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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
X Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended September 30, 1996.
Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to .
Commission File No. 0-18809
___________________________________________________________________
CE SOFTWARE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 41-1614808
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
1801 Industrial Circle, West Des Moines, Iowa 50265
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (515) 221-1801
________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.02 per share
(Title of class)
Indicate by mark (X) whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
(Cover page continued)
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Indicate by mark (X) if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year: $10,437,520.
Aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing price of the Common Stock on November 30,
1996: $3,905,996
Number of shares outstanding of each of the registrant's classes of common
stock as of November 30, 1996:
Class A 5,627,028
Class B 0
DOCUMENTS INCORPORATED BY REFERENCE:
List hereunder the following documents if incorporated by reference and the
Part of the 10-KSB into which the document is incorporated.
Portions of the registrant's Annual Report to Stockholders for the fiscal year
ended September 30, 1996, are incorporated herein by reference in Parts I,
II, and IV.
Portions of the Proxy Statement to be delivered to stockholders in connection
with the Annual Meeting of Stockholders to be held February 28, 1997, are
incorporated by reference into Part III.
<PAGE>
CE SOFTWARE HOLDINGS, INC.
1996 FORM 10-KSB ANNUAL REPORT
Table of Contents
Page
Trademarks/Definitions 1
PART I
Item 1. Business 2
Item 2. Properties 11
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 12
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters 12
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 7. Financial Statements 12
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 12
PART III
Item 9. Directors and Executive Officers of the Registrant 13
Item 10.Executive Compensation 13
Item 11.Security Ownership of Certain Beneficial Owners and
Management 13
Item 12.Certain Relationships and Related Transactions 13
PART IV
Item 13. Exhibits, Financial Statements, and Reports on Form 8-K 14
Signatures 16
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TRADEMARKS/DEFINITIONS
Arrange(tm), BackMatic(tm), ButtonAction(tm), CalendarMaker(tm), CEToolbox(tm),
Choosy(tm), CursorWait(tm), DayVision(tm), DemoQuicKeys(tm), DialogKeys(tm),
DisMounty(tm), EnRoute(tm), Finder Events(tm), Grab Ease(tm), Grabber(tm),
IconMover(tm), MailManager(tm), MassCopier(tm), Medi:for(r), MenuDecision(tm),
MenuWait(tm), MobileVision(tm), Mounty(tm), Mousie(tm), My Time Manager(r),
NameFinder(tm), NameServer(tm), NetModemChoosy(tm), Network Scheduler(r),
ns:Agent(tm), NSDD(tm), Paste Ease(tm), Powercore(r), Printer Bridge(tm),
ProcessSwap(tm), ProKey(tm), QK Icons(tm), QK Install(tm), QM Server(tm),
QM Administrator(tm), QM-Connect(tm), Gateway(tm), QM Config(tm),
QM-Data Collection Bridge(tm), Bridge(tm), QM-Direct(tm), Bridge(tm),
QM Forms(tm), QM-Internet(tm) Gateway, QM-Link Gateway(tm), QM Menu(tm),
QM-MHS Gateway(tm), QM-QM Bridge(tm), QM Recorder(tm), QM Recorder II(tm),
QM Remote(tm), QM Resources(tm), QM-Script Gateway(tm), QM-Serial Gateway(tm),
QM Server(tm), QM TimeOuts(tm), QuickAccess(tm), QuicKeys(r),
QuicKeys Icons(tm), QuickConference(tm), QuickMail(tm), QuickMail(tm) Pro,
QuickMailBar(tm), QuickMessenger(tm), QuickSend(tm), QuickTimer(tm),
Schedule/DOS(r), Scrap Ease(tm), Screen Ease(tm), SpeakEase(tm), TeamVision(tm),
Technical Assistance Assistant(tm), The Time Traveler(r), TimeVision(r),
TimeVision NS(tm), TypeEase(tm), Vaccine(tm), WebArranger(tm),
WindowDecision(tm), and WindowWait(tm) are trademarks or registered trademarks
of CE Software, Inc., an Iowa corporation.
IBM(r) is a registered trademark of International Business Machines
Corporation ("IBM"). Macintosh(r) and Apple(r) are registered trademarks,
and AppleScript(tm), AppleTalk(tm), AppleTalk Remote Access(tm), and Mac(tm) are
trademarks of Apple Computer, Inc. ("Apple"). MS-DOS(r) and Microsoft(r) are
registered trademarks and Windows(tm) is a trademark of Microsoft Corporation
("Microsoft"). Intercall(tm) UUCP is a trademark of Holmen and Ungman.
QM-Link(tm) and QM Postman(tm) are trademarks of Netstrategy Software, Inc.
Netware(r) and Novell(r) are registered trademarks of Novell, Inc. Wizard(tm),
is a trademark of Sharp Corporation. cc:Mail(tm) is a trademark of Lotus
Corporation. Netscape Navigator(tm) is a trademark of Netscape Communications,
Inc., and WebWhacker(tm) is a trademark of The Forefront Group, Inc.
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PART I
Item 1: Business
General
CE Software Holdings, Inc., a Delaware corporation (the "Company"), designs,
develops, publishes, markets, and supports a line of commercial software
products for personal computers to enhance office communications,
connectivity, and productivity of its business and home users. As of September
1996, the Company had eight products on the market for Apple Macintosh
and/or IBM and IBM compatible personal computers (PCs), plus a number of
subsidiary products, as well as others under development. It produces messaging
products, including its award-winning electronic mailprogram, QuickMail;
personal application products, such as QuicKeys, Web-Arranger, and
CalenderMaker; and group caledaring and scheduling products,such as
TimeVision NS.
The Company
The Company was formed in 1988 as Anubis Corp. and changed its name to CE
Software Holdings, Inc., a Delaware corporation, after it acquired all the
common stock of CE Software, Inc., an Iowa corporation, in a February 1990
merger transaction. The merger was accounted for as a reverse acquisition.
Since its organization, CE Software Holdings, Inc., has not had any operations;
accordingly, the operations described herein, unless otherwise specified, are
those of the subsidiary, CE Software, Inc. As of November 30, 1996, 35.5% of
the Company's outstanding common stock was beneficially owned by the three
founders of CE Software, Inc.: Richard A. Skeie, Donald M. Brown,
and John S. Kirk.
CE Software, Inc. (CE) was formed in January 1987 as the successor to a
business begun in 1981 as the software development arm of a retail computer
store. During the early 1980's the original business emphasized a range of
accounting software, games, and programming products for the Apple II
computer. After the release of the Macintosh in 1984, CE released its first
Macintosh program in December 1984. For several years the bulk of CE's
product development and sales was for Macintosh applications. Since 1990,the
Company has expanded its development staff and specifically assigned certain
programmers to convert existing products for use in IBM PC and compatible
computers. Through this effort, the Company's major product, QuickMail, was
upgraded in September 1991 to work with networks commonly used with IBM
PC and compatible computers. In March 1993, the Company further extended
QuickMail to operate with Microsoft Windows.In May 1994, CE Software,
Inc., acquired substantially all the assets and in-process research and
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development of Powercore, Inc., a privately held developer and manufacturer of
computer software. The primary asset acquired was Network Scheduler, which
operates using IBM and compatible computers in the Microsoft Windows
environment.
Products
The Company's products are designed to enhance office communications,
connectivity, and productivity of users. All the products are in the same
category of business software. Several of the products have received various
domestic and international awards from professional groups, user groups, and
industry magazines.
The products may be functionally divided into three groups: (1) messaging, (2)
personal applications, and (3) group calendaring and scheduling. Messaging
includes the products QuickMail, QM-Link for ARA, QM Postman, Intercall
UUCP, and QM-Internet Gateway. Personal application products include
QuicKeys, CalendarMaker and WebArranger. Group calendaring and scheduling
consist of the TimeVision NS product. The Company's approximate net
revenues have been divided into the three groups as follows:
<TABLE>
<CAPTION>
Years Ended September 30,
1996 1995 1994
<S> <C> <C> <C>
Messaging $7,979,000 8,882,000 6,958,000
Personal applications 2,153,000 3,003,000 3,775,000
Calendaring and scheduling 306,000 1,034,000 652,000
$10,438,000 12,919,000 11,385,000
</TABLE>
The Company has emphasized use of its QuickMail product in the electronic mail
messaging and networking area, and of its QuicKeys product in the personal
applications area. The Company believes these products, as updated from time
to time, will continue to make a significant revenue contribution inside their
respective product groups. To the extent that the Company is unable to produce
competitive products or respond to changes in usage of such products, it may be
at risk of reduced sales of such products.
Messaging
QuickMail is an easy-to-use electronic mail application for a computer
network, first introduced in 1988. It allows sending and receiving of
messages, real time conferencing, remote access, and a variety of connectivity
options to QuickMail locations and to other electronic mail systems.
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QuickMail is sold in packages for one, five, ten, twenty-five, fifty or one
hundred users. Gateway and bridge components, including QM-QM, QM-Direct, QM-
Link, QM-Script, and QM-Printer are included in the product. Suggested list
price of a 10-user pack is $649.00. The company also separately sells certain
proprietary bridges and gateways. Many other developers have written custom
gateways, for sale commercially, linking QuickMail to a wide variety of other
local area network (LAN), mainframe-based messaging systems and the
Worldwide Internet.
The Company in 1989 released the QuickMail PC version that allowed the
addition of PCs using AppleTalk to a Macintosh QuickMail network. The
Company in September 1991 released QuickMail version 2.5, a version that for
the first time integrated both Macintosh and PC software in the same package.
PC users gained access to the QuickMail network either through the AppleTalk
solution or through a file-based solution using a Novell network. In March
1993, the Company released QuickMail version 2.6 that extended the product
further by offering a Windows interface to the QuickMail client.
In October 1993, the Company released QuickMail AOCE (Apple Open Collaborative
Environment) for Macintosh computers. Using the technology pre-installed on
all newer Macintosh computers, QuickMail AOCE provides the familiar QuickMail
interface while utilizing the transport and addressing scheme provided by
Apple Computer.
In July 1994, the Company completed a publisher/developer agreement with
Netstrategy Software, Inc., that allows the Company to publish and market the
following QuickMail related products. QM Postman, a mail distribution product,
allows users to easily mail messages to a wide group of individuals without
having to individually address the message for each recipient. QM Postman
dynamically maintains correct addresses without direct user involvement. QM-
Link for ARA simplifies the process of connecting, via AppleTalk Remote
Access (ARA), to a user's QuickMail account. Once configured by the end user,
QM-Link for ARA automates the remote connection process, eliminating the manual
process of modem connection and launching QuickMail.
In August 1994, the Company released QuickMail version 3.0. QuickMail 3.0
offers users several enhancements to the client portion of the software,
including new spell-checking features, an advanced mail management utility
(MailManager), and a powerful search engine used to identify specific messages
filed in QuickMail folders. QuickMail 3.0 also enhanced the server portion of
the software with several specific additions designed to improve performance in
high-traffic environments.
In September 1995, the Company released QuickMail version 3.5. This version
added many new features including, but not limited to, styled text, drag and
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drop mobility, quick conference dialog, enhanced security, and expanded server-
based mail handling capabilities. Version 3.6 followed in March of 1996, making
QuickMail even faster on Power Macintosh clients, allowing larger address books,
easier distribution of centralized address books as well as several other speed
enhancing features.
In fiscal 1996, the Company released two new gateway products for QuickMail;
Intercall UUCP and QM-Internet Gateway. Intercall UUCP operates utilizing the
popular Unix to Unix Copy Protocol (UUCP) standards of communication, and
QM-Internet Gateway is a Simple Mail Transfer Protocol (SMTP) gateway which
connects QuickMail to the Internet. The Intercall UUCP gateway is available
for unlimited users for a suggested retail price of $495.00 and QM-Internet
Gateway is available for unlimited users for a suggested retail price of
$2,495.00.
In November 1996, the Company released QuickMail Pro, its new electronic mail
product for the POP3 (Post Office Protocol, version 3) Internet and Intranet
environment. Available for Windows and Macintosh operating systems,
QuickMail Pro brings the powerful features and ease-of-use associated with CE
Software's award-winning LAN E-mail client to the Internet.
Personal Applications
QuicKeys, CE Software's flagship automation software, was first introduced in
1987. QuicKeys allows users to trigger shortcuts that automate many of the
day-to-day functions inherent with most computer programs. Since its release,
QuicKeys has been the leading desktop automation package for the Macintosh
computing environment.
In August 1993, QuicKeys version 3.0 was released. Recognizing the changing
requirements of the software industry, this release built in close support for
two of the leading Apple Computer technology initiatives: Apple Events and
AppleScript. In addition, QuicKeys 3.0 was designed from the start to take
advantage of the audio/visual workstations now offered by Apple Computer.
With the appropriate technology installed, shortcuts can be triggered by voice
command as well as the more traditional keyboard interaction.
QuicKeys 3.0 represented an innovative shift in the way shortcuts are
initiated by the user. By combining many operating components into one main
user interface window, QuicKeys 3.0 greatly simplifies user interaction.
QuicKeys 3.0 was named the Best Utility of the Year, for 1993 by the editors
of MacUser magazine.
In August 1996, QuicKeys version 3.5 was released. With QuicKeys 3.5 users
are able to create toolbars and floating palettes for triggering shortcuts,
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create a desired QuicKeys sequence in batch processing for multiple documents,
edit QuicKeys instructions using a new tab-oriented interface with movable
windows, and utilize enhanced dial-up capabilities. With added reliability
improvements, QuicKeys is enabled to work seamlessly with the latest version
of Apple's operating system, Mac OS, and the most popular applications
software. QuicKeys sells for a suggested retail price of $119.00.
ProKey DOS and ProKey Windows were macro (automation) programs acquired from
RoseSoft, Inc., in 1992. These programs have functionality similar to
QuicKeys, but operate within the DOS (disk operating system) and Windows
environments. In June 1993, CE Software released version 1.5 of ProKey
Windows. This version added support for extended scripting in the Windows
environment and added a handicapped module to assist users who may have
mobility challenges. Due to lack of profits and technological changes in the
industry, sales of ProKey DOS and ProKey Windows were discontinued in fiscal
1996.
CalendarMaker Macintosh, a personal calendaring product, was upgraded to
version 4.0 in March 1993. First introduced in 1986, CalendarMaker has
consistently provided an easy-to-use, easy-to-learn, calendaring environment
for the small business, school or church environment. Version 4.0 supports
advanced calendaring functions such as unlimited calendar size, duplicating
events by date or time period, even full color capabilities. Version 4.1
released in January 1994 added memory management routines to improve
performance. CalenderMaker sells for a suggested retail price of $59.95.
CalendarMaker Windows represented an entry-level calendaring capability for
the Windows environment. Appealing to the same market, CalendarMaker Windows
provided basic calendaring capabilities to users with Windows operating
systems. Due to the lack of profits and future potential for this product,
CalendarMaker Windows was discontinued in fiscal 1996.
In October 1995, CE Software, Inc., acquired Arrange, a software technology
from Common Knowledge, Inc. A month later, CE announced WebArranger version
1.0, an Internet information management application that combines extensive
Internet tracking and capturing capabilities with the flexible personal
information management features of Arrange. The application works in
conjunction with today's popular Web browser technologies including Netscape
Navigator, to provide users with a simple means of tracking and organizing
Internet data. WebArranger version 1.0 was initially distributed, free of
charge to more than 20,000 users, via the Internet. In February 1996,
WebArranger 2.0 was released with a suggested retail price of $99.95. Web-
Arranger 2.0 included numerous significant enhancements over the 1.0 version.
Some of the more significant include a Uniform Resource Locator (URL) Validator
that automatically updates URLs by checking Web sites to see if they are still
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active, and updating them with the new or changed information as needed. A
universal Grabber technology was added for capturing information from any
source, text or graphics with a single keystroke. Another addition was a down-
load agent that automatically retries busy file transfer protocol sites at user-
defined time intervals until a successful down load is logged. A feature
called WebWhacker, that captures applications and allows users to copy multiple
pages or whole sites, was incorporated into the product. This new feature
provides a timely and cost-effective way to browse the Internet even while
disconnected.
Calendaring and Scheduling
In May 1994, CE Software, Inc., acquired the assets of Powercore, Inc., of
Manteno, Illinois. As a result, the Company acquired a number of calendaring
and scheduling applications which included both products developed under
contract with Original Equipment Manufacturers (OEM) and a commercial product.
The OEM products include Schedule+ for DOS developed under contract for
Microsoft and 9000-Link, and a Windows product developed under contract with
Sharp Corporation for use with the Sharp Wizard electronic organizer. The
commercial product was Network Scheduler.
Network Scheduler for DOS was commercially released by Powercore in 1989.
Powercore followed up with a version for Windows in 1990 and with subsequent
enhanced versions in 1991 and 1993. In March 1995, ten months after
acquiring Network Scheduler, the Company released an enhanced version of
Network Scheduler named TimeVision NS. TimeVision NS is a calendaring and
scheduling application that allows groups of people within a department or
throughout a company to schedule meetings with others, track tasks, and
schedule shared resources such as conference rooms and audiovisual equipment.
The product is available for Windows and DOS environments and operates over
virtually and PC Local Area Network.
TimeVision NS also allows for the sending of meeting notifications to other
non-TimeVision NS users through popular electronic mail systems. Electronic
mail systems supported by Network Scheduler include Lotus cc:Mail, Microsoft
Mail and Novell's Mail Handling System.
TimeVision NS may be used by individuals or by hundreds of people within a
company, but due to technical barriers within the product, its release into
larger enterprises has been more difficult than projected. The product is
available in 5-and 25-user packages with a suggested retail price for a 25-
user pack of $1,995.00.
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Product Support
CE believes that customer technical support is an important part of its
overall performance. As of September 30, 1996, the Company had 14 full-time
employees involved in technical support services, available to all customers
by electronic mail, Worldwide Web site, commercial bulletin board services,
telephone, or fax. Certain customers are charged an annual maintenance fee
for upgrades and support. Support services include explaining how the
customer's computer works, how their other software works in relation to CE
products, solving problems with software operation, and suggesting solutions
to business and personal computing issues.
Distribution and Marketing
The Company's products are primarily marketed through independent distributors
in the United States, through numerous independent dealers and distributors in
other countries, directly to large corporate accounts under site licensing
agreements, and directly to end-users through direct marketing campaigns.
Of the Company's total revenues for fiscal 1996, approximately 23% are through
two independent, domestic, nonexclusive distributors: Ingram Micro (19%) and
Merisel (3%). Generally, distributors purchase product at a 40% discount from
list prices. Of the Company's total revenues, an additional 5% and 3% are
through SRA and Prisma, independent, international, exclusive distributors
located in Japan and West Germany, respectively. International distribution
generally requires a larger discount, in return for various advertising and
customer registration duties demanded of the distributors.
The Company is involved in direct marketing through its sales and marketing
staff of 31 persons. Much of this work involves ongoing contacts with the
major distributors and dealers, and working with major corporate accounts on
site licensing agreements. Site licensing agreements accounted for
approximately 16% of the Company's revenue in fiscal 1996, and typically
involve substantial front-end payments for the privilege of using a specified
number of copies of the programs on their premises.
The Company gives its distributors industry-standard rights of return for
stock balancing and for defective products, and replacement rights when
products are upgraded to new versions. Distributor returns for stock
balancing and defective products have totaled approximately $443,000 and
$259,000 in fiscal years 1996 and 1995, respectively. A reserve for returns
has been recorded and was $31,100 and $56,900 at September 30, 1996 and 1995,
respectively. Returns exchanged for product upgrades and new version releases
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are not material because of the Company's low cost to replace such returns. Re-
from end users, for any reason, have not been significant.
Approximately 25% and 24% of the Company's sales in fiscal 1996 and 1995,
respectively, have been international, primarily through 16 international
distributors (see note 7 to the Consolidated Financial Statements). Several of
these are limited by contract as distributors for specified geographic areas.
The Company expects to continue emphasizing its international sales in upcoming
periods by providing additional translations of its products. It currently
provides translations of certain programs in French, German, Japanese, and
several other languages.
Product Development
The personal computer software industry is undergoing rapid technological
change, requiring a continuous high level of enhancement of existing products
and development of new products. The Company is committed to the creation of
new products and intends to continue the enhancement of existing products.
The Company's future financial performance will depend in part on the
successful development, completion, and introduction of new software products,
and of enhanced versions of existing products, and customer acceptance of those
products. In the past the Company has experienced delays in completing the
development of certain new products and there can be no assurance that it will
not encounter difficulties that could delay or prevent the successful marketing
of new products or enhancements of existing products. There also can
be no assurance that the Company's continuig development program will yield
positive results in the future or that such results can be obtained on a timely
basis or without the expenditure of substantial funds.
The majority of the Company's software products are developed internally,
although the Company has purchased and/or licensed software products from
independent authors and other software companies. As of September 30, 1996,
24 persons were engaged full time in product development. During fiscal years
1996, 1995, and 1994, the Company spent approximately $2,000,000, $2,498,000,
and $2,029,000, respectively, on product development and enhancement
activities, representing approximately 19%, 19%, and 18%, respectively, of net
revenues in each of these periods.
Competition
The personal computer software market is highly competitive and has been
subject to rapid change, which is expected to continue. The Company's
competitors include many independent software vendors that have financial,
marketing, and technological resources far in excess of those of the Company.
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Certain of these include Microsoft Corporation, Lotus, Netscape Communications,
Inc., Qualcomm, and Novell Corporation and its subsidiary, WordPerfect. A
number of independent smaller firms have created specialized products which
compete with the Company's products. In addition, certain computer manu-
facturers may devote significant resources to creating software, directly
competitive with products of the Company, for inclusion with their computers
and computer systems without additional charge to consumers.
The Company's messaging, personal application, and calendaring and scheduling
products are marketed primarily through the retail channel. All of these
products face competing products offering many similar features. The Company
believes that the principal competitive factors in the market include product
features and functions, ease of understanding and operating the software,
product reliability, price/performance characteristics, name recognition, and
availability and quality of support and training services. Price competition
could become an increasing factor in the personal computer software market,
which could, in turn, be expected to increase pressures on profit margins in the
future.
Product Protection
The Company regards its software as proprietary and attempts to protect it with
copyrights, trade secret laws, and internal nondisclosure safeguards, as well as
restrictions on disclosure and transferability that are incorporated into its
software license agreements. The Company licenses its software products to
customers rather than transferring title. Despite these restrictions, it may be
possible for competitors or users to copy aspects of the Company's products or
to obtain information which the Company regards as trade secrets. Computer
software generally can be patented only with difficulty, and existing copyright
laws afford only limited practical protection. Policing unauthorized use of
such a broadly disseminated product as computer software is difficult, and
software piracy can be expected to be a persistent problem for the packaged
software industry. These problems may be particularly acute in international
markets. However, because of the rapid pace of technological change in its
industry, such protections are less significant than factors such as knowledge,
ability, and experience of the Company's employees, frequent product
enhancement, and the timeliness and quality of Company support services.
Employees
As of September 30, 1996, the Company employed 93 full-time equivalent
employees (part-time employees in total working an aggregate of 40-hour work
week make one full-time equivalent employee). The development staff of 24
includes 10 quality assurance engineers and 12 computer programmers. Other
employees included 31 in domestic and international sales and marketing, 14 in
customer technical support, 5 in production and shipping capacities, 5 in
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product design and 14 in general and administrative. None of the Company's
employees is represented by a union. The Company has experienced no work
stoppages, and the Company believes that its employee relations are good.
Competition in the recruiting of personnel in the computer industry is intense.
The Company believes that its future success will depend in significant part on
its continued ability to hire and retain qualified management, marketing, and
technical employees, and independent contractors, as needed.
Risk Factors
Statements made within this Form 10-KSB which are forward-looking statements
involve risks and uncertainties that could render them materially different.
Risk factors that may impact future results include, but are not limited to,
the risk that product upgrades may not be effected on a timely basis, the
risk that such product upgrades may not achieve market acceptance, the risk
that competitors will develop similar products and reach the market first,
and the risk that the Company would not be able to fund its working capital
needs from cash flow, or be able to borrow under it line of credit.
Item 2: Properties
The Company's principal facility is a 22,000-square-foot office building which
the Company built in 1990 in West Des Moines, Iowa. In May 1994, the Company
borrowed $1,000,000 secured by a mortgage on this building. In February 1995,
the Company purchased the land adjacent to this building, giving the Company
an additional option for future expansion. The purchase price was $225,000.
In August 1996, the Company ended its month-to-month lease of 7,800 square feet
of additional office space located in a separate West Des Moines facility.
This space was no longer needed due to the consolidation of the Company's sales
and marketing force into the Company's principal location. Also in August
1996, the Company entered into a one-year lease agreement, with 3 one-year
options to renew, for the rental of 1,700 square feet of office space in a
facility adjacent to the Company's principal facility. The space was
immediately subleased to 4-Sight L.C., who was housed at the Company's principal
location prior to this arrangement.
Item 3: Legal Proceedings
The Company and its subsidiary, CE Software, Inc., are plaintiffs in a pending
legal proceeding against Powercore, Inc., and its principal owners. The
complaint alleges a breach of contract and fraud in connection with the sale of
Powercore's assets. The complaint was filed February 22, 1996, in the United
States District Court for the Northern District of Illinois, Eastern Division.
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Actual damages in excess of $7 million and punitive damages of $25 million are
claimed. Although management believes the claims are meritorious, no assurance
can be given that damages in such amounts, in any substantial amount, or in any
amount, will be recovered. The complaint is included herewith as Exhibit 10(k).
Item 4: Submission of Matters to a Vote of Security Holders
No matters were submitted to the stockholders in the fourth quarter of fiscal
1996.
PART II
Item 5: Market for Registrant's Common Equity and Related Stockholder
Matters
Incorporated by reference is data for shares of Class A common stock: market
prices per share, stock market, and number of stockholders in "Market for
Registrant's Common Equity and Related Stockholder Matters" on page 23 of the
Registrant's Annual Report to Stockholders for the fiscal year ended September
30, 1996.
Item 6: Management's Discussion and Analysis of Financial Condition and
Results of Operations
Incorporated by reference is "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 6 through 8 of the Registrant's
Annual Report to Stockholders for the fiscal year ended September 30, 1996.
Item 7: Financial Statements
Incorporated by reference are "Consolidated Financial Statements," "Notes to
Consolidated Financial Statements" and "Independent Auditors' Report" appearing
on pages 9 through 22 of the Registrant's Annual Report to Stockholders for the
fiscal year ended September 30, 1996.
Item 8: Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Not applicable.
page 12
<PAGE>
PART III
Item 9: Directors and Executive Officers of the Registrant
Information with respect to this Item may be found in the section captioned
"Nominees for Elections as Directors" appearing in the Proxy Statement to be
delivered to stockholders in connection with the Annual Meeting of Stockholders
to be held February 28, 1997. Such information is incorporated herein by
reference.
Information with respect to delinquent Form 4 filings may be found in the
section captioned "Security Ownership of Certain Beneficial Owners and
Management" appearing in the Proxy Statement to be delivered to stockholder
in connection with the Annual Meeting of Stockholders to be held February 28,
1997. Such information is incorporated herein by reference.
Item 10: Executive Compensation
Information with respect to this Item may be found in the section captioned
"Executive Compensation" appearing in the Proxy Statement to be delivered to
stockholders in connection with the Annual Meeting of Stockholders to be held
February 28, 1997. Such information is incorporated herein by reference.
Item 11: Security Ownership of Certain Beneficial Owners and
Management
Information with respect to this Item may be found in the section captioned
"Security Ownership of Certain Beneficial Owners and Management" appearing in
the Proxy Statement to be delivered to stockholders in connection with the
Annual Meeting of Stockholders to be held February 28, 1997. Such information
is incorporated herein by reference.
Item 12: Certain Relationships and Related Transactions
Information with respect to this Item may be found in the section captioned
"Executive Compensation" appearing in the Proxy Statement to be delivered to
stockholders in connection with the Annual Meeting of Stockholders to be held
February 28, 1997. Such information is incorporated herein by reference.
page 13
<PAGE>
PART IV
Item 13: Exhibits, Financial Statements, and Reports on Form 8-K
(a) The following documents are filed as a part of this Report:
1. Financial Statements
The following consolidated financial statements of CE Software Holdings, Inc.,
and subsidiaries, and the Independent Auditors' Report issued thereon, appear
on pages 9 through 22 of the Registrant's Annual Report to stockholders for
the fiscal year ended September 30, 1996, and are incorporated by reference in
Part II, Item 7:
Independent Auditors' Report.
Consolidated Balance Sheets, as of September 30, 1996 and 1995.
Consolidated Statements of Operations, for the three years ended
September 30, 1996.
Consolidated Statements of Stockholders' Equity, for the three years
ended September 30, 1996.
Consolidated Statements of Cash Flows, for the three years ended
September 30, 1996.
Notes to Consolidated Financial Statements.
2. Exhibits.............................................. Page 17
The following exhibits are filed as part of, or incorporated by reference into,
this Report:
3(a) I Certificate of Incorporation
3(b) I Amendment dated April 10, 1990, to Certificate of Incorporation
3(c) I Amendment dated April 19, 1990, to Certificate of Incorporation
3(d) I Bylaws
4(a) I Form of Stock Certificate
4(b) I CE Software Holdings, Inc., 1990 Stock Option Plan
4(c) I Representative Form of Incentive Stock Option
4(d) II 1992 Stock Option Plan
4(e) II Nonemployee Directors Stock Option Plan
10(a) I Agreement and Plan of Reorganization dated February 15, 1990,
between Anubis Corp., CE Software, Inc., Richard Skeie, Donald
Brown, and John Kirk on his own behalf and as custodian on
behalf of his minor children
10(b) I Profit Sharing Plan of CE Software, Inc.
page 14
<PAGE>
10(c) I Form of CE Software, Inc., Noncompete-Nondisclosure
Agreement for Significant Employees
10(d) III Amended and restated Executive Employment Agreement with
Stanford H. Goodman, including Stock Purchase Agreement and
Non-Recourse Promissory Note
10(e) IV Asset Purchase Agreement
10(f) IV Registration Rights Agreement
10(g) IV Indemnity Agreement
10(h) IV Business Loan Agreement
10(i) V Amended Non-Recourse Promissory Note with Stanford H.Goodman
10(j) VI First Amendment to Amended and Restated Executive Employment
Agreement with Stanford H. Goodman
10(k) VII Powercore, Inc., Lawsuit
10(l) Settlement Agreement and General Release with Stanford H. Goodman
10(m) Unit Purchase and Debt Payment Agreement with 4-Sight plc
10(n) Agreement to establish Net Target
11 Statement Re: Computation of per share (loss) earnings
22 Subsidiaries of the Registrant
23 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule - for SEC filing only
Legend
I Incorporated into this Report by reference to the Registrant's
Registration Statement on Form S-18 which became effective August 31,
1990, (Registration No. 33-36008C).
II Incorporated into this Report by reference to the Registrant's
Registration Statement on Form S-8 which became effective November
6, 1992, (Registration # 33-54210).
III Incorporated into this Report by reference to the exhibits filed as part
of the Registrant's Form 10-KSB for the fiscal year ended September 30,
1993.
IV Incorporated into this Report by reference to the exhibits filed as part
of the Registrant's Form 8-K filed on May 24, 1994.
V Incorporated into this Report by reference to the exhibits filed as part
of the Registrant's Form 10-KSB for the fiscal year ended September 30,
1994.
VI Incorporated into this Report by reference to the exhibits filed as part
of the Registrant's Form 10-KSB for the fiscal year ended September
30, 1995.
VII Incorporated into this Report by reference to the exhibits filed as part
of the Registrant's Form 10-QSB for the quarter ended March 31, 1996.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of fiscal 1996.
page 15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CE SOFTWARE HOLDINGS, INC.
(Registrant)
/s/ Richard A. Skeie
By___________________________
(Richard A. Skeie, President, Chief
Executive Officer and Director)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated below.
Signature Title Date
/s/ Richard A. Skeie 12/20/96
_________________________ President, Chief Executive ___________
(Richard A. Skeie) Officer and Director
/s/ John S. Kirk 12/20/96
_________________________ Secretary and Treasurer, ___________
(John S. Kirk) Chief Financial Officer,
Chief Accounting Officer, and
Director
/s/ David J. Lundquist 12/20/96
_________________________ Director ___________
(David J. Lundquist)
page 16
<PAGE>
EXHIBIT INDEX
Exhibit Reference (*)
Number Description or Page #
3(a) Certificate of Incorporation I
3(b) Amendment dated April 10, 1990, to Certificate of Incorporation I
3(c) Amendment dated April 19, 1990, to Certificate of Incorporation I
3(d) Bylaws I
4(a) Form of Stock Certificate I
4(b) CE Software Holdings, Inc., 1990 Stock Option Plan I
4(c) Representative Form of Incentive Stock Option I
4(d) 1992 Stock Option Plan II
4(e) Nonemployee Director Stock Option Plan II
10(a) Agreement and Plan of Reorganization dated February 15, 1990,
between Anubis Corp., CE Software, Inc., Richard Skeie, Donald
Brown, and John Kirk on his own behalf and as custodian on
behalf of his minor children I
10(b) Profit Sharing Plan of CE Software, Inc. I
10(c) Form of CE Software, Inc., Noncompete-Nondisclosure
Agreement for Significant Employees I
10(d) Amended and restated Executive Employment Agreement with
Stanford H. Goodman, including Stock Purchase Agreement and
Non-Recourse Promissory Note III
10(e) Asset Purchase Agreement with Powercore, Inc.,
dated May 9, 1994 IV
10(f) Registration Rights Agreement with Powercore, Inc., dated
May 9, 1994 IV
10(g) Indemnity Agreement with Powercore, Inc., dated May 9, 1994 IV
10(h) Business Loan Agreement with Brenton Bank dated May 6, 1994 IV
10(i) Amended Non-Recourse Promissory Note with Stanford H.Goodman
dated July 20, 1994 V
10(j) First Amendment to Amended and Restated Executive Employee
Agreement with Stanford H. Goodman dated February 24, 1995 VI
10(k) Powercore, Inc., Lawsuit VII
10(l) Settlement Agreement and General Release with Stanford H.
Goodman dated September 30, 1996 Page 19
10(m) Unit Purchase and Debt Payment Agreement with 4-Sight Inc.
dated August 31, 1996 Page 28
10(n) Agreement to establish Net Target dated September 30, 1996 Page 31
11 Statement Re: Computation of (loss) earnings per share Page 39
22 Subsidiaries of the Registrant Page 40
23 Consent of KPMG Peat Marwick LLP Page 41
27 Financial Data Schedule Page 42
* See legend on following page
page 17
<PAGE>
EXHIBIT INDEX
(continued)
Legend
I Incorporated into this Report by reference to the Registrant's
Registration Statement on Form S-18 which became effective
August 31, 1990, (Registration No. 33-36008C).
II Incorporated into this Report by reference to the Registrant's
Registration Statement on Form S-8 which became effective
November 6, 1992, (Registration # 33-54210).
III Incorporated into this Report by reference to the exhibits filed as
part of the Registrant's Form 10-KSB for the fiscal year ended
September 30, 1993.
IV Incorporated into this Report by reference to the exhibits filed as
part of the Registrant's Form 8-K filed on May 24, 1994.
V Incorporated into this Report by reference to the exhibits filed as
part of the Registrant's Form 10-KSB for the fiscal year ended
September 30, 1994.
VI Incorporated into this Report by reference to the exhibits filed as
part of the Registrant's Form 10-KSB for the fiscal year ended
September 30, 1995.
VII Incorporated into this Report by reference to the exhibits filed as
part of the Registrant's Form 10-QSB for the quarter ended
March 31, 1996.
page 18
<PAGE>
Exhibit 10(l)
SETTLEMENT AGREEMENT AND GENERAL RELEASE
THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE ("Agreement
and Release") is made and entered into between CE Software, Inc., an Iowa
corporation, CE Distributing Inc., an Iowa corporation, CE Software Holdings,
Inc., a Delaware corporation, and the officers, directors, and agents thereof
(collectively "CES") and Stanford H. Goodman ("Goodman") (CES and Goodman,
jointly the "Parties").
RECITALS:
WHEREAS, Goodman and CES desire now to settle fully and finally all matters
between them, relating to Goodman's employment with CES
AND WHEREAS, Goodman has tendered, and CES has accepted, his resignations
effective June 18 1996 as a director, and as President and CEO of CE Software,
Inc., CE Software FSC, Inc. and CE Distributing, Inc.;
NOW, THEREFORE, in consideration of the premises and mutual promises herein
contained, it is agreed as follows:
1. Payment. CES agrees to pay Goodman the sum of Sixty-eight Thousand
Three Hundred Thirty-six dollars and no cents ($68,336.00), of which Forty-five
Thousand Seven Hundred Fifty dollars and no cents ($45,750.00) represents three
(3) months severance pay and Twenty-two Thousand Five Hundred Eighty-six dollars
and no cents ($22,586.00) represents a cash bonus for taxes which may arise by
reason of the forgiveness of cash advances as referenced in section five (5)
below. The above amounts shall be paid to Goodman on or before September
30, 1996.
page 19
<PAGE>
Exhibit 10(l)
2. Options Goodman retains all options for shares of stock of CE
Software Holdings, Inc. to which he may be entitled under the terms of the
1990 or the 1992 CE Software Holdings, Inc. Non-Qualified Employee Stock
Option Plans. All options to which Goodman may be entitled are subject to
paragraph 3(e) of the Amended and Restated Executive Employment Agreement dated
August 12, 1993 ("Employment Agreement").
3. Benefits. Goodman's group health insurance will remain in effect
until midnight on August 31, 1996, at which time such insurance coverage will
terminate unless Goodman determines, at his option and expense, to continue the
coverage under applicable state or federal laws. All employment benefits not
referenced herein, whether direct or indirect, shall cease on August 15, 1996.
4. Loan to Goodman. Pursuant to the terms of the Employment Agreement
and the Stock Purchase and Buy-Sell Agreement dated August 12, 1993 ("Stock
Purchase Agreement") Goodman has agreed to purchase One Hundred Twenty-five
Thousand (125,000) shares of restricted Common Stock of CE Software Holdings,
Inc. (the "Loan Shares") for a total purchase price of Four Hundred Twenty-one
Thousand Eight Hundred Seventy-five dollars and no cents ($421,875.00). This
amount has been paid to CE Software Holdings, Inc. in cash of Two Thousand
Five Hundred dollars and no cents ($2,500.00) and a non-interest bearing
promissory note dated July 26, 1994 for Four Hundred Nineteen Thousand Three
Hundred Seventy-five dollars and no cents ($419,375.00) (the "Note"). The Note
remains unpaid in its entirety and CES has elected to repurchase from Goodman
all of the Loan Shares in accordance with paragraph three
page 20
<PAGE>
Exhibit 10(l)
(3) of the Stock Purchase Agreement. The repurchase price shall be Four Hundred
Twenty-one Thousand Eight Hundred Seventy-five dollars and no cents
($421,875.00), which amount shall be paid to Goodman in cash of Two Thousand
Five Hundred dollars and no cents ($2,500.00) and forgiveness of the Four
Hundred Nineteen Thousand Three Hundred Seventy-five dollars and no cents
($419,375.00) remaining payable under the Note. Any income taxes due from
Goodman as a result of imputed income arising from the non-interest bearing
nature of the Note shall be the sole responsibility of Goodman.
5. Advances to Goodman. As of the date of this Agreement, CES shall
have provided cash advances to Goodman on December 27, 1995 in the amount of
Twelve Thousand Three Hundred Sixty-one dollars ($12,361); on June 27, 1996 in
the amount of Eleven Thousand Five Hundred Forty-one dollars ($11,541); and
on August 30, 1996 in the amount of Six Thousand Six Hundred Fifty-six dollars
($6,656), for a total amount of Thirty Thousand Five Hundred Fifty-eight dollars
($30,558) (the "Advances"). CES hereby forgives the indebtedness from Goodman
to CES resulting from the Advances; waives any and all claim or right it may
have to recover from Goodman the amount, including any interest thereon, of the
Advances; and releases Goodman from any and all obligation to repay the
Advances.
6. Settlement. All payments, options and benefits referenced in
paragraphs one (1) through three (3) above are tendered in full, final and
complete settlement of any and all of Goodman's claims against CES including,
but not limited to, any claims for reinstatement, back pay, accrued vacation,
page 21
<PAGE>
compensatory damages, punitive damages, liquidated damages, interest, attorneys'
fees, and expenses and cost which Goodman or his attorneys may have incurred in
connection with his employment with CES.
7. Voluntary Resignations By his execution of this Agreement and
Release, Goodman hereby confirms his voluntary resignations. as a director, and
as President and CEO of CE Software, Inc., CE Software FSC, Inc. and CE
Distributing, Inc. effective June 18, 1996. CES, by its execution of this
Agreement and Release, hereby confirms its acceptance of such voluntary
resignations effective on such date. This voluntary resignation does not
include Goodman's position as a member of the Board of Directors of CE Software
Holdings, Inc.
8. Non-competition. During the term of the Employment Agreement,
Goodman has obtained knowledge and familiarity with the operations of CES, the
conduct of its business, its operating and marketing procedures, the identity
and requirements of its customers and proprietary information and trade secrets,
which must be safeguarded. For a period commencing on the date of this
Agreement and continuing for a period of two (2) years thereafter, Goodman, or
any person or entity controlled by Goodman, will not directly or indirectly:
(a) own, manage, operate, control, be employed or engaged by, lend to, or
engage in the following, in any manner, directly or indirectly, including in the
capacity of a sole proprietor or a shareholder, officer, employee, agent,
partner or director of any person, firm, corporation or organization, or as a
consultant or otherwise, whether for compensation or otherwise, anywhere within
the United States or in any other country where CES's products are being sold;
page 22
<PAGE>
Exhibit 10(l)
any business or entity which designs, develops, manufactures, seany business or
entity which designs, develops, manufactures, sells, repairs,
distributes or otherwise promotes the design, development, manufacture, sale,
repair or distribution of any products or services in substantial and direct
competition with any CES product or CES service that is or has been available or
announced as of the date of this Agreement; provided, however, that the
foregoing shall not be deemed to prohibit Goodman's ownership of stock in any
publicly owned corporation so long as such ownership, directly and indirectly,
when aggregated with the direct and indirect ownership of all members of such
Contractor's family, does not exceed five percent (5%) of the total outstanding
stock of such publicly owned corporation, measured by reference to either market
value of voting power.
(b) except as otherwise specifically agreed in writing between Goodman
and CES, solicit any employee, independent contractor or consultant of CES to
terminate his or her employment with CES, or to enter into employment with any
other person, firm or corporations; or,
(c) induce, persuade or entice any customer or supplier of CES to
terminate its relationship (contractual or otherwise) with CES, or to enter into
any relationship with any other person, firm or corporation engaged in a
business described in clause (a) above; or,
(d) in any way slander, libel or through any other means take any action
which may be detrimental to CES, its products, personnel or operations.
During the above non-competition period, Goodman shall not approach any
person, corporation or other entity for any such purpose or action described in
this Section or authorize or cooperate with the taking of any such action by any
other person, corporation or other entity.
page 23
<PAGE>
Exhibit 10(l)
9. Severance of Employment. Goodman agrees and recognizes that his
employment relationship with CES has been permanently and irrevocably severed
and that CES has no obligation, contractual or otherwise, to rehire, reemploy,
recall or hire Goodman in the future. Goodman remains obligated to furnish all
expense reports and supporting documents requested by CES in the ordinary course
of business.
10. Comprehensive Release. In consideration of the payments set forth
herein, Goodman hereby irrevocably and unconditionally releases, remisses and
forever discharges CES, and each of CES's directors, officers, agents,
employees, representatives, attorneys and its and their predecessors,
successors, heirs, executors, officers, and assigns, and all persons acting by,
through, under or in concert with any of them (collectively "Releasees"), of and
from any and all claims, actions, causes of actions, suits, debts, charges,
complaints, grievances, liabilities, obligations, promises, agreements,
controversies, damages, and expenses (including attorneys' fees and costs
actually incurred), of any nature whatsoever, in law or in equity, which he ever
had, now has, or he and his heirs, executors and administrators hereinafter may
have against each or any of the Releasees, from the beginning of time to the
date of this Agreement and Release, by reason of any claims against CES arising
from, or related to, Goodman's employment with CES or the termination of that
employment; any claim filed pursuant to the federal Civil Rights Acts of 1866
and 1871; any claim alleging CES violated Title VII of the Civil Rights Act of
1964, 42 U.S.C. 2000e et seq.; any claim alleging the violation of the federal
Age Discrimination in Employment Act; any claim alleging discrimination in vio-
lation of Iowa Code Chapter 601A; any claim under Iowa Code Chapter 91A; and any
page 24
<PAGE>
Exhibit 10(l)
claim alleging breach of contract, wrongful termination, intentional or
negligent infliction of emotional distress, defamation, promissory estoppel or
wrongful interference with contractual or business relations under Iowa common
law, except any action to enforce the terms and conditions of this Agreement
and Release. Goodman also expressly acknowledges that this Agreement and
Release is intended to include in its effect, without limitation, all claims
which have arisen and of which Goodman knows or does not know, should have
known, had reason to know or suspects to exist in Goodman's favor at the time of
execution hereof (except as otherwise provided in this paragraph), that this
Agreement and Release provides for the extinguishment of any such claim or
claims.
11. Release of Goodman. CES hereby irrevocably and unconditionally
releases, remisses and forever discharges Goodman of and from any and all
claims, actions, causes of action, suits, debts, charges, complaints,
grievances, liabilities, obligations, promises, agreements, controversies,
damages, and expenses (including attorneys' fees and costs actually incurred),
of any nature whatsoever, in law or in equity, which it ever had, now has or may
have against Goodman, from the beginning of time to the date of this Agreement
and Release, by reason of any claims against Goodman arising from, or related
to, the failure, or alleged failure, to perform any duty or obligation under
the Employment Agreement or the Stock Purchase Agreement.
12. Agreement Not to Initiate Legal Action. The Parties mutually agree,
promise and covenant that neither Party , nor any person, organization or any
other entity acting on such Party's behalf will file, charge, claim, sue or
cause or permit to be filed, charged or claimed, any action for damages or other
page 25
<PAGE>
Exhibit 10(l)
relief (including injunctive, declaratory, monetary or administrative relief)
against the other, the other's directors, administrators, employees, agents and
representatives, involving any matter occurring in the past up to the date of
this Agreement and Release or involving any continuing effects of actions or
practices which concern Goodman's employment with CES and arose prior to the
date of this Agreement and Release, and involving and based upon any claims,
demands, causes of action, obligations, damages or liabilities which are
otherwise released pursuant to the terms and conditions of this Agreement and
Release.
13. Voluntary Agreement. Goodman represents and certifies that he has
carefully read and fully understands all of the provisions and effects of this
Agreement and Release, and has thoroughly discussed all aspects of this
Agreement and Release with his attorney, that Goodman is voluntarily entering
into this Agreement and Release, and that neither CES nor its directors,
administrators, agents, representatives or attorneys, made any representations
14. Choice of Law. This Agreement and Release is made and entered into
in the State of Iowa, and shall in all respects be interpreted, enforced and
governed by the laws of this State. The language of all parts of this Agreement
and Release shall in all cases be construed as a whole, according to its fair
meaning, and not strictly for or against any of the parties.
15. Severability of Terms. Should any provision of this Agreement and
Release be determined by any court to be illegal or invalid, the validity of the
remaining parts, terms or provisions shall not be affected thereby and said
illegal or invalid part, term, or provision shall be deemed not to be a part of
this Agreement and Release.
page 26
<PAGE>
Exhibit 10(l)
16. Integrated Agreement. This Agreement and Release sets forth the
entire agreement between the parties hereto, and supersedes any and all prior
agreements or understanding between the parties hereto pertaining to the subject
matter hereof.
PLEASE READ CAREFULLY. THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE INCLUDES
A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the Goodman
and CES have executed the foregoing Agreement and Release.
Executed on this 30 day of September, 1996.
STANFORD H. GOODMAN
/s/ Ford H. Goodman
__________________________________
CE SOFTWARE, INC. CE SOFTWARE HOLDINGS, INC.
/s/ Curtis W. Lack /s/ John S. Kirk
By_________________________________ By__________________________________
CFO/Treasurer Secretary/Treasurer
Title______________________________ Title______________________________
page 27
<PAGE>
Exhibit 10(m)
Unit Purchase and Debt Payment Agreement
Agreement (the "Agreement") made this 31 day of August, 1996, by and
between CE Distributing, Inc., an Iowa corporation (the "Seller"), 4 Sight Inc.,
a Delaware corporation (the "Buyer"), 4-Sight plc, a United Kingdom public
limited company (the "Guarantor") relating to the sale by Seller to Buyer of
units ("Units") of interest in 4-Sight, L.C., (formerly known as CommForce,
L.C.) an Iowa limited liability company ("4-Sight, L.C."), and the terms for
payment and collateralization of indebtedness (the "Debt" as defined below) of
Buyer to Seller and the terms of service to be provided by CE Software, Inc., an
Iowa corporation ("CE Software") affiliated with Seller.
1. AGREEMENT TO SELL. Seller agrees to sell to Buyer Nine Hundred
Ninety-nine (999) Units of the one thousand (1,000) Units owned by Seller, on
the terms and conditions herein stated.
2. AGREEMENT TO BUY. Buyer agrees to buy the Units from Seller on the terms
and conditions hereinafter stated.
3. GUARANTY. Guarantor agrees to guaranty the Debt of Buyer represented by the
Note (as hereinafter defined) on the terms and conditions set forth in the form
of Guaranty attached hereto as Exhibit A.
4. PURCHASE PRICE. The Purchase Price of the Units shall consist of a Cash
Purchase Price of two hundred fifty thousand dollars ($250,000) and the
assumption of the Debt (as defined herein). Buyer shall pay the Cash Purchase
Price to Seller by certified or bank cashier's check (or other means acceptable
to Seller) on the Closing Date (as hereinafter defined). In addition, 4 Sight
Inc. is assuming the indebtedness of 4-Sight, L.C. to Seller in an amount which,
as of August 31, 1996 equals one million four hundred one thousand dollars
($1,401,000), and which, as adjusted for interest, accruals, additional
advances and payments to the Closing Date (as hereinafter defined) is herein
referenced as the "Debt".
5. DEBT REPAYMENT. On the Closing Date, Buyer will pay to Seller, by certified
or bank cashier's check (or other means acceptable to Seller) one-third of the
Debt and deliver to Seller 4 Sight Inc.'s promissory note (the "Note") in the
form of Exhibit B attached hereto for the balance of the Debt, payable in two
equal installments on December 31, 1996 and March 31, 1997, together with
interest thereon as set forth in the Note.
6. INDEMNIFICATION. CE Software and CE Software Holdings, Inc., a Delaware
corporation, the parent corporation of CE Software and Seller, have, from time
to time, guaranteed the obligations of Buyer and of its employees (e.g.
page 28
<PAGE>
Exhibit 10(m)
car leases and credit cards). Buyer agrees to fully indemnify CE Software and
CE Software Holdings, Inc., or any officer, director or employee of either, for
any and all actions, suits, proceedings, complaints, claims, demands,
injunctions, judgments, orders, decrees, damages, penalties, costs, amounts paid
in settlement, liabilities, obligations, expenses, and fees, including court
costs and attorneys' fees and expenses, resulting from, arising out of, or
relating to any such guaranty.
7. PLEDGE. On the Closing Date, Seller will sign and deliver to the Buyer an
assignment (the "Assignment") assigning ownership of the Units to the Buyer and
Buyer will then immediately pledge the Units and the Assignment to Seller as
collateral for the obligations set forth herein and in the Note, pursuant to the
terms of the Pledge Agreement in the form of Exhibit C attached hereto.
8. REPRESENTATIONS OF SELLER. Seller represents that it has, and on the
Closing Date will have, good title to the Units, free and clear of all liens
and encumbrances.
9. REPRESENTATIONS OF BUYER. Buyer represents that it is acquiring the Units
for purposes of investment and not with a view to the distribution thereof; and
that it is fully knowledgeable concerning the condition and affairs of 4-Sight,
L.C.
10. CLOSING DATE. The Closing Date shall be the 31st day of August, 1996, or
on such other date and time as the parties hereto may agree in writing, and is
to be effective as of July 1, 1996.
11. CONTINUED SERVICES. Seller or its affiliates shall continue to provide
production, shipping and accounting services to 4-Sight, L.C. of the same
nature provided on the date hereof, and allow 4-Sight, L.C. to use Seller's
Aurum facilities (or equivalent) for production, phone system connection, ISDN,
Internet access and help desk. Buyer will pay fees for such services to Seller
at the level currently agreed. Either party may terminate the arrangements for
services described in this paragraph by giving the other party ninety (90) days
notice of termination. The fee arrangement for such services may be changed
upon ninety (90) days notice of termination. The fee arrangement for such
services may only be changed upon ninety (90) days notice to the other party.
12. WAIVER OF BUY-SELL AGREEMENT RIGHTS. Seller, Buyer, and Guarantor,
comprising all the members of 4-Sight, L.C. on behalf of themselves and on
behalf of 4-Sight, L.C. and 4-Sight, L.C.'s managers hereby waive all
requirements of timely notice of change of ownership in 4-Sight, L.C., waive all
rights to purchase the Units pursuant to the Buy-Sell Agreement between the
members of 4-Sight, L.C., waive any right or requirement to valuation of the
Units, waive all requirements that the managers of 4-Sight, L.C. approve of such
page 29
<PAGE>
Exhibit 10(m)
transfer of ownership, and accepts that in all other respects this transfer of
Units satisfies the requirements of the Member Buy-Sell Agreement dated November
12, 1992 among the Seller and Guarantor and to which Buyer became a party on
June 29, 1995.
13. SEPARATE SIGNATURES. This document may be executed on separate signature
pages by the parties and the separate signatures of all the parties shall be
considered complete execution of the Agreement.
14. MISCELLANEOUS. This Agreement is governed by the laws of the State of
Iowa. Each party consents to the jurisdiction of the state and federal courts
of the State of Iowa with respect to any litigation relating to the Agreement.
All parties waive trial by jury in any proceeding relating to this Agreement.
Each party waives any right to receive punitive or compensatory damages based on
an action for breach of this Agreement. No party to this Agreement may assign
this Agreement without the written consent of each other party, which consent
shall not be unreasonably withheld. No assignment shall relieve the assigning
party of liability for its obligations under the Agreement. This Agreement may
be amended or modified only by an instrument in writing signed by all parties.
4-Sight plc, Guarantor 4 Sight Inc., Buyer
/s/ Andrew S. Baird /s/ A. Titley
By: __________________________ By: ________________________
CE Software, Inc. CE Distributing, Inc., Seller
/s/ Richard A. Skeie /s/ Richard A. Skeie
By: __________________________ By: ________________________
With concurrence and approval by the Managers of 4-Sight, L.C.:
/s/ David Townend /s/ Richard A. Skeie
By: __________________________ By: _________________________
David Townend Richard A. Skeie
/s/ Andrew S. Baird /s/ John S. Kirk
By: _________________________ By: _________________________
Andrew Baird John S. Kirk
page 30
<PAGE>
Exhibit 10(n)
AGREEMENT
THIS AGREEMENT is made and entered into on the 30th day of September, 1996 by
and among CE Software Holdings, Inc., a Delaware Corporation; CE Software, Inc.,
an Iowa Corporation and a wholly owned subsidiary of CE Software Holdings, Inc.
(herinafter CE Software Holdings, Inc. and CE Software, Inc. are referenced
jointly as "CEH"; Stanford H. Goodman, a resident of the state of Missouri
("Goodman") and Scott Wiener, a resident of the state of California ("Wiener").
WHEREAS, CEH, Goodman and Wiener desire to commence a business enterprise
which enterprise shall be based upon the combined skills, experience and re-
sources of CEH, Goodman and Wiener (hereinafter referenced as "Net Target"), and
WHEREAS, the parties desire to establish the ownership interests in
and general agreements for the operations of Net Target.
NOW, THEREFORE, in consideration of the mutual conditions and covenants
contained in this Agreement, and for other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, it is agreed as
follows:
1. Incorporation and Directors. The parties shall cause Net Target to be
incorporated under the laws of the state of Delaware, and designated as a "C"
corporation for purposes of the Internal Revenue Code of 1986 (as amended). The
Certificate of Incorporation of Net Target (the "Certificate") shall provide
that Net Target shall be governed by a Board of Directors (the "Net Target
Board") of no less than three persons the initial number of which shall be three
(3) and the initial members of which shall be Goodman, Wiener and an individual
appointed by the Board of Directors of CE Software, Inc. The parties shall take
all steps necessary to insure that Net Target is organized in compliance with
and bound to the terms and conditions of this Agreement.
2. CEH Expenditure. Commencing in April 1993 and continuing to
the date of this Agreement, CEH has devoted considerable time and resources on
the Net Target project, a/k/a TargetCast, including, but not limited to the
research for and development of the software technology upon which Net Target
will build its operations (collectively, the time and resources devoted to Net
Target, including without limitation all work performed by the Engineers after
the date of this Agreement as contemplated by Section three (3), and the
resulting (and any interim) software and software technology are referenced
herein as the "Project"). Prior to execution of this Agreement, ownership of
the Project has rested solely with CEH. Upon execution of this Agreement, and
subject to the license granted in Section ten (10), CEH agrees (a) to
contribute to Net Target an additional Seventy-five Thousand dollars
($75,000.00)and does hereby contribute its
page 31
<PAGE>
Exhibit 10(n)
entire interest in the Project, and (b) to assign and hereby does assign to Net
Target all rights, including without limitation all copyrights, patent rights,
trade secret and know-how rights in and to or used or embodied in the Project,
or the research and development thereof, the trademark "TargetCast", and all
other materials and information developed as part of the Project by or on behalf
of CEH. CEH acknowledges that it has never had and will not have any right
or interest in the mark "TargetGuide." Of the additional Seventy-five Thousand
dollars ($75,000.00) CEH has agreed to contribute to the Project Six Thousand
Six Hundred Thirty-nine dollars ($6,639.00) shall be paid to Net Target and the
remainder shall be held by CEH and used to reimburse CEH for funds expended on
the Project, from and after August 1, 1996 to the date of this Agreement, in the
amount of Thirty-two Thousand Three Hundred Sixty-one dollars ($32,361.00) and
as a prepayment of employment expenses (120% of gross wages) of the Engineers
(as defined in Section three (3) below) up to and including December 16, 1996.
Any funds in excess of the amount needed to reimburse CEH for such expenditures
to and including December 16, 1996, shall be paid to Net Target. CEH shall
promptly provide Net Target with appropriate tangible manifestations of all the
foregoing, will take such actions and execute such documents as may be necessary
or desirable to evidence, perfect, create, enforce, maintain or defend the
rights of Net Target in and to the foregoing, and will keep confidential and
(except as allowed in the license set out in Section ten (10) of this Agreement)
not use any non-public information within the foregoing.
3. CEH Employees. The software engineers of CEH who are working with
the Project as of the date of this Agreement, Viktor Spivak and Alex Rankov,
(the "Engineers") will, subject to the consent of the Engineers and of CEH,
remain employees of CEH but shall work only on the Project. Commencing August
1, 1996 and continuing during such time as the Engineers remain employees of CEH
and are working for Net Target, Net Target will reimburse CEH monthly in an
amount equal to 120% of gross wages earned by the Engineers as employees of CEH.
The Engineers will not receive a raise from CEH from the salary in effect on
September 1, 1996 without the prior approval of the Board of Directors of Net
Target. During the term of this Agreement, Net Target may at any time solicit
the employment of such Engineers but shall not solicit the employment or
services of, or recruit, any other CEH employee.
4. Shares. The Certificate shall provide that Net Target is authorized
to issue no less than ten Million five hundred thousand (10,500,000) shares of
Common Stock. Immediately upon the incorporation of Net Target, Goodman,
Wiener and CEH shall make contributions and Net Target shall issue shares of its
Common Stock as follows:
A. In consideration of a cash capital contribution of fifty thousand
dollars ($50,000), Goodman shall receive seven hundred sixty-five thousand
(765,000) shares of Common Stock, which purchase and sale of Common Stock shall
be evidenced by a stock purchase agreement, in substantially the form attached
hereto as Exhibit B. Each of the parties to this Agreement acknowledges
page 32
<PAGE>
Exhibit 10(n)
and agrees that the consideration being paid by Mr. Goodman for the shares
of Common Stock (as described in the paragraph) represents the fair market value
of the Common Stock as of the date of this Agreement.
B. In consideration of a cash capital contribution of fifty thousand
dollars ($50,000), Wiener shall receive seven hundred sixty-five thousand
(765,000) shares of Common Stock, which purchase and sale of Common Stock
shall be evidenced by a stock purchase agreement, in substantially the form
attached hereto as Exhibit B. Each of the parties to this Agreement
acknowledges and agrees that the consideration being paid by Wiener for the
shares of Common Stock (as described in the paragraph) represents the fair
market value of the Common Stock as of the date of this Agreement.
C. In consideration of the additional capital contribution of
seventy-five thousand dollars ($75,000) and the assignment of the Project to
Net Target, CEH shall receive One Million four hundred seventy thousand
(1,470,000) shares of Common Stock, which purchase and sale of Common Stock
shall be evidenced by a stock purchase agreement, in substantially the form
attached hereto as Exhibit B.
5. Target Date. The Target Date shall be March 31, 1997, or such other
later date as requested jointly by Goodman and Wiener and approved by CEH.
CEH's approval of such other later date shall not be withheld unless, in the
reasonable determination of the Board of Directors of CE Software Holdings,
Inc., the granting of such approval would have a materially adverse effect on
CEH, Net Target or the shareholders of CEH or Net Target. CEH acknowledges
that, for purposes of this Section five (5), its recording of expenses in the
amount of up to Seventy-five Thousand dollars ($75,000) on its income statement
as a direct or indirect result of its purchase of shares of Common Stock of Net
Target shall in no event be determined to have a materially adverse effect on
CEH or the shareholders of CEH.
6. Venture Capital. Goodman and Wiener shall undertake to raise funds for
Net Target from outside investors ("Venture Capitalists") in exchange for shares
of stock of Net Target to be issued to the Venture Capitalists at a price no
less than thirty-three cents ($0.33) per share (or, in the event the shares
shall be issued in a class or series which is either voting stock or convertible
to voting stock, the price per share shall be the equivalent of thirty-three
cents ($0.33) per vote). Funds received from Venture Capitalists shall be held
in escrow and no shares of stock of Net Target shall be issued unless and until
Goodman and Wiener are successful, on or before the Target Date, in obtaining
funds for Net Target from Venture Capitalists in a minimum amount of either (i)
five hundred thousand dollars ($500,000) from a single source or (ii) seven
hundred fifty thousand dollars ($750,000) from two sources (the amount specified
in (i) or (ii), whichever is applicable, will be referenced herein as the
page 33
<PAGE>
Exhibit 10(n)
"Minimum Amount"). Funds shall be deemed to have come from a single source if
such funds are received from an investor which, as a condition of its investment
in Net Target, has required and received the right to exercise oversight control
of Net Target. Such oversight control shall include, but not be limited to, the
right to elect one or more members of the Board of Directors of Net Target. For
purposes of this Section six (6), an investor may be an individual, a
corporation, a partnership, a limited liability company, or other business
entity organized and existing under the laws of any state or a group of related
venture/affiliate funds and/or partners of such funds.
7. Voting Agreement. Each of Goodman and Wiener agrees that he
shall not vote any of his shares of Common Stock and shall not take any other
action within his control (whether in his capacity as stockholder, director,
member of a board committee or officer of Net Target or otherwise, and
including, without limitation, attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of written consents in lieu of
meetings) in favor of any proposal for the reclassification, reorganization,
merger, share exchange, liquidation, or dissolution of Net Target or the
reclassification or modification of rights of the shares of the Common Stock or
other securities of Net Target unless CEH has also voted its shares in favor of
such proposal. The parties to this Agreement acknowledge (i) that this Section
seven (7) shall not apply in the event that Goodman and Wiener determine in good
faith on the basis of advice of counsel that his obligations hereunder are
inconsistent with and contrary to his fiduciary duties as directors and (ii)
that this Section seven (7) shall in no way be construed to require either
Goodman or Wiener to vote in favor of any of the transactions described herein.
CEH shall not unreasonably withhold its vote for approval of any proposal to
issue shares of stock to Venture Capitalists. The provisions of this Section
seven (7) shall terminate automatically and be of no further force and effect
upon the date that Goodman and Wiener have successfully raised, and Net Target
has received, the Minimum Amount from Venture Capitalists on or before the
Target Date.
8. Initial Options. Goodman and Wiener shall be authorized to grant to
employees of Net Target, other than Goodman or Wiener, options for the
purchase of up to four hundred fifty thousand (450,000) shares of Common Stock
for an exercise price equal to the fair market value of such shares on the date
of grant, which value shall be determined by the Net Target Board; provided,
however, that such exercise price shall not be less than ten cents ($.10) per
share. All options granted under this paragraph shall be granted under a stock
option plan, the terms and conditions of which shall be either (i) consistent
with the CEH 1992 Stock Option Plan (a copy of which shall be provided to Net
Target or (ii) approved by the member of the Board of Directors of Net Target
that is affiliated with CEH. Except as otherwise provided in this Section eight
(8), Net Target shall not grant any stock options until after the date upon
which Net Target has successfully raised the Minimum Amount from Venture
Capitalists. The restrictions imposed by this section eight (8) shall not apply
page 34
<PAGE>
Exhibit 10(n)
to any options granted after the date upon which Goodman and Wiener have
successfully raised, and Net Target has received, the Minimum Amount from
Venture Capitalists on or before the Target Date.
9. Noncompete. Noncompete agreements will be signed by both Goodman and
Wiener, which agreements shall provide as follows
A. During the period of the employment by Net Target and for a period of
one (1) year after such employment, the employee shall not (i) engage in; (ii)
have any interest in any person, firm or corporation that engages in competition
with Net Target, or any of its subsidiaries, in the development, manufacture,
processing, distribution, or sale of any products (including any item of
intellectual property) that were developed, manufactured, processed,
distributed, or sold by Net Target or any of its subsidiaries at any time during
the period of his or her employment by Net Target, in any area in which such
business shall be carried on. The employee will not be deemed in violation of
this Agreement solely because of his involvement or interest in such a person,
firm or corporation if (i) his interest is limited to a one-percent interest or
(ii) his involvement is limited to a portion of such person, firm or corporation
that is not involved in such competitive activity.
B. The employee shall not, directly or indirectly, solicit for
employment, or advise or recommend to any other person that they employ or
solicit for employment, any employee of Net Target during the period of the
employee's employment by Net Target and for a period of one (1) year thereafter.
C. During and after his or her employment, the employee shall not
divulge or appropriate to his or her own use or to the use of others, in
competition with Net Target, any secret or confidential information or
knowledge pertaining to the business of Net Target, or of any of its
subsidiaries, obtained by him or her in any way while employed by Net Target or
by any of its affiliates.
10. License. All intellectual property in the Project (excluding the
TargetCast and Target Guide trademarks), including all trade secrets, copyrights
and patents, existing at the time of execution of this Agreement and, to the
extent provided below, arising in the future as a result of the Project, shall
be the sole property of Net Target, subject to a limited, non-exclusive,
royalty-free, perpetual license back to CEH on and subject to the following
terms. The license shall include all such intellectual property transferred by
CEH to the Project (in both source and object code), including any improvements
thereto through the date that the Minimum Amount has been received from Venture
Capitalists. Such license shall include the unlimited (except for Section
eleven (11)) right of CEH to use all such intellectual property in the
continuing development and marketing of its
page 35
<PAGE>
Exhibit 10(n)
products, with the exception of the server-technology intellectual property
(the "TargetCast Server"). Such license shall be restricted in that CEH may not
re-license, sell or distribute the TargetCast Server except in object code
(accompanied by reverse engineering restrictions as currently set forth in
standard CEH software licenses), as part of an e-mail system in which the
TargetCast Server is a constituent part and is used only for processing,
managing, replying to, forwarding, rerouting and rerouting incoming e-mail. For
the avoidance of doubt, the interest of Net Target in and to such intellectual
property is, as a consequence of such license, non-exclusive as to CEH in that
there are no restrictions on the ability of CEH to the full use and enjoyment of
such intellectual property except as specified in this Section ten (10) and in
Sections eleven (11) and twelve (12) below.
11. Noncompete by CEH. CEH shall not, during the term of this Agreement,
use the intellectual property developed after April 1, 1996 as a direct result
of the Project in a manner which is in competition with Net Target in its use of
the intellectual property as a basis for a system which gathers information to
create personal profiles for the purpose of selling targeted services on the
Internet or providing a customized information service.
12. Core Libraries. All program codes which are part of any past,
current or announced CEH product (as of August 1, 1996), except for program
codes written after April 1, 1996 solely for the Project, are part of the CEH
core libraries of codes ("Core Libraries"). Notwithstanding any language to the
contrary in this Agreement, all of the Core Libraries are, and shall continue to
be, the property of CEH. Use of the Core Libraries by CEH shall not be
considered a violation of Sections ten (10) or eleven (11). To the extent the
Core Libraries have been incorporated into the Project, Net Target shall have a
non-exclusive, royalty-free license to use the Core Libraries in the continuing
development and marketing of the Project and derivatives of the Project.
13. Termination. This Agreement may be terminated by the mutual written
consent at any time of all parties or by vote of the shareholders of Net Target.
Upon termination of this Agreement, all rights and obligations of the parties
hereunder shall terminate without any liability of any party to any other party
(except for any liability of any party then in breach for such breach);
provided, however, that the confidentiality provisions, the noncompetition
provisions of Section nine (9) of this Agreement, and the intellectual property
provisions contained herein shall survive any termination.
14. Additional Shares. CEH shall be entitled to purchase from Net Target
up to six hundred thousand (600,000) shares of Common Stock (not to exceed that
number of shares necessary to give CEH voting rights in excess of fifty percent
(50%) of the voting rights of all shares then outstanding) at a price
equivalent to ten cents ($.10) per share upon the happening of any one of the
following events: (i) Net Target fails to receive the Minimum Amount from
Venture Capitalists on or before the Target Date, or
page 36
<PAGE>
Exhibit 10(n)
(ii) either Goodman or Wiener ceases to be a full-time employee of Net Target
on or before the Target Date.
15. Representation. Each party to this Agreement acknowledges and
represents that: (a) each has read the Agreement; (b) each clearly understands
the Agreement and each of its terms; (c) each fully and unconditionally consents
to the terms of this Agreement; (d) each has had the benefit and advice of
counsel of its own selection, or has had the opportunity to consult with counsel
of his/her own selection; (e) each has executed this Agreement freely, with
knowledge, and without influence or duress; (f) each is not relying upon any
representations, either written or oral, express or implied, made to them by any
person except those in this Agreement; (g) the consideration received by them
has been actual and adequate; (h) such party has not assigned, transferred,
licensed, pledged or otherwise encumbered anything purportedly transferred by it
hereunder or agreed to do so; (i) each has the full power and authority to enter
into this Agreement and to make the assignments and licenses it purports to
grant hereunder; and (j) each party is not aware of any violation, infringement,
or misappropriation of any third party's rights (or any claim thereof) by the
Project or the assigned or licensed rights.
16. Binding Effect. This Agreement shall be binding on and inure to the
benefit of the predecessors, successors and assigns of the parties hereto.
17. Entire Agreement. It is agreed and understood that all
understandings and agreements heretofore by the parties with respect to matters
covered by this Agreement are merged into this Agreement which alone fully and
completely expresses the parties' agreement.
18. Iowa Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Iowa.
19. Independent Parties. Nothing contained in this Agreement shall be
construed as creating a joint venture, partnership or employment relationship
between CEH and Net Target, it being understood that CEH and Net Target are
independent contractors vis-a-vis one another. Except as specified herein, no
party shall have the right, power or implied authority to create any obligation
or duty, express or implied, on behalf of any other party hereto.
20. Blue-Pencil Provision. If any provision of or within this Agreement
is found void, invalid or unenforceable, it will not affect the validity of the
balance of this Agreement which shall remain valid and enforceable according to
its terms. If any provision of this Agreement is found to be void, invalid or
unenforceable for reasons of being overly broad, unconscionable, against public
policy or the like, the parties agree that the provision should be interpreted
so as to be valid and enforceable to the maximum
page 37
<PAGE>
Exhibit 10(n)
extent deemed legally or equitably permissible consistent with the overall
intent of the Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed on this 30 day of September, 1996.
FORD GOODMAN CE SOFTWARE HOLDINGS, INC.
/s/ Ford Goodman /s/ John S. Kirk
_________________________ By__________________________
Secretary & Treasurer
Title_______________________
SCOTT WIENER CE SOFTWARE, INC.
/s/ Scott Wiener /s/ Curtis W. lack
________________________ By__________________________
CFO/Treasurer
Title_______________________
page 38
<PAGE>
EXHIBIT 11
CE SOFTWARE HOLDINGS, INC., AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE (LOSS) EARNINGS
(Not Covered by Auditors' Report)
<TABLE>
<CAPTION>
Primary Earnings per Share Information:
1996 1995 1994
<S> <C> <C> <C>
Weighted average
number of shares
outstanding during
the year 5,741,078 5,739,517 5,561,169
Annualized additional
shares due to stock
options 1,446 6,262 1,508
Annualized additional
shares due to warrants - - 7
5,742,524 5,745,779 5,562,684
Net loss $(1,398,567) (442,559) (1,800,993)
Primary loss
per share $(.24) (.08) (.32)
Fully Diluted Earnings
per Share Information:
1996 1995 1994
Weighted average
number of shares
outstanding during
the year 5,741,078 5,739,517 5,561,657
Annualized additional
shares due to stock
options 3,015 8,154 3,612
Annualized additional
shares due to warrants - - 9
5,744,093 5,747,671 5,565,278
Net loss $(1,398,567) (442,559) (1,800,993)
Fully diluted loss
per share $(.24) (.08) (.32)
page 39
</TABLE>
<PAGE>
EXHIBIT 22
CE SOFTWARE HOLDINGS, INC.
SUBSIDIARIES OF THE REGISTRANT
NAME STATE OF INCORPORATION
CE Software, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . .Iowa
CE Distributing, Inc. . . . . . . . . . . . . . . . . . . . . . . . . .Iowa
page 40
<PAGE>
Exhibit 23
The Board of Directors
CE Software Holdings, Inc.:
We consent to incorporation by reference in the registration statement (Nos 33-
54210 and 33-41037) on Form S-8 of CE Software Holding, Inc. of our report dated
November 8, 1996, relating to the consolidated balance sheets of CE Software
Holdings, Inc. and subsidiaries as of September 30, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended September 30, 1996,
which report appears in the September 30, 1996 Form 10-KSB of CE Software
Holdings, Inc.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Des Moines, Iowa
December 23, 1996
page 41
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,862,703
<SECURITIES> 0
<RECEIVABLES> 1,532,987
<ALLOWANCES> 78,100
<INVENTORY> 471,597
<CURRENT-ASSETS> 5,380,787
<PP&E> 4,653,400
<DEPRECIATION> 1,970,580
<TOTAL-ASSETS> 8,970,364
<CURRENT-LIABILITIES> 1,640,671
<BONDS> 878,292
0
0
<COMMON> 112,343
<OTHER-SE> 6,339,058
<TOTAL-LIABILITY-AND-EQUITY> 8,970,364
<SALES> 10,437,520
<TOTAL-REVENUES> 10,437,520
<CGS> 1,722,261
<TOTAL-COSTS> 1,722,261
<OTHER-EXPENSES> 10,036,340
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 87,486
<INCOME-PRETAX> (1,408,567)
<INCOME-TAX> (10,000)
<INCOME-CONTINUING> (1,398,567)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,398,567)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
</TABLE>
