<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT TO
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD ______________ TO ______________
Commission file number: 0-25075
ARTIFICIAL LIFE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3253298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
FOUR COPLEY PLACE, SUITE 102
BOSTON, MASSACHUSETTS 02116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 266-5542
Securities registered pursuant to Section 12(b) of the Exchange Act: NONE
Securities registered pursuant to Section 12(g) of the Exchange Act:
COMMON STOCK, $.01 PAR VALUE PER SHARE
(Title of Class)
THE PURPOSE OF THIS AMENDMENT IS TO ADD AN ELECTRONIC COPY OF THE REFERENCED
EXHIBITS FILED IN PAPER PURSUANT TO A TEMPORARY HARDSHIP EXEMPTION.
THE ANNUAL REPORT ON FORM 10-K IS HEREBY AMENDED BY INCLUDING AS PART IV, ITEM
14 THE LIST OF EXHIBITS SET FORTH HEREIN AND THE EXHIBITS LISTED THEREON.
<PAGE>
Part IV
Item 14 c. List of Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
Exhibit 10.14-CE Lease Agreement dated March 30, 1999 between the Company
(Artificial Life Deutschland A.G.) and Internationales Immobilen.
Exhibit 10.15-CE Lease Agreement dated December 31, 1999 between the
Company (Artificial Life RUS) and the Association of Concert
Performers in the Russian Federation (ARENDODATEL).
Exhibit 10.16-CE Lease Agreement dated October 1, 1999 between the Company
(Artificial Life Solutions) and Vierwaldstratter Bereiligungen A.G.
Exhibit 10.17-CE Lease Agreement dated October 1, 1999 between the Company
(Artificial Life Solutions) and Vierwaldstratter Bereiligungen A.G.
Exhibit 10.18-CE Lease Agreement dated August 1, 1999 between the Company
(Artificial Life Solutions) and Charles Barrier Immobilen.
Exhibit10.19-CE A June 1999 Stock Purchase Agreement between the Company
and Eberhard Schoneburg for the Purchase of 490,000 shares of
Cybermind Ventures, Inc.
Exhibit 10.20-CE A June 1999 Stock Purchase Agreement between the Company and
Cybermind Interactive A.G. for the Purchase of 20,000 shares of
Cybermind Ventures, Inc.
Exhibit 10.21-CE A November 1999 Stock Purchase Agreement between the Company
and Cybermind Interactive A.G. for the Purchase of 490,000 shares
of Cybermind Ventures, Inc.
</TABLE>
2
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 31 or 15(d) of the Securities
Exchange Act of 1934, the Registrant certifies that it has duly caused this
Amended Annual Report on Form 10-K/A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, Commonwealth of
Massachusetts, on April 6, 2000.
ARTIFICIAL LIFE, INC.
By: /s/ Robert Pantano
-------------------------------
Robert Pantano
Chief Financial Officer (Principal
financial and accounting officer)
3
<PAGE>
Exhibit 10.14-CE
Contract No.
LEASE
of Premises for Business Purposes
between the firm INTERNATIONALES IMMOBILIEN-INSTITUT GmbH/(1)/
Albrechtstr. 14, 80636 Munich, (Germany)
represented by its Manager Harald von Sohnen, Holder of a Diploma in Commerce
Gunther Hackeneis, Academically Qualified Engineer
and Industrial Engineer
- hereinafter known as the "Landlord"
and Artificial Life Deutschland AG i. G./(2)/
BarckhausstraBe 1-3; 60325 Frankfurt/Main
- hereinafter known as the "Tenant" -
the following lease agreement shall be concluded:
ss. 1 Leased Premises
- ---------------------
1.1 The Landlord shall rent the following business premises in the building to
the Tenant:
BarckhausstraBr 2-4, Kettenhofweg, 60, in 60325 Frankfurt/Main, 3rd Floor
The leased premises are indicated in Appendix 1 of the attached plan,
which is the essential component of this agreement.
1.2 The leased premises shall be leased for use as an office.
01/99
- -------------------------
/(1)/[Translator's note: = INTERNATIONAL REAL ESTATE INSTITUTE) L.L.C.]
/(2)/[Translator's note: =AG i.G = Aktiensgesellschaft i.G = Joint Stock
Corporation]
2-14
<PAGE>
1.3 The Contracting Parties agree that the leased premises comprise 826.83
m(2).
ss.2. Waiver of the Sales Tax Exemption
- ---------------------------------------
2.1 The Tenant declares that, at the time of the signing of the lease
agreement, he is an entrepreneur within the meaning of the Sales Tax Act
and agrees that, in accordance with ss. 1, he is only to use the leased
premises for business purposes.
2.2 The Tenant is aware that the Landlord has waived his right to the
value-added sales tax exemption in this lease agreement and that the
Tenant's declaration for the Landlord forms the basis of the business with
respect to the purchasing costs, manufacturing costs, as well as
out-of-pocket expenses for the building in question.
2.3 If, for whatever reason, the Tenant does not completely or only partially
fulfills the commitment undertaken by him under 2.1, he must immediately
notify the Landlord. In such case, the Contracting Parties are bound to
find a mutually satisfactory solution that takes into consideration the
tax loss for the Landlord. This occurs, unless otherwise agreed in
particular cases, from the time of the discontinuation of the conditions
assured according to No. 2.1 until the rent previously agreed upon as the
gross amount is no longer valid as net rent (without any separate
statement of the sales tax). In addition, the Tenant is bound to
compensate the Landlord for the damages, which consists of the Landlord
reimbursing the input tax pro rata, where applicable. The Tenant now
agrees to any bill adjustment required by the Landlord.
Should the Landlord have doubts as to whether the prerequisites of No. 2.1
exist, he may request the original of the appropriate documents from the
Tenant.
2.4 Disadvantages suffered by the Landlord due to the violation of one of the
obligations accepted in No. 2.1, particularly due to default, incomplete
or belated communication of considerable changes of usage by the Tenant,
for which usage the Landlord had agreed to waive the lease sales tax
exemption, shall be borne by the Tenant. In particular, the input tax
adjustment due to the change in usage is just such a disadvantage. In
addition, the regulations in No. 2.3 correspond to the question of the
compensation for damages.
2-15
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Page 3
ss.3 Leasing Period
- -------------------
3.1 The leasing period shall begin on May 15, 1999, and run for a period of
five years until May 31, 2004.
3.2 Twelve months must have elapsed before the Tenant may give notice of
termination of the lease agreement. Unless a 6 months' notice has been
received by registered letter by the end of this lease agreement, this
contract shall be renewed for another 12 months.
3.3. Should the leased premises still be leased upon the conclusion of this
lease agreement, in the event that the premises have not been vacated, the
Landlord shall be held liable only for malicious intent or gross
negligence. The same liability applies to new buildings or renovations
that have not been completed on time.
3.4 The preparation of the leased premises shall be executed according to the
blueprint and cost estimate attached as Appendices 1-3. The preparation
time has been calculated as being seven weeks following submission of the
signed lease agreement (in the original). The Landlord can only comply
with the scheduled commencement of the leasing period, which is more
closely described under ss. 3.1, if the signed lease agreement is
submitted to the Landlord by March 26, 1999. Delays caused by the Tenant
or later structural changes, which cause a prolongation of the
construction time, do not entitle the Tenant to either compensation or
withholding of the rent money agreed upon. The security deposit can be
handed in subsequently up to the commencement date of the commencement of
the lease agreement.
2-16
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Page 4
ss.4 Rent and Utilities
- ------------------------
4.1 Rent and utilities amount to the following:
Basic rent per month: EURO 19,025.36
2 outside parking places @ EURO 76.69 EURO 153.39
8 underground parking places @ EURO 127.82 EURO 1,022.58
----------------------------------------------------------------------
Net rent per month EURO 20,201.33
Monthly advance payments for hot and warm water costs EURO 438.00
Monthly advance payments for other operating costs EURO 1,960.00
according to ss.4.2
----------------------------------------------------------------------
Sub-total EURO 22,599.33
Value-added sales tax - 16% at present EURO 3,615.89
----------------------------------------------------------------------
Total gross rent EURO 26,215.22
======================================================================
The total gross rent shall be paid no later than the third of the month to
the Landlord's account in the Internationales Immobilien - Institut GmbH
(International Real Estate Institute, L.L.C.) in Munich.
Account No. F1: 62 004 282
Bank Code 700 202 70
Bank Bayerishe Hypo- und Vereinsbank AG
The Tenant hereby empowers the Landlord to collect the total gross rent
and the arrears according to ss. 4.2 - 4.5, as well as further payment
obligations within the scope of the lease agreement by means of an
automatic debt transfer from the Tenant's account as follows:
Account No.
2-17
Bank Code
Credit institution:
Page 5
<PAGE>
If the Tenant is late with his payment or defaults, he shall pay interest
on the arrears in the amount of 4% above the prime rate according to the
Discount Rate Transitional Act (DuG).
4.2 The Tenant shall reimburse the Landlord the operating costs, i.e., the
subsequent costs that are constantly accruing to the latter through the
regular and ordinary use of the building or the economic unit of the
adjacent buildings, facilities, equipment and property. In principle, it
is the Landlord's right to authorize the work required for the stipulated
use of the building or to award contracts for this purpose. With respect
to some operating costs, the Landlord may request the Tenant to take care
of the work himself or have him award the necessary contracts. In this
event, the Tenant shall pay the costs directly instead of operating costs.
Basically, the Tenant shall bear the following costs:
4.2.1 The Accruing Public Encumbrances on the Premises, in particular the Land
Tax Should the land tax be increased subsequently during the term of the
lease agreement, e.g., because the value of the property has been
reassessed due to the new construction, the Tenant shall bear the
resulting higher taxes, regardless of when they were established.
4.2.2 Costs for water supply and drainage
4.2.3 Heating costs
4.2.4 Hot water supply costs
4.2.5 Costs of the operation of the personnel and service elevator, operation
and maintenance of the facilities, particularly the operation, inspection,
servicing, cleaning, periodic testing of the operational readiness and
occupational safety, including fitting by experts as well as the prime
mover, alarm installations, and emergency systems, where applicable.
4.2.6 Costs of street cleaning and garbage removal (public fees and costs for
non-public measures).
4.2.7 Housekeeping costs (Keeping the sections of the buildings used jointly
clean, as well as the building facilities and accesses, as well as the
purchasing of cleaning agents and equipment, the costs for dispersing salt
and the cost of the product itself, the operation and maintenance of
vacuum cleaners, sweepers and other maintenance equipment as well as pest
control). The costs of periodic cleaning of the walls and shutters.
4.2.8 Landscaping costs (Care of planted areas, including sidewalks and roads,
accesses and service roads, and, where applicable, existing roof greenery
and hydroponics, including the replacement of plants, woods,
2-18
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Page 6
earth, sand, gravel and the like, as well as the operation, maintenance
and repair of lawn mowers and other gardening equipment).
4.2.9 Lighting costs. (Outside lighting and lighting of the jointly used
sections of the buildings as well as fuses, light bulbs and fluorescent
tubes for these areas, as well as the operation and maintenance of the
clocks).
4.2.10 Costs of chimney sweeping and emissions testing.
4.2.11 Costs of property and liability insurance (Costs of insurance against
fire, storm and water damage), glass insurance (only for common areas),
liability insurance for the building, the oil tank or the elevator.
4.2.12 Costs for the caretaker and house technician, who is responsible, in
addition to the caretaker for the following: current salaries, social
benefits, compensation, special payments, monetary compensation, payments
in kind and other allowances, including employer contributions for social
security, professional associations and the like, in addition to
replacements for employees on vacation or on sick leave, as well as
reimbursements of expense allowances paid by the Landlord and
reimbursement of expenses, excluding, however, special compensation paid
for maintenance and renovation.
4.2.13 Costs for gatekeepers and security.
4.2.14 Costs of operating the community antenna (the prime mover, periodic
testing of the operational readiness, including fitting by experts) and
broadband access.
4.2.15 Costs for the operation, maintenance and upkeep of refuse chutes,
power-operated garbage removal equipment, gutters, lightning arrestors,
emergency power generator, drainage pipes, fire alarm systems, sprinkler
systems.
4.2.16 Costs for snow and ice removal including the salt required for this
purpose.
4.2.17 Other operating costs that are not mentioned in items 1 to 16, but which
are directly connected with the management of the building or the
business unit, i.e., the operating costs of adjacent buildings,
facilities and equipment, as well as the costs for the operation and
maintenance of fire extinguishers and other household appliances, costs
for the operation and maintenance of the existing ventilation system, a
humidifier or an existing supporting refrigeration system, where
applicable, as well as new taxes, duties and user charges or other
property costs levied on real property and landholdings.
4.2.18 Costs of real property management and operating cost accounting
procedures, the flat rate being 1.5% of the net rent.
2-19
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4.2.19 The meters for the heating costs, cold water usage and - and, where
applicable, hot water usage, shall be rented. The costs shall be included
with the yearly operating costs.
4.3 The operating costs constantly accruing to the Landlord shall be adjusted
for the Tenant in consideration of the advance payments to be paid by the
latter. Said costs are divided into the costs of heating, including hot
water (heat bill) and the other operating costs. The allocation formula
and the billing cycle shall be determined by the Landlord after a proper
assessment. The allocation formula as well as the billing cycle
originally selected may be changed by the Landlord after a proper
assessment. The Landlord is entitled, after a proper assessment, to
re-determine the advance payments for the operating costs based on the
previous calculation in view of the already established changes in
operating costs.
The Landlord shall invoice the operating costs (heating and ancillary
costs) in Euro dollars. The invoices submitted by the Landlord in German
marks, are invoiced to the Tenant on the basis of the official conversion
rate in Euro dollars. The amounts converted into Euro dollars are rounded
off.
4.4 The heating bill shall be invoiced by the Landlord according to the terms
of the HKVO (heating and ventilation) for heat billing.
4.5 Arrears and accounts based on operating costs invoices are to be settled
within one month following receipt of the final bill.
4.6 Should the lease agreement or usufruct relationship terminate during the
billing cycle, an interim reading shall be taken with the measuring
devices to determine heat consumption for invoicing purposes. The costs
of the interim reading shall be borne by the Tenant.
4.7 Even if the lease agreement or usufruct relationship is terminated during
the billing cycle, the operating costs shall be invoiced according to the
above-mentioned provisions. There shall be no intermediate invoice.
4.8 Invoices may be consulted at the head office of the Landlord/Manager for
one month following receipt of the final bill.
4.9 The Tenant may set off against the Landlord's payment claims only if his
claim for set-off is undisputed or has become res judicata. The same
applies to the Tenant exercising his right of retention.
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4.10 The Tenant is entitled to reduce the rent or make other claims due to a
defect in the leased premises only if the suitability for use of the
leased premises is considerably reduced for more than a temporary period
of time.
A reduction in rent due to a defect that the Tenant was aware of when he
inspected the leased premises prior to the signing of this contract, or
may have been aware of under the given circumstances, or which he still
accepted when he signed the acceptance-transfer certificate, is precluded;
due to this type of defect, further claims made by the Tenant (e.g.,
compensation for damages, remedial action) are also precluded.
A reduction in rent and the invoking of other claims against the Landlord
is precluded, if under the circumstances for which the Landlord is not
responsible (e.g., detours, roadblocks, public works, public works around
neighboring buildings, etc.), the industrial use of the premises is
impaired. The Landlord shall assign the claims to which he is legally
entitled with respect to the leased premises to third parties.
ss.5 Security Deposit
- ----------------------
As security for all assigned or some outstanding claims of the Landlord's
against the Tenant, arising from this contractual relationship, as well as any
negligent actions, the Tenant shall have an irrevocable, open-ended bank deposit
issued to the Landlord, with himself as the primary debtor, at a German bank of
his choice. The amount of the bank deposit shall be as follows:
78,650.00 EURO
(in words: seventy-eight thousand, six hundred and fifty EURO)
The original bank deposit document shall be handed over to the Landlord by the
time of the signing of the contract, but by the beginning of the lease agreement
at the latest. It has been agreed that the Landlord's form shall used be used
for the security deposit, which is attached to this lease agreement.
ss.6 Adjustment of monthly rent. Renewal option
- ------------------------------------------------
6.1 On June 1, 2000, and thereafter yearly, every June 1, the monthly net rent
shall increase or decrease according to ss. 4 of this lease agreement by
the percentage by which the consumer price index of all private households
in Germany (territorial boundaries according to October 3,1990), of the
Federal Statistics Office (Basis 1991 = 100) has increased or decreased in
comparison with the index status at the commencement of the leasing
agreement according to ss. 3.1 of this lease agreement (and by subsequent
changes to the index status of the latest change in rates). Neither the
Landlord nor the Tenant are notified of the change in rent which occurs to
the contract partner. ___
2-21
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6.2 Should the clause according to ss. 6.1 of the lease agreement not be
approved within the scope of the pertinent provisions of the Price Clause
Act and the Price Clause Ordinance, then either party may request
adjustment of the rent (retroactively as well) on January 1st of the year,
whereby the scale for the rent adjustment, which the index change
mentioned in ss. 6.1, should include considerations of fairness.
Should a new agreement between the Contracting Parties on the new rent not
materialize within two months following the first adjustment requests of
one of the parties, the new rent shall be determined in compliance with
the above-mentioned scale by a publicly appointed sworn expert. This
expert is to be named at the request of the one of the Contracting Parties
by the local competent Chamber of Commerce and Industry (CCI). The expert
must be actively working in the rental business. The decision of the
expert as an arbitrator shall be binding on both parties. The right to
challenge the decision because of an obvious mistake remains unaffected.
The cost of the expert's decision-making procedure shall be borne by the
parties following the success-failure ratio depending on the status of the
negotiations prior to calling the Chamber of Commerce and Industry.
6.3 The Tenant shall be granted the right to renew the lease agreement for 5
years by means of a unilateral written statement declaration (option). If
the Tenant chooses to exercise this option, it must submitted in writing
to the Landlord at least 15 months prior to the expiration of the lease
agreement.
If this renewal option is exercised, an agreement must be reached between
the parties about the amount of rent to be paid during the Tenant's option
period.
If the Contracting Parties do not come to an agreement about the future
rent to be paid by 12 months prior to the expiration of the lease
agreement at the latest, then at the request of one or both of the
Contracting Parties, an expert named by the Chamber of Commerce and
Industry in Frankfurt/Main as an arbitrator according to ss. 317 BGB
[[Translator's note: "Burgerliches Gesetzbuch" = German Civil Code] shall
decide whether and in what amount a change should be made of the rent paid
to date after a proper assessment. When deciding what the rent should be,
the arbitrator must take into consideration what would normally be paid
for leased premises in a similar location and condition and of a similar
type and size in Frankfurt/Main at the prevailing rates). The cost of the
expert's decision-making procedure shall be borne by the parties
following the success-failure ratio depending on the status of the
negotiations prior to calling the Chamber of Commerce and Industry.
The new price agreed up or established by the arbitrator shall be paid
from the commencement of the option period. During the option period, the
rent adjustment clause ss. 6.1 shall apply.
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ss.7 Use of the leased premises
- --------------------------------
7.1 Should the way in which the leased premises are used require government
licenses, or may be required during the leasing period, the Tenant shall
take care of such matters. If government requirements are issued, the
Tenant shall see to it that they are complied with. The Landlord shall not
reimburse the Tenant for any of the expenses involved.
7.2 The Landlord may not be held liable for the fact that government licenses
have been issued for the operation of the Tenant's business or that those
government licenses issued have not been paid for. The Tenant must obtain
the legal prerequisites to run his business.
7.3 The Landlord assumes no liability for the fact that the premises are
designed for a use other than as offices. This is particularly true for
the loading capacity of the floor structures and the technical
installations. Should any construction projects become necessary for
statistical or other reasons, or due to industrial policy regulations or
requirements, the Tenant is obliged to award such contracts in his name
and at his expense. These construction projects shall be executed with the
Landlord's prior approval. Should building permits or the like be required
for construction projects, they shall be applied for either in the name of
the Tenant or in the name of the Landlord, as the latter sees fit, at the
Tenant's expense and risk.
7.4 The Landlord shall not be held liable for damages incurred by water, fire,
dampness, fungus or smoke to the Tenant's property, regardless of the
type, origin, duration and scope of the effect, unless the Landlord caused
the damage intentionally or due to gross negligence.
7.5 Disturbing neighbors with noises, vibrations, smells and the like should
be avoided when using the leased premises.
7.6 Outside the leased premises, no goods, containers or other objects should
be left lying around or be stored.
7.7 The Tenant hereby undertakes to bear the costs of having the name plate
for the premises, for briefcases, elevators and for the electric bell
installation designed in the style and size requested by the Landlord. The
Landlord may also make these name plates or have them made at the Tenant's
expense.
7.8 The existing display windows or display cabinets shall be always be
carefully decorated and kept clean.
7.9 The Tenant shall ventilate the premises on a regular basis, and adjust the
blinds so as to keep the rooms from becoming damp or overheated. Toilets
shall be cleaned on a regular basis. The floor downcomers shall not be
allowed to dry out.
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7.10 Non-competition protection is precluded.
<PAGE>
7.11 Structural changes, additions and renovations including changes in
technical devices in the leased premises needed by the Tenant require the
Landlord's prior approval. Should building permits or the like be
required, the Tenant shall apply for these at his expense and risk, either
in his name or in the Landlord's, as the latter sees fit. The permit for
construction projects must be presented to the Landlord before work may
commence.
The Tenant shall immediately notify the Landlord when a change in the
floor plan, for which a permit has been issued, has been implemented, so
that the Landlord always has an up-to-date floor plan.
7.12 In connection with all the construction projects, the Tenant is obliged to
take all precautions regarding traffic safety. He therefore takes all the
precautions necessary to protect third parties from all conceivable
dangers. Should he transfer the planning and execution of these
construction projects to third parties, he shall be bound to supervise
their activities with respect to possible sources of danger. The Tenant
hereby releases the Landlord from any claims arising from the violation of
these duties.
ss.8 Care. Maintenance and Repair of the Leased Premises
- ---------------------------------------------------------
8.1 The Tenant shall keep the leased premises in order during the entire
leasing period. This includes the specialized cleaning of windows and
ledges (both inside and out).
8.2 The esthetic repairs required inside the premises periodically shall be
the Tenant's responsibility. The Tenant assumes responsibility for up to
2% of the annual rent plus the value-added sales tax per year.
ss.9 Subletting of the Leased Premises to Third Parties
- --------------------------------------------------------
Subletting of the leased premises is allowed. The Landlord may deny the Tenant
the right to sublet for important reasons. If leased with the intention of
subletting, the Landlord must be immediately notified in writing.
ss.10 Renovations and Repairs Done by the Landlord
- --------------------------------------------------
10.1 However, improvements, structural changes, as well as other precautions
required to maintain and improve the house or premises, to remove
threatening dangers, or to eliminate damages, or which serve to
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modernize or develop the leased premises or building may be carried out by
the Landlord without first obtaining the Tenant's approval. The Tenant
shall keep the premises intended for projects accessible until an
announcement to this effect has been made. He may not impede nor delay the
projects, or he will be liable for the additional costs or damages
incurred.
10.2 The work required to remove dangers or prevent damages may also be
performed immediately without prior notice.
10.3 If scaffolding needs to be erected inside or outside the house to carry
out work, the Tenant shall take the necessary precautions in view of the
associated dangers.
10.4 To the extent that the Tenant must endure the work performed by the
Landlord on the leased premises, he may only reduce the rent when the work
involved completely or considerably restricts his use of the leased
premises.
ss.11 Return of the Leased Premises
- -----------------------------------
11.1 The Tenant hereby undertakes to completely vacate all the leased premises
at the end of the leasing period as well as to return the key he received
at the beginning of the lease agreement. The leased premises shall be
handed over renovated, and worn out or damaged floors shall be replaced.
Furthermore, the Tenant hereby undertakes to remove the dowel pins at his
expense, to close holes in accordance with the regulations, and to replace
tiles that have been drilled through in the same style or color. The
partitions purchased by the Landlord shall be handed over undamaged. If
these partitions are damaged, they shall be replaced at the Tenant's
expense.
11.2 In addition, the Tenant hereby undertakes to complete the esthetic repairs
by the end of the lease agreement or usufruct relationship. The basis and
standard for the execution of the esthetic repairs is the restoration of
the original condition at the beginning of the lease agreement. The Tenant
is likewise liable for damages to the leased premises that are not due to
normal wear and tear. In such cases, the Landlord may also require
replacement in specie. The same applies to culpable damage to the floor
covering or other furnishings in the leased premises.
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11.4 Upon the termination of the leasing agreement, the installations erected
on the Tenant's behalf shall be demolished by the Tenant (demolition
obligation). However, the Contracting Parties may agree to another
settlement prior to the termination of the contract.
11.5 If the return of the leased premises is delayed beyond the termination of
the lease agreement, the application of ss. 568 BGB [Translator's note:
German Civil Code] (tacit renewal) is precluded.
ss. 12 Summary Termination
- --------------------------
12.1 If he presents an important reason, the Landlord is entitled to cancel the
lease agreement effective immediately without observance of a period of
advanced notice, particularly when:
a) the Tenant, despite a written warning from the Landlord, has
continued to use the leased premises in a manner that violates the
contract
b) the Tenant is in arrears with respect to his rent by an amount that
is equal to two months' rent, or the Letter of Credit referring to
his security deposit according to ss. 5 of the leasing agreement was
not received on time
c) the Tenant has initiated receivership proceedings against his
creditors to protect his assets or has applied for judicial
receivership proceedings to protect his assets, or judicial
bankruptcy and insolvency proceedings have been initiated to protect
the Tenant's assets.
12.2 The Landlord's right to summary termination is not extinguished by the
fact that the Landlord does not use his prerequisites immediately
following their presentation.
12.3 The statutory provisions apply to the remainder.
ss.13 Outdoor Advertising
- -------------------------
The outside walls of the leased premises are not included in the lease
agreement. The Tenant must ask the Landlord for permission to put up outside
advertising.
Putting up posters inside and outside the fence is not permitted.
ss. 14 Final Provisions
- -----------------------
14.1 Should some of the provisions of this contract be null and void or become
voidable, the contract as a whole will not be affected. Such provisions are to
be replaced by new versions within the scope and purpose of this
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contract and that best meet the intentions of the two Parties. This layout
rule applies for any ambiguous or conflicting clauses.
14.2 All explanations shall be sent to the last known address of the other
Party.
14.3 Changes and amendments to this contract must be in writing. Separate
verbal agreements shall be null and void. The same applies to separate
written agreements.
14.4 The Tenant is a resident within the meaning of ss.4,P. 1, No. 3 AWG
[Translator's note: AWG = External Economic Relations Act]
Yes
---
Wording of ss. 4, P. 1, No.3, AWG
"Natural persons with domicile or usual place of residence in the economic
territory, legal entities and commercial partnerships with their head
office or place of management in the economic territory; as well as
non-resident branches in the economic territory are deemed as residents
when they have their management and accounting here; non-resident
establishments in the economic territory are considered residents if they
have their administration, especially some accounting, herein."
The Tenant hereby undertakes to immediately announce any changes
concerning residency or non-residency status.
14.5 The Tenant is liable for damages to the windows of the premises that are
used exclusively by the Tenant, unless the damages were caused by the
Landlord. The Tenant shall take out insurance for this purpose.
The Landlord is insured against tap water, storm and fire damages and has
liability insurance as well. Since, according to 8.4, the Landlord is not
liable for damages caused by slight negligence on his part, the Tenant is
thus obliged to seek insurance protection against such damages himself.
14.6 Both parties to the lease agreement are aware of the special statutory
written form requirements of ss.ss. 566 P. 1, 126 BGB [Translator's note:
German Civil Code]. They hereby acknowledge that they each signed a bound
copy of a single document within the scope of ss.ss. 566, P. 1, 126 BGB.
If, against all expectations, a doubt should arise about the compliance
with the statutory requirement for documents in writing, the Parties to
the lease agreement hereby mutually undertake, at the request of one of
the Contracting Parties at all reasonable times to take all measures and
to provide all explanations necessary to satisfy the statutory requirement
for documents in writing and not to cancel the lease agreement prematurely
due to a judgment of non-compliance with the statutory requirement for
documents in writing. This applies not only to the conclusion of the
original contract/principal contract, but also to amendments,
modifications, addenda and appendices.
2-27
<PAGE>
Page 15
14.7 Both Contracting Parties shall store data regarding the administration of
the lease agreement. The Landlord and Tenant shall ensure that only data
required regarding compliance of the lease agreement with the regulations
is stored, and that such data is in accordance with the provisions of the
Data Protection Act.
14.8 Other Agreements
a) The Landlord assumes one third of the costs of the Tenant's additional
requests, resulting from Appendix 1. The Tenant assumes the remaining
two-thirds.
b) The Tenant is aware that at the present time no other areas have been
developed and that the future development and conversion could well mean
there will be some installation noise. The Tenant hereby agrees not to
make a claim for rent reduction due to such noise.
c) Once the lease agreement has been signed, the model office space may be
used by the Tenant prior to the date of his official occupancy. The
incidental costs for this space shall be charged as of April 1, 1999
(advance payment for heating costs: 148.00 EURO/m(2) per month; advance
payment for incidental expenses: 660.00 EURO/m(2) per month).
Munich, the March 26,'99
------------------------------ -----------------------
[Stamp illegible]
- ----------------------------------------- -----------------------
- - Landlord - - Tenant -
Appendix 1: Preparation plan
Appendix 2: Minutes of Meeting for Discussion held on March 1, 1999 - Lease Plan
Appendix 3: Cost Estimate for Lease Plan
2-28
<PAGE>
LEASE PLAN
Development
Reception
Conference
Offices
Office ES Technical
Office Co Office
Conference Office
Conference Toilets Women
Reception Toilets Men
Development Entrance
Office Anteroom Technical
Technical
Toilets Women
Toilets Men
Office
2-29
<PAGE>
Legend: Room Assignments
Codes for area calculations
e.g. Office area = area assignm.
Illegible
Development Office Staircase Toilets Men
Staircase Toilets Women
Elevator
Anteroom
Development Archives Personnel Kitchen
Development
Rental Premises
Barchthaustrasse 1-3
Frankfurt am Main
Internationales Immobilien Institut GmbH PLAN
Albrechtstasse 14D 3rd Floor
Munich ARIFICIAL
Torsten Balluff
Dr. Hassan Ghaemi
ARCHITECTS
Lowengasse 27
Frankfurt
2-30
<PAGE>
<TABLE>
<S> <C> <C>
TORSTEN BALLUFF GRADUATE IN ENGINEERING ARCHITECT
DR. HASSEN GHAEMI GRADUATE IN ENGINEERING ARCHITECT
LOWENGASSE 278 D-60985 FRANKFURT AM MAIN TELEPHONE: (089) 94592860 FAX (089) 9459285
- ---------------------------------------------------------------------------------------------------------
Minutes of meeting for Discussion No. 01 Property: Page 1
Date: March 1, 1999 gh-h Barckhausstr. 1-3, Frankfurt/Main
Re: Barckhaussstrasse, Frankfurt/main Leased premises preparation: 2 floors
- ---------------------------------------------------------------------------------------------------------
SUBJECT: DISCUSSION OF LEASE AGREEMENT
- ---------------------------------------------------------------------------------------------------------
Present: DISTRIBUTION:
Mrs. Orth, ARIF iii: Mr. Karl/Mr. Dreher
Mr. Gerlinger, ARIF iii: Mr. Meier
Mr. Lopez-Schimm, Muller, in-house AB: Bailuff/Dr. Ghaemi
- ---------------------------------------------------------------------------------------------------------
</TABLE>
On March 1, 1999, the discussion of a lease agreement was held with the Firm
ARIFICIAL in Barckhaussstrasse 1-3:
1. The ARIFICIAL firm is interested in leasing the 3rd floor area.
2. The draft should be ready on May 1, 1999.
3. The ARIFICIAL firm was handed the basic floor plans drawn to a scale of
1:200. The desired layout was turned over to AB Bailiuff/Dr. Ghaemi and
Muller International on March 4, 1999. It was to be prepared and presented
to the ARIFICIAL firm at the beginning of the calendar week 10/99.
4. The ARIFICIAL firm wants an open receiving area. In addition, one area of
the leased premises is to be used as a large office. It may thus be
necessary to refer to the call back inquiry with BAB Frankfurt am Main to
request the permit.
5. Once the plans for cost allocation have been handed in, the architects
should be able to do cost estimates for the additional services requested
by the Tenant, such as F90 glazing, glazed T30 doors separating the
corridors, laminated floors (as soundproof as possible), in sections, etc.
6. A calculation of the costs for leasing the entire 311 floor is also
supposed to be submitted.
2-31
<PAGE>
<TABLE>
<S> <C> <C>
TORSTEN BALLUFF GRADUATE IN ENGINEERING ARCHITECT
DR. HASSEN GHAEMI GRADUATE IN ENGINEERING ARCHITECT
LOWENGASSE 278 D-60985 FRANKFURT AM MAIN TELEPHONE: (089) 94592860 FAX (089) 9459285
</TABLE>
<TABLE>
<CAPTION>
Location: iii-Leased premises 1.103,
Barckhausstr.1-3/Kettenhofweg, Frankfurt am Main Preparation of leased premises 3rd floor
- ----------------------------------------------------------------------------------------
Section: Preparation of 3rd floor Amount Unit EP* in GP* in EP* in GP* in
Cost estimate for DM DM EURO EURO
customization
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Position Explanation
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Compilation
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Sub-total Pos. 1
- ----------------------------------------------------------------------------------------
Sub-total Pos. 2
- ----------------------------------------------------------------------------------------
Sub-total Pos. 3
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Total Pos. 1 to 3
- ----------------------------------------------------------------------------------------
Plus incidental expenses
15%
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Total net costs
- ----------------------------------------------------------------------------------------
Plus value-added sales tax
16%
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Total gross costs
- ----------------------------------------------------------------------------------------
</TABLE>
* [Translator's note: No reference found for these abbreviations]
ARIFICIAL
Cost Estimate
2-32
<PAGE>
INTERNATIONAL IMMOBILIEN INSTITUT
(INTERNATIONAL REAL ESTAT INSTITUTE)
Contract No. _____________
(CONTRACT OF) GUARANTEE
In which Internationales Immobilen Institut GmbH [Int. Real Estate
Institute,L/L.C.
Albrechtstr. 14, 80636 Munich
hereinafter known as the "Landlord"
and Mr/Mrs./Firm
- --------------------------------------------------------------------------------
hereinafter known as the "Tenant"
Lease agreement signed by ___________concerning Apartment/Offices/Premises in
the house
- --------------------------------------------------------------------------------
hereby agree that the Tenant is to give the Landlord, as security for the
performance of this contract, as stipulated in the contract a security deposit
in the amount of EURO ___________ (in words _____________________________ EURO).
The security is provided by means of a bank guarantee. It serves as security for
all the claims of the Landlord that arise from the above-mentioned lease
agreement or a any contract amending or replacing this contract or a subsequent
usufruct or a renewal of the contract.
On this premise, we assume the (please provide the exact address)
- --------------------------------------------------------------------------------
for the Tenant against the Landlord a guarantee for which the Tenant is directly
liable up to the amount of
EURO_____________
(in words _____________________________________ EURO) upon the waiver of the
defense plea of the principal debtor (ss. 768 BGB [Translator's note: German
Civil Code], of the voidability and offsetability (ss. 770 BGB) and of the
benefit of discussion (ss. 771 BGB) as well as of the notifications according to
ss. 177 BGB.
We hereby undertake, at the Landlord's first request, to pay him in full the
amount guaranteed. All that is required as proof of such claims is a photocopy
of the lease account.
If the building is sold in which the leased premises are located, the guarantee
is given to the purchaser.
Our guarantee is valid until the Landlord's claims arising from the
above-mentioned lease agreement have been liquidated. The bank's right, to
release itself from its obligation arising from the guarantee by depositing the
security deposit is precluded. The bank's obligation terminates with the return
of this contract of guaranty.
Venue is Munich, insofar as possible.
_________________________the ______________ ________________________________
Place Date Stamp and Signature
2-33
<PAGE>
EXHIBIT 10.15-CE
Lease Agreement
Saint Petersburg 1 December 1998
The Union of Concert Artists of the Russian Federation, hereinafter the
"LESSOR," represented by the Deputy Chairman of the Union of Concert Artists of
the Russian Federation, A. P. Uteshev, acting on the basis of the Charter, party
of the first part, and the Artificial Life Rus [Artifishel Layf Rus] Limited
Liability Corporation, represented by
B. L. Malokhavskiy and S. V. Vasil'eva
--------------------------------------
acting on the basis of of the Charter, party of the second part, hereinafter
collectively the "PARTIES," have concluded the present Agreement regarding the
following:
Article 1
Scope of the Agreement
1.1. The Lessor shall, on the basis of the order of the Deputy Chairman
of the Government of Saint Petersburg, Chairman of the Committe for the
Administration of City Property of the Mayor's Office of Saint Petersburg, of 5
Jan 1996 (attached to the Agreement), lease to the Lessee premises at the
following address: 15 Mokhovaya St., with a total space of 240 (two hundred
forty) square meters, which the Lessor pursuant to Lease Agreement No. 00-
001268(03) of 1 Sep 1993.
1.2. Said space shall be furnished to the Lessee to accommodate the office
of the Artificial Life Rus Limited Liability Corporation.
1.3. The Lessee shall have the right to use the leased premises exclusively
to accommodate the office, with due regard to the restrictions stipulated for
the use of the premises of an architectural monument building, as well as to the
conditions of the present Agreement.
1.4. The lay-out of the premises to be turned over to the Lessee and of
their spaces shall be exhibited in appendix No. 1 to the present Agreement,
which shall be an integral part of it. Appendix No. 1 to the present Agreement
shall take precedence in the
<PAGE>
interpretation of the conditions of the agreement with respect to lay-out and
area.
1.5. The premises referred to in item 1.1 and in appendix No. 1 to the
present Agreement shall be turned over to the Lessee for temporary use (leased).
1.6. The present agreement shall be in force for 5 (five) years starting 1
December 1998, and the date indicated shall be the date the agreement shall take
effect, through 30 November 2003.
ARTICLE 2
PAYMENTS AND SETTLEMENTS UNDER THE AGREEMENT
2.1. The Lessee shall pay rent to the Lessor, expressed in minimal
monthly wage rate units (hereinafter the MMWR), for the premises indicated in
item 1.1. of the Agreement.
The MMWR, set in the Russian Federation at the time of the conclusion of
the Agreement, shall be 83 rubles 40 kopecks.
The cost of one square meter of the premises to be leased shall be 23.1
(twenty-three [illegible - ? and one -tenth] MMWR without value added tax.
2.1.1. The Lessee shall independently calculate quarterly the amount of
the rental payment subject to remittance pursuant to item 2.1 in accordance with
the minimal wage rate accepted for calculations and the value added tax. In case
of payment in cash, 5% tax shall be added to the amount of the payment.
2.1.2. The Lessee shall remit the rental payment as well as the value
added tax for each quarter in advance, no later than the fifth of the first
month of the current quarter.
2.1.3. In case of breach of the payment dates indicated in item 2.1.2, the
Lessee shall pay the Lessor a penalty in the amount of 0.5% of the amount of the
arrears for each day in arrears.
2.2. In case of the remittance by the Lessee of the rental payment in
advance, its amount and the criteria for its calculation specified in item 2.1
of the Agreement shall be deemed fixed and not subject to adjustment for the
entire payment period by either of the parties to the Agreement.
The parties have agreed to regard a period from 6 to 12 months as a
considerable period.
2.3. The rental payment for the following years of leasing shall be the
ruble equivalent of 15 (fifteen) US dollars at the rate of the Central Bank of
the Russian Federation on the day of payment for 1 square meter per year without
value added tax.
<PAGE>
2.3.1. Should the Lessee in the following years remit the rental payment a
considerable period in advance, and the exchange rate of the Central Bank of the
Russian Federation be equal to or higher than 15 rubles for one dollar, the
Lessee shall have the right to a discount in the amount of 25% of the amount of
the advance rental payment. Should the exchange rate be lower than 15 rubles,
the parties shall come to terms on the rental payment.
2.4. The mutual relationships of the parties relating to rental payment
matters may be determined by additional agreements to be concluded.
2.5. All expenses relating to remittance of payments to the Lessor's
settlement account shall be borne by the Lessee.
2.6. In case of a change in rental expenses introduced by federal or
regional authorities in the term of validity of the Agreement, the Lessor shall
track these changes quarterly and shall unilaterally adjust the rental payment
for the following quarter, with notification of the Lessee.
2.7. The Lessee shall quarterly pay the insurance premium, which shall be
specified by the insurance agreement between the Lessor and the insurance
company in an amount proportional to the leased spaces, in accordance with the
approved methods of assessing the value of real estate for the calculation of
the insurance amount and the insurance premium in the insurance agreement under
the conditions of insurance of the available non-residential space to be leased.
Payment shall be made by remittance of the amount of the insurance premium to
the Lessor's settlement account, with indication of the payment on the payment
order.
2.8. The amount of the insurance premium can be recalculated in accordance
with the approved "Methods of assessing the value of real estate for the
calculation of the insurance amount and the insurance premium in the insurance
agreement under the Conditions of insurance of the available non-residential
space to be leased." The recalculation of the amount of the insurance premium
shall be carried out by the insurance company, and the Lessor and the Lessee
must be notified of the recalculation that has been carried out no later than
one month before the ensual of the corresponding payment period.
ARTICLE 3
OBLIGATIONS OF THE PARTIES
3.1. Pursuant to the present Agreement, the Lessor shall undertake to
fulfill the following obligations:
<PAGE>
3.1.1. To turn over to the Lessee the premises indicated in appendix No. 1
to the present Agreement within 3 days of the receipt in the Lessor's account of
the payments stipulated in item 2.1.
Note: the date of the receipt of the payments shall be confirmed by the
Lessor by his bank account statement.
3.1.2. To ensure the removal from them of the Lessor's property as well
as of third parties prior to the time the leased premises are to be turned over.
3.1.3. To make major repairs, related to overall major repairs of the
building, of the leased premises at his own expense, in accordance with the
schedule of major repairs and the current regulations and rules.
3.1.4. To turn over the utilities and service lines to the Lessee in
working order.
3.1.5. To ensure the security of the building. Additional internal
security for the office premises shall be arranged and paid for by the Lessee.
3.2. Pursuant to the present Agreement, the Lessee shall undertake to
fulfill the following obligations:
3.2.1. To use the leased premises in strict accordance with article 1 of
the present Agreement.
3.2.2. To pay the Lessor the rental payment specified by the Agreement and
the subsequent amendments and additions to it on time and fully.
3.2.3. To pay the insurance premium on the leased premises on time during
the entire term of validity of the Agreement in the manner and under the
conditions stipulated by items 2.7 and 2.8 of the present Agreement.
3.2.4. At his own expense, through his own efforts and with his own
materials, to make current repairs of the leased premises in a timely manner,
exclusively by written permission of the Lessor, at times stipulated by a
schedule coordinated with the Lessor.
At each stage of the performance of said work, the Lessee shall show the
Lessor the repaired premises within 10 days.
3.2.5. To ensure the integrity of the utilities, service lines, and
equipment at the facility.
3.2.6. Not to install concealed or open wiring and service lines, not to
change the lay-out or re-equip, not to carry out reconstructions, including
transfer of service lines, at the facility without the written permission of the
Lessor.
Should the Lessor discover reconstructions, impairments of the integrity of
the utilities, partitions, and coverings, remodelings or installations of
utilities which deface the original appearance of the facility, effected without
permission, such must be eliminated by the Lessee, and the premises returned to
its former appearance at his own
<PAGE>
expense within the time determined by unilateral order of the Lessor.
3.2.7. To reach agreement on the use of the leased premises with the state
fire inspection authorities.
3.2.8. To observe the requirements on the leased premises of the sanitary
and epidemiological stations and the state fire inspection, as well as the
sectoral rules and standards in effect in relation to the types of activity of
the Lessee.
3.2.9. To service the utilities and service lines furnished by the Lessor,
using his own resources and funds.
3.2.10. To vacate the premises in connection with a hazardous condition of
the structures of the building or a part of it, the setting up of the building
for major repairs, or its liquidation for city designing and building
considerations within the times determined by order of the Lessor.
3.2.11. To notify the Lessor immediately regarding any damage, breakdown,
or other event that has caused (or threatens to cause) harm to the facility, and
in a timely manner to take all possible measures to avert the danger, against
further destruction or damage to the facility.
3.2.12. Not to conclude agreements or to enter into deals, a consequence
of which is or may be any encumbering of the property rights granted to the
Lessee under the agreement, in particular, the transfer to any person (mortgage,
sublet agreements; contribution of the right to lease the facility or a part of
it to authorized capital of a business; etc.) without the written permission of
the Lessor.
The conclusion by the Lessee of such agreements or the consummation by him
of such deals without said permission shall be a basis for the unilateral
cancellation of the agreement.
3.2.13. To provide the representatives of the Lessor access to the
facility for its examination and inspection of the observance of the conditions
of the Agreement.
3.2.14. Should an insurance event arise as stipulated by the insurance
agreement, to inform the Lessor as well as the relevant competent authorities
(police, state fire inspection bodies, the organization operating the service
lines, etc.) and the insurance company immediately regarding the occurrence,
while providing representatives of the insurance company with the opportunity to
inspect the premises.
3.2.15. To inform the Lessor in writing no later than two months in
advance of the impending vacation of the leased premises, both in relation to
the completion of the term of validity of the agreement and to its early
cancellation.
3.2.16. To turn over the facility upon its vacation in accordance with the
certificate, in sound condition, taking natural wear into account, completely
intact with
<PAGE>
all permitted remodelings, reconstructions,, and nonremovable improvements.
3.2.17. To comply within the specified time with orders of the Lessor,
state fire inspection bodies, and other governing authorities relating to the
taking of measures to eliminate situations arising as a result of the Lessee's
activities which endanger the integrity of the facility and the ecological and
sanitary situation on the leased premises.
3.2.18. At his own expense, to carry out work to eliminate damages that
have occurred through fault of the Lessee, fully indemnifying damage done to
other premises in the building.
3.2.19. Within 5 calendar days of the completion of the term of validity
of the present Agreement, to leave the leased premises entirely, and to hand
them over to the Lessor in accordance with the certificate.
ARTICLE 4
GUARANTEES AND OBLIGATIONS OF THE PARTIES
4.1. The Lessor shall guarantee that at the time of the signing of the
present agreement he has the right to conclude the Lease Agreement for premises
in the building at the following address: 191028, Russia, Saint Petersburg, 15
Mokhovaya St.
4.2. The Lessee hereby guarantees that he is familiar with the condition
of the premises to be leased and will not file any claims or suits with respect
to them.
ARTICLE 5
AMENDMENT AND PREMATURE CANCELLATION OF THE AGREEMENT
5.1. Amendment of the conditions of the present Agreement and its
premature cancellation shall be permitted by agreement of the Parties.
5.2. The reorganization or liquidation of the Lessor's organization, as
well as the transfer to another person of the right of ownership (full business
management, day-to-day or trust management) in the premises and equipment leased
pursuant to this Agreement, shall not be grounds for amendment of the conditions
nor cancellation of the present Agreement.
5.3. Upon the expiration of the term of validity of the present Agreement,
the Lessee shall have the right to extend its term up to five years.
5.4. The Lessee shall have the right to decline the use of the leased
premises before the expiration of the term of validity of the present Agreement,
after warning the
<PAGE>
Lessor of this no later than one month in advance. The advance shall not be
returned in this event.
5.5. Upon the demand of the Lessor, the present Agreement may be canceled
unilaterally in the following cases:
- delay in rental payments greater than 10 days
- use of the premises not for the purpose indicated in the Agreement
- use of the premises by third parties without the consent of the Lessor
- should the Lessee not provide unimpeded access to the facility for its
examination and inspection of the observance of the conditions of the
Agreement to representatives of the Lessor or the balance-holder, the
Administration of the State Inspection for the Preservation of
Architectural Monuments [UGIOP]
- should the Lessor deliberately or through carelessness impair the
condition of the facility or the service equipment, or not fulfill the
obligations stipulated by items of the Agreement
In other cases, the cancellation of the Agreement shall be effected by
adjudication.
5.6. In case of the cancellation of the Agreement by consent of the
parties, or upon the initiative of the Lessor, the Lessor shall, within 10 days
of the time of cancellation of the Agreement, return the remainder of the
advance rental payment (with the exception of the payment for the current
quarter), and shall also pay the Lessee all expenses, confirmed by calculation,
relating to the dismantling of equipment and its installation at new
accommodations.
In case of failure to observe the time periods stipulated by this item, the
Lessor shall pay the Lessee a penalty of 0.5% of the sum in arrears for each day
in arrears.
ARTICLE 6
TERMINATION OF THE AGREEMENT
6.1. In case of the termination of the present Agreement in connection
with the completion of the term of its validity, the Lessee shall vacate the
premises within 5 calendar days pursuant to the certificate.
6.2. In case of the existence of remarks, signed by both parties, in the
certificate of acceptance of the leased premises, the Lessee shall undertake to
eliminate them within the time period stipulated in the certificate, at his own
expense.
In case of failure to observe the time periods for the elimination of the
remarks,
<PAGE>
the Lessee shall pay a fine in the amount of 10% of the quarterly rental
payment.
ARTICLE 7
SPECIAL CONDITIONS
7.1. The Lessee is hereby warned that there is reconstruction going on in
the building, and that this will cause some inconveniences, which must be
reduced to the minimum, to the Lessee.
7.2. The Lessee may, according to his desire, insure his property at his
own expense.
7.3. The Lessee shall undertake to:
- fulfill the requirements of the preservation commitment to the
Administration of the State Inspectorate for the Preservation of
Historical Monuments (agreement No. 2490 of 20 November 1994) in the
section concerning leased premises
- keep fire-prevention equipment on the premises to be used pursuant to
the requirements of the fire protection authorities and the official
responsible for the observance of the fire safety rules.
7.4. The Lessor shall not be liable and shall not pay any compensations for
losses of or damage to the Lessor's property that were not his fault.
ARTICLE 8
LIABILITY OF THE PARTIES
8.1. The Parties shall bear property liability for the nonfulfillment or
improper fulfillment of obligations pursuant to the present Agreement in
accordance with current law of the Russian Federation and the conditions of the
present Agreement.
8.2. In case of the improper fulfillment of its obligations by one of the
Parties, the Party at fault shall pay the other Party for all the losses
incurred by the latter in connection with such improper execution.
8.3. Should damage to the leased premises or to equipment be caused by
the Lessee as a result of violation of the rules of operation of electrical,
water and sewage systems, devices, or instruments, the Lessee shall fully
compensate the Lessor for the damages in accordance with a bilateral statement.
8.4. Should the Lessor undertake any actions impeding the legal and
actual use by the Lessee of the premises furnished under the present Agreement,
the Lessor shall
<PAGE>
compensate the Lessee for all the losses incurred by the latter in this
connection.
8.5. The payment of punitive sanctions shall not exempt the Parties from
the elimination of a violation and the fulfillment of its obligations pursuant
to the present Agreement.
ARTICLE 9
SETTLEMENT OF DISPUTES
9.1. The Parties have agreed that they will take all measures to settle
disputes and disagreements that may arise from the present Agreement or in
connection with it through negotiations.
9.2. Should the Parties be unable to come to agreement with respect to
matters in dispute that are related to the fulfillment of obligations pursuant
to the present Agreement, the disputes or disagreements shall be subject to
settlement at the Saint Petersburg International Commercial Arbitration Court in
accordance with its rules of procedure. The third-party tribunal will be
comprised of one arbiter. The Russian language will be used as the language of
the legal proceedings.
ARTICLE 10
FORCE MAJEURE
10.1. Neither of the Parties shall be liable for the complete or partial
nonfulfillment of any of its obligations if the nonfulfillment is the
consequence of such circumstances as flood, fire, earthquake or other natural
disasters, as well as war, military actions, blockade, the actions of state
authorities, and other circumstances beyond the control of the Parties.
In such case, the time for the fulfillment of the obligations shall be
increased commensurately by the time of the action of such circumstances and
their consequences that are beyond the control of the Parties.
10.2. The Party for which the impossibility of the fulfillment of its
obligations has been created must notify the other Party of this, and should
these circumstances exist more than three months, the other Party shall have the
right to cancel the present Agreement entirely or partially without obligations
to compensate losses (including the
<PAGE>
expenses) of the first Party.
ARTICLE 11
OTHER CONDITIONS
11.1. All amendments and additions to the present Agreement shall be
valid only if they are made in writing and signed by both Parties.
11.2. Matters not regulated by the Agreement shall be regulated by
current civil law.
11.3. All expenses relating to the state registration of the present
Agreement shall be borne by the Lessee.
11.4. The present Agreement shall be drawn up and signed in two copies.
Both copies shall have identical legal force.
LEGAL ADDRESSES AND PAYMENT REQUISITES
THE LESSOR
Union of Concert Artists of the Russian Federation
Russia, 191028, Saint Petersburg, 15 Mokhovaya St.
Settlement account 407038000000000616 at the Ligovskiy branch of the Bank Sankt-
Peterburg Public Joint Stock Company, Saint Petersburg; correspondent account
30101810900000000790, Taxpayer Identification Number 7803042829.
THE LESSEE
Artificial Life Rus Limited Liability Corporation
Russia, 191028, Saint Petersburg, 15 Mokhovaya St.
FOR THE LESSOR FOR THE LESSEE
Deputy Chairman of the Union of Concert Director-General
Artists of the Russian Federation
_______________ A. P. UTESHEV _______________ (Malokhavskiy)
(Vasil'eva)
<PAGE>
[Seal] [Seal]
[DIAGRAM]
3rd floor plan
==============
<PAGE>
Exhibit 10.16-CE
Lease
(Subsidized, in effect until September 30, 2001)
Lessor Vierwaldstatter Beteiligungen AG, Stans
represented by
Noetzli Immobilien-Treuhand AG
Kappehmattstrasse 5
5052 Hergiswil
Lessee: Artificial Life Solutions AG
Muhlebach 2
6362 Stansstad
Property: Muhlebach 2, 6362 Stansstad
- --------------------------------------------------------------------------------
Leased Premises - 65.95 m(2) of office space (including a portion of the traffic
area, water-closet facilities, etc.) on the third floor as shown an the enclosed
ground plan
<PAGE>
1. Commencement and Term of the Lease
----------------------------------
Tenancy begins on October 1, 1999. The lease agreement is concluded for a
fixed term of two years, ending on September 30, 2001. The lease expires
without notice upon the lapse of the agreed term. As of October 1, 2001,
the lease of September 24, 1999, is effective for these same premises.
2. Rent and Other Charges
----------------------
<TABLE>
<S> <C> <C> <C>
The annual net rent amounts to:
from October 1, 1999 to June 30, 2000 Fr. 150.00/m(2) Fr. 9,892.50
less subsidy per year Fr. 50.00/m(2) Fr. 3,297.50 Fr. 6,595.00
from July 1, 2000 to June 30, 2001 Fr. 170.00/m(2) Fr. 11,211.50
less subsidy per year Fr. 70.00/m(2) Fr. 4,616.50
from July 1, 2001 to September 30, 2001 Fr. 200.00/m(2) Fr. 13,190.00
less subsidy per year Fr. 100.00/m(2) Fr. 6,595.00
Furthermore, the lessee has to make payments
on account for the following additional expenses:
- heating, hot water and
water treatment
- janitorial, cleaning, materials
- trash collection, sewage purification, operating fees.
general electric, water, elevator service,
television fees Fr. 600.00
------------
Annual gross rent Fr. 7,195.00
Monthly gross rent Fr. 599.60
============
</TABLE>
The preceding gross rent is to be paid in advance an monthly installments.
Other claims arising from the lease agreement cannot be offset against the
lessor's claims from this lease agreement. The aforesaid rent reduction is
a program of Vierwaldstatter Beteiligungen AG for the promotion of
economic development. The purpose of this program is to lighten the
starting conditions for enterprising young businesspeople and to promote
the economy. The rent reduction is limited to 2 years. After the lapse of
2 years the conditions which are usual for the market will be in force and
will be regulated in a separate agreement having a term of 5 years and
nine months with the option right to extend the agreement an additional 5
years.
<PAGE>
Thus the subsidy amounts to
from October 1, 1999 to June 30, 2000 Fr 2,473.15
from July 1, 2000 to June 30, 2001 Fr 4,616.50
from July 1, 2001 to September 30, 2001 Fr 1,648.75
-----------
Total Fr 8,738.40
===========
3. Other Payments
--------------
Every year a derailed statement of other payments shall be made in
accordance with Provision 2. These shall be computed from the actual costs
and distributed according to an apportionment formula for hearing and
other expenses. The lessee is obligated to make all resulting additional
payments based on this statement. Excess payments shall be carried forward
to the new statement for the lessee. Each monthly contribution for other
charges shall be increased or decreased according to the result of the
annual statement balance sheet plus the profit-and-loss-account.
4. Delivery of Possession of the Leased Property
---------------------------------------------
Possession of the Leased Property shall be delivered with the assistance
of the company Noetzli Immobilien-Treuhand AG. The office space is fully
developed. Upon delivery of possession of the leased property a record of
the delivery shall be drawn up and signed by the parties to the agreement.
5. Maintenance, Repairs and Renovations
------------------------------------
The lessee is required to keep the leased premises in good and clean
condition in accordance with Article 257fOR. It is liable to indemnify
the lessor for damages which are not the result of ordinary usage or acts
of God. If work that is the responsibility of the lessor becomes
necessary, the lessee shall report it immediately to the lessor in order
to prevent increasing damage.
6. Repairs Payable by the Lessee
-----------------------------
The lessee assumes responsibility for the so-called minor maintenance of
the leased property in accordance with Article 263 OR, namely, all repairs
which individually cost no more than 0.2 percent of the annual net rent.
The following repairs shall always be paid by the lessee in accordance
with local custom:
- Reparation of door locks and keys, hinges, doorbells and windows and
the replacement of window cranks, electric switches and broken panes
of glass and all repairs to the lessee's own furnishings and
equipment.
<PAGE>
7. Inspection Right of the Lessor
------------------------------
The lessor is permitted at any time, with prior notice to the lessee, to
inspect the leased premises as necessary for the preservation of the
property right and the supervisory right. Normally this inspection shall
be made during the day. The lessor has the right of access to the furnace
and utility room in the basement, to the extent that this is necessary.
8. Liens
-----
For a lapsed annual rent and the current half-year rent and for the other
charges specified in this agreement the lessor has a lien on the movable
property which is located in the rented spaces and which furnishes and is
used in them.
9. Subleasing
----------
The lessor can withhold consent to sublease, if either
- the lessee refuses to inform the lessor of the conditions of the
sublease,
- the sublease is disadvantageous to the lessor,
- the conditions of the sublease are improper in comparison with those
of the main lease.
Once given, consent to sublease especially becomes inapplicable if the
lessee agrees to or allows a sub-sublease without the written consent of
the lessor.
10. Transfer of the Lease to a Third Party
--------------------------------------
In connection with the transfer of the lease to a third party, the
following, among other things, shall be agreed upon:
The lessor can withhold consent to the transfer on significant grounds in
accordance with Article 263 Paragraph 2 OR.
11. Return of the Leased Property
-----------------------------
Upon expiration of the lease, the premises must be returned in clean
condition. Fixtures and installations which the lessee has installed at
its own expense and which are firmly affixed to the building shall become
the property of the lessor upon expiration of this agreement.
<PAGE>
12. Additional Contractual Rights
-----------------------------
Wherever the present agreement does not specify differently, the
requirements of the OR (Articles 253 - 274) and the local regulations by
order the fire and health authorities shall additionally apply. All
insurance connected with the leased property such as theft, fire, glass,
liability and loss-of-profit, and staff insurance and insurance of
furnishings and equipment are the lessee's responsibility. The increased
premium for the lessor's building insurance which results from approved
alterations and improvements by the lessee to the leased premises shall be
borne by the lessee.
13. Court of Jurisdiction
---------------------
The Court of Stansstad has jurisdiction over all disputes developing from
this agreement. Reserved for this are Article 274b OR and the cantonal law
on arbitration authorities for rent and lease (GSMP), the cantonal and
Swiss means of legal redress and the arbitration authorities for rent and
lease in the case of Provision 5 Paragraph 3 ff.
The parties acknowledge that they have read this agreement and that each has
received a copy of it.
Hergiswil/Stansstad, September 23, 1999
The Lessor: The Lessee:
Vierwaldstatter Beteiligungen AG
represented by
Noetzli Immobilien-Treuhand AG Artificial Life Solutions AG
<PAGE>
Exhibit 10.17-CE
[logo:]
NOETZLI
IMMOBILIEN-TREUHAND AG
[end of logo]
Lease
Lessor: Vierwaldstatter Beteiligungen/(1)/ AG, Stans)
represented by
Noetzli Immobilien-Treuhand/(2)/ AG)
Kappelihmattstrasse 5
5052 Hergiswil
Lessee: Artificial Life Solutions AG
Muhlebach 2
6362 Stansstad
Property: Muhlebach 2, 6362 Stansstad
- --------------------------------------------------------------------------------
Leased Premises: - approximately 424.6(m2) of office and archive space
(including traffic area, water-closet facilities and
kitchen for joint use) on the third floor as shown in
the enclosed ground plan
- 2 covered parking places, Nos. 16 and 17
- 4 open-air parking places. Nos. 4 - 7
[handwritten note:] Photocopy given to [illegible; Rob Pantano?] on March 22,
1999.
- ----------
/(1)/ investments
/(2)/ real estate trust
<PAGE>
1. Commencement and Term of the Lease
----------------------------------
Tenancy begins on July 1, 1999. The lease agreement is concluded for a
fixed term of eight years, ending on June 30, 2007. The rent shall be
graduated for the first three years of the lease term, i.e. until June 30,
2002, after which the rent shall be indexed The lessee has the option to
extend the term of this agreement for a period of five years, ending on
June 30, 2012. If it wishes to exercise this right, it must declare its
intent to the lessor in writing by registered mail no later than November
30, 2006. The lease agreement continues tacitly insofar as it is not
terminated by one or the other party after a six-month period of notice
has elapsed or later on one of the dates set for payment at the end of
June or the end of December.
2. Rent and Other Charges
----------------------
<TABLE>
<S> <C> <C>
The annual net rent amounts to:
for the first year (Fr. 150.00/m(2)) - June 30, 2000 Fr. 63,700.00
for the second year (Fr. 170.00/m(2)) - June 30, 2001 Fr. 72,180.00
for the third year (Fr. 200 00/m(2)) and thereafter Fr. 84,920.00
2 covered parking places, Nos. 16 and 17, each at Fr 125/month Fr. 3,000.00
4 open-air parking places, Nos. 4-7, each at Fr. 50.00/month Fr. 2,400.00
Furthermore, the lessee has to make payments
on account for the following additional expenses:
- heating, hot water and
water treatment
- janitorial, cleaning, materials
- trash collection, sewage purification, operating fees,
general electric, water, elevator service,
television fees Fr. 4,100.00
-------------
Annual gross rent in the first year Fr. 73,200.00
in the second year Fr. 81,680.00
in the third year Fr. 94,420.00
Monthly gross rent in the first year Fr. 6,100.00
=============
in the second year Fr. 6,806.65
in the third year Fr. 7,868.35
</TABLE>
The preceding gross rent is to be paid in advance in monthly installments.
Other claims arising from the lease agreement cannot be offset against the
lessor's claims from this lease agreement.
<PAGE>
3. Other Payments
--------------
Every year a detailed statement of other payments shall be made in
accordance with Provision 2. These shall be computed from the actual costs
and distributed according to an apportionment formula for heating and
other expenses. The lessee is obligated to make all resulting additional
payments based on this statement Excess payments shall be carried forward
to the new statement for the lessee. Each monthly contribution for other
charges shall be increased or decreased according to the result of the
annual statement balance sheet plus the profit-and-loss-account.
4. Rent Adjustment
---------------
The rent shall be graduated until June 30, 2002 (see Provision 2,
Paragraph 1). As of July 1, 2002, the annual net rent for the office and
archive spaces shall be Fr 84,920.00 and shall be adjusted according to
the National Consumer Price Index. The index figure at the time of the
conclusion of this agreement, i.e. 104.7 points (April 1999. Based on May
1993 = 100), shall serve as the base level. If the National Index rises or
falls by 5 (five) points with respect to that at the conclusion of this
agreement or since the last adjustment, the parties shall be entitled to
adjust the net rent by the same amount as the change in the index. A rent
adjustment shall be announced with the official form one month in advance
of the next rent payment date.
5. Delivery of Possession of the Leased Property
---------------------------------------------
Possession of the leased property was delivered from the company No
Comment to the lessee on May 17, 1999, with the assistance of the company
Noetzli Immobilien-Treuhand AG. All office and archive premises are fully
developed and were newly painted. Upon delivery of possession of the
leased property a record of the delivery was drawn up and signed by all
parties to the agreement. The shortcomings mentioned in the record were
rectified. For the period from May 17, 1999, until June 30, 1999, a
sublease exists between the company No Comment as lessor and the company
Artificial Life Solutions AG as lessee. The sublease and the lease between
the owner and the company No Comment shall be terminated as of June 30,
1999
6. Maintenance, Repairs and Renovations
------------------------------------
The lessee is required to keep the leased premises in good and clean
condition in accordance with Article 257f OR/(3)/. It is liable to
indemnify the lessor for damages which are not the result of ordinary
usage or acts of God. If work that is the responsibility of the lessor
becomes necessary, the lessee shall report it immediately to the lessor in
order to prevent increasing damage.
- ----------
/(3)/ Obligationsrecht = obligation law
<PAGE>
7. Repairs Payable by the Lessee
The lessee assumes responsibility for the so-called minor maintenance of
the leased property in accordance with Article 263 OR, namely, all repairs
which individually cost no more than 0.2 percent of the annual net rent.
The following repairs shall always be paid by the lessee in accordance
with local custom:
- Reparation of door locks and keys, hinges, doorbells and windows and
the replacement of window cranks, electric switches and broken panes
of glass and all repairs to the lessee's own furnishings and
equipment
8. Inspection Right of the Lessor
------------------------------
The lessor is permitted at any time, with prior notice to the lessee, to
inspect the leased premises as necessary for the preservation of the
property right and the supervisory right. Normally this inspection shall
be made during the day. The lessor has the right of access to the furnace
and utility room in the basement, to the extent that this is necessary.
9. Liens
-----
For a lapsed annual rent and the current half-year rent and for the other
charges specified in this agreement the lessor has a lien on the movable
property which is located in the rented spaces and which furnishes and is
used in them.
10. Subleasing
----------
The lessor can withhold consent to sublease, if either
- the lessee refuses to inform the lessor of the conditions of the
sublease,
- the sublease is disadvantageous to the lessor,
- the conditions of the sublease are improper in comparison with those
of the main lease.
Once given, consent to sublease especially becomes inapplicable if the
lessee agrees to or allows a sub-sublease without the written consent of
the lessor.
11. Transfer of the Lease to a Third Party
--------------------------------------
In connection with the transfer of the lease to a third party, the
following, among other things, shall be agreed upon: The lessor can
withhold consent to the transfer on significant grounds in accordance with
Article 263 Paragraph 2 OR.
<PAGE>
12. Return of the Leased Property
-----------------------------
Upon expiration of the lease, the premises must be returned in clean
condition. Fixtures and installations which the lessee has installed at
its own expense and which are firmly affixed to the building shall become
the property of the lessor upon expiration of this agreement.
13. Additional Contractual Rights
-----------------------------
Wherever the present agreement does not specify differently, the
requirements of the OR (Articles 253 - 274) and the local regulations by
order the fire and health authorities shall additionally apply. All
insurance connected with the leased property such as theft, fire, glass,
liability and loss-of-profit, and staff insurance and insurance of
furnishings and equipment are the lessee's responsibility. The increased
premium for the lessor's building insurance which results from approved
alterations and improvements by the lessee to the leased premises shall be
borne by the lessee.
14. Rent Deposit
------------
The lessor shall open a savings account for the rent deposit in the name
of the lessee at the Nidwaldner Kantonalbank. The lessee is obligated to
pay the amount of Fr. 20,000.00 into the newly opened account by June 30,
1999, at the latest. In other respects, the requirements according to
Article 257e OR are in force.
15. Court of Jurisdiction
---------------------
The Court of Stansstad has jurisdiction over all disputes developing from
this agreement. Reserved for this are Article 274b OR and the cantonal law
on arbitration authorities for rent and lease (GSMP), the cantonal and
Swiss means of legal redress and the arbitration authorities for rent and
lease in the case of Provision 5 Paragraph 3 ff.
<PAGE>
The parties acknowledge that they have read this agreement and that each has
received a copy of it.
Date: June 4, 1999
The Lessor: The Lessee:
Vierwaldstatter Beteiligungen AG
represented by
Noetzli Immobilien-Treuhand AG Artificial Life Solutions AG
[signature] [signature]
<PAGE>
Exhibit 10.18-CE
[logo:] CB
Lease for Office Spaces
- --------------------------------------------------------------------------------
Lessor Erbengemeinschaft/(1)/ A. + W Hummel Reference No
represented by CHARLES BARRIER IMMOBILIEN/(2)/ AG Guarantee 10,000.00 SFr.
Minervastr. 27, 8032 Zurich
Lessee (If several persons are lessees, they are jointly and severally liable
for the obligations arising from this agreement)
Artificial Life Solutions AG
Muhlebach 2
6362 Stansstad
Property Seestrasse 11, 8002 Zurich
1. Leased Premises / Annual Rent
<TABLE>
<CAPTION>
Property No Floor Property/Purpose of Use Area m(2) Rate Fr /m2 Annual Rent
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SFr.
01 2nd floor, left offices approximately 75 21,600.00 SFr.
SFr.
Total Annual Rent, Net 21,600.00 SFr.
Jointly used by ----------
</TABLE>
2. Commencement and Termination of the Lease
Commencement on August 1. 1999, 12.00 p.m.
Notice requirements: six months in advance at the end of March and the end
at the earliest on of September
Notice by the lessee shall be given with registered letter. Notice by the lessor
shall be given with an official form. The notice is valid if it is received by
the other party or is awaiting collection at the post office box on the last day
before commencement of the period of notice at the latest. If the lessee wishes
to dissolve the lease without keeping to the agreed periods and dates of notice,
then he shall be liable for rent and the other obligations of the lessee until
further leasing but until a date no later than the next contractually possible
termination date. The outgoing lessee who has dissolved the lease on a date
other than an agreed termination date shall assume responsibility for the
advertisement-insertion costs and other activities connected with the
re-leasing.
3. Rent and Other Charges
The rent shall be paid in advance in monthly installments on the first day of
every month. Provided that no other arrangement has been made, the first rent
payment shall be paid upon conclusion of this agreement.
<TABLE>
<CAPTION>
Property No Rent Payment on Account** Flat Rate for Janitorial Gross Rent
(see Annual Rent*) Heating and Stairwell Cleaning
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SFr.
01 Fr. 1,800.00 Fr 85.00 Fr 20.00 1,905.00 SFr.
SFr.
Total Gross Rent per Month 1,905.00 SFr.
</TABLE>
- ----------
/(1)/ community of heirs
/(2)/ real estate
<PAGE>
On the appointed day, a heat or other-charge statement will be drawn up for
heating based on prime costs with allowances made for the payment on account**
4. Reminder Fees and Collection Fees
The lessor is entitled to charge the lessee for expenses in connection with late
rent payments.
5. Additional Requirements or References to the Appendix of the Lease
- - The appendix to the lease of July 14, 1999, forms an integral part of this
agreement.
- - General conditions of the lease for office spaces
The "general conditions of the lease for office spaces" form an integral part of
this agreement. The parties acknowledge with their signatures that they have
received a copy and that they give their consent to the contents.
This lease is drawn up in duplicate and contains all agreements made. Any change
or addition to the same must be made in writing in order to be valid. The lease
takes effect when both parties to the agreement have signed.
Zurich, July 14, 1999/ir
The Lessor The Lessee(s)
[signature] [signature]
- ----------------------------- -----------------------------
CHARLES BARRIER IMMOBILIEN AG Artificial Life Solutions AG
<PAGE>
[logo:] CB
5. Sublease/Transfer of the Rent to a Third Parry
Sublease or transfer of the lease shall be permitted only with the prior written
consent of the lessor. The lessee shall give the lessor all details about each
intended sublessee or third party which are necessary for the consideration of
the request and shall especially announce to the lessor all conditions of the
sublease or transfer. Once given, the lessor's consent shall no longer apply if
the lessee has not completely or correctly informed the lessor.
Sublease
The lessor can withhold consent to sublease, if
- the lessee refuses to inform the lessor of the conditions of the
sublease,
- the sublease is disadvantageous to the lessor,
- the conditions of the sublease are improper in comparison with those of
the main lease.
Once given, consent to sublease shall no longer apply especially if the lessee
agrees to or allows a sub-sublease without the written consent of the lessor.
Regarding misuse of the sublease, the following, among other things, shall be
agreed upon:
A rent demanded of the sublessee shall be considered misuse if it increases the
rent of the main lease by the amortization of the investments which the lessee
demonstrably transacted in the leased property for the duration of the lease
term and exceeds a commensurate payment of interest on such investments.
Transfer of the Lease to a Third Parry
- --------------------------------------
Regarding the transfer of the lease to a third party, the following, among other
things, shall be agreed upon:
The lessor can withhold consent to transfer on significant grounds in the sense
of Article 263 Paragraph 2 OR/(3)/. Namely, significant grounds are present if
the lessee intends to make a profit through the transfer of his rights from the
lease to a third party or if the lessee actually makes a profit. Any payment,
whether it is a one-time or periodic payment, which a lessee makes receivable or
stipulates shall be considered a profit in this sense if because of it more than
the demonstrably transacted investments in the leased property are amortized for
the term of the agreed lease and yields commensurate interest.
- ----------
/(3)/ Obligationsrecht = obligation law
<PAGE>
[logo:] CB
6. Improvements by the Lessee
The rent does not include any of the lessee-specific improvements (installations
of telephone, fax and other means of communication, alterations, additions and
refurbishments). All renovations and/or installations are payable by the lessee.
The lessee shall bear the cost of refurbishments during the term of the lease.
Any alteration of the premises requires the prior approval of the lessee. The
lessee itself is responsible for the necessary building petitions and shall pay
the costs of them. Partitions, fixtures and installations which the lessee has
constructed at its own expense must be removed upon the lessor's request after
the termination of the lease. The installations can be left in place if the
succeeding lessee agrees to accept them. In any case, the lessor's approval is
required
7. Guarantee for the Lease
For the guarantee of the lessee's contractual obligations, it shall pay the
lessor, upon the signing of this agreement, a rent deposit in the amount of Fr.
10,000.00, which shall be paid into an account with the CREDIT SUISSE,
Zurich-Enge.
Zurich, July 14, 1999/ir
The Lessor: The Lessee:
[signature] [signature]
- ---------------------------------------- -----------------------------------
Erbengemeinschaft A. + W. Hummel, Zurich Artificial Life Solutions AG
represented by:
CHARLES BARRIER IMMOBILIEN AG
<PAGE>
[Logo:] CB
Appendix No. 1 to the Lease Agreement of July 14, 1999
SPECIAL ARRANGEMENTS FOR THE LEASE
The appendix is effective as an integral part of the lease agreement of July 14,
1999, between Erbengemeinschaft A. + W. Hummel, Zurich, represented by CHARLES
BARRIER IMMOBILIEN AG, Minervastrasse 27, 8032 Zurich, and Artificial Life
Solutions AG, Muhlebach 2, 6362 Stansstad, for the office spaces (approximately
75 m(2)) on the second floor of "Seestrasse 11," 8002 Zurich.
1. Applicability / Changes In the Lease
In case of doubt, the requirements of this supplementary agreement take
precedence over the printed text of the lease form. The requirements of the
obligations law have subsidiary applicability. Changes and additions to the
present lease/appendix must be made in writing and must be designated in an
addendum as an integral part of the main lease.
All agreements and promises which are not made in the required written form are
not valid.
2. Rent Adjustments
The lessee notes that the agreed rent is based on the cost level of the
following factors:
a) Mortgage-loan interest rate 3.75% (reserves ---- %)
b) The offset for the purchasing-power protection of the
risk-bearing capital was effected until June 30, 1999
(144.8 points) (reserves ---- %)
c) Offset for the general increases in cost until
June 30, 1999 (reserves ---- %)
3. Cleaning of the Lease Premises
The lessee is solely responsible for the cleaning of the leased premises.
4. Company Signs
Company signs are payable by the lessee. Size, kind and location of the signs
require prior approval by the lessor.
<PAGE>
EXHIBIT 10.19-CE
STOCK PURCHASE AGREEMENT
AGREEMENT made this ____ day of May, 1999, by and between Eberhard
Schoneburg ("Schoneburg") having an address at 218 Commonwealth Avenue, Boston,
Massachusetts, 02116, and Artificial Life, Inc. ("Artificial Life"), a Delaware
corporation having a principal place of business at Four Copley Place, Suite
102, Boston, Massachusetts, 02116.
WHEREAS, Schoneburg owns Four Hundred Ninety Thousand (490,000) shares of
Common Stock, $0.01 par value (the "Shares"), of Cybermind Ventures, Inc. (the
"Company");
WHEREAS, Schoneburg wishes to sell a total of Four Hundred Ninety Thousand
(490,000) shares of Common Stock of the Company to Artificial Life and
Artificial Life wishes to buy from Schoneburg a total of Four Hundred Ninety
Thousand (490,000) Shares from Schoneburg;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration mutually exchanged by the parties hereto, the receipt and
sufficiency of which are hereby mutually acknowledged, intending to be legally
bound the parties hereto covenant and agree as follows:
1. Purchase of the Shares. Upon the terms and conditions set forth herein
----------------------
and in reliance upon the representations and warranties set forth below,
Schoneburg agrees to sell to Artificial Life, and Artificial Life agrees to
purchase from Schoneburg, Four Hundred Ninety Thousand (490,000) Shares. The
parties hereto agree that the purchase price for the Shares payable by
Artificial Life will be Fifty Thousand Dollars ($50,000) (the "Purchase Price").
2. Closing. The purchase and sale of the Shares shall take place at a
-------
closing (the "Closing") shall take place at the offices of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, Massachusetts at
10 o'clock a.m., on May __, 1999 or such other location, date and time as may be
agreed to by the parties (such date and time being called the "Closing Date").
At the Closing, Schoneburg will deliver to Artificial Life certificates
representing Four Hundred Ninety Thousand (490,000) Shares, duly endorsed for
transfer to the Purchasers, as appropriate, and the Purchasers will each deliver
Schoneburg a separate check or wire transfer for $50,000, representing
Artificial Life's full payment of the Purchase Price.
3. Representations and Warranties of Schoneburg. Schoneburg hereby
--------------------------------------------
represents and warrants to Artificial Life that he is the record and beneficial
owner of the Shares and has good and marketable title thereto, free and clear of
all pledges, liens, security interests, charges, options, restrictions or other
encumbrances. Schoneburg has the right, power and authority to enter into this
Agreement and to perform his obligations hereunder. The representations and
warranties of Schoneburg shall survive the purchase and sale of the Shares.
<PAGE>
4. Representations and Warranties of the Purchasers. Artificial Life
------------------------------------------------
represents and warrants to Schoneburg that:
(i) the execution and delivery of this Agreement by Artificial Life and
the consummation by Artificial Life of the transactions contemplated
hereby have been duly authorized by all necessary corporate action
on the part of Artificial Life;
(ii) neither the execution and delivery of this Agreement by Artificial
Life nor the consummation of the transactions contemplated hereby
(a) violate, conflict with or result in the breach or termination
of, or constitute a default under either of the Artificial Life's
Certificate of Incorporation or its By-laws, or the terms of any
agreement or instrument to which Artificial Life is a party or by
which Artificial Life is bound or subject, (b) violate any judgment,
order, injunction, decree or award against or binding upon
Artificial Life, or (c) constitute a violation of any applicable law
or regulation of any applicable jurisdiction;
5. Indemnification. In consideration of Artificial Life's purchase of the
---------------
Shares, Schoneburg hereby agrees to indemnify, defend and hold Artificial Life
harmless for any claim, liability, obligation, loss, damage, assessment,
judgment, cost and expense (including, without limitation, reasonable attorneys'
and accountants' fees and costs and expenses reasonably incurred in
investigating, preparing, defending against or prosecuting any litigation or
claim, action, suit, proceeding or demand) of any kind or character resulting
from claims, charges, liens, contracts, rights, options, security interests,
mortgages, encumbrances and restrictions of every kind and nature against the
Purchasers arising out of or in any manner relating or attributable to any
inaccuracy in any representation, or any breach of any warranty or covenant
herein.
6. Miscellaneous.
-------------
(a) Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral.
(b) Assignment. This Agreement shall not be assigned by operation of law
----------
or otherwise without the prior written consent of the other parties hereto. This
Agreement shall be binding upon the heirs, legatees and devisees, executors,
administrators and legal representatives of the parties, and upon the permitted
assigns of both parties.
(c) Amendment; Waiver. This Agreement may not be amended or modified
-----------------
except by an instrument in writing signed by the parties.
(d) Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the law of The Commonwealth of Massachusetts, without giving
effect to the conflict of law principles thereof.
<PAGE>
IN WITNESS WHEREOF, Schoneburg and Artificial Life have caused this
Agreement to be executed and delivered under seal as of the date first written
above.
/s/ Eberhard Schoneburg
-----------------------------------
Eberhard Schoneburg
ARTIFICIAL LIFE, INC.
By: /s/ Robert Pantano
-----------------------------------
Name:
Title:
<PAGE>
Exhibit 10.20-CE
STOCK PURCHASE AGREEMENT
AGREEMENT made this day of May, 1999, by and between Cybermind
----
Interactive AG ("Cybermind AG"), a German corporation having a principal place
of business at Am Bersigturm 48, 13507, Berlin, Germany, and Artificial Life,
Inc. ("Artificial Life"), a Delaware corporation having a principal place of
business at Four Copley Place, Suite 102, Boston, Massachusetts, 02116.
WHEREAS, Cybermind AG owns Five Hundred Ten Thousand (510,000) shares of
Common Stock, $0.01 par value (the "Shares"), of Cybermind Ventures, Inc. (the
"Company");
WHEREAS, Cybermind AG wishes to sell a total of Twenty Thousand (20,000)
shares of Common Stock of the Company to Artificial Life and Artificial Life
wishes to buy from Cybermind AG a total of Twenty Thousand (20,000) Shares from
Cybermind AG;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration mutually exchanged by the parties hereto, the receipt and
sufficiency of which are hereby mutually acknowledged, intending to be legally
bound the parties hereto covenant and agree as follows:
1. Purchase of the Shares. Upon the terms and conditions set forth herein
----------------------
and in reliance upon the representations and warranties set forth below,
Cybermind AG agrees to sell to Artificial Life, and Artificial Life agrees to
purchase from Cybermind AG, Twenty Thousand (20,000) Shares. The parties hereto
agree that the purchase price for the Shares payable by Artificial Life will be
Twenty-five Thousand Dollars ($25,000) (the "Purchase Price").
2. Closing. The purchase and sale of the Shares shall take place at a
-------
closing (the "Closing") shall take place at the offices of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, Massachusetts at
10 o'clock a.m., on May 1999 or such other location, date and time as may be
---
agreed to by the parties (such date and time being called the "Closing Date").
At the Closing, Cybermind AG will deliver to Artificial Life certificates
representing Twenty Thousand (20,000) Shares, duly endorsed for transfer to the
Purchasers, as appropriate, and the Purchasers will each deliver Cybermind AG a
separate check or wire transfer for Twenty-five Thousand Dollars ($25,000),
representing Artificial Life's full payment of the Purchase Price.
3. Representations and Warranties of Schoneburg. Cybermind AG hereby
--------------------------------------------
represents and warrants to Artificial Life that he is the record and beneficial
owner of the Shares and has good and marketable title thereto, free and clear of
all pledges, liens, security interests, charges, options, restrictions or other
encumbrances. Cybermind AG has the right, power and authority to enter into this
Agreement and to perform his obligations hereunder. The representations and
warranties of Cybermind AG shall survive the purchase and sale of the Shares.
<PAGE>
4. Representations and Warranties of the Purchasers. Artificial Life
------------------------------------------------
represents and warrants to Cybermind AG that:
(i) the execution and delivery of this Agreement by Artificial Life and
the consummation by Artificial Life of the transactions contemplated
hereby have been duly authorized by all necessary corporate action
on the part of Artificial Life;
(ii) neither the execution and delivery of this Agreement by Artificial
Life nor the consummation of the transactions contemplated hereby
(a) violate, conflict with or result in the breach or termination
of, or constitute a default under either of the Artificial Life's
Certificate of Incorporation or its By-laws, or the terms of any
agreement or instrument to which Artificial Life is a party or by
which Artificial Life is bound or subject, (b) violate any judgment,
order, injunction, decree or award against or binding upon
Artificial Life, or (c) constitute a violation of any applicable law
or regulation of any applicable jurisdiction;
5. Indemnification. In consideration of Artificial Life's purchase of the
---------------
Shares, Cybermind AG hereby agrees to indemnify, defend and hold Artificial Life
harmless for any claim, liability, obligation, loss, damage, assessment,
judgment, cost and expense (including, without limitation, reasonable attorneys'
and accountants' fees and costs and expenses reasonably incurred in
investigating, preparing, defending against or prosecuting any litigation or
claim, action, suit, proceeding or demand) of any kind or character resulting
from claims, charges, liens, contracts, rights, options, security interests,
mortgages, encumbrances and restrictions of every kind and nature against the
Purchasers arising out of or in any manner relating or attributable to any
inaccuracy in any representation, or any breach of any warranty or covenant
herein.
6. Miscellaneous.
-------------
(a) Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral.
(b) Assignment. This Agreement shall not be assigned by operation of law
----------
or otherwise without the prior written consent of the other parties hereto. This
Agreement shall be binding upon the heirs, legatees and devisees, executors,
administrators and legal representatives of the parties, and upon the permitted
assigns of both parties.
(c) Amendment: Waiver. This Agreement may not be amended or modified
-----------------
except by an instrument in writing signed by the parties.
(d) Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the law of The Commonwealth of Massachusetts, without giving
effect to the conflict of law principles thereof.
<PAGE>
IN WITNESS WHEREOF, Cybermind AG and Artificial Life have caused this
Agreement to be executed and delivered under seal as of the date first written
above.
CYBERMIND INTERACTIVE AG
By: /s/ Holger timm
------------------------------
Name:
Title: CEO
ARTIFICIAL LIFE, INC.
By: /s/ Eberhard Shoneburg
------------------------------
Name:
Title:
<PAGE>
Exhibit 10.21-CE
STOCK PURCHASE AGREEMENT
AGREEMENT made this 1st day of November, 1999, by and between Cybermind
Interactive AG ("Cybermind AG"), a German corporation having a principal place
of business at Am Bersigturm 48, 13507 Berlin, Germany, and Artificial Life,
Inc. ("Artificial Life"), a Delaware corporation having a principal place of
business at Four Copley Place, Suite 102, Boston, Massachusetts, 02116.
RECITALS
WHEREAS, Cybermind AG owns Four Hundred Ninety Thousand (490,000) shares
(the "Shares") of the Common Stock, $0.01 par value per share (the "Common
Stock"), of Artificial Life Ventures, Inc. (the "Company"); and
WHEREAS, Cybermind AG wishes to sell all of its shares of Common Stock of
the Company to Artificial Life and Artificial Life wishes to buy such shares
from Cybermind AG.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration mutually exchanged by the parties hereto, the receipt and
sufficiency of which are hereby mutually acknowledged, intending to be legally
bound the parties hereto covenant and agree as follows:
1. Purchase of the Shares. Upon the terms and conditions set forth herein
and in reliance upon the representations and warranties set forth below,
Cybermind AG agrees to sell to Artificial Life, and Artificial Life agrees to
purchase from Cybermind AG, the Shares. The parties hereto agree that the
aggregate consideration to be paid to by Cybermind AG for the Shares will be (a)
Seventy-Five Thousand Dollars ($75,000), plus (b) options (the "Options") to
purchase 5,000 shares of the Common Stock, $0.01 par value, of Artificial Life
at an exercise price of $14.50 per share, which Options shall be governed by the
terms and conditions of the Option Agreement between Artificial Life and
Cybermind AG being executed contemporaneously herewith (the "Purchase Price") a
copy of which is attached hereto as Exhibit A (the "Option Agreement").
2. Closing. The purchase and sale of the Shares shall take place at a
closing (the "Closing") at the offices of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., One Financial Center, Boston, Massachusetts at 10 o'clock am.,
on November 1st, 1999 or such other location, date and time as may be agreed to
by the parties (such date and time being called the "Closing Date") or at such
time as Artificial Life tenders the Purchase Price in full. At the Closing,
Cybermind AG will deliver to Artificial Life certificates representing the
Shares, duly endorsed for transfer to Artificial Life, and Artificial Life will
deliver to Cybermind AG by check or wire transfer Seventy-Five Thousand Dollars
($75,000), plus an executed copy of the Option Agreement in full payment of the
Purchase Price.
3. Representations and Warranties of Cybermind AG. Cybermind AG represents
and warrants to Artificial Life that:
<PAGE>
(a) It is the record and beneficial owner of the Shares and has good and
marketable title thereto, free and clear of all pledges, liens, security
interests, charges, options, restrictions or other encumbrances. Cybermind AG
has the right, power and authority to enter into this Agreement and the Option
Agreement and to perform its obligations hereunder and thereunder and that this
Agreement and the Option Agreement constitute legal, valid and binding
obligations of Cybermind AG, enforceable against Cybermind AG in accordance with
their respective terms. The representations and warranties of Cybermind AG shall
survive the purchase and sale of the Shares.
(b) Neither the execution and delivery of this Agreement by Cybermind AG
nor the consummation of the transactions contemplated hereby (a) violate,
conflict with or result in the breach or termination of, or constitute a default
under the charter documents of Cybermind AG or the terms of any material
agreement or instrument to which Cybermind AG is a party or by which Cybermind
AG is bound or subject, (b) violate any judgment, order, injunction, decree or
award against or binding upon Cybermind AG, or (c) constitute a violation of any
applicable law or regulation of any applicable jurisdiction.
4. Representations and Warranties of Artificial Life. Artificial Life
represents and warrants to Cybermind AG that:
(a) The execution and delivery of this Agreement by Artificial Life and
the consummation by Artificial Life of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Artificial
Life; and
(b) Neither the execution and delivery of this Agreement by Artificial
Life nor the consummation of the transactions contemplated hereby (a) violate,
conflict with or result in the breach or termination of, or constitute a default
under either of Artificial Life's Certificate of Incorporation or By-laws, or
the terms of any material agreement or instrument to which Artificial Life is a
party or by which Artificial Life is bound or subject, (b) violate any judgment,
order, injunction, decree or award against or binding upon Artificial Life, or
(c) constitute a violation of any applicable law or regulation of any applicable
jurisdiction.
5. Indemnification. In consideration of Artificial Life's purchase of the
Shares, Cybermind AG hereby agrees to defend, indemnify against and hold
Artificial Life harmless from any claim, liability, obligation, loss, damage,
assessment, judgment, cost and expense (including, without limitation,
reasonable attorneys' and accountants' fees and costs and expenses reasonably
incurred in investigating, preparing, defending against or prosecuting any
litigation or claim, action, suit, proceeding or demand) of any kind or
character resulting from claims, charges, liens, contracts, rights, options,
security interests, mortgages, encumbrances and restrictions of every kind and
nature against Artificial Life arising out of or in any manner relating or
attributable to any inaccuracy in any representation, or any breach of any
warranty or covenant of Cybermind AG herein.
6. Effect of Tender of Purchase Price by Artificial Life. If Artificial
Life tenders the Purchase Price for the Four Hundred Ninety Thousand (490,000)
Shares in full (i.e., a check for $490,000 and a duly executed Option Agreement,
and Cybermind AG does not deliver its certificate for such Shares duly endorsed
within five (5) business days and Artificial Life advises the Company in writing
of this, the Company is hereby authorized to effect such transfer in its Stock
records with
<PAGE>
the same effect as the receipt of duly endorsed certificates. Thereafter, any
Certificates representing the Shares and registered in the name of Cybermind AG
not delivered shall be null and void.
7. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral.
(b) Assignment. This Agreement shall not be assigned by operation of law
or otherwise without the prior written consent of the other parties hereto. This
Agreement shall be binding upon the heirs, legatees and devisees, executors,
administrators and legal representatives of the parties, and upon the permitted
assigns of both parties.
(c) Amendment; Waiver. This Agreement may not be amended or modified
except by an instrument in writing signed by the parties.
(d) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of The Commonwealth of Massachusetts, without giving
effect to the conflict of law principles thereof.
(e) Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally, sent by reputable overnight courier, sent by registered or certified
mail, postage prepaid, or by facsimile.
if to the Grantee: Cybermind Interactive AG
AM Bersigturm 48
13507 Berlin
Germany
Attention:
Fax:
if to the Company: Artificial Life, Inc.
4 Copley Place, Suite 102
Boston, Massachusetts 02114
Attention: Eberhard Schoneburg, Chairman and
Chief Executive Officer
Fax: (617) 266-5779
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
[signature page follows]
<PAGE>
IN WITNESS WHEREOF, Cybermind AG and Artificial Life have caused this
Agreement to be executed and delivered under seal as of the date first written
above.
CYBERMIND INTERACTIVE AG
By: /s/ Holger Timm
-----------------------------------
Name: HOLGER TIMM
Title: CEO
ARTIFICIAL LIFE, INC.
By: /s/ Eberhard Schoneburg
-----------------------------------
Name: Schoneburg, Eberhard
Title: CEO
<PAGE>
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement") is entered into as of 1st
day of November, 1999, by and between Artificial Life, Inc., a Delaware
corporation (the "Company"), and Cybermind Interactive AG, a German corporation
(the "Grantee").
RECITALS
WHEREAS, the Grantee and the Company are entering into a Stock Purchase
Agreement dated the date hereof (the "Stock Purchase Agreement"), which provides
(subject to the conditions set forth therein) for the purchase by the Company of
Four Hundred Ninety Thousand (490,000) shares of the Common Stock, $0.01 par
value per share, of Artificial Life Ventures, Inc. (the "Shares"); and
WHEREAS, as partial consideration for the purchase by the Company of the
Shares, the Grantee has required that the Company enter into this Option
Agreement and the Company desires to enter into this Option Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration mutually exchanged by the parties hereto, the receipt and
sufficiency of which are hereby mutually acknowledged, intending to be legally
bound the parties hereto covenant and agree as follows:
1. Certain Definitions. Capitalized terms used but not defined in this
Option Agreement shall have the meanings ascribed to such terms in the Stock
Purchase Agreement.
2. Grant of Options. Subject to the terms of this Option Agreement, the
Company hereby grants to the Grantee options (the "Options") to purchase 5,000
shares (the "Option Shares") of the authorized but unissued shares of the Common
Stock, $0.01 par value per share, of the Company (the "Common Stock") at a price
per Option Share equal to $14.50 (the "Exercise Price"). The number of shares of
Common Stock that may be received upon exercise of the Options and the Exercise
Price are subject to adjustment as set forth herein.
3. Term. The Options shall terminate three(3) years from the date hereof
(the "Termination Date").
4. Vesting and Exercise of Options.
(a) The Options shall vest as follows:
(i) One Thousand Six Hundred Sixty-Six (1,666) Options shall vest
and be exercisable twelve (12) months from the date hereof;
(ii) One Thousand Six Hundred Sixty-Seven (1,667) Options shall vest
and be exercisable twenty-four (24) months from the date hereof; and
<PAGE>
(iii) One Thousand Six Hundred Sixty-Seven (1,667) Options shall
vest and be exercisable thirty-six (36) months from the date hereof.
There shall be no partial vesting during any period.
(b) The Grantee may exercise the Options which have vested at any time and
from time to time on or before the Termination Date. Notwithstanding the
occurrence of the Termination Date, the Grantee shall be entitled to purchase
those Option Shares with respect to which it has exercised an Option in
accordance with the terms hereof prior to the Termination Date.
(c) In the event the Grantee wishes to exercise an Option with respect to
any Option Shares, the Grantee shall send to the Company a written notice (the
date of which being herein referred to as the "Notice Date") specifying: (i) the
number of Option Shares that the Grantee will purchase; (ii) the place at which
such Option Shares are to be purchased; and (iii) the date on which such Option
Shares are to be purchased, which shall not be earlier than three (3) business
days nor later than twenty (20) business days after the Notice Date. The closing
of the purchase of such Option Shares (the "Closing") shall take place at the
place specified in such written notice and on the date specified in such written
notice (the "Closing Date"); provided, however, that: (i) if such purchase
cannot be consummated by reason of any applicable law, regulation, order,
judgment, decree or other legal impediment, the Closing Date may be extended by
the Grantee to a date not more than thirty (30) days after the date on which
such impediment is removed; and (ii) if prior notification to or approval of any
governmental authority is required (or if any waiting period must expire or be
terminated) in connection with such purchase, the Company shall promptly cause
to be filed the required notice or application for approval and shall
expeditiously process the same (and the Company shall cooperate with the Grantee
in the filing of any such notice or application required to be filed by the
Grantee and the obtaining of any such approval required to be obtained by the
Grantee), and the Closing Date may be extended by the Grantee to a date not more
than thirty (30) days after the date on which any required notification has been
made, approval has been obtained or waiting period has expired or been
terminated.
(d) Notwithstanding Section 4(c) of this Option Agreement, so long as the
Company shall have fully complied with all of its obligations under this Option
Agreement, no Closing Date shall be more than twelve (12) months after the
related Notice Date, and, if the Closing Date shall not have occurred within
twelve (12) months after the related Notice Date, the exercise of the Options
effected on the Notice Date shall be deemed to have expired.
5. Payment and Delivery of Certificates.
(a) On each Closing Date, the Grantee shall pay to the Company by wire
transfer in immediately available funds to a bank account designated by the
Company an amount equal to the Exercise Price multiplied by the number of Option
Shares to be purchased on such Closing Date.
2
<PAGE>
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 5(a) of this Option Agreement, the
Company shall deliver to the Grantee or its designee a certificate or
certificates representing the Option Shares to be purchased at such Closing
registered in the name of the Grantee, which Option Shares shall be duly
authorized, validly issued, fully paid and nonassessable and free and clear of
all liens, security interests, charges or other encumbrances (collectively, the
"Encumbrances").
6. Adjustment Upon Changes in Capitalization, Etc.
(a) In the event of any change in the Common Stock issued and outstanding
by reason of a distribution, reclassification stock dividend, split-up
(including a reverse stock split), combination, recapitalization, exchange of
shares or similar transaction, the type and number of shares or securities
subject to the Options, and the Exercise Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that the Grantee shall receive upon exercise of the Options
the same class and number of outstanding shares or other securities or property
that Grantee would have received upon exercise of the Options if the Options had
been exercised immediately prior to such event or the record date therefor, as
applicable.
(b) If the Company shall enter into an agreement (i) to consolidate,
exchange shares or merge with any person other than the Grantee or one of the
Grantee's subsidiaries, and, in the case of a merger, shall not be the
continuing or surviving corporation, (ii) to permit any person, other than the
Grantee or one of the Grantee's subsidiaries, to merge into the Company and the
Company shall be the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of the Company or any other
person or cash or any other property, or the shares of Common Stock outstanding
immediately before such merger shall after such merger represent less than 50%
of the common shares and common share equivalents of the Company outstanding
immediately after the merger, or (iii) to sell, lease or otherwise transfer all
or substantially all of its assets to any person, other than the Grantee or one
of the Grantee's subsidiaries, then, and in each such case, proper provision
shall be made in the agreement governing such transactions so that the Option
shall, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, become exercisable for the stock, securities, cash
or other property that would have been received by the Grantee upon exercise of
the Options if the Grantee had exercised the Options immediately prior to such
transaction or the record date for determining the stockholders entitled to
participate therein, as appropriate.
7. Representations and Warranties of the Company.
(a) The Company hereby represents and warrants to the Grantee that the
Company has taken all necessary action to authorize and reserve for issuance and
to permit it to issue, and at all times from the date of this Option Agreement
through the Termination Date will have reserved for issuance upon exercise of
the Options, a sufficient number of authorized shares of Common Stock for
issuance upon exercise of the Options, each of which, upon issuance pursuant to
this Option Agreement and when paid for as provided herein, will be validly
issued, fully paid and nonassessable, and shall be delivered free and clear of
all Encumbrances.
3
<PAGE>
8. Representations and Warranties of Grantee.
The Grantee hereby represents and warrants to the Company as follows:
(a) The Grantee is purchasing the Options and the Option Shares for
investment purposes only, for its own account and not with a view to, or for
sale in connection with, any distribution thereof in violation of Federal or
state securities law.
(b) By reason of its business or financial experience, Grantee has the
capacity to protect its own interests in connection with the transactions
contemplated hereunder.
(c) The Grantee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Options and the Option
Shares.
(d) The Grantee is an "accredited investor" as such term is defined in
Rule 501 of Regulation D under the Securities Act of 1933, as amended (the
"Securities Act").
(e) The Grantee understands that (a) the Option Shares have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (1)
subsequently registered thereunder, (2) Grantee shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to the effect
that the Option Shares to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration, or (3) the
Option Shares can be sold, assigned or transferred pursuant to Rule 144
promulgated under the Securities Act (or a successor rule thereto) ("Rule 144");
(b) any sale of the Option Shares made in reliance on Rule 144 may be made only
in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Option Shares under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the Securities Exchange Commission thereunder; and (c) neither
the Company nor any other person is under any obligation to register the Option
Shares under the Securities Act or any state securities laws or to comply with
the terms and conditions of any exemption thereunder.
(f) Grantee understands that the certificate(s) or other instrument(s)
representing the Option Shares shall bear a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against transfer of
such stock certificates):
LEGEND
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN
4
<PAGE>
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL. IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
9. Miscellaneous.
(a) Extension; Waiver. At any time prior to the Termination Date, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, or (ii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. Except as
provided in this Option Agreement, no action taken pursuant to this Option
Agreement shall be deemed to constitute a waiver by the party taking such action
of compliance with any covenants or agreements contained in this Option
Agreement. The waiver by any party hereto of a breach of any provision hereunder
shall not operate or be construed as a waiver of any prior or subsequent breach
of the same or any other provision hereunder.
(b) Amendment and Modification. Subject to applicable law, this Option
Agreement may be amended, modified and supplemented, or provisions hereof
waived, in writing by the parties hereto in any and all respects before the
Termination Date, by action taken by the respective Boards of Directors of the
Company or the Grantee or by the respective officers authorized by such Boards
of Directors. This Option Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
(c) Further Actions. Each of the parties hereto agrees that, subject to
its legal obligations, it will use its reasonable efforts to do all things
reasonably necessary to consummate the transactions contemplated hereby.
(d) Counterparts. This Option Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
(e) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of Delaware, without giving effect to the
conflict of law principles thereof.
(f) Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally, sent by reputable overnight courier, sent by registered or certified
mail, postage prepaid, or by facsimile.
if to the Grantee: Cybermind Interactive AG
AM Bersigturm 48
5
<PAGE>
13507 Berlin
Germany
Attention:
Fax:
if to the Company: Artificial Life, Inc.
4 Copley Place, Suite 102
Boston, Massachusetts 02114
Attention: Eberhard Schoneburg, Chairman
and Chief Executive Officer
Fax: (617) 266-5779
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
(g) Entire Agreement. This Option Agreement and the other documents
referred to herein or delivered pursuant hereto collectively constitute the
entire agreement and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, among the parties, with
respect to the subject matter of this Option Agreement.
(h) No Third Party Beneficiaries. This Option Agreement is not intended to
confer upon any person other than the parties to this Option Agreement any
rights or remedies under this Option Agreement.
(i) Severability. The provisions of this Option Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions of this Option
Agreement. If any provision of this Option Agreement, or the application of that
provision to any person or any circumstance, is invalid or unenforceable, (i) a
suitable and equitable provision shall be substituted for that provision in
order to carry out, so far as may be valid and enforceable, the intent and
purpose of the invalid or unenforceable provision and (ii) the remainder of this
Option Agreement and the application of the provision to other persons or
circumstances shall not be affect by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability
of the provision, or the application of that provision, in any other
jurisdiction.
(j) Interpretation. The headings in this Option Agreement are for
convenience of reference only, do not constitute part of this Option Agreement
and shall not be deemed to limit or otherwise affect any of the provisions of
this Option Agreement. Where a reference in this Option Agreement is made to a
Section, that reference shall be to a section of this Option Agreement unless
otherwise indicated. Wherever the words "include," "includes" or "including" are
used in this Option Agreement, they shall be deemed to be followed by the words
"without limitation."
(k) Assignment. This Option Agreement shall not be assignable by operation
of law or otherwise.
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<PAGE>
(l) Specific Performance. The parties to this Option Agreement agree that
irreparable damage would occur in the event that any of the provisions of this
Option Agreement were nor performed in accordance with their specific terms or
were otherwise reached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Option
Agreement, this being in addition to any other remedy to which they are entitled
at law or in equity.
[signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the Company and the Grantee have caused this Option
Agreement to be signed by their respective officers thereupon duly authorized,
all as of the day and year first written above.
ARTIFICIAL LIFE, INC.
By: /s/ Eberhard Schoneburg
-----------------------------------
Name: Schoneburg, Eberhard
Title: CEO
CYBERMIND AG
By: /s/ Holger Timm
-----------------------------------
Name: HOLGER TIMM
Title: CEO
8
