SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 1998
Access Solutions International, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-28920 05-0426298
(Commission File Number) (IRS Employer Identification No.)
(401) 295-2691
(Registrant's Telephone Number, Including Area Code)
<PAGE>
Item 4. Change in Registrant's Certifying Accountant
i) On June 2, 1998, Access Solutions International, Inc. ("Registrant") was
notified by Price Waterhouse LLP ("Price Waterhouse") that Price Waterhouse
would not serve as Registrant's independent auditor for the year ended June
30, 1998. The decision was initiated by Price Waterhouse, and no
recommendation or approval by Registrant's Board of Directors or Audit
Committee was sought. Registrant has commenced the process of interviewing
and engaging a new auditor to replace Price Waterhouse.
ii) Price Waterhouse's annual reports for the last two years did not contain
any adverse opinions, disclaimers of opinion, modifications or
qualifications except to include a modification with respect to the
Registrant's ability to continue as a going concern for the years ended
June 30, 1996 and 1997.
iii) Not applicable.
iv) There have not been any disagreements with Price Waterhouse on any matters
of principles or practices, financial statement disclosure, or auditing
scope or procedures for the last two Fiscal years or for the interim
periods subsequent to the date of the last Fiscal year.
v) Not applicable.
Item 5. Other Events.
Financing
On May 27, 1998, Registrant announced that it had completed an interim
financing totaling $750,000 ("Financing"). The consummation of this agreement is
the first step in the company's previously announced plan to raise additional
equity funding.
The financing agreement calls for the purchase of a minority interest in
several of the company's patents by Mr. Malcolm G. Chace, a stockholder and
former director, for $100,000. These patents are the subject of a lawsuit
pending in the United States District Court for the District of Rhode Island. In
addition, Mr. Chace also has loaned the company $650,000, and has agreed to make
additional advances in amounts equal to outstanding and future legal fees and
costs incurred in connection with the lawsuit.
The loan is secured by a first priority interest in these patents and bears
interest at the rate of 19%. The loan has a term of the lesser of three years or
completion of the company's patent litigation and converts to a demand note at
the end of its term.
The loan also is convertible into equity under certain circumstances. The
company is presently talking with several parties regarding establishment of a
financing or strategic relationship including a future financing of between $2
and $4 million to meet the obligations of the merger agreement and to address
the company's cash flow requirements.
The company's current plan is to seek at least $2 million of additional
financing in the quarter ending September 30, 1998. Mr. Chace has agreed to
convert his $650,000 loan into equity in the event he is satisfied with the
terms of such financing and upon the satisfaction of certain other conditions.
There can be no assurance that additional funds can be obtained on acceptable
terms, if at all.
Extension of Merger Agreement
On May 27, 1998, Registrant and PaperClip Software Inc. ("PaperClip") also
announced that their merger agreement has been amended to extend the date for
the consummation of PaperClip's previously announced merger with and into a
newly formed wholly-owned subsidiary of Access Solutions ("Extension"). Pursuant
to the terms of the merger agreement, completion of the merger transaction is
subject to certain conditions, including a financing contingency. Because the
financing contingency has not been satisfied, the merger transaction has not
been consummated, and the merger agreement has been amended to allow more time
for the financing condition to be satisfied. The latest agreement calls for an
extension to August 24, 1998. There can be no assurance that the financing
condition will be satisfied or that the merger transaction will be consummated.
Certain additional information regarding the Financing and the Extension is
contained in the Press Release dated May 27, 1998 (the "Press Release").
The Press Release and the material documents relating to the Financing and
the Extension are attached hereto as Exhibits and incorporated herein by
reference. The foregoing summary of such exhibits is qualified in its entirety
by reference to the complete text of such exhibits.
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of business acquired.
Not applicable
(b) Pro forma financial information.
Not applicable
(c) Exhibits
Exhibit Number
Exhibit Title
99 Press Release relating to the Financing and the Extension
10.1 Loan Agreement dated May 8, 1998 between Registrant and Malcom G.
Chace
10.2 Promissory Note dated May 8, 1998 issued by Registrant to Malcolm
G. Chace
10.3 Security Agreement dated May 8, 1998 between Registrant and Malcom
G. Chace
10.4 Letter Agreement dated May 8, 1998 between Registrant and Malcolm
G. Chace concerning assignment of patent interests
10.5 Tenth Amendment to Agreement and Plan of Merger dated as of April
22, 1998 between Registrant and PaperClip
10.6 Tenth Amendment to Convertible Promissory Note dated as of April
22, 1998 between Registrant and PaperClip
10.7 Second Amendment to Management Agreement dated as of April 22, 1998
between Registrant and PaperClip
16.1 Letter from Price Waterhouse to Registrant dated June 2, 1998
<PAGE>
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Access Solutions International, Inc.
Registrant
By /s/ Denise L. Marchand
-------------------------------------
Denis L. Marchand
Vice President Finance and Administration
and Chief Accounting Officer
Dated: June 9, 1998
FOR IMMEDIATE RELEASE: May 27, 1998
CONTACT: Denis Marchand Bill Weiss
VP - Finance & Administration CEO
Access Solutions International, Inc. PaperClip Software Inc.
401-295-2691 201-329-6300
ACCESS SOLUTIONS ANNOUNCES COMPLETION OF
INTERIM FINANCING
ACCESS SOLUTIONS AND PAPERCLIP SOFTWARE ANNOUNCE
EXTENSION OF MERGER AGREEMENT
NORTH KINGSTOWN, RI AND HASBROUCK HEIGHTS, NJ - Access Solutions International,
Inc. (NASDAQ: ASIC) announced today that it has completed an interim financing
totaling $750,000. The consummation of this agreement is the first step in the
company's previously announced plan to raise additional equity funding.
FINANCING
The financing agreement calls for the purchase of a minority interest in several
of the company's patents by Mr. Malcolm G. Chace, a stockholder and former
director, for $100,000. These patents are the subject of a lawsuit pending in
the United States District Court for the District of Rhode Island. In addition,
Mr. Chace also has loaned the company $650,000, and has agreed to make
additional advances in amounts equal to outstanding and future legal fees and
costs incurred in connection with the lawsuit.
The loan is secured by a first priority interest in these patents and bears
interest at the rate of 19%. The loan has a term of the lesser of three years or
completion of the company's patent litigation and converts to a demand note at
the end of its term.
The loan also is convertible into equity under certain circumstances. The
company is presently talking with several parties regarding establishment of a
financing or strategic relationship including a future financing of between $2
and $4 million to meet the obligations of the merger agreement and to address
the company's cash flow requirements.
The company's current plan is to seek at least $2 million of additional
financing in the quarter ending September 30, 1998. Mr. Chace has agreed to
convert his $650,000 loan into equity in the event he is satisfied with the
terms of such financing and upon the satisfaction of certain other conditions.
There can be no assurance that additional funds can be obtained on acceptable
terms, if at all.
EXTENSION OF MERGER AGREEMENT
Access Solutions and PaperClip Software Inc. (OCCBB:PCLP) also announced that
their merger agreement has been amended to extend the date for the consummation
of PaperClip's previously announced merger with and into a newly formed
wholly-owned subsidiary of Access Solutions. Pursuant to the terms of the merger
agreement, completion of the merger transaction is subject to certain
conditions, including a financing contingency. Because the financing contingency
has not been satisfied,
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the merger transaction has not been consummated, and the merger agreement has
been amended to allow more time for the financing condition to be satisfied. The
latest agreement calls for an extension to August 24, 1998. There can be no
assurance that the financing condition will be satisfied or that the merger
transaction will be consummated.
PaperClip Software, Inc., founded in 1991, develops and distributes computer
software for document management and imaging systems. Access Solutions
International, Inc., founded in 1986, designs, develops, assembles and markets
mainframe information storage and retrieval systems, including both hardware and
software, for large companies.
# # #
NOTE: Any statements released by Access Solutions International, Inc. that are
forward looking are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Editors and investors are cautioned
that forward-looking statements involve risks and uncertainties, which may
affect the company's business prospects and performance. These include economic,
competitive, governmental, technological and other factors discussed in the
company's filings with the SEC on forms 10-KSB and 10-QSB.
ACCESS SOLUTIONS INTERNATIONAL, INC.
650 Ten Rod Road
North Kingstown, Rhode Island 02852
As of May 8, 1998
Malcolm G. Chace or his designee
c/o Point Gammon Corporation
731 Hospital Trust Building
Providence, Rhode Island 02903
Re: $1,000,000 Secured Promissory Note
Gentlemen:
Access Solutions International, Inc., a Delaware corporation (the
"Company"), hereby agrees with Malcolm G. Chace, an individual resident of the
State of Rhode Island, or such Affiliate as may be designated by Malcolm G.
Chace as his designee pursuant to the provisions of Section 7.04 hereof (the
"Lender"), as follows:
ARTICLE I
LOAN AND TERMS OF NOTE
1.01. The Note. Pursuant to the terms of this Loan Agreement, the Company
has authorized the issuance to the Lender of its Secured Promissory Note, due on
the Repayment Date, as hereinafter defined, in the original principal amount of
$1,000,000 (the "Note", which term shall also include any Note delivered in
exchange or replacement therefor). The Note shall be substantially in the form
set forth in Exhibit 1.01 hereto.
1.02. Loan.
(a) The Closing. Subject to and in reliance upon the representations,
warranties, terms and conditions of this Agreement, the Lender agrees to make
certain loans to the Company from time to time until the hereinafter defined
Repayment Date in an aggregate principal amount not to exceed One Million
Dollars ($1,000,000,000), which such advances under the Note shall be solely as
provided in Section 1.05 hereof. Subject to the provisions of Article II hereof,
the initial advance of funds under this Agreement and the Note shall take place
at a closing (the "Closing") to be held at the office of Messrs. Hinckley, Allen
& Snyder, 1500 Fleet Center, Providence, Rhode Island on May 8, 1998 at 3:00
p.m., or on such other date and at such time as may be mutually agreed upon.
(b) Use of Proceeds. The Company agrees to use the full proceeds from
the loans made hereunder solely to assist the Company in the Lawsuit, for
working capital and to fulfill the Company's obligation to make advances to
PaperClip Software, Inc. ("PaperClip") pursuant to a Management Agreement by and
between the Company and PaperClip.
1.03. Interest. Interest shall accrue on the outstanding principal balance
of the Note at the rate of Nineteen Percent (19%) per annum until the payment in
full of amounts under the Note. Payments of principal and interest on the Note,
shall be made directly by check duly mailed or delivered to the Lender at its
address referred to in Section 7.03 hereof, without any presentment or notation
of payment, except that prior to any transfer of the Note, the holder of record
shall endorse on such Note a record of the date to which interest has been paid
and all payments made on account of principal of such Note.
1.04. Required Repayments. Upon demand by the Lender after the earlier to
occur of (i) the third anniversary of the Note, (ii) the settlement or the
rendering of final judgment in the Lawsuit, as defined below, or (iii) the
occurrence of an Event of Default (the "Repayment Date"), the Company will repay
the entire then-outstanding principal amount under the Note, together with all
accrued and unpaid interest then due on the amount so repaid.
1.05. Advances. Advances under the Note (from and after satisfaction of the
conditions set forth in Article II hereof, and initial funding of up to $650,000
at the Closing) will be in amounts equal to actual costs incurred by the Company
for legal fees in connection with the Lawsuit (supported by appropriate
documentation), excluding, however, any contingency fees owing by the Company in
connection with the Lawsuit; provided however that the aggregate advances under
the Note (including initial funding) shall in no event exceed $1,000,000. The
Company shall have ten (10) days after receipt of an invoice for legal fees in
connection with the Lawsuit to object in good faith to such invoice and failing
such timely objection, such invoice will be deemed approved by the Company and
the Lender may then advance amounts under the Note to pay such invoice.
1.06 Security. The Note and the obligations evidenced by this Agreement
will be secured by a perfected first priority lien on the accounts receivable,
contract rights and proceeds, claims and choses in action of the Company arising
out of or in connection with that certain civil action now pending in the United
States District Court for the District of Rhode Island captioned :Access
Solutions International, Inc. v. Data/Ware Development, Inc. and Eastman Kodak
Company, C.A.No. 97-0501-L (the "Lawsuit") pursuant to the terms of a security
agreement, by and between the Company and the Lender, substantially in the form
set forth in Exhibit 1.06 hereto (the "Security Agreement").
1.07 Replacement of Note. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of the Note and, if
requested in the case of any such other agreement or security reasonably
satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of such Note, the Company will issue a new Note, of
like tenor and amount and dated the date to which interest has been paid, in
lieu of such lost, stolen, destroyed or mutilated Note.
ARTICLE II
CONDITIONS TO LENDER'S OBLIGATION
The obligation of the Lender to make the initial advance under the Note at
the Closing is subject to the following conditions:
2.01. Representations and Warranties. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true on the
date of the Closing.
2.02. Documentation at Closing. The Lender shall have received prior to or
at the Closing all of the following, each in form and substance satisfactory to
the Lender and its special counsel:
(a) A certified copy of all charter documents of the Company; a
certified copy of the resolutions of the Board of Directors and, to the extent
required, the stockholders of the Company evidencing approval of this Agreement,
the Note and other matters contemplated hereby; a certified copy of the By-laws
of the Company; and certified copies of all documents evidencing other necessary
corporate approvals, if any, with respect to this Agreement, the Note and the
Related Agreements, as hereinafter defined.
(b) A certificate of the Secretary or an Assistant Secretary of the
Company which shall certify the names of the officers of the Company, authorized
to sign this Agreement, the Note, the Related Agreements and the other documents
or certificates to be delivered pursuant to this Agreement by the Company, or
any of its officers, together with the true signatures of such officers. The
Lender may conclusively rely on such certificates until it shall receive a
further certificate of the Secretary or an Assistant Secretary canceling or
amending the prior certificate and submitting the signatures of the officers
named in such further certificate.
(c) The agreements between the Company and PaperClip regarding the
terms of a merger between such entities and attached hereto as Exhibit 2.02
shall remain in full force and effect.
(d) Forbearance letters (the "Forbearance Letters") from the Company
to certain of its creditors pursuant to which the foregoing secured creditors
have agreed to forbear from the exercise of remedies arising from the Company's
breach of its obligations to such creditors for such period and upon such terms
and conditions as are reasonably satisfactory to the Lender.
(e) The executed Assignment of Patent Interests, Side Letter regarding
Patent Interest and Security Agreement (the "Related Agreements").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
3.01. Organization and Standing. The Company and each Subsidiary is a duly
organized and validly existing corporation in good standing under the laws of
the jurisdiction in which it was organized and has all requisite corporate power
and authority for the ownership and operation of its properties and for the
carrying on of its business as now conducted and as now proposed to be
conducted. The Company and each Subsidiary is duly licensed or qualified and in
good standing as a foreign corporation authorized to do business in all
jurisdictions wherein the character of the property owned or leased, or the
nature of the activities conducted, by it makes such licensing or qualification
necessary. Attached hereto as Exhibit 3.01 is a schedule which correctly
identifies all Subsidiaries of the Company as of the date hereof and shows with
respect to each Subsidiary its jurisdiction of incorporation.
3.02. Corporate Action. The Company has all necessary corporate power and
has taken all corporate action required to make all the provisions of this
Agreement, the Note, the Related Agreements and any other agreements and
instruments executed in connection herewith and therewith the valid and
enforceable obligations they purport to be. Neither the issuance of the Note nor
the issuance of shares of the Company's common stock upon the exercise of the
Conversion, is subject to preemptive or other similar statutory or contractual
rights and will not conflict with any provisions of any agreement or instrument
to which the Company or any Subsidiary is a party or by which it is bound.
3.03. Litigation. Other than the Lawsuit and except as disclosed in public
filings by the Company with the Securities and Exchange Commission or in press
releases of the Company, there is no litigation or governmental proceeding or
investigation pending or, to the best of the knowledge of the Company,
threatened in writing against the Company or any Subsidiary affecting any of its
properties or assets, or against any officer, key employee or principal
stockholder of the Company or any Subsidiary where such litigation, proceeding
or investigation, either individually or in the aggregate, would have a material
adverse effect on the Company or any Subsidiary, nor, to the best of the
knowledge of the Company, has there occurred any event or does there exist any
condition on the basis of which any litigation, proceeding or investigation
might properly be instituted or which might call into question the validity of
this Agreement, the Note, the Related Agreements or any action taken or to be
taken pursuant hereto or thereto. Neither the Company nor any Subsidiary, nor,
to the best of the knowledge of the Company, any officer or key employee of the
Company or any Subsidiary is in default with respect to any order, writ,
injunction, decree, ruling or decision of any court, commission, board or other
government agency affecting the Company or any Subsidiary.
3.04. Disclosure. Neither this Agreement, nor any other agreement,
document, certificate or written statement furnished to the Lender or its
special counsel by or on behalf of the Company or any Subsidiary in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
3.05. No Brokers or Finders. No Person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or valid claim
against or upon the Company or any subsidiary for any commission, fee or other
compensation as a finder or broker because of any act or omission by the Company
or any Subsidiary or any agent of the Company or any Subsidiary.
3.06. Capitalization; Status of Capital Stock. The Company has a total
authorized capitalization consisting of 13,000,000 shares of common stock, of
which 3,965,199 shares are issued and outstanding and 1,000,000 shares of
preferred stock, of which 0 shares are issued and outstanding. All of the
outstanding capital stock of the Company have been duly authorized, are validly
issued and are fully paid and non-assessable. The shares of the Company's common
stock issuable upon exercise of the Conversion, when so issued, will be duly
authorized, validly issued and fully paid and non-assessable. There are no
restrictions on the transfer of shares of capital stock of the Company other
than those imposed by relevant state and federal securities laws. No holder of
any security of the Company is entitled to preemptive or similar statutory or
contractual rights, either arising pursuant to any agreement or instrument to
which the Company is a party, or which are otherwise binding upon the Company.
ARTICLE IV
COVENANTS; REPORTING; INDEMNIFICATION
4.01. Affirmative Covenants. Without limiting any other covenants and
provisions hereof, the Company covenants and agrees that, as long as the Note is
outstanding, it will perform and observe the following covenants and provisions:
(a) Punctual Payment. Pay the principal of and interest on the Note at
the times and place and in the manner provided in the Note and herein.
(b) PaperClip Merger. The Company will diligently and in good faith
pursue consummation of the merger between the Company and PaperClip in a
reasonably expeditious manner, consistent with the terms set forth on Exhibit
2.02 hereto.
(c) The Conversion. Sufficient shares of authorized but unissued
common stock of the Company will be reserved by appropriate corporate action in
connection with the prospective exercise of the Conversion, as hereinafter
defined.
4.02. Negative Covenants. Without limiting any other covenants and
provisions hereof, the Company covenants and agrees that, as long as the Note is
outstanding, it will not settle the Lawsuit or make any material decisions
involving the Lawsuit without the prior written consent of the Lender.
4.03. Reporting Requirements. The Company will furnish to the Lender as
soon as possible and in any event within five (5) business days after the
occurrence of each Event of Default or each event which, with the giving of
notice or lapse of time or both, would constitute an Event of Default, the
statement of the chief executive officer of the Company setting forth details of
such Event of Default or event and the action which the Company proposes to take
with respect thereto.
4.04. Indemnification. The Company hereby indemnifies and holds the Lender
and/or his designee (collectively, the "Indemnified Parties") harmless from and
against, and agrees to defend promptly each of the Indemnified Parties for, any
and all losses, damages, costs, expenses, fines, penalties, settlement payments
and expenses, liabilities, obligations and claims of any kind, including,
without limitation, reasonable attorneys' fees and other legal and professional
costs and expenses (hereinafter referred to collectively as "Losses"), that any
of the Indemnified Parties may at any time suffer or incur, or become subject
to, as a result of or in connection with the following (the "Claims"): (i) any
breach or inaccuracy of any of the representations and warranties made by the
Company in or pursuant to this Agreement; (ii) any failure of the Company to
carry out, perform, satisfy and discharge any of its covenants, agreements,
undertakings, liabilities or obligations under this Agreement or under any of
the documents and instruments delivered by the Company pursuant to this
Agreement and (iii) the Lawsuit (excluding the obligation of the Lender
undertaken hereunder to advance funds to the Company with respect to legal fees
incurred by the Company in connection with the Lawsuit).
ARTICLE V
EVENTS OF DEFAULT
5.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) The Company shall fail to pay any installment of principal,
interest or fees on the Note within ten (10) days after the same becomes due; or
(b) Any representation or warranty made by the Company or any
Subsidiary in this Agreement or by the Company or any Subsidiary (or any
officers of the Company or any Subsidiary) in any certificate, instrument or
written statement contemplated by or made or delivered pursuant to or in
connection with this Agreement or the Related Agreements, shall prove to have
been incorrect when made in any material respect; or
(c) The Company or any Subsidiary shall fail to perform or observe any
other term, covenant or agreement contained in this Agreement, the Note or the
Related Agreements on its part to be performed or observed and any such failure
remains unremedied for thirty (30) days after written notice thereof shall have
been given to the Company by the Lender; or
(d) Subject to the Forbearance Letters, the Company or any Subsidiary
shall fail to pay any indebtedness for borrowed money (other than as evidenced
by the Note) owing by the Company or such Subsidiary (as the case may be), or
any interest or premium thereon, when due (or, if permitted by the terms of the
relevant document, within any applicable grace period), whether such
indebtedness for borrowed money shall become due by scheduled maturity, by
required prepayment, by acceleration, by demand or otherwise, or shall fail to
perform any term, covenant or agreement on its part to be performed under any
agreement or instrument (other than this Agreement or the Note) evidencing or
securing or relating to any indebtedness for borrowed money owing by the Company
or any Subsidiary, as the case may be, when required to be performed (or, if
permitted by the terms of the relevant document, within any applicable grace
period); or
(e) The Company or any Subsidiary shall be involved in financial
difficulties as evidenced (i) by its admitting in writing its inability to pay
its debts generally as they become due; (ii) by its commencement of a voluntary
case under Title 11 of the United States Code as from time to time in effect, or
by its authorizing, by appropriate proceedings of its Board of Directors or
other governing body, the commencement of such a voluntary case; (iii) by its
filing an answer or other pleading admitting or failing to deny the material
allegations of a petition filed against it commencing an involuntary case under
said Title 11, or seeking, consenting to or acquiescing in the relief therein
provided, or by its failing to controvert timely the material allegations of any
such petition; (iv) by the entry of an order for relief in any involuntary case
commenced under said Title 11, by its failure to obtain a dismissal within sixty
(60) days of any petition seeking such order; (v) by its seeking relief as a
debtor under any applicable law, other than said Title 11, of any jurisdiction
relating to the liquidation or reorganization of debtors or to the modification
or alteration of the rights of creditors, or by its consenting to or acquiescing
in such relief; (vi) by the entry of an order by a court of competent
jurisdiction (a) finding it to be bankrupt or insolvent, (b) ordering or
approving its liquidation, reorganization or any modification or alteration of
the rights of its creditors, or (c) assuming custody of, or appointing a
receiver or other custodian for, all or a substantial part of its property; or
(vii) by its making an assignment for the benefit of, or entering into a
composition with, its creditors, or appointing or consenting to the appointment
of a receiver or other custodian for all or a substantial part of its property;
or
(f) Any judgment, writ, warrant of attachment or execution or similar
process shall be issued or levied against a substantial part of the property of
the Company or any Subsidiary and such judgment, writ, or similar process shall
not be released, vacated or fully bonded within (60) days after its issue or
levy;
then, and in any such event, the obligation of the Lender to make advances under
the Note as provided in Section 1.05 hereof shall immediately cease and
terminate and the Lender or any other holder of the Note may, by notice to the
Company, declare the entire unpaid principal amount of the Note, all interest
accrued and unpaid thereon and all other amounts payable under this Agreement to
be forthwith due and payable, whereupon the Note, all such accrued interest and
all such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Company.
ARTICLE VI
CONVERSION
6.01 Optional Conversion. The Lender shall have the right, at his option at
any time after August 24, 1998 (provided that and so long as the Company is not
then a party to a binding agreement with the party or parties providing the
hereinafter defined Equity Infusion and which such agreement remains in full
force and effect), to convert the Note into that number of fully paid and
nonassessable shares of the Company's common stock as is obtained by dividing
the outstanding principal and interest balance of the Note as of the date of
conversion by the hereinafter defined Market Price (the "Optional Conversion").
Such Optional Conversion shall be exercised by the Lender giving written notice
of such election to convert, surrender of the Note to the Company, the Company's
payment to the Lender of interest accrued on the Note through the date of such
conversion and the issuance of the Company to the Lender of that number of
shares of the Company's common stock as is obtained by the above formula. As
used herein, the term "Market Price" on any day shall mean the average of the
daily market prices of shares of the Company's common stock over a period of 20
consecutive business days prior to the day as of which "Market Price" is being
determined. The market price for each such business day shall be the average of
the highest bid and lowest asked prices on all domestic exchanges on which the
shares of the Company's common stock is then listed at the end of such day, or,
if the shares of the Company's common stock shall not be so listed, the average
of the representative bid and asked prices quoted in the NASDAQ System as of
3:30 p.m., New York time, on such day, or if the shares of the Company's common
stock shall not be quoted in the NASDAQ System, the average of the high and low
bid and asked prices on such day in the domestic over the counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization. If the shares of the Company's common stock is listed on
any domestic exchange the term "business days" as used in this sentence shall
mean business days on which such exchange is open for trading. If at any time
bid and asked prices for the shares of the Company's common stock are not then
available or the shares of the Company's common stock is not listed on any
domestic exchange or quoted in the NASDAQ System or the domestic
over-the-counter market, the "Market Price" shall be deemed to be the highest of
(i) the book value thereof, as determined by any firm of independent public
accountants of recognized standing selected by the board of directors of the
Company, as at the last day of any month ending within 60 days preceding the
date as of which the determination is to be made or (ii) the fair value thereof,
which shall be reasonably determined by the board of directors of the Company as
of a date which is within 15 days of the date as of which the determination is
to be made.
6.02 Mandatory Conversion. The Lender shall convert the Note into that
number of fully paid and nonassessable shares of the Company's common stock as
is obtained by dividing the outstanding principal balance of the Note as of the
date of conversion by the lowest per share issue price for shares of the
Company's common stock that the Company has issued or sold in connection with
the Equity Infusion, as defined below; provided that each of the following
conditions shall have been met: (i) the Lender is reasonably satisfied with the
terms and conditions associated with the Equity Infusion, (ii) the proceeds to
the Company from the Equity Infusion are not less than $1,250,000, (iii) the
merger of the Company with PaperClip, consistent with the terms set forth on
Exhibit 2.02 hereto, has been or will simultaneously with such conversion be
consummated, (iv) the Company shall have paid any and all interest that has
accrued under the Note as of the date of such conversion and (v) the shares of
the Company's Common Stock to be issued to the Lender shall have at least as
favorable rights and benefits as afforded to the capital stock of the Company
issued in connection with the Equity Infusion (the "Mandatory Conversion") (the
Optional Conversion and the Mandatory Conversion are sometimes also referred to
herein as the "Conversion"). As used herein, the term "Equity Infusion" shall
mean the receipt by the Company of additional capital through the purchase of
the Company's securities by third parties. Such Mandatory Conversion shall be
exercised by the Company giving written notice of such to the Lender, together
with evidence that the foregoing conditions have been met, surrender of the Note
to the Company by the Lender, the Company's payment to the Lender of interest
accrued on the Note through the date of such conversion and the issuance by the
Company to the Lender of that number of shares of the Company's common stock as
is obtained by the above formula.
ARTICLE VII
MISCELLANEOUS
7.01. No Waiver; Cumulative Remedies. No failure or delay on the part of
the Lender, or any other holder of the Note in exercising any right, power or
remedy he reunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
7.02. Amendments, Waivers and Consents. Any provision in this Agreement,
the Note to the contrary notwithstanding, changes in or additions to this
Agreement may be made, and compliance with any covenant or provision herein or
therein set forth may be omitted or waived, if the Company shall obtain consent
thereto in writing from the Lender. Any waiver or consent may be given subject
to satisfaction of conditions stated therein and any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Written notice of any waiver or consent effected under this subsection
shall promptly be delivered by the Company to any holders who did not execute
the same.
7.03. Addresses for Notices, etc. All notices, requests, demands and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and mailed or telegraphed or delivered to the applicable party at
the addresses indicated below:
If to the Company:
Access Solutions International Inc.
650 Ten Rod Road
North Kingstown, Rhode Island 02852
Attention: Robert H. Stone, President and Chief Executive Officer
with a copy to:
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Attention: John E. Ottaviani
If to the Lender:
Malcolm G. Chace
c/o Point Gammon Corporation
731 Hospital Trust Building
Providence, Rhode Island 02903
with a copy to:
Hinckley, Allen & Snyder
1500 Fleet Center
Providence, Rhode Island 02903
Attention: Malcolm Farmer III
If to any other holder of the Note: at such holder's address for notice as
set forth in the register maintained by the Company, or, as to each of the
foregoing, at such other address as shall be designated by such Person in a
written notice to the other party complying as to delivery with the terms of
this Section. All such notices, requests, demands and other communications
shall, when mailed or telegraphed, respectively, be effective when deposited in
the mails or delivered to the telegraph company, respectively, addressed as
aforesaid.
7.04. Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the Company and the Lender and their respective
successors and assigns, except that the Company shall have no right to assign
its rights hereunder or any interest herein without the prior written consent of
the Lender and, except for an assignment by the Lender to an Affiliate of its
rights under this Agreement (which such assignment shall be expressly permitted
without the consent of the Company), the Lender shall have no right to assign
its rights hereunder or any interest herein without the prior written consent of
the Company. The Company acknowledges and agrees that the Lender may designate
an Affiliate as his designee hereunder and in such case will assign all of his
rights under this Agreement and any documents executed in connection herewith to
said Affiliate and will transfer to said Affiliate any and all of the Note. The
Lender will provide the Company with notice of any such assignment. "Affiliate"
means, singly and collectively, any Person which, directly or indirectly, is in
control of, is controlled by, or is under common control with, the Lender or the
Company, as the case may be and expressly includes any trust or trusts under
which trust agreements the Lender is a trustee or a beneficiary. "Person" means
an individual, corporation, limited liability company, partnership, joint
venture, trust, or unincorporated organization, or a government or any agency or
political subdivision thereof.
7.05. Survival of Representations and Warranties. All representations and
warranties made in this Agreement, the Note, the Related Agreements or any other
instrument or document delivered in connection herewith or therewith, shall
survive the execution and delivery hereof or thereof and the making of the
loans.
7.06. Prior Agreements. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings or agreements
concerning the subject matter hereof.
7.07. Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
7.08. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Rhode Island.
7.09. Headings. Article, Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
7.10. Sealed Instrument. This Agreement is executed as an instrument under
seal.
7.11. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and each of the parties hereto may execute this Agreement by signing
any such counterpart.
7.12. Further Assurances. From and after the date of this Agreement, upon
the request of the Lender, the Company and each Subsidiary shall execute and
deliver such instruments, documents and other writings as may be reasonably
requested by the Lender to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement, the Note and the Related Agreements.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
ACCESS SOLUTIONS
INTERNATIONAL, INC.
By: /s/ Robert H. Stone
Title: President and CEO
/s/ Malcolm G. Chace
--------------------------------
MALCOLM G. CHACE
EXHIBIT 10.2
SECURED PROMISSORY NOTE
$1,000,000.00 Providence, Rhode Island
May 8, 1998
FOR VALUE RECEIVED, ACCESS SOLUTIONS INTERNATIONAL, INC., a Delaware
corporation with a principal place of business at 650 Ten Rod Road, North
Kingstown, Rhode Island 02852 (the "Maker") promises to pay to the order of
MALCOLM G. CHACE, an individual resident of the State of Rhode Island having an
address c/o Point Gammon Corporation, 731 Hospital Trust Building, Providence,
Rhode Island 02903 (the "Payee"), the lesser of: (i) the principal sum of One
Million Dollars ($1,000,000), or (ii) the aggregate unpaid principal amount of
all advances of funds to the Maker by the Payee pursuant to that certain Loan
Agreement of even date herewith by and between the Maker and the Payee (the
"Agreement"), payable at the times hereinafter specified, together with
interest, in arrears, from the date hereof on the unpaid balance from time to
time outstanding, whether before or after the maturity of or default under this
Note, at a rate per annum equal to Nineteen Percent (19%). Advances under this
Note shall be in accordance with Section 1.05 of the Agreement.
This Note is the note referred to in the Agreement. Capitalized terms used
herein, but not otherwise defined herein, shall have the meaning ascribed to
such term in the Agreement.
At the time of (i) the making of each advance evidenced by this Note, and
(ii) each payment or prepayment of this Note, the Holder may enter upon its
records an appropriate notation evidencing such advance or such payment or
prepayment of principal. No failure to make any such notation shall affect the
Maker's unconditional obligation to repay the principal amount borrowed pursuant
to this Note and all interest, fees and other sums due in connection with this
Note in full, nor shall any such failure, standing alone, constitute grounds for
disproving a payment of principal by the Maker. However, in the absence of
manifest error, such notations and the Holder's records containing such
notations shall constitute prima facie evidence of the facts stated therein,
including, without limitation, the outstanding amount of the advances made to
the Maker pursuant to this Note and all amounts due and owing to the Holder at
any time. Any such notations and the Holder's records containing such notations
may be introduced in evidence in any judicial or administrative proceeding
relating to this Note.
All interest payable hereunder shall be computed on the basis of the actual
number of days elapsed using a three hundred sixty (360) day year. Interest
accrued on this Note shall be payable upon the Repayment Date.
The entire principal balance, together with all unpaid interest, fees,
expenses and other charges, if not sooner paid, shall in any event be paid upon
demand by the Holder after the earlier to occur of (i) the third anniversary of
the Note, (ii) the settlement or the rendering of final judgment in the Lawsuit,
as defined in the Agreement, or (iii) the occurrence of any Event of Default by
the Company under the Agreement (the "Repayment Date").
This Note is secured by the Security Agreement.
All sums payable hereunder are payable in lawful money of the United States
of America and in immediately available funds at the Payee's address set forth
above or at such place or places as the Payee, its successors or assigns (the
"Holder") may designate in writing.
This Note may be prepaid at any time, in whole or in part, without penalty
or premium.
All sums paid under this Note shall be applied first to any interest, fees,
expenses and other charges then due and unpaid, in such order as the Holder
shall determine, with the remaining balance, if any, to be applied to unpaid
principal.
Whenever a day on which payment of interest and/or principal required to be
made hereunder falls on a Saturday, Sunday or public holiday, such payment shall
be due on the next following normal business day, and where time is extended for
the payment of principal by virtue of the due date thereof falling on a
Saturday, Sunday or public holiday, such extended time shall be included in the
computation of interest.
The Holder may assign, transfer or negotiate this Note, and in such event
all the provisions of this Note shall inure to the benefit of and may be
exercised by or on behalf of the successor Holder, and all payments of principal
and of interest due and to become due under this Note shall not thereafter be
subject to any defense, counterclaim or set-off which the Maker may have against
any prior Holder.
Upon the occurrence of any Event of Default as provided in the Agreement,
this Note, at the option of the Holder, shall become immediately due and payable
without notice of any kind. The Holder's failure to exercise such option shall
not constitute a waiver of the right to exercise it at any other time.
No renewal or extension granted, or any indulgence shown to, or any release
of, or any dealings between the Holder and any other person, corporation, or
entity now or hereafter interested in this Note whether as owner, encumbrancer,
guarantor, or otherwise, shall discharge, extend or in any way affect the
obligations of the Maker hereunder.
The Maker will pay upon the Repayment Date the legal and other fees and
expenses of the Holder reasonably incurred in connection with or incidental to
(i) the negotiation, closing and administration of the loan evidenced by this
Note, and (ii) the enforcement of any of the obligations of the Maker or rights
of the Holder under this Note or any other agreement, document or instrument now
or hereafter executed in connection herewith, by litigation or otherwise; and
all such fees and expenses shall be indebtedness under this Note.
All provisions of this Note are expressly subject to the condition that in
no event, whether by reason of acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to The
Payee hereunder and deemed interest under applicable law exceed the maximum rate
of interest on the unpaid principal balance of this Note allowed by applicable
law (the "Maximum Allowable Rate"), which shall mean the law in effect on the
date of this Note, except that if there is a change in such law which results in
a higher Maximum Allowable Rate being applicable to this Note, then this Note
shall be governed by such amended law from and after its effective date. In the
event that fulfillment of any provision of this Note results in the interest
rate hereunder being in excess of the Maximum Allowable Rate, the obligation to
be fulfilled shall automatically be reduced to eliminate such excess. If,
notwithstanding the foregoing, the Holder receives an amount which under
applicable law would cause the interest rate hereunder to exceed the Maximum
Allowable Rate, the portion thereof which would be excessive shall automatically
be applied to and deemed a prepayment of the unpaid principal balance of this
Note and not a payment of interest.
This Note may not be modified or terminated orally. This Note is entitled
to the benefits of the Agreement.
The Maker expressly waives presentment, demand for payment, protest and
notice of non-payment. If this Note is signed by more than one Maker, all
obligations of the Maker are their joint and several obligations, and all
references to the Maker shall be deemed to refer to each of them, either of
them, and all of them.
This Note has been executed and delivered in Rhode Island and for all
purposes shall be enforced and construed in accordance with the local laws of
the State of Rhode Island, without regard to such state's conflict of laws
principles.
ACCESS SOLUTIONS
INTERNATIONAL, INC.
By: /s/ Robert H. Stone
Title: President and CEO
SECURITY AGREEMENT
The undersigned, ACCESS SOLUTIONS, INC., a Delaware corporation with a
principal place of business at 650 Ten Rod Road, North Kingstown, Rhode Island
02852 (the "Debtor") hereby grants to MALCOLM G. CHACE an individual resident of
the State of Rhode Island having an address c/o Point Gammon Corporation, 731
Hospital Trust Building, Providence, Rhode Island 02903 (the "Secured Party"), a
security interest in certain of Debtor's assets, both presently owned and after
acquired, and all proceeds thereof, as set forth below:
All of Debtor's accounts, accounts receivable, contract rights, notes,
drafts, acceptances, instruments and proceeds, claims and choses in action
arising out of or in connection with that certain civil action now pending
in the United States District Court for the District of Rhode Island
captioned : Access Solutions International, Inc. v. Data/Ware Development,
Inc. and Eastman Kodak Company, C.A.No. 97-0501-L (the "Lawsuit").
(all hereinafter sometimes collectively referred to as "Collateral"); to secure
the payment of any and all indebtedness and liabilities whatsoever of Debtor to
Secured Party whether direct, indirect, absolute or contingent, due or to become
due and whether now existing or hereafter arising and howsoever evidenced or
acquired, and arising in connection with that certain Loan Agreement of even
date herewith by and between Debtor and Secured Party (the "Loan Agreement"),
and that certain $1,000,000 Secured Promissory Note of even date herewith made
by Debtor and payable to Secured Party (the "Note") (hereinafter sometimes
referred to as "obligation" or "obligations").
I. WARRANTIES AND COVENANTS
Debtor hereby warrants and covenants that:
A. Except for prior security interests previously disclosed to Secured
Party (if any) and except for the security interest granted hereby, Debtor is
the owner of presently owned Collateral and will be the owner of Collateral
hereafter acquired free from any adverse lien, security interest or encumbrance,
and Debtor will defend the Collateral against the claims and demands of all
persons at any time claiming the same or any interest therein.
B. Except for financing statements evidencing existing security interests
previously disclosed to Secured Party (if any), no financing statements covering
any Collateral are on file in any public office, and at the request of Secured
Party, Debtor will join with Secured Party in executing one or more (i)
financing statements pursuant to the Uniform Commercial Code; and (ii) other
documents necessary or advisable to perfect the security interests evidenced
hereby, all in form satisfactory to Secured Party, and Debtor will pay the cost
of filing the same or filing or recording this agreement in all public offices
wherever filing or recording is deemed by Secured Party to be necessary or
desirable.
C. Debtor will keep the Collateral free from any future adverse lien,
security interest or encumbrances.
D. Debtor will keep all records concerning the Collateral at the
location(s) listed on affixed Exhibit A. Debtor will not remove any of such
records from said offices without written consent of Secured Party.
II. ADDITIONAL RIGHTS OF THE PARTIES
A. Secured Party may, at its election, discharge taxes, liens or security
interests or other encumbrances at any time levied or placed on the Collateral.
Debtor agrees to reimburse Secured Party on demand for any payment made, or any
expense incurred by Secured Party pursuant to the foregoing authorization, and
in any event all such payments and expenses shall constitute an obligation
hereunder.
B. Until the occurrence of an Event of Default, Debtor may have possession
of the Collateral and use it in any lawful manner not inconsistent with this
Agreement and not inconsistent with any policy of insurance thereon.
C. Debtor hereby irrevocably designates and appoints Secured Party its true
and lawful attorney with full power of substitution to execute, deliver, and
record in the name of Debtor all financing statements, continuation statements,
title certificate lien applications and other documents deemed by Secured Party
to be necessary or advisable to perfect or to continue the perfection of the
security interests granted hereunder.
D. A carbon, photographic, or other reproduction of a security agreement or
a financing statement is sufficient as a financing statement.
III. EVENTS OF DEFAULT
Debtor shall be in default under this Agreement upon the happening of any
of the following events or conditions (individually and collectively as "Event
of Default"):
(a) Failure by the Debtor to observe or perform any covenant or
agreement referred to herein and any such failure remains unremedied for
thirty (30) days after written notice thereof shall have been given to the
Debtor by the Secured Party;
(b) The falsity in any material respect of any warranty,
representation or statement made or furnished to Secured Party by or on
behalf of Debtor;
(c) Sale or transfer of any of the Collateral;
(d) the occurrence of a default or an event of default under any
agreement, instrument or other document between the Secured Party and the
Debtor, including, without limitation, the Note and the Loan Agreement.
In addition, this Security Agreement is entitled to the benefit of the Loan
Agreement, which Loan Agreement, among other things, contains provisions for the
acceleration of the maturity of the obligations secured hereby upon the
happening of certain stated events of default, which events of default shall be
deemed Events of Default under this Security Agreement.
IV. REMEDIES
A. If an Event of Default occurs:
1. Secured Party may declare all obligations secured hereby to be
immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived.
2. Secured Party may exercise and shall have any and all rights
and remedies accorded it by the Uniform Commercial Code. Secured Party
may require Debtor to assemble the Collateral and make it available to
Secured Party at a place to be designated by Secured Party which is
reasonably convenient to both parties. The requirement of reasonable
notice shall be met, if notice is mailed, postage prepaid, to Debtor
or other person entitled thereto at least ten (10) days (including
non-business days) before the time of sale or disposition of the
Collateral. Debtor shall pay to Secured Party on demand any and all
expenses, including legal expenses and attorney's fees, incurred or
paid by Secured Party in protecting or enforcing any rights of Secured
Party hereunder, including its right to take possession of the
Collateral, storing and disposing of the same or in collecting the
proceeds thereof.
3. Secured Party shall have the right to notify any and all
account debtors to make payment thereof directly to Secured Party.
Debtor hereby irrevocably designates and appoints Secured Party its
true and lawful attorney with full power of substitution in its own
name or in the name of Debtor to demand, collect, receive, receipt
for, sue for, compound and give acquittance for, any and all amounts
due and to become due on the Accounts and to endorse the name of
Debtor on all commercial paper given in payment or part-payment
thereof and in its discretion to file any claim or take any other
action which Secured Party may deem necessary or appropriate to
protect and preserve and realize upon the security interest of Secured
Party in the Collateral.
B. Debtor understands and agrees Secured Party may exercise its rights
hereunder without affording Debtor an opportunity for a preseizure hearing
before Secured Party, through judicial process or otherwise, takes possession of
the Collateral upon the occurrence of an Event of Default, and Debtor expressly
waives its constitutional right, if any, to such prior hearing.
C. No delay in accelerating the maturity of any obligation as aforesaid or
in taking any other action with respect to any Event of Default or in exercising
any rights with respect to the Collateral shall affect the rights of Secured
Party later to take such action with respect thereto, and no waiver as to one
Event of Default shall affect rights as to any other default.
D. All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns; and all obligations of Debtor shall bind the successors
or assigns of Debtor. This agreement was executed and delivered in the Rhode
Island and all the provisions hereof shall be construed by and administered in
accordance with the local laws of the Rhode Island, including without limitation
the Uniform Commercial Code except to the extent that the perfection of security
interests or the exercise of a secured party's remedies may be governed by the
laws of a jurisdiction other than the Rhode Island. This agreement shall become
effective when it is signed by Debtor. Debtor acknowledges receipt of a copy of
this agreement.
IN WITNESS WHEREOF, this Security Agreement has been executed by the
parties hereto all as of May 8, 1998.
ACCESS SOLUTIONS
INTERNATIONAL, INC.
By: /s/ Robert H. Stone
--------------------------
Name: Robert H. Stone
Title: President and CEO
MALCOLM G. CHACE
/s/ Malcolm G. Chace
------------------------------
Malcolm G. Chace
<PAGE>
EXHIBIT A
Business Locations of Debtor
1. 650 Ten Rod Road, North Kingstown, RI 02852
2. 611 Route 46, Hasbrouck Heights, NJ 17604
<PAGE>
EXHIBIT 2.02
PAPERCLIP SOFTWARE, INC. MERGER TERMS AND CONDITIONS
<PAGE>
EXHIBIT 3.01
SUBSIDIARIES
PaperClip Acquisition Corp., a Delaware corporation.
May 8, 1998
Malcolm G. Chace or his designee
c/o Point Gammon Corporation
731 Hospital Trust Building
Providence, Rhode Island 02903
Re: Malcolm G. Chace or his designee (the "Purchaser")/Access Solutions
International, Inc. (the "Company")
Dear Mr. Chace:
United States Letters Patent Nos. 4,775,969 for "Optical Disk Storage
Format, Method and Apparatus for Emulating a Magnetic Tape Drive" and 5,034,914
for "Optical Disk Data Storage Method and Apparatus with Buffered Interface"
were duly and legally issued to the Company as assignee of the inventor, Steven
W. Osterlund, on October 4, 1988 and July 23, 1991, respectively (the
"Patents"). The Company has authorized the sale to the Purchaser of a Thirty
Percent (30%) interest in the Patents (the "Patent Interests") for an aggregate
purchase price of One Hundred Thousand Dollars ($100,000). This letter shall
serve to confirm our agreements regarding the purchase of the Patent Interests.
Upon receipt of the purchase price, the Patent Interests shall be assigned
by the Company to the Purchaser by an Assignment of Patent Interests,
substantially in the form set forth in Exhibit A hereto.
To the best of the Company's knowledge, no one has asserted that the
Patents infringe, violate or otherwise are adverse to, the rights of any person
under or in respect of any Proprietary Rights. "Proprietary Rights" means any
one or more of the following: (a) letters patent and any applications therefore,
whether foreign or domestic and all rights associated therewith; (b) trademarks,
service marks, collective marks, and certificate marks, whether registered
(state and/or federal) or unregistered, and whether foreign or domestic and the
goodwill and all rights associated therewith; (c) copyrights, whether registered
or unregistered, and whether foreign or domestic, and all rights associated
therewith; (d) tradenames and business identifications; (e) trade secrets and
other legally protectible proprietary information, data or knowledge, (f)
methods, processes, inventions, technology and know-how; and (g) all other
similar proprietary rights and intellectual property. The Company owns or
controls all rights to the Patents. The Patents have been duly issued by the
United States Patents and Trademark Office and the Company has no notice of any
revocation, interference action or procedural defect involving the Patents.
The Company covenants and agrees to maintain in full force and effect the
Patents and to file such materials, prosecute, maintain and enforce the Patents
in such manner as is reasonably necessary to protect the Company's and the
Purchaser's proprietary interest therein.
The Company hereby indemnifies and holds the Purchaser and/or his designee
(collectively, the "Indemnified Parties") harmless from and against, and agrees
to defend promptly each of the Indemnified Parties for, any and all loses,
damages, costs, expenses, fines, penalties, settlement payments and expenses,
liabilities, obligations and claims of any kind, including, without limitation,
reasonable attorneys' fees and other legal and professional costs and expenses
(hereinafter referred to collectively as "Losses"), that any of the Indemnified
Parties may at any time suffer or incur, or become subject to, as a result of or
in connection with the following (the "Claims"): (i) any breach or inaccuracy of
any of the representations and warranties made by the Company in or pursuant to
this letter; (ii) any failure of the Company to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this letter and (iii) the Patents.
The Purchaser hereby acknowledges and agrees that the Purchaser shall not
be entitled to any licensing or other fees or royalties on account of the
Company's use of the Patents unless the Company receives any such fees or
royalties from a third party, in which case such amounts shall be distributed on
a pro rata basis to the Purchaser and the Company based on their respective
ownership interests in the Patents.
ACCESS SOLUTIONS INTERNATIONAL, INC.
By: /s/ Robert H. Stone
Title: President and CEO
Acknowledged:
/s/ Malcolm G. Chace
- --------------------------------
Malcolm G. Chace
<PAGE>
EXHIBIT A
FORM OF
ASSIGNMENT OF PATENT INTERESTS
THIS ASSIGNMENT OF PATENT INTERESTS is entered into as of this 8th day of
May, 1998 by and between ACCESS SOLUTIONS INTERNATIONAL, INC., a Delaware
corporation with a principal place of business at 650 Ten Rod Road, North
Kingstown, Rhode Island 02852 (hereinafter, "Assignor") and MALCOLM G. CHACE, an
individual resident of the State of Rhode Island having an address c/o Point
Gammon Corporation, 731 Hospital Trust Building, Providence, Rhode Island 02903
(hereinafter, "Assignee").
United States Letters Patent Nos. 4,775,969 for "Optical Disk Storage
Format, Method and Apparatus for Emulating a Magnetic Tape Drive" and 5,034,914
for "Optical Disk Data Storage Method and Apparatus with Buffered Interface"
were duly and legally issued to the Company as assignee of the inventor, Steven
W. Osterlund, on October 4, 1988 and July 23, 1991, respectively (the
"Patents");
WHEREAS, Assignor desires to assign a thirty percent (30%) interest in the
Patents and Assignee desires to acquire such interest in the Patents;
NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, Assignor does hereby assign to Assignee, its
successors and assigns, an undivided thirty percent (30%) interest of Assignor's
right, title and interest in and to the Patents, together with all claims for
damages and profits by reason of any past infringement of the Patents, such
interest to be held for the full term of the Patents, including any reissues,
renewals, or extensions thereof as are or may be granted, and all goodwill
arising out of the Patents assigned pursuant hereto.
The Assignor, for itself and its successors and assigns, does hereby
authorize the Assignee, its successors and assigns, in the name of the Assignor
and as its attorney, to do any and all things necessary or advisable to reduce
the assigned interest in the Patents to the Assignee's possession. The Assignor,
for itself and its successors and assigns, does hereby covenant with the
Assignee to execute, acknowledge, deliver and perform, or to authorize the
Assignee, as the agent and attorney of the Assignor, to execute, acknowledge,
deliver or perform, any and all further instruments and acts which may be
reasonably required to transfer and assign to the Assignee the interest in the
Patents transferred or intended to be transferred hereby or to accomplish the
intent and purpose hereof.
ASSIGNOR
ACCESS SOLUTIONS INTERNATIONAL, INC.
By: _______________________________
Title: ____________________________
Dated: ____________________________
ASSIGNEE
____________________________________
MALCOLM G. CHACE
Dated: ____________________________
TENTH AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS TENTH AMENDMENT is made as of the 22nd day of April, 1998, by and
between ACCESS SOLUTIONS INTERNATIONAL, INC., a Delaware corporation ("Parent"),
PAPERCLIP SOFTWARE, INC., a Delaware corporation ("PSI"), and PAPERCLIP
ACQUISITION CORP., a Delaware corporation and wholly-owned subsidiary of Parent
("Acquisition"). Parent and Acquisition are hereinafter sometimes referred to
collectively as "Access."
W I T N E S S E T H:
WHEREAS, Parent, Acquisition and PSI executed and delivered a certain
Agreement and Plan of Merger dated as of November 12, 1997, as amended by a
certain First Amendment to Agreement and Plan of Merger dated January 8, 1998
("First Amendment"), Second Amendment to Agreement and Plan of Merger dated
February 20, 1998, Third Amendment to Agreement and Plan of Merger dated
February 27, 1998, Fourth Amendment to Agreement and Plan of Merger dated March
3, 1998, Fifth Amendment to Agreement and Plan of Merger dated March 4, 1998,
Sixth Amendment to Agreement and Plan of Merger dated March 6, 1998, Seventh
Amendment to Agreement and Plan of Merger dated March 10, 1998, Eighth Amendment
to Agreement and Plan of Merger dated March 12, 1998, and Ninth Amendment to
Agreement and Plan of Merger dated as of March 24, 1998 (as amended, the "Merger
Agreement"), pursuant to which Acquisition will merge with and into PSI on the
terms and conditions set forth therein; and
WHEREAS, the parties hereto now desire to amend the Merger Agreement to
reflect their agreement that the deadline for Closing be further extended and to
reflect certain other agreements among the parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Section 10.1(f) of the Merger Agreement is hereby amended to read as
follows: "At the election of Access or PSI, if the Closing shall not have taken
place on or before the earlier of: (i) May 20, 1998, or (ii) the consummation of
the financing contemplated by the Term Sheet dated as of April 14, 1998 between
the Company and Malcolm G. Chace ("Financing")."
2. The parties further agree that, effective upon the Parent's receipt of
$750,000 from the Financing, Section 10.1(f) of the Merger Agreement is hereby
amended to read as follows:
"At the election of Access or PSI, if the Closing shall not have taken
place on or before August 24, 1998 (or such later date as may be agreed to
in writing by Access and PSI)."
3. Notwithstanding the provisions of the Management Agreement, from the
date of the Financing through termination of this Agreement or the Closing Date,
no cash proceeds of the Financing may be spent by Parent or PaperClip without
the consent of both Robert H. Stone, the President and CEO of Parent, and
Stephen Kornfeld; provided, however, that no such approval is required for
payments for payroll, payroll taxes, sales taxes and Director & Officer
liability insurance for either Parent or PSI, and that best efforts will be made
on payments required under forbearance agreements and other payments deemed
essential for the continuing operation of the business or those necessary to
preserve the corporate entity. If a dispute arises between Messrs. Stone and
Kornfeld regarding the amount or timing of a specific expenditure, it will be
brought to the Chairman of the Board of Parent for resolution.
4. Section 8.11 of the Merger Agreement is hereby amended by deleting the
existing Section 8.11 and by substituting the following paragraph:
"SECTION 8.11 Financing. Parent shall have received at least two
million dollars ($2,000,000), or a commitment to raise at least Two Million
Dollars ($2,000,000) reasonably satisfactory to PSI (in either case before
deduction of expenses or placement fees or commissions) from a private
placement of Parent's securities or other source of financing; provided,
however, that PSI agrees that, if at least $650,000 of the proceeds of the
financing contemplated by the Term Sheet dated as of April 14, 1998 between
Parent and Malcolm G. Chace is converted into equity of Parent, the amount
to be raised or the commitment shall be reduced to $1,900,000.
5. PSI agrees to use its best efforts to file as soon as practicable with
the SEC all reports and filings required to be filed with the SEC pursuant to
the Securities Act, the Exchange Act, and any other applicable federal
securities laws, unless ASI consents otherwise from time to time.
6. The first sentence of Section 10.2 of the Merger Agreement is hereby
amended by substituting the following language for the last clause of said
sentence: "and provided, further, that if this Agreement is terminated: (a) by
either party pursuant to Section 10.1 of this Agreement: (i) due to failure to
obtain the Access Director Approval or the Access Stockholder approval (if
applicable), or (ii) due to the failure of the condition contained in Section
8.11 of this Agreement, or (b) by Parent pursuant to Section 10.1(f) of this
Agreement, then in any such case, Parent will negotiate in good faith with PSI
an extension of the Maturity Date (as defined in the Convertible Promissory Note
dated January 29, 1997, as amended, issued by PSI), and of the date for
repayment of the Management Fee, the Out-of-Pocket Expenses, and the Advances
and any interest thereon(as defined in the Management Agreement between Parent
and PSI dated as of April 15, 1997, as amended) to permit PSI a sufficient
amount of time to secure capital necessary to continue its business and to pay
amounts due to Parent in a reasonable time period."
7. Section 3.2 of the Merger Agreement is hereby amended to read as
follows:
Effective upon the Closing Date, the Board of Directors of Parent
shall be reconstituted to consist of four persons designated by PSI (who
initially shall be Stephen Kornfeld, William Weiss and two persons
designated by PSI prior to the Closing Date) and four persons designated by
ASI (who initially shall be Thomas Gardner, Adrian Hancock, Howard Yenke
and Robert Stone).
8. The following new Section 3.3 is hereby added to the Merger Agreement
SECTION 3.3 Parent Officers.
Effective upon the Closing Date, Parent's Board of Directors shall elect
Stephen Kornfeld as Chairman of Parent, and Robert H. Stone as President of
Parent.
9. Section 2.2(c) of the Merger Agreement is hereby amended to read as
follows:
"At the Effective Time, Parent will offer stock options to PSI
employees who continue to be employed by Parent or the Surviving
Corporation in the amounts set forth on Schedule 2.2(c) attached hereto."
10. The third sentence of Section 2.4(e) of the Merger Agreement is hereby
amended by deleting the existing sentence and substituting the following
sentence therefor:
"As soon as practicable after the Effective Time, the Parent shall
cause the Exchange Agent to send a notice and a transmittal form to each
holder of record of a Certificate advising such holder of the effectiveness
of the Merger and the procedure for surrendering to the Exchange Agent such
Certificate in exchange for the Merger Consideration."
11. Section 6.13 of the Merger Agreement is hereby amended by deleting said
section and by substituting the following therefor:
"SECTION 6.13 Intentionally omitted."
12. Section 11.1 of the Merger Agreement is hereby amended by deleting said
section and by substituting the following therefor:
"SECTION 11.1 Intentionally omitted."
13. In the event of a conflict between the terms of the Merger Agreement
and this Tenth Amendment, the terms of this Tenth Amendment shall control.
14. This Tenth Amendment supersedes and replaces the Second through Ninth
Amendments, and all other prior agreements among the parties with respect to its
subject matter.
15. Except as modified and amended hereby, the Merger Agreement, as
modified by the First Amendment and this Tenth Amendment shall remain in full
force and effect and is in all other respects ratified and confirmed.
16. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year indicated above.
ACCESS SOLUTIONS INTERNATIONAL, INC.
By: /s/ Robert H. Stone
----------------------------------
Robert H. Stone, President and CEO
PAPERCLIP SOFTWARE, INC.
By: /s/ William Weiss
----------------------------------
William Weiss, Chief Executive Officer
PAPERCLIP ACQUISITION CORP.
By: /s/ Robert H. Stone
----------------------------------
Robert H. Stone, President
TENTH AMENDMENT TO CONVERTIBLE PROMISSORY NOTE
THIS TENTH AMENDMENT is made as of the 22nd day of April, 1998, by and
between ACCESS SOLUTIONS INTERNATIONAL, INC., a Delaware corporation having an
address at 650 Ten Rod Road, North Kingstown, Rhode Island 02852 (the "Lender")
and PAPERCLIP SOFTWARE, INC., a Delaware corporation having an address at 611
Route 46, Hasbrouck Heights, New Jersey 07604 (the "Borrower").
W I T N E S S E T H T H A T:
WHEREAS, the Borrower executed and delivered to the Lender a certain
Convertible Promissory Note dated January 29, 1997, as amended on January 8,
1998, February 20, 1998, February 27, 1998, March 3, 1998, March 4, 1998, March
6, 1998, March 10, 1998, March 12, 1998, and March 24, 1998 in the principal
amount of $300,000, which Note is hereby incorporated by reference herein and
made a part hereof (as amended, the "Note"); and
WHEREAS, the parties desire to further extend the maturity date of the
Note; and
WHEREAS, the parties hereto desire to amend the Note in the manner
hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. The "Maturity Date" (as defined in Section 4 of the Note) is hereby
extended from April 22, 1998 to the earlier of: (a) May 15, 1998, or (b)
consummation of the financing contemplated by the Term Sheet dated as of April
14, 1998 between the Company and Malcolm G. Chace.
2. The parties further agree that, effective upon Lender's receipt of
$750,000 from the Financing, the "Maturity Date" is hereby further extended to
"August 24, 1998."
3. Security for the Note is evidenced by, among other things, a Security
Agreement dated as of January 29, 1997, and UCC financing statements filed with
the New Jersey Secretary of State ("Security Instruments"). All references to
the Note in the Security Instruments shall be deemed to include this amendment
to the Note and any other amendments which may be executed.
4. Except as modified and amended hereby, the Note shall remain in full
force and effect and is in all other respects ratified and confirmed.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year indicated above.
LENDER: BORROWER:
ACCESS SOLUTIONS INTERNATIONAL, PAPERCLIP SOFTWARE, INC.
INC.
By: /s/ Robert H. Stone By: /s/ William Weiss
------------------------------ ----------------------------
Title: President and CEO Title: CEO
SECOND AMENDMENT TO MANAGEMENT AGREEMENT
THIS AMENDMENT is made as of the 22nd day of April, 1998, by and between
ACCESS SOLUTIONS INTERNATIONAL, INC., a Delaware corporation having an address
at 650 Ten Rod Road, North Kingstown, Rhode Island 02852 (the "Manager") and
PAPERCLIP SOFTWARE, INC., a Delaware corporation having an address at Three
University Plaza, Hackensack, New Jersey 07601 (the "Owner").
W I T N E S S E T H T H A T:
WHEREAS, Owner and Manager executed and delivered a certain Management
Agreement dated as of April 15, 1997, as amended by a First Amendment to
Management Agreement dated as of November 12, 1997 (the "Management Agreement),
pursuant to which Manager is managing the day-to-day operations of Owner pending
the Merger of Owner into a wholly-owned subsidiary of Manager; and
WHEREAS, the parties hereto now desire to further amend the Management
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Section 4.3 of the Management Agreement is hereby amended by
substituting "August 24, 1998" for "May 31, 1998."
2. Except as modified and amended hereby, the Management Agreement shall
remain in full force and effect and is in all other respects ratified and
confirmed.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year indicated above.
MANAGER:
ACCESS SOLUTIONS INTERNATIONAL, INC.
By: /s/ Robert H. Stone
----------------------------------
Robert H. Stone, President and CEO
OWNER:
PAPERCLIP SOFTWARE, INC.
By: /s/ William Weiss
----------------------------------
William Weiss, Chief Executive Officer
Exhibit 16.1
June 2, 1998
Mr. Denis L. Marchand
Vice President of Finance and Administration
and Chief Accounting Officer
Access Solutions International, Inc.
650 Ten Rod Rd.
North Kingstown, RI 02852
Dear Mr. Marchand:
This is to confirm that the client-auditor relationship between Access Solutions
International, Inc. (Commission File Number 0-28920) and Price Waterhouse LLP
has ceased.
Yours very truly,
/s/ Price Waterhouse LLP
- -------------------------------
Price Waterhouse LLP
cc: Chief Accountant
SECPS Letter File, Mail Stop 11-3
Securities and Exchange Commission
450 Fifth St., N.W.
Washington, D.C. 20549
