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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report: September 20, 1996
ASA INTERNATIONAL, LTD.
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(Exact name of registrant as specified in its charter)
Delaware 0-14741 02-0398205
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
10 Speen Street, Framingham, Massachusetts 01701
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number Including Area Code: (508) 626-2727
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TABLE OF CONTENTS
FORM 8-K
September 20, 1996
Item Page
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Item 5. Other Event 1
Item 7. Exhibit 1
Signatures 2
Exhibit E-1
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Item 5. Other Event
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Effective August 30, 1996, the Company entered into an asset purchase
agreement (the "Agreement") with Progressive Computer Systems, Inc.,
("Progressive"), a Washington corporation. Under the terms of the Agreement, the
Company will acquire all of the assets of Progressive, with the exception of any
causes of action running to Progressive, and will assume certain specified
liabilities of Progressive. The purchase price paid by the Company is $400,000,
which shall be adjusted downward in accordance with any reduction in
Progressive's accounts receivable at the time of closing as compared to
Progressive's accounts receivable on August 30, 1996. During the period prior to
the closing, the Company will make operating advances to Progressive, which will
be deducted from the purchase price at closing in the event they are not repaid,
and will license for sale certain software owned by Progressive. After closing,
the Company intends to use the assets acquired from Progressive in the operation
of its Tire Systems division.
Item 7. Exhibit
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The following exhibit is filed herewith:
2 Agreement by and between the Company and Progressive dated as of
August 30, 1996.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ASA International, Ltd.
By:/s/ Alfred C. Angelone
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Alfred C. Angelone
Chief Executive Officer
Date: September 20, 1996
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EXHIBIT 2
ASSET PURCHASE AGREEMENT
This agreement is executed in duplicate this 30th day of August, 1996, by
PROGRESSIVE COMPUTER SYSTEMS, INC., a Washington corporation whose principal
place of business is located at Suite 500, 12515 Willows Road, Kirkland,
Washington 98034 ("Seller"), and ASA INTERNATIONAL, LTD., a Delaware corporation
whose principal place of business is located at 10 Speen Street, Framingham,
Massachusetts 01701 ("Buyer").
I. RECITALS
A. Seller is engaged in the business of developing, selling and maintaining
certain computer software accounting modules consisting of inventory control,
order entry, point of sale, accounts payable, accounts receivable, payroll,
general ledger, Prolink and RPM designed for the wholesale and retail sale of
vehicle tires.
B. Buyer desires to buy, and Seller desires to sell, substantially all of
Seller's assets pursuant to the terms of this agreement.
C. Buyer and Seller have agreed that a sale of the assets of Seller, on the
terms set forth below, is in the best interests of all parties, including the
creditors of Seller. Upon execution of this Asset Purchase Agreement by both
parties, Buyer has agreed to provide interim financing on the terms and
conditions set forth herein.
II. AGREEMENT
The parties agree as follows:
1. Progressive Computer Systems, Inc. shall file a voluntary liquidating
receivership in the King County Superior Court and shall present this Asset
Purchase Agreement to the duly appointed receiver who shall, in turn, seek
approval of the terms of this Asset Purchase Agreement by the Court.
2. FORM OF TRANSFER. The sale of the Assets under this Asset Purchase
Agreement shall be free and clear of all liens and encumbrances, except as
expressly set forth herein. The sale shall be approved by the receivership
court in a form acceptable to Buyer in its sole and absolute discretion.
3. ASSETS. Seller agrees to sell to Buyer and Buyer agrees to purchase from
Seller the following assets:
a) All furniture , fixtures, equipment, artwork, signs, vehicles, and
other tangible personal property of the Seller, including, but not
limited to all of the assets identified in Exhibit A attached hereto;
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b) All cash and accounts receivable existing at the time of Closing,
including all cash and accounts receivable arising from the activities
of the Buyer after the execution of the Asset Purchase Agreement;
c) All inventory and equipment acquired by Seller after execution of the
Asset Purchase Agreement;
d) All trademarks, service marks, logos owned and/or registered by
Seller, as well as the telephone numbers used by Seller in the
operation of the Business;
e) All prepaid expenses or deposits existing at the time of Closing;
f) All customer lists, vendor lists, trade secrets, know-how, and other
proprietary information used by Seller in the operation of the
business;
g) All non-competition agreements held by Seller with former employees,
to the extent such agreements can be assigned;
h) All books and records relating to the operation of the Business;
i) All governmental permits, licenses, authorizations and approvals
relating to the operation of the Business to the extent transferable
to Seller.
j) All computer program source and object code (and assignment of site
licenses issued by ___________________________), operating and
training manuals and the copyrights pertaining to such written and
electronic works.
4. EXCLUDED ASSETS. Seller expressly excludes the following assets from this
Asset Purchase Agreement:
a) Causes of Action, including avoidance actions that may be brought by a
receiver under Washington State law.
b) leasehold interests except as specifically identified herein
5. PURCHASE PRICE AND PAYMENT TERMS. In consideration for the sale of the
Assets by the Seller to Buyer, Buyer agrees to pay the Seller or assume the
following obligations:
a) PURCHASE PRICE. The purchase price for the Assets shall be FOUR
HUNDRED THOUSAND DOLLARS ($400,000). To the extent that the gross
amount of the Accounts Receivable is less at closing than the gross
amount of the Accounts Receivable as of the date of execution of this
Asset Purchase Agreement by both parties, the purchase price will be
adjusted downward accordingly.
b) PAYMENT TERMS. The purchase price shall be due and payable at closing.
Payment shall be made by immediately available funds.
c) ASSUMPTION OF LIABILITIES. The following liabilities of the Seller
will be assumed by the Buyer:
i) Seller's obligations under its lease for non-residential real
property for the premises located at Suite 500, 12515 Willows
Road, Kirkland, Washington 98034; on the express condition that
the landlord, agrees, in
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writing, to amortize any and all delinquent rent over the
remaining term of the lease.
ii) Seller's obligations pursuant to the telephone system lease with
Rockford Industries, Inc.
iii) As a material part of such assumptions, Buyer shall use
commercially reasonable efforts, which may but need not include
offering a replacement guarantee, to obtain the release of
personal guarantees given by Mary Winter and Doug Winter, Jr.
with regard to such leases. Additionally, Buyer shall use its
commercially reasonable efforts to obtain the release of the
personal guaranty given by Douglas Winter, Sr. to Penril. Seller
understands that Buyer cannot assure Seller that it will be
successful in obtaining a release of the personal guarantees.
iv) Buyer shall assume all responsibility for providing support to
Seller's customers who have prepaid for annual support pursuant
to maintenance agreements between such customers and Seller.
BUYER EXPRESSLY DOES NOT ASSUME ANY LIABILITY OR OBLIGATION OF SELLER OF
ANY KIND OR NATURE, HOWEVER, OR WHEVER ARISING, EXCEPT FOR THE OBLIGATIONS OF
SELLER DESCRIBED IN THIS AGREEMENT.
6. INTERIM OPERATIONS. The parties recognize that a substantial portion of the
value of Seller's assets is derived of its customer good will and customer
list. The Buyer also recognizes that in its current financial condition,
Seller cannot continue to operate in the ordinary course of its business
until closing. Accordingly, before closing, Buyer shall fund Seller's
operations pursuant to the terms of this Section. Seller may request
advances, of up to a maximum of $50,000 per month, to fund shortfalls in
paying current obligations. Such funding shall continue for a period not to
exceed 120 days by Seller making a written request to Buyer, along with a
proposed budget on how the advances are to be spent, on or before the 30th
day of each month, commencing August 30, 1996. Such advances shall be known
as OPERATING ADVANCES. Upon the filing of Seller's petition for voluntary
receivership, the parties shall jointly seek an emergency order of the
court providing for a cash collateral loan having super priority status.
Such loan shall be secured by the Seller's accounts receivable, including
royalties owed by the Purchaser pursuant to the source code license between
the parties. Seller shall use Operating Advances to pay its current
obligations as the same come due. Current obligations are those coming due
within thirty (30) days. CURRENT OBLIGATIONS include current portions of
long-term debt, leases and executory contracts. To the extent that
Operating Advances are not repaid with as provided herein, such Operating
Advances shall be treated as prepayment of the purchase price, and shall be
applied against the purchase price.
a) CONTINGENCY LOAN. In the event that this transaction fails to close
for any reason, the Operating Advances shall be deemed to constitute
loans to the Seller. Upon termination of the parties' right and
obligation to close pursuant to Section 13
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below, Seller shall execute a promissory note to Purchaser
substantially in the form attached as Exhibit B ("Operating Advance
Note"). Simultaneously with execution of the Operating Advance Note,
Seller shall grant Purchaser a security interest in Seller's contract
rights, accounts and accounts receivable by executing a security
agreement substantially in the form attached as Exhibit C and a UCC
Form-1 Financing Statement.
b) INTERIM RECEIVABLES. During the period of interim operations, the
parties contemplate that Seller will continue selling its products and
services and will, as a consequence, continue to book accounts
receivable. Receivables booked during the period between execution of
this agreement and closing shall be known as INTERIM RECEIVABLES.
Collections on Interim Receivables shall be paid to Buyer as received
to repay Operating Advances. The surplus of Interim Receivables over
Operating Advances shall be shared equally between Buyer and Seller,
regardless of whether collected before or after closing. Buyer shall
apply such receipts against Operating Advances made by Buyer. At
closing, or upon termination of this agreement, if closing does not
occur, Buyer and Seller shall share equally the surplus of Interim
Receivables over Operating Advances.
7. SOURCE CODE LICENSES. Buyer understands that Seller has granted certain
non-exclusive, perpetual licenses of its product (including source code) to
certain individuals and entities ("Source Code Licensees"). Such Source
Code Licensees are identified on Exhibit D to this agreement. Seller
represents and warrants that other than the Source Code Licensees, it is
aware of no person or entity who or which hold, or claims to hold, a
license to Seller's source code. Buyer acknowledges that it has had an
opportunity to review the source code licenses granted by Seller to the
Source Code Licensees and agrees to be bound by the terms of such licenses.
8. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller does hereby make the
following warranties, which warranties shall survive closing:
a) TITLE. Other than certain recorded security interests in Seller's
assets, Seller's assets are owned free and clear of any lien, claim or
encumbrance by any person or entity. To the best of Seller's
knowledge, the source code of its products does not infringe upon the
copyrights of any other author. Seller makes no other warranty with
regard to the source code, operating or training manuals.
b) CORPORATE APPROVALS. This transaction constitutes a transaction other
than in the other course of Seller's business. Pursuant to the laws of
the State of Washington, such action requires the assent of two-thirds
of the shares outstanding. Prior to closing, Seller shall represent
and warrant that its shareholders have assented to this transaction,
as required by the laws of the State of Washington and that this is a
binding obligation of the Seller.
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c) FINANCIAL CONDITION. Attached as Exhibit E is, to the best of Seller's
knowledge, a materially accurate financial statement for the period
ending July 31, 1996. Seller recognizes that there is a risk that this
Asset Purchase Agreement may be challenged in Court. In the event of
such creditor attack, Seller and its officers and directors shall
provide reasonable assistance to Buyer in justifying this transaction
as one in which the Seller has entered for the best interests of its
creditors. Failure to provide such assistance shall be a default under
this Asset Purchase Agreement and shall provide a basis for Buyer to
terminate this Asset Purchase Agreement. In the event that the Asset
Purchase Agreement is terminated under this subsection, Seller shall
indemnify, defend and protect Buyer from such charges, claims or
actions.
d) OTHER AGREEMENTS - NON-BREACH. Seller is not a party to any agreement
the performance of which would render its performance of this
agreement impossible or a breach of such other agreement.
e) EMPLOYMENT AGREEMENTS. Other than as disclosed on Exhibit F, Seller is
not a party to any continuing employment agreements, whose obligations
would have to be assumed by Buyer.
f) APPLICATION OF SALES PROCEEDS. Seller shall apply all proceeds of sale
in the normal scheme of priorities under state receivership law. It is
contemplated that this scheme of priorities shall be first, to the
payment of the secured loan obligations of the Seller to Enterprise
Bank in the approximate amount of $100,000.00 and to Arrow
Electronics, in the approximate amount of $10,000.00, and to any other
secured creditors of record; second, to the payment of state and
federal taxes owed by Seller prior to the date of this agreement, in
the amount of $51,941; then to payment of unsecured creditors in
accordance with the priorities established in the receivership.
9. BUYER'S REPRESENTATIONS, ACKNOWLEDGMENTS AND WARRANTIES. Buyer represents,
acknowledges and warrants as follows.
a) CORPORATE AUTHORITY. Prior to closing, Buyer shall represent and
warrant that it is authorized to enter into the transactions
contemplated by this agreement. Buyer, and the individual executing
this agreement on Buyer's behalf, represent and warrant that such
resolution was adopted in accordance with the laws of the Commonwealth
of Massachusetts and Delaware, as may be the case.
b) FUNDS. Subject to the provisions of its loan agreement with CoreStates
Bank, and its approval of this transaction, Buyer has funds to finance
Operating Advances, and on the date of closing will have immediately
available funds to close this transaction.
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c) DUE DILIGENCE. Buyer has conducted such examination of the Operating
Assets as it has deemed necessary and appropriate under the
circumstances. In conducting such examinations, Buyer has not relied
upon any statement or representation of the Seller with regard to any
fact or matter which Buyer has deemed material to this transaction.
d) RISKS. Buyer recognizes that this transaction involves an element of
risk that one or more of Seller's creditors will challenge, before the
receivership court, the sufficiency of the consideration which Buyer
will pay for the Seller's Operating Assets. To the extent that
creditors so challenge this transaction, Buyer shall assume all such
risks and shall indemnify, defend and protect Seller from such
charges, claims or actions.
e) COMPLIANCE WITH LAWS. Buyer has determined that it may consummate this
transaction without obtaining any regulatory approval from the United
States Department of Justice or the Federal Trade Commission, or if
such approvals are required, Buyer will obtain the same prior to
closing.
10. SOURCE CODE LICENSE. Upon execution of this agreement, Seller shall grant
to Buyer a non-exclusive, perpetual, source code license substantially in
the form of Exhibit H attached. Royalty payments due to Seller under such
source code license shall be independent of any and all other financial
obligations arising under this agreement. Such source code license shall
expire upon closing. Royalties accrued prior to expiration shall be payable
to Seller on Buyer's collection of accounts receivable attributable to its
sale of Seller's product. In the event that this transaction fails to close
for any reason, the parties may mutually elect to continue the source code
license. In the event that the parties terminate the source code license,
Buyer shall surrender, at no cost to Seller, a list of all customers to
whom Buyer sold Seller's software product so that Seller may continue to
offer support services to such customers.
11. EMPLOYMENT AGREEMENT. In addition to the payments required by this
agreement and by the Source Code License, upon closing, Buyer shall enter
into a written employment agreement with Mary Winter on terms and
conditions to be agreed upon. Additionally, Buyer shall offer employment
to all other individuals on Seller's payroll of July 31, 1996, upon the
same terms and conditions as those employees were employed by Seller.
12. COVENANT NOT TO COMPETE. As additional consideration for the purchase of
Seller's assets, during the period of interim operations, and for a period
of 36 months following closing, Seller, and its shareholders agree that
they shall not directly, or indirectly, offer any computer hardware or
software product or service to the vehicle tire industry in the United
States of America which competes with the computer software being acquired
pursuant to this agreement. As used in this Section 12, COMPUTER
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SOFTWARE means the current software (including source and object code)
owned by Seller, as well as any modifications, upgrades or enhancements of
such Computer Software.
a) BREACH AND REMEDIES. In the event of any material default of any
provision of this Section 12, Buyer shall be entitled to such
injunctive relief as is reasonably necessary to protect Buyer's
interest in the Operating Assets.
b) LIQUIDATED DAMAGES. In lieu of specific enforcement of this covenant
not to compete, Buyer may, at its election, seek compensation for such
breach. The parties recognize and acknowledge that determining damages
upon breach is difficult and speculative. Accordingly, they desire to
fix the damages to which Buyer is entitled on Seller's breach of this
covenant not to compete. In the event of breach of this Section 12,
Buyer shall be entitled to damages equal to fifty percent (50%) of the
gross sales proceeds of products (hardware and software) and services
sold in violation of this Section 12.
13. CLOSING. Closing shall occur at the offices of Betts Patterson and Mines,
P.S., Suite 800, 1215 Fourth Avenue, Seattle Washington, within ten days
after the Receivership Court approves this transaction. Closing may be
extended from time to time as agreed upon by the parties. At the time of
closing, Buyer shall tender immediately available funds to close in the
form of a wire transfer instruction or cashier's check. Seller shall
deliver a bill of sale, originals and all copies (in all forms of storage
media) of source code for all Software Products to which Seller claims any
authorship or ownership, together with the originals and all duplicates of
owner's manuals, training manuals and the like.
14. MISCELLANEOUS PROVISIONS.
a) APPLICABLE LAW. This Agreement shall be construed in accordance with
the laws of the State of Washington.
b) COMPLETE UNDERSTANDING - MODIFICATION. This Agreement supersedes any
and all other agreements, either oral or in writing, between the
parties hereto with respect to the subject matter hereof, and
constitutes the entire agreement and understanding between the parties
and shall not be modified, altered or changed in any respect unless in
writing signed by both parties.
c) FAILURE TO ENFORCE - Not a Waiver. Failure of either party to enforce
its rights hereunder or in any particular breach shall not be deemed
to constitute a waiver by such party to enforce its rights on any
subsequent breach.
d) NOTICES. In the event that any written notice is required to be given
pursuant to the terms of this Agreement, such notice shall be
delivered by first class mail, postage prepaid, to the addresses
stated at the outset of this agreement. Notices
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given in writing shall be deemed received three days following the
date of posting.
e) AMBIGUITIES. The parties hereto have negotiated each of the terms of
this document. Ambiguities in this document, if any, shall be
reasonably interpreted according to all of the relevant circumstances
and shall not otherwise be construed against either party regardless
of which party may have drafted the ambiguous provision.
f) TIME. Time is of the essence of this Agreement. Any failure by any
party to fully perform that party's obligations at or prior to the
time required by this Agreement shall be conclusively deemed to be a
material breach of this Agreement.
g) BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and their respective heirs, successors, personal
representatives and assigns.
h) EFFECTIVE DATE. This Agreement shall not be effective until all
parties hereto have fully and properly executed this Agreement.
i) LITIGATION EXPENSES. In any controversy, claim or dispute arising out
of, or relating to, this Agreement or the method and manner of
performance thereof or the breach thereof, the prevailing party shall
be entitled to and awarded, in addition to any other relief, a
reasonable sum as litigation expenses, including attorneys' fees. In
determining what is a reasonable sum for attorneys' fees, the actual
amount of attorneys' fees the party is obligated to pay its attorney
or attorneys shall be presumed to be reasonable, which presumption is
rebuttable. For the purposes of this provision, the term proceeding
shall include arbitration, administrative, bankruptcy, and judicial
proceedings, including appeals therefrom.
j) DRAFTING. This Agreement has been carefully negotiated and drafted by
all parties. All parties have had equal opportunity to participate in
its drafting and it shall not be construed in favor of, or against,
any party on the ground that it was drafted by a particular party.
k) EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by each party on separate counterparts,
each of which when so executed and delivered shall be deemed an
original and all of which taken together shall constitute but one and
the same instrument. A facsimile signature of a party, on any
counterpart, shall be treated the same as an original signature.
l) SEVERABILITY. In the event that any provision of this Agreement shall
be declared unenforceable by any court of competent jurisdiction, the
balance of this Agreement shall remain in full force and effect.
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m) ASSIGNABILITY. Neither this Agreement or any duties or obligations
hereunder shall be assignable by either party without the prior
written consent of the other.
n) CAPTIONS. The paragraph headings used in this Agreement are for
convenience of reference only and shall not affect the construction of
any provision of this Agreement.
o) GENDER AND NUMBER. Whenever appropriate to the meaning of this
Agreement, use of the singular shall be deemed to refer to the plural
and use of the plural to the singular, and pronouns of certain gender
shall be deemed to comprehend either or both of the other genders.
p) VENUE. If any legal action should be brought regarding the enforcement
of this Agreement, the parties agree to venue and jurisdiction in the
state or federal courts in the State of Washington, situated at
Seattle, Washington, and waive any claim that the forum for such
action is inconvenient.
Executed on the dates below indicated.
PROGRESSIVE COMPUTER SYSTEMS, INC.
By /s/ Mary Winter
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Mary Winter, President
Dated: August 30, 1996
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ASA INTERNATIONAL, LTD.
By /s/ Alfred C. Angelone
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Alfred C. Angelone, Chief Executive Officer
Dated: August 30, 1996
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LIST OF EXHIBITS
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TO ASSET PURCHASE AGREEMENT BY
AND BETWEEN ASA INTERNATIONAL LTD. ("BUYER")
AND PROGRESSIVE COMPUTER SYSTEMS, INC. ("SELLER")
EXHIBIT A List of Operating Assets
EXHIBIT B Operating Advance Note
EXHIBIT C Security Agreement
EXHIBIT D List of Outstanding Source Code Licenses
EXHIBIT E Seller's Financial Statement as of July 31, 1996
EXHIBIT F List of Current Employment Agreements
EXHIBIT G Resolution of Buyer's Board of Directors Authorizing
Transaction
EXHIBIT H Source Code License between Buyer and Seller
Pursuant to Instruction (2) to Item 601 of Regulation S-K, the exhibits
listed above are omitted. The Registrant agrees to file copies of such exhibits
if so requested by the Securities and Exchange Commission.
