September 6, 1996
VIA EDGAR
U. S. Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 10549
Re: Semicon Tools Inc.
Form 10-QSB
File No. 0-28698
Dear Sirs:
On behalf of Semicon Tools Inc. (the "Company"), I hereby submit for electronic
filing, pursuant to Rule 101 of Regulation S-T under the Securities Act of 1933,
as amended, the following document:
1. Form 10-QSB for the fiscal quarter ended July 31, 1996.
Please do not hesitate to call me if I can be of any assistance.
Very truly yours,
Mark Gasarch
MG:mg
Enc.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended July 31, 1996
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1939
For the transition period from to
Commission File Number: 0-28698
SEMICON TOOLS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 77-0082545
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
111 Business Park Drive, Armonk, New York 10504
(Address of principal executive offices)
Issuer's telephone number, including area code: (914) 636-4325
-----------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of Shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 1996
Common Stock, par value $.001
per share 8,242,500
<PAGE>
INDEX
Part I. Financial Information
Item 1. Condensed consolidated financial statements:
Balance sheet as of July 31, 1996 F-2
Consolidated statement of operations for six and three
months ended July 31, 1996 F-3
Consolidated statement of cash flows for six and three
months ended July 31, 1996 F-4
Consolidated statement of shareholders' equity as
of July 31, 1996 F-5
Notes to condensed consolidated financial statements F-6 - F-12
Item 2. Management's discussion and analysis of
financial condition
Part II. Other information
Signatures
<PAGE>
SEMICON TOOLS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
JULY 31, 1996
(UNAUDITED)
ASSETS
Current assets:
Cash $ 128,824
Notes receivable affiliate KBR (Malaysia) (Note 4) 63,000
Accounts receivable, less allowance
for doubtful accounts of $6,000 182,409
Inventory 284,216
Due from officers 6,620
Prepaid expenses and other assets 41,777
----------
Total current assets 706,846
Property and equipment (Note 3) 245,194
----------
Other assets:
Investment in foreign subsidiary (Note 4) 219,196
Goodwill, net of amortization 103,916
Other assets 10,191
----------
333,303
-------
$1,285,343
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (Note 8) $ 38,551
Notes payable, shareholders (Note 9) 90,313
Accounts payable 75,348
Accrued expenses 5,913
Accrued interest 172,584
Payroll taxes payable 1,493
----------
Total current liabilities 384,202
Long term debt, net of current portion (Note 8) 170,000
----------
Commitments and contingencies (Note 6)
Shareholders' equity
Common stock par value $.001; 100,000,000
shares authorized 8,242,500 shares issued and
outstanding (Note 7) 8,243
Additional paid in capital 2,567,397
Retained earnings (deficit) ( 1,844,499)
----------
731,141
-------
$1,285,343
==========
See notes to condensed consolidated financial statements.
F-2
<PAGE>
SEMICON TOOLS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
SIX AND THREE MONTHS ENDED JULY 31, 1996 AND 1995
(AUDITED)
Six months ended Three months ended
July 31 July 31
1996 1995 1996 1995
(Restated (Restated
Note 14) Note 14)
--------- ----------- ---------- ----------
Net sales $ 747,002 $ 536,475 $ 370,535 $ 288,536
Cost of sales 209,802 134,867 106,225 70,697
--------- ---------- ---------- ----------
Gross profit 537,200 401,608 264,310 217,839
Selling, general and
administrative expenses 442,945 495,995 231,541 272,317
--------- ---------- ---------- ----------
Income (loss)
from operations 94,255 ( 94,387) 32,769 ( 54,478)
--------- ---------- ---------- ----------
Other income (expenses):
Rental income 3,500 ( 350)
Interest expense ( 17,902) ( 23,473) ( 6,711 ( 10,783)
--------- ---------- ---------- ----------
( 17,902) ( 19,973) ( 6,711) ( 11,133)
--------- ---------- ---------- ----------
Income (loss) before
income taxes 76,353 ( 114,360) 26,058 ( 65,611)
--------- ---------- ---------- ----------
Income tax expense (benefit)
(Note 10)
Current 22,905 6,253
Deferred ( 22,905) ( 6,253)
--------- ---------- ---------- --------
Net income (loss) $ 76,353 ($ 114,360) $ 26,058 ($ 65,611)
========= ========== ========= ==========
Income (loss) per
common share $ 0.01 ($ 0.03) $ 0.00 ($ 0.02)
========= =========== ========== ==========
Weighted average number
of common shares
outstanding (Note 13) 7,685,749 3,725,500 11,497,388 3,687,055
========= =========== ========== =========
See notes to condensed consolidated financial statements
F-3
<PAGE>
SEMICON TOOLS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
SIX MONTHS ENDED JULY 31, 1996 AND 1995
(UNAUDITED)
1996 1995
(Restated
Note 14)
Cash flows from operating activities:
Net income (loss) $ 76,353 ($114,360)
Adjustments to reconcile net income to
cash provided from operating activities:
Depreciation and amortization 6,750 13,251
Compensatory stock issued 7,500 43,650
Change in operating assets and liabilities:
Increase in accounts receivable ( 10,932) ( 31,778)
Increase in inventories ( 23,723) ( 11,466)
(Increase) decrease in prepaid expenses
and other current assets ( 41,147) 153,742
(Decrease) increase in accounts payable
accrued expenses and payroll taxes payable ( 151,801) 3,179
-------- --------
Net cash used in operating expenses ( 137,000) 56,218
-------- --------
Investing activities, use of cash,
increase in other assets ( 550)
--------
Financing activities:
Source of cash:
Proceeds from sale of stock 268,125
Use of cash:
Decrease in notes payable ( 10,186)
Decrease in notes payable, shareholders' ( 17,487) ( 11,099)
Payment of long term debt ( 23,130) ( 14,139)
-------- --------
Net cash provided from financing activities 227,508 ( 35,424)
-------- --------
Net increase in cash 89,958 20,794
Cash, beginning of year 38,866 891
-------- --------
Cash, end of year $128,824 $ 21,685
======== ========
Supplemental disclosures of cash flow information: Cash paid during the year
for:
Interest $ 2,320 $ 4,254
======== ========
Income taxes
======== ========
Supplemental schedule of non-cash investing and financing activities:
Issuance of common stock for purchase of
subsidiary (Note 12) $274,338
Issuance of common stock for conversion of debt,
agreements, services and payment of interest 7,500 43,650
-------- --------
$281,838 $ 43,650
======== ========
See notes to condensed consolidated financial statements.
F-4
<PAGE>
SEMICON TOOLS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JULY 31, 1996
(UNAUDITED)
Total
Additional Retained Share-
Common paid in earnings holders'
Shares Stock capital (deficit) Equity
Balance at
Jan. 31, 1994 2,520,000 $2,520 $1,362,855 ($1,323,782) $ 41,593
Stock issued for
services 5,000 5 2,497 2,502
Stock issued for
settlement agreement 50,000 50 24,950 25,000
Sale of stock 350,000 350 99,650 100,000
Stock issued for
services 760,000 760 379,240 380,000
Net loss for the year
ended Jan. 31, 1995 ( 267,231) ( 267,231)
--------- ------ ---------- ---------- --------
Balance at
Jan. 31, 1995 3,685,000 3,685 1,869,192 ( 1,591,013) 281,864
Stock issued for
settlement of
accounts payable 600,000 600 73,050 73,650
Stock issued for
consulting services 150,000 150 9,900 10,050
Shares issued for
exchange of loans 670,000 670 39,330 40,000
Sale of stock 62,500 63 23,375 23,438
Net loss for the year
ended Jan. 31, 1996 ( 329,839) ( 329,839)
--------- ------ ---------- ---------- --------
Balance at
Jan. 31, 1996 5,167,500 $ 5,168 $2,014,847 ($1,920,852) $ 99,163
Issuance of stock on
exercise of stock
options (Note 6) 2,550,000 2,550 237,450 240,000
Sale of stock (Note 7) 75,000 75 28,050 28,125
Issuance of stock for
consulting services
(Note 7) 150,000 150 7,350 7,500
Issuance of stock
regarding acquisition
of subsidiary
(Notes 2, 7 and 12) 300,000 300 279,700 280,000
Net income for the
six months ended
July 31, 1996 76,353 76,353
--------- ------ ---------- ---------- --------
Balance at
July 31, 1996 8,242,500 $8,243 $2,567,397 ($1,844,499 $731,141
========= ====== ========== ========== ========
See notes to condensed consolidated financial statements.
F-5
<PAGE>
SEMICON TOOLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. The results of operations for the six months ended is not
necessarily indicative of the results to be expected for the full year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report for the year ended
January 31, 1996 included in its Annual Report filed on Form 10-KSB.
2. Organization of the Company:
Semicon Tools, Inc. (the "Company"), a Nevada corporation, is primarily in
the business of selling small precision disposable diamond tools used to
manufacture electronic components and devices.
One of the Company's wholly-owned subsidiaries, East Coast Sales Company,
Inc. ("ECS") is a Connecticut corporation which distributes and
fabricates technical ceramic products and distributes clean room
supplies and tools. This Company, which was acquired on January 26,
1990, was accounted for in a manner similar to the pooling of interests
method of accounting. The total cost of the acquisition, $309,000, was
paid for by the issuance of a $300,000 note, bearing interest at 10% per
annum, and the issuance of 9,000,000 shares of the Company's $.001 par
value common stock.
OnJune 22, 1996, the Company purchased the assets of DTI Technology, SDN
BHD (DTI). DTI's product line is similar to that of Semicon Tools, Inc.
The total cost of the acquisition, $280,000, was paid for by the
issuance of 300,000 shares of the Company's $.001 par value common stock
with a negotiated fair value of $.93 per share.
3. Property and equipment:
Major classifications of property and equipment are as follows:
Manufacturing equipment $193,923
Other equipment and technology 451,665
Office equipment 20,535
--------
666,123
Less accumulated depreciation 420,929
-------
$245,194
========
F-6
<PAGE>
SEMICON TOOLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Investment in foreign affiliate:
As of January 31, 1996, the Company had a 9 1/4% interest in KBR (Malaysia)
SDN. BHD., a foreign affiliate, which manufactures products sold by the Company.
This investment is recorded under the equity method of accounting since the
Company exercises significant influence over its operating and financial
activities. During the six months ended July 31, 1996, this affiliate relocated
its manufacturing facilities and operations were minimal, accordingly, the
Company has not recorded any equity in operations for the year.
During the year ended January 31, 1993, the Company sold non-exclusive
rights to certain processing and manufacturing technology to this affiliate.
This sale included processing technology and patent rights for the manufacture
of hub and hubless diamond dicing blades. The value assigned to this technology
was $200,000 for which payment was received in the form of 500,000 shares of the
affiliate's common stock.
In addition to the sale of technology, the Company also sold machinery and
equipment, reflected in the books of the Company at a net book value of $17,367,
to this affiliate, for aggregate proceeds of $68,463.
5. Common stock options:
On March 6, 1996 the Company entered into an investment agreement for a
three year term. The consultant shall assist management in broadening the
Company's exposure to the financial community and securing necessary funding to
meet its needs according to the terms of the agreement. The consultant shall be
compensated by having the option to purchase up to 6,000,000 of the Company's
common shares at prices varying from $.10 to $1.75 during the period commencing
on March 6, 1996 and ending September 30, 1996. Either party may terminate this
agreement upon notice to the other. As of July 31, 1996, 2,550,000 shares had
been issued for $240,000.
6. Commitments and contingencies:
The Company is currently obligated under a lease agreement for office and
manufacturing facilities. This lease, which expires on May 31, 1998, requires
the following future minimum rental payments:
July 31, 1997 $40,010
July 31, 1998 34,925
-------
$74,935
=======
Rent expense for the six months ended July 31, 1996 and 1995 amounted to
$19,282 and $18,750, respectively.
The Company also leases three vehicles under operating leases with terms
expiring through 1998. Total lease expense was $7,938 for the six months ended
July 31, 1996 and 1995.
Future minimum rentals are as follows:
1996 $11,907
1997 5,762
-------
$17,669
=======
F-7
<PAGE>
SEMICON TOOLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Commitments and contingencies (continued):
On December 1, 1995, the Company signed a letter of intent with Ling
Dynamic SDN BHN and Cable-Vision Technologies (M) SDN BHN. Semicon Tools, Inc.
is to exchange 5,000,000 of its common stock for 100% ownership in Ling Dynamic.
For a 100% ownership in Cable-Vision Technologies, Semicon intends to issue
3,000,000 of its common shares and also remit $2,500,000. This letter of intent
is not a binding agreement. Management feels at this time that the consummation
of either letter of intent is not probable.
The Company has entered into written sales agreements with two employees.
The agreements are on a year to year basis and call for the payment of
commissions, varying from 1 to 4 percent, on the sale of selected products.
On April 8, 1996, the Company reached a settlement with their prior
accountants of fees due from the Company. The agreement calls for monthly
installments of $4,000 commencing April 1, 1996 and ending on September 1, 1996
for a total $24,000. The balance reflected at January 31, 1996 on the Company's
accounts payable was $28,068. The books at July 31, 1996 have been adjusted to
reflect this settlement.
7. Common stock:
During the six months ended July 31, 1996, the Company issued shares of its
common shares in non-cash transactions as follows:
Number
of Total
Date Issuee shares Value Reason for issuance
03/05/96 Richard Staper 100,000 $ 5,000 Consulting services
03/05/96 Richard Korlinchak 50,000 2,500 Consulting services
06/22/96 Lee Beng Wang 100,000 93,000 Acquisition of DTI Technology
06/22/96 LS Technology 50,000 47,000 Acquisition of DTI Technology
06/22/96 Eugene Pian 150,000 140,000 Acquisition of DTI Technology
------- --------
450,000 $287,500
======= ========
The Company sold 2,625,000 common shares during the six month period
ended July 31, 1996 for $268,125.
F-8
<PAGE>
SEMICON TOOLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Long-term debt:
Long-term Current
Rate Portion Portion Maturity
Note payable, Citibank (a) 10% $38,551 1998
Note payable, shareholders (b) 13.5%-15% $170,000 1998
-------- -------
$170,000 $38,551
(a) Note payable to Citibank is payable in monthly installments of $3,855
including interest. The note is collateralized by all assets of the Company and
guaranteed by its principle shareholder. As of July 31, 1996, the Company was in
default of certain financial covenants as required under its loan agreements
with the bank. The lender has waived compliance with these ratios for the above
mentioned period.
(b) Notes payable to two shareholders in the aggregate amount of
$170,000. These notes are subordinate to the borrowing from
Citibank and will become due when the bank is paid in full.
The maturities of these loans are as follows:
July 31, 1997 $ 38,551
July 31, 1998 170,000
--------
$208,551
========
9. Notes payable, shareholders:
Notes payable consist of the following past due obligations. The terms
of these notes have not been extended and are payable on demand:
Notes payable to shareholders were payable in monthly installments of
$2,326, including interest at 14%. The note matured in July 1994 and
amounted to $87,313.
Demand note payable to shareholder carries interest at 10% and amounted to
$3,000.
Shareholders have not demanded payment in the current year.
F-9
<PAGE>
SEMICON TOOLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Income taxes:
As of July 31, 1996 the Company had net operating loss carryovers of
approximately $1,900,000 expiring in various years through 2008.
Effective February 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"), the cumulative effect of which was not material to the
consolidated financial statements and is therefore not presented
separately. Under the asset and liability method of SFAS No. 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to the differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the year in which those
temporary differences are expected to be recovered or settled. Under
SFAS No. 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date; this effect was immaterial during the period ending
July 31, 1996 and 1995. The deferred tax asset less the deferred tax
liabilities has been reduced by a valuation allowance equal to the net
tax benefit from the net operating loss carryovers.
Provision for income taxes:
1996 1995
---- ----
Current $ 22,905 $ 0
Deferred ( 22,905)
----------- --------
Total $ 0 $ 0
========== ========
The component of deferred income tax expense (benefit) is as follows:
Tax benefit of net operating
loss carryfoward ($ 22,905) $ 0
======== ========
The components of deferred tax assets and liabilities is as follows:
Deferred tax asset:
Net operating loss carryfoward $570,000 $592,905
-------- --------
Total deferred tax asset 570,000 592,905
Valuation allowance ( 570,000) ( 592,905)
-------- --------
$ 0 $ 0
======== ========
F-10
<PAGE>
SEMICON TOOLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Consulting agreements:
As of December 30, 1994, the Company entered into an agreement for
consulting services to advise and assist it in its ongoing business, investor
and financial public relations. Such services are to include, as necessary and
as authorized by the client, the preparation of a business plan, the development
of new business, press relations, releases and conferences, distribution of the
Company's financial reports and the making of both individual and business
contracts. The agreement is for a one year term with the consultant to receive
compensation of $380,000 in the form of 760,000 shares of common stocks, valued
at $.50 per share. The agreement may be terminated by either party by notice or
if either party has failed to comply with any of the terms, conditions or
provisions of the agreement. As of July 31, 1996, the agreement was no longer in
force.
The Company also entered into an investment banking consultant agreement
effective December 31, 1994 for a period of thirty-six months. The consultant
shall advise the Company on capital structure, make introductions to financial
institutions and provide advice of financing strategies and special projects.
The consultant shall be compensated on a per introduction basis using the Lehman
formula (5-4-3-2-1). As of July 31, 1996 no renumeration had been paid, nor were
any amounts owed to this consultant.
12. Acquisition of subsidiary:
On June 22, 1996, the Company acquired 100% of the assets of DTI
Technology, SDN, BHD for a total cost of $280,000. The Company issued 300,000 of
its common shares to the shareholders of DTI Technology. The condensed balance
sheet of DTI Technology, SDN BHD at June 22, 1996 was as follows:
BALANCE SHEET
ASSETS
Current assets $138,826
Property and equipment 180,681
-------
Total assets $319,507
========
LIABILITIES AND SHAREHOLDERS" EQUITY
Current liabilities $ 32,892
Shareholders' equity 286,615
-------
Total liabilities and shareholders' equity $319,507
========
The assets and liabilities of DTI have been included in the consolidated
balance sheet at July 31, 1996. The results of operations for DTI for the period
June 22, 1996 to July 31, 1996 were insignificant and had no material effect on
the consolidated income statement for the six months ended July 31, 1996.
F-11
<PAGE>
SEMICON TOOLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Reconciliation of shares used in computation of earnings per share:
Six month Three months
ended ended
July 31, 1996 July 31, 1996
------------- -------------
Weighted average shares actually
outstanding 6,246,166 8,047,388
Common stock options 1,439,583 3,450,000
--------- ----------
Primary and fully diluted weighted
average common shares outstanding 7,685,749 11,497,388
========= ==========
14. Restated financial statements for July 31, 1995:
The Company has restated the financial statements as of July 31, 1995 to
reflect an error in interest expense. This change resulted in an increase in net
income of $22,365 for the six and three months ended July 31, 1996.
F-12
<PAGE>
PART II - OTHER INFORMATION
Item 1. - Legal Proceedings None
Item 2. - Changes in Securities None
Item 3. - Defaults Upon Senior Securities None
Item 4. - Submission of Matters to a Vote of None
Security Holders
Item 5. - Other Information
On July 11, 1996 the Company entered into an Acquisition Agreement with
Cable-Vision Technologies (M) Sdn Bhd ("Cable"), a Malaysian corporation, and
the majority shareholders of Cable pursuant to which the Company would acquire
certain assets of Cable in exchange for 3,000,000 of its common shares and a
cash payment of $2,500,000. There can be no assurance that the Company can raise
the $2,500,000 cash payment prior to the proposed September 30, 1996 closing
date.
Item 6. - (a) Exhibits
10.1 Acquisition Agreement
(b) Reports on Form 8-K None
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: SEMICON TOOLS INC.
September 5, 1996 (Registrant)
By_/s/ Eugene J. Pian________________________
Eugene J. Pian, President and Principal
Executive Officer
By_/s/ Craig Pian____________________________
Craig Pian, Vice President, Treasurer,
Principal Financial and
Accounting Officer
Exhibit 10.1
Acquisition Agreement
<PAGE>
ACQUISITION AGREEMENT
AGREEMENT, dated this 11 day of July, 1996 by and between:
SEMICON TOOLS, INC., with offices at 111 Business Park Drive, Armonk,
New York, 10504 ("the Company");
Cable-Vision Technologies (M) Sdn Bhd, a Malaysian corporation, with an
address at Plot 232, Jalan PKNK2, Sungai Petani Industrial Estate,
08000 Sungai Petani, Kedah Darul Aman, Malaysia ("Cable"); and
ROZLAN YUSOF, EFENDY GOON and MOHAD GHAZALI IBRHIM ("Shareholders") being
the majority shareholders of Cable; all of whom are sometimes referred to as
"the Parties."
W I T N E S S E T H :
WHEREAS, the Company confirms that there is no other class of securities, either
issued and outstanding or authorized, except as specifically set forth on
Schedule A; and
WHEREAS, the Company desires to acquire all of the assets, subject to certain of
the liabilities of Cable in exchange for 3,000,000 shares of the Common Stock of
the Company (the "Acquiror Shares"), to be issued to Shareholders and the
satisfaction of certain of the assumed liabilities or the payment of said
liabiltiies according to their terms; and
NOW, THEREFORE, in consideration of the promises and mutual representations,
warranties and covenants herein contained, the parties hereto adopt this
Agreement and Plan of Reorganization (the "Agreement"), and hereby agree as
follows:
1. Acquisition of Assets. The Cable Assets, as set forth on Schedule A annexed
hereto and made a part hereof, shall be acquired by the Company in exchange
solely for the Acquiror Shares and the satisfaction of the Cable liabilties set
forth on Schedule B annexed hereto. The remaining Cable liabilities being
assumed by the Company shall be paid according to their terms. The parties
understand and agree that the Cable Assets, and the assumed liabilities, will be
contributed by the Company to a new corporation to be formed under the laws of
Malaysia which corporation shall be a wholly owned subsidiary of the Company.
2. Issuance of the Acquiror Shares. The Acquiror Shares shall be issued to the
Shareholder, in such names and denominations as shall be designated in writing
by the Shareholders prior to the Closing Date. Such Acquiror Shares are to be
deemed "restricted securities" as defined by Rule 144 promulgated under the
Securities Act of 1933, as amended, (the "Act").
3. Delivery of Shares. On the Closing Date as set forth herein, the Company
shall deliver a 1
<PAGE>
certificate or certificates (or if physical certificates cannot be available
then the Company shall deliver irrevocable instructions to its transfer agent to
issue such certificates) representing the Acquiror Shares to Shareholders so as
to make Shareholders the sole holders thereof, free and clear of all claims and
encumbrances, which Acquiror Shares will be subject to the restrictions on
transfer described herein.
4. Representations of Cable and Shareholder. Cable hereby represents and
warrants, with respect to its operations and to the Cable Shares, and
Shareholders hereby represent and warrant, with respect to the matters specified
that the representations listed below are true and correct as of the date hereof
and will be true and correct as of the Closing Date (as hereinafter defined):
4.1 Cable is a corporation validly organized and existing in good standing
under the laws of Malaysia;
4.2 Cable has taken all requisite corporate action required under its
Certificate of Incorporation, By-Laws and/or the Laws of the country of
its incorporation, to the extent necessary to enter into this Agreement
and to carry out the terms and conditions to be performed by it.
Similarly, Shareholders represents that the shareholders of Cable are
under no impediment or constraint, legal or otherwise, which would
prevent Shareholders from entering into this Agreement;
4.3 Cable is duly qualified as a foreign corporation in good standing
in each country or state in which such qualification is necessary except
where the failure to be so qualified would not materially adversely
affect Cable's business operations;
4.4 The execution of this Agreement by Cable, and the performance by
Cable of its covenants and undertakings hereunder have been duly
authorized by all requisite corporate action, and approved by the Board
of Directors and the Shareholders of Cable; Cable has the corporate
power and authority to enter into this Agreement and perform the
covenants and undertakings to be performed by it hereunder, and is under
no impediment which would adversely affect its ability to consummate or
prohibit it from consummating this transaction;
4.5 Cable has delivered, or on or before the Closing Date will deliver,
to the Company copies of its unaudited balance sheet as at May 31, 1996,
and financial statements for the period(s) ended May 31, 1996; such
financial statement shall, prior to the Closing Date, be audited and
prepared in such manner as to comply with the financial reporting
obligations of the Company pursuant to the requirements of the Act and
the Securities Exchange Act of 1934, as amended, (the "Exchange Act"),
duly prepared and certified by an, independent certified public
accountant. Said financial statement is complete, accurate and fairly
present the financial condition of Cable as of the date thereof, all in
conformity with generally accepted accounting principles applied on a
consistent basis. Cable has no material liabilities, either fixed or
contingent, not reflected in such financial statement, other than for
contracts or obligations incurred in the ordinary and usual course of
business and no such contracts or obligations constitute liens or other
liabilities which, if disclosed,
2
<PAGE>
would alter substantially the financial condition of Cable as reflected
in such financial statement. All liabilities for the current and for all
prior years, including any income and sales taxes or other taxes for
which Cable has any liability, have been paid in full or have been
adequately provided for in said financial statement in accordance with
generally accepted accounting principles;
4.6 Since the date of the most recent financial statements described in
the paragraph 4.6 above, there have not been (i) any adverse changes in
the financial condition or in the operations of the Cable; (ii) any
damage, destruction or loss, whether covered by insurance or not,
adversely affecting the properties and business of the Cable; (iii) any
declaration, setting aside of payment of any dividend in respect of the
capital stock of the Cable; (iv) any issuance of capital stock by the
Cable or securities exercisable or exchangeable for capital stock, any
distribution (whether by way of reclassification, recapitalization,
stock split or otherwise) in respect of the capital stock of the Cable,
or any redemption or other acquisition of any such stock; (v) any
contract or transaction entered into by the Cable except this Agreement
or as otherwise approved by Acquiror in writing; (iv) any default in any
contract, obligation or debt of the Cable; or (vii) any other event or
condition of any character pertaining to and adversely affecting the
assets or business of the Cable taken as a whole;
4.7 Cable has filed all income, excise, property, sales and other tax
returns, forms or reports which are due or required to be filed by it
under the laws of the country of its incorporation, or of such other
jurisdiction where it is obligated to do so by reason of its business
operations, prior to the date hereof, and has paid or made adequate
provisions for the payment of all taxes, fees or assessments which have
or may become due pursuant to such returns or pursuant to any
assessments received;
4.8 Except as set forth in Schedule C annexed hereto, Cable is not
involved in any pending litigation, governmental investigation or
proceeding and, to the best of Cable's knowledge, no material
litigation, claim, assessment or governmental investigation or
proceeding is threatened which might reasonably be expected to result in
any material change in the business or condition, financial or
otherwise, of Cable or in any of its properties or assets, or which
might reasonably be expected to result in any material liability on the
part of Cable or which questions the validity of this Agreement, or
which would, in the case of officers, directors or employees of Cable,
impair their ability to carry out their duties as such officers,
directors or employees now or in the future, or which might reasonably
be expected to otherwise adversely affect the Company or Cable, or of
any action taken or to be taken pursuant to or in connection with the
provisions of this Agreement. Shareholders represent that, except as set
forth in Schedule F annexed hereto, Shareholders are not involved in any
pending material litigation or governmental investigation or proceeding
which would, to the best of their knowledge and information, affect
Shareholders' ability to enter into this Agreement or carry out its
terms and conditions. Shareholders further covenant that to the best of
their knowledge and infor mation, no such material litigation, claim,
assessment or governmental investigation or proceeding of any kind
exists or is threatened, except as set forth in Schedule D annexed
hereto;
3
<PAGE>
4.9 Cable has not breached, and there are no pending claims or any legal
basis for a claim that Cable has breached, any of the terms or
conditions of any material agreement, contract or commitment to which it
is a party or is bound, and the execution and performance hereof will
not violate any law or any provisions of any agreement to which Cable is
subject;
4.10 Cable has complied with all applicable laws in connection with its
formation, issuance of securities, organization, capitalization and
operation, and no contingent liabilities have been threatened, or claims
made or threatened with respect thereto, including claims for violation
of any such laws and there is no basis for any such claim or liability
except, in all such cases, for violations and claims which individually
or in the aggregate would not materially adversely affect Cable. No
consent, approval, author ization or order of, or registration,
qualification, designation, declaration or filing with, any governmental
authority is required on the part of either Cable or Shareholders in
connec tion with the execution and delivery of this Agreement, or the
carrying out of any of the transactions contemplated hereby;
4.11 Cable and Shareholder have full power, authority and legal right to
enter into this Agreement and to consummate the transactions
contemplated hereby; the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the compliance
by Cable and Shareholders with the provisions hereof will not: (i)
conflict with or result in a breach of any provisions of, or constitute
a material default (or an event which, with notice or lapse of time or
both, would constitute a material default) under, or result in the
creation of any material lien, security interest, charge or encumbrance
upon the Cable Shares or any of the material property or assets of the
Cable under any of the terms, conditions or provisions of the
Certificate of Incorporation or By-Laws of Cable or any material note,
bond, mortgage, indenture, license, agreement or other instrument or
obligation to which either Cable or Shareholders are a party, or by
which they are bound; or (ii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Cable or Shareholders
or any of their properties or assets;
4.12 Cable does not have any agreement, contract, lease, commitment or
obligation (including employment agreements or labor contracts) which
could interfere with or prevent the consumation of the tramsactions
contemplated by this Agreement;
4.13 The respective books of account and other records of Cable are
true, complete and correct, and accurately present or reflect all of the
transactions entered into by the Cable or to which Cable has been a
party, or to which its properties and assets may be subject;
5. Warranties and Representations of the Company. The Company hereby makes the
following representations and warranties to Cable and Shareholders, each of
which is true as of the date hereof and as of the Closing Date and each of which
shall be deemed to be material and to have been relied upon by Cable and the
Shareholder in connection with this Agreement:
5.1 The Company is a corporation duly organized, validly existing by virtue
of the laws
4
<PAGE>
of Colorado, and is in good standing under the laws thereof; and neither
the nature of its business nor the character and location of its
properties requires it to be qualified or licensed to do business in any
other jurisdiction. Since its incorporation, no claim has been asserted
by any governmental authority that the nature of its business, or the
character and location of the properties owned or operated by the
Company makes qualification or licensing to do business necessary in any
jurisdiction in which it is not so qualified or licensed;
5.2 The authorized capital stock of the Company consists solely of
100,000,000 Shares of Common Stock, $.001 par value per Share, of which
_____________ Shares are currently issued and outstanding, or which have
been authorized to be issued but are not yet actually outstanding. Cable
and Shareholders also confirm their understanding that at present the
Company is negotiating for the acquisition of other companies, including
but not necessarily limited to Ling Dynamic Sdn Bhd, upon terms and
conditions similar to the Cable which, if consummated, will also have
the effect of increasing the issued and outstanding shares of the
Company's capital stock. Cable and Shareholders also understand that, in
the future, the Company may undertake additional acquisitions of other
companies upon terms and conditions similar to those under which the
Company will acquire Cable, or may engage in further financing efforts,
which acquisitions and financing efforts, if consummated will also have
the effect of increasing the issued and outstanding shares of its
capital stock. All of the issued and outstanding shares of the Company's
capital stock, including the Cable Shares to be issued hereunder, are or
will be when issued fully paid and non-assessable shares of the
Company's common stock.
5.3 The Company has no subsidiaries nor ownsany interest in any
corporation, partnership or proprietorship except for East Coast Sales, Inc. and
DTI Technologies Sdn Bhd.;
5.4 The Company has filed all federal, state, county and local income,
franchise, property and other tax returns, forms or reports which are
due or required to be filed by it prior to the date hereof, and has paid
or made adequate provisions for the payment of all taxes, fees or
assessments which have or may become due pursuant to such returns or
pursuant to any assessments received;
5.5 The Company has complied with all state, federal and local laws in
connection with its formation, issuance of securities, organization,
capitalization and operation, and no contingent liabilities have been
threatened, or claims made or threatened with respect to said
operations, formation or capitalization, including claims for violation
of any state or federal securities laws and, to the best of it's
knowledge, no basis for any such claim or liability exists. All filings
required to be made by the Company pursuant to federal or state
securities laws have been made and are current, comply as to form with
all requirements of the securities laws and contain no material
misstatement or omit any facts required so as not to be misleading. No
consent, approval, authorization or order of, or registration,
qualification, designation, declaration or filing with, any governmental
authority is required on the part of the Company in connection with the
execution and delivery of this Agreement, or the carrying out of any of
the transactions contemplated hereby;
5
<PAGE>
5.6 Except as set forth on Schedule E, the Company is not involved in
any pending litigation or governmental investigation or proceeding, and
to the best knowledge of the Company, no litigation, claim, assessment
or governmental investigation or proceeding is pending or threatened,
except as may be disclosed on said Schedule E annexed hereto. The
Company has not breached, nor is there any pending or threatened claims
or any legal basis for a claim that the Company has breached, any of the
terms or conditions of any agreement, contract or commitment to which it
is a party or is bound and the execution and performance hereof will not
result in a violation of any agreement, law or governmental regulations
to which the Company is subject;
5.7 The Acquiror Shares to be issued to Shareholders have been duly
authorized, and when issued will be validly issued, non-assessable and
fully paid under the laws of the state of Colorado and will be issued in
a non-public offering pursuant to exemptions from registration under
federal and state securities laws; the Acquiror Shares will have all the
same dividend, voting and other rights, powers, preferences, limitations
and restrictions as all of the shares of common stock of the Company
issued and outstanding as of the date hereof, except that the Acquiror
Shares shall be deemed "restricted shares" as defined in Rule 144
promulgated under the Act and shall bear a restricted legend with stop
transfer instructions at the Company's Transfer Agent. All of the
Acquiror Shares will, when delivered, be free and clear of all voting
trusts, agreements, arrangements, liens and all other encumbrances,
claims, equities and liabilities of every nature, and the Company,
having duly taken all corporate action required therefore, has the
unqualified right to issue the Acquiror Shares and to deliver clear and
unencumbered title thereto;
5.8 The execution of this Agreement by the Company, and the performance
by the Company of its covenants and undertakings hereunder have been
duly authorized by all requisite corporate action, and approved by the
Board of Directors, subject to approval by the Shareholders of the
Company, and the Company has the corporate power and authority to enter
into this Agreement and perform the covenants and undertakings to be
performed by it hereunder, and is under no other impediment which would
adversely affect its ability to consummate or prohibit it from
consummating the transactions contemplated hereby. This Agreement has
been duly authorized, executed and delivered by the Company and
constitutes the Company's bindiing obligation enforceable in accordance
with its terms;
5.9 The Company has full power, authority and legal right to enter into
this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the compliance by the Company with
the provisions hereof will not: (i) conflict with or result in a breach
of any provisions of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or
result in the creation of any lien, security interest, charge or
encumbrance upon the Acquiror Shares or any of the property or assets of
the Company under any of the terms, conditions or provisions of the
Articles of Incorporation or By-Laws of the Company or any note, bond,
mortgage, indenture, license, agreement or other instrument or
obligation to which the Company is a party, or by which it is bound; or
(ii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of its properties or assets;
6
<PAGE>
6. Interim Operations. Between the date hereof and the Closing Date the
Company and Cable will conduct their operations as follows:
6.1 Except as herein provided, Cable will carry on its business in
substantially the same manner as heretofore and the assets, properties
and rights now owned by it will be maintained, as far as practicable, in
the usual and ordinary course of business, to the same extent, under the
same insurance coverage and in the same condition as on the date of this
Agreement; except with the consent of Acquiror, the Cable shall engage
in no activity or business other than as is necessary to effect the
transactions contemplated herein;
6.2 Except as herein provided, or as may hereafter be agreed to in
writing by the parties, the Cable shall not sell or dispose of any
property or assets, nor will it encumber any property or assets;
6.3 Cable will not, except with the written consent of the Company,
issue or sell, or issue the right to subscribe to, any shares of capital
stock or securities exchangeable or exercisable for capital stock, or
acquire for a consideration any shares of capital stock or warrants, or
declare or pay any dividend on any capital stock;
6.4 Except as contemplated herein, Cable will not, absent a written
consent of the Company, amend its Certificates of Incorporation or
By-Laws;
6.5 Cable shall at all reasonable times permit access to its properties,
books and records for the purpose of examination by the Company and its
officers, directors, attorneys, accountants and representatives, and
Cable shall furnish to the Company upon request any information
reasonably required in respect of such property, assets and business;
6.6 Cable will not incur any indebtedness or contingent liability, or
enter into any agreement except in the ordinary course of business
without the Company's consent;
6.7 Except as may be specifically disclosed in Schedule L annexed
hereto, Cable will not acquire any business or assets of any going
business, nor will it merge or consolidate with or into any other
corporation, nor will it change the character of its business except
with the prior consent of the Company;
6.8 Cable will promptly advise the Company in writing of any material
adverse change in its financial condition, business or affairs arising
from matters occurring not in the usual course of business; the Company
will promptly advise Cable in writing of any adverse change in its
financial condition, business or affairs.
7. Conditions Precedent to the Acquisition.
A. The obligations of the Company to consummate and effect the acquisition
contemplated hereunder is subject to the satisfaction prior to the Closing Date
of the following conditions: 7
<PAGE>
7.1 Except as otherwise contemplated by this Agreement, the
representations and warranties of Cable and Shareholder herein contained
shall be true and correct as of the Closing Date with the same effect as
though made on the Closing Date and Cable shall have performed all
obligations and complied with all covenants required by this Agreement
to be performed or complied with by it prior to such Closing Date; and
Cable shall have delivered to the Company a certificate dated at such
Closing Date and signed by the Chairman of the Board of Directors, the
President, Treasurer, or any Vice President of Cable to the foregoing
effect, to the best knowledge of the person giving the certificate;
7.2 As required by law or by the provisions of the certificate of
incorporation of Cable, the shareholders of Cable shall have approved
this Agreement and the disposition of assets;
7.3 All transactions contemplated hereby and the form and substance of
all legal proceedings and of all papers used or delivered hereunder,
shall be acceptable to counsel for the Company;
7.4 There shall not be any litigation to restrain or invalidate the
acquisition of assets, the defense of which would, in the judgment of
the Board of Directors of the Company made in good faith and based upon
the advice of counsel, involve expense or lapse of time that would be
materially adverse to the interests of each party;
7.5 The Company shall have received the opinion of counsel for Cable,
dated the Closing Date, with respect to the following matters:
(a) Cable is a corporation duly organized, validly existing and
in good standing under the laws of its country of incorporation
and it has the corporate power and authority to carry on the
business now conducted and own and operate its properties;
(b) All necessary corporate proceedings, including action by the
shareholders and directors of Cable, to approve this Agreement
and the execution, delivery and per formance thereof and all
other proceedings required by law or by the provisions of this
Agreement have been taken, and Cable has the right, power and
authority to enter into this Agreement and to carry out its terms
without further action;
(c) To the best knowledge of such counsel, except as herein
indicated, there are no suits, action, claims or proceedings
pending or threatened against Cable, nor to the knowledge of such
counsel is Cable a party to or subject to any order, judgment,
decree, agreement, stipulation or consent of or with any court or
administrative agency, nor, to the best knowledge of such
counsel, is any investigation pending or threatened against
Cable.
7.6 Acquiror shall have received the tax returns (if any), corporate
minute book and all other corporate, business and financial records of
the Cable.
B. The obligations of Cable to consummate and effect the acquisition
contemplated hereunder is subject to the satisfaction prior to the Closing Date,
of the following conditions:
<PAGE>
7.7 The representations and warranties of the Company herein contained
shall be true and correct as of and at the date of this Agreement and as
of the Closing Date of the acquisition; and the Company shall have
performed all obligations and complied with all covenants required by
this Agreement to be performed or complied with by it prior to the
Closing Date; and the Company shall have delivered to Cable a
certificate at such date, signed by the Chairman of the Board of
Directors or the President and Treasurer to the foregoing effect, to the
best knowledge of the person giving such certificate;
7.8 The holders of the required number of shares of common stock of the
Company, in accordance with the Certificate of Incorporation, By-Laws
and statutes affecting the Company, shall have voted in favor of this
Agreement and the acquisition contemplated hereunder and the Company
shall have delivered at the Closing Date a Certificate of the President
and the Secretary of the Company attesting thereto;
7.9 All transactions contemplated hereby, and the form and substance of
all legal proceedings and of all papers used or delivered hereunder,
shall be acceptable to counsel for Cable;
7.10 There shall not be any litigation to restrain or invalidate the
exchange, the defense of which would, in the judgement of the Board of
Directors of Cable, made in good faith and based upon the advice of
counsel, involve expense or lapse of time that would be adverse to the
interest of Cable or Shareholder or the Company;
7.11 There shall not be any governmental proceeding, claim or other
litigation pending or threatened to restrain or invalidate the exchange,
or which, if adversely decided, could adversely affect the Company;
7.12 Cable shall have received the opinion of counsel for Acquiror,
dated the Closing Date, with respect to the following matters:
(a) Acquiror is a corporation duly organized, validly existing
and in good standing under the laws of the state of Colorado and
it has all requisite corporate power and authority to carry on
the business now conducted and to own and operate its respective
properties;
(b) All necessary corporate proceedings, including appropriate
action by the shareholders and directors of the Company, to
approve this Agreement and the execution, delivery and
performance thereof and all other proceedings required by law or
by the provisions of this Agreement have been taken, and the
Company has the full right, power and authority to enter into
this Agreement and to carry out the terms thereof without further
action. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally
binding obligation of the Company enforceable in accordance with
its terms. No consent, approval, authorization or order of, or
registration, qualification, designation,
9
<PAGE>
declaration or filing with, any governmental authority is
required on the part of the Company with respect to the execution
and delivery of this Agreement, or the carrying out of the
transactions contemplated hereby;
(c) To the best knowledge of such counsel, except as herein
indicated, there are no suits, actions, claims or proceedings
pending or threatened against the Company, nor to the knowledge
of such officers is the Company a party to or subject to any
order, judgment, decree, agreement, stipulation or consent of or
with any court or administrative agency, nor, to the best
knowledge of such counsel, is any investigation pending or
threatened against the Company.
(d) To the best knowledge or information of such counsel, the
Company has filed all federal, state, county and local income,
franchise, property and other tax returns, forms or reports which
are due or required to be filed by it prior to the date hereof,
and has paid or made adequate provisions for the payment of all
taxes, fees or assessments which have or may become due pursuant
to such returns or pursuant to any assessments received;
C. At least 72 hours prior to the Closing Date set herein, the parties shall
have delivered all of the Schedules and Exhibits required by this Agreement and
the information set forth herein shall be accepted and approved by the party
receiving such Schedule or Exhibit.
D. As a further condition of Closing, the parties shall cooperate in their
efforts to secure approximately $2,500,000 which shall be made available for the
repurchase of the ordinary shares and the preference shares owned by PUNB. The
parties agree that such financing may be either in the form of debt or equity,
or a combination thereof, and further understand and agree that any equity
financing shall be conducted by the Company for the benefit of Cable; that any
debt financing shall also be undertaken by the Company except that as may be
required by any financial institution the assets and revenues of Cable may be
pledged as additional security for such funding. All financing, whether debt,
equity or a combination thereof, shall be upon such terms and conditions as
shall be agreeable to the parties, it being understood that either party may
refuse any available funding if it shall, in its sole and absolute discretion,
determine that the terms offered are not consistent with good business
practices. The parties hereto shall cooperate fully with each other in meeting
any and all requests for information from any funding source in a timely fashion
and shall make such corporate books and records as may reasonably be requested
available for review and shall also make available any corporate officer or
other key employee which may be necessary in connection with the proper
presentation of Cable's business plan and in support of its proposed use of the
proceeds from such funding. The parties agree that the Closing herein shall be
held no later than September 30, 1996, after which date either party may
terminate this Agreement upon 5 days written notice.
8. Indemnification.
8.1 In order to induce the Company to enter into this Agreement, and for
other good and valuable consideration, receipt whereof is acknowledged,
Cable agrees to indemnify the Company and its successors and assigns,
and to hold them harmless in respect of (i) all
10
<PAGE>
liabilities of Cable of any nature, whether accrued, contingent,
absolute or otherwise, as of the Closing Date, which are not disclosed
or provided for in the financial statements delivered to the Company as
herein provided; (ii) any damage or deficiency arising from any
misrepresentation or breach of warranty made by Cable herein; and (iii)
all actions, suits, proceedings, demands, assessments, fines, judgments,
costs, expenses, or reasonable attorney's fees incident to the
foregoing;
8.2 In order to induce Cable and Shareholders to enter into this
Agreement, and for other good and valuable consideration, receipt
whereof is acknowledged, the Company agrees to indemnify Cable and
Shareholders and their successors and assigns, and their respective
officers, directors, employees, controlling persons and agents, and to
hold each of them harmless in respect of (i) any damage or deficiency
arising from any misrepresentation or breach of warranty or agreement
made by the Company herein; and (ii) all actions, suits, proceedings,
demands, assessments, fines, judgments, costs, expenses, or reasonable
attorney's fees (whether related to claims between the parties,
involving third parties or otherwise), as they are incurred, incident to
the foregoing.
9. Closing.
9.1 The closing of the transactions described in this Agreement (the
"Closing Date"), shall take place within 72 hours after compliance with
all conditions precedent to such Closing Date as set forth in Paragraph
8 of this Agreement and shall take place at the offices of the Company
or such later date or other place as the parties may agree.
9.2 Each party will comply with their respective requirements at the
closing and will deliver appropriate documents as called for by this
Agreement.
10. Termination. This Agreement may be terminated and abandoned at any time
prior to the Closing Date upon the following conditions:
10.1 By the mutual consent of the Boards of Directors of the Company and
Cable; or
10.2 By the Board of Directors of either the Company or Cable if, in the
bona fide judgment of such Board there shall have been a violation of
any covenant or agreement set forth herein; or if any warranty or
representation shall be untrue; or such Board of Directors should, in
its bona fide judgment, deem the acquisition inadvisable or impractical
by reason of any defect which, in the opinion of counsel for the company
whose Board of Directors has made such a determination, constitutes a
part of its assets or there exists or there is a threat of a liability
or obligation of such other company not previously known at the time of
this Agreement.
11. Effect of Termination. In the event of the termination and abandonment
of the acquisition and this Agreement as herein provided, notice shall be given
to the company or person to be notified of the termination or abandonment as
herein provided in Paragraph 14.6, and thereupon this Agreement shall become
wholly void and of no effect, and there shall be no liability on the part of any
person who is a party hereto, or any liability for the Board of Directors,
stockholders, officers or directors of either the Company or Cable or any other
party to this Agreement.
<PAGE>
12. Nature and Survival of Representations. All representations, warranties and
covenants made by a party to this Agreement shall survive the execution of this
Agreement and the consu mmation of the transactions contemplated hereby. All of
the parties hereto are executing and carrying out the provisions of this
Agreement, and relying solely upon the representations, warranties and covenants
contained in this Agreement and not upon any investigation upon which it might
have made, or any representation, warranties, agreements, promises or
information, written or oral, made by the other party, or by persons other than
as specifically set forth herein.
13. Investment Representations of Shareholders. The Shareholders warrant,
represent and agree with respect to the Acquiror Shares to be received pursuant
to this Agreement (and also understands that he and each shareholder receiving
Acquiror Shares hereunder shall be required to execute an investment letter in
form satisfactory to counsel for Acquiror which shall include the following
representations):
13.1 That such shares are being acquired for the purpose of investment,
for the separate account of Shareholder, and not with a view to
distribution or resale or any present intention to divide their
participation with others;
13.2 The Shareholder has been informed that neither the Acquiror Shares
to be received by him nor the common shares of the Company into which
they may be converted are being registered under the Act in reliance
upon the exemption provided by Section 4(2) of the Act as a transaction
not involving any public offering and/or Regulation D adopted under said
Act and that reliance upon such exemptions is predicated in part on the
representations made in Paragraph 13.1 above;
13.3 The Shareholder consents to the imposition of a legend on the
certificate or certificates of stock to be acquired by it to the effect
that such securities have not been registered under the Act and such
securities may not be sold, pledged or hypothecated, except in
compliance with said Act, or upon an appropriate opinion of counsel
acceptable to the Company to the effect that an exemption from the
registration provisions of said Act is available to the selling
shareholder. The Shareholder further consents to the imposition of "stop
transfer" instructions with respect to its respective account as
recorded by the transfer agent of the Company, to the effect that such
shares may not be sold or disposed of without evidence of compliance
with the requirements of said Act, or upon an acceptable opinion of
counsel.
14. Miscellaneous.
12
<PAGE>
14.1 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
14.2 Entire Agreement. This Agreement constitutes the entire Agreement
among the parties pertaining to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings
of the parties in connection herewith. There are no oral promises,
conditions, representations, understandings, interpretations or terms of
any kind as conditions or inducements to the execution of this
Agreement.
14.3 Successors. This Agreement shall be binding upon the parties
hereto, and inure to the benefit of the parties, and their respective
successors in interest and assigns.
14.4 Further Assurances. At any time and from time to time after the
date hereof, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or
otherwise to carry out the intent and purposes of this Agreement.
14.5 Waiver. Any failure on the part of any party hereto to comply with
any of the obligations, agreements or conditions hereunder may be waived
in writing by the party to whom such compliance is owed.
14.6 Notices. All notices and communications hereunder shall be made in
writing and shall be deemed to have been given if delivered in person or
sent by prepaid, first class, registered or certified mail, return
receipt requested to the addresses indicated above.
14.7 Severability. The parties to this Agreement hereby agree and affirm
that none of the above provisions is dependent upon the validity or of
any other provisions, and if any part of this Agreement is deemed to be
unenforceable, the balance of the Agreement shall remain in full force
and effect.
14.8 Finder's Fees. The parties hereto acknowledge that there have been
no brokers, finders or other parties whomsoever which would be entitled
to receive a fee in connection with this transaction except as set forth
in Schedule M annexed hereto.
14.9 Headings. The section and subsection headings in this Agreement are
inserted for convenience only, and shall not affect in any way the
meaning or interpretation of this Agreement.
14.10 Governing Law. This Agreement shall be governed by the laws of New
York State.
14.11 Amendment. This Agreement or any provision hereof, may not be
changed, waived, terminated or discharged except by means of a written
instrument signed by the party against whom enforcement of the change,
waiver, termination or discharge is sought.
13
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the above
written date.
SEMICON TOOLS, INC. CABLE-VISION TECHNOLOGIES (M) Sdn Bhd
By: ________________________ By: _______________________
Eugene J. Pian, President usof, President
SHAREHOLDERS:
- ------------------------------- -----------------------------
- -------------------------------
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> JUL-31-1997
<EXCHANGE-RATE> 1
<CASH> 128,824
<SECURITIES> 0
<RECEIVABLES> 188,409
<ALLOWANCES> 6,000
<INVENTORY> 284,216
<CURRENT-ASSETS> 706,846
<PP&E> 666,123
<DEPRECIATION> 420,929
<TOTAL-ASSETS> 1,285,343
<CURRENT-LIABILITIES> 384,202
<BONDS> 0
0
0
<COMMON> 8,243
<OTHER-SE> 2,567,397
<TOTAL-LIABILITY-AND-EQUITY> 1,285,343
<SALES> 747,002
<TOTAL-REVENUES> 747,002
<CGS> 209,802
<TOTAL-COSTS> 442,945
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,902
<INCOME-PRETAX> 76,353
<INCOME-TAX> 0
<INCOME-CONTINUING> 76,353
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76,353
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
