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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)*
Tech Electro Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK
- --------------------------------------------------------------------------------
(Title of Class of Securities)
0008782401
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(CUSIP Number)
Robert E. Braun, Esq.
c/o Jeffer, Mangels, Butler & Marmaro,
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067 (310) 203-8080
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
February 11, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [X]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP NO. 000 878-24-01 PAGE 2 OF 7 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Placement & Acceptance, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
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NUMBER OF 7 SOLE VOTING POWER
SHARES 190,000 Shares of Common Stock (see response
BENEFICIALLY to Item 5(a))
OWNED BY -------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON -0-
WITH -------------------------------------------------------
9 SOLE DISPOSITIVE POWER
190,000 Shares of Common Stock (see response
to Item 5(a))
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10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
190,000 Shares of Common Stock (see response to Item 5(a))
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.99%(see response to Item 5(a))
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 000 878-24-01 Page 3 of 7 Pages
Item 1. Security and Issuer.
Securities:
Common Stock, no par value ("Common Stock")
Options to acquire Common Stock ("Options")
Units, each consisting of one share of Common Stock and
one share of Series A Preferred Stock
Issuer: Tech Electro Industries, Inc.
4300 Wiley Post Road
Dallas, TX 75244-2131
Item 2. Identity and Background.
Information as to the Reporting Person
Name: Placement & Acceptance, Inc.
Address: c/o Wisma Stephens #12-08
Jalan Raja Chulan
50200 Kuala Lumpur, Malaysia
Principal Business: Investor
(a) The reporting person has not, during the last five
years, been convicted in a criminal proceeding.
(b) The reporting person has not, during the last five
years, been a party to a civil proceeding of a
judicial or administrative body of competent
jurisdiction as a result of which it was or is
subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state
securities laws or finding any violation with
respect to such laws.
Information as to Directors, Officers and Controlling
Persons
(a) Tan Kim Wah
(b) Residence or Business Address
c/o Wisma Stephens #12-08
Jalan Raja Chulan
50200 Kuala Lumpur, Malaysia
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CUSIP No. 000 878-24-01 Page 4 of 7 Pages
(c) Occupation:
Investor
(d) The reporting person has not, during the last five
years, been convicted in a criminal proceeding.
(c) The reporting person has not, during the last five
years, been a party to a civil proceeding of a
judicial or administrative body of competent
jurisdiction as a result of which it was or is
subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state
securities laws or finding any violation with
respect to such laws.
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CUSIP No. 000 878-24-01 Page 5 of 7 Pages
Item 3. Source and Amount of Funds or Other Consideration.
The Reporting Person purchased 75,000 shares of Common Stock
and options to acquire 100,000 shares of Common Stock at a
total cost of approximately $127,500, including all fees and
commissions. All funds for the foregoing purchase were made
from working capital and cash on hand of the Reporting Person.
Item 4. Purpose of Transaction.
The Reporting Person acquired the Units, Common Stock and
Options in connection with the placement of Common Stock and
Options by parties unrelated to the Reporting Person. The
Reporting Person will examine opportunities for the Issuer to
attract additional personnel, engage in acquisition or other
transactions, depending in all cases on the result of the
Reporting Person's analysis of the business and operations of
the Issuer, and has no specific plans to influence the
operations of the Issuer.
Item 5. Interest in Securities of Issuer.
(a) The Reporting Person holds 75,000 shares of Common
Stock and options to acquire 100,000 shares of
Common Stock, and 5,000 Units, each consisting of
one share of Common Stock and one share of Series
A Preferred Stock. Based on public filings of the
Issuer, the Reporting person believes this sum
represents 6.99% of the Common Stock of the Issuer
outstanding as of January 31, 1997.
In conformance with Section 13(d) under the
Securities Exchange Act of 1934, as amended, and Rule
13d promulgated thereunder, the Reporting Person has
reported all its ownership interest based on both
shares of Common Stock directly owned by the
Reporting Person and shares of Common Stock
underlying securities which are exercisable or
convertible within 60 days of the date of this
Schedule.
(b) The Reporting Person has sole voting and investment
power over the Common Stock, Options and Units held
by the Reporting Person.
(c) All transactions in the securities of the Issuer
during the past sixty days are reported in Exhibit
A hereto.
(d) Not applicable.
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CUSIP No. 000 878-24-01 Page 6 of 7 Pages
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
The Reporting Person has entered into a Sales Agent Agreement,
a Subscription Agreement and an Option Agreement with the
Issuer, copies of which are attached hereto as Exhibits B, C
and D, respectively. Except for such agreements, no agreement,
contract or understanding with respect to the securities of
the Issuer.
Item 7. Material to be Filed as Exhibits.
Exhibit A - Transactions in the shares of the Issuer
within sixty days prior to filing
Schedule 13D
Exhibit B - Sales Agent Agreement
Exhibit C - Subscription Agreement
Exhibit D - Option Agreement
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CUSIP No. 000 878-24-01 Page 7 of 7 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
February 12, 1997 Placement & Acceptance, Inc.
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Date
By: /s/ Tan Kim Wah
----------------------------
Name: Tan Kim Wah
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Title: Managing Director
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Exhibit A
Transactions in Shares of
Issuer's Securities
None
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EXHIBIT B
AGREEMENT FOR PRIVATE PLACEMENT OF
COMMON STOCK AND OPTIONS
TECH ELECTRO INDUSTRIES, INC.
REGULATION S
SALES AGENT AGREEMENT
ACCREDITED INVESTORS ONLY
December 17, 1996
Placement & Acceptance, Inc.
c/o Wisma Stephens
#12-09, Jalan Chulan
50200
Kuala Lumpur, Malaysia
Ladies and Gentlemen:
Tech Electro Industries, Inc. (together with its
subsidiaries, the "Company"), a corporation organized under the laws of the
State of Texas, hereby confirm its agreements with Placement and Acceptance,
Inc., a British Virgin Islands corporation ("PAI"), as follows:
1. Description of the Offering. The Company proposes to offer
to prospective purchasers ("Purchasers") an aggregate of 1,100,000 shares of its
common stock, par value $.01 per share (the "Common Stock") and options to
purchase an additional 1,000,000 shares of Common Stock (the "Options") at a
combined price of $1.70 net to the Company (except as otherwise provided herein,
the combined Common Stock and Options are referred to herein as the "Shares").
The offer and sale of the Shares will be referred to herein as the "Offering".
The preferred minimum purchase per investor is 100,000 Shares; provided,
however, that the Company may, in its discretion, allow an investor to purchase
less than 100,000 Shares; provided, however, the Options may be exercised only
in blocks of 150,000 shares of Common Stock. The Company and the Offering are
more fully described in the Regulation S Offering Circular Memorandum relating
to the offering dated January 28, 1997 (the "Memorandum"). All terms used
herein, unless specifically defined herein, shall have the same meanings
assigned in the Memorandum.
2. Representations and Warranties of the Company. The Company
represents and warrants that:
(a) The Memorandum has been prepared by the
Company and copies of such Memorandum and any amendments thereto have been
delivered by the Company to PAI for distribution to potential Purchasers. No
stop order or other similar order or decree preventing the use of the Memorandum
or any amendment or supplement thereto, or any order
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asserting that the transactions contemplated by this Agreement are subject to
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), has been issued and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Company, is contemplated.
(b) The Common Stock is duly registered under
Section 12(g) of the United States Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the Company has filed all reports required by the
Exchange Act during the last 12 months.
(c) The Memorandum was, on the date of its
issuance, and is, at the date hereof, accurate in all material respects and did
not and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances existing at such dates, not misleading and will
be, as of the Closing Date (as herein defined) accurate in all material respects
and will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the Closing Date, not misleading.
(d) The offer, sale and delivery of the Shares
in the manner contemplated by this Agreement and the Memorandum will comply with
the terms and conditions of Regulation S.
(e) None of the Company, its affiliates (as
defined in Rule 144(a)(1) under the Securities Act) or any person acting on its
or their behalf has engaged or will engage in any directed selling efforts (as
defined in Regulation S) with respect to the Shares or will offer or sell any
Shares in the United States or to a U.S. Person (as defined in Regulation S).
(f) The Company is, and at the Closing Date
will be, a corporation duly organized, validly existing and in good standing
under the laws of Texas. The Company has, and at the Closing will have, full
power and authority to conduct all the activities conducted by it, to own or
lease all the assets owned or leased by it and to conduct its business as
described in the Memorandum. The Company is, and at the Closing Date will be,
duly licensed or qualified to do business and in good standing as a foreign
corporation in all jurisdictions in which the nature of the activities conducted
by it or the character of the assets owned or leased by it makes such licensing
or qualification necessary. Except for Computer Components Corporation ("CCC")
and Vary Brite Technologies, Incorporated ("VBT"), the Company's wholly-owned
subsidiaries, and Universal Battery Corporation ("UBC"), the Company's
majority-owned subsidiary, the Company has no subsidiary and does not own, and
at the Closing Date will not own, directly or indirectly, any shares of stock or
any other equity or long-term debt securities of any corporation or have any
equity interest in any firms, partnership, joint venture, association or other
entity. Complete and correct copies of the Certificates of Incorporation and of
the By-laws of the Company and VBT, UBC, CCC and all amendments thereto have
been delivered to PAI, and no change therein will be made subsequent to the date
hereof and prior to the Closing Date.
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(g) The outstanding shares of Common Stock have been,
and, the Shares to be issued and sold by the Company upon such issuance will be,
when paid for as provided herein, duly authorized, validly issued, fully paid
and nonassessable (except for the exercise price of the Options), will not be
subject to any preemptive or similar right and are all entitled to the same
rights, preferences and privileges (including dividends). The description of the
Common Stock in the Memorandum is, and at the Closing Date will be, complete and
accurate in all respects. Except as set forth in the Memorandum, the Company
does not have outstanding, and at the Closing Date will not have outstanding,
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any shares of Common Stock or any such options, rights, warrants,
convertible securities or obligations.
(h) The financial statements of the Company
(including the related notes and supporting schedules) included in the
Memorandum are materially true and correct and reflect the financial conditions
of the Company, at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting principles as applied
in the United States on a consistent basis throughout the periods involved,
except as otherwise stated therein.
(i) King, Burns & Company, P.C., which has certified
certain financial statements of the Company, whose report appears in the
Memorandum is an independent public accountant within the meaning of the
Securities Act.
(j) The Company maintains a system of internal
accounting control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific authorization
and (iv) the recorded accountability for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(k) Subsequent to the respective dates as of which
information is given in the Memorandum and prior to the Closing Date, except as
set forth in or contemplated by the Memorandum, (i) there has not been and will
not have been any change in the capitalization of the Company, or in the
business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company, arising for any reason whatsoever other
than in the ordinary course of business, (ii) the Company has not incurred and
will not incur any material liabilities or obligations, direct or contingent,
nor has it entered into nor will it enter into any material transactions other
than pursuant to this Agreement and the transactions referred to herein and
(iii) the Company has not and will not have paid or declared any dividends or
other distributions of any kind on any class of its capital stock, except for
dividends payable on its Series A Preferred Stock and Series B Preferred Stock.
To
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the best of the Company's knowledge, it does not anticipate any material adverse
changes in the Company's business, prospects or financial condition within the
next twelve months.
(l) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended.
(m) Except as set forth in the Memorandum, there are
no actions, suits or proceedings pending or, to the Company's knowledge,
threatened against or affecting the Company or any of its respective officers in
their capacity as such, before or by any federal of state court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding might materially and
adversely affect the Company or its business, properties, business prospects,
conditions (financial or otherwise) or results of operations taken as a whole (a
"Material Adverse Effect").
(n) Except as disclosed in the Memorandum the Company
has, and at the Closing Date will have, (i) all governmental licenses, permits,
consents, orders, approval and other authorizations necessary to carry on its
business as contemplated in the Memorandum (ii) complied in all material
respects with all laws, regulations and orders applicable to it or its business
and (iii) performed all its material obligations required to be performed by it,
and is not, and at the Closing Date will not be, in default, under any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement, lease, contract or other agreement or
instrument (collectively, a "contract or other agreement") to which it is a
party or by which its property is bound or affected. To the best knowledge of
the Company, no other party under any contract or other agreement to which it is
a party is in default in any respect thereunder that would materially and
adversely affect the Company. The Company is not, and at the Closing Date will
not be, in violation of any provision of its certificate of incorporation or
by-laws.
(o) No consent, approval, authorization or order of,
or any filing or declaration with, any court or governmental agency or body is
required for the consideration by the Company of the transactions on its part
herein contemplated.
(p) The Company has full corporate power and
authority to enter into this Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company and is enforceable against the Company in accordance
with the terms hereof. The performance of this Agreement and the consummation of
the transactions contemplated hereby will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of the
Company pursuant to the terms or provisions of, or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or give any other party a right to terminate any of its obligations under, or
result in the acceleration of any obligation under, the Certificate or
Incorporation or By-laws of the Company, any contract or other agreement to
which the
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Company is a party or by which the Company or any of its properties is bound or
affected, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or body
applicable to the business or properties of the Company.
(q) The Company has good and marketable title to all
properties and assets described in the Memorandum as owned by it, free and clear
of all liens, charges, encumbrances or restrictions, except such as are
described in the Memorandum or are not material to the business of the Company.
The Company has valid, subsisting and enforceable leases for the properties
described in the Memorandum as leased by it, with such exceptions as are not
material and do not materially interfere with the use made and proposed to be
made of such properties by the Company.
(r) No statement, representation, warranty or
covenant made by the Company in this Agreement or made in any certificate or
document required by this Agreement was or will be, when made, inaccurate,
untrue or incorrect in any material respect.
(s) Neither the Company nor any of its directors,
officers or controlling persons has taken, directly or indirectly, any action
intended, or which might reasonably be expected, to cause or result, under the
Securities Act, the Exchange Act or otherwise, in, or which has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(t) On or prior to the Closing Date the Shares
(including Shares to be issued upon exercise of the Options) will be duly
authorized for quotation on the Nasdaq Small Cap Market.
(u) The Company is not involved in any material labor
dispute nor, to the knowledge of the Company, is any such dispute threatened.
(v) The Company owns, or is licensed or otherwise has
the full exclusive right to use, all material trademarks and trade names which
are used in or necessary for the conduct of its business except as may be
described in the Memorandum. No claims have been asserted by any person to the
use of any such trademarks or trade names or challenging or questioning the
validity or effectiveness of any such trademark or trade name. The use, in
connection with the business and operations of the Company of such trademarks
and trade names does not, to the Company's knowledge, infringe on the rights of
any person.
(w) Neither the Company nor, to the Company's
knowledge, any person acting on the Company's behalf has (i) used any corporate
funds for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; (iii) violated any
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provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any other unlawful bribe, rebate, payoff, influence payment or kickback.
(x) There are no material contracts or other
agreements to which the Company is a party which have not been described in the
Memorandum (including being listed as an Exhibit to the Form 10-KSB for the year
ended December 31, 1995). All such contracts or other agreements to which the
Company is a party have been duly authorized, executed and delivered by the
Company, constitute valid and binding agreements of the Company and are
enforceable against the Company in accordance with the terms thereof.
(y) No material relationship (as described in Item
404 of Regulation S-X), exists between or among the Company on the one hand, and
any director or officer of the Company or any holder of 5% or more of any class
of equity security of the Company or any affiliate of any such director,
officer, stockholder, customer or supplier of the Company on the other hand,
except as described in the Memorandum.
(z) The Company has filed all income, franchise,
sales and other tax returns required to be filed through the date hereof and has
paid all taxes shown as due thereon, and no tax deficiency has been determined
adversely to the Company which has had (nor does the Company have any knowledge
of any questions or disputes pending or threatened relating to a tax deficiency
which, if determined adversely to the Company, might have) a Material Adverse
Effect.
(aa) The Company has obtained all permits, licenses
and other authorizations that are required under, and is otherwise in compliance
with, all environmental laws relating directly to the Company's manufacture,
storage, transportation and sale, and the use by others as intended by the
Company, of the Company's products, including but not limited to the Federal
Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), Resource Conservation
& Recovery Act (42 U.S.C. ss. 6901 et seq.), Safe Drinking Water Act (21 U.S.C.
ss. 349, 42 U.S.C. ss.ss. 201, 300f), Toxic Substances Control Act (15 U.S.C.
ss. 2601 at seq.), Clean Air Act (42 U.S.C. 5 7401 et seq.), Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. ss. 9601 et
seq.), other appropriate laws and any other laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, surface water, ground
water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes, or petroleum and related products or under any regulation, code,
plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder (collectively the "Environmental
Laws"), except as otherwise set forth in the Memorandum or to the extent failure
to have any such permit, license or authorization or failure to comply,
individually or in the aggregate, does not have a Material Adverse Effect.
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(bb) To the best of the Company's knowledge, there
are no past or present events, conditions, circumstances, activities, practices,
incidents, actions, or plans relating to the business as presently being
conducted by the Company that interfere with or prevent compliance or continued
compliance with the Environmental Laws, or which would be reasonably likely to
give rise to any legal liability (whether statutory or common law) or otherwise
would be reasonably likely to form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of violation, study, investigation, remediation or
cleanup based on or related to the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release into the workplace, the community or the
environment of any pollutant, contaminant, chemical or industrial, toxic, or
hazardous substance or waste, or petroleum and related products, except for any
liabilities or any claims, demands or other actions specified above that will
not individually or in the aggregate have a Material Adverse Effect, and except
as previously disclosed in the Memorandum, no asbestos-containing material and
no underground or above-ground tanks are, to the best of the Company's
knowledge, located on property owned or leased by the Company and none have been
previously removed or filled by the Company or any predecessor of the Company.
(cc) There are no contracts, agreements or
understandings between the Company and any person (other than PAI) that would
give rise to a valid claim against the Company or PAI for a brokerage
commission, finder's fee or like payment in connection with the transactions
contemplated by this Agreement.
(dd) The Company causes to be maintained insurance
covering the properties, operations, personnel and businesses of the Company in
such amounts and against such losses and risks as are adequate in accordance
with customary industry practice to protect the Company and its business. The
Company has not received notice from any insurer or agent of such insurer that
substantial capital improvements or other expenditures will have to be made in
order to continue such insurance. All such insurance is outstanding and duly in
force on the date hereof, and will be outstanding and duly in force on the
Closing Date,
(ee) The Shares when issued and paid for will be
issued to the designated holder and such holder will obtain valid and marketable
title to the Shares free of any adverse claim with respect thereto and the
Shares will be free and clear of all liens, encumbrances and claims other than
as provided for in the Memorandum and herein.
(ff) The Company has not offered and will not offer
the Shares to any person in the United States, any identifiable group of U.S.
citizens abroad, nor to any U.S. Person;
(gg) At the time the buy order will be originated,
the Company and/or agents will reasonably believe each Purchaser was outside the
United States and was not a U.S. Person;
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(hh) The Company and/or its agents believe that the
sale of the Shares has not been and will not be prearranged with a buyer in the
United States or for the account or benefit of such a buyer.
3. Representations and Warranties of PAI. PAI represents, covenants,
and warrants to the Company that:
(a) PAI is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated, with all requisite power and authority to enter into this
Agreement and to carry out its obligations hereunder.
(b) This Agreement has been duly authorized, executed
and delivered by PAI and is a valid and binding agreement on PAI's part
enforceable in accordance with its terms.
(c) The consummation of the transactions contemplated
herein and those contemplated by the Memorandum will not result in any breach of
any of the terms or conditions of or constitute a default under any indenture,
agreement or other instrument to which PAI is a party, or violate any law or any
order directed to PAI by any court or any federal or state regulatory body or
administrative agency having jurisdiction over PAI, its affiliates, or its
property.
(d) PAI acknowledges that the Shares have not been
and will not be registered under the Securities Act (except as otherwise may be
provided herein) and may not be offered or sold within the United States or to
or for the account or benefit of a U.S. Person except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act. PAI has not offered or sold, and will not offer or sell, any
Shares within the United States or to any U.S. Person or for the account or
benefit of any U.S. Person. All sales of the Shares by PAI will be made in
offshore transactions and otherwise in strict compliance with the terms and
conditions set forth in the Memorandum and Regulation S promulgated under the
Securities Act. PAI or its affiliates will receive an executed Confirmation
Letter from each of the Purchasers of the Shares substantially in the form of
Exhibit A. PAI shall certify in writing at the Closing Date that all Shares to
be purchased and sold have been purchased and sold and the Offering is
terminated. None of PAI, any of its affiliates, or any person acting on its or
their behalf has engaged or will engage in any directed selling efforts with
respect to the Shares. All offers and sales of the Shares until the fortieth day
after the Closing Date (the "Termination Date") shall be made in accordance with
Rule 903 or 904 of Regulation S, pursuant to registration of the Shares under
the Securities Act, or pursuant to an available exemption from the registration
requirements under the Securities Act. Terms used in this paragraph have the
meanings given to them by Regulation S, unless the context otherwise requires.
(e) No action is being taken or is contemplated by
PAI that would permit a public offering of the Shares or distribution of the
Memorandum or any other offering
8
<PAGE> 9
material relating to the Shares in any jurisdiction where, or in any other
circumstances in which, action for those purposes is required (other than in
jurisdictions where such action has been duly taken). PAI understands and agrees
that it will comply with all applicable laws and regulations in any jurisdiction
in which it may offer, sell or deliver Shares and that it will not, directly or
indirectly, offer, sell or deliver Shares or distribute or publish any
prospectus, circular, advertisement or other offering material in relation to
the Shares in or from any country or jurisdiction except under circumstances
that will result in compliance with any applicable laws and regulations, and all
offers, sales and deliveries of Shares by it will be made on the foregoing
terms.
(f) Neither PAI nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the Securities
Act, the Exchange Act or otherwise, in, or which has constituted, stabilization
or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
(g) PAI will offer and sell the Shares only to
persons and entities who are not a "U.S. person" as defined in Rule 902 of
Regulation S, were not organized under the laws of any U.S. jurisdiction, and
were not formed for the purpose of investing in securities not registered under
the Securities Act.
(h) At the time any buy order for the Shares are
originated, PAI shall believe and have reason to reasonably believe that the
Purchaser was outside the United States.
(i) Until the Termination Date PAI will not within or
outside the United States with regard to the Company's Common Stock engage in
any short-selling or other hedging transactions, such as equity swaps or other
types of derivative transactions, designed to transfer the burdens of ownership
of the Shares back to the United States market.
(j) In the event of resale of the Shares prior to the
Termination Date, PAI shall provide a written confirmation or other written
notice to any distributor, dealer, or person receiving a selling concession,
fee, or other remuneration in respect of the Shares stating that such purchaser
is subject to the same restrictions on offers and sales that apply to PAI, and
shall require that any such purchaser shall provide such written confirmation or
other notice upon resale prior to the Termination Date.
4. Covenants of the Company. As additional consideration hereunder, the
Company agrees as follows:
(a) To deliver to PAI, at the expense of the Company,
as many copies of the Memorandum (including all amendments and supplements
thereto) as PAI may reasonably request.
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<PAGE> 10
(b) If, at any time prior to the Closing Date, any
event shall occur as a result of which the Memorandum, as then amended or
supplemented, would include a statement of fact which is not true and accurate
in all material respects, or omit any fact the omission of which would make
misleading in any material respect any statement therein, or if for any other
reason it shall be necessary to amend or supplement the Memorandum, the Company
will so amend or supplement the Memorandum and will promptly notify PAI and
will, at the expense of the Company, supply to PAI (and to any persons
designated by PAI) such amendments or supplements to the Memorandum as may be
necessary so that the statements in the Memorandum as so amended or supplemented
will not, in the light of the circumstances existing at the time, be misleading.
(c) To notify PAI promptly of any change having or
which is likely to have a Material Adverse Effect relating to any of the
Company's representations, warranties, covenants or agreements contained herein
that occurs at any time prior to the payment of the full purchase price for the
Shares to the Company on the Closing Date.
(d) None of the Company, any of its affiliates (as
defined in Rule 144(a)(1) under the Securities Act) or any person acting on
behalf of any of the foregoing will engage in any directed selling efforts with
respect to the Shares within the meaning of Regulation S. None of the Company or
any such affiliates shall issue any advertisements or press releases or file any
documents with the Securities and Exchange Commission, Nasdaq or otherwise
publicly disclose any information with regards to the offering or sale of the
Shares without the prior approval of PAI except the Company will promptly file a
Form 8-K reporting the sale of the Shares as required by Form 8-K and will make
such other filings as required by laws and regulations applicable to the
Company. Any such advertisement, release or filing made with the consent of PAI
shall be determined not to be a directed selling effort for purposes of this
Agreement, the Memorandum and any opinion or certificate in connection herewith.
(e) The Company will use the net proceeds received
from the issuance of the Shares in the manner specified in the Memorandum under
"Use of Proceeds."
(f) The Company will not take, directly or
indirectly, any action designed to, or that might be reasonably expected to,
cause or result in stabilization or manipulation of the price of the Shares at
any time prior to the Closing Date.
(g) On or after the Termination Date at the request
of a Purchaser who is not an affiliate of the Company, the Company will cause
its transfer agent within two business days, (or on the Termination Date if the
request was received at least two business days prior to the Termination Date)
at the Company's expense (including transportation and insurance), to exchange
the certificate for the Shares issued to such Purchaser on the Closing Date for
new certificates for the same number of Shares, without any legends or stop
transfer notices. Prior to the Termination Date all certificates for the Shares
shall bear the following legend:
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<PAGE> 11
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
SUCH SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (1) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT OR (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION AS CONFIRMED IN AN OPINION OF COUNSEL
SATISFACTORY TO TECH ELECTRO INDUSTRIES, INC., AND IN EACH
CASE IN ACCORDANCE WITH ANY OTHER APPLICABLE LAW.
(h) If, as a result of any changes in Regulation S
after the Closing Date, or for any other reason, including, but not limited to
the failure of the Company or PAI to comply with any of the provisions of
Regulation S in the offer and sale of the Shares, the Shares, in the reasonable
opinion of counsels to the Company and PAI, cannot on or after the Termination
Date be resold by any of the Purchasers in the United States without
registration under the Securities Act, the Company, at its expense, will
immediately after the Termination Date, file a registration statement under the
Securities Act and use its best efforts to have such registration statement
declared effective and kept effective at least through the earlier of the second
annual anniversary of the Closing Date or the expiration of the Company's
obligation and undertaking to file post-effective amendments to its Form SB-2
Registration Statement, File No. 33-98662, with respect to its Redeemable Class
A Warrants and underlying shares of Common Stock, which registration statement
shall provide for the sale of the Common Stock and shares of Common Stock
underlying the Options included in the Shares by the Purchasers in the United
States. Notwithstanding the above, no registration statement will be required if
a Purchaser becomes an affiliate of the Company or fails to comply with
Regulation S.
(i) For five years after the date hereof, the Company
shall send to PAI copies of all filings with the Securities and Exchange
Commission (simultaneously with such filing) and copies of all press releases
(faxed when released).
(j) On the Closing Date, a majority of the members of
the board of directors of the Company shall be individuals designated by PAI;
provided, that if, within 13 months following the Closing, either (i) the
Options have not been exercised, or (ii) PAI or purchasers of the Common Stock
hereunder or their designees have not acquired a majority of the voting
securities of the Company, PAI and the purchasers of Common Stock shall vote
their shares of Common Stock at the following annual meeting of the Company's
shareholders so that a majority of the directors of the Company are individuals
designated by Craig D. La Taste.
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<PAGE> 12
(k) On the Closing Date, Martin Frank and Craig D. La
Taste shall have entered into employment agreements with CCC in form and
substance mutually acceptable to the Board of Directors of CCC and the Company,
and PAI.
(l) The Options may only be exercised (i) by a person
who is not a U.S. person (as defined in Regulation S), (ii) if not exercised on
behalf of a U.S. person, (iii) if no U.S. person has any interest in the Options
being exercised or the underlying securities to be issued upon exercise, and
(iv) if the Options are exercised outside the United States and the shares
underlying the Options are to be delivered outside the United States. If the
above cannot be complied with, then the Options can be exercised only if a
written opinion of counsel, the form and substance of which is acceptable to the
Company, is delivered to the Company prior to exercise to the Options being
exercised, that the underlying securities delivered upon exercise have been
registered under the Securities Act, or the securities are exempt from
registration thereunder and specifying the exemption.
5. Purchase, Sale, and Delivery of the Shares. On the basis of the
covenants, representations, and warranties herein contained and subject to the
terms and conditions herein set forth:
(a) The Company hereby engages PAI as its agent to solicit
subscrip tions to the Shares in accordance with the terms of the Memorandum and
this Agreement, and PAI agrees to use its best efforts to solicit such
subscriptions. Such subscriptions shall be evidenced by the completion and
execution by the prospective Purchaser and acceptance by the Company of the
Subscription Agreement and related documents in the form included in the
Memorandum. It is understood that no sale shall be regarded as effective unless
and until accepted in writing by the Company and that the Company reserves the
right in its sole discretion for any reason to refuse to sell Shares to any
person at any time.
(i) PAI is obligated to place all of the Shares on a
"firm commitment" basis. If PAI or its affiliates believe they have not received
firm, irrevocable and paid orders to purchase the Shares by February 7, 1997,
PAI will be obligated to purchase such number of Shares as are necessary to
complete the offering of the Shares by February 21, 1997.
(ii) The exact number of Shares to be purchased by
PAI and/or the Purchasers shall be not less that one million one hundred
thousand (1,100,000) shares of Common Stock and one million (1,000,000) Options.
The Options shall be in the form of and contain the terms as set forth in the
form of Option attached hereto as Exhibit B and incorporated herein.
(iii) PAI shall notify the Company by no later than
5:00 p.m., Dallas time on February 16, 1997 as to the time and date for the
purchase of the Shares (the "Closing Date") which Closing Date shall be within
five business days of giving the notice.
12
<PAGE> 13
(b) After the Closing Date, PAI, except as otherwise
specifically provided herein, will not be considered to have any continuing or
future duty or obligation of any kind to the Company. PAI has not assumed, nor
will it assume or be permitted to assume any duties, responsibilities, or
obligations regarding the management, operations, or any of the business affairs
of the Company after the Closing Date.
6. Delivery of and Payment for the Shares. Delivery of and
payment for the Shares shall be made at the offices of Jeffer, Mangels, Butler &
Marmaro LLP, at 2121 Avenue of the Stars, 10th Floor, Los Angeles, California
90067 on the Closing Date as determined by PAI pursuant to Section 5(a)(iii)
hereof, or at such other place as the parties may agree.
Payment for the Shares (in an amount equal to the
aggregate amount payable for the Shares calculated at the purchase price set
forth in Paragraph 1, above) shall be made on the Closing Date to the Company or
its order in United States dollars in same day funds by wire transfer (or if
such transfer is impracticable, by cashier bank check) to a United States dollar
account of the Company (under the account name of Tech Electro Industries, Inc.
Certificates evidencing the Shares shall be in
definitive form and shall be registered in such names and in such denominations
as PAI shall request at least two business days prior to the Closing Date by
written notice to the Company. For the purpose of expediting the checking and
packaging of certificates for the Shares, the Company agrees to make such
certificates available for inspection at least 12 hours prior to the Closing
Date.
7. Expenses of Sale. The Company will pay all expenses
incident to the performance of its obligations hereunder, including but not
limited to the fees and expenses of its counsel and accountants. PAI will pay
all expenses incident to the performance of its obligations hereunder, including
but not limited to the fees and expenses of its counsel and accountants.
8. Conditions to PAI's Obligations. PAI's obligations
hereunder shall be subject to the accuracy of and compliance with, as of the
date hereof and on the Closing Date, the representations and warranties
contained in Section 2 hereof, the performance by the Company of its obligations
hereunder required to be performed on or before the Closing Date, and to the
following further conditions:
(a) PAI shall not have discovered and disclosed to
the Company on or prior to the Closing Date that the Memorandum or any amendment
or supplement thereto contains an untrue statement of a fact which, in the
opinion of PAI, is material or omits to state a fact which, in the opinion of
PAI, is material and is required to be stated therein or is necessary to make
the statements therein in light of the circumstances under which they were made
not misleading.
13
<PAGE> 14
(b) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the
certificates representing the Shares and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for PAI, and the Company shall
have furnished to such counsel all documents and information that they may
reasonably request to enable then to pass upon such matters.
(c) All proceedings and legal matters incident to the
sale of the Shares shall be reasonably satisfactory in all material respects to
counsel for PAI, and each Purchaser shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters.
(d) There shall have not occurred any event or
occurrence constituting a Material Adverse Effect in the financial condition,
prospects, assets or operations of the Company, taken as a whole, since November
11, 1996.
(e) There shall be no litigation, action, or
proceeding pending or threatened regarding this Agreement or the transactions
contemplated hereby.
(f) PAI shall have completed, to its satisfaction, a
"due diligence" examination of the books, records and operations of the Company
and its subsidiaries.
(g) Carl A. Generes shall have furnished to PAI its
written opinion, as counsel to the Company addressed to PAI and dated the
Closing Date, substantially in the form of Exhibit C hereto.
(h) The Company shall have furnished to PAI a
certificate, dated the Closing Date, of the President and the chief financial
officer of the Company stating that:
(i) The representations, warranties and
agreements of the Company contained herein are true and correct on and as of the
Closing Date with the same effect as if made on the Closing Date; the Company
has complied in all material respects with all its agreements contained herein
to be performed on or prior to the Closing Date; and the conditions precedent to
the obligations of PAI set forth herein have been fulfilled; and
(ii) Such officers have reviewed, or have
had reviewed on their behalf, the Memorandum and (A) as of the date hereof, and
as of the Closing Date, the Memorandum did not, and will not, include any untrue
statement of a material fact and did not, and will not, omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (B) since the date thereof no event has occurred which
should have been set forth in a supplement or amendment to the Memorandum.
14
<PAGE> 15
(i) Subsequent to the date of the execution of this
Agreement, there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, the American Stock Exchange
or in the United States over-the-counter market shall have been suspended or
limited or minimum prices shall have been established on any such exchange or
such market by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by the United States Federal, New York State or Texas State authority
or authorities, (iii) the United States shall have become engaged in any war or
there shall have been a declaration of a national emergency by the United States
which makes it, in the reasonable judgment of PAI, after consultation with the
Company, impracticable or inadvisable to proceed with the offering and
distribution of the Shares in the manner contemplated herein, (iv) any material
adverse change in United States or international financial, political or
economic conditions which makes it, in the reasonable judgment of PAI, after
consultation with the Company, impracticable or inadvisable to proceed with the
offering and distribution of the Shares in the manner contemplated herein, or
(v) there shall have been any Material Adverse Effect, otherwise than as set
forth or contemplated in the Memorandum, so as to make it, in any such case in
the reasonable judgment of PAI, after consultation with the Company,
impracticable or inadvisable to proceed with the offering and distribution of
the Shares in the manner contemplated herein.
(j) The Common Stock of the Company shall have been
approved for quotation on the Nasdaq Small Cap Market.
(k) The Company shall have furnished to PAI such
further information, certificates and documents as PAI may reasonably request.
(l) The Company shall have entered into employment
agreements with Craig D. La Taste and Martin Frank in form and substance
reasonably acceptable to PAI.
All opinions, letters, evidence and verification
mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form and substance
satisfactory to counsel of PAI.
9. Conditions to the Company's Obligations. The Company's
obligations hereunder shall be subject to (i) the accuracy and compliance with,
as of the date hereof and on the Closing Date, the representations, warranties
and covenants of PAI contained in Section 3 hereof to the reasonable
satisfaction of the Company and its counsel and (ii) the receipt of a
Confirmation Letter from each Purchaser, fully executed Subscription Agreements
for all of the Shares and tender of the Purchase Price.
15
<PAGE> 16
10. Reorganization of Subsidiaries.
(a) Within thirty (30) days following the Closing,
the Company shall take all necessary steps to transfer to CCC all of the common
stock of VBT and UBC currently owned by the Company. Concurrently with such
transfer, CCC or its subsidiaries shall assume all liabilities and acquire all
assets of the Company, except for the stock of CCC and assets specified in
Exhibit D hereto, and except for a portion of the funds derived from the sale of
the Common Stock, and exercise of the Options and outstanding warrants, as
described below.
(b) The Company shall contribute to CCC as additional
capital $1,500,000 of the funds derived from the issuance of the Common Stock
promptly following the Closing. All such funds shall be used by CCC or its
subsidiaries solely to fund acquisitions, expansion and growth by such
companies; provided, that CCC shall not acquire, or cause any subsidiary or
affiliate to acquire, any business entity without the prior consent of the Board
of Directors of the Company.
(c) The Company shall, promptly after receipt
thereof, contribute to CCC as additional capital eighty-four percent (84%), or
an aggregate of approximately $1,800,000, of the funds realized by the exercise
of the Options. All such funds shall be used by CCC or its subsidiaries solely
to fund expansion and growth by such companies.
(d) The Company shall, promptly after receipt
thereof, contribute to CCC as additional capital eighty-four percent (84%) of
the funds realized by the exercise of the Company's outstanding warrants. All
such funds shall be used by CCC or its subsidiaries solely to fund expansion and
growth by such companies.
(e) If the Company is unable to meet its commitment
to pay dividends on the Series A or Series B Preferred Stock in the five years
following the Closing, CCC shall funds such dividends promptly upon TEI's
request.
(f) If the Company determines to acquire a business
entity, the Company may request that the funds for such acquisition be provided
by CCC; provided, that any such request must be approved by a unanimous vote of
the Company's Board of Directors.
11. Fairness Letters and Appraisals. The parties hereto agree
that, should the Board of Directors of the Company determine it to be in the
best interests of the Company to obtain an appraisal or fairness opinion
regarding an acquisition by the Company, of assets or securities of an affiliate
of the Company (as that term is defined in Rule 144(a)(1) under the Securities
Act, the appraisal or fairness opinion shall be conducted by a "Big Six"
accounting firm or by an internationally-recognized investment banking firm.
16
<PAGE> 17
12. Indemnification.
(a) The Company will indemnify and hold PAI harmless
against any losses, claims, damages or liabilities, joint or several, to which
PAI may become subject under the Securities Act, the Exchange Act, the various
state securities acts or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Memorandum, any other offering documentation authorized by the Company or
state "blue sky" application prepared on behalf of the Company or any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and will reimburse PAI for any legal or
other expenses reasonably incurred in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the Memorandum,
in any other offering documentation prepared by the Company or in any state
"blue sky" application prepared on behalf of the Company or such amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by PAI specifically for use in the preparation thereof.
The foregoing indemnity agreement shall extend upon the same
terms and conditions to, and shall inure to the benefit of, PAI's officers and
directors and its counsel and each person, if any, who "controls" PAI within the
meaning of the Securities Act or the Exchange Act.
(b) PAI will indemnify and hold harmless the Company
against any losses, claims, damages, or liabilities, joint or several, to which
it may become subject, under the Securities Act, the Exchange Act, the various
state securities acts or otherwise insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Memorandum, in any other offering documentation or state "blue sky"
application prepared on behalf of the Company or any amendment or supplement
thereto, or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Memorandum, in any other offering documentation or in any state "blue
sky" application prepared on behalf of the Company or such amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by PAI specifically for use in the preparation thereof. PAI also
will reimburse the Company for such legal or other expenses reasonably incurred
in connection with investigating or defending any such loss, claim, damage,
liability or action as to which PAI is required to indemnify the Company.
17
<PAGE> 18
The foregoing indemnity agreement shall extend upon the same
terms and conditions to, and shall inure to the benefit of, the officers,
directors, employees, agents, accountants, counsel and affiliates of the Company
and each person, if any, who "controls" the Company within the meaning of the
Securities Act or the Exchange Act.
(c) Promptly after receipt by an indemnified person
of notice of the commencement of any action, such indemnified person shall, if a
claim in respect thereof is to be made against the indemnifying party under such
subparagraph, notify the indemnifying party in writing of the commencement
thereof; but the omission to so notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subparagraph. In case any such action shall be brought against such
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel selected
by the indemnifying party but satisfactory to such indemnified party, and after
the indemnified party shall have received notice from the agreed upon counsel
that the defense under such paragraph has been assumed, the indemnifying party
shall not be responsible for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof, other than
reasonable costs of investigation.
13. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants and agreements of the Company and PAI
herein or in certificates delivered pursuant hereto, and the indemnity agreement
contained in Section 11 hereof, shall survive the delivery and execution of this
Agreement and the Closing Date and shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of PAI or any
controlling person or any controlling person thereof, the Company, or any of its
officers, directors, partners, or any controlling persons. The indemnification
provisions of Section 11 hereof are in addition to any and all remedies or
rights any of the parties hereto may have, including the right to sue and
recover damages for any breach of any representation, warranty or covenant made
or given by one or more parties to any other party.
14. Notices. All notices or communications hereunder, except
as herein otherwise specifically provided, shall be in writing and if sent to
PAI or the Company shall be mailed, delivered or telegraphed and confirmed to
PAI or the Company at its address set forth above for PAI and for the Company at
4300 Wiley Post Road, Dallas, Texas 75244, attention: Craig P. La Taste. PAI or
the Company may change its address for receiving notices by giving written
notice to the other parties.
15. Parties. This Agreement shall inure to the benefit of and
be binding upon PAI and the Company, and each of their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any person or corporation, other than the parties hereto
and their respective successors and assigns and the controlling persons,
officers and directors and counsel referred to in this Agreement, any legal
18
<PAGE> 19
or equitable right, remedy or claim under or in respect to this Agreement or any
provision herein contained.
16. Severability. Every provision in this Agreement is
intended to be severable. If any term or provision hereof is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity of the remainder hereof.
17. Captions. The captions or headings in this Agreement are
inserted for convenience and identification only and are in no way intended to
describe, interpret, define, or limit the scope, extent, or intent of this
Agreement or any provisions hereof.
18. Applicable Law. This Agreement shall be governed by and
construed under Texas law.
19. Prior Agreements. This Agreement supersedes all prior
agreements oral or written, covering the same subject matter.
19
<PAGE> 20
If the foregoing correctly sets forth our understanding,
please so indicate in the space provided below for that purpose whereupon this
letter shall constitute a binding agreement between us.
Very truly yours,
TECH ELECTRO INDUSTRIES, INC., a Texas
corporation
By /s/ Craig D. La Taste
---------------------------------------
Its: President
ACCEPTED AND AGREED TO
this 17th day of December, 1996
PLACEMENT & ACCEPTANCE, INC.
a British Virgin Islands corporation
By /s/ Tan Kim Wah
---------------------------------
Its Managing Director
ACCEPTED AND AGREED TO
this 28th day of January, 1997,
as to Paragraph 10 only.
COMPUTER COMPONENTS
CORPORATION
By /s/ Craig D. La Taste
---------------------------------
Its: President
20
<PAGE> 1
EXHIBIT C
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
February 10, 1997
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter
the "Agreement") has been executed by the undersigned in connection with the
sale of such number of shares of Common Stock, $0.01 par value per share
("Common Stock") and options ("Options") to purchase Common Stock of Tech
Electro Industries, Inc. (the "Seller" or the "Company") (NASDAQ symbol:
"TELE"), a corporation organized under the laws of the State of Texas, to the
Buyer whose name and address are set forth on the signature page hereof
(hereinafter "Buyer"). As used in this Agreement, the term "Unit" means the
Common Stock and the Options, and, where the context requires, the Common Stock
underlying the Units. Seller and Buyer (hereinafter collectively, the "parties")
each hereby represents, warrants and agrees as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE
(i) Buyer hereby subscribes for the number of shares of Common
Stock and Options at a subscription price of $1.70 U.S. per share of Common
Stock, with no additional consideration payable with respect to Options, payable
in United States Dollars, shown below its signature on page 7 hereof.
(ii) Buyer shall pay the purchase price by delivering same day
funds in United States Dollars to an agent or as otherwise agreed between the
parties, to be delivered to the order of Seller upon delivery of the Common
Stock and Options.
(iii) This Agreement has been executed in connection with an
offering by Seller of its Common Stock and Options pursuant to Regulation S (the
"Offering"). Buyer will be notified of the date of the completion of the
Offering (the "Closing Date").
2. BUYER'S REPRESENTATIONS
Buyer represents and warrants to Seller as follows:
(i) Buyer is not a "U.S. person" as defined in Rule 902 of
Regulation S promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), was not organized under the laws of any U.S. jurisdiction,
and was not formed for the purpose of investing in securities not registered
under the Securities Act;
(ii) At the time the buy order for this transaction was
originated, Buyer was outside the United States;
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<PAGE> 2
(iii) No offer to purchase the Units was made in the United
States nor were any "directed selling efforts," as defined in Rule 902 of
Regulation S, made to it in the United States;
(iv) Buyer is purchasing the Units for its own account for
investment purposes and not with a view towards distribution. Buyer does not
have a contract, understanding, or arrangement with any person to sell,
transfer, or grant a participation to such person or a third party with respect
to the Units;
(v) All subsequent offers and sales of the Units and the
underlying Common Stock will be made outside the United States in compliance
with Rule 903 or Rule 904 of Regulation S, pursuant to registration of the Units
under the Securities Act, or pursuant to an exemption from such registration.
Buyer understands the conditions of the exemption from registration afforded by
Section 4(1) of the Securities Act and acknowledges that there can be no
assurance that it will be able to rely on such exemption. In any case, Buyer
will not resell the Units to or for the account or benefit of U.S. Persons or
within the United States until after the end of the forty (40) day period
commencing on the date of completion of the Offering (as defined above) (the
"Restricted Period"). During the Restricted Period Buyer will not within the
United States with regard to Seller's Common Stock engage in any short-selling
or other hedging transactions, such as equity swaps or other types of derivative
transactions, designed to transfer the burdens of ownership of the Shares back
to the United States market.
(vi) Buyer understands that the Units are being offered and
sold to it in reliance on specific provisions of federal and state securities
laws and that Seller is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements and understandings of
Buyer set forth herein in order to determine the applicability of such
provisions. Accordingly, Buyer agrees to notify Seller of any events which would
cause the representations and warranties of Buyer to be untrue or breached at
any time after the execution of this Agreement by Buyer and prior to the
expiration of the Restricted Period;
(vii) This Agreement has been duly authorized, validly
executed, and delivered on behalf of Buyer and is a valid and binding agreement
enforceable in accordance with its terms, subject to general principles of
equity and to bankruptcy or other laws affecting the enforcement of creditors'
rights generally;
(viii) Any offering documents received by Buyer include
statements to the effect that the Units have not been registered under the
Securities Act and may not be offered or sold in the United States or to U.S.
persons during the Restricted Period, unless the Units are registered or unless
such resale is exempt from or not subject to the registration requirements of
the Securities Act;
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<PAGE> 3
(ix) Buyer, in making the decision to purchase the Units
subscribed for, has relied upon solely upon the Offering Circular and the
Exchange Act documents attached thereto and relating to the Offering prepared by
Seller;
(x) In the event of resale of the Units during the Restricted
Period, Buyer shall provide a written confirmation or other written notice to
any distributor, dealer, or person receiving a selling concession, fee, or other
remuneration in respect of the Units stating that such purchaser is subject to
the same restrictions on offers and sales that apply to Buyer, and shall require
that any such purchaser shall provide such written confirmation or other notice
upon resale during the Restricted Period;
(xi) Buyer has not taken any action that would cause Seller to
be subject to any claim for commission or other fee or remuneration by any
broker, finder, or other person and Buyer hereby indemnifies Seller against any
such claim caused by the actions of Buyer or any of its employees or agents;
(xii) Buyer acknowledges that he is familiar with Regulation S
and represents and warrants that he will comply with the terms thereof.
3. SELLER'S REPRESENTATIONS
Seller represents and warrants to Buyer as follows:
(i) Seller is a "domestic issuer" and a "reporting issuer", as
such terms are defined in Rule 902 of Regulation S. Seller has registered its
common stock pursuant to Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), is in full compliance with all reporting
requirements of Section 13(a) of the Exchange Act for at least the last 12
months, and Seller's Common Stock trades on the Nasdaq Small Cap Market;
(ii) Seller has furnished Buyer with copies of Seller's most
recent annual report on Form 10-K and the most recent quarterly report on Form
10-Q (the "SEC Filings");
(iii) Since the date of the Company's SEC Filings, except as
otherwise stated in the Offering Circular, there has been no material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company, whether or not arising in the
ordinary course of business.
(iv) Seller has not offered the Units to any person in the
United States, any identifiable group of U.S. citizens abroad, nor to any U.S.
Person;
(v) At the time the buy order was originated, Seller and/or
agents reasonably believed Buyer was outside the United States and was not a
U.S. Person;
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<PAGE> 4
(vi) Seller and/or its agents believe that the sale of the
Units has not been prearranged with a buyer in the United States or for the
account or benefit of such a buyer;
(vii) Seller has not conducted any "directed selling efforts"
with respect to the Units nor has Seller conducted any general solicitation (as
that term is used in Regulation D under the Securities Act) with respect to the
Units;
(viii) The Units when issued and delivered will be duly and
validly authorized and issued, fully-paid and nonassessable and will not subject
the holders thereof to personal liability by reason of being such holders. There
are no preemptive rights of any shareholder of Seller with respect to the Units;
(ix) This Agreement has been duly authorized and validly
executed and delivered on behalf of Seller and is a valid and binding agreement
in accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally;
(x) The execution and delivery of this Agreement and the
consummation of the issuance of the Units and the transactions contemplated by
this Agreement do not and will not conflict with or result in a breach by Seller
of any of the terms or provisions of, or constitute a default under, the
certificate of incorporation (or charter) or bylaws of the Seller, or any
indenture, mortgage, deed of trust or other material agreement or instrument to
which Seller is a party or by which it or any of its properties or assets are
bound, or any existing applicable decree, judgment order of any court, Federal
or State regulatory body, administrative agency or other governmental body
having jurisdiction over Seller or any of its properties or assets;
(xi) Seller is not aware of any authorization, approval or
consent of any governmental body which is legally required for the issuance and
sale of the Units as contemplated by the Agreement;
(xii) Seller will issue one or more share certificates
representing the Units without restrictive legend in the name of Buyer. Seller
further warrants that no instructions other than these instructions, and
instructions for a "stop transfer" until the end of the Restricted Period, have
been given to the transfer agent and also warrants that the Units and the Common
Stock underlying the Units shall otherwise be freely transferable on the books
and records of Seller. Seller will notify the transfer agent of the date of
completion of the Offering, a date not later than the Closing Date, and of the
date of expiration of the Restricted Period, a date not later than forty (40)
days from the Closing Date. Nothing in this section shall affect in any way
Buyer's obligations and agreement to comply with all applicable securities laws
upon resale of the Units and the underlying Common Stock, including the
restrictions provided for in section 2(v) hereof;
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<PAGE> 5
(xiii) Seller has taken and will take no action that will
affect in any way the running of the Restricted Period or the ability of Buyer
to resell the Units and the Common Stock underlying the Units, in accordance
with applicable securities laws and this Agreement;
(xiv) Seller will comply with all applicable securities laws
with respect to the sale of the Units, including but not limited to the filing
of all reports required to be filed in connection therewith with the Securities
and Exchange Commission or any stock exchange or the Nasdaq stock market or any
other regulatory authority.
4. COVENANTS
The Company hereby agrees that, upon demand of holders of the
Units or the underlying Common Stock, as a result of a regulatory development
including, but not limited to, an amendment of Regulation S, or any "no-action"
or written interpretive guidance from the Securities and Exchange Commission,
which call into question the ability of Buyer to resell the Units or the
underlying Common Stock without registration, the Company will file, and use its
reasonable best efforts to cause to become effective, a registration statement
on Form S-3 (or any other available form) under the Securities Act covering the
resale of the Common Stock issuable upon conversion of the Options. Any such
registration statement shall remain effective for up to twelve (12) months, or
until all of the shares of Common Stock are sold, whichever is earlier. The
Company shall provide the Buyer with such number of copies of the prospectus as
shall be reasonably requested to facilitate the sale of the Common Stock
issuable upon conversion of the Options. The Company shall bear all expenses
incurred in connection with any such registration, excluding discounts and
commissions and other expenses of the Buyer (including, but not limited to
Buyer's counsel's fees).
5. CLOSING
Share certificates for the Common Stock and Options shall be
delivered to Buyer and the funds therefor shall be delivered to Seller on
February 10, 1997 or at such other time as the parties hereto may mutually
agree.
6. CONDITIONS TO CLOSING
(i) Buyer understands that Seller's obligations to sell the
Units is conditioned upon delivery into escrow or otherwise as agreed between
Buyer and Seller by Buyer of the aggregate purchase price set forth in Section 1
hereof.
(ii) Seller understands that Buyer's obligation to purchase
the Units is conditioned upon delivery of certificate(s) representing shares of
Units without restrictive legend as described herein and provision of an opinion
of counsel confirming that Seller is a "domestic issuer" and a "reporting
issuer," and that Seller has registered its Common Stock pursuant to Section
12(g) of the Exchange Act, as set forth in Section 3(i) above, as well as the
matters set out in Section 3(vii), (viii), (ix), (x) and (xi) above.
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<PAGE> 6
7. GOVERNING LAW; INTERPRETATION
This Agreement shall be governed by an interpreted in
accordance with the laws of the State of Texas. Facsimile signatures of this
Agreement shall be binding on the parties hereto. All terms used herein that are
defined in Regulation S under the Securities Act shall have the meanings set
forth therein.
IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above.
Tech Electro Industries, Inc.
By /s/ Craig D. La Taste
----------------------------------------
Craig D. La Taste, President
Name of Purchaser (Individual or Institution):
PLACEMENT & ACCEPTANCE, INC.
Name of Individual representing Purchaser (if an Institution):
KIM WAH TAN
Title of Individual representing Purchaser (if an Institution):
Managing Director
Signature by: Individual Purchaser or Individual representing Purchaser
/s/ Kim Wah Tan
- ----------------------------------------
Kim Wah Tan
Address:
Telephone:____________________
Telecopier:___________________
NUMBER OF UNITS 75,000 shares; 100,000 options
AGGREGATE PURCHASE PRICE: $127,500
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<PAGE> 1
EXHIBIT D
THIS OPTION AND THE SHARES OF COMMON STOCK UNDERLYING THIS OPTION (collectively,
the "Securities") HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (the "Act") AND MAY NOT BE EXERCISED IN THE UNITED
STATES OR BY A "U.S. PERSON" (as defined in Section 9 hereof) UNLESS THE
SECURITIES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION
UNDER THE ACT IS APPLICABLE OR AS OTHERWISE PROVIDED IN REGULATION S PROMULGATED
UNDER SUCH ACT. IN ADDITION, FOR FORTY DAYS AFTER THE CLOSE OF THE SALES BY THE
COMPANY OF ANY UNITS OF WHICH THIS OPTION IS A PART (the "Restricted Period"),
NO OFFERS OR SALES OR TRANSFERS (INCLUDING INTERESTS THEREIN) MAY BE MADE OF ANY
OF THE SECURITIES IN THE UNITED STATES OR TO A U.S. PERSON OR FOR THE ACCOUNT
AND BENEFIT OF A U.S. PERSON, EXCEPT AS PERMITTED BY REGULATION S.
OPTION
TO PURCHASE COMMON STOCK IN
TECH ELECTRO INDUSTRIES, INC.
Exercisable Commencing
February 10, 1997
Void After
March 10, 1998
Holder: Placement & Acceptance, Inc.
Number of Options: One Hundred Thousand (100,000)
---------------
THIS CERTIFIES THAT Holder is the owner of the number of Options set
forth above of Tech Electro Industries, Inc., a Texas corporation (hereinafter
called the "Company"). Upon surrender of each Option, the registered holder
shall be entitled to purchase for $2.15 one share of Common Stock of the Company
("Common Stock"). Options may be exercised only in multiples of 250,000. This
Option is issued in connection with the acquisition of Units consisting of the
Company's Common Stock and Options to acquire Common Stock as set forth in that
certain Subscription Agreement dated as of January 28, 1997 (the "Agreement").
For purposes of this Option, the term "Affiliated Person" means Holder
or any entity controlled by or under common control with Holder. For purposes
hereof, a person shall be deemed to have "control" of an entity if such person
is the owner of a majority voting interest in such entity.
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<PAGE> 2
1. Right to Exercise Options. The rights represented by this Option may
be exercised at any time commencing on January 28, 1997 (the "Exercise Date"),
and terminating at 2:00 p.m., Los Angeles time, thirteen (13) months after the
Exercise Date.
2. Exercise of Options. Subject to the provisions of this Option, the
rights represented by this Option may be exercised by (i) surrender of this
Option (with the purchase form at the end hereof properly executed) at the
principal executive office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to Holder at the address of
Holder appearing on the books of the Company); and (ii) payment to the Company
of the exercise price for the number of shares specified in the above-mentioned
purchase form together with applicable stock transfer taxes, if any. This Option
may be exercised only in multiples of 250,000. This Option shall be deemed to
have been exercised immediately prior to the close of business on the date the
Option is surrendered and payment is made in accordance with the foregoing
provisions of this Section 2, and the person or persons in whose name or names
the certificates for shares of Common Stock shall be issuable upon such exercise
shall become the holder or holders of record of such Common Stock at that time
and date. The certificates for the Common Stock so purchased shall be delivered
to Holder within a reasonable time, not exceeding thirty (30) business days,
after the rights represented by this Option shall have been so exercised, and,
during the Restricted Period (as defined in the legend first appearing on the
cover page hereof), shall bear a legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SAID SHARES MAY NOT BE
SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND UNLESS (A) THEY HAVE BEEN REGISTERED UNDER SAID ACT, OR (B) THE
COMPANY HAS RECEIVED WRITTEN REPRESENTATIONS FROM THE HOLDER AND THE
PROPOSED TRANSFEREE, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE
COMPANY, ESTABLISHING THAT REGISTRATION OF THE SECURITIES EVIDENCED BY
THIS CERTIFICATE IS NOT NECESSARY IN CONNECTION WITH SUCH SALE OR
TRANSFER, OR (C) THE TRANSFER AGENT (OR THE COMPANY IF THEN ACTING AS
ITS TRANSFER AGENT) IS PRESENTED WITH EITHER A WRITTEN OPINION
SATISFACTORY TO COUNSEL FOR THE COMPANY OR A "NO-ACTION' OR
INTERPRETIVE LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE CIRCUMSTANCES
OF SUCH SALE OR TRANSFER."
Notwithstanding the above, except as otherwise provided in Regulation S
adopted under the United States Securities Act of 1933, as amended (the "Act"),
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<PAGE> 3
(a) This Option may not be exercised by a U.S. Person (as
defined in Section 9 hereof);
(b) This Option may not be exercised within the United States
and the shares of Common Stock issued upon exercise of this Option may not be
delivered upon such exercise within the United States;
(c) The person exercising this Option must either (i) certify
to the Company that he is not a U.S. Person and is not exercising this Option on
behalf of a U.S. Person or (ii) deliver an opinion of counsel that this Option
and the underlying Common Stock have been registered under the Act or are exempt
from registration under the Act.
3. Assignment. Subject to Section 2 hereof, this Option may be
transferred, sold, assigned or hypothecated, only (a) pursuant to a valid and
effective registration statement, or (b) if the Company has received written
representations from the Holder and the proposed transferee, in form and
substance reasonably acceptable to the Company, establishing that registration
of the Option or the Common Stock underlying the Option is not necessary in
connection with such transfer, sale, assignment or hypothecation, or (c) if the
Company has received from counsel to the Company (or from counsel to the Holder
that is reasonably acceptable to the Company) a written opinion, in a form
reasonably acceptable to the Company, to the effect that registration of the
Option or the Common Stock underlying the Option is not necessary in connection
with such transfer, sale, assignment or hypothecation. Any such assignment shall
be effected by Holder by (i) executing the form of assignment at the end hereof;
(ii) surrendering the Option for cancellation at the office or agency of the
Company referred to in Section 2 hereof, accompanied by the certification or
opinion of counsel to the Company referred to above; and (iii) delivery to the
Company of a statement by the transferee Holder (in a form acceptable to the
Company and its counsel) that such Option is being acquired by such Holder in
conformance with the Act and Regulation S, and is being acquired for investment
and not with a view to its distribution or resale; whereupon the Company shall
issue, in the name or names specified by Holder (including Holder) new Options
representing in the aggregate rights to purchase the same number of Shares as
are purchasable under the Option surrendered. The term "Holder" shall be deemed
to include any person to whom this Option is transferred in accordance with the
terms herein.
4. Common Stock. The Company covenants and agrees that all shares of
Common Stock which may be issued upon exercise hereof will, upon issuance, be
duly and validly issued, fully paid and non-assessable and no personal liability
will attach to the holder thereof. The Company further covenants and agrees
that, during the periods within which this Option may be exercised, the Company
will at all times have authorized and reserved a sufficient number of shares of
Common Stock for issuance upon exercise of this Option and all other Options.
5. No Stockholder Rights. This Option shall not entitle Holder to any
voting rights or other rights as a stockholder of the Company.
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<PAGE> 4
6. Adjustment of Rights. In the event that the outstanding shares of
Common Stock of the Company are at any time increased or decreased or changed
into or exchanged for a different number or kind of share or other security of
the Company or of another corporation through reorganization, merger,
consolidation, liquidation, recapitalization, stock split, combination of shares
or stock dividends payable with respect to such Common Stock, appropriate
adjustments in the number, kind and price of such securities then subject to
this Option shall be made effective as of the date of such occurrence so that
the position of Holder upon exercise will be the same as it would have been had
he owned immediately prior to the occurrence of such events the Common Stock
subject to this Option. Such adjustment shall be made successively whenever any
event listed above shall occur and the Company will notify Holder of the Option
of each such adjustment. Any fraction of a share resulting from any adjustment
shall be eliminated and the price per share of the remaining shares subject to
this Option adjusted accordingly.
7. Notices. Unless applicable law requires a different method of giving
notice, any and all notices, demands or other communications required or desired
to be given hereunder by any party shall be in writing. Assuming that the
contents of a notice meet the requirements of the specific Section of this
Option which mandates the giving of that notice, a notice shall be validly given
or made to another party if served either personally or if transmitted by
telegraph, telecopy or other electronic written transmission device or if sent
by overnight courier service, and if addressed to the applicable party as set
forth below. If such notice, demand or other communication is served personally,
service shall be conclusively deemed made at the time of such personal service.
If such notice, demand or other communication is given by overnight courier, or
electronic transmission, service shall be conclusively made at the time of
confirmation of delivery. The addresses for Holder and the Company are as
follows:
If to Holder:
Placement & Acceptance, Inc.
Wisma Stephens #12-09
Jalan Chulan 50200
Kuala Lumpur, Malaysia
If to the Company:
Tech Electro Industries, Inc.
4300 Wiley Post Road
Dallas, Texas 75244-2131
Attention: Chief Financial Officer
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<PAGE> 5
Any party hereto may change its or his address for the purpose of receiving
notices, demands and other communications as herein provided, by a written
notice given in the aforesaid manner to the other parties hereto.
8. Governing Law. This Option shall be governed by and construed in
accordance with the internal laws of the State of Texas.
9. Covenants During the Restricted Period.
a. The Holder of this Option agrees that during the Restricted
Period (as defined on the legend first appearing on the cover page hereof), upon
any offer, sale or transfer of the Common Stock (or any interest therein), that
the Holder, or any successor, or any Professional (as defined in Section 9(c)
hereof) (except for sales of any Common Stock registered under the Act or
otherwise exempt from such registration), (A) will not sell to a U.S. Person or
an account for the benefit of a U.S. Person or any one believed to be a U.S.
Person, (B) will not engage in any efforts to sell the Common Stock in the
United States, (C) will, at the time the buy order or transfer is originated,
believe the buyer or transferee is outside the United States, and (D) will send
to a "Professional" acting as agent or principal, a confirmation or other notice
stating that the Professional is subject to the same restrictions on transfer to
U.S. Persons or for the account of U.S. Persons during the Restrictive Period as
provided for herein. The Company will not honor or register, and will not be
obligated to honor or register, any transfer or exercise in violation of any of
the provisions herein.
b. For purposes hereof, in general under Regulation S, a "U.S.
Person" means any natural person, resident of the United States; any partnership
or corporation organized or incorporated under the laws of the United States;
any estate of which any executor or administrator is a U.S. Person; any trust of
which any trustee is a U.S. Person; any agency or branch of a foreign entity
located in the United States; any nondiscretionary account or similar account,
other than estate or trust, held by a dealer or other fiduciary for the benefit
or account of the U.S. Person; any discretionary account or similar account,
other than estate or trust, held by dealer or other fiduciary organized
incorporated or, (if an individual) resident of the United States; and any
partnership or corporation if organized or incorporated under the laws of any
foreign jurisdiction and formed by a U.S. Person principally for the purpose of
investing in securities and not registered under the Act unless it is organized
and incorporated and owned by "accredited investors," as defined under Rule
501(a) under the Act, who are not natural persons, estates or trust. "U.S.
Person" is further defined in Rule 9.02(o) under the Act.
c. A "Professional" is a "distributor" as defined in Rule
9.02(c) of Regulation S under the Act (generally any underwriter, or other
person, who participates, pursuant to a contractual arrangement, in the
distribution of the Securities); a dealer as defined in Section 2(12) of the
U.S. Securities Exchange Act of 1934, as amended (encompassing those who engage
in the business of trading or dealing in securities as agent, broker or
principal); or a person receiving a selling concession, fee or other
remuneration in respect of the Securities sold.
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<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Option to be signed by
its duly authorized officers, and to be dated as of the date set forth above.
TECH ELECTRO INDUSTRIES, INC.
By:______________________________
Name: Craig D. La Taste
Title: President
ACKNOWLEDGED, AGREED AND ACCEPTED BY HOLDER:
PLACEMENT & ACCEPTANCE, INC.
By:__________________________________
Name: Kim Wah Tan
Title:_______________________________
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<PAGE> 7
PURCHASE FORM
(To be signed only upon exercise of Option)
The undersigned, the holder of the foregoing Option hereby
irrevocably elects to exercise the purchase rights represented by such Option to
exercise ___________ Options for, and to the purchase thereunder, __________
shares of Common Stock and herewith makes payment of $____________ thereof, and
requests that the certificates for shares of Common Stock be issued in the
name(s) of, and delivered to _______________ whose address(es) is (are)
_________________________.
_______ The undersigned hereby certifies to Tech Electro Industries, Inc. that
Please he is not a U.S. Person and is not exercising this Option on behalf of
Initial a U.S. Person as defined in Regulation S promulgated under the
if True U.S. Securities Act of 1933 and this exercise is not taking place
within the United States.
---------------
Dated:____________, ____
------------------------------
------------------------------
Address
<PAGE> 8
TRANSFER FORM
(To be signed only upon transfer of Option)
For value received, the undersigned hereby sells, assigns, and
transfers unto _______________ the right to purchase shares of Common Stock
represented by _________________________ Options, and appoints
_________________________ attorney to transfer such rights on the books of
_________________________, with full power of substitution in the premises.
_______ The undersigned hereby certifies to Tech Electro Industries, Inc. that
Please he is not a U.S. Person and is not transferring this Option to or on
Initial behalf of a U.S. Person as defined in Regulation S promulgated
if True under the U.S. Securities Act of 1933 and this transfer is not taking
place within the United States.
Dated:____________, ____
------------------------------
Holder
------------------------------
Address
In the presence of:
- -------------------------
