-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mo0NCTK4E1XOv9wi3R8qv2AzGf7DA7hcnw2pyhJ49XtJd2OW5YO+Pu23+1MI2/GJ j7vmTtLfkdJ4gcKIo5WwJw== 0000950123-01-502617.txt : 20010517 0000950123-01-502617.hdr.sgml : 20010517 ACCESSION NUMBER: 0000950123-01-502617 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFOCURE CORP CENTRAL INDEX KEY: 0001028584 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 582271614 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-25311 FILM NUMBER: 1640909 BUSINESS ADDRESS: STREET 1: 239 ETHAN ALLEN HIGHWAY CITY: RIDGEFIELD STATE: CT ZIP: 06877 BUSINESS PHONE: 7702219990 MAIL ADDRESS: STREET 1: 239 ETHAN ALLEN HIGHWAY CITY: ATLANTA STATE: GA ZIP: 30339 10-Q 1 y49091e10-q.txt INFOCURE CORPORATION 1 - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) --- OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) --- OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ ----------- -------------------------------- COMMISSION FILE NUMBER 001-12799 INFOCURE CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 58-2271614 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 239 ETHAN ALLEN HIGHWAY, RIDGEFIELD, CT 06877 (Address of principal executive offices, including zip code) (203) 894-1300 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- As of May 11, 2001, there were 37,167,720 shares of the Registrant's common stock, $.001 par value, outstanding. - -------------------------------------------------------------------------------- 2 INFOCURE CORPORATION FORM 10-Q - -------------------------------------------------------------------------------- INDEX PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheet-- March 31, 2001 and December 31, 2000...................................2 Condensed Consolidated Statement of Operations-- Three Months Ended March 31, 2001 and 2000.............................3 Condensed Consolidated Statement of Cash Flows-- Three Months Ended March 31, 2001 and 2000.............................4 Notes to Condensed Consolidated Financial Statements-- March 31, 2001.........................................................5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.........................................10 Item 3. Quantitative and Qualitative Disclosures about Market Risk........15 PART II. OTHER INFORMATION Item 1. Legal Proceedings..................................................16 Item 6. Exhibits and Reports on Form 8-K...................................18 SIGNATURES.................................................................19 For further information, refer to the InfoCure Corporation annual report on Form 10-K filed on April 2, 2001. INFOCURE AND VITALWORKS ARE REGISTERED TRADEMARKS OF INFOCURE CORPORATION. ALL OTHER TRADEMARKS AND COMPANY NAMES MENTIONED ARE THE PROPERTY OF THEIR RESPECTIVE OWNERS. 3 InfoCure Corporation Condensed Consolidated Balance Sheet (IN THOUSANDS, EXCEPT PER SHARE DATA)
MARCH 31, DECEMBER 31, 2001 2000 ----------------------- ASSETS (UNAUDITED) (NOTE) Current assets: Cash and cash equivalents $ 7,127 $ 5,969 Accounts receivable - net of allowances of $1,652 and $1,936 10,347 11,199 Other receivables 1,365 1,332 Inventory 634 639 Deferred income taxes 3,876 3,859 Prepaid expenses and other current assets 806 629 ----------------------- TOTAL CURRENT ASSETS 24,155 23,627 Property and equipment - at cost, less accumulated depreciation and amortization of $6,199 and $9,175 17,416 19,291 Goodwill - at cost, less accumulated amortization of $38,509 and $32,763 37,645 43,390 Product development and financing costs - at cost, less accumulated amortization of $358 and $267 1,702 1,041 Deferred income taxes 22,858 23,056 Other assets 510 419 Net noncurrent assets of discontinued operations 33,001 ----------------------- Total assets $ 104,286 $ 143,825 ======================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,611 $ 4,532 Accrued expenses 11,532 10,802 Accrued restructuring costs 5,874 6,834 Deferred revenue 7,088 6,704 Current portion of long-term debt 4,128 2,727 Net current liabilities of discontinued operations 3,172 ----------------------- TOTAL CURRENT LIABILITIES 33,233 34,771 Long-term debt 34,996 35,057 Other liabilities, primarily deferred gain on sale of assets 5,229 5,547 Convertible, redeemable preferred stock issuable 10,000 Contingencies - Note E Stockholders' equity: Common stock $.001 par value; 200,000,000 shares authorized; and 37,167,352 and 34,236,235 shares issued and outstanding 37 34 Additional paid-in capital 189,390 203,959 Notes receivable from director and former directors - net of allowance of $6,000 in 2001 (6,431) (12,431) Accumulated deficit (151,699) (132,643) Treasury stock, at cost, 125,000 shares (469) (469) ----------------------- TOTAL STOCKHOLDERS' EQUITY 30,828 58,450 ----------------------- Total liabilities and stockholders' equity $ 104,286 $ 143,825 =======================
Note: The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date; certain amounts have been reclassified to conform to the 2001 presentation. SEE ACCOMPANYING NOTES. -2- 4 InfoCure Corporation Condensed Consolidated Statement of Operations (Unaudited) (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, 2001 2000 ---------------------- REVENUES Software licenses and system sales $ 4,553 $ 6,628 Maintenance and services 20,865 19,271 ---------------------- Total revenues 25,418 25,899 ---------------------- COSTS AND EXPENSES Cost of revenues: Software licenses and system sales 1,220 2,339 Maintenance and services 5,350 4,288 Selling, general and administrative 15,544 19,133 Research and development 2,065 4,255 Depreciation and amortization 6,707 6,757 Nonrecurring costs, primarily provision for notes receivable 7,747 Restructuring costs 426 ---------------------- 38,633 37,198 ---------------------- OPERATING LOSS (13,215) (11,299) Interest expense, net (822) (847) Gain on sale of assets 365 ---------------------- LOSS FROM CONTINUING OPERATIONS, BEFORE INCOME TAXES (13,672) (12,146) Income tax benefit (3,923) ---------------------- LOSS FROM CONTINUING OPERATIONS (13,672) (8,223) Loss from discontinued operations, net of income tax benefit of $1,502 in 2000 (5,384) (2,958) ---------------------- NET LOSS $(19,056) $(11,181) ====================== EARNINGS (LOSS) PER SHARE - BASIC AND DILUTED Continuing operations $ (0.39) $ (0.25) Discontinued operations (0.15) (0.09) ---------------------- $ (0.54) $ (0.34) ====================== AVERAGE NUMBER OF SHARES OUTSTANDING Basic and diluted 35,406 32,773
SEE ACCOMPANYING NOTES. -3- 5 InfoCure Corporation Condensed Consolidated Statement of Cash Flows (Unaudited) (IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, 2001 2000 ---------------------- CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 2,483 $ (7,368) INVESTING ACTIVITIES Property and equipment expenditures (288) (2,299) Product development and financing expenditures (521) (276) Net cash advances to PracticeWorks (discontinued operations) (344) (4,705) Other (91) (113) ---------------------- Cash used in investing activities (1,244) (7,393) ---------------------- FINANCING ACTIVITIES Principal payments on long-term debt (126) (351) Borrowings under credit facility and other long-term debt 4,308 Proceeds from convertible, redeemable preferred stock issuable 10,000 Exercise of stock options by employees 45 883 ---------------------- Cash (used in) provided by financing activities (81) 14,840 ---------------------- INCREASE IN CASH AND CASH EQUIVALENTS 1,158 79 Cash and cash equivalents at beginning of period 5,969 14,309 ---------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,127 $ 14,388 ====================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Income taxes $ 501 Interest $ 41 407
SEE ACCOMPANYING NOTES. -4- 6 InfoCure Corporation Notes to Condensed Consolidated Financial Statements (Unaudited) March 31, 2001 A. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation have been included in the accompanying unaudited financial statements. Operating results for the three-month period ended March 31, 2001 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2000 included in the InfoCure Corporation (the "Company" or "InfoCure") annual report on Form 10-K filed on April 2, 2001. The statements of operations and cash flows for the three-month period ended March 31, 2000 have been derived from the Company's consolidated financial statements as reported on Form 10-Q for the quarterly period ended March 31, 2000. B. DISCONTINUED OPERATIONS On March 5, 2001 (the "Distribution Date"), InfoCure completed the distribution of the common stock of its dental business subsidiary, PracticeWorks, Inc. ("PracticeWorks" or "Division"), to its stockholders in a tax-free distribution. The spin-off of PracticeWorks was affected by way of a pro rata dividend (the "Distribution" or "Spin-Off"), of all of the issued and outstanding shares of PracticeWorks common stock to InfoCure's stockholders resulting in PracticeWorks being an independent, publicly traded company. Immediately prior to the Distribution, InfoCure transferred to PracticeWorks, Inc. the Division's assets and liabilities and, thereby, distributed $26.6 million of net assets in connection with the Spin-Off. Accordingly, the accompanying consolidated financial statements reflect the assets, liabilities, net equity and results of operations of PracticeWorks as discontinued operations. For the quarters ended March 31, 2001 and 2000, revenues included in the loss from discontinued operations were $6.6 million and $9.8 million, respectively. C. EARNINGS PER SHARE Because their effect would be antidilutive, stock option and warrant rights (for up to 17.6 million common shares) were excluded from the diluted earnings per share calculation for the three-month period ended March 31, 2001. D. COMPREHENSIVE INCOME Comprehensive income is a measure of all changes in equity of an enterprise that results from recognized transactions and other economic events of a period other than transactions with owners in their capacity as owners. For the Company, comprehensive income (loss) is equivalent to its consolidated net loss. E. CONTINGENT MATTERS From time to time, in the normal course of business, various claims are made against the Company. Except for proceedings described below related to individuals who sold their businesses to the Company in exchange for shares of InfoCure common stock, there are no material proceedings to which the Company is a party, and management is unaware of any material contemplated actions against the Company. On June 21, 2000, a lawsuit styled Joseph Hafner v. InfoCure Corporation et al., was filed in the United States District Court in and for the Eastern District of Pennsylvania. On InfoCure's motion, this case was -5- 7 InfoCure Corporation Notes to Condensed Consolidated Financial Statements (Unaudited) March 31, 2001 transferred to the United States District Court in and for the Northern District of Georgia. The lawsuit alleges that the Company breached the terms of a registration rights agreement whereby the Company was required, prior to a specified date, to affect the registration for resale with the Securities and Exchange Commission of shares of the Company's common stock which the plaintiff owned. The complaint further alleges breach of fiduciary duties owed to the plaintiff as a stockholder of the Company and tort claims against the Company as a result of the alleged failure to timely register shares for resale. The complaint seeks in excess of $3.2 million in compensatory damages as a result of the Company's alleged breach of this agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. In connection with the Distribution, PracticeWorks has agreed to assume any and all liability associated with the definitive resolution of this matter. On August 4, 2000, a lawsuit styled Joseph Memminger v. InfoCure Corporation, et al., was filed in the United States District Court in and for the District of Delaware. On InfoCure's motion, this case was transferred to the United States District Court in and for the Northern District of Georgia. The lawsuit alleges that the Company breached the terms of a registration rights agreement, whereby the Company was required to affect the registration for resale with the Securities and Exchange Commission, of shares of the Company's common stock which the plaintiff owned. The complaint further alleges securities fraud, breach of fiduciary duties owed to the plaintiff as a stockholder of the Company and tort claims against the Company as a result of the alleged failure to timely register shares for resale. The complaint seeks approximately $7.2 million in compensatory damages as a result of the Company's alleged breach of the agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. On December 28, 2000, a lawsuit styled Habermeier v. InfoCure Corporation, et al., was filed in the United States District Court in and for the Northern District of Georgia. The lawsuit alleges that the Company breached the terms of a registration rights agreement, whereby the Company was required to affect the registration for resale with the Securities and Exchange Commission, of shares of the Company's common stock which the plaintiff owned. The complaint further alleges securities law violations, breach of contract, breach of fiduciary duties owed to the plaintiff as a stockholder of the Company and tort claims against the Company as a result of the alleged failure to timely register shares for resale. The complaint seeks approximately $2.7 million in compensatory damages as a result of the Company's alleged breach of the agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. On December 28, 2000, a lawsuit styled Runde v. InfoCure Corporation, et al., was filed in the United States District Court in and for the Northern District of Georgia. The lawsuit alleges that the Company breached the terms of a registration rights agreement, whereby the Company was required to affect the registration for resale with the Securities and Exchange Commission, of shares of the Company's common stock which the plaintiff owned. The complaint further alleges securities law violations, breach of contract, breach of fiduciary duties owed to the plaintiff as a stockholder of the Company and tort claims against the Company as a result of the alleged failure to timely register shares for resale. The complaint seeks approximately $2.8 million in compensatory damages as a result of the Company's alleged breach of the agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. On December 28, 2000, a lawsuit styled Weintraub v. InfoCure Corporation, et al., was filed in the United States District Court in and for the Northern District of Georgia. The lawsuit alleges that the Company breached the terms of a registration rights agreement, whereby the Company was required to affect the registration for resale with the Securities and Exchange Commission, of shares of the Company's common stock which the plaintiff owned. The complaint further alleges securities law violations, breach of contract, breach of fiduciary duties owed to the plaintiff as a stockholder of the Company and tort claims against the Company as a result of the alleged failure to timely register shares for resale. The complaint seeks approximately $2.8 million in compensatory -6- 8 damages as a result of the Company's alleged breach of the agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. On January 2, 2001, a lawsuit styled Gary Weiner, et al. v. InfoCure Corporation et al., was filed in the United States District Court in and for the Northern District of Georgia. The complaint alleges securities law violations, breach of contract, and breach of fiduciary duties owed to the plaintiff as a stockholder of the Company. The complaint seeks approximately $3.4 million in compensatory damages as a result of the Company's alleged breach of the agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. The InfoCure defendants filed motions to dismiss certain of the tort and contract claims in these cases subsequent to December 31, 2000. The Court ultimately dismissed certain tort claims against the individual defendants to the actions and granted the plaintiffs leave to amend their claims for securities law violations. The above cases have been consolidated for discovery purposes and the parties have recently begun discovery in the case. On April 19, 2001, a lawsuit styled David and Susan Jones v. InfoCure Corporation, et al., was filed in Boone County Superior Court in Indiana. The complaint alleges state securities law violations, breach of contract, and fraud claims against the defendants. The complaint does not specify the amount of damages sought by plaintiffs, but seeks rescission of a transaction plaintiffs value at $5 million, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. Management believes that it has meritorious defenses in each of the foregoing matters and intends to pursue its positions vigorously. Litigation is inherently subject to many uncertainties; however, management does not believe that the outcome of these cases, individually, or in the aggregate, will have a material adverse effect on the financial position of the Company. However, depending on the amount and timing of an unfavorable resolution(s) of the contingencies, it is possible that the Company's future results of operations or cash flows could be materially affected in a particular quarterly period. On March 8, 2001, InfoCure Corporation, filed a lawsuit in the Superior Court of the County of Fulton in the State of Georgia against WebMD and its subsidiary, Envoy Corporation ("Envoy"), alleging breach of contract, tortious interference with business relations, and related commercial claims, arising from WebMD's alleged failure and refusal to pay InfoCure rebates owed under the parties' agreement for certain electronic data interchange, or "EDI", transactions performed by Envoy; the alleged improper solicitation by WebMD's sales representatives of practice management software customers of InfoCure; and allegedly false and damaging statements made by WebMD representatives about InfoCure, among other alleged wrongful conduct. InfoCure seeks money damages aggregating in excess of $46.5 million resulting from WebMD's alleged wrongful actions. Additionally, InfoCure asked for a declaration by the Court as to: the applicable agreement governing the calculation and payment of the rebates due InfoCure; the nonexclusive nature of the parties' contractual arrangements; and WebMD's asserted right to receive 1,929,012 shares of registered, rather than restricted, common stock of InfoCure previously issued to WebMD. F. RESTRUCTURING AND NONRECURRING COSTS On August 1, 2000, InfoCure announced its plans to restructure its operations through a plan of employee reductions and consolidation of existing facilities. In the third and fourth quarters of 2000, the Company closed or consolidated 14 facilities and terminated approximately 400 employees. The terminated office leases have various expiration dates through 2006 and the other costs will be substantially paid in the first half of 2001. -7- 9 InfoCure Corporation Notes to Condensed Consolidated Financial Statements (Unaudited) March 31, 2001 The following table sets forth changes in accrued restructuring costs as a result of actions taken to implement the Company's restructuring and reorganization plan during the three-month period ended March 31, 2001 (IN THOUSANDS): COSTS APPLIED Balance at AGAINST BALANCE AT December 31, 2000 ACCRUAL MARCH 31, 2001 - -------------------------------------------------------------------------------- Facility closure and consolidation $4,603 $ (251) $4,352 Employee severance and other termination benefits 2,231 (709) 1,522 - -------------------------------------------------------------------------------- Total $6,834 $ (960) $5,874 - -------------------------------------------------------------------------------- The Company incurred nonrecurring charges to operations of $7.7 million. These charges included a $6 million provision for notes receivable (see Note H), $.9 million for unused financing and retention bonuses of $.4 million for terminated employees. Included in accrued expenses at March 31, 2001 are unpaid costs of $1.3 million relating to the retention bonuses and unused financing. G. LONG-TERM DEBT As of March 31, 2001, maturities of long-term debt, including capital leases, are as follows (IN MILLIONS): $3.6 million in 2001, $6.9 million in 2002, $22.4 million in 2003 and $6.2 million in 2004. H. STOCKHOLDERS' EQUITY In June 2000, inside directors of InfoCure borrowed $11.8 million from the Company in the form of unsecured promissory notes due December 31, 2000 and June 30, 2002 (the "Notes"). Interest is due and payable quarterly at the rate of prime plus .5%. The December Notes represent cash loans and the June Notes represent loans to acquire common stock of the Company. On March 5, 2001, the December Notes were extended to December 31, 2001. At March 31, 2001, the December Notes and the June Notes totaled $6.9 million and $5.5 million, including accrued interest through December 31, 2000, respectively. As of March 31, 2001, management determined that collection was doubtful with respect to approximately $6 million of the outstanding balance of the Notes. At the same time, the Company ceased accruing interest on the Notes. Management intends to continue to monitor the collectibility of the Notes. The amount of the allowance against the Notes may be increased or decreased in future periods based on management's determinations. In the quarter ended March 31, 2001, WebMD Corporation converted its rights to preferred stock of a wholly owned subsidiary of the Company into 1,929,012 shares of InfoCure common stock. The shares were issued on March 2, 2001. InfoCure has committed to issue approximately 900,000 shares of its common stock to the shareholders of Medical Dynamics, Inc. as partial consideration for a pending acquisition of Medical Dynamics, Inc. entered into by InfoCure that will be entirely attributed to PracticeWorks. The issuance of InfoCure shares will be recorded as an additional equity distribution to PracticeWorks representing the substance of the transaction as originally contemplated. I. EQUITY FINANCING AGREEMENT On August 1, 2000, the Company entered into an agreement with Acqua Wellington North American Equities Fund, Ltd. whereby it has the right to make periodic sales to an institutional investor (the "Equity -8- 10 InfoCure Corporation Notes to Condensed Consolidated Financial Statements (Unaudited) March 31, 2001 Investor") of up to an aggregate of $60.0 million of its common stock through December 1, 2002. The sale of common stock under the terms of the agreement is at the Company's sole discretion, although the Company is required to pay a fee of $750,000 and grant 125,000 warrants to the Equity Investor to purchase shares of the Company's common stock if the Company has not sold to the Equity Investor a stated minimum amount ($15.0 million) of its common stock pursuant to the agreement on or before October 1, 2001. The dollar amount that the Company can "Put" to the Equity Investor at one time will be determined in accordance with the terms of the agreement based on the Company's current stock price at the time of the sale. At the Threshold Price (minimum price) of $3.00 per share, $2.5 million may be drawn. For every $2.00 per share increase above the Threshold Price, an additional $1.5 million may be drawn, not to exceed $28 million. The purchase price of the shares of stock will represent a discount of 4.0% to 6.0% from the current stock price at the time of the sale. Although the Equity Investor may resell the stock purchased pursuant to an effective registration statement which the Company will file with the Securities and Exchange Commission, the agreement also requires the Equity Investor to limit certain selling activities. As of March 31, 2001, the Company has not sold any shares under this agreement. J. SEGMENT INFORMATION Statement of Financial Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and Related Information" establishes standards for the way in which public companies are to disclose certain information about operating segments in their financial reports. The Company has identified two reportable operating segments based on the criteria of Statement No. 131: software licenses and system sales, and maintenance and services. Software license fees and system revenues are derived from the sale of software product licenses and hardware. Maintenance and services revenues come from providing product installation, support, training and transaction processing services. The Company's President and Chief Executive Officer evaluates performance based on measures of segment revenues, gross profit and company-wide operating results. Employee headcount and operating costs and expenses are managed by functional areas, rather than by revenue segments. Moreover, the Company does not account for or report to the President and CEO its assets or capital expenditures by segments. The accompanying statement of operations discloses the financial information of the Company's reportable segments in accordance with Statement No. 131 for the quarters ended March 31, 2001 and 2000. -9- 11 InfoCure Corporation Management's Discussion and Analysis of Financial Condition and Results of Operations ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS AND RISK FACTORS Except for the historical information contained in this report on Form 10-Q, the matters discussed herein are "forward-looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are that generally, the Company operates with a minimal amount of software licensing and system sales backlog. Therefore, quarterly revenues and operating results are quite dependent on the volume and timing of the signing of licensing agreements and product deliveries during the quarter, which are difficult to forecast. The Company's future operating results may fluctuate due to these and other factors, such as customer buying patterns, the availability of specified hardware systems for resale, the deferral and/or realization of deferred software license and system revenues according to contract terms, the timing of new product introductions and product upgrade releases, the Company's ability or inability to attract and retain qualified personnel, the scheduling of sales and marketing programs, new product development by the Company or its competitors, uncertainties concerning InfoCure's future capital needs and the ability to obtain capital, and changing economic, political and regulatory influences on the healthcare industry. Due to the relatively fixed nature of certain costs, including personnel and facilities expenses, a decline or shortfall in quarterly and/or annual revenues typically results in losses or in lower profitability. Management believes that these forward-looking statements are reasonable and that the projections contained in this report are based on reasonable assumptions and forecasts; however, you should not place undue reliance on such statements which speak only as of the date hereof. Any forward-looking statements should be considered in light of these factors as well as other risks as detailed in the Company's most recent annual report on Form 10-K. OVERVIEW The Company is a leading, nationwide provider of information management technology and services targeted to healthcare practices and organizations. InfoCure provides IT-based solutions for general medical practices and has specialty-specific products and services for specialties such as radiology, anesthesiology, ophthalmology, emergency medicine, plastic surgery, and dermatology. InfoCure also offers enterprise-level systems designed for large physician groups and networks. InfoCure's wide range of software solutions automate the administrative, financial, and clinical information management functions for physicians and other healthcare providers. InfoCure provides its clients with ongoing software, training, electronic data interchange (EDI), and certain Internet-based services. Software license fees and system sales are derived from the sale of software product licenses and hardware. Maintenance and services revenues come from providing product installation, support, training and transaction processing services. -10- 12 InfoCure Corporation Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS REVENUES First Quarter Ended March 31, 2001 CHANGE 2000 - -------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) Software licenses and system sales $ 4,553 (31.3)% $ 6,628 Percentage of total revenues 17.9% 25.6% - -------------------------------------------------------------------------------- Maintenance and services $20,865 8.3% $19,271 Percentage of total revenues 82.1% 74.4% - -------------------------------------------------------------------------------- Software license and system revenues declined primarily as a result of a decrease in the number of licenses and systems sold (unit volume) versus, for example, price decreases. The decrease in revenues reflects the near-term result of management's reorganization and redeployment of the sales force and redirection of its marketing focus. The decline in sales productivity will likely continue through the September 2001 quarter. The increase in maintenance and services revenue is mainly attributable to the year-to-year growth of the Company's installed customer base as well as an increase in EDI revenues of $.7 million resulting from an increase in the number of practices using the transaction processing service. COST OF REVENUES First Quarter Ended March 31, 2001 CHANGE 2000 - -------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) Software licenses and system sales $1,220 (47.8)% $2,339 Gross profit percentage 73.2% 64.7% - -------------------------------------------------------------------------------- Maintenance and services $5,350 24.8% $4,288 Gross profit percentage 74.4% 77.7% - -------------------------------------------------------------------------------- Cost of software license and system revenues consist primarily of costs incurred to purchase hardware, third-party software and other items for resale in connection with sales of new systems and software. The decrease in the cost of software license and system revenues principally reflects the decline in software and system sales. The increase in the gross profit percentage was due primarily to a change in product mix resulting in fewer sales of lower margin general medical systems compared to higher margin enterprise and radiology systems. Cost of maintenance and service revenues consist primarily of costs of EDI transactions, outsourced hardware maintenance and forms and postage. The increase in the cost of maintenance and service revenues principally reflects the year-over-year increase in maintenance and services revenue. The decrease in the gross profit percentage was due primarily to increased costs associated with EDI services. -11- 13 InfoCure Corporation Management's Discussion and Analysis of Financial Condition and Results of Operations OPERATING EXPENSES First Quarter Ended March 31, 2001 CHANGE 2000 - ------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) Selling, general and administrative costs $15,544 (18.8)% $19,133 Percentage of total revenues 61.2% 73.9% - ------------------------------------------------------------------------------- Research and development $ 2,065 (51.5)% $ 4,255 Percentage of total revenues 8.1% 16.4% - ------------------------------------------------------------------------------- Depreciation and amortization $ 6,707 (.7)% $ 6,757 Percentage of total revenues 26.4% 26.1% - ------------------------------------------------------------------------------- Selling, general and administrative, or SG&A expenses, include salaries and benefits, product maintenance and support, variable commissions and bonuses, marketing, travel, communications, facilities, insurance and other administrative expenses. The decrease in SG&A expenses is principally related to the savings that resulted from the restructuring plan that was initiated in August 2000. The employee base was reduced to 705 from 1,059 at March 31, 2000. The decrease in research and development expenses reflects the reduction in staff that commenced in August 2000 as part of a restructuring plan. In the quarter ended March 31, 2001, the Company capitalized $.5 million of software development costs in accordance with Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed." The amounts capitalized relate to the Company's development of internet-based applications and represented 20.1% of total research and development expenditures. Capitalized software development costs are amortized over the estimated economic life of the products, but generally not more than three years. There were no product development activities that qualified for capitalization in the first quarter of 2000. Depreciation and amortization expense remained relatively unchanged year-over-year. In the March 2001 quarter, the Company incurred nonrecurring charges to operations of $7.7 million. These charges included a $6 million provision for notes receivable, $.9 million for unused financing and retention bonuses of $.4 million for terminated employees. In June 2000, inside directors of InfoCure borrowed $11.8 million from the Company in the form of unsecured promissory notes due December 31, 2000 and June 30, 2002 (the "Notes"). Interest is due and payable quarterly at the rate of prime plus .5%. The December Notes represent cash loans and the June Notes represent loans to acquire common stock of the Company. On March 5, 2001, the December Notes were extended to December 31, 2001. At March 31, 2001, the December Notes and the June Notes totaled $6.9 million and $5.5 million, including accrued interest through December 31, 2000, respectively. As of March 31, 2001, management determined that collection was doubtful with respect to approximately $6 million of the outstanding balance of the Notes. At the same time, the Company ceased accruing interest on the Notes. Management intends to continue to monitor the collectibility of the Notes. The amount of the allowance against the Notes may be increased or decreased in future periods based on management's determinations. In the March 2000 quarter, the Company incurred restructuring costs of $.4 million primarily associated with employee severance, other termination and facility closure costs which were part of the 1999 restructuring plan. INTEREST EXPENSE, NET Interest expense, net, which consists primarily of interest expense incurred in connection with the Company's long-term credit facility, remained relatively unchanged year-over-year. GAIN ON SALE OF ASSETS In the quarter ended March 31, 2001, the Company recognized a gain of approximately $.4 million. This gain relates to the gain on the sale of certain of the Company's medical statement processing assets in August 2000. The gain on the sale totaled approximately $7.3 million -12- 14 InfoCure Corporation Management's Discussion and Analysis of Financial Condition and Results of Operations and is being recognized ratably over the five-year term of the statement and claims processing agreement entered into at the time of the sale. INCOME TAX BENEFIT For the quarter ended March 31, 2001, the Company did not record an income tax provision or benefit. Management has assessed the realizability of the Company's gross deferred tax assets of $48.8 million and determined that a valuation allowance of $21.4 million was necessary as of March 31, 2001 to reduce the gross deferred tax assets to $27.4 million, an amount which management believes is more likely than not to be realized. In reaching this conclusion, management noted a number of factors, including the following: o The loss generated during the quarter ended March 31, 2001 was not indicative of the Company's ability to generate future earnings as the results were significantly impacted by the recognition of nonrecurring charges. o Management's projections indicate that the Company will generate sufficient taxable income to realize the net deferred tax assets within three to seven years. The effective tax rate for continuing operations was 32.3% for the quarter ended March 31, 2000. The Company does not expect to record an income tax provision or benefit for the remainder of 2001. LOSS FROM DISCONTINUED OPERATIONS The loss from discontinued operations was $5.4 million for the first quarter of 2001, compared to $3.0 million in 2000. The discontinued operations represents the results of PracticeWorks for each period presented. NET LOSS As a result of the above factors, InfoCure had a net loss of $19.1 million for the quarter ended March 31, 2001, compared to a net loss of $11.2 million for the corresponding period of 2000. To date, the overall impact of inflation on the Company has not been material. LIQUIDITY AND CAPITAL RESOURCES For fiscal years 1998, 1999 and 2000, and for the three months ended March 31, 2001, the Company generated positive cash flow from operations of $5.1 million, $3.4 million, $3.9 million and $2.5 million, respectively. For the three months ended March 31, 2000, the Company used $7.4 million of cash in connection with its operating activities. Cash used in investing activities amounted to $1.2 million for the three months ended March 31, 2001, including $.3 million to fund its discontinued operations, $.5 million for software development costs, and $.3 million primarily for the purchases of computer equipment and software. -13- 15 InfoCure Corporation Management's Discussion and Analysis of Financial Condition and Results of Operations Financing activities in the quarter ended March 31, 2001, including stock options exercised by employees and payments of indebtedness, used cash of $.1 million. There were no borrowings under our long-term credit facility in the first quarter of 2001. As of March 31, 2001, the Company had cash and cash equivalents of $7.1 million, and $39.1 million of long-term debt. The Company believes that its current cash and cash equivalent balances, and the funds it expects to generate from its operations will be sufficient to finance the Company's business for the next twelve months. RECENT ACCOUNTING PRONOUNCEMENTS SFAS No. 133, "Accounting for Derivatives and Hedging Activities", as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. Historically, we have not entered into derivative contracts either to hedge existing risks or for speculative purposes. We adopted the provisions of SFAS No. 133 on January 1, 2001. Adoption of this new standard did not have an effect on our financial statements. SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities -- a Replacement of FASB Statement No. 125" was issued in September 2000 to address securitizations and other transfers of financial assets and collateral, and requires specified new disclosures. Specified disclosure provisions are effective for fiscal years ending after December 15, 2000 with the accounting for transfers and servicing of financial assets and extinguishments of liabilities effective for transactions occurring after March 31, 2001. Adoption of this new standard is not expected to have an effect on our financial statements. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, -- Revenue Recognition, which outlines the basic criteria that must be met to recognize revenue and provides guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with the Securities and Exchange Commission. The effective date for SAB No. 101 is September 1, 2001, however we adopted the provisions of SAB No. 101 in the first quarter of 2000 without a significant impact on our financial position or results of operations. -14- 16 InfoCure Corporation Quantitative and Qualitative Disclosures about Market Risk March 31, 2001 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our primary market risks include fluctuations in interest rates and variability in interest rate spread relationships, such as prime to LIBOR spreads. Approximately $35.6 million of our outstanding debt at March 31, 2001 related to long-term indebtedness under our credit facility with FINOVA. We expect interest on the outstanding balance of our credit facility to be charged based on a variable rate related to prime rate or, at our option, the LIBOR rate. Both rate bases are incremented for margins specified in the agreement. Thus, our interest rate is subject to market risk in the form of fluctuations in interest rates. The effect of a hypothetical one percentage point increase across all maturities of variable rate debt would result in an increase of approximately $356,000 in pre-tax net loss assuming no further changes in the amount of borrowings subject to variable rate interest from amounts outstanding at March 31, 2001. We do not trade in derivative financial instruments. -15- 17 InfoCure Corporation Part II. Other Information PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS From time to time, in the normal course of business, various claims are made against the Company. Except for proceedings described below related to individuals who sold their businesses to the Company in exchange for shares of InfoCure common stock, there are no material proceedings to which the Company is a party and management is unaware of any material contemplated actions against the Company. On June 21, 2000, a lawsuit styled Joseph Hafner v. InfoCure Corporation et al., was filed in the United States District Court in and for the Eastern District of Pennsylvania. On InfoCure's motion, this case was transferred to the United States District Court in and for the Northern District of Georgia. The lawsuit alleges that the Company breached the terms of a registration rights agreement whereby the Company was required, prior to a specified date, to affect the registration for resale with the Securities and Exchange Commission of shares of the Company's common stock which the plaintiff owned. The complaint further alleges breach of fiduciary duties owed to the plaintiff as a stockholder of the Company and tort claims against the Company as a result of the alleged failure to timely register shares for resale. The complaint seeks in excess of $3.2 million in compensatory damages as a result of the Company's alleged breach of this agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. In connection with the Distribution, PracticeWorks has agreed to assume any and all liability associated with the definitive resolution of this matter. On August 4, 2000, a lawsuit styled Joseph Memminger v. InfoCure Corporation, et al., was filed in the United States District Court in and for the District of Delaware. On InfoCure's motion, this case was transferred to the United States District Court in and for the Northern District of Georgia. The lawsuit alleges that the Company breached the terms of a registration rights agreement, whereby the Company was required to affect the registration for resale with the Securities and Exchange Commission, of shares of the Company's common stock which the plaintiff owned. The complaint further alleges securities fraud, breach of fiduciary duties owed to the plaintiff as a stockholder of the Company and tort claims against the Company as a result of the alleged failure to timely register shares for resale. The complaint seeks approximately $7.2 million in compensatory damages as a result of the Company's alleged breach of the agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. On December 28, 2000, a lawsuit styled Habermeier v. InfoCure Corporation, et al., was filed in the United States District Court in and for the Northern District of Georgia. The lawsuit alleges that the Company breached the terms of a registration rights agreement, whereby the Company was required to affect the registration for resale with the Securities and Exchange Commission, of shares of the Company's common stock which the plaintiff owned. The complaint further alleges securities law violations, breach of contract, breach of fiduciary duties owed to the plaintiff as a stockholder of the Company and tort claims against the Company as a result of the alleged failure to timely register shares for resale. The complaint seeks approximately $2.7 million in compensatory damages as a result of the Company's alleged breach of the agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. On December 28, 2000, a lawsuit styled Runde v. InfoCure Corporation, et al., was filed in the United States District Court in and for the Northern District of Georgia. The lawsuit alleges that the Company breached the terms of a registration rights agreement, whereby the Company was required to affect the registration for resale with the Securities and Exchange Commission, of shares of the Company's common stock which the plaintiff owned. The complaint further alleges securities law violations, breach of contract, breach of fiduciary duties owed to the plaintiff as a stockholder of the Company and tort claims against the Company as a result of the alleged failure to timely register shares for resale. The complaint seeks approximately $2.8 million in compensatory damages as a result of the Company's alleged breach of the agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. On December 28, 2000, a lawsuit styled Weintraub v. InfoCure Corporation, et al. was filed in the United States District Court in and for the Northern District of Georgia. The lawsuit alleges that the Company breached the terms of a registration rights agreement, whereby the Company was required to affect the registration for resale with the Securities and Exchange Commission, of shares of the Company's common stock which the plaintiff owned. The complaint further alleges securities law violations, breach of contract, breach of fiduciary duties owed to the plaintiff as a stockholder of the Company and tort claims against the Company as a result of the alleged failure to timely register shares for resale. The complaint seeks approximately $2.8 million in compensatory -16- 18 InfoCure Corporation Part II. Other Information damages as a result of the Company's alleged breach of the agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. On January 2, 2001, a lawsuit styled Gary Weiner, et al. v. InfoCure Corporation et al., was filed in the United States District Court in and for the Northern District of Georgia. The complaint alleges securities law violations, breach of contract, and breach of fiduciary duties owed to the plaintiff as a stockholder of the Company. The complaint seeks approximately $3.4 million in compensatory damages as a result of the Company's alleged breach of the agreement, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. The InfoCure defendants filed motions to dismiss certain of the tort and contract claims in these cases subsequent to December 31, 2000. The Court ultimately dismissed certain tort claims against the individual defendants to the actions and granted the plaintiffs leave to amend their claims for securities law violations. The above cases have been consolidated for discovery purposes and the parties have recently begun discovery in the case. On April 19, 2001, a lawsuit styled David and Susan Jones v. InfoCure Corporation, et al., was filed in Boone County Superior Court in Indiana. The complaint alleges state securities law violations, breach of contract, and fraud claims against the defendants. The complaint does not specify the amount of damages sought by plaintiffs, but seeks rescission of a transaction plaintiffs value at $5 million, as well as punitive damages and reimbursement for the plaintiff's attorney's fees and associated costs and expenses of the lawsuit. Management believes that it has meritorious defenses in each of the foregoing matters and intends to pursue its positions vigorously. Litigation is inherently subject to many uncertainties; however, management does not believe that the outcome of these cases, individually, or in the aggregate, will have a material adverse effect on the financial position of the Company. However, depending on the amount and timing of an unfavorable resolution(s) of the contingencies, it is possible that the Company's future results of operations or cash flows could be materially affected in a particular quarterly period. On March 8, 2001, InfoCure Corporation, filed a lawsuit in the Superior Court of the County of Fulton in the State of Georgia against WebMD and its subsidiary, Envoy Corporation ("Envoy"), alleging breach of contract, tortious interference with business relations, and related commercial claims, arising from WebMD's alleged failure and refusal to pay InfoCure rebates owed under the parties' agreement for certain electronic data interchange, or "EDI", transactions performed by Envoy; the alleged improper solicitation by WebMD's sales representatives of practice management software customers of InfoCure; and allegedly false and damaging statements made by WebMD representatives about InfoCure, among other alleged wrongful conduct. InfoCure seeks money damages aggregating in excess of $46.5 million resulting from WebMD's alleged wrongful actions. Additionally, InfoCure asked for a declaration by the Court as to: the applicable agreement governing the calculation and payment of the rebates due InfoCure; the nonexclusive nature of the parties' contractual -17- 19 arrangements; and WebMD's asserted right to receive 1,929,012 shares of registered, rather than restricted, common stock of InfoCure previously issued to WebMD. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.1 Lease Agreement, dated March 6, 2001, by and between InfoCure Corporation and PracticeWorks Systems, LLC 10.2 SubLease Agreement, dated February 28, 2001, by and between InfoCure Corporation and Southern Company Services, Inc. 10.3 Lease Agreement, dated March 13, 2001, by and between InfoCure Corporation and Joseph V. Fisher, LLC (B) REPORTS ON FORM 8-K The Company filed a current report on Form 8-K with the Securities and Exchange Commission on February 21, 2001 for the purposes of announcing that the Company's Board of Directors had formally approved the spin-off of its PracticeWorks subsidiary to its stockholders in a tax-free distribution. The Company filed a current report on Form 8-K with the Securities and Exchange Commission on March 8, 2001 for the purposes of announcing that the Company had filed a lawsuit in the Superior Court of the County of Fulton in the State of Georgia against WebMD Corporation ("WebMD") and its subsidiary, Envoy Corporation ("Envoy"), alleging breach of contract, tortious interference with business relations, and related commercial claims, arising from WebMD's alleged failure and refusal to pay VitalWorks rebates owed under the parties' agreement for certain electronic data interchange, or "EDI", transactions performed by Envoy; the alleged improper solicitation by WebMD's sales representatives of practice management software customers of VitalWorks; and allegedly false and damaging statements made by WebMD representatives about VitalWorks, among other alleged wrongful conduct. The Company filed a current report on Form 8-K with the Securities and Exchange Commission on March 16, 2001 for the purposes of announcing that the Company named a new executive team and the addition of five new members to its board of directors, as presented in the press release dated March 9, 2001, following the distribution to its stockholders of 100% of the issued and outstanding common stock of PracticeWorks, Inc. The Company filed a current report on Form 8-K with the Securities and Exchange Commission on March 20, 2001 for the purposes of announcing that the Company completed the distribution of the common stock of PracticeWorks, Inc. to its stockholders in a tax-free distribution. The Company filed an amended current report on Form 8-K with the Securities and Exchange Commission on March 21, 2001 for the purposes of announcing that the Company completed the distribution of the common stock of PracticeWorks, Inc. to its stockholders in a tax-free distribution. -18- 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. InfoCure Corporation /S/ MICHAEL A. MANTO 5/15/01 ------------------------------------------------------------- Michael A. Manto Date Executive Vice President and Chief Financial Officer /S/ JOSEPH M. WALSH 5/15/01 ------------------------------------------------------------- Joseph M. Walsh Date President and Chief Executive Officer -19- EX-10.1 2 y49091ex10-1.txt LEASE AGREEMENT 1 EXHIBIT 10.1 LEASE AGREEMENT BETWEEN INFOCURE CORPORATION, ITS SUCCESSORS AND/OR ASSIGNS ("LANDLORD") AND PRACTICEWORKS SYSTEMS, LLC ("TENANT") ------------------------------------------------------------- DEMISED PREMISES 59,323 RSF 1765 THE EXCHANGE ATLANTA, GA 30339 2 OFFICE LEASE THIS LEASE made effective as of the 6th day of March, 2001, between INFOCURE CORPORATION, ITS SUCCESSORS AND/OR ASSIGNS, 239 ETHAN ALLEN HIGHWAY, RIDGEFIELD, CT 06877 , as landlord ("Landlord") and PRACTICEWORKS SYSTEMS, LLC, 1765 THE EXCHANGE, SUITE 200, ATLANTA, GA 30339, as tenant ("Tenant"). WITNESSETH: ARTICLE I PREMISES AND TERM Landlord hereby leases to Tenant and Tenant hereby leases from Landlord that certain space known as Suite 100 containing 9,768 rsf, Suite 105 containing 987 rsf, Suite 200 containing 9,266 rsf, Suite 250 containing 7,629 rsf, Suite 300 containing 7,700 rsf, Suite 350 containing 5,578 rsf, and Suite 500 containing 18,395 rsf (such suites, or such portions of suites occupied by Tenant and governed by this Lease subject to Article 4, collectively referred to herein as the "Premises") in the building located at 1765 The Exchange ("Building"), Atlanta, Georgia ("Property," as further described in Article 24), subject to the provisions herein contained. The term ("Term") of this Lease shall commence on the 6th day of March, 2001 ("Commencement Date"), and end on August 31, 2006 ("Expiration Date"), except as otherwise provided herein. The Commencement Date shall be subject to adjustment as provided in Article 4. Landlord and Tenant agree that for purposes of this Lease the total rentable area of the Premises shall be 59,323 square feet (as of the "Target Commencement Date" or such later date as described in Article 4) and the rentable area of the Property is 90,215 square feet. ARTICLE 2 BASE RENT Tenant shall pay Landlord monthly Base Rent of FORTY FOUR THOUSAND SEVEN HUNDRED NINETY TWO AND 50/100 DOLLARS ($44,792.50), in advance on or before the first day of each calendar month during the Term, except that Base Rent for the first and second full calendar month for which Base Rent shall be due, shall be paid when Tenant executes this Lease. If the Term commences on a day other than the first day of a calendar month, or ends on a day other than the last day of a calendar month, then the Base Rent for such month shall be prorated on the basis of 1/30th of the monthly Base Rent for each day of such month. (See Article 39 for the complete base rent schedule). ARTICLE 3 ADDITIONAL RENT (A) OPERATING EXPENSES. In addition to the Base Rent required to be paid hereunder, in the event the sum of Landlord's Operating Expenses shall, in any calendar year during the term, exceed Operating Expenses for the Building incurred during the Base Year, Tenant agrees to pay as Additional Rent Tenant's Prorata share of such excess Operating Expenses on a per rentable square foot per annum basis. The terms "OPERATING EXPENSES", "TENANT'S PRORATA SHARE" and "BASE YEAR" shall have the meanings specified in Article 24. (B) MANNER OF PAYMENT. (i) Following the Base Year, Landlord may reasonably estimate in advance the amounts Tenant shall owe for Operating Expenses in excess of the Base Year for any full calendar year of the Term. In such event, Tenant shall pay such estimated amounts, on a monthly basis, on or before the FIRST day of each calendar month, together with Tenant's payment of Base Rent. Such estimate may be reasonably adjusted once per year by Landlord as set forth in paragraph (ii) below. 1 3 (ii) Within 120 days after the end of each calendar year including the Base Year, Landlord shall provide a statement (the "Statement") to Tenant showing: (a) the amount of actual Operating Expenses for such calendar year, with a listing of amounts for major categories of Operating Expenses, (b) any amount paid by Tenant towards Operating Expenses during such calendar year on an estimated basis, (c) any revised estimate of Tenant's obligations for Operating Expenses for the current calendar year and (d) the amount of Operating Expenses for the Base Year, with a listing of amounts for the major categories of Operating Expenses. (iii) If the Statement shows that Tenant's estimated payments were less than Tenant's actual obligations for Operating, Expenses for such year, Tenant shall pay the difference. If the Statement shows an increase in Tenant's estimated payments for the current calendar year, Tenant shall pay the difference between the new and former estimates, for the period from January 1 of the current calendar year through the month in which the Statement is sent. Tenant shall make all such payments contemplated in this paragraph, within thirty (30) days after Landlord sends the Statement. (iv) If the Statement shows that Tenant's estimated payments exceeded Tenant's actual obligations for Operating Expenses, Tenant shall receive a credit for the difference against payments of Rent next due. If the Term shall have expired and no further Rent shall be due, Tenant shall receive a refund of such difference, within thirty (30) days after Landlord sends the Statement. (v) So long as Tenant's obligations hereunder are not materially adversely affected thereby, Landlord reserves the right to reasonably change, from time to time, the manner or timing, of the foregoing payments. No reasonable delay by Landlord in providing the Statement (or separate statements) shall be deemed a default by Landlord or a waiver of Landlord's right to require payment of Tenant's obligations for actual or estimated Operating Expenses. In no event shall a decrease in Operating Expenses ever decrease the monthly Base Rent. (D) PRORATION. If the Term commences other than on January 1, or ends other than on December 31, Tenant's obligations to pay estimated and actual amounts towards Operating Expenses for such first or final calendar years shall be prorated to reflect the portion of such years included in the Term. Such proration shall be made by multiplying the total estimated or actual (as the case may be) Operating Expenses, for such calendar years, by a fraction, the numerator of which shall be the number of days of the Term during such calendar year, and the denominator of which shall be 365. (E) LANDLORD'S RECORDS. Landlord shall maintain records respecting Operating Expenses and determine the same in accordance with sound accounting and management practices, consistently applied. Although this Lease contemplates the computation of Operating Expenses on a cash basis, Landlord shall make reasonable and appropriate accrual adjustments to ensure that each calendar year includes substantially the same recurring items. Landlord reserves the right to change to a full accrual system of accounting so long as the same is consistently applied and Tenant's obligations are not materially adversely affected. Tenant or its representative shall have the right to examine such records upon reasonable prior notice specifying such records Tenant desires to examine, during normal business hours at the place or places where such records are normally kept by sending such notice no later than sixty (60) days following the furnishing of the Statement. Tenant may take exception to matters included in Operating Expenses, or Landlord's computation of Tenant's Prorata Share, by sending notice specifying such exception and the reasons therefore to Landlord no later than sixty (60) days after Landlord makes such records available for examination. Such Statement shall be considered final, except as to matters to which exception is taken after examination of Landlord's records in the foregoing manner and within the foregoing times. Tenant acknowledges that Landlord's ability to budget and incur expenses depend on the finality of such Statement, and accordingly agrees that time is of the essence of this Paragraph. If Tenant takes exception to any matter contained in the Statement as provided herein, Landlord shall refer the matter to an independent certified public accountant mutually agreed upon by Landlord and Tenant, such accountant having no prior affiliation with Tenant or Landlord whose certification as to the proper amount shall be final and conclusive as between Landlord and Tenant. Tenant shall promptly pay the cost of such certification unless such certification determines that Tenant was overbilled by more than 3%, in which event Landlord shall pay the cost of such certification. Pending resolution of any such exceptions in the foregoing manner, Tenant shall continue paying Tenant's Prorata Share of Operating Expenses in the amounts determined by Landlord, subject to adjustment after any such exceptions are so resolved. 2 4 (F) RENT AND OTHER CHARGES. Base Rent, Operating Expenses, and any other amounts which Tenant is or becomes obligated to pay Landlord under this Lease or other agreement entered in connection herewith, are sometimes herein referred to collectively as "Rent," and all remedies applicable to the non-payment of Rent shall be applicable thereto. Rent shall be paid at any office maintained by Landlord or its agent at the Property, or at such other place as Landlord may designate. ARTICLE 4 COMMENCEMENT OF TERM FOR SUITE 100 AND SUITE 500 The commencement date for Suite 100 shall be July 1, 2001 ( "Target Commencement Date"), except as otherwise provided herein. Rent for this portion of the Premises shall commence 180 days thereafter ("Suite 100 Rent Commencement Date"), except as otherwise provided herein. In the event the Target Commencement Date shall be delayed then Rent shall be abated to the extent that Landlord fails to deliver possession of the Premises for Suite 100 for any reason on or before the Target Commencement Date, including but not limited to holding over by prior occupants, except to the extent that Tenant, its contractors, agents or employees in any way contribute to such failure. Landlord and Tenant hereby acknowledge that Suite 100 is a necessary and integral part of Tenant's operations at the Premises and a material inducement for Tenant entering into this Lease. If Landlord's failure to deliver Suite 100 continues beyond one hundred twenty (120) days from the intended Target Commencement Date, or such additional time as may be necessary due to fire or other casualty, strikes, lock-outs or other labor troubles, weather conditions, shortages of material, equipment or labor, governmental requirements, power shortages or outages, or other causes beyond Landlord's reasonable control (collectively, "force majeure events"), Tenant shall have the right, but not the obligation, to terminate this Lease, by written notice to Landlord (the "Termination Notice") any time thereafter up until Landlord delivers Suite 100 to Tenant. If Tenant exercises its right to terminate, this Lease shall terminate on the date so selected by Tenant in the Termination Notice which date shall not be less than three months nor later than six months from the date such notice is delivered to Landlord (the "Termination Date"), and on the Termination Date this Lease shall terminate and come to an end as though the date selected by Tenant were the last day of the natural expiration of the Term; provided, however, that no such termination shall affect or limit any obligations or liabilities of Tenant or Landlord arising or accruing under this Lease prior to the effective date of any such termination. Any such delay shall not subject Landlord to liability for loss or damage resulting therefrom, and Tenant's sole recourse with respect thereto shall be the abatement of Rent and right to terminate this Lease as described above. Tenant shall be permitted to enter Suite 100 at any time after the Target Commencement Date but prior to the Suite 100 Rent Commencement Date to perform alterations or improvements and/or to occupy same for the purpose of conducting its business, so long as Tenant shall comply with all terms and provisions of this Lease, except those provisions requiring the payment of Rent. Landlord shall deliver the fifth floor ("Suite 500") as of the date hereof, in its "as is, where is" condition, so that Tenant may commence tenant fit-up and finish work. Once Tenant has completed its tenant finish work, Tenant shall have the right to occupy Suite 500 for the purpose of conducting its business. Notwithstanding the foregoing, the Tenant's obligation to pay rent for Suite 500 shall commence on October 1, 2001 ("Suite 500 Rent Commencement Date"). ARTICLE 5 USE AND RULES Tenant shall use the Premises for general office purposes and training, in compliance with all applicable Laws, and without disturbing or interfering with any other tenant or occupant of the Property. Tenant shall not use the Premises in any manner so as to cause a cancellation of Landlord's insurance policies, or an increase in the premiums thereunder. Tenant shall comply with all rules set forth in Exhibit "A" attached hereto (the "Rules"). Landlord shall have the right to reasonably amend such Rules and supplement the same with other reasonable Rules (not expressly inconsistent with this Lease) relating to the Property, or the promotion of safety, care, cleanliness or good order therein, and all such amendments or new Rules shall be binding upon Tenant after five (5) days' notice thereof to Tenant so long as such modifications do not materially, adversely impact upon Tenant's use or access to the Premises. All Rules shall be applied on a non-discriminatory basis, but nothing herein shall be construed to give 3 5 Tenant or any other Person (as defined in Article 24) any claim, demand or cause of action against Landlord arising out of the violation of such Rules by any other tenant, occupant, or visitor of the Property, or out of the enforcement or waiver of the Rules by Landlord in any particular instance. Subject to force majeure events, Tenant shall have twenty-four (24) hour access to Building and Premises 365 days per year. ARTICLE 6 SERVICES AND UTILITIES Landlord shall provide the following services and utilities (the cost of which shall be included in Operating Expenses unless otherwise stated herein or in any separate Exhibit hereto): (A) Electricity for standard office lighting fixtures, and equipment and accessories for offices where: (1) the connected electrical load of all of the same does not exceed an amount necessary for normal OFFICE use and consistent with rentable square footage of the Premises, (2) the electricity will be at nominal 120 volts, single phase (or 110 volts, depending on available service in the Building), and (3) the safe and lawful capacity of the existing electrical circuit(s) serving the Premises is not exceeded. Tenant hereby agrees that, as of the date of this Lease, the operations of Tenant currently in place at the Premises do not exceed a necessary amount of electrical load for normal office use. (B) Heat and air-conditioning to provide a temperature required, in Landlord's reasonable opinion and customary in comparable office buildings in Atlanta, Georgia and in accordance with applicable Law, for occupancy of the Premises under normal business operations, from 8:00 a.m. until 6:00 p.m. Monday through Friday, and Saturday 8:00 a.m. to 1:00 p.m., except on Holidays (as defined in Article 25). Landlord shall not be responsible for inadequate air-conditioning or ventilation to the extent the same occurs because Tenant uses any item of equipment consuming more than 500 watts at rated capacity (except for normal office copiers) without providing adequate air-conditioning and ventilation therefor. Tenant hereby agrees to modify the HVAC, or that portion of the HVAC serving Suite 500, if necessary, to the extent such HVAC becomes inadequate as a result of Tenant's occupancy. After hours HVAC is available to Tenant, upon prior notice of twenty-four (24) hours, at fifty $50 Dollars per hour. (C) Water for drinking, lavatory and toilet purposes at those points of supply provided for nonexclusive general use of tenants at the Property. (D) Customary office cleaning and trash removal service on Monday through Friday (or Sunday through Thursday), except on Holidays, in and about the Premises. (E) Operatorless passenger elevator service and freight elevator service in common with Landlord and other tenants and their contractors, agents and visitors. (F) All building standard fluorescent bulb replacement in all areas and all incandescent bulb replacement in public areas, toilet and restroom areas, and stairwells. (G) Landlord shall seek to provide such extra utilities or services as Tenant may from time to time request, if the same are reasonable and feasible for Landlord to provide and do not involve modifications or additions to the Property or existing Systems and Equipment (as defined in Article 24), and if Landlord shall receive Tenant's request within a reasonable period prior to the time such extra utilities or services are required. Landlord may comply with written or oral requests by any officer or employee of Tenant, unless Tenant shall notify Landlord of, or Landlord shall request, the names of authorized individuals (up to 3 for each floor on which the Premises are located) and procedures for written requests. Tenant shall, for such extra utilities or services, pay such charges as Landlord shall from time to time reasonably establish. The initial cost for after-hour HVAC shall be $50 per hour. All charges for such extra utilities or services shall be due at the same time as the installment of Base Rent with which the same are billed, or if billed separately, shall be due within thirty (30) days after such billing. Landlord may install and operate meters or any other reasonable system for monitoring or estimating any services or utilities used by Tenant in excess of those required to be provided by Landlord under this Article 4 6 (including a system for Landlord's engineer to reasonably estimate any such excess usage). If such system indicates such excess services or utilities, Tenant shall pay Landlord's reasonable charges for installing and operating such system and any supplementary air-conditioning, ventilation, heat, electrical or other systems or equipment (or adjustments or modifications to the existing Systems and Equipment), and Landlord's reasonable charges for such amount of excess services or utilities used by Tenant. Such reasonable charges for utilities shall not be marked up and shall reflect the cost for actual use incurred by the Tenant. Landlord does not warrant that any services or utilities will be free from shortages, failures, variations, or interruptions caused by repairs, maintenance, replacements, improvements, alterations, changes of service, strikes, lockouts, labor controversies, accidents, weather conditions, inability to obtain services, fuel, steam, water or supplies, governmental requirements or requests, or other causes beyond Landlord's reasonable control. None of the same shall be deemed an eviction or disturbance of Tenant's use and possession of the Premises or any part thereof, or render Landlord liable to Tenant for abatement of Rent, or relieve Tenant from performance of Tenant's obligations under this Lease. Landlord in no event shall be liable for damages by reason of loss of profits, business interruption or other consequential damages so long as Landlord is diligently working to restore such service whenever reasonably possible. Landlord hereby agrees that Landlord shall perform all work requiring utilities or other services to be temporarily suspended during non-business hours, except in the event of emergency. ARTICLE 7 ALTERATIONS AND LIENS Except as provided herein, Tenant shall make no additions, changes, alterations or improvements the cost of which exceeds $5,000.00 in the aggregate (the "Work") to the Premises or the Systems and Equipment (as defined in Article 25) pertaining to the Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Landlord may impose reasonable requirements as a condition of such consent including without limitation the submission of plans and specifications for Landlord's prior written approval, obtaining necessary permits, obtaining insurance, prior approval of contractors, subcontractor and suppliers, prior receipt of copies of all contracts and subcontracts contractor and subcontractor lien waivers, affidavits listing all contractors, subcontractors and suppliers, affidavits from engineers acceptable to Landlord stating that the Work will not adversely affect the Systems and Equipment or the structure of the Property, and requirements as to the manner and times in which such Work shall be done. All Work shall be performed in a good and workmanlike manner in compliance with all applicable governmental standards, rules and regulations and approval requirements and all materials used shall be of a quality comparable to or better than those in the Premises and Property and shall be in accordance with plans and specifications approved by Landlord, and Landlord may require that all such Work be performed under Landlord's supervision. Tenant shall pay Landlord a reasonable fee to cover Landlord's overhead in reviewing Tenant's plans and specifications and performing any supervision of the Work. Landlord consent or supervision shall not be deemed a warranty as to the adequacy of the design, workmanship or quality of materials, and Landlord hereby expressly disclaims any responsibility or liability for the same. Landlord shall under no circumstances have any obligation to repair, maintain or replace any portion of the Work, unless damaged by the gross negligence of Landlord, its agents, employees or contractors. Landlord hereby consents to Tenant's proposed alterations to Suite 100 and Suite 500, so long as such alterations are consistent with the improvements existing in the Premises currently occupied by Tenant. Tenant shall keep the Property and Premises free from any mechanic's, materialman's or similar liens or other such encumbrances in connection with any Work on or respecting the Premises not performed by or at the request of Landlord, and shall indemnify and hold Landlord harmless from and against any claims, liabilities, judgments, or costs (including reasonable attorneys' fees actually incurred) arising out of the same or in connection therewith. Tenant shall give Landlord notice at least ten (10) days prior to the commencement of any Work on the Premises (or such additional time as may be necessary under applicable Laws), to afford Landlord the opportunity of posting and recording appropriate notices of non-responsibility. Tenant shall remove any such lien or encumbrance caused by or connected with Tenant's work, by bond or otherwise within thirty (30) days after written notice by Landlord, and if Tenant shall fail to do so, Landlord may pay the amount necessary to remove such lien or encumbrance, without being responsible for investigating the validity thereof. The amount so paid shall be deemed additional Rent under this Lease payable upon demand, without limitation as to other remedies available to Landlord 5 7 under this Lease. Nothing contained in this Lease shall authorize Tenant to do any act, which shall subject Landlord's title to the Property or Premises to any liens or encumbrances whether claimed by operation of law or express or implied contract. Any claim to a lien or encumbrance upon the Property or Premises arising in connection with any Work on or respecting the Premises not performed by or at the request of Landlord shall be null and void, or at Landlord's option shall attach only against Tenant's interest in the Premises and shall in all respects be subordinate to Landlord's title to the Property and Premises. ARTICLE 8 REPAIRS Except for customary cleaning and trash removal provided by Landlord under Article 6, reasonable wear and tear, and damage covered under Article 9, Tenant shall keep the Premises in good and sanitary condition, working order and repair (including without limitation, carpet, wall-covering, doors, plumbing and other fixtures, equipment, alterations and improvements whether installed by Landlord or Tenant). In the event that any repairs, maintenance or replacements are required, Tenant shall promptly arrange for the same. If Tenant does not promptly make such arrangements, Landlord may, but need not, make such repairs, maintenance and replacements, and the costs incurred by Landlord therefore shall be reimbursed by Tenant promptly after request by Landlord. Tenant shall indemnify Landlord and pay for any repairs, maintenance and replacements to areas of the Property outside the Premises, caused, in whole or in part, as a result of moving any furniture, fixtures, or other property to or from the Premises, or caused by Tenant or its employees, agents, contractors, or visitors (notwithstanding anything to the contrary contained in this Lease), so long as Landlord provides to Tenant upon Tenant's request customary materials necessary to protect elevators (i.e. elevator pads). Except as provided in the preceding sentence, or for damage covered under Article 9, Landlord shall keep the common areas of the Property in good and sanitary condition, working order and repair (the cost of which shall be included in Operating Expenses, as described in Article 24, except as limited therein). ARTICLE 9 CASUALTY DAMAGE If the Premises or any common areas of the Property providing access thereto shall be damaged by fire or other casualty, Landlord may use available insurance proceeds to restore the same. Such restoration shall be to substantially the condition prior to the casualty, except for modifications required by zoning and building codes and other Laws or by any Holder (as defined in Article 24), any other modifications to the common areas deemed desirable by Landlord (provided access to the Premises is not materially impaired), and except that Landlord shall not be required to repair or replace any of Tenant's furniture, furnishings, fixtures or equipment, or any alterations or improvements in excess of any work performed or paid for by Landlord under any separate agreement signed by the parties in connection herewith. Landlord shall not be liable for any inconvenience or annoyance to Tenant or its visitors, or injury to Tenant's business resulting in any way from such damage or the repair thereof. However, Landlord shall allow Tenant a proportionate abatement of Rent during the time and to the extent the Premises are unfit for occupancy for the purposes permitted under this Lease and not occupied by Tenant as a result thereof (unless Tenant or its employees or agents caused the damage). Notwithstanding the foregoing to the contrary, Landlord may elect to terminate this Lease by notifying Tenant in writing of such termination within sixty (60) days after the date of damage (such termination notice to include a termination date providing at least ninety (90) days for Tenant to vacate the Premises), if the Property shall be materially damaged by Tenant or its employees or agents, or if the Property shall be damaged by fire or other casualty or cause such that: (a) repairs to the Premises and access thereto cannot reasonably be completed within 120 days after the casualty without the payment of overtime or other premiums, (b) more than 25% of the Premises is affected by the damage, and fewer than 24 months remain in the Term, or any material damage occurs to the Premises during the last 12 months of the Term, (c) any Holder (as defined in Article 24) shall require that the insurance proceeds or any portion thereof be used to retire the Mortgage debt or the damage is not fully covered by Landlord's insurance policies, or (d) the cost of the repairs, alterations, restoration or improvement work would exceed 25% of the replacement value of the Building, or the nature of such work would make termination of this Lease necessary or convenient. Tenant agrees that the remedies provided in this Article 9 shall be Tenant's sole recourse in the event of such damage, and Tenant waives any other rights Tenant may have under any applicable Law to terminate the Lease by reason of damage to the Premises or Property. Tenant 6 8 acknowledges that this Article represents the entire agreement between the parties respecting Landlord's obligations concerning damage to the Premises or Property. ARTICLE 10 INSURANCE, SUBROGATION. AND WAIVER OF CLAIMS Tenant shall maintain during the Term comprehensive (or commercial) general liability insurance, with limits of not less than $1,000,000 combined single limit for personal injury, bodily injury or death, or property damage or destruction (including loss of use thereof) for any one occurrence. Tenant shall also maintain during the Term worker compensation insurance as required by statute, and primary, noncontributory, "all-risk" property damage insurance covering Tenant's personal property, business records, fixtures and equipment, for damage or other loss caused by fire or other casualty or cause including, but not limited to, vandalism and malicious mischief, theft, water damage of any type, including sprinkler leakage, bursting or stoppage of pipes, explosion, business interruption, and other insurable risks in amounts not less than the full insurable replacement value of such property and full insurable value of such other interests of Tenant (subject to reasonable deductible amounts). Landlord shall, as part of Operating Expenses, maintain during the Term comprehensive (or commercial) general liability insurance, with limits of not less than $ 1,000,000 combined single limit for personal injury, bodily injury or death, or property damage or destruction (including loss of use thereof) for any one occurrence. Landlord shall also, as part of Operating Expenses, maintain during the Term worker compensation insurance in an amount as required by statute, and primary, noncontributory, "all-risk" property damage insurance covering the Property, fixtures and equipment, for damage or other loss caused by fire or other casualty or cause including, but not limited to, vandalism and malicious mischief, theft, water damage of any type, including sprinkler leakage, bursting or stoppage of pipes, explosion, business interruption, and other insurable risks in amounts not less than the full insurable replacement value of the Property and full insurable value of such other interests of Landlord (subject to reasonable deductible amounts).. Tenant shall provide Landlord with certificates evidencing such coverage (and, with respect to liability coverage, showing Landlord and such other parties as Landlord may designate from time to time as additional insureds) prior to the Commencement Date, which shall state that such insurance coverage may not be changed or canceled without at least twenty (20) days' prior written notice to the other party, and shall provide renewal certificates to the other party at least twenty (20) days prior to expiration of such policies. Except as provided to the contrary herein, any insurance carried by Landlord or Tenant shall be for the sole benefit of the party carrying such insurance. Any insurance policies hereunder may be "blanket policies." All insurance required hereunder shall be provided by responsible insurers and Tenant's insurer shall be reasonably acceptable to Landlord. By this Article, Landlord and Tenant intend that their respective property loss risks shall be borne by responsible insurance carriers to the extent above provided, and Landlord and Tenant hereby agree to look solely to, and seek recovery only from, their respective insurance carriers in the event of a property loss to the extent that such coverage is agreed to be provided hereunder. The parties each hereby waive all rights and claims against each other for such losses, and waive all rights of subrogation of their respective insurers, provided such waiver of subrogation shall not affect the right of the insured to recover thereunder. The parties agree that their respective insurance policies are now, or shall be, endorsed such that said waiver of subrogation shall not affect the right of the insured to recover thereunder. By this Article, Landlord and Tenant agree to look solely to, and seek recovery only from, their respective insurance carriers in the event of a property loss. The parties each hereby waive all rights and claims against each other for such losses, and waive all rights of subrogation of their respective insurers, provided such waiver shall not affect the right of the insured to recover thereunder from its own insurance carrier. ARTICLE II CONDEMNATION If the whole or any material part of the Premises or Property shall be taken by power of eminent domain or condemned by any competent authority for any public or quasi-public use or purpose, or if any adjacent property or street shall be so taken or condemned, or reconfigured or vacated by such authority in such manner as to require the 7 9 use, reconstruction or remodeling of any part of the Premises or Property, or if Landlord shall grant a deed or other instrument in lieu of such taking by eminent domain or condemnation, Landlord or Tenant shall have the option to terminate this Lease upon ninety (90) days' notice, provided such notice is given no later than 180 days after the date of such taking, condemnation, reconfiguration, vacation, deed or other instrument. Tenant shall have reciprocal termination rights if the whole or any material part of the Premises is permanently taken, or if access to, or parking for, the Premises is permanently materially impaired. Landlord shall be entitled to receive the entire award or payment in connection therewith, except that Tenant shall have the right to file any separate claim available to Tenant for any taking, of Tenant's personal property and fixtures belonging to Tenant and removable by Tenant upon expiration of the Term, and for moving expenses (so long as such claim does not diminish the award available to Landlord or any Holder, and such claim is payable separately to Tenant). All Rent shall be apportioned as of the date of such termination, or the date of such taking, whichever shall first occur. If any part of the Premises shall be taken, and this Lease shall not be so terminated, the Rent shall be proportionately abated. ARTICLE 12 RETURN OF POSSESSION At the expiration or earlier termination of this Lease or Tenant's right of possession, Tenant shall surrender possession of the Premises in the condition required under Article 8, ordinary wear and tear excepted, and shall surrender all keys, any key cards, and any parking cards, to Landlord, and advise Landlord as to the combination of any locks or vaults then remaining in the Premises, and shall remove all personal property. All improvements, fixtures and other items in or upon the Premises (except personal property belonging to Tenant), whether installed by Tenant or Landlord, shall be Landlord's property and shall remain upon the Premises, all without compensation, allowance or credit to Tenant. However, if prior to such termination or within ten (10) days thereafter Landlord so directs by notice, Tenant shall promptly remove such of the foregoing items as are designated in such notice and restore the Premises to the condition prior to the installation of such items so long as Landlord previously designated such items at the time of installation of same and; provided, Landlord shall not require removal of customary office improvements installed pursuant to any separate agreement signed by both parties (except as expressly provided to the contrary therein), or installed by Tenant with Landlord's written approval (except as expressly required by Landlord in connection with granting such approval). If Tenant shall fail to perform any repairs or restoration, or fail to remove any items from the Premises required hereunder, Landlord may do so, and Tenant shall pay Landlord the cost thereof upon demand. All property removed from the Premises by Landlord pursuant to any provisions of this Lease or any Law may be handled or stored by Landlord at Tenant's expense, and Landlord shall in no event be responsible for the value, preservation or safekeeping thereof. All property not removed from the Premises or retaken from storage by Tenant within thirty (30) days after expiration or earlier termination of this Lease or Tenant's right to possession, shall at Landlord's option be conclusively deemed to have been conveyed by Tenant to Landlord as if by bill of sale without payment by Landlord. Unless prohibited by applicable Law, Landlord shall have a lien against such property for the costs incurred in removing and storing the same ARTICLE 13 HOLDING OVER Tenant agrees it shall indemnify, defend and save Landlord harmless against all actual and direct costs, claims, loss or liability resulting from delay by Tenant in surrendering the Premises upon the expiration or sooner termination of the term of this Lease. Tenant agrees that if possession of the Premises is not surrendered to Landlord upon the Expiration Date or sooner termination of the term of this Lease, then Tenant will pay Landlord for each month and for each portion of any month during which Tenant holds over in the Premises after expiration or sooner termination of the term of this Lease (the "Holdover Period"), a sum (the "Holdover Rent") equal to one hundred fifty percent (150%) times the average of the monthly installments of Rent which was payable per month under this Lease during the six (6) month period preceding such expiration or sooner termination of the term of this Lease, which Holdover Rent shall be in addition to all other costs, claims, losses or liabilities which Tenant has agreed to 8 10 indemnify Landlord against pursuant to this Article. If Landlord shall, at any time after the expiration or sooner termination of the term hereof, proceed to remove Tenant from the Premises as a holdover tenant, Tenant shall pay the Holdover Rent for the Use and occupancy of the Premises during any Holdover Period, Tenant's aforesaid obligations shall survive the expiration or earlier termination of the term of this Lease. There shall be no renewal of this Lease by operation of law. ARTICLE 14 NO WAIVER No provision of this Lease will be deemed waived by either party unless expressly waived in writing signed by the waiving party. No waiver shall be implied by delay or any other act or omission of either party. No waiver by either party of any provision of this Lease shall be deemed a waiver of such provision with respect to any subsequent matter relating to such provision, and Landlord's consent or approval respecting any action by Tenant shall not constitute a waiver of the requirement for obtaining Landlord's consent or approval respecting any subsequent action. Acceptance of Rent by Landlord shall not constitute a waiver of any breach by Tenant of any term or provision of this Lease. No acceptance of a lesser amount than the Rent herein stipulated shall be deemed a waiver of Landlord's right to receive the full amount due, nor shall any endorsement or statement on any check or payment or any letter accompanying such check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the full amount due. The acceptance of Rent or of the performance of any other term or provision from any Person other than Tenant, including any Transferee, shall not constitute a waiver of Landlord's right to approve any Transfer. ARTICLE 15 ATTORNEYS' FEES AND JURY TRIAL In the event of any litigation between the parties, the prevailing party shall be entitled to obtain, as part of the judgment, all reasonable attorneys' fees, costs and expenses actually incurred in connection with such litigation, except as may be limited by applicable Law. In the interest of obtaining a speedier and less costly hearing of any dispute, the parties hereby each irrevocably waive the right to trial by jury. ARTICLE 16 PERSONAL PROPERTY TAXES, RENT TAXES AND OTHER TAXES Tenant shall pay prior to delinquency all taxes, charges or other governmental impositions assessed against or levied upon Tenant's fixtures, furnishings, equipment and personal property located in the Premises, and any Work to the Premises under Article 7. Whenever possible, Tenant shall cause all such items to be assessed and billed separately from the property of Landlord. In the event any such items shall be assessed and billed with the property of Landlord, Tenant shall pay Landlord its share of such taxes, charges or other governmental impositions within thirty (30) days after Landlord delivers a statement and a copy of the assessment or other documentation showing the amount of such impositions applicable to Tenant's property. Tenant shall pay any rent tax or sales tax, service tax, transfer tax or value added tax, or any other applicable tax on the Rent or services herein or otherwise respecting this Lease. Notwithstanding Tenant's obligation to pay the above-referenced taxes, Tenant shall have the right to protest any taxes levied by any governmental authority in accordance with this paragraph and shall not be in default hereunder of its obligations to pay any such taxes during the pendency of such protest or appeal. ARTICLE 17 APPROVALS Whenever Landlord's consent or approval is expressly required under this Lease, (including Article 20 or any other agreement between the parties), Landlord agrees that such consent or approval shall not be unreasonably withheld, conditioned or delayed. Landlord shall only be permitted to withhold such consent or approval in its sole and absolute discretion, where specifically provided in this Lease. ARTICLE 18 9 11 SUBORDINATION, ATTORNMENT AND MORTGAGEE PROTECTION This Lease is subject and subordinate to all Mortgages (as defined in Article 24) now or hereafter placed upon the Property, and all other encumbrances and matters of public record applicable to the Property. If any foreclosure proceedings are initiated by any Holder or a deed in lieu is granted, Tenant agrees, upon written request of any such Holder or any purchaser at foreclosure sale, to attorn and pay Rent to such party and to execute and deliver any instruments necessary or appropriate to evidence or effectuate such attornment (provided such Holder or purchaser shall agree to accept this Lease and not disturb Tenant's occupancy, so long as Tenant does not default and fail to cure within the time permitted hereunder). However, in the event of attornment, no Holder shall be liable for any act or omission of Landlord, or subject to any offsets or defenses which Tenant might have against Landlord (prior to such Holder becoming Landlord under such attornment). Any Holder may elect to make this Lease prior to the lien of its Mortgage, by written notice to Tenant, and if the Holder of any prior Mortgage shall require, this Lease shall be prior to any subordinate Mortgage. Tenant agrees to give any Holder by certified mail, return receipt requested, a copy of any notice of default served by Tenant upon Landlord, provided that prior to such notice Tenant has been notified in writing (by way of service on Tenant of a copy of an assignment of leases, or otherwise) of the address of such Holder. Tenant further agrees that if Landlord shall have failed to cure such default within the times permitted Landlord for cure under this Lease, any such Holder whose address has been provided to Tenant shall have an additional period of thirty (30) days in which to cure (or such additional time as may be required due to causes beyond such Holder's control, including time to obtain possession of the Property by power of sale or judicial action). Tenant shall execute such documentation as Landlord may reasonably request from time to time, in order to confirm the matters set forth in this Article in recordable form. ARTICLE 19 ESTOPPEL CERTIFICATE Tenant shall from time to time, within twenty (20) days after written request from Landlord, execute, acknowledge and deliver a statement (i) certifying that this Lease is unmodified and in full force and effect or, if modified, stating the nature of such modification and certifying, that this Lease as so modified, is in full force and effect (or if this Lease is claimed not to be in force and effect, specifying the ground therefor) and any dates to which the Rent has been paid in advance, and the amount of any Security Deposit, (ii) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such defaults if any are claimed, and (iii) stating the term of the Lease and the amounts of all rentals due thereunder. Any such statement may be relied upon by Landlord, its prospective purchaser or mortgagee. ARTICLE 20 ASSIGNMENT AND SUBLETTING (A) TRANSFERS. Tenant shall not, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed: (i) directly or indirectly assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise transfer, this Lease or any interest hereunder, by operation of law or otherwise (ii) sublet the Premises or any part thereof, or (iii) permit the use of the Premises by any Persons (as defined in Article 24) other than Tenant. Any use or transfer to anyone other than Tenant, as contemplated by this Article, are hereinafter sometimes referred to collectively as "Transfers" and any Person to whom any Transfer is made or solicited to be made is hereinafter sometimes referred to as a "Transferee"). If Tenant shall desire Landlord's consent to any Transfer, Tenant shall notify Landlord in writing, which notice shall include: (a) the proposed effective date (which shall not be less than fifteen (15) nor more than 180 days after Tenant's notice), (b) the portion of the Premises to be Transferred (herein called the "Subject Space"), (c) the terms of the proposed Transfer and the consideration therefor, the name and address of the proposed Transferee, and a copy of all proposed documentation pertaining to such Transfer and (d) current financial statements of the proposed Transferee certified by an officer, partner or owner thereof, and any other reasonable information to enable Landlord to determine the financial responsibility, character, and reputation of the proposed Transferee, nature of such Transferee's business and proposed use of the Subject Space, and such other information as Landlord may reasonably require. Any Transfer made without complying with this Article shall, at Landlord's option, be null, void and of no effect. Whether or not Landlord shall grant consent, Tenant shall pay any reasonable legal fees actually incurred by 10 12 Landlord, not to exceed One Thousand and no/Dollars ($1,000.00) within thirty (30) days after written request by Landlord. (B) APPROVAL. The parties hereby agree that it shall be reasonable under this Lease and under any applicable Law for Landlord to withhold consent to any proposed Transfer where one or more of the following applies (without limitation as to other reasonable grounds for withholding consent): (i) the Transferee is of a character or reputation or engaged in a business which is not consistent with the quality of the Property, (ii) the Transferee intends to use the Subject Space for purposes which are not permitted under this Lease, (iii) the Subject Space is not regular in shape with appropriate means of ingress and egress suitable for normal renting purposes, (iv) the proposed Transferee does not have a reasonable financial condition in relation to the obligations to be assumed in connection with the Transfer, or (v) Tenant has committed and failed to cure a Default within the time allowed hereunder for cure of such Default at the time Tenant requests consent to the proposed Transfer. (C) TRANSFER PREMIUM. If Landlord consents to a Transfer, then as a condition thereto, which the parties hereby agree is reasonable, Tenant shall pay Landlord fifty percent (50%) of any Transfer Premium derived by Tenant from such Transfer. "Transfer Premium" shall mean all rent, additional rent or other consideration paid by such Transferee in excess of the Rent payable by Tenant under this Lease (on a monthly basis during the Term, and on a per rentable square foot basis, if less than all of the Premises is transferred), after deducting the reasonable expenses incurred by Tenant for any changes, alterations and improvements to the Premises, and other economic concessions or services provided to the Transferee, legal fees and other administrative expenses incurred by Tenant in connection with the Transfer, and any customary brokerage commissions paid in connection with the Transfer. The percentage of the Transfer Premium due Landlord hereunder shall be paid within ten (10) days after Tenant receives any Transfer Premium from the Transferee. In the event that Tenant should transfer this Lease to, or permit use of the Premises by, Tenant's affiliates or subsidiaries, the provisions of this subparagraph shall not apply, provided that Tenant shall continue to be liable under this Lease. (D) RECAPTURE. Notwithstanding, anything to the contrary contained in this Article, Landlord shall have the option by giving written notice to Tenant within thirty (30) days after receipt of Tenant's written notice of any proposed Transfer excluding an Affiliate Transfer (as defined in Section 20(f)), to recapture the Subject Space. Such recapture notice shall cancel and terminate this Lease with respect to the Subject Space as of the date stated in Tenant's notice as the effective date of the proposed Transfer (or at Landlord's option, shall cause the Transfer to be made to Landlord or its agent, in which case the parties shall execute the Transfer documentation promptly thereafter). If this Lease shall be canceled with respect to less than the entire Premises, the Rent reserved herein shall be prorated on the basis of the number of rentable square feet retained by Tenant in proportion to the number of rentable square feet contained in the Premises, this Lease as so amended shall continue thereafter in full force and effect, and upon request of either party, the parties shall execute written confirmation of the same. (E) TERMS OF CONSENT. If Landlord consents to a Transfer, (a) the terms and conditions of this Lease, including among other things, Tenant's liability for the Subject Space, shall in no way be deemed to have been waived, (b) such consent shall not be deemed consent to any further Transfer by either Tenant or a Transferee, (c) no Transferee shall succeed to any rights provided in this Lease or any amendment hereto to extend the Term of this Lease, expand the Premises, or lease additional space, any such rights being deemed personal to Tenant (except in the event of an Affiliate Transfer-as defined herein), (d) Tenant shall deliver to Landlord promptly after execution, an executed copy of all documentation pertaining to the Transfer in form reasonably acceptable to Landlord, and (d) Tenant shall furnish upon Landlord's request a complete statement, certified by an independent certified public accountant, or Tenant's chief financial officer, setting forth in detail the computation of any Transfer Premium Tenant has derived and shall derive from such Transfer. Landlord or its authorized representatives upon prior notice shall have the right at all reasonable times to audit the books, records and papers of Tenant relating to any Transfer, and shall have the right to make copies thereof. If the Transfer Premium respecting any Transfer shall be found understated, Tenant shall within thirty (30) days after demand pay the deficiency, and if understated by more than 3%, Tenant shall pay Landlord's costs of such audit. Any sublease hereunder shall be subordinate and subject to the provisions of this Lease, and if this Lease shall be terminated during the term of any sublease, Landlord shall have the right to: (i) treat such sublease as canceled and repossess the Subject Space by any lawful means, or (ii) require that such subtenant attorn to and recognize Landlord as its landlord under any such sublease. 11 13 (F) CERTAIN TRANSFERS. For purposes of this Lease, the term "TRANSFER" shall also include the voluntary or involuntary filing of bankruptcy by or against Tenant or reorganization by Tenant, dissolution or winding up of Tenant's affairs. Notwithstanding the foregoing, the Tenant may assign this Lease, without Landlord's consent, to: (i) a corporation that, either directly or through one or more corporations, owns or controls a majority of the voting stock of Tenant, (ii) a corporation of which a majority of the voting stock is owned or controlled by Tenant, either directly or through one or more corporations; (iii) a corporation of which a majority of the voting stock is directly or indirectly owned or controlled by the same corporation that directly or indirectly owns or controls a majority of the voting stock of Tenant; or (iv) a corporation in which Tenant is merged or consolidated in accordance with applicable statutory provisions for merger and consolidation of corporations; (hereinafter referred to as an "Affiliate Transfer") so long as, with regard to each of the foregoing, (a) this Lease is assumed by the assignee and the liabilities of the corporations participating in such merger or consolidation are assumed by the corporation surviving that merger or created by that consolidation, as the case may be, (b) the assignee's or surviving corporation's net worth is equal to or greater than the Tenant's as of the date hereof, and (c) Tenant gives Landlord ) twenty (20) days prior written notice thereof. ARTICLE 21 RIGHTS RESERVED BY LANDLORD Except to the extent expressly limited herein, Landlord reserves full rights to reasonably control the Property (which rights may be exercised without subjecting Landlord to claims for constructive eviction, abatement of Rent, damages or other claims of any kind), including more particularly, but without limitation, the following rights: (A) To change the name or street address of the Property; install and maintain signs on the exterior and interior of the Property; retain at all times, and use in appropriate instances, keys to all doors within and into the Premises; grant to any Person the right to conduct any business or render any service at the Property, whether or not it is the same or similar to the use permitted Tenant by this Lease; and have access for Landlord and other tenants of the Property to any mail chutes located on the Premises according to the rules of the United States Postal Service. If change of name or street address of the Property shall occur, Landlord shall pay the actual cost of new stationery, business cards and marketing materials for Tenant to the extent such materials are rendered unusable by such name or address change. However in no event shall Landlord's cost exceed $10,000.00 (B) To enter the Premises during normal business hours for reasonable purposes with reasonable notice to Tenant, including inspection and supplying cleaning service or other services to be provided Tenant hereunder, to show the Premises to current and prospective mortgage lenders, ground lessors, insurers, and prospective purchasers, tenants (notwithstanding anything to the contrary herein, Landlord shall only be permitted to show the Premises to a prospective tenant during the last six (6) months of the term of the Lease) and brokers, at reasonable hours. (C) To limit or prevent access to the Property, shut down elevator service, activate elevator emergency, controls, or otherwise take such action or preventative measures deemed necessary by Landlord for the safety of tenants or other occupants of the Property or the protection of the Property and other property located thereon or therein, in case of fire, invasion, insurrection, riot, civil disorder, public excitement or other dangerous condition, or threat thereof. (D) To decorate and to make alterations, additions and improvements, structural or otherwise, in or to the Property or any part thereof, and any adjacent building, structure, parking facility, land, street or alley (including without limitation changes and reductions in corridors, lobbies, parking facilities (so long as Tenant still has use of the minimum number of parking spaces as provided in Article 35) and other public areas and the installation of kiosks, planters, sculptures, displays, escalators, mezzanines, and other structures, facilities, amenities and features therein, and changes for the purpose of connection with or entrance into or use of the Property in conjunction with any adjoining or adjacent building or buildings, now existing or hereafter constructed). In 12 14 connection with such matters, or with any other repairs, maintenance, improvements or alterations, in or about the Property, Landlord may erect scaffolding and other structures reasonably required, and during such operations may enter upon the Premises and take into and upon or through the Premises, all materials required to make such repairs, maintenance, alterations or improvements, and may close public entry ways, other public areas, restrooms, stairways or corridors. the Premises to exercise any of the foregoing rights, Landlord shall: (a) provide reasonable advance written or oral notice to Tenant's on-site manager or other appropriate person (except in emergencies, or for routine cleaning or other routine matters), and (b) take reasonable steps to minimize any interference with Tenant's business. ARTICLE 22 LANDLORD'S REMEDIES (A) DEFAULT. The occurrence of any one or more of the following events shall constitute a "Default" by Tenant, which if not cured within any applicable time permitted for cure below, shall give rise to Landlord's remedies set forth in Paragraph (B), below: (i) failure by Tenant to make when due any payment of Rent, unless such failure is cured within ten (10) days after written notice; (ii) failure by Tenant to observe or perform any of the terms or conditions of this Lease to be observed or performed by Tenant other than the payment of Rent, or as provided below, unless such failure is cured within thirty (30) days after written notice, or such shorter period expressly provided elsewhere in this Lease (provided, if the nature of Tenant's failure is such that more than thirty (30) days time is reasonably required in order to cure, Tenant shall not be in default if Tenant commences to cure within such period and thereafter diligently seeks to cure such failure to completion); (iii) failure by Tenant to comply with the Rules, unless such failure is cured within ten (10) days after written notice (provided, if the nature of Tenant's failure is such that more time is reasonably required in order to cure, Tenant shall not be in Default if Tenant commences to cure within such period and thereafter reasonably pursues such cure to completion); (iv) (a) making by Tenant or any guarantor of this Lease ("Guarantor") of any general assignment for the benefit of creditors, (b) filing by or against Tenant or any Guarantor of a petition to have Tenant or such Guarantor adjudged a bankrupt or a petition for reorganization or any other proceeding under any Law relating to bankruptcy (unless, in the case of a petition filed against Tenant or such Guarantor, the same is dismissed within sixty (60) days), (c) appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located on the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within thirty (30) days, (d) attachment, execution or other judicial seizure of substantially all of Tenant's assets located on the Premises or of Tenant's interest in this Lease, (e) Tenant's or any Guarantor's convening of a meeting of its creditors or any class thereof for the purpose of effecting a moratorium upon or composition of its debts, or (f) Tenant's or any Guarantor's insolvency or admission of an inability to pay its debts as they mature; (v) any material misrepresentation herein, or material misrepresentation or omission in any financial statements or other materials provided by Tenant or any Guarantor in connection with negotiating or entering this Lease or in connection with any Transfer under Article 20; (vi) cancellation of any guaranty of this Lease by any Guarantor. The aforementioned periods of time permitted for Tenant to cure shall be extended for any period of time during which Tenant is delayed in, or prevented from, curing due to fire or other casualty, strikes, lock-outs or other labor troubles, shortages of equipment or materials, governmental requirements, power shortages or outages, acts or omissions by Landlord or other Persons, Failure by Tenant to comply with the same term or condition of this Lease on three occasions during any twelve month period shall cause any failure to comply with such term or condition during the succeeding twelve month period, at Landlord's option, to constitute an incurable Default, if Landlord has given Tenant written notice of each such failure within ten (10) days after each such failure occurs. The notice and cure periods provided herein are in lieu of, and not in addition to, any notice and cure periods provided by Law. (B) REMEDIES. If a Default occurs and is not cured within any applicable time permitted under Paragraph (A), Landlord shall have the rights and remedies hereinafter set forth, which shall be distinct, separate and cumulative with and in addition to any other right or remedy allowed under any Law or, other provisions of this Lease: (i) Landlord may terminate this Lease, repossess the Premises by detainer suit, summary proceedings or other lawful means, and recover as damages a sum of money equal to: (a) any unpaid Rent as of the termination date including interest at the Default Rate (as defined in Article 24), (b) any unpaid Rent which would have accrued after the termination date through the time of award including interest at the Default Rate, less such 13 15 loss of Rent that Tenant proves could have been reasonably avoided, and (c) any other amounts necessary to compensate Landlord for all actual damages directly caused by Tenant's failure to perform its obligations under this Lease, including, without limitation all reasonable Costs of Re-letting (as defined in Paragraph F). For purposes of computing the amount of Rent herein that would have accrued after the time of award, Tenant's Prorata Share of Operating Expenses shall be projected, based upon the average rate of increase, if any, in such items from the Commencement Date through the time of award. (ii) If applicable Law permits, Landlord may terminate Tenant's right of possession and repossess the Premises by detainer suit, summary proceedings or other lawful means, without terminating this Lease (and if such Law permits, and Landlord shall not have expressly terminated the Lease in writing, any termination shall be deemed a termination of Tenant's right of possession only). In such event, Landlord may recover: (a) any unpaid Rent as of the date possession is terminated, including interest at the Default Rate, (b) any unpaid Rent which accrues during the Term from the date possession is terminated through the time of award (or which may have accrued from the time of any earlier award obtained by Landlord through the time of award), including interest at the Default Rate, less any Net Re-Letting Proceeds (as defined in Paragraph F) received by Landlord during such period, and less such loss of Rent that Tenant proves could have been reasonably avoided, and (c) any other amounts necessary to compensate Landlord for all damages directly caused by Tenant's failure to perform its obligations under this Lease, including without limitation, all Costs of Re-letting (as defined in Paragraph F). Landlord may bring suits for such amounts or portions thereof, at any time or times as the same accrue or after the same have accrued, and no suit or recovery of any portion due hereunder shall be deemed a waiver of Landlord's right to collect all amounts to which Landlord is entitled hereunder, nor shall the same serve as any defense to any subsequent suit brought for any amount not theretofore reduced to judgment. (C) MITIGATION OF DAMAGES. If Landlord terminates this Lease or Tenant's right to possession, Landlord shall use reasonable efforts to mitigate Landlord's damages, and Tenant shall be entitled to submit proof of such failure to mitigate as a defense to Landlord's claims hereunder. If Landlord has not terminated this Lease or Tenant's right to possession, Landlord shall have no obligation to mitigate, and may permit the Premises to remain vacant or abandoned; in such case, Tenant may seek to mitigate damages by attempting to sublease the Premises or assign this Lease (subject to Article 20). (D) SPECIFIC PERFORMANCE, COLLECTION OF RENT AND ACCELERATION. Landlord shall at all times have the rights and remedies (which shall be cumulative with each other and cumulative and in addition to those rights and remedies available under Paragraph (B) above, or any Law or other provision of this Lease), without prior demand or notice except as required by applicable Law: (i) to seek any declaratory, injunctive or other equitable relief, and specifically enforce this Lease, or restrain or enjoin a violation or breach of any provision hereof, and (ii) to sue for and collect any unpaid Rent which has accrued. Notwithstanding anything to the contrary contained in this Lease, to the extent not expressly prohibited by applicable Law, in the event of any Default by Tenant not cured within any applicable time for cure hereunder, Landlord may terminate this Lease or Tenant's right to possession and accelerate and declare that all Rent reserved for the remainder of the Term shall be immediately due and payable to the extent provided by law (in which event, Tenant's Prorata Share of Operating Expenses, and for the remainder of the Term shall be projected based upon the average rate of increase, if any, in such items from the Commencement Date through the date of such declaration); provided, Landlord shall, after receiving payment of the same from Tenant, be obligated to turn over to Tenant any actual Net Re-Letting Proceeds thereafter received during the remainder of the Term, up to the amount so received from Tenant pursuant to this provision. (E) LATE CHARGES AND INTEREST. Tenant shall pay, as additional Rent, a service charge of fifty dollars ($50.00) for bookkeeping and administrative expenses, if Rent is not received within ten (10) days after its due date. In addition, any Rent paid more than ten (10) days after due shall accrue interest from the due date at the Default Rate (as defined in Article 25), until payment is received by Landlord. Such service charge and interest payments shall not be deemed consent by Landlord to late payments, nor a waiver of Landlord's right to insist upon timely payments at any time, nor a waiver of any remedies to which Landlord is entitled as a result of the late payment of Rent. 14 16 (F) CERTAIN DEFINITIONS. "Net Re-Letting Proceeds" shall mean the total amount of rent and other consideration paid by any Replacement Tenants, less all Costs of Re-Letting, during given period of time. "Costs of Re-Letting" shall include without limitation, all reasonable costs and expenses actually incurred by Landlord for any repairs, maintenance, changes, alterations and improvements to the Premises, brokerage commissions, advertising, costs, reasonable attorneys' fees actually incurred, tenant improvement allowances not to exceed $20 per rsf, and costs of collecting rent from Replacement Tenants. "Replacement Tenants" shall mean any Persons (as defined in Article 24) to whom Landlord re-lets the Premises or any portion thereof pursuant to this Article. (G) OTHER MATTERS. No re-entry or repossession, repairs, changes, alterations and additions, re-letting" acceptance of keys from Tenant, or any other action or omission by Landlord shall be construed as an election by Landlord to terminate this Lease or Tenant's right to possession, or accept a surrender of the Premises, nor shall the same operate to release the Tenant in whole or in part from any of Tenant's obligations hereunder, unless express written notice of such intention is sent by Landlord or its agent to Tenant. To the fullest extent permitted by Law, all rent and other consideration paid by any Replacement Tenants shall be applied: first, to the Costs of Re-Letting, second, to the payment of any Rent theretofore accrued, and the residue, if any, shall be held by Landlord and applied to the payment of other obligations of Tenant to Landlord as the same become due (with any remaining, residue to be retained by Landlord). Rent shall be paid without any prior demand or notice therefor (except as expressly provided herein) and without any deduction, set-off or counterclaim, or relief from any valuation or appraisement laws. . The times set forth herein for the curing of any defaults by Tenant are of the essence of this Lease. Tenant hereby irrevocably waives any right otherwise available under any Law to redeem or reinstate this Lease. ARTICLE 23 LANDLORD'S RIGHT TO CURE If Landlord shall fail to perform any term or provision under this Lease required to be performed by Landlord, Landlord shall not be deemed to be in default hereunder nor subject to any claims for damages of any kind, unless such failure shall have continued for a period of thirty (30) days after written notice thereof by Tenant, provided, if the nature of Landlord's failure is such that more than thirty (30) days are reasonably required in order to cure, Landlord shall not be in default if Landlord commences to cure such failure within such thirty (30) day period, and thereafter reasonably seeks to cure such failure to completion (unless the default involves a condition dangerous to person or property, or which will become worse if no immediate action is taken to cure such default, in which event such default shall be cured forthwith upon Tenant's demand). The aforementioned periods of time permitted for Landlord to cure shall be extended for any period of time during which Landlord is delayed in, or prevented from, curing due to fire or other casualty, strikes, lock-outs or other labor troubles, shortages of equipment or materials, governmental requirements, power shortages or outages, acts or omissions by Tenant or other Persons, and other causes beyond Landlord's reasonable control. If Landlord shall fail to cure within the times permitted for cure herein, Landlord shall be subject to such remedies as may be available to Tenant at law and in equity (subject to the other provisions of this Lease), as well as an abatement of Rent due hereunder until such time as such default of Landlord is cured. Anything to the contrary contained in this Lease notwithstanding, in the event Tenant shall offset any moneys (claimed to be owed to Tenant by Landlord) against the Rent payable by Tenant hereunder pursuant to the provisions of this Lease, and Landlord shall dispute Tenant's right to such offset or the amount thereof, Tenant shall not be deemed to be in default of this Lease by reason of such offset until such dispute is resolved and Tenant shall fail to pay any sums determined to be payable by Tenant to Landlord in the resolution of such dispute after the expiration of ten (10) days following such determination (whether by arbitration or otherwise). ARTICLE 24 CAPTIONS, DEFINITIONS AND SEVERABILITY The captions of the Articles and Paragraphs of this Lease are for convenience of reference only and shall not be considered or referred to in resolving questions of interpretation. If any term or provision of this Lease shall 15 17 be found invalid, void, illegal, or unenforceable with respect to any particular Person by a court of competent jurisdiction, it shall not affect, impair or invalidate any other terms or provisions hereof, or its enforceability with respect to any other Person, the parties hereto agreeing that they would have entered into the remaining portion of this Lease notwithstanding the omission of the portion or portions adjudged invalid, void, illegal, or unenforceable with respect to such Person. (A) "Base Year" shall mean the calendar year 2001. (B) "Building" shall mean the structure identified in Article 1 of this Lease. (C) "Default Rate" shall mean twelve percent (12%) per annum, or the highest rate permitted by applicable Law, whichever shall be less. (D) "Holder" shall mean the holder of any Mortgage at the time in question, and where such Mortgage is a ground lease, such term shall refer to the ground lessor. (E) "Holidays" shall mean New Year's Day, President's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day and any other federal or state holidays recognized by landlords or comparable buildings. (F) "Landlord" and "Tenant" shall be applicable to one or more Persons as the case may be, and the singular shall include the plural, and the neuter shall include the masculine and feminine; and if there be more than one, the obligations thereof shall be joint and several. For purposes of any provisions indemnifying or limiting the liability of Landlord, the term "Landlord" shall include Landlord's present and future partners, beneficiaries, trustees, officers, directors, employees, shareholders, principals, agents, affiliates, successors and assigns. (G) "Law" shall mean all federal, state, county and local governmental and municipal laws, statutes, ordinances, rules, regulations, codes, decrees, orders and other such requirements, applicable equitable remedies and decisions by courts in cases where such decisions are considered binding precedents in the state in which the Property is located, and decisions of federal courts applying the Laws of such State. (H) "Mortgage" shall mean all mortgages, deeds of trust, ground leases and other such encumbrances now or hereafter placed upon the Property or Building, or any part thereof, and all renewals, modifications, consolidations, replacements or extensions thereof, and all indebtedness now or hereafter secured thereby and all interest thereon. (I) "Operating Expenses" shall mean all reasonable expenses, costs and amounts of every kind and nature which Landlord shall pay during any calendar year any portion of which occurs during the Term, because of or in connection with the management, repair, maintenance, restoration and operation of the Property, including without limitation, any amounts paid for: (a) utilities for the Property, including but not limited to electricity, power, gas, steam, oil or other fuel, water, sewer, lighting, heating, air conditioning and ventilating, (b) permits, licenses and certificates necessary to operate, manage and lease the Property, (c) insurance applicable to the Property, not limited to the amount of coverage Landlord is required to provide under this Lease, (d) supplies, tools, equipment and materials used in the operation, repair and maintenance of the Property, (e) accounting, legal, inspection, consulting, concierge and other services (except as provided herein), (f) any equipment rental (or installment equipment purchase or equipment financing agreements), or management agreements (including the cost of any management fee actually paid thereunder and the fair rental value of any office space provided thereunder, up to customary and reasonable amounts), (g) wages, salaries, and other compensation and benefits (including the fair value of any parking privileges provided) for all on-site persons engaged in the day-to-day operation, but shall not include salaries and other compensation of executive officers of Landlord, Building Manager, maintenance or security of the Property, and employer's Social Security taxes, unemployment taxes or insurance, and any other taxes which may be levied on such wages, salaries, compensation and benefits, (h) payments under any easement, operating agreement, declaration, restrictive covenant, or instrument pertaining to the sharing of costs in any planned development, (i) 16 18 operation, repair, and maintenance of all Systems and Equipment and components thereof (including replacement of components provided, if such component is a capital expenditure such cost shall be amortized as provided herein), janitorial service, alarm and security service, window cleaning, trash removal, elevator maintenance, cleaning of walks, parking facilities and building walls, removal of ice and snow, replacement of wall and floor coverings, ceiling tiles and fixtures in lobbies, corridors, restrooms and other common or public areas or facilities, maintenance and replacement of shrubs, grass, sod and other landscaped items, irrigation systems (maintenance only), drainage facilities, fences, curbs, and walkways, re-paving, and re-striping parking facilities, and roof repairs, (j) Taxes and (k) costs and expenses assessed against Landlord or the Property as part of the "North x Northwest" Office Park. If the Property is not fully occupied during all or a portion of any calendar year, Landlord may, in accordance with sound accounting and management practices, determine the amount of variable Operating Expenses (i.e. those items which vary according to occupancy levels that would have been paid had the Property been fully occupied), and the amount so determined shall be deemed to have been the amount of variable Operating Expenses for such year. If Landlord makes such an adjustment, Landlord shall make a comparable adjustment for the Base Expense Year. Notwithstanding the foregoing, Operating Expenses shall not, however, include: (i) depreciation, interest and amortization on Mortgages, and other debt costs or ground lease payments, if any; legal fees in connection with leasing, tenant disputes or enforcement of leases; real estate brokers' leasing commissions; improvement or alterations to tenant spaces; the cost of providing any service directly to and paid directly by, any tenant; any costs expressly excluded from Operating Expenses elsewhere in this Lease; costs of any items to the extent Landlord receives reimbursement from insurance proceeds or from a third party (such proceeds to be deducted from Operating Expenses in the year in which received); and (ii) capital expenditures, except those: (a) made primarily to reduce Operating Expenses, or to comply with any Laws or other governmental requirements, but only to the extent such expenditures accomplish such goal; provided, however, that Landlord shall not be able to pass on Landlord's costs which arise out of correcting a matter or item in the Building which is not in compliance with governmental requirements as of the date of this Lease, or (b) for reasonable replacements (as opposed to additions or new improvements) of non-structural items located in the common areas of the Property required to keep such areas in good condition; provided, all such permitted capital expenditures (together with reasonable financing charges) shall be amortized for purposes of this Lease over their useful lives. (iii) those expenses listed in Article 41 and by this reference incorporated herein. (J) "Person" shall mean an individual, trust, partnership, joint venture, association, corporation, and any other entity. (K) "Property" shall mean the Building, and any common or public areas or facilities, easements, corridors, lobbies, sidewalks, loading areas, driveways, landscaped areas, skywalks, parking garages and lots, and any and all other structures or facilities operated or maintained in connection with or for the benefit of the Building, and all parcels or tracts of land on which all or any portion of the Building or any of the other foregoing items are located, and any fixtures, machinery, equipment, apparatus, Systems and Equipment, furniture and other personal property located thereon or therein and used in connection therewith, whether title is held by Landlord or its affiliates. Possession of areas necessary for utilities, services, safety and operation of the Property, including the Systems and Equipment (as defined in Article 24) fire stairways, perimeter walls, space between the finished ceiling of the Premises and the slab of the floor or roof of the Property therein above, and the use thereof together with the right to install, maintain, operate, repair and replace the Systems and Equipment, including any of the same in, through, under or above the Premises in locations that will not materially interfere with Tenant's use of the Premises, are hereby excepted and reserved by Landlord, and not demised to Tenant (L) "Rent" shall have the meaning specified therefor in Article 3(F). (M) "Systems and Equipment" shall mean any heat pumps, plant, machinery, transformers, duct work, cable, wires, and other equipment, facilities, and systems designed to supply heat, ventilation, air conditioning and 17 19 humidity or any other services or utilities, or comprising or serving as any component or portion of the electrical, gas, steam, plumbing, sprinkler, communications, alarm, security, or fire/life/safety systems or equipment, or any other mechanical, electrical, electronic, computer or other systems or equipment for the Property. (N) "Taxes" shall mean all federal, state, county, or local governmental or municipal taxes, fees, charges or other impositions of every kind and nature, whether general, special, ordinary or extraordinary (including without limitation, real estate taxes, general and special assessments, transit taxes, water and sewer rents, taxes based upon the receipt of rent including gross receipts or sales taxes applicable to the receipt of rent or service or value added taxes (unless required to be paid by Tenant under Article 16), personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, Systems and Equipment, appurtenances, furniture and other personal property used in connection with the Property which Landlord shall pay during any calendar year, any portion of which occurs during the Term (without regard to any different fiscal year used by such government or municipal authority) because of or in connection with the leasing and operation of the property. Notwithstanding the foregoing, there shall be excluded from Taxes all excess profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes, federal and state income taxes, and other taxes to the extent applicable to Landlord's general or net income (as opposed to rents, receipts or income attributable to operations at the Property). If the method of taxation of real estate prevailing at the time of execution hereof shall be, or has been altered, so as to cause the whole or any part of the taxes now, hereafter or heretofore levied, assessed or imposed on real estate to be levied, assessed or imposed on Landlord, wholly or partially, as a capital levy or otherwise, or on or measured by the rents received therefrom, then such new or altered taxes attributable to the Property shall be included within the term "Taxes," except that the same shall not include any enhancement of said tax attributable to other income of Landlord. Any expenses incurred by Landlord in attempting to protest, reduce or minimize Taxes shall be included in Taxes in the calendar year such expenses are paid. Tax refunds shall be deducted from Taxes in the year they are received by Landlord, but if such refund shall relate to taxes paid in a prior year of the Term, and the Lease shall have expired, Landlord shall mail Tenant's Prorata Share of such net refund (after deducting expenses and attorneys' fees), up to the amount Tenant paid towards Taxes during such year, to Tenant's last known address. If Taxes for any period during the Term or any extension thereof, shall be increased after payment thereof by Landlord, for any reason including without limitation error or reassessment by applicable governmental or municipal authorities, Tenant shall pay Landlord upon demand Tenant's Prorata Share of such increased Taxes. Tenant shall pay increased Taxes whether Taxes are increased as a result of increases in the assessment or valuation of the Property (unless such reassessment is based on a sale, change in ownership or refinancing of the Property or otherwise), increases in the tax rates, reduction or elimination of any rollbacks or other deductions available under current law, scheduled reductions of any tax abatement, as a result of the elimination, invalidity or withdrawal of any tax abatement, or for any other cause whatsoever. Notwithstanding anything to the contrary contained in this Lease, if, at any time during the first three (3) years of the Lease term, any change in ownership of the Building is consummated, and as a result thereof, and to the extent that in connection therewith the Building is reassessed (the "Reassessment") for real estate tax purposes by the appropriate governmental authority, then Tenant shall not be liable for such Tax Increase (as hereinafter defined). The term "Tax Increase" shall mean that portion of the Taxes, as calculated immediately following the Reassessment, which is attributable to the Reassessment. Accordingly, the term Tax Increase shall not include any portion of the Taxes, as calculated immediately following the Reassessment, which (i) is attributable to the initial assessment of the value of the Building, or the tenant improvements located in the Building, or (ii) is attributable to an annual inflationary increase of real estate taxes. Notwithstanding the foregoing, if any Taxes shall be paid based on assessments or bills by a governmental or municipal authority using a fiscal year other than a calendar year, Landlord may elect to average the assessments or bills for the subject calendar year, based on the number of months of such calendar year included in each such assessment or bill. (O) "Tenant's Prorata Share" of Operating Expenses shall be the rentable area of the Premises divided by the rentable area of the Property as set forth in Article I on the last day of the calendar year for which Operating, Expenses are being determined, excluding any parking facilities. As of the date hereof, Tenant's Prorata Share of Operating Expenses is 54.93%. As of the Suite 100 Commencement Date (as hereinafter defined), Tenant's Prorata Share of Operating Expenses shall be 65.76%. If the Property shall contain tenants who do not participate in all or certain categories of Operating Expenses on a prorata basis, Landlord may exclude the amount of Operating Expenses, or such categories of the same, as the case may be, attributable to such tenants, and exclude the rentable area of their premises, in computing Tenant's Prorata Share. If the Property shall be part of or shall include a 18 20 complex, development or group of buildings or structures collectively owned or managed by Landlord or its affiliates or collectively managed by Landlord's managing agent, Landlord may allocate Operating Expenses within such complex, development or group, and between such buildings and structures and the parcels on which they are located, in accordance with sound accounting and management principles. In the alternative, Landlord shall have the right to determine, in accordance with sound accounting and management principles, Tenant's Prorata Share of Operating Expenses based upon the totals of each of the same for all such buildings and structures, the land constituting parcels on which the same are located, and all related facilities, including common areas and easements, corridors, lobbies, sidewalks, elevators, loading areas, parking facilities and driveways and other appurtenances and public areas, in which event Tenant's Prorata Share shall be based on the ratio of the rentable area of the Premises to the rentable area of all such buildings. ARTICLE 25 CONVEYANCE BY LANDLORD AND LIABILITY (A) In case Landlord or any successor owner of the Property or the Building shall convey or otherwise dispose of any portion thereof in which the Premises are located, to another Person (and nothing herein shall be construed to restrict or prevent such conveyance or disposition), such other Person shall thereupon be and become landlord hereunder and shall be required to execute a written agreement assuming all of Landlord's obligations under this Lease under which such successor owner shall fully assumed and be liable for all obligations of this Lease to be performed by Landlord which first arise after the date of conveyance, including the return of any Security Deposit, and Tenant shall attorn to such other Person, and Landlord or such successor owner shall, from and after the date of conveyance, be free of all liabilities and obligations hereunder not then incurred. The liability of Landlord to Tenant for any default by Landlord under this Lease or arising in connection herewith or with Landlord's operation, management, leasing, repair, renovation, alteration, or any other matter relating to the Property or the Premises, shall be limited to the interest of Landlord in the Property (and the rental proceeds thereof). Tenant agrees to look solely to Landlord's interest in the Property (and the rental proceeds thereof) for the recovery of any judgment against Landlord, and Landlord shall not be personally liable for any such judgment or deficiency after execution thereon. The limitations of liability contained in this Article shall apply equally and inure to the benefit of Landlord's present and future partners, beneficiaries, officers, directors, trustees, shareholders, agents and employees, and their respective partners, heirs, successors and assigns. Under no circumstances shall any present or future general or limited partner of Landlord (if Landlord is a partnership), or trustee or beneficiary (if Landlord or any partner of Landlord is a trust) have any personal liability for the performance of Landlord's obligations under this Lease. Notwithstanding the foregoing to the contrary, Landlord shall have personal liability for insured claims, beyond Landlord's interest in the Property (and rental proceeds thereof), to the extent of Landlord's liability insurance coverage available for such claims. (B) [Intentionally Deleted] (C) Whenever this Lease requires Landlord's consent or approval, Tenant shall reimburse Landlord on demand as a condition to granting such consent or approval any reasonable and customary costs actually incurred in connection with reviewing the request for consent or approval, including, without limitation, reasonable attorneys fees, not to exceed $500. ARTICLE 26 INDEMNIFICATION Except to the extent arising, from the negligent acts of Landlord or Landlord's agents or employees, Tenant shall defend, indemnify and hold harmless Landlord from and against any and all claims, demands, liabilities, damages, judgments, orders, decrees, actions, proceedings, fines, penalties, costs and expenses, including without limitation, court costs and reasonable attorneys' fees actually incurred arising from or relating to any loss of life, damage or injury to person, property or business occurring in or from the Premises, or caused by Tenant or in connection with any violation of this Lease or use of the Premises or Property by, or any other act or omission of, Tenant, any other occupant of the Premises, or any of their respective agents, employees, contractors or guests. Without limiting the generality of the foregoing, Tenant specifically acknowledges that the indemnity undertaking 19 21 herein shall apply to claims in connection with or arising out of any "Work" as described in Article 7, the installation, maintenance, use or removal of any "Lines" located in or serving the Premises as described in Article 28, and the transportation, use, storage, maintenance, generation, manufacturing, handling, disposal, release or discharge of any "Hazardous Material" as described in Article 29 (whether or not any of such matters shall have been theretofore approved by Landlord), except to the extent that any of the same arises from the negligent acts of Landlord or Landlord's agents or employees. Except to the extent arising, from the negligent acts of Tenant or Tenant's agents or employees, Landlord shall defend, indemnify and hold harmless Tenant from and against any and all claims, demands, liabilities, damages, judgments, orders, decrees, actions, proceedings, fines, penalties, costs and expenses, including without limitation, court costs and reasonable attorneys' fees actually incurred arising from or relating to any loss of life, damage or injury to person, property or business occurring in or from the Premises, or caused by the Landlord or in connection with any violation of this Lease by the Landlord or use of the Premises or Property by, or any other act or omission of Landlord or any of its respective agents, employees, contractors or guests. ARTICLE 27 SAFETY AND SECURITY DEVICES, SERVICES AND PROGRAMS The parties acknowledge that safety and security devices, services and programs provided by Landlord, if any, while intended to deter crime and ensure safety, may not in given instances prevent theft or other criminal acts, or ensure safety of persons or property. The risk that any safety or security device, service or program may not be effective, or may malfunction, or be circumvented by a criminal, is assumed by Tenant with respect to Tenant's property and interests, and Tenant shall obtain insurance coverage to the extent Tenant desires protection against such criminal acts and other losses, as further described in Article 10. Tenant agrees to cooperate in any reasonable safety or security program developed by Landlord or required by Law. ARTICLE 28 COMMUNICATIONS AND COMPUTER LINES Tenant may install, maintain, replace, remove or use any communications or computer wires, cables and related devices (collectively the "Lines") at the Property in or serving the Premises, provided: (a) Tenant shall obtain Landlord's prior written consent, use an experienced and qualified contractor approved in writing by Landlord, and comply with all of the other provisions of Article 7, (b) any such installation, maintenance, replacement, removal or use shall comply with all Laws applicable thereto and good work practices, and shall not interfere with the use of any then existing Lines at the Property, (c) an acceptable number of spare Lines and space for additional Lines shall be maintained for existing and future occupants of the Property, as determined in Landlord's reasonable opinion, (d) if Tenant at any time uses any equipment that may create an electromagnetic field exceeding the normal insulation ratings of ordinary twisted pair riser cable or cause radiation higher than normal background radiation, the Lines therefor (including riser cables) shall be appropriately insulated to prevent such excessive electromagnetic fields or radiation, (e) as a condition to permitting the installation of new Lines, Landlord may require that Tenant remove existing Lines located in or serving the Premises, and (f) Tenant shall pay all costs in connection therewith. Landlord reserves the right to require that Tenant remove any Lines located in or serving the Premises which are installed in violation of these provisions, or which are at any time in violation of any Laws or represent a dangerous or potentially dangerous condition (whether such Lines were installed by Tenant or any other party), within three (3) business days after written notice. Landlord may (but shall not have the obligation to): (i) install new Lines at the Property (ii) create additional space for Lines at the Property, and (iii) reasonably direct, monitor and/or supervise the installation, maintenance, replacement and removal of, the allocation and periodic re-allocation of available space (if any) for, and the allocation of excess capacity (if any) on, any Lines now or hereafter installed at the Property by Landlord, Tenant or any other party (but Landlord shall have no right to monitor or control the information transmitted through such Lines). Such rights shall not be in limitation of other rights that may be available to Landlord by Law or 20 22 otherwise. If Landlord exercises any such rights, Landlord may charge Tenant for the costs attributable to Tenant, or may include those costs and all other costs in Operating Expenses under Article 24 (including without limitation, costs for acquiring, and installing Lines and risers to accommodate new Lines and spare Lines, any associated computerized system and software for maintaining records of Line connections, and the fees of any consulting engineers and other experts); provided, any capital expenditures included in Operating Expenses hereunder shall be amortized (together with reasonable finance charges) over the period of time prescribed by Article 24. Tenant hereby reserves the right to remove any or all Lines installed by or for Tenant within or serving the Premises upon termination of this Lease. Notwithstanding anything, to the contrary contained in Article 12, Landlord reserves the right to require that Tenant remove any or all Lines installed by or for Tenant within or serving the Premises upon termination of this Lease, provided Landlord notifies Tenant prior to or within thirty (30) days following such termination. Tenant shall have a reasonable period of time to complete such removal. Any Lines not required to be removed pursuant to this Article shall, at Landlord's option, become the property of Landlord (without payment by Landlord). If Tenant fails to remove such Lines as required by Landlord, or violates any other provision of this Article, Landlord may, after twenty (20) days written notice to Tenant, remove such Lines or remedy such other violation, at Tenant's expense (without limiting Landlord's other remedies available under this Lease or applicable Law). Except to the extent arising from the intentional or negligent acts of Landlord or Landlord's agents or employees, Landlord shall have no liability for damages arising from, and Landlord does not warrant that the Tenant's use of any Lines will be free from the following (collectively called "Line Problems"): (x) any eavesdropping or wire-tapping by unauthorized parties other than by Landlord, its agents or employees, (y) any failure of any Lines to satisfy Tenant's requirements, or (z) any shortages, failures, variations, interruptions, disconnections, loss or damage caused by the installation, maintenance, replacement, use or removal of Lines by or for other tenants or occupants at the Property, by any failure of the environmental conditions or the power supply for the Property to conform to any requirements for the Lines or any associated equipment, or any other problems associated with any Lines by any other cause. Under no circumstances shall any Line Problems be deemed an actual or constructive eviction of Tenant, render Landlord liable to Tenant for abatement of Rent, or relieve Tenant from performance of Tenant's obligations under this Lease. Landlord in no event shall be liable for damages by reason of loss of profits, business interruption or other consequential damage arising from any Line Problems. Landlord shall be responsible for repairing all Line Problems caused by Landlord, its agents, employees, invitees or contractors, and Landlord shall use its best efforts to cause any third party causing such Line Problems to promptly repair such Line Problems. ARTICLE 29 HAZARDOUS MATERIALS Tenant shall not transport, use, store, maintain, generate, manufacture, handle, dispose, release or discharge any "Hazardous Material" (as defined below) upon or about the Property, or permit Tenant's employees, agents, contractors, and other occupants of the Premises to engage in such activities upon or about the Property. However, the foregoing provisions shall not prohibit the transportation to and from and use, storage, maintenance and handling, within, the Premises of substances customarily used in offices (or such other business or activity expressly permitted to be undertaken in the Premises under Article 5), provided: (a) such substances shall be used and maintained only in such quantities as are reasonably necessary for such permitted use of the Premises, strictly in accordance with applicable Law and the manufacturers' instructions therefor, (b) such substances shall not be disposed of, released or discharged on the Property, and shall be transported to and from the Premises in compliance with all applicable Laws, and as Landlord shall reasonably require, (c) if any applicable Law or Landlord's trash removal contractor requires that any such substances be disposed of separately from ordinary trash, Tenant shall make arrangements at Tenant's expense for such disposal directly with a qualified and licensed disposal company at a lawful disposal site (subject to scheduling and approval by Landlord), and shall ensure that disposal occurs frequently enough to prevent unnecessary storage of such substances in the Premises, and (d) any remaining such substances shall be completely, properly and lawfully removed from the Property upon expiration or earlier termination of this Lease. Tenant shall promptly notify Landlord of: (i) any enforcement, cleanup or other regulatory action taken or threatened by any governmental or regulatory authority with respect to the presence of any Hazardous Material on 21 23 the Premises or the migration thereof from or to other property, (ii) any demands or claims made or threatened by any party against Tenant or the Premises relating to any loss or injury resulting from any Hazardous Material, (iii) any release, discharge or nonroutine, improper or unlawful disposal or transportation of any Hazardous Material on or from the Premises, and (iv) any matters where Tenant is required by Law to give a notice to any governmental or regulatory authority respecting any Hazardous Material on the Premises. Landlord shall have the right (but not the obligation) to join and participate as a party in any legal proceedings or actions affecting the Premises initiated in connection with any environmental, health or safety Law. At such times as Landlord may reasonably request, Tenant shall provide Landlord with a written list identifying any Hazardous Material then used, stored, or maintained upon the Premises, the use and approximate quantity of each such material, a copy of any material safety data sheet ("MSDS") issued by the manufacturer therefor, written information concerning the removal, transportation and disposal of the same, and such other information as Landlord may reasonably require or as may be required by Law. The term "Hazardous Material" for purposes hereof shall mean any chemical, substance, material or waste or component thereof which is now or hereafter listed, defined or regulated as a hazardous or toxic chemical, substance, material or waste or component thereof by any federal, state or local governing or regulatory body having jurisdiction, or which would trigger any employee or community "right-to-know" requirements adopted by any such body, or for which any such body has adopted any requirements for the preparation or distribution of an MSDS. If any Hazardous Material is released, discharged or disposed of by Tenant or any other occupant of the Premises, or their employees, agents or contractors, on or about the Property in violation of the foregoing provisions, Tenant shall immediately, properly and in compliance with applicable Laws clean up and remove the Hazardous Material from the Property and any other affected property and clean or replace any affected personal property (whether or not owned by Landlord), at Tenant's expense. Such clean up and removal work shall be subject to Landlord's prior written approval (except in emergencies), and shall include, without limitation, any testing investigation, and the preparation and implementation of any remedial action plan required by any governmental body having jurisdiction or reasonably required by Landlord. If Tenant shall fail to comply with the provisions of this Article within five (5) days after written notice by Landlord, or such shorter time as may be required by Law or in order to minimize any hazard to Persons or property, Landlord may (but shall not be obligated to) arrange for such compliance directly or as Tenant's agent through contractors or other parties selected by Landlord, at Tenant's expense (without limiting Landlord's other remedies under this Lease or applicable Law). If any Hazardous Material is released, discharged or disposed of on or about the Property and such release, discharge or disposal is not caused by Tenant or other occupants of the Premises, or their employees, agents or contractors, such release, discharge or disposal shall be deemed casualty damage under Article 9 to the extent that the Premises or common areas serving the Premises are affected thereby; in such case, Landlord and Tenant shall have the obligations and rights respecting such casualty damage provided under Article 9. ARTICLE 30 MISCELLANEOUS (A) Each of the terms and provisions of this Lease shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, executors, administrators, guardians, custodians, successors and assigns, subject to the provisions of Article 20 respecting Transfers. (B) Neither this Lease nor any memorandum of lease or short form lease shall be recorded by Tenant. (C) This Lease shall be construed in accordance with the Laws of the State of Georgia. (D) All obligations or rights of either party arising during or attributable to the period ending upon expiration or earlier termination of this Lease shall survive such expiration or earlier termination. (E) Landlord agrees that, if Tenant timely pays the Rent and performs the terms and provisions hereunder, and subject to all other terms and provisions of this Lease, Tenant shall hold and enjoy the Premises during, the Term, free of all lawful claims by any Person acting by or through Landlord. 22 24 (F) This Lease does not grant any legal rights to "light and air" outside the Premises nor any particular view visible from the Premises. ARTICLE 31 OFFER The submission and negotiation of this Lease shall not be deemed an offer to enter the same by Landlord, but the solicitation of such an offer by Tenant. Tenant agrees that its execution of this Lease constitutes a firm offer to enter the same. During such period and in reliance on the foregoing, Landlord may, at Landlord's option (and shall, if required by applicable Law), deposit any security deposit and Rent, and proceed with any plans, specifications, alterations or improvements, and permit Tenant to enter the Premises, but such acts shall not be deemed an acceptance of Tenant's offer to enter this Lease, and such acceptance shall be evidenced only by Landlord signing and delivering this Lease to Tenant. ARTICLE 32 NOTICES Except as expressly provided to the contrary in this Lease, every notice or other communication to be given by either party to the other with respect hereto or to the Premises or Property, shall be in writing, and shall not be effective for any purpose unless the same shall be delivered by facsimile transmission, served personally or by national air courier service, or United States certified mail, return receipt requested, postage prepaid, addressed, if to Tenant, at the address first set forth in the Lease, until the Commencement Date, and thereafter to the Tenant at the Premises, and if to Landlord, 239 Ethan Allen Highway, Ridgefield, Connecticut 06877, Attention: CFO, Facsimile No. 203-894-1801 or to such other place as Landlord may from time to time designate in writing to Tenant. Every notice or other communication hereunder shall be deemed to have been given as of the third business day following the date of such mailing (or as of any earlier date evidenced by a receipt from such national air courier service or the United States Postal Service) or immediately if personally delivered. Notices may be given by facsimile, so long as a copy is provided otherwise in accordance with the terms hereof (the receipt of a facsimile copy shall not constitute receipt for purposes of commencing any time period for any action or response to any notice). Notices not sent in accordance with the foregoing shall be of no force or effect until received by the foregoing parties at such addresses required herein. ARTICLE 33 REAL ESTATE BROKERS Tenant represents that Tenant has dealt only with Hailey Realty Associates as broker, agent or finder in connection with this Lease and agrees to indemnify, defend and hold Landlord harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys' fees) arising from any claims or demands of any other broker, agent or finder with whom Tenant has dealt for any commission or fee alleged to be due in connection with its participation in the procurement of Tenant or the negotiation with Tenant of this Lease. Landlord represents that Landlord has dealt only with Hailey Realty as broker, agent or finder in connection with this Lease and agrees to indemnify, defend and hold Tenant harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys' fees) arising from any claims or demands of any other broker, agent or finder with whom Landlord has dealt for any commission or fee alleged to be due in connection with its participation in the negotiation of this Lease. ARTICLE 34 SECURITY DEPOSIT Tenant shall deposit with Landlord the amount of $44,792.50 ("Initial Deposit"), upon Tenant's execution and submission of this Lease. On or before the date Tenant occupies Suite 500 (as defined herein), Tenant shall deposit with Landlord the amount of $26,442.81 ("5th Floor Deposit"). Upon the Suite 100 Rent Commencement Date, Tenant shall deposit an additional $14,041.50 ("1st Floor Deposit"). The Initial Deposit, the 5th Floor Deposit and the 1st Floor Deposit collectively referred to herein as the "Security Deposit." The Security Deposit shall serve 23 25 as security for the prompt, full and faithful performance by Tenant of the terms and provisions of this Lease. In the event that Tenant is in Default hereunder and fails to cure within any applicable time permitted under this Lease, or in the event that Tenant owes any amounts to Landlord upon the expiration of this Lease, Landlord may use or apply the whole or any part of the Security Deposit necessary for the payment of Tenant's obligations hereunder. The use or application of the Security Deposit or any portion thereof shall not prevent Landlord from exercising any other right or remedy provided hereunder or under any Law and shall not be construed as liquidated damages. In the event the Security Deposit is reduced by such use or application, Tenant shall deposit with Landlord within ten (10) days after written notice, an amount sufficient to restore the full amount of the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from Landlord's general funds or pay interest on the Security Deposit. Any remaining portion of the Security Deposit shall be returned to Tenant within forty-five (45) days after Tenant has vacated the Premises in accordance with Article 12. ARTICLE 35 PARKING SPACES During the Term, Landlord hereby grants to Tenant and persons designated by Tenant a non-exclusive license and right to use not less than 3.7 parking spaces per 1,000 square feet on an unreserved basis, in the designated parking area at the Property (the "Parking Area"); provided, however, while InfoCure Corporation is a tenant of the Building, Landlord hereby grants Tenant the right to use not less than 240 parking spaces. The term of such license shall commence on the Lease Commencement Date and shall continue until the earlier to occur of the Expiration Date under this Lease, or termination of this Lease. The parking spaces hereunder shall be available to Tenant, its employees and visitors on an unreserved "first-come, first-served" basis. Washing, waxing, cleaning or servicing of any vehicle in the Parking Area is prohibited. Parking spaces may be used only for parking automobiles, sport utility vehicles, motorcycles and minivans. Tenant shall at all times comply with all applicable ordinances, rules, regulations, codes, laws, statutes and requirements of all federal, state, county and municipal governmental bodies or their subdivisions respecting, the use of the parking spaces. Landlord reserves the right to adopt, modify and enforce reasonable rules governing the use of the parking, spaces from time to time, including any key-card, sticker or other identification or entrance system, and hours of operation. Landlord may refuse to permit any person who violates such rules to park, and any violation of the rules shall subject the car to removal from the Parking Area. Landlord shall have no liability whatsoever for any damage to vehicles or other property located in the Parking Area, nor for any personal injuries or death arising out of any matter relating to the Parking Area, and in all events, Tenant agrees to look first to its insurance carrier and to request that Tenant's employees look first to their respective insurance carriers for payment of any losses sustained in connection with any use of the Parking Area. Tenant hereby waives on behalf of its insurance carriers all rights of subrogation against Landlord or Landlord's agents. Landlord reserves the right to assign a reasonable number of specific spaces, and to reserve spaces for couriers, visitors, compact or midget cars, handicapped persons and for other tenants, guests of tenants or other parties, and Tenant and persons designated by Tenant hereunder shall not park in any such assigned or reserved space, so long as Tenant still has the use of the minimum number of parking spaces as provided herein. Landlord also reserves the right to close all or any portion of the Parking Area in order to make repairs or perform maintenance services, or to alter, modify, re-stripe or renovate the Parking Area, or if required by casualty, strike, condemnation, act of God, governmental law or requirement or other reason beyond Landlord's reasonable control. If Landlord closes all or substantially all of the Parking Area, Landlord will provide alternative parking areas. ARTICLE 36 CONSENT TO JURISDICTION [Intentionally Deleted] ARTICLE 37 ENTIRE AGREEMENT 24 26 This Lease, together with the Exhibits (WHICH COLLECTIVELY ARE HEREBY INCORPORATED WHERE REFERRED TO HEREIN AND MADE A PART HEREOF AS THOUGH FULLY SET FORTH), contains all the terms and provisions between Landlord and Tenant relating to the matters set forth herein and no prior or contemporaneous agreement or understanding pertaining to the same shall be of any force or effect, except any such contemporaneous agreement specifically referring to and modifying this Lease, signed by both parties. Without limitation as to the generality of the foregoing, Tenant hereby acknowledges and agrees that Landlord's leasing agents and field personnel are only authorized to show the Premises and negotiate terms and conditions for leases subject to Landlord's final approval, and are not authorized to make any agreements, representations, understandings or obligations, binding upon Landlord, respecting the condition of the Premises or Property, suitability of the same for Tenant's business, or any other matter, and no such agreements, representations, understandings or obligations not expressly contained herein or in such contemporaneous agreement shall be of any force or effect. Neither this Lease, nor any Exhibits or Exhibits referred to above may be modified, except in writing signed by both parties. ARTICLE 38 SPECIAL STIPULATIONS Insofar as the special stipulations attached hereto and incorporated herein conflict with any of the foregoing provisions, said special stipulations shall control. ARTICLE 39 BASE RENTAL
PERIOD RENTABLE SQUARE ANNUAL BASE RENT BASE RENT PER ANNUAL BASE RENT FOOTAGE PER RENTABLE SQUARE MONTH FOOT 3/06/01 - 9/30/01 31,160 $ 17.25 $44, 792.50 $537,510.00
PERIOD RENTABLE SQUARE ANNUAL BASE RENT BASE RENT PER ANNUAL BASE RENT FOOTAGE PER RENTABLE SQUARE MONTH FOOT 10/01/01 - Day 49,555 $ 17.25 $ 71,235.31 $ 854,823.75 Preceding the Suite 100 Rent Commencement Date Suite 100 Rent 59,323 $ 17.25 $ 85,276.81 $ 1,023,321.75 Commencement Date - 2/28/02 3/01/02 - 2/28/03 59,323 $ 17.77 $ 87,847.48 $ 1,054,169.71 3/01/03 - 2/29/04 59,323 $ 18.30 $ 90,467.58 $ 1,085,610.90 3/01/04 - 2/28/05 59,323 $ 18.85 $ 93,186.55 $ 1,118,238.55 3/01/05 - 2/28/06 59,323 $ 19.42 $ 96,004.39 $ 1,152,052.66 3/01/06 - 8/31/06 59,323 $ 20.00 $ 98,871.67 $ 1,186,460.00
*NOTWITHSTANDING THE SCHEDULE SET FORTH HEREIN, THE BASE RENT PER MONTH, THE ANNUAL BASE RENT AND RENTABLE SQUARE FOOTAGE MAY BE ADJUSTED PROPORTIONATELY, AS NECESSARY, TO REFLECT ADDITION AREA ADDED TO THE PREMISES. 25 27 AT THE REQUEST OF EITHER PARTY, LANDLORD AND TENANT HEREBY AGREE TO EXECUTE A CERTIFICATE SETTING FORTH THE REVISED RENT SCHEDULE AND CONFIRMING THE SUITE 100 COMMENCEMENT DATE. ARTICLE 40 SECURITY Landlord is not responsible or liable for any thefts or criminal acts incurred on the premises at any time for any reason, except when caused by the gross negligence of Landlord, its agents, employees or contractors. ARTICLE 41 OPERATING EXPENSES In further reference to Article 24(h)(i) and (ii) operating expenses shall also not include the following,: - - interest and principal payments on mortgage debt; - - ground rental payments; - - the cost of capital improvements not otherwise allowed in Paragraph 1.4(j) of the Lease; - - the costs of painting or decorating other than Common Areas, alterations to the Premises or the premises of other tenants of the building, or work furnished by Landlord without charge as an inducement for a tenant to lease space (i.e. free rent, improvement allowances); - - salaries and other compensation of executive officers of Landlord or Managing Agent senior to the Building manager; - - income or franchise taxes or other such taxes unless imposed in lieu of Property Taxes imposed or measured by the income of Landlord from the operation of the Building; - - the cost of constructing, installing, operating or maintaining any special service or facility such as an observatory, broadcasting facility, luncheon club, athletic or recreational club, cafeteria or dining facility; - - the costs associated with services or amenities not available to all tenants or provided to any tenant to a materially greater extent or more favorable manner than generally provided to other tenants; - - the costs of correcting latent defects and defects in construction or renovation of the Building or its systems; - - the costs (including fines and penalties), to comply with laws such as ADA and environmental laws not otherwise Tenant's obligation as provided for in Article 29, including without limitation, laws relating to the required phase out of so-called "freon" as a coolant or to accomplish other future retrofitting driven by as-yet-unknown future environmental concerns, or to purchase environmental insurance; - - the cost of any work performed or service provided for which fees are charged or other compensation received; - - payments for rental items, the cost of which would constitute a capital expenditure except where used to reduce or offset operating expenses if such equipment were purchased; - - legal expenses incurred in connection with tenant leases including, without limitation, negotiations with prospective tenants and enforcing provisions of this Lease or other leases in the Building; - - costs for sculptures, paintings and other objects of art located in the interior or on the exterior of the Building or immediately adjacent thereto; - - any fees and expenses paid to an agent which is related to Landlord to the extent such fees or expenses are in excess of the customary market amounts which would be paid in the absence of such a relationship; - - expenditures for repairs or maintenance which are covered by warranties, guarantees or service contracts; - - any expenditure for which Landlord has been or is entitled to be reimbursed by third parties such as insurance companies or would have been compensated through proceeds of insurance had Landlord maintained insurance required under this Lease; - - the cost of any alterations, additions or equipment replacements and the like which under generally accepted accounting principals and practices are properly classified as capital expenditures, except 26 28 for those items which were purchased for the purpose of reducing Operating Expenses and actually reduce Operating Expenses; - - advertising, promotional and marketing expenses, or the cost of maintaining a leasing or marketing office for the Building; - - real estate brokerage and leasing commissions; - - expenses in connection with repairs or other work occasioned by the exercise of the right of eminent domain; - - damages incurred due to the gross negligence of the Landlord; - - debt costs or the costs of financing or refinancing; - - the costs, fines or penalties incurred due to violations by Landlord of any governmental rule or authority; - - expenses incurred by Landlord, if any, in connection with the operation, cleaning, repair, safety, management, security, maintenance or other services of any kind provided to any portions of the Building which are leased or designated to be used for retail, garage or storage purposes to the extent such expenses are reimbursed or paid directly by any tenant or garage operator; - - expenses incurred by Landlord, if any, in connection with any special services or any garage operations, but to the extent such expenses are less than any income generated by such special services or garage operation; - - any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord; - - Landlord's overhead not related to management of the Building; - - Charitable contributions of Landlord; - - Any "finders' fees," brokerage commissions, job placement costs, or job advertising cost; - - Any "above-standard" cleaning, including, but not limited to construction cleanup or special cleanings associated with parties/events; - - Cost of any magazine, newspaper, trade or other subscriptions; - - Cost of any training or incentive programs, other than for Tenant life safety information services; - - Cost of any "Tenant relations" parties, events or promotion not consented to by an authorized representative of Tenant in writing; - - "In-house" legal and/or accounting fees; and - - Reserves for bad debts or for future improvements, repairs, additions, etc. ARTICLE 42 PREMISES "AS IS" Tenant acknowledges and agrees that the Premises are being delivered in "as is" condition, and Landlord has no obligation to make any alteration or representation to the same, except, Landlord hereby agrees to replace the carpet in the common areas, renovate the elevator cabs during the calendar year 2001 and to replace the heat pumps throughout the building, as necessary to keep same in good and working order. ARTICLE 43 VIOLATIONS Any violation, municipal, governmental or otherwise, placed on the Premises as a result of Tenant's (or its employees or agents) acts or omissions, is deemed a default by Tenant under the Lease and the Landlord will be entitled to pursue all rights and remedies set forth in the Lease for a Tenant default and any other rights or remedies available to Landlord under applicable law. ARTICLE 44 EXPANSION OPTIONS (A) RIGHT OF FIRST REFUSAL 27 29 (i) Tenant shall have an on-going Right of First Refusal (as described herein) on any office space in the Building currently available or any office space in the Building that becomes available during the Term (hereinafter the "First Refusal Space"). Landlord acknowledges that Tenant may wish to expand the Premises and lease a portion or portions of the First Refusal Space. Tenant, however, acknowledges that Landlord must be in a position to lease the First Refusal Space to other tenants. In order to accommodate Tenant's desires regarding the First Refusal Space and Landlord's requirement for future leasing of the First Refusal Space, Landlord grants to Tenant the right of first refusal to lease the First Refusal Space in accordance with the terms and conditions contained herein. If Landlord makes a written offer (in response to a request, written or oral, for proposal) to a prospective tenant to lease all or any portion of the First Refusal Space, then Landlord shall submit to Tenant in writing a copy of such proposed offer to lease (hereinafter referred to as the "Offer") and, for a period of ten (10) business days after Landlord submits the offer to Tenant, Tenant shall have the right and option to lease the First Refusal Space covered by the Offer upon equivalent monetary terms and conditions, including security deposit, any offer of free rent and leasehold improvement allowances, as embodied in the copy of such Offer submitted to Tenant by Landlord, but upon all other terms and conditions contained in this Lease and for a term expiring as of the date of the expiration of this Lease. In the event the remaining months in the Term or any extension thereof, are less than the number of months in the term embodied in the Offer, then such free rent and leasehold improvement allowances shall be reduced to the amounts that bear the same ratio to the free rent and leasehold improvement allowances embodied in the Offer as the remaining months in the Term bears to the number of months of the term embodied in the Offer. If Tenant shall elect to exercise its right to lease the First Refusal Space covered by the Offer, written notice of such election shall be given to Landlord within ten (10) business days from the time that Landlord submitted a copy of the Offer to Tenant (hereinafter referred to as the "Offer Period"), which notice by Tenant shall specify a date that Tenant shall lease the space covered by the Offer, which date shall be not less than thirty (30) nor more than ninety (90) days after the giving of notice thereof. (ii) Upon the exercise of its right to lease the First Refusal Space covered by the Offer, Landlord and Tenant shall enter into a written agreement modifying and supplementing this Lease and specifying that the First Refusal Space is a part of the Premises and under this Lease and containing other appropriate terms and provisions relating to the addition of such area to this Lease, including, without limitation, increasing, adjusting or augmenting Rent and Additional Rent and Security Deposit as a result of the addition of such space. (iii) If a right to lease pursuant to this Article shall not be exercised within the Offer Period or shall be waived (no notice is deemed to be a waiver of such right), then Landlord shall have the right to lease such space to the prospective tenant, and if such transaction is consummated, Tenant's rights under this Article shall automatically terminate and be of no further force or effect. If a right to lease pursuant to this Article shall not be exercised within the Offer Period or shall be waived (no notice is deemed to be a waiver of such right), and Landlord fails to lease the space covered by the Offer within six (6) months after Landlord's submission of a copy of the Offer to Tenant, then this Article shall be applicable to any subsequent offer to lease the First Refusal Space or any portion thereof. (iv) Notwithstanding the foregoing right of first refusal and any other provision of this Lease to the contrary, such right of first refusal is conditioned upon this Lease being in full force and effect, that Tenant has received not more than one default notice relating to the payment of Rent or Additional Rent from Landlord in the preceding six (6) months, and there being no default continuing under this Lease. If Tenant fails to exercise the foregoing right of first refusal as provided in and in strict accordance with the terms of this Article, the foregoing right of first refusal shall automatically terminate and be of no further force or effect, or if exercised, shall be null and void. (v) Tenant shall not have the right to assign its right of first refusal to any sublessee of the Premises or any portion thereof or to any assignee of this Lease (except an "Affiliate Transfer"), nor may any such sublessee or assignee exercise or enjoy the benefit of such right of first refusal. 28 30 (vi) Notwithstanding any other term or provision of this Article or elsewhere in this Lease, expressed or implied, it is understood and agreed by Tenant that (i) Landlord shall not be liable for the failure or inability of Tenant to exercise or benefit from any or all rights granted in this Article with respect to said First Refusal Space or any portion thereof and (ii) Tenant shall not be entitled to any compensation, consolation, consideration, replacement of such space, or any other remedy from or against Landlord by reason of such failure or inability. (B) Right of First Offer (i) In addition to the foregoing Right of First Refusal, Provided no event of Default on the part of Tenant has occurred or is continuing, and further provided, that during the term of this Lease any additional space in the Building becomes available for lease, Landlord shall before offering same on the market, first offer same to the Tenant upon the same rent, terms and conditions as Landlord shall offer to any third party. (ii) Tenant shall have ten (10) business days immediately following receipt of written notification from Landlord of the availability of such space for lease to notify Landlord in writing by certified mail with return receipt requested or by overnight courier that Tenant has agreed to lease such additional space upon the terms and conditions as set forth by Landlord. (iii) In the event Tenant has notified Landlord of its intention to exercise its option to lease the additional space as provided herein, Landlord will deliver to Tenant a lease amendment to reflect the addition of such space to the Premises and incorporating any other financial terms and conditions as agreed upon between the parties relating to such space. ARTICLE 45 AUTHORITY If either party signs as a corporation, execution hereof shall constitute a representation and warranty by such party to the other that such party is a duly organized and existing corporation, that such party has been and is qualified to do business in the State of Georgia and in good standing with the State of Georgia, that the corporation has full right and authority to enter into this Lease, and that all persons signing on behalf of the corporation were authorized to do so by appropriate corporate action. If either party signs as a partnership, trust, or other legal entity, execution hereof shall constitute a representation and warranty by such party to the other that such party has complied with all applicable laws, rules, and governmental regulations relative to such party's right to do business in the State of Georgia, that such entity has the full right and authority to enter into this Lease, and that all persons signing on behalf of such entity were authorized to do so by any and all necessary or appropriate partnership, trust, or other legal entity. ARTICLE 46 WAIVER OF LANDLORD'S LIEN Landlord hereby expressly waives Landlord's statutory or common law Landlord's lien with regard to the personal property of Tenant, and further agrees to execute at any time or times hereafter, upon request of Tenant, all instruments evidencing such waiver. ARTICLE 47 INTERRUPTION OF SERVICES If any essential services (such as HVAC, passenger elevators if necessary for reasonable access, electricity, water) supplied by Landlord are interrupted, and the interruption does not result from the negligence or willful misconduct of Tenant, its employees, invitees, or agents, Tenant shall be entitled to an abatement of Rent and Additional Rent. The abatement shall begin on the third consecutive business day of the interruption or when Tenant stops using the Premises because of the interruption, whichever is later. The abatement shall end when the services are restored. Tenant shall have the option to cancel the Lease if the interruption unreasonably and materially interferes with Tenant's use of or access to the Premises for at least ninety (90) days. To exercise this option Tenant 29 31 must give Landlord notice of the cancellation within ten (10) days from the end of the ninety (90) day period. During any such interruption, Landlord shall use its best efforts to restore the services. ARTICLE 48 GENERATOR During the Term, Landlord hereby grants to Tenant the exclusive right to use the generator currently located at the Building. In consideration for such right, Tenant hereby agrees to maintain such generator; provided, however, Tenant shall not be responsible for non-routine maintenance or repairs to or replacement of the generator. Tenant shall have the right to test the generator on a weekly basis and shall be provided the benefit of any riser space or other space required for connection to the Premises. Landlord and Tenant acknowledge that InfoCure Corporation's computer room is currently connected to the generator and will remain connected to the generator so long as InfoCure Corporation, or its affiliate, remains a tenant in the Building. During such time period, InfoCure Corporation agrees to share the cost of maintenance of the generator proportionately. ARTICLE 49 RIGHT OF FIRST REFUSAL TO PURCHASE: Landlord hereby grants to Tenant the right of first refusal to purchase the Property upon the terms and conditions as set forth herein. Landlord shall not sell and convey all or any portion of the Property to any party other than Tenant during the Term unless Landlord shall have first (a) obtained a valid offer in writing from a prospective purchaser other than Tenant to purchase all or a portion of Property (hereinafter referred to as the "Third Party Offer"), (b) offered (hereinafter referred to as the "Refusal Offer") to sell the Property (or such portion thereof) to Tenant in writing on terms substantially identical to those contained in the Third Party Offer and (c) received notice of rejection of the Refusal Offer in writing from Tenant or failed to receive from Tenant a notice of acceptance of the Refusal Offer together with an earnest money deposit of Twenty Thousand Dollars ($20,000.00) within ten (10) business days after receipt by Tenant of the Refusal Offer (the "Election Period"). Such earnest money shall be applied as part payment of the purchase price of the Property at the closing. If Tenant rejects or fails to accept the Refusal Offer within the Election Period, then Landlord may enter into a binding agreement in accordance with the Third Party Offer. In the event that such transaction does not close within six (6) months after the expiration of the Election Period, Tenant's right of first refusal shall be reinstated with respect to the Property and, Landlord shall, prior to consummating any sale of the Property, again give Tenant the right of first refusal to purchase the Property pursuant to the terms of this Section. Landlord, in such event, shall again be required to submit to Tenant written notice which shall trigger all the same time periods for Tenant's response as provided above. Tenant will provide such documentation as Landlord shall reasonably request to release the Property from this right of first refusal, if applicable. [SIGNATURES BEGIN ON FOLLOWING PAGE] 30 32 LANDLORD: TENANT: INFOCURE CORPORATION PRACTICEWORKS SYSTEMS, LLC - ---------------------------------- ------------------------------------- - ---------------------------------- ------------------------------------- Printed Name Printed Name - ---------------------------------- ------------------------------------- Title Title WITNESS: WITNESS: - ---------------------------------- ------------------------------------- (print name & title) (print name & title) - ---------------------------------- ------------------------------------- (print name & title) (print name & title 31 EX-10.2 3 y49091ex10-2.txt SUBLEASE AGREEMENT 1 EXHIBIT 10.2 SUBLEASE AGREEMENT THIS SUBLEASE AGREEMENT (the "Sublease"), is entered into by and between SOUTHERN COMPANY SERVICES, INC., an Alabama Corporation, having an office located at 600 North 18th Street, Birmingham, Alabama 35203 ("Sublessor"); and INFOCURE CORPORATION, a Delaware corporation, having an office located at 239 Ethan Allen Highway, Ridgefield, Connecticut 06877 ("Sublessee") (collectively the "Parties"), and shall become effective on the date it is executed by the later of Sublessor and Sublessee (the "Effective Date"). W I T N E S S E T H: WHEREAS, Sublessor, as "Tenant", entered into a lease (the "Prime Lease") with Metropolitan Life Insurance Company (the "Prime Landlord"), dated April 1, 1992, leasing, among other areas, that certain building known as "Inverness 44" (the "Building"). Said Prime Lease to which reference is made above is incorporated herein by this reference, and WHEREAS, Sublessor and Sublessee have agreed that Sublessor shall sublet approximately 45,926 square feet of such space as rented under the Prime Lease to Sublessee, as such space is shown on Exhibit "A" attached hereto and by this reference incorporated herein, upon the terms and conditions as herein described, and WHEREAS, concurrently with and on the Effective Date of this Sublease, the Parties entered into a Second Amendment ("Amendment") to an existing Sublease ("Original Sublease") in which Amendment the Parties agreed to terminate the Original Sublease on May 31, 2001, and WHEREAS, in the Original Sublease the Sublessor subleased and rented to Sublessee and Sublessee subleased and rented from Sublessor the entire 2nd floor of that certain Building known as Inverness 42 ("Original Sublease Premises") with a term set to expire on February 28, 2004, and WHEREAS, the Parties desire that the 5th floor of the Building shall serve as substitute premises ("Substitute Premises") for the Original Sublease Premises, and WHEREAS, the Parties desire for the term of the Substitute Premises to expire on the same date as the Original Sublease Premises, February 28, 2004, but to automatically renew for an additional term expiring on March 31, 2007, and WHEREAS, the Parties intend that upon the commencement date of the Substitute Premises, the Original Sublease shall terminate. NOW THEREFORE, for Ten and No/100 Dollars ($10.00) and other good and valuable consideration, paid by the Parties hereto to one another, the receipt and sufficiency of which are hereby acknowledged by the Parties hereto, the Parties hereto hereby covenant and agree as follows: Page 1 of 8 2 1. Sublease Premises, Rent and Term. (a) Sublessor hereby leases and rents to Sublessee and Sublessee hereby leases and rents from Sublessor, the 22,963 square feet, more or less, of space on the 4th floor and the 22,963 square feet, more or less, of space on the 5th floor of the Building, shown on Exhibit "A", by this reference incorporated herein, (the "Sublease Premises"), beginning for the 4th floor on April 1, 2001 ("Commencement Date") and beginning for the 5th floor on June 1, 2001 and ending for the entire Sublease Premises at midnight on March 31, 2007 (the "Term"). Sublessee shall, however, have the right to occupy the 4th floor of the Sublease Premises on March 15, 2001 and the 5th floor of the Sublease Premises on May 1, 2001, for the purpose of performing tenant fit-up and finish work therein (subject in all circumstances to the terms of this Sublease). All terms and conditions of this Sublease shall be in force and effect upon such occupancy by Sublessee, although no Base Rent for the 4th floor shall be due from Sublessee until April 1, 2001; and no Base Rent for the 5th floor shall be due from the Sublessee until June 1, 2001. (b) The Base Rent due from Sublessee for such Sublease Premises shall be as follows:
Base Rent Rate Monthly Period (Per Square Foot Per Annum) *Base Rent ------ -------------------------- ----------- April 1, 2001 - May 31, 2001 $15.50 $29,660.54 ----- --------- June 1, 2001 - March 31, 2002 $15.50 $59,321.08 ----- --------- April 1, 2002 - March 31, 2003 $15.75 $60,277.88 ----- --------- April 1, 2003 - March 31, 2004 $16.00 $61,234.66 ----- --------- April 1, 2004 - March 31, 2005 $16.25 $62,191.46 ----- --------- April 1, 2005 - March 31, 2006 $16.50 $63,148.25 ----- --------- April 1, 2006 - March 31, 2007 $16.75 $64,105.04 ----- ---------
* Assuming Sublessee is leasing 22,963 rentable square feet from April 1, 2001 through May 31, 2001 and 45,926 rentable square feet thereafter. Sublessee shall also pay the additional rent (the "Additional Rent") described in Paragraph 3 of this Sublease. (c) Sublessee shall pay the Base Rent and Additional Rent (collectively the "Rent") provided for hereunder in advance on the first day of every month during the Term. (d) The Sublease Premises are hereby leased by Sublessee on the express condition that the term of the Original Sublease shall automatically terminate upon the commencement date of the Substitute Premises. 2. No Assignment without Consent. Sublessee shall not assign this Sublease nor sublet the Sublease Premises in whole or in part and shall not permit Sublessee's interest in this Page 2 of 8 3 Sublease to be vested in any third party by operation of law or otherwise, without the prior written consent of Sublessor, which consent shall not be unreasonably withheld, conditioned or delayed. 3. Other Charges. (a) Sublessee shall be liable for and shall pay any and all charges attributable to the Sublease Premises for actual "O&M Expenses" (as that term is defined in the Prime Lease) to the extent such O&M Expenses exceed the O&M Expenses for calendar year 1997 ($937,924.00), as Additional Rent. In determining O&M Expenses attributable to the Sublease Premises, Sublessor shall assume an even and equal allocation of O&M Expenses over all of the square footage of the Building. (b) If Sublessee shall procure any additional services from the Building, such as alterations or after-hour air conditioning, Sublessee shall pay for same at the rates charged therefor by the Prime Landlord and shall make such payment to the Sublessor or Prime Landlord, as Sublessor shall direct. Any Rent or other sums payable by Sublessee under this Paragraph 3 shall be Additional Rent and collectible by Sublessor as such. If Sublessor shall receive any refund from Prime Landlord, Sublessee shall be entitled to the return of so much thereof as shall be attributable to prior payments by Sublessee. (c) Notwithstanding that the aforesaid Additional Rent payments are due of Sublessee on a monthly basis, Sublessor and Sublessee shall adjust between themselves amounts of Additional Rent due of Sublessee, and pay to one another amounts due, as applicable, any time Sublessor provides or desires such a reconciliation. 4. Subordinate to Prime Lease. This Sublease is subject and subordinate in all instances and under all circumstances to the Prime Lease. Except as may be inconsistent with the terms hereof, all the terms, covenants and conditions in the Prime Lease contained shall be applicable to this Sublease with the same force and affect as if Sublessor were the "Landlord" under the Prime Lease and Sublessee were the "Tenant" thereunder; and in case of any breach hereof by Sublessee, Sublessor shall have all the rights against Sublessee as would be available to Prime Landlord against Sublessor as "Tenant" under the Prime Lease. 5. Use. Sublessee shall use the Sublease Premises for general office purposes only, and also in accordance with and subject to the Prime Lease, and in a manner which does not interfere with Sublessor or create any disturbance or nuisance to any other party. 6. Services. Notwithstanding anything to the contrary contained herein, the only services or rights to which Sublessee is entitled hereunder are those to which Sublessor is entitled to as "Tenant" under the Prime Lease and that for all such services and rights Sublessee will look to Prime Landlord under the Prime Lease. Sublessor and Sublessee acknowledge that this Sublease is a full-service sublease, to the extent such services are available and provided under the Prime Lease, and that services such as utilities and cleaning and janitorial service are provided hereunder. Page 3 of 8 4 7. No Acts; Indemnity. (a) Sublessee shall neither do nor permit anything to be done which would cause the Prime Lease to be terminated or forfeited or any claims to accrue to the benefit of Prime Landlord by reason of any right of termination or forfeiture reserved or vested in Prime Landlord under the Prime Lease, or any rights to damages accruing to or for the benefit of Prime Landlord under the Prime Lease. (b) Sublessee hereby indemnifies and holds Sublessor harmless from and against all loss, cost, damage or expense, including, but not limited to, attorney's fees and court costs, incurred by Sublessor by reason of any default on the part of Sublessee by reason of which the Prime Lease may be terminated or forfeited, or any claims that shall accrue to the benefit of or for Prime Landlord under the Prime Lease, and against any and all other loss, cost, damage or expense incurred or suffered by Sublessor as a result of or arising out of the negligence of Sublessee or the failure of Sublessee to act in accordance with this Sublease. 8. Sublease Premises; Review by Sublessee. (a) Sublessee shall take the Sublease Premises "as is, where is", and Sublessor makes and has made no representations or warranties whatsoever with respect to the Sublease Premises or the fitness thereof for Sublessee's intended purpose. (b) Sublessee hereby acknowledges and agrees that Sublessee has had the opportunity to and has reviewed the Prime Lease. 9. Right-of-First Refusal. (a) Provided this Sublease is then in full force and effect and Sublessee is in full compliance with the terms and conditions of this Sublease, and there is no sub-sublease affecting the Sublease Premises and no assignment of Sublessee's interest in the Sublease at such time, Sublessor hereby grants Sublessee the right to sublease any other space in the Building on the 6th floor (the "Expansion Space") in accordance with the within terms and conditions. Should Sublessor receive a bona fide written offer to lease the Expansion Space, upon terms and conditions and at a rental rate acceptable to Sublessor, Sublessor shall notify Sublessee thereof in writing setting forth the terms and conditions of such offer, and offering to lease the Expansion Space to Sublessee upon the financial terms contained in the third party offer. Sublessee shall have fifteen (15) days to accept or reject such offer. If Sublessee rejects such offer or fails to respond within said fifteen (15) day period, then Sublessor shall be entitled to rent said space to such third party on such terms and conditions not materially more favorable than the terms and conditions offered to Sublessee. If Sublessee accepts said offer, then Sublessee shall have leased such space upon the financial terms contained in said offer, and upon the other terms and conditions as contained in this Sublease and for a term co-terminus with the Term except that the space shall be leased "as is, where is". The Rent for said Expansion Space shall commence on the earlier to occur of (i) thirty (30) days after Sublessee accepts such offer for such Expansion Space, or (ii) on the date Sublessee occupies said Expansion Space. Page 4 of 8 5 (b) Notwithstanding the above, Sublessee shall have no rights of offer or to lease any Expansion Space offered by Sublessor to any affiliates of, or with a common parent with, Sublessor, present and future. Present affiliates of Sublessor include Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Nuclear Operating Company, Southern Electric Generating Company, Southern Company Energy Solutions, Inc., and Southern Communications Services, Inc. 10. Improvement Allowances. (a) Sublessee shall cause the tenant fit-up and finish work in the Sublease Premises to be completed in accordance with plans and specifications to be agreed upon by Sublessor and Sublessee, in their respective reasonable judgment. Sublessor shall provide an allowance for the tenant fit-up and finish work in the Sublease Premises of $12.00 per rentable square foot for the 4th floor and $6.00 per rentable square foot for the 5th floor within the Sublease Premises (the "Allowance"). To the extent the costs to complete the tenant fit-up and finish work in the Sublease Premises are less than the Allowance, then the difference shall be retained by Sublessor. To the extent the costs to complete the tenant fit-up and finish work in the Sublease Premises are greater than the Allowance, then the amount of such excess shall be paid by Sublessee. (b) Sublessor may, if requested by Sublessee, provide an additional allowance to Sublessee for the tenant fit-up and finish work within the Sublease Premises of up to Two and No/l00 Dollars ($2.00) per rentable square foot within the Sublease Premises. Such amount, or so much thereof as is funded by Sublessor, may, at Sublessee's option, either be repaid by Sublessee (i) in one lump sum, within thirty (30) days after the bill thereof is delivered to Sublessee, or (ii) at the time Base Rent is paid under the Sublease in equal monthly installments over the Term of the Sublease at an interest rate of ten percent (10%) per annum on amounts outstanding. Sublessee shall elect such option on or before the Commencement Date. Such amounts shall be considered Rent for the purposes of this Sublease. (c) Sublessor will also provide to Sublessee a space planning allowance of ten cents (10(cent)) per rentable square foot, or $4,592.60. No further space planning allowance shall be made available or paid to Sublessee. 11. Insurance. Sublessee shall carry (at its sole expense during the Term) (i) fire and extended coverage insurance insuring Sublessee's interest in its improvements to the Sublease Premises and any and all furniture, equipment, supplies, contents and other property owned, leased, held or possessed by Sublessee and contained therein, such insurance coverage to be in an amount equal to the full insurable value of such improvements and property, as such may increase from time to time, (ii) worker's compensation insurance as required by applicable law, and (iii) comprehensive liability coverage for injury to or death of a person or persons and for damage to property occasioned by or arising out of any construction work being done on the Sublease Premises, or arising out of the condition, use, or occupancy of the Sublease Premises, or other portions of the Building or property, the limits of such policy or policies to be in amounts not less than One Million Five Hundred Thousand Dollars ($1,500,000) with respect to Page 5 of 8 6 injuries to or death of any one person, Five Million Dollars ($5,000,000) with respect to any one casualty or occurrence and Three Hundred Thousand Dollars ($300,000) with respect to property damage. Sublessee shall have included in all policies of insurance obtained by them with respect to the Building or Sublease Premises a waiver by the insurer of all right of subrogation against the other in connection with any loss or damage insured against. To the full extent permitted by law, Sublessor and Sublessee each waives all right of recovery against the other, and agrees to release the other from liability for loss or damage to the extent such loss or damage is covered by valid and collectible insurance in effect at the time of such loss or damage; provided, however, that the foregoing release by each party is conditioned upon the other party's carrying insurance with the above described waiver of subrogation, and if such coverage is not obtained or maintained by either party, then the other party's foregoing release shall be deemed to be rescinded until such waiver is either obtained or reinstated. All said insurance policies shall be carried with companies licensed to do business in the State of Alabama reasonably satisfactory to Sublessor and shall be non-cancelable except after twenty (20) days' written notice to Sublessor. Each policy shall name Sublessor, Sublessor's property manager and any other person designated by Sublessor's as additional insureds and provide that it is primary to, and not contributing with, any policy carried by Sublessor, Sublessor' s property manager, or other designated person covering the same loss. At Sublessor's request, duly executed certificates of such insurance shall be delivered to Sublessor prior to the Commencement Date and at least thirty (30) days prior to the expiration of each respective policy term. 12. Sublease Work; Lien Free Basis. With respect to Sublessee's construction work within the Sublease Premises, (a) Sublessee must apply for and maintain all relevant and necessary permits in connection with or as a part of such construction, and Sublessor agrees to sign any and all reasonably required documents from any applicable municipal agency to enable Sublessee to obtain the same, provided such municipal agency requires the signature of Sublessor; (b) such work must not adversely affect the structural components of the Building or the Building's systems; (c) such work must be performed in a manner so as not to disrupt or disturb Sublessor, or Sublessor's use of the Building; (d) Sublessee must deliver to Sublessor, upon the completion of such work, complete, as-built plans and specifications for the work performed; and (e) such work shall be completed on a lien free basis, and Sublessee shall provide Sublessor with evidence of such, sufficient for Sublessor in Sublessor's sole, reasonable judgment. 13. Signage. Sublessee will be allowed to have a reasonable listing on the Building directory located in the lobby of the Building. The exact size and type of listing will be dependent on space available in the directory and will be determined at a later date, in Sublessor's reasonable discretion. Sublessee shall have the right, at Sublessee's sole cost and expense, to place directional and informational signs throughout the Sublease Premises. 14. Broker Commissions. Hailey Realty Company, Inc. is serving as Sublessee's "tenant representative". Sublessor shall pay a commission to Hailey Realty Company of four percent (4%) of the gross dollar value of the Sublease with respect to the expansion to the 4th floor of the Sublease Premises, two percent (2%) of the gross dollar value Page 6 of 8 7 of the Sublease with respect to the renewal of the Substitute Premises (5th floor) on March 1, 2004, four percent (4%) of the gross dollar value of any other expansions, and two percent (2%) of the gross dollar value of any other renewal terms in which Hailey Realty Company, Inc. has been actively involved (without the involvement of another broker or agent). Sublessor will review the proposed commission agreement and will work with Hailey Realty Company to complete a mutually acceptable agreement. Sublessor and Sublessee hereby indemnify one another, and hold one another harmless, from and against all loss, cost, damage or expense, including, but not limited to, attorney's fees and court costs, incurred by a party hereto as a result of any claims for brokerage fees or commissions due which are made by, through or under the other party hereto. 15. No Other Agreements. All prior understandings and agreements between the Parties are merged within this Sublease, which alone fully and completely sets forth the understanding of the Parties hereto. This Sublease may not be changed or terminated in any manner other than by an agreement in writing, executed by the party against whom enforcement of the change or termination is sought. 16. Notice. Any notice of demand which either party may or must give to the other hereunder shall be in writing and delivered personally, sent by certified mail, return receipt requested, or by nationally recognized overnight courier, addressed as follows: If to Southern Company Services, Inc.: R. Scott Vickers 8N-0286 Alabama Power Company 600 North 18th Street Birmingham, Alabama 35203-0286 With a copy to: Legal Department 7N-8374 Southern Company Services, Inc. 600 North 18th Street Birmingham, Alabama 35203-8374 and if to Sublessee, as follows: InfoCure Corporation/VitalWorks 239 Ethan Allen Highway Ridgefield, Connecticut 06877 Attn.: CFO and: Infocure Corporation/VitalWorks 44 Inverness Center Parkway Birmingham, Alabama 35242 Attn.: Daren McCormick Page 7 of 8 8 Either party may, by notice in writing, direct that future notices or demands be sent to a different address. 17. Binding. The covenants and agreements herein contained shall bind and inure to the benefit of Sublessor, Sublessee, and their respective executors, administrators, successors and assigns. 18. Representations. Sublessor represents and warrants to Sublessee that: a. It has full power and authority to enter into this Sublease; b. This Sublease does not violate any term or provision of the Prime Lease; c. Prime Landlord has consented to this Sublease; d. Sublessor is not in default under the Prime Lease and the Prime Lease is currently in full force and effect. IN WITNESS WHEREOF, the Parties hereto have caused this Sublease to be executed by their duly authorized representatives on the date(s) set forth below. SOUTHERN COMPANY SERVICES, INC. "SUBLESSOR" - ------------------------------------ BY: WITNESS -------------------------- NAME: ------------------------ (TYPED OR PRINTED) TITLE: ----------------------- DATE: ------------------------ INFOCURE CORPORATION "SUBLESSEE" - ----------------------------------- BY: WITNESS -------------------------- NAME: -------------------------- (TYPED OR PRINTED) TITLE: ----------------------- DATE: ------------------------ Page 8 of 8 EX-10.3 4 y49091ex10-3.txt LEASE AGREEMENT 1 Exhibit 10.3 INFOCURE CORPORATION Lease Agreement Index 1. Premises 2. Use of Premises 3. Term 4. Possession 5. Rent 6. Net Lease 7. Compliance with Law 8. Alterations 9. Repairs and Air Conditioning 10. Abandonment 11. Liens 12. Assignment and Subletting 13. Mutual Indemnification; Insurance 14. Subrogation 15. Services 16. Corporate or Partnership Lessee 17. Holding Over with Consent 18. Entry by Lessor 19. Event of Default 20. Remedies of Lessor 21. Damage and Destruction 22. Eminent Domain 23. Mortgage Requirements 24. Notices 25. Lessor's Right to Cure Defaults 26. Delays; Default by Lessor 27. Transfer of Lessor's Interest 28. Security Deposit 29. Successors and Assigns 30. Attorneys' Fees 31. Surrender of Premises 32. Interest on Past Due Obligations 33. Waiver 34. Construction 35. Definitions and Headings 36. Time of Essence 37. Environmental Compliance 38. Hazardous Waste 39. Radon Gas 40. Waiver of Trial by Jury 41. Signage 42. Tax Grievance 43. Covenant of Quiet and Enjoyment 44. Real Estate Broker Commission 45. Right of First Refusal 46. Parking 47. Recording 48. Entire Agreement Exhibit A-1 Legal Description; A-2 Leased Premises Description Exhibit B Construction Terms and Conditions Exhibit C Site Plan Page -1- 2 InfoCure Corporation LEASE AGREEMENT THIS LEASE AGREEMENT, dated this 13th day of March, 2001, is entered into between JOSEPH V. FISHER, LLC, a Florida Limited Liability Corporation, manager of the Premises by assignment from the Owners, Joseph V. Fisher and Laverne B. Fisher, jointly and severally (such owners and managers are hereinafter collectively referred to as "Lessor"), and INFOCURE CORPORATION, a Delaware Corporation ("Lessee"). 1. PREMISES. Lessor hereby leases to Lessee and Lessee hereby leases from Lessor, on the terms and conditions herein set forth, the premises known and described as being located on part of Volusia Plaza Site, and more specifically described in Exhibit "A-2" attached hereto (the "Premises"). The building, improvements and landscaping which contain the Premises are to be constructed by Lessor in accordance with the terms and conditions set forth in Exhibit "B" attached hereto as a part hereof. The Premises shall consist of approximately 35,253 square feet of that certain building, landscaping, and the parking spaces shown on Exhibit "C" attached hereto and made a part hereof. In the event Lessor decides to develop the Out Parcels as shown on the attached Exhibit C, Lessor will present to Lessee a proposal, including the building's intended use and construction details, for Lessee's comments and approval. Approval will not be unreasonably withheld. If Lessee's exercises its privilege not to approve based on the proposed building being objectionable to its business or image, it must do so within 30 days of receipt of the proposal, and any objection must be in writing. In the event the Lessee does not object in writing to the proposed building within the 30 day period, the Lessor is free to develop the property as presented with no further liability to the Lessee. Lessee will give Lessor a four (4) month notice of its intention to expand its operation, and Lessor will present in writing during that period all permitted options available at the Premises for expansion. Said options shall include at a minimum the expansion of the Premises for an additional 8,000 square feet. All construction and interior improvements, in connection with the expansion, including additional parking spaces, carpeting and painting, but excluding furniture, to be done at Lessor's sole cost and expense in a timely manner, and with minimal disruption to Lessee's on going business. Lessor represents that Lessee shall be the sole occupant of the building to be constructed. 2. USE OF PREMISES. The Premises are to be used for general office and operational activities as may be customarily incidental to InfoCure Corporation. Lessee shall not use the Premises for any other purpose without the prior written consent of Lessor. Page -2- 3 Lessee shall not do or permit anything to be done in or about the Premises nor keep or bring anything therein which will in any way increase the existing rate of or affect any policy of fire or other insurance upon the building or of its contents, or cause cancellation of any insurance policy. Lessee shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of other buildings or injure or annoy them. Lessee shall not use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose, nor shall Lessee cause, maintain or permit any nuisance in, on or about the Premises. Lessee shall not damage or deface or otherwise commit or suffer to be committed any waste in or upon the Premises. 3. TERM. The term of this Lease shall be seven (7) years, commencing on the 1st day of August, 2001, (the "Commencement Date"), and ending on 31st day of July, 2008, (the "Termination Date"). Lessee shall have two (2) options to extend the term of this Lease for five (5) years each by written notice to Lessor, which notice shall be given not later than the date ninety (90) days prior to the Termination Date and shall specify the number of years the term of this Lease is extended. 4. POSSESSION. If Lessor, for any reason whatsoever, cannot on or before August 1, 2001, complete its construction under this Lease, deliver the Completion Notice (defined in Exhibit B hereto) to Lessee, and deliver possession of the Premises to Lessee, this Lease shall not be void or voidable (except as hereinafter provided) nor shall Lessor under any circumstances be liable to Lessee for any loss or damage resulting therefrom except as provided in Exhibit B hereto, but as Lessee's sole remedy, all rent shall be abated during the period between the Commencement Date and the time when Lessor delivers possession and the Commencement Date and the Termination Date shall each be extended by the period of delay beyond August 1, 2001, it being the intent of the parties that Lessee have at least fourteen (14) days after receiving possession of the Premises and prior to the Commencement Date during which to install its fixtures and equipment and otherwise prepare for commencement of its operations on the Premises. Notwithstanding anything herein to the contrary, if Lessor has not completed construction and delivered a Completion Notice to Lessee by November 15th, 2001, then Lessee shall have the right to terminate this Lease by sending Lessor written notice of its intent to terminate. Upon any such termination, Lessee shall have no further obligation to Lessor hereunder. 5. RENT. Lessee shall pay to Lessor, as rent for the Premises during the first year of this Lease Thirteen Dollars and Fifty Cents ($13.50) per square foot, the total sum of Four Hundred Seventy Five Thousand Nine Hundred Fifteen Dollars and 50/100 ($475,915.50), payable in monthly installments of Thirty Nine Thousand Six Hundred Fifty Nine Dollars and 63/100 ($39,659.63), per month on or before the first day of each calendar month, plus Florida Sales Tax currently six percent (6%), commencing on the Commencement Date. Rent will increase yearly at a rate of two percent (2%). Rent for the term of the option will also increase at a rate of two and one half percent (2.5%) for each year of the option. Rent due for a period of less than a full month shall be prorated on the basis of a thirty (30) day month and shall be payable on the first day of the period. Page -3- 4 Rent shall be paid to Lessor, without deduction or offset, in lawful money of the United States of America and shall be paid at the office of Lessor or at such other place as Lessor may from time to time designate. All rents shall be due on the first day of each month. Rents received after the tenth day of any month shall be considered late, and at such time Lessee shall be assessed a charge of six percent (6%) of the gross rental due for that period. Lessee shall also pay to Lessor with the payments of rent above required, to be referred to for convenience herein as additional rent, any privilege, excise, sales, gross proceeds, rent or other tax now or hereafter levied, assessed or imposed by any governmental authority, upon any rent or other payments required by this Lease. In addition, all other charges of any type required to be paid by Lessee to Lessor or on behalf of Lessor under this Lease shall be deemed additional rent due hereunder. Lessee shall pay in addition to the rent all real property taxes and special assessments, which shall during the term hereof shall be assessed against or become a lien upon the Premises, which payment shall be made by Lessee directly to the public officials charged with collection of same as the same may become due and payable, provided Lessor first provides Lessee with the appropriate tax bill specifying the amount due in a timely manner so as to afford the Lessee the opportunity to obtain all available discounts; and provided further, that if the commencement date is other than January 1, real estate taxes for the calendar year in which the commencement date occurs shall be prorated between Lessor and Lessee with Lessor first paying Lessee Lessor's prorata share of such taxes, and if the term of this Lease ends on a date other than December 31, real estate taxes for the calendar year in which this Lease terminates shall be similarly prorated except if this Lease terminates before such taxes have been paid Lessee shall pay Lessor Lessee's prorata share of such taxes. If Lessor fails to provide a tax bill in a timely manner as required herein, Lessor shall reimburse Lessee for any additional taxes, late charges, interest or penalties paid by Lessee as a result of such failure. Any personal property taxes levied on equipment, fixtures, and other property of Lessor installed in the building for Lessee's use shall also be Lessee's responsibility upon terms and conditions similar to those set forth above for real property taxes. 6. RENT ADJUSTMENT. The total first year's payment specified above has been calculated based upon the building containing 35,253 square feet of space as specified below. If the actual building after construction has been completed should be more or less than 35,253 square feet, the first year's annual rent and sales tax specified below and the monthly installments payable under this Lease shall be adjusted accordingly. Provided, however, Lessee shall not be obligated to lease and pay for amount of space over 37,000 square feet. It is the understanding and agreement of the parties hereto that, except as maybe set forth herein, this is a clear "Net Lease" to the Lessor free of any set-offs, deductions, charges or Direct Expenses. Cost, fees, taxes, interest, charges, expenses, reimbursements and obligations of every kind and nature whatsoever which the Lessee assumes or agrees to pay under any of the provisions of this Lease shall be paid or discharged by the Lessee without notice (excluding payments which Lessor receives notice directly) and without abatement, deduction or set-off, and in the event of non-payment or non-performance thereof, the Lessor shall have with respect thereto all rights and remedies provided for in this Lease for the non-payment of rent or non-performance thereof. Page -4- 5 Direct Expenses: All direct costs of operation and maintenance of the building, which shall include, but shall not be limited to, the following costs: real property taxes and assessments, personal property, which shall include, but shall not be limited to, the following costs: real property taxes and assessments, personal property taxes levied on equipment, fixtures and other property of Lessee located in the building and used in connection with the operation thereof, and any other taxes imposed by any federal, state, county, municipal or other governmental entity, whether assessed against the Lessor or assessed against the Lessee and collected by the Lessor, or both (except any tax payable by the Lessee pursuant to Section 5); water and sewer charges, insurance premiums of any type, except any insurance payable by the Lessee pursuant to Section 13) including but not limited to fire and other casualty insurance and public liability insurance; utilities; janitorial, and other services; air conditioning; the cost of supplies, materials, equipment and tools used in the operation of the Building . Such Direct Expenses shall not include all costs, expenses, charges, taxes (other than net income taxes) or assessments of any type, whether or not now customary or within the contemplation of the parties hereto, including expenditures for improvements normally designed as capital improvements, which are imposed or required by or result from statutes or regulations, or interpretations thereof, promulgated by any federal, state, county, municipal or other governmental body or agency of any type performing any governmental or other function (including, but not limited to, the Environmental Protection Agency and the authority administrating the Occupational Safety and Health Act, or any successor agencies performing the same or similar functions). Lessor represents that during the first twelve months of Lessee's occupancy, the Direct Expenses shall not exceed an amount equal to the total square feet multiplied by $1.10. Except as above provided, Direct Expenses shall not include depreciation on the Building or which the Premises are a part, interest on mortgages or other loans of Lessor, or real estate broker's commission. Even though the term has expired and Lessee has vacated from the Premises when the final determination is made of Lessee's share of Direct Expenses for the year in which this Lease terminates, Lessee shall immediately pay any increase due over the estimated expenses paid and conversely any overpayment made in the event said expenses decrease, shall be immediately rebated by Lessor to Lessee. Notwithstanding anything contained in this paragraph, the rental payable by Lessee shall in no event be less than the rent specified. The annual determination and statement of Direct Expenses shall be prepared in accordance with general recognized and established accounting practices and each such annual determination and statement shall be, certified by Lessor. The total monthly payments by the Lessee for the first year, and adjusted accordingly annually thereafter shall be on the following calculations:
Yearly base rental per square foot $ 13.50 Yearly sales tax per square foot $ .81 -------- Yearly total per square foot $14.31
Building size 35,253 square feet x $14.31 = $504,470.43 yearly payment, $42,039.20 monthly rent Page -5- 6 6A. On or before thirty (30) days from the date this Lease is executed, Lessor shall deliver a check to Lessee in the amount of $118,928.88 to offset Lessee's relocation costs and expenses. 6B. INTERIM FACILITY. Within ten (10) days from the date this Lease is executed, Lessor shall provide Lessee with at least 3,000 square feet of office space at Renaissance Square for Lessee's use until the Premises are ready for occupancy at no cost to Lessee. 7. COMPLIANCE WITH LAW. Lessee shall not permit anything to be done on or about the Premises which will in any way conflict with any law, statute, ordinance or governmental rule or regulation now in force or which may hereafter be enacted or promulgated. Lessee shall at its sole cost and expense promptly comply with all such laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force and with the requirements of any board of fire underwriters or other similar body relating to or affecting the condition, use or occupancy of the Premises, other than those requiring alterations, replacements, additions or improvements to the Building or the Premises (which shall be Lessor's responsibility). 8. ALTERATIONS. Except as otherwise provided for or contemplated by the Plans (defined in Exhibit B attached hereto), Lessee shall not make or permit to be made any alterations, additions or improvements to or on the Premises or any part thereof without the prior written consent of Lessor and any alterations, additions or improvements to or on the Premises, except movable furniture and trade fixtures, shall at once become a part of the realty and belong to Lessor. In the event Lessor consents to the making of any alterations, additions or improvements, the same shall be made by Lessee at Lessee's sole cost and expense and selection by Lessee of any contractor or person to construct or install the same shall be subject to prior written approval of Lessor, which approval may be conditioned upon the obtaining of performance or material men bonds by Lessee or the execution of lien waivers by the contractor or other person. Notice is hereby given that the Lessor shall not be liable for any work, labor, or materials furnished or to be furnished upon credit to or for the Lessee or anyone claiming under the Lessee, and that no mechanic's or other liens for any such work, labor or materials shall attach to or affect the estate or interest of the Lessor in and to the Premises. The Lessee shall not do or suffer anything to be done whereby the Premises may be encumbered by any mechanic's lien. Upon the expiration or sooner termination of the term hereof, Lessee shall, upon demand by Lessor and at Lessee's sole cost and expense, forthwith and with all due diligence remove any such alterations, additions or improvements designated by Lessor to be removed and repair any damage to the Premises caused by such removal. 9. REPAIRS AND AIR CONDITIONING MAINTENANCE. Lessee and its agents shall be given full opportunity to inspect and examine the Premises and, by entry hereunder, Lessee accepts and acknowledges the Premises as being in good order, condition and repair. Lessee shall, at Lessee's sole cost and expense, make all necessary repairs and replacements, otherwise necessary or desirable in order to keep the Premises in good order and repair (excluding the roof and exterior walls, doors (not hardware) landscaping maintenance, parking lot maintenance, HVAC repairs in excess of $250.00 for each occasion, and windows, excluding glass breakage, ordinary wear and tear, and damage thereto which is not within Lessee's repair responsibility under Section 21 below), Lessee shall, upon expiration or sooner termination of the term hereof, surrender the Premises to Lessor in the same condition as when received, ordinary wear and tear, and damage which is not within Lessee's repair responsibility as provided above and under Section 21 below, excepted. It is specifically understood and agreed that, except as specifically set forth herein, no representations respecting the condition of the Premises or the Building have been made by Lessor or Lessee. Page -6- 7 The Lessee shall enter into a Maintenance Contract with a Licensed Air Conditioning Contractor for monthly preventative maintenance, including change of air filters and clearing the condensation lines of all debris and any mold or algae growth. In consideration of Lessee contracting for this service, the Lessor will guarantee reimbursement to the Lessee for the replacement of any faulty compressor and/or fan motor at Lessor's cost. 10. ABANDONMENT. Lessee shall not vacate or abandon the premises at any time prior to the expiration or earlier termination of the term hereof. In the event Lessee shall abandon, vacate or surrender the Premises, or be dispossessed by process of law, or otherwise, any personal property belonging to Lessee and left on the Premises shall be deemed to have been abandoned. The absence of Lessee for a period of thirty (30) consecutive days during the term of this Lease shall automatically be deemed an abandonment of the Premises, but such period of absence shall not be the exclusive test for a determination that Lessee has vacated or abandoned the Premises if it may be determined that Lessee has permanently abandoned the Premises even though Lessee has not been absent from the Premises for thirty (30) consecutive days. 11. LIENS. Notice is hereby given that the Lessor shall not be liable for any work, labor, or materials furnished or to be furnished upon credit to or for the Lessee or anyone claiming under the Lessee, and that no mechanic's or other liens for any such work, labor or materials shall attach to or affect the estate or interest of the Lessor in and to the Premises. The Lessee shall not do or suffer anything to be done whereby the Premises may be encumbered by any mechanic's lien. 12. ASSIGNMENT AND SUBLETTING. Neither Lessee nor anyone claiming by, through or under Lessee shall assign, transfer, mortgage, pledge, hypothecate or encumber this Lease, or any interest therein, nor sublet the Premises or any part thereof, or any right or privilege appurtenant thereto, or permit any other person (the agents and employees of Lessee excepted) to occupy or use the Premises, or any part thereof, without the prior written consent of Lessor, which will not be unreasonably withheld. Upon any assignment or subletting, voluntary or involuntary, Lessee named under this Lease shall pay any costs incurred by Lessor to Lessor as a result of assignment or subletting of this Lease, including, but not limited to, attorneys' fees and commissions. A consent to one assignment, subletting, occupation or use by any other person shall not be deemed a consent to any subsequent assignment, subletting, occupation or use by any other person and no such assignment, subletting, occupation or use shall relieve Lessee of any liability or obligation hereunder. Any such assignment or subletting without such consent shall be voidable at the sole discretion of Lessor and in any event shall constitute a default of Lessee under this Lease. In the event of any assignment or subletting, the assignee or sub-Lessee shall be bound by the terms hereof and Lessor may, after default by Lessee in the payment of rent (including additional rent) or any other sum payable hereunder, or any part thereof, collect such amount from such assignee or sublease without first instituting legal action against Lessee. In no event shall this Lease or the prior written consent of Lessor or by voluntary or involuntary bankruptcy proceedings or otherwise and in no event shall this Lease or any rights or privileges hereunder be an asset of Lessee under any bankruptcy, insolvency or reorganization proceedings. 13. INDEMNIFICATION OF LESSOR; INSURANCE. Lessor shall not be liable or answerable to Lessee or any other person, firm or corporation for any injury or damage resulting from the condition of, or any defect in, the Premises unless Lessor's negligence resulted in such injury or damage, or such injury or damages arises out of (a)Lessor's failure to construct the building in accordance with the requirements of this Lease, or (b) any other Page -7- 8 breach of this Lease by Lessor. Lessee agrees to indemnify Lessor against, and hold Lessor free and harmless from, any and all penalties, costs, and expenses (including attorney's fees, claims and demands and causes of action) arising out of or in connection with (a) any accident or other occurrence in or on the Premises, when such injury or damage shall be caused in part or in whole by the act, neglect, fault of or omission of any duty with respect to the same by Lessee, its agents, servants, employees, invitees, permittees, customers, clients or guests, (b) the condition of, or any defect in the Premises or any part thereof or any improvements thereon, provided said condition or defect was caused by Lessee's negligence, (c) the Lessee's misuse of the Premises, or (d) any breach of this lease by Lessee. Lessee agrees to and shall at its own cost and expense procure and maintain during the entire Lease term and any extensions thereof comprehensive public liability insurance covering the Premises and their surrounding areas and naming Lessor as an additional insured. The liability coverage under such insurance shall not be less than One Million Dollars ($1,000,000.00) for injury or death of one person in any one accident or occurrence, Three Million Dollars ($3,000,000.00) for injury or death of more than one person in any one accident or occurrence, and Two Million Dollars ($2,000,000.00) for property damage. Lessee shall provide Lessor with certificates of such insurance evidencing Lessee's compliance. All policies of insurance shall also provide that such insurance will not be canceled except after ten (10) days' written notice to Lessor. The originals of all policies shall remain in possession of Lessee; provided, however, that Lessor shall have the right to receive from Lessee, upon written demand, a duplicate policy or policies of any or all policies. All insurance policies procured shall be issued by a responsible company or companies authorized to do business in the State of Florida. In no event shall the limits of said policies be considered as limiting the liability of Lessee to Lessor under the first section of this Paragraph 13. 14. SUBROGATION. Lessee and Lessor agree that if during the term hereof either of them shall carry insurance against loss or damage or upon any property of either party located therein, such insurance shall contain, if available without additional cost, a clause where the insurer waives its right of subrogation, if any, against the other party hereto and its successors and assigns. 15. SERVICES. The Lessor hereby represents that at the time of the execution of this Lease, sufficient water, electricity, telephone, sewage facilities and garbage removal capability will be available to the Lessee, for the Lessee's intended use of the Premises. It is expressly understood that it is the Lessee's responsibility to make necessary applications with the proper authority for required utility service to serve the Premises, and such applications are to be filed in sufficient time to allow the utility company to provide service to the Premises after the Certificate of Occupancy is issued. All cash deposits as may be required by the utility companies are the responsibility of the Lessee. The Lessee agrees and covenants to pay all utility charges, including, but not limited to, water, gas, electricity, sewage and removal of waste materials used on or arising from use of the Premises and to pay the same monthly or as they shall become due. 16. CORPORATE LESSEE. If Lessee is a corporation, Lessee shall, at the time of the execution of this Lease, deliver to Lessor a certified resolution of its board of directors authorizing the execution of this Lease on behalf of Lessee; provided, however, if the President or any Vice-President of Lessee executes this Lease, no certified resolution need be provided. Lessor acknowledges that Lessee is a corporation the stock of which is publically traded on the NASDAQ Exchange. Page -8- 9 17. HOLDING OVER WITH CONSENT. If Lessee holds possession of the Premises after the term of this Lease with Lessor's consent in writing signed by both parties, Lessee shall become a tenant from month-to-month upon the terms herein specified at the rental rate in effect for the Building as of the expiration of the term of this Lease, payable in advance on or before the first (1st) day of each month. Lessee shall continue in possession until such tenancy shall be terminated by either Lessor or Lessee giving written notice of termination to the other party at least thirty (30) days prior to the effective date of termination. Any holding over without written consent of Lessor will be at twice the rent rate in effect at the time. 18. ENTRY BY LESSOR. Lessor shall have the right to enter the Premises after first providing twenty-four (24) hour prior notice (whether written or oral) to Lessee at all reasonable times (where such entry will not unreasonably disturb or interfere with Lessee's use of the Premises) to inspect the same or to cure any default, provided any applicable grace, notice or cure period has expired, to supply any service to be provided by Lessor hereunder, and to submit the Premises to prospective purchasers, tenants or mortgagees, to post notices of non-responsibility, always providing that the business of Lessee shall not be interfered with unreasonably. For each of the aforesaid purposes, Lessor shall at all times have and retain a key with which to unlock all of the doors upon the Premises, excluding Lessee's vaults, and Lessor shall have the right to use any and all means to open said doors in an emergency in order to obtain entry to the Premises, and any entry to the Premises obtained by Lessor shall not under any circumstances constitute forcible or unlawful entry into or a detainment of the Premises or an eviction of Lessee from the Premises or any portion thereof. 19. EVENT OF DEFAULT. In addition to any events defined elsewhere in this Lease as constituting a default of Lessee, any of the following shall also be considered an event of default of Lessee hereunder: (a) If Lessee shall fail to pay rent (including additional rent) or any part thereof or any other sums payable pursuant to this Lease on the date due hereunder whether or not the same shall have be demanded and such default shall continue for a period of fifteen (15) days after written notice thereof from Lessor to Lessee; (b) If Lessee shall fail to perform its obligation under Section 27 herein; (c) If Lessee shall fail to observe or perform any of the other covenants or agreements contained in this Lease to be observed or performed by Lessee, but such failure, if of a type that can be cured or corrected by Lessee, shall not be a default unless such failure continues for thirty (30) days after written notice of breach thereof is given by Lessor to Lessee or in the case of a default which by its nature will take longer than thirty (30) days to cure or correct, Lessee fails to commence curing or correcting such default within such thirty (30) day notice period; (d) If Lessee shall become bankrupt, go into receivership, or make an assignment for the benefit of creditors, or take or have taken against Lessee any proceedings of any kind under any provision of the Federal Bankruptcy Act, and in the case where such proceeding has been commenced against Lessee, such proceeding is not discharged within sixty (60) days of the filing thereof; (e) If Lessee shall abandon the Premises in violation of Section 10 above; or (f) If this Lease or any estate of Lessee shall be in default with respect to any other lease between Lessor and Lessee. 20. REMEDIES OF LESSOR. In the event of any default by Lessee, then Lessor, in addition to any other rights or remedies it may have by statute or otherwise, including the right to take no action other than to sue for damages or rental in default, shall have the immediate right of re-entry and may remove all persons and property from the Premises. Such property may, but need not, be removed and stored in a public warehouse or elsewhere at the cost of any for the account of Lessee. Should Lessor elect to re-enter by giving notice of such intention to Lessee, as herein provided, or should Lessor actually take possession by physical act, pursuant Page -9- 10 to legal proceedings or any notices provided by law, Lessor shall either terminate this lease or may from time to time, without terminating this Lease, attempt to re-let the Premises or any part thereof for the account of Lessee for such term or terms (which may be for a term extending beyond the term of this Lease) and at such rental or rentals payable to Lessor and upon such other terms and conditions as Lessor in exercise of Lessor's sole discretion may deem advisable with the right to make alterations and repairs to the Premises at Lessee's expense for the purpose of such re-letting. If Lessor elects to re-enter and attempts to re-let, or does re-let, the Premises, Lessee shall remain fully liable for all obligations of Lessee under this Lease and Lessor may attempt to lease other space in the Building prior to re-letting or attempting to re-let the Premises. Lessor shall give notice of any re-letting without termination to Lessee and upon such re-letting (a) Lessee shall be immediately liable for and shall pay to Lessor, as additional rent and in addition to any other sums due hereunder, the costs and expenses of such re-letting (including advertising costs, brokerage fees, any reasonable attorneys' fees incurred and the cost of any alterations and repairs incurred by Lessor), and shall also become immediately liable for and shall pay to Lessor the amount, if any, by which the rent reserved in this Lease for the period of such re-letting (up to but not beyond the term of this Lease) exceeds the amount (as then determinable) agreed in such re-letting to be paid as rent for the Premises for said period, or (b) at the option of Lessor given in the notice of re-letting, rents received by Lessor from such re-letting shall be applied to the payment of the costs and expenses of such re-letting (including advertising costs, brokerage fees, any reasonable attorneys' fees incurred and the costs incurred for alterations and repairs); second, to the payment of rent and other charges due and unpaid hereunder; and the residue, if any shall be held without interest to Lessee by Lessor and applied in payment of future rent as the same may become due and payable hereunder. If Lessee has been credited with any rent to be received by such re-letting under option (a) and such rents shall not be promptly paid to Lessor by the new tenant, or if adjustments to rent pursuant to this Lease cause an increase in the rent, or if the rent received from such re-letting under option (b) during any month be less than that to be paid during that month by Lessee hereunder, Lessee shall pay any deficiency to Lessor. Such deficiency shall be calculated and paid monthly arrears; if any such monthly payments are not made, Lessor may at any time undertake legal proceedings to recover all such payments, whether one or more payments are past due, and Lessee shall be liable for all attorney's fees of Lessor in connection with attempts to recover said payments, whether or not legal proceedings are commenced. No re-entry or taking possession of the Premises by Lessor shall be construed as an election on Lessor's part to terminate this Lease unless a written notice of such intention be given to Lessee or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any re-letting or attempted re-letting without termination, Lessor may at any time thereafter elect to terminate this Lease for such previous default. Should Lessor at any time terminate this Lease for any default, in addition to any other remedy Lessor may have, Lessor may recover from Lessee all damages Lessor may incur by reason of such default, including the cost of recovering the Premises (including attorneys' fees, court costs, and storage charges), the amount of rental payments then in default, and the worth at the time of such termination of the excess, if any, of the amount of rent and additional rent reserved in this lease for the remainder of the stated term over the then reasonable rental value of the Premises for the remainder of the stated term, and any other amount necessary to compensate Lessor for all detriment proximately caused by Lessee's failure to perform its obligations under this Lease or which in the ordinary course of events would be likely to result therefrom, all of which amounts shall be immediately due and payable from Lessee to Lessor upon demand. Page -10- 11 21. DAMAGE OR DESTRUCTION. Except as otherwise provided in this Lease in the event the Premises are damaged by fire or other casualty covered by Lessor's insurance, such damage shall be repaired by and at the expense of the Lessor. Lessor shall commence such repair work within thirty (30) days of such casualty and shall proceed with due diligence to complete such repairs. Unless such damage was caused by Lessee or its agents or employees in violation of this Lease, either party may terminate this Lease by written notice to the other if Lessor is unable to complete such repairs within one hundred fifty (150) days of such casualty for any reason whatsoever, including Force Majeure, notwithstanding Lessor's exercise of due diligence to complete such repairs, or if prior to commencement of such repair work Lessor determines in its reasonable opinion that such required repairs can not be completed within one hundred fifty (150) days of the casualty and so notifies Lessor within thirty (30) days after such casualty. Until such repairs are completed, and except to the extent such damage was caused by Lessee or its agents or employees in violation of this Lease, the rent payable hereunder shall be abated in proportion to the portion of the Premises which is rendered unusable by Lessee in the conduct of its business. Lessor agrees to keep the Premises insured at all times against all perils for which insurance is available under a special multi-peril policy, including without limitation, fire and extended coverage insurance, for the greater of the full insurable or replacement value of the Premises, with a responsible insurance company authorized to do business in Florida. Lessor hereby acknowledges that Lessee shall insure for all or a portion of perils for which insurance would normally be available to cover Lessee's personal property, inventory, liability and Lessor's interest. Lessee shall provide Lessor with Certificate(s) of Insurance evidencing compliance with the foregoing requirements and naming Lessor as a loss payee as Lessor's interest may appear. 22. EMINENT DOMAIN. If at any time during the term of this Lease the entire Premises or any part thereof shall be taken as a result of the exercise of the power of eminent domain or by agreement in lieu thereof (a "taking"), this Lease shall terminate as to the part so taken as of the date possession is taken by the condemning authority. If all of any substantial portion of the Premises shall be taken, Lessor may terminate this Lease, at its option, by giving Lessee written notice of such termination within thirty (30) days of such taking. If all or a portion of the Premises shall be taken and Lessee reasonably determines that such taking materially affects Lessee's ability to use the remaining portion of the Premises for the uses permitted under this lease, Lessee may terminate this Lease at its option by giving Lessor written notice of such termination within thirty (30) days of such taking. In either of the foregoing events, this lease shall terminate upon the giving of such notice; provided, however, Lessee shall have up to ninety (90) days after such notice to remove its equipment and other personal property from, and to vacate, the Premises. If neither party terminates this Lease pursuant to this paragraph, this Lease shall remain in full force and effect except that the rent payable by Lessee hereunder shall be reduced on a pro-rata basis. All awards for the taking shall be the property of the Lessor; provided, however, Lessee shall have the right to claim and recover from the condemning authority such compensation as may be separately awarded or recoverable by Lessee for any damage to Lessee's business, for any cost or loss in removing Lessee's merchandise, trade fixtures, equipment, and other personal property, for the non-amortized balance of Lessee's improvements to the Premises, if any, and for the value of the remaining portion of the term of this Lease with respect to the portion of the Premises subject to the taking. Page -11- 12 23. MORTGAGE REQUIREMENTS. This Lease is junior, subject, and subordinate to all mortgages, deeds of trust, and other security instruments of any kind (each of which is hereinafter referred to as a "mortgage") now covering the Building and/or the property on which the Building is located or any portion thereof. Lessor reserves the right to place liens or encumbrances on the Building and/or the property on which the Building is located or any part thereof superior in lien and effect to this Lease. This Lease, at the option of Lessor, without the necessity for any notice to Lessee, shall be subject and subordinate to any and all such liens and encumbrances now or hereafter imposed by Lessor without the part of Lessee to effectuate such subordination. Notwithstanding the foregoing, Lessee covenants and agrees to execute and deliver upon demand such further instruments evidencing such subordination as may be requested by Lessor. Lessee agrees that in the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage affecting the Premises, whether or not this Lease is terminated by such foreclosure or sale, it will, upon request by the purchaser, attorn to the purchaser under any such foreclosure or sale and recognize such purchaser as Lessor under this lease. Lessee covenants upon not less than ten (10) days' prior written notice by Lessor to execute, acknowledge and deliver to Lessor a statement in writing certifying that this Lease is unmodified and in full force and effect and that Lessee has no defenses, offsets or counterclaims against its obligations to pay the rent and to perform its other covenants under this Lease (or, if there have been any modifications that the same is in full force and effect as modified and stating the modifications and, if there are any defenses, offsets or counterclaims, setting them forth in reasonable detail), and the date to which the rent has been paid. Any such statement delivered pursuant to this Section may be relied upon by any prospective purchaser or mortgagee of the Premises or any prospective assignee of any such mortgage. 24. NOTICES. All notices, demands and statements which may or are required to be given by either party to the other hereunder shall be in writing and shall be personally delivered or sent by United States certified mail, postage prepaid or sent by overnight courier or by facsimile, addressed as follows: If to Lessee, at: INFOCURE CORPORATION Attn: Manager Premises (904) 253-6222 FAX (904) 253-4275 With a copy to: InfoCure Corporation 239 Ethan Allen Highway Ridgefield, Connecticut 06877 Attn: General Counsel #203-894-1300 Fax: 203-894-1801 If to Lessor, at: JOSEPH V. FISHER, LLC c/o Joseph V. Fisher 1200 Ocean Drive PO Box 420500 Summerland Key, FL 33042-0500 (305) 745-1854 FAX (305) 745-1433 Page -12- 13 Either party may change its address by notice given to the other in the manner set forth in this Section. Notices, demands and statements shall be deemed given and received when personally delivered or two (2) days after they are mailed or one (1) day after they are faxed as provided. 25. LESSOR'S RIGHT TO CURE DEFAULTS. All covenants and agreements to be performed by Lessee under any of the terms of this Lease shall be at its sole cost and expense and, except as otherwise specifically provided herein, without any abatement of rent. If Lessee shall fail to pay any sum of money, other than rent, required to be paid by it hereunder or shall fail to perform any other act on its part to be performed hereunder, then, upon expiration of any notice, cure or grace period required elsewhere in this Lease for defaults, Lessor may, but shall not be obligated so to do, and without waiving any rights of Lessor or releasing Lessee from any obligations of Lessee hereunder, make such payment or perform such other act. All sums so paid or expenses incurred by Lessor and all necessary incidental costs together with interest thereon at the rate of twelve percent (12%) per annum from the date of such payment by Lessor shall be considered as rent owing hereunder and shall be payable to Lessor on demand or, at the option of Lessor, may be added to any rent then due or thereafter becoming due under this Lease. In addition, Lessor shall have the same rights and remedies in the event of the non-payment thereof by Lessee as in the case of default by Lessee in the payment of any rent hereunder. 26. DELAYS; DEFAULT BY LESSOR. Except as otherwise provided in this Lease, neither Lessee or Lessor shall not be responsible for any delay or failure in the observance or performance of any term of condition of this Lease to be observed or performed by Lessor or Lessee, as the case may be, to the extent that such delay results from action or order of governmental authorities; civil commotion; strikes, fires, acts of God or the public enemy; inability to procure labor, material, fuel, electricity, or other forms of energy; or any other cause beyond the reasonable control of Lessor or Lessee, as the case may be, whether or not similar to the matter herein specifically enumerated. Except as otherwise provided in this Lease, any delay shall extend by like time any period of performance by Lessor or Lessee, as the case may be, and shall not be deemed a breach of or failure to perform this Lease or any provisions hereof. In the event of any default under this Lease by Lessor, Lessee, before exercising any rights that it may have at law to cancel this Lease, shall have given notice of such default to Lessor and Lessor shall have thirty (30) days from such notice to cure such default, or in the case of a default which by its nature cannot be cured within such thirty (30) days, Lessor shall have thirty (30) days to commence curing or correcting such default provided Lessor continues to pursue such corrective action until the default is cured. Lessee also agrees to give the holders of any mortgages or deeds of trust ("mortgages") by certified mail, a copy of any notice of default served upon Lessor, provided that prior to such notice Lessee has been notified in writing (by way of Notice of Assignment of Rents and Leases, or otherwise) of the addresses of such mortgagees. Lessee further agrees that if Lessor shall have failed to cure such default within the aforesaid time limit, then the mortgagees shall have an additional thirty (30) days within which to cure such default or if such default cannot be cured with that time, then such additional time as may be necessary if within such thirty (30) days any mortgages has commenced and is diligently pursuing the remedies necessary to cure such default (including but not limited to commencement of foreclosure proceedings if necessary to effect such cure), in which event this Lease shall not be terminated while such remedies are being so diligently pursued. Page -13- 14 27. TRANSFER OF LESSOR'S INTEREST. In the event Lessor transfers its reversionary interest in the Premises (other than a transfer for security purposes only), Lessor shall be relieved of all obligations accruing hereunder after the effective date of such transfer, including, but not limited to, the return of the security deposits or other funds held by Lessor, provided that such obligations have been expressly assumed in writing by the transferee, and Lessee agrees to attorn to the transferee. Lessee agrees at any time and from time to time to at the request of Lessor, to execute, acknowledge and deliver to Lessor within ten (10) days from the date of said request a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications or if there are any defenses, offsets or counterclaims, setting them forth in reasonable detail), and the dates to which the fixed rent and other charges have been paid in advance, if any, it being intended that any such statement delivered pursuant to this paragraph may be relied upon by any prospective purchaser, mortgagee or assignee of any mortgage on the Premises. 28. SECURITY DEPOSIT. Lessor has waived any security deposit. 29. SUCCESSOR AND ASSIGNS. Subject to all limitations on assignment and subletting set forth herein, all of the terms and provisions of this Lease shall inure to the benefit of and be binding upon the heirs, devisees, legal and personal representatives, successors and assigns of each of the parties hereto. 30. ATTORNEYS' FEES. In the event of any action or proceeding to compel compliance with or for a breach of the terms and conditions of this lease, the prevailing party shall be entitled to recover from the losing party all costs and expenses of such action or proceeding, including, but not limited to attorneys' fees of the prevailing party in such amount as the court may adjudge reasonable. 31. SURRENDER OF PREMISES. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Lessor, terminate all or any existing sub-tenancies, or may, at the option of Lessor, operate as an assignment to it of any or all such sub-tenancies. 32. INTEREST ON PAST DUE OBLIGATIONS. Except as otherwise provided in Section 38, any amount due to Lessor not paid when due shall bear interest at the rate of twelve percent (12%) per annum from default. Payment of such interest shall not excuse or cure any default by Lessee under this Lease. 33. WAIVER. No waiver of any term, covenant, condition or obligation of this Lease, or any breach thereof, shall be effective unless granted in writing. The waiver by Lessor or Lessee of any term, covenant, condition or obligation herein contained or of any other breach thereof shall not be deemed to be a waiver of any other term, covenant, condition or obligation or of any other breach of the same or other term, covenant, condition or obligation herein contained. The subsequent acceptance of rent hereunder by Lessor shall not constitute a waiver of any preceding breach by Lessee, regardless of Lessor's knowledge of such preceding breach at the time of acceptance of such rent. 34. CONSTRUCTION. This Lease shall be governed by and construed in accordance with Florida law, and the invalidity of unenforceable provisions of this Lease shall not affect or impair the validity of any other provision hereof. Page -14- 15 35. DEFINITIONS AND HEADINGS. The term "Lessor" and "Lessee" as used herein shall include the plural as well as the singular and shall include the masculine, feminine and neuter. If there is more than one Lessor, the obligations of Lessor hereunder shall be joint and several. Paragraph headings in this Lease are for convenience only and shall not define or limit the scope or intent of any provision hereof. 36. TIME OF ESSENCE. Time is of the essence of this Lease and of each provision hereof. Lessee hereby acknowledges that late payment by Lessee to Lessor of rent or other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges and delinquency reports to lien holders. Accordingly, if any installment of rent or any sum due from Lessee shall not be received by Lessor within ten (10) business days after said amount is due, then Lessee shall pay to Lessor four percent (4%) of the amount due as liquidated damages, plus any attorneys' fees incurred by Lessor by reason of Lessee's failure to pay rent and/or other charges when due hereunder. Acceptance of such amounts by Lessor shall in no event constitute a waiver of Lessee's default with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted under this Lease. 37. ENVIRONMENTAL COMPLIANCE. Lessor further warrants that the Premises is in environmental compliance with all Environmental Laws, and there is no contamination that exists on the Premises that would result in liability to Lessee. 38. HAZARDOUS WASTE. Lessee agrees to comply strictly and in all respects with the requirements of any and all federal, state and local statutes, rules and regulations now or hereinafter existing relating to the discharge, spillage, storage, uncontrolled loss, seepage, filtration, disposal, removal or use of hazardous materials, including but not limited to the Comprehensive Environmental Response, Conservation and Liability Act of 1980, the Superfund Amendments and Re-authorization Act, the Resource Conservation and Recovery Act, the Hazardous Materials Transportation Act and the Florida Substances Law (collectively the "Hazardous Waste Law"). 39. RADON GAS. Pursuant to Florida Statutes, Section 404.056(8) every prospective purchaser of any building and every prospective Lessee of any building is hereby notified prior to or at the time of execution of a Contract for Sale and Purchase or the execution of a Rental Agreement for any building of the following: "RADON GAS: Radon is a naturally occurring radioactive gas that when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit." 40. WAIVER OF JURY TRIAL. Each party by execution hereof knowingly, voluntarily, and intentionally waives, for themselves and their respective heirs, successors, and assigns, any right any one of them may have to a trial by jury in respect to any litigation, action, suit or proceeding (whether at law or in equity) based on this Lease or any other documents arising out of, under, or in connection with any of the foregoing, or any course of conduct, course of dealing (whether verbal or written) or action of any party or their respective officers, principals, partners, employees, agents, or representatives in connection with or in respect to the Page -15- 16 Premises, whether arising in contract, tort, or otherwise and whether asserted by way of complaint, answer, cross-claim, counterclaim, affirmative defense, or otherwise. No party shall seek to consolidate any such litigation, action, suit or proceeding in which a jury trial cannot be or has not been waived with any other action in which a jury trial has been waived. This provision is a material inducement to Lessor and Lessee to enter into and perform this Lease. 41. SIGNAGE. Lessee shall have the right, at Lessor's expense, to erect directional and informational sign(s) on the exterior and/or interior of the building as Lessee shall deem necessary and appropriate. Said sign(s) may be replaced from time to time in Lessee's discretion at Lessor's expense. 42. TAX GRIEVANCE. Lessee shall have the right at Lessee's expense at any time during the term of this Lease to institute a proceeding at the local taxing authority to have the real estate taxes attributable to the Premises reduced. Lessor shall cooperate with Lessee in all such proceedings, including but not limited to signing any and all documents and if necessary bringing the proceeding in Lessor's name. In the event Lessee is successful in any such proceeding and Lessor should receive any refund from the local taxing authority, said refund shall immediately be paid over to the Lessee in the event that said refund covers a period during which Lessee was paying said taxes. 43. COVENANT OF QUIET ENJOYMENT. Lessor covenants and agrees that so long as Lessee shall be in possession of the Premises under this Lease, and shall pay the rent as herein provided, and shall comply with the terms and conditions of this Lease on the Lessee's part to be performed hereunder, Lessee shall be entitled to peaceably enjoy possession of the Premises without undue interference from the Lessor or any other lessee(s) in the building. 44. REAL ESTATE BROKERS COMMISSION. The parties hereto agree that Hailey Realty Company brought about the execution of this Lease and Lessor shall be responsible to pay Hailey Realty Company a commission pursuant to a separate agreement between Lessor and Hailey Realty Company. 45. RIGHT OF FIRST REFUSAL. A. ADDITIONAL SPACE OF LEASE: Provided Lessee shall have throughout the term of this Lease, fully performed all of its obligations under this Lease, and has not defaulted herein, and further provided, that during the term of this Lease any additional space at or near the Premises becomes available for lease, Lessor shall before offering same on the market, first offer same to the Lessee upon the same rent, terms and conditions as Lessor shall offer to any third party. Lessee shall have twenty (20) business days immediately following receipt of written notification from Lessor of the availability of such space for lease to notify Lessor in writing by certified mail with return receipt requested or by overnight courier that Lessee has agreed to lease such additional space upon the terms and conditions as set forth by Lessor. In the event Lessee has notified Lessor of its intention to exercise its option to lease the additional space as provided herein, Lessor will deliver to Lessee a lease agreement with respect to such additional space with the terms and conditions as agreed upon between the parties. Page -16- 17 B. BUILDING FOR PURCHASE: Provided Lessee shall have throughout the term of this Lease, fully performed all of its obligations under this Lease, and has not defaulted herein, and further provided, that during the term of this Lease the Building becomes available for purchase, Lessor shall before offering same on the market, first offer same to the Lessee upon the same purchase price, terms and conditions as Lessor shall offer to any third party. Lessee shall have twenty (20) business days immediately following receipt of written notification from Lessor of the availability of Building for purchase to notify Lessor in writing by certified mail with return receipt requested or by overnight courier that Lessee has agreed to purchase the Building upon the terms and conditions as set forth by Lessor. In the event Lessee has notified Lessor of its intention to exercise its option to purchase the Building as provided herein, Lessor will deliver to Lessee a contract of sale with respect to the purchase of the Building incorporating the terms and conditions as agreed upon between the parties. 46. PARKING. Lessor shall provide to Lessee, and Lessee shall have the right to use 5.3 parking spaces for every 1000 square feet that Lessee shall rent pursuant to the terms herein. Said number of spaces shall adjust in accordance with any adjustment in square footage rented. 47. RECORDING. The Lessee agrees that it will not record this Lease in any government facility and in the event the Lessee should record this Lease, then said recording will serve to automatically cancel this Lease. 48. ENTIRE AGREEMENT. This Lease, the Exhibits, and any agenda attached hereto and executed by the parties, constitute the entire agreement of the parties and supersede all prior agreements or understanding between the parties with respect to the subject matter hereof. This Lease may not be modified or amended except by written agreement of the parties. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals, the day and year first above written. AS TO LESSEE: INFOCURE CORPORATION - ---------------------------------- ------------------------------------ Witness Name: ______________________________ AS TO LESSOR: JOSEPH V. FISHER, LLC - --------------------------------- ------------------------------------ Witness Joseph V. Fisher, Managing Member Page -17- 18 EXHIBIT "A-1" LEGAL DESCRIPTION OF REAL PROPERTY (Volusia Plaza Site) Part of the Southeast 1/4 of Section 14, Township 15 South, Range 32 East, Volusia County, Florida, more particularly described as follows: As a point of reference, commence at the Northwest corner of the "Volusia Mall" tract as described in Official Record Book 1671, Pages 632 and 636, of the Public Records of Volusia County, Florida, said reference point being on the east right-of-way line of Bill France Boulevard (a 100.00 foot right-of-way - formerly Mason Avenue) and lying 1644.32 feet Northerly along said East right-of-way line of U.S. Highway 92 (a 200.00 foot right-of-way); thence North 24E 24' 05" West along the East right-of-way line of Bill France Boulevard for a distance of 597.46 feet to the Point of Beginning of this description: Thence continue North 24E 24' 05" West along said East right-of-way line of Bill France Boulevard for a distance of 35.00 feet to the Southwest corner of the "Westwood Apartment" tract as described in Official Record Book 1998, Pages 729 to 731, and Official Record Book 2088, Pages 827 to 829, of the Public Records of Volusia County, Florida; thence North 65E 29' 55" East along the South line of the said "Westwood Apartment" tract for a distance of 1101.21 feet; thence departing the South line of the said "Westwood Apartment" tract and run South 22E 20" 13" East for a distance of 135.63 feet; thence North 67E 39' 47" East 100.00 feet; thence South 22E 20' 13" East 175.00 feet; thence South 67E 39' 47" West 225.00 feet; thence South 22E 20' 13" East 235.00 feet; thence South 67E 39' 47" West 347.36 feet; thence North 22E 20' 13" West 46.93 feet; thence South 67E 39' 47" West 111.51 feet; thence South 19E 20' 04" West 33.89 feet; thence South 24E 12' 34" East 157.05 feet; thence South 40E 42' 15" East 18.44 feet; thence South 67E 39' 47" West 51 feet; thence North 24E 24' 05" West 200.00 feet; thence South 65E 35' 55" West 79.30 feet; thence North 22E 50' 42" West 232.30 feet; thence South 67E 52' 02" West 46.60 feet; thence North 22E 22' 38" West 204.54 feet; thence North 65E 29' 55" East 317.66 feet to the Point of Beginning. Page -18- 19 EXHIBIT "A-2" LEGAL DESCRIPTION OF REAL PROPERTY (Volusia Plaza Site) (This exhibit shall contain the exact description of the leased premises when received from the architect or engineer and then become part of this Lease.) EXHIBIT B CONSTRUCTION TERMS AND CONDITIONS 1. Construction: Lessor shall construct, or cause to be constructed, at Lessor's cost and expense and at no cost or expense to Lessee, the building and other improvements (collectively the "Improvements") to the Premises in accordance the Plans (hereinafter defined), all applicable governmental laws, ordinances and regulations (the "Laws") and this Lease, and in connection therewith, Lessor shall (a) promptly and diligently furnish, or cause to be furnished, all materials and perform, or cause to be performed, all work necessary to construct the Improvements and improve the Premises in accordance with the Plans, all in good workman like manner and in accordance with best trade practices and in compliance with the Laws and this Lease, (b) obtain and pay for all required governmental permits and approvals (the "Governmental Approvals") required for construction of the Improvements and occupancy and use of same by Lessee for the uses permitted under this Lease and (c) install and connect all requisite sewer, water, electrical, and drainage facilities required for the Premises and its use by Lessee as permitted under this Lease after completion, and pay all connection fees therefore (which utility facilities are to be considered part of the "Improvements" as such term is used herein). Lessor has employed T.G. Glass & Associates, Inc. ("Contractor") to provide and perform all architectural, engineering and contracting services required for the construction of the Improvements. Lessor has the right to use any other contractor to perform such services for construction of the Improvements with approval of Lessee, which approval will not be unreasonably withheld. 2. Plans: Lessor shall contract an engineer, architect and general contractor to prepare final plans and specifications for the Improvements based upon Lessee's input. Upon completion of the final plans and specifications for the Improvements and approval of same by Lessor and Lessee each having initialed each page of same, such plans and specifications (the "Plans") shall be deemed a part of this Lease as if attached hereto even if not physically attached hereto. In the event final plans and specifications have not been so approved by both Lessor and Lessee on or before March 5, 2001 (the "Approval Date"), Lessor and Lessee shall each have the right to cancel this Lease by written notice to the other any time thereafter unless and until plans and specifications have been so approved by both parties. If the Plans are approved after the approval date, permit date, completion date, commencement date and termination date shall each be extended by the same number of days unless the parties agree otherwise in writing. Page -19- 20 3. Governmental Approvals: Upon approval of the Plans by both parties, Lessor shall promptly submit the Plans to all appropriate governmental authorities and diligently seek to obtain the Governmental Approvals on or before the permit date, as the same may be extended by agreement of the parties. In the event Lessor has not obtained the Governmental Approvals and commenced work within ten (10) days of the permit date (as the same may be extended by agreement only) for any reason whatsoever, including Force Majeure, Lessee may at its option terminate this Lease. Upon such termination the security deposit paid to Lessor by Lessee pursuant to this Lease shall be returned to Lessee. 4. Completion: Lessor shall complete the construction of the Improvements and provide Lessee with the notice of completion and a copy of the Certificate of Occupancy or other official notice from the appropriate governmental agency indicating the building constructed was completed pursuant to all required governmental laws and regulations and can be fully occupied for the use(s) intended herein (the "Completion Notice"). The completion date may be extended by agreement or changes to the Plans agreed upon as provided below, subject, however, to delays caused by Force Majeure as defined in Section 26 of this Lease. Lessor's construction obligations under this Lease shall be considered completed upon (a) completion of construction of the Improvements in accordance with the Plans, the Laws, and this Lease, and (b) upon Lessor having delivered the Completion Notice to Lessee. Lessor shall deliver possession of the Premises to Lessee, and Lessee shall accept delivery of possession of the Premises from Lessor, upon such completion by Lessor of its construction obligation under this Lease (including Lessor having delivered the Completion Notice to Lessee). Notwithstanding anything in this Lease to the contrary, in the event such construction obligations are not completed, the Completion Notice is not given and possession delivered to Lessee by a) September 15, 2001, then Lessor shall pay all costs, expenses and penalties incurred by Lessee, including but not limited, all additional rent and other charges imposed by Lessee's current Landlord, for each day thereafter until two weeks after the Completion Notice is delivered to Lessee; and b) by November 15th, 2001 (as the same may be extended by agreement only) for any reason whatsoever, including Force Majeure, then Lessee may at its option terminate this Lease unless delay of possession was caused by Lessee. Upon such termination the Security Deposit paid to Lessor by Lessee pursuant to this Lease shall be returned to Lessee. The Completion Notice shall include copies of all required Governmental Approvals, including a Certificate of Occupancy, required for (and permitting) occupancy and use of the Premises by Lessee for uses under this Lease, and a certificate by Lessor's Contractor or by its engineer certifying that all Lessor's construction obligations under this Lease have been substantially completed in accordance with the Plans and the Laws. 5. Change Orders. All changes, omissions, or additions to the Plans shall be made only by written change order or other amendment duly signed by the parties hereto (signers of this Lease). Any such written change order amendment shall extend the Completion Date, as agreed to by the contractor's time estimate for the change made to construct said change order. 6. Lessee Inspections. Lessor shall allow Lessee to review and inspect all material and work at all times and shall, after receiving written notice from Lessee of defective work and/or materials, whether complete or incomplete, proceed to remove all such defective work and materials and replace same at Lessor's expense. Page -20- 21 7. Warranties. Lessor shall provide Lessee with copies of all warranties of the Contractor and all other contractors, sub-contractors, manufacturers and suppliers of equipment used in connection with construction of the Improvements. Lessor shall at Lessee's request enforce such warranties with respect to any portion of the Improvements (including fixtures and other equipment) for which Lessee has repair obligations under this Lease. Such warranties shall not relieve Lessor of its obligations under this Lease. 8. Time of Essence. Time is of the essence as to the provisions of this Exhibit B. Page -21- 22 EXHIBIT C (This Exhibit is for execution of Lease purposes only and is to be replaced with the architect's finished site plan, becoming a permanent part of this Lease.) Page -22- -----END PRIVACY-ENHANCED MESSAGE-----