UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarterly Period Ended July 31, 1995.
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 2-33108
ACCESS CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-0673364
-----------------------------------------------------------------------------
(State of incorporation) (I.R.S Employer Identification Number)
4350 Glendale-Milford Road, Suite 250, Cincinnati, Ohio 45242-3700
-----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (513) 786-8350
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
------ -------
Indicate the number of shares outstanding of each of the issuer's classes
of common shares, as of July 31, 1995. Common Stock, no par value: 3,453,257
shares; Class A Common Stock, no par value: 1,428,572 shares.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ACCESS CORPORATION
BALANCE SHEET
ASSETS
<CAPTION>
July 31 April 30, 1995
1995 ---------------
-------
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,216,621 $ 883,487
Accounts Receivable, Less
Allowances for Doubtful
Accounts of $203,268 in
July 1995 and $18,100 in
April 1995 1,838,328 1,015,811
Inventories
Raw Material and Purchased
Parts 73,817 79,495
Work-in-Process 356,263 318,598
Finished Goods 16,631 14,772
---------- ----------
446,711 412,865
Prepaid Expenses 152,200 68,990
Deferred income tax benefit 112,000 112,000
----------- ----------
TOTAL CURRENT ASSETS 3,765,860 2,493,153
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Computer Hardware & Software 1,347,966 1,952,220
Machinery and Equipment 503,338 503,337
Office and Service Equipment 320,025 313,431
Leasehold Improvements 5,251 5,000
Tools, Dies and Fixtures 115,013 115,013
---------- -----------
2,291,593 2,889,001
Less Accumulated Depreciation 2,078,518 2,646,833
---------- -----------
213,075 242,168
COMPUTER SOFTWARE COSTS 1,574,200 1,742,627
DEFERRED INCOME TAX BENEFIT 651,300 651,300
---------- -----------
TOTAL ASSETS $ 6,204,435 $ 5,129,248
=========== ============
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
July 31, April 30,
1995 1995
------- --------
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 252,383 $ 95,864
Accrued Salaries, Wages
and Commissions 375,321 120,054
Accrued Taxes 25,128 24,429
Accrued Warranty Expense 28,553 44,275
Capital Leases- Current 48,238 77,683
Other Accrued Liabilities 243,014 339,456
Advances from Customers 865,677 56,613
-------- --------
TOTAL CURRENT LIABILITIES 1,838,314 758,374
PREPAID MAINTENANCE CONTRACT 378,469 299,578
CAPITAL LEASES 17,965 23,099
MANDATORILY REDEEMABLE
PREFERRED STOCK 1,500,000 1,500,000
Preferred Dividends 0 64,685
STOCKHOLDERS' EQUITY
Capital Stock
Common Stock, No Par Value,
Authorized 8,000,000 Shares;
Issued and Outstanding
3,453,257 Shares 345,325 345,325
Class A Common Stock, No Par
Value, Authorized 2,000,000
Shares; Issued and Outstanding
1,428,572 Shares 142,857 142,857
Additional Paid-In Capital 10,761,408 10,760,162
Deficit from April 1, 1985 (8,764,520) (8,749,449)
16,270 Common Stock Shares In
Treasury, at Cost (15,383) (15,383)
-------- ---------
TOTAL CAPITAL STOCK AND OTHER 2,469,687 2,483,512
STOCKHOLDERS' EQUITY
TOTAL LIABILITIES AND $ 6,204,435 $ 5,129,248
STOCKHOLDERS' EQUITY =========== ==========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENTS OF OPERATIONS
<CAPTION>
THREE MONTHS ENDED
JULY 31,
1995 1994
----------------------------------
<S> <C> <C>
REVENUE
System Sales $ 216,061 $ 423,340
Service 1,090,209 1,046,211
Manufacturing 51,001 46,633
----------- ------------
1,357,271 1,516,184
COST
System Sales 151,598 228,111
Service 568,597 405,315
Manufacturing 39,256 127,411
----------- -------------
759,451 760,837
GROSS PROFIT BEFORE
AMORTIZATION 597,820 755,347
AMORTIZATION OF COMPUTER
SOFTWARE COST 168,426 168,426
GROSS PROFIT 429,394 586,921
Selling and Administrative 337,758 411,928
Engineering, Research
and Development 109,289 157,319
------------ -------------
Total Costs and Expenses 447,047 569,247
EARNINGS (LOSS)FROM
OPERATIONS (17,653) 17,674
OTHER INCOME (EXPENSE)
Interest Income 12,414 950
Other Income 66 728
Interest Expense (2,176) (10,031)
Other (7,723) (250)
------------- -------------
EARNINGS (LOSS) (15,072) 9,071
BEFORE INCOME TAXES
INCOME TAXES 3,100
------------- -------------
NET EARNINGS (LOSS) (15,072) 5,971
============= =============
PER COMMON SHARE AND COMMON
SHARE EQUIVALENTS
Net Earnings Per Common
Share and Common Share
Equivalent $ (0.00) $ 0.00
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENTS OF CASH FLOWS
<CAPTION>
THREE MONTHS ENDED
JULY 31,
1995 1994
-----------------------------
<S> <C> <C>
CASH FLOWS FROM:
OPERATING ACTIVITIES
Net Earnings $ (15,072) $ 5,971
Adjustments to Reconcile
Net Earnings To Net Cash
Used in Operations:
Depreciation 33,760 33,740
Amortization 168,426 168,425
(Gain) Loss on Disposal of
Fixed Assets 7,377
Deferred Income Taxes 3,100
Changes In Assets and Liabilities:
Accounts Receivable 291,313 (242,725)
Inventories (33,846) 95,408
Prepaid Expenses (83,210) (91,132)
Accounts Payable 52,895 (28,207)
Accrued Liabilities (66,265) 148,818
Advances From Customers 8,223 615
Prepaid Maintenace Contract 63,715 59,664
----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES: 427,316 153,677
INVESTING ACTIVITIES
Capital Additions (12,045) (10,908)
Investment in Subsidiary-Net
of Cash Acquired of $281,371 (68,629)
----------- -----------
NET CASH (USED IN) INVESTING
ACTIVITIES: (80,674) (10,908)
FINANCING ACTIVITIES
Proceeds(repayments) under
bank line of credit 0 (54,252)
Payments on Capital Leases (13,508) (88,767)
----------- ------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES: (13,508) (143,019)
NET CHANGE IN CASH $ 333,134 $ (250)
CASH, Beginning of Year 883,487 3,500
----------- ------------
CASH, July 31, 1995 and 1994 $ 1,216,621 $ 3,250
=========== ==========
<FN>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
ACCESS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JULY 31, 1995
NOTE A - Condensed Financial Statements
----------------------------------------
The condensed balance sheets as of July 31, 1995, the condensed statements
of earnings for the three month periods ended July 31, 1995 and 1994, and
the condensed statements of cash flows for the three month periods then
ended have been prepared by the Company without audit. These financial
statements reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim periods
presented. All adjustments made during the quarter ended July 31, 1995 are
of a normal recurring nature.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's annual report on Form 10-K for the year
ended April 30, 1995. The results of operations for the period ended
July 31, 1995 are not necessarily indicative of the operating results for
the full year.
NOTE B - Reclassification
--------------------------
Certain amounts previously reported have been reclassified to be consistent
with the classifications being used in the current period.
NOTE C - Acquisition of Subsidiary
-----------------------------------
On July 31, 1995, the Company acquired a new company at a net cost of
$350,000, CimSoft Incorporated. CimSoft has offices in Michigan and
California. It is the exclusive distributor for all of Cimage Enterprises
Systems, Limited (CESL) products in North America. These products are sold
under the trade name "Cimage" in markets similar to those the Company has
served for many years.
The Company expects to expand their ability to serve its existing markets
through new product offerings, broader sales and distribution coverage,
and continued growth in its customer service programs.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company has two primary lines of business. Over the
years the Company has built a substantial, continuing field
maintenance business. This business services, on a
nationwide basis, hardware and, on a national and
international basis, software for the Company's installed
base of customers and third parties. The Company is also a
leader in the Technical Document Management Systems (TDMS)
software business. In this line of business, the Company
develops and markets software solutions for its customers'
technical processes. TDMS has the potential for substantial
growth in revenue and profits in that it serves a
potentially large, worldwide market opportunity.
First quarter 1995 revenue of $1.4 million was down $158,900
(10%) compared with the first quarter of fiscal 1995, due to
a decrease in TDMS revenue. System Sales declined $207,300
while Service and Manufacturing revenue increased $48,400.
TDMS revenue of $216,100 was 49% lower than the first
quarter of fiscal 1995. TDMS represented 16% of the total
revenue in the first quarter of fiscal 1996 compared with
28% in the same period of fiscal 1995. In the first
quarter of Fiscal 1995, the Company delivered one (1) system
as compared to 15 small enhancements in fiscal 1996.
Service/Manufacturing revenue in the first quarter of 1996
of $1.1 million increased 4% over the first quarter of
fiscal 1995.
The Company's backlog of orders at July 31, 1995 was $2.1
million compared to $3.4 at July 31, 1994. Current TDMS
backlog is 21% lower than the same date last year.
Service/Manufacturing backlog was 50% lower than the same
period last year. The Service backlog decreased due to a
loss of a contract for a customer with multiple sites as well
as a steady decrease occuring in the micrographic based
maintenace. The Company expects a continual decrease in the
service on the micrographic based systems as systems age and
are taken out of service. However, the Company is actively
seeking additional third party service. The Company expects
that additional third party service in combination with service
revenue from its new customers will maintain or even grow its
service revenue over the long run.
Gross margins before amortization for the first quarter of
fiscal 1996 of 44% were within 6% of that for the comparable
period in fiscal 1995. Gross margins for the first quarter
of fiscal 1995 were higher due to the sale of one TDMS
system in 1994 versus the 15 small enhancements delivered in
this same period in fiscal 1996. Total cost stayed
relatively the same for the first quarter in fiscal 1996.
The 15 small enhancements have higher costs than a system
which would be mostly software with lower cost.
Service/Manufacturing business unit costs increased 14%
primarily due to the increased revenue for third party
maintenance contracts.
Selling and administrative expenses of $337,800 for the
first quarter of fiscal 1996 were 18% lower than the first
quarter of fiscal 1995. The primary cause of this reduction
was a decrease in labor and travel expenses.
Engineering, research and development expenses are incurred
for maintaining, upgrading and developing new products. The
first quarter expenses for engineering, research and
development of $109,300 decreased $48,000 from the first
quarter 1995. This decrease is due to the Company spending
less on labor and outside contractors and applying more time
to inventory projects rather than development projects.
Interest expense for the first quarter was $2,200 compared
with $10,000 in the same period of fiscal 1995. Interest
income of $12,400 in the first quarter of fiscal 1996 is
$11,500 higher than the $950 reported in the same period in
fiscal 1995. This fluctuation in interest expense and
income is the result of the Company not using its bank
line of credit in fiscal 1996.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The first quarter of fiscal 1996 ended with $1,216,600 in
cash and zero borrowing under tha bank line of credit. The
Company provided $427,300 in cash from operations and
invested $12,100 in fixed assets. The Company invested
$350,000 in the acquisition of a subsidiary which was offset
by an additional $281,400 in cash provided by this
subsidiary.
Inventories have increased $33,800 since April 30, 1995.
This is primarily due to more time being applied toward a
large TDMS system order currently in backlog.
Accounts Receivable increased $291,300 during the first
three months of fiscal 1996. This was the result of 15
enhancements completed in the first quarter of fiscal 1996
and not yet paid.
On large customer orders in backlog there are provisions for
progress payments to be made by customers based on
predetermined events. These orders are expected to be filled
within this fiscal year.
Working capital on July 31, 1995 was approximately
$2,007,500 which is $272,700 higher than the April 30, 1995
level. This primarily was the result of the increase in
accounts receivable.
The Company's plans are structured so that revenues from its
AS/400, UNIX and new Cimage products, in combination with
those from its recurring service business, are expected to
provide the cash flow required to operate the Company.
On July 31, 1995, the Company acquired a new company at a net
cost of $350,000, CimSoft Incorporated. CimSoft has offices in
Michigan and California. It is the exclusive distributor for all
of Cimage Enterprises Systems, Limited (CESL) products in North
America. These products are sold under the trade name "Cimage"
in markets similar to those the Company has served for many years.
The Company expects to expand their ability to serve its existing
markets through new product offerings, broader sales and distribution
coverage, and continued growth in its customer service programs.
<PAGE>
PART II OTHER INFORMATION
--------------------------
Item 4. Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------
The Registrant's Annual Meeting of Shareholders was held on
August 21, 1995.
At the Annual Meeting, the holders of Common Stock of the
Registrant approved a resolution setting the number of
directors to be elected at seven. The vote of the
shareholders was:
FOR: 3,062,387
AGAINST: 2,170
ABSTAIN: 2,081
BROKER NON-VOTES: 370,349
The holders of Common Stock of the Registrant approved the
appointment of the following directors. The vote of the
shareholders was:
FOR WITHHELD
Newton D. Baker 3,063,473 3,165
Kent P. Friel 3,063,473 3,165
James H. Hardie 3,065,378 1,260
Robert J. Kalthoff 3,063,473 3,165
Dennis J. Sullivan,Jr. 3,065,378 1,260
Scott D. Watkins 3,065,378 1,260
John W. Weil 3,065,378 1,260
Item 6. Exhibits and Reports on Form 8-K
------------------------------------------
(a) Exhibits. Refer to EXHIBIT INDEX on page 12 of this
Quarterly Report on Form 10-Q.
(b) Reports on Form 8-K. No reports on Form 8-K were filed
during the first quarter of fiscal year 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
ACCESS CORPORATION
Date: August 31, 1995 NEWTON D. BAKER
--------------- --------------------
Newton D. Baker
Executive Vice President
Date: August 31, 1995 BARBARA A. SOMMER
--------------- -----------------------
Barbara A. Sommer
Assistant Treasurer & Chief
Accounting Officer
<PAGE>
EXHIBIT INDEX
(11) Statement recomputation of per share earnings.
(a) The calculation of net earnings per common share
and common share equivalent for the three month period ended
July 31, 1995 and 1994 is attached as Exhibit 11(a), page
13.
(19) Material Contracts:
(i) Stock Purchase agreement between the Company and
William Manning is attached hereto as Exhibit 19(i).
(ii) Consulting Agreement between the Company and
Joseph Ben-Gal is attached hereto as Exhibit 19(ii).
<PAGE>
<TABLE>
ACCESS CORPORATION
CALCULATION OF NET EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENT
<CAPTION>
THREE MONTHS ENDED
JULY 31,
1995 1994
------------------------------
<S> <C> <C>
NET EARNINGS (LOSS) $ (15,072) $ 5,971
NET EARNINGS APPLICABLE TO COMMON
SHARES AND COMMON SHARE
EQUIVALENTS:
Net Earnings Applicable to Common
Shares and Common Share
Equivalents (0.00) 0.00
============== =============
CALCULATION OF PRIMARY NET EARNINGS
PER COMMON SHARE AND COMMON SHARE
EQUIVALENTS:
Average Number of Common Shares
and Common Share Equivalents
Outsatanding 4,865,559 4,865,559
<FN>
a) Common Share Equivalents have not been included as their inclusion
would be anti-dilutive or dilusion is less than 3%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> JUL-31-1995
<CASH> 1216621
<SECURITIES> 0
<RECEIVABLES> 2,041,596
<ALLOWANCES> 203,268
<INVENTORY> 446,711
<CURRENT-ASSETS> 3,765,860
<PP&E> 2,291,593
<DEPRECIATION> 2,078,518
<TOTAL-ASSETS> 6,204,435
<CURRENT-LIABILITIES> 1,838,314
<BONDS> 0
<COMMON> 488,182
1,500,000
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,204,435
<SALES> 1,357,271
<TOTAL-REVENUES> 1,357,271
<CGS> 927,877
<TOTAL-COSTS> 1,374,924
<OTHER-EXPENSES> 7,723
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,176
<INCOME-PRETAX> (15,072)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,072)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,072)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
CONSULTING AGREEMENT
This Agreement is made as of the 31st day of July,1995, by and
between Joseph Ben-Gal of Farmington Hills, Michigan ("Executive") and
CimSoft, Inc., a Delaware and/or ACCESS Corporation, an Ohio corporation
(the "Company").
Simultaneously with the execution and delivery of this Agreement,
ACCESS Corporation, an Ohio corporation, ("ACCESS") is acquiring
all of the stock of the Company from William Manning. In order to induce
ACCESS to make such acquisition, Executive hereby agrees as follows:
1. Executive Services.
(a) Until January 31, 1997, Executive will provide consulting
and executive services to the Company with respect to:
(i) The operations of the Company as they relate to
those of ACCESS;
(ii) Collection of the Company's receivables;
(iii) Booking of new business from both new and existing
customers of Cimage systems;
(iv) Recruiting and retention of key employees of the
Company; and
(v) Such other duties as may reasonably be requested by
the Company.
(b) Prior to November 1, 1995 (other than during a two-week
vacation in August) Executive will devote his full
business time to the services to be performed
thereunder. From November 1, 1995 through
January 31, 1996, Executive may seek and accept other
part time or full time employment, but will devote a
reasonable portion of his business time to performing
his service hereunder. From February 1, 1996 through
January 31, 1997, Executive will provide such
consulting services to the Company as it may request,
subject to his other business and personal commitments.
2. Compensation. As compensation for Executive'services hereunder,
the Company shall pay him:
(a) A bonus of $20,000 on the later to occur of
(i) the execution of a written reseller agreement between
Cimage Enterprise Systems, Ltd. and the Company
in form and substance satisfactory to the Company and
(ii) the execution of an employment agreement between the
Company and Marc Baines in form and substance
satisfactory to the Company;
(b) $4,231.00, payable biweekly, for each two week period
through January 1996;
(c) $7,500 per month, payable monthly in arrears, for each
month from February 1996 through January 1997;
(d) 10% of the Company's Free Cash to be paid thirty days after
the date hereof. "Free Cash" shall mean the excess on the
date hereof of the Company's cash on hand and in bank
deposits less the Company's accounts payable and other
liabilities (exclusive of accrued payroll and other
commissions) in excess of $12,000 and excluding $183,545
accounts payable to Cimage Enterprise Systems for software
purchased to fulfill orders revenued in July;
(e) 10% of the Company's Cimage Corporation accounts receivable
purchased from the NBD Bank outstanding on the date hereof
and collected prior to January 1, 1996 ("Collections") to
be paid by the end of the month following the month in which
such Collections are received by the Company;
(f) an additional 10% (in total 20%) of Collections on the
amount that such Collections plus Free Cash exceed $700,000
to be paid by the end of the month following the month in
which such Collections are received by the Company;
(g) An amount equal to 7.5% of the invoice value of valid
Cimage software orders booked by the Company during the
period from July 1, 1995 to July 28, 1995 and 5% of the
invoice value of such orders booked by the Company during
the period from July 29, 1995 through October 31, 1995.
The amount described in this Paragraph 2(g) shall be paid
by the end of the month following the month in which such
order is taken into revenue by the Company.
(h) Executive shall be entitled to review the books and records
of the Company at reasonable times and on reasonable notice
to verify the calculations required by Paragraphs 2(d)-2(g).
3. Termination. Notwithstanding anything contained herein to the
contrary, the Company shall have the right, upon written notice to
Executive, to terminate Executive's services hereunder for cause,
if Executive (i) defrauds the Company or misappropriates property
or opportunities belonging to the Company, (ii) materially
breaches any of the provisions set out in Paragraphs 1 or 6
hereof and fails to cure such breach within thirty (30) days from
the time Executive becomes aware or should have become aware of
such material breach, or (iii) is convicted of any crime which is
classified as a felony.
4. Reimbursement of Expenses. The Company will reimburse Executive
for all reasonable travel and other expenses incurred by him in
the performance of his obligations under this Agreement consistent
with the policies of the Company approved by ACCESS in advance.
5. Death and Disability.
(a) If, prior to November 1, 1995, Executive dies or contracts
an illness or other injury which prevents performance by
him of his duties as described herein, the Company, at its
option, may at any time thereafter terminate this Agreement
by serving five (5) days' prior written notice thereof on
Executive. Executive's rights under this Agreement shall
terminate and come to an end upon the date set forth in
said notice as if such date were the termination date of
this Agreement. If prior to the date specified in such
notice, Executive's illness or incapacity shall have been
terminated and he is physically and mentally able to perform
his duties as described herein and shall have taken up and is
performing such duties on a full-time basis, he shall be
entitled to resume employment hereunder as though such notice
had not been given.
(b) During any period of disability which occurs during the term
of this Agreement after October 31, 1995, Executive shall
continue to be paid in full by the Company in accordance with
the provisions of Paragraph 2 of this Agreement, except that
the Company shall deduct from Executive's compensation as
therein provided an amount equal to any disability insurance
payments received by Employee for such period pursuant to
disability insurance policies paid for and maintained by
the Company for the benefit of Executive.
(c) In the event Executive dies during the term of this
Agreement after October 31, 1995, Executive shall continue
to be paid in full by the Company in accordance with the
provisions of Paragraph 2 of this Agreement, except that
Company shall deduct from Executive's compensation as therein
provided an amount equal to any life insurance proceeds
payable with respect to Executive's life pursuant to life
insurance policies paid for and maintained by the Company for
the benefit of Executive.
6. Confidentiality. Executive will not at any time either during
the term of this Agreement or for two years after the termination
of this Agreement, except as authorized by the Company, divulge,
furnish or make accessible to any person, firm, corporation or
other entity any such confidential and sensitive information
and any other information not otherwise publicly available which
he presently possesses or which he may obtain during the course
of his services to Access or the Company with respect to (a) the
business, services, customers and affairs of the Company or
Access and/or any subsidiary or affiliate of the Company or
Access or (b) any trade secrets, developments, know-how, methods
or other information and data pertaining to practices, processes,
formulas, developments or business of the Company or Access, or
(c) any confidential or secret aspect of the business of the
Company or Access and/or any subsidiary or affiliate of the
Company or Access. Executive will keep all such matters and
information strictly and absolutely confidential. Executive,
upon the termination of his services hereunder, irrespective of
the time, manner or cause of termination, will surrender and
deliver to the Company all lists, books, records and data of
every kind relating to or in connection with the customers,
suppliers, products and business of the Company or Access and/or
any subsidiary or affiliate of the Company or Access and all
property belonging to the Company or Access and/or any subsidiary
or affiliate of the Company or Access.
7. Assignability. Executive recognizes that this Agreement is
personal to the Company and none of Executive's obligations
under this Agreement may be assigned or delegated by him. The
Company may not assign its rights and obligations hereunder,
except upon a merger, consolidation or sale of all or
substantially all of its assets and business, and it shall be a
condition of any such assignment that the purchaser agree to
assume all obligations of the Company hereunder.
8. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when
delivered personally, or delivered to a United States post office,
first-class postage prepaid, or given by prepaid telegram as
follows (or to such changed address of which notice shall
have been given in the manner provided in this Paragraph):
To Executive: Joseph Ben-Gal
30123 Fox Grove
Farmington Hills, Michigan 48334
To Company: CimSoft, Inc.
4350 Glendale-Milford Road
Suite 250
Cincinnati, Ohio 45242
Attn: Newton D. Baker
9. Miscellaneous.
(a) This Agreement may not be amended except by a writing signed
by each of the parties.
(b) This Agreement and its interpretation and construction shall
be governed by the laws of the State of Ohio.
(c) This Agreement shall be binding upon and inure to the benefit
of the parties and their respective heirs, executors,
personal representatives or successors.
(d) Except as otherwise provided herein, neither this Agreement
nor any of the obligations or benefits of the parties
hereunder may be assigned without the written consent of
the other party.
(e) Executive's status hereunder shall be that of an employee
of the Company until the earlier of February 1, 1996 or the
first week during which he shall work fewer than thirty (30)
hours (other than vacation time agreed upon by Company and
Executive) and thereafter shall be that of independent
contractor to, and not an employee of, the Company.
Executive shall make when due all income tax, FICA,
unemployment insurance and other payments required by law.
Executive shall not be entitled to any benefits of employment
except as specifically set forth herein or which are incident
to his status as an employee. In Witness Whereof the parties
have hereunto set their hands the day and year first above
written.
ACCESS CORPORATION
By:NEWTON B. BAKER By:JOESPH BEN-GAL
____________________________ ___________________________
Newton D. Baker Joseph Ben-Gal
Executive Vice President
STOCK PURCHASE AGREEMENT
Agreement dated as of July 31, 1995 between ACCESS CORPORATION, an
Ohio corporation ("Buyer"), and WILLIAM MANNING (the "Seller").
The Seller owns all of the outstanding equity securities of
CimSoft, Inc., a Delaware corporation ("CimSoft"), consisting of 510,000
shares of Common Stock, $.01 par value (the "Shares") and Promissory Notes
of CimSoft in the aggregate principal amount of $172,500 (the "Notes").
The Buyer wishes to purchase, and the Seller wishes to sell, the Shares
and the Notes on the terms and conditions of this Agreement.
The parties agree as follows:
1. The Acquisition.
1.1 Purchase and Sale. Subject to the terms and conditions of
this Agreement, the Seller hereby sells the Shares and the
Notes to the Buyer, and the Buyer hereby purchases the Shares
from Seller, free and clear of all liens, charges and
encumbrances ("Encumbrances"). In furtherance thereof, the
Seller is herewith delivering to the Buyer certificates
representing the Shares and the Notes, duly endorsed for
transfer to the Buyer.
1.2 Purchase Price. The aggregate purchase price for the Shares
is $257,500, $177,500 of which is being paid simultaneously
herewith by the Buyer to the Seller by certified check or
wire transfer and $80,000 of which will be so paid on
September 30, 1995 by certified check or wire transfer. The
aggregate purchase price for the Notes is $172,500 which is
being paid simultaneously herewith by the Buyer to the Seller
by certified check or wire transfer.
1.3 Other Transactions. Simultaneously with the execution and
delivery of this Agreement:
(a) The Seller is delivering to the Buyer his resignation
as director and officer of CimSoft;
(b) Mr. Ben-Gal is entering into an employment and non-
competition agreement with CimSoft;
(c) The Buyer shall receive a confirmation from [Cimage
Enterprise Systems Limited] in form and substance
satisfactory to Buyer consenting to the transactions
contemplated by the Agreement.
2. Representations and Warranties of the Seller. In order to induce
the Buyer to enter into this Agreement and to purchase the Shares
and the Notes, the Seller represents to the Buyer that:
2.1 Authority of the Seller. This Agreement constitutes a valid
and binding obligation of the Seller, enforceable against him
in accordance with its terms. Neither the execution and
delivery of this Agreement nor the sale of the Shares and
the Notes to the Buyer will: (a) violate, be in conflict
with, or constitute a default under any agreement to which
Seller is a party or (b) violate any statute, law, regulation,
judgment, decree or order to which the Seller is subject.
2.2 Ownership of the Shares and the Notes. The authorized equity
securities of CimSoft consist of 1,000,000 shares of common
stock of which 510,000 shares are outstanding and constitute
the Shares. The Notes referred in Section 1.2 above
constitute the entire indebtedness of CimSoft to William
Manning. Seller owns the Shares and the Notes, of record and
beneficially, free and clear of all Encumbrances. No legend
or other reference to any purported Encumbrance appears
upon any certificate representing the Shares and the Notes
except a legend that the Shares have not been registered
under the Securities Act of 1933 and cannot be sold or
transferred unless or until registered or unless such
registration is not then required under the circumstances of
such sale or transfer. The delivery of certificates to the
Buyer provided in Section 1.1 and the payment to the Seller
provided in Section 1.2 will result in the Buyer's immediate
acquisition of record and beneficial ownership of the Shares
and the Notes, free and clear of all Encumbrances. There are
no outstanding options, rights, conversion rights, agreements
or commitments of any kind relating to the issuance, sale or
transfer of any equity securities or other securities of
CimSoft.
2.3 Organization of CimSoft. CimSoft is a corporation duly
organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, with full
corporate power and authority to own its properties and to
engage in its business as presently conducted, is duly
qualified and in good standing as a foreign corporation under
the laws of each other jurisdiction in which it is authorized
to do business and is not required to qualify as a foreign
corporation in any other jurisdiction except California where
application for qualifications is pending. CimSoft does not
own, or have any option, right, agreement or commitment of
any kind to acquire, any equity securities or other securities
of any other corporation or other entity or any direct or
indirect equity or ownership interest in any other business.
2.4 No Conflict as to CimSoft. Neither the execution and delivery
of this Agreement nor the consummation of the sale of the
Shares and the Notes to the Buyer will (a) violate any
provision of the certificate of incorporation or by-laws (or
other governing instrument) of CimSoft or (b) violate, or be
in conflict with, or constitute a default under, or result in
the termination of, or accelerate the performance required
by, or excuse performance by any person of any of its
obligations under, or cause the acceleration of the maturity
of any debt or obligation pursuant to, or result in the
creation or imposition of any Encumbrance upon any property
or assets of CimSoft under, any agreement or commitment to
which CimSoft is a party or by which any of its property or
assets is bound, or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or
other governmental body applicable to CimSoft.
2.5 Consents and Approvals of Governmental Authorities. No
consent, approval or authorization of, or declaration, filing
or registration with, any governmental body is required to be
made or obtained by the Seller or CimSoft in connection with
the execution, delivery and performance of this Agreement by
the Seller or the consummation of the sale of the Shares and
the Notes to the Buyer.
2.6 Other Consents. Except as contemplated by Section 1.3(c),
no consent of any person is required to be obtained by the
Seller or CimSoft to the execution, delivery and performance
of this Agreement or the consummation of the sale of the
Shares and the Notes to the Buyer, including, but not limited
to, consents from parties to leases or other agreements or
commitments.
2.7 Assets. All of the assets by CimSoft are owned free and clear
of all Encumbrances. All accounts receivable purchased by
CimSoft from Cimage Corporation are "as is" and Seller makes
no warranty or representation to Buyer other than as to
ownership by CimSoft of such accounts.
2.8 Litigation. To the best knowledge of the Seller, there is no
action, suit, inquiry, proceeding or investigation by or
before any court or governmental body pending or threatened
against or affecting CimSoft or which questions or challenges
the validity of this Agreement. CimSoft is not subject to
any judgment, order or decree.
2.9 No Material Adverse Change. Since June 29, 1995,
there has not been any material adverse change in the
business, assets or prospects of CimSoft and since
June 29, 1995, CimSoft has not made any payments or
distributions to any Shareholder, member of management or
related parties (other than its President's salary at the
monthly rate of $9,166.67 and the reimbursement of normal
business and travel expenses) and has not incurred any
liability or obligation to or on behalf of any such person,
other than those incurred directly and solely in CimSoft's
normal business operations.
2.10 Patents, Trademarks and Copyrights. Exhibit 2.10 hereto
contains a list of (a) all material patents and registered
trademarks and copyrights ("Proprietary Rights"), and
applications therefor, owned by CimSoft and (b) all material
license agreements relating to Proprietary Rights to which
CimSoft is a party. To the best knowledge of the seller, the
sale of the Shares and the Notes to the Buyer will not
adversely affect the use by CimSoft of any Proprietary Rights.
2.11 Contracts and Commitments. Other than as set forth on
Exhibit 2.11 CimSoft is not a party to any:
(a) Except for the above referenced Notes, contract or
agreement involving any liability on the part of CimSoft
of more than $10,000 and not cancelable by CimSoft
within 60 days;
(b) Lease of personal property involving annual rental
payments in excess of $10,000 and not cancelable by
CimSoft within 60 days;
(c) Employee bonus, stock option or stock purchase,
performance unit, profit-sharing, pension, savings,
retirement, health, deferred or incentive compensation,
insurance or other material employee benefit plan
(as defined in Section 2(3) of ERISA) or program for any
of the employees, former employees or retired employees
of CimSoft;
(d) Commitment, contract or agreement that is currently
expected by the management of CimSoft to result in any
material loss upon completion or performance thereof;
(e) Contract, agreement or commitment that is material to the
business of CimSoft with any officer, employee, agent,
consultant, advisor, salesman, sales representative,
value added reseller, distributor or dealer;
(f) Employment agreement or other similar agreement;
(g) Lease of real or personal property; or
(h) Other contract, agreement or commitment that is material
to the business of CimSoft.
All such contracts and agreements are in full force and effect.
CimSoft is not in breach of, in violation of, or in default under, any
agreement, instrument, indenture, deed of trust, commitment, contract or
other obligation of any type to which CimSoft is a party or is or may be
bound that relates to its business or to which any of its assets or
properties is subject.
2.12 Compliance with Law. The operations of CimSoft have been
conducted in accordance with all applicable laws and
regulations of all governmental bodies having jurisdiction
over them. Since June 29, CimSoft has not received any
notification of any asserted present or past failure by it
to comply with any such applicable laws or regulations.
CimSoft has or in the case of California has applied for all
material licenses, permits, orders or approvals from the
governmental bodies required for the conduct of its
businesses, and is not in violation of any such licenses,
permits, orders and approvals. All such licenses, permits,
orders and approvals that have been issued are in full force
and effect, and no suspension or cancellation of any thereof
has been threatened.
2.13 Brokers or Finders. Seller has not employed any broker or
finder or incurred any liability for any brokerage or finder's
fees or commissions or similar payments in connection with the
sale of the Shares and the Notes to the Buyer.
3. Representations and Warranties of the Buyer.
3.1 Organization of the Buyer; Authorization. The Buyer is a
corporation duly organized, validly existing and in good
standing under the laws of Ohio, with full corporate power and
authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery
and performance of this Agreement have been duly authorized by
all necessary corporate action of the Buyer and this Agreement
constitutes a valid and binding obligation of the Buyer,
enforceable against it in accordance with its terms.
3.2 Conflict to the Buyer. Neither the execution and delivery of
this Agreement nor the performance of the Buyer's obligations
hereunder will (a) violate any provision of the Articles of
Incorporation or Code of Regulations of the Buyer, (b) violate,
be in conflict with, or constitute a default (or an event
which, with notice of lapse of time or both, would constitute
a default) under any agreement or commitment to which the
Buyer is a party, or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or
other governmental body applicable to the Buyer.
3.3 Brokers or Finders. The Buyer has not employed any broker
or finder or incurred any liability for any brokerage or
finder's fees or commissions or similar payments in
connection with any of the transactions contemplated hereby.
3.4 Consents and Approvals or Governmental Authorities. No
consent, approval or authorization of, or declaration, filing
or registration with, any governmental body is required to be
made or obtained by the Buyer in connection with the
execution, delivery and performance of this Agreement by the
Buyer or the consummation of the purchase of the Shares and
the Notes by the Buyer.
3.5 Other Consents. No consent of any person is required to be
obtained by the Buyer to the execution, delivery and
performance of this Agreement by the Buyer or the
consummation of the purchase of the Shares and the Notes by
the Buyer.
3.6 Purchase for Investment. The Buyer is purchasing the Shares
and the Notes solely for its own account for the purpose of
investment and not with a view to, or for sale in connection
with, any distribution of any portion thereof in violation of
any applicable securities law.
4. Survival of Representations and Warranties; Indemnification.
4.1 Survival. The representations and warranties contained in
Sections 2.7, 2.8, 2.9. 2.10, 2.11, 2.12 and 2.13 of this
Agreement shall expire twelve months after the Closing. All
other representations and warranties contained in this
Agreement shall survive the Closing.
4.2 Indemnification by the Seller. The Seller shall indemnify
and hold harmless the Buyer and CimSoft for any loss,
liability, damage or expense (including reasonable attorneys
fees) (collectively, "Damages") arising from or in connection
with (a) any inaccuracy in any of the representations and
warranties of the Seller in this Agreement or (b) any failure
by the Seller to perform or comply with any agreement in this
Agreement.
4.3 Indemnification by the Buyer. The Buyer shall indemnify and
hold harmless the Seller for any Damages arising from or in
connection with (a) any inaccuracy in any of the
representations and warranties of the Buyer in this Agreement,
(b) any failure by the Buyer to perform or comply with any
agreement in this Agreement and (c) any claims arising from
the conduct of the business of CimSoft after the date hereof.
4.4 Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 4.2 or 4.3 of notice of the
commencement of any action which give rise to Damages, such
indemnified party shall, if a claim in respect thereof is to
be made against an indemnifying party under such Section,
give notice to the indemnifying party of the commencement
thereof. Failure so to notify the indemnifying party shall
relieve it of any liability that it may have to any
indemnified party to the extent that the defense of such
action is materially prejudiced thereby, providing the
indemnifying party did not receive or otherwise have actual
notice thereof. If any such action shall be brought against
an indemnified party and it shall give notice to the
indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein
and, to the extent that it shall wish, to assume the defense
thereof with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such
indemnified party of its election so they assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party under such Section for any fees of other
counsel or any other expenses (unless such fees or expenses
are incurred at the request of the indemnifying party), in
each case subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable
costs of investigation, provided, however, that the Buyer and
CimSoft shall be entitled, at their sole election, to retain
control of any action or demand related to any intellectual
property right matters or as to which the remedy would have a
materially adverse on-going effect on CimSoft. If the
indemnifying party receives notice of any action or demand, it
shall promptly notify the indemnified party as to whether it
intends to control the defense thereof. If any indemnifying
party defends an action (a) no compromise or settlement
thereof may be effected by the indemnifying party without the
indemnified party's consent (which shall not be unreasonably
withheld) unless (i) there is no finding or admission of any
violation of law and no effect on any other claims that may
be made against the indemnified party and (ii) the sole
relief provided is monetary damages that are paid in full by
the indemnifying party and (b) the indemnifying party shall
have no liability with respect to any compromise or settlement
thereof effected without its consent. If notice is given to
an indemnifying party to the commencement of any action and
it does not, within 20 days after the indemnified party's
notice is given, give notice to the indemnified party of its
election to assume the defense thereof, the indemnifying party
shall not be bound by any compromise or settlement thereof
effected by the indemnified party without its consent, which
shall not be unreasonably withheld.
5. Notices.
All notices, consents, assignments and other communications under this
Agreement shall be in writing and shall be deemed to have been duly
given when (a) delivered by hand, (b) sent by telecopier (with receipt
confirmed), provided that a copy is mailed by registered mail, return
receipt requested, or (c) received by the delivery service (receipt
requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier
numbers as a party may designate as to itself by notice to the other
parties).
(a) If to the Buyer:
4350 Glendale - Milford Road
Suite 250
Cincinnati, OH 45242
Fax (513) 786-8363
Attn: Newton D. Baker
(b) If to the Seller:
1100 Chase Square
Rochester, New York 14604-1999
Fax (716) 325-3266
Attn: William Manning
6. Miscellaneous.
6.1 Expenses. Each party shall bear its own expenses incident to
the preparation, negotiation, execution and delivery of this
Agreement and the performance of its obligations hereunder.
6.2 Captions. The captions in this Agreement are for convenience
of reference only and shall not be given any effect in the
interpretation of this Agreement.
6.3 No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall
not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or
any other term of this Agreement. Any waiver must be in
writing.
6.4 Exclusive Agreement; Amendment. This Agreement supersedes
all prior agreements among the parties with respect to its
subject matter, and is intended (with the documents referred
to herein) as a complete and exclusive statement of the terms
of the agreement among the parties with respect thereto and
cannot be changed or terminated orally.
6.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original,
but all of which together shall constitute the same instrument.
6.6 Governing Law. This Agreement and (unless otherwise provided)
all amendments hereof and waivers and consents hereunder
shall be governed by the internal law of the State of Ohio,
without regard to the conflicts of law principles thereof.
6.7 Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective
successors and assigns, provided that none of the parties may
assign their rights hereunder without the consent of the other
except that the Buyer may assign its rights in connection
with any merger or consolidation of the Buyer with or into
another entity.
ACCESS CORPORATION
By:
WILLIAM MANNING
William Manning
