UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED SEPTEMBER 30, 1997.
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION
PERIOD FROM _________________ TO _________________.
Commission File Number: 0-17773
___________________________ATS Money Systems, Inc._______________________
(Exact name of small business issuer as specified in its charter)
____________Nevada_________________ ___________13-3442314______________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
25 Rockwood Place________Englewood, New Jersey________07631___________
(Address of principal executive offices) (Zip Code)
___________________________201/894-1700___________________________________
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
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. __X__Yes _____No
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
As of November 11, 1997, - 5,803,911 shares of common stock,
$.001 par value.
Transitional Small Business Disclosure Form Yes _____ No __X__
Part I. FINANCIAL INFORMATION
Item I. Financial Statements
<TABLE>
<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30 DECEMBER 31
ASSETS: 1997 1996
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,255,757 $ 308,138
Trade accounts receivable, less
allowance for doubtful accounts
of $87,015 in 1997 and $74,183 in 1996 787,666 1,264,521
Inventories 703,979 567,420
Prepaid expenses and other current assets 99,436 219,922
Total current assets 2,846,838 2,360,001
PROPERTY - At cost:
Office furniture 95,994 91,011
Office machinery and equipment 214,766 146,021
_________ ________
Subtotal 310,760 237,032
Less Accumulated depreciation 133,443 102,432
_________ _________
Property - net 177,317 134,600
OTHER ASSETS:
Software costs, less accumulated
amortization of $769,557 in 1997
and $511,790 in 1996 1,432,510 908,586
Deposits 54,677 50,677
__________ _________
Total other assets 1,487,187 959,263
TOTAL $ 4,511,342 $ 3,453,864
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 14,744 $ 148,921
Accrued expenses 724,563 210,160
Deferred revenue 795,509 322,125
Deferred income taxes 4,732 4,732
Other liabilities 72,147 161,963
__________ __________
Total current liabilities 1,611,695 847,901
LONG-TERM-Deferred Credit, less
amortization of $89,113 in 1997
and $67,727 in 1996 196,054 217,440
STOCKHOLDERS' EQUITY:
Common stock - $.001 par value, 25,000,000
shares authorized, 5,891,911 shares issued
at September 30, 1997, and 5,903,911 at
December 31, 1996 5,904 5,892
Additional paid-in capital 2,377,760 2,374,397
Accumulated earnings 320,029 8,334
Treasury stock - 100,000 shares at par
value ( 100) ( 100)
___________ ___________
Total stockholders' equity 2,703,593 2,388,523
___________ ___________
TOTAL $ 4,511,342 $ 3,453,864
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
SEPTEMBER 30 SEPTEMBER 30
1997 1996
<S> <C> <C>
REVENUE:
Equipment and systems sales $ 1,266,760 $ 1,177,971
Equipment maintenance and service revenue 628,667 561,392
__________ __________
Total revenue 1,895,427 1,739,363
COST AND EXPENSES:
Cost of goods sold and service expense:
Equipment and systems 649,975 609,320
Equipment maintenance and service 266,783 227,211
Selling, general and administrative
expenses 1,035,477 891,674
__________ __________
Total costs and expenses 1,952,235 1,728,205
___________ __________
INCOME(LOSS)FROM OPERATIONS ( 56,808) 11,158
INTEREST INCOME 16,318 13,363
___________ __________
INCOME(LOSS)BEFORE INCOME TAXES ( 40,490) 24,521
INCOME TAX (BENEFIT) PROVISION ( 10,000) 11,000
___________ ___________
NET INCOME (LOSS) $ ( 30,490) $ 13,521
EARNING (LOSS) PER COMMON SHARE:
Primary and fully diluted ( $.01) $.00
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,797,911 5,776,486
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
SEPTEMBER 30 SEPTEMBER 30
1997 1996
<S> <C> <C>
REVENUE:
Equipment and systems sales $ 4,567,328 $ 4,222,008
Equipment maintenance and service revenue 1,849,708 1,770,305
_________ _________
Total revenue 6,417,036 5,992,313
COSTS AND EXPENSES:
Cost of goods sold and service expense:
Equipment and systems 2,044,040 1,942,210
Equipment maintenance and service 752,521 720,047
Selling, general and administrative
expenses 3,149,578 2,780,606
Total costs and expenses 5,946,139 5,442,863
___________ __________
INCOME FROM OPERATIONS 470,897 549,450
INTEREST INCOME 48,801 33,235
__________ _________
INCOME BEFORE INCOME TAXES 519,698 582,685
INCOME TAXES 208,000 218,000
__________ __________
NET INCOME $ 311,698 $ 364,685
EARNINGS PER COMMON SHARE:
Primary and fully diluted $.05 $.06
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,793,911 5,774,187
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
SEPTEMBER 30 SEPTMBER 30
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 311,698 $ 364,685
Adjustments to reconcile net income
to cash provided by (used in) operating
activities:
Depreciation and amortization 267,392 155,188
Changes in current assets and liabilities:
Compensation expense recorded for common
stock issued under Director Stock Plan 0 50,000
Trade accounts receivable - net 476,856 278,211
Inventories ( 136,559) 119,914
Prepaid expenses and other assets 116,486 ( 284,184)
Accounts payable - trade ( 134,177) ( 58,060)
Accrued expenses 514,403 276,444
Deferred revenue 473,384 453,382
Other liabilities ( 89,818) ( 48,242)
___________ ___________
Net cash provided by operating activities 1,799,665 1,307,338
___________ __________
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalization of software development
costs ( 781,693) ( 285,724)
Additions to property ( 73,728) ( 76,538)
__________ __________
Net cash used in investing activities ( 855,421) ( 362,262)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options: 3,375 195
_________ __________
Net cash provided by financing activities 3,375 195
_________ __________
NET INCREASE IN CASH AND CASH EQUIVALENTS 947,619 945,271
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 308,138 164,548
__________ _________
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,255,757 $ 1,109,819
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Income Taxes (Refunds) $ ( 5,790) $ 328,234
See notes to consolidated financial statements.
</TABLE>
ATS MONEY SYSTEMS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
September 30, 1997
Note 1 - Unaudited Information:
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of management, the accompanying unaudited
financial statements reflect all adjustments (which comprise
only normal recurring accruals) necessary to present fairly the
Company's consolidated financial position as of September 30,
1997, and the results of its operations for the three month and
nine month periods ended September 30, 1997 and 1996 and its
cash flows for the nine month periods ended September 30, 1997
and 1996. Information included in the consolidated balance sheet
as of December 31, 1996 has been derived from the Company's
audited financial statements contained in its Annual Report on
Form 10-KSB for the year ended December 31, 1996, to which
reference is made. Operating results for the three month and
nine month periods ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the year
ending December 31, 1997.
Certain prior year amounts have been reclassified in order to
conform with the 1997 financial statement presentation.
Note 2 - Inventories
Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method for machine parts
and specific identification for machines held for sale.
Note 3 - Capitalized Software Costs
The Company capitalizes computer software development costs in
accordance with the provisions of Statement of Financial
Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed".
Costs incurred to establish the technological feasibility of
computer software are expensed as incurred. Costs incurred for
product enhancements, subsequent to establishing technological
feasibility, are capitalized and stated at the lower of cost or
net realizable value. Capitalized costs are amortized using the
straight-line method over five years, which approximates the
estimated remaining useful life of the product. Amortization of
computer software costs amounted to $257,768 and $152,157 for
the nine month periods ended September 30, 1997 and 1996,
respectively, and $87,988 and $54,889 for the three month
periods ended September 30, 1997 and 1996, respectively.
Note 4 - Revenue Recognition
Revenue from equipment and systems sales is recognized upon
shipment to the buyer and satisfaction of related obligations by
the Company. Revenue from software licensing is recognized on
delivery of the software if collectibility is probable, and any
remaining insignificant obligations of the Company are accounted
for by deferring a pro-rata portion of revenue and recognizing
it either ratably as the obligations are fulfilled or on
completion of performance or by recording a current year expense
for the remaining costs associated with completing the project.
Note 5 - Equipment Maintenance and Service Revenue
Equipment maintenance and service revenue is recognized as
earned over the term of the contract, which is generally a
maximum of one year in length. Deferred revenue represents the
unearned portion of equipment maintenance and service fees.
Note 6 - Stockholders' Equity
Common Stock - The authorized capital stock of the Company
consists of 25,000,000 shares of noncumulative, voting, common
stock, with a par value of $.001 per share.
Common Stock Incentive Plan - In 1993, the Company adopted a
common stock incentive plan (the "Plan"), which, as amended,
authorizes the issuance, within ten years, of options covering
up to 480,000 shares of common stock to certain employees and
other individuals of importance to the Company. The Plan is
intended to provide incentive to continued employment of certain
employees and other individuals by enabling them to acquire a
proprietary interest in the Company. Options granted under the
Plan may be either "incentive stock options" or "non-qualified
stock options." Incentive stock options, granted only to
certain employees of the Company, expire within ten years (five
years for a 10% beneficial owner of the Company's securities)
from the date granted and are exercisable from time to time,
after the first year, in accordance with the terms of such
options. The exercise price of an incentive stock option must
be at least equal to the fair market value of the common stock
on the date of grant (110% for a 10% beneficial owner of the
Company's securities). Nonqualified stock options can be
granted to certain employees of the Company and advisors and
consultants to the Company. Such stock options are exercisable
on or after the date of grant and the exercise price is not
limited and may be below fair market value.
On September 14, 1993, when the fair market value of the common
stock was $.28125 per share, the Company granted 159,685
incentive stock options at such price ($.31 per share for one
employee) and 65,315 nonqualified stock options (15,315 granted
at $.28125 per share and 50,000 granted at $.001 per share).
During 1993, 50,000 nonqualified options were exercised at a
price of $.001 per share.
During 1994, the Company granted 36,000 incentive stock options
(21,000 granted at $1.25 per share and 15,000 granted at $1.375
per share). Also during 1994, 4,171 options were exercised at a
price of $.28125 per share.
The Company did not grant any options in 1995. During 1995,
15,653 options were exercised at a price of $.28125 per share.
During 1996, the Company granted 48,501 incentive stock options
(37,626 granted at $1.03125 per share and 10,875 granted at
$1.1344 per share). Also during 1996, 16,117 options were
exercised at a price of $.28125 per share.
At December 31, 1996, there were 207,295 options outstanding at
prices ranging from $.28125 to $1.375 per share, of which
165,619 were then exercisable.
On February 14, 1997, the Company granted 34,000 incentive stock
options at $.71 per share.
As of September 30, 1997, there were 221,628 options outstanding
at prices ranging from $.28125 to $1.375 per share, of which
168,168 were then exercisable.
Director Stock Plan - In 1995, the Company adopted the 1995
Director Stock Plan pursuant to which the Company's nonemployee
directors, upon first being elected to the Board, are granted
10,000 shares of common stock, and thereafter, on each
reelection, are granted options to purchase 5,000 shares of
common stock with an exercise price equal to the fair market
value of such shares as of the date of grant. In 1995, the
nonemployee directors were granted 40,000 shares of common stock
under this plan, all of which were issued during 1996. At the
Annual Meeting held May 30, 1997, the stockholders approved an
amendment to increase the annual grant of options to 10,000
shares. At September 30, 1997, there were 30,000 options
outstanding at prices ranging from $.8281 to $.9109 per share,
of which 9,999 were exercisable.
Common Stock Warrants - In connection with services to be
rendered by an investment banker, as of April 7, 1997, the
Company granted to the investment banker warrants to purchase
80,000 shares of common stock exercisable at $.75 per share,
agreed to grant to the investment banker on April 8, 1998,
warrants to purchase an additional 80,000 shares of common stock
exercisable at $1.25 per share and, unless the agreement is
canceled by the Company before April 8, 1999, agreed to grant to
the investment banker on such date warrants to purchase an
additional 80,000 shares of common stock exercisable at $1.25
per share. All of the warrants will expire on April 7, 2001,
unless exercised prior thereto.
Note 7 - Commitments and Contingencies
At September 30, 1997, the Company was committed under
noncancelable, operating leases for office space, automobiles
and office equipment, expiring at various dates through April
2000, requiring minimum rental payments as follows:
<TABLE>
<CAPTION>
Year Ending December 31:
<S> <C>
1997 (balance of year) $ 76,979
1998 305,325
1999 142,158
2000 37,469
$561,931
</TABLE>
Note 8 - Earnings Per Common Share
For purposes of calculating earnings per common share, the
Company used the weighted average number of shares of common
stock outstanding during the year applied to the net income.
The exercise of stock options (See Note 6) was assumed in the
calculation. In February 1997, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS"), No. 128 "Earnings per Share",
which is effective for periods ending after December 15, 1997.
This statement establishes standards for computing and
presenting earnings per share and applies to entities with
publicly held common stock or potential common stock. The
adoption of SFAS 128 is not expected to have a material effect
on the Company's financial statements.
Note 9 - Other
In February 1997, FASB issued SFAS 129 "Disclosure of
Information about Capital Structure", which is effective for
periods ending after December 15, 1997. In June 1997, FASB also
issued SFAS 131 "Disclosure about Segments of an Enterprise and
Related Information". This statement is effective for periods
beginning after December 15, 1997. The Company has not fully
assessed the impacts of the disclosure requirements of these
statements. However, the Company does not believe these
statements will have a significant effect on the financial
statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Reference is made to Item 6 - "Management's Discussion and
Analysis or Plan of Operation," contained in the Company's
Annual Report on Form 10-KSB for its fiscal year ended December
31, 1996 for a discussion of the Company's financial condition
as of December 31, 1996, including a discussion of the Company's
anticipated liquidity and working capital requirements during
1997.
This Quarterly Report on Form 10-QSB contains, in addition to
historical information, certain forward-looking statements that
involve significant risks and uncertainties. Such
forward-looking statements are based on management's belief as
well as assumptions made by, and information currently available
to, management pursuant to the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995.
Forward-looking statements can generally be identified as such
because the context of the statement may include words such as
the Company "believes," "expects" or words of similar import.
Similarly, statements that describe the Company's future plans,
objectives, estimates or goals are also forward-looking
statements. Such statements address future events and
conditions concerning capital expenditures, earnings, sales,
liquidity and capital resources, and accounting matters. The
Company's actual results could differ materially from those
expressed in or implied by the forward-looking statements
contained herein. Factors that could cause or contribute to
such differences include, but are not limited to, those
discussed in "Financial Condition" below and in Item 1 -
"Description of Business" and elsewhere in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1996, as
well as factors such as future economic conditions and
economic conditions in the industries in which the Company's
customers compete, a determination by the Company's customers to
prolong their test cycles of the Company's equipment, software
and software support services, a determination by the Company's
customers to modify or change their underlying computer and cash
reporting systems, acceptance by customers of the Company's
products, changes in customer demand, legislative, regulatory
and competitive developments in markets in which the Company
operates and other circumstances affecting anticipated revenues
and costs. The Company undertakes no obligation to release
publicly the result of any revisions to these forward-looking
statements that may be made to reflect events or circumstances
after the date of this Quarterly Report on Form 10-QSB or to
reflect the occurrence of other unanticipated events.
COMPARISON OF CONSOLIDATED OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 (THE "1997 PERIOD") TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 (THE "1996 PERIOD").
Total revenues for the 1997 Period were $6,417,036, an increase
of $424,723 (7.1%) over the 1996 Period. System and equipment
sales increased $345,320 (8.2%) to $4,567,328 for the 1997
Period. Sales by ATS Money Systems, Inc. (parent company)
increased by $491,867 (17.6%) during the 1997 Period and a
portion of such increase was attributed to a new software
contract. This increase was offset by a decrease of $146,547
(10.3%) at Innovative Electronics resulting from fewer contracts
in the 1997 Period. Maintenance and service revenues were
$1,849,708 for the 1997 Period. This was an increase of $79,403
(4.5%) from the 1996 Period.
Cost of equipment and system sales declined from 46.0% of sales
in the 1996 Period to 44.8% in the 1997 Period due to revenues
from a software lease agreement, the cost of which are being
amortized over five years. Cost of maintenance and service
remained constant at 40.7% of revenues in both periods.
Selling, general and administrative expenses were $3,149,578 for
the 1997 Period compared to $2,780,606 in the 1996 Period. This
was an increase of $368,972 (13.3%) and was primarily
attributable to increased software amortization of new products,
increased personnel costs due to additional customer service
positions at Innovative Electronics and a provision for employee
incentives. Also, outside consultants were used for business
evaluation purposes.
Interest income for the 1997 Period was $48,801 compared to
$33,235 in the 1996 Period. This increase of $15,566 (46.8%)
was due to greater amounts available for investments, primarily
due to prepayments by customers of their annual maintenance
contracts.
Income taxes were $208,000 for the 1997 Period compared to
$218,000 for the 1996 Period. This decrease of $10,000 (4.6%)
was due to less income from operations.
As a result of the foregoing, net income after taxes was
$311,698 for the 1997 Period compared to $364,685 for the 1996
Period.
COMPARISON OF CONSOLIDATED OPERATIONS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997 (THE "1997 QUARTER") TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1996 (THE "1996 QUARTER").
Total revenues for the 1997 Quarter were $1,895,427 compared to
$1,739,363 for the 1996 quarter. This was an increase of
$156,064 (9.0%) primarily caused by an increase at ATS Money
Systems (parent company) of $134,860 (14.6%) in systems sales
partially offset by a $46,071 (18.3%) decline at Innovative
Electronics, Inc. Also contributing to this increase was a
$67,275 (12.0%) increase in maintenance and service revenue from
the 1996 quarter.
Cost of equipment and system sales remained fairly constant in
both periods with costs being 51.3% of sales in the 1997 Quarter
and 51.7% in the 1996 Quarter. Cost of maintenance increased in
the comparable periods from 40.5% in 1996 to 42.4% in 1997
primarily due to a contract with a new third party maintenance
provider.
Selling, general and administrative expenses were $1,035,477 for
the 1997 Quarter compared to $891,674 for the 1996 Quarter.
This increase of $143,803 was primarily due to the use of
outside consultants for business evaluation purposes, additional
staffing at Innovative Electronics, Inc., a provision for
employee incentives and amortization of a new software product.
Interest income for the 1997 Quarter was $16,318 compared to
$13,363 in the 1996 Quarter. This increase of $2,955 (22.1%)
was primarily due to greater amounts available for investment
primarily from customers prepaying their annual maintenance
contracts.
Due to an operating loss, the income tax benefit was $10,000 in
the 1997 Quarter compared to an $11,000 expense in the 1996
Quarter.
As a result of the foregoing, there was a net loss of $30,490 in
the 1997 Quarter compared to a $13,521 net profit in the 1996
Quarter.
FINANCIAL CONDITION
At September 30, 1997, the Company had working capital of
$1,235,143 (a decrease of $276,957 from $1,512,100 at December
31, 1996) and cash and cash equivalents (including short-term
investments) of $1,255,757 as compared to cash and cash
equivalents of $308,138 at December 31, 1996. At September 30,
1997, the Company did not have any outstanding borrowings. The
Company's invested funds consist primarily of certificates of
deposit and bankers acceptances.
During the first nine months of 1997, operating activities
provided $1,799,665 of net cash, primarily from profits before
depreciation and amortization as well as payments to certain
vendors being deferred until future months. Investing
activities used $855,421 of net cash primarily for software
development costs.
In April 1997, First Union National Bank renewed a $750,000
discretionary line of credit for the Company's short-term needs,
at an interest rate equal to such bank's base rate plus 1/2%.
All advances under this line of credit are required to be
secured by a lien on substantially all of the Company's assets.
The Company has not drawn against this line of credit.
The Company believes that its current working capital, together
with anticipated funds from operations, will be sufficient to
meet the Company's projected operating needs and capital
expenditures for the foreseeable future.
The Company leases its facilities. As of September 30, 1997,
the Company had no material commitments for capital expenditures.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.(a) Agreement between ATS Money Systems, Inc., and
Vanstar Corporation dated September 1, 1997.
11. Computation of Per Share Earnings.
27. Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter for
which this report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ATS Money Systems, Inc.
(Registrant)
___________November 11, 1997________ ___________________________
(Date) Gerard F. Murphy
Chief Executive Officer
President
(Principal Executive Officer)
___________November 11, 1997________ ____________________________
(Date) Joseph M. Burke
Vice President - Finance
(Principal Accounting and
Financial Officer)
</TEXT)
EXHIBIT 11 - COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS
PER SHARE
Nine Months Ended Three Months Ended
_________________________ _________________________
September 30 September 30 September 30 September 30
1997 1996 1997 1996
Net Earnings $311,698 $364,685 ( $30,490) $13,521
Primary earnings
per share:
Weighted average
number of common
shares outstanding 5,793,911 5,774,187 5,797,911 5,776,486
Add: Shares arising
from the assumed
exercise of stock
options (as determined
under the Treasury
Stock Method) 0 0 0 0
__________________________________________________
Weighted average of
common and
equivalent shares 5,793,911 5,774,187 5,797,911 5,776,486
Primary earnings
per share $.05 $.06 ( $.01) $.00
==================================================
Fully diluted earnings
per share:
Weighted average number
of common shares
outstanding (as
determined for the
Primary earnings
per share calculation
above) 5,793,911 5,774,187 5,797,911 5,776,486
Add: Additional shares
arising from the
assumed exercise of
stock options (as
determined under the
Treasury Stock Method) 80,580 115,380 90,999 111,112
_______________________________________________
Weighted average of
common and equivalent
shares 5,874,491 5,889,567 5,888,910 5,887,598
Fully diluted earnings
per share $.05 $.06 ( $.01) $.00
==================================================
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as of September 30, 1997 and the Consolidated
Statement of Operations for the nine months ended September 30, 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,255,757
<SECURITIES> 0
<RECEIVABLES> 874,681
<ALLOWANCES> 87,015
<INVENTORY> 703,979
<CURRENT-ASSETS> 2,846,838
<PP&E> 310,760
<DEPRECIATION> 133,443
<TOTAL-ASSETS> 4,511,342
<CURRENT-LIABILITIES> 1,611,695
<BONDS> 0
<COMMON> 5,904
0
0
<OTHER-SE> 2,703,593
<TOTAL-LIABILITY-AND-EQUITY> 4,511,342
<SALES> 4,567,328
<TOTAL-REVENUES> 6,417,036
<CGS> 2,044,040
<TOTAL-COSTS> 2,796,561
<OTHER-EXPENSES> 3,136,746
<LOSS-PROVISION> 12,832
<INTEREST-EXPENSE> 48,801
<INCOME-PRETAX> 519,698
<INCOME-TAX> 208,000
<INCOME-CONTINUING> 311,698
<DISCONTINUED> 0
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EXHIBIT 10
MASTER SERVICE AGREEMENT
AGREEMENT made as of September 1, 1997, by and between ATS Money Systems
("ATS Money Systems"), with its principal office at 25 Rockwood Place,
Englewood, New Jersey 07631, and Vanstar Corporation ("Vanstar"), a
Delaware corporation with its principal office at 5964 West Las Positas
Boulevard, Pleasanton, California 94588.
WHEREAS, Vanstar is a provider of desktop-computing technology services;
WHEREAS, ATS Money Systems desires to utilize Vanstar's desktop-computing
technology services as set forth below;
WHEREAS, Vanstar has indicated its willingness to provide such services as
set forth below.
NOW THEREFORE, the parties hereby agree as follows:
1. Scope of Services
Subject to the general terms and conditions set forth in this Agreement
and of any exhibits and/or amendments to which the parties may mutually
agree in writing, ATS Money Systems agrees to purchase from Vanstar,
and Vanstar agrees to provide to ATS Money Systems such services, as
identified and priced in Exhibit A, including specified reporting and
performance parameters as set forth therein. Subsequent exhibits
and/or amendments may be added to this Agreement from time to time
during the Agreement term, by mutual agreement and execution by both
parties in writing.
ATS Money Systems will review the progress of services performed by
Vanstar hereunder no less frequently than monthly. Changes will be
processed by both parties in accordance with the Change Management
Process of Exhibit B. All resulting changes requested by ATS Money
Systems will be in writing.
Vanstar will notify ATS Money Systems if a requested change would either
require additional time or increase Vanstar's charges in excess of those
stated within this Agreement. Vanstar will perform the change only if
Vanstar and ATS Money Systems agree in writing on additional time and/or
charges.
In the event that end item materials or data are first developed for ATS
Money Systems by Vanstar under this Agreement it is agreed that ATS Money
Systems will have all right and title to such material and/or data. Nothing
in this Agreement, however, will be construed to restrain either party in
the use of the techniques and skills of computer operation, system design
and programming which may be used or acquired in the course of this
Agreement.
ATS Money Systems agrees that any machine-readable data or software
furnished to Vanstar for use in the services to be provided herein
or for use in configuring any hardware on ATS Money Systems' account
for any purpose agreed to by ATS Money Systems will be in good and
usable condition. ATS Money Systems will be responsible for the
correctness and completeness of any such data and/or software. ATS
Money Systems will retain copies of all data and software provided
to Vanstar.
2. Program Management, Review Meetings, and Disputes Resolution
ATS Money Systems and Vanstar shall each appoint a Program Manager of
suitable experience to be its single operational interface and point
of initial contact for the duration of the Agreement. Either party
may change its Program Manager by providing reasonable written notice
to the other party of such change before the change is to become
effective. The Program Managers will establish and jointly host
regular quarterly program status meetings of suitable representatives
of both parties, at mutually agreed times and locations, to discuss
such items as: issues arising in connection with performance of this
Agreement by ATS Money Systems and/or Vanstar, proposed changes in
accordance with the Change Management Process of Exhibit B, and
potential cost savings projects.
Both ATS Money Systems and Vanstar have an interest in improving the cost
effectiveness of the service delivery over the period of this Agreement.
ATS Money Systems and Vanstar Program Managers will conduct a quarterly
planning meeting throughout the period of the Agreement to identify and
evaluate potential cost savings due to productivity and/or efficiency gains.
The parties will implement any related projects by separate agreement, and
if necessary, amend this Agreement in accordance with Section 1 above. The
goal of this effort is to achieve tangible cost savings for ATS Money
Systems and improved profitability for Vanstar.
In the event there is a performance or proposed change issue which cannot
be resolved at these review meetings, either party may request that their
Program Managers meet separately to resolve the issue. If the issue is
still not resolved to the mutual satisfaction of both parties, then the
Program Managers will involve the ATS Money Systems and Vanstar contracting
authorities to resolve the issue.
For any Agreement performance issues, as the final step in the resolution
process, and prior to either party giving written notice of intent to
terminate, as described in Section 3, ATS Money Systems and Vanstar will
each designate a corporate executive who will meet to resolve the issue.
3. Term and Termination
The parties agree that the term of this Agreement will commence upon
September 1, 1997, and continue for a period of three (3) years. ATS Money
Systems may terminate this Agreement at any time for any reason upon ninety
(90) days prior written notice. Vanstar may terminate this Agreement at any
time for any reason upon ninety (90) days prior written notice. If ATS Money
Systems becomes insolvent, is unable to pays it's debts when due, ceases to
operate in the normal course of business, has a receiver appointed, or has
it's assets assigned, it shall be considered a material breach and Vanstar
may cancel any unfulfilled obligations and terminate for cause without
notice. In the event Vanstar is purchased by a third party during the
term of this Agreement ATS Money Systems may terminate the Agreement by
providing Vanstar with ninety (90) days prior written notice.
If Vanstar fails to perform substantially in accordance with its obligations
under this Agreement, ATS Money Systems may notify Vanstar in writing of
the nature of the failure. If Vanstar fails to correct such failure within
sixty (60) days of receipt of ATS Money Systems notice, or secure ATS
Money Systems' written approval for an extension, , ATS Money Systems
may there upon terminate all or part of this Agreement, as applicable.
Such approval for an extension shall not be unreasonably withheld.
Except for non-payment by ATS Money Systems, if ATS Money Systems fails
to perform substantially in accordance with its obligations under this
Agreement, Vanstar may notify ATS Money Systems in writing of the nature
of the failure. If ATS Money Systems fails to correct such failure within
thirty (30) days of receipt of Vanstar's notice, Vanstar may, in addition
to any other remedies provided herein or by law, cease providing services
hereunder and/or terminate specific exhibits or amendments for Service,
or this entire Agreement for cause. In the event of non-payment by ATS
Money Systems, Vanstar may give fifteen (15) days written notice after
payment was due, and, in addition to any other remedies provided herein
or by law, cease providing services hereunder or terminate specific
exhibits or amendments for Service or this entire Agreement for cause,
if payment is not made by the end of the fifteen (15) day notice period.
Upon termination of this Agreement by ATS Money Systems, Vanstar shall
upon mutual agreement and as requested by ATS Money Systems in writing
prior to the termination date, continue delivering services at the
contract terms for an additional two (2) months. Such approval for
an extension shall not be unreasonably withheld.
4. Prices and Payment
Prices for Covered Maintenance Services and Billable Call Services shall
be as set forth and defined in Exhibit A. The parties agree that after
the first three (3) months of the Agreement, all service requirements,
pricing and price assumptions will be reviewed for effectiveness and
validity. Mutually agreed upon changes with the appropriate pricing
adjustments may be made for the remainder of the initial twelve (12)
months and apply retroactively to the beginning of the Agreement.
All pricing and service requirements will be reviewed on an annual basis.
Mutually agreed upon changes with the appropriate pricing adjustments may
be made and applied going forward.
Invoices for Covered Maintenance Services will be provided by Vanstar to
ATS Money Systems on a monthly basis. ATS Money Systems acknowledges that
the prices for Covered Maintenance Services are based upon the actual
quantities of supported equipment as identified in Exhibit A, as provided
to Vanstar by ATS Money Systems, and the "Pricing Factors & Assumptions"
identified in Exhibit A, derived from information discussions with ATS
Money Systems. ATS Money Systems agrees that Vanstar may adjust the
Covered Maintenance Services pricing in the event Vanstar determines
the data and/or documented information from ATS Money Systems was
incomplete, incorrect, or otherwise substantially affects the basis
of Vanstar's pricing. Vanstar shall notify ATS Money Systems in writing
of any proposed adjustments to Covered Maintenance Services pricing,
including supporting rationale/justification. All price changes will
be mutually agreed in writing in accordance with Section 1. The intent
of both parties is that all changes to Exhibit A be resolved through
the Change Management Process of Exhibit B.
In the event that ATS Money Systems adds new equipment types and/or models,
Vanstar will use the same pricing methodology as used for current Covered
Maintenance Services to determine the proposed adjustments to contract
pricing.
Invoices for Billable Call Maintenance services shall be provided to
ATS Money Systems on a monthly basis. Copies of supporting data
documenting the maintenance calls shall be attached.
Invoices are payable to Vanstar within thirty (30) days from the date of
invoice.
5. Taxes
ATS Money Systems agrees to pay charges for the goods and services set
forth herein plus an amount equal to any applicable sales, use, excise,
value added, utility or similar taxes, unless otherwise provided for in
writing and set forth in this Agreement. In lieu of paying such taxes
ATS Money Systems will provide Vanstar with a tax exemption certificate
acceptable to the taxing authorities.
6. Confidentiality
Vanstar and ATS Money Systems acknowledge that material and information
may come into the possession or knowledge of each in connection with this
transaction or the performance hereof, which consists of confidential and
proprietary data. Vanstar and ATS Money Systems agree to hold all material
and information, including but not limited to such confidential and
proprietary data, in strictest confidence; not to make use thereof
other than for the performance of the contract; to release it only
to employees requiring such Information and not to release or disclose
it to any other party. No obligation of confidentiality applies to
any Information that the receiving party (i) already possesses without
obligation of confidentiality; or (ii) develops independently; or
(iii) rightly receives without obligation of the confidentiality
from a third party; or (iv) receives after prior disclosure by the
disclosing party to a third party without similar restrictions. This
obligation shall survive the expiration or termination of this Agreement.
7. Warranties
Vanstar warrants that the services provided will be performed in a
professional and workmanlike manner and in accordance with the
applicable service descriptions as set forth in exhibits to this
Agreement. Vanstar's sole obligation for failure to perform any
service substantially in accordance with the applicable service
description will be refund of any charges paid by ATS Money Systems
to Vanstar for services which were not performed as warranted.
Vanstar agrees to take all necessary steps to provide, to the
extent permitted by third party vendors, any and all license rights
and/or manufacturers' warranties related to the replacement hardware
and/or software provided and such warranties shall be exclusive.
Vanstar warrants that it is in compliance with all federal, state and local
laws and regulations as such may pertain to this Agreement or the services
being provided by Vanstar hereunder.
IN NO EVENT WILL VANSTAR BE LIABLE FOR ANY LOSS OR DAMAGE WHATSOEVER
ARISING FROM ITS FAILURE TO DISCOVER OR REPAIR LATENT DEFECTS OR DEFECTS
INHERENT IN THE DESIGN OF THE EQUIPMENT BEING PROVIDED UNDER THIS AGREEMENT.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NO OTHER WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY INCLUDING ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, APPLY TO HARDWARE AND/OR SOFTWARE
PROVIDED HEREUNDER.
8. Limitation of Liability
EXCEPT FOR SECTIONS 7 (WARRANTIES) AND 10 (INDEMNIFICATION) OF THIS
AGREEMENT, FOR ANY BREACH OF THIS AGREEMENT BY VANSTAR, ATS MONEY
SYSTEMS' EXCLUSIVE REMEDY SHALL BE LIMITED TO REFUND OF CHARGES PAID
BY ATS MONEY SYSTEMS DIRECTLY ATTRIBUTABLE TO THE BREACH AND DURING
THE PERIOD OF BREACH UP TO THE TOTAL AMOUNT OF THIS AGREEMENT.
IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR SPECIAL,
INCIDENTIAL OR CONSEQUENTAL DAMAGES EVEN IF A PARTY IS ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
This obligation shall survive the expiration or termination of this
Agreement.
9. Force Majeure
Except for failure to make payments when due, neither party shall be liable
for loss or damage suffered as result of any delay or failure in performance
under this Agreement or interruption of performance resulting directly or
indirectly from acts of God, civil or military authority, acts of public
enemy, war, riots, civil disturbance, insurrections, accidents, fire,
explosions, earthquakes, floods, water, wind, or lightning to the extent
such events are beyond the reasonable control of the party claiming
excuse from liability resulting therefrom.
10. Indemnification
Vanstar shall defend, indemnify and hold ATS Money Systems harmless from
and against any and all costs, claims, liabilities, damages and expenses
(including reasonable attorney's fees) on account of personal injuries
and/or damage to or loss of tangible personal property caused by negligent
or willful acts or omissions of Vanstar's employees, agents, contractors or
prospective customers provided that Vanstar is notified promptly in writing
and given authority, information and assistance to defend and/or settle or
compromise such suit or proceeding. Vanstar however, shall not be
responsible for any compromise or settlement of any such suit or
proceeding made without Vanstar's prior consent. Additionally,
Vanstar's obligations and responsibilities hereunder will be mitigated
to the extent of relevant ATS Money Systems' negligence or willful acts
or omissions.
Vanstar warrants that the services provided hereunder shall be provided free
of any rightful claim of any third party for infringement of any duly issued
patent, registered design, utility model, trademark, copyright or any other
intellectual property right. If notified promptly in writing and given
authority, information and assistance, Vanstar shall defend, indemnify and
hold harmless ATS Money Systems of from and against any and all costs,
claims, liabilities and expenses (including reasonable attorney's fees)
based on or related to a claimed infringement and shall pay all damages
and costs finally awarded therein or made in settlement or compromise
thereof against ATS Money Systems due to such claim. In the event the
services provided to ATS Money Systems hereunder are in such suit held
to constitute such an infringement and further use is enjoined, Vanstar
shall at its expense and option, either (i) procure for ATS Money Systems
the right to continue to use the services or, in the alternative;
(ii) modify the services so that they become non-infringing without
loss of functionality or, in the alternative; (iii) replace the services
with an equally suitable non-infringing service; or (iv) terminate this
Agreement and refund the price paid by ATS Money Systems for the infringing
service. This indemnity shall not extend to any infringement or alleged
infringement caused directly by a design or instruction in writing supplied
by ATS Money Systems, modification of the service by a party other than
Vanstar after delivery by Vanstar, or use or sale of the service in
combination with any other service. The foregoing states the entire
obligation and the exclusive remedy of each party hereto with respect
to any alleged intellectual property right infringement by any service
furnished hereunder.These obligations shall survive the expiration or
termination of this Agreement.
11. Insurance
During the term of this Agreement, both ATS Money Systems and Vanstar will
maintain in full force and effect, at their own expense, insurance coverage
to include Worker's Compensation, Employer's Liability, Commercial General
Liability, Automobile Liability and Property insurance. Certificates of
Insurance evidencing the required coverages shall be furnished to ATS Money
Systems and Vanstar respectively before any work is commenced hereunder and
shall provide: (1) that there will be no cancellation without 30 days prior
written notice and (2) each shall be named as an Additional Insured as their
interests may appear. All insurance policies shall be written by a company
authorized to do business in the state where the services are delivered.
12. General Provisions
12.1 Sole Benefit
The provisions of this Agreement are for the sole benefit of the parties
denoted hereunder and not for the benefit of any other persons or legal
entities.
12.2 Enforceability
If any provision of this Agreement (Including items incorporated by
reference) is declared or found to be illegal, unenforceable, or void,
then both ATS Money Systems and Vanstar shall be relieved of all
obligations arising under such provision; if the remainder of this
Agreement is capable of performance, it shall not be affected by
such declaration or finding and shall be fully performed.
12.3 Assignment and Subcontracting
Neither party may assign this Agreement without the prior written consent
of the other party, which consent will not be unreasonably withheld;
provided, however, that either party may assign this Agreement, without
consent, to a successor in interest to substantially all of the business
of that party to which the subject matter of this Agreement relates.
Vanstar is authorized to subcontract services hereunder with the
understanding and agreement by Vanstar and ATS Money Systems that
such subcontracting shall not relieve Vanstar of any of its liabilities
or obligations to ATS Money Systems to be performed hereunder.
Specifically, Vanstar shall ensure that its subcontractors comply with
the applicable provisions of this Agreement including, without
limitation, the Personnel Guidelines provisions of Exhibit A.
12.4 Governing Law
This Agreement shall be governed by the law of the State of New Jersey.
This provision shall survive the expiration or termination of this
Agreement.
12.5 Hiring of Employees
In the absence of Vanstar's consent, during the term of this Agreement
and for a period of twelve (12) months after expiration or termination
of this Agreement, ATS Money Systems agrees not to solicit and hire any
person who, during the year immediately preceding such hiring, has been
a Vanstar employee engaged in services as described herein. In the event
of breach of this provision ATS Money Systems agrees to pay Vanstar, as
liquidated damages, a sum equal to twelve (12) months pay for each hired
Vanstar employee at the rate paid by Vanstar for the last full month of
employment. This obligation shall survive the expiration or termination
of this Agreement.
12.6 Commencement of Action
Any action of any kind by either party arising out of this Agreement must
be commenced within two (2) years from the date the right, claim, demand,
or cause of action shall first arise. This obligation shall survive the
expiration or termination of this Agreement.
12.7 Notices
Notices hereunder shall be delivered and be effective as follows: (i)
Every written notice may be delivered in person or may be sent by courier,
telecopy, express mail or commercial equivalent, or postage prepaid or
first class mail, addressed to the party for whom it is intended at the
address specified at the head of this Agreement or such other address as
authorized representatives of the parties may agree in writing; (ii) Any
written notice shall be effective on the date received.
To ATS Money Systems: ATS Money Systems
25 Rockwood Place
Englewood, New Jersey 07631
To Vanstar : Vanstar Corporation
150 Hembree Park Drive
Suite 100
Roswell, Georgia 30076
Attention: Samuel Stewart
Program Manager
12.8 Similar Services
Nothing in this Agreement shall bar Vanstar from providing to other
customers services that are similar or the same as services provided
to ATS Money Systems hereunder. Nothing herein shall bar ATS Money
Systems from obtaining from other suppliers services similar or the
same as the services provided by Vanstar hereunder.
12.9 Backup of Data
ATS Money Systems acknowledges and agrees that the use of computer
products is accompanied by a risk of loss of magnetically stored data
and agrees therefore to assume all responsibility for the back-up and
restoration of its own data. ATS Money Systems agrees that Vanstar shall
not assume any risk of loss of ATS Money Systems' magnetically stored
data in any way related to or resulting from the service of equipment
or systems by Vanstar or any other handling of ATS Money Systems'
magnetically stored data by Vanstar. ATS Money Systems hereby releases
Vanstar from any liability for loss of ATS Money Systems' magnetically
stored data from any and all causes.
12.10 Advertising and Publicity
During the term of this Agreement, Vanstar may include ATS Money Systems
among its list of clients but Vanstar may not otherwise mention ATS Money
Systems in any advertising or publicity without ATS Money Systems' prior
written consent, which consent shall not be unreasonably withheld. This
restriction shall survive the expiration or earlier termination of this
Agreement.
12.11 Complete Agreement
This Agreement (including Exhibits A and B and such other exhibits and/or
amendments as may be subsequently executed by the parties and incorporated
herein) contains the full understanding of the parties with respect to the
subject matter hereof, and no waiver, alteration, or modification of any of
the provisions hereof shall be binding unless in writing and signed by the
parties to this Agreement. Neither the course of conduct between the
parties nor trade usage shall act to modify or alter the provisions of
this Agreement. In the event ATS Money Systems issues a purchase order,
memorandum, or other instrument covering the services herein provided,
it is hereby specifically agreed and understood that such instrument is
for ATS Money Systems' internal purposes only and any and all terms and
conditions contained therein, whether printed or written, shall be of
no force and effect.
ACCEPTED AND AGREED TO:
VANSTAR CORPORATION ATS MONEY SYSTEMS, INC.
By: By:
Title:____________________________ Title:_____________________________
Date:____________________________ Date:______________________________
EXHIBIT A
SERVICES DESCRIPTION AND PRICE SCHEDULE
COVERED MAINTENANCE SERVICES AND PRICING
Covered Equipment
Vanstar will provide maintenance support for Standard Equipment and ATS
Equipment. Standard Equipment is defined as the equipment that Vanstar
currently provides support on a national basis. ATS Equipment is defined
as the unique proprietary hardware for which Vanstar will provide customized
support only for ATS Money Systems.
Standard equipment: All CPU's, and connected Monitors and Printers
ATS Equipment: All Currency Counters, ATS Keyboards, Interface
Boards, Encoders
Service Level Agreement (SLA's)
Standard equipment:
For all ATS Money Systems' end-user locations with the exception of Home
Depot, the response time shall be eight (8) business hours and the repair
time shall be the next business day after response. For Home Depot, the
response time shall be four (4) business hours and the repair time shall be
next business day.
ATS Equipment:
For all end-user locations, when ATS Money Systems is required to deploy a
repair part for ATS Equipment, ATS Money Systems' Helpdesk shall schedule
the Estimated Time of Arrival (ETA) for the Vanstar Field Engineer to go
on-site, based on the arrival of the repair part. Repair time shall be on
the day of the Vanstar Field Engineer's arrival. If an ATS Equipment
repair part is not required the response and repair times shall be as
defined above for Standard Equipment.
Other:
Repair is defined as returning the CPU to the DOS C-prompt or Windows
functionality level, and all other equipment to a functioning condition.
Vanstar shall not be responsible for delays as a result of the actions of
ATS Money Systems and/or ATS Money Systems' Customers, to include but not
limited to access to site, site readiness, availability of ATS Money Systems
supplied components, or customer request.
Principle Period of Maintenance
The Principle Period of Maintenance (PPM) is Monday through Friday 8:30-5:00
local time, excluding Vanstar holidays.
Call Process
Vanstar will provide ATS Money Systems with a remote CIM (Call Incident
Management) system interface to place, update and status service calls
directly. Vanstar will provide the software and training for the remote
system. ATS Money Systems will be responsible for hardware and communication
charges.
ATS Money Systems will have the option of placing calls telephonically for
the first ninety (90) days of the Agreement.
For all equipment, ATS Money Systems will provide the manufacturer, model,
customer and failure data, to include the recommended replacement part.
Each failing device will be assigned an individual service call incident
number.
For all ATS Equipment, as well as clone CPU (i.e. Acer, Goldstar, Leading
Edge) equipment, ATS will provide specific part numbers to be replaced at
the time of call placement. Failure to provide this information could
extend repair times.
Technical Support
ATS Money Systems will provide direct technical support to Vanstar Field
Engineers on request for all ATS Equipment service calls. ATS Money Systems
will provide an 800 number for Vanstar Field Engineer access to this
technical support.
Documentation and Training
ATS Money Systems will provide Vanstar with initial documentation and
training for ATS Equipment. Training delivery methods for ATS Equipment
shall be at Vanstar's discretion. ATS Money Systems will provide Vanstar
with initial documentation and training for new products and/or engineering
changes for existing equipment.
Program Manager
Vanstar will designate a Program Manager to be responsible for service
performance of the account. The Program Manager will reside in Atlanta and
have the following responsibilities:
Provide central Vanstar point of escalation for ATS Money Systems
management.
Manage the service delivery processes to ensure that Vanstar complies with
SLA's.
Meet with ATS Money Systems management regularly (via phone) to address
issues and provide resolutions.
Prepare monthly reports.
Manage the Change Management Process as defined in Exhibit B.
Parts Procurement and Management
Vanstar will provide necessary sparing for Standard Equipment at strategic
locations to meet the SLA's as defined above. Vanstar's Wharton logistics
center will manage the deployment and distribution of the parts throughout
Vanstar's service geography. ATS Money Systems will procure and manage the
spare parts for all ATS Equipment. Although ATS Money Systems plans to
generally deploy parts for next day delivery, ATS Money Systems will
determine when the parts will ship and establish ETA's for Vanstar's
on-site response based upon the part(s) availability on-site. ATS
Money Systems may elect to provide spare parts for ATS Equipment to
Vanstar on a consignment basis. In this event, the following Annual Pricing
shall be charged by Vanstar for Parts Management.
Parts Management:
Encoders $45.00
ATS Keyboard: $ 1.00
Model 537 Currency Counter: $11.00
Other Currency Counter: $ 9.00
Pricing Factors and Assumptions
1) Above pricing assumes 85% of calls require parts.
2) 70% First Time Repair Rate for ATS and Clone Equipment.
3) ATS will provide technical support to Vanstar technicians for ATS
Equipment.
4) ATS will provide all repair parts for ATS Equipment.
5) ATS Equipment Maintenance Pricing for this Agreement is based on
failure information provided by ATS Money Systems. The following
annual failure rates are assumed to be accurate:
Billable Call Maintenance Pricing
Service calls outside of the Principle Period of Maintenance (PPM) shall be
invoiced at the rate of $157.00 per hour, portal to portal, with a two (2)
hour minimum charge per incident.
Standard Equipment Installs shall be invoiced at a Per Incident rate of
$135.00 per system for locations within fifty (50) miles of a Vanstar
Service Location. Travel Time shall be invoiced at the rate of $115.00
per hour for locations beyond fifty (50) miles of a Vanstar Service Location.
Service as defined below as Billable Call Maintenance shall be invoiced at a
Time and Materials rate of $115.00 per hour, portal to portal, plus parts,
with a two (2) hour minimum change per incident.
ATS Money Systems Obligations in Association With Covered Maintenance
Services
(a) maintenance of environmental conditions at the location of equipment
installations in accordance with specifications established by the equipment
manufacturer;
(b) adequate working space, including telephone service, heat, light,
ventilation and electric power for use by Vanstar representatives on ATS
Money Systems sites;
(c) access to all equipment, attachments and features to be maintained,
rescheduled trips due to lack of such access shall be subject to charges as
described below in Billable Call Maintenance.
(d) supply and installation of all expendable items such as printer paper,
ribbons, magnetic tape, lamps, batteries, filters and disk cartridges;
(e) unless otherwise provided for in this Agreement, all software-related
services, including diagnosis of non-hardware problems; implementation of
programming, microcode or communication instruction sets; loading, saving,
replacement, backup, restoration or reloading of network operating systems
programs, databases, data or instruction sets; and interaction with
software supplier, interpretation of documentation or other services
required to Identify or resolve software problems.
Exclusions From Covered Maintenance Services
Covered Maintenance services do not include:
(a) maintenance of accessories, attachments, supplies, machines or other
devices that are not Supported Equipment items;
(b) repair or damage not caused by Vanstar, including without limitation,
damage resulting from accident, vandalism/burglary, neglect/misuse,
transportation, power, air conditioning or humidity control, telephone
equipment or communication lines failure, failure of foreign interconnect
equipment, use of external materials or supplies, which do not adhere to
manufacturer specification, or causes other than ordinary use.
(c) Supported Equipment specification changes in which no advance written
notice was provided to Vanstar;
(d) service which is impractical for Vanstar to render because of:
alterations in the Supported Equipment made by persons other than ATS Money
Systems, a qualified third party, or Vanstar without Vanstar's prior written
approval; the connection of Supported Equipment by mechanical or electrical
means to another machine or device; or the physical inaccessibility of
Supported Equipment;
(e) any services in respect to software or firmware programming or any
repair of any damage to Supported Equipment caused by software or firmware
programming;
(f) Reconditioning required when repair and parts cannot keep Supported
Equipment in operating condition;
(g) Consumables and/or ATS Money Systems maintainable items so designated
within the manufacturer/user documentation as operator responsibilities,
including but not limited to printer printheads, ribbons, toner, cartridges,
etc.;
(h) end-of-life replacement of print engines or other products that are
deemed by the manufacturer to have a designated life span;
(i) any replacement of the Cathode Ray Tube (CRT) for such occurrences as
burnt phosphor of the screen, but does include the replacement if the CRT
should fail; and
(j) restoration of drive images, software, or data on any systems including
servers, routers, or workstations.
(k) any action by ATS Money Systems which invalidates or voids the Supported
Equipment manufacturer warranty(ies).
All work requests by ATS Money Systems in association with the above noted
maintenance exclusions shall be acknowledged by the parties as out-of-scope
work under this Agreement (labor and material) and shall be handled in
accordance with Section 1 of this Agreement.
With the exception of item (a) above, ATS Money Systems or a qualified third
party may perform the corrective action to return the Supported Equipment to
an acceptable condition to re-instate in-scope Covered Maintenance Services.
Upon ATS Money Systems' request, Vanstar shall validate the corrective
action on a Billable Call Maintenance basis as described below.
Personnel Guidelines
Neither party nor its personnel are or shall be deemed to be employees of
the other party. Each party will be solely responsible for the payment of
its employees' compensation and benefits, including employment taxes,
workers' compensation, unemployment insurance and any similar taxes or
assessments arising out of or associated with their employment. Vanstar
agrees to maintain full and sole responsibility for the payment of Vanstar
personnel salaries (including withholding of income and social security
taxes), workers' compensation insurance, disability insurance and benefits,
health insurance and benefits, sick time, vacation time, personnel time off,
time off for religious observance and any and all other responsibilities,
obligations and liabilities employers have toward their employees.
This Agreement shall not create any partnership or joint venture between the
parties. Nothing contained in this Agreement shall constitute either party
as the agent or legal representative of the other for any purpose. No
provision of this Agreement grants either party any express or implied
right of authority to assume or create any obligation or responsibility
on behalf of or in the name of the other party, or to bind the other party
in any manner or thing whatsoever.
While on ATS Money Systems' premises in connection with the performance of
this Agreement Vanstar personnel will comply with the same rules of conduct
as apply to ATS Money Systems' own personnel at that location of which
Vanstar is given notice. On notice from ATS Money Systems, Vanstar will
remove immediately any of its personnel assigned to perform work under
this Agreement for ATS Money Systems who do not meet this condition. ATS
Money Systems agrees to provide to Vanstar such office facilities,
equipment, modems, telephone access and other resources necessary and
appropriate for Vanstar to perform its work for ATS Money Systems.
Vanstar agrees that provision by ATS Money Systems of such access by
Vanstar to ATS Money Systems' facilities shall not result in additional
charges to ATS Money Systems than are denoted within this exhibit.
Billable Call Maintenance
The term "Billable Call Maintenance" as used herein means any maintenance,
other than Covered Maintenance, performed by Vanstar and includes, but is
not limited to, the following types of maintenance:
(a.) Work requested by ATS Money Systems for rearrangement, such as
additional wiring, moving other equipment or cables, relocating Supported
Equipment or repairing a previously prepared site or station to make it
operational;
(b.) Electrical work external to the Supported Equipment;
(c.) Refinishing of Supported Equipment;
(d.) Adding or removing accessories, attachments or other devices not
included within the definition of Supported Equipment;
(e.) Work on Supported Equipment related to those actions and/or
circumstances identified in the above Exclusions From Covered Maintenance;
and
(f.) Specific requests by ATS Money Systems for maintenance in addition to
Covered Maintenance requirements. To include performing maintenance or other
services on Non-supported Equipment.
Billing
Invoices for Covered Equipment Maintenance Services will be provided by
Vanstar to ATS Money Systems on a monthly basis. Maintenance charges will
be based on actual quantities of Covered Equipment and will be charged at
the beginning of the monthly maintenance period (i.e., in advance) and
adjusted to reflect the changes in Base Rates from the previous maintenance
period. The quantities of each type of Standard Equipment and ATS Equipment
will be shown separately on the invoice. Invoices for Billable Call
Maintenance will be provided by Vanstar to ATS Money Systems on a monthly
basis. Copies of supporting data documenting the maintenance calls shall
be attached. Invoices are payable to Vanstar within thirty (30) days from
the date of invoice.
ACCEPTED AND AGREED TO:
VANSTAR CORPORATION ATS MONEY SYSTEMS, INC.
By: By:
Title:________________________ Title:_____________________________
Date:_________________________ Date:_____________________________
Master Service Agreement For ATS Money Systems September 1, 1997
