-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LHfwpLqyOeMx3KfS1oiafQ8bkLu0l0GeJ3KAmzsw2tdrpz1nv855Eyih8ZKH8VkI 9nSYha+e7kZFLJLkJXfKRA== 0000950170-98-000868.txt : 19980505 0000950170-98-000868.hdr.sgml : 19980505 ACCESSION NUMBER: 0000950170-98-000868 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980504 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAZTEC INTERNATIONAL INC CENTRAL INDEX KEY: 0000801354 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 330178457 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-15353 FILM NUMBER: 98609396 BUSINESS ADDRESS: STREET 1: 43 MANNING ROAD CITY: BILLERICA STATE: MA ZIP: 01821-3966 BUSINESS PHONE: 5082629600 MAIL ADDRESS: STREET 1: 43 MANNING ROAD CITY: BILLERICA STATE: MA ZIP: 01821-3966 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended March 31, 1998 Commission File Number 0-15353 ---------------------------- SAZTEC INTERNATIONAL, INC. CALIFORNIA 33-0178457 - ------------------------------- ---------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 43 MANNING ROAD, BILLERICA, MASSACHUSETTS 01821 ----------------------------------------------- (Address of Principal Executive Office) 978-901-9600 ------------------------------- (Registrant's Telephone Number) --------------- 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 and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of registrant's Common Stock at April 27, 1998, was 4,461,129 shares. SAZTEC INTERNATIONAL, INC. FORM 10-QSB QUARTER ENDED MARCH 31, 1998 CONTENTS PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Statements of Operations for the three months ended March 31, 1998 and 1997 3 Consolidated Statements of Operations for the 4 nine months ended March 31, 1998 and 1997 Consolidated Balance Sheets -- March 31, 1998 and June 30, 1997 5 Consolidated Statement of Changes in Stockholders' Equity for the nine months ended March 31, 1998 6 Consolidated Statements of Cash Flows for the nine months ended March 31, 1998 and 1997 7 - 8 Notes to Consolidated Financial Statements -- March 31, 1998 and 1997 9 - 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Changes in Securities 13 Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14 2 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED) 1998 1997 ----------- ----------- REVENUES $ 2,271,910 $ 2,374,030 Cost of services 1,716,596 1,963,917 ----------- ----------- Gross profit 555,314 410,113 Selling and administrative expense 477,079 498,362 ----------- ----------- Income (Loss) from operations 78,235 (88,249) Interest expense 11,281 16,091 ----------- ----------- Income (Loss) before provision for income taxes 66,954 (104,340) Provision (benefit) for income taxes 14,368 (16,894) ----------- ----------- Net income (loss) $ 52,586 $ (87,446) =========== =========== Income (Loss) per share of common stock (Note 4): Basic and diluted net income (loss) per share $ .01 $ (.02) =========== =========== Net income (loss) per share- assuming dilution $ .01 =========== Weighted average number of shares-basic 4,461,129 3,574,413 =========== =========== Weighted average number of shares- diluted 4,543,927 =========== See accompanying notes. 3 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED) 1998 1997 ----------- ----------- REVENUES $ 5,850,130 $ 7,391,138 Cost of services 4,616,629 5,884,083 ----------- ----------- Gross profiT 1,233,501 1,507,055 Selling and administrative expense 1,483,552 1,640,552 ----------- ----------- Loss from operations (250,051) (133,497) Interest expense 35,541 63,019 ----------- ----------- Loss before provision for income taxes (285,592) (196,516) Provision (benefit) for income taxes 14,368 (38,560) ----------- ----------- Net loss $ (299,960) $ (157,956) =========== =========== LOSS PER SHARE OF COMMON STOCK: Basic net loss applicable to common stockholders $ (.07) $ (.04) =========== =========== Weighted average number of shares 4,089,022 3,512,004 =========== =========== See accompanying notes. 4
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 1998 AND JUNE 30, 1997 ASSETS MARCH 31, 1998 JUNE 30, 1997 -------------- ------------ (UNAUDITED) Current assets Cash and cash equivalents $ 550,734 $ 386,785 Restricted cash 50,338 192,643 Accounts receivable, less allowance for doubtful accounts of $57,223 and $45,070 at March 31, 1998 and June 30, 1997 1,980,198 1,342,831 Work in process 249,283 217,518 Prepaid expenses and other current assets 133,514 134,803 Note receivable for stock subscribed (Note 2) 860,000 ------------ ------------ Total current assets 2,964,067 3,134,580 Equipment, net 433,845 364,040 Other assets Goodwill and other intangible assets, less accumulated amortization of $72,692 and $63,602 at March 31, 1998 and June 30, 1997 152,670 161,760 Deposits and other assets 118,895 170,068 ------------ ------------ Total assets $ 3,669,477 $ 3,830,448 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable $ 179,108 $ 274,512 Current portion of long-term debt and capital lease obligations 260,279 199,460 Common stock subject to repurchase (Note 2) 33,342 Accounts payable 455,297 569,716 Accrued liabilities 709,863 429,396 Customer deposits 785,760 456,989 Excess of billings over costs and estimated earnings 56,200 223,633 ------------ ------------ Total current liabilities 2,446,507 2,187,048 Long-term debt and capital lease obligations 36,508 151,980 Accrued expenses, non-current 30,155 39,546 Stockholders' equity Common stock-no par value; 10,000,000 shares authorized; 4,461,129 shares issued at March 31, 1998, and 3,571,963 shares issued at June 30, 1997 12,430,811 11,570,811 Common stock subscribed (Note 2) 860,000 Contributed capital 14,498 14,498 Accumulated deficit (11,178,480) (10,878,520) Cumulative translation adjustment (110,522) (114,915) ------------ ------------ Total stockholders' equity 1,156,307 1,451,874 ------------ ------------ Total liabilities and stockholders' equity $ 3,669,477 $ 3,830,448 ============ ============
See accompanying notes. 5
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED MARCH 31, 1998 COMMON STOCK COMMON STOCK SUBSCRIBED --------------------------- ------------ CUMULATIVE NUMBER OF NUMBER OF CONTRIBUTED ACCUMULATED TRANSLATION SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT --------- ----------- --------- --------- ----------- ------------ ----------- June 30, 1997 3,571,963 $11,570,811 860,000 $ 860,000 $14,498 $(10,878,520) $(114,915) (1) September 10, 1997 300,000 300,000 (300,000) (300,000) (2) October 22, 1997 8,333 - (2) November 6, 1997 20,833 - (1) November 14, 1997 560,000 560,000 (560,000) (560,000) Net loss (299,960) Translation adjustment 4,393 --------- ----------- -------- --------- ------- ------------ --------- 4,461,129 $12,430,811 0 $0 $14,498 $(11,178,480) $(110,522) (1) Shares issued pursuant to a private placement completed November 14, 1997 (Note2). (2) Shares issued pursuant to an amendment to a private placement completed March 31, 1994 (Note 2).
See accompanying notes. 6
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED) 1998 1997 ----------- ----------- Cash flows from operating activities: Net loss $ (299,960) $ (157,956) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 179,366 287,510 Provision for bad debts 12,062 (4,448) Loss on sale of assets 2,333 Other 17 (17,054) Changes in assets and liabilities: Accounts receivable (681,434) 298,003 Work in process (165,389) 208,408 Prepaid expenses and other current assets (17,657) 32,994 Deposits and other assets 59,316 975 Accounts payable (116,871) (312,437) Accrued liabilities 268,829 (26,775) Customer deposits and non-current accrued expenses 327,067 (288,318) Income taxes payable (38,560) ----------- ----------- Net cash used in operating activities (434,654) (15,325) ----------- ----------- Cash flows from investing activities: Additions to equipment (226,714) (18,239) Payments received on note receivable 11,937 14,113 (Increase) decrease in restricted cash 142,305 (7,433) ----------- ----------- Net cash used in investing activities (72,470) (11,559) ----------- ----------- Cash flows from financing activities: Principal payments on debt and capital lease obligations (101,410) (156,359) Borrowings on revolving credit agreement 2,098,554 2,675,154 Payments on revolving credit agreement (2,193,958) (2,832,936) Net proceeds from issuance of common stock 860,000 300,000 ----------- ----------- Net cash provided by (used in) financing activities 663,186 (14,141) ----------- ----------- Effect of exchange rate changes on cash 7,887 11,766 ----------- ----------- Net increase (decrease) in cash 163,949 (29,259) Cash and cash equivalents at beginning of period 386,785 222,023 ----------- ----------- Cash and cash equivalents at end of period $ 550,734 $ 192,764 =========== ===========
See accompanying notes. 7
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED) 1998 1997 ------- ------- Supplemental schedule of non-cash investing and financing activities: Purchase of equipment through issuance of notes payable and capital lease obligations $13,624 $ 8,910 ======= ======= Partial settlement of Common Stock Repurchase obligation $14,110 ======= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $24,221 $60,109 ======= ======= Income taxes $14,368 =======
See accompanying notes. 8 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998 AND 1997 NOTE 1. ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements include all adjustments (consisting only of normal recurring accruals) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and cash flows. Results of operations for interim periods are not necessarily indicative of results to be expected for a full year. Certain reclassifications have been made to the fiscal 1997 financial statements to conform with the current year's presentation. Effective for interim and annual periods ending after December 15, 1997, the Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 128, Earnings per Share. The standard amends the computation of earnings per share to provide for two measures, Basic Earnings Per Share and Dilutive Earnings Per Share. The effect of this standard is reflected in the financial statements. The Company's shareholders approved a one for four reverse stock split which became effective November 7, 1997. All share and per share amounts have been restated to account for the reverse split. NOTE 2. COMMON STOCK In connection with the Company's acquisition of the outstanding minority interest of Saztec Europe, Ltd. in 1991, the Company granted a put option to the selling shareholders to repurchase 120,000 shares at $2.00 per share. The put option was exercisable at 10,000 shares ($20,000) per quarter through April, 1996. The options were exercised in their entirety and at June 30, 1997 $33,342 remained payable to the selling shareholders. Subsequent to one of the three private placements of common stock completed during the quarter ended March 31, 1994 management agreed to issue 91,666 additional shares to the participants of one of the placements. At June 30, 1995, 62,500 of the shares had been issued. On September 30, 1997 and November 6, 1997 the remaining participants filed the required agreements and on October 22 and November 6, 1997 8,333 and 20,833 shares were issued, respectively. On June 29, 1997 the Company and several current shareholders and shareholder/directors agreed to a private placement of 860,000 shares of common stock and warrants to purchase 860,000 additional shares of common stock. The cash for the shares and warrants of $860,000 was placed in escrow. The placement was contingent on the Company's shareholders consent to a one for four reverse stock split and an amendment to the Company's Restated Articles of Incorporation, which amendment increases from 5,000,000 to 10,000,000 the number of shares of common stock the Company is authorized to issue. In September 1997, the Company and one of the participants agreed to the release of $300,000 from the participant's escrow account and 300,000 shares and warrants were issued September 10, 1997. On October 31, 1997 the Company's shareholders consented to the reverse split and the amendment, effective November 7, 1997. The remaining 560,000 shares were issued November 14, 1997. 9 NOTE 3. FOREIGN OPERATIONS AND MAJOR CUSTOMERS-SEGMENTS United Kingdom/Western Europe amounts in the following tables relate solely to Saztec Europe, Ltd. and its subsidiaries, whose customers are located in England, Scotland, Germany, Italy, Spain, and Belgium. Identifiable assets of Saztec Europe Ltd. located outside of Ardrossan, Scotland are immaterial.
SEP 30, 1997 DEC 31, 1997 MAR 31, 1998 TOTAL ------------ ------------ ------------ ----------- Revenue United States $ 818,662 $ 982,126 $ 1,168,268 $ 2,969,056 United Kingdom/Western Europe 794,809 982,623 1,103,642 2,881,074 ----------- ----------- ----------- ----------- $ 1,613,471 $ 1,964,749 $ 2,271,910 $ 5,850,130 =========== =========== =========== =========== Income (loss) before income taxes United States $ (148,309) $ (34,704) $ 70,080 $ (112,933) United Kingdom/Western Europe (63,252) (106,281) (3,126) (172,659) ----------- ----------- ----------- ----------- $ (211,561) $ (140,985) $ 66,954 $ (285,592) =========== =========== =========== =========== Depreciation United States $ 24,682 $ 23,730 $ 23,457 $ 71,869 United Kingdom/Western Europe 34,418 32,542 31,447 98,407 Amortization-U.S. only 3,030 3,030 3,030 9,090 =========== =========== =========== =========== $ 62,130 $ 59,302 $ 57,934 $ 179,366 =========== =========== =========== ===========
SEP 30, 1996 DEC 31, 1996 MAR 31, 1997 TOTAL ------------ ------------ ------------ ----------- Revenue United States $ 1,044,706 $ 1,030,578 $ 1,043,130 $ 3,118,414 United Kingdom/Western Europe 1,330,436 1,611,388 1,330,900 4,272,724 =========== =========== =========== =========== $ 2,375,142 $ 2,641,966 $ 2,374,030 $ 7,391,138 =========== =========== =========== =========== Income (loss) before income taxes United States $ 21,492 $ (57,541) $ (87,834) $ (123,883) United Kingdom/Western Europe (39,248) (16,879) (16,506) (72,633) =========== =========== =========== =========== $ (17,756) $ (74,420) $ (104,340) $ (196,516) =========== =========== =========== =========== Depreciation United States $ 48,255 $ 45,710 $ 44,390 $ 138,355 United Kingdom/Western Europe 50,913 47,072 42,029 140,014 Amortization-U.S. only 3,081 3,030 3,030 9,141 =========== =========== =========== =========== $ 102,249 $ 95,812 $ 89,449 $ 287,510 =========== =========== =========== ===========
MAR 31, 1998 JUN 30, 1997 ------------ ------------ Identifiable Assets United States $ 1,887,536 $ 2,415,816 United Kingdom 1,781,941 1,414,632 =========== =========== $ 3,669,477 $ 3,830,448 =========== =========== 10 NOTE 4. EARNINGS (LOSS) PER SHARE During the nine month periods ended March 31, 1998 and 1997 the following potentially dilutive securities were outstanding:
1998 1997 NUMBER PRICE RANGE NUMBER PRICE RANGE $ $ Employee options 394,500 .315 - 4.13 155,500 .68 - 4.13 Other options 358,750 .315 - 4.13 106,250 .68 - 4.13 Warrants 1,641,000 2.00 446,000 2.00 - 6.00
11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenue for the nine months ended March 31, 1998, declined to $5,850,130 from $7,391,138 for the nine months ended March 31, 1997, a decrease of $1,541,008 or (20.8%). The decrease is due mainly to lower revenue from library conversion projects in the U.K. and Western Europe. This decline has been partially offset by sales of British Library card catalogue sets on CD/ROM. Revenue from projects utilizing scanning services in the United States in the current year was $215,476 higher than earned in the prior year. Revenue for the quarter ended March 31, 1998 was $102,120 (4.3%) short of the same quarter in the prior year. U.S. revenue for the quarter ended March 31, 1998 was $125,138 higher than the figure for the same period in the prior year, but European revenue was $227,258 lower than the figure posted in the same quarter of the prior year. Gross margin for the quarter ended March 31, 1998 of 24.4% compares favorably with the prior year quarter margin of 17.3% of sales. The prior year margin reflected one-time workforce training costs and pricing pressures on projects which have been completed. Selling and administrative expenses of $477,079 for the quarter was $21,283 less than the same period in the prior year. Selling expense for the quarter ended March 31, 1998 of $199,194 was consistent with selling expense incurred in the first two quarters of the current year, which averaged $199,167 per quarter. Administrative expense of $277,885 for the current quarter is $26,184 less than the per quarter average expensed in the first six months of the current year. Cash contributed by operations for the quarter amounted to $66,720, despite increases in current asset balances which exceeded increases in current liability balances by $56,561. However, cash purchases during the quarter of $120,251 for operating equipment and net payments on notes and capital lease obligations of $12,525 offset the increase from operating activities and other adjustments by $30,405, the net decrease in cash for the quarter's activities. CAPITAL RESOURCES AND LIQUIDITY At June 30, 1997, the Company had a revolving credit agreement secured by accounts receivable, work in process, property and equipment and other assets, bearing interest at the lender's prime rate plus 4.0% (12.5% at June 30, 1997). Available borrowings were 70% of domestic trade receivables less than 90 days old, with an aggregate maximum borrowing level that declined $10,000 per month to $280,000 on June 30, 1997. The credit line was renewed on July 1 and October 1, 1997 and April 1, 1998. The current renewal incorporates the same terms as the prior agreements, with the exception that the maximum borrowings decline $10,000 per month from $210,000 on April 1, 1998. The current and prior agreements contain covenants that require, among other things, a minimum consolidated net stockholders' equity of $500,000 and a ratio of consolidated total indebtedness to consolidated net worth not to exceed 8:1. The Company was in compliance with all covenants contained in the agreements at April 1, 1998. Outstanding borrowings at March 31, 1998 were $179,108 with $30,892 available. The Company's unrestricted cash balance of $550,734 on March 31, 1998 is $163,949 more than the $386,785 figure of June 30, 1997. Working capital at March 31, 1998 of $517,560 is $429,972 less than the June 30, 1997 working capital amount of $947,532, but $45,816 higher than the March 31, 1997 balance. The decrease in working capital results mainly from the year to date net loss of $299,960 and purchases of equipment in the first three quarters of $226,714. 12 SAZTEC INTERNATIONAL, INC. MARCH 31, 1998 FORM 10-QSB PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES On November 7, 1997 the shareholders of the Company approved a four for one reverse stock split. The reverse stock split does not change the rights or ownership interests of any of the stockholders. On April 1, 1998 the Company executed a new note to its prime lender to replace its revolving line of credit agreement. The new agreement does not change the rights of any holders of its securities. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders was held February 19, 1998. All directors were re-elected for one year. Tallard B.V. nominated two directors, Robert W. Forsyth and Hans Lindroth, to fill the two seats which were vacated by the prior representatives in June, 1995. Both nominees were elected. There was no solicitation in opposition to management nominees. One other proposal was presented for shareholder vote: 1. Proposal to ratify appointment of Grant Thornton LLP as independent certifying accountants for the year ended June 30, 1998: For: 4,027,979 Against: 5,263 Abstain: 2,900 ITEM 5. OTHER INFORMATION Christopher Parker joined the Company as Chief Executive Officer of the Company. He was elected to the Board of Directors at the Board's regular quarterly meeting on February 19, 1998. The Board elected Gary N. Abernathy to the positions of President and Chief Operating Officer-U.S. Division. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The following Exhibits are filed by attachment to this Form 10-QSB: EXHIBIT NUMBER DESCRIPTION OF EXHIBIT PAGE - -------------- ---------------------- ------- 2.1 Amendment to By-Laws of Saztec International, Inc. 15 - 16 10.15 Employment Contract, Christopher Parker 17 - 22 10.16 Renewal of Revolving Credit Agreement dated April 1, 1998 23 - 31 27 Financial Data Schedule 32 (b) Reports on Form 8-K: None. 13 SIGNATURES Pursuant to the requirements 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. Dated: April 27, 1998 SAZTEC INTERNATIONAL, INC. -------------------------- (Registrant) By: /s/ THOMAS K. O'LOUGHLIN ------------------------ Thomas K. O'Loughlin Treasurer 14 EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 2.1 Amendment to By-Laws of Saztec International, Inc. 10.15 Employment Contract, Christopher Parker 10.16 Renewal of Revolving Credit Agreement dated April 1, 1998 27 Financial Data Schedule EX-2.1 2 EXHIBIT 2.1 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF SAZTEC INTERNATIONAL, INC. Pursuant to Section 905 the General Corporation Law of the State of California, Gary N. Abernathy and Kent L. Meyer, President and Secretary of Saztec International, Inc., a California corporation, hereby certify as follows: 1. That Gary N. Abernathy is the President and Kent L. Meyer is the Secretary of Saztec International, Inc., a California corporation (the "Corporation"). 2. That on April 30, 1997, pursuant to Section 902 of the General Corporation Law of the State of California, the Board of Directors of the Corporation duly adopted the following resolution, declared its advisability and directed its submission to the stockholders for consideration and approval: WHEREAS, the Board of Directors of the Corporation have decided that it is in the best interests of the Corporation to effect a reverse stock split of the common stock of the Corporation and, in conjunction therewith, an increase in the authorized number of shares of common stock of the Corporation; NOW, THEREFORE, BE IT RESOLVED, that the Articles of Incorporation of the corporation shall be amended by deleting the present Article FOURTH thereof in its entirety, and inserting in its place a new Article FOURTH as follows: "FOURTH: (a) Upon the effectiveness of this amendment each of the issued and outstanding shares of common stock of the Corporation shall be, and hereby is, automatically reclassified as and converted into shares of common stock of the Corporation on the basis of one (1) share of newly issued common stock for each four (4) shares of common stock held by the Corporation's shareholders prior to the filing of this amendment. Any fractional shares created by this 1-for-4 reverse stock split shall be canceled and paid in cash to the shareholder upon the issuance of the shareholder's stock certificate, calculated in accordance with the closing trading price for the Corporation's common stock on the date this amendment is filed. (b) The Corporation shall have authority to issue two classes of stock, 1,000,000 shares of preferred stock ("Preferred Stock"), and 10,000,000 shares of common stock ("Common Stock"). (c) The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the number of shares of any series of Preferred Stock and to determine the designation of any such series. The Board of Directors is also authorized to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly-unissued series of Preferred Stock and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series." FURTHER RESOLVED, that the proposed amendment to Article FOURTH of the Corporation's Articles of Incorporation be submitted to a vote or consent of the shareholders of the Corporation in accordance with Sections 601 and 603 of the California General Corporation Law; FURTHER RESOLVED, that the Board of Directors recommends to the shareholders that they vote or consent in favor of the proposed amendment; FURTHER RESOLVED, that the officers of the Corporation are hereby authorized and directed to prepare a Consent Solicitation Statement for the solicitation of consents in favor of the proposed amendment to Article FOURTH of the Corporation's Articles of Incorporation in accordance with Sections 601 and 603 of the California General Corporation Law, to file the Consent Solicitation Statement and any other solicitation materials with the Securities and Exchange Commission, and to take such other actions and to prepare and file such other consents, notices, filings and certificates as may be necessary or desirable in the judgment of any officer of the Corporation to effectuate the consent solicitation and to obtain approval of the shareholders of the proposed amendment. 15 3. The foregoing amendment to the Articles of Incorporation of the Corporation has been approved by the required vote of the outstanding shares of the Corporation, pursuant to the shareholder consent solicitation described in the foregoing resolutions, in accordance with Section 903 of the General Corporation Law of the State of California. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this Certificate are true and correct. This Certificate of Amendment was executed this 24th day of October, 1997. /s/ GARY N. ABERNATHY - --------------------- Gary N. Abernathy, President ATTEST: /s/ KENT L. MEYER - --------------------- Kent L. Meyer, Secretary 16 EX-10.15 3 EXHIBIT 10.15 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made as of the 7th day of February, 1998, by and between CHRISTOPHER PARKER, an individual ("Parker") and SAZTEC INTERNATIONAL, INC., a California corporation (the "Company"). 1. Employment. The Company agrees to employ Parker and Parker agrees to serve the Company as Chief Executive Officer for a term of forty-one (41) months, commencing on February 9, 1998 and continuing thereafter until June 30, 2001, unless earlier terminated in accordance with the terms hereof. This Employment Agreement may be extended or renewed by mutual written agreement of the parties hereto. 2. Duties. Parker shall perform and be responsible for all of the usual and customary duties of a Chief Executive Officer of the Company, and such other duties as may be reasonably assigned to him from time to time by the Board of Directors of the Company. Parker shall report to, and be responsible to, the Board of Directors of the Company. Parker shall perform all of his work to his highest standards of skill, competence, and efficiency; and Parker shall give his best efforts and skill to further the best interests of the Company. 3. Board of Directors. For so long as Parker is employed under this Employment Agreement, Parker shall have the right to be designated as a candidate at each election of the Board of Directors of the Company, or its successors, and the Company and its successors shall use its best efforts to cause Parker to be elected to its Board of Directors, including, without limitation, placing Parker's name in nomination, recommending him to its shareholders, and including him on proxy solicitations for the election of directors sent to its shareholders. 4. Business Plans. Parker shall prepare or cause to be prepared, for the Fiscal Years beginning July 1, 1998, July 1, 1999 and July 1, 2000, Business Plans for the Company and its subsidiaries, containing such information and projections as are required by the Board of Directors of the Company. The Business Plans shall be submitted to the Board of Directors for their review and approval, in the sole discretion of the Board of Directors, prior to the commencement of each of the foregoing Fiscal Years. 5. Full Time and Attention. Parker shall devote his full business time, attention and energy to the performance of his duties on behalf of the Company exclusively, other than certain charitable work, or as specifically allowed in writing by the Company; provided that Parker may serve as a member of the Boards of Directors of entities other than the Company, if such other entities are not engaged in activities that are competitive with the activities of the Company, and such service does not adversely impact upon the ability of Parker to perform his duties on behalf of the Company, as set forth herein. 6. Relocation. Parker shall perform his duties hereunder at the Company's headquarters in Billerica, Massachusetts; provided that Parker may maintain his residence at his present home until no later than September 1, 1998, at which date he shall have relocated his residence to the headquarters area. Failure of Parker to relocate his residence as set forth herein shall constitute grounds for termination of this Employment Agreement by the Company, for cause. The Company shall reimburse Parker for the ordinary and reasonable costs of his relocation including closing costs pertaining to the sale of his current residence and the purchase of a new residence in the vicinity of the Company's headquarters in Massachusetts, and of his travel and living expenses occasioned by his maintaining his residence outside of the headquarters area until no later than September 1, 1998. Reimbursement for Parker's cost of moving his personal property to the headquarters area shall not exceed Nine Thousand Dollars ($9,000), and shall be determined by his obtaining bids from no less than three (3) reputable moving companies, one of which shall be acceptable to him and the Company. 7. Compensation. (a) Base Salary. Parker's Base Salary will be One Hundred Forty Thousand 17 Dollars ($140,000) per annum for the term of this Agreement, which Base Salary shall be payable every two (2) weeks in arrears. Parker's Base Salary shall be subject to review by the Board of Directors of the Company on an annual basis, and may be increased, but not decreased, by the Board of Directors, at its sole discretion. The Company will take into consideration any significant difference in the cost of living between Parker's current residence area and the area of his new residence. (b) Incentive Compensation. Parker shall receive Incentive Compensation as follows: (i) If and in the event that the Company shall attain the goals and objectives set forth in the Business Plans approved by the Board of Directors, including attaining not less than seventy-five percent (75%) of the Pre-Tax Net Income projected by the Business Plan for the Fiscal Year in question, the company shall pay Parker Incentive Compensation, with respect to such Fiscal Year, in the following amount: For each one percentage point (1%) by which the Pre-Tax Net Profit of the Company exceeds seventy-five percent (75%) of the amount in the Business Plan, Parker will receive bonus compensation equal to two percentage points (2%) of his Base Salary; provided that such amount shall not exceed fifty percent (50%) of the amount of Parker's Base Salary for such Fiscal Year. The amount as determined above shall be paid to Parker within ninety (90) days of the end of the fiscal year. In the event the audited results are not known within ninety (90) days, Parker shall be paid fifty percent (50%) of the anticipated amount of the Incentive Compensation on the ninetieth (90') day, and the balance when known. (ii) If and in the event that the Company shall attain the goals and objectives set forth in the Business Plans approved by the Board of Directors, including attaining more than one hundred percent (100%) of the Pre-Tax Net Income projected by the Business Plan for the Fiscal Year in question, then Parker shall receive additional Incentive Compensation equal to five percent (5%) of the amount by which the Pre-Tax Net Income exceeds the Pre-Tax Net Income in the Business Plan for the Fiscal Year in question. (iii) For the purposes hereof, the Pre-Tax Net Income of the Company shall be as determined by the audit of the books and records of the Company by its independent Certified Public Accountants, after allowance for all bonuses and incentive compensation payable, including the Incentive Compensation payable to Parker hereunder. (iv) The Board of Directors of the Company, in its sole discretion, may grant to Parker, Incentive Compensation in addition to that set forth herein, regardless of the financial or operating performance of the Company. Said additional Incentive Compensation may be in the form of cash, stock options, deferred compensation or other form. (c) Automobile Expense. Employee will use an automobile in the discharge of his duties under this Agreement and shall be entitled to a Five Hundred Dollar ($500) per month car allowance to be paid to Employee in addition to the Base Salary. (d) Stock Options. The Company shall, as of February 9, 1998, grant to Parker, options to purchase One Hundred Forty Thousand (140,000) shares of common stock of the Company pursuant to and in accordance with the terms of, the Company's 1995 Stock Option Plan adopted by the Company's Board of Directors by resolution dated December 9, 1994, including with respect to the Option Price. The Stock Options granted hereunder shall vest as follows: 35,000 Shares February 1, 1999 45,000 Shares February 1, 2000 18 60,000 Shares February 1, 2001 (e) Expenses. The duties of employment may require that Parker incur expenses for meals, lodging, travel and entertainment in the interest of the business. Accordingly, the Company will reimburse Parker for all reasonable expenses incurred by him in connection with the performance of his duties under this Employment Agreement. 8. Termination of Employment by the Company. The Company may terminate this Employment Agreement immediately only for good cause in which case all of Parker's compensation rights as set forth herein which have not vested, shall be terminated, and shall be null and void, and of no further force or effect. Termination of this Employment Agreement by the Company for any reason other than good cause shall be a breach hereof by the Company and Parker shall be entitled to all applicable rights and remedies in connection therewith. For the purposes of this Employment Agreement, good cause shall be deemed to include, but shall not in any manner be limited to, the following acts of Parker: (a) recurring absence from company business without cause acceptable to the Board of Directors of the Company; (b) material breach of any provision of this Agreement; (c) repeated, material and willful failure to communicate with the Board of Directors of the Company regarding the business of the Company; (d) material, willful failure to properly respond to and implement appropriate, express directives of the Board of Directors of the Company; (e) any material act of deceit, misrepresentation or dishonesty in the discharge of Parker's duties; (f) material, improper use or diversion of Company fiunds to personal use; (g) conviction of a felony; provided that good cause shall also include the Company's reasonable determination, following an appropriate investigation, that the Company would suffer material, adverse consequences arising from Parker's indictment for a felony or involvement in any other act of moral turpitude; and; (h) abusive use of drugs and/or alcohol. (i) Prior to any termination hereunder, Parker shall have reasonable written notice and at least thirty (30) days in which to cure the breach, except for instances involving moral turpitude. 9. Termination of Employment by Parker. (a) "Parker may terminate this Employment Agreement in the event the Company should materially breach any provision hereunder including, but not limited to the failure to timely pay any compensation owned to Parker. In such event, Parker shall give the Company reasonable written notice of the claimed breach and at least thirty (30) days in which to cure the same. (b) Parker may also terminate this Employment Agreement if control of the Company should be sold or transferred to another party and Parker shall not be retained or is retained with material or diminished changes in his responsibilities. In such case, the restrictive covenants in Paragraphs 13, 14 and 15 shall be null and void. In the event of sale or transfer of control and Parker is not retained, fifty (50%) of any shares not previously vested under Paragraph 7(d) shall be considered fully vested and earned. 10. Fringe Benefit and Health Care Plans. Parker shall be entitled to participate in the various incentive or "fringe benefit" plans offered by the Company to its executive employees pursuant to the normal policies of the Company, including vacation benefits, disability, life and other insurance benefits and such participation shall not be deemed to reduce or affect the compensation payable to Parker under this Employment Agreement. Specifically, but not in limitation of the foregoing, the Company shall pay the full premium on Parker's behalf for family coverage for Parker and Parker's family under the Company's Health Care Plan. 19 11. Death or Incapacity. Parker's death, illness or incapacity such that he shall be unable to perform his duties hereunder for a period of six (6) consecutive months or more, shall result in automatic termination of his employment hereunder. In the event of termination of Parker's employment hereunder due to death, illness or incapacity, any stock options or grants earned pursuant this Employment Agreement, as of such date, shall be considered to have fully vested as of the date of such death, illness or incapacity. 12. Business Conduct. During Parker's employment by the Company, Parker will not: (a) willfully act contrary to the best interests of the Company, its parent, subsidiary, or affiliated companies, or its employees, in a manner that has a direct, material, adverse impact upon the Company; (b) (other than as specifically allowed in writing by the Company) engage in, or have any financial or other interest in, or render any service in any capacity to any competitor, customer, or supplier of the Company; (c) solicit or encourage a customer of the Company to take its business. elsewhere; or (d)(other than as specifically allowed in writing by the Company) solicit or encourage a Company employee to work elsewhere. 13. Covenant Not to Compete with Company. Parker agrees that: (a) if the Company terminates Parker for good cause at any time during the term of this Employment Agreement; or (b) if Parker terminates his employment with the Company for any reason during the term of this Employment Agreement, then for a period of one (1) year immediately following the termination of Parker's active employment with the Company, Parker will not engage or participate, directly or indirectly, in (i) data conversion and imaging involving the conversion of information from traditional media including paper, microfilm, microfiche and aperture cards to computer usable formats and media; or (ii) any other business activity in which the Company is actively engaged during the course of Parker's employment with the Company, in competition with the business conducted by the Company within the United States of America or the United Kingdom. Said restriction shall not prohibit Parker from owning up to two percent (2%) of the stock of any public company. 14. Agreement of Non-Solicitation. Parker further agrees that for a period of one (1) year immediately following the termination described in Paragraph 8, Parker will not, directly or indirectly, or in concert with any other person or persons, firm, corporation or other entity or in any other manner, solicit, divert or handle or attempt to solicit, divert or handle any active customers of the Company, or entities that were active customers of the Company within one (1) year prior to the date of Termination of Parker's employment with the Company, regardless of where such customers might be located , with respect to any business that consists of or relates or pertains in any way to the business described in paragraph 13(i) and (ii), above. 15. Agreement of Non-Disclosure. Parker agrees that he will not at any time impart to any competitor of the Company or otherwise use for the purpose of competing with the Company any customer lists or other customer information or any confidential information which he may have acquired as an officer, director or shareholder of the Company unless the same shall have otherwise become known to competitors of the Company. 16. Severance. If, and in the event that, Parker's employment hereunder shall be terminated for any reason other than good cause, as defined above, including termination without good cause, or expiration of the term hereof or of any extended term, Parker shall be entitled to severance payments equal to six (6) months of his base salary payable in lump sum within thirty (30) days following the termination of his employment hereunder. Such severance shall be in full satisfaction of Parker's rights hereunder, including those set forth in Paragraph 8 hereof. The Company will provide outsourcing placement services to Parker for a reasonable period of time after termination, to be determined by Company in its sole discretion. 17. Indemnification. The Company agrees to defend any cause of action against 20 Parker as an Officer or Director of the Company and to indemnify and hold him harmless from any loss resulting from such action which is related to the conducting of this responsibilities under the Employment Agreement, to the full extent permitted under the Bylaws of the Company and the Laws of the State of California. The Company shall attempt to obtain Directors and Officers liability insurance at such time as it is judged to be financially reasonable by the Board of Directors of the Company. 18. Equitable Remedies. It is recognized by the parties hereto that irreparable damage will result to Company from any violation of Paragraphs 12, 13, 14 or 15 hereof by Parker. Therefore, Parker agrees that, in addition to any and all other remedies available to the Company, it shall have the remedy of restraining order, injunction, and other equitable relief as may be declared or issued by a court to enforce the provisions of said Paragraphs, and Parker, in any such equitable proceeding agrees not to claim that a remedy at law is available to the Company. 19. Construction. It is agreed that the terms and provisions hereof are severable, and that should any clause or provisions hereof be unenforceable or be declared invalid for any reason whatsoever, this Employment Agreement shall be construed and read as if such invalid or unenforceable clause or provisions were omitted. 20. Savings Clause. Notwithstanding anything to the contrary herein contained and if, and only if, provisions of the type contained in this Paragraph 20 are enforceable in the jurisdiction in question, if any one or more of the provisions contained in Paragraphs, 12, 13, 14 or 15 of this Employment Agreement shall for any reason be held to be excessively broad as to time, duration, geographical scope, activity or subject, said provisions shall be construed by limiting and reducing them so as to be enforceable to the extent compatible with the applicable law as it should then be determined. 21. Company Policies. Parker will be subject to and will adhere to all of the Company's policies applicable to the Company's employees generally, including, but not limited to, all policies relating to standards of conduct, conflicts of interest, and compliance with the Company's rules and obligations. Parker represents that he has no agreements with or obligations to others that in any way conflict with any of his obligations contained in this Employment Agreement. 22. Recovery of Expenses. In the event a dispute arises with respect to this Employment Agreement, the party prevailing in such dispute shall be entitled to recover all expenses including, without limitation, reasonable attorneys' fees and expenses incurred in ascertaining such party's rights, in preparing to enforce, or in enforcing such party's rights under this Employment Agreement, whether or not it was necessary for such party to institute suit. 23. Governing Law. This Employment Agreement shall be governed by and construed in accordance with the laws of the State of Massachusetts. Any claim arising hereunder shall be heard in a court of competent jurisdiction in the State of Massachusetts. 24. Entire Agreement: Amendments. This Employment Agreement is intended to be a complete and exclusive statement of the terms of the agreements between the parties, superseding all prior agreements, and may not be changed or terminated orally. Subject to applicable law, this Employment Agreement may be amended only by a writing executed by all parties hereto. Waiver of any part of this Employment Agreement shall not constitute a waiver of any other part of this Employment Agreement and shall not operate as any future waiver of the same part. 25. Counterparts. This Employment Agreement may be executed in any number of counterparts, all of which, taken together, shall constitute one agreement. IN WITNESS WHEREOF, the undersigned have executed this Employment Agreement as of the day and year first set forth above. 21 COMPANY: SAZTEC INTERNATIONAL, INC., a California Corporation By- /s/ Robert P. Dunne ----------------------- Robert P. Dunne, Chairman PARKER: /s/ Christopher Parker ----------------------- Christopher Parker 22 EX-10.16 4 EXHIBIT 10.16 UMB BANK March 27, 1998 Mr. Gary Abernathy, President Saztec International, Inc. 43 Manning Road Billerica, Massachusetts 01821 Dear Mr. Abernathy: The Discount Committee of UMB Bank, n.a. has reviewed the Authority to Loan (the "Authority to Loan") for Saztec International, Inc. and all of its subsidiaries ("Saztec") on the terms and conditions set forth in this letter. 1. UMB Bank, n.a. hereby extends to Saztec an Authority to Loan in the initial amount of $210,000. Furthermore, the Authority to Loan will decrease $10,000 on the first of each month beginning May 1, 1998. Any remaining outstanding balance is payable in full on October 1, 1998. The above listed amount will be available provided that the outstanding principal amount of all advances under such Authority to Loan at no time exceeds an amount equal to 70% of Saztec's qualified accounts receivable. Qualified accounts receivable shall have the meaning as set forth in a Security Agreement to be executed by Saztec. 2. All advances under the Authority to Loan will be evidenced by a Master Revolving Note on this bank's standard form. Such Note shall be payable not later than October 1, 1998. Accrued interest will be due and payable monthly. 3. All advances under the Authority to Loan are subject to Saztec being in full and complete compliance with all terms and conditions stated in this letter at the time of each such advance and the continuation of extensions of credit are subject to Saztec being in full compliance with all terms hereof at all times. 4. All advances under the Authority to Loan will be secured by all accounts receivables of Saztec, now owned or hereafter existing, notwithstanding the 70% of qualified accounts receivable basis for making advances, and by all inventory, machinery, equipment, furniture, fixtures and all common stock of all subsidiaries of Saztec now owned or hereafter acquired or created. PO. Box 419226. Kansas City, Missouri 64141-6226 (816)860-7000 Internet: http://www.umb.com 23 UMB 5. Saztec will continue to maintain a lockbox for the receipt of all accounts receivable payments over which this bank has sole access and also a cash collateral account with this bank into which all accounts receivable payments will be deposited. 6. All advances under the Authority to Loan shall bear interest per annum at 4% over this bank's prime rate of interest adjusted daily. For purposes hereof, this bank's prime rate of interest shall be that rate of interest which it states from time to time, to be its prime rate of interest. 7. Each extension of credit under the Authority to Loan shall be subject in the sole discretion of this bank, to the occurrence of no adverse material change in (i). the financial condition of Saztec or (ii) the aging or collectability of its accounts receivables. 8. This bank must at all times have a first priority perfected security interest in all personal property of Saztec and all proceeds of all the foregoing and all common stock of all subsidiaries of Saztec. 9. At all times, the consolidated net worth of Saztec must be at least equal to $500,000, the calculation of such to be performed in accordance with generally accepted accounting principals, consistently applied. 10. At all times, the ratio of consolidated total indebtedness to consolidated net worth shall not exceed 8.00:1, the calculation of such to be performed in accordance with generally accepted accounting principals, consistently applied. 11. Saztec must provide this bank with monthly financial statements and accounts receivable listing and agings and a borrowing base certificate in form and substance acceptable to this bank not later than twenty (20) days following the end of each month certified by borrower. Such financial statements to include, at a minimum, a balance sheet and an income statement. Year end statements are to be prepared by a certified public accounting firm acceptable to the Bank and be of an audit quality. 24 UMB 12. Should the terms of this letter and any terms of any Promissory Note or Security Agreement executed or continued in conjunction herewith be in conflict, then the terms of any such Note or Security Agreement shall prevail. 13. All documentation evidencing the Authority to Loan and any collateral therefore shall be on this bank's standard forms and must be satisfactory in all respects to this bank and its attorneys. 14. All costs incurred by this bank in extending credit under the Authority to Loan must be paid by Saztec. 15. This letter supersedes any and all prior agreements, whether written or verbal, between Saztec and this bank relating to the subject matter hereof except existing Promissory Notes, Security Agreements and financing statements. By signing below, you and this bank agree that there are no unwritten agreements between us relating to the transactions proposed hereunder. 16. STATUTORY STATEMENT MADE PURSUANT TO MO. REV. STAT. 432.045. Oral agreements or commitments to loan money, extend credit or to forebear from enforcing payment of a debt, including promises to extend or renew such debt, are not enforceable. To protect Saztec International, Inc. and to protect UMB Bank, n.a. from misunderstanding or disappointment, any agreements we reach concerning such matters are contained in this letter and the documents referred to herein, which are the complete and exclusive statements of the agreement between us, except as we may later agree in writing to modify it. If you agree to the above terms and conditions, kindly acknowledge the same by signing in the space provided for that purpose below and return the original of this letter to the undersigned. Sincerely, UMB Bank, n.a. 25 UMB By: /s/ TRAVIS J. BURNS ------------------- Travis J. Burns, Assistant Vice President The undersigned hereby acknowledges and agrees to all the terms and conditions stated in the foregoing letter. SAZTEC INTERNATIONAL, INC. By: /s/ GARY N. ABERNATHY --------------------- Gary N. Abernathy, President Dated: 4/1/98 ADVANCED AUTOMATION ASSOCIATES, INC. By: /S/ GARY N. ABERNATHY --------------------- Gary N. Abernathy, President Dated: 4/1/98 26 BORROWER UMB 2020300 (R 6191) All States SAZTEC INTERNATIONAL, INC., ADVANCED UMB AUTOMATION ASSOCIATES, INC. MASTER. 43 MANNING RD NOTE BILLERICA, MA 01821 **See attached addendum
OFFICER INTEREST PRINCIPAL FUNDING MATURITY CUSTOMER LOAN NUMBER INITIALS RATE AMOUNT/CREDIT LIMIT DATE DATE NUMBER TJB 12.500% $210,000.00 04/01/98 10/01/98 3904321 82658 RENEWAL #82658
FOR VALUE RECEIVED, the undersigned Borrower (the "Undersigned" means each maker and each endorser, and if more than one, each shall be jointly and severally liable hereunder) promises to pay to the order of Lender, at the offices set forth above or at such other place as the holder hereof may from time to time designate In writing, ON DEMAND, but If no Demand, on OCTOBER 1, 1998 the principal amount of TWO HUNDRED TEN THOUSAND AND N01100 DOLLARS ($ 210,000.00), or such other lesser amount as shall be noted as the Unpaid Principal Balance on the Schedule of Disbursements and Payments of Principal Included herein or attached hereto pursuant to the authority set forth herein, together with interest on the unpaid principal balance hereof from time to time outstanding from date(s) of disbursement(s) until Maturity (as herein defined) at the rate (the "Loan Interest Rate") indicated below: Daily Variable Rate. From the date hereof until the first Adjustment Date (as herein defined) the Loan Interest Rate shall be TWELVE AND 500/1000 percent (12.500 %) per annum. The Loan Interest Rate shall be adjusted each day to a rate equal to FOUR AND NOI 1000 percentage points ( 4,000 %) Above the Index Rate (as herein defined) in effect as of that day. The Lender's Index Rate for this Note shall be defined as: UMB BANK, n. a . PRIME RATE Accrued interest shall be payable Monthly. The term "Maturity" shall mean OCTOBER 1, 1998, or any earlier date on which payment hereunder is due pursuant to any demand or acceleration rights provided in this Note. The term "Index Rate", if applicable to this Note, shall mean that rate of interest per annum determined from time to time by Lender as Its base or index rate for loans to commercial borrowers. Such base or index rate does not necessarily reflect the rate that Lender charges Its best or most creditworthy customers. It the Lender is precluded by law or otherwise from using the above base or Index rate, the term "Index Rate" shall mean that substitute Index rate selected by Lender in place of its base or index rate, which substitute Index rate shall be comparable to Lender's base or index rate provided for herein. Interest hereunder shall be computed on the basis of days elapsed and assuming a 360-day year. Each payment received shall be applied first to accrued interest, and then to a reduction of the principal sum and any expense or other sums owed under this Note, or in any other order as determined by Lender in Lender's sole discretion and as permitted by law. Any sum remaining unpaid after Maturity shall thereafter bear interest at a rate (the "Default Interest Rate") which shall be at all times TWO AND NO/1000 percentage points ( _2,000 ___________ %) in excess of the Loan Interest Rate (adjusted, if applicable, as provided abov6) that would have been applicable-but for such Maturity. If not paid at Maturity, Interest thereafter shall be compounded monthly. The privilege Is hereby reserved to prepay without penalty all or any part of the outstanding amount due hereunder at any time prior to Maturity. If at any time prior to Maturity the outstanding principal balance due hereunder is less than the face amount of this Note, the undersigned, or any of them, may from time to time until Maturity request, and Lender may in Its sole discretion, make further disbursements hereunder which shall be evidenced by this Note; provided, however, the aggregate amount of all principal amounts outstanding hereunder shall at no time exceed the face amount of this Note; and provided further, that each and every disbursement made under this Note shall be at the Lender's sole discretion, Lender having made no commitment to make any such disbursements, The principal amount due hereunder shall be the last amount stated to be the Unpaid Principal Balance on the Schedule of Disbursements and Payments of Principal, and the undersigned hereby authorizes any officer of the Lender to make notations on the Schedule of Disbursements and Payments of Principal from time to time to evidence payments and disbursements hereunder. The Lender Is hereby directed by the undersigned to credit all future disbursements, if any, under this Note to account number(s) carried on the books of Lender in the name(s) of SAZTEC INTERNATIONAL, INC., ADVANCED AUTOMATION ASSOCIATES, INC, and the undersigned agrees that the Lender or holder hereof may make disbursements, at Its discretion, upon oral or written Instructions of any of the undersigned, or any other person(s) authorized by any of the undersigned. 27 Notwithstanding anything contained herein to the contrary, In no event shall Interest accrue under this Note, before or after Maturity, at a rate In excess of the highest rate permitted by applicable law, and If Interest (including any charge or fee held to be interest by a court of competent jurisdiction) In excess thereof shall be paid, then the excess shall constitute a payment of, and be applied to, the principal balance hereof, or at Lender's option, shall be repaid to the undersigned. The undersigned warrants and represents that all proceeds of the loan evidenced by this Note are to be used solely for business or agricultural purposes, and not for personal. family or household purposes. The undersigned agrees that If the proceeds are to be used for agricultural purposes, such proceeds will be used only for the specific operating purposes described to Lender by the undersigned, and not for the acquisition of fixed assets or capital expenditures. No collateral security securing this Note will be sold unless Lender Is first notified and approves in writing of such sale. As security for payment of all amounts due under this Note and all renewals and extensions hereof, and for the payment of all other present or future indebtedness and obligations to the Lender of any party liable hereon, however and whenever created, arising or evidenced, direct or indirect, contingent, secured, unsecured, matured or not yet due, the undersigned pledges and grants to Lender a lien and security Interest In all indebtedness of Lender to any of the undersigned, including (without limitation) any moneys, credit balances or deposits (general or special) due from or standing on deposit with the Lender, which belongs to, is in the name of, or is subject to withdrawal by, any party liable hereon, whether( now existing or hereafter arising or deposited, and in all items, moneys, Instruments, certificates of deposit, securities and other personal property of or In the name of any of the undersigned now or hereafter in the possession or control of, or in transit to, the Lender for any purpose and in any capacity (but excluding however from the foregoing any accounts or deposits held in or by any trust qualified under sections 401 (a) or 408 of the Internal Revenue Code of 1986), Including all proceeds and products thereof and all accessions and accruals thereto and all dividends, rights, payments, shares and property received in respect thereto, the undersigned further agreeing that the aforesaid Indebtedness (if any) of Lender to any of the undersigned may, at any time that all or any part of this Note remains unpaid (whether before or after Maturity), be held or applied to the payment of this Note by the holder hereof. Nothing herein shall in any way limit any of Lender's rights of setoff. This Note may also be secured by other collateral in which the undersigned or others may have granted a security interest or lien to Lender, including, without limitation, the following: ALL ACCOUNTS RECEIVABLE & INVENTORY AS FURTHER DESCRIBED IN SECURITY AGREEMENT DATED 10-7-97, EQUIPMENT, FURNITURE & FIXTURES AS FURTHER DESCRIBED IN SECURITY AGREEMENTS DATED 4-7-92, 9-25-92, & 2-15-93. ALL STOCK CERTIFICATES, BONDS, RECEIPTS, CONFIRMATIONS AND SIMILAR DOCUMENTS AS FURTHER DESCRIBED IN SECURITY AGREEMENTS DATED 9-25-92 & 12-15-94. ALL COMMISSION RECEIVABLES AS FURTHER DESCRIBED IN SECURITY AGREEMENT DATED,10-8-93. All security Interests and liens granted to the Lender by the undersigned, together with all other provisions relating thereto, shall be deemed a continuing agreement and shall continue In full force and effect (and Lender may retain any and all of the aforesaid collateral security and proceeds thereof, irrespective of the payment In full of the Indebtedness evidenced by this Note) until all Indebtedness secured thereby has been repaid and performed in full. It is intended that the above security Interests and liens secure all of each of the undersigned's existing and future indebtedness to Lender of all types and nature, including indebtedness unrelated or dissimilar to the Indebtedness evidenced by this Note. If this Note Is secured by mortgages) or deed(s) of trust, such mortgages) or deed(s) of trust is dated and is a lien on real property described therein, located in the State of _____ and, If previously recorded, recorded as Document Number In ________ with the _____________ of Deeds of County, ____________________________________ . The undersigned agrees to give to Lender upon Lender's request, from time to time, such other and further security as Lender, In its sole discretion, may deem necessary or appropriate, such additional security to become collateral security for this Note under the provisions hereof. Presentment, demand, notice of nonpayment, dishonor, protest, notice of protest, notice of dishonor or default, and any and all lack of diligence and suit are hereby waived by all parties liable hereon. The undersigned and each endorser, guarantor, surety or other person who may now or hereafter be liable for the payment of this Note, by executing, endorsing, guaranteeing or assuming this Note, jointly and severally consent and agree to all of the terms and conditions herein, and without limitation of the foregoing and without affecting their liabilities hereunder or under any other document or Instrument, agree and consent without further notice to (I) all renewals, deferrals, extensions and modifications hereof, (II) the Impairment, alteration, compromise, acceleration, extension of change In the time or manner of the payment of any of the undersigned's Indebtedness to Lender, (III) the Impairment, substitution, exchange or release at any time of all or any part of any collateral security or any guaranty for this Note, (IV) the release of. or Impairment of, the right of recourse against, any of the undersigned or any endorser, guarantor, surety or any other person now or hereafter liable herein, (V) the substitution of extension or renewal notes for this Note, and (VI) the modification of 28 any terms hereof or of any mortgage, deed of trust or other agreement now or hereafter given In connection with or as security for this Note. To the full extent (if any) permitted by applicable law, the undersigned agrees to pay, and to indemnify the Lender from and against, all costs, charges, expenses, judgments, fines, penalties, collection agency fees and reasonable attorneys fees Incurred by the holder in: (a) collecting this Note; b) enforcing rights with respect to or realizing upon any collateral security therefor; (c) defending any action brought against the Lender with respect to this Note, any matter relating thereto or to any relationship or transaction between Lender and any of the undersigned; or (d) complying with, or failing to comply with, any Environmental Regulations (as herein defined) including abatement and cleanup costs, Any sums paid by the holder for any such expenses shall be immediately due and payable by the undersigned and shall bear interest at the rate then applicable to any outstanding principal hereunder from the date advanced until paid. The occurrence of any of the following shall constitute an "Event of Default": (i) default In the payment of any sum due hereunder, or in the payment or performance of any other obligation of any of the undersigned to Lender or the occurrence of any default by any of the undersigned pursuant to any obligation or undertaking under any security agreement, assignment, pledge agreement, deed of trust, mortgage or other Instrument or document governing or relating to the Indebtedness evidenced hereby or granting or providing for a security Interest, pledge or other lien as security for any obligations of any of the undersigned to Lender (including, but not limited to, the Indebtedness evidenced by this Note); (ii) the occurrence of any adverse development with respect to the financial condition of any of the undersigned or any other person or entity ("Guarantor") who Is directly or Indirectly liable for any of Indebtedness evidenced by this Note, which materially affects the ability of any of the undersigned or such Guarantor to perform their respective obligations to Lender; (iii) any material representation or warranty made by any of the undersigned or any Guarantor to Lender being untrue, inaccurate or Incomplete as of the day it was made or given; (iv) the death, dissolution or termination of existence of any of the undersigned or any Guarantor or the failure of any of the undersigned or any Guarantor to pay debts as they mature, the appointment of a receiver for any part of the property of any of the undersigned or any Guarantor, an assignment for the benefit of creditors by any of the undersigned or any Guarantor, or the commencement of any proceedings under bankruptcy or Insolvency laws by or against any of the undersigned or any Guarantor; (v) a levy, attachment, restraint or other legal process filed against any of the undersigned or any Guarantor or any collateral security securing this Note; (vi) as a result of Its reasonable determination that any collateral security given for this Note is impaired or has a value Insufficient to adequately secure the obligations of the undersigned secured thereby, Lender has requested additional collateral and such additional collateral has not been promptly provided by the undersigned or a Guarantor, of a type and In the manner satisfactory to Lender; (vii) that subsequent to the date of this Note (or any predecessor note(s) for which this Note constitutes a renewal, extension or refinancing) there has occurred a 'Change of Control' In any of the undersigned that is a Corporation or Partnership (for purposes of this Note, a "Change of Control" is deemed to have occurred upon the transfer, directly or Indirectly, in one or more transactions, of any general partnership interest or of TEN AND NO@1000 percentage points ( 10. 000 %) or more of any class of voting stock of a corporation or the right to vote or control such stock or partnership Interest, or if the percentage of a corporation's issued and outstanding shares that are held by any one shareholder changes (for any reason) by more than TEN AND N0/1000 percentage points ( 10.000 %) or (viii) Lender has deemed itself insecure with respect to the undersigned's indebtedness under this Note or with respect to any of the undersigned's other obligations to Lender. Upon the occurrence of any Event of Default, Lender may, at Its sole option and without limitation on the demand feature of this Note and without notice or demand: (A) declare the entire principal sum owed hereunder and all other Indebtedness of the undersigned to Lender, Immediately due and payable; (B) appropriate and apply toward the payment of the undersigned's obligations to Lender (including, but not limited to, the Indebtedness evidenced by this Note), In such order of application as it elects, any or all balances, credits, deposits, accounts or moneys of or In the name of any of the undersigned then or thereafter with Lender In any capacity; and (C) exercise, In addition to all other rights hereunder or under any other applicable agreements and Instruments, its rights under applicable law, Including those of a secured party under the Uniform Commercial Code of the state in which Lender's office Identified above is located. Upon the occurrence of an Event of Default described In clause (iv) of the Immediately preceding paragraph, this Note shall automatically and immediately become due and payable without notice or demand. The failure of the Lender to exercise any option or right or remedy shall not preclude the Lender from exercising any other right or remedy Lender may be entitled to exercise upon the occurrence of any Event of Default hereunder, and shall not constitute a waiver of such option or any other right at any time thereafter. Lender's acceptance of a partial payment of any sum due hereunder after any Event of Default or after Maturity, shall not rescind, waive or otherwise affect any such Event of Default or Maturity or any acceleration or any other exercise by Lender of any of Its rights hereunder or under any other documents or applicable law. The undersigned agrees that time is of the essence. If any provision of this Note violates the law or Is unenforceable, the other provisions of this Note shall remain valid. 29 The undersigned shall furnish to Lender such Information and reports regarding any collateral security, the undersigned's financial condition and operations, and such other matters as Lender may from time to time reasonably request. Specifically, and without limitation on the foregoing, the undersigned shall provide to Lender upon reasonable request, current financial statements for each of the undersigned and each Guarantor Including, but not limited to, balance sheets and profit and loss statements. The undersigned shall comply with all federal, state and local laws, statutes, rules, regulations, standards, ordinances and orders pertaining to the environment, hazardous substances, pollutants or contaminants ("Environmental Regulations") and shall Immediately deliver to Lender copies of any notice or other communication received by any of the undersigned alleging a violation of, or a failure to maintain any permit or license required by, any Environmental Regulations. The undersigned covenants, represents and warrants to Lender that any property now or hereafter or previously owned or operated by any of the undersigned, has not been, and will not be, used by any of the undersigned, or to the best knowledge and belief of each of the undersigned, by any prior owner or operator, to refine, produce, store, handle, process or transport any hazardous substance, pollutant or contaminant except in full compliance with all applicable Environmental Regulations, and that any substance disposed of off-site by any of the undersigned have been, and will be, disposed of in accordance with all applicable Environmental Regulations. The loan evidenced hereby has been made, and this Note has been delivered, at Lender's office at the address indicated above, and such loan, this Note and the rights, obligations and remedies of Lender and the undersigned shall be governed by and construed in accordance with the laws of the state in which Lender's office identified above Is located. All obligations of the undersigned, an the rights, powers and remedies of Lender, expressed herein shall be in addition to, and not In limitation of, those provided by law or in any written agreements or Instruments (other than this Note) relating to any obligation of any of the undersigned to Lender, the loan evidenced by this Note or any collateral security. Borrower shall not a) voluntarily transfer any assets Into trust or, b) if already owned In trust, shall not voluntarily transfer title to such trust assets to any other person or entity, without giving Lender at least 30 days prior written notice thereof. It is the Intent hereof that each of the undersigned (if more than one) remain liable as principal until the full amount of all indebtedness evidenced by this Note has been paid, notwithstanding any act, omission or event that might otherwise operate as a legal or equitable discharge or defense with respect to any of the undersigned. No setoff of counterclaim of any kind claimed by any person liable under this Note shall stand as a defense to the enforcement such person. It being agreed that any such setoff or counterclaim must be maintained by separate suit. The undersigned and Lender hereby agree to trial by court and Irrevocably waive jury trial In any action or proceeding (Including but not limited to, any counterclaim) arising out of or In any way relating to or connected to this Note, any relationship or transaction between any of the undersigned and Lender, the origination, administration or enforcement of the Indebtedness evidenced or secured by this Note, or any other matter. Additional Terms: ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENTS OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (LENDER) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. Borrower: SAZTEC INTERNATIONAL, INC. Borrower: Advanced Automation Associates, Inc. By: /s/ GARY N. ABERNATHY By: /s/ GARY N. ABERNATHY --------------------- --------------------- Title: President Title: President Address: 43 MANNING RD. BILLERICA, MA 01821 ADDENDUM It is hereby agreed by UMB Bank, n.a. and Saztec International, Inc. and Advanced Automation Associates, Inc. that the dollar availability of this Master Note shall decrease Ten Thousand dollars on the first business day of each month beginning May 1, 1998 until maturity at October 1, 1998. 30 UMB Bank, n.a. Saztec International, Inc. By /s/ TRAVIS J. BURNS /s/ GARY ABERNATHY ------------------------ ------------------ Travis J. Burns, Gary Abernathy, Assistant Vice President President Advanced Automation Associates, Inc. By /s/ GARY N. ABERNATHY ------------------------- Gary N. Abernathy, President 31 EX-27 5
5 9-MOS JUN-30-1998 JUL-01-1997 MAR-31-1998 550,734 0 2,037,421 57,223 249,283 2,964,067 2,533,367 3,099,522 3,669,477 2,446,507 36,508 0 0 12,430,811 (96,024) 3,669,477 0 5,850,130 0 4,616,629 1,483,552 0 35,541 (283,592) 14,368 (299,960) 0 0 0 (299,960) (0.07) (0.07)
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