UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended January 31, 1998
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ________ to __________
Commission File Number 333-5753
Exigent International, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 59-3379927
(State of Incorporation) (IRS Employer
Identification Number)
1225 Evans Road, Melbourne, Florida 32904-2314
(Address of Principal Executive Offices)
(407) 952-7550
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Shares, $0.01 par The Chicago Stock Exchange
value per share The Chicago Stock Exchange
Common Stock Purchase Warrants
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, $0.01 par value per share
Common Stock Purchase Warrants
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 ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this From 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value, as of March 31, 1998 (based upon the average
bid and asked price on such date) of the voting and non-voting common equity
held by nonaffiliates of the registrant was $9,113,264.
The number of shares outstanding of the registrant's Common Stock and Class
B Common Stock on March 31, 1998 was 3,872,655 and 0, respectively. Documents
Incorporated by Reference
Portions of the Proxy Statement for the 1998 Annual Meeting of Stockholders
(to be filed with the Securities and Exchange Commission on or before May 28,
1998) are incorporated by reference into Part III hereof.
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TABLE OF CONTENTS
<S> <C>
PART I------------------------------------------------------------------------------------------------1
ITEM 1. BUSINESS---------------------------------------------------------------------------------1
ITEM 2. PROPERTIES--------------------------------------------------------------------------------7
ITEM 3. LEGAL PROCEEDINGS-------------------------------------------------------------------------7
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS-----------------------------------------7
PART II-----------------------------------------------------------------------------------------------8
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS---------------------8
ITEM 6. SELECTED FINANCIAL DATA-------------------------------------------------------------------8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION------9
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK-----------------------------14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA-------------------------------------------- .
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES----41
PART III---------------------------------------------------------------------------------------------42
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT-------------------------------------42
ITEM 11. EXECUTIVE COMPENSATION-----------------------------------------------------------------42
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT-------------------------42
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS-----------------------------------------42
PART IV----------------------------------------------------------------------------------------------43
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K------------------------43
SIGNATURES ------------------------------------------------------------------------------------------46
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PART I
ITEM 1. BUSINESS
THE COMPANY
Exigent International, Inc. (together with its subsidiaries, "Exigent" or
the "Company") is a holding company formed in 1996 to capitalize on emerging
high-technology opportunities.
The Exigent Family of Companies:
Exigent International, Inc.
[--------------------------------------------------]
Software Technology, Inc. FotoTag, Inc.
Exigent was formed on March 25, 1996 by Software Technology, Inc. ("STI")
to acquire and hold all of the assets and the issued and outstanding stock of
STI. On January 30, 1997, Exigent acquired all of the issued and outstanding STI
stock in exchange for 3,486,600 Exigent Common Shares and 697,320 Exigent Class
A Preferred Shares. Exigent also issued 645,270 Warrants in exchange for STI
warrants held by STI shareholders and Joseph Walker & Sons, Inc. ("JWSI"). Upon
the completion of the exchange, STI became a wholly owned subsidiary of Exigent.
As reflected in the chart above, Exigent has two wholly-owned operating
subsidiaries, STI and FotoTag, Inc. ("FTI"). Formed in 1978, STI provides
systems and software engineering services to a range of industry and government
clients. STI specializes in software solutions for the command and control of
spacecraft. FTI (formed in 1997) developed and markets internationally an
advanced passenger/baggage reconciliation system, FotoTag(R)1, for use by
airports and airlines.
Typical customers for the products and services of Exigent's subsidiaries
are:
o Agencies and departments of the U.S. government that use
satellites for research, communication, or in defense programs.
o Commercial telecommunication companies, particularly those
focused on low-earth-orbit ("LEO") satellite systems, that
provide cellular telephone services.
o Commercial and government customers that require MIS and data
base development services.
o Commercial launch facilities and contractors that provide
commercial launch services.
o Aerospace and defense contractors that develop computerized
weaponry and defense systems employing satellite technology,
especially embedded software systems.
o Value Added Resellers ("VARs") and strategic partners that
develop custom or specialized computer applications. o
Engineering firms that require software design and development
services.
o Foreign agencies that control airports and airport security.
o Foreign and domestic airlines.
PRODUCTS AND SERVICES
SYSTEM ENGINEERING AND RELATED SERVICES
The Company offers a wide range of custom software applications and other
software engineering services. The Company provides advanced technical solutions
for defense, government, and industry, including advanced embedded software
products.
<PAGE>
Company personnel, working at Company facilities or at customer's sites,
develop operational systems for government and commercial space-based
applications. These include ground station support, test and integration
systems, mission tasking systems, operational simulators, launch support
systems, and data analysis and MIS centers. The Company also provides
space-based flight systems and simulators.
In addition to developing and providing the general-purpose and customized
engineering solutions described in the previous paragraph, the Company provides
engineering support to the users of OS/COMETTM2 products.
The Company has signed a strategic agreement to provide software solutions
to a major vendor of fast-food systems. Under this agreement, Exigent has the
right to participate in the development of future improvements to the system.
This initiative reflects the Company's goal to leverage its core technology and
skills to expand to other markets.
SOFTWARE PRODUCTS
The OS/COMET suite of command and control software products forms the
Company's flagship software offering. Originally developed for the support of
satellite ground stations and for spacecraft integration and testing, this
software suite has evolved into a general-purpose integrated tool set. This
"Commercial-Off-The-Shelf" ("COTS") program provides a real-time command,
control, and data acquisition environment for government and commercial
solutions. Because of the flexibility of its design and its architecture,
OS/COMET products can be adapted to many complex control situations, on the
ground or in space. OS/COMET executes on any of several inexpensive,
POSIX-compliant UNIX(TM)3 workstations and makes extensive use of the "X Window
System(TM)"4 and the "OSF/Motif(TM)"5 graphical user environment standards.
OS/COMET is the heart of the satellite control system for "IRIDIUM(R)"6 ,
the global wireless communication system built by a world-wide consortium of
investors to provide the elusive "world-wide dial tone". IRIDIUM offers local
calling, data transmission and paging, anywhere on the planet. It is a
constellation of 66 Low Earth Orbit ("LEO") satellites (plus six on-orbit
spares).
As a result of the use of OS/COMET in the IRIDIUM and other programs,
Exigent was selected by prime contractor Motorola, Inc. as the preferred
supplier of command and control software for the Celestri(TM)7 and future
communication systems. Celestri, a mix of LEO and Geostationary Earth Orbit
("GEO") broadband satellites in a hybrid constellation of about 70 units, is
planned to be operational in 2003.
STI was also selected to upgrade the ground station software for the
NAVSTAR Global Positioning System ("GPS"). A U.S. Air Force project, the
24-satellite GPS constellation provides precise and continuous world-wide
all-weather positioning, navigation data and nuclear detonation detection. The
entire constellation is under OS/COMET command and control. GPS's 24 satellites
provide worldwide navigation data for military and civilian aircraft, spacecraft
and land and marine applications. The new system replaces a slower
mainframe-based system with antiquated "legacy" software that is now too costly
to maintain.
FotoTag is an innovative airport passenger/baggage reconciliation system,
developed in response to the needs of international airport and airline
operations. It is expected to provide enhanced departure control facilities,
improve passenger servicing, and reduce airline and airport management costs.
The system uses IATA-standard barcode technology coupled with digital
photography. FotoTag can interface with currently existing airline networks and
Customer Reservation Systems ("CRSs"). Exigent expects its FotoTag products to
begin generating revenues in the Company's next fiscal year as its airline and
airport passenger/baggage reconciliation system becomes operational.
PRODUCT DEVELOPMENT
The Company is developing the Active Tracking Engine(TM)8 ("ATE"), an open
architecture, middleware product for horizontal market applications. This
object-oriented "network facilitator" enables message-oriented data distribution
in collaborative computing environments. It employs a "publish and subscribe"
information management method that efficiently uses available bandwidth.
Application-independent ATE is being developed to run under the "Windows
95/NT"(R)9 operating system, and can be readily integrated with other platforms.
The Company expects to market ATE as a stand-alone product to system
integrators and application developers. ATE is expected to provide a
communication and integration core for a whole family of related products.
FTI is developing plans to integrate ATE in the FotoTag product to route
messages between distributed servers and workstations in the local installation,
or between any networked equipment at widely separated airports. ATE is being
readied for testing and delivery in the third quarter of 1998.
The Company plans to develop and offer the Integrated Control Center(TM)
10("ICC"), a complete mission control solution based on the OS/COMET family of
products, but with added functionality provided by the ATE and specialized
product development. The ICC is expected to deliver a turnkey ground station
solution including mission planning, mission support, orbit maintenance and
decision-making capabilities, all within the context of a Graphical User
Interface. The Company anticipates that it will find strategic partners to
provide certain products to be integrated into the ICC structure.
RESEARCH AND DEVELOPMENT
Exigent continues to conduct research and development for specific projects
or tasks under contract to customers in government and industry. The Company is
also now pursuing diversification into the commercial products business with an
array of internally developed products planned. The Company funds R&D for
development or enhancement of certain products which management believes are
commercially marketable. Generally, most of the Company's contract-funded R&D
relates to satellite command and control, developing systems for the ground and
space segments of the aerospace/defense industry, and telephone systems
providers in the telecommunications industry. Through these projects, Exigent
often identifies potential software product offerings for commonly used
functions. These concepts are evaluated and, based on estimated costs and
commercial sales potential, funded and developed by the Company as separate
products. The emphasis placed on low cost solutions by customers drives the need
for reusable software components and products.
Exigent expensed against earnings $47,854, $239,986, and $154,856 in its
fiscal years ended January 31, 1998, 1997 and 1996, respectively, on internally
sponsored research and development. These expenditures were made for the
evaluation of new products and technologies to expand and enhance the Company's
products and services.
In addition to these expensed funds, the Company continues to invest
significantly in product development. With respect to commercial product
development, the Company has capitalized $1,149,685, $556,167, and $161,785 in
its fiscal years ended January 31, 1998, 1997 and 1996, respectively. These
amounts include investments allocated to FotoTag and to the OS/COMET family of
products. Exigent continues its commitment to these products with sustaining
engineering expenditures in excess of $2,000,000 against earnings for its fiscal
year ended January 31, 1998.
Of Exigent's major sites of operation, the majority are available for R&D
activity. Details of the various Exigent locations can be found under the
heading "Properties". Each facility has extensive computer resources and is
networked to each of the other facilities.
MARKETING AND SALES
MARKETING
The Company distributes its products and services and licenses its products
(a) indirectly through VARs, and (b) directly to end users.
Many of the Company's opportunities to bid on contracts for systems
development, software engineering, or support are derived through solicitation
of, or by initiation from, existing customers and through direct mail
solicitation. The Company also uses leads generated by print-media
advertisements, Internet inquiries, round-table forums, speaking engagements,
trade shows, and specialized publications such as the "Commerce Business Daily".
Exigent's solicitation efforts are supported by a number of in-house business
development representatives, periodically augmented by ad hoc technical teams
recruited internally from the Company's engineering staff to pursue individual
contract initiatives.
Prospects for the Company's present and future commercial products are
usually generated through similar means. Exigent regularly advertises in "Space
News Magazine", "Via Satellite" and "Aviation Week", and participates in various
trade shows, including the recent "Satellite98 Conference".
Exigent has recently used its new demonstration and multi-media facility to
showcase products and services to a number of potential customers. Through this
and the other related and coordinated marketing efforts mentioned above and an
expansion of the Company's presence on the World-Wide Web, the Company hopes to
increase product sales as a percentage of total revenue while also growing
revenues from services.
REVENUE SOURCES
The Company's revenues are dependent on three significant customers, the
Naval Research Laboratory ("NRL"), Motorola, Inc. ("Motorola") and Lockheed
Martin Corporation ("Lockheed"), the loss of any one or more of which would have
a material adverse effect on the Company's business, results of operations, and
financial condition. Aggregate sales to each of NRL, Lockheed and Motorola in
the Company's fiscal year ended January 31, 1998 were in excess of 10% of the
Company's consolidated revenues. The loss of NRL, Motorola or Lockheed as a
customer would have a material adverse effect on the Company and its
subsidiaries taken as a whole.
The government contracts to which the Company is a party are subject to
termination at the election of the government entity party thereto.
See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation and Note 12 to the Financial Statements for additional
information on the Company's dependence on certain customers.
CONTRACTS
Generally, the government contracts specify goals to be reached and
estimate the number of hours of work of various levels of employees required to
reach the goals. The contract price is based on pre-approved, hourly rates for
employees' time with certain pre-approved overhead costs included. If the goals
are met in fewer hours, the contract value is reduced. If it takes more hours
than estimated to meet goals, the resulting fee percentage is reduced on a pro
rata basis based on cost of actual hours delivered versus the cost of hours
estimated in the contract.
Most of the Company's commercial contracts are "firm fixed price" or "time
and material" agreements. These agreements generally call for a specified set of
requirements to be delivered at a negotiated price. With respect to fixed price
agreements, if development costs yield a result that is less than the estimate
for the fixed price, the Company will make a greater profit on that contract. If
development costs exceed the estimated effort for the fixed price, the Company
will have less profit on that contract. These types of contracts are typically
broken down into a set of milestones with progress payments made at each
milestone. These are generally called earned value milestones and are used to
benchmark progress, help the customer track status, and provide trigger points
for payments.
STI has several contracts with the NRL. Its largest contract with NRL,
which relates to space systems applications and operations, was renewed in
January 1995. It provides for services to be initially performed over two base
years with three one-year options, with a total estimated cost of $25,186,826
and a fixed fee of $1,896,362. As of January 31, 1998, these three options had
been exercised and STI had received cost payments and fees in the aggregate of
$23,691,856 under the contract. The contract with Lockheed relates to a GPS
project with the U.S. Air Force. It began in August 1995 and continues through
September 30, 2000 unless modified by Lockheed. STI received $3,914,692 under
this contract for the Company's fiscal year ended January 31, 1998 with a funded
backlog at that time of approximately $806,847.
STI has various contracts with Motorola, some of which are fixed price
contracts and some of which are time and material contracts. Most of the
revenues from Motorola in the past four years were received under an agreement
executed in February 1994 under which STI agreed to provide Motorola with
satellite and ground control software for the system control segment of the
IRIDIUM communications system. STI expects to receive payments under the
contract for several more years. As of January 31, 1998, STI had received
approximately $41,886,144 from Motorola under this and other contracts. The
backlog as of January 31, 1998 for Motorola was $1,577,223.
STI also receives revenues from Allied Signal Technical Services
Corporation ("Allied") under various purchase orders. It has received
approximately $492,633 from Allied during the fiscal year ended January 31, 1998
and approximately $1,041,536 in backlog remains under existing purchase orders.
Based on the development plans and schedule to incorporate customer
features and functionality, there were no revenues generated by FTI in the
Company's fiscal year ended January 31, 1998. Exigent expects its FotoTag
products to begin generating revenues in the Company's next fiscal year, as its
airline and airport passenger/baggage reconciliation system becomes operational.
ATE is being readied for testing and delivery in the third calendar quarter of
1998.
BACKLOG
STI estimates that its backlog orders believed to be firm as of January 31,
1998 and 1997 were $11,334,085 and $31,571,380, respectively. Approximately
$5,101,154 of the backlog in the Company's fiscal year ended January 31, 1998
relates to the unfunded portion of government contracts. The Company estimates
that approximately 85% of its backlog on January 31, 1998 will be completed
before December 31, 1998. This does not include potential additional revenue
anticipated from this and other new contracts.
COMPETITION
Exigent believes it is best known (through its subsidiary STI) for the
development of advanced command and control technology for communication
satellite systems. In general, aerospace/defense contractors must obtain or
produce this type of software in connection with the manufacture and sale of
satellites, but they often contract with other companies, such as Exigent, to
provide the software.
Exigent (through its subsidiary STI) has two competitors who are
"independent" providers of command and control systems and software. There are
few "independent" competitors because of the depth of expertise involved and the
high cost of failure. STI is the largest of this group.
Exigent competes directly and indirectly with many of the large
aerospace/defense contractors, which are also often its customers. Companies
within the professional services sector of the computer industry are also
potential competitors. Some professional computer services companies service
satellite ground stations with information technologies such as systems to
organize, archive, interpret and analyze telemetered data. These and other
computer companies also may compete in a limited way with some of Exigent's
products and services.
In addition to the independent competitors, there are seven leading
aerospace and/or defense contractors in the United States that derive
substantial revenues from space-related sales and who have substantially greater
capital and other resources than Exigent. Most of them have developed tracking,
telemetry, and command and control software in-house as primary contractors,
through sub-contractors and through outsourcing. Income derived from the
development of such software represents only a small portion of the revenues of
these companies, but the software is nevertheless essential to their contracts
to manufacture satellites.
FTI builds on the Company's tracking control expertise to compete against
the three major systems (developed outside the USA) that represent competition
in the airline passenger/baggage reconciliation market.
PATENTS, TRADEMARKS, AND LICENSES
Exigent received a trademark registration on the "FotoTag" product name.
The Company believes that OS/COMET will also be accorded registered status in
the near future.
Three provisional patent applications were filed in 1997, including
applications covering the ATE, and for a software architecture for a satellite
constellation control schema.
EMPLOYEES
As of January 31, 1998, the Company had 299 employees, of which
approximately 90% were engineers. Of these employees, approximately 45% work in
Melbourne, Florida, also the corporate headquarters, 40% in the Virginia and
Maryland offices in the Washington, D.C. area, 8% in the Arizona office, and 3%
at the Colorado office, with the remaining 4% working at customer locations or
their homes.
Approximately 87% of these individuals work directly in software
development, with the remaining 13% providing various services in administrative
positions.
EXECUTIVE OFFICERS
The executive officers of the Company as of the date of filing of
this Form 10-K are as follows:
NAME POSITION WITH REGISTRANT
Bernard R. Smedley Chairman of the Board, CEO, President, COO,
and Director
Don F. Riordan, Jr. (1) Executive Vice-President, Treasurer, CFO,
and Director
William K. Presley Executive Vice-President, Chief Technology
Officer, and Director
(1) Mr. Riordan is the Trustee of the Company's three qualified retirement
plans, including its Employee Stock Ownership Plan (the "ESOP").
Bernard R. Smedley, age 61, became a director of Exigent on February 7,
1997. He currently serves as Chairman, CEO, President and COO of Exigent and
President and COO of STI. Prior to joining Exigent, Mr. Smedley was founding
President, CEO and COO of AirNet Communications Corporation, a private company
(1994 to 1997). In 1994, he took early retirement from Motorola, Inc., which he
had jointed in 1976, to become President and Chief Executive Officer of AirNet.
Don F. Riordan, Jr., age 51, has been a Director of STI since 1980, and
Secretary/Treasurer and Chief Financial Officer since 1991 as well as holding
the offices of Chairman of the Board, Vice President, Secretary and Treasurer at
various times prior to 1991. Mr. Riordan is currently a Director, Treasurer, and
Chief Financial Officer of Exigent, and is a Director, and Secretary/Treasurer
of both STI and FTI.
William K. Presley, age 51, has been a Director of STI since 1987, Chairman
of the Board until 1997 and Vice President (or President in 1990) since 1987. He
is currently serving as a Director, Executive Vice President, and Chief
Technology Officer of Exigent. He has been employed by the Company since July
1983 as a chief systems engineer.
ITEM 2. PROPERTIES
Exigent's corporate headquarters are located in Melbourne, Florida on the
"Space Coast", near NASA's Kennedy Space Center. The Company, through its
subsidiary STI, currently leases a 29,000 square foot building under a ten-year
lease, which will expire on December 1, 2005. Exigent has the right to renew the
lease for two additional five-year terms, and has an option to purchase the
property that may be exercised during certain periods prior to the expiration of
the fifth and tenth years of the lease. The purchase price is the fair market
value of the property determined by appraisal, but in no event less than the
outstanding balance on the mortgage.
In February 1998, Exigent, through its subsidiary STI, occupied an
additional leased building of approximately 30,000 square feet, located adjacent
to its existing facility. This building houses the Exigent corporate
headquarters, including the executive, administrative, and marketing staff, FTI
and the Product Development department. The lease is for a ten-year period
expiring in April 2007.
In addition to the corporate headquarters, Exigent, through its subsidiary
STI, leases the following space at other sites. Lease expiration dates are shown
parenthetically:
o Alexandria, Virginia - approximately 15,296 square feet (August
31, 1998); Exigent has the right to renew this lease for up to
two additional one-year terms.
o Aurora, Colorado - approximately 2,494 square feet (October 31,
1999).
o Colorado Springs, Colorado - approximately 1,946 square feet
(July 1, 2000).
o La Plata, Maryland - approximately 1,935 square feet (October 14,
1998); Exigent has the right to renew this lease for up to three
additional one-year terms.
o Mesa, Arizona - approximately 2,971 square feet (November 20,
1999).
Management believes that with the new addition to its headquarters, its
occupancy needs will be met through the Company's next fiscal year. Due to the
nature of the Company's business, there are no special facility requirements to
consider, given that software development can be conducted in standard office
space and its manufacturing requirements are minimal and most often handled
through outsourcing.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which Exigent or its
subsidiaries or their properties are a party or were a party during the fourth
quarter of the Company's fiscal year ended January 31, 1998.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of Exigent during
the fourth quarter of the Company's fiscal year ended January 31, 1998.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Trading of Exigent's Common Shares and Common Stock Purchase Warrants is
reported on the NASDAQ Electronic Bulletin Board (the "Bulletin Board") under
the symbols XGNT and XGNTW, respectively. Reporting commenced on March 24, 1997.
Additionally, Exigent Common Shares and Common Stock Purchase Warrants are
traded on the Chicago Stock Exchange under the symbol XNT and XNTW,
respectively. There is no established trading market for the Company's Class A
Preferred Shares.
The following table represents the high and low bid prices for the
Company's Common Shares and Common Stock Purchase Warrants for each quarter of
its fiscal year ended January 31, 1998, as reported in the Daily Trade and Quote
Summary provided by the Bulletin Board:
Common Stock
COMMON SHARES PURCHASE WARRANTS
1998 High Low High Low
4th Quarter $4.25 $2.75 $1.5 $0.625
3rd Quarter $4.13 $2.13 $1.0 $0.25
2nd Quarter $2.25 $2.00 $0.25 $0.0625
1st Quarter $4.50 $2.00 $0.25 $0.0625
The Company's Common Shares and Common Stock Purchase Warrants were not
traded during the Company's fiscal year ended January 31, 1997. The Company's
Common Shares and Common Stock Purchase Warrants have traded only sporadically
on The Chicago Stock Exchange.
The approximate number of holders of Common Shares of Exigent is 1,115
(based upon the number of record holders), excluding stockholders whose Common
Shares are held in nominee or street name by brokers. The approximate number of
holders of Exigent's Common Stock Purchase Warrants is approximately 1,314
(based upon the number of record holders), excluding holders whose Common Stock
Purchase Warrants are held in nominee or street name by brokers.
As a private company Exigent paid annual cash dividends of $0.05 and
$0.075, respectively, during its fiscal years ended January 31, 1996 and 1997
(the amounts stated reflect the reorganization and current capitalization of the
Company). In its fiscal year ended January 31, 1998, the Board of Directors
decided that Exigent would forego dividend payments in order to invest in the
Company's growth.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data is that of the Company. The pro forma per share
figures are calculated based upon the weighted average common shares
outstanding, fully diluted, of Exigent giving retroactive effect to the
reorganization (see notes to the financial statements for a further
description). The earnings per share amounts prior to 1997 have been restated as
required to comply with Statement of Financial Accounting Standards No. 128,
Earnings Per Share.
<TABLE>
<CAPTION>
Years Ended January 31
(Amounts in thousands except
per share amounts)
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Revenues $ 35,749 $ 29,936 $ 25,292 $ 19,761 $ 16,761
Cost of Sales (26,422) (24,689) (19,408) (16,064) (13,401)
Gross Profit 9,327 5,247 5,884 3,697 3,360
General and Administrative Expenses (7,050) (5,344) (3,841) (2,539) (2,511)
Research and Development Costs (48) (240) (155) (102) (126)
Operating Income 2,229 (337) 1,888 1,056 723
Total Other Income (Expense) (53) 1 (1) 20 (13)
Income before Taxes 2,176 (336) 1,887 1,076 710
Income Tax Expense (831) (150) (755) (354) (216)
Net Income $ 1,345 $ (486) $ 1,132 $ 722 $ 494
Income per Pro Forma Weighted Average
Common Shares, Outstanding - Diluted $ 0.29 $ (0.13) $ 0.29 $ 0.19 $ 0.13
Cash Dividends $ - $ (310) $ (178) $ (89) $ (89)
Cash Dividends Paid per Pro Forma Share
Outstanding $ - $ 0.075 $ 0.05 $ 0.03 $ 0.03
Total Assets $ 14,693 $ 10,949 $ 8,328 $ 6,471 $ 4,631
Total Long-Term Liabilities
(Excluding Deferred Income Taxes) $ 467 $ 317 $ 10 $ 17 $ -
Total Stockholders' Equity $ 7,781 $ 6,258 $ 4,893 $ 3,939 $ 3,306
Stockholders' Equity per Pro Forma Weighted
Common Share, Outstanding - Diluted $ 1.67 $ 1.72 $ 1.27 $ 0.88 $ 0.86
Dividends Declared per Pro Forma Weighted
Average Common Share, Outstanding -
Diluted $ - $ 0.075 $ 0.05 $ 0.02 $ 0.02
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
LIQUIDITY
As of January 31, 1998 and 1997, the Company's ratio of current assets to
current liabilities was 1.9 and 2.0, respectively. As of January 31, 1998, the
Company's quick liquidity ratio was 1.8, up from 1.7 for the year ended January
31, 1997. This increase is due to the increase in product sales over the
Company's fiscal year ended January 31, 1997.
The Company's cash portfolio (cash and cash equivalents) increased
$3,211,803 at January 31, 1998. This increase is due to cash provided by
operating activities of $5,239,810 and cash provided by financing activities of
$413,759 less cash in the amount of $2,441,766 used in investing activities. The
cash provided by operating activities increased primarily due to an increase in
cash paid by customers. This increase is the result of the increase in product
sales during the Company's fiscal year ended January 31, 1998. By comparison,
the Company's cash portfolio increased $158,621 at January 31, 1997. This
increase was due to cash provided by operating activities of $1,679,983 and cash
provided by financing activities of $428,366 less cash in the amount of
$1,949,728 used in investing activities. The cash provided by operating
activities increased primarily due to an increase in cash received from
customers.
In the Company's fiscal years ended January 31, 1998 and 1997, Exigent
acquired $1,306,693 and $1,382,163, respectively, of capital assets compared
with $1,122,226 in 1995. This expenditure in the Company's fiscal year ended
January 31, 1998 was due primarily to an investment made in computing resources
to support the demonstration of the Company's products and capabilities in an
integrated control center. The expenditures in prior fiscal years were made to
support programs and for the modernization of office equipment. In the Company's
fiscal year ended January 31, 1998, the Company made a decision to lease
resources for office computing needs. Capital for equipment purchases is
expected to remain stable for the next two fiscal years as the Company has now
modernized, and has acquired computer resources for expected near-term
operations. The Company will continue its policy of leasing resources for office
computing needs.
In the Company's fiscal years ended January 31, 1998 and 1997, the Company
also spent $1,149,685 and $556,167, respectively, in capitalized research and
development costs to develop new products considered essential in maintaining a
strong market position in the Satellite Command and Control Industry as well as
the airport security industry. There was $161,785 of research and development
costs capitalized in fiscal 1995. In the Company's fiscal year ended January 31,
1998, it was determined that the capitalized research and development
expenditures related to the OS/COMET product incurred prior to such fiscal year
should be expensed due to a change in estimated revenue and therefore these
costs were taken against the current fiscal year earnings.
In addition, management reviewed the status of the ICC development project
which had been accomplished to date and determined that the asset was more
appropriately classified as property, plant, and equipment, as it was being used
as demonstration equipment during the Company's fiscal year ended January 31,
1998. The first year depreciation (20%) was taken against the Company's fiscal
year ended January 31, 1998 earnings. Both of these management decisions
resulted in an adjustment in earnings per share from $0.33 to $0.29.
Cash provided by financing activities for the Company's fiscal year ended
January 31, 1998 was $413,759. This was comprised of $800,000 borrowed to
purchase computer equipment for product developments, offset by $382,108 in
principal payments on long-term debt. In addition, $177,867 of capital was
raised through the exercise of stock options and warrants. Cash used in
financing activities for the Company's fiscal year ended January 31, 1998 was
$428,366.
In the Company's fiscal year ended January 31, 1998 the Board of Directors
determined not to pay any dividends, but instead to use its cash for product
development and operations. As a private company, the Company paid dividends of
$0.45 and $0.30 ($.075 and $.050, giving retroactive effect of the stock
exchange) per share in the Company's fiscal years ended January 31, 1997 and
1996, respectively, for total dividends of $309,549 and $177,955, respectively.
Principal payments on long-term debt amounted to $382,108, $251,335 and
$6,363 in the Company's fiscal years ended January 31, 1998, 1997, and 1996,
respectively. As of January 31, 1998 and 1997, Exigent had a line of credit with
a bank of $1,800,000. Draws against the line as of January 31, 1998 and 1997
were $0 and $182,000, respectively. All accounts receivable, equipment,
furniture, and fixtures of STI are pledged as collateral on the line of credit.
Management believes that capital in addition to that available through
operations and the available line of credit will be necessary to fund the
Company's plans for expansion and growth during the Company's next fiscal year
and the growth plans for such fiscal year and beyond. The Company may seek debt
or equity financings. However, there can be no assurance that such financing
will be available on acceptable terms, if at all.
PROVISION FOR INCOME TAXES
The effective rate for the Company's fiscal year ended January 31, 1998 was
38.2%, up 82.7% from the Company's fiscal year ended January 31, 1997 effective
rate of negative 44.5%. This increase is the result of the public offering costs
incurred during the Company's fiscal year ended January 31, 1997 that were not
deductible for federal and state taxes. The Notes to Financial Statements
describe the differences between the U.S. statutory and effective income tax
rates.
ANALYSIS OF OPERATIONS
OVERVIEW
The Company has changed the last day of its fiscal year to December 31.
Hence, the Company's next fiscal year, which will be an eleven month period,
will end on December 31, 1998.
The current contract base provides sufficient backlog to maintain the
Company through the first four to six months of its next fiscal year. The
backlog as of January 31, 1998 for commercial and government contracts was
$1,626,606 and $9,707,479, respectively. The Company invested in excess of
$3,000,000 over the last two years in its software product OS/COMET. This
investment facilitated the significant contract awards that management believes
would have been impossible otherwise. Commitment to maintain support for the
product will continue through the Company's next fiscal year and is necessary to
deliver the services under contract.
The Company completed development of a new commercial software product,
FotoTag, during its fiscal year ended January 31, 1998. Management expects
revenue to begin on sales of this product in its next fiscal year.
The Company completed expansion of its corporate headquarters in January
1998. The commercial satellite business is projected to continue with strong
sales worldwide and is expected to show moderate increases throughout the end of
the decade, providing additional opportunities for the Company.
Demand for software engineers is expected to provide new customer
opportunities for the Company, but will place a premium on efforts to retain the
current workforce. This risk will put additional pressure on overall payroll
costs, but should be an industry-wide phenomenon. Management believes that the
benefits offered by the Company remain above the level of its competition and
should help to stabilize its workforce. Overhead costs for benefits should
remain flat and the Company expects to maintain the same percentage of wages for
the Company's next fiscal year. Management believes it is important that the
Company not reduce benefits while the demand for software engineers remains
high. To do so and hold costs stable has been a management challenge and will
continue to be so in the near future. Maintaining the Company's comprehensive
benefit plan will also facilitate its ability to sustain an effective recruiting
campaign.
COMPARISON OF YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
Sales for the Company's fiscal year ended January 31, 1998 were
$35,748,719, up 19% from sales of $29,935,691 for its fiscal year ended January
31, 1997. The sales for the Company's fiscal year ended January 31, 1997
increased 18% from sales of $25,291,635 for the Company's fiscal year ended
January 31, 1996. The breakdown between government and commercial sales for
these periods were as follows:
<TABLE>
<CAPTION>
Year ended 1/31/98 Year ended 1/31/97 Year ended 1/31/96
---------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Government $ 23,113,150 65% $ 18,233,915 61% $ 12,892,121 51%
Commercial 12,635,209 35% 11,701,776 39% 12,399,514 49%
-------
=== ================== === =================== ============ ==== ================= ========
$ 35,748,719 100% $ 29,935,691 100% $ 25,291,635 100%
=== ================== ======= === =================== ============ ==== ================= ========
</TABLE>
These sales reflect a 65% to 35% government to commercial split in the
Company's fiscal year ended January 31, 1998 compared to a 61% to 39% split in
the Company's fiscal year ended January 31, 1997 and a 51% to 49% split in the
Company's fiscal year ended January 31, 1996. Government contract revenue
increased in the Company's fiscal year ended January 31, 1998 due to the Company
obtaining additional work with Lockheed on the GPS contract as well as the sale
of OS/COMET licenses for use on the GPS contract. The Company's sales in its
fiscal year ended January 31, 1997 increased from its sales in its fiscal year
ended January 31, 1996 due largely to obtaining the Lockheed contract as well as
additional work on NRL contracts.
Gross profit increased significantly from $5,246,847 (17.5% of sales) to
$9,326,933 (26.1% of sales) for the years ended January 31, 1997 and 1998,
respectively, primarily due to the Company's increase in product sales over the
previous fiscal year and a decrease in labor costs on programs. Gross profit as
a percent of sales for the Company's fiscal year ended January 31, 1996 was
fairly consistent with the Company's fiscal year ended January 31, 1998 at
$5,883,499 (23.3% of sales).
The following chart shows the gross profit breakdown between government and
commercial contracts:
<TABLE>
<CAPTION>
Government: Year ended 1/31/98 Year ended 1/31/97 Year ended 1/31/96
------------------------ ----------------------- -----------------------
<S> <C> <C> <C>
Revenue from services $ 23,113,510 $ 18,233,915 $ 12,892,121
Cost of sales (17,842,830) (14,674,760) (11,167,741)
------------------------
--------------------- -----------------------
Gross profit $ 5,270,680 $ 3,559,155 $ 1,724,380
========================= ====================== =======================
Gross profit as % of Sales 22.8% 19.5% 13.4%
Commercial: Year ended 1/31/98 Year ended 1/31/97 Year ended 1/31/96
------------------------- ----------------------- ----------------------
Revenue from services $ 12,635,209 $ 11,701,776 $ 12,399,514
Cost of sales (8,578,956) (10,014,084) (8,240,395)
------------------------- ----------------------- ------- --------------
Gross profit $ 4,056,253 $ 1,687,692 $ 4,159,119
========================= ======================= ======================
Gross profit as % of Sales 32.1% 14.4% 33.5%
</TABLE>
General and administrative expenses in the Company's fiscal year ended
January 31, 1998 were $7,050,070, 32% or $1,705,859 higher than its fiscal year
ended January 31, 1997 expenses of $5,344,211. This increase resulted primarily
from $706,139 in administrative labor costs due to the addition of new employees
required to administer a public company and to expand the business base of the
company, $290,151 in additional costs related to marketing and recruiting and
$425,000 in severance costs associated with the unplanned departure of several
senior level employees. General and administrative expenses in the Company's
fiscal year ended January 31, 1997 were $5,344,211, 39% or $1,503,542 higher
than its expenses of $3,840,669 in its fiscal year ended January 31, 1996. This
increase resulted primarily from $1,058,951 in public offering costs, $364,155
in additional costs related to marketing and recruiting, and $387,442 in
administrative costs due to the hiring of more employees during the Company's
fiscal year ended January 31, 1997.
Net income increased significantly to $1,345,429 (3.8% of sales) in the
Company's fiscal year ended January 31, 1998. Management attributes the increase
to the increased OS/COMET product sales from 1.5% of total revenue in the
Company's fiscal year ended January 31, 1997 to 5.6% in the Company's fiscal
year ended January 31, 1998. As was mentioned previously in the discussion on
capitalized research and development, the decisions to take a more conservative
position on both the integrated control center asset and the OS/COMET in the
Company's fiscal year ended January 31, 1997 and prior expenditures had a fairly
significant impact on the current year earnings. The net income for the
Company's fiscal year ended January 31, 1998 was decreased for these two actions
by approximately $225,000 or $0.04 per share. Net income dropped from $1,131,741
(4.5% of sales) in the Company's fiscal year ended January 31, 1996 to a net
loss of $486,238 (1.6% of sales) in the Company's fiscal year ended January 31,
1997. Management attributes this decrease to the approximately $1,000,000 of
costs incurred for the public offering during the Company's fiscal year ended
January 31, 1997.
FAS 130 AND 131 DISCLOSURE
The two new financial Accounting Standards, 130 - Reporting Comprehensive
Income and 131 - Disclosures about Segments of an Enterprise and Related
Information, will not be effective until the Company's next fiscal year. At that
time if there is an impact, the statements will be adjusted accordingly. There
appears to be no impact to the statments as a result of these new standards for
the Company's fiscal year ended January 31, 1998.
YEAR 2000 ISSUES
Some existing computer programs will be unable to recognize dates properly
in the Year 2000 ("Y2K") and beyond. During 1997, Exigent conducted an informal
study of its products, systems and operations, including systems under
development, to improve business functionality, to identify those of its
computer hardware, software and process control systems that do not properly
recognize dates after December 31, 1999, and those that are linked to third
parties' systems. Based on this informal study, Exigent recognized that the
OS/COMET product required certain modifications to be Y2K compliant. Those
modifications have been made to the software and are available in the current
release, Version 3.5. Exigent has also initiated communications with certain
third parties whose computer systems' functionality could adversely impact the
Company. These communications will facilitate coordination of any necessary Y2K
conversions and will, additionally, permit Exigent to determine the extent to
which the Company may be vulnerable to the failure of third parties to address
their own Y2K issues.
The costs of Exigent's Y2K compliance efforts are being funded with cash
flows from operations. Some of these costs relate solely to the modification of
existing systems, while others are for new systems that will improve business
functionality. In total, these costs are not expected to be substantially
different from the normal, recurring costs that are incurred for systems
development and implementation, in part due to the reallocation of internal
resources and the deferral of other projects. As a result, these costs are not
expected to have a material adverse effect on Exigent's overall results of
operations or cash flows.
The assessment of the costs of Exigent's Y2K compliance effort, and the
timetable for the Company's planned completion of its own Y2K modifications, are
management's best estimates. These estimates were based upon numerous
assumptions regarding future events, including assumptions as to the continued
availability of certain resources, and, in particular, personnel with expertise
in this area, and as to the ability of such personnel to locate and either
re-program or replace, and test, all affected computer hardware, software and
process control systems in accordance with the Company's planned schedule. There
can be no guarantee that these estimates will prove accurate, and actual results
could differ from those estimated if these assumptions prove inaccurate.
Based upon progress to date, however, Exigent believes that it is unlikely
that the foregoing factors will cause actual results to differ significantly
from those estimated. As to the systems of the third parties that are linked to
Exigent's, there can be no guarantee that those of such systems that are not now
Y2K-compliant will be timely converted to compliance. Additionally, there can be
no guarantee that third parties of business importance to Exigent will
successfully and timely reprogram or replace, and test, all of their own
computer hardware, software and process control systems.
OUTLOOK
This section captioned "Outlook" and other parts of this Annual Report on
Form 10-K include certain forward-looking statements within the meaning of the
federal securities laws. Actual results and the occurrence or timing of certain
events could differ materially from those projected in any of such
forward-looking statements due to a number of factors, including those set forth
below and elsewhere in this Form 10-K. See "Other Factors Relating to
Forward-Looking Statements" below.
DIVERSIFICATION AND LONG TERM GROWTH. The Company expects to diversify its
business by developing additional COTS products for sale in both commercial and
government markets. The Company currently plans to seek opportunities for long
term growth through acquisitions, development of products for commercial
applications, and leveraging the Company's existing technologies and products.
PRODUCT DEVELOPMENT. As described above (see "Business - Product
Development" and "Business - Research and Development"), the Company is
developing new products and product offerings, including the ATE and the ICC.
The Company plans to investigate other new product development opportunities as
part of its effort to expand its product offerings and market.
OTHER FORWARD-LOOKING STATEMENTS
Statements contained in this Form 10-K that are not historical facts are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. In addition, words such as
"believes," "anticipates," "expects" and similar expressions are intended to
identify forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties, and other factors which may cause the
actual results, performance or achievements of the Company or events, or timing
of events, relating to the Company to differ materially from any future results,
performance or achievements of the Company or events, or timing of events,
relating to the Company expressed or implied by such forward-looking statements.
The Company cannot assure that it will be able to anticipate or respond timely
to changes which could adversely affect its operating results in one or more
fiscal quarters. Results of operations in any past period should not be
considered indicative of results to be expected in future periods. Fluctuations
in operating results may result in fluctuations in the price of the Company's
common stock.
The more prominent known risks and uncertainties inherent in the Company's
business are set forth below. However, this section does not discuss all
possible risks and uncertainties to which the Company is subject, nor can it be
assumed that there are not other risks and uncertainties which may be more
significant to the Company.
Such other factors include, among others, those described in Item 1.
"Business," and this Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operation " and the following:
continued dependence on a small number of significant customers for
substantially all of the Company's revenue and the potential loss of
one or more of the Company's principal customers;
continued dependence on government agencies for a significant portion
of the Company's revenue;
the shortage of qualified and competent software engineers and the
risk that the Company will be unable to retain its key employees and
managers, especially in the event the Company loses one or more
contracts or principal customers;
dependence on the satellite command and control industry and the
potential failure to diversify the Company's product and service
offerings and to expand its markets for commercial applications;
the unanticipated expense of new product development, the potential
failure by the Company to develop new products under development and
others to be developed in the future successfully or on a timely
basis, and the failure of such products to achieve substantial market
acceptance;
the potential loss of customers or opportunities because of the
Company's relationship as a competitor to some of its principal
customers;
the potential loss of other customer opportunities because of the
Company's subcontractor relationship with Motorola SatCom on the
IRIDIUM project;
the possibility that Motorola will elect not to move forward with the
Celestri project, or that Motorola may choose a vendor other than the
Company; and
the potential impact of increases in salary rates due to the amount of
revenue related to services.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE>
Item 8. Financial Statements and Supplementary Data
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Exigent International, Inc.
We have audited the accompanying consolidated balance sheets of Exigent
International, Inc. (a Delaware corporation) and subsidiaries as of January 31,
1998 and 1997, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for the years ended January 31, 1998, 1997
and 1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Exigent
International, Inc. and subsidiaries as of January 31, 1998 and 1997, and the
results of its operations and its cash flows for the years ended January 31,
1998, 1997 and 1996 in conformity with generally accepted accounting principles.
By:/s/Charles W. Hoyman, Jr., President
-------------------------------------
Hoyman, Dobson & Company, P.A.
Melbourne, Florida
April 4, 1998
<PAGE>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
JANUARY 31, 1998 AND 1997
ASSETS
<TABLE>
<CAPTION>
January 31,
-----------------------------------------
1998 1997
------------------- ------------------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 3,640,508 $ 428,705
Accounts receivable, pledged 2,747,383 2,909,746
Costs and estimated earnings in excess
of billings on uncompleted contracts, pledged 3,823,768 3,836,828
Prepaid expenses 64,288 60,428
Inventory 5,288 -
Income taxes receivable - 796,143
Deferred income taxes 663,000 333,000
-------------- -------------
TOTAL CURRENT ASSETS 10,944,235 8,364,850
-------------- -------------
PROPERTY AND EQUIPMENT, pledged
Cost 5,304,630 4,043,152
Accumulated depreciation (3,135,923) (2,195,150)
-------------- -------------
NET PROPERTY AND EQUIPMENT 2,168,707 1,848,002
-------------- -------------
OTHER ASSETS
Software development costs, net of
accumulated amortization of $195,714
in 1998 and $217,137 in 1997 1,508,887 663,599
Organization costs 10,638 11,398
Deposits 43,466 40,611
Cash surrender value of life insurance 17,028 20,269
-------------- -------------
TOTAL OTHER ASSETS 1,580,019 735,877
-------------- -------------
TOTAL ASSETS $ 14,692,961 $ 10,948,729
============== =============
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
JANUARY 31, 1998 AND 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
January 31,
-----------------------------------
1998 1997
-------------- ----------------
CURRENT LIABILITIES
<S> <C> <C>
Line of credit $ - $ 182,000
Accounts payable 392,799 1,100,123
Accrued expenses 3,401,311 2,179,200
Billings in excess of costs and estimated
earnings on uncompleted contracts 1,252,700 418,426
Income taxes payable 242,524 -
Current portion, long-term debt 511,111 248,775
-------------- -------------
TOTAL CURRENT LIABILITIES 5,800,445 4,128,524
-------------- -------------
LONG-TERM LIABILITIES
Long-term debt, less current portion 466,667 311,111
Deferred income taxes 645,000 246,000
Other liabilities - 5,541
-------------- -------------
TOTAL LONG-TERM LIABILITIES 1,111,667 562,652
-------------- -------------
TOTAL LIABILITIES 6,912,112 4,691,176
-------------- -------------
STOCKHOLDERS' EQUITY
Class A preferred shares, $.01 par value
5,000,000 shares authorized, 688,792
and 697,320 issued and outstanding at
January 31, 1998 and 1997, respectively;
$2.50 per share liquidation/dissolution
preference
6,888 6,973
Common stock, $.01 par value, 30,000,000 shares
authorized, 3,872,655 issued and outstanding
at January 31, 1998: 3,786,600 issued and
outstanding at January 31, 1997
38,726 37,866
Class B common stock, $.01 par value; 600,000
shares authorized, no shares issued or outstanding - -
Paid in capital 1,585,007 1,407,915
Retained earnings 6,150,228 4,804,799
-------------- -------------
TOTAL STOCKHOLDERS' EQUITY 7,780,849 6,257,553
-------------- -------------
COMMITMENTS AND CONTINGENCIES - -
-------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 14,692,961 $ 10,948,729
============== =============
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
1998 1997 1996
----------------- --------------- ---------------
<S> <C> <C> <C>
REVENUES FROM SERVICES $ 35,748,719 $ 29,935,691 $ 25,291,635
COST OF SALES (26,421,786) (24,688,844) (19,408,136)
----------------- --------------- ---------------
GROSS PROFIT 9,326,933 5,246,847 5,883,499
GENERAL AND ADMINISTRATIVE
EXPENSES (Includes $1,058,951 of
public offering costs in 1997) (7,050,070) (5,344,211) (3,840,669)
RESEARCH AND DEVELOPMENT COSTS (47,854) (239,986) (154,856)
----------------- --------------- ---------------
OPERATING INCOME (LOSS) 2,229,009 (337,350) 1,887,974
----------------- --------------- ---------------
OTHER INCOME (EXPENSE)
Interest income 36,887 55,939 33,987
Interest expense (91,276) (55,119) (26,311)
Loss on disposal of fixed assets (4,655) - (8,509)
Other, net 6,229 - -
----------------- --------------- ---------------
TOTAL OTHER INCOME (EXPENSE) (52,815) 820 (833)
----------------- --------------- ---------------
INCOME (LOSS) BEFORE INCOME TAXES 2,176,194 (336,530) 1,887,141
INCOME TAX EXPENSE (830,765) (149,708) (755,400)
----------------- --------------- ---------------
NET INCOME (LOSS) $ 1,345,429 $ (486,238) $ 1,131,741
================= =============== ===============
EARNINGS (LOSS) PER SHARE-BASIC $ .29 $ (.11) $ .29
================= =============== ===============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC 4,617,712 4,339,834 3,859,092
================= =============== ===============
EARNINGS (LOSS) PER SHARE - DILUTED $ .29 $ (.13) $ .29
================= =============== ===============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 4,647,290 3,642,514 3,859,092
================== ============== ===============
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
Common Stock Class A Preferred
--------------------------------- -------------------------
Shares Amount Shares Amount
--------------- -------------- ------------ ---------
<S> <C> <C> <C> <C>
BALANCE JANUARY 31, 1995 768,400 $ 7,684 - $ -
Net income - - - -
Cash dividends of $.30 per common share
($.05 giving retroactive effect
of stock exchange) - - - -
--------------- ----------- ------------ -----------
BALANCE JANUARY 31, 1996 768,400 7,684 - -
Issued 46,986 shares of treasury stock
to fund accrued bonuses, cost $4.25.
Market value of Company's common
stock $14.03. - - - -
Issued 38,600 shares of treasury
stock to fund accrued ESOP
contributions, cost $4.25. Market value
of Company's common stock $14.03. - - - -
Issued 18,552 shares of treasury stock for
bonuses and management incentives, cost
$4.25. Market value of Company's common
stock $14.03. - - - -
Cash dividend of $.45 per common share
($.075 giving retroactive effect of - - - -
stock exchange)
Issued warrants for services - - - -
Retired 71,080 shares of treasury stock (71,080) (711) - -
5 for 1 exchange of stock 2,789,280 27,893 - -
Issued one share of class A preferred
stock for every five shares of common
stock for total issuance of 697,320 shares
of class A preferred stock - - 697,320 6,973
Issued 300,000 shares of stock for services
and cash 300,000 3,000 - -
Issued warrants for cash - - - -
Net loss - - - -
-------------- ----------- ------------ -----------
BALANCE JANUARY 31, 1997 3,786,600 $ 37,866 697,320 $ 6,973
Exercise of stock options 73,800 738 - -
Exercise of warrants 3,852 38 - -
Shares retired (125) (1) - -
Conversion of 8,528 shares of class A
preferred stock for 8,528 shares of common stock 8,528 85 (8,528) (85)
Net income - - - -
-------------- ------------ ------------ -----------
BALANCE JANUARY 31, 1998 3,872,655 $ 38,726 688,792 $ 6,888
============== ============ ============ ============
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class B Common Total
- ------------------------ Paid In Retained Treasury Stockholders
Shares Amount Capital Earnings Stock Equity
- ---------- ------------ --------------- --------------- --------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
- - 29,030 4,646,800 (744,763) 3,938,751
- - - 1,131,741 - 1,131,741
- - - (177,955) - (177,955)
- ---------- ------------ --------------- --------------- --------------- ---------------
- - 29,030 5,600,586 (744,763) 4,892,537
- - 459,523 - 199,690 659,213
- - 377,508 - 164,050 541,558
- - 181,439 - 78,846 260,285
- - - (309,549) - (309,549)
- - 17,497 - - 17,497
- - (301,466) - 302,177 -
- - (27,893) - - -
- - (6,973) - - -
- - 675,000 - - 678,000
- - 4,250 - - 4,250
- - - (486,238) - (486,238)
- ---------- ----------- ---------------- ---------------- -------------- ---------------
- - 1,407,915 4,804,799 - 6,257,553
- - 165,574 - - 166,312
- - 11,518 - - 11,556
- - - - - (1)
- - - - - -
- - - 1,345,429 - 1,345,429
- ---------- ----------- ---------------- ----------------- -------------- ---------------
- $ - $ 1,585,007 $ 6,150,228 $ - $ 7,780,849
========== =========== ================ ================= ================ ================
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
1998 1997 1996
---------------- ---------------- ------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C>
Cash received from customers $ 36,769,657 $ 29,559,470 $ 24,719,672
Interest received 36,887 55,939 33,987
Cash paid to suppliers and employees (31,752,360) (26,398,002) (21,621,853)
Public offering costs - (366,454) -
Interest paid (91,276) (55,119) (26,311)
Income taxes received (paid) 276,902 (1,115,851) (512,600)
---------------- ---------------- ------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 5,239,810 1,679,983 2,592,895
---------------- ---------------- ------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Cash paid for acquisition of capital assets (1,306,693) (1,382,163) (1,122,226)
Cash paid for organizational costs - (11,398) -
Cash proceeds from the sale of capital
assets 14,612 - 36,878
Cash paid for capitalized software
development (1,149,685) (556,167) (161,785)
---------------- ----------------- -------------------
NET CASH USED IN INVESTING
ACTIVITIES (2,441,766) (1,949,728) (1,247,133)
----------------- ----------------- -------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net borrowings under line of credit (182,000) 182,000 (900,000)
Proceeds from issuance of long-term debt 800,000 800,000 -
Principal payments on long-term debt (382,108) (251,335) (6,363)
Cash received from exercise of common
stock options 166,311 3,000 -
Cash received from exercise of warrants 11,556 4,250 -
Dividends paid - (309,549) (177,955)
---------------- ---------------- ------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 413,759 428,366 (1,084,318)
---------------- ---------------- ------------------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 3,211,803 158,621 261,444
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 428,705 270,084 8,640
---------------- ---------------- ------------------
CASH AND CASH EQUIVALENTS, END
OF YEAR 3,640,508 $ 428,705 $ 270,084
================ ================ ==================
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998 1997 1996
-------------- ------------- ---------------
RECONCILIATION OF NET INCOME (LOSS) TO
NET CASH PROVIDED BY OPERATING
ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) $ 1,345,429 $ (486,238) $ 1,131,741
-------------- -------------- --------------
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 1,271,878 855,252 549,621
Loss on disposal of fixed assets 4,655 - 8,509
Public offering costs - 692,495 -
Decrease (increase) in accounts receivable 162,363 (1,458,502) 134,979
Decrease (increase) in costs and estimated earnings
in excess of billings on uncompleted contracts 13,060 861,295 (878,236)
Decrease (increase) in income tax refunds
receivable 796,143 (796,143) -
Decrease (increase) in prepaid expenses (3,860) 62,378 (108,316)
Decrease (increase) inventory (5,288) - -
Decrease (increase) in deferred income taxes (330,000) (32,000) (49,700)
Decrease (increase) in deposits (2,855) (5,808) (3,495)
Decrease (increase) in cash surrender value of life
insurance 3,241 898 (1,425)
Increase (decrease) in accounts payable (707,324) 878,104 72,979
Increase (decrease) in accrued expenses 1,222,111 1,026,052 1,272,207
Increase (decrease) in deferred income taxes - long-term 399,000 166,000 80,000
Increase (decrease) in billings in excess of costs and estimated
earnings on uncompleted contracts 834,274 220,087 171,294
Increase (decrease) in income taxes payable 242,524 (304,000) 212,500
Increase (decrease) in other liabilities (5,541) 113 237
-------------- -------------- --------------
Total adjustments 3,894,381 2,166,221 1,461,154
-------------- --------------- --------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 5,239,810 $ 1,679,983 $ 2,592,895
============== ============== ==============
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
At January 31, 1996 the Company had accrued $1,375,959 in bonus and ESOP
payments. The Company paid $175,188 of this amount in cash during the year ended
January 31, 1997. In addition, the Company issued 46,986 shares of treasury
stock with a cost of $4.25 per share $(199,690) for accrued bonuses and 38,600
shares of treasury stock with a cost of $4.25 per share $(164,050) for the ESOP
payable. The difference between the cost and market value of the treasury stock
issued $(837,031), was recorded as additional paid in capital when the shares
were issued.
On May 29, 1996, the Company accrued a $260,285 bonus and issued 18,552 shares
of treasury stock with a cost of $4.25 per share or $78,846, for bonus and
management incentive awards. The Company's stock was valued at $14.03 on the
date of the issuance; therefore, the difference between cost and market of
$181,439 was recorded as additional paid in capital.
On January 30, 1997, the following noncash transactions occurred:
The Company stockholders exchanged 100% of Software Technology, Inc.'s
outstanding common stock, 697,320 shares, for 3,486,600 shares of Exigent's
common stock and 697,320 shares of Exigent's Class A preferred stock which
reduced paid in capital by $34,866.
The Company retired 71,080 shares of treasury stock with a cost of $4.25 per
share ($302,177). The remaining balance of $301,466, representing the difference
between the par value and cost of the treasury stock issued, was recorded as a
reduction of paid in capital.
The Company issued 300,000 shares of Exigent common stock to Monogenesis
Corporation in exchange for cash and services performed related to the business
combination (See Note 1). The shares had been valued at $2.25 per share
($675,000) by independent appraisal for purposes of administration of the
Company's employee stock ownership plan. The Company received $3,000 in cash and
expensed services which were reflected at a value of $675,000. The Company
reported an increase in the par value of its stock of $3,000 and additional paid
in capital of $675,000 as a result of the transaction.
The accompanying notes are an integral part of this statement.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS - Exigent International, Inc. (Exigent), a Delaware corporation, was
formed on March 25, 1996 as a holding company. On January 30, 1997, it acquired
all of the outstanding stock of Software Technology, Inc. (STI) in exchange for
stock of Exigent. STI, therefore, became a wholly owned subsidiary of Exigent
and was the consolidated group's (the "Company") only source of business
operations at January 30, 1997. In March, 1997 FotoTag, Inc. (FotoTag) was
formed as a wholly owned subsidiary of Exigent. Exigent, from the date of
formation through January 30, 1997, had no material activity other than the
issuance of 300,000 shares of the Company's stock for services related to the
reorganization.
STI is a systems and software engineering firm providing innovative technical
solutions for government and industry throughout the U.S. STI also produces
OS/COMET - a commercially available command and control development and support
system. STI provides systems and software engineering services and commercial
off the shelf products for real-time command, control, and data acquisition
systems. STI retains expertise in leading edge technologies supporting
applications ranging from bit slice microprocessor software to large realtime
systems. STI specializes in command and control applications for ground, flight,
test, and process control and has extensive expertise in graphics, simulations,
and information systems.
FotoTag was created as a subsidiary of Exigent in 1997 to provide the structure
for concentration on tracking and control system solutions for international
high technology applications. The subsidiary's first product, also called
FotoTag(R), is used for tracking airport and airline passengers and their
checked bags.
Most recently, the FotoTag subsidiary designed Active Tracking Engine(TM) (ATE),
a new system platform for rapid application development of tracking objects in
global domains. This subsidiary has positioned ATE for implementation in
end-user applications as well as horizontal marketing middleware for system
integrators.
POOLING OF INTERESTS - On January 30, 1997 Exigent acquired STI in a business
combination accounted for as a pooling of interests. STI became a wholly owned
subsidiary of the Company through the exchange of 3,486,600 shares of Exigent's
common stock and 697,320 shares of Exigent's Class A preferred stock for all of
the outstanding stock and warrants of STI. The accompanying financial statements
for the year ended January 31, 1997 are based on the assumption that the
companies were combined for the full year, and financial statements of prior
years have been restated to give effect to the combination. There were no
adjustments to net assets or net income during the fiscal year as a result of
the entities combining.
CONSOLIDATION POLICY - The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries.
Intercompany transactions and balances have been eliminated in consolidation.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE AND COST RECOGNITION - The Company recognizes revenues on
time-and-material and cost-plus-fixed-fee contracts as time is expended and
costs are incurred. The fee on cost-plus fixed fee contracts is recognized
ratably over total costs as they are incurred. Revenues and costs from fixed
price contracts are recognized on the percentage-of-completion method, measured
by the percentage of total costs incurred to date to total estimated costs for
each contract. This method is used because management considers total expended
costs to be the best available measure of progress on these contracts.
Contract costs include all direct material and labor costs and those indirect
costs related to contract performance such as indirect labor, supplies, repairs,
and depreciation costs.
Certain general and administrative expenses (including bid and proposal
expenses) allowable in accordance with United States Government procurement
practices are included in contract costs because they are identifiable with
contract revenue.
Adjustments to cost estimates are made periodically, and losses expected to be
incurred on contracts in progress are charged to operations in the period such
losses are determined. The aggregate of costs incurred and income recognized on
uncompleted contracts in excess of related billings is shown as a current asset,
and the aggregate of billings on uncompleted contracts in excess of related
costs incurred and income recognized is shown as a current liability.
The Company is also engaged as a seller of a number of software products.
Generally, revenue is recognized upon delivery of the software. After the sale,
if significant obligations remain or significant uncertainties exist about
customer acceptance of the software, revenue is deferred until the obligations
are satisfied or the uncertainties are resolved. When collectibility of the
receivable is in doubt, revenue is recognized under the installment method or
cost recovery method. Revenue from software services is recognized as the
services are performed.
CASH EQUIVALENTS - For purposes of the statement of cash flows, cash equivalents
include time deposits, certificates of deposit, and all highly liquid debt
instruments with original maturities of three months or less.
CONTRACT AND OTHER RECEIVABLES - The Company considers contract and other
receivables to be fully collectible; accordingly, no allowance for doubtful
accounts is required.
DEPRECIATION - The cost of property, plant and equipment is depreciated over the
estimated useful lives of the related assets. Depreciation is computed on the
straight-line method, accelerated cost recovery system and the modified
accelerated cost recovery system as appropriate.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
AMORTIZATION - The costs of capitalized research and development costs are
amortized over their estimated useful lives of three years. Amortization is
computed on the straight-line method. The amortization method used is the
greater of the amount computed using (a) the ratio that current gross revenues
for a product bear to the total of current and anticipated future gross revenues
for that product or (b) the straight-line method over the remaining estimated
economic life of the product.
INCOME TAXES - Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due and
deferred taxes related primarily to differences between the basis of vacation
and sick leave and research and development costs for financial and income tax
reporting. The deferred tax assets and liabilities represent the future tax
return consequences of those differences, which will either be taxable or
deductible when the assets and liabilities are recovered or settled.
SOFTWARE DEVELOPMENT COSTS - In accordance with Statement of Financial
Accounting Standard No. 86, "Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed," the Company capitalizes the direct costs
and allocated indirect expenses associated with the development of software
products. Initial costs are charged to operations as research prior to the
development of a detailed program design or a working model. Costs incurred
subsequent to the product release, and research and development performed as
contractual requirements are charged to operations.
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE - During fiscal year ended January
31, 1998, the Company adopted the provisions of Statement of Financial
Accounting (SFAS) No. 128, "Earnings per Share". SFAS No. 128 superseded APB
Opinion No. 15, "Earnings Per Share", and specifies the computation,
presentation, and disclosure requirements for earnings per share for entities
with publicly held common stock or potential common stock. It also requires that
prior period earnings per share be restated to conform to the requirements of
SFAS No. 128.
Basic earnings (loss) per share for the years ended January 31, 1998, 1997 and
1996 have been computed by dividing net income (loss) by the weighted average
number of common shares outstanding. Diluted earnings per share for the years
ended January 31, 1998 and 1997 have been computed by dividing net income by the
weighted average number of common shares and dilutive potential common shares,
outstanding. Diluted earnings (loss) per share for the year ended January 31,
1996 is the same as basic earnings (loss) per share because there were no
dilutive potential shares outstanding during this year.
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amount
reported in the balance sheet for cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses approximates fair value
because of the immediate or short-term maturity of these instruments.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED) -
As of January 31, 1998 and 1997 the fair value of indebtedness approximates its
carrying value and was determined using market interest rates for debt with
similar maturities.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 2 - ACCOUNTS RECEIVABLE
The following is a summary of accounts receivable:
January 31
--------------------------------------
1998 1997
---------------- ----------------
Contract receivables $ 2,482,463 $ 2,658,827
Retainage receivable 229,954 237,685
Other receivables 34,966 13,234
---------------- ----------------
Total accounts receivable $ 2,747,383 $ 2,909,746
================ ================
The retainage receivable balance represents contracts which provide for
retainage provisions against billable amounts and are due upon completion of the
contracts and acceptance by the customer.
The Company expects to collect all receivables within the next fiscal year.
NOTE 3 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment:
<TABLE>
<CAPTION>
January 31
------------------------------------ Estimated
1998 1997 Life
--------------- ---------------- ---------
<S> <C> <C> <C>
Furniture and equipment $ 585,663 $ 558,082 3-8 years
Vehicles 15,703 15,703 5 years
Computer equipment 4,607,879 3,400,579 3-5 years
Leasehold improvements 95,385 68,788 10 years
--------------- ----------------
Total cost 5,304,630 4,043,152
Less accumulated depreciation (3,135,923) (2,195,150)
--------------- ----------------
Net property and equipment $ 2,168,707 $ 1,848,002
=============== ================
</TABLE>
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 3 - PROPERTY AND EQUIPMENT (CONTINUED)
Depreciation expense charged to general and administrative expense in 1998, 1997
and 1996 was $394,116, $131,535 and $78,737, respectively. Depreciation expense
charged to applied overhead in 1998, 1997 and 1996 was $359,528, $306,916 and
$218,555, respectively. Depreciation expense charged directly to cost of sales
in 1998, 1997 and 1996 was $213,077, $308,044 and $167,635, respectively.
NOTE 4 - LINE OF CREDIT
STI has a $1,800,000 line of credit available from a bank as of January 31, 1998
and 1997. The note bears interest on the unpaid principal balances at an
interest rate per annum equal to the bank's prime rate plus .25%. As of January
31, 1998 and 1997 the outstanding draws against the lines were $0 and $182,000,
respectively. The interest rate at January 31, 1998 and 1997 was 8.25%. All
accounts receivable, equipment, furniture and fixtures of STI are pledged as
collateral on the line of credit.
An additional line of credit was entered into for $500,000 to fund the startup
expenses associated with the new FotoTag entity. This note bears the same terms
as the previously discussed line of credit. The note was signed in August with
an effective date of June 15, 1997. No amounts have been drawn as of January 31,
1998.
The weighted average interest rate on short-term borrowings outstanding at
January 31, 1998 was 8.25%.
NOTE 5 - ACCRUED EXPENSES
Accrued expenses consist of the following:
January 31
-----------------------------------
1998 1997
--------------- ---------------
Accrued bonuses $ 150,000 $ 55,000
Accrued payroll taxes 680,456 647,262
Accrued fringe benefits 1,338,515 1,113,552
Accrued pension and profit sharing 343,064 246,715
Accrued ESOP payment 137,225 49,343
Accrued 401K payable 220,351 67,328
Accrued severance pay 265,000 -
Other accrued expenses 266,700 -
--------------- ---------------
Total accrued expenses $ 3,401,311 $ 2,179,200
=============== ===============
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 6 - LONG TERM DEBT
Long term debt outstanding consists
of the following:
January 31
-----------------------------
1998 1997
-------------- --------------
Unsecured note payable to bank,
payable in thirty-six monthly
installments of $630, including
interest at 7.25% beginning monthly
October 1994, ending August 1997.
$ - $ 4,330
Note payable to bank, payable
in monthly installments of $22,222
through February 28, 1999. Interest
is payable on the unpaid balance at
an interest rate per annum equal to
the bank's prime rate plus .375%. The
note is collateralized by all accounts
receivable, equipment and furniture
and fixtures of STI and prohibits STI
from declaring or paying dividends
in excess of the lesser of 25% of net
income or $100,000 without prior lender
approval.
288,889 555,556
Note payable to bank, payable in monthly
installments of $22,222, through August
15, 2000. Interest is payable on the
unpaid balance at a per annum interest rate
equal to the bank's prime rate plus
.375%. The note is collateralized by all
accounts receivable, equipment, furniture
and fixtures of STI and prohibits STI
from declaring or paying dividends in
excess of the lesser of 25% of net income
or $100,000 without prior lender approval.
688,889 -
----------- --------------
TOTAL LONG-TERM DEBT 977,778 559,886
Less: current portion of long-term debt (511,111) (248,775)
----------- --------------
TOTAL LONG-TERM DEBT, less current portion$ 466,667 $ 311,111
=========== ==============
Future maturities of long-term debt as
of January 31, 1998 are as follows:
Amount
--------------
1999 511,111
2000 311,111
2001 155,556
==============
$ 977,778
==============
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 7 - CLASS A PREFERRED STOCK
Each share of Class A preferred stock is convertible to a share of common stock
at the option of the holder. Each share of Class A preferred stock participates
equally with each share of common stock upon declaration of dividends. Upon
liquidation or dissolution, the Class A preferred stockholders are entitled to
receive $2.50 per share prior to any distribution to holders of common shares
and Class B common shares. The Class A preferred shares are not subject to call
or redemption. The dividends of the Class A preferred stock are noncumulative.
The issuance of the preferred stock has been reflected as a stock dividend and
is given retroactive recognition in all earnings (loss) and dividends per share
disclosures.
NOTE 8 - STOCK WARRANTS
Common stock warrants and related exercise prices have been adjusted, where
applicable, to reflect the effects of the aforementioned common stock and
warrant exchange.
On March 20, 1996, STI sold 174,996 ten year capital stock purchase warrants to
its financial advisors for one cent each to purchase 174,996 shares of STI's
capital stock, for a fixed exercise price of $3 per share. The warrants were
issued for services rendered in connection with the registration offer. STI
determined the value of these warrants to be $17,497 and recorded this amount in
general and administrative expenses in fiscal year 1997. The exercise price of
the warrants was greater than their fair market value on the date issued,
therefore they were deemed to be valued at the $17,497 purchase price.
On January 30, 1997, the Company issued common stock purchase warrants in the
amount of 229,896, to participants of the Software Technology, Inc. Restated
Employee Stock Ownership Plan and Trust; 240,378 to other affiliates of the
Company and 174,996 to a company engaged as a consultant. In addition, on
January 30, 1997, the Company issued 425,000 warrants to Monogenesis Corporation
for $4,250 in cash. Each warrant entitles the holder to purchase one share of
Exigent's common stock at an exercise price of $3 per share. The terms of these
warrants provide that they may be exercised during the period beginning January
30, 1997 and ending three years from that date.
The exercise price of some of the warrants was greater than their fair
market value at January 31, 1998. These warrants were included in the diluted
earnings per share calculation at Note 19. The exercise price of all warrants
was greater than their fair market value at January 31, 1997. At January 31,
1998, 1,664 warrants were canceled. Total warrants outstanding at January 31,
1998 and 1997 were 1,064,754 and 1,070,270, respectively.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 9 - EMPLOYEE RETIREMENT PLANS
The Company has a defined contribution pension plan that covers substantially
all employees who have met certain age and length of service requirements.
Contributions to the plan were 10% of eligible compensation for 1998 and 5% of
eligible compensation for 1997 and 1996. Eligible compensation for the years
ended January 31, 1998, 1997 and 1996 was approximately $13,810,000, $12,377,000
and $10,958,000, respectively. For the years ended January 31, 1998, 1997 and
1996, the amount of pension expense was $1,381,023, $618,838, and $547,894,
respectively.
The Company also sponsors a profit-sharing plan which allows substantially all
full-time employees to defer compensation under Section 401(k) of the Internal
Revenue Code and the employer to electively contribute to the plan. Employer
contributions to the plan are made at the discretion of the Board of Directors.
The employer contributions made to the plan for the years ended January 31,
1998, 1997 and 1996 were $0, $618,838 and $547,894, respectively.
NOTE 10 - EMPLOYEE STOCK OWNERSHIP PLAN
The Company has an employee stock ownership plan (ESOP). Contributions to this
plan are at the discretion of the Board of Directors. Full time employees who
have attained the age of twenty-one (21) are eligible to participate in the
plan. Contributions to the plan are allocated annually to eligible employees
proportionate to their compensation, not including overtime and bonuses.
Employee stock ownership plan contributions charged to operations and applied to
overhead amounted to $0 and $552,409, respectively, for the year ending January
31, 1998, $ -0- and $247,535, respectively, for the year ending January 31,
1997, and $542,064 and $ -0-, respectively, for the year ending January 31,
1996. The ESOP has 2,056,142, 2,045,316 and 1,676,640 shares of the total issued
and outstanding stock respectively at January 31, 1998, 1997 and 1996.
Dividends paid on the ESOP shares, as well as other shares, are considered to be
reductions in retained earnings. The shares owned by the ESOP are considered to
be outstanding shares and therefore included in the earnings per share
calculation.
The plan acquired 62,000, 0 and 137,076 shares during the Company's fiscal years
ended January 31, 1998, 1997 and 1996, respectively, from shareholders. In
addition, in fiscal year 1996, 231,600 shares were purchased from treasury
stock. Shares distributed from the plan as a result of termination of employment
were 51,174, 0, and 0 during the Company's fiscal years ended January 31, 1998,
1997 and 1996. The shares' fair market value was determined based on the trading
value of common shares of the Company at January 31, 1998 and on independent
appraisal for January 31, 1997 and 1996.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 11 - LEASE OBLIGATIONS
Office space and equipment is leased under operating leases expiring in various
years through 2007.
The Company's corporate headquarters are located in Melbourne, Florida near the
"Space Coast." The Company is currently leasing a 29,000 square foot building
pursuant to a ten year lease which will expire on December 1, 2005. It has the
right to renew the lease for two additional five year terms and has an option to
purchase the property which may be exercised during certain periods prior to the
expiration of the fifth year and of the tenth year of the lease. The purchase
price is the fair market value of the property determined by appraisal, but in
no event less than the outstanding balance on the mortgage.
In addition to the corporate headquarters, the Company leases 15,296 square feet
of space in Alexandria, Virginia which lease will expire August 31, 1998
(subject to the right to renew for up to two additional one year terms),
approximately 2,494 square feet of space in Aurora, Colorado which lease will
expire October 31, 1999, approximately 1,946 square feet in Colorado Springs,
Colorado, which lease will expire July 1, 2000, another 1,935 square feet of
space in LaPlata, Maryland which lease will expire October 14, 1998 (subject to
the right to renew for up to three additional one year terms) and approximately
2,971 square feet of space in Mesa, Arizona which will expire November 20, 1999.
See also Note 23 - Subsequent Events.
Minimum future rental payments under non-cancelable operating leases having
remaining terms in excess of one year as of January 31, 1998 for each of the
next five years and in the aggregate are:
Year ending January 31: Amount
-----------
1999 $ 871,006
2000 615,911
2001 581,416
2002 586,230
2003 593,431
Subsequent to 2003 607,658
-----------
Total minimum future rental payments $3,855,652
===========
Rent expense for the years ended January 31, 1998, 1997 and 1996 was $830,609,
$649,638 and $549,573, respectively. Rent expense was offset by sublease rental
income for the years ended January 31, 1998, 1997 and 1996 of $15,064, $66,655
and $62,103, respectively.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 12 - ECONOMIC DEPENDENCY
The Company sold a substantial portion of its products and services to three
major customers during its fiscal years ended January 31, 1998 and 1997 and two
in its fiscal year ended January 31, 1996 in the Satellite Command and Control
Industry. Transactions with these major customers; a commercial customer, a
government contractor and a group of U.S. Government agencies, consisted of the
following:
<TABLE>
<CAPTION>
1998 Customer 1 Customer 2 Customer 3
----------- ------------- -------------- --------------
<S> <C> <C> <C>
Revenues $ 11,700,279 $ 11,435,270 $ 5,157,842
Accounts receivable - at year end 913,281 737,996 642,109
Costs and estimated earnings in excess of billings
on uncompleted contracts - at year end 1,904,120 623,662 444,411
Billings in excess of costs and estimated earnings
on uncompleted contracts - at year end - (363,766) (30,061)
1997 Customer 1 Customer 2 Customer 3
----------- ------------- ------------- --------------
Revenues $ 10,308,204 $ 7,840,135 $ 3,133,871
Accounts receivable - at year end 1,313,767 - 164,184
Costs and estimated earnings in excess of billings
on uncompleted contracts - at year end 1,753,614 1,108,647 415,899
Billings in excess of costs and estimated earnings
on uncompleted contracts - at year end (54,673) - (173,823)
1996 Customer 1 Customer 2
----------- --------------- --------------
Revenues $ 10,564,099 $ 6,076,692
Accounts receivable - at year end 763,374 -
Costs and estimated earnings in excess of
billings on uncompleted contracts - at year end 3,241,681 701,094
Billings in excess of costs and estimated
earnings on uncompleted contracts - at year end (149,569) (16,868)
</TABLE>
NOTE 13 - SOFTWARE DEVELOPMENT COSTS
Some software development costs are charged to operations when incurred and are
included in operating expenses. The amounts charged for the years ending January
31, 1998, 1997 and 1996 were $47,854, $239,986 and $154,856, respectively.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 13 - SOFTWARE DEVELOPMENT COSTS (CONTINUED)
During the years ended January 31, 1998, 1997 and 1996, $1,149,685, $556,167 and
$161,785, respectively, of software development costs for computer software to
be sold or otherwise marketed were capitalized. The amortization of costs
related to computer software product development held for sale was $304,397,
$108,757 and $84,694 for the years ended January 31, 1998, 1997 and 1996,
respectively.
In management's opinion, the net realizable value of future sales exceeds the
carrying value of unamortized software development costs, therefore, no
adjustment to carrying value is required.
NOTE 14 - INCOME TAXES
The Company accounts for income taxes in accordance with SFAS No. 109
"Accounting for Income Taxes."
The components of the provision for income taxes are as follows:
Year ended January 31,
---------------------------------------
1998 1997 1996
---------- ---------- ----------
Current expense
Federal $ 593,000 $ 3,469 $ 596,000
State 150,000 12,239 129,100
Deferred tax benefit due to
temporary differences
Federal 63,765 124,000 26,800
State 24,000 10,000 3,500
---------- ----------- -----------
Total provision for income taxes $ 830,765 $ 149,708 $ 755,400
========== =========== ===========
The following is a reconciliation of the provisions for income taxes to the
expected amounts using the statutory rate:
Year ended January 31,
------------------------------
1998 1997 1996
------------------------------
Expected statutory amount 34.0% 34.0% 34.0%
Nondeductible meals and entertainment .6 (2.1) .3
Nondeductible officers life insurance .1 (2.9) .5
Nondeductible contributions .1 - -
Tax penalties - - -
Dividends - ESOP - 15.1 (1.6)
Research and experimental credit (.8) 19.9 (.6)
Public offering costs - (107.0) -
State income taxes 4.6 (3.7) 4.6
Other (.4) 2.2 2.8
----- ------- ------
Actual tax provision 38.2% (44.5)% 40.0%
===== ======= ======
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 14 - INCOME TAXES (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes.
The following is a summary of the significant components of the Company's
deferred tax assets and liabilities as of January 31, 1998 and 1997:
January 31
------------------------
1998 1997
---------- -----------
CURRENT
Accrued vacation and sick pay $ 379,277 $ 333,000
Revenue reserve 98,717 -
Accrued severance pay 90,519 -
Accrued incentive compensation 58,069 -
Deferred bid and proposal costs 36,418 -
----------- ------------
Net current deferred tax liability $ 663,000 $ 333,000
=========== ============
NONCURRENT
Depreciation (38,060) 3,600
Amortization (606,940) (249,600)
----------- ------------
Net noncurrent deferred tax liability $ (645,000) $ (246,000)
=========== ============
NOTE 15- SIGNIFICANT ESTIMATE
The Company recognizes revenue on certain contracts using the
percentage-of-completion method which is based upon total estimated costs for
each contract. The estimate is subject to change as the work progresses on each
contract.
NOTE 16 - RECLASSIFICATION
Deferred income taxes in the January 31, 1996 statement of cash flows have been
reclassified to be consistent with the January 31, 1997 presentation.
NOTE 17 - CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risk consist primarily of temporary cash investments. The Company places
its temporary cash investments with a financial institution. The amount of
credit exposure in excess of federally-insured limits at January 31, 1998 and
1997 was $3,694,629 and $754,282, respectively.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 18 - STOCK OPTIONS
On June 11, 1997, the Company reserved 600,000 shares of Exigent's common stock
for its nonqualified stock option plan (Plan 1Q). The terms of these options
provide that the options are exercisable on the date of grant and expire three
years after the date the options were granted. Plan 1Q is administered by the
Company's CEO. Plan 1Q gives broad powers to the CEO to administer and interpret
the plan, including the authority to select the individuals to be granted
options and the particular form and conditions of each option granted. All
options are granted at an exercise price of $2.25. Awards may be granted
pursuant to Plan 1Q through June 11, 2007. Plan 1Q may be terminated earlier by
the Board of Directors at its sole discretion.
On March 10, 1997, the Company reserved 200,000 shares of Exigent's common stock
for its qualified incentive stock option plan (Plan 2Q). The terms of these
options provide that the options are exercisable on the date of grant and expire
three years after the date of grant. Plan 2Q is administered by the Company's
CEO. Plan 2Q gives broad powers to the CEO to administer and interpret the Plan,
including the authority to select the individuals to be granted options and the
particular form and conditions of each option granted. All options are granted
at an exercise price not less than one hundred percent of the fair market value
at the date of grant. The purchase price will be at least 110 percent of the
fair market value of the Company's common stock on the date of the grant if the
optionee owns more than ten percent of the total combined voting power of all
the classes of stock of the Company. Awards may be granted pursuant to Plan 2Q
through March 9, 2007. Plan 2Q may be terminated earlier by the Board of
Directors at its sole discretion.
On July 30, 1997, the Company reserved 240,000 shares for a second qualified
stock incentive plan (Plan 3Q) under terms similar to the first qualified plan.
The terms of these options provide that the options are exercisable one year
from the date of grant and expire three years after the date of grant. Plan 3Q
is administered by the Company's CEO. Plan 3Q gives broad powers to the CEO to
administer and interpret the Plan, including the Authority to select the
individuals to be granted options and to prescribe the particular form and
conditions of each option granted. However, a Committee of the Board of
Directors shall approve each grant of an option pursuant to Plan 3Q in advance
of issuance. In addition, the Plan stipulates that the aggregate number of
shares of stock for which options may be granted shall be allocated 50% to new
hire employees and the remaining 50% to such employees as the CEO shall select
at his discretion. All options are granted at an exercise price not less than
100% percent of the fair market value at date of grant. The purchase price will
be at least 110 percent of the fair market value of Exigent's common stock on
the date of the grant if the optionee owns more then ten percent of the total
combined voting power of all classes of stock of the Company. Awards may be
granted pursuant to Plan 3Q through July 29, 2007. Plan 3Q may be terminated
earlier by the Board of Directors at its sole discretion.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 18 - STOCK OPTIONS (CONTINUED)
On September 30, 1997, the Company reserved 120,000 shares of common stock for
its non-qualified non-employee director stock option plan (Plan 5NQ). Each
optionee who is granted options will receive 40,000 shares of common stock. The
terms of these options provide that the options are exercisable on a quarterly
basis following grant at the rate of 2,500 shares per quarter for the 16
quarters following grant date, provided the optionee continues to serve on the
Board of Directors. Optionees will be eligible to receive a grant of options
upon their initial election to the Board. All options will expire ten years
after the date of grant. Plan 5NQ is administered by the Company's Board of
Directors or a committee thereof. All options are granted at an exercise price
equal to the fair market value of the Company's common stock on the date of the
grant. Awards may be granted pursuant to Plan 5NQ through September 30, 2007.
Plan 5NQ may be terminated earlier by the Board of Directors at its sole
discretion.
Each plan noted above allows the plan administrator, in his discretion, to grant
stock appreciation rights with each option granted. As of January 31, 1998, no
stock appreciation rights had been granted.
At January 31, 1998, there were 25,000, 11,250, 203,600 and 80,000 additional
shares available for grant under Plan 1Q, Plan 2Q, Plan 3Q and Plan 5NQ,
respectively. Using the Black Scholes option-pricing model, the per share
weighted-average fair value of stock options granted during 1998 where exercise
price equals the market price of the stock on the grant date was $0.8261.
The following weighted average assumptions were used:
1998
----------
Exercise price equal to market price on grant date
Expected risk-free interest rate 6.21%
Expected life 3.05 years
Expected volatility 50%
Expected dividend yield 0.00%
Exercise price greater than market price on grant date
Expected risk-free interest rate -
Expected life -
Expected volatility -
Expected dividend yield -
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 18 - STOCK OPTIONS (CONTINUED)
The Company applies APB Opinion No. 25 in accounting for its option plans and,
accordingly, no compensation cost has been recognized for its stock options in
the financial statements for stock options granted. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, the Company's net income and earnings per share
would have been reduced to the pro forma amounts indicated below:
1998
----------
Net income
As reported $ 1,345,429
Pro forma 951,559
Earnings per share, basic and diluted
As reported $ 0.29
Pro forma $ 0.21
Stock option activity, during the
periods indicated, is as follows:
Weighted
Average
1998 Exercise Price
------------- -------------------
Outstanding at January 31, 1997 - $ -
Granted 836,400 2.32
Exercised (73,800) 2.45
Forfeited (36,250) 2.53
==============
Outstanding at January 31, 1998 726,350 2.45
==============
At January 31, 1998, the range of exercise prices and weighted-average remaining
contractual life of outstanding options was $2.25 to $3.375 and 2.36 years to
3.80 years, respectively.
See also Note 23 - Subsequent Events.
NOTE 19 - EARNINGS PER SHARE
The following table sets forth the computation of basis and diluted earnings per
share:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ---------
Numerator:
<S> <C> <C> <C>
Net income $ 1,345,429 $(486,238) $ 1,131,741
Preferred stock dividends - - -
----------- ---------- -----------
Numerator for basic and diluted earnings
per share - income available to common
stockholders $ 1,345,429 $(486,238) $ 1,131,741
----------- ---------- -----------
</TABLE>
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 19 - EARNINGS PER SHARE (CONTINUED)
<TABLE>
<CAPTION>
Denominator:
Denominator for basic earnings per share -
<S> <C> <C> <C>
weighted-average shares $ 4,483,538 $ 4,339,834 $ 3,859,092
Effect of dilutive securities:
Convertible preferred stock with dilutive
effect - 697,320 -
Effect of assumed exercise of outstanding
stock options and warrants 163,752 - -
---------------- ---------------- -----------------
Denominator for diluted earnings per
share - adjusted weighted-average
shares and assumed conversions 4,647,290 3,642,514 3,859,092
================ ================ =================
Basic earnings per share .29 (.11) .29
================ ================ =================
Diluted earnings per share .29 (.13) .29
================ ================ =================
</TABLE>
NOTE 20 -SOURCE OF LABOR SUPPLY
The Company's business of providing computer services and custom software
programming is dependent upon having a supply of computer/engineering employees.
As a result of the expansion of the number of business users of computers and
the expansion in demand for computer services and custom software programming,
there is a short supply of computer professionals. The situation is not expected
to improve in the near future. However, with the defense contractors having laid
off many of their computer/engineering employees and the trend expected to
continue, there is currently a pool of employees who would likely have at least
some of the expertise needed by the Company. In addition, the Company has a
competitive benefit package it believes will help to attract and retain
qualified employees.
NOTE 20 - DEPENDENCE ON INDUSTRY
Most of the Company's revenues are derived from products and services related to
the satellite command and control industry. Should this industry take a
substantial downturn and the number of satellites deployed be materially
reduced, the Company's new business opportunities would be limited
significantly.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
NOTE 21 - COMMITMENTS AND CONTINGENCIES
The Company has outstanding purchase commitments of $145,309 as of January 31,
1998. These represent outstanding purchase orders for which neither the item nor
invoice has been received.
NOTE 22 - RELATED PARTY
STI paid $48,000 in consulting fees during the year ended January 31, 1996 and
issued 29,161 warrants of STI on March 20, 1996 to a company for which one of
the directors of STI provides consulting services. The STI warrants were
converted into Exigent warrants on January 30, 1997 (see Note 8). Consulting
fees paid by STI to this company for the year ended January 31, 1998 and 1997
were $45,485 and $94,620, respectively.
During fiscal year 1997, the director discussed above was also Secretary of
Monogenesis and Chairman and controlling shareholder of another company that
received shares of the stock of the Company from Monogenesis. On January 31,
1998, this director's services were terminated and on March 23, 1998 he resigned
from the Board.
NOTE 23 - SUBSEQUENT EVENTS
In February, 1998, the Company entered into an additional leased facility
located adjacent to its existing STI Melbourne facility. This new facility is
30,000 square feet and will house the Exigent corporate headquarters, FotoTag,
and product development. The lease is a 10 year lease with expiration in
April, 2007.
At April 4, 1998, the Company was in the process of reserving 250,000 shares of
common stock for a qualified non-officers stock option plan (Plan 4Q). The terms
of these options provide that the options are exercisable on the date of grant
and expire three years after the options were granted. Plan 4Q is administered
by the Company's CEO. Plan 4Q gives broad powers to the CEO to administer and
interpret the plan, including the authority to select the individuals to be
granted options and the particular form and conditions of each option granted.
Options granted are to be tied to the corporate financial performance goals of
the officer's plan. All options are granted at an exercise price not less than
one hundred percent of the fair market value on the date of grant of such
option. The purchase price will be at least 110 percent of the fair market value
of the Company's common stock on the date of the grant if the optionee owns more
than ten percent of the total combined voting power of all the classes of stock
of the Company. Awards may be granted within 10 years from the date the plan is
adopted. Plan 4Q may be terminated earlier by the Board of Directors at its sole
discretion.
In February of 1998, the Company announced that it entered into negotiations
related to an acquisition. The terms of the acquisition, including price and
acquisition date, have not yet been determined.
<PAGE>
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
On March 18, 1998, the Board of Directors of the Company adopted
resolutions changing the Company's certifying accountant to Ernst & Young LLP.
The engagement letter was executed on March 20, 1998. The change will be
effective after the audit for the fiscal year ended January 31, 1998. The
certifying accountant for the previous years and the fiscal year ended January
31, 1998, Hoyman, Dobson & Company, P.A., will continue to provide various
accounting services to the Company and its subsidiaries. The change was made
because the new certifying accountant has greater national name recognition.
The principal accountant's report on the financial statements for the
previous two years has not contained an adverse opinion or disclaimer of opinion
nor were such reports qualified or modified as to uncertainty, audit scope or
accounting principles. The Company has not had any disagreements with its
principle accountants on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure during its two
most recent fiscal years or since then. During its two most recent fiscal years
or since then, the Company has not been advised by its principal accountant: (i)
that the internal controls necessary for the Company to develop reliable
financial information do not exist; (ii) that information has come to the
accountant's attention that has led the accountant to no longer be able to rely
on management's representations or that have made the accountant unwilling to be
associated with the financial statements prepared by management; (iii) of the
need to expand significantly the scope of its audit, or that information has
come to the accountant's attention that if further investigated may materially
impact the fairness or reliability of either a previously issued audit report or
the underlying financial statements, or the financial statements covering a
period subsequent to the date of the most recent financial statements covered by
an audit report or cause the accountant to be unwilling to rely on management's
representations or be associated with the Company's financial statements; or
(iv) that information has come to the accountant's attention that the accountant
has concluded materially impacts the fairness or reliability of either a
previously issued audit report or the underlying financial statements, or the
financial statements issued or to be issued covering the fiscal periods
subsequent to the date of the most recent financial statements covered by an
audit report.
By letter dated March 27, 1998, Hoyman, Dobson & Company, P.A. confirmed
its agreement with the foregoing, as disclosed in Item 4 of the Company's filing
on Form 8-K on March 30, 1998, which letter is attached as Exhibit 16 to such
Form 8-K.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
"Election of Directors" and "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission on or
before May 28, 1998 (the "1998 Proxy Statement") are hereby incorporated by
reference.
ITEM 11. EXECUTIVE COMPENSATION
"Compensation of Executive Officers" and "Compensation Committee Interlocks
and Insider Participation" in the 1998 Proxy Statement are hereby incorporated
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
"Principal Stockholders" in the 1998 Proxy Statement is hereby incorporated
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
"Certain Relationships and Related Transactions" in the 1998 Proxy
Statement are hereby incorporated by reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements (See Item 8 of this Report)
Independent Auditor's Report - April 4,1998
Consolidated Balance Sheets - January 31, 1998 and 1997
Consolidated Statements of Income - For the Years Ended January
31, 1998, 1997 and 1996
Consolidated Statements of Changes in Stockholders' Equity - For
the Years Ended January 31, 1998, 1997 and 1996
ConsolidatedStatements of Cash Flows - For the Years Ended
January 31, 1998, 1997 and 1996
Notes to Financial Statements For the Years Ended January 31,
1998, 1997 and 1996
(2) None
(3) Exhibits Index
<PAGE>
EXHIBIT NUMBER EXHIBIT
2.1 Stock Purchase Agreement and Plan of Reorganization (including all
Schedules except 1.1) (1)
2.2 Amendment to Stock Purchase Agreement and Plan of Reorganization (5)
3.1 Certificate of Incorporation of Exigent International, Inc. (2)
3.2 Amended and Restated Certificate of Incorporation of Exigent
International, Inc. (6)
3.3 Bylaws of Exigent International, Inc. (7)
10.1 Agreement between Exigent International, Inc. and Transfer Agent (3)
10.2 Common Stock Purchase Warrant Agreement between Exigent International,
Inc. and Warrant Agent (4)
10.3 Contract between Motorola, Inc. Government and Systems Technology
Group, Satellite Communications Division and Software Technology, Inc.
(11)
10.4 Contract between Naval Research Laboratory and Software Technology,
Inc. ("NRL Contract") (8)
10.5 Subcontract/Purchase Order between Lockheed-Martin Federal Systems
Company and Software Technology, Inc. (10)
10.6 Purchase Orders from Allied Signal Technical Services Corporation (9)
10.7 Amendment to NRL Contract dated March 10, 1998
10.8 Lease Agreement, dated May 14, 1993, between Henderson Evans, L.C. and
Software Technology, Inc.
10.9 Lease Agreement, dated March 31, 1997, between Henderson Comet, L.C.
and Software Technology, Inc.
10.10 Agreement of Lease, dated August 15, 1994, between Alexandria South
Associates, L.P. and Software Technology, Inc.
10.11 Incentive Stock Option Plan 1Q (nonqualified) (12)
10.12 Independent Director Stock Option Plan (5NQ) (13)
10.13 Employment Agreement dated June 11, 1997 between Exigent
International, Inc. and Jeffrey C. Clift
10.14 Employment Agreement dated June 11, 1997 between Exigent
International, Inc. and William K. Presley
10.15 Employment Agreement dated June 11, 1997 between Exigent
International, Inc. and Bernard R. Smedley
10.16 Employment Agreement dated June 11, 1997 between Exigent
International, Inc. and Don F. Riordan, Jr.
16 Letter re Change in Certifying Accountant (14)
21 Subsidiaries
23 Consent of Hoyman, Dobson & Company, P.A., Certified Public
Accountants
27 Financial Data Schedule
(1) Exhibit 2 to the Registration Statement on Form S-1 of Exigent
International, Inc., which was declared effective on January 30,
1997.*
(2) Exhibit 3(i) to the Registration Statement on Form S-1 of Exigent
International, Inc., which was declared effective on January 30,
1997.*
(3) Exhibit 10(i) to the Registration Statement on Form S-1 of Exigent
International, Inc., which was declared effective on January 30,
1997.*
(4) Exhibit 10(ii) to the Registration Statement on Form S-1 of Exigent
International, Inc., which was declared effective on January 30,
1997.*
(5) Exhibit 2(ii) to Pre-Effective Amendment No. 1 to the Registration
Statement on Form S-1 of Exigent International, Inc., which was
declared effective on January 30, 1997.*
(6) Exhibit 3(iii) to Pre-Effective Amendment No. 1 to the Registration
Statement on Form S-1 of Exigent International, Inc., which was
declared effective on January 30, 1997.*
(7) Exhibit 3(ii) to Pre-Effective Amendment No. 1 to the Registration
Statement on Form S-1 of Exigent International, Inc., which was
declared effective on January 30, 1997.*
(8) Exhibit 10(iv) to Pre-Effective Amendment No. 1 to the Registration
Statement on Form S-1 of Exigent International, Inc., which was
declared effective on January 30, 1997.*
(9) Exhibit 10(vi) to Pre-Effective Amendment No. 1 to the Registration
Statement on Form S-1 of Exigent International, Inc., which was
declared effective on January 30, 1997.*
(10) Previously filed as an Exhibit 10.6 to Pre-Effective Amendment No. 2
to the Registration Statement on Form S-1 of Exigent International,
Inc., which was declared effective on January 30, 1997.*
(11) Previously filed as an Exhibit 10(iii) to Pre-Effective Amendment No.
2 and Pre-Effective Amendment No. 3 to the Registration Statement on
Form S-1 of Exigent International, Inc., which was declared effective
on January 30, 1997.*
(12) Exhibit 4 to Form 8-K filed on October 27, 1997 and to Form S-8 filed
on October 27, 1997.*
(13) Exhibit 4 to Form 8-K filed on March 30, 1998 and to Form S-8 filed on
April 1, 1998.*
(14) Exhibit 16 to Form 8-K filed on March 30, 1998.*
* Incorporated by reference
(b) Reports on Form 8-K.
Form 8-K was filed on January 2, 1998 to report the following items:
1. Resignation of Dean Boley as a director and Jeffrey Clift as President
and a director and election of Bernard Smedley as President.
2. Appointment of Robert M. Janowiak to the Board of Directors.
3. Adoption of Incentive Stock Option Plan 3Q and filing of related Form
S-8.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 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.
Date: April 30, 1998
EXIGENT INTERNATIONAL, INC.
By: /s/Bernard R. Smedley
--------------------------------------
Bernard R. Smedley
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed by the following persons on behalf of the registrant and in the
capacities indicated on April 30, 1998.
NAME POSITION
/s/Bernard R. Smedley
- ----------------------------
Bernard R. Smedley Director, Chief Executive Officer
/s/Don F. Riordan, Jr.
- ----------------------------
Don F. Riordan, Jr. Director, Treasurer, Chief Financial Officer
/s/Daniel J. Stark
- ----------------------------
Daniel J. Stark Director
/s/ William K. Presley
- ----------------------------
William K. Presley Director, Executive Vice President and Chief
Technical Officer
/s/ Robert M. Janowiak
- ----------------------------
Robert M. Janowiak Director
/s/ Arthur H. Collier
- ---------------------------- Director
Arthur H. Collier
<PAGE>
- -----------------------------------
1 FotoTag is a registered trademark of Exigent International, Inc.
2 OS/COMET is a trademark of Exigent International, Inc.
3 UNIX is a registered trademark in the United States and other countries,
licensed exclusively through X/Open Company, Limited.
4 X Window System is a trademark of the Massachusetts Institute
of Technology.
5 OSF/Motif is a trademark of the Open Software Foundation.
6 IRIDIUM is a registered trademark and service mark of Iridium LLC
(1997)
7 Celestri is a trademark of Motorola, Inc.
8 Active Tracking Engine is a trademark of Exigent International, Inc.
9 Windows 95 and Windows NT are registered trademarks of Microsoft Corp.
10 Integrated Control Center is a trademark of Exigent International, Inc.
and its subsidiaries.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1. CONTRACT ID CODE PAGE OF PAGES
X 1
- ----------------------------------------------------------------------------------------------------------------------------------
2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (IF APPLICABLE)
P00060 SEE BLOCK 16C 81-0135-98
- ----------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY CODE N00173 7. ADMINISTERED BY (IF OTHER THAN ITEM 6) CODE S1002A
CONTRACTING OFFICER DCMC ORLANDO
NAVAL RESEARCH LABORATORY 3555 MAQUIRE BLVD
WASHINGTON, DC 20375-5326 ORLANDO, FL 32803-3726 SCD: C
- ----------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (NO., STREET, COUNTY, STATE AND ZIP CODE) (x) 9A. AMENDMENT OF SOLICIATION NO.
SOFTWARE TECHNOLOGY, INC. 9B. DATED (SEE ITEM 11)
1225 EVANS ROAD
MELBOURNE, FL 32904-2314 10A. MODIFICATION OF CONTRACT/ORDER NO.
N00014-95-C-2044
10B. DATED (SEE ITEM 13)
CODE 3R623 FACILITY CODE X 95 JAN 23
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11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
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The above numbered solicitation is amended as set forth in Item 14. The hour and
date specified for receipt of Offers is extended, is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and date
specified in the solicitation or as amended, by one of the following methods;
(a) By completing items 5 and 15, and returning ________ copies of the
amendment; (b) By acknowleding receipt of this amendment on each copy of the
offer submitted; or (c) By separate letter or telegram which includes a
reference to the soliciation and amendment numbers. FAILURE OF YOUR
ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS
PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If
by virtue of this amendment you desire to change an offer already submitted,
such change may be made by telegram, or letter, provided each telegram or letter
makes reference to the solicitation and this amendment, and is received prior to
the opening hour and date specified.
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12. ACCOUNTING AND APPROPRIATION DATA (IF REQUIRED)
SEE CONTINUATION PAGE
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13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS, IT MODIFIES THE
CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
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(X) A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (SPECIFY AUTHORITY) THE CHANGES
SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
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B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE
ADMINISTRATIVE CHANGES (SUCH AS CHANGES IN PAYING OFFICE,
APPROPRIATION DATE, ETC.) SET FORTH IN ITEM 14, PURSUANT TO THE
AUTHORITY OF FAR 43.103(B).
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C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:
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D. OTHER (SPECIFY TYPE OF MODIFICATION AND AUTHORITY)
(X) H - 6 LEVEL OF EFFORT AND MUTUAL AGREEMENT OF THE PARTIES
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E. IMPORTANT: Contractor is not, is required to sign this document and
return 2 copies to the issuing office.
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14. DESCRIPTION OF AMENDMENT/MODIFICATION (ORGANIZED BY UCF SECTION
HEADINGS, INCLUDING SOLICITATION/CONTRACT SUBJECT MATTER WHERE
FEASIBLE).
Any questions concerning this modification should be directed to:
DONNA M. WASHINGTON Code: 3230.DM 202/767-0667
Continued on page 2.
Except as provided herein, all terms and conditions of the document referenced
in item 9A or 10A as heretofore changed, remains unchanged and in full force and
effect.
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15A. NAME AND TITLE OF SIGNER (TYPE OR PRINT) 16a. NAME AND TITLE OF CONTRACTING OFFICER (TYPE OR PRINT)
Don F. Riordan Carol Parnell
Secretary/Treasurer Contracting Officer
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15B. CONTRACTOR/OFFEROR 16B. UNITED STATES OF AMERICA 16C. DATE SIGNED
BY
15C. DATE SIGNED
/s/Don F. Riordan /s/Carol Parnell
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(SIGNATURE OF PERSON AUTHORIZED TO SIGN) (SIGNATURE OF CONTRACTING OFFICER)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONTRACT NUMBER N00014-95-C-2044
MODIFICATION NUMBER P00060
PAGE 2
The purpose of this modification is to increase the Level of Effort and extend
the Period of Performance.
1. SECTION B - SUPPLIES/SERVICES OR PRICES is hereby revised and Option 3 is hereby modified as follows:
FROM:
TOTAL EST COST PLUS
FIXED FEE
ITEM NO. SUPPLIES OR SERVICES EST. COST FIXED FEE
<S> <C> <C> <C> <C>
0007 The contractor shall conduct research as $4,727,394 $359,328 $5,086,722
described below and in Section C.
0008 Reports and Data in accordance with Exhibit A NSP NSP NSP
(DD 1423)
TO:
0007 The contractor shall conduct research as $6,475,272 $492,041 $6,967,313.00
described below and in Section C.
0008 Reports and Data in accordance with Exhibit A NSP NSP NSP
(DD 1423)
2. The amount of Option 3 is hereby increased as follows:
From: $5,086,722.00
Increased by: $1,880,591.00
To: $6,967,313.00
</TABLE>
<PAGE>
3. Block 16 of the face page of the contract is revised to read:
TOTAL AMOUNT OF THE CONTRACT: $27,083,188.00
4. SECTION F - DELIVERIES OR PERFORMANCE is hereby revised to read:
F-1 The research work under this contract shall be conducted during the
period from date of award through 30 April 1998.
5. INCREMENTAL FUNDING
This contract is incrementally funded pursuant to the Limitation of Funds
clause, FAR 52.232-22. Funds are allotted to the contract in the amount of
$25,173,518.00 and it is estimated that they are sufficient for contract
performance through 12 March 1998.
6. SECTION H-6 LEVEL OF EFFORT (5252.216-9706) (DEC 88) is hereby revised
to read:
The Level of Effort for this contract is NOT-TO-EXCEED 26,054.35 hours for
the term of the contract
7. All other terms and conditions remain unchanged.
<PAGE>
G-4 ACCOUNTING AND APPROPRIATION DATA
The following accounting and appropriation data is applicable to this
modification.
The following data indicates Non-Navy Funding:
<TABLE>
<CAPTION>
APPROPRIATION AND SUBHEAD
ACRN SUPPLEMENTAL ACCOUTING DATA AMOUNT
<S> <C> <C> <C>
DN 5783600. 298 6001 671200 0000 63011F 98057L 659901 $28,000.00
FUNDING DOCUMENT - 44898057L
DU 5783600. 398 6001 671200 0000 63011F 659901 $230,000.00
FUNDING DOCUMENT - 44898161T
</TABLE>
Exhibit 10.8
LEASE AGREEMENT
THIS AGREEMENT is made the 14th day of May, 1993, by and between HENDERSON
EVANS, L.C., a Florida limited liability company, and SOFTWARE TECHNOLOGY, INC.,
a Florida corporation ("Tenant").
1. DEMISED PREMISES. Landlord does hereby demise and let unto Tenant, and
Tenant rents from Landlord, all that land ("Land") as shown on the recorded Plat
Plan for Airport Corporate Center for Lot Nos. 1 and 7, together with the
building of appropriately 22,500 square feet ("Building") to be constructed
thereon on behalf of Landlord in Airport Corporate Center ("Center"), Melbourne,
Brevard County, Florida. (Land and Building hereinafter collectively "Demised
Premises"), for a term described in Paragraph 2 hereof, and to be used and
occupied as office, engineering, manufacturing and assembly space and for no
other purpose.
2. DEMISED TERM. This Lease shall be for a term of ten (10) years (plus any
partial month if the Commencement Date is other than the first day of the month)
("Demised Term"), unless earlier terminated pursuant to the terms of this Lease,
beginning the date on which Landlord substantially completes the leasehold
improvements, as evidenced by a certificate of occupancy issued by the City of
Melbourne, in accordance with Paragraph 5 hereof and delivers the Demised
Premises to Tenant ("Commencement Date"), and ending the last day of the one
hundred twentieth (120th) month following the Commencement Date, ("Expiration
Date"). Within thirty (30) days following the Commencement Date, Landlord and
Tenant shall confirm the Commencement Date in writing. The Commencement Date
shall be as specified in Paragraph 6b. hereof.
3. BASIC RENT.
a. FIRST YEAR OF THE DEMISED TERM. During the first Lease Year of the
Demised Term, Tenant agrees to pay a net Basic Rent ("Basic Rent") in the sum of
$166,500.00 per annum lawful money of the United States of America, payable in
advance during the First Year of the Demised Term of this Lease in sums of
$13,875.00 on the first day of each month, rent to begin on the Commencement
Date. Rent due and payable without demand or offset, at the office of Landlord
(Attention: Accounting Department).
b. YEARS 2-10 OF THE DEMISED TERM AND EXTENDED TERMS. During the
second through tenth Lease Years and any years during the Extended Term, Tenant
agrees to pay a net Basic Rent ("Basic Rent") in the sum of: the previous Year's
Basic Rent, PLUS the lesser of: (i) an adjustment for Consumer Price Index
("CPI") increase, as defined below, or (ii) three percent (3%) of the previous
Year's Basic Rent.
ADJUSTMENT FOR CPI INCREASE: The CPI adjustment for each subsequent
Year's Basic Rent shall be: an amount equal to the percentage change
in the Consumer Price Index, as measured from the Base Index to the
Comparison Index, multiplied by the previous Year's Basic Rent. For
the purposes of this paragraph:
(a) The CPI shall mean the Consumer Price Index (Base Period 1967)
(U.S. city average for urban consumers), published by the Bureau of
Labor Statistics of the United States Department of Labor; provided
that if such Consumer Price Index is no longer published at regular
periods, then any similar report released by any other bureau,
department or agency of the United States Government at regular
periods, for substantially similar purposes, shall be used;
(b) The Base Index shall mean the most recent Consumer Price Index
published sixty (60) days prior to commencement of the Lease Year;
(c) The Comparison Index shall mean the most recent Consumer Price
Index published sixty (60) days prior to the end of the Lease Year.
(d) Lease Year shall mean the twelve (12) month period starting on the
Commencement Date and each anniversary thereof during the Demised
Term.
4. NET LEASE. It is the intent of the parties hereto that this is a net
lease, and that all costs of ownership, maintenance and use of the Demised
Premises, shall be paid by Tenant in addition to the payments of Basic Rent
specified above, provided however, Landlord shall be responsible for property
management expenses, if any, structural repairs to the exterior foundation,
roofs, the plumbing in common areas and/or outside of the Building, and exterior
walls (but excluding the exterior of, and the frames surrounding all windows,
doors, plate glass, store fronts and signs). Said repairs by Landlord will be
made within a reasonable time after notice from Tenant. Landlord shall provide
all Common Area Services ("Common Area Services" is defined as exterior
janitorial services, grounds maintenance, landscaping, parking lot maintenance
and site lighting, if applicable) to the Demised Premises, at Tenant's expense.
Tenant shall have the right to approve, in advance, all contracts for Common
Area Services for the Demised Premises.
5. IMPROVEMENT OF DEMISED PREMISES.
(a) CONSTRUCTION OF THE BUILDING. After execution of this Lease and
initialing of the final plans and specifications ("Final Plans and
Specifications") for the Building, which Final Plans and Specifications are
attached hereto as Exhibit "A" and incorporated herein by reference, Landlord
shall promptly make application for all building permits and approvals. Any
changes to the Final Plans and Specifications required by Tenant during the
building or fit-up of the Demised Premises shall be by separate written change
order (including payment terms), with an extension of time to complete the
building of the Demised Premises, if necessary, signed by both parties.
(b) FIT-UP WORK. Utilizing a general contractor selected by Landlord,
Landlord shall complete and prepare the Demised Premises for Tenant's initial
occupancy in a good and workmanlike manner in accordance with Tenant's
Improvement Plan which has been initialed by both Landlord and Tenant.
(c) MATERIALS USED FOR FIT-UP WORK. Landlord shall use materials as
outlined on the attached Tenant Scope of Work (Exhibit "A"). Landlord reserves
the right, however: (1) to make substitutions of material of equivalent grade
and quality when and if any specified material shall not be readily and
reasonably available, and (2) to make changes necessitated by conditions met in
the course of construction, provided that Tenant's approval of any change shall
first be obtained (which approval shall not be unreasonably withheld) so long as
there shall be general conformity with Tenant's Improvement Plans and Tenant's
intended use of the Demised Premises and which approval must be given or denied
(with reasons stated in the case of denial) within forty-eight (48) hours after
request or approval shall be conclusively deemed to have been given.
6. INABILITY TO GIVE POSSESSION.
(a) EXCUSABLE DELAYS. Landlord shall not be liable to Tenant for any
damages caused by Landlord's inability to deliver possession of the Demised
Premises to Tenant on the Commencement Date, as a result of causes beyond
Landlord's reasonable control, including, but not limited to, delays caused by
Tenant's acts or by strikes, lockouts, labor disputes, inclement weather
(including the day(s) following inclement weather when construction work cannot
proceed due to saturation of soils or other unsatisfactory conditions),
inability to procure materials, failure of power, restrictive governmental rules
and regulations, riots, insurrections or war ("Excusable Delays").
(b) DELIVERY OF DEMISED PREMISES. If the Landlord shall be unable to
give possession of the Demised Premises within nine (9) months of receiving the
building permit from the City of Melbourne, exclusive of Excusable Delays
("Completion Date"), or because a certificate of occupancy has not been
procured, Landlord shall not be subject to any liability for such inability to
give possession under such circumstances. The payment of rent shall not commence
until the Commencement Date. The failure to give possession on the Completion
Date shall not affect the validity of this Lease or the obligations of Tenant
hereunder or extend the Demised Term, provided, however, in the event Landlord
is unable to give possession on or before the tenth (10th) month after receiving
the building permit from the township (exclusive of Excusable Delays), then
Tenant shall have the option of declaring the Lease terminated by giving
Landlord written notification thereof, by registered mail, within two (2) weeks
of the first day of said tenth (10th) month.
7. ADDITIONAL RENT.
(a) BREACH. Tenant agrees to pay as rent in addition to the Basic Rent
any and all sums which may become due by reason of the failure of Tenant to
comply with all of the covenants of this Lease and any and all damages, costs
and expenses, including attorney's fees, which the Landlord may suffer or incur
by reason of such default, and also any and all damages to the Demised Premises
caused by any act or neglect of the Tenant.
(b) TAXES, ASSESSMENTS, ETC. Tenant will duly promptly pay as
additional rent to Landlord, as the same shall become due and payable and before
they become delinquent, all taxes, rates, assessments and other governmental
charges, and charges of every kind and nature whatsoever, nonrecurring as well
as recurring, special or extraordinary as well as ordinary, foreseen and
unforeseen, and each and every installment thereof, which shall or may during
the term of the Lease be levied, assessed or imposed, or become due and payable
or become liens upon, or arise in connection with the use, occupancy or
possession of, or any interest in, the Demised Premises, or upon the rents,
issues, income and profits therefrom so as to prevent the same from becoming or
being an enforceable lien or claim against the property or the interest of
Landlord ("Expenses"). Landlord shall apply such payment by Tenant to the
payment of such Expenses, but in no event shall Landlord be required to pay such
Expenses early or during discount periods. Such Expenses shall include all real
estate taxes, assessments, water and sewer charges which may become liens upon
the Demised Premises or any part thereof. If Landlord requests Tenant to pay
such Expenses other than to Landlord, Tenant will furnish or cause to be
furnished to Landlord not less than fifteen (15) days prior to the date on which
payment of the same would become delinquent, or subject to penalty or interest,
receipts or other evidence satisfactory to Landlord of the payment of all such
Expenses. If Landlord requests in writing, Tenant shall pay to Landlord, or as
Landlord may direct, such Expenses in advance in installments as estimated and
determined by Landlord, and deposited with Landlord, or as directed by Landlord,
for payment of all such Expenses when the same may become due and payable.
Notwithstanding the foregoing, Tenant shall not be responsible for gross
receipts or other income taxes incurred by Landlord on the rents received
hereunder unless it is imposed in lieu of another charge for which Tenant is
responsible hereunder.
If the tenant deems excessive or illegal any such Expenses, with the
written consent of the Landlord, the Tenant may make payment under protest. Any
contest, whether before or after payment, may be made in the name of the
Landlord or the Tenant or both, with the written consent of the Landlord. If
requested by Tenant, Landlord may, but shall not be required to participate in
any such contest, but the Tenant shall be entitled to any refund of any such
Expenses, and any penalty or interest thereon which may have been paid by the
Tenant, but all costs in connection with such contest shall be borne by the
Tenant.
In case of failure of the Tenant to make any of the payments to be
made by Tenant for such Expenses, the Landlord may, but shall not be required
to, pay the amount of same, with penalty and interest thereon, if any. The
amount so paid by the Landlord, with interest thereon from the date of payment
thereof by the Landlord, shall be added to and become a part of the next
installment of rent.
If at any time during the term of this Lease the methods of taxation
prevailing at the commencement of the term hereof shall be altered so that in
lieu of or as a supplement to or a substitute for the whole or any part of the
real estate taxes or assessments now levied, assessed or imposed (1) a tax,
assessment, levy, imposition or charge, wholly or partially as a capital levy or
otherwise, on the rents received therefrom or (2) a tax, assessment, levy
(including but not limited to any municipal, state or federal levy), imposition
or charge measured by or based in whole or in part upon the premises and imposed
upon the Landlord, or (3) a license fee measured by the rent payable under this
Lease, then all such taxes, assessments, levies or impositions and charges, or
the part thereof so measured or based shall be deemed to be included in the
general real estate taxes and assessments payable by the Tenant pursuant hereto
the extent that such taxes, assessments, levies, impositions and charges would
be payable if the premises were the only property of the Landlord subject
thereto, and the Tenant shall pay and discharge the same as herein provided in
respect of the payment of general real estate taxes and assessments.
(c) INSURANCE. Landlord shall keep all buildings and improvements now
or hereafter erected upon the Demised Premises, together with Chattels therein,
insured for the benefit of Landlord against loss by fire and other causalities
and hazards usually covered by extended coverage insurance in an amount not less
than the replacement value of the Demised Premises (excluding foundations and
other parts below parts below the surface of the lowest floor), as determined
not more than once annually by an appraiser or rating bureau satisfactory to
Landlord. Tenant agrees that it will, throughout the Demised Term, pay and
discharge as additional rent, the cost incurred by Landlord in insuring the
Demised Premises as above stated. Insurance premiums at the beginning and end of
the term shall be apportioned. It is expressly understood and agreed that if for
any reason attributable to Tenant it shall be impossible to obtain Fire
insurance on the building and improvements on the Demised Premises in an amount
and in the form and with fire insurance companies acceptable to the Landlord,
the Landlord may, if the Landlord elects, (a) terminate this Lease and the term
thereof on giving to the Tenant fifteen (15) days' notice in writing of
Landlord's intention so to do and upon the giving of such notice this lease and
the terms thereof, shall terminate and come to an end; (b) compute the
additional costs for such insurance over and above the standard cost as if the
condition attributable to Tenant did not exist and Tenant shall be obligated to
pay all of such additional cost.
Tenant shall also provide at its sole cost and expense, any insurance
on improvements made to or inside the Demised Premises by Tenant. Such policy
shall name as insured Landlord and Tenant, as their interests may appear and
shall name Landlord's first mortgagee, if any, as mortgagee. A copy of such
policy shall be furnished to Landlord and Landlord's first mortgagee.
Tenant at its own cost and expense will provide and keep in force
during the Demised Term of this Lease commercial general liability insurance
covering at least the hazards of "premises-operations", "elevators" (if
applicable) and "independent contractors", in which Landlord shall be included
as a named insured, in such other limits of liability as may be required by
landlord from time to time, but not less than One Million Dollars
($1,000,000.00) combined single limit, with a deductible not to exceed Five
Thousand Dollars ($5,000.00). Such insurance shall cover not only the Demised
Premises but shall also include all elevators, hoists, hallways, entranceways,
stairs or any other common areas (exterior or interior), streets, driveways,
alleys, lawns, parking and loading areas, sidewalks and curbs adjacent thereto.
All such policies shall contain provision for notice to the said
Landlord not less than ten (10) days in advance of any cancellation or material
change of such policy. In case of failure of the Tenant to make premium payments
when due, the Landlord may pay the amount of any such premiums, which amount
with interest thereon from the date of payment by Landlord shall be added to and
become part of the next installment of rent.
Copies of renewal policies or certificates for any insurance required
under this Paragraph shall be deposited by Tenant with Landlord at least ten
(10) days prior to the expiration of existing policies, and upon failure so to
do Landlord may immediately purchase, for the account of Tenant, the necessary
insurance from any reputable insurance company without notice to Tenant, and
Tenant shall reimburse Landlord for cost thereof within ten (10) days after
demand.
All insurance required hereunder shall be issued by companies licensed
to do business in Florida and acceptable to Landlord. Tenant shall have the
right to carry the insurance provided for in this Paragraph, or any portions of
such insurance under a blanket or comprehensive all-risks policy.
(d) UTILITIES. Tenant further agrees to pay as additional rent all
charges for water, sewer, gas, oil, electricity, light, heat, power, telephone
or other utility used by Tenant at the Demised Premises during the Demised Term.
All charges for repair of the utility meter(s) on the Demised Premises, whether
such repairs are made necessary by ordinary wear and tear, freezing, hot water,
accident, or other causes, shall be payable by Tenant as additional rent and
shall be paid immediately when the same become due.
(e) MISCELLANEOUS. Tenant agrees to pay as Additional Rent its
pro-rata share of all Center charges, as set forth in Paragraph 35 hereof, for:
signage repairs, exterior janitorial service, grounds maintenance and
landscaping, parking lot maintenance, fences and site lighting. Landlord shall
perform, at Tenant's cost and expense, the grounds maintenance, landscaping,
parking lot maintenance and site lighting for the Demised Premises and bill
Tenant the cost for same as Additional Rent.
8. TIME, PLACE AND WITHHOLDING OF PAYMENT. Unless provided otherwise
herein, all Basic Rent and additional rent shall be payable in advance without
prior notice or demand and without any set off or deduction whatsoever at the
office of Landlord (or at such other place as Landlord may from time to time
designate by notice in writing) and at the times provided for the payment of the
Basic Rent. Under no circumstances will Tenant be permitted to withhold for any
reason.
9. AFFIRMATIVE COVENANTS OF TENANT. Tenant covenants and agrees that it
will without demand:
(a) INTERFERENCE AND WASTE. Conduct its business in such a manner as
not to interfere with or be a nuisance to the conduct of the Landlord's business
or that of any of Landlord's other tenants, and shall not allow any noxious
odors or vapors to be emitted from the Demised Premises. Landlord agrees that it
will conduct its business so as not to interfere with that of the Tenant. Use of
explosives, flammable and/or corrosive agents and other like materials is not
approved unless authorized by Landlord in advance. Any cleaning agent apparatus
will be installed and vented to the outside at Tenant's cost and only if
installation is approved in writing in advance by Landlord. Tenant shall not
engage in activities that waste the premises.
(b) MAINTENANCE AND REPAIR. Keep the Demised Premises and improvements
erected thereon in good condition and repair, including all plumbing, heating,
electrical and air conditioning systems and any loading facilities including
loading doors and dock bumpers. Tenant at its own expense shall enter into a
maintenance contract ("Maintenance Contract") with a heating and air
conditioning repair service acceptable to Landlord for the Demised Term and
shall provide Landlord with a copy of same. The specifications for the
Maintenance Contract are attached hereto as Exhibit "B". The Demised Premises
and the buildings and improvements thereon erected at any reasonable time, and
from time to time, for the purpose of inspecting and appraising the same. The
Tenant shall comply with all orders, regulations, rules and requirements of
every kind and nature relating to the Demised Premises, now or hereafter in
effect, of the Federal, State, Municipal or other governmental authorities
having power to enact, adopt, impose or require the same, whether they be usual
or unusual, ordinary or extraordinary, and whether they or any of them relate to
structural changes or requirements of whatever nature, or to changes or
requirements incident thereto, or as the result of the use or occupation thereof
by Tenant, and the Tenant shall pay all costs and expenses incidental to such
compliance, and shall indemnify and save harmless the Landlord from all expense,
and damages by reason of any notices, orders, violations or penalties filed
against or imposed upon the Demised Premises or against the Landlord as owner
thereof, because of the failure of the Tenant to comply with this covenant.
Tenant further agrees to keep the Demised Premises clean and free from all
ashes, dirt and other refuse matter; replace all glass windows, doors, etc.,
which are broken; and keep all waste and drain pipes open.
In the event of the failure of Tenant promptly to perform the
covenants of Paragraph 8(b) hereof, Landlord may go upon the Demised Premises
and perform such covenants, the cost thereof, at the sole option of Landlord, to
be charged to Tenant as additional and delinquent rent.
(c) COMPLIANCE. Comply with any requirements of any of the constituted
public authorities, and with the terms of any State or Federal statute or local
ordinance or regulation applicable to Tenant or its use of the Demised Premises
and save Landlord harmless from penalties, fines, costs or damages resulting
from failure so to do.
(d) FIRE. Use every reasonable precaution against fire.
(e) RULES AND REGULATIONS. Comply with reasonable rules and
regulations of Landlord promulgated as hereinafter provided (See attached
Exhibit "C").
(f) SURRENDER OF DEMISED PREMISES. Upon the expiration or other
termination of this Lease, for any reason whatsoever, surrender to the Landlord
the Demised Premises together with the buildings and improvements thereon
erected or standing thereon and the building equipment then upon the Demised
Premises, together with all alterations and replacements thereon, in good order,
condition and repair, except for reasonable wear and use thereof, and except
also, such damages by fire or other cause for which the Tenant is obligated to
maintain insurance under the provisions of this Lease if the proceeds of such
insurance have been received by Landlord, and except further, such damage by any
taking by condemnation or exercise of the right of eminent domain if the
Landlord has received the proceeds of such condemnation or exercise of eminent
domain and applied the same under the provisions of this Lease. Tenant further
agrees to promptly deliver to Landlord at his office all keys for the Demised
Premises, and shall have removed from the Demised Premises those items listed on
Exhibit "D" and such other items referred to in Paragraph 10d hereof as Landlord
shall have given Tenant notice to remove. If Tenant fails to remove said items
prior to the surrender of the Demised Premises, Landlord may dispose of the
same, at Tenant's expense.
(g) NOTICE TO CASUALTY. Give to Landlord prompt written notice of any
accident, fire, or damage occurring on or to the Demised Premises.
(h) AGENCY FOR LEASING. Not vacate or desert the Demised Premises
during the Demised Term, or any renewal term, nor permit same to be empty and
unoccupied without consent of Landlord. If, with the permission in writing of
Landlord, Tenant shall vacate or decide at any time during the Demised Term to
vacate the herein Demised Premises prior to the expiration of this Lease, or any
renewal hereof, Tenant will not cause or allow any other agent to represent
Tenant in any subletting or reletting of the Demised Premises other than an
agent approved by the Landlord, and that should Tenant do so, or attempt to do
so, the Landlord, may remove any signs that may be placed on or about the
Demised Premises by such other agent without any liability to Landlord or to
said agent, the Tenant assuming all responsibility for such action.
10. NEGATIVE COVENANTS OF TENANT. Tenant covenants and agrees that he
will do none of the following things without the consent in writing of Landlord
first had and obtained:
(a) USE. Occupy the Demised Premises in any other manner or for any
other purpose than as above set forth.
(b) ASSIGNMENT, ETC. Assign this Lease or hypothecate or mortgage the
same or sublet the Demised Premises or any part thereof. Any assignment,
transfer, hypothecation, mortgaging or subletting without the written consent of
the Landlord shall be void. The following shall be considered a violation of
this covenant:
(1) filing of a petition by or against the Tenant under Chapter
7, 11 or 13 of Title 11, United States Code, Bankruptcy, as now or hereafter
amended or supplemented, or the filing of any petition by or against (and if
against not dismissed within thirty (30) days) the Tenant under any future
bankruptcy act or state law for the same or similar relief;
(2) the dissolution or the commencement of any action or
proceeding for the dissolution or liquidation of the Tenant, in connection with
bankruptcy or other insolvency, whether instituted by or against (and if against
not dismissed within thirty (30) days) the Tenant or for the appointment of a
permanent receiver or a permanent trustee of all or substantially all the
property of the Tenant;
(3) the taking possession of the property of the Tenant by any
governmental officer or agency pursuant to statutory authority for the
dissolution, rehabilitation, reorganization, or liquidation of the Tenant; or
(4) the making by the Tenant of any assignment for the benefit of
creditors.
(c) Place or allow to be placed any stand, booth, or show case upon
the doorsteps, vestibules or outside walls, pavements of said Demised Premises,
or place, erect or cause to be placed or erected any projection or device on or
in part of the Demised Premises. Tenant shall remove any projection or device
placed or erected, if permission has been granted and restore the walls, etc.,
to their former conditions, at or prior to the expiration of this lease. In case
of the breach of this convenant (in addition to all another remedies given to
Landlord in case of the breach of any conditions or covenants of this Lease)
Landlord shall have the privilege of removing said stand, booth, show case,
projection or device, and restoring said walls, etc., to their former condition,
and Tenant, at Landlord's option, shall be liable to Landlord as additional rent
for any and all expenses so incurred by Landlord.
(d) ALTERATIONS AND IMPROVEMENTS. Make any structural alterations,
improvements, or additions to the Demised Premises. All alterations, additions
and improvements (except trade fixtures, furniture and equipment listed on the
attached Exhibit "D", other than building equipment but including electrical
installations, plumbing installations, heating units, cooling and/or
refrigeration units, fire and burglar alarms and associated detection devices
and related wiring, communication equipment and lighting fixtures) which may be
made or installed by Tenant upon the Demised Premises shall upon the making or
installation thereof be and become a part of the Demised Premises and shall
remain upon and be surrendered with the Demised Premises as a part thereof at
the termination of this Lease, unless Landlord shall, prior to the termination
of this Lease, have given written notice to Tenant to remove the same, in which
event Tenant will remove such alterations, improvements, and additions and
restore the Demised Premises to the same good order and condition in which they
now are. Should Tenant fail so to do, Landlord may do so, collecting, at
Landlord's option, the cost and expense thereof from Tenant as additional rent.
(e) MACHINERY. Use or operate any machinery that, in Landlord's
opinion, is harmful to the Demised Premises or building of which the Demised
Premises is a part.
(f) WEIGHTS. Place any weights in any portion of the Demised Premises
beyond the safe carrying capacity of the structure.
(g) REMOVAL. Remove, attempt to remove or manifest an intention to
remove Tenant's goods or property from or out of the Demised Premises otherwise
than in the ordinary and usual course of business, without having first paid and
satisfied Landlord for all rent then due.
(h) VACATION. Vacate or desert the Demised Premises during the Demised
Term, or permit the same to be empty and unoccupied without the permission of
Landlord.
(i) RECORDATION. Record this Lease. If Tenant violates this covenant,
Tenant hereby irrevocably authorizes, empowers and designates Landlord as its
lawful attorney for the purpose of having said Lease marked satisfied of record.
11. LANDLORD'S RIGHTS. Tenant covenants and agrees that Landlord shall have
the right to do the following things and matters in and about the Demised
Premises:
(a) INSPECTION. At all reasonable times by himself or his duly
authorized agent to go upon and inspect the Demised Premises and every part
thereof, and/or at his option to make repairs, alterations and additions to the
Demised Premises or the building of which the Demised Premises is a part.
Excepting emergencies, Landlord shall give Tenant 24 hours' prior notice of
inspection, and Tenant shall have the right to escort Landlord during such
inspection, if Tenant so desires.
(b) RULES AND REGULATIONS. At any time or times and from time to time
to make such reasonable rules and regulations as in his judgment may from time
to time be necessary for the safety, care and cleanliness of the Demised
Premises, and for the preservation of good order herein. Such rules and
regulations shall, when notice thereof is given to Tenant, form a part of this
Lease.
(c) FOR SALE OR RENT. To display a "For Sale" sign at any time and
also, after notice from either party of intention to terminate this Lease, or at
any time within three months prior to the expiration of this Lease, a "For Rent"
sign, or both "For Rent" and "For Sale" signs; and all of said signs shall be
placed upon such part of the Demised Premises as Landlord may elect and may
contain such matter as Landlord shall require. Prospective purchasers or tenants
authorized by Landlord may inspect the premises at reasonable hours at any time.
(d) DISCONTINUANCE OF FACILITIES AND SERVICES. The Landlord may
discontinue all facilities furnished and services rendered, or any of them by
Landlord, not expressly covenanted for herein, it being understood that they
constitute no part of the consideration for this Lease.
12. RESPONSIBILITY OF TENANT. Landlord shall not in any event be
responsible, and the Tenant hereby specifically assumes responsibility for any
personal or bodily injury or death of any persons (including employees of Tenant
and Landlord) and damage, destruction, or loss of use of any property, including
the Demised Premises (except as specifically provided otherwise herein)
occasioned by any event happening on or about the Demised Premises, hallways,
entranceways, stairs or any other common areas (exterior or interior),
elevators, hoists, streets, driveways, parking and loading areas, alleys, lawns,
sidewalks and curbs adjacent thereto including those resulting from any work in
connection with any alterations, changes, new construction or demolition, except
if same results solely from the negligence of Landlord, its agents, servants, or
employees. Tenant is subrogated to any rights of Landlord against any other
parties in connection therewith. Tenant shall defend, indemnify and hold
harmless Landlord from and against any and all claims, demands, suits, damages,
liability and costs (including counsel fees and expenses) arising out of or in
any manner connected with any act or omission, negligent or otherwise of Tenant,
third persons, or any of their agents, servants or employees which arise out of
or are in any way connected with the erection, maintenance, use, operation,
existence or occupation of the Demised Premises, hallways, entranceways, stairs
or any other common areas (exterior or interior), elevators, hoists, streets,
driveways, parking and loading areas, alleys, lawns, sidewalks and curbs
adjacent thereto unless due solely to the negligence of Landlord, its agents,
servants or employees.
The Landlord shall promptly notify the Tenant of any claim asserted against
the Landlord on account of any such injury or claimed injury to persons or
property and shall promptly deliver to the Tenant the original or a true copy of
any summons or other process pleading or notice issued in any suit or other
proceeding to assert to enforce any such claim. The Tenant shall have the right
to defend any such suit with attorneys of its own selection and the Landlord
shall have the right, if it sees fit, to participate in such defense.
Tenant further shall defend, indemnify and hold harmless Landlord from
claims, demands, suits, liability for damages for personal or bodily injury or
death of any persons or damage or destruction of any property (including loss of
use thereof) caused by or in any manner arising out of any breach, violation or
nonperformance by Tenant of any covenant, term or provision of this Lease.
13. DAMAGE TO DEMISED PREMISES.
(a) In the event that the Demised Premises is totally destroyed or so
damaged by fire or other casualty not occurring through fault or negligence of
the Tenant or those employed by or acting for him, that, in Landlord's judgment,
the same cannot be repaired or restored within one hundred eighty (180) days,
this Lease shall absolutely cease and determine, and the rent shall abate as of
the date of casualty for the balance of the term. If Landlord cannot locate
alternate space for Tenant to continue operation during the course of the
repairs, then Tenant shall have the right to terminate this Lease within thirty
(30) days.
(b) If the damage caused as above be only partial and such that the
Demised Premises, in Landlord's judgment, can be restored within the time period
and under the conditions as provided in Subparagraph 13(a) above, the Landlord
may, at its option, restore the same (excluding fixtures and improvements owned
by Tenant) with reasonable promptness, reserving the right to enter upon the
Demised Premises for that purpose. The Landlord also reserves the right to enter
upon the Demised Premises whenever necessary to repair damage caused by fire or
other casualty to the building of which the Demised Premises is a part, even
though the effect of such entry be to render the Demised Premises or a part
thereof untenantable. In either event the rent shall be apportioned and
suspended during the time the Landlord is in possession, taking into account the
portion of the Demised Premises rendered untenantable and the duration of the
Landlord's possession. If a dispute arises as to the amount of rent due under
this clause, Tenant agrees to pay the full amount claimed by Landlord. Tenant
shall, however, have the right to proceed by law to recover the excess payment,
if any.
(c) Landlord shall make such election to repair the Demised Premises
or terminate this Lease by giving notice thereof to Tenant within thirty (30)
days from the day Landlord received notice that the Demised Premises had been
destroyed or damaged by fire or other casualty.
(d) Notwithstanding the fact that Landlord may have elected to repair
the Demised Premises within said thirty (30) day period, if the mortgagee
chooses to accelerate the mortgage due to damage by fire or other casualty to
the Demised Premises or the building of which the Demised Premises is a part,
Landlord shall have the right to rescind and/or cancel said election to repair
and shall have the right to elect not to repair the damaged to the Demised
Premises or the building of which the Demised Premises is a part, provided said
notification of election not to repair is given to Tenant within thirty (30)
days after date of the receipt of said notice of acceleration.
(e) Landlord shall not be liable for any damage, compensation or claim
by reason of inconvenience or annoyance arising from the necessity of repairing
any portion of the building, the interruption in the use of the Demised
Premises, or the termination of this Lease by reason of the destruction of the
Demised Premises.
14. MISCELLANEOUS AGREEMENTS AND CONDITIONS.
(a) NON-WAIVER BY LANDLORD OR TENANT. The failure of the Landlord or
Tenant to insist upon strict performance of any of the covenants or conditions
to this Lease, or to exercise any option herein conferred in any one or more
instances, shall not be construed as a waiver or relinquishment for the future
of any such covenants or conditions of this Lease or option, but the same shall
be and remain in full force and effect.
(b) ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of a lesser amount than the monthly rent herein stipulated shall be
deemed to be other than on account of the earliest stipulated rent, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy herein.
(c) JURISDICTION AND LAW. Tenant hereby subjects itself to the
jurisdiction of the Court of Brevard County, Florida. The laws of the State of
Florida shall be applicable to this lease and any interpretations thereof.
(d) The Landlord has let the Demised Premises, with the Building and
Improvements as required by Paragraph 5, and without any representations on the
part of Landlord, his officers, employees, servants and/or agents.
15. REMEDIES OF LANDLORD. If the Tenant:
(a) Does not pay within ten (10) days after it is due and all
installments of rent and/or any other charge or payment herein reserved,
included, or agreed to be treated or collected as rent and/or any other charge,
expense, or cost herein agreed to be paid by the Landlord; or
(b) Violates or fails to perform or otherwise breaks any non-monetary
covenant or agreement herein contained which is not corrected in compliance
within thirty (30) days after the notice; or
(c) Vacates the Demised Premises or removes or attempts to remove or
manifests an intention to remove any goods or property therefrom otherwise than
in the ordinary and usual course of business without having first paid and
satisfied the Landlord in full for all rent and other charges then due; or
(d) Files or has filed against it (and if against not dismissed in
thirty (30) days) a petition under Title 11, United States Code, Bankruptcy, as
now or hereafter amended or supplemented, whether under Chapter 7, 11 or 13 of
the aforesaid Bankruptcy Code; or if there is the commencement of any action or
proceeding under state or federal law for the dissolution or liquidation of the
Tenant in connection with bankruptcy or other insolvency, whether instituted by
or against (and if against not dismissed in thirty (30) days) the Tenant or for
the appointment of a receiver or trustee of all or substantially all of the
property of the Tenant; or if there is the taking of possession of the property
of the Tenant by any governmental officer or agency pursuant to statutory
authority for the dissolution, rehabilitation, reorganization or liquidation of
the Tenant; or if there is the making by the Tenant of an assignment for the
benefit of creditors;
Then and in any of said events, there shall be deemed to be a breach
of this Lease, and thereupon Landlord shall have the following rights:
(1) To accelerate the whole or any part of the Basic Rent and
additional rent (sometimes collectively referred to herein as "Rent") and other
charges, payments, costs and expenses herein agreed to be paid by Tenant for the
entire unexpired balance of the term of this Lease, and any Rent, other charges,
payments, costs and expenses if so accelerated shall, in addition to any and all
installments of Rent already due and payable and in arrears, and/or any other
charge, expense or cost herein agreed to be paid by Tenant which may be due and
payable and in arrears, be deemed due and payable as if, by the terms and
provisions of this Lease, such accelerated Rent and other charges, payments,
costs and expenses were on that date payable in advance, provided, however, that
Landlord agrees it will not exercise this remedy unless Tenant is in arrears for
a total of three (3) monthly installments of Base Rent under the Lease.
(2) To enter the Demised Premises and without further demand or notice
proceed to distrain and sell the goods, chattels and personal property there
found, to levy the Rent and Tenant shall pay all costs and officers'
commissions, including watchmen's wages and sums chargeable to Landlord, and in
such case all costs, officers' commissions and other charges shall immediately
attach and become part of the claim of Landlord for Rent, and any tender of rent
without said costs, commissions and charges made, after the issuance of a
warrant of distress, shall not be sufficient to satisfy the claim of Landlord.
(3) To re-enter the Demised Premises and remove all persons and all or
any property therefrom, either by summary dispossess proceedings or by any
suitable action or proceeding at law, without being liable to indictment,
prosecution or damages therefor, and repossess and enjoy the Demised Premises,
together with all alterations, fixtures, signs and other installations of
Tenant. Upon recovering possession of the Demised Premises by reason of or based
upon or arising out of a default on the part of Tenant, Landlord may, at
Landlord's option, either terminate this Lease or make such alterations and
repairs as may be necessary in order to relet the Demised Premises and relet the
Demised Premises or any part or parts thereof, either in Landlord's name or
otherwise, for a term or terms which may at Landlord's option be less than or
exceed the period which would otherwise have constituted the balance of the term
of this Lease and at such rent or rents and upon such other terms and conditions
as in Landlord's sole discretion may seem advisable and to such person or
persons as may in Landlord's discretion seem best; upon each such reletting all
rents received by Landlord from such reletting shall be applied: first, to the
payment of any indebtedness other than rent due hereunder from Tenant to
Landlord; second, to the payment of any costs and expenses of such reletting,
including brokerage fees and attorney's fees and all costs of such alterations
and repairs; third, to the payment of Rent due and unpaid hereunder; and the
residue, if any, shall be held by Landlord and applied in payment of future Rent
as it may become due and payable hereunder. If such rentals received from such
reletting during any month shall be less than that to be paid during that month
by Tenant hereunder, Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No such re-entry or taking
possession of the Demised Premises or the making of alterations and/or
improvements thereto or the reletting thereof shall be construed as an election
on the part of Landlord to terminate this Lease unless written notice of such
intention be given to Tenant. Landlord shall in no event be liable in any way
whatsoever for failure to relet the Demised Premises or, in the event that the
Demised Premises or any part or parts thereof are relet, for failure to collect
the rent thereof under such reletting. Tenant, for Tenant and Tenant's successor
and assigns, hereby irrevocably constitutes and appoints Landlord as Tenant's
and Landlord's agent to collect the rents due and to become due under all
subleases of the Demised Premises or any parts thereof without in any way
affecting Tenant's obligation to pay any unpaid balance of Rent due or to become
due hereunder. Notwithstanding any such reletting without termination, Landlord
may at any time thereafter elect to terminate this Lease for such previous
breach.
(4) To terminate this Lease and the term hereby created without any
right on the part of Tenant to waive the forfeiture by payment of any sum due or
by other performance of any condition, term or covenant broken. Whereupon
Landlord shall be entitled to recover, in addition to any and all sums and
damages for violation of Tenant's obligations hereunder in existence at the time
of such termination, damages for Tenant's default in an amount equal to the
greater of (i) amount of the Rent reserved for the balance of the Demised Term,
as well as all other charges, payments, costs and expenses herein agreed to be
paid by Tenant, also discounted at the rate of nine percent (9%) per annum to
its then present worth or (ii) three (3) months' rent, all of which amount shall
be immediately due and payable from Tenant to Landlord as liquidated damages.
16. RIGHT TO INJUNCTIVE RELIEF. In the event of a breach or threatened
breach by Tenant of any of the covenants or provisions hereof, Landlord shall
have the right of injunction and the right to invoke any remedy allowed at law
or in equity, as if re-entry, summary proceedings and other remedies were not
herein provided for.
17. RIGHTS NOT EXCLUSIVE. No right or remedy herein conferred upon or
reserved to Landlord is intended to be exclusive of any other right or remedy
herein or by law provided but each shall be cumulative and in addition to every
other right or remedy given herein or now or hereafter existing at law or in
equity or by statute.
18. WAIVERS BY TENANT. Tenant expressly waives the right to delay execution
on any real estate that may be levied upon to collect any amount which may
become due under the terms and conditions of this Lease and any right to have
the same appraised. Tenant agrees that said real estate may be sold on a writ of
execution or other process.
19. CALCULATIONS OF AMOUNTS DUE. For the purpose of calculating the
accelerated Rent payable under paragraph (1) of Paragraph 15(d) of this Article
and the "Rent reserved for the balance of the term" of this Lease for the
purposes of Paragraph (4) of Paragraph 15(d) of this Article, the amount payable
as Tenant's share of real estate taxes, Tenant's share of the cost of insurance
on the Demised Premises and Tenant's share of common area maintenance expenses
and any other charges for which Tenant is responsible hereunder for the balance
of the term hereof shall be equal to the sum of the highest amount paid or
payable by Tenant in any calendar year for each of the foregoing items
multiplied by the number of calendar years (including any fractional calendar
year) remaining in the term of this Lease.
20. RIGHT OF ASSIGNEE OF LANDLORD. The right to pursue the remedies herein
provided against Tenant and to enforce all of the other provisions of this Lease
may, at the option of any assignee of this Lease, be exercised by any assignee
of the Landlord's right, title and interest in this Lease in his, her or their
own name, any statute, rule of court, custom or practice to the contrary
notwithstanding.
21. REMEDIES CUMULATIVE. All of the remedies hereinbefore given to Landlord
and all rights and remedies given to it by law and equity shall be cumulative
and concurrent. No termination of this Lease or the taking or recovering of the
Demised Premises shall deprive Landlord of any of its remedies or actions
against Tenant for rent or sums due at the time or which, under the terms
hereof, would in the future become due as if there has been no termination; nor
shall the bringing of any action for rent or breach of covenant, or the resort
to any other remedy herein provided for the recovery of rent be construed as a
waiver of the right to obtain possession of the premises.
22. CONDEMNATION. If at any time during the Demised Term or any renewal or
extension thereof the Demised Premises, or any portion thereof, be lawfully
condemned or conveyed in lieu or condemnation, the Landlord shall be entitled
to, and shall receive the award or payment therefor, and the Tenant shall
assign, and does hereby assign and transfer to the Landlord such award or
payment as may be made therefor, and in no event and under no circumstances
shall the Tenant be entitled to receive or retain any award or payment of any
part thereof. This Lease shall, as to the part so taken terminate as of the date
title shall vest in the condemnor, and rent shall abate in proportion to the
square feet of the leased space taken or condemned.
23. EXECUTION OF ESTOPPEL CERTIFICATE. At any time, and from time to time,
upon the written request of Landlord or any first mortgagee, Tenant within
twenty (20) days of the date of such written request agrees to execute and
deliver to Landlord and/or such first mortgagee, without charge and in a form
satisfactory to Landlord and/or such mortgagee, a written statement: (a)
ratifying this Lease; (b) confirming the commencement and expiration date of the
term of this Lease and the minimum annual rental rate payable during the lease
term; (c) certifying that Tenant is in occupancy of the Demised Premises, and
that the Lease is in full force and effect and has not been modified, assigned,
supplemented or amended except by such writings as shall be stated; (d)
certifying that all conditions and agreements under this Lease to be satisfied
or performed by Landlord have been satisfied and performed except as shall be
stated; (e) certifying that Landlord is not in default under the Lease and there
are no defenses or offsets against the enforcement of this Lease by Landlord or
stating the defaults and/or defenses claimed by Tenant; (f) reciting the amount
of advance rent, if any, paid by Tenant and the date to which such rent has been
paid and, if requested by Landlord and/or Mortgagee, agreeing that Tenant shall
not pay rent to Landlord more than thirty days in advance; (g) reciting the
amount of security deposited with Landlord, if any; (h) certifying that Tenant
has no option or right of first refusal to purchase the Demised Premises or
option to extend the term of the Lease (unless specifically set forth to the
contrary in the Lease); (i) if requested by Landlord and/or Mortgagee, agreeing
that the Lease will not be modified without the prior written consent of the
Mortgagee; (j) certifying that tenant will not generate, store, handle or
otherwise deal with any amount of any hazardous substances or hazardous waste
(as defined in federal, state and local law) in or about the Demised Premises,
in excess of those levels or quantities specified for regulatory purposes; (k)
agreeing, if requested by Mortgagee, that Tenant will give Mortgagee such notice
of any default by Landlord and reasonable opportunity to cure such default, not
in excess of thirty (30) days, unless the default cannot be cured within said
time, before exercising Tenant's remedies under the Lease; and (l) any other
information which Landlord or the mortgagee shall require.
24. FAILURE TO EXECUTE ESTOPPEL CERTIFICATE. The failure of Tenant to
execute, acknowledge and deliver to Landlord and/or any first mortgagee a
statement in accordance with the provisions of Paragraph 23 above within the
said twenty (20) day period shall constitute acknowledgment by Tenant which may
be relied upon by any person holding or intending to acquire any interest
whatsoever in the Demised Premises that this Lease has not been assigned,
amended, changed, or modified, is in full force and effect and that the Basic
Rent and additional rent have been duly and fully paid not beyond the respective
due dates immediately preceding the date of the request for such statement and
shall constitute as to any persons entitled to rely on such statements a waiver
of any defaults by Landlord or defenses or offsets against the enforcement of
this Lease by Landlord which may exist prior to the date of the written request,
and Landlord at its option, may treat such failure as a deliberate event of
default.
25. SUBORDINATION AND ATTORNMENT. Tenant agrees:
(a) that, except as hereinafter provided, this Lease is, and all of
Tenant's rights hereunder are and shall always be, subject and subordinate to
any first mortgage ("First Mortgage"); and
(b) That if the holder of any such First Mortgage ("Mortgagee") or if
the purchaser at any foreclosure sale or at any sale under a power of sale
contained in any Mortgage shall at its sole option so request, Tenant will
attorn to, and recognize such mortgagee or purchaser, as the case may be as
Landlord under this Lease for the balance then remaining of the term of this
Lease, subject to all terms of this Lease; and
(c) That the aforesaid provisions shall be self-operative and no
further instrument or document shall be necessary unless required by any such
First Mortgagee or purchaser. Notwithstanding anything to the contrary set forth
above, any First Mortgagee may at any time subordinate its Mortgage to this
Lease, without Tenant's consent, by notice in writing to Tenant, and thereupon
this Lease shall be deemed prior to such Mortgage without regard to their
respective dates of execution, delivery and/or recording and in that event such
First Mortgagee shall have the same rights with respect to this Lease as though
this Lease had been executed and a memorandum thereof recorded prior to the
execution, delivery and recording of the Mortgage and as though this Lease had
been assigned to such First Mortgagee. Should Landlord or any First Mortgagee or
purchaser desire confirmation of either such subordination or such attornment,
as the case may be, Tenant upon written request, and from time to time, will
execute and deliver without charge and in form satisfactory to Landlord, the
First Mortgagee or the purchaser all instruments and/or documents that may be
requested to acknowledge such subordination and/or agreement to attorn, in
recordable form.
(d) Landlord agrees that is shall procure from the mortgagee who has
agreed to provide a commitment for a five-year permanent mortgage on the
Property the mortgagee's consent to a non-disturbance agreement, in form
reasonably satisfactory to Tenant, which approval shall not be unreasonably
withheld. If Landlord is unable to produce said agreement from such mortgagee
prior to the closing of the construction mortgage, then Tenant shall have the
right to terminate this Agreement within five (5) days after receipt of such
advice from Landlord.
Landlord further agrees that it shall use reasonable efforts to obtain
a similar agreement from any successor first mortgagee.
26. FAILURE TO EXECUTE INSTRUMENTS AND DOCUMENTS. In the event Tenant fails
to execute and deliver the instruments and documents as provided for in
Paragraphs 23 and 25 within twenty (20) days after request in writing by
Landlord or such First Mortgagee or purchaser, as the case may be, Tenant does
hereby make, constitute and appoint Landlord or such First Mortgagee or
purchaser, as the case may be, as Tenant's attorney-in-fact and in its name,
place and stead to do so, or Landlord may treat such failure as a deliberate
event of default. The aforesaid power of attorney is given as coupled with an
interest and is irrevocable.
27. QUIET ENJOYMENT; EVICTION BY FORECLOSURE. Tenant, on paying the rent
reserved, and performing all the covenants and conditions hereof, shall at all
times during the Demised Term, peaceably and quietly have, hold and enjoy the
Demised Premises; provided, however, eviction of the Tenant by reason of the
foreclosure of any First Mortgage now or hereafter on the Demised Premises shall
not be construed as a breach of this covenant, nor shall any action by reason
thereof be brought against the Landlord; and provided further, that no eviction
of the Tenant for any reason whatsoever, after the Landlord shall have conveyed
the fee of the Demised Premises shall be construed as a breach of this covenant,
and no action therefor shall be brought against the Landlord.
28. TERMINATION OF LEASE.
It is hereby mutually agreed that either party hereto may terminate this
Lease at the end of the Demised Term or at the end of either option period by
giving to the other party written notice thereof at least 180 days prior
thereto, but in default of such notice, this Lease shall continue upon the same
terms and conditions in force immediately prior to the expiration of the Demised
Term hereof as are herein contained except for Basic Rent which shall be
adjusted to reflect the then current market rates for space comparable to the
Demised Premises as determined by Landlord based upon other of Landlord's rental
properties for Melbourne, Florida, for a further period of one years and so on
from year to year unless or until termination by either party hereto, giving the
other one hundred eighty (180) days written notice for removal previous to
expiration of the then current term; PROVIDED, however, that should this Lease
be continued for a further period under the terms herein-above mentioned, any
allowances given Tenant on the Basic Rent during the original term shall not
extend beyond such original term. In the event that Tenant shall give notice, as
stipulated in this Lease, of intention to vacate the Demised Premises at the end
of the Demised Term, or any renewal or extension thereof, and shall fail or
refuse so to vacate the same on the date designated by such notice, then it is
expressly agreed that Landlord shall have the option either:
(a) To disregard the notice so given as having no effect, in which
case all the terms and conditions of this Lease shall continue thereafter, as
set forth above, with full force precisely as if such notice has not been given,
or
(b) Landlord may, at any time within thirty days after the Demised
Term or any renewal or extension thereof, as aforesaid, give the said Tenant
fifteen (15) days' written notice of his intention to terminate the said Lease;
whereupon the Tenant expressly agrees to vacate said premises at the expiration
of the said fifteen (15) day period.
All powers granted to Landlord by this lease may be exercised and all
obligations imposed upon Tenant by this Lease shall be performed by Tenant as
well during any extension of the Demised Term of this Lease as during the
Demised Term itself.
29. NOTICES. All notices required shall be in writing given by certified
mail, return receipt requested or by a recognized overnight delivery service:
TO LANDLORD: Henderson Evans, L.C.
1800 Penn Street, Suite 3
Melbourne, FL 32901
With a copy to: Norman C. Henss, Esq.
200 Stevens Drive, Suite 210
Lester, PA 19113
TO TENANT: Software Technology, Inc.
Evans Road
Melbourne, FL 32901
Such address may be changed from time to time by either party by serving
notices as above provided.
30. MECHANIC'S LIENS.
(a) MECHANIC'S LIENS PROHIBITED. Tenant shall not suffer any
mechanic's lien to be filed against the Demised Premises by reason of work,
labor, services or materials performed or furnished to Tenant or anyone holding
the Demised Premises, or any part hereof, through or under Tenant. If any
mechanic's lien or any notice of intention to file a mechanic's lien shall at
any time be filed against the Demised Premises Tenant shall at Tenant's cost,
within fourteen (14) days after knowledge or notice of the filing of any
mechanic's lien cause the same to be removed or discharged of record by payment,
bond, order of a court of competent jurisdiction, or otherwise.
(b) LANDLORD'S REMEDY FOR TENANT'S BREACH. If Tenant shall fail to
remove or discharge any mechanic's lien or any notice of intention to file a
mechanic's lien within the prescribed time, then in addition to any other right
or remedy of Landlord, Landlord may, at its option, procure the removal or
discharge of the same by payment or bond or otherwise. Any amount paid by
Landlord for such purpose, together with all legal and other expenses of
Landlord in procuring the removal or discharge or such lien or notice of
intention and together with interest thereon at the highest permissible rate
shall be and become due and payable by Tenant to Landlord as additional rent,
and in the event of Tenant's failure to pay therefor within fifteen (15) days
after demand, the same shall be added to and be due and payable with the next
month's rent.
(c) NON-CONSENT OF LANDLORD TO FILING OF LIENS. Nothing contained in
this Lease shall be construed as a consent on the part of Landlord to subject
Landlord's estate in the Demised Premises to any lien or liability arising out
of Tenant's use or occupancy of the premises.
31. LEASE CONTAINS ALL AGREEMENTS. It is expressly understood and agreed by
and between the parties hereto that this Lease sets forth all the promises,
agreements, and conditions or understandings between Landlord or his Agent and
Tenant relative to the Demised Premises, and that there are no promises,
agreements, conditions or understandings, either oral or written, between them
other than are herein set forth. It is further understood and agreed that,
except as herein otherwise provided, no subsequent alteration, amendment, change
or addition to this Lease shall be binding upon Landlord or Tenant unless
reduced to writing and signed by them.
32. HEIRS AND ASSIGNEES. All rights and liabilities herein given to, or
imposed upon, the respective parties hereto shall extend to and bind the several
and respective heirs, executors, administrators, successors and assigns of said
parties; and if there shall be more than one Tenant, they shall all be bound
jointly and severally by the terms, covenants and agreements herein, and the
word "Tenant" shall be deemed and taken to mean each and every person or party
mentioned as a Tenant herein, be the same one or more; and if there shall be
more than one Tenant, any notice required or permitted by the terms of this
Lease may be given by or to any one thereof, and shall have the same force and
effect as if given by or to all thereof. The words "his" and "him" or "its"
wherever stated herein, shall be deemed to refer to the "Landlord" or "Tenant"
whether such Landlord or Tenant be singular or plural and irrespective of
gender. No rights, however, shall inure to the benefit of the assignee of Tenant
unless the assignment to such assignee has been approved by Landlord in writing
as aforesaid.
33. SECURITY DEPOSIT. INTENTIONALLY OMITTED.
34. HEADINGS NO PART OF LEASE. Any headings preceding the text of the
several paragraphs and subparagraphs hereof are inserted solely for convenience
of reference and shall not constitute a part of this Lease nor shall they affect
its meaning, construction or effect.
35. TENANT'S PRO-RATA SHARE OF CENTER: 19.2% (determined by dividing the
acreage of the Center (20.85 acres) by the acreage of the Land (including area
covered by the Building) (4.0 acres).
36. LATE PAYMENT. In the event that any payment of Basic Rent or additional
rent or any other charge required to be paid by Tenant under the provisions of
this Lease, shall not be paid within fifteen (15) days of the due date, Tenant
shall pay to Landlord a late charge of five (5%) percent of such past due
payment; and such late charge shall be deemed "rent" for all purposes under this
Lease.
37. LANDLORD'S CONSENT. Landlord agrees that it shall not unreasonably
withhold any consent required of it under this Lease.
38. SEVERABILITY. If a provision of this Lease Agreement is held invalid,
it is hereby agreed that all valid provisions that are severable from the
invalid provision remain in effect. If a provision in this Lease Agreement is
held invalid in one or more of its applications, the provision remains in effect
in all valid applications.
39. LANDLORD'S LIABILITY. Anything to the contrary herein notwithstanding,
Landlord's liability for any damages or assessments hereunder shall be limited
solely to Landlord's interest in the Demised Premises or land and building of
which the Demised Premises is part, as the case may be. It is further covenanted
and agreed by the parties hereto that in no case shall the Landlord be liable
for any consequential damages.
40. SIGNAGE. Tenant shall have the right to place neat, professionally
executed signs at the front entrance and/or loading areas as shall adequately
advertise Tenant's occupancy of the Premises and direct visitors, guests and the
like to Tenant's Premises provided that they comply with any and all laws and
ordinances applicable thereto. Tenant shall not place any sign on any part of
the Building without the written consent of Landlord, which consent Landlord
shall not unreasonably withhold.
41. LANDLORD'S ENVIRONMENTAL CLAUSE.
(a) Tenant shall not cause, allow or permit the escape, disposal or
release of toxic or hazardous substances or materials, including those which are
biologically active or chemically active, which shall include, but not be
limited to, those substances listed in the Environmental Statutes, as defined
below, polychlorinated biphenyls ("PCB's"), asbestos and materials containing
PCG's and asbestos (hereinafter collectively "Hazardous Materials"), in, around
or from the Demised Premises. Tenant shall not store, use or allow the storage
or use of Hazardous Materials in or around the Demised Premises in any manner
not sanctioned by law or the highest standards prevailing in the industry for
handling and storage of such Hazardous Materials. In the event that any such
Hazardous Materials are required to be used by Tenant in the ordinary course of
its business, Tenant shall send at least five (5) days' advance written notice
to Landlord of the uses of such substances, including any identification of such
substances or materials. Landlord may deny or restrict Tenant's use or manner of
use of such Hazardous Materials in or around the Demised Premises; however,
Landlord's failure to deny or restrict Tenant's use of Hazardous Materials or to
advise Tenant of an objection to Tenant's use or manner of use of same in the
Demised Premises does not indicate Landlord's approval of such use and, in any
event, Tenant shall remain strictly responsible and liable for any and all
consequences, direct or indirect, resulting from the use of such Hazardous
Materials in or around the Demised Premises.
(b) Tenant shall conduct all of its operations at the Premises in
compliance with all federal, state and local statutes (including, but not
limited to the Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. Section 9601 et. seq., as amended by the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (October 17,
1986) ("CERCLA"); the Resources Conservation and Recovery Act, 42 U.S.C. Section
6901 et. seq. ("RCRA"), Florida Air and Water Pollution Control Act and
regulations enacted thereunder), ordinances, regulations, orders and
requirements of common law, regarding, but not limited to, (i) discharges to the
air, soil, surface or groundwater; and (ii) handling, utilizing, storage,
treatment or disposal of any hazardous substances or toxic substances as defined
therein ("Environmental Statues"). Tenant shall obtain all permits, licenses or
approvals and shall make all notifications and registrations required by
Environmental Statues and shall submit to Landlord, upon request, for inspecting
and copying all documents, permits, licenses, approvals, manifests and records
required to be submitted and/or maintained by the provision of the Environmental
Statutes. Tenant shall also provide promptly to Lessor copies of any
correspondence, notice of violation, summons, order, complaint or other document
received by Tenant pertaining to compliance with Environmental Statutes.
(c) Tenant shall not install at the Premises any temporary or
permanent tanks for the storage of any liquid or gas above or below ground
except as in compliance with the other provisions of this section and after
obtaining written permission to do so from Landlord.
(d) If, because of the manner in which Tenant operates its business,
the Landlord, Landlord's mortgage lender or a governmental agency shall require
testing by an environmental testing entity of its choice, to ascertain whether
there has been a release of Hazardous Materials by Tenant, its agents, servants,
employees or business invitees, in or around the Demised Premises, the
reasonable costs of such testing shall be reimbursed by Tenant to Landlord as
Additional Rent. Tenant shall execute affidavits or representations, at
Landlord's request, stating that, to the best of Tenant's knowledge and belief,
since the time that Tenant took possession of the Demised Premises, there have
been no and there presently are no Hazardous Materials present in the Demised
Premises.
(e) Tenant hereby agrees to indemnify Landlord and to hold Landlord
harmless of, from and against any and all expense, loss, cost, fines, penalties,
loss of value or liability suffered by Landlord by reason of Tenant's breach of
any of the provisions of this section.
(f) The provisions of this section shall survive the termination of
Tenant's tenancy or of this Lease.
42. OPTION TO RENEW
Tenant shall have the right to extend the term of this lease for two
(2) additional terms of five (5) years each ("Extended Terms #1 and #2),
commencing (#1) the first day after the Expiration Date and (#2) the first day
after the last day of Extended Term #1 ("Renewal Day"), upon the following terms
and conditions:
a. On or before the day one hundred eighty (180) days prior to the
applicable Renewal Day, Tenant shall notify Landlord in writing by certified
mail, return receipt requested, of Tenant's election to extend the term of the
Lease, under the terms and provisions of Paragraph 44 of the Lease;
b. At the time of the exercise of such rights and thereafter until
either Extended Term shall commence, Tenant shall not be in breach of the
performance of any of the terms, covenants or conditions of this Lease, which
breach has not been remedied before an event of default has occurred;
c. Such extended term shall be upon the same terms, covenants and
conditions as in this Lease, except that (i) there will be no right to extend
this Lease beyond Extended Terms #1 and #2, and (ii) the annual Basic Rent for
the Extended Terms shall be calculated (with increases) in the same manner as
set forth in Paragraph 3(b) of the Lease.
d. Upon the giving of such notice in writing as aforementioned, this
Lease shall be deemed extended for each Extended Term, subject to the provisions
and conditions of this paragraph, without execution of any further instruments.
e. This Renewal Option may be assigned to a subtenant.
IN WITNESS WHEREOF, the parties hereto have executed these presents the day
and year first above written, intending to be legally bound hereby.
LANDLORD:
WITNESS: HENDERSON EVANS, L.C.
By:/s/David Henderson
------------------------------------
David Henderson
TENANT:
ATTEST: SOFTWARE TECHNOLOGY, INC.
/s/Don F. Riordan
- ------------------------------- By:/s/J.C. Clift
Don F. Riordan ------------------------------------
(Asst.) Secretary Jeffrey C. Clift, President
<PAGE>
EXHIBITS TO SOFTWARE TECHNOLOGY LEASE
Exhibit "A" Final Plans and Specifications and Tenant Scope of Work
Exhibit "B" Specifications for Maintenance Contract
Exhibit "C" Rules and Regulations
Exhibit "D" Tenant Fixtures and Equipment
<PAGE>
EXHIBIT A
[Does Not Exist]
<PAGE>
RIDER
THIS IS A RIDER MADE THIS 14TH DAY OF MAY, 1993, TO THE LEASE OF MAY 14,
1993, BETWEEN HENDERSON EVANS, L.C., a Florida limited liability company, and
SOFTWARE TECHNOLOGY, INC., a Florida corporation ("Tenant").
OPTION TO PURCHASE.
Landlord hereby grants to Tenant the following options to purchase the
Demised Premises. Said options are personal to Tenant and may not be assigned by
Tenant with or without the assignment of the Lease and are under and subject to
the following terms and conditions:
a. Said options shall be exercised, if at all:
(i) at least ninety (90) days prior to the expiration of the
fifth year of the Demised Term of the Lease, by written notice from
Tenant to Landlord by certified mail at Landlord's last known address
("Option A"); or
(ii) at least one hundred eighty (180) days prior to the
expiration of the tenth year of the Demised Term of the Lease, with
written notice by Tenant to Landlord by certified mail at Landlord's
last known address ("Option B").
(b) The purchase price for the Demised Premises shall be its fair
market value (but in no event less than the outstanding mortgage
balance against said Property) as determined by appraisal conducted in
the following manner:
(i) Tenant shall include with its notice of exercise of the
option its name, address and qualifications as set forth in paragraph
b(iv) hereof of its nomination for an appraiser.
(ii) Within ten (10) days thereafter, Landlord shall advise
Tenant in writing of the name, address and qualifications as set forth
in paragraph b(iv) hereof its selected appraiser.
(iii) The two appraisers shall select, within the next ten (10)
days, a third appraiser. If the appraisers selected by Tenant and
Landlord are unable to reach an agreement as to the identity of the
third appraiser within said time period, the appraiser shall be
determined in accordance with the procedures established by the
American Arbitration Association for the selection of an arbitrator,
except that the appraiser selected must meet the qualifications for an
appraiser as hereinafter set forth in (b)(iv) hereof.
(iv) In order to qualify as an appraiser in accordance with the
provisions of this paragraph, the appraiser must qualify as an M.A.I.
Appraiser, be licensed as a real estate broker in accordance with the
laws of the State of Florida, which license is in good standing and
has not been revoked, and it must have substantial experience in the
sale and leasing of commercial and industrial real estate in the area
of Melbourne, Florida.
(v) The third appraiser selected shall actually conduct the
appraisal and determine the fair market value. In determining fair
market value, the appraiser shall appraise the building as being
vacant and available for occupancy by a third party.
(vi) Both Landlord and Tenant may submit to the Appraiser such
information as they believe appropriate for the determination of the
appraisal price. The appraiser may or may not hold a meeting of
Landlord's and Tenant's representatives, as such appraiser deems
desirable;
(vii) Within twenty (20) days after his appointment, the
appraiser shall make his determination of the fair market value,
determined in accordance with the foregoing standards. Said decision
shall be final and binding and not subject to appeal.
(viii) Unless written objection is made to the other party within
five (5) days after the selection of the identity of the appraiser,
the objection to the qualifications of the appraiser shall be deemed
waived. If objections are made to the selection of an appraiser, the
party whose nominee it is will have ten (10) days in which to select
the identity of a new appraiser.
(ix) Tenant and Landlord shall pay the fees and expenses of the
appraiser each has chosen. The parties shall equally divide the fees,
compensation and expenses of the third appraiser.
c. Tenant shall purchase the premises "as is" and Landlord shall not
be responsible for the condition of the building, the infrastructure, the
land or the necessity for any repairs thereto, whether or not structural.
d. The Demised Premises shall be conveyed, subject to title exceptions
appearing on Exhibit "E" attached hereto and incorporated herein by
reference. Said title exceptions include a reference to a certain
Declaration of Covenants, Conditions and Restrictions by and between
Henderson Holding Company and Elmer J. Krauss Organization, recorded of
record in the Office of the Clerk of the Circuit Court in and for Brevard
County, Florida, at Book #2652, Page #2739, et. seq., on December 2, 1985.
e. Title shall be free and clear of all liens, encumbrances and
easements, except those set forth in Exhibit "E" attached hereto. Landlord
shall have the affirmative obligation to discharge before or at the time of
settlement all liens which can be discharged by the payment of money, the
total of which shall not be in excess of the net proceeds of the sale. If
Landlord is unable to provide good and marketable title and such as would
be insured by title insurance and at regular rates, subject only to the
exceptions set forth in Exhibit "E", then Tenant's sole remedy shall be to
terminate its Option or to accept such title as Landlord is able to convey,
without abatement of the Purchase Price.
f. Settlement shall be made on said Purchase under subparagraph (a)(1)
hereof during the last month of the fifth year of the Demised Premise, upon
ten (10) days' written notice from Tenant to Landlord of under paragraph
(a)(2), during the last month of the tenth year of the Demised Term, again
settlement being on ten (10) days' written notice from Tenant to Landlord.
Settlement shall be held at the office of title insurer, and if there is no
title insurer, at the office of seller.
g. Time is of the essence of this Agreement in exercising the option
and in consummating closing.
h. At the time of closing, the purchase price shall be payable by
certified check, cashier's check or wire transfer to Landlord's account
pursuant to the written instructions of Landlord.
i. Documentary stamps on the deed and recording corrective instruments
shall be paid by Landlord. Documentary stamps and intangible tax on the
mortgage, if any, shall be paid by Landlord. Documentary stamps and
intangible tax on the mortgage, if any, shall be paid by Tenant. Taxes,
assessments, rent, interest, insurance and other expenses and revenue of
property shall be pro rated through day before closing. Cash at closing
shall be increased or decreased as may be required by pro-rations. Taxes
shall be pro rated based on the current year's tax, with due allowance made
for maximum allowance discount, homestead and other exemptions. If closing
occurs at a date when the current year's millage is not fixed, and current
year's assessment is available, taxes will be pro-rated based upon such
assessment in a prior year's millage. If current year's assessment is not
available, then taxes will be pro-rated on the prior year's tax. Any tax
pro ration based on an assessment may, at request of either Tenant or
Landlord, be subsequently readjusted upon receipt of tax bill on condition
that a statement to that effect is in the closing statement.
j. The deed shall be a special warranty deed which shall be recorded
upon clearance of funds.
k. If Tenant fails or refuses to consummate closing on the purchase
within the time specified, and at Landlord's option, the Tenant shall be
liable to Landlord for ten percent (10%) of the purchase price as agreed
upon liquidated damages, and in full settlement of any claims whereupon
Tenant and Landlord shall be relieved of all further obligations under the
exercised option to purchase; or Landlord, at Landlord's option, may
proceed in equity to enforce Landlord's rights under this Agreement for
consummation of the exercise to Purchase. If for any reason other than
failure of Landlord to make Landlord's title marketable after diligent
effort, Landlord fails or neglects or refuses to perform this Contract, the
Tenant may seek specific performance, which shall be Tenant's only remedy.
l. From the time of exercise of the Option to Purchase until the time
of Closing, Tenant on the Lease for the property to be purchased may not be
in default in any of the provisions of its Lease. In the event the Option
to Purchase is rescinded due to Tenant default in its Lease, Seller may
retain the deposit money as liquidated damages, and Tenant shall have no
further options to purchase the Demised Premises.
IN WITNESS WHEREOF, the parties hereto have executed this Rider to the
Lease the day and year first above written.
LANDLORD:
WITNESS: HENDERSON EVANS, L.C.
By:/s/David Henderson
------------------------------------
David Henderson
TENANT:
ATTEST: SOFTWARE TECHNOLOGY, INC.
/s/Don F. Riordan
- ------------------------------- By:/s/J.C. Clift
Don F. Riordan ------------------------------------
(Asst.) Secretary Jeffrey C. Clift, President
<PAGE>
EXHIBIT B
MAINTENANCE SERVICE SPECIFICATIONS FOR HVAC SYSTEMS
Service Agreements must include the following items:
a. Quarterly inspections (four times per year) to include filter changing.
b. Belt replacement as needed (but at least once per year), adjust belt
tension.
c. Grease and oil all motor, bearings and additional moving parts (i.e.,
dampers).
d. Preserve exterior casing by removing rust and apply paint. Insure casing is
secure.
e. Evaporator and condenser cleaning once a year prior to spring start-up: (1)
Condensate drain pans cleaned and preserved as needed. (2) Cleaning
solution to be non-acidic type (as to protect delicate roofing materials)
f. Evaporative condensers or cooling towers shall be cleaned upon
winterization. All debris shall be removed from sumps and water drained
from lines and pump casing. (1) Upon restart, water treatment shall be
added as necessary to inhibit molds (by drip feeder or tablet method, cost
of material to be additional to base contract price).
g. Heat exchangers shall be inspected and cleaned prior to heating season.
h. Stacks shall be checked for corrosion and leakage prior to heating season;
clean as necessary, make sure flue caps are installed and intact.
i. Warning safety controls shall be checked as per manufacturer's testing
instructions with result noted on each service report.
j. Oil tanks shall be dipped and tested for water contamination prior to
heating season.
k. Lift tanks, pumps, and controls shall be serviced prior to heating season.
l. Unitary controls (i.e., fan limits, gas valves, modulating fire controls,
pressure switches, remote shut-offs) shall be checked and calibrated as
necessary.
m. Refrigerant circuits shall be leak checked prior to start up.
n. Refrigerant controls shall be checked and adjusted to manufacturer's
specifications (i.e., thermostatic expansion valve, hot gas bypass valves).
o. Unitary operating controls and safety controls (i.e., oil failure, high-low
pressure cutouts, time delay/and short cycle device), shall be tested and
adjusted to maintain complete system protection.
p. All electrical connections will be tightened.
q. All contractors will be inspected and cleaned.
r. All electric motor loads shall be monitored including amperage and voltage.
s. All motor mounts and compressor mounts shall be checked for integrity and
serviced as necessary to prevent vibration throughout units.
t. All record of all operating temperatures pressure and electrical data shall
be forwarded to the customer for each unit serviced, the record will
include model and serial number.
u. A schedule of rates will be included for standard overtime and holiday
rates for service not covered under contract.
v. A mark-up percentage for material shall be forwarded along with rate
schedule.
w. A guaranteed response time, a referred customer status shall be extended to
the customer for emergency call out.
x. A form listing the maintenance work completed on what date shall be
forwarded to customer with service order or invoice.
<PAGE>
EXHIBIT C
RULES AND REGULATIONS
1. Tenant will not keep any animals or birds in the Demised Premises or in the
building nor permit any animals or birds to be brought into or kept in the
Demised Premises by others.
2. Tenant will not go, or authorize or permit anyone to go upon the roof of
the building except as authorized by Landlord for the maintenance or repair
of HVAC equipment.
3. Tenant will not make, commit or permit any improper noises or disturbances
in the building, mark, defile and deface the Demised Premises or the
building of which the Demised Premises is a part or interfere in any way
with other tenants, their employees or those having business with them.
4. Tenant agrees that Landlord shall in no case be liable for the admission or
exclusion of any person from said building.
5. Tenant will not occupy the Demised Premises as living quarters or sleeping
apartments or in any manner or for any use or purpose other than as herein
stated. Tenant will not use the halls, passages, elevators and stairways of
the building of which the Demised Premises are a part for any purpose other
than ingress and egress.
6. Tenant will not use the toilet rooms, water closets, urinals and other
water fixtures and apparatus on the Demised Premises or in the building of
which the same are a part for any purpose other than that for which they
were designed and constructed, nor throw sweepings, rubbish, rags, ashes,
chemicals or other injurious substances therein.
7. Tenant will give Landlord prompt notice of any canvassers, newsboys,
peddlers or beggars plying their trade in the building of which the Demised
Premises are a part.
8. Tenant will close the windows and securely lock the doors of the Demised
Premises before leaving the building each day.
9. Tenant will not hang or install on any window any window shade, blind or
curtain without the written approval of Landlord. Landlord will supply
uniform window blinds for all Tenants; however, the Tenant shall be
responsible for (all costs incurred) repair or replacement of the window
blinds except for reasonable wear and tear.
10. Tenant will not permit or allow any sign to be displayed or painted on the
exterior door of the demised Premises or the building of which the Demised
Premises is a part without the consent of Landlord in writing.
<PAGE>
EXHIBIT D
[Does Not Exist]
<PAGE>
LEASE MODIFICATION NUMBER ONE
This agreement dated September 5, 1995 by and between HENDERSON EVANS,
L.C., a Florida limited liability company as Landlord, and SOFTWARE TECHNOLOGY,
INC., a Florida corporation, as Tenant, covers the Demised Premises commonly
known as 1225 Evans Road, Melbourne, Florida 32904.
Whereas, Landlord and Tenant entered into a Lease Agreement on May 14, 1993
and;
Whereas, the Tenant requests that its current Lease be modified to include
an additional 6,900 square feet which is located contiguous to and south of the
Demised Premises as shown on the attached Exhibit "X"; and to be constructed
according to the attached Plans and Specifications.
Now therefore, in consideration of the Tenant's request the Landlord and
Tenant hereby agrees to the following modifications to the Lease.
1. The floor area under the referenced Lease shall be 29,400 square feet.
2. Upon receipt of a Certificate of Occupancy the annual net rental
amount will be $223,440.00 and paid monthly at the rate of $18,620.00.
The lease rate will be adjusted annually per paragraph 3 commencing
with year two of the new term. Expense reconciliation will continue to
occur on February 1st of each year.
3. The term will be reset to ten (10) years and the expiration date will
be December 31, 2005.
All other terms and conditions of the referenced Lease shall remain
unchanged.
In witness whereof, the parties have hereunto set their hands and seals the
day and the year first written above.
LANDLORD:
HENDERSON EVANS, L.C.
/s/John B. Conda By:/s/William Henderson
- ------------------------------ -----------------------------
Witness ITS: Partner
/s/Joy Schaible
- ------------------------------
Witness
PARTNER:
SOFTWARE TECHNOLOGY, INC.
By:/s/Don F. Riordan
/s/J.C. Clift -----------------------------
- ------------------------------ ITS: Secretary/Treasurer
Witness
Signature Illegible
- -------------------------------
Witness
<PAGE>
Exhibit X
[Map of Demised Premises]
<PAGE>
LEASE MODIFICATION NUMBER TWO
This agreement dated April 3, 1996 by and between HENDERSON EVANS, L.C., a
Florida limited liability company as Landlord, and SOFTWARE TECHNOLOGY, INC., a
Florida corporation, as Tenant, covers the Demised Premises commonly known as
1225 Evans Road, Melbourne, Florida 32904.
Whereas, Landlord and Tenant entered into a Lease Agreement on May 14, 1993
and;
Whereas, Landlord and Tenant modified such Lease Agreement on September 5,
1995 and;
Whereas, the Landlord requests that the current lease expiration date be
adjusted to coincide with the completion of the addition to the facility.
Now therefore, in consideration of the Landlord's request the Landlord and
Tenant hereby agrees to the following modifications to the Lease.
1. The term will be reset to ten (10) years and the expiration date will
be February 28, 2006.
2. As inducement to reset the Lease Term, the Landlord shall forgo the
annual increase which was due on February 1, 1996.
3. Annual Base Rent beginning March 1, 1996 will be $223,440 and shall be
adjusted annually pursuant to paragraph 3 of the Lease. The new Base
Index, pursuant to paragraph 3 of the Lease, will be the Consumer
Price Index (CPI) for November, 1995.
All other terms and conditions of the referenced Lease shall remain
unchanged.
In witness whereof, the parties have hereunto set their hands and seals the
day and the year first written above.
LANDLORD:
HENDERSON EVANS, L.C.
/s/John D. Conda By:/s/David Henderson
- ------------------------------ ----------------------------------
Witness David Henderson
/s/Joy Schaible
- -------------------------------
Witness ITS: Partner
PARTNER:
SOFTWARE TECHNOLOGY, INC.
/s/Barbara Cole By:/s/J.C. Clift
- ----------------------------- ----------------------------------
Witness J.C. Clift
ITS: President
/s/Marianne Crovetto
- ----------------------------
Witness
Exhibit 10.9
LEASE AGREEMENT
THIS AGREEMENT is made the 31st day of March, 1997 by and between HENDERSON
COMET, L.C. a Florida limited liability company, ("Landlord"), and SOFTWARE
TECHNOLOGY, INC., a Florida corporation, ("Tenant").
1. DEMISED PREMISES. Landlord does hereby demise and let unto Tenant, and
Tenant rents from landlord, all that land ("Land") as shown on the recorded Plat
Plan for Airport Corporate Center for Lot No. 2, together with the building of
approximately 30,000 square feet ("Building") to be constructed thereon on
behalf of Landlord in Airport Corporate Center ("Center"), Melbourne, Brevard
County, Florida. (Land and Building hereinafter collectively "Demised
Premises"), for a term described in Paragraph 2 hereof, and to be used and
occupied as office, engineering, manufacturing and assembly space and for no
other purpose.
2. DEMISED TERM. This Lease shall be for a term of ten (10) years (plus any
partial month if the Commencement Date is other than the first day of the month)
("Demised Term"), unless earlier terminated pursuant to the terms of this Lease,
beginning the date on which Landlord substantially completes the leasehold
improvements, as evidenced by a certificate of occupancy issued by the City of
Melbourne, in accordance with Paragraph 5 hereof and delivers the Demised
Premises to Tenant ("Commencement Date"), and ending the last day of the one
hundred twentieth (120th) month following the Commencement Date ("Expiration
Date"). Within thirty (30) days following the Commencement Date, Landlord and
tenant shall confirm the Commencement Date in writing. The Commencement Date
shall be as specified in Paragraph 6b. hereof.
3. BASIC RENT.
(a) FIRST YEAR OF THE DEMISED TERM. During the first Lease Year of the
Demised Term, Tenant agrees to pay a net Basic Rent (`Basic Rent") in the sum of
$178,000.00 per annum lawful money of the United States of America, payable in
advance during the First Year of the Demised Term of this Lease in sums of
$14,883.33 on the first day of each month subject to those conditions outlined
in Exhibit "E" attached, rent to begin on the Commencement Date. Rent due and
payable without demand or offset, at the office of Landlord (Attention:
Accounting Department).
(b) YEARS 3-10 OF THE DEMISED TERM AND EXTENDED TERMS. During the
third through tenth Lease Years and any years during the Extended Term, Tenant
agrees to pay a net Basic Rent ("Basic Rent") in the sum of: the previous Year's
Basic Rent, PLUS the lessor of: (I) an adjustment for Consumer Price Index
("CPI") increase, as defined below, or (ii) two percent (3%) of the previous
Year's Basic Rent.
ADJUSTMENT FOR CPI INCREASE: The CPI adjustment for each subsequent
Year's Basic Rent shall be: an amount equal to the percentage change
in the Consumer Price Index, as measured from the Base Index to the
Comparison Index, multiplied by the previous Year's Basic Rent. For
the purposes of this paragraph:
(a) The CPI shall mean the Consumer Price Index (Base Period 1967)
(U.S. city average for urban consumers), published by the Bureau of
Labor Statistics of the United Stated Department of Labor; provided
that if such Consumer Price Index is no longer published at regular
periods, then any similar report released by any other bureau,
department or agency of the United States Government at regular
periods, for substantially similar purposes, shall be used;
(b) The Base Index shall mean the most recent Consumer Price Index
published sixty (60) days prior to commencement of the Lease Year;
(c) The Comparison Index shall mean the most recent Consumer Price
Index published sixty (60) days prior to the end of the Lease Year.
(d) Lease Year shall mean the twelve (12) month period starting on the
Commencement Date and each anniversary thereof during the Demised
Term.
4. NET LEASE. It is the intent of the parties hereto that this is a net
lease, and that all costs of ownership, maintenance and use of the Demised
Premises, shall be paid by Tenant in addition to the payments of Basic Rent
specified above, provided, however, Landlord shall be responsible for property
management expenses, if any, structural repairs to the exterior foundation,
roofs, the plumbing in common areas and/or outside of the Building, and exterior
walls (but excluding the exterior of, and the frames surrounding all windows,
doors, plate glass, store fronts and signs). Said repairs by Landlord will be
made within a reasonable time after notice from Tenant. Landlord shall provide
all Common Area Services ("Common Area Services" is defined as exterior
janitorial services, grounds maintenance, landscaping, parking lot maintenance
and site lighting, if applicable) to the Demised Premises, at Tenant's expense.
Tenant shall have the right to approve, in advance, all contracts for Common
Area Services for the Demised Premises.
5. IMPROVEMENT OF DEMISED PREMISES.
(a) CONSTRUCTION OF THE BUILDING. After execution of this Lease and
initialing of the final plans and specifications ("Final Plans and
Specifications") for the Building, which Final Plans and Specifications are
attached hereto as Exhibit "A" and incorporated herein by reference, Landlord
shall promptly make application for all building permits and approvals. Any
changes to the Final Plans and Specifications required by Tenant during the
building or fit-up of the Demised Premises shall be by separate written change
order (including payment terms), with an extension of time to complete the
building of the Demises Premises, if necessary, signed by both parties.
(b) FIT-UP WORK. Utilizing a general contractor selected by Landlord,
Landlord shall complete and prepare the Demised Premises for Tenant's initial
occupancy in a good and workmanlike manner in accordance with Tenant's
Improvement Plan which has been initialed by both Landlord and Tenant.
(c) MATERIALS USED FOR FIT-UP WORK. Landlord shall use materials as
outlined on the attached Tenant Scope of Work (Exhibit "A"). Landlord reserves
the right, however: (1) to make substitutions of material of equivalent grade
and quality when and if any specified material shall not be readily and
reasonably available, and (2) to make changes necessitated by conditions met in
the course of construction, provided that Tenant's approval of any change shall
first be obtained (which approval shall not be unreasonably withheld) so long as
there shall be general conformity with Tenant's Improvement Plans and Tenant's
intended use of the Demised Premises and which approval must be given or denied
(with reasons stated in the case of denial) within forty-eight (48) hours after
request or approval shall be conclusively deemed to have been given.
6. INABILITY TO GIVE POSSESSION.
(a) EXCUSABLE DELAYS. Landlord shall not be liable to Tenant for any
damages caused by Landlord's inability to deliver possession of the Demised
Premises to Tenant on the Commencement Date, as a result of causes beyond
Landlord's reasonable control, including, but not limited to, delays caused by
Tenant's acts or by strikes, lockouts, labor disputes, inclement weather
(including the day(s) following inclement weather when contraction work cannot
proceed due to saturation of soils or other unsatisfactory conditions),
inability to procure materials, failure of power, restrictive governmental rules
and regulations, riots, insurrections or war ("Excusable Delays").
(b) DELIVERY OF DEMISED PREMISES. If the Landlord shall be unable to
give possession of the Demised Premises within nine (9) months of receiving the
building permit from the City of Melbourne, exclusive of Excusable Delays
("Completion Date") or because a certificate of occupancy has not been procured,
Landlord shall not be subject to any liability for such inability to give
possession under such circumstances. The payment of rent shall not commence
until the Commencement Date. The failure to give possession on the Completion
Date shall not affect the validity of this Lease or the obligations of Tenant
hereunder or extend the Demised Terms, provided, however, in the event Landlord
is unable to give possession on or before the tenth (10th) month after receiving
the building permit from the township (exclusive of Excusable Delays), then
Tenant shall have the option of declaring the Lease terminated by giving
Landlord written notification thereof, by registered mail, within two (2) weeks
of the first day of said tenth (10th) month.
7. ADDITIONAL RENT.
(a) BREACH. Tenant agrees to pay as rent in addition to the Basic Rent
any and all sums which may become due by reason of the failure of Tenant to
comply with all of the covenants of this Lease and any and all damages, costs
and expenses, including attorney's fees, which the Landlord may suffer or incur
by reason of such default, and also any and all damages to the Demised Premises
caused by any act or neglect of the Tenant.
(b) TAXES, ASSESSMENTS, ETC. Tenant will duly promptly pay as
additional rent to Landlord, as the same shall become due and payable and before
they become delinquent, all taxes, rates, assessments and other governmental
charges, and charges of every kind and nature whatsoever; nonrecurring as well
as recurring, special or extraordinary as well as ordinary, foreseen and
unforeseen, and each and every installment thereof, which shall or may during
the term of the Lease be levied, assessed or imposed, or become due and payable
or become liens upon, or arise in connection with the use, occupancy or
possession of, or any interest in, the Demised Premises, or upon the rents,
issues, income and profits therefrom so as to prevent the same from becoming or
being an enforceable lien or claim against the property or the interest of
Landlord ("Expenses"). Landlord shall apply such payment by Tenant to the
payment of such Expenses, but in no event shall Landlord be required to pay such
Expenses early or during discount periods. Such Expenses shall include all real
estate taxes, assessments, water and sewer charges which may become liens upon
the Demised Premises or any part thereof. If Landlord requests Tenant to pay
such Expenses other than to Landlord, Tenant will furnish or cause to be
furnished to Landlord not less than fifteen (15) days prior to the date on which
payment of the same would become delinquent, or subject to penalty or interest,
receipts or other evidence satisfactory to Landlord of the payment of all such
Expenses. If Landlord requests in writing, Tenant shall pay to Landlord, or as
Landlord may direct, such Expenses in advance in installments as estimated and
determined by Landlord, and deposited with Landlord, or as directed by Landlord,
for payment of all such Expenses when the same may become due and payable.
Notwithstanding the foregoing, Tenant shall not be responsible for gross
receipts or other income taxes incurred by Landlord on the rents received
hereunder unless it is imposed in lieu of another charge for which Tenant is
responsible hereunder.
If the Tenant deems excessive or illegal any such Expenses, with the
written consent of the Landlord, the tenant may make payment under protest. Any
contest, whether before or after payment, may be made in the name of the
Landlord or the Tenant or both, with the written consent of the Landlord. If
requested by Tenant, Landlord may, but shall not be required to participate in
any such contest, but the Tenant shall be entitled to any refund of any such
Expenses, and any penalty or interest thereon which may have been paid by the
Tenant, but all costs in connection with such contest shall be borne by the
Tenant.
In case of failure of the Tenant to make any of the payments to be
made by Tenant for such Expenses, the Landlord may, but shall not be required
to, pay the amount of same, with penalty and interest thereon, if any. The
amount so paid by the Landlord, with interest thereon from the date of payment
thereof by the Landlord, shall be added to and become a part of the next
installment of rent.
If at any time during the term of this Lease the methods of taxation
prevailing at the commencement of the term hereof shall be altered so that in
lieu of or as a supplement to or a substitute for the whole or any part of the
real estate taxes or assessments now levied, assessed or imposed (1) a tax,
assessment, levy, imposition or charge, wholly or partially as a capital levy or
otherwise, on the rents received therefrom or (2) a tax, assessment, levy
(including but not limited to any municipal, state or federal levy), imposition
or charge measured by or based in whole or in part upon the premises and imposed
upon the Landlord, or (3) a license fee measured by the rent payable under this
Lease, then all such taxes, assessments, levies or impositions and charges, or
the part thereof so measured or based shall be deemed to be included in the
general real estate taxes and assessments payable by the Tenant pursuant hereto
to the extent that such taxes, assessments, levies, impositions and charges
would be payable if the premises were the only property of the Landlord subject
thereto, and the Tenant shall pay and discharge the same as herein provided in
respect of the payment of general real estate taxes and assessments.
(c) INSURANCE. Landlord shall keep all buildings and improvements now
or hereafter erected upon the Demised Premises, together with Chattels therein,
insured for the benefit of Landlord against loss by fire and other casualties
and hazards usually covered by extended coverage insurance in an amount not less
than the replacement value of the Demised Premises (excluding foundations and
other parts below the surface of the lowest floor), as determined not more than
once annually by an appraiser or rating bureau satisfactory to Landlord. Tenant
agrees that it will, throughout the Demised Term, pay and discharge as
additional rent, the cost incurred by Landlord in insuring the Demised Premises
as above stated. Insurance premiums at the beginning and end of the term shall
be apportioned. It is expressly understood and agreed that if for any reason
attributable to Tenant it shall be impossible to obtain Fire insurance on the
building and improvements on the Demised Premises in an amount and in the form
and with fire insurance companies acceptable to the Landlord, the Landlord may,
if the Landlord elects, (a) terminate this Lease and the term thereof on giving
to the Tenant fifteen (15) days' notice in writing of Landlord's intention to do
so and upon the giving of such notice this lease and the terms thereof, shall
terminate and come to an end; (b) compute the additional costs for such
insurance over and above the standard cost as if the condition attributable to
Tenant did not exist and Tenant shall be obligated to pay all of such additional
cost.
Tenant shall also provide at its sole cost and expense, any insurance
on improvements made to or inside the Demised Premises by Tenant. Such policy
shall name as insured Landlord and Tenant, as their interests may appear and
shall name Landlord's first mortgagee, if any, as mortgagee. A copy of such
policy shall be furnished to Landlord and Landlord's first mortgagee.
Tenant at its own cost and expense will provide and keep in force
during the Demised Term of this Lease commercial general liability insurance
covering at lease the hazards of "premises-operations", "elevators" (if
applicable) and "independent contractors" in which Landlord shall be included as
a named insured, in such other limits of liability as may be required by
Landlord from time to time, but not less than One Million Dollars
($1,000,000.00) combined single limit, with a deductible not to exceed Five
Thousand Dollars ($5,000.00). Such insurance shall cover not only the Demised
Premises but shall also include all elevators, hoists, hallways, entranceways,
stairs or any other common areas (exterior or interior), streets, driveways,
alleys, lawns, parking and loading areas, sidewalks and curbs adjacent thereto.
All such policies shall contain provision for notice to the said
Landlord not less than ten (10) days in advance of any cancellation or material
change of such policy. In case of failure of the Tenant to make premium payments
when due, the Landlord may pay the amount of any such premiums, which amount
with interest thereon from the date of payment by Landlord shall be added to and
become part of the next installment of rent.
Copies of renewal policies or certificates for any insurance required
under this Paragraph shall be deposited by Tenant with Landlord at least ten
(10) days prior to the expiration of existing policies, and upon failure to do
so Landlord may immediately purchase, for the account of Tenant, the necessary
insurance from any reputable insurance company without notice to Tenant, and
Tenant shall reimburse Landlord for cost thereof within ten (10) days after
demand.
All insurance required hereunder shall be issues by companies licensed
to do business in Florida and acceptable to Landlord. Tenant shall have the
right to carry the insurance provided for in this Paragraph, or any portions of
such insurance under a blanket or comprehensive all-risks policy.
d. UTILITIES. Tenant further agrees to pay as additional rent all
charges for water, sewer, gas, oil, electricity, light, heat, power, telephone
or other utility used by Tenant at the Demise Premises during the Demised Term.
All charges for repair of the utility meter(s) on the Demised Premises, whether
such repairs are made necessary by ordinary wear and tear, freezing, hot water,
accident, or other causes, shall be payable by Tenant as additional rent and
shall be paid immediately when the same become due.
e. MISCELLANEOUS. Tenant agrees to pay as Additional Rent its pro-rata
share of all Center charges, as set forth in Paragraph 35 hereof, for: signage
repairs, exterior janitorial service, grounds maintenance and landscaping,
parking lot maintenance, fences and site lighting. Landlord shall perform, at
Tenant's cost and expense, the grounds maintenance, landscaping, parking lot
maintenance and site lighting for the Demised Premises and bill Tenant the cost
for same as Additional Rent.
8. TIME, PLACE AND WITHHOLDING OF PAYMENT. Unless provided otherwise
herein, all Basic Rent and additional rent shall be payable in advance without
prior notice or demand and without any set off or deduction whatsoever at the
office of Landlord (or at such other place as Landlord may from time to time
designate by notice in writing) and at the times provided for the payment of the
Basic Rent. Under no circumstances will Tenant be permitted to withhold rent for
any reason.
9. AFFIRMATIVE COVENANTS OF TENANT. Tenant covenants and agrees that it
will without demand:
(a) INTERFERENCE AND WASTE. Conduct its business in such a manner as
not to interfere with or be a nuisance to the conduct of the Landlord's business
or that of any of Landlord's other tenants, and shall not allow any noxious
odors or vapors to be emitted from the Demised Premises. Landlord agrees that it
will conduct its business so as not to interfere with that of the Tenant. Use of
explosives, flammables and/or corrosive agents and other like materials is not
approved unless authorized by Landlord in advance. Any cleaning agent apparatus
will be installed and vented to the outside at Tenant's cost and only if
installation is approved in writing in advance by Landlord. Tenant shall not
engage in activities that waste the premises.
(b) MAINTENANCE AND REPAIR. Keep the Demised Premises and improvements
erected thereon in good condition and repair, including all plumbing, heating,
electrical and air conditioning systems and any loading facilities including
loading doors and dock bumpers. Tenant at its own expense shall enter into a
maintenance contract ("Maintenance Contract") with a heating and air
conditioning repair service acceptable to Landlord for the Demised Term and
shall provide Landlord with a copy of same. The specifications for the
Maintenance Contract are attached hereto as Exhibit "B". The Tenant shall permit
the Landlord or Landlord's duly authorized agents to enter upon the Demised
Premises and the buildings and improvements thereon erected at any reasonable
time, and from time to time, for the purpose of inspecting and appraising the
same. The Tenant shall comply with all orders, regulations, rules and
requirements of every kind and nature relating to the Demised Premises, now or
hereafter in effect, of the Federal, State Municipal or other governmental
authorities having power to enact, adopt, impose or require the same, whether
they be usual or unusual, ordinary or extraordinary, and whether they or any of
them relate to structural changes or requirements of whatever nature, or to
changes or requirements incident thereto, or as the result of the use or
occupation thereof by Tenant, and the Tenant shall pay all costs and expenses
incidental to such compliance, and shall indemnify and save harmless the
Landlord from all expense, and damages by reason of any notices, orders,
violations or penalties filed against or imposed upon the Demised Premises or
against the Landlord as owner thereof, because of the failure of the Tenant to
comply with this covenant. Tenant further agrees to keep the Demised Premises
clean and free from all ashes, dirt and other refuse matter; replace all glass
windows, doors, etc., which are broken; and keep all waste and drain pipes open.
In the event of the failure of Tenant promptly to perform the
covenants of Paragraph 8(b) hereof, Landlord may go upon the Demised Premises
and perform such covenants, the cost thereof, at the sole option of Landlord, to
be charged to Tenant as additional and delinquent rent.
(c) COMPLIANCE. Comply with any requirements of any of the constituted
public authorities, and with the terms of any State or Federal statute or local
ordinance or regulation applicable to Tenant or its use of the Demised Premises
and save Landlord harmless from penalties, fines, costs or damages resulting
from failure to do so.
(d) FIRE. Use every reasonable precaution against fire.
(e) RULES AND REGULATIONS. Comply with reasonable rules and
regulations of Landlord promulgated as hereinafter provided (See attached
Exhibit "C").
(f) SURRENDER OF DEMISED PREMISES. Upon the expiration or other
termination of this Lease, for any reason whatsoever, surrender to the Landlord
the Demised Premises together with the buildings and improvements thereon
erected or standing thereon and the building equipment then upon the Demised
Premises, together with all alterations and replacements thereon, in good order,
condition and repair, except for reasonable wear and use thereof, and except
also, such damage by fire or other cause for which the Tenant is obligated to
maintain insurance under the provisions of this Lease if the proceeds of such
insurance have been received by Landlord, and except further, such damage by any
taking by condemnation or exercise of the right of eminent domain if the
Landlord has received the proceeds of such condemnation or exercise of eminent
domain and applied the same under the provisions of this Lease. Tenant further
agrees to promptly deliver to Landlord at his office all keys for the Demised
Premises, and shall have removed from the Demised Premises those items listed on
Exhibit "D" and such other items referred to in Paragraph 10d hereof as Landlord
shall have given Tenant notice to remove. If Tenant fails to remove said items
prior to the surrender of the Demised Premises, Landlord may dispose of the
same, at Tenant's expense.
(g) NOTICE OF CASUALTY. Give to Landlord prompt written notice of any
accident, fire, or damage occurring on or to the Demised Premises.
(h) AGENCY FOR LEASING. Not vacate or desert the Demised Promises
during the Demised Term, or any renewal term, nor permit same to be empty and
unoccupied without consent of Landlord. If, with the permission in writing of
Landlord, Tenant shall vacate or decide at any time during the Demised Term to
vacate the herein Demised Premises prior to the expiration of this Lease, or any
renewal hereof, Tenant will not cause or allow any other agent to represent
Tenant in any subletting or reletting of the Demised Premises other than an
agent approved by the Landlord, and that should Tenant do so, or attempt to do
so, the Landlord, may remove any signs that may be placed on or about the
Demised Premises by such other agent without any liability to landlord or to
said agent, the Tenant assuming all responsibility for such action.
10. NEGATIVE COVENANTS OF TENANT. Tenant covenants and agrees that he
will do none of the following things without the consent in writing of Landlord
first had and obtained:
(a) USE. Occupy the Demised Premises in any other manner or for any
other purpose than as above set forth.
(b) ASSIGNMENT, ETC. Assign this Lease or hypothecate or mortgage the
same or sublet the Demised Premises or any part thereof. Any assignment,
transfer, hypothecation, mortgaging or subletting without the written consent of
the Landlord shall be void. The following shall be considered a violation of
this covenant:
1. filing of a petition by or against the Tenant under Chapter 7,
11 or 13 of Title 11, United States Code, Bankruptcy, as now or hereafter
amended or supplemented, or the filing of any petition by or against (and if
against not dismissed within thirty (30) days) the Tenant under any future
bankruptcy act or state law for the same or similar relief;
2. the dissolution or the commencement of any action or
proceeding for the dissolution or liquidation of the Tenant, in connection with
bankruptcy or other insolvency, whether instituted by or against (and if against
not dismissed within thirty (30) days) the Tenant or for the appointment of a
permanent receiver or a permanent trustee of all or substantially all the
property of the Tenant;
3. the taking possession of the property of the Tenant by any
governmental officer or agency pursuant to statutory authority for the
dissolution, rehabilitation, reorganization, or liquidation of the Tenant; or
4. the making by the Tenant of any assignment for the benefit of
creditors.
(c) Place or allow to be placed any stand, booth, or show case upon
the doorsteps, vestibules or outside walls, pavements of said Demised Premises,
or place, erect or cause to be placed or erected any projection or device on or
in part of the Demised Premises. Tenant shall remove any projection or device
placed or erected, if permission has been granted and restore the walls, etc.,
to their former conditions, at or prior to the expiration of the lease. In case
of the breach of this covenant (in addition to all other remedies given to
Landlord in case of the breach of any conditions or covenants of this Lease)
Landlord shall have the privilege of removing said stand, booth, show case,
projection or device, and restoring said walls, etc., to their former condition,
and Tenant, at Landlord's option, shall be liable to Landlord as additional rent
for any and all expenses so incurred by Landlord.
(d) ALTERATIONS AND IMPROVEMENTS. Make any structural alterations,
improvements, or additions to the Demised Premises. All alterations, additions
and improvements (except trade fixtures, furniture and equipment listed on the
attached Exhibit "D", other than building equipment but including electrical
installations, plumbing installations, heating units, cooling and/or
refrigeration units, fire and burglar alarms and associated detection devices
and related wiring, communication equipment and lighting fixtures) which may be
made or installed by Tenant upon the Demised Premises shall upon the making or
installation thereof be and become a part of the Demised Premises and shall
remain upon and be surrendered with the Demised Premises as a part thereof at
the termination of this Lease, unless Landlord shall, prior to the termination
of this Lease, have given written notice to Tenant to remove the same, in which
event Tenant will remove such alterations, improvements, and additions and
restore the Demised Premises to the same good order and condition in which they
now are. Should Tenant fail to do so, Landlord may do so, collecting, at
Landlord's option, the cost and expense thereof from Tenant as additional rent.
(e) MACHINERY. Use or operate any machinery that, in Landlord's
opinion, is harmful to the Demised Premises or building of which the Demised
Premises is a part.
(f) WEIGHTS. Place any weights in any portion of the Demised Premises
beyond the safe carrying capacity of the structure.
(g) REMOVAL. Remove, attempt to remove or manifest an intention to
remove Tenant's goods or property from or out of the Demised Premises otherwise
than in the ordinary and usual course of business, without having first paid and
satisfied Landlord for all rent then due.
(h) VACATION. Vacate or desert the Demised Premises during the Demised
Term, or permit the same to be empty and unoccupied without the permission of
Landlord.
(i) RECORDATION. Record this lease. If Tenant violates this covenant,
Tenant hereby irrevocably authorizes, empowers and designates Landlord as its
lawful attorney for the purpose of having said Lease marked satisfied of record.
11. LANDLORD'S RIGHTS. Tenant covenants and agrees that Landlord shall have
the right to do the following things and matters in and about the Demised
Premises:
(a) INSPECTION. At all reasonable times by himself or his duly
authorized agent to go upon and inspect the Demised Premises and every part
thereof, and/or at his option to make repairs, alterations and additions to the
Demised Premises or the building of which the Demised Premises is a part.
Excepting emergencies, Landlord shall give Tenant 24 hours' prior notice of
inspection, and Tenant shall have the right to escort Landlord during such
inspection, if Tenant so desires.
(b) RULES AND REGULATIONS. At any time or times and from time to time
to make such reasonable rules and regulations as in his judgment may from time
to time be necessary for the safety, care and cleanliness of the Demised
Premises, and for the preservation of good order herein. Such rules and
regulations shall, when notice thereof is given to Tenant, form a part of this
Lease.
(c) FOR SALE OR RENT. To display a "For Sale" sign at any time and
also, after notice from either party of intention to terminate this Lease, or at
any time within three months prior to the expiration of this Lease, a "For Rent"
sign, or both "For Rent" and "For Sale" signs; and all of said signs shall be
placed upon such part of the Demised Premises as Landlord may elect and may
contain such matter as Landlord shall require. Prospective purchasers or tenants
authorized by Landlord may inspect the premises at reasonable hours at any time.
(d) DISCONTINUANCE OF FACILITIES AND SERVICES. The Landlord may
discontinue all facilities furnished and services rendered, or any of them by
Landlord, not expressly covenanted for herein, it being understood that they
constitute no part of the consideration for this Lease.
12. RESPONSIBILITY OF TENANT. Landlord shall not in any event be
responsible, and the Tenant hereby specifically assumes responsibility for any
personal or bodily injury or death of any persons (including employees of Tenant
and Landlord) and damage, destruction, or loss of use of any property, including
the Demised Premises (except as specifically provided otherwise herein)
occasioned by any event happening on or about the Demised Premises, hallways,
entranceways, stairs or any other common areas (exterior or interior),
elevators, hoists, streets, driveways, parking and loading areas, alleys, lawns,
sidewalks and curbs adjacent thereto including those resulting from any work in
connection with any alterations, changes, new construction or demolition, except
if same results solely from the negligence of Landlord, its agents, servants, or
employees. Tenant is subrogated to any rights of Landlord against any other
parties in connection therewith. Tenant shall defend, indemnify and hold
harmless Landlord from and against any and all claims, demands, suits, damages,
liability and costs (including counsel fees and expenses) arising out of or in
any manner connected with any act or omission, negligent or otherwise of Tenant,
third persons, or any of their agents, servants or employees which arise out of
or are in any way connected with the erection, maintenance, use, operation,
existence or occupation of the Demised Premises, hallways, entranceways, stairs
or any other common areas (exterior or interior), elevators, hoists, streets,
driveways, parking and loading areas, alleys, lawns, sidewalks and curbs
adjacent thereto unless due solely to the negligence of Landlord, its agents,
servants or employees.
The Landlord shall promptly notify the Tenant of any claim asserted
against the Landlord on account of any such injury or claimed injury to persons
or party and shall promptly deliver to the Tenant the original or a true copy of
any summons or other process, pleading or notice issues in any suit or other
proceeding or assert or enforce any such claim. The Tenant shall have the right
to defend any such suit with attorneys of its own selection and the Landlord
shall have the right, if it sees fit, to participate in such defense.
Tenant further shall defend, indemnify and hold harmless Landlord from
claims, demands, suits, liability for damages for personal or bodily injury or
death of any persons or damage or destruction of any property (including loss of
use thereof) caused by or in any manner arising out of any breach, violation of
nonperformance by Tenant of any covenant, term or provision of this Lease.
13. DAMAGE TO DEMISED PREMISES.
(a) In the event that the Demised Premises is totally destroyed or so
damaged by fire or other casualty not occurring through fault or negligence of
the Tenant or those employed by or acting for him, that, in Landlord's judgment,
the same cannot be repaired or restored within one hundred eighty (180) days,
this Lease shall absolutely cease and determine, and the rent shall abate as of
the date of casualty for the balance of the term. If Landlord cannot locate
alternate space for Tenant to continue operation during the course of the
repairs, then Tenant shall have the right to terminate this Lease within thirty
(30) days.
(b) If the damage caused as above be only partial and such that the
Demised Premises, in Landlord's judgment, can be restored within the time period
and under the conditions as provided in Subparagraph 13(a) above, the Landlord
may, at its option, restore the same (excluding fixtures and improvements owned
by Tenant) with reasonable promptness, reserving the right to cater upon the
Demised Premises for that purpose. The Landlord also reserves the right to enter
upon the Demised Premises whenever necessary to repair damage caused by fire or
other casualty to the building of which the Demised Premises is a part, even
though the effect of such entry be to render the Demised Premises or a part
thereof untenantable. In either event the rent shall be apportioned and
suspended during the time the Landlord is in possession, taking into account the
portion of the Demised Premises rendered untenantable and the duration of the
Landlord's possession. If a dispute arises as the amount of rent due under this
clause, Tenant agrees to pay the full amount claimed by Landlord. Tenant shall,
however, have the right to proceed by law to recover the excess payment, if any.
(c) Landlord shall make such election to repair the Demised Premises
or terminate this Lease by giving notice thereof to Tenant within thirty (30)
days from the day Landlord received notice that the Demised Premises had been
destroyed or damaged by fire or other casualty.
(d) Notwithstanding the fact that Landlord may have elected to repair
the Demised Premises within said thirty (30) day period, if the mortgagee
chooses to accelerate the mortgage due to damage by fire or other casualty to
the Demised Premises or the building of which the Demised Premises is a part,
Landlord shall have the right to rescind and/or cancel said election to repair
and shall have the right to elect not to repair the damaged to the Demised
Premises or the building of which the Demised Premises is a part, provided said
notification of election not to repair is given to Tenant within thirty (30)
days after date of the receipt of said notice of acceleration.
(e) Landlord shall not be liable for any damage, compensation or claim
by reason of inconvenience or annoyance arising from the necessity of repairing
any portion of the building, the interruption in the use of the Demised
Premises, or the termination of this Lease by reason of the destruction of the
Demised Premises.
14. MISCELLANEOUS AGREEMENTS AND CONDITIONS.
(a) NON-WAIVER BY LANDLORD OR TENANT. The failure of the Landlord or
Tenant to insist upon strict performance of any of the covenants or conditions
to this lease, or to exercise any option herein conferred in any one or more
instances, shall not be construed as a waiver or relinquishment for the future
of any such covenants or conditions of this Lease or option, but the same shall
be and remain in full force and effect.
(b) ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of a lesser amount than the monthly rent herein stipulated shall be
deemed to be other than on account of the earliest stipulated rent, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy herein.
(c) JURISDICTION AND LAW. Tenant hereby subjects itself to the
jurisdiction of the Court of Brevard County, Florida. The laws of the State of
Florida shall be applicable to this lease and any interpretations thereof.
(d) The Landlord has let the Demised Premises, with the Building and
Improvements as required by Paragraph 5, and without any representations on the
part of Landlord, his officers, employees, servants and/or agents.
15. REMEDIES OF LANDLORD. If the Tenant:
(a) Does not pay within ten (10) days after it is due any and all
installments of rent and/or any other charge or payment herein reserved,
included, or agreed to be treated or collected as rent and/or any other charge,
expense, or cost herein agreed to be paid by the Landlord; or
(b) Violates or fails to perform or otherwise breaks any non-monetary
covenant or agreement herein contained which is not corrected in compliance
within thirty (30) days after the notice; or
(c) Vacates the Demised Premises or removes or attempts to remove or
manifests an intention to remove any goods or property therefrom otherwise than
in the ordinary and usual course of business without having first paid and
satisfied the Landlord in full for all rent and other charges then due; or
(d) Files or has filed against it (and if against not dismissed in
thirty (30) days) a petition under Title 11, United States Code, Bankruptcy, as
now or hereafter amended or supplemented, whether under Chapter 7, 11 or 13 of
the aforesaid Bankruptcy Code; or if there is the commencement of any action or
proceeding under state or federal law for the dissolution or liquidation of the
Tenant in connection with bankruptcy or other insolvency, whether instituted by
or against (and if against not dismissed in thirty (30) days) the Tenant or for
the appointment of a receiver or trustee of all or substantially all of the
property of the Tenant; or if there is the taking of possession of the property
of the Tenant by any governmental officer or agency pursuant to statutory
authority for the dissolution, rehabilitation, reorganization or liquidation of
the Tenant; or if there is the making by the Tenant of an assignment for the
benefit of creditors;
Then and in any of said events, there shall be deemed to be a breach
of this Lease, and thereupon Landlord shall have the following rights:
1. To accelerate the whole or any part of the Basic Rent and
additional rent (sometimes collectively referred to herein as "Rent") and other
charges, payments, costs and expenses herein agreed to be paid by Tenant for the
entire unexpired balance of the term of this Lease, and any Rent, other charges,
payment, costs and expenses if so accelerated shall, in addition to any and all
installments of Rent already due and payable and in arrears, and/or any other
charge, expense or cost herein agreed to be paid by Tenant which may be due and
payable and in arrears, be deemed due and payable as if, by the terms and
provisions of this Lease, such accelerated Rent and other charges, payments,
costs and expenses were on that date payable in advance, provided, however, that
Landlord agrees it will not exercise this remedy unless Tenant is in arrears for
a total of three (3) monthly installments of Base Rent under the Lease.
2. To re-enter the Demised Premises and remove all persons therefrom,
either by summary dispossess proceedings or by any suitable action or proceeding
at law, without being liable to indictment, prosecution or damages therefor, and
repossess and enjoy the Demised Premises, together with all alterations,
fixtures and signs. Upon recovering possession of the Demised Premises by reason
of or based upon or arising out of a default on the part of Tenant, Landlord
may, at Landlord's option, either terminate this Lease or make such alterations
and repairs as may be necessary in order to relet the Demised Premises and relet
the Demised premises or any part or parts thereof, either in Landlord's name or
otherwise, for a term or terms which may at Landlord's option be less than or
exceed the period which would otherwise have constituted the balance of the term
of this Lease and at such rent or rents and upon such other terms and conditions
as in Landlord's sole discretion may seem advisable and to such person or
persons as may in Landlord's discretion seem best; upon each such reletting all
rents received by Landlord from such reletting shall be applied: first, to the
payment of any indebtedness other than rent due hereunder from tenant to
Landlord; second, to the payment of any costs and expenses of such reletting,
including brokerage fees and attorney's fees and all costs of such alterations
and repairs; third, to the payment of Rent due and unpaid hereunder; and the
residue, if any, shall be held by Landlord and applied in payment of future Rent
as it may become due and payable hereunder. If such rentals received from such
reletting during any month shall be less than that to be paid during that month
by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No such re-entry or taking
possession of the Demised Premises or the making of alterations and/or
improvements thereto or the reletting thereof shall be construed as an election
on the part of Landlord to terminate this Lease unless written notice of such
intention be given to Tenant. Landlord shall in no event be liable in any way
whatsoever for failure to relet the Demised Premises or, in the event that the
Demised Premises or any part or parts thereof are relet, for failure to collect
the rent thereof under such reletting. Tenant, for Tenant and Tenant's
successors and assigns, hereby irrevocably constitutes and appoints Landlord as
Tenant's and Landlord's agent to collect the rents due and to become due under
all subleases of the Demised Premises or any parts thereof without in any way
affecting Tenant's obligation to pay any unpaid balance of Rent due or to become
due hereunder. Notwithstanding any such reletting without termination, Landlord
may at any time thereafter elect to terminate this Lease for such previous
breach.
(4) To terminate this Lease and the term hereby created without any
right on the part of Tenant to waive the forfeiture by payment of any sum due or
by other performance of any condition, term or covenant broken. Whereupon
Landlord shall be entitled to recover, in addition to any and all sums and
damages for violation of Tenant's obligations hereunder in existence at the time
of such termination, damages for Tenant's default in an amount equal to the
greater of (i) amount of the Rent reserved for the balance of the Demised Term,
as well as all other charges, payments, costs and expenses herein agreed to be
paid by Tenant, all discounted at the rate of nine percent (9%) per annum to
their then present worth, less the fair rental value of the Demised Premises for
the remainder of said term, also discounted at the rate of nine percent (9%) per
annum to its then present worth or (ii) three (3) months' rent, all of which
amount shall be immediately due and payable from Tenant to Landlord as
liquidated damages.
16. RIGHT OF INJUNCTIVE RELIEF. In the event of a breach or threatened
breach by Tenant of any of the covenants or provisions hereof, Landlord shall
have the right of injunction and the right to invoke any remedy allowed at law
or in equity, as if re-entry, summary proceedings and other remedies were not
herein provided for.
17. RIGHTS NOT EXCLUSIVE. No right or remedy herein conferred upon or
reserved to Landlord is intended to be exclusive of any other right or remedy
herein or by law provided but each shall be cumulative and in addition to every
other right or remedy given herein or now or hereafter existing at law or in
equity or by statute.
18. WAIVERS BY TENANT. Tenant expressly waives the right to delay execution
on any real estate that may be levied upon to collect any amount which may
become due under the terms and conditions of this Lease and any right to have
the same appraised. Tenant agrees that said real estate may be sold on a writ of
execution or other process.
19. CALCULATIONS OF AMOUNTS DUE. For the purpose of calculating the
accelerated Rent payable under paragraph (1) of Paragraph 15(d) of this Article
and the "Rent reserved for the balance of the term" of this Lease for the
purposes of Paragraph (4) of Paragraph 15(d) of this Article, the amount payable
as Tenant's share of real estate taxes, Tenant's share of the cost of insurance
on the Demised Premises and Tenant's share of common area maintenance expenses
and any other charges for which Tenant is responsible hereunder for the balance
of the term hereof shall be equal to the sum of the highest amount paid or
payable by Tenant in any calendar year for each of the foregoing items
multiplied by the number of calendar years (including any fractional calendar
year) remaining in the term of this Lease.
20. RIGHT OF ASSIGNEE OF LANDLORD. The right to pursue the remedies herein
provided against Tenant and to enforce all of the other provisions of this Lease
may, at the option of any assignee of this Lease, be exercised by any assignee
of the Landlord's right, title and interest in this Lease in his, her or their
own name, any statute, rule of court, custom, or practice to the contrary
notwithstanding.
21. REMEDIES CUMULATIVE. All of the remedies hereinbefore given to Landlord
and all rights and remedies given to it by law and equity shall be cumulative
and concurrent. No termination of this Lease or the taking or recovering of the
Demised Premises shall deprive Landlord of any of its remedies or actions
against Tenant for rent or sums due at the time or which, under the terms
hereof, would in the future become due as if there has been no termination; nor
shall the bringing of any action for rent or breach of covenant, or the resort
to any other remedy herein provided for the recovery of rent be construed as a
waiver of the right to obtain possession of the premises.
22. CONDEMNATION. If at any time during the Demised Term or any renewal or
extension thereof the Demised Premises, or any portion thereof, be lawfully
condemned or conveyed in lieu of condemnation, the Landlord shall be entitled
to, and shall receive the award or payment therefor, and the Tenant shall
assign, and does hereby assign and transfer to the Landlord such award or
payment as may be made therefor, and in no event and under no circumstances
shall the Tenant be entitled to receive or retain any award or payment of any
part thereof. This Lease shall, as to the part so taken terminate as of the date
title shall vest in the condemnor, and rent shall abate in proportion to the
square feet of the leased space taken or condemned.
23. EXECUTION OF ESTOPPEL CERTIFICATE. At any time, and from time to time,
upon the written request of Landlord or any first mortgagee, Tenant within
twenty (20) days of the date of such written request agrees to execute and
deliver to Landlord and/or such first mortgagee, without charge and in a form
satisfactory to Landlord and/or such mortgagee, a written statement: (a)
ratifying this Lease; (b) confirming the commencement and expiration date of the
term of this Lease and the minimum annual rental rate payable during the lease
term; (c) certifying that Tenant is in occupancy of the Demised Premises, and
that the Lease is in full force and effect and has not been modified, assigned,
supplemented or amended except by such writing as shall be stated; (d)
certifying that all conditions and agreements under this Lease to be satisfied
or performed by Landlord have been satisfied and performed except as shall be
stated; (e) certifying that Landlord is not in default under the Lease and there
are no defenses or offsets against the enforcement of this Lease by Landlord or
stating the defaults and/or defenses claimed by Tenant; (f) reciting the amount
of advance rent, if any, paid by Tenant and the date to which such rent has been
paid and, if requested by Landlord and/or Mortgagee, agreeing that Tenant shall
not pay rent to Landlord more than thirty days in advance; (g) reciting the
amount of security deposited with Landlord, if any; (h) certifying that Tenant
has no option or right of first refusal to purchase the Demised Premises or
option to extend the term of the Lease (unless specifically set froth to the
contrary in the Lease); (i) if requested by Landlord and/or Mortgagee, agreeing
that the Lease will not be modified without the prior written consent of the
Mortgagee; (j) certifying that tenant will not generate, store, handle or
otherwise deal with any amount of any hazardous substances or hazardous waste(as
defined in federal, state and local law) in or about the Demised Premises, in
excess of those levels or quantities specified for regulatory purposes; (k)
agreeing, if requested by Mortgagee, that Tenant will give Mortgagee such notice
of any default by Landlord and reasonable opportunity to cure such default, not
in excess of thirty (30) days, unless the default cannot be cured within said
time, before exercising Tenant's remedies under the Lease; and (l) any other
information which Landlord or the mortgagee shall require.
24. FAILURE TO EXECUTE ESTOPPEL CERTIFICATE. The failure of Tenant to
execute, acknowledge and deliver to Landlord and/or any first mortgagee a
statement in accordance with the provisions of Paragraph 23 above within the
said twenty (20) day period shall constitute acknowledgment by Tenant which may
be relied upon by any person holding or intending to acquire any interest
whatsoever in the Demised Premises that this Lease has not been assigned,
amended, changed, or modified, is in full force and effect and that the Basic
Rent and additional rent have been duly and fully paid not beyond the respective
due dates immediately preceding the date of the request for such statement and
shall constitute as to any persons entitled to rely on such statements a waiver
of any defaults by Landlord or defenses or offsets against the enforcement of
this Lease by Landlord which may exist prior to the date of the written request,
and Landlord at its option, may treat such failure as a deliberate event of
default.
25. SUBORDINATION AND ATTORNMENT. Tenant agrees:
(a) that, except as hereinafter provided, this Lease is, and all of
Tenant's rights hereunder are and shall always be, subject and subordinate to
any first mortgage ("First Mortgage"); and
(b) That if the holder of any such First Mortgage ("Mortgagee") or if
the purchaser at any foreclosure sale or at any sale under a power of sale
contained in any Mortgage shall at its sole option so request, Tenant will
attorn to, and recognize such mortgagee or purchaser, as the case may be as
Landlord under this Lease for the balance then remaining of the term of this
Lease, subject to all terms of this Lease; and
(c) That the aforesaid provisions shall be self-operative and no
further instrument or document shall be necessary unless required by any such
First Mortgagee or purchaser. Notwithstanding anything to the contrary set forth
above, and First Mortgagee may at any time subordinate its Mortgage to this
Lease, without Tenant's consent, by notice in writing to Tenant, and thereupon
this Lease shall be deemed prior to such Mortgage without regard to their
respective dates of execution, delivery and/or recording and in that event such
First Mortgage shall have the same rights with respect to this Lease as though
this Lease had been executed and a memorandum thereof recorded prior to the
execution, delivery and recording of the Mortgage and as though this Lease had
been assigned to such First Mortgagee. Should Landlord or any First Mortgagee or
purchaser desire confirmation of either such subordination or such attornment,
as the case may be, Tenant upon written request, and from time to time, will
execute and deliver without charge and in form satisfactory to Landlord, the
First Mortgagee or the purchaser all instruments and/or documents that may be
requested to acknowledge such subordination and/or agreement to attorn, in
recordable form.
(d) Landlord agrees that it shall procure from the mortgagee who has
agreed to provide a commitment for a five-year permanent mortgage on the
Property the mortgagee's consent to a non-disturbance agreement, in form
reasonably satisfactory to Tenant, which approval shall not be unreasonably
withheld. If Landlord is unable to produce said agreement from such mortgagee
prior to the closing of the construction mortgage, then Tenant shall have the
right to terminate this Agreement within five (5) days after receipt of such
advice from Landlord.
Landlord further agrees that it shall use reasonable efforts to obtain
a similar agreement from any successor first mortgagee.
26. FAILURE TO EXECUTE INSTRUMENTS AND DOCUMENTS. In the event Tenant fails
to execute and deliver the instruments and documents as provided for in
Paragraphs 23 and 25 within twenty (20) days after request in writing by
Landlord or such First Mortgagee or purchaser, as the case may be, Tenant does
hereby make, constitute and appoint Landlord or such First Mortgagee or
purchaser, as the case may be, as Tenant's attorney-in-fact and in its name,
place and stead to do so, or Landlord may treat such failure as a deliberate
event of default. The aforesaid power of attorney is given as coupled with an
interest and is irrevocable.
27. QUIET ENJOYMENT; EVICTION BY FORECLOSURE. Tenant, on paying the rent
reserved, and performing all the covenants and conditions hereof, shall at all
times during the Demised Term, peaceably and quietly have, hold and enjoy the
Demised Premises; provided, however, eviction of the Tenant by reason of the
foreclosure of any First Mortgage now or hereafter on the Demised Premises shall
not be construed as a breach of this covenant, nor shall any action by reason
thereof be brought against the Landlord; and provided further, that no eviction
of the Tenant for any reason whatsoever, after the Landlord shall have conveyed
the fee of the Demised Premises shall be construed as a breach of this covenant,
and no action therefor shall be brought against the Landlord.
28. TERMINATION OF LEASE. It is hereby mutually agreed that either party
hereto may terminate this Lease at the end of the Demised Term or at the end of
either option period by giving to the other party written notice thereof at
least 180 days prior thereto, but in default of such notice, this Lease shall
continue upon the same terms and conditions in force immediately prior to the
expiration of the Demised Term hereof as are herein contained except for Basic
Rent which shall be adjusted to reflect the then current market rates for space
comparable to the Demised Premises as determined by Landlord based upon other of
Landlord's rental properties for Melbourne, Florida, for a further period of one
year and so on from year to year unless or until termination by either party
hereto, giving the other one hundred eighty (180) days written notice for
removal previous to expiration of the then current term; PROVIDED, however, that
should this Lease be continued for a further period under the terms herein-above
mentioned, any allowances given Tenant on the Basic Rent during the original
term shall not extend beyond such original terms. In the event that Tenant shall
give notice, as stipulated in this Lease, of intention to vacate the Demised
Premises at the end of the Demised Term, or any renewal or extension thereof,
and shall fail or refuse so to vacate the same on the date designated by such
notice, then it is expressly agreed that Landlord shall have the option either:
(a) To disregard the notice so given as having no effect, in which
case all the terms and conditions of this Lease shall continue thereafter, as
set forth above, with full force precisely as if such notice has not been given,
or
(b) Landlord may, at any time within thirty days after the Demised
Term or any renewal or extension thereof, as aforesaid, give the said Tenant
fifteen (15) days' written notice of his intention to terminate the said Lease;
whereupon the Tenant expressly agrees to vacate said premises at the expiration
of the said fifteen (15) day period.
All powers granted to Landlord by this Lease may be exercised and all
obligations imposed upon Tenant by this Lease shall be performed by Tenant as
well during any extension of the Demised Term of this Lease as during the
Demised Term itself.
29. NOTICES. All notices required shall be in writing given by certified
mail, return receipt requested or by a recognized overnight delivery service:
TO LANDLORD: Henderson Comet, L.C.
1800 Penn Street, Suite 3
Melbourne, Florida 32901
With a copy to: Norman C. Henss, Esquire
200 Stevens Drive, Suite 210
Lester, Pennsylvania 19113
TO TENANT: Software Technology, Inc.
1225 Evans Road
Melbourne, Florida 32904
Such address may be changed from time to time by either party by
serving notices as above provided.
30. MECHANIC'S LIENS
(a) MECHANIC'S LIENS PROHIBITED. Tenant shall not suffer any
mechanic's lien to be filed against the Demised Premises by reason of work,
labor, services or materials performed or furnished to Tenant or anyone holding
the Demised Premises, or any part hereof, through or under Tenant. If any
mechanic's lien or any notice of intention to file a mechanic's lien shall at
any time be filed against the Demised Premises Tenant shall at Tenant's cost,
within fourteen (14) days after knowledge or notice of the filing of any
mechanic's lien cause the same to be removed or discharged of record by payment,
bond, order of a court of competent jurisdiction, or otherwise.
(b) LANDLORD'S REMEDY FOR TENANT'S BREACH. If Tenant shall fail to
remove or discharge any mechanic's lien or any notice of intention to file a
mechanic's lien within the prescribed time, then in addition to any other right
or remedy of Landlord, Landlord may, at its option, procure the removal or
discharge of the same by payment or bond or otherwise. Any amount paid by
Landlord for such purpose, together with all legal and other expenses of
Landlord in procuring the removal or discharge of such lien or notice of
intention and together with interest thereon at the highest permissible rate
shall be and become due and payable by Tenant to Landlord as additional rent,
and in the event of Tenant's failure to pay therefor within fifteen (15) days
after demand, the same shall be added to and be due and payable with the next
month's rent.
(c) NON-CONSENT OF LANDLORD TO FILING OF LIENS. Nothing contained in
this Lease shall be construed as a consent on the part of Landlord to subject
Landlord's estate in the Demised Premises to any lien or liability arising out
of Tenant's use or occupancy of the premises.
31. LEASE CONTAINS ALL AGREEMENTS. It is expressly understood and agreed by
and between the parties hereto that this Lease sets forth all the promises,
agreement, and conditions or understandings between Landlord or his Agent and
Tenant relative to the Demised Premises, and that there are no promises,
agreements, conditions or understandings, either oral or written, between them
other than are herein set forth. It is further understood and agreed that,
except as herein otherwise provided, no subsequent alteration, amendment, change
or addition to this Lease shall be binding upon Landlord or Tenant unless
reduced to writing and signed by them.
32. HEIRS AND ASSIGNEES. All rights and liabilities herein given to, or
imposed upon, the respective parties hereto shall extend to and bind the several
and respective heirs, executors, administrators, successors and assigns of said
parties; and if there shall be more than one Tenant, they shall all be bound
jointly and severally by the terms, covenants and agreements herein, and the
word "Tenant" shall be deemed and taken to mean each and every person or party
mentioned as a Tenant herein, be the same one or more; and if there shall be
more than one Tenant, any notice required or permitted by the terms of this
Lease may be given by or to any one thereof, and shall have the same force and
effect as if given by or to all thereof. The words, "his" and "him" or "its"
wherever stated herein, shall be deemed to refer to the "Landlord" or "Tenant"
whether such Landlord or Tenant be singular or plural and irrespective of
gender. No rights, however, shall inure to the benefit of any assignee of Tenant
unless the assignment to such assignee has been approved by Landlord in writing
as aforesaid.
33. SECURITY DEPOSIT. INTENTIONALLY OMITTED.
34. HEADINGS NOT PART OF LEASE. Any headings preceding the text of the
several paragraphs and subparagraphs hereof are inserted solely for convenience
of reference and shall not constitute a part of this Lease nor shall they affect
its meaning, construction or effect.
35. TENANT'S PRO-RATA SHARE OF CENTER. 14.23% (determined by dividing the
acreage of the Center (20.85 acres) by the acreage of the Land (including area
covered by the Building) (2.967 acres)).
36. LATE PAYMENT. In the event that any payment of Basic Rent or additional
rent or any other charge required to be paid by Tenant under the provisions of
this Lease, shall not be paid within fifteen (15) days of the due date, Tenant
shall pay to Landlord a late charge of five (5%) percent of such past due
payment; and such late charge shall be deemed "rent" for all purposes under this
Lease.
37. LANDLORD'S CONSENT. Landlord agrees that it shall not unreasonably
withhold any consent required of it under this Lease.
38. SEVERABILITY. If a provision of this Lease Agreement is held invalid,
it is hereby agreed that all valid provisions that are severable from the
invalid provision remain in effect. If a provision in this Lease Agreement is
held invalid in one or more of its applications, the provision remains in effect
in all valid applications.
39. LANDLORD'S LIABILITY. Anything to the contrary herein notwithstanding,
Landlord's liability for any damages or assessments hereunder shall be limited
solely to Landlord's interest in the Demised Premises or land and building of
which the Demised Premises is part, as the case may be. It is further covenanted
and agreed by the parties hereto that in no case shall the Landlord be liable
for any consequential damages.
40. SIGNAGE. Tenant shall have the right to place neat, professionally
executed signs at the front entrance and/or loading areas as shall adequately
advertise Tenant's occupancy of the Premises and direct visitors, guests and the
like to Tenant's Premises provided that they comply with any and all laws and
ordinances applicable thereto. Tenant shall not place any sign on any part of
the Building without the written consent of Landlord, which consent Landlord
shall not unreasonably withhold.
41. LANDLORD'S ENVIRONMENTAL CLAUSE.
(a) Tenant shall not cause, allow or permit the escape, disposal or
release of toxic or hazardous substances or materials, including those which are
biologically active or chemically active, which shall include, but not be
limited to, those substances listed in the Environmental Statutes, as defined
below, polychlorinated biphenyls ("PCB's"), asbestos and materials containing
PCB's and asbestos (hereinafter collectively "Hazardous Material"), in, around
or from the Demised Premises. Tenant shall not store, use or allow the storage
or use of Hazardous Materials in or around the Demised Premises in any manner
not sanctioned by law or the highest standards prevailing in the industry for
handling and storage of such Hazardous Materials. In the event that any such
Hazardous Materials are required to be used by Tenant in the ordinary course of
its business, Tenant shall send at least five (5) days' advance written notice
to Landlord of the uses of such substances, including any identification of such
substances or materials. Landlord may deny or restrict Tenant's use or manner of
use of such Hazardous Materials in or around the Demised Premises; however,
Landlord's failure to deny or restrict Tenant's use of Hazardous Materials or to
advise Tenant of an objection to Tenant's use or manner of use of same in the
Demised Premises does not indicate Landlord's approval for such use and, in any
event, Tenant shall remain strictly responsible and liable for any and all
consequences, direct or indirect, resulting from the use of such Hazardous
Materials in or around the Demised Premises.
(b) Tenant shall conduct all of its operations at the Premises in
compliance with all federal, state and local statutes (including, but not
limited tot he Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. Section 9601 et. seq., as amended by the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (October 17,
1986) ("CERCLA"); the Resources Conservation and Recovery Act, 42 U.S.C. Section
6901 et. seq. ("RCRA"), Florida Air and Water Pollution Control Act and
regulations enacted thereunder), ordinances, regulations, orders and
requirements of common law, regarding, but not limited to, (i) discharges to the
air, soil, surface or groundwater; and (ii) handling, utilizing, storage,
treatment or disposal of any hazardous substances or toxic substances as defined
therein ("Environmental Statutes"). Tenant shall obtain all permits, licenses or
approvals and shall make all notifications and registrations required by
Environmental Statutes and shall submit to Landlord, upon, request, or
inspecting and copying all documents, permits, licenses, approvals, manifests
and records required to be submitted and/or maintained by the provisions of the
Environmental Statutes. Tenant shall also provide promptly to Lessor copies of
any correspondence notice of violation, summons, order, complaint or other
documents received by Tenant pertaining to compliance with Environmental
Statutes.
(c) Tenant shall not install at the Premises any temporary or
permanent tanks for the storage of any liquid or gas above or below ground
except as in compliance with the other provisions of this section and after
obtaining written permission to do so from Landlord.
(d) If, because of the manner in which Tenant operates its business,
the Landlord, Landlord's mortgage lender or a governmental agency shall require
testing by an environmental testing entity of its choice, to ascertain whether
there has been a release of Hazardous Materials by Tenant, its agents, servants,
employees or business invitees, in or around the Demised Premises, the
reasonable costs of such testing shall be reimbursed by Tenant to Landlord as
Additional Rent. Tenant shall execute affidavits or representations, at
Landlord's request, stating that, to the best of Tenant's knowledge and belief,
since the time that Tenant took possession of the Demised Premises, there have
been no and there presently are no Hazardous Materials present in the Demised
Premises.
(e) Tenant hereby agrees to indemnify Landlord and to hold Landlord
harmless of, from and against any and all expense, loss, cost, fines, penalties,
loss of value or liability suffered by Landlord by reason of Tenant's breach of
any of the provisions of this section.
(f) The provisions of this section shall survive the termination of
Tenant's tenancy or of this Lease.
42. OPTION TO RENEW.
Tenant shall have the right to extend the term of this Lease for two
(2) additional terms of five (5) years each ("Extend Terms #1 and #2),
commencing (#1) the first day after the Expiration Date and (#2) the first day
after the last day of Extended Term #1 ("Renewal Day"), upon the following terms
and conditions:
(a) On or before the day one hundred eighty (180) days prior to the
applicable Renewal Day, Tenant shall notify Landlord in writing by certified
mail, return receipt requested, of Tenant's election to extend the term of the
Lease, under the terms and provisions of Paragraph 42 of the Lease;
(b) At the time of the exercise of such rights and thereafter until
either Extended Term shall commence, Tenant shall not be in breach of the
performance of any of the terms, covenants or conditions of this Lease, which
breach has not been remedied before an event of default has occurred;
(c) Such Extended Term shall be upon the same terms, covenants and
conditions as in this Lease, except that (i) there will be no right to extend
this Lease beyond Extended Terms #1 and #2, and (ii) the annual Basic Rent for
the Extended Terms shall be calculated (with increases) in the same manner as
set forth in Paragraph 3(b) of the Lease.
(d) Upon the giving of such notice in writing as aforementioned, this
Lease shall be deemed extended for the Extended Term, subject to the provisions
and conditions of this paragraph, without execution of any further instruments.
(e) This Renewal Option may be assigned to a subtenant.
IN WITNESS WHEREOF, the parties hereto have executed these presents
the day and year first above written, intending to be legally bound hereby.
LANDLORD:
HENDERSON COMET, L.C.
Signature Illegible By:/s/William Henderson
- ---------------------------------- ------------------------------
Witness William Henderson
TENANT:
ATTEST: SOFTWARE TECHNOLOGY, INC.
/s/Marianne Crovetto By:/s/Don F. Riordan, Jr.
- ---------------------------------- -------------------------------
(Asst.) Secretary Don F. Riordan
<PAGE>
EXHIBITS TO SOFTWARE TECHNOLOGY LEASE
Exhibit "A" Final Plans and Specifications and Tenant Scope of Work
Exhibit "B" Specifications for Maintenance Contract
Exhibit "C" Rules and Regulations
Exhibit "D" Tenant Fixtures and Equipment
Exhibit "E" Special Terms
<PAGE>
EXHIBIT A
[Floor Plans]
<PAGE>
EXHIBIT B
MAINTENANCE SERVICE SPECIFICATIONS FOR HVAC SYSTEMS
Service Agreements must include the following items:
a. Quarterly inspections (four per year) to include filter changing.
b. Belt replacement as needed (but at least once per year), adjust belt
tension.
c. Grease and oil all motor, bearings and additional moving parts (i.e.,
dampers).
d. Preserve exterior casing by removing rust and apply paint. Insure casing is
secure.
e. Evaporator and condenser cleaning once a year prior to spring start-up: (1)
Condensate drain pans cleaned and preserved as needed. (2) Cleaning
solution to be non-acidic type (as to protect delicate roofing materials).
f. Evaporative condensers or cooling towers shall be cleaned upon
winterization. All debris shall be removed from sumps and water drained
from lines and pump casing. (1) Upon restart, water treatment shall be
added as necessary to inhibit molds (by drip feeder or tablet method, cost
of material to be additional to base contract price).
g. Heat exchangers shall be inspected and cleaned prior to heating season.
h. Stacks shall be checked for corrosion and leakage prior to heating season;
clean as necessary, make sure flue caps are installed and intact.
i. Warning safety controls shall be checked as per manufacturer's testing
instructions with result noted on each service report.
j. Oil tanks shall be dipped and tested for water contamination prior to
heating season.
k. Lift tanks, pumps, and controls shall be serviced prior to heating season.
l. Unitary controls (i.e., fans limits, gas valves, modulating fire controls,
pressure switches, remote shut-offs) shall be checked and calibrated as
necessary.
m. Refrigerant circuits shall be leak checked prior to start up.
n. Refrigerant controls shall be checked and adjusted to manufacturer's
specifications (i.e., thermostatic expansion valve, hot gas bypass valves).
o. Unitary operating controls and safety controls (i.e., oil failure, high-low
pressure cutouts, time delay/and short cycle device), shall be tested and
adjusted to maintain complete system protection.
p. All electrical connections will be tightened.
q. All contractors will be inspected and cleaned.
r. All electric motor loads shall be monitored including amperage and voltage.
s. All motor mounts and compressor mounts shall be checked for integrity and
serviced as necessary to prevent vibration throughout units.
t. All record of all operating temperatures pressure and electrical data shall
be forwarded to the customer for each unit serviced, the record will
include model and serial number.
u. A schedule of rates will be included for standard overtime and holiday
rates for service not covered under contract.
v. A mark-up percentage for material shall be forwarded along with rate
schedule.
w. A guaranteed response time, a referred customer status shall be extended to
the customer for emergency call out.
x. A form listing the maintenance work completed on what date shall be
forwarded to customer with service order or invoice.
<PAGE>
EXHIBIT C
RULES AND REGULATIONS
1. Tenant will not keep any animals or birds in the Demised Premises or in the
building nor permit any animals or birds to be brought into or kept in the
Demised Premises by others.
2. Tenant will not go, or authorize or permit anyone to go upon the roof of
the building except as authorized by Landlord for the maintenance or repair
of HVAC equipment.
3. Tenant will not make, commit or permit any improper noises or disturbances
in the building, mark, defile and deface the Demised Premises or the
building of which the Demised Premises is a part or interfere in any way
with other tenants, their employees or those having business with them.
4. Tenant agrees that Landlord shall in no case be liable for the admission or
exclusion of any person from said building.
5. Tenant will not occupy the Demised Premises as living quarters or sleeping
apartments or in any manner or for any use or purpose other than as herein
stated. Tenant will not use the halls, passages, elevators and stairways of
the building of which the Demised Premises are a part for any purpose other
than ingress and egress.
6. Tenant will not use the toilet rooms, water closets, urinals and other
water fixtures and apparatus on the Demised Premises or in the building of
which the same are a part for any purpose other than that for which they
were designed and constructed, nor throw sweepings, rubbish, rags, ashes,
chemicals or other injurious substances therein.
7. Tenant will give Landlord prompt notice of any canvassers, newsboys,
peddlers or beggars plying their trade in the building of which the Demised
Premises are a part.
8. Tenant will close the windows and securely lock the doors of the Demised
Premises before leaving the building each day.
9. Tenant will not hang or install on any window any window shade, blind or
curtain without the written approval of Landlord. Landlord will supply
uniform window blinds for all Tenants; however, the Tenant shall be
responsible for (all costs incurred) or replacement of the window blinds
except for reasonable wear and tear.
10. Tenant will not permit or allow any sign to be displayed or painted on the
exterior door of the Demised Premises or the building of which the Demised
Premises is a part without the consent of Landlord in writing.
<PAGE>
EXHIBIT E
The following items shall amend and/or clarify the Lease dated March ____
1997 by and between Henderson Comet, L.C. ("Landlord"), and Software Technology,
Inc.("Tenant").
BASE RENT During the first lease year the Base Rent shall be calculated on
16,000 square feet of finished space and 14,000 square feet of
unfinished space as follows:
16,000 x 8.50 = $136,000.00
14,000 x 3.00 = 42,000.00
-----------
ANNUAL BASE RENT $178,000.00
Upon completion of the Tenant Improvements in the 14,000 square feet
as evidenced by a Certificate of Occupancy or one (1) year after the
Lease Commencement Date; whichever occurs first, the Base Rate shall
be as follows:
16,000 x 8.50 = $136,000.00
14,000 x 7.75 = 108,500.00
-----------
ANNUAL BASE RENT $224,500.00
At the beginning of the Third Lease Year, the Base Rate will be
adjusted per paragraph 3B of the Lease.
IN WITNESS WHEREOF, the parties hereto have executed these presents the day
and year first above written, intending to be legally bound thereby.
HENDERSON COMET, L.C.
/s/Karen L. Pearce
- ------------------------- By:/s/William Henderson
Witness --------------------------
William Henderson
Signature Illegible
- -------------------------
Witness
SOFTWARE TECHNOLOGY, INC.
/s/Marianne Crovetto
- ------------------------- By:/s/Don F. Riordan, Jr.
Witness -------------------------
Don F. Riordan, Jr.
/s/Barbara Cole
- -------------------------
Witness
Exhibit 10.10
SOFTWARE TECHNOLOGY, INC. LEASE
5904 RICHMOND HIGHWAY
ALEXANDRIA, VA
THIS AGREEMENT OF LEASE ("Lease") by and between Alexandria South
Associates, L.P., a Virginia limited partnership, its successors and assigns
(hereinafter referred to as "Landlord"), and Software Technology, Inc., a
Florida corporation, (hereinafter referred to as "Tenant").
I. SUMMARY PROVISIONS
1. PREMISES: 15,296 square feet; Suite #600, 610 and 611 (see Exhibit A) which
will be changed to Suites 600 and 611.
2. TERM: Four (4) years beginning on September 1, 1994, the "Lease
Commencement Date" and ending on August 31, 1998, the "Lease Expiration
Date".
3. BASE ANNUAL RENT: $210,320.00 ($13.75 per square foot per annum)
Monthly Payment $ 17,526.00
4. ADDITIONAL RENT: Pro rata share of Operating Expense increases over the
Operating Expense Amount of the Base Year 1994. Tenant's pro rata share:
20.13%. Increases shall not be more than five (5%) percent of the previous
year's operating expenses per annum.
5. INCREASE IN COST OF LIVING: Greater of 30% of CPI increase or 2.5%.
6. SECURITY DEPOSIT: Transferred from prior lease in the amount of $22,263.02.
7. IMPROVEMENTS: See Exhibit "B".
8. PARKING: Initial Number of Parking Permits: 54, six of which are reserved.
Initial Monthly Permit Fee: Reserved only, $10.00 month per space.
9. TENANT'S ADDRESS FOR NOTICES:
Software Technology, Inc. Dr. C. Camden McCarl
1225 Evans Road Manager of DC Engineering
Melbourne, Florida 32904-2314 Software Technology, Inc.
Attn: Accounts Payable 5904 Richmond Highway, Ste. 610
Alexandria, VA 22303
10. BROKER'S ADDRESS: Fetsch Commercial Realty, Inc.
5285 Shawnee Road, Ste. 401
Alexandria, VA 22312
Attn: Phyllis Fordham
11. SPECIAL PROVISIONS:
34. Termination of Former Lease
35. Contingent Lease
36. Right to Signage
37. Parking
38. Option to Extend
39. Reduction to Size of Premises
12. EXHIBITS TO LEASE: Exhibit "A" - Description of Premises Exhibit "B"
- Landlord's Workletter Exhibit "C" - Cleaning Specifications
Exhibit "D" - Signage Specifications/Drawings Exhibit "E" - Premises
Subject to Reduction
Exhibit "F" - Calculation of Interest on Security Deposit
<PAGE>
II. DETAILED PROVISIONS
1. PREMISES.
(a) DESCRIPTION. Landlord hereby leases to Tenant and Tenants leases from
Landlord, for the term and upon the terms, conditions, covenants and agreements
hereinafter provided, the premises more particularly described in Exhibit "A"
annexed hereto (the "Premises") located in the building (the "Building")
referenced above. The Premises contains 15,296 square feet of Rentable Area, 90%
or 13,766 square feet of which is Usable Area, which Usable Area is defined by
the Washington Board of Realtors.
(b) LANDLORD'S WORK. Tenant may be entitled to certain improvements
specified on Exhibit "B" attached hereto and incorporated herein by reference.
The work which Landlord agrees to perform under the terms and conditions of
Exhibit "B" hereinafter shall be referred to as "Landlord's Work." It is
understood and agreed that Landlord is under no obligation to perform any
alterations, installations (including floor coverings), decorations (including
painting and wall coverings), replacements, additions or improvements,
structural or otherwise, in or to the Premises except as set forth in Exhibit
"B".
2. TERM
(a) The "Term", "Lease Commencement Date" and "Lease Expiration Date" are
specified on page one of this Lease.
(b) FAILURE TO DELIVER POSSESSION OF PREMISES. Landlord shall put forth its
best efforts to complete the Premises on or before the Lease Commencement Date.
If Landlord's Work is not substantially completed (as defined in paragraph (e)
below) in accordance with Exhibit "B" on or before the Lease Commencement Date,
or if Landlord shall be unable to give possession of the Premises on such Lease
Commencement Date for any other reason, this Lease shall not be void or
voidable, and Landlord, its agents or employees, shall not be subject to any
claim or liability whatsoever for the failure timely to complete such work or to
give possession on such date. If Landlord has not completed the improvements as
shown on Exhibit "B", the Tenant shall have the right to use its own contractor
and deduct the cost of construction from the rent.
(c) DELAYS IN SUBSTANTIAL COMPLETION CAUSED BY TENANT. If such substantial
completion of Landlord's Work in accordance with Exhibit "B" shall be delayed
because of (i) Tenant's failure to furnish its requirements and/or to approve
drawings, plans, specifications or cost estimates, including those pertaining to
additional or non-standard work and materials, by the dates specified by Exhibit
"B", (ii) Tenant's request for changes in drawings, plans or specifications
after the date specified by Exhibit "B", (iii) Tenant's request for materials,
finishes or installations other than Landlord's Building Standard, as defined by
Exhibit "B", or (iv) the performance of any work by Tenant, Tenant's agents,
employees or contractors, Landlord's Work shall be deemed substantially
completed for the purpose of determining the Lease Commencement Date on the date
which Landlord reasonably determines, in its sole judgment, that such work would
have been substantially completed had such delay or delays not occurred.
(d) SUBSTANTIAL COMPLETION DEFINED. The Premises shall not be deemed
substantially completed until all the work undertaken by Landlord pursuant to
Exhibit "B" is substantially completed, subject to a punch list of items
prepared by Tenant and Landlord on the Lease Commencement Date which items shall
not materially interfere with Tenant's use of the Premises. Nothing in this
clause shall effect Tenant's termination right as described in Article 34 or
Tenant's occupancy of the Premises.
(e) LEASE YEAR DEFINED. As used herein, "Lease Year" shall mean that period
of 365 days (366 in leap years) commencing on the Lease Commencement Date, and
each successive period of 365 days (or 366 days in leap years) thereafter;
provided, however, that if the Lease Commencement Date is a date other than the
first day of a month, then the first Lease Year shall mean that period
commencing on the Lease Commencement Date and continuing for the balance of the
month in which said date occurs and for a period of 365 or 366 days thereafter,
and the last Lease Year shall terminate on the date this Lease expires or is
terminated.
3. RENT.
(a) BASE ANNUAL RENT. The Base Annual Rent as specified in the Summary
Provisions of this Lease shall be payable, in advance, in equal monthly
installments, specified as the Monthly Payment in the Summary Provisions hereof
by U.S. mail, courier or otherwise delivered to Landlord at the address provided
in Article 30 hereof or to such other party or to such other address as Landlord
may designate from time to time by written adjustment as hereinafter provided.
The first Monthly Payment coming due shall be made upon the signing of this
Lease by Tenant, and the second and subsequent Monthly Payments shall be made on
the first day of each and every calendar month as provided herein. If the term
of this Lease begins on a date other than on the first day of a month, rent from
such date until the first of the following month shall be prorated at the rate
of one thirtieth (1/30th) of the fixed Monthly Payment for each day, payable in
advance.
(b) INCREASE IN COST OF LIVING. Commencing on the first day of each
calendar year following the calendar year in which this Lease commences, Tenant
shall pay monthly one-twelfth of an increase in the Base Annual Rent based upon
thirty percent (30%) of any increase in the index now known as UNITED STATES
BUREAU OF LABOR STATISTICS, CONSUMER PRICE INDEX FOR URBAN WAGE EARNERS AND
CLERICAL WORKERS, WASHINGTON, D.C. SMSA (1982-84=100). All Items (the "Index")
over the Base Index (as defined herein). Notwithstanding the preceding sentence,
in no event shall the adjustment of Base Annual Rent for any calendar year be
less than two and one-half percent (2.5%) of the Base Annual Rent as increased
from year to year hereby (the "Minimum Base Annual Rent Adjustment"). In order
to apply such adjustments in a timely and convenient manner, Landlord and Tenant
agree that the Base Index shall be the Index for the month which is
approximately three months prior to the month in which the Lease Commencement
Date occurs and that adjustments of Base Annual Rent shall be based upon
comparison of the Index for the month of September last preceding the calendar
year for which an adjustment is to be made (the "Current Index") with the Base
Index. For the purposes of this paragraph, Base Annual Rent which is adjusted
pursuant to this paragraph shall be referred to as "Adjusted Base Annual Rent."
Adjusted Rent Annual Rent shall be computed as follows: (i) the increase in the
Index shall be determined by dividing (A) the difference of the Current Index
minus the Base Index, by (B) the Base Index; (ii) the increase in Base Annual
Rent due to the increase in the Index shall be determined by multiplying the
original Base Annual Rent payable hereunder by thirty percent (30%) of the
increase in the Index; (iii) the Adjusted Base Annual Rent shall be the greater
of (A) the original Base Annual Rent payable hereunder plus the increase in the
Base Annual Rent due to the increase in the Index or (B) the previous year's
Adjusted Base Annual Rent payable hereunder plus the Minimum Base Annual Rent
Adjustment. Landlord promptly shall determine the Adjusted Base Annual Rent for
each calendar year, as hereinabove provided, and shall submit to Tenant a
statement setting forth the amount of such Adjusted Base Annual Rent and the
calculation by which it was determined. If the base year of the Index is
changed, the Index used to determine Adjusted Base Annual Rent shall be
converted in accordance with the conversion factor published by the Bureau of
Labor Statistics of the United States Department of Labor. If the Index is
discontinued, then any successor consumer price index of the United States
Bureau of Labor Statistics, or successor agency thereto, for the Washington,
D.C. Metropolitan Area, shall be used. If the Index is discontinued with no
comparable successor Index, the parties shall use their best efforts to agree
upon a substitute formula, but if the parties are unable so to agree, then a
substitute formula shall be determined by arbitration as provided herein.
(c) SERVICE CHARGE. Notwithstanding any of the other rights of Landlord set
forth in this Lease, if during the term of this Lease, Monthly Payments or
Additional Rent remains unpaid on the tenth day after the date when the same is
required to be paid, Landlord at its option, may make a service charge for the
purpose of defraying the expenses incidental to handling delinquent payments.
Such charge shall be in an initial amount of five percent (5%) of the delinquent
payment. In addition, Monthly Payments or Additional Rent which is not paid when
due shall bear interest, computed from the date such item becomes due to the
date of payment, at a rate which shall be the lesser of (i) two percent higher
than the "prime rate" charged by Crestar Bank on the date such item becomes due
and fluctuating thereafter as the "prime rate" charged by said Crestar Bank may
change from time to time or (ii) the maximum rate of interest then allowed by
law. Late charges referenced above shall be applicable only after Landlord
provides Tenant notice of Tenant's second event of failure to make a timely
payment of Base Annual Rent, Monthly Payments, or Additional Rent.
4. ADDITIONAL RENT; OPERATING EXPENSE AND REAL ESTATE TAX INCREASES.
(a) ANNUAL OPERATING EXPENSE INCREASE. Throughout the Term, Tenant shall be
obligated to pay as Additional Rent, Tenant's pro rata share of the amount by
which Operating Expenses (as defined in Article 4(b) hereof) exceeds the
Operating Expense Amount specified in the Summary Provisions hereof. Such
payments shall be made as follows:
(i) ESTIMATED MONTHLY PAYMENTS. Within the first one hundred twenty
(120) days after the end of each calendar year (or portion thereof) during the
Term of Lease, Landlord shall furnish Tenant with Landlord's reasonable estimate
of the Operating Expenses for the then current calendar year (Landlord's
Operating Expense Estimate). Until the first day of the calendar month following
the month in which Tenant is given Landlord's Operating Expense Statement,
Tenant shall continue to pay to Landlord on the first day of each calendar month
the monthly sum, if any, payable by Tenant under this Article 4(a)(i) for the
month of December of the preceding calendar year. Landlord shall give notice to
Tenant stating whether the Tenant's monthly payments made pursuant to this
Article 4(a)(i) during the then current calendar year were greater or less than
the revised monthly payment stated in Landlord's Operating Expense Estimate, and
(i) if there shall be a deficiency, Tenant shall pay the amount thereof to
Landlord within thirty (30) days after the giving of Landlord's estimate, or
(ii) if there shall have been an overpayment, Landlord shall pay the amount
thereof to Tenant within thirty (30) days after the giving of Landlord's
estimate, and (iii) on the first day of the first calendar month following the
month in which Tenant is given Landlord's estimate, and on the first day of each
calendar month thereafter during the Term throughout the remainder of such
calendar year, Tenant shall pay to Landlord an amount equal to one-twelfth of
Tenant's pro rata share of the amount by which Operating Expenses for such
calendar year are estimated to exceed the Operating Expense Amount.
(ii) ANNUAL SETTLEMENT. Beginning with the first full calendar year
following the Commencement Date, within the first one hundred twenty (120) days
after the end of each calendar year or portion thereof, Landlord shall furnish
to Tenant a detailed statement setting forth the actual Operating Expenses for
the previous calendar year and Tenant's pro rata share of the increase over the
Operating Expense Amount (hereinafter "Actual Operating Statement"). Landlord's
failure to provide the Actual Operating Statement within the time frame
referenced above shall not relieve Tenant of its obligations hereunder. Within
thirty (30) days after the delivery of the Actual Operating Statement, a lump
sum payment will be made by Tenant equal to the amount, if any, by which
Tenant's pro rata share of the actual increase in Operating Expenses over the
Operating Expense Amount exceeds that amount, if any, which Tenant has paid
toward the estimated increase in Operating Expenses for the prior calendar year.
If Tenant's pro rata share of such items is less than the amount Tenant paid
toward the estimated increase in Operating Expenses, Landlord shall reimburse
Tenant in cash for the difference within thrity (30) days afer the date of
Landlord's delivery of its Actual Operating Statement to Tenant. The effect of
this adjustment is that Tenant will pay during each calendar year during the
Term Tenant's pro rata share of actual Operating Expenses in excess of the
Operating Expenses Amount.
(iii) PARTIAL YEARS. If the Commencement Date occurs on a date other
than the first day of a calendar year of the Term or expires on a date other
than the last day of a calendar year, then the actual Operating Expenses
incurred during such partial calendar years shall be computed and an appropriate
proration shall be made in the actual Operating Expenses and in the Operating
Expense Amount so that Tenant pays only that portion of Tenant's pro rata share
of excess Operating Expenses incurred during the portion of such calendar year
that includes the beginning of the end of the Term.
(b) OPERATING EXPENSES DEFINED. The term "Operating Expenses" shall mean
all costs and expenses (and taxes thereon, if any) paid or incurred by Landlord
with respect to the ownership, operation, cleaning, repair, safety, management,
security, and maintenance of the Building (and the land upon which it is
situated), including, but not limited to: (a) real estate taxes; (b) gas,
electricity, telephone, water, sewer, and other fuel and utility charges
(including surcharges) of whatever nature; (c) casualty, rent, liability,
fidelity, and any other insurance; (d) building personnel costs, including, but
not limited to, salaries, wages, fringes benefits, and other direct and indirect
costs of building managers, engineers, superintendents, watchmen, porters, char
workers, and any other building personnel; (e) social security, unemployment,
and other payroll taxes and the cost of providing disability and workers'
compensation coverage required by law or otherwise with respect to such
employees; (f) costs of service and maintenance contracts, including, but not
limited to, chillers, boilers, controls, elevators, windows, security, trash
removal, and any other Building service or system; (g) charges of independent
contractors performing work with respect to the operation, cleaning, repair,
safety, security, and maintenance of the Building; (h) maintenance and repair
expenses and supplies; (i) the cost or rental of all Building and management
office cleaning supplies, materials, tools, and equipment; (j) management fees;
(k) legal, accounting, and other professional fees and disbursements incurred in
connection with the operation and management of the Building; (l) costs of
uniforms, work clothes, and dry cleaning; (m) depreciation of hand tools and
other movable equipment used for the management of the Building; and (n)
business taxes and licenses. The term "Operating Expenses" shall include, also,
(a) expenditures for capital improvements and capital equipment purchased or
installed for the purpose of decreasing Operating Expenses, but only to the
extent that relevant decreases are applied in any given year. Such expenditures
for capital improvements and capital equipment shall be amortized in subsequent
Lease Years on a straight-line amortized basis over an appropriate period, not
to exceed ten years, together with interest on the unamortized cost fluctuating
at the "prime rate" charged by Crestar Bank (as changed from time to time). The
term "Operating Expenses" shall exclude; (a) executives' salaries above the
grade of building manager; (b) expenditures for capital improvements and capital
equipment other than those specified above; (c) principal and interest payments
on any mortgages, deeds of trust or other financing encumbrances; (d) leasing
commissions payable by Landlord; (e) deductions for depreciation; (f) costs of
repairs or replacements incurred by reason of fire or other casualty or
condemnation to the extent Landlord is compensated for same; and (g) the costs
of preparing, improving or altering space for any new or renewal tenant.
(c) REAL ESTATE TAX COMPONENT OF OPERATING EXPENSES. As a component of
"Operating Expenses", the term "real estate taxes" shall include all taxes and
assessments, general and special, ordinary and extraordinary, foreseen and
unforeseen, including assessments for public improvements or betterments, which
Landlord reasonably determines are assessed, levied or imposed with respect to
the Building, the land on which it stands or Landlord's personal property used
in connection therewith; any tax in the nature of a real estate tax; an AD
VALOREM tax on rent; any tax on income if imposed in lieu of, in addition to or
as a component of real estate taxes and assessments; and all reasonable expenses
incurred by Landlord in obtaining or attempting to obtain a reduction of such
taxes, rates or assessments, including, reasonable attorney fees. Any REDUCTION
shall be applied in its correct proportion to the Tenant's operating expense
statements in the year the adjustment is made.
(d) TENANT'S PRO RATA SHARE. Tenant's pro rata share of any Operating
Expense increase shall be the percentage amount specified in the Summary
Provisions of this Lease, which represents the proportion of rentable area of
the Premises divided by the total rentable area of the Building.
(e) ANNUAL STATEMENTS. Each Actual Operating Statement provided by Landlord
hereunder shall be conclusive and binding upon Tenant unless Tenant notifies
Landlord within 30 days after any such statement is given that it disputes the
correctness of such statement and states with particularity the items disputed.
Unless otherwise mutually agreed, any such dispute shall be determined by
arbitration in Washington, D.C., pursuant to the rules then obtaining of the
American Arbitration Association, and judgment on the award rendered thereby may
be entered in any court of competent jurisdiction. Pending determination of any
such dispute, Tenant shall pay Additional Rent in accordance with the disputed
statement (and the most recent Estimated Annual Operating Expense Increase given
by Landlord to Tenant), but such payments shall not prejudice Tenant's challenge
of the disputed statement. Upon notice given by Tenant to Landlord at least
fifteen (15) days in advance, Tenant shall have reasonable access, during normal
business hours, to appropriate books and records of Landlord relating to
Operating Expenses for the purpose of verifying, at Tenant's sole expense, any
Actual Operating Expense Statement.
(f) OTHER ADDITIONAL RENT. All other sums of money or charges required to
be paid by Tenant to Landlord under this Lease shall be deemed Additional Rent
and shall be due and payable fifteen days after Landlord gives Tenant notice
thereof. Tenant's failure to pay any sum or charged required to be paid by
Tenant to Landlord under this Lease when due shall carry with it the same
consequences as Tenant's failure to pay Monthly Payments and any other
Additional Rent payable hereunder when due.
5. USE.
(a) PERMITTED USE. Except as provided in paragraph (b) below, Tenant shall
use and occupy the Premises solely for office space during the Term of this
Lease and for no other purpose without the prior written consent of Landlord.
(b) COMPLIANCE WITH LAW. Tenant (and its permitted assignees and
subtentants) shall not use or permit the use of the Building, the Premises or
any part thereof for any disorderly, unlawful or hazardous purpose, or in a
manner which will obstruct or interfere with the rights of other tenants or
their invitees or in any way injure or annoy them, or in any manner which would
tend to lower the first-class character of the building. Tenant, at its sole
cost and expense, shall comply promptly with all present and future laws,
ordinances, rules, regulations, orders or requirements of all governments,
departments, commissions, boards and public officers which may impose any
violation, order or duty (including the duty to perform alterations to or to
install equipment in its Premises) upon Landlord or Tenant with respect to the
Premises or the Building arising out of Tenant's use or occupancy thereof.
Tenant shall pay as Additional Rent all costs, expenses, fines, penalties or
damages which may be imposed upon Landlord by reason of Tenant's failure to
comply with the provision of this paragraph. Landlord assumes no liability or
responsibility whatsoever with respect to the conduct or operation of the
business conducted in the Premises. Tenant shall not do or permit any act or
thing to be done to the Premises or to the Building which will invalidate or
cause an increase in the premium of any public liability, fire or other policy
of insurance at any time carried by or for the benefit of Landlord or which
might subject Landlord to liability for injury to any person or damage to any
property. If any increase in the premium of any public liability, fire or other
policy of insurance is stated by any insurance company or by any applicable
governmental ratings bureau to be due to any activity done or permitted by
Tenant in or to the Premises or the Building, such statement shall be conclusive
evidence that the increase in such premium is due to such activity, the Tenant
shall pay to Landlord the amount of such increase as Additional Rent.
(c) SUITABILITY OF PREMISES. Tenant hereby accepts the Premises, which may
be improved by Landlord as described in Section 1(b), in their condition
existing as of the day Tenant takes possession hereunder, subject to all
applicable zoning, local and State laws, ordinances and regulations governing
and regulating the use of the Premises and accepts the Lease subject thereto and
to all matters disclosed thereby and by any exhibits attached hereto. Tenant
acknowledges that neither Landlord nor Landlord's agent had made any
representations or warranties as to the suitability of the Premises for the
conduct of Tenant's business.
6. SECURITY DEPOSIT.
The Security Deposit shall be the same Deposit which Tenant made to
Landlord with its lease dated April 10, 1990 and which Landlord hereby agrees to
transfer as Security for the Lease (see Exhibit "F"). Such security deposit
shall be considered as security for obligations, covenants, conditions and
agreements under the Lease and shall be held by Landlord in an interest bearing
account. Upon the expiration of the term hereof (or any renewal or extension
thereof in accordance with this Lease), Landlord shall (provided that Tenant is
not in default under the terms hereof) return and pay back such security deposit
along with interest accrued to Tenant less such portion thereof as Landlord
shall have appropriated to make good any default by Tenant with respect to any
of Tenant's aforesaid obligations, covenants, conditions and agreements. In the
event of any default by Tenant hereunder during the term of this Lease, Landlord
shall have the right, but shall not be obligated, to apply all or any portion of
the security deposit to cure such default, in which event Tenant shall be
obligated, promptly to deposit with Landlord the amount necessary to restore the
security deposit to its original amount. In the event of the sale or transfer of
Landlord's interest in the Building, Landlord shall have the obligation to
return the security deposit to the Tenant or transfer said deposit to such
purchaser or transferee, in which event Tenant shall look only to the new
Landlord for the return of the security deposit, and Landlord shall thereupon be
released from all liability to Tenant for the return of such security deposit.
Landlord shall not be required to keep Tenant's security deposit in an account
separate from Landlord's own accounts.
7. SERVICES AND UTILITIES.
Landlord shall furnish to Tenant reasonably adequate electricity, exterior
window cleaning service (as required) in Landlord's sole and reasonable
judgment, and, provided the Premises are kept in good order by Tenant, cleaning
and char service in conformance with specifications attached hereto as Exhibit
"C" after 5:00 p.m. on Monday through Friday (exclusive of New Year's Day,
President's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day). Landlord shall not be responsible for cleaning, repair or
other maintenance (except vacuuming) of carpets, rugs or drapes within the
Premises, whether provided by Landlord or not, and such items shall be the sole
responsibility of Tenant. Landlord shall replace light bulbs or tubes for
Building standard lighting fixtures only. Landlord shall furnish rest room
facilities, necessary lavatory supplies and running water for the general use of
the tenants of the Building. Landlord shall furnish automatically-operated
elevator service and at least one elevator will be subject to call at all times.
Landlord shall furnish heat and air conditioning from 8:00 a.m. to 6:00 p.m., on
Monday through Friday (exclusive of New Year's Day, President's Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day) and from
9:00 a.m. to 1:00 p.m. on Saturday, during those seasons of the year when such
services are normally and usually furnished in comparable office buildings in
the Northern Virginia suburbs of the Washington, DC metropolitan area and within
the temperature ranges and in such amounts normally or usually furnished in such
comparable office buildings. If Tenant requires heat or air conditioning beyond
the hours specified by this paragraph, Landlord shall furnish such additional
heat or air conditioning upon notice of such requirement given to Landlord
(verbal, written or by means of automated system, as required by landlord from
time to time) no later than noon of the last business day preceding the day on
which Tenant requires such additional heat or air conditioning. Tenant shall pay
to Landlord as Additional Rent a charge for such additional heat or air
conditioning in accordance with Landlord's then current schedule of charges,
which may be made and changed from time to time without notice to Tenant.
Landlord shall provide a security system for the Building; PROVIDED HOWEVER,
that no representation or warranty is made by Landlord with respect to the
adequacy, completeness or integrity of the security system so provided. Landlord
reserves the right to change or modify the security system or guard service
(including right to substitute one for the other) at any time in its sole
judgment. Landlord shall not be liable in any respect for failure to furnish, or
for suspension or delays in furnishing, any of the services described by this
paragraph as a result of breakdown, maintenance, repairs, strike, riot, civil
commotion, scarcity of labor or materials, acts of God or any cause or reason
whatever beyond the control of Landlord; nor shall any such failure, suspension
or delay be deemed an eviction, actual or constructive, entitling Tenant to
terminate this Lease or to any reduction or adjustment of rent hereunder. If any
public utility or governmental authority having jurisdiction shall require
Landlord or Tenant to restrict consumption of any utility or to reduce any
service for the Premises or the Building, Landlord and Tenant shall comply with
such requirement without any reduction or adjustment of rent hereunder.
8. RULES AND REGULATIONS.
Tenant and Tenant's agents, employees, contractors, invitees and licenses
shall observe faithfully and comply strictly with all reasonable rules and
regulations promulgated by Landlord at any time and from time to time for the
general well-being, safety, care and cleanliness of the Premises and the
Building. Landlord shall put forth in best efforts to enforce such rules upon
all tenants. Nothing in this Lease shall be construed to impose upon Landlord
any duty or obligation to enforce any rule or regulation or any covenant or
agreement in any lease as against any other tenant, and Landlord shall not be
liable to Tenant for violation of the same by any other tenant of the Building.
9. ALTERATIONS.
(a) APPROVAL BY LANDLORD. Tenant shall not make, or cause to be made, any
alterations, installations (including floor coverings), decorations (including
painting and wall coverings), replacements, additions or improvements,
structural or otherwise, (hereinafter collectively referred to as "alterations")
in or to the Premises or the Building without the prior written consent of
Landlord which consent shall not be unreasonably withheld. Landlord may
condition such consent upon Tenant's written agreement to pay the cost of
additional utility consumption, if any, and to restore the Premises and the
Building to the condition in which they were found immediately prior to such
alteration and upon the requirement that Tenant post a security deposit to
secure performance of such agreement. Landlord also may condition such consent
upon its prior approval of plans and specifications and contractors and
subcontractors with respect to such alterations, and such alterations shall not
be commenced until such plans and specifications and contractors and
subcontractors have been submitted to and approved by Landlord. Such approval
shall not be unreasonably withheld or delayed. Upon such approval, alterations
shall be commenced promptly, performed in a good and workmanlike manner in
accordance with the approved plan and specifications, and diligently carried
forward to completion. Any alterations performed by Tenant shall be subject to
Landlord's inspection and approval after completion to determine whether the
same comply with matters approved by Landlord. It is understood and agreed that
any alterations performed in or to the Premises or the Building, other than
Landlord's Work, shall be made on behalf of Tenant, and not on behalf of
Landlord, and that Tenant shall be deemed the "owner" and not the "agent" of
Landlord with respect to such alterations. If any alteration is performed by
Tenant without the prior written consent of Landlord, Landlord may correct or
remove same and restore the Premises and the Building to the condition in which
they were found immediately prior to such alteration at Tenant's sole cost and
expense, and Tenant shall pay to Landlord as Additional Rent all costs and
expenses incurred by Landlord for such correction or removal.
(b) PERMITS AND INSURANCE COVERING TENANT ALTERATIONS. Tenant covenants
that any alterations which it shall perform shall be in conformity with all
applicable laws, ordinances, rules, regulations, orders or requirements of
governmental authorities having jurisdiction and all applicable insurance
requirements. Before commencing any alterations, Tenant shall obtain at its sole
cost and expense all permits, approvals and certificates required by
governmental authorities having jurisdiction and promptly shall deliver to
Landlord duplicates of all such permits, approvals, and certificates. Upon
completion of any alteration performed by Tenant, Tenant shall obtain, at its
sole cost and expense, certificates of final approval thereof and promptly shall
deliver to Landlord duplicates of all such certificates. In connection with any
Tenant alterations, Tenant shall carry, and shall cause its contractors and
subcontractors to carry, workmen's compensation, general liability, and personal
and property damage insurance in such amounts and with such companies as are
reasonably satisfactory to Landlord.
(c) MECHANIC'S LIENS. Tenant shall obtain and deliver to Landlord written
and unconditional waivers of mechanics' and materialmen's liens upon the
Building and the Land for all labor and services which have been performed and
materials which have been furnished in the Premises or in the Building in
connection with any tenant alterations, signed by all contractors,
subcontractors, materialmen and laborers. If, notwithstanding the foregoing, any
mechanic's or materialmen's lien is filed against the Building or the Land for
labor, services or materials claimed to have been furnished for Tenant, such
lien shall be discharged by Tenant within ten days after the filing thereof, at
Tenant's sole cost and expense, by the payment thereof or by posting the bond
required by law. If Tenant shall fail so to discharge or bond any such
mechanic's or materialmen's lien within the time agreed upon, Landlord may do
so, at Tenant's sole cost and expense, without inquiring into the validity of
such lien, and Tenant shall pay to Landlord as Additional Rent all costs and
expenses of same (including reasonable attorneys fees). Tenant's failure to
discharge or bond any such mechanics' or materialman's liens shall be deemed a
default under this Lease, and the discharge of any such lien by Landlord shall
not be deemed to waive or release such default.
(d) REMOVAL BY TENANT. Unless otherwise agreed by Landlord and Tenant, all
alterations in or to the Premises or the Building, whether with or without
Landlord's consent and whether Landlord's Work or Tenant alterations, shall
become the property of Landlord at the expiration or termination of this Lease
and shall be in good working order. Unless otherwise agreed by Landlord and
Tenant, Tenant shall not remove any such alterations. Trade fixtures installed
by Tenant may be removed prior to the expiration or termination of this Lease if
all rents due herein are paid in full, Tenant is not then otherwise in default
hereunder, and Tenant restores the Premises to good condition.
(e) INDEMNIFICATION. Tenant hereby indemnifies and agrees to save harmless
Landlord and any mortgagee of the Building against and from any cost, expense,
lien, damage, claim or liability (including reasonable attorneys fees) which may
arise directly or indirectly by reason of the performance of any alterations by
Tenant in or to the Premises or the Building.
10. CARE OF PREMISES.
(a) REPAIRS AND MAINTENANCE BY LANDLORD. During the term of this Lease,
including any extensions thereof, and during any period of holding over
hereunder, Landlord, at its sole cost and expense, shall correct any structural
defects in the foundation, floor slab and walls of the Premises, upon notice
from Tenant of the necessity for same, and shall keep and maintain in good order
and repair the exterior windows, exterior walls, and common areas of the
Building, the fixtures and equipment serving the Building generally, and sewer,
utility (other than telephone), and water lines within the Building serving the
Premises.
(b) REPAIRS AND MAINTENANCE BY TENANT. Other than those elements for which
Landlord is specifically responsible, during the Term of this Lease, including
any extensions thereof, and during any period of holding over hereunder, Tenant,
at its sole cost and expense, shall keep and maintain the Premises in a clean,
safe and sanitary condition.
(c) DAMAGE CAUSED BY TENANT. Tenant shall be responsible for all damage or
injury to the Premises, to the alterations and equipment therein or appurtenant
thereto, to alterations and equipment performed or installed by Tenant elsewhere
in the Building, and to any part of the Building or to the Building's fixtures
and equipment, caused by or resulting from carelessness, omission, neglect or
improper conduct of Tenant, Tenant's agents, employees, contractors, invitees or
licensees. Tenant shall repair property so damaged or injured to a quality and
class equal to the original work or construction. In the event Tenant shall fail
within thirty (30) days after notice by Landlord to commence such repairs and
diligently pursue same to completion, Landlord shall commence such repairs and
Tenant shall pay the Landlord as Additional Rent an amount equal to all of
Landlord's costs and expenses of repairing damage or injury for which Tenant is
responsible hereunder. In addition, if such repairs are performed by Landlord's
employees or by more than one contractor, Tenant shall pay to Landlord as
Additional Rent an amount equal to 25 percent of Landlord's direct costs and
expenses of such repairs, representing Landlord' s administrative costs and a
reasonable mark-up for providing such service. Tenant also shall pay to Landlord
as Additional Rent the amount of rent payable by other tenants which is lost by
Landlord as a result of damage or injury to property caused by or resulting from
carelessness, omission, neglect or improper conduct of Tenant, Tenant's agents,
employees, contractors, invitees or licensees. The above provisions are
additional remedies granted to Landlord and are not in limitation of any other
rights and remedies which Landlord may have under this Lease or at law or in
equity. Notwithstanding the foregoing, Tenant shall not be liable to Landlord
for any cost, expense or loss of rent under this paragraph to the extent that
Landlord is insured against such hazards and damages under an insurance policy
containing a waiver of subrogation clause and to the extent that the proceeds of
such insurance actually compensate Landlord for such cost, expense or loss of
rent.
(d) NOTICE OF DEFECTIVE CONDITION. Tenant shall give Landlord prompt notice
of any apparent defects to the foundations, floor slab and walls of the Premises
and of any apparent defective condition in the plumbing, heating or electrical
systems located in, servicing or passing through the Premises.
11. ACCESS TO PREMISES.
(a) TENANT'S ACCESS. Tenant shall have access to the Premises on a
full-time 24-hour basis, subject to such reasonable restrictions as Landlord may
impose for security or maintenance reasons.
(b) LANDLORD'S ACCESS. Landlord and its agents with prior reasonable
written or verbal notice to Tenant shall have the right to enter (but shall not
be obligated to enter) the Premises at all reasonable times to inspect same, to
make such repairs or alterations as Landlord may deem necessary and reasonably
desirable or in compliance with laws, ordinances, rules, regulations, orders or
requirements of any governmental authority having jurisdiction. During the
progress of any repairs or alterations performed by Landlord in the Premises,
Landlord may take all necessary materials and equipment into the Premises
without the same constituting an eviction, actual or constructive, entitling
Tenant to terminate this Lease, to any reduction or adjustment of rent for the
period during which such work is in progress or to any damages by reason of loss
or interruption of business or otherwise. Tenant shall permit Landlord to use,
maintain, and replace pipes and conduits in and through the Premises and to
erect new pipes and conduits therewith. Landlord shall have the right to enter
the Premises during normal business hours, throughout the term of this Lease,
for the purpose of showing the same to prospective purchasers or mortgagees of
the Building, and during the last six months of the term, for the purpose of
showing the same to prospective tenants of the Premises. No lock shall be
changed and no additional lock shall be placed upon any door of the Premises
without Landlord's prior written consent, which consent may be conditioned upon
Tenant's furnishing to Landlord a duplicate key to such changed or additional
lock. If Tenant is not present to open and permit an entry into the Premises,
Landlord or its agents may enter the same, whenever such entry may be permitted
by this Lease, by master key, keys provided by Tenant or forcibly, if necessary,
provided reasonable care is exercised to safeguard Tenant's property. All damage
done to the Premises by Landlord's permitted forcible entry as a result of
Tenant's failure to provide a duplicate key to any lock shall be repaired
promptly by Landlord, and Tenant shall pay to Landlord as Additional Rent the
cost of expense of such repair. If, after giving or receiving notice of
termination or non-extension of this Lease, as above provided, Tenant shall
remove all or substantially all of its property from the Premises. Landlord
thereupon may enter the Premises and perform alterations in and to same without
reduction or adjustment of rent and without liability to Tenant.
(c) EMERGENCY REPAIRS. If, in order to prevent damage to the Premises or
the Building, or to prevent harm to person or property in the Building, it shall
become necessary promptly to make any repair within the Premises and Tenant
shall not be immediately available to permit entry, then Landlord may enter (but
shall not be obligated to enter) the Premises at any time for the purpose of
making such repair.
12. TENANT'S EQUIPMENT.
(a) ELECTRICAL EQUIPMENT. Tenant shall not install or operate in the
Premises or in the Building any electrically operated equipment or machinery
which operates at a capacity of greater than 120 volts/12 amps without first
obtaining the written consent of Landlord. Landlord may condition such consent
upon (i) Tenant's agreement to pay the cost for additional wiring and facilities
occasioned by the operation of such equipment or machinery and (ii) Tenant's
securing any necessary permits from governmental authorities and utility
companies. Tenant shall not install or operate in the Premises or in the
Building any equipment or machinery which may affect the general use of any such
system without first obtaining the written consent of Landlord. Landlord may
condition such consent upon Tenant's agreement to pay the cost of change,
replacements or additions in Building systems necessary for the operation of
such equipment or machinery. Tenant shall not operate in the Premises or in the
Building any equipment or machinery which causes noises or vibration to such a
degree as to be objectionable to Landlord or to any other tenant of the
Building.
(b) EXCESS ELECTRICAL USAGE. Tenant shall pay to Landlord as Additional
Rent the cost of any electricity consumed by Tenant in excess of an average of
five watts per square foot of approximate rentable area of the Premises. Upon
determining Tenant's regular requirement of electricity in excess of an average
of five watts per square foot of approximate rentable area of the Premises per
month Landlord shall have the right to install a separate meter serving the
Premises to measure Tenant's additional electrical consumption. Such meter shall
be installed, maintained and read by Landlord. Tenant shall pay to Landlord as
Additional Rent the cost and expense of installation, maintenance, and reading
of such meter.
(c) HEAVY EQUIPMENT. Tenant shall not place or install in the Premises any
equipment, machinery or fixture which shall place a load upon any floor in
excess of the floor load per square foot of area which such floor was designed
to carry. Landlord shall have the right to prescribe the weight, method of
installation, and position of any heavy equipment, machinery or fixture which
Tenant desires to place or install in the Premises. Notwithstanding any
prescription by Landlord, Tenant shall be liable to Landlord for any damage done
to the Premises or the Building by the placement, installation, presence or
removal of such heavy equipment, machinery or fixture to the extent that
Landlord is not insured against such damage under an insurance policy containing
a waiver of subrogation clause and to the extent that the proceeds of such
insurance do not actually compensate Landlord for such damage.
13. SIGNS.
No sign, advertisement or notice shall be inscribed, painted, affixed or
otherwise displayed on any part of the inside or the outside of the Building
without the prior written consent of the Landlord, which consent shall not be
unreasonably withheld or delayed. If any such sign, advertisement or notice is
nevertheless displayed by Tenant without Landlord's consent, Landlord may remove
such sign, advertisement or notice, and Tenant shall pay to Landlord as
Additional Rent the cost and expense of such removal.
14. INSURANCE.
(a) INSURANCE TO BE PROCURED BY TENANT. Tenant, at its sole cost and
expense, shall obtain and maintain in effect all times during the term of this
Lease, including any renewals thereof, and during any period of holding over
hereunder, policies of insurance providing for the following coverages:
(i) A policy covering Tenant's trade fixtures and equipment installed
and located within the Premises; any alterations made by Tenant in or to the
Premises or the Building, whether or not removable by Tenant upon the expiration
or termination of this Lease, and all of the furnishings, merchandise and other
contents within the Premises, for the full replacement value of such items.
Coverage shall at least insure against any and all perils included within the
classification "Fire and Extended Coverage" under insurance industry practice in
the state wherein the Building is located, together with insurance against
vandalism, malicious mischief and sprinkler leakage or other sprinkler damage.
Any proceeds of such insurance insuring alterations which are not removable by
Tenant upon the expiration or termination of this Lease shall be used only to
repair or replace the items so insured or to compensate Landlord for their loss.
(ii) A comprehensive policy of general liability insurance protecting
against liability for bodily injury, personal injury, death or property damage
occurring in or about any part of the Premises or the Building or arising from
any of the acts set forth in Section 15 to the extend such acts are reasonably
insurable under a general liability policy, with such policy to be in the
minimum amounts providing such coverages as are usual and customary.
There shall be a single occurrence limit of One Million Dollars
($1,000,000.00) for all of the above coverages.
(b) GENERAL PROVISIONS GOVERNING POLICIES. All insurance policies herein to
be obtained by tenant (i) shall be issued by good and solvent insurance
companies licenses to do business in the state in which the Building is located;
(ii) shall be written as primary policy coverage and not contributing with or in
excess of any coverage which Landlord or its mortgagees may carry; and (iii)
shall insure and name Landlord and any mortgagee of the Building as additional
insureds as their respective interests may appear. Each and every insurance
policy required to be carried hereunder by or on behalf of Tenant shall provide
(and any certificate evidencing the existence of each such insurance policy
shall certify) that, unless Landlord shall first have been given 30 days prior
written notice hereof; (i) such insurance policy shall not be canceled and shall
continue in full force and effect; and (ii) no material changes may be made in
such insurance policy. Upon request by Landlord, Tenant shall give to Landlord a
duplicate original or certified copy of each policy, or renewal of a policy, of
insurance required herein to be obtained by Tenant, together with evidence of
payment of all applicable premiums. Neither the issuance of any policy required
hereunder nor the minimum limits specified herein with respect to Tenant's
insurance coverage shall be deemed to limit or restrict in any way Tenant's
liability arising under or out of this Lease. The term "insurance policy" as
used herein shall be deemed to include any extension or renewal of such
insurance policy. In the event that Tenant shall fail promptly to furnish any
insurance coverage hereunder required to be obtained by Tenant, Landlord shall
have the right to obtain (but shall not obligated to obtain) the same and to pay
the premium for same for a period not to exceed one year in each instance, and
Tenant shall pay to Landlord the amount of such premium paid by Landlord.
(c) WAIVER OF SUBROGATION. Landlord and Tenant hereby release each other
from any claim for damage or loss to the Premises, the Building or any person or
property caused by or resulting from any risks insured against under any
insurance policies carried by Landlord or Tenant and in force at the time of any
such damage or loss, to the extent that such damage or loss actually in
compensated by insurance proceeds, regardless of the cause of the damage or loss
(including the negligence of Landlord or Tenant). All insurance policies
required to be obtained and maintained by Tenant under this Lease shall contain
an express wavier of any right of subrogation by the insurance company against
Landlord. Likewise, all insurance policies obtained by Landlord with respect to
the Premises and the Building shall contain an express waiver of any right of
subrogation by the insurance company against Tenant.
15. INDEMNITY.
(a) TENANT'S INDEMNITY. Tenant hereby indemnifies and agrees to save
harmless Landlord, its agents and employees, and any mortgagee of the Building
against and from any cost, expense, lien, damage, claim or liability (including
attorneys fees) arising from or in connection with: (i) the possession, use,
occupancy, repair, maintenance or control of the Premises or any portion thereof
by Tenant or Tenant's agents, employees, contractors, invitees or licensees;
(ii) the business conducted in the Premises by Tenant; (iii) any act or omission
of Tenant or Tenant's agent, employees ,contractors, invitees or licensees; and
(iv) any default, breach, violation or non-performance of this Lease or any
provision thereof by Tenant. Tenant, at its sole cost and expense, shall defend
any and all actions, suits and proceedings which may be brought against
Landlord, its agents or employees, or any mortgagee of the Building, with
respect to the foregoing or in which they may be impleaded, and Tenant shall
satisfy and discharge any and all judgments, orders and decrees which may be
recovered against Landlord, its agents or employees, or any such mortgagee in
connection with the foregoing. Tenant shall pay to Landlord the amount of any
cost, expense, damage, claim or liability incurred by Landlord against which
Tenant has indemnified Landlord thereunder. Notwithstanding any of the foregoing
sentences, Tenant shall not be liable of any claims or liabilities arising out
of the sole negligence of Landlord.
(b) LANDLORD'S INDEMNITY. Landlord hereby indemnifies and agrees to save
harmless Tenant, its agents and employees, against and from any cost, expense,
lien, damage, claim or liability (including attorneys fees) to the extent
arising from or in connection with any default, breach, violation or
non-performance of this Lease or any provision therefor by Landlord. Landlord at
its sole cost and expense, shall defend any and all actions, suits and
proceedings which may be brought against Tenant, its agents or employees, with
respect to the foregoing or in which they may be impleaded, and Landlord shall
satisfy and discharge any and all judgments, orders and decrees which may be
recovered against Tenants, its agents or employees, in connection with the
foregoing. Landlord shall pay to Tenant the amount of any cost, expenses,
damage, claim or liability incurred by Tenant against which Landlord has
indemnified Tenant hereunder. Notwithstanding any of the foregoing sentences,
Landlord shall not be liable for any claims or liabilities arising out of the
sole negligence of Tenant.
16. LIABILITY OF LANDLORD.
Landlord and its agents, employees and contractors shall not be liable to
Tenant, its agents, employees, contractors, invitees or licensees for any
damage, claim or liability arising from: (a) the necessity for making repairs to
the Premises or the Building and any resultant interruption of the use of the
Premises or any part of the Building; (b) accident or damage in connection with
the use or operation by any person of elevators or heating, cooling, electrical
or plumbing equipment in the Building; (c) fire, robbery, theft, mysterious
disappearance or any other casualty; (d) leakage of water, steam, rain, snow or
any other substance into or from any part of the Premises or the Building; (e)
any failure of any security system; (f) any personal injury resulting from the
use, occupancy or condition of the Premises; or (g) termination of this Lease by
reason of the destruction of the Premises; provided, however, that nothing
herein shall be construed to relieve Landlord and its agents, employees, and
contractors from liability for gross negligence or willful misconduct. No such
event or events shall be deemed an eviction, actual or constructive, and Tenant
shall not be entitled to terminate this Lease or to any reduction or adjustment
of rent as a result of any such event or events. Any goods, property or personal
effects of Tenant, its agents, employees, contractors, invitees, licensees,
customers, family members or guests stored or place in or about the Premises or
the Building shall be at the sole risk of the owner of such goods, property or
personal effects, and Landlord shall not be responsible for same.
17. DAMAGE BY FIRE OR OTHER CASUALTY.
(a) DUTY TO RESTORE. If, during the term of this Lease, or any renewals
thereof, or any period of holding over hereunder, the Premises or the Building
is damaged or rendered totally or partially inaccessible or unusable by fire or
other casualty, this Lease shall continue in full force and effect, except as
hereinafter provided, and Landlord diligently and as soon as practicable after
such damage occurs (taking into account the time necessary to effectuate a
satisfactory settlement with any insurer involved with Landlord exercising good
faith efforts to attain a settlement as soon as reasonably possible) shall
restore and repair the Premises and the Building to substantially the same
condition in which they were found prior to such fire or other casualty,
exclusive of alterations required to be restored or repaired by Tenant
hereunder. If such fire or other casualty was not caused by the carelessness,
omission, neglect or improper conduct of Tenant or Tenant's agents, employees,
contractors, invitees or licensees, Landlord shall bear the costs and expenses
of such restoration and repair. If however such fire or other casualty was
caused by the carelessness, omission, neglect or improper conduct of Tenant or
Tenant's agents, employees, contractors' invitees or licensees, then Tenant, to
the extent such actions contributed to such fire or other casualty, shall bear
the cost and expense of such restoration and repair. If this Lease is not
terminated, as hereinafter provided, Tenant shall restore and repair, at
Tenant's sole cost and expense, any alterations made by Tenant in or to the
Premises or the Building which are damaged or destroyed by fire or other
casualty during the term of this Lease or during any period of holding over
hereunder to substantially the same condition in which they were found prior to
such fire or other casualty or Tenant shall request alterations thereto which
are subject to Landlord's reasonable consent. Tenant shall be bound by the
provisions of Article 9 of this Lease in making any restoration or repair
required or permitted by this paragraph.
(b) RIGHT TO TERMINATE. Landlord shall have the right, at its sole option,
to terminate this Lease by giving notice of such termination to Tenant within
ninety (90) days from the date of such damage if (a) settlement of insurance
claims and Landlord's restoration and repair of the Premises damaged by fire or
other casualty cannot be fully completed within 90 days from the date of such
damage of (b) the Building shall be so damaged by fire or other casualty that
substantial reconstruction of the Building is required (whether or not the
Premises have been damaged or rendered untenantable or inaccessible). This Lease
shall terminate immediately upon the giving of such notice.
Tenant shall have the right, at its sole option, to terminate this Lease by
giving notice of such termination to Landlord within 90 days of the date of such
damage if (a) Landlord's restoration and repair of the Premises damaged by fire
or other casualty cannot be completed within 90 days from the date of such
damage, if an and only if such damage id not arise out of any willful, careless,
negligent, or improper act of Tenant or Tenant's agents, employees, contractors,
invitees or licenses. For the purposes of this Lease, "substantial
reconstruction" shall mean reconstruction which is reasonably estimated to cost
in excess of 25 percent of the replacement value of the Building.
(c) RENT ABATEMENT. If this Lease is not terminated in the event of such
fire or the casualty, and provided that such fire or other casualty was not
caused by or did not result from carelessness, omission, neglect or improper
conduct of Tenant or Tenant's agents, employees, contractors, invitees or
licensees, until the restoration and repair of the Premises (exclusive of
alterations for which Tenant is responsible hereunder or which Tenant elects to
perform) is completed, Tenant shall pay any rent whether characterized as
Monthly Payments or Additional Rent only for that part of the Premises that
Tenant is able to use while restoration and repair is made, based upon the ratio
that the amount of area usable by Tenant compared to the usable square feet of
the Premises determined pursuant to Section 1(a) above. So long as this Lease
shall remain in effect, Tenant shall be entitled to a reduction of rent
hereunder only to the extent that such fire or other casualty was not caused by
or was not resulting from carelessness, omission, neglect or improper conduct of
Tenant or Tenant's agents, employees, contractors, invitees or licensees.
18. CONDEMNATION
If all or a substantial part of the Premises is taken or condemned for all
public or quasi-public use or purpose by any competent authority, this Lease
shall terminate as the date of such taking or condemnation, and the rent
required otherwise to be paid by Tenant hereunder shall be abated as of the date
of such taking. If less than a substantial part of the Premises is so taken or
condemned, the rent required to be paid by Tenant hereunder shall be equitably
adjusted based upon the ratio that the amount of rentable square feet shall be
equitable adjusted based upon the ratio that the amount of rentable square feet
remaining available for Tenant's use and occupancy after such taking or
condemnation bears to the rentable square feet of the Premises determined
pursuant to Section 1(a) above, and this Lease otherwise shall continue in full
force and effect. In either event, Tenant shall have no claim against Landlord
for the value of the unexpired portion of the term of this Lease. Tenant shall
have no claim or right to any portion of the amount that may be awarded as
damages or paid as a result of any such taking or condemnation, and all rights
of Tenant to damages therefor, if any, are hereby assigned by Tenant to
Landlord. Tenant, however, shall be entitled to claim, prove and receive in the
condemnation proceedings such awards as may be allowed for alterations made by
Tenant in or to the Premises of the Building which are removable by Tenant upon
the expiration or termination of this Lease, or for any other type of special
damages allowable by law to Tenant, but only if any and all such awards shall be
made by the condemnation court in addition to and stated separately from the
award made by it for the Building and the land on which it stands, or part
thereof, so taken. For the purposes of this article, a substantial part of the
Premises shall be deemed to have been taken if more than 50 percent of the
approximate rentable square feet of the Premises determined pursuant to Section
1(a) above is unusable by Tenant as a direct result of such taking. For the
purposes of this Section, any purchase by a competent authority, or its
designee, of all or part of the Premises, in lieu of taking or condemnation
thereof under powers of eminent domain, shall be deemed to be an actual taking
or condemnation thereof.
19. SURRENDER OF PREMISES
Upon the expiration of termination of this Lease, Tenant shall quit and
surrender the Premises broom clean and in good condition, ordinary wear and tear
and damage by fire or other casualty excepted. Landlord shall have the right to
retain, at no cost to Landlord, any Tenant alterations or improvements to the
Premises constituting Landlord's Work. Tenant shall remove from the Building all
personal property (other than any property constituting Landlord's Work)
belonging to Tenant or Tenant's agents, employees, contractors, invitees or
licensees, and if Tenant fails to remove any such property from the Building,
such property shall be deemed to have been abandoned, and Landlord, at its sole
option, may retain possession thereof or may cause the same to be removed at
Tenant's sole cost and expense. Tenant agrees to reimburse Landlord for the cost
of such removal together with any and all damages which Landlord may sustain
thereby. Tenant's obligation to perform the covenants contained in this Section
shall survive the expiration or termination of this Lease.
20. ASSIGNMENT, SUBLETTING
(a) Tenant (and its permitted assignees and subtenants) shall not assign,
mortgage or encumber this Lease, or sublease the Premises, or permit the same or
any part thereof to be used by others, without the prior written consent of
Landlord in each instance, nor shall any assignment or transfer of this Lease or
the right to occupancy hereunder be effectuated by operation of law or otherwise
without the prior written consent of Landlord. Any attempted or purported
assignment, mortgage or encumbering of this Lease or of Tenant's interest
hereunder and any attempted or purported subletting or grant of a right to use
or occupy all or any portion of the Premises without the prior written consent
of Landlord shall be null and void and shall not confer any rights upon any
purported assignee, mortgagee, transferee, sublessee or occupant. Tenant shall
give notice to Landlord of any proposed sublease or assignment not less than
fifteen (15) days prior to the effective date of such proposed sublease or
assignment, and such notice shall include a copy of the proposed sublease or
assignment. Landlord shall approve or disapprove of such request no later than
ten (10) days after receipt of such request. Landlord's consent shall not be
unreasonably withheld or delayed.
(b) Landlord shall approve of a proposed sublease in accordance with the
terms of Paragraph 20(a) hereof if (i) such sublease is expressly subject and
subordinate to this Lease; (ii) such sublease provides that the subtenant must
abide by all of the terms and conditions of this Lease; (iii) such sublease
provides that any expiration or termination of this Lease shall extinguish the
sublease as well; (iv) the rent payable to Tenant under such sublease for any
subleased space be no less than the pro rata rent payable by Tenant hereunder
for such space; (v) if the net rent (i.e., rental and other consideration less
all fees, costs and related expenses incurred by tenant in completing said
sublease and delivering the sublease premises to the new subtenant) payable to
Tenant under such sublease space exceeds the rent payable by Tenant hereunder
for such space, the sublease must provide that Tenant shall pay to Landlord as
Additional Rent One-half of the amount of any such net excess (and/or other net
consideration in addition to rent) paid by Tenant on the first day of each month
following receipt by Tenant of any such payment; (vi) the proposed subtenant has
a credit rating satisfactory to Landlord, in Landlord's reasonable Judgment; and
(vii) the proposed subtenant is engaged in a business or activity which would
not tend to lower the first-class character of the Building.
(c) In the event that a proposed sublease is not approved by Landlord in
accordance with the criteria set forth herein, then in that event Landlord shall
have the right to elect, within ten (10) additional days thereafter, (a) to
terminate this Lease with respect to that portion of the Premises (including the
whole thereof) for which a sublease is proposed, (b) to sublet from Tenant that
portion of the Premises for which a sublease is proposed at the rent then being
paid by Tenant for such portion by a proportionate reduction or rent payable by
Tenant as hereinafter set forth, or (c) to consent or refuse consent to such
proposed sublease. If Landlord shall elect to terminate this Lease with respect
to any portion of the Premises for which Tenant has proposed a sublease or to
sublet such potion of the Premises , Tenant shall surrender to Landlord for the
term of the sublease such portion of the Premises on the commencement date of
the proposed sublease, and thereafter the Base Annual Rent, Additional Rent and
all other related financial matters shall be appropriately adjusted based upon
the ratio that the rentable area of the Premises remaining after such surrenders
bears to the rentable area of the Premises first herein recited. This Lease
otherwise shall continue in full force and effect.
(d) If this Lease is assigned, or if the Premises or any part thereof is
sublet or occupied by any person, firm or corporation other than Tenant, and
Landlord, if permitted, fails to elect to terminate this Lease with respect to
the applicable portion of the Premises so transferred, Landlord may collect rent
from the assignee, subtenant or occupant and apply the net amount collected to
the account of rent payable by Tenant under this Lease and any excess shall be
promptly paid to Tenant, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver or release of Tenant's covenants or
obligations under this Lease.
(e) Notwithstanding any other section in this Article 20, Tenant shall have
the right to sublet space to XEN, Inc. without Landlord's approval and without
sharing any of its "profits" if there are any, with Landlord.
21. DEFAULT OF TENANT
(a) DEFAULT DEFINED. A default under this Lease shall be defined as the
occurrence of any one or more of the following events (a "Default").
(i) Tenant's failure to pay any installment of the Monthly Payment or
Additional Rent on or before the date on which such installment is due and
payable under this Lease, although no legal or formal demand has been made
therefor;
(ii) Tenant's violation of, or failure to perform, any other term,
condition, covenant or agreement under this Lease;
(iii) The appointment of a receiver or custodian for any or all of the
property or assets of Tenant, the institution of a foreclosure action upon any
real or personal property of Tenant or the filing of an involuntary petition
against Tenant as the subject debtor under the bankruptcy provisions of the
United States Code (the "Bankruptcy Code") or under this insolvency laws of any
State, District, Commonwealth or Territory of the United States ("Insolvency
Laws") which either is not dismissed within 30 days of filing or results in the
issuance of an order for relief against the debtor within 30 days of filing;
(iv) The filing of a voluntary petition under the provisions of the
Bankruptcy Code or Insolvency Law by Tenant; or
(v) The making or consenting to an assignment for the benefit of
creditors or a common law composition of creditors by Tenant.
(b) LANDLORD'S REMEDIES. Should a Default occur under this Lease, Landlord
may pursue any or all of the following remedies:
(i) TERMINATION OF LEASE. Landlord may terminate this Lease by giving
notice of such termination to Tenant, (1) if Tenant is in default due to failure
to pay Monthly Payment(s) or Additional Rent when due, or (2) if Tenant fails to
cure any nonmonetary default within ten days after such notice (which ten day
period shall be extended for such additional period of time as reasonably may be
necessary to cure such default if by its nature such default cannot be cured
within such ten day period, so long as, however, Tenant shall commence to cure
such default within such ten day period and shall proceed diligently to cure
same); PROVIDED, HOWEVER, that this subparagraph may not be invoked while a case
under the Bankruptcy Code is pending in which Tenant is the subject debtor,
unless Tenant or its Trustee in Bankruptcy is unable to comply with the
provisions of subparagraph 21 (b)(vi), 21 (b)(vii), and 21 (b)(viii) below. Upon
the giving of notice, this Lease shall terminate and Tenant shall be obligated
to quit and surrender the Premises. Any other notice to quit or notice of
Landlord's intention to re-enter is hereby expressly waived by Tenant. If
Landlord elects to terminate this Lease, all covenants and agreements herein
made by Landlord shall cease without prejudice to the right of Landlord to
recover from Tenant all rent accrued to the time of termination or recovery of
possession of the Premises by Landlord, whichever is later, and any other
monetary damages or loss sustained by Landlord, including, but not limited to,
loss of rent, costs of advertising, commissions, physical alterations, and rent
concessions of any kind.
(ii) SUIT FOR POSSESSION. Upon termination of this Lease pursuant to
subparagraph 21(b)(i), Landlord may proceed to recover possession of the
Premises under and by virtue of the provisions of the laws of the state in which
the Building is located, or by such other proceedings, including re-entry and
possession, as are permitted by law.
(iii) RELETTING OF PREMISES. Should this Lease be terminated before
the expiration of the term of this Lease, including any renewals thereof, by
reason of Default of Tenant, the Premises may be relet by Landlord or such rent
and upon such terms as are reasonable under the circumstances. If the full
amount of rent payable by Tenant under this Lease and costs, expenses or damages
sustained by Landlord as a result of Default of Tenant, including, without
limitation, additional administrative costs, reasonable attorneys fees,
brokerage fees and expenses of placing the Premises in first-class rentable
condition, shall not be realized by landlord through such reletting, Tenant
shall be liable for any deficiency in such amount. In preparing the Premises for
such reletting, Landlord, at its sole option, may make such alternations and
repairs in and to the Premises as Landlord considers advisable and necessary for
the purpose of reletting same, and the making of such alterations and/or repairs
shall not operate or be construed to release Tenant from liability hereunder.
Landlord shall not be liable to Tenant for failure to relet the Premises or, in
the event the Premises are relet, for failure to collect rent under such
reletting. Tenant shall not be entitled to receive any excess o rent collected
by Landlord under such reletting over the full amount of rent payable by Tenant
under this Lease and costs, expenses or damages sustained by Landlord as a
result of Default of Tenant.
(iv) ADDITIONAL SECURITY. If, for three months of any period of four
consecutive months, Tenant shall fail to pay any monthly installment of rent on
or before the tenth day of the month in which such payment is due under this
Lease, Landlord may declare the total amount of monthly installments of rent
payable under this Lease for either the six months immediately following or the
last six months of the Lease Term to be due and payable within ten days after
Landlord gives notice to Tenant of such action. For the purpose of this
subparagraph, the term "monthly installment of rent" shall mean the total of
monthly installments of Base Annual Rent and Additional Rent payable for a month
under this Lease. Landlord shall hold any amount received under this
subparagraph in escrow, to be applied to satisfaction of Tenant's rent account
for such six-month period (whether such period be for the six months immediately
following or the last six months of the Lease Term) as each installment of rent
otherwise shall become due and payable. This subparagraph may not be invoked
while a case under the Bankruptcy Code is pending in which Tenant is the subject
debtor.
(v) MONETARY DAMAGES. Any damage or loss of rent sustained by Landlord
as a result of Default of Tenant may be recovered by Landlord, at Landlord's
option, at the time of reletting all or a portion of the Premises or in separate
action, or from time to time, as said damage or loss shall have been made more
easily ascertainable by partial, initial or successive relettings, or in a
single proceedings deferred until the expiration of the term of this Lease, or
any renewals thereof, (in which event Tenant hereby agrees that the cause of
action shall be deemed to accrue upon the expiration or termination of this
Lease), or in a single proceedings prior to either the time of reletting or the
expiration of the term of this Lease, or any renewals thereof, in any of which
events Tenant agrees to pay to Landlord, as agreed liquidated damages, the
present value, at ten percent per annum, of rent which would have been payable
from the end of the period for which Tenant has paid rent to the Lease
Expiration Date. Upon payment of such agreed liquidated damages, Tenant shall be
under no further liability with respect to such period. In the event Tenant
shall become the subject debtor in a case under the Bankruptcy Code, the
provisions of this subparagraph may be limited by the limitation of damage
provisions of the Bankruptcy Code.
(vi) ASSUMPTION OR ASSIGNMENT BY TRUSTEE. In the event Tenant shall
become the subject debtor in a case under the Bankruptcy Code, Landlord's right
to terminate this Lease pursuant to subparagraph 21 (b)(i) shall be subject to
the rights of the Trustee in Bankruptcy to assume or assign this Lease. The
Trustee shall not have the right to assume or assign this Lease unless the
trustee (a) promptly cures all Defaults of Tenant; (b) promptly compensates
Landlord for monetary damages incurred as a result of such Defaults; and (c)
provides adequate assurance of future performance.
(vii) ADEQUATE ASSURANCE OF FUTURE PERFORMANCE. Landlord and Tenant
hereby agree in advance that adequate assurance of future performance, as used
in subparagraph 21 (b)(vi) above, shall mean that all of the following minimum
criteria must be met: (a) the Trustee or Tenant must pay to Landlord, at the
time the next monthly installment of rent is due under this Lease, in addition
to such monthly installment of rent, an amount equal to the total amount of
monthly installments of rent payable under this Lease for the three months
immediately following, and Landlord shall hold said amount in escrow until
either the Trustee or Tenant defaults in its payments of rent under this Lease
(whereupon Landlord shall have the right to apply funds held in escrow to any
deficiency in Tenant's rent account) or until the expiration of this Lease
(whereupon such funds shall be returned to the Trustee or Tenant); (b) the
Tenant or Trustee must agree to pay to Landlord, at any time the Landlord is
authorized to and does apply the funds as escrowed, the amount necessary to
restore such escrow account to the original level required by this subparagraph;
(c) the Trustee must agree that Tenant's business shall be conducted in a
first-class manner and that no liquidating sale auctions, or other
non-first-class business operation shall be conducted in the Premises; (d) the
trustee or Tenant must agree that the use of the Premises as stated in this
Lease will remain unchanged; and (e) the Trustee must agree that the assumption
or assignment of this Lease will not violate or affect the rights of other
tenants in the Building. For the purpose of this subparagraph, the term "monthly
installment of rent" shall mean the total of monthly installments of Base Annual
Rent and Additional Rent for a month under this Lease.
(viii) FAILURE TO PROVIDE ADEQUATE ASSURANCE. In the event Tenant's
Trustee is unable (a) to cure Tenant's Defaults, (b) to compensate Landlord for
Landlord's monetary damages, (c) to pay the rent due under this Lease without
Default and (d) to meet the criteria and obligations imposed by 21 (b)(vii)
above, then Tenant agrees in advance that its Trustee has not met its burden to
provide adequate assurance of future performance, and this Lease may be
terminated by Landlord in accordance with subparagraph 21 (b)(i).
(c) LANDLORD'S RIGHT TO PERFORM FOR ACCOUNT OF TENANT. If Tenant shall fail
to make any payment or to do any act required by this Lease, Landlord may (but
shall not be required to) make such payments or do such act for and on behalf of
Tenant. Tenant agrees to pay to Landlord the amount of any such payment and the
cost of expense of any such act (including without limitation attorney fees)
paid or carried out by Landlord on Tenant's behalf and interest thereon,
computed from the date of Landlord's payment of such item to the date of payment
to such item by Tenant, at a rate which shall be the lesser of (i) two
percentage points in excess of the "prime rate" charged by Crestar Bank on the
date such item becomes due and fluctuating thereafter as the "prime rate"
charged by said Bank may change from time to time or (ii) the maximum rate of
interest then allowed by law.
(d) WAIVER. If Landlord shall institute a proceeding against Tenant in
enforcement of the provisions of this Section and a compromise or settlement of
such proceeding shall be made, the election so to compromise or settle shall not
constitute a waiver of any condition, covenant or agreement set forth by this
Lease or of any other rights of Landlord hereunder. Waiver by Landlord of its
remedy for any breach of any condition, covenant or agreement set forth by this
Lease shall not operate as a waiver of such condition, covenant or agreement or
of Landlord's right to remedy for any subsequent breach thereof. The receipt by
Landlord of rent with knowledge of the breach of any condition, covenant or
agreement of this Lease shall not be deemed a waiver of such breach and no
provision of this Lease shall be deemed to have been waived by Landlord unless
such waiver is in writing signed by Landlord. Payment by Tenant or receipt by
Landlord of a lesser amount than the amount or rent then due and payable shall
be deemed to be on account of the earlier installment of rent due at the time of
such payment. Landlord's acceptance of any payment in a lesser amount than the
amount of rent then due and payable shall not be deemed an accord and
satisfaction, and Landlord may accept such payment without prejudice to
Landlord's right to recover the balance due and to pursue any other remedy
provided in this Lease. No act or thing done by landlord or Landlord's agents
during the term of this Lease shall be deemed an acceptance of a surrender of
the Premises, and no agreement to accept such surrender shall be valid unless in
writing signed by Landlord. No employee or agent of Landlord shall have any
power to accept the keys of the Premises prior to the expiration or termination
of this Lease, and the delivery of keys to any such employee or agent shall not
operate as a termination of the Lease or a surrender of the Premises.
(e) EFFECT OF DEFAULT ON TENANT'S RIGHTS. For so long as a Tenant's Default
exists and remains uncured by Tenant, Tenant hereby forfeits its right to
exercise any provision hereof or any amendment made hereto.
(f) ADDITIONAL REMEDIES. The rights and remedies of Landlord specified by
this Lease shall be in addition to any other fright and remedy now and hereafter
provided by law. All such rights and remedies shall be cumulative and not
exclusive of each other, and Landlord may exercise such rights and remedies at
such times, in such order, to such extent and as often as Landlord deems
advisable, without regard to whether the exercise of one right or remedy
precedes, concurs with or succeeds the exercise of another.
22. FORCE MAJEURE
Except as expressly provided otherwise in this Lease, in the event that
Landlord or Tenant is in any way delayed interrupted or prevented from
performing any of its non-monetary obligations under this Lease and such delay,
interruption or prevention is due to fire, act of God, strike, civil commotion
or insurrection, war, failure of public utilities, governmental act (not arising
from a party's acts or omissions) or other cause (similar or dissimilar) outside
the reasonable control of such party, then the time for performance of any
affected obligations by such party shall be extended for a period equivalent to
the period of such unavoidable delay, interruption or prevention.
23. HOLDING OVER
If Tenant, with the knowledge and consent of Landlord, continues to remain
in the Premises after the expiration of the Term, including any extension
thereof, Tenant thereupon shall become a month-to-month tenant at the Monthly
Payment in effect at the expiration of the Term and Additional Rent in effect
during the last year of the Term. During such month-to-month tenancy, Tenant
shall give to Landlord at least thirty (30) days prior notice of its intent to
quit the Premises, and, if Tenant is not then in default under this Lease,
Tenant shall be entitled to at least thirty (30) days prior notice to quit the
Premises. Tenant shall not be entitled to any notice to quit the Premises if it
shall be then in default under this Lease, the usual 30 days notice to quit
being hereby expressly waived. As a month-to-month tenant, Tenant shall be
subject to all other terms, conditions, covenants and agreements of this Lease.
24. COVENANT OF QUIET ENJOYMENT
Landlord covenants that it has the right to make this Lease for the term
aforesaid and that, if Tenant shall pay the rent and perform all of the
covenants, terms, conditions and agreements of this Lease to be performed by
Tenant, Tenant, during the term hereby created, shall freely occupy and enjoy
the full possession of the Premises without molestation or hindrance by Landlord
or any party claiming through or under Landlord.
25. SUBORDINATION
This Lease is subject and subordinate to all ground or underlying leases
and to all mortgages and deeds of trust (including those which secure either
construction or permanent financing) which may now or hereafter affect the
Building and to all renewals, modifications, consolidations, replacement and
extensions thereof. This clause shall be self-operative and no further
instrument of subordinations shall be necessary. Nevertheless, in confirmation
of such subordination, Tenant, at Landlord's request, promptly shall execute,
acknowledge and deliver any instrument that has for its purpose and effect the
subordination of this Lease to any such lease, mortgage or deed of trust
provided that Tenant obtains a non-disturbance agreement. Tenant hereby
constitutes and appoints Landlord as Tenant's attorney-in-fact to execute any
such instrument for and on behalf of Tenant. Any mortgagee or trustee shall
recognize this Lease and in the event of any foreclosure sale under said
mortgage or deed of trust this Lease shall continue in full force and effect.
Tenant hereby waives the provisions of any statute or rule of law now or
hereafter in effect which purports to give Tenant the right to terminate or
otherwise affect this Lease and the obligations hereunder in the event any
proceeding for the foreclosure of any mortgage or deed of trust encumbering the
Building is instituted or completed.
26. NO REPRESENTATION
Tenant acknowledges that neither Landlord nor any broker, agent or employee
of Landlord has made any representations or promises with respect to any matter
or thing affecting or related to the Premises or the Building except as herein
expressly set forth, and no rights, privileges, easements or licenses are
acquired by Tenant except as herein expressly provided. Tenant acknowledges that
the taking of possession of the Premises shall be conclusive evidence that the
said Premises and the Building were in good and satisfactory condition at the
time such possession was so taken, except as to latent defects, if any.
27. ESTOPPEL CERTIFICATE
Within five days after Landlord shall request same by giving notice to
Tenant, at any time and from time to time, Tenant shall execute, acknowledge and
deliver to Landlord, without charge, a statement in writing which shall contain
substantially the following provisions: (a) that this Lease is unmodified and in
full force and effect (or) if there have been modifications, that the Lease is
in full force and effect as modified and stating the modifications); (b) that
Tenant accepts the Premises and the improvements therein; (c) a statement of the
dates to which rent and any other charges hereunder have been paid by Tenant;
(d) a statement as to whether or not, to the best of Tenant's knowledge,
Landlord is in default in the performance of any condition, covenant or
agreement set forth by this Lease and, if so, each such default of which Tenant
has knowledge; (e) a statement that Tenant will not attempt to terminate this
Lease by reason of Landlord's default or omission without giving notice of such
default or omission to Landlord and any mortgage or deed of trust of the
Building of which Tenant has knowledge; and (f) a statement of the address to/at
which notice to Tenant should be delivered, sent or left. Any such statement may
be relied upon by any owner of the Building, any prospective purchaser of the
Building, any mortgagee or prospective mortgagee of the Building or any
prospective assignee of any mortgagee.
28. RESERVATION OF RIGHTS
Landlord hereby reserves to itself and its successors and assigns the right
(a) to change the name of the Building; (b) to change the arrangement and/or
location of entrances, passageways, doors, doorways, corridors, elevators,
stairs, bathrooms or other public areas of the Building; (c) to erect, maintain,
and use pipes and conduits in and through the Premises; and (d) to grant to
anyone the right (even to the exclusion of others) to conduct any particular
business or undertaking in the Building so long as Landlord's rights do not
adversely effect Tenant's ability to conduct it's business. Tenant hereby
consents to the reservation of all such rights and agrees that Landlord may
exercise any or all such rights without the same constituting an eviction,
actual or constructive.
29. GOVERNING LAW
This Lease shall be construed and enforced in accordance with the laws of
the state in which the Building is located. It is expressly understood that if
any present or future law, ordinance, regulation or order requires an occupancy
permit for the Premises other than that in effect at the commencement of this
Lease, Tenant will obtain such permit at Tenant's sole cost and expense.
30. NOTICES
Unless notice of a change of address is given pursuant to the provisions of
this Section, all notices or other communications hereunder shall be in writing
and shall be deemed duly given if delivery in person or upon receipt by
certified or registered mail, return receipt requested first-class, postage
prepaid, addressed to Landlord or Tenant, as the case may be, as follows:
If to Landlord, to: William B. Fetsch
President
Fetsch Commercial Realty, Inc.
5285 Shawnee Road, Suite 401
Alexandria, Virginia 22312
with a copy to: Robert E. Falb, Partner
Robins, Kaplan, Miller & Ciresi
1801 K St., NW, Ste. 1200
Washington, DC 20006
If to Tenant, to (As specified on page one of this Lease)
31. LIMITATION OF LIABILITY
Tenant agrees that the liability of Landlord to Tenant under this
Lease is limited solely to the assets of the limited partnership which owns the
Building and the leasehold interest in the land on which it stands and that the
partners thereof shall have no personal liability under this Lease. Tenant
covenants and agrees to look solely to the assets of the limited partnership for
the satisfaction of any liability of Landlord to Tenant under this Lease, and
Tenant agrees not to bring any action asserting personal liability of the
partners of said limited partnership.
32. MISCELLANEOUS
(a) HAZARDOUS/INFECTIOUS WASTE.
(i) Tenant shall not cause or allow the generation, treatment, storage
or disposal of hazardous/infectious substances (as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the
Superfund Amendments and Reauthorization Act of 1986 (SARA), any subsequent
amendments thereto, and/or any similar state legislation in effect in the state
where the Premises are located) at the Premises except in accordance with the
local, state and federal statues and regulations. Tenant shall immediately
notify Landlord of any hazardous/infectious substances to be used, generated or
discharged form the Premises. If any such substances hall be present on the
Premises, Tenant shall submit to Landlord detailed plans for the handling,
storage and disposal of such substances; shall comply with any reasonable
regulations of Landlord for handling of such substances including use of
specifically provided waste management systems; and shall comply with all
requirements of the Resource Conversation and Recovery Act and any applicable
state law for disposal of such substances. Failure to comply with any of the
above requirements shall be considered a default under this Lease and cause for
immediate termination.
(ii) Tenant shall indemnify Landlord and hold it harmless from and
against any and all other liability, judgments, fines, settlements, costs or
expenses (including counsel fees) sustained by landlord to the extent resulting
from any act of Tenant which brings about an action brought pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(CERCLA), the Superfund Amendments and Reauthorization Act of 1986 (SARA), any
subsequent amendments thereto, and/or any similar state legislation. This
provision and Tenant's obligations hereunder shall survive any termination of
the Lease agreement.
(iii) Landlord shall indemnify Tenant and hold it harmless from and
against any and all other liability, judgments, fines, settlements, costs or
expenses (including counsel fees) sustained by Tenant to the extent resulting
from any act of Landlord or any condition currently existing which brings about
an action brought pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA), the Superfund Amendments and
Reauthorization Act of 1986 (SARA), any subsequent amendments thereto, and/or
any similar state legislation to the extent not caused by Tenant. This provision
and Landlord's obligations hereunder shall survive any termination of the Lease
agreement.
(b) FEES. Landlord recognizes the broker(s) specified on page one of this
Lease as the sole broker(s) procuring this Lease and shall pay broker(s) a
commission therefore pursuant to a separate agreement between said broker(s) and
Landlord. Landlord and Tenant each represent and warrant one to another that
except as set forth herein, neither of them has employed any broker, agent or
finder in carrying on the negotiations relating to this Lease. Landlord shall
indemnify and hold Tenant harmless, and Tenant shall indemnify and hold Landlord
harmless, from and against any claim or class for brokerage or other commission
arising from or out of any breach of the foregoing representation and warranty
by the respective indemnitors. Tenant and Landlord agree that in the event
Tenant's broker, Fetsch Commercial Realty, Inc., remains unpaid as to the
requisite commission due from Landlord on or after September 15, 1994 and
Tenant's broker notifies both Landlord and Tenant of the aforesaid occurrence.
Tenant shall then be at liberty to pay Tenant's broker directly and credit its
payment against Rent next coming due until such time as Tenant has been
reimbursed dollar for dollar for such payment to Tenant's broker. The amount of
such payment shall not exceed Thirty-three thousand six hundred fifty-one and
20/100 dollars ($33,651.20).
(c) NO PARTNERSHIP. Nothing contained in this Lease shall be deemed or
construed to create a partnership or joint venture of or between Landlord and
Tenant, or to create any other relationship than that of Landlord and Tenant.
(d) SUCCESSORS AND ASSIGNS. The covenants, conditions and agreements
contained in this Lease shall bind and inure to the benefit of Landlord and
Tenant and their respective heirs, distributes, executors, administrators,
successors and except as otherwise provided by this Lease, their assigns.
Landlord may freely and fully assign its interest under this Lease. In the event
of the sale, transfer or conveyance of Landlord's interest in the Building,
subject to the leasehold estate provided for herein, then upon the written
assumption of all of Landlord's obligations hereunder by the transferee and the
delivery of a signed copy of such assumption document to Tenant, Landlord shall
be entirely freed and relieved of all covenants and obligations hereunder which
thereafter accrue.
(e) INVALIDITY OF PARTICULAR PROVISIONS. If any provision of this Lease or
the application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and shall be enforced to the fullest extent permitted
by law.
(f) ENTIRE AGREEMENT. All understanding and agreements heretofore made
between Landlord and Tenant are merged in this Lease, which alone fully and
completely expresses the agreement between Landlord and Tenant, and any
agreement hereafter made shall be ineffective to change, modify, discharge or
effect a termination of this Lease in whole or in part, unless such agreement is
in writing and signed by both parties.
(g) CAPTIONS. Captions are inserted in this Lease only as a matter of
convenience and for reference; they in no way define, limit or describe the
scope of this Lease or the intent of any provision thereof.
(h) PARTS OF SPEECH. Feminine or masculine pronouns shall be substituted
for those of the neuter form, and the plural shall be substituted for the
singular number wherever the context reasonably may require such substitution.
(i) TENANT RESOLUTION. If Tenant signs as a corporation, each of the
persons executing this Lease on behalf of Tenant does hereby covenant and
warrant that Tenant is a duly authorized and existing corporation, qualified to
do business in the state where the building is located, that the corporation has
full right and authority to enter into this Lease and that each and both of the
person signing on behalf of the corporation were authorized to do so.
(j) SALE. In the event that original Landlord hereunder, or any successor
owner of the Building, shall sell or convey the Building, all liabilities and
obligations on the part of the original Landlord, or such successor owner, under
this Lease occurring thereafter shall terminate, and thereupon all such
liabilities and obligations shall be binding on the new owner, including, but
not limited to, the right of Tenant to remain on the Premises so long as Tenant
is not then in default under any provision of this Lease. Tenant agrees to
attorn to such new owner.
(k) ATTORNEYS FEES. In the event it is necessary for Tenant or Landlord to
institute any proceeding in enforcement of its rights under this Lease, the
non-prevailing party shall pay to the prevailing party the amount of costs and
reasonable attorneys fees incurred by the prevailing party in connection with
such proceeding.
(l) WAIVER OF JURY. The parties hereby waive trial by jury in any action,
proceeding or counterclaim brought by either party against the other on any
matters whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, or Tenant's use or occupancy of the
Premises.
(m) BENEFIT AND BURDEN. The provisions of this Lease shall be binding upon,
and shall inure to the benefit of the parties hereto and each of their respect
representatives, successors and assigns. Landlord may freely and fully assign
its interest hereunder.
(n) MORTGAGEE'S AMENDMENTS. This Lease is amendable by any mortgagee of
Landlord providing construction financing and/or initial permanent financing for
the Building provided such amendment in Tenant's reasonable judgment does not
materially affect Tenant's right or obligations hereunder.
(o) TENANT'S FINANCIAL DATA. If Tenant is in monetary default of the Lease,
Tenant shall have audited annual financial statements prepared and certified by
an independent certified public accounting firm or by an officer of the
corporation and upon Landlord's written request therefore Tenant shall supply a
copy to Landlord. Tenant warrants that all financial data regarding Tenant or
entities or individuals related to Tenant which Tenant has provided or shall
provide Landlord either prior to or subsequent to Tenant's execution of this
Lease is or shall be (as the case may be) accurate in all material respects.
33. OPTION TO RECORD SHORT FORM LEASE
Either Tenant and Landlord shall have the option to record at the electing
party's sole cost and expense a short form of this Lease approved by the other
party, such approval not to be unreasonably withheld or delayed.
34. TERMINATION OF FORMER LEASE
As of the Commencement Date, the Lease dated April 10, 1990 between
Landlord and Tenant shall terminate without penalty to Tenant.
35. CONTINGENT LEASE
This Lease shall be contingent on the executed Termination Agreement by and
between Allied Signal and Landlord which Agreement terminates the Bendix Field
Engineering Lease for the Premises known as Suite 600 and Suite 611 of the
Building as of the Execution Date of this Lease. The Lease is further contingent
on the execution of a sublease between Tenant and XEN, Inc. for approximately
4,106 rentable square feet of the Premises.
36. SIGNAGE
Tenant shall have the right to erect signage on the top spandrel of the
Building which signage shall be mutually agreeable to both Landlord and Tenant.
Landlord shall contribute up to ten thousand and no/100 dollars ($10,000.00) for
the design, purchase and erecting of exterior signage selected by Tenant
(including but not limited to any additional electrical wiring, metering and any
adaptation of the building required to accommodate the sign). All costs of
maintenance and operation of the sign(s) shall be assumed by Tenant. Signs shall
occupy no more than two (2) sides of the Building and shall comprise the maximum
size allowable under Fairfax County Zoning Regulations with regards to signage
and shall be removed by Tenant at the end of the Term or any extension of the
Term. The specifications which shall be defined after execution of this Lease
shall be incorporated as an addendum to the Lease.
Landlord shall reimburse Tenant within fifteen (15) days of receipt of Tenant's
approved invoices from sign or other contractors or if Landlord has not
reimbursed Tenant within the period specified Tenant shall have the right to
deduct from the next month's rent, due and payable to Landlord, the cost as
shown and approved on those invoices and shall directly pay its' contractor with
the deducted funds.
37. PARKING
Landlord hereby grants to Tenant fifty-four (54) parking permits to Tenant
for use in common with other tenants and the public of the on-site parking areas
currently surrounding the ground level of the Building. Six (6) of the spaces
shall be under the deck of the Building and shall be marked "STI", or another
business designation mutually acceptable to Tenant and Landlord.
38. OPTION TO EXTEND
Provided Tenant is not in default under the Lease, Tenant shall have the
unilateral option, upon at least one hundred twenty( 120) days prior written
notice to Landlord of its intent to exercise such option, to extend this Lease
for two (2) additional one (1) year periods. The rental rate for each option
period shall be the prevailing rental rate in the building as quoted by the
Landlord within thirty (30) days of receipt of Tenant's letter exercising the
option. The rental rate is stipulated by Landlord shall be similar to that
stated for comparable space, outfitted with similar improvements in its building
and in similar buildings in the immediate market area. In no event shall
Landlord be obligated to commit to a rental rate for this option period prior to
one hundred twenty (120) days before Tenant's Lease term has expired.
39. REDUCTION TO SIZE OF PREMISES
At the end of the thirty-sixth (36th) month of the Lease, Tenant shall have
the right to "give back" to the Landlord up to 4,106 rentable square feet of
space which Tenant shall sublet under a separate document approved by Landlord.
Tenant shall pay no penalty for this early termination of 4,106 square feet but
shall notify the Landlord ninety (90) days prior to the Termination Date (August
31st, 1997). The space which Tenant may give back to the Landlord is shown on
Exhibit "E" but may be of another configuration which is reasonably considered
to be "Leaseable space" and it mutually agreeable to both parties.
IN WITNESS WHEREOF, the undersigned hereby ratify, accept and agree to and
acknowledge this Lease as of this 15th day of August, 1994.
WITNESS: LANDLORD: Alexandria South Associates, L.P.,
Alexandria South, L.C.,
General Par
/s/Heather Cashmer By:/s/W.B. Fetsch
- ------------------------------ ------------------------------------------
Witness William B. Fetsch, Manager
Date: 8/15/94
WITNESS: TENANT: Software Technology, Inc.
/s/Jane Clary By:/s/Don F. Riordan
- ------------------------------ ------------------------------------------
Witness Don F. Riordan
Title: TREASURER
Date: 8/15/94
<PAGE>
Exhibit A
5904 Richmond Highway - 6th Floor
[Building Floor Plan]
<PAGE>
Exhibit B
5904 Richmond Highway - 6th Floor
[Building Floor Plan]
<PAGE>
Exhibit C
JANITORIAL SERVICES SPECIFICATIONS
GENERAL:
a. Clean all areas of the building interior including entrance lobby,
corridors, loading docks, stairwells, lavatories and elevators. Cleaning
will be accomplished between the hours of 5 p.m. - 10 p.m., Monday through
Friday. No services are required on legal holidays. These holidays include:
New Year's Day, Washington's Birthday, Memorial Day, Independence Day,
Labor Day, Veteran's Day, Thanksgiving Day and Christmas Day.
b. The Contractor will maintain insurance during the term of this contract
that shall include Property Damage and Public Liability in the amount of
$1,000,000.00 (including umbrella). Workmen's Compensation and a fidelity
bond of $10,000.00 on each employee. A certificate of insurance will be
provided to the Management for the above-stated coverage.
c. Employee assigned to the building shall be carefully interviewed, screened
and bonded. They shall be neat and clean in appearance and properly
identified.
d. Employees shall abide by all building regulations and safety rules.
e. Employees shall not eat, drink or smoke on duty. They shall not disturb
papers on desks, open drawers or cabinets, use telephone, televisions or
radios.
f. Competent supervisory personnel shall be employed and they will, at a
minimum, have completed a supervisory training course.
g. The supervisor will report to the Customer of his agent any maintenance
conditions such as leaky faucets, stopped toilets and drains, broken
fixtures, etc. The supervisor will also report any unusual happenings in
the building noticed or called to his/her attention by Contractor's
employees.
h. Necessary, appropriate, tested and approved machinery and cleaning supplied
for the satisfactory performance of services will be provided by the
Service.
i. Customer shall sign sufficient space in the premises for storage of
cleaning materials and machinery. Utilities will be provided without
charge.
j. A log book will be maintained in the building in which a record shall be
made of any events requiring Customer's or Contractor's attention.
k. All office cleaning, if possible, will be performed behind locked doors.
l. The Customer may require the dismissal of any of Contractor's employees who
is objectionable.
m. Upon completion of work, the Contractor will leave all slop sinks and
equipment storage areas in a neat and orderly condition; all unnecessary
lights out and all doors locked. The security sheet is to be completed by
the supervisor on a nightly basis.
n. Regular periodic inspection of the building shall be performed by a
representative of Contractor's management staff with the Customer's
representative. This is in addition to the regular nightly inspection to be
performed by the supervisor.
o. The Contractor will operate within the terms of the Federal Wage and Hour
Act as amended, and all applicable Federal and local laws, rules,
regulations, Executive Order 11236 (Equal Opportunity), and the
Occupational Safety and Health Act of 1970.
ENTRANCE LOBBY - DAILY
Entrance lobby will be thoroughly cleaned. Lobby glass and metal will be cleaned
and dusted, directory glass will be damp cleaned and wiped. Lobby walls will be
dusted and kept free from fingermarks and smudges. Floor and entrances are to be
dust mopped and damp mopped daily, and the surface is to be non-slippery. In
addition, the floor and entrances are to be buffed and refinished as necessary
to maintain a clean and glossy appearance.
OFFICES AND CORRIDORS - DAILY
a. DUSTING - All furniture, including desks, chairs, tables, file cabinets,
window sills and shelving will be dusted with a treated cloth or static
duster. This shall include all horizontal surfaces up to 7 feet high and
enough vertical surfaces daily to complete all vertical surfaces within
each week. Desks and tables not cleared of paper and work materials will
only be dusted where desk is exposed.
b. DUST MOPPING - After furniture dusting is completed, all non-carpeted floor
areas will be dust mopped with a treated dust mop with special attention
being given to areas under desks and furniture to prevent accumulation of
dust and dirt.
c. VACUUMING. All rugs and carpets in office areas, as well as public spaces,
are to be vacuumed daily in all traffic areas. Hard to reach places, under
desks and chairs shall be vacuumed weekly. However, in no instance shall
dirt/crumbs, etc. remain visible within a 24 hour period.
d. WASTECANS/ASHTRAYS - Wastecans and ashtrays will be emptied and wiped
clean. Wastecans shall be damp wiped as necessary. Plastic liners where
used will be changed as needed. Waste that is not in can will not be
removed unless clearly marked "TRASH".
e. SPOT CLEANING CARPETS - All carpeted areas will be inspected for spots and
stains. All spots and stains will be removed as soon as possible. Where
difficult spots are encountered, Customer or his agent will be notified.
f. WET MOPPING AS NEEDED. Extreme care shall be used in all mopping to avoid
splashing walls or furniture. Moving water and other liquids over carpeted
areas will be done in a manner to avoid spillage.
g. TILE FLOORS - All tile floors will be buffed and kept in scuff/spot free
condition at all times. Recoating and buffing will be done on an
"as-needed" basis. Care shall be taken in applying finish to keep it off of
furniture, baseboards and walls. Floor machines will be used in a manner to
avoid damage to the walls, baseboards and furniture.
h. WATER COOLERS - Will be cleaned and polished.
i. SPOT CLEANING WALLS, WOODWORK, ETC. - All handprints and spots will be
removed from doors and light switches. Walls, woodwork and interior glass
to be cleaned as needed.
j. CIGARETTE URNS - Cigarette urns and ash receivers shall be cleaned and
sanitized.
OFFICE AND CORRIDORS - PERIODIC
a. HIGH DUSTING (QUARTERLY) - Pipes, ledges, ceilings, moldings, picture
frames, etc. will be cleaned quarterly or more frequently if necessary.
b. AIR CONDITIONING GRILLS (MONTHLY) - All areas around air conditioning and
return air grills will be cleaned one each month or more frequently if
necessary.
c. VENETIAN BLINDS - Venetian blinds will be dusted monthly and damped wiped
quarterly.
d. LIGHT FIXTURES - The exterior of all light fixtures will be dusted as
needed. Exterior of fixtures will be damp wiped semi-annually.
ELEVATORS - DAILY
a. All elevators will have the floors swept and damp mopped or vacuumed.
b. All stainless steel and metal will be cleaned.
c. All elevator tracks will be vacuumed.
d. Elevator button panels and elevator doors will be cleaned.
e. Ceilings, overhead plexiglass, and/or special light fixtures will be
cleaned periodically.
LAVATORIES - DAILY
a. Clean all mirrors.
b. Wash basins and bright work with a non-abrasive cleaner.
c. Clean urinals.
d. Wash toilet seats and bowls using a disinfectant in water.
e. Mop floor using disinfectant in water.
f. Damp wipe and clean walls and partitions. They are to be free of hand
prints and dust.
g. Refill hand soap, towels, tissues and sanitary napkin dispensers.
h. Clean ventilating louvre.
i. Power scrub floors and germicidal solution monthly.
j. Collect trash, replace liners and needed.
k. Toilet bowl brush shall be used to clean flush holes, under rims of bowls
and traps. Bowl cleaner shall be used at least once each week and more
often if necessary.
STAIRWAYS & LANDINGS
All stairways and landings will be policed daily. They will be dust mopped with
a treated yard dust mop weekly. Spot cleaning of walls and doors will be done
weekly. These areas will be mopped and scrubbed as necessary. Hand rails, fire
points and other miscellaneous hardware will be cleaned as necessary.
POLISHING
All door plates, kick plates, brass and metal fixtures within the building will
be wiped weekly and polished monthly.
GARAGE/PARKING LOT
To be policed for bottles, cans, trash on an "as needed" basis, but not to
exceed less than weekly basis.
WINDOWS
All windows (exterior and interior) to be washed on a semi-annual basis.
<PAGE>
EXHIBIT "D"
Specifications for signage shall be added as an Addendum after Lease execution.
<PAGE>
EXHIBIT "E"
[Floor Plan]
<PAGE>
EXHIBIT "F"
Alexandrias South Associates L.P.
Security Deposit and Interest Software Technology
01-Aug-95
Lease date April 15, 1990
Original Deposit: $19,998.00
INTEREST EARNED BALANCE AT
PER YEAR YEAR END
December 31, 1990 $360.10 $20,358.10
December 31, 1991 $500.25 $20,858.35
December 31, 1993 $514.08 $21,902.04
July 31, 1994 $360.98 $22,263.02
Original Deposit Interest earned
$19,998.00
Total security deposit and interest on hand $ 2,265.02
----------
$22,263.02
Exhibit 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of June 11, 1997
between Exigent International Inc., a Delaware corporation (the "Company") and
Jeffrey C. Clift (the "Employee").
WHEREAS, Company has determined that it would be desirable and in the best
interests of Company to continue to employ Employee, and Employee wishes to
continue his employment with Company.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereinafter contained, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, Company and Employee agree
as follows:
1. Employment. Company hereby employs the Employee and the Employee hereby
accepts employment upon the terms and conditions set forth in this
Agreement. Employee will serve as Exigent President and Chief Operating
Officer of Company, at the discretion of the Company's Chief Executive
Officer ("CEO").
2. Term. Unless sooner terminated as set forth herein, the term of this
Agreement ("Term") shall begin on the business day this Agreement is
executed (the "Commencement Date"), and end at midnight on the third
anniversary of the commencement date, unless extended. The Term may be
extended by mutual written agreement of the Company and Employee provided
the parties shall agree in writing at least three months' prior to
expiration of the Term.
3. Compensation.
(a) For all services rendered by the Employee under this Agreement, the
Company shall pay and Employee shall accept an annual salary of ONE
HUNDRED FORTY-FIVE THOUSAND and NO/100 DOLLARS ($145,000) per annum or
lesser amount, on a pro rata basis, for any period less than a full
year. This compensation shall be payable to Employee in equal
installments in accordance with the Company's normal pay periods, and
shall be subject to all appropriate withholding taxes.
The annual salary payable to Employee will be subject to upward
adjustment as determined by Company's management and approved by the
Board of Directors in the event that Company generates annual revenues
equal to or greater than that specified in an approved three-year plan
(the "Plan").
(b) In addition to the compensation provided for in Section 3(a), Employee
shall be granted options to purchase up to 100,000 shares of the
common stock, $.01 par value per share, of Company (the "Common
Stock"), at an exercise price of $2.25 per share of 110% of current
market value whichever is higher and on the terms and conditions
described in the Incentive Stock Option Agreement, which Employee
agrees to sign, attached hereto as Exhibit A and incorporated herein
by this reference.
(c) Provided that Employee has not been terminated for due cause (as that
term is defined below in Section 8), in addition to the compensation
provided for in Section (3)(a) above, Company shall grant to Employee
options to purchase an additional 72,500 shares of Common Stock at an
exercise price of $2.25 per share or 110% of current market value
whichever is higher if Company shall receive on or prior to February
1, 1998. (See annual Executive Incentive Plan), including
(i) earnings of at least $2.9 million or prorated in accordance with
the approved Executive Incentive Plan for 1998; or
(ii) new funding for Company of at least $5,000,000, including long
term (at least 5 years) subordinated debt or equity or a
combination of both.
The Board of Directors may, in its sole discretion, award part or all
of the options to purchase such 72,500 shares of Common Stock even if
none of the foregoing conditions are achieved on or prior to February
1, 1998. If and to the extent any such options are awarded pursuant to
this Section 3(c), they shall be awarded on the terms and conditions
described in the form of the Incentive Stock Option Agreement, except
that the amount of Common Stock subject thereto shall be adjusted to
reflect the amount to which Employee is then entitled.
(d) In addition to the compensation provided for in Sections 3(a), (b) and
(c) hereof, Employee shall also be entitled to the following during
the Term of this Agreement:
(i) Four weeks paid vacation annually initially and additional
vacation as appropriate in accordance with Company policy to be
adopted, provided that Employee will endeavor to schedule his
vacation to avoid conflicts with his duties hereunder. During the
term of his employment under the Agreement, Employee shall be
entitled to the holidays and sick leave afforded and permitted by
Company to other employees;
(ii) at Employee's option, group medical insurance and dental
insurance of the kind and to the extend offered from time to time
during the Term of this Agreement to other employees of Company;
(iii)long-term disability insurance, providing for benefits equal to
66 2/3% of Employee's monthly salary to a maximum of $6,000
(Company will continue to pay Employee's full salary during
period of short-term disability);
(iv) participation in Company's 401(k) plan, on such terms and
conditions as such participation is made generally available to
all employees of Company;
(v) such other benefits, such as pension, profit sharing, insurance,
short-term disability made generally available by Company, in its
sole discretion, now or in the future to all of its employees;
and
(vi) such other benefits, if any, which the Board of Directors, in its
sole discretion, may make available to Employee.
4. Duties; Authority.
(a) During the Term, Employee shall perform those services reasonably
requested by his immediate manager and the CEO in a manner and to an
extent which will allow the Company to benefit from Employee's
experience in and knowledge of the industry in which the Company is
engaged and as specified in greater detail in Exhibit B attached
hereto and incorporated herein by this reference. During the Term,
Employee shall devote his full professional time, attention, skill and
energy to the business, welfare and affairs of the Company. While
serving as Exigent President and Chief Operating Officer, Employee
shall have the authority and responsibility to devise and implement
strategies and operations and to supervise and manage all employees in
his/her business unit as shown on the corporate organizational chart
approved by the Board of Directors on June 11, 1997 which is set forth
as Attachment 1 to Exhibit B. Such organization chart may be modified
by the CEO in his discretion after collaboration from Employee.
Employee shall use his best efforts in the performance of his duties
hereunder and to promote the interests of the Company and its present
and future subsidiaries and affiliates. Employee agrees to abide by
all rules and regulations of Company as established or amended from
time to time.
(b) The parties agree that Employee may not, without the prior written
consent of Company, be engaged in any other business activity without
Company's prior written consent, whether or not such activity is
pursued for gain, profit or other pecuniary advantage; provided,
however, that subject to the Non-Disclosure and Non-Competition
Agreement set forth in Exhibit D. Employee may passively invest his
personal assets in businesses where the form or manner of such
investment will not require services on the part of Employee.
5. Business Expenses and Reimbursements. Employee shall further be entitled to
reimbursement by Company for other ordinary and necessary business expenses
incurred by Employee in the performance of his duties hereunder, and
further provided that:
(a) Each such expenditure is of a nature qualifying it as a proper
deduction on the federal and state income tax returns of the Company
as a business expense and not as deductible compensation to the
Employee; and
(b) Employee furnishes the Company with adequate records and other
documentary evidence required by federal and state statutes and
regulations for the substantiation of such expenditures as deductible
business expenses of the Company and not as deductible compensation to
the Employee.
Employee agrees that if, at any time, any payment made to the Employee by
the Company as a business expense reimbursement for a particular item shall
be disallowed in whole as a deductible expense to the Company by the
appropriate taxing authorities, Employee shall reimburse Company to the
full extent of such disallowance if so requested by the Company in writing.
6. Proprietary Information and Inventions Agreement. As a condition to his
employment hereunder, Employee agrees to execute and deliver to Company a
Proprietary Information and Inventions Agreement in the form attached
hereto at Exhibit C and incorporated herein by this reference.
7. Non-Disclosure and Non-Competition Agreement. As a condition to his
employment hereunder, Employee agrees to execute and to deliver to the
Company a Non-Disclosure and Non-Competition Agreement in the form attached
hereto as Exhibit D and incorporated herein by this reference.
8. Termination.
(a) This Agreement may be terminated at any time prior to expiration of
the Term (i) by Employee upon sixty (60) days' prior written notice to
the Company, (ii) upon the disability (defined to mean the inability
of Employee to engage in substantial employment duties by reason of
any medically determinable physical or mental impairment for a
continuous period of 60 days) of Employee, (iii) by the Company for
"due cause" at any time (iv) by the Company without "due cause" at any
time upon fifteen (15) days' prior written notice to the Employee.
(b) In the event of termination pursuant to Section 8(a)(i), or Section
8(a)(iii), the Company shall not be obligated to make any severance
payments or any other further payments hereunder, except with respect
to accrued but unpaid compensation and reimbursements owed Employee
for expenses incurred prior to the effective date of termination. For
purposes of Section 8, "due cause" shall mean personal dishonesty,
willful misconduct, breach of a fiduciary duty involving personal
profit, willful violation of any law, rule, regulation (other than a
law, rule or regulation relating to offenses or misdemeanors unrelated
to any of the foregoing or to the Company's business) or final cease
and desist order, or material breach of any provision of this
Agreement, including but not limited to Employee's obligations under
Sections 4 hereof or a material breach of any of Employee's
obligations under Proprietary Information and Inventions Agreement
attached hereto as Exhibit C or under the Non-Disclosure and
Non-Competition Agreement attached hereto as Exhibit D.
(c) In the event of termination by the Company pursuant to Section
8(a)(iv) (i.e., without due cause), then in addition to any amounts to
which Employee is entitled under Section 8(b), Employee shall also be
entitled to receive severance pay as follows:
(i) If Employee is so terminated without due cause within the first
twelve months of the Term ("First Year"), an amount equal to
eighteen (18) months' salary, based on the then current salary of
Employee as of the effective date of termination, payable in
equal installments in accordance with Company's normal pay
periods for Employee (i.e. weekly, bi-weekly or monthly)
beginning one pay period after the effective date of termination;
(ii) If Employee is so terminated without due cause within the second
twelve months of the Term ("Second Year"), an amount equal to
twelve (12) months' salary, based on the then current salary of
Employee as of the effective date of termination, payable in
equal installments in accordance with Company's normal pay
periods for Employee beginning one pay period after the effective
date of termination;
(iii)If Employee is so terminated without due cause within the third
twelve months of the Term ("Third Year"), an amount equal to six
(6) months' salary, based on the then current salary of Employee
as of the effective date of termination, payable in equal
installments in accordance with Company's normal pay periods for
Employee beginning one pay period after the effective date of
termination; and
(iv) If Employee is still employed by Company after the Third Year,
and (in the absence of any superseding arrangement with Company,
whether pursuant to renewal of this Agreement or otherwise) is so
terminated without due cause, an amount equal to three (3)
months' salary, based on the then current salary of Employee as
of the effective date of termination, payable in equal
installments in accordance with Company's normal pay periods for
Employee beginning one pay period after the effective date of
termination.
(d) In the event of termination by the Company pursuant to Section
8(a)(iv) (i.e. without due cause), Employee shall also be entitled to
receive, at his option and upon his written request, group medical
insurance as described in Section 3(d)(ii) during the period Employee
is entitled to receive severance pay under Section 8(d) plus, if
applicable, any additional extension of the applicable
"Non-Competition Period" (as defined in the Non-Disclosure and
Non-Competition Agreement, pursuant to Section 3(g) of such
agreement).
(e) In the event of termination upon Employee's disability pursuant to
Section 8(a)(ii), the Company agrees to continue Employee's regular
salary payments from the date of termination through the date the
insurance company commences long term disability insurance payments or
denies coverage. In the event long term disability coverage is denied
due to admitted or proven fraud on behalf of the Employee, the Company
will have no severance payment obligations to Employee. If coverage is
denied for any other reason, Employee's termination will be treated as
termination without due cause under Section 8(a)(iv) and Employee will
be entitled to severance pay under Section 8(c) provided any such
regular salary payments made by Company to Employee under this Section
8(e) will be credited against Company's severance payment obligations.
(f) Notwithstanding anything to the contrary set forth in this Agreement,
in the event that Employee dies during the Term of this Agreement or
any extension thereof, this Agreement shall terminate upon the date of
such death, provided that in the event of Employee's death during the
Term of this Agreement or any extension thereof the Company shall
continue to pay Employee's salary for a period of ninety (90) days
following the date of death to the executor or administrator of the
Employee's estate, except in no event shall the Company be liable for
the payment of any such death benefit which exceeds the maximum
severance payment obligations pursuant to Section 8(e) above.
9. Notices. Any notice required or permitted hereunder shall be in writing and
shall be sufficiently given if personally delivered, delivered by facsimile
telephone transmission, delivered by express delivery service (such as
Federal Express), or mailed first class U.S. mail, postage prepaid,
addressed as follows:
If to the Employee:
Jeffrey C. Clift
571 Wethersfield Place
Melbourne, FL 32940
If to the Company:
Exigent International Inc.
1225 Evans Road
Melbourne, FL 32904
Attn: Legal Counsel
(or to such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so
delivered or three (3) days after mailing for domestic mail and seven (7)
days for international mail.
10. Binding Effect; Benefits. This Agreement shall be binding upon and shall
inure to the benefit of this parties hereto and their respective successors
and assigns, if any. Notwithstanding anything contained in this Agreement
to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators or assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida, without
reference to principles of conflict of laws.
12. Headings. Headings of the Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
13. No Conflict. Employee represents and warrants that performance of the terms
of this Agreement, and the terms of any agreement attached hereto as an
Exhibit, to the best of his actual knowledge, will not breach any agreement
entered into by Employee, and Employee agrees that he will not enter into
any agreement in conflict with this Agreement and the agreements attached
as Exhibits. Employee further covenants that (i) he shall not in the
performance of his duties hereunder (and the performance of such duties
shall not require him to) utilize any proprietary or confidential
information owned by any third party which he is prohibited from utilizing
by reason of agreement or applicable law, and (ii) he shall not at any time
disclose to Company any proprietary or confidential information owned by
any third party which he is prohibited from disclosing by reason of
agreement or applicable law.
14. Injunctive Relief. Employee acknowledges and agrees that a breach of his
obligations under this Agreement, and any agreement attached hereto as an
Exhibit or any other exhibit or attachment hereto, will result in
irreparable and continuing harm to the Company, for which there will be no
adequate remedy at law, and agrees that in the event of any breach or
prospective breach of this Agreement, the Company, its successors and
assigns will be entitled to injunctive relief in any federal or state court
of competent jurisdiction residing in the State of Florida without the
necessity or posting bond or other security therefor and without the
necessity of proving irreparable harm, and to such other and further relief
as may be proper. Employee hereby submits to the jurisdiction of the
preceding courts for the purposes of any actions or proceedings instituted
by the Company to obtain such injunctive relief, and agrees that the
process may be served on the Employee by registered mail, addressed to the
last address of the Employee known to the Company, or in any manner
authorized by law.
15. Severability. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases,
such circumstances shall not have the effect of rendering such provision
invalid in any other case or of rendering any of the other provisions of
this Agreement inoperative, unenforceable or invalid.
16. Assignability. By reason of the special and unique nature of the services
hereunder, it is agreed that neither party hereto may assign any interest,
rights or duties which it or he may have in this Agreement without the
prior written consent of the other party, except that upon any merger,
liquidation, or sale of all or substantially all of the assets of the
Company to another corporation, this Agreement shall inure to the benefit
of and be binding upon the Employee and the purchasing, surviving or
resulting company or corporation in the same manner and to the same extent
as though such company or corporation were the Company.
17. Waivers. The failure or delay of the Company at any time to require
performance by the employee of any provision of this Agreement, even if
know, shall not affect the right of the Company to require performance of
that provision or to exercise any right, power or remedy hereunder, and any
waiver by the Company of any breach of any provision of this Agreement
should not be construed as a waiver of any continuing or succeeding breach
of such provision, a waiver of the provision itself, or a waiver of any
right, power or remedy under this Agreement. No notice to or demand on
Employee in any case shall, of itself, entitle Employee to any other or
further notice or demand in similar or other circumstances.
18. Indemnification. Company agrees to exercise its power to indemnify Employee
in the situations provided in the Company's current Certificate of
Incorporation in its form filed with the Secretary of State for the State
of Delaware as of the date of this Agreement. This indemnification shall
apply even if such Certificate is later amended or deleted.
19. Covenants of the Essence. The covenants of Employee set forth in this
Agreement and the other Exhibits are the essence of this Agreement; they
shall be construed as independent of any other provision in this Agreement;
and the existence of any claim or cause of action of the Employee against
the Company, whether predicated on this Agreement or not, shall not
constitute a defense to the enforcement by the Company of these covenants.
20. Survival. The provisions of this Agreement will survive the termination or
expiration of this Agreement where the intent so indicates they shall
survive and all other obligations of the Company and the Employee will
cease on termination or expiration of this Agreement. Notwithstanding the
foregoing, the Company and the Employee will remain liable for obligations
which accrued before termination or expiration of this Agreement (including
the Employee's rights to be paid or reimbursed for services rendered and
expenses incurred before termination or expiration of this Agreement.)
21. Entire Agreement. This Agreement, together with the agreements in the form
attached as Exhibits hereto and all other exhibits and attachments hereto,
constitutes the final written expression of all of the agreements between
the parties with respect to the subject matter hereof, supersedes all
correspondence, understandings, discussions and negotiations concerning the
matters specified herein, and specifically supersedes in its entirety other
agreements between Company and Employee. No addition to or modification of
any provision of this Agreement shall be binding upon any party unless made
in writing and signed by the party to be bound.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
on the date written above.
EXIGENT INTERNATIONAL, INC.
/s/ B.R. Smedley
------------------------------------
Name: B.R. SMEDLEY
Title: CEO
/s/ Jeffrey C. Clift
------------------------------------
(Employee Signature)
Exhibit 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of 11 June 1997 between
Exigent International Inc., a Delaware Corporation (the "Company") and William
K. Presley (the "Employee").
WHEREAS, Company has determined that it would be desirable and in the best
interests of Company to continue to employ Employee, and Employee wishes to
continue his employment with Company.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereinafter contained, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, Company and Employee agree
as follows:
1. EMPLOYMENT. Company hereby employs the Employee and the Employee hereby
accepts employment upon the terms and conditions set forth in this
Agreement. Employee will serve as Exigent Chief Technical Officer of
Company, at the discretion of the Company's Chief Executive Officer
("CEO").
2. TERM. Unless sooner terminated as set forth herein, the term of this
Agreement ("Term") shall begin on the business day this Agreement is
executed (the "Commencement Date"), and end at midnight on the third
anniversary of the commencement date, unless extended. The Term may be
extended by mutual written agreement of the Company and Employee provided
the parties shall agree in writing at least three months' prior to
expiration of the Term.
3. COMPENSATION.
(a) For all services rendered by the Employee under this Agreement, the
Company shall pay and Employee shall accept an annual salary of ONE
HUNDRED THIRTY-ONE THOUSAND and NO/100 DOLLARS ($131,000) per annum or
lesser amount, on a pro rata basis, for any period less than a full
year. This compensation shall be payable to Employee in equal
installments in accordance with the Company's normal pay periods, and
shall be subject to all appropriate withholding taxes.
The annual salary payable to Employee will be subject to upward
adjustment as determined by Company's management and approved by the
Board of Directors in the event that Company generates annual revenues
equal to or greater than that specified in an approved three-year plan
(the "Plan").
(b) In addition to the compensation provided for in Section 3(a), Employee
shall be granted options to purchase up to 50,000 shares of the common
stock, $.01 par value per share, of Company (the "Common Stock"), at
an exercise price of $2.25 per share or 110% of current market value
whichever is higher and on the terms and conditions described in the
Incentive Stock Option Agreement, which Employee agrees to sign,
attached hereto as Exhibit A and incorporated herein by this
reference.
(c) Provided that Employee has not been terminated for due cause (as that
term is defined below in Section 8), in addition to the compensation
provided for in Section (3) (a) above, Company shall grant to Employee
options to purchase an additional 65,500 shares of Common Stock at an
exercise price of $2.25 per share or 110% of current market value
whichever is higher if Company shall receive on or prior to February
1, 1998. (See annual Executive Incentive Plan), including
(i) earnings of at least $2.9 million or prorated in accordance with
the approved Executive Incentive Plan for 1998; or
(ii) new funding for Company of at least $5,000,000, including long
term (at least 5 years) subordinated debt or equity or a
combination of both.
The Board of Directors may, in its sole discretion, award part or all
of the options to purchase such 65,500 shares of Common Stock even if
none of the foregoing conditions are achieved on or prior to February
1, 1998. If and to the extent any such options are awarded pursuant to
this Section 3(c), they shall be awarded on the terms and conditions
described in the form of the Incentive Stock Option Agreement, except
that the amount of Common Stock subject thereto shall be adjusted to
reflect the amount to which Employee is then entitled.
(d) In addition to the compensation provided for in Sections 3(a), (b) and
(c) hereof, Employee shall also be entitled to the following during
the Term of this Agreement:
(i) Four weeks paid vacation annually initially and additional
vacation as appropriate in accordance with Company policy to be
adopted, provided that Employee will endeavor to schedule his
vacation to avoid conflicts with his duties hereunder. During the
term of his employment under the Agreement, Employee shall be
entitled to the holidays and sick leave afforded and permitted by
Company to other employees;
(ii) at Employee's option, group medical insurance and dental
insurance of the kind and to the extent offered from time to time
during the Term of this Agreement to other employees of Company;
(iii)long-term disability insurance, providing for benefits equal to
66 2/3% of Employee's monthly salary to a maximum of $6,000
(Company will continue to pay Employee's full salary during
periods of short-term disability);
(iv) participation in Company's 401(k) plan, on such terms and
conditions as such participation is made generally available to
all employees of Company;
(v) such other benefits, such as pension, profit sharing, insurance,
short-term disability made generally available by Company, in its
sole discretion, now or in the future to all of its employees;
and
(vi) such other benefits, if any, which the Board of Directors, in its
sole discretion, may make available to Employee.
4. DUTIES; AUTHORITY.
(a) During the Term, Employee shall perform those services reasonably
requested by his immediate manager and the CEO in a manner and to an
extent which will allow the Company to benefit from Employee's
experience in and knowledge of the industry in which the Company is
engaged and as specified in greater detail in Exhibit B attached
hereto and incorporated herein by this reference. During the Term,
Employee shall devote his full professional time, attention, skill and
energy to the business, welfare and affairs of the Company. While
serving as Exigent Chief Technical Officer, Employee shall have the
authority and responsibility to devise and implement strategies and
operations and to supervise and manage all employees in his/her
business unit as shown on the corporate organizational chart approved
by the Board of Directors on June 11, 1997 which is set forth as
Attachment 1 to Exhibit B. Such organization chart may be modified by
the CEO in his discretion after collaboration from Employee. Employee
shall use his best efforts in the performance of his duties hereunder
and to promote the interests of the Company and its present and future
subsidiaries and affiliates. Employee agrees to abide by all rules and
regulations of Company as established or amended from time to time.
(b) The parties agree that Employee may not, without the prior written
consent of Company, be engaged in any other business activity without
Company's prior written consent, whether or not such activity is
pursued for gain, profit or other pecuniary advantage; provided,
however, that subject to the Non-Disclosure and Non-Competition
Agreement set forth in Exhibit D. Employee may passively invest his
personal assets in businesses where the form or manner of such
investment will not require services on the part of Employee.
5. BUSINESS EXPENSES AND REIMBURSEMENTS. Employee shall further be entitled to
reimbursement by Company for other ordinary and necessary business expenses
incurred by Employee in the performance of his duties hereunder, and
further provided that:
(a) Each such expenditure is of a nature qualifying it as a proper
deduction on the federal and state income tax returns of the
Company as a business expense and not as deductible compensation
to the Employee; and
(b) Employee furnishes the Company with adequate records and other
documentary evidence required by federal and state statutes and
regulations for the substantiation of such expenditures as
deductible business expenses of the Company and not as deductible
compensation to the Employee.
Employee agrees that if, at any time, any payment made to the Employee
by the Company as a business expense reimbursement for a particular
item shall be disallowed in whole as a deductible expense to the
Company by the appropriate taxing authorities, Employee shall
reimburse Company to the full extent of such disallowance if so
requested by the Company in writing.
6. PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. As a condition to his
employment hereunder, Employee agrees to execute and deliver to Company a
Proprietary Information and Inventions Agreement in the form attached
hereto as Exhibit C and incorporated herein by this reference.
7. NON-DISCLOSURE AND NON-COMPETITION AGREEMENT. As a condition to his
employment hereunder, Employee agrees to execute and to deliver to the
Company a Non-Disclosure and Non-Competition Agreement in the form attached
hereto as Exhibit D and incorporated herein by this reference.
8. TERMINATION.
(a) This Agreement may be terminated at any time prior to expiration of
the Term (i) by Employee upon sixty (60) days' prior written notice to
the Company, (ii) upon the disability (defined to mean the inability
of Employee to engage in substantial employment duties by reason of
any medically determinable physical or mental impairment for a
continuous period of 60 days) of Employee, (iii) by the Company for
"due cause" at any time (iv) by the Company without "due cause" at any
time upon fifteen (15) days' prior written notice to the Employee.
(b) In the event of termination pursuant to Section 8(a)(i), or Section
8(a)(iii), the Company shall not be obligated to make any severance
payments or any other further payments hereunder, except with respect
to accrued but unpaid compensation and reimbursements owed Employee
for expenses incurred prior to the effective date of termination. For
purposes of Section 8, "due cause" shall mean personal dishonesty,
willful misconduct, breach of a fiduciary duty involving personal
profit, willful violation of any law, rule, regulation (other than a
law, rule or regulation relating to offenses or misdemeanors unrelated
to any of the foregoing or to the Company's business) or final cease
and desist order, or material breach of any provision of this
Agreement, including but not limited to Employee's obligations under
Sections 4 hereof or a material breach of any of Employee's
obligations under Proprietary Information and Inventions Agreement
attached hereto as Exhibit C or under the Non-Disclosure and
Non-Competition Agreement attached hereto as Exhibit D.
(c) In the event of termination by the Company pursuant to Section
8(a)(iv) (i.e., without due cause), then in addition to any amounts to
which Employee is entitled under Section 8(b), Employee shall also be
entitled to receive severance pay as follows:
(i) If Employee is so terminated without due cause within the first
twelve months of the Term ("First Year"), an amount equal to
eighteen (18) months' salary, based on the then current salary of
Employee as of the effective date of termination, payable in
equal installments in accordance with Company's normal pay
periods for Employee (i.e. weekly, bi-weekly or monthly)
beginning one pay period after the effective date of termination;
(ii) If Employee is so terminated without due cause within the second
twelve months of the Term ("Second Year"), an amount equal to
twelve (12) months' salary, based on the then current salary of
Employee as of the effective date of termination, payable in
equal installments in accordance with Company's normal pay
periods for Employee beginning one pay period after the effective
date of termination;
(iii)If Employee is so terminated without due cause within the third
twelve months of the Term ("Third Year"), an amount equal to six
(6) months' salary, based on the then current salary of Employee
as of the effective date of termination, payable in equal
installments in accordance with Company's normal pay periods for
Employee beginning one pay period after the effective date of
termination; and
(iv) If Employee is still employed by Company after the Third Year,
and (in the absence of any superseding arrangement with Company,
whether pursuant to renewal of this Agreement or otherwise) is so
terminated without due cause, an amount equal to three (3)
months' salary, based on the then current salary of Employee as
of the effective date of termination, payable in equal
installments in accordance with Company's normal pay periods for
Employee beginning one pay period after the effective date of
termination.
(d) In the event of termination by the Company pursuant to Section
8(a)(iv) (i.e. without due cause), Employee shall also be entitled to
receive, at his option and upon his written request, group medical
insurance as described in Section 3(d)(ii) during the period Employee
is entitled to receive severance pay under Section 8(d) plus, if
applicable, any additional extension of the applicable
"Non-Competition Period" (as defined in the Non-Disclosure and
Non-Competition Agreement, pursuant to Section 3(g) of such
agreement).
(e) In the event of termination upon Employee's disability pursuant to
Section 8(a)(ii), the Company agrees to continue Employee's regular
salary payments from the date of termination through the date the
insurance company commences long term disability insurance payments or
denies coverage. In the event long term disability coverage is denied
due to admitted or proven fraud on behalf of the Employee, the Company
will have no severance payment obligations to Employee. If coverage is
denied for any other reason, Employee's termination will be treated as
termination without due cause under Section 8(a)(iv) and Employee will
be entitled to severance pay under Section 8(c) provided any such
regular salary payments made by Company to Employee under this Section
8(e) will be credited against Company's severance payment obligations.
(f) Notwithstanding anything to the contrary set forth in this Agreement,
in the event that Employee dies during the Term of this Agreement or
any extension thereof, this Agreement shall terminate upon the date of
such death, provided that in the event of Employee's death during the
Term of this Agreement or any extension thereof the Company shall
continue to pay Employee's salary for a period of ninety (90) days
following the date of death to the executor or administrator of the
Employee's estate, except in no event shall the Company be liable for
the payment of any such death benefit which exceeds the maximum
severance payment obligations pursuant to Section 8(e) above.
9. NOTICES. Any notice required or permitted hereunder shall be in writing and
shall be sufficiently given if personally delivered, delivered by facsimile
telephone transmission, delivered by express delivery service (such as
Federal Express), or mailed first class U.S. mail, postage prepaid,
addressed as follows:
If to the Employee:
William K. Presley
10710 S. Tropical Trail
Merritt Island, FL 32952-6930
If to the Company:
Exigent International Inc.
1225 Evans Road
Melbourne, FL 32904
Attn: Legal Counsel
(or to such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so
delivered or three (3) days after mailing for domestic mail and seven (7)
days for international mail.
10. BINDING EFFECT; BENEFITS. This Agreement shall be binding upon and shall
inure to the benefit of this parties hereto and their respective successors
and assigns, if any. Notwithstanding anything contained in this Agreement
to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators or assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida, without
reference to principles of conflict of laws.
12. HEADINGS. Headings of the Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
13. NO CONFLICT. Employee represents and warrants that performance of the terms
of this Agreement, and the terms of any agreement attached hereto as an
Exhibit, to the best of his actual knowledge, will not breach any agreement
entered into by Employee, and Employee agrees that he will not enter into
any agreement in conflict with this Agreement and the agreements attached
as Exhibits. Employee further covenants that (i) he shall not in the
performance of his duties hereunder (and the performance of such duties
shall not require him to) utilize any proprietary or confidential
information owned by any third party which he is prohibited from utilizing
by reason of agreement or applicable law, and (ii) he shall not at any time
disclose to Company any proprietary or confidential information owned by
any third party which he is prohibited from disclosing by reason of
agreement or applicable law.
14. INJUNCTIVE RELIEF. Employee acknowledges and agrees that a breach of his
obligations under this Agreement, and any agreement attached hereto as an
Exhibit or any other exhibit or attachment hereto, will result in
irreparable and continuing harm to the Company, for which there will be no
adequate remedy at law, and agrees that in the event of any breach or
prospective breach of this Agreement, the Company, its successors and
assigns will be entitled to injunctive relief in any federal or state court
of competent jurisdiction residing in the State of Florida without the
necessity of posting bond or other security therefor and without the
necessity of proving irreparable harm, and to such other and further relief
as may be proper. Employee hereby submits to the jurisdiction of the
preceding courts for the purposes of any actions or proceedings instituted
by the Company to obtain such injunctive relief, and agrees that the
process may be served on the Employee by registered mail, addressed to the
last address of the Employee known to the Company, or in any manner
authorized by law.
15. SEVERABILITY. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases,
such circumstances shall not have the effect of rendering such provision
invalid in any other case or of rendering any of the other provisions of
this Agreement inoperative, unenforceable or invalid.
16. ASSIGNABILITY. By reason of the special and unique nature of the services
hereunder, it is agreed that neither party hereto may assign any interest,
rights or duties which it or he may have in this Agreement without the
prior written consent of the other party, except that upon any merger,
liquidation, or sale of all or substantially all of the assets of the
Company to another corporation, this Agreement shall inure to the benefit
of and be binding upon the Employee and the purchasing, surviving or
resulting company or corporation in the same manner and to the same extent
as though such company or corporation were the Company.
17. WAIVERS. The failure or delay of the Company at any time to require
performance by the employee of any provision of this Agreement, even if
know, shall not affect the right of the Company to require performance of
that provision or to exercise any right, power or remedy hereunder, and any
waiver by the Company of any breach of any provision of this Agreement
should not be construed as a waiver of any continuing or succeeding breach
of such provision, a waiver of the provision itself, or a waiver of any
right, power or remedy under this Agreement. No notice to or demand on
Employee in any case shall, of itself, entitle Employee to any other or
further notice or demand in similar or other circumstances.
18. INDEMNIFICATION. Company agrees to exercise its power to indemnify Employee
in the situations provided in the Company's current Certificate of
Incorporation in its form filed with the Secretary of State for the State
of Delaware as of the date of this Agreement. This indemnification shall
apply even if such Certificate is later amended or deleted.
19. COVENANTS OF THE ESSENCE. The covenants of Employee set forth in this
Agreement and the other Exhibits are the essence of this Agreement; they
shall be construed as independent of any other provision in this Agreement;
and the existence of any claim or cause of action of the Employee against
the Company, whether predicated on this Agreement or not, shall not
constitute a defense to the enforcement by the Company of these covenants.
20. SURVIVAL. The provisions of this Agreement will survive the termination or
expiration of this Agreement where the intent so indicates they shall
survive and all other obligations of the Company and the Employee will
cease on termination or expiration of this Agreement. Notwithstanding the
foregoing, the Company and the Employee will remain liable for obligations
which accrued before termination or expiration of this Agreement (including
the Employee's right to be paid or reimbursed for services rendered and
expenses incurred before termination or expiration of this Agreement.)
21. ENTIRE AGREEMENT. This Agreement, together with the agreements in the form
attached as Exhibits hereto and all other exhibits and attachments hereto,
constitutes the final written expression of all of the agreements between
the parties with respect to the subject matter hereof, supersedes all
correspondence, understandings, discussions and negotiations concerning the
matters specified herein, and specifically supersedes in its entirety other
agreements between Company and Employee. No addition to or modification of
any provision of this Agreement shall be binding upon any party unless made
in writing and signed by the party to be bound.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
on the date written above.
EXIGENT INTERNATIONAL, INC.
/S/ B.R. SMEDLEY
-------------------------------------
Name: B.R. "BERNIE" SMEDLEY
Title: CEO & CHAIRMAN
/S/ WILLIAM K. PRESLEY
-------------------------------------
(Employee Signature)
<PAGE>
Exhibit A
INCENTIVE STOCK OPTION AGREEMENT (PLAN 1Q)
THIS AGREEMENT dated as of the 11th day of June, 1997, (the "Grant Date")
by and between EXIGENT INTERNATIONAL, INC., with its principal office at 1225
Evans Road, Melbourne, Florida 32904 (the "Company"), and William K. Presley
("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted an Incentive Stock Option Plan (the "Plan
1Q") as defined in Section 422 of the Internal Revenue Code of 1986 to permit
options to purchase shares of the common stock of Exigent International, Inc. to
be granted to certain key employees of the Company or its subsidiaries; and
WHEREAS, the Optionee is a key employee of the Company or one of its
subsidiaries and the Company desires him/her to remain in such employee by
providing him/her with a means to acquire or to increase his/her proprietary
interest in the Company's success;
NOW, THEREFORE, in consideration of the promises and of the covenants and
agreement set forth, the parties hereby mutually covenant and agree as follows:
1. Subject to the terms and conditions of the Plan 1Q, a copy of which is
attached hereto as Exhibit "A" and made a part hereof, and this
Agreement, the Company grants to the Optionee the option to purchase
from the Company all or any part of an aggregate number of 50,000
shares of Exigent International, Inc.'s Common Shares (30,000,000
authorized shares, par value $0.01) (hereinafter such shares are
referred to as the "Optioned Shares").
2. The price to be paid for the Optioned Shares shall be Two and 25/100
dollars ($2.25) per share, or 110% of current market value whichever
is higher, of the Optioned Shares on the Grant Date, as determined in
good faith by the President of the Company who is in charge of
administering the Plan 1Q. However, if it is determined by a
subsequent Internal Revenue Service audit that the fair market value
of the stock at the time the option was granted exceeded the value
established by the President, then the option value shall be adjusted
to comply with the Internal Revenue Service's determined fair market
value, and such adjusted value shall apply to any and all subsequent
exercise of options.
3. Subject to terms and conditions of the Plan 1Q and this Agreement,
Optioned Shares may be purchased pursuant to this Agreement at any
time and from time to time during a period of three (3) years from the
date hereof, in whole or in part. All options to purchase Optioned
Shares subject to this Agreement must be exercised on or before June
11, 2000 at which time all unexercised options will expire.
4. An option may be exercised only by written notice, delivered or mailed
by postpaid registered or certified mail addressed to the Secretary of
the Company at the corporate headquarters, specifying the number of
Optioned Shares being purchased in cash or its equivalent. Within five
(5) business days following the date of exercise, payment shall be
made in full or by such other payment means as shall be mutually
agreeable. Such purchased shares shall be forthwith delivered to
Optionee.
5. (a) If the Optionee's employment with the Company or any subsidiary of
the Company is terminated for due cause, this Agreement shall
terminate simultaneously therewith and Optionee shall have no further
right to exercise an option thereafter. For purposes of this
paragraph, "due cause" shall be the same as defined in the Employment
Agreement.
(b) If the Optionee ceases to be an employee of the Company or any
subsidiary of the Company for any reason other than (1)
termination for due cause as set forth in paragraph 5(a) above,
or (2) death or disability, the term of any option shall expire
on a date not later than three (3) months after termination.
(c) If the Optionee ceases to be an employee of the Company or any
subsidiary of the Company by reason of disability or death within
the meaning of Section 22(e)(3) of the Internal Revenue Code of
1986, as amended, the term of any option shall expire on a date
which is not later than twelve (12) months following the date of
death or disability.
6. The options herein granted shall not be transferable by the Optionee
otherwise than by will or the laws of descent and distribution, and
may be exercised during the life of the Optionee only by the Optionee,
except as set forth in 5( c) above.
7. If any change is made in the shares subject to the Plan 1Q or any
option granted thereunder (through merger, consolidation,
reorganization, recapitalization, or change in capital structure),
appropriate adjustment shall be made by the Company in the number of
shares and kind of common stock for which options may be or may have
been granted under the Plan 1Q, to the end that such proportional
interest shall be maintained as before the occurrence of such an
event.
8. (a) Optionee acknowledges and understands that the Optioned Shares
have not been registered with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, in reliance upon the
exemption from registration provided in Regulation D of the Act, nor
with any state securities regulatory authority in reliance upon
particular statutory transactional exemptions. As such, the shares
purchased under this Agreement, if exercised, cannot be sold
subsequently or otherwise transferred without prior (1) registration
under the Act and under applicable state law or (2) receipt of an
opinion of counsel for the issuer to the effect that such proposed
sale or other transfer does not affect the exempt status of the
original issuance and sale of these shares and is in compliance with
all applicable state and federal securities laws.
(b) That Optionee will be acquiring the stock for his/her own
investment and personal interest in the Company and not for the
account of any other person, with no intention on his/her part of
affecting a redistribution of such stock or any part thereof.
(c) That Optionee has asked questions and received all answers to
information he/she considers pertinent to form a knowledgeable
opinion about his investment.
(d) That the Optionee understands and acknowledges that he/she shall
not be deemed for any purpose to be a shareholder of the Company
with respect to any of the Optioned Shares, except to the extent
that the options herein granted shall have been exercised with
respect thereto and a stock certified issued therefor.
(e) That the existence of the options herein granted shall not affect
in any way the right or power of Exigent International, Inc. to
make or authorize any or all adjustments, recapitalizations,
reorganizations, or other changes in Exigent International Inc.'s
capital structure or its business, or any merger or consolidation
of the Company or Exigent International, Inc., or any issue of
bonds, debentures, preferred or prior preference stock ahead of
or affecting the common shares of Exigent International, Inc. or
the rights thereof, or dissolution or liquidation of Exigent
International, Inc., or any sale or transfer of all or any part
of their assets or business or any other corporate act or
proceeding, whether of a similar character or otherwise.
(f) That as a condition of the granting of the option(s) herein
granted, the Optionee agrees, for himself/herself, and his/her
Personal Representative, that any dispute or disagreements which
may arise under or as a result of or pursuant to this Agreement
shall be determined by the President in his sole discretion, and
that any interpretation by the President of the terms of this
Agreement shall be final, binding and conclusive.
9. This Agreement shall not confer upon the Optionee any right with
respect to continuance of employment by the Company or its related
corporations, nor shall it interfere in any way with the right of the
Optionee's employer to terminate the Optionee's employment at any
time.
10. As used in this Agreement, the masculine, feminine or neuter gender
and the singular or plural number shall be deemed to include the
others whenever the context so indicates or requires.
11. This Agreement shall be governed and interpreted by the laws of the
State of Florida.
12. This Agreement and any exhibit hereto constitutes the entire agreement
between the parties with respect to the subject matter hereof, and no
change or modification shall be valid unless made in writing and
signed by the party against whom such change or modification is sought
to be enforced.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officer and its corporate seal hereunto affixed, and the
Optionee has hereunto affixed his/her hand the day and year first above written.
EXIGENT INTERNATIONAL, INC.
By: /S/ B.R. SMEDLEY
------------------------------
"The Company"
/S/ DON F. RIORDAN, JR.
- --------------------------------
Secretary)
( S E A L )
/S/ WILLIAM K. PRESLEY
------------------------------
"The Optionee"
<PAGE>
EXHIBIT B
DUTIES AND RESPONSIBILITIES AND GOALS FOR WILLIAM PRESLEY
Responsible for planning and directing the Company's efforts to stay abreast of
technological change. This may include the analysis of purchased systems,
hardware and software, or the internal design and development of hardware and
software systems. This includes the interfacing and control of the Company's
present technology and the dissemination of technological information to all of
the divisions.
RESPONSIBILITIES
Sets the corporate strategy for all new technical matters.
Supports new business activity as Corporate Technical Expert.
Selects and participates, directly or indirectly, on appropriate standards
committees (particularly for emerging technology).
Selects and recommends the corporation technology road map for new
technology areas.
Reviews and participates with the CEO and CFO and President in examination
of new business opportunities (JV, mergers, acquisitions).
Supports the various operating companies activities from a technology
perspective.
Reviews the corporation's technology base and participates in recruiting
appropriate technologies.
Heads up the Exigent intellectual property committee for the protection of
all corporate investors and know how.
Establishes the IPR standard review and reward system.
Hosts the Annual Patent Award dinner to recognize new awardees and their
spouses.
Acts as the corporate interface to the public (financial, press) on
technical matters.
1998 AND 1999 GOALS
FINANCIAL
The Corporate P&L, Balance Sheet and Cash Flow Statements (attachment #1);
Fiat Model (attachment #2); Business Objectives (attachment #3); and 1998
Executive Incentive Program (attachment #4) provide the basis for 1998
corporate financial goals. Achieving these financial goals (financial
statements to be audited next February by Controller and an outside
auditor) measures 60% towards reaching 100% award, plus all other
cumulative goals as described below:
STAFFING
Assist organization in hiring 46 new employees (10%) Maintain an attrition
rate of 3% of actual staff (284 actual at 7/1/97) (10%)
QUALITY
Quality of Product or Services - customer satisfaction rating of =>85% as
measured by an outside audit firm contracted by Exigent (10%)
NEW CUSTOMER ACQUISITION
Assist in acquiring new customer of at least $500K of sales (10%)
<PAGE>
ATTACHMENT #1 TO EXHIBIT B
EXIGENT INTERNATIONAL
MANAGEMENT PERFORMANCE MEASUREMENTS
STI STI FOTO Total STI PRODUCTS**
GOV SYS COMM SYS TAG EXIGENT
Revenue 18,000 17,000 1,000 36,000 -
Pretax Earnings* 918 1,835 162 2,915 (1,079)
Net Earnings 567 1,133 100 1,800 (666)
Budgeted G&A Base 16,583 9,656 246 26,485 309
G&A Budget 2,073 1,980 330 4,382 770
Capital Investment 1,000
* PRETAX EARNINGS SHOULD BE AFTER INTEREST AND UNALLOWABLES.
** STI PRODUCTS NET EARNINGS IS SPLIT EVENLY BETWEEN GOVERNMENT AND COMMERCIAL
<PAGE>
<TABLE>
<CAPTION>
ATTACHMENT #2 TO EXHIBIT B
FIAT WITH 30% AWARD
<S> <C> <C> <C> <C> <C>
PROJECTION FY97 FY98 FY99 FY00 FY01
Total Investment Value (market cap) $16,010,472 $27,900,000 $48,000,000 $82,500,000 $102,000,000
Value Control Stockholders Holdings (2138604) $5,346,510 $7,255,068 $10,040,209 $14,433,255 $15,335,680
Cash Conversion Discount 50% 40% 30% 20% 20%
Cash Employed Growth Capital (300K/year) $125,000 $610,638 $985,897 $1,619,739 $1,721,012
Cash Employed Acquisitions (100K/year) $125,000 $203,546 $281,685 $404,935 $430,253
Value Stock Employed Acquisitions (1M/year) $625,000 $3,392,432 $4,694,749 $6,748,914 $7,170,884
Value Issued Incentive Securities (600K/year) $500,000 $610,638 $2,816,849 $4,049,349 $4,302,530
Budgeted Stock I/O/R (+500K/year) 6,404,189 8,224,189 10,224,169 12,224,169 14,224,189
Control Stockholders' Percent Ownership 33.39% 26.00% 20.92% 17.49% 15.03%
Net Sales Revenue Goals (5%) $30,000,000 $36,000,000 $50,000,000 $65,000,000 $75,000,000
Net After Tax Earnings Goals (15%/year) $(450,000) $1,800,000 $3,000,000 $5,000,000 $6,000,00
Aggregate Dividend Goals $300,000 $839,000 $1,080,000 $1,825,000 $2,220,000
Percent of Net Earnings for Dividend 35.0% 35.5% 36.0% 36.5% 37.0%
Net Worth Buildup $6,109,620 $11,477,236 $19,359,567 $31,308,155 $44,410,304
Book Value Per Share Goals $.95 $1.40 $1.89 $2.56 $3.12
Earnings Per Share Goals $(0.07) $0.22 $0.29 $0.41 $0.42
Guesstimated Price Earnings Ratio 15.0 15.5 16.0 16.5 17.0
</TABLE>
<PAGE>
ATTACHMENT #3 TO EXHIBIT B
BUSINESS OBJECTIVES
FY 98 revenue of $36M
STI Federal revenue of $18M
STI Commercial revenue of $17M
FotoTag revenue of $1M
FY 98 Earnings of $1.8M
STI Federal earnings of $900K STI
Commercial earnings of $800K
FotoTag earnings of $100K
Raise capital for R&D, minimum $5M
Raise price of stock to $5/share
<PAGE>
ATTACHMENT #4 TO EXHIBIT B
1998 EXECUTIVE INCENTIVE PROGRAM
CORPORATE GATE OPENS
If Exigent has:
THEN BONUS OF FOLLOWING % OF BASE SALARY TO BE AVAILABLE TO EACH MANAGER
EARNINGS OF:
$1.4M 15%
$1.7M 30%
$2.0M 45%
$2.3M 60%
$2.6M 90%
$2.9M 100%
The bonus will be split 50% cash and 50% stock, unless the manager prefers it
all in stock.
ADDITIONALLY,
Each manager will have a set of individuals goals covering such areas as
customer relations, employee relations, budget performance, quality goals,
intellectual property creation and management, each tailored to their job
function. In addition, the Division Managers are responsible as follows with the
help of all corporate managers:
SALES REVENUE EARNINGS
STI Commercial $26M $15.5M $2.0
STI Government $26M $21M $1.0
Foto Tag $1M $1M $.5
to permit Corporate Gate to achieve 100% bonus or a pro rata share.
<PAGE>
Exhibit C
Proprietary Information and Inventions Agreement
In consideration and as a condition of my employment or continued employment by
Exigent International Inc. and/or by companies which it owns, controls, or is
affiliated with, or their successors in business (the "Company"), I hereby agree
with the Company as follows:
1. Proprietary Information. I understand that during my employment I may
produce, obtain, make known, or learn about certain information which has
commercial value in the business in which the Company is engaged and which
is treated by the Company as confidential. This information may have been
created, discovered, or developed by the Company or otherwise received by
the Company from third parties subject to a duty to maintain the
confidentiality of such information. All such information is hereinafter
called "Proprietary Information."
(a) Proprietary Information Defined. By way of illustration, but not
limitation, "Proprietary Information" includes trade secrets, ideas,
processes, formulas, source codes, data, programs, other original
works of authorship, know-how, improvements, discoveries,
developments, designs, inventions, techniques, marketing plans,
strategies, forecasts, new products, unpublished financial statements,
budgets, projections, licenses, prices, costs, and customers and
supplier lists.
(b) Assignment and Protection of Proprietary Information. I understand
that all Proprietary Information shall be the sole property of the
Company and its assigns (or, in some cases, its clients, suppliers, or
customers), and the Company and its assigns (or in some cases, its
clients, suppliers, or customers) shall be the sole owner of all
patents, copyrights, and other rights in connection therewith. I
hereby assign to the Company any rights I may have or acquire in such
Proprietary Information. At all times, both during my employment by
the Company and after its termination, I will keep in strictest
confidence and trust all Proprietary Information, and I will not use,
reproduce, or disclose any Proprietary Information without the written
consent of the Company, except as may be necessary in the ordinary
course of performing my duties as an employee of the Company.
(c) Maintenance of Records. I agree to keep and maintain adequate and
current records of all proprietary information developed by me (in the
form of notes, sketches, drawings and as may be specified by the
Company) which records shall be available to and remain the sole
property of the Company at all times.
2. Inventions During and Immediately After My Term of Employment. I understand
that during my employment or following my employment, I may make, conceive
of, or reduce to practice various discoveries, developments, designs,
improvements, inventions, formulas, processes, techniques, programs, other
works of authorship, know-how, and data (all of which shall be referred to
as "inventions" throughout this Agreement, whether or not patentable or
registrable under copyright, mask work, or similar statutes).
(a) Assignment of Inventions. I hereby assign and transfer to the Company
my entire right, title, and interest in and to all inventions made or
conceived or reduced to practice by me, either alone or jointly with
others, during the period of my employment with the Company, except
for those inventions which I have developed entirely on my own time
without using the Company's equipment, supplies, facilities, or trade
secret information excluding those inventions that either: (1) relate
at the time of conception or reduction to practice of the invention to
the business, or actual or demonstrably anticipated research or
development of the Company; or (2) result from any work performed by
me for the Company. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within
the scope of my employment and which are protectable by copyright are
"works made for hire," as that term is defined in the U.S. Copyright
Act as in effect as of this date. I will, at the Company's request,
promptly execute a written assignment of title to the Company for any
such invention and I will preserve any such invention as confidential
information of the Company.
Notwithstanding the foregoing, I also hereby assign and transfer to,
or as directed by, the Company all my right, title, and interest in
and to any and all inventions, full title to which is required to be
in the United States by a contract between the Company and the United
States or any of its agencies.
(b) Maintenance of Records. I agree to keep and maintain adequate and
current records of all inventions made by me (in the form of notes,
sketches, drawings and as may be specified by the Company) which
records shall be available to and remain the sole property of the
Company at all times.
(c) Disclosure of Inventions. I will promptly disclose in writing to the
Company all inventions made or conceived or reduced to practice by me,
either alone or jointly with others, during the period of my
employment, and for six months after termination of my employment with
the Company.
(d) Execution of Documents. I further agree as to all inventions to assist
the Company in every proper way (but at the Company's expense) to
obtain and from time to time enforce patents, copyrights, mask works,
and other rights and protections relating to inventions in any and all
countries, and to that end I will execute all documents for use in
applying for and obtaining such patents, copyrights, mask works, and
other rights and protections on and enforcing inventions as the
Company may desire, together with any assignments thereof to the
Company or persons designated by it. My obligation to assist the
Company in obtaining and enforcing patents, copyrights, mask works,
and other rights and protections relating to inventions in any and all
countries shall continue beyond the termination of my employment, but
the Company shall compensate me at a reasonable rate after such
termination for time actually spent by me at the Company's request on
such assistance. In the event the Company is unable, after reasonable
effort, to secure my signature on any document or documents needed to
obtain or enforce any patent, copyright, mask work, or other right or
protection relating to any inventions, whether because of my physical
or mental incapacity or for any other reason whatsoever, I hereby
irrevocably designate and appoint the Company and its duly authorized
officers and agents as my agent and attorney-in-fact, to act for and
in my behalf and stead to execute and file any application or
assignment and to do all other lawfully permitted acts to further the
prosecution and issuance to the Company of patents, copyrights, mask
works, or similar protections thereon with the same legal force and
effect as if executed by me.
3. Prior Inventions. I understand that all inventions, if any, patented or
unpatented, which I made prior to my employment by the Company, are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth in Item 1 of Exhibit A attached hereto and
made a part hereof a complete list of all of my prior inventions, including
numbers of all patents and patent applications, and a brief description of
unpatented inventions which are not the property of a previous employer. I
represent and covenant that the list is complete and that, if no items are
on the list, I have no such prior inventions. I agree to notify the Company
in writing before I make any disclosure or perform any work on behalf of
the Company which appears to threaten or conflict with proprietary rights I
claim in any invention or idea. In the event of my failure to give such
notice, I agree that I will make no claim against the Company with respect
to any such inventions or ideas.
4. Conflicting Employment Obligations.
(a) Trade Secrets of Others. I represent that I have not brought and will
not bring with me to the Company or use in the performance of my
responsibilities at the Company any devices, materials, or documents
of a former employer that are not generally available to the public,
unless I have obtained express written authorization from the former
employer for their possession and use. The only devices, materials,
documents of a former employer that are not generally available to the
public that I will bring to the Company or use in my employment are
identified on Item 2 of Exhibit A attached hereto, and as to each such
item, I represent that I have obtained express written authorization
for their possession and use in employment with the Company and have
delivered a copy of such written authorization to the Company.
(b) Conflicting Confidentiality Agreements. I agree that during my
employment with the Company, I will not breach any obligation of
confidentiality that I have to former employers. I represent that any
performance under the terms of this Agreement and as an employee of
Company does not and will not breach any agreement to keep in
confidence proprietary information acquired by me in confidence or in
trust prior to employment by the Company. I have not entered into, and
I agree I will not enter into, any agreement either written or oral in
conflict herewith.
5. Government Contracts. I acknowledge that the Company from time to time may
be involved in government projects of a highly classified nature. I further
acknowledge that the Company from time to time may have agreements with
other persons or governmental agencies which impose obligations or
restrictions on the Company regarding inventions made during the course of
work thereunder or regarding the confidential nature of such work or
information disclosed in connection therewith. I agree to be bound by all
such obligations and restrictions and to take all action necessary to
discharge the obligations of the Company thereunder.
6. Termination of Employment. In the event of the termination of my employment
by me or by the Company for any reason, I will deliver to the Company all
documents, notes, drawings, specifications, programs, data, devices, and
other materials of any nature pertaining to my work with the Company and I
will neither take with me nor recreate any of the foregoing, any
reproduction of any of the foregoing, or any Proprietary Information that
is embodied in a tangible medium of expression.
7. Modification. This Agreement may not be changed, modified, released,
discharged, abandoned, or otherwise amended, in whole or part, except by an
instrument in writing, signed by myself and the Company. I agree that any
subsequent change or changes in my duties, salary, or compensation shall
not affect the validity or scope of this Agreement.
8. Entire Agreement. I acknowledge receipt of this Agreement and agree that
with respect to the subject matter hereof it is my entire agreement with
the Company, superseding any previous oral or written communications,
representations, understandings, or agreements with the Company or any
officer or representative.
9. Severability. In the event that any paragraph or provision of this
Agreement shall be held to be illegal or unenforceable, such paragraph or
provision shall be severed from this Agreement and the entire Agreement
shall not fail on account thereof, but shall otherwise remain in full force
and effect.
10. Successor and Assigns. This Agreement shall be binding upon my heirs,
executors, administrators, or other legal representatives and is for the
benefit of the Company, its successors, and assigns.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
12. Counterparts. This Agreement may be signed in two counterparts, each of
which shall be deemed an original and both of which shall together
constitute one agreement.
13. I agree that the Company may make known to others either during or
subsequent to my employment the existence of this Agreement and the
provisions of all or any part thereof.
IN WITNESS WHEREOF, THIS AGREEMENT has been executed as of this 11th day of
June, 1997 and is effective from July 23, 1997.
By: /s/ William K. Presley
-------------------------------------
Name: WILLIAM K. PRESLEY
Title: CTO
ACCEPTED AND AGREED TO:
EXIGENT INTERNATIONAL, INC.
By: /s/ B.R. Smedley
-------------------------------------
Title: CEO
<PAGE>
Exhibit A
To
Proprietary Information and
Inventions Agreement
Exigent International, Inc.
1225 Evans Road
Melbourne, FL 32904
Gentlemen:
1. The following is a complete list of all inventions or improvements relevant
to the subject matter of my employment by Exigent International, Inc. (the
"Company") that have been made or conceived or first reduced to practice by
me alone or jointly with others prior to my engagement by the Company:
_____ No inventions or improvements
_____ See below:
_____ Additional sheets attached.
2. I propose to bring to my employment the following devices, materials, and
documents of a former employer that are not generally available to the
public, which materials and documents may be used in my employment pursuant
to the express written authorization of my former employer (a copy of which
is attached hereto):
_____ No materials
_____ See below:
_____ Additional sheets attached.
Very truly yours,
___________________________________
Name:
<PAGE>
Exhibit D
NON-DISCLOSURE AND
NON-COMPETITION AGREEMENT
THIS NON-DISCLOSURE AND NON-COMPETITION AGREEMENT dated June 11, 1997 is between
EXIGENT INTERNATIONAL, INC., with its principal office at 1225 Evans Road,
Melbourne, Florida 32904 (the "Company") and William K. Presley, with a
residence at 10710 S. Tropical Trail, Merritt Island, FL 32952-6930
("Employee").
1. CONSIDERATION. Employee has agreed to enter into this Agreement in
consideration of: The Company's engagement of Employee as an employee under
the terms of the Employment Agreement ("Employment Agreement") of even date
between the Company and Employee; the Company's agreement to grant stock
options to Employee under its Incentive Stock Option Plan of even date
between the Company and Employee.
2. NON-DISCLOSURE OBLIGATIONS.
(a) In Employee's position as Exigent Chief Technical Officer of the
Company, he will have access to:
(i) information ("Confidential Business Information") relating to the
business plans of the Company and treated as confidential, including
without limitation, information relating to the Company's investors,
capitalization, marketing plans and strategies, product concepts, product
development status, material agreements, plans for raising capital, target
customers and markets, pricing policies, finances, financial information of
the Company, customer lists; and
(ii) information of a proprietary nature relating to the technology
and products of the Company ("Confidential Proprietary Information")
including without limitation, information relating to the technology
developed or to be developed by the Company relating to the Company's
products and other matters, trade secrets, research and development
activities, technical, engineering and scientific data, specifications, and
patent applications or patents.
(The Confidential Business Information and Confidential Proprietary
Information is sometimes collectively referred to herein as "Confidential
Information") or confidential information relating to the organization,
research and development activities, marketing plans and strategies,
pricing policies, technical and scientific data, specifications, patent
applications or patents, customer lists and accounts, business, finances or
financial information of the Company.
(b) Employee agrees that he will not at any time during (i) his employment
by the Company and during any time period he is receiving severance pay from the
Company, including extended periods under Section 4(f) herein, and (ii) for one
year thereafter, reveal to any person, association or company any of the
Company's Confidential Business Information, so far as such Confidential
Business Information has come or may come to his knowledge, except as may be
required in the ordinary course of performing his duties as an officer of the
Company or as may be in the public domain through no fault of Employee or as may
be required by law.
(c) Employee hereby agrees that he will not at any time, whether during or
after the termination of his employment, reveal to any person, association or
company any of the Company's Confidential Proprietary Information, so far as to
his knowledge, except as may be required in the ordinary course of performing
his duties as an officer of the Company or as may be in the public domain
through no fault of Employee or as may be required by law.
(d) Employee agrees to keep in confidence and secret all matters of such
nature entrusted to him and he shall not use or attempt to use any such
information in any manner which may injure or cause loss to the Company, whether
directly or indirectly.
(e) Employee acknowledges the critical importance of the Confidential
Information to the Company's business operations and plans. Employee
acknowledges that unauthorized disclosure or use of any of the Confidential
Information (in particular trade secrets and technical proprietary information)
would cause significant and irreparable damage to the Company and would
jeopardize the Company's business and financial condition.
(f) Nothing herein shall be construed as granting to Employee any right or
license under any copyrights, inventions, or patents now or hereafter owned or
controlled by the Company or any right to employment by the Company.
(g) In the event Employee's employment is terminated for any reason,
Employee shall return all Confidential Information in his possession, together
with any copies, to the Company.
3. NON-COMPETITION. Employee agrees and acknowledges that the products and
services to be sold and rendered by the Company are different in character
and are of particular significance to the Company, and that the Company is
in a competitive business. Due to the proprietary and specialized nature of
the Company's business, Employee agrees to the following:
(a) During his employment and thereafter during the applicable
"Non-Competition Period" (as defined in Section 3(e)) Employee shall not,
directly or indirectly, induce, influence, combine or conspire with, or attempt
to induce, influence, combine or conspire with, any of the officers, employees
or consultants of the Company to terminate their employment or relationship with
the Company.
(b) During his employment and thereafter during the applicable
"Non-Competition Period" (as defined in Section 3(e)), Employee shall not,
directly or indirectly, induce, or attempt to induce, any of the customers or
suppliers of the Company to terminate their relationship with the Company.
(c) During his employment and thereafter during the applicable
"Non-Competition Period (as defined in Section 3(e)), Employee agrees that he
will not voluntarily or involuntarily, for any reason whatsoever, directly or
indirectly, individually or on behalf of persons not now parties to this
Agreement, or as a partner, stockholder, director, officer, principal, agent,
broker, licensor, employee, or in any other capacity or relationship, engage in
any business or employment, or aid or endeavor to assist any business or legal
entity, which is in competition with the products and/or services of the
Company; provided, however, this Section 3(c) shall not be deemed to prevent
Employee from working after termination of the applicable Non-Competition Period
in any areas or division within the applicable industry. The ownership by
Employee of not more than five percent (5%) of shares of stock or any
corporation having a class or equity securities actively traded on a national
securities exchange or NASDAQ shall not be deemed, in and of itself, to violate
this Section 3(c).
(d) Employee agrees not to do or say anything that reasonably may be
expected to have the effect of disparaging the Company or diminishing or
impairing the goodwill and reputation of the Company and the services it
provides. Likewise, the Company agrees not to do or say anything that reasonably
may be expected to have the effect of disparaging the Employee or diminishing or
impairing the reputation of the Employee.
(e) If, in any judicial proceedings a court shall refuse to enforce any of
the other separate covenants set forth in this Section 3, then such
unenforceable covenant shall be amended to relate to such lesser period or
geographical areas as shall be enforceable or, if deemed appropriate by such
court, deemed eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
(f) Under the terms of the Employment Agreement, Employee is entitled to
receive severance pay in the event his employment is terminated by the Company
without due cause. In the event Employee's employment is terminated for any
reason whatsoever,
(i) during the first year of his employment, then the applicable
Non-Competition Period for Section 3(a), (b) and (c) will be eighteen (18)
months; or
(ii) during the second year of his employment, then the applicable
Non-Competition Period for Section 3(a), (b) and (c) will be twelve (12)
months; or
(iii) during the third year of his employment, then the applicable
Non-Competition Period for Section 3(a), (b) and (c) will be six (6)
months; or
(iv) by expiration of the Term or otherwise, at any time after the
third anniversary of his employment, then the applicable Non-Competition
Period for Sections 3(a), (b) and (c) will be three (3) months.
(g) Notwithstanding the foregoing, the Company may, at its option, elect to
extend the applicable Non-Competition Period by up to twelve (12) additional
months by payment to Employee of additional severance pay equal to his salary in
effect at the date of termination of his employment for such time period.
Payments will be made in accordance with the Company's normal pay periods for as
long as the Company elects to so extend the Non-Competition Period. Employee
hereby agrees to accept such payments as compensation for such extension of the
applicable Non-Competition Period.
(h) Company and Employee hereby acknowledge that:
(i) Company's market for its products is unlimited geographically and
the foregoing noncompetition and non-solicitation requirements shall be
applied on a worldwide basis;
(ii) the duration and geographical limitations imposed with respect to
said noncompetition and non-solicitation requirements are reasonable;
(iii) the restrictions stated hereinabove are reasonably necessary for
the protection of Company's legitimate proprietary interests.
(i) Employee represents and warrants that his/her experience and
capabilities are such that the restrictive covenants set forth herein will not
prevent him/her from earning his/her livelihood and that Employee will be fully
able to earn an adequate livelihood for himself/herself and his/her dependents
if any such provisions should be specifically enforced against Employee.
(j) The non-competition and non-solicitation obligations contained herein
shall be extended by the length of time during which Employee shall have been in
breach of any said provisions and during any time the Company is required to
seek compliance by judicial proceeding.
4. SPECIFIC REMEDIES. In addition to any other remedy provided herein or
contemplated under law, and not as liquidated damages, in the even Employee
breaches any material covenant of this Agreement, such breach will
constitute "due cause" for termination of his employment under the
Employment Agreement and the Company shall have the right, but not the
obligation, to purchase from Employee and Employee shall have the
obligation to sell to the Company any or all of the shares of Common Stock
of the Company at a purchase price equal to Employee's cost for such
shares. Such right shall be exercised by written notice to Employee within
sixty (60) days of establishment by consent, judicial decision or
arbitration that Employee so breached this Agreement. Any of Employee's
permitted transferees will be obligated to sell to the Company Common Stock
shares of the Company held by them in the event the Company exercises this
right to purchase.
5. NOTICES. Any notice required or permitted hereunder shall be in writing and
shall be sufficiently given if personally delivered, delivered by facsimile
telephone transmission, delivered by express delivery service (such as
Federal Express), or mailed first class U.S. mail, postage prepaid,
addressed as follows:
If to Employee:
William K. Presley
10710 S. Tropical Trail
Merritt Island, FL 32952-6930
If to the Company:
Exigent International, Inc.
1225 Evans Road
Melbourne, FL 32904
Attn: Legal Counsel
(or such other address as any party shall specify by written notice
so given), and shall be deemed to have been delivered as of the date
so delivered or three (3) days after mailing for domestic mail and
seven (7) days for international mail.
6. BINDING EFFECT; BENEFITS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns. Notwithstanding anything contained in this Agreement to the
contrary, nothing in the Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
heirs, successors, executors, administrators or assigns any right,
remedies, obligations or liabilities under or by reason of this Agreement.
7. ENTIRE AGREEMENT. This Agreement constitutes the final written expression
of all the agreements between the parties with respect to the subject
matter hereof. No addition to or modification of any provision of this
Agreement shall be binding upon any party unless made in writing and signed
by the party to be bound.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida, without
reference to principles of conflict of laws.
9. HEADINGS. Headings of the Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
10. NO CONFLICT. Employee represents and warrants that performance of the terms
of this Agreement, including but not limited to Sections 2 and 3 hereof, to
the best of his actual knowledge will not breach any agreement entered into
by Employee, and Employee agrees that he will not enter into any agreement
in conflict herewith. Employee further covenants that
(a) he shall not in the performance of his duties under the Employment
Agreement or hereunder (and the performance of such duties shall not require him
to) utilize any proprietary or confidential information owned by any third party
which he is prohibited from utilizing by reason of agreement or applicable law,
and
(b) he shall not at any time disclose to the Company any proprietary or
confidential information owned by any third party which he is prohibited from
disclosing by reason of agreement or applicable law.
11. SPECIFIC PERFORMANCE. Employee acknowledges and agrees that a breach of his
obligations under this Agreement, including but not limited to Section 2
and 3, will result in irreparable and continuing harm to the Company, for
which there will be no adequate remedy at law (it being understood and
agreed that the Company's remedy under Section 4 herein is not exclusive or
adequate), and agrees that in the event of any breach of this Agreement the
Company, its successors and assigns shall be entitled to injunctive relief
without the necessity of posting bond or other security therefor and
without the necessity of proving irreparable harm, and to such other and
further relief as may be proper.
12. SEVERABILITY. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case in all cases,
such circumstances shall not have the effect of rendering such provision
invalid in any other case or of rendering any of the other provisions of
this Agreement inoperative, unenforceable or invalid.
13. ASSIGNABILITY. Employee may not assign any of his rights or obligations
hereunder without the prior written consent of the Company, which may be
withheld in its sole discretion.
14. WAIVER. The failure or delay of the Company at any time to require
performance by Employee of any provision of this Agreement, even if known,
shall not affect the right of the Company to require performance of that
provision or to exercise any right, power or remedy hereunder, and any
waiver by the Company of any breach of any provision of this Agreement
should not be construed as a waiver of any continuing or succeeding breach
of such provision, a waiver of the provision itself, or a waiver of any
right, power or remedy under this Agreement. No notice to or demand on
Employee in any case shall, of itself, entitle Employee to any other or
further notice or demand in similar or other circumstances.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
on the date written above.
EXIGENT INTERNATIONAL, INC.
/S/B.R. SMEDLEY
-------------------------------------------
Name: B.R. SMEDLEY
Title: CEO
/S/WILLIAM K. PRESLEY
-------------------------------------------
Name: William K. Presley
Title: Exigent Chief Technical Officer
<PAGE>
Exhibit E
CONFIDENTIAL NATURE OF COMPANY AFFAIRS
PURPOSE:
It is the policy of Exigent International Inc. (Exigent) that the internal
business affairs of the organization, particularly confidential information and
trade secrets, represent proprietary assets that each employee has a continuing
obligation to protect.
POLICY:
1. CONFIDENTIAL INFORMATION. Information designated as confidential is to
be discussed with no one outside the organization and only discussed
within the organization on a "need to know" basis. In addition,
employees have a responsibility to avoid unnecessary disclosure of
nonconfidential internal information about Exigent, its customers, and
its suppliers. This responsibility is not intended to impede normal
business communications and relationships, but is intended to alert
employees to their obligations to use discretion to safeguard internal
Exigent affairs.
2. VIOLATION OF UNAUTHORIZED ACCESS. Employees authorized to have access
to confidential information must treat the information as proprietary
Exigent property for which they are personally responsible. Employees
are prohibited from attempting to obtain confidential information for
which they have not received authorization. Employees violating this
policy will be subject to discipline, up to and including termination
and may be subject to legal action.
3. MEDIA/INQUIRIES. All media inquiries and other inquiries of a general
nature should be referred to the President or CEO. Also, all press
releases, publications, speeches, and other official declarations must
be approved in advance by the President, Inquiries seeking information
concerning current or former employees should be referred to the
Personnel Department.
4. DISCUSSIONS WITH COMPETING COMPANIES AND EXIGENT CONFIDENTIALITY.
Employees are not to discuss with the officers, directors, or
employees of competing companies any topics which might give the
impression of an illegal agreement in restraint of trade. Such topics
include pricing agreements, customer allocation, and division of sales
territories.
5. MATERIAL INSIDE INFORMATION. Employees are prohibited from disclosing
"material inside" information, that could affect the market value of
Exigent's financial securities, to anyone outside the organization
until such information has been made available to the public by
management. Employees are also prohibited from using such information
for their own personal profit.
I, WILLIAM K. PRESLEY , hereby acknowledge I have read and fully understand the
above
(Print Name)
policy and agree to comply with all terms, conditions and/or requirements as
stated.
/S/ WILLIAM K. PRESLEY 11 JUNE 1997
- ---------------------------
Employee Signature Date
<PAGE>
A M E N D M E N T T O E M P L O Y M E N T A G R E E M E N T
This amendment ("Amendment") to the Employment Agreement ("Agreement") executed
between Exigent International, Inc. and William K. Presley dated 11 June 1997 is
entered into as of September 15, 1997 between Exigent International, Inc.
("Exigent"), a corporation duly authorized and existing under the laws of the
State of Delaware with a principal place of business at 1225 Evans Road,
Melbourne, Florida 32904 and William K. Presley ("Employee"), an individual
domiciled at 10710 S. Tropical Trail, Merrit Island, FL 32952-6930.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby mutually acknowledged, Exigent and Employee hereby agree as
follows:
1. PARAGRAPH 3(D)(II) MODIFICATION; PARAGRAPH 3(D)(III) DELETED. That
paragraph 3(d)(ii) is amended to read as follows and incorporates
language from paragraph 3(d)(iii) which is now deleted: "Group
medical, dental, life, AD&D, supplemental life, long term disability,
or short term disability insurance, or other insurance of the kind and
to the extent offered from time to time during the Term of this
Agreement to other employees of the Company."
2. EXHIBIT "B" TO EMPLOYMENT AGREEMENT. The document attached hereto as
EXHIBIT "B" TO EMPLOYMENT AGREEMENT and all related attachments
containing the duties and responsibilities of Employee is hereby
incorporated into the Agreement as if fully set forth therein.
3. RATIFICATION AND APPROVAL. In all other respects the Agreement is
hereby ratified by Exigent and Employee and remains in full force and
effect.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the date set
forth above.
For Exigent: For Employee:
EXIGENT INTERNATIONAL, INC. WILLIAM K. PRESLEY, AN INDIVIDUAL
By: /S/ B.R. SMEDLEY By: /S/ WILLIAM K. PRESLEY
- ------------------------------- -----------------------------
(Signature) (Signature)
Name: B.R. SMEDLEY
(Print - Block Letters)
Title: CEO & CHAIRMAN
(Print - Block Letters)
Exhibit 10.15
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of June 11, 1997 between
Exigent International Inc., a Delaware Corporation (the "Company"), and Bernard
R. Smedley (the "Employee").
WHEREAS, Company has determined that it would be desirable and in the best
interests of Company to employ Employee, and Employee wishes to be employed by
Company.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereinafter contained, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, Company and Employee agree
as follows:
1. Employment. Company hereby employs the Employee and the Employee hereby
accepts employment upon the terms and conditions set forth in this
Agreement. Employee will serve as Chairman and Chief Executive Officer of
Company, at the discretion of the Company's Board of Directors, and will
report to the Board of Directors.
2. Term. Unless sooner terminated as set forth herein, the term of this
Agreement ("Term") shall begin on the business day this Agreement is
executed (the "Commencement Date"), and end at midnight on the third
anniversary of the Commencement Date, unless extended. The Term may be
extended by mutual written agreement of Company and Employee, provided that
in each case the parties shall agree in writing to such extension at least
three months' prior to expiration of the Term.
3. Compensation.
(a) For all services rendered by the Employee under this Agreement, the
Company shall pay and Employee shall accept an annual salary of TWO
HUNDRED FIFTY THOUSAND and NO/100 DOLLARS ($250,000.00) per annum or
lesser amount, on a pro rata basis, for any period less than a full
year. This compensation shall be payable to Employee in equal
installments in accordance with the Company's normal pay periods, and
shall be subject to all appropriate withholding taxes.
The annual salary payable to Employee will be subject to upward
adjustment as determined by Company's Board of Directors in the event
that Company generates annual revenues equal to or greater than that
specified in the approved 3-year plan (the "Plan").
(b) In addition to the compensation provided for in Section 3(a), as a
signing bonus, Employee shall be granted 125,000 options to purchase
common shares, $.01 par value per share, of Company (the Common
Stock"), at an exercise price of $2.25 per share or 110% of current
market value whichever is higher and on the terms and conditions
described in the Incentive Stock Option Agreement, which Employee
agrees to sign, attached hereto as Exhibit A and incorporated herein
by this reference.
(c) Provided that Employee has not been terminated for due cause (as that
term is defined below in Section 8), in addition to the compensation
provided for in Section (3) (a) and (b) above, Company shall grant to
Employee options to purchase an additional 125,000 shares of Common
Stock at an exercise price of $2.25 per share or 110% of current
market value whichever is higher if Company shall receive on or prior
to February 1, 1998. (See annual Executive Incentive Plan), including
(i) earnings of at least $2.9 million or prorated in accordance with
the approved executive management plan for 1998; or
(ii) new funding for Company of at least $5,000,000, including long
term (at least 5 years) subordinated debt or equity or a
combination of both.
The Board of Directors may, in its sole discretion, award part or all
of the options to purchase such 125,000 shares of Common Stock even if
none of the foregoing conditions are achieved on or prior to February
1, 1998. If and to the extent any such options are awarded pursuant to
this Section 3(c), they shall be awarded on the terms and conditions
described in the form of the Stock Option Agreement, except that the
amount of Common Stock subject thereto shall be adjusted to reflect
the amount to which Employee is then entitled.
(d) In addition to the compensation provided for in Sections 3(a), (b) and
(c) hereof, Employee shall also be entitled to the following during
the Term of this Agreement:
(i) Four (4) weeks paid vacation annually initially and additional
vacation as appropriate in accordance with Company policy to be
adopted, provided that Employee will endeavor to schedule his
vacation to avoid conflicts with his duties hereunder. During the
term of his employment under the Agreement, Employee shall be
entitled to the holidays and sick leave afforded and permitted by
Company to other employees;
(ii) at Employee's option, group medical insurance and dental
insurance of the kind and to the extent offered from time to time
during the Term of this Agreement to other employees of Company;
(iii)long-term disability insurance, providing for benefits equal to
66 2/3% of Employee's monthly salary to a maximum of $6,000
(Company will continue to pay Employee's full salary during
periods of short-term disability);
(iv) participation in Company's 401(k) plan, on such terms and
conditions as such participation is made generally available to
all employees of Company;
(v) life insurance coverage, as follows: (A) a "key man" life
insurance policy in the amount of $1,000,000, which shall be
obtained at Company's expense and shall designate Company as the
sole beneficiary thereof (and Employee agrees as a condition of
his employment that he will successfully complete a physical
examination conducted by a physician of his choice, or provide
the results of any such examination conducted within the one
hundred twenty (120) day period prior to the date of this
Agreement to Company), and (B) a second life insurance policy in
the amount of $600,000, which shall be obtained at Company's
expense and shall designate any designee selected by Employee as
the sole beneficiary thereof, provided that Company shall only be
obligated to pay premiums required for such policy for so long as
Employee continues to serve as an employee of Company; (vi) up to
$10,000 per year for documented, unreimbursed medical expenses
incurred by Employee or his spouse that are not reimbursable
under other medical insurance plans;
(vi) such other benefits, such as pension, profit sharing, insurance,
short-term disability made generally available by Company, in its
sole discretion, now or in the future to all of its employees;
and
(vii)reimbursement to employee of 75% of his annual dues at the Eau
Gallie Yacht Club and 100% of actual business expenses of
Exigent/STI.
(viii) such other benefits, if any, which the Board of Directors, in
its sole discretion, may make available to Employee.
4. Duties; Authority.
(a) During the Term, Employee shall perform those services reasonably
requested by the Board of Directors in a manner and to an extent which
will allow the Company to benefit from Employee's experience in and
knowledge of the industry in which the Company is engaged and as
specified in greater detail in Exhibit B attached hereto and
incorporated herein by this reference. During the Term, Employee shall
devote his full professional time, attention, skill and energy to the
business, welfare and affairs of the Company. While serving as
Chairman and Chief Executive Officer, Employee shall have the
authority and responsibility to devise and implement corporate
strategies and operations and to supervise and manage all employees.
Employee shall use his best efforts in the performance of his duties
hereunder and to promote the interests of the Company and its present
and future subsidiaries and affiliates. Employee agrees to abide by
all rules and regulations of Company as established or amended from
time to time.
(b) The parties agree that Employee may complete his obligations to four
(4) other companies which he was consulting. It is understood that
these activities are intermittent and will be completed within four
months. CEO certifies that these entities are non-competitive to
Exigent and its subsidiaries. That subject to the Non-Disclosure and
Non-Competition Agreement attached hereto as Exhibit D. Employee may
passively invest his personal assets in businesses where the form or
manner of such investment will not require services on the part of
Employee.
5. Business Expenses and Reimbursements. Employee shall further be entitled to
reimbursement by Company for other ordinary and necessary business expenses
incurred by Employee in the performance of his duties hereunder, and
further provided that:
(a) Each such expenditure is of a nature qualifying it as a proper
deduction on the federal and state income tax returns of the
Company as a business expense and not as deductible compensation
to the Employee; and
(b) Employee furnishes the Company with adequate records and other
documentary evidence required by federal and state statutes and
regulations for the substantiation of such expenditures as
deductible business expenses of the Company and not as deductible
compensation to the Employee.
Employee agrees that if, at any time, any payment made to the Employee by
the Company as a business expense reimbursement for a particular item shall
be disallowed in whole as a deductible expense to the Company by the
appropriate taxing authorities, Employee shall reimburse Company to the
full extent of such disallowance if so requested by the Company in writing.
6. Proprietary Information and Inventions Agreement. As a condition to his
employment hereunder, Employee agreed to execute and deliver to Company a
Proprietary Information and Inventions Agreement in the form attached
hereto as Exhibit C.
7. Non-Disclosure and Non-Competition Agreement. As a condition to his
employment hereunder, Employee agrees to execute and deliver to the Company
a Non-Disclosure and Non-Competition Agreement in the form attached hereto
as Exhibit D and incorporated herein by this reference.
8. Termination.
(a) This Agreement may be terminated at any time prior to expiration of
the Term (i) by Employee upon sixty (60) days' prior written notice to
the Company, (ii) upon the disability (defined to mean the inability
of Employee to engage in substantial employment duties by reason of
any medically determinable physical or mental impairment for a
continuous period of 60 days) of Employee, (iii) by the Company for
"due cause" at any time (iv) by the Company without "due cause" upon
fifteen (15) days' prior written notice to the Employee.
(b) In the event of termination pursuant to Section 8(a)(i), or Section
8(a)(iii), the Company shall not be obligated to make any severance
payments or any other further payments hereunder, except with respect
to accrued but unpaid compensation and reimbursements owed Employee
for expenses incurred prior to the effective date of termination. For
purposes of Section 8, "due cause" shall mean personal dishonesty,
willful misconduct, breach of a fiduciary duty involving personal
profit, willful violation of any law, rule, regulation (other than a
law, rule or regulation relating to offenses or misdemeanors unrelated
to any of the foregoing or to the Company's business) or final cease
and desist order, or material breach of any provision of this
Agreement, including but not limited to Employee's obligations under
Sections 4 hereof or a material breach of any of Employee's
obligations under the Proprietary Information and Inventions Agreement
attached hereto as Exhibit C or under the Non-Disclosure and
Non-Competition Agreement attached hereto as Exhibit D.
(c) In the event of an impasse between the Board of Directors of the
Company and Employee as to corporate strategies, marketing, or
operational policies and such impasse leads to a determination by the
Board of Directors that Employee's employment should be terminated,
the Company agrees that termination in such circumstances will be
deemed terminated by the Company without "due cause."
(d) In the event of termination by the Company pursuant to Section
8(a)(iv), or Section 8(c) (i.e., without due cause), then in addition
to any amounts to which Employee is entitled under Section 8(b),
Employee shall also be entitled to receive severance pay as follows:
(i) If Employee is so terminated without due cause within the first
twelve months of the Term ("First Year"), an amount equal to
eighteen (18) months' salary, based on the then current salary of
Employee as of the effective date of termination, payable in
equal installments in accordance with Company's normal pay
periods for Employee (i.e. weekly, bi-weekly or monthly)
beginning one pay period after the effective date of termination;
(ii) If Employee is so terminated without due cause within the second
twelve months of the Term ("Second Year"), an amount equal to
twelve (12) months' salary, based on the then current salary of
Employee as of the effective date of termination, payable in
equal installments in accordance with Company's normal pay
periods for Employee beginning one pay period after the effective
date of termination;
(iii)If Employee is so terminated without due cause within the third
twelve months of the Term ("Third Year"), an amount equal to six
(6) months' salary, based on the then current salary of Employee
as of the effective date of termination, payable in equal
installments in accordance with Company's normal pay periods for
Employee beginning one pay period after the effective date of
termination; and
(iv) If Employee is still employed by Company after the Third Year,
and (in the absence of any superseding arrangement with Company,
whether pursuant to renewal of this Agreement or otherwise) is so
terminated without due cause, an amount equal to three (3)
months' salary, based on the then current salary of Employee as
of the effective date of termination, payable in equal
installments in accordance with Company's normal pay periods for
Employee beginning one pay period after the effective date of
termination.
(e) In the event of termination by the Company pursuant to Section
8(a)(iv), or Section 8(c) (i.e. without due cause), Employee shall
also be entitled to receive, at his option and upon his written
request, group medical insurance as described in Section 3(f)(ii)
during the period Employee is entitled to receive severance pay under
Section 8(d) plus, if applicable, any additional extension of the
applicable "Non-Competition Period" (as defined in the Non-Disclosure
and Non-Competition Agreement, pursuant to Section 3(g) of such
agreement.
(f) In the event of termination upon Employee's disability pursuant to
Section 8(a)(ii), the Company agrees to continue Employee's regular
salary payments from the date of termination through the date the
insurance company commences long term disability insurance payments or
denies coverage. In the event long term disability coverage is denied
due to admitted or proven fraud on behalf of the Employee, the Company
will have no severance payment obligations to Employee. If coverage is
denied for any other reason, Employee's termination will be treated as
termination without due cause under Section 8(a)(iv) and Employee will
be entitled to severance pay under Section 8(d) provided any such
payments made by Company to Employee under this Section 8(f) will be
credited against Company's severance payment obligations.
(g) Notwithstanding anything to the contrary set forth in this Agreement,
in the event that Employee dies during the Term of this Agreement or
any extension thereof, this Agreement shall terminate upon the date of
such death, provided that in the event of Employee's death during the
Term of this Agreement or any extension thereof the Company shall
continue to pay Employee's salary for a period of ninety (90) days
following the date of death to the executor or administrator of the
Employee's estate, except in no event shall the Company be liable for
the payment of any such death benefit which exceeds the maximum
severance payment obligations pursuant to Section 8(e) above.
9. Notices. Any notice required or permitted hereunder shall be in writing and
shall be sufficiently given if personally delivered, delivered by facsimile
telephone transmission, delivered by express delivery service (such as
Federal Express), or mailed first class U.S. mail, postage prepaid,
addressed as follows:
If to the Employee:
Bernard R. Smedley
295 Hwy A1A, No. 205
Satellite Beach, FL 32937
with copy to:
Stinespring, Lambert & Associates
77 West Washington Street, Suite 1801
Chicago, IL 60602
Attn: Harry P. Stinespring
Fax No. (312) 641-6920
If to the Company:
Exigent International Inc.
1225 Evans Road
Melbourne, FL 32904
Attn: Legal Counsel
(or to such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so
delivered or three (3) days after mailing for domestic mail and seven (7)
days for international mail.
10. Binding Effect; Benefits. This Agreement shall be binding upon and shall
inure to the benefit of this parties hereto and their respective successors
and assigns, if any. Notwithstanding anything contained in this Agreement
to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators or assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida, without
reference to principles of conflict of laws.
12. Headings. Headings of the Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
13. No Conflict. Employee represents and warrants that performance of the terms
of this Agreement, and the terms of any agreement attached hereto as an
Exhibit, to the best of his actual knowledge, will not breach any agreement
entered into by Employee, and Employee agrees that he will not enter into
any agreement in conflict with this Agreement and the agreements attached
as Exhibits. Employee further covenants that (i) he shall not in the
performance of his duties hereunder (and the performance of such duties
shall not require him to) utilize any proprietary or confidential
information owned by any third party which he is prohibited from utilizing
by reason of agreement or applicable law, and (ii) he shall not at any time
disclose to Company any proprietary or confidential information owned by
any third party which he is prohibited from disclosing by reason of
agreement or applicable law.
14. Injunctive Relief. Employee acknowledges and agrees that a breach of his
obligations under this Agreement, and any agreement attached hereto as an
Exhibit or any other exhibit or attachment hereto, will result in
irreparable and continuing harm to the Company, for which there will be no
adequate remedy at law, and agrees that in the event of any breach or
prospective breach of this Agreement, the Company, its successors and
assigns will be entitled to injunctive relief in any federal or state court
of competent jurisdiction residing in the State of Florida without the
necessity of posting bond or other security therefor and without the
necessity of proving irreparable harm, and to such other and further relief
as may be proper. Employee hereby submits to the jurisdiction of the
preceding courts for the purposes of any actions or proceedings instituted
by the Company to obtain such injunctive relief, and agrees that the
process may be served on the Employee by registered mail, addressed to the
last address of the Employee known to the Company, or in any manner
authorized by law.
15. Severability. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases,
such circumstances shall not have the effect of rendering such provision
invalid in any other case or of rendering any of the other provisions of
this Agreement inoperative, unenforceable or invalid.
16. Assignability. By reason of the special and unique nature of the services
hereunder, it is agreed that neither party hereto may assign any interest,
rights or duties which it or he may have in this Agreement without the
prior written consent of the other party, except that upon any merger,
liquidation, or sale of all or substantially all of the assets of the
Company to another corporation, this Agreement shall inure to the benefit
of and be binding upon the Employee and the purchasing, surviving or
resulting company or corporation in the same manner and to the same extent
as though such company or corporation were the Company.
17. Waivers. The failure or delay of the Company at any time to require
performance by the employee of any provision of this Agreement, even if
know, shall not affect the right of the Company to require performance of
that provision or to exercise any right, power or remedy hereunder, and any
waiver by the Company of any breach of any provision of this Agreement
should not be construed as a waiver of any continuing or succeeding breach
of such provision, a waiver of the provision itself, or a waiver of any
right, power or remedy under this Agreement. No notice to or demand on
Employee in any case shall, of itself, entitle Employee to any other or
further notice or demand in similar or other circumstances.
18. Indemnification. Company agrees to exercise its power to indemnify Employee
in the situations provided in the Company's current Certificate of
Incorporation in its form filed with the Secretary of State for the State
of Delaware as of the date of this Agreement. This indemnification shall
apply even if such Certificate is later amended or deleted.
19. Covenants of the Essence. The covenants of Employee set forth in this
Agreement and the other Exhibits are the essence of this Agreement; they
shall be construed as independent of any other provision in this Agreement;
and the existence of any claim or cause of action of the Employee against
the Company, whether predicated on this Agreement or not, shall not
constitute a defense to the enforcement by the Company of these covenants.
20. Survival. The provisions of this Agreement will survive the termination or
expiration of this Agreement where the intent so indicates they shall
survive and all other obligations of the Company and the Employee will
cease on termination or expiration of this Agreement. Notwithstanding the
foregoing, the Company and the Employee will remain liable for obligations
which accrued before termination or expiration of this Agreement (including
the Employee's right to be paid or reimbursed for services rendered and
expenses incurred before termination or expiration of this Agreement.)
21. Entire Agreement. This Agreement, together with the agreements in the form
attached as Exhibits hereto, constitutes the final written expression of
all of the agreements between the parties with respect to the subject
matter hereof, supersedes all correspondence, understandings, discussions
and negotiations concerning the matters specified herein, and specifically
supersedes in its entirety other agreements between Company and Employee.
No addition to or modification of any provision of this Agreement shall be
binding upon any party unless made in writing and signed by the party to be
bound.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
on the date written above.
EXIGENT INTERNATIONAL, INC.
/s/ P. Bradley Walker
-----------------------------------------
Name: P. BRADLEY WALKER
Title: COMP COMMITTEE CHAIRMAN
/s/ B. R. Smedley
-----------------------------------------
Bernard R. Smedley
<PAGE>
Exhibit A
INCENTIVE STOCK OPTION AGREEMENT (PLAN 1Q)
THIS AGREEMENT dated as of the 11th day of June, 1997, (the "Grant Date")
by and between EXIGENT INTERNATIONAL, INC., with its principal office at 1225
Evans Road, Melbourne, Florida 32904 (the "Company"), and Bernard R. Smedley
("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted an Incentive Stock Option Plan (the "Plan
1Q") as defined in Section 422 of the Internal Revenue Code of 1986 to permit
options to purchase shares of the common stock of Exigent International, Inc.,
to be granted to certain key employees of the Company or its subsidiaries; and
WHEREAS, the Optionee is a key employee of the Company or one of its
subsidiaries and the Company desires him/her to remain in such employee by
providing him/her with a means to acquire or to increase his/her proprietary
interest in the Company's success;
NOW, THEREFORE, in consideration of the promises and of the covenants and
agreement set forth, the parties hereby mutually covenant and agree as follows:
1. Subject to the terms and conditions of the Plan 1Q, a copy of which is
attached hereto as Exhibit "A" and made a part hereof, and this
Agreement, the Company grants to the Optionee the option to purchase
from the Company all or any part of an aggregate number of 125,000
shares of Exigent International, Inc.'s Common Shares (30,000,000
authorized shares, par value $0.01) (hereinafter such shares are
referred to as the "Optioned Shares").
2. The price to be paid for the Optioned Shares shall be Two and 25/100
dollars ($2.25) per share, or 110% of current market value whichever
is higher, of the Optioned Shares on the Grant Date, as determined in
good faith by the President of the Company who is in charge of
administering the Plan 1Q. However, if it is determined by a
subsequent Internal Revenue Service audit that the fair market value
of the stock at the time the option was granted exceeded the value
established by the President, then the option value shall be adjusted
to comply with the Internal Revenue Service's determined fair market
value, and such adjusted value shall apply to any and all subsequent
exercise of options.
3. Subject to terms and conditions of the Plan 1Q and this Agreement,
Optioned Shares may be purchased pursuant to this Agreement at any
time and from time to time during a period of three (3) years from the
date hereof, in whole or in part. All options to purchase Optioned
Shares subject to this Agreement must be exercised on or before June
11, 2000 at which time all unexercised options will expire.
4. An option may be exercised only by written notice, delivered or mailed
by postpaid registered or certified mail addressed to the Secretary of
the Company at the corporate headquarters, specifying the number of
Optioned Shares being purchased in cash or its equivalent. Within
three (3) business days following the date of exercise, payment shall
be made in full or by such other payment means as shall be mutually
agreeable. Such purchased shares shall be forthwith delivered to
Optionee.
5. (a) If the Optionee's employment with the Company or any subsidiary of
the Company is terminated for due cause, this Agreement shall
terminate simultaneously therewith and Optionee shall have no further
right to exercise an option thereafter. For purposes of this
paragraph, "due cause" shall be the same as defined in the Employment
Agreement.
(b) If the Optionee ceases to be an employee of the Company or any
subsidiary of the Company for any reason other than (1)
termination for due cause as set forth in paragraph 5(a) above,
or (2) death or disability, the term of any option shall expire
on a date not later than three (3) months after termination.
(c) If the Optionee ceases to be an employee of the Company or any
subsidiary of the Company by reason of disability or death within
the meaning of Section 22(e)(3) of the Internal Revenue Code of
1986, as amended, the term of any option shall expire on a date
which is not later than twelve (12) months following the date of
death or disability.
6. The options herein granted shall not be transferable by the Optionee
otherwise than by will or the laws of descent and distribution, and
may be exercised during the life of the Optionee only by the Optionee,
except as set forth in 5( c) above.
7. If any change is made in the shares subject to the Plan 1Q or any
option granted thereunder (through merger, consolidation,
reorganization, recapitalization, or change in capital structure),
appropriate adjustment shall be made by the Company in the number of
shares and kind of common stock for which options may be or may have
been granted under the Plan 1Q, to the end that such proportional
interest shall be maintained as before the occurrence of such an
event.
8. (a) Optionee acknowledges and understands that the Optioned Shares
have not been registered with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, in reliance upon the
exemption from registration provided in Regulation D of the Act, nor
with any state securities regulatory authority in reliance upon
particular statutory transactional exemptions. As such, the shares
purchased under this Agreement, if exercised, cannot be sold
subsequently or otherwise transferred without prior (1) registration
under the Act and under applicable state law or (2) receipt of an
opinion of counsel for the issuer to the effect that such proposed
sale or other transfer does not affect the exempt status of the
original issuance and sale of these shares and is in compliance with
all applicable state and federal securities laws.
(b) That Optionee will be acquiring the stock for his/her own
investment and personal interest in the Company and not for the
account of any other person, with no intention on his/her part of
affecting a redistribution of such stock or any part thereof.
(c) That Optionee has asked questions and received all answers to
information he/she considers pertinent to form a knowledgeable
opinion about his investment.
(d) That the Optionee understands and acknowledges that he/she shall
not be deemed for any purpose to be a shareholder of the Company
with respect to any of the Optioned Shares, except to the extent
that the options herein granted shall have been exercised with
respect thereto and a stock certified issued therefor.
(e) That the existence of the options herein granted shall not affect
in any way the right or power of Exigent International, Inc. to
make or authorize any or all adjustments, recapitalizations,
reorganizations, or other changes in Exigent International Inc.'s
capital structure or its business, or any merger or consolidation
of the Company or Exigent International, Inc., or any issue of
bonds, debentures, preferred or prior preference stock ahead of
or affecting the common shares of Exigent International, Inc. or
the rights thereof, or dissolution or liquidation of Exigent
International, Inc., or any sale or transfer of all or any part
of their assets or business or any other corporate act or
proceeding, whether of a similar character or otherwise.
(f) That as a condition of the granting of the option(s) herein
granted, the Optionee agrees, for himself/herself, and his/her
Personal Representative, that any dispute or disagreements which
may arise under or as a result of or pursuant to this Agreement
shall be determined by the President in his sole discretion, and
that any interpretation by the President of the terms of this
Agreement shall be final, binding and conclusive.
9. This Agreement shall not confer upon the Optionee any right with
respect to continuance of employment by the Company or its related
corporations, nor shall it interfere in any way with the right of the
Optionee's employer to terminate the Optionee's employment at any
time.
10. As used in this Agreement, the masculine, feminine or neuter gender
and the singular or plural number shall be deemed to include the
others whenever the context so indicates or requires.
11. This Agreement shall be governed and interpreted by the laws of the
State of Florida.
12. This Agreement and any exhibit hereto constitutes the entire agreement
between the parties with respect to the subject matter hereof, and no
change or modification shall be valid unless made in writing and
signed by the party against whom such change or modification is sought
to be enforced.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officer and its corporate seal hereunto affixed, and the
Optionee has hereunto affixed his/her hand the day and year first above written.
EXIGENT INTERNATIONAL, INC.
By: /S/ P. BRADLEY WALKER
----------------------------------
For: The Compensation Committee
It's: Chairman
"The Company"
/S/ DON F. RIORDAN, JR.
- ----------------------------
Secretary)
( S E A L )
/S/ B.R. SMEDLEY
----------------------------------
"The Optionee"
<PAGE>
EXHIBIT B
DUTIES AND RESPONSIBILITIES OF CEO/CHAIRMAN
This is the chief executive officer for the overall company, with overall
responsibility for operating results and growth of the corporation. The Chief
Executive reports to the Board of Directors. Specific responsibilities may
include, but are not limited to: the establishment of long-range plans and
goals, approval of capital projects, major investor relations, measurement of
the performance of top executives, nomination of new officers of the
corporation.
1998 AND 1999 GOALS
1. Increase net after tax earning/share year over year
2. Facilitate the restructuring of Exigent into a Commercial and
Government entity
3. Set strategy and vision for company embodied in a five-year business
plan
4. Grow the company to meet 5-year business plan goals
5. Meet or exceed profit goals of business plan
6. Raise funds for new and existing business
7. Provide professional leadership for the board of directors and the
companies
8. Lead company to be a commercial entity
GOALS AND OBJECTIVES
Meet corporate financial goals $36M in sales and $1.8M in earnings.
Meet staffing requirements required to support sales.
Customer satisfaction rating of at least 80% per feedback survey.
Improve earnings as a % of sales by at least 10%.
<PAGE>
ATTACHMENT #1 TO EXHIBIT B
EXIGENT INTERNATIONAL
MANAGEMENT PERFORMANCE MEASUREMENTS
STI STI FOTO Total STI PRODUCTS**
GOV SYS COMM SYS TAG EXIGENT
Revenue 18,000 17,000 1,000 36,000 -
Pretax Earnings* 918 1,835 162 2,915 (1,079)
Net Earnings 567 1,133 100 1,800 (666)
Budgeted G&A Base 16,583 9,656 246 26,485 309
G&A Budget 2,073 1,980 330 4,382 770
Capital Investment 1,000
* PRETAX EARNINGS SHOULD BE AFTER INTEREST AND UNALLOWABLES.
** STI PRODUCTS NET EARNINGS IS SPLIT EVENLY BETWEEN GOVERNMENT AND COMMERCIAL
<PAGE>
<TABLE>
<CAPTION>
ATTACHMENT #2 TO EXHIBIT B
FIAT WITH 30% AWARD
<S> <C> <C> <C> <C> <C>
PROJECTION FY97 FY98 FY99 FY00 FY01
Total Investment Value (market cap) $16,010,472 $27,900,000 $48,000,000 $82,500,000 $102,000,000
Value Control Stockholders Holdings (2138604) $5,346,510 $7,255,068 $10,040,209 $14,433,255 $15,335,680
Cash Conversion Discount 50% 40% 30% 20% 20%
Cash Employed Growth Capital (300K/year) $125,000 $610,638 $985,897 $1,619,739 $1,721,012
Cash Employed Acquisitions (100K/year) $125,000 $203,546 $281,685 $404,935 $430,253
Value Stock Employed Acquisitions (1M/year) $625,000 $3,392,432 $4,694,749 $6,748,914 $7,170,884
Value Issued Incentive Securities (600K/year) $500,000 $610,638 $2,816,849 $4,049,349 $4,302,530
Budgeted Stock I/O/R (+500K/year) 6,404,189 8,224,189 10,224,169 12,224,169 14,224,189
Control Stockholders' Percent Ownership 33.39% 26.00% 20.92% 17.49% 15.03%
Net Sales Revenue Goals (5%) $30,000,000 $36,000,000 $50,000,000 $65,000,000 $75,000,000
Net After Tax Earnings Goals (15%/year) $(450,000) $1,800,000 $3,000,000 $5,000,000 $6,000,00
Aggregate Dividend Goals $300,000 $839,000 $1,080,000 $1,825,000 $2,220,000
Percent of Net Earnings for Dividend 35.0% 35.5% 36.0% 36.5% 37.0%
Net Worth Buildup $6,109,620 $11,477,236 $19,359,567 $31,308,155 $44,410,304
Book Value Per Share Goals $.95 $1.40 $1.89 $2.56 $3.12
Earnings Per Share Goals $(0.07) $0.22 $0.29 $0.41 $0.42
Guesstimated Price Earnings Ratio 15.0 15.5 16.0 16.5 17.0
</TABLE>
<PAGE>
ATTACHMENT #3 TO EXHIBIT B
BUSINESS OBJECTIVES
FY 98 revenue of $36M
STI Federal revenue of $18M
STI Commercial revenue of $17M
FotoTag revenue of $1M
FY 98 Earnings of $1.8M
STI Federal earnings of $900K STI
Commercial earnings of $800K
FotoTag earnings of $100K
Raise capital for R&D, minimum $5M
Raise price of stock to $5/share
<PAGE>
ATTACHMENT #4 TO EXHIBIT B
1998 EXECUTIVE INCENTIVE PROGRAM
CORPORATE GATE OPENS
If Exigent has:
THEN BONUS OF FOLLOWING % OF BASE SALARY TO BE AVAILABLE TO EACH MANAGER
EARNINGS OF:
$1.4M 15%
$1.7M 30%
$2.0M 45%
$2.3M 60%
$2.6M 90%
$2.9M 100%
The bonus will be split 50% cash and 50% stock, unless the manager prefers it
all in stock.
ADDITIONALLY,
Each manager will have a set of individuals goals covering such areas as
customer relations, employee relations, budget performance, quality goals,
intellectual property creation and management, each tailored to their job
function. In addition, the Division Managers are responsible as follows with the
help of all corporate managers:
SALES REVENUE EARNINGS
STI Commercial $26M $15.5M $2.0
STI Government $26M $21M $1.0
Foto Tag $1M $1M $.5
to permit Corporate Gate to achieve 100% bonus or a pro rata share.
<PAGE>
EXHIBIT C
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
In consideration and as a condition of my employment or continued employment by
Exigent International Inc. and/or by companies which it owns, controls, or is
affiliated with, or their successors in business (the "Company"), I hereby agree
with the Company as follows:
1. PROPRIETARY INFORMATION. I understand that during my employment I
may produce, obtain, make known, or learn about certain information
which has commercial value in the business in which the Company is
engaged and which is treated by the Company as confidential. This
information may have been created, discovered, or developed by the
Company or otherwise received by the Company from third parties
subject to a duty to maintain the confidentiality of such
information. All such information is hereinafter called "Proprietary
Information."
(a) PROPRIETARY INFORMATION DEFINED. By way of illustration, but not
limitation, "Proprietary Information" includes trade secrets,
ideas, processes, formulas, source codes, data, programs, other
original works of authorship, know-how, improvements,
discoveries, developments, designs, inventions, techniques,
marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices,
costs, and customers and supplier lists.
(b) ASSIGNMENT AND PROTECTION OF PROPRIETARY INFORMATION. I
understand that all Proprietary Information shall be the sole
property of the Company and its assigns (or, in some cases, its
clients, suppliers, or customers), and the Company and its
assigns (or in some cases, its clients, suppliers, or customers)
shall be the sole owner of all patents, copyrights, and other
rights in connection therewith. I hereby assign to the Company
any rights I may have or acquire in such Proprietary Information.
At all times, both during my employment by the Company and after
its termination, I will keep in strictest confidence and trust
all Proprietary Information, and I will not use, reproduce, or
disclose any Proprietary Information without the written consent
of the Company, except as may be necessary in the ordinary course
of performing my duties as an employee of the Company.
(c) MAINTENANCE OF RECORDS. I agree to keep and maintain adequate and
current records of all proprietary information developed by me
(in the form of notes, sketches, drawings and as may be specified
by the Company) which records shall be available to and remain
the sole property of the Company at all times.
2. INVENTIONS DURING AND IMMEDIATELY AFTER MY TERM OF EMPLOYMENT. I
understand that during my employment or following my employment, I
may make, conceive of, or reduce to practice various discoveries,
developments, designs, improvements, inventions, formulas,
processes, techniques, programs, other works of authorship,
know-how, and data (all of which shall be referred to as
"inventions" throughout this Agreement, whether or not patentable or
registrable under copyright, mask work, or similar statutes).
(a) ASSIGNMENT OF INVENTIONS. I hereby assign and transfer to the
Company my entire right, title, and interest in and to all
inventions made or conceived or reduced to practice by me, either
alone or jointly with others, during the period of my employment
with the Company, except for those inventions which I have
developed entirely on my own time without using the Company's
equipment, supplies, facilities, or trade secret information
excluding those inventions that either: (1) relate at the time of
conception or reduction to practice of the invention to the
business, or actual or demonstrably anticipated research or
development of the Company; or (2) result from any work performed
by me for the Company. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others)
within the scope of my employment and which are protectable by
copyright are "works made for hire," as that term is defined in
the U.S. Copyright Act as in effect as of this date. I will, at
the Company's request, promptly execute a written assignment of
title to the Company for any such invention and I will preserve
any such invention as confidential information of the Company.
Notwithstanding the foregoing, I also hereby assign and transfer
to, or as directed by, the Company all my right, title, and
interest in and to any and all inventions, full title to which is
required to be in the United States by a contract between the
Company and the United States or any of its agencies.
(b) MAINTENANCE OF RECORDS. I agree to keep and maintain adequate and
current records of all inventions made by me (in the form of
notes, sketches, drawings and as may be specified by the Company)
which records shall be available to and remain the sole property
of the Company at all times.
(c) DISCLOSURE OF INVENTIONS. I will promptly disclose in writing to
the Company all inventions made or conceived or reduced to
practice by me, either alone or jointly with others, during the
period of my employment, and for six months after termination of
my employment with the Company.
(d) EXECUTION OF DOCUMENTS. I further agree as to all inventions to
assist the Company in every proper way (but at the Company's
expense) to obtain and from time to time enforce patents,
copyrights, mask works, and other rights and protections relating
to inventions in any and all countries, and to that end I will
execute all documents for use in applying for and obtaining such
patents, copyrights, mask works, and other rights and protections
on and enforcing inventions as the Company may desire, together
with any assignments thereof to the Company or persons designated
by it. My obligation to assist the Company in obtaining and
enforcing patents, copyrights, mask works, and other rights and
protections relating to inventions in any and all countries shall
continue beyond the termination of my employment, but the Company
shall compensate me at a reasonable rate after such termination
for time actually spent by me at the Company's request on such
assistance. In the event the Company is unable, after reasonable
effort, to secure my signature on any document or documents
needed to obtain or enforce any patent, copyright, mask work, or
other right or protection relating to any inventions, whether
because of my physical or mental incapacity or for any other
reason whatsoever, I hereby irrevocably designate and appoint the
Company and its duly authorized officers and agents as my agent
and attorney-in-fact, to act for and in my behalf and stead to
execute and file any application or assignment and to do all
other lawfully permitted acts to further the prosecution and
issuance to the Company of patents, copyrights, mask works, or
similar protections thereon with the same legal force and effect
as if executed by me.
3. PRIOR INVENTIONS. I understand that all inventions, if any, patented or
unpatented, which I made prior to my employment by the Company, are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth in Item 1 of Exhibit A attached hereto and
made a part hereof a complete list of all of my prior inventions, including
numbers of all patents and patent applications, and a brief description of
unpatented inventions which are not the property of a previous employer. I
represent and covenant that the list is complete and that, if no items are
on the list, I have no such prior inventions. I agree to notify the Company
in writing before I make any disclosure or perform any work on behalf of
the Company which appears to threaten or conflict with proprietary rights I
claim in any invention or idea. In the event of my failure to give such
notice, I agree that I will make no claim against the Company with respect
to any such inventions or ideas.
4. CONFLICTING EMPLOYMENT OBLIGATIONS.
(a) TRADE SECRETS OF OTHERS. I represent that I have not brought and will
not bring with me to the Company or use in the performance of my
responsibilities at the Company any devices, materials, or documents
of a former employer that are not generally available to the public,
unless I have obtained express written authorization from the former
employer for their possession and use. The only devices, materials,
documents of a former employer that are not generally available to the
public that I will bring to the Company or use in my employment are
identified on Item 2 of Exhibit A attached hereto, and as to each such
item, I represent that I have obtained express written authorization
for their possession and use in employment with the Company and have
delivered a copy of such written authorization to the Company.
(b) CONFLICTING CONFIDENTIALITY AGREEMENTS. I agree that during my
employment with the Company, I will not breach any obligation of
confidentiality that I have to former employers. I represent that any
performance under the terms of this Agreement and as an employee of
Company does not and will not breach any agreement to keep in
confidence proprietary information acquired by me in confidence or in
trust prior to employment by the Company. I have not entered into, and
I agree I will not enter into, any agreement either written or oral in
conflict herewith.
5. GOVERNMENT CONTRACTS. I acknowledge that the Company from time to time may
be involved in government projects of a highly classified nature. I further
acknowledge that the Company from time to time may have agreements with
other persons or governmental agencies which impose obligations or
restrictions on the Company regarding inventions made during the course of
work thereunder or regarding the confidential nature of such work or
information disclosed in connection therewith. I agree to be bound by all
such obligations and restrictions and to take all action necessary to
discharge the obligations of the Company thereunder.
6. TERMINATION OF EMPLOYMENT. In the event of the termination of my employment
by me or by the Company for any reason, I will deliver to the Company all
documents, notes, drawings, specifications, programs, data, devices, and
other materials of any nature pertaining to my work with the Company and I
will neither take with me nor recreate any of the foregoing, any
reproduction of any of the foregoing, or any Proprietary Information that
is embodied in a tangible medium of expression.
7. MODIFICATION. This Agreement may not be changed, modified, released,
discharged, abandoned, or otherwise amended, in whole or part, except by an
instrument in writing, signed by myself and the Company. I agree that any
subsequent change or changes in my duties, salary, or compensation shall
not affect the validity or scope of this Agreement.
8. ENTIRE AGREEMENT. I acknowledge receipt of this Agreement and agree that
with respect to the subject matter hereof it is my entire agreement with
the Company, superseding any previous oral or written communications,
representations, understandings, or agreements with the Company or any
officer or representative.
9. SEVERABILITY. In the event that any paragraph or provision of this
Agreement shall be held to be illegal or unenforceable, such paragraph or
provision shall be severed from this Agreement and the entire Agreement
shall not fail on account thereof, but shall otherwise remain in full force
and effect.
10. SUCCESSOR AND ASSIGNS. This Agreement shall be binding upon my heirs,
executors, administrators, or other legal representatives and is for the
benefit of the Company, its successors, and assigns.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
12. COUNTERPARTS. This Agreement may be signed in two counterparts, each of
which shall be deemed an original and both of which shall together
constitute one agreement.
13. I agree that the Company may make known to others either during or
subsequent to my employment the existence of this Agreement and the
provisions of all or any part thereof.
IN WITNESS WHEREOF, THIS AGREEMENT has been executed as of this 11th day of
June, 1997 and is effective from January 3, 1979.
By: /S/ DON F. RIORDAN, JR.
----------------------------------
Name: DON F. RIORDAN, JR.
Title: SECRETARY/TREASURER
ACCEPTED AND AGREED TO:
EXIGENT INTERNATIONAL, INC.
By: /S/ B.R. SMEDLEY
----------------------------------
Title: CEO
<PAGE>
EXHIBIT A
To
Proprietary Information and
Inventions Agreement
Exigent International, Inc.
1225 Evans Road
Melbourne, FL 32904
Gentlemen:
The following is a complete list of all inventions or improvements
relevant to the subject matter of my employment by Exigent
International, Inc. (the "Company") that have been made or conceived
or first reduced to practice by me alone or jointly with others
prior to my engagement by the Company:
No inventions or improvements See below:
Additional sheets attached.
2. I propose to bring to my employment the following devices,
materials, and documents of a former employer that are not generally
available to the public, which materials and documents may be used
in my employment pursuant to the express written authorization of my
former employer (a copy of which is attached hereto):
No materials
See below:
Additional sheets attached.
Very truly yours,
Name:
<PAGE>
Exhibit D
NON-DISCLOSURE AND
NON-COMPETITION AGREEMENT
This Non-Disclosure and Non-Competition Agreement dated June 11, 1997 is between
EXIGENT INTERNATIONAL, INC., with its principal office at 1225 Evans Road,
Melbourne, Florida 32904 (the "Company") and Bernard R. Smedley, with a
residence at 295 Hwy A1A, #205, Satellite Beach, FL 32937 ("Employee").
1. Consideration. Employee has agreed to enter into this Agreement in
consideration of: the Company's engagement of Employee as an employee under
the terms of the Employment Agreement ("Employment Agreement") of even date
between the Company and Employee; the Company's agreement to grant stock
options to Employee under its Incentive Stock Option Plan of even date
between the Company and Employee.
2. Non-Disclosure Obligations.
(a) In Employee's position as Chairman and Chief Executive Officer of the
Company, he will have access to:
(i) information ("Confidential Business Information") relating to the
business plans of the Company and treated as confidential,
including without limitation, information relating to the
Company's investors, capitalization, marketing plans and
strategies, product concepts, product development status,
material agreements, plans for raising capital, target customers
and markets, pricing policies, finances, financial information of
the Company, customer lists; and
(ii) information of a proprietary nature relating to the technology
and products of the Company ("Confidential Proprietary
Information") including without limitation, information relating
to the technology developed or to be developed by the Company
relating to the Company's products and other matters, trade
secrets, research and development activities, technical,
engineering and scientific data, specifications, and patent
applications or patents.
(The Confidential Business Information and Confidential
Proprietary Information is sometimes collectively referred to
herein as "Confidential Information") or confidential information
relating to the organization, research and development
activities, marketing plans and strategies, pricing policies,
technical and scientific data, specifications, patent
applications or patents, customer lists and accounts, business,
finances or financial information of the Company.
(b) Employee agrees that he will not at any time during (i) his employment
by the Company and during any time period he is receiving severance
pay from the Company, including extended periods under Section 4(f)
herein, and (ii) for one year thereafter, reveal to any person,
association or company any of the Company's Confidential Business
Information, so far as such Confidential Business Information has come
or may come to his knowledge, except as may be required in the
ordinary course of performing his duties as an officer of the Company
or as may be in the public domain through no fault of Employee or as
may be required by law.
(c) Employee hereby agrees that he will not at any time, whether during or
after the termination of his employment, reveal to any person,
association or company any of the Company's Confidential Proprietary
Information, so far as to his knowledge, except as may be required in
the ordinary course of performing his duties as an officer of the
Company or as may be in the public domain through no fault of Employee
or as may be required by law.
(d) Employee agrees to keep in confidence and secret all matters of such
nature entrusted to him and he shall not use or attempt to use any
such information in any manner which may injure or cause loss to the
Company, whether directly or indirectly.
(e) Employee acknowledges the critical importance of the Confidential
Information to the Company's business operations and plans. Employee
acknowledges that unauthorized disclosure or use of any of the
Confidential Information (in particular trade secrets and technical
proprietary information) would cause significant and irreparable
damage to the Company and would jeopardize the Company's business and
financial condition.
(f) Nothing herein shall be construed as granting to Employee any right or
license under any copyrights, inventions, or patents now or hereafter
owned or controlled by the Company or any right to employment by the
Company.
(g) In the event Employee's employment is terminated for any reason,
Employee shall return all Confidential Information in his possession,
together with any copies, to the Company.
3. Non-Competition. Employee agrees and acknowledges that the products and
services to be sold and rendered by the Company are different in character
and are of particular significance to the Company, and that the Company is
in a competitive business. Due to the proprietary and specialized nature of
the Company's business, Employee agrees to the following:
(a) "Non-Competition Period" (as defined in Section 3(e)) Employee shall
not, directly or indirectly, induce, influence, combine or conspire
with, or attempt to induce, influence, combine or conspire with, any
of the officers, employees or consultants of the Company to terminate
their employment or relationship with the Company.
(b) During his employment and thereafter during the applicable
"Non-Competition Period" (as defined in Section 3(e)), Employee shall
not, directly or indirectly, induce, or attempt to induce, any of the
customers or suppliers of the Company to terminate their relationship
with the Company.
(c) During his employment and thereafter during the applicable
"Non-Competition Period (as defined in Section 3(e)), Employee agrees
that he will not voluntarily or involuntarily, for any reason
whatsoever, directly or indirectly, individually or on behalf of
persons not now parties to this Agreement, or as a partner,
stockholder, director, officer, principal, agent, broker, licensor,
employee, or in any other capacity or relationship, engage in any
business or employment, or aid or endeavor to assist any business or
legal entity, which is in competition with the products and/or
services of the Company; provided, however, this Section 3(c) shall
not be deemed to prevent Employee from working after termination of
the applicable Non-Competition Period in any areas or division within
the applicable industry. The ownership by Employee of not more than
five percent (5%) of shares of stock of any corporation having a class
or equity securities actively traded on a national securities exchange
or NASDAQ shall not be deemed, in and of itself, to violate this
Section 3(c ) .
(d) Employee agrees not to do or say anything that reasonably may be
expected to have the effect of disparaging the Company or diminishing
or impairing the goodwill and reputation of the Company and the
services it provides. Likewise, the Company agrees not to do or say
anything that reasonably may be expected to have the effect of
disparaging the Employee or diminishing or impairing the reputation of
the Employee.
(e) If, in any judicial proceedings a court shall refuse to enforce any of
the other separate covenants set forth in this Section 3, then such
unenforceable covenant shall be amended to relate to such lesser
period or geographical areas as shall be enforceable or, if deemed
appropriate by such court, deemed eliminated from these provisions for
the purpose of those proceedings to the extent necessary to permit the
remaining separate covenants to be enforced.
(f) Under the terms of the Employment Agreement, Employee is entitled to
receive severance pay in the event his employment is terminated by the
Company without due cause. In the event Employee's employment is
terminated for any reason whatsoever,
(i) during the first year of his employment, then the applicable
Non-Competition Period for Section 3(a), (b) and (c) will be
eighteen (18) months; or
(ii) during the second year of his employment, then the applicable
Non-Competition Period for Section 3(a), (b) and (c) will be
twelve (12) months; or
(iii)during the third year of his employment, then the applicable
Non-Competition Period for Section 3(a), (b) and (c) will be six
(6) months; or
(iv) by expiration of the Term or otherwise, at any time after the
third anniversary of his employment, then the applicable
Non-Competition Period for Sections 3(a), (b) and (c) will be
three (3) months.
(g) Notwithstanding the foregoing, the Company may, at its option, elect
to extend the applicable Non-Competition Period by up to twelve (12)
additional months by payment to Employee of additional severance pay
equal to his salary in effect at the date of termination of his
employment for such time period. Payments will be made in accordance
with the Company's normal pay periods for as long as the Company
elects to so extend the Non-Competition Period. Employee hereby agrees
to accept such payments as compensation for such extension of the
applicable Non-Competition Period.
(h) Company and Employee hereby acknowledge that:
(i) Company's market for its products is unlimited geographically and
the foregoing noncompetition and non-solicitation requirements
shall be applied on a worldwide basis;
(ii) the duration and geographical limitations imposed with respect to
said noncompetition and non-solicitation requirements are
reasonable;
(iii)the restrictions stated hereinabove are reasonably necessary for
the protection of Company's legitimate proprietary interests.
(i) Employee represents and warrants that his/her experience and
capabilities are such that the restrictive covenants set forth herein
will not prevent him/her from earning his/her livelihood and that
Employee will be fully able to earn an adequate livelihood for
himself/herself and his/her dependents if any such provisions should
be specifically enforced against Employee.
(j) The non-competition and non-solicitation obligations contained herein
shall be extended by the length of time during which Employee shall
have been in breach of any said provisions and during any time the
Company is required to seek compliance by judicial proceeding.
4. Specific Remedies. In addition to any other remedy provided herein or
contemplated under law, and not as liquidated damages, in the even Employee
breaches any material covenant of this Agreement, such breach will
constitute "due cause" for termination of his employment under the
Employment Agreement and the Company shall have the right, but not the
obligation, to purchase from Employee and Employee shall have the
obligation to sell to the Company any or all of the shares of Common Stock
of the Company at a purchase price equal to Employee's cost for such
shares. Such right shall be exercised by written notice to Employee within
sixty (60) days of establishment by consent, judicial decision or
arbitration that Employee so breached this Agreement. Any of Employee's
permitted transferees will be obligated to sell to the Company Common Stock
shares of the Company held by them in the event the Company exercises this
right to purchase.
5. Notices. Any notice required or permitted hereunder shall be in writing and
shall be sufficiently given if personally delivered, delivered by facsimile
telephone transmission, delivered by express delivery service (such as
Federal Express), or mailed first class U.S. mail, postage prepaid,
addressed as follows:
If to Employee:
Bernard R. Smedley
295 Hwy A1A, #205
Satellite Beach, FL 32937
If to the Company:
Exigent International, Inc.
1225 Evans Road
Melbourne, FL 32904
Attn: Legal Counsel
(or such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so
delivered or three (3) days after mailing for domestic mail and seven (7)
days for international mail.
6. Binding Effect; Benefits. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns. Notwithstanding anything contained in this Agreement to the
contrary, nothing in the Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
heirs, successors, executors, administrators or assigns any right,
remedies, obligations or liabilities under or by reason of this Agreement.
7. Entire Agreement. This Agreement constitutes the final written expression
of all the agreements between the parties with respect to the subject
matter hereof. No addition to or modification of any provision of this
Agreement shall be binding upon any party unless made in writing and signed
by the party to be bound.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida, without
reference to principles of conflict of laws.
9. Headings. Headings of the Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
10. No Conflict. Employee represents and warrants that performance of the terms
of this Agreement, including but not limited to Sections 2 and 3 hereof, to
the best of his actual knowledge will not breach any agreement entered into
by Employee, and Employee agrees that he will not enter into any agreement
in conflict herewith. Employee further covenants that
(a) he shall not in the performance of his duties under the Employment
Agreement or hereunder (and the performance of such duties shall not
require him to) utilize any proprietary or confidential information
owned by any third party which he is prohibited from utilizing by
reason of agreement or applicable law, and
(b) he shall not at any time disclose to the Company any proprietary or
confidential information owned by any third party which he is
prohibited from disclosing by reason of agreement or applicable law.
11. Specific Performance. Employee acknowledges and agrees that a breach of his
obligations under this Agreement, including but not limited to Section 2
and 3, will result in irreparable and continuing harm to the Company, for
which there will be no adequate remedy at law (it being understood and
agreed that the Company's remedy under Section 4 herein is not exclusive or
adequate), and agrees that in the event of any breach of this Agreement the
Company, its successors and assigns shall be entitled to injunctive relief
without the necessity of posting bond or other security therefor and
without the necessity of proving irreparable harm, and to such other and
further relief as may be proper.
12. Severablility. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case in all cases,
such circumstances shall not have the effect of rendering such provision
invalid in any other case or of rendering any of the other provisions of
this Agreement inoperative, unenforceable or invalid.
13. Assignability. Employee may not assign any of his rights or obligations
hereunder without the prior written consent of the Company, which may be
withheld in its sole discretion.
14. Waiver. The failure or delay of the Company at any time to require
performance by Employee of any provision of this Agreement, even if known,
shall not affect the right of the Company to require performance of that
provision or to exercise any right, power or remedy hereunder, and any
waiver by the Company of any breach of any provision of this Agreement
should not be construed as a waiver of any continuing or succeeding breach
of such provision, a waiver of the provision itself, or a waiver of any
right, power or remedy under this Agreement. No notice to or demand on
Employee in any case shall, of itself, entitle Employee to any other or
further notice or demand in similar or other circumstances.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
on the date written above.
EXIGENT INTERNATIONAL, INC.
P. Bradley Walker
--------------------------
Name: P. BRADLEY WALKER
Title: Compensation Committee Chairman
/s/ B.R. Smedley
--------------------------
Name: Bernard R. Smedley
Title: Chairman and Chief Executive Officer
<PAGE>
EXHIBIT E
CONFIDENTIAL NATURE OF COMPANY AFFAIRS
PURPOSE:
It is the policy of Exigent International Inc. (Exigent) that the internal
business affairs of the organization, particularly confidential information and
trade secrets, represent proprietary assets that each employee has a continuing
obligation to protect.
POLICY:
1. CONFIDENTIAL INFORMATION. Information designated as confidential is to
be discussed with no one outside the organization and only discussed
within the organization on a "need to know" basis. In addition,
employees have a responsibility to avoid unnecessary disclosure of
nonconfidential internal information about Exigent, its customers, and
its suppliers. This responsibility is not intended to impede normal
business communications and relationships, but is intended to alert
employees to their obligations to use discretion to safeguard internal
Exigent affairs.
2. VIOLATION OF UNAUTHORIZED ACCESS. Employees authorized to have access
to confidential information must treat the information as proprietary
Exigent property for which they are personally responsible. Employees
are prohibited from attempting to obtain confidential information for
which they have not received authorization. Employees violating this
policy will be subject to discipline, up to and including termination
and may be subject to legal action.
3. MEDIA/INQUIRIES. All media inquiries and other inquiries of a general
nature should be referred to the President or CEO. Also, all press
releases, publications, speeches, and other official declarations must
be approved in advance by the President, Inquiries seeking information
concerning current or former employees should be referred to the
Personnel Department.
4. DISCUSSIONS WITH COMPETING COMPANIES AND EXIGENT CONFIDENTIALITY.
Employees are not to discuss with the officers, directors, or
employees of competing companies any topics which might give the
impression of an illegal agreement in restraint of trade. Such topics
include pricing agreements, customer allocation, and division of sales
territories.
5. MATERIAL INSIDE INFORMATION. Employees are prohibited from disclosing
"material inside" information, that could affect the market value of
Exigent's financial securities, to anyone outside the organization
until such information has been made available to the public by
management. Employees are also prohibited from using such information
for their own personal profit.
I, B. R. SMEDLEY, hereby acknowledge I have read and fully understand the above
(Print Name)
policy and agree to comply with all terms, conditions and/or requirements as
stated.
/S/ B.R. SMEDLEY JUNE 11, 1997
- -------------------------------- Date
Employee Signature
Exhibit 10.16
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of June 11, 1997 between
Exigent International Inc., a Delaware Corporation (the "Company") and Don F.
Riordan, Jr. (the "Employee").
WHEREAS, Company has determined that it would be desirable and in the best
interests of Company to continue to employ Employee, and Employee wishes to
continue his employment with Company.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereinafter contained, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, Company and Employee agree
as follows:
1. EMPLOYMENT. Company hereby employs the Employee and the Employee hereby
accepts employment upon the terms and conditions set forth in this
Agreement. Employee will serve as Exigent Chief Financial Officer of
Company, at the discretion of the Company's Chief Executive Officer
("CEO").
2. TERM. Unless sooner terminated as set forth herein, the term of this
Agreement ("Term") shall begin on the business day this Agreement is
executed (the "Commencement Date"), and end at midnight on the third
anniversary of the commencement date, unless extended. The Term may be
extended by mutual written agreement of the Company and Employee provided
the parties shall agree in writing at least three months' prior to
expiration of the Term.
3. COMPENSATION.
(a) For all services rendered by the Employee under this Agreement, the
Company shall pay and Employee shall accept an annual salary of
NINETY-TWO THOUSAND and NO/100 DOLLARS ($92,000) per annum or lesser
amount, on a pro rata basis, for any period less than a full year.
This compensation shall be payable to Employee in equal installments
in accordance with the Company's normal pay periods, and shall be
subject to all appropriate withholding taxes.
The annual salary payable to Employee will be subject to upward
adjustment as determined by Company's management and approved by the
Board of Directors in the event that Company generates annual revenues
equal to or greater than that specified in an approved three-year plan
(the "Plan").
(b) In addition to the compensation provided for in Section 3(a), Employee
shall be granted options to purchase up to 50,000 shares of the common
stock, $.01 par value per share, of Company (the "Common Stock"), at
an exercise price of $2.25 per share or 110% of current market value
whichever is higher and on the terms and conditions described in the
Incentive Stock Option Agreement, which Employee agrees to sign,
attached hereto as Exhibit A and incorporated herein by this
reference.
(c) Provided that Employee has not been terminated for due cause (as that
term is defined below in Section 8), in addition to the compensation
provided for in Section (3) (a) above, Company shall grant to Employee
options to purchase an additional 46,000 shares of Common Stock at an
exercise price of $2.25 per share or 110% of current market value
whichever is higher if Company shall receive on or prior to February
1, 1998. (See annual Executive Incentive Plan), including
(i) earnings of at least $2.9 million or prorated in accordance
with the approved Executive Incentive Plan for 1998; or
(ii) new funding for Company of at least $5,000,000, including long
term (at least 5 years) subordinated debt or equity or a
combination of both.
The Board of Directors may, in its sole discretion, award part or all
of the options to purchase such 46,000 shares of Common Stock even if
none of the foregoing conditions are achieved on or prior to February
1, 1998. If and to the extent any such options are awarded pursuant to
this Section 3(c), they shall be awarded on the terms and conditions
described in the form of the Incentive Stock Option Agreement, except
that the amount of Common Stock subject thereto shall be adjusted to
reflect the amount to which Employee is then entitled.
(d) In addition to the compensation provided for in Sections 3(a), (b) and
(c) hereof, Employee shall also be entitled to the following during
the Term of this Agreement:
(i) Four weeks paid vacation annually initially and additional
vacation as appropriate in accordance with Company policy to be
adopted, provided that Employee will endeavor to schedule his
vacation to avoid conflicts with his duties hereunder. During
the term of his employment under the Agreement, Employee shall
be entitled to the holidays and sick leave afforded and
permitted by Company to other employees;
(ii) at Employee's option, group medical insurance and dental
insurance of the kind and to the extent offered from time to
time during the Term of this Agreement to other employees of
Company;
(iii)long-term disability insurance, providing for benefits equal to
66 2/3% of Employee's monthly salary to a maximum of $6,000
(Company will continue to pay Employee's full salary during
periods of short-term disability);
(iv) participation in Company's 401(k) plan, on such terms and
conditions as such participation is made generally available to
all employees of Company;
(v) such other benefits, such as pension, profit sharing,
insurance, short-term disability made generally available by
Company, in its sole discretion, now or in the future to all of
its employees; and
(vi) such other benefits, if any, which the Board of Directors, in
its sole discretion, may make available to Employee.
4. DUTIES; AUTHORITY.
(a) During the Term, Employee shall perform those services reasonably
requested by his immediate manager and the CEO in a manner and to an
extent which will allow the Company to benefit from Employee's
experience in and knowledge of the industry in which the Company is
engaged and as specified in greater detail in Exhibit B attached
hereto and incorporated herein by this reference. During the Term,
Employee shall devote his full professional time, attention, skill and
energy to the business, welfare and affairs of the Company. While
serving as Exigent Chief Financial Officer, Employee shall have the
authority and responsibility to devise and implement strategies and
operations and to supervise and manage all employees in his/her
business unit as shown on the corporate organizational chart approved
by the Board of Directors on June 11, 1997 which is set forth as
Attachment 1 to Exhibit B. Such organization chart may be modified by
the CEO in his discretion after collaboration from Employee. Employee
shall use his best efforts in the performance of his duties hereunder
and to promote the interests of the Company and its present and future
subsidiaries and affiliates. Employee agrees to abide by all rules and
regulations of Company as established or amended from time to time.
(b) The parties agree that Employee may not, without the prior written
consent of Company, be engaged in any other business activity without
Company's prior written consent, whether or not such activity is
pursued for gain, profit or other pecuniary advantage; provided,
however, that subject to the Non-Disclosure and Non-Competition
Agreement set forth in Exhibit D. Employee may passively invest his
personal assets in businesses where the form or manner of such
investment will not require services on the part of Employee.
5. BUSINESS EXPENSES AND REIMBURSEMENTS. Employee shall further be entitled to
reimbursement by Company for other ordinary and necessary business expenses
incurred by Employee in the performance of his duties hereunder, and
further provided that:
(a) Each such expenditure is of a nature qualifying it as a proper
deduction on the federal and state income tax returns of the Company
as a business expense and not as deductible compensation to the
Employee; and
(b) Employee furnishes the Company with adequate records and other
documentary evidence required by federal and state statutes and
regulations for the substantiation of such expenditures as deductible
business expenses of the Company and not as deductible compensation to
the Employee.
Employee agrees that if, at any time, any payment made to the Employee
by the Company as a business expense reimbursement for a particular
item shall be disallowed in whole as a deductible expense to the
Company by the appropriate taxing authorities, Employee shall
reimburse Company to the full extent of such disallowance if so
requested by the Company in writing.
6. PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. As a condition to his
employment hereunder, Employee agrees to execute and deliver to Company a
Proprietary Information and Inventions Agreement in the form attached
hereto as Exhibit C and incorporated herein by this reference.
7. NON-DISCLOSURE AND NON-COMPETITION AGREEMENT. As a condition to his
employment hereunder, Employee agrees to execute and to deliver to the
Company a Non-Disclosure and Non-Competition Agreement in the form attached
hereto as Exhibit D and incorporated herein by this reference.
8. TERMINATION.
(a) This Agreement may be terminated at any time prior to expiration of
the Term (i) by Employee upon sixty (60) days' prior written notice to
the Company, (ii) upon the disability (defined to mean the inability
of Employee to engage in substantial employment duties by reason of
any medically determinable physical or mental impairment for a
continuous period of 60 days) of Employee, (iii) by the Company for
"due cause" at any time (iv) by the Company without "due cause" at any
time upon fifteen (15) days' prior written notice to the Employee.
(b) In the event of termination pursuant to Section 8(a)(i), or Section
8(a)(iii), the Company shall not be obligated to make any severance
payments or any other further payments hereunder, except with respect
to accrued but unpaid compensation and reimbursements owed Employee
for expenses incurred prior to the effective date of termination. For
purposes of Section 8, "due cause" shall mean personal dishonesty,
willful misconduct, breach of a fiduciary duty involving personal
profit, willful violation of any law, rule, regulation (other than a
law, rule or regulation relating to offenses or misdemeanors unrelated
to any of the foregoing or to the Company's business) or final cease
and desist order, or material breach of any provision of this
Agreement, including but not limited to Employee's obligations under
Sections 4 hereof or a material breach of any of Employee's
obligations under Proprietary Information and Inventions Agreement
attached hereto as Exhibit C or under the Non-Disclosure and
Non-Competition Agreement attached hereto as Exhibit D.
(c) In the event of termination by the Company pursuant to Section
8(a)(iv) (i.e., without due cause), then in addition to any amounts to
which Employee is entitled under Section 8(b), Employee shall also be
entitled to receive severance pay as follows:
(i) If Employee is so terminated without due cause within the first
twelve months of the Term ("First Year"), an amount equal to
eighteen (18) months' salary, based on the then current salary
of Employee as of the effective date of termination, payable in
equal installments in accordance with Company's normal pay
periods for Employee (i.e. weekly, bi-weekly or monthly)
beginning one pay period after the effective date of
termination;
(ii) If Employee is so terminated without due cause within the
second twelve months of the Term ("Second Year"), an amount
equal to twelve (12) months' salary, based on the then current
salary of Employee as of the effective date of termination,
payable in equal installments in accordance with Company's
normal pay periods for Employee beginning one pay period after
the effective date of termination;
(iii)If Employee is so terminated without due cause within the third
twelve months of the Term ("Third Year"), an amount equal to
six (6) months' salary, based on the then current salary of
Employee as of the effective date of termination, payable in
equal installments in accordance with Company's normal pay
periods for Employee beginning one pay period after the
effective date of termination; and
(iv) If Employee is still employed by Company after the Third Year,
and (in the absence of any superseding arrangement with
Company, whether pursuant to renewal of this Agreement or
otherwise) is so terminated without due cause, an amount equal
to three (3) months' salary, based on the then current salary
of Employee as of the effective date of termination, payable in
equal installments in accordance with Company's normal pay
periods for Employee beginning one pay period after the
effective date of termination.
(d) In the event of termination by the Company pursuant to Section
8(a)(iv) (i.e. without due cause), Employee shall also be entitled to
receive, at his option and upon his written request, group medical
insurance as described in Section 3(d)(ii) during the period Employee
is entitled to receive severance pay under Section 8(d) plus, if
applicable, any additional extension of the applicable
"Non-Competition Period" (as defined in the Non-Disclosure and
Non-Competition Agreement, pursuant to Section 3(g) of such
agreement).
(e) In the event of termination upon Employee's disability pursuant to
Section 8(a)(ii), the Company agrees to continue Employee's regular
salary payments from the date of termination through the date the
insurance company commences long term disability insurance payments or
denies coverage. In the event long term disability coverage is denied
due to admitted or proven fraud on behalf of the Employee, the Company
will have no severance payment obligations to Employee. If coverage is
denied for any other reason, Employee's termination will be treated as
termination without due cause under Section 8(a)(iv) and Employee will
be entitled to severance pay under Section 8(c) provided any such
regular salary payments made by Company to Employee under this Section
8(e) will be credited against Company's severance payment obligations.
(f) Notwithstanding anything to the contrary set forth in this Agreement,
in the event that Employee dies during the Term of this Agreement or
any extension thereof, this Agreement shall terminate upon the date of
such death, provided that in the event of Employee's death during the
Term of this Agreement or any extension thereof the Company shall
continue to pay Employee's salary for a period of ninety (90) days
following the date of death to the executor or administrator of the
Employee's estate, except in no event shall the Company be liable for
the payment of any such death benefit which exceeds the maximum
severance payment obligations pursuant to Section 8(e) above.
9. NOTICES. Any notice required or permitted hereunder shall be in writing and
shall be sufficiently given if personally delivered, delivered by facsimile
telephone transmission, delivered by express delivery service (such as
Federal Express), or mailed first class U.S. mail, postage prepaid,
addressed as follows:
If to the Employee:
Don F. Riordan, Jr.
414 La Costa Street
Melbourne Beach, FL 32951
If to the Company:
Exigent International Inc.
1225 Evans Road
Melbourne, FL 32904
Attn: Legal Counsel
(or to such other address as any party shall specify by written
notice so given), and shall be deemed to have been delivered as of
the date so delivered or three (3) days after mailing for domestic
mail and seven (7) days for international mail.
10. BINDING EFFECT; BENEFITS. This Agreement shall be binding upon and shall
inure to the benefit of this parties hereto and their respective successors
and assigns, if any. Notwithstanding anything contained in this Agreement
to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators or assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida, without
reference to principles of conflict of laws.
12. HEADINGS. Headings of the Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
13. NO CONFLICT. Employee represents and warrants that performance of the terms
of this Agreement, and the terms of any agreement attached hereto as an
Exhibit, to the best of his actual knowledge, will not breach any agreement
entered into by Employee, and Employee agrees that he will not enter into
any agreement in conflict with this Agreement and the agreements attached
as Exhibits. Employee further covenants that (i) he shall not in the
performance of his duties hereunder (and the performance of such duties
shall not require him to) utilize any proprietary or confidential
information owned by any third party which he is prohibited from utilizing
by reason of agreement or applicable law, and (ii) he shall not at any time
disclose to Company any proprietary or confidential information owned by
any third party which he is prohibited from disclosing by reason of
agreement or applicable law.
14. INJUNCTIVE RELIEF. Employee acknowledges and agrees that a breach of his
obligations under this Agreement, and any agreement attached hereto as an
Exhibit or any other exhibit or attachment hereto, will result in
irreparable and continuing harm to the Company, for which there will be no
adequate remedy at law, and agrees that in the event of any breach or
prospective breach of this Agreement, the Company, its successors and
assigns will be entitled to injunctive relief in any federal or state court
of competent jurisdiction residing in the State of Florida without the
necessity of posting bond or other security therefor and without the
necessity of proving irreparable harm, and to such other and further relief
as may be proper. Employee hereby submits to the jurisdiction of the
preceding courts for the purposes of any actions or proceedings instituted
by the Company to obtain such injunctive relief, and agrees that the
process may be served on the Employee by registered mail, addressed to the
last address of the Employee known to the Company, or in any manner
authorized by law.
15. SEVERABILITY. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases,
such circumstances shall not have the effect of rendering such provision
invalid in any other case or of rendering any of the other provisions of
this Agreement inoperative, unenforceable or invalid.
16. ASSIGNABILITY. By reason of the special and unique nature of the services
hereunder, it is agreed that neither party hereto may assign any interest,
rights or duties which it or he may have in this Agreement without the
prior written consent of the other party, except that upon any merger,
liquidation, or sale of all or substantially all of the assets of the
Company to another corporation, this Agreement shall inure to the benefit
of and be binding upon the Employee and the purchasing, surviving or
resulting company or corporation in the same manner and to the same extent
as though such company or corporation were the Company.
17. WAIVERS. The failure or delay of the Company at any time to require
performance by the employee of any provision of this Agreement, even if
know, shall not affect the right of the Company to require performance of
that provision or to exercise any right, power or remedy hereunder, and any
waiver by the Company of any breach of any provision of this Agreement
should not be construed as a waiver of any continuing or succeeding breach
of such provision, a waiver of the provision itself, or a waiver of any
right, power or remedy under this Agreement. No notice to or demand on
Employee in any case shall, of itself, entitle Employee to any other or
further notice or demand in similar or other circumstances.
18. INDEMNIFICATION. Company agrees to exercise its power to indemnify Employee
in the situations provided in the Company's current Certificate of
Incorporation in its form filed with the Secretary of State for the State
of Delaware as of the date of this Agreement. This indemnification shall
apply even if such Certificate is later amended or deleted.
19. COVENANTS OF THE ESSENCE. The covenants of Employee set forth in this
Agreement and the other Exhibits are the essence of this Agreement; they
shall be construed as independent of any other provision in this Agreement;
and the existence of any claim or cause of action of the Employee against
the Company, whether predicated on this Agreement or not, shall not
constitute a defense to the enforcement by the Company of these covenants.
20. SURVIVAL. The provisions of this Agreement will survive the termination or
expiration of this Agreement where the intent so indicates they shall
survive and all other obligations of the Company and the Employee will
cease on termination or expiration of this Agreement. Notwithstanding the
foregoing, the Company and the Employee will remain liable for obligations
which accrued before termination or expiration of this Agreement (including
the Employee's right to be paid or reimbursed for services rendered and
expenses incurred before termination or expiration of this Agreement.)
21. ENTIRE AGREEMENT. This Agreement, together with the agreements in the form
attached as Exhibits hereto and all other exhibits and attachments hereto,
constitutes the final written expression of all of the agreements between
the parties with respect to the subject matter hereof, supersedes all
correspondence, understandings, discussions and negotiations concerning the
matters specified herein, and specifically supersedes in its entirety other
agreements between Company and Employee. No addition to or modification of
any provision of this Agreement shall be binding upon any party unless made
in writing and signed by the party to be bound.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
on the date written above.
EXIGENT INTERNATIONAL, INC.
/S/ B. R. SMEDLEY
----------------------------------------
Name: B.R. SMEDLEY
Title: CEO & CHAIRMAN
/S/ DON F. RIORDAN, JR.
----------------------------------------
(Employee Signature)
<PAGE>
EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT (PLAN 1Q)
THIS AGREEMENT dated as of the 11th day of June, 1997, (the "Grant Date")
by and between EXIGENT INTERNATIONAL, INC., with its principal office at 1225
Evans Road, Melbourne, Florida 32904 (the "Company"), and Don F. Riordan, Jr.
("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted an Incentive Stock Option Plan (the "Plan
1Q") as defined in Section 422 of the Internal Revenue Code of 1986 to permit
options to purchase shares of the common stock of Exigent International, Inc. to
be granted to certain key employees of the Company or its subsidiaries; and
WHEREAS, the Optionee is a key employee of the Company or one of its
subsidiaries and the Company desires him/her to remain in such employee by
providing him/her with a means to acquire or to increase his/her proprietary
interest in the Company's success;
NOW, THEREFORE, in consideration of the promises and of the covenants and
agreement set forth, the parties hereby mutually covenant and agree as follows:
1. Subject to the terms and conditions of the Plan 1Q, a copy of which is
attached hereto as Exhibit "A" and made a part hereof, and this Agreement, the
Company grants to the Optionee the option to purchase from the Company all or
any part of an aggregate number of 50,000 shares of Exigent International,
Inc.'s Common Shares (30,000,000 authorized shares, par value $0.01)
(hereinafter such shares are referred to as the "Optioned Shares").
2. The price to be paid for the Optioned Shares shall be Two and 25/100
dollars ($2.25) per share, or 110% of current market value whichever is higher,
of the Optioned Shares on the Grant Date, as determined in good faith by the
President of the Company who is in charge of administering the Plan 1Q. However,
if it is determined by a subsequent Internal Revenue Service audit that the fair
market value of the stock at the time the option was granted exceeded the value
established by the President, then the option value shall be adjusted to comply
with the Internal Revenue Service's determined fair market value, and such
adjusted value shall apply to any and all subsequent exercise of options.
3. Subject to terms and conditions of the Plan 1Q and this Agreement,
Optioned Shares may be purchased pursuant to this Agreement at any time and from
time to time during a period of three (3) years from the date hereof, in whole
or in part. All options to purchase Optioned Shares subject to this Agreement
must be exercised on or before June 11, 2000 at which time all unexercised
options will expire.
4. An option may be exercised only by written notice, delivered or mailed
by postpaid registered or certified mail addressed to the Secretary of the
Company at the corporate headquarters, specifying the number of Optioned Shares
being purchased in cash or its equivalent. Within five (5) business days
following the date of exercise, payment shall be made in full or by such other
payment means as shall be mutually agreeable. Such purchased shares shall be
forthwith delivered to Optionee.
5. (a) If the Optionee's employment with the Company or any subsidiary of
the Company is terminated for due cause, this Agreement shall terminate
simultaneously therewith and Optionee shall have no further right to exercise an
option thereafter. For purposes of this paragraph, "due cause" shall be the same
as defined in the Employment Agreement.
(b) If the Optionee ceases to be an employee of the Company or any
subsidiary of the Company for any reason other than (1) termination for due
cause as set forth in paragraph 5(a) above, or (2) death or disability, the term
of any option shall expire on a date not later than three (3) months after
termination.
(c) If the Optionee ceases to be an employee of the Company or any
subsidiary of the Company by reason of disability or death within the meaning of
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, the term of
any option shall expire on a date which is not later than twelve (12) months
following the date of death or disability.
6. The options herein granted shall not be transferable by the Optionee
otherwise than by will or the laws of descent and distribution, and may be
exercised during the life of the Optionee only by the Optionee, except as set
forth in 5( c) above.
7. If any change is made in the shares subject to the Plan 1Q or any option
granted thereunder (through merger, consolidation, reorganization,
recapitalization, or change in capital structure), appropriate adjustment shall
be made by the Company in the number of shares and kind of common stock for
which options may be or may have been granted under the Plan 1Q, to the end that
such proportional interest shall be maintained as before the occurrence of such
an event.
8. (a) Optionee acknowledges and understands that the Optioned Shares have
not been registered with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, in reliance upon the exemption from
registration provided in Regulation D of the Act, nor with any state securities
regulatory authority in reliance upon particular statutory transactional
exemptions. As such, the shares purchased under this Agreement, if exercised,
cannot be sold subsequently or otherwise transferred without prior (1)
registration under the Act and under applicable state law or (2) receipt of an
opinion of counsel for the issuer to the effect that such proposed sale or other
transfer does not affect the exempt status of the original issuance and sale of
these shares and is in compliance with all applicable state and federal
securities laws.
(b) That Optionee will be acquiring the stock for his/her own
investment and personal interest in the Company and not for the account of any
other person, with no intention on his/her part of affecting a redistribution of
such stock or any part thereof.
(c ) That Optionee has asked questions and received all answers to
information he/she considers pertinent to form a knowledgeable opinion about his
investment.
(d) That the Optionee understands and acknowledges that he/she shall
not be deemed for any purpose to be a shareholder of the Company with respect to
any of the Optioned Shares, except to the extent that the options herein granted
shall have been exercised with respect thereto and a stock certified issued
therefor.
(e) That the existence of the options herein granted shall not affect
in any way the right or power of Exigent International, Inc. to make or
authorize any or all adjustments, recapitalizations, reorganizations, or other
changes in Exigent International Inc.'s capital structure or its business, or
any merger or consolidation of the Company or Exigent International, Inc., or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the common shares of Exigent International, Inc. or the rights
thereof, or dissolution or liquidation of Exigent International, Inc., or any
sale or transfer of all or any part of their assets or business or any other
corporate act or proceeding, whether of a similar character or otherwise.
(f) That as a condition of the granting of the option(s) herein
granted, the Optionee agrees, for himself/herself, and his/her Personal
Representative, that any dispute or disagreements which may arise under or as a
result of or pursuant to this Agreement shall be determined by the President in
his sole discretion, and that any interpretation by the President of the terms
of this Agreement shall be final, binding and conclusive.
9. This Agreement shall not confer upon the Optionee any right with respect
to continuance of employment by the Company or its related corporations, nor
shall it interfere in any way with the right of the Optionee's employer to
terminate the Optionee's employment at any time.
10. As used in this Agreement, the masculine, feminine or neuter gender and
the singular or plural number shall be deemed to include the others whenever the
context so indicates or requires.
11.This Agreement shall be governed and interpreted by the laws of the
State of Florida.
12. This Agreement and any exhibit hereto constitutes the entire agreement
between the parties with respect to the subject matter hereof, and no change or
modification shall be valid unless made in writing and signed by the party
against whom such change or modification is sought to be enforced.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
duly authorized officer and its corporate seal hereunto affixed, and the
Optionee has hereunto affixed his/her hand the day and year first above written.
EXIGENT INTERNATIONAL, INC.
By: /S/ B.R. SMEDLEY
---------------------------
"The Company"
/S/ DON F. RIORDAN, JR.
- --------------------------
Secretary)
( S E A L )
/S/ DON F. RIORDAN, JR.
------------------------------
"The Optionee"
<PAGE>
EXHIBIT B
DUTIES, RESPONSIBILITIES AND GOALS FOR DON RIORDAN, CFO
Responsible for the company's overall financial plans and policies along with
its accounting practices and the conduct of its relationship with lending
institutions, shareholders and the financial community. Directs treasury,
budgeting, audit, tax, accounting, purchasing, real estate, and insurance
activities for the corporation and its subsidiaries. Has specific responsibility
for developing and coordinating necessary and appropriate accounting and
statistical data for all departments of the business.
POSITION RESPONSIBILITY
Directs the Controller in providing and directing procedures and systems
necessary to maintain proper records and to afford adequate accounting controls
and services.
Directs the Treasurer in activities as custodian of the funds, securities and
assets of the corporation.
Appraises the corporation's financial position and issues monthly, quarterly and
annual financial and operating reports. Directs and coordinates the
establishment of corporate budget programs.
Cooperates with the Vice Presidents in coordinating expenditures programs with
forecasted cash flow.
Directs, consolidates and analyzes all cost accounting procedures together with
other statistical and routine reports, including any desirable analysis of
monthly departmental reports.
Proposes policies for the establishment and maintenance of inventory levels for
raw materials, supplies, material-in-process and finished goods.
Directs the company's insurance programs.
Responsible for the preparation and issuance of the corporation's Annual Report.
Directs and analyzes studies of general economic, business and financial
conditions and their impact on the corporation's policies and operations.
1998 AND 1999 GOALS
FINANCIAL
The Corporate P&L, Balance Sheet and Cash Flow Statements (attachment #1);
Fiat Model (attachment #2); Business Objectives (attachment #3); and 1998
Executive Incentive Program (attachment #4) provide the basis for 1998
corporate financial goals. Achieving these financial goals (financial
statements to be audited next February by Controller and an outside
auditor) measures 60% towards reaching 100% award, plus all other
cumulative goals as described below:
STAFFING
Assist organization in hiring 46 new employees (10%)
Maintain an attrition rate of 3% of actual staff (284 actual at 7/1/97)
(10%)
QUALITY
Quality of Product or Services - customer satisfaction rating of 85% as
measured by an outside audit firm contracted by Exigent (10%)
NEW CUSTOMER ACQUISITION
Assist in acquiring new customer of at least $500K of sales (10%)
<PAGE>
ATTACHMENT #1 TO EXHIBIT B
EXIGENT INTERNATIONAL
MANAGEMENT PERFORMANCE MEASUREMENTS
STI STI FOTO Total STI PRODUCTS**
GOV SYS COMM SYS TAG EXIGENT
Revenue 18,000 17,000 1,000 36,000 -
Pretax Earnings* 918 1,835 162 2,915 (1,079)
Net Earnings 567 1,133 100 1,800 (666)
Budgeted G&A Base 16,583 9,656 246 26,485 309
G&A Budget 2,073 1,980 330 4,382 770
Capital Investment 1,000
* PRETAX EARNINGS SHOULD BE AFTER INTEREST AND UNALLOWABLES.
** STI PRODUCTS NET EARNINGS IS SPLIT EVENLY BETWEEN GOVERNMENT AND COMMERCIAL
<PAGE>
<TABLE>
<CAPTION>
ATTACHMENT #2 TO EXHIBIT B
FIAT WITH 30% AWARD
<S> <C> <C> <C> <C> <C>
PROJECTION FY97 FY98 FY99 FY00 FY01
Total Investment Value (market cap) $16,010,472 $27,900,000 $48,000,000 $82,500,000 $102,000,000
Value Control Stockholders Holdings (2138604) $5,346,510 $7,255,068 $10,040,209 $14,433,255 $15,335,680
Cash Conversion Discount 50% 40% 30% 20% 20%
Cash Employed Growth Capital (300K/year) $125,000 $610,638 $985,897 $1,619,739 $1,721,012
Cash Employed Acquisitions (100K/year) $125,000 $203,546 $281,685 $404,935 $430,253
Value Stock Employed Acquisitions (1M/year) $625,000 $3,392,432 $4,694,749 $6,748,914 $7,170,884
Value Issued Incentive Securities (600K/year) $500,000 $610,638 $2,816,849 $4,049,349 $4,302,530
Budgeted Stock I/O/R (+500K/year) 6,404,189 8,224,189 10,224,169 12,224,169 14,224,189
Control Stockholders' Percent Ownership 33.39% 26.00% 20.92% 17.49% 15.03%
Net Sales Revenue Goals (5%) $30,000,000 $36,000,000 $50,000,000 $65,000,000 $75,000,000
Net After Tax Earnings Goals (15%/year) $(450,000) $1,800,000 $3,000,000 $5,000,000 $6,000,00
Aggregate Dividend Goals $300,000 $839,000 $1,080,000 $1,825,000 $2,220,000
Percent of Net Earnings for Dividend 35.0% 35.5% 36.0% 36.5% 37.0%
Net Worth Buildup $6,109,620 $11,477,236 $19,359,567 $31,308,155 $44,410,304
Book Value Per Share Goals $.95 $1.40 $1.89 $2.56 $3.12
Earnings Per Share Goals $(0.07) $0.22 $0.29 $0.41 $0.42
Guesstimated Price Earnings Ratio 15.0 15.5 16.0 16.5 17.0
</TABLE>
<PAGE>
ATTACHMENT #3 TO EXHIBIT B
BUSINESS OBJECTIVES
FY 98 revenue of $36M
STI Federal revenue of $18M
STI Commercial revenue of $17M
FotoTag revenue of $1M
FY 98 Earnings of $1.8M
STI Federal earnings of $900K STI
Commercial earnings of $800K
FotoTag earnings of $100K
Raise capital for R&D, minimum $5M
Raise price of stock to $5/share
<PAGE>
ATTACHMENT #4 TO EXHIBIT B
1998 EXECUTIVE INCENTIVE PROGRAM
CORPORATE GATE OPENS
If Exigent has:
THEN BONUS OF FOLLOWING % OF BASE SALARY TO BE AVAILABLE TO EACH MANAGER
EARNINGS OF:
$1.4M 15%
$1.7M 30%
$2.0M 45%
$2.3M 60%
$2.6M 90%
$2.9M 100%
The bonus will be split 50% cash and 50% stock, unless the manager prefers it
all in stock.
ADDITIONALLY,
Each manager will have a set of individuals goals covering such areas as
customer relations, employee relations, budget performance, quality goals,
intellectual property creation and management, each tailored to their job
function. In addition, the Division Managers are responsible as follows with the
help of all corporate managers:
SALES REVENUE EARNINGS
STI Commercial $26M $15.5M $2.0
STI Government $26M $21M $1.0
Foto Tag $1M $1M $.5
to permit Corporate Gate to achieve 100% bonus or a pro rata share.
<PAGE>
<PAGE>
Exhibit C
Proprietary Information and Inventions Agreement
In consideration and as a condition of my employment or continued employment by
Exigent International Inc. and/or by companies which it owns, controls, or is
affiliated with, or their successors in business (the "Company"), I hereby agree
with the Company as follows:
1. Proprietary Information. I understand that during my employment I may
produce, obtain, make known, or learn about certain information which has
commercial value in the business in which the Company is engaged and which
is treated by the Company as confidential. This information may have been
created, discovered, or developed by the Company or otherwise received by
the Company from third parties subject to a duty to maintain the
confidentiality of such information. All such information is hereinafter
called "Proprietary Information."
(a) Proprietary Information Defined. By way of illustration, but not
limitation, "Proprietary Information" includes trade secrets, ideas,
processes, formulas, source codes, data, programs, other original
works of authorship, know-how, improvements, discoveries,
developments, designs, inventions, techniques, marketing plans,
strategies, forecasts, new products, unpublished financial statements,
budgets, projections, licenses, prices, costs, and customers and
supplier lists.
(b) Assignment and Protection of Proprietary Information. I understand
that all Proprietary Information shall be the sole property of the
Company and its assigns (or, in some cases, its clients, suppliers, or
customers), and the Company and its assigns (or in some cases, its
clients, suppliers, or customers) shall be the sole owner of all
patents, copyrights, and other rights in connection therewith. I
hereby assign to the Company any rights I may have or acquire in such
Proprietary Information. At all times, both during my employment by
the Company and after its termination, I will keep in strictest
confidence and trust all Proprietary Information, and I will not use,
reproduce, or disclose any Proprietary Information without the written
consent of the Company, except as may be necessary in the ordinary
course of performing my duties as an employee of the Company.
(c) Maintenance of Records. I agree to keep and maintain adequate and
current records of all proprietary information developed by me (in the
form of notes, sketches, drawings and as may be specified by the
Company) which records shall be available to and remain the sole
property of the Company at all times.
2. Inventions During and Immediately After My Term of Employment. I understand
that during my employment or following my employment, I may make, conceive
of, or reduce to practice various discoveries, developments, designs,
improvements, inventions, formulas, processes, techniques, programs, other
works of authorship, know-how, and data (all of which shall be referred to
as "inventions" throughout this Agreement, whether or not patentable or
registrable under copyright, mask work, or similar statutes).
(a) Assignment of Inventions. I hereby assign and transfer to the Company
my entire right, title, and interest in and to all inventions made or
conceived or reduced to practice by me, either alone or jointly with
others, during the period of my employment with the Company, except
for those inventions which I have developed entirely on my own time
without using the Company's equipment, supplies, facilities, or trade
secret information excluding those inventions that either: (1) relate
at the time of conception or reduction to practice of the invention to
the business, or actual or demonstrably anticipated research or
development of the Company; or (2) result from any work performed by
me for the Company. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within
the scope of my employment and which are protectable by copyright are
"works made for hire," as that term is defined in the U.S. Copyright
Act as in effect as of this date. I will, at the Company's request,
promptly execute a written assignment of title to the Company for any
such invention and I will preserve any such invention as confidential
information of the Company.
Notwithstanding the foregoing, I also hereby assign and transfer to,
or as directed by, the Company all my right, title, and interest in
and to any and all inventions, full title to which is required to be
in the United States by a contract between the Company and the United
States or any of its agencies.
(b) Maintenance of Records. I agree to keep and maintain adequate and
current records of all inventions made by me (in the form of notes,
sketches, drawings and as may be specified by the Company) which
records shall be available to and remain the sole property of the
Company at all times.
(c) Disclosure of Inventions. I will promptly disclose in writing to the
Company all inventions made or conceived or reduced to practice by me,
either alone or jointly with others, during the period of my
employment, and for six months after termination of my employment with
the Company.
(d) Execution of Documents. I further agree as to all inventions to assist
the Company in every proper way (but at the Company's expense) to
obtain and from time to time enforce patents, copyrights, mask works,
and other rights and protections relating to inventions in any and all
countries, and to that end I will execute all documents for use in
applying for and obtaining such patents, copyrights, mask works, and
other rights and protections on and enforcing inventions as the
Company may desire, together with any assignments thereof to the
Company or persons designated by it. My obligation to assist the
Company in obtaining and enforcing patents, copyrights, mask works,
and other rights and protections relating to inventions in any and all
countries shall continue beyond the termination of my employment, but
the Company shall compensate me at a reasonable rate after such
termination for time actually spent by me at the Company's request on
such assistance. In the event the Company is unable, after reasonable
effort, to secure my signature on any document or documents needed to
obtain or enforce any patent, copyright, mask work, or other right or
protection relating to any inventions, whether because of my physical
or mental incapacity or for any other reason whatsoever, I hereby
irrevocably designate and appoint the Company and its duly authorized
officers and agents as my agent and attorney-in-fact, to act for and
in my behalf and stead to execute and file any application or
assignment and to do all other lawfully permitted acts to further the
prosecution and issuance to the Company of patents, copyrights, mask
works, or similar protections thereon with the same legal force and
effect as if executed by me.
3. Prior Inventions. I understand that all inventions, if any, patented or
unpatented, which I made prior to my employment by the Company, are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth in Item 1 of Exhibit A attached hereto and
made a part hereof a complete list of all of my prior inventions, including
numbers of all patents and patent applications, and a brief description of
unpatented inventions which are not the property of a previous employer. I
represent and covenant that the list is complete and that, if no items are
on the list, I have no such prior inventions. I agree to notify the Company
in writing before I make any disclosure or perform any work on behalf of
the Company which appears to threaten or conflict with proprietary rights I
claim in any invention or idea. In the event of my failure to give such
notice, I agree that I will make no claim against the Company with respect
to any such inventions or ideas.
4. Conflicting Employment Obligations.
(a) Trade Secrets of Others. I represent that I have not brought and will
not bring with me to the Company or use in the performance of my
responsibilities at the Company any devices, materials, or documents
of a former employer that are not generally available to the public,
unless I have obtained express written authorization from the former
employer for their possession and use. The only devices, materials,
documents of a former employer that are not generally available to the
public that I will bring to the Company or use in my employment are
identified on Item 2 of Exhibit A attached hereto, and as to each such
item, I represent that I have obtained express written authorization
for their possession and use in employment with the Company and have
delivered a copy of such written authorization to the Company.
(b) Conflicting Confidentiality Agreements. I agree that during my
employment with the Company, I will not breach any obligation of
confidentiality that I have to former employers. I represent that any
performance under the terms of this Agreement and as an employee of
Company does not and will not breach any agreement to keep in
confidence proprietary information acquired by me in confidence or in
trust prior to employment by the Company. I have not entered into, and
I agree I will not enter into, any agreement either written or oral in
conflict herewith.
5. Government Contracts. I acknowledge that the Company from time to time may
be involved in government projects of a highly classified nature. I further
acknowledge that the Company from time to time may have agreements with
other persons or governmental agencies which impose obligations or
restrictions on the Company regarding inventions made during the course of
work thereunder or regarding the confidential nature of such work or
information disclosed in connection therewith. I agree to be bound by all
such obligations and restrictions and to take all action necessary to
discharge the obligations of the Company thereunder.
6. Termination of Employment. In the event of the termination of my employment
by me or by the Company for any reason, I will deliver to the Company all
documents, notes, drawings, specifications, programs, data, devices, and
other materials of any nature pertaining to my work with the Company and I
will neither take with me nor recreate any of the foregoing, any
reproduction of any of the foregoing, or any Proprietary Information that
is embodied in a tangible medium of expression.
7. Modification. This Agreement may not be changed, modified, released,
discharged, abandoned, or otherwise amended, in whole or part, except by an
instrument in writing, signed by myself and the Company. I agree that any
subsequent change or changes in my duties, salary, or compensation shall
not affect the validity or scope of this Agreement.
8. Entire Agreement. I acknowledge receipt of this Agreement and agree that
with respect to the subject matter hereof it is my entire agreement with
the Company, superseding any previous oral or written communications,
representations, understandings, or agreements with the Company or any
officer or representative.
9. Severability. In the event that any paragraph or provision of this
Agreement shall be held to be illegal or unenforceable, such paragraph or
provision shall be severed from this Agreement and the entire Agreement
shall not fail on account thereof, but shall otherwise remain in full force
and effect.
10. Successor and Assigns. This Agreement shall be binding upon my heirs,
executors, administrators, or other legal representatives and is for the
benefit of the Company, its successors, and assigns.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
12. Counterparts. This Agreement may be signed in two counterparts, each of
which shall be deemed an original and both of which shall together
constitute one agreement.
13. I agree that the Company may make known to others either during or
subsequent to my employment the existence of this Agreement and the
provisions of all or any part thereof.
IN WITNESS WHEREOF, THIS AGREEMENT has been executed as of this 11th day of
June, 1997 and is effective from February 7, 1997.
By: /s/ B.R. Smedley
-------------------------------------
Name: Bernard R. Smedley
Title: Chairman and Chief Executive Officer
ACCEPTED AND AGREED TO:
EXIGENT INTERNATIONAL, INC.
By: /s/ Don F. Riordan, Jr.
-------------------------------------
Title: CFO
<PAGE>
Exhibit A
To
Proprietary Information and
Inventions Agreement
Exigent International, Inc.
1225 Evans Road
Melbourne, FL 32904
Gentlemen:
1. The following is a complete list of all inventions or improvements
relevant to the subject matter of my employment by Exigent
International, Inc. (the "Company") that have been made or conceived
or first reduced to practice by me alone or jointly with others prior
to my engagement by the Company:
_____ No inventions or improvements
_____ See below:
_____ Additional sheets attached.
2. I propose to bring to my employment the following devices, materials,
and documents of a former employer that are not generally available to
the public, which materials and documents may be used in my employment
pursuant to the express written authorization of my former employer (a
copy of which is attached hereto):
______ No materials
______ See below:
______ Additional sheets attached.
Very truly yours,
- -------------------------
Bernard R. Smedley
<PAGE>
EXHIBIT D
NON-DISCLOSURE AND
NON-COMPETITION AGREEMENT
THIS NON-DISCLOSURE AND NON-COMPETITION AGREEMENT dated June 11, 1997 is between
EXIGENT INTERNATIONAL, INC., with its principal office at 1225 Evans Road,
Melbourne, Florida 32904 (the "Company") and Don F. Riordan, Jr., with a
residence at 414 La Costa Street, Melbourne Beach, FL 32951 ("Employee").
1. CONSIDERATION. Employee has agreed to enter into this Agreement in
consideration of: the Company's engagement of Employee as an employee
under the terms of the Employment Agreement ("Employment Agreement")
of even date between the Company and Employee; the Company's agreement
to grant stock options to Employee under its Incentive Stock Option
Plan of even date between the Company and Employee.
2. NON-DISCLOSURE OBLIGATIONS.
(a) In Employee's position as Exigent Chief Financial Officer of the
Company, he will have access to:
(i) information ("Confidential Business Information") relating
to the business plans of the Company and treated as
confidential, including without limitation, information
relating to the Company's investors, capitalization,
marketing plans and strategies, product concepts, product
development status, material agreements, plans for raising
capital, target customers and markets, pricing policies,
finances, financial information of the Company, customer
lists; and
(ii) information of a proprietary nature relating to the
technology and products of the Company ("Confidential
Proprietary Information") including without limitation,
information relating to the technology developed or to be
developed by the Company relating to the Company's products
and other matters, trade secrets, research and development
activities, technical, engineering and scientific data,
specifications, and patent applications or patents.
(The Confidential Business Information and Confidential
Proprietary Information is sometimes collectively referred
to herein as "Confidential Information") or confidential
information relating to the organization, research and
development activities, marketing plans and strategies,
pricing policies, technical and scientific data,
specifications, patent applications or patents, customer
lists and accounts, business, finances or financial
information of the Company.
(b) Employee agrees that he will not at any time during (i) his
employment by the Company and during any time period he is
receiving severance pay from the Company, including extended
periods under Section 4(f) herein, and (ii) for one year
thereafter, reveal to any person, association or company any of
the Company's Confidential Business Information, so far as such
Confidential Business Information has come or may come to his
knowledge, except as may be required in the ordinary course of
performing his duties as an officer of the Company or as may be
in the public domain through no fault of Employee or as may be
required by law.
(c) Employee hereby agrees that he will not at any time, whether
during or after the termination of his employment, reveal to any
person, association or company any of the Company's Confidential
Proprietary Information, so far as to his knowledge, except as
may be required in the ordinary course of performing his duties
as an officer of the Company or as may be in the public domain
through no fault of Employee or as may be required by law.
(d) Employee agrees to keep in confidence and secret all matters of
such nature entrusted to him and he shall not use or attempt to
use any such information in any manner which may injure or cause
loss to the Company, whether directly or indirectly.
(e) Employee acknowledges the critical importance of the Confidential
Information to the Company's business operations and plans.
Employee acknowledges that unauthorized disclosure or use of any
of the Confidential Information (in particular trade secrets and
technical proprietary information) would cause significant and
irreparable damage to the Company and would jeopardize the
Company's business and financial condition.
(f) Nothing herein shall be construed as granting to Employee any
right or license under any copyrights, inventions, or patents now
or hereafter owned or controlled by the Company or any right to
employment by the Company.
(g) In the event Employee's employment is terminated for any reason,
Employee shall return all Confidential Information in his
possession, together with any copies, to the Company.
3. NON-COMPETITION. Employee agrees and acknowledges that the products
and services to be sold and rendered by the Company are different in
character and are of particular significance to the Company, and that
the Company is in a competitive business. Due to the proprietary and
specialized nature of the Company's business, Employee agrees to the
following:
(a) During his employment and thereafter during the applicable
"Non-Competition Period" (as defined in Section 3(e)) Employee
shall not, directly or indirectly, induce, influence, combine or
conspire with, or attempt to induce, influence, combine or
conspire with, any of the officers, employees or consultants of
the Company to terminate their employment or relationship with
the Company.
(b) During his employment and thereafter during the applicable
"Non-Competition Period" (as defined in Section 3(e)), Employee
shall not, directly or indirectly, induce, or attempt to induce,
any of the customers or suppliers of the Company to terminate
their relationship with the Company.
(c) During his employment and thereafter during the applicable
"Non-Competition Period (as defined in Section 3(e)), Employee
agrees that he will not voluntarily or involuntarily, for any
reason whatsoever, directly or indirectly, individually or on
behalf of persons not now parties to this Agreement, or as a
partner, stockholder, director, officer, principal, agent,
broker, licensor, employee, or in any other capacity or
relationship, engage in any business or employment, or aid or
endeavor to assist any business or legal entity, which is in
competition with the products and/or services of the Company;
provided, however, this Section 3(c) shall not be deemed to
prevent Employee from working after termination of the applicable
Non-Competition Period in any areas or division within the
applicable industry. The ownership by Employee of not more than
five percent (5%) of shares of stock of any corporation having a
class or equity securities actively traded on a national
securities exchange or NASDAQ shall not be deemed, in and of
itself, to violate this Section 3(c ) .
(d) Employee agrees not to do or say anything that reasonably may be
expected to have the effect of disparaging the Company or
diminishing or impairing the goodwill and reputation of the
Company and the services it provides. Likewise, the Company
agrees not to do or say anything that reasonably may be expected
to have the effect of disparaging the Employee or diminishing or
impairing the reputation of the Employee.
(e) If, in any judicial proceedings a court shall refuse to enforce
any of the other separate covenants set forth in this Section 3,
then such unenforceable covenant shall be amended to relate to
such lesser period or geographical areas as shall be enforceable
or, if deemed appropriate by such court, deemed eliminated from
these provisions for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants to be
enforced.
(f) Under the terms of the Employment Agreement, Employee is entitled
to receive severance pay in the event his employment is
terminated by the Company without due cause. In the event
Employee's employment is terminated for any reason whatsoever,
(i) during the first year of his employment, then the applicable
Non-Competition Period for Section 3(a), (b) and (c) will be
eighteen (18) months; or
(ii) during the second year of his employment, then the
applicable Non-Competition Period for Section 3(a), (b) and
(c) will be twelve (12) months; or
(iii)during the third year of his employment, then the
applicable Non-Competition Period for Section 3(a), (b) and
(c) will be six (6) months; or
(iv) by expiration of the Term or otherwise, at any time after
the third anniversary of his employment, then the applicable
Non-Competition Period for Sections 3(a), (b) and (c) will
be three (3) months.
(g) Notwithstanding the foregoing, the Company may, at its option,
elect to extend the applicable Non-Competition Period by up to
twelve (12) additional months by payment to Employee of
additional severance pay equal to his salary in effect at the
date of termination of his employment for such time period.
Payments will be made in accordance with the Company's normal pay
periods for as long as the Company elects to so extend the
Non-Competition Period. Employee hereby agrees to accept such
payments as compensation for such extension of the applicable
Non-Competition Period.
(h) Company and Employee hereby acknowledge that:
(i) Company's market for its products is unlimited
geographically and the foregoing noncompetition and
non-solicitation requirements shall be applied on a
worldwide basis;
(ii) the duration and geographical limitations imposed with
respect to said noncompetition and non-solicitation
requirements are reasonable;
(iii)the restrictions stated hereinabove are reasonably
necessary for the protection of Company's legitimate
proprietary interests.
(i) Employee represents and warrants that his/her experience and
capabilities are such that the restrictive covenants set forth
herein will not prevent him/her from earning his/her livelihood
and that Employee will be fully able to earn an adequate
livelihood for himself/herself and his/her dependents if any such
provisions should be specifically enforced against Employee.
(j) The non-competition and non-solicitation obligations contained
herein shall be extended by the length of time during which
Employee shall have been in breach of any said provisions and
during any time the Company is required to seek compliance by
judicial proceeding.
4. SPECIFIC REMEDIES. In addition to any other remedy provided herein or
contemplated under law, and not as liquidated damages, in the even Employee
breaches any material covenant of this Agreement, such breach will
constitute "due cause" for termination of his employment under the
Employment Agreement and the Company shall have the right, but not the
obligation, to purchase from Employee and Employee shall have the
obligation to sell to the Company any or all of the shares of Common Stock
of the Company at a purchase price equal to Employee's cost for such
shares. Such right shall be exercised by written notice to Employee within
sixty (60) days of establishment by consent, judicial decision or
arbitration that Employee so breached this Agreement. Any of Employee's
permitted transferees will be obligated to sell to the Company Common Stock
shares of the Company held by them in the event the Company exercises this
right to purchase.
5. NOTICES. Any notice required or permitted hereunder shall be in writing and
shall be sufficiently given if personally delivered, delivered by facsimile
telephone transmission, delivered by express delivery service (such as
Federal Express), or mailed first class U.S. mail, postage prepaid,
addressed as follows:
If to Employee:
Don F. Riordan, Jr.
414 La Costa Street
Melbourne Beach, FL 32951
If to the Company:
Exigent International, Inc.
1225 Evans Road
Melbourne, FL 32904
Attn: Legal Counsel
(or such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so
delivered or three (3) days after mailing for domestic mail and seven (7)
days for international mail.
6. BINDING EFFECT; BENEFITS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns. Notwithstanding anything contained in this Agreement to the
contrary, nothing in the Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
heirs, successors, executors, administrators or assigns any right,
remedies, obligations or liabilities under or by reason of this Agreement.
7. ENTIRE AGREEMENT. This Agreement constitutes the final written expression
of all the agreements between the parties with respect to the subject
matter hereof. No addition to or modification of any provision of this
Agreement shall be binding upon any party unless made in writing and signed
by the party to be bound.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida, without
reference to principles of conflict of laws.
9. HEADINGS. Headings of the Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
10. NO CONFLICT. Employee represents and warrants that performance of the terms
of this Agreement, including but not limited to Sections 2 and 3 hereof, to
the best of his actual knowledge will not breach any agreement entered into
by Employee, and Employee agrees that he will not enter into any agreement
in conflict herewith. Employee further covenants that
(a) he shall not in the performance of his duties under the Employment
Agreement or hereunder (and the performance of such duties shall not
require him to) utilize any proprietary or confidential information
owned by any third party which he is prohibited from utilizing by
reason of agreement or applicable law, and
(b) he shall not at any time disclose to the Company any proprietary or
confidential information owned by any third party which he is
prohibited from disclosing by reason of agreement or applicable law.
11. SPECIFIC PERFORMANCE. Employee acknowledges and agrees that a breach of his
obligations under this Agreement, including but not limited to Section 2
and 3, will result in irreparable and continuing harm to the Company, for
which there will be no adequate remedy at law (it being understood and
agreed that the Company's remedy under Section 4 herein is not exclusive or
adequate), and agrees that in the event of any breach of this Agreement the
Company, its successors and assigns shall be entitled to injunctive relief
without the necessity of posting bond or other security therefor and
without the necessity of proving irreparable harm, and to such other and
further relief as may be proper.
12. SEVERABLILITY. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case in all cases,
such circumstances shall not have the effect of rendering such provision
invalid in any other case or of rendering any of the other provisions of
this Agreement inoperative, unenforceable or invalid.
13. ASSIGNABILITY. Employee may not assign any of his rights or obligations
hereunder without the prior written consent of the Company, which may be
withheld in its sole discretion.
14. WAIVER. The failure or delay of the Company at any time to require
performance by Employee of any provision of this Agreement, even if known,
shall not affect the right of the Company to require performance of that
provision or to exercise any right, power or remedy hereunder, and any
waiver by the Company of any breach of any provision of this Agreement
should not be construed as a waiver of any continuing or succeeding breach
of such provision, a waiver of the provision itself, or a waiver of any
right, power or remedy under this Agreement. No notice to or demand on
Employee in any case shall, of itself, entitle Employee to any other or
further notice or demand in similar or other circumstances.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
on the date written above.
EXIGENT INTERNATIONAL, INC.
/S/ B.R. SMEDLEY
-----------------------------------
Name: B.R. SMEDLEY
Title: CEO
/S/ DON F. RIORDAN, JR.
-----------------------------------
Name: Don F. Riordan, Jr.
Title: Exigent Chief Financial Officer
<PAGE>
Exhibit E
CONFIDENTIAL NATURE OF COMPANY AFFAIRS
PURPOSE:
It is the policy of Exigent International Inc. (Exigent) that the internal
business affairs of the organization, particularly confidential information and
trade secrets, represent proprietary assets that each employee has a continuing
obligation to protect.
POLICY:
1. CONFIDENTIAL INFORMATION. Information designated as confidential is to be
discussed with no one outside the organization and only discussed within
the organization on a "need to know" basis. In addition, employees have a
responsibility to avoid unnecessary disclosure of nonconfidential internal
information about Exigent, its customers, and its suppliers. This
responsibility is not intended to impede normal business communications and
relationships, but is intended to alert employees to their obligations to
use discretion to safeguard internal Exigent affairs.
2. VIOLATION OF UNAUTHORIZED ACCESS. Employees authorized to have access to
confidential information must treat the information as proprietary Exigent
property for which they are personally responsible. Employees are
prohibited from attempting to obtain confidential information for which
they have not received authorization. Employees violating this policy will
be subject to discipline, up to and including termination and may be
subject to legal action.
3. MEDIA/INQUIRIES. All media inquiries and other inquiries of a general
nature should be referred to the President or CEO. Also, all press
releases, publications, speeches, and other official declarations must be
approved in advance by the President. Inquiries seeking information
concerning current or former employees should be referred to the Personnel
Department.
4. DISCUSSIONS WITH COMPETING COMPANIES AND EXIGENT CONFIDENTIALITY. Employees
are not to discuss with the officers, directors, or employees of competing
companies any topics which might give the impression of an illegal
agreement in restraint of trade. Such topics include pricing agreements,
customer allocation, and division of sales territories.
5. MATERIAL INSIDE INFORMATION. Employees are prohibited from disclosing
"material inside" information, that could affect the market value of
Exigent's financial securities, to anyone outside the organization until
such information has been made available to the public by management.
Employees are also prohibited from using such information for their own
personal profit.
I, DON F. RIORDAN, JR., hereby acknowledge I have read and fully understand the
(Print Name)
above policy and agree to comply with all terms, conditions and/or requirements
as stated.
/S/ DON F. RIORDAN, JR. JUNE 11, 1997
- ------------------------------------ -------------
Employee Signature Date
<PAGE>
A M E N D M E N T T O E M P L O Y M E N T A G R E E M E N T
This amendment ("Amendment") to the Employment Agreement ("Agreement") executed
between Exigent International, Inc. and Don F. Riordan dated 11 June 1997 is
entered into as of September 15, 1997 between Exigent International, Inc.
("Exigent"), a corporation duly authorized and existing under the laws of the
State of Delaware with a principal place of business at 1225 Evans Road,
Melbourne, Florida 32904 and Don F. Riordan ("Employee"), an individual
domiciled at 414 La Costa Street, Melbourne Beach, FL 32951.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby mutually acknowledged, Exigent and Employee hereby agree as
follows:
1. PARAGRAPH 3(D)(II) MODIFICATION; PARAGRAPH 3(D)(III) DELETED. That
paragraph 3(d)(ii) is amended to read as follows and incorporates language
from paragraph 3(d)(iii) which is now deleted: "Group medical, dental,
life, AD&D, supplemental life, long term disability, or short term
disability insurance, or other insurance of the kind and to the extent
offered from time to time during the Term of this Agreement to other
employees of the Company."
2. EXHIBIT "B" TO EMPLOYMENT AGREEMENT. The document attached hereto as
EXHIBIT "B" TO EMPLOYMENT AGREEMENT and all related attachments containing
the duties and responsibilities of Employee is hereby incorporated into the
Agreement as if fully set forth therein.
3. RATIFICATION AND APPROVAL. In all other respects the Agreement is hereby
ratified by Exigent and Employee and remains in full force and effect.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the date set
forth above.
For Exigent: For Employee:
EXIGENT INTERNATIONAL, INC. DON F. RIORDAN, AN INDIVIDUAL
By: /S/ B.R. SMEDLEY By:/S/ DON F. RIORDAN, JR.
---------------------------------- ---------------------------
(Signature) (Signature)
Name: B.R. SMEDLEY
(Print - Block Letters)
Title: CEO & CHAIRMAN
(Print - Block Letters)
Exhibit 21
The Company has only the following two subsidiaries:
1. Software Technology, Inc.
2. FotoTag, Inc.
Exhibit 23
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our audit report relating to certain financial
statements of Exigent International, Inc. dated April 4, 1998 in the Annual
Report on Form 10-K filed on behalf of Exigent International, Inc.
Dated: April 28, 1998 Hoyman, Dobson & Company, P.A.
By:/s/Charles W. Hoyman, Jr.
-------------------------------------------
Charles W. Hoyman, Jr.
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Consolidated Financial Statements of Exigent International, Inc. for the Year
Ended January 31, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0001015854
<NAME> Exigent International, Inc.
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<PERIOD-TYPE> YEAR
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<PERIOD-START> FEB-01-1997
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<CASH> 3,641
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<PP&E> 5,305
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0
7
<COMMON> 39
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<TOTAL-LIABILITY-AND-EQUITY> 14,693
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,345
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
<FN>
(F1) Includes cost and estimated earnings in excess of billings on uncompleted
contracts.
</FN>
</TABLE>
