<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission file number:
December 31, 1995 0-14741
- ------------------------- ----------------------
ASA INTERNATIONAL LTD
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 02-0398205
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 Speen Street, Framingham, MA 01701
- ----------------------------------------- ----------
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 626-2727
- ------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
- ----------------------------------------------------------
Title of each class Name of each exchange
- ------------------- on which registered
---------------------
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
- -----------------------------------------------------------
Common Stock, $.01 par value
----------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
As of March 22, 1996, 3,787,517 shares of Common Stock, $.01 par value per
share, were outstanding. The aggregate market value, held by non-affiliates, of
shares of the Common Stock, based upon the average of the bid and ask prices for
such stock on that date was approximately $9,241,541.
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<TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
<CAPTION>
Document Part of Form 10-K Annual
- -------- Report in which Document
is Incorporated
<S> <C>
Report on Form 10-K filed on March 30, 1995 Part IV
Report on Form 10-K filed on March 30, 1994 Part IV
Report on Form 10-K filed on March 30, 1993 Part IV
Report on Form 10-K filed on March 26, 1992 Part IV
Report on Form 10-K filed on March 28, 1991 Part IV
Report on Form 10-K filed on March 30, 1990 Part IV
Report on Form 10-K filed on March 31, 1988 Part IV
Report on Form 8-K filed on August 31, 1995 Part IV
Report on Form 8-K filed on December 30, 1994 Part IV
Report on Form 8-K filed on September 29, 1993 Part IV
Registration Statement on Form S-18
(File number 33-3832-B) Part IV
Registration Statement on Form S-1
(File number 33-15381) Part IV
</TABLE>
3
<PAGE> 3
PART I
ITEM 1. Business
--------
GENERAL
ASA International Ltd. (the "Registrant" or the "Company") provides
networked automation systems and ongoing monthly support to approximately 950
businesses in the United States and Canada. The Company designs and develops
proprietary enterprise and point solution software for the electronic time and
labor recording market, for catalog direct marketers, and for the legal,
international trade, and tire dealer markets. The Company installs this software
on a variety of computers and networks, including Digital Equipment Corporation
("DEC"), IBM Corporation ("IBM"), Hewlett Packard ("HP"), and Unix/Open Systems
hardware platforms and provides implementation, training, and long-term software
and hardware support to its clients.
The Company is comprised of five operating groups and a corporate services
group. The International Trade and Transportation Systems Group provides
integrated hardware and software solutions to customs house brokers, freight
forwarders, and other companies involved in international trade. The Company
believes it is now the leading supplier of computer solutions to customs house
brokers and freight forwarders in the United States. The Company's Business
Systems Group provides electronic time recording solutions for payroll and pay
rules for companies of over 500 employees and over $10 million in sales. The
Tire Systems Group provides integrated hardware and software solutions to
independent tire dealers, wholesalers, and retreaders. The Legal Systems Group
provides integrated accounting and practice management solutions to law firms.
Lastly, the Direct Marketing Systems Group, acquired in August 1993, specializes
in delivering turnkey management systems to consumer and business direct
marketing firms.
The Company, founded in 1969, was organized as a Massachusetts corporation
on December 15, 1982 and was reincorporated as a Delaware corporation on May 5,
1986. As used in this Report, the term "Company" includes ASA International
Ltd., ASA Properties, Inc. ("Properties"), and ASA International Ventures, Inc.
("Ventures"). In 1995, its Massachusetts predecessor and its wholly owned
subsidiaries, ASA Incorporated ("ASA, Inc."), ASA Legal Systems Company, Inc.
("Legal") were merged into their parent corporation, ASA International Ltd.
The Company's consulting and general business systems operations began in
1969 under the direction of the Company's founder and Chief Executive Officer,
Alfred C. Angelone. The Company is a Value-Added Reseller for Digital, and its
International Trade and Transportation Systems, Business Systems, and Direct
Marketing Systems Groups are IBM Authorized Industry Remarketers for the
international trade, data collection, and catalog direct marketing industry
segments.
Except as set forth above, during the past year, there have been no
bankruptcy proceedings, receivership, or similar proceedings with
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respect to the Registrant, nor has there been any merger or consolidation of the
Registrant, and there has been no disposition of any material amount of the
Registrant's assets.
BUSINESS
The following paragraphs describe in greater detail the business conducted
by the Registrant.
International Trade and Transportation Systems
- ----------------------------------------------
The Company's international trade solutions prepare import and export
documentation, support electronic communications (EDI) with U.S. and Canadian
Customs, track the movement of goods and paperwork, and perform invoicing and
general accounting functions. The Company believes it now has the largest number
of users for customs house brokerage systems in the United States. The Company's
customers are located in the United States, Canada, Puerto Rico, Bermuda, and
the Virgin Islands.
The Company installs systems on a range of DEC, IBM, and Unix-based
hardware platforms. The systems range in price between approximately $30,000 and
$500,000. The Company's computer solutions for Canada are similar in scope and
nature to its systems for United States customs brokers.
Business Systems
- ----------------
The Company designs, develops, supports, and markets software to collect
data for time and attendance and labor reporting. The SmartTime(TM) product for
electronic time recording of time and attendance for payroll was introduced in
September 1993. ShopKeeper(TM) is the Company's family of bar code data
collection applications for time and operations management and control. The
SmartTime and ShopKeeper product sets include data collection applications for
time and attendance, labor reporting, work-in-process, inventory movement, and
lot traceability. The SmartTime applications are based on the SmartLink
real-time software for interactive data collection. The Company also supports
legacy manufacturing management and control and accounting software products
based primarily on the DEC hardware platform.
The Company offers a range of consulting services to all of its clients,
including training, implementation support, operations support, custom software
development, and hardware dispatch support.
Tire Systems
- ------------
The Company provides integrated hardware and software multi-user solutions
on DEC and Unix-based systems to independent tire dealers, wholesalers, and
retreaders in the United States and Canada for point-of-sale, work orders,
inventory control, purchasing, and accounting
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functions. The systems range in price between approximately $15,000 and
$200,000.
In September 1988, July 1989, and September 1990, respectively, the Company
acquired Associated Software Consultants Organization, Inc. ("ASCO"), Snyder
Computing Systems, and Computers Northwest ("CNW"), all of which specialized in
supplying systems to independent tire dealers. In recent years, the Company has
consolidated its position in the independent tire dealer marketplace. The
Company believes that it has the largest installed base of independent tire
retailer and distributor multi-user systems in the United States.
Legal Systems
- -------------
The Company provides integrated networked financial management systems for
law firms throughout the United States. The Company's Pyramid product is a
powerful, fully integrated, set of legal specific applications designed to run
on PC networks. The product is written in a fourth generation, fully relational,
SQL compliant database. Targeted at the smaller-sized law firm, the product
compliments the Company's existing offerings to mid and high-end market
segments. In the mid to high-end market, the Company provides client/server
based systems which operate on servers such as the DEC VAX running Open VMS, the
DEC Alpha running OSF1, the DEC Intel-based 433 running SCO Unix, Intel 486 and
586 running DOS, and the HP 9000 running UX. The software applications form a
comprehensive set of all the components necessary to run a modern legal firm,
including accounting, word processing, practice management, and litigation
support. Systems range in price between approximately $25,000 and $500,000.
The Company entered the legal systems marketplace in June 1991 by acquiring
Quorum Legal Systems of Plymouth Meeting, Pennsylvania from Control Data
Corporation. In January 1992, the Company acquired the fixed assets of Legal
Data Systems of Boston, Massachusetts. In November 1994, the Company acquired
certain software products of Precedent Technologies Incorporated of New Hope,
Pennsylvania. The Company has approximately 250 clients in this market.
Direct Marketing Systems
- ------------------------
The Company provides turnkey management systems to consumer and business
catalog and direct marketing firms. Utilizing the IBM AS/400, the Company's
OASIS(SM) and Mozart (SM) products are leading industry standards for order
fulfillment, customer service, and decision support systems. The Company entered
this marketplace in August 1993 when it acquired CommercialWare of Norwood,
Massachusetts. The Company now believes it has an estimated 10% market share in
this marketplace.
Marketing
- ---------
The Company markets its products and services to new prospects and existing
clients primarily using the Company's direct sales force,
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assisted by technical personnel. These personnel are trained in the Company's
product and service offerings and in the operations of the Company's clients.
The Company uses its own personnel, rather than third-party distributors,
because prospects and the Company's clients often lack comprehensive computer
and systems technical expertise and require a "consultative" selling approach,
involving a long selling cycle.
More importantly, the Company's objective is to develop a direct, long-term
relationship with each client. This marketing approach requires substantial,
specialized knowledge of the requirements of the Company's clients generally not
available from third-party distribution arrangements. These requirements result
from the intangible nature of applications software and related services, the
sophistication of the Company's products and the need for each client to
understand how the Company's products and services will work to meet its
requirements. The Company's sales force is supported by marketing personnel who
develop advertising and marketing campaigns; produce product literature,
periodic newsletters, and direct mail campaigns; arrange attendance at trade
shows and conventions; and sponsor seminars.
Marketing to a new prospect consists of identifying the prospect,
qualifying the prospect and, if the prospect is qualified, preparing and
presenting a sales proposal. In the international trade, tire, direct marketing,
and legal markets served by the Company, the total domestic market is well
defined through the respective industry and professional organizations. In these
markets, trade shows and direct contacts are used to determine how prospects are
satisfying their information processing requirements. For the time and
attendance product line, the prospects for the Company's products are more
diverse and difficult to target. In these markets, the Company engages in
"prospecting" to identify interest in the Company's products by companies who
are currently seeking products or services of the type offered by the Company.
The prospecting process includes trade publication advertising, purchased
mailing lists, telemarketing, direct mail, seminars, and trade shows to generate
appointments for the direct sales force with qualified prospects.
Once a prospect is qualified as to interest in the Company's products
and/or services, the direct sales and, as required, support personnel, visit the
prospect to understand the prospect's specific requirements. This process
usually results in the preparation of a written proposal which describes the
hardware, software, and services that will meet the prospect's requirements.
This sales cycle can be long, ranging from six months to beyond one year. The
Company believes the success of its sales activities depends upon this
consultative approach.
The Company believes that its client base presents continuing opportunities
for sales of additional software and services. The Company's products and
services generally become an integral part of the client's business. As a
result, the quality of customer support is essential to selling to existing
clients. Additionally, in the International Trade and Transportation Systems
Group, government mandated or sponsored changes require the Company to stay
current with
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governmental regulations and assist clients in maintaining their systems to meet
regulatory changes.
The Company maintains frequent contact with clients through sales and
service representatives. The Company provides customer support lines to handle
client system operational issues within a prescribed response time, and
continually communicates with its clients through newsletters and client
seminars. Through frequent contact with its clients by marketing and service
activities, the Company believes that it can better understand client
requirements and direct its product development activities toward developing and
enhancing products that should be well accepted by both existing clients and new
prospects.
Sources and Availability of Raw Materials
- -----------------------------------------
The Company's systems operate on computer hardware supplied by leading
hardware manufacturers pursuant to Original Equipment Manufacturer or Value
Added Reseller Agreements. These agreements are renewable on a year-to-year
basis, and entitle the Company to purchase equipment at various discounts based
upon volume and the type of equipment. The loss of the Company's ability to
purchase equipment from the manufacturer would not have an adverse effect on the
Company's business. The Company's products have been ported to run under the
Unix operating system. The Company could also continue to purchase from hardware
distributors, but on terms less favorable than from the original manufacturer.
The Company believes that its relationship with the hardware manufacturers is
satisfactory.
The Company purchases IBM hardware for certain of the Company's market
segments from IBM under Industry Remarketer Agreements. The Company believes
that its relationship with IBM is satisfactory based upon IBM's selection of the
Company as an Authorized Industry Remarketer for these segments.
The Company also purchases HP and DEC hardware for certain of the Company's
market segments from HP and DEC under Value-Added Reseller Programs. The Company
believes that its relationship with HP and DEC is satisfactory given the
selection of the Company as a Value-Added Reseller for these markets.
The Company purchases all of its computer hardware and peripheral equipment
from DEC, IBM, HP, or other vendors, and performs only software installation,
testing, final system configuration, and quality control. With the exception of
multi-user systems purchased from DEC, IBM, and HP, the Company believes there
are several alternative suppliers for system components used by the Company.
Patents and Proprietary Technology
- ----------------------------------
The Company does not believe that patents are material to its business. The
Company relies primarily upon trade secrets, unpatented proprietary know-how,
and continuing technological innovation to develop and maintain its competitive
position. In particular, the Company
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generally provides only "run time" code for its software to its international
trade, tire, and legal clients, although manufacturing systems and certain legal
clients may also purchase "source" code. In addition, most catalogue direct
marketing clients purchase source code licenses. Insofar as the Company relies
on trade secrets and unpatented know-how, there can be no assurance that others
may not independently develop similar technology or that secrecy will not be
breached. Certain product names of the Company are recognized as trademarks in
interstate commerce and are or may be registered trademarks.
Seasonality
- -----------
The Company has not experienced material seasonality in its business, other
than that due to the economic fluctuation of the economies of the United States
and Canada.
Working Capital Items
- ---------------------
The Company does not have any unusual trade practices which would require
restrictions on working capital.
Customers
- ---------
<TABLE>
During fiscal year-ended December 31, 1995, the Company's revenue by
product line was as follows:
<CAPTION>
Product Line Revenue($) %
- ------------ ---------- ---
<S> <C> <C>
International Trade $ 6,968,000 22%
Business Systems 7,216,000 23
Tire Systems 3,301,000 11
Legal Systems 5,201,000 17
Direct Marketing Systems 8,346,000 27
----------- ---
$31,032,000 100%
=========== ===
</TABLE>
Backlog
- -------
Set forth below is information concerning the Company's backlog at December
31, 1995 and 1994, respectively:
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<TABLE>
<CAPTION>
Backlog at December 31,
-----------------------
1995 1994
---- ----
Support Support
Product Line Total Contracts Total Contracts
- ------------ ----- --------- ----- ---------
<S> <C> <C> <C> <C>
International Trade $ 3,200,000 $2,400,000 $ 3,700,000 $2,500,000
Business Systems 2,900,000 1,400,000 6,800,000 1,300,000
Tire Systems 1,700,000 1,400,000 1,700,000 1,400,000
Legal Systems 2,600,000 1,600,000 3,200,000 1,600,000
Direct Marketing Systems 2,200,000 800,000 1,200,000 500,000
----------- ---------- ----------- ----------
$12,600,000 $7,600,000 $16,600,000 $7,300,000
=========== ========== =========== ==========
</TABLE>
Support contracts are generally cancelable by the Company or the Company's
customers upon 90 days written notice.
Competition
- -----------
The Company's competitors for international trade systems include Freight
Data Systems Ltd. and ITS. The Company believes that the principal competitive
factors in the international trade systems business are: ease of operation;
completeness and sophistication of software products; price/performance ratio;
the ability to expand and upgrade a system; product reliability; support for EDI
(Electronic Data Interchange); timely conformance to everchanging governmental
regulations; and service and support. The Company believes it competes favorably
with respect to all of these factors.
The Company's primary competitors for time and attendance, labor reporting,
and bar code data collection software are Kronos and JeTech. The Company
believes the principal competitive factors for bar code systems are:
technological sophistication; ease of handling complex payrules; real time
processing; unlimited ability for data validation; the ability to update
applications anywhere in the operation, independent of the hardware
manufacturer; and the ability to develop applications without writing new code.
The Company believes it competes favorably with respect to all of these factors.
The Company's primary competitors for tire systems are Signal Software and
Progressive Computer Systems. The Company believes the principal competitive
factors for tire systems are: complete point of sale functionality to assist
sales personnel to maximize gross margin on each sale; the ability to post data
automatically to the accounting system; and the ability to track the
manufacturing process of tire retreaders. The Company believes it competes
favorably with respect to all of these factors.
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The legal systems market is highly competitive and includes a number of
independent software vendors and service bureaus. The Company's primary
competitors for legal systems are Capsoft Development, CMS/DATA Corp., Elite
Data Processing, Barrister, Juris, and Omega. The Company believes that the
principal competitive factors in the legal systems business are: completeness
and sophistication of software products; vendor reputation and references;
price/performance ratio; the ability to expand and upgrade a system; the ability
to provide an open systems solution; the ability to run both the "front office"
and the "back office" applications on a single network; product reliability; and
service and support. The Company believes it competes favorably with respect to
all of these factors.
The direct marketing systems market is highly competitive. The Company's
major competitors are Smith-Gardner, Sigma Micro, and Computer Solutions. The
direct marketing product competes on price/performance, ease of use, and
sophistication of software. The Company believes it competes favorably with
respect to all these factors. The next generation product, Mozart, unveiled in
1994, is CASE-developed and competes favorably with the products of competitors,
as well as provides a foundation for future development.
Research and Development
- ------------------------
During the last three fiscal years, the amounts spent by the Company on
Company-sponsored research and development activities and on customer-sponsored
research activities relating to the development of new products, services, or
techniques or the improvement of existing products, services, or techniques were
not material.
Government Regulation
- ---------------------
There is presently no material government regulation with respect to the
Company's business. Approvals for computer hardware from Underwriter's
Laboratories and the Federal Communications Commission are obtained by the
hardware manufacturer. However, the extent to which future federal, state, or
local governmental regulations may regulate the Company's activities cannot be
predicted, and the Company may be subject to restrictions on export of its
computer systems to other countries if it seeks to expand into non-U.S. markets.
Employees
- ---------
As of December 31, 1995, the Company had 186 full time employees. Of these
employees, 12 are executive officers or senior managers, 20 were engaged in
marketing and sales, 79 in customer support and training, 47 in custom/product
development or engineering, 4 in Legal System's service bureau, and 24 in
general and administrative positions. The Company's ability to develop, market
and sell products and to establish and maintain its competitive position in
light of new technological developments will depend, in large part, on its
ability to attract and retain qualified personnel. The Company believes that it
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has been successful to date in attracting highly skilled personnel critical to
its business. No employees are covered by collective bargaining agreements.
Management of the Company believes that its relationship with its employees is
satisfactory.
ITEM 2. Description of Properties
-------------------------
The Company's Corporate Headquarters are located in a 32,000 square foot
office building at 10 Speen Street, Framingham, Massachusetts. The Business and
Direct Marketing Systems product operations are also located at this facility.
The Company occupies approximately 80% of the space in the building, while
tenants lease the remainder of the space. The carrying costs for the building,
which was acquired in October 1991, include monthly principal and interest
payments of $14,815 on a fifteen-year mortgage note along with operating costs
and taxes.
The Company's International Trade and Tire Systems operations are located
in a 24,000 square foot office building at 615 Amherst Street, Nashua, New
Hampshire, purchased in December 1992. The carrying costs for the facility
include approximately $10,000 per month for principal and interest on
twenty-year mortgage notes plus operating costs and taxes.
<TABLE>
The Company maintains the following additional offices:
<CAPTION>
Current Date of Lease
Location Monthly Rent Office Area Expiration
- -------- ------------ ----------- ----------------
<S> <C> <C> <C>
Tucker, Georgia $ 1,569 1,395 s.f. July 31, 1996
Blue Bell, Pennsylvania $24,907 20,420 s.f. February 1, 1998
</TABLE>
ITEM 3. Legal Proceedings
-----------------
In November 1995, the Company commenced an action against a customer for
breach of contract and other charges for an amount in excess of $2,000,000. In
answering the complaint, the client alleged counterclaims for alleged breach of
contract and other charges seeking damages and attorneys' fees of an unspecified
amount. The Company intends to vigorously pursue its claim and defend the
counterclaim. In the opinion of management of the Company, this action can be
successfully defended without material adverse effect on the financial condition
of the Company.
ITEM 4. Submission of Matters to a Vote of Security-Holders
---------------------------------------------------
(a) No matter was submitted to a vote of security-holders during the
fourth quarter of the fiscal-year ended December 31, 1995, through the
solicitation of proxies or otherwise.
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(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
PART II
ITEM 5. Market Price of and Dividends on the Company's Common
Equity and Related Stockholder Matters
-------------------------------------------------------
<TABLE>
The Company's Common Stock has been traded on the over-the-counter market
(NASDAQ symbol: ASAA) since June 25, 1986. The following table shows the range
of low and high bid quotations for the Company's Common Stock on the NASDAQ
System for the periods indicated, as furnished to the Company by NASDAQ.
<CAPTION>
Calendar Year 1994 Low Bid High Bid
------------------ ------- --------
<S> <C> <C>
First Quarter $1.188 $1.938
Second Quarter $1.063 $1.438
Third Quarter $ .750 $1.125
Fourth Quarter $ .688 $1.188
</TABLE>
<TABLE>
<CAPTION>
Calendar Year 1995 Low Bid High Bid
------------------ ------- --------
<S> <C> <C>
First Quarter $ .906 $1.188
Second Quarter $ .875 $1.313
Third Quarter $1.250 $2.375
Fourth Quarter $1.125 $1.750
</TABLE>
These quotations represent prices between dealers and do not include retail
markups, markdowns, or commissions, and may not necessarily represent actual
transactions. There were 1,422 holders of record of the Company's outstanding
Common Stock as of March 22, 1996.
Under the terms of a share repurchase program authorized by the Company's
Board of Directors in June 1990, the Company is authorized to repurchase up to
$500,000 of its Common Stock. In December 1991, the Company repurchased 25,000
shares at a cost of approximately $1.06 per share. The Company also repurchased
shares as follows for the months indicated:
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<TABLE>
<CAPTION>
1992 Number of Shares Per Share Purchase Price
---- ---------------- ------------------------
<S> <C> <C>
March 5,000 $1.15
May 10,000 $1.53
July 3,000 $1.81
August 6,700 $1.81
8,100 $2.00
September 45,000 $1.94
15,000 $2.00
5,000 $1.99
October 5,000 $1.88
</TABLE>
<TABLE>
<CAPTION>
1993 Number of Shares Per Share Purchase Price
---- ---------------- ------------------------
<S> <C> <C>
March 5,000 $1.54
August 10,000 $2.93
September 1,800 $3.02
</TABLE>
Although it is not obligated to do so, the Company may continue to
repurchase shares of Common Stock when market conditions for the purchase of its
stock meet its requirements.
Since its organization, the Company has not paid any dividends on its
Common Stock and its Board of Directors does not contemplate declaring any
dividends in the foreseeable future. The declaration and payment of dividends in
the future will be determined by the Board of Directors in light of conditions
then existing, including the Company's earnings, its financial condition and
requirements (including working capital needs), any agreements restricting the
payment of dividends and other factors. The Company's current banking
arrangements prohibit the payment of dividends by the Company.
ITEM 6. Selected Consolidated Financial Data
----------------------------------------
(in thousands, except per share amounts)
The following selected consolidated financial data are derived from the
consolidated financial statements of the Company. The income statement data for
the year ended December 31, 1995 and the balance sheet data as of December 31,
1995 are derived from and qualifed by reference to the consolidated financial
statements and notes thereto included herein and audited by BDO Seidman, LLP,
the Company's independent certified public accountants, as set forth in their
report and also included elsewhere herein. The income statement data for the
years ended December 31, 1994, and 1993, and the balance sheet data as of
December 31, 1994, are derived from the consolidated financial statements and
notes thereto included herein and audited by Deloitte & Touche LLP, the
Company's then independent certified public accountants, as set forth in their
report and also included elsewhere herein. The statement of operations data for
the years ended December 31, 1992 and 1991, and the balance sheet data as of
December 31, 1993, 1992, and 1991 are derived from financial statements audited
by Deloitte & Touche LLP.
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<TABLE>
The financial information set forth below should be read in conjunction
with, and is qualified in its entirety by, the detailed information in the
consolidated financial statements and notes thereto appearing elsewhere herein.
<CAPTION>
Years Ended December 31,
------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Operating Data:
- ---------------
<S> <C> <C> <C> <C> <C>
Revenues $31,032 $27,111 $27,863 $31,448 $23,463
Costs and Expenses 29,983 26,545 27,555 30,553 23,056
Earnings from Operations 1,502 920 569 1,057 489
Earnings
Before Cumulative Effect
of Adopting SFAS No. 109 457 166 98 400 125
Net Earnings 457 166 742 775 336
Earnings per share
Before Cumulative Effect
of Adopting SFAS No. 109 .11 .04 .02 .10 .03
Net Earnings per share .11 .04 .18 .19 .09
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Balance Sheet Data:
- -------------------
<S> <C> <C> <C> <C> <C>
Total Assets $19,515 $20,131 $20,826 $19,073 $16,888
Long-Term Obligations 2,707 3,112 3,366 2,096 1,143
Shareholders' Equity 10,110 9,652 9,486 8,614 8,026
</TABLE>
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
-------------------------------------------------
As described in the notes to the consolidated financial statements, the
Company, during the three years ended December 31, 1995, acquired
CommercialWare, Inc., for its direct marketing division.
The above transaction was accounted for under the purchase method of
accounting. As such, the results of the acquired company are included in the
Company's consolidated financial statements beginning at the date of
acquisition, September 1, 1994.
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<TABLE>
Results of Operations
- ---------------------
Compare 1995 to 1994
- ---------------------
<CAPTION>
(000's omitted)
---------------------------------------
Revenue Increase/(Decrease)
------------------ -------------------
1995 1994 Amount Percentage
---- ---- ------ ----------
<S> <C> <C> <C> <C>
Computer and add-on hardware $ 8,444 $ 5,553 $2,891 52%
Services 16,654 16,138 516 3%
Product licenses 5,934 5,420 514 9%
Net Revenue 31,032 27,111 3,921 14%
Revenue net of hardware costs $24,112 $22,153 $1,959 9%
</TABLE>
Comparison of revenues and revenues net of hardware costs
- ---------------------------------------------------------
The increase in computer and add-on hardware revenue of approximately
$2,891,000 for the year ended December 31, 1995, compared to the same period in
1994, resulted primarily from an increase in revenue from the international
trade and direct marketing systems product lines. This increase was partially
offset by a decrease for the same period in computer and add-on hardware revenue
from the electronic time recording, tire, and legal systems product lines.
Hardware margins increased to approximately 18% for the year ended December
31, 1995, from approximately 11% in 1994. Margins on computer and add-on
hardware do fluctuate based on the mix of computer hardware and add-on hardware
products sold. Accordingly, the Company expects hardware gross margins in the
future to continue to fluctuate. The Company continues to direct its efforts
toward building service and product license revenue to offset the historical
decline in hardware revenue and margins.
Revenue from services increased approximately $516,000, or 3%, for the
year. Service revenue increases for the electronic time recording and direct
marketing systems product lines were offset by revenue decreases in the
international trade, tire, and legal systems product lines. Gross margin from
services decreased to approximately 27% from 36%. The Company's revenue and
margin from services fluctuate from period to period due to the mix of contracts
and projects.
Product license revenue increased by approximately $514,000, or 9%, for the
year ended December 31, 1995, compared to the same period in 1994. The change
was a result of revenue increases from the international trade, electronic time
recording, and direct marketing
16
<PAGE> 16
systems products lines, partially offset by decreases from the tire and legal
systems product lines.
Sales and marketing expenses decreased by approximately $409,000, or 9%.
This change primarily reflects a decrease in advertising, marketing, and
commission-related expenses for the electronic time recording, tire, and legal
systems product lines. General and administrative expenses for the year ended
December 31, 1995 decreased by approximately $703,000, or 18%, compared to the
prior year. These changes reflect the cost reductions and controls enacted by
the Company in the prior year. The cost reductions and controls included
severing specific employees, not replacing employees as they left voluntarily,
delaying hiring decisions previously budgeted, changing long-distance carriers,
combining of functions between divisions at the point in time when an employee
left, and hiring temporary employees as opposed to full-time employees (thus
reducing employee benefits costs).
Pretax earnings from operations were approximately $1,502,000 for 1995,
compared to approximately $920,000 for 1994. The increase in earnings results
from an increase in contribution from the Company's legal systems and direct
marketing systems product lines. Contribution decreased in the electronic time
recording and tire systems product lines.
The net earnings for the year ended December 31, 1995 were approximately
$504,000, as compared to net earnings of approximately $166,000 for the
comparable period in 1994. The change results from the increases in net interest
expense and net income tax expense of approximately $99,000 and $145,000,
respectively. These changes were partially offset by an increase in earnings
from operations of approximately $582,000.
<TABLE>
Compare 1994 to 1993
- ---------------------
(000's omitted)
----------------------------------------
Revenue Increase/(Decrease)
------------------ -------------------
1994 1993 Amount Percentage
---- ---- ------ ----------
<S> <C> <C> <C> <C>
Computer and add-on hardware $ 5,553 $ 8,709 $(3,156) (36%)
Services 16,138 16,207 (69) 0%
Product licenses 5,420 2,947 2,473 84%
Net Revenue 27,111 27,863 (752) (3%)
Revenue net of hardware costs $22,153 $20,900 $ 1,253 6%
</TABLE>
17
<PAGE> 17
Comparison of revenues and revenues net of hardware costs
- ---------------------------------------------------------
The decrease in computer and add-on hardware revenue of $3,156,000 results
from decreases in sales from all product lines of the Company except for the
direct marketing systems product line, acquired in 1993, for which there is no
comparable amount. Hardware margins decreased to 11% in 1994, from 20% in 1993.
These decreases reflect the continuing deterioration of computer hardware prices
in the market caused by the combination of constant technological change,
dominance of open systems, and the commodity nature of computer hardware.
Product license revenue increased by approximately 84%, or $2,473,000. The
increase is a result of revenue increases from all of the Company's existing
product lines, except for tire, as well as from revenue generated by the direct
marketing systems product line for which there was no comparable amount in 1993.
Revenue from services remained approximately the same as in the prior year; a
decrease of $874,000, or approximately 6% from previously existing product lines
was partially offset by the service revenue produced by the newly acquired
direct marketing systems product line. Gross margin from services declined to
36% from 45%. This change results from decreased margin from services from each
of the Company's product lines except for international trade. The Company's
revenue and margin from services fluctuate from period to period due to the mix
of contracts and projects.
Sales and marketing expenses increased by approximately $90,000, or 2%.
This change primarily reflects an increase in advertising, marketing, and
commission-related expenses for the electronic time recording product line and
the expenses of the direct marketing systems product line, for which there was
no comparable amount in the prior year. General and administrative expenses for
the year ended December 31, 1994 decreased by approximately $265,000, or 6%,
when compared to 1993. The decrease reflects cost reductions and controls
enacted throughout 1994 and the elimination of certain general and
administrative expenses related to the newly acquired direct marketing system
product line.
Pretax earnings from operations were approximately $920,000 for 1994,
compared to pretax earnings from operations of approximately $569,000 for 1993.
The increase in earnings results from an increase in contribution from the
Company's international trade and legal systems product lines, coupled with a
decrease in the loss associated with the newly acquired direct marketing systems
product line. Contribution decreased in the electronic time recording and tire
systems product lines.
The net earnings for the year ended December 31, 1994 were approximately
$166,000, as compared to net earnings of approximately $742,000 for the
comparable period in 1993. The change results from the effect of the
implementation of Statement of Financial Accounting Standards (SFAS) No. 109,
which increased 1993 first quarter net earnings by approximately $644,000 and
increases in net interest expense and net income tax expense of approximately
$93,000 and $190,000, respectively. These changes were partially offset by an
increase in income from operations of $351,000.
18
<PAGE> 18
Liquidity and Capital Resources
- -------------------------------
The Company had total cash and cash equivalents at December 31, 1995 of
approximately $404,000, an increase of $394,000 from December 31, 1994. The
Company and its subsidiaries currently have a maximum line of credit totaling
$2,350,000, of which approximately $1,325,000 was available at December 31,
1995. This line is scheduled to expire in 1996. The Company expects to renew the
line under approximately the same terms.
Over the past three years, the Company has expended significant working
capital on the development of a new generation of software products. The level
of these expenditures has decreased in the current year. However, due to the
continuing rapid changes in software technology, the Company will have to
continue to fund product development in order to retain existing clients and to
attract new clients. The Company intends, as it has in the past, to fund this
development from its cash from operations.
The Company's hardware and software license revenues can fluctuate as a
result of a number of factors, particularly trends in the overall economy,
client buying patterns, and hardware and software technological developments.
Consequently, the Company could be subject to material variations in operating
results. As the uncertainties of the economy are incalculable, the Company
acknowledges the potential adverse impact that economic uncertainty could have
on its ability to maintain liquidity and raise additional capital. Subject to
the foregoing, the Company believes that based on the level of operating
revenue, cash on hand, and available bank debt, it has sufficient capital to
finance its ongoing business.
Inflation
- ---------
General inflation over the last three years has not had a material effect
on the Company's cost of doing business.
New Accounting Standards
- ------------------------
Effective January 1, 1995, the Company adopted Statement of Financial
Acounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed of (SFAS No. 121) issued by the
Financial Accounting Standards Board (FASB). The new standards established new
guidelines regarding when impairment losses on long-lived assets, which include
plant and equipment, certain identifiable intangible assets and goodwill, should
be recognized and how impairment losses should be measured. The adoption of this
standard did not have a material effect on financial position or results of
operations of the Company.
19
<PAGE> 19
In October 1995, FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 establishes a new, fair value-based method of
measuring stock-based compensation, but does not require an entity to adopt the
new method for preparing its basic financial statements. For entities not
adopting the new method for preparing basic financial statements, SFAS No. 123
requires disclosure in the footnotes of pro forma net earnings and earnings per
share information as if the fair value-based method had been adopted. Adoption
of SFAS No. 123 is required no later than the Company's year ending December 31,
1996. The disclosure requirements of SFAS No. 123 are effective for financial
statements for financial years beginning after December 15, 1995. The Company
will comply with the disclosure requirements of SFAS No. 123 in its financial
statements for its year ending December 31, 1996.
ITEM 8. Supplementary Financial Information
-----------------------------------
Not applicable.
ITEM 9. Disagreements with Accountants on Accounting and
Financial Disclosure
------------------------------------------------
Effective August 28, 1995, the Company retained as its new independent
accountants BDO Seidman, LLP, replacing its prior independent accountants,
Deloitte & Touche, LLP ("Deloitte & Touche"). Deloitte & Touche's report on the
financial statements for the two most recent fiscal years contained no adverse
opinion or a disclaimer of opinion, nor was it qualified or modified as to
uncertainty, audit scope, or accounting principles. No action on the decision to
change accountants has been taken by the Board of Directors of the Company.
During the last two fiscal years and the subsequent interim period
preceding such replacement, there were no disagreements between the Company and
Deloitte & Touche on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Deloitte & Touche, would
have caused it to make a reference to the subject matter of the disagreements in
connection with its reports.
None of the "reportable events" described in Item 304(a)(1)(v) occurred
with respect to the Company within the last two fiscal years and the subsequent
interim period to the date of the change in accountants.
PART III
Items 10-13 are incorporated herein by reference to the Company's
definitive proxy statement to be filed with the Securities and Exchange
Commission.
20
<PAGE> 20
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports On
Form 8-K
------------------------------------------------------
(a)1. Financial Statements.
---------------------
The Consolidated Financial Statements required to be filed herein
are as follows:
Report of Independent Public Accountants
Consolidated Balance Sheets
Consolidated Income Statements
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flow
Notes to Consolidated Financial Statements
(a)2. Financial Statement Schedules.
-----------------------------
None
(b) Exhibits.
---------
The following exhibits are filed with this report:
2-1 The Commonwealth of Massachusetts Articles of Merger Merging
ASA Incorporated and ASA Legal Systems Company, Inc. into ASA
International Ltd., dated December 28, 1995.
2-2 Certificate of Ownership and Merger Merging ASA Incorporated and
ASA Legal Systems Company, Inc. into ASA International Ltd.,
dated December 28, 1995.
3a Certificate of Incorporation of ASA International Ventures, Inc.,
dated December 28, 1995.
3b ByLaws of ASA International Ventures, Inc.
10-1 Promissory Note (Revolver) between ASA International Ltd. and
CoreStates Bank, N.A., dated June 30, 1995.
10-2 Lease for DeKalb Corners Office Center, Tucker, Georgia.
10-3 Consent to Assignment of Lease for 960 Harvest Drive, Blue Bell,
Pennsylvania.
10-4 Agreement for Purchase and Sale of Assets between ASA
International Ventures, Inc. and ASA Incorporated, dated
December 29, 1995.
10-5 Agreement for Purchase and Exchange of Assets between ASA
International Ventures, Inc. and ASA International Ltd., dated
December 29, 1995.
21
<PAGE> 21
10-6 Agreement for Exchange of Intangibles between ASA International
Ventures, Inc. and ASA International Ltd., dated December 29,
1995.
11 Statement of Computation of Net Earnings per Share.
21 Subsidiary of Registrant Formed in 1995.
The following documents are incorporated by reference to the Registrant's Report
on Form 10-K filed on March 30, 1995:
10-1 Loan Agreement between ASA International Ltd., ASA Incorporated
and ASA Legal Systems Company, Inc., and CoreStates Bank, N.A.,
dated November 3, 1994.
10-2 Promissory Note (Term) between ASA International Ltd. and
CoreStates Bank, N.A., dated November 3, 1994.
10-3 Promissory Note (Revolver) between ASA International Ltd. and
CoreStates Bank, N.A., dated November 3, 1994.
10-4 Security Agreement between ASA International Ltd. and CoreStates
Bank, N.A., dated November 3, 1994.
10-5 Security Agreement between ASA Incorporated and CoreStates Bank,
N.A., dated November 3, 1994.
10-6 Security Agreement between ASA Legal Systems Company, Inc., and
CoreStates Bank, N.A., dated November 3, 1994.
10-7 Guaranty between ASA Incorporated and CoreStates Bank, N.A.,
dated November 3, 1994.
10-8 Guaranty between ASA Legal Systems Company, Inc., and CoreStates
Bank, N.A., dated November 3, 1994.
11 Statement re: Computation of Per Share Earnings.
23 Consent of Deloitte & Touche LLP, independent certified public
accountants.
The following documents are incorporated by reference to the Registrant's Report
on Form 10-K filed on March 30, 1994:
10-1 Promissory Note between ASA Properties, Inc., and Berkshire Life
Insurance Company, dated September 28, 1993.
10-2 Mortgage and Security Agreement between ASA Properties, Inc. and
Berkshire Life Insurance Company, dated September 28,1993.
10-3 Collateral Assignment of Leases between ASA Properties, Inc., and
Berkshire Life Insurance Company, dated September 28, 1993.
22
<PAGE> 22
10-4 Collateral Assignment and Security Agreement between ASA
Properties, Inc., and Berkshire Life Insurance Company, dated
September 28, 1993.
10-5 Promissory Note between ASA Properties, Inc., and Granite State
Development Corporation, dated December 23, 1992.
10-6 Servicing Agent Agreement between ASA Properties, Inc., and
Colson Services Corporation, dated May 12, 1993.
10-7 Promissory Note and First Amendment to Promissory Note between
ASA Incorporated, and the Economic Stabilization Trust, dated
October 29, 1993 and December 15, 1993, respectively.
10-8 Loan and Security Agreement between ASA, Inc., and the Economic
Stabilization Trust, dated October 29, 1993.
10-9 Guaranty between ASA International Ltd. and the Economic
Stabilization Trust dated October 29, 1993.
10-10 Intercreditor Agreement between Worcester County Institution for
Savings and the Economic Stabilization Trust as to their loans to
ASA Incorporated, dated October 29, 1993.
10-15 Amendment to Merger Agreement by and among the Company, ASA
Incorporated, CommercialWare, Donald Askin and Jonathan Ellman,
dated September 15, 1993.
The following documents are incorporated by reference to the Registrant's Report
on Form 10-K filed on March 30, 1993:
10-3 Lease for 960 Harvest Drive, Blue Bell, Pennsylvania.
10-4 Mortgage and Security Agreement between ASA Properties, Inc. and
Sun Life Assurance Company of Canada.
10-5 Promissory Note of ASA Properties, Inc. in favor of Sun Life
Assurance Company of Canada.
The following document is incorporated by reference to the Registrant's Form 8-K
filed on September 29, 1993:
10-1 Agreement and Plan of Merger by and among the Company, ASA
Incorporated, CommercialWare, Donald Askin, and Jonathan Ellman,
dated as of August 31, 1993.
The following documents are incorporated by reference to the Registrant's Report
on Form 10-K filed on March 26, 1992:
10-1 Asset Purchase Agreement by and between Control Data Company and
ASA Legal Systems Company, Inc., dated June 28, 1991.
10-7 Agreement by and between ASA International Ltd. and The Data
Group, dated January 1, 1992.
23
<PAGE> 23
21 Subsidiaries of the Registrant Formed in 1991.
The following documents are incorporated by reference to the Registrant's Report
on Form 10-K filed on March 30, 1990:
10-1 Agreement of Merger by and between the Registrant and Associated
Software Consultants Organization, Inc.
10-2 Agreement between the Registrant and ISI re: FASBE Software.
10-3 Agreement between the Registrant and Intermec.
21 Subsidiaries of the Registrant.
The following documents are incorporated by reference to the Registrant's Report
on Form 10-K filed on March 31, 1988:
3b Bylaws, as amended.
10-8 Directors' and Officers' Insurance Policy.
The following documents are incorporated by reference to the Company's
Registration Statement on Form S-18 (File number 33-5832-B):
4c Specimen Convertible Note.
The following documents are incorporated by reference to the Company's
Registration Statement on Form S-1 (File number 33- 15381):
3a Certificate of Incorporation, as amended.
(c) Reports on Form 8-K.
--------------------
During the year ended December 31, 1995, the Company filed the following Report
on Form 8-K:
1. August 31, 1995 - The Registrant announced that it had retained
BDO Seidman, LLP, as its new independent accountants, replacing
its prior independent accountants, Deloitte & Touche, LLP.
24
<PAGE> 24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ASA INTERNATIONAL LTD.
By /s/ Alfred C. Angelone
-----------------------------------
Chief Executive Officer
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, report
has been signed below by the following persons on the dates indicated.
<CAPTION>
Name Capacity Date
- ---- -------- ----
<S> <C> <C>
/s/ Alfred C. Angelone Director, Chief March 29, 1996
- -------------------------- Executive Officer
Alfred C. Angelone and Treasurer
(principal executive
officer and principal
accounting officer
/s/ Christopher J. Crane Director March 29, 1996
- --------------------------
Christopher J. Crane
/s/ James P. O'Halloran Director March 29, 1996
- --------------------------
James P. O'Halloran
/s/ Gordon J. Rollert Director March 29, 1996
- --------------------------
Gordon J. Rollert
/s/ William A. Kulok Director March 29, 1996
- --------------------------
William A. Kulok
</TABLE>
25
<PAGE> 25
Board of Directors and Shareholders
ASA INTERNATIONAL LTD.
We have audited the accompanying consolidated balance sheet of ASA International
Ltd. and Subsidiaries as of December 31, 1995 and the related consolidated
statements of income, shareholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ASA International
Ltd. and Subsidiaries at December 31, 1995 and the results of their operations
and their cash flows for the year then ended in conformity with generally
accepted accounting principles.
/s/ BDO Seidman, LLP
Boston, Massachusetts
March 15, 1996
26
<PAGE> 26
Board of Directors and Shareholders
ASA INTERNATIONAL LTD.
We have audited the accompanying consolidated balance sheet of ASA International
Ltd. and subsidiaries as of December 31, 1994, the related consolidated income
statements, consolidated statements of shareholders' equity and cash flows for
each of the two years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of ASA International Ltd. and
subsidiaries as of December 31, 1994, and the results of their operations and
their cash flows for each of the two years in the period ended December 31, 1994
in conformity with generally accepted accounting principles.
As discussed in Note A, in 1993 the Company changed its method of accounting for
income taxes to conform with Statement of Financial Accounting Standards No.
109.
/s/ Deloitte & Touche, LLP
March 16, 1995
Boston, Massachusetts
27
<PAGE> 27
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31,
-------------
1995 1994
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 404,026 $ 10,381
Receivables -- net 5,085,172 5,228,384
Computer hardware held for resale 238,624 313,836
Other current assets 748,221 901,642
----------- -----------
TOTAL CURRENT ASSETS 6,476,043 6,454,243
PROPERTY AND EQUIPMENT:
Land and buildings 3,804,194 3,730,196
Computer equipment 4,137,949 3,855,015
Office furniture and equipment 1,077,060 1,126,211
Leasehold improvements 36,574 107,631
Vehicles 261,703 220,980
----------- -----------
9,317,480 9,040,033
Accumulated depreciation
and amortization 4,612,375 4,226,580
----------- -----------
4,705,105 4,813,453
SOFTWARE
(less cumulative amortization
of $7,689,103 and $6,342,913) 6,193,625 6,485,771
COST EXCEEDING NET ASSETS ACQUIRED
(less cumulative amortization
of $1,362,750 and $1,104,704) 1,537,673 1,795,718
OTHER ASSETS 602,755 581,745
----------- -----------
$19,515,201 $20,130,930
=========== ===========
</TABLE>
See notes to consolidated financial statements.
28
<PAGE> 28
<TABLE>
<CAPTION>
December 31,
-------------
1995 1994
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit note $ 1,025,000 $ 975,000
Accounts payable 1,157,573 1,994,103
Accrued expenses 2,292,514 2,368,444
Customer deposits 822,365 634,809
Deferred revenue 344,693 771,394
Current maturities of
long-term obligations 439,005 506,040
----------- -----------
TOTAL CURRENT LIABILITIES 6,081,150 7,249,790
LONG-TERM OBLIGATIONS,
NET OF CURRENT MATURITIES 2,707,459 3,111,905
DEFERRED INCOME TAXES 617,000 117,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, par value
$.01 per share: Authorized
and unissued, 1,000,000 shares - -
Common stock, par value
$.01 per share: Authorized, 6,000,000
shares; issued 3,917,316 and 3,917,268
shares; outstanding, 3,787,517
shares and 3,787,469 39,173 39,173
Additional paid-in capital 7,681,675 7,681,632
Retained earnings 2,809,186 2,351,872
----------- -----------
10,530,034 10,072,677
Less treasury stock, at cost 420,442 420,442
----------- -----------
10,109,592 9,652,235
----------- -----------
$19,515,201 $20,130,930
=========== ===========
</TABLE>
See notes to consolidated financial statements.
29
<PAGE> 29
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED INCOME STATEMENTS
<CAPTION>
--Years Ended December 31,--
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
REVENUES
Computer and add-on hardware $ 8,443,995 $ 5,553,320 $ 8,708,608
Services 16,654,125 16,137,785 16,206,951
Product licenses 5,934,237 5,420,224 2,947,356
----------- ----------- -----------
NET REVENUE 31,032,357 27,111,329 27,862,915
COST OF REVENUE
Computer and add-on hardware 6,920,796 4,958,818 6,963,237
Services 12,136,916 10,306,546 8,858,718
Product licenses and development 2,598,035 1,938,125 2,357,138
----------- ----------- -----------
TOTAL COST OF REVENUE 21,655,747 17,203,489 18,179,093
EXPENSES
Marketing and sales 4,362,178 4,771,300 4,681,292
General and administrative 3,252,290 3,954,673 4,219,496
Amortization of goodwill 260,523 262,215 213,997
----------- ----------- -----------
TOTAL EXPENSES 7,874,991 8,988,188 9,114,785
EARNINGS FROM OPERATIONS 1,501,619 919,652 569,037
INTEREST EXPENSE (463,199) (375,241) (286,861)
INTEREST INCOME 10,894 21,493 25,699
----------- ----------- -----------
EARNINGS BEFORE INCOME
TAXES AND CUMULATIVE EFFECT
OF ADOPTING SFAS NO. 109 1,049,314 565,904 307,875
INCOME TAXES 592,000 400,000 210,000
----------- ----------- -----------
EARNINGS BEFORE CUMULATIVE EFFECT
OF ADOPTING SFAS NO. 109 457,314 165,904 97,875
CUMULATIVE EFFECT OF ADOPTING
SFAS NO. 109 - - 644,000
----------- ----------- -----------
NET EARNINGS $ 457,314 $ 165,904 $ 741,875
=========== =========== ===========
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
EARNINGS BEFORE CUMULATIVE
EFFECT OF ADOPTING SFAS NO. 109 $.11 $.04 $.02
=========== =========== ===========
CUMULATIVE EFFECT OF ADOPTING
SFAS NO. 109 - - $.16
=========== =========== ===========
NET EARNINGS $.11 $.04 $.18
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 4,224,503 4,179,298 4,020,068
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
30
<PAGE> 30
ASA INTERNATIONAL LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Treasury Stock
------------ --------------
Additional
Paid-in Retained
Shares Amount Capital Earnings Shares Amount Total
------ ------ ---------- -------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES,
1/01/93 3,916,999 $39,170 $7,681,386 $1,519,804 169,451 $(586,080) $ 8,654,280
Purchase of
Company stock - - - - 16,800 (42,401) (42,401)
Exercise of
stock options 269 3 (18,704) (75,711) (43,500) 146,300 51,888
CommercialWare
Acquisition - - 18,950 - (135,000) 436,050 455,000
Stock awarded as
compensation
to employee - - - - (6,000) 19,440 19,440
Reacquisition
of stock in
payment of
officers notes - - - - 128,048 (393,751) (393,751)
Net earnings - - - 741,875 - - 741,875
--------- ------- ---------- ---------- ------- --------- -----------
BALANCES,
12/31/93 3,917,268 39,173 7,681,632 2,185,968 129,799 (420,442) 9,486,331
Net earnings - - - 165,904 - - 165,904
--------- ------- ---------- ---------- ------- --------- -----------
BALANCES,
12/31/94 3,917,268 39,173 7,681,632 2,351,872 129,799 (420,442) 9,652,235
Exercise of
stock options 48 - 43 - - - 43
Net earnings - - - 457,314 - - 457,314
--------- ------- ---------- ---------- ------- --------- -----------
BALANCES,
12/31/95 3,917,316 $39,173 $7,681,675 $2,809,186 129,799 $(420,442) $10,109,592
========= ======= ========== ========== ======= ========= ===========
</TABLE>
See notes to consolidated financial statements.
31
<PAGE> 31
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
---Years Ended December 31,---
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 457,314 $ 165,904 $ 741,875
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Cumulative effect of change in
accounting principle - - (644,000)
Depreciation and amortization 2,167,419 1,823,072 1,769,959
Deferred taxes 500,000 372,000 210,000
Doubtful receivables provision (62,621) (252,571) 132,272
Changes in assets and liabilities,
net of effects of acquisitions:
Receivables 122,798 878,150 2,279,260
Computer hardware held for resale 75,212 (73,486) 92,843
Other current assets 450,421 52,058 (136,489)
Accounts payable (836,530) (810,212) (799,144)
Accrued expenses (431,211) (87,321) (1,124,390)
Other current liabilities (180,863) 254,266 266,361
----------- ----------- -----------
Total adjustments 1,804,625 2,155,956 2,046,672
----------- ----------- -----------
Net cash provided by operating
activities 2,261,939 2,321,860 2,788,547
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (429,637) (254,788) (922,140)
Additions to software (1,054,043) (2,119,113) (2,454,424)
Reductions of (increases to)
sales-type leases 112,152 93,161 (2,778)
Cash paid for acquisitions - - (139,932)
Other assets (50,127) 28,958 (116,473)
----------- ----------- -----------
Net cash used for investing
activities (1,421,655) (2,251,782) (3,635,747)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in bank and other notes 50,000 25,000 191,959
Reduction in long-term debt (496,682) (1,099,843) (1,342,714)
Increase in long-term debt - 650,000 2,102,046
Issuance of common stock 43 - 249
Purchase of treasury stock - - (42,401)
Proceeds from sale of treasury stock - - 17,800
----------- ----------- -----------
Net cash provided by (used for)
financing activities (446,639) (424,843) 926,939
----------- ----------- -----------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) 393,645 (354,765) 79,739
Balance, beginning of year 10,381 365,146 285,407
----------- ----------- -----------
Balance, end of year $ 404,026 $ 10,381 $ 365,146
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
32
<PAGE> 32
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994, 1993
A. Summary of Significant Accounting Policies:
Business description and principles of consolidation
The Company develops, markets, and provides services for its proprietary
enterprise and point solution software products and distributes computer
hardware to its software customers. The consolidated financial statements
include the accounts of ASA International Ltd. and its wholly owned
subsidiaries, ASA Properties, Inc. and ASA International Ventures, Inc. after
elimination of all material intercompany balances and transactions. In 1995, two
wholly owned subsidiaries, ASA, Inc. and ASA Legal Systems Company, Inc. were
merged into the parent corporation, ASA International Ltd.
Cash equivalents
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. On a cash basis,
interest income received approximates the amounts reported on the income
statements.
Concentration of Credit Risks
Concentration of credit risk with respect to accounts receivable is limited due
to the large number of customers comprising the Company's customer base. Ongoing
credit reviews of customers' financial condition are performed, and collateral
is not required. The Company maintains reserves for potential credit losses and
such losses, in the aggregate, have not exceeded management's expectation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Computer hardware held for resale
Inventory is stated at the lower of cost (first-in, first-out method) or market.
Property and equipment
Property and equipment are stated at cost. Depreciation for equipment and
vehicles is recorded on the straight-line method, based on the estimated useful
lives of the related assets (ranging from 5 to 7 years). Buildings are
depreciated over 40 years. Equipment under
33
<PAGE> 33
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
capital leases and leasehold improvements are amortized over the shorter of the
lease term or the estimated useful lives of the assets.
Costs exceeding net assets acquired
Costs exceeding net assets of businesses acquired are amortized on a
straight-line basis over periods of 10 and 20 years. On an annual basis, the
Company reviews the carrying value of the costs exceeding net assets acquired
against projections of undiscounted cash flows and, if necessary, records
impairment.
Revenue recognition
Computer hardware revenue is recognized upon shipment of the product to the
client. Product license revenue is recognized upon shipment to the client
provided that no significant vendor obligations remain in connection with the
software being licensed and the collectability of the sale is probable in
accordance with Statement of Position 91-1 "Accounting for Software Revenue
Recognition."
The Company renders services in the areas of implementation and training,
consulting to existing clients, and post-contract client support.
Service revenues include post-contract client support, consulting, and training
support. Post-contract client support is generally provided under self-renewing
maintenance agreements. Revenue on these maintenance agreements is recognized
ratably over the contract term. Consulting and training services revenue is
recognized in the period the service is rendered.
Sales-type leases
Long-term computer system leases, whereby the Company transfers all the benefits
and risks incident to the ownership of the hardware, are recorded as sales-type
leases. All other leases have been accounted for as operating leases, which
recognize lease revenue as earned over the lives of the leases.
Research and development
The Company expenses research and development costs as incurred.
Software
The Company accounts for the costs of computer software developed in accordance
with Statement of Financial Accounting Standard No. 86. Accordingly, the costs
of purchased software and of that software developed internally (once technology
feasibility is established) associated with coding new applications or modules
and enhancing and
34
<PAGE> 34
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
porting existing applications software are capitalized. Amoritization of these
costs is based on the greater of the charge resulting from the application of
either the straight-line method over five years or the proportion of current
sales to estimated future revenues of each product. Total amortization of
software charged to operations was approximately $1,346,000, $984,000, and
$1,035,000 for the years ended December 31, 1995, 1994, and 1993, respectively.
Capitalized interest
Interest costs incurred on borrowed funds during the period of software
capitalization are capitalized as a component of the costs of software. Interest
costs capitalized in 1995 and 1994 amounted to approximately $60,000 and
$130,000, respectively.
Income taxes
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes," effective January 1, 1993. This statement
supersedes Accounting Principles Board No. 11, "Accounting for Income Taxes,"
which was used previously by the Company. The cumulative effect of adopting SFAS
No. 109 on the Company's financial statements was to increase income by $644,000
($.16 per share) for the year ended December 31, 1993.
Deferred tax assets or liabilities are recognized for the estimated tax effects
of temporary differences between the tax and financial reporting bases of the
Company's assets and liabilities and for loss carryforwards based on enacted tax
laws and rates.
Net earnings per share
Net earnings per common share are computed using the weighted average number of
common equivalent shares outstanding during the year as calculated under the
treasury stock method. Common equivalents include outstanding warrants and
options, when dilutive, as well as contingent shares issuable as a result of a
business acquisition. The number of contingent shares issuable are determined
based upon the difference between the market value of the stock at the end of
the year and the guaranteed minimum value of that stock.
New Accounting Standards
Effective January 1, 1995, the Company adopted Statement of Financial Acounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of (SFAS No. 121) issued by the Financial
Accounting Standards Board (FASB). The new standards established new guidelines
regarding when impairment losses on long-lived assets, which include plant and
equipment, certain
35
<PAGE> 35
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
identifiable intangible assets and goodwill, should be recognized and how
impairment losses should be measured. The adoption of this standard did not have
a material effect on financial position or results of operations of the Company.
In October 1995, FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 establishes a new, fair value-based method of
measuring stock-based compensation, but does not require an entity to adopt the
new method for preparing its basic financial statements. For entities not
adopting the new method for preparing basic financial statements, SFAS No. 123
requires disclosure in the footnotes of pro forma net earnings and earnings per
share information as if the fair value based method had been adopted. Adoption
of SFAS No. 123 is required no later than the Company's year ending December 31,
1996. The disclosure requirements of SFAS No. 123 are effective for financial
statements for financial years beginning after December 15, 1995. The Company
will comply with the disclosure requirements of SFAS No. 123 in its financial
statements for its year end December 31, 1996.
B. Business Acquisitions and Divestitures:
Acquisitions
The Company has consummated the following business combination using the
purchase method of accounting during the three years ended December 31, 1995.
The Company's consolidated income statements include the operating results of
this entity from its respective acquisition date.
<TABLE>
<CAPTION>
Consideration
-----------------------------------------------------
Stock Notes
----- ------
Cost Exceeding
Date of Rate/ Net Assets
Company Acquisition Cash Shares Value Amount Term Total Acquired
- ------- ----------- ---- ------ ----- ------ ---- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CommercialWare August 1993 $140,000 135,000 $455,000 - - $595,000 $848,000
</TABLE>
The acquisition price of CommercialWare, Inc. (CWI) contemplates a contingent
future payment in Company stock or cash (an adjustment to purchase price) based
on the future performance of CWI and the market value of the Company's stock. Up
to 100,000 additional shares are issuable to the former owners of CWI over the
three years ending December 31, 1996, based upon CWI attaining at least 80% of
yearly targeted contribution levels. As of December 31, 1995, CWI has not met
the targeted contribution level and, therefore, no contingent payments
36
<PAGE> 36
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
were made. In addition, should the Company's stock price be less than $5 per
share on December 31, 1997, the Company will pay to the former owners of CWI, at
its option in cash or stock, the difference between the existing market price
and $5 per share. The payment will be based on the number of shares still owned
by the former owners of CWI on that date and would include the 135,000 shares
exchanged on the date of the original transaction and any of the 100,000
contingent shares issued. The stock was adjusted to reflect the estimated
present value of the market price guarantee at the acquisition date.
In November 1994, the Company completed the acquisition of certain software
products of Precedent Technologies Incorporated. The purchase agreement called
for an initial payment of $297,000 ($70,000 in cash and $227,000 in short-term
notes) and potential contingent consideration of an additional $400,000 over
three years, based upon a percentage of the gross revenues received by the
Company through the licensing of these software products. As of December 31,
1995 the Company has not exceeded the gross revenues necessary for the payment
of additional consideration.
Divestitures
In 1990, the Company sold the assets of its BIT unit which provided computer
systems to the hardgoods distribution market segment. A portion of the
consideration paid consisted of a promissory note for $300,000 with a five-year
term at 6% interest (discounted value of $272,000 at 10% interest) and 10,000
shares of Class B Non-Voting Stock of the acquiring corporation, Distribution
Management Systems, Inc. (DMS). The DMS shares, valued at $334,000 as of
December 31, 1995, are recorded at cost and are included under the category of
Other Assets on the Balance Sheet, since the investment is intended by
management to be of a long-term nature. The note was paid in full during 1995.
37
<PAGE> 37
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<TABLE>
C. Receivables:
<CAPTION>
December 31,
------------
1995 1994
---- ----
<S> <C> <C>
Trade $4,774,530 $4,941,904
Net investment
in sales-type leases --
current portion 99,906 182,941
Amounts due from officers
and employees 270,982 226,406
---------- ----------
5,145,418 5,351,251
Less allowance for
doubtful accounts 60,246 122,867
---------- ----------
$5,085,172 $5,228,384
========== ==========
</TABLE>
Amounts due from officers and employees represent unsecured periodic advances
reduced by repayments. There is no interest charged on these advances.
The allowance for doubtful accounts at December 31, 1992 was $297,912. During
the three years ending December 31, 1995, the provisions for doubtful accounts
were $334,250, $118,016, and $357,161, and write-offs were $256,724, $370,587,
and $419,782, respectively.
D. Sales-type Leasing and Rental Operations:
The Company's leasing and rental operations consist of the leasing and rental of
computer systems. The leases are classified as either operating or sales-type
leases and expire during the next five years. The Company does not anticipate
any residual value on this leased equipment.
Information relating to sales-type leases is as follows:
38
<PAGE> 38
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Minimum lease payments $182,000 $311,000
Unearned income (29,000) (46,000)
-------- --------
$153,000 $265,000
======== ========
Property held for
sale or lease $ - $ 6,000
======== ========
</TABLE>
<TABLE>
As of December 31, 1995, the minimum lease payments receivable under leases with
initial terms of one year or more were approximately as follows:
<CAPTION>
Sales-type Operating
Year ending December 31 Leases Leases
----------------------- ---------- ---------
<S> <C> <C>
1996 $123,000 $5,000
1997 47,000 1,000
1998 12,000 -
-------- ------
$182,000 $6,000
======== ======
</TABLE>
<TABLE>
E. Notes Payable, Long-Term Obligations, Commitments, and
Contingencies:
<CAPTION>
December 31,
------------
1995 1994
---- ----
<S> <C> <C>
Revolving credit note $1,025,000 $ 975,000
========== ==========
Long-term obligations
Term loans $ 602,292 $ 905,125
Mortgage notes 2,390,845 2,470,591
Equipment loans 4,554 23,382
Capital lease obligations 136,374 202,160
Other 12,399 16,687
---------- ----------
3,146,464 3,617,945
Less current maturities 439,005 506,040
---------- ----------
$2,707,459 $3,111,905
========== ==========
</TABLE>
39
<PAGE> 39
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The current carrying value of long-term obligations approximate their fair
market value.
Revolving credit note
The Company has a revolving credit agreement for $2,350,000 (which cannot exceed
75% of acceptable accounts receivable). The agreement, which extends through
June 30, 1996, stipulates interest at prime (8.5% at December 31, 1995), plus
1%. At December 31, 1995, $1,025,000 was outstanding and $1,325,000 was
available under the agreement. The weighted average interest rates on
outstanding borrowings for the years ended December 31, 1995, 1994, and 1993
were 9.79%, 8.41%, and 7.30%, respectively.
This credit facility, which includes the Company's $650,000 term loan, requires
the Company to maintain a stated tangible net worth amount and debt service
coverage. Payment of dividends is prohibited under the terms of this agreement.
This note is secured by the personal property of the Company.
Term loans
The Company has two term loans outstanding at December 31, 1995. The first is a
bank loan for $650,000, dated November 3, 1994, which is due on December 1,
1998, and is payable in monthly installments of $13,542 plus interest at 10%.
The loan is secured by the personal property of the Company. The second term
loan for $350,000, which was funded through a state agency and dated December
15, 1993, is due October 31, 1996. Monthly interest payments are at prime plus
1-1/2% on the outstanding balance. Monthly principal payments of $11,667 plus
interest commenced in May 1994. The loan which is subordinate to the interest of
the Company's existing lender, is secured by certain of the Company's assets and
is guaranteed by the Company.
Mortgage notes
The Company has three mortgage notes outstanding at December 31, 1995. In
September 1993, the Company completed the refinancing of its Corporate
Headquarters in Framingham, Massachusetts. The mortgage note, in the original
amount of $1,450,000 at 9.125% for 15 years, provides for monthly principal and
interest payments of $14,815. A note on a second building acquired in December
1992 requires monthly principal and interest (at 9-1/2%) payments of $5,710 over
twenty years. In May 1993, the Company received $507,000 in mortgage financing
for the improvement and updating of this facility under a note from the Small
Business Administration. The twenty year note with interest at approximately
6.6% calls for monthly principal and interest payments of $4,277. Each of these
notes is collateralized by the buildings which they financed.
40
<PAGE> 40
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Equipment loans and capital lease obligations
The Company purchases or leases various vehicles and computer equipment under
loan and capital lease agreements. The agreements require monthly or quarterly
payments of varying amounts and expire through 1999.
Interest paid was approximately $523,000, $505,000, and $371,000 for the years
ended December 31, 1995, 1994, and 1993, respectively. The Company and its
subsidiaries lease office and warehouse facilities under operating leases
expiring on various dates through February 1, 1998. Total rent expense charged
to operations approximated $356,000, $411,000, and $395,000 in 1995, 1994, and
1993, respectively.
<TABLE>
At December 31, 1995, long-term obligations and minimum rental commitments under
noncancelable operating and capital leases with initial terms of one year or
more are as follows:
<CAPTION>
Capital Leases Long-Term Obligations Operating Leases
-------------- --------------------- ----------------
<S> <C> <C> <C>
1996 $ 56,102 $ 394,795 $ 347,464
1997 47,857 257,439 317,712
1998 33,310 252,563 324,066
1999 24,914 113,070 27,500
2000 - 123,413 -
Thereafter - 1,868,810 -
-------- ---------- ----------
162,183 3,010,090 1,016,742
Less
imputed
interest 25,809 - -
-------- ---------- ----------
$136,374 $3,010,090 $1,016,742
======== ========== ==========
</TABLE>
Amounts recorded under capital leases included in computer equipment are
approximately, $466,000 and $441,000 at December 31, 1995 and 1994,
respectively. Accumulated depreciation and amortization was approximately
$232,000 and $88,000 at December 31, 1995 and 1994, respectively.
Litigation
The Company is involved in various disputes and legal proceedings. In the
opinion of the Company, although the outcome of any litigation cannot be
predicted with certainty, the ultimate liability of the Company in connection
with pending litigation will not have a material adverse effect on the Company's
financial position.
41
<PAGE> 41
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<TABLE>
F. Income Taxes:
<CAPTION>
Years Ended December 31,
------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ 28,000 $ - $ -
State 64,000 28,000 -
Deferred 500,000 372,000 210,000
-------- -------- --------
$592,000 $400,000 $210,000
======== ======== ========
</TABLE>
On a cash basis, income taxes paid in 1995, 1994, and 1993 were
approximately $33,700, $73,700, and 194,000, respectively.
<TABLE>
Income taxes are reconciled with the federal statutory rate as follows:
<CAPTION>
Years Ended December 31,
------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income taxes at statutory
federal rate $357,000 $192,000 $108,000
State income tax, net of
federal income tax benefit 66,000 34,000 19,000
Non-deductible amortization
of intangibles 88,000 105,000 81,000
Other, net 81,000 69,000 2,000
-------- -------- --------
$592,000 $400,000 $210,000
======== ======== ========
</TABLE>
Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts for income tax purposes, and (b) operating loss and tax
credit carryforwards. The tax effects of significant items comprising the
Company's net deferred tax liability as of December 31, 1995 and 1994 are as
follows:
42
<PAGE> 42
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax liabilities:
Software development
deducted for tax, not book $1,798,000 $1,657,000
Differences between book
and tax basis of property 4,000 73,000
Other 57,000 53,000
---------- ----------
1,859,000 1,783,000
Deferred tax assets:
Reserves not currently deductible - 33,000
Operating loss carryforwards 866,000 1,244,000
Tax credit carryforwards 494,000 494,000
Other 66,000 79,000
---------- ----------
1,426,000 1,850,000
Net deferred tax asset (liability) (433,000) 67,000
Less valuation allowance (184,000) (184,000)
---------- ----------
Net deferred tax liability $ (617,000) $ (117,000)
========== ==========
</TABLE>
As a result of applying SFAS No. 109, previously unrecorded tax benefits from
operating loss carryforwards and tax credit carryforwards incurred by the
Company were recognized at January 1, 1993 as part of the cumulative effect of
adopting the statement. The Company increased its valuation allowance in 1993 to
reflect purchased net operating losses that may not be realized.
The Company has available operating loss carryforwards primarily for Federal
purposes of $2,131,000 at December 31, 1995, that expire through 2009, some of
which are losses of purchased subsidiaries and whose use is limited.
G. Capital Transactions:
Approximately $343,000 of the balance in treasury stock represents the Company's
50% investment in a partnership which consists of shares of its own common
stock. The Chief Executive Officer and the President hold the remaining 50% of
the investment.
In June 1993, a former officer of the Company exercised options for 23,500
shares in exchange for a note for $33,840 at 6% interest. Subsequent to this
transaction, the officer resigned. Pursuant to the officer's resignation, the
Company received 31,929 shares (which the
43
<PAGE> 43
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
officer already owned outright), in payment for this note and a $40,000 note
issued under a prior stock purchase agreement. The notes plus accrued interest
totaled $95,786. The shares received were recorded as treasury stock at the then
current market value of $3.00. In September 1993, the Company received 55,405
and 40,714 shares from the Chairman and President of the Company, respectively,
as consideration for notes, accrued interest and advances due the Company
totaling $171,755 and $126,214, respectively. The shares received were recorded
as treasury stock at the then current market value of $3.10 per share.
During 1993 the Company utilized treasury shares to satisfy stock option
exercises, stock awards, and acquisition consideration. In instances where the
cost basis of the treasury stock was greater than the transaction price,
retained earnings was charged.
<TABLE>
Stock options
The Company has stock option plans which provide for the granting of incentive
stock options and nonqualified stock options to purchase an aggregate of 680,000
shares of common stock at a price not less than fair market value on the date
the option is granted.
<CAPTION>
Incentive stock options Nonqualified options
----------------------- --------------------
Number Price Number Price
of shares per share of shares per share
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE,
January 1, 1993 159,158 $ .89-8.00 105,000 $ .89-1.75
Granted 49,243 1.44-2.63 240,000 1.44-2.69
Exercised (43,769) .89-1.44 - -
Canceled (63,839) .89-8.00 (55,000) .89
------- ---------- ------- ----------
BALANCE,
December 31, 1993 100,793 .89-2.63 290,000 .89-2.69
Granted 9,050 .88-1.57 - -
Canceled (4,607) .88-2.63 - -
------- ---------- ------- ----------
BALANCE,
December 31, 1994 105,236 .88-2.63 290,000 .89-2.69
Granted 8,150 .92-1.07 - -
Exercised (48) .89 - -
Canceled (16,152) .88-2.63 - -
------- ---------- ------- ----------
BALANCE,
December 31, 1995 97,186 $ .88-2.63 290,000 $ .89-2.69
======= ========== ======= ==========
</TABLE>
44
<PAGE> 44
ASA INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
As of December 31, 1995, options for 353,438 shares are exercisable at an
average exercise price of $1.45 per share.
The Chairman and President of the Company have additional nonqualified options
outstanding to purchase an aggregate of 220,000 shares at $.89 per share. These
options are fully vested but can be used only to purchase unregistered stock.
Common stock reserved
At December 31, 1995, the Company has reserved 1,126,575 shares of its common
stock for incentive and nonqualified stock options.
H. Employee Benefit Plan:
The Company maintains a defined contribution benefit plan covering substantially
all its employees. The Company makes contributions to the plan at the discretion
of the Board of Directors based upon a percentage of employee compensation as
provided by the terms of the plan. Contributions charged to operations in 1995
and 1993 were approximately $63,000 and $59,000, respectively. The Company did
not make a contribution to the plan in 1994.
I. Transactions with Major Suppliers:
In 1995 and 1994, the Company purchased a significant amount of hardware from
two suppliers totaling $6,129,000 and $5,667,000, respectively. Previously, in
1993 the Company had purchases from one supplier totaling approximately
$4,061,000.
J. Major Customers:
Sales to one customer, a United States governmental agency, were approximately
$4,292,000 in 1993. Transactions with this customer for 1995 and 1994 were not
significant.
45
<PAGE> 1
Federal Identification
No. 02-0398205
Fee: $250.00
THE COMMONWEALTH OF MASSACHUSETTS
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachuetts 02108-1512
ARTICLES OF MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
(General Laws, Chapter 156B, Section 82)
We, Terence C. McCarthy , / * Vice President,
---------------------------------------------
and Terrence C. McCarthy , / *Assistant Clerk,
---------------------------------------------
of ASA International Ltd. - ,
------------------------------------------------------------------
(Exact name of corporation)
organized under the laws of Delaware and herein called the parent
----------
corporation, certify as follows:
<TABLE>
1. That the subsidiary corporation(s) to be merged into the parent
corporation is/are:
<CAPTION>
STATE OF DATE OF
NAME ORGANIZATION ORGANIZATION
---- ------------ ------------
<S> <C> <C>
ASA Legal Systems MA 06/12/91
Company, Inc.
ASA Incorporated MA 07/16/76
</TABLE>
2. The parent corporation, at the date of the vote, owned not less than ninety
percent (90%) of the outstanding shares of each class of stock of the subsidiary
corporation or corporations with which it has voted to merge.
Item 3 below may be deleted if all the corporations are organized under the laws
of Massachusetts and if General Laws, Chapter 156B is applicable to them.
3. That in the case of each of the above named corporations, the laws of the
state of its organization, if other than Massachusetts, permit the merger herein
described, and that all action required under the laws of each such state in
connection with this merger has been duly taken.
- --------------------------------------------------------------------------------
*Delete the inapplicable words. In case the parent corporation is organized
under the laws of a state other than Massachusetts, these articles are to be
signed by officers having corresponding powers and duties.
47
<PAGE> 2
4. That at a meeting of the directors of the parent corporation, the following
vote, pursuant to General Laws, Chapter 156B, Section 82, Subsection (a) was
duly adopted:
RESOLVED: That ASA International Ltd. merge, and it hereby does
merge into itself said ASA Incorporated and ASA Legal
Systems Company, Inc., and assumes all its obligations.
- ----------------------------------------------------------------------
Note: Votes, for which the space provided above is not sufficient, should be
listed on additional sheets to be numbered 4A, 4B, etc. Additional sheets must
be 8 1/2 x 11 and have a left hand margin of 1 inch. Only one side should be
used.
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<PAGE> 3
5. The effective date of the merger shall be the date
approved and filed by the Secretary of the Commonwealth.
Section 5 below may be deleted if the parent corporation is organized under the
laws of Massachusetts.
6. The parent corporation hereby agrees that it may be sued in the Commonwealth
of Massachusetts for any prior obligation of any corporation organized under the
laws of Massachusetts with which it has merged, and any obligation hereafter
incurred by the parent corporation, including the obligation created by General
Laws, Chapter 156B, Section 82, Subsection (e), so long as any liability remains
outstanding against the parent corporation in the Commonwealth of Massachusetts,
and it hereby irrevocably appoints the Secretary of the Commonwealth as its
agent to accept service of process in any action for the enforcement of any such
obligations, including taxes, in the same manner as provided in Chapter 181.
SIGNED UNDER THE PENALTIES OF PERJURY, this 28th day of December, 1995,
---- --------------
/s/ Terrence C. McCarthy
- --------------------------------------------------
Terrence C. McCarthy , / * Vice President,
/s/ Terrence C. McCarthy
- --------------------------------------------------
Terrence C. McCarthy , / * Assistant Clerk,
- ------------------------------------------------------------------------
* Delete the inapplicable words. In case the parent corporation is organized
under the laws of a state other than Massachusetts, these articles are to be
signed by officers having corresponding powers and duties.
49
<PAGE> 4
522512
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
(General Laws, Chapter 156B, Section 82)
================================================================================
I hereby approved the within Articles of Merger of Parent and Subsidiary
Corporations and, the filing fee in the amount of $250.00, having been paid,
said articles are deemed to have been filed with me this 29th day of December,
1995.
Effective date: --------------------------------------------------------
/s/ William Francis Galvin
---------------------------
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
Mark J. Tarallo, Esquire
O'CONNOR, BROUDE & ARONSON
-----------------------------
950 Winter Street, Suite 2300
-----------------------------
Waltham, MA 02154
-----------------------------
Telephone: (617) 890-6600
-----------------------------
50
<PAGE> 1
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
ASA INCORPORATED
AND
ASA LEGAL SYSTEMS COMPANY, INC.
INTO
ASA INTERNATIONAL LTD.
******
ASA INTERNATIONAL LTD., a corporation organized and existing under
the laws of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That this Corporation was incorporated on the 1st day of
April, 1986, pursuant to the General Corporation Law of the
State of Delaware.
SECOND: That this Corporation owns all of the outstanding shares of
the stock of ASA INCORPORATED, a corporation incorporated on
the 16th day of July, 1976 pursuant to the Business
Corporation Laws of the Commonwealth of Massachusetts.
THIRD: That this Corporation owns all of the outstanding shares of
the stock of ASA LEGAL SYSTEMS COMPANY, INC., a corporation
incorporated on the 1st day of February, 1984 pursuant to the
Business Corporation Laws of the Commonwealth of
Massachusetts.
FOURTH: That this Corporation, by the following resolutions of its
Board of Directors by unanimous written consent of dated
December 22, 1995, determined and did merge into itself said
ASA INCORPORATED and ASA LEGAL SYSTEMS INC.:
RESOLVED: That ASA International Ltd. merge, and it hereby
does merge into itself said ASA Incorporated and
ASA Legal Systems Company, Inc. and assumes all its
obligations.
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<PAGE> 2
FURTHER
RESOLVED: That the merger shall be effective upon the date of
filing with the Secretary of State of Delaware.
FIFTH: Anything herein or elsewhere to the contrary notwithstanding,
this merger may be amended or terminated and abandoned by the
Board of Directors of ASA INTERNATIONAL LTD. at any time prior
to the date of filing the merger with the Secretary of State.
IN WITNESS WHEREOF, said ASA INTERNATIONAL LTD. has caused this
Certificate to be signed by Terrence C. McCarthy, its Vice President
this 28th day of December, 1995.
/s/ Terrence C. McCarthy
---------------------------
Terrence C. McCarthy
Vice President
53
<PAGE> 1
CERTIFICATE OF INCORPORATION
OF
ASA INTERNATIONAL VENTURES, INC.
*****
1. The name of the corporation is ASA INTERNATIONAL VENTURES, INC.
2. The address of its registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation
Trust Company.
3. The nature of the business or purposes to be conducted or promoted
is:
To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is one million (1,000,000) shares of Common
Stock, $.01 par value per share.
Additional designations and powers, preferences and rights and
qualifications, limitations or restrictions thereof of the shares
shall be determined by the Board of Directors of the corporation
from time to time.
5. The name and mailing address of the corporation's incorporator is:
Mark J. Tarallo
c/o O'Connor, Broude & Aronson
950 Winter Street, Suite 2300
Waltham, Massachusetts 02154
6. The name and address of the persons who are to serve as the
directors of the Corporation until the first annual meeting of the
stockholders or until their successor(s) are elected and qualified
are:
Alfred C. Angelone Christopher J. Crane
303 Hillside Street 283 Littleton Road
Milton, Massachusetts 02186 Harvard, Massachusetts 01451
7. The corporation is to have perpetual existence.
8. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the bylaws of the corporation.
To authorize and cause to be executed mortgages and liens upon
the real and personal property of the corporation.
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<PAGE> 2
To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper purpose
and to abolish any such reserve in the manner in which it was
created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the
corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of the committee. The bylaws may provide that in the absence
or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or
not he or they constitute a quorum, may unanimously appoint another member
of the board of directors to act at the meeting in the place of any such
agent or disqualified member. Any such committee, to the extent provided in
the resolution of the board of directors, or in the bylaws of the
corporation, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to
all papers which may require it; but no such committee shall have the power
or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease, or exchange of all or substantially all of
the corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or
amending the bylaws of the corporation; and, unless the resolution or
bylaws expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with statute,
to sell, lease or exchange all or substantially all of the property and
assets of the corporation, including its goodwill and its corporate
franchises, upon such terms and conditions and for such consideration,
which may consist in whole or in part of money or property, including
shares of stock in, and/or other securities of, any other corporation or
corporation, as its board of directors shall deem expedient and for the
best interests of the corporation.
9. To the maximum extent permitted by Section 102(b)(7) of the General
Corporation Law of Delaware, a director of this Corporation shall not be
personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
56
<PAGE> 3
10. Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and
its stockholders or any class of them, any court or equitable jurisdiction
within the State of Delaware may, on the application in a summary way of
this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on
the application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 279 of Title
8 of the Delaware Code, order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said
court directors. If a majority in number representing three-fourths in
value of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this corporation, as the case may be, agree to any
compromise or arrangement to any reorganization of this corporation as
consequences of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court
to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders of this corporation, as the case may be, and also on this
corporation.
11. Meetings of the stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time
by the Board of Directors or in the bylaws of the corporation. Elections of
directors need not be by written ballot unless the bylaws of the
corporation shall so provide.
12. The corporation reserves the right to amend, alter, change, or repeal any
provision contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation; except that
any such amendment shall be made by the holders of a majority of the
outstanding shares of Common Stock of the Corporation.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
57
<PAGE> 4
THE UNDERSIGNED, being the incorporator named hereinbefore, for the
purposes of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this certificate, hereby declaring and certifying
that this is his act and deed and the facts herein stated are true, and
accordingly, has hereunto set his hand this 28th day of December, 1995.
/s/ Mark J. Tarallo
-------------------------------
Mark J. Tarallo
Sole Incorporator
COMMONWEALTH OF MASSACHUSETTS)
) ss.:
COUNTY OF MIDDLESEX )
BE IT REMEMBERED that on this 28th day of December, 1995, personally came
before me, a Notary Public for the Commonwealth of Massachusetts, Mark J.
Tarallo, the party to the foregoing Certificate of Incorporation, known to me
personally to be such, and acknowledged the said certificate to be his act and
deed and that the facts stated therein are true. GIVEN under my hand and seal of
office the day and year aforesaid.
/s/ Janet M. Davenport
---------------------------------
Janet M. Davenport
Notary Public
My Commission Expires: 02/16/01
58
<PAGE> 1
BYLAWS
OF
ASA INTERNATIONAL VENTURES, INC.
ARTICLE I. Offices.
-------
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
shall be at The Corporation Trust Company, 1209 Orange Street, in the City of
Wilmington, County of New Castle, State of Delaware 19801.
SECTION 2. ADDITIONAL OFFICES. The Corporation may also have offices at
such other places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE II. Meetings of Stockholders.
------------------------
SECTION 1. TIME AND PLACE. A meeting of stockholders for any purpose may be
held at such time and place within or without the State of Delaware as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
SECTION 2. ANNUAL MEETING. Annual meetings of stockholders, commencing with
the year 1996, shall be held on the first Monday in May, if not a legal holiday,
or, if a legal holiday, then on the next secular day following, at 10:00 a.m.,
or at such other date and time as shall, from time to time, be designated by the
Board of Directors and stated in the notice of the meeting. At such annual
meetings, the stockholders shall elect a Board of Directors and transact such
other business as may properly be brought before the meetings.
SECTION 3. NOTICE OF ANNUAL MEETING. Written notice of the annual meeting,
stating the place, date, and time thereof, shall be given to each stockholder
entitled to vote at such meeting not less than ten (unless a longer period is
required by law) nor more than sixty days prior to the meeting.
SECTION 4. SPECIAL MEETINGS. Special meetings of the stockholders may be
called for any purpose or purposes, unless otherwise prescribed by statute or by
the Certificate of Incorporation, by the Chairman of the Board, if any, or the
President, and shall be called by the
60
<PAGE> 2
President or Secretary at the request, in writing, of a majority of the Board of
Directors or of the stockholders owning a majority of the shares of capital
stock of the Corporation issued and outstanding and entitled to vote. Such
request shall state the purpose of the proposed meeting.
SECTION 5. NOTICE OF SPECIAL MEETING. Written notice of a special meeting,
stating the place, date, and time thereof and the purpose or purposes for which
the meeting is called, shall be given to each stockholder entitled to vote at
such meeting not less than ten (unless a longer period is required by law) nor
more than sixty days prior to the meeting.
SECTION 6. LIST OF STOCKHOLDERS. The transfer agent or the officer in
charge of the stock ledger of the Corporation shall prepare and make, at least
ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, at a
place within the city where the meeting is to be held, which place, if other
than the place of the meeting, shall be specified in the notice of the meeting.
The list shall also be produced and kept at the place of the meeting during the
whole time thereof and may be inspected by any stockholder who is present in
person thereat.
SECTION 7. PRESIDING OFFICER AND ORDER OF BUSINESS
(a) Meetings of stockholders shall be presided over by the Chairman of the
Board. If he is not present or there is none, they shall be presided over by the
President, or, if he is not present or there is none, by a Vice President, or,
if he is not present or there is none, by a person chosen by the Board of
Directors, or, if no such person is present or has been chosen, by a chairman to
be chosen by the stockholders owning a majority of the shares of capital stock
of the Corporation issued and outstanding and entitled to vote at the meeting
and who are present in person or represented by proxy. The Secretary of the
Corporation, or, if he is not present, an Assistant Secretary, or, if he is not
present, a person chosen by the Board of Directors, shall act as Secretary at
meetings of stockholders; if no such person is present or has been chosen, the
stockholders owning a majority of the shares of capital stock of the Corporation
issued and outstanding and entitled to vote at the meeting who are present in
person or represented by proxy shall choose any person present to act as
secretary of the meeting.
(b) The following order of business, unless otherwise determined at the
meeting, shall be observed as far as prac ticable and consistent with the
purposes of the meeting:
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<PAGE> 3
(1) Call of the meeting to order.
(2) Presentation of proof of mailing of the notice of the
meeting and, if he meeting is a special meeting, the call
thereof.
(3) Presentation of proxies.
(4) Announcement that a quorum is present.
(5) Reading and approval of the minutes of the previous
meeting.
(6) Reports, if any, of officers.
(7) Election of directors, if the meeting is an annual
meeting or a meeting called for that purpose.
(8) Consideration of the specific purpose or purposes, other
than the election of directors, for which the meeting has
been called, if the meeting is a special meeting.
(9) Transaction of such other business as may properly come
before the meeting.
(10) Adjournment.
SECTION 8. QUORUM AND ADJOURNMENTS. The presence in person or
representation by proxy of the holders of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote
shall be necessary to, and shall constitute a quorum for, the transaction of
business at all meetings of the stockholders, except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, a quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat who are present in person or represented by proxy shall
have the power to adjourn the meeting from time to time until a quorum shall be
present or represented. If the time and place of the adjourned meeting are
announced at the meeting at which the adjournment is taken, no further notice of
the adjourned meeting need be given. Even if a quorum shall be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat who are present in person or represented by proxy shall have the
power to adjourn the meeting from time to time for good cause to a date that is
not more than thirty days after the date of the original meeting. Further notice
of the adjourned meeting need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken. At any adjourned
meeting at which a quorum is present in person or represented by proxy, any
business may be transacted that might have been transacted at the meeting as
originally called. If the adjournment is for more than thirty days, or if, after
the adjournment, a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote thereat.
SECTION 9. VOTING.
(a) At any meeting of the stockholders, every stockholder having the right
to vote shall be entitled to vote in person or by proxy. Except as otherwise
provided by law or the Certificate of Incorporation, each stockholder of record
shall be entitled to one vote for each share of capital stock registered in his
name on the books of the Corporation.
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<PAGE> 4
(b) All elections shall be determined by a plurality vote, and, except as
otherwise provided by law or the Certificate of Incorporation, all other matters
shall be determined by a vote of a majority of the shares present in person or
represented by proxy and voting on such other matters.
SECTION 10. ACTION BY CONSENT. Any action required or permitted by law or
the Certificate of Incorporation to be taken at any meeting of stockholders may
be taken without a meeting, without prior notice if a written consent, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present or represented by proxy and voted. Such written consent
shall be filed with the minutes of the meetings of stockholders. Prompt notice
of the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stock holders who have not consented in
writing thereto.
ARTICLE III. Directors.
---------
SECTION 1. GENERAL POWERS, NUMBER, AND TENURE. The business of the
Corporation shall be managed by its Board of Directors, which may exercise all
powers of the Corporation and perform all lawful acts that are not by law, the
Certificate of Incorporation, or these Bylaws directed or required to be
exercised or performed by the stockholders. The number of directors shall be
determined by the Board of Directors; if no such determination is made, the
number of directors shall be one. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 2 of this Article,
and each director elected shall hold office until the next annual meeting and
until his successor is elected and shall qualify. Directors need not be
stockholders.
SECTION 2. VACANCIES. If any vacancies occur in the Board of Directors, or
if any new directorships are created, they may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. Each director so chosen shall hold office until the next annual
meeting of stockholders and until his successor is duly elected and shall
qualify. If there are no directors in office, any officer or stockholder may
call a special meeting of stockholders in accordance with the provisions of the
Certificate of Incorporation or these Bylaws, at which meeting such vacancies
shall be filled.
SECTION 3. REMOVAL OR RESIGNATION.
(a) except as otherwise provided by law or the Certificate of
Incorporation, any director or the entire Board of Directors may be
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<PAGE> 5
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
(b) Any director may resign at any time by giving written notice to the
Board of Directors, the Chairman of the Board, if any, or the President or
Secretary of the Corporation. Unless otherwise specified in such written notice,
a resignation shall take effect on delivery thereof to the Board of Directors or
the designated officer. It shall not be necessary for a resignation to be
accepted before it becomes effective.
SECTION 4. PLACE OF MEETINGS. The Board of Directors may hold meetings,
both regular and special, either within or without the State of Delaware.
SECTION 5. ANNUAL MEETING. The annual meeting of each newly elected Board
of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting shall be necessary to the newly
elected directors in order to constitute the meeting legally, provided a quorum
shall be present.
SECTION 6. REGULAR MEETINGS. Additional regular meetings of the Board of
Directors may be held without notice of such time and place as may be determined
from time to time by the Board of Directors.
SECTION 7. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by the Chairman of the Board, the President, or by two or more
directors on at least two days' notice to each director, if such notice is
delivered personally or sent by telegram, or on at least three days' notice if
sent by mail. Special meetings shall be called by the Chairman of the Board,
President, Secretary, or two or more directors in like manner and on like notice
on the written request of one-half or more of the number of directors then in
office. Any such notice need not state the purpose or purposes of such meeting,
except as provided in Article XI.
SECTION 8. QUORUM AND ADJOURNMENTS. At all meetings of the Board of
Directors, a majority of the directors then in office shall constitute a quorum
for the transaction of business, and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by law or the
Certificate of Incorporation. If a quorum is not present at any meeting of the
Board of Directors, the directors present may adjourn the meeting from time to
time, without notice other than announcement at the meeting at which the
adjournment is taken, until a quorum shall be present.
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SECTION 9. COMPENSATION. Directors shall be entitled to such compensation
for their services as directors and to such reimbursement for any reasonable
expenses incurred in attending directors' meetings as may from time to time be
fixed by the Board of Directors. The compensation of directors may be on such
basis as is determined by the Board of Directors. Any director may waive
compensation for any meeting. Any director receiving compensation under these
provisions shall not be barred from serving the Corporation in any other
capacity and receiving compensation and reimbursement for reasonable expenses
for such other services.
SECTION 10. ACTION BY CONSENT. Any action required or permitted to be taken
at any meeting of the Board of Directors may be taken without a meeting, and
without prior notice, if a written consent to such action is signed by all
members of the Board of Directors and such written consent is filed with the
minutes of its proceedings.
SECTION 11. MEETINGS BY TELEPHONE OR SIMILAR COMMUNICATIONS Equipment. The
Board of Directors may participate in a meeting by conference telephone or
similar communications equipment by means of which all directors participating
in the meeting can hear each other, and participation in such a meeting shall
constitute presence in person by any such director at such meeting.
ARTICLE IV. Committees.
----------
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may appoint an Executive Committee
consisting of one or more directors, one of whom shall be designated as Chairman
of the Executive Committee. Each member of the Executive Committee shall
continue as a member thereof until the expiration of his term as a director or
his earlier resignation, unless sooner removed as a member or as a director.
SECTION 2. POWERS. The Executive Committee shall have and may exercise
those rights, powers, and authority of the Board of Directors as may from time
to time be granted to it by the Board of Directors to the extent permitted by
law, and may authorize the seal of the Corporation to be affixed to all papers
that may require it.
SECTION 3. PROCEDURE AND MEETINGS. The Executive Committee shall fix its
own rules of procedure and shall meet at such times and at such place or places
as may be provided by such rules or as the members of the Executive Committee
shall fix. The Executive Committee shall keep regular minutes of its meetings,
which it shall deliver to the Board of Directors from time to time. The Chairman
of the Executive Committee or, in his absence, a member of the Executive
Committee chosen by a majority of the members present, shall preside at meetings
of the
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Executive Committee; and another member chosen by the Executive Committee
shall act as Secretary of the Executive Committee.
SECTION 4. QUORUM. A majority of the Executive Committee shall constitute a
quorum for the transaction of business, and the affirmative vote of a majority
of the members present at any meeting at which there is a quorum shall be
required for any action of the Executive Committee; provided, however, that when
an Executive Committee of one member is authorized under the provisions of
Section 1 of this Article, that one member shall constitute a quorum.
SECTION 5. OTHER COMMITTEES. The Board of Directors, by resolutions adopted
by a majority of the whole Board, may appoint such other committee or committees
as it shall deem advisable and with such rights, power, and authority as it
shall prescribe. Each such committee shall consist of one or more directors.
SECTION 6. COMMITTEE CHANGES. The Board of Directors shall have the power
at any time to fill vacancies in, to change the membership of, and to discharge
any committee.
SECTION 7. COMPENSATION. Members of any committee shall be entitled to such
compensation for their services as members of the committee and to such
reimbursement for any reasonable expenses incurred in attending committee
meetings as may from time to time be fixed by the Board of Directors. Any member
may waive compensation for any meeting. Any committee member receiving
compensation under these provisions shall not be barred from serving the
Corporation in any other capacity and from receiving compensation and
reimbursement of reasonable expenses for such other services.
SECTION 8. ACTION BY CONSENT. Any action required or permitted to be taken
at any meeting of any committee of the Board of Directors may be taken without a
meeting if a written consent to such action is signed by all members of the
committee and such written consent is filed with the minutes of its proceedings.
SECTION 9. MEETINGS BY TELEPHONE OR SIMILAR COMMUNICATIONS Equipment. The
members of any committee designated by the Board of Directors may participate in
a meeting of such committee by conference telephone or similar communications
equipment by means of which all persons participating in such meeting can hear
each other, and participation in such a meeting shall constitute presence in
person by any such committee member at such meeting.
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ARTICLE V. Notices.
-------
SECTION 1. FORM AND DELIVERY. Whenever a provision of any law, the
Certificate of Incorporation, or these Bylaws requires that notice be given to
any director or stockholder, it shall not be construed to require personal
notice unless so specifically provided, but such notice may be given in writing,
by mail addressed to the address of the director or stockholder as it appears on
the records of the Corporation, with postage prepaid. These notices shall be
deemed to be given when they are deposited in the United States mail. Notice to
a director may also be given personally or by telephone or by telegram sent to
his address as it appears on the records of the Corporation.
SECTION 2. WAIVER. Whenever any notice is required to be given
under the provisions of any law, the Certificate of Incorporation, or these
Bylaws, a written waiver thereof signed by the person entitled to said notice,
whether before or after the time stated therein, shall be deemed to be
equivalent to such notice. In addition, any stockholder who attends a meeting of
stockholders in person or is represented at such meeting by proxy, without
protesting at the commencement of the meeting the lack of notice thereof to him,
or any director who attends a meeting of the Board of Directors without
protesting at the commencement of the meeting of the lack of notice, shall be
conclusively deemed to have waived notice of such meeting.
ARTICLE VI. Officers.
--------
SECTION 1. DESIGNATIONS. The officers of the Corporation shall be chosen by
the Board of Directors. The Board of Directors may choose a Chairman of the
Board, a President, a Vice President or Vice Presidents, a Secretary, a
Treasurer, one or more Assistant Secretaries and/or Assistant Treasurers, and
other officers and agents that it shall deem necessary or appropriate. All
officers of the Corporation shall exercise the powers and perform the duties
that shall from time to time be determined by the Board of Directors. Any number
of offices may be held by the same person, unless the Certificate of
Incorporation or these Bylaws provide otherwise.
SECTION 2. TERM OF, AND REMOVAL FROM, OFFICE. At its first regular meeting
after each annual meeting of stockholders, the Board of Directors shall choose a
President, a Secretary, and a Treasurer. It may also choose a Chairman of the
Board, a Vice President or Vice Presidents, one or more Assistant Secretaries
and/or Assistant Treasurers, and such other officers and agents as it shall deem
necessary or appropriate. Each officer of the Corporation shall hold office
until his successor is chosen and shall qualify. Any officer elected or
appointed by the Board of Directors may be removed, with or without cause, at
any time by the affirmative vote of a majority of the
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directors then in office. Removal from office, however, shall not prejudice the
contract rights, if any, of the person removed. Any vacancy occurring in any
office of the Corporation may be filled for the unexpired portion of the term by
the Board of Directors.
SECTION 3. COMPENSATION. The salaries of all officers of the Corporation
shall be fixed from time to time by the Board of Directors, and no officer shall
be prevented from receiving a salary because he is also a director of the
Corporation.
SECTION 4. THE CHAIRMAN OF THE BOARD. The Chairman of the Board, if any,
shall be an officer of the Corporation and, subject to the direction of the
Board of Directors, shall perform such executive, supervisory, and management
functions and duties as may be assigned to him from time to time by the Board of
Directors. He shall, if present, preside at all meetings of stockholders and of
the Board of Directors.
SECTION 5. THE PRESIDENT.
(a) The President shall be the chief executive officer of the Corporation
and, subject to the direction of the Board of Directors, shall have general
charge of the business, affairs, and property of the Corporation and general
supervision over its other officers and agents. In general, he shall perform all
duties incident to the office of President and shall see that all orders and
resolutions of the Board of Directors are carried into effect.
(b) Unless otherwise prescribed by the Board of Directors, the President
shall have full power and authority to attend, act, and vote on behalf of the
Corporation at any meeting of the security holders of other corporations in
which the Corporation may hold securities. At any such meeting, the President
shall possess and may exercise any and all rights and powers incident to the
ownership of such securities that the Corporation might have possessed and
exercised if it had been present. The Board of Directors may from time to time
confer like powers upon any other person or persons.
SECTION 6. THE VICE PRESIDENT. The Vice President, if any, or in the event
there be more than one, the Vice Presidents in the order designated, or in the
absence of any designation, in the order of their election, shall, in the
absence of the President or in the event of his disability, perform the duties
and exercise the powers of the President and shall generally assist the
President and perform such other duties and have such other powers as may from
time to time be prescribed by the Board of Directors.
SECTION 7. THE SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and the stockholders and record all votes and the proceedings
of the meetings in a book to be kept for that purpose. He shall perform like
duties for the Executive Committee or other
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committees, if required. He shall give, or cause to be given, notice of all
meetings of stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may from time to time be prescribed by the
Board of Directors, the Chairman of the Board, or the President, under whose
supervision he shall act. He shall have custody of the seal of the Corporation,
and he, or an Assistant Secretary, shall have authority to affix it to any
instrument requiring it, and, when so affixed, the seal may be attested by his
signature or by the signature of the Assistant Secretary. The Board of Directors
may give general authority to any other officer to affix the seal of the
Corporation and to attest the affixing thereof by his signature.
SECTION 8. THE ASSISTANT SECRETARY. The Assistant Secretary, if any, or in
the event there be more than one, the Assistant Secretaries in the order
designated, or in the absence of any designation, in the order of their
election, shall, in the absence of the Secretary or in the event of his
disability, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board of Directors.
SECTION 9. THE TREASURER. The Treasurer shall have custody of the corporate
funds and other valuable effects, including securities, and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may from time to
time be designated by the Board of Directors. He shall disburse the funds of the
Corporation in accord with the orders of the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chairman of the Board,
if any, the President, and the Board of Directors, whenever they may require it
or at regular meetings of the Board, an account of all his transactions as
Treasurer and of the financial condition of the Corporation.
SECTION 10. THE ASSISTANT TREASURER. The Assistant Treasurer, if any, or in
the event there shall be more than one, the Assistant Treasurers in the order
designated, or in the absence of any designation, in the order of their
election, shall, in the absence of the Treasurer or in the event of his
disability, perform such other duties and have such other powers as may from
time to time be prescribed by the Board of Directors.
ARTICLE VII. Indemnification.
---------------
Reference is made to Section 145 and any other relevant provisions of the
General Corporation Law of the State of Delaware. Particular reference is made
to the class of persons, hereinafter called "Indemnitees", who may be indem
nified by a Delaware corporation pursuant to the provisions of such Section 145,
namely, any person, or the heirs, executors, or administrators of such person,
who was or is a party or is
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threatened to be made a party to any threatened, pending or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
by reason of the fact that such person is or was a director, officer, employee,
or agent of such corporation or is or was serving at the request of such
corporation as a director, officer, employee, or agent of such corporation or is
or was serving at the request of such corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise. The Corporation shall, and is hereby obligated to, indemnify
the Indem nitees, and each of them, in each and every situation where the
Corporation is obligated to make such indemnification pursuant to the aforesaid
statutory provisions. The Corporation shall indemnify the Indemnitees, and each
of them, in each and every situation where, under the aforesaid statutory
provisions, the Corporation is not obligated, but is nevertheless permitted or
empowered, to make such indemnification, it being understood that, before making
such indemnification with respect to any situation covered under this sentence,
(i) the Corporation shall promptly make or cause to be made, by any of the
methods referred to in Subsection (d) of such Section 145, a determination as to
whether each Indemnitee acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Corporation,
and, in the case of any criminal action or proceeding, had no reasonable cause
to believe that his conduct was unlawful, and (ii) that no such indemnification
shall be made unless it is determined that such Indemnitee acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, in the case of any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
ARTICLE VIII. Affiliated Transactions and Interested Directors.
------------------------------------------------
SECTION 1. AFFILIATED TRANSACTIONS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at or participates
in the meeting of the Board of Directors or committee thereof that authorizes
the contract or transaction or solely because his or their votes are counted for
such purpose if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the
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stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by the vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved, or ratified by the Board of Directors, a
committee thereof, or the stockholders.
SECTION 2. DETERMINING QUORUM. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee thereof which authorizes the contract or
transaction.
ARTICLE IX. Stock Certificates.
------------------
SECTION 1. FORM AND SIGNATURES.
(a) Every holder of stock of the Corporation shall be entitled to a
certificate stating the number and class, and series, if any, of shares owned by
him, signed by the Chairman of the Board, if any, or the President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the Corporation, and bearing the seal of the Corporation. The signatures and
the seal may be facsimiles. A certificate may be signed, manually or by
facsimile, by a transfer agent or registrar other than the Corporation or its
employee. In case any officer who has signed, or whose facsimile signature was
placed on, a certificate shall have ceased to be such officer before the
certificate is issued, it may nevertheless be issued by the Corporation with the
same effect as if he were such officer at the date of its issue.
(b) All stock certificates representing shares of capital stock that are
subject to restrictions on transfer or to other restrictions may have imprinted
thereon any notation to that effect determined by the Board of Directors.
SECTION 2. REGISTRATION OF TRANSFER. Upon surrender to the Corporation
or any transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment, or
authority to transfer, the Corporation or its transfer agent shall issue a new
certificate to the person entitled thereto, cancel the old certificate, and
record the transaction upon the books of the Corporation.
SECTION 3. REGISTERED STOCKHOLDERS.
(a) Except as otherwise provided by law, the Corporation shall be entitled
to recognize the exclusive right of a person who is registered on its books as
the owner of shares of its capital stock to receive dividends or other
distributions and to vote or consent as such owner, and to hold liable for calls
and assessments any person who is
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registered on its books as the owner of shares of its capital stock. The
Corporation shall not be bound to recognize any equitable or legal claim to, or
interest in, such shares on the part of any other person.
(b) If a stockholder desires that notices and/or dividends shall be sent to
a name or address other than the name or address appearing on the stock ledger
maintained by the Corporation, or its transfer agent or registrar, if any, the
stockholder shall have the duty to notify the Corporation, or its transfer agent
or registrar, if any, in writing of his desire and specify the alternate name or
address to be used.
SECTION 4. RECORD DATE. In order that the Corporation may determine the
stockholders of record who are entitled to receive notice of, or to vote at, any
meeting of stockholders or any adjournment thereof or to express consent to
corporate action in writing without a meeting, to receive payment of any
dividend or other distribution or allotment of any rights, or to exercise any
rights in respect of any change, conversion, or exchange of stock or for the
purpose of any lawful action, the Board of Directors may, in advance, fix a date
as the record date for any such determination. Such date shall not be more than
sixty nor less than ten days before the date of such meeting, nor more than
sixty days prior to the date of any other action. A determination of
stockholders of record entitled to notice of, or to vote at, a meeting of
stockholders shall apply to any adjournment of the meeting taken pursuant to
Section 8 of Article II; provided, however, that the Board of Directors may fix
a new record date for the adjourned meeting.
SECTION 5. LOST, STOLEN, OR DESTROYED CERTIFICATES. The Board of Directors
may direct that a new certificate be issued to replace any certificate
theretofore issued by the Corporation that, it is claimed, has been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate to be lost, stolen, or destroyed. When authorizing the
issue of a new certificate, the Board of Directors may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of the lost,
stolen, or destroyed certificate, or his legal representative, to advertise the
same in such manner as it shall require, and/or to give the Corporation a bond
in such sum, or other security in such form, as it may direct as indemnity
against any claims that may be made against the Corporation with respect to the
certificate claimed to have been lost, stolen, or destroyed.
ARTICLE X. General Provisions.
------------------
SECTION 1. DIVIDENDS. Subject to the provisions of law and the Certificate
of Incorporation, dividends upon the outstanding capital stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the Corporation`s
capital stock.
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SECTION 2. RESERVES. The Board of Directors shall have full power, subject
to the provisions of law and the Certificate of Incorporation, to determine
whether any, and, if so, what part, of the funds legally available for the
payment of dividends shall be declared as dividends and paid to the stockholders
of the Corporation. The Board of Directors, in its sole discretion, may fix a
sum that may be set aside or reserved over and above the paid-in capital of the
Corporation as a reserve for any proper purpose, and may, from time to time,
increase, diminish, or vary such amount.
SECTION 3. FISCAL YEAR. Except as from time to time otherwise provided by
the Board of Directors, the fiscal year of the Corporation shall end on December
31 in each year.
SECTION 4. SEAL. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its incorporation, and the words "Corporate
Seal" and "Delaware".
ARTICLE XI. Amendments.
----------
The Board of Directors shall have the power to alter and repeal these
Bylaws and to adopt new Bylaws by an affirmative vote of a majority of the whole
Board, provided that notice of the proposal to alter or repeal these Bylaws or
to adopt new Bylaws must be included in the notice of the meeting of the Board
of Directors at which such action takes place.
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<TABLE>
For Bank Use Only
<S> <C> <C> <C>
- -------------- ------------------ ------------------- -----------------------
/s/ R. Thomas Esser
- -------------- ------------------ ------------------- -----------------------
LIS NO. LOAN NO. BORROWER APPROVAL SIGNATURE
- --------------------------------------------------------------------------------
</TABLE>
COMMERCIAL PROMISSORY NOTE CoreStates
$2,350,000.00 June 30, 1995
FOR VALUE RECEIVED, each of the undersigned, jointly and severally if more
than one (hereinafter collectively referred to as "Borrower"), promises to pay
to the order of CORESTATES BANK, N.A.*, a national banking association (the
"Bank"), at any of its banking offices in Pennsylvania, the principal amount of
Two Million Three Hundred Fifty Thousand DOLLARS ($2,350,000), in lawful money
of the United States, plus interest, to be paid as follows:
Said principal, or the aggregated unpaid principal amount of all loans then
outstanding under this note, shall be payable in full on June 30, 1996. Interest
shall accrue at the Prime Rate plus 1% and shall be payable on the first day of
each month commencing August 1, 1995 with a final payment on June 30, 1996.
This note renews the existing Revolving Credit Note of the undersigned to the
Bank, dated November 3, 1994, due June 30, 1995, in the principal amount of
$2,350,000, which is referred to in SECTION 2.03 of the Loan Agreement between
the undersigned and the Bank dated as of November 3, 1994.
This Note is secured by a Security Agreement (Accounts, Inventory and Equipment)
executed by Borrower of even date herewith and a Guaranty of Borrower's
subsidiaries, ASA Incorporated and ASA Legal Systems Company, Inc., under
separate instruments of Guaranty of even date herewith.
ADDITIONAL TERMS OF THIS NOTE - Each of the following provisions shall apply to
this Note, to any extension of modification hereof and to the indebtedness
evidenced hereby, except as otherwise expressly stated above or in a separate
writing signed by Bank and Borrower.
INTEREST - Interest shall be calculated on the basis of a 360-day year and shall
be charged for the actual number of days elapsed. Accrued interest shall be
payable monthly. Accrued interest shall also be payable when the entire
principal balance of this Note becomes due and payable (whether by demand,
stated maturity or acceleration) or, if earlier, when such principal balance is
actually paid to Bank. If the rate at which interest accrues is based on the
"Prime Rate," that term is defined as the rate of interest for loans established
by Bank from time to time as its prime rate. Said per annum rate of interest
shall change each time Bank's prime rate shall change, effective on and as of
the date of the change. Interest shall accrue on each disbursement hereunder
from the date such disbursement is made by Bank, provided however, that to the
extent this Note represents a replacement, substitution, renewal or refinancing
of existing indebtedness, interest
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<PAGE> 2
shall accrue from the date hereof. Interest shall accrue on the unpaid balance
hereof at the rate provided for in this Note until the entire unpaid balance
has been paid in full, notwithstanding the entry of any judgment against
Borrower.
PREPAYMENT - If this Note bears interest at a floating or variable rate and no
floor or minimum rate is specified, Borrower may prepay all or any portion of
the principal balance of this Note at any time, without premium or penalty. If
not permitted under the preceding sentence, any prepayment of principal
(including any principal repayment as a result of acceleration by Bank of this
Note) shall require immediate payment to Bank of a prepayment fee equal to the
amount, if any, by which the aggregate present value of scheduled principal and
interest payments eliminated by the prepayment exceeds the principal amount
being prepaid. Said present value shall be calculated by application of a
discount rate determined by Bank in its reasonable judgment to be the
yield-to-maturity at the time of prepayment on U.S. Treasury securities having a
maturity which most closely approximates the final maturity date of the
principal balance then outstanding. Whether or not a prepayment fee is required
hereunder, prepayments shall be applied to scheduled installments of principal
in the inverse order of their maturity, shall be accompanied by payment of
accrued interest on the principal amount being prepaid and, unless this Note has
been accelerated by Bank, shall not be permitted in an amount less than the
scheduled principal installment immediately prior to final maturity of the
outstanding principal balance.
COLLATERAL - As security for all indebtedness to Bank now or hereafter incurred
by Borrower, under this Note or otherwise, Borrower grants Bank a lien upon and
security interest in any securities, instruments or other personal property of
Borrower now or hereafter in Bank's possession and in any deposit balances now
or hereafter held by Bank for Borrower's account, and in all proceeds of any
such personal property or deposit balances. Such liens and security interest
shall be independent of Bank's right of setoff. This Note and the indebtedness
evidenced hereby shall be additionally secured by any lien or security interest
evidenced by a writing (whether now existing or hereafter executed) which
contains a provision to the effect that such lien or security interest is
intended to secure (a) this Note or indebtedness evidenced hereby or (b) any
category of liabilities, obligations or indebtedness of Borrower to Bank which
included this Note or the indebtedness evidenced hereby, and all property
subject to any such lien or security interest shall be collateral for this Note.
EVENTS OF DEFAULT - Each of the following shall be an Event of Default
hereunder: within 10 days of becoming due, (a) the nonpayment of any amount
payable under this Note or under any obligation or indebtedness to Bank of
Borrower or any person liable, either absolutely or contingently, for payment of
any indebtedness evidenced hereby, including endorsers, guarantors and sureties
(each such person is referred to as an "Obligor"); (b) if Borrower or any
Obligor has failed to observe or perform any other existing or future agreement
with Bank of any nature whatsoever; (c) if any representation, warranty,
certificate, financial statement or other information made or given by Borrower
or any Obligor to Bank is materially incorrect or misleading;
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(d) if Borrower or any Obligor shall become insolvent or make an assignment
for the benefit of creditors or if any petition shall be filed by or against
Borrower or any Obligor under any bankruptcy or insolvency law; (e) the entry
of any uninsured judgement greater than $100,000 against Borrower or any
Obligor which remains unsatisfied for 15 days or the issuance of any
attachment, tax lien, levy or garnishment against any property of material
value in which Borrower or any Obligor has an interest; (f) if any attachment,
levy, garnishment or similar legal process is served upon Bank as a result of
any claim against Borrower or any Obligor or against any property of Borrower
or any Obligor; (g) the dissolution, merger, consolidation or change in control
(as control is defined in Rule 12b-2 under the Securities Exchange Act of
1934), of any Borrower which is a corporation or partnership, or the sale or
transfer of any substantial portion of any of Borrower's assets, or if any
agreement for such dissolution, merger, or consolidation, change in control,
sale or transfer is entered into by Borrower without the written consent of
Bank; (h) the death of any Borrower or Obligor who is a natural person; (i) if
Bank determines reasonably and in good faith that an event has occurred or a
condition exists which has had, or is likely to have, a material adverse effect
on the financial condition or creditworthiness of Borrower or any Obligor, or
on the ability of Borrower or any Obligor to perform its obligation evidenced
by this Note; (j) if Borrower shall fail to remit promptly when due to the
appropriate government agency or authorized depository, any amount collected or
withheld from any employee of Borrower for payroll taxes, Social Security
payments or similar payroll deductions; (k) if any Obligor shall attempt to
terminate or disclaim such Obligor's liability for the indebtedness evidenced
by this Note; (l) if Bank shall reasonably and in good faith determine and
notify Borrower that any collateral for his Note or for the indebtedness
evidenced hereby is insufficient as to quality or quantity; (m) if Borrower
shall fail to pay when due any material indebtedness for borrowed money other
than to Bank; or (n) if Borrower shall be notified of the failure of Borrower
or any Obligor to provide financial and other information promptly when
reasonably requested by Bank. If this Note is payable on demand, Bank's right
to demand payment hereof shall not be restricted or impaired by the absence,
non-occurrence or waiver of an Event of Default, and it is understood that if
this Note is payable on demand, Bank may demand payment at any time.
BANK REMEDIES - Upon the occurrence of one or more Events of Default (including,
if this Note is payable on demand, any Event of Default resulting from
Borrower's failure to make any payment hereunder when demanded), unless Bank
elects otherwise, the entire unpaid balance of this Note and all accrued
interest shall be immediately due and payable without notice to Borrower or any
Obligor, and Bank may, immediately or at any time thereafter, exercise any or
all of its rights and remedies hereunder or under any agreement or otherwise
under applicable law against Borrower, any Obligor and any collateral. Bank may
exercise its rights and remedies in any order and may, at its option, delay in
or refrain from exercising some or all of its rights and remedies without
prejudice thereto. Upon the occurrence of any such Event of Default or at any
time thereafter, Bank may, at its option, and upon five days written notice to
Borrower, begin accruing interest on this Note, at a rate not to exceed five
percent (5%) per annum in excess of the greater
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of (a) the rate of interest provided for above, or (b) the Prime Rate in effect
from time to time on the unpaid principal balance hereof; provided, however,
that no interest shall accrue hereunder in excess of the maximum rate permitted
by law. All such additional interest shall be payable on demand.
NOTICE TO BORROWER - Any notice required to be given by Bank under the
provisions of this Note shall be effective as to each Borrower and each Obligor
when addressed to Borrower and deposited in the mail, postage prepaid, for
delivery by first class mail at Borrower's mailing address as it appears on
Bank's records.
DISBURSEMENTS AND PAYMENTS - The proceeds of this Note, or any portion thereof,
may be credited by Bank to the deposit account of Borrower, or disbursed in any
other manner requested by Borrower and approved by Bank. If Borrower so
requests, Bank may, at its option, disburse the proceeds of this Note in more
than one disbursement on the same or different dates, but except as otherwise
agreed by Bank in writing, no action taken by Bank in response to any such
request shall be deemed to create or shall imply the existence of any commitment
or obligation to pay or credit the undisbursed portion of this Note. All
payments due under this Note are to be made in immediately available funds. If
Bank accepts payment in any other form, such payment shall not be deemed to have
been made until the funds comprising such payment have actually been received by
or made available to Bank. If Borrower is not an individual, Borrower authorizes
Bank (but Bank shall have no obligation) to charge any deposit account in
Borrower's name for any and all payments of principal, interest, or any other
amounts due under this Note.
PAYMENT OF COSTS - In addition to the principal and interest payable hereunder,
Borrower agrees to pay Bank, on demand, all costs and expenses (including
reasonable attorney's fees and disbursements) which may be incurred by Bank in
the collection of this Note or the enforcement of Bank's rights and remedies
hereunder.
REPRESENTATIONS BY BORROWER - If Borrower is a corporation or a general or
limited partnership, Borrower represents and warrants that it is validly
existing and in good standing in the jurisdiction under whose laws it was
organized. If Borrower is a corporation, Borrower represents and warrants that
the execution, delivery and performance of this Note are within Borrower's
corporate powers, have been duly authorized by all necessary action by
Borrower's Board of Directors, and are not in contravention of the terms of
Borrower's charter, by-laws, or any resolution of its Board of Directors. If
Borrower is a general or limited partnership, Borrower represents and warrants
that the execution, delivery and performance of this Note have been duly
authorized and are not in conflict with any provision of Borrower's partnership
agreement or certificate of limited partnership. Borrower further represents and
warrants that this Note has been validly executed and is enforceable in
accordance with its terms, that the execution, delivery and performance by
Borrower of this Note are not in contravention of law and do not conflict with
any indenture, agreement of undertaking to which Borrower is a party or is
otherwise bound, and that no consent or approval of any governmental authority
or any third
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party is required in connection with the execution, delivery and performance of
this Note.
WAIVERS, ETC. - Borrower and each Obligor waive presentment, dishonor, notice of
dishonor, protest and notice of protest. Neither the failure nor any delay on
the part of Bank to exercise any right, remedy, power or privilege hereunder
shall operate as a waiver or modification thereof. No modification of the terms
of this Note shall be effective unless set forth in writing signed by Bank and
Borrower. No consent or waiver of the terms of this Note shall be effective
unless set forth in a writing signed by Bank. All rights and remedies of Bank
are cumulative and concurrent and no single or partial exercise of any power or
privilege shall preclude any other or further exercise of any right, power or
privilege.
MISCELLANEOUS - This Note is the unconditional obligation of Borrower, and
Borrower agrees that Bank shall not be required to exercise any of its rights or
remedies against any collateral in which it holds a lien or security interest or
against which it has a right of setoff or against any particular Obligor. All
representations, warranties and agreements herein are made jointly and severally
by each Borrower. If any provision of this Note shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision hereof. To the extent that this Note represents a replacement,
substitution, renewal or refinancing of a pre-existing note or other evidence of
indebtedness, the indebtedness represented by such pre-exiting note or other
instrument shall not be deemed to have been extinguished hereby. In the event
that any due date specified or otherwise provided for in this Note shall fall on
a day on which Bank is not open for business, such due date shall be postponed
until the next banking day, and interest and any fees or similar charges shall
continue to accrue during such period of postponement. This Note has been
delivered in and shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania without regard to the law of conflicts. This
Note shall be binding upon each Borrower and each Obligor and upon their
personal representatives, heirs, successors and assigns, and shall benefit Bank
and its successors and assigns.
CONSENT TO JURISDICTION AND VENUE - IN ANY LEGAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE OR THE
RELATIONSHIP EVIDENCED HEREBY, EACH UNDERSIGNED PARTY HEREBY IRREVOCABLY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN ANY
COUNTY OR THE COMMONWEALTH OF MASSACHUSETTS AND AGREES NOT TO RAISE ANY
OBJECTION TO SUCH JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE OF
ANY SUCH PROCEEDING IN SUCH COUNTY. EACH UNDERSIGNED PARTY AGREES THAT SERVICE
OF PROCESS IN ANY SUCH PROCEEDING MAY BE DULY EFFECTED UPON IT BY MAILING A COPY
THEREOF, BY REGISTERED MAIL, POSTAGE PREPAID, TO EACH UNDERSIGNED PARTY.
WAIVER OF JURY TRIAL - EACH UNDERSIGNED PARTY HEREBY WAIVES, AND BANK BY ITS
ACCEPTANCE HEREOF THEREBY WAIVES, TRIAL BY JURY IN ANY LEGAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE OR THE
RELATIONSHIP EVIDENCED HEREBY. THIS
79
<PAGE> 6
PROVISION IS A MATERIAL INDUCEMENT FOR BANK TO ENTER INTO, ACCEPT OR RELY UPON
THIS NOTE.
IN WITNESS WHEREOF, Borrower, intending this to be a sealed instrument and
intending to be legally bound hereby, has executed and delivered this Note as of
the day and year first above written.
- --------------------------------------------------------------------------------
Name of Corporation
or Partnership ASA International Ltd.
- --------------------------------------------------------------------------------
By: /s/ Terrence C. McCarthy By:
- ------------------------------------- ------------------------------------
(Signature of Authorized Signer) (Signature of Authorized Signer)
Terrence C. McCarthy
Vice President and Controller
- ------------------------------------- ------------------------------------
(Print or Type Name and Title of (Print or Type Name and Title of
Signer Above) Signer Above)
INDIVIDUALS SIGN BELOW
- ------------------------------------- ------------------------------(Seal)
(Signature of Witness) (Signature of Individual Borrower)
- ------------------------------------- ------------------------------------
(Print or Type Name of Above (Print or Type Name of Borrower
Witness) Signing Above)
- ------------------------------------- ------------------------------(Seal)
(Signature of Witness) (Signature of Individual Borrower)
- ------------------------------------- ------------------------------------
(Print or Type Name of Above (Print or Type Name of Borrower
Witness) Signing Above)
- --------------------------------------------------------------------------------
*CoreStates Bank, N.A. also conducts business as Philadelphia National Bank,
as CoreStates First Pennsylvania Bank and as CoreStates Hamilton Bank.
8979-C 10/93
80
<PAGE> 1
L E A S E C O N T R A C T
GEORGIA
DEKALB COUNTY
THIS LEASE, made this 1ST day of JUNE, 1995, by and between DEKALB CORNERS,
a division of DEKALB STEEL, INC., first party, (hereinafter called "Landlord"),
and ASA TIRE SYSTEMS GROUP, second party, (hereinafter called "Tenant").
W I T N E S S E T H:
PREMISES
1. The Landlord, for and in consideration of the rents, covenants, agreements,
and stipulations hereinafter mentioned, reserved, and contained, to be paid by
the Tenant, has leased and rented, and by these presents does lease and take
upon the terms and conditions which hereinafter appear, the following described
property (hereinafter called premises), to wit: A PORTION of DEKALB CORNERS
CENTER office building, located at 3469 Lawrenceville Highway, Dekalb County,
Georgia, said portion being more particularly described as follows: 1395
square feet of floor space located the 1ST floor of said DEKALB CORNERS
CENTER building according to the attached drawing marked EXHIBIT "A".
TERM
2. To have and to hold the same for a term beginning on the 1st day of
AUGUST, 1995, and ending on the 31ST day of JULY, 1998, at midnight,
unless sooner terminated as hereinafter provided.
RENTAL
3. Tenant agrees to pay Landlord, by payments to Landlord at 3469 Lawrenceville
Highway, Dekalb County, Georgia, promptly on the first day of each month in
advance, during the term of this lease, a monthly rental of ***ONE THOUSAND
FIVE HUNDRED SIXTY NINE AND 38/100** DOLLARS ($*1,569.38*).
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<PAGE> 2
UTILITY BILLS
4. Landlord shall pay water, sewer, and electricity bills for the leased
premises, or used by the tenant in connection therewith. If Landlord does not
pay the same, Tenant may pay the same and such payment shall be deducted from
the rental of the premises.
USE OF THE PREMISES
5. Premises shall be used for GENERAL OFFICE purposes and no other. Premises
shall not be used for any illegal purposes; nor in any manner to create any
nuisance or trespass; nor in any manner to vitiate the insurance or increase
the rate of insurance on premises.
ABANDONMENT OF LEASED PREMISES
6. Tenant agrees not to abandon or vacate leased premises during the period of
this lease, and agrees to use said premises for the purpose herein until the
expiration hereof.
REPAIRS BY LANDLORD
7. Landlord agrees to keep in good repair the roof, foundations, exterior walls
including glass, exterior doors, common spaces, elevator, parking lot and
utilities except repairs rendered necessary by the negligence of Tenant, its
agents, employees, or invites. Landlord gives exclusive right of control of said
premises and shall be under no obligation to inspect said premises. Tenant shall
promptly report in writing to Landlord any defective condition known to it in
which Landlord is required to repair, and failure to so report such defects
shall make Tenant responsible to Landlord for any liability incurred by landlord
by reason of such defects.
REPAIRS BY TENANT
8. Tenant accepts the leased premises in their present condition and as suited
for the use intended by Tenant. Tenant shall, throughout the initial term of the
lease and all renewals thereof, at its expense, maintain in good order and
repair the leased premises, including electrical and plumbing fixtures, except
those repairs expressly required to be made by Landlord.
TAXES & UTILITY RATE ESCALLATION
9. This section was deleted.
DESTRUCTION OF, OR DAMAGE TO PREMISES
10. If premises are totally destroyed by storm, fire, lighting, earthquake, or
other casualty, this lease shall terminate as of the date of such destruction,
and all rental shall be accounted for as of that date. If premises are damaged
but not destroyed by such casulaties, rental shall abate in such proportion as
use of premises has been destroyed, and Landlord shall restore premises to
substantially the same
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<PAGE> 3
condition as before the damage as speedily as practicable, whereupon full
rental shall recommence.
INDEMNITY
11. Tenant agrees to indemnify and hold harmless the Landlord against all claims
for damages to persons or property by reason of the use or occupancy of the
leased premises, and all expenses incurred by Landlord because thereof,
including attorney's fees and court cost.
GOVERNMENTAL ORDERS
12. Tenant agrees, at his own expense, to promptly comply with all requirements
of any legally constituted public authority made necessary by reason of Tenant's
occupancy of said premises. Landlord agrees to promptly comply with any such
requirements if not made necessary by reason of Tenant's occupancy of said
premises. It is mutually agreed, however, between Landlord and Tenant, that if
in order to comply with such requirements, the cost to Landlord or Tenant, as
the case may be, shall exceed a sum equal to one year's rent, then the Landlord
or Tenant who is obligated to comply with such requirements is privileged to
terminate this lease by giving written notice of termination to the other party,
by registered mail, which termination shall become effective sixty (60) days
after receipt of such notice, and which notice shall eliminate necessity of
compliance with such requirements by party giving such notice unless party
receiving such notice of termination shall, before termination becomes
effective, pay to party giving notice all cost of compliance in excess of one
year's rent, or secure payment of said sum in a manner satisfactory to party
giving notice.
CONDEMNATION
13. If the whole of the leased premises, or such portion thereof as will make
premises unuseable for the purposes herein leased, be condemned by any legally
constituted authority for any public use or purpose, then in either of said
events the term hereby granted shall cease from the time when possession thereof
is taken by public authorities, and rental shall be accounted for as between the
Landlord and Tenant as of that date. "Tenant shall not be entitled to any part
of the condemnation award or any payment in lieu thereof and expressly waives
any right to make a claim which would reduce the award otherwise payble to
Landlord."
ASSIGNMENT AND SUBLETTING
14. Tenant may sublease portions of the leased premises to others provided such
subleassee's operation is a part of the general operation of Tenant and under
the supervision and control of Tenant, and provided such operation is within the
purposes for which said premises shall be used. Except as provided in preceding
sentence, Tenant shall not, without prior written consent of Landlord endorsed
hereon, assign this lease or any interest hereunder, or sublet premises or any
part thereof, or permit the use of premises by any party other than Tenant.
Consent to any assignment or sublease shall not destroy this provision, and all
later assignments or subleases shall be made likewise only on the prior
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<PAGE> 4
written consent of Landlord, shall become directly liable to Landlord for all
obligations of Tenant hereunder, but no sublease or assignment by Tenant shall
relieve Tenant of any liability hereunder.
REMOVAL OF FIXTURES
15. Tenant may (if not in default hereunder) prior to the expiration of this
lease, or any extension thereof, remove all fixtures and equipment which the
Tenant has placed in premises, provided Tenant repairs all damage to premises by
such removal.
CANCELLATION OF LEASE BY LANDLORD
16. It is mutually agreed that in the event the Tenant shall default in the
payment of rent herein reserved, when due, and fails to cure said default within
five (5) days after written notice thereof from Landlord; or if Tenant shall be
in default in performing any of the terms or provisions of this lease other than
the provision requiring the payment of rent, and fails to cure such default
within thirty (30) days after the date of written notice of default from
Landlord; or if Tenant is adjudicated bankrupt; or if a permanent receiver is
appointed for Tenant's property and such receiver is not removed within sixty
(60) days after written notice from Landlord to Tenant to obtain such removal;
or if, whether voluntarily or involuntarily, Tenant takes advantage of any
debtor relief proceedings under any present or future law, whereby the rent or
any part thereof is, or is proposed to be, reduced or payment thereof deferred;
or if Tenant makes an assignment for benefit of creditors; or if Tenant's
effects should be levied upon or attached under process against Tenant, not
satisfied or dissolved within thirty (30) days after written notice from
Landlord to Tenant to obtain satisfaction thereof; then, and in any of said
events, Landlord at his option may at once, or within six (6) months thereafter
(but only during continuance of such default or condition), terminate this lease
by written notice to Tenant; whereupon this lease shall end. Any notice in this
paragraph may be given by Landlord, or his attorney, or Agent herein named. Upon
termination by Landlord, Tenant will at once surrender possession of the
premises to Landlord and remove all of Tenant's effects therefrom; and Landlord
may forthwith re-enter the premises and repossess himself thereof, and remove
all persons and effects therefrom, using such force as may be necessary without
being guilty of trespass, forcible entry or detainer or other tort.
RELETTING BY LANDLORD
17. Landlord, as Tenant's agent, without terminating this lease, upon Tenant's
breaching this contract, may at Landlord's option enter upon and rent premises
at the best price obtainable by reasonable effort, without advertisement and by
private negotiations and for any term Landlord deems proper. Tenant shall be
liable to Landlord for the deficiency, if any, between Tenant's rent hereunder
and the price obtained by Landlord on reletting.
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<PAGE> 5
SIGNS
18. Tenant shall place no signs upon the property without written consent of the
Landlord. Any and all signs placed on the property by the Tenant shall be
maintained in compliance with rules and regulations as set forth by the
Landlord. Tenant shall be responsible to Landlord for any damage caused by
installation, use, or maintenance of said signs, and Tenant agrees upon removal
of such signs to repair all damage incident to such removal.
ENTRY FOR CARDING, ETC.
19. Landlord may card premises "For Rent" sixty (60) days before the termination
of this lease, and "For Sale" at any time during the lease. Landlord may enter
premises at reasonable hours to exhibit same to prospective purchasers or
tenants and to make repairs required of Landlord under the terms hereof, or to
make repairs to Landlord's adjoining property, if any.
EFFECT OF TERMINATION OF LEASE
20. No termination of this lease prior to the normal ending thereof, by laps of
time or otherwise, shall affect the Landlord's right to collect rent for the
period to termination thereof.
MORTGAGEE'S RIGHTS
21. Tenant's rights shall be subject to any bona fide mortgage or deed to secure
debt which is now, or may hereafter be, placed upon the premises by Landlord.
NO ESTATE IN LAND
22. This contract shall create the relationship of Landlord and Tenant between
the parties hereto; no estate shall pass out of Landlord. Tenant has only a
usufruct, not subject to levy and sale, and not assignable by Tenant except by
Landlord's consent.
HOLDING OVER
23. If Tenant remains in possession of premises after expiration of the term
hereof, with Landlord's acquiescence and without express agreement of parties,
Tenant shall be a tenant at will at a rental rate of 150 percent of the rental
rate in effect at the end of the lease if the tenant holds over; and there shall
be no renewal of this lease by operation of law.
ATTORNEY'S FEES AND HOMESTEAD
24. If any rent owning under this lease is collected by or through an attorney
at law, Tenant agrees to pay fifteen percent (15%) thereof as attorney's fees.
Tenant waives all homestead rights and exemptions which he may have under any
law as against any obligation owing under this lease. Tenant hereby assigns to
Landlord his homestead and exemption.
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<PAGE> 6
RIGHTS CUMULATIVE
25. All rights, powers, and privileges conferred hereunder upon parties hereto
shall be cumulative but not restrictive to those given by law.
SERVICE OF NOTICE
26. Tenant hereby appoints as his agent to receive service of all dispossessory
or distaint proceedings and notices thereunder, and all notices required under
this lease, the person in charge of leased premises at the time, or occupying
said premises and if no person is in charge, or occupying said premises, then
such service or notice may be made by attaching the same on the main entrance to
said premises. A copy of all notices under this lease shall also be sent to
Tenant's last known address.
WAIVER OF RIGHTS
27. No failure of Landlord to exercise any power given Landlord hereunder, or to
insist upon strict compliance by Tenant with his obligation hereunder and no
custom or practice of the parties at variance with the terms hereof shall
constitute a waiver of Landlord's right to demand exact compliance with the
terms hereof.
28. TIME IS OF THE ESSENCE OF THIS AGREEMENT.
DEFINITIONS
29. "Landlord" as used in this lease shall include first party, its assigns and
successors in title to the premises. "Tenant" shall include second party, his
heirs and representatives, or its successors, as the case may be, and if this
lease shall be validly assigned or sublet, shall include also Tenant's assignees
or sublessees, as to the premises covered by such assignment or sublease.
SPECIAL STIPULATIONS
30. In so far as the following stipulations conflict with any of the foregoing
provisions, the following shall control:
RIGHT TO RELOCATE
Landlord reserves the right to relocate tenant during the term of this
lease or any renewal thereof to similar quality office space with DEKALB CORNERS
CENTER office building. If Landlord exercises this right to relocate Tenant,
then any and all costs incident to said relocation shall be the responsibility
of Landlord, said costs to be determined prior to relocation of Tenant. (The
purpose of this provision is to allow you to relocate a small tenant if you find
a tenant who wants a large block of space which you would not have unless you
relocated the small tenant.)
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<PAGE> 7
LATE PAYMENTS
Payments of rent received after the fifth day of the month may be assessed
and additional 5% charge as a late payment penalty and shall be assessed an
additional 5% charge for each month thereafter until paid in full. Acceptance by
Landlord of a payment in an amount less than that which is currently due shall
in no way affect Landlord's rights under this lease and in no way be an accord
and satisfaction. This provision does not prevent Landlord from declaring the
nonpayment of rent when due an event of default hereunder.
LANDLORD'S LIABILITY
Landlord's obligations and liability to Tenant with respect to this lease
shall be limited solely to Landlord's interest in the property, and neither
Landlord nor any officer, director or shareholder of Landlord shall have any
personal liability whatsoever with respect to this lease.
GEORGIA LAW
This lease has been made under and shall be construed and interpreted under
and in accordance with the laws of the State of Georgia.
SECURITY DEPOSIT
Tenant has this day deposited with Landlord $*1,569.38* as security
deposit for the performance by Tenant of all the terms, covenants and
conditions of this lease upon Tenant's part to be performed, which sum without
interest shall be returned to Tenant within thirty (30) days after expiration
of the term hereof, provided Tenant has fully performed hereunder, Landlord
shall have the right to apply any part of said deposit to cure any default of
Tenant, and if Landlord does so Tenant shall upon demand deposit with Landlord
the amount so applied so that Landlord shall have the full deposit on hand at
all times during the term of this lease. In the event of a sale of the building
or a lease of the building, subject to this lease, Landlord shall transfer the
security to the purchaser or lessee, and Landlord shall thereupon be released
from all liability for the return of such security and Tenant shall look to the
new Landlord solely for the return of said security and this provision shall
apply to every transfer or assignment made of the security to a new Landlord.
The security deposit under this lease shall not be assigned or encumbered by
Tenant without the written consent of landlord and any such assignment or
encumbrance shall be void.
RULES AND REGULATIONS
Landlord may from time to time establish, amend, modify, delete or add
reasonable rules and regulations for the use, safety, cleanliness and care of
the premises and the building. Such rules and regulations,
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<PAGE> 8
and any modifications thereof, shall be effective upon notice thereof to Tenant
from Landlord. Tenant will cause its employees and agents, or any others
permitted by Tenant to occupy or enter the premises, at all times to abide by
any such rules and regulations. In the event of any breach of any such rules
and regulations, Landlord shall have all the remedies in this lease provided
for in the event of default by Tenant and shall, in addition, have any remedies
available at law or in equity, including, but not limited to, the right to
enjoin any breach of such rules and regulations. The Landlord shall not be
responsible to Tenant for the nonobservance by any other Tenant or person of
any such rules and regulations.
This lease contains the entire agreement of the parties hereto and no
representations, inducements, promises or agreements, oral or otherwise, between
the parties, not embodied herein, shall be of any for ce or effect.
IN WITNESS WHEREOF, the parties herein have hereunto set their hands and seals,
in duplicate, the day and year first above written.
Signed, sealed and delivered as
to Landlord, in the presence of:
DeKalb Corners, a division of
- -------------------------------- DeKalb Steel, Inc.
(Landlord)
/s/ Patricia R. Bennett By: /s/ Kayla S. Jones
- --------------------------------- ---------------------------
Notary Public Kayla S. Jones
Secretary/Treasurer
Signed, sealed and delivered as
to Tenant, in the presence of:
- ---------------------------------- ------------------------------
(Tenant)
By: /s/ Eli Szklanka
- ---------------------------------- ---------------------------
Notary Public Eli Szklanka
President
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<PAGE> 9
DEKALB CORNERS
OFFICE CENTER
3469 LAWRENCEVILLE HWY.
SUITE 202
TUCKER, GEORGIA 30085
PHONE 938-1980
June 1, 1995
ADDENDUM TO LEASE BETWEEN DEKALB CORNERS AND ASA TIRE SYSTEMS GROUP
- -------------------------------------------------------------------
SUITE #103/1395 SQUARE FEET
DeKalb Corners has agreed to carpet and paint (2 paint colors) Suite #103,
repair all existing lighting and door hardware and patch minor wall damage at
their cost.
DeKalb Corners will also pay for the removal of one wall and the repair of
existing walls in one specific room of Suite #103. Three phone jacks and ten
electrical outlets will also be added. The total cost will be $1,729.00. This
$1, 729.00 was originally to be paid for by ASA Tire Systems Group but will
remain unamortized and not be charged to ASA unless they take advantage of the
cancellation options.
ASA Tire Systems Group will be allowed to take advantage of the cancellation
option only at the end of year one (12 months) with a payment of $4,081.52 or at
the end of year two (24 months) with a payment of $2,040.76 (see attached
figures). If either of these options are exercised the seurity deposit will be
forfeited. This will be in addition to a ninety (90) day notice.
If ASA Tire Systems Group does not cancel this lease, the security deposit will
be returned at the end of said lease provided there are no damages to the suite
upon vacating the premises. In the event of a renewal of said lease, the
security deposit will be held on account for the term of the new lease.
/s/ Patricia R. Bennett /s/ Kayla S. Jones
- ------------------------------- ------------------------------
Notary Public Kayla S. Jones
Secretary/Treasurer
/s/ Eli Szklanka
- ------------------------------- ------------------------------
Notary Public Eli Szklanka
President
90
<PAGE> 10
<TABLE>
<CAPTION>
<S> <C>
Renovation Unamortized 1,729.00 (divided by)
3.00 =
576.33 *
1st Year Cancellation 576.00 +
576.00 +
1,152.00 *
2nd Year Cancellation 576.00 +
576.00 *
Mark Turner Commission 4,394.27 (divided by)
3.00 =
1,464.76
1st Year Cancellation 1,464.76 +
1,464.76 +
2,929.52 *
2nd Year Cancellation 1,464.76 +
1,464.76 *
Total Amount 1,152.00 +
1st Year Cancellation 2,929.52 +
4,081.52 *
Total Amount 576.00 +
2nd Year Cancellation 1,464.76 +
2,040.76 *
</TABLE>
91
<PAGE> 1
CONSENT TO ASSIGNMENT
---------------------
This Consent is effective as of December 28, 1995.
--------------------
RECITALS
--------
1. Allstate Life Insurance Company ("Allstate"), successor by deed in lieu
of foreclosure to Chamanbell Limited Partnership, and ASA Legal Systems Company,
Inc. ("Tenant") previously entered into that certain Lease ("Lease") dated
December 16, 1992, wherein Tenant leased from Allstate approximately 20,420
square feet of space ("Leased Premises") in the building commonly known as 960 C
Harvest Drive, Blue Bell, PA 19422.
2. Pursuant to that certain Assignment ("Assignment") dated December
28, 1995, executed by and between Tenant and ASA International Ltd.
("Assignee"), Tenant has assigned the Lease to the Assignee.
3. Pursuant to Section 21 of the Lease, any Assignment is subject to
the consent of Allstate.
AGREEMENTS
----------
1. Subject to the terms and conditions set forth herein, Allstate
recognizes and consents to the Assignment which consent is given pursuant to
Section 21 of the Lease.
2. Notwithstanding this consent, Tenant shall not be released of liability
and shall continue to be liable on its obligations as set forth under the terms
and condition of the Lease. Allstate shall not be obligated to pursue any
remedies against Assignee or any other person or entity prior to seeking the
remedies provided for under the Lease against Tenant. Default by the Assignee of
any of the terms of the Lease or any of the terms of Assignment which Allstate
has agreed to be bound by, shall be deemed a default under the terms of the
Lease.
3. Unless specifically stated herein, Allstate does not agree to be bound
by any obligations created pursuant to the terms of the Assignment nor shall the
Assignment amend or modify the Lease, except that Allstate will recognize the
Assignee as the successor in interest of Tenant to that portion of the Lease
Premises which is the subject of the Assignment.
4. Upon notice to Assignee, all rent due and owing under the terms of the
Assignment shall be paid directly to Allstate, which sums actually received by
Allstate shall be credited toward the Rent due under the terms of the Lease.
93
<PAGE> 2
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Howard Fields
----------------------------
Authorized Signatory
By:
----------------------------
Authorized Signatory
94
<PAGE> 3
ASSIGNMENT OF LEASE
-------------------
THIS ASSIGNMENT OF LEASE is dated as of DECEMBER 28, 1995 between
ASA Legal Systems Company, Inc. ("Assignor") and ASA International Ltd., a
Delaware corporation ("Assignee").
As used herein, the term "Lease" shall mean the Lease dated as of December
16, 1992, from Chamanbell Limited Partnership to Assignor as tenant and any
amendment of addendum thereto.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Assignor and Assignee hereby agree as follows:
1. Assignor hereby assigns, sets over, and transfers to Assignee all of
Assignor's rights, title, and interest as tenant under the Lease attached
hereto.
2. Assignee herby assumes and agrees with Asssignor to perform, fulfill,
and observe all of the covenants, agreements, obligations, and liabilities of
Assignor as tenant under the Lease arising or accruing on and after the date
hereof.
3. Assignor hereby represents, warrants, and covenants that the Lease is in
full force and effect and unmodified except as specified herein; that Assignor
is not in default under the Lease nor has any event occurred that would, with
the giving of notice or the passage of time, or both, become a default or
entitle Landlord to terminate the Lease; that the Premises are in the same
condition as they were at the commencement of the Lease, or as expanded or
improved by mutual agreement of the parties, except for ordinary wear and tear
and improvements and alterations permitted under the Lease and not required to
be removed by Assignee, as tenant under the lease, upon surrender of the
Premises at the termination of the Lease; that the Lease is not encumbered by
any prior transfer, assignment, mortgage, or other encumbrance attributable to
Assignor; and that Assignor has full and lawful authority to assign the Lease to
Assignee.
4. Assignor agrees to indemnify and hold Assignee harmless from and against
all loss, cost, expense, and damages, including reasonable attorney's fees,
arising out of any act or omission by Assignor as tenant under the Lease arising
or accruing prior to the date hereof. Assignee agrees to indemnify and hold
Assignor harmless from and against all loss, cost, expense, and damages,
including reasonable attorney's fees, arising out of any act or omission by
Assignee as tenant under the Lease arising or accruing after the date hereof.
5. (This section has been replaced in its entirety by the Consent to
Assignment attached to this document.)
6. By execution hereof by Assignor, Assignor hereby acknowledges and agrees
that this Agreement shall not in any manner operate to
95
<PAGE> 4
release or relieve Assignor from any or all of its obligations pursuant to the
terms of the Lease, and in the event Assignee defaults in any payment or
performance required by the terms of the Lease, Assignor shall not be relieved
from responsibility to cure such default.
WITNESS the execution hereof as an instrument under seal as of the date
first above written.
ASSIGNEE
ASA INTERNATIONAL LTD.
By: /s/ Terrence C. McCarthy
---------------------------------
Title: Vice President & Controller
------------------------------
ASSIGNOR
ASA Legal Systems Company, Inc.
By: /s/ Terrence C. McCarthy
------------------------------
Title: Assistant Clerk
----------------------------
96
<PAGE> 1
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
AGREEMENT dated as of the 29 day of December, 1995, by and among
ASA INTERNATIONAL VENTURES, INC., a Delaware Corporation ("ASA Ventures"); and
ASA INCORPORATED, a Massachusetts corporation ("ASA Inc.").
W I T N E S S E T H T H A T:
------------------- -------
WHEREAS, ASA Inc., a company which is engaged in the computer software
business wishes to sell certain of its assets; and
WHEREAS, ASA Ventures, a company which is engaged in the computer software
business, wishes to acquire certain assets of ASA Inc.
Intending to be legally bound hereby, and in consideration of the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. PURCHASE OF ASSETS. On December 29, 1995 (the "Closing Date" or the
"Closing") ASA Ventures will purchase and acquire from ASA Inc., and ASA
Inc. will sell, transfer and deliver to ASA Ventures, all of the customer
intangibles of ASA Inc. related to the CWI, BSD and Tire product lines (the
"Assets") as more fully set forth on SCHEDULE 1.
2. NO LIABILITIES ASSUMED. ASA Ventures shall not assume any of the
liabilities of ASA Inc.
3. PURCHASE PRICE. In full consideration for the conveyance and
transfer to ASA Ventures of the Assets in Section 1 hereof, ASA Ventures shall
pay ASA Inc. a purchase price of Five Million Two Hundred Thousand Dollars
($5,200,000) in accordance with the terms of a promissory note attached
hereto as EXHIBIT 1.
4. REPRESENTATIONS AND WARRANTIES OF ASA INC. ASA Inc. represents and
warrants to ASA Ventures, upon which representations and warranties ASA
Ventures relies, and which representations and warranties shall survive the
Closing, notwithstanding any investigation of the affairs of ASA Inc. by ASA
Ventures, as follows:
(a) ASA Inc. is a corporation duly organized, validly existing and in
corporate and tax good standing under the laws of the Commonwealth of
Massachusetts, and has full corporate power and authority to own its properties
and carry on its business as it is now being conducted and as presently proposed
to be conducted.
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<PAGE> 2
(b) ASA Inc. has full power and authority (corporate and other) to
execute and deliver this Agreement and consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors and stockholder of ASA Inc., and no other corporate actions
or proceedings on the part of ASA Inc. or its stockholder are necessary to
consummate the transactions so contemplated.
5. REPRESENTATIONS AND WARRANTIES OF ASA VENTURES. ASA Ventures represents
and warrants to ASA Inc. as follows:
(a) ASA Ventures represents and warrants that it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) ASA Ventures represents and warrants that any transfer by ASA Inc.
to ASA Ventures of the Assets will not violate the terms of any contract, loan
or other agreement under which ASA Ventures is now bound.
(c) ASA Ventures represents and warrants that the execution and
delivery of this Agreement and the consummation of the transactions contemplated
have been duly authorized by its Board of Directors.
(d) The representations and warranties of ASA Ventures contained in
this Agreement or its attachments or attendant documents shall be true and
correct in all respects as of the date when made and as of Closing as though
such representations were made at and as of Closing.
6. DISCLOSURE OF INFORMATION. ASA Ventures and ASA Inc. each
agree that it will has not and will not disclose to the other any of its
confidential information, other than that information which is necessary to
complete the transaction contemplated by this Agreement. ASA Inc. will not
release any information regarding this Agreement or the transaction contemplated
herein to any third party, including current or future employees of ASA Inc.,
without the prior written approval of ASA Ventures.
7. FURTHER ASSURANCES. Subsequent to the Closing, ASA Ventures and ASA
Inc. shall each, at the request of the other, furnish, execute and deliver
such documents, instruments, opinions of counsel, certificates, notices and
other such instruments and further assurances as counsel for the requesting
party shall reasonably require as necessary or desirable to effect complete
consummation of this Agreement, or in connection with the preparation and filing
of reports required or requested by governmental agencies, stock exchanges or
other regulatory bodies. ASA Inc. shall assure the retention and availability of
all records as requested by ASA Ventures.
99
<PAGE> 3
8. EXPENSES. Whether or not the transactions contemplated hereby are
consummated, ASA Ventures and ASA Inc. shall pay their own expenses in
connection with the negotiation, authorization, preparation, execution and
performance of this Agreement, including, without limitation, all fees and
expenses of investment banking firms, agents, representatives, counsel and
accountants. All expenses of ASA Inc. incurred in connection with the
transactions contemplated hereby shall not constitute a liability assumed by ASA
Ventures. Each party to this Agreement has had the opportunity to consult with
independent legal counsel, and any decision by a party not to seek legal counsel
is that party's sole decision.
9. ENTIRE AGREEMENT. This Agreement and the Schedule and Exhibit
hereto set forth the entire Agreement and understanding of the parties, and
there are no other prior or contemporaneous written or oral agreements,
undertakings, promises, warranties or covenants not specifically referred to or
contained herein or attached hereto. This Agreement may be amended, modified or
terminated only by a written instrument signed by the parties hereto.
10. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their and each of their respective
heirs, executors, administrators, successors and permitted assigns, but may not
be assigned by any party without the prior written consent of the other parties;
except that ASA Ventures may assign its rights hereunder (a) to any affiliate of
ASA Ventures, provided that ASA Ventures shall guarantee and remain liable for
the performance of all of ASA Ventures' obligations hereunder; or (b) to any
purchaser of all or substantially all of ASA Ventures' business.
11. HEADINGS. The headings of the various paragraphs of this
Agreement are inserted merely for the purpose of convenience and do not
expressly or by implication limit, define or extend the specific terms or text
of the paragraph so designated.
12. LAW GOVERNING. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance or otherwise, by
the laws of the Commonwealth of Massachusetts without regard to its conflict
of laws principles in which it has been executed and in which it has a situs.
If any provision of this Agreement shall be held invalid by a court with
jurisdiction over the parties to this Agreement, then and in that event such
provision shall be deleted from the Agreement, which shall then be construed
to give effect to the remaining provisions thereof.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall be considered one Agreement.
100
<PAGE> 4
IN WITNESS WHEREOF, ASA Ventures and ASA Inc. have caused this Agreement for
Purchase and Sale of Assets to be executed by their respective duly authorized
officers and have affixed their respective corporate seals all on the day and
year first above written.
Attest: ASA INTERNATIONAL VENTURES, INC.
/s/ MaryAnn Bishop By: /s/ Terrence C. McCarthy
- ------------------------------ --------------------------------
Attest: ASA INCORPORATED
/s/ MaryAnn Bishop By: /s/ Terrence C. McCarthy
- ------------------------------ --------------------------------
101
<PAGE> 5
Schedule 1
Description of Assets
The Assets consist of the following, as related to the CWI, BSD, and Tire
product lines:
Any and all information regarding the composition of the customer
market, market share, and any other value resulting from the future
provisions of goods or services pursuant to relationships with
customers (contractual or otherwise) in the ordinary course of
business.
102
<PAGE> 6
EXHIBIT 1
---------
ASA INTERNATIONAL VENTURES, INC.
December 29, 1995 $5,200,000
--
DEMAND PROMISSORY NOTE
ASA International Ventures, Inc., a Delaware corporation (the "Company"),
for value received, hereby promises to pay to ASA Incorporated (the "Payee")
with an address at 10 Speen Street, Framingham, Massachusetts 01701, the
principal amount of Five Million Two Hundred Thousand Dollars and no Cents
($5,200,000.00), in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts.
I. Payment
-------
The amounts to be repaid by the Company to the Payee shall be in such
amount and at such time as the Payee shall demand in writing. The Payee may
demand payment in full or in part at any time.
II. Interest
--------
Interest on all amounts unpaid under this Note shall accrue at the rate of
seven percent (7%) per annum.
III. Prepayment
----------
The principal amount of this Note may be prepaid by the Company, in whole
or in part, without penalty, at any time. The Company's payments will be
credited first to accrued interest, and the remainder to the principal amount.
IV. Events of Default
-----------------
A. Notwithstanding any other provision to the contrary, this Note shall
become and be due and payable in its entirety within 45 days after receipt of
written demand made by the Payee hereof if one or more of the following events,
herein called "events of default," shall happen and be continuing for a period
of 45 days:
(i) Default in any payment of the principal or accrued interest on this
Note when and as the same shall become due and payable, whether by acceleration
or otherwise;
(ii) Application for, or consent to, the appointment of a receiver,
trustee or liquidator of the Company or of its property;
103
<PAGE> 7
(iii) General assignment by the Company for the benefit of creditors;
(iv) Filing by the Company of a voluntary petition in bankruptcy or
a petition or an answer seeking reorganization, or an arrangement with
creditors;
(v) Entering against the Company of a court order approving a petition
filed against it under the federal bankruptcy laws, which order shall not have
been vacated or set aside or otherwise terminated within ninety (90) days; and
(vi) Upon the sale of all or substantially all of the Company's assets,
a discontinuation of the Company's business or a liquidation of the Company's
assets.
B. In case any one or more of the events of default specified above shall
happen and be continuing, the Payee of this Note may proceed to protect and
enforce his rights by suit in the specific performance of any covenant or
agreement contained in this Note or in aid of the exercise of any power granted
in this Note or may proceed to enforce the payment of this Note or to enforce
any other legal or equitable rights as such Payee.
V. Miscellaneous
-------------
A. All agreements between the Company and Payee expressly are limited so
that in no event whatsoever shall the amount paid or agreed to be paid by the
Company to Payee hereunder exceed the higher lawful contractual rate of interest
permissible under the law which a court of competent jurisdiction, by a final
order which is not appealed or is nonappealable, determines is applicable to
this Note. If fulfillment of any provision of this Note at the time performance
of such provision becomes due involves exceeding such highest lawful contractual
rate, then such obligation shall be reduced to such highest lawful contractual
rate. If by any circumstance Payee shall ever receive as interest an amount
which exceeds such highest lawful contractual rate, any amount which may be
deemed excessive interest shall be applied as payment of the principal of the
indebtedness evidenced hereby and not as payment of interest. The terms and
provisions of this paragraph shall control all other terms and provisions
contained in this Note.
B. The Payee acknowledges and represents that the Company has been induced
to execute this Note based upon certain representations, covenants, and
statements made by the Payee in an Agreement for Purchase and Sale of Assets of
even date herewith and that the terms, representations, statements, and
acknowledgements of the Payee therein are incorporated in this Note.
C. If any provision hereof is for any reason and to any extent invalid or
unenforceable, the remainder of this Note shall not be affected thereby, but
instead shall be enforceable to the maximum extent permitted by law.
104
<PAGE> 8
D. This Note may not be terminated or amended orally, but only by a
termination or amendment in writing signed by both parties hereto.
E. This Note shall be construed and enforced in accordance with the laws
of the Commonwealth of Massachusetts without regard to its conflict of law
provisions.
F. All notices required or permitted under this Note shall be in writing
and shall be effective upon receipt thereof.
G. No recourse shall be had for the payment of the principal or
interest of this Note against any incorporator or any past, present or future
stockholder, officer, director or agent of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, under any statute or by the enforcement of any assessment or
otherwise, all such liability of the incorporators, stockholders, officers,
directors and agents being waived, released and surrendered by the holder
hereof by the acceptance of this Note.
IN WITNESS WHEREOF, ASA International Ventures, Inc. has caused this Note
to be signed in its name by its Chief Executive Officer.
ASA INTERNATIONAL VENTURES, INC.
By: /s/ Alfred C. Angelone
----------------------------
Alfred C. Angelone
Chief Executive Officer
Dated: December 29, 1995
--
105
<PAGE> 1
AGREEMENT FOR PURCHASE AND EXCHANGE OF ASSETS
AGREEMENT dated as of the 29 day of December, 1995, by and among ASA
INTERNATIONAL VENTURES, INC., a Delaware Corporation ("ASA Ventures"); and ASA
INTERNATIONAL LTD., a Delaware corporation ("ASA International").
W I T N E S S E T H T H A T:
WHEREAS, ASA Incorporated ("ASA Inc."), a company which is engaged in the
computer software business wishes to sell certain of its assets;
WHEREAS, ASA Ventures, a company which is engaged in the computer software
business, wishes to acquire certain assets of ASA Inc. for the purpose of
exchanging certain assets with ASA International; and
WHEREAS, ASA International wishes to engage in an exchange of assets with
ASA Ventures.
Intending to be legally bound hereby, and in consideration of the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. PURCHASE OF ASSETS. ASA Ventures will use its best efforts to
purchase and acquire from ASA Inc., all of the customer intangibles of ASA Inc.
related to the CWI, BSD and Tire product lines (the "Assets") as more fully set
forth on SCHEDULE 1 on or before December___, 1995. In the event that ASA
Ventures is able to purchase and acquire the Assets, ASA Ventures agrees to
enter into an Agreement for Exchange of Intangibles with ASA International.
2. REPRESENTATIONS AND WARRANTIES OF ASA INTERNATIONAL. ASA
International represents and warrants to ASA Ventures, upon which
representations and warranties ASA Ventures relies, and which representations
and warranties shall survive the Closing, notwithstanding any investigation of
the affairs of ASA International by ASA Ventures, as follows:
(a) ASA International is a corporation duly organized, validly existing
and in corporate and tax good standing under the laws of the State of Delaware,
and has full corporate power and authority to own its properties and carry on
its business as it is now being conducted and as presently proposed to be
conducted.
(b) ASA International has full power and authority (corporate and
other) to execute and deliver this Agreement and consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby
107
<PAGE> 2
have been duly and validly authorized by the Board of Directors and
stockholder of ASA International, and no other corporate actions or
proceedings on the part of ASA International or its stockholder are necessary
to consummate the transactions so contemplated.
3. REPRESENTATIONS AND WARRANTIES OF ASA VENTURES. ASA Ventures
represents and warrants to ASA Inc. as follows:
(a) ASA Ventures represents and warrants that it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) ASA Ventures represents and warrants that any transfer by ASA Inc.
to ASA Ventures of the Assets will not violate the terms of any contract, loan
or other agreement under which ASA Ventures is now bound.
(c) ASA Ventures represents and warrants that the execution and
delivery of this Agreement and the consummation of the transactions contemplated
have been duly authorized by its Board of Directors.
(d) The representations and warranties of ASA Ventures contained in
this Agreement or its attachments or attendant documents shall be true and
correct in all respects as of the date when made and as of Closing as though
such representations were made at and as of Closing.
4. DISCLOSURE OF INFORMATION. ASA Ventures and ASA International each
agree that it will has not and will not disclose to the other any of its
confidential information, other than that information which is necessary to
complete the transaction contemplated by this Agreement. ASA International will
not release any information regarding this Agreement or the transaction
contemplated herein to any third party, including current or future employees of
ASA International, without the prior written approval of ASA Ventures.
5. EXPENSES. Whether or not the transactions contemplated hereby are
consummated, ASA Ventures and ASA International shall pay their own expenses
in connection with the negotiation, authorization, preparation, execution and
performance of this Agreement, including, without limitation, all fees and
expenses of investment banking firms, agents, representatives, counsel and
accountants. Each party to this Agreement has had the opportunity to consult
with independent legal counsel, and any decision by a party not to seek legal
counsel is that party's sole decision.
6. ENTIRE AGREEMENT. This Agreement sets forth the entire Agreement
and understanding of the parties, and there are no other prior or
contemporaneous written or oral agreements, undertakings, promises, warranties
or covenants not specifically referred to or contained herein or attached
hereto. This Agreement may be amended, modified or terminated only by a written
instrument signed by the parties hereto.
108
<PAGE> 3
7. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their and each of their respective
heirs, executors, administrators, successors and permitted assigns, but may not
be assigned by any party without the prior written consent of the other parties;
except that ASA Ventures may assign its rights hereunder (a) to any affiliate of
ASA Ventures, provided that ASA Ventures shall guarantee and remain liable for
the performance of all of ASA Ventures' obligations hereunder; or (b) to any
purchaser of all or substantially all of ASA Ventures' business.
8. HEADINGS. The headings of the various paragraphs of this
Agreement are inserted merely for the purpose of convenience and do not
expressly or by implication limit, define or extend the specific terms or text
of the paragraph so designated.
9. LAW GOVERNING. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance or otherwise, by
the laws of the Commonwealth of Massachusetts without regard to its conflict
of laws principles in which it has been executed and in which it has a situs.
If any provision of this Agreement shall be held invalid by a court with
jurisdiction over the parties to this Agreement, then and in that event
such provision shall be deleted from the Agreement, which shall then be
construed to give effect to the remaining provisions thereof.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall be considered one Agreement.
IN WITNESS WHEREOF, ASA Ventures and ASA International have caused this
Agreement for Purchase and Sale of Assets to be executed by their respective
duly authorized officers and have affixed their respective corporate seals all
on the day and year first above written.
Attest: ASA INTERNATIONAL VENTURES, INC.
/s/ MaryAnn Bishop By: /s/ Terrence C. McCarthy
- ----------------------------- -------------------------------
Attest: ASA INTERNATIONAL LTD.
/s/ MaryAnn Bishop By: /s/ Terrence C. McCarthy
- ----------------------------- -------------------------------
109
<PAGE> 4
Schedule 1
Description of Assets
The Assets consist of the following, as related to the CWI, BSD, and Tire
product lines:
Any and all information regarding the composition of the
customer market, market share, and any other value resulting
from the future provisions of goods or services pursuant to
relationships with customers (contractual or otherwise) in
the ordinary course of business.
110
<PAGE> 1
AGREEMENT FOR EXCHANGE OF INTANGIBLES
THIS AGREEMENT FOR EXCHANGE OF INTANGIBLES is made this 29th day of
December, 1995 (the "Effective Date"), by and between ASA INTERNATIONAL
VENTURES, INC., a Delaware corporation ("ASA Ventures"); and ASA INTERNATIONAL
LTD., a Delaware corporation ("ASA International").
W I T N E S S E T H :
WHEREAS, ASA Ventures and ASA International are the
owners of certain Intangibles, as defined below; and
WHEREAS, ASA Ventures and ASA International desire to exchange certain
Intangibles.
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Definitions.
-----------
a. THE ASA VENTURES INTANGIBLES. The "ASA Venture Intangibles"
shall mean any and all information regarding the composition of the customer
market, market share, and any other value resulting from the future provision
of goods and services pursuant to relationships with customers (contractual or
otherwise) in the ordinary course of business related to ASA Ventures' CWI
and BSD product lines.
b. THE ASA INTERNATIONAL INTANGIBLES. The "ASA International
Intangibles" shall mean any and all information regarding the composition of the
customer market, market share, and any other value resulting from the future
provision of goods and services pursuant to relationships with customers
(contractual or otherwise) in the ordinary course of business related to ASA
International's Trade and Legal Data product lines.
2. EXCHANGE OF INTANGIBLES. As of the Effective Date, ASA Ventures
grants to ASA International the right to use the ASA Ventures Intangibles,
and ASA International grants to ASA Ventures the right to use the ASA
International Intangibles.
3. PAYMENT TO ASA VENTURES. In addition to the exchange of
Intangibles set forth above in Section 2, ASA International shall pay annually
to ASA Ventures the sum of One Hundred Thousand Dollars ($100,000) as a royalty
payment for use of the International Trade, Legal Data, and Tire Intangibles
owned by ASA Ventures.
112
<PAGE> 2
In the event that ASA International suffers a loss, expense, cost or damage
resulting from any claim made against ASA International relating to this
Agreement, including but not limited to a breach of ASA Ventures's obligations
pursuant to Section 2 of this Agreement or a breach of the representations and
warranties of ASA Ventures, as set forth below, ASA International may reduce the
amounts paid to ASA Ventures under this Section by the amount of the loss
suffered by ASA International, including related fees and costs.
4. Representations and Warranties of the Parties.
---------------------------------------------
a. REPRESENTATIONS AND WARRANTIES OF ASA VENTURES. ASA Ventures
represents and warrants, upon which representations and warranties ASA
International relies, and which shall survive the execution of this Agreement
that:
(i) ASA Ventures is the sole owner of the ASA Ventures
Intangibles free of any liens, encumbrances and claims of any description.
(ii) ASA Ventures has not previously assigned the ASA Ventures
Intangibles.
(iii) ASA Ventures has not granted any license to any person or
entity permitting the use of the ASA Ventures Intangibles, or granting the right
to reproduce the ASA Ventures Intangibles, except as previously disclosed to ASA
International.
(iv) The ASA Ventures Intangibles being transferred are fit and
sufficient for the purposes which ASA International intends to use them.
b. REPRESENTATIONS AND WARRANTIES OF ASA INTERNATIONAL. ASA
International represents and warrants, upon which representations and
warranties ASA Ventures relies, and which shall survive the execution of
this Agreement that:
(i) ASA International is the sole owner of the ASA International
Intangibles free of any liens, encumbrances and claims of any description.
(ii) ASA International has not previously assigned the ASA
International Intangibles.
(iii) ASA International has not granted any license to any person
or entity permitting the use of the ASA International Intangibles, or granting
the right to reproduce the ASA International Intangibles, except as previously
disclosed to ASA Ventures.
113
<PAGE> 3
(iv) The ASA International Intangibles being transferred are fit
and sufficient for the purposes which ASA Ventures intends to use them.
5. COVENANTS OF ASA INTERNATIONAL. ASA International agrees that the
ASA Ventures Intangibles are, or will be, used exclusively for business
purposes. ASA Ventures shall have the right to use the ASA International
Intangibles and to receive the proceeds and profits thereof in the ordinary
course of business.
6. COVENANTS OF ASA VENTURES. ASA Ventures agrees that the ASA
International Intangibles are, or will be, used exclusively for business
purposes. ASA International shall have the right to use the ASA Ventures
Intangibles and to receive the proceeds and profits thereof in the ordinary
course of business.
7. FURTHER ACTIONS. The parties agree to execute such further
instruments and to take such further actions as may reasonably be necessary to
carry out the intent of this Agreement.
8. INTERPRETATION. It is the intent of the parties that in case
any one or more of the provisions contained in this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. Moreover, it
is the intent of the parties that if any provision of this Agreement is or
becomes or is deemed invalid, illegal or unenforceable or in case any one or
more of the provisions contained in this Agreement shall for any reason be held
to be excessively broad as to duration, geographical scope, activity or subject,
such provision shall be construed by amending, limiting and/or reducing it to
conform to applicable laws so as to be valid and enforceable or, if it cannot be
so amended without materially altering the intention of the parties, it shall be
stricken and the remainder of this Agreement shall remain in full force and
effect.
9. WAIVERS. No waiver of any right under this Agreement shall be deemed
effective unless contained in a writing signed by the party charged with
such waiver, and no waiver of any right arising from any breach or failure to
perform shall be deemed to be a waiver of any future such right or of any other
right arising under this Agreement. If either party should waive any breach of
any provision of this Agreement, it shall not thereby be deemed to have waived
any preceding or succeeding breach of the same or any other provision of this
Agreement.
114
<PAGE> 4
10. COMPLETE ASSIGNMENT, AMENDMENTS. The parties agree that with
respect to the subject matter hereof this Agreement is the entire agreement of
the parties, superseding any previous oral or written communications,
representations, understandings, or agreements. Any amendment to this Agreement
shall be effective only if evidenced by a written instrument executed by the
parties hereto.
11. HEADINGS. The headings of the Sections contained in this Agreement are
for convenience and reference only and in no way define, limit, extend or
describe the scope of this Agreement, the intent of any provisions hereof, and
shall not be deemed to constitute a part hereof nor to affect the meaning of
this Agreement in any way.
12. COUNTERPARTS. This Agreement may be signed by facsimile and in
counterparts, each of which shall be deemed an original and both of which shall
together constitute a single Agreement.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Massachusetts,
without regard to its conflict of law principles.
14. NOTICES. All notices, requests, demands and communications which are
or may be required to be given hereunder shall be deemed effectively given
upon receipt after being sent by registered or certified mail, return receipt
requested, postage prepaid.
15. SUCCESSORS AND ASSIGNS. ASA International may not assign this
Agreement without the express written consent of ASA Ventures. Any attempt to so
assign shall be deemed to be null and void and given no force or effect. This
Agreement shall be binding upon and shall inure to the benefit of the respective
legal representatives, successors and permitted assigns of the parties hereto.
16. INDEPENDENT LEGAL COUNSEL. Each party represents that it: (1)(i) has
received independent advice from counsel of its own choosing with respect to
the advisability of entering into this Agreement, and (ii) has had a reasonable
amount of time to properly review this Agreement with such legal counsel; or
(2) that it has had the opportunity to seek independent advice from legal
counsel but for reasons of its own decided not to seek such advice.
115
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on the day and year first set
forth above.
WITNESS ASA INTERNATIONAL VENTURES, INC.
/s/ MaryAnn Bishop By: /s/ Terrence C. McCarthy
- -------------------------------- --------------------------------
WITNESS ASA INTERNATIONAL LTD.
/s/ MaryAnn Bishop By: /s/ Terrence C. McCarthy
- -------------------------------- --------------------------------
116
<PAGE> 1
<TABLE>
STATEMENT OF COMPUTATION OF
NET EARNINGS PER SHARE
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
Year ended December 31,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Weighted Average Number of
Shares Outstanding:
Common Stock 3,787,497 3,787,469 3,766,665
Common equivalent shares resulting
from stock options
(Treasury Stock Method) 112,432 (a) 174,094
Shares contingently issuable
based on market price 324,574 391,829 79,309
--------- --------- ---------
4,224,503 4,179,298 4,020,068
========= ========= =========
Earnings before cumulative effect
of adopting SFAS No. 109 $ 457 $ 166 $ 98
========= ========= =========
Net earnings $ 457 $ 166 $ 742
========= ========= =========
Earnings per common and
common equivalent share:
Earnings before cumulative effect
of adopting SFAS No. 109 $ .11 $ .04 $ .02
Net Earnings $ .11 $ .04 $ .18
<FN>
(a) Dilution is less than 3%; therefore, earnings per share is based
on weighted average number of shares outstanding and shares
contingently issuable based on market price.
</TABLE>
118
<PAGE> 1
ASA INTERNATIONAL LTD.
SUBSIDIARIES OF THE REGISTRANT
FORMED IN 1995
ASA International Ventures, Inc., a Delaware Corporation
120
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM (A) CONDENSED CONSOLIDATED BALANCE SHEET AT
DECEMBER 31, 1995 CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Dec-31-1995
<EXCHANGE-RATE> 1
<CASH> 404,026
<SECURITIES> 0
<RECEIVABLES> 5,145,418
<ALLOWANCES> 60,246
<INVENTORY> 238,624
<CURRENT-ASSETS> 6,476,043
<PP&E> 9,317,480
<DEPRECIATION> 4,612,375
<TOTAL-ASSETS> 19,515,201
<CURRENT-LIABILITIES> 6,081,150
<BONDS> 2,707,459
<COMMON> 39,173
0
0
<OTHER-SE> 10,070,419
<TOTAL-LIABILITY-AND-EQUITY> 19,515,201
<SALES> 31,032,357
<TOTAL-REVENUES> 31,032,357
<CGS> 6,920,796
<TOTAL-COSTS> 21,655,747
<OTHER-EXPENSES> 7,874,991
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 452,306
<INCOME-PRETAX> 1,049,314
<INCOME-TAX> 592,000
<INCOME-CONTINUING> 457,314
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 457,314
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
