ten (10) days written minimum cancellation notice to the Secured
Party. Each such policy shall, if the Secured Party so requests, be deposited
with the Secured Party and the Secured Party may act as attorney for the Debtor
in obtaining, adjusting, settling, and canceling such insurance and endorsing
any drafts. Such policies shall provide that no act or default of the Debtor
shall affect the right of the Secured Party to recover.
5.4 The Debtor will at all times keep the Collateral in good order
and repair and will not waste or destroy the Collateral or any part thereof.
5.5 The Debtor warrants that no financing statement covering any
Collateral or any proceeds thereof is on file in any public office, other than
financing statements naming the Secured Party and financing statements filed
4
<PAGE>
with respect to Permitted Encumbrances. The Debtor will promptly forward, if
requested by the Secured Party, mark its records evidencing its Accounts and
Chattel Paper in a manner satisfactory to the Secured Party so as to show the
same having been assigned to the Secured Party. The Debtor authorizes the
Secured Party to file financing statements with respect to the Collateral signed
only by the Secured Party. The Debtor will join with the Secured Party in
executing financing statements, notices, affidavits or similar instruments in
forms satisfactory to the Secured Party and such other documents as the Secured
Party may from time to time request, and will pay the cost of filing the same in
any public office deemed advisable by the Secured Party. The Debtor will do such
other acts and things, all as the Secured Party may request, to maintain a valid
perfected security interest in the Collateral (free of all other liens and
claims whatsoever other than Permitted Encumbrances) to secure the payment of
the Obligations secured hereby. The Secured Party is hereby appointed the
Debtor's attorney-in-fact to do all acts and things which the Secured Part may
deem necessary to perfect and to continue to the perfection of the security
interest created hereby and to protect the Collateral, only in the Event of
Default as defined in Section 7 hereof.
5.6 The Debtor will not use the Collateral or permit the same to be
used in violation of any statute or ordinance. The Secured Party may examine and
inspect the Collateral at any time, wherever located. The Debtor will pay
promptly when due all taxes and assessments upon the Collateral or for its use
or operation or upon this Security Agreement or other writing evidencing the
Obligations, or any of them.
5.7 The Debtor keeps the bulk of its Inventory at the address
specified at the beginning of this Security Agreement and/or at the address or
addresses specified on Schedule I hereto. The chief executive office where
Debtor keeps its records concerning its Receivables is at the address specified
at the beginning of this Security Agreement unless a different address is
specified on Schedule I hereto. The Debtor shall give the Secured Party written
notice of each additional location at which Inventory will be kept and of any
change in the chief executive office of the Debtor at which records of the
Debtor pertaining to Receivables are kept at least thirty (30) days prior to the
location of Inventory at such address or the change of the chief executive
office.
Section 6. SPECIAL COVENANTS REGARDING RECEIVABLES. Until the Secured
Party requests that account debtors on Receivables of the Debtor be notified of
the Secured Party's security interest, the Debtor shall continue to collect
them, subject to the direction and control of the Secured Party at all times. In
the Event of Default, any proceeds of Receivables collected by the Debtor shall
not be commingled with other funds of the Debtor and shall, upon the request of
the Secured Party, be immediately delivered to the Secured Party in the form
received except for necessary endorsements to permit collection. In the Event of
Default, the Debtor shall, at the request of the Secured Party, notify its
account debtors of the security interest of the Secured Party in any Receivables
and that payment thereof is to be made directly to the Secured Party, and the
Secured Party may itself at any time, without notice to or demand upon the
Debtor, so notify account debtors. The making of such a request or the giving of
any such notification shall not affect the duties of the Debtor described above
with respect to the proceeds of collection of Receivables received by the
Debtor. In the Event of Default, the Debtor will at any time upon the Secured
Party's request deliver to the Secured Party the original documents in the
Debtor's possession for any Chattel Paper, Documents or Instrument, held or
owned by the Debtor.
5
<PAGE>
Section 7. DEFAULTS AND REMEDIES. If any one of the following "Events
of Default" shall occur and shall not have been remedied:
(a) Any "Event of Default" under Note A or Note B; or
(b) Any default by the Debtor with respect to the payment of any
of the Obligations; or
(c) Any representation or warranty made by the Debtor herein or in
any written certificate or report furnished by the Debtor
hereunder shall prove to have been incorrect in any material
respect; or
(d) The Debtor shall default in the performance of any agreement,
covenant or obligation contained herein;
then the Secured Party, may in addition to any other rights and remedies which
it may have, immediately and without demand exercise any and all of the rights
and remedies granted to a secured party upon default under the Code; and upon
request or demand of the Secured Party, the Debtor shall at its expense assemble
all or any part of the Collateral and make it available to the Secured Party at
a convenient place designated by the Secured Party. The Secured Party and its
agents are authorized to enter into or onto any premises where the Collateral
may be located for the purpose of taking possession of such Collateral. Any
notice of sale, disposition or other intended action by the Secured Party, sent
to the Debtor at the address specified at the beginning of this Security
Agreement or at such other address of the Debtor as may from time to time be
shown on the Secured Party's records, at least ten (10) days prior to such
action, shall constitute reasonable notice to the Debtor. Any proceeds of any
disposition of any of the Collateral may be applied to the Secured Party toward
payment of such of the Obligations and in such order of application as the
Secured Party may from time to time elect.
Section 8. MISCELLANEOUS.
8.1 No waiver by the Secured Party of any default shall operate as a
waiver of any other default or of the same default on a future occasion. No
delay or omission on the part of the Secured Party in exercising any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
the Secured Party of any right or remedy shall preclude any other or future
exercise thereof or the exercise of any other rights or remedy. Time is of the
essence of this Security Agreement. The provisions of this Security Agreement
are cumulative and in addition to the provisions of any liability of the Debtor
under any note, any guaranty or any other writing, and the Secured Party shall
have all benefits, rights and remedies of a secured party under this Security
Agreement and any other document.
8.2 All rights of the Secured Party hereunder shall inure to the
benefit of its successors and its assigns, and all Obligations of the Debtor
shall bind the successors and assigns of the Debtor.
8.3 This Security Agreement has been delivered in the State of
Florida and shall be construed in accordance with the internal laws of Florida.
6
<PAGE>
8.4 The Debtor shall pay on demand all expenses and expenditures of
the Secured Party, including reasonable attorneys' fees and legal expenses,
incurred or paid by the Secured Party in protecting, enforcing or exercising its
security interest, rights or remedies created by, connected with or provided in
this Security Agreement or performance pursuant to this Security Agreement.
8.5 At its option, the Secured Party may discharge taxes, liens or
security interests or other encumbrances at any time levied or placed on the
Collateral, may pay for insurance on the Collateral, and may pay for the
maintenance and preservation of the Collateral. The Debtor agrees to reimburse
the Secured Party on demand for any payments made, or any expense incurred, by
the Secured Party, pursuant to the foregoing authorization. Except as otherwise
expressly provided in this Security Agreement, until default the Debtor may have
possession of the Collateral and use it in any lawful manner not inconsistent
with this Security Agreement and no inconsistent with any policy of insurance
thereon.
8.6 If any of the provisions of this Security Agreement shall
contravene or be held invalid under the laws of any jurisdiction, the Security
Agreement shall be construed as if not containing such provision and the
remainder of this Security Agreement shall be construed and enforced
accordingly.
8.7 The Secured Party's rights under the Loan Agreement and all
documents executed pursuant thereto or in connection therewith are cumulative.
Without limiting the generality of the foregoing, the Secured Party may enforce
its rights hereunder in all or part of the Collateral or in any other security
in the order selected by Secured Party.
8.8 THE DEBTOR HEREBY, AND THE SECURED PARTY BY ITS ACCEPTANCE OF
THIS SECURITY AGREEMENT, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SECURITY AGREEMENT
AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED
PARTY ACCEPTING THIS SECURITY AGREEMENT.
7
<PAGE>
IN WITNESS WHEREOF, this Security Agreement has been dated for
convenience as of the date hereinabove first written, but in fact executed on
July 23, 1996.
DEBTOR: LEE'S ACQUISITION CORPORATION, a Florida
corporation
By: /s/ Jose L. Rodriguez
-----------------------------
Print Jose L. Rodriguez
Name:
-----------------------------
Title: President
-----------------------------
: LEE'S PRESCRIPTION SHOPS, INC.
a Florida corporation
By: /s/ Jose L. Rodriguez
-----------------------------
Print Jose L. Rodriguez
Name:
-----------------------------
Title: President
-----------------------------
8
<PAGE>
EXHIBIT A
TO
SECURED AGREEMENT
LEGAL DESCRIPTION OF
REAL PROPERTY TO WHICH FIXTURES ARE ATTACHED
<PAGE>
SCHEDULE OF ASSETS
1. Assets owned by Lee's Acquisition Corp. consist of 100% of the issued
stock of Lee's Prescription Shops.
2. Assets owned by Lee's Prescription Shops, Inc. as of June 30, 1996
Cash in Bank
Accounts Receivable Pledged To: Former
Inventory Shareholders and
Property & Equipment United National
Security Deposits Bank
Other Miscellaneous
Assets
<PAGE>
SCHEDULE I
TO
SECURITY AGREEMENT
ADDITIONAL LOCATIONS AT WHICH
COLLATERAL OF THE DEBTOR IS LOCATED
1. LEE'S PHARMACY/SOUTH MIAMI (Leased)
5898 Sunset Drive
South Miami, Florida
(305) 667-7651
2. LEE'S PHARMACY/GABLES (Leased)
401 Miracle Mile
Coral Gables, Florida
(305) 448-1728
3. LEE'S PHARMACY/BRICKELL (Leased)
2525 SW Third Avenue
Miami, Florida
(305) 854-3625
<PAGE>
EXHIBIT B
TO
SECURED AGREEMENT
PERMITTED ENCUMBRANCES
<TABLE>
<CAPTION>
FILED WITH SECRETARY OF STATE
<S> <C> <C>
1. UCC-1 filed 9/29/1995 Filing Number 950000195056
Expires 9/29/2000 Jules Pincus
Secured Parties: Lionel Pincus
Robert Schockett
Debtors: Lee's Prescription Shops, Inc.
Lee's Prescription Corporation
2. UCC-1 filed 3/29/1996 Filing Number 960000064151
Expires 3/29/2001
Secured Party: Fox Meyer Drug Company
Debtor: Lee's Prescription Shops, Inc.
3. UCC-1 filed 1/22/1996 Filing Number 960000015259
Expires 1/22/2001
Secured Party: United National Bank
Debtor: Lee's Prescription Shops, Inc.
4. UCC-1 filed 10/9/1991 Filing Number 910000217104
Expires 10/9/1996
Secured Party: Lee's Prescription Shops, Inc.
Debtor: Lee's Prescription Shops No. 5, Inc.
</TABLE>
<PAGE>
FILED WITH PUBLIC RECORDS OF DADE COUNTY, FLORIDA
5. UCC-1 Financing Statement
Filed 10/8/91
CFN: 91R 355172
Official Records Book
15220 Page 2902
Secured Party: Lee's Prescription Shops, Inc.
Debtor: Lee's Prescription Shops No. 5, Inc.
EXHIBIT 10.15
AGREEMENT
THIS AGREEMENT, made and entered into as of this 23rd of July, 1997, by
and among PHARMASYSTEMS COST CONTAINMENT CORP., a Florida corporation
("Debtor"), LEE'S ACQUISITION CORPORATION, a Florida corporation and its wholly
owned subsidiary Lee's Prescription Shops, Inc., a Florida corporation
(collectively "LAC") and CARLOS M. MARIN, JR., an individual, as Successor in
Interest to Exired, S.A. de C.V., a Mexican corporation ("Marin"); (the Debtor,
LAC and Marin are sometimes collectively referred to herein as the "parties "
or, generically, as a "party").
WHEREAS, Debtor has requested a loan from Exired, S.A. de C.V., a Mexican
corporation, in the principal amount of $537,500.00 ("Loan A") to be used for
general corporate purposes, including funding the corporate operations of LAC, a
wholly owned subsidiary of Debtor.
WHEREAS, Debtor has also requested that Exired, S.A. de C.V., a Mexican
corporation, make a loan to Healthcare Workshop, Ltd., a British Virgin Islands
corporation ("HWL") in the principal amount of $1,000,000.00 for similar
corporate purposes ("Loan B") (Loan A and Loan B are hereinafter collectively
referred to as the "Loans").
WHEREAS, Exired, S.A. de C.V., a Mexican corporation, has transferred
all of its rights, claims, title and interest, including subrogation of all
claims, in connection with the Loans to Marin.
WHEREAS, in order to evidence and secure Loan A, the Debtor is executing
and delivering to Marin on this date a Promissory Note and Security Agreement in
the principal amount of $537,500.00 (the "Note") granting to Marin a perfected
security interest in 100% of the outstanding capital stock of LAC.
WHEREAS, in order to evidence and secure Loan B, HWL is executing and
delivering to Marin on this date a Promissory Note and Security Agreement, of
even date herewith ("Note B") in the principal amount of $1,000,000.00).
WHEREAS, LAC is the sole owner of all assets of the operating business
commonly known as Lee's Pharmacies, a pharmaceutical drug store chain doing
business in Dade County, Florida, and owns such assets directly, not through an
intervening subsidiary (wholly owned or otherwise).
WHEREAS, Marin has agreed to make the Loans on the express condition tht
the Debtor and LAC agree to abide by certain affirmative and negative covenants
and conditions more particularly described in this Agreement.
WHEREAS, in order to induce Marin to make the Loans, the Debtor and LAC
are willing to enter into this Agreement and to abide by the terms hereof.
<PAGE>
NOW THEREFORE, in consideration of the premises and the respective mutual
agreements, covenants, representations and warranties herein contained, as well
as other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties, intending to be legally bound, hereby agree
as follows:
1. RECITALS. The above recitals are true and correct in all
respects as of the date hereof and are hereby incorporated by reference.
2. COVENANTS AND AGREEMENTS OF DEBTOR.
2.1. TRANSACTIONS EFFECTING ORGANIZATION AND GOOD STANDING. Between
the date hereof and the time when the Note is fully discharged, the Debtor and
LAC shall take all necessary actions to keep in full force and effect the legal
existence of the Debtor and LAC.
2.2. CONDUCT OF DEBTOR.
2.2.1. Between the date hereof and the time when the Notes
are fully discharged, the Debtor and LAC will each conduct its business
diligently in the ordinary course of its business, and Debtor and LAC shall use
their best efforts to preserve intact their business organization, and to
preserve their good will and relationships with their employees, suppliers,
contractors, clients and others having business relations with Debtor and LAC,
respectively.
2.2.2. Between the date hereof and the time when the Notes
are fully discharged, Debtor and LAC will not, without the prior written consent
of Marin, except as otherwise provided for in Section 4 of the Security
Agreement executed concurrent herewith (a) sell, lease or otherwise transfer or
dispose of a significant portion of the Debtor's business assets, or, (b)
mortgage or pledge any of their business assets.
2.2.3. Between the date hereof and the time when the Notes
are fully discharged, the Debtor will provide Marin with its consolidated and
consolidating quarterly financial statements within forty-five (45) days of the
end of each quarter and annual consolidated and consolidating audited financial
statements within ninety (90) days of its fiscal year end.
2.2.4. Between the date hereon and the time when the Notes
are fully discharged, neither the Debtor nor LAC will, without the prior written
consent of Marin, (a) incur any indebtedness, or (b) guarantee any debt, except
in the ordinary course of business.
2.2.5. Between the date hereof and the time when the Notes
are fully discharged, neither Debtor nor LAC will, without the prior written
consent of Marin, merge or consolidate the Debtor into another entity or permit
any entity to consolidate or merge into it.
2.2.6. Between the date hereof and the time when the Notes
are fully discharged, neither the Debtor nor LAC will, without the prior written
consent of Marin, declare any dividends or acquire any outstanding shares of its
stock or make any other distribution of cash or property with respect to its
shares.
2
<PAGE>
2.2.7. Between the date hereof and the time when the Notes
are fully discharged, the Debtor and LAC will furnish to Marin such other
information as Marin may reasonably request and permit Marin or his
representatives to visit Debtor's and/or LAC's respective places of business,
talk with Debtor's or LAC's officers and inspect Debtor's and or LAC's books and
records.
3. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Florida.
4. DEFAULT. The failure by Debtor or LAC to abide by the terms hereof
shall be deemed to be an Event of Default under Note A and under Note B
permitting Marin to enforce his remedies under the terms of such Notes and under
the Security Agreement, of even date herewith, from LAC to Marin.
5. NOTICES. Any notice, request, demand and other communication required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given (a) when delivered by hand, or (b) five (5) days after
deposit in the United States mail, by registered air mail, postage prepaid,
return receipt requested, as follows:
If to Debtor or LAC: PharmaSystems Cost Containment Corp.
7350 N.W. 7th Street, #104
Miami, Florida 33126
with a copy to: Caruncho & Mur, P.A.
2600 Douglas Road, Suite 501
Coral Gables, Florida 33134
If to Marin: c/o Alfonso J. Perez, Esq.
Haley, Sinagra & Perez, P.A.
100 S. Biscayne Boulevard, Suite 800
Miami, Florida 33131
or to such other addresses as the parties hereto may from time to time give
written notice of to the others.
6. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among
the parties hereto and supersede all prior agreements, understandings,
negotiations and discussions, both written and oral, among the parties hereto
with respect to the subject matter hereof. This Agreement may not be amended or
modified in any way except by a written instrument executed by all of the
parties hereto.
7. BENEFITS: BINDING EFFECT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
representatives, heirs, legal representatives, successors and assigns.
3
<PAGE>
8. NO WAIVER . No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provisions hereof (whether
or not similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly so provided.
9. SEVERABILITY. In the event that one or more of the words, phrases,
sentences, clauses, subsections or sections contained in this Agreement shall be
declared invalid, this Agreement shall be construed as if such invalid word or
words, phrase or phrases, sentence or sentences, clause or clauses, subsection
or subsections, section or sections had not been inserted, and shall remain in
full force and effect to the extent of the other provisions hereof.
10. SECTION HEADINGS. The section and other headings contained in
this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of any provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have each executed an delivered
this Agreement as of the day and year first above written.
DEBTOR:
PHARMASYSTEMS COST CONTAINMENT CORP.
By: /s/ Jose L. Rodriguez
-------------------------------------------
Jose L. Rodriguez, as President
LAC:
LEE'S ACQUISITION CORPORATION, a Florida
corporation
By: /s/ Jose L. Rodriguez
-------------------------------------------
Jose L. Rodriguez, President
LEE'S PRESCRIPTION SHOPS, INC., a Florida
corporation
By: /s/ Jose L. Rodriguez
-------------------------------------------
Jose L. Rodriguez, President
4
<PAGE>
MARIN:
/s/ Carlos Marin
------------------------------------------------
Carlos, Marin Individually, as
Successor-in-Interest to Exired, S.A. de C.V.,
a Mexican corporation
EXHIBIT 10.16
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE
PLEDGED, SOLD ASSIGNED OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW
HAS BECOME EFFECTIVE WITH RESPECT THERETO, OR (2) RECEIPT BY THE MAKER OF
AN OPINION OF COUNSEL TO THE MAKER TO THE EFFECT THAT REGISTRATION UNDER
THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN
CONNECTION WITH THE PROPOSED TRANSFER.
$537,500.00 JULY 23, 1996.
PROMISSORY NOTE AND SECURITY AGREEMENT
FOR VALUE RECEIVED, the undersigned PHARMASYSTEMS COST CONTAINMENT CORP.,
a Florida corporation (the "Maker") promises to pay to the order of CARLOS M.
MARIN, JR., an Individual, as Successor in Interest to Expired, S.A. de C.V., a
Mexican corporation (collectively, the "Payee"), the principal sum of Five
Hundred Thirty Seven Thousand Five Hundred Dollars ($537,500.00) in lawful money
of the United States, together with interest in like lawful money at the rate of
ten percent (10%) per annum.
1. PAYMENT OF PRINCIPAL AND INTEREST. This Note shall be payable in
monthly payments of Ten Thousand Dollars ($10,000.00), representing principal
and interest, commencing with the execution of this Note and subsequently, on
the 15th day of each month thereafter until fully discharged. Ninety days
following the successful completion and funding of an initial public offering of
Maker's securities under the Securities Act of 1933, as amended, or the merger
and or other consolidation of the Maker into a publicly registered trading
company, Maker shall pay the outstanding principal balance on the Note together
with accrued interest thereon. If Maker does not successfully complete and fund
an initial public offering of its' Securities under the Securities Act of 1933,
as amended, within ninety (90) days of the date hereof, then the monthly
payments of principal and interest on the Note shall be increased to Twenty
Thousand Dollars ($20,000.00) until such time as the Note is paid in full.
2. INTEREST RATE. The unpaid principal balance of this Note shall
bear interest at the rate of ten percent (10%) per annum. Interest shall be
calculated on the basis of a calendar year and the actual days elapsed and
shall be paid as set forth in Section 1 above.
3. SECURITY. To secure its obligations hereunder, and the obligations of
Healthcare Workshop, Ltd., a British Virgin Island corporation ("HWL") under
that certain promissory Note and Security Agreement in the amount of $1,000,000
from Healthcare Workshop, Ltd. to Carlos Marin (the "HWL Note") the Maker hereby
pledges, assigns and grants to the Payee, with full recourse therein to the
<PAGE>
Maker and subject to the provisions of this Note, a continuing security interest
in the following property (the "Collateral"): 100% of the Maker's ownership
interest in Lee's Acquisition Corporation, a Florida corporation ("LAC"), such
stock being more fully described in Schedule "1" attached hereto which is
incorporated herein and made a part hereof by this reference. The Collateral
also includes all proceeds, products and profits of any Collateral, all
increases and additions and accessions to any Collateral and all replacements
and substitutions for any Collateral, including without limitation, any proceeds
of any insurance, indemnity, warranty or guaranty payable with respect to any
Collateral, any awards or payments due or payable in connection with any
condemnation, requisition, confiscation, seizure or forfeiture of any Collateral
by any person acting under governmental authority or color thereof, and any
damages or other amounts payable to the Maker in connection with any lawsuit
regarding any of the Collateral. The Collateral secures and will secure the
prompt and unconditional payment of the indebtedness, obligations and
liabilities of the Maker evidence by or arising under this Note and the
obligations of HWL under the HWL Note. Unless an Event of Default (as defined
below) is then continuing, the Maker shall retain any and all rights relating to
the Stock constituting the Collateral, including without limitation, the voting
rights relating thereto PROVIDED, HOWEVER that the voting rights will not be
exercised in a manner that violates the covenants set forth in the Agreement, of
even date herewith, between PharmaSystems Cost Containment Corp., LAC and Carlos
Marin (the "Covenant Agreement").
3.1. In order to facilitate Payee's rights with respect to
the Collateral, Maker shall execute Stock Powers granting
upon Haley, Sinagra & Perez, P.A. the power to transfer
the Collateral in the Event of Default hereunder. Said
Stock Powers and the Share Certificates representing the
Collateral shall be held in escrow by Haley, Sinagra &
Perez, P.A. and will be released to Payee upon the
occurrence of an Event of Default hereunder.
3.2. Upon the occurrence of an Event of Default as defined
hereunder, Payee shall have the right to take ownership,
possession and control of the Collateral. Payee shall,
within a reasonable time period, attempt to sell and/or
otherwise dispose of the Collateral upon terms deemed
reasonable by Payee in its sole and unfettered discretion.
3.3. Upon a sale or disposition of the Collateral, the
proceeds from such sale or disposition shall be applied
to the repayment of the full principal balance and
interest outstanding under this Note and the HWL Note, as
of the date of such disposition (collectively the
"Outstanding Balance"). The express proceeds, if any,
received by Payee upon sale or disposition of the
Collateral, after full payment of the Outstanding
Balance, shall be paid to Maker of its designee.
3.4. Between the date hereof and the time when the Notes are
fully discharged, the Maker shall have the absolute
right, without the consent of Payee, to pledge and
encumber the Six Hundred (600) shares of Lee's
Acquisition Corporation issued to PharmaSystems Cost
Containment Corp., represented by Certificate No. 1, for
the specific purpose of paying Payee the outstanding
balance on this Note and/or the outstanding balance on
2
<PAGE>
the Promissory Note and Security Agreement executed
between Payee and Healthcare Workshop, Ltd., a British
Virgin Islands corporation.
4. EVENTS OF DEFAULT. The entire unpaid principal balance of this Note,
together with all unpaid interest accrued thereon and all other sums owing under
this Note, shall at the option of the Payee become immediately due and payable
without notice or demand upon the occurrence of any one or more of the following
events ("Events of Default"), regardless of the cause thereof and whether within
or beyond the control of the Maker:
(a) The failure of the Maker to pay any sum when due under this
Note;
(b) The failure of the Maker to observe or perform any covenant
or agreement by Maker in this Note after the Payee's written
notice to Maker of such failure and the Maker's further
failure to cure such breach within five days of such notice;
or
(c) The occurrence of an Event of Default under the HWL Note;
(d) The occurrence of an Event of Default under the Covenant
Agreement; or
(e) If the Maker shall make an assignment for the benefit of
creditors, file a petition in bankruptcy, apply to or
petition any tribunal for the appointment of a custodian,
receiver, intervenor or trustee for the Maker or a
substantial part of the Maker's assets; or if the Maker shall
commence any proceeding under any bankruptcy, arrangement,
readjustment of debts owed, dissolution or liquidation law or
statute of any jurisdiction, whether now or hereafter in
effect; or if any such petition or application shall have
been filed or proceeding commenced against the Maker or if
any such custodian, receiver, intervenor or trustee shall
have been appointed.
5. RIGHTS AND REMEDIES OF THE PAYEE. The Payee's delays in exercising or
failure to exercise any rights or remedies to which the Payee may be entitled if
any Event of Default occurs shall not constitute a waiver of any of the Payee's
rights or remedies with respect to that or any subsequent Event of Default,
whether of the same or a different nature, nor shall any single or partial
exercise of any right or remedy by the Payee preclude any other or further
exercise of that or any other right or remedy.
6. WAIVER AND CONSENT. To the fullest permitted extent by law, the Maker
waives demand, presentment, protest, notice of dishonor, suit against or joinder
of any other person, and all other requirements necessary to charge or hold the
Maker liable with respect to this Note.
7. COSTS, INDEMNITIES AND EXPENSES. All filing fees and similar charges
and all costs incurred by the Payee in collecting or securing or attempting to
collect or secure this Note, including attorney's fees, whether or not involving
litigation and/or appellate, administrative or bankruptcy proceedings shall be
paid by Maker and are deemed included in the liquidated damages described in
Section 3 hereof. The Maker agrees to pay any documentary stamp taxes,
3
<PAGE>
intangible taxes or other taxes (except for federal or state income or franchise
taxes based on the Payee's income) which may now or hereafter apply to this Note
or any payment made in respect of this Note or any security for this Note.
8. MAXIMUM INTEREST RATE. In no event shall any agreed to or actual
exaction charged, reserved or taken as an advance or forbearance by the Payee as
consideration for this Note exceed the limits (if any) imposed or provided by
the law applicable from time to time to this Note for the use or detention of
money or for forbearance in seeking its collection, the Payee hereby waives any
right to demand such excess. In the event that the interest provisions of this
Note shall result at any time or for any reason in an effective rate of interest
that exceeds the maximum interest rate permitted by applicable law (if any),
then without further agreement or notice the obligation to be fulfilled shall
automatically reduced to such limit and all sums received by the Payee in excess
of those lawfully collectible as interest shall be applied against the principal
of this Note immediately upon the Payee's receipt thereof, with the same force
and effect as though the Maker had specifically designated such extra sums to be
so applied to principal and the Payee had agreed to accept such extra payment(s)
as a premium-free prepayment or prepayments.
9. CORPORATE OBLIGATION OF MAKER. It is expressly understood that
this Note is solely a corporate obligation of the Maker.
10. ASSIGNABILITY BY PAYEE. This Note shall be assignable by Payee,
with the prior written consent of Maker, which consent shall not be
unreasonably withheld.
11. GOVERNING LAW. This Note shall be governed by, and construed
and enforced in accordance with, the laws of the State of Florida.
12. SEVERABILITY. Any provision of this Note which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction only, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
13. INTERPRETATION. Whenever used in this Note, words in the singular
include the plural, words in the plural include the singular, and pronouns of
any gender include the other genders, all as may be appropriate. Captions and
paragraph headings in this Note are for convenience of reference only and shall
not affect its interpretation. As used in this Note, the term "the Payee" shall
be deemed to include any subsequent holder(s) of this Note.
14. SURRENDER OF NOTE TO BE PAID IN FULL. At such time as the Note is
paid by the Maker in full as to principal, and accrued interest, the holder
thereof shall surrender the original Note to the Maker for cancellation after
payment.
15. MISCELLANEOUS. Time shall be of the essence with respect to the terms
of this Note. This Note cannot be changed or modified orally. Except as
otherwise required by the provisions of this Note, any notice required to be
given to other Maker shall be deemed sufficient if made personally or if mailed,
postage prepaid, to the Maker's address as it appears on the signature page of
this Note.
4
<PAGE>
MAKER:
PHARMASYSTEMS COST CONTAINMENT CORP., a
Florida corporation
7350 N.W. 7th Street, Suite 104
Miami, Florida 33126
By: /s/ Jose L. Rodriguez
-------------------------------------------
Jose L. Rodriguez, solely in his
capacity as President, and not
individually
5
<PAGE>
SCHEDULE 1
COLLATERAL:
Stock Certificate No. 1 issued to PharmaSystems Cost Containment Corp.
for six hundred (600) shares of Lee's Acquisition Corporation, a Florida
corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 39,671
<SECURITIES> 0
<RECEIVABLES> 280,273
<ALLOWANCES> 8,000
<INVENTORY> 558,245
<CURRENT-ASSETS> 935,228
<PP&E> 271,864
<DEPRECIATION> 71,446
<TOTAL-ASSETS> 1,392,502
<CURRENT-LIABILITIES> 2,308,383
<BONDS> 537,500
0
0
<COMMON> 0
<OTHER-SE> (1,453,381)
<TOTAL-LIABILITY-AND-EQUITY> 1,392,502
<SALES> 2,340,428
<TOTAL-REVENUES> 2,340,428
<CGS> 1,728,427
<TOTAL-COSTS> 1,785,445
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,218
<INCOME-PRETAX> (1,173,444)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,173,444)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,173,444)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.06)
</TABLE>
