<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-17920
BRITE VOICE SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
KANSAS 48-0986248
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
250 INTERNATIONAL PARKWAY
HEATHROW, FLORIDA 32746
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (407) 357-1000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
As of August 7, 1997, 11,882,360 shares of the registrant's common stock were
outstanding.
TOTAL NUMBER OF PAGES: 17
<PAGE>
BRITE VOICE SYSTEMS, INC.
INDEX
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Page #
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1997
and December 31, 1996 . . . . . . . . . . . . . 3
Consolidated Statements of Income - Three and Six
Months Ended June 30, 1997 and 1996 . . . . . . 5
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1997 and 1996 . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . 8
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . 15
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . 15
Item 2. Changes in Securities . . . . . . . . . . . . . . . 15
Item 3. Defaults Upon Senior Securities . . . . . . . . . . 15
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . 15
Item 5. Other Information . . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . $2,575 $8,084
Accounts receivable, less allowance for
doubtful accounts: $611 - 1997; $471 - 1996 . . 37,806 35,067
Inventories . . . . . . . . . . . . . . . . . . 14,987 12,507
Prepaid expenses and other . . . . . . . . . . . 3,586 2,601
----------- ------------
Total Current Assets . . . . . . . . . . . . . 58,954 58,259
----------- ------------
PROPERTY AND EQUIPMENT
Land and building . . . . . . . . . . . . . . . . 3,074 3,074
Furniture and equipment . . . . . . . .. . . . . 23,448 23,430
----------- ------------
26,522 26,504
Less accumulated depreciation . . . . . . . . . . (12,575) (12,204)
----------- ------------
Total Property and Equipment . . . . . . . . . 13,947 14,300
----------- ------------
OTHER ASSETS . . . . . . . . . . . . . . . . . . . 1,641 2,323
----------- ------------
TOTAL ASSETS . . . . . . . . . . . . . . . . $74,542 $74,882
----------- ------------
----------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE>
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . $11,822 $10,539
Accrued salaries and wages . . . . . . . . . . . . 2,829 1,974
Other accrued expenses . . . . . . . . . . . . . . 4,555 1,512
Deferred revenue . . . . . . . . . . . . . . . . . 1,972 2,063
Customer deposits . . . . . . . . . . . . . . . . 1,276 3,526
Income taxes payable . . . . . . . . . . . . . . . 593 1,087
Short-term debt . . . . . . . . . . . . . . . . . 1,500 --
----------- ------------
Total Current Liabilities . . . . . . . . . . . . 24,547 20,701
----------- ------------
COMMITMENTS AND CONTINGENCIES . . . . . . . . . . . . -- --
STOCKHOLDERS' EQUITY
Preferred stock, no par value; authorized
10,000,000 shares; none issued and outstanding . . -- --
Common stock, no par value; authorized
30,000,000 shares; issued 11,849,729 shares -
1997; 11,829,595 shares - 1996 . . . . . . . . . 38,680 38,417
Retained earnings . . . . . . . . . . . . . . . . 11,369 14,938
Cumulative foreign currency translation adjustment. (54) 826
----------- ------------
Total Stockholders' Equity . . . . . . . . . . . 49,995 54,181
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . $74,542 $74,882
----------- ------------
----------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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BRITE VOICE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
------- ------- ------- -------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES
Systems . . . . . . . . . . . . . . . $16,770 $15,688 $35,876 $29,804
Services . . . . . . . . . . . . . . 12,375 12,979 24,259 24,711
------- ------- ------- -------
29,145 28,667 60,135 54,515
------- ------- ------- -------
COSTS AND EXPENSES
Cost of Sales:
Systems . . . . . . . . . . . . . . 7,467 7,107 16,160 13,117
Services . . . . . . . . . . . . . 7,193 6,293 14,026 11,914
Research and engineering . . . . . . 3,281 2,738 6,356 5,324
Selling, general and
administrative . . . . . . . . . . 11,715 8,645 22,099 16,572
Restructuring, relocation and other . 6,785 -- 6,785 --
------- ------- ------- -------
36,441 24,783 65,426 46,927
------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS . . . . . (7,296) 3,884 (5,291) 7,588
OTHER INCOME (EXPENSE), NET . . . . . (39) 122 37 180
------- ------- ------- -------
INCOME (LOSS) BEFORE TAXES . . . . . . (7,335) 4,006 (5,254) 7,768
PROVISION (CREDIT) FOR
INCOME TAXES . . . . . . . . . . . . (2,459) 1,118 (1,669) 2,176
------- ------- ------- -------
NET INCOME (LOSS) . . . . . . . . . . . $(4,876) $2,888 $(3,585) $5,592
------- ------- ------- -------
------- ------- ------- -------
EARNINGS (LOSS) PER SHARE . . . . . . . $(0.41) $0.24 $(0.30) $0.46
------- ------- ------- -------
------- ------- ------- -------
WEIGHTED AVERAGE SHARES
OUTSTANDING . . . . . . . . . . . . . 11,955 12,287 12,049 12,104
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE>
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) . . . . . . . . . . . . . . . $(3,585) $5,591
Items not requiring cash:
Depreciation and amortization . . . . . . . . 2,227 1,695
Restructuring, relocation and other . . . . . 3,327 --
Changes in:
Accounts receivable . . . . . . . . . . . . . (3,253) (3,795)
Inventories . . . . . . . . . . . . . . . . . (3,271) (1,140)
Accounts payable and accrued expenses . . . . 5,044 (649)
Other current assets and liabilities . . . . (3,625) (2,227)
------- ------
Net cash used in operating activities . . . (3,136) (525)
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment, net . . . . (2,711) (2,903)
Increase in other assets . . . . . . . . . . . (1,180) (417)
Proceeds from sale of property . . . . . . . . 16 --
------- ------
Net cash used in investing activities . . . (3,875) (3,320)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock . . . . . . . . . . . -- 2,761
Exercise of stock options . . . . . . . . . . . 263 421
Principal payments on debt . . . . . . . . . . -- (551)
Short term borrowings . . . . . . . . . . . . 1,500 --
------- ------
Net cash provided by financing activities. . 1,763 2,631
------- ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH . . . . . (261) (103)
------- ------
DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . (5,509) (1,317)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD . . . . . . . . . . . . . . . . . . . 8,084 3,405
------- ------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . $2,575 $2,088
------- ------
------- ------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE>
BRITE VOICE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
1. The 1997 and 1996 financial statements (except for the December 31, 1996
Balance Sheet) included herein have been prepared by the Company, without
audit, and reflect all adjustments (consisting only of those of a normal
recurring nature) which are, in the opinion of management, necessary to
fairly present the financial position, results of operations and cash flows
for the interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes thereto for the year ended December 31, 1996, contained in the
Company's Annual Report to Stockholders and Form 10-K filed with the
Securities and Exchange Commission.
2. Inventories consist of the following (in thousands):
June 30, December 31,
1997 1996
------- -----------
Purchased parts . . . . $ 5,780 $ 4,060
Work in progress . . . 6,559 5,581
Finished goods . . . . 2,648 2,066
------- -------
$14,987 $12,507
------- -------
------- -------
3. During the three months ended June 30,1997, the Company recorded a charge
of $6,785,000 related to the restructuring of the Company's operations and
the relocation of its headquarters to Orlando, Florida. Included in the
charge was approximately $3,327,000 in asset impairments as a result of the
Company's decision to discontinue certain product lines and abandon certain
assets, and the reevaluation of the net realizable value of certain
intangible assets. The Company also recorded severance costs of approximately
$1,243,000 relating to the elimination of certain product lines, the closing
of its Dallas, Texas facility and the transfer of certain functions from its
facilities in Wichita, Kansas, and Boston, Massachusetts to its new
headquarters in Orlando. Additionally, relocation and restructuring costs,
consisting principally of moving expenses, consulting costs, temporary labor
and travel, amounted to approximately $2,215,000 during the three months
ended June 30.
4. Income taxes paid, net of refunds received, during the three months ended
June 30, 1997 and 1996 were $558,000 and $2,104,000 respectively.
Interest paid during the three months ended June 30, 1997 and 1996 was
$55,000 and $29,000, respectively.
-7-
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
From time to time, information provided by the Company, statements made
by its employees or information included in its filings with the Securities
and Exchange Commission, including this Form 10-Q report, may contain certain
"forward-looking" information, as that term is defined by the Private
Securities Litigation Reform Act of 1995 (the "Act"). The words "expects,"
"anticipates," "believes" and similar words generally signify a
"forward-looking" statement. These forward-looking statements are made
pursuant to the safe harbor provisions of the Act. The reader is cautioned
that all forward-looking statements are necessarily speculative and that
there are certain risks and uncertainties that could cause actual events or
results to differ materially from those referred to in such forward-looking
statements. Such risks and uncertainties include those inherent generally in
the voice processing and telecommunications consulting industries, such as
product demand, pricing, market acceptance, reliance on significant
customers, intellectual property rights, risks in product and technology
developments, and other risk factors detailed in the section below entitled
"Certain Factors to be Considered". The Company undertakes no obligation to
publicly revise any forward-looking statement due to changes in circumstances
after the date of this report, or to reflect the occurrence of unanticipated
events.
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE AND SIX MONTHS
ENDED JUNE 30, 1996
The Company derives revenue from the sale of voice processing systems to
domestic and international customers and the provision of services related to
the operation of these systems. The Company's products can be divided into
two categories: those that increase its customers' revenues through
increased subscription or user fees ("Network Systems"), and those that
reduce customers' costs or improve the efficiency of services provided to end
user customers ("Business Systems").
Total revenues increased $478,000, or 1.7%, for the three months ended
June 30, 1997, and increased $5,620,000, or 10.3%, for the six months ended
June 30, 1997. The increases were due primarily to increased equipment sales
to new and existing customers, increases in managed services and service
contract and repair revenue, offset by a decrease in telecommunications
management services.
Systems revenues increased $1,082,000, or 6.9%, for the three months
ended June 30, 1997 and increased $6,072,000, or 20.4%, for the six months
ended June 30, 1997. Network systems revenues increased while business
systems revenues decreased, as shown in the following table:
-8-
<PAGE>
SYSTEMS REVENUES
Three Months ended June 30, %Increase/
1997 1996 (Decrease)
----------- ----------- ----------
Business Systems . . . . $ 3,507,000 $ 6,850,000 (48.8%)
Network Systems . . . . 13,263,000 8,837,000 50.1%
----------- ----------- -----
Total . . . . . . . . . $16,770,000 $15,687,000 6.9%
Six Months ended June 30, %Increase/
1997 1996 (Decrease)
----------- ----------- ---------
Business Systems . . . . $ 8,663,000 $11,424,000 (24.2%)
Network Systems . . . . 27,213,000 18,380,000 48.1%
----------- ----------- -----
Total . . . . . . . . , $35,876,000 $29,803,000 20.4%
Business Systems revenue consists principally of sales of interactive
voice response ("IVR"), audiotex or electronic publishing, and small voice
messaging systems for use in conjunction with a corporation's PBX. The
decrease of $3,343,000, or 48.8%, for the three months ended June 30, 1997
and the decrease of $2,760,000, or 24.2%, for the six months ended June 30,
1997 was primarily due to a reduction in the number of systems shipped to new
and existing customers. The Company believes this decline is primarily due to
delays in purchasing upgrades by existing customers for the Company's IVR
equipment, the discontinuation of the Company's voice mail product line, and
to a decline in sales of the Company's audiotex systems. Because many of
the Company's customers have shifted their emphasis from audiotex to other
on-line systems and services, future sales of electronic publishing systems
in the domestic market will be increasingly more difficult to obtain.
Network systems revenues, consisting of sales of voice messaging, voice
activated dialing and prepaid calling systems, increased $4,426,000, or
50.1%, for the three months ended June 30, 1997 and increased $8,833,000, or
48.1%, for the six months ended June 30, 1997. These increases are due
primarily to continued purchases by existing customers, as well as expansion
of the Company's customer base in the European and Pacific Rim markets. The
Company believes that significant growth potential exists within the network
operator market both in the US and internationally. The Company believes
that international markets are behind the United States in terms of market
penetration of voice processing systems and intends to devote additional
resources to capture these markets.
The Company's systems sales are dependent upon continued orders by
existing customers, orders from new customers, and development of new
products. There can be no assurance that the Company will be able to
increase or maintain its market share in the future or to sustain recent
growth rates.
Services revenues decreased $604,000, or 4.7%, for the three months ended
June 30, 1997 and decreased $452,000, or 1.8%, for the six months ended June
30, 1997, principally due to declines in telecommunications management
services revenues. In addition, the Company sold its 900 Voice Personals
product in July 1996. With the voice personals product revenue excluded from
the 1996 results, service revenues would have increased $592,000, or 5.0%,
for the three months ended June 30, 1997 and $1,991,000, or 8.9%, for the six
months ended June 30, 1997. The breakdown of services revenues is shown in
the following table:
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<PAGE>
SERVICES REVENUES
Three Months ended June 30, %Increase/
1997 1996 Decrease
----------- ----------- ---------
Managed services(1) . . . . . . $3,851,000 $3,261,000 18.1%
Service contract and repair . . 3,614,000 3,680,000 (1.8%)
Information services . . . . . 1,470,000 1,398,000 5.2%
Telecommunication management
services . . . . . . . . . . 3,440,000 4,640,000 (26.9%)
----------- ----------- ------
Total $12,375,000 $12,979,000 (4.7%)
Six Months ended June 30, %Increase/
1997 1996 (Decrease)
----------- ----------- ---------
Managed services(1) . . . . . . $7,123,000 $6,152,000 15.8%
Service contract and repair . . 7,375,000 6,617,000 11.5%
Information services . . . . . 2,961,000 2,753,000 7.6%
Telecommunication management
services . . . . . . . . . . 6,800,000 9,189,000 (26.0%)
----------- ----------- ------
Total . . . . . . . . . . . . . $24,259,000 $24,711,000 (1.8%)
(1) Includes voice personals revenues of $1,196,000 for the three months
and $2,443,000 for the six months ended June 30, 1996. The voice personals
product line was sold in July 1996.
Managed services revenues increased $590,000, or 18.1%, for the three
months ended June 30, 1997 and $971,000, or 15.8%, for the six months ended June
30, 1997, primarily due to a large system rental to one customer and the
commencement of advertising sales on behalf of Yellow Pages customers. With the
voice personals product revenues excluded from the 1996 results, managed
services revenues would have increased $1,786,000, or 86.5%, for the three
months ended June 30, 1997 and $3,414,000, or 92.1%, for the six months ended
June 30, 1997.
Service contract and repair revenue decreased $66,000, or 1.8%, for the
three months ended June 30, 1997 and increased $758,000, or 11.5%, for the six
months ended June 30, 1997. The decrease for the three months ended June 30,
1997 is due primarily to the existence of a one-time project for a large
customer in the prior year. The increase for the six months ended June 30, 1997
is due primarily to the Company's continuing emphasis on expanding its base of
customers who subscribe to quarterly or annual maintenance contracts.
Information services revenue increased $72,000, or 5.2%, for the three months
ended June 30, 1997 and $208,000, or 7.6%, for the six months ended June 30,
1997, due primarily to the introduction of new audio products. The Company
believes that due to the decline in electronic publishing systems sales,
continued expansion of information services revenue will be dependent upon
developing additional new audio products and applications.
Telecommunications management services decreased $1,200,000, or 25.9%, for
the three months ended June 30, 1997 and $2,389,000, or 26.0%, for the six
months ended June 30, 1997. This decrease is due to the absence of large
billing verification refunds similar to those received during the first two
quarters of 1996, as well as a decrease in the Company's consulting revenues.
The Company's efforts to obtain large billing verification contracts have been
generally unsuccessful and the Company is currently evaluating the future
direction of its telecommunications management services business.
Cost of systems sales increased $360,000, or 5.1%, for the three months
ended June 30, 1997 and $3,043,000, or 23.2%, for the six months ended June 30,
1997. As a percentage of systems sales, actual costs decreased to 44.5% from
45.3% for the three months ended June 30, and increased to 45.0% from
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<PAGE>
44.0% for the six months ended June 30, 1997. Actual costs increased due
primarily to an increase in the number of systems shipped by the Company.
The decrease as a percentage of revenues for the three months ended June 30
is due primarily to a greater presence of domestic sales which have
historically had higher gross margins than international sales. The increase
as a percentage of revenues for the six months ended June 30 is due primarily
to a decline in software content in certain systems sales.
Cost of services revenue increased $900,000, or 14.3%, for the three
months ended June 30, 1997 and $2,112,000, or 17.7%, for the six months ended
June 30, 1997. As a percentage of services revenues, actual costs increased
to 58.1% from 48.5% for the three months ended June 30, and increased to
57.8% from 48.2% for the six months ended June 30, 1997. The increase in
actual costs for the three months and six months ended June 30, 1997 were due
primarily to an expansion of the infrastructure of the telecommunications
management services departments. The decline in margins was due to a shift
in the mix of revenues away from higher margin billing verification revenues
to lower margin outsourcing and software services revenue.
Research and engineering expenses increased $543,000, or 19.8%, for the
three months ended June 30, 1997, and $1,032,000, or 19.4%, for the six
months ended June 30, 1997. The increase in actual expenditures was due to
an increase in staff dedicated to designing new products and enhancing
existing products. As a percentage of revenue, these expenses increased to
11.3% from 9.6% for the three months ended June 30, and to 10.6% from 9.8%
for the six months ended June 30, 1997. The increase as a percentage of
revenue is due to the fact that spending for research and development is
relatively fixed in the short term, and cannot be quickly expanded or
contracted as a result of short term revenue fluctuations. The Company
believes that it must continue to increase spending on research and
engineering activities in absolute terms in order to remain competitive in
the voice response market. Such expenses could continue to increase as a
percentage of revenues as well.
Selling, general and administrative expenses increased $3,070,000, or
35.5%, for the three months ended June 30, 1997 and $5,527,000, or 33.4%, for
the six months ended June 30, 1997. The increase in actual expenditures were
primarily due to an increase in the Company's international sales staff. As
a percentage of revenues, these expenses increased to 40.2% from 30.2% for
the three months ended June 30, 1997, and to 36.7% from 30.4% for the six
months ended June 30, 1997. The increases as a percentage of revenue were due
to the fact that sales and marketing expense is relatively fixed in the short
term, and cannot be quickly expanded or contracted as a result of short term
revenue fluctuations.
During the three months ended June 30,1997, the Company recorded a charge
of $6,785,000 related to the restructuring of the Company's operations and
the relocation of its headquarters to Orlando, Florida. Included in the
charge was approximately $3,327,000 in asset impairments as a result of the
Company's decision to discontinue certain product lines, reevaluation of the
net realizable value of certain intangible assets, and abandonment of certain
assets. The Company also recorded severance costs of approximately $1,243,000
million relating to the elimination of certain product lines, the closing of
its Dallas, Texas facility and the transfer of certain functions from its
facilities in Wichita, Kansas, and Boston, Massachusetts to its new
headquarters in Orlando. Additionally, relocation and restructuring costs,
consisting principally of moving expenses, consulting costs, temporary labor
and travel, amounted to approximately $2,215,000 million during the three
months ended June 30. The Company anticipates that additional operating
expenses of between $2,000,000 and $3,000,000 will be required to complete
the relocation, and that substantially all such costs will be incurred by the
end of the current fiscal year.
The effective income tax rate for the three months ended June 30, 1997
was 34.0%, compared to 28.0% for the three months ended June 30, 1996. The
effective income tax rate for the six months ended June 30, 1997 was 32.0%,
compared to 28.0% for the six months ended June 30, 1996. The variance from
the United States statutory rate for both the six months and the three months
ended June 30, 1997
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<PAGE>
was due primarily to restructuring and relocation charges incurred in
connection with the Company's relocation to Orlando, some portion of which
may not be deductible for income tax purposes. The variance from the United
States statutory rate for both the six months and the three months ended June
30, 1996 was due primarily to a reduction of the Company's deferred tax
valuation allowance, and utilization of net operating losses and credit
carryforwards acquired through the Company's 1993 merger with Perception
Technology Corporation.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had a current ratio of 2.4 to 1, and
working capital of $34,407,000, compared to a current ratio of 2.8 to 1 and
working capital of $37,558,000 at December 31, 1996.
Cash flows from operating activities utilized net cash of $3,136,000 for
the six months ended June 30, 1997. Accounts receivable at June 30, 1997
increased by $3,047,000 compared to December 31, 1996, principally due to an
increase in international sales, which typically have longer payment and
collection cycles. Inventory increased by $2,680,000, primarily due to the
backlog of orders that were to be shipped shortly after June 30, 1997. The
Company believes the increase in each of these areas to be in line with the
business growth experienced in systems sales during the six months ended June
30, 1997, and the backlog of orders at the end of the quarter. The cash
utilization was offset by the available cash of $8,082,000 at December 31, 1996
plus short-term borrowings of $1,500,000.
The Company regularly invests excess funds in short-term securities, such
as bankers' acceptances, government obligations and variable rate demand
notes, having maturities up to one year. Management believes that
restricting investments to these types of securities maximizes financial
flexibility and minimizes exposure to interest rate and market risks. The
Company utilizes these investments as a source of liquidity, to the extent
that cash requirements exceed short-term cash receipts.
The Company maintains a $5,000,000 line of credit that is used from time
to time to fund short-term cash requirements. Borrowings of $1,500,000 were
outstanding under the line as of June 30, 1997. Subsequent to June 30, 1997,
the Company entered into a new agreement, which provides a $10,000,000 line
of credit (see Item 5 herein).
The Company estimates that the relocation of its headquarters will
require between $1,000,000 and $2,000,000 in capital expenditures as well as
$2,000,000 to $3,000,000 in operating expenses for the remainder of 1997. In
addition, the Company has committed to constructing a hardware platform
capable of providing certain of its products on a managed service basis.
Costs estimated to complete this platform are between $3 and $4 million. The
Company intends to fund these capital requirements through a combination of
operating and financing leases, utilization of its line of credit, and funds
generated from operations. The Company has no other significant capital
commitments, and believes that current working capital, and funds from future
operations will be sufficient to fund the Company's capital requirements for
at least the next twelve months.
INFLATION
Inflation has not had a material impact on the Company's results of
operations. Because of the competitive nature of the computer industry, the
costs of parts used in the Company's products have remained relatively stable.
However, should inflation rise to higher levels, the Company believes that such
inflationary costs would be passed on to customers by both the Company and its
competition.
-12-
<PAGE>
CERTAIN FACTORS TO BE CONSIDERED
The Company has historically operated with very little backlog. There
are no long-term supply agreements with customers and, as a result, revenues
in any quarter are dependent upon orders that are received and shipped during
the quarter. Further, a large percentage of any quarter's system shipments
are recorded in the last month of the quarter. Consequently, quarterly
revenues and operating results will depend on the volume and timing of new
orders received during a quarter, which are difficult to predict. Failure to
receive adequate amounts of new orders could adversely affect revenues and
operating results, and such shortfalls may not be known until very late in
any quarter.
The Company faces a number of risks in conducting its international
business that do not affect its domestic business, including greater
concentration of business with fewer customers, longer payment cycles,
greater difficulty in accounts receivable collection and difficulty in
staffing and managing foreign subsidiary operations. Installation of the
Company's products outside the United States requires that the Company
conform to local telephone and electrical regulations. The Company has
traditionally relied on its suppliers to obtain the necessary registration in
order for the Company to install products within specific countries. There
can be no assurance that these factors will not have an adverse impact on the
Company's future international sales or operating results.
The voice processing industry is subject to rapid technological change,
including continuing improvements in hardware and software performance. In
order to maintain its competitive position, the Company must continually
release new products and develop enhancements and new features for its
existing products on a timely basis. There can be no assurance that the
Company will be successful in developing and marketing, on a timely basis,
product modifications or enhancements, or new products that respond to
technological advances by others, or that such new or enhanced products or
features will adequately and competitively address the needs of the
marketplace. Because of the increasing complexity of the Company's products,
these efforts can be expected to continue to increase in technical
difficulty. Moreover, the Company must manage product transitions
successfully, since announcements or introductions, or the perception that
such events are likely to occur, by either the Company or its competitors,
could adversely affect sales of existing products. In recent months, the
Company has dedicated much of its engineering capacity to the development of
a prepaid calling platform to be offered by a large customer on a service
bureau basis. The dedication of substantial resources to this project may
adversely affect the Company's ability to obtain and complete other
development projects.
The Company is relocating its corporate headquarters and certain sales
and marketing functions to Orlando, Florida, and has experienced anticipated
disruptions in its operations in the process. It is possible that these
disruptions could lead to delays in the development or delivery of new
products and that customer dissatisfaction could result. In addition, it is
possible that actual relocation costs will exceed those projected.
The Company's success is largely dependent upon its ability to attract
and retain qualified employees, especially technical employees and
executives. There exists substantial competition for highly qualified
personnel and there can be no assurance that the Company will be successful
in hiring and retaining the required personnel. The Company has experienced
some attrition in its work force as a result of the relocation of its
headquarters to Orlando.
For quality control, ease of development and purchasing efficiencies, the
Company has elected to purchase certain components from one supplier. Although
the Company has been able to obtain supplies of these components in a timely
manner, the interruption in supply of any of these components could have an
adverse impact on the Company's revenues and operating results. While the
Company believes that other suppliers could provide required components in the
event of an interruption in supply, a change
-13-
<PAGE>
in suppliers could cause a delay in manufacturing and a possible loss of
sales, which would adversely affect operating results.
The Company has periodically received, and may receive in the future,
communications from third parties asserting patent rights or copyrights on
certain of the Company's products and product features. The Company believes
that its products and other proprietary rights do not infringe the
proprietary rights of third parties. There can be no assurance, however,
that third parties will not assert infringement claims against the Company in
the future, or that any such claims will not require the Company to enter
into license arrangements or result in protracted and costly litigation,
regardless of the merits of such claims. There also can be no assurance that
the Company will be able to obtain licenses to disputed third party
technology or that such licenses, if available, would be available on
commercially reasonable terms.
The market for the Company's stock is highly volatile. Any variance in
operating results from analysts' expectations or changes in estimated results
by industry analysts could have an adverse affect on the trading price of the
Company's common stock in a given period. Furthermore in recent years the
market prices of securities of many high technology companies have
experienced extreme fluctuations, in many cases for reasons unrelated to the
operating performance of the specific companies. These broad market
fluctuations may adversely affect the market price of the Company's common
stock.
-14-
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders of the Company held on May 13, 1997,
the Company's stockholders:
(a) elected the following to serve as Directors of the Company:
For Withheld
---------- --------
Stanley G. Brannan 10,265,884 612,868
Perry E. Esping 10,259,658 612,868
C. MacKay Ganson, Jr. 10,259,658 612,868
David S. Gergacz 10,217,920 612,868
John F. Kelsey, III 10,259,658 612,868
Alan C. Maltz 10,046,441 612,868
Scott A. Maltz 10,106,136 612,868
(b) approved an amendment to the Company's 1994 Stock Option Plan by a
vote of 7,395,565 shares in favor, 1,181,478 shares against,
2,225,645 broker non-votes and 21,386 shares abstaining; and
(c) ratified the appointment of Arthur Andersen LLP to serve as the
Company's independent public accountants for 1997 by a vote of
10,792,768 shares in favor, 21,446 shares against and
9,860 shares abstaining.
ITEM 5. OTHER INFORMATION
On July 28, 1997, the Company replaced its then existing $5,000,000 bank
line of credit with a $10,000,000 line of credit loan agreement with Barnett
Bank, N.A. As of August 11, 1997, $7,000,000 was outstanding under the line.
Advances under the line are due on demand and bear interest at a variable rate,
payable monthly.
-15-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 10.1 - First Amendment to Lease dated June 30, 1997, between
the Company and Heathrow Office Building Corporation.
Exhibit 10.2 - Sublease dated June 1, 1997 between the Company and
Olsten Staffing Services, Inc.
Exhibit 10.3 - Employment Agreement dated February 25, 1997 between
the Company and Samuel J. Kline.
Exhibit 10.4 - Employment Agreement dated March 22, 1997 between the
Company and Christine King.
Exhibit 10.5 - Employment Agreement dated March 27, 1997 between the
Company and Brian Klumpp.
Exhibit 10.6 - Employment Agreement dated June 23, 1997 between the
Company and Glenn A. Etherington.
Exhibit 10.7 - Stock Option Agreement dated May 13, 1997 between the
Company and David S. Gergacz.
Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
-16-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 12, 1997
BRITE VOICE SYSTEMS, INC.
/s/ Glenn A. Etherington
-------------------------
Glenn A. Etherington
Chief Financial Officer
Duly Authorized Officer on behalf of
the Registrant
-17-
<PAGE>
EXHIBIT INDEX
10.1 First Amendment to Lease dated June ___, 1997, between the Company and
Heathrow Office Building Corporation.
10.2 Sublease dated June 1, 1997 between the Company and Olsten Staffing
Services, Inc.
10.3 Employment Agreement dated February 25, 1997 between the Company and
Samuel J. Kline.
10.4 Employment Agreement dated March 22, 1997 between the Company and
Christine King.
10.5 Employment Agreement dated March 27, 1997 between the Company and Brian
Klumpp.
10.6 Employment Agreement dated June 23, 1997 between the Company and
Glenn A. Etherington.
10.7 Stock Option Agreement dated May 13, 1997 between the Company and
David S. Gergacz
27 Financial Data Schedule.
<PAGE>
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ( the "FIRST AMENDMENT") is made and
entered into as of this 30th day of June, 1997 by and between HEATHROW
OFFICE BUILDING CORPORATION, a Florida corporation (hereinafter referred to as
"Landlord") and CREATIVE DATA SOLUTIONS, INC., a Florida corporation,
(hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Lease dated April
10, 1997, for approximately 5,293 rentable square feet of leased space at the
Heathrow Office Building, 250 International Parkway, Suite 200, Heathrow,
County of Seminole, Florida (as amended, the "Lease"). Capitalized terms not
otherwise defined herein shall have the meaning set forth in the Lease; and
WHEREAS, the actual rentable square feet in the Premises is 5,255, and
Landlord and Tenant have agreed to modify the Lease to reflect such actual
square footage.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration the receipt and sufficiency of
which is hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. The foregoing recitals are true and correct and are hereby
incorporated herein by reference.
2. The first paragraph of the Lease is hereby deleted in its entirety
and replaced with the following:
WITNESSETH, that for good and valuable consideration, the
Landlord hereby leases to the Tenant, and the Tenant hereby leases
from the Landlord, certain space containing an agreed-upon amount of
5,255 rentable square feet of floor area (the "Premises") on the
second floor of an office building (the "Building") calculated in
accordance with BOMA standards based on a useable to rentable
conversion factor of 1.13, as more particularly shown on the floor
plan attached hereto as Exhibit A, which Building together with other
real property and improvements is located at 250 International
Parkway in Lake Mary, Florida (collectively the "Property"), all upon
the following terms and conditions:
3. Section 2.01 of the Lease is hereby deleted in its entirety and
replaced with the following:
2
<PAGE>
Section 2.01 BASE RENT. Tenant shall pay a minimum annual
rental in each one-year period during the Term hereof which shall be
referred to hereinafter as "Base Rent", without reduction, abatement
or setoff. Base Rent shall be calculated and increased for each such
year as follows:
(1) Base Rent for the first one-year period in the Lease
Term shall be the sum of $75,431.15, payable in equal monthly
installments of $5,692.92 for months 1-7 and $7116.15 for months
8-12.
(3) Base Rent for the second one-year period in the Lease
Term shall be the sum of $87,495.75, payable in equal monthly
installments of $7,291.31 each.
(3) Base Rent for the third one-year period in the Lease
Term shall be the sum of $89,335.00, payable in equal monthly
installments of $7,444.58 each.
(4) Base Rent for the fourth one-year period in the Lease
Term shall be the sum of $91,437.00, payable in equal monthly
installments of $7,619.75 each.
(5) Base Rent for the fifth one-year period in the Lease
Term shall be the sum of $93,276.25, payable in equal monthly
installments of $7,773.02 each.
4. Section 3.04 of the Lease is hereby deleted in its entirety and
replaced with the following:
Section 3.04 RELOCATION. Landlord shall reimburse Tenant,
within fifteen (15) days after receipt by Landlord from Tenant of
receipts or other substantiation sufficient to Landlord to establish
such costs, for actual costs incurred to third parties by Tenant for
the relocation of Tenant's machinery, furniture, fixtures and
equipment in an amount not to exceed $5,255.00.
5. Except as amended as set forth herein, the terms and conditions set
forth in the Lease remain in full force and effect.
3
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have hereunto set their hands and
seals on the dates set forth below their respective signatures.
WITNESSES: LANDLORD:
HEATHROW OFFICE BUILDING CORPORATION
By: LaSalle Advisors Limited
Partnership Authorized Agent
/s/ Patricia C. Thompson By: /s/ David L. Reahl
- -------------------------- -----------------------------
Witness Name: David L. Reahl
Title: Vice President
/s/ Patricia C. Thompson By: /s/ George W. Duke
- --------------------------- -----------------------------
Witness Name: George W. Duke
Title: Principal
WITNESSES: TENANT:
BRITE VOICE SYSTEMS, INC.
/s/ Ken King By: /s/ D.S. Gergacz
- --------------------------- -----------------------------
Name: D.S. Gergacz
Title: CEO
4
<PAGE>
SUBLEASE
PARTIES:
This Agreement of Sublease made the 1st day of June, 1997 by and between Olsten
Staffing Services, Inc. ("Sublessor") and Brite Voice Systems, Inc.
("Sublessee").
MASTER LEASE:
Sublessor is the lessee of the premises consisting of approximately 1902
rentable square feet ("the premises") by virtue of that certain lease dated the
25th day of March, 1996 (hereinafter referred to as the "Master Lease"), a copy
of which is attached hereto as Exhibit A, wherein Heathrow Office Building
Corporation is the lessor, hereinafter referred to as the "Master Lessor".
Sublessee understands and agrees with Sublessor that this Sublease is in all
ways subject and subordinate to the provisions of the Master Lease. Sublessee
shall do nothing which would, in any way, constitute a default on the
performance of the obligations of the Sublessor, as lessee in and to the Master
Lease. In the event the provisions of this Sublease and the provisions of the
Master Lease shall be in conflict, the provisions of the Master Lease shall
govern. Sublessee hereby assumes, and agrees to be bound by, all of the
agreements, obligations and covenants of Sublessor (as tenant under the Master
Lease), and covenants and agrees with both Sublessor and the Master Lessor to
faithfully perform the same. Without limitation, the foregoing includes:
(a) All Tenant indemnification provisions and insurance requirements
set forth in the Master Lease, whether the same are effective before
or after the Commencement Date.
(b) All insurance policies maintained by Sublessee with respect to
the Premises (whether or not required by the terms hereof) shall name
both Sublessor and Master Lessor as additional insureds thereunder
and as loss payees, as their interests may appear, in the amounts
required under the Master Lease, and certificates of such policies
shall be deposited with Sublessor and Master Lessor, in accordance
with the applicable provisions of the Master Lease.
Any amendment to the Master Lease hereafter made shall require the consent of
Sublessee, Sublessor, and Master Lessor, and shall be binding upon Sublessee
and shall for all purposes of this Sublease, be considered a part of the Master
Lease. A default under any agreement between Sublessee and Master Lessor,
including but not limited to that certain Lease dated April 16, 1997, shall
constitute a default under this Sublease and the Master Lease.
PREMISES:
Sublessor hereby subleases to Sublessee the premises on the terms and
conditions set forth in this Sublease.
WARRANTY BY SUBLESSOR:
Sublessor warrants and represents to Sublessee that the Master Lease has not
been amended or modified except as expressly set forth herein, that Sublessor
is not now, and as of the commencement of the term hereof will not be, in
default or breach of any of the provisions of the Master Lease, and that
Sublessor has no knowledge of any claim by Lessor that Sublessor is in default
or breach of any provision of the Master Lease.
TERM:
The term of this Sublease shall be commencing on June 1, 1997 and ending on
March 31, 2001.
5
<PAGE>
In the event the term commences on a date other than the commencement date,
Sublessor and Sublessee shall execute a memorandum setting forth the actual
date of commencement of the term. If for any reason Sublessor does not deliver
possession to Sublessee on the commencement of the term, Sublessor shall not be
subject to any liability for such failure, the Termination Date shall not be
extended by the delay, and the validity of this Sublease shall not be impaired,
but the rent shall abate until delivery of possession. Notwithstanding the
foregoing, if Sublessor has not delivered possession to Sublessee within ten
(10) days after the commencement date, then at any time thereafter and before
delivery of possession, Sublessee may give written notice to Sublessor of
Sublessee's intention to cancel this Sublease. Said notice shall set forth an
effective date for such cancellation which shall be at least ten (10) days
after delivery of said notice to Sublessor. If Sublessor delivers possession
to Sublessee on or before such effective date, this Sublease may at Sublessee's
option remain in full force and effect. If Sublessor fails to deliver
possession to Sublessee on or before such effective date, this Sublease shall
be canceled, in which case all consideration previously paid by Sublessee to
Sublessor on account of this Sublease shall be returned to Sublessee, this
Sublease shall thereafter be of no further force or effect, and Sublessor shall
have no further liability to Sublessee on account of such delay or
cancellation.
If Sublessor permits Sublessee to take possession prior to the commencement of
the term, such early possession shall not advance the termination date and
shall be subject to the provisions of this Sublease, including without
limitation the payment of rent.
RENT:
Rent: Sublessee shall pay to Sublessor as rent, without deduction, setoff,
notice or demand, to:
Olsten Staffing Services
175 Broad Hollow Road
Melville, New York 11747
Attention: Lenore Eagle
or at such other place as Sublessor shall designate from time to time by notice
to Sublessee, the sum of $2,798.32 per month, in advance on the first day of
each month of the term.
Sublessee shall pay to Sublessor upon execution of this Sublease the sum of
$2,798.32 to be applied to the first month's rental payment. If the term
begins on a day other than the first or last day of a month, the rent for the
partial month shall be prorated on a per diem basis.
OPERATING COSTS AND REAL ESTATE TAXES:
Sublessee shall pay to Sublessor additional rent its prorata share of increases
in operating expenses and real estate taxes over the base year 1995.
SECURITY DEPOSIT:
Sublessee agrees to deposit with Sublessor the amount of $2,798.32 (1 month's
rent) as a security deposit. Sublessor agrees to return Sublessee's security
deposit, without interest, within ten (10) days after the termination date
hereto, upon Sublessee's full performance of all Sublessee's obligations.
ASSIGNMENT AND SUBLETTING:
Sublessee shall not assign this Sublease or further sublet all or any part of
the premises without the prior written consent of Sublessor and the consent of
Lessor.
6
<PAGE>
All applicable terms and conditions of the Master Lease are incorporated into
and made a part of this Sublease as if Sublessor were the Lessor thereunder,
Sublessee the lessee thereunder, and the premises the Master Premises.
Sublessee shall not be deemed to have vacated or abandoned the premises so long
as Sublessee shall pay its rent.
If the Master Lease terminates, this Sublease shall terminate and the parties
shall be relieved of any further liability or obligation under this Sublease,
provided however, that the Master Lease terminates as a result of a default or
breach by Sublessor or Sublessee under this Sublease and/or the Master Lease,
then the defaulting party shall be liable to the non defaulting party for the
damage suffered as a result of such termination. Notwithstanding the
foregoing, if the Master Lease gives Sublessor any right to terminate the
Master Lease in the event of a partial or total damage, destruction or
condemnation of the Master Premises or the building or project of which the
Master Premises are a part, the exercise of such right by Sublessor shall not
constitute a default or breach hereunder.
AGENCY DISCLOSURE:
Sublessor and Sublessee each warrant that they have dealt with no other real
estate broker in connection with this transaction except: USI Real Estate
Brokerage Services, Inc. who represents Sublessor., and N/A who represents
Sublessee. Sublessor and Sublessee each warrant that they will cover their
respective brokers in this transaction.
IMPROVEMENTS:
Sublessee agrees to accept the premises in "as is" condition.
NOTICES:
All notices and demands which may or are to be required or permitted to be
given by either party on the other hereunder shall be in writing. All notices
and demands by the Sublessor to Sublessee shall be sent by Untied States mail,
postage prepaid, addressed to Sublessee at the premises and to the address
hereinbelow, or to such other place as Sublessee may from time to time
designate to the Sublessor. All notices and demands by the Sublessee to
Sublessor shall be sent by United States mail, postage prepaid, addressed to
the Sublessor at the address set forth herein, and to such other person or
place as the Sublessor may from time to time designate in a notice to the
Sublessee.
7
<PAGE>
To Sublessor: Law Department, The Olsten Corporation
175 Broad Hollow Road, Melville
New York, NY 11747
To Sublessee: Glen Etherington, CFO
Brite Voice Systems
7309 East 21st Street North
Wichita, KS 67206-1083
CONSENT BY LESSOR:
This Sublease shall be of no force or effect unless consented to by Lessor
within ten (10) days after execution hereof.
(SUBLESSOR) (SUBLESSEE)
THE OLSTEN CORPORATION BRITE VOICE SYSTEMS, INC.
By: /s/ Lauren L. Laderourte, Jr. By /s/ D.S. Gergacz
----------------------------- --------------------
Lauren L. Laderoute, Jr.
Its: VP Its: CEO
------------------------------- -------------------
8
<PAGE>
LESSOR'S CONSENT TO SUBLEASE:
The Master Lessor under the Master Lease, hereby consents to the foregoing
Sublease without waiver of any restriction in the Master Lease concerning
further assignment or subletting, provided, however, Master Lessor's consent
provided herein shall in no way serve or be deemed to relieve or release the
Sublessor in any way from full and direct liability for the timely performance
of all of the Sublessor's duties and obligations as tenant under the Master
Lease.
Lessor: _________________________________
By: _____________________________________
Title: __________________________________
Date: ___________________________________
9
<PAGE>
LEASE AGREEMENT
(OFFICE)
BETWEEN
AETNA LIFE INSURANCE COMPANY
("LANDLORD")
AND
OLSTEN STAFFING SERVICES, INC.
("TENANT")
10
<PAGE>
LEASE INDEX
1. DEFINITIONS -1-
2. PREMISES AND TERM -2-
3. RENT -2-
4. CONSUMER PRICE ADJUSTMENT -3-
5. OPERATING EXPENSE ADJUSTMENTS -3-
6. USE OF PREMISES -4-
7. ASSIGNMENT AND SUBLETTING -4-
8. ACCESS TO PREMISES -5-
9. LANDLORD'S SERVICES -5-
10. ELECTRICAL OVERLOAD; STRUCTURAL OVERLOAD -6-
11. PARKING AREAS -7-
12. LEASEHOLD IMPROVEMENTS -7-
13. REPAIRS AND MAINTENANCE -7-
14. ALTERATIONS AND IMPROVEMENTS -7-
15. INDEMNITY -8-
16. DAMAGE BY FIRE OR THE ELEMENTS -9-
17. BUILDING RULES AND REGULATIONS -9-
18. EMINENT DOMAIN -9-
19. SIGNS AND ADVERTISING -9-
20. TENANT'S DEFAULT -10-
21. CONTRACTUAL LANDLORD'S LIEN -12-
22. SUBORDINATION ESTOPPEL CERTIFICATES -12-
23. TRANSFER OF LANDLORD'S INTEREST -13-
24. QUIET ENJOYMENT -13-
25. SECURITY DEPOSIT -13-
26. CONSTRUCTION LIENS -13-
27. FORCE MAJEURE -14-
28. SEVERABILITY -14-
11
<PAGE>
29. HOLDING OVER -14-
30. RELOCATION -14-
31. RENT A SEPARATE COVENANT -14-
32. JOINT AND SEVERAL LIABILITY -14-
33. ABSENCE OF OPTION -14-
34. CORPORATE TENANCY -15-
35. BROKERAGE COMMISSION -15-
36. LANDLORD'S DEFAULT -15-
37. NOTICES -15-
38. INSURANCE -16-
39. RECORDING -17-
40. STATUTORILY MANDATED NOTIFICATION -17-
41. NONDISCLOSURE -17-
42. HAZARDOUS MATERIALS -17-
43. AMENDMENTS -18-
44. FINANCIAL STATEMENTS -19-
EXHIBIT A -20-
EXHIBIT B -21-
BUILDING RULES AND REGULATIONS -23-
EXHIBIT F -25-
12
<PAGE>
LEASE
THIS LEASE AGREEMENT ("Lease") is made this 1st day of February, 1996,
between "Landlord" and "Tenant", as hereafter defined.
WITNESSETH:
WHEREAS, Tenant desires to lease from Landlord, and Landlord desires to
lease to Tenant, certain commercial office space set forth herein.
NOW, THEREFORE, for and in consideration of the rents and all other
charges and payments hereunder and of the covenants, agreements, terms,
provisions and conditions, Landlord and Tenant hereby agree as follows:
1. DEFINITIONS. For purposes of this Lease, the following terms shall
bear the meanings set forth in this section, unless the context clearly
requires otherwise:
(a) "Landlord": AETNA LIFE INSURANCE COMPANY
C/O AETNA REALTY INVESTORS, INC.
Address: 151 Farmington Avenue
Hartford, Connecticut 06156
(b) "Tenant": OLSTEN STAFFING SERVICES, INC.
Attn: Law Department
Address: 175 Broad Hollow Road
Melville, New York 11747
(c) "Premises": Suite No. 128 consisting of approximately 1,902
square feet of net rentable area, which the parties agree are contained in the
Premises, as outlined in red on the attached Exhibit "A", expressly made a part
hereof. The Premises are located on the first (1st) floor of the structure,
hereinafter called the "Building" located at 250 International Parkway,
Heathrow, Florida 32746.
(d) "Use of Premises": General office use and other related uses.
(e) "Commencement Date": The later of 2/1/96 ("the anticipated
Commencement Date"), or the date Landlord can deliver possession of the
Premises.
(f) "Term": Not less than 60 months commencing on the Commencement
Date, this Lease to end on the last day of the 60th calendar month after the
Commencement Date.
(g) "Rent": The sum of SEE EXHIBIT B DOLLARS ($____) per month as
defined in Item 3. Rent and all other sums payable by Tenant to Landlord under
this Lease, plus any applicable tax, shall be paid to Landlord, without demand,
deduction or offset, at its management office presently located at 250
International Pkwy., Suite 1414, Heathrow, FL 32746, or at such other place as
Landlord may hereafter specify in writing.
(h) [Deleted]
(i) "Operating Expense Base": Actual Operating Expenses, Real
Estate Taxes and utility costs for the calendar year 1996.
In addition to Rent and Additional Rent, Tenant shall pay to Landlord each
month a sum equal to any sales, use or excise tax on rentals, and any other
charges, taxes and/or impositions now in existence or hereafter imposed based
upon the privilege of renting space or upon the amount of rentals collected
that may be charged by any governmental authority or agency.
4. DELETED.
13
<PAGE>
5. OPERATING EXPENSE ADJUSTMENTS. The parties each acknowledge that the
Rent specified in Item 3 of the Lease does not provide for increases in
Operating Expenses, Real Estate Taxes, and Utility Costs which may hereafter
affect the Premises or the Building; accordingly, during the term of this
Lease, and any renewals thereof, Tenant shall pay to Landlord, in the form of
Additional Rent (plus any applicable tax), its Proportionate Share of increased
expenses over the Operating Expense Base.
To implement and effect the foregoing obligation of Tenant to pay its
Proportionate share of the expenses, taxes and costs referenced in this Item 5,
the parties agree that Tenant shall pay Landlord on or before the first day of
each calendar month one twelfth (1/12) of the amount of Tenant's estimated
annualized liability for such expenses, taxes and costs for the coming calendar
year. Any amount paid by Tenant which exceeds the correct amount due shall be
credited to the next rental obligation due or next succeeding payment due under
this Item 5. If Tenant has paid less than the correct amount due, Tenant shall
pay the balance within thirty (30) days of receipt of notice from Landlord. If
the term of this Lease shall begin or end other than on the first day or last
day of a calendar year, the foregoing expenses, taxes and costs shall be billed
and adjusted on the basis of such fraction of a calendar year. Tenant's
obligation to pay the adjustments described in this Item 5 shall survive the
expiration of this Lease. Tenant shall have sixty (60) days following the
submission to it by Landlord of each applicable adjustment calculation to
object to each such calculation. Should Tenant fail duly and timely to object
to each such calculation, which objection, to be effective, must be in writing
and must state the particulars of such objection, then, the parties understand
and agree, Landlord's calculation shall be conclusively deemed to be correct.
The term "Real Estate Taxes" shall mean the annual taxes and any special
assessments or other charges levied against the real property of which the
Premises are a part by any authority having the direct power so to tax,
including any city, county, state or Federal government, or any school,
agricultural, transportation or environmental control agency, lighting,
drainage, or other improvement district thereof, and shall include the expense
of contesting the amount or validity of any such taxes, charges or assessments.
The term "Operating Expenses" shall include the annual expenses of Landlord for
the operation, maintenance and repair of the Premises and Building which are
reasonable or customary for the operation of this type of premises and
Building, and shall include, but not be limited to, management salaries,
consultants' fees, maintenance and janitorial expense, administrative salaries,
costs and fees, insurance, security and landscaping. The term "Utility Costs"
shall include Landlord's annual expenses for the operation and maintenance of
the Building and the Premises with respect to utility charges for furnishing
heat, air conditioning, electricity, water, sewerage, gas, garage removal, etc.
6. USE OF PREMISES. The Premises shall be used by Tenant as described
above in Item 1, Section (d), and for no other purpose without the prior
written discretionary consent of Landlord. Tenant shall not do or permit to be
done in or about the Premises, nor bring or keep or permit to be brought or
kept therein, anything which is prohibited by or will in any way conflict with
any law, statute, ordinance or governmental rule or regulation now in force or
which may hereafter be enacted or promulgated, or which is prohibited by any
standard form of fire insurance policy or will in any way increase the existing
rate of or affect any fire or other insurance upon the Building or any of its
contents, or cause a cancellation of any insurance policy covering the Building
or any part thereof or any of its contents. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way obstruct or
interfere with the rights of other tenants of the Building, or injure or annoy
them or use or allow the Premises to be used for any improper, immoral,
unlawful or objectionable purpose (as determined by Landlord); nor shall Tenant
cause, maintain, or permit any nuisance (as determined by Landlord or by law)
in or about the Premises or commit or suffer to be committed any waste in, on,
or about the Premises. Tenant, at Tenant's expense, shall comply with all
laws, rules, orders, statutes, ordinances, directions, regulations and
requirements of all federal, state, county and municipal authorities pertaining
to Tenant's use of the Premises and with the recorded covenants, conditions and
restrictions pertaining thereto, regardless of when they become effective or
applicable, including, without limitation, all applicable federal, state and
local laws, regulations or ordinances pertaining to air and water quality,
hazardous materials, waste disposal, air emissions and other environmental
matters, all zoning and other land use matters, and the
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Americans with Disabilities Act of 1990 and Florida Americans With Disabilities
Accessibility Implementation Act, as both may be amended from time to time
(collectively "ADA") and with any direction of any public officer or officials
which shall impose any duty upon Landlord or Tenant with respect to the use or
occupation of the Premises.
7. ASSIGNMENT AND SUBLETTING. Tenant shall not assign the right of
occupancy under this lease, or any other interest therein, or sublet the
Premises, or any portion thereof, without the prior written consent of
Landlord, which may not be unreasonably withheld or delayed by Landlord. When
Tenant requests Landlord's consent to such assignment or sublease, Tenant shall
notify Landlord in writing of the name and address of the proposed assignee or
subtenant and the nature and character of the business of the proposed assignee
or subtenant and shall provide financial information including financial
statements of the proposed assignee and subtenant. Tenant shall also provide
Landlord with a copy of the proposed sublease or assignment agreement. Tenant
absolutely shall have no right of assignment or subletting if Tenant is or has
ever been in default of this Lease. Should Landlord elect to grant its written
consent to any proposed assignment or sublease (whether by Tenant or by others
claiming by or through Tenant), Tenant or such others agree to pay Landlord an
administrative fee for each transportation in a reasonable amount (but not less
than $150.00), plus reasonable attorneys' and paralegals' fees to process and
approve such assignment or sublease, and Landlord may prescribe the substance
and form of such assignment or sublease.
Notwithstanding any assignment of the Lease, or the subletting of the
Premises, or any portion thereof, Tenant shall continue to be liable for the
performance of the terms, conditions and covenants of this Lease, including,
but not limited to, the payment of Rent and Additional Rent. Consent by
Landlord to one or more assignments or sublettings shall not operate as a
waiver of Landlord's rights as to any subsequent assignments or sublettings.
Landlord shall have the additional option, which shall be exercised by
providing Tenant with written notice, of terminating Tenant's rights and
obligations under this Lease rather than permitting any assignment or
subletting by Tenant.
Should Landlord permit any assignment or subletting by Tenant and should
the monies received as a result of such assignment or subletting (when compared
to the monies still payable by Tenant to Landlord) be greater than would have
been received hereunder had not landlord permitted such assignment or
subletting, then the excess shall be payable by Tenant to Landlord, it being
the parties' intention that Landlord, and not Tenant, in consideration for
Landlord's permitting such assignment or subletting, shall be the party to
receive any profit from any such assignment or subletting. If there are one or
more assignments or sublettings by Tenant to which Landlord consents, then any
and all renewal options to be exercised subsequent to the date of such
assignment or subletting and an options to lease additional space in the
Building to be exercised subsequent to the date of such assignment or
subletting are absolutely waived and terminated at landlord's sole discretion.
In the event of the transfer and assignment by Landlord of its interest in this
Lease and/or sale of the Building containing the Premises, either of which it
may do at its sole option, Landlord shall thereby be released from any further
obligations hereunder, and Tenant agrees to look solely to such successor in
interest of Landlord for performance of such obligations. The provisions of
Item 37 hereafter dealing with "Notices" shall be amended to provide the
correct names and addresses of the assignee or sublessee. If Tenant is a
corporation whose stock is not regularly traded on a bona fide public exchange,
and if any transfer, sale, pledge or other disposition of the common stock
shall occur which changes the power to vote the majority of the outstanding
capital stock of the company, such action shall be considered an assignment
under the terms of this Lease. Any breach of this Item 7 by Tenant will
constitute a default under the terms of this Lease, per Item 20 hereof.
Notwithstanding the foregoing, a sublease, assignment, or transfer to an
affiliate of the Olsten Corporation shall not require Landlord's consent, but
Tenant shall promptly notify Landlord thereof.
8. ACCESS TO PREMISES. Landlord or its authorized agent or agents shall
have the right to enter upon the Premises at all reasonable times and with
reasonable notice to Tenant, for the purposes of inspecting the same,
preventing waste, making such repairs as Landlord may consider and showing the
Premises to prospective tenants, mortgagees and/or purchasers. If during the
last month of the term, Tenant shall have removed all or substantially all of
Tenant's property therefrom, Landlord may immediately enter and alter, renovate
and redecorate the
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Premises without elimination or abatement of Rent or incurring liability to
Tenant for any compensation or offsets in Rent and charges owed and such acts
shall have no effect upon this Lease.
9. LANDLORD'S SERVICES. Landlord shall, at its expense, furnish the
Premises with (i) electricity subject to Item 10 of this Lease; (ii) heat and
air conditioning during reasonable and usual business hours (exclusive of
Saturday afternoons, Sundays and holidays) reasonably required for the
occupation of the Premises, such heat and air conditioning to be provided by
utilizing the existing systems in the Building, it being expressly understood
and agreed by the parties that Landlord specifically shall not be liable for
any losses or damages of any nature whatsoever incurred by Tenant due to any
failure of the equipment to function properly, or while it is being repaired,
or due to any governmental laws, regulations or restrictions pertaining to the
furnishing or use of such heat and air conditioning; (iii) elevator service;
(iv) lighting replacement for Building Standards lights; (v) toilet room
supplies; (vi) daily janitor service during the time and in the manner that
such janitor service is customarily furnished in first class office buildings
in the metropolitan area where the Building is located; (vii) water; and (viii)
sewerage. The foregoing services are designated "Building Standard".
Monday - Friday 6:00 a.m. - 6:00 p.m.
Saturday 7:00 a.m. - 2:00 p.m.
Additional hours billed at $35.00 per hour.
Tenant agrees that Landlord is only responsible for Building Standard
maintenance and Building Standard services. If other, more complete or special
services and maintenance (over Building Standard) are required, then Tenant
solely shall be and is responsible for same and for any expenses and costs of
any nature whatsoever associated with same. To this end, Tenant is and shall
be solely responsible for any expenses and costs of any nature whatsoever
associated with, among other things, maintaining upgraded tenant improvements
in the Premises, replacing non-Building Standard lighting fixtures and bulbs in
the Premises, servicing, operating and maintaining any separate and non-
Building Standard HVAC systems and facilities serving the Premises, etc.
Landlord warrants and represents that all systems are in good working order and
repair as of the commencement date hereof, to the best of Landlord's ability.
Landlord shall not be liable for any damages directly or indirectly
resulting from, nor shall any Rent herein set forth be reduced or abated by
reason of (1) installation, use, or interruption of use of any equipment in
connection with the furnishing of any of the foregoing services, or (2) failure
to furnish, or delay in furnishing, any such services when such failure or
delay is caused by accident or any condition beyond the reasonable control of
Landlord or by the making of necessary repairs or improvements to the Premises
or to the Building or because of any governmental laws, regulations or
restrictions. The temporary failure to furnish any such services shall not be
construed as an eviction of Tenant or relieve Tenant form the duty of observing
and performing any and all of the provisions of this lease.
10. ELECTRICAL OVERLOAD; STRUCTURAL OVERLOAD.
A. Tenant's use of electrical services furnished by Landlord shall
be subject to the following:
(1) Tenant's electrical equipment shall be restricted to that
equipment which individually does not have a rated capacity
greater than .5 kilowatts per hour and/or require voltage
other than 120/208 volts, single phase. Collectively,
Tenant's equipment shall not have an electrical design load
greater than an average of 3 watts per square foot
(including overhead lighting).
(2) Tenant's overhead lighting shall not have a design load
greater than an average of 2 watts per square foot.
(3) If Tenant's consumption of electrical services exceeds
either the rated capacities and/or design loads as per
subsections (1) and (2)
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above, then Tenant shall remove such equipment
and/or lighting to achieve compliance within
ten (10) days after receiving notice from Landlord. Or
upon receiving Landlord's prior written approval, such
equipment and/or lighting may remain in the, Premises,
subject to the following:
(a) Tenant shall pay for all costs of installation and
maintenance of submeter, wiring, air conditioning and
other items required by Landlord, in Landlord's
discretion, to accommodate Tenant's excess design
loads and capacities.
(b) Tenant shall pay to landlord, upon demand, the cost of
the excess demand and consumption of electrical
service at rates determined by landlord which shall be
in accordance with any applicable laws.
(c) Landlord may, at its option, upon not less than thirty
(30) days' prior written notice to Tenant, discontinue
the availability of such extraordinary utility
service. If Landlord gives any such notice, Tenant
will contract directly with the public utility for the
supplying of such utility service to the Premises.
B. Tenant shall not place a load upon any floor of the Premises
exceeding the floor load per square foot area which such floor
was designed to carry and which may be allowed by law. Landlord
reserves the right to prescribe the weight and position of all
heavy equipment and similar items and any reinforcement deemed
by Landlord to be required under the circumstances, such
reinforcement to be at Tenant's prepaid expense.
11. PARKING AREAS. Landlord shall keep and maintain in good condition
any parking areas that may be provided. Landlord reserves the right to control
the method, manner and time of parking in parking spaces.
12. LEASEHOLD IMPROVEMENTS. the Premises are rented "as is", without any
additional services or improvements to be rendered by Landlord other than those
services described in Item 9 and such other services or improvements as may be
described in Exhibit "B" attached hereto and expressly made a part hereof. If
Landlord is to additionally alter, remodel, improve, or do any physical act or
thing to the space as presently constituted or as described in Exhibit "B",
same shall be at the sole expense of Tenant and shall be effected only by an
"Extra Work Agreement" signed by the parties, the monies due Landlord from
Tenant for which shall be deemed "Additional Rent" hereunder. In the absence
of an "Extra Work Agreement" signed by the parties, Landlord is under no
obligation to make any such alteration, remodeling or improvement or do any
physical act or thing to the space.
Any and all extraordinary expenses and costs of any nature whatsoever
attributable to the installation, maintenance and/or removal of telephone
equipment, computer equipment and the like shall be borne solely by Tenant and
may be deemed by Landlord to be "Additional Rent" hereunder.
13. REPAIRS AND MAINTENANCE. Landlord will, at its own cost and expense,
except as may be provided elsewhere herein, make necessary repairs of damage to
the Building corridors, lobby, structural members of the Building, and
equipment used to provide the Building Standard services referred to in Item 9,
unless any such damage is caused by acts or omissions of Tenant, its agents,
customers, employees, principals, contractors, consultants, assigns, subtenants
or invitees, in which event Tenant will bear the cost of such repairs. Tenant
will not injure the Premises or the Building but will maintain the Premises in
a clean, attractive condition and in good repair, except as to damage to be
repaired by landlord as provided above. Upon termination of this Lease, Tenant
will surrender and deliver the Premises to Landlord in the same condition in
which they existed at the commencement of this lease, excepting only ordinary
wear
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and tear and damage arising from any cause not required to be repaired by
Tenant. This Item 13 shall not apply in the case of damage or destruction by
fire or other casualty which is covered by insurance maintained by Landlord on
the Building (as to which Item 16 hereof shall apply) or damage resulting from
an Eminent Domain taking (as to which item 18 hereof shall apply).
14. ALTERATIONS AND IMPROVEMENTS. Tenant shall make no alterations,
additions or improvements to the Premises without the prior written approval of
landlord, unless in each instance and for each such alteration, addition or
improvement Landlord or a contractor approved by Landlord is hired to do such
alterations, additions or improvements. Such approval shall not be
unreasonably withheld in the case of alterations, additions or improvements to
the interior of the premises if such alterations, additions, or improvements
are normal for the use described in Item 1 (d) of this Lease, do not adversely
affect utility of the Premises for future tenants, do not alter the exterior of
the Building, and are accompanied by prepayment or bond provisions or waivers
by the contractor in form satisfactory to landlord sufficient to protect the
Building from claims of lien of any sort; otherwise, such approval may be
withheld for any reason whatsoever. Furthermore, such alterations, additions
or improvements absolutely shall not affect the plumbing, electrical and HVAC
systems in the Premises or the Building and shall not be of a structural
nature. Tenant shall conduct its work in such a manner as to maintain
harmonious labor relations and as not to interfere with the operation of the
Building and shall, prior to the commencement of the work, submit to Landlord
copies of all necessary permits. landlord reserves the right to have final
approval of the contractors hired by Tenant. All such contractors hired by
Tenant shall be, at levels and coverages prescribed by Landlord, bonded and
insured, and Landlord may require evidence of same, which Tenant agrees to
secure and provide Landlord prior to the commencement of any work by such
contractors. All alterations, additions or improvements, whether temporary or
permanent in character, made in or upon the Premises, either by Landlord or
Tenant, shall be Landlord's property and at the end of the term hereof shall
remain in or upon the Premises without compensation to Tenant. If, however,
Landlord shall request in writing, Tenant will, prior to expiration or earlier
termination of this Lease, remove any and all alterations, additions and
improvements placed or installed by Tenant in the Premises, and will repair any
damage caused by such removal. All of Tenant's furniture, movable trade
fixtures and equipment not attached to the Building may be removed by Tenant at
the termination of this Lease, if Tenant so elects, and shall be so removed, if
required by Landlord, and, if not so removed, shall, at the option of Landlord,
become the property of Landlord. To the extent Tenant makes any alterations,
additions or improvements and/or to the extent Landlord on behalf of Tenant
under an "Extra Work Agreement" makes such alterations, additions or
improvements, and as a result thereof it can be determined that thereupon was
caused an increase in real estate taxes or insurance premiums, then Tenant
shall be responsible for reimbursing Landlord for such increases as Landlord
may pay. Tenant shall keep the premises and Building free from any liens
arising from any work performed in accordance with this Lease. Any such
alterations, additions or improvements conducted by Tenant shall be in
accordance with all federal, state and local laws, rules and regulations,
including, without limitation, the ADA.
15. INDEMNITY. Landlord shall not be liable for, and Tenant will
indemnify, and save Landlord harmless of and from, all fines, suits, damages,
claims, demands, losses and actions (including reasonable attorneys' and
paralegals' fees (whether incurred in court, out of court, on appeal or in
bankruptcy or administrative proceedings)) for any injury to person or damage
to or loss of property on or about the premises and Building caused by the
negligence or misconduct or breach of this Lease by Tenant, its employees,
agents, principals, contractors, consultants, assigns, subtenants, invitees or
by any other person entering the Premises or the Building under express or
implied invitation of Tenant, or arising out of Tenant's use of the Premises,
unless such injury or damage was caused solely by landlord's gross negligence.
Landlord shall not be liable or responsible for any loss or damage to any
property or the death or injury to a person occasioned by theft, fire, act of
God, public enemy, injunction, riot, strike, insurrection, war, court order,
requisition of governmental body or authority, by other tenants of the Building
or by any other matter beyond the absolute control of Landlord, or for any
injury or damage or inconvenience which may arise through repair or alteration
of any part of the Building, or failure to make repairs, or from any cause
whatsoever except Landlord's negligence or intentional act. It is specifically
understood and agreed that there shall be no personal liability on Landlord
with respect to any of the covenants, conditions or provisions of this Lease;
in the
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event of a breach or default by Landlord of any of its obligations under
this Lease, Tenant shall look solely to the equity of Landlord in the Building
for the satisfaction of Tenant's remedies. Separate from and in addition to
any consideration for the execution of this Lease, Landlord has paid to Tenant
the sum of $50.00 as consideration for Tenant's indemnification under this
Lease. See Exhibit "B" for additional language.
16. DAMAGE BY FIRE OR THE ELEMENTS. In the event that the Building
should be totally destroyed by fire, tornado or other casualty, or in the event
the Premises or Building should be so damaged that rebuilding or repairs cannot
be completed within ninety (90) days after the date of such damage, either
Landlord or Tenant may, at its option, by written notice to the other given not
more than thirty (30) days after the date of such fire or other casualty,
terminate this Lease. In such event, the Rent shall be abated during the
unexpired portion of this Lease effective with the date of such fire or other
casualty.
In the event the Building or Premises should be damaged by fire, tornado,
or other casualty covered by landlord's insurance but only to such extent that
rebuilding or repairs can be completed within ninety (90) days after the date
of such damage, or if the damage should be more serious but neither Landlord
nor Tenant elects to terminate this Lease, then Landlord shall, within thirty
(30) days after the date of such damage or such election, commence to rebuild
or repair the Building and/or the Premises and shall proceed with reasonable
diligence to restore the Building and/or the Premises to substantially the same
condition in which it/they was/were immediately prior to the happening of the
casualty, except that Landlord shall not be required to rebuild, repair or
replace any part of the furniture, equipment, fixtures and other improvements
which may have been placed by Tenant or other tenants within the Building or
premises. Landlord shall, unless such damage is the result of the negligence
or willful misconduct of Tenant or Tenant's employees, agents, principals,
contractors, consultants, assigns, subtenants or invitees, allow Tenant a fair
diminution of Rent during the time of such rebuilding or repairs. In the event
any mortgagee, or the holder of any deed of trust, security agreement or
mortgage on the building, requires that the insurance proceeds be used to
retire the mortgage debt, Landlord shall have no obligation to rebuild and this
Lease shall terminate upon notice to Tenant. Any insurance which may be
carried by Landlord or Tenant against loss or damage to the Building or to the
Premises shall be for the sole benefit of the party carrying such insurance and
under its sole control.
17. BUILDING RULES AND REGULATIONS. Tenant shall faithfully observe and
comply with the Rules and Regulations printed on or annexed to this Lease and
all reasonable modifications of and additions thereto from time to time put
into effect by Landlord. Landlord shall not be responsible to Tenant for the
nonperformance of any of said Rules and Regulations by any other tenant or
occupant of the Building. Tenant shall and does hereby have an affirmative
obligation (to include indemnification of Landlord, per Item 15 hereof) to
notify its agents, employees, principals, assigns, subtenants and invitees of
the contents of such Rules and Regulations and of this Lease and to assure
their compliance therewith.
18. EMINENT DOMAIN. If the whole or a portion of the Building shall be
taken for any public or quasi public use under any statute or by right of
Eminent Domain or private purchase in lieu thereof, then at Landlord's option,
but not otherwise, the term hereby demised and all rights of Tenant hereunder
shall immediately cease and terminate and the Rent shall be adjusted as of the
date of such termination. Tenant shall be entitled to no part of the award
made for such condemnation (or other taking) or the purchase price thereof.
Nevertheless, anything to the contrary notwithstanding, likewise at Landlord's
option, but not otherwise, if the Premises are unaffected by such condemnation
(or other taking), then this Lease and each and every one of its provisions
shall continue in full force and effect.
19. SIGNS AND ADVERTISING. Without the prior written approval of
landlord, which may be withheld at Landlord's discretion, Tenant shall not
permit the painting or display of any signs, placard, lettering, or advertising
material of any kind on or near the exterior of the Premises or the Building.
Notwithstanding the foregoing, Tenant may, with Landlord's prior approval,
display Tenant's name on or near the entrance to the Premises, in a manner
prescribed by Landlord. Landlord shall install and pay for building standard
lobby/directory and door signage, one time only. Tenant shall pay for any
other or additional signage.
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20. TENANT'S DEFAULT. Landlord, at its election, may exercise any one or
more of the options referred to below upon the happening, or at any time after
the happening, of any one or more of the following events, to wit:
(a) Tenant's failure to pay the Rent, Additional Rent, or any other
sums payable hereunder for a period of ten (10) days after
written Notice by landlord.
(b) Tenant's failure to observe, keep or perform any of the other
terms, covenants, agreements or conditions of this Lease or in
the Building Rules and Regulations for a period of ten (10)
business days after written notice by Landlord; provided,
however, if Tenant shall fail to observe, keep or perform any
one such term or condition of this Lease on more than three (3)
occasions, Tenant shall no longer be given a ten (10) day right
to cure that same failure or performance, and, instead, a
default shall be deemed to have occurred immediately upon the
fourth (4) failure of Tenant to observe or to perform said term
or condition.
(c) The bankruptcy of Tenant;
(d) Tenant making an assignment for the benefit for creditors;
(e) A receiver or trustee being appointed for Tenant or a
substantial portion of Tenant's assets;
(f) Tenant's voluntary petitioning for relief under, or otherwise
seeking the benefit of, any bankruptcy, reorganization,
arrangement or insolvency law;
(g) [deleted]
(h) Tenant's interest under this Lease being sold under execution or
other legal process;
(i) Tenant's interest under this Lease;
(j) Any of the goods or chattels of Tenant used in, or incident to,
the operation of Tenant's business in the Premises being seized,
sequestered, or impounded by virtue of, or under authority of,
any legal proceeding;
(k) Tenant's failure to pay timely the Rent, Additional Rent, or any
other sums payable when due for two (2) consecutive months or
for a total of four (4) months in any lease or calendar year, no
notice whatsoever to be due Tenant from Landlord;
(l) Tenant's failure to operate continuously during normal business
hours from the Premises in a fully staffed, fully equipped
manner and/or as contemplated by item 1 (d) of this Lease; or
(m) Tenant's failure to take occupancy of the Premises when same is
tendered by Landlord to Tenant, unless Rent has been prepaid to
cover the applicable period of nonoccupancy.
In the event of any of the foregoing happenings, Landlord, at its election, may
exercise any one or more of the following options, the exercise of any of which
shall not be deemed to preclude the exercise of any others herein listed or
otherwise provided by statute or general law at the same time or in subsequent
times or actions:
(1) Terminate Tenant's right to possession under the Lease and
reenter and retake possession of the Premises and relet or
attempt to relet the Premises on behalf of Tenant at such rent
and under such terms and conditions as
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Landlord may deem best under the circumstances for the purpose
of reducing Tenant's liability. Landlord shall not be deemed
to have thereby accepted a surrender of the Premises, and
Tenant shall remain liable for all Rent, Additional Rent, or
other sums due under this Lease and for all damages suffered
by Landlord because of Tenant's breach of any of the covenants
of the Lease.
(2) Declare this Lease to be terminated, ended and null and void,
and reenter upon and take possession of the Premises whereupon
all right, title and interest of Tenant in the Premises shall
end.
(3) Delete
No reentry or retaking possession of the Premises by Landlord shall be
construed as an election on its part to terminate this Lease, unless a written
notice of such intention be given to Tenant, nor shall pursuit of any remedy
herein provided constitute a forfeiture or waiver of any Rent or other monies
due to Landlord hereunder or of any damages accruing to Landlord by reason of
the violations of any of the terms, provisions, and covenants herein contained.
Landlord's acceptance of Rent or Additional Rent or other monies following any
event of default hereunder shall not be construed as Landlord's waiver of such
event of default. No forbearance by Landlord of action upon any violation or
breach of any of the terms, provisions, and covenants herein contained shall be
deemed or construed to constitute a waiver of the terms, provisions, and
covenants herein contained. Forbearance by Landlord to enforce one or more of
the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of any other violation or default. Legal
actions to recover for loss or damage that Landlord may suffer by reason of
termination of this Lease or the deficiency from any reletting as provided for
above shall include the expense of repossession or reletting and any repairs or
remodeling undertaken by Landlord following repossession.
The parties hereto shall, and they hereby do, waive trial by jury in any
action, proceeding, or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of, or in any way
connected with, this Lease, the relationship of landlord and tenant, Tenant's
use or occupancy of the Premises and/or Building, and/ or claim or injury or
damage. In the event Landlord commences any proceeding to enforce this Lease
or the landlord/tenant relationship between the parties or for nonpayment of
Rent (of any nature whatsoever) or additional monies due Landlord from Tenant
under this Lease, Tenant will not interpose any counterclaim of whatever nature
or description in any such proceedings. In the event Tenant must, because of
applicable court rules, interpose any counterclaim or other claim against
Landlord in such proceedings, Landlord and Tenant covenant and agree that, in
addition to any other lawful remedy of Landlord, upon motion of Landlord, such
counterclaim or other claim asserted by Tenant shall be severed out of the
proceedings instituted by Landlord (and, if necessary, transferred to a court
of different jurisdiction), and the proceedings instituted by Landlord may
proceed to final judgment separately and apart from and without consolidation
with or reference to the status of each counterclaim or any other claim
asserted by Tenant.
The parties hereto agree that any and all suits for any and every breach
of this Lease shall be instituted and maintained only in those courts of
competent jurisdiction in the county or municipality in which the Building is
located. In the event it shall become necessary (as determined by Landlord)
for Landlord at any time to institute or defend any legal action or proceedings
of any nature for the enforcement of, or as regards, this Lease, or any of the
provisions hereof, or any of its statutory or common law rights as concern
Tenant, or to employ an attorney therefor, Tenant agrees to pay all court costs
and reasonable attorneys' and paralegals' fees (whether incurred in court, out
of court, on appeal or in bankruptcy or administrative proceedings) incurred by
Landlord.
Time is of the essence of this Lease; and in case Tenant shall fail to
perform the covenants on its part to be performed at the time fixed for the
performance of such respective covenants by the provisions of this Lease,
Landlord may declare Tenant to be in default of such Lease.
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21. [Deleted]
22. SUBORDINATION ESTOPPEL CERTIFICATES. In consideration of the
execution of this Lease by Landlord, Tenant accepts this Lease subject to any
deeds of conveyance and any deeds of trust, master leases, security interests
or mortgages and all renewals, modifications, extensions, consolidations and
replacements of the foregoing which might now or hereafter constitute a lien
upon the Building (or the land upon which it is situated) or improvements
therein or thereon or upon the Premises and to zoning ordinances and other
building and fire ordinances and governmental regulations relating to the use
of the property. Although no instrument or act on the part of Tenant shall be
necessary to effectuate such subordination, Tenant shall, nevertheless, for the
purpose of confirmation at any time hereafter, on demand in the forms(s)
prescribed by Landlord, execute any instruments, estoppel certificates, release
or other documents that may be requested or required by any purchaser or any
holder of any superior interest for the purposes of subjecting and
subordinating this Lease to such deed or conveyance or to the lien of any such
deed of trust, master lease, security interest, mortgage, or superior interest.
Tenant hereby appoints Landlord attorney in fact, irrevocably, to execute and
deliver any such instrument or document for Tenant should Tenant fail or refuse
to do so within ten (10) days of Landlord's written request for such instrument
or document. In the event the Building is sold or subjected to foreclosure
proceedings, Tenant shall attorn to the purchaser and recognize same as
Landlord under this Lease. In the event any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by landlord covering the Premises, Tenant shall
attorn to the purchaser at any such foreclosure or to the grantee of a deed in
lieu of foreclosure and recognize such purchase or grantee as Landlord under
this Lease.
23. TRANSFER OF LANDLORD'S INTEREST. In the event of any transfer(s) of
Landlord's interest in the Premises or the Building, other than a transfer for
security purposes only, the transferor shall be automatically relieved of any
and all obligations and liabilities on the part of Landlord accruing from and
after the date of such transfer, and Tenant agrees to attorn to the transferee.
24. QUIET ENJOYMENT. Provided Tenant has fully, duly and timely
performed all of the terms, covenants, agreements and conditions of this Lease
on its part to be performed, including the payment of Rent and all other sums
due hereunder, Tenant shall peacefully and quietly hold and enjoy the Premises,
except as described in Item 22 above, against Landlord and all persons claiming
by, through or under Landlord, for the term herein described, subject to the
provisions and conditions of this Lease.
25. [Deleted]
26. CONSTRUCTION LIENS. Tenant is prohibited from making, and agrees not
to make, alterations in the Premises, except as permitted by Item 14, and
Tenant will not permit any construction lien or liens to be placed upon the
Premises or the Building or improvements thereon during the term hereof caused
by or resulting from any work performed, materials furnished or obligation
incurred by or at the request of Tenant, and in the case of the filing of any
such lien, Tenant will promptly pay same. If default in payment thereof shall
continue for ten (10) days after written notice thereof from Landlord to
Tenant, Landlord shall have the right and privilege, Landlord's option, of
paying the same or any portion thereof without inquiry as to the validity
thereof, and any amounts so paid, including expenses, interest, and reasonable
attorneys' and paralegals' fees (whether incurred in court, out of court, on
appeal or in bankruptcy or administrative proceedings), shall be so much
additional indebtedness hereunder due from Tenant to Landlord and shall be
repaid to Landlord immediately on rendition of a bill therefor, together with
interest per annum at the maximum rate permitted by law until repaid, and if
not so paid within ten (10) days of the rendition of such bill shall constitute
a default under Item 20 hereof.
The interest of Landlord shall not be subject liens for improvements made
by Tenant in and to the Premises. Tenant shall notify every contractor making
such improvements of the provision set forth in the preceding sentence of this
paragraph. The parties agree, should
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Landlord so request, to execute, acknowledge and deliver, without charge to the
other, a Short From Lease in recordable form in accordance with Chapter 713,
Florida Statutes, containing a confirmation that the interest of Landlord shall
not be subject to liens for improvements made by Tenant to the Premises.
27. FORCE MAJEURE. Whenever a period of time is herein prescribed for
action to be taken by Landlord, Landlord shall not be liable or responsible
for, and there shall be excluded from the computation for any such period of
time, any delays due to strikes, riots, acts of God, shortages of labor or
materials, theft, fire, public enemy, injunction, insurrection, court order,
requisition of other governmental body or authority, war, governmental laws,
regulations or restrictions or any other causes of any kind whatsoever which
are beyond the control of Landlord.
28. SEVERABILITY. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws effective during the term
of this Lease, then and in that event, it is the intention of the parties
hereto that the remainder of this Lease shall not be affected thereby.
29. HOLDING OVER. The failure of Tenant to surrender the Premises on the
date provided herein for the expiration of the term of this Lease (or at the
time the Lease may be terminated otherwise by Landlord), and the subsequent
holding over by Tenant, with or without the consent of Landlord, shall result
in the creation of a tenancy at will at one hundred twenty-five percent (125%)
the Rent payable at the time of the date provided herein for the expiration of
this Lease or at the time the Lease may be terminated otherwise by Landlord.
This provision does not give Tenant any right to hold over at the expiration of
the term of this Lease, and shall not be deemed, the parties agree, to be a
renewal of the Lease term, either by operation of law or otherwise.
30. [Deleted]
31. RENT A SEPARATE COVENANT. Tenant shall not for any reason withhold
or reduce Tenant's required payments of Rent and other charges provided in this
Lease, it being expressly understood and agreed by the parties that the payment
of Rent and Additional Rent is a contractual covenant by Tenant that is
independent of the other covenants of the parties hereunder.
32. JOINT AND SEVERAL LIABILITY. If two or more individuals,
corporation, partnerships, or other business associations (or any combination
of two or more thereof) shall sign this Lease as Tenant, the liability of each
such individual corporation, partnership or other business association to pay
Rent and perform all other obligations hereunder shall be deemed to be joint
and several. In like manner, if Tenant is a partnership or other business
association, the members of which are, by virtue of statute or general law,
subject to personal liability, the liability of each such member shall be joint
and several.
33. ABSENCE OF OPTION. The submission of this Lease for examination does
not constitute a reservation of or option for the Premises, and this Lease
becomes effective only upon execution and delivery thereof by Landlord.
34. CORPORATE TENANCY. If Tenant is a corporation, the undersigned
officer of Tenant hereby warrants and certifies to Landlord that Tenant is a
corporation in good standing and is authorized to do business in the State of
Florida. The undersigned officer of Tenant hereby further warrants and
certifies to Landlord that he or she, as such officer, is authorized and
empowered to bind the corporation to the terms of this Lease by his or her
signature thereto. Landlord, before it accepts and delivers this Lease, may
require Tenant to supply it with a certified copy of the corporate resolution
authorizing the execution of this Lease by Tenant. If Tenant is a corporation
(other than one whose shares are regularly and publicly traded on a recognized
stock exchange), Tenant represents that the ownership and power to vote its
entire outstanding capital stock belongs to and is vested in the officer or
officers executing this Lease or members of his, her or their immediate family.
If there shall occur any change in the ownership or and/or power to vote the
majority of the outstanding capital stock of Tenant, whether such
23
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change of ownership is by sale, assignment, bequest, inheritance, operation
of law or otherwise, without the prior written consent of Landlord, then
Landlord shall have the option to terminate this Lease upon thirty (30) days'
written notice to Tenant. Furthermore, Tenant shall have an affirmative
obligation to notify immediately Landlord of any such change.
35. BROKERAGE COMMISSION. Tenant warrants that there are no claims for
broker's commissions or finder's fees in connection with its execution of this
Lease and agrees to indemnify and save Landlord harmless from any liability
that may arise from such claim, including reasonable attorneys' and paralegals'
fees (whether incurred in court, out of court, on appeal or in bankruptcy or
administrative proceedings). Notwithstanding the foregoing, Landlord hereby
acknowledges that Tenant is represented by Southeast Corporate Realty, Inc.
(Southeast). Landlord or Landlord's agent hereby agrees to pay Southeast a
commission in accordance with a separate agreement, which shall be executed by
the parties prior to Tenant's execution of this Lease.
36. LANDLORD'S DEFAULT. Landlord shall in no event be charged with
default in the performance of any of its obligations under this Lease unless
and until Landlord shall have failed to perform such obligations within thirty
(30) days (or within such additional time as is reasonably required to remedy
any such default). after written notice to Landlord by Tenant properly
specifying and detailing the particulars of wherein and whereby Tenant claims
Landlord has failed to perform such obligations. No default by Landlord under
this Lease shall give Tenant the right to terminate this Lease or withhold or
otherwise abate Rent, Additional Rent or any sums payable by Landlord to Tenant
under this Lease. If the holder of the first mortgage covering the Premises
shall have given prior written notice to tenant that it is the holder of such
first mortgage and such notice includes the address at which notices to such
mortgagee are to be sent, then Tenant shall give such mortgagee notice
simultaneously with any notice given to Landlord to correct any default of
Landlord as hereinabove provided. Such mortgagee shall have the right within
thirty (30) days (or within such additional time as is reasonably required to
correct any such default) after receipt of such notice to correct or remedy
such default before Tenant may take any action under this Lease by reason of
such default. Any notice of default given by landlord by Tenant shall be null
and void unless simultaneous notice has been given by Tenant to said first
mortgagee.
Anything in this Lease to the contrary notwithstanding, covenants,
undertakings and agreements herein made on the part of the Landlord are made
personally or the assets of Landlord but are made and intended to bind only the
Landlord's interest in the Premises, as the same may, from time to time, be
encumbered and no personal ability shall at any time be asserted or enforceable
against Landlord to its stockholders, officers or partners or their respective
heirs, legal representative, successors and assigns on account of the Lease or
on account of any covenant, undertaking or agreement of Landlord in this Lease.
37. NOTICE. Any notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered or given when (a) actually
received or (b) signed for or "refused" as indicated on the postal service
return receipt. Delivery may be by personal delivery or by United States mail,
postage prepaid, certified or registered mail, addressed to the parties hereto
at the respective addresses set out opposite their names below, or at such
other address as they may hereafter specify by written notice delivered in
accordance herewith:
LANDLORD:
AETNA LIFE INSURANCE COMPANY
c/o AETNA REALTY INVESTORS, INC.
242 Trumbull Street
Hartford, Connecticut 06156
Attn: Equities Management Section.
With a copy to:
FLORIDA REAL ESTATE ADVISORS
250 International Parkway
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Suite 114
Heathrow, FL 32746
TENANT
Before Occupancy: (as well as during occupancy)
OLSTEN STAFFING SERVICES, INC.
Attn: Law Department
175 Broad Hollow Road
Melville, New York, 11747
During Occupancy:
OLSTEN STAFFING SERVICES, INC.
250 International Parkway, Suite 128
Heathrow, FL. 32746
38. INSURANCE. Tenant shall not conduct or permit to be conducted any
activity, or place any equipment, materials or other items in, on or about the
Premises or the Building, which will in any way increase the rate of fire or
liability or casualty insurance on the Building. Should Tenant fail to comply
with the foregoing covenant on its part to be performed, Tenant shall reimburse
Landlord for such increased amount upon written demand therefor from Landlord,
the same to be considered Additional Rent payable hereunder.
Tenant shall, at Tenant's sole expense, obtain and keep in force at all
times during the term of this Lease, comprehensive general liability insurance,
including property damage on an occurrence basis, with limits of not less than
One Million Dollars ($1,000.000.00) combined single limit, insuring Landlord
and Tenant against any liability arising out of the ownership, use, occupancy
or maintenance of the Premises and all areas appurtenant thereto. Fire legal
liability insurance in an amount of not less than $50,000.00 shall also be
obtained and kept in force during the term of this Lease at Tenant's expense.
The limit of said insurance shall not, however, limit the liability of Tenant
hereunder. Tenant may carry said insurance under a blanket policy, provided an
endorsement naming Landlord as an additional insured is attached thereto.
Tenant shall maintain insurance upon Tenant's trade fixtures, merchandise
and personal property in the Premises in an amount not less than one hundred
percent (100%) of their full replacement cost, which insurance shall provide
protection against perils included within the standard Florida form of fire and
extended coverage insurance policy, together with insurance against sprinkler
damage, vandalism and malicious mischief. Tenant shall maintain insurance
against such other perils and in such amounts as Landlord may in writing from
time to time requite.
All insurance policies required to be obtained and maintained under this
Lease shall be with a company or companies licensed to issue the relevant
insurance, licensed to do business in the State of Florida, and reasonably
acceptable to Landlord. Such insurance company or companies shall each have a
policyholder's rating of no less than "A" in the most recent edition of BEST
INSURANCE REPORTS. No policy shall be cancelable or subject to reduction of
coverage except after thirty (30) days prior written notice to Landlord.
Landlord shall receive written evidence of insurance upon request. All
policies of insurance maintained by Tenant shall be in a form and, shall have a
substance, acceptable to Landlord with satisfactory evidence that all premiums
have been paid. Tenant agrees not to violate knowingly or permit to be violated
any of the conditions or provisions of the surface policies required to be
furnished hereunder, and agrees to promptly notify Landlord of any fire or
other casualty. If Tenant fails to procure and maintain insurance as required
hereunder, Landlord may do so, and Tenant shall, on written demand, as
Additional Rent, reimburse Landlord for all monies expended by Landlord to
procure and maintain such insurance.
Tenant hereby waives and releases Landlord of and from any and all
liabilities, claims and losses for which Landlord is or may be held liable to
the extent Tenant receives insurance proceeds on account thereof.
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Upon Landlord's written request for same, Tenant will provide Landlord
with written evidence of tenant's compliance with its obligations under this
Item 38.
39. RECORDING. This Lease shall not be recorded without Landlord's prior
written consent.
40. STATUTORILY MANDATED NOTIFICATION. As required by F.S. 404.056(8),
Landlord notifies Tenant as follows: "RADON GAS: Radon is a naturally
occurring radioactive gas that, when it has accumulated in a building in
sufficient quantities, may present health risks to persons who are exposed to
it over time. Levels of radon that exceed federal and state guidelines have
been found in buildings in Florida. Additional information regarding radon and
radon testing may be obtained from your county public health unit."
41. NONDISCLOSURE. Tenant agrees that it will not divulge or disclose to
third parties the terms, provisions and conditions of this Lease. Tenant's
breach of this Item 41 shall constitute a default under Item 20 of this Lease,
no curative notice to Tenant from Landlord being required.
42. HAZARDOUS MATERIALS. Tenant shall not cause or permit any Hazardous
Material (as hereinafter define) to be brought upon, kept or used in or about
the Premises or the Building by Tenant, its agents, principal, employees,
assigns, sublessees, contractors, consultants or invitees without the prior
written consent of Landlord, which consent may not be unreasonably withheld.
If Tenant breaches the obligations stated in the preceding sentence, or if the
presence of Hazardous Material on the Premises or around the Building caused or
permitted by Tenant (or the aforesaid others) results in (a) any contamination
of the Premises, the Building, the surrounding area(s), the soil or surface or
ground water or (b) loss or damage to person(s) or property, or if
contamination of the Premises or the Building or the surrounding area(s) by
Hazardous Material otherwise occurs for which Tenant is legally, actually or
factually liable or responsible to Landlord (or any party claiming by, through
or under Landlord) for damages, losses, costs or expenses resulting therefrom,
the Tenant shall fully and completely indemnify, defend and hold harmless
Landlord (or any party claiming by, through or under Landlord) from any and all
claims, judgments, damages, penalties, fines, costs liabilities or losses
(including, without limitation: (I) diminution in the value of the Premises
and/or the Building and/or the land on which the Building is located and/or any
adjoining area(s) which Landlord owns or in which it holds a property interest;
(ii) damages for the loss or restriction on use of rentable or usable space of
any amenity of the Premises, the Building or the land on which the Building is
located; (iii) damages arising from any adverse impact on marketing of space;
and (iv) any sums paid in settlement of claims, reasonable attorneys' and
paralegals' fees, (whether incurred in court, out of court, on appeal or in
bankruptcy or administrative proceedings) (consultants fees and expert fees))
which arise during or after the term of this Lease, as may be extended, as a
consequence of such contamination. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation or site conditions or any cleanup, remedial, removal or
restoration work required by any federal, state or local governmental agency or
political subdivision because of Hazardous Material present in the soil or
ground water on or under the Premises or the Building.
Without limiting the foregoing, if the present of any Hazardous Material
on, under or about the Premises, the Building or the surrounding area(s) caused
or permitted by Tenant (or the aforesaid others) results in (a) any
contamination of the Premises, the Building, the surrounding area(s), the soil
or surface or ground water or (b) loss or damage to person(s) or property, then
Tenant shall immediately notify Landlord of any contamination, claim of
contamination, loss or damage and, after consultation and approval by Landlord,
take all actions at Tenant's sole expense as are necessary or appropriate to
return the Premises, the Building, the surrounding area(s) and the soil or
surface or ground water to the condition existing prior to the introduction of
any such Hazardous Material thereto, such that the contaminated areas are
brought into full compliance with all applicable statutory regulations and
standards. The foregoing obligations and responsibilities of Tenant shall
survive the expiration or earlier termination of this Lease.
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As used herein, the term "Hazardous Material" means any hazardous or toxic
substance, material or waste, including, but not limited to, those substances,
materials, and wastes listed in the United States Department of Transportation
Hazardous Materials Table (49 CFR 172.101) or by the Environmental Protection
Agency as hazardous substances (40 CFR Part 302) amendments thereto, or such
substances, materials and wastes that are or become regulated under any
applicable local, state or federal law. "Hazardous Material" includes any and
all material or substances which are defined as "hazardous waste", "extremely
hazardous waste" or a "hazardous substance" pursuant to local, state or federal
governmental law. "Hazardous substance" includes, but is not restricted to,
asbestos, polychorobiphonyis ("PCB's"), petroleum, any and all material or
substances which are classified as "biohazardous" or "biological waste" (as
such terms are defined by Florida Administrative Code ("F.A.C.") Chapter 17712,
as amended from time to time), and extremely "hazardous waste" or "hazardous
substance" pursuant to federal, state or local government law.
Landlord and its agents shall have the right, but not the duty, to inspect
the Premises at any time to determine whether Tenant is complying with the
terms of this Lease. If Tenant is not in compliance with this Lease, Landlord
shall have the right to immediately enter upon the Premises to remedy any
contamination caused by Tenant's failure to comply, notwithstanding any other
provision of this Lease. Landlord shall use its best efforts to minimize
interference with Tenant's business, but shall not be liable for any
interference caused thereby. SEE EXHIBIT B FOR ADDITIONAL LANGUAGE.
Any noncompliance by Tenant with its duties, responsibilities and
obligations under this Item 42 shall be an "automatic" (notice of any nature
from Landlord to Tenant being required) default of this Lease (see Item 20).
43. AMENDMENTS. This Lease contains the entire agreement between the
parties hereto and may not be altered, changed or amended, except by written
instrument signed by both parties hereto. No provisions of this Lease shall be
deemed to have been waived by Landlord unless such waiver is in writing signed
by Landlord and addressed to Tenant, nor shall any custom of practice which may
grow up between the parties in the administration of the provisions hereof be
construed to waive or lessen the right of Landlord to insist upon the
performance by Tenant in strict accordance with the terms hereof. The terms,
provisions, covenants, and conditions contained in this Lease shall apply to,
inure to the benefit of, and be binding upon the parties hereto, and upon their
respective successors in interest and legal representative, except as otherwise
herein expressly provided.
44. FINANCIAL STATEMENTS. Within five (5) days after Landlord's request,
Tenant shall deliver to Landlord the current financial statements of Tenant,
and financial statement of the two (2) years prior to the current financial
statements year, with an opinion of a certified public accountant, including a
balance sheet and profit and loss statement for the most recent prior year, all
prepared in accordance with generally accepted accounting principles
consistently applied.
The parties acknowledge that they have read this Lease (to include its
Exhibits and attachments) in its entirety, that they are familiar with all of
the terms, covenants, provisions and conditions set forth therein and that
there are no other representations, undertakings, warranties or agreements
concerning this Lease which do not appear in writing therein. The parties
further acknowledge that the terms and provisions contained within this Lease
have been fully, freely and fairly negotiated by and between them.
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IN WITNESS WHEREOF, the undersigned authorities have hereunto executed
this Lease, effective on the day and year first above written.
Signed, sealed and delivered
in the presence of: TENANT:
OLSTEN STAFFING SERVICES, INC.
/s/ Tricia Posa BY: /s/ Lauren L. Laderoute, Jr
- --------------------------- --------------------------------
Print Name: Tricia Posa Print Name: Lauren L. Laderoute, Jr.
Its: Vice President
/s/ Barbra Massina
- ---------------------------
Print Name: Barbra Massina
LANDLORD
AETNA LIFE INSURANCE COMPANY
/s/ Kathleen Sullivan BY: /s/
- ------------------------------- ---------------------------------
Print Name: Kathleen Sullivan
/s/ Joanne Fitzgerald
- ------------------------------
Print Name: Joanne Fitzgerald
28
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EXHIBIT A
[FLOOR PLAN]
29
<PAGE>
EXHIBIT B
THIS EXHIBIT is hereby attached to and made a part of this Lease between
Landlord and Tenant. Notwithstanding anything else set forth in the
Lease, Landlord and Tenant hereby agree as follows:
1. RENT SCHEDULE
Landlord and Tenant agree to the following rent schedule for the term of
the Lease:
January 1, 1996 - December 31, 1996 $16.00/sf $2,536.00/month
January 1, 1997 - December 31, 1997 $16.50/sf $2,615.25/month
January 1, 1998 - December 31, 1998 $17.00/sf $2,694.50/month
January 1, 1999 - December 31, 1999 $17.50/sf $2,773.75/month
January 1, 2000 - December 31, 2000 $18.00/sf $2,853.00/month
The above numbers do not include sales tax which Tenant will be
responsible for paying.
2. INDEMNITY
Notwithstanding the foregoing provided in Section 15 of the Lease
Agreements, Tenant shall not be liable for, and Landlord will indemnify,
and save Tenant harmless of and from all suits, damages, claims, demands
and losses and actions (including reasonable attorneys' fees and
paralegal's fees, whether incurred in court, out of court, on appeal, or
in bankruptcy administrative proceedings), for any injury to person on or
about the Premises caused by the gross negligence or willful misconduct of
Landlord or its employees.
3. HAZARDOUS MATERIALS
Notwithstanding the foregoing provided in Section 42 of the Lease
Agreement, and Landlord acknowledges, and hereby consents to, Tenant's
temporary storage of medical or quasi-medical waste in a dedicated closet
within the Premises, in accordance with all applicable Federal and State
laws and standards. Further, Tenant shall instruct its employees,
independent contractors and building janitorial staff, in the handling,
storage, and disposal of such medical or quasi-medical waste. It is
further understood that Tenant shall be solely responsible for all costs
associated with property disposal of all medical or quasi-medical waste.
4. TENANT IMPROVEMENTS
On or before November 1, 1995, Tenant shall submit to Landlord, for
Landlord's approval, plans and specifications for the interior
improvements to the Premises (the "Plans and Specifications"). If
disapproved by Landlord, Tenant will review the Plans and Specifications
in order to incorporate Landlord's comments. On
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approval of the Plans and Specifications by Landlord, the Plans and
Specifications shall be attached to and shall become a part of this
Lease. Landlord shall complete the improvements described in the Plans
and Specifications ("Improvements") for a total cost not to exceed $12.50
per rentable square foot of the Premises ("Improvements Allowance"). In
the event that the cost of the Improvements exceeds $12.50 per rentable
square foot of the Premises, all such excess costs shall be paid by Tenant
to Landlord upon demand for payment from Landlord. If the cost of the
Improvements is less than $12.50 per rentable square feet of the Premises,
such difference shall be credited against Rent due and owing to Landlord
under this Lease; provided, however, that the total Rent credit shall not
exceed the sum equal to the number of rentable square feet of the Premises
multiplied by $3.00.
Upon substantial completion of the Improvements, Landlord shall notify
Tenant and Landlord and Tenant shall conduct a joint inspection of the
Premises during which they will develop a mutually agreeable punchlist of
items to be completed by Landlord. Tenant's occupancy of the Premises
shall be deemed to constitute acceptance of the Premises and
acknowledgment by Tenant that Landlord has fully complied with its
obligations hereunder to construct and deliver the Premises to Tenant,
except for punchlist items, which shall be completed by Landlord within a
reasonable time thereafter. Landlord shall have the right to enter the
Premises to complete or repair any such punchlist items and entry by
Landlord, its agents, servants, employees or contractors for such purpose
shall not constitute a constructive eviction in whole or in part, entitle
Tenant to any abatement of Rent, relieve Tenant of any of its obligations
under this Lease or impose any liability upon Landlord or its agents,
servants, employees or contractors. Except for the Improvements, Tenant
accepts the Premises in its "AS IS" condition and agrees and acknowledges
that Landlord is not obligated to make any alterations or improvements to
the Premises except for the Improvements.
5. CANCELLATION OPTION
Provided Tenant duly, fully, and timely complies with all of its duties
and obligations under this Lease, Tenant may cancel this Lease upon the
third anniversary date of the Commencement Date of this Amendment
("Cancellation Date"). Tenant must notify Landlord in writing ninety (90)
days prior to the Cancellation Date of Tenant's intent to cancel the then
remaining Term of this Lease and simultaneously with such notice Tenant
shall pay to Landlord in a lump sum an amount of $15,210.52, together with
any sales, use or excise tax due thereon. The failure of Tenant to
deliver the above cancellation fee simultaneously with such notice shall
render any notice of cancellation invalid and of no force and effect and
Tenant shall have no further right to terminate this Lease as provided in
this paragraph.
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7. OPTION TO EXTEND
Provided Tenant is in possession of the Premises and is not in default of
any term, covenant or condition of this Lease, Tenant shall have one (1)
option to renew the Term of this Lease for five (5) years to commence
immediately upon the expiration of the initial Term or renewal term, upon
the same terms, covenants and conditions as contained in this Lease,
except that (i) the annual base Rent during said Renewal Term shall be the
then prevailing market rate, plus all sales, use, excise and other taxes
now or hereinafter enforced by any lawful authority on all amounts due.
In order to exercise the option granted herein, Tenant shall notify
Landlord, in writing, not less than ninety (90) days prior to the
expiration of the initial Term, that it is considering exercising its
option to renew the Term. On receipt of such notice, Landlord will, in
writing, not later than thirty (30) days after receipt of the notice from
Tenant, quote to Tenant what the new annual base Rent will be for the
ensuing Renewal Term. Tenant shall then notify Landlord, in writing, not
later than fifteen (15) days after notice received of such annual base
rents, as to whether or not it will exercise the option herein granted,
and, if no such notice of exercise is received, the option shall be deemed
waived. In the event Tenant exercises the option, Landlord and Tenant
shall execute a modification to this Lease acknowledging such renewal and
setting forth the new annual base Rent.
The option shall be void if, at the time of exercise of such option,
Tenant is not in possession of the Premises or is in default under this
Lease or if Tenant fails to deliver the requisite notice thereof within
the time period specified above. The option granted herein shall not be
severed from this Lease, separately sold, assigned or transferred.
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BUILDING RULES AND REGULATIONS
The following Building Rules and Regulations have been adopted by Landlord
for the care, protection and benefit of the Premises and the Building and for
the general comfort and welfare of all tenants.
1. The sidewalks, entrances, passages, halls, elevators and stairways
shall not be obstructed by Tenant or used by Tenant for any purpose other than
for ingress and egress to and from the Building and Tenant's Premises.
2. Restroom facilities, water fountains, and other water apparatus shall
not be used for any purpose other than those for which they were constructed.
3. Landlord reserves the right to designate the time when freight,
furniture, goods, merchandise and other articles may be brought into, moved or
taken from Tenant's Premises or the Building.
4. Tenant shall not put additional locks or latches upon any door
without the prior written discretionary consent of Landlord. Any and all locks
so added on any door shall remain for the benefit of Landlord, and the keys to
such locks shall be delivered to Landlord by and from Tenant.
5. Landlord shall not be liable for injuries, damage, theft, or other
loss, to persons or property that may occur upon, or near any parking areas
that may be provided by Landlord. Tenant, its agents, employees, and invitees
are to use same at their own risk, Landlord to provide no security with respect
thereto. The driveways, entrances, and exits upon, into and from such parking
areas shall not be obstructed by Tenant, Tenant's employees, agents, guests, or
invitees. Tenant, its employees, agents, guests and/or invitees shall not park
in space(s) that are identified as reserved for others.
6. Tenant shall not install in the Premises any heavy equipment or
fixtures or permit any concentration of excessive weight in any portion thereof
without first having obtained Landlord's written consent.
7. Landlord reserves the right at all times to exclude newsboys,
loiterers, vendors, solicitors, and peddlers from the Building and to require
registration or satisfactory identification or credentials from all persons
seeking access to any part of the Building outside ordinary business hours.
Landlord will exercise its best judgment in the execution of such control but
will not be liable for the granting or refusal of such access.
8. Landlord reserves the right at all times to exclude the general
public from the Building upon such days and at such hours as in Landlord's sole
judgment will be in the best interest of the Building and its tenants.
9. No wires of any kind or type (including but not limited to T.V. and
radio antennas) shall be attached to the outside of the building and no wires
shall be run or installed in any part of the Building without Landlord's prior
written consent.
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10. If the Premises are furnished with carpeting, Tenant shall provide a
plexiglass or comparable carpet protection mat for each desk chair customarily
used by Tenant. For default or carelessness in these respects, Tenant shall
pay Landlord the cost of repairing or replacing said carpet, in whole or in
part, as Additional Rent when, in Landlord's sole judgment, shall repair or
replacement is necessary.
11. Landlord shall furnish a reasonable number of door keys to Tenant's
premises and/or the Building which shall be surrendered on termination or
expiration of the Lease. Landlord reserves the right to require a deposit for
such keys to insure their return at the termination or expiration of the Lease.
Tenant shall get keys only from Landlord and shall not obtain duplicate keys
from an outside source. Further, Tenant shall not alter the locks or effect
any substitution of such locks as are presently being used by Tenant's Premises
or the Building.
12. Tenant shall keep all doors to Premises closed at all times except
for ingress and egress to the Premises.
13. All installations in the Common Telephone/Electrical Equipment Rooms
shall be limited to terminal boards and connections. All other electrical
equipment must be installed within Tenant's Premises.
14. It is expressly understood and agreed that any items of any nature
whatsoever placed in Common Areas (i.e., hallways, restrooms, elevators,
parking garage, storage areas and equipment rooms) are placed at Tenant's sole
risk and Landlord assumes no responsibility whatsoever for any loss or damage
as regards same.
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<PAGE>
EXHIBIT "F"
Hold Harmless Agreement for Heathrow I.
This HOLD HARMLESS AGREEMENT made as of the ___ day of ____________________,
19__, by and between Florida Real Estate Advisors, Inc. (hereinafter called
"FREA") and Olsten Staffing Services, Inc. (hereinafter called "Tenant") and
____________ (hereinafter called "Guarantor").
WITNESSETH:
WHEREAS, FREA is the property manager and leasing agent for Heathrow I
(hereinafter called "Property") pursuant to a Management and Leasing Agreement
(hereinafter called "Management Agreement") dated June 10, 1991 by and between
FREA and Aetna Life Insurance Company (hereinafter called "Owner" or
"Landlord"); and
WHEREAS, Landlord and Tenant have executed or are about to execute a lease
agreement (hereinafter called "Lease"), whereby Tenant will lease space in the
Property from Landlord; and
WHEREAS, Guarantor has executed or is about to execute a Lease Guaranty to be
attached to said Lease.
NOW, THEREFORE, in consideration of the premises and the mutual promises and
covenants herein contained, FREA, Tenant and Guarantor hereby agree as follows:
1. Tenant and Guarantor acknowledge (a) that FREA is an agent for Owner
acting solely within the scope of and pursuant to the terms of the Management
Agreement; and (b) that FREA is not affiliated with the Owner nor does FREA
have any ownership rights with respect to the Property.
2. FREA, Tenant and Guarantor acknowledge that no representations by FREA,
understandings or agreements have been made or relied upon in the making of the
Lease other than those set forth in the Lease, and the Lease contains all
representations, understandings and agreements made with Tenant by FREA on
behalf of Owner. No course of prior dealings between Tenant and FREA or their
officers, employees, agents or affiliates shall be relevant or admissible to
supplement, explain or vary any of the terms of the Lease.
3. Tenant and Guarantor agree to look solely to Landlord for the satisfaction
of any judgment obtained by Tenant or Guarantor against Landlord or the
Property and shall hold and save FREA free and harmless from all expenses,
claims, liabilities, losses, judgments or damages, including reasonable
attorneys' fees, arising therefrom or directly or indirectly related thereto.
4. Tenant acknowledges that Owner is not a signatory to this agreement, but
agrees that Owner can rely on the provisions of Section 2 hereinabove.
IN WITNESS WHEREOF, this Agreement has been executed as of the first day and
year first above written.
FREA
Florida Real Estate Advisors, Inc.
35
<PAGE>
By: /s/ Norman Mansour
---------------------------------
Norman Mansour, Managing Partner
TENANT
Olsten Staffing Services, Inc.
By: /s/
---------------------------------
Vice President
GUARANTOR:
_____________________________
36
<PAGE>
February 25, 1997
David S. Gergacz
CEO and President
Brite
7309 E. 21st Street North
Wichita, Kansas 67206
Sam Kline
130 Nason Hill Road
Sherborn, MA 01770
Sam,
It is my pleasure to offer you a position with Brite. This position will report
to me and be based in our office in Canton, Massachusetts. The title for this
position will be Vice President of Business Development.
Initially the position would entail assisting me with business development and
leading certain product development and joint venture efforts the business is
trying to establish to leverage its growth for the future.
The effective date of your employment will be March 10, 1997.
The compensation for this position would consist of the following:
Base $165,000
Bonus 30% of annual base salary based upon specific performance
targets.
Stock An initial stock grant of 40,000 of non-qualified stock
options priced on the date you sign your contract.
Additional grants of non-qualified options of 10,000 shares
would be made annually subject to the approval of the Board
of Directors.
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<PAGE>
The initial grant of options will vest over four years
with 25% vesting in each year. The objects are subject to
the terms of the 1994 Stock Option Plan.
Benefits This position would receive all the standard benefits
normally afforded a position of this level within the
company, including: health care, insurance and a 401K
plan. These benefits are specifically detailed in your
benefit package.
Vacation Four weeks.
Termination You shall be entitled to payment of your base salary and
benefits at the time of termination, if such termination is
not a termination for cause, voluntary, caused by death, or
you are unable to render services required of you for a
period of six months.
Change of
Control In the event of a change in control of the company all
options granted up to that time will vest and become
exercisable under the terms of the plan. You will also
receive the same compensation benefits as outlined in the
paragraph defining termination benefits above. "Change in
Control" shall mean, a dissolution or liquidation of the
company, a merger or consolidation in which the company in
not the surviving corporation, or the acquisition of more
than 50% of the outstanding Stock by any person, or group
of related persons acting in concert, in a single
transaction or series of related transactions.
Covenant not
to compete You covenant and agree that during your employment with
Brite and for a period of one year following the date of
your termination, you will not compete with any of the
existing or specifically planned activities of the company.
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<PAGE>
You also agree not to directly or indirectly solicit any
employee of the company for employment outside of the
company for a period of one year.
Your acceptance of this agreement is indicated by your signature below
/s/ D.S. Gergacz 2/25/97
David S. Gergacz Date
- ----------------------------
/s/ Samuel J. Kline 2/25/97
Samuel J. Kline Date
- ---------------------------
39
<PAGE>
EMPLOYMENT AGREEMENT
THIS Employment Agreement ("Agreement") is made and entered into this 22nd
day of March, 1997, by and between Christine King ("Employee") and Brite Voice
Systems, Inc. ("Brite").
WHEREAS, Brite desires to engage Employee to perform services for Brite,
and Employee desires to perform such services on the terms and conditions set
forth herein:
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and in consideration of the
covenants and obligations herein contained, the parties hereto agree as
follows:
1. EMPLOYMENT AND DUTIES.
From and after April 14, 1997, ("Commencement Date") Brite shall
employ Christine King as Senior Vice President of Product Development and
Program Management. Such Employee, at this time, shall report to the CEO.
Employee shall use her best and most diligent efforts on a full time,
exclusive basis to promote the best interests of Brite.
2. COMPENSATION AND BENEFITS.
A. SALARY. Employee's initial annual salary shall be $160,000
("Base Salary") payable pursuant to Brite's customary payroll policies in
force at the time of payment.
B. BONUS. For each year of employment commencing with calendar
year 1997, Employee will be entitled to participate in an incentive
compensation program which shall be based on the performance of Employee
measured against performance targets established for Employee. For
calendar year 1997, such bonus program shall provide for bonus
compensation of 30% of base salary if targeted performance is attained,
and additional bonus compensation, not to exceed an additional 30% of base
salary, upon the attainment of performance levels above the target
performance goal. For years subsequent to calendar year 1997, Employee
will be entitled to participate in such incentive compensation programs as
shall be established for other employees of Brite holding positions of
similar responsibility. In the first year the bonus will be based 50% on
the overall financial performance of the company and 50% on specific
personal objectives to be determined by May 1, 1997.
C. BENEFITS. Employee will be entitled to participate in Brite's
benefits provided to other employees having similar responsibilities with
Brite, as established and/or modified by Brite from time to time,
including, but not limited to, paid vacation time (four weeks), life
insurance, health insurance and dental insurance. The current benefit
program is represented by Attachment A.
D. BUSINESS EXPENSES. Pursuant to Brite's customary policies in
force at the time of payment, Employee shall be promptly reimbursed
against presentation of
40
<PAGE>
vouchers or receipts, for all authorized expenses
properly incurred by her in the performance of her duties hereunder.
3. RELOCATION.
Employee shall be entitled to the relocation package as described in
Attachment B.
4. TERMINATION.
A. TERMINATION FOR CAUSE. If Employee's employment is terminated
and such termination is a Termination for Cause, Employee shall be
entitled to payment of her Base Salary to the date of termination, accrued
bonus (if any) and benefits existing at the time of termination of her
employment. Termination for Cause means one or more of: (i) voluntary
termination of employment by Employee for any reason; (ii) the death of
Employee; (iii) Employee having been unable to render services required of
her hereunder for a consecutive period of six months or for any period in
the aggregate of six months in any twelve month period because of a
serious and continuing health impairment, which impairment will most
likely result in Employee's continued inability to render the services
required of her hereunder; (iv) Employee's misappropriation of corporate
funds; (v) Employee's conviction of a felony; (vi) Employee's conviction
of any crime involving theft, dishonesty, or moral turpitude;
(vii) Employee's failure to devote substantially her full business time
to Brite as provided in Section 1 hereof; (viii) falsification of any
material representation made by Employee to Brite; or, (ix) the commission
by Employee of a material breach of the terms of this Agreement.
B. TERMINATION OTHER THAN FOR CAUSE. If Employee's employment with
Brite is terminated and such termination is not a Termination for Cause,
Employee will be entitled to severance pay equal to one year of salary and
benefits, plus that portion of Employee's Base Salary, bonus and benefits
that had accrued as of the termination date. The foregoing payments and
benefits shall constitute full satisfaction of any and all payments or
benefits that might otherwise be due Employee hereunder.
5. OPTIONS TO PURCHASE COMMON STOCK
On the commencement Date, or as soon thereafter as is practicable,
the Board of Directors of Brite shall grant Employee an option to purchase
30,000 shares of Brite's common stock. The terms of such option grant
shall be set forth in a stock option agreement in form substantially the
same as that set forth in Exhibit C hereto, with the option exercise price
being established at the close of business on the grant date. The stock
option agreement shall further provide that the options granted thereunder
shall vest ratably over a four year period, subject in all respects to the
terms of the Company's 1994 Stock Option Plan. Additional grants of
10,000 shares may be made annually subject to approval of the Board of
Directors.
41
<PAGE>
6. CONFIDENTIAL INFORMATION.
A. DEFINITION OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, the term "Confidential Information" means:
That secret, proprietary information of Brite not otherwise
publicly disclosed (whether or not discovered or developed by
Employee) and known by Employee as a consequence of Employee's
employment with Brite. Without limiting the generality of the
foregoing, such proprietary information shall include:
information not generally known in the industry or related
industries which concerns (i) customer lists; (ii) computer
programs and facilities; (iii) the identity of specialized
consultants and contractors and confidential information
developed by them for Brite; (iv) operating and other cost data,
including information regarding salaries and benefits of
employees; (v) cost and pricing data; (vi) acquisition,
expansion, marketing, financial and other business plans;
(vii) Brite manuals, files, records; memoranda, plans, drawings and
designs, specifications and computer programs and records; and
(viii) all information which is a "trade secret" as defined in
the Uniform Trade Secrets Act as adopted in Kansas at K.S.A. 60-
3320.
B. CONFIDENTIAL INFORMATION. During Employee's employment with
Brite, Employee will have access to and become familiar with Confidential
Information of Brite. Employee acknowledges that such Confidential
Information is owned and shall continue to be owned solely by Brite.
During the term of Employee's employment with Brite and after termination
of such employment, Employee shall not use or divulge Confidential
Information to any person or entity other than Brite, or persons to whom
Brite has given its written consent, unless such information has become
common knowledge and is no longer Confidential Information.
C. RETURN OF DOCUMENTS. Upon termination of Employee's employment
with Brite, all procedural manuals, guides, specifications, plans,
drawings, designs, records, lists, notebooks, software, diskettes,
customer lists, pricing documentation and other property which is or
contains Confidential Information, including all copies thereof, in the
possession or control of Employee, whether prepared by Employee or others,
shall be forthwith delivered by Employee to Brite.
7. COVENANTS NOT TO COMPETE.
A. RESTRICTIVE COVENANT. Employee covenants and agrees that
during Employee's employment with Brite and for a period of one year
following the date of termination of Employee's employment with Brite (the
"Restricted Period"), Employee shall not, without the prior written
approval of the President of Brite, in any manner compete with Brite or
any successor to the business of Brite, as an owner, officer, director,
employee, agent, consultant, lender or otherwise, with any person or
entity in a business involving a line of business conducted by Brite
during the term of Employee's employment.
B. SOLICITATION OF EMPLOYEES. During the one-year period
following Employee's termination of employment with Brite, Employee shall
not without the prior written approval of the President of Brite, directly
or indirectly solicit, raid, entice, or induce any person who is, or was
at any time within six months prior to such termination, an employee of
Brite, to become employed by any other person, firm, or corporation in any
business which is in any manner in competition with Brite.
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<PAGE>
Furthermore, Employee shall inform Brite in writing if any other person
employed by Brite contacts Employee for the purpose of seeking employment
during such one year period.
C. NEW DEVELOPMENTS. Employee agrees that any developments made by
Employee or under Employee's direction in connection with the work of
Brite shall be the sole and complete property of Brite and that any and
all copyrights, patent rights and other proprietary rights therein shall
belong to Brite. Employee shall cooperate with Brite and execute any
documents prepared by Brite to secure or protect any such rights.
43
<PAGE>
D. REASONABLENESS OF RESTRICTIONS, REFORMATION, AND SEVERABILITY.
Employee has carefully read and considered the provisions of this Section
7 and, having done so agrees that the restrictions set forth herein,
including, but not limited to, the duration of the Restricted Period and
the scope of the restriction are fair and reasonable and are reasonably
required for the protection of the interests of Brite.
In the event that, notwithstanding the foregoing any part of the
covenants set forth in this Section 7 shall be held to be invalid or
unenforceable, the remaining parts thereof shall nevertheless continue to
be valid and enforceable as though the invalid or unenforceable parts had
not been included therein. In the event that any provision of this Section
7 relating to the time period and/or scope of the restrictions shall be
declared by a court of competent jurisdiction to exceed the maximum time
period or area as such court deems reasonable and enforceable, said time
period and;/or areas of restrictions shall be deemed to become and
thereafter bye the maximum time period and/or scope which such court deems
reasonable and enforceable.
Any provision hereof otherwise prohibited by or unenforceable
under any applicable law or public policy in any jurisdiction which cannot be
reformed in accordance with the provisions herein, shall, as to such
jurisdiction, be ineffective without affecting any other provision of this
Agreement, or shall be deemed to be served or otherwise modified to conform
with such law or public policy; and the remaining provisions of this agreement
shall remain in force., provided that the purpose of this Agreement can be
effected. To the full extent, however, that the provisions of such applicable
law or public policy may be waived, this Agreement shall be deemed to be a
waiver thereof. The parties hereto understand and agree that all the covenants
set forth herein are an shall be separately enforceable, each to the full
extent permitted by applicable law.
E. TOLLING PERIOD. It if should become desirable for necessary for
Brite to seek compliance with this Section 7 by judicial proceedings, the
period during which Employee shall comply with its provisions shall extend
to the first anniversary of the date of the final, nonappealable order
requiring such compliance.
F. REMEDIES. It is agreed that Brite would be irreparably damaged
by reason of any violation of the provisions of this agreement and that
any remedy at law for a breach of the provisions of this agreement would
be inadequate. Therefore, Brite shall be entitled to seek injunctive or
other equitable relief in a court of competent jurisdiction against
Employee or Employee's agents, affiliates, partners, or other associates,
for any breach or threatened breach of this Agreement, without the
necessity of proving actual monetary loss. It is expressly understood that
the remedy described in this Paragraph F shall not be the exclusive remedy
of Brite for any breach of this agreement, and Brite shall be entitled to
seek such other relief or remedy at law or in equity to which it may be
entitled as a consequence of any breach of this Agreement.
8. NOTICES.
Any notice permitted or required to be given under this Agreement
shall be sufficient if in writing and delivered personally or by
registered mail return receipt requested, if to Employee, Christine King
at her residence address as reflected in Brite's records, and if to
Brite, to the attention of President, Brite Voice Systems, Inc., 7309 East
21st Street North, Wichita, Kansas 67206. A party may change its address
for receipt of notices by complying with this section.
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<PAGE>
9. ENTIRE AGREEMENT.
This agreement contains the entire understanding of the parties in
respect of its subject matter and supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
10. AMENDMENT; WAIVER.
This agreement may not be amended, supplemented, canceled or
discharged except by written instrument executed by the party affected
thereby. No failure to exercise, and no delay in exercising , any right,
power or privilege hereunder shall operate as a waiver thereof. No waiver
of any breach of any provision of this agreement shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other
provision.
11. BINDING EFFECT; ASSIGNMENT.
The rights and obligations of this Agreement shall bind and inure to
the benefit of any successor of Brite by reorganization, merger or
consolidation or any assignee of all or substantially all of Brite's
business and properties. Employee's rights or obligations under this
Agreement may not be assigned by employee, except that upon Employee's
death, all right to compensation hereunder shall pass to Employee's
executor or administrator.
12. HEADINGS.
The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
13. GOVERNING LAW; INTERPRETATION.
This Agreement shall be construed in accordance with, and governed
for all purposes by, the laws and public policy of the State of Florida
applicable to contracts executed and to be wholly performed with such
State.
14. FURTHER ASSURANCES
Each of the parties agrees to execute, acknowledge, deliver and
perform, and/or cause to be executed, acknowledged, delivered and
performed at any time and/or from time to time, as the case may be, all
such further acts, documents, transfers, conveyances, and/or assurances as
may be necessary and/or proper to carry out the provisions and/or intent
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
effective the date first above written.
BRITE VOICE SYSTEMS, INC.
By: /s/ David S. Gergacz
----------------------
Name: David S. Gergacz
Title: CEO
EMPLOYEE
/s/ Christine L. King
---------------------------
Name: Christine King
45
<PAGE>
EMPLOYMENT AGREEMENT
THIS Employment Agreement ("Agreement") is made and entered into this 27th
day of March, 1997, by and between Brian Klumpp ("Employee") and Brite Voice
Systems, Inc. ("Brite").
WHEREAS, Brite desires to engage Employee to perform services for Brite,
and Employee desires to perform such services on the terms and conditions set
forth herein:
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and in consideration of the
covenants and obligations herein contained, the parties hereto agree as
follows:
1. EMPLOYMENT AND DUTIES. From and after March 28, 1997, ("Commencement
Date") Brite shall employ Brian Klumpp as Vice President of Human
Resources and Corporate Communications. Such Employee, at this time,
shall report to the CEO. Employee shall use his best and most diligent
efforts on a full time, exclusive basis to promote the best interests of
Brite.
2. COMPENSATION AND BENEFITS.
A. SALARY. Employee's initial annual salary shall be $150,000
("Base Salary") payable pursuant to Brite's customary payroll policies in
force at the time of payment.
B. BONUS. For each year of employment commencing with calendar
year 1997, Employee will be entitled to participate in an incentive
compensation program which shall be based on the performance of Employee
measured against performance targets established for Employee. For
calendar year 1997, such bonus program shall provide for bonus
compensation of 20% of base salary if targeted performance is attained,
and additional bonus compensation, not to exceed an additional 30% of base
salary, upon the attainment of performance levels above the target
performance goal. For years subsequent to calendar year 1997, Employee
will be entitled to participate in such incentive compensation programs as
shall be established for other employees of Brite holding positions of
similar responsibility. In the first year the bonus will be based 50% on
the overall financial performance of the company and 50% on specific
personal objectives to be determined by May 1, 1997.
C. BENEFITS. Employee will be entitled to participate in Brite's
benefits provided to other employees having similar responsibilities with
Brite, as established and/or modified by Brite from time to time,
including, but not limited to, paid vacation time (three weeks), life
insurance, health insurance and dental insurance. The current benefit
program is represented by Attachment A.
D. BUSINESS EXPENSES. Pursuant to Brite's customary policies in
force at the time of payment, Employee shall be promptly reimbursed
against presentation of vouchers or receipts, for all authorized expenses
properly incurred by him in the performance of his duties hereunder.
3. RELOCATION.
Employee shall be entitled to the relocation package as described in
Attachment B.
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<PAGE>
4. TERMINATION.
A. TERMINATION FOR CAUSE. If Employee's employment is terminated
and such termination is a Termination for Cause, Employee shall be
entitled to payment of his Base Salary to the date of termination, accrued
bonus (if any) and benefits existing at the time of termination of his
employment. Termination for Cause means one or more of: (i) voluntary
termination of employment by Employee for any reason; (ii) the death of
Employee; (iii) Employee having been unable to render services required of
him hereunder for a consecutive period of six months or for any period in
the aggregate of six months in any twelve month period because of a
serious and continuing health impairment, which impairment will most
likely result in Employee's continued inability to render the services
required of him hereunder; (iv) Employee's misappropriation of corporate
funds; (v) Employee's conviction of a felony; (vi) Employee's conviction
of any crime involving theft, dishonesty, or moral turpitude; (vii)
Employee's failure to devote substantially his full business time to Brite
as provided in Section 1 hereof; (viii) falsification of any material
representation made by Employee to Brite; or, (ix) the commission by
Employee of a material breach of the terms of this Agreement.
B. TERMINATION OTHER THAN FOR CAUSE. If Employee's employment with
Brite is terminated and such termination is not a Termination for Cause,
Employee will be entitled to severance pay equal to one year of salary and
benefits, plus that portion of Employee's Base Salary, bonus and benefits
that had accrued as of the termination date. The foregoing payments and
benefits shall constitute full satisfaction of any and all payments or
benefits that might otherwise be due Employee hereunder.
5. OPTIONS TO PURCHASE COMMON STOCK
On the Commencement Date, or as soon thereafter as is practicable,
the Board of Directors of Brite shall grant Employee an option to purchase
25,000 shares of Brite's common stock. The terms of such option grant
shall be set forth in a stock option agreement in form substantially the
same as that set forth in Exhibit C hereto, with the option exercise price
being established at the close of business on the grant date. The stock
option agreement shall further provide that the options granted thereunder
shall vest ratably over a four year period, subject in all respects to the
terms of the Company's 1994 Stock Option Plan. Additional grants of
10,000 shares may be made annually subject to approval of the Board of
Directors.
6. CONFIDENTIAL INFORMATION.
A. DEFINITION OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, the term "Confidential Information" means:
That secret, proprietary information of Brite not otherwise
publicly disclosed (whether or not discovered or developed by
Employee) and known by Employee as a consequence of Employee's
employment with Brite. Without limiting the generality of the
foregoing, such proprietary information shall include:
information not generally known in the industry or related
industries which concerns (i) customer lists; (ii) computer
programs and facilities; (iii) the identity of specialized
48
<PAGE>
consultants and contractors and confidential information
developed by them for Brite; (iv) operating and other cost data,
including information regarding salaries and benefits of
employees; (v) cost and pricing data; (vi) acquisition,
expansion, marketing, financial and other business plans; (vii)
Brite manuals, files, records; memoranda, plans, drawings and
designs, specifications and computer programs and records; and
(viii) all information which is a "trade secret" as defined in
the Uniform Trade Secrets Act as adopted in Kansas at K.S.A. 60-
3320.
B. CONFIDENTIAL INFORMATION. During Employee's employment with
Brite, Employee will have access to and become familiar with Confidential
Information of Brite. Employee acknowledges that such Confidential
Information is owned and shall continue to be owned solely by Brite.
During the term of Employee's employment with Brite and after termination
of such employment, Employee shall not use or divulge Confidential
Information to any person or entity other than Brite, or persons to whom
Brite has given its written consent, unless such information has become
common knowledge and is no longer Confidential Information.
C. RETURN OF DOCUMENTS. Upon termination of Employee's employment
with Brite, all procedural manuals, guides, specifications, plans,
drawings, designs, records, lists, notebooks, software, diskettes,
customer lists, pricing documentation and other property which is or
contains Confidential Information, including all copies thereof, in the
possession or control of Employee, whether prepared by Employee or others,
shall be forthwith delivered by Employee to Brite.
7. COVENANTS NOT TO COMPETE.
A. RESTRICTIVE COVENANT. Employee covenants and agrees that
during Employee's employment with Brite and for a period of one year
following the date of termination of Employee's employment with Brite (the
"Restricted Period"), Employee shall not, without the prior written
approval of the President of Brite, in any manner compete with Brite or
any successor to the business of Brite, as an owner, officer, director,
employee, agent, consultant, lender or otherwise, with any person or
entity in a business involving a line of business conducted by Brite
during the term of Employee's employment.
B. SOLICITATION OF EMPLOYEES. During the one-year period
following Employee's termination of employment with Brite, Employee shall
not without the prior written approval of the President of Brite, directly
or indirectly solicit, raid, entice, or induce any person who is, or was
at any time within six months prior to such termination, an employee of
Brite, to become employed by any other person, firm, or corporation in any
business which is in any manner in competition with Brite. Furthermore,
Employee shall inform Brite in writing if any other person employed by
Brite contacts Employee for the purpose of seeking employment during such
one year period.
C. NEW DEVELOPMENTS. Employee agrees that any developments made by
Employee or under Employee's direction in connection with the work of
Brite shall be the sole and complete property of Brite and that any and
all copyrights, patent rights and other proprietary rights therein shall
belong to Brite. Employee shall cooperate with Brite and execute any
documents prepared by Brite to secure or protect any such rights.
49
<PAGE>
D. REASONABLENESS OF RESTRICTIONS, REFORMATION, AND SEVERABILITY.
Employee has carefully read and considered the provisions of this Section
7 and, having done so agrees that the restrictions set forth herein,
including, but not limited to, the duration of the Restricted Period and
the scope of the restriction are fair and reasonable and are reasonably
required for the protection of the interests of Brite.
In the event that, notwithstanding the foregoing any part of the
covenants set forth in this Section 7 shall be held to be invalid or
unenforceable, the remaining parts thereof shall nevertheless continue to
be valid and enforceable as though the invalid or unenforceable parts had
not been included therein. In the event that any provision of this Section
7 relating to the time period and/or scope of the restrictions shall be
declared by a court of competent jurisdiction to exceed the maximum time
period or area as such court deems reasonable and enforceable, said time
period and;/or areas of restrictions shall be deemed to become and
thereafter bye the maximum time period and/or scope which such court deems
reasonable and enforceable.
Any provision hereof otherwise prohibited by or unenforceable
under any applicable law or public policy in any jurisdiction which cannot be
reformed in accordance with the provisions herein, shall, as to such
jurisdiction, be ineffective without affecting any other provision of this
Agreement, or shall be deemed to be served or otherwise modified to conform
with such law or public policy; and the remaining provisions of this agreement
shall remain in force., provided that the purpose of this Agreement can be
effected. To the full extent, however, that the provisions of such applicable
law or public policy may be waived, this Agreement shall be deemed to be a
waiver thereof. The parties hereto understand and agree that all the covenants
set forth herein are an shall be separately enforceable, each to the full
extent permitted by applicable law.
E. TOLLING PERIOD. It if should become desirable for necessary for
Brite to seek compliance with this Section 7 by judicial proceedings, the
period during which Employee shall comply with its provisions shall extend
to the first anniversary of the date of the final, nonappealable order
requiring such compliance.
F. REMEDIES. It is agreed that Brite would be irreparably damaged
by reason of any violation of the provisions of this agreement and that
any remedy at law for a breach of the provisions of this agreement would
be inadequate. Therefore, Brite shall be entitled to seek injunctive or
other equitable relief in a court of competent jurisdiction against
Employee or Employee's agents, affiliates, partners, or other associates,
for any breach or threatened breach of this Agreement, without the
necessity of proving actual monetary loss. It is expressly understood that
the remedy described in this Paragraph F shall not be the exclusive remedy
of Brite for any breach of this agreement, and Brite shall be entitled to
seek such other relief or remedy at law or in equity to which it may be
entitled as a consequence of any breach of this Agreement.
8. NOTICES.
Any notice permitted or required to be given under this Agreement
shall be sufficient if in writing and delivered personally or by
registered mail return receipt requested, if to Employee, Brian Klumpp at
his residence address as reflected in Brite's records, and if to Brite,
to the attention of President, Brite Voice Systems, Inc., 7309
50
<PAGE>
East 21st Street North, Wichita, Kansas 67206. A party may change its
address for receipt of notices by complying with this section.
9. ENTIRE AGREEMENT.
This agreement contains the entire understanding of the parties in
respect of its subject matter and supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
10. AMENDMENT; WAIVER.
This agreement may not be amended, supplemented, canceled or
discharged except by written instrument executed by the party affected
thereby. No failure to exercise, and no delay in exercising , any right,
power or privilege hereunder shall operate as a waiver thereof. No waiver
of any breach of any provision of this agreement shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other
provision.
11. BINDING EFFECT; ASSIGNMENT.
The rights and obligations of this Agreement shall bind and inure to
the benefit of any successor of Brite by reorganization, merger or
consolidation or any assignee of all or substantially all of Brite's
business and properties. Employee's rights or obligations under this
Agreement may not be assigned by employee, except that upon Employee's
death, all right to compensation hereunder shall pass to Employee's
executor or administrator.
12. HEADINGS.
The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
13. GOVERNING LAW; INTERPRETATION.
This Agreement shall be construed in accordance with, and governed
for all purposes by, the laws and public policy of the State of Florida
applicable to contracts executed and to be wholly performed with such
State.
14. FURTHER ASSURANCES
Each of the parties agrees to execute, acknowledge, deliver and
perform, and/or cause to be executed, acknowledged, delivered and
performed at any time and/or from time to time, as the case may be, all
such further acts, documents, transfers, conveyances, and/or assurances as
may be necessary and/or proper to carry out the provisions and/or intent
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
effective the date first above written.
BRITE VOICE SYSTEMS, INC.
By: /s/ David S. Gergacz
-----------------------
Name: David S. Gergacz
Title: CEO
EMPLOYEE
/s/ Brian M. Klumpp
-----------------------
Name: Brian Klumpp
51
<PAGE>
EMPLOYMENT AGREEMENT
THIS Employment Agreement ("Agreement") is made and entered into this 23rd
day of June, 1997, by and between Glenn A. Etherington ("Employee") and Brite
Voice Systems, Inc. ("Brite").
WHEREAS, Brite has elected to relocate Employee to its new headquarters
facility in Heathrow, Florida; and
WHEREAS, Brite wishes to provide certain inducements to Employee to
relocate to Brite's Heathrow, Florida area headquarters;
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and in consideration of the
covenants and obligations herein contained, the parties hereto agree as
follows:
1. EMPLOYMENT AND DUTIES. From and after July 1, 1997, ("Commencement
Date") Brite shall employ Employee as Chief Financial Officer.
Employee shall report to Brite's President or as the President may
otherwise direct. Employee shall use his best and most diligent
efforts on a full time, exclusive basis to promote the best interests
of Brite.
2. COMPENSATION AND BENEFITS.
A. SALARY. Employee's initial annual salary shall be $176,400
("Base Salary") payable pursuant to Brite's customary payroll policies in
force at the time of payment.
B. BONUS. For each year of employment commencing with calendar
year 1997, Employee will be entitled to participate in an incentive
compensation program which shall be based on the performance of Employee
measured against performance targets established for Employee. For
calendar year 1997, such bonus program shall provide for aggregate bonus
compensation of $58,000 if targeted performance is attained, and
additional bonus compensation, not to exceed an additional $58,000, upon
the attainment of performance levels above the target performance goal.
For years subsequent to calendar year 1997, Employee will be entitled to
participate in such incentive compensation programs as shall be
established for other employees of Brite holding positions of similar
responsibility.
52
<PAGE>
C. BENEFITS. Employee will be entitled to participate in Brite's
standard benefits provided to other employees having similar
responsibilities with Brite, as established and/or modified by Brite from
time to time, including, but not limited to, paid vacation time, life
insurance, health insurance and dental insurance. In addition, Employee
shall be paid an automobile allowance of $3,600 per year.
D. BUSINESS EXPENSES. Pursuant to Brite's customary policies in
force at the time of payment, Employee shall be promptly reimbursed
against presentation of vouchers or receipts, for all authorized expenses
properly incurred by him in the performance of his duties hereunder.
3. TERMINATION.
A. TERMINATION FOR CAUSE. If Employee's employment is terminated
and such termination is a Termination for Cause, Employee shall be
entitled to payment of his Base Salary to the date of termination, accrued
bonus (if any) and benefits existing at the time of termination of his
employment. Termination for Cause means one or more of: (i) voluntary
termination of employment by Employee for any reason; (ii) the death of
Employee; (iii) Employee having been unable to render services required of
him hereunder for a consecutive period of six months or for any period in
the aggregate of six months in any twelve month period because of a
serious and continuing health impairment, which impairment will most
likely result in Employee's continued inability to render the services
required of him hereunder; (iv) Employee's misappropriation of corporate
funds; (v) Employee's conviction of a felony; (vi) Employee's conviction
of any crime involving theft, dishonesty, or moral turpitude; (vii)
Employee's failure to devote substantially his full business time to Brite
as provided in Section 1 hereof; (viii) falsification of any material
representation made by Employee to Brite; or, (ix) the commission by
Employee of a material breach of the terms of this Agreement.
B. TERMINATION OTHER THAN FOR CAUSE. If Employee's employment with
Brite is terminated and such termination is not a Termination for Cause,
Employee will be entitled to severance pay equal to one year of salary and
benefits, plus that portion of Employee's Base Salary, bonus and benefits
that had accrued as of the termination date. The foregoing payments and
benefits shall constitute full satisfaction of any and all payments or
benefits that might otherwise be due Employee hereunder.
53
<PAGE>
4. RELOCATION EXPENSES. Employee shall receive relocation expense
reimbursements in accordance with the relocation plan summary previously
provided to Employee. All unearned payments of relocation expenses made by
Brite, either directly to third party providers or reimbursements made to the
Employee, shall be reimbursed to Brite by Employee in the event that Employee's
employment is terminated prior to the end of the Employment Period, and such
termination is a voluntary termination of employment by Employee. Relocation
expenses will be deemed earned by Employee according to the following schedule:
Employment For Not Less Than Percent Earned
----------------------------- ---------------
6 months 50%
9 months 75%
12 months 100%
With respect to any calculation of the number of months of Employee's
employment for purposes of this Section 4, the first day of Employee's
employment at the Heathrow headquarters shall be the beginning date and the
corresponding day in each succeeding month shall constitute one month of
employment.
If Employee is required to make reimbursement to Brite as provided herein, any
such amount may be deducted by Brite from the last paycheck or any other
amounts owed by Brite upon Employee's termination. To the extent such amounts
are insufficient, Employee agrees to pay to Brite any remaining unpaid
relocation expenses required to be reimbursed hereunder.
5. NOTICES. Any notice permitted or required to be given under this
Agreement shall be sufficient if in writing and delivered personally or by
registered mail return receipt requested, if to Employee, at his residence
address as reflected in Brite's records, and if to Brite, to the attention of
President, Brite Voice Systems, Inc., 7309 East 21st Street North, Wichita,
Kansas 67206. A party may change its address for receipt of notices by
complying with this section.
6. NON-DISCLOSURE OF TERMS. The terms of this Agreement are to be kept
confidential by Employee and shall not be disclosed by Employee to any third
party without the express written consent of Brite. Any breach of the
preceding sentence shall terminate Employee's right, if any, to receive payment
under Section 3(B).
7. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties in respect of its subject matter and supersedes all prior
agreements and understandings between the parties with respect to such subject
matter; provided, however, that the terms of any Confidentiality and Non-
compete Agreement theretfore entered into between the Employee and Brie shall
remain in effect unless expressly amended by the terms of a written agreement
between the Employee and Brite.
8. AMENDMENT; WAIVER. This Agreement may not be amended, supplemented,
canceled or discharged except by written instrument executed by the party
affected thereby. No failure to exercise, and no delay in exercising, any
right, power or privilege hereunder shall
54
<PAGE>
operate as a waive thereof. No waiver of any breach of any provision of
this agreement shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision.
9. BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind an inure to the benefit of any successor of Brite by
reorganization, merger or consolidation or any assignee of all or substantially
all of Brite's business and properties. Employee's rights or obligations under
this Agreement may not be assigned by Employee, except that upon Employee's
death, all right to compensation hereunder shall pass to Employee's executor or
administrator.
10. HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
11. GOVERNING LAW; INTERPRETATION. This Agreement shall be construed in
accordance with, and governed for all purposes by, the laws and public policy
of the State of Florida applicable to contracts executed and to be wholly
performed with such State.
12. FURTHER ASSURANCES. Each of the parties agrees to execute,
acknowledge, deliver and perform, and/or cause to be executed, acknowledged,
delivered and performed, at any time and/or from time to time, as the case may
be, all such further acts, documents, transfers, conveyances, and/or assurances
as may be necessary and/or proper to carry out the provisions and/or intent of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
effective the date first above written.
BRITE VOICE SYSTEMS, INC.
By: /s/ D. S. Gergacz
----------------------------
Name: D. S. Gergacz
--------------------------
Title: CEO
-------------------------
EMPLOYEE
/s/ Glenn Etherington
--------------------------------
Name: Glenn A. Etherington
/101712
55
<PAGE>
STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into this 13th day of May, 1997, by and between
David S. Gergacz ("Gergacz") and Brite Voice Systems, Inc. ("Brite");
WHEREAS, Gergacz and Brite have heretofore entered into an Employment
Agreement dated December 2, 1996; and
WHEREAS, the Employment Agreement contains, among other things, a grant of
options to purchase shares of common stock of Brite in favor of Gergacz; and
WHEREAS, due to adverse price movements in Brite's common stock since the
date of such option grant, the incentive intended to be provided to Gergacz by
the options has been substantially diminished; and
WHEREAS, it is deemed necessary and appropriate and in Brite's best
interests to provide significant incentives to Gergacz as Brite's President and
Chief Executive Officer;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. NEW OPTION GRANT.
1.1 OPTION GRANT. Brite hereby grants Gergacz non-statutory stock
options ("Options") to purchase 300,000 shares of its no par value common
stock (the "Stock") at the option exercise price of $8.50 per share, being
the fair market value of the Stock as of the close of business on the date
hereof.
1.2 VESTING OF OPTIONS. Subject to such further limitations and
qualifications as are provided herein, the Options shall be exercisable as
follows:
a. 150,000 shares on December 2, 1998; and
b. 150,000 shares on December 2, 1999.
Upon termination of Gergacz's employment, Gergacz shall have the
right to exercise the Options at any time within ninety (90) days after
such termination of employment, to the extent his right to exercise such
Options had accrued pursuant to Section 1.2 and had not previously been
exercised at the date of such termination. Upon a Change in Control, all
previously unexercised Options shall become immediately exercisable and
shall be canceled ninety (90) days thereafter.
56
<PAGE>
1.3 METHOD OF EXERCISE. Each option shall be exercised by written
notice, directed to the Chief Financial Officer of Brite at Brite's
principal place of business and accompanied by a check in payment of the
exercise price for the number of shares of Stock being purchased. Brite
shall make immediate delivery of the Stock to be acquired upon such
exercise, provided that, if any law or regulation requires Brite to take
any action with respect to the Stock specified in such notice or for the
issuance thereof, the date of delivery of such Stock shall be extended for
the period necessary to take such action.
1.4 TERMINATION OF OPTIONS. Except as herein otherwise stated, each
Option, to the extent not previously exercised, shall terminate on
December 2, 2006.
1.5 RECAPITALIZATION.
a. Subject to any required action by the stockholders, the
number of shares of Stock covered by each outstanding Option, and the
price per share of each such Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares
of Stock of Brite resulting from a subdivision or consolidation of
shares or the payment of a stock dividend (but only on the Stock) or
any increase or decrease in the number of such shares effected
without receipt of consideration by Brite.
b. Subject to any required action by the stockholders, if
Brite shall be the surviving corporation in any merger or
consolidation, each outstanding Option shall pertain to and apply to
the securities to which a holder of the number of shares of Stock
subject to the Option would have been entitled.
c. In the event of a change in the Stock as presently
constituted, which is limited to a change of all if its authorized
shares with par value into the same number of shares with a different
par value or without par value, the shares resulting from any such
change shall be deemed to be the Stock.
d. To the extent that the foregoing adjustments relate to
stock or securities of Brite, such adjustments shall be made by the
Board, whose determination in such respect shall be final, binding
and conclusive.
e. Except as hereinbefore expressly provided, Gergacz shall
have no rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or
any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, merger of
consolidation or spin-off of assets or stock of another corporation,
and any issue by Brite of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not effect, and
no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Stock subject to an Option.
1.6 RIGHTS PRIOR TO EXERCISE OF OPTION. The Options are
nontransferable by Gergacz, and during his lifetime are exercisable only
by him; provided, however, in the event of the death of Gergacz, the
Options may pass to his executor or administrator or any person who shall
acquire the Options directly from Gergacz or his estate by bequest or
inheritance. Gergacz shall not have any rights as a stockholder with
respect to any
57
<PAGE>
shares covered by the Options until the date of the issuance of a stock
certificate to him for such shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record
date is prior to the date such stock certificate is issued, except as
provided in Section 1.5 hereof.
1.7 INVESTMENT PURPOSE. The Options are granted on the condition
that any purchase of Stock thereunder shall be for investment purposes,
and not with a view to resale or distribution, except that in the event
the Stock subject to the Options is registered under the Securities Act of
1933, as amended, or in the event a resale of such Stock without such
registration would otherwise be permissible, such condition shall be
inoperative if, in the opinion of counsel for Brite, such condition is not
required under the Securities Act of 1933 or any other applicable law,
regulation, or rule of any governmental agency.
2. SURRENDER OF OPTIONS. In consideration of the grant of options
provided for in Section 1.1 hereof, Gergacz surrenders to Brite options
covering 150,000 share of Stock vesting on December 2, 1998 and options
covering 150,000 shares of Stock vesting on December 2, 1999, such options
being described in subsections c and d of section 3.2 of the Employment
Agreement. Otherwise, to the extent not amended specifically by the terms of
this Agreement, the Employment Agreement between Gergacz and Brite shall remain
in full force and effect.
3. GOVERNING LAW. This Agreement is executed pursuant to and shall be
governed by the laws of the State of Kansas.
4. BINDING EFFECT. Subject to all restrictions provided for herein and
by applicable law relating to assignment and transfer of job options provided
for herein, this agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
5. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior understandings, agreements,
written or oral, with respect to the subject matter hereof. Neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
except by written instruments signed by the parties.
58
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on and
effective as of the date first set forth above.
Brite Voice Systems, Inc.
By: /s/ Stanley G. Brannan /s/ David S. Gergacz
--------------------------- -----------------------
Stanley G. Brannan David S. Gergacz
Chairman of the Board
/100069
59
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,575
<SECURITIES> 0
<RECEIVABLES> 37,806
<ALLOWANCES> 611
<INVENTORY> 14,987
<CURRENT-ASSETS> 58,954
<PP&E> 26,522
<DEPRECIATION> 12,575
<TOTAL-ASSETS> 74,542
<CURRENT-LIABILITIES> 24,547
<BONDS> 0
0
0
<COMMON> 38,680
<OTHER-SE> 11,315
<TOTAL-LIABILITY-AND-EQUITY> 74,542
<SALES> 35,876
<TOTAL-REVENUES> 60,135
<CGS> 16,160
<TOTAL-COSTS> 65,426
<OTHER-EXPENSES> (37)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,254)
<INCOME-TAX> (1,669)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,585)
<EPS-PRIMARY> (0.30)
<EPS-DILUTED> 0
</TABLE>
