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 JUNE 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 August 13, 1997, - 5,791,911 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
JUNE 30 DECEMBER 31
ASSETS: 1997 1996
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,487,521 $ 308,138
Trade accounts receivable, less allowance
for doubtful accounts of $87,015 in 1997
and $74,183 1996 1,008.769 1,264,521
Inventories 709,189 567,420
Prepaid expenses and other current assets 180,315 219,922
Total current assets 3,385,794 2,360,001
PROPERTY - At cost:
Office furniture 95,014 91,011
Office machinery and equipment 190,657 146,021
Subtotal 285,671 237,032
Less Accumulated depreciation 123,121 102,432
Property - net 162,550 134,600
OTHER ASSETS:
Software costs, less accumulated amortization
of $681,570 in 1997 and $511,790 in 1996 1,276,782 908,586
Deposits 50,677 50,677
_________ _________
Total other assets 1,327,459 959,263
TOTAL $ 4,875,803 $ 3,453,864
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 157,838 $ 148,921
Accrued expenses 506,896 210,160
Deferred revenue 1,195,288 322,125
Deferred income taxes 4,732 4,732
Other liabilities 77,157 161,963
___________ __________
Total current liabilities 1,941,911 847,901
LONG-TERM-Deferred Credit, less amortization of
$81,985 in 1997 and $67,727 in 1996 203,181 217,440
STOCKHOLDERS' EQUITY:
Common stock - $.001 par value, 25,000,000
shares authorized, 5,891,911 shares issued
at June 30, 1997 and December 31, 1996 5,892 5,892
Additional paid-in capital 2,374,397 2,374,397
Accumulated earnings 350,522 8,334
Treasury stock - 100,000 shares at par value ( 100) ( 100)
__________ __________
Total stockholders' equity 2,730,711 2,388,523
___________ ___________
TOTAL $ 4,875,803 $ 3,453,864
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
JUNE 30 JUNE 30
1997 1996
<S> <C> <C>
REVENUE:
Equipment and systems sales $ 1,470,626 $ 1,517,522
Equipment maintenance and service revenue 647,392 564,295
__________ ___________
Total revenue 2,118,018 2,081,817
COST AND EXPENSES:
Cost of goods sold and service expense:
Equipment and systems 642,344 697,070
Equipment maintenance and service 211,155 234,873
Selling, general and administrative expenses 1,111,856 926,622
___________ ___________
Total costs and expenses 1,965,355 1,858,565
___________ ___________
INCOME FROM OPERATIONS 152,663 223,252
INTEREST INCOME 18,218 16,188
____________ ____________
INCOME BEFORE INCOME TAXES 170,881 239,440
INCOME TAXES 62,000 86,000
__________ ___________
NET INCOME $ 108,881 $ 153,440
EARNING PER COMMON SHARE:
Primary and fully diluted $.02 $.03
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,885,443 5,888,417
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTH PERIODS JUNE 30, 1997 AND 1996
(UNAUDITED)
JUNE 30 JUNE 30
1997 1996
<S> <C> <C>
REVENUE:
Equipment and systems sales $ 3,300,568 $ 3,044,037
Equipment maintenance and service revenue 1,221,041 1,208,913
Total revenue 4,521,609 4,252,950
COSTS AND EXPENSES:
Cost of goods sold and service expense:
Equipment and systems 1,394,065 1,332,890
Equipment maintenance and service 485,738 492,836
Selling, general and administrative expenses 2,114,101 1,888,932
Total costs and expenses 3,993,904 3,714,658
INCOME FROM OPERATIONS 527,705 538,292
INTEREST INCOME 32,483 19,872
__________ __________
INCOME BEFORE INCOME TAXES 560,188 558,164
INCOME TAXES 218,000 207,000
__________ __________
NET INCOME $ 342,188 $ 351,164
EARNINGS PER COMMON SHARE:
Primary and fully diluted $.06 $.06
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,875,007 5,890,377
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
JUNE 30 JUNE 30
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 342,188 $ 351,164
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 176,210 100,330
Changes in current assets and liabilities:
Compensation expense recorded for common stock
issued under Director Stock Plan 0 50,198
Trade accounts receivable - net 255,754 < 94,248)
Inventories ( 141,769) 49,508
Prepaid expenses and other assets 39,607 ( 51,738)
Accounts payable - trade 8,917 ( 70,302)
Accrued expenses 296,736 ( 31,420)
Deferred revenue 873,163 947,695
Other liabilities ( 84,008) 46,201
Net cash provided by operating activities 1,765,998 1,297,388
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalization of software development costs ( 537,976) ( 173,794)
Additions to property ( 48,639) ( 63,933)
__________ __________
Net cash used in investing activities ( 586,615) ( 237,727)
NET INCREASE IN CASH AND _________ _________
CASH EQUIVALENTS 1,179,383 1,059,661
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 308,138 164,548
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,487,521 $1,224,209
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Income Taxes (Refunds) $ ( 5,790) $ 90,000
See notes to consolidated financial statements.
</TABLE>
ATS MONEY SYSTEMS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
June 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 June 30, 1997, and the results
of its operations for the three month and six month periods ended
June 30, 1997 and 1996 and its cash flows for the six month periods
ended June 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 six month periods
ended June 30, 1997 are not necessarily indicative of the results that
may be expected for the fiscal 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 $169,780 and $97,268
for the six month periods ended June 30, 1997 and 1996, respectively,
and $101,821 and $50,013 for the three month periods ended June
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 June 30, 1997, there were 236,795 options outstanding at prices
ranging from $.28125 to $1.375 per share, of which 180,168 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 June 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 June 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) $ 153,433
1998 293,908
1999 132,705
2000 34,184
$ 614,230
</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"), "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 "Disclosures 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, at this juncture, 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
fiscal 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 SIX MONTHS ENDED
JUNE 30, 1997 TO THE SIX MONTHS ENDED JUNE 30, 1996.
Total revenues for the first half of 1997 were $4,521,609, an increase
of $268,659 (6.3%) over the first six months of 1996. System and
equipment sales increased $256,531 (8.4%) to $3,300,568 for the half
year. This increase was comprised of sales by ATS Money Systems, Inc.
(parent company) which increased by $357,007 (19.1%) primarily as the
result of a new software contract offset by a decrease of $100,476
(8.6%) at Innovative Electronics, Inc., resulting from fewer contracts
in the comparable periods. Maintenance and service revenues were
$1,221,041 for the first half of 1997. This was an increase of $12,128
(1.0%) from the prior year's first half.
Cost of equipment and system sales declined from 43.8% of sales in the
first half of 1996 to 42.2% in the 1997 period due to revenues from a
software license agreement, the costs of which are being amortized.
Cost of maintenance and service decreased from 40.8% of revenues in
the first half of 1996 to 39.8% in the first six months of 1997
primarily due to a favorable third party maintenance contract
attributable to ATS Money Systems, Inc.
Selling, general and administrative expenses were $2,114,101 in the
first half of 1997 compared to $1,888,932 in the comparable period of
1996. This is an increase of $225,169 (11.9%) and is primarily
attributable to increases in employee incentives, commissions and travel.
Interest income for the first six months of 1997 was $32,483 compared
to $19,872 in the first half of 1996. This increase of $12,611 (63.5%)
was due to greater amounts available for investment, primarily due to
prepayments by customers of their annual maintenance contracts.
Income taxes for the six months of 1997 were $218,000 compared to
$207,000 for the same period of 1996. This $11,000 (5.3%) increase
was due to higher taxable income in 1997.
As a result of the foregoing, the first six months of 1997 produced
income before taxes of $342,188 compared to $351,164 in the first
half of 1996.
FINANCIAL CONDITION
At June 30, 1997, the Company had working capital of $1,443,883 (a
decrease of $68,217 from $1,512,100 at December 31, 1996) and cash
and cash equivalents (including short-term investments) of $1,487,521
(as compared to cash and cash equivalents of $308,138 at December 31,
1996). During the first part of the year, many of the Company's
customers prepay their annual maintenance contracts, which increases
the Company's cash and correspondingly the Company's deferred revenue
liability. At June 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 six months of 1997, operating activities provided
$1,765,998 of net cash, primarily from prepayment of equipment
maintenance and service fees and income from operations, and
investing activities used $586,615 of net cash primarily for
the capitalization of 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 June 30, 1997, the Company
had no material commitments for capital expenditures.
COMPARISON OF CONSOLIDATED OPERATIONS FOR THE THREE MONTHS ENDED
JUNE 30, 1997 TO THE THREE MONTHS ENDED JUNE 30, 1996.
Total revenues for the three month period ended June 30, 1997 were
$2,118,018 compared to $2,081,817 for the 1996 quarter. This was
an increase of $36,201 (1.7%). Equipment and systems sales declined
from $1,517,522 in the second quarter of 1996 to $1,470,626 in the
1997 quarter. This decrease of $46,896 (3.1%) was comprised of a
$140,649 (32.8%) sales decline at Innovative Electronics, Inc.
offset by an increase of $93,753 (8.6%) from the parent company.
Both changes being the result of different software contracts in
the comparable periods. Maintenance revenue for the three months
ended June 30, 1997 was $647,392, an increase of $83,097 (14.7%)
over the 1996 quarter primarily due to the reinstatement of a
maintenance contract with a major customer.
Cost of equipment and system sales declined from 45.9% of sales in the
second quarter of 1996 to 43.7% in the 1997 quarter due to revenues in
1997 from a software license agreement, the costs of which are being
amortized. Maintenance costs declined from 41.6% of revenue in the
three months ended June 30, 1996 to 32.6% in the 1997 quarter primarily
due to a favorable short term contract in 1997 with a third party
maintenance provider.
Selling, general and administrative expenses were $1,111,856 for the
second quarter of 1997 vs. $926,622 in the 1996 quarter. This
increase of $185,234 (20.0%) is attributable to an increase in the
provision for employee incentives, an increase in the reserve for
bad debts and increased software amortization.
Interest income for the second quarter of 1997 was $18,218 compared
to $16,188 in the comparable period of 1996. This increase of
$2,030 (12.5%) was primarily due to greater amounts available for
investment, primarily due to prepayments by customers of their
annual maintenance contracts.
The income tax provision in 1997 was $24,000 (27.9%) lower due to
lower income from operations.
As a result of the foregoing, the net income for the three months
ended June 30, 1997 was $108,881 which was $44,559 (29.0%) lower
than the three months ended June 30, 1996.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Company's 1997 Annual Meeting of Stockholders was held on May 30, 1997
at The Clinton Inn Hotel, 145 Dean Drive, Tenafly, New Jersey. At the
meeting, 5,445,429 shares were present in person or by proxy. At the
meeting, each of the four incumbent directors of the Company who had
been nominated by the Board of Directors for re-election as a director
of the Company was re-elected as a director. The votes cast were as
follows:
<TABLE>
<CAPTION>
Name of Nominee Votes Cast For Votes Withheld
<S> <C> <C>
A. Paul Cox, Jr. 5,403,679 51,750
Gerard F. Murphy 5,397,079 58,350
Fred Den 5,401,679 53,750
Thomas J. Carey 5,403,679 51,750
</TABLE>
At the meeting, three additional proposals were voted upon as
follows:
(a) Proposal to amend and restate the Company's Common Stock Incentive
Plan was approved by the stockholders with 5,266,429 shares voting in
favor, 126,025 shares voting against and 15,750 shares abstaining.
(b) Proposal to amend the Company's 1995 Director Stock Plan was
approved by the stockholders with 5,291,222 shares voting in favor,
136,257 shares voting against and 20,075 shares abstaining.
(c) Proposal to ratify the selection of Deloitte & Touche LLP as the
Company's independent auditors for the year ending December 31, 1997
was approved by the stockholders with 5,386,079 shares voting in favor,
48,300 shares voting against and 21,050 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.(a) Agreement for Software License between ATS Money Systems,
Inc., and Dayton-Hudson Corporation, dated April 15, 1997.
10.(b) Agreement between ATS Money Systems, Inc., and
M. H. Meyerson & Co., Inc., dated April 7, 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)
___________August 13, 1997 _______ _______________________________
(Date) Gerard F. Murphy
Chief Executive Officer
President
<Principal Executive Officer)
___________August 13, 1997 _______ _______________________________
(Date) Joseph M. Burke
Vice President - Finance
(Principal Accounting and
Financial Officer)
EXHIBIT 11 - COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30 June 30 June 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net Earnings $342,188 $351,164 $108,881 $153,440
Primary earnings per share:
Weighted average number of
common shares outstanding 5,791,911 5,773,037 5,791,911 5,773,037
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 5,791,911 5,773,037 5,791,911 5,773,037
Primary earnings per share $.06 $.06 $.02 $.03
Fully diluted earnings per share:
Weighted average number of
common shares outstanding
(as determined for the
Primary earnings per share
calculation above) 5,791,911 5,773,037 5,791,911 5,773,037
Add: Additional shares
arising from the assumed
exercise of stock options (as
determined under the Treasury
Stock Method) 83,096 117,340 93,532 115,380
Weighted average of common
and equivalent shares 5,875,007 5,890,377 5,885,443 5,888,417
Fully diluted earnings
per share $.06 $.06 $.02 $.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as ofJune 30, 1997 and the Consolidated
Statement of Operations for the six months ended June 30, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
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<PERIOD-END> JUN-30-1997
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<ALLOWANCES> 87,015
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0
0
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<TOTAL-REVENUES> 4,521,609
<CGS> 1,394,065
<TOTAL-COSTS> 1,879,803
<OTHER-EXPENSES> 2,101,269
<LOSS-PROVISION> 12,832
<INTEREST-EXPENSE> 32,483
<INCOME-PRETAX> 560,188
<INCOME-TAX> 218,000
<INCOME-CONTINUING> 342,188
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</TABLE>
EXHIBIT 10.(a)
AGREEMENT FOR SOFTWARE LICENSE
THIS SOFTWARE LICENSE AGREEMENT ("Agreement") is
entered into as of April 15,1997, by and between Dayton Hudson
Corporation, a Minnesota corporation ("Customer"), on behalf of
itself, its existing and future operating divisions existing
and future-owned majority subsidiaries, and ATS Money Systems,
Inc. a Nevada corporation ("Vendor").
RECITALS
WHEREAS, in the past, Vendor has licensed to Customer
certain Cash Office Systems software known as CP2000 (the "Base
Software") on a per-store basis ("Existing Licenses").
WHEREAS, Customer needs certain enhancements and
revisions to the Base Software, and Vendor is willing to
provide Customer on a nonexclusive basis, with such
enhancements and modifications (the "Base Software" as so
modified and enhanced, shall be known as CP4000 and is referred
to herein as the "Software").
WHEREAS, Vendor is willing to license the Software to
Customer on an enterprise-wide basis, so that Customer may
install the Base Software, the Software and/or another software
product known as CP3000 in as many store locations within the
operating divisions and majority-owned subsidiaries of Customer
as Customer desires.
NOW, THEREFORE, Customer and Vendor agree as follows:
1. DEVELOPMENT OF THE SOFTWARE.
Vendor agrees to make the modifications and
enhancements to the Base Software that are described in the
CP4000 Systems Specifications. attached as Exhibit A hereto
(the "Scope").
2. DELIVERY OF SOFTWARE.
Vendor shall deliver to Customer, and install on a
computer system designated by Customer (as provided for in the
Scope) at Customer's test laboratory, one Customer store, and
Customer's Central Processing Center by no later than 16 weeks
after the execution of this Agreement by all parties, the
Software, with all modifications and enhancements described in
the Scope. Accompanying such delivery will be a report signed
by an authorized officer of Vendor certifying that, to the best
of Vendor's knowledge, Vendor has complied with the
specifications and requirements of the Scope. Vendor then shall
notify Customer for Vendor's readiness for testing by Customer
(the date of such notification referred to herein as the
"Installation Date").
3. INITIAL TESTING OF SOFTWARE.
Promptly after the Installation Date, Customer shall
perform the tests for the Installation Stage referenced in
Exhibit A hereto, which shall include but shall not be limited
to tests in Customer's test laboratory environment and in one
(1) of Customer's stores, Customer shall perform such tests
over a 30-day period following the Installation Date, to
determine whether: (i) the Software meets the specifications
and performance standards in Exhibit A, and (ii) the Software
performs repetitively on a variety of data without failure. In
the event that the Software does not perform in accordance with
such specifications and performance standards, Customer shall
forthwith notify Vendor in writing and Vendor shall have a
period of twenty (20) days from receipt of the written notice
to correct the deficiencies of the Software discovered by
Customer. Upon redelivery to Customer, Customer shall have a
period of fifteen (15) days to re-test the Software. Failure of
the Software to meet the aforesaid specifications and
performance standards after the second set of tests shall
constitute a default by Vendor under Section 16 hereof. If
Customer determines that the Software satisfies the
specifications and performance standards for the Installation
Stage set forth in Exhibit A, then Customer shall promptly
notify Vendor in writing that Customer is prepared to proceed
with the Pilot.
4. PILOT OF SOFTWARE.
The Pilot shall consist of installation and
operation of the Software in up to fourteen (14) stores. The
Pilot shall commence within fifteen (15) days of Customer's
notification under Section 3 (provided, however, that if
Customer's notification is provided after October 1, 1997,
Customer, at its sole option, reserves the right to delay the
commencement of the Pilot until January 15, 1998). The Pilot
shall continue for a period of eight (8) weeks after the date
of commencement. If, during the eight (8) week period, Customer
discovers that the Software does not perform in accordance
with the specifications and performance standards for the Pilot
set forth in Exhibit A, then Customer shall forthwith notify
Vendor in writing and Vendor shall have a period of twenty (20)
days to correct the deficiencies discovered by Customer. Upon
re-delivery to Customer, Customer shall have a period of
fifteen (15) days to re-test the Software. Failure of the
Software to meet the specifications and performance standards
after the second set of tests shall constitute a default by
Vendor under Section 16 hereof. If Customer determines that the
Software satisfies the specifications and performance standards
for the Pilot set forth in Exhibit A, then Customer shall
promptly notify Vendor in writing that the Software has
successfully completed the Pilot ("Pilot Completion").
5. ROLL-OUT.
Within 120 days of the occurrence of Pilot
Completion, Customer will commence to install the Software in
its stores on a widespread basis. Customer will notify Vendor
in writing of the first day that such installation commences
(the "Roll-Out Commencement Date"), and will make best efforts
to provide such written notice at least ten (10) days before
the Rollout Commencement Date.
6. PROGRESS PAYMENTS.
a. Payments.
Customer shall pay Vendor a fee for development of
the Software (including therein the fee for licensing of the
software Products (as defined in Section 8 below) as follows
("Progress Payments"):
(1) upon execution of this Agreement;
(2) upon Pilot Completion;
(3) upon the Roll-Out Commencement Date.
Vendor will invoice Customer for each of these
payments once due, and Customer will pay the invoice within
thirty (30) days of receipt.
b. Termination prior to the Roll-Out Commencement Date.
At any time prior to Roll-Out Commencement Date,
Customer shall be entitled (with or without cause) to terminate
the portion of this Agreement that pertains to the development
of and licensing of the Software ("Software Development and
Licensing Project"). In the event Customer elects to terminate
the Software Development and Licensing Project as provided
herein, the following shall apply:
(1) Customer shall not be required to pay
Vendor any further Progress Payments and Vendor shall be
entitled to retain any amounts paid prior to termination;
(2) Customer shall pay Vendor a license fee of
per store for Base Software shipped to Customer since January
1,1997;
(3) Customer shall pay Vendor a license fee of
per store for Power Encode Software shipped to Customer since
January 1,1997 (the "Power Encode Software" is that software
that allows the Unisys Enc9620 to operate simultaneously with
the Base Software and the CP3000 Software including without
limitation all upgrades, enhancements and modifications
thereto.)
(4) The Software Products enterprise license
contemplated by this Agreement shall be deemed null and void
and Customer shall have a non- exclusive, nontransferable and
perpetual per store license to use the Base Software and Power
Encode Software for the Existing Licenses and the per store
licenses paid for pursuant to subsections (2) and (3) above
(the "Store Licenses"). Except as modified in this subsection
(4), the licensing terms and conditions of the Agreement shall
apply to the Store Licenses.
7. OWNERSHIP OF SOFTWARE.
The Software Products, together with all
improvements, additions, enhancements, and modifications made
thereto by Vendor, shall be and remain the sole and exclusive
property of Vendor.
8. LICENSE.
Subject to the provisions of this Agreement, Vendor
hereby grants Customer a nonexclusive, nontransferable and
perpetual license in the Base Software, the Power Encode
Software, the Software and that certain software known as
CP3000 (together referred to as the "Software Products")
consisting of the object code(s) and related documentation
under each program element thereof of an unlimited number of
copies of the Software Products for use by Customer at any and
all locations of Customer, which by its definition herein
includes all its operating divisions and majority- owned
subsidiaries. Vendor also grants to Customer a license to use
the source code and related documentation for the Software
Products for the sole purpose of maintaining the Software
Products for Customer's use, subject to the terms of this
Agreement; provided however, that Customer shall comply fully
with the terms of the Escrow Agreement, attached hereto as
Exhibit B hereto and made a part hereof, prior to receiving
such source code and documentation from the Escrow Agent. In
the event the source code and related documents are released to
the Customer by Escrow Agent for use as provided for herein
("Released Escrow Materials"), the Customer's right to use the
Released Escrow Materials shall terminate if the Vendor
rectifies the underlying situation that permitted the release
of the escrowed materials and Vendor demonstrates that it is
capable of performing as required by this Agreement. In such
event, the Customer shall return the Released Escrow Materials
to the Escrow Agent to be held in escrow pursuant to the Escrow
Agreement, which will continue in full force and effect. The
Software Products licensed shall include any improvements,
additions, or modifications of the version or versions of the
Software Products which Vendor has licensed Customer to use and
materials related thereto and all materials, documentation,
and technical information provided to Customer in written form
for use in connection with the Software Products.
9. ESCROW AND MODIFICATIONS OF SOURCE CODE.
Vendor shall place a copy of the source code for the
Base Software and that certain software known as CP3000 into
escrow pursuant to the Escrow Agreement executed as of even
date herewith and appended hereto. After each determination by
Customer that the Software satisfies the specifications and
performance standards set forth in the Scope for the
Installation Stage, and the Pilot, respectively, Vendor shall
place the updated source code for the Software into escrow.
Thereafter, throughout the term of this Agreement, Vendor shall
improve, add to, or otherwise modify the source code prior to
or at the time that any modifications of the Software Products
are generally made available to the public by Vendor and shall
place the updated source code into escrow.
10. SUPPORT SERVICES.
(a) Payment.
Customer shall pay Vendor for the services
described in subsections 10(b) and 10(c) below (the "Support
Services") for a period of four years commencing on the Rollout
Commencement Date. Vendor will invoice Customer for the payment
after the Rollout Commencement Date. Customer shall pay the
invoice within 30 days after Customer's receipt of the invoice.
Not less than 60 days before the last day of the initial
four-year term, and each renewal term thereafter, Vendor shall
notify Customer and provide Customer with the option to renew
Support Services for an additional one-year term. The fee for
Support Services for each one-year renewal term will be based
on the number of Customer stores using the Software, Base
Software and/or CP3000 Software, as of the first day of the
renewal term; this amount will not be adjusted during such
renewal term even if Customer adds or deletes the Software,
Base Software or CP3000 Software in its stores. The cost of
Support Services per store will be per store for the first
renewal term and thereafter will not increase more than once
per year with any such increase not exceeding 5% of the prior
term's per-store fee.
(b) Telephone Support.
Vendor will provide telephone support to Customer's
help desk for the Software Products from 8:00 am to 6:00 pm,
Eastern Time, Monday through Friday, excluding the holidays
designated on Exhibit C. Vendor will respond to all phone calls
from Customer's help desk within 2 hours. In the event that a
problem that Customer reasonably believes is caused by the
Software Product (rather than being caused by other external
factors such as equipment failure or Customer misuse) prevents
the Customer from using the Software Product or severely
impacts Customer's ability to use the Software Product, Vendor
shall work continuously on the problem until the problem is
resolved. If Vendor is not able to correct such problem within
seven (7) days of the first phone call placed by Customer's
help desk, Vendor shall assign a senior software engineer and a
development manager, both of whom are fully familiar with the
Software Products, to work continuously and exclusively on the
problem until resolved; furthermore, if the problem is not
corrected within twenty (20) days of the first phone call
placed by Customer's help desk, then Customer, at its option,
may require Vendor, at Vendor's expense, to provide on-site
service for the problem.
(c) Improvements /Enhancements/New Versions.
During the period of time that Customer purchases
Support Services from Vendor pursuant to this Section 10,
Vendor will provide to Customer any and all improvements of,
enhancements to, and new versions of the Software Products at
the time that Vendor makes them generally available to the
public. If Customer requests Vendor to make customizations so
that the Software Products are compatible with other new
software added by Customer after the date of this Agreement,
then Customer shall pay for such customizations a fee that is
mutually agreed to by Customer and Vendor.
11. WARRANTIES.
(a) Ownership; Authority.
Vendor warrants that it has full power and authority
to grant the rights granted by this Agreement to Customer with
respect to the Software Products without the consent of any
other person; and that neither the performance of the Support
Services by Vendor nor the development of the enhancements and
modifications to the Base Software hereunder nor the license to
and use by the Customer of the Software Products (including the
copying thereof) will in any way constitute an infringement or
other violation of any copyright, trade secret, trademark,
patent, invention, proprietary information, nondisclosure or
other rights of any third party.
(b) Software.
Vendor warrants that following Pilot Completion,
and as long as Customer purchases Support Services from Vendor
pursuant to Section 10, the Software Products (and associated
documentation) to be delivered to Customer hereunder shall be
free from significant programming errors and from significant
defects in workmanship and materials; shall conform to the
performance capabilities, characteristics, specifications,
functions and other descriptions and standards applicable
thereto as set forth in the Scope; and that, in general, the
development services to be performed by Vendor shall be
performed in a timely and professional manner by qualified
technicians totally familiar with the Software.
(c) Original Development.
Vendor warrants that the Software Products and all
products, documentation and other materials required to be
delivered to Customer hereunder will be of original development
by Vendor or, if developed by another party, will be subject to
a valid license from such party to Vendor (which license does
not in any way preclude Vendor from entering into this
Agreement with Customer) and that the Software does not
infringe upon or violate any patent, copyrights, trade secret,
trademark, invention, proprietary information, nondisclosure,
or other rights of any third party.
(d) Support Services.
Vendor warrants that, in general, the Support
Services shall be performed in a timely and professional manner
by qualified professional personnel; and that the Support
Services shall conform to the standards generally observed in
the industry for similar Support Services.
(e) Compliance with Applicable Laws.
Vendor warrants that the Software Products and all
other products, documentation and other materials required to
be delivered to Customer hereunder, the development and use by
Customer thereof, and the performance by Vendor of its
obligations hereunder, shall be in compliance with all
applicable laws, rules and regulations as of the date of
delivery thereof.
(f) Vendor warrants that, in the event that (1)
the Unisys ENC 9620 equipment ceases to be manufactured, and
(2) Vendor elects in its sole discretion, to make
modifications to the Software (and the Base Software and CP3000
Software, along with the Power Encode Software) so that such
Software Products can operate on a different designated piece
of equipment and (3) Customer is continuing to pay for Support
Services hereunder, then Vendor shall, at no cost to Customer,
make available to Customer such modifications to the Software
Products so that the Software Products perform on such new
designated piece of equipment, and such modifications shall
become part of the Software Products covered herein and shall
be supported under the Support Services set forth in Section
10 hereto.
(g) Warranty Disclaimer.
THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE EXCEPT AND TO
THE EXTENT EXPRESSLY PROVIDED IN THIS SECTION 11.
(h) Warranty Exclusions.
Vendor shall not be liable to Customer for the
warranty provisions of this Paragraph 11 if:
(1) Modifications are made to the Software
Products by any party other than Vendor without Vendor's prior
written consent;
(2) The media for the Software Products is
subject to misuse or abuse.
(3) The Software Products are run on hardware
that does satisfy either the requirements set forth in Scope A
or such other requirements as Vendor may approve.
12. INDEMNIFICATION.
(a) Vendor does hereby indemnify and shall hold
harmless (including reasonable attorney's fees) the Customer
and any employer or agent thereof (each of the foregoing being
hereinafter referred to individually as the "indemnified
Party") against all liability to third parties (other than
liability caused by the Indemnified Party) arising from the
negligence of Vendor or its agents or the violation of any
third party's trade secrets, proprietary information,
trademark, copyright, or patent rights in connection with the
Software Products hereunder. Vendor may, at its option, conduct
the defense in any such third party action arising as
described herein and Customer promises fully to cooperate with
such defense.
(b) If a third party claim causes Customer's
quiet enjoyment and use of the Software Products(s) supplied by
Vendor to be seriously endangered or disrupted, Vendor shall,
at its option, (1) replace the Software Product, without
additional charge, with a compatible, functionally equivalent
and non-infringing product; (2) modify the Software Product(s)
to avoid the infringement without adversely affecting
functionality and performance; or (3) obtain a license for the
Customer to continue use of the Software Product(s) and pay for
any additional fee required for such license. If none of the
foregoing alternatives are possible even after the Vendor's
best efforts, the Vendor shall return a pro rata portion of
the license fee paid hereunder based on a straight-line
depreciation schedule of 5 years, as well as any unused portion
of prepaid maintenance fees.
(c) Vendor shall have no liability to Customer
for any claim of infringement pursuant to this Section 12 if:
(1) Customer has altered its version of the
Software Products and such infringement would have been
avoided if Customer had not altered its version of the Software
Products (it being agreed that, whether or not Customer is
paying for maintenance and support, Vendor has the obligation
to comply with Section 12(b) above);
(2) Customer fails to promptly notify Vendor in
writing of such a claim;
(3) Vendor is denied the opportunity to provide
the defense for any such claim;
(4) Customer settles a claim without first
obtaining the written consent of Vendor; or
(d) The foregoing sets forth the entire liability
of Vendor to Customer for the infringement of proprietary
rights by the Software Products or any portion thereof.
13. CONFIDENTIALITY.
Vendor and Customer agree to abide by the terms and
conditions of that certain Cross-Company Mutual Nondisclosure
Agreement dated as of January 24, 1997, by and among Vendor,
Dayton Hudson Corporation and Mervyn's, which is attached as
Exhibit E hereto, and Vendor and Customer acknowledge that the
obligations of confidentiality thereunder shall survive
termination of this Agreement.
14. INSURANCE.
In addition to any other insurance requirements set
forth in this Agreement, Vendor shall maintain (and cause its
subcontractors, if any, to maintain) the following coverages
shown on Exhibit D hereto in full force and effect until Pilot
Completion occurs.
The foregoing insurance shall contain a provision
whereby the insurer agrees to give Customer thirty (30) days'
written notice before the insurance is canceled, expires or is
materially altered. The foregoing insurance shall be written on
an occurrence basis and shall include Dayton Hudson Corporation
and Mervyn's as additional insureds. If the Certificate of
Insurance attached as Exhibit D is replaced, Vendor shall
furnish current certificates evidencing that the foregoing
insurance is being maintained by Vendor. If Vendor replaces the
insurance company shown in the Certificate of Insurance
attached as Exhibit D with a new insurance company(ies), such
company(ies) must be either rated no less than X as to
financial rating and no less than A- as to Policy Holder's
Rating (if rated) in the current edition of Best's Insurance
Guide (or with an association of companies each of the members
of which are so rated) or having a parent company's debt to
policyholder surplus ratio of 1:1.
15. LIMITATION OF LIABILITY.
Circumstances may arise where one party is entitled
to recover damages from the other. In each such instance,
regardless of the basis on which one party is entitled to claim
damages from the other, EXCLUDING THE INDEMNIFICATION
OBLIGATIONS UNDER SECTION 12 AND THE CONFIDENTIALITY
OBLIGATIONS UNDER SECTION 13, each party shall only be liable
for:
a. Bodily injury (including death) and damage
to real property and tangible personal property to the extent
caused by the negligence or willful misconduct of that party;
and
b. An amount not to exceed the amount paid as
the total Progress Payments paid hereunder.
EXCLUDING THE INDEMNIFICATION OBLIGATIONS UNDER
SECTION 12 AND THE CONFIDENTIALITY OBLIGATIONS UNDER SECTION
13, under no circumstances shall either party be liable for any
of the following:
a. Third-party claims against that party for
losses or damages (other than those for bodily injury or damage
to property);
b. Loss of, or damage to, the other party's
records or data; or
c. Economic consequential damages (including
lost profits or savings or loss of use) or incidental, indirect
or special damages, even if that party is informed of their
possibility.
16. REMEDIES.
a. If any material breach of the terms and
conditions provided for in this Agreement arise due to Vendor
or Vendor's actions or inaction, Customer shall notify Vendor
in writing and allow Vendor fifteen (15) days to resolve the
material breach. If Vendor is unable to resolv e the material
breach to Customer's satisfaction, Customer may then cancel the
Agreement; or, if Section 6(b) is applicable, at Customer's
option, Customer may cancel only the portion of the Agreement
that pertains to the Software Development and Licensing Project.
b. Upon default in the payment of any fee or
other charge invoiced to Customer pursuant hereto or upon a
material breach of any other condition of this Agreement to be
performed or observed by Customer, Vendor may at its option:
(i) terminate the Agreement, but only if
Customer fails to cure such default within fifteen (15) days
after Vendor gives Customer written notice of such default, and
(ii) whether or not the Agreement is terminated,
maintain an action for damages for breach of any material
condition of the Agreement or for non- payment of any charges,
but only if Customer fails to cure such breach within fifteen
(15) days after Vendor gives Customer written notice of such
default.
(iii)in the event of the termination of this
Agreement by Vendor as provided herein (in which case Customer
shall have no further obligation to make any Progress Payments
to Vendor), Vendor may:
(1) Require that Customer cease any further
use of the Software Products or any product licensed hereunder
and immediately return the same and all copies thereof, in
whole or in part, to Vendor.
(2) Cease performance of all Vendor's
obligations to Customer without liability to Customer.
c. If, during the term of this Agreement,
bankruptcy or insolvency proceedings are commenced by or
against either party, the other party may, on written notice,
terminate this Agreement.
d. No remedy in this Section is intended to be
exclusive, but each shall be cumulative and in addition to any
other remedy provided for in this Agreement or otherwise
available to the parties at law or in equity. No express or
implied waiver by a party of any default shall constitute the
waiver of any other default by such party.
17. FORCE MAJEURE.
Any delay or failure of performance of either party
to this Agreement shall not constitute a breach or default of
the Agreement, or give rise to any claims for damages, if and
to the extent that such delay or failure is caused by an
occurrence beyond the reasonable control of the party affected,
including, but not limited to, acts of governmental
authorities, acts of God, the discovery of materially different
site conditions, wars, riots, rebellions, sabotage, fire,
explosions, accidents, floods, strikes or lockouts involving
another person's employees, or changes in laws, regulations, or
ordinances. In the event that a party intends to invoke this
force majeure provision, that party shall (a) promptly notify
the other in writing of any such event of unavoidable
circumstances, the expected duration thereof, and its
anticipated effect on the ability of such party to perform its
obligations hereunder; (b) make reasonable efforts to remedy
any such event of unavoidable circumstances; and (c) promptly
notify the other when its ability to perform is no longer
impaired by the force majeure circumstances.
18. NOTICE.
All notices, demands and requests required or
permitted to be given under this Agreement must be in writing
and must be delivered personally, by nationally recognized
overnight courier or sent by United States certified mail,
return receipt requested, postage prepaid and addressed to the
parties at their respective addresses set forth below, and the
same shall be effective upon receipt if delivered personally,
or on the next business day if sent by overnight courier, or
three (3) business days after deposit in the mail if mailed.
The initial addresses of the parties shall be:
To Vendor: ATS Money Systems, Inc.
25 Rockwood Place
Englewood, New Jersey
Attn: Jim Halpin
To Customer: Dayton Hudson Corporation
c/o Target Stores
33 South Sixth Street
Minneapolis, Minnesota 55402
Attn: Chief Information Officer
Upon at least ten (10) days' prior written notice,
each party shall have the right to change its address to any
other address within the United States of America.
19. USE OF A PARTY'S NAME.
Neither party shall use the other party's name,
trademarks, service marks or logo in any advertisements or
materials of a promotional nature or in soliciting other
clients without first obtaining that party's written
permission, which may be withheld at that party's sole
discretion. The foregoing shall not apply to releases or
disclosures required by law or directed in writing by a party's
securities counsel, provided that a copy of such securities
counsel's letter setting forth such direction is provided to
the other party in advance of such release or disclosure and
(unless necessary time constraints do not allow) the other
party has the opportunity to review and approve such disclosure
or release.
20. NO WAIVER.
Except as expressly set forth in this Agreement, the
failure of either party at any time to require performance by
the other party of any provision of this Agreement shall in no
way affect the right of such party to require performance of
that provision. Any waiver by either party of any breach of any
provision of this Agreement shall not be construed as a waiver
of any continuing or succeeding breach of such provision, a
waver of the provision itself, or a waiver of any right under
this Agreement.
21. CAPTIONS, GENDER, NUMBER AND LANGUAGE OF
INCLUSION.
The captions are inserted in this Agreement only for
convenience of reference and do not define, limit, or describe
the scope or intent of any provisions of this Agreement. Unless
the context clearly requires otherwise, the singular includes
the plural, and vice versa, and the masculine, feminine, and
neuter adjectives include one another. As used in this
Agreement, the word "including" shall mean "including, but not
limited to".
22. ARBITRATION.
Any controversy or claim arising out of or related
to this Agreement shall be resolved by arbitration in
accordance with the then governing commercial rules of the
American Arbitration Association. The location of the
arbitration shall be Chicago, Illinois, unless the parties
mutually agree to a different location. The decision of the
arbitrator shall be binding and conclusive on all parties
involved and judgment on the decision of the arbitrator may be
entered in the highest court of any forum, federal or state,
having jurisdiction. Initially, the parties shall split equally
the costs of the arbitrator and the administration of the
arbitration. The prevailing party, however, shall be entitled
to recover from the other party its share of such costs and
reasonable attorneys' fees. Exercise of any remedies for a
matter that is subject to arbitration shall be suspended until
the arbitration decision is made.
23. GOVERNING LAW.
The validity, performance and construction of this
Agreement shall be governed and interpreted in accordance with
the laws of the State of California.
24. ENTIRE AGREEMENT.
This Agreement contains the entire understanding and
agreement between the parties with respect to the subject
matter hereof and supersedes all previous communications,
negotiations and agreements, whether oral or written, between
the parties with respect to such subject matter. No additions
to or modifications of this Agreement or waiver of any
provisions of this Agreement shall be binding on either party
unless made in writing and executed by Customer and Vendor.
25. SEVERABILITY/SURVIVAL.
Every section, term and provision of this Agreement
is severable from the others. Any future determination by a
court or other authority having jurisdiction over the parties
or this Agreement that a particular section, term, or provision
of this Agreement is invalid, void, illegal, or unenforceable
shall not affect the validity and enforceability of the
remaining sections, terms, or provisions. The provisions of
Sections and all of the warranties and representations
expressly set forth herein shall survive the termination of
this Agreement.
26. ASSIGNMENT AND SALE.
This Agreement and the rights granted hereunder
shall not be assigned without the prior written consent of the
other party; provided, however, that a successor in interest by
merger, operation of laws, assignment, purchase, or otherwise
of the entire business of a party shall acquire all of the
interests and obligations of that entity hereunder; and further
provided, however, that either party shall have the right to
assign or otherwise transfer this Agreement and/or its rights
hereunder, to its parent or to one of its subsidiaries or
affiliates upon prior written notice to the other party. The
assignee shall have the same rights and obligations as the
assignor and shall agree in writing to be bound by the terms
and conditions of this Agreement. Notwithstanding any provision
contained herein to the contrary, in the event the Customer
sells and/or otherwise disposes of its interest ("Divestiture")
in an operating division or subsidiary (the "Divested Entity"),
the Divested Entity shall be entitled to the continued use of
the licensed Software Products only at the locations authorized
to use the Software Products prior to the Divestiture provided
the Divested Entity agrees in writing to be bound by the
provisions of this Agreement. In addition, a Divested Entity
shall not be entitled to Support Services pursuant to Section
10.
27. ADDITIONAL OR CONTRARY TERMS AND PROVISIONS,
IF ANY.
Any additional or contrary terms and provisions set
forth in a rider dated as of the date of this Agreement, signed
by both parties, and attached hereto shall be incorporated
herein and shall govern over any contrary terms and provisions
set forth above.
28. MISCELLANEOUS.
(a) Taxes.
Customer shall pay all taxes based on or in any way
measured by this Agreement, the Software Products or any
portion thereof, or any services related thereto, excluding
taxes based on Vendor's net income, but including personal
property taxes. Customer may challenge the validity of any such
tax provided that Customer shall nevertheless pay such tax when
due and thereafter seek a refund.
(b) Access to Software Products.
Access to the Software Products shall be limited to
employees and subcontractors of Customer ("Persons with
Access") who require access to the Software Products to perform
their designated responsibilities for Customer. Customer shall
take reasonable steps to protect Vendor's interest in the
Software Products and to have such Persons with Access comply
with Customer's obligations under this Agreement.
(c) Obligations of Subsidiaries.
Dayton Hudson Corporation acknowledges that, in
executing this Agreement on behalf of itself, its operating
divisions and its majority-owned subsidiaries, it is binding
its majority-owned subsidiaries to the terms hereof and that it
shall cause such majority-owned subsidiaries to fully comply
with tile terms hereof.
EXHIBITS:
EXHIBIT A - SCOPE OF WORK
EXHIBIT B - SOURCE CODE ESCROW AGREEMENT
EXHIBIT C - HOLIDAYS OF ATS
EXHIBIT D - CERTIFICATE OF INSURANCE
EXHIBIT E - CROSS-COMPANY MUTUAL NONDISCLOSURE AGREEMENT
VENDOR: CUSTOMER:
ATS MONEY SYSTEMS, INC. DAYTON HUDSON CORPORATION.
ON BEHALF OF ITSELF, ITS
OPERATING DIVISIONS AND ITS
MAJORITY-OWNED SUBSIDIARIES
By:______________________
By:_________________________
Name:____________________
Name:_______________________
Title:___________________
Title:______________________
Date:____________________
Date:_______________________
EXHIBIT B
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is made as of
the 15th day of April, 1997, by and between ATS Money Systems,
Inc., a Nevada corporation whose principal office is located at
25 Rockwood Place, Englewood, New Jersey 07631 ("ATS"), Dayton
Hudson Corporation, a Minnesota corporation whose principal
office is located at 33 South Sixth Street, Minneapolis,
Minnesota 55402 ("DHC") and Fort Knox Escrow Services, Inc.
("Escrow Agent"), a Georgia corporation located at 3539 A
Church Street, Clarkston, Georgia 30031-1717.
Whereas, pursuant to that certain Agreement For
Software License between ATS and DHC dated as of April 15, 1997
(the "Project Agreement"), ATS has agreed to deposit certain
proprietary materials into escrow.
Whereas, ATS and DHC desire Escrow Agent to keep the
materials deposited into escrow in its possession for delivery
to DHC under certain circumstances; and
Whereas, Escrow Agent desires to act as custodian of
the deposited materials under the terms and conditions
specified herein.
Now, therefore, in consideration of the foregoing,
of the mutual promises hereinafter set forth, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be
bound legally, agree as follows:
1. Definitions. In addition to the terms
defined elsewhere in this Agreement, the following terms shall
have the meanings provided for in this Section 1, unless the
context clearly requires otherwise:
1.1 "Licensed Programs" shall mean, individually
and collectively, the computer software programs licensed by
DHC from ATS pursuant to the Project Agreement.
1.2 "Source Code Materials" shall mean a
complete copy of the source code for each of the Licensed
Programs, consisting of the full source code language of the
Licensed Programs including, but not limited to, development
tools, utilities and interfaces, together with complete system
programming, maintenance and system documentation describing the
interrelationships and functions of each program, routine or
module, and all other necessary information which would enable
a reasonably skilled computer programmer or analyst to
reconstruct, maintain, or enhance the Licensed Programs without
the aid of ATS or any other person or reference to any other
materials.
1.3 "Escrow Materials" shall mean, collectively,
the Source Code Materials as the same may be modified and
updated from time to time in accordance with the Project
Agreement or any other agreement between ATS and DHC.
2. Delivery by ATS. On or prior to the date
specified in the Project Agreement for delivery of the Escrow
Materials, ATS shall deliver to Escrow Agent one or more sealed
packages containing the Source Code Materials. ATS shall
identify each item in each package and certify the completeness
and accuracy of the indicated Escrow Materials in a letter
forwarding the same to Escrow Agent with a copy to DHC.
3. New Releases. ATS agrees to deposit with
Escrow Agent all modifications, updates and new releases of the
Escrow Materials by delivery to Escrow Agent as required by the
Project Agreement. When ATS delivers any update of the Escrow
Materials to Escrow Agent, it shall provide a complete version
of the Escrow materials in a sealed package and certify the
completeness and accuracy of the indicated Escrow Materials in a
letter forwarding the same to Escrow Agent with a copy to DHC.
Upon receipt of same, Escrow Agent shall return to ATS the
previous version of the Escrow Materials it held in custody.
4. Terms and Conditions for Delivery of Escrow
Materials. Escrow Agent agrees that the Escrow Materials shall
be held by it for delivery to ATS or DHC under the terms and
conditions hereinafter set forth.
4.1 Delivery of Source Code Materials to DHC.
Subject to the provisions of Sections 4.2 and 4.3 hereof, ATS
and Escrow Agent agree that the Source Code Materials shall be
held by Escrow Agent for delivery to DHC but only in the event
that:
(a) ATS notifies Escrow Agent in writing to effect
such delivery by mail to DHC, the notification being
accompanied by a certified or cashier's check payable to Escrow
Agent for the required fee reflected on Exhibit A; or
(b) Escrow Agent received from DHC written
notification that ATS has:
(i) failed in any material respect to support or
maintain the Licensed Programs as required by the Project
Agreement, and the Source Code Materials are required by DHC to
perform or allow a third party to perform such services in an
efficient manner;
(ii) ceased to be engaged in the business of
providing support or maintenance for the Licensed Software or
similar software, and the Source Code Materials are required by
DHC to place itself in a position to support or maintain the
Licensed Programs; or
(iii) availed itself of, or been subjected to by
any third party, a proceeding in bankruptcy in which ATS is the
named debtor (other than a reorganization under Chapter 11 of
the federal bankruptcy laws) which is not dismissed or converted
to a Chapter 11 proceeding within 90 days following the date
the petition was filed, a general assignment by ATS for the
benefit or its creditors, or any dissolution or liquidation of
ATS.
(c) Any such written notice from DHC shall be
accompanied by: (i) evidence that DHC has previously notified
ATS of such failure in writing; (ii) a written demand that the
Source Code Materials be released and delivered to DHC; (iii) a
written undertaking from DHC that the Source Code Materials
being supplied to DHC will be used only as permitted under the
terms of the Project Agreement; (iv) specific instructions from
DHC for this delivery; and (v) a certified or cashier's check
payable to Escrow Agent for the required fee reflected on
Exhibit A.
4.2 Notification to ATS. In the event a request
for a copy of any Escrow Materials from DHC, Escrow Agent
shall, within five (5) working days of receipt of any written
notification pursuant to paragraph (b) and (c) of Section 4.1,
send by a recognized overnight courier, and by certified mail,
return receipt requested, a photostatic copy of all documents
received from DHC to ATS, with a copy to Kraemer, Burns,
Mytelka & Lovell, P.A. by overnight courier and certified mail,
return receipt requested. ATS shall have fifteen (15) days from
the date Escrow Agent shall have sent such documents to ATS to
send to Escrow Agent written notice of its objection to the
release of a copy of the Escrow Materials requested by DHC and
to request that the issue of DHC's entitlement to a copy of the
requested Escrow Materials be submitted to arbitration in
accordance with the provisions hereof. Escrow Agent will
forward a copy of ATS' written notice of objection and demand
for arbitration to DHC within five (5) days following receipt
from ATS. If within fifteen (15) days after mailing and
sending by overnight courier the items specified in paragraph
(b) and (c) of Section 4.1 to ATS, Escrow Agent has not received
written notice of ATS' objection to the release of a copy of
the Escrow Materials and its request for arbitration, then
Escrow Agent shall mail a copy of the Escrow Materials requested
to DHC in accordance with the instruction specified in DHC's
request.
4.3 Arbitration. In the event that ATS shall
send written notice to Escrow Agent within the time required by
Section 4.2, DHC's right to receive the requested Escrow
Materials shall be submitted to, and settled by arbitration by
a panel of three (3) arbitrators in accordance with the rules
of the American Arbitration Association (the "Arbitration
Proceeding"). The Arbitration Proceeding shall be held in
Chicago, Illinois unless the parties mutually agree to a
different locations and the arbitrators shall apply California
law. At least one (1) arbitrator shall be reasonably familiar
with the computer software industry. Any decision of the
arbitrators shall be binding and conclusive on all parties
involved, and judgment upon their decision may be entered in
the highest court of any forum, federal or sate, having
jurisdiction. All costs of the Arbitration Proceeding,
including reasonable attorneys' fees and costs incurred by the
prevailing party and Escrow Agent shall be paid by the
non-prevailing party. The provisions of this sub-section shall
not in any way limit any party's right to seek equitable relief
from any court.
4.4 Delivery by Escrow Agent to ATS. Escrow
Agent shall release and deliver the Escrow Materials to ATS
upon termination of this Agreement pursuant to Section 9 hereof.
5. Liability. Except for actual fraud, gross
negligence or intentional misconduct, Escrow Agent shall not be
liable to ATS or DHC for any act, or failure to act, by Escrow
Agent in connection with this Agreement. Escrow Agent will not
be liable for special, indirect, incidental or consequential
damages hereunder. The foregoing notwithstanding, nothing in
this Agreement shall limit any remedies to which ATS may be
entitled, whether at law or in equity, in connection with any
claim relating to the misappropriation of confidential
information or trade secrets or the violation of any copyright
or other intellectual property right of ATS.
6. Indemnity. ATS and DHC hereby agree to
indemnify and hold harmless Escrow Agent and each of its
directors, officers, and stockholders, absolutely and forever,
and from and against any and all claims, actions, damages,
suits, liabilities, obligations, costs, fees, charges, and any
other expenses whatsoever, including legal fees, that may be
asserted against Escrow Agent or any of its directors,
officers, or stockholders with respect to any act, except as a
result of the negligent act or omission on the part of Escrow
Agent (or any of its officers, directors, stockholders,
employees or agents) and as otherwise provided in Section 5.
7. Disputes and Interpleader. In the event of
any dispute between ATS and DHC relating to delivery of any
Escrow Materials by Escrow Agent or to any other matter covered
by this Agreement, Escrow Agent may submit the matter to any
court of competent jurisdiction in an interpleader or similar
action. Any and all costs incurred by Escrow Agent in
connection therewith shall be borne by the party bringing such
action, however, the party bringing such action shall be
entitled to recover such costs if it prevails against the other
party (but not from the Escrow Agent). Without limiting the
generality of the foregoing, if Escrow Agent shall be uncertain
as to its duties or rights hereunder, shall receive any notice,
advice, schedule, report, certificate, direction or other
document from any person or entity with respect to the Escrow
Materials, that, in the opinion of the management of Escrow
Agent is in conflict with any of the provisions of this
Agreement, or shall be advised that a dispute has arisen with
respect to the ownership or right of possession of the Escrow
Materials or any part thereof, Escrow Agent shall be entitled,
without liability to anyone, to refrain from taking any action
other than to exercise best efforts to keep safe the Escrow
Materials until Escrow Agent shall be directed otherwise in
writing by an order, decree, ruling or judgment of the
Arbitration Proceeding or a court of competent jurisdiction, but
Escrow Agent shall be under no duty to institute or defined any
such proceeding.
8. Bankruptcy. ATS and DHC acknowledge that
this Agreement is an "agreement supplementary to" the Project
Agreement as provided in Section 365(n) of Title 11, United
States Code (the "Bankruptcy Code"). ATS acknowledges that if
ATS, as a debtor in possession or a trustee in Bankruptcy in a
case under the Bankruptcy Code, rejects the Project Agreement or
this Agreement, DHC may elect to retain its rights under the
Project Agreement and this Agreement as provided in Section
365(n) of the Bankruptcy Code as they relate to the Escrow
Materials. Upon written request of DHC to ATS of the
Bankruptcy Trustee, ATS or such Bankruptcy Trustee shall not
interfere with the rights of DHC as provided in the Project
Agreement and this Agreement, as they relate to the right to
obtain the Escrow Materials from the Escrow Agent in accordance
with Section 4 hereof.
9. Termination. This Agreement may be
terminated at any time by any party upon ninety (90) days'
prior written notice to each of the other parties sent by
registered or certified mail, return receipt requested and
first class postage prepaid. In the event of termination, and
provided Escrow Agent has been paid all fees due hereunder,
Escrow Agent will forward all copies of the Escrow Materials in
its possession to the replacement escrow agent, or, if agreed by
DHC in writing, to ATS. Prior to the expiration of such 90 day
period, ATS and DHC shall enter into an escrow agreement with a
replacement escrow agent, which agreement shall be on the same
terms and conditions set forth herein, together with such
changes and modifications as both parties may approve, which
approval shall not be unreasonably withheld, conditioned or
delayed. ATS and DHC will promptly notify Escrow Agent of the
name and address of any replacement escrow agent.
10. Fees; Non-Payment. Except as otherwise
provided in this Agreement, ATS and DHC shall share equally the
Escrow Agent fees in accordance with Exhibit A as compensation
for Escrow Agent's services under this Agreement, including any
amounts due Escrow Agent on termination of this Agreement. In
the event of non-payment of any fees or charges invoiced by
Escrow Agent, Escrow Agent shall give notice of non-payment of
any fee due and payable hereunder to ATS and DHC and, in such
an event, either party shall have the right to pay the unpaid
fee within thirty (30) days of receipt of notice from Escrow
Agent and recover such amount from the responsible party, and
upon timely payment of the unpaid fee by either party, this
Agreement shall continue in full force and effect. Failure to
pay the unpaid fee within thirty (30) days shall result in
termination, as outlined above in Section 9.
11. Governing Law. This Agreement shall be
construed and enforced in accordance with the laws of the State
of California.
12. Notices. Except as otherwise provided in
Section 4.2, all notices and other communications hereunder or
in connection herewith shall be deemed to have been duly given
if delivered personally or sent by registered or certified mail
in writing, return receipt requested and first class postage
prepaid:
If to ATS: ATS Money Systems, Inc.
25 Rockwood Place
Englewood, New Jersey 07631
Attn: Gerard F. Murphy, President
with a copy to: Kraemer, Burns, Mytelka & Lovell, P.A.
Counselors at Law
675 Morris Avenue
Springfield, New Jersey 07081
Attn: Douglas E. Burns
If to Escrow Agent: Fort Knox Escrow Services, Inc.
3539 A Church Street
Clarkston, Georgia 30031-1717
Attn: Lisa McKinney
If to DHC: Dayton Hudson Corporation,
33 South Sixth Street
Minneapolis, Minnesota 55402
Attn: Chief Information Officer
with a copy to: Dayton Hudson Corporation
22301 Foothill Blvd.
Mailstop MO2Q
Hayward, California 94541
Patricia Rigby Williams, Esq.
Either party may change its address for notices under
this Agreement by providing the other party with written notice
in the matter set forth above.
13. Third Party Beneficiaries. Other than the
parties specifically identified herein, there are no intended
third party beneficiaries of this Agreement.
14. Entire Agreement. This Agreement, together
with Exhibit A hereto, constitute the entire agreement between
Escrow Agent and ATS with respect to the subject matter hereof,
all prior agreements and understanding being merged herewith.
Witness (Attest): ATS MONEY SYSTEMS, INC.
______________________
By:________________________________
Printed Name:______________________
Title:_____________________________
Date:______________________________
Witness (Attest): DAYTON HUDSON CORPORATION
_______________________
By:________________________________
Printed Name:______________________
Title:_____________________________
Date:_____________________________
Witness (Attest): FORT KNOX ESCROW SERVICES, INC.
______________________
By:________________________________
Printed Name:______________________
Title:_____________________________
Date:_____________________________
EXHIBIT 10.(b)
M.H. MEYERSON & CO., INC.
FOUNDED 1960
BROKERS & DEALERS IN SECURITIES
UNDERWRITERS
NEWPORT TOWER OFFICE
525 WASHINGTON BLVD.
P.O. BOX 260
JERSEY CITY, NJ 07303-0260
201-459=9500 800-888-8188 FAX 201-459-9510
www.mhmeyerson.com
April 7, 1997
Mr. Gerard F. Murphy,
President ATS Money Systems,Inc.
25 Rockwood Place Englewood, NJ 07631
Dear Mr. Murphy:
THIS AGREEMENT (the "AGREEMENT") is made as of April
7, 1997 between ATS Money Systems, Inc. ("ATSM") and M.H.
Meyerson & Co., Inc. ("MEYERSON").
In consideration of the mutual covenants contained
herein and intending to be legally bound thereby, ATSM and
MEYERSON hereby agree as follows:
1. MEYERSON will perform investment banking services
for ATSM on the terms set forth below for a period of four
years from the date hereof. Such services will be performed on
a best efforts basis and will include, without limitation,
assistance to ATSM in mergers, acquisitions, and internal
capital structuring and the placement of new debt and equity
issues of ATSM, all with the objective of accomplishing ATSM's
business and financial goals. In each instance, MEYERSON shall
endeavor, subject to market conditions, to assist ATSM in
identifying corporate candidates for mergers and acquisitions
and sources of private and institutional funds; to provide
planning, structuring, strategic and other advisory services to
ATSM; and to assist in negotiations on behalf of ATSM. In each
instance, MEYERSON will render such services as to which ATSM
and MEYERSON mutually agree and MEYERSON will exert its best
efforts to accomplish the goals agreed to by MEYERSON and ATSM.
2. In connection with the performance of this
AGREEMENT, MEYERSON and ATSM shall comply with all applicable
laws and regulations, including, without limitation, those of
the National Association of Securities Dealers, Inc. and the
Securities and Exchange Commission.
3. In consideration of the services to be rendered
by MEYERSON hereunder, MEYERSON is granted Warrants to purchase
common shares of ATSM in the following manner:
1) Warrants to purchase 80,000 common shares of
ATSM at $0.75 per share issuable as of the day of signing of
this AGREEMENT.
2) Warrants to purchase 80,000 common shares of ATSM
at $1.25, issuable one year and one day from the signing of
this AGREEMENT.
3) Warrants to purchase 80,000 common shares of ATSM
at $1.25 two years and one day from the signing of this
AGREEMENT.
All Warrants are irrevocable upon issuance. All
Warrants will expire at the end of the fourth year of the
signing of this AGREEMENT.
4. If ATSM should, at any time, or from time to time
hereinafter, effect a stock split, a reverse stock split, or a
recapitalization, the terms of the MEYERSON Warrants shall be
proportionately adjusted to prevent the dilution or enlargement
of the rights of the holders.
5. During the four (4) year period from the date of
signing of this AGREEMENT, the holders of a least 51% of: (i)
the MEYERSON Warrants not then exercised; and (ii) the shares
previously issued upon exercise of any of the MEYERSON Warrants
(hereinafter, collectively, the "MEYERSON EQUITY"), may demand,
on one occasion only, that ATSM, at MEYERSON's expense,
promptly file a Registration Statement under the Securities Act
of 1933, as amended ("ACT"), to permit a public offering of the
shares of Common Stock issued and issuable pursuant to exercise
of the MEYERSON Warrants (the "MEYERSON SHARES").
Additionally, if ATSM during such four (4) year period, files a
Registration Statement covering the sale of any of ATSM's common
stock, other than a Registration Statement on Form S-8, then
ATSM, on each such occasion, at the request of the holders of
at least 51% of the shares and warrants constituting the
MEYERSON EQUITY, shall include in any such Registration
Statement, at ATSM's expense, and if such inclusion is
permitted under the rules of the SEC the MEYERSON SHARES,
provided that, if the sale of securities by ATSM is being made
through an underwriter and the underwriter objects to inclusion
of the MEYERSON shares in the Registration Statement, the
MEYERSON SHARES shall not be so included in the Registration
Statement or in any registration statement filed within 90 days
after the effective date of the underwritten Registration
Statement.
6. The obligation of ATSM to register the MEYERSON
SHARES, including the shares issuable upon exercise of the
MEYERSON Warrants, pursuant to the demand or the piggy back
registration rights set forth in paragraph 5, above, shall be
without regard to whether the MEYERSON Warrants have been or
will be exercised.
7. The Warrants are not being registered under the
ACT and may not be transferred, nor may the shares issuable
upon exercise be transferred, in the absence of being registered
under the ACT and applicable state securities laws, unless ATSM
receives an opinion of MEYERSON's counsel (which counsel and
opinion are reasonably satisfactory to counsel to ATSM) that
such transfer is exempt from the ACT and applicable state
securities law.
8. This AGREEMENT constitutes the entire Warrant
Agreement between the parties and when a copy hereof is
presented to ATSM's transfer agent, together with a certified
check in the proper amount and a request that all or part of
the MEYERSON Warrant be exercised, the certificates for the
appropriate number of shares of Common Stock shall be promptly
issued.
9. ATSM shall make such disclosure with respect to
this investment banking AGREEMENT as is required under the ACT
and other federal securities laws.
10. Upon the signing of this AGREEMENT, ATSM shall
pay MEYERSON $5,000.00 as a non-accountable and non-refundable
expense allowance for due diligence and general compliance
review. MEYERSON shall be entitled to additional compensation,
to be negotiated between MEYERSON and ATSM, arising out of any
transactions that are proposed or executed by MEYERSON and
consummated by ATSM, or are executed by MEYERSON at ATSM's
request, during the term of this AGREEMENT to the extent that
such compensation is approved in writing in advance by ATSM's
Chief Executive Officer. In addition, MEYERSON shall be
reimbursed by ATSM for any reasonable out-of-pocket expenses
that MEYERSON may incur in connection with rendering any service
to or on behalf of ATSM which expenses are approved, in
writing, in advance by ATSM's Chief Executive Officer.
11. ATSM agrees to indemnify and hold MEYERSON and
its directors, officers and employees harmless from and against
any and all losses, claims, damages, liabilities, costs or
expenses arising out of any action or cause of action brought
against MEYERSON in connection with its rendering services
under this AGREEMENT except for any losses, claims, damages,
liabilities, costs or expenses resulting from any violation by
MEYERSON of applicable laws and regulations including, without
limitation, those of the National Association of Securities
Dealers, Inc. and the Securities and Exchange Commission or any
state securities commission or from any act of MEYERSON
involving negligence or misconduct and except that ATSM shall
not be liable for any amount paid in settlement of any claim
that is settled without its prior written consent.
12. MEYERSON agrees to indemnify and hold ATSM and
its directors, officers and employees harmless from and against
any and all losses, claims, damages, liabilities, costs or
expenses resulting from any violation by MEYERSON of applicable
laws and regulations including without limitation, those of the
National Association of Securities Dealers, Inc., the
Securities and Exchange Commission any state securities
commission or from any act of MEYERSON involving negligence or
misconduct.
13. Within 90 days of the date of this AGREEMENT, a
representative of MEYERSON will visit the corporate
headquarters of ATSM. ATSM will submit to MEYERSON a current
business plan setting forth how ATSM plans to proceed over the
next two (2) years.
14. Nothing contained in this AGREEMENT shall be
construed to constitute MEYERSON as a partner, employee, or
agent of ATSM; nor shall either party have any authority to bind
the other in any respect, it being intended that MEYERSON is,
and shall remain an independent contractor.
15. This AGREEMENT may not be assigned by either
party hereto, shall be interpreted in accordance with the laws
of the State of New Jersey, and shall be binding upon the
successors of the parties. Either party may terminate this
investment banking contract at any time; however, issued
Warrants will remain with MEYERSON.
16. If any paragraph, sentence, clause or phrase of
this AGREEMENT is for any reason declared to be illegal,
invalid, unconstitutional, void or unenforceable, all other
paragraphs, sentences, clauses or phrases hereof not so held
shall be and remain in full force and effect.
17. None of the terms of this AGREEMENT shall be
deemed to be waived or modified except by an express agreement
in writing signed by the party against whom enforcement of such
waiver or modification is sought. The failure of either party
at any time to require performance by the other party of any
provision hereof shall, in no way, affect the full right to
require such performance at any time thereafter. Nor shall the
wavier by either party of a breach of any provision hereof be
taken or held to be a waiver of any succeeding breach of such
provision or as a waiver of the provision itself.
18. Any dispute, claim or controversy arising out of
or relating to this AGREEMENT, or the breach thereof, shall be
settled by arbitration in Jersey City, New Jersey, in accordance
with the Commercial Arbitration Rules of the American
Arbitration Association. The parties hereto agree that they
will abide by and perform any award rendered by the
arbitrator(s) and that judgement upon any such award may be
entered in any Court, state or federal, having jurisdiction
over the party against whom the judgment is being entered. Any
arbitration demand, summons, complaint, other process, notice
of motion, or other application to an arbitration panel, Court
or Judge, and any arbitration award or judgement may be served
upon any party hereto by registered or certified mail, or by
personal service, provided a reasonable time for appearance or
answer is allowed.
19. For purpose of compliance with laws pertaining
to potential inside information being distributed unauthorized
to anyone, all communications regarding ATSM's confidential
information should only be directed to Martin H. Meyerson,
Chairman, Michael Silvestri, President, or Linda Antosiewicz,
Senior Vice President, Compliance. If information is being
faxed, our confidential compliance fax number is (201) 459-9534
for communication use.
20. ATSM shall have the right to cancel this
AGREEMENT at any time. Unless ATSM exercises their
cancellation rights, this Agreement will remain in effect for
the full four years. If ATSM exercises their right on the
first anniversary of this AGREEMENT, ATSM agrees that MEYERSON
will be entitled to a minimum of Warrants for 160,000 shares as
described in parts one and two of paragraph three.
IN WITNESS WHEREOF, the parties hereto have executed
this AGREEMENT as of the day and year set forth above.
M.H. Meyerson & Co., Inc. ATS Money Systems, Inc.
MICHAEL SILVESTRI GERARD F.MURPHY
Michael Silvestri Gerard F. Murphy
President President
