<PAGE> 1
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
------------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 5(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED MAY 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
------------------------
COMMISSION FILE NO. 6-19538
IMRS INC.
(Exact name of registrant as specified in Charter)
<TABLE>
<S> <C>
DELAWARE 04-1326879
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
</TABLE>
777 LONG RIDGE ROAD, STAMFORD, CONNECTICUT 06902
(Address of principal executive offices)(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (203) 321-3500
------------------------
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 $.01
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
As of September 15, 1994, there were 7,199,151 shares of the registrant's
Common Stock, $.01 par value, outstanding. The aggregate market value of the
registrant's voting stock held by non-affiliates as of
September 15, 1994 was approximately $251 million.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1994 Annual Report to Stockholders for the
fiscal year ended June 30, 1994 are incorporated by reference in Part II hereof.
Portions of the registrant's Proxy Statement for its 1994 Annual Meeting of
Stockholders, scheduled to be held on November 15, 1994, are incorporated by
reference in Part III hereof.
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
Index to exhibits, page 16 Page 1 of 195
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
IMRS Inc. (the "Company") develops, markets and supports enterprise level
financial applications for client/server environments. IMRS software addresses
the diverse accounting, financial consolidation, management reporting, and
information access needs of large corporations worldwide. The Company designs
products specifically for network implementation, providing fast, multi-user
access to centrally controlled and secure corporate data.
IMRS, Hyperion, IMRS OnTrack, Executive Forum, Micro Control, FASTAR,
FinalForm, Financial Intelligence, Retrieve-MC, Interactive/MC and TelePath are
registered trademarks of the Company. Hyperion Connect, Hyperion Financials,
Hyperion SQL, IMRS Forms, Visual Information Access, and OnRequest are
trademarks of the Company. All other trademarks or tradenames referred to herein
are the property of their respective owners.
INDUSTRY BACKGROUND
Large corporations generate significant amounts of accounting,
manufacturing, human resources, sales and marketing data. To be useful to senior
executives, managers and analysts, such transactional data must be retrieved
from a variety of financial and operational systems, then summarized and
organized into meaningful business information that is consistent and easily
accessible. The process of integrating the data is complicated because most
large corporations use multiple accounting systems and transactional databases,
conduct business in numerous locations and have diverse information requirements
across functions and throughout the management hierarchy.
Historically, corporations have attempted to collect, summarize, organize
and present information from fragmented computer systems and transactional data
sources in a number of ways. In many instances, business information reports are
assembled manually with the aid of spreadsheets and using data from general
ledgers and other operational systems. Additionally, many corporations have
sought to automate business information systems through the use of mainframe or
minicomputer software developed by their internal management information systems
("MIS") department. IMRS believes that these systems are becoming increasingly
obsolete because they are inherently rigid in structure, slow in response time,
expensive to maintain, and difficult to update when information requirements
change. In addition, growing corporate competition has increased the demand for
more comprehensive and timely business information that is accessible throughout
the corporation.
Recent advances in computer and networking technology have allowed business
information processing at large corporations to be moved to local area networks
("LANs") of personal computers. This trend in down-sizing corporate computing
has gained momentum as a result of improvements in PC processing speeds and
memory capacity and the widespread acceptance of LANs. Local area and
enterprise-wide networks have significantly increased the ability to share
information among users throughout an organization. While MIS departments were
initially slow to adopt LAN technology, they now view networked PCs as a
strategic element of information management. LAN-based solutions are becoming
accepted as an important means of decreasing computing costs while improving the
flow, accessibility and usefulness of corporate information. Additionally, the
flexibility of new client/server architectures has led to MIS adoption of new
technologies at a faster pace. Client/server computing takes advantage of the
power of desktop computers by appropriately segregating user interface and
application processing tasks between separate client and server machines.
The need for better business information, combined with the acceptance of
PCs and network computing, has created a significant market opportunity for a
new class of information software designed to operate on this platform. Most
financial analysts and accountants and many executives rely on personal
computers for analysis and forecasting through the use of spreadsheets. While
spreadsheets and other PC software tools have been used to perform some
corporate business information tasks, they have limited capability for
information sharing and lack the necessary controls to ensure corporate
consistency. Existing custom or packaged software
2
<PAGE> 3
for mainframes or minicomputers is impractical to modify for network computing
because it is based on operating systems and architectures which are
incompatible with PCs and lack the ease of use of PC software. The Company's
experience since 1981 in developing and marketing business information
management software for PCs and networks positions it well for this market.
STRATEGY
The Company's objective is to be the leading provider of enterprise level
financial management solutions to large, multi-divisional or multi-location
companies worldwide. Within a corporation, headquarters and remote feeder
systems, primarily mainframe and minicomputer-based, download data to IMRS
software, which manages the transfer of information to a network server
database. Senior executives, managers, analysts and other users may then access
business information through the appropriate IMRS software user interface.
IMRS focuses on designing network-based applications that are easy to
implement and operate. The Company's products are designed to be flexible, easy
to maintain, cost-efficient, fast, functionally complete and integrated with
popular general purpose spreadsheets. The Company will continue to enhance its
functionally rich DOS product line, and extend its suite of integrated Microsoft
Windows-based, client/server products. The Company believes that its financial
reporting and consolidation solutions are well established in the financial and
corporate offices of multinational enterprises. And, accordingly, with the
introduction of Hyperion Financials, a line of integrated transaction-based
accounting management products, IMRS believes it is well positioned to
participate in this emerging client/server, accounting applications market.
Hyperion Financials, which are scheduled for commercial release beginning in
calendar year 1995, will include Microsoft Windows-based: general ledger,
accounts payable, accounts receivable, fixed asset management and purchasing
modules plus toolkit, report writer and system administrator modules.
The Company believes that client/server and networked personal computing
have become a standard direction for the largest and best known companies in the
world. These technologies, when coupled with software that reflects applications
expertise, produce clear and immediate benefits to an organization.
The Company's strategy to achieve its objective includes the following
elements:
Increase Penetration of Financial Reporting Market. The Company believes
that approximately 15% of potential customers have purchased network-based
financial consolidation and reporting software. The Company intends to further
its penetration in this market and expand its leadership position by enhancing
its current products and dedicating significant resources to sales, marketing,
support and new product development.
Leverage Existing Market Leadership Position. The Company believes that
the core of a complete business information system is financial consolidation
and reporting because much of the data that executives use relates to a
company's internal financial information. The Company believes that its
established strength in providing financial reporting solutions places it in a
strong position to market its financial information management applications to
both new and existing customers.
Focus on Leading Network and Software Technologies. IMRS is committed to
the development of network-based software for business information applications.
The Company has products designed to run in the Microsoft Windows environment
and others designed to run on Microsoft's DOS operating system, all of which are
compatible with widely-used LANs. The Company intends to enhance its existing
products and develop new products linked to emerging software standards,
including Windows NT and Sybase SQL server.
Design Applications for Specific Business Information Needs. The Company's
product line is designed specifically for business information data collection,
consolidation and presentation. IMRS products have pre-programmed functionality,
reducing implementation time. This orientation to specific tasks results in
superior processing speed for fast consolidation and access to data. The use of
application specific, as opposed to general purpose, databases optimizes
performance on high volume networked applications. Hyperion SQL, which was
released in fiscal year 1994, offers an industry standard SQL database as an
option.
3
<PAGE> 4
Design for Ease of Implementation and Ease of Use. The Company's products
are designed for an end-user role in implementation and maintenance, with
minimal training. Application expertise is built into products and is also
provided by the Company through consulting services. Following implementation,
customers are able to operate self-sufficiently with trained administrators at
headquarters locations and independent end-users at headquarters and at remote
sites.
Maintain Direct Sales and Support Relationships. Unlike many other PC
software companies, the Company licenses its products throughout the world
primarily through a direct sales force. In certain territories outside of North
America, products are licensed through independent distributors, including major
accounting firms. IMRS often provides installation and post-sale consulting
support to build long-term customer relationships.
Generate Follow-on Revenues. The Company generates revenues from existing
customers through the licensing of additional sites, the introduction of new
products and license renewal fees. In addition, sales of services to existing
customers represents a significant portion of the Company's total service
revenues. Follow-on revenues leverage sales and marketing resources and
strengthen the Company's relationships with its customers.
PRODUCTS AND SERVICES
The Company's product line provides executives, managers, analysts and
accountants with the capability to collect, process, report and analyze business
information. The Company's Hyperion, Micro Control and FASTAR products
consolidate and report financial and other business data; IMRS OnTrack is a
complete Visual Information Access software product; and IMRS Forms and
FinalForm are used to design, implement and control forms for detailed and
consistent data collection. The Company also offers installation, training,
consulting and support services.
PRODUCTS
Hyperion. Hyperion, released in July 1991 and now in its third major
release, is an advanced business information consolidation and reporting product
designed to take advantage of the capabilities of the Microsoft Windows
graphical operating environment. The Company began development of Hyperion in
mid-1988 as a new product that combines powerful consolidation and reporting
capabilities with an open architecture and administrative ease of use made
possible through the graphical user interface of Windows. Hyperion reflects the
Company's twelve years of experience in financial and business information
software, and is targeted to corporations that have committed to a Windows
standard and direction. The Company has provided a migration path to Hyperion
for Micro Control or FASTAR users who may decide to adopt Windows, but intends
to continue to offer both character-based and Windows products to the reporting
and consolidation market. The Company derived approximately 56%, 22% and 4% of
its worldwide total revenues from Hyperion licenses and related services during
fiscal 1994, 1993 and 1992, respectively.
A Hyperion headquarters site license is priced at $125,000 (Hyperion SQL --
$150,000), with reporting site licenses priced at $4,500 or less, depending on
the number of sites.
Micro Control. Micro Control was introduced in 1982 and is now in its
seventh major release. Micro Control consolidates, reports and maintains, in one
integrated database, a company's financial and statistical reporting
information, including actual, budget, forecast, plan and prior years' data. The
Company derived approximately 27%, 56% and 75% of its worldwide total revenues
from Micro Control licenses and related services during fiscal 1994, 1993 and
1992, respectively.
Micro Control enables a financial staff to independently manage the
collection, consolidation, analysis and reporting of financial data without the
need for technical training. Information can be automatically loaded from
various sources, including mainframe or minicomputer-based general ledgers and
from spreadsheets. Reporting locations enter and validate information and
transmit it to headquarters through a wide area network, local area network or
direct PC-to-PC. Consolidation, currency conversions, intercompany eliminations
and expense allocations are performed automatically by Micro Control. Security
and audit trail features are also provided.
4
<PAGE> 5
The Company offers several complementary Micro Control modules. Through
Retrieve-MC and Retrieve MC/XL, Micro Control users can link directly to Lotus
1-2-3 and Microsoft Excel, respectively, for further data manipulation and
analysis. TelePath allows menu-driven on-screen report building. Chartbuilder
provides a method for quick and easy creation and maintenance of a Micro Control
system.
A Micro Control headquarters site license is priced at $95,000, and it
allows for an unlimited number of computers at the site to run the software.
Reporting site licenses are $3,500 per site or less, depending on the number of
sites.
FASTAR. FASTAR, acquired in 1989 in connection with the Company's
acquisition of Corporate Class Software, Inc., is a spreadsheet-based financial
consolidation and reporting system. FASTAR incorporates many of the same
consolidation and reporting features as Micro Control, but is targeted to
organizations oriented to a spreadsheet-based solution. It provides significant
ease of use and learning advantages for companies with a large investment in
Lotus 1-2-3. While financial reporting in Micro Control is based on a chart of
accounts, FASTAR uses financial schedules as the primary data interface and uses
cell/range-based logic consistent with Lotus 1-2-3 conventions. FASTAR uses
Lotus 1-2-3 as both an input and output reporting mechanism, and a corporation's
existing Lotus 1-2-3 spreadsheets may be used as templates for FASTAR schedules.
FASTAR is designed to allow consolidation of financial results from diverse
locations, with reporting and query capabilities at all levels. Control is
realized through password protection and on-line data and validity checks.
FASTAR allows communication of information between remote sites and
headquarters.
A FASTAR headquarters site license is priced at $75,000, and it allows for
up to thirty computers to use the software. Reporting site licenses are $3,000
per site or less, depending on the number of sites.
IMRS OnTrack. IMRS OnTrack, introduced in 1989 and now in its third major
release, is a Microsoft Windows-based, Visual Information Access product. IMRS
OnTrack provides senior executives, managers and analysts with access to
business information through an attractive, intuitive user interface.
Presentation of information from a variety of sources, which may include one of
the Company's financial reporting software products, is easily accomplished
through a set of Windows-based system administration facilities. Information
from mainframe or network-based systems, such as marketing, sales, human
resources or production data, and external information, such as stock price
quotations or economic data, may also be incorporated. Graphics and spreadsheets
are easily integrated. A key benefit to IMRS OnTrack is greatly reduced
development and maintenance effort in comparison to traditional mainframe-based
systems.
The Company's Executive Forum product, a module that works within IMRS
OnTrack, was released in October 1991. This product was developed in cooperation
with Lotus Development Corporation and integrates IMRS OnTrack with Lotus Notes,
a LAN-based group communications software product. Executive Forum permits users
to share analysis and comments related to the business information presented in
IMRS OnTrack through use of a Lotus Notes database.
OnRequest, another IMRS OnTrack module was released in June 1992. OnRequest
incorporates Trinzic Corp.'s Forest and Trees product into IMRS OnTrack,
providing access to a number of SQL databases.
An IMRS OnTrack license for system administration and including 10 end
users is priced at $65,000. An Executive Forum headquarters license is priced at
$15,000 and includes 10 users and 10 copies of Lotus Notes. An OnRequest license
for application development, including 10 end user versions of Forest and Trees,
is priced at $15,000.
FinalForm. FinalForm, a Microsoft DOS-based product introduced in 1987, is
used to design, implement and control forms for detailed and consistent data
collection. FinalForm permits headquarters staff to design forms for data entry
and to control submission and collection of forms. Major features of FinalForm
include validation procedures embedded within data entry forms, distribution of
forms to field locations and cross-validation of multiple forms. FinalForm can
be used to build such self-contained applications as tax reporting, product
tracking and financial reporting schedules and to cross-validate data between
applications. FinalForm is frequently integrated with one of the Company's
financial reporting software products, providing expanded data entry and control
capabilities.
5
<PAGE> 6
A headquarters site license for FinalForm is priced at $40,000, with remote
locations priced at $1,000 per site.
IMRS Forms. IMRS Forms, commercially released in fiscal year 1994, is a
Microsoft Windows-based product used to control a full range of data collection
and forms management functions. IMRS Forms supports financial workflow by
accelerating and securing data collecting and transferring procedures. It
provides customers with the ability to design custom forms for detailed data
entry and transfer data into IMRS Forms from virtually any corporate database.
A headquarters site license for IMRS Forms is priced at $60,000, with
remote locations priced at $1,500 per site.
SERVICES
The Company provides design consulting and implementation support for its
products and their operation on LANs and offers a range of administrator and
end-user courses at its training facilities or at the customer's site.
Implementation, consulting and training services are not included in software
license fees but are provided on a time and materials basis. This allows the
customer to determine the level of support appropriate to its needs and permits
the Company to provide high quality services on a profitable basis.
Following product implementation, a customer receives support under its
standard license renewal and maintenance fee and may choose, through payment of
a retainer, to receive ongoing consulting services at a discount from standard
rates. Under the terms of the Company's standard license agreement, customers
pay a license renewal and maintenance fee 90 days after delivery of software and
annually thereafter. The annual fee charged to a customer is generally a fixed
percentage of the then-current list prices for the licensed software used by the
customer (subject to a 10% limit on the permitted increase in any one year).
This fee entitles customers to support, including a user hotline and electronic
bulletin board, and to any updates and enhancements provided for their software.
The Company's product support function provides a hotline, collects and
evaluates requests for enhancement of products and together with the product
management and planning group, coordinates the design, development and releases
of new products and product enhancements.
An active user group, including a steering committee and product
enhancement sub-committees, works closely with the Company in helping to define
product enhancement priorities and directions. A U.S. user group meeting,
attended by over 1,200 users from 513 companies in April 1994, is held annually.
Regional user meetings and product-specific focus groups are also scheduled
periodically, including an annual European user group meeting.
CUSTOMERS AND APPLICATIONS
The Company markets its products worldwide to multi-divisional or
multi-locational organizations which have extensive operations and significant
information management requirements. Examples of the use of IMRS products by the
Company's clients include the following:
- A leading international home appliance manufacturer and marketer has
implemented Hyperion as part of its global financial information process
re-engineering initiative. Operating in more than 120 countries, sites
from around the world were previously faxing data to corporate
headquarters, where the data was manually entered into spreadsheets. The
entire process was "extremely tedious and prone to error," according to
the company. Now, Hyperion is addressing the company's expanding global
information requirements, providing easy access to data, direct links to
spreadsheets and easy system maintenance, all within a Microsoft
Windows-based computing environment.
- A healthcare company eliminated tedious re-keying of data and
dramatically reduced manual input by using Hyperion for its worldwide
financial information requirements. An expanding presence in Europe and
the addition of a new line of over-the-counter products required that the
company keep track of an extensive amount of product data on a global
basis. Essential business data of the company includes knowing where and
when sales are made, products are introduced, and whether budgets are
being
6
<PAGE> 7
achieved. Hyperion's flexible reporting, dynamic links to spreadsheet
products, speed, and access to both detail and top-level data for
more than 500 products is the cornerstone for this data.
- IMRS software solutions are critical components in the budgeting and
forecasting activities of a $2 billion services organization. Rapid
growth over the last several years made system flexibility and control
a paramount concern and, according to the company, IMRS products and
services meet these requirements. With Microsoft Windows adopted as the
company's standard operating environment, Hyperion currently downloads
financial data into several critical databases. Before the Hyperion
implementation, this process required 35 people; now, it is completed
in less than a day, resulting in more time for analysis of the information.
The Company has licensed its software to over 1,600 corporate headquarters
customers. In the past three fiscal years, no one customer accounted for more
than 10% of total revenues. The Company's customers include the following:
<TABLE>
<CAPTION>
COMPUTERS & SOFTWARE FINANCIAL SERVICES & INSURANCE COMMUNICATIONS
- - - ---------------------- ------------------------------- ----------------------
<S> <C> <C>
3COM Aetna AT&T
Amdahl American Express Bell Atlantic
AST Research Bank of America BellSouth
AT&T/GSI The Bank of New York Centel
Bull Chemical Bank GTE
Compaq Computer Dean Witter ITT
Digital Equipment Kemper Life ICL
Lotus Development Metropolitan Life NYNEX
Novell National Westminster Bancorp SNET
Wang Skandia Southwestern Bell
Shawmut Bank Sprint
Teacher's Insurance Turner Broadcasting
USF&G
</TABLE>
<TABLE>
<CAPTION>
CONSUMER GOODS FOOD & BEVERAGE UTILITIES & ENERGY
- - - ---------------------- ------------------------------- ----------------------
<S> <C> <C>
American Brands Burger King AMOCO
Black & Decker CPC International Arco Oil & Gas
Bristol Myers Squibb Dannon BP Oil
Clairol Dole Canadian Occidental
Colgate-Palmolive Hiram Walker -- Allied Vintners Citizens Utilities
Eveready Battery H.J. Heinz Conoco
Gillette Kraft General Foods Mobil Oil
Goodyear Nabisco International Northwest Utilities
Levi Strauss & Co. Pepsi-Cola International Pennzoil
Nike Reckitt & Colman Santa Fe Energy
Sony USA Sara Lee Southern California
Timex Gas
Whirlpool Tenneco
</TABLE>
SALES AND MARKETING
The Company has a direct sales force comprised of 77 sales personnel as of
June 30, 1994. The Company supports its sales force with lead generation and
marketing programs which include telemarketing, public relations, direct mail,
advertising, seminars, trade shows and ongoing customer communication programs.
The Company has sales offices at its headquarters in Stamford, Connecticut and
in: Atlanta, Boston, Brussels, Calgary, Chicago, Dallas, Denver, Detroit,
Frankfurt, Hong Kong, Houston, London, Los Angeles, Manchester, Milan, Newark,
Ottawa, Paris, Philadelphia, Rome, St. Louis, San Francisco, Seattle, Tampa, The
Netherlands, Toronto and Washington, DC. Product support and training are
available as well through many of these locations.
7
<PAGE> 8
The Company markets its products outside of North America through a
combination of subsidiaries and independent distributors. These distributors are
managed through the Company's facility in Milan, Italy, which is staffed by
fourteen Company employees. The Company has license and distribution agreements
with independent distributors in: Australia, Austria, Japan, Mexico, New
Zealand, Scandinavia, South Africa, Southeast Asia, Spain and Switzerland. The
Company's distributors include affiliates of Arthur Andersen & Co. in Japan,
Spain and Switzerland, and of KPMG Peat Marwick in Australia and New Zealand.
The distributors generally maintain sales and service personnel dedicated solely
to the Company's products. The distribution agreements between the Company and
its distributors generally provide for the exclusive right to offer the
Company's products within a territory, in return for royalties typically equal
to 50% of license and license renewal fees. In each of its 1994, 1993 and 1992
fiscal years, approximately 29.3%, 27.8% and 20.0%, respectively, of the
Company's total revenues were derived from sources outside of the United States.
Because the Company generally ships its products shortly after license
agreements are signed, the Company's software licensing backlog is typically
small.
PRODUCT DEVELOPMENT
To date, all of the Company's products have been developed by its internal
staff except for FASTAR, which was acquired in connection with the Company's
acquisition of Corporate Class Software, Inc., and portions of IMRS OnTrack and
IMRS Forms. When developing a new product or enhancement, the Company works
closely with current and prospective customers to determine their requirements.
A user product enhancement committee, comprised of representatives of certain of
the Company's customers, meets quarterly and advises the Company of their
priorities for product development and enhancement, as well as product support
service.
The Company's current product development efforts are primarily focused on
Hyperion Financials, and on maintaining the competitiveness of its current
product line, including development of the next releases of Hyperion, Micro
Control, IMRS OnTrack and IMRS Forms. The Company generally releases
enhancements to its products every 12 to 18 months. As of June 30, 1994, the
Company's product development was performed by 116 employees primarily located
at its Stamford, Connecticut headquarters.
During fiscal 1994, 1993 and 1992, the Company's product development
expense, which is net of capitalized development costs, was $10,538,000,
$7,029,000 and $5,398,000, or 12.5%, 11.5% and 11.7% of total revenues,
respectively. In accordance with Statement of Financial Accounting Standards No.
86, the Company capitalizes certain development costs. During fiscal 1994, 1993
and 1992, the Company capitalized $4,009,000, $2,050,000 and $1,490,000,
respectively, or 27.6%, 22.6% and 21.6% of total product development
expenditures.
In February 1993, the Company acquired, from MAI Systems Corporation,
client/server accounting and related applications technology for $2,600,000. The
substance of the transaction represented the purchase of research and
development and, as such, is included as a one-time charge in the Company's 1993
operating results. The Company is using this technology to develop accounting
software, including general ledger, accounts payable, accounts receivable, fixed
assets and purchasing systems. Complementing Hyperion, the Company's existing
Microsoft Windows-based financial information solution, these products will
constitute Hyperion Financials, a fully integrated line of financial
applications software designed for large company client/server environments. The
accounting products are scheduled for commercial release beginning in calendar
year 1995.
COMPETITION
The principal competitive factors in the markets served by the Company
include product quality and functionality, speed, reliability, ease of use,
customer satisfaction, service, price, and vendor reputation and financial
stability. The Company believes that its products currently compete favorably
with respect to such factors, although it may be at a competitive disadvantage
against companies with greater financial, marketing, service and support and
technological resources.
8
<PAGE> 9
The Company experiences competition from applications software vendors and
from software developed by the MIS departments of its potential customers. Many
of the Company's potential customers utilize software developed internally for
mainframes or minicomputers. The market for network-based business information
software is still an emerging market and is not well established. As the market
for the Company's products develops, additional competitors may enter the market
and competition may intensify. Some of the Company's current and potential
competitors have significantly greater development, marketing and capital
resources than the Company. While IMRS is anticipating formidable competition
with respect to Hyperion Financials, the Company believes the presence and
acceptance of its existing financial management solutions in the marketplace
will serve to establish the position of Hyperion Financials in the emerging
client/server, transaction-based accounting applications market.
PROPRIETARY RIGHTS AND LICENSES
The Company depends upon a combination of trade secret, copyright and
trademark laws, license agreements, nondisclosure and other contractual
provisions and technical measures to protect its proprietary rights in its
products. In addition, the Company attempts to protect its trade secrets and
other proprietary information through agreements with employees and consultants.
Despite these precautions, it may be possible for unauthorized third parties to
copy aspects of the Company's products or to obtain information that the Company
regards as proprietary. The Company also seeks to protect the source code of its
products as a trade secret and as an unpublished copyright work.
The Company distributes its products under software license agreements
which grant customers a nonexclusive, nontransferable license to the Company
products and contain terms and conditions prohibiting the unauthorized
reproductions or transfer of the Company's products. The Company does not
provide licensees with the source code for its products.
Customers are billed an initial license fee for the software upon delivery
and, subsequently, are billed an annual license renewal fee entitling them to
routine support and product updates. The license renewal fee is typically
calculated at a fixed percentage of the then-current price of all licensed
software used by the customer, subject to a maximum year-to-year increase of
10%. After four years, the licensee may elect to cease paying annual license
renewal fees and receive a perpetual fully paid license to use the licensed
software in its then current form, without receiving future updates or product
support. See "Services."
The Company believes that, due to the rapid pace of innovation within the
software industry, factors such as the technological and creative skills of its
personnel and ongoing reliable product maintenance and support are more
important in establishing and maintaining a leadership position within the
industry than are the various legal protections of its technology. In addition,
the Company believes that the nature of its customers, the importance of the
Company's products to them and their need for continuing product support reduce
the risk of unauthorized reproduction.
EMPLOYEES
As of July 31, 1994, the Company employed a total of 580 employees,
including 139 in marketing and sales, 389 in product development, support and
technical services, and 52 in management, administration and finance. None of
the Company's employees is represented by a labor union. The Company has
experienced no work stoppages and believes that its employee relations are good.
9
<PAGE> 10
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James A. Perakis......... 50 President and Chief Executive Officer and Director
Terence W. Rogers........ 52 Executive Vice President
David M. Sample.......... 46 Senior Vice President
John N. Adinolfi......... 44 Vice President -- Marketing
Thomas E. Bell........... 40 Vice President -- Product Development
Gordon O. Rapkin......... 39 Vice President -- Product Management and Planning
Lucy Rae Ricciardi....... 52 Vice President -- Finance and Chief Financial
Officer
Craig M. Schiff.......... 39 Vice President -- Products and Services and
Secretary
</TABLE>
Mr. Perakis has served as Chief Executive Officer and as a director of the
Company since September 1985 and as President since December 1987. Mr. Perakis
is also Chairman of the Board of Directors. From 1983 to September 1985, Mr.
Perakis served as Senior Vice President and General Manager of Chase Decision
Systems, a division of Interactive Data Corporation, a developer and marketer of
mainframe software for planning and financial applications. From 1979 to 1983,
Mr. Perakis was Chief Financial Officer of Interactive Data Corporation, a
supplier of data and software to financial and corporate markets.
Mr. Rogers was appointed Executive Vice President of the Company in August
1993. From August 1991 to August 1993, Mr. Rogers served as Vice President --
Communications Products Division of Lotus Development Corporation, a developer
and marketer of applications software and information services. From April 1990
to August 1991, Mr. Rogers was Vice President -- Spreadsheet Development of
Lotus. Prior to April 1990, Mr. Rogers served in a variety of senior development
positions at IBM.
Mr. Sample was appointed Senior Vice President of the Company in July 1993.
From July 1986 to July 1993, Mr. Sample served as Vice President -- Sales of the
Company. From 1978 to July 1986, Mr. Sample was associated with the Business
Information Services Division of Control Data Corporation, most recently as a
District Sales Manager.
Mr. Adinolfi has served as Vice President -- Marketing of the Company since
March 1987. Prior to March 1987, Mr. Adinolfi served in a variety of software
and product management positions with Dun & Bradstreet.
Mr. Bell was appointed Vice President -- Product Development of the Company
in April 1994. From May 1991 to April 1994, Mr. Bell served first as Director of
Software Architecture and later as Director of Programming of the Company. Prior
to May 1991, Mr. Bell served as Director of Development with Must Software, a
spin-off from Dun & Bradstreet.
Mr. Rapkin was appointed Vice President -- Product Management and Planning
of the Company in November 1992. From October 1988 to November 1992, Mr. Rapkin
served as Vice President -- Product Development of the Company. From 1981 to
October 1988, Mr. Rapkin served as Senior Director, Product Development of
Comshare, Inc., an applications software company.
Ms. Ricciardi has served as Vice President -- Finance and Chief Financial
Officer of the Company since February 1990. From February 1988 to February 1990,
Ms. Ricciardi served as Director of Finance of the Company. Prior to 1988, Ms.
Ricciardi was associated with Dun & Bradstreet, most recently in its
Acquisitions Analysis Group.
Mr. Schiff has served as Vice President -- Products and Services of the
Company since July 1985. Mr. Schiff originally joined the Company in July 1983.
Prior to July 1983, Mr. Schiff served in a variety of customer service and
support positions with General Electric Information Services.
ITEM 2. PROPERTIES
The Company's principal administrative, marketing and product development
and support facilities are located in Stamford, Connecticut, where the Company
leases approximately 73,600 square feet under several agreements that expire in
fiscal 1996. The annual base rent (not including operating expenses, insurance,
10
<PAGE> 11
property taxes and assessments) is approximately $1,300,000 and is subject to an
annual adjustment in accordance with the Consumer Price Index.
The Company also leases regional office space for its local sales and
service needs.
On September 27, 1994, the Company agreed in principle to purchase an
office facility in Stamford, Connecticut for $11.4 million. The Company has
outgrown, particularly with respect to increases in research and development
activities, the offices it currently leases in Stamford. The new location has
approximately 140,000 square feet of existent office space and it offers the
possibility of expansion.
The purchase price is to be financed by the Connecticut Development
Authority ("CDA," an agency of the State of Connecticut) through a $9.5 million
mortgage loan, with Company funds to be used for the balance. In the interest of
Connecticut-based jobs, the CDA has agreed to such financing over a 15 year
period at LIBOR minus 2%, subject to, among other things: (i) the creation of a
specified number of new Connecticut-based jobs, (ii) a ten year residency in the
state, and (iii) the payment of the remaining unpaid principal at year ten.
Violations of certain such covenants, if any, would result in additional
interest charges and/or a penalty payment.
The purchase transaction is subject to a third party's right of first
refusal to acquire the property which right expires in October 1994, as well as
the outcome of customary due diligence procedures, including independent
appraisals of the property, and the execution of a definitive purchase and sale
agreement. In the meantime, the Company continues its evaluation of various
other expansion alternatives.
ITEM 3. LEGAL PROCEEDINGS
The Company has no material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, no
matter was submitted to a vote of security holders, through the solicitation of
proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
See the section entitled "Common Stock Data," which is incorporated herein
by reference, appearing on page 34 of the Company's 1994 Annual Report to
Stockholders.
ITEM 6. SELECTED FINANCIAL DATA
See the section entitled "Selected Consolidated Financial Data," which is
incorporated herein by reference, appearing on page 12 of the Company's 1994
Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
See the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which is incorporated herein by reference,
appearing on pages 13 through 19 of the Company's 1994 Annual Report to
Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, which are incorporated herein by
reference to the Company's 1994 Annual Report to Stockholders, are indexed
herein under Item 14(a)(1) of Part IV. See also the financial statement
schedules appearing herein, as indexed under Item 14(a)(2) of Part IV.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
11
<PAGE> 12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See the sections entitled "Election of Directors" and "Reports About
Ownership of the Company's Common Stock," which are incorporated herein by
reference to the Company's Proxy Statement for its 1994 Annual Meeting of
Stockholders. See also the section entitled "Executive Officers of the Company"
appearing in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
See the section entitled "Compensation Information Concerning Directors and
Officers," which is incorporated herein by reference to the Company's Proxy
Statement for its 1994 Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See the section entitled "Principal Holders of Voting Securities," which is
incorporated herein by reference to the Company's Proxy Statement for its 1994
Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See the section entitled "Certain Transactions," which is incorporated
herein by reference to the Company's Proxy Statement for its 1994 Annual Meeting
of Stockholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) FINANCIAL STATEMENTS WHICH ARE INCORPORATED HEREIN BY REFERENCE TO THE
COMPANY'S 1994 ANNUAL REPORT TO STOCKHOLDERS:
Consolidated Balance Sheet as of June 30, 1994 and 1993.
Consolidated Statement of Income for the years ended June 30, 1994,
1993 and 1992.
Consolidated Statement of Stockholders' Equity for the years ended June
30, 1994, 1993 and 1992.
Consolidated Statement of Cash Flows for the years ended June 30, 1994,
1993 and 1992.
Notes to Consolidated Financial Statements.
(2) FINANCIAL STATEMENT SCHEDULES, WHICH ARE INCLUDED AT THE END OF THIS
REPORT:
Schedule VIII -- Valuation and Qualifying Accounts
Schedule IX -- Short-Term Borrowings
All other schedules have been omitted since they are not required, not
applicable or the information has been included in the consolidated
financial statements or the notes thereto.
(3) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- - - ----------- -----------------------------------------------------------------------------
<C> <C> <S>
**3.1 -- Restated Certificate of Incorporation of the Company.
**3.2 -- By-laws, as amended and restated, of the Company.
**10.1 -- 1985 Incentive Stock Option Plan.
**10.2 -- 1989 Stock Option Plan.
**10.3 -- 1991 Stock Plan.
**10.4 -- 1991 Employee Stock Purchase Plan.
**10.5 -- 1991 Non-Employee Director Stock Option Plan.
**10.6 -- Sub-Lease Agreement with Amstar Corporation for the lease of premises located
at 777 Long Ridge Road, Stamford, CT
**10.7 -- Sub-Lease Agreement with Citicorp North America, Inc. for the lease of
premises located at 777 Long Ridge Road, Stamford, CT.
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- - - ----------- -----------------------------------------------------------------------------
<C> <C> <S>
**10.8 -- Sub-Lease Agreement with National Reinsurance Corporation for the lease of
premises located at 777 Long Ridge Road, Stamford, CT.
***10.9 -- Amended and Restated Credit Agreement with The Bank of New York and the
signatory banks thereto, dated as of May 1, 1992 (including forms of guaranty
and security agreement, and pledge agreement).
**10.10 -- Registration Rights Agreement among the Company and certain holders of Common
Stock of the Company, dated as of August 9, 1991
10.11 -- Employment Agreement with James A. Perakis, dated as of August 1, 1993
10.12 -- Employment Agreement with David M. Sample, dated as of July 1, 1994
10.13 -- Employment Agreement with Lucy Rae Ricciardi, dated as of July 1, 1994.
10.14 -- Employment Agreement with Craig M. Schiff, dated as of July 1, 1994.
10.15 -- Employment Agreement with John N. Adinolfi, dated as of July 1, 1994
10.16 -- Employment Agreement with Gordon O. Rapkin, dated as of July 1, 1994.
**10.17 -- Agreement with Marco Arese Lucini, dated as of October 1, 1990.
**10.18 -- Stock Option Agreement with Harry S. Gruner, dated as of December 22, 1989.
10.19 -- Employment Agreement with Thomas Bell, dated as of July 1, 1994.
**10.20 -- Form of Software License Agreement.
**10.21 -- Consulting Agreement with Natcom Consulting Services Ltd., dated as of
January 1, 1988.
**10.22 -- Consulting Agreement with Natcom Consulting Services Ltd., dated as of
January 1, 1991, and amendments thereto.
**10.23 -- Software Development License Agreement with Teknedata S.R.L.
**10.24 -- Lease with 1033 Washington Blvd. Associates, dated as of December 23, 1985
and amended thereto.
10.25 -- [Reserved]
10.26 -- [Reserved]
**10.27 -- License Agreement with KPMG Peat Marwick Hungerfords Managements Consultants
dated as of June 8, 1989.
**10.28 -- Trademark and Tradename License Agreement with KPMG of Hong Kong.
**10.29 -- License Agreement with IMRS Nordic dated as of January 1, 1989.
**10.30 -- License Agreement with Prologic Decision Support (PTY) Ltd. dated as of March
28, 1991.
**10.31 -- License Agreement with Arthur Andersen Japan dated as of December 17, 1990.
*10.32 -- Software Development and License Agreement with Channel Computing, Inc.,
dated February 27, 1992.
**10.33 -- License Agreement with Arthur Andersen AG dated as of November 2, 1989.
**10.34 -- License Agreement with Drs. A.J. Hordijk BV dated as of July 1, 1989.
10.35 -- [Reserved]
*10.36 -- Distributor Agreement with Arthur Andersen Auditors, S.A. dated March 1,
1992.
*10.37 -- Distributor Agreement with Austrian Industries Informatics Ges.m.b.H dated
July 1, 1992.
***10.38 -- Amendment to the Termination of the License Agreement with Sema Group Systems
Limited, Government and Commerce Division, dated March 31, 1992.
***10.39 -- Exclusive Sales Agency Agreement with Sema Group Systems Limited, Government
and Commerce Division, dated April 1, 1992
***10.40 -- Business Purchase and Sale Agreement with Sema Group Systems Limited,
Government and Commerce Division, dated March 31, 1992, effective July 1,
1992.
****10.41 -- Asset Purchase and Sale Agreement between Columbia Software, Inc. and IMRS
Inc., dated January 21, 1993.
****10.42 -- Asset Purchase and Sale Agreement between MAI Systems Corporation and IMRS
Inc., dated February 12, 1993.
*****10.43 -- Letter Agreement with Arthur Andersen AG, dated as of May 19, 1993, regarding
distribution of Company products in Switzerland and Liechtenstein.
*****10.44 -- Waiver and Amendment to Amended and Restated Credit Agreement with The Bank
of New York and signatory banks thereto, dated as of June 30, 1993.
*****10.45 -- Employment Agreement with Terence W. Rogers, dated as of July 16, 1993.
10.46 -- Distributor Agreement with Consultores de Integracion de Sistemas S.A. de
C.V.
10.47 -- Distributor Agreement with Delteq Systems Pte Ltd. 13.1
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- - - ----------- -----------------------------------------------------------------------------
<C> <C> <S>
13.1 -- Registrant's Annual Report to Stockholders for fiscal year ended June 30,
1994 (filed herewith to the extent expressly incorporated by reference
herein).
22.1 -- Subsidiaries of the Company.
23.1 -- Consent of Ernst & Young LLP, independent auditors (filed herewith).
</TABLE>
- - - ---------------
* Incorporated by reference to the exhibits to the registrant's
Registration Statement on Form S-1 (File No. 33-50694)
** Incorporated by reference to the exhibits to the registrant's Registration
Statement on Form S-1 (File No. 33-42855).
*** Incorporated by reference to the exhibits to the registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1992.
**** Incorporated by reference to the exhibits to the registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1992.
***** Incorporated by reference to the exhibits to the registrant's Annual
Report on Form 10-K for the year ended June 30, 1993.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed or were required to be filed by the
registrant during the fourth quarter of the fiscal year ended June 30, 1994.
14
<PAGE> 15
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.
IMRS INC.
(Registrant)
/s/ JAMES A. PERAKIS
Date: September 27, 1994 By:.................................
JAMES A. PERAKIS
President
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - - ------------------------------ ----------------------------------------- -------------------
<C> <S> <C>
/S/ JAMES A. PERAKIS President, Chief Executive Officer and September 27, 1994
............................ Director
JAMES A. PERAKIS (principal executive officer)
/S/ LUCY RAE RICCIARDI Chief Financial Officer September 27, 1994
............................ (principal financial and accounting
LUCY RAE RICCIARDI officer)
/S/ GARY G. GREENFIELD Director September 22, 1994
............................
GARY G. GREENFIELD
Director September , 1994
............................
HARRY S. GRUNER
/S/ WILLIAM W. HELMAN IV Director September 21, 1994
............................
WILLIAM W. HELMAN IV
/S/ MARCO ARESE LUCINI Director September 27, 1994
............................
MARCO ARESE LUCINI
/S/ ALDO PAPONE Director September 27, 1994
............................
ALDO PAPONE
Director September , 1994
............................
ROBERT W. THOMSON
</TABLE>
15
<PAGE> 16
SCHEDULE VIII
IMRS INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
----------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER ACCOUNTS DEDUCTIONS END
DEDUCTIONS OF PERIOD EXPENSES -- DESCRIBE -- DESCRIBE OF PERIOD
- - - ------------------------------- ---------- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
For the year ended June 30,
1992
Allowance for doubtful
accounts, returns and
discounts............... $ 601 $ 706 $ 257(a) $ 1,050
For the year ended June 30,
1993
Allowance for doubtful
accounts, returns and
discounts............... 1,050 1,194 1,044(a) 1,200
For the year ended June 30,
1994
Allowance for doubtful
accounts, returns and
discounts............... 1,200 1,904 1,604(a) 1,500
</TABLE>
- - - ---------------
(a) Write-offs, returns and discounts, net of recoveries.
16
<PAGE> 17
SCHEDULE IX
IMRS INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(B)
(A) WEIGHTED
MAXIMUM AVERAGE AVERAGE
WEIGHTED AMOUNT AMOUNT INTEREST
BALANCE AVERAGE OUTSTANDING OUTSTANDING RATE
CATEGORY OF AGGREGATE AT END INTEREST DURING DURING DURING
SHORT-TERM BORROWINGS OF PERIOD RATE THE PERIOD THE PERIOD THE PERIOD
- - - ----------------------------------------- --------- -------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Year ended June 30, 1992
14% notes payable................... $68 14% $ 73 $ 67 14%
Revolving line of credit............ -- 9.5% 731 244 9.5%
</TABLE>
- - - ---------------
(a) The average amount outstanding during the period was computed by dividing
the total of month-end outstanding principal balances by 12.
(b) The weighted average interest rate during the period was computed by
dividing the actual interest expense by the average amount of short-term
debt outstanding during the period.
17
<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT ("Agreement") made as of the 1st day of August,
1993, between JAMES A. PERAKIS of Wilton, Connecticut, (hereinafter referred to
as "Employee") and IMRS Operations Inc. d/b/a IMRS INC., a Delaware corporation
with offices in Stamford, Connecticut (hereinafter referred to as
"Corporation")-
WHEREAS, the Corporation and Employee are parties to an Employment
Agreement dated as of August 1, 1990 (the "Previous Agreement").
WHEREAS, the Corporation desires to extend the employment of the
Employee to July 31, 1996, and the Employee desires that his employment with
the Corporation be extended to July 31, 1996, on the terms and conditions
hereinafter set forth.
WHEREAS, the Employee is vested with the options to purchase the
Corporation's voting stock listed in Schedule A, which options shall remain in
force and effect in accordance with their respective terms and conditions.
NOW THEREFORE, in consideration of the mutual covenants and promises of
the parties hereto, the Corporation and the Employee agree as follows:
1. EMPLOYMENT: The Corporation hereby agrees to employ the Employee as
its President and Chief Executive Officer to perform managerial and executive
functions of the Corporation on the terms and conditions hereinafter stated,
and the Employee hereby agrees to perform such services for the Corporation on
the
<PAGE> 2
terms and conditions hereinafter stated, subject to the directions of the Board
of Directors of the Corporation. Employee shall submit a business plan to the
Board of Directors for its approval each year during the term of this
Agreement, prior to September 30 of each fiscal year of the Corporation.
Employee shall have the responsibility of managing the Corporation on a
day-to-day basis in order to promote the goals set forth in the aforesaid
business plan.
2. TERM OF EMPLOYMENT: The initial term of this Agreement shall begin
as of August 1, 1993 and shall continue in full force and effect until July 31,
1996; provided, however, that this Agreement shall be automatically renewed
from year to year thereafter for successive one (1) year terms unless
terminated by either party on written notice sent not later than three (3)
months prior to the expiration of the initial three (3) year term or any
renewal year, which notice shall be effective on the last day of the year
immediately succeeding the then current year, unless sooner terminated as
provided herein.
3. Compensation:
------------
(a) The Corporation shall pay the Employee an annual base salary ("Base
Salary") for the first year of this Agreement equal to TWO HUNDRED AND
THIRTY-FIVE THOUSAND DOLLARS ($235,000.00) per annum, payable at the rate of
NINE THOUSAND SEVEN HUNDRED AND NINETY-ONE and 66/100 ($9,791.66) DOLLARS on
the 15th and last day of each month. This Base Salary may be increased
effective
-2-
<PAGE> 3
August 1, 1994 and August 1, 1995 in an amount to be determined by the Board of
Directors in its sole discretion, provided that any such increase shall in no
event be greater than 10% over the Employee's then current Base Salary.
(b) As additional compensation, the Corporation, in the sole discretion
of the Board of Directors, shall pay to Employee an annual performance bonus
based upon a formula submitted to and approved by the Board of Directors. Each
year during the term hereof the Chief Executive Officer ("CEO") shall, prior to
September 30, submit such formula to the Board of Directors for its approval.
In approving the formula, the Board of Directors shall take into consideration,
among other factors, the Corporation's progress in achieving the goals
established in the annual business plan, the Corporation's profitability and
revenue growth as projected in such plan, and the compensation packages of CEOs
of comparable companies of similar size in the software industry. Without
limiting the generality of the foregoing, the Employee's annual performance
bonus for the first year of the term hereof shall be targeted at forty (40%)
percent of the Employee's Base Salary for such year provided that the
Corporation achieves all of the goals relating to his annual performance bonus
established in the annual business plan for the such year.
-3-
<PAGE> 4
4. Fringe Benefits:
---------------
(a) The Corporation shall provide the Employee with either all benefits
provided to its senior executives generally or to its employees generally,
whichever is more favorable to the Employee.
(b) The Corporation shall provide the Employee with basic major medical
insurance for the Employee and his immediate family which is at least
equivalent to the Corporation's current medical insurance plan and shall in no
event be less favorable than the more favorable of either the medical insurance
provided to the Corporation's senior executives generally or its employees
generally.
(c) The Employee is authorized to incur on behalf of the Corporation
reasonable expenses in connection with the business of the Corporation. The
Corporation will reimburse the Employee for all reasonable expenses incurred in
connection with the business of the Corporation upon the presentation by the
Employee, from time to time, of an itemized account of such expenditures, which
itemized account shall be in conformity with Section 274(d) of the Internal
Revenue Code of 1986, as amended.
(d) The Corporation shall provide the Employee with a term insurance
policy on the life of the Employee in the amount of two (2) times the
Employee's current Base Salary. The Employee will be the initial owner of said
policy and select the beneficiary thereof and the owner shall have the right to
-4-
<PAGE> 5
transfer or change the ownership and/or beneficiary designation. Upon
termination of this Agreement, the then owner shall have the option of
purchasing such policy from the Corporation at its then current cash surrender
value if any, and in any event shall have the option to assume the obligations
under such policy upon termination of this Agreement and thereafter the
Corporation shall not be required to make premium payments.
(e) The Corporation shall provide the Employee with a monthly
automobile allowance equal to the greater of (i) reimbursement based upon
business mileage recorded in accordance with current Internal Revenue Service
guidelines or (ii) $850.00 per month during the term hereof. The automobile
allowance referred to in (ii) of this subparagraph (e) shall be increased on
August 1, 1994 and August 1, 1995 by 5% over the automobile allowance of the
immediately preceding year.
(f) The Corporation shall provide the Employee with disability
insurance equal to 60% of his Base Salary during the term of this Agreement,
provided the Employee is insurable and such insurance is available at
reasonable rates. If the Employee becomes uninsurable or such insurance is not
available at reasonable rates, the Corporation shall nevertheless continue to
maintain disability insurance for the Employee of substantially the same type
and amount of coverage as that existing at the time the Employee became
uninsurable or the cost of same became unreasonable.
-5-
<PAGE> 6
5. DUTIES AND EXTENT OF SERVICES: Throughout the term of this
Agreement, Employee shall assume the position of President and CEO of the
Corporation. The Corporation shall not change the Employee's duties or title
without Employee's consent. Employee shall exert his best efforts and shall
devote his full time and attention to the affairs of the Corporation. During
the term of this Agreement, except as permitted in Section 10 hereof, Employee
shall not, directly or indirectly, alone or as a member of a partnership, or as
an officer, director, shareholder or employee of any other corporation, be
engaged in or concerned with any other employment duties or employment pursuits
whatsoever requiring his personal services without the prior written consent of
the Corporation, which consent shall not be unreasonably withheld.
6. VACATION: During each year of the term of this Agreement, the
Employee shall be entitled to four (4) weeks paid vacation, the time of which
shall be as determined by agreement between Employee and the Board of Directors
of the Corporation.
7. Stock Option:
------------
(a) (i) As further consideration for the Employee's employment
hereunder and pursuant to the resolution of the Compensation Committee and
Stock Option Committee dated July 20, 1993 of the Corporation's parent, IMRS
Inc., a Delaware corporation ("Parent") the Employee was granted the additional
option ("Option") to purchase 100,000 shares of the Parent's
-6-
<PAGE> 7
Common Stock, par value $.01 per share ("Stock") at a price of $18.50 per
share, under the Parent's 1991 Stock Plan (the "1991 Plan") and a separate
agreement thereunder. To the maximum extent permissible under the 1991 Plan,
the Option shall be a Qualified Incentive Stock Option, (as such term is
defined in the 1991 Plan) and the balance of the Option shall be a
Non-Qualified Option (as such term is defined in the 1991 Plan). To the extent
the Employee incurs taxes in excess of the taxes he would have incurred had the
entire Option been a Qualified Incentive Stock Option, which excess shall be
calculated as the difference between the tax payable at ordinary income tax
rates and the tax payable at long term capital gains rates upon exercise of the
Option, the Corporation or the Transferee (as such term is hereafter defined)
shall pay to the Employee, or reimburse the Employee for, an amount equal to
the increase, if any, of any and all federal and state taxes required to be
paid or actually paid by the Employee resulting from such difference. The
Corporation or Transferee shall pay the foregoing amount promptly upon the
determination of the Employee's federal and state income tax liability for any
year in which the Option is exercised in whole or in part, but in any event on
or prior to the date or dates on which taxes in respect thereof are required to
be paid. The Corporation or the Transferee shall not be obligated to pay, or
reimburse Employee for, any such taxes required to be paid or actually paid by
the Employee in respect of the payment or
-7-
<PAGE> 8
reimbursement described in this subparagraph (i). For purposes of this
Agreement, the term "Transferee" shall mean any unrelated person or entity
which acquires all or substantially all of the assets of the Corporation or
Parent or 50% or more of the voting stock of the Corporation or Parent in a
single transaction or series of related transactions within a six (6) month
period or merges or consolidates with the Corporation or Parent.
(ii) The Option shall not be exercisable until it becomes vested. The
Option granted under this Agreement shall vest in the Employee and thus become
exercisable in accordance with the following schedule provided that the
Employee has continuously served as an employee of the Corporation through such
vesting date:
Cumulative Number
of Shares for which
Option Will be Exercisable Date of Vesting
-------------------------- ---------------
33,333 shares On the first anniversary
of the date of grant
33,333 shares On the second anniversary
of the date of grant
33,334 shares On the third anniversary
of the date of grant
The number of shares as to which the Option may be exercised shall be
cumulative, so that once the Option shall become exercisable as to any shares
it shall continue to be exercisable as to said shares, until expiration or
termination of the Option as provided in this Agreement and/or the 1991 Plan.
Subject to
-8-
<PAGE> 9
the 1991 Plan, the Option, once vested as provided above, shall be exercisable,
in whole or in part, until July 20, 2003.
(b) The Option granted to the Employee by this Agreement shall be
subject to the terms and restrictions of the 1991 Plan which is hereby
incorporated herein by reference. Employee acknowledges receipt of a copy of
the 1991 Plan.
8. TERMINATION: The Employee's employment hereunder, unless renewed by
the Corporation, shall terminate July 31, 1996, unless extended or renewed as
provided herein or sooner upon the occurrence of any of the following events:
(a) The Employee's death;
(b) The termination of the Employee's employment hereunder by
Corporation, at its option, to be exercised by written notice from Corporation
to the Employee after the Employee's incapacity or inability to further perform
his services as contemplated herein for a period of six (6) consecutive months
due to the fact that his physical or mental health shall have become impaired
so as to make it impossible or impractical for him to perform the duties and
responsibilities contemplated for him hereunder as evidenced by the written
medical report of a doctor reasonably acceptable to the Corporation and the
Employee;
(c) The termination for cause (as hereinafter defined) of the
Employee's employment hereunder by Corporation, at its
-9-
<PAGE> 10
option, to be exercised by written notice from Corporation to the Employee; or
(d) At any time without cause upon ninety (90) days written notice from
the Corporation. If the Corporation terminates this Agreement pursuant to this
Section 8(d) without cause for a reason not specified in subparagraphs (a), (b)
and/or (c) of this Section 8 and Employee does not voluntarily terminate his
employment other than pursuant to Section 8(f) below, then Corporation shall
pay to Employee as severance pay, a total amount equal to (i) twice his Base
Salary in the year in which such termination occurs, payable in twenty-four
(24) consecutive monthly installments (without interest) beginning one (1)
month after such termination, plus (ii) the fringe benefits described in
Section 4(b) hereof for the twenty-four (24) month period commencing on the
effective date of his termination by the Corporation pursuant to this Section
(d). Employee expressly understands that payment of such severance pay
represents liquidated damages in full and final settlement of any and all
amounts owed by Corporation to Employee under this Agreement or otherwise.
(e) By either party on notice pursuant to Section 2 hereof after the
expiration of the initial term in which case no severance shall be paid or
payable pursuant to Section 8(d) above.
-10-
<PAGE> 11
(f) If the Corporation moves its offices from Stamford, Connecticut,
to a location more than fifty (50) miles from its present location, the
Employee may terminate this Agreement upon one hundred twenty (120) days
written notice after he receives notice of the relocation. If the Employee
terminates this Agreement pursuant to this subparagraph (f), then the
Corporation shall pay to the Employee the severance benefits described in
Section 8(d) above.
(g) For purposes of paragraph 8(c) the term "cause" shall include only
the following:
(i) Employee's failure or refusal to perform the services
specified herein, or to carry out any reasonable and lawful directions of the
Board of Directors of the Corporation with respect to the services to be
rendered or the manner of rendering such services other than by reason of his
disability as described in Section 8(b) hereof; provided, however, that (i)
such failure or refusal is material, and (ii) Employee is given reasonable
notice and explanation of each refusal or failure, and reasonable opportunity
to cure such refusal or failure, and no cure has been effected within a
reasonable time after notice;
(ii) Conviction of a felony which can reasonably be expected
to have a material adverse impact on the Corporation's business or reputation;
or
(iii) Fraud or embezzlement involving the assets of the
Corporation, its customers, suppliers or affiliates;
-11-
<PAGE> 12
(iv) Violation of the provisions of Sections 9, 10 and/or 11
of this Agreement by the Employee.
In the event of any such termination, Corporation shall pay to Employee
such portion of his Base Salary payable to Employee to the date such
termination becomes effective plus a pro rata portion of any bonus due Employee
through the date of his termination unless Employee is terminated pursuant to
Section 8(c) hereof in which case no bonus shall be paid or payable, less (a)
applicable taxes, (b) any other required withholdings, and (c) any other
amounts Employee may owe to the Corporation, and thereafter Employee shall have
no claim for any further compensation hereunder.
9. RESTRICTIONS ON EMPLOYEE: During the period commencing on the date
hereof, and ending two (2) years after the termination of the Employee's
employment for any reason, the Employee shall not directly or indirectly induce
or attempt to induce any of the employees of Corporation to leave the
employment of Corporation. If the Corporation fails to renew this Agreement at
the expiration of its term as the same may be renewed or extended other than
for cause (as defined in Section 8(e) hereof), the covenant contained in this
Section 9 shall be reduced to one (1) year from two (2) years.
10. COVENANT NOT TO COMPETE: During the period commencing on the date
hereof, and ending two (2) years after the termination of the Employee's
employment for any reason, the
-12-
<PAGE> 13
Employee shall not, except as a passive investor in publicly held
companies and except for investments held at the date hereof,
engage in, or own or control any interest in, or act as director,
officer or employee of, or consultant to, any firm or corporation
engaged in a venture or business which is in direct competition
with the Corporation. If the Corporation fails to renew this
Agreement at the expiration of its term as the same may be
renewed or extended other than for cause (as defined in Section
8(e) hereof), the covenant contained in this Section 10 shall be
reduced to one (1) year from two (2) years.
11. Proprietary Information:
-----------------------
(a) For purposes of this Agreement, "proprietary
information" shall mean any information relating to the business
of the Corporation or any entity in which the Corporation has a
controlling interest that has not previously been publicly
released by duly authorized representatives of the Corporation
and shall include (but shall not be limited to) confidential
information encompassed in all proposals, marketing and sales
plans, financial information, costs, pricing information,
computer programs (including without limitation source code,
object code, algorithms and models), customer information,
customer lists, and all methods, concepts, know-how or ideas in
or reasonably related to the business of the Corporation or any
entity in which the Corporation has a controlling interest. The
Employee agrees to regard and preserve as confidential all
-13-
<PAGE> 14
proprietary information, whether he has such information in his
memory or in writing or other tangible or intangible form. The
Employee will not, without written authority from the Corporation
to do so, directly or indirectly, use for his benefit or
purposes, nor disclose to others, either during the term of his
employment hereunder or thereafter, except as required by the
conditions of his employment hereunder, any proprietary
information. The Employee agrees not to remove from the premises
of the Corporation or any subsidiary or affiliate of the
Corporation, except as an employee of the Corporation in pursuit
of the business of the Corporation or any of its subsidiaries,
affiliates or any entity in which the Corporation has a
controlling interest, or except as specifically permitted in
writing by the Corporation, any document or object containing or
reflecting any proprietary information. The Employee recognizes
that all such documents and objects, whether developed by him or
by someone else, are the exclusive property of the Corporation.
The restrictions set forth in this Section il(a) shall not apply
to information which (i) was known to the Employee at the time he
was told of it by the Corporation, (ii) is known to the industry
or public generally, (iii) was subsequently disclosed to the
Employee by a third party having the right to do so, or (iv) is
required to be disclosed by law.
(b) All proprietary information and all of the
Employee's interest in trade secrets, trademarks, computer
-14-
<PAGE> 15
programs, customer information, customer lists, employee lists,
products, procedure, copyrights, patents and developments
hereafter to the end of the period of employment hereunder
developed by the Employee as a result of, or in connection with,
his employment hereunder, shall belong to the Corporation; and,
without further compensation, but at the Corporation's expense,
forthwith upon request of the Corporation, Employee shall execute
any and all such assignments and other documents and take any and
all such other action as Corporation may reasonably request in
order to vest in Corporation all the Employee's right, title and
interest in and to all of the aforesaid items, free and clear of
liens, charges and encumbrances.
(c) The Employee expressly agrees that the covenants
set forth in Sections 9, 10 and 11 of this Agreement are being
given to Corporation in connection with the employment of the
Employee by Corporation and that such covenants are intended to
protect Corporation against the competition by the Employee,
within the terms stated, to the fullest extent deemed reasonable
and permitted in law and equity. In the event that the foregoing
limitations upon the conduct of the Employee are beyond those
permitted by law, such limitations, both as to time and
geographical area, shall be, and be deemed to be, reduced in
scope and effect to the maximum effect permitted by law.
12. INJUNCTIVE RELIEF: The Employee acknowledges that
the injury to Corporation resulting from any violation by him of
-15-
<PAGE> 16
any of the covenants contained in Sections 9, 10 and 11 of this
Agreement will be of such a character that it cannot be
adequately compensated by money damages, and, accordingly,
Corporation may, in addition to pursuing its other remedies,
obtain an injunction from any court having jurisdiction of the
matter restraining any such violation; and no bond or other
security shall be required in connection with such injunction.
13. REPRESENTATION OF EMPLOYEE: The Employee
represents and warrants that neither the execution and delivery
of this Agreement nor the performance of his duties hereunder
violates the provisions of any other agreement to which he is a
party or by which he is bound.
14. REPRESENTATIONS OF THE PARENT. The Parent
represents that as of the date of this Agreement, it is
authorized to issue 15,000,000 shares of Common Stock, one cent
($.01) par value, and 1,000,000 shares of Preferred Stock, one
cent ($.01) par value; that 6,913,964 shares of Common Stock are
issued and outstanding and that no shares of Preferred Stock are
issued and outstanding. The Parent has a sufficient number of
authorized and unissued shares of Common Stock to fulfill the
Option granted to Employee hereunder and under any previous
agreements or option plans.
15. PARTIES; NON-ASSIQNABILITY BY EMPLOYEE: As used
herein, the term "Corporation" shall mean and include Corporation
and any parent or subsidiary thereof and any successor thereto
-16-
<PAGE> 17
unless the context indicates otherwise. Except as otherwise
provided and except with respect to the Employee's rights with
respect to the common stock or options to purchase common stock
owned or to be received by the Employee, this Agreement and all
rights hereunder are personal to the Employee and shall not be
assignable by him and any purported assignment shall be null and
void and shall not be binding on Corporation. This Agreement
shall be assignable and transferable by the Corporation pursuant
to (i) the sale of all or substantially all of the assets of the
Corporation or Parent to any related or unrelated person, (ii)
the sale of 50% or more of the voting stock of the Corporation or
Parent to any related or unrelated person or entity in a single
transaction or series of related transactions within a six (6)
month period, or (iii) a merger or consolidation of the
Corporation or Parent with any related or unrelated person or
entity.
16. ENTIRE AQREEMENT: This Agreement, the 1991 Plan
and option agreement executed thereunder contain the entire
agreement between the parties hereto with respect to the
transactions contemplated herein and supersedes the Previous
Agreement and all previous representations, negotiations,
commitments, and writings with respect thereto. The Previous
Agreement is hereby terminated except for (i) the options granted
pursuant to Section 7(a) of the Previous Agreement and (ii) the
options granted to the Employee pursuant to Section 7 of that
-17-
<PAGE> 18
certain Employment Agreement between the Corporation and the
Employee dated April 1, 1988.
17. Indemnification; D&O Coverage:
-----------------------------
(a) The Corporation agrees that it will not, without
the consent of the Employee, which consent will not be unreasonably
withheld, conditioned or delayed, amend or alter the provisions
of its Certificate of Incorporation relating to indemnification
of officers and directors if the effect of such amendment or
alteration would materially reduce the protection presently
provided to the Employee by such provisions.
(b) The Corporation agrees that it will continue to
maintain directors and officers liability insurance coverage for
the Employee during the term of this Agreement on terms
commensurate with comparable companies in the software industry,
provided such coverage is available at reasonable rates.
18. AMENDMENT OR ALTERATION: No amendment or
alteration of the terms of this Agreement shall be valid unless
made in writing and signed by all of the parties hereto.
19. CHOICE OF LAW: This Agreement shall be governed
by the laws of the State of Connecticut.
20. NOTICES: Any notices required or permitted to be
given under this Agreement shall be sufficient if in writing, and
if sent by registered mail to the residence of the Employee, or
to the principal office of the Corporation, respectively.
-18-
<PAGE> 19
21. WAIVER OF BREACH: The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach by any of
the parties hereto.
22. BINDING EFFECT: The terms of this Agreement shall
be binding upon and inure to the benefit of the parties hereto
and their respective personal representatives, heirs,
administrators, successors, and permitted assigns.
23. SEVERABILITY. In the event that any provision of
this Agreement is held by a court of competent jurisdiction to be
illegal or unenforceable, such provision shall be deleted from
this Agreement, which shall otherwise remain in full force and
effect and binding upon the parties hereto.
24. CAPTIONS. The captions contained herein are for
convenience only and shall not affect the interpretation of this
Agreement.
-19-
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
CORPORATION:
IMRS OPERATIONS INC. D/B/A
IMRS INC.
By /s/ LUCY RICCIARDI
-----------------------------
Its Vice President, Finance
EMPLOYEE:
/s/ JAMES A. PERAKIS
--------------------------------
As to Sections 7 and 14 Only:
IMRS INC.
By: /s/ LUCY RICCIARDI
----------------------------
Lucy Ricciardi
Its Vice President, Finance
-20-
<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT made as of the 1st day of July, 1994, between
DAVID M. SAMPLE, of Ridgefield, Connecticut (hereinafter referred to as the
"Employee") and IMRS Operations Inc. d/b/a IMRS INC., a Delaware corporation
with offices at 777 Long Ridge Road, Stamford, Connecticut 06902 (hereinafter
referred to as the "Corporation").
WHEREAS, the Corporation desires to employ the Employee, and the
Employee desires to serve as an employee of the Corporation on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and promises of
the parties hereto, the Corporation and the Employee agree as follows:
1. EMPLOYMENT: The Corporation hereby agrees to employ the Employee
as Senior Vice President to perform managerial and executive functions of the
Corporation, specific responsibilities to include North American sales and all
international operations, and the Employee hereby agrees to perform such
services for the Corporation on the terms and conditions hereinafter stated,
subject to the directives of the Board of Directors of the Corporation.
2. TERM OF EMPLOYMENT: The term of this Agreement shall begin on
July 1, 1994 and shall continue in full force and effect until June 30, 1997;
provided, however, that this Agreement shall be automatically renewed on a
year-to-year basis thereafter unless terminated by either party on at least six
(6) months prior written notice during any given year, unless sooner terminated
as provided herein. Notwithstanding the foregoing, the Corporation may
terminate this Agreement at any time without cause upon thirty (30) days
written notice to Employee in which event the Corporation shall pay severance
to Employee pursuant to Section 8(g) hereof.
3. COMPENSATION: During the term of this Agreement, for all
services rendered by Employee under this Agreement, the Corporation shall pay
the Employee such compensation (including base salary and any bonus) as shall
be mutually agreed upon and set forth in a written compensation schedule (the
"Compensation Schedule") signed by the Employee and the Corporation's President
and Chief Executive Officer. The Compensation Schedule shall be agreed upon
and executed not later than June 30 of each year during the term hereof and
<PAGE> 2
shall be effective for the immediately succeeding fiscal year. The Employee's
compensation may be increased by the Board of Directors from time to time in
its sole and absolute discretion.
4. Stock Option:
------------
All options to purchase shares of the Common Stock of the Corporation's
parent, IMRS Inc. ("Parent") previously granted to the Employee by agreement
between the Parent and the Employee, under the 1991 Stock Plan of the Parent
or otherwise, shall continue in full force and effect in accordance with their
respective terms and conditions notwithstanding any provision of this
Agreement.
5. Fringe Benefits:
---------------
(a) During the term hereof, commencing on the day and year first
above written, the Corporation shall (i) provide the Employee and his
immediate family with medical and hospitalization insurance substantially
similar to that provided for the other executive personnel of the Corporation
in similar management positions, (ii) reimburse the Employee and his immediate
family for dental expenses incurred each year in excess of $200, including but
not limited to orthodontics for the Employee's children under the age of
twenty- one (21) years only, provided that the aggregate amount of such
reimbursement in any year shall not exceed $4,000 (such reimbursement shall be
in addition to any dental insurance provided to the Employee and his immediate
family under any dental plan from time to time maintained by the Corporation),
(iii) reimburse the Employee for expenses incurred in connection with the
purchase by Employee of fitness or exercise equipment or membership .in a
fitness or exercise program reasonably acceptable to the Corporation in an
aggregate amount equal to the lesser of (x) seventy-five (75%) percent of all
such expenses each year and (y) $500 each year, (iv) reimburse the Employee
for the reasonable and customary cost of an annual physical examination, (v)
provide to the Employee dependent group medical coverage upon terms and
conditions satisfactory to the Corporation without charge to the Employee,
(vi) if the Employee is not covered by group long-term disability insurance
in an amount equal to at least 100% of Employee's base salary, the Corporation
will provide to Employee additional long-term disability insurance in an
amount reasonably determined by the insurer
2
<PAGE> 3
based on the Employee's total earned income and personal financial
circumstances, the cost of such coverage to be reported by the Corporation as
compensation for income tax purposes on the employee's Form W-2 each year, and
(vii) life insurance in an amount equal to three times (3X's) Employee's annual
base salary.
(b) The Employee is authorized to incur on behalf of the
Corporation only such reasonable expenses (including travel and entertainment)
in connection with the business of the Corporation as are in conformity with
the Corporation's published guidelines. The Corporation shall reimburse
Employee for all such reasonable expenses incurred in connection with the
business of the Corporation upon the presentation by the Employee, from time to
time, of an itemized account of such expenditures, which account shall be in
form and substance in conformity with the rules and regulations of the Internal
Revenue Service. Any single expenditure in excess of $5,000 shall require the
prior approval of the Chief Executive Officer or the Chief Financial Officer of
the Corporation.
(c) During the term hereof, the Corporation shall provide Employee with
an automobile expense allowance equal to $600.00 per month.
6. DUTIES AND EXTENT OF SERVICES; Upon the execution of this Agreement
and throughout its term, the Employee shall assume the position of Senior Vice
President for the Corporation and shall undertake all of the duties incident to
such office in addition to rendering all such other management duties as the
Board of Directors may reasonably request. The parties hereto shall take
whatever action is necessary to cause the election or appointment of the
Employee to such position. The Employee shall exert his best efforts and shall
devote his full time and attention to the affairs of the Corporation. During
the term of this Agreement the Employee shall not, directly or indirectly,
alone or as a member of a partnership (in the capacity of a general partner) or
limited liability company (in the capacity of a manager), or as an officer,
director, significant shareholder (i.e., owning or holding beneficially or of
record 5% or more of the voting shares of an entity), or employee of any other
corporation or entity, be engaged in or concerned with any other duties or
pursuits whatsoever for pecuniary gain requiring his personal services without
the prior written consent of the Corporation.
3
<PAGE> 4
7. VACATION: During each year of the term of this Agreement, the
Employee shall be entitled to four (4) weeks vacation, the time of which shall
be subject to the prior approval of the Chief Executive Officer of the
Corporation.
8. TERMINATION: Unless renewed as provided herein, the Employee's
employment hereunder shall terminate on June 30, 1997, or sooner upon the
occurrence of any of the following events:
(a) The Employee's death;
(b) The termination of the Employee's employment hereunder by the
Corporation, at its option, to be exercised by written notice from the
Corporation to the Employee, upon the Employee's incapacity or inability to
perform his services as contemplated herein for a period of at least sixty (60)
consecutive days or an aggregate of ninety (90) consecutive or non-consecutive
days during any twelve (12) month period during the term hereof due to the fact
that his physical or mental health shall have become impaired so as to make it
impossible or impractical for him to perform the duties and responsibilities
contemplated for him hereunder; or
(c) The termination for cause of the Employee's employment
hereunder by the Corporation, at its option, to be exercised by written notice
from the Corporation to the Employee in the event the Employee is derelict in
his duties or commits any misconduct with respect to the Corporation's affairs
and such dereliction or misconduct shall continue for a period of fifteen (15)
days after the Corporation shall have given the Employee written notice
specifying such dereliction or misconduct, and advising him that the
Corporation shall have the right to terminate his employment hereunder in the
event such misconduct continues through such fifteen (15) day period.
(d) In the event that the Employee commits an act constituting
common law fraud or any crime, which could reasonably be expected to have an
adverse impact on the Corporation, its business or assets.
(e) In the event that the Employee should fail (otherwise than on
account of illness or other incapacity) or refuse to carry out the reasonable
directives of the Board of Directors of the Corporation, and such failure or
refusal shall continue for a period of fifteen
4
<PAGE> 5
(15) days after the Corporation shall have given the Employee written notice
specifying such directives and wherein the Employee has failed or refused to
carry out the same, and advising him that the Corporation shall have the right
to terminate his employment hereunder in the event such failure or refusal
continues through such fifeen (15) day period.
(f) Cessation of the Corporation's business.
(g) On thirty (30) days written notice from the Corporation
pursuant to Section 2 hereof. If (i) the Corporation terminates this
Agreement pursuant to Section 2 hereof on thirty (30) days notice without cause
or (ii) there is a Change in Control (as hereinafter defined) that occurs prior
to the expiration or termination of this Agreement and, within twelve (12)
months after the Change in Control, (A) Employee's employment is terminated by
the Corporation otherwise than for the reasons set forth in Sections (8) (a),
(b), (c), (d), (e) and/or (f') hereof or (B) Employee terminates his employment
for Good Reason (as hereinafter defined), then Corporation shall pay to
Employee as severance pay, a total amount equal to (i) his annual base salary,
payable in twelve (12) equal consecutive monthly installments (without
interest) beginning one (1) month after such termination plus (ii) the fringe
benefits described in Section 5(a) for the twelve (12) month period commencing
on the effective date of such termination.
Employee expressly understands that payment of such severance pay and
benefits (or portion thereof if such payments terminate pursuant to the last
sentence of this paragraph) represents liquidated damages in full and final
settlement of any and all amounts owed by Corporation to Employee under this
Agreement or otherwise except for the accrued portion, if any, of any bonus,
any guaranteed additional compensation (including any amounts set forth in
Employee's Compensation Schedule), stock option, commission, vacation or other
benefit to which Employee is expressly entitled pursuant to any formal, written
plan or agreement maintained by the Corporation. Notwithstanding the foregoing,
if Employee obtains full time employment from any person or entity or accepts
an engagement as a self-employed consultant or similar position during
such twelve (12) month period, then, upon commencement of any such
employment or engagement, the severance pay and benefits payable under this
Section 8(g) shall immediately be and be deemed reduced by an amount
5
<PAGE> 6
equal to the compensation and/or benefits payable by such other employment or
engagement and the Corporation shall have no further obligation to Employee
under this Agreement or otherwise.
(h) As used in this Agreement, the following terms have the meanings set forth
below:
(i) "Affiliate" of a person means any person directly. or indirectly
controlling, controlled by or under common control with the first
person.
(ii) "Associate" has the meaning ascribed thereto in Rule 12b-2 under the
Exchange Act as in effect on the date hereof.
(iii) "Change in Control" means the occurrence of any of the following
events:
(A) A consolidation, merger, combination or other transaction
between Parent or Corporation, and any other corporation or other
legal entity (other than an Affiliate of Parent or Corporation) in
which shares of common stock of Parent or Corporation are exchanged
for or changed into other stock or securities, cash and/or other
property, if as a result of such transaction less than 20% of the
combined voting power of the common stock (or other securities
entitled to vote generally in the election of directors) of the
surviving or resulting entity is beneficially owned (as hereinafter
defined) by the beneficial owners of the Parent's or Corporation's
common stock as the case may be as of the date hereof ("Current
Shareholders") and the number of persons serving on the Board of
Directors of the surviving or resulting entity who are Affiliates,
Associates, designees or nominees of any single "person" (as defined
in Section 13(d)(3) of the Exchange Act) other than the Current
Shareholders is greater than the number of persons serving on such
Board of Directors who are Affiliates, Associates, designees or
nominees of the Current Shareholders;
6
<PAGE> 7
(B) A sale of all or at least 80% (measured by book value as of the
most recent annual or quarterly balance sheet) of the assets of Parent
or Corporation to another corporation or other legal entity (other
than one of the Current Shareholders or any Affiliate of Parent or
Corporation); and
(C) A sale or other disposition of shares of common stock of Parent
or Corporation by the Current Shareholders to any Corporation or other
legal entity (other than one of the Current Shareholders or any
Affiliate of Parent or Corporation) as a result of which less than 20%
of the then-outstanding common stock of Parent or Corporation is
beneficially owned (as hereinafter defined) by the Current
Shareholders and the number of persons serving on Parent's or
Corporation's Board of Directors who are Affiliates, Associates,
designees or nominees of any single "person" (as defined in Section
13(d)(3) of the Exchange Act) other than the Current Shareholders is
greater than the number of persons serving on Parent's or
Corporation's Board of Directors who are Affiliates, Associates,
designees or nominees of the Current Shareholders.
Beneficial ownership will be determined by applying the definition set
forth in Rule 13d-3 under the Exchange Act as in effect on the date
hereof. Also, for purposes of this Agreement, any person who, on the
date on which a Change in control occurs, is serving on Parent's or
Corporation's Board of Directors will deemed to be an Affiliate,
Associate, designee or nominee of the Current Shareholders after the
Change in Control for as long as such person serves as a director of
Parent or Corporation or of any entity that survives or results from a
transaction described in Section 8(h)(iii).
(iv) "Corporation" includes any successor to all or substantially all of
the business or assets of the Corporation.
7
<PAGE> 8
(v) "Exchange Act" means the Securities Exchange Act of 1934, as amended
form time to time.
(vi) "Good Reason" means that, following a Change in Control and without
Employee's written consent, (A) there has been a material and
significant adverse change in the nature or scope of Employee's
authority, duties or responsibilities in effect immediately prior to
the Change in Control; (B) there has been a reduction in Employee's
annual base salary in effect immediately prior to the Change in
Control or an adverse change in Employee's total compensation such
that Employee's compensation and benefits in the aggregate are not
materially comparable to his aggregate compensation and benefits in
effect immediately prior to the Change in Control; or (C) the
principal place of Employee's employment is relocated to a place that
is more than 25 miles from the principal place of Employee's
employment immediately prior to the Change in Control or Employee is
required to be away from his office in the course of discharging his
duties and responsibilities materially and significantly more than
was required prior to the Change in Control.
In the event of any termination (other than by the Corporation without
cause on thirty (30) days notice pursuant to Section 2), the Corporation shall
pay to the Employee such portion of his annual base salary payable and any
additional accrued guaranteed compensation set forth in his Compensation
Schedule to the date such termination becomes effective (reduced by any amount
payable pursuant to any disability insurance policies), and thereafter the
Employee shall have no claim for any further compensation hereunder; provided,
however, that in the event of the Employee's death, his death shall be deemed
to have occurred on the last day of the month in which he dies. Upon any
termination Employee shall also receive all the benefits to which he is
entitled under the Consolidated Omnibus Budget Reconciliation Act ("COBRA"),
provided that if the Employee is entitled to receive severance and fringe
benefits described in Section 8(g), COBRA benefits shall commence at the
8
<PAGE> 9
expiration of the twelve (12) month (or such shorter period) as is provided in
such Section.
9. RESTRICTIONS ON THE EMPLOYEE: During the period commencing on the
date hereof and ending two (2) years after the termination of the Employee's
employment by the Corporation for any reason, the Employee shall not directly
or indirectly induce or attempt to induce any of the employees of the
Corporation to leave the employ of Corporation. If this Agreement is terminated
by the Corporation pursuant to Section 2 hereof, the foregoing two (2) year
period shall be reduced to one (1) year. -
10. COVENANT NOT TO COMPETE: During the period commencing on the date
hereof, and ending two (2) years after the termination of the Employee's
employment for any reason, the Employee shall not, except as a passive investor
in publicly held companies, engage in, or own or control any interest in, or
act as principal, director, officer or employee of, or consultant to, any firm
or corporation which is in competition with the Corporation or its Parent. If
this Agreement is terminated by the Corporation pursuant to Section 2 hereof,
the foregoing two (2) year period shall be reduced to one (1) year.
11. Proprietary Information:
------------------------
(a) For purposes of this Agreement, "proprietary information" shall
mean any proprietary information relating to the business of the Corporation or
its Parent or any entity in which the Corporation or its Parent has a
controlling interest that has not previously been publicly released by duly
authorized representatives of the Corporation and shall include (but shall not
be limited to) information encompassed in all proposals, marketing and sales
plans, financial information, costs, pricing information, computer programs
(including without limitation source code, object code, algorithms and models),
customer information, customer lists, and all methods, concepts, know-how or
ideas in or reasonably related to the business of Corporation or any entity in
which the Corporation has a controlling interest. The Employee agrees to regard
and preserve as confidential all proprietary information, whether he has such
information in his memory or in writing or other tangible or intangible form.
The Employee will not, without written authority from the Corporation to do so,
directly or indirectly, use for his benefit or purposes, nor disclose to
others, either during the term of his employment hereunder or thereafter, any
proprietary information except as required by the conditions of
9
<PAGE> 10
his employment hereunder or pursuant to court order (in which case Employee
shall give the Corporation prompt written notice [not less than 24 hours] so
that the Corporation may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement. The Employee
agrees not to remove from the premises of the Corporation or any subsidiary or
affiliate of the Corporation, except as an employee of the Corporation in
pursuit of the business of the Corporation or any of its subsidiaries,
affiliates or any entity in which the Corporation has a controlling interest,
or except as specifically permitted in writing by the Corporation, any document
or object containing or reflecting any proprietary information. The Employee
recognizes that all such documents and objects, whether developed by him or by
someone else, are the exclusive property of the Corporation. Proprietary
information shall not include information which is presently in the public
domain or which comes into the public domain through no fault of the Employee
or which is disclosed to the Employee by a third party lawfully in possession
of such information with a right to disclose same.
(b) All proprietary information and all of the EmpIoyee's interest
in trade secrets, trademarks, computer programs, customer information, customer
lists, employee lists, products, procedure, copyrights, patents and
developments hereafter to the end of the period of employment hereunder
developed by the Employee as a result of, or in connection with, his employment
hereunder, shall belong to the Corporation; and without further compensation,
but at the Corporation's expense, forthwith upon request of the Corporation,
Employee shall execute any and all such assignments and other documents and
take any and all such other action as Corporation may reasonably request in
order to vest in Corporation all the Employee's right, title and interest in
and to all of the aforesaid items, free and clear of liens, charges and
encumbrances.
(c) The Employee expressly agrees that the covenants set forth in
Sections 9, 10 and 11 of this Agreement are being given to Corporation in
connection with the employment of the Employee by Corporation and that such
covenants are intended to protect Corporation against the competition by the
Employee, within the terms stated, to the fullest extent deemed reasonable and
permitted in law and equity. In the event that the foregoing
10
<PAGE> 11
limitations upon the conduct of the Employee are beyond those permitted by law,
such limitations, both as to time and geographical area, shall be, and be
deemed to be, reduced in scope and effect to the maximum extent permitted by
law.
12. INJUNCTIVE RELIEF: The Employee acknowledges that the injury to
the Corporation resulting from any violation by him of any of the covenants
contained in this Agreement will be of such a character that it cannot be
adequately compensated by money damages, and, accordingly, the Corporation may,
in addition to pursuing its other remedies, obtain an injunction from any court
having jurisdiction of the matter restraining any such violation.
13. REPRESENTATION OF EMPLOYEE: The Employee represents and warrants
that neither the execution and delivery of this Agreement nor the performance
of his duties hereunder violates the provisions of any other agreement to which
he is a party or by which he is bound.
14. PARTIES; NON-ASSIGNABILITY: As used herein, the term the
"Corporation" shall mean and include the Corporation, its Parent and any
subsidiary thereof and any successor thereto unless the context indicates
otherwise. Any assignment of this Agreement shall be subject to the provisions
of Section 8(g). This Agreement and all rights hereunder are personal to the
Employee and shall not be assignable by him and any purported assignment shall
be null and void and shall not be binding on the Corporation.
15. ENTIRE AGREEMENT: This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and supersedes all previous representations, negotiations, commitments, and
writing with respect thereto, including, but not limited to, the Employment
Agreement between the Employee and the Corporation dated as of October 1, 1990
provided, however, that the option to purchase the Corporation's Common Stock
contained in such agreement, as amended, shall survive the termination of said
Employment Agreement.
16. AMENDMENT OR ALTERATION: No amendment or alteration of the terms
of this Agreement shall be valid unless made in writing and signed by all of
the parties hereto.
17. CHOICE OF LAW: This Agreement shall be governed by the laws of
the State of
11
<PAGE> 12
Connecticut.
18. ARBITRATION: Any controversy, claim, or breach arising out of or
relating to this Agreement or the breach thereof shall be settled by
arbitration in Stamford, Connecticut in accordance with the rules of the
American Arbitration Association and the judgment upon the award rendered
shall be entered by consent in any court having jurisdiction thereof.
19. NOTICES: Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered mail to
the residence of the Employee, or to the principal office of the Corporation,
respectively.
20. WAIVER OF BREACH: The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by any of the parties hereto.
21. BINDING EFFECT: The terms of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective personal
representatives, heirs, administrators, successors, and permitted assigns.
22. GENDER: Pronouns in any gender shall be construed as masculine,
feminine, or neuter as the context requires in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
As to Section 4 only: CORPORATION:
IMRS Operations Inc. d/b/a
IMRS INC. IMRS INC.
By /s/ JAMES PERAKIS By /s/ JAMES PERAKIS
------------------- -------------------
James Perakis, Its James Perakis, Its
President and Chief President and Chief
Executive Officer Executive Officer
EMPLOYEE:
/s/ DAVID M. SAMPLE
-------------------
David M. Sample
<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT made as of the 1st day of July, 1994, between LUCY
RICCIARDI of Greenwich, Connecticut (hereinafter referred to as the "Employee")
and IMRS Operations Inc. d/b/a IMRS INC., a Delaware corporation with offices
at 777 Long Ridge Road, Stamford, Connecticut 06902 (hereinafter referred to as
the "Corporation").
WHEREAS, the Corporation desires to employ the Employee, and the
Employee desires to serve as an employee of the Corporation on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and promises of
the parties hereto, the Corporation and the Employee agree as follows:
1. EMPLOYMENT: The Corporation hereby agrees to employ the Employee
as Vice President, Finance and Chief Financial Officer to perform financial and
tax as well as managerial and executive functions of the Corporation, and the
Employee hereby agrees to perform such services for the Corporation on the
terms and conditions hereinafter stated, subject to the directives of the Board
of Directors of the Corporation.
2. TERM OF EMPLOYMENT: The term of this Agreement shall begin on
July 1, 1994 and shall continue in full force and effect until June 30, 1997;
provided, however, that this Agreement shall be automatically renewed on a
year-to-year basis thereafter unless terminated by either party on at least six
(6) months prior written notice during any given year, unless sooner terminated
as provided herein. Notwithstanding the foregoing, the Corporation may
terminate this Agreement at any time without cause upon thirty (30) days
written notice to Employee in which event the Corporation shall pay severance
to Employee pursuant to Section 8(g) hereof.
3. COMPENSATION: During the term of this Agreement, for all
services rendered by Employee under this Agreement, the Corporation shall pay
the Employee an annual base salary of $125,000.00 per annum, payable in arrears
at a rate of $5,208.33 on the fifteenth and last day of each month. It is
understood that foregoing base salary is the base salary in effect for the
Corporation's 1994 fiscal year and that such base salary will be increased,
which increase will be retroactive to July 1, 1994. The Employee's base salary
may be increased by the Board of Directors from time to time in its sole and
absolute discretion. In addition to
<PAGE> 2
the annual base salary described in this Section, Employee may receive, cash
performance bonuses in the sole and absolute discretion of the Board of
Directors of the Corporation.
4. Stock Option:
------------
All options to purchase shares of the Common Stock of the Corporation's
parent, IMRS Inc. ("Parent") previously granted to the Employee by agreement
between the Parent and the Employee, under the 1991 Stock Plan of the Parent or
otherwise, shall continue in full force and effect in accordance with their
respective terms and conditions notwithstanding any provision of this
Agreement.
5. Fringe Benefits;
---------------
(a) During the term hereof, commencing on the day and year first
above written, the Corporation shall (i) provide the Employee and her immediate
family with medical and hospitalization insurance substantially similar to that
provided for the other executive personnel of the Corporation in similar
management positions, (ii) reimburse the Employee and her immediate family for
dental expenses incurred each year in excess of $200, including but not limited
to orthodontics for the Employee's children under the age of twenty-one (21)
years only, provided that the aggregate amount of such reimbursement in any
year shall not exceed $4,000 (such reimbursement shall be in addition to any
dental insurance provided to the Employee and her immediate family under any
dental plan from time to time maintained by the Company), (iii) reimburse the
Employee for expenses incurred in connection with the purchase by Employee of
fitness or exercise equipment or membership in a fitness or exercise program
reasonably acceptable to the Company in an aggregate amount equal to the lesser
of (x) seventy-five (75%) percent of all such expenses each year and (y) $500
each year, (iv) reimburse the Employee for the reasonable and customary cost of
an annual physical examination, (v) provide to the Employee dependent group
medical coverage upon terms and conditions satisfactory to the Company without
charge to the Employee, (vi) if the Employee is not covered by group long-term
disability insurance in an amount equal to at least 100% of Employee's base
salary, the Company will provide to Employee additional long-term disability
insurance in an amount reasonably determined by the insurer based on the
Employee's total earned income and personal financial circumstances, the cost
of such
2
<PAGE> 3
coverage to be reported by the Company as compensation for income tax purposes
on the employee's Form W-2 each year, and (vii) life insurance in an amount
equal to three times (3X's) Employee's annual base salary.
(b) The Employee is authorized to incur on behalf of the Corporation
only such reasonable expenses (including travel and entertainment) in
connection with the business of the Corporation as are in conformity with the
Corporation's published guidelines. The Corporation shall reimburse Employee
for all such reasonable expenses incurred in connection with the business of
the Corporation upon the presentation by the Employee, from time to time, of an
itemized account of such expenditures, which account shall be in form and
substance in conformity with the rules and regulations of the Intemal Revenue
Service. Any single expenditure in excess of $5,000 shall require the prior
approval of the Chief Executive Officer of the Corporation.
(c) During the term hereof, the Corporation shall provide Employee
with an automobile expense allowance equal to $600.00 per month.
6. DUTIES AND EXTENT OF SERVICES; Upon the execution of this
Agreement and throughout its term, the Employee shall assume the position of
Vice President, Finance and Chief Financial Officer for the Corporation and
shall undertake all of the duties incident to such office in addition to
rendering all such other management duties as the Board of Directors may
reasonably request. The parties hereto shall take whatever action is necessary
to cause the election or appointment of the Employee to such position. The
Employee shall exert her best efforts and shall devote her full time and
attention to the affairs of the Corporation. During the term of this
Agreement the Employee shall not, directly or indirectly, alone or as a member
of a partnership (in the capacity of a general partner) or limited liability
company (in the capacity of a manager), or as an officer, director, significant
shareholder (i.e., owning or holding beneficially or of record 5% or more of
the voting shares of an entity), or employee of any other corporation or
entity, be engaged in or concerned with any other duties or pursuits whatsoever
for pecuniary gain requiring her personal services without the prior written
consent of the Corporation.
7. VACATION: During each year of the term of this Agreement, the
Employee shall
3
<PAGE> 4
be entitled to four (4) weeks vacation, the time of which shall be subject to
the prior approval of the Chief Executive Officer of the Corporation.
8. TERMINATION: Unless renewed as provided herein, the Employee's
employment hereunder shall terminate on June 30, 1997, or sooner upon the
occurrence of any of the following events:
(a) The Employee's death;
(b) The termination of the Employee's employment hereunder by the
Corporation, at its option, to be exercised by written notice from the
Corporation to the Employee, upon the Employee's incapacity or inability to
perform her services as contemplated herein for a period of at least sixty (60)
consecutive days or an aggregate of ninety (90) consecutive or non-consecutive
days during any twelve (12) month period during the term hereof due to the fact
that her physical or mental health shall have become impaired so as to make it
impossible or impractical for her to perform the duties and responsibilities
contemplated for her hereunder; or
(c) The termination for cause of the Employee's employment hereunder
by the Corporation, at its option, to be exercised by written notice from the
Corporation to the Employee in the event the Employee is derelict in her duties
or commits any misconduct with respect to the Corporation's affairs and such
dereliction or misconduct shall continue for a period of fifteen (15) days
after the Corporation shall have given the Employee written notice specifying
such dereliction or misconduct, and advising her that the Corporation shall
have the right to terminate her employment hereunder in the event such
misconduct continues through such fifteen (15) day period.
(d) In the event that the Employee commits an act constituting
common law fraud or any crime, which could reasonably be expected to have an
adverse impact on the Corporation, its business or assets.
(e) In the event that the Employee should fail (otherwise than on
account of illness or other incapacity) or refuse to carry out the reasonable
directives of the Board of Directors of the Corporation, and such failure or
refusal shall continue for a period of fifteen (15) days after the Corporation
shall have given the Employee written notice specifying such
4
<PAGE> 5
directives and wherein the Employee has failed or refused to carry out the
same, and advising her that the Corporation shall have the fight to
terminate her employment hereunder in the event such failure or refusal
continues through such fifteen (15) day period.
(f) Cessation of the Corporation's business.
(g) On thirty (30) days written notice from the Corporation pursuant
to Section 2 hereof. If (i) the Corporation terminates this Agreement pursuant
to Section 2 hereof on thirty (30) days notice without cause or (ii) there is a
Change in Control (as hereinafter defined) that occurs prior to the expiration
or termination of this Agreement and, within twelve (12) months after the
Change in Control, (A) Employee's employment is terminated by the Corporation
otherwise than for the reasons set forth in Sections (8) (a), (b), (c), (d),
(e) and/or (f) hereof or (B) Employee terminates her employment for Good
Reason (as hereinafter defined), then Corporation shall pay to Employee as
severance pay, a total amount equal to (i) her annual base salary, payable in
twelve (12) equal consecutive monthly installments (without interest) beginning
one (1) month after such termination plus (ii) the fringe benefits described in
Section 5(a) for the twelve (12) month period commencing on the effective date
of such termination.
Employee expressly understands that payment of such severance pay and
benefits (or portion thereof if such payments terminate pursuant to the last
sentence of this paragraph) represents liquidated damages in full and final
settlement of any and all amounts owed by Corporation to Employee under this
Agreement or otherwise except for the accrued portion, if any, of any bonus,
stock option, commission, vacation or other benefit to which Employee is
expressly entitled pursuant to any formal, written plan or agreement maintained
by the Corporation. Notwithstanding the foregoing, if Employee obtains full
time employment from any person or entity or accepts an engagement as a
self-employed consultant or similar position during such twelve (12) month
period, then, upon commencement of any such employment or engagement, the
severance pay and benefits payable under this Section 8(g) shall immediately be
and be deemed reduced by an amount equal to the compensation and/or benefits
payable by such other employment or engagement and the Corporation shall have
no further obligation to Employee under this Agreement or otherwise.
5
<PAGE> 6
(h) As used in this Agreement, the following terms have the meanings
set forth below:
(i) "Affiliate" of a person means any person directly or indirectly
controlling, controlled by or under common control with the first
person.
(ii) "Associate" has the meaning ascribed thereto in Rule 12b-2 under
the Exchange Act as in effect on the date hereof.
(iii) "Change in Control" means the occurrence of any of the
following events:
(A) A consolidation, merger, combination or other transaction
between Parent or Corporation, and any other corporation or
other legal entity (other than an Affiliate of Parent or
Corporation) in which shares of common stock of Parent or
Corporation are exchanged for or changed into other stock or
securities, cash and/or other property, if as a result of such
transaction less than 20% of the combined voting power of the
common stock (or other securities entitled to vote generally in
the election of directors) of the surviving or resulting entity
is beneficially owned (as hereinafter defined) by the beneficial
owners of the Parent's or Corporation's common stock as the case
may be as of the date hereof ("Current Shareholders") and the
number of persons serving on the Board of Directors of the
surviving or resulting entity who are Affiliates, Associates,
designees or nominees of any single "person" (as defined in
Section 13(d)(3) of the Exchange Act) other than the Current
Shareholders is greater than the number of persons serving on
such Board of Directors who are Affiliates, Associates, designees
or nominees of the Current Shareholders;
(B) A sale of all or at least 80% (measured by book value as of
the most recent annual or quarterly balance sheet) of the assets
of Parent or Corporation to another corporation or other legal
entity (other than one of the Current Shareholders or any
Affiliate of Parent or Corporation); and
6
<PAGE> 7
(C) A sale or other disposition of shares of common stock of
Parent or Corporation by the Current Shareholders to any
corporation or other legal entity (other than one of the Current
Shareholders or any Affiliate of Parent or Corporation) as a
result of which less than 20% of the then-outstanding common
stock of Parent or Corporation is beneficially owned (as
hereinafter defined) by the Current Shareholders and the number
of persons serving on Parent's or Corporation's Board of
Directors who are Affiliates, Associates, designees or nominees
of any single "person" (as defined in Section 13(d)(3) of the
Exchange Act) other than the Current Shareholders is greater than
the number of persons serving on Parent's or Corporation's Board
of Directors who are Affiliates, Associates, designees or
nominees of the Current Shareholders.
Beneficial ownership will be determined by applying the
definition set forth in Rule 13d-3 under the Exchange Act as in
effect on the date hereof. Also, for purposes of this Agreement,
any person who, on the date on which a Change in control occurs,
is serving on Parent's or Corporation's Board of Directors will
deemed to be an Affiliate, Associate, designee or nominee of the
Current Shareholders after the Change in Control for as long as
such person serves as a director of Parent or Corporation or of
any entity that survives or results from a transaction described
in Section 8(h)(iii).
(iv) "Corporation" includes any successor to all or substantially all
of the business or assets of the Corporation.
(v) "Exchange Act" means the Securities Exchange Act of 1934, as
amended form time to time.
(vi) "Good Reason" means that, following a Change in Control and
without Employee's written consent, (A) there has been a
material and significant
7
<PAGE> 8
adverse change in the nature or scope of Employee's authority,
duties or responsibilities in effect immediately prior to the
Change in Control; (B) there has been a reduction in Employee's
annual base salary in effect immediately prior to the Change in
Control or an adverse change in Employee's total compensation
such that Employee's compensation and benefits in the aggregate
are not materially comparable to her aggregate compensation and
benefits in effect immediately prior to the Change in Control; or
(C) the principal place of Employee's employment is relocated to
a place that is more than 25 miles from the principal place of
Employee's employment immediately prior to the Change in Control
or Employee is required to be away from her office in the course
of discharging her duties and responsibilities materially and
significantly more than was required prior to the Change in
Control.
In the event of any termination (other than by the Corporation without
cause on thirty (30) days notice pursuant to Section 2), the Corporation shall
pay to the Employee such portion of her annual base salary payable to the date
such termination becomes effective (reduced by any amount payable pursuant to
any disability insurance policies), and thereafter the Employee shall have no
claim for any further compensation hereunder; provided, however, that in the
event of the Employee's death, her death shall be deemed to have occurred on
the last day of the month in which she dies. Upon any termination Employee
shall also receive all the benefits to which she is entitled under the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"), provided that if the
Employee is entitled to receive severance and fringe benefits described in
Section 8(g), COBRA benefits shall commence at the expiration of the twelve
(12) month (or such shorter period) as is provided in such Section.
9. RESTRICTIONS ON THE EMPLOYEE: During the period commencing on
the date hereof and ending two (2) years after the termination of the
Employee's employment by the Corporation for any reason, the Employee shall not
directly or indirectly induce or attempt to induce any of the employees of the
Corporation to leave the employ of Corporation. If this
8
<PAGE> 9
Agreement is terminated by the Corporation pursuant to Section 2 hereof, the
foregoing two (2) year period shall be reduced to one (1) year.
10. COVENANT NOT TO COMPETE: During the period commencing on the
date hereof, and ending two (2) years after the termination of the Employee's
employment for any reason, the Employee shall not, except as a passive investor
in publicly held companies, engage in, or own or control any interest in, or
act as principal, director, officer or employee of, or consultant to, any firm
or corporation which is in competition with the Corporation or its Parent. If
this Agreement is terminated by the Corporation pursuant to Section 2 hereof,
the foregoing two (2) year period shall be reduced to one (1) year.
11. Proprietary Information:
------------------------
(a) For purposes of this Agreement, "proprietary information" shall
mean any proprietary information relating to the business of the Corporation or
its Parent or any entity in which the Corporation or its Parent has a
controlling interest that has not previously been publicly released by duly
authorized representatives of the Corporation and shall include (but shall not
be limited to) information encompassed in all proposals, marketing and sales
plans, financial information, costs, pricing information, computer programs
(including without limitation source code, object code, algorithms and models),
customer information, customer lists, and all methods, concepts, know-how or
ideas in or reasonably related to the business of Corporation or any entity in
which the Corporation has a controlling interest. The Employee agrees to regard
and preserve as confidential all proprietary information, whether she has such
information in her memory or in writing or other tangible or intangible form.
The Employee will not, without written authority from the Corporation to do so,
directly or indirectly, use for her benefit or purposes, nor disclose to
others, either during the term of her employment hereunder or thereafter, any
proprietary information except as required by the conditions of her employment
hereunder or pursuant to court order (in which case Employee shall give the
Corporation prompt written notice [not less than 24 hours] so that the
Corporation may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. The Employee agrees
not to remove from the premises of the Corporation or any subsidiary or
affiliate of the Corporation, except as an employee of the Corporation in
9
<PAGE> 10
pursuit of the business of the Corporation or any of its subsidiaries,
affiliates or any entity in which the Corporation has a controlling interest,
or except as specifically permitted in writing by the Corporation, any document
or object containing or reflecting any proprietary information. The Employee
recognizes that all such documents and objects, whether developed by her or by
someone else, are the exclusive property of the Corporation. Proprietary
information shall not include information which is presently in the public
domain or which comes into the public domain through no fault of the Employee
or which is disclosed to the Employee by a third party lawfully in possession
of such information with a right to disclose same.
(b) All proprietary information and all of the Employee's interest in
trade secrets, trademarks, computer programs, customer information, customer
lists, employee lists, products, procedure, copyrights, patents and
developments hereafter to the end of the period of employment hereunder
developed by the Employee as a result of, or in connection with, her
employment hereunder, shall belong to the Corporation; and without
further compensation, but at the Corporation's expense, forthwith upon request
of the Corporation, Employee shall execute any and all such assignments and
other documents and take any and all such other action as Corporation may
reasonably request in order to vest in Corporation all the Employee's right,
title and interest in and to all of the aforesaid items, free and clear of
liens, charges and encumbrances.
(c) The Employee expressly agrees that the covenants set forth in
Sections 9, 10 and 11 of this Agreement are being given to Corporation in
connection with the employment of the Employee by Corporation and that such
covenants are intended to protect Corporation against the competition by the
Employee, within the terms stated, to the fullest extent deemed reasonable and
permitted in law and equity. In the event that the foregoing limitations upon
the conduct of the Employee are beyond those permitted by law, such
limitations, both as to time and geographical area, shall be, and be deemed to
be, reduced in scope and effect to the maximum extent permitted by law.
12. INJUNCTIVE RELIEF: The Employee acknowledges that the injury
to the Corporation resulting from any violation by her of any of the covenants
contained in this
10
<PAGE> 11
Agreement will be of such a character that it cannot be adequately compensated
by money damages, and, accordingly, the Corporation may, in addition to
pursuing its other remedies, obtain an injunction from any court having
jurisdiction of the matter restraining any such violation.
13. REPRESENTATION OF EMPLOYEE: The Employee represents and warrants
that neither the execution and delivery of this Agreement nor the performance
of her duties hereunder violates the provisions of any other agreement to which
she is a party or by which she is bound.
14. PARTIES: NON-ASSIGNABILITY: As used herein, the term the
"Corporation" shall mean and include the Corporation, its Parent and any
subsidiary thereof and any successor thereto unless the context indicates
otherwise. Any assignment of this Agreement shall be subject to the provisions
of Section 8(g). This Agreement and all rights hereunder are personal to the
Employee and shall not be assignable by her and any purported assignment shall
be null and void and shall not be binding on the Corporation.
15. ENTIRE AGREEMENT: This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and supersedes all previous representations, negotiations, commitments, and
writing with respect thereto, including, but not limited to, the Employment
Agreement between the Employee and the Corporation dated as of February 1,
1990, provided, however, that the option to purchase the Corporation's Common
Stock contained in such agreement, as amended, shall survive the termination of
said Employment Agreement.
16. AMENDMENT OR ALTERATION: No amendment or alteration of the terms
of this Agreement shall be valid unless made in writing and signed by all of
the parties hereto.
17. CHOICE OF LAW: This Agreement shall be governed by the laws of the
State of Connecticut.
18. ARBITRATION: Any controversy, claim, or breach arising out of or
relating to this Agreement or the breach thereof shall be settled by
arbitration in Stamford, Connecticut in accordance with the rules of the
American Arbitration Association and the judgment upon the award rendered shall
be entered by consent in any court having jurisdiction thereof.
11
<PAGE> 12
19. NOTICES: Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered mail to
the residence of the Employee, or to the principal office of the Corporation,
respectively.
20. WAIVER OF BREACH: The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by any of the parties hereto.
21. BINDING EFFECT: The terms of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective personal
representatives, heirs, administrators, successors, and permitted assigns.
22. GENDER: Pronouns in any gender shall be construed as masculine,
feminine, or neuter as the context requires in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
As to Section 4 only: CORPORATION:
IMRS Operations Inc. d/b/a
IMRS INC. IMRS INC.
By /s/ JAMES PERAKIS By /s/ JAMES PERAKIS
----------------- --------------------
James Perakis, Its James Perakis, Its
President and Chief President and Chief
Executive Officer Executive Officer
EMPLOYEE:
/s/ LUCY RICCIARDI
--------------------
12
<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT made as of the 1st day of July, 1994, between CRAIG
M. SCHIFF of Forest Hills, New York (hereinafter referred to as the "Employee")
and IMRS Operations Inc. d/b/a IMRS INC., a Delaware corporation with offices
at 777 Long Ridge Road Stamford, Connecticut 06902 (hereinafter referred to as
the "Corporation").
WHEREAS, the Corporation desires to employ the Employee, and the Employee
desires to serve as an employee of the Corporation on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and promises of the
parties hereto, the Corporation and. the Employee agree as follows:
1. EMPLOYMENT: The Corporation hereby agrees to employ the Employee as
Vice President, Products and Services to perform product and services as well
as managerial and executive functions of the Corporation, and the Employee
hereby agrees to perform such services for the Corporation on the terms and
conditions hereinafter stated, subject to the directives of the Board of
Directors of the Corporation.
2. TERM OF EMP]OYMENT: The term of this Agreement shall begin on July 1,
1994 and shall continue in full force and effect until June 30, 1997;
provided, however, that this Agreement shall be automatically renewed on a
year-to-year basis thereafter unless terminated by either party on at least six
(6) months prior written notice during any given year, unless sooner terminated
as provided herein. Notwithstanding the foregoing, the Corporation may
terminate this Agreement at any time without cause upon thirty (30) days
written notice to Employee in which event the Corporation shall pay severance
to Employee pursuant to Section 8(g) hereof.
3. COMPENSATION: During the term of this Agreement, for all services
rendered by Employee under this Agreement, the Corporation shall pay the
Employee an annual base salary of $136,000.00 per annum, payable in arrears at
a rate of $5,666.66 on the fifteenth and last day of each month. It is
understood that foregoing base salary is the base, salary in effect for the
Corporation's 1994 fiscal year and that such base salary will be increased,
which increase will be retroactive to July 1, 1994. The Employee's base
salary may be increased by the Board of Directors from time to time in its sole
and absolute discretion. In addition to
<PAGE> 2
the annual base salary described in this Section, Employee may receive cash
performance bonuses in the sole and absolute discretion of the Board of
Directors of the Corporation.
4. Stock Option:
------------
All options to purchase shares of the Common Stock of the Corporation's
parent, IMRS Inc. ("Parent") previously granted to the Employee by agreement
between the Parent and the Employee, under the 1991 Stock Plan of the Parent
or otherwise, shall continue in full force and effect in accordance with their
respective terms and conditions notwithstanding any provision of this
Agreement.
5. Fringe Benefits:
---------------
(a) During the term hereof, commencing on the day and year first
above written, the Corporation shall (i) provide the Employee and his
immediate family with medical and hospitalization insurance substantially
similar to that provided for the other executive personnel of the Corporation
in similar management positions, (ii) reimburse the Employee and his immediate
family for dental expenses incurred each year in excess of $200, including but
not limited to orthodontics for the Employee's children under the age of
twenty- one (21) years only, provided that the aggregate amount of such
reimbursement in any year shall not exceed $4,000 (such reimbursement shall be
in addition to any dental insurance provided to the Employee and his immediate
family under any dental plan from time to time maintained by the Company),
(iii) reimburse the Employee for expenses incurred in connection with the
purchase by Employee of fitness or exercise equipment or membership in a
fitness or exercise program reasonably acceptable to the Company in an
aggregate amount equal to the lesser of (x) seventy-five (75%) percent of all
such expenses each year and (y) $500 each year, (iv) reimburse the Employee
for the reasonable and customary cost of an annual physical examination, (v)
provide to the Employee dependent group medical coverage upon terms and
conditions satisfactory to the Company without charge to the Employee, (vi)
if the Employee is not covered by group long-term disability insurance in an
amount equal to at least 100% of Employee's base salary, the Company will
provide to Employee additional Iong-term disability insurance in an amount
reasonably determined by the insurer based on the Employee's total earned
income and personal financial circumstances, the cost of such
2
<PAGE> 3
coverage to be reported by the Company as compensation for income tax purposes
on the employee's Form W-2 each year, and (vii) life insurance in an amount
equal to three times (3X's) Employee's annual base salary.
(b) The Employee is authorized to incur on behalf of the Corporation
only such reasonable expenses (including travel and entertainment) in
connection with the business of the Corporation as are in conformity with the
Corporation's published guidelines. The Corporation shall reimburse Employee
for all such reasonable expenses incurred in connection with the business of
the Corporation upon the presentation by the Employee, from time to time, of an
itemized account of such expenditures, which account shall be in form and
substance in conformity with the rules and regulations of the Internal Revenue
Service. Any single expenditure in excess of $5,000 shall require the prior
approval of the Chief Executive Officer or the Chief Financial Officer of the
Corporation.
(c) During the term hereof, the Corporation shall provide Employee
with an automobile expense allowance equal to $600.00 per month.
6. DUTIES AND EXTENT OF SERVICES: Upon the execution of this Agreement
and throughout its term, the Employee shall assume the position of Vice
President, Products and Services for the Corporation and shall undertake all
of the duties incident to such office in addition to rendering all such other
management duties as the Board of Directors may reasonably request. The
parties hereto shall take whatever action is necessary to cause the election or
appointment of the Employee to such position. The Employee shall exert his best
efforts and shall devote his full time and attention to the affairs of the
Corporation. During the term of this Agreement the Employee shall not, directly
or indirectly, alone or as a member of a partnership (in the capacity of a
general partner) or limited liability company (in the capacity of a manager),
or as an officer, director, significant shareholder (i.e., owning or holding
beneficially or of record 5% or more of the voting shares of an entity), or
employee of any other corporation or entity, be engaged in or concerned with
any other duties or pursuits whatsoever for pecuniary gain requiring his
personal services without the prior written consent of the Corporation.
7. VACATION: During each year of the term of this Agreement, the
Employee shall
3
<PAGE> 4
be entitled to four (4) weeks vacation, the time of which shall be subject to
the prior approval of the Chief Executive Officer of the Corporation.
8. TERMINATION: Unless renewed as provided herein, the Employee's
employment hereunder shall terminate on June 30, 1997, or sooner upon the
occurrence of any of the following events:
(a) The Employee's death;
The termination of the Employee's employment hereunder by the
Corporation, at its option, to be exercised by written notice from the
Corporation to the Employee, upon the Employee's incapacity or inability to
perform his services as contemplated herein for a period of at least sixty
(60) consecutive days or an aggregate of ninety (90) consecutive or
non-consecutive days during any twelve (12) month period during the term hereof
due to the fact that his physical or mental health shall have become impaired
so as to make it impossible or impractical for him to perform the duties and
responsibilities contemplated for him hereunder; or
(c) The termination for cause of the Employee's employment
hereunder by the Corporation, at its option, to be exercised by written notice
from the Corporation to the Employee in the event the Employee is derelict in
his duties or commits any misconduct with respect to the Corporation's affairs
and such dereliction or misconduct shall continue for a period of fifteen (15)
days after the Corporation shall have given the Employee written notice
specifying such dereliction or misconduct, and advising him that the
Corporation shall have the right to terminate his employment hereunder in the
event such misconduct continues thorough such fifteen (15) day period.
(d) In the event that the Employee commits an act constituting
common law fraud or any crime, which could reasonably be expected to have an
adverse impact on the Corporation, its business or assets.
(e) In the event that the Employee should fail (otherwise than on
account of illness or other incapacity) or refuse to carry out the reasonable
directives of the Board of Directors of the Corporation, and such failure or
refusal shall continue for a period of fifteen (15) days after the Corporation
shall have given the Employee written notice specifying such
4
<PAGE> 5
directives and wherein the Employee has failed or refused to carry out the
same, and advising him that the Corporation shall have the right to terminate
his employment hereunder in the event such failure or refusal continues through
such fifteen (15) day period.
(f) Cessation of the Corporation's business.
(g) On thirty (30) days written notice from the Corporation pursuant
to Section 2 hereof. If (i) the Corporation terminates this Agreement pursuant
to Section 2 hereof on thirty (30) days notice without cause or (ii) there is a
Change in Control (as hereinafter defined) that occurs prior to the expiration
or termination of this Agreement and, within twelve (12) months after the Change
in Control, (A) Employee's employment is terminated by the Corporation otherwise
than for the reasons set forth in Sections (8) (a), (b), (c), (d), (e) and/or
(f) hereof or (B) Employee terminates his employment for Good Reason (as
hereinafter defined), then Corporation shall pay to Employee as severance pay, a
totaI amount equal to (i) his annual base salary, payable in tweIve (12) equal
consecutive monthly installments (without interest) beginning one (1) month
after such termination plus (ii) the fringe benefits described in Section 5(a)
for the twelve (12) month period commencing on the effective date of such
termination.
Employee expressly understands that payment of such severance pay and
benefits (or portion thereof if such payments terminate pursuant to the last
sentence of this paragraph) represents liquidated damages in full and final
settlement of any and all amounts owed by Corporation to Employee under this
Agreement or otherwise except for the accrued portion, if any, of any bonus,
stock option, commission, vacation or other benefit to which Employee is
expressly entitled pursuant to any formal, written plan or agreement maintained
by the Corporation. Notwithstanding the foregoing, if Employee obtains full
time employment from any person or entity or accepts an engagement as a
self-employed consultant or simiIar position during such twelve (12) month
period, then, upon commencement of any such empIoyment or engagement, the
severance pay and benefits payable under this Section 8(g) shall immediately be
and be deemed reduced by an amount equal to the compensation and/or benefits
payable by such other employment or engagement and the Corporation shall have
no further obligation to Employee under this Agreement or otherwise.
5
<PAGE> 6
(h) As used in this Agreement, the following terms have the meanings set
forth below:
(i) "Affiliate" of a person means any person directly or indirectly
controlling, controlled by or under common control with the first
person.
(ii) "Associate" has the meaning ascribed thereto in Rule 12b-2 under the
Exchange Act as in effect on the date hereof.
(iii) "Change in Control" means the occurrence of any of the following
events:
(A) A consolidation, merger, combination or other transaction
between Parent or Corporation, and any other corporation or other
legal entity (other than an Affiliate of Parent or Corporation) in
which shares of common stock of Parent or Corporation are exchanged
for or changed into other stock or securities, cash and/or other
property, if as a result of such transaction less than 20% of the
combined voting power of the common stock (or other securities
entitled to vote generally in the election of directors) of the
surviving or resulting entity is beneficially owned (as hereinafter
defined) by the beneficial owners of the Parent's or Corporation's
common stock as the case may be as of the date hereof ("Current
Shareholders") and the number of persons serving on the Board of
Directors of the surviving or resulting entity who are Affiliates,
Associates, designees or nominees of any single "person" (as defined
in Section 13(d)(3) of the Exchange Act) other than the Current
Shareholders is greater than the number of persons serving on such
Board of Directors who are Affiliates, Associates, designees or
nominees of the Current Shareholders;
(B) A sale of all or at least 80% (measured by book value as of the
most recent annual or quarterly balance sheet) of the assets of
Parent or Corporation to another corporation or other legal entity
(other than one of the Current Shareholders or any Affiliate of
Parent or Corporation); and
6
<PAGE> 7
(C) A sale or other disposition of shares of common stock of Parent
or Corporation by the Current Shareholders to any corporation or other
legal entity (other than one of the Current Shareholders or any
Affiliate of Parent or Corporation) as a result of which less than 20%
of the then-outstanding common stock of Parent or Corporation is
beneficially owned (as hereinafter defined) by the Current
Shareholders and the number of persons serving on Parent's or
Corporation's Board of Directors who are Affiliates, Associates,
designees or nominees of any single "person", (as defined in Section
13(d)(3) of the Exchange Act) other than the Current Shareholders is
greater than the number of persons serving on Parent's or
Corporation's Board of Directors who are Affiliates, Associates,
designees or nominees of the Current Shareholders.
Beneficial ownership will be determined by applying the definition set
forth in Rule 13d-3 under the Exchange Act as in effect on the date
hereof. Also, for purposes of this Agreement, any person who, on the
date on which a Change in control occurs, is serving on Parent's or
Corporation's Board of Directors will deemed to be an Affiliate,
Associate, designee or nominee of the Current Shareholders after the
Change in Control for as long as such person serves as a director of
Parent or Corporation or of any entity that survives or results from a
transaction described in Section 8(h)(iii).
(iv) "Corporation" includes any successor to all or substantially all of
the business or assets of the Corporation.
(v) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
(vi) "Good Reason" means that, following a Change in Control and without
Employee's written consent, (A) there has been a material and
significant
7
<PAGE> 8
adverse change in the nature or scope of Employee's authority, duties
or responsibilities in effect immediately prior to the Change in
Control; (B) there has been a reduction in Employee's annual base
salary in effect immediately prior to the Change in Control or an
adverse change in Employee's total compensation such that Employee's
compensation and benefits in the aggregate are not materially
comparable to his aggregate compensation and benefits in effect
immediately prior to the Change in Control; or (C) the principal place
of Employee's employment is relocated to a place that is more than 25
miles from the principal place of Employee's employment immediately
prior to the Change in Control or Employee is required to be away
from his office in the course of discharging his duties and
responsibilities materially and significantly more than was required
prior to the Change in Control.
In the event of any termination (other than by the Corporation without
cause on thirty (30) days notice pursuant to Section 2), the Corporation shall
pay to the Employee such portion of his annual base salary payable to the date
such termination becomes effective (reduced by any amount payable pursuant to
any disability insurance policies), and thereafter the Employee shall have no
claim for any further compensation hereunder; provided, however, that in the
event of the Employee's death, his death shall be deemed to have occurred on
the last day of the month in which he dies. Upon any termination Employee
shall also receive all the benefits to which he is entitled under the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"), provided that if the
Employee is entitled to receive severance and fringe benefits described in
Section 8(g), COBRA benefits shall commence at the expiration of the twelve
(12) month (or such shorter period) as is provided in such Section.
9. RESTRICTIONS ON THE EMPLOYEE: During the period commencing on the
date hereof and ending two (2) years after the termination of the Employee's
employment by the Corporation for any reason, the Employee shall not directly
or indirectly induce or attempt to induce any of the employees of the
Corporation to leave the employ of Corporation. If this Agreement is
terminated by the Corporation pursuant to Section 2 hereof, the foregoing two
8
<PAGE> 9
(2) year period shall be reduced to one (1) year.
10. COVENANT NOT TO COMPETE: During the period commencing on the
date hereof, and ending two (2) years after the termination of the Employee's
employment for any reason, the Employee shall not, except as a passive investor
in publicly held companies, engage in, or own or controI any interest in, or
act as principal, director, officer or employee of, or consultant to, any firm
or corporation which is in competition with the Corporation or its Parent. If
this Agreement is terminated by the Corporation pursuant to Section 2 hereof,
the foregoing two (2) year period shall be reduced to one (1) year.
11. Proprietary. Information:
------------------------
(a) For purposes of this Agreement, "proprietary information" shall
mean any proprietary information relating to the business of the Corporation or
its Parent or any entity in which the Corporation or its Parent has a
controlling interest that has not previously been publicly released by duly
authorized representatives of the Corporation and shall include (but shall not
be limited to) information encompassed in all proposals, marketing and sales
plans, financial information, costs, pricing information, computer programs
(including without limitation source code, object code, algorithms and models),
customer information, customer lists, and all methods, concepts, know-how or
ideas in or reasonably related to the business of Corporation or any entity in
which the Corporation has a controlling interest. The Employee agrees to regard
and preserve as confidential all proprietary information, whether he has such
information in his memory or in writing or other tangible or intangible form.
The Employee will not, without written authority from the Corporation to do so,
directly or indirectly, use for his benefit or purposes, nor disclose to
others, either during the term of his employment hereunder or thereafter, any
proprietary information except as required by the conditions of his employment
hereunder or pursuant to court order (in which case Employee shall give the
Corporation prompt written notice [not less than 24 hours] so that the
Corporation may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. The Employee agrees not
to remove from the premises of the Corporation or any subsidiary or affiliate
of the Corporation, except as an employee of the Corporation in pursuit of the
business of the Corporation or any of its subsidiaries, affiliates or any
entity in
9
<PAGE> 10
which the Corporation has a controlling interest, or except as specifically
permitted in writing by the Corporation, any document or object containing or
reflecting any proprietary information. The Employee recognizes that all
such documents and objects, whether developed by him or by someone else, are
the exclusive property of the Corporation. Proprietary information shall not
include information which is presently in the public domain or which comes
into the public domain through no fault of the Employee or which is disclosed
to the Employee by a third party lawfully in possession of such information
with a right to disclose same.
(b) All proprietary information and all of the Employee's interest
in trade secrets, trademarks, computer programs, customer information,
customer lists, employee lists, products, procedure, copyrights, patents and
developments hereafter to the end of the period of employment hereunder
developed by the Employee as a result of, or in connection with, his
employment hereunder, shall belong to the Corporation; and without further
compensation, but at the Corporation's expense, forthwith upon request of the
Corporation, Employee shall execute any and all such assignments and other
documents and take any and all such other action as Corporation may reasonably
request in order to vest in Corporation all the EmpIoyee's right, title and
interest in and to all or the aforesaid items, free and clear of liens,
charges and encumbrances.
(c) The Employee expressly agrees that the covenants set forth in
Sections 9, 10 and 11 of this Agreement are being given to Corporation in
connection with the employment of the Employee by Corporation and that such
covenants are intended to protect Corporation against the competition by the
Employee, within the terms stated, to the fullest extent deemed reasonable and
permitted in law and equity. In the event that the foregoing limitations upon
the conduct of the Employee are beyond those permitted by law, such
limitations, both as to time and geographical area, shall be, and be deemed to
be, reduced in scope and effect to the maximum extent permitted by law.
12. INJUNCTIVE RELIEF: The Employee acknowledges that the injury to
the Corporation resulting from any violation by him of any of the covenants
contained in this Agreement will be of such a character that it cannot be
adequately compensated by money
10
<PAGE> 11
damages, and, accordingly, the Corporation may, in addition to pursuing its
other remedies, obtain an injunction from any court having jurisdiction of the
matter restraining any such violation.
13. REPRESENTATION OF EMPLOYEE: The Employee represents and warrants
that neither the execution and delivery of this Agreement nor the performance
of his duties hereunder violates the provisions of any other agreement to
which he is a party or by which he is bound.
14. PARTIES: NON-ASSIGNABILITY: As used herein, the term the
"Corporation" shall mean and include the Corporation, its Parent and any
subsidiary thereof and any successor thereto unless the context indicates
otherwise. Any assignment of this Agreement shall be subject to the
provisions of Section 8(g). This Agreement and all rights hereunder are
personal to the Employee and shall not be assignable by him and any purported
assignment shall be null and void and shall not be binding on the Corporation.
15. ENTIRE AGREEMENT: This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated
herein and supersedes all previous representations, negotiations, commitments,
and writing with respect thereto, including, but not limited to, the
Employment Agreement between the Employee and the Corporation dated as of
October 1, 1990; provided, however, that the option to purchase the
Corporation's Common Stock contained in such agreement, as amended, shall
survive the termination of said Employment Agreement.
16. AMENDMENT OR ALTERATIION: No amendment or alteration of the terms of
this Agreement shall be valid unless made in writing and signed by all of the
parties hereto.
17. CHOICE OF LAW: This Agreement shall be governed by the laws of
the State of Connecticut.
18. ARBITRATION: Any controversy, claim, or breach arising out of or
relating to this Agreement or the breach thereof shall be settled by
arbitration in Stamford, Connecticut in accordance with the rules of the
American Arbitration Association and the judgment upon the award rendered shall
be entered by consent in any court having jurisdiction thereof.
19. NOTICES: Any notices required or pertained to be given under this
Agreement
11
<PAGE> 12
shall be sufficient if in writing, and if sent by registered mail to the
residence of the Employee, or to the principal office of the Corporation,
respectively.
20. WAIVER OF BREACH: The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by any of the parties hereto.
21. BINDING EFFECT: The terms of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective personal
representatives, heirs, administrators, successors, and permitted assigns.
22. GENDER: Pronouns in any gender shall be construed as masculine,
feminine, or neuter as the context requires in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written
As to Section 4 only: CORPORATION:
IMRS Operations Inc. d/b/a
IMRS INC. IMRS INC.
By ___________________ By ___________________
James Perakis, Its James Perakis, Its
President and Chief President and Chief
Executive Officer Executive Officer
EMPLOYEE:
/s/ CRAIG M. SCHIFF
-----------------------
Craig M. Schiff
12
<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT made as of the 1st day of July, 1994, between JOHN
ADINOLFI of Fairfield, Connecticut (hereinafter referred to as the "Employee")
and IMRS Operations Inc. d/b/a IMRS INC., a Delaware corporation with offices
at 777 Long Ridge Road, Stamford, Connecticut 06902 (hereinafter referred to as
the "Corporation").
WHEREAS, the Corporation desires to employ the Employee, and the
Employee desires to serve as an employee of the Corporation on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and promises of
the parties hereto, the Corporation and the Employee agree as follows:
1. EMPLOYMENT: The Corporation hereby agrees to employ the Employee
as Vice President, Marketing to perform marketing and sales as well as
managerial and executive functions of the Corporation, and the Employee hereby
agrees to perform such services for the Corporation on the terms and conditions
hereinafter stated, subject to the directives of the Board of Directors of the
Corporation.
2. TERM OF EMPLOYMENT: The term of this Agreement shall begin on
July 1, 1994 and shall continue in full force and effect until June 30, 1997;
provided, however, that this Agreement shall be automatically renewed on a
year-to-year basis thereafter unless terminated by either party on at least six
(6) months prior written notice during any given year, unless sooner terminated
as provided herein. Notwithstanding the foregoing, the Corporation may
terminate this Agreement at any time without cause upon thirty (30) days
written notice to Employee in which event the Corporation shall pay severance
to Employee pursuant to Section 8(g) hereof.
3. COMPENSATION: During the term of this Agreement, for all
services rendered by Employee under this Agreement, the Corporation shall pay
the Employee an annual base salary of $117,000.00 per annum, payable in arrears
at a rate of $4,875.00 on the fifteenth and last day of each month. It is
understood that foregoing base salary is the base salary in effect for the
Corporation's 1994 fiscal year and that such base salary will be increased,
which increase will be retroactive to July 1, 1994. The Employee's base salary
may be increased by the Board of Directors from time to time in its sole and
absolute discretion. In addition to
<PAGE> 2
the annual base salary described in this Section, Employee may receive cash
performance bonuses in the sole and absolute discretion of the Board of
Directors of the Corporation.
4. Stock Option:
------------
All options to purchase shares of the Common Stock of the Corporation's
parent, IMRS Inc. ("Parent") previously granted to the Employee by agreement
between the Parent and the Employee, under the 1991 Stock Plan of the Parent or
otherwise, shall continue in full force and effect in accordance with their
respective terms and conditions notwithstanding any provision of this
Agreement.
5. Fringe Benefits:
---------------
(a) During the term hereof, commencing on the day and year first
above written, the Corporation shall (i) provide the Employee and his immediate
family with medical and hospitalization insurance substantially similar to that
provided for the other executive personnel of the Corporation in similar
management positions, (ii) reimburse the Employee and his immediate family for
dental expenses incurred each year in excess of $200, including but not limited
to orthodontics for the Employee's children under the age of twenty- one (21)
years only, provided that the aggregate amount of such reimbursement in any
year shall not exceed $4,000 (such reimbursement shall be in addition to any
dental insurance provided to the Employee and his immediate family under any
dental plan from time to time maintained by the Company), (iii) reimburse the
Employee for expenses incurred in connection with the purchase by Employee of
fitness or exercise equipment or membership in a fitness or exercise program
reasonably acceptable to the Company in an aggregate amount equal to the lesser
of (x) seventy-five (75%) percent of all such expenses each year and (y) $500
each year, (iv) reimburse the Employee for the reasonable and customary cost of
an annual physical examination, (v) provide to the Employee dependent group
medical coverage upon terms and conditions satisfactory to the Company without
charge to the Employee, (vi) if the Employee is not covered by group long-term
disability insurance in an amount equal to at least 100% of Employee's base
salary, the Company will provide to Employee additional long-term disability
insurance in an amount reasonably determined by the insurer based on the
Employee's total earned income and personal financial circumstances, the cost
of such
2
<PAGE> 3
coverage to be reported by the Company. as compensation for income tax purposes
on the employee's Form W-2 each year, and (vii) life insurance in an amount
equal to three times (3X's) Employee's annual base salary.
(b) The Employee is authorized to incur on behalf of the Corporation
only such reasonable expenses (including travel and entertainment) in
connection with the business of the Corporation as are in conformity with the
Corporation's published guidelines. The Corporation shall reimburse Employee
for all such reasonable expenses incurred in connection with the business of
the Corporation upon the presentation by the Employee, from time to time, of an
itemized account of such expenditures, which account shall be in form and
substance in conformity with the rules and regulations of the Internal Revenue
Service. Any single expenditure in excess of $5,000 shall require the prior
approval of the Chief Executive Officer or Chief Financial Officer of the
Corporation.
(c) During the term hereof, the Corporation shall provide Employee
with an automobile expense allowance equal to $600.00 per month.
6. DUTIES AND EXTENT OF SERVICES: Upon the execution of this
Agreement and throughout its term, the Employee shall assume the position of
Vice President, Marketing for the Corporation and shall undertake all of the
duties incident to such office in addition to rendering all such other
management duties as the Board of Directors may reasonably request. The parties
hereto shall take whatever action is necessary to cause the election or
appointment of the Employee to such position. The Employee shall exert his best
efforts and shall devote his full time and attention to the affairs of the
Corporation. During the term of this Agreement the Employee shall not,
directly or indirectly, alone or as a member of a partnership (in the capacity
of a general partner) or limited liability company (in the capacity of a
manager), or as an officer, director, significant shareholder (i.e., owning or
holding beneficially or of record 5% or more of the voting shares of an
entity), or employee of any other corporation or entity, be engaged in or
concerned with any other duties or pursuits whatsoever for pecuniary gain
requiring his personal services without the prior written consent of the
Corporation.
7. VACATION: During each year of the term of this Agreement, the
Employee shall
3
<PAGE> 4
be entitled to four (4) weeks vacation, the time of which shall be subject to
the prior approval of the Chief Executive Officer of the Corporation.
8. TERMINATION: Unless renewed as provided herein, the Employee's
employment hereunder shall terminate on June 30, 1997, or sooner upon the
occurrence of any of the following events:
(a) The Employee's death;
(b) The termination of the Employee's employment hereunder by the
Corporation, at its option, to be exercised by written notice from the
Corporation to the Employee, upon the Employee's incapacity or inability to
perform his services as contemplated herein for a period of at least sixty (60)
consecutive days or an aggregate of ninety (90) consecutive or non-consecutive
days during any twelve (12) month period during the term hereof due to the fact
that his physical or mental health shall have become impaired so as to make it
impossible or impractical for him to perform the duties and responsibilities
contemplated for him hereunder; or
(c) The termination for cause of the Employee's employment hereunder
by the Corporation, at its option, to be exercised by written notice from the
Corporation to the Employee in the event the Employee is derelict in his duties
or commits any misconduct with respect to the Corporation's affairs and such
dereliction or misconduct shall continue for a period of fifteen (15) days
after the Corporation shall have given the Employee writ'ten notice specifying
such dereliction or misconduct, and advising him that the Corporation shall
have the right to terminate his employment hereunder in the event such
misconduct continues through such fifteen (15) day period.
(d) In the event that the Employee commits an act constituting
common law fraud or any crime, which could reasonably be expected to have an
adverse impact on the Corporation, its business or assets.
(e) In the event that the Employee should fail (otherwise than on
account of illness or other incapacity) or refuse to carry out the reasonable
directives of the Board of Directors of the Corporation, and such failure or
refusal shall continue for a period of fifteen (15) days after the Corporation
shall have given the Employee written notice specifying such
4
<PAGE> 5
directives and wherein the Employee has failed or refused to carry out the
same, and advising him that the Corporation shall have the right to
terminate his employment hereunder in the event such failure or refusal
continues through such fifteen (15) day period.
(f) Cessation of the Corporation's business.
(g) On thirty (30) days written notice from the Corporation
pursuant to Section 2 hereof. If (i) the Corporation terminates this
Agreement pursuant to Section 2 hereof on thirty (30) days notice without cause
or (ii) there is a Change in Control (as hereinafter defined) that occurs prior
to the expiration or termination of this Agreement and, within twelve (12)
months after the Change in Control, (A) Employee's employment is terminated by
the Corporation otherwise than for the reasons set forth in Sections (8) (a),
(b), (c), (d), (e) and/or (f) hereof or (13) Employee terminates his employment
for Good Reason (as hereinafter defined), then Corporation shall pay to
Employee as severance pay, a total amount equal to (i) his annual base salary,
payable in twelve (12) equal consecutive monthly installments (without
interest) beginning one (1) month after such termination plus (ii) the fringe
benefits described in Section 5(a) for the twelve (12) month period commencing
on the effective date of such termination.
Employee expressly understands that payment of such severance pay and
benefits (or portion thereof if such payments terminate pursuant to the last
sentence of this paragraph) represents liquidated damages in full and final
settlement of any and all amounts owed by Corporation to Employee under this
Agreement or otherwise except for the accrued portion, if any, of any bonus,
stock option, commission, vacation or other benefit to which Employee is
expressly entitled pursuant to any formal, written plan or agreement maintained
by the Corporation. Notwithstanding the foregoing, if Employee obtains full
time employment from any person or entity or accepts an engagement as a
self-employed consultant or similar position during such twelve (12) month
period, then, upon commencement of any such employment or engagement, the
severance pay and benefits payable under this Section 8(g) shall immediately be
and be deemed reduced by an amount equal to the compensation and/or benefits
payable by such other employment or engagement and the Corporation shall have
no further obligation to Employee under this Agreement or otherwise.
5
<PAGE> 6
(h) As used in this Agreement, the following terms have the meanings set forth
below:
(i) "Affiliate" of a person means any person directly or indirectly
controlling, controlled by or under common control with the
first person.
(ii) "Associate" has the meaning ascribed thereto in Rule 12b-2
under the Exchange Act as in effect on the date hereof.
(iii) "Change in Control" means the occurrence of any of the
following events:
(A) A consolidation, merger, combination or other transaction
between Parent or Corporation, and any other corporation or
other legal entity (other than an Affiliate of Parent or
Corporation) in which shares of common stock of Parent or
Corporation are exchanged for or changed into other stock or
securities, cash and/or other property, if as a result of such
transaction less than 20% of the combined voting power of the
common stock (or other securities entitled to vote generally in
the election of directors) of the surviving or resulting entity
is beneficially owned (as hereinafter defined) by the
beneficial owners of the Parent's or Corporation's common stock
as the case may be as of the date hereof ("Current
Shareholders") and the number of persons serving on the Board
of Directors of the surviving or resulting entity who are
Affiliates, Associates, designees or nominees of any single
"person" (as defined in Section 13(d)(3) of the Exchange Act)
other than the Current Shareholders is greater than the number
of persons serving on such Board of Directors who are
Affiliates, Associates, designees or nominees of the Current
Shareholders;
(B) A sale of all or at least 80% (measured by book value as
of the most recent annual or quarterly balance sheet) of
the assets of Parent or Corporation to another corporation or
other legal entity (other than one of the Current Shareholders
or any Affiliate of Parent or Corporation); and
6
<PAGE> 7
(C) A sale or other disposition of shares of common stock of
Parent or Corporation by the Current Shareholders to any
corporation or other legal entity (other than one of the
Current Shareholders or any Affiliate of Parent or Corporation)
as a result of which less than 20% of the then-outstanding
common stock of Parent or Corporation is beneficially owned (as
hereinafter defined) by the Current Shareholders and the number
of persons serving on Parent's or Corporation's Board of
Directors who are Affiliates, Associates, designees or nominees
of any single "person" (as defined in Section 13(d)(3) of the
Exchange Act) other than the Current Shareholders is greater
than the number of persons serving on Parent's or Corporation's
Board of Directors who are Affiliates, Associates, designees or
nominees of the Current Shareholders.
Beneficial ownership will be determined by applying the
definition set forth in Rule 13d-3 under the Exchange Act as in
effect on the date hereof. Also, for purposes of this
Agreement, any person who, on the date on which a Change in
control occurs, is serving on Parent's or Corporation's Board
of Directors will deemed to be an Affiliate, Associate,
designee or nominee of the Current Shareholders after the
Change in Control for as long as such person serves as a
director of Parent or Corporation or of any entity that
survives or results from a transaction described in Section
8(h)(iii).
(iv) "Corporation" includes any successor to all or substantially
all of the business or assets of the Corporation.
(v) "Exchange Act" means the Securities Exchange Act of 1934, as
amended form time to time.
(vi) "Good Reason" means that, following a Change in Control and
without Employee's written consent, (A) there has been a
material and significant
7
<PAGE> 8
adverse change in the nature or scope of Employee's authority,
duties or responsibilities in effect immediately prior to the
Change in Control; (B) there has been a reduction in Employee's
annual base salary in effect immediately prior to the Change in
Control or an adverse change in Employee's total compensation
such that Employee's compensation and benefits in the aggregate
are not materially comparable to his aggregate compensation and
benefits in effect immediately prior to the Change in Control;
or (C) the principal place of Employee's employment is
relocated to a place that is more than 25 miles from the
principal place of Employee's employment immediately prior to
the Change in Control or Employee is required to be away from
his office in the course of discharging his duties and
responsibilities materially and significantly more than was
required prior to the Change in Control.
In the event of any termination (other than by the Corporation without
cause on thirty (30) days notice pursuant to Section 2), the Corporation shall
pay to the Employee such portion of his annual base salary payable to the date
such termination becomes effective (reduced by any amount payable pursuant to
any disability insurance policies), and thereafter the Employee shall have no
claim for any further compensation hereunder; provided, however, that in the
event of the Employee's death, his death shall be deemed to have occurred on
the last day of the month in which he dies. Upon any termination Employee shall
also receive all the benefits to which he is entitled under the Consolidated
Omnibus Budget Reconciliation Act ("COBRA"), provided that if the Employee is
entitled to receive severance and fringe benefits described in Section 8(g),
COBRA benefits shall commence at the expiration of the twelve (12) month (or
such shorter period) as is provided in such Section.
9. RESTRICTIONS ON THE EMPLOYEE: During the period commencing on
the date hereof and ending two (2) years after the termination of the
Employee's employment by the Corporation for any reason, the Employee shall not
directly or indirectly induce or attempt to induce any of the employees of the
Corporation to leave the employ of Corporation. If this Agreement is terminated
by the Corporation pursuant to Section 2 hereof, the foregoing two
8
<PAGE> 9
(2) year period shall be reduced to one (1) year.
10. COVENANT NOT TO COMPETE: During the period commencing on the
date hereof, and ending two (2) years after the termination of the Employee's
employment for any reason, the Employee shall not, except as a passive investor
in publicly held companies, engage in, or own or control any interest in, or
act as principal, director, officer or employee of, or consultant to, any firm
or corporation which is in competition with the Corporation or its Parent. If
this Agreement is terminated by the Corporation pursuant to Section 2 hereof,
the foregoing two (2) year period shall be reduced to one (1) year.
11. Proprietary Information:
------------------------
(a) For purposes of this Agreement, "proprietary information" shall
mean any proprietary information relating to the business of the Corporation or
its Parent or any entity in which the Corporation or its Parent has a
controlling interest that has not previously been publicly released by duly
authorized representatives of the Corporation and shall include (but shall not
be limited to) information encompassed in all proposals, marketing and sales
plans, financial information, costs, pricing information, computer programs
(including without limitation source code, object code, algorithms and models),
customer information, customer lists, and all methods, concepts, know-how or
ideas in or reasonably related to the business of Corporation or any entity in
which the Corporation has a controlling interest. The Employee agrees to regard
and preserve as confidential all proprietary information, whether he has such
information in his memory or in writing or other tangible or intangible form.
The Employee will not, without written authority from the Corporation to do so,
directly or indirectly, use for his benefit or purposes, nor disclose to
others, either during the term of his employment hereunder or thereafter, any
proprietary information except as required by the conditions of his employment
hereunder or pursuant to court order (in which case Employee shall give the
Corporation prompt written notice [not less than 24 hours] so that the
Corporation may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. The Employee agrees not
to remove from the premises of the Corporation or any subsidiary or affiliate
of the Corporation, except as an employee of the Corporation in pursuit of the
business of the Corporation or any of its subsidiaries, affiliates or any
entity in
9
<PAGE> 10
which the Corporation has a controlling interest, or except as specifically
permitted in writing by the Corporation, any document or object containing
or reflecting any proprietary information. The Employee recognizes that all
such documents and objects, whether developed by him or by someone else, are
the exclusive property of the Corporation. Proprietary information shall not
include information which is presently in the public domain or which comes into
the public domain through no fault of the Employee or which is disclosed to the
Employee by a third party lawfully in possession of such information with a
right to disclose same.
(b) All proprietary information and all of the Employee's interest
in trade secrets, trademarks, computer programs, customer information, customer
lists, employee lists, products, procedure, copyrights, patents and
developments hereafter to the end of the period of employment hereunder
developed by the Employee as a result of, or in connection with, his employment
hereunder, shall belong to the Corporation; and without further compensation,
but at the Corporation's expense, forthwith upon request of the Corporation,
Employee shall execute any and all such assignments and other documents and
take any and all such other action as Corporation may reasonably request in
order to vest in Corporation all the Employee's right, title and interest in
and to all of the aforesaid items, free and clear of liens, charges and
encumbrances.
(c) The Employee expressly agrees that the covenants set forth in
Sections 9, 10 and 11 of this Agreement are being given to Corporation in
connection with the employment of the Employee by Corporation and that such
covenants are intended to protect Corporation against the competition by the
Employee, within the terms stated, to the fullest extent deemed reasonable and
permitted in law and equity. In the event that the foregoing limitations upon
the conduct of the Employee are beyond those permitted by law, such
limitations, both as to time and geographical area, shall be, and be deemed to
be, reduced in scope and effect to the maximum extent permitted by law.
12. INJUNCTIVE RELIEF: The Employee acknowledges that the injury
to the Corporation resulting from any violation by him of any of the covenants
contained in this Agreement will be of such a character that it cannot be
adequately compensated by money
10
<PAGE> 11
damages, and, accordingly, the Corporation may, in addition to pursuing its
other remedies, obtain an injunction from any court having jurisdiction of the
matter restraining any such violation.
13. REPRESENTATION OF EMPLOYEE: The Employee represents and warrants
that neither the execution and delivery of this Agreement nor the performance
of his duties hereunder violates the provisions of any other agreement to which
he is a party or by which he is bound.
14. PARTIES; NON-ASSIGNABILITY: As used herein, the term the
"Corporation" shall mean and include the Corporation, its Parent and any
subsidiary thereof and any successor thereto unless the context indicates
otherwise. Any assignment of this Agreement shall be subject to the provisions
of Section 8(g). This Agreement and all rights hereunder are personal to the
Employee and shall not be assignable by him and any purported assignment shall
be null and void and shall not be binding on the Corporation.
15. ENTIRE AGREEMENT: This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and supersedes all previous representations, negotiations, commitments, and
writing with respect thereto, including, but not limited to, the Employment
Agreement between the Employee and the Corporation dated as of March 15, 1991,
provided, however, that the option to purchase the Corporation's Common Stock
contained in any such agreement, as amended, shall survive the termination of
said Employment Agreement.
16. AMENDMENT OR ALTERATION: No amendment or alteration of the terms
of this Agreement shall be valid unless made in writing and signed by all of
the parties hereto.
17. CHOICE OF LAW: This Agreement shall be governed by the laws
of the State of Connecticut.
18. ARBITRATION: Any controversy, claim, or breach arising out of or
relating to this Agreement or the breach thereof shall be settled by
arbitration in Stamford, Connecticut in accordance with the rules of the
American Arbitration Association and the judgment upon the award rendered shall
be entered by consent in any court having jurisdiction thereof.
19. NOTICES: Any notices required or permitted to be given under
this Agreement
11
<PAGE> 12
shall be sufficient if in writing, and if sent by registered mail to the
residence of the Employee, or to the principal office of the Corporation,
respectively.
20. WAIVER OF BREACH: The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by any of the parties hereto.
21. BINDING EFFECT: The terms of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective personal
representatives, heirs, administrators, successors, and permitted assigns.
22. GENDER: Pronouns in any gender shall be construed as masculine,
feminine, or neuter as the context requires in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
As to Section 4 only: CORPORATION:
IMRS Operations Inc. d/b/a
IMRS INC. IMRS INC.
By /s/ JAMES PERAKIS By /s/ JAMES PERAKIS
------------------- -------------------
James Perakis, Its James Perakis, Its
President and Chief President and Chief
Executive Officer Executive Officer
EMPLOYEE:
/s/ JOHN ADINOLFI
-----------------
John Adinolfi
12
<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT made as of the l st day of July, 1994, between
GORDON O. RAPKIN of Wilton, Connecticut (hereinafter referred to as the
"Employee") and IMRS Operations Inc. d/b/a IMRS INC., a Delaware corporation
with offices at 777 Long Ridge Road, Stamford, Connecticut 06902 (hereinafter
referred to as the "Corporation").
WHEREAS, the Corporation desires to employ the Employee, and the
Employee desires to serve as an employee of the Corporation on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and promises of
the parties hereto, the Corporation and the Employee agree as follows:
1. Employment: The Corporation hereby agrees to employ the Employee as
Vice President, Product Management and Planning to perform product management
and planning as well as managerial and executive functions of the Corporation,
and the EmpIoyee hereby agrees to perform such services for the Corporation on
the terms and conditions hereinafter stated, subject to the directives of the
Board of Directors of the Corporation.
2. Term of Employment: The term of this Agreement shall begin on July
1, 1994 and shall continue in full force and effect until June 30, 1997;
provided, however, that this Agreement shall be automatically renewed on a
year-to-year basis thereafter unless terminated by either party on at least six
(6) months prior written notice during any given year, unless sooner terminated
as provided herein. Notwithstanding the foregoing, the Corporation may
terminate this Agreement at any time without cause upon thirty (30) days
written notice to Employee in which event the Corporation shall pay severance
to Employee pursuant to Section 8(g) hereof.
3. Compensation: During the term of this Agreement, for all services
rendered by Employee under this Agreement, the Corporation shall pay the
Employee an annual base salary of $150,000.00 per annum, payable in arrears at
a rate of $6,250.00 on the fifteenth and last day of each month. It is
understood that foregoing base salary is the base salary in effect for the
Corporation's 1994 fiscal year and that such base salary will be increased,
which increase will be retroactive to July 1, 1994. The Employee's base salary
may be increased by the Board of Directors from time to time in its sole and
absolute discretion. In addition to
<PAGE> 2
the annual base salary described in this Section, Employee may receive cash
performance bonuses in the sole and absolute discretion of the Board of
Directors of the Corporation.
4. Stock Option:
All options to purchase shares of the Common Stock of the Corporation's
parent, IMRS Inc. ("Parent") previously granted to the Employee by agreement
between the Parent and the Employee, under the 1991 Stock Plan of the Parent or
otherwise, shall continue in full force and effect in accordance with their
respective terms and conditions notwithstanding any provision of this
Agreement.
5. Fringe Benefits:
(a) During the term hereof, commencing on the day and year first
above written, the Corporation shall (i) provide the Employee and his immediate
family with medical and hospitalization insurance substantially similar to that
provided for the other executive personnel of the Corporation in similar
management positions, (ii) reimburse the Employee and his immediate family for
dental expenses incurred each year in excess of $200, including but not limited
to orthodontics for the Employee's children under the age of twenty-one (21)
years only, provided that the aggregate amount of such reimbursement in any
year shall not exceed $4,000 (such reimbursement shall be in addition to any
dental insurance provided to the Employee and his immediate family under any
dental plan from time to time maintained by the Company), (iii) reimburse the
Employee for expenses incurred in connection with the purchase by Employee of
fitness or exercise equipment or membership in a fitness or exercise program
reasonably acceptable to the Company in an aggregate amount equal to the lesser
of (x) seventy-five (75%) percent of all such expenses each year and (y) $500
each year, (iv) reimburse the Employee for the reasonable and customary cost of
an annual physical examination, (v) provide to the Employee dependent group
medical coverage upon terms and conditions satisfactory to the Company without
charge to the Employee, (vi) if the Employee is not covered by group long-term
disability insurance in an amount equal to at least 100% of Employee's base
salary, the Company will provide to Employee additional long-term disability
insurance in an amount reasonably determined by the insurer based on the
Employee's total earned income and personal financial circumstances, the cost
of such
2
<PAGE> 3
coverage to be reported by the Company. as compensation for income tax purposes
on the empIoyee's Form W-2 each year, and (vii) life insurance in an amount
equal to three times (3X's) Employee's annual base salary.
(b) The Employee is authorized to incur on behalf of the Corporation
only such reasonable expenses (including travel and entertainment) in
connection with the business of the Corporation as are in conformity with the
Corporation's published guidelines. The Corporation shall reimburse Employee
for all such reasonable expenses incurred in connection with the business of
the Corporation upon the presentation by the Employee, from time to time, of an
itemized account of such expenditures, which account shall be in form and
substance in conformity with the rules and regulations of the Internal Revenue
Service. Any single expenditure in excess of $5,000 shall require the prior
approval of the Chief Executive Officer or the Chief Financial Officer of the
Corporation.
(c) During the term hereof, the Corporation shall provide Employee
with an automobile expense allowance equal to $600.00 per month.
6. Duties and Extent of Services: Upon the execution of this Agreement
and throughout its term, the Employee shall assume the position of Vice
President, Product Management and Planning for the Corporation and shall
undertake all of the duties incident to such office in addition to rendering
all such other management duties as the Board of Directors may reasonably
request. The parties hereto shall take whatever action is necessary to cause
the election or appointment of the Employee to such position. The Employee
shall exert his best efforts and shall devote his full time and attention to
the affairs of the Corporation. During the term of this Agreement the Employee
shall not, directly or indirectly, alone or as a member of a partnership (in
the capacity of a general partner) or limited liability company (in the
capacity of a manager), or as an officer, director, significant shareholder
(i.e., owning or holding beneficially or of record 5% or more of the voting
shares of an entity), or employee of any other corporation or entity, be
engaged in or concerned with any other duties or pursuits whatsoever for
pecuniary gain requiring his personal services without the prior written
consent of the Corporation.
7. Vacation: During each year of the term of this Agreement, the
Employee shall
3
<PAGE> 4
be entitled to four (4) weeks vacation, the .time of which shall be subject to
the prior approval of the Chief Executive Officer of the Corporation.
8. Termination: Unless renewed as provided herein, the Employee's
employment hereunder shall terminate on June 30, 1997, or sooner upon the
occurrence of any of the following events:
(a) The Employee's death;
(b) The termination of the Employee's employment hereunder by the
Corporation, at its option, to be exercised by written notice from the
Corporation to the Employee, upon the Employee's incapacity or inability to
perform his services as contemplated herein for a period of at least sixty (60)
consecutive days or an aggregate of ninety (90) consecutive or non-consecutive
days during any twelve (12) month period during the term hereof due to the
fact that his physical or mental health shall have become impaired so as to
make it impossible or impractical for him to perform the duties and
responsibilities contemplated for him hereunder; or
(c) The termination for cause of the Employee's employment hereunder
by the Corporation, at its option, to be exercised by written notice from the
Corporation to the Employee in the event the Employee is derelict in his duties
or commits any misconduct with respect to the Corporation's affairs and such
dereliction or misconduct shall continue for a period of fifteen (15) days
after the Corporation shall have given the Employee written notice specifying
such dereliction or misconduct, and advising him that the Corporation shall
have the right to terminate his employment hereunder in the event such
misconduct continues through such fifteen (15) day period.
(d) In the event that the Employee commits an act constituting common
law fraud or any crime, which could reasonably be expected to have an adverse
impact on the Corporation, its business or assets.
(e) In the event that the Employee should fail (otherwise than on
account of illness or other incapacity) or refuse to carry out the reasonable
directives of the Board of Directors of the Corporation, and such failure or
refusal shall continue for a period of fifteen (15) days after the Corporation
shall have given the Employee written notice specifying such
4
<PAGE> 5
directives and wherein the Employee has failed or refused to carry out the same,
and advising him that the Corporation shall have the right to terminate his
employment hereunder in the event such failure or refusal continues through
such fifteen (15) day period.
(f) Cessation of the Corporation's business.
(g) On thirty (30) days written notice from the Corporation pursuant
to Section 2 hereof. If (i) the Corporation terminates this Agreement pursuant
to Section 2 hereof on thirty (30) days notice without cause or (ii) there is a
Change in Control (as hereinafter defined) that occurs prior to the expiration
or termination of this Agreement and, within twelve (12) months after the
Change in Control, (A) Employee's employment is terminated by the Corporation
otherwise than for the reasons set forth in Sections (8) (a), (b), (c), (d),
(e) and/or (f) hereof or (B) Employee terminates his employment for Good Reason
(as hereinafter defined), then Corporation shall pay to Employee as severance
pay, a total amount equal to (i) his annual base salary, payable in twelve (12)
equal consecutive monthly installments (without interest) beginning one (1)
month after such termination plus (ii) the fringe benefits described in Section
5(a) for the twelve (12) month period commencing on the effective date of such
termination.
Employee expressly understands that payment of such severance pay and
benefits (or portion thereof if such payments terminate pursuant to the last
sentence of this paragraph) represents liquidated damages in full and final
settlement of any and all amounts owed by Corporation to Employee under this
Agreement or otherwise except for the accrued portion, if any, of any bonus,
stock option, commission, vacation or other benefit to which Employee is
expressly entitled pursuant to any formal, written plan or agreement maintained
by the Corporation. Notwithstanding the foregoing, if Employee obtains full
time employment from any person or entity or accepts an engagement as a
self-employed consultant or similar position during such twelve (12) month
period, then, upon commencement of any such employment or engagement, the
severance pay and benefits payable under this Section 8(g) shall immediately be
and be deemed reduced by an amount equal to the compensation and/or benefits
payable by such other employment or engagement and the Corporation shall have
no further obligation to Employee under this Agreement or otherwise.
5
<PAGE> 6
(h) As used in this Agreement, the following terms have the meanings
set forth below:
(i) "Affiliate" of a person means any person directly or
indirectly controlling, controlled by or under common
control with the first person.
(ii) "Associate" has the meaning ascribed thereto in Rule 12b-2
under the Exchange Act as in effect on the date hereof.
(iii) "Change in Control" means the occurrence of any of the
following events:
(A) A consolidation, merger, combination or other
transaction between Parent or Corporation, and any other
corporation or other legal entity (other than an Affiliate
of Parent or Corporation) in which shares of common stock of
Parent or Corporation are exchanged for or changed into
other stock or securities, cash and/or other property, if
as a result of such transaction less than 20% of the
combined voting power of the common stock (or other
securities entitled to vote generally in the election of
directors) of the surviving or resulting entity is
beneficially owned (as hereinafter defined) by the
beneficial owners of the Parent's or Corporation's common
stock as the case may be as of the date hereof ("Current
Shareholders") and the number of persons serving on the
Board of Directors of the surviving or resulting entity
who are Affiliates, Associates, designees or nominees of
any single "person" (as defined in Section 13(d)(3) of the
Exchange Act) other than the Current Shareholders is greater
than the number of persons serving on such Board of
Directors who are Affiliates, Associates, designees or
nominees of the Current Shareholders;
(B) A sale of all or at least 80% (measured by book value
as of the most recent annual or quarterly balance sheet) of
the assets of Parent or Corporation to another corporation
or other legal entity (other than one of the Current
Shareholders or any Affiliate of Parent or Corporation); and
6
<PAGE> 7
(C) A sale or other disposition of shares of common stock
of Parent or Corporation by the Current Shareholders to
any corporation or other legal entity (other than one of
the Current Shareholders or any Affiliate of Parent or
Corporation) as a result of which less than 20% of the
then-outstanding common stock of Parent or Corporation is
beneficially owned (as hereinafter defined) by the Current
Shareholders and the number of persons serving on Parent's
or Corporation's Board of Directors who are Affiliates,
Associates, designees or nominees of any single "person"
(as defined in Section 13(d)(3) of the Exchange Act) other
than the Current Shareholders is greater than the number
of persons serving on Parent's or Corporation's Board of
Directors who are Affiliates, Associates, designees or
nominees of the Current Shareholders.
Beneficial ownership will be determined by applying the
definition set forth in Rule 13d-3 under the Exchange Act
as in effect on the date hereof. Also, for purposes of this
Agreement, any person who, on the date on which a Change in
control occurs, is serving on Parent's or Corporation's
Board of Directors will deemed to be an Affiliate,
Associate, designee or nominee of the Current Shareholders
after the Change in Control for as long as such person
serves as a director of Parent or Corporation or of any
entity that survives or results from a transaction described
in Section 8(h)(iii).
(iv) "Corporation" includes any successor to all or substantially
all of the business or assets of the Corporation.
(v) "Exchange Act" means the Securities Exchange Act of 1934,
as amended form time to time.
(vi) "Good Reason" means that, following a Change in Control and
without Employee's written consent, (A) there has been a
material and significant
7
<PAGE> 8
adverse change in the nature or scope of Employee's
authority, duties or responsibilities in effect immediately
prior to the Change in Control; (B) there has been a
reduction in Employee's annual base salary in effect
immediately prior to the Change in Control or an adverse
change in Employee's total compensation such that EmpIoyee's
compensation and benefits in the aggregate are not
materially comparable to his aggregate compensation and
benefits in effect immediately prior to the Change in
Control; or (C) the principal place of Employee's employment
is relocated to a place that is more than 25 miles from
the principal place of Employee's employment immediately
prior to the Change in Control or Employee is required to
be away from his office in the course of discharging his
duties and responsibilities materially and significantly
more than was required prior to the Change in Control.
In the event of any termination (other than by the Corporation without
cause on thirty (30) days notice pursuant to Section 2), the Corporation shall
pay to the Employee such portion of his annual base salary payable to the date
such termination becomes effective (reduced by any amount payable pursuant to
any disability insurance policies), and thereafter the Employee shall have no
claim for any further compensation hereunder; provided, however, that in the
event of the Employee's death, his death shall be deemed to have occurred on
the last day of the month in which he dies. Upon any termination Employee shall
also receive all the benefits to which he is entitled under the Consolidated
Omnibus Budget Reconciliation Act ("COBRA"), provided that if the Employee is
entitled to receive severance and fringe benefits described in Section 8(g),
COBRA benefits shall commence at the expiration of the twelve (12) month (or
such shorter period) as is provided in such Section.
9. Restrictions On The Employee: During the period commencing on the
date hereof and ending two (2) years after the termination of the Employee's
employment by the Corporation for any reason, the Employee shall not directly
or indirectly induce or attempt to induce any of the employees of the
Corporation to leave the employ of Corporation. If this Agreement is terminated
by the Corporation pursuant to Section 2 hereof, the foregoing two
8
<PAGE> 9
(2) year period shall be reduced to one (1) year.
10. Covenant Not To Compete: During the period commencing on the date
hereof, and ending two (2) years after the termination of the Employee's
employment for any reason, the Employee shall not, except as a passive investor
in publicly held companies, engage in, or own or control any interest in, or
act as principal, director, officer or employee of, or consultant to, any firm
or corporation which is in competition with the Corporation or its Parent. If
this Agreement is terminated. by the Corporation pursuant to Section 2 hereof,
the foregoing two (2) year period shall be reduced to one (1) year.
11. Proprietary Information:
(a) For purposes of this Agreement, "proprietary information" shall
mean any proprietary information relating to the business of the Corporation or
its Parent or any entity in which the Corporation or its Parent has a
controlling interest that has not previously been publicly released by duly
authorized representatives of the Corporation and shall include (but shall not
be limited to) information encompassed in all proposals, marketing and sales
plans, financial information, costs, pricing information, computer programs
(including without limitation source code, object code, algorithms and models),
customer information, customer lists, and all methods, concepts, know-how or
ideas in or reasonably related to the business of Corporation or any entity in
which the Corporation has a controlling interest. The Employee agrees to regard
and preserve as confidential all proprietary information, whether he has such
information in his memory or in writing or other tangible or intangible form.
The Employee will not, without written authority from the Corporation to do so,
directly or indirectly, use for his benefit or purposes, nor disclose to
others, either during the term of his employment hereunder or thereafter, any
proprietary information except as required by the conditions of his employment
hereunder or pursuant to court order (in which case Employee shall give the
Corporation prompt written notice [not less than 24 hours] so that the
Corporation may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. The Employee agrees not
to remove from the premises of the Corporation or any subsidiary or affiliate
of the Corporation, except as an employee of the Corporation in pursuit of the
business of the Corporation or any of its subsidiaries, affiliates or any
entity in
9
<PAGE> 10
which the Corporation has a controlling interest, or except as specifically
permitted in writing by the Corporation, any document or object containing or
reflecting any proprietary information. The Employee recognizes that all such
documents and objects, whether developed by him or by someone else, are the
exclusive property of the Corporation. Proprietary information shall not
include information which is presently in the public domain or which comes
into the public domain through no fault of the Employee or which is disclosed
to the Employee by a third party lawfully in possession of such information
with a right to disclose same.
(b) All proprietary information and all of the Employee's interest
in trade secrets, trademarks, computer programs, customer information, customer
lists, employee lists, products, procedure, copyrights, patents and developments
hereafter to the end of the period of employment hereunder developed by the
Employee as a result of, or in connection with, his employment hereunder, shall
belong to the Corporation; and without further compensation, but at the
Corporation's expense, forthwith upon request of the Corporation, Employee
shall execute any and all such assignments and other documents and take any and
all such other action as Corporation may reasonably request in order to vest
in Corporation all the Employee's right, title and interest in and to all of
the aforesaid items, free and clear of liens, charges and encumbrances.
(c) The Employee expressly agrees that the covenants set forth in
Sections 9, 10 and 11 of this Agreement are being given to Corporation in
connection with the employment of the Employee by Corporation and that such
covenants are intended to protect Corporation against the competition by the
Employee, within the terms stated, to the fullest extent deemed reasonable and
permitted in law and equity. In the event that the foregoing limitations upon
the conduct of the Employee are beyond those permitted by law, such limitations,
both as to time and geographical area, shall be, and be deemed to be, reduced in
scope and effect to the maximum extent permitted by law.
12. Injunctive Relief: The Employee acknowledges that the injury to the
Corporation resulting from any violation by him of any of the covenants
contained in this Agreement will be of such a character that it cannot be
adequately compensated by money
10
<PAGE> 11
damages, and, accordingly, the Corporation may, in addition to pursuing its
other remedies, obtain an injunction from any court having jurisdiction of the
matter restraining any such violation.
13. Representation of Employee: The Employee represents and warrants
that neither the execution and delivery of this Agreement nor the performance
of his duties hereunder violates the provisions of any other agreement to which
he is a party or by which he is bound.
14. Parties; Non-Assignability: As used herein, the term the
"Corporation" shall mean and include the Corporation, its Parent and any
subsidiary thereof and any successor thereto unless the context indicates
otherwise. Any assignment of this Agreement shall be subject to the provisions
of Section 8(g). This Agreement and all rights hereunder are personal to the
Employee and shall not be assignable by him and any purported assignment shall
be null and void and shall not be binding on the Corporation.
15. Entire Agreement: This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and supersedes all previous representations, negotiations, commitments, and
writing with respect thereto, including, but not limited to, the Employment
Agreement between the Employee and the Corporation dated as of October 17,
1988, provided, however, that the option to purchase the Corporation's Common
Stock contained in such agreement, as amended, shall survive the termination of
said Employment Agreement.
16. Amendment or Alteration: No amendment or alteration of the terms of
this Agreement shall be valid unless made in writing and signed by all of the
parties hereto.
17. Choice of Law: This Agreement shall be governed by the laws of the
State of Connecticut.
18. Arbitration: Any controversy, claim, or breach arising out of or
relating to this Agreement or the breach thereof shall be settled by
arbitration in Stamford, Connecticut in accordance with the rules of the
American Arbitration Association and the judgment upon the award rendered shall
be entered by consent in any court having jurisdiction thereof.
19. Notices: Any notices required or permitted to be given under this
Agreement
11
<PAGE> 12
shall be sufficient if in writing, and if sent by registered mail to the
residence of the Employee, or to the principal office of the Corporation,
respectively.
20. Waiver of Breach: The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by any of the parties hereto.
21. Binding Effect: The terms of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective personal
representatives, heirs, administrators, successors, and permitted assigns.
22. Gender: Pronouns in any gender shall be construed as masculine,
feminine, or neuter as the context requires in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
As to Section 4 only: CORPORATION:
IMRS Operations Inc. d/b/a
IMRS INC. IMRS INC.
By By
James Perakis, Its James Perakis, Its
President and Chief President and Chief
Executive Officer Executive Officer
EMPLOYEE:
Gordon O. Rapkin
12
<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT made as of the first day of July, 1994, between
THOMAS BELL, of Newtown, Connecticut (hereinafter referred to as the
"Employee") and IMRS Operations Inc. d/b/a IMRS INC., a Delaware corporation
with offices at 777 Long Ridge Road, Stamford, Connecticut 06902 (hereinafter
referred to as the "Corporation").
WHEREAS, the Corporation desires to employ the Employee, and the
Employee desires to serve as an employee of the Corporation on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and promises of
the parties hereto, the Corporation and the Employee agree as follows:
1. EMPLOYMENT: The Corporation hereby agrees to employ the Employee
as Vice President of Developement to perform managerial and executive
functions of the Corporation, and the Employee hereby agrees to perform such
services for the Corporation on the terms and conditions hereinafter stated,
subject to the directives of the Board of Directors of the Corporation.
2. TERM OF EMPLOYMENT: The term of this Agreement shall begin on
July 1, 1994 and shall continue in full force and effect until June 30, 1997;
provided, however, that this Agreement shall be automatically renewed on a
year-to-year basis thereafter unless terminated by either party on at least six
(6) months prior written notice during any given year, unless sooner terminated
as provided herein. Notwithstanding the foregoing, the Corporation may
terminate this Agreement at any time without cause upon thirty (30) days
written notice to Employee in which event the Corporation shall pay severance
to Employee pursuant to Section 8(g) hereof.
3. COMPENSATION: During the term of this Agreement, for all
services rendered by Employee under this Agreement, the Corporation shall pay
the Employee an annual base salary of $135,000.00 per annum, payable in arrears
at a rate of $5,625.00 on the fifteenth and last day of each month. It is
understood that foregoing base salary is the base salary in effect for the
Corporation's 1994 fiscal year and that such base salary will be increased,
which increase will be retroactive to July 1, 1994. The Employee's base salary
may be increased by the Board of Directors from time to time in its sole and
absolute discretion. In addition to
<PAGE> 2
the annual base salary described in this Section, Employee may receive cash
performance bonuses in the sole and absolute discretion of the Board of
Directors of the Corporation.
4. Stock Option:
------------
All options to purchase shares of the Common Stock of the Corporation's
parent, IMRS Inc. ("Parent") previously granted to the Employee by agreement
between the Parent and the Employee, under the 1991 Stock Plan of the Parent
or otherwise, shall continue in full force and effect in accordance with
their respective terms and conditions notwithstanding any provision of this
Agreement.
5. Fringe Benefits;
---------------
(a) During the term hereof, commencing on the day and year first
above written, the Corporation shall (i) provide the Employee and his
immediate family with medical and hospitalization insurance substantially
similar to that provided for the other executive personnel of the Corporation
in similar management positions, (ii) reimburse the Employee and his immediate
family for dental expenses incurred each year in excess of $200, including but
not limited to orthodontics for the Employee's children under the age of
twenty- one (21) years only, provided that the aggregate amount of such
reimbursement in any year shall not exceed $4,000 (such reimbursement shall be
in addition to any dental insurance provided to the Employee and his immediate
family under any dental plan from time to time maintained by the Company),
(iii) reimburse the Employee for expenses incurred in connection with the
purchase by Employee of fitness or exercise equipment or membership in a
fitness or exercise program reasonably acceptable to the Company in an
aggregate amount equal to the lesser of (x) seventy-five (75%) percent of all
such expenses each year and (y) $500 each year, (iv) reimburse the Employee
for the reasonable and customary cost of an annual physical examination, (v)
provide to the Employee dependent group medical coverage upon terms and
conditions satisfactory to the Company without charge to the Employee, (vi)
if the Employee is not covered by group long-term disability insurance in an
amount equal to at least 100% of Employee's base salary, the Company will
provide to Employee additional long-term disability insurance in an amount
reasonably determined by the insurer based on the Employee's total earned
income and personal financial circumstances, the cost of such
2
<PAGE> 3
coverage to be reported by the Company as compensation for income tax purposes
on the employee's Form W-2 each year, and (vii) life insurance in an amount
equal to three times (3X's) Employee's annual base salary.
(b) The Employee is authorized to incur on behalf of the Corporation
only such reasonable expenses (including travel and entertainment) in
connection with the business of the Corporation as are in conformity with the
Corporation's published guidelines. The Corporation shall reimburse Employee
for all such reasonable expenses incurred in connection with the business of
the Corporation upon the presentation by the Employee, from time to time, of an
itemized account of such expenditures, which account shall be in form and
substance in conformity with the rules and regulations of the Internal Revenue
Service. Any single expenditure in excess of $5,000 shall require the prior
approval of the Chief Executive Officer or the Chief Financial Officer of the
Corporation.
(c) During the term hereof, the Corporation shall provide Employee
with an automobile expense allowance equal to $600.00 per month.
6. DUTIES AND EXTENT OF SERVICES; Upon the execution of this
Agreement and throughout its term, the Employee shall assume the position of
Vice President of Development for the Corporation and shall undertake all of
the duties incident to such office in addition to rendering all such other
management duties as the Board of Directors may reasonably request. The
parties hereto shall take whatever action is necessary to cause the election or
appointment of the Employee to such position. The Employee shall exert his best
efforts and shall devote his full time and attention to the affairs of the
Corporation. During the term of this Agreement the Employee shall not,
directly or indirectly, alone or as a member of a partnership (in the capacity
of a general partner) or limited liability company (in the capacity of a
manager), or as an officer, director, significant shareholder (i.e., owning or
holding beneficially or of record 5% or more of the voting shares of an
entity), or employee of any other corporation or entity, be engaged in or
concerned with any other duties or pursuits whatsoever for pecuniary gain
requiring his personal services without the prior written consent of the
Corporation.
7. VACATION: During each year of the term of this Agreement, the
Employee shall
3
<PAGE> 4
be entitled to four (4) weeks vacation, the time of which shall be subject to
the prior approval of the Chief Executive Officer of the Corporation.
8. TERMINATION: Unless renewed as provided herein, the Employee's
employment hereunder shall terminate on June 30, 1997, or sooner upon the
occurrence of any of the following events:
(a) The Employee's death;
(b) The termination of the Employee's employment hereunder by the
Corporation, at its option, to be exercised by written notice from the
Corporation to the Employee, upon the Employee's incapacity or inability to
perform his services as contemplated herein for a period of at least sixty (60)
consecutive days or an aggregate of ninety (90) consecutive or non-consecutive
days during any twelve (12) month period during the term hereof due to the fact
that his physical or mental health shall have become impaired so as to make it
impossible or impractical for him to perform the duties and responsibilities
contemplated for him hereunder; or
(c) The termination for cause of the Employee's employment
hereunder by the Corporation, at its option, to be exercised by written notice
from the Corporation to the Employee in the event the Employee is derelict in
his duties or commits any misconduct with respect to the Corporation's affairs
and such dereliction or misconduct shall continue for a period of fifteen (15)
days after the Corporation shall have given the Employee written notice
specifying such dereliction or misconduct, and advising him that the
Corporation shall have the right to terminate his employment hereunder in the
event such misconduct continues through such fifteen (15) day period.
(d) In the event that the Employee commits an act constituting
common law fraud or any crime, which could reasonably be expected to have an
adverse impact on the Corporation, its business or assets.
(e) In the event that the Employee should fail (otherwise than on
account of illness or other incapacity) or refuse to carry out the reasonable
directives of the Board of Directors of the Corporation, and such failure or
refusal shall continue for a period of fifteen (15) days after the Corporation
shall have given the Employee written notice specifying such
4
<PAGE> 5
directives and wherein the Employee has failed or refused to carry out the
same, and advising him that the Corporation shall have the right to terminate
his employment hereunder in the event such failure or refusal continues
through such fifteen (15) day period.
(f) Cessation of the Corporation's business.
(g) On thirty (30) days written notice from the Corporation
pursuant to Section 2 hereof. If (i) the Corporation terminates this
Agreement pursuant to Section 2 hereof on thirty (30) days notice without
cause or (ii) there is a Change in Control (as hereinafter defined) that
occurs prior to the expiration or termination of this Agreement and, within
twelve (12) months after the Change in Control, (A) Employee's employment is
terminated by the Corporation otherwise than for the reasons set forth in
Sections (8) (a), (b), (c), (d), (e) and/or (f) hereof or (B) Employee
terminates his employment for Good Reason (as hereinafter defined), then
Corporation shall pay to Employee as severance pay, a total amount equal to
(i) his annual base salary, payable in twelve (12) equal consecutive monthly
installments (without interest) beginning one (1) month after such termination
plus (ii) the fringe benefits described in Section 5(a) for the twelve (12)
month period commencing on the effective date of such termination.
Employee expressly understands that payment of such severance pay and
benefits (or portion thereof if such payments terminate pursuant to the last
sentence of this paragraph) represents liquidated damages in full and final
settlement of any and all amounts owed by Corporation to Employee under this
Agreement or otherwise except for the accrued portion, if any, of any bonus,
stock option, commission, vacation or other benefit to which Employee is
expressly entitled pursuant to any formal, written plan or agreement
maintained by the Corporation. Notwithstanding the foregoing, if Employee
obtains full time employment from any person or entity or accepts an
engagement as a self-employed consultant or similar position during such
twelve (12) month period, then, upon commencement of any such employment or
engagement, the severance pay and benefits payable under this Section 8(g)
shall immediately be and be deemed reduced by an amount equal to the
compensation and/or benefits payable by such other employment or engagement
and the Corporation shall have no further obligation to Employee under this
Agreement or otherwise.
5
<PAGE> 6
(h) As used in this Agreement, the following terms have the meanings set forth
below:
(i) "Affiliate" of a person means any person directly or indirectly
controlling, controlled by or under common control with the first
person.
(ii) "Associate" has the meaning ascribed thereto in Rule 12b-2 under the
Exchange Act as in effect on the date hereof.
(iii) "Change in Control" means the occurrence of any of the following
events:
(A) A consolidation, merger, combination or other transaction
between Parent or Corporation, and any other corporation or other
legal entity (other than an Affiliate of Parent or Corporation) in
which shares of common stock of Parent or Corporation are exchanged
for or changed into other stock or securities, cash and/or other
property, if as a result of such transaction less than 20% of the
combined voting power of the common stock (or other securities
entitled to vote generally in the election of directors) of the
surviving or resulting entity is beneficially owned (as hereinafter
defined) by the beneficial owners of the Parent's or Corporation's
common stock as the case may be as of the date hereof ("Current
Shareholders") and the number of persons serving on the Board of
Directors of the surviving or resulting entity who are Affiliates,
Associates, designees or nominees of any single "person" (as defined
in Section 13(d)(3) of the Exchange Act) other than the Current
Shareholders is greater than the number of persons serving on such
Board of Directors who are Affiliates, Associates, designees or
nominees of the Current Shareholders;
(B) A sale of all or at least 80% (measured by book value as of the
most recent annual or quarterly balance sheet) of the assets of Parent
or Corporation to another corporation or other legal entity (other
than one of the Current Shareholders or any Affiliate of Parent or
Corporation); and
6
<PAGE> 7
(C) A sale or other disposition of shares of common stock of Parent
or Corporation by the Current Shareholders to any corporation or other
legal entity (other than one of the Current Shareholders or any
Affiliate of Parent or Corporation) as a result of which less than 20%
of the then-outstanding common stock of Parent or Corporation is
beneficially owned (as hereinafter defined) by the Current
Shareholders and the number of persons serving on Parent's or
Corporation's Board of Directors who are Affiliates, Associates,
designees or nominees of any single "person" (as defined in Section
13(d)(3) of the Exchange Act) other than the Current Shareholders is
greater than the number of persons serving on Parent's or
Corporation's Board of Directors who are Affiliates, Associates,
designees or nominees of the Current Shareholders.
Beneficial ownership will be determined by applying the definition set
forth in Rule 13d-3 under the Exchange Act as in effect on the date
hereof. Also, for purposes of this Agreement, any person who, on the
date on which a Change in control occurs, is serving on Parent's or
Corporation's Board of Directors will deemed to be an Affiliate,
Associate, designee or nominee of the Current Shareholders after the
Change in Control for as long as such person serves as a director of
Parent or Corporation or of any entity that survives or results from a
transaction described in Section 8(h)(iii).
(iv) "Corporation" includes any successor to all or substantially all of
the business or assets of the Corporation.
(v) "Exchange Act" means the Securities Exchange Act of 1934, as amended
form time to time.
(vi) "Good Reason" means that, following a Change in Control and without
Employee's written consent, (A) there has been a material and
significant
7
<PAGE> 8
adverse change in the nature or scope of Employee's authority, duties
or responsibilities in effect immediately prior to the Change in
Control; (B) there has been a reduction in Employee's annual base
salary in effect immediately prior to the Change in Control or an
adverse change in Employee's total compensation such that Employee's
compensation and benefits in the aggregate are not materially
comparable to his aggregate compensation and benefits in effect
immediately prior to the Change in Control; or (C) the principal place
of Employee's employment is relocated to a place that is more than 25
miles from the principal place of Employee's employment immediately
prior to the Change in Control or Employee is required to be away
from his office in the course of discharging his duties and
responsibilities materially and significantly more than was required
prior to the Change in Control.
In the event of any termination (other than by the Corporation without
cause on thirty (30) days notice pursuant to Section 2), the Corporation shall
pay to the Employee such portion of his annual base salary payable to the date
such termination becomes effective (reduced by any amount payable pursuant to
any disability insurance policies), and thereafter the Employee shall have no
claim for any further compensation hereunder; provided, however, that in the
event of the Employee's death, his death shall be deemed to have occurred on
the last day of the month in which he dies. Upon any termination Employee shall
also receive all the benefits to which he is entitled under the Consolidated
Omnibus Budget Reconciliation Act ("COBRA"), provided that if the Employee is
entitled to receive severance and fringe benefits described in Section 8(g),
COBRA benefits shall commence at the expiration of the twelve (12) month (or
such shorter period) as is provided in such Section.
9. RESTRICTIONS ON THE EMPLOYEE: During the period commencing on the
date hereof and ending two (2) years after the termination of the Employee's
employment by the Corporation for any reason, the Employee shall not directly
or indirectly induce or attempt to induce any of the employees of the
Corporation to leave the employ of Corporation. If this Agreement is terminated
by the Corporation pursuant to Section 2 hereof, the foregoing two
8
<PAGE> 9
(2) year period shall be reduced to one (1) year.
10. COVENANT NOT TO COMPETE: During the period commencing on the date
hereof, and ending two (2) years after the termination of the Employee's
employment for any reason, the Employee shall not, except as a passive
investor in publicly held companies, engage in, or own or control any interest
in, or act as principal, director, officer or employee of, or consultant to,
any firm or corporation which is in competition with the Corporation or its
Parent. If this Agreement is terminated by the Corporation pursuant to Section
2 hereof, the foregoing two (2) year period shall be reduced to one (1) year.
11. Proprietary Information:
------------------------
(a) For purposes of this Agreement, "proprietary information"
shall mean any proprietary information relating to the business of the
Corporation or its Parent or any entity in which the Corporation or its Parent
has a controlling interest that has not previously been publicly released by
duly authorized representatives of the Corporation and shall include (but
shall not be limited to) information encompassed in all proposals, marketing
and sales plans, financial information, costs, pricing information, computer
programs (including without limitation source code, object code, algorithms
and models), customer information, customer lists, and all methods, concepts,
know-how or ideas in or reasonably related to the business of Corporation or
any entity in which the Corporation has a controlling interest. The Employee
agrees to regard and preserve as confidential all proprietary information,
whether he has such information in his memory or in writing or other tangible
or intangible form. The Employee will not, without written authority from the
Corporation to do so, directly or indirectly, use for his benefit or purposes,
nor disclose to others, either during the term of his employment hereunder or
thereafter, any proprietary information except as required by the conditions
of his employment hereunder or pursuant to court order (in which case Employee
shall give the Corporation prompt written notice [not less than 24 hours] so
that the Corporation may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement. The Employee
agrees not to remove from the premises of the Corporation or any subsidiary or
affiliate of the Corporation, except as an employee of the Corporation in
pursuit of the business of the Corporation or any of its subsidiaries,
affiliates or any entity in
9
<PAGE> 10
which the Corporation has a controlling interest, or except as specifically
permitted in writing by the Corporation, any document or object containing or
reflecting any proprietary information. The Employee recognizes that all
such documents and objects, whether developed by him or by someone else, are
the exclusive property of the Corporation. Proprietary information shall
not include information which is presently in the public domain or which comes
into the public domain through no fault of the Employee or which is disclosed
to the Employee by a third party lawfully in possession of such information
with a right to disclose same.
(b) All proprietary information and all of the Employee's interest
in trade secrets, trademarks, computer programs, customer information,
customer lists, employee lists, products, procedure, copyrights, patents and
developments hereafter to the end of the period of employment hereunder
developed by the Employee as a result of, or in connection with, his
employment hereunder, shall belong to the Corporation; and without further
compensation, but at the Corporation's expense, forthwith upon request of the
Corporation, Employee shall execute any and all such assignments and other
documents and take any and all such other action as Corporation may reasonably
request in order to vest in Corporation all the Employee's right, title and
interest in and to all of the aforesaid items, free and clear of liens,
charges and encumbrances.
(c) The Employee expressly agrees that the covenants set forth in
Sections 9, 10 and 11 of this Agreement are being given to Corporation in
connection with the employment of the Employee by Corporation and that such
covenants are intended to protect Corporation against the competition by the
Employee, within the terms stated, to the fullest extent deemed reasonable and
permitted in law and equity. In the event that the foregoing limitations upon
the conduct of the Employee are beyond those permitted by law, such
limitations, both as to time and geographical area, shall be, and be deemed to
be, reduced in scope and effect to the maximum extent permitted by law.
12. INJUNCTIVE RELIEF: The Employee acknowledges that the injury to
the Corporation resulting from any violation by him of any of the covenants
contained in this Agreement will be of such a character that it cannot be
adequately compensated by money
10
<PAGE> 11
damages, and, accordingly, the Corporation may, in addition to pursuing its
other remedies, obtain an injunction from any court having jurisdiction of the
matter restraining any such violation.
13. REPRESENTATION OF EMPLOYEE: The Employee represents and warrants
that neither the execution and delivery of this Agreement nor the performance
of his duties hereunder violates the provisions of any other agreement to which
he is a party or by which he is bound.
14. PARTIES; NON-ASSIGNABILITY: As used herein, the term the
"Corporation" shall mean and include the Corporation, its Parent and any
subsidiary thereof and any successor thereto unless the context indicates
otherwise. Any assignment of this Agreement shall be subject to the provisions
of Section 8(g). This Agreement and all rights hereunder are personal to the
Employee and shall not be assignable by him and any purported assignment shall
be null and void and shall not be binding on the Corporation.
15. ENTIRE AGREEMENT: This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and supersedes all previous representations, negotiations, commitments, and
writing with respect thereto.
16. AMENDMENT OR ALTERATION: No amendment or alteration of the terms
of this Agreement shall be valid unless made in writing and signed by all of
the parties hereto.
17. CHOICE OF LAW: This Agreement shall be governed by the laws of
the State of Connecticut.
18. ARBITRATION: Any controversy, claim, or breach arising out of or
relating to this Agreement or the breach thereof shall be settled by
arbitration in Stamford, Connecticut in accordance with the rules of the
American Arbitration Association and the judgment upon the award rendered shall
be entered by consent in any court having jurisdiction thereof.
19. NOTICES: Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered mail to
the residence of the Employee, or to the principal office of the Corporation,
respectively.
20. WAIVER OF BREACH: The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent
11
<PAGE> 12
breach by any of the parties hereto.
21. BINDING EFFECT: The terms of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective personal
representatives, heirs, administrators, successors, and permitted assigns.
22. GENDER: Pronouns in any gender shall be construed as masculine,
feminine, or neuter as the context requires in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
As to Section 4 only: CORPORATION:
IMRS Operations Inc. d/b/a
IMRS INC. IMRS INC.
By /s/ JAMES PERAKIS By /s/ JAMES PERAKIS
------------------- -------------------
James Perakis, Its James Perakis, Its
President and Chief President and Chief
Executive Officer Executive Officer
EMPLOYEE:
/s/ THOMAS BELL
-----------------
Thomas Bell
12
<PAGE> 1
EXCLUSIVE DISTRIBUTOR AGREEMENT
EXCLUSIVE DISTRIBUTOR AGREEMENT ("Agreement") dated as of December 31 .
1993 by and between IMRS OPERATIONS INC. d/b/a IMRS INC., a Delaware
corporation with its principal place of business at 777 Long Ridge Road.
Stamford. Connecticut 06902. U.S.A. (hereinafter referred to as "Developer")
and Consultores de Integracion de Sistemas S.A. de C.V. a Mexican company with
its principal place of business at Marsella 17. Cot. Juarez. Mexico. D.F. 06600
(hereinafter referred to as "Distributor").
WHEREAS, Developer has developed certain computer programs and related
documentation more particularly described in Schedule A attached hereto (the
"Products") and desires to grant distributor the right to market and distribute
the Products in Mexico; and
WHEREAS, Distributor is in the business of marketing and distributing
computer-related products and desires to have Developer grant to it the right
to market and distribute the Products in Mexico.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency whereof are hereby acknowledged, the parties hereto agree as
follows: acknowledge.
1. LICENSE
-------
1.1 Exclusive Distribution License
------------------------------
Upon the terms and subject to the conditions of this Agreement,
Developer hereby grants to Distributor an exclusive, non-transferrable right
and license to market and distribute the Products in Mexico (the "Territory").
Distributor shall distribute the Products to existing and potential customers
of Developer located in the Territory (the "End-Users") who enter into an
End-User License Agreement (as hereinafter defined). Except for certain modules
of the Maintenance Version (as hereinafter defined) provided by Developer
solely, to Distributor hereunder, the Products shall be in executable object
code form only and Distributor shall have no other right to the source code of
such Products. The Products distributed to End-Users shall be in executable
object code form only. Distributor shall not modify, translate, decompile, nor
create or attempt to create, by reverse engineering or otherwise, the source
code from the object code of the Products supplied hereunder, or adapt the
Products in any way or for use to create a derivative work. Distributor may
not, and may not permit End-Users to use, reproduce, sublicense. distribute or
dispose of the Products, in whole or in part, except as expressIy permitted
under this Agreement.
1
<PAGE> 2
1.2 The Territory.
--------------
Distributor may market and distribute the Products soleIy within
Mexico. Distributor shall not have the right to establish third-party
agreements for the license, sale, installation and/or support of the Products
in the Territory or elsewhere, without the prior written approval of Developer,
which approval may be withheld for any reason.
1.3 License of the Products to End-Users: Other Responsibilities
------------------------------------------------------------
of Distributor.
- - - --------------
(a) In connection with Distributor's license and distribution of the
Products to End-Users, Distributor will have End-Users execute an IMRS Software
License Agreement in the form attached hereto as Schedule B (the "End-User
License Agreement"). Distributor may not negotiate the terms of the End-User
License Agreement with any prospective End-User or agree to any conflicting,
different or additional terms from those set forth in the End- User License
Agreement without Developer's prior written consent. Developer shall have no
liability to Distributor in the event any prospective End-User refuses to agree
to enter into an End-User License Agreement.
(b) Distributor will at all times during the term hereof use all
reasonable efforts to promote and increase sales of Products throughout the
Territory, and will work diligently to obtain orders for Products. Developer
shall, during the term hereof, adopt such policies, strategies, prices,
customer license terms and conditions, and decisions which will reasonably
support Distributor in promoting and increasing sales of Products throughout
the Territory and shall respond to Distributor as soon as reasonably
practicable with respect to the foregoing.
(c) Distributor will promote the sale of Products throughout the
Territory to End-Users by means of personal visits, presentations, and
correspondence with such End-Users.
(d) Distributor hereby acknowledges that prompt, courteous and
professional service of all End-Users and the fostering and maintenance of of
good relations with End-Users is of paramount importance to Developer, and
Distributor hereby agrees to use reasonable efforts to so serve End-Users and
promote such relations with End-Users. Distributor shall call upon End-Users
regulary, provide assistance and information to End- Users as requested by
End-Users or Developer, serve as liaison between End-Users and Developer, and
comply with such policies and procedures as Developer may from time to time
communicate to Distributor.
(e) Distributor shall take all necessary steps to ensure that it and
all of its sales personnel are fully familiar with the Products, Developer's
then-current suggested price list, and applicable Developer policies and
procedures.
(f) Distributor shall attend such sales meetings for, among other
things,
2
<PAGE> 3
training and education as Developer shall reasonably require. Developer shall
be responsible for the reasonable cost of any travel or lodging for attendance
at such meetings outside of the Territory required by Developer.
(g) All payments by End-Users for Products shall be made directly to
Distributor, and Distributor shall so advise Developer of the End-Users to whom
sales are made.
(h) Distributor will not incur or create any liability on behalf of
Developer or in any way pledge or purport to pledge the credit of Developer.
(i) Distributor will use reasonable efforts to help Developer to:
(i) implement the sales strategy and marketing strategy for Developer in the
Territory' (ii) prepare any market survey or other marketing or sales report
reasonably requested by Developer from time to time: (iii) inquire as to the
financial situation of End-Users and collect any outstanding bills from
End-Users; and (iv) inform Developer promptly of commercial, financial,
technical or other information which would be of interest to Developer,
including but not limited to foreseeable developments regarding End-Users'
needs of Distributor becomes aware.
(j) Distributor will observe all directions and instructions given
by Developer in relation to Developer's commercial policy, delivery and payment
terms and the distribution of Products, and, in the absence of any such
directions or instructions in relation to any particular matter, will act in
such manner as Distributor reasonably considers to be most beneficial to the
best interests of Developer. Notwithstanding the foregoing, Distributor shall
be free to fix the price for each end-user license which shall be marketed
within the Territory.
(k) Distributor will observe and take all necessary or appropriate
steps to observe the standards and technical specifications applicable to
Developer's business as may be communicated from time to time by Developer to
Distributor.
(l) Developer shall be the sole source of all copies of the Products
or their components distributed by Distributor under the terms of this
Agreement. Furthermore, Developer's and the Product names shall appear on the
initial screen in all cases. Distributor may mark all such products and
materials with its own names or logos to indicate that the Distributor is a
marketer of the Products, provided that any such label or lettering is no
larger in size than that used for the name and logo of Developer.
1.4 Product Changes
---------------
Developer retains the right, in its sole discretion, to upgrade or
modily the Products from time to time. In addition, upon thirty (30) days prior
wrritten notice to Distributor, Developer may add or delete Products from
Schedule A. Upon receipt of any
3
<PAGE> 4
such notice of any upgrade or modification, or upon the expiration of the
notice period set forth above for additions or deletions to Schedule A,
Distributor shall cease to market and distribute earlier versions of the
Products and/or Products deleted from Schedule A.
1.5 License to Use Trademark and Trade Name.
---------------------------------------
Any and all trademarks and trade names which Developer uses in
connection with the license granted hereunder are and shall remain the
exclusive property of Developer. Nothing contained in this Agreement shall be
deemed to give Distributor any right, title or interest in any trademark or
trade name of Developer relating to the Products. Subject to notice from
Developer in writing which modifies or cancels such authorization, during the
term of this Agreement, Distributor may use at no charge the trademarks and
trade names specified by Developer in writing for normal advertising and
promotion of Products.
2. PRICE. PAYMENT AND SHIPMENT.
---------------------------
2.1 Price.
-----
Distributor shall. in its sole discretion, establish software license
fees, lease fees, installation fees, ongoing support and maintenance fees and
license renewal fees for the Products (collectively, the "Prices"). Developer's
current suggested Prices for each Product are set forth in Schedule C.
Developer may increase or decrease the Prices for any or all Products upon
written notice to Distributor.
2.2. Orders, Payment and Shipment.
-----------------------------
Upon Developer's receipt of a written order from Distributor (each an
"Order") together with a copy of an executed End-User License Agreement,
Developer will ship to Distributor the designated quantities of the Products.
At Distributor's expense, the Products shall be shipped by Developer to
Distributor F.O.B. origin, freight pre-paid, with risk of loss to pass to
Distributor upon delivery of the Products by Developer to a common carrier. The
terms and conditions of this Agreement shall apply to all Orders submitted to
Developer by Distributor and supersede any different or additional terms on any
Distributor Order form. Orders issued by Distributor to Developer are solely
for the purpose of requesting delivery dates and quantities. All Orders shall
be subject to acceptance by Developer. Developer shall use reasonable efforts
to deliver accepted Orders but shall not be liable for any damages to
Distributor or to any third party caused by Developer's delay or error in
filling, or failure to fill, any Orders for any reason. Developer shall have no
obligation to accept any Order. Except as otherwise provided herein, all fees
and expenses payable hereunder which Developer issues an invoice to Distributor
shall be due and payablc thirty (30) days from the date of the invoice. A late
payment charge of the lesser of one and one-half percent (1.5%) per month or
the highest interest rate allowed by applicable law shall be charged upon all
unpaid amounts due hereunder for more than thirty (30) days. Distributor shall
reimburse Developer for any out-of-pocket expenses incurred at Distributor's
request.
4
<PAGE> 5
including, without limitation, telephone, shipping, insurance and
travel-related expenses. Notwithstanding the above, upon notice to
Distributor, Developer may ship the Software directly to Distributor's customer
2.3 Reporting; Royalties.
--------------------
Distributor shall submit Quarterly Sales and Royalty Reports and make
payments to Developer as provided herein. All royalties paid to Developer shall
be based upon Developer's list prices in U.S. Dollars, except as otherwise
agreed by Developer.
Software license fees, ongoing maintenance fees and license renewal
fees associated with new Software license agreements for Product sites in the
Territory, shall be allocated and distributed as follows:
Gross Software Revenue Generated % to Distributor
-------------------------------- ----------------
US$0 - $399,999 30%
US$400,000 - $999,999 40%
US$1,O00,000 + 50%
However, the foregoing allocation of such fees associated with new Software
license agreements involving a headquarter Product or other site license
situated outside of the Territory may be subject to reduced percentages
to Distributor due to royalties owed to other IMRS entities, affiliates, or
distributors located within the Territory in which such licensee is
headquartered, who may have also participated in the sale. Each such situation
will be evaluated individually and a final decision on the royalty due will be
based upon each party's relative contribution and will be made in IMRS's sole
discretion.
Installation, consulting, training and support fees associated with the
Produicts are due and payable to the party performing the services.
Distributor will submit a report to Developer accurately identifying
the Software license fees, maintenance fees, and any other fees set forth
above, at the earliest possible time, but in no event later than ten (10) days,
following the end of each calendar month. Payment by Distributor of the
applicable royalty fees to Developer shall accompany the report; provided
however, that Developer shall have the reasonable right to inspect
Distributor's books from time to time during the term hereof and for a one (1)
year period after the termination of this Agreement for purposes of verifying
the royalties payable to Developer. In addition, Distributor shall report the
acquisition of each new client for the Software system to Developer within ten
(10) days of accepting the order.
2.4 Inspection and Acceptance.
--------------------------
Distributor shall inspect all Products immediately upon delivery and
shall, within seven (7) calendar days, give written notice to the common
carrier and Developer of any claim for damages or shortages. Distributor shall
give written notice to Developer within thirty (30) calendar days of delivery
in the event that any Product does not conform with the terms of this
Agreement. If Distributor fails to give any such notice, the Products shall be
deemed accepted for all purposes of this Agreement.
5
<PAGE> 6
2.5 Taxes.
-----
In addition to the Prices and other fees payable hereunder, Distributor
shall record and pay any federal, state, local or other duties, withholding and
excise taxes, now or hereafter applied on the sale, transportation, import,
export, licensing or use of the Products including sales tax, value added tax
or similar tax. Any taxes imposed by federal, state or any local government or
any amount in lieu thereof, including interest and penalties thereon, paid or
payable at any time by Developer in connection with Developer's license to
Distributor, exclusive of taxes based on Developer's net income, shall be borne
by Distributor.
Distributor shall co-operate with and assist Developer, as reasonably
necessary, to obtain United States tax credits for any duties or taxes
described in this Section 2.5 which may be credited to and/or recovered by
Developer and applied by Developer to reduce its United States tax liability.
In the event Developer obtains any such tax credits, Developer shall notify
Distributor of the amount thereof and Distributor shall be entitled to apply
such amount against future amounts payable by Distributor to Developer
hereunder.
3. MAINTENANCE AND SUPPORT.
-----------------------
3.1 Distributor Support.
-------------------
Distributor shall remain solely responsible for all installation,
maintenance, consulting and support services to the End-Users with regard to
the Products. Developer agrees to deliver to Distributor together with the
first Order delivered to Distributor a maintenance version of such Products
which shall include certain modules of the software Products in source code
form (the "Maintenance Version"). The Maintenance Version shall be used solely
by Distributor's personnel providing installation, maintenance, consulting or
support services to End-Users and shall only be used at Distributor's site. As
mutually agreeable, Developer or Distributor may each provide local support to
the sites of multi-location clients, each on behalf of the other where the
provisions of such support will enhance the quality of support provided to the
client. Such services will be provided at the local billing rate or such
alternative billing rate as shall be agreed between the parties. The party
providing the support shall receive all revenues arising therefrom unless
otherwise agreed. Furthermore, it is understood that travel expenses, if any,
are to be borne by the client utilizing the support services or by the party
providing the services. Distributor's failure to use or maintain the
confidentiality of the Maintenance Version pursuant to the terms of this
Agreement shall be deemed a material breach of this Agreement.
3.2 Audit Rights.
------------
Distributor shall maintain accurate books and records of all End-User
License Agreements granted for the Products in the Tcrritory, the End-Users
receiving maintenance, consulting and support services, and the Developer
Support Fees payable under this
6
<PAGE> 7
Agreement. Upon reasonable notice to Distributor, Distributor shall make such
books and records available to Developer, at Distributor's place of business
during normal business hours, to audit the payments being made by Distributor
hereunder.
7
<PAGE> 8
3.3 End-User Training and Developer Consulting Services.
---------------------------------------------------
Distributor shall be solely responsible for the training of End-Users.
Developer shall be available at its then current standard rates to provide
training, special enhancements, customization and other special work or
services to either Distributor or End-Users.
4. CONFIDENTIALITY AND PROPRIETARY RIGHTS.
4.1 Confidentiality.
---------------
Distributor acknowledges that in the course of dealings between the
parties, Distributor may acquire information about Developer, its business
activities and operations, its technical information and trade secrets,
including but not limited to the Products, all of which are highly confidential
and proprietary to Developer (the "Confidential Information"). Confidential
Information shall not include information generally available to or known by
the public, or information independently developed outside the scope of this
Agreement. Distributor shall hold all such Confidential Information in strict
confidence and shall not reveal or use the same except pursuant to a court
order or upon request of Developer. The Confidential Information shall be
safeguarded with at least as great a degree of care as Distributor uses to
safeguard its own most confidential materials or data relating to its own
business, but in no event less than a reasonable degree of care.
4.2 Proprietary Rights.
------------------
Distributor acknowledges and agrees that the Products, and all copies
thereof, constitute valuable trade secrets of Developer and/or proprietary and
confidential information of Developer and title thereto remains in Developer.
Ownership of all applicable copyrights, trade secrets, patents and other
intellectual property rights in the Products are and shall remain vested in
Developer. All other aspects of the Products, including without limitation,
algorithms, models, programs, methods of processing, design and structure of
individual programs and their interaction and programming techniques employed
therein shall remain the sole and exclusive property of Developer and shall not
be sold, revealed, disclosed or otherwise communicated, directly or indirectly,
by Distributor to any person, company or entitv whatsoever other than as
expressly set forth herein. The copyright notice and restricted rights legends
contained in the Products shall appear on all tapes, diskettes and other
tangible media distributed by Distributor.
4.3 Specific Remedies.
-----------------
If Distributor commits a breach of any of the provisions of Sections
4.1 or 4.2 above, Developer shall have, in addition to all other rights in law
and equity, (a) the right to have such provisions specifically enforced by any
court having equity jurisdiction, it being acknowledged and and agreed that any
such breach will cause irreparable injury to Developer and
8
<PAGE> 9
that money damages will not provide an adequate remedy, and (b) the right to
require Distributor to account for and pay to Developer all compensation,
profits, monies or other tangible benefits (collectively "Benefits") derived
or received as the result of any transactions constituting a breach of any of
the provisions of this Article 4, and Distributor hereby agrees to account for
and pay such Benefits.
4.4 Covenant Not to Compete.
-----------------------
During the term of this Agreement and for a period of one (1) year
after the termination hereof for any reason, Distributor will not market, or
attempt to market, a computer program which competes in any way with the
Products in the areas of consolidation, financial information, financial
transaction processing, reporting, data collection, or modeling, including but
not limited to the use of personal computers, nor which competes with any
modification, alteration or enhancement to the Products which is developed
during the term of this Agreement.
5. LIMITED WARRANTY.
----------------
5.1 Limited Warranty.
----------------
For ninety (90) days after delivery of a Product to Distributor,
Developer warrants that media upon which the Products are delivered shall be of
good quality and workmanship. Upon written notice from Distributor of defective
media for a Product, Developer shall use reasonable efforts to promptly provide
replacement media.
5.2 Disclaimer of Warranties.
------------------------
EXCEPT FOR THE LIMITED WARRANTY SET FORTH IN SECTION 5.1, THE PRODUCTS
ARE PROVIDED "AS IS". DEVELOPER SPECIFICALLY DISCLAIMS ALL WARRANTIES EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE PRODUCTS OR DEFECTS IN
THE TAPE, DISKETTE OR OTHER TANGIBLE MEDIA AND DOCUMENTATION, OPERATION OF THE
PRODUCTS, AND ANY PARTICULAR APPLICATION OR USE OF THE PRODUCTS.
6. LIMITATION OF LIABILITY.
-----------------------
IN NO EVENT SHALL DEVELOPER BE LIABLE FOR ANY LOSS OF PROFIT OR ANY
OTHER COMMERCIAL DAMAGE, INCLUDING BUT NOT LIMITED TO SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR OTHER INDIRECT DAMAGES UNDER ANY CAUSE OF ACTION ARISING OUT
OF OR RELATING TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, CLAIMS ARISING
FROM MALFUNCTION OR DEFECTS IN THE PRODUCTS. DEVELOPER'S MAXIMUM
9
<PAGE> 10
LIABILITY HEREUNDER IS EXPRESSLY LIMITED TO THE AMOUNT PAID UNDER THIS
AGREEMENT BY DISTRIBUTOR TO DEVELOPER WITHIN THE SIX (6) MONTH PERIOD
IMMEDIATELY PRECEDING THE CAUSE GIVING RISE TO THE CLAIM.
7. DISTRIBUTOR OBLIGATIONS.
-----------------------
7.1 Marketing Efforts.
-----------------
Distributor agrees to use its best efforts to promote the sale of the
Products in the Territory. Distributor agrees to permit Developer to review all
of Distributor's promotion and advertising material for the Products prior to
use. Distributor shall not use and shall withdraw and retract any promotion or
advertising that Developer finds unsuitable, or is in breach of the terms of
this Agreement.
7.2 Prohibited Practices.
--------------------
Distributor may not make any contracts or commitments on behalf of
Developer nor make any warranties or other representations regarding the
Products other than those authorized herein or by Developer in a separate
writing.
7.3 Export Notice.
-------------
Distributor agrees to provide Developer with reasonable advance notice
of each country to which it intends to export the Products. Prior to exporting
to a foreign country for the first time, Distributor shall provide Developer
with a reasonable opportunity to file such proprietary rights notices,
applications, and other documents as Developer determines to be reasonably
necessary to protect in such country the proprietary rights associated with the
Products. Distributor agrees at Developer's expense to cooperate with Developer
in the protection of such proprietary rights in each country to which it
exports the Products.
7.4 Compliance with Laws.
--------------------
Distributor agrees to comply with all applicable laws and regulations,
both foreign and domestic, in its performance under this Agreement, including,
but not limited to, domestic and foreign export/import laws and regulations.
10
<PAGE> 11
8. TERMS AND TERMINATION.
---------------------
8.1 Term.
----
This Agreement shall have an initial term of one (1) year from the date
first above written (the "Initial Term"), and shall thereafter automatically
renew for successive one (1) year periods (each a "Renewal Term"), unless
earlier terminated in accordance with the terms of this Agreement. Either party
may cancel this Agreement effective on the last day of the Initial Term, or any
Renewal Term, by serving written notice of such termination on the other party
at least ninety (90) days prior to the end of the Initial Term or any Renewal
Term as the case may be. Notwithstanding anything to the contrary contained
herein, Developer may cancel this Agreement effective on the last day of the
sixth (6th) calendar month of the Initial Term if the total Gross Software
Revenue during the Initial Term does not exceed US $100,000 by such date, such
cancellation to be effected by written notice delivered to Distributor not
later than the last day of the ninth (9th) calendar month of the Initial Month.
8.2 Developer Termination.
---------------------
This Agreement may be terminated immediately by Developer under any of
the following conditions:
(a) if one of the parties shall be declared insolvent or bankrupt:
(b) if a petition is filed in any court to declare one of the
parties bankrupt or for a reorganization under the Backruptcy Code or any
similar statute and such petition is not dismissed in ninety (90) days or if a
Trustee in Bankruptcy or a Receiver or similar entity is appointed for one of
the parties;
(c) if Distributor does not pay Developer within thirty (30) days
from the date that any payments are due hereunder;
(d) if Distributor breaches the provisions of Sections 4.1 or 4.2 of
this Agreement; or
(e) if Distributor otherwise materialIy breaches the terms of this
Agreement, and such breach is not cured within thirty (30) days after written
notice of such breach is given by Developer.
8.3 Duties Upon Termination.
-----------------------
(a) Provided termination is not a result of a material breach of
Sections 4.1 or 4.2, the parties agree to continue their cooperation in order
to effect an orderly termination of their relationship. Distributor may
continue running the Maintenance Version
11
<PAGE> 12
solely for purposes of providing maintenance to End-Users granted licenses
pursuant to an End-User License Agreement prior to termination. Upon
termination, Distributor shall have no right to order or receive any additional
copies of the Products and all of Distributor's rights and licenses granted
hereunder shall immediately cease. Within thirty (30) days of termination,
Distributor shall return all copies of any promotional materials, marketing
literature, written information and reports pertaining to the Products that
have been supplied by Developer.
(b) Upon termination of this Agreement for any reason, Distributor
shall forthwith return all documentation and materials relating thereto to
Developer. Termination of this Agreement shall not relieve Distributor of any
financial obligations to Developer which remain unsettled at the date of
termination, nor of the terms relating to proprietary rights. trade secrets, or
non compete restrictions; provided, further, that if this Agreement is
terminated for any reason, Developer shall have the option, but not the
obligation to assume any or all of Distributor's third party agreements
(including End-User Agreements) relating to the Products and to receive any and
all fees therefrom.
9. INDEMNIFICATION.
---------------
9.1 Copyright Indemnification.
-------------------------
Developer shall indemnify, defend and hold Distributor harmless from
any claims, demands, liabilities or expenses, including reasonable attorneys'
fees, directly resulting from any infringement or violation of any copyright
with respect to the Products, as so awarded by a final judgment against
Distributor by a court of competent jurisdiction that the Products infringe
any third party's copyright, Developer shall, in its sole discretion:
(a) procure for Distributor the right to continue to use, distribute
and sell the Products at no additional expense to Distributor;
(b) provide Distributor with a non-infringing version of the
Products with substantially similar functionality, or
(c) notify Distributor that the Products are being withdrawn from
the market and immediately terminate this Agreement.
9.2 Cooperation by Distributor.
--------------------------
Notwithstanding Section 9.1 of this Agreement, Developer is under no
obligation to indemnify and hold Distributor harmless unless:
(a) Developer shall have been promptly notified of the
suit, action, proceeding or claim by Distributor and furnished by Distributor
with a copy of each communication, notice or other action relating to said
suit, action, proceeding or claim:
12
<PAGE> 13
(b) Developer shall have the right to assume sole authority to
conduct the trial or settlement of such suit, action, proceeding or claim or
any negotiations related thereto at Developer's expense: and
(c) Distributor shall provide reasonable information and assistance
requested by Developer in connection with such claim or suit.
9.3 Distributor Indemnification.
---------------------------
Distributor shall indemnify, defend and hold Developer harmless from
any claims, demands, liability or expenses, including reasonable attorneys'
fees, incurred by Developer as a result of any claim or proceeding against
Developer arising out of or based upon (i) the combination, operation or use of
the Products with any hardware, products, programs or data not supplied or
approved in writing by Developer, if such infringement would have been avoided
but for such combination, operation or use or (ii) modification of the Products
by Distributor or End-Users.
10. GENERAL.
-------
10.1 Force Majeure.
-------------
Neither party shall be liable or deemed to be in default for any delay
or failure in performance (other than the payment of money) under this
Agreement or interruption of service resulting directly or indirectly from
acts of God, or any causes beyond the reasonable control of such party.
10.2 Jurisdiction and Venue.
----------------------
This Agreement shall be governed by and construed in accordance with
laws of the State of Connecticut, U.S.A. Jurisdiction for litigation of any
dispute, controversy or claim arising out of or in connection with this
Agreement, or the breach thereof shall be only in the Federal or the State
court with competent jurisdiction located in Stamford, Connecticut.
10.3 Entire Agreement.
----------------
This Agreement, including the Schedules attached hereto, constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all previous proposals, both oral and written,
negotiations, representations, commitments, writings and all other
communications between the parties. This Agreement may not be modified except
by a writing signed by a duly authorized representative of each of the parties.
10.4 Independent Contractors.
-----------------------
13
<PAGE> 14
It is expressly agreed that Developer and Distributor are acting
hereunder as independent contractors and under no circumstances shall any of
the employees of one party be deemed the employees of the other for any
purpose. This Agreement shall not be construed as authority for either party to
act for the other party in any agency or other capacity, or to make commitments
of any kind for the account of or on behalf of the other except to the extent
and for the purposes provided for herein.
10.5 Assignment.
----------
This Agreement is not assignable by either party hereto without the
consent of the other, except that this Agreement shall be assignable by
Developer to an affiliated entity or upon the sale of the right to license and
sublicense the Products to the purchaser of said right. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns.
10.6 Severability and Waiver.
-----------------------
If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable, such determination shall
not affect the validity or enforceability of any other part or provision of
this Agreement. No waiver by any party of any breach of any provisions hereof
shall constitute a waiver unless made in writing signed by the party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
a duly authorized representative as of the date set forth above.
DISTRIBUTOR: DEVELOPER:
CONSULTORES DE INTEGRACION IMRS OPERATIONS INC. d/b/a
DE SISTEMAS, S.A. de C.V. IMRS INC.
By /s/ GUILLERMO NIETO CRUZ By: /s/ LUCY RICCIARDI
--------------------------- -------------------------
Name: Guillermo Nieto Cruz Name: Lucy Ricciardi
------------------------ -----------------------
Title: Administrador Title: Vice President and CFO
----------------------
14
<PAGE> 1
EXCLUSIVE DISTRIBUTOR AGREEMENT
EXCLUSIVE DISTRIBUTOR AGREEMENT ("Agreement") dated as April 15, 1994
by and between IMRS OPERATIONS INC. d/b/a IMRS INC., a Delaware corporation
with its principal place of business at 777 Long Ridge Road, Stamford,
Connecticut 06902, U.S.A. (hereinafter referred to as "Developer") and Delteq
Pte Ltd, a Singapore company (and a subsidiary of Wuthelam Industries (S) Pte
LTD) with its principal place of business at 215 Henderson Road, #101-03
Henderson Industrial Park, Singapore 0315 (hereinafter referred to as
"Distributor").
WHEREAS, Developer has developed certain computer programs and related
documentation more particularly described in Schedule A attached hereto (the
"Products") and desires to grant distributor the right to market and distribute
the Products in Singapore, Malaysia, Indonesia, Thailand, and Brunei (the
"Territory"); and
WHEREAS, Distributor is in the business of marketing and distributing
computer-related products and desires to have Developer grant to it the right
to market and distribute the Products in the Territory.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency whereof are hereby acknowledged, the parties hereto agree as
follows:
1. LICENSE
1.1 Exclusive Distribution License.
------------------------------
Upon the terms and subject to the conditions of this Agreement,
Developer hereby grants to Distributor an exclusive, non-transferable fight and
license to market and distribute the Products in the Territory. Distributor
shall distribute the Products to existing and new customers of Distributor
located in the Territory (the "End-Users") who enter into an End-User License
Agreement (as hereinafter defined). The Products shall be in executable object
code form only and Distributor shall have no fight to the source code of such
Products. The Products distributed to End-Users shall be in executable object
code form only. Distributor shall not itself, nor allow others to modify,
translate, decompile, nor create or attempt to create, by reverse engineering
or otherwise, the source code from the object code of the Products supplied
hereunder, or adapt the Products in any way or for use to create a derivative
work. Should Distributor wish to create such a derivative work, Distributor
must first seek and obtain express written permission to do so from the
Developer and Developer may withold such permission at its sole discretion.
Distributor may not, and may not permit End-Users to, use, reproduce,
siblicense, distribute or dispose of the Products, in whole or in part, except
as expressly permitted under this Agreement.
1
<PAGE> 2
1.2 The Territory.
-------------
Distributor may market and distribute the Products solely within the
Territory. Distributor shall not have the right to establish third-party
agreements for the license, sale, installation and/or support of the Products
in the Territory or elsewhere, without the prior written approval of Developer,
which approval may be withheld for any reason.
1.3 License of the Products to End-Users; Other Responsibilities of
---------------------------------------------------------------
Distributor.
- - - -----------
(a) In connection with Distributor's license and distribution of the
Products to End-Users, Distributor will have End-Users execute a Software
License Agreement in the form attached hereto as Schedule B (the "End-User
License Agreement"). Distributor may not negotiate the terms of the End-User
License Agreement with any prospective End-User or agree to any conflicting,
different or additional terms from those set forth in the End-User License
Agreement without Developer's prior written consent. Developer shall have no
liability to Distributor in the event any prospective End-User refuses to agree
to enter into an End-User License Agreement.
(b) Distributor will at all times during the term hereof use all
reasonable efforts to promote and increase sales of Products throughout the
Territory, and will work diligently to obtain orders for Products. Developer
shall, during the term hereof, adopt such policies, strategies, prices,
customer license terms and conditions, and decisions which will reasonably
support Distributor in promoting and increasing sales of Products throughout
the Territory and shall respond to Distributor as soon as reasonably
practicable with respect to the foregoing.
(c) Distributor will promote the sale of Products throughout the
Territory to End-Users by means of personal visits, presentations, seminars,
correspondence. Specific marketing and sales programs will be defined jointly
by Distributor and Developer.
(d) Distributor hereby acknowledges that prompt, courteous and
professional service of all End-Users and the fostering and maintenance of good
relations with End-Users is of paramount importance to Developer, and
Distributor hereby agrees to use reasonable efforts to so serve End-Users and
promote such relations with End-Users. Distributor shall call upon End-Users
regularly, provide assistance and information to End-Users as requested by
End-Users or Developer, serve as liaison between End-Users and Developer, and
comply with such policies and procedures as Developer may from time to time
communicate to Distributor.
(e) Distributor shall take all necessary steps to ensure that it and
all of its sales personnel are fully familiar with and can effectively
demonstrate the Products, are familiar with the Developer's then-current price
list, and applicable Developer policies and procedures.
(f) Distributor shall attend such annual sales and consulting
meetings for, among other things, training and education as Developer shall
reasonably require. Distributor
2
<PAGE> 3
shall be responsible for the cost of any travel or lodging for attendance at
such meetings required by Developer.
(g) All payments by End-Users for Products shall be made directly to
Distributor, and Distributor shall so advise Developer of the End-Users to whom
sales are made.
(h) Distributor will not incur or create any liability on behalf of
Developer or in any way pledge or purport to pledge the credit of Developer.
(i) Distributor will: (i) work closely with Developer to implement
the agreed upon sales strategy and marketing strategy for Developer in the
Territory; (ii) prepare any market survey or other marketing or sales report
reasonably requested by Developer from time to time; and (iii) inform Developer
promptly of any commercial, financial, technical or other information which
would be of interest to Developer, including but not limited to foreseeable
developments regarding End-Users' needs of which Distributor becomes aware.
(j) Distributor will observe all directions and instructions given
by Developer in relation to Developer's commercial policy, delivery and payment
terms and the distribution of Products, and, in the absence of any such
directions or instructions in relation to any particular matter, will act in
such manner as Distributor reasonably considers to be most beneficial to the
best interests of Developer.
(k) Distributor will observe and take all necessary or appropriate
steps to observe the standards and technical specifications applicable to
Developer's business as may be communicated from time to time by Developer to
Distributor.
(1) Developer shall be the sole source of all copies of the Products
or their components distributed by Distributor under the terms of this
Agreement. Furthermore, Developer's and the Product names shall appear on the
initial screen in all cases. Distributor may mark all such products and
materials with its own names or logos to indicate that the Distributor is a
marketer of the Products, provided that any such label or lettering is no
larger in size than that used for the name and logo of Developer.
(m) Distributor shall allocate a minimum of two (2) dedicated people
to sell and support the Products full-time. Distributor shall immediately
notify Developer in the event that these people are assigned additional
responsibilities that prevent them from remaining dedicated to the Products
full-time.
3
<PAGE> 4
1.4 Product Changes.
---------------
Developer retains the right, in its sole discretion, to upgrade or
modify the Products from time to time. In addition, upon ninety (90) days prior
written notice to Distributor, Developer may add or delete Products from
Schedule A. Upon receipt of any such notice of any upgrade or modification, or
upon the expiration of the notice period set forth above for additions or
deletions to Schedule A, Distributor shall cease to market and distribute
earlier versions of the Products and/or Products deleted from Schedule A.
1.5 License to Use Trademark and Trade Name.
---------------------------------------
Any and all trademarks and trade names which Developer uses in
connection with the license granted hereunder are and shall remain the
exclusive property of Developer. Nothing contained in this Agreement shall be
deemed to give Distributor any right, title or interest in any trademark or
trade name of Developer relating to the Products. Subject to notice in writing
from Developer which modifies or cancels such authorization, during the term of
this Agreement, Distributor may use at no charge the trademarks and trade names
specified by Developer in writing for normal advertising and promotion of
Products. Developer occasionally uses third party trademarks, trade names or
screen shots in advertising; Distributor may not use such trademarks, trade
names or screen shots in writing for advertising without the prior written
permission from the third party developer.
2. PRICE, PAYMENT AND SHIPMENT.
---------------------------
2.1 Price.
-----
Distributor shall adhere to the then current Developer Prices for each
Product (collectively, the "Prices"). Developer's current Prices for each
Product are set forth in Schedule C. Developer may increase or decrease the
Prices for any or all Products upon written notice to Distributor. Distributor
must receive, for each instance, express written permission from Developer to
sell Product at any price other than such Prices.
2.2. Orders, Payment and Shipment.
----------------------------
Upon Developer's receipt of a written order from Distributor (each an
"Order") together with a copy of an executed End-User License Agreement and
Contract Summary Form (Appendix D), Developer will ship to Distributor the
designated quantities of the Products. At Distributor's expense, the Products
shall be shipped by Developer to Distributor F.O.B. origin, freight pre-paid,
with risk of loss to pass to Distributor upon delivery of the Products by
Developer to a common carrier. Notwithstanding the above, upon notice to
Distributor, Developer may ship the Software directly to Distributor's
customer. The terms and conditions of this Agreement shall apply to all Orders
submitted to Developer by Distributor. Orders issued by
4
<PAGE> 5
Distributor to Developer are solely for the purpose of requesting delivery
dates and quantities. All Orders shall be subject to acceptance by Developer;
Developer will not unreasonably delay acceptance of any order. Developer shall
use reasonable efforts to deliver accepted Orders but shall not be liable for
any damages to Distributor or to any third party caused by Developer's delay or
error in filling, or failure to fill, any Orders for any reason. Except as
otherwise provided herein, all fees and expenses payable hereunder for which
Developer issues an invoice to Distributor shall be due and payable thirty (30)
days from the date of the invoice. A late payment charge of the lesser of one
and one-half percent (1.5%) per month or the highest interest rate allowed by
applicable law shall be charged upon all unpaid amounts due hereunder for more
than thirty (30) days.
2.3 Reporting; Royalties.
--------------------
Distributor shall submit Monthly Sales and Royalty Reports and make
payments to Developer as provided herein. All royalties paid to Developer shall
be based upon Developer's list prices in U.S. Dollars, except as otherwise
agreed in writing by Developer.
Software license fees associated with Software license agreements in
which the sales cycle begins on or after May 1, 1994 (hereinafter "New Software
license agreements") for Product sites located in the Territory, shall be
allocated and distributed as follows:
Gross Software Revenue Generated % to Distributor
-------------------------------- ----------------
Per Annum July 1- June 30
US$O -- $999,999 40%
US$1,O00,000 + 50%
On July 1 each year, the gross software revenue generated figure will
be reset to zero and the accumulation of software revenues will restart.
However, the foregoing allocation of such fees associated with the New
Software license agreements involving a headquarter Product or other site
licenses situated outside of the Territory may be subject to reduced
percentages to Distributor due to royalties owed to other Developer entities,
affiliates, or distributors located outside the Territory, who may also have
participated in the sale. Each such situation will be evaluated individually
and a final decision on the royalty due will be based upon each party's
relative contribution and will be made in Developer's sole discretion. The
general guidelines for such cases are outlined in Appendix E (Bergamo Rules).
Installation, consulting, and training fees associated with the
Products are due and payable to the party performing the services.
5
<PAGE> 6
License Renewal and Maintenance Fees will be split evenIy with 50%
distributed to Developer and 50% distributed to Distributor, also subject to
paragraph 4 of this section 2.3.
Distributor will submit a monthly report to Developer which accurately
identifies the Software license fees, maintenance fees, and any other fees set
forth in this Agreement (repons outlined in Schedule D). This report is due at
the earliest possible time, but in no event later than ten (10) days following
the end of each calendar month Payment by Distributor of the applicable royalty
fees to Developer shall accompany the report; provided, however, that Developer
shall have the reasonable fight to inspect Distributor's books from time to
time during the term hereof and for a one (1) year period after the termination
of this Agreement for purposes of verifying the royalties payable to Developer.
In addition, Distributor shall report the acquisition of each new license for
the Software system to Developer and will provide either an English translation
of the End-User License Agreement or a completed contract extract schedule in
the form of Exhibit D (Contract Summary Form) within one (1) day of accepting
the order.
24 Inspection and Acceptance.
-------------------------
Distributor shall inspect all Products immediately upon delivery and
shall, within seven (7) calendar days, give written notice to the common
cartier and Developer of any claim for damages or shortages. Distributor shall
give written notice to Developer within thirty (30) calendar days of delivery
in the event that any Product does not conform with the terms of this
Agreement. If Distributor fails to give any such notice, the Products shall be
deemed accepted for all purposes of this Agreement.
2.5 Taxes.
-----
In addition to the Prices and other fees payable hereunder, Distributor
shall record and pay any federal, state, local or other duties, withholding and
excise taxes, now or hereafter applied on the sale, transportation, import,
export, licensing or use of the Products including sales tax, value added tax
or similar tax. Any taxes imposed by federal, state or any local government or
any amount in lieu thereof, including interest and penalties thereon, paid or
payable at any time by Developer in connection with Developer's license to
Distributor, exclusive of taxes based on Developer's net income, shall be borne
by Distributor.
Distributor shall co-operate with and assist Developer, as reasonably
necessary, to obtain United States tax credits for any duties or taxes
described in this Section 2.5 which may be credited to and/or recovered by
Developer and applied by Developer to reduce its United States tax liability.
In the event Developer obtains any such tax credits, Developer shall notify
Distributor of the amount thereof and Distributor shall be entitled to apply
such amount against future amounts payable by Distributor to Developer
hereunder.
6
<PAGE> 7
3. MAINTENANCE AND SUPPORT.
-----------------------
3.1 Distributor Support
-------------------
Distributor shall remain solely responsible for all installation,
maintenance, consulting and support services to the End-Users with regard to
the Products. Developer agrees to deliver to Distributor together with the
first Order delivered to Distributor a copy of the Product to be used solely by
Distributor's personnel providing installation, maintenance, consulting or
support services to End-Users and shall only be used at Distributor's site.
Distributor's failure to maintain the confidentiality of the Products pursuant
to the terms of this Agreement shall be deemed a material breach of this
Agreement. As mutually agreeable, Developer, Developer's affiliates, or
Distributor may each provide local support to the sites of multi-location
clients, each on behalf of the other where the provisions of such support will
enhance the quality of support provided to the client. Such services will be
provided at the local billing rate or such alternative billing rate as shall be
agreed between the parties. The party providing the support shall receive all
revenues arising therefrom unless otherwise agreed. Furthermore, it is
understood that travel expenses, if any, are to be borne by the client
utilizing the support services or by the Distributor unless otherwise agreed.
For End-Users that have a World Wide Retainer in place, Distributor will
provide local support in the Territory as defined in the World Wide Retainer
(Schedule F).
3.2 Audit Rights.
------------
Distributor shall maintain accurate books and records of all End-User
License Agreements granted for the Products (which will include at a minimum
the location, type and number of products and sites, renewal and payment terms
and any special conditions or terms), the End-Users receiving maintenance, and
consulting and support services, payable under this Agreement. Upon reasonable
notice to Distributor, Distributor shall make such books and records available
to Developer, at Distributor's place of business during normal business hours,
to audit the payments being made by Distributor hereunder.
3.3 End-User Training and Developer Consulting Services
---------------------------------------------------
Distributor shall be solely responsible for the training of End-Users.
Developer may be available at its then current standard rates to provide
training, special enhancements, customization and other special work or
services to either Distributor or End-Users.
7
<PAGE> 8
4. CONFIDENTIALITY AND PROPRIETARY RIGHTS.
--------------------------------------
4.1 Confidentiality.
---------------
Distributor acknowledges that in the course of dealings between the
parties, Distributor may acquire information about Developer, its business
activities and operations, its technical information and trade secrets,
including but not limited to the Products, all of which are highly confidential
and proprietary to Developer (the "Confidential Information"). Confidential
Information shall not include information generally available to or known by
the public, or information independently developed outside the scope of this
Agreement. Distributor shall hold all such Confidential Information in strict
confidence and shall not reveal or use the same except pursuant to a court
order or upon written request of Developer. The Confidential Information shall
be safeguarded with at least as great a degree of care as Distributor uses to
safeguard its own most confidential materials or data relating to its own
business, but in no event less than a reasonable degree of care.
4.2 Proprietary Rights.
------------------
Distributor acknowledges and agrees that the Products, and all copies
thereof, constitute valuable trade secrets of Developer and/or proprietary and
confidential information of Developer and title thereto remains in Developer.
Ownership of all applicable copyrights, trade secrets, patents and other
intellectual property rights in the Products are and shall remain vested in
Developer. All other aspects of the Products, including without limitation,
algorithms, models, programs, methods of processing, design and structure of
individual programs and their interaction and programming techniques employed
therein shall remain the sole and exclusive property of Developer and shall not
be sold, revealed, disclosed or otherwise communicated, directly or indirectly,
by Distributor to any person, company or entity whatsoever other than as
expressly set forth herein. The copyright notice and restricted rights legends
contained in the Products shall appear on all tapes, diskettes and other
tangible media distributed by Distributor.
4.3 Specific Remedies.
-----------------
If Distributor commits a breach of any of the provisions of Sections
4.1 or 4.2 above, Developer shall have, in addition to all other fights in law
and equity, (a) the right to have such provisions specifically enforced by any
court having equity jurisdiction, it being acknowledged and agreed that any
such breach will cause irreparable injury to Developer and that money damages
will not provide an adequate remedy, and (b) the right to require Distributor
to account for and pay to Developer all compensation, profits, monies or other
tangible benefits (collectively "Benefits") derived or received as the result
of any transactions constituting a breach of any of the provisions of this
Article 4, and Distributor hereby agrees to account for and pay such Benefits.
8
<PAGE> 9
4.4 Covenant Not to Compete.
-----------------------
During the term of this Agreement and for a period of two (2) years
after the termination hereof for any reason, Distributor will not market, or
attempt to market, a computer program which competes in any way with the
Products in the areas of consolidation, financial information, financial
transaction processing, reporting, data collection, or modeling, including but
not limited to the use of personal computers, nor which competes with any
modification, alteration or enhancement to the Products which is developed
during the term of this Agreement.
5. LIMITED WARRANTY.
----------------
5.1 Limited Warranty.
----------------
For ninety (90) days after delivery of a Product to Distributor,
Developer warrants that media upon which the Products are delivered shall be of
good quality and workmanship. Upon written notice from Distributor of defective
media for a Product, Developer shall use reasonable efforts to promptly provide
replacement media.
5.2 Disclaimer of Warranties.
------------------------
EXCEPT FOR THE LIMITED WARRANTY SET FORTH IN SECTION 5.1, THE PRODUCTS
ARE PROVIDED "AS IS". DEVELOPER SPECIFICALLY DISCLAIMS ALL WARRANTIES EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT'TO THE PRODUCTS OR DEFECTS IN
THE TAPE, DISKETTE OR OTHER TANGIBLE MEDIA AND DOCUMENTATION, OPERATION OF THE
PRODUCTS, AND ANY PARTICULAR APPLICATION OR USE OF THE PRODUCTS.
6. LIMITATION OF LIABILITY.
-----------------------
IN NO EVENT SHALL DEVELOPER BE LIABLE FOR ANY LOSS OF PROFIT OR ANY
OTHER COMMERCIAL DAMAGE, INCLUDING BUT NOT LIMITED TO SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR OTHER INDIRECT DAMAGES UNDER ANY CAUSE OF ACTION ARISING OUT
OF OR RELATING TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, CLAIMS ARISING
FROM MALFUNCTION OR DEFECTS IN THE PRODUCTS. DEVELOPER'S MAXIMUM LIABILITY
HEREUNDER IS EXPRESSLY LIMITED TO THE LESSER OF: THE AMOUNT PAID UNDER THIS
AGREEMENT BY DISTRIBUTOR TO DEVELOPER WITHIN THE SIX (6) MONTH PERIOD
IMMEDIATELY PRECEDING THE CAUSE GIVING RISE TO THE CLAIM; OR FIVE HUNDRED
THOUSAND DOLLARS ($5OO,000).
9
<PAGE> 10
7. DISTRIBUTOR OBLIGATIONS.
-----------------------
7.1 Marketing Efforts.
-----------------
Distributor agrees to use its best efforts to promote the sale of the
Products in the Territory. Distributor agrees to permit Developer to review all
of Distributor's promotion and advertising material for the Products prior to
use. Distributor shall not use and shall withdraw and retract any promotion or
advertising that Developer finds unsuitable, or is in breach of the terms of
this Agreement.
7.2 Prohibited Practices.
--------------------
Distributor may not make any contracts or commitments on behalf of
Developer nor make any warranties or other representations regarding the
Products other than those authorized herein or by Developer in a separate
writing.
7.3 Export Notice.
-------------
Distributor agrees to provide Developer with reasonable advance notice
of each country- to which it intends to export the Products. Prior to exporting
to a foreign country for the first time, Distributor shall provide Developer
with a reasonable opportunity to file such proprietary rights notices,
applications, and other documents as Developer determines to be reasonably
necessary to protect in such country the proprietary rights associated with the
Products. Distributor agrees at Developer's expense to cooperate with Developer
in the protection of such proprietary rights in each country to which it
exports the Products.
7.4 Compliance with Laws.
--------------------
Distributor agrees to comply with all applicable laws and
regulations, both foreign and domestic, in its performance under this
Agreement, including, but not limited to, domestic and foreign export/import
laws and regulations.
8. TERMS AND TERMINATION.
---------------------
8.1 Term.
----
This Agreement shall have an initial term of one (1) year from the date
first above written (the "Initial Term"), and shall thereafter automatically
renew for successive two (2) year periods (each a "Renewal Term"), unless
earlier terminated in accordance with the terms of this Agreement. Developer
may cancel this Agreement if the total gross annual software revenue does not
meet DeVeloper's revenue forecast for the Distributor, such cancellation to be
eftected by written notice delivered to Distributor not later than 30 days
after any Developer's Fiscal Year end (June 30). Either party may cancel this
Agreement effective on the last day of the Initial Term, or
10
<PAGE> 11
any Renewal Term, by serving written notice of such termination on the other
party at least ninety (90) days prior to the end of the Initial Term or any
Renewal Term as the case may be.
8.2 Developer Termination.
---------------------
This Agreement may be terminated immediately by Developer under any of
the following conditions:
(a) if one of the parties shall be declared insolvent or bankrupt;
(b) if a petition is filed in any court to declare one of the parties
bankrupt or for a reorganization under the Bankruptcy Code or any similar
statute and such petition is not dismissed in ninety (90) days or if a Trustee
in Bankruptcy or a Receiver or similar entity is appointed for one of the
parties;
(c) if Distributor does not pay Developer within thirty (30) days
from the date that any payments are due hereunder;
(d) if Distributor breaches the provisions of Sections 4.1 or 4.2 of
this Agreement; or
(e) if Distributor otherwise materially breaches the terms of this
Agreement, and such breach is not cured within thirty (30) days after written
notice of such breach is given by Developer.
8.3 Duties Upon Termination.
-----------------------
(a) Provided termination is not a result of a material breach of
Sections 4.1 or 4.2, the parties agree to continue their cooperation in order
to effect an orderly termination of their relationship. Distributor may
continue running the Products solely for purposes of providing maintenance to
End-Users granted licenses pursuant to an End-User License Agreement prior to
termination. Upon termination, Distributor shall have no fight to order or
receive any additional copies of the Products and all of Distributor's rights
and licenses granted hereunder shall immediately cease. Within thirty (30) days
of termination, Distributor shall return all copies of any promotional
materials, marketing literature, written information and reports pertaining to
the Products that have been supplied by Developer.
(b) Upon termination of this Agreement for any reason, Distributor
shall forthwith return all Products, documentation and materials relating
thereto to Developer. Termination of this Agreement shall not relieve
Distributor of any financial obligations to Developer which remain unsettled at
the date of termination, nor of the terms relating to proprietary rights, trade
secrets, or non compete restrictions; provided, further, that if this Agreement
is terminated for any reason, Developer shall have the option, but not the
obligation to
11
<PAGE> 12
assume at no cost to Developer, any or all of Distributor's third party
agreements (including End-User Agreements) relating to the Products and
to receive any and all fees therefrom.
8.4 Survival
--------
The provisions of Sections 4, 5 and 9 shall survive the termination of
this Agreement.
9. INDEMNIFICATION.
---------------
9.1 Copyright Indemnification.
-------------------------
Developer shall indemnify, defend and hold Distributor harmless from
any claims, demands, liabilities or expenses, including reasonable attorneys'
fees, directly resulting from any infringement or violation of any copyright
with respect to the Product(s), as so awarded by a final judgment against
Distributor by a court of competent jurisdiction that the Product(s) infringe
any third party's copyright, Developer shall, in its sole discretion:
(a) procure for Distributor the right to continue to use, distribute
and sell the Product(s) at no additional expense to Distributor;
(b) provide Distributor with a non-infringing version of the
Product(s) with substantially similar functionality; or
(c) notify Distributor that the Product(s) are being withdrawn from
the market and Distributor agrees to immediately cease its distribution of such
Product(s). If all Products are withdrawn from the market, this Agreement will
immediately terminate.
9.2 Cooperation by Distributor.
--------------------------
Notwithstanding Section 9.1 of this Agreement, Developer is under no
obligation to indemnify and hold Distributor harmless unless:
(a) Developer shall have been promptly notified of the suit, action,
proceeding or claim by Distributor and furnished by Distributor with a copy of
each communication, notice or other action relating to said suit, action,
proceeding or claim;
(b) Developer shall have the right to assume sole authority to
conduct the trial or settlement of such suit, action, proceeding or claim or
any negotiations related thereto at Developer's expense; and
(c) Distributor shall provide reasonable information and assistance
requested by Developer in connection with such claim or suit.
12
<PAGE> 13
9.3 Distributor Indemnification.
---------------------------
Distributor shall indemnify, defend and hold Developer harmless from
any claims, demands, liability or expenses, including reasonable attorneys'
fees, incurred by Developer as a result of any claim or proceeding against
Developer arising out of or based upon (i) the combination, operation or use of
the Products with any hardware, products, programs or data not supplied or
approved in writing by Developer, if such infringement would have been avoided
but for such combination, operation or use (ii) modification of the Products by
Distributor or End- Users(iii) any breach of this Agreement by the Distributor
or (iv) any breach by the Distributor of any End User or other agreement to
which Developer or Distributor is a party.
10. GENERAL.
-------
10.1 Force Majeure.
-------------
Neither party shall be liable or deemed to be in default for any delay
or failure in performance (other than the payment of money) under this
Agreement or interruption of service resulting directly or indirectly from acts
of God, or any causes beyond the reasonable control of such party.
10.2 Jurisdiction and Venue.
----------------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut, U.S.A. without regard to its conflict of
taws provision. Jurisdiction for litigation of any dispute, controversy or
claim arising out of or in connection with this Agreement, or the breach
thereof shall be only in the Federal or the State court with competent
jurisdiction located in Stamford, Connecticut.
10.3 Entire Agreement.
----------------
This Agreement, including the Schedules attached hereto, constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all previous proposals, both oral and written,
negotiations, representations, commitments, writings and all other
communications between the parties. This Agreement may not be modified except
by a writing signed by a duly authorized representative of each of the parties.
13
<PAGE> 14
10.4 Independent Contractors.
-----------------------
It is expressly agreed that Developer and Distributor are acting
hereunder as independent contractors and under no circumstances shall any of
the employees of one party be deemed the employees of the other for any
purpose. This Agreement shall not be construed as authority for either party to
act for the other party in any agency or other capacity, or to make commitments
of any kind for the account of or on behalf of the other except to the extent
and for the purposes provided for herein.
10.5 Assignment.
----------
This Agreement is not assignable by either party hereto without the
prior written consent of the other, except that this Agreement shall be
assignable by Developer to an affiliated entity or upon the sale of the fight
to license and sublicense the Products to the purchaser of said right. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.
10.6 Severability and Waiver.
-----------------------
If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable, such determination shall
not affect the validity or enforceability of any other part or provision of
this Agreement. No waiver by any party of any breach of any provisions hereof
shall constitute a waiver unless made in writing signed by the party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
a duly authorized representative as of the date set forth above.
DISTRIBUTOR: DEVELOPER:
----------- ---------
DELTEQ SYSTEMS PTE LTD IMRS OPERATIONS INC. d/b/a
IMRS INC.
By: /s/ S.C. CHEN By: /s/ DAVID M. SAMPLE
-------------------- -----------------------
Name: S.C. Chen Name: David M. Sample
---------------------
Title: Managing Director Title: Senior Vice President
14
<PAGE> 1
Exhibit 13.1
IMRS
----------------------------------
1994 ANNUAL REPORT
----------------------------------
<PAGE> 2
- - - --------------------------------------------------------------------------------
DELIVERING THE WORLD'S BEST BUSINESS SOFTWARE SOLUTIONS
- - - --------------------------------------------------------------------------------
HEADQUARTERED IN STAMFORD, CONNECTICUT, IMRS(R) IS A LEADING DEVELOPER AND
SUPPLIER OF CLIENT/SERVER FINANCIAL SOFTWARE FOR ENTERPRISES WORLDWIDE. A
TECHNOLOGY LEADER, IMRS HAS BEEN DEVELOPING FINANCIAL APPLICATIONS FOR NETWORK
COMPUTING ENVIRONMENTS SINCE 1981.
TODAY, IMRS SOFTWARE IS USED IN A WIDE VARIETY OF BUSINESS APPLICATIONS
INCLUDING ACCOUNTING, FINANCIAL CONSOLIDATION, MANAGEMENT REPORTING, BUDGETING,
PLANNING AND ANALYSIS.
PRODUCTS INCLUDE: HYPERION(R) AND HYPERION SQL(TM), FOR FINANCIAL
MANAGEMENT UNDER MICROSOFT WINDOWS; MICRO CONTROL(R), FOR ENTERPRISE-WIDE
FINANCIAL REPORTING; FASTAR(R), FOR SPREADSHEET-BASED REPORTING; FINALFORM,
FOR CONTROLLED DATA COLLECTION; IMRS FORMS(TM), A WINDOWS-BASED DATA COLLECTION
PRODUCT; AND IMRS ONTRACK(R), FOR GRAPHICAL DATA PRESENTATION. THE DELIVERY OF
HYPERION FINANCIALS(TM), A WINDOWS-BASED SUITE OF INTEGRATED ACCOUNTING
SOFTWARE FOR CLIENT/SERVER ENVIRONMENTS, WILL ROUND OUT THE COMPANY'S FAMILY OF
COMPLETE FINANCIAL SOFTWARE SOLUTIONS.
THROUGH DIRECT SALES AND SUPPORT OPERATIONS IN 23 COUNTRIES, IMRS HAS DELIVERED
SOLUTIONS TO OVER 1600 BLUE CHIP MULTINATIONAL CLIENTS.
<TABLE>
- - - -----------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share data)
- - - -----------------------------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended June 30
1990 1991 1992 1993 1994
- - - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $24,087 $34,324 $45,996 $61,025 $84,384
- - - -----------------------------------------------------------------------------------------------------------
Net income 1,664 2,651 4,202 4,284 8,470
- - - -----------------------------------------------------------------------------------------------------------
Earnings per share $ .29 $ .46 $ .61 $ .57 $ 1.09
- - - -----------------------------------------------------------------------------------------------------------
R & D spending $ 4,164 $ 5,774 $ 6,888 $11,679 $14,547
- - - -----------------------------------------------------------------------------------------------------------
As of June 30
Cash and cash equivalents $ 1,409 $ 4,798 $22,870 $22,887 $35,404
- - - -----------------------------------------------------------------------------------------------------------
Working capital 2,442 5,499 24,970 26,185 34,157
- - - -----------------------------------------------------------------------------------------------------------
Total assets 18.949 23,867 51,160 64,571 89,371
- - - -----------------------------------------------------------------------------------------------------------
Stockholders' equity $ 6,084 $ 8,735 $33,337 $40,519 $52,305
- - - -----------------------------------------------------------------------------------------------------------
Number of employees 190 261 335 419 554
- - - -----------------------------------------------------------------------------------------------------------
<FN>
* includes a one-time charge relating to the fiscal 1993 purchase of R&D, which had the effect of reducing
net income by approximately $1,560 or $.21 per share.
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
--------------------------------------------------------------------------------
TO OUR STOCKHOLDERS
--------------------------------------------------------------------------------
I am pleased to report another year of exceptional growth and success for IMRS.
With total revenue growth of 38%, to $84.4 million, including a 42% increase in
software license revenues, we continue to demonstrate our ability to provide
strong financial management solutions for our customers - enterprises numbering
over 1600 worldwide.
A STRONG PRODUCT LINE;
A TECHNOLOGY VISION; A COMMITMENT Operating income increased 107% to $13.9 million from $6.7 million for the
TO SERVICE; AND OUR COMPHENSIVE prior year ended June 30, 1993, reflecting an operating margin of 16.4% of
GLOBAL CAPABILITIES, ALLOW US TO revenues for fiscal 1994. Net income was $8.5 million or $1.09 per share, up
DELIVER THE WORLD'S BEST BUSINESS 98% from $4.3 million ($.57 per share) last year. IMRS's fiscal 1993 operating
SOFTWARE SOLUTIONS TO OUR CUSTOMERS. results included a one-time charge relating to the purchase of research and
development, which had the effect of reducing net income for that year by $1.6
million (or $.21 per share).
During the year IMRS was identified by Forbes magazine as one of "The World's Best
Small Companies." And, once again we were included in Software Magazine's listing of "Top
100 Independent Software Companies," this year cited among the 20 fastest growing of the
top 100 worldwide.
International Data Corporation, a leading market research firm, recently recognized
IMRS as having the third largest share of client/server financial systems. We are in fact
the largest Windows-based solutions provider in this market - even before the addition of
our transaction accounting product line.
Our Windows products - Hyperion, IMRS OnTrack, and IMRS Forms, now combine to provide a
unique and powerful enterprise-wide financial management system. We remain convinced that
over the next several years the market will increasingly demand an integrated financial
solution - a line of management reporting and accounting products built around new
client/server technologies and a Microsoft Windows graphical user interface.
IMRS is a company that has repeatedly broken new ground. With Micro Control we were the
first software company to prove that corporate solutions could be achieved using networks
of personal computers. With the introduction of Hyperion we demonstrated that a
Windows-based solution could successfully manage large scale financial data requirements.
Our internal tracking shows that Hyperion, which collects, manages and reports financial
information, was chosen in more than 80 percent of all corporate decisions in North
America in this product category. As of June our Hyperion client base numbered 560
headquarters sites.
And now as we introduce Hyperion Financials, our new line of accounting products, we
are prepared once again to lead the way with all the components of a complete solution -
one that we believe no competitor can match.
</TABLE>
<PAGE> 4
THE BEST TECHNOLOGY
Technology changes continue to be rapid and complex. Our ability to
successfully turn the latest advances in information technology into useful
solutions has made us an innovator in financial management software.
A pure, balanced client/server architecture underlies our new product line.
Our products are built in an object-oriented programming environment, and
offer performance, portability, and scalability.
As an early Windows NT applications developer, we were one of the first to
ship a Windows 32-bit application. In addition, the development work
we've done for Hyperion NT has provided us with a running start on
Microsoft's new operating system, Windows 95.
Our agreement with Sybase to develop client/server products for Sybase SQL
server has resulted in Hyperion SQL, released in December, 1993. Hyperion
and Hyperion SQL are integrated with IMRS OnTrack, for graphical data
presentation, and with IMRS Forms, our new Windows-based data collection
system. The IMRS interfaces to Lotus 1-2-3 and Microsoft Excel, along with
the Hyperion Developer's Toolkit, further extend the accessibility of IMRS
applications.
We will continue to base our information technology strategies on open
standards - and develop client/server products that fit into mixed
environments and provide open access to financial data. Our product design
anticipates continued change and allows us to quickly adapt to new
technologies as they are introduced and established.
REVENUE CHART
SEE FINANCIAL HIGHLIGHTS TABLE FOR THE 5 YEARS ENDED JUNE 30, 1994
NET INCOME CHART
SEE FINANCIAL HIGHLIGHTS TABLE FOR THE 5 YEARS ENDED JUNE 30, 1994
AN INTEGRATED PRODUCT LINE
To meet the high volume and complex requirements of our customers we provide
comprehensive solutions that address both financial management and
accounting. IMRS software meets the diverse accounting, financial
consolidation, management reporting, budgeting, planning and information
access needs of these corporations with a suite of high performance
products. Through our drill-down analytical capabilities, we are able to
provide companies with dynamic access to their corporate information - the
view from the top and high volume supporting detail.
Hyperion Financials carries forward the IMRS vision of enterprise-wide
financial management. With our established reporting, consolidation and
analysis products, IMRS will provide the broadest set of client/server
financial applications on the market - extending from transaction level
processing through accounting to sophisticated planning and analysis.
<PAGE> 5
R&D SPENDING CHART
SEE FINANCIAL HIGHLIGHTS TABLE FOR THE 5 YEARS ENDED JUNE 30, 1994
COMPANY STABILITY AND VIABILITY
A track record of strong growth, profitability, and 13 years of solid
financial applications expertise has earned IMRS credibility and long-term
relationships with CFOs, controllers and information systems professionals.
Our enterprise financial management solutions have helped many of the most
successful companies in the world maintain their leadership positions.
Along the way, we created an international program of high quality service
and support - backed by a sincere commitment to customer satisfaction. The
10th annual IMRS user conference held last April saw record attendance of
more than 1200 customers. Our European user conference, to be held next
month in Cannes, France, will bring together customers from 15 countries.
Our product direction and focus comes from information drawn from these
conferences, our quarterly regional meetings, product user groups, customer
surveys, and informal client interaction throughout the year.
This partnership with our customers drives us to continue to deliver
products and services that address the real world needs of business
users. And we believe the key to success in the still emerging
client/server financial software market will be the delivery of real
solutions. Great software backed by dedicated support professionals has
driven our leadership in the past, and we will carry forward that formula
for success.
Our mission statement defines our business:
DELIVER THE WORLD'S BEST BUSINESS SOFTWARE SOLUTIONS
* We have proven our ability to consistently produce great software.
* We understand the importance of service and support in delivering
superior customer solutions.
* We will continue to grow our business globally as our product line is
extended, our solutions broadened, and our growth horizons expanded.
We are proud of our achievements in the past year and look forward to the
exciting opportunities and challenges of the year ahead.
Sincerely,
James A. Perakis
President and CEO
September 26, 1994
<PAGE> 6
"IMRS SOLUTIONS ARE
THE LIFEBLOOD OF OUR FINANCIAL
INFORMATION MANAGEMENT."
James Froisland, Vice President/Corporate Controller,
BUDGET RENT A CAR CORPORATION
- - - --------------------------------------------------------------------------------
A STRONG PRODUCT LINE
- - - --------------------------------------------------------------------------------
IMRS products are designed by application experts with experience in largescale
finance and accounting departments. This real world business expertise along
with on-going customer input ensures products that meet growing application
demands.
At IMRS we understand the challenges facing financial professionals. From the
start we recognized the value of giving users flexibility and control over their
financial applications. Today more and more companies are using IMRS software
for their diverse accounting, financial consolidation, management reporting,
budgeting, planning and information access needs. Our integrated solutions
optimize the flow of information across the enterprise to increase productivity
and deliver consistent information to all levels of users.
With 13 years experience in delivering high performance financial software,
we've put our expertise to work for some of the most successful corporations in
the world. Our customer base continues to grow in every major industry,
including advertising, banking, chemicals, communications, computers, consumer
products, education, government, healthcare, insurance, manufacturing,
publishing, retail, transportation and utilities.
"TODAY, IMRS HAS
ROUGHLY A 75% MARKET SHARE
IN THE FINANCIAL REPORTING
AND CONSOLIDATION MARKET SECTOR."
W. Christopher Mortenson,
ALEX. BROWN & SONS INCORPORATED
[PHOTOGRAPH OF:]
LUCY RAE RICCIARDI
Vice President and Chief Financial Officer
<PAGE> 7
[PHOTOGRAPH OF:]
JAMES A. PERAKIS
President and CEO
IMRS financial management and accounting products provide clients with a total
solution - from transaction level processing through sophisticated planning and
analysis.
- - - --------------------------------------------------------------------------------
IMRS SOLUTIONS FOR BUSINESS
- - - --------------------------------------------------------------------------------
HYPERION, HYPERION SQL
Windows-based, client/server financial management
MICRO CONTROL
Enterprise-wide financial reporting
FASTAR
Spreadsheet-based reporting
FINALFORM
DOS-based controlled data collection
IMRSFORMS
Windows-based data collection
IMRS OnTrack
Graphical data presentation
HYPERION FINANCIALS
High performance, client/server accounting applications
<PAGE> 8
- - - --------------------------------------------------------------------------------
TECHNOLOGY VISION
- - - --------------------------------------------------------------------------------
"IMRS HAS HARNESSED
A POWERFUL LINK BETWEEN THEIR HYPERION PRODUCT
AND LOTUS SPREADSHEET PRODUCTS.
THIS TECHNOLOGY EXEMPLIFIES
THE WAY 3RD PARTIES CAN
ADD VALUE TO THEIR APPLICATIONS WITH CONNECTIONS
TO OUR PACKAGED PRODUCTS."
Jeffrey Anderholm, Director of Spreadsheet Marketing,
LOTUS DEVELOPMENT CORPORATION
Today's progressive enterprises are basing information technology strategies on
open standards. IMRS solutions are open, adhere to standards and provide
upward compatibility from one generation of technology to the next. We leverage
these standards to deliver high quality applications that offer long-term
flexibility and choice.
Through client/server architecture, Microsoft Windows, high performance
time-series databases, high speed data access capabilities, and SQL databases,
we provide innovative solutions to meet the challenges of enterprise financial
management.
Our extensive client/server experience has helped us re-define this powerful
technology to incorporate a balanced approach in our software design. By
developing applications that balance processing between the client and server
we are able to significantly improve the performance in large, high volume
applications.
"IMRS UNDERSTANDS
THE BENEFITS OF OUR TECHNOLOGY, AND THEIR HYPERION PRODUCT
IS JUST THE KIND OF
APPLICATION WE ENVISIONED
RUNNING IN THE
MICROSOFT WINDOWS NT
ENVIRONMENT."
Daniel Bourgoin, Manager of Vertical
Market Development, MICROSOFT CORPORATION
[PHOTOGRAPH OF:]
Vice President - Product Management and Planning, GORDON O. RAPKIN
<PAGE> 9
[PHOTOGRAPH OF:]
Vice President - Product Development, THOMAS E. BELL
"HYPERION FROM IMRS IS
ONE OF THE FIRST
ENTERPRISE-WIDE FINANCIAL
APPLICATIONS TO TAKE ADVANTAGE OF THE SPEED AND PERFORMANCE
OF DIGITAL'S 64-BIT ALPHA AXP SYSTEMS - MAKING HIGH PERFORMANCE
A PRIORITY IN THEIR
APPLICATION DELIVERY."
Michael Carabetta, Vice President of Cross Industry
Applications Marketing,
DIGITAL EQUIPMENT MARKETING
Through our object-oriented design we are able to ensure application integrity,
simplify system maintenance, and create an environment for rapid application
development. And IMRS's multi-layered approach to systems architecture
insulates application functionality from changes in hardware, networks, and
operating systems.
IMRS develops the highest level of partnership with the industry's primary
leaders and innovators. Through a new partnering program, Enterprise
Solutions Partners, we are able to further enhance the scope of our total
financial management solutions.
Our design philosophy is to apply the best technologies to real world business
needs. Our most important criterion is to give users the benefits of
technology - benefits like portability, scalability, cost-effectiveness and
performance.
"IMRS IS THE TYPE
OF PARTNER THAT SYBASE ENJOYS
WORKING WITH. THEIR
TECHNOLOGY LEADERSHIP IS EVIDENT
IN THEIR SELECTION OF SYBASE
AS THE FIRST SQL DATABASE TO WORK
WITH THEIR NEW PRODUCT LINE."
Verne Dykema, Vice President
NORTH AMERICAN CHANNELS, SYBASE INC.
<PAGE> 10
- - - --------------------------------------------------------------------------------
A COMMITMENT TO SERVICE
- - - --------------------------------------------------------------------------------
"IMRS SERVICE AND SUPPORT STAFF
ARE KNOWLEDGEABLE AND WELL
TRAINED; THEIR APPROACH IS VERY
CUSTOMER ORIENTED."
Jeffrey Limm, Assistant Controller,
YORK INTERNATIONAL CORPORATION
We understand the importance of quality consulting, support and training
services in helping our customers meet the ongoing challenges of financial
management. That's why our worldwide support and service programs are an
integral part of the IMRS offering.
We continue to broaden our already comprehensive service and support program to
ensure complete customer satisfaction. We accomplish this through a network of
global support resources dedicated to superior customer solutions. Our strong
client relationships focus on long term needs.
Through our unmatched product and technical consulting expertise, a wide range
of comprehensive training programs and true customer-oriented Hotline support
we are able to deliver complete solutions.
"GOOD SOFTWARE IS ONLY PART OF
THE FINANCIAL SYSTEMS SOLUTION.
YOU ALSO NEED A SUPPLIER WITH A
PRODUCT STRATEGY IN TOUCH WITH A
FAST CHANGING ENVIRONMENT AND
STRONG SERVICE AND SUPPORT
CAPABILITIES"
Ray Lamy, Manager,
Financial Systems Administration
UNITED TECHNOLOGIES CORPORATION,
CORPORATE HEADQUARTERS
[PHOTOGRAPH OF:]
CRAIG M. SCHIFF
Vice President - Products and Services
<PAGE> 11
[PHOTOGRAPH OF:]
TERENCE W. ROGERS
Executive Vice President
Our international service capabilities include a full range of programs and
activities designed to maintain an ongoing, open dialog with customers.
* Bulletin Board
* Customer Council
* Customer Development
Partnerships
* Customer Surveys
* Customized Documentation
* Customized Training
* External Test Client Programs
* Focus Groups
* Hotline Report
* Newsletter and Quarterly Client Updates
* Product User Groups
* Regional Meetings
* Technical Consulting
* Usability Studies
* User Conferences
* User Group Steering Committee
And by working closely with customers we will continue to provide financial
applications that help maximize success in a rapidly competitive business
world.
REPRESENTATIVES FROM THE FOLLOWING COMPANIES SERVE ON THE 1994 IMRS USER
GROUP STEERING COMMITTEE
American Brands
American General
American National Can
AT&T
Bon Secours Health Systems
Caltex Petroleum
ITT
Otis Elevator Company
Siecor
Tenneco
<PAGE> 12
- - - --------------------------------------------------------------------------------
GLOBAL CAPABILITIES
- - - --------------------------------------------------------------------------------
"IMRS HAS OFFICES
AND DISTRIBUTORSHIPS IN THE
COUNTRIES WE DO
BUSINESS IN. LOCAL SERVICE
AND SUPPORT IS
A REAL PLUS IN GETTING THE
SYSTEM INTO
OUR INTERNATIONAL OFFICES."
Luca Moroni, Senior Financial Analyst,
WHIRLPOOL CORPORATION
Our goal is to provide clients with the tools and resources necessary to
effectively meet the demands of managing information while operating in a
global marketplace. We are extending and enriching our international product
and service capabilities. Today, IMRS has offices in 23 countries. Through a
team of international technical and financial experts, we are able to deliver
solutions that match unique local information requirements.
During the year these events helped strengthen our worldwide capabilities and
those of our clients.
The new KANJI version of Hyperion helps Japanese companies obtain critical
information and enables them to react more quickly to changing business
conditions. IMRS products are designed to handle multi-language implementations
to ensure global companies have a consistent set of applications.
Our annual European user conference, this year in Cannes, France, brings
together customers representing 15 countries. The simultaneous translation
of general sessions ensures all attendees are able to participate fully in the
conference. In addition, individual break out sessions and all conference
materials are available in local languages.
[PHOTOGRAPH OF:]
JOHN N. ADINOLFI
Vice President - Marketing
<PAGE> 13
[PHOTOGRAPH OF:]
DAVID M. SAMPLE
Senior Vice President
The recent openings of IMRS Italia in Milan and a new office in The Netherlands
help us provide ongoing services to existing clients in these countries. Our
global business strategy includes plans for further expansion in the
international marketplace.
Through our distributor Consultores de Integracion de Sistemas S.A. de C.V.,
IMRS is providing Mexican companies with a full range of financial management
technology.
We will continue to seek new global business opportunities and partnerships
in order to provide a comprehensive suite of products and services worldwide.
"THE TOTAL
TECHNOLOGY SOLUTION FROM
IMRS WILL HELP US MEET AMBITIOUS
CORPORATE OBJECTIVES
IN THE FINANCIAL AREA, INCLUDING
STANDARDIZATION
OF OUR FINANCIAL OPERATIONS AND
SUPPORT FOR LEGAL AND
STATUTORY REQUIREMENTS.
WE WILL BE ABLE
TO DOWNSIZE PROCESSING
USING CLIENT/SERVER TECHNOLOGY,
AND ACCOMMODATE
MORE EFFICIENT CLOSINGS AND
MANAGEMENT REPORTING."
Herman Gierhl, Deputy Director, SIEMENS A.G.
<PAGE> 14
<TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per share data)
<CAPTION>
STATEMENT OF INCOME DATA
- - - -------------------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30 1994 1993 1992(a) 1991 1990(b)
- - - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
Software licenses $45,286 $32,004 $26,574 $19,303 $16,268
License renewals and services 39,098 29,021 19,422 15,021 7,819
- - - -------------------------------------------------------------------------------------------------------------------
Total revenues 84,384 61,025 45,996 34,324 24,087
COSTS AND EXPENSES
Cost of revenues:
Software licenses 2,716 1,800 1,272 535 556
License renewals and services 24,300 18,050 12,032 10,233 5,541
Sales and marketing 25,937 18,211 15,673 10,587 8,972
Product development 10,538 7,029 5,398 5,018 3,938
Purchased research and development 2,600
General and administrative 7,039 6,655 4,821 3,094 2,137
- - - -------------------------------------------------------------------------------------------------------------------
70,530 54,345 39,196 29,467 21,144
- - - -------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 13,854 6,680 6,800 4,857 2,943
Interest income 825 579 533 106 69
Interest expense (79) (115) (381) (478) (346)
- - - -------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 14,600 7,144 6,952 4,485 2,666
Provision for income taxes 6,130 2,860 2,750 1,834 1,002
- - - -------------------------------------------------------------------------------------------------------------------
NET INCOME $ 8,470 $ 4,284(c) $ 4,202 $ 2,651 $ 1,664
- - - -------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
Primary $1.09 $.58(c) $.62 $.47 $.30
Fully diluted $1.09 $.57(c) $.61 $.46 $.29
AVERAGE NUMBER OF SHARES OUTSTANDING
Primary 7,736 7,325 6,767 5,700 5,572
Fully diluted 7,744 7,527 6,837 5,759 5,660
BALANCE SHEET DATA
- - - -------------------------------------------------------------------------------------------------------------------
JUNE 30 1994 1993 1992(a) 1991 1990(b)
- - - -------------------------------------------------------------------------------------------------------------------
Working capital $34,157 $26,185 $24,970 $ 5,499 $ 2,442
Total assets 89,371 64,571 51,160 23,867 18,949
Total long-term debt - - - 2,731 2,612
Stockholders' equity 52,305 40,519 33,337 8,735 6,084
<FN>
(a) Reflects the initial public offering of the Company's Common Stock in
November 1991.
(b) Reflects the acquisition of Corporate Class Software, Inc. in October 1989.
Unaudited pro forma revenues, net income and earnings per share as if the
acquisition had occurred at the beginning of the 1990 fiscal year were:
$24,983, $584 and $.11 for 1990.
(c) Includes a one-time charge relating to the fiscal 1993 purchase of research
and development, which had the effect of reducing net income by
approximately $1,560 or $.21 per share.
</TABLE>
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
RESULTS OF OPERATIONS
IMRS derives revenues from licensing its software products and providing related
product installation, support and training services. Customers are billed an
initial license fee for the software upon delivery and, subsequently, are billed
an annual license renewal fee, entitling them to routine support and product
updates. IMRS licenses its products throughout the world primarily through a
direct sales force. In certain territories outside of North America, products
are licensed through independent distributors, including major accounting
firms. The Company includes in revenues its net share of revenues generated
by distributors.
<TABLE>
- - - -----------------------------------------------------------------------------------------------
FISCAL 1994 COMPARED TO FISCAL 1993
<CAPTION>
REVENUES
1994 CHANGE 1993
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Software licenses $45,286 41.5% $32,004
Percentage of total revenues 53.7% 52.4%
- - - -----------------------------------------------------------------------------------------------
License renewals and services $39,098 34.7% $29,021
Percentage of total revenues 46.3% 47.6%
- - - -----------------------------------------------------------------------------------------------
</TABLE>
Software license revenues rose primarily as a result of an increase in the
number of licenses sold. Demand for the Company's Microsoft Windows-based
products rose sharply. In 1994, Windows-based product licenses comprised 91.4%
of the Company's total software license revenues, up from 55.8% for 1993. While
the Company intends to continue enhancing its DOS-based product, Micro Control,
it expects the trend toward the Windows market to continue. Accordingly, the
Company has extended its suite of integrated Windows-based, client/server
products, including IMRS Forms, data collection and forms management software;
Hyperion 1.8 ("Hyperion SQL") which allows for the use of Sybase SQL Server or
Microsoft SQL Server for the Hyperion database, providing open access and
scalability of hardware for server processing; and Hyperion Financials, a line
of transaction-based accounting applications, currently under-going internal and
external testing. IMRS Forms and Hyperion SQL were delivered in December 1993.
The increase in license renewal and service revenue is mainly attributable to
the year-to-year growth of the Company's installed customer base.
Revenues generated from markets outside the United States for fiscal 1994 and
1993 were $24,743 and $16,973, or 29.3% and 27.8% of total revenues,
respectively.
<TABLE>
COST OF REVENUES
<CAPTION>
1994 CHANGE 1993
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Software Licenses $ 2,716 50.9% $ 1,800
Gross profit percentage 94.0% 94.4%
- - - -----------------------------------------------------------------------------------------------
License renewals and services $24,300 34.6% $18,050
Gross profit percentage 37.8% 37.8%
- - - -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(Dollars in thousands)
Cost of software license revenues consists primarily of the cost of product
packaging and documentation materials, amortization of capitalized software
costs, amortization of certain intangible assets related to business
acquisitions, and royalty expenses. The increase in the cost of software
license revenues resulted principally from the amortization of capitalized costs
related to new products and product enhancements, which commenced upon the
general release of the software to customers in the second half of fiscal 1993
and in the second quarter of fiscal 1994.
The increase in the cost of license renewal and service revenues was due
primarily to additional staffing expense for both installation and ongoing
support services.
<TABLE>
OPERATING EXPENSES
<CAPTION>
1994 CHANGE 1993
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales and marketing $25,937 42.4% $18,211
Percentage of total revenues 30.7% 29.8%
- - - -----------------------------------------------------------------------------------------------
Product development $10,538 49.9% $ 7,029
Percentage of total revenues 12.5% 11.5%
- - - -----------------------------------------------------------------------------------------------
General and administrative $ 7,039 5.8% $ 6,655
Percentage of total revenues 8.3% 10.9%
- - - -----------------------------------------------------------------------------------------------
</TABLE>
The increase in sales and marketing expenses is primarily due to a net increase
of sales-marketing personnel, greater overall marketing initiatives and an
increase in commission costs directly associated with the significant increase
in software license revenues.
The increase in product development expenses reflects additional personnel and
third-party development costs associated with expanded research and development
activities. In fiscal 1994 and 1993, the Company capitalized $4,009 and $2,050
of software development costs, respectively, in accordance with Statement of
Financial Accounting Standards No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed" ("FAS-86"). The amounts
capitalized by the Company in 1994 and 1993 primarily relate to the Company's
development of Microsoft Windows-based financial management applications for
client/server environments and represented 27.6% and 22.6%, respectively, of
total product development expenditures. In addition to IMRS Forms, Hyperion
SQL and Hyperion Financials, as mentioned above, various other development and
major product enhancement projects, which costs are required to be capitalized
under FAS-86, were in process during the year ended June 30, 1994. Capitalized
software costs are amortized over the estimated useful life of the product, but
not more than four years.
Currently, Hyperion Financials represents the Company's largest development
project. It began in February 1993 with the technology acquisition from MAI
Systems Corporation for $2,600. The substance of the transaction represented
the purchase of research and development and, as such, is included as a one-time
charge in the Company's operating results. The charge had the effect of
reducing net income for fiscal 1993 by approximately $1,560 or $.21 per share.
The increase in general and administrative expenses resulted from increases in
personnel and professional services costs incurred to support the growth of the
Company's overall operations, as well as an increase in the provision for
doubtful accounts directly associated with the significant increase in revenues.
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(Dollars in thousands)
<TABLE>
NONOPERATING INCOME AND EXPENSE
<CAPTION>
1994 CHANGE 1993
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $ 825 42.5% $ 579
- - - -----------------------------------------------------------------------------------------------
Interest expense $ (79) 31.3% $(115)
- - - -----------------------------------------------------------------------------------------------
</TABLE>
Interest income increased primarily due to the increase in cash available for
investment which resulted from 1994's operations.
PROVISION FOR INCOME TAXES
The Company's effective income tax rate increased from 40.0% to 42.0%, as a
greater portion of the Company's operations arose in certain jurisdictions where
the income tax rates are higher.
NET INCOME
As a result of the above factors, net income for 1994 increased to $8,470 or
by 97.7% from $4,284 for 1993.
To date, the overall impact of inflation on the Company has not been material.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The Company is required to adopt the new method
of accounting for certain investment securities in fiscal 1995. Adoption of
this statement is not expected to have a material effect on the Company's
financial position.
<TABLE>
FISCAL 1993 COMPARED TO FISCAL 1992
- - - -----------------------------------------------------------------------------------------------
REVENUES
<CAPTION>
1994 CHANGE 1993
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Software licenses $32,004 20.4% $26,574
Percentage of total revenues 52.4% 57.8%
- - - -----------------------------------------------------------------------------------------------
License renewals and services $29,021 49.4% $19,422
Percentage of total revenues 47.6% 42.2%
- - - -----------------------------------------------------------------------------------------------
</TABLE>
Software license revenues rose primarily as a result of an increase in the
number of licenses sold. In 1993, the Company saw an improvement in the mix of
software licenses sold. In particular, the demand for its Microsoft
Windows-based products, Hyperion and IMRS OnTrack, rose sharply.
License renewal and service revenue increased due to growth in the Company's
installed customer base and the establishment of Company-owned consulting and
training practices in the United Kingdom (July 1, 1992), France and Germany
(third quarter of fiscal 1992).
Revenues generated from markets outside the United States for fiscal 1993 and
1992 were $16,973 and $9,199, or 27.8% and 20.0% of total revenues,
respectively. The increase reflects the Company's overall success in Europe,
in particular its new direct presence in the UK.
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(Dollars in thousands)
<TABLE>
COST OF REVENUES
<CAPTION>
1993 CHANGE 1992
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Software licenses $ 1,800 41.5% $ 1,272
Gross profit percentage 94.4% 95.2%
- - - -----------------------------------------------------------------------------------------------
License renewals and services $18,050 50.0% $12,032
Gross profit percentage 37.8% 38.0%
- - - -----------------------------------------------------------------------------------------------
</TABLE>
Cost of software license revenues consists primarily of the cost of product
packaging and documentation materials, amortization of capitalized software
costs, amortization of certain intangible assets related to business
acquisitions, and royalty expenses. The increase in the cost of software
license revenues resulted principally from the amortization of capitalized costs
related to IMRS OnTrack version 2.0 with Interactive/MC and Hyperion version
1.5, which commenced upon the general release of the products to customers in
the fourth quarter of fiscal 1992 and in the third quarter of fiscal 1993,
respectively, and an increase in royalties associated with increased sales of
IMRS OnTrack licenses.
The increase in the cost of license renewal and service revenues was due
primarily to additional staffing expense for both installation and ongoing
support services.
<TABLE>
OPERATING EXPENSES
1993 CHANGE 1992
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales and marketing $18,211 16.2% $15,673
Percentage of total revenues 29.8% 34.1%
- - - -----------------------------------------------------------------------------------------------
Product development $ 7,029 30.2% $ 5,398
Percentage of total revenues 11.5% 11.7%
- - - -----------------------------------------------------------------------------------------------
Purchased research and development $ 2,600
Percentage of total revenues 4.3%
- - - -----------------------------------------------------------------------------------------------
General and administrative $ 6,655 38.0% $ 4,821
Percentage of total revenues 10.9% 10.5%
- - - -----------------------------------------------------------------------------------------------
</TABLE>
The increase in sales and marketing expenses is primarily due to the addition
of sales-marketing personnel relating to the Company's recently established
operations in the UK, France and Germany.
The increase in product development expenses reflects additional personnel
associated with expanded research and development activities. In fiscal 1993
and 1992, the Company capitalized $2,050 and $1,490 of software development
costs, respectively, in accordance with Statement of Financial Accounting
Standards, No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed." The amounts capitalized by the Company in 1993
and 1992 primarily relate to the Company's Microsoft Windows-based products and
represented 22.6% and 21.6%, respectively, of total product development
expenditures (excluding purchased research and development). Capitalized
software costs are amortized over the estimated useful life of the product, but
not more than four years.
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(Dollars in thousands)
In February 1993, the Company acquired, from MAI Systems Corporation,
client/server accounting and related applications technology for $2,600. The
substance of the transaction represented the purchase of research and
development and, as such, is included as a one-time charge in the Company's
operating results. The Company is using this technology to develop
accounting software, including general ledger, accounts payable, accounts
receivable, fixed assets and purchasing systems. Complementing Hyperion, the
Company's existing Microsoft Windows-based financial information solution,
these products will constitute Hyperion Financials, a fully integrated line
of financial applications software designed for large company client/server
environments.
The increase in general and administrative expenses resulted principally from
increases in personnel and professional services costs incurred to support
the growth of the Company's overall operations, including newly established
subsidiaries in the UK, France and Germany.
<TABLE>
NONOPERATING INCOME AND EXPENSE
<CAPTION>
1993 CHANGE 1992
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $ 579 8.6% $ 533
- - - -----------------------------------------------------------------------------------------------
Interest expense $(115) 69.8% $(381)
- - - -----------------------------------------------------------------------------------------------
</TABLE>
In connection with the initial public offering of its Common Stock, the
Company repaid all of its outstanding bank debt in November 1991 and,
therefore, interest expense has declined.
PROVISION FOR INCOME TAXES
In the fourth quarter of fiscal 1993, the Company adopted the provisions of
Financial Accounting Standards Board Statement 109, "Accounting for Income
Taxes." The change to the newly required method of accounting for income
taxes had no material effect on the Company's financial statements.
The Company's effective income tax rate increased as follows:
<TABLE>
<CAPTION>
1993 1992
- - - --------------------------------------------------------------------------------------------------
<S> <C> <C>
Statutory U.S. tax rate 34.0% 34.0%
State income taxes, net of U.S. tax benefit 7.0 7.8
Valuation change - deferred tax assets 3.1
Tax exempt interest (2.2) (1.9)
Export sales (1.9) (3.3)
Other - net 3.0
- - - --------------------------------------------------------------------------------------------------
Effective income tax rate 40.0% 39.6%
- - - --------------------------------------------------------------------------------------------------
</TABLE>
NET INCOME
As a result of the above factors - including the one-time charge relating to
the purchase of R&D, which had the effect of reducing net income for 1993 by
$1,560 - net income for 1993 increased to $4,284 or by 2.0% from $4,202 for
1992.
Recently issued, Financial Accounting Standards Board Statements Nos. 106 and
112 regarding accounting for postretirement and postemployment benefits, will
not have a material effect on the financial statements as the Company
generally does not offer its employees such benefits.
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(Dollars in thousands)
<TABLE>
QUARTERLY FINANCIAL INFORMATION
- - - ------------------------------------------------------------------------------
The following table sets forth certain unaudited operating results for each
of the Company's eight most recent fiscal quarters. This information has
been prepared by the Company on the same basis as its audited consolidated
financial statements appearing elsewhere in this Annual Report and includes
all adjustments (consisting only of normal recurring adjustments) necessary
to present fairly this information when read in conjunction with the
Company's audited consolidated financial statements and notes thereto. The
Company's operating results for any one quarter or series of quarters are
not necessarily indicative of results for any future period.
<CAPTION>
- - - ----------------------------------------------------------------------------------------------------------------------------------
Quarter ended June March Dec. Sept. June March Dec. Sept.
30, 1994 31, 1994 31, 1993 30, 1993 30, 1993 31, 1993 31, 1992 30, 1992
- - - ----------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $31,758 $18,038 $19,236 $15,352 $22,512 $13,317 $13,965 $11,231
Operating income (loss) 7,330 1,895 3,376 1,253 5,076 (1,456)* 2,139 921
Net income (loss) 4,414 1,203 2,043 810 3,104 (821)* 1,383 618
Earnings (loss) per share .57 .15 .26 .11 .41 (.12)* .18 .08
<FN>
* includes a one-time charge relating to the purchase of research and development, which had the effect of reducing operating
results by approximately $2,600 ($1,560 or $.21 per share after tax).
</TABLE>
The Company operates with a minimal software licensing backlog. Therefore,
quarterly revenues and operating results are quite dependent on the volume
and timing of the signing of license agreements and product deliveries during
the quarter, which are difficult to forecast. The Company's future operating
results may fluctuate due to these and other factors, such as customer buying
patterns, the timing of new product introductions and product upgrade
releases, the Company's hiring plans, the scheduling of sales and marketing
programs, and new product development. The Company generally has realized
lower revenues in its first (September) and third (March) fiscal quarters
than in the immediately preceding quarters. The Company believes that these
revenue fluctuations are caused by customer buying patterns, including
traditionally slow purchase activity in the summer months and low purchase
activity in the accounting and financial reporting applications market during
the March quarter, as many potential customers are busy with their year-end
closing and financial reporting. Due to the relatively fixed nature of
certain costs, including personnel and facilities expenses, the decline in
revenues in the first and third fiscal quarters typically results in lower
profitability or may result in losses in these quarters.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has financed its business principally through positive
cash flow from operations, long-term and short-term borrowings and sales of
its Common Stock. For fiscal years 1994, 1993, and 1992, the Company
generated positive cash flow from operations of $19,834, $7,343 and $7,890,
respectively.
Cash used by investing activities amounted to $9,333 for fiscal 1994 - $5,324
for leasehold improvements and purchases of equipment and software, and
$4,009 for product development costs.
Financing activities in fiscal 1994, including stock options exercised by
employees and payment of short-term debt, generated cash of $1,879. In
connection with the stock options exercised by certain of its employees (for
a total of 224,337 common shares), the Company recognized (as a credit to
additional paid-in capital) an income tax benefit of $1,200 for the year
ended June 30, 1994.
As of June 30, 1994, the Company had cash and cash equivalents of $35,404 and
working capital of $34,157, no long-term debt, and its ratio of current
assets to current liabilities was 2 to 1. The Company
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(Dollars in thousands)
has long-term credit availability of $10,000 under a revolving credit
facility. For further details of the credit facility, see Note E of the
Company's consolidated financial statements. The Company anticipates capital
expenditures of approximately $12,000 for its 1995 fiscal year, including $4,000
of capitalized product development costs.
The Company believes that funds generated from operations, existing cash
balances and its available credit facility will be sufficient to finance
the Company's operations for at least the next two years.
RECENT DEVELOPMENT
- - - --------------------------------------------------------------------------------
On September 27, 1994, the Company agreed in principle to purchase an office
facility in Stamford, Connecticut for $11.4 million. The Company has outgrown,
particularly with respect to increases in research and development activities,
the offices it currently leases in Stamford. The new location has approximately
140,000 square feet of existent office space and it offers the possibility of
expansion.
The purchase price is to be financed by the Connecticut Development Authority
("CDA," an agency of the State of Connecticut) through a $9.5 million mortgage
loan, with Company funds to be used for the balance. In the interest of
Connecticut-based jobs, the CDA has agreed to such financing over a 15-year
period at LIBOR minus 2%, subject to among other things: (i) the creation of
a specified number of new Connecticut-based jobs, (ii) a 10-year residency in
the state, and (iii) the payment of the remaining unpaid principal at year ten.
Violations of certain such covenants, if any, would result in additional
interest charges and/or a penalty payment.
The purchase transaction is subject to a third party's right of first refusal
to acquire the property which right expires in October 1994, as well as the
outcome of customary due diligence procedures, including independent
appraisals of the property, and the execution of a definitive purchase and
sale agreement. In the meantime, the Company continues its evaluation of
various other expansion alternatives.
REPORT OF INDEPENDENT AUDITORS
BOARD OF DIRECTORS AND STOCKHOLDERS
IMRS INC.
We have audited the accompanying consolidated balance sheet of IMRS Inc. and
subsidiaries as of June 30, 1994 and 1993, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended June 30, 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of IMRS Inc. and
subsidiaries at June 30, 1994 and 1993, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
June 30, 1994, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
July 22, 1994,
except for Note K, as to which
the date is September 27, 1994
<PAGE> 22
IMRS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except for share data)
<TABLE>
<CAPTION>
JUNE 30 1994 1993
- - - ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $35,404 $22,887
Accounts receivable - net of allowances of $1,500 and $1,200 31,843 23,205
Prepaid expenses and other current assets 1,540 787
Deferred income taxes 770 2,387
- - - ----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 69,557 49,266
Property and equipment - at cost, less accumulated
depreciation and amortization of $7,389 and $4,504 9,731 7,353
Product development costs - at cost, less accumulated
amortization of $2,355 and $1,103 6,443 3,686
Goodwill and other intangible assets - at cost, less accumulated
amortization of $3,605 and $2,749 2,671 3,475
Deposits and other assets 969 791
- - - ----------------------------------------------------------------------------------------------------------
Total assets $89,371 $64,571
- - - ----------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 7,323 $ 6,533
Accrued employee compensation and benefits 7,638 4,952
Income taxes payable 1,229 781
Deferred revenue 19,210 10,815
- - - ----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 35,400 23,081
Deferred income taxes 1,666 971
COMMITMENTS - Note H
Stockholders' equity:
Preferred stock - $.01 par value; authorized - 1,000,000 shares;
none issued
Common stock - $.01 par value; authorized - 15,000,000 shares;
issued - 9,298,721 and 9,074,384 shares 93 91
Additional paid-in capital 43,811 40,634
Retained earnings 21,870 13,400
Currency translation adjustments (436) (573)
Treasury stock, at cost - 2,160,420 shares (13,033) (13,033)
- - - ----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 52,305 40,519
- - - ----------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $89,371 $64,571
- - - ----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE> 23
<TABLE>
IMRS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
<CAPTION>
YEAR ENDED JUNE 30 1994 1993 1992
- - - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Software licenses $45,286 $32,004 $26,574
License renewals and services 39,098 29,021 19,422
- - - ----------------------------------------------------------------------------------------------------------
Total revenues 84,384 61,025 45,996
COSTS AND EXPENSES
Cost of revenues:
Software licenses 2,716 1,800 1,272
License renewals and services 24,300 18,050 12,032
Sales and marketing 25,937 18,211 15,673
Product development 10,538 7,029 5,398
Purchased research and development 2,600
General and administrative 7,039 6,655 4,821
- - - ----------------------------------------------------------------------------------------------------------
70,530 54,345 39,196
- - - ----------------------------------------------------------------------------------------------------------
OPERATING INCOME 13,854 6,680 6,800
Interest income 825 579 533
Interest expense (79) (115) (381)
- - - ----------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 14,600 7,144 6,952
Provision for income taxes 6,130 2,860 2,750
- - - ----------------------------------------------------------------------------------------------------------
NET INCOME $ 8,470 $ 4,284 $ 4,202
- - - ----------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
Primary $ 1.09 $ .58 $ .62
Fully diluted $ 1.09 $ .57 $ .61
AVERAGE NUMBER OF SHARES OUTSTANDING
Primary 7,736 7,325 6,767
Fully diluted 7,744 7,527 6,837
</TABLE>
See accompanying notes.
<PAGE> 24
<TABLE>
IMRS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands, except for share data)
<CAPTION>
COMMON STOCK
------------ Additional Currency
Par Paid-in Retained Translation Treasury
Shares Value Capital Earnings Adjustments Stock
- - - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1991 4,929,520 $49 $ 3,772 $ 4,914 -- --
Net proceeds from
private placement 1,166,666 12 6,740
Purchase of outstanding
common shares - 2,160,420 $(13,033)
Net proceeds from initial
public offering 2,036,180 21 22,902
Exercise of stock options 528,704 5 1,455
Income tax benefit from
exercise of stock options 2,298
Net income 4,202
- - - ---------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1992 8,661,070 87 37,167 9,116 -- (13,033)
Exercise of stock options 413,314 4 2,075
Income tax benefit from
exercise of stock options 1,392
Currency translation effect $(573)
Net income 4,284
- - - ---------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1993 9,074,384 91 40,634 13,400 (573) (13,033)
Exercise of stock options 224,337 2 1,977
Income tax benefit from
exercise of stock options 1,200
Currency translation effect 137
Net income 8,470
- - - ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1994 9,298,721 $93 $43,811 $21,870 $(436) $(13,033)
- - - ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE> 25
<TABLE>
IMRS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<CAPTION>
YEAR ENDED JUNE 30 1994 1993 1992
- - - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 8,470 $ 4,284 $ 4,202
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,053 3,154 1,942
Accounts receivable allowance provisions 1,904 1,194 706
Deferred income taxes 2,312 (513) (6)
Changes in operating assets and liabilities:
Accounts receivable (10,542) (8,131) (5,205)
Prepaid expenses and other assets 218 1,604 1,450
Accounts payable and accrued expenses 3,576 1,955 3,306
Income taxes payable 448 781 (735)
Deferred revenue 8,395 3,015 2,230
- - - -------------------------------------------------------------------------------------------------------------
Cash provided by operating activities 19,834 7,343 7,890
INVESTING ACTIVITIES
Leasehold improvements and purchases
of furniture, equipment and software (5,324) (4,685) (2,946)
Product development costs (4,009) (2,050) (1,490)
Acquisition of business (1,764)
Security deposits and other assets (329) (640)
- - - -------------------------------------------------------------------------------------------------------------
Cash used by investing activities (9,333) (8,828) (5,076)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 7,231
Principal payments on long-term borrowings (9,962)
Principal payments on capital lease/notes payable (100) (111) (113)
Exercise of stock options by employees/
sale of Common Stock 1,979 1,980 31,135
Acquisition of treasury stock (13,033)
- - - -------------------------------------------------------------------------------------------------------------
Cash provided by financing activities 1,879 1,869 15,258
Effect of exchange rate changes 137 (367)
- - - -------------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 12,517 17 18,072
Cash and cash equivalents at beginning of year 22,887 22,870 4,798
- - - -------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $35,404 $22,887 $22,870
- - - -------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $ 2,170 $ 746 $ 1,266
Interest 31 74 317
</TABLE>
See accompanying notes.
<PAGE> 26
IMRS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BUSINESS
IMRS Inc. (the "Company") develops, markets and supports financial
management software for client/server environments. Customers consist primarily
of large multinational corporations.
- - - --------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries all of which are wholly owned. All significant intercompany
accounts and transactions have been eliminated.
Assets and liabilities denominated in foreign currencies are translated at the
exchange rate on the balance sheet date. The related revenues, costs and
expenses are translated at average rates of exchange prevailing during the
reporting period. Translation adjustments resulting from this process are
charged or credited to stockholders' equity.
REVENUE RECOGNITION
Revenues and costs associated with the initial software licensing period
(generally 90 days) are recognized upon execution of the license agreement and
delivery of the software.
License renewal fees, for routine support and product updates, are recognized
ratably over the term of the license agreement.
CASH EQUIVALENTS
The Company considers highly liquid investment instruments with remaining
maturities of three months or less at the time of acquisition to be cash
equivalents.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The Company is required to adopt the new
method of accounting for certain investment securities in fiscal 1995.
Adoption of this statement is not expected to have a material effect on the
Company's financial position.
PRODUCT DEVELOPMENT COSTS
The Company begins capitalizing product development costs, principally wages and
contractor fees, only after establishing commercial and technical viability.
Product development costs are stated at the lower of cost or net realizable
value. These costs are amortized using the straight-line method over the
shorter of the estimated useful life of the product or four years.
Amortization commences when the product is available for general release to
customers. Amortization expense totaled $1.3 million for 1994, $.6 million for
1993 and $.3 million for 1992.
<PAGE> 27
IMRS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
- - - --------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
DEPRECIATION/AMORTIZATION
Depreciation and amortization are computed principally using the straight-line
method over the estimated useful lives of the applicable assets.
INCOME TAXES
The Company provides for taxes based on current taxable income and the future
tax consequences of temporary differences between the financial reporting and
income tax carrying values of its assets and liabilities.
EARNINGS PER SHARE
Earnings per share (EPS) are calculated by dividing net income by the weighted
average number of common and common equivalent shares outstanding during the
period. For primary EPS, common equivalent shares are shares which would be
issuable upon the exercise of outstanding stock options, reduced by the number
of shares assumed to be purchased by the Company with the proceeds obtained
thereby at the average market price during the period. For the fully diluted
EPS calculation, shares are assumed to be purchased by the Company at the
higher of the average or period-end market price and, therefore, this
calculation may include additional equivalent shares.
RECLASSIFICATION
Certain amounts included in the 1993 balance sheet have been reclassified to
conform to the current year presentation.
B. ACQUISITIONS
- - - --------------------------------------------------------------------------------
On July 1, 1992, the Company acquired the business, assets and assumed certain
liabilities of the Sema Financial Management Systems Group (Sema), a unit of
Sema Group Systems Ltd. Sema began exclusive distribution of the Company's
products in the United Kingdom and Ireland in August 1987 and had developed
a related customer support practice. The acquisition of the net assets was
accounted for as a purchase transaction and, accordingly, the purchase price,
$1.8 million was allocated to identifiable assets and liabilities based on their
estimated fair values. The excess purchase price over such allocation,
$1.1 million, was ascribed to goodwill. The net earnings of the acquired
business for the years ended June 30, 1994 and 1993, are included in the
consolidated statement of income. Pro forma consolidated statement of income
data as if the acquisition had occurred on July 1, 1991 is not shown as it
would not differ significantly from reported results.
On January 21, 1993, the Company acquired certain form building and forms
management software and related technology from Columbia Software, Inc. The
transaction represented the purchase of discrete assets and, accordingly, was
accounted for at cost, $1.2 million. In connection with this transaction, the
Company paid Columbia Software an additional $.8 million in fiscal 1994 for
its part in developing IMRS Forms, a Windows-based data collection and forms
management product linking to Hyperion.
On February 12, 1993, the Company acquired, from MAI Systems Corporation,
client/server accounting and related applications technology for $2.6 million.
The substance of the transaction represented the purchase of research and
development and, as such, is included as a one-time charge in the Company's
operating results. The charge had the effect of reducing net income for fiscal
1993 by approximately $1.6 million or $.21 per share.
<PAGE> 28
IMRS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<TABLE>
- - - ----------------------------------------------------------------------------------------
C. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at June 30:
<CAPTION>
(In thousands) 1994 1993
- - - ----------------------------------------------------------------------------------------
<S> <C> <C>
Furniture, equipment and software $15,951 $10,899
Leasehold improvements 1,169 958
- - - ----------------------------------------------------------------------------------------
17,120 11,857
Less accumulated depreciation and amortization 7,389 4,504
- - - ----------------------------------------------------------------------------------------
$ 9,731 $ 7,353
</TABLE>
Depreciation and amortization of these assets totaled $2.9 million, $2 million
and $1.1 million for 1994, 1993 and 1992, respectively.
<TABLE>
- - - ----------------------------------------------------------------------------------------
D. GOODWILL AND OTHER INTANGIBLE ASSETS
Components of intangible assets, which relate primarily to business acquisitions,
are as follows at June 30:
<CAPTION>
Amortization
(In thousands) 1994 1993 Period (years)
- - - ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Goodwill $2,649 $2,611 9 to 20
Software 1,789 1,789 4 to 5
Customer base 1,019 1,019 5
Noncompete agreements 476 476 3
Technology 300 300 6
Trademarks and other 43 29 various
- - - ----------------------------------------------------------------------------------------
6,276 6,224
Less accumulated amortization 3,605 2,749
- - - ----------------------------------------------------------------------------------------
$2,671 $3,475
- - - ----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 29
IMRS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
- - - --------------------------------------------------------------------------------
E. AVAILABLE CREDIT FACILITY
The Company may borrow up to $10 million under an amended and restated credit
facility (the "Facility") with The Bank of New York. Key provisions of
the Facility are as follows: (i) the maturity date is June 30, 1997, (ii) the
interest rate is the bank's base rate plus .25% or, at the Company's option,
LIBOR plus 1.5%, (iii) a commitment fee is charged based on any unused credit,
at the rate of .375% per annum, and (iv) borrowings under the Facility are
limited to the sum of (a) 85% of eligible accounts receivable, as defined, from
debtors located in the United States, plus (b) 75% of eligible accounts
receivable, as defined, from debtors located outside of the United States.
Other significant terms of the Facility restrict the Company regarding the
payment of dividends, capital expenditures and acquisitions and additional
indebtedness, including other fiscal commitments, and require the Company to
maintain minimum net worth and working capital ratios and to meet certain
profitability criteria, as defined. Substantially all of the Company's assets
have been pledged as security under terms of the Facility.
<TABLE>
- - - -------------------------------------------------------------------------------
F. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and their tax bases. Significant components of deferred tax
assets and liabilities at June 30 are as follows:
<CAPTION>
(In thousands) 1994 1993
- - - -------------------------------------------------------------------------------
<S> <C> <C>
Deferred income tax assets:
Deferred revenue $ 931* $1,750
Acquired technology, amortization 668 962
Accounts receivable, allowances 577 431
Net operating loss carryforwards 500 225
Other 71 118
- - - -------------------------------------------------------------------------------
2,747 3,486
Less valuation allowance 500 225
- - - -------------------------------------------------------------------------------
2,247 3,261
- - - -------------------------------------------------------------------------------
Deferred income tax liabilities:
Product development costs 2,642 1,475
Property and equipment, depreciation 439 370
Other 62
- - - -------------------------------------------------------------------------------
3,143 1,845
- - - -------------------------------------------------------------------------------
Net deferred income tax (liability) asset $ (896) $1,416
- - - -------------------------------------------------------------------------------
<FN>
* In fiscal 1994, the Company was permitted, with respect to U.S. taxes, to
change its method of accounting for license renewal fees to the same revenue
recognition policy used for financial reporting purposes (see Note A). Due to
the phase-in provisions of the accounting change, there still remains a
significant deferred tax asset relating to license renewal fees.
</TABLE>
<PAGE> 30
<TABLE>
IMRS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The provision for income taxes consists of the following charges (credits):
- - - ---------------------------------------------------------------------------------
F. INCOME TAXES (continued)
<CAPTION>
(In thousands) 1994 1993 1992
- - - ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
U.S. $2,261 $2,200 $1,851
State 957 946 905
Other countries 600 227
- - - ---------------------------------------------------------------------------------
3,818 3,373 2,756
- - - ---------------------------------------------------------------------------------
Deferred:
U.S. 1,766 (400) (5)
State 588 (134) (1)
Other countries (42) (21)
- - - ---------------------------------------------------------------------------------
2,312 (513) (6)
- - - ---------------------------------------------------------------------------------
$6,130 $2,860 $2,750
- - - ---------------------------------------------------------------------------------
</TABLE>
The effective income tax rate varied from the statutory U.S. federal tax rate
as follows:
<TABLE>
<CAPTION>
1994 1993 1992
- - - ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory U.S. tax rate 35.0% 34.0% 34.0%
State income taxes, net of U.S. tax benefit 7.0 7.0 7.8
Valuation change - deferred tax assets 1.9 3.1
Tax exempt interest (1.3) (2.2) (1.9)
Export sales (1.0) (1.9) (3.3)
Other - net .4 3.0
- - - ---------------------------------------------------------------------------------
Effective income tax rate 42.0% 40.0% 39.6%
- - - ---------------------------------------------------------------------------------
</TABLE>
The Company has non-U.S. net operating loss carryforwards of $1.4 million,
$1.1 million of which may be carried forward indefinitely.
<PAGE> 31
IMRS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<TABLE>
- - - --------------------------------------------------------------------------------
G. STOCK OPTION AND EMPLOYEE SAVINGS PROGRAMS
Under the Company's stock option plans and its employee stock purchase plan
("Plans") and under certain employee compensation arrangements, 2,905,645
shares of Common Stock are reserved for issuance to eligible participants
at June 30, 1994.
Changes in outstanding options were as follows:
<CAPTION>
Price Range Shares
- - - -----------------------------------------------------------------------------------
<S> <C> <C>
Outstanding, June 30, 1991 $ .415 - $ 5.50 1,772,000
Options granted:
Plans 9.00 - 17.50 373,924
Options exercised:
Plans .415 - 12.00 (83,104)
Compensation arrangements .415 - 5.50 (445,600)
- - - -----------------------------------------------------------------------------------
Outstanding, June 30, 1992 .415 - 17.50 1,617,220
- - - -----------------------------------------------------------------------------------
Options granted:
Plans 12.75 - 18.00 199,739
Options exercised:
Plans .415 - 17.50 (179,314)
Compensation arrangements .415 - 5.50 (234,000)
Options forfeited:
Plans 14.25 - 17.50 (875)
- - - -----------------------------------------------------------------------------------
Outstanding, June 30, 1993 .415 - 18.00 1,402,770
- - - -----------------------------------------------------------------------------------
Options granted:
Plans 14.50 - 25.00 382,087
Options exercised:
Plans 1.50 - 19.50 (117,615)
Compensation arrangements .75 - 5.50 (106,722)
Options forfeited:
Plans 14.25 - 18.25 (4,250)
- - - -----------------------------------------------------------------------------------
Outstanding, June 30, 1994 .415 - 25.00 1,556,270
- - - -----------------------------------------------------------------------------------
</TABLE>
Generally, options under the stock option plans expire 10 years after the date
of grant, are granted at prices not less than fair market value and become
exercisable over two to four year periods. Under the employee stock purchase
plan, shares of the Company's Common Stock may be purchased at six-month
intervals at 85% of the lower of the fair market value on the first or the last
business day of each six-month period. Employees may purchase shares having a
value not exceeding 10% of their gross compensation, up to 500 shares, during
an offering period. Options granted under employee compensation
arrangements become exercisable and expire over various periods. At June 30,
1994, 1,064,271 options outstanding for Common Stock were exercisable and the
average option price for all outstanding options was $9.77 per share.
Outstanding options expire on various dates beginning December 22, 1994 and
ending on June 18, 2004.
The Company maintains an employee savings plan that qualifies as a cash or
deferred salary arrangement under Section 401(k) of the Internal Revenue Code.
Under the plan, participating U.S. employees may defer up to 15% of
their pre-tax compensation, but not more than approximately $9,000 per
calendar year. The Company contributes to the plan, annually, up to a maximum
of $1,000 per participant. A similar savings plan is maintained with respect
to certain non-U.S. employees. In fiscal 1994, 1993 and 1992, the Company
contributed $.6 million, $.4 million and $.3 million, respectively, to the
savings plans.
<PAGE> 32
IMRS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
- - - --------------------------------------------------------------------------------
H. COMMITMENTS
The Company leases office facilities and certain equipment under various
operating lease agreements. The leases expire at various times through
the year 2000.
<TABLE>
Future minimum lease payments under all operating leases with noncancellable
terms in excess of one year are as follows :
<CAPTION>
(In thousands)
- - - ---------------------------------------------------------------------------
<S> <C>
1995 $3,033
1996 1,536
1997 689
1998 331
1999 and thereafter 249
- - - ---------------------------------------------------------------------------
$5,838
- - - ---------------------------------------------------------------------------
</TABLE>
Certain of the office leases provide as well for contingent payments based on
building operating expenses. Rental expense for the years ended June 30,
1994, 1993 and 1992 under all lease agreements was $2.6 million, $2.3 million
and $2 million, respectively.
<TABLE>
- - - ----------------------------------------------------------------------------
I. FINANCIAL DATA BY GEOGRAPHIC AREA
<CAPTION>
U.S. U.K. Other International
(In thousands) Operations Operations Operations Eliminations Consolidated
- - - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Revenues:
Customers $72,703 $9,070 $2,611 $84,384
Intercompany 2,900 3,913 $(6,813)
- - - -------------------------------------------------------------------------------------------------------
Total 75,603 9,070 6,524 $(6,813) 84,384
- - - -------------------------------------------------------------------------------------------------------
Operating income (loss) 14,013 667 (826) -- 13,854
- - - -------------------------------------------------------------------------------------------------------
Identifiable assets $80,788 $5,413 $3,170 -- $89,371
- - - -------------------------------------------------------------------------------------------------------
- - - -------------------------------------------------------------------------------------------------------
1993
Revenues:
Customers $51,278 $8,007 $1,740 $61,025
Intercompany 1,895 2,215 $(4,110)
- - - -------------------------------------------------------------------------------------------------------
Total 53,173 8,007 3,955 (4,110) 61,025
- - - -------------------------------------------------------------------------------------------------------
Operating income (loss) 6,481 858 (651) $ (8) 6,680
- - - -------------------------------------------------------------------------------------------------------
Identifiable assets $58,445 $4,547 $1,579 -- $64,571
- - - -------------------------------------------------------------------------------------------------------
- - - -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 33
IMRS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
- - - --------------------------------------------------------------------------------
I. FINANCIAL DATA BY GEOGRAPHIC AREA (continued)
"Other International Operations" relate primarily to subsidiaries in Belgium,
Canada, France, Germany and Italy. Intercompany revenues between geographic
areas are accounted for at prices representative of unaffiliated party
transactions of a similar nature.
<TABLE>
Revenues from markets outside the United States were as follows (dollars in thousands):
<CAPTION>
1994 1993
- - - ----------------------------------------------------------------------------------
<S> <C> <C>
U.K operations $ 9,070 $ 8,007
Other international operations 2,611 1,740
Export 13,062 7,226
- - - ----------------------------------------------------------------------------------
$24,743 $16,973
- - - ----------------------------------------------------------------------------------
Percentage of total revenues 29% 28%
- - - ----------------------------------------------------------------------------------
- - - ----------------------------------------------------------------------------------
</TABLE>
The majority of "Export" revenues, some of which are generated through
independent distributors, results from product licenses and services sold to
customers in Europe.
- - - --------------------------------------------------------------------------------
J. QUARTERLY RESULTS OF OPERATIONS (Unaudited)
<TABLE>
The following is a tabulation of the unaudited quarterly results of operations
for the two years ended June 30, 1994 (thousands of dollars, except per
share data):
<CAPTION>
- - - ---------------------------------------------------------------------------
Fiscal 1994 Sept. 30 Dec. 31 March 31 June 30
- - - ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $15,352 $19,236 $18,038 $31,758
Gross profit 9,883 13,514 11,519 22,452
Net income 810 2,043 1,203 4,414
Earnings per share .11 .26 .15 .57
</TABLE>
<TABLE>
<CAPTION>
- - - ---------------------------------------------------------------------------
Fiscal 1993 Sept. 30 Dec. 31 March 31 June 30
- - - ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $11,231 $13,965 $13,317 $22,512
Gross profit 7,160 9,613 8,458 15,944
Net income (loss) 618 1,383 (821)* 3,104
Earnings (loss) per share .08 .18 (.12)* .41
<FN>
* includes a one-time charge relating to the purchase of research and
development (see Note B), which had the effect of reducing results of
operations by approximately $1,560 or $.21 per share.
</TABLE>
<PAGE> 34
IMRS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
- - - ---------------------------------------------------------------------------
K. SUBSEQUENT EVENT
On September 27, 1994, the Company agreed in principle to purchase an office
facility in Stamford, Connecticut for $11.4 million. The Company has outgrown,
particularly with respect to increases in research and development activities,
the offices it currently leases in Stamford. The new location has
approximately 140,000 square feet of existent office space and it offers the
possibility of expansion.
The purchase price is to be financed by the Connecticut Development Authority
("CDA," an agency of the State of Connecticut) through a $9.5 million mortgage
loan, with Company funds to be used for the balance. In the interest of
Connecticut-based jobs, the CDA has agreed to such financing over a 15-year
period at LIBOR minus 2%, subject to, among other things: (i) the creation of a
specified number of new Connecticut-based jobs, (ii) a 10-year residency in the
state, and (iii) the payment of the remaining unpaid principal at year ten.
Violations of certain such covenants, if any, would result in additional
interest charges and/or a penalty payment.
The purchase transaction is subject to a third party's right of first refusal to
acquire the property which right expires in October 1994, as well as the outcome
of customary due diligence procedures, including independent appraisals of
the property, and the execution of a definitive purchase and sale agreement. In
the meantime, the Company continues its evaluation of various other expansion
alternatives.
<TABLE>
COMMON STOCK DATA
The Company's Common Stock is listed on the NASDAQ National Market System under
the symbol "IMRS." The following table sets forth, for the periods indicated,
the high and low closing prices of the Common Stock as reported on the NASDAQ
National Market System.
<CAPTION>
- - - -----------------------------------------------------------------------------
Fiscal 1993: High Low
- - - -----------------------------------------------------------------------------
<S> <C> <C>
First quarter $17 1/2 $14 1/4
Second quarter 24 3/4 15 1/4
Third quarter 25 12 1/4
Fourth quarter 19 1/2 11 3/4
- - - -----------------------------------------------------------------------------
FISCAL 1994: HIGH LOW
- - - -----------------------------------------------------------------------------
First quarter $21 1/2 $16 1/4
Second quarter 27 1/8 19
Third quarter 28 3/4 21 3/4
Fourth quarter 26 1/4 19 1/4
- - - -----------------------------------------------------------------------------
FISCAL 1995: HIGH LOW
- - - -----------------------------------------------------------------------------
First quarter (through September 15th) $35 3/4 $21 7/8
</TABLE>
The Company has never declared or paid any cash dividends on its capital stock.
The Company currently intends to retain all earnings to finance future growth
and therefore does not anticipate paying any cash dividends in the
foreseeable future. The Company's credit agreement with its bank contains
covenants that restrict the Company regarding the payment of dividends.
As of September 15, 1994, the Company had 74 stockholders of record and
approximately 1,800 beneficial holders of its Common Stock.
<PAGE> 35
<TABLE>
<CAPTION>
STOCKHOLDER INFORMATION BOARD OF DIRECTORS IMRS CORPORATE HEADQUARTERS
<S> <C> <C>
COMMON STOCK James A. Perakis 777 Long Ridge Road
The Company's Common Stock is listed Chairman of the Board Stamford, CT 06902
on the NASDAQ National Market System President and Chief Executive Officer, Tel (203) 321-3500
under the symbol "IMRS". IMRS Inc. Fax (203) 322-3904
FORM 10-K Marco Arese Lucini
Copies of the Company's Annual Report Co-Founder, IMRS Inc. REGIONAL OFFICES
on Form 10-K are available upon written Atlanta
request from: Gary G. Greenfield Boston
IMRS Inc. Chief Operating Officer Calgary
Investor Relations Department INTERSOLV, Inc. Chicago
777 Long Ridge Road (software) Dallas
Stamford, CT 06902 Denver
Harry S. Gruner Detroit
ANNUAL MEETING General Partner, JMI, Inc. Houston
The annual meeting of stockholders will (investment group) Los Angeles
be held Tuesday, November 15, 1994, Newark
9:00 am at the Hyatt Regency Greenwich, William W. Helman IV Ottawa
Old Greenwich, Connecticut. General Partner, Philadelphia
Greylock Limited Partnership St. Louis
TRANSFER AGENT AND REGISTRAR (venture capital) San Francisco
The transfer agent and registrar for the Seattle
Company's Common Stock is the American Aldo Papone Tampa
Stock Transfer & Trust Company. Senior Advisor Toronto
American Express Company Washington, D.C.
INDEPENDENT AUDITORS (financial services)
Ernst & Young LLP
Stamford, Connecticut Robert W. Thomson
Founder, IMRS Inc.
LEGAL COUNSEL
Kleban & Samor, P.C. INTERNATIONAL OFFICES
Southport, Connecticut EXECUTIVE OFFICERS Brussels
Frankfurt
Testa, Hurwitz & Thibeault James A. Perakis Hong Kong
Boston, Massachusetts President and CEO London
Manchester
Terence W. Rogers Milan
USER GROUP Executive Vice President Paris
Rome
David M. Sample The Netherlands
Elected representatives from the following Senior Vice President
companies serve on the 1994 IMRS User
Group Steering Committee: John N. Adinolfi
Vice President - Marketing
American Brands
American General Thomas E. Bell
American National Can Vice President - Product Development DISTRIBUTORS
AT&T Australia - KPMG
Bon Secours Health Systems Gordon O. Rapkin Austria - Al Informatics
Caltex Petroleum Vice President - Product Management Japan - Arthur Andersen
ITT Corp. and Planning Mexico - Consultores de Integracion
Otis Elevator Company de Sistemas S.A. de C.V.
Siecor Lucy Rae Ricciardi New Zealand - KPMG
Tenneco Vice President and Chief Financial Scandinavia - IMRS Nordic
Officer South Africa - Prologic Decision
Support Ltd.
Craig M. Schiff Southeast Asia - Delteq Systems Pte Ltd.
Vice President - Products and Services Spain - Arthur Andersen Auditores S.A.
and Corporate Secretary Switzerland - Arthur Andersen AG
</TABLE>
Fastar, FinalForm, Financial Intelligence, Hyperion, IMRS, IMRS OnTrack,
Interactive MC, Micro Control, and Retrieve-MC are registered trademarks, and
Hyperion Financials, Hyperion SQL, and IMRS Forms are trademarks of IMRS Inc.
All other trademarks and company names mentioned are the property of their
respective owners.
<PAGE> 1
<TABLE>
EXHIBIT 22.1
IMRS INC.
SUBSIDIARIES OF THE COMPANY
<CAPTION>
JURISDICTION OF
NAME INCORPORATION
---------------------------- ----------------------------
<S> <C>
IMRS Operations Inc......... Delaware
IMRS of Canada, Ltd......... Ontario
IMRS Europe, S.r.l.......... Italy
IMRS Italia, S.r.l.......... Italy
IMRS Foreign Sales Corp..... Virgin Islands
IMRS plc.................... United Kingdom
IMRS Deutschland GmbH....... Germany
IMRS France S.A............. France
IMRS BeLux S.A.............. Belgium
IMRS Nederland B.V.......... The Netherlands
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of IMRS Inc. of our report dated July 22, 1994, except for Note K as to which
the date is September 27, 1994, included in the 1994 Annual Report to
Stockholders of IMRS Inc.
Our audits also included the financial statement schedules of IMRS Inc. listed
in Item 14(a). These schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-44127) pertaining to the IMRS Inc. 1985 Incentive Stock Option
Plan, 1989 Stock Option Plan, 1991 Stock Plan, 1991 Employee Stock Purchase
Plan, 1991 Non-Employee Director Stock Option Plan, and to Stock Options
Granted Pursuant to Employment, Consulting and Option Agreements of our report
dated July 22, 1994, except for Note K as to which the date is September 27,
1994, with respect to the consolidated financial statements and schedules of
IMRS Inc. included and/or incorporated by reference in the Annual Report (Form
10-K) for the year ended June 30, 1994.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
September 27, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF IMRS INC. FOR THE YEAR ENDED JUNE 30, 1994,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-START> JUL-01-1993
<PERIOD-END> JUN-30-1994
<EXCHANGE-RATE> 1
<CASH> 35,404
<SECURITIES> 0
<RECEIVABLES> 33,343
<ALLOWANCES> 1,500
<INVENTORY> 0
<CURRENT-ASSETS> 69,557
<PP&E> 17,120
<DEPRECIATION> 7,389
<TOTAL-ASSETS> 89,371
<CURRENT-LIABILITIES> 35,400
<BONDS> 0
<COMMON> 93
0
0
<OTHER-SE> 52,212
<TOTAL-LIABILITY-AND-EQUITY> 89,371
<SALES> 84,384
<TOTAL-REVENUES> 84,384
<CGS> 27,016
<TOTAL-COSTS> 70,530
<OTHER-EXPENSES> 43,514
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 79
<INCOME-PRETAX> 14,600
<INCOME-TAX> 6,130
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,470
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.09
</TABLE>
