U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File No. 333-24671
CYBEAR, INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-3936988
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5000 Blue Lake Drive, Suite 200
Boca Raton, Florida 33431
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(Address of principal (Zip Code)
executive offices)
(561) 999-3500
--------------
(Registrant's telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
Indicate by check mark whether the Registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO ___
Indicate by check mark disclosure of delinquent filers in response to Item 405
of Regulation S-K (ss. 229.405) is not contained herein and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]
The number of shares outstanding of the Registrant's Common Stock is 13,269,400
(as of March 26, 1999).
The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $315,148,250 (as of March 26, 1999).
DOCUMENTS INCORPORATED BY REFERENCE
None
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As used in this Report, the terms "we," "us," "our," the "Company" and "Cybear"
mean Cybear, Inc. and its subsidiaries (unless the context indicates a different
meaning).
FORWARD-LOOKING STATEMENTS
Some of the information in this Report contains forward-looking statements
within the meaning of the federal securities laws. These statements include,
among others, product development plans, strategies, expectations regarding
competition and market acceptance of our products and the Internet as a secure
and reliable communications and commerce medium, and possible effects of pending
and future government regulation. Forward-looking statements typically are
identified by use of terms like "may," "will," "expect," "anticipate,"
"estimate" and similar words, although some forward-looking statements are
expressed differently. You should be aware that Cybear's actual results could
differ materially from those contained in the forward-looking statements due to
a number of factors, including our limited operating history and substantial
operating losses, availability of capital resources, ability to effectively
compete, economic conditions, unanticipated difficulties in product
development, ability to gain market acceptance and market share, ability to
manage growth, reliance on short-term non-exclusive contracts, Internet security
risks and uncertainty relating to the evolution of the Internet as a medium for
commerce, dependence on third party content providers, dependence on our key
personnel, ability to protect our intellectual property, Year 2000 problems
and the impact of future government regulation on our business. You should also
consider carefully the risks described in this Report or detailed from time to
time in our filings with the Securities and Exchange Commission (the
"Commission").
toni
PART I
ITEM 1. BUSINESS
OVERVIEW
Cybear is an information technology company using the Internet and
Internet-based browser technologies to develop applications designed to improve
communications and increase efficiencies for healthcare providers. Cybear has
focused its efforts on developing its Solutions product line, an Internet
Service Provider ("ISP") system that provides information and Internet-based
productivity applications to the participants in the healthcare industry. In
March 1999, Cybear introduced its first Solutions product, SolutionsMD, which is
designed to address the communications and operational needs of physicians.
Cybear's other Solutions products, derived from SolutionsMD, will provide
Internet-based productivity software applications and communication networks for
other participants in the healthcare industry.
SolutionsMD is a subscription-based Internet portal site that provides a
combination of healthcare content, practice management tools, the entry point to
a comprehensive communications network and ongoing access to further Solutions
products and services. We intend to market our first product, SolutionsMD to
physicians and physician organizations throughout the United States.
Over the next year, we intend to supplement our core SolutionsMD product by
introducing SolutionsNet, SolutionsRx and SolutionsHosp. These complementary
products will contain applications, content and connectivity features that the
more specialized users of these products will find useful. Our ability to create
private communications networks is an important improvement over the paper and
fax communications typically used by physicians and their staffs and other
healthcare providers. We believe that our Solutions products will provide the
structured communications and information necessary to improve the efficiency
and quality of patient care, meeting the information demands of managed care and
other reimbursement systems.
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In addition to our subscribers, we believe advertisers will be attracted to our
site because of our ability to target physicians by specialty, interact with
them electronically and allow them to order pharmaceutical samples and other
goods over a secure network.
OUR RECENT MERGER
We were incorporated in Delaware on February 5, 1997 and are in the development
stage. On November 20, 1998, Cybear, Inc., a then 98% owned subsidiary of Andrx
Corporation ("Andrx"), merged with a wholly-owned subsidiary of 1997 Corp. Andrx
is a company that formulates and commercializes controlled-release
pharmaceuticals using proprietary drug delivery technologies. 1997 Corp. was a
"blank check" company seeking a business combination with an operating entity.
Upon completion of the merger, Cybear, Inc. became a wholly-owned subsidiary of
1997 Corp. and 1997 Corp. changed its name to Cybear, Inc. As of December 31,
1998, Cybear, Inc. was 95% owned by Andrx Corporation. The merger was intended
to be a tax-free reorganization for federal income tax purposes and was treated
as a recapitalization of Cybear, Inc. for accounting and financial reporting
purposes.
CORPORATE INFORMATION
Our executive offices are located at 5000 Blue Lake Drive, Suite 200, Boca
Raton, Florida 33431. Our telephone number is (561) 999-3500 and our web site
address is www.cybear.com. Information contained on our web site is not part of
this Report.
HEALTHCARE COMMUNICATIONS AND INFORMATION TECHNOLOGY ISSUES
Participants in the healthcare industry are highly dependent upon information.
Information is generated by multiple sources, must be acted on at various times
by a variety of participants and forms the basis of quality care and adequate
reimbursement for services. With both the continued penetration of managed care
and reductions in government reimbursement, the need for accurate, rapid and
interactive information continues to increase. At the same time, the acceptance
of capitated, risk-based contracts by healthcare providers has created increased
demands for real-time accurate clinical and administrative information among
network providers.
Despite these needs, healthcare organizations have been allocating as little as
2% of their operating budgets for information technology ("IT"). This is
significantly less than the level of IT expenditures by other U.S. industries,
like manufacturing, insurance and banking, which have been allocating 4%, 7% and
10%, respectively, of their operating budgets to IT.
Many healthcare providers have not adopted sufficient communication and
information technology functions necessary to efficiently maintain quality care
and improved reimbursement. As a result, wasted efforts, redundant tests and
procedures and administrative inefficiencies are a daily part of medical
practice. It is not unusual for patients and providers to experience delays in
obtaining authorizations, to access specialists or to have diagnostic or
therapeutic procedures performed. For example, physicians find it increasingly
difficult to monitor the thousands of different medications covered by insurers,
so pharmacists often times interrupt patient care with requests to change or
substitute medications. It is common practice for physicians and their office
staff to telephonically verify a patient's eligibility and other items necessary
to render care. This complex communication currently depends on the
inefficiencies inherent in mail, telephone and fax communications. These methods
are inefficient and contribute to the difficulties physicians and networks are
experiencing with clinical and expense management.
The desired linkage of existing computer systems used by participants in the
healthcare industry has been hindered by a variety of factors, including the
sheer number of industry participants, the
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complexity of healthcare transactions, the high cost of technology, limitations
of existing information systems, the incompatibility of the many existing
operating platforms and the continuing prevalence of computer systems that are
not Y2K compliant.
We believe that the Internet is a transformational communications technology
that will be best suited to handle complex communications between healthcare
providers and payors. The Internet's open architecture, universal accessibility
and acceptance makes it a powerful communications medium overcoming many of the
limitations of legacy healthcare IT systems. Additionally, the Internet has
gained wide acceptance in the healthcare community initially as an information
access and gathering tool, with approximately 75% of U.S. physicians accessing
the Internet regularly for that purpose only. Consequently, the deployment of
various applications, content and tools will more readily be accepted by
physicians and their office staffs.
THE CYBEAR SOLUTION
We developed SolutionsMD to meet healthcare providers' need to improve the
accuracy and efficiency of communications with other providers, third party
payors and provider networks. In order to meet the demands of managed care, a
system needs to quickly collect and deliver patient information at the point of
care, track physician activities and patterns, identify trends and issues that
affect the critical components of managed care such as quality, cost, outcomes,
variability and patient satisfaction and facilitate prospective utilization
review. We also believe that there will be a strong demand for real-time
clinical and practice management solutions that are easy to use, secure and cost
effective.
Our Solutions integrated set of Internet-based products and services are
designed to improve the efficiency of day-to-day administrative and
communication tasks of the various participants in the healthcare industry,
including physicians, hospitals, networks and payors that must interact to
successfully manage patient care. These products will include applications,
information and data transfer capabilities designed by us to meet their
particular needs and through our dedicated ISP, will allow for the creation of
secure intranets for members of these networks to communicate and share private
information. Our Internet-based technology platform allows for efficient
installation, maintenance and customization using the subscriber's existing
computer system.
CYBEAR'S COMPETITIVE ADVANTAGES
We believe our extensive healthcare experience combined with our own sales
force, our Internet-based technology platform and our in-house software
development capabilities provide us with a competitive advantage to be the
leading Internet communications and applications provider for the healthcare
community. Our main strengths are:
/bullet/ We Have Extensive Healthcare Experience - Our Chief Executive Officer
is a physician with experience practicing medicine, managing provider
networks and providing practice management services. Other members of
our senior management and Board of Directors have extensive experience
in healthcare practice management and pharmaceutical industries. Our
development, marketing and support staff have in-depth knowledge of the
operations and specific needs of physicians and other key participants
in the healthcare industry. As a result, we believe we are able to
develop and deliver products that are useful to our subscribers and we
can build meaningful and lasting subscriber and advertiser
relationships.
/bullet/ We Have Our Own Sales Force - We have an in-house sales and marketing
staff that has long-standing ties to key segments of the healthcare
industry, including physician practices,
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physician organizations and pharmaceutical companies. We believe that
these relationships will allow us to rapidly expand our subscriber
base.
/bullet/ We Have an Internet-Based Technology Platform - Unlike our competitors,
we provide direct Internet access to our subscribers through our own
ISP rather than having to depend on others for Internet access. Being
an ISP allows us to provide a secure medium for transmission of
sensitive patient and transactional information in an easy to use, low
cost, fast and reliable manner. Our ISP platform also allows us to
provide more value to our subscribers through web-hosting and the
ability to develop private intranets, which we believe will result in
subscribers being less likely to switch to a competitor's product or
service.
/bullet/ We Have Extensive In-House Software Development Capabilities -We have
an in-house software development team made up of over 20 programmers,
allowing us to provide easy to use, low cost tools for day-to-day
operational and management needs of medical practices and networks.
This allows us to create flexible Java language-based applications to
address the particular needs of different segments of the healthcare
industry. Our in-house development capability together with our
server-based applications technology will allow us to make continuous
improvements to our products.
CYBEAR'S STRATEGY
Our strategy to become the leading Internet-based platform linking physicians
with other healthcare providers, third party payors and participants in the
healthcare industry is based upon several elements, including:
/bullet/ Rapidly Building a Physician Subscriber Base - We are marketing
SolutionsMD to physicians, their staff and physician organizations that
have ever-increasing and complex communications needs. In addition to
individual physician subscribers, large physician organizations will
either subscribe to encourage their members to subscribe to
SolutionsMD. We expect administrative staff, particularly office
managers, schedulers and billers will be regular users of many of the
administrative tools of SolutionsMD.
/bullet/ Using Physician Subscriber Base to Obtain Additional Industry Users -
By developing a physician-centered subscriber base, we believe that we
will attract non-physician subscribers such as pharmacies, hospitals
and Independent Practice Associations ("IPA's") who will use our future
products to communicate and transact business with our SolutionsMD
physician subscribers. To this end, we are actively pursuing strategic
relationships with key healthcare, technology and content partners to
enable us to offer higher quality products and solutions to other
segments of the healthcare industry.
/bullet/ Using Connectivity to Retain Subscribers - We believe that our
ISP-related ability to link physician organizations through private
networks will improve communications and administrative efficiency, and
that this in turn will limit the desire and ability of individual
subscribers to discontinue subscribing to our products and services in
favor of competitors.
/bullet/ Building Brand Recognition - We believe that establishing the
SolutionsMD and our other Solutions brands and building brand
recognition is critical to our ability to attract and retain new
subscribers, advertisers and e-commerce co-marketers. We have allocated
significant resources and commenced a marketing campaign to develop
awareness of Cybear and SolutionsMD through advertising, product
promotion and strategic relationships.
/bullet/ Capitalizing on Multiple Revenue Sources - We intend to generate
revenues from multiple sources, including subscription fees,
advertising revenues, e-commerce sales commissions
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and transaction fees. We believe that this revenue model will reduce
dependence on any single revenue source and maximize our revenue
generating potential.
PRODUCTS
OUR TECHNOLOGY PLATFORM
Our Internet-based technology platform for our Solutions product line includes a
dedicated ISP, which ensures secure and reliable Internet access to our
subscribers, the use of Java language-based programming to design our user
applications, and a fully-redundant Network Operations Center ("NOC") to provide
scalability and reliability to our subscriber base.
COMMON FEATURES OF SOLUTIONS PRODUCTS
Each of our Solutions products will share the following common features tailored
to meet the needs of the targeted user:
<TABLE>
<CAPTION>
Component Features
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
ISP-Based Communications System /bullet/ Automatic configuration of the user's computer
/bullet/ Dial-in from any location in the U.S. through a network of local
numbers
/bullet/ Customizable front-end image that may include the name and service
mark of the user or the user's network
/bullet/ On-demand customer support
/bullet/ E-mail, private network capabilities and web hosting services
/bullet/ Tiered multiple user groups for password secure Intranet
communications with others in the relevant healthcare delivery system,
with the ability to control access to information as desired
/bullet/ User group menus comprising larger groups or organizations defined by
a common interest or situation
- ----------------------------------------------------------------------------------------------------------------------
Content and Applications /bullet/ A portal entry point notifying users of new information and product
updates relevant to the particular user group
/bullet/ A web site template, search engine/directory, and online newsletter
publisher, each customizable to the needs of the user, and web site
access and usage tracking
/bullet/ Software applications tools to streamline day-to-day healthcare
administrative and operational tasks
/bullet/ Lifestyle information geared for the e-commerce needs of healthcare
professionals
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
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SOLUTIONSMD
SolutionsMD includes a broad range of practice management tools to assist
physicians and their office staff, increase physician productivity and enhance
potential reimbursement. SolutionsMD is designed to manage communications
between physicians and the various other segments of the healthcare industry
that interact with them. Cybear launched SolutionsMD in March 1999. The
following highlights the SolutionsMD physician, practice and office tools:
PHYSICIAN TOOLS
<TABLE>
<CAPTION>
Application Content Benefit
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Continuing Education /bullet/ Continuing Medical Education Keeps physicians updated on their
/bullet/ Medical Library education, and allows patient,
/bullet/ Conference calendar disease and clinical research.
/bullet/ Clinical Studies
- ----------------------------------------------------------------------------------------------------------------------
Prescription Management /bullet/ Managed Care Tracks the medications covered by
/bullet/ Formularies different insurance carriers,
/bullet/ FDA Approvals minimizes changes and substitutions
/bullet/ Formulary Prescription of patient medications.
Profiling
- ----------------------------------------------------------------------------------------------------------------------
Certification Assistance /bullet/ Credentialing Database Updates physician's profile
/bullet/ Utilization Benchmarking regarding education, hospital
privileges, licensure, etc. Allows
comparison of patient management and
treatment to standard clinical protocols
and treatment regimes.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
OFFICE TOOLS
<TABLE>
<CAPTION>
Application Content Benefit
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Supply Replacement /bullet/ Medical Supplies Online ordering of medical,
Injectables Vaccines pharmaceutical and office supplies
/bullet/ Office Supplies frees staff time and insures
availability.
- ----------------------------------------------------------------------------------------------------------------------
Staff Services /bullet/ Human Resources Helps track required human resource
/bullet/ Policy and Procedures documentation, contains staff
/bullet/ Office Training policies and procedures, online
/bullet/ OSHA Compliance training courses, and OSHA
/bullet/ Disaster Protocols compliance evaluation and protocols.
- ----------------------------------------------------------------------------------------------------------------------
Infrastructure Support /bullet/ Office Forms Database Extensive repository of office forms
for all needs, both business and
clinical.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
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PRACTICE TOOLS
<TABLE>
<CAPTION>
Application Content Benefit
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Managed Care Applications /bullet/ Contract Manager Helps manage differing insurance
/bullet/ Eligibility and contracts, checks a patient's
Authorization insurance status, obtains referral
/bullet/ Capitation Evaluation authorization and evaluates managed
care payments.
- ----------------------------------------------------------------------------------------------------------------------
Care Management /bullet/ Patient Satisfaction Survey Patient services including
/bullet/ Patient Education satisfaction evaluation, educational
/bullet/ Patient Support handouts, online patient support
/bullet/ Practice Benchmarks links and evaluation of practice by
comparing to standard norms.
- ----------------------------------------------------------------------------------------------------------------------
Coding Management /bullet/ Coding Newsletter Updates and trains staff on coding
/bullet/ Medicare Training changes, simplifies billing with
/bullet/ ICD 9 Online online procedure and disease
/bullet/ CPT 4 Online listings, and compares practice
/bullet/ HCFA Norms coding to HFCA audit criteria.
- ----------------------------------------------------------------------------------------------------------------------
Practice Compliance /bullet/ Compliance Newsletter Keeps practice abreast of compliance
/bullet/ Legislative Update issues and legislative initiatives,
/bullet/ Legal Resources alerts regarding fraud and abuse
/bullet/ Fraud and Abuse Alerts issues and evaluates health care
attorney qualifications.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
FUTURE SOLUTIONS PRODUCTS
Cybear is developing additional Internet-based products and services targeted to
the needs of other healthcare providers such as physician organizations,
pharmacies and hospitals. Like physicians, all of these providers interact and
must communicate with patients and others in their field as well as with other
segments of the healthcare community. These products are based on our
Internet-based technology platform, and will add tools specially designed to
meet the needs of the expected users. Cybear anticipates that these future
products will attract new subscribers that will benefit from the connectivity
features to communicate among themselves and with physicians. Among the
Solutions products currently in development are:
/bullet/ SOLUTIONSNET is designed for physician networks and healthcare business
organizations at the management and operational level. The target
market for this product includes physician organizations with the need
to improve communications with and among their members and improve
their ability to manage risk. SolutionsNet will contain all of the
features and services of SolutionsMD and will serve as the SolutionsMD
management interface to allow an organization to manage their
SolutionsMD Intranet. In addition,
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SolutionsNet will contain numerous additional web-based applications
designed specifically for the healthcare business organization
including:
/bullet/ Online real-time eligibility and authorization transaction
capability for varying plan sizes.
/bullet/ Quality assurance tracking of patient satisfaction and
customer service through all levels of the organization.
/bullet/ Benchmarking statistical information to compare the
SolutionsNet user's performance to goals and standards.
/bullet/ Prescription management tools that give the organization the
ability to effectively manage and analyze prescription
utilization.
/bullet/ Online consulting services for support and guidance through a
network of partners.
/bullet/ SOLUTIONSRX is targeted to the approximately 21,000 independent
pharmacists, a segment of the healthcare community that is experiencing
increasing market pressure due to consolidation and the growth of
national pharmacy chains. SolutionsRx will have applications that can
be used by independent pharmacies to better compete with chains, and
Cybear believes that these applications will be useful to the pharmacy
chain market as well. In addition to standard portal products,
SolutionsRx will offer unique programs developed by Cybear, including:
/bullet/ Drug dosing and compounding calculations and drug imaging
identification to ensure proper delivery of the accurate
amount of medication based on a patient's demographics.
/bullet/ Online prescription refilling and renewal.
/bullet/ E-commerce through the pharmacist's web page.
/bullet/ Access to numerous journals, regulatory information, formulary
listings and clinical study summaries.
/bullet/ SOLUTIONSHOSP is targeted to hospital systems and hospital-physician
networks. SolutionsHosp will complement and enhance the functionality
of existing hospital-based information systems, and will serve as the
interface to SolutionsMD subscribers. SolutionsHosp will contain all of
the tools and resources as SolutionsMD as well as several specific
applications designed for this market including:
/bullet/ Delivery of discharge orders and updates to admitting
physicians. Physicians will be able to complete admission
paperwork via the secure Intranet.
/bullet/ Access to transcription services to easily complete and access
chart notes.
/bullet/ A sophisticated indexing and search system to quickly locate
chart content and create summaries and reports for hospital
staff and management.
/bullet/ Two-way secure connectivity among hospital lab and imaging
departments and the medical staff.
These products will be packaged in a similar product configuration to
SolutionsMD and utilize a similar marketing strategy. Cybear expects to release
the initial versions of these three products over the next year.
OTHER PRODUCTS UNDER DEVELOPMENT
Cybear is developing a consumer-oriented healthcare web site that will be
marketed to other web sites and ISPs to become the healthcare channel for these
providers. This site will be content-neutral and will use some of the content
developed for SolutionsMD.
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Additionally, in parallel with SolutionsMD, Cybear will continue to develop and
test additional management applications including its electronic prescription
management product designed for use in physician office-based practices.
STRATEGIC RELATIONSHIPS
An essential element of Cybear's growth strategy is the development and use of
various strategic partnering relationships that will serve to more rapidly
increase the subscriber base, provide high-quality content and ensure that
Cybear's Internet-based technology platform will remain state-of-the art. In
focusing Cybear's strategic relationships on distribution, content and
technology, Cybear ensures its subscriber base a continuing flow of useful
Internet-based product.
The following is a brief description of our key strategic relationships:
DISTRIBUTION PARTNERS
INTERNATIONAL ONCOLOGY NETWORK. A physician practice management organization
serving 1,000 oncologists. Cybear is its preferred ISP and Internet business
applications provider.
THE IPA ASSOCIATION OF AMERICA ("T.I.P.A.A.A."). The preeminent organizing body
for independent practice associations in the United States that represents over
200,000 physicians across the country. In 1998, Cybear entered into a three-year
strategic alliance with T.I.P.A.A.A. to become its preferred ISP and Internet
business applications provider. T.I.P.A.A.A. has actively endorsed Cybear's
Solutions product line and will help to market Cybear's products to
T.I.P.A.A.A.'s membership.
OMNA PRACTICE MANAGEMENT. A multi-specialty physician practice management
organization. Cybear is its preferred ISP and Internet business applications
provider.
PHYMATRIX CORPORATION. A publicly-traded physician practice management company
serving over 12,000 physicians. Cybear is its preferred ISP and Internet
business applications provider.
CONTENT PARTNERS
DATA ADVANTAGE CORP. A provider of hospital statistic databases and rating
mechanisms useful for benchmarking comparisons.
ENVOY CORPORATION. A provider of online transaction processing applications.
Envoy's transaction network provides online eligibility verification for
numerous managed care organizations.
INFOSPACE, INC. A nonmedical Internet content provider specializing in general
information such as telephone and address directories, government, weather and
lifestyle information content.
MEDIMEDIA USA, INC. Creator of the Infoscan database of drug formularies
categorized by managed care organizations.
MEDPAPER, INC.. A provider of organizational communications software that
provides a template for creation of broadcast "newsletter" information via the
Internet.
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MOORE MEDICAL SUPPLY. A medical supply provider with online supply ordering
facilities.
REUTERS HEALTH INFORMATION, INC. A leading provider of custom news feeds
focusing on healthcare, business and entertainment as well as Moneynet portfolio
content.
VISTAR TECHNOLOGIES, INC. A provider of online physician credentialing forms
generation and printing services.
TECHNOLOGY PARTNERS
ANDOVER GROUP. A technology standards organization sponsored by Hewlett Packard
that works with Microsoft Health Users Group ("MSHUG") in developing medical
transmission standards.
GTE. A leading telecommunications infrastructure provider. Cybear is a partner
in GTE's beta program of ADSL networks in the Tampa market as well as a GTE
dial-up partner.
MICROSOFT HEALTH USERS GROUP. The technology standards organization that jointly
developed the current standards by which medical data is transmitted. Cybear is
a committee member of MSHUG, which allows Cybear to provide input on the
development of future medical data transmission standards.
SUN MICROSYSTEMS. The leading developer of 100% Java language-based software
applications. Cybear is a member of the Sun Development Group and has
collaborated with Sun Microsystems in the development of Java software tools.
We are actively pursuing strategic relationships with other key distribution,
content and technology leaders that we believes will further our growth
strategies and competitive advantages. Certain of our existing relationships, as
well as others that may be established in the future, involve or may involve the
sale or issuance of our common stock to our partners. For example, our
three-year strategic alliance with T.I.P.A.A.A. entered into in 1998 provides
that, in exchange for Cybear's preferred vendor status, Cybear agrees to make
three $100,000 annual payments to T.I.P.A.A.A. and to grant T.I.P.A.A.A. an
option to purchase 100,000 shares of its common stock. The first 30,000 of such
options have an exercise price of $3.00 per share, have a seven-year term and
vest at the rate of one share for every two T.I.P.A.A.A. physicians that become
and remain a Cybear user for a minimum of three months. In the event that such
30,000 options are not vested by the expiration date of the agreement, the
options shall vest in 2003. After the first 30,000 options have vested, the
remaining 70,000 options will vest at the rate of one share for every two
T.I.P.A.A.A. physicians that become and remain a Cybear subscriber for a minimum
of three months during the term of this agreement. These 70,000 options will
have an exercise price equal to the market price of Cybear's common stock on the
date these options vest and will have a five-year term from the date of grant.
MARKETING AND SALES
GENERAL
We market our products and services primarily through two mechanisms: our
in-house sales force and our strategic distribution partnerships. We have hired
an in-house sales force of individuals with healthcare backgrounds and
relationships oriented to building the physician subscriber base. The sales
force activity will be complemented by senior management in approaching other
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segments of the healthcare community, including the pharmaceutical, medical
device and supplies and ancillary service providers. We believe both through
direct sales and through distribution partnerships, we will have more rapid
product penetration and revenue generation. We plan to continue recruiting
additional sales and marketing staff.
To complement our sales strategy, we have a multifaceted marketing approach that
includes advertising, direct mailing, telemarketing, trade show visibility and
direct selling activity. Our marketing efforts take a business partnership
approach, with a focus on developing three main revenue bases: subscribers,
advertisers and e-commerce co-marketing/revenue-sharing relationships.
In addition to our two-pronged sales efforts and our multifaceted marketing
approach, we believe that the generation of revenue in the following three major
areas underscores the importance of diversified revenue streams in our financial
model:
SUBSCRIBER MARKETING
Our subscriber marketing strategy is to identify and attract selected targets
with large physician affiliations within the managed care arena to permit the
maximum product penetration with a minimum investment of resources. Primary
targets include physician organizations with a high probability of conversion
and a high probability of successful distribution to and utilization by the
physician. Our senior management is actively involved in marketing discussions
with these larger entities, and our established relationships represent
successful implementations of this strategy.
Cybear also has deployed its marketing staff to build its individual and small
group physician subscriber base, offering promotional trial subscriptions, with
the intention that trial subscribers will become continuing subscribers after
they have had the opportunity to use our SolutionsMD and experience its practice
enhancing capabilities. We plan to employ this technique in marketing our other
Solutions products.
SITE ADVERTISING
The 650,000 physicians in the United States who are SolutionsMD's targeted
customers make more than 80% of the decisions regarding the $1.0 trillion
domestic annual healthcare expenditures. With almost $1.5 million in decision
making power per physician, this is a highly sought after audience.
As has been demonstrated in other market areas, the Internet has a unique
ability to deliver effective, targeted, and interactive messaging and
communication to its target. That focus, combined with the tremendous purchasing
power of a physician user base, makes SolutionsMD a valuable advertising and
product promotion medium to potential advertisers such as pharmaceutical
companies. Cybear will provide very targeted advertising alternatives for
various areas of business seeking to increase their healthcare market share,
from large pharmaceutical companies seeking to present specific products to the
particular healthcare specialists that would likely prescribe and administer
such products, to consumer goods distributors seeking marketing to local
healthcare practitioners.
Cybear's strategy to attract advertisers is to build its base of subscribers
from the healthcare community to include not only individual practitioners but
also large organizations of practitioners of particular specialties, so that
businesses seeking to advertise on SolutionsMD will be able to
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access their desired targeted audience. Our SolutionsNet and SolutionsHosp
products will include a portal page that is co-branded by Cybear and the network
sponsor. Advertisers will also participate in special partnership and/or
sponsorship opportunities and will have a presence on SolutionsMD beyond a
typical targeted banner advertisement. Special services and promotional programs
will be available to partners and sponsors that will greatly increase their
visibility to SolutionsMD users. Advertisers also have the flexibility to
purchase general or targeted advertisements.
E-COMMERCE CO-MARKETING
Cybear's marketing efforts are also directed to establishing co-marketing
relationships with other e-commerce businesses, whereby the Solutions product
line serves as a medium for these other e-commerce ventures to sell their goods
or services to Cybear's subscribers with Cybear sharing in the revenues of such
sales. Our alliances with Office Max and Moore Medical Supply are two
examples of this potential revenue generating, product enhancing marketing
avenue.
CUSTOMER SERVICE AND SUPPORT
Cybear believes that effective customer service is essential to attracting and
retaining subscribers and is acutely sensitive to the demands for
person-to-person responsiveness of the healthcare community. Cybear provides
ongoing telephone support in both technical computer hardware and healthcare
applications matters. This support will be provided through its customer service
and sales support centers which are accessible by a toll-free call and are
available from 8:00 a.m. to 8:00 p.m. eastern standard time Monday through
Friday with after hours support available via pager. Cybear's customer service
center screens all requests for telephone support and directs the call to the
appropriate customer service personnel. Personnel are trained to both resolve
technical problems and to answer inquiries on product usage. Cybear also has
trained customer satisfaction associates to ensure proper use and customer
satisfaction.
NETWORK OPERATIONS CENTER
Our NOC located in Boca Raton, Florida, is a state-of-the-art network control
and hosting facility which manages, maintains and supports the SolutionsMD
network and its users. The NOC includes all the hardware, software, and
personnel necessary to support the ISP, our product lines and corporate data
processing needs. The NOC includes a Network Consulting Group and other
personnel to assist with customer support and troubleshooting.
COMPETITION
Cybear's competitors include online services or web sites targeted to
healthcare, general purpose ISPs, publishers and distributors of offline media,
healthcare information companies and large data processing and information
companies. Many of these competitors have substantial installed customer bases
in the healthcare industry and the ability to fund significant product
development and acquisition efforts. Cybear believes that the principal
competitive factors in its market include knowledge of user needs and client
service, system quality and product features, price and the effectiveness of
marketing and sales efforts. There can be no assurance that Cybear will be
competitive with respect to any individual factor or combination thereof.
To be competitive, Cybear must incorporate leading technologies, enhance its
existing services and content, develop new technologies that address the
increasingly sophisticated and varied
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needs of healthcare professionals and healthcare consumers and respond to
technological advances and emerging industry standards and practices on a timely
and cost-effective basis. There can be no assurance that Cybear will be
successful in using new technologies effectively or adapting SolutionsMD and
other products to user requirements or emerging industry standards. Any pricing
pressures, reduced margins or loss of market share resulting from Cybear's
failure to compete effectively would materially adversely affect Cybear's
business, financial condition and operating results.
Many of Cybear's current and potential competitors have greater resources to
devote to the development, promotion and sale of their services; longer
operating histories; greater financial, technical and marketing resources;
greater name recognition; and larger subscriber bases than Cybear and,
therefore, may have a greater ability to attract subscribers and advertisers.
Many of these competitors may be able to respond more quickly than Cybear to new
or emerging technologies in the Internet and the personal communications market
and changes in Internet user requirements and to devote greater resources than
Cybear to the development, promotion and sale of their services. In addition,
Cybear does not have contractual rights to prevent its strategic partners from
entering into competing businesses or directly competing with it.
GOVERNMENT REGULATION AND HEALTHCARE REFORM
The healthcare industry is subject to changing political, economic and
regulatory influences that may affect the procurement practices and operation of
healthcare organizations. Cybear's products are designed to function within the
structure of the healthcare financing and reimbursement system currently being
used in the United States. During the past several years, the healthcare
industry has been subject to an increase in governmental regulation of, among
other things, reimbursement rates.
Proposals to reform the U.S. healthcare system have been and will continue to be
considered by the U.S. Congress. These programs may contain proposals to
increase governmental involvement in healthcare and otherwise change the
operating environment for Cybear's potential customers. Healthcare organizations
may react to these proposals and the uncertainty surrounding such proposals by
curtailing or deferring investments, including those for Cybear's products. On
the other hand, changes in the regulatory environment have in the past increased
and may continue to increase the needs of healthcare organizations for
cost-effective information management and thereby enhance the marketability of
Cybear's products and services. Cybear cannot predict with any certainty what
impact, if any, such proposals or healthcare reforms might have on Cybear's
results of operations, financial condition and business.
Cybear's products and services are not directly subject to governmental
regulations, although the proposed user base is subject to extensive and
frequently changing federal and state laws and regulations. However, with regard
to healthcare issues on the Internet, the recently enacted Health Insurance
Portability and Accountability Act of 1996, mandates the use of standard
transactions, standard identifiers, security and other provisions by the year
2000. It will be necessary for Cybear's platform and for the applications that
it provides to be in compliance with the proposed regulations. Congress is also
likely to consider legislation that would establish uniform, comprehensive
federal rules about an individual's right to access his own or someone else's
medical information. This legislation would likely define what is to be
considered "protected health information" and outline steps to ensure the
confidentiality of this information. The proposed Health Information
Modernization and Security Act would provide for establishing standards and
requirements for the electronic transmission of health information.
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There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. However, laws and regulations may be
adopted in the future that address issues such as online content, user privacy,
pricing and characteristics and quality of products and services. For example,
although it was held unconstitutional, the Communications Decency Act of 1996
prohibited the transmission over the Internet of certain types of information
and content. In addition, several telecommunications carriers are seeking to
have telecommunications over the Internet regulated by the FCC in the same
manner as other telecommunications services. Because the growing popularity and
use of the Internet has burdened the existing telecommunications infrastructure
in many areas, local exchange carriers have petitioned the FCC to regulate ISPs
in a manner similar to long distance telephone carriers and to impose access
fees on the ISPs.
Internet user privacy has become an issue in the United States. Current United
States privacy law consists of a few disparate statutes directed at specific
industries that collect personal data, none of which specifically covers the
collection of personal information online. Cybear cannot guarantee that the
United States will not adopt legislation purporting to protect such privacy. Any
such legislation could affect the way in which Cybear is allowed to conduct its
business, especially those aspects that involve the collection or use of
personal information, and could have a material adverse effect on Cybear's
business, financial condition and operating results. Moreover, it may take years
to determine the extent to which existing laws governing issues such as property
ownership, libel, negligence and personal privacy are applicable to the
Internet.
With regard to copyright infringement liability, Congress recently enacted the
Online Copyright Infringement Liability Limitation Act as part of the Digital
Millennium Copyright Act which limits the copyright liability of ISPs for
certain transmissions through their systems. Through this law, an ISP can avoid
liability for copyright infringement with respect to the ISP's transmitting,
routing, linking, and storing materials through its service if the materials are
transmitted or stored by or at the direction of a person other than the ISP
through an automatic process without selection of the materials by the ISP, the
ISP does not select the recipients of the materials except as an automatic
response to the request of another person, the materials are not accessible by
unanticipated recipients, and the materials are transmitted without modification
of content.
The ISP must not have actual knowledge or information making it apparent that
materials on its system infringe, and must have procedures in place to deal with
allegations of infringement, including a designated person to receive
notifications of claimed infringement, a commitment to remove allegedly
infringing material from the service upon receipt of credible notifications and
notification of the subscriber whose material is removed from the service.
While this law provides some protection, it will not apply in all aspects where
Cybear could face liability for copyright infringement as a result of materials
available on its ISP because Cybear may create or modify certain of these
materials, and therefore be outside of the safe harbor provided by this law.
The tax treatment of the Internet and e-commerce is currently unsettled. A
number of proposals have been made at the federal, state and local level and by
certain foreign governments that could impose taxes on the sale of goods and
services and certain other Internet activities. A recently-passed law places a
temporary moratorium on certain types of taxation on Internet commerce. Cybear
cannot predict the effect of current attempts at taxing or regulating commerce
over the Internet. Any legislation that substantially impairs the growth of
e-commerce could have a material adverse effect on Cybear's business, financial
condition and operating results.
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INTELLECTUAL PROPERTY
Cybear considers its methodologies, computer software and knowledge bases to be
proprietary. Cybear owns all of its applications. Cybear seeks to protect its
proprietary information through nondisclosure agreements with its employees.
Cybear's policy is to have employees enter into nondisclosure agreements
containing provisions prohibiting the disclosure of confidential information to
anyone outside Cybear, requiring disclosure to Cybear of any new ideas,
developments, discoveries or inventions conceived during employment, and
requiring assignment to Cybear of proprietary rights to such matters that are
related to Cybear's business.
Cybear also relies on a combination of trade secrets, copyright and trademark
laws, contractual provisions and technical measures to protect its rights in
various methodologies, systems and products and knowledge bases. Cybear believes
that because of the rapid pace of technological change in the EDI industry,
trade secret and copyright protection are less significant than factors such as
the knowledge, ability, experience and integrity of Cybear's employees, frequent
product enhancements and the timeliness and quality of support services.
Cybear has filed one patent application and several copyright applications
relating to its software technology and has obtained trademark protection for
the name Cybear. There can be no assurance that these or other applications will
result in issued patents or copyrights. Any infringement or misappropriation of
Cybear's intellectual property rights would disadvantage Cybear in its efforts
to retain and attract new customers in a highly competitive market and could
cause Cybear to lose revenues or incur substantial litigation expense.
Although Cybear believes that its products do not infringe on the intellectual
property rights of others, there can be no assurance that such a claim will not
be asserted against Cybear in the future. If asserted, such a claim could cause
Cybear to lose revenues or incur substantial litigation expense.
EMPLOYEES
As of March 15, 1999, Cybear had 65 full-time employees. None of such employees
is a member of a labor union and Cybear considers its relationship with its
employees to be good.
ITEM 2. PROPERTIES
Cybear currently leases 21,648 square feet of space in Boca Raton, Florida
housing its corporate headquarters and network systems. This facility is located
in a high-technology office park and includes a state-of-the-art power and
communications infrastructure that will be adequate for Cybear's needs for the
foreseeable future. The lease provides for annual rent of $270,600, excluding
taxes, insurance, utilities and common area maintenance charges, and has a
five-year term beginning on January 1, 1999, with one five-year renewal option
at market rates. Cybear currently leases approximately 5,725 square feet of
space in Tampa, Florida, for its software development staff, pursuant to two
leases expiring in November 1999, each with a one-year renewal option, at a
current total annual rent of approximately $95,000. Cybear also subleases
approximately 4,000 square feet of office space in Ridgefield Park, New Jersey
housing its business development and marketing activities. This lease is for a
term of five years beginning November 1998, and the rent under this lease is
$10,000 per month plus $417 per month for electrical service. Cybear has
adequate insurance for these premises.
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ITEM 3. LEGAL PROCEEDINGS
On March 18, 1998, Andrx received a letter from counsel for Medix
Resources, Inc. ("Medix") and its subsidiary, Cymedix Lynx Corporation
("Cymedix") alleging the theft and unlawful appropriation by Andrx, Cybear, and
certain directors, officers and employees of Cybear and Andrx of certain
computer medical software and internet medical communications technology
allegedly owned by Cymedix. The letter demanded trebled damages totaling $396.6
million pursuant to the civil theft provisions of Florida law, including
Florida's Racketeer Influenced and Corrupt Organization Act and certain other
provisions of federal and state law. On March 23, 1998, Cybear and Andrx filed a
complaint against Medix and Cymedix in Broward County, Florida for libel and
slander arising from the improper public dissemination of the contents of the
aforesaid demand letter. On June 2, 1998, Medix, on behalf of Cymedix, filed a
complaint against Cybear, Andrx and certain of their directors, officers and
employees in Hillsborough County, Florida making the same allegations as were
reflected in the aforesaid demand letter. On December 22, 1998, the Medix
complaint was provisionally dismissed and transferred to Broward County Florida
by the Hillsborough County Court. In February 1999, this matter was settled,
with all of the parties respectively releasing the others from any liability,
through the payment to Medix of $125,000.
From time to time, Cybear may be involved in litigation relating to
claims arising out of its operations in the normal course of business. Cybear is
not currently a party to any other legal proceeding or aware of any other claim,
the adverse outcome of which, individually or in the aggregate, could reasonably
be expected to have a material adverse effect on Cybear's business, operating
results and financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In a special meeting of shareholders held on November 19, 1998, 1997
Corp. submitted the following matters to the record holders of its 45,000 then
outstanding shares for approval: (1) the merger of Cybear Capital Corp., a
wholly owned subsidiary of 1997 Corp. (the former name of the Company), with and
into Cybear, Inc., a Florida corporation, (2) the subsequent amendment of the
1997 Corp.'s Certificate of Incorporation to increase the number of shares of
the 1997 Corp.'s common stock from 10 million shares to 25 million shares and to
change the Company's name from "1997 Corp." to "Cybear, Inc.," and (3) adoption
of Cybear, Inc.'s Employee Stock Option Plan as the Company's stock option plan.
All of these matters were approved by a majority of the 1997 Corp.'s
shareholders present in person or by proxy and entitled to vote thereon. The
following is a tabulation of votes cast in person at the meeting or by proxy
solicitation:
FOR AGAINST ABSTAINED
--- ------- ---------
Merger 44,640 100 50
Amendment of Certificate
of Incorporation 44,640 100 50
Adoption of Cybear, Inc.
Stock Option Plan 39,640 100 5,050
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
MARKET INFORMATION
Our common stock has been traded on the OTC Bulletin Board under the symbol
"CYBR" since January 28, 1999. High and low bid prices for the common stock
during the period from January 28, 1999 through March 26, 1999 ranged from $3.25
to $25.25 according to information obtained from the OTC Bulletin Board. On
March 26, 1999, the last reported sales price was $23.75 per share. The
quotations are over-the-market quotations and, accordingly, reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions. Because only 269,400 shares are freely tradable, there has
been a limited public market for our common stock and the prices may not reflect
the true value of our common stock.
HOLDERS
At March 22, 1999, there were approximately 28 holders of record of Cybear's
common stock. Cybear believes the number of beneficial owners of its common
stock is approximately 325.
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DIVIDENDS
Cybear has not paid dividends on its common stock and does not intend to pay
dividends for the foreseeable future. Cybear intends to retain any earnings, to
finance the development and expansion of its business.
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ITEM 6. SELECTED FINANCIAL DATA
This section presents selected historical financial data of Cybear. You should
read this selected financial data together with "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations" in this Report as
well as Cybear's Consolidated Financial Statements and related notes contained
in Item 8 of this Report. The selected data in this section is not intended to
replace the Consolidated Financial Statements.
Cybear derived the statement of operations data and balanced sheet data from the
audited consolidated financial statements contained in Item 8 of this Report.
Those financial statements were audited by Arthur Andersen LLP, independent
certified public accountants.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS DATA*:
FOR THE PERIOD FROM CUMULATIVE FROM
FEBRUARY 5, 1997 FEBRUARY 5, 1997
(INCEPTION) TO FOR THE YEAR ENDED (INCEPTION) TO
DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
Revenues $ 95,927 $ -- $ 95,927
Software development expenses $ 945,497 $ 1,621,422 $ 2,566,919
General and administrative expenses $ 680,779 $ 2,264,252 $ 2,945,031
Loss from operations $(1,530,349) $(4,170,571) $(5,700,920)
Net loss $(1,558,569) $(2,481,012) $(4,039,581)
Basic and diluted net loss per share $ (0.12) $ (0.19) $ (0.31)
Basic and diluted weighted average shares
of common stock outstanding 12,768,303 13,030,999 12,906,266
<CAPTION>
BALANCE SHEET DATA:
DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
Working capital deficit $(1,378,412) $(3,235,200)
Total assets $ 395,456 $ 3,331,951
Total liabilities $ 1,410,119 $ 3,799,568
Stockholders' deficit $(1,014,663) $( 467,617)
</TABLE>
*Certain prior year amounts have been reclassified to conform with the
current year presentation.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. CYBEAR'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THOSE SET FORTH IN THIS REPORT AND DETAILED FROM TIME TO TIME IN
CYBEAR'S FILINGS WITH THE COMMISSION. THE FOLLOWING DISCUSSION ALSO SHOULD BE
READ TOGETHER WITH CYBEAR'S CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES
CONTAINED IN ITEM 8 OF THIS REPORT.
INTRODUCTION
Cybear, a Delaware corporation in the development stage, was incorporated on
February 5, 1997. Cybear is an information technology company using the Internet
and Internet-based browser technologies to develop applications designed to
improve communications and increase efficiencies for healthcare providers.
Cybear has focused its efforts on developing its Solutions product line, an
Internet service provider system that provides information and Internet-based
productivity applications to the healthcare community. In March 1999, Cybear
introduced its first Solutions product, SolutionsMD, which addresses the
communications and operational needs of physicians. Cybear's other Solutions
products, derived from SolutionsMD, will provide Internet-based productivity
software applications and communication networks for other constituents of the
healthcare community. From February 5, 1997 (inception) through December 31,
1998, Cybear's principal activities have consisted of developing its products,
establishing its administrative, selling and marketing, network operations and
customer support infrastructure and providing software development services to
Andrx.
RECENT MERGER. On November 20, 1998, Cybear, Inc., a Florida corporation, merged
with 1997 Corp. pursuant to a Merger Agreement and Plan of Reorganization dated
July 15, 1998. 1997 Corp. was a "blank check" company that had a registration
statement on file with the Securities and Exchange Commission to seek a business
combination with an operating entity. Upon consummation of the merger, Cybear,
Inc. became a wholly-owned subsidiary of 1997 Corp. 1997 Corp. changed its name
to Cybear, Inc. and remains the continuing registrant for SEC reporting
purposes. The merger was intended to be a tax-free reorganization for federal
income tax purposes and was treated as a recapitalization of Cybear, Inc. (the
Florida corporation that merged into 1997 Corp.) for accounting and financial
reporting purposes.
The result of the merger was that the holders of Cybear, Inc.'s (the Florida
corporation) common stock own 13,000,000 shares of Cybear's common stock or
approximately 98% of Cybear's common stock and the 1997 Corp.'s original
shareholders own 269,400 shares of Cybear's common stock or approximately 2% of
Cybear's common stock. See Note 1 of the Notes to the Consolidated Financial
Statements.
RELATIONSHIP WITH ANDRX. As of December 31, 1998, Cybear was 95% owned by Andrx
and has been funded primarily through Andrx. In September 1998, Andrx and Cybear
entered into a Credit Agreement with respect to Andrx's funding obligations to
Cybear. The Credit Agreement provides that Andrx will continue to fund Cybear's
operations until Cybear is in a position to raise at least $4,000,000 on its own
(whether through debt or equity) or 12 months from the consummation of the
above-described merger, whichever occurs first, and that Andrx will make at
least $3,000,000 available to Cybear on Cybear's demand. Interest accrues on the
unpaid principal amount from the date of borrowing until the principal amount is
repaid in full, at an
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annual interest rate equal to the prime rate plus 1/2%. Cybear recorded $28,220
in interest expense on the balance due to Andrx for the period from February 5,
1997 (inception) to December 31, 1997 and $210,441 for the year ended December
31, 1998.
Cybear and Andrx have a corporate services agreement whereby Andrx provides
Cybear with various services such as executive management, accounting and
finance, legal, payroll and human resources. For the period from February 5,
1997 (inception) to December 31, 1997 and for the year ended December 31, 1998,
Cybear incurred amounts for these services based upon mutually agreed upon
allocation methods. Management believes that the amounts incurred for these
services approximate fair market value. Costs for such services were $110,000
for the period from February 5, 1997 (inception) to December 31, 1997 and
$120,000 for the year ended December 31, 1998.
Cybear and Andrx have a tax allocation agreement that provides, among other
things, for the allocation of federal income tax liabilities to Cybear at the
approximate amounts that would have been computed as if Cybear and Andrx had
filed separate income tax returns. Cybear recorded a tax benefit of $1,900,000
for the year ended December 31, 1998, reflecting the reimbursement from Andrx
for the utilization of Cybear's tax attributes pursuant to the tax allocation
agreement.
PRODUCTS AND SOURCES OF REVENUE. Cybear introduced SolutionsMD to the healthcare
community in March 1999. With respect to SolutionsMD, Cybear anticipates that
its revenues will initially consist of recurring revenues from product
subscriptions. SolutionsMD is sold to subscribers on an individual monthly
subscription basis with the monthly subscription fee for the basic product
package initially set at $24.95 per user. A premium package with more
applications is expected to be released in the second half of 1999 at a monthly
subscription fee of $34.99. Cybear may consider giving subscription discounts
for paid-in-advance contracts. Subscribers will also be able to purchase
additional services for additional fees. Currently, all subscriptions are on a
month-to-month basis, payable in advance. Advance billings and collections
relating to future product usage will be recorded as deferred revenue and
recognized when revenue is earned. If Cybear is successful in building its
subscriber base, brand recognition and increasing traffic on its web site,
Cybear expects to generate additional revenues through advertising and
sponsorships on its Solutions products.
Advertising revenues will be derived principally from short-term contracts in
which Cybear will guarantee a minimum number of page impressions to be delivered
to subscribers over a specified period of time for a fixed fee. Sponsorship
revenues will be derived principally from contracts that have typically longer
terms than standard advertising contracts and will involve more integration with
Cybear's services such as the placement of logos on the home page or other
sections of Cybear's applications. Revenues on advertising and sponsorship
contracts will be recognized ratably in the period in which the advertisement is
displayed, provided that no significant Cybear obligations remain, at the lesser
of the ratio of impressions delivered over the total guaranteed impressions or
the straight line basis over the term of the contract. To the extent that
minimum guaranteed impressions are not met, Cybear will defer recognition of the
corresponding revenues until the guaranteed impressions are achieved.
With respect to its management applications products, Cybear plans to build a
customer base consisting of physician organizations, pharmacies and hospitals
and anticipates that its primary source of revenues derived from such management
applications products will be in the form of transaction fees. Cybear will
recognize revenue when services are provided.
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Cybear's strategy is to rapidly develop a broad customer base and a source of
revenue by marketing SolutionsMD and its other Solutions products once
introduced, which are intended to provide a one-stop location on the Internet
for the healthcare community to locate relevant news, healthcare-related
information and customizable features unique to each user. Cybear's launched
product, SolutionsMD, will provide a base for the marketing of Cybear's other
Solutions products to the healthcare industry.
Over the next year, Cybear intends to build on its SolutionsMD by introducing
further products such as SolutionsNet, SolutionsRx and SolutionsHosp that are
targeted to other areas of the healthcare community such as pharmacists,
independent practice associations and hospitals. These products will have many
of the same features as SolutionsMD with certain different applications and
services tailored to the target market.
Cybear has incurred net operating losses and negative cash flows from operating
activities since its inception. As of December 31, 1998, CyBear had an
accumulated deficit of $4,039,581. In addition, Cybear intends to continue to
invest heavily in product development and marketing. As a result, Cybear expects
to continue to incur substantial operating losses for the foreseeable future,
and may not achieve or sustain profitability.
In addition, Cybear may offer promotional packages to subscribers at subsidized
prices. These arrangements may require Cybear to incur significant expenses, and
Cybear cannot guarantee that it will generate sufficient revenues to offset
these expenses. Cybear cannot be certain that it can achieve sufficient revenues
in relation to its expenses to ever become profitable. If Cybear does achieve
profitability, it cannot be certain that it can sustain or increase
profitability on a quarterly or annual basis in the future.
If Cybear's revenues fall short of its projections, its business, financial
condition and operating results would be materially adversely affected. Cybear
may also need to raise additional capital through public or private debt or
equity financings to fund the deployment of its Solutions products. However,
Cybear may not be able to raise additional capital on favorable terms or at all.
Cybear's quarterly operating results may fluctuate significantly in the future
as a result of a variety of factors, some of which are outside its control.
These factors include: the number of subscribers to SolutionsMD and their use of
the site, market acceptance of Cybear's products, Cybear's ability to timely
release its connectivity products, advertisers or sponsors on Cybear's web site,
fees Cybear may pay for distribution, service or content agreements and
promotional arrangements or other costs Cybear may incur as it expands its
operations, Cybear's ability to attract and retain personnel with the necessary
strategic, technical and creative skills required to develop and service its
customers, the amount and timing of capital expenditures and other costs
relating to the expansion of Cybear's operations, the introduction of new
products or services by Cybear or its competitors, pricing changes in the
industry, technical difficulties in the use of the Internet or Cybear's web
site, system downtime, undetected software errors, the level of traffic on
Cybear's web site and the level of usage of the Internet generally, future
government regulations that may affect healthcare or the Internet and general
economic conditions.
Due to all of these factors, in some future quarter Cybear's operating results
may fall below market expectations. If this happens, the trading price of
Cybear's common stock would likely decline, perhaps significantly.
As a result of Cybear's limited operating history and the emerging nature of the
products and markets in which it competes, Cybear's historical financial data is
of limited value in planning
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future operating expenses. Accordingly, Cybear's planned expenses are based in
part on its expectations concerning future revenues and are fixed to a large
extent. Cybear expects its expenses to increase significantly in the future as
it continues to incur significant network operations, operations support, sales
and marketing, product development and administrative expenses. Cybear's success
depends on its ability to increase its revenues to offset its expenses. Cybear
cannot guarantee that it will be able to generate sufficient revenues to offset
its expenses or that it will be able to achieve profitability. If its revenues
fall short of its projections, Cybear's business, financial condition and
operating results could be materially and adversely affected.
RESULTS OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 5, 1997 (INCEPTION) TO DECEMBER 31, 1997
COMPARED TO THE YEAR ENDED DECEMBER 31, 1998
Revenues were $95,927 for the period from February 5, 1997 (inception) to
December 31, 1997 and consisted of software development services rendered to
Andrx. Cybear had no revenues for the year ended December 31, 1998 as it is in
the development stage.
Software development costs were $945,497 for the period from February 5, 1997
(inception) to December 31, 1997 compared to $1,621,422 for the year ended
December 31, 1998. Software development costs include outside consultant fees,
payroll, benefits and housing expenses of employees involved in the creation,
design and development of Cybear's products. Also included in the period from
February 5, 1997 (inception) to December 31, 1997, are the costs of providing
software development services to Andrx. The increase in the software development
costs for the year ended December 31, 1998 reflects the progress and expansion
of Cybear's development activities.
General and administrative expenses were $680,779 for the period from February
5, 1997 (inception) to December 31, 1997 compared to $2,264,252 for the year
ended December 31, 1998. General and administrative expenses include costs
incurred in the areas of sales and marketing, network operations and
maintenance, administration, and customer support. The increase in general and
administrative expenses for the year ended December 31, 1998 relates to the
establishment of the administrative, selling and marketing and customer support
infrastructure and the establishment of a network operations center.
In the year ended December 31, 1998, Cybear recorded $159,897 to write off the
unamortized portion of a software license obtained from a third party in 1997.
The software was to be used as a means to handle certain types of electronic
data interchange ("EDI") messages in Cybear's Internet-based management
applications. In the fourth quarter of 1998, new EDI standards were approved for
use in the medical systems community in the U.S. and are now released as open
standards to the development community. Cybear has now adopted these new
standards to be compatible with the industry standards and has integrated them
into its software development process. This has rendered obsolete the software
licensed by Cybear.
In the year ended December 31, 1998, Cybear recorded a settlement charge of
$125,000 in connection with a legal settlement reached with Medix and Cymedix to
settle all previously outstanding legal disputes between the companies.
Interest expense was $28,220 in the period from February 5, 1997 (inception) to
December 31, 1997. Interest expense was $210,441 for the year ended December 31,
1998. Interest expense represents interest on advances from Andrx under the
Credit Agreement between the two companies to fund Cybear's operations. At
December 31, 1998, such net advances including interest
-22-
<PAGE>
amounted to $5,357,179 and bear interest at prime (7.75% at December 31, 1998)
plus 1/2%.
Cybear's taxable results are included in the consolidated income tax return of
Andrx. Cybear's taxable results will be included in the consolidated income tax
return of Andrx as long as Andrx owns at least 80% of the common stock of
Cybear. Cybear and Andrx have a tax allocation agreement that provides, among
other things, for the allocation of federal income tax liabilities to Cybear at
the approximate amounts that would have been computed as if Cybear had filed
separate income tax returns. Cybear recorded a tax benefit of $1,900,000 for the
year ended December 31, 1998 reflecting the reimbursement from Andrx for the
utilization of Cybear's tax attributes pursuant to the tax allocation agreement.
As of December 31, 1998, Cybear has a net operating loss carryforward in the
amount of approximately $800,000 which is available to offset future earnings.
Under the provisions of SFAS No. 109, Cybear has provided a valuation allowance
to reserve against 100% of its deferred tax asset given Cybear's history of net
losses.
The following table sets forth the selected quarterly data for the year ended
December 31, 1998:
<TABLE>
<CAPTION>
FISCAL 1998 QUARTER ENDED
--------------------------------------------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $ -- $ -- $ -- $ --
Operating expenses:
Software development 305,793 449,812 413,721 452,096
General and administrative 224,681 350,771 577,623 1,111,177
Write-off of software license -- -- -- 159,897
Litigation settlement charge -- -- -- 125,000
----------- ----------- ----------- -----------
Total operating expenses 530,474 800,583 991,344 1,848,170
----------- ----------- ----------- -----------
Loss from operations (530,474) (800,583) (991,344) (1,848,170)
Interest expense on due to Andrx Corporation (32,102) (47,547) (65,610) (65,182)
----------- ----------- ----------- -----------
Loss before income taxes (562,576) (848,130) (1,056,954) (1,913,352)
Income tax benefit -- -- -- 1,900,000
----------- ----------- ----------- -----------
Net loss $ (562,576) $ (848,130) $(1,056,954) $ (13,352)
=========== =========== =========== ===========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
From February 5, 1997 (inception) through December 31, 1998, Cybear has incurred
a net loss of $4,039,581 and has been dependent upon funding from Andrx. As of
December 31, 1998, Cybear owed Andrx $2,344,727. As of December 31, 1998, Cybear
had $3,983 in cash and a working capital deficit of $3,235,200.
Net cash used in operating activities for the period from February 5, 1997
(inception) through December 31, 1997 was $1,397,238 compared to $1,386,300 for
the year ended December 31, 1998. Net cash used in operating activities was
primarily attributable to Cybear's loss from operations offset by accounts
payable and accrued liabilities.
-23-
<PAGE>
Net cash used in investing activities for the period from February 5, 1997
(inception) through December 31, 1997 was $400,535 compared to $2,699,123 for
the year ended December 31, 1998. For the period from February 5, 1997
(inception) through December 31, 1997, Cybear invested $240,535 in capital
expenditures consisting mainly of computer hardware and software used in the
development of its products. In addition, Cybear entered into an agreement with
a third party to license the use of the third party's software for an unlimited
period of time. Cybear purchased this license for $160,000. In 1998, Cybear
wrote-off the unamortized portion of this software license as noted above. In
1998, Cybear invested $2,341,123 in capital expenditures consisting mainly of
computer hardware and software used in the establishment of its network
operations center and the development of its products, and leasehold
improvements to the rented space housing its corporate headquarters and network
operations center. Cybear also capitalized $358,000 in software development
costs associated with the development of SolutionsMD.
Net cash provided by financing activities for the period from February 5, 1997
(inception) through December 31, 1997 was $1,798,773 compared to $4,088,406 for
the year ended December 31, 1998. For the period from February 5, 1997
(inception) to December 31, 1997, net cash provided by financing activities
consisted of proceeds from issuance of shares of Cybear's stock and funding from
Andrx. In February 1997, Cybear issued 12,870,000 shares of common stock to
Andrx for an aggregate amount of $500,000 and 130,000 shares of convertible
preferred stock for a promissory note of $30,000. The promissory note was paid
in full and the preferred stock was converted into 130,000 shares of common
stock. In addition, Cybear received advances of $1,268,773 from Andrx to fund
its operations. In 1998, net cash provided by financing activities consisted of
advances from Andrx to fund Cybear's operations and the reimbursement from Andrx
for the utilization of Cybear's tax attributes pursuant to the tax allocation
agreement. The advances bear interest at prime (7.75% at December 31, 1998) plus
1/2%. On November 20, 1998, upon consummation of the merger with 1997 Corp., the
then outstanding "Due to Andrx" of $3,012,452 was converted into additional
paid-in capital to Cybear.
In September 1998, Andrx and Cybear entered into a Credit Agreement with respect
to Andrx's funding obligations to Cybear. The Credit Agreement provides that
Andrx will continue to fund Cybear's operations until Cybear is in a position to
raise at least $4,000,000 on its own (whether through debt or equity) or 12
months from the consummation of the above-described merger, whichever occurs
first, and that Andrx will make at least $3,000,000 available to Cybear on
Cybear's demand. Interest accrues on the unpaid principal amount from the date
of borrowing until the principal amount is repaid in full, at an annual interest
rate equal to the prime rate plus 1/2%.
In the year ended December 31, 1998, Cybear recorded a settlement charge of
$125,000 in connection with a legal settlement reached with Medix and Cymedix to
resolve all previously outstanding legal disputes between the companies. The
disputes involved allegations of misappropriation by Cybear, Andrx and certain
of their respective officers, directors and employees of medical software and
Internet communications technology allegedly owned by Cymedix, and Cybear's
claims for defamation against Cymedix and Medix relating to such allegations.
From time to time, Cybear may be involved in litigation relating to claims
arising out of its operations in the normal course of business. Cybear is not
currently a party to any other legal proceeding or aware of any other claim, the
adverse outcome of which, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on Cybear's business, operating
results and financial condition.
-24-
<PAGE>
Cybear anticipates that its cash requirements will continue to increase as it
continues to expend substantial resources to build its infrastructure, develop
its products and establish its sales and marketing, network operations, customer
support and administrative organizations. Andrx is committed to the required
funding of Cybear's operations until Cybear is able to raise capital from third
parties or the next twelve months. From February 5, 1997 (inception) through
December 31, 1998, Cybear has been dependent upon funding from Andrx. As of
December 31, 1998, Cybear owed Andrx $2,344,727. Cybear currently anticipates
that its available cash resources and available funding from Andrx will be
sufficient to meet its presently anticipated working capital and capital
expenditure requirements for at least the next 12 months. Based on Andrx's most
recent financial statements, Cybear believes that Andrx currently has the
resources to fund Cybear's cash requirements for at least the next 12 months.
In March 1999, Cybear announced that it intends to file a registration statement
for a public offering of its common stock. Cybear expects to complete such
offering during the second quarter of 1999. No assurance can be given that the
registration statement will be filed or that, if filed, the offering will be
consummated.
YEAR 2000
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Cybear's computer
equipment and software and devices with embedded technology that are
time-sensitive may recognize a date using "00" as the Year 1900 rather than the
Year 2000. This could result in a system failure or a miscalculation, causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Based upon its identification and assessment efforts to date, Cybear believes
that certain of the computer equipment and software it currently uses will
require replacement or modification. In the ordinary course of replacing
computer equipment and software, Cybear will attempt to obtain replacements that
are Year 2000 compliant. Utilizing both internal and external resources to
identify and assess needed Year 2000 remediation, Cybear began its Year 2000
identification, assessment, remediation and testing efforts in the fourth
quarter 1998 and expects to complete such activities by third quarter 1999 and
that such efforts will be completed prior to any currently anticipated impact on
its computer equipment and software. Cybear estimates that as of March 15, 1999,
it had completed approximately 40% of the initiatives that it believes will be
necessary to fully address potential Year 2000 issues relating to its computer
equipment and software. The projects comprising the remaining 60% of the
initiatives are in process and expected to be completed on or about the third
quarter 1999.
Cybear has also mailed letters to its significant vendors and service providers
to determine the extent to which interfaces with such entities are vulnerable to
Year 2000 issues and whether the products and services purchased from or by such
entities are Year 2000 compliant. As of March 15, 1999, Cybear had received
responses on Internet documentation from approximately 92% of such third
parties, and 93% of the companies that have responded have provided written
assurance that they are Year 2000 compliant, with the remaining 7% expecting to
address all their significant Year 2000 issues on a timely basis. A follow-up
mailing to significant vendors and service providers that did not initially
respond, or whose responses were deemed unsatisfactory by Cybear, was conducted
in March 1999.
Cybear believes that the cost of its Year 2000 identification, assessment,
remediation and testing efforts, as well as currently anticipated costs to be
incurred by Cybear with respect to Year 2000 issues of third parties, will not
exceed $500,000 and will be funded from current existing financial resources. As
of the date of this prospectus, Cybear had incurred costs of approximately
$100,000
-25-
<PAGE>
related to its Year 2000 identification, assessment, remediation and testing
efforts. These costs were for planning, analysis, repair or replacement of
existing software, upgrades of existing software, or evaluation of information
received from significant vendors, service providers, or customers. Other
non-Year 2000 efforts have not been and are not expected to be materially
delayed.
Cybear has not yet completed comprehensive analysis of the operational problems
and costs (including loss of revenues) that would be reasonably likely to result
from the failure by Cybear and certain third parties to complete efforts
necessary to achieve Year 2000 compliance on a timely basis. A contingency plan
for dealing with the most reasonably likely worst case scenario is under
development and should be completed by December 31, 1999.
The costs of Cybear's Year 2000 identification, assessment, remediation and
testing efforts and the dates on which Cybear believes it will complete such
efforts are based upon management's best estimates, which were derived using
numerous assumptions regarding future events, including the continued
availability of certain resources, third-party remediation plans, and other
factors. Cybear cannot assure you that these estimates will prove to be
accurate, and actual results could differ materially from those currently
anticipated. Specific factors that could cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in Year 2000 issues, the ability to identify, assess, remediate and test all
relevant computer codes and embedded technology and other similar uncertainties.
In addition, variability of definitions of "compliance with Year 2000" and the
variety of different products and services and combinations thereof sold by
Cybear may lead to claims relating to Year 2000 compliance whose impact on
Cybear is not currently estimable. Cybear cannot provide assurance that the
aggregate cost of defending and resolving such claims, if any, will not
materially adversely affect Cybear's results of operations.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. Cybear has adopted the provisions of SFAS No. 130
beginning January 1, 1998, as required. Cybear's comprehensive losses and net
losses are the same for all periods presented.
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," establishes standards for reporting information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. Cybear has adopted
the provisions of SFAS No. 131 for the year ending December 31, 1998 as
required. Currently, Cybear does not believe it has any separately reportable
business segments or other disclosure information required by the Statement.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related
-26-
<PAGE>
results on the hedged item in the income statement, and requires that a company
formally document, designate and assess the effectiveness of transactions that
receive hedge accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. A
company may also implement the provision of SFAS No. 133 as of the beginning of
any fiscal quarter June 16, 1998 and thereafter. SFAS No. 133 cannot be applied
retroactively. SFAS No. 133 must be applied to (a) derivative instruments and
(b) certain derivative instruments embedded in hybrid contracts that were
issued, acquired, or substantively modified after December 31, 1997 (and, at
Cybear's election, before January 1, 1998).
Cybear has not yet quantified the impact of adopting SFAS No. 133 on its
financial statements and has not determined the timing or method of its adoption
of SFAS No. 133.
-27-
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.........................F-2
CONSOLIDATED BALANCE SHEETS................................................F-3
CONSOLIDATED STATEMENTS OF OPERATIONS......................................F-4
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT...........................F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS......................................F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.................................F-7
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Cybear, Inc.:
We have audited the accompanying consolidated balance sheets of Cybear, Inc. (a
Delaware corporation in the development stage) and subsidiary, a 95% owned
subsidiary of Andrx Corporation and subsidiaries, as of December 31, 1997 and
1998, and the related consolidated statements of operations, shareholders'
deficit and cash flows for the period from February 5, 1997 (inception) to
December 31, 1997, for the year ended December 31, 1998 and for the cumulative
period from February 5, 1997 (inception) to December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cybear, Inc. and subsidiary as
of December 31, 1997 and 1998, and the results of their operations and their
cash flows for the period from February 5, 1997 (inception) to December 31,
1997, for the year ended December 31, 1998 and for the cumulative period from
February 5, 1997 (inception) to December 31, 1998, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
February 12, 1999.
F-2
<PAGE>
<TABLE>
<CAPTION>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
----------------------------
1997 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,000 $ 3,983
Receivable from Blue Lake Ltd. -- 366,000
Prepaid expenses 30,707 194,385
----------- -----------
Total current assets 31,707 564,368
Property and equipment, net 189,065 2,406,629
Software development costs -- 358,000
Software license 160,000 --
Other assets 14,684 2,954
----------- -----------
Total assets $ 395,456 $ 3,331,951
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 64,813 $ 1,153,059
Accrued liabilities 76,533 301,782
Due to Andrx Corporation 1,268,773 2,344,727
----------- -----------
Total current liabilities 1,410,119 3,799,568
----------- -----------
Commitments and contingencies (Notes 7 and 11)
Shareholders' deficit:
Convertible preferred stock, $.01 par value;
2,000,000 shares authorized, none issued and
outstanding at December 31, 1997 and 1998 -- --
Common stock, $.001 par value; 25,000,000 shares
authorized, 13,000,000 and 13,269,400 shares
issued and outstanding at December 31, 1997 and
1998, respectively 13,000 13,269
Additional paid-in-capital 530,906 3,558,695
Deficit accumulated during development stage (1,558,569) (4,039,581)
----------- -----------
Total shareholders' deficit (1,014,663) (467,617)
----------- -----------
Total liabilities and shareholders' deficit $ 395,456 $ 3,331,951
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
F-3
<PAGE>
<TABLE>
<CAPTION>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM CUMULATIVE FROM
FEBRUARY 5, 1997 FEBRUARY 5, 1997
(INCEPTION) TO FOR THE YEAR ENDED (INCEPTION) TO
DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1998
-------------------- ------------------ -----------------
<S> <C> <C> <C>
Revenues:
Software development services to Andrx Corporation $ 95,927 $ - $ 95,927
------------ ------------ ------------
Operating expenses:
Software development 945,497 1,621,422 2,566,919
General and administrative 680,779 2,264,252 2,945,031
Write-off of software license -- 159,897 159,897
Litigation settlement charge -- 125,000 125,000
------------ ------------ ------------
Total operating expenses 1,626,276 4,170,571 5,796,847
------------ ------------ ------------
Loss from operations (1,530,349) (4,170,571) (5,700,920)
Interest expense on due to Andrx Corporation (28,220) (210,441) (238,661)
------------ ------------ ------------
Loss before income taxes (1,558,569) (4,381,012) (5,939,581)
Income tax benefit -- 1,900,000 1,900,000
------------ ------------ ------------
Net loss $ (1,558,569) $ (2,481,012) $ (4,039,581)
============ ============ ============
Basic and diluted net loss per share $ (0.12) $ (0.19) $ (0.31)
============ ============ ============
Basic and diluted weighted average shares of common
stock outstanding 12,768,303 13,030,999 12,906,266
============ ============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
DEFICIT
CONVERTIBLE ACCUMULATED
PREFERRED STOCK COMMON STOCK ADDITIONAL DURING TOTAL
---------------------- ------------------------- PAID-IN DEVELOPMENT SHAREHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL STAGE DEFICIT
--------- --------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
FEBRUARY 5, 1997 (INCEPTION) -- $ -- -- $ -- $ -- $ -- $ --
Issuance of shares of
common stock to Andrx
Corporation as promoter -- -- 12,870,000 12,870 487,130 -- 500,000
Issuance of shares of
convertible preferred stock 130,000 130 -- -- 29,870 -- 30,000
Shares of common stock
issued in connection
with conversion of shares
of convertible preferred stock (130,000) (130) 130,000 130 -- -- --
Options granted to consultants -- -- -- -- 13,906 -- 13,906
Net loss -- -- -- -- -- (1,558,569) (1,558,569)
--------- --------- ----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1997 -- -- 13,000,000 13,000 530,906 (1,558,569) (1,014,663)
Shares of common stock
issued in connection with
merger with 1997 Corp. -- -- 269,400 269 (269) -- --
Conversion of due to Andrx
Corporation upon
consummation of merger
with 1997 Corp. -- -- -- -- 3,012,452 -- 3,012,452
Options granted to consultants -- -- -- -- 15,606 -- 15,606
Net loss -- -- -- -- -- (2,481,012) (2,481,012)
--------- --------- ----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1998 -- $ -- 13,269,400 $ 13,269 $ 3,558,695 $(4,039,581) $ (467,617)
========= ========= =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM CUMULATIVE FROM
FEBRUARY 5, 1997 FEBRUARY 5, 1997
(INCEPTION) TO FOR THE YEAR ENDED (INCEPTION) TO
DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1998
------------------- ------------------ ------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(1,558,569) $(2,481,012) $(4,039,581)
Adjustments to reconcile net loss to net cash used in
operating activities -
Write-off of software license -- 159,897 159,897
Provision for litigation settlement -- 125,000 125,000
Depreciation and amortization 51,470 123,662 175,132
Non cash charges for options granted to consultants 13,906 15,606 29,512
Changes in operating assets and liabilities:
Receivable from Blue Lake Ltd. -- (366,000) (366,000)
Prepaid expenses (30,707) (163,678) (194,385)
Other assets (14,684) 11,730 (2,954)
Accounts payable 64,813 1,088,246 1,153,059
Accrued liabilities 76,533 100,249 176,782
----------- ----------- -----------
Net cash used in operating activities (1,397,238) (1,386,300) (2,783,538)
----------- ----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (240,535) (2,341,123) (2,581,658)
Software development costs -- (358,000) (358,000)
Purchase of software license (160,000) -- (160,000)
----------- ----------- -----------
Net cash used in investing activities (400,535) (2,699,123) (3,099,658)
----------- ----------- -----------
Cash flows from financing activities:
Advances from Andrx Corporation 1,268,773 5,988,406 7,257,179
Payments on due to Andrx Corporation -- (1,900,000) (1,900,000)
Proceeds from issuance of shares of common stock 500,000 -- 500,000
Proceeds from promissory note issued for purchase
of shares of convertible preferred stock 30,000 -- 30,000
----------- ----------- -----------
Net cash provided by financing activities 1,798,773 4,088,406 5,887,179
----------- ----------- -----------
Net increase in cash 1,000 2,983 3,983
Cash, beginning of period -- 1,000 --
----------- ----------- -----------
Cash, end of period $ 1,000 $ 3,983 $ 3,983
=========== =========== ===========
Supplemental disclosure of non-cash activities:
Conversion of due to Andrx into additional paid-in capital $ -- $ 3,012,452 $ 3,012,452
=========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-6
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
(1) GENERAL
Cybear, Inc. ("Cybear" or the "Company"), a Delaware corporation in the
development stage, was incorporated on February 5, 1997. As of December 31,
1998, Cybear, Inc. was a 95% owned subsidiary of Andrx Corporation ("Andrx").
Cybear is an information technology company using the Internet and
Internet-based browser technologies to develop applications designed to improve
communications and increase efficiencies within the healthcare community. The
Company has focused its efforts on developing SolutionsMD, an Internet service
provider system ("ISP") that will provide information and Internet-based
applications to the healthcare community. The Company is also developing a suite
of Internet-based management applications and communication networks
for the healthcare community. From February 5, 1997 (inception) through December
31, 1998, the Company's principal activities have consisted of developing its
products, establishing its administrative, selling and marketing, customer
support and network operations infrastructure and providing software development
services to Andrx.
RECAPITALIZATION
On November 20, 1998, Cybear, Inc. ("Cybear, Inc. (FL)"), a Florida corporation,
merged with 1997 Corp. (the "Merger") pursuant to a Merger Agreement and Plan of
Reorganization, dated July 15, 1998 ("the Merger Agreement"). 1997 Corp. was a
"blank check" company that had a registration statement on file with the
Securities and Exchange Commission ("SEC") to seek a business combination with
an operating entity. Upon consummation of the Merger, Cybear, Inc. (FL) became a
wholly owned subsidiary of 1997 Corp. and 1997 Corp. changed its name to Cybear,
Inc. 1997 Corp. (now called Cybear, Inc.) remains the continuing registrant for
SEC reporting purposes. The Merger was intended to be a tax-free reorganization
for federal income tax purposes and was treated as a recapitalization of Cybear,
Inc. (FL) for accounting and financial reporting purposes.
Under the terms of the Merger Agreement, all outstanding Cybear, Inc. (FL)
common shares were cancelled and were converted by virtue of the Merger into a
total of 13,000,000 1997 Corp. common shares. All outstanding employee stock
options of Cybear, Inc. (FL) were assumed by 1997 Corp. There was no change in
the ownership of the 270,000 registered shares of 1997 Corp. common stock
outstanding immediately prior to the Merger (after giving effect to a
five-for-one common stock dividend payable on each of the 45,000 outstanding
shares of 1997 Corp.). As required by Rule 419 promulgated pursuant to the
Securities Act of 1933, as amended, stockholders of 1997 Corp. were required to
reconfirm their purchase of 1997 Corp.'s common shares and each stockholder who
rejected or failed to approve the Merger Agreement was paid his or her pro rata
share of the funds deposited in the Rule 419 escrow account at Continental Stock
Transfer and Trust Company, or approximately $5.13 per share. Funds were
returned for a total of 100 shares.
The result of the Merger was that the holders of Cybear Inc. (FL)'s common stock
own 13,000,000 shares of Cybear, Inc.'s common stock or approximately 98% of
Cybear, Inc.'s common stock and the 1997 Corp.'s original shareholders own
269,400 shares of Cybear, Inc.'s common stock or approximately 2% of Cybear,
Inc.'s common stock.
F-7
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
MANAGEMENT'S PLANS
From February 5, 1997 (inception) through December 31, 1998, the Company has
incurred a net loss of $4,039,581 and has been dependent upon funding from
Andrx. Management anticipates incurring additional net losses in the near term,
as the focus of the Company's business is to develop and market its products. In
September 1998, Andrx and Cybear entered into a credit agreement with respect to
Andrx's funding obligations to Cybear. The credit agreement provides that Andrx
will continue to fund Cybear's operations until Cybear is in a position to raise
at least $4,000,000 on its own (whether through debt or equity) or 12 months
from the consummation of the Merger, whichever date is earlier and that Andrx
will make at least $3,000,000 available to Cybear on Cybear's demand. Interest
will accrue on the unpaid principal amount from the date of borrowing until the
principal amount is repaid in full, at an annual interest rate equal to the
prime rate plus 1/2% (see Note 8).
Cybear is planning to introduce SolutionsMD to the healthcare community in the
first quarter of 1999. The Company has not yet completed third-party testing of
its Internet-based management applications or the development or testing of
certain system enhancements. The Company will be required to commit considerable
time, effort and resources to finalize such development and adapt its software
to satisfy specific requirements of potential customers. There can be no
assurance that Cybear will successfully develop its products, achieve or sustain
profitability or positive cash flow from its operations.
The likelihood of the success of the Company must be considered in light of the
problems, expenses, complications and delays frequently encountered in
connection with the development of new business ventures. Cybear's business
risks include its limited operating history, its history of losses, the emerging
and competitive nature of its markets, the greater financial, marketing and
other resources of its competitors, the rapid technology change in its industry,
changes in government regulations, dependence on network infrastructure,
telecommunications carriers and content providers, dependence on a limited
number of key personnel, dependence on continued growth in the use of the
Internet and its adoption as an advertising medium, security risks involved with
Internet commerce and market acceptance and profitability of its products.
F-8
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Cybear, Inc. and its subsidiary. All significant intercompany transactions and
balances have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
PROPERTY AND EQUIPMENT, NET
Property and equipment is recorded at cost less accumulated depreciation or
amortization. Depreciation or amortization is provided using the straight-line
method over the following estimated useful lives:
Computer hardware and software 3 years
Furniture and fixtures 5 years
Leasehold improvements Lesser of useful life or term of lease
Major renewals and betterments are capitalized, while maintenance and repairs
are expensed as incurred.
SOFTWARE LICENSE, NET
In 1997, Cybear entered into an agreement with a third party to license the use
of their software as a means to handle certain types of electronic data
interchanges ("EDI") messages in the Company's Internet-based management
applications. As of December 31, 1997, the Company had capitalized $160,000
under this agreement. In the fourth quarter of 1998, new EDI standards were
approved for use in the medical systems community in the U.S. and are now
released as open standards to the development community. The Company has now
adopted these new standards to be compatible with the industry standards and has
integrated them into its software development process. This has rendered
obsolete the software licensed by the Company. Accordingly, the Company has
written off its software license in its consolidated statement of operations for
the year ended December 31, 1998.
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The Company utilizes the provisions of Financial Accounting Standards Board
("FASB") Statement on Financial Accounting Standards ("SFAS") No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of" which requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstance indicate
F-9
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
that the carrying amount of an asset may not be recoverable. To determine a
loss, if any, to be recognized, the book value of the asset would be compared to
the market value or expected future cash flow value. Except for the write-off of
its software license as noted above, such provisions had no impact on the
Company's financial position or results of operations as of or for the period
from February 5, 1997 (inception) to December 31, 1997 and for the year ended
December 31, 1998.
REVENUE RECOGNITION
Software development service revenues which to date have been rendered to Andrx
are recognized at the time the services are rendered.
SOFTWARE DEVELOPMENT COSTS
SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased
or Otherwise Marketed", requires capitalization of certain software development
costs subsequent to the establishment of technological feasibility. Based on the
Company's product development process, technological feasibility is established
upon completion of a working model. Once technological feasibility has been
established, such costs are capitalized until the software has completed beta
testing and is generally available. Software development costs are amortized, on
a product-by-product basis, using the straight-line method over a maximum of
five years or the expected life of the product, whichever is less. As of
December 31, 1998, the Company has achieved technical feasibility for
SolutionsMD but not for its Internet-based management applications. Accordingly,
the capitalized software development costs represent only costs associated with
the development of the Company's SolutionsMD product. Software development costs
for SolutionsMD were incurred with third-party vendors. The Company did not
record any amortization of its capitalized software development costs in the
year ended December 31, 1998 as it had not yet released SolutionsMD.
START-UP COSTS
All costs to organize the Company and start up its operations are expensed as
incurred.
STOCK-BASED COMPENSATION
Under the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation",
companies can either measure the compensation cost of equity instruments issued
to employees under employee compensation plans using a fair value based method,
or can continue to recognize compensation cost using the intrinsic value method
under the provisions of Accounting Principles Board Opinion ("APB") No. 25.
However, if the provisions of APB No. 25 are applied, pro forma disclosures of
net income or loss and earnings or loss per share must be presented in the
financial statements as if the fair value method had been applied. For the
period from February 5, 1997 (inception) to December 31, 1997 and for the year
ended December 31, 1998, the Company recognized compensation costs for options
granted to non-employees under the provisions of APB No. 25, and the Company has
provided the expanded disclosure required by SFAS No. 123 (see Note 10).
F-10
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
INCOME TAXES
The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for
Income Taxes". The provisions of SFAS No. 109 require, among other things,
recognition of future tax benefits measured at enacted rates attributable to the
deductible temporary differences between the financial reporting and income tax
bases of assets and liabilities and to tax net operating loss carryforwards to
the extent that the realization of said benefits is "more likely than not". The
Company's taxable results will be included in the consolidated income tax return
of Andrx as long as Andrx owns at least 80% of the common stock of the Company
(see Note 6).
NET LOSS PER SHARE
SFAS No. 128, "Earnings Per Share". SFAS No. 128 specifies the computation,
presentation and disclosure requirements for earnings or loss per share. The
provisions of SFAS No. 128 are effective for financial statements for periods
ended after December 15, 1997. The Company has adopted the provisions of SFAS
No. 128.
For the period from February 5, 1997 (inception) to December 31, 1997, and for
the year ended December 31, 1998, basic and diluted net loss per share is based
on the weighted average number of shares of common stock outstanding. Since the
effect of common stock equivalents was antidilutive, all such equivalents were
excluded in diluted loss per share.
FAIR VALUE OF FINANCIAL INSTRUMENTS
As of December 31, 1997 and 1998, the carrying amounts of the receivable from
Blue Lake Ltd., the accounts payable, accrued liabilities and the due to Andrx
approximate fair value. In accordance with SFAS No. 107, "Disclosures about fair
value of financial instruments", the fair value of the due to Andrx was
estimated based on future cash flows discounted at current interest rates
available to the Company for instruments with similar characteristics.
COMPREHENSIVE INCOME
SFAS No. 130, "Reporting Comprehensive Income", requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The Company has adopted the
provisions of SFAS No. 130 as of January 1, 1998. The adoption of the provisions
of this standard had no impact on the Company's existing reporting disclosures.
Cybear's comprehensive losses and net losses are the same for all periods
presented.
BUSINESS SEGMENTS
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", establishes standards for reporting information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. The Company has
adopted the provisions of SFAS No. 131 in the year ended December 31, 1998, as
required. Currently, the Company does not believe it has any separately
reportable business segments or other disclosure information required by the
Statement.
F-11
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
DERIVATIVES
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities",
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. A
company may also implement the provision of SFAS No. 133 as of the beginning of
any fiscal quarter after issuance. SFAS No. 133 cannot be applied retroactively.
SFAS No. 133 must be applied to (a) derivative instruments and (b) certain
derivative instruments embedded in hybrid contracts that were issued, acquired,
or substantively modified after December 31, 1997 (and, at the Company's
election, before January 1, 1998). The Company has not yet quantified the
impacts of adopting SFAS No. 133 on its financial statements and has not
determined the timing of or method of adoption of SFAS No. 133.
RECLASSIFICATION
Certain prior year amounts have been reclassified to conform to the current year
presentation.
(3) RECEIVABLE FROM BLUE LAKE LTD.
In September 1998, the Company entered into a lease agreement with Blue Lake
Ltd. ("Blue Lake") to house its corporate headquarters and network systems (see
Note 7). As part of the lease agreement, Blue Lake has agreed to pay the Company
$406,667 ("Landlord Contribution") of the total costs incurred by the Company to
improve the rented space prior to its occupancy. Payment of the Landlord
Contribution is due 30 days from the date of receipt by Blue Lake of copy of an
invoice and other support documents from the contractor. As of December 31,
1998, 90% of the leasehold improvements were completed and invoiced, and as such
the Company recorded a receivable of $366,000 from Blue Lake. The Company has
collected the receivable in 1999.
(4) PROPERTY AND EQUIPMENT, NET
Property and equipment is summarized as follows:
DECEMBER 31,
---------------------------
1997 1998
----------- -----------
Computer hardware and software $ 164,410 $ 1,806,831
Furniture and fixtures 73,408 241,911
Leasehold improvements 2,717 532,916
----------- -----------
240,535 2,581,658
Less: accumulated depreciation and amortization (51,470) (175,029)
----------- -----------
Property and equipment, net $ 189,065 $ 2,406,629
=========== ===========
F-12
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
(5) ACCRUED LIABILITIES
Accrued liabilities consist of the following:
DECEMBER 31,
---------------------
1998 1997
-------- --------
Payroll and employee benefits $ 76,533 $116,782
Litigation settlement charge -- 125,000
Other -- 60,000
-------- --------
$ 76,533 $301,782
======== ========
(6) INCOME TAXES
The components of the income tax benefit are summarized as follows:
DECEMBER 31,
-----------------------
1998 1997
-------- ----------
Current $ -- $1,900,000
Deferred -- --
-------- ----------
Total $ -- $1,900,000
======== ==========
The Company and Andrx have a tax allocation agreement that provides, among other
things, for the allocation of federal income tax liabilities to the Company at
the approximate amounts which would have been computed as if the Company had
filed separate income tax returns. The tax benefit reflects the reimbursement
from Andrx for the utilization of Cybear's tax attributes pursuant to the tax
allocation agreement.
Deferred income taxes represent the tax effect of the difference between the
financial reporting and tax bases of assets and liabilities. The major
components of deferred tax assets and liabilities are as follows:
DECEMBER 31,
------------------------
1997 1998
--------- ---------
Net operating loss carryforward $ 576,500 $ 324,989
Tax over book depreciation (2,597) (7,525)
Operating reserves -- 24,704
Software license (50,180) --
--------- ---------
523,723 342,168
Valuation allowance (523,723) (342,168)
--------- ---------
Net $ -- $ --
========= =========
As of December 31, 1998, the Company has a net operating loss carryforward in
the amount of approximately $800,000 which is available to offset future
earnings. Under the provisions of SFAS No. 109, the Company has provided a
valuation allowance to reserve against 100% of its net deferred tax assets given
the Company's history of net losses. Net operating loss carryforwards are
subject to review and possible adjustments by the Internal Revenue Service and
may be limited in the event of certain cumulative changes in the ownership
interest of
F-13
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
significant shareholders over a three-year period in excess of 50%.
(7) COMMITMENTS
EMPLOYMENT CONTRACTS
The Company has entered into employment contracts with certain officers, the
terms of which expire at various dates through September 2003. Such agreements
provide for annual base salary, stock options, severance packages and in some
instances, signing and/or incentive bonuses or deferred compensation.
Future commitments under employment agreements at December 31, 1998 are as
follows:
1999 $ 608,000
2000 545,000
2001 450,000
2002 450,000
2003 313,000
----------
$2,366,000
==========
In addition, as part of the Company's President's contract, effective September
15, 1998, Andrx has issued to the President 20,000 options to purchase common
stock of Andrx, at its then market price, vesting in four annual increments of
5,000 shares on the anniversary of the date of grant and for payment of $50,000,
a warrant to purchase 650,000 shares of common stock of the Company exercisable
at its then market price of $3.00 per share, beginning on April 30, 1999 (the
"Warrant Exercise Date"). The warrant expires seven years after the Warrant
Exercise Date subject to contractual obligations with Andrx. As such
transactions were effected at market prices, there is no impact on the Company's
accompanying consolidated financial statements.
PRODUCT LIABILITY
Software products such as those to be offered by the Company frequently contain
undetected errors or failures when first introduced or as new versions are
released. Testing of the Company's products is particularly challenging because
it is difficult to simulate the wide variety of computing environments in which
the Company's potential customers may deploy these products. There can be no
assurance that defects, errors or difficulties will not cause delays in product
introductions, result in increased costs and diversion of development resources,
require design modifications or decrease market acceptance or customer
satisfaction with the Company's products. In addition, there can be no assurance
that, despite testing by the Company and by potential customers, errors will not
be found after commencement of commercial introduction, resulting in loss of or
delay in market acceptance, which could have a material adverse effect upon the
Company's business, operating results and financial condition.
OPERATING LEASES
In September 1998, Cybear entered into a lease with Blue Lake Ltd. (see Note 3)
for 18,400 square feet of space in Boca Raton, Florida to house its corporate
headquarters and network systems. In January 1999, the leased premises were
enlarged to 21,648 square feet. The lease provides for an annual base rent of
$271,000 excluding taxes, insurance, utilities and common area maintenance
charges and has a five-year term commencing on January 1, 1999 with one
five-year renewal option at market rates.
In November, 1998, the Company entered into a sublease with Strategy Business
and Technology Solutions, LLC, a company owned by the chairman of the Company
(see Note 8), for 4,000 square feet of office space in Ridgefield Park, New
Jersey to house its business development and sales activities. The lease
provides for $120,000 and $5,000 in annual base rent and electricity,
respectively, and has a five-year term commencing on November 1, 1998. In
addition, the Company agreed to pay a security deposit of $20,000. For the year
ended December 31, 1998, the Company has recorded an expense of $20,834 relative
to this lease which had not been paid as of December 31, 1998.
In October 1998, the Company entered into a three year lease with Bell South
Telecommunications, Inc. to provide business Internet service to the Company.
This lease is effective January 1999 and provides for $159,000 in annual
recurring charges.
F-14
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
In addition, the Company leases various office equipment and telephone lines
under operating leases. The following schedule summarizes future minimum lease
payments required under non-cancelable operating leases with terms greater than
one year, as of December 31, 1998:
1999 $ 994,000
2000 1,004,000
2001 979,000
2002 566,000
2003 537,000
------------
$ 4,080,000
============
Rent expense amounted to $130,000 for the period from February 5, 1997
(inception) to December 31, 1997 and $145,000 for the year ended December 31,
1998.
PREFERRED VENDOR AGREEMENTS
In 1998, the Company entered into a three-year strategic alliance with The IPA
Association of America ("TIPAAA"), the nation's leading trade association
focused on physician independent practice associations whereby Cybear will
become the preferred ISP and Internet business applications provider for TIPAAA.
In consideration of its preferred vendor status, Cybear agreed to make to TIPAAA
three $100,000 annual payments and to grant TIPAAA an option to purchase 100,000
shares of its common stock . The first 30,000 of such options have an exercise
price of $3.00 per share and have a seven (7) year term and shall vest at the
rate of one share for every two TIPAAA physicians that become and remain a
Cybear user for a minimum of three months. In the event, that all such options
are not vested by the expiration date of the agreement, such options shall vest
in 2003. After such 30,000 have vested, the remaining 70,000 options will vest
at the rate of one share for every two TIPAAA physicians that become and remain
a Cybear user for a minimum of three months during the term of this agreement.
These 70,000 options will have an exercise price equal to the market price of
Cybear common stock on the date such options vest and shall have a five (5) year
term from the date of grant. The Company will record charges to earnings for the
options that vest. In the year ended December 31, 1998, the Company has paid and
recorded the annual fee of $100,000 to prepaid expenses. The Company will start
amortizing the annual fees over the term of its contract with TIPAAA when its
SolutionsMD product is launched.
In February 1999, the Company entered into a three-year agreement with PhyMatrix
Corporation ("PhyMatrix") whereby Cybear will receive preferential access to all
PhyMatrix physicians to use Cybear's ISP and applications. PhyMatrix will use
Cybear's applications as the means of communicating with its physician group
practices and independent practice associations ("PhyMatrix Business Partners")
and PhyMatrix will market Cybear's ISP and its applications for business
development purposes. In consideration of its preferred vendor status, Cybear
agreed to, among other things, to consult with and provide advice to PhyMatrix
concerning hardware and software that may be required by PhyMatrix to
electronically communicate with the PhyMatrix Business Partners, to create, when
commercially practicable, applications and efficiencies that are of interest to
PhyMatrix, to advance to PhyMatrix the funds for hook-ups or dial-up modems that
Cybear believes to be reasonably necessary to run Cybear's applications and
establish electronic communications between the PhyMatrix Business Partners, and
after recouping any advance noted above, pay to PhyMatrix, on a quarterly basis,
50% of the net revenues that Cybear derives from PhyMatrix directly or from the
PhyMatrix Business Partners
F-15
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
or from any business developed through PhyMatrix. Cybear's net revenues are
defined as the total amount collected by Cybear from PhyMatrix or PhyMatrix
Business Partners, before interest and taxes attributable thereto.
LICENSE AGREEMENT
In October 1998, the Company entered into a three-year license agreement
effective January 1999, with Medimedia USA, Inc. ("MMUSA") whereby MMUSA granted
a non exclusive license to use the InfoScan formulary database ("Licensed
Product") and related documentation for the lookup of drug formulary statuses by
the Company and its customers. The Company is permitted to use the Licensed
Product internally and to integrate it into its software products. In return,
the Company has agreed to pay MMUSA an annual database access fee of $20,000 and
a fee per prescription equal to 10% of the Company's receipts per script from
licensees, users, subscribers or retail pharmacies connecting to Cybear client
installations. Total fees paid by Cybear shall not exceed $150,000 in any one
year. In the year ended December 31, 1998, the Company has paid and recorded the
annual database access fee of $20,000 to prepaid expenses. The annual fee will
be amortized in 1999.
(8) RELATED PARTY TRANSACTIONS
The Company and Andrx have a corporate services agreement whereby Andrx provides
the Company with various services of its management such as executive
management, accounting and finance, legal, payroll and human resources. For the
period from February 5, 1997 (inception) to December 31, 1997 and for the year
ended December 31, 1998, the Company incurred amounts for these services based
upon mutually agreed upon allocation methods. Management believes that the
amounts incurred for these services approximate fair market value. Costs for
such services were $110,000 for the period from February 5, 1997 (inception) to
December 31, 1997 and $120,000 for the year ended December 31, 1998.
The Company and Andrx have a tax allocation agreement that provides, among other
things, for the allocation of federal income tax liabilities to the Company at
the approximate amounts which would have been computed as if the Company had
filed separate income tax returns. The Company recorded a tax benefit of
$1,900,000 for the year ended December 31, 1998 reflecting the reimbursement
from Andrx for the utilization of Cybear's tax attributes pursuant to the tax
allocation agreement (see Note 6).
Due to Andrx in the accompanying balance sheets represents advances from Andrx
to fund the Company's operations and the related accrued interest. Such advances
bear interest at prime (7.75% at December 31, 1998) plus 1/2%. On November 20,
1998, upon consummation of the merger with 1997 Corp., the then outstanding Due
to Andrx of $3,012,452 was converted into additional paid-in capital to the
Company. In September 1998, Andrx and Cybear entered into a credit agreement
with respect to Andrx's funding obligations to Cybear. The credit agreement
provides that Andrx will continue to fund Cybear's operations until Cybear is in
a position to raise at least $4,000,000 on its own (whether through debt or
equity) or 12 months from the consummation of the merger with 1997 Corp.,
whichever date is earlier and that Andrx will make at least $3,000,000 available
to Cybear on Cybear's demand. The Company recorded $28,220 in interest expense
on the Due to Andrx for the period from February 5, 1997 (inception) to December
31, 1997 and $210,441 for the year ended December 31, 1998. As of December 31,
1998, the Company has not paid any interest expense on the Due to Andrx.
F-16
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
From February 5, 1997 (inception) to December 31, 1997, the Company provided
Andrx with software development services. The Company charged Andrx based on
mutually agreed upon allocation methods. Software development services charged
to Andrx were $95,927 for the period from February 5, 1997 (inception) to
December 31, 1997. The Company did not provide Andrx with software development
services for the year ended December 31, 1998.
In February 1997, Cybear entered into an agreement with Group One Enterprises,
Inc. ("Group One"), a minority shareholder of the Company, whereby Group One
agreed to provide certain consulting services to the Company. The agreement with
Group One was terminated in 1997. Costs incurred for services provided by Group
One were $68,000 for the period from February 5, 1997 (inception) to December
31, 1997.
In September 1998, Andrx agreed to sell to the Company's chairman 333,333 shares
of Cybear common stock for $1 million or at its then current market price of
$3.00 per share. Andrx will use such proceeds to fund its loan commitment to
Cybear. As of December 31, 1998, Andrx had sold 233,333 shares to the Company's
chairman for $700,000. In January 1999, Andrx sold the remaining 100,000 under
this agreement to the Company's chairman for $300,000. As such transactions were
effected at market prices, there is no impact on the Company's accompanying
consolidated financial statements.
(9) CONVERTIBLE PREFERRED STOCK
In February 1997, the Company issued 130,000 shares of convertible preferred
stock to Group One for a promissory note of $30,000. The fair value of the
convertible preferred stock was $0.23 per share as determined by the Company's
Board of Directors. As of December 31, 1997, the promissory note was paid in
full. The preferred stock issued had the same voting and dividend rights as the
common stock but had a liquidation preference and was convertible into common
stock of the Company on a one-for-one basis if the consulting agreement with
Group One was terminated before an initial public offering. The agreement with
Group One was terminated in 1997 and the 130,000 shares of preferred stock were
converted into 130,000 shares of common stock.
(10) STOCK INCENTIVE PLAN
The Company has reserved 1,000,000 shares of its common stock for issuance under
its 1997 Stock Option Plan (the "Plan"). Under the Plan, incentive and
nonqualified stock options are available to directors, officers, employees or
consultants to the Company. The terms of each option agreement are determined by
the Company's Board of Directors or its compensation committee (the
"Committee"). The terms for, and exercise price at which any stock option may be
awarded is to be determined by the Committee. Options granted under the Plan
must be exercised within ten years of the date of grant, unless a shorter period
is designated at the time of grant. In January 1999, the Company's Board of
Directors approved an amendment to the Company's Plan increasing the number of
shares issuable under the Plan by 800,000 to 1,800,000.
The Company accounts for options granted to employees under the Plan in
accordance with the provisions of APB No. 25. Each stock option has an exercise
price equal to the market price on the date of grant and, accordingly, no
compensation expense has been recorded for any stock option grants to employees.
Had compensation cost for the Company's stock options been based on fair value
at the grant dates consistent with the methodologies of SFAS No. 123, the
F-17
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
Company's pro forma basic and diluted net loss and basic and diluted net loss
per share would have been $1,590,717 and $0.12 for the period from February 5,
1997 (inception) to December 31, 1997 and $2,581,962 and $0.20 for the year
ended December 31, 1998, respectively.
A summary of the Plan's activity is as follows:
<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
---------------------------------------------- -------------------
NUMBER OF EXERCISE PRICE PER SHARE WTD. AVG.
SHARES ------------------------------- EXERCISE
UNDER OPTION LOW HIGH WTD. AVG. SHARES PRICE
------------ ------ ----- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
FEBRUARY 5, 1997 (INCEPTION) --
Granted 350,000 $ 1.00 $1.00 $1.00
-------
DECEMBER 31, 1997 350,000 1.00 1.00 1.00 -- $ --
Granted 705,083 2.00 3.00 2.81
Forfeited (70,000) 1.00 1.00 1.00
-------
DECEMBER 31, 1998 985,083 $ 1.00 $3.00 $2.30 70,000 $ 1.00
=======
</TABLE>
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING AT EXERCISABLE OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998
- --------------------------------------------------------------- ------------------------
RANGE OF WEIGHTED AVG. WEIGHTED AVG. WEIGHTED AVG.
EXERCISE REMAINING LIFE EXERCISE EXERCISE
PRICES SHARES (YEARS) PRICE SHARES PRICE
- ------------- ------- -------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C>
$1.00 - $1.00 280,000 8.2 1.0 70,000 $1.00
$2.00 - $2.00 130,500 9.4 2.0 -- --
$3.00 - $3.00 574,583 9.8 3.0 -- --
------- ------
985,083 9.3 2.3 70,000 $1.00
======= ======
</TABLE>
The range of weighted average fair market value per share as of the grant date
was $0.70 for the stock options granted during the period from February 5, 1997
(inception) to December 31, 1997 and $1.50 to $2.23 for the stock options
granted during the year ended December 31, 1998. The fair market value of each
option grant was estimated using the Black-Scholes option pricing model with the
following assumptions:
FOR THE PERIOD FROM
FEBRUARY 5, 1997
(INCEPTION) TO FOR THE YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- -----------------
Risk-free interest rate 5.3% 4.8%
Average life of options (years) 6.0 4.5
Average volatility 75% 85%
Dividend yield -- --
F-18
<PAGE>
CYBEAR, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
(11) LITIGATION
On March 18, 1998, Andrx received a letter from counsel for Medix Resources,
Inc. ("Medix") and its subsidiary, Cymedix Lynx Corporation ("Cymedix") alleging
the theft and unlawful appropriation by Andrx, the Company, and certain
directors, officers and employees of the Company and Andrx of certain computer
medical software and internet medical communications technology allegedly owned
by Cymedix. The letter demanded trebled damages totaling $396.6 million pursuant
to the civil theft provisions of Florida law, including Florida's Racketeer
Influenced and Corrupt Organization Act and certain other provisions of federal
and state law. On March 23, 1998, the Company and Andrx filed a complaint
against Medix and Cymedix in Broward County, Florida for libel and slander
arising from the improper public dissemination of the contents of the aforesaid
demand letter. On June 2, 1998, Medix, on behalf of Cymedix, filed a complaint
against the Company, Andrx and certain of their directors, officers and
employees in Hillsborough County, Florida making the same allegations as were
reflected in the aforesaid demand letter. On December 22, 1998, the Medix
complaint was provisionally dismissed and transferred to Broward County Florida
by the Hillsborough County Court. In February 1999, this matter was settled,
with all of the parties respectively releasing the others from any liability,
through the payment to Medix of $125,000 which was accrued in the accompanying
consolidated financial statements for the year ended December 31, 1998.
From time to time, the Company may be involved in litigation relating to claims
arising out of its operations in the normal course of business. The Company is
not currently a party to any other legal proceeding or aware of any other claim,
the adverse outcome of which, individually or in the aggregate, could reasonably
be expected to have a material adverse effect on the Company's business,
operating results and financial condition.
(12) EVENT SUBSEQUENT TO DATE OF AUDITORS' REPORT (UNAUDITED)
In March 1999, the Company announced that it intends to file a registration
statement for a public offering of its common stock. Cybear expects to complete
such offering during the second quarter of 1999. No assurance can be given that
the registration statement will be filed or that, if filed, the offering will be
consummated.
F-19
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of Cybear are set forth below. All
directors hold office for one year or until their successors have been elected
and qualified. Vacancies in the existing Board are filled by majority vote of
the remaining directors.
NAME AGE POSITION(S) HELD
- ---- --- ----------------
John H. Klein 52 Chairman and Director
Edward E. Goldman, M.D. 53 President, Chief Executive Officer
and Director
Debra S. Richman 40 Executive Vice President-Business
Development
Scott Lodin 42 Secretary and Director
Alan P. Cohen 43 Director
Joel L. Stocker 51 Vice President for Legal Affairs
JOHN H. KLEIN became the Chairman and a director of Cybear on September 1, 1998.
Mr. Klein has been a director of Hackensack University Medical Center in New
Jersey since 1997, and became a director of Sunbeam Corporation in February
1999. Mr. Klein was the Chief Executive Officer, Chairman of the Board and a
director of MIM Corporation, a publicly traded pharmacy management company, from
May 1996 to May 1998. From 1989 to 1994, Mr. Klein served as President, Chief
Executive Officer, a director and a member of the Executive Committee of the
Board of Directors of Zenith Laboratories, Inc. ("Zenith"), a manufacturer of
multi-source generic pharmaceutical drugs, which was acquired by IVAX
Corporation ("IVAX"), a major multi-source generic pharmaceutical manufacturer
and marketer. From January 1995 to January 1996, Mr. Klein was a member of the
Executive Committee of IVAX and was President of IVAX's North American
Multi-Source Pharmaceutical Group.
-28-
<PAGE>
EDWARD E. GOLDMAN, M.D. became the President and Chief Executive Officer of
Cybear on September 1, 1998. From October 1985, he had served as founding
partner and executive officer of PhyMatrix Corporation, a publicly traded
physician practice management company, where he was Executive Vice President of
Physician Development and Chief Medical Officer. From February 1983 to September
1994, he served as Chairman of Pal-Med Health Services, a multi-divisional
healthcare company engaged in practice management, risk contracting and the
operation of imaging centers, ambulatory surgeries and ancillary service
facilities.
DEBRA S. RICHMAN joined Cybear as Executive Vice President--Business Development
in August 1998. From 1996 to 1998, Ms. Richman was the Executive Vice
President/Marketing for PhyMatrix. From 1994 to 1996 she was the Executive Vice
President/Chief Operating Officer of CompreMedx Medical Management, Inc., a
start-up physician management company. From 1989 to 1994 she had various
positions with Caremark International (previously Baxter International),
including as Vice President, Physician Networks and Vice President, Business
Development, Orthopedic Services. Ms. Richman is also a Vice President and
director of TIPAAA, which has an agreement with Cybear, as disclosed under
"Business--Marketing."
SCOTT LODIN has been Secretary and a director of Cybear since February 5, 1997
(inception). He joined Andrx in January 1994 and is its Vice President, General
Counsel and Secretary. Prior to joining Andrx, Mr. Lodin was Special Counsel to
Hughes, Hubbard & Reed (and a predecessor law firm) in Miami, Florida, where he
practiced primarily in the areas of corporate and commercial law for over 13
years.
ALAN P. COHEN was the Chairman and a director of Cybear from February 5, 1997
(inception) to August 31, 1998, when he resigned as Chairman upon John Klein's
assuming such position. He remains a director of Cybear. Mr. Cohen has been the
Chairman of the Board, Chief Executive Officer and a director of Andrx, which he
founded in August 1992. He is a graduate of the University of Florida and is a
registered pharmacist. In 1984, Mr. Cohen founded Best Generics, Inc., a generic
drug distribution firm ("Best"), which was sold to IVAX Corporation ("IVAX") in
1988. Mr. Cohen served as President of Best from April 1989 until June 1990.
Alan P. Cohen and certain members of his family controlled Corner Drugstore,
Inc., a privately-held retail drugstore chain. Corner Drugstore, Inc. filed for
reorganization under Chapter 11 of the United States Bankruptcy Code in December
1994.
JOEL L. STOCKER became Vice President for Legal Affairs in February of 1999. Mr.
Stocker's career has focused on the representation of healthcare providers and
insurers. Mr. Stocker founded and chaired the Health Law Department of Greenberg
Traurig, P.A. At Greenberg
-29-
<PAGE>
Traurig, Mr. Stocker co-chaired the firm's technology committee. Mr. Stocker was
a principal shareholder at Greenberg and a member of the firm for 10 years.
Prior to that, he managed Wood, Lucksinger and Epstein's Miami, Florida health
law practice. Mr. Stocker is a graduate of the University of Michigan Law
School.
Cybear is currently searching for a Chief Financial Officer.
-30-
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation for 1998
received by the Chief Executive Officer (the "CEO"). No executive officer of
Cybear received compensation in 1997 and 1998 in excess of $100,000. Mr. Cohen
and Mr. Lodin are employees of Andrx and were compensated by Andrx.
ANNUAL COMPENSATION
-------------------
FISCAL OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- --------------------------- ---- ------ ------ ------------
Edward E. Goldman, M.D. 1998 $72,115 -- (1)
President and CEO
(1) Dr. Goldman joined Cybear in September 1998. Pursuant to his employment
agreement, Andrx has issued to Edward Goldman, upon payment of $50,000, a
warrant to purchase 650,000 shares Cybear held by Andrx common stock at
its then market price of $3.00 per share and stock options for 20,000
shares of common stock of Andrx having an exercise price per share of the
fair market value of Andrx common stock at the close of business on the
date of grant. See "Employment Agreements."
STOCK OPTION GRANTS IN 1998
No grants of stock options were made to the CEO during 1998.
COMPENSATION OF DIRECTORS
Non-employee directors of Cybear do not receive cash compensation for their
services. Messrs. Cohen and Lodin are employees of Andrx and were compensated by
Andrx. Messrs. Klein and Goldman are employees of Cybear.
EMPLOYMENT AGREEMENTS
Cybear entered into a five-year employment agreement effective as of September
15, 1998 with Edward Goldman, M.D. pursuant to which he serves as Cybear's
President and Chief Executive Officer. The agreement provides for an annual
salary of $250,000 during the first two years and $300,000 for the remaining
three years. The agreement may be renewed for additional two-year periods upon
the agreement of the parties.
The agreement also provides that Dr. Goldman will continue to receive his salary
until the expiration of the term of the employment agreement if his employment
is terminated by Cybear for any reason other than death or "good cause" or by
Dr. Goldman by reason of a material breach of the agreement by Cybear. In the
event of such a termination, Dr. Goldman is entitled to
-31-
<PAGE>
receive full compensation to which he would otherwise be entitled under the
agreement as if he had not so terminated his employment and was continuing to
serve as an employee thereunder for the full term of the agreement, payable in a
single lump sum distribution in cash or in equivalent marketable securities of
Andrx (without any present value adjustment) on the date of such termination.
In the event Dr. Goldman's employment with Cybear is terminated within six
months following a "Change in Control" of Cybear, then Cybear is obligated to
pay him on the date of such termination a single lump sum distribution (without
any present value adjustment) equal to his salary for the remaining term of the
agreement. Notwithstanding the foregoing, Dr. Goldman's employment will not be
deemed terminated if, in lieu of his position with Cybear, Andrx or any other
entity owned or controlled by Andrx offers him a replacement position, where he
will perform similar executive duties and will receive a compensation package at
least equal to the one set forth in the agreement; provided, however, that he is
not required be appointed as president and chief executive officer of any
entity, but rather that he shall continue to perform employment duties generally
performed by senior management personnel of an entity in the healthcare
industry.
In recognition of the potential value of Dr. Goldman to Cybear and to induce him
to forego other employment opportunities, Andrx agreed to issue to Dr. Goldman
upon payment of $50,000, a warrant to purchase 650,000 shares of Cybear common
stock held by Andrx (the "Warrant") at its then market price of $3.00 per share.
In addition, Andrx has issued to Dr. Goldman stock options for 20,000 shares of
Andrx common stock having an exercise price, per share, of the fair market value
of Andrx stock at the close of business on the date of grant. As such
transactions were effected at market prices, there is no impact on Cybear's
consolidated financial statements.
The stock to be issued pursuant to the exercise of the Warrant includes
piggyback registration rights. The Warrant is exercisable commencing on April
30, 1999 (the "Warrant Exercise Date"). The Warrant shall be exercisable for a
period of seven years after the Warrant Exercise Date, subject to contractual
obligations with Andrx.
Cybear has entered into an employment agreement with Debra Richman,
Cybear's Executive Vice President--Business Development. The agreement provides
for a two-year term, a base salary of $160,000 and $80,000 in deferred
compensation that is payable in eight $10,000 quarterly installments. Ms.
Richman was also granted options to purchase 100,000 shares of Cybear's common
stock at its then market price of $3.00 per share under Cybear's 1997 Stock
Option Plan. The options will vest and become exercisable in two annual
increments, as follows: two increments of 37,500 shares each will vest on the
first and second anniversary of the agreement and the remaining 25,000 options
will vest and become exercisable only if the agreement is renewed and then at
the end of the first calendar year of a renewal period.
In the event that Ms. Richman's employment by Cybear is terminated by Cybear
prior to the expiration of the initial two-year term for any reason that does
not constitute cause (as defined in the agreement), she will be entitled to
receive the balance of any unpaid base compensation for the remaining portion of
the initial term and any remaining unpaid portion of the deferred compensation,
as well as any accrued entitlements, including any unused vacation and
-32-
<PAGE>
unreimbursed business expenses. In addition in the event of such termination of
employment by Cybear for other than cause during the first year of her
employment, options to purchase 50,000 shares shall accelerate and become
vested, and, if in the event of such termination during the second year of
employment, options to purchase 37,500 shares shall accelerate and become
vested.
Messrs. Cohen and Lodin are employees of Andrx and do not have employment
agreements with Cybear. Cybear does not have any agreements, plans or
understandings to pay any cash compensation to Messrs. Cohen and Lodin for
serving as directors or officers of Cybear. Mr. Lodin spends approximately 20%
of his time on Cybear matters.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Cybear had no compensation committee during 1998. Messrs. Cohen and Lodin
participated in deliberations of Cybear's Board of Directors concerning
compensation of executive officers.
-33-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Cybear's common stock as of March 26, 1999, by (i) each person
owning more than 5% of such common stock, (ii) each director and executive
officer; and (iii) by all directors and executive officers as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF CLASS
BENEFICIAL OWNER(1), (2) BENEFICIAL OWNERSHIP OUTSTANDING
- ------------------------ -------------------- -----------
<S> <C> <C>
Andrx Corporation 12,536,667 94.5%
John Klein 333,333 2.5%
Edward E. Goldman, M.D. - -
Debra Richman - -
Scott Lodin 12,536,667(3) 94.5%
Alan P. Cohen 12,536,667(3) 94.5%
Joel L. Stocker - -
All directors and executive officers as
a group (six persons) 12,870,000 97.0%
<FN>
- ---------------------------------------
(1) Except as indicated, the address of each person named in the table is c/o
Cybear, Inc., 5000 Blue Lake Drive, Suite 200, Boca Raton, Florida 33431.
(2) Except as otherwise indicated, the persons named in this table have sole
voting and investment power with respect to all shares of Common Stock
listed, which include shares of common stock that such persons have the
right to acquire a beneficial interest within 60 days from the date of this
Report.
(3) Represents shares owned indirectly by Andrx Corporation.
</FN>
</TABLE>
-34-
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. Cohen and Lodin are executive officers of Andrx and none of such persons
are required to commit his full time to the affairs of Cybear and it is likely
that such persons will not devote a substantial amount of time to the affairs of
Cybear. Such personnel may have conflicts of interest in allocating management
time among various business activities. Since its inception in February 1997,
Andrx has funded substantially all of Cybear's operations through loans or
purchases of shares of Cybear common stock. As of December 31, 1998, such
funding including interest amounted to $5,857,179. Andrx and Cybear have entered
into a corporate services agreement pursuant to which Andrx provides certain
legal, financial and administrative services to Cybear in exchange for $120,000
per annum. Andrx and Cybear have also entered into a tax allocation agreement
pursuant to which Cybear will be responsible for its tax liabilities as if it
had filed separate income tax returns. Cybear recorded a tax benefit of
$1,900,000 for the year ended December 31, 1998 reflecting the reimbursement
from Andrx for the utilization of Cybear's tax attributes pursuant to the tax
allocation agreement.
In September 1998, Andrx agreed to sell John Klein, the Chairman of Cybear,
333,333 shares of Cybear common stock for $1,000,000 or its then market price of
$3.00 per share. As of March 15, 1999, Andrx had sold the 333,333 shares of
Cybear common stock for $1,000,000. Andrx will use such proceeds to fund its
loan commitment to Cybear. As such transactions were effected at market prices,
there is no impact on Cybear's consolidated financial statements.
In September 1998, Andrx agreed to issue to Edward Goldman, M.D., Cybear's
President, upon payment of $50,000, a warrant to purchase 650,000 shares of
Cybear common stock held by Andrx (the "Warrant") at its then market price of
$3.00 per share. In addition, Andrx issued to Dr. Goldman stock options for
20,000 shares of Andrx common stock having an exercise price, per share, of the
fair market value of Andrx stock at the close of business on the date of grant.
The stock to be issued pursuant to the exercise of the Warrant includes
piggyback registration rights. The Warrant is exercisable commencing on April
30, 1999 (the "Warrant Exercise Date"). The Warrant shall be exercisable for a
period of seven years after the Warrant Exercise Date, subject to contractual
obligations with Andrx. As such transactions were effected at market prices,
there is no impact on Cybear's consolidated financial statements.
In November, 1998, Cybear entered into a five year sublease agreement with
Strategy Business and Technology Solutions, LLC (the "Lessor"), a company owned
by John Klein, whereby Cybear leases approximately 4,000 square feet of office
space in Ridgefield Park, New Jersey, to house its business development and
sales activities. Cybear agreed to pay the Lessor $10,000 and $417 per month in
base rent and electricity, respectively. In addition, Cybear agreed to pay a
security deposit of $20,000. For the year ended December 31, 1998, Cybear has
recorded an expense of $20,834 relative to this lease which had not been paid as
of December 31, 1998.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" for a description of a credit agreement and other funding
obligations of Andrx to Cybear.
-35-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report
(1) Financial Statements.
See the Index to Consolidated Financial Statements contained in Item 8
of this Report for a description of Cybear's Consolidated Financial Statements
filed with this Report.
(2) Consolidated Financial Statement Schedules
All schedules for which provision is made in applicable regulations of
the Commission are not required under the related instructions, are inapplicable
or the required information has been included in Cybear's consolidated financial
statements and therefore such schedules have been omitted.
(3) Exhibits
EXHIBIT DESCRIPTION
3.1 Registrant's Certificate of Incorporation, as amended
3.2 Registrant's Bylaws (1)
10.1 Stock Option Plan*
10.2 Employment Agreement between the Registrant and Edward
Goldman, M.D.*
10.3 Employment Agreement between the Registrant and Debra Richman*
10.4 Form of Indemnification Agreement between the Registrant and
each of its directors and executive officers*
10.5 Corporate Services Agreement between the Registrant and Andrx
Corporation(1)
10.6 Credit Agreement between Andrx Corporation and the
Registrant(1)
10.7 Tax Allocation Agreement between Andrx Corporation and the
Registrant
10.8 Lease Agreement relating to premises located at 5000 Blue Lake
Dr., Suite 200, Boca Raton, Florida
10.9 First Amendment to Lease Agreement relating to premises
located at 5000 Blue Lake Dr., Suite 200, Boca Raton, Florida
10.10 Lease Agreement relating to premises located at 105 Challeger
Rd., Ridgefield Park, New Jersey
27.1 Financial Data Schedule (SEC use only)
- ---------------------------
* Management Compensation Plan or Arrangement.
(1) Previously filed as an Exhibit to the Registrant's Registration Statement
on Form SB-2, including the post-effective amendments thereto
(File No. 333-24671) and incorporated herein by reference.
-36-
<PAGE>
(b) Reports On Form 8-K
On December 7, 1998, the Registrant filed a Current Report of 8-K to
disclose the acquisition by merger of Cybear, Inc., a Florida corporation and
certain related matters.
(c) Item 601 Exhibits
The exhibits required by Item 601 of Regulation S-K are set forth in
(a)(3) above.
(d) Financial Statement Schedules
The financial statement schedules required by Regulation S-K are set
forth in (a)(2) above.
-37-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CYBEAR, INC.
By: /s/ EDWARD E. GOLDMAN
----------------------------------------------
Edward E. Goldman, M.D.
President, Chief Executive Officer and Director
Date: March 29, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ JOHN H. KLEIN Chairman and Director March 29, 1999
- ---------------------
John H. Klein
/s/ EDWARD E. GOLDMAN President, Chief Executive Officer and Director March 29, 1999
- --------------------- (Principal Executive and Financial Officer)
Edward E. Goldman, M.D.
/s/ CLAUDE BERTRAND Controller March 29, 1999
- --------------------- (Principal Accounting Officer)
Claude Bertrand
/s/ DEBRA RICHMAN Executive Vice President-Business March 29, 1999
- --------------------- Development
Debra Richman
/s/ ALAN COHEN Director March 29, 1999
- ---------------------
Alan Cohen
/s/ SCOTT LODIN Vice President, General Counsel, Secretary March 29, 1999
- --------------------- and Director
Scott Lodin
</TABLE>
-38-
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
3.1 Registrant's Certificate of Incorporation, as amended
10.1 Stock Option Plan*
10.2 Employment Agreement between the Registrant and Edward
Goldman*
10.3 Employment Agreement between the Registrant and Debra Richman*
10.4 Form of Indemnification Agreement between the Registrant and
each of its directors and executive officers*
10.7 Tax Allocation Agreement between Andrx Corporation and the
Registrant
10.8 Lease Agreement relating to premises located at 5000 Blue Lake
Dr., Suite 200, Boca Raton, Florida
10.9 First Amendment to Lease Agreement relating to premises
located at 5000 Blue Lake Dr., Suite 200, Boca Raton, Florida
10.10 Lease Agreement relating to premises located at 105 Challeger
Rd., Ridgefield Park, New Jersey
27.1 Financial Data Schedule (SEC use only)
- ---------------------------
* Management Compensation Plan or Arrangement.
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
1997 CORP.
The undersigned, being the incorporator of 1997 Corp. (the
"Corporation") hereby certifies as follows:
FIRST: The name of the Corporation is 1997 Corp.
SECOND: The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, County
of New Castle, Delaware 19801. The registered agent in change thereof is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
law of Delaware.
FOURTH: The total number of shares that this Corporation shall have
authority to issue is (i) 10,000,000 shares of Common Stock, $.001 par value per
share ("Common Stock"), and (ii) 2,000,000 shares of Preferred Stock, $.01 par
value per share ("Preferred Stock").
There shall be no preemptive rights with respect to the Corporation's
shares of stock. The following is a further statement of the designations and
the powers, preferences and rights, and the relative participating, optional or
other special rights, and the qualifications, limitations and restrictions
granted to or imposed upon the respective slasses of shares of capital stock of
the Corporation or the holders thereof.
COMMON STOCK
1. GENERAL. The voting, dividend and liquidation rights of the holders
of the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.
2. VOTING. The holders of Common Stock are entitled to one
1
<PAGE>
vote for each share held at all meetings of stockholders (and written actions in
lieu of meetings). There shall be no cumulative voting.
3. DIVIDENDS. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefore as and when determined by the Board of
Directors and subject to any preferential dividend rights or restrictions of any
then outstanding Preferred Stock.
4. LIQUIDATION. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders after payment of creditors and subject to any preferential rights
of any then outstanding Preferred Stock.
PREFERRED STOCK.
Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided herein or by law. Different series
of Preferred Stock shall not be construed to constitute different classes of
shares for the purposes of voting by classes unless expressly provided for
herein or by law.
Authority is hereby expressly granted to the Board of Directors from
time to time to issue the Preferred Stock in one or more series, and in
connection with the creation of any such series, by resolution or resolutions
providing for the issuance of the shares thereof, to determine and fix such
voting powers, full or limited, or no voting powers, and such designations,
preferences and relative participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, including without
limitation thereof, dividend rights, conversion rights, redemption privileges
and liquidation preferences, as shall be stated and expressed in such
resolutions, all to the full extent now or hereafter permitted by the General
Corporation law of the State of Delaware. Without limiting the generality of the
foregoing, the resolutions providing for issuance of any series of preferred
Stock may provide that such series shall be superior or rank equally or be
junior to the Preferred Stock of any other series to the extent permitted by
law.
FIFTH: The Corporation is to have perpetual existence.
2
<PAGE>
SIXTH: The number of directors which shall constitute the entire Board
of Directors shall be as set forth in the by-laws of the Corporation. The board
of directors is expressly authoized to adopt, amnend or repeal the by-laws of
the Corporation.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockhoder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Cor[poration, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctined by the court to which said application has been made, be
binding on all the creditors of stockholders of this Corporation, as the case
may be, and also on this Corportion.
EIGHTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
NINTH: No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit.
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directors, agents and such other parties to the full extent permitted by
Delaware law.
ELEVENTH: (i) Any vacancies in the Board of Directors for any reason
and any newly created directorships resulting by reason of any increase in the
number of directors may be filled only by the Board of Directors (unless there
are no reamining directors), acting by a majority of the remaining directors
then in office, although less than a quorum, and any directors so chosen shall
hold office until the next election of directors and until their successors are
elected and qualified.
(ii) any director, or the entire Board of Directors, may be removed
from office at any time, but only for cause and only by the affirmative vote of
the holders of at least 75% of the voting power of all the shares of capital
stock of the Corporation then entitled to vote generally in the election of
directors, voting together as a single class.
TWELFTH: Special meetings of stockholders of the Corporation may be
called only by (i) the Board of Directors pursuant to a resolution adopted by a
majority of the entire Board of Directors, either upon motion of a director or
upon written request of the holders of at least 50% of the voting pwoer of all
the shares of capital stock of the Corporation then entitled to vote generally
in the election of directors, voting together as a single class, or (ii) the
President of the Corporation.
THIRTEENTH: In addition to any requirements of the General Corporation
Law of Delaware (and notwithstanding the fact that a lesser percentage may be
specified by the General Corporation Law of Delaware), the affirmative vote of
the holders of at least 75% of the voting power of all of the shares of capital
stock of the Corporation then entitled to vote generally in the election of
directors, voting together as a single class, shall be required for the
stockholders of the Corporation to amend, alter, change, adopt or repeal
Articles Eleventh, Twelfth or Thirteenth hereof.
FOURTEENTH: The name of the incorporator is Richard L. Campbell, whose
address is 250 Park Avenue, 12th Floor, New York, New York 10177.
IN WITNESS WHEREOF: I hereunto set my hand this 12th day of March, 1997
and I affirm that the foregoing certificate is my act and deed and that the
facts stated therein are true.
/s/ RICHARD L. CAMPBELL
---------------------------
Richard L. Campbell, Incorporator
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF 1997 CORP.
-----------
PURSUANT TO SECTION 242 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
-----------
1997 CORP., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), hereby certifies
as follows:
FIRST: The name of the corporation (which is hereinafter referred to as
the "Corporation") is 1997 CORP.
SECOND: The original Certificate of Incorporation was filed with the
Secretary of State of Delaware on March 17, 1997.
THIRD: The Certificate of Incorporation of the Corporation, is hereby
amended by deleting Article First and the first paragraph of Article Fourth in
their entirety and substituting in lieu thereof the following:
"FIRST: The name of the corporation is "CyBear Inc."; and
"FOURTH: The authorized capital stock of the Corporation shall consist
of (i) 25,000,000 shares of common stock, $.001 par value per share ("Common
Stock") and (ii) 2,000,000 shares of preferred stock, $.01 par value per share
("Preferred Stock").
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by its President this 19th day of November 1998.
1997 CORP
By /s/ Judith Haselton, President
--------------------------------
Judith Haselton, President
EXHIBIT 10.1
CYBEAR, INC.
1997 STOCK OPTION PLAN (Adopted by 1997 Corp.,
a Delaware corporation, now named Cybear, Inc.)
1. PURPOSE. The purpose of the CyBear, Inc. 1997 Stock Option Plan (the
"Plan") is to advance the interests of CyBear, Inc., a Florida corporation (the
"Company"), by providing an additional incentive to attract, retain and motivate
highly qualified and competent persons who are key to the Company, and upon
whose efforts and judgment the success of the Company and its Subsidiaries is
largely dependent, including key employees, consultants, independent
contractors, Officers and Directors, by authorizing the grant of options to
purchase Common Stock of the Company to persons who are eligible to participate
hereunder, thereby encouraging stock ownership in the Company by such persons,
all upon and subject to the terms and conditions of this Plan.
2. DEFINITIONS. As used herein, the following terms shall have the
meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean any of the following:
(i) a determination by the Company that there has been a
willful, reckless or grossly negligent failure by the Optionee to perform his or
her duties as an employee of the Company;
(ii) a determination by the Company that there has been a
willful breach by the Optionee of any of the material terms or provisions of any
employment agreement between such Optionee and the Company;
(iii) any conduct by the Optionee that either results in his
or her conviction of a felony under the laws of the United States of America or
any state thereof, or of an equivalent crime under the laws of any other
jurisdiction;
(iv) a determination by the Company that the Optionee has
committed an act or acts involving fraud, embezzlement, misappropriation, theft,
breach of fiduciary duty or material dishonesty against the Company, its
properties or personnel;
(v) any act by the Optionee that the Company determines to be
in willful or wanton disregard of the Company's best interests, or which
results, or is intended to result, directly or indirectly, in improper gain or
personal enrichment of the Optionee at the expense of the Company;
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(vi) a determination by the Company that there has been a
willful, reckless or grossly negligent failure by the Optionee to comply with
any rules, regulations, policies or procedures of the Company, or that the
Optionee has engaged in any act, behavior or conduct demonstrating a deliberate
and material violation or disregard of standards of behavior that the Company
has a right to expect of its employees; or
(vii) if the Optionee, while employed by the Company and for
two years thereafter, violates a confidentiality and/or noncompete agreement
with the Company, or fails to safeguard, divulges, communicates, uses to the
detriment of the Company or for the benefit of any person or persons, or misuses
in any way, any Confidential Information;
PROVIDED, HOWEVER, that, if the Optionee has entered into a written employment
agreement with the Company which remains effective and which expressly provides
for a termination of such Optionee's employment for "cause", the term "Cause" as
used herein shall have the meaning as set forth in the Optionee's employment
agreement in lieu of the definition of "Cause" set forth in this Section 2(b).
(c) "Change of Control" shall mean the acquisition by any person or
group (as that term is defined in the Securities Exchange Act of 1934 (the
"Exchange Act"), and the rules promulgated pursuant to that act) in a single
transaction or a series of transactions of thirty percent (30%) or more in
voting power of the outstanding stock of the Company and a change of the
composition of the Board of Directors so that, within two years after the
acquisition took place, a majority of the members of the Board of Directors of
the Company, or of any corporation with which the Company may be consolidated or
merged, are persons who were not directors or officers of the Company or one of
its Subsidiaries immediately prior to the acquisition, or to the first of a
series of transactions which resulted in the acquisition of thirty percent (30%)
or more in voting power of the outstanding stock of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean the stock option or compensation
committee appointed by the Board or, if not appointed, the Board.
(f) "Common Stock" shall mean the Company's Common Stock, par value
$.001 per share.
(g) "Confidential Information" shall mean any and all information
pertaining to the Company's financial condition, clients, customers, prospects,
sources of prospects, customer lists, trademarks, trade names, service marks,
service names, "know-how," trade secrets, products, services, details of client
or consulting contracts, management agreements, pricing policies, operational
methods, site selection, results of operations, costs and methods of doing
business, owners and ownership structure, marketing practices, marketing plans
or strategies, product development techniques or plans, procurement and sales
activities, promotion
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and pricing techniques, credit and financial data concerning customers and
business acquisition plans, that is not generally available to the public.
(h) "Director" shall mean a member of the Board.
(i) "Employee" shall mean any person, including officers, directors,
consultants and independent contractors who are either employed or engaged by
the Company or any parent or Subsidiary of the Company within the meaning of
Code Section 3401(c) or the regulations promulgated thereunder.
(j) "Fair Market Value" of a Share on any date of reference shall be
the Closing Price of a share of Common Stock on the business day immediately
preceding such date, unless the Committee in its sole discretion shall determine
otherwise in a fair and uniform manner. For this purpose, the "Closing Price" of
the Common Stock on any business day shall be (i) if the Common Stock is listed
or admitted for trading on any United States national securities exchange, or if
actual transactions are otherwise reported on a consolidated transaction
reporting system, the last reported sale price of the Common Stock on such
exchange or reporting system, as reported in any newspaper of general
circulation, (ii) if the Common Stock is quoted on the National Association of
Securities Dealers Automated Quotations System ("NASDAQ"), or any similar system
of automated dissemination of quotations of securities prices in common use, the
mean between the closing high bid and low asked quotations for such day of the
Common Stock on such system, or (iii) if neither clause (i) nor (ii) is
applicable, the mean between the high bid and low asked quotations for the
Common Stock as reported by the National Quotation Bureau, Incorporated if at
least two securities dealers have inserted both bid and asked quotations for the
Common Stock on at least five of the 10 preceding days. If the information set
forth in clauses (i) through (iii) above is unavailable or inapplicable to the
Company (E.G., if the Company's Common Stock is not then publicly traded or
quoted), then the "Fair Market Value" of a Share shall be the fair market value
(I.E., the price at which a willing seller would sell a Share to a willing buyer
when neither is acting under compulsion and when both have reasonable knowledge
of all relevant facts) of a share of the Common Stock on the business day
immediately preceding such date as the Committee in its sole and absolute
discretion shall determine in a fair and uniform manner.
(k) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Code.
(l) "Non-Employee Directors" shall have the meaning set forth in
Rule 16b-3(b)(3)(i) (17 C.F.R. /section/ 240.16(b)-3(b)(3)(i)) under the
Securities Exchange Act of 1934, as amended.
(m) "Non-Statutory Stock Option" or "Nonqualified Stock Option"
shall mean an Option which is not an Incentive Stock Option.
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(n) "Officer" shall mean the Company's chairman, president,
principal financial officer, principal accounting officer (or, if there is no
such accounting officer, the controller), any vice-president of the Company in
charge of a principal business unit, division or function (such as sales,
administration or finance), any other officer who performs a policy-making
function, or any other person who performs similar policy-making functions for
the Company. Officers of Subsidiaries shall be deemed Officers of the Company if
they perform such policy-making functions for the Company. As used in this
paragraph, the phrase "policy-making function" does not include policy-making
functions that are not significant. Unless specified otherwise in a resolution
by the Board, an "executive officer" pursuant to Item 401(b) of Regulation S-K
(17 C.F.R. ?229.401(b)) shall be only such person designated as an "Officer"
pursuant to the foregoing provisions of this paragraph.
(o) "Option" (when capitalized) shall mean any stock option granted
under this Plan.
(p) "Optionee" shall mean a person to whom an Option is granted
under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.
(q) "Plan" shall mean this 1997 Stock Option Plan of the Company,
which Plan shall be effective upon approval by the Board, subject to approval,
within 12 months of the date thereof by holders of a majority of the Company's
issued and outstanding Common Stock of the Company.
(r) "Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(s) "Share" or "Shares" shall mean a share or shares, as the case
may be, of the Common Stock, as adjusted in accordance with Section 10 of this
Plan.
(t) "Subsidiary" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AND OPTIONS. Subject to adjustment in accordance with Section
10 hereof, the Company may grant to Optionees from time to time Options to
purchase an aggregate of up to One Million (1,000,000) Shares from Shares held
in the Company's treasury or from authorized and unissued Shares. If any Option
granted under this Plan shall terminate, expire, or be canceled, forfeited or
surrendered as to any Shares, the Shares relating to such lapsed Option shall be
available for issuance pursuant to new Options subsequently granted under this
Plan. Upon the grant of any Option hereunder, the authorized and unissued Shares
to which such Option relates shall be reserved for issuance to permit exercise
under this Plan. Subject to the provisions
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of Section 14 hereof, an Option granted hereunder shall be either an Incentive
Stock Option or a Non-Statutory Stock Option as determined by the Committee at
the time of grant of such Option and shall clearly state whether it is an
Incentive Stock Option or Non-Statutory Stock Option. All Incentive Stock
Options shall be granted within 10 years from the effective date of this Plan.
4. LIMITATIONS. Options otherwise qualifying as Incentive Stock Options
hereunder will not be treated as Incentive Stock Options to the extent that the
aggregate Fair Market Value (determined at the time the Option is granted) of
the Shares, with respect to which Options meeting the requirements of Code
Section 422(b) are exercisable for the first time by any individual during any
calendar year (under all stock option or similar plans of the Company and any
Subsidiary), exceeds $100,000.
5. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee, provided such
terms are not inconsistent with this Plan or any applicable law. Optionees shall
be those persons selected by the Committee from the class of all regular
Employees of the Company or its Subsidiaries, including Employee Directors and
Officers who are regular or former regular employees of the Company, as well as
consultants to the Company. Any person who files with the Committee, in a form
satisfactory to the Committee, a written waiver of eligibility to receive any
Option under this Plan shall not be eligible to receive any Option under this
Plan for the duration of such waiver.
(b) In granting Options, the Committee shall take into consideration
the contribution the person has made, or is expected to make, to the success of
the Company or its Subsidiaries and such other factors as the Committee shall
determine. The Committee shall also have the authority to consult with and
receive recommendations from Officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee may from time to time
in granting Options under this Plan prescribe such terms and conditions
concerning such Options as it deems appropriate, including, without limitation,
(i) the exercise price or prices of the Option or any installments thereof, (ii)
prescribing the date or dates on which the Option becomes and/or remains
exercisable, (iii) providing that the Option vests or becomes exercisable in
installments over a period of time, and/or upon the attainment of certain stated
standards, specifications or goals, (iv) relating an Option to the continued
employment of the Optionee for a specified period of time, or (v) conditions or
termination events with respect to the exercisability of any Option, provided
that such terms and conditions are not more favorable to an Optionee than those
expressly permitted herein; provided, however, that to the extent not canceled
pursuant to Section 9(b) hereof, upon a Change in Control, any Options that have
not yet vested, shall vest upon such Change in Control.
(c) The Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other benefits related
to their employment with the Company or its Subsidiaries. Neither this Plan nor
any Option granted under this Plan shall
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confer upon any person any right to employment or continuance of employment (or
related salary and benefits) by the Company or its Subsidiaries.
6. EXERCISE PRICE. The exercise price per Share of any Option shall be
any price determined by the Committee but shall not be less than the par value
per Share; PROVIDED, HOWEVER, that in no event shall the exercise price per
Share of any Incentive Stock Option be less than the Fair Market Value of the
Shares underlying such Option on the date such Option is granted and, in the
case of an Incentive Stock Option granted to a 10% shareholder, the per Share
exercise price will not be less than 110% of the Fair Market Value in accordance
with Section 14 of this Plan. Re-granted Options, or Options which are canceled
and then re-granted covering such canceled Options, will, for purposes of this
Section 6, be deemed to have been granted on the date of the re-granting.
7. EXERCISE OF OPTIONS.
(a) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms of the
Option, (ii) full payment of the aggregate option price of the Shares as to
which the Option is exercised has been made, (iii) the Optionee has agreed to be
bound by the terms, provisions and conditions of any applicable shareholders'
agreement, and (iv) arrangements that are satisfactory to the Committee in its
sole discretion have been made for the Optionee's payment to the Company of the
amount that is necessary for the Company or the Subsidiary employing the
Optionee to withhold in accordance with applicable Federal or state tax
withholding requirements. Unless further limited by the Committee in any Option,
the exercise price of any Shares purchased pursuant to the exercise of such
Option shall be paid in cash, by certified or official bank check, by money
order, with Shares or by a combination of the above; PROVIDED, HOWEVER, that the
Committee in its sole discretion may accept a personal check in full or partial
payment of any Shares. If the exercise price is paid in whole or in part with
Shares, the value of the Shares surrendered shall be their Fair Market Value on
the date the Option is exercised. The Company in its sole discretion may, on an
individual basis or pursuant to a general program established by the Committee
in connection with this Plan, lend money to an Optionee to exercise all or a
portion of the Option granted hereunder. If the exercise price is paid in whole
or part with the Optionee's promissory note, such note shall (i) provide for
full recourse to the maker, (ii) be collateralized by the pledge of the Shares
that the Optionee purchases upon exercise of such Option, (iii) bear interest at
a rate no less than the rate of interest payable by the Company to its principal
lender, and (iv) contain such other terms as the Committee in its sole
discretion shall require. No Optionee shall be deemed to be a holder of any
shares subject to an Option unless and until a stock certificate or certificates
for such shares are issued to the person(s) under the terms of this Plan. No
adjustments shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or property) or distributions or other rights for which the
record date is prior to the date such stock certificate is issued, except as
expressly provided in Section 10 hereof
(b) No Optionee shall be deemed to be a holder of any Shares subject
to an Option unless and until a stock certificate or certificates for such
Shares are issued to such
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person(s) under the terms of this Plan. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as expressly provided in
Section 10 hereof.
8. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals, upon such events or occurrences and upon such
other terms and conditions as shall be provided in an individual Option
agreement evidencing such Option, except as otherwise provided in Section 5(b)
or this Section 8.
(a) The expiration date(s) of an Option shall be determined by the
Committee at the time of grant, but in no event shall an Option be exercisable
after the expiration of 10 years from the date of grant of the Option.
(b) Unless otherwise expressly provided in any Option as approved by
the Committee, notwithstanding the exercise schedule set forth in any Option,
each outstanding Option, may, in the sole discretion of the Committee, become
fully exercisable upon the date of the occurrence of any Change of Control, but,
unless otherwise expressly provided in any Option, no earlier than six months
after the date of grant, and if and only if Optionee is in the employ of the
Company on such date.
(c) The Committee may in its sole discretion accelerate the date on
which any Option may be exercised and may accelerate the vesting of any Shares
subject to any Option or previously acquired by the exercise of any Option.
9. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise expressly provided in any Option, the
unexercised portion of any Option shall automatically and without notice
immediately terminate and become forfeited, null and void at the time of the
earliest to occur of the following:
(i) three months after the date on which the Optionee's
employment is terminated for any reason other than by reason of (A) Cause, (B)
the termination of the Optionee's employment with the Company by such Optionee
following less than ninety (90) days' prior written notice to the Company of
such termination (an "Improper Termination"), (C) a mental or physical
disability (within the meaning of Section 22(e) of the Code) as determined by a
medical doctor satisfactory to the Committee, or (D) death;
(ii) immediately upon (A) the termination by the Company of
the Optionee's employment for Cause, or (B) an Improper Termination;
(iii) one year after the date on which the Optionee's
employment is terminated by reason of a mental or physical disability (within
the meaning of Code Section 22(e)) as determined by a medical doctor
satisfactory to the Committee; or
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(iv) the later of (A) twelve months after the date of
termination of the Optionee's employment by reason of death of the employee, or
(B) three months after the date on which the Optionee shall die if such death
shall occur during the one year period specified in Subsection 9(a)(iii) hereof.
(b) The Committee in its sole discretion may, by giving written
notice ("cancellation notice"), cancel effective upon the date of the
consummation of any corporate transaction described in Subsection 10(d) hereof,
any Option that remains unexercised on such date. Such cancellation notice shall
be given a reasonable period of time prior to the proposed date of such
cancellation and may be given either before or after approval of such corporate
transaction.
(c) Upon Optionee's termination of employment as described in this
Section 9, or otherwise, any Option (or portion thereof) not previously vested
or not yet exercisable pursuant to Section 8 of this Plan or the vesting
schedule set forth in such Option shall be immediately canceled.
10. ADJUSTMENT OF SHARES.
(a) If at any time while this Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split, combination or exchange
of Shares (other than any such exchange or issuance of Shares through which
Shares are issued to effect an acquisition of another business or entity or the
Company's purchase of Shares to exercise a "call" purchase option), then and in
such event:
(i) appropriate adjustment shall be made in the maximum number
of Shares available for grant under this Plan, so that the same percentage of
the Company's issued and outstanding Shares shall continue to be subject to
being so optioned;
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject to any outstanding
Option, so that the same percentage of the Company's issued and outstanding
Shares shall remain subject to purchase at the same aggregate exercise price;
and
(iii) such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
(b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect to the
option price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate by reason
of a corporate transaction described in Subsection 10(d) hereof, or otherwise.
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(c) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into or exchangeable for shares of its capital stock of any class,
either in connection with a direct or unwritten sale or upon the exercise of
rights or warrants to subscribe therefor or purchase such Shares, or upon
conversion of shares of obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of or exercise price of Shares then subject
to outstanding Options granted under this Plan.
(d) Without limiting the generality of the foregoing, the existence
of outstanding Options granted under this Plan shall not affect in any manner
the right or power of the Company to make, authorize or consummate (i) any or
all adjustments, reclassifications, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business; (ii) any merger or
consolidation of the Company or to which the Company is a party; (iii) any
issuance by the Company of debt securities, or preferred or preference stock
that would rank senior to or above the Shares subject to outstanding Options;
(iv) any purchase or issuance by the Company of Shares or other classes of
common stock or common equity securities; (v) the dissolution or liquidation of
the Company; (vi) any sale, transfer, encumbrance, pledge or assignment of all
or any part of the assets or business of the Company; or (vii) any other
corporate act or proceeding, whether of a similar character or otherwise.
(e) The Optionee shall receive written notice within a reasonable
time prior to the consummation of such action advising the Optionee of any of
the foregoing. The Committee may, in the exercise of its sole discretion, in
such instances declare that any Option shall terminate as of a date fixed by the
Board and give each Optionee the right to exercise his or her Option.
11. TRANSFERABILITY OF OPTIONS. No Option granted hereunder shall be
sold, pledged, assigned, hypothecated, disposed or otherwise transferred by the
Optionee other than by will or the laws of descent and distribution, unless
otherwise authorized by the Board, and no Option shall be exercisable during the
Optionee's lifetime by any person other than the Optionee.
12. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(i) a representation and warranty by the Optionee to the
Company, at the time any Option is exercised, that he is acquiring the Shares to
be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) (A) an agreement and undertaking to comply with all of
the terms, restrictions and provisions set forth in any then applicable
shareholders' agreement relating to the Shares, including, without limitation,
any restrictions on transferability, any rights of first refusal and any option
of the Company to "call" or purchase such Shares under then applicable
agreements, and
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(B) any restrictive legend or legends, to be embossed or
imprinted on Share certificates, that are, in the discretion of the Committee,
necessary or appropriate to comply with the provisions of any securities law or
other restriction applicable to the issuance of the Shares.
13. ADMINISTRATION OF THIS PLAN.
(a) This Plan shall initially be administered by the Board. As soon
as may be practicable, but no later than the date (if ever) the Common Stock is
listed or admitted for trading on any United States national securities
exchange, the Plan shall be administered by the Committee, which shall consist
of not less than two Non-Employee Directors. The Committee shall have all of the
powers of the Board with respect to this Plan. Any member of the Committee may
be removed at any time, with or without cause, by resolution of the Board and
any vacancy occurring in the membership of the Committee may be filled by
appointment by the Board.
(b) Subject to the provisions of this Plan, the Committee shall have
the authority, in its sole discretion, to: (i) grant Options, (ii) determine the
exercise price per Share at which Options may be exercised, (iii) determine the
Optionees to whom, and time or times at which, Options shall be granted, (iv)
determine the number of Shares to be represented by each Option, (v) determine
the terms, conditions and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Option, (vi) defer (with the consent of the Optionee) or accelerate the exercise
date of any Option, and (vii) make all other determinations deemed necessary or
advisable for the administration of this Plan, including repricing, canceling
and regranting Options.
(c) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of this Plan. The Committee's
determinations and its interpretation and construction of any provision of this
Plan shall be final, conclusive and binding upon all Optionees and any holders
of any Options granted under this Plan.
(d) Any and all decisions or determinations of the Committee shall
be made either (i) by a majority vote of the members of the Committee at a
meeting of the Committee or (ii) without a meeting by the unanimous written
approval of the members of the Committee.
(e) No member of the Committee, or any Officer or Director of the
Company or its Subsidiaries, shall be personally liable for any act or omission
made in good faith in connection with this Plan.
14. INCENTIVE OPTIONS FOR 10% SHAREHOLDERS. Notwithstanding any other
provisions of this Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly or indirectly (through attribution under
Section 424(d) of the Code) at the date of grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or of
its Subsidiary) at the date of grant unless the exercise price of such Option is
at
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least 110% of the Fair Market Value of the Shares subject to such Option on the
date the Option is granted, and such Option by its terms is not exercisable
after the expiration of 10 years from the date such Option is granted.
15. INTERPRETATION.
(a) This Plan shall be administered and interpreted so that all
Incentive Stock Options granted under this Plan will qualify as Incentive Stock
Options under Section 422 of the Code. If any provision of this Plan should be
held invalid for the granting of Incentive Stock Options or illegal for any
reason, such determination shall not affect the remaining provisions hereof, and
this Plan shall be construed and enforced as if such provision had never been
included in this Plan.
(b) This Plan shall be governed by the laws of the State of Florida.
(c) Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan or affect the meaning or
interpretation of any part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender shall
be a reference to such other gender as is appropriate.
(e) Time shall be of the essence with respect to all time periods
specified for the giving of notices to the company hereunder, as well as all
time periods for the expiration and termination of Options in accordance with
Section 9 hereof (or as otherwise set forth in an option agreement).
16. AMENDMENT AND DISCONTINUATION OF THIS PLAN. Either the Board or the
Committee may from time to time amend this Plan or any Option without the
consent or approval of the shareholders of the Company; PROVIDED, HOWEVER, that,
except to the extent provided in Section 9, no amendment or suspension of this
Plan or any Option issued hereunder shall substantially impair any Option
previously granted to any Optionee without the consent of such Optionee.
17 TERMINATION DATE. This Plan shall terminate ten years after the date
of adoption by the Board of Directors.
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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of August 24, 1998,
is hereby made between Cybear, Inc. ("Employer"), a subsidiary of Andrx
Corporation ("Andrx"), and Edward Goldman, M.D., an individual ("Employee").
W I T N E S S E T H
WHEREAS, Employer is in the business of developing information
technologies and systems for use in the healthcare industry; and
WHEREAS, Employee has experience and specialized expertise in the
management and operation of healthcare delivery systems and the healthcare
industry; and
WHEREAS, Employer desires to employ the Employee, Employee desires to
accept such employment and Andrx is ready and willing to guarantee the
performance by Employer of this Agreement on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises,
representations and warranties set forth herein, and for other good and valuable
consideration, it is hereby agreed as follows:
1. EMPLOYMENT. Employer hereby agrees to employ the Employee, and the
Employee hereby accepts such employment, upon the terms and conditions set forth
herein.
2. TERM. Subject to the provisions of Section 9 hereof, the Employee's
employment under this Agreement shall continue for a period of five (5) years
from the date hereof ("Term"). This Agreement may be renewed by the parties at
the end of the initial Term for successive two (2) year periods (which, if
renewed, shall also be considered part of the "Term") on such terms and
conditions as the parties may then agree in writing.
3. POSITION AND DUTIES.
(a) Employee shall have the position of President and Chief
Executive Officer of Employer. In this capacity, Employee shall have the primary
responsibility and authority for the strategic planning and operation of the
business of Employer and such other duties as are generally recognized as within
the scope of employment of a President and Chief Executive Officer, subject only
to the direction of the Board of Directors of Employer.
(b) During the Term, the Employee shall, subject to the
direction and control of Employer's Board of Directors, perform and discharge
Employee's duties in accordance with this Agreement, and shall devote his best
talents, efforts and abilities to the performance of his duties hereunder.
Employee shall report directly to the Chairman and the Board of Directors of
Employer.
(c) Employee shall at all times perform his duties in
accordance with Employer's policies and procedures and all federal, state and
local laws, rules and regulations.
<PAGE>
(d) During the Term, Employee shall devote the preponderance
of his business time to his employment. Employee may have outside investments
and activities that do not interfere with the performance of his duties
hereunder, including but not limited to consulting assignments and serving on
boards of directors or advisory committees of other entities, provided he
requests Employer's consent (which shall not be unreasonably withheld) before
accepting or undertaking any new activity or assignment.
4. COMPENSATION. For the Employee's services hereunder, Employer shall
pay the Employee compensation during the Term in such amounts and in accordance
with the terms set forth on Exhibit A, attached to and incorporated as part of
this Agreement.
5. BENEFITS. Andrx maintains a 401(k) plan and group medical, dental
and life insurance plans for all of its full-time employees. As a member of the
Andrx management team, Employee and his family will be entitled to immediately
participate in the Andrx medical insurance plan (beginning the first day of the
month after Employee reports to work) and will receive certain other benefits,
including life insurance in the amount of Employee's annual salary, four weeks
of paid vacation (which may not be carried over to subsequent years) and
disability insurance coverage. Andrx and CyBear reserve the right to make
changes to the benefit packages which they individually or collectively offer to
its or their management.
6. FACILITIES. Employer shall provide Employee with a suitable office,
secretarial support and such other equipment and materials as may be necessary
for Employee's performance of his duties under this Agreement.
7. REIMBURSEMENT OF EXPENSES. Employer shall pay or reimburse the
Employee for all reasonable business expenses actually incurred or paid by the
Employee in the performance of his duties hereunder. Employee shall present
expense statements or vouchers or such other supporting information as Employer
may reasonably require of the Employee.
8. RECORD KEEPING. Employee shall prepare and timely submit to Employer
such reports and records as are reasonably requested by Employer related to
Employee's duties hereunder. All business records of Employer are and shall
remain the property of Employer and not Employee.
9. TERMINATION. This Agreement may be terminated prior to the
expiration of the Term in the manner described in this Section 9.
(a) Termination by Employer for Good Cause. Employer shall
have the right immediately to terminate the employment of the Employee for "Good
Cause" (as such term is defined herein) by written notice to the Employee
specifying the particulars of the conduct of the Employee forming the basis for
such termination.
(b) Termination upon Death. The employment of the Employee
hereunder shall terminate immediately upon Employee's death.
(c) Termination by Employee. Employee shall have the right to
terminate this Agreement in the event of a material breach of this Agreement
which continues uncured for
2
<PAGE>
thirty (30) days after written notice to Employer of such breach. Employee shall
also have the right to terminate his employment for any other reason (or for no
reason at all), provided he gives Employer at least sixty (60) days prior
written notice to Employer of such desire, and in such event, Employee and both
Employer and Andrx shall thereafter be relieved of his or their obligations
under this Agreement.
(d) Termination upon Change of Control. In the event
Employee's employment with the Employer is terminated within six (6) months
following a "Change in Control" of the Employer (as defined below), then the
Employer shall pay to Employee on the date of such termination a single lump sum
distribution (without any present value adjustment) equal to Employee's salary
for the remaining Term of this Employment Agreement. Notwithstanding the
foregoing, Employee's employment shall not be deemed terminated if, in lieu of
his position with Employer, Andrx or any other entity owned or controlled by
Andrx offers Employee a replacement position, wherein Employee will perform
similar executive duties and will receive a compensation package at least equal
to the one set forth in this Agreement; provided, however, the provisions of
this section shall not require that Employee be appointed as President and Chief
Executive of any entity, but rather that he shall continue to perform employment
duties generally performed by senior management personnel of an entity in the
healthcare industry.
(e) Termination Date. Any notice of termination given pursuant
to the provisions of this Agreement shall specify therein the effective date of
such termination (the "Termination Date").
(f) CERTAIN DEFINITIONS.
(i) For purposes of this Agreement, "Good Cause"
shall mean: conviction of Employee of, plea of guilty to, or plea of no contest
to, a felony or a crime of moral turpitude, Employee's breach of a material
provision of this Agreement which continues uncured for thirty (30) days after
written notice to Employee of such breach, Employee's material neglect of his
responsibilities, actions by Employee which cause CyBear's or any Andrx entity's
image or reputation to materially suffer, and Employee's breach of any material
provision of any other agreement with or any fiduciary obligation due to
Employer or Andrx.
(ii) For purposes of this Agreement, "Change of
Control" shall mean any of the following events: the reorganization or
consolidation of the Employer, with one or more other companies, other than
through a public offering of stock of Employer or a transaction following which
at least fifty percent (50%) of the ownership interests of the company resulting
from such transaction are owned by one or a group of related persons who,
collectively, prior to such transaction, did not own more than fifty percent
(50%) of the outstanding voting shares of the Employer; or the sale of all or
substantially all of the assets of the Employer; and the sale or merger of
Employer where Employer is not the surviving entity.
10. OBLIGATIONS OF COMPANY ON TERMINATION.
(a) In the event of a termination claimed by the Employer to
be for "Good Cause" pursuant to Section 9 above, Employee shall have the right
to have the justification for
3
<PAGE>
said termination determined by arbitration. In such event, Employee shall serve
on the Employer, within thirty (30) days of receipt of notice of termination, a
written request for arbitration. The Employer immediately shall request the
appointment of an arbitrator by the American Arbitration Association and
thereafter the issues shall be determined under the rules of the American
Arbitration Association and the decision of the arbitrator shall be final and
binding on both parties. The parties shall use all reasonable efforts to
facilitate and expedite the arbitration, and shall act to cause the arbitration
to be completed as promptly as possible. Expenses of the arbitration shall be
borne by the Employer pending a final determination of this matter at which time
such expenses shall borne by the non-prevailing party.
(b) In the event of Employee's termination pursuant to the
first sentence of Section 9(c), Employee shall: (i) be entitled to receive the
full compensation to which he would otherwise be entitled under this Employment
Agreement as if Employee had not so terminated his employment and was continuing
to serve as an employee hereunder for the full Term of this Agreement, payable
in a single lump sum distribution in cash or in equivalent marketable securities
of Andrx (without any present value adjustment) on the date of such termination.
If Employee terminates this Employment Agreement for any reason other than
pursuant to the first sentence of Section 9(c), except as otherwise provided in
this Agreement, Employee shall be entitled to no further compensation or other
benefits under this Employment Agreement, except as to that portion of any
unpaid salary and other benefits accrued and earned by him hereunder up to and
including the effective date of such termination.
11. CONFIDENTIALITY; NON-COMPETITION. Employee's employment by CyBear
is conditioned upon his execution of Andrx Confidentiality and Non-Competition
Agreement, a copy of which is attached hereto as Exhibit B.
12. EFFECTIVE DATE. Employee's employment shall be deemed effective on
the date he reports to work (September 15, 1998).
13. ADDITIONAL COMPENSATION.
(a) In recognition of the potential value of Employee to
Employer and to induce Employee to forego other employment opportunities and to
accept employment pursuant to this Agreement, Andrx shall issue to Employee,
within thirty (30) days of the execution of this Agreement and payment of
$50,000, a warrant to purchase 650,000 shares of Employer's stock (the
"Warrant"), representing five (5%) percent of the total issued and outstanding
common stock of Employer on the date Employer agreed to merge with 1997 Corp.
The stock to be issued pursuant to the exercise of the Warrant shall, if
restricted in any manner, include piggyback registration rights at the earliest
possible date and in connection with the next registration of securities by
Employer with the Securities and Exchange Commission.
(b) In order to obtain all or part of the stock underlying the
Warrant, Employee shall pay to Employer the amount of One Million Nine Hundred
Fifty Thousand Dollars ($1,950,000) or the corresponding part thereof.
4
<PAGE>
14. ANDRX OBLIGATIONS.
(a) In addition to the compensation to be granted hereunder to
Employee by Employer, Andrx shall cause stock options to be issued to Employee
for 20,000 shares of Andrx common stock having an exercise price, per share, of
the fair market value of Andrx stock at the close of business on the date of
grant. Such options shall vest in four annual increments of 5,000 shares on each
anniversary of the date of grant.
(b) As described above, the Warrant will allow Employee to
purchase up to 650,000 shares of Employer's stock at a price of $3.00 per share,
beginning on the date Andrx's ownership percentage in Employer is less than 80%
or August 31, 2000, whichever is sooner (the "Warrant Exercise Date"). The
Warrant shall be exercisable in whole or in part for a period of seven years
after the Warrant Exercise Date, provided (i) Employee has not previously
resigned his position as the President and Chief Executive Officer of Employer,
(ii) Employee's position as the President and Chief Executive Officer of
Employer was not terminated for good cause (as defined above), and (iii)
Eployee's exercise of any portion of such Warrant does not, in the reasonable
opinion of Andrx, cause or result in unfavorable accounting consequences for
Andrx (including, but not limited to a loss of the ability to utilize the
pooling of interests method of accounting). If Employee's ability to exercise
the Warrant is delayed as a result of (iii) above, the term of the Warrant shall
be extended for a like period of time, provided such delays shall not result in
the Warrant term extending beyond a period of nine years.
15. Intentionally deleted.
16. SEVERABILITY. Should any provision of this Agreement be held, by a
court of competent jurisdiction, to be invalid or unenforceable, such invalidity
or unenforceability shall not render the entire Agreement invalid or
unenforceable, and this Agreement and each individual provision hereof shall be
enforceable and valid to the fullest extent permitted by law.
17. SUCCESSORS AND ASSIGNS. This Agreement and all rights under this
Agreement are personal to the Employee and shall not be assignable by either
party without the written consent of the other party. All of the Employee's
rights under the Agreement shall inure to the benefit of his heirs, personal
representatives, designees or other legal representatives, as the case may be.
This Agreement shall inure to the benefit of and be binding upon Employer and
its successors and assigns.
18. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Florida, without regard to the
conflicts of laws rules thereof. The venue for any action arising from or
relating to this Agreement shall be in Broward County, Florida.
19. NOTICES. All notices, requests and demands given to or made upon
the respective parties hereto shall be deemed to have been given or made three
(3) business days after the date of mailing, when mailed by registered or
certified mail, postage prepaid, or on the date of delivery if delivered by
hand, or one business day after the date of delivery by Federal Express or
similar overnight delivery service, addressed to the parties at their addresses
set forth below or to such other addresses furnished by notice given in
accordance with this Section 19:
To Employer: CyBear, Inc.
4001 SW 47th Avenue
Ft. Lauderdale, FL 33314
Attn: John Klein, Chairman
5
<PAGE>
With a copy to: 4001 SW 47th Avenue
Ft. Lauderdale, FL 33314
Attn: Scott Lodin, VP / General Counsel
To Employee: Edward Goldman, M.D.
7000 W. Cypresshead Drive
Parkland, FL 33067
To Andrx: 4001 SW 47th Avenue
Ft. Lauderdale, FL 33314
Attn: Scott Lodin, VP / General Counsel
20. WITHHOLDING. All payments required to be made by Employer to the
Employee under this Agreement shall be subject to withholding taxes, Social
Security and other payroll deductions in accordance with the law and Employer's
policies applicable to employees of Employer.
21. COMPLETE UNDERSTANDING. This Agreement supersedes any prior
contracts, understandings, discussions and agreements relating to employment
between the Employee and Employer and constitutes the complete understanding
between the parties with respect to the subject matter hereof. No statement,
representation, warranty or covenant has been made by either party with respect
to the subject matter hereof except as expressly set forth herein.
22. MODIFICATION; WAIVER. This Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by Employer and the Employee, or in the case of a waiver, by the
party against whom the waiver is to be effective. Any such waiver shall be
effective only to the extent specifically set forth in such writing. No failure
or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
23. MUTUAL REPRESENTATIONS. Employee represents and warrants to
Employer that the execution and delivery of this Agreement and the fulfillment
of the terms hereof will not constitute a default under or conflict with any
agreement or other instrument to which Employee is a party or by which Employee
is bound and does not require the consent of any person or entity. Employer
represents and warrants to the Employee that this Agreement has been duly
authorized, executed and delivered by Employer and that the fulfillment of the
terms hereof will not constitute a default under or conflict with any agreement
or other instrument to which it is a party or by which it is bound. Each party
hereto warrants and represents to the other that this Agreement constitutes the
valid and binding obligation of such party enforceable against such party in
accordance with its terms.
24. INDEMNIFICATION. Employer and Andrx, jointly and severally, agree
to indemnify, defend and hold harmless Employee from and against any losses,
liabilities, damages, deficiencies, all suits, proceedings, actions, judgments,
claims, charges, damages (including
6
<PAGE>
special or consequential damages), assessments, costs or expenses (including
interest, penalties and reasonable attorneys' fees and disbursements), fines and
penalties incurred or suffered by Employee, whether suit is instituted or not,
and, if instituted, whether at any trial and appellate level, raised by any
third party (collectively, a "Loss") in connection with any and all matters
relating in any manner to the litigation pending between Employer and/or Andrx,
on the one hand, and Medix Resources, Inc. or Cymedix Lynx Corporation, on the
other, or the facts and circumstances underlying such litigation. Employer also
agrees to indemnify and hold Employee harmless for his actions on behalf of
Employer, to the fullest extent permitted by law.
25. HEADINGS/CONSTRUCTION. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of this Agreement. This Agreement shall not be construed against
the party drafting the document as the terms herein have been negotiated at
arms' length and both parties have had the opportunity to ask questions and to
seek the advice of independent counsel.
26. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by the other party hereto.
27. ATTORNEY'S FEES. In the event any action is commenced arising from
or related to this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees (at all levels), court costs and out-of-pocket
expenses.
IN WITNESS WHEREOF, Employer has caused this Agreement to be duly
executed by one of its officers duly authorized to enter into and execute this
Agreement, and the Employee has manually signed his name hereto, all as of the
day and year first above written.
ANDRX CORPORATION CYBEAR, INC.
By: /s/ SCOTT LODIN By: /s/ EDWARD GOLDMAN M.D.
-------------------------------- ------------------------------
Title: Vice President, General Title: President and CEO
----------------------------- ---------------------------
Counsel and Secretary
---------------------------------
EDWARD GOLDMAN, M.D.
7
<PAGE>
EXHIBIT "A"
COMPENSATION
During the Term of this Agreement, Employer shall pay Employee the following
compensation for services rendered in the amounts and according to the schedule
set forth below:
ANNUAL SALARY: Two Hundred Fifty Thousand ($250,000) Dollars for each twelve
month period during the first Twenty-Four (24) months of the Term and Three
Hundred Thousand ($300,000) Dollars for each Twelve (12) month period commencing
with month Twenty-Five (25) and continuing until expiration of the Term of the
Agreement. Employer shall pay the salary amounts above, in arrears, in
accordance with Employer's regular payroll schedule; provided, however, salary
payments shall be not less frequent than monthly.
8
EXHIBIT 10.3
November 5, 1998
Ms. Debra S. Richman
2373 Broadway, Apt. 923
New York, New York 10024
Dear Ms. Richman:
This will confirm the terms and conditions of your employment by
CyBear, Inc. ("CyBear") which have been mutually agreed upon by you and CyBear.
Commencing as of August 17, 1998 (the "Commencement Date"), you will
serve as CyBear's Executive Vice President - Business Development. You will be
employed for a two-year term (the "Initial Term") from the Commencement Date,
subject to renewal by mutual agreement of the parties. Approximately ninety days
prior to the expiration of the Initial Term, the parties will enter into
discussions concerning a renewal of your employment. You will be based in an
office to be located in New York or New Jersey, at CyBear's discretion. Any
request that you relocate will be subject to the mutual agreement of the
parties. If you agree to relocate, CyBear will reimburse you for your reasonable
relocation costs.
Your base compensation during the Initial Term will be at the annual
rate of $160,000. In addition, you will be entitled to receive a Signing Bonus
in the amount of $80,000 payable in eight quarterly installments of $10,000 each
(less applicable withholding) on the last day of each three month period after
the Commencement Date, during the Initial Term. You will also receive an auto
allowance in the amount of $450.00 monthly.
As a CyBear executive, you will be entitled to participate in our
affiliated company's 401-K Plan (the "401-K Plan") (a copy of which has been or
will be provided to you) and its group, medical, dental and life insurance
plans, as well as a short-term disability plan. You will be entitled to three
weeks of paid vacation each year. Your reasonable business expenses will be
reimbursed.
STOCK OPTIONS
In addition to the above, pursuant to CyBear's 1997 Stock Option Plan
(the "Plan"), CyBear will immediately issue to you options to purchase (the
"Stock Options") from CyBear an aggregate of 100,000 shares of CyBear's common
stock at an exercise price of $3.00 per share. The Stock Options will, except as
otherwise set out below, vest and become exercisable in two annual increments,
as follows: Two increments of 37,500 shares each will vest and become
exercisable, respectively, one year from the Commencement Date and two years
from the Commencement Date, subject to the provisions set forth under
"Termination of "Employment" below. In the event that your employment is renewed
beyond the Initial Term, the remaining 25,000 shares of CyBear common stock at
an exercise price of $3.00 per share will be issued to you and will vest and
become exercisable at the end of the first calendar year of a renewal period. As
set forth in the Plan, the Stock Options will be exercisable for a period of ten
years from the date of vesting and, upon exercise, the shares purchased pursuant
thereto will be registered and freely transferable.
<PAGE>
ADDITIONAL STOCK OPTIONS
In addition to the Stock Options referred to above, during the
discussions concerning a renewal of your employment, the parties will seek to
reach mutual agreement on additional stock options to be issued during such
renewal period.
TERMINATION OF EMPLOYMENT
In the event of the termination of your employment by CyBear prior to
the expiration of the Initial Term, where such termination is for "cause" as
hereinafter defined or in the event of the termination of your employment by you
prior to the expiration of the Initial Term, then CyBear's sole obligation to
you shall be to pay to you all base salary and other accrued entitlements up to
the date of such termination of employment. For purposes of this agreement,
cause shall be defined as (a) your conviction (after trial or upon a plea) of
any fraud, embezzlement, or other misappropriation; (b) your failure to perform
any of your material duties, which failure is not cured within ten days after
CyBear gives you written notice of such failure; (c) your representations under
this agreement being not true and correct as of the date of this agreement; or
(d) your material breach of the provisions of the Confidentiality and
Non-Competition Agreement you execute. For purposes of this agreement, your
death or disability for a period of three consecutive months during the Initial
Term shall be deemed to be "cause" under this agreement.
In the event that your employment by CyBear is terminated by CyBear
prior to the expiration of the Initial Term for any reason that does not
constitute cause hereunder, you shall be entitled to receive (i) the balance of
any unpaid base compensation for the remaining portion of the Initial Term, (ii)
any remaining unpaid portion of the Signing Bonus, (iii) any accrued
entitlements, including unused vacation and unreimbursed business expenses, and
(iv) the continued contribution to the monthly cost of any COBRA health
insurance benefits you obtain for the balance of the Initial Term in an amount
equal to 50% of CyBear's contribution to those health insurance benefits while
you were an employee. In addition to the foregoing, in the event of such
termination of employment by CyBear for other than cause, CyBear agrees to
immediately vest such additional Stock Options, allowing you to purchase the
shares from CyBear: (a) if such termination for other than cause occurs during
the first year of the
<PAGE>
Initial Term, of $50,000 shares of CyBear's common stock at an exercise price of
$3.00 per share; and (b) if such termination for other than cause occurs during
the second year of the Initial Term, of the balance of the stock for which the
Stock Options have been granted, making a total of vested options to purchase an
aggregate of 75,000 shares of CyBear's common stock at an exercise price of
$3.00 per share.
NON-COMPETITION
During the Initial Term and any subsequent renewal term, while employed
by CyBear, you will be required to refrain from competing as described in
Paragraph 6 of the Andrx Confidentiality and Non-Competition Agreement (the
"Non-Compete Agreement"). In the event that you terminate your employment with
CyBear during the Initial Term or any agreed renewal term, you will also be
required to refrain from competing, as set for the in the Non-Compete Agreement,
until the expiration of the Initial Term or any agreed upon renewal term.
Similarly, in the event that CyBear terminates your employment, whether or not
for a reason that constitutes cause hereunder, during the Initial Term or any
agreed upon renewal term, you will be required to refrain from competing, as set
forth the in the Non-Compete Agreement, until the expiration of the Initial Term
or any agreed upon renewal term. If we do not reach agreement on a renewal of
this Agreement, you will not be subject to the Non-Compete Agreement after the
expiration of the Initial Term. In all events, you shall be required to adhere
to the confidentiality and other provisions set forth in the Non-Compete
Agreement. The provisions of this Paragraph shall, with respect to the
applicable period during which you are required to refrain from competing,
supersede the conflicting provisions of the Non-Compete Agreement.
ADVERSE CHANGE IN CONDITIONS
An adverse change in your conditions of employment (an "Adverse
Change") shall be deemed to occur if for reasons other than for cause (a) there
is any material reduction of or change in your position or the duties assigned
to you as Executive Vice President-Business Development and the responsibilities
attendant upon such position; (b) there is any other material diminution in the
status, working conditions and/or economic benefits to which you may at any time
become entitled as an employee of CyBear; or (c) there has been a "change in
control" of CyBear and your employment is terminated by the Company. For
purposes of this agreement, a change in control shall be deemed to have occurred
in the event that there is, whether by merger, an acquisition of CyBear by any
party other than Andrx, or otherwise, a change in the party controlling the
management and policies of CyBear. In the event of an Adverse Change, you may
elect, by written notice to CyBear, to treat such Adverse Change as a
termination of your employment by CyBear for other than cause.
<PAGE>
REPRESENTATION
By your execution of this agreement, you are confirming your
representation to CyBear that you're acceptance of a position with CyBear and
the performance of your duties will not violate the terms of any non-compete,
non-disclosure or other agreements to which you are a party.
NOTICES
All notices under this agreement shall be in writing and shall be given
by certified mail, overnight courier, or by hand delivery at the appropriate
address below or at a substitute address designated by written notice to the
other parties to the agreement:
if to you, at: 2373 Broadway, Apt. 923
New York, NY 10024
with a copy to: Merril A. Mironer, Esq.
Rosenman & Colin LLP
575 Madison Avenue
New York, NY 10022-2585
if to CyBear or Andrx: 4001 SW 47th Avenue
Ft. Lauderdale, FL 33314
Attn: President
with a copy to: Scott Lodin, Esq. V.P. and
General Counsel
4001 SW 47th Avenue
Ft. Lauderdale, FL 33314
MISCELLANEOUS
This agreement supersedes all previous agreements and understandings
among the parties hereto and contains the entire understanding of the parties
relating to is subject matter. It may not be modified or terminated except by a
written agreement signed by all of the parties hereto. This agreement has been
entered into in the State of Florida and the validity, interpretation and legal
effect of this agreement shall be governed by and construed in accordance with
the laws of the State of Florida applicable to contracts entered into and
performed entirely within the State of Florida.
We acknowledge that you, CyBear and Value Options, Inc. will be
participating in a joint business venture that is separate from, and not related
to, your employment by CyBear as described in this letter. From time to time, we
understand that you will be undertaking various consulting assignments for other
<PAGE>
companies, where such companies are not engaged in any business that is
competitive with CyBear. So long as such assignments do not detract from the
performance of your responsibilities for CyBear, we have no objection to you
undertaking any new consulting assignments, Provided that CyBear agrees that
such business relationships are not competitive with the business of CyBear.
Attached hereto as Schedule B is a list of your current consulting arrangements.
CyBear hereby consent to such existing consulting arrangements.
If the above accurately reflects our agreement, please so indicate by
signing a copy of this agreement where indicated below and returning the signed
copy to me by either fax (at 954-792-1034) or by mail.
CYBEAR, INC.
By: /s/ EDWARD GOLDMAN
----------------------------
Edward Goldman, MD
Chief Executive Officer
ANDRX CORPORATION
By: /s/ ALAN P. COHEN
----------------------------
Alan P. Cohen
Chairman and CEO
Agreed to and accepted on
this 24th day of November, 1998
/s/ DEBRA S. RICHMAN
- ------------------------------
DEBRA S. RICHMAN
EXHIBIT 10.4
FORM OF
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement"), dated as of the ___
day of _____, 1999, by and between Cybear, Inc., a Delaware corporation with its
principal place of business at 5000 Blue Lake Drive, Suite 200, Boca Raton, FL
(the "Company"), and _________________, who resides at _______________________
(the "Executive").
R E C I T A L S:
A. The Company currently receives the benefits of the services of the
Executive as a member of the Company's Board of Directors and an executive
officer.
B. The Executive has requested indemnification and the Company is
willing to indemnify the Executive as a member of the Company's Board of
Directors and an executive officer to the fullest extent permitted by applicable
law and regulation.
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein, the Company and the Executive agree as follows:
SECTION 1. MANDATORY INDEMNIFICATION IN ACTIONS, SUITS OR PROCEEDINGS
OTHER THAN THOSE BY OR IN THE RIGHT OF THE COMPANY. Subject to Section 5 hereof
and to the extent and except as otherwise provided hereunder, the Company shall
indemnify and hold harmless the Executive from and against any and all claims,
damages, reasonable expenses (including, without limitation, attorneys' and
paralegals' fees), judgments, penalties, fines (including excise taxes assessed
with respect to an employee benefit plan) and amounts paid in settlement and all
other liabilities actually incurred by the Executive in connection with the
investigation, defense, prosecution, settlement or appeal of any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Company) and to which the Executive was or is a party or is threatened to be
made a party by reason of the fact that the Executive is or was a director,
officer, stockholder, employee or agent of the Company, or is or was serving at
the request of the Company as a director, officer, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan, or other enterprise, or by reason of anything done or not done by
the Executive in any such capacity or capacities; provided, however, that this
Agreement shall not eliminate or limit the liability of the Executive (i) for
any breach of the Executive's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for the willful or
negligent payment of unlawful dividends or unlawful stock repurchases or
redemptions in violation of Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the Executive derived
an improper personal benefit. For purposes of this Agreement, the Executive is
considered to be serving as a fiduciary or similar capacity or as an agent of an
employee benefit plan at the Company's request if his duties to the Company also
impose duties
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on, or otherwise involve services by, the Executive to the plan or to
participants in or beneficiaries of the plan. Notwithstanding the foregoing, the
Company shall only indemnify the Executive for amounts paid in settlement if
such settlement was consented to by the Company, which consent shall not be
unreasonably withheld.
SECTION 2. MANDATORY INDEMNIFICATION IN ACTIONS OR SUITS BY OR IN THE
RIGHT OF THE COMPANY. Subject to Section 5 hereof and to the extent and except
as otherwise provided hereunder, the Company shall indemnify and hold harmless
the Executive from and against any and all reasonable expenses (including,
without limitation, attorneys' and paralegals' fees) and/or amounts paid in
settlement actually incurred by the Executive in connection with the
investigation, defense, settlement or appeal of any threatened, pending or
completed action or suit by or in the right of the Company to procure a judgment
in its favor and to which the Executive was or is a party or is threatened to be
made a party by reason of the fact that the Executive is or was a director,
officer, stockholder, employee or agent of the Company, or is or was serving at
the request of the Company as a director, officer, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or not done by
the Executive in such capacity or capacities, provided that (i) the Executive
acted in good faith and in a manner the Executive reasonably believed to be in
or not opposed to the best interests of the Company (ii) indemnification for
amounts paid in settlement shall not exceed the estimated expense of litigating
the proceeding to conclusion, (iii) no indemnification shall be made in respect
of any claim, issue or matter as to which the Executive shall have been adjudged
to be liable for misconduct in the performance of his duty to the Company unless
and only to the extent that the court in which such action, suit or proceeding
was brought (or any other court of competent jurisdiction) shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, the Executive is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper, and (iv) no
indemnification shall be made in respect of any claim, issue or matter in which
the Executive shall have been adjudged to be liable for any willful or negligent
payment of unlawful dividends or unlawful stock repurchases or redemptions in
violation of Section 174 of the General Corporation Law of the State of Delaware
or for any transaction in which the Executive derived a personal benefit.
Notwithstanding the foregoing, the Company shall only indemnify the Executive
for amounts paid in settlement, if such settlement was consented to by the
Company, which consent shall not be unreasonably withheld.
SECTION 3. MANDATORY INDEMNIFICATION AGAINST EXPENSES INCURRED WHILE
TESTIFYING. Subject to Section 5 hereof, the Company shall indemnify the
Executive against expenses (including attorneys' fees and paralegals' fees)
incurred or paid by the Executive as a result of providing testimony in any
proceeding, whether civil, criminal, administrative or investigative (including
but not limited to any action or suit by or in the right of the Company to
procure a judgment in its favor), by reason of the fact that the Executive is or
was an officer, director, stockholder, employee, consultant, adviser or agent of
the Company, or is or was serving at the request of the Company as an
officer, director, partner, trustee, employee, adviser or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise
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SECTION 4. REIMBURSEMENT OF EXPENSES FOLLOWING ADJUDICATION OF
NEGLIGENCE. Except as otherwise specified in Section 2 herein, the Company shall
reimburse the Executive for any expenses (including attorneys' fees and
paralegals' fees) and amounts actually and reasonably incurred or paid by him in
connection with the investigation, defense, settlement or appeal of any action
or suit described in Section 2 hereof that results in an adjudication that the
Executive was liable for negligence, gross negligence or recklessness (but not
willful misconduct) in the performance of his duty to the Company; provided,
however, that the Executive acted in good faith and in a manner he believed to
be in the best interests of the Company.
SECTION 5. AUTHORIZATION OF INDEMNIFICATION.
5.1 INDEMNIFICATION DETERMINATION. Any indemnification under
Sections 1 and 2 hereof (unless ordered by a court) and any reimbursement made
under Section 3 hereof, shall be made by the Company only as authorized in the
specific case upon a determination (the "Determination") that indemnification or
reimbursement of the Executive is proper in the circumstances because the
Executive has met the applicable standard of conduct set forth in Sections 1, 2
or 3 hereof, as the case may be and which Determination shall be based on the
presumptions, if applicable, set forth in this Section 5. Subject to Subsections
6.6, 6.7 and 6.8 of this Agreement, the Determination shall be made in the
following order of preference:
(1) first, by the Company's Board of Directors (the "Board")
by majority vote or consent of a quorum consisting of directors who are not, at
the time of the Determination, named parties to such action, suit or proceeding
("Disinterested Directors"); or
(2) next, if such a quorum of Disinterested Directors cannot
be obtained, by majority vote of a committee duly designated by the Board (in
which designation all directors, whether or not Disinterested Directors, may
participate) consisting solely of two or more Disinterested Directors; or
(3) next, if such a committee cannot be designated, by
independent legal counsel (who may be the outside counsel regularly employed by
the Company) in a written opinion; or
(4) next, if such legal opinion cannot be obtained, by vote of
the holders of a majority of the Company's common stock that are represented in
person or by proxy and entitled to vote at a meeting called for such purpose or
by a written consent of the holders of a majority of the outstanding shares of
common stock of the Company in lieu thereof.
5.2 NO PRESUMPTIONS. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea OF NOLO
CONTENDERE or its equivalent, shall not, of itself, create a presumption that
the Executive did not act in good faith
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and in a manner which the Executive reasonably believed to be in or not opposed
to the best interests of the Company, and with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
5.3 BENEFIT PLAN CONDUCT. The Executive's conduct with respect
to an employee benefit plan for a purpose the Executive reasonably believed to
be in the interests of the participants in and beneficiaries of the plan shall
be deemed, in rendering a Determination, to be conduct that the Executive
reasonably believed to be not opposed to the best interests of the Company.
5.4 RELIANCE AS SAFE HARBOR. For purposes of rendering any
Determination hereunder, the Executive shall be deemed to have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company or, with respect to any criminal action or proceeding,
to have had no reasonable cause to believe the Executive's conduct was unlawful,
if the Executive's action is based on (i) the records or books of account of the
Company or another enterprise, including financial statements, (ii) information
supplied to the Executive by the officers of the Company or another enterprise
in the course of their duties, (iii) the advice of legal counsel for the Company
or another enterprise, or (iv) information or records given or reports made to
the Company or another enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the Company
or another enterprise. The term "another enterprise" as used in this Subsection
5.4 shall mean any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise of which the Executive is or was
serving at the request of the Company as a director, officer, partner, trustee,
employee or agent. The provisions of this Subsection 5.4 shall not be deemed to
be exclusive or to limit in any way the other circumstances in which the
Executive may be deemed to have met the applicable standard of conduct set forth
in Sections 1, 2 or 3 hereof, as the case may be.
5.5 SUCCESS ON MERITS OR OTHERWISE. Notwithstanding any other
provision of this Agreement, to the extent that the Executive has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described in Sections 1 or 2 hereof, or in defense of any claim,
issue or matter therein, the Executive shall be indemnified against expenses
(including, without limitation, attorneys' and paralegals' fees) actually and
reasonably incurred by the Executive in connection with the investigation,
defense, settlement or appeal thereof. For purposes of this Subsection 5.5, the
term "successful on the merits or otherwise" shall include, but not be limited
to, (i) any termination, withdrawal, or dismissal (with or without prejudice) of
any claim, action, suit or proceeding against the Executive without any express
finding of liability or guilt against the Executive, (ii) the expiration of 120
days after the making of any claim or threat of an action, suit or proceeding
without the institution of the same and without any promise or payment made to
induce a settlement, or (iii) the settlement of any action, suit or proceeding
under Section 1, 2 or 3 hereof pursuant to which the Executive pays less than
$10,000.
5.6 PARTIAL INDEMNIFICATION OR REIMBURSEMENT. If the Executive
is entitled under any provision of this Agreement to indemnification and/or
reimbursement by the Company for some or a portion of the claims, damages,
expenses (including, without limitation, attorneys' and paralegals' fees),
judgments, fines or amounts paid in settlement by the Executive in connection
with the investigation, defense, settlement or appeal of any action specified in
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Sections 1, 2 or 3 hereof, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify and/or reimburse the Executive for the
portion thereof to which the Executive is entitled. The party or parties making
the Determination shall determine the portion (if less than all) of such claims,
damages, expenses (including, without limitation, attorneys' and paralegals'
fees), judgments, fines or amounts paid in settlement for which the Executive is
entitled to indemnification and/or reimbursement under this Agreement.
SECTION 6. PROCEDURES FOR DETERMINATION OF WHETHER STANDARDS HAVE BEEN
SATISFIED.
6.1 COSTS. All costs of making the Determination required by
Section 5 hereof shall be borne solely by the Company, including, but not
limited to, the costs of legal counsel, proxy solicitations and judicial
determinations, and all costs of defending any suits or proceedings challenging
payments to the Executive under this Agreement. Provided the Executive prevails
in such matter, the Company shall also be solely responsible for paying all
reasonable expenses incurred by the Executive to enforce this Agreement,
including, but not limited to, the costs incurred by the Executive to obtain
court-ordered indemnification pursuant to Section 9 hereof, regardless of the
outcome of such application or proceeding.
6.2 TIMING OF THE DETERMINATION. The Company shall use its
best efforts to make the Determination contemplated by Section 5 hereof
promptly. In addition, the Company agrees:
(1) if the Determination is to be made by the Board or a
committee thereof, such Determination shall be made not later than 15 days after
a written request for a Determination (a "Request") is delivered to the Company
by the Executive;
(2) if the Determination is to be made by independent legal
counsel, such Determination shall be made not later than 30 days after a Request
is delivered to the Company by the Executive; and
(3) if the Determination is to be made by the stockholders of
the Company, such Determination shall be made not later than 90 days after a
Request is delivered to the Company by the Executive.
The failure of the Company to use its best efforts to make a Determination
within the above-specified time period shall constitute a Determination
approving full indemnification or reimbursement of the Executive notwithstanding
anything herein to the contrary. A Determination may be made in advance of (i)
the Executive's payment (or incurring) of expenses with respect to which
indemnification or reimbursement is sought, and/or (ii) final disposition
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of the action, suit or proceeding with respect to which indemnification or
reimbursement is sought.
6.3 REASONABLENESS OF EXPENSES. Notwithstanding anything
contained herein to the contrary, prior to the payment of any expenses
hereunder, the Company shall determine the reasonableness of such expenses as
provided below. The Board shall use its best efforts to ensure that the
evaluation and finding as to the reasonableness of expenses incurred by the
Executive for purposes of this Agreement shall be made (in the following order
of preference) within 15 days of the Executive's delivery to the Company of a
request for reimbursement of expenses that includes a reasonable accounting of
expenses incurred:
(1) first, by the Board by a majority vote of a quorum
consisting of Disinterested Directors; or
(2) next, if a quorum cannot be obtained under subdivision
(1), by majority vote or consent of a committee duly designated by the Board (in
which designation all directors, whether or not Disinterested Directors, may
participate), consisting solely of two or more Disinterested Directors.
All expenses shall be considered reasonable for purposes of this Agreement if
the finding contemplated by this Subsection 6.3 is not made within the
prescribed time due to the Company's failure to use its best efforts to comply
therewith. The finding required by this Subsection 6.3 must be made in advance
of the payment (or incurring) of the expenses for which indemnification or
reimbursement is sought.
6.4 PAYMENT OF INDEMNIFIED AMOUNT. Immediately following a
Determination that the Executive has met the applicable standard of conduct set
forth in Sections 1, 2 or 3 hereof, as the case may be, and/or the finding of
reasonableness of expenses contemplated by Subsection 6.3 hereof, the Company
shall pay to the Executive in cash the amount to which the Executive is entitled
to be indemnified and/or reimbursed, as the case may be, without further
authorization or action by the Board; provided, however, that the expenses for
which indemnification or reimbursement is sought have actually been incurred by
the Executive and the Executive is able to provide appropriate receipts.
6.5 STOCKHOLDER VOTE ON DETERMINATION. The Executive and any
other stockholder who is a party to the proceeding for which indemnification or
reimbursement is sought shall be entitled to vote on any Determination to be
made by the Company's stockholders, including a Determination made pursuant to
Subsection 6.7 hereof. In addition, in connection with each meeting at which a
stockholder Determination will be made, the Company shall solicit proxies that
expressly include a proposal to indemnify or reimburse the Executive. The
Company proxy statement relating to the proposal to indemnify or reimburse the
Executive shall not include a recommendation against indemnification or
reimbursement.
6.6 SELECTION OF INDEPENDENT LEGAL COUNSEL. If the
Determination required under Section 5 is to be made by independent legal
counsel, such counsel shall be selected by the Executive with the approval of
the Board of Directors, which approval shall not be unreasonably withheld. The
fees and expenses incurred by counsel in making any Determination
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(including Determinations pursuant to Subsection 6.8 hereof) shall be borne
solely by the Company regardless of the results of any Determination and, if
requested by counsel, the Company shall give such counsel an appropriate written
agreement with respect to the payment of their fees and expenses and such other
matters as may be reasonably requested by counsel.
6.7 RIGHT OF EXECUTIVE TO APPEAL AN ADVERSE DETERMINATION BY
BOARD. If a Determination is made by the Board or a committee thereof that the
Executive did not meet the applicable standard of conduct set forth in Sections
1, 2 or 3 hereof, upon the written request of the Executive and the Executive's
delivery of $500 to the Company, the Company shall cause a new Determination to
be made by the Company's stockholders at the next regular or special meeting of
stockholders. Subject to Section 9 hereof, such Determination by the Company's
stockholders shall be binding and conclusive for purposes of this Agreement.
6.8 RIGHT OF EXECUTIVE TO SELECT FORUM FOR DETERMINATION. If,
at any time subsequent to the date of this Agreement, "Continuing Directors," as
defined below, do not constitute a majority of the members of the Board, or
there is otherwise a change in control of the Company (as contemplated by Item
403(c) of Regulation S-K promulgated under the Securities Act of 1933, as
amended), then upon the request of the Executive, the Company shall cause the
Determination required by Section 5 hereof to be made by independent legal
counsel selected by the Executive and approved by the Board (which approval
shall not be unreasonably withheld), which counsel shall be deemed to satisfy
the requirements of Subsection 6.6 hereof. If none of the legal counsel selected
by the Executive are willing and/or able to make the Determination, then the
Company shall cause the Determination to be made by a majority vote or consent
of a Board committee consisting solely of Continuing Directors. If there are no
Continuing Directors, then the Company shall cause the Determination required by
Section 5 hereof to be made by the stockholders at the next regular or special
meeting of stockholders. For purposes of this Agreement, a "Continuing Director"
means either a member of the Board at the date of this Agreement or a person
nominated to serve as a member of the Board by a majority of the then Continuing
Directors.
6.9 ACCESS BY EXECUTIVE TO DETERMINATION. The Company shall
afford to the Executive and his representatives ample opportunity to present
evidence of the facts upon which the Executive relies for indemnification or
reimbursement, together with other information relating to any requested
Determination. The Company shall also afford the Executive the reasonable
opportunity to include such evidence and information in any Company proxy
statement relating to a stockholder Determination.
6.10 JUDICIAL DETERMINATIONS IN DERIVATIVE SUITS. In each
action or suit described in Section 2 hereof, the Company shall cause its
counsel to use its best efforts to obtain from the Court in which such action or
suit was brought (i) an express adjudication whether the Executive is liable for
negligence or misconduct in the performance of his duty to
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the Company, and, if the Executive is so liable, (ii) a determination whether
and to what extent, despite the adjudication of liability but in view of all the
circumstances of the case (including this Agreement), the Executive is fairly
and reasonably entitled to indemnification.
SECTION 7. SCOPE OF INDEMNITY. The actions, suits and proceedings
described in Sections 1 and 2 hereof shall include, for purposes of this
Agreement, any actions that involve, directly or indirectly, activities of the
Executive both in his official capacities as a Company director or officer and
actions taken in another capacity while serving as director or officer,
including, but not limited to, actions or proceedings involving (i) compensation
paid to the Executive by the Company, (ii) activities by the Executive on behalf
of the Company, including actions in which the Executive is plaintiff, (iii)
actions alleging a misappropriation of a "corporate opportunity," (iv) responses
to a takeover attempt or threatened takeover attempt of the Company, (v)
transactions by the Executive in Company securities, and (vi) the Executive's
preparation for and appearance (or potential appearance) as a witness in any
proceeding relating, directly or indirectly, to the Company. In addition, the
Company agrees that, for purposes of this Agreement, all services performed by
the Executive on behalf of, in connection with or related to any subsidiary of
the Company, any employee benefit plan established for the benefit of employees
of the Company or any subsidiary, any corporation or partnership or other entity
in which the Company or any subsidiary has a 5 % ownership interest, or any
other affiliate of the Company, shall be deemed to be at the request of the
Company.
SECTION 8. ADVANCE FOR EXPENSES.
8.1 MANDATORY ADVANCE. Reasonable expenses (including, without
limitation, attorneys' and paralegals' fees) incurred by the Executive in
investigating, defending, settling or appealing any action, suit or proceeding
described in Sections 1 or 2 hereof shall be advanced by the Company in advance
of the final disposition of such action, suit or proceeding upon the request by
the Executive and said expenses shall be paid within 10 days following the
Executive's delivery to the Company of such written request for an advance
pursuant to this Section 8, together with a reasonable accounting of such
expenses. However, prior to the payment of any expenses hereunder, the Company
shall determine the reasonableness of such expenses as provided in Subsection
6.3.
8.2 UNDERTAKING TO REPAY. The Executive hereby undertakes and
agrees to repay to the Company any advances made pursuant to this Section 8 if
and to the extent that it shall ultimately be determined that the Executive is
not entitled to be indemnified by the Company for such amounts, as described
above.
8.3 MISCELLANEOUS. The Company shall make the advances
contemplated by this Section 8 regardless of the Executive's financial ability
to make repayment, and regardless whether indemnification of the Executive by
the Company will ultimately be required. Any advances and undertakings to repay
pursuant to this Section 8 shall be unsecured and interest-free.
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SECTION 9. COURT ORDERED INDEMNIFICATION. Regardless of whether the
Executive has met the standard of conduct set forth in Sections 1, 2 or 3
hereof, as the case may be, and notwithstanding the presence or absence of any
Determination whether such standards have been satisfied, the Executive may
apply for indemnification (and/or reimbursement pursuant to Sections 3 or 13
hereof) to the court conducting any proceeding to which the Executive is a party
or to any other court of competent jurisdiction. Upon receipt of an application,
the court, after giving any notice the court considers necessary, may order
indemnification (and/or reimbursement) if it determines the Executive is fairly
and reasonably entitled to indemnification (and/or reimbursement) in view of all
the relevant circumstances (including this Agreement).
SECTION 10. NONDISCLOSURE OF PAYMENTS. Except as required by applicable
securities laws, neither party shall disclose any payments under this Agreement
unless prior approval of the other party is obtained. Any payments to the
Executive that must be disclosed shall, unless otherwise requested by law, be
described only in Company proxy or information statements relating to
special/annual meetings of the Company's stockholders and the Company shall
afford the Executive the reasonable opportunity to review all such disclosures
and, if requested, to explain in such statement any mitigating circumstances
regarding the event reported.
SECTION 11. COVENANT NOT TO SUE, LIMITATION OF ACTIONS AND RELEASE OF
CLAIMS. No legal action shall be brought and no cause of action shall be
asserted by or on behalf of the Company (or any of its subsidiaries) against the
Executive, his spouse, heirs, executors, personal representatives or
administrators after the expiration of two years from the time the Executive
ceases (for any reason) to serve as either an officer or director of the
Company, and any claim or cause of action of the Company (or any of its
subsidiaries) shall be extinguished and deemed released unless asserted by
filing of a legal action within such two-year period.
SECTION 12. INDEMNIFICATION OF EXECUTIVE'S ESTATE. Notwithstanding any
other provision of this Agreement, and regardless of whether indemnification of
the Executive would be permitted and/or required under this Agreement, if the
Executive is deceased, the Company shall indemnify and hold harmless the
Executive's estate, spouse, heirs, administrators, personal representatives and
executors (collectively the "Executive's Estate") against, and the Company shall
assume, any and all claims, damages, expenses (including attorneys' and
paralegals' fees), penalties, judgments, fines and amounts paid in settlement
actually incurred by the Executive or the Executive's Estate in connection with
the investigation, defense, settlement or appeal of any action described in
Sections 1 or 2 hereof, to the same extent as the Executive. Indemnification of
the Executive's Estate pursuant to this Section 12 shall be mandatory and not
require a Determination or any other finding that the Executive's conduct
satisfied a particular standard of conduct.
SECTION 13. REIMBURSEMENT OF ALL LEGAL EXPENSES. Notwithstanding any
other provision of this Agreement, and regardless of the presence or absence of
any Determination, the Company promptly (but not later than 30 days following
the
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Executive's submission of a reasonable accounting) shall reimburse the Executive
for all attorneys' fees and related court costs and other expenses incurred by
the Executive in connection with the investigation, defense, settlement or
appeal of any action described in Section 1 or 2 hereof (including, but not
limited to, the matters specified in Section 6 hereof).
SECTION 14. MISCELLANEOUS.
14.1 NOTICE PROVISION. Any notice, payment, demand or
communication required or permitted to be delivered or given by the provisions
of this Agreement shall be deemed to have been effectively delivered or given
and received on the date personally delivered to the respective party to whom it
is directed, or when deposited by registered or certified mail, return receipt
requested, with postage and charges prepaid and addressed to the parties at the
addresses set forth above their signatures to this Agreement.
14.2 ENTIRE AGREEMENT. Except for the Company's Certificate of
Incorporation, this Agreement constitutes the entire understanding of the
parties and supersedes all prior understandings, whether written or oral,
between the parties with respect to the subject matter of this Agreement.
14.3 SEVERABILITY OF PROVISIONS. If any provision of this
Agreement is held to be illegal, invalid, or unenforceable under present or
future laws effective during the term of this Agreement, such provision shall be
fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement. Furthermore, in
lieu of each such illegal, invalid, or unenforceable provision, there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid, and enforceable.
14.4 APPLICABLE LAW. This Agreement shall be governed by and
construed under the laws of the State of Delaware, without application of the
principles of conflicts of laws.
14.5 EXECUTION IN COUNTERPARTS. This Agreement and any
amendment may be executed simultaneously or in two or more counterparts, each of
which together shall constitute one and the same instrument.
14.6 COOPERATION AND INTENT. The Company shall cooperate in
good faith with the Executive and use its best efforts to ensure that the
Executive is indemnified and/or reimbursed for liabilities described herein to
the fullest extent permitted by law.
14.7 AMENDMENT. No amendment, modification or alteration of
the terms of this Agreement shall be binding unless in writing, dated subsequent
to the date of this Agreement, and executed by the parties.
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14.8 BINDING EFFECT. The obligations of the Company to the
Executive hereunder shall survive and continue as to the Executive even if the
Executive ceases to be a director, officer, employee and/or agent of the
Company. Each and all of the covenants, terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the successors to the Company
and, upon the death of the Executive, to the benefit of the estate, heirs,
executors, administrators and personal representatives of the Executive.
14.9 GENDER AND NUMBER. Wherever the context shall so require,
all words herein in the male gender shall be deemed to include the female or
neuter gender, all singular words shall include the plural and all plural words
shall include the singular.
14. 10 NON-EXCLUSIVITY. The rights of indemnification and
reimbursement provided in this Agreement shall be in addition to any rights to
which the Executive may otherwise be entitled by statute, bylaw, agreement, vote
of stockholders or otherwise.
14. 11 EFFECTIVE DATE. The provisions of this Agreement shall
cover claims, actions, suits and proceedings whether now pending or hereafter
commenced and shall be retroactive to cover acts or omissions or alleged acts or
omissions which heretofore have taken place.
IN WITNESS WHEREFORE, the undersigned have executed this Agreement as
of the date first above written.
THE COMPANY:
CYBEAR, INC. a Delaware corporation
By:
-------------------------------
Name:
-------------------------
Title:
------------------------
EXECUTIVE:
[NAME]
- ----------------------------------
EXHIBIT 10.7
FEDERAL INCOME TAX
ALLOCATION AGREEMENT
THIS FEDERAL INCOME TAX ALLOCATION AGREEMENT (the "Agreement") is
entered into as of the 2nd day February 1997, between Andrx Corporation, a
Florida corporation ("Parent"), and Cybear, Inc., a Florida corporation
("Subsidiary").
WITNESSETH:
WHEREAS, Parent and Subsidiary are members of an "affiliated group" of
corporations (as that term is defined in Section 1504, and is used in Section
1501, of the Internal Revenue Code of 1986, as amended (the "Code")) of which
Parent is the common parent (Parent and Subsidiary are sometimes referred to
herein, collectively, as the "Group" and individually as the "Member");
WHEREAS, Parent and Subsidiary have agreed to file a consolidated
federal income tax return in lieu of separate returns; and
WHEREAS, Parent and Subsidiary desire to establish a method for
apportioning the Group's consolidated federal income tax liability among the
members of the Group and for reimbursing Parent for the payment of the Group's
federal income tax liability.
NOW, THEREFORE, Parent and Subsidiary agree as follows:
1. CONSOLIDATED RETURN TO BE FILED. Parent and Subsidiary shall
file a consolidated return in lieu of separate returns with
respect to the income tax imposed by Chapter 1 of the Code
beginning for the taxable year ending December 31, 1997 and
for any subsequent taxable periods for which the Group is
required or permitted to make a consolidated federal income
tax return. All consolidated federal income tax returns and
amendments thereof required or permitted to be filed by the
Group, including all consents and elections, shall be prepared
and filed by Parent. Parent shall take all other actions it
determines are necessary or appropriate with respect to the
Group's federal income tax liability.
2. APPORTIONMENT OF TAX LIABILITY. The Group's consolidated
federal income tax liability shall be apportioned among the
members of the Group in accordance with the ratio which that
portion of the Group's consolidated taxable income
attributable to each Member having taxable income bears to the
Group's consolidated taxable income, as provided in Sections
1552(a)(1) and 1552(b) of the Code and utilizing the
provisions of Treasury Regulations Section 1.1552-1(a)(1).
3. COMPENSATION FOR USE OF DEDUCTIONS, NET OPERATING LOSSES AND
CREDITS. Parent and Subsidiary acknowledge that the federal
income tax liability apportioned to each Member under Section
2 of this Agreement shall be the federal income tax liability
of the Member for purposes of determining the Member's
earnings and profits under the Code. Parent and Subsidiary,
however, agree that each Member shall be compensated for the
use by other members of the Group of deductions,
<PAGE>
net operating losses, credits and other tax attributes
generated by such Member. Accordingly, each Member whose
"separate return tax liability" for the taxable year is in
excess of such Member's apportioned amount of the Group's
consolidated federal income tax liability for the taxable year
determined under Section 2 hereof shall pay such excess to
Parent for allocation and distribution by Parent to the
members of the Group that generated the deductions, net
operating losses, credits and other tax attributes utilized by
such Member. For purposes of this Agreement, the "separate
return tax liability" of each Member for the taxable year
shall be determined as if such Member were filing a separate
tax return under the Code, and shall be determined without
reference to the provisions of Treasury Regulations Section
1.1502-12.
4. LIABILITY FOR THE PAYMENT OF APPORTIONED TAX LIABILITY. Each
Member shall be liable only for (x) the portion of the Group's
consolidated federal income tax liability apportioned to it
under Section 2 hereof and (y) the excess of such Member's
separate return tax liability over the apportioned amount as
determined under Section 3 hereof. Each Member shall pay to
Parent all such amounts within thirty (30) days of receipt of
a statement from Parent indicating such amount or amounts.
Within ten (10) days of receipt thereof, Parent shall allocate
and pay such amounts to the members of the Group that
generated the deductions, net operating losses, credits and
other tax attributes used by other members of the Group. Each
Member hereby agrees to indemnify, hold harmless and defend
all other members of the Group from any and all loss,
liability, cost, expense or claim of or to the other members
of the Group, including without limitation, the fees of
counsel with respect thereto, resulting or arising from the
amounts determined as owed by such Member pursuant to Sections
2 and 3 of this Agreement.
5. ESTIMATED TAX PAYMENTS. Parent may assess each Member for its
share of estimated federal income tax payments to be made by
the Group. Payment of the assessment to Parent shall be made
within thirty (30) days after such assessment. The payment
shall be credited against the portion of the Group's
consolidated tax liability apportioned to the Member under
this Agreement.
6. EFFECT OF CARRYBACK/CARRYFORWARD TO YEAR NOT COVERED BY THIS
AGREEMENT. If part or all of a consolidated net operating loss
or tax credit is allocated to a Member pursuant to Treasury
Regulations Section 1.1502-21T(b), and such loss or credit is
carried back or forward to a year in which the Member filed a
separate income tax return or joined in a consolidated federal
income tax return of another affiliated group, any refund or
reduction in tax liability arising from such carry-back or
carryover shall be retained by the Member. The Parent shall
determine whether an election shall be made not to carry back
any consolidated net operating loss arising in a consolidated
return year (including any portion allocated to a Member under
Treasury Regulations Section 1.1502-79) in accordance with
Section 172(b)(3) of the Code.
7. ADJUSTMENTS FOR REFUNDS AND DEFICIENCIES. If the group's
consolidated federal income tax liability is adjusted for any
taxable period, whether by means of an amended return, claim
for refund, audit by the Internal Revenue Service or
2
<PAGE>
otherwise, the liabilities of each Member shall be recomputed
under Sections 2 and 3 of the Agreement to give effect to such
adjustments. Parent shall determine the effect of the
adjustments and shall provide to the members of the Group a
statement indicating the portion of each adjustment
attributable to each Member. If the adjustment results in a
refund for any Member, Parent shall pay to such Member the
portion of the refund attributable to such Member within ten
(10) days after being notified by Parent of the receipt of the
refund. If the adjustment results in a deficiency for any
Member, such Member shall pay to Parent the amount of the
deficiency attributable to such Member within ten (10) days
after the receipt of a statement from Parent indicating the
amount attributable to such Member. If any interest is to be
paid or received as a result of a consolidated federal income
tax deficiency or refund, such interest shall be allocated to
the members of the Group in the ratio each Member's portion of
the change in the Group's consolidated federal income tax
liability bears to the total change in the Group's
consolidated federal income tax liability. Any penalty shall
be allocated upon such basis as Parent deems just and proper
in view of all applicable circumstances.
8. TERMINATION. This Agreement shall apply to the taxable year
ending on December 31, 1997 and all subsequent taxable
periods, unless Parent and Subsidiaries terminate this
Agreement in writing. Notwithstanding such termination, this
Agreement shall continue in effect with respect to any payment
or refunds due for all taxable periods to which this Agreement
applies. Failure of one or more parties hereto to qualify by
meeting the definition of a member of an "affiliated group"
under Section 1504 of the Code shall not operate to terminate
this Agreement with respect to the other parties hereto so
long as two or more parties continue to qualify.
9. AVAILABILITY OF RECORDS. All materials, including, but not
limited to, returns, supporting schedules, work papers,
correspondence and other such documents, relating to the
Group's consolidated federal income tax return filed for a
taxable year during which this Agreement was in effect shall
be made available to any Member that was included in the
return during Parent's regular business hours for seven (7)
years after the date the return was filed.
10. MEMBER LEAVING GROUP. Any Member which leaves the Group shall
continue to be bound by this Agreement. Any tax
allocation/sharing or similar agreement subsequently entered
into by any Member leaving the Group, should incorporate the
Agreement therein.
11. ADDITIONAL MEMBERS OF THE GROUP. Parent and Subsidiary
recognize and acknowledge that from time to time other
corporations may become members of the affiliated group (as
that term is defined in Section 1504 of the Code) and hereby
agree that each of those corporations shall become a party to
this Agreement by executing an Addendum Agreement under which
the corporation becomes one of the "Subsidiaries" and a
"Member" under this Agreement as though it was an original
party thereto. For this purpose, the then existing members of
the Group hereby expressly bind themselves to the Addendum
3
<PAGE>
Agreement by Parent's execution of the Addendum Agreement
without further action on their part.
12. MISCELLANEOUS. This Agreement shall be binding upon and inure
to the benefit of Parent and its successors and each of the
members and their respective successors. This Agreement shall
be construed under and governed by the laws of the State of
Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date written above.
ANDRX CORPORATION
By: /s/ ANGELO C. MALAHIAS
------------------------------------------
Angelo C. Malahias
Its: Vice President and Chief Financial Officer
Date: September 15, 1998
CYBEAR, INC.
By: /s/ EDWARD E. GOLDMAN
------------------------------------------
Edward E. Goldman, M.D.
Its: President and Chief Executive Officer
Date: September 15, 1998
4
EXHIBIT 10.8
Standard Lease
between
Blue Lake, Ltd.
and
Cybear, Inc., a Florida corporation
Dated September 14, 1998
<PAGE>
INDEX TO
BLUE LAKE CORPORATE CENTER
STANDARD LEASE
LEASE PAGE NO.
--------
1. PREMISES; BUILDING; AND COMMON AREAS............................ 1
2. LEASE TERM; LEASE DATE.......................................... 2
3. RENT............................................................ 3
4. SECURITY DEPOSIT................................................ 6
5. USE............................................................. 6
6. ACCEPTANCE OF PREMISES; LANDLORD'S WORK......................... 6
7. PARKING......................................................... 7
8. BUILDING SERVICES............................................... 7
9. SECURITY........................................................ 9
10. REPAIRS, MAINTENANCE AND UTILITIES.............................. 9
11. TENANT'S ALTERATIONS............................................ 10
12. LANDLORD'S ADDITIONS AND ALTERATIONS............................ 11
13. ASSIGNMENT AND SUBLETTING....................................... 11
14. TENANT'S INSURANCE COVERAGE..................................... 13
15. LANDLORD'S INSURANCE COVERAGE................................... 14
16. WAIVER OF RIGHT OF RECOVERY..................................... 14
17. DAMAGE OR DESTRUCTION BY CASUALTY............................... 14
18. CONDEMNATION AND EMINENT DOMAIN................................. 15
19. LIMITATION OF LANDLORD'S LIABILITY; INDEMNIFICATION............. 15
20. RELOCATION OF TENANT............................................ 16
21. COMPLIANCE WITH LAWS AND PROCEDURES............................. 16
22. RIGHT OF ENTRY.................................................. 17
23. DEFAULT......................................................... 17
24. LANDLORD'S REMEDIES FOR TENANT'S DEFAULT........................ 18
25. LANDLORD'S RIGHT TO PERFORM FOR TENANT'S ACCOUNT................ 19
26. LIENS........................................................... 20
27. NOTICES......................................................... 20
28. MORTGAGE ESTOPPEL CERTIFICATE; SUBORDINATION.................... 20
29. ATTORNMENT AND MORTGAGEE'S REQUEST.............................. 21
30. TRANSFER BY LANDLORD............................................ 22
31. SURRENDER OF PREMISES; HOLDING OVER............................. 22
<PAGE>
32. NO WAIVER, CUMULATIVE REMEDIES.................................. 22
33. WAIVER.......................................................... 22
34. CONSENTS AND APPROVALS.......................................... 23
35. RULES AND REGULATIONS........................................... 23
36. SUCCESSORS AND ASSIGNS.......................................... 23
37. QUIET ENJOYMENT................................................. 23
38. ENTIRE AGREEMENT................................................ 23
39. HAZARDOUS MATERIALS............................................. 23
40. BANKRUPTCY PROVISIONS........................................... 25
41. FIRE PREVENTION SYSTEMS......................................... 26
42. SPECIAL EVENTS.................................................. 27
43. MISCELLANEOUS................................................... 27
44. DELIVERY OF GUARANTY............................................ 29
45. CONFIDENTIALITY................................................. 29
46. SIGNAGE CRITERIA................................................ 29
47. CARPOOLING, MASS TRANSIT AND TRAFFIC CONTROL.................... 29
48. LEASE CONTINGENCIES............................................. 29
49. ASSOCIATION..................................................... 29
50. VENDING MACHINES................................................ 30
51. FOOD SERVICE.................................................... 30
52. AUDITORIUM/CONFERENCE CENTER.................................... 30
53. TELECOMMUNICATIONS.............................................. 30
54. INCENTIVE PROGRAMS.............................................. 31
55. SAVING PROVISION................................................ 31
56. SATELLITE DISH.................................................. 31
<PAGE>
BASIC LEASE INFORMATION RIDER
BLUE LAKE CORPORATE CENTER
STANDARD LEASE
PREAMBLE Date of Lease September 14, 1998 ("Lease Commencement Date")
PREAMBLE Landlord: BLUE LAKE, LTD., a Florida limited partnership.
PREAMBLE Tenant: CYBEAR, INC. a Florida corporation, authorized to do
business in the State of Florida
SECTION 1 Premises: A portion of the second floor of 5000 Blue Lake
Drive, as shown on Exhibit "A" of Blue Lake Corporate Center,
Boca Raton, Florida, being hereby designated as: Suite 200.
The office building campus (as shown on Exhibit "F") including
parking spaces, driveways, walkways, drainage systems, utility
systems, green space areas and other elements of the "Blue
Lake Corporate Center" are hereinafter collectively referred
to as the "Building."
SECTION 1 Net Rentable Area of Premises: [18,400] square feet which is
stipulated and agreed by the parties (based on [16,000] square
feet of usable area and a fifteen (15%) add-on factor);
provided, however, that within ten (10) days after substantial
completion of the Improvements to the Premises, either
Landlord or Tenant shall be entitled to have the Premises
measured in accordance with BOMA Standards (ANSI Z65.1-1996).
Following such measurement, if it is determined that in fact
the Premises contain more or less than the Rentable Area set
forth above, Base Rent, Tenant's Share, and any other
provision which is based on the amount of square footage
leased by Tenant shall be ratably modified. The Rentable Area
of the Premises includes restrooms, electrical and mechanical
rooms over which the Tenant is herein granted exclusive
control and dominion which are themselves deemed part of the
Premises, except that Landlord shall maintain such restrooms,
electrical and mechanical rooms which are shared among
tenants.
SECTION 2 Rent Commencement Date: The earlier to occur of (i) the
"Completion Date" as defined in the Work Letter,
notwithstanding that any Tenant finish work, special fixtures
or equipment or decorative treatment has not been performed by
Tenant or (ii) the date that Tenant first uses the Premises or
any portion thereof for any purpose permitted under this
Lease, but in no event shall the Rent Commencement Date occur
later than January 1, 1999.
SECTION 2 Tenant Access for Improvements Prior to Commencement Date:
Upon the execution of this Lease and all addenda hereto, and
the delivery by Tenant to Landlord of the appropriate
insurance certificates reflecting Tenant's securing of all
insurance required by Tenant hereunder and following the
recordation of a Notice of Commencement prepared and recorded
in accordance Florida Statute 713.10 and Landlord's reasonable
approval of Tenant's construction contract for the purpose of
confirming the inclusion of a lien prohibition provision in
accordance with Section 26 of this Lease, Tenant and Tenant's
contractor and sub-contractors shall be provided reasonable
access to the Premises at all reasonable times in order to
make improvements to the Premises. All work will be defined in
the Work Letter attached hereto as Exhibit "B".
SECTION 2 Expiration Date: Five (5) years after Rent Commencement
Date.
SECTION 2 Lease Term: From the Rent Commencement Date plus Five (5)
years after the Rent Commencement Date, unless sooner
terminated pursuant to any provision hereof; provided,
however, that if the Rent Commencement Date is a date other
than the first day of a calendar month, said Term shall extend
for said number of days at said in addition to the remainder
of the calendar month following the Rent Commencement Date.
SECTION 2 Renewal Term(s): One Renewal Term of Five (5) years; at
Market Rate Rent.
SECTION 3 Base Rent: Tenant agrees to pay to Landlord as Rent for the
Premises, in advance without demand, deduction or set off
(except as otherwise may be specifically provided in the
Lease), from and after the Rent Commencement Date and
throughout the term, the Annual Base Rent in the amounts as
indicated in the following Schedule of Base Rent in equal
monthly installments, plus applicable sales tax.
Page I
------------------
Blue Lake Standard Lease
<PAGE>
SCHEDULE OF BASE RENT
- ------------------------------------------------------------------------------
PERIOD PER SQUARE FOOT ANNUAL BASE RENT MONTHLY BASE RENT
- ------------------------------------------------------------------------------
Months 1 -12: $12.50 $230,000 $19,167.17
- ------------------------------------------------------------------------------
Months 13-24: $12.88 $236,992 $19,749.33
- ------------------------------------------------------------------------------
Months 25-36: $13.27 $244,168 $20,347.33
- ------------------------------------------------------------------------------
Months 37-48: $13.67 $251,528 $20,960.67
- ------------------------------------------------------------------------------
Months 49-60: $14.08 $259,072 $21,589.33
- ------------------------------------------------------------------------------
Each monthly installment in accordance with the above Schedule shall be due and
payable on or before the first day of each calendar month succeeding the Rent
Commencement Date, except that the rental payment for any fractional calendar
month commencing on the Rent Commencement Date of the Lease shall be prorated.
SECTION 3 Base Year for Overhead Rent: Calendar year 1999.
Estimated per square foot Overhead Rent in Base Year $4.50
SECTION 3 Cap on "Controllable Operating Expenses" (as defined): eight
(8.0%) percent applied non-cumulatively.
SECTION 3 Tenant's Share: 1.039%. Landlord and Tenant acknowledge that
Tenant's Share has been obtained by taking the Net Rentable
Area of the Premises and dividing such number by [1,770,600]
square feet, being the rentable area contained in the Building
as determined by Landlord, and multiplying such quotient by
100. In the event Tenant's Share is changed during a calendar
year by reason of a change in the Net Rentable Area of the
Premises, Tenant's Share shall thereafter mean the result
obtained by dividing the new Net Rentable Area of the Premises
by [1,770,600] and multiplying such quotient by 100.
SECTION 4 Security Deposit Received: $ N/A
Date Received:________________________
Prepaid First Month's Rent $ N/A (including Florida sales tax)
Date Received: _________________________
Prepared First Month's Overhead Rent: $ N/A (including Florida
sales tax)
Date Received: _________________________
Prepaid Last Month's Rent $ N/A (including Florida sales tax)
Date Received: _________________________
Prepaid Last Month's Overhead Rent: $ N/A (including Florida
sales tax)
Date Received: _________________________
Deposit for Energy Management: $ N/A
Date Received:_________________________
Deposit for Electric Utilities: $ N/A
Date Received:_________________________
Guarantor: Andrx Corporation, a Florida corporation
4001 S. W. 47th Avenue, Suite 201
Fort Lauderdale, Florida 33314
Attention: Scott Lodin, Esq.
SECTION 5 Use of Premises: Corporate offices, including software
development, internet related sales and service (but not
retail sales), and the supporting use of conference and
computer facilities, employee breakroom and related
non-commercial facilities for employee use only.
Page II
------------------
Blue Lake Standard Lease
<PAGE>
Tenant's Address for Notices Prior to Commencement Date:
Cybear, Inc.
c/o Andrx Corporation
400 S. W. 47th Avenue, Suite 201
Fort Lauderdale, Florida 33314
Attention: Scott Lodin, Esq.
Tenant's Address for Notices After Commencement Date:
Tenant
The Premises; Attention: Mr. Todd MacLeod
with a copy to Tenant's pre-Commencement Date Address
Landlord's Address for Notices:
Blue Lake, Ltd.
5000 Blue Lake Drive, Suite 100
Boca Raton, Florida 33432
Attention: Michael D. Masanoff, Executive Vice President
With copies of default notices only to:
Sachs, Sax & Klein, P.A.
Suite 4150
301 Yamato Road
Boca Raton, Florida 33431
Attention: Michael S. Greene, Esq.
SECTION 8 Standby Electrical Generator System Subscription Fee:
$500,000.00; pursuant to Rider attached hereto as Exhibit "G"
SECTION 15 Amount of General Comprehensive Liability Insurance:
$1,000,000.00 per occurrence $3,000,000.00 in the aggregate.
WORK LETTER:
PARAGRAPH 3G. Landlord's Contribution: $ 15.00 per usable square foot
PARAGRAPH 6. Tenant's Construction Agent: /s/ Bill Tucker
Tenant may, from time to time, identify a substituted Tenant's
Construction Agent from a list of persons pre-approved by
Landlord to act as a Tenant's Construction Agent for the
Building, or such other person as requested by Tenant having
experience in construction of the type and nature of the
undertaking pursuant to the Work Letter, and who shall be
reasonably acceptable to Landlord.
Certain of the information relating to the Lease, including many of the
principal economic terms, are set forth in the foregoing Basic Lease Information
Rider (the "BLI Rider"). The BLI Rider and the Lease are, I by this reference,
hereby incorporated into one another. In the event of any direct conflict
between the terms of the BLI Rider and the terms of the Lease, the BLI Rider
shall control. Where the Lease simply supplements the BLI Rider and does not
conflict directly therewith, the Lease shall control.
IN WITNESS WHEREOF, Landlord and Tenant have signed this BLI Rider as
of this 14 day of September, 1998.
WITNESSES: "TENANT"
CYBEAR, INC., a Florida corporation
/s/ [ILLEGIBLE]
- -----------------------------------
/s/ [ILLEGIBLE]
- -----------------------------------
(As to Tenant) By: /s/ SCOTT LODIN
-------------------------------------
Name: Scott Lodin
Title: Vice President/General Counsel
(SEAL)
WITNESSES: "LANDLORD"
BLUE LAKE, LTD.,
/s/ [ILLEGIBLE] a Florida limited partnership
- -----------------------------------
/s/ [ILLEGIBLE] By: Blue Lake, Inc., a Florida
- ----------------------------------- corporation, its general partner
(As to Landlord)
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Agent
[Illegible}
Executive Vice President
Page III
------------------
Blue Lake Standard Lease
<PAGE>
BLUE LAKE CORPORATE CENTER
STANDARD LEASE
THIS LEASE ("Lease") is made as of today of the 14th day of September,
1998, by and between BLUE LAKE, LTD., a Florida limited partnership ("Landlord")
and BEAR, INC., a Florida corporation, authorized to do business in the State of
Florida ("Tenant").
WITNESSETH:
1. PREMISES; BUILDING; AND COMMON AREAS.
A. PREMISES; BUILDING; AND COMMON AREAS. Landlord leases to Tenant
and Tenant leases from Landlord the Premises described in the Basic Lease
Information Rider (the "BLI Rider") attached to the front of this Lease and
incorporated into this Lease by this reference, and as more particularly
outlined on the floor plan attached hereto as Exhibit "A" and by this reference
incorporated herein ("Premises"). The parties hereby agree that the Premises
contain the number of Net Rentable Area set forth in the BLI Rider. The Premises
constitute a portion of the office building campus, including parking spaces,
driveways, walkways, drainage systems, utility systems, green space areas, and
other elements of the Blue Lake Corporate Center (collectively the "Building").
In addition to the Premises, Tenant has the right to use, in common with others,
the lobby, public entrances, public stairways, public areas and public elevators
of the Building (the "Common Areas"). The Common Areas serving the Building will
at all times be subject to Landlord's exclusive control and management in
accordance with the terms and provisions of this Lease. In addition, the Tenant
shall be entitled to use during the term of this Lease, up to four thousand
square feet of raised flooring located in the Building and identified by
Landlord as available for the Premises. Such raised flooring shall be accepted
by the Tenant in its "as is, where is, with all faults" condition and Tenant
shall be solely responsible for removing the flooring from its current location
and installing such in the Premises. Tenant shall return the flooring to the
Landlord at the expiration or earlier termination of this Lease, in its current
condition, reasonable wear and tear excepted.
B. RIGHT OF FIRST REFUSAL. Provided that no default beyond any
applicable notice and cure periods shall have occurred under this Lease, the
Landlord grants to the Tenant a right of first refusal, exercisable from the
date hereof and continuing through one (1) year prior to the expiration of the
term of this Lease, unless Tenant, prior to such one (1) year, elects to renew
the term hereof as provided in Paragraph 2B hereof, inclusive, to lease the
Expansion Premises as described on Exhibit "A-1" attached hereto and made a part
hereof upon the terms herein provided (the "Right of First Refusal Term"). If
during the Right of First Refusal Term the Landlord shall receive a BONAFIDE
third-party offer to lease all or a portion of the Expansion Premises ("Third
Party Offer"), then Landlord shall advise Tenant, in writing, of Landlord's
intention to accept such Third Party Offer and shall furnish to Tenant all of
the basic terms and conditions of such Third Party Offer (the "Landlord's
Notice"). Tenant shall thereafter have the option, within ten (10) days
following Tenant's receipt of Landlord's Notice, to exercise its Right of First
Refusal to lease not less than all of the entire Expansion Premises
(notwithstanding a Third Party Offer for the lease of less than all of the
Expansion Premises) by giving notice of its election to exercise its Right of
First Refusal in writing to Landlord (the "Tenant's Acceptance"). If Tenant
timely exercises the right of first refusal, Landlord and Tenant shall, within
five (5) business days thereafter, enter into an amendment to this Lease
affirming the covenants and conditions contained in this Lease, except that the
amendment, with respect to the Expansion Premises shall contain the applicable
business terms and conditions as contained in the Third Party Offer. If Tenant
waives or fails to exercise its right of first refusal, the Landlord may then
lease all or such portion of the Expansion Premises to any other party,
including the third party offerer on the same terms and conditions set forth in
the Landlord's notice and the Right of First Refusal shall thereafter be
terminated on a self-effectuating basis and be of no further force or effect
until the third party lease expires (after all elected renewal terms thereof)
Notwithstanding the immediately preceding sentence, Landlord may, additionally,
request the Tenant to execute a written certification of the lapse and
termination of the Right of First Refusal as herein contained.
C. NO RESERVATION. Nothing herein shall constitute a reservation or
other rights in or to the Expansion Premises or shall impose an obligation on
the Landlord to abstain from marketing the
Page 1
------------------
Blue Lake Standard Lease
<PAGE>
Expansion Premises for lease to third parties, subject to this right of first
refusal.
2. LEASE TERM; LEASE DATE
A. GENERAL. The lease term ("Lease Term") is for the period of time
set forth in the BLI Rider, commencing on the Lease Commencement Date set forth
in the BLI Rider ("Commencement Date") and ending on the Lease expiration date
set forth in the BLI Rider ("Expiration Date"). Tenant's obligation to pay all
rent, including Base Rent, Overhead Rent and Additional Rent, (collectively,
"Rent"), as such terms are hereafter defined, will commence on the Rent
Commencement Date. Tenant shall observe and perform all of its obligations under
this Lease (except its obligations to conduct business), from the earlier to
occur of the date that the Premises are delivered to Tenant for the purpose of
commencement of the Tenant's improvements to the Premises or the date Tenant
otherwise takes possession of the Premises (until the Commencement Date) in the
same manner as though the Lease Term began when the Premises were so delivered
to Tenant. Except as specifically provided in the BLI Rider, under no
circumstances, however, may Tenant enter into possession of the Premises prior
to the earlier to occur of the date that the Premises are delivered to Tenant
for the purpose of commencement of Tenant's improvements to the Premises or the
Commencement Date without the express written consent of Landlord and subject to
any reasonable terms of the consent. Tenant shall not be required to pay Rent
(as such term is hereinafter defined) for any period prior to the Rent
Commencement Date or as otherwise stated in the BLI. However, Tenant shall pay
for all utilities and services consumed by or on behalf of Tenant prior to the
Rent Commencement Date for construction, fixturing and move-in. Upon Landlord's
request, Tenant shall execute a "Rent commencement Expiration Certification
Rider" in the form attached hereto and made a part hereof as Exhibit "I".
B. RENEWAL OPTION. Landlord grants to Tenant an option (the
"Option") to extend the term of this Lease for one (1) additional period of five
(5) years (the "Renewal Term") under the terms set forth below. Tenant shall not
be entitled to exercise the Option unless each of the following conditions shall
be fully satisfied at the time of its exercise: (i) the Lease shall be in full
force and effect; (ii) the Tenant originally named in this Lease, or its
permitted assignees, shall be in possession of the entire Premises; and (iii)
Tenant shall not then be in default under any of the material terms, provisions,
covenants or conditions of the Lease beyond any applicable notice and cure
periods. In order to exercise the Option, Tenant must first give written request
to Landlord, not less than twelve (12) months prior to the Expiration Date of
the Initial Lease Term for delivery of Landlord's determination of Market Rent,
as defined below. Base Rent for each Renewal Term shall be equal to the Market
Rent, as determined in accordance with this section ("Market Rent"). Within
thirty (30) days following its receipt of Tenant's request, Landlord shall
advise Tenant of Market Rent for each year of the respective Renewal Term.
Market Rent (including escalations for successive years of the Renewal Term)
shall be determined by Landlord in its reasonable judgment. Landlord's
determination of the Market Rent shall be based, as Landlord reasonably deems
appropriate, upon then current and projected rents for space in the Building,
adjusted for any special conditions applicable to such space and leases, for
location, length of term, amount of space and other factors Landlord deems
relevant in computing rents for space in the Building, including adjustments for
anticipated inflation. Tenant may exercise its option by notifying Landlord;
within 30 days from the date on which Tenant was first advised by Landlord of
its determination of Market Rent, that Tenant has elected to exercise the Option
at the Market Rent determined by Landlord or proceed as provided below. If
Tenant exercises the Option as provided, the Expiration Date of the Lease shall
be extended for the length of the Renewal Term and Base Rent shall be adjusted
to Market Rent. If Tenant shall fail to timely exercise the Option as provided.
Tenant shall be deemed to have waived its right to exercise the Option and to
occupy the Premises beyond the initial Term of the Lease or beyond any
previously exercised Renewal Term of this Lease. The Base Year for the Renewal
Term shall be the first Lease year of the Renewal Term. Upon a determination of
Base Rent for the First Lease Year of the Renewal Term, Landlord and Tenant
shall agree on a Base Rent schedule, in the same format set forth in the BLI
Rider for the Initial Lease Term, for the balance of the Renewal Term, based
upon the herein above prescribed formula. Landlord's determination shall be
based, as Landlord reasonably deems appropriate, upon then current and projected
rents for space in the Building, adjusted for any special conditions applicable
to such space and leases, for location, length of term, amount of space and
other factors Landlord deems relevant in computing rents for space in the
Building, including adjustments for anticipated inflation. Any agreement of
Landlord and Tenant regarding the amount of Market Rent shall be in writing
signed by them within thirty (30) days after the date Tenant was first advised
by Landlord of its initial determination of Market Rent, in which event Tenant
shall be deemed to have exercised the Option. If Landlord and Tenant are unable
to agree upon Market Rent in writing within such thirty (30) day period, Tenant
may nevertheless exercise its option by notifying Landlord, within 30 days from
the date on which Tenant was first advised by Landlord of its initial
determination of Market Rent, that Tenant has elected to exercise the Option at
the Market Rent determined by Landlord subject to a reservation of Tenant's
right to arbitrate Landlord's determination of Market Rent in accordance with
this Section. If Tenant exercises the Option as provided, the termination date
of the Lease shall be extended for a period of five (5) years and Base Rent
shall be adjusted to Market Rent. If Tenant shall fail to timely exercise the
Option as provided, Tenant shall be deemed to have waived its right to exercise
the Option and to occupy the Premises beyond the initial term of the Lease. If
the parties cannot agree in writing on Market Rent and Tenant timely exercises
the Option,
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then within thirty (30) days after Tenant's exercise of the Option, Tenant and
Landlord shall each select a licensed real estate appraiser with at least ten
(10) years substantial commercial leasing expertise particularly in the this
area of Palm Beach County, Florida and notify the other party of such selection,
and the selected appraisers shall in turn select a similar third appraiser who
will determine Market Rent. If the appraisers are unable to agree on a third
appraiser within sixty (60) days after Tenant's exercise of the Option, Market
Rent shall be determined by suit for declaratory relief. The cost of the third
appraiser and any court costs shall be shared equally by the parties. If either
party fails to timely select a appraiser and notify the other party of such
selection, the other party's timely selected appraiser shall unilaterally
determine Market Rent. If Tenant elects to exercise the Option subject to its
reservation to contest Market Rent, Tenant shall nonetheless on the commencement
of the Renewal Term begin paying Base Rent at the Market Rate determined by
Landlord. If Market Rent is ultimately determined to be other than the amount
initially determined by Landlord, the next due payment or payments of Rent shall
be appropriately adjusted to reflect such overpayment or underpayment
retroactive to commencement of the Renewal Term.
3. RENT
A. BASE RENT. Beginning on the Rent Commencement Date, and
continuing during the Lease Term, Tenant will pay to Landlord in lawful It is
estimated that on or before March 31 following a United States Currency as the
base rent for the Premises ("Base Rent") the amounts set forth in the BLI Rider,
with same being payable without demand, setoff or deduction except as otherwise
specifically provided in this Lease, in advance, on or before the first day of
each month, in equal monthly installments of the amounts set forth in the BLI
Rider, plus applicable sales and other such taxes as are now or later enacted.
All payments of Base Rent, Overhead Rent, (and Security Deposits if subsequently
applicable during the Lease Term), and any other sums due from Tenant under this
Lease shall be made by wire transfer to such account as may be designated (or
re-designated from time to time) by Landlord's written notice. Such Rent shall
be immediately payable to Landlord upon written demand and any failure to so
pay, subject to the grace provisions set forth in Section 3, shall constitute an
Event of Default.
B. OVERHEAD RENT Beginning on the Rent Commencement Date, Tenant
shall pay Tenant's Share, as defined in the BLI Rider, of (I) the total amount
of the annual Operating Expenses (as hereafter defined). And (ii) the total
amount of Taxes (as hereafter defined). As used herein, "Overhead Rent" means
the total of Tenant's allocated Share of Operating Expenses and Taxes.
B.1. "CAP" ON CONTROLLABLE OPERATING EXPENSES. Notwithstanding
the foregoing, in no event shall the Tenant's share of the Controllable
Operating Expenses be increased by more than eight (8%) percent, on a
non-cumulative basis, from that charged to the Tenant, as part of Overhead Rent,
for the immediately preceding calendar year. Increases in Operating Expenses
that are not deemed "controllable" as defined hereunder shall not be limited by
the foregoing sentence. Controllable Operating Expenses do not include (i)
Taxes, (ii) utility charges and fees (including, but not limited to, water,
sewer, electrical, telephone, chilled water and ventilation and air-conditioning
charges, cable communications and the like), (iii) premiums for any increases in
insurance contracted for by Landlord to the extent that any such increases shall
be a commercially reasonable judgment by Landlord, and in conformance with
responsible management customary for a Building of the size, nature and
character of the Building; (iv) minimum wage changes, and (v) costs resulting
from changes in law, to the extent however that any such cost is incurred as to
an item which is otherwise chargeable as an Operating Expense and is not
otherwise an exclusion from Operating Expenses.
B.2. ESTIMATES OF OVERHEAD RENT. Prior to each subsequent
calendar year; beginning with the calendar year immediately following the Base
Year, Landlord shall, in advance, reasonably estimate for each such calendar
year the total amount of the Overhead Rent. One-twelfth (1/12) of the estimated
Overhead Rent shall be payable monthly, along with the monthly payment of the
Base Rent. B. Overhead Rent Beginning on the Rent Commencement Date, Tenant
shall pay Tenant's Share, as defined in the BLI Rider, of (i) the total amount
of the annual Operating Expenses (as hereafter defined) and (ii) the total
amount of Taxes (as hereafter defined). As used herein, "Overhead Rent" means
the total of Tenant's allocated Share of Operating Expenses and Taxes.
B.3. RECONCILIATION STATEMENT. It is estimated that on or before
March 31 following a calendar year for which Overhead Rent is payable hereunder,
Landlord shall provide Tenant with a reconciliation statement showing the amount
of the actual components of Overhead Rent for the immediately previous calendar
year only. Notwithstanding the provisions of the immediately preceding sentence,
should Landlord fail to provide Tenant with a reconciliation statement by June
30 for the immediately preceding calendar year, Tenant shall have no further
liability for any additional payment to Landlord that would otherwise be
reflected and required in the said reconciliation statement for the preceding
year. If the reconciliation statement reflects an underpayment in either
component of Overhead Rent, Landlord shall also deliver to Tenant an invoice
which Tenant shall pay within thirty (30) days following receipt of such
invoice. If the reconciliation statement reflects an overpayment in either
component of Overhead Rent, Tenant shall be entitled to either, at Landlord's
option, to a credit against the next month's payment of Rent together with a
refund check from Landlord for the balance of such overpayment or a refund check
from the Landlord for the entire amount of such overpayment If the Lease has
expired, the overpayment shall be refunded. In no event shall the Base Rent
under this Lease be reduced by virtue of this Section. As used in this paragraph
3., the following terms shall have the following meanings:
(1) The term "Operating Expenses" shall mean (i) any and all
reasonable costs of ownership, management, operation, repair and maintenance of
the Building, including, without limitation, wages, salaries, professionals'
fees, taxes,
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insurance, benefits and other payroll burdens of all employees,
Building Management fee, Common Area janitorial, maintenance, guard and other
services, building management office rent or rental value, power, fuel, water,
waste disposal, chilled water and hearing, ventilating and air conditioning
charges, stand-by electric generator system maintenance, upkeep, monitoring and
refueling charges, landscaping care, lighting, garbage removal, window cleaning,
system maintenance, parking area care, fees and assessments paid to or on behalf
of the "Association" (as later defined herein), and any and all other utilities
not separately metered for the Premises or a portion thereof, materials,
supplies, maintenance, repairs, insurance applicable to the Building and
Landlord's personal property and depreciation on personal property, and (ii) the
cost (amortized over such reasonable period as Landlord shall determine together
with interest at the rate of twelve percent (12%) per annum on the unamortized
balance) of any capital improvements made to the Building by Landlord after the
date of this Lease that reduce in a commercially reasonable manner Operating
Expenses or made to the Building by Landlord after the date of this Lease that
are required under any governmental law or regulation; provided, however, that
Operating Expenses shall not include real property taxes, depreciation on the
Building, costs of tenants' improvements, marketing or advertising costs for the
rental or sale of the Building, costs of electricity or other utilities
separately metered for other tenant's spaces, executive or managerial salaries
or benefits above the level of management, consulting fees not related to
operation, management or repairs, market study fees, capital repairs or
replacements (except as provided above), real estate broker's commissions, costs
of repairs covered and paid by insurance (subject to deductibles paid by
Landlord), fines or penalties for Landlord's failure to pay taxes and
assessments before such became delinquent, or any other obligation on time,
points, fees and interest charges, principal payments or any other payments of
any kind related to Landlord's financing or refinancing of the Building as a
whole, transaction costs directly incurred in a sale or transfer of the
Building, expenses resulting from defective construction work performed by
Landlord, the initial acquisition and installation costs of the stand-by
electrical generator and related systems, interest and capital items other than
those referred to in subsection (ii) above. Landlord shall maintain accounting
books and records in accordance with sound accounting principles. Landlord
hereby agrees to deduct each calendar year from the amount of the Operating
Expenses the total amount of any and all sums, amounts or charges paid by Tenant
or other tenants of the Building directly to Landlord or its agent for specific
tenant requested services or specific utility charges, if applicable.
Notwithstanding anything to the contrary in the definition
of "Operating Expenses", Operating Expenses shall, also, not include any of the
following:
(a) Legal fees, accounting fees or other expenses related to
the defense of Landlord's title to or interest in the Premises or the Building.
(b) Payment of debt service on loans secured by a mortgage
or lien encumbering the Building or any portion or interest of or in the
Building.
(c) All costs and expenses which have been paid by Landlord
and reimbursed directly to Landlord by third-parties, including other tenants in
the Building, rather than through Operating Expenses.
(d) Legal fees and disbursements incurred for negotiation of
leases or enforcement of leases.
(e) Rent and additional rent payable under a ground lease or
any other superior lease encumbering the Building.
(f) Costs for which Landlord is compensated by insurance
proceeds or for which Landlord would have been compensated by insurance proceeds
had Landlord carried the insurance required by this Lease.
(g) Any fee or expenditure paid to an entity related to
Landlord materially in excess of the amount which would be paid in an arms
length transaction for materials or services of comparable quality (but only to
the extent of such excess).
(h) All costs and expenses, including fines, penalties and
legal fees) incurred due to a violation caused by Landlord in connection with
any new improvements constructed by Landlord within or as part of the Building.
(i) Salaries or fringe benefits of full-time personnel of
Landlord for any time periods performing for properties other than the Building.
(j) Any bad debt loss, rent loss, or reserves for bad debts
or rent loss.
(k) Costs incurred by Landlord for repairs or replacements
to the extent that Landlord is actually reimbursed under warranties or
guaranties.
(l) Any compensation paid to clerks, attendants, or other
persons in any potential commercial parking garage constructed to support the
Building for which separate parking fees or charges will be made to tenants.
(m) The cost of installing and maintaining any specialty
facility, such as a dining facility, athletic or recreational club, or luncheon
club if such facility is exclusive to any single tenant of the Building.
(n) Costs for sculptures, paintings, and other objects of
art located within or outside of the Building, other than the cost of
maintaining such sculptures, paintings and objects.
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<PAGE>
(2) The term "Taxes" shall mean the amount actually incurred
by Landlord (exclusive of any penalties, interest or late fees) of all
impositions, taxes, assessments (special or otherwise), water and sewer
assessments and other governmental liens or charges of any and every kind,
nature and sort whatsoever, ordinary and extraordinary, foreseen and unforeseen,
and substitutes therefor, including all taxes whatsoever (except for taxes for
the following categories which shall be excluded from the definition of Taxes:
any inheritance, estate, succession, transfer or gift taxes imposed upon
Landlord or any income taxes specifically payable by Landlord as a separate
tax-paying entity without regard to Landlord's income source as arising from or
out of the Building and/or the land on which it is located) attributable in any
manner to the Building, the land on which the Building is located and the
approximately 350 acre portion of the property surrounding the building, shown
on Exhibit "F" hereto (but excluding the assessed value of any new building(s)
and the land allocated to such new building(s) constructed on such campus), or
the rents (however the term may be defined) receivable therefrom, or any part
thereof, or any use thereon, or any facility located therein or used in
conjunction therewith or any charge or other amount required to be paid to any
governmental authority. For purposes hereof, until such time as a separate tax
folio is established for the Building and the approximate 350 acre campus, the
taxes on the Building and other improvements shall be determined from the
assessment line-item therefor and the taxes on the approximate 350 acres campus
shall be determined by comparison to the assessment for unimproved land located
in the Arvida Park of Commerce located in Boca Raton, Florida. The term "Taxes"
does not include income, excess profits, estate inheritance, succession,
transfer of capital tax assessments on Landlord or on Rent.
Tenant hereby agrees that the Overhead Rent from time to time computed
by Landlord shall be final and binding for all purposes of this Lease unless,
within ninety (90) days after Landlord provides Tenant with written notice of
the amount thereof, Tenant provides Landlord with written notice (i) disputing
the mathematical accuracy of such amount or whether such is a proper Operating
Expense under this Lease (the "Disputed Amount"), and (ii) designating an
attorney or accountant, reasonably acceptable to Landlord, and appointed by
Tenant, at its sole cost and expense, to review the mathematical accuracy of the
Disputed Amount, or whether such is a proper Operating Expense under this Lease
with Landlord and/or its designated representatives Tenant shall within thirty
(30) days of invoice, pay all of Landlord's reasonable costs and expenses in
connection with such review, including reasonable attorneys' fees and
accountants' fees, unless as a result thereof the Disputed Amount is
demonstrated to reflect a mathematical error in excess of three and one-half
percent (3.5%) of the amount actually due from Tenant. If such error is in
excess of three and one-half percent (3.5%), Landlord shall pay, within thirty
(30) days of invoice, Tenant's reasonable costs and expenses in connection with
such review, including reasonable attorneys' fees and accounting fees. Landlord
hereby agrees, in the event it receives such notice from Tenant, to cooperate in
promptly completing such review and promptly refunding any portion of the
Disputed Amount which exceeds the amount actually due from Tenant. Such an audit
shall be at Tenant's expense, at any time within ninety (90) days after
Landlord's annual statement is delivered to Tenant for such calendar year,
provided, that Tenant shall give Landlord not less than fifteen (15) days prior
written notice of any such audit and sign a confidential non-disclosure
agreement prior to the audit reasonably acceptable to Tenant and subject to any
qualifications expressly provided in this Lease. Notwithstanding the foregoing,
in no event shall Tenant have the right to dispute or audit Overhead Rent to the
extent that such Overhead Rent is less than $4.50 per square foot of Rentable
Area.
C. LATE CHARGE. Tenant covenants and agrees to pay a late charge in
the amount of Five (5.0%) percent of any payment of Base Rent and Overhead Rent
not received by Landlord within three (3) days from written notice from Landlord
and within ten (10) days from written notice from Landlord for all other
payments due hereunder. Tenant shall also pay Landlord interest at a rate equal
to twelve percent (12%) per annum accruing on any Rent(s) outstanding beyond
such three (3) day period or ten (10) day period, as applicable. Tenant shall
pay Landlord any such late charge(s) or interest within five (5) days after
landlord notifies Tenant of same.
D. DEFINITION OF RENT. The term "Rent" shall refer collectively to
Base Rent, Overhead Rent and Additional Rent. The term "Additional Rent" is
sometimes used herein to refer to any and all other sums payable by Tenant
hereunder, including, but not limited to, parking charges and sums payable on
account of default by Tenant. All Rent shall be paid by Tenant without offset,
demand or other credit except as otherwise specifically provided herein, and
shall be payable only in lawful money of the United States of America which
shall be legal tender in payment of all debts and dues, public and private, at
the time of payment. All sums payable by Tenant hereunder by check shall be
obtained against a financial institution located in the United States of
America. The Rent shall be paid by Tenant at the Building management office
located in the Building or elsewhere as designated by Landlord in writing to
Tenant. Any Rent payable for a portion of a month shall be prorated based upon
the number of days in the applicable calendar month.
E. RENT TAXES. In addition to Base Rent and Overhead Rent, Tenant
shall and hereby agrees to pay to Landlord each month a sum equal to any sales
tax, tax on rentals and any other similar charges now existing or hereafter
imposed, based upon the privilege of leasing the space leased hereunder or based
upon the amount of rent collected therefor.
F. COMMENCEMENT OTHER THAN FIRST DAY. If the Commencement Date
occurs on any
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day other than the first day of the month, or the Lease Term ends on a date
other than the last day of a calendar month, Tenant shall occupy the Premises
under the terms of this Lease and the pro rata portion of the Rent shall be paid
by Tenant; provided, however, that in such an event the Commencement Date, for
the purposes of this Lease, shall be deemed to be the first day of the month
immediately following the month in which possession is given.
G. OVERHEAD RENT AFTER EXPIRATION DATE. Overhead Rent for the final
months of this Lease is due and payable even though it may not be calculated
until subsequent to the Expiration Date of the Lease.
4. SECURITY DEPOSIT.
A. SECURITY DEPOSIT. [Intentionally Omitted.]
B. SECURITY INTEREST. Landlord waives any statutory and common law
liens for rent, except as any tenant improvements installed or constructed in
the Premises, which waiver shall be automatic and self-executing.
Notwithstanding the foregoing, Landlord agrees to execute such reasonable
documents requested by Tenant to evidence such waiver set forth herein.
5. USE
A. GENERAL. Tenant will use and occupy the Premises solely specific
uses set forth in the BLI Rider and for no other use whatsoever. Tenant shall,
at its own cost and expense, obtain any and all licenses and permits necessary
for such use. Tenant acknowledges that its type of business, as above specified,
is a material consideration for Landlord's execution of this Lease. Tenant will
not commit waste upon the Premises nor suffer or permit the Premises or any part
of them to be used in any manner, or suffer or permit anything to be done in or
brought into or kept in the Premises or the Building, which would: (i) violate
any law or requirement of public authorities, (ii) cause injury to the Building
or any part thereof, (iii) annoy or offend other tenants or their patrons or
interfere with the normal operations of HVAC, plumbing or other mechanical or
electrical systems of the Building or the elevators installed therein, (iv)
constitute a public or private nuisance, or (v) alter the appearance of the
exterior of the Building or of any portion of the interior other than the
Premises pursuant to the provisions of this Lease. Tenant agrees and
acknowledges that Tenant shall be responsible for obtaining, and for any and all
costs of obtaining, any special amendments to the certificate of occupancy for
the Premises and/or the Building and any other governmental permits,
authorizations or consents required solely on account of Tenant's use of the
Premises.
B. PROHIBITED USES. Notwithstanding anything to the contrary in this
Lease or the BLI Rider, including but not limited to, the "Use of Premises"
Section of the BLI Rider, Tenant hereby covenants and agrees that Tenant's
business is not and shall not be, and that Tenant shall not use the Premises or
any part thereof, or permit the Premises or any part thereof to be used without
Landlord's prior written consent, [(i) for the business of photographic,
multilith or multigraph reproductions or offset printing; (ii) for a retail
banking, trust company, depository, guarantee or safe deposit business open to
the general public, or indoor automated teller machines, (iii) as a savings
bank, a savings and loan company open to the general public, (iv) for the sale
to the general public of travelers checks, money orders, drafts, foreign
exchange or letters of credit or for the receipt of money for transmission, (v)
as a stock broker's or dealer's office or for the underwriting or sale of
securities open to the general public, (vi) as a restaurant, cafeteria, bar, or
an establishment for the sale of confectionery, soda, beverages, sandwiches, ice
cream or baked goods or for the preparation, dispensing or consumption of food
or beverages in any manner whatsoever, (vii) as a news or cigar stand, (viii) as
an employment agency, labor union office, physician's or dentist's office, dance
or music studio, school (except for the training of employees and clients of
Tenant), (ix) as a barber shop or beauty salon, (x) for the business of (a)
operating a shared office facility, that is, a business which subleases space
and/or offers centralized services to subtenants or customers on a shared basis,
such as secretarial, receptionist, telephone, etc., or (b) for a fee to persons
inside or outside of the Building, providing as a service word processing,
secretarial, video conferencing, conference services, telephone answering,
receptionist or mail receipt services, (xi) for any services or uses to the
general public to be conducted on the Premises, (xii) amateur recreational uses
or movie theaters, (xiii) retail sales, including but not limited to drug stores
or florists, or (xiv) warehousing, showroom and wholesale uses. Nothing in this
Section shall preclude Tenant from using any part of the Premises for
photographic, multilith or multigraph reproductions to the extent that such uses
are incidental to Tenant's own business or activities.
6. ACCEPTANCE OF PREMISES; LANDLORD'S WORK
Taking possession of the Premises by Tenant shall be conclusive
evidence that the Premises were in good and satisfactory condition when
possession was so taken subject to latent defects and Landlord's maintenance and
repair obligations provided in this Lease. Unless expressly stated herein to the
contrary, Landlord has no obligation to repair, improve, or add to the Premises
subsequent to Tenant's taking possession thereof and Tenant shall, at its sole
cost and expense and in compliance with the provisions of this Lease, be
responsible for any changes, alterations, replacements or repairs, maintenance
and decorations to the Premises. Except as may be specifically provided in this
Lease, Tenant shall not be required to make alterations to the structural or
base building improvements of the Building. Neither Landlord nor Landlord's
agents have made any representations or promises with respect to the physical
condition of the Building or the Premises,
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or any other matter or thing affecting or relating to Premises except as herein
expressly set forth, and no use, and its right to permit its principals and
guests to rights, easements or licenses are acquired by Tenant use, the parking
facilities pursuant to this Lease are by implication or otherwise, except as
expressly set subject to the following conditions: (i) Landlord forth in the
provisions of this Lease. Notwithstanding Deserves the right to reasonably
reduce the number of the foregoing, Landlord represents and warrants to Tenant
that it has not received any notice that the Building is currently in violation
of any laws, regulations or ordinances. Any existing ceiling system and
demountable partitions are to be removed from the Premises to the delivery of
the Premises at Landlord's expense. Improvements if any, to be made to the
Premises by Tenant shall be made in accordance with the Work Letter. Landlord's
published list of pre-approved general contractors and architects for The Blue
Lake Corporate Center, as may be amended from time to time Landlord at its
option (except if Landlord has already approved a general contractor or
architect), shall have exclusive right to bid for Tenant's construction
contracts. Improvements, if any, to be made to the Premises by Landlord are
specifically set forth in Work Letter and there are no others. All leasehold
improvements (as distinguished from trade fixtures and apparatus) installed in
the Premises at any time, whether by or on behalf of Tenant or by or on behalf
of Landlord, shall not be removed from the Premises at any time, unless such
removal is consented to in advance by Landlord; and at the expiration of this
Lease (either on the Expiration Date or upon such earlier termination as
provided in this Lease), all such leasehold improvements shall be deemed to be
part of the Premises, shall not be removed by Tenant when it vacates the
Premises, and title thereto shall vest solely in Landlord without payment of any
nature to Tenant. All trade fixtures and apparatus (as distinguished from
leasehold improvements) owned by Tenant and installed in the Premises shall
remain the property of Tenant and shall be removable at any time, including upon
the expiration of the Term; provided that Tenant shall repair any damage to the
Premises caused by the removal of said trade fixtures and apparatus and shall
restore the Premises to substantially the same condition as existed prior to the
installation of said trade fixtures and apparatus. The taking of possession by
Tenant (or any permitted assignee or subtenant of Tenant) of all or any portion
of the Premises for the conduct of business will be deemed conclusive evidence
that Tenant has found the Premises, and all of their fixtures and equipment,
acceptable, subject to latent defects and Landlord's maintenance and repair
obligations provided in this Lease.
7. PARKING
A. RESERVATIONS. Landlord has and reserves the right to reasonably
alter the methods used to control parking and the right to reasonably establish
such controls and rules and regulations (such as parking stickers to be affixed
to vehicles) regarding parking that Landlord may deem desirable. Without
liability, Landlord will have the right to tow or otherwise remove vehicles
improperly parked, blocking ingress or egress lanes, or violating parking rules,
at the expense of the offending tenant and/or owner of the vehicle.
B. CONDITIONS. Tenant's right to use, and its right to permit its
principals and guests to use, the parking facilities pursuant to this Lease are
subject to the following conditions: (i) Landlord reserves the right to
reasonably reduce the number of spaces in the parking area by not more than ten
percent (10%) of the then number of parking area spaces in the parking area
and/or reasonably change access thereto so long as such does not materially
reduce the number of parking spaces within reasonable priximity to the Premises;
and none of the foregoing shall entitle Tenant to any claim against Landlord or
to any abatement of Rent (or any part thereof); (ii) Landlord has no obligation
to provide a parking lot attendant and Landlord shall have no liability on
account of any loss or damage to any caused by the negligence or willful
misconduct of Landlord, or its agents, employees or contractors, Tenant hereby
agreeing to bear the risk of loss for same; (iii) Tenant, its agents, employees
and invitees, shall park their automobiles and other vehicles only where and as
reasonably designated from time to time by Landlord within the parking area so
long as such remain in reasonable proximity to the Premises; and (iv) if and
when so requested by Landlord, Tenant shall furnish Landlord with the license
numbers of any vehicles of Tenant, its agents and employees.
8. BUILDING SERVICES
A. GENERAL. In general, the services set forth below will be
provided by Landlord or Landlord's licensee or an independent contractor
contracted for by Landlord at a service level set, defined and regulated
consistent with office buildings of similar quality to and in the same immediate
geographic area as the Building. During the Lease Term, the regular business
hours ("Business Hours") of the Building (including the auditorium and
cafeteria) will be 7:00 a.m. to 7:00 p.m., Monday through Saturday, except
holidays generally recognized by state and federal governments or as may be
shortened in accordance with applicable policies or regulations adopted by any
utility company servicing the Building or government. During periods other than
Business Hours chilled water will be available from Landlord or its energy
manager on prior request on an as-available basis at the per-ton-pricing from
time-to-time then in effect, except if such chilled water is separately metered
to the Premises, in which event Tenant shall pay the costs of such chilled water
as provided in below. Landlord reserves the right to increase the Business
Hours. The Building will be accessible to Tenant, its subtenants, agents,
servants, employees, contractors, invitees or licensees (collectively, "Tenant's
Agents") twenty-four hours per day, seven days per week except in the case of
temporary closure due to emergencies, repairs, casualty, governmental or
quasi-governmental requirements or as Landlord reasonably deems necessary in
order to prevent damage or injury to person or property. Landlord shall use
reasonable efforts not to materially disturb or interfere with Tenant's business
or Tenant's use of the Premises in connection with any such entry.
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(1) ELECTRICITY:
(a) Landlord is the exclusive vendee of electrical utility
services for the Project. There shall be installed, at Landlord's expense, in
conformance with the Work Letter, separate electric metering for the Premises.
Tenant shall pay all applicable security deposits required to secure electrical
services as provided in the BLI Rider. Landlord shall be solely responsible for
the expenses of all sub-metering for all other utility services to the Premises,
to the extent such may be reasonably sub-metered. In the event that sub-metering
is not available until completion of all demising work for the Premises prior to
the Rent Commencement Date electric power will be available through the auspices
of lighting and general office equipment use in amounts consistent with Building
Standard Electric Capacities. Landlord reserves the right after business hours
during non-Business Hours to turn off all unnecessary lighting in the unoccupied
areas of the Building to minimize the energy consumption of the Building. Tenant
will not, without written consent of Landlord connect with electric current
except through existing electrical outlets in the Premises, any major apparatus
or major device for the purpose of using electric current, except for Tenant's
ability to add a supplemental package air-conditioning unit as provided in this
Section 8.
(2) STAND-BY ELECTRIC GENERATOR RIDER. Tenant may participate in
the stand-by electric generator service program available to the Building by
executing the stand-by electric generator subscription rider attached hereto and
made a part hereof as Exhibit "G".
(3) AIR-CONDITIONING SERVICES: Landlord agrees that either
Landlord or its designated utility manager (the "Utility Manager") shall
provide, air-conditioning services to the Premises which air-conditioning
services (including chilled water) shall be separately metered to the Premises
and billed directly by either Landlord or the Utility Manager directly to
Tenant. During Business Hours, air conditioning consistent with comparable
buildings in the Boca Raton area shall be supplied to the Premises for the
purposes of comfort control in the Premises during regular business hours
consistent with comparable office buildings in the Boca Raton area. Landlord and
Tenant agree that Landlord's air-conditioning system is not designed to cool
machinery and equipment. Tenant shall not re-direct, or in any manner modify,
the air-conditioning duct distribution to accommodate Tenant's build-out unless
any such modifications are first approved in writing by the Landlord, which
modifications shall be designed only by an engineer pre-approved by the
Landlord. If Tenant requires additional air-conditioning services for comfort
control during Business Hours, (i.e., in excess of Building Standard) or during
non-Business Hours Landlord shall, in response to Tenant's request for any such
additional air-conditioning service accommodate Tenant subject to availability
at the then prescribed per-ton hour basis which service shall be billed to
Tenant as Additional Rent. At the time of the execution of this Lease, the
per-ton hour charge for additional air-conditioning services is $.24. This rate
may be subject to change during the Lease Term as evaluated and determined by
FPL Services, the Utility Manager or a similar service. At Landlord's option,
Landlord may secure air-conditioning controls (thermostats) in lockable metal
boxes to regulate the efficiency and use of the system. The Landlord may, at its
option, contract with FPL Services, or such other provider of chilled-water
distribution system sources as the Landlord may reasonably elect.
(4) WATER AND SEWER: Landlord agrees to provide municipally
supplied cold water and sewer services to the Common Areas for lavatory
purposes.
(5) ELEVATOR SERVICE: Subject to events of force majeure, Tenant
shall have passenger elevator access to the Premises twenty-four (24) hours per
day, seven days per week; however, access for deliveries and use of freight
elevators are subject to Landlord's reasonable rules and regulations.
(6) WINDOW WASHING: Landlord will provide exterior window washing
with reasonable frequency.
B. INTERRUPTION OF SERVICES. Tenant understands and agrees that
Landlord does not warrant that any of the services referred to above, or any
other services which Landlord may supply, will be free from interruption. Tenant
acknowledges that any one or more of such services may be suspended by reason of
accident or repairs, alterations or improvements necessary to be made, or by
strikes or lockouts, or by reason of operation of law, or other causes beyond
the control of Landlord. No such interruption or discontinuance of service will
be deemed an eviction or a disturbance of Tenant's use and possession of the
Premises or any part thereof, or render Landlord liable to Tenant for damages or
abatement of Rent or relieve Tenant from the responsibility of performing any of
Tenant's obligations under this Lease. However, to the extent that electrical
service is interrupted for more than five (5) consecutive business days due to
the negligence or willful act of the Landlord, its agents, employees or
contractors, and such interruption prevents the Tenant from occupying the
Premises for its business operations and Tenant does not occupy the Premises for
the duration of such interruption, Rent shall abate to the extent that such
interruption continues beyond the five (5) consecutive business day period.
C. FIBER OPTICS. Tenant may contract with BellSouth, which has been
provided access through the underlying property by Landlord for
telecommunication service wiring and installation and which has been designated
by the Landlord as the vendor of choice at the Blue Lake Building, for
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voice and data telecommunication wiring and services, and installing any
telecommunication products and, specifically, dual access points for Tenant's
fiber optic lines, at Tenant's sole expense. To the extent that such
installation requires the digging of a trench through the Property in order to
gain dual access points, the Tenant shall provide the Landlord with plans and
schematics for the referenced installation which plans and schematics shall be
subject to the reasonable satisfaction of the Landlord and which installation
shall be further subject to the approval, as necessary, of the City of Boca
Raton or other agencies having jurisdiction thereon.
D. UTILITY DEREGULATION: Landlord has advised Tenant that presently,
Florida Power & Light ("Electric Service Provider") is the utility company
selected by Landlord to provide utility service for the Building.
Notwithstanding the foregoing, if permitted by law, Landlord shall have the
right at any time and from time to time during the Lease Term to either contract
for service from a different company or companies providing electric service (a
such company shall hereinafter be referred to as an "Alternate Service
Provider") or continue to contract for service from the Electric Service
Provider. Tenant shall cooperate with Landlord, the Electric Service Provider
and any Alternate Service Provider at all times and, as reasonably necessary,
shall allow Landlord, Electric Service Provider, and any Alternate Service
Provider reasonable access to the Building's electric lines, feeders, risers,
wiring and any other machinery within the Premises. Landlord shall be in no way
liable or responsible for any loss, damage or expense that Tenant may sustain or
incur by reason of change, failure, interference, disruption or defect in the
supply or character of the electric energy furnished to the Premises (except to
the extent caused by the negligence or willful misconduct of Landlord, its
agents, employees or contractors), or if the quantity or character of the
electric energy supplied by the Electric Service Provider or any Alternate
Service Provider is no longer available or suitable for Tenant's requirements,
then no such change, failure, defect, unavailability or unsuitability shall
constitute an actual or constructive eviction, in whole or in part, or entitle
Tenant to any abatement or diminution of Rent, or relieve Tenant from any of its
obligations under the Lease.
9. SECURITY
With respect to security for the Building and the parking lot,
Landlord and Tenant hereby agree as follows: Security of the Premises is the
sole responsibility of the Tenant and that the Landlord has no liability for
breach of security to the Premises. Tenant may at Tenant's expense install a
security system to the Premises; provided, however, that Tenant, in addition to
access otherwise required hereunder, will provide Landlord adequate access to
the Premises in case of emergencies particularly regarding Premises that contain
fire sprinkler risers and equipment. Landlord will install in the Building, an
access device, such as a keypad or card reader, as Landlord may deem appropriate
for the Building, in Landlord's sole and absolute discretion. All repairs
required to the Premises caused by security breaches are the responsibility of
the Tenant, except to the extent caused by the negligence or willful misconduct
of Landlord, its agents, employees or contractors, however, Landlord may elect
to effect such repairs, if appropriate to insure continued security, protection
of property, or safety of life. The cost of such repairs shall be Additional
Rent.
A. TENANT'S RESPONSIBILITY. Tenant shall: (1) abide by all
reasonable policies, procedures and rules and regulations for use of the access
system, (2) report promptly the loss or theft of all keys which would permit
unauthorized entrance to the Premises, Building or parking lot, (3) promptly
report to Landlord door-to-door solicitation or other unauthorized activity in
the Building or parking lot, and (4) promptly inform the Landlord's security
contractor in the event of a break-in or other emergency. In addition, Tenant
may, at its option and sole cost and expense, install its own interior security
system pursuant to plans to be submitted to Landlord for Landlord's approval,
which approval shall not be unreasonably withheld. The Tenant shall deliver
mechanic's lien releases prior to the initiation of the work.
B. INTERRUPTION OF SECURITY. Tenant acknowledges that the above
security provisions may be suspended or modified at Landlord's sole discretion
or as a result of causes beyond the reasonable control of Landlord. No such
interruption, discontinuance or modification of security service will constitute
an eviction, constructive eviction, or a disturbance of Tenant's use and
possession of the Premises, and further, no interruption, discontinuance or
modification of security service will render Landlord liable to Tenant or
third-parties for damages, abatement of Rent, or otherwise, or relieve Tenant of
the responsibility of performing Tenant's obligations under this Lease.
C. HURRICANE SHUTTER OPTION. Tenant may, at Tenant's sole cost and
expense (which shall include all expenses reasonably incurred by Landlord unless
plans for hurricane shutters were incorporated as part of the initial
construction document review process) install protective hurricane shutters one
the interior of the windows of the Premises. Any such installation of hurricane
shutters shall be subject to the prior approval of the Landlord, which approval
shall not be unreasonably withheld. The hurricane shutters shall be approved by
the Landlord as to size, color, type of shutter, mode of attachment and such
other criteria as Landlord shall from time-to-time determine. The Tenant must
also receive the approval of the City of Boca Raton, Florida prior to the
installation of hurricane shutters.
10. REPAIRS, MAINTENANCE AND UTILITIES
A. LANDLORD'S RESPONSIBILITIES. During the Lease Term, Landlord
shall maintain the
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level of repairs and maintenance (and replacements if needed) for the Building,
the Common Areas, and all other areas serving the Building, in a manner
comparable to office buildings of similar quality to and in the immediate
geographic area of the Building and perform or have performed all such repairs
and maintenance. Landlord's responsibilities for repairs and maintenance with
respect to this paragraph are as follows: (1) the structural, foundation, and
roof systems of the Building and the surface parking lot, (2) the Building
standard electrical and mechanical systems, (3) the primary water and sewer
systems, life-safety, air conditioning, and sprinkler systems, of the Building
and to the Premises (excluding, however, those systems which are installed by
Tenant for Tenant's sole use), (4) the Building Common Areas and the common area
furniture, fixtures, and equipment and exterior windows, (5) the landscaped
areas in and about the Building, (6) the parking lot, driveways, sidewalks,
drainage systems and exterior Common Areas, and (7) replacement of Building
standard fluorescent light bulbs in the Common Areas.
B. TENANT'S RESPONSIBILITIES. Tenant shall at its own cost and
expense keep and maintain all parts of the Premises and such portion of the
Building within the exclusive control of Tenant in good condition, promptly
making all necessary repairs and replacements, whether ordinary or
extraordinary, with materials and workmanship of the same character, kind and
quality as the original, including but not limited to interior windows, glass
and plate glass, doors, skylights, any, special office entries, interior walls
and finish work, floors and floor coverings, heating and air conditioning,
electrical systems and fixtures, sprinkler systems, water heaters, truck doors,
and plumbing work and fixtures, all of the foregoing systems inside the
Premises. Tenant as part of its obligation hereunder shall keep the whole of the
Premises in a clean and sanitary condition. Tenant will as far as possible keep
all such parts of the Premises from Deteriorating, ordinary wear and tear
excepted, and from falling temporarily out of repair, and upon termination of
this Lease in any way. Tenant will yield up the Premises to Landlord in good
condition and repair, loss by fire or other casualty covered by insurance to be
secured pursuant to section 14 excepted (but not excepting any damage to glass
or loss not reimbursed by insurance because of the existence of a deductible
under the appropriate policy, ordinary wear and tear excepted). Tenant shall not
damage any demising wall or disturb the integrity and supports provided by any
demising wall and shall, at its sole cost and expense, properly repair any
damage or injury to any demising wall caused by Tenant or its employees, agents
or invitees. Tenant shall, at its own cost and expense, as additional rent, pay
for the repair of any damage to the Premises or the Building, resulting from
and/or caused in whole or in part by the negligence or misconduct of Tenant, its
agent, servants, employees, patrons, customers, or any other person entering
upon the Building as a result of Tenant's business activities caused by Tenant's
default hereunder.
C. REPAIRS AND MAINTENANCE; MISCELLANEOUS. Notwithstanding Anything
to the contrary in this Lease, Landlord shall have no responsibility to repair
or maintain the Building, any of its components, the Common Areas, the Premises,
or any fixture, improvement, trade fixture, or any item of personal property
contained in the Building, the Common Areas, and/or the Premises if such repairs
or maintenance are required because of the occurrence of any of the following:
(i) the improper acts, misuse, improper conduct, omission or neglect of Tenant
or Tenant's Agents, or (ii) the conduct of business in the Premises. Should
Landlord elect to make repairs or maintenance occasioned by the occurrence of
any of the foregoing, Tenant shall pay as Additional Rent all such reasonable
costs and expenses incurred by Landlord. Landlord shall have the right to
reasonably approve in advance all work, repair, maintenance or otherwise, to be
performed under this Lease by Tenant and all of Tenant's repairmen, contractors,
subcontractors and suppliers performing work or supplying materials. Tenant
shall be responsible for all permits, inspections and certificates for
accomplishing the above. Tenant shall obtain lien waivers for all work done in
or to the Premises, by contractors, subcontractors, and suppliers retained by
Tenant.
11. TENANT'S ALTERATIONS
A. GENERAL. During the Lease Term, Tenant will make no alterations,
additions or improvements in or to the Premises or the Building envelope,
structure, roof, mechanical and plumbing systems, electrical systems, or any
area in which asbestos has been located (as noted in the Environmental Report
(as hereinafter defined) or as identified in writing by the Landlord), and will
perform no work the cost of which is in excess of $20,000.00 in the aggregate
(any and all of such alterations, additions or improvements other than those set
forth in the Work Letter attached hereto are collectively referred to in this
Lease as the "Alteration(s)", and the foregoing Alterations collectively
referred to as "Major Alterations"), without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Tenant shall submit
to Landlord detailed drawings and plans of the proposed Major Alterations at the
time Landlord's consent is sought. Upon Landlord's consent to any proposed Major
Alterations by Tenant, such consent will be conditioned upon Tenant's agreement
to comply with all reasonable requirements established by Landlord, including
safety requirements and the matters referenced in Section 22 of this Lease. All
Alterations shall be done in compliance with all other applicable provisions of
this Lease and with all applicable laws, ordinances, directives, rules and
regulations of government or authorities having jurisdiction, including, without
limitation, the Americans with Disabilities Act (ADA), the Florida Accessibility
Code, and all laws dealing with the abatement, storage, transportation and
disposal of asbestos or other hazardous materials, which work, shall be effected
by contractors and consultants reasonably approved by Landlord and in compliance
with all applicable laws and with
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Landlord's rules and regulations. Tenant may provide Landlord with a list of
proposed contractors and consultants regularly engaged by Tenant for minor
Alterations such as carpeting, painting, and low voltage wiring. Once such list
has been approved by Landlord, the Tenant shall not be required to obtain
separate approvals for such contractors and consultants for each such minor
Alterations project. Notwithstanding anything to the contrary contained in this
Section, Tenant shall not penetrate or disrupt the structural columns of the
Building located within the Premises; and shall not penetrate or disrupt any
area within three (3) feet of any structural column in performing any
Alterations, without Landlord's prior written consent which shall not be
unreasonably withheld or delayed. All Material Alterations shall be performed by
those pre-qualified architects and contractors designated by Landlord as
approved for the Blue Lake Corporate Center, a list of which are attached hereto
and made a part hereof as Exhibit "B-3", which list is subject to amendment from
time-to-time. If Tenant elects to remove any Major Alterations at the expiration
of the Lease, Tenant shall repair any and all damage caused to the Premise by
such removal. Additionally, prior to the commencement of any work by or for
Tenant, Tenant shall furnish to Landlord certificates evidencing the existence
of builder's risk, comprehensive general liability, and worker's compensation
insurance complying with the requirements of Insurance Section of this Lease.
Any damage to any part of the Building that occurs as a result of any
Alterations shall be repaired by Tenant, as soon as reasonably practicable, to
the reasonable satisfaction of Landlord. Tenant and its contractor and all other
persons performing any Alterations shall abide by the Landlord's reasonable job
site rules and regulations and reasonably cooperate with Landlord's construction
representative in coordinating all of the work in the Building including,
without limitation, the hours of work, parking, and use of the construction
elevator. Landlord shall not charge any other fee to Tenant in respect of
Landlord's construction representative. All alterations will comply with the
requirements of any energy efficiency program offered by the electric service
provided to the Building to the extent practicable. All materials used in any
Major Alterations, including, without limitation, paint, carpet, wall or window
coverings, carpet glues, and any other chemicals shall be subject to Landlord's
prior written reasonable approval. All alterations shall be done in a good and
workmanlike manner. Tenant shall, prior to the commencement of any Alterations,
obtain and exhibit to Landlord any governmental permit required for the
Alterations. Within ten (10) days after completion of any Alteration, Tenant
shall deliver to the Landlord, copies of any plans and specifications for such
Alteration. All contractors, sub-contractors, mechanics, laborers and
materialmen shall be put on notice of and shall be subject to the fact that
Tenant is not authorized to subject Landlord's interest in the Building or the
Premises to any claim for construction, mechanics, laborer's and materialman's
liens and all persons dealing directly or indirectly with Tenant may not look to
the Landlord's interest in the Premises as security for payment, all as more
fully provided in Section 26 of this Lease.
B. ALTERATION COSTS.
(1) Tenant shall pay to Landlord as Additional Rent (or to its
nominee or designated contractor, as Landlord may direct) in connection with all
Major Alterations (other than the initial tenant improvements) reasonable fees
and costs of Landlord's engineers, architects, and construction managers for
review and approval of all plans and specifications for such Major Alteration,
and for all other reasonable costs and expenses incurred by Landlord as a result
of or in connection with each such Major Alteration, based on an hourly fee and
reasonable and customary hours expended for each such Major Alteration.
(2) The Major Alteration costs shall be paid monthly installments
during the course of the performance of the Major Alteration, within thirty (30)
days from receipt of Landlord's reasonably detailed invoice. Within thirty (30)
days after completion of the Major Alteration, Tenant shall pay to Landlord the
entire balance of the Major Alteration costs if not theretofore paid in full.
12. LANDLORD'S ADDITIONS AND ALTERATIONS
Landlord has the right to make changes in and about the Building and
parking areas, including, but not limited to, signs, entrances, address or name
of Building. Such changes may include, but not be limited to, rehabilitation,
redecoration, refurbishment and refixturing of the Building and expansion of or
structural changes to the Building. The right of Tenant to quiet enjoyment and
peaceful possession given under the Lease will not be deemed breached or
interfered with by reason of Landlord's actions pursuant to this paragraph so
long as such actions do not materially deprive Tenant of its use and enjoyment
of the Premises. If Landlord voluntarily changes the street address of the
Building, then Landlord will reimburse Tenant for all reasonable expenses
incurred by Tenant in connection with reprinting stationery, business cards, and
brochures due to such change (but not to exceed $5,000.00), unless Landlord
provides Tenant at least one hundred twenty (120) days prior written notice of
such change.
13. ASSIGNMENT AND SUBLETTING
A. LANDLORD'S CONSENT REQUIRED. Except as provided below with
respect to assignment of this Lease following Tenants bankruptcy, neither
Tenant, nor Tenant's legal representatives or successors-in-interest by
operation of law or otherwise will effect a "Transfer", as herein defined
without first obtaining the consent of Landlord, which consent Landlord shall
not unreasonably withhold or delay provided that all of the requirements of
paragraph B. of this Section 13 are satisfied. As used in this Section 13, any
of the following shall be deemed to be a Transfer ("Transfer"): assignment of
this Lease, in whole or in part; sublet of all or any part of the Premises; any
license allowing anyone other than Tenant to use or occupy all or any part of
the
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Premises; a pledge or encumbrance by mortgage or other instrument of Tenant's
interest in this Lease; any transfer of corporate shares as described in
paragraph C. of this Section 13; or any transfer of partnership interest as
described in paragraph D. of this Section 13. Consent by Landlord to any
transfer shall not constitute a waiver of the requirement for such consent to
any subsequent transfer. Upon such approved assignment, Tenant shall not be
released from its obligations hereunder arising after such assignment has been
accomplished, unless the approved assignee specifically assumes, in writing, for
the benefit of the Landlord, all such obligations, in which event Tenant shall
be released of all such obligations hereunder.
B. CONDITIONS FOR TRANSFER APPROVAL. Unless all of the following
conditions are satisfied, Landlord withholding of consent will be deemed
reasonable:
(1) In Landlord's reasonable judgment, the proposed assignee or
subtenant or occupant is engaged in a business or activity, which (a) is in
keeping with the then zoning requirements, (b) is limited to the use of the
Premises as set forth in the BLI Rider, and (c) will not violate any negative
covenant as to use contained in any other lease of office space in the Building;
(d) use of the Premises by the proposed transferee or assignee will not violate
or create any potential violation of any laws or any other agreements affecting
the Premises, the Building, the Landlord or other tenants;
(2) The proposed transferee is a reputable person of good
character, in Landlord's reasonable judgment, and has sufficient financial
wherewithal to discharge its obligations under this Lease and/or the proposed
Agreement of Assignment or the Sublease.
(3) The form of the proposed sublease or instrument of assignment
or occupancy shall be reasonably satisfactory to Landlord, and shall comply with
the applicable provisions of this Section;
(4) There shall not be more than a total of three (3) occupying
entities (including Tenant and any assignee or sublessee requiring approval by
Landlord hereunder) of the Premises; and
(5) The proposed subtenant or assignee or occupant shall not be
entitled, directly or indirectly, to diplomatic or sovereign immunity and shall
be subject to the service of process in, and the jurisdiction of the courts of
the State of Florida.
(6) Such transferee (if an assignment) shall assume in writing,
in a form reasonably acceptable to Landlord, all of Tenant's obligations
hereunder and Tenant shall provide Landlord with a copy of such assumption/
transfer document;
(7) Tenant shall reimburse Landlord for all of its reasonable
out-of-pocket costs and expenses incurred with respect to the transfer, not to
exceed $5,000.00.
(8) Tenant to which the Premises were initially leased shall
continue to remain liable under this Lease for the performance of all terms,
including but not limited to, payment of Rental due under this Lease;
(9) Tenant's Guarantor, if any, shall continue to remain liable
under the terms of the Guaranty of this Lease and, if Landlord deems it
necessary, such guarantor shall execute such documents necessary to insure the
continuation of its guaranty;
(10) Each of Landlord's Mortgagees shall have consented in
writing to such transfer.
(11) Tenant shall give notice of a requested transfer to
Landlord, which notice shall be accompanied by (a) a conformed or photostatic
copy of the proposed assignment or sublease, the effective or commencement date
of which shall be at least thirty (30) days after the giving of such notice, (b)
a statement setting forth in reasonable detail the identity of the proposed
assignee or subtenant, the nature of its business and its proposed use of the
Premises, (c) current financial information with respect to the proposed
assignee or subtenant, including, without limitation, its most recent financial
report and (d) such other information as Landlord may reasonably request.
(12) The proposed use of the Premises by the Transferee will not
require increased services from the Landlord from that provided to Tenant under
the Lease.
(13) Then sublease or assignment will not violate any exclusivity
clause contained in any lease affecting any portion of the Building.
C. TRANSFER OF CORPORATE SHARES. Notwithstanding anything to the
contrary contained in this Lease, Tenant may assign this Lease or sublet all or
any portion of the Premises from time to time, without Landlord's consent, to
any entity controlling, controlled by or under common control with Tenant, or to
any successor of Tenant resulting from a merger or consolidation of Tenant, or
as a result of a sale by Tenant of all or substantially all of its assets or
stock, provided that no such transfer shall relieve Tenant or the Guarantor from
any liability under this Lease, whether accrued to the date of such transfer or
thereafter accruing. In addition, any change in the controlling interest in the
stock of Tenant as a result of an initial public offering of Tenant's stock, and
any transfer of the capital stock of Tenant by persons or parties through the
"over-the-counter market" or through any recognized stock exchange, shall not be
deemed to be a transfer requiring Landlord's consent. Landlord shall not be
entitled to receive any portion of
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the Transfer consideration as described below arising out of an assignment or
sublease not requiring Landlord's consent. Tenant shall provide written notice
of such assignment or subletting, together with the name and address of the
assignee or subtenant, five (5) days prior to the assignment or subletting to
the extent permitted by law, but in no event more than ten (10) days after such
assignment or subletting.
D. ACCEPTANCE OF RENT FROM TRANSFEREE. The acceptance by Landlord of
the payment of Rent following any assignment or other transfer prohibited by
this Section shall not be deemed to be a consent by Landlord to any such
assignment or other transfer nor shall the same be deemed to be a waiver of any
right or remedy of Landlord hereunder. Following a permitted sub-lease, if
Tenant breaches any of the terms and provisions of this Lease, Landlord may
elect to receive directly from the Sub-tenant due or payable to Tenant by
Sub-Tenant pursuant to the Sub-Lease, and upon receipt of a written notice from
Landlord referencing this section, Sub-Tenant shall have to pay to Landlord any
and all sums becoming due or payable under the Sub-Lease. Tenant shall receive
from Landlord a corresponding credit for such sums against any payments then due
or thereafter becoming due from Tenant. Neither the giving of such written
notice to Sub-Tenant nor the receipt of such direct payments from the Sub-Tenant
shall cause the Landlord to assume any of Tenant's duties, obligations, and/or
liabilities under any sublease, nor shall such event impose upon Landlord the
duty or obligation to honor the sublease or subsequently to accept Sub-Tenant's
attornment.
E. If, this Lease is purported to be assigned, without the consent
of the Landlord, or the Premises are sublet or occupied by anyone other than
Tenant, Landlord may accept rents from the assignee, subtenant or occupant and
apply the net amount received to the Rent reserved in this Lease, but no such
assignment, subletting, occupancy or acceptance of Rent shall be deemed a waiver
of the requirement for Landlord's consent as contained in this section or
constitute a novation or otherwise release Tenant from its obligations under
this Lease.
F. If Landlord shall consent to any Transfer, Tenant shall in
consideration therefor, pay to Landlord as Additional Rent, an amount equal to
one hundred (100%) percent of the Transfer Consideration, or Landlord may elect
to recapture the Transferred portion of the Premises and terminate this Lease
with respect to that portion only. For purposes of this paragraph, the term
Transfer consideration shall mean in any Lease Year (i) any rents, additional
charges or other consideration payable to Tenant by the transferee of the
Transfer which is in excess of the Base Rent and Overhead Rent accruing during
such Lease Year, net of the reasonable costs incurred by Tenant in connection
with the Transfer including but not limited to reasonable fees paid to Tenant's
attorneys and accountants with respect to the Transfer, broker commissions, and
advertising costs associated therewith, and improvement costs. Landlord shall
have the right to audit Tenant's books and records during normal business hours,
at a location in South Florida reasonably designated by Tenant, upon reasonable
notice to determine the amount of Transfer Consideration payable to Landlord. In
the event such audit reveals an understatement of Transfer Consideration in
excess of five percent (5%) of the actual Transfer Consideration due Landlord,
Tenant shall pay for the cost of such audit within ten (10) business days after
Landlord's written demand for same otherwise, Landlord shall be solely
responsible for the costs of such audit.
G. Any permitted sublease shall provide: (i) the subtenant shall
comply with all applicable terms and conditions of this Lease to be performed by
Tenant (except as to Rent); (ii) the sublease is expressly subject to all of the
terms and provisions of this Lease; and (iii) unless Landlord elects otherwise,
the sublease will not survive the termination of this Lease (whether voluntarily
or involuntarily) or resumption of possession of the Premises by Landlord
following a default by Tenant. The sublease shall further provide that if
Landlord elects, the sublease shall further survive a termination of this Lease
or resumption of possession of the Premises by Landlord following a default by
Tenant, the subtenant will, at the election of Landlord, attorn to the Landlord
and continue to perform its obligations under its sublease as if this Lease had
not been terminated and the sublease were a direct lease between the Landlord
and subtenant. The sublease shall otherwise be in form and substance reasonably
satisfactory to the Landlord's lawyer. Any permitted assignment of lease shall
contain an assumption by the Assignee of all terms, covenants and conditions of
this Lease to be performed by the Tenant and shall otherwise be in form and
substance reasonably satisfactory to the Landlord's lawyer.
H. BUILDING DIRECTORY ADDITIONS. The listing or posting of any name,
other than that of Tenant, whether on the door or exterior wall of the Premises,
the Building's tenant directory in the lobby or elevator, or elsewhere shall not
(i) constitute a waiver of Landlord's rights to withhold consent of any sublease
or assignment pursuant to this Section 13; (ii) be deemed an implied consent by
Landlord to any sublease of the Premises or any portion thereof, to any
assignment or transfer of the Lease, or to any unauthorized occupancy of the
Premises, except in accordance with the express terms of that Lease; or (iii)
operate to vest any right or interest in the Lease or in the Premises. Any such
listing as described in this subsection shall constitute a privilege extended by
Landlord to Tenant and shall be immediately revocable at Landlord's will by
notice to Tenant.
14. TENANT'SINSURANCE COVERAGE
A. GENERAL. Tenant agrees that, at all times during the Lease Term
(as well as prior and subsequent thereto if Tenant or any of Tenant's Agents
should then use or occupy any portion of the Premises), it will keep in force,
with an insurance company licensed to do business in the State of Florida, and
at least A+lX-rated in the most current
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edition of Best's Insurance Reports and acceptable to Landlord, (i) without
deductible in excess of $5,000.00, comprehensive general liability insurance,
including coverage for bodily injury and death, property damage and personal
injury and contractual liability as referred to below, in the amount of not less
than the amount set forth in the BLI Rider, combined single limit per occurrence
for injury (or death) and damages to property, (ii) with deductible of not more
than Five Thousand Dollars ($5,000.00), insurance on an "All Risk or Physical
Loss" basis, including sprinkler leakage, vandalism, malicious mischief, fire
and extended coverage, covering all improvements to the Premises, fixtures,
furnishings, removable floor coverings, equipment, signs and all other
decoration or stock in trade, in the amounts of not less than the full
replacement value thereof, and (iii) workmen's compensation and employer's
liability insurance, if required by statute. Such policies will: (i) include
Landlord, Landlord's Lender, and Landlord's affiliates, or such other parties as
Landlord may reasonably designate as additional insured's, (ii) be considered
primary insurance, (iii) include within the terms of the policy or by
contractual liability endorsement coverage insuring Tenant's indemnity
obligations under paragraph 19 for bodily injury and property damage, and (v)
provide that it may not be canceled or changed without at least thirty (30) days
prior written notice from the company providing such insurance to each party
insured thereunder. Tenant will also maintain throughout the Lease Term worker's
compensation insurance with not less than the maximum statutory limits of
coverage.
B. EVIDENCE. The insurance coverages to be provided by Tenant will
be for a period of not less than one year. At least thirty (30) days prior to
the Commencement Date, Tenant will deliver to Landlord original certificates of
all such paid-up insurance; thereafter, at least thirty (30) days prior to the
expiration of any policy Tenant will deliver to Landlord such original
certificates as will evidence a paid-up renewal or new policy to take the place
of the one expiring. Any insurance required of Tenant under this Lease may be
furnished by Tenant under an umbrella or blanket policy carried by Tenant. Such
umbrella or blanket policy shall contain an endorsement that names Landlord as
an additional insured, references the Premises, and provides for a minimum limit
available for the Premises equal to the insurance amounts required in the Lease.
15. LANDLORD'S INSURANCE COVERAGE
A. GENERAL. Landlord will at all times during the Lease Term
maintain a policy or policies of insurance insuring the Building against loss or
damage by fire, explosion or other hazards and contingencies typically covered
by insurance for an amount acceptable to the mortgagees encumbering the
Building. Landlord reserves the right, in its reasonable business judgement, to
self insure in lieu of maintaining such policies.
B. TENANT'S ACTS. Tenant will not do or permit anything to be done
upon or bring or keep or permit anything to be brought or kept upon the Premises
which will increase Landlord's rate of insurance on the Building. If by reason
of the failure of Tenant to comply with the terms of this Lease, or by reason of
Tenant's occupancy (even though permitted or contemplated by this Lease), the
insurance rate shall at any time be higher than it would otherwise be, Tenant
will reimburse Landlord for that part of all insurance premiums charged because
of such violation or occupancy by Tenant. Tenant agrees to comply with any
reasonable requests or recommendation made by Landlords insurance underwriter
inspectors.
C. EXCLUSIONS. Tenant acknowledges that Landlord will not carry
insurance on tenant improvements, furniture, furnishings, trade fixtures,
equipment installed in or made to the Premises by or for Tenant, in accordance
with the Work Letter attached hereto, and Tenant agrees that Tenant, and not
Landlord, will be obligated to promptly repair any damage thereto or replace the
same.
16. WAIVER OF RIGHT OF RECOVERY Except as otherwise provided in this
Lease, neither Landlord nor Tenant shall be liable to the other for any damage
to any building, structure or other tangible property, or any resulting loss of
income, or losses under worker's compensation laws and benefits, even though
such loss or damage might have been occasioned by the negligence of such party,
its agents or employees. The provisions of this Section shall not limit the
indemnification for liability to third parties pursuant to Section 19. As used
in this section 16.A., "damage" refers to any loss, destruction or other damage.
17. DAMAGE OR DESTRUCTION BY CASUALTY
A. LANDLORD'S ABSOLUTE RIGHT TO TERMINATE. If by fire or other
casualty the Premises or the Building is damaged or destroyed to the extent of
Twenty Five (25%) Percent or more of the insured value thereof but in the
reasonable estimation of Landlord made within thirty (30) days of the fire or
casualty cannot be restored in less than two hundred ten (210) days from the
date of Landlord's notice, Landlord or Tenant will have the option of
terminating this Lease or any renewal thereof by serving written notice upon the
other within ninety (90) days from the date of the casualty and any prepaid Rent
or Additional Rent will be prorated as of the date of destruction and the
unearned portion of such Rent will be refunded to Tenant without interest. If
neither party elects to terminate, Landlord shall promptly commence to restore
and diligently and continuously complete within such two hundred and ten (210)
days.
B. QUALIFIED RIGHT TO TERMINATE. In addition to the foregoing, if
this Lease is not cancelled and the Landlord undertakes such reconstruction or
repair but does not complete the reconstruction or repair within two hundred ten
(210)
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days after the date of the fire or other casualty, then the Tenant shall have
the additional right to terminate this Lease by written notice to the Landlord
delivered within thirty (30) days after the expiration of such two hundred ten
(210) day period.
C. OBLIGATION TO RESTORE. If by fire or other casualty either the
Premises or the Building is destroyed or damaged, but only to the extent of less
than Twenty-Five (25%) Percent of the insured value of the Premises or the
Building (as applicable), and more than one (1) year remains in either the
initial Lease Term or Renewal Term, as applicable, then Landlord will restore
the Premises within ninety (90) days of the date of the fire or other casualty
subject to events of force majeure.
D. RENT ADJUSTMENTS. In the event of restoration by Landlord, all
Base Rent and Additional Rent paid in advance shall be apportioned as of the
date of damage or destruction and all such Base Rent and Additional Rent as
above described, thereafter accruing, shall be equitably and proportionally
adjusted according to the nature and extent of the destruction or damage,
pending substantial completion of rebuilding, restoration or repair. In the
event the destruction or damage is so extensive as to make it impossible for
Tenant to conduct Tenant's business in the Premises, Rent and Additional Rent
will be fully abated until the Premises are substantially restored by Landlord
or until Tenant resumes use and occupancy of the Premises, whichever shall first
occur. In lieu of abating Rent and Additional Rent, as provided above, Landlord
shall have the right to temporarily or permanently relocate Tenant to another
space reasonably acceptable to Tenant. Landlord will not be liable for any
damage, whether proximate or consequential, to, or any inconvenience or
interruption of the business of Tenant or Tenant's Agents, occasioned by fire or
other casualty except to the extent caused by the negligence or its willful
misconduct of the Landlord, its agents, employees or contractors.
E. QUALIFICATIONS. Notwithstanding the foregoing, Landlord's
obligation to restore exists (i) only if and/or to the extent, that the
insurance proceeds received by Landlord are sufficient to compensate Landlord
for its restoration costs and/or (ii) the area unaffected by the casualty may,
as determined by Landlord's reasonable business judgment, be restored as a
profitable, and self functioning unit.
18. CONDEMNATION AND EMINENT DOMAIN
A. ABSOLUTE RIGHT TO TERMINATE. If all or a material part of the
Premises or the Building or the parking spaces is taken for any public or
quasi-public use under any governmental law, ordinance or regulation or by right
of eminent domain or by purchase in lieu thereof, and the taking would prevent
or materially interfere with the use of the Premises for the purpose for which
they are then being used, this Lease will terminate and the Rent will be abated
during the unexpired portion of this Lease effective on the date physical
possession is taken by the condemning authority and any unearned portion of Rent
prepaid will be refunded to Tenant. Tenant will have no claim to the
condemnation award, other than as to its Tenant Improvements, trade fixtures,
moving expenses, and other out of pocket damages so long as such does not
diminish the Landlord's award.
B. OBLIGATION TO RESTORE. In the event an immaterial part of the
Premises or the Building or the parking spaces is taken for any public or
quasi-public use under any governmental law, ordinance or regulation, or by
right of eminent domain or by purchase in lieu thereof, and this Lease is not
terminated as provided in subsection A above, then Landlord shall, subject to
the remaining provisions of this Section, at Landlord's expense, as soon as
reasonably practicable, restore the portion of the Premises (for which Landlord
receives the condemnation award pursuant hereto) and the Building to the extent
necessary to make them reasonably tenantable. The Rent payable under this Lease
during the unexpired portion of the Lease Term shall be adjusted to such an
extent as may be fair and reasonable under the circumstances. Tenant shall have
no claim to the condemnation award with respect to the leasehold estate but, in
a separate proceeding, may make a separate claim for trade fixtures and tenant
improvements installed in the Premises by and at the expense of Tenant and
Tenant's moving expense. In no event will Tenant have any claim for the value of
the unexpired Lease Term.
C. QUALIFICATIONS. Notwithstanding the foregoing, Landlord's
obligation to restore exists (i) only if and/or to the extent, that the
condemnation or similar award received by Landlord is sufficient to compensate
Landlord for its loss and its restoration costs and/or (ii) the area unaffected
by the condemnation or similar proceeding may, as determined by Landlord's
reasonable business judgment, be restored as a profitable, and self functioning
unit.
19. LIMITATION OF LANDLORD'S LIABILITY; INDEMNIFICATION
A. PERSONAL PROPERTY. All personal property placed or moved into the
Building will be at the sole risk of Tenant or other owner. Landlord will not be
liable to Tenant or others for any damage to person or property arising from
theft, vandalism, air-conditioning malfunction, the bursting or leaking of water
pipes, any act or omission of any cotenant or occupant of the Building or of any
other person, or otherwise, except to the extent caused by the negligence or
willful misconduct of the Landlord, its agents, employees or contractors.
B. LIMITATIONS. Notwithstanding any contrary provision of this
Lease: (i) Tenant will look solely (to the extent insurance coverage is not
applicable or available) to the interest of Landlord (or its successor as
Landlord hereunder) in the Building (including proceeds of sale, insurance and
condemnation) for the satisfaction of any judgment or other judicial process
requiring the payment of money
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Blue Lake Standard Lease
<PAGE>
as a result of any negligence or breach of this Lease by Landlord or its
successor or of Landlord's managing agent (including any beneficial owners,
partners, corporations and/or others affiliated or in any way related to
Landlord or such successor or managing agent) and Landlord has no personal
liability hereunder of any kind.
C. INDEMNITY. Tenant agrees to indemnify, defend and hold harmless
Landlord and its agents from and against all claims, causes of actions,
liabilities, judgments, damages, losses, costs and expenses, including
reasonable attorneys' fees and costs, including appellate proceedings and
bankruptcy proceedings, incurred or suffered by Landlord and arising from or in
any way connected with the Premises or the use thereof or any acts, omissions,
neglect or fault of Tenant or any of Tenant's Agents, including, but not limited
to, any breach of this Lease or any death, personal injury or property damage
occurring in or about the Premises or the Building or arising from environmental
Concerns, as hereafter defined, except to the extent caused by the Landlord, its
agents, employees, or contractors. Tenant will reimburse Landlord upon request
for all costs incurred by Landlord in the interpretation and enforcement of any
provisions of this Lease and/or the collection of any sums due to Landlord under
this Lease, including collection of agency fees, and reasonable attorneys' fees
and costs, regardless of whether litigation is commenced, and through all
appellate actions and proceedings, including bankruptcy proceedings, if
litigation is commenced. The foregoing claims, causes of actions, liabilities,
judgments, damages, losses, costs and expenses shall include but not be limited
to any of same arising from Tenant's failure to comply with any of the
requirements of Americans with Disabilities Act ("ADA") or Florida Accessibility
Code ("FAC")within the Premises and/or any and all claims or liability arising
from the performance of the repair, renovation, and/or maintenance described
above. This indemnity shall include, but not be limited to, claims or
liabilities asserted against Landlord based upon negligence, strict liability or
other liability by operation of law to any third party or government entity, and
all costs, attorney's fees, expenses, and liabilities incurred by Landlord in
the defense of any such claim. Landlord shall defend any such claim at Tenant's
expense by counsel selected by Landlord. Tenant shall not alter, cut, drill,
penetrate, remove or damage any portion of the Premises in which Landlord has
identified to Tenant the presence or suspected presence of asbestos, without
Landlord's prior written consent. Tenant indemnifies Landlord from and against
any and all damages, liabilities, fines, costs and expenses, including without
limitation reasonable attorneys fees and costs, from Tenant's violation or
breach of this covenant.
20. RELOCATION OF TENANT
A. GENERAL. Recognizing that the Building is large and the needs of
tenants as to space may vary from time to time, and in order for Landlord to
accommodate Tenant and prospective tenants, Landlord expressly reserves the
right, prior to and/or during the Lease Term, at Landlord's sole expense, to
move Tenant from the Premises and relocate Tenant in other comparable space of
Landlord's choosing of approximately the same dimensions and at least the same
size within the Building (or additions to the Building or new construction
related to the Building or the campus in which Building is located), which other
space will be decorated by Landlord at its expense. Landlord shall, in
exercising its right to relocate the Tenant, make said decision in full
consideration and deference to the nature of Tenant's business which business
operates (including Tenant's on-line computer network) on a twenty-four (24)
hour basis, seven (7) days per week. Landlord may use decorations and materials
from the existing Premises, or other materials, so that the space in which
Tenant is relocated will be comparable in its interior design and decoration to
the space from which Tenant is removed.
B. NO INTERFERENCE. During the relocation period Landlord will use
reasonable efforts not to unduly interfere with Tenants business activities
(recognizing that such business operations may only be shut down for a de
minimus period of time during the relocation, and will not limit Tenant's access
to the Premises prior to such relocation. Landlord agrees to substantially
complete the relocation within a reasonable time under all then existing
circumstances.
C. PREMISES. This Lease and each of its terms and conditions will
remain in full force and effect and be applicable to any such new space and such
new space will be deemed to be the Premises demised hereunder; upon request
Tenant will execute such documents which may be requested to evidence,
acknowledge and confirm the relocation (but it will be effective even in the
absence of such confirmation).
D. COSTS. Landlord's obligation for expenses of removal and
relocation will be the actual cost of relocating and decorating Tenant's new
space, moving expenses, telephone and computer relocation and all other
reasonable costs arising directly from such relocation, and Tenant agrees that
Landlord's exercise of its election to remove and relocate Tenant will not
release Tenant in whole or in part from its obligations hereunder for the full
Lease Term. No rights granted in this Lease to Tenant, including the right of
peaceful possession and quiet enjoyment, will be deemed breached or interfered
with by reason of Landlord's exercise of the relocation right reserved herein.
E. NOTICE. If Landlord exercises its relocation right under this
paragraph, Tenant will be given ninety (90) days prior notice in writing.
21. COMPLIANCE WITH LAWS AND PROCEDURES
A. COMPLIANCE. Except as otherwise provided herein, Tenant, at its
sole cost, will promptly comply with all applicable laws, guidelines, rules,
regulations and requirements, whether of
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Blue Lake Standard Lease
<PAGE>
federal, state, or local origin, applicable to the Premises, including, but not
limited to, the Americans with Disabilities Act, 42 U.S.C. 12101 et seq. The FAC
(as to the interior of the Premises), and those for the correction, prevention
and abatement of nuisance, unsafe conditions, or other grievances arising from
or pertaining to the use or occupancy of the Premises. Tenant acknowledges that
(i) the Premises and the parking facilities may contain potentially hazardous
substances, including, but not limited to, asbestos containing materials, radon
gas, mineral fibers, and other like materials (all of such materials are
referred to herein as "Environmental Concerns") and (ii) Tenant has been advised
that the Premises and the Building do contain either encapsulated or non-friable
asbestos containing materials. Accordingly, Tenant agrees that Tenant and
Tenant's Agents shall comply with all operation and maintenance programs and
guidelines implemented or promulgated from time to time by Landlord or its
consultants, including, but not limited to, those matters set forth in
subsections B and C below, in order to reduce the risk to Tenant, Tenant's
Agents or any other tenants of the Building of injury from Environmental
Concerns. Except as otherwise provided herein, Tenant at its sole cost and
expense shall be solely responsible for taking any and all measures which are
required to substantially comply with the requirements of the ADA and the FAC
within the Premises. Landlord shall be responsible for causing compliance of the
Building, other than the Premises, with the requirements of the ADA and the FAC,
the cost of such compliance being an Operating Expense hereunder. Any
Alterations to the Premises made by or on behalf of Tenant for the purpose of
complying with the ADA and FAC or which otherwise require compliance with the
ADA and FAC shall be done in accordance with this Lease; provided, that
Landlord's consent to such Alterations shall not constitute either Landlord's
assumption, in whole or in part, of Tenant's responsibility for substantial
compliance with the ADA and FAC, or representation or confirmation by Landlord
that such Alterations comply with the provisions of the ADA and FAC.
Notwithstanding the foregoing, Landlord shall be solely responsible at its sole
cost and expense, for making any changes or improvements which are required
pursuant to the terms of this Lease, to the condition of the Premises delivered
by Landlord to Tenant.
B. NOTICE PRIOR TO WORK. Except as provided in Section 11, Tenant
shall provide thirty (30) days notice to Landlord prior to the performance by
Tenant, Tenant's Agents or contractors of any repairs, renovation and/or major
structural or mechanical systems maintenance, to the Premises. Such notice shall
include a detailed description of the work contemplated. Tenant shall not
perform, or cause to be performed, any such repair, renovation and/or
maintenance without the written consent of Landlord and, if such consent is
granted, the repair, renovation and/or maintenance must be performed in
accordance with the terms of Landlord's consent.
22. RIGHT OF ENTRY
Landlord and its agents will have the right to enter the Premises
during all reasonable hours to make necessary repairs to the Premises upon
reasonable prior notice. In the event of an emergency, Landlord or its agents
may enter the Premises at any time, without notice (except that Landlord shall
make a good faith effort to contact Tenant's designated representative by
telephone prior to such entry), to appraise and correct the emergency condition.
Said right of entry will, after reasonable prior notice, likewise exist for the
purpose of removing placards, signs, fixtures, alterations, or additions which
do not conform to this Lease. Landlord or its agents will have the right to
exhibit the Premises at any time to prospective tenants within one hundred and
eighty days (180) before the Expiration Date of the Lease.
23. DEFAULT
A. EVENTS OF DEFAULT BY TENANT. The following shall, upon the giving
of notice to Tenant of the nature of the default and the expiration of any
applicable grace period afforded Tenant hereunder as set forth in Section 23.B.
constitute an Event of Default under this Lease. If (1) Tenant fails to make any
payment of Rent when due (a "Monetary Default"); or (2) Tenant fails to fulfill
any of the terms or conditions, covenants, agreements or any rules and
regulations attached to this Lease, as Exhibit "C" or promulgated by Landlord
under this Lease which shall in all instances be reasonable and have as close to
equal application to all tenants of the Building as is practicable (a
"Non-Monetary Default"); or (3) the appointment of a trustee or a receiver to
take possession of all or substantially all of Tenant's assets occurs, and such
appointment is not dismissed within thirty (30) days after appointment, or if
the attachment, execution or other judicial seizure of all or substantially all
of Tenant's assets located at the Premises, or of Tenant's interest in this
Lease, occurs; or (4) Tenant or any of its successors or assigns or any
guarantor of this Lease ("Guarantor"), if any, should file any voluntary
petition in bankruptcy, reorganization or arrangement, or an 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 (5) Tenant or any of its
successors or assigns or any Guarantor should be adjudicated bankrupt or have an
involuntary petition in bankruptcy, reorganization or arrangement filed against
it and such proceeding is not dismissed within thirty (30) days of filing; or
(6) Tenant, before the expiration of the Lease Term and without the prior
written consent of Landlord, vacates the Premises or abandons possession of the
Premises, and fails to pay Rent on a timely basis; or (7) Tenant shall permit,
allow or suffer to exist any lien by or through Tenant, judgment, writ,
assessment, charge, attachment or execution upon Landlord's or Tenant's interest
in this Lease or to the Premises, and/or the fixtures, improvements and
furnishings located thereon, whether claimant or holder thereof has acquired its
right by or through Tenant, unless such lien, judgment, writ, assessment,
charge, attachment or execution is discharged of record or transferred from
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Blue Lake Standard Lease
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the Property by bond within ten (10) days following notice to Tenant.
B. GRACE PERIOD. Notwithstanding anything contained in this Lease to
the contrary, Tenant shall have (i) a period of three (3) calendar days after
written notice from Landlord of a Monetary Default with respect to payment of
Base Rent or Overhead Rent; (ii) a period of ten (10) days after notice from
Landlord of a Monetary Default, other than as to payment of Base Rent or
Overhead Rent; and (iii) a period of twenty (20) days after notice from Landlord
of a Non-Monetary Default in which to cure the Event of Default. In addition,
provided that the Event of Default does not involve an emergency that must be
addressed in a shorter time frame, the grace period for Non-Monetary Defaults
shall be extended for such time as is reasonably necessary to complete such cure
if the Event of Default is of a nature that it cannot be completely cured within
the twenty (20) day period solely as a result of nonfinancial circumstances
outside of Tenant's control, provided that Tenant has promptly commenced all
appropriate actions to cure the default after notice and those actions are
thereafter diligently and continuously pursued by Tenant in good faith. However,
if the Non-Monetary Default is not cured prior to a maximum of ninety (90) days
from the date of the notice of the Non-Monetary Default, then Landlord may
pursue all of its remedies. The notice of a Non-Monetary Default to be given
under this subsection may be combined with the notice required under Section
83.20(3), Florida Statutes or any successor statute and this Lease shall not be
construed to require Landlord to give two separate notices to Tenant before
proceeding with any remedies.
C. REPEATED LATE PAYMENT. Regardless of the number of times of
Landlord's prior acceptance of late payments and/or late charges, (i) if
Landlord notifies Tenant four (4) times in any 1 2-month period that Rent has
not been paid when due, then any other late payment within such 12-month period
shall automatically constitute an event of default hereunder and (ii) the mere
acceptance by Landlord of late payments of Rent in the past shall not,
regardless of any applicable laws to the contrary, thereafter be deemed to waive
Landlord's right to strictly enforce this Lease, including Tenant's obligation
to make payment of Rent on the exact day same is due, against Tenant.
24. LANDLORD'S REMEDIES FOR TENANT'S DEFAULT
A. LANDLORD'S OPTIONS. Upon an Event of Default by Tenant under this
Lease, Landlord may, at its option exercise any of the remedies enumerated
below, in addition to such other remedies as may be available under Florida law:
(1) terminate this Lease and Tenant's right of possession by
notice to Tenant; or
(2) terminate Tenant's right to possession but not the Lease
and/or proceed in accordance with any and all provisions of paragraph B below.
B. LANDLORD'S REMEDIES. If there is an Event of Default by Tenant
under this Lease (subject to applicable notice and cure periods), in addition to
all other remedies available to Landlord at law or in equity, Landlord may:
(1) Terminate this Lease by notice to Tenant and retake
possession of the Premises;
(a) Terminate Tenant's right of possession by notice to
Tenant without terminating this Lease and retaking possession of the Premises
and relet the Premises or any part of the Premises in the name of Landlord, or
otherwise, as Tenant's agent, for a term shorter or longer than the balance of
the Lease Term, and may grant concessions or free rent to the new tenant,
thereby terminating Tenant's tenancy in the Premises and right to possess the
Premises, without terminating Tenant's obligations to pay (a) the entire balance
of all forms of Base Rent and Additional Rent for the remainder of the Lease
Term, plus (b) the Reletting Expenses, and (c) the unamortized balance of any
brokerage commissions paid by Landlord in connection with this Lease, any
allowances granted to Tenant under this Lease, and the cost of any Tenant
Improvements made by Landlord. Landlord shall have no obligation to relet the
Premises, and its failure to do so, or failure to collect rent on reletting,
shall not affect Tenant's liability under this Lease. Landlord shall not, in any
event, be required to pay Tenant any surplus of any sums received by Landlord on
a reletting of the Premises in excess of the rent provided in this Lease. If
Landlord decides to relet the Premises or a duty to relet is imposed by law,
Landlord shall only be required to use commercially reasonable efforts to relet
the Premises. Commercially reasonable efforts shall not require Landlord to: (i)
use any greater efforts than Landlord then uses to lease other properties
Landlord or its affiliates owns or manages; (ii) relet the Premises in
preference to any other space in the Building; (iii) relet the Premises to any
party that Landlord could reasonably reject as a transferee under the Assignment
or Subletting section of this Lease; (iv) accept rent in an amount which is less
than the fair market rental for the Premises; (v) perform any tenant
improvements, grant any tenant improvement allowances, grant any "free rent," or
otherwise pay any sums or grant any monetary concessions in order to obtain a
new tenant; (vi) observe any instruction given by Tenant about the reletting
process or accept any tenant offered by Tenant unless the offered tenant leases
the entire Premises and the criteria of this subsection are otherwise fully met.
Any entry or reentry by Landlord, whether had or taken under summary proceedings
or otherwise, shall not absolve or discharge Tenant from liability under this
Lease so long as Landlord's actions are not in violation of applicable laws.
"Reenter" and "re-entry" as used in this Lease are not restricted to their
technical legal meaning. No reentry or taking possession of the Premises by
Landlord shall be construed as an election on Landlord's part to accept a
surrender of
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the Premises unless a notice of such intention is given to Tenant;
(2) Stand by and do nothing, and hold Tenant liable for all
Base Rent and additional rent payable under this Lease through the remainder of
the Lease Term; provided by law;
(3) Institute any action as
(4) Obtain injunctive and declaratory relief, temporary or
permanent, or both, against Tenant or any acts, conduct or omissions of Tenant,
and further to obtain specific performance of any term, covenant, or condition
of this Lease;
(5) After regaining possession of the Premises, remove all
or any part of Tenant's Property from the Premises and any property removed may
be stored at the cost of, and for the account of, Tenant, and Landlord shall not
be responsible for the care or safekeeping of Tenant's Property whether in
transport, storage, or otherwise, and Tenant waives any and all claims against
Landlord for loss, destruction, damage or injury that may be occasioned by any
acts taken by Landlord under this subsection. Landlord may retain possession of
Tenant's Property until all storage charges and all other amounts owed by Tenant
to Landlord under this Section 23 have been paid in full. Nothing set forth in
this subsection shall limit Landlord's rights to enforce any lien or security
interest in favor of Landlord against Tenant's Property or Landlord's rights
under the End of Term section of this Lease; and
(6) If all or any part of the Premises is then assigned,
sublet, transferred, or occupied by someone other than Tenant, Landlord, at its
option, may collect directly from the assignee, subtenant, transferee, or
occupant all rent becoming due to Tenant by reason of the assignment, sublease,
transfer, or occupancy. Any collection directly by Landlord from the assignee,
subtenant, transferee, or occupant shall not be construed to constitute a
novation or a release of Tenant from the further performance of its obligations
under this Lease.
C. ACCELERATION. If Landlord exercises the remedies provided in
Subsections (2), (3) or (4) above, Landlord may declare the entire balance of
all forms of Rent due under this Lease for the remainder of the Lease Term to be
forthwith due and payable and may collect the then present value of the rents
calculated using a discount rate equal to the yield then obtainable from the
United States Treasury Bill or Note with a maturity date closest to the date of
expiration of the Lease Term) by distress or otherwise, provided, however that
Landlord shall utilize commercially reasonable attempts to mitigate its damages.
The accelerated additional rent for expenses shall be calculated by multiplying
the highest additional rent amount for Expenses payable by Tenant in any
calendar year times the number of calendar years (including any fractional
calendar year) remaining in the Lease Term following the date of default. If
Landlord exercises the remedy provided in Subsection (2) above and collects from
Tenant all forms of rent owed for the remainder of the Lease Term, Landlord
shall account to Tenant, at the date of the expiration of the Lease Term for
amounts actually collected by Landlord as a result of reletting, net of the
Tenant's obligations under Subsections 24 B. 2(a)-(c).
D. GUARANTY. In addition to the remedies of the Landlord contained
in this Section 24, a separate action or actions may, at Landlord's option, be
brought and prosecuted against the Guarantor, if any, whether or not any action
is first or subsequently brought against Tenant or whether or not Tenant is
joined in any such action. The Landlord may, at its sole option, proceed against
the Tenant without first seeking recourse against the Guarantor and may pursue
any other remedy in Landlord's power whatsoever and the Tenant waives any right
to complain of delay in enforcement of Landlord's rights under this Lease.
E. Notwithstanding the foregoing or anything to the contrary
contained in this Lease, any and all rights and remedies of Landlord and Tenant
set for forth in this Lease shall be exercisable only to the extent permitted by
Florida law at the time of exercise. Any waivers by Tenant of damages or
liability shall be applicable only to the extent Landlord's actions are in
material accordance with applicable law and only to the extent that Landlord or
its agents, employees or contractors are not negligent or willfully at fault.
F. Landlord shall not be deemed to be in default of this Lease
unless and until Landlord fails to cure any default within thirty (30) days
after written notice from Tenant; provided, however, that if such default
reasonably requires more than thirty (30) days to cure, Landlord shall have a
reasonable time to cure such default, provided Landlord commences to cure within
such thirty (30) day period and thereafter diligently prosecutes such cure to
completion. In the event of an uncured default by Landlord, Tenant shall have
the right to exercise any available legal and equitable remedies.
25. LANDLORD'S RIGHT TO PERFORM FOR TENANT'S ACCOUNT.
Should Tenant fail to observe or perform any term or condition of
this Lease within a provided grace period following notice, Landlord may at any
time thereafter, perform the same for the account of Tenant in a commercially
reasonable manner. If Landlord makes any expenditure or incurs any obligation
for the payment of money in connection with such performance for Tenant's
account (including reasonable attorneys' fees and costs in instituting,
prosecuting and/or defending any action or proceeding through appeal), the sums
paid or obligations incurred, with interest at Twelve Percent (12%) per annum,
will be paid by Tenant to Landlord within ten (10) days after rendition of a
bill or statement to Tenant. In the event Tenant, in the performance or
non-performance of any term or
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condition of this Lease, should cause an emergency situation to occur or arise
within the Premises or in the Building, Landlord will have all rights set forth
in this paragraph immediately without the necessity of providing Tenant any
advance notice.
26. LIENS
A. GENERAL. In accordance with the applicable provisions of the
Florida Construction Lien Law and specifically Florida Statutes, Section 713.10,
no interest of Landlord whether personally or in the Premises, or in the
underlying land or Building of which the Premises are a part, or the leasehold
interest aforesaid shall be subject to liens for improvements made by Tenant or
caused to be made by Tenant hereunder. Further, Tenant shall have no power or
authority to create any lien or permit any lien to attach to the present estate,
reversion, or other estate of Landlord in the Premises or in the Building, and
all mechanics, materialmen, contractors, artisans and other parties contracting
with Tenant or its representatives or privies as to the Premises or any part of
the Premises are hereby charged with notice that they must look to the Tenant to
secure payment of any bill for work done or material furnished or for any other
purpose during this Lease term. The foregoing provisions are made with express
reference to Section 713.10 of the Florida Statutes. Notwithstanding the
foregoing provisions, Tenant, at its expense, shall cause any liens filed
against the Premises or the Building for work or materials claimed to have been
furnished to Tenant to be discharged of record or properly transferred to a bond
under Section 713.24 of the Florida Statutes within ten (10) days after notice
to Tenant. Landlord has recorded a notice of the foregoing in the Public Records
of Palm Beach County, Florida, pursuant to the provisions of Section 713.10
Florida Statutes.
B. DEFAULT. Notwithstanding the foregoing, if any construction lien
or other lien, attachment, judgment, execution, writ, charge or encumbrance is
filed against the Building or the Premises or this leasehold, or any
alterations, fixtures or improvements therein or thereto, as a result of any
work action or inaction done by or at the direction of Tenant or any of Tenant's
Agents, Tenant will discharge same of record within ten (10) days after the
filing thereof and written notice from either Landlord or the lien or, failing
which Tenant will be in default under this Lease. Further, Tenant agrees to
indemnify, defend and save Landlord harmless from and against any damage or
loss, including reasonable attorneys' fees, incurred by Landlord as a result of
any liens or other claims arising out of or related to work performed in the
Premises by or on behalf of Tenant. In such event, without waiving Tenant's
default, Landlord, in addition to all other available rights and remedies,
without further notice, may discharge the same of record by payment, bonding or
otherwise, as Landlord may elect, and upon request Tenant will reimburse
Landlord for all costs and expenses so incurred by Landlord plus interest
thereon at the rate of eighteen percent (18%) per annum.
27. NOTICES
Notices to Tenant under this Lease will be in writing (unless
otherwise specifically provided herein) addressed to Tenant and mailed or
delivered to the address set forth for Tenant in the BLI Rider. Notices to
Landlord under this Lease (as well as the required copies there of) will be in
writing and addressed to Landlord (and its agents) and mailed or delivered to
the address set forth in the BLI Rider. Notices will be personally delivered or
given by registered or certified mail, return receipt requested. As used herein,
personal delivery includes delivery by overnight courier. Notices delivered
personally will be deemed to have been given as of the date of delivery and
notices given by mail will be deemed to have been given forty-eight (48) hours
after the time said properly addressed notice is placed in the mail. Each party
may change its address from time to time by written notice given to the other as
specified above.
28. MORTGAGE ESTOPPEL CERTIFICATE; SUBORDINATION
Landlord has the unrestricted right to convey, mortgage and
refinance the Building, or any part thereof. Tenant and Landlord agree, within
ten (10) days after notice but not more than twice in any calendar year, to
execute and deliver to the other or its mortgagee or designee such instruments
as the other or its mortgagee may reasonably require, certifying (i) whether
this Lease is in full force and effect (or if there shall have been any
modification, that the Lease is in full force and effect as modified and stating
the modification, (ii) the amount of any prepaid rent paid under this Lease,
(iii) the dates to which the rents and other charges have been paid, (iv)
whether or not Tenant claims any defenses or offsets concerning its obligations
under this Lease and whether or not the other is in default in the performance
of any covenant, agreement, or condition contained in this Lease on its part to
be performed, and if so, specify each defense, offset or default of which the
party may have knowledge, and (v) such other matters as may be reasonably
required by institutional lenders or purchasers in similar estoppel
certificates. Nothing contained in this Section shall constitute a waiver by
Landlord of any default in payment of rent or other charges existing as of the
date of any notices or certificates under this Section. Subject to the
provisions hereof, this Lease is and at all times will be subject and
subordinate to all present and future mortgages or ground leases which may
affect the Building and/or the parking lot, and to all recastings, renewals,
modifications, consolidations, replacements, and extensions of any such
mortgage(s), and to all increases and voluntary and involuntary advances made
thereunder. The foregoing will be self-operative and no further instrument of
subordination will be required. However, in confirmation of this subordination,
Tenant shall execute promptly any certificate that Landlord may request provided
that, without limiting Landlord's right of specific performance and right to
injunctive relief, the Tenant's failure to do so shall constitute an Event of
Default under the Lease. In the event that the
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holder ("Lender") of any encumbrance ("Mortgage") on the Building or any other
person acquires title to the Building pursuant to the exercise of any remedy
provided for in the Mortgage or by reason of the acceptance of a deed in lieu of
foreclosure (the Lender, any other such person and their participants,
successors and assigns being referred to herein as the "Purchaser"), Tenant
covenants and agrees to attorn to and recognize and be bound to Purchaser as its
new Landlord, and except as provided below, this Lease shall continue in full
force and effect as a direct Lease between Tenant and Purchaser, except that,
notwithstanding anything to the contrary herein or in the Lease. It is an
express condition of the subordination of this Lease set forth herein, that so
long as Tenant is not in material default under any provision of this Lease
beyond any applicable notice or cure period, and no event has occurred that has
continued to exist for a period of time (after notice, if any, required by this
Lease) as would entitle Landlord to terminate this Lease or would cause without
further action by Landlord, the termination of this Lease or would entitle
Landlord to dispossess the Tenant thereunder:
A. The right of possession of Tenant to the Premises and Tenant's
rights hereunder shall not be terminated or disturbed by any steps or
proceedings taken by Lender or anyone claiming by or through Lender in the
exercise of any of its rights under the Mortgage or the indebtedness secured
thereby;
B. This Lease shall not be terminated or affected and Tenant's
possession, use, and enjoyment of the Premises shall not be disturbed by said
exercise of any remedy provided for in the Mortgage, and any sale by Lender of
the Building pursuant to the exercise of any rights and remedies under the
Mortgage or otherwise, shall be made subject to this Lease and the rights of
Tenant hereunder.
C. In no event shall Lender or any other Purchaser be:
(1) liable for any act or omission of Landlord or any prior
landlord (except to the extent such continue without cure after acquisition of
the Building by the Lender and such may be cured by Lender with its reasonable
efforts;
(2) subject to any offsets or defenses that the Tenant might have
against Landlord or any prior landlord;
(3) bound by any payment or rent or additional rent that Tenant
might have paid to Landlord or any prior landlord for more than the current
month unless the same is delivered to the Lender or the Purchaser; or
(4) bound by any material amendment or modifications of the Lease
made without Lender's or such other Purchaser's prior written consent, which
shall not be unreasonably withheld or delayed.
D. Provided that Landlord has previously notified Tenant of Lender's
address for notice, Tenant agrees to give written notice to Lender as soon as
reasonably practicable of any default by Landlord that would entitle Tenant to
cancel this Lease, and agrees that notwithstanding any provision of this Lease,
no notice of cancellation thereof given on behalf of Tenant shall be effective
unless Lender has received said notice and has failed within 30 days of the date
of receipt thereof to cure Landlord's default, or if the default cannot be cured
within 30 days, has failed to promptly commence and to diligently pursue the
cure of Landlord's default which gave rise to such right of cancellation. Tenant
further agrees to give such notices to any successor of Lender, provided that
such successor shall have given written notice of Tenant of its acquisition of
Lender's interest in the Mortgage and designated the address to which such
notices are to be sent.
E. Tenant acknowledges that Landlord may execute and deliver to
Lender an Assignment of Leases and Rents conveying the rentals under this Lease
as additional security for the loan secured by the Mortgage, and Tenant hereby
expressly consents to such Assignment.
F. Within ten (10) days after the execution of this Lease, and as a
condition to the effectiveness of this Lease, Landlord shall obtain, for the
benefit of Tenant, a Subordination, Non-disturbance and Attornment Agreement
from each and every Lender as of the date of this Lease, such Subordination,
Non-Disturbance and Attornment Agreement to be in form substantially similar to
that attached hereto as Exhibit "J". Landlord represents and warrants to Tenants
that, as of the date of this Lease, it is the fee simple owner of the Building,
and that, as of the date hereof, there are no (i) ground leases of all or any
part of Landlord's interest in the Building, or (ii) mortgages with respect to
the Building, other than with Lenders providing such Subordination,
Non-Disturbance and Attornment Agreements to Tenant.
G. Notwithstanding anything to the contrary contained in this Lease,
after the date of this Lease, any subordination of this Lease to a mortgage or
any ground lease shall be conditioned on Tenant obtaining a. Subordination,
Non-Disturbance and Attornment Agreement from the applicable Lender and ground
lessor, such Subordination, Non-Disturbance and Attornment Agreement in a form
substantially similar to that attached hereto as Exhibit "J".
29. ATTORNMENT AND MORTGAGEE'S REQUEST
A. ATTORNMENT. Subject to the provisions of Section 28, if any
mortgagee of the Building comes into possession or ownership of the Premises, or
acquires Landlord's interest by foreclosure of the mortgage or otherwise, upon
the mortgagee's request Tenant will attorn to the mortgagee.
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<PAGE>
30. TRANSFER BY LANDLORD
If Landlord's interest in the Building terminates by reason of a
bona fide sale or other transfer, Landlord will, upon assumption by the new
owner of the Landlord's obligations hereunder from and after the date of
transfer, thereupon be released from all further liability to Tenant under this
Lease. At the expiration or termination of the Lease Term, Tenant shall deliver
to Landlord all keys to the Premises and make known to Landlord the location and
combination of all safes, locks and similar items.
31. SURRENDER OF PREMISES; HOLDING OVER
A. SURRENDER. Tenant agrees to surrender the Premises to Landlord on
the Expiration Date (or sooner termination of the Lease Term pursuant to other
applicable provisions hereof) in as good condition as they were at the
commencement of Tenant's occupancy, ordinary wear and tear, and damage by fire
and windstorm excepted.
B. RESTORATION. In all events, Tenant will promptly restore all
damage caused in connection with any removal of Tenant's personal property.
Tenant will pay to Landlord, upon request, all damages that Landlord may suffer
on account of Tenant's failure to surrender possession as and when aforesaid and
will indemnify Landlord against all liabilities, costs and expenses (including
all reasonable attorneys' fees and costs if any) arising out of Tenant's delay
in so delivering possession, including claims of any succeeding tenant.
C. REMOVAL. Upon expiration of the Lease Term, at Landlord's option,
Tenant may not be required to remove from the Premises, Building Standard Items
(as defined in the Work Letter), all of such Building Standard Items are the
property of Landlord or tenant improvements installed prior to the Rent
Commencement Date unless Landlord shall require such removal during the review
and approval of the plans and specifications as provided in the Work Letter.
D. HOLDOVER. In the event of a holding-over by Tenant, after the
expiration of the Lease or the early termination of the Lease without the
written consent of Landlord, Tenant shall, in addition to being responsible for
any liquidated damages provided by Florida statute, also indemnify Landlord
against all claims for damages by any other tenant to whom Landlord may have
leased all or any part of the Premises covered hereby effective after the
termination of this Lease so long as Landlord has previously provided Tenant
notice of such lease. No payments of money by Tenant after the expiration of the
Lease Term of the earlier termination of this Lease will reinstate, continue or
extend the Term; reduce the liability of Tenant to Landlord for damages; or
affect any termination notice given by Landlord to Tenant. No extension of the
Lease Term will be valid unless and until the same will be reduced to writing
and signed by both Landlord and Tenant.
E. NO SURRENDER. No offer of surrender of the Premises, by delivery
to Landlord or its agent of keys to the Premises or otherwise, will be binding
on Landlord unless accepted by Landlord, in writing, specifying the effective
surrender of the Premises. At the expiration or termination of the Lease Term,
Tenant shall deliver to Landlord all keys to the Premises and make known to
Landlord the location and combinations of all locks, safes and similar items.
32. NO WAIVER, CUMULATIVE REMEDIES
A. NO WAIVER. No waiver of any provision of this Lease by either
party will be deemed to imply or constitute a further waiver by such party of
the same or any other provision hereof. The rights and remedies of Landlord and
Tenant under this Lease or otherwise are cumulative and are not intended to be
exclusive and the use of one will not be taken to exclude or waive the use of
another, and Landlord and Tenant will be entitled to pursue all rights and
remedies available under the laws of the State of Florida.
B. RENT PAYMENTS. No receipt of money by Landlord from Tenant at any
time, or any act, or thing done by, Landlord or its agent shall be deemed a
release of Tenant from any liability whatsoever to pay Rent, Additional Rent, or
any other sums due hereunder, unless such release is in writing, subscribed by a
duly authorized officer or agent of Landlord and refers expressly to this
Section. Any payment by Tenant or receipt by Landlord of less than the entire
amount due at such time shall be deemed to be on account of the earliest sum
due. No endorsement or statement on any check or any letter accompanying any
check or payment shall be deemed an accord and satisfaction. In the case of such
a partial payment or endorsement, Landlord may accept such payment, check or
letter without prejudice to Its right to collect all remaining sums due and
pursue all of its remedies under the Lease.
33. WAIVER
LANDLORD AND TENANT HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM INVOLVING ANY MATTER WHATSOEVER ARISING OUT OF OR IN
CONNECTION WITH (i) THIS LEASE, (ii) THE PREMISES, (iii) TENANT'S USE OR
OCCUPANCY OF THE PREMISES, OR (iv) THE RIGHT TO ANY STATUTORY RELIEF OR REMEDY.
TENANT FURTHER~WAIVES THE RIGHT TO INTERPOSE ANY PERMISSIVE COUNTERCLAIM OF ANY
NATURE IN ANY ACTION OR PROCEEDING COMMENCED BY LANDLORD TO OBTAIN POSSESSION OF
THE PREMISES. IF TENANT VIOLATES THIS PROVISION BY FILING A PERMISSIVE
COUNTERCLAIM, WITHOUT PREJUDICE TO LANDLORD'S RIGHT TO HAVE SUCH COUNTERCLAIM
DISMISSED, THE PARTIES STIPULATE THAT SHOULD THE COURT PERMIT TENANT TO MAINTAIN
THE COUNTERCLAIM, THE
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COUNTERCLAIM SHALL BE SEVERED AND TRIED SEPARATELY FROM THE ACTION FOR
POSSESSION PURSUANT TO RULE 1.270(b) OF THE FLORIDA RULES OF CIVIL PROCEDURE OR
OTHER SUMMARY PROCEDURES SET FORTH IN SECTION 51.01 1, FLORIDA STATUTES (1993).
THE WAIVERS SET FORTH IN THIS SECTION ARE MADE KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY BY TENANT. TENANT FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED
IN THE MAKING OF THIS WAIVER BY INDEPENDENT COUNSEL, SELECTED OF ITS OWN FREE
WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THESE WAIVERS WITH COUNSEL.
THIS PROVISION IS A MATERIAL INDUCEMENT TO LANDLORD IN AGREEING TO ENTER INTO
THIS LEASE.
34. CONSENTS AND APPROVALS
[Intentionally Omitted]
35. RULES AND REGULATIONS
Tenant agrees to abide by all rules and regulations attached hereto
as Exhibit "C" and incorporated herein by this reference, as reasonably amended
and supplemented from time to time by Landlord. Landlord will not be liable to
Tenant for violation of the same or any other act or omission by any other
tenant except to the extent the same materially affects Tenant's use and
enjoyment of the Premises as provided in this Lease. All rules and regulations
shall, to the extent reasonably practicable, be uniformly applicable to all
tenants and occupants and shall not interfere with Tenant's use of the Premises
in any material manner. In the event of a conflict between the rules and
regulations and the provisions of this Lease, the provisions of this Lease shall
prevail.
36. SUCCESSORS AND ASSIGNS
This Lease will be binding upon and inure to the benefit of the
respective heirs, personal and legal representatives, successors and permitted
assigns of the parties hereto.
37. QUIET ENJOYMENT
In accordance with and subject to the terms and provisions of this
Lease, Landlord warrants that it has full right to execute and to perform under
this Lease and to grant the estate demised. Tenant, upon Tenant's payment of
Rent and performing of all of the terms, conditions, covenants, and agreements
as and when required in this Lease, shall peaceably and quietly have, hold and
enjoy the Premises during the full Lease Term.
38. ENTIRE AGREEMENT
This Lease, together with the BLI Rider, exhibits, schedules,
addenda and guaranties (as the case may be) fully incorporated into this Lease
by this reference, contains the entire agreement between the parties hereto
regarding the subject matters referenced herein and supersedes all prior oral
and written agreements between them regarding such matters. This Lease may be
modified only by an agreement in writing dated and signed by Landlord and Tenant
after the date hereof.
39. HAZARDOUS MATERIALS
A. REPRESENTATION. Tenant represents, warrants and covenants that (1
) the Premises will not be used for any dangerous, noxious or offensive trade or
business and that it will not cause or maintain a nuisance there, (2) it will
not bring, generate, treat, store, use or dispose of Hazardous Substances at the
Premises other than use in the ordinary course of business and in compliance
with all applicable laws, (3) it shall, with respect to Tenant's use and
occupancy of the Premises, the parking lot and any other area of the Building,
as applicable, at all times comply with all Environmental Laws (as hereinafter
defined) and shall cause the Premises, while in the possession and control of
Tenant to comply, and (4) Tenant will keep the Premises free of any lien imposed
pursuant to any Environmental Laws. Only for purposes of this paragraph entitled
"Representation", the term "Premises" shall mean, only with respect to Tenant's
use and occupancy of the Premises, the Building including Common Areas, parking
areas, greenspace and all other elements thereof.
B. REPORTING REQUIREMENTS. Tenant warrants that it will promptly
deliver to the Landlord, (i) copies of any documents received from the United
States Environmental Protection Agency and/or any state, county or municipal
environmental or health agency concerning the Tenant's operations upon the
Premises; and (ii) copies of any documents submitted by the Tenant to the United
States Environmental Protection Agency and/or any state, county or municipal
environmental or health agency concerning its operations on the Premises,
including but not limited to copies of permits, licenses, annual filings,
registration forms.
C. TERMINATION, CANCELLATION, SURRENDER. At the Expiration Date or
earlier termination of this Lease, Tenant shall surrender the Premises to
Landlord free of any and all Hazardous Substances which have been placed on, in
or about the Premises by Tenant or Tenant's agents, and in compliance with all
Environmental Laws. Landlord may at Landlord's expense at the end of the term,
order a clean-site certification, environmental audit or site assessment with
respect to the Premises the cost of which shall be reimbursed by Tenant to
Landlord in the event such environmental audit reflects a violation of this
Section 39 by Tenant.
D. ACCESS AND INSPECTION. Landlord shall have the right, subject to
not materially disturbing Tenant's peaceful use and occupancy of the Premises
and the Common Areas and subject to reasonable advance notice, except in the
instance of emergencies, but not the obligation, at all times during
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the term of this Lease to (i) enter upon and inspect the Premises, (ii) conduct
tests and investigations and take samples to determine whether Tenant is in
compliance with the provisions of this article, and (iii) request lists of all
Hazardous Substances used, stored or located on the Premises; the cost of all
such inspections, tests and investigations to be borne by Landlord, unless,
however, said inspections, tests and investigations reflect a violation of
Environmental Laws by Tenant in which instance the Tenant shall promptly either
pay or reimburse Landlord for all inspections, tests and investigations.
Promptly upon the written request of Landlord, from time to time, if Landlord
shall reasonably suspect a violation of Environmental Laws, Landlord may obtain
an environmental site assessment or environmental audit report prepared by an
environmental engineering firm acceptable to Landlord to assess, with a
reasonable degree of certainty, the presence or absence of any Hazardous
Substances and the potential costs in connection with abatement, clean-up, or
removal of any Hazardous Substances found on, under, at, or without the
Premises. If such audit reveals a violation of Environmental Laws caused by
Tenant or Tenant's agents, or the presence of Hazardous Substances not in the
Premises upon delivery of possession to Tenant, and such was not caused by
Landlord or its agents, the Tenant shall pay the cost of such audit. Tenant will
reasonably cooperate with Landlord, at no cost or expense to Tenant, and allow
Landlord and Landlord's representatives access, upon ten (10) days notice
(except in the case of an emergency), to any and all parts of the Premises and
to the records of Tenant with respect to the Premises for environmental
inspection purposes at any time. In connection therewith, Tenant hereby agrees
that Landlord, or Landlord's agent, may perform any testing upon or of the
Premises that Landlord's deems reasonably necessary for the evaluation of
environmental risks, costs, or procedures, including soils or other sampling or
coring. Landlord shall repair and restore the Premises damaged during such
testing unless testing reveals a violation by Tenant of Environmental Laws in
which case all such expenses shall be that of Tenant. Landlord shall use
reasonable effort to minimize any disruption or interference with Tenant's
operations in the Premises in connection with such inspection and/or testing.
E. VIOLATIONS - ENVIRONMENTAL DEFAULTS. Tenant shall give to
Landlord immediate verbal and follow-up written notice of any actual or
threatened spills, releases or discharges of Hazardous Substances on the
Premises, caused by the acts or omissions of Tenant or its agents, employees,
representatives, invitees, licensees, subtenants, customers or contractors.
Tenant covenants to promptly investigate, clean up and otherwise remediate any
spill, release or discharge of Hazardous Substances in or about the Premises or
the Building, including but not limited to those caused by the acts or omissions
of Tenant or its agents, employees, representatives, invitees, licensees,
subtenants, customers or contractors at Tenant's sole cost and expense; such
investigation, clean up and remediation to be performed in accordance with all
Environmental Laws and after Tenant has obtained Landlord's written consent,
which shall not be unreasonably withheld or delayed. Tenant shall return the
Premises to the condition existing prior to the introduction of any such
Hazardous Substances by Tenant or Tenant's agents.
(1) In the event of (1) a violation of an Environmental Law by
Tenant, (2) a release, spill or discharge of a Hazardous Substance on or from
the Premises, or (3) the discovery of an environmental condition requiring
response which violation, release, or condition is attributable to the acts or
omissions of Tenant, its agents, employees, representatives, invitees,
licensees, subtenants, customers, or contractors, or (4) an emergency
environmental condition which is the result of an act of Tenant (collectively
"Environmental Defaults"), Landlord shall have the right, but not the
obligation, within ten (10) business days after notice to Tenant, except in the
case of an emergency which requires more prompt action, to enter the Premises,
to supervise and approve any actions taken by Tenant to address the
Environmental Default; and in the event Tenant fails to immediately address such
Environmental Default, then Landlord may perform, at Tenant's expense, any
lawful actions necessary to address the Environmental Default.
(2) Landlord has the right, but not the obligation to cure any
Environmental Defaults, has the reasonable right to suspend some or all of the
operations to the extent that the operations have caused the Environmental
Default of the Tenant until it has determined to its sole satisfaction that
appropriate measures have been taken, and has the right to terminate this Lease
upon the occurrence of an Environmental Default.
F. ADDITIONAL RENT. Any expenses which the Landlord incurs, which
are to be at Tenant's expense pursuant to this Article, will be considered
Additional Rent under this Lease and shall be paid by Tenant on demand by
Landlord.
G. ASSIGNMENT AND SUBLETTING. Notwithstanding anything to the
contrary in this Lease, the Landlord may condition its approval of any
assignment or subletting by Tenant to an Assignee or Subtenant that in the
judgment of the Landlord, reasonably exercised, does not create any additional
environmental exposure.
H. INDEMNIFICATIONS.
(1) INDEMNIFICATION OF LANDLORD. Tenant shall indemnify, defend
(with counsel approved by Landlord) and hold Landlord and Landlord's affiliates,
shareholders, directors, officers, employees and agents harmless from and
against any and all claims, judgments, damages (including consequential
damages), penalties, fines, liabilities, losses, suits, administrative
proceedings, costs and expenses of any kind or nature which arise out of or in
anyway related to any Environmental Default by Tenant, its agents, employees,
representatives, invitees, licensees, subtenants, customers or contractors
during or after the term of this Lease
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(including, but not limited to, attorneys', consultant, laboratory and expert
fees expert fees and including without limitation, diminution in the value of
the Premises, damages for the loss or restriction on use of rentable or usable
space or of any amenity of the Premises and damages arising from any adverse
impact on marketing of space), arising from or related to the use, presence,
transportation, storage, disposal, spill, release or discharge of Hazardous
Substances on or about the Premises, to the extent caused by Tenant or Tenant's
agents, employees, representatives, invitees, licensees, subtenants, customers
or contractors.
(2) INDEMNIFICATION OF TENANT. Landlord shall indemnify, defend
(with counsel reasonably approved by Tenant) and hold Tenant and Tenant's
affiliates, shareholders, directors, officers, employees and agents, harmless
from and against any and all claims, judgments, damages (including consequential
damages), penalties, fines, liabilities, losses, suits, administrative
proceedings, costs and expenses of any kind or nature which arise out of or are
in any way related to an environmental condition constituting a violation of
this Section, except due to the acts of Tenant or Tenant's agents, employees,
representatives, invitees, licensees, subtenants, customers or contractors.
I. DEFINITIONS.
(1) "Hazardous Substance" means, (i) asbestos and any asbestos
containing material and any substance that is then defined or listed in, or
otherwise classified pursuant to, any Environmental Laws or any applicable laws
or regulations as a "hazardous substance", "hazardous material", "hazardous
waste", "infectious waste", "toxic substance", "toxic pollutant" or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or Toxicity Characteristic
Leaching Procedure (TCLP) toxicity, (ii) any petroleum and drilling fluids,
produced waters, and other wastes associated with the exploration, development
or production of crude oil, natural gas, or geothermal resources and (iii)
petroleum products, polychlorinated biphenyls, urea formaldehyde, radon gas,
radioactive material (including any source, special nuclear, or by-product
material), and medical waste. Excepted from the foregoing shall be substances
(for example, those used in construction or cleaning supplies or office
machines) which contain Hazardous Substances but in amounts and/or quantities
which comply with all Environmental Laws as herein below defined.
(2) "Environmental Laws" collectively means and includes all
present and future laws and any amendments (whether common law, statute, rule,
order, regulation or otherwise), permits, and other requirements or guidelines
of governmental authorities applicable to the Premises and relating to the
environment and environmental conditions or to any Hazardous Substance
(including, without limitation, CERCLA, 42 U.S.C. 9601, et. seq.; the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. 6901, et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. 1801, et seq., the Federal Water
Pollution Control Act, 33 U.S.C. 1251, et seq., the Clean Air Act, 33 U.S.C.
7401, et seq., the Clear Air Act, 42 U.S.C. 741, et seq., the Toxic Substances
Control Act,15 U.S.C. 2601 -2629, the Safe Drinking Water Act, 42 U.S.C.
300f-300j, the Emergency Planning and Community Right-To-Know Act, 42 U.S.C.
1101, et seq., and any so-called "Super Fund" or "Super Lien" law, any law
requiring the filing of reports and notices relating to hazardous substances,
environmental laws administered by the Environmental Protection Agency, and any
similar state and local laws and regulations, all amendments thereto and all
regulations, orders, decisions, and decrees now or hereafter promulgated
thereunder concerning the environment, industrial hygiene or public health or
safety.)
J. RADON. RADON GAS: Radon is a naturally occurring radioactive gas
that, when it has accumulated in a building in sufficient quantities, may
present health risk to persons who are exposed to it over time. Levels of radon
that exceed Federal and State Guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may be
obtained from your county public health unit.
K. SURVIVAL OF INDEMNIFICATIONS. All indemnities herein shall
survive termination or expiration of this Lease.
40. BANKRUPTCY PROVISIONS
A. EVENT OF BANKRUPTCY. If this Lease is assigned to any person or
entity pursuant to the provisions of the United States Bankruptcy Code, 11
U.S.C. Section 101 et seq. (the "Bankruptcy Code"), any and all monies or other
consideration payable to Landlord or otherwise to be delivered to Landlord in
connection with such assignment shall be paid or delivered to Landlord, shall be
and remain the exclusive property of Landlord, and shall not constitute the
property of Tenant or of the estate of Tenant within the meaning of the
Bankruptcy Code. Any and all monies or other considerations constituting
Landlord's property under this Section not paid or delivered to Landlord shall
be held in trust for the benefit of Landlord and shall be promptly paid or
delivered to Landlord. Any person or entity to which this Lease is assigned
pursuant to the provisions of the Bankruptcy Code shall be deemed without
further act or deed to have assumed all of the obligations arising under this
Lease on and after the date of such assignment. For purposes of this Lease, an
"Event of Bankruptcy" shall mean the filing of a voluntary petition by Tenant or
the entry of an order for relief against Tenant, under Chapter 7, 11 or 13 of
the Bankruptcy Code (or the conversion to a Chapter 11 or 13 proceeding of a
proceeding that is filed by or against Tenant under any other Chapter of the
Bankruptcy Code).
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B. ADDITIONAL REMEDIES. In addition to any rights or remedies herein
before or hereinafter conferred upon Landlord under the terms of this Lease, the
following remedies and provisions shall specifically apply in the event Tenant
is in default of this Lease beyond applicable notice and cure periods:
(1) In all events, any receiver or trustee in bankruptcy shall
either expressly assume or reject this Lease within ninety (90) days following
the entry of an "Order for Relief" or within such earlier time as may be
provided by applicable law.
(2) In the event of an assumption of this Lease by a debtor or by
a trustee, such debtor or trustee shall within thirty (30) days after such
assumption (i) cure any default or provide adequate assurance that defaults will
be promptly cured; (ii) compensate Landlord for actual pecuniary loss or provide
adequate assurance that compensation will be made for actual losses, including,
but not limited to, all attorneys" fees and costs incurred by Landlord resulting
from any such proceedings; and (iii) provide adequate assurance of future
performance.
(3) Where an Event of Default exists under this Lease beyond
applicable notice and cure periods, the trustee or debtor assuming this Lease
may not require Landlord to provide services or supplies incidental to this
Lease before its assumption by such trustee or debtor, unless Landlord is
compensated under the terms of this Lease for such services and supplies
provided before the assumption of such Lease.
(4) The debtor or trustee may only assign this Lease if (i) it is
assumed and the assignee agrees to be bound by this Lease, (ii) adequate
assurance of future performance by the assignee is provided, whether or not
there has been a default under this Lease, and (iii) the assignee has been
approved by Landlord in accordance with Section 13 or is an assignee permitted
under Section 13. Any consideration paid by any assignee in excess of the rental
reserved in this Lease shall be the sole property of, and paid to, Landlord.
(5) Landlord shall be entitled to the Rent provided under the
Federal Bankruptcy Code subsequent to the commencement of an Event of
Bankruptcy.
(6) Any security deposit given by Tenant to Landlord to secure
the future performance by Tenant of all or any of the terms and conditions of
this Lease shall be automatically transferred to Landlord upon the entry of an
"Order of Relief", such being deemed a material part of the consideration for
Landlord's agreement to enter into this Lease.
(7) The parties agree that Landlord is entitled to adequate
assurance of future performance of the terms and provisions of this Lease in the
event of an assignment under the provisions of the Bankruptcy Code. For purposes
of any such assumption or assignment of this Lease, the parties agree that the
term "adequate assurance" shall include, without limitation, at least the
following: (i) any proposed assignee must have, as demonstrated to Landlord's
reasonable satisfaction, a net worth (as defined in accordance with generally
accepted accounting principles consistently applied) in an amount sufficient to
assure that the proposed assignee will have the resources to meet the financial
responsibilities under this Lease, including the payment of all Rent; the
financial condition and resources of Tenant are material inducements to Landlord
entering into this Lease; (ii) any assumption of this Lease by a proposed
assignee shall not adversely affect Landlord's relationship with any of the
remaining tenants in the Building taking into consideration any and all other
"use" clauses and/or "exclusivity" clauses which may then exist under their
leases with Landlord; and (iii) any proposed assignee must not be engaged in any
business or activity which it will conduct on the Premises and which will
subject the Premises to contamination by any Hazardous Materials.
41. FIRE PREVENTION SYSTEMS
After the Landlord installs the base sprinkler system, the Tenant shall
be responsible for the cost of any change, modification, alteration or
installation of any new or existing sprinkler system, fire extinguishing system
and/or fire detection system which may now or hereafter be required as follows:
A. If the National Board of Fire Underwriters or any local Board of
Fire Underwriters or Insurance Exchange (or other bodies hereafter exercising
similar functions) shall require or recommend the installation of fire
extinguishers, a Sprinkler system," fire detection and prevention equipment
(including, but not limited to, smoke detectors and heat sensors), or any
changes, modifications, alterations, or the installation of additional sprinkler
heads or other equipment for any existing sprinkler, fire extinguishing system,
and/or fire detection system for any reason, to the extent attributable to
Tenant's specific use of the Premises or Alterations performed by Tenant; OR
B. If any law, regulation, or order or if any bureau, department, or
official of the Federal, State, and/or Municipal Governments shall require or
recommend the installation of fire extinguishers, a "sprinkler system," fire
detection and prevention equipment (including, but not limited to, smoke
detectors and heat sensors), or any changes, modifications, alterations, or the
installation of additional sprinkler heads or other equipment for any existing
sprinkler system, fire extinguishing system, and/or fire detection system for
any reason, to the extent attributable to Tenant's specific use of the Premises
or Alterations performed by Tenant; OR
C. If any such installations, changes, modifications, alterations,
sprinkler heads, or other equipment become necessary to prevent the imposition
of a penalty, an additional charge, or an increase in the fire insurance rate as
fixed by said
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Board or Exchange, from time to time, or by any fire insurance company as a
result of the use of the Premises whether or not the same is a Permitted Use
under this Lease.
D. The Landlord may elect to perform the work and charge the cost
thereof to Tenant as Additional Rent. The Tenant shall pay to Landlord the full
cost of such work within thirty (30) days after Landlord has presented invoices
and/or paid receipts for the same. If the Landlord does not elect to perform
such work, the Tenant shall immediately proceed, at its sole cost, to perform
the work upon the following conditions:
(i) a general contractor licensed in Florida and reasonably
approved by Landlord shall be utilized
(ii) all laws, ordinances and regulations governing such work
shall be complied with
(iii) a payment and performance bond in Landlord's favor and with
a surety acceptable to Landlord shall be obtained
(iv) the construction contract and all plans and specifications
for the work shall be subject to Landlord's reasonable approval.
42. SPECIAL EVENTS
The Tenant shall not, without the prior written consent of the Landlord
which shall not be unreasonably withheld or delayed, schedule, advertise or
undertake any exposition, promotion or other type of special event at the
Premises. Any approval of the Landlord to a special event may include, but not
be limited to, at the Landlord's option, to reasonable conditions such as
guidelines for traffic and pedestrian control, security, parking and other
considerations in the interest of maintaining the health and safety for both the
Tenant's invitees as well as that of other tenants. In addition, the Landlord
may, in its reasonable discretion, require the Tenant to have delivered a bond
by a surety acceptable to Landlord to guaranty any financial undertakings of any
indemnification in connection with a special event.
43. MISCELLANEOUS
A. If Tenant has a lease for other space in the Building, an Event
of Default by Tenant under such lease beyond applicable notice and cure periods
will constitute a default hereunder.
B. If any term or condition of this Lease or the application thereof
to any person or circumstance is, to any extent, invalid or unenforceable, the
remainder of this Lease, or the application of such term or condition to persons
or circumstances other than those as to which it is held invalid or
unenforceable, is not to be affected thereby and each term and condition of this
Lease is to be valid and enforceable to the fullest extent permitted by law.
This Lease will be construed in accordance with the laws of the State of
Florida.
C. Submission of this Lease to Tenant does not constitute an offer,
and this Lease becomes effective only upon execution and delivery by both
Landlord and Tenant.
D. Tenant acknowledges that it has not relied upon any statement,
representation, prior or contemporaneous written or oral promises, agreements or
warranties, except such as are expressed herein.
E. Tenant agrees to pay, before delinquency, all taxes assessed
during the Lease Term agreement (i) all personal property, trade fixtures, and
improvements located in or upon the Premises and (ii) any occupancy interest of
Tenant in the Premises. Landlord agrees to pay all real estate taxes and
assessments against the Building before the Building would be sold by tax deed
to pay such delinquent taxes.
F. If Tenant, with Landlord's consent, occupies the Premises or any
part thereof for the purpose of conducting business prior to the Rent
Commencement Date all provisions of this Lease will be in full force and effect
commencing upon such occupancy, and Base Rent and Additional Rent, where
applicable, for such period will be paid by Tenant at the same rate herein
specified.
G. Each party represents and warrants that it has not dealt with any
agent or broker in connection with this transaction except for Blue Lake Realty,
Inc. and the agents or brokers specifically set forth in the BLI Rider whose
commissions shall be paid by Landlord pursuant to separate agreement. If either
party's representation and warranty proves to be untrue, such party will
indemnify the other party against all resulting liabilities, costs, expenses,
claims, demands and causes of action, including reasonable attorneys" fees and
costs through all appellate actions and proceedings, if any. The foregoing will
survive the end of the Lease Term.
H. Neither this Lease nor any memorandum hereof will be recorded by
Tenant.
I. Nothing contained in this Lease shall be deemed by the parties
hereto or by any third party to create the relationship of principal and agent,
partnership, joint venturer or any association between Landlord and Tenant, it
being expressly understood and agreed that neither the method of computation of
Rent nor any other provisions contained in this Lease nor any act of the parties
hereto shall be deemed to create any relationship between Landlord and Tenant
other than the relationship of landlord and tenant.
J. Whenever in this Lease the context allows, the word "including"
will be deemed to mean "including without limitation". The headings of articles,
sections or paragraphs are for convenience
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Blue Lake Standard Lease
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only and shall not be relevant for purposes of interpretation of the provisions
of this Lease.
K. Except as otherwise stated in this Lease, this Lease does not
create, nor will Tenant have, any express or implied easement for or other
rights to air, light or view over or about the Building or any part thereof.
L. Landlord reserves the right, upon reasonable advance notice to
Tenant, except in the case of an emergency, to use, install, monitor, and repair
pipes, ducts and conduits within the walls columns, and ceilings of the
Premises. Landlord shall use all reasonable efforts to not materially interfere
with Tenant's peaceful use and occupancy of the Premises.
M. Any acts to be performed by candors under or in connection with
this Lease may be delegated by Landlord to its managing agent or other
authorized person or firm. Provided, however that any such delegation shall not
reduce or alter the obligations to be performed by Landlord as set forth in this
ease.
N. It is acknowledged that each of the parties hereto has been fully
represented by legal counsel and that each of such legal counsel has contributed
substantially to the content of this Lease. Accordingly, this Lease shall not be
more strictly construed against either party hereto by reason of the fact that
one party may have drafted or prepared any or all of the terms and provisions
hereof.
O. If more than one person or entity is named herein as Tenant,
their liability hereunder will be joint and several. In case Tenant is a
corporation, Tenant (a) represents and warrants that this Lease has been duly
authorized, executed and delivered by and on behalf of Tenant and constitutes
the valid and binding agreement of Tenant in accordance with the terms hereof,
and (b) Tenant shall deliver to Landlord or its agent, within three (3) business
days of the execution of this Lease, executed by Tenant, certified resolutions
of the board of directors authorizing Tenant's execution and delivery of this
Lease and the performance of Tenant's obligations hereunder. In case Tenant is a
partnership, Tenant represents and warrants that all of the persons who are
general or managing partners in said partnership have executed this Lease on
behalf of Tenant, or that this Lease has been executed and delivered pursuant to
and in conformity with a valid and effective authorization therefor by all of
the general or managing partners of such partnership, and is and constitutes the
valid and binding agreement of the partnership and every partner therein in
accordance with its terms. It is agreed that each and every present and future
partner in Tenant, to the extent that Tenant is a partnership, shall be and
remain at all times jointly and severally liable hereunder and that neither the
death, resignation or withdrawal of any partner, nor the subsequent modification
or waiver of any of the terms and provisions of this Lease, shall release the
liability of such partner under the terms of this Lease unless and until
Landlord shall have consented in writing to such release.
P. Landlord has made no inquiries about and makes no representations
(express or implied) concerning whether Tenant's proposed use of the Premises is
permitted under applicable law, including applicable zoning law; should Tenant's
proposed use be prohibited, Tenant shall be obligated to comply with applicable
law and this Lease shall nevertheless remain in full force and effect. Landlord
covenants that the Building is zoned to permit corporate headquarters office use
as contemplated in the BLI Rider.
Q. Notwithstanding anything to the contrary in this Lease, if
Landlord or Tenant cannot perform any of its non-monetary obligations due to
events beyond that party's control, the time provided for performing such
obligations shall be extended by a period of time equal to the duration of such
events. Events beyond either party's control include, but are not limited to,
hurricanes and floods and other acts of God, war, civil commotion, labor
disputes, strikes, fire, flood or other casualty, shortages of labor or
material, government regulation or restriction and weather conditions. Nothing
herein contained shall constitute a waiver or mitigation of Tenant's
responsibility to pay Rent.
R. Notwithstanding anything to the contrary contained in this Lease,
in the event of any litigation under this Lease the prevailing party will be
reimbursed by the non-prevailing party for all reasonable attorneys' fees and
costs including through all appellate actions and proceedings, including
bankruptcy proceedings.
S. This Lease and the schedules and riders attached, form part of
this Lease together with the Rules and Regulations adopted and promulgated by
Landlord and set forth all the covenants, promises, assurances, agreements,
representations, conditions, warranties, statements and understandings
("Representations") between Landlord and Tenant concerning the Premises and the
Building and there are no Representations, either oral or written between them
other than those in this Lease. This Lease supersedes and revokes all previous
negotiations, arrangements, letters of intent, offers to lease, lease proposals,
brochures, Representations and information conveyed whether oral or in writing,
between the parties hereto or their respective representatives or any other
person purporting to represent Landlord or Tenant. Tenant acknowledges it has
not been induced to enter into this Lease by any representations not set forth
in this Lease, and has not relied on any such Representations not set forth
herein, no such Representations not set forth herein shall be used in the
interpretation or construction of this Lease, and the Landlord shall have no
liability for any consequences arising as a result of any such Representations
not set forth herein. Except as herein otherwise provided, no subsequent
alteration, amendment, change, or addition to this Lease shall be binding upon
Landlord or Tenant unless in writing and signed by each of them.
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T. Time shall be of the essence for all actions required under this
Lease.
44. DELIVERY OF GUARANTY
If Tenant is required to deliver a Guaranty by a Guarantor, Tenant shall
deliver a guaranty in the form of guaranty (the "Guaranty"),together with the
form of Guarantor's resolution in the form attached hereto attached as Exhibit
"K", and the Guarantor's certificate of financial standing attached hereto as
Exhibit "K" fully executed by each Guarantor. If a Guaranty is required pursuant
to the BLI Rider then, at or prior to the parties' execution of this Lease
Landlord has delivered to Tenant a form of guaranty (the "Guaranty") to be
signed by each Guarantor identified in the BLI Rider. Tenant's failure to
deliver the Guaranty fully executed by the Guarantor within 5 days from the
earliest date on which this Lease has been signed by the parties shall
constitute an Event of Default.
45. CONFIDENTIALITY
Landlord and Tenant acknowledge that the terms and provisions of this
Lease have been negotiated based upon a variety of factors, occurring at a
coincident point in time, including, but not limited to: (i) the individual
principals involved and the financial strength of Tenant, (ii) the nature of
tenant's business and use of the Premises, (iii) the current leasing market
place and the economic conditions affecting rental rates, (iv) the present and
projected tenant mix of the Building, and (v) the projected juxtaposition of
tenants on the floor(s) upon which the Premises are located and the floors
within the Building. Therefore, recognizing the totality, uniqueness, complexity
and interrelation of the aforementioned factors, the Tenant agrees that
information concerning Landlord and the Blue Lake Building, and the financial
terms of this Lease, are confidential and proprietary information and Tenant
agrees that it will use all reasonable efforts to not permit the duplication or
disclosure (whether by word of mouth, mechanical reproduction, physical tender
or visual or oral transmission or review) of any such information, including the
terms and conditions of this Lease to third parties who could, in any way, be
considered presently or in the future as prospective tenants of the Building, to
any person, unless such duplication, use, or disclosure is specifically
authorized by Landlord in writing. Confidential information is not meant to
include any information that is in the public domain. In addition, Tenant agrees
to use all reasonable efforts to keep the terms and conditions as contained
herein confidential, with the following exceptions:
A. Tenant may disclose the contents of this Lease to its advisors in
the contemplated transaction, so long as the advisor agrees in wroting to use
all reasonable efforts to maintain confidentiality;
B. Tenant may disclose such information as required by court order;
C. Tenant may disclose such information as required by any laws,
regulations or requirements applicable to Tenant or any affiliate of Tenant; and
D. Tenant may disclose the contents of this Lease to potential
assignees or subtenants, so long as such potential assignees or subtenants agree
in writing to use all reasonable efforts to maintain confidentiality.
Tenant shall issue no press release or statement to the media regarding
this Lease without the Landlord's prior approval, which approval shall not be
unreasonably withheld or delayed.
46. SIGNAGE CRITERIA
Tenant shall be permitted to erect or enplace a sign, as applicable, in
conformance with the BLOC design criteria for the Premises as attached hereto
and made a part hereof as Exhibit "H".
47. CARPOOLING, MASS TRANSIT AND TRAFFIC CONTROL
Tenant acknowledges that, due to the nature and size of the Building,
Landlord may be required by applicable governmental authorities to participate
in, and require tenants to participate in, carpool programs, mass transit
programs, flexible shift and other flexible time programs, and other frame
reduction programs and measures. Tenant agrees to participate in and comply with
such programs and measures required by applicable governmental authorities or
agreed to by Landlord with respect to the Building. Tenant's breach of this
provision shall not be a default under this Lease or expose Tenant otherwise to
damages or injunction.
48. LEASE CONTINGENCIES
This Lease shall be conditioned and contingent upon the occurrence of
the following event: within ten (10) days from the Effective Date hereof,
Landlord's mortgagee(s) and other lenders have approved this Lease and the
Tenant (including but not limited to Tenant's financial condition).
49. ASSOCIATION
The Building, in which the Premises are located shall be subject to a
Declaration of Restrictive Covenants, Easements and Conditions (the
"Declaration") which shall govern certain matters with respect to the
development, management and maintenance of the Building and to satisfy contents
of this Lease to its advisors in the requirements with respect to surface water
management, drainage and other aspects of the agrees in writing to use all
reasonable efforts to Building. The Declaration shall provide for the creation
maintain confidentiality; of a property owner's association ("Association") to
perform certain management, operational and maintenance obligations pursuant
thereto. The Association will have the authority to levy fees and assessments
against the Building, including the Building, to pay for the obligations of the
Association.
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This Lease is subject to the Declaration, upon the recordation of the
Declaration, and to the rights of the Association pursuant thereto.
Additionally, fees and assessments of the Association paid by the Landlord shall
be deemed Operating Expenses for the purpose of determining Overhead Rent. The
Declaration shall not materially impair Tenant's rights under this Lease.
50. VENDING MACHINES
No Tenant shall obtain, or accept for use in the Premises, vending
machines or pay telephones, or other similar services from any persons other
than those specifically designated by Landlord to offer or distribute such
services. Landlord shall designate at least one vendor for such services.
51. FOOD SERVICE
At all times during the term of the Lease (subject; however, to
reasonable temporary interruptions), Landlord will provide a cafeteria or other
food service facility within the Building campus to serve breakfast and lunches
to employees of Tenant and other tenants. The scope and types of food to be
served, and all other aspects of such food service facility shall be determined
in Landlord's sole discretion.
52. AUDITORIUM/CONFERENCECENTER
Landlord will make available to Tenant on an as available, first come -
first serve basis, the existing auditorium and conference center, at a cost no
greater a cost than that charged to other tenants, together with Landlord's
charges for setup and cleanup, and for any damages thereto resulting from
Tenant's use thereof.
53. TELECOMMUNICATIONS
A. TENANT'S RESPONSIBILITY. Tenant acknowledges and agrees that all
telephone and telecommunications and data services, including wiring and
installation therefor, desired by Tenant shall be ordered and utilized at the
sole expense of Tenant. Unless Landlord otherwise requests or consents in
writing, all of Tenant's telecommunications equipment shall be and remain solely
in the Premises and the telephone closets on the floor on which the Premises is
located, in accordance with the rules and regulations adopted by Landlord from
time to time. Unless otherwise specifically agreed to in writing, Landlord shall
have no responsibility for the maintenance of Tenant's telecommunications or
data equipment, including wiring; nor for any wiring or other infrastructure to
which Tenant's telecommunications or data equipment may be connected. Tenant
agrees that, to the extent any such service is interrupted, curtailed or
discontinued, Landlord shall have no obligation or liability with respect
thereto and it shall be the sole obligation of Tenant at its expense to obtain
substitute service, unless caused by the negligence or willful misconduct of the
Landlord, its agents, employees, or contractors.
B. REMOVAL OF EQUIPMENT AND WIRING AND OTHER FACILITIES. Any and all
telecommunications and data equipment installed in the Premises or elsewhere in
the Building or the Project by or on behalf of Tenant, including wiring, or
other facilities for telecommunications or data transmittal reception, shall be
removed prior to the expiration or earlier termination of the Term, by Tenant at
its sole cost or, at Landlord's election, by Landlord at Tenant's sole cost,
with the cost therefor to be paid as Additional Rent.
C. NEW TELECOMMUNICATIONS OR DATA PROVIDER INSTALLATIONS. Tenant
acknowledges that the Landlord has or will enter into an agreement with a
telephone, telecommunications or data provider for the installation and
maintenance of telecommunications lines to and within the Building and that such
lines will be the exclusive lines serving the Building and the Premises. In the
event that Tenant wishes at any time to utilize the services of a telephone,
telecommunications or data provider whose equipment is not then servicing the
Project, no such provider shall be permitted to install its line within the
Building or Project without first securing the prior written approval of
Landlord, which approval shall be in the Landlord's sole and absolute
discretion. The Landlord's approval, if given, shall not be deemed any kind of
warranty or representation by Landlord, including without limitation, any
warranty or representation as to the suitability, confidence, or financial
strength of the provider without limitation of the foregoing standard and may be
conditioned upon such terms as shall be determined by Landlord in its reasonable
judgment.
D. LIMITS ON PROVIDER RELATIONSHIP. Notwithstanding anything herein
to the contrary, no telephone, telecommunications or data provider shall be
deemed a third-party beneficiary of this Lease.
E. INSTALLATION AND USE OF WIRELESS TECHNOLOGIES. Subject to
Paragraph 56 hereof, Tenant shall not utilize any wireless communications or
data equipment (other than usual and customary cellular telephones), including
antenna and satellite receiver dishes, within the Premises, or the Building or
the Project, without Landlord's prior written consent, which consent may be
arbitrarily withheld. Such consent may be conditioned in such manner so as to p
protect Landlord's financial interest and the interest of the Building and the
other tenants therein, in a manner similar to the arrangement described in the
immediately preceding paragraphs.
F. CONSENT NOT LANDLORD WARRANTY. Landlord's consent under this
Section shall not be deemed any kind of warranty or representation by Landlord,
including without limitation, any warranty or representation as to the
suitability, competence or financial strength of provider.
G. TENANT RESPONSIBLE FOR SERVICE INTERRUPTION. Tenant agrees that
to the extent service by its provider is interrupted, curtailed or discontinued,
Landlord shall have no obligation or liability with
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<PAGE>
respect thereto and it shall be the sole obligation of Tenant at its expense to
obtain substitute service as to another, except to the extent caused by the
negligence or willful misconduct of Landlord, its agents, employees or its
contractors..
H. NO THIRD PARTY RIGHTS. The provisions of this Section may be
enforced solely by the Tenant and Landlord, and are not for the benefit of any
other party, specifically without limitation, no telephone or telecommunications
provider shall be deemed a third party beneficiary of the Lease.
I. LIABILITY FOR EQUIPMENT INTERFERENCE. In the event that
telecommunications or data equipment, wiring and facilities or satellites and
antenna equipment of any kind installed by or at the request of Tenant within
the Premises, on the roof, or elsewhere within or on the Building, or the
Project, causes interference to equipment used by another party, Tenant shall
assume all liability related to such interference. Tenant shall use reasonable
efforts, and shall cooperate with Landlord and other parties to promptly
eliminate such interference. In the event that Tenant is unable to do so, Tenant
will substitute alternative equipment which remedies the situation. If such
interference persists, Tenant shall discontinue the use of such equipment, and
at Landlord's discretion, remove such equipment according to the foregoing
specifications. Tenant agrees to and shall indemnify and hold Landlord harmless
or any liabilities and claims against Landlord resulting from such interference.
54. INCENTIVE PROGRAMS. Tenant acknowledges advice from Landlord that
Landlord may, from time to time, apply for various loans, grants and/or other
incentive programs ("Incentive Programs"), which may enhance the value of the
Building. It is anticipated that certain applications for solicitations may
require a tenant or other possessor of portions of the Building to be the
applicant, co-applicant or participating party in applying for and/or securing
the Incentive Program(s). Within five (5) business days of Landlord's request,
Tenant shall, at Landlord's expense execute, to the extent required as to any
Incentive Program, any and all applications, petitions and/or other
documentation in support of Incentive Program. In any instance in which an
Incentive Program is applied for and secured, Tenant hereby irrevocably assigns
and quit-claims to Landlord any and all rights and interests which Tenant may
claim in and to any benefits or proceeds of t the Incentive Programs. The
assignment contained in the immediately preceding sentence is self-effectuating
without need for further confirmation to be effective; however, at the request
of Landlord, Tenant shall execute and deliver such assignment(s), confirmations
with supporting documentation as may from time-to-time be required by Landlord
in furtherance of this Section. Landlord covenants with Tenant that Tenant shall
not incur any liability or obligation by virtue of or associated with the
application, processing or any participation in the securing of any Incentive
Program, and Landlord shall indemnify Tenant in connection therewith. Tenant
further agrees that, except that to the extent necessary in processing any
application for Incentive Programs, Tenant will use all reasonable efforts to
have all information received by Tenant or any employee, shareholder, attorney,
accountant or other party acting by, through or under Tenant shall and remain
confidential as proprietary information owned and reserved solely by Landlord.
Landlord may exclusively, and its sole option, prepare a memorandum of this
Section which shall be executed by Tenant upon request of Landlord and which may
be recorded in the public records of Palm Beach County, Florida.
55. SAVING PROVISION. If any provision of this Lease, or its application
to any situation shall be invalid or unenforceable to any extent, the remainder
of this Lease, or the application thereof to situations other than that as to
which it is invalid or unenforceable, shall not be affected thereby and every
provision of this Lease shall be valid and enforceable to the fullest extent
permitted by law.
56. SATELLITE DISH. Landlord agrees that Tenant, at its sole cost and
expense, has the right to install a satellite dish, fibre optics and microwave
transmission equipment (collectively, the "Satellite Dish") on the roof of the
Building. Should Tenant elect to install a Satellite Dish on the roof of the
Building, Tenant agrees to install the Satellite Dish in accordance with all
applicable codes and laws and sound engineering and construction practices.
Tenant further agrees to use any specified roofing contractor or other general
contractor required by Landlord to install the Satellite Dish so as avoid any
compromise to the roof structure or membrane. The architectural and engineering
plans and specifications for the Satellite Dish and any required Alterations to
the Building in connection therewith shall be subject to the Landlord's approval
as an Alteration under this Lease. Tenant warrants and represents that any
emissions from the Satellite Dish are not harmful to humans and indemnifies the
Landlord from and against any claims thereof in the same manner as for any other
Environmental Default hereunder.
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IN WITNESS WHEREOF, the parties have signed and delivered this Lease as
of the day and year first above written.
WITNESSES: "TENANT"
CYBEAR, INC., a Florida corporation
/s/ [ILLEGIBLE]
- -----------------------------------
/s/ [ILLEGIBLE]
- -----------------------------------
(As to Tenant) By: /s/ SCOTT LODIN
-------------------------------------
Print Name: Scott Lodin
Title: Vice President/General Counsel
(SEAL)
WITNESSES: "LANDLORD"
BLUE LAKE, LTD.,
/s/ [ILLEGIBLE] a Florida limited partnership
- -----------------------------------
/s/ [ILLEGIBLE] By: Blue Lake, Inc., a Florida
- ----------------------------------- corporation, its general partner
(As to Landlord)
By: /s/ [ILLEGIBLE]
-------------------------------------
Print Name: [Illegible]
Authorized Agent: Executive Vice
President
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<PAGE>
EXHIBIT "A"
FLOOR PLAN
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<PAGE>
EXHIBIT "A"
<PAGE>
EXHIBIT "A-1"
EXPANSION
<PAGE>
EXHIBIT "B"
WORK LETTER AGREEMENT
In the event of any inconsistencies between this Agreement and the
Lease dated currently herewith to which this Agreement is attached as Exhibit
"B", this Agreement shall control. Capitalized terms used in this Agreement
shall, unless otherwise specifically set forth herein, have the same meanings as
in the Lease.
1. Tenant shall complete or cause the completion of improvements to the Premises
as shown on the Final Plans (defined below) and as more fully described in this
Section (the "Work"). Tenant shall retain an architect and engineer from and
amongst a group which shall consist of the published list of pre-approved
architects and engineers at Blue Lake Corporate Center, listed pursuant to
Schedule B-3 to prepare complete and detailed architectural plans and
specifications, and structural, mechanical and engineering plans and
specifications, showing the Work (collectively, the "Construction Plans").
Subject to the Landlord's Contribution for Tenant Improvements, the cost of the
Construction Plans shall be the responsibility of Tenant. The Construction Plans
shall be prepared in a manner as will be acceptable to Landlord in its
reasonable discretion. The Work shall meet or exceed the minimum standards for
the Work ("Minimum Building Materials and Construction") attached hereto as
Exhibit "B-1" and otherwise as determined by Landlord in its reasonable
discretion. It is the intent of the parties that Exhibit "B-1" set forth the
minimum quality of the Work, however, Exhibit "B-1" shall not be construed to
require any particular quantity of the items described therein except to the
extent required by applicable codes or laws. The Construction Plans shall be
consistent with all applicable laws, codes, ordinances and regulations,
including but not limited to the Americans with Disabilities Act of 1990, of
governmental and quasi-governmental entities having jurisdiction regarding the
Work and/or the Building.
Tenant's Construction Plans shall include, but not be limited to, indication or
identification of the following:
A. locations and structural design of all floor area requiring live
load capacities in excess of 75 pounds per square foot; areas;
B. the density of occupancy in large work
C. the location of any food service areas or vending equipment rooms if
permitted by Landlord;
D. areas requiring 24-hour air conditioning, Tenant's supplemental
air-conditioning units (if any), and electrical consumption subverters if
required by Landlord;
E. location of rooms for telephone equipment;
F. locations and types of plumbing, if any, required for toilets (other
than core facilities), sinks, drinking fountains, etc.;
G. light switching of offices, conference rooms, etc.;
H. layouts for specially installed equipment, including computers, size
and capacity of mechanical and electrical services required and heat projection
of equipment;
I. dimensioned location of: (a) electrical receptacles (120 volts),
including receptacles for wall clocks, and telephone outlets and their
respective locations (wall or floor), (b) electrical receptacles for use in the
operation of Tenant's business equipment which requires 208 volts or separate
electrical circuits, (c) electronic calculating, CRT systems, etc., and (d)
special audio-visual requirements;
J. special fire protection equipment and raised flooring where
permitted by Building systems and otherwise approved by Landlord;
K. reflected ceiling plan;
L. information concerning air conditioning loads, including, but not
limited to, air volume amounts at all supply vents;
M. non-building standard ceiling heights and/or materials;
N. materials, colors and designs of wall coverings and finishes;
O. painting and decorative treatment required to complete all
construction;
P. swing of each door;
Q. a schedule for doors (including dimensions for undercutting of doors
to clear carpeting) and frames complete with hardware; and
R. all other information necessary to make the work complete and in all
respects ready for operation.
2. Tenant shall deliver Construction Plans to Landlord for Landlord's approval.
Landlord shall respond to Tenant's request for approval of Tenant's Construction
Plans within ten (10) business days of their submission, during which time the
Landlord's architect and engineer ("Landlord's Consultants") will
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<PAGE>
review the Construction Plans. In the event Landlord or Landlord's Consultants
shall reasonably disapprove of all or a portion of Tenant's Construction Plans,
it shall set forth its reasons therefor in writing in reasonable detail within
such ten (10) business day period. Tenant shall be required to incorporate any
reasonable changes to the Construction Plans as required by Landlord. Landlord
or Landlord's Consultants shall respond to `Tenant's request for consent of its
revised plans within three (3) business days of submission unless the revisions
are substantial in which event Landlord's response shall be within five (5)
business days thereafter. Neither the recommendation or designation by the
Landlord of a pre-approved list of architects or contractors shall be deemed to
create any liability on the part of Landlord with respect to the Construction
Plans (whether with respect to design, functionality, specifications, compliance
with legal requirements or otherwise). Tenant shall reimburse Landlord for
reasonable architect, engineer and other professional fees incurred by Landlord
in connection with review of Tenant's Construction Plans and Revisions to the
extent that such relate to an a Landlord-approved structural, roof or mechanical
system modification. However, (i) Tenant may use Landlord's Contribution, if
provided for in the BLI Rider, for such reimbursement, and (ii) reimbursement
shall be limited to customary rates.
3. As used herein, "Final Plans" refers to the Construction Plans after the same
have been approved in writing by Landlord. The Landlord Contribution to cost of
construction, if any, is set forth in the BLI Rider. Tenant shall be responsible
for the entire cost of demolition, if any, and Tenant's Initial Improvements
including any revisions to the Final Plans ("Revisions") subject to the
Landlord's Contribution. Tenant shall obtain, or cause to be obtained, all
necessary governmental permits and commence and diligently pursue at its sole
cost and expense construction of the Work contemplated by the Final Plans,
substantially in accordance with the Final Plans. Tenant shall obtain Landlord's
prior written approval of its building permit application before submission of
same. If applicable, Tenant's plans shall include all information necessary to
reflect Tenant's requirement for the installation of any supplemental air
conditioning system and ductor, electrical, plumbing and other mechanical
systems and all work necessary to connect any special or non-standard facilities
to the Building's base mechanical, electrical and structural systems. Tenant's
submission shall include not less than one (1) set of sepias, three (3) signed
and sealed sets, and six (6) bidding sets of black and white prints for each
bidder.
A. PERFORMANCE OF WORK. The Work shall be constructed in a good and
workmanlike manner substantially in accordance with the Construction Plans. The
Work shall be subject, at the option of Landlord, to the inspection of Landlord,
Landlord's Architect and Landlord's General Contractor from time to time, during
the period in which the Work is being performed, provided that such inspection
does not unreasonably interfere with the completion of the Work. If such
inspections reveal that any of the Work is not being constructed substantially
in conformance with the provisions of this Agreement or the Final Plans, Tenant
at its expense shall correct same forthwith. Only new, first class materials
shall be used in the performance of the Work. At all times during the
construction of the Work, it shall be Tenant's responsibility to cause each of
Tenant's contractors and subcontractors to maintain protection of the Premises
in such a manner as to prevent any damage to the Work, or to adjacent property
and improvements by reason of the performance of the Work. Tenant's contractor
and subcontractors shall properly secure the Premises, including, to the extent
required, the furnishing of temporary guard rails and barricades. Landlord for
good cause shall have the right to require Tenant to terminate any construction
work at any time being performed by or on behalf of Tenant in the Premises, and
to require that any contractor or subcontractor, or any employee of same, leave
the Building. Upon written notification, setting forth in reasonable detail such
good cause, from Landlord to Tenant to cease any work, Tenant shall forthwith
remove from the Premises all agents, employees and contractors of Tenant
performing such work until such time as Landlord shall have given its written
consent for the resumption of such construction work (such consent not to be
unreasonably withheld or delayed), and Tenant shall have no claim for damages of
any nature whatsoever against Tenant in connection therewith.
B. CHANCE ORDERS. Landlord's written approval shall be obtained by
Tenant prior to the undertaking of any construction work which deviates from or
modifies in a substantial manner from the Final Plans. Should Tenant or Tenant's
contractor request or desire to make any substantial changes to the Final Plans,
Tenant shall submit same to Landlord for its approval which shall not be
unreasonably withheld or delayed.
C. INSURANCE. During the course of construction, Tenant or Contractor
shall provide builder's risk insurance equal to the replacement cost of any
improvements being constructed, naming Landlord as an additional insured as its
interests may appears, and owners and contractors protective liability insurance
in an amount of not less than $3,000,000. In addition, Tenant shall maintain the
insurance required pursuant to the Lease.
D. BUILDING RULES AND REGULATIONS. During the course of construction,
Tenant and Contractor shall comply the with Building rules and regulations
relating to construction within the Building. Attached hereto as Exhibit "C are
such rules and regulations, which Tenant and Contractor shall initial and cause
to be posted during the course of construction.
E. NOTICE OF COMMENCEMENT. Tenant agrees not to cause or permit the
Contractor to commence construction and shall not disburse any funds to
Contractor, any subcontractors, sub-
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Blue Lake Standard Lease
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subcontractors, materialmen and laborers until a Notice of Commencement is
recorded pursuant to Chapter 713.13 of the Florida Statutes, a certified copy of
such Notice of Commencement has been posted on the construction site, and an
Affidavit of such posting is furnished to Landlord. Such Notice of Commencement
shall not be recorded without Landlord's prior written consent to the form and
content of same which shall not be unreasonably withheld or delayed. The form of
the Notice of Commencement shall be in accordance with Exhibit "B-2" attached
hereto. Landlord shall be named on the Notice of Commencement to receive copies
of Notices to Owner. Landlord may desire to inquire and communicate directly
with various parties named in statements provided to Landlord by Tenant and
Contractor or those parties who give a Notice to Owner. Tenant hereby authorizes
Landlord to make such inquiries and authorize those parties to furnish the
information required by Landlord.
F. LIENS. Pursuant to the provisions of the Florida Construction Lien
Law (Chapter 713) and this Lease, the interest of the Landlord shall not be
subject to the liens for improvements made by the Tenant, Contractor, any
subcontractor, sub-subcontractor, materialman, supplier or laborer, and the
Lease is hereby deemed to expressly prohibit such liability. Tenant agrees to
notify Contractor, any subcontractors, sub-subcontractors, materialmen, laborers
and suppliers doing Work for Tenant on the Premises of this provision.
G. LANDLORD'S CONTRIBUTION. Notwithstanding anything to the contrary
contained herein, Tenant acknowledges that Landlord is merely providing the
Landlord's Contribution as an incentive for Tenant to enter into this Lease and
Landlord is not in any way acting as a contractor or as any other party with
respect to construction of the Work, and further, that neither the Landlord nor
the Building are liable for, nor stand as security for the claims or liens of
any Contractor, subcontractors, sub- subcontractors, materialmen, laborers and
other third parties, hired by or on behalf of the Tenant, except to the extent
caused by the negligence or willful misconduct of Landlord, its agents,
employees, or contractors.
H. PAYMENT OF LANDLORD'S CONTRIBUTION. Payment of Landlord's
Contribution ("Payment"), shall be made by Landlord (at its election in a check
payable jointly to Tenant and Contractor), monthly, within thirty (30) days
after satisfaction of the following conditions:
(1) The Construction Contract has been fully performed by the
Contractor to date; and
(2) Tenant submits verifiable receipts that it has paid in full the
Contractor on the Construction Contract through the date of the particular
payment; and
(3) As to final payment, all punchlist relating to the Work has been
completed; and
(4) Tenant's architect has certified to Landlord, in form reasonably
acceptable to Landlord, that all of the Work has been performed (as to monthly
payments) or completed (as to final payment) substantially in accordance with
the Final Plans, except as modified by change orders approved in writing by
Landlord; and
(5) The Contractor has furnished to both the Landlord and Landlord's
Architect, a duly and properly executed Contractor's Progress Payment Affidavit
or Final Affidavit, as applicable, complying in all respects to the provisions
of Chapter 713 of Florida Statutes (the "Construction Lien Law"), a duly and
properly executed Contractor's Partial Release of Lien or Final Release of Lien,
as applicable, all in such form and having such content as is satisfactory to
Landlord in its reasonable discretion, duly and properly executed Partial
Releases of Lien or Final Releases of Lien, as applicable, from each and every
subcontractor, sub-subcontractor, materialman, supplier and laborer and such
other documents as Landlord shall be entitled to under the Construction Lien
Law, all in such form and having such content as is satisfactory to Landlord in
its reasonable discretion. In the event Contractor does not furnish to Landlord
all of the aforesaid final releases of lien, then Landlord shall be entitled to
subtract from the amount that Landlord determines is necessary to transfer to
bond or to pay in full any subcontractor, sub-subcontractor, materialman,
laborer who has not furnished a Release of Lien (but no reduction in the Payment
shall be made if the Contractor posts a cash bond or other surety accessible to
Landlord covering such amounts). Landlord shall have the right to pay directly
any subcontractor, sub-subcontractor, materialman, supplier and laborer listed
on the Contractor's Affidavit given in connection with the Contractor's
Application for Payment, and any such other subcontractor, sub-subcontractor,
materialman, supplier and laborer who has given a Notice to Owner; and
(6) As to final payment, certification by Tenant in form
satisfactory to Landlord that Tenant accepts the Premises, and that all Work has
been substantially completed in accordance with the Final Plans; and
(7) As to final payment, receipt by Landlord of two (2) sets of
detailed and complete As-Built Final Plans of the Work, including all
architectural, structural, mechanical, plumbing and electrical work done in the
Premises; and
(8) As to final payment, evidence reasonably satisfactory to
Landlord that the Work is substantially complete in accordance with the Final
Plans and evidence of approval of such completion by local governmental
authorities; and
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Blue Lake Standard Lease
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(9) As to final payment, Tenant is in occupancy of the Premises and
has made its first monthly installment of Base Rent, and is not otherwise in
default of the Lease beyond applicable notice and cure periods; and
(10) As to final payment, Landlord receives a copy of the
Certificate of Occupancy.
All progress payments shall be subject to a ten (10%) percent retainage
held by Landlord until final payment of Landlord's Contribution.
4. Tenant shall have the right to make Revisions from time to time after Final
Plans have been prepared. Ail Revisions, of a substantial nature (i.e., those
that are material, structural or mechanical in nature) shall be subject to
Landlord's prior written approval, which shall not be unreasonably withheld or
delayed. Landlord shall either approve or disapprove such Revisions within five
(5) business days after submission thereof by Tenant. Without limiting the
generality of the foregoing, no Revision will be approved unless (a) all changes
to and modifications from the Final Plans are circled or highlighted as per
standard practices and (b) said Revisions conform with the requirements of this
Work Letter. The cost of any Revisions shall be home solely by Tenant and the
Revisions shall not delay the Commencement Date hereunder.
5. Tenant shall use due diligence to complete the Work as soon as may be
practicable.
6. Tenant shall notify Landlord of the date of Substantial Completion at least
five (5) days prior thereto. As used herein, "Substantial Completion" shall mean
that, with the exception of punch-list items, the Work shall have been completed
in accordance with the Final Plans. Landlord and Tenant shall thereupon set a
mutually convenient time for Tenant's Construction Agent and Landlord or
Landlord's Consultant to inspect the Premises. Upon completion of the
inspection, Tenant's construction Agent shall acknowledge in writing that
substantial completion has occurred.
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<PAGE>
EXHIBIT "B-1"
TO WORK LETTER AGREEMENT
1. PARTITIONS
(A) Demising Walls:
One hour fire rated construction (unless otherwise required by code due
to existing conditions), full height from floor slab to underside of
upper deck, 3-5/8" 25 gauge (or as structurally required for height to
underside of upper deck) steel studs spaced per code requirements, 3-1/2"
fiberglass batt insulation for sound attenuation full height of wall,
Type "X" 5/8" gypsum board, taped and finished 2" above ceiling height
ready to receive finishes, and fire taped to the underside of the upper
deck. Construction to include both sides of wall.
(B) Interior Partitions:
Non-rated wall construction, framed above ceiling height 2", or to
ceiling height (with zip bead), 3-5/8" 25 gauge steel studs spaced per
code requirements, minimum 5/8" gypsum board, taped and finished ready to
receive finishes.
(C) Interior Face of Concrete/Masonry Walls:
Non-rated wall construction, furred above ceiling height 2", furring
strips spaced per applicable code, minimum Liz'' gypsum board, taped and
finished ready to receive finishes. No alterations or changes to exterior
wall without the written consent of the Landlord
2. DOORS
(A) Interior Entry Doors:
(i). Main Entry: C-Label fire rated door, 3'-0" X 8'-0" X 1-3/4", two
flush solid core wood, paint grade, steel frame.
(ii). Secondary Entry: same as above. Landlord to review for access to
mechanical systems and door requirements. Doors to be recessed
within the tenant space.
(B) Exterior Entry Doors:
Two flush glass and aluminum non-label doors, 3'-0" X B'-0", with
aluminum frame.
(C) Interior Doors:
Solid core wood, 3'-0" X 8'-0", paint grade, hollow metal frame. Match
existing for spaces re-using existing doors.
3. HARDWARE
(A) Interior Entry Doors:
Three (3) pair Hager BB1279 4.5" X 4.5" US 26D finish hinges, Lever
lockset Schlage "D"! series Athens model with US 26D finish and to have
top and bottom flush bolts with threshold and weatherstrips, two door
closers LCN Smooth Series with US 26D finish, two door stoppers model
IVES 435/436 and eight door silencers model IVES 20.
(B) Exterior Entry Doors:
Three (3) pair Hager BB1279 4.5" X 4.5" US 26D finish hinges, Lever
lockset Schlage "D" series Athens model with US 26D finish and to have
top and bottom flush bolts with threshold and weatherstrips, two door
closers LCN Smooth Series with US 26D finish, two door stoppers model
IVES 435/436 and eight door silencers model IVES 20.
(C) Interior Doors:
Three (3) Hager BB1279 4.5" X 4.5" US 26D finish hinges, Lever latchset
Schlage "D" series Athens model with US 26D finish, one door stopper
model IVES 435/436 and four door silencers model IVES 20.
(D) Tenant shall provide one entry keyed to the Landlord's building master
key (see building engineer) that entry shall be the closest door to the
fire alarm control panel.
4. CEILINGS
(A) For new construction: 2' X 2' Armstrong Cortega #704 ceiling tile with
15" X 16" white metal grid at 9'-0" above finish floor.
(B) Existing construction: Match existing.
5. FLOORING
(A) Carpet:
Shaw, Lotus or equivalent 26 ounce commercial grade textured loop pile
direct glue down carpet in work areas and offices. Vinyl base.
(B) Vinyl (VCT) tiles in kitchen areas.
(C) Ceramic tiles (4" X 4") in bathrooms.
6. FINISHES
(A) Paint - Walls primed first coat, latex based paint single color.
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(B) Window Treatments are to be mini-blinds, white, Levelor, to match
existing. The Y-buildings (001, 002, 031, 032, 003, 005) shall be
vertical blinds Satique-off white/3522.
(C) No wallcoverings to be used on exterior masonry/concrete walls.
7. MECHANICAL
(A) Controls
All thermostats and other controls to match existing controls (Johnson
Controls, Robert-Shaw, see Building Engineer).
(B) Variable Air Volume Box:
Match existing VAV (Trane, Carrier)
(C) Registers, Grills:
MetalAire white perforated air diffuser series 7000 Model PCS-CB-5
(4-way) all 24" X 24"
(D) Ductor:
Ducting shall be 24 gauge sheet metal construction with appropriate
connections and hangers as per code. Match existing shall be code
compliant.
8. ELECTRICAL
(A) Light Fixtures:
2' X 4' four tube recessed fluorescent fixture with electronic ballast
and T-8 lamps or match/re-use existing lighting.
(B) Light Switches:
Toggle type single pole single throw switch.
(C) Exit Lights:
Battery backup and/or emergency lighting circuit direct wired. Installed
per code.
(D) Receptacles:
Wall mounted duplex at 110 volts 20 amp rating at 16" above finish floor
as per code.
(E) Telephone:
Modular wall mounted outlets with pull string conduit stubbed above
ceiling with pull-string. 3/4" inch conduit supplied from telephone room
to leased space.
(F) Power:
Electric to be individually metered.
9. PLUMBING
Common area restrooms as per existing. New bathrooms and/or renovation of
existing bathrooms as below and are to be ADA compliant:
(A) Toilet Partitions:
Formica laminate or equal solid color with 1-1/4" thick panels and 5'-10"
high mounted with stainless steel hardware.
(B) Vanity Top:
Formica laminate or equivalent solid color with ADA compliant design.
(C) Water Closet:
Wall mounted, American Standard
(D) Per applicable code for ADA and density requirements.
10. LIFE SAFETY SYSTEMS
(A) Fire alarm panel to be Thorn AutoCall AL-1 500.
(B) Approved fire alarm contractor is WSA Systems, Inc., contact Brad Golub
(954) 422-9662.
(C) Fire Sprinkler system per code
11. EXTERIOR ENTRIES
All exterior entries to be per approved style as attached. Landlord to
review.
(A) Y-building entries.
(B) Flex building entries.
(C) Building 021/022/023/042 west face entries.
12. ARCHITECTURAL STANDARDS
(A) Drawing standards.
(B) CAD storage maintenance standards
13. SIGNAGE
(A) Exterior signage to be submitted by tenant and approved in writing by
Landlord.
(B) Interior signage package to be submitted by tenant and approved in
writing by Landlord.
(C) Temporary directional signage: tenant to submit to Landlord a signage
package. Landlord to review and approve in writing.
14. OTHER
(A) Any exterior details, modifications, temporary signage, posters,
banners, etc.., to be reviewed and approved in writing by Landlord
prior to installation.
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<PAGE>
EXHIBIT I
FORM OF NOTICE OF COMMENCEMENT
Permit No.______________________________
Tax Folio No.___________________________
NOTICE OF COMMENCEMENT
STATE OF FLORIDA
COUNTY OF PALM BEACH
The undersigned hereby gives notice that improvement will be made to
certain real property, and in accordance with Chapter 713, Florida Statutes, the
following information is provided in this Notice of Commencement.
1. Description of property: (legal description of the property, and
street address if available)
See Exhibit "A" attached hereto and made a part hereof.
2. General description of improvement:
Tenant's build-out of leasehold improvements to a portion of 5000
Blue Lake Drive, Boca Raton, Florida, pursuant to Work Letter
Exhibit to Lease between Owner and Cybear, Inc..
3. Owner information
a. Name and address:
Cybear, Inc.
c/o Andrx Corporation
400 S. W. 47th Avenue, Suite 201
Fort Lauderdale, Florida 33314
Attention: Scott Lodin, Esq.
b. Interest in property:
Leasehold
c. Name and address of fee simple titleholder (if other than
Owner): N/A
Blue Lake, Ltd.
5000 Blue Lake Drive, Suite 100
Boca Raton, Florida 33431
Attn: Michael D. Masanoff, Exec. Vice President
4. Contractor (name and address):
a. Name and address:
b. Fax Number:
5. Surety
a. Name and address: N/A
b. Phone Number:
c. Fax Number: (optional, if service by fax is acceptable).
d. Amount of bond: $
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<PAGE>
6. Lender: (name end address)
a. Name and address:
b. Fax Number: (optional, if service by fax is acceptable).
7. Persons within the State of Florida designated by Owner upon whom
notices or other documents may be served as provided by Section 713.13(1)(a)7.,
Florida Statutes. (name and address)
Blue Lake, Ltd.
5000 Blue Lake Drive
Suite 100
Boca Raton, Florida 33432
Att: Michael D. Masanoff, Executive Vice President
8. In addition to himself, Owner designates___________________ (name)
___________________(address) to receive a copy of the Lienor's Notice as
provided in Section 713.13(1)(b), Florida Statutes.
9. Expiration date of notice of commencement: Six (6) months from the
date of recordation.
CYBEAR, INC., a Florida Corporation
By: /s/ SCOTT LODIN
----------------------------------
Print Name: Scott Lodin
Title: Vice President/General Counsel
Sworn to and subscribed before me this 14th day of September, 1998, by
Scott Landin as V.P./General Counsel of CYBEAR, INC., a Florida corporation, who
is personally known to me.
/s/ ALLISON A. LICHTER
-----------------------------
Notary Public
My Commission Expires: 3/14/00
NOTARY PUBLIC
STATE OF FLORIDA
ALLISON A. LICHTER
COMMISSION # CC 540391
EXPIRES MAR 14, 2000
BONDED THRU
ATLANTIC BONDING CO., INC.
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<PAGE>
EXHIBIT "B-2"
LIST OF PRE-APPROVED BLUE LAKE CORPORATE CENTER CONTRACTORS
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<PAGE>
EXHIBIT "B-2"
BLCC APPROVED GENERAL CONTRACTORS AND ARCHITECHTS
(AS OF JUNE 1, 1998)
CONTRACTORS
SHAKMAN CONSTRUCTION
MICHAEL GOLDMAN
BOCA RATON, FLORIDA
TELEPHONE: 561-750-8288
SEAWOOD BUILDERS
BETTYY MASI
DEERFIELD BEACH, FLORIDA
TELEPHONE: 954-421-4200
BOCA CONTRACTING CORP.
CHARLES JOHNSON
BOCA RATON, FLORIDA
TELEPHONE: 561 -998-3311
ARCHITECTS
PGAC ARCHITECTS
IAN NESTLER
BOCA RATON, FLORIDA
TELEPHONE: 561-998-3311
GEORGE F. WHITE & ASSOCIATES
JEFF FAICMAN
BOCA RATON, FLORIDA
TELEPHONE: 561-997-6698
SLATTERY & ROOT ARCHITECTS
PAUL SLATTERY
BOCA RATON, FLORIDA
TELEPHONE: 561-392-3720
<PAGE>
EXHIBIT "C"
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors, and halls shall not be obstructed or encumbered by any
Tenant or used for any purpose other than ingress and ingress to and from the
Premises.
2. No awnings or other projections shall be attached to the outside
walls of the Building without the prior written consent of 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 Premises, without the prior written
consent of Landlord. Tenant shall be required to use only Landlord's standard
blinds and Tenant shall comply with any and all energy conservation measures
instituted by 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 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 of the Premises or Building or on the inside of the Premises if the same
can be seen from the outside of the Premises without the prior written consent
of Landlord except that the name of Tenant may appear on the entrance door of
the Premises. In the event of a violation of the foregoing by 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 the directory shall be inscribed, painted or affixed for each Tenant
by Landlord at the expense of such Tenant and shall be of a size and style
acceptable to the Landlord. Tenant must furnish Landlord with evidence of
compliance with applicable legal requirements including Florida's Fictitious
Name Law if Tenant desires to identify itself by a name other than its legal
name.
4. Tenant shall not occupy or permit any portion of the Premises
demised to it to be occupied as an office for a public stenographer or typist,
or as a barber or manicure shop, or as an employment bureau. Tenant shall not
engage or pay any employees on the Premises, except those actually working for
Tenant at the Premises, nor advertise for labor giving an address at the
Premises. The Premises shall not be used for gambling, lodging, or sleeping or
for any immoral or illegal purposes.
5. The sashes, sash doors, skylights, windows, and doors that reflect
or admit light and air into the halls, passageway or other public places in the
Building shall not be covered or obstructed by any Tenant nor shall any bottles,
parcels or other articles be placed on the window sills. No materials shall be
placed in the corridors or vestibules nor shall any articles obstruct any air
conditioning supply or exhaust vent.
6. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed and no
sweepings, rubbish, rags, or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures by Tenant, its servants,
employees, agents, or licensees shall be borne by Tenant.
7. No Tenant shall mark, paint, drill into, or in any way deface any
part of the Premises or the Building of which they form a part. No boring,
cutting, or stringing of wires shall be permitted, except with the prior written
consent of Landlord, and as it may direct. Should a Tenant require telegraphic,
telephonic, annunciator or other communication service, Landlord will direct the
electricians where and how wires are to be introduced and placed, and none shall
be introduced or placed except as Landlord shall direct. Electric current shall
not be used for power or heating without Landlord's prior written permission.
Neither Tenant nor Tenant's Agents including, but not limited to, electrical
repairmen and telephone installers, shall lift, remove or in any way alter or
disturb any of the interior ceiling materials of the Premises or building, nor
shall any of same have any access whatsoever to the area above the interior
ceiling of the Premises or the Building except with the prior written consent of
Landlord and in accordance with guidelines established by Landlord. No antennas
shall be permitted.
8. No bicycles, vehicles, or animals of any kind shall be brought into
or kept in or about the Premises, and no cooling shall be done or permitted by
any Tenant on said Premises. Bicycles shall be locked in the racks provided
therefor. No Tenant shall cause or permit any unusual or objectionable odors to
be produced upon or permeate from the Premises.
9. Landlord shall have the right to retain a passkey and to enter the
Premises at any time, to examine same or to make such alterations and repairs as
may be deemed necessary, or to exhibit same to prospective Tenants during normal
business hours.
10. No Tenant shall make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of this or neighboring
buildings or premises or those having business with them, whether by the use of
any musical instrument, radio, talking machine, unmusical noise, whistling,
singing, or in any other way. No Tenant shall throw anything out of doors,
windows, skylights, or down the passageways.
11. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by any Tenant, nor shall any changes be made in existing
locks or the mechanism thereof. Each Tenant must, upon the termination of his
tenancy restore to the Landlord all keys of offices and toilet rooms, either
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<PAGE>
furnished to, or otherwise procured by, such Tenant. Tenant shall pay to the
Landlord the cost of any lost keys.
12. Tenant will refer all contractors, contractors' representatives and
installation technicians, rendering any service to Tenant, to Landlord for
Landlord's supervision, approval, and control before performance of any
contractual service. This provision shall apply to all work performed in the
building, including installations of telephones, telegraph equipment, electrical
devices and attachments, and installations of any nature affecting floors,
walls, woodwork, trim, windows, ceilings, equipment or any other physical
portion of the Building.
13. All removals, or the carrying in or out of any safes, freight,
furniture or bulky matter of any description must take place during the hours
which the Landlord or its agent may determine from time to time. All such
movement shall be under supervision of Landlord and in the manner agreed between
Tenant and Landlord by pre-arrangement before performance. Such pre-arrangements
initiated by Tenant will include determination by Landlord, subject to his
decision and control, of the time, method, and routing of movement and
limitations imposed by safety or other concerns which may prohibit any article,
equipment or any other item from being brought into the building. Landlord
reserves the right to prescribe the weight and position of all safes, which must
be placed upon 2-inch thick plank strips to distribute the weight. Any damage
done to the Building or to other Tenants or to other persons in bringing in or
removing safes, furniture or other bulky or heavy articles shall be paid for by
the Tenant.
14. Tenant agrees that all machines or machinery placed in the Premises
by Tenant will be erected and placed so as to prevent any vibration or annoyance
to any other Tenants in the Building of which the Premises are a part, and it is
agreed that upon written request of Landlord, Tenant will, within ten (10) days
after the mailing of such notice, provide approved settings for the absorbing,
preventing, or decreasing of noise from any or all machines or machinery placed
in the Premises.
15. Each Tenant shall, at its expense, provide artificial light for the
employees of the Landlord while doing janitor service or other cleaning, and in
making repairs or alterations in said Premises.
16. The requirements of Tenant will be attended to only upon written
application at the office of the Building. Employees of Landlord shall not
receive or carry messages for or to any Tenant or other person nor contract with
or render free or paid services to any Tenant or Tenant's agent, employees, or
invitees.
17. Canvassing, soliciting, and peddling in the Building is prohibited
and each Tenant shall cooperate to prevent the same.
18. Landlord will not be responsible for lost, stolen, or damaged
property, equipment, money, or jewelry from Tenant's area or public rooms
regardless of whether such loss occurs when area is locked against entry or not,
except due to the negligence or willful misconduct of the Landlord, its agents,
employees or contractors.
19. Landlord specifically reserves the right to refuse admittance to
the Building from 6 p.m. to 8 a.m. daily, or on Saturdays, Sundays or 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, should be denied access to the Premises. Landlord, for the
protection of the Tenant and Tenant's effects may prescribe hours and intervals
during the night and on Saturdays, Sundays and holidays, when all persons
entering and departing the Building shall be required to enter their names, the
offices to which they are going or from which they are leaving, and the time of
entrance and departure in a register provided for the purpose by the Landlord.
20. Tenant shall remit the sum of TEN and NO/100 DOLLARS ($10.00) per
key/card to Landlord as security for any and all replacement buildings access
keys/cards provided to Tenant by Landlord, if Landlord elects, in its sole
discretion to install such system.
21. Landlord may refuse admission to the Building outside of ordinary
business hours to any person not known to Landlord or Landlord's agent in charge
or not having a pass issued by Landlord or not property identified, and may
require all persons admitted to or leaving the Building outside of ordinary
business hours to register. Tenants, employees, agents and visitors shall be
permitted to enter and leave the Building whenever appropriate arrangements have
been previously made between Landlord and Tenant with respect thereto. Each
tenant shall be responsible for all persons for whom he requests such permission
and shall be liable to Landlord for all acts of such persons. Any person whose
presence in the Building at any time shall, in the judgment of Landlord, be
prejudicial to the safety, character, reputation and interests of the Building
or its tenants may be denied access to the Building or may be ejected therefrom.
In case of invasion, riot, public excitement or other commotion, Landlord may
prevent all access to the Building during the continuance of the same, by
closing the doors or otherwise, for the safety of the tenants and protection of
property in the Building. Landlord may require any person leaving the Building
with any package or other object to exhibit a pass from the Tenant from whose
leased premises the package or object is being removed, but the establishment
and enforcement of such requirements shall not impose any responsibility on the
Landlord for the protection of any Tenant against the removal of property from
the leased premises of Tenant. Landlord shall in no way be liable to any Tenant
for damages or loss arising from the admission, exclusion or ejection of any
person to or from Tenant's leased premises or the Building under the provision
of this rule, except due to
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Blue Lake Standard Lease
<PAGE>
the negligence or willful misconduct of the Landlord, its agents, employees or
contractors.
22. Tenant shall not obtain or accept for use in its leased premises
ice, drinking water, food, beverage, towel, barbering, boot blacking, floor
polishing, lighting maintenance, cleaning or other similar services from any
persons not authorized by Landlord in writing to furnish such services.
23. There shall not be used in any space, or in the public halls of the
Building, either by Tenant or by jobbers or others, in the delivery or receipt
of merchandise, any hand trucks, except those equipped with rubber tires and
side guards.
24. Tenant shall not permit its employees, licensees and invitees to
loiter around the hallways, plazas, lobbies, stairways, elevators, front, roof
or any other part of the Building used in common by the occupants thereof nor
permit them to use the same for purposes of lunches, coffee breaks or other
similar activities.
25. Tenant shall not advertise or permit any advertising which, in
Landlord's reasonable opinion, tends to impair the reputation of the Building or
its desirability as a building for offices or for financial, insurance and other
institutions and businesses of like nature; and upon written notice from the
Landlord, Tenant shall refrain from or discontinue any such advertising.
26. Each tenant, before closing and leaving the said leased premises at
any time, shall see that all windows are closed. All tenants must observe strict
care not to leave their windows open when it rains, and for any default or
carelessness in these respects, or any of them, shall make good any injury
sustained by other tenants, and to Landlord for damage to paint, plastering, or
other parts of the Buildings, resulting from default or carelessness.
27. 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 or 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.
28. Tenant covenants and agrees, at its sole cost and expense, to
comply with all present and future laws, orders and regulations of all state,
federal, municipal, and local governments, departments, commissions and boards
regarding the collection, sorting, separation, and recycling of waste products,
garbage, refuse, and trash. Tenant shall, as required, sort and separate such
waste products, garbage, refuse and trash into such categories as provided by
law. Each separately sorted category of waste products, garbage, refuse, and
trash shall be placed in separate receptacles reasonably approved by Landlord.
Such separate receptacles may, at the Landlord's option be removed from the
Premises in accordance with a collection schedule prescribed by law. Landlord
reserves the right to refuse to collect or accept from Tenant any waste
products, garbage, refuse or trash that is not separated and sorted and required
by law and to require Tenant to arrange for such collection at Tenant's sole
cost and expense, utilizing a contractor reasonably satisfactory to Landlord.
Tenant shall pay all costs, expenses, fines, penalties or damages that may be
imposed on Landlord or Tenant by reason of Tenant's failure to comply with the
provisions of this Section, and, at Tenant's sole cost and expense shall
indemnify, defend, and hold Landlord harmless (including legal fees and
expenses) from and against any actions, claims and suits arising from such
non-compliance, utilizing counsel reasonable satisfactory to Landlord.
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Blue Lake Standard Lease
<PAGE>
EXHIBIT "D-1"
CORPORATE RESOLUTIONS
The undersigned Officer of CYBEAR, INC., a Florida corporation
authorized to transact business in Florida (the "Corporation") hereby certifies
that the following is a true and correct copy of the Resolutions adopted at a
duly called meeting of the Directors of the Corporation held on September 13,
1998, at which a quorum of Directors were present and voting throughout:
"BE IT RESOLVED, that this Corporation enter into a Lease with BLUE
LAKE, LTD., (the "Landlord") for space in The Blue Lake Corporate
Center, Boca Raton, Florida.
"BE IF FURTHER RESOLVED, that the President or any other officer of
this Corporation, acting singly or together, be and hereby is and are
authorized and directed to negotiate the specific terms and conditions
of the Lease and the rent and charges in connection therewith and to
execute and deliver on behalf of this Corporation such Lease and such
other documents as may be necessary or required by Landlord with
respect to the Lease.
"BE IT FURTHER RESOLVED, that the foregoing Resolutions are in
conformity with the Articles of Incorporation and the By-Laws of the
Corporation, and are within its corporate powers. The authority given
hereunder shall be deemed retroactive to the extent necessary or
convenient for the full effectuation of these Resolutions. In such
event, all acts performed prior to the adoption of these Resolutions,
but which are necessary or convenient for the full effectuation of
these Resolutions, are hereby ratified, adopted and affirmed. The
authority conferred by these Resolutions shall continue in full force
and effect until actual written notice of revocation of these
Resolutions shall have been received by the Landlord."
I FURTHER CERTIFY (i) that the above Resolutions were duly enacted by
the Board of Directors called for that purpose and held in accordance with the
Articles of Incorporation and By-Laws of the Corporation and the statutes of the
State of the incorporation of the Corporation; (ii) that the Directors of the
Corporation have full power and authority to bind the Corporation pursuant
thereto; and (iii) that the Resolutions are in full force and effect and have
not been altered, modified, rescinded or revoked in any way.
IN WITNESS WHEREOF, I have affixed my name as Vice President General
Counsel of the Corporation, and have affixed the corporate seal of the
Corporation this 13th day of September, 1998.
CYBEAR, INC.
By: /s/ SCOTT LODIN
----------------------------------
Print Name: Scott Lodin
Title: Vice President/General Counsel
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<PAGE>
EXHIBIT "F"
CAMPUS SKETCH
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<PAGE>
EXHIBIT "F"
CAMPUS SKETCH
<PAGE>
EXHIBIT "G"
STAND-BY ELECTRIC GENERATOR RIDER SUBSCRIPTION AGREEMENT
BLUE LAKE CORPORATE CENTER
SUPPLEMENT TO LEASE
FOR SUBSCRIPTION TO
STANDBY POWER FACILITIES
This Supplement to Lease for Subscription to Standby Power Facilities
Program ("Supplement") is made as of Able , 199t ("Agreement Date") between BLUE
LAKE, LTD., a Florida limited partnership, Suite 100, 5000 Blue Lake Drive, Boca
Raton, Florida 33431 ("Landlord") and ________________ ("Tenant"), 5000 Blue
Lake Drive Ste. 200, Boca Raton Raton, Florida, 33431.
WHEREAS, Tenant has entered into a lease with Landlord dated 9/14/98
("Lease") for the premises described on Exhibit "A" attached hereto and made a
part hereof ("Premises").
WHEREAS, Landlord has elected to install standby electric power
generators ("Generator(s)") to provide for standby power service ("Standby
Power") to subscribing tenants of the Blue Lake Corporate Center ("Center") as
part of Landlord's Standby Power Facilities Program ("Power Program"). Tenants
of the Center may subscribe ("Subscribing Tenants") until the Generator(s)
capacity available to tenants has been fully subscribed or otherwise reserved by
Landlord.
WHEREAS, the Tenant has elected to subscribe to the Power Program, and
Landlord has agreed to such subscription, as provided in this Supplement to the
Lease for its Premises.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Landlord and the Tenant hereby agree as follows:
TERMS
1. RELATIONSHIP TO LEASE. This Supplement modifies and amends the Lease
as specifically provided herein. In all other respects the Lease is ratified,
remains in full force and effect without change, and the terms of the Lease
shall be deemed incorporated herein. Capitalized terms not defined herein shall
have the meanings set forth in the Lease. In the event of any inconsistencies
between the Lease and this Supplement, as it relates or applies to the Power
Program, the terms of this Supplement shall control.
2. TERM. The term of this Supplement shall commence on the date hereof
and continue for the balance of the Lease Term and any renewals thereof.
3. CAPACITY RESERVATION AND RESERVATION CHARGE. Tenant hereby
subscribed the Power 7 Program, and Landlord hereby accepts such subscription,
for the reservation of______________________________ megawatts of Generator
capacity ("Capacity Reservation") for the Premises. Tenant's,Capacity
Reservation is expressly conditioned on Tenant paying to Landlord on or before
___________________ 199_ ("Due Date"), the sum of $_______________ (Capacity
Reservation Charge"), in federal wire transfer funds. If the Tenant fails to pay
the Capacity Reservation Charge on or before the Due Date, the Capacity
Reservation shall be canceled, and this Supplement shall automatically terminate
without the requirement of further notice or demand by Landlord, in which event
Landlord may sell to, and/or reserve for the Capacity Reservation to other
Subscribing Tenant(s). To the extent that the Generators have been placed in
service prior to the Agreement Date, the Tenant's Capacity Reservation shall not
become effective and the Tenant shall have no right to Standby Power, unless and
until the Capacity Reservation Charge is paid to Landlord, on or before the Due
Date. The Capacity Reservation Charge is neither refundable nor subject to
proration or abatement.
4. SERVED SYSTEMS.
a. Tenant acknowledges that the Standby Power for Tenant's Capacity
Reservation shall be limited to serving the equipment and systems described on
EXHIBIT "B" attached hereto and made a part hereof ("Served Systems"). Tenant
acknowledges and agrees that, the Capacity Reservation
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Blue Lake Standard Lease
<PAGE>
includes Standby Power for Center air conditioning services ("Center AC") to the
Premises, which represents forty (40%) percent ("Center AC Capacity") of the
Capacity Reservation (except if, and only to the extent that, Tenant has
installed, pursuant to the Lease, a separate or supplemental air conditioning
system for any portion of the Premises.) All Served Systems shall be connected
to electrical panels and/or breakers separate from the main panels and breakers
for the Premises, so as to permit the disconnection of all electrical systems
and equipment, other than Served Systems, from the Standby Power.
b. In the event that Center AC is not supplied to the Premises
because Tenant, under the Lease, has installed a separate or supplemental air
conditioning system ("Premises AC"), then Tenant's Capacity Reservation may be
applied to the Premises AC to the extent that Center AC Capacity is not used for
the Premises.
c. Tenant shall solely be responsible for the compatibility with the
Generators, of the Served Systems, including but not limited to, electrical
systems, wire, conduit, panels, transformers, switchgear, and breakers in the
Premises, and Tenant's equipment (including but not limited to trade equipment,
office equipment, and other electrically-powered equipment) to be connected to
the Standby Power, Tenant, prior to the Served Systems being connected to the
Generator, shall make, at Tena sole cost and expense, any and all modifications
and enhancements to the Served Systems necessary for such to be compatible with
the Generators. Landlord shall have no liability or responsibility for damage or
injury to Served Systems or any of Tenant's Equipment or personnel, due to such
incompatibility, or for any resulting business interruption (and any direct,
indirect, consequential, or special damages related thereto), such being
expressly waived by Tenant.
5. GENERATOR OPERATION.
a. SERVICE COMMENCEMENT DATE. The Landlord shall place the
Generators in operation on or before December 31, 1998 ("Service Commencement
Date"), subject to Force Majeure (as hereinafter defined).
b. TENANT'S TEMPORARY GENERATORS. If Landlord has, under separate
agreement, permitted Tenant to operate a mobile, temporary backup generator for
its Premises, Tenant shall, within ten (10) days after the Generators have been
placed in operation, disconnect such mobile, temporary backup generator and
remove such from Landlord's property, and shall restore the Landlord's property
to the condition existing prior to the installation of such mobile temporary
backup generators. Tenant indemnifies Landlord from and against any and all
claims, demands, responsibility, liability, damages, fines, penalties, costs and
expenses; including but not limited to reasonable attorney's fees and costs,
arising from or related to Tenant's installation, use, operation or removal of
the Tenant's mobile, temporary backup generators, including but not limited to
any violations of environmental law or the contamination of Landlord's property
with hazardous or toxic materials or with petroleum products.
c. EMERGENCY SERVICE USE. The Generators are only intended for
limited emergency backup use and are not designed for, nor does the Generators'
fuel storage tank have sufficient capacity for, more than temporary, limited use
of the Generators.
d. STARTUP DELAY. In the event of a power failure ("Outage"), the
Generators are designed to start up over la period of one to thirty minutes].
The Tenant acknowledges and agrees that the Landlord shall not be liable or
responsible for any resulting direct, indirect, consequential, or special
damages that may occur due to an interruption of Tenant's business or business
operations, or to Tenant's Equipment, or to Served Systems or any of the
Premises due to any delay in the startup of Generators. Tenant shall be
responsible to provide for its own backup uniform power supply) to its Premises
and the Served Systems to address any startup delay of the Generators.
e. EMERGENCY REPRESENTATIVE: Tenant designates ______________ and
____________________ as its "Emergency Representative(s)" for contact by
Landlord in the event of an Outage. The Emergency Representative(s) shall have
full authority to act on behalf of Tenant in the event of an Outage or other
emergency and shall be required to be available to Landlord in the event of an
emergency or an Outage. Tenant shall provide to Landlord in writing after- hours
contact information for its Emergen Representatives, including but not limited
to home addresses and telephone numbers, cellular telephone numbers and pager
numbers. Notices to Tenant under this Supplement shall be deemed made to Tenant
if delivered or made to the Emergency Representative. Tenant shall notify the
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Landlord in writing of any changes in the after-hours contact information of the
Emergency Representative. Tenant shall provide written notice to Landlord of any
changes in its Emergency Representative(s) or in the appointment of temporary
Emergency Representative(s) in the absence of those otherwise identified by the
Tenant pursuant hereto, together with their contact information as provided
above. The Emergency Representative(s) shall participate in emergency drills
and, in the event of an emergency or an Outage, shall be available to meet with
Landlord and the emergency representatives of other tenants to address emergency
procedures implemented by Landlord as a result thereof.
e. GENERATOR OPERATION DURING EXTENDED OUTAGE. For the purposes
hereof, any Outage lasting more than one hour shall be referred to as an
"Extended Outage". Tenant acknowledges and agrees that, at the contemplated
total capacity of the Generators, the Generators' fuel storage capacity for the
Blue Lake Corporate Center is not sufficient for continuous or extended use of
the Generators at the capacity of the Power Program (as may be increased as
Generator capacity is increased from time time) for all potential Subscribing
Tenants. In the event of an Extended Outage or a series of Outages, Landlord
shall have the right, but not the obligation, to regulate, reduce, and limit the
availability of Standby Power to Subscribing Tenants, including but not limited
to Tenant in Landlord's sole and absolute discretion, to essential needs in
order to meet the Federal Emergency Management Agency's ("FEMA") [seven (7)] day
generator recommendations, the safety of tenants of the Center, the availability
of fuel, or the operating conditions and requirements of the Generators.
In order to manage the Power Program in the best interests of the
Center, the Landlord has established the following rules, procedures and
protocols for responding to an Extended Outage:
(1) DEFINITIONS:
LEVEL ONE OUTAGE: An Extended Outage lasting more than one hour, but
anticipated by Landlord, in Landlord's sole judgement and
discretion, to last less than three (3) hours.
LEVEL TWO OUTAGE: An Extended Outage lasting or anticipated by
Landlord, in Landlord's sole judgement and discretion, to last more
than, three (3) hours, but less than 24 hours.
LEVEL THREE OUTAGE: An Extended Outage lasting or anticipated by
Landlord, in Landlord's sole judgement and discretion, to last more
than 24 hours.
(2) EXTENDED OUTAGE PROTOCOLS:
In the event of an Extended Outage, the Landlord has established the
following emergency protocols ("Protocols") for each level of
Extended Outage. Tenant shall comply with the Protocols as invoked
by Landlord from time to time.
LEVEL ONE OUTAGE: Tenant's Served Systems may operate as anticipated
under this Supplement. The Landlord shall notify the Tenant of the
occurrence of a Level One Outage.
LEVEL TWO OUTAGE: Tenant's Served Systems may operate as anticipated
under this Supplement. Tenant shall turn off or disconnect all
non-Served Systems within one (1) hour from Landlord's notice of
Level Two Outage. Tenant's personnel not required in the operation
of the Served Systems may be required by the Landlord to immediately
leave the Premises and the Center, and Tenant shall comply with
Landlord's emergency procedures and rules promulgated from time to
time in accordance with the Lease. The Landlord may, in Landlord's
sole discretion, (i) reduce or eliminate Center AC, (ii) reduce or
eliminate non-emergency Common Area systems and services (including
but not limited to operation of the Food Court, conference centers,
and other services provided by the Landlord to the Center), and
(iii) require that Tenant turn off or disconnect non-essential
Served Systems, which shall be accomplished within one (1) to three
(3) hours from Landlord's request to Tenant. The Landlord shall
regularly update the Tenant's Emergency Representative on the
changes in status and anticipated duration of the Level Two Outage.
LEVEL THREE OUTAGE: Only essential Served Systems may operate as
anticipated under this Supplement. Tenant shall turn off or
disconnect all non-essential Served
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Systems and non-Served Systems within one (1) hour from Landlord's
notice of a Level Three Outage. Tenant's personnel not required in
the operation of the Served Systems shall immediately leave the
Premises and the Center, and Tenant shall comply with Landlord's
emergency procedures and rules promulgated from time to time in
accordance with the Lease. The Landlord may, in Landlord's sole
discretion, (i) reduce or eliminate Center AC, (ii) reduce or
eliminate non-emergency Common Area systems and services (including
but not limited to operation of the Food Court, conference centers,
and other services provided by the Landlord to the Center), and
(iii) require that Tenant turn off, reduce, or disconnect all Served
Systems as the availability of necessary fuel supply may require.
During a Level Three Outage, the Landlord shall regularly report to
Tenant as to the status of the Extended Outage, anticipated actions
by Landlord, and the availability of fuel supplies, and shall use
all reasonable efforts to notify Tenant of an impending shut down of
Standby Power at least sixty (60) minutes prior to such shut down.
The Tenant acknowledges and agrees that, upon Landlord's request, the
Tenant will immediately disconnect all non-essential Served Systems from the
Standby Power. Further, Tenant acknowledges and agrees that, in the event of a
Level Three Outage, fuel may become exhausted and additional fuel unavailable,
and, therefore, the Generators will be shut down and Standby Power discontinued
to the Premises, Served Systems and all Tenant Equipment. Tenant agrees to
cooperate with Landlord in maximizing the fuel supplies and in obtaining
deliveries of additional fuel supplies.
Tenant hereby waives, releases and holds harmless the Landlord, its
partners, affiliates, subsidiaries, officers, employees, and agents from all
claims, demands, damages, liability, costs and expenses with respect to the
Landlord's regulation, reduction, limitation, and discontinuation of the Standby
Power, Landlord's decisions, acts and omissions relating thereto, or the
inability to deliver the Standby Power hereunder.
f. GENERATOR MAINTENANCE PROGRAM. Landlord intends to enter into a
service agreement for the maintenance of the Generators with a generator
maintenance company selected by Landlord in its sole and absolute discretion.
The service agreement shall provide for maintenance of the Generators in
accordance with the National Fire Protection Agency Level 2 standards for
emergency generators. Copies of the maintenance and repair records for the
Generators shall be kept at the offices of Blue Lake Management, Inc.
("Management") for inspection by the Tenant upon reasonable written notice
during business normal hours.
6. EXCESS DEMAND LOAD. Tenant acknowledges and agrees that the Landlord
is providing Standby Power to other Subscribing Tenants and that Tenant may not
exceed its Capacity Reservation during any Outage. If the Tenant exceeds its
Capacity Reservation during an Outage ("Excess Demand"), Landlord may, in
Landlord's sole and absolute discretion: (i) require that Tenant immediately
disconnect non-essential Served Equipment and reduce the actual load to the
Capacity Reservation, (ii) if Tenant fails to do so immediately, Landlord may
reduce Standby Power to the Premises so that the actual load is at the Capacity
Reservation, or (iii) if there is sufficient Generator capacity for other
Subscribing Tenants, as Landlord shall determine in its sole and absolute
discretion, charge the Tenant an additional fee for the Excess Demand equal to
200% of the then current Capacity Reservation Fee prorated for the actual load
in excess of the Capacity Reservation ("Excess Demand Fee"). All of the
foregoing are in addition to Landlord's other rights and remedies under this
Supplement and at law or in equity, and, further, are in addition to Protocols
implemented by Landlord in the event of an Extended Outage. Such Excess Demand
Fee shall be billed by Landlord and paid by Tenant as Additional Rent under the
Lease.
7. USE CHARGES.
a. The Tenant shall pay for fuel consumed by the Generators during
an Extended Outage in proportion of its Capacity Reservation to the total of all
Capacity Reservations of Subscribing Tenants. The cost of fuel for non-Extended
Outages shall be charged as an Operating Expense under the Lease.
b. All other costs of maintaining, repairing, testing and servicing
the Generators shall be treated, budgeted and invoiced as Operating Expenses
under the Lease; however, such costs shall not be limited by any provisions of
the Lease limiting Operating Expenses or Overhead Rent.
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8. COVENANTS OF TENANT. The Tenant covenants that:
a. The Tenant shall not cause or voluntarily permit any modification
or alteration to any of the Served Systems or the Premises which would have the
effect of increasing the level of electrical demand for the Premises or which
would adversely affect the Generators or Landlord's ability to provide the
Standby Power.
b. The Tenant shall maintain, repair and replace the Served Systems
as necessary and appropriate in accordance with prudent and sound engineering
practices so that the Served Systems is in proper condition to receive,
distribute, and or utilize the Standby Power without damage to Served Systems or
the Generators.
9. DEFAULT BY TENANT; TERMINATION BY LANDLORD. Landlord may terminate
this Supplement, discontinue the delivery of Standby Power to Tenant, and remove
the any and all equipment connecting the Premises to the Generators, upon the
occurrence of any one of the following events:
a. Failure of Tenant to pay any charges, including but not limited
to the Capacity Reservation Charge, due hereunder, as and when due.
b. Default by Tenant under the Lease, which is not cured within any
applicable cure periods (so ling as the Lease is also terminated).
c. Tenant's actual electric load connected to the Generators
increases in excess of the Capacity Reservation and Tenant fails to immediately
disconnect such of Tenant's Equipment so as to reduce the actual load below the
Capacity Reservation or enter into an agreement with Landlord in Landlord's sole
and absolute discretion and providing for an increase in Tenant's Capacity
Reservation, subject to availability and price.
10. NO WAIVER. The failure of a party to enforce any term of this
Supplement or a party's waiver of the nonperformance of a term by the other
party shall not be construed as a general waiver or amendment of that term, but
the term shall remain in effect and enforceable in the future. This Supplement
can only be amended by written agreement of the Parties.
11. INTERRUPTION OF BACKUP SERVICE. Landlord shall have the right to
temporarily interrupt the delivery of Standby Power to the Premises for purposes
of inspection, maintenance, repair, replacement, construction, installation,
removal or alteration of the Generators and related equipment or to prevent and
emergency situation from arising. Landlord shall give twenty-four (24) hours
notice to Tenant of any planned interruption of more than seven (7) days in
delivery of Standby Power reasonably in advance of such planned interruption.
12. PERMITTED ASSIGNMENT.
a. This Supplement, and the Capacity Reservation, shall not be
transferred, assigned, subcontracted, or sold by Tenant, in whole or part, other
than in connection with a permitted Transfer of Lease to a permitted Transferee,
so long as the permitted Transferee does not require or present a Demand Load
greater than that of the Tenant.
b. The Landlord may assign its obligations, rights and duties under
this Supplement, separate and apart from the Lease, without the consent of the
Tenant. In such event, the Lease shall continue in full force and effect without
change, abatement or offset, and Landlord shall be automatically relieved of all
liability and obligations under this Supplement so long as such are expressly
assumed in writing by the assignee.
13. FORCE MAJEURE. The obligations of Landlord and Tenant hereunder,
and Landlord's ability to install, maintain, and operate the Generators and to
provide the Standby Power pursuant hereto are subject to the occurrence of
events or circumstances that are beyond the reasonable control of Landlord
and/or Tenant, as applicable, or their respective agents, employees or
contractors, including, without limitation, strikes, lockouts or picketing
(legal or illegal); governmental action and condemnation; riot, civil commotion,
insurrection, and war; fire or other casualty, accident, acts of God or the
enemy; adverse weather conditions; unavailability of fuel, power, supplies or
materials; the passage or reasonably
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Blue Lake Standard Lease
<PAGE>
unexpected interpretation or application of any statute, law, regulation or
moratorium of any governmental restriction or order; or delays in issuance of
permits or approvals.
IN WITNESS WHEREOF, the parties hereto have executed this Supplement as
of the day and year first above written.
LANDLORD:
BLUE LAKE, LTD., a Florida limited partnership
By: BLUE LAKE, INC., a Florida corporation,
general partner.
By: /s/ MICHAEL MASANOFF
---------------------------------------------
Michael Masanoff
Executive Vice President
Date: 9/14/98
TENANT:
By: /s/ SCOTT LODIN
-----------------------------------------------
Name: Scott Lodin
Its: Vice President/General Counsel
Date: 9/14/98
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Blue Lake Standard Lease
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EXHIBIT "H"
SIGNAGE CRITERIA
To be submitted by Landlord as approved by all applicable governing bodies.
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Blue Lake Standard Lease
<PAGE>
EXHIBIT "I"
RENT COMMENCEMENT/EXPIRATION CERTIFICATE
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<PAGE>
EXHIBIT "J"
SUBORDINATION NON-DISTURBANCE AGREEMENTS
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Blue Lake Standard Lease
<PAGE>
EXHIBIT "K"
LEASE GUARANTY
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Blue Lake Standard Lease
<PAGE>
LEASE GUARANTY
FOR VALUE RECEIVED, and in consideration for and as an inducement to
BLUE LAKE, LTD., as LANDLORD to lease the PREMISES referred to in the annexed
LEASE dated August __, 1998 (the "LEASE") to CYBEAR, INC., a Florida
corporation, as TENANT therein named, the undersigned does hereby, jointly and
severally if more than one, guaranty to LANDLORD the punctual payment of the
Base Rent, Overhead Rent and all Additional Rent and other charges (hereinafter
collectively called "RENTS") and the due performance of all the other terms,
covenants and conditions contained in said LEASE on the part of the TENANT to be
paid and/or to be performed thereunder, and if any default shall be made by the
TENANT under said LEASE, the undersigned does hereby covenant and agree to pay
to the LANDLORD in each and every instance such sum or sums of money as the
TENANT is and shall become liable for and/or obligated to pay under said LEASE
and/or fully to satisfy and perform such other terms, covenants and conditions
of said LEASE on the part of the TENANT to be performed thereunder and to pay
also any and all damages, expenses and attorneys fees (hereafter collectively
called "DAMAGES") that may be suffered or incurred by LANDLORD in consequence of
the nonpayment of said RENTS or the nonperformance of any such other terms,
covenants and conditions of said LEASE; such payments of RENTS to be made
monthly or at such other intervals as the same shall or may become payable under
said LEASE, including any accelerations thereof, such performance of said other
terms, covenants and conditions to be made when due under said LEASE and such
DAMAGES to be paid when incurred by LANDLORD, all without requiring any notice
from LANDLORD, all without requiring any notice from LANDLORD to the undersigned
of such non-payments, non-performance, or non-observance or proof of notice or
demand, all of which the undersigned hereby expressly waives, but without
limiting Tenant's right to receive notices required to be given to Tenant under
the Lease, and the maintenance of any action or proceeding by the LANDLORD to
recover any sum or sums that may be or become due under said LEASE, or to secure
the performance of any of the other terms, covenants and conditions of said
LEASE or to recover damages, shall not preclude the LANDLORD from thereafter
instituting and maintaining subsequent actions or proceedings for any subsequent
default or defaults of TENANT under said LEASE. The undersigned does hereby
consent that without affecting the liability of the undersigned under this
Guaranty and without notice to the undersigned, time may be given by LANDLORD to
TENANT for payment of RENTS and performance of said other terms, covenants and
conditions, or any of them, and such time extended and indulgences granted, from
time to time, or the TENANT may be dispossessed or the LANDLORD may avail itself
of or exercise any or all of the rights and/or remedies against the TENANT
provided by law or by said LEASE, and may proceed either against the TENANT
alone or jointly against the TENANT and the undersigned or against the
undersigned alone without proceeding against the TENANT. The undersigned does
hereby further consent to any subsequent change, modification and/or amendment
of said LEASE in any of its terms, covenants or conditions, or in the RENTS
payable thereunder, and/or to any assignment or assignments of said LEASE,
and/or to any renewals or extensions thereof ("OPTION PERIODS"), all of which
may be made without notice to or consent of the undersigned and without in any
manner releasing or relieving the undersigned from liability under this
Guaranty. The undersigned does hereby further agree that in respect of any
payments made by the undersigned hereunder, the undersigned shall not have any
rights based on surety ship or otherwise to stand in the place of LANDLORD so as
to compete with LANDLORD as a creditor of TENANT, unless and until all claims of
LANDLORD under said LEASE shall have been fully paid and satisfied. The
undersigned acknowledges receipt of valuable consideration received in its
undertaking of this GUARANTY and it is acknowledged by the undersigned that the
LEASE herein guaranteed by the undersigned is of benefit and value to the
undersigned and would not have been negotiated or consummated by LANDLORD
without this LEASE Guaranty being executed and delivered by the undersigned. As
a further inducement to LANDLORD to made said LEASE and in consideration
therefor, LANDLORD and the undersigned hereby agree that in any action,
proceeding or counterclaim brought by
<PAGE>
either LANDLORD or the undersigned against the other on any matters whatsoever
arising out of or in any way connected with said LEASE or this Guaranty, that
LANDLORD and the undersigned shall and do hereby waive trial by jury. This
Guaranty or any of the provisions hereof cannot be modified, waived or
terminated, unless in writing, signed by the parties hereto. The provisions of
this Guaranty shall apply to and bind and inure to the benefit of the
undersigned and LANDLORD and their respective heirs, legal representatives,
successors and assigns. The prevailing party shall be entitled to payment of all
attorneys' fees incurred in connection with any litigation arising out of this
guaranty including, without limitation, fees at the trial and all appellate
levels.
IN WITNESS WHEREOF, the undersigned have executed, or caused to be
executed, this Guaranty on September 13, 1998.
WITNESSES: ANDRX CORPORATION, a Florida corporation
/s/ [ILLEGIBLE]
- -----------------------------------
/s/ [ILLEGIBLE]
- -----------------------------------
By: /s/ SCOTT LODIN
-------------------------------------
Title: V.P. General Counsel
Address: 4001 SW 47th Ave
Ft. Lauderdale, FL 3314
EXHIBIT 10.9
FIRST AMENDMENT TO BLUE LAKE CORPORATE CENTER
STANDARD LEASE BETWEEN BLUE LAKE, LTD. AND CYBEAR, INC.
THIS FIRST AMENDMENT TO LEASE (this "Amendment") is made by and between
BLUE LAKE, LTD. (the "Landlord") and CYBEAR, INC.(FL), successor by merger to
Cybear, Inc. (the "Tenant") as of this 4th day of February, 1999.
WITNESSETH:
WHEREAS, Landlord and Tenant are bound under that certain Blue Lake
Corporate Center Standard Lease dated September 14, 1998 (the "Lease")
regarding certain leased premises (the "Existing Premises") described in the
Lease, being located in Blue Lake Corporate Center, Boca Raton, Florida; and
WHEREAS, Tenant desires to increase the area of the Existing Premises
to that more particularly described on Exhibit "A-revised" hereto (the "Enlarged
Premises"), and, which thereby will result in a decrease in the size of the
Expansion Premises described in the Lease ("Existing Expansion Premises) as more
particularly described in Exhibit "A-1-revised" hereto ("Reduced Expansion
Premises") and Landlord has agreed to lease the Enlarged Premises to Tenant and
to decrease the area of the Existing Expansion Premises to the Reduced Expansion
Premises, subject to and on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the sum of TEN and NO/100 DOLLARS
($10.00) paid by Tenant to Landlord, the mutual promises contained herein, and
other good and valuable considerations, the receipt and adequacy of which are
hereby acknowledged, Landlord and Tenant do hereby agree as follows:
1. RECITALS. The foregoing recitals are true and correct and are hereby
incorporated by this reference as if set forth in their entirety.
2. DEFINED TERMS. Terms in this Amendment shall have the same meaning
as ascribed to said terms in the Lease, unless otherwise provided in this
Amendment. As hereby amended, the Lease and this Amendment shall hereinafter be
referred to as the "Lease".
3. ENLARGED PREMISES. Attached hereto as Exhibit "A-revised" is a floor
plan of the Enlarged Premises. Exhibit "A" of the Lease is hereby replaced with
Exhibit "A-revised" as attached hereto and made a part hereof which the parties
hereto stipulate contains 21,648 square feet of Net Rentable Area based on
18,824 usable square feet and a fifteen (15%) percent add-on factor. The term,
"Premises" shall be deemed to be, and shall be defined as, the Enlarged
Premises. Attached hereto as Exhibit "A-1-revised" is a floor plan of the
Reduced Expansion Premises. Exhibit "A-1" of the Lease is hereby replaced with
Exhibit ,'A-1- revised" attached hereto and made a part hereof, which the
parties stipulate contains 16,420 square feet of Net Rentable Area, based on
14,278 usable square feet and a fifteen (15%) percent add-on factor. Landlord
and Tenant
1
<PAGE>
agree that the foregoing calculation shall be dispositive of the actual
Net Rentable Area and that no further measurement shall be made of the Premises
pursuant to Section 1 of the BLI Rider to the Lease. The Rentable Area of the
Premises includes restrooms, electrical and mechanical rooms over which the
Tenant is herein granted exclusive control and dominion which are themselves
deemed part of the Premises, except that Landlord shall maintain such restrooms,
electrical and mechanical rooms which are shared among tenants.
4. TENANT'S SHARE. Tenant's Share (as set forth in Paragraph 3 of the
BLI Rider and as defined in the Lease) for the Enlarged Premises shall be
increased to 1.22%.
5. BASE RENT. Section 3 of the BLI Rider to the Lease is hereby
replaced with the following:
Base Rent: Tenant agrees to pay to Landlord as Rent for the Premises,
in advance without demand, deduction or set off (except as otherwise
may be specifically provided in the Lease), from and after the Rent
Commencement Date and throughout the term, the Annual Base Rent in the
amounts as indicated in the following Schedule of Base Rent in equal
monthly installments, plus applicable sales tax.
SCHEDULE OF BASE RENT
- ------------------------------------------------------------------------------
PERIOD PER SQUARE FOOT ANNUAL BASE RENT MONTHLY BASE RENT
- ------------------------------------------------------------------------------
Months 1-12: $12.50 $270,600.00 $22,550.00
- ------------------------------------------------------------------------------
Months 13-24: $12.88 $278,826.24 $23,235.52
- ------------------------------------------------------------------------------
Months 25-36: $13.27 $287,268.96 $23,939.08
- ------------------------------------------------------------------------------
Months 37-48: $13.67 $295,928.16 $24,660.68
- ------------------------------------------------------------------------------
Months 49-60: $14.08 $304,803.84 $25,400.32
- ------------------------------------------------------------------------------
Each monthly installment in accordance with the above Schedule shall be
due and payable on or before the first day of each calendar month
succeeding the Rent Commencement Date, except that the rental payment
for any fractional calendar month commencing on the Rent Commencement
Date of the Lease shall be prorated.
6. DEMISING OF PREMISES, The Landlord is not and shall not be
responsible for the design or construction of any Tenant improvements (other
than for any Landlord's Contribution as defined and as may be provided in the
Lease) or for the demising of the Premises, other than for the construction of a
temporary wall, as depicted on Exhibit "B" attached hereto and designated as
"Temporary
2
<PAGE>
Demising Wall", which shall be installed at Landlord's expense. However, the
Tenant further acknowledges that if Tenant does not exercise its Right of First
Refusal pursuant to Paragraph 1.B of the Lease, the Reduced Expansion Premises
or portions thereof may be leased to third party(ies) or used for common areas,
and in such event, a corridor will be required to be constructed between the
Reduced Expansion Premises and the stairs as depicted on Exhibit "B" attached
hereto ("Corridor") for the purpose of fire egress in accordance with applicable
codes, standards, ordinances and laws. The Tenant acknowledges and agrees that
it shall be responsible for removing from the area of the Corridor all of
Tenant's improvements, personal property, equipment, furnishings and fixtures.
Tenant shall pay for all actual reasonable costs and fees associated with (i)
the demolition, removal and relocation of the improvements located in the
Corridor including, but not limited to, ceilings, HVAC, life-safety, lighting,
alarms, electrical, plumbing and other mechanical systems; and (ii) the cost of
designing, permitting and constructing the Corridor, including but not limited
to the fire-rated wall, and the installation of ceilings, HVAC, lighting,
alarms, life-safety, electrical, plumbing and other mechanical systems serving
the Corridor ("Corridor Expenses"). The Landlord shall prepare an estimate of
the Corridor Expenses prior to commencing work on the Corridor, and within ten
(10) days from receipt of Landlord's estimate, Tenant shall deposit with
Landlord the amount shown therein. After completion of all work associated with
the Corridor, the Landlord shall notify the Tenant of actual Corridor Expenses.
If the actual Corridor Expenses are less than the amount deposited by Tenant
with the Landlord, the Landlord shall refund the excess amount so deposited
within fifteen (15) days and if the actual Corridor Expenses are greater than
the amount so deposited, the Tenant shall pay such costs and fees within fifteen
(15) days from receipt of Landlord's notice.
7. TENANT IMPROVEMENTS. Tenant shall complete or cause the completion
of improvements to the Enlarged Premises in accordance with the Work Letter
Agreement to the Lease. The Landlord's Contribution shall apply to the Enlarged
Premises on the same basis as provided in the Work Letter Agreement to the
Premises.
8. SUPPLEMENTAL AIR CONDITIONING. Landlord agrees that Tenant, at its
sole cost and expense, may install a backup emergency supplemental air
conditioning system for the Enlarged Premises (the "Backup AC")on the roof of
the Building. Should Tenant elect to install a Backup AC on the roof of the
Building, Tenant agrees to install the Backup AC in accordance with all
applicable codes and laws and sound engineering and construction practices.
Tenant further agrees to use any specified architect, engineer, roofing
contractor or other general contractor reasonably required by Landlord to design
and install the Backup AC so as avoid any compromise to the roof structure or
membrane, or to other elements of the Building. The architectural and
engineering plans and specifications for the Backup AC and any required
Alterations to the Building in connection therewith shall be subject to the
Landlords approval as an Alteration under this Lease. Tenant covenants and
agrees that the Backup AC shall only be use for emergency backup use in the
event of the cessation of air conditioning provided by the Landlord or the
Utility Manager pursuant to the terms of the Lease, and the Tenant shall not use
the Backup AC in lieu of the air conditioning services provided by the Landlord
or the Utility Manager pursuant to Section 8.A.(3) of the Lease. The Tenant
shall be responsible to maintain, repair and replace the roof in the area of the
Backup AC and any supporting or related roofing systems, such maintenance,
repair and replacement, subject to the Landlord's prior
3
<PAGE>
written approval. If the Tenant fails to promptly, and as and when appropriate
or necessary, maintain, repair or replace the roof and supporting and related
systems, the Landlord may perform such maintenance, repair or replacement, and
such shall be charged to the Tenant as Additional Rent.
9. TENANT STIPULATIONS. Tenant acknowledges that, as a result of a
merger, it is the tenant under the Lease, has assumed all of Cybear, Inc.'s
obligations, liabilities and responsibilities under the Lease, and hereby
stipulates, agrees and affirms that there are no other assignees, sublessees or
transferees of the Lease, or any part thereof, or any person or firm occupying
or having the right in the future to occupy the Existing Premises, or any part
thereof, except as has been approved in writing by Landlord. As of the date
hereof, Landlord and Tenant are not aware of the occurrence of any event of
default under the Lease by either Landlord or Tenant.
10. RATIFICATION. Except as herein specifically amended, the terms of
the Lease are incorporated herein by reference as fully set forth herein and
shall apply to and bind the Enlarged Premises. In the events of any conflict or
ambiguity between this Amendment and the Lease, this Amendment shall pre-empt
and control. The parties hereby ratify and confirm their rights and obligations
under the Lease as modified by this Amendment Landlord and Tenant each represent
and warrant to the other that (i)the execution and delivery of the Amendment has
been fully authorized by all necessary corporate action, and (ii) this Amendment
is valid, binding and legally enforceable in accordance with its terms.
11. STROKED. Each party represents and warrants that it has not dealt
with any agent or broker in connection with this transaction except for Blue
Lake Realty, Inc. and the agents or brokers specifically set forth in the BLI
Rider to the Lease whose commissions shall be paid by Landlord pursuant to
separate agreement. If either party's representation and warranty proves to be
untrue, such party will indemnify the other party against all resulting
liabilities, costs, expenses, claims, demands and causes of action, including
reasonable attorneys' fees and costs through all appellate actions and
proceedings, if any. The foregoing will survive the end of the Lease Term.
IN WITNESS WHEREOF, Landlord and Tenant have signed this Amendment as
of this 4th day of February, 1999.
WITNESSES: "TENANT"
CYBEAR, INC. (FL), a Florida corporation
__________________________
__________________________
By: /s/ TODD MACLEOD
----------------------------------
Name: Todd MacLeod
--------------------------------
Title: EVP-Operations
-------------------------------
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WITNESSES: "LANDLORD"
_________________________ BLUE LAKE, LTD., a Florida limited partnership
_________________________ By: Blue Lake, Inc., a Florida corporation, its
general partner
By: MICHAEL MASANOFF
---------------------------------------
Executive Vice President
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Revised Exhibit A Enlarged Premises
<PAGE>
Revised Exhibit "A-1" Reduced Expansion Premises
<PAGE>
Exhibit B Demising Corridor/Temporary Wall
<PAGE>
ASSIGNMENT OR SUBLETTING
The parties acknowledge that they have entered into this Sublease only on
account of the strategic relationship of the Sublessor to the Subtenant.
Therefore the Sublessor acknowledges that Subtenant shall be allowed to assign
this Sublease or sublet any of the Space without the written consent of the
Sublessor. Subtenant acknowledges however that the approval of the Lessor, which
is not to be unreasonably withheld, a condition to any such assignment or
sublease.
EXHIBIT 10.10
STRATEGIC BUSINESS AND TECHNOLOGY SOLUTIONS, LLC
SUBLEASE TO
CYBEAR, INC.
THIS AGREEMENT is made as of the 1st day of October, 1998 between
Strategic Business and Technology Solutions, LLC having an address at c/o Huttle
Profita LLC, 300 Glenpointe Centre East, Teaneck, NJ 07666 (hereinafter referred
to as "Sublessor") and CyBear, Inc., a Delaware Corporation having an address at
5000 Blue Lake Drive, Boca Raton, Florida 33431 (hereinafter referred to as
"Subtenant").
WHEREAS, on or about October 15, 1998 the Sublessor entered into a
lease with Samsung America, Inc. and Samsung Semiconductor, Inc. (hereinafter
referred to as "Lessor") for the premises known as the Seventh Floor of 105
Challenger Road, Ridgefield Park, NJ 07660 (the "Premises") which lease expires
on August 31, 2003 (the "Original Lease"); and
WHEREAS, the Subtenant desires to let and lease a portion of the
Premises from the Sublessor.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEMISE OF TERM. Subject to the provisions of this Sublease,
Sublessor does hereby sublease to Subtenant approximately 4,000 square feet of
the Premises located as shown on Exhibit A hereto (the "Space"). The term of the
Sublease will commence as of November 1, 1998 and shall terminate on October 31,
2003. However, if the Original Lease is terminated for any reason, this Sublease
shall also terminate as of the same date.
<PAGE>
2. BASIC RENT. Subtenant agrees to pay Sublessor annual base rent for
the Space equal to $120,000.00 per year, payable by the Subtenant in equal
monthly installments of $10,000.00 (the "Basic Rent") on the first day of each
month during the term of the Sublease. The Subtenant also agrees to pay, as
additional rent, the sum of $416.67 per month on the first day of every month
for electricity consumed by the Subtenant. In the event the Sublessor is
required to pay more than the sum of $1.25 per square foot annually for
electrical consumption at the Premises, then the monthly charge to the Subtenant
for electrical consumption shall be increased proportionately.
3. NO DEFAULT. Sublessor warrants and represents that it is not in
material default of any of the terms or covenants of the Original Lease; that
all rent due under the Original Lease has been paid to date; and that the
Original Lease is in full force and effect.
4. USE OF SPACE. The Subtenant shall use and occupy the space for
general office and administrative purposes only, and for no other use or
purpose. Sublessee shall use the Premises in a careful, lawful, safe and proper
manner at all times, and agrees to cooperate with the Sublessor and any other
subtenants of the Premises so that all parties can use and enjoy the Premises.
5. COMMON AREAS. The Subtenant and its business invitees shall be
entitled to the use of the reception area at the entrance to the Premises, the
lavatory facilities located in the Premises, the four conference rooms near the
entrance to the Premises, as
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well as any common hallways required for ingress or egress to the Space. The
Subtenant acknowledges that the Sublessor as well as other subtenants will also
utilize the reception area, lavatories and conference rooms as well as common
hallways (which may be located within the Space) in order to gain ingress and
egress to other portions of the Premises. Subtenant shall also have the right to
the use of the common areas of 105 Challenger Road, Ridgefield Park, New Jersey
(the Building) to the same extent as the Sublessor under the terms of the
Original Lease.
6. ASSIGNMENT OR SUBLETTING. The Subtenant acknowledges that the
Sublessor has entered into this Sublease only on account of the Strategic
relationship of the Sublessor to the Subtenant, and therefore the Subtenant
acknowledges that under no circumstances shall it be allowed to assign this
Sublease or sublet any of the Space without the written consent of the Sublessor
which may be either granted or withheld in the sole and absolute discretion of
the Sublessor. The Sublessor shall not be required to act reasonably in
considering whether or not to approve a proposed assignment or sublease, and may
arbitrarily withhold approval to a proposed assignment or sublease. Subtenant
also acknowledges that the approval of the Lessor shall also be required as a
condition to any assignment or sublease.
7. CONDITION OF SPACE. The Subtenant accepts the Space in "as is"
condition, and acknowledges that Sublessor shall not be required to make any
improvements or perform any repairs to the Space. Subtenant agrees to be solely
responsible to obtain any and
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all permits or approvals required for the Subtenant to occupy the Space.
8. BROKERS. The Sublessor and the Subtenant warrant and represent to
each other that no broker or other intermediary was involved in bringing about
this transaction, and each agrees to indemnify and hold the other harmless from
any claims for a brokerage commission incurred on account of the actions of the
other party.
9. ASSUMPTION OF OBLIGATIONS. Subtenant agrees to assume and discharge
toward the Sublessor and Lessor, all of the covenants and obligations set forth
in this paragraph 9 which the Sublessor has undertaken to the Lessor in the
Original Lease, as concerns the Subtenant's occupancy of the Space. The Lessor
and the Sublessor shall have the right to enforce against the Subtenant all of
the rights and remedies which the Lessor has against the Sublessor as set forth
in this paragraph 9 specifically including, but not limited to, all of the same
rights and remedies which the Lessor would be entitled to assert against the
Sublessor in the event of a breach by the Sublessor:
A. USE AND OCCUPANCY. Lessee shall use and occupy the Demised
Premises for general office and administrative purposes and for no other
purpose. Lessee shall use the Demised Premises in a careful, safe and proper
manner.
Lessee agrees to indemnify and save harmless Lessor from and
against (i) all claims of whatever nature against Lessor arising from any act,
omission, or negligence of Lessee, its contractors, licensees, agents, servants,
employees, invitees,or visitors, including any claims arising from any act,
omission or negligence of Lessee, (ii) all claims against Lessor arising from
any accident, injury or damage whatsoever caused to any person or to the
property of any person and occurring during the Term in or about the Demised
Premises provided same is not caused by the
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omission or negligence of Lessor, (iii) all claims against Lessor arising from
any accident, injury or damage occurring outside of the Demised Premises or
anywhere within or about Lessor's Building where such accident, injury or damage
results or is claimed to have resulted from an act or omission of Lessee or
Lessee's agents, employees, invitees or visitors, including any claims arising
from any act, omission, or negligence of Lessee, and (iv) any breach, violation
or non-performance of any covenant, condition or agreement in this Lease set
forth and contained on the part of Lessee to be fulfilled, kept, observed and
performed. This indemnity and hold harmless agreement shall include indemnity
from and against any and all liability, fines, suits, demands, costs and
expenses of any kind or nature incurred in or in connection with any such claim
or proceeding brought thereon and the defense thereof. In any event, there shall
be absolutely no personal liability on the part of the Lessor to the Lessee with
respect to any of the terms, covenants and conditions of this Lease and Lessee
shall look solely to the equity of the Lessor or any successors in interest to
the Lessor in the fee or leasehold estate of the Lessor, as the case may be, for
the satisfaction of each and every remedy of the Lessee in the event of any
breach by the Lessor of any of the terms, covenants and conditions of this Lease
to be performed by the Lessor. Such exculpation of personal liability is to be
absolute and without any exculpation whatsoever.
B. CARE AND REPAIR OF PREMISES. Lessee shall commit no act of
waste and shall take good care of the Premises and fixtures and appurtenances
therein, and shall, in the use and occupancy of the Premises, conform to all
laws, orders and regulations of the federal, state, county and municipal
governments or any agency or department thereof. Lessee shall make all necessary
repairs, not including structural repairs, to the Premises at Lessee's sole cost
and expense to preserve the Premises in good condition and working order. All of
Lessee's repairs shall be of a first class quality and done in a good and
workmanlike manner and performed by such contractors that have been approved by
Lessor and have executed and delivered Lessor's standard indemnity agreement and
provided a certificate of insurance evidencing liability coverage in such an
amount and by such carrier satisfactory to Lessor. All such work shall be
scheduled in consultation with and subject to the approval of Lessor. If Lessor
shall fail to make such repairs as necessary, Lessor shall nevertheless make the
necessary repairs but Lessee shall pay to Lessor, as additional rent,
immediately upon demand, the costs therefor.
All alterations, additions and improvements made by Lessee to the
Premises, which are so attached to the Premises that they cannot be removed
without material injury to the Premises, shall become the property of Lessor
upon installation. Not later than the last day of the term, Lessee shall, at
Lessee's expense, (i) remove all Lessee's personal property and those
improvements made by Lessee which have not become the property of Lessor, as
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hereinabove provided, (including trade fixtures, cabinetwork, movable paneling,
partitions and the like); (ii) repair all injury done by or in connection with
the installation or removal of said property and improvements; and (iii)
surrender the Premises in as good conditions as they were at the beginning of
the term, reasonable wear and damage done by fire, the elements, casualty, or
other cause not due to the misuse or neglect of fault of or by Lessee, Lessee's
agents, servants, visitors or licensees excepted. All other property of Lessee
remaining on the Premises after the last day of the term of this Lease shall be
conclusively deemed abandoned and may be removed by Lessor, and Lessee shall
reimburse Lessor for the cost of such removal. Lessor may have any such property
stored at Lessee's risk and expense. Any fixtures placed upon the Demised
Premises shall be the property of the Lessor. Lessee shall not mortgage,
hypothecate, assign, or otherwise permit a lien to attach to said fixtures. At
Lessor's option, prior to vacating the Demised Premises at the expiration or
earlier termination of this Lease, Lessee shall remove all the telephone and
computer cable, wiring and flooring and deliver the Demised Premises in broom
clean condition.
If during the last sixty (60) days of the term of this Lease,
Lessee shall have removed all or substantially all of its property and personnel
from the Premises, Lessor may, at anytime thereafter, enter upon the Premises to
commence the alteration and renovation of the Premises. Lessor's entry upon the
Premises as aforesaid shall not affect or modify Lessee's obligation to pay
Basic and Additional Rent which shall not be reduced or abated. If Lessor shall
enter upon the Premises and commence the alteration and/or renovation of the
Premises as provided herein, Lessee shall not thereafter occupy the Premises.
C. ALTERATIONS, ADDITIONS OR IMPROVEMENTS. Lessee shall not make
any non-structural alterations, additions or improvements in, to or about the
Premises without first obtaining the express written consent of Lessor, which
consent shall not be unreasonably withheld or delayed. Lessor's consent may be
subject to such terms and conditions as Lessor may reasonably require including
the requirement that Lessee solely utilize union labor. If, in Lessor's sole
opinion, the proposed alteration, addition or improvement shall affect or impact
on any structural or mechanical systems in the Building, Lessor may withhold its
consent with or without cause. Lessee shall not install any air-conditioning or
heating systems of any kind whatsoever within the Demised Premises.
D. ACTIVITIES INCREASING FIRE INSURANCE RATES. Lessee shall not
do or suffer anything to be done on the Premises which will increase the rate of
fire insurance on the Building.
E. COMPLIANCE WITH RULES AND REGULATIONS. Lessee shall observe
and comply with the rules and regulations hereinafter set forth in Exhibit B
attached hereto and made a part hereof and with
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such further reasonable rules and regulations as Lessor may prescribe, on
written notice to the Lessee, for the security, safety, care and cleanliness of
the Building the comfort, quiet and convenience of other occupants of the
Building. Lessee shall not place a load upon any floor of the Demised Premises
exceeding the floor load per square foot area which it was designed to carry and
which is allowed by law. Lessor reserves the right to prescribe the weight and
position of all safes, business machines and mechanical equipment. Such
installations shall be placed and maintained by Lessee, at Lessee's expense, in
settings sufficient, in Lessor's judgment, to absorb and prevent vibration,
noise and annoyance.
F. INSOLVENCY OF LESSOR. Either (i) the appointment of a receiver
to take possession of all or substantially all of the assets of Lessee, or (ii)
a general assignment of Lessee for the benefit of creditors, or (iii) any action
taken or suffered by Lessee, voluntarily or involuntarily, under any insolvency
or bankruptcy or reorganization act of law, shall constitute a default of this
Lease by Lessee.
G. DEFAULT OF LESSEE. Any of the following events shall be a
default of Lessee: (i) Lessee's default in the payment on the due date of the
Basic Rents and/or additional rents and/or any other payment required of Lessee
by this Lease, unless Lessee shall cure such default within five (5) days after
the due date of such Basic Rent and/or additional rent and/or other payment
required of Lessee hereunder; (ii) Lessee's default in the performance of any of
the other covenants of Lessee or conditions of this Lease, unless Lessee shall
cure such default within fifteen (15) days after notice of such default given by
Lessor (or if any such default is of such nature that it cannot be completely
cured within such period, then unless Lessee shall commence such curing within
fifteen (15) days after notice of such default given by Lessor and shall
thereafter proceed with reasonable due diligence and in good faith to cure such
default and shall succeed in curing such default within a reasonable period of
time, and provided that the existence of such default for more than fifteen (15)
days does not, in Lessor's reasonable judgment, itself result in substantial
damages to Lessor and place Lessor in risk of substantial damage by such
additional time to cure such default); (iii) insolvency of Lessee as set forth
in the preceding paragraph above; (iv) the sale or attempted sale by or under
execution or other legal process of Lessee's leasehold interest hereunder and/or
substantially all of Lessee's other assets; (v) the initiation of legal
proceedings to effect, or resulting in, the seizure, sequestering or impounding
of any of Lessee's goods of chattels used in, or incident to, the operation of
the Premises by Lessee; (vi) assignment by operation of law of Lessee's
leasehold interest hereunder; (vii) any attempt by Lessee to assign the within
Lease or sublet the Demised Premises without the express prior written consent
of the Lessor; or (viii) any act of omission of Lessee constituting and
anticipatory breach or repudiation of this Lease.
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H. LESSOR'S REMEDIES ON DEFAULT OF LEASE. Upon any default of
Lessee as set forth in this Lease, Lessor, at Lessor's sole option, may elect
and enforce any of the remedies hereinafter provided in this paragraph;
provided, however, that Lessor may, at Lessor's sole option, elect and enforce
multiple remedies from among those remedies hereinafter provided to the extent
such remedies are not inconsistent and are not legally mutually exclusive and to
the extent Lessor, in Lessor's reasonable judgment, deem the enforcement of such
multiple remedies necessary or appropriate to indemnify and make Lessor whole
from any loss or damage as a result of the default or defaults of Lessee; and
provided further that Lessor, at Lessor's sole discretion, may successively
elect and enforce any number of the remedies hereinafter provided to the extent
that Lessor, in Lessor's reasonable judgment, deems necessary or appropriate to
indemnify and make Lessor whole from any loss or damage as a result of the
default or defaults of Lessee:
(i) Termination and Lessee's Liabilities. Lessor shall have
the right to terminate this Lease forthwith, and upon notice of such termination
given by Lessor to Lessee in accordance with the notice provisions of this
Lease, Lessee's right to possession, use and enjoyment of the Demised Premises
shall cease, and Lessee shall immediately quit and surrender the Demised
Premises to Lessor, but Lessee shall remain liable to Lessor as hereinafter
provided. Upon such termination of this Lease, Lessor may at any time thereafter
re-enter and resume possession of the Premises by any lawful means and remove
Lessee and/or other occupants and their goods and chattels. In any case where
Lessor has recovered possession of the Premises by reason of Lessee's default,
Lessor may, at Lessor's option, occupy the Premises or cause the Premises to be
redecorated, altered, divided, consolidated with other adjoining Premises, or
otherwise changed or prepared for reletting, and may relet the Premises or any
portion thereof prepared for reletting, and may relet the Premises or any part
thereof as agent of Lessee or otherwise, for a term or terms to expire prior to,
at the same time as, or subsequent to, the original expiration date of this
Lease, at Lessor's sole option, and Lessor shall receive the rent therefor. Rent
so received shall be applied first to the payment of such expenses as Lessor may
have incurred in connection with the recovery of possession, redecorating,
altering, dividing, consolidating with other adjoining Premises, or otherwise
changing or preparing for reletting, and the reletting, including brokerage and
reasonable attorney's fees, and then to the payment of damages in amounts equal
to the rent (basic and additional) and other payments required of Lessee
hereunder and to the costs and expenses of performance of the other covenants of
Lessee as herein provided. Lessee agrees, in any such case, whether or not
Lessor has relet, to pay to Lessor damage equal to the basic and additional rent
and other sums herein agreed to be paid by Lessee, less the net proceeds of the
reletting, if any, as ascertained from time to
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time, and the same shall be payable by Lessee on the several rent days above
specified. Lessee shall not be entitled to any surplus accruing as a result of
any such reletting. In reletting the Premises as aforesaid, Lessor may grant
rent concessions and Lessee shall not be credited therewith. No such reletting
shall constitute a surrender and acceptance of or be deemed evidenced thereof.
If Lessor elects, pursuant hereto, actually to occupy and use the Premises or
any part thereof during any part of the balance of the term as originally fixed
or since extended, there shall be allowed against Lessee's obligation for rent,
other payments and damages as herein defined, during the period of Lessor's
occupancy, the reasonable value of such occupancy, equal to in any event the
basic and additional rent herein reserved. In no event shall such occupancy by
Lessor be construed as a release of Lessee's liability hereunder.
(ii) Specific Performance of Lease. Lessor she have the right
to enforce Lessee's specific performance of each and every covenant, condition
and other provision of this Lease.
(iii) Liquidated Damages. In any case where Lessor has
recovered possession of the Premises by reason of Lessee's default, Lessor may
at Lessor's option, and at any time thereafter, and without notice or other
action by Lessor, and without prejudice to any other rights or remedies it might
have hereunder or at law or equity, become entitled to recover from Lessee, as
damages for such default, in addition to such other sums herein agreed to be
paid by Lessee, to the date of re-entry, expiration and/or dispossess, an amount
equal to the difference between (a) the sum of the Basic Rent and additional
rents and other payments reserved in the Lease and required of Lessee hereunder
from the date of such default to the date of expiration of the original term
demised, and (b) the then fair and reasonable rental value of the Premises for
the same period. Said damages shall become due and payable to Lessor immediately
upon such default of this Lease and without regard to whether this Lease be
terminated or not; and if this Lease be terminated, without regard to the manner
in which it is terminated. In the computation of such damage, the difference
between any installments of rent (basic and additional) thereafter becoming due
and the fair and reasonable rental value of the Premises for the period for
which such installment was payable shall be discounted to the date of such
default at the rate of not more than four (4%) percent per annum.
(iv) Waiver of Right of Redemption. Lessee hereby waives all
right of redemption to which Lessee or any person under Lessee might be entitled
to by law or in equity.
(v) Other Remedies. Lessor's remedies hereunder are in
addition to any remedy allowed by law or in equity.
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(vi) Non-exclusivity. The remedies set forth above shall be
non-exclusive and the Lessor's election to enforce any remedy shall not be
deemed a waiver of any other remedy Lessor may be entitled to hereunder or as
allowed by law or in equity.
(vii) Lessor's Duty to Mitigate. Lessor and Lessee acknowledge
that Lessor's obligation to mitigate damages in the event of Lessee's breach
shall be satisfied by providing adequate information to the commercial brokerage
community as to the availability for letting of the Demised Premises; having the
Demised Premises available for inspection by prospective tenants during Building
Hours, and by the acceptance of a commercially reasonable offer for all or a
portion of the Demised Premises, which acceptance shall be evidenced by the
execution of a lease agreement in form and providing terms substantially the
same as the form utilized for all space tenants at the Building and without
material changes therefrom. Lessor shall be under no obligation to accept any
offer other than a commercially reasonable offer. Lessor's actions required
hereunder, including providing information as to the availability of the Demised
Premises for letting, the showing of the Demised Premises to prospective lessees
and the evaluation and acceptance of proposed offers to let, shall be in the
ordinary course of business and shall neither discriminate in favor of nor
against the Demised Premises.
I. SUBORDINATION OF LEASE. This Lease shall, at Lessor's option, or
at the option of any holder of any underlying or ground lease or holder of a
first institutional mortgage or deed of trust, be subject and subordinate to any
such underlying leases and to any such first institutional mortgage and/or Deed
of Trust which may now or hereafter affect the real property of which the
Premises form a part, and also to all renewals, modifications, consolidations
and replacements of said underlying lease and said first institutional mortgage
an/or Deed of Trust. Although no instrument or act on the part of Lessee shall
be necessary to effectuate such subordination, Lessee will, nevertheless,
execute and deliver such further instruments confirming such subordination of
this lease as may be desired by the holder of said first institutional mortgage
and/or Deed of Trust of by any of the lessors under such underlying or ground
leases. Lessee hereby appoints Lessor attorney-in-fact, irrevocably, to execute
and deliver any such instrument for Lessee. If any underlying or ground lease to
which this Lease is subject shall terminate, Lessee shall, on timely request,
attorn to the owner of the reversion. Lessor shall use reasonable efforts to
obtain from its institutional mortgagee a non-disturbance agreement in form
customarily used by the mortgagee, for the benefit of Lessee.
J. RIGHT TO CURE LESSEE'S BREACH. If Lessee breaches any covenant or
condition of this lease, Lessor may, on reasonable notice to Lessee (except that
no notice need be given in case of emergency), cure such breach at the expense
of Lessee and the
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reasonable amount of all expenses, including attorney's fees, incurred by Lessor
in so doing (whether paid by Lessor or not) shall be deemed additional rent
payable on demand.
K. MECHANIC'S LIEN. Lessee shall, within fifteen (15) days after
notice from Lessor, discharge or satisfy by bonding or otherwise any mechanic's
liens or other liens for equipment, material, labor or goods or services claimed
to have been furnished to the Premises on Lessee's behalf.
L. RIGHT TO INSPECT AND REPAIR. Lessor may enter the Premises but
shall not be obligated to do so (except as required by any specific provision of
this Lease) at any reasonable time on reasonable notice to Lessee (except that
no notice need be given in case of emergency) for the purpose of inspection of
the making of such repairs, replacement or additions, in, to, on and about the
Premises or the Building, as Lessor deems necessary or desirable. Lessee shall
have no claim or cause of action against Lessor for interruption to Lessee's
business, however occurring.
M. INTERRUPTION OF SERVICE. Interruption or curtailment of any
service maintained in the Building or at the Office Building Area, if caused by
force majeure, as hereinafter defined, shall not entitle Lessee or any claim
against Lessor or to any abatement in rent, and shall not constitute a
constructive or partial eviction, unless Lessor fails to take measures as may be
reasonable under the circumstances to restore the service within five (5) days
after receipt of notice from Lessee regarding such interruption or curtailment.
If the Premises are rendered untenantable in whole or in part for a period of
thirty (30) consecutive days by the making of repairs or replacements, other
than those made with Lessee's consent or caused by misuse or neglect by Lessee,
or Lessee's agents, servants, visitors or licensees, Lessee shall have the right
to make such repairs or replacements and offset the cost thereof against the
Basic Rent. In no event shall Lessee be entitled to claim a constructive
eviction from the Premises, unless Lessee shall first have notified Lessor in
writing of the condition or conditions giving rise thereof, and, if the
complaints be justified, unless Lessor shall have failed within thirty (30)
days, after receipt of such notice, to remedy, to commence and proceed with due
diligence to remedy such condition or conditions, subject to force majeure, as
hereinafter defined.
N. LESSEE'S ESTOPPEL. Lessee shall, from time to time, on not less
than seven (7) days' prior written request by Lessor, execute, acknowledge and
deliver to Lessor a written statement certifying that the Lease is unmodified
and in full force and effect, or that the Lease is in full force and effect as
modified and listing the instruments of modification; the dates to which the
rents and charges have been paid; and whether or not, to the best of the
Lessee's knowledge, Lessor is in default hereunder, and if so, specifying the
nature of the default. It is intended that any
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such statement delivered pursuant to this paragraph may be relied upon by a
prospective purchaser of Lessor's interest or mortgagee of Lessor's interest or
assignee of any mortgage or Lessor's interest. Lessee shall promptly provide
Lessor with its most recent financial statements prepared in accordance with
generally accepted accounting principles and/or tax returns for submission to
Lessor's mortgagee.
O. HOLDOVER TENANCY. If Lessee holds possession of the Premises
after the term of this Lease, Lessee shall become a tenant from month to month
under the provisions herein provided, but, at a monthly Basic Rental of one
hundred fifty (150%) percent of the Basic Rent for the last month of the lease
term or any renewed or extended term, payable in advance on the first day of
each month, and such tenancy shall continue until terminated by Lessor, or until
Lessee shall have give to Lessor a written notice, at least sixty (60) days
prior to the intended date of termination of intent to terminate such tenancy.
P. LESSOR'S WORK. Lessee acknowledges that it has inspected and is
fully familiar with the Demised Premises and that it has accepted the Demised
Premises in "AS IS" condition. Lessee shall be solely responsible for obtaining
a Certificate of Occupancy from the Village of Ridgefield Park at Lessee's sole
cost and expense.
No "high hats" or other lighting fixtures shall be permitted without
the express written consent of the Lessor. Lessee agrees to maintain 100%
covering of the floor area within the Demised Premises utilizing carpeting,
vinyl floor tiles, hardwood or a similar covering. No bare concrete floors shall
be permitted.
Q. RIGHT TO SHOW PREMISES. Lessor may show the Premises, on
reasonable notice to Lessee, during business hours, and, during the twelve (12)
months prior to termination of this Lease, to prospective tenants, during
business hours.
R. WAIVER OF TRIAL BY JURY. To the extent such waiver is permitted
by law, the parties waive trial by jury in any action or proceeding brought in
connection with this Lease or the Premises.
S. NO RECORDATION. Lessee agrees not to record of file this Lease or
any memorandum thereof in any public recording office, including the Bergen
County Clerks' Office. Any such recording or filing shall constitute a default
hereunder entitling Lessor to all available remedies, including but not limited
to termination and re-entry.
T. PERSONAL LIABILITY. Notwithstanding anything to the contrary
provided in this Lease, it is specifically understood and
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agreed such agreement being a primary consideration for the execution of this
Lease by Lessor, that there shall be absolutely no personal liability on the
part of Lessor, its partners, shareholders of partners, affiliated Company, its
successors, assigns or any mortgagee in possession (for the purposes of this
paragraph, collectively referred to as "Lessor"), with respect to any of the
terms, covenants and conditions of the Lease, and that Lessee shall look solely
to the equity of Lessor in the Building for the satisfaction of each and every
remedy of Lessee in the event of any breach by Lessor of any of the terms,
covenants and conditions of this Lease to be performed by Lessor, such
exculpation of liability to be absolute and without any exceptions whatsoever.
U. ATTORNEY'S FEES. In the event Lessor shall employ an attorney to
enforce any of the conditions of this Lease, or to enforce Lessee's covenants
hereunder, or any of Lessor's rights, remedies, privileges or options under this
Lease, or at law or in equity, the Lessor shall be entitled to reimbursement
from Lessee of all costs and expenses incurred or paid by Lessor in so doing,
including, but not by way of limitation, all reasonable attorney's fees and
costs incurred or paid by Lessor at any time or times in connection therewith,
whether the matter is settled privately, or by arbitration, or by legal action
at the trial court level and at any and all appellate court levels, provided,
however, that Lessor shall be entitled to reimbursement as provided in this
paragraph only if Lessor shall prevail in such arbitration or legal action or
that the matter or issue shall be settled in Lessor's favor.
V. APPLICABILITY TO HEIRS AND ASSIGNS. The provisions of this Lease
shall apply to, bind and inure to the benefit of Lessor and Lessee, and their
respective heirs, successors, legal representatives and assigns. It is
understood that the term "Lessor" as used in this Lease means only the owner, a
mortgagee in possession or a term lessee of the Building, so that in the event
of any sale of the Building and/or the parcel of land upon which the Building is
situate (the "Office Building Area") and/or of any lease thereof, or if a
mortgagee shall take possession of the Premises, the Lessor named herein shall
be and hereby is entirely freed and relieved of all covenants, obligations and
liabilities of Lessor hereunder accruing thereafter, and it shall be deemed
without further agreement that the purchaser, the term lessee of the Building,
or the mortgagee in possession has assumed and agreed to carry out any and all
covenants and obligations of Lessor hereunder. In the event of any sale or
transfer as provided hereinabove, the liability of the Lessor hereunder shall
cease and Lessee agrees to present any claim to the purchaser, successor or
assigns.
W. WAIVER. Lessee agrees that the failure of Lessor in one or more
instances to insist upon strict performance or observance of one or more of the
covenants or conditions hereunder,
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or to exercise any rights, remedies, privileges, or option provided by law or in
equity or provided or reserved to Lessor in this Lease, shall not operate or be
construed as a relinquishment or waiver for the future of such covenant or
condition or of the right to enforce the same or to exercise such right, remedy,
privilege or option; but rather, the same shall continue in full force and
effect. The receipt and acceptance by Lessor of Basic Rents and/or additional
rents and/or any other payments hereunder, or any part or portion thereof, shall
not be a waiver of any other Basic Rents and/or additional rents and/or any
other payments hereunder, or any part or portion thereof, and such receipt and
acceptance by Lessor, though with knowledge on the part of Lessor of the breach
of any covenant or conditions of this Lease, shall not be, or operate as, a
waiver of such breach or a waiver of any right, remedy, privilege or option of
Lessor arising hereunder or at law or in equity on account of such breach in the
absence of such receipt or acceptance. No waiver by Lessor of any of the
provisions of this Lease, or of any of Lessor's rights, remedies, privileges or
options under this Lease, shall be deemed to have been made unless made by
Lessor in writing. If Lessor shall consent to the assignment of this Lease or to
a subletting of all or a portion of the Demised Premises, or if any such
assignment or subletting may be made hereunder without Lessor's consent, no
further assignment or subletting shall be made without the prior written consent
of Lessor, unless otherwise expressly permitted elsewhere in this Lease (this
provision with respect to an assignment or subletting without Lessor's consent
shall not constitute a waiver, or any way lesson Lessor's rights and remedies
with respect to an assignment or subletting made without Lessor's consent).
X. NO UNLAWFUL OCCUPANCY. Lessee shall not use or occupy, nor permit
or suffer, the Demised Premises or any part thereof to be used or occupied for
any unlawful purpose deemed by Lessor disreputable or not in keeping with the
high-class nature of the complex of which the Demised Premises forms a part, or
extra-hazardous, nor in such manner as to constitute a nuisance of any kind, nor
for any purpose or in any way in violation of any present or future governmental
laws, ordinances, requirements, orders, directions, rules or regulations. Lessee
shall immediately upon the discovery of any such unlawful, illegal, disreputable
or extra-hazardous use not in keeping with the high-class nature of the building
of which the Demised Premises forms a part, take all necessary steps, legal and
equitable, to compel the discontinuance of such sue and to oust and remove any
subtenants, occupants or other persons guilty of such unlawful, illegal,
disreputable or extra-hazardous use.
Y. ENVIRONMENTAL/ISRA COMPLIANCE.
(i) Lessee shall indemnify and hold Lessor harmless including
attorneys and professional fees, with respect to any and all liability pursuant
to and/or under any federal and state
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environmental statute, law, regulation, rule or ordinance and from all suits,
fines, claims and actions of whatsoever nature arising out of the use and/or
storage of any substance determined by the New Jersey Department of
Environmental Protection and Energy ("NJDEPE") or the United States
Environmental Protection Agency ("EPA") to be hazardous or toxic and any damages
or liabilities therefrom. Lessee's liability shall be limited to claims, damages
or contamination arising from Lessee's use and occupancy of the Demised Premises
and use of the common areas. Lessee shall promptly provide Lessor with a copy of
any notice, correspondence, or document received by Lessee from and/or
disclosure required to be submitted by Lessee to any governmental agency in
respect of environmental, health and safety matters including but not limited to
NJDEPE, EPA and OSHA.
(ii) Lessee shall, at Lessee's own expense, comply with the
Industrial Site Recovery Act, N.J.S.A. 13: 1K-6 et seq., the regulations
promulgated thereunder and any amending and successor legislation and
regulations ("ISRA"). Lessee shall, at Lessee's own expense, make all
submissions to, provide all information to, and comply with all requirements of
the Industrial Site Evaluation Element or its successor ("Element") of the New
Jersey Department of Environmental Protection and Energy or its successor
("NJDEPE").
(iii) If ISRA is applicable, Lessee's obligations under this
paragraph shall arise if there is a closing of operations, a transfer of
ownership or operations, or a change in ownership at or affecting the Premises
pursuant to ISRA.
(iv) Lessee represents and warrants to Lessor that Lessee intends
to use the Premises for general office and administrative purposes which has the
following Standard Industrial Classification ("S.I.C.") numbers as defined by
the most recent edition of the Standard Industrial Classification Manual
published by the Federal Executive Office of the President, Office of Management
and Budget: 7389, Lessee's use of the Demised Premises shall be restricted to
the classification set forth above. Prior to the Lease Commencement Date, Lessee
shall supply to Lessor an affidavit of an officer or partner of Lessee setting
forth Lessee's S.I.C. number and a detailed description of the use. The
affidavit shall be supplemented and updated in the event of any change but no
less frequently than every two (2) years.
(v) If ISRA is applicable, Lessee shall, at Lessee's sole cost
and expense, obtain a letter of non-applicability from the Element prior to the
termination of the Lease Term and shall promptly provide to Lessor copies of
Lessee's submission and the Element's non-applicability letter.
(vi) Lessee shall notify Lessor in advance of all meetings
scheduled between Lessee or Lessee's representatives and
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NJDEPE or any other environmental authority, and Lessor and Lessor's
representatives shall have the right, but not the obligation, to attend and
participate in all such meetings.
(vii) Lessee shall permit Lessor and Lessor's agents, servants,
and employees, including but not limited to legal counsel and environmental
consultants and engineers, access to the premises for the purposes of
environmental inspection and sampling during regular business hours, or during
other hours either by agreement of the parties or in the event of any
environmental emergency. Lessee shall not restrict access to any part of the
Premises, and Lessee shall not impose any conditions to access. In the event
that Lessor's environmental inspection shall include sampling and testing of the
Premises, Lessor shall use its best efforts to avoid unreasonably interfering
with Lessee's use of the Premises, and upon completion of sampling and testing
shall, to the extent reasonably practicable, repair and restore the affected
areas of the Premises from any damage caused by the sampling and testing.
(viii) Lessee shall indemnify, defend, and hold harmless Lessor
from and against all claims, liabilities, losses, damages, penalties and costs,
foreseen or unforeseen, including without limitation, counsel, engineering and
other professional or expert fees, which Lessor may incur resulting directly or
indirectly, wholly or partly from Lessee's action or non-action with regard to
Lessee's obligations under this paragraph.
(ix) This paragraph shall survive the expiration or earlier
termination of this Lease. Lessee's failure to abide by the terms of this
paragraph shall be restrainable by injunction.
Z. AMERICANS WITH DISABILITY ACT. Notwithstanding anything herein to
the contrary, Lessee shall be obligated to, and have the responsibility of
complying with all of the relevant terms, conditions and requirements of the
Americans with Disability Act (the "ADA") to the extent the ADA is applicable to
Lessee's use and occupancy of the Demised Premises. To the extent the provisions
of the ADA mandate modifications to the Demised Premises, such modifications
shall be made by Lessee at its sole cost and expense, but in coordination and
consultation with Lessor. In the event Lessee shall fail to comply with the
requirements of the ADA, Lessor may, but shall not be obligated, take such steps
as may be necessary to comply with the ADA and Lessee shall pay Lessor, upon
demand, the cost thereof which shall be deemed Additional Rent.
AA. RELOCATION OF LESSEE. Lessor hereby reserves the right, at its
sole expense and on at least sixty (60) days prior written notice, to require
Lessee to move from the Premises to other space within the Building, but not
below the fourth (4th) floor, of comparable size (i.e. an entire floor) and
decor in order to permit Lessor to consolidate the space leased to Lessee with
any other
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space leased or to be leased to another tenant. In the event of any such
relocation, Lessor will pay all expenses of preparing and decorating the new
premises so that the same shall be substantially similar to the Premises from
which Lessee is moving and Lessor will also pay the expense of moving Lessee's
furniture and equipment to the relocated premises. Lessor shall use its
reasonable efforts not to disrupt Lessee's business operations in completing the
relocation. In such event, this Lease and each and all of the terms, covenants
and conditions hereof, shall remain in full force and effect and thereupon be
deemed applicable to such new space except that the description of the Premises
shall be revised and if applicable, Lessee's Proportionate Share shall likewise
be revised.
10. DEFAULT BY SUBTENANT. In the event the Subtenant shall default in
any of its obligations under this Sublease, or in any of the obligations which
the Subtenant has assumed toward the Sublessor and Lessor pursuant to paragraph
9 hereof, then the Sublessor shall have the right to exercise against the
Subtenant all of the same rights and remedies which the Lessor would have the
right to assert against the Sublessor pursuant to those terms and conditions of
the Original Lease which have been included in paragraph 9 of this Sublease. The
Subtenant acknowledges and agrees that the Sublessor as well as its members and
officers shall be entitled to exculpation from any personal liability under this
Sublease to the same extent that the Lessor and its officers and stockholders
are entitled to exculpation from personal liability as set forth in those terms
and conditions of the Original Lease which have been included in paragraph 9
hereof.
11. ADDITIONAL RENT. It is expressly agreed that Subtenant will pay, in
addition to the Basic Rent provided in paragraph 2 above, additional rent to
cover Subtenant's proportionate share, as hereinafter defined, of the increased
cost to Sublessor, for each of the categories enumerated herein, over the "Base
Period Costs" (as hereinafter defined) for said categories.
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A. OPERATING COSTS ESCALATION. If the Operating Costs (as
hereinafter defined) incurred for the Building and Office Building Area for any
calendar year or proportionate part thereof during the Term of the Sublease
shall be greater than the Base Operating Costs incurred during the Base Period
(as hereinafter defined), adjusted proportionately for periods less than a lease
year (as hereinafter defined), then Subtenant shall pay to Sublessor, as
additional rent, its proportionate share (as hereinafter defined) of such excess
Operating Costs. Operating Costs means each and every item of cost and expense
of whatever variety or description paid or incurred for maintenance and variety
or description paid or incurred for maintenance and operation of the Office
Building Area and Building of which the Premises form a part (excluding Real
Estate Taxes), including by way of illustration and not of limitation, fuel,
utilities, electric, water, sewer, heating, ventilating and air conditioning,
service contracts, elevators, plumbing/sprinkler pumps and motors, roofing and
waterproofing, widow and glass, water treatment, painting, rubbish removal,
tools and equipment, metal maintenance, general building supplies, locks and
keys, signage and directory, security, masonry repairs, personal property taxes,
management fees, direct labor, (including all wages and salaries), fringe
benefits, unemployment taxes, social security taxes, worker's compensation,
insurance and other similar taxes which may be levied upon the Lessor with
respect to such wages and salaries; disability benefits, hospitalization,
medical, surgical, union and general
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welfare benefits, any pensions, retirement, or life insurance plan and other
benefit or similar expense respecting employees of the Lessor; uniforms and
working clothes for such employees; Lessor's expenses imposed pursuant to law or
to any collective bargaining agreement), fire and other insurance, trash
removal, data processing costs, interior and exterior landscaping and
decoration, repairs, replacements and improvements which are necessary or
appropriate for the continued operation of the Building and Office Building Area
as a first class office building or are made in compliance with requirements of
any federal, state or local law or governmental regulation, whether or not such
law or regulation is valid or mandatory, management fees for the management of
the Building, or if no managing agent is employed by the Lessor, a sum in lieu
thereof which is not in excess of the then prevailing rates for management fees
in Bergen County, New Jersey, attorneys' fees, appraisal and other experts fees
incurred in pursuance of any real estate tax appeal, accounting fees and all
other items properly constituting direct operating costs or that portion of a
capital expenditure amortized during the Base Period and/or applicable lease
year according generally accepted accounting principles, but not including
depreciation of Building or equipment, interest, income or excess profits,
taxes, costs of maintaining the Lessor's corporate or other existence, franchise
taxes, or any expenditures required to be capitalized for federal income tax
purposes in excess of that portion of the said capital expenditure amortized
during the Base Period and/or applicable lease year. As used in
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this subparagraph A, the Base Operating Costs shall be the Operating Costs
incurred during the Base Period with respect to the establishment of the Base
Operating Costs (as said Base Period is hereinafter defined in subparagraph E).
If such Base Period is less than three hundred sixty-five (365) days, then the
Base Operating Costs shall be determined by analyzing the Operating Costs
incurred during such Base Period.
B. TAX ESCALATION.
(i) If the Real Estate Taxes (as hereinafter defined in
subparagraph B (ii) (b) for the Building and Office Building Area at which the
Demised Premises are located for any Sublease year or proportionate part thereof
during the Sublease term, shall be greater than the Base Real Estate Taxes (as
hereinafter defined in subparagraph B (ii) (b), incurred in the Base Period
adjusted proportionately for periods less than a sublease year, then the
Subtenant shall pay to Sublessor as additional rent its proportionate share, as
hereinafter defined, of all such excess Real Estate Taxes.
(ii) As used in this subparagraph (ii), the words and terms which
follow mean and include the following:
(a) "Base Real Estate Taxes" shall mean those real estate
taxes assessed against the Building and Office Building Area as provided for in
the tax bill issued by the Village of Ridgefield Park for the year commencing
July 1, 1999.
(b) "Real Estate Taxes" shall mean the property taxes and
assessments imposed upon the Building and the
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land upon which it stands, or upon the rent, as such, payable to the Lessor. If
due to a future change in the method of taxation, any franchise, income or
profit tax shall be levied against Lessor in substitution for, or in lieu of, or
in addition to, any tax which would otherwise constitute a Real Estate Tax, such
franchise, income or profit tax shall be deemed to be a Real Estate Tax for the
purposes hereof; conversely, any additional Real Estate Tax hereafter imposed in
substitution for, or in lieu of, any franchise, income or profit tax (which is
not in substitution for, or in lieu of, or in addition to, a Real Estate Tax as
hereinbefore provided) shall not be deemed a Real Estate Tax for the purpose
hereof.
(c) In the event Lessor is successful, as a result of a tax
appeal or protest, in obtaining a reduction in Real Estate Taxes for any period
for which Subtenant has paid additional rent pursuant to subparagraph B hereof,
Subtenant shall be entitled to a rebate for its proportionate share of the
reduction less all costs and expenses incurred in pursuance of the said tax
appeal or protest, including filing fees, legal fees and expert fees. Sublessor
shall pay the rebate within 30 days after receipt of the same from Lessor. A
reduction shall be deemed final thereby entitling Subtenant to the rebate
hereunder only upon final judgment of a court of competent jurisdiction and not
until the time for filing any appeal therefrom has expired. Nothing contained
herein shall be deemed to give Lessee standing to file a tax appeal Subtenant
expressly acknowledges that the right to file such a tax appeal shall be solely
that of the Lessor.
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C. LEASE YEAR. As used in this paragraph, sublease year shall mean
the calendar year within which possession is delivered, and each twelve (12)
month calendar year thereafter. Once the Base Period Costs are established, in
the event any sublease year is less than twelve (12) months, then the Base
Period Costs for the categories listed above shall be adjusted to equal the
proportion that said period bears to twelve (12) months, and Subtenant shall pay
to Sublessor as additional rent for such period, an amount equal to Subtenant's
proportionate share, as hereinafter defined, of the excess for said period over
the adjusted Base Period Costs with respect to each of the categories listed
above.
D. PAYMENT. The increase in Base Period Costs shall be paid by
Subtenant as set forth in this subparagraph. Upon receipt of a notice of
increase from Lessor, the Sublessor shall advise Subtenant, in writing, of
Subtenant's proportionate share of the increase in the Operating Costs and Real
Estate Taxes over the Base Period Costs as Lessor has estimated for the next
twelve (12) months, in the exercise of Lessor's reasonable business judgment.
Subtenant's proportionate share of the estimated increase shall be paid by
Subtenant in twelve (12) equal monthly installments. The estimated increase, and
the monthly installments shall be adjusted at the expiration of each sublease
year to reflect the actual increases in Operating Costs as reported by Lessor
and, after each annual tax bill has been issued, to reflect the actual increase
in Real Estate Taxes. All of these payments shall be deemed to be additional
rent. Any overage shall be refunded to Subtenant within thirty (30) days after
Sublessor has received a refund from Lessor.
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Notwithstanding anything herein contained to the contrary, in the
event the last sublease year prior to termination is less than twelve (12)
months, the Base Period Costs shall be proportionately reduced to correspond to
the duration of said final period.
E. BASE PERIOD.
(i) The Base Period with respect to the establishment of the Base
Operating Costs shall be the calendar year 1999.
(ii) The Base Period with respect to the establishment of the
Base Real Estate Taxes shall mean the calendar year 1999 as set forth in the tax
bill issued for the second half of 1999.
F. BILLS AND CHARGES. Lessor has agreed to maintain bills and
charges for the previous 12 month period which, provided Operating Cost
Escalation shall increase by more than five (5%) percent in any calendar year
during the term of the Sublease, shall be open to Sublessor and its
representatives at all reasonable times and upon reasonable notice, so that
Sublessor can determine that such Operating and Tax Costs have, in fact, been
paid or incurred. In the event of any disagreement as to one or more charges not
settled between Sublessor and Lessor, such disagreement shall be referred to an
independent certified public accountant mutually acceptable to Sublessor and
Lessor. If Sublessor and Lessor shall fail to agree upon such an accountant,
either party may refer the dispute to the American Arbitration Associate (the
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"AAA"). The decision of the accountant or the AAA, as applicable, shall be final
and binding. Sublessor and Lessor shall share equally the costs and expenses
incurred with respect to such arbitration and Subtenant shall reimburse
Sublessor for its pro rata share thereof. Pending resolution or determination of
any dispute, Subtenant shall pay to Sublessor the sum as billed by Sublessor.
Sublessor has no right to review such bills and charges more than once in any 12
month period and then may only review bills and charges for the said 12 month
period. Sublessor shall not be required to contest or review any Operating or
Tax Costs, and the Subtenant shall be bound by any agreement or determination
reached by Sublessor.
G. For purposes of this Sublease, the Subtenant's proportionate
share of the Premises is agreed to be 22.47%.
12. SIGNAGE. Subtenant shall not place any signs of any nature
whatsoever on or about the entry or other door or on any exterior wall of the
Premises or Building; signage shall be limited to the name of the Subtenant on
the wall in reception area of the Premises as approved by Sublessor. Provided
that Lessor maintains a computerized directory in the Building lobby, Sublessor
shall make available on the Building directory a sufficient number of lines or a
sufficient amount of space for Subtenant's use to accommodate Subtenant's firm
name in a style approved by Sublessor.
13. LATE CHARGES. Anything in this Sublease to the contrary
notwithstanding, at Sublessor's option, Subtenant shall pay a "Late Charge" of
five (5%) percent of any installment of rent or
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additional rent paid more than five (5) days after the due date thereof, to
cover the extra expense involved in handling delinquent payments.
14. ACCORD AND SATISFACTION. No payment by Subtenant or receipt by
Sublessor of a lesser amount than the rent and additional charges payable
hereunder shall be deemed to be other than a payment on account of the earliest
stipulated Basic Rent and additional rent, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment for rent
or additional rent be deemed an accord and satisfaction, and Sublessor may
accept such check or payment without prejudice to Sublessor's right to recover
the balance of such rent and additional rent or pursue any other remedy provided
herein or by law.
15. SUBTENANT'S INSURANCE.
A. Subtenant covenants to provide on or before the commencement
date, a comprehensive policy of general liability insurance, naming the Lessor
and Sublessor as additional named insureds, insuring Subtenant, Sublessor, and
Lessor against any liability commonly insured against and occasioned by accident
resulting from any act or omission on or about the Premises and any
appurtenances thereto. Said policy is to be written by an insurance company
licensed and qualified to do business in the State of New Jersey and reasonably
satisfactory to Sublessor and Lessor. The policy shall have a combined single
limit of not less than Three Million ($3,000,000.00) Dollars in respect of
injury to any one person and any one accident, and One Million
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($1,000,000.00) Dollars in respect of property damage. Said limits shall be
subject to periodic review and the Sublessor and Lessor reserve the right to
increase said coverage limits if, in the reasonable opinion of Lessor or
Sublessor, said coverage becomes inadequate and is less than commonly maintained
by tenants in similar buildings in the area by tenants making similar uses. At
least thirty (30) days prior to the expiration or cancellation date of any
policy, the Subtenant shall deliver a renewal or replacement policy with proof
of the payment of the premium therefor to Lessor and Sublessor.
B. Subtenant covenants and represents, said representation being
specifically designed to induce Sublessor to execute this Sublease, that
Subtenant's (i) personal property, fixtures and any other items which Subtenant
may bring to the Premises, and (ii) business which may be subject to any claim
for damages, interruption or destruction due to Lessor's or Sublessor's
negligence shall be fully insured by a policy of insurance covering all risks
with no deductible which policy shall specifically provide for a waiver of
subrogation for Lessor and Sublessor and all Building tenants without regard to
whether or not same shall cost an additional premium and notwithstanding
anything to the contrary contained in this Sublease. Should Subtenant fail to
maintain said all risk insurance with the required waiver of subrogation, or
fail to maintain the liability insurance, naming Lessor and Sublessor as
additional named insureds, then Subtenant shall be in default hereunder and
shall be deemed to have breached its covenants as set forth herein.
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16. CASUALTY AND EMINENT DOMAIN. In the event the Original Lease
terminates on account of any damage by fire or other cause to the Building or
Premises or on account of the exercise of any right of eminent domain or threat
thereof, then this Sublease shall terminate on the same date that the Original
Lease terminates. In such case, Basic Rent and additional rent shall be paid up
to the date of termination of this Sublease. Subtenant agrees that it shall not
be entitled to any part of any award for any taking by eminent domain or payment
in lieu thereof, however Subtenant may file a separate claim for any taking of
the Subtenant's fixtures and improvements which have not become the Lessor's
property, and for moving expenses provided the same shall in no way affect or
diminish Lessor's award, and under no circumstances shall Subtenant have any
right to any part of the award resulting from the value of the sublease held
estate of the Subtenant. In the event the Sublease does not terminate on account
of such damage or eminent domain proceedings, then the Subtenant shall be
entitled to its pro rata share of any abatement or reduction of Basic Rent or
additional rent allowed by the Lessor to the Sublessor. Notwithstanding the
foregoing, in the event of any loss or damage to the building or the Premises or
any contents, each party shall first look to any insurance in its favor before
making any claim against the other party, and to the extent possible without
additional cost, each party shall obtain, for each policy of insurance,
provisions permitting waiver of any claim against the other party (including the
Sublessor and Lessor) for loss or damage
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within the scope of such insurance, and each party, to the extent permitted,
for itself and its insurers waives all such insured claims against the other
party.
17. INDEMNITY. The Subtenant agrees to indemnify and hold the Sublessor
harmless from any claim, action, or demand arising from or relating to its
failure to perform its obligations under this Sublease or those obligations of
the Sublessor to the Lessor under the Original Lease which have been assumed by
the Subtenant in accordance with paragraph 9 hereof, including reasonable
attorneys' fees and expenses in defense of any such claim. Without limiting the
generality of the foregoing indemnity, the Subtenant specifically agrees that it
shall be solely responsible for any Basic Rent, additional rent, or other
charges which may be due the Lessor from the Sublessor as a result of the
Subtenant's failure to vacate the Space and the Premises and give possession
thereof to the Lessor upon the expiration of the Original Lease or this
Sublease, whichever occurs first.
18. SERVICES TO BE PROVIDED. While Subtenant is not in default under
any of the provisions of this Lease, Sublessor agrees to furnish, except on
holidays as set forth on Exhibit C attached hereto and made a part hereof, the
following:
A. The cleaning services, as set forth in Exhibit D attached hereto
and made a part hereof, and subject to the conditions therein stated. Except as
set forth in Exhibit D, Subtenant shall pay Sublessor the cost of all other
cleaning services required by Subtenant.
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B. Heating, ventilating and air conditioning (herein "HVAC") as
appropriate for the season, during "Building Hours", as hereinafter defined. In
the event Subtenant shall require HVAC other than during Building Hours (as
defined elsewhere herein), Subtenant shall give not less than twenty-four (24)
hours notice to Sublessor and shall pay Sublessor, upon demand, the sum of
$75.00 for each hour, or portion thereof, of HVAC provided outside Building
Hours.
C. Electric current for usual office requirements and equipment
which shall include typewriters and collators, copying machines, calculators,
clocks, water coolers, personal computers and similar office equipment;
provided, however, that Sublessor shall not be required to provide electrical
current for any office equipment needing greater than fifteen amp service.
D. As used herein, the term "Building Hours" shall be Monday
through Friday, 8 o'clock a.m. to 6 o'clock p.m., and on Saturday 8 o'clock a.m.
to 1 o'clock p.m.
E. Notwithstanding the requirements of Exhibit D or any other
provision of this Lease, Sublessor shall not be liable for failure to furnish
any of the aforesaid services when such failure is due to actions or omissions
of Lessor or any third party or force majeure. Sublessor shall not be liable,
under any circumstances, for loss of, or injury to Subtenant or to the business
or property of Subtenant through or in connection with or incidental to the
furnishing of, or failure to furnish, any of the aforesaid services or for any
interruption to Subtenant's business, however occurring.
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19. PARKING SPACES. Sublessor represents that pursuant to the terms of
the Original Lease, the Subtenant has been allocated the use of 71 parking
spaces at the Building, and the Subtenant shall be entitled to the use of such
parking spaces in common with the Sublessor and any other subtenants. The
Sublessor reserves the right to allocate and reserve such parking spaces, so
long as such allocation is made upon a fair and reasonable basis. Neither
Sublessor nor Lessor shall be responsible or liable for any damage to any
vehicles or the contents thereof as a result of fire, theft, vandalism and/or
collision.
20. SECURITY DEPOSIT. The Subtenant shall deposit with Sublessor upon
the execution hereof, the sum of Twenty Thousand ($20,000) Dollars as security
for the performance of Subtenant's obligations hereunder. If Sublessor applies
any part of said deposit to cure any default of Subtenant, then Subtenant shall
upon demand deposit with Sublessor the amount so applied so that at all times
Sublessor will have the full security deposit on hand. The Subtenant shall not
be entitled to any interest on the security deposit, and under no circumstances
shall the Subtenant be entitled to treat the security deposit as an advance
payment of rent.
21. NO LIABILITY FOR PROPERTY. Neither Lessor nor Sublessor shall be
liable for any loss of or damage to personal property of Subtenant or any
interruption of Subtenant's business from any cause whatsoever, including but
not by way of limitation, theft, casualty or vandalism, and Subtenant covenants
and agrees to make no claim against Lessor or Sublessor for any such loss.
30
<PAGE>
22. NO OPTION. The provision of a draft or drafts of this Sublease to
the Subtenant or its attorneys shall not be considered as the extension of any
option to the Subtenant, or the making of any offer on the part of the
Sublessor. In addition, the effectiveness of this Sublease is subject to the
following conditions:
A. The Lessor's mortgagee's approval of the Original Lease; and
B. The Sublessor obtaining a Certificate of Occupancy from the
local municipality, or such documentation as the Sublessor shall deem sufficient
to prove that no such certificate is required.
23. MISCELLANEOUS.
A. No change, modification or termination of any of the terms,
provisions, covenants, promises or conditions of this Sublease agreement shall
be effective unless made in writing and signed or initialed by all parties
hereto or their successors or assigns.
B. This Sublease agreement shall be governed by and construed in
accordance with the substantive and procedural laws of the State of New Jersey,
and Sublessor and Subtenant acknowledge that they are subject to the
jurisdiction of the courts of the State of New Jersey.
C. If any paragraph, subparagraph or other provision of this
Sublease agreement, or application of such paragraph, subparagraph or provision,
is held invalid, then the remainder of
31
<PAGE>
the Sublease agreement, and the application of such paragraph, subparagraph or
provision to persons, parties or circumstances other than those with respect to
which it is held invalid, shall not be affected thereby.
D. The Subtenant warrants and represents that the Sublessor nor
anyone acting on behalf of Sublessor has made any representations, promises, or
warranties to Subtenant, other than specifically as set forth in this Sublease
agreement.
E. Subtenant warrants and represents that this Sublease has been
duly authorized and approved by its Board of Directors, and that the corporate
officers executing this Sublease have the power and authority to execute the
same. Subtenant warrants and represents that it is not insolvent, and that it
has no present intention to commence bankruptcy or other debtor relief
proceedings.
24. NOTICE. Except as otherwise provided in this Sublease, all notices,
demands, requests, consents, approvals or other communications (for the purposes
of this paragraph, collectively called "Notices") required or permitted to be
given hereunder or which are given with respect to this Sublease shall be in
writing and shall be sent by registered or certified mail, return receipt
requested, postage prepaid, or delivered by hand delivery or by a nationally
recognized overnight courier service addressed as follows:
32
<PAGE>
TO SUBLESSOR: At the Premises, with a copy to Michael Profita, Esq.,
Huttle Profita LLC, 300 Glenpointe Centre East, Teaneck, NJ 07666.
TO SUBTENANT: At the address set forth on page 1 of this Agreement.
Notices given as provided herein shall be deemed given two days after
the date of registration or certification as to mailings, or as to overnight and
hand delivery, on the day of delivery.
STRATEGIC BUSINESS AND TECHNOLOGY
SOLUTIONS, LLC, SUBLESSOR
By: /s/ JOHN KLEIN
----------------------------------
JOHN KLEIN, MANAGING MEMBER
CYBEAR, INC., SUBTENANT
By: /s/ [ILLEGIBLE]
------------------------------------
33
<PAGE>
7TH FLOOR LAYOUT
FINAL AS OF APRIL 23, 1998
CYBEAR
EXHIBIT A
<PAGE>
EXHIBIT "B"
RULES AND REGULATIONS
1. OBSTRUCTION OF PASSAGEWAYS:
The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors and public parts of the building shall not be obstructed or
encumbered by Lessee or used by Lessee for any purpose other than ingress and
egress.
2. PROJECTIONS FROM BUILDING:
No equipment or other fixtures shall be attached to the outside walls
or the windowsills of the building or otherwise affixed so as to project from
the building, without the prior written consent of Lessor.
3. SIGNS:
No sign or lettering shall be affixed by Lessee to any part of the
outside of the premises, or any part of the inside of the premises so as to be
clearly visible from the outside of the premises, without the prior written
consent of Lessor. Lessor shall place Lessee's name 1) next to the primary entry
door to the Lessee's building standard sign premises and on the touchscreen
directory in the lobby of the building, 2) in conformance with the building
standards. Lessee shall not have the right to have additional names placed on
the directory without Lessor's prior written consent.
4. WINDOWS
Windows in the premises shall not be covered or obstructed by Lessee.
No bottles, parcels, bookshelves or other articles shall be placed on the
windowsills, in the halls, or in any other part of the building other than the
leased premises.
<PAGE>
EXHIBIT "B"
RULES AND REGULATIONS
5. FLOOR COVERING:
Lessee shall not lay linoleum or other similar floor covering so that
the same shall come in direct contact with the floor of the premises. If
linoleum or other similar floor covering is desired to be used, an interlining
of builder's deadening felt first shall be fixed to the floor by a paste or
other material that may easily be removed with water, the use of cement or other
similar material being expressly prohibited.
6. INTERFERENCE WITH OCCUPANTS OF BUILDING:
Lessee shall not make, or permit to be made, any unseemly or disturbing
noises and shall not interfere with other tenants or those having business with
them.
7. LOCKS: KEYS:
Two additional keys are provided for each primary entrance door. No
additional locks or bolts of any kind shall be placed on any of the doors by
Lessee. Lessee shall, on the termination of Lessee's tenancy, deliver to
Lessor, all keys to any space within the building, either furnished to or
otherwise procured by lessee, and in the event of the loss of any keys
furnished, Lessee shall pay to Lessor the cost thereof.
8. MOVEMENT OF FURNITURE FREIGHT OR BULKY MATTER:
The carrying in or out of freight, furniture, or bulky matter of any
description must take place during such hours as lessor may from time to time,
reasonably determine and only after advance notice to the Lessor. The persons
employed by Lessee for such work must be reasonably acceptable to the Lessor.
Lessee may, subject to such provisions, move freight, furniture, bulky matter,
and other material into or out of the premises on Saturdays between the hours of
9:00 a.m. and l:00 p.m., provided Lessee pays additional costs, if any, incurred
by Lessor for elevator operators or security guards, and for other expenses
occasioned by such activity of Lessee If, at least five (5) days prior to such
activity, Lessor requests that lessee deposit with lessor, as security for
Lessee's obligation to pay such additional costs, a sum which Lessor reasonably
estimates to be the amount of such additional cost, the Lessee shall deposit
such amount with Lessor as security for such
<PAGE>
cost.
EXHIBIT "B"
RULES AND REGULATIONS
9. SAFES AND OTHER HEAVY EQUIPMENT:
Lessor reserves the right to prescribe the weight and position of all
safes and other heavy equipment so a: to distribute properly the weight thereof
and to prevent any unsafe condition from arising. Business machines and other
equipment shall be placed and maintained by Lessee at Lessee's expense in
settings sufficient in Lessor's reasonable judgement to absorb and prevent
unreasonable vibration, noise and annoyance.
10. NON-OBSERVANCE OR VIOLATION OF RULES BY OTHER TENANTS:
Lessor shall not be responsible to Lessee for the non-observance or
violation of any of these rules and regulations by any other tenant.
11. AFTER HOUR USE:
Lessor reserves the right to exclude from the Building between the
hours of 6:00 p m. and 6:00 a.m. and at all hours on Saturdays, Sundays and
Building Holidays, all persons who do not present a pass to the building signed
by the Lessee. Each Lessee shall be responsible for all persons for whom such a
pass is issued and shall be liable to the Lessor for the acts of such persons.
12. PLUMBING FACILITIES USE
Lessee shall not use the Office Building's plumbing facilities for any
purpose other than that for which they were constructed and will not permit any
foreign substance of any kind to be thrown therein and the expense of repairing
any breakage, seepage or damage, no matter where occurring, resulting from a
violation of this provision by Lessee or Lessee's servants, employees, agents,
invitees or licensees shall be borne by Lessee. Wasteful and excessive or
unusual use or misuse of Building Standard Office Electrical Service, Water,
Sewer or other utilities is prohibited.
13. VEHICLES:
No bicycles, mopeds, motorcycles or other vehicles of any kind shall be
brought into or kept in, on or about the Premises, Office Building or Office
Building Area, except in those locations specifically designated by Lessor for
same.
<PAGE>
EXHIBIT "B"
RULES AND REGULATIONS
14. ANIMALS:
No animal of any kind's shall be brought into, kept in, on or about the
Premises, Office Building or Office Building Area
15. LESSOR'S RIGHTS:
Lessor hereby reserves to itself any and all rights not granted to
Lessee hereunder, including, but not limited to, the following rights which are
reserved to Lessor for its purpose in operating the Office Building and Office
Building Area:
a) the exclusive right to the use of the name of the Office Building
for all purposes, except that Lessee may use the name as its
business address and for no other purpose;
b) the right to change the name of the Office Building at any time and
from time to time, without incurring any liability to Lessee for so
doing;
c) the right to install and maintain a sign or signs on the exterior
of the Office Building and/or anywhere in the Office Building Area;
d) the exclusive right to use or dispose of the use of all or any part
of the roof of the Office Building and Office Building Area;
e) the right to grant anyone the right to conduct any particular
business or undertaking in the Office Building or Office Building
Area.
16. MOVING:
Moving in and out of the Office Building must be coordinated with the
Lessor. At the discretion of the Lessor, moving may be required to be done under
the supervision of management personnel. No furniture will be moved in the
Office Building's elevators without the permission of the Lessor and until
necessary pads have been installed.
<PAGE>
EXHIBIT "C"
BUILDING HOLIDAYS
BUILDING HOLIDAYS SHALL BE AS FOLLOWS:
1. Memorial Day
2. Independence Day
3. Labor Day
4. Thanksgiving Day and the day after
5. Christmas Day
6. New Year's Day
7. Monday before or Friday after if July 4th falls on Tuesday or Thursday.
<PAGE>
EXHIBIT "D"
CLEANING SERVICES
NIGHTLY SERVCIES -RESTROOM AREA:
1. Sweep, mop and sanitize floors
2. Wash and polish mirrors, powder shelves, bright work, etc.
3. Clean and sanitize commodes, toilet seats, wash basins and urinals
4. Dust partitions, tile walls, dispensers, doors and receptacles
5. Empty and clean towel and sanitary disposal receptacles
6. Remove wastepaper and refuse to a designated area in the premises
7. Fill toilet tissue, soap and towel dispenser with supplies as needed
OCCASIONAL SERVICE-RESTROOM AREA:
1. Wash partitions, tile walls, enamel surface and power scrub lavatory
floors
2. High dust walls and ceilings
3. Dust exterior of lighting fixtures
ENTRANCE LOBBIES AND PUBLIC AREAS AS REQUIRED (NIGHTLY):
1. Sweep and damp mop (as required) flooring and vacuum carpeting
2. Clean cigarette urns and replace sand or water
3. Clean elevator cabs
4. Clean entrance glass doors (daily)
5. Clean lobby glass other than doors as required.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 11-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-START> FEB-05-1997 JAN-01-1998
<PERIOD-END> DEC-31-1997 DEC-31-1998
<CASH> 1,000 3,983
<SECURITIES> 0 0
<RECEIVABLES> 0 366,000
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 31,707 564,368
<PP&E> 240,535 2,581,658
<DEPRECIATION> (51,470) (175,029)
<TOTAL-ASSETS> 395,456 3,331,951
<CURRENT-LIABILITIES> 1,410,119 3,799,568
<BONDS> 0 0
0 0
0 0
<COMMON> 13,000 13,269
<OTHER-SE> (1,027,663) (480,886)
<TOTAL-LIABILITY-AND-EQUITY> 395,456 3,331,951
<SALES> 95,927 0
<TOTAL-REVENUES> 95,927 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 1,626,276 4,170,571
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 28,220 210,441
<INCOME-PRETAX> (1,558,569) (4,381,012)
<INCOME-TAX> 0 1,900,000
<INCOME-CONTINUING> (1,558,569) (2,481,012)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,558,569) (2,481,012)
<EPS-PRIMARY> (0.12) (0.19)
<EPS-DILUTED> (0.12) (0.19)
</TABLE>
