SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 12(g) and Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 18, 1997
TECH ELECTRO INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Texas 0-27210 75-2408297
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
4300 Wiley Post Road, Dallas, Texas 75244-2131
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Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 239-7151
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Item 2. Acquisition or Disposition of Assets
On December 19, 1997 Tech Electro Industries, Inc. (the "Company")
signed a purchase agreement to acquire 62.59% of US Computer Group, Inc. from
Telstar Holdings Limited. US Computer Group is a complete systems solution and
information technology partner headquartered in Farmingdale, NY with annual
revenues in excess of $25 million.
The purchase consideration for the controlling interest in US
Computer Group was $1 million. In addition, the Company granted a put to Telstar
under which Telstar can require the Company to purchase all remaining shares of
US Computer Group held by Telstar -- approximately 20% of the stock of US
Computer Group -- for $2 million. The Company obtained the funds for the
acquisition through a private placement of shares pursuant to Regulation S of
the Securities Act of 1933, as amended.
For further information, see the Press Release dated December 19,
1997 filed herewith as Exhibit 10.1.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
It is currently impracticable to provide financial statements of US
Computer Group, Inc. The Company's independent auditor is currently
completing its audit of the financial statements of US Computer
Group, Inc. and it is anticipated that the Company will file those
audited financial statements no later than 60 days following the
date by which this Form 8-K must be filed.
(b) Pro Formal Financial Information
It is currently impracticable to provide pro forma financial
statements of US Computer Group, Inc. The Company's independent
auditor is currently completing its audit of the financial
statements of US Computer Group, Inc. and it is anticipated that
the Company will file the pro forma financial statements no later
than 60 days following the date by which this Form 8-K must be
filed.
(c) Exhibits
10.1 Press Release, December 19, 1997
10.2 Sales Agent Agreement, dated October 17, 1997,
between Placement & Acceptance, Inc. and the
Company
10.3 Form of Subscription Agreement
10.4 Form of the Option
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Item 9. Recent Sales of Unregistered Securities
On October 17, 1997, the Company entered into a Sales Agent
Agreement for the sale of 1,000,000 shares of its Common Stock at a price of
$1.60 per share in reliance upon the transaction exemptions afforded by
Regulation S as promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended ("Regulation S"). In conjunction with the
sale of the Common Stock, the Company issued options to purchase 1,000,000
shares of Common Stock at an exercise price of $1.75 per share (the "Options")
(together with the sale of the Common Stock, the "Offering"). Each Option was
exercisable commencing December 12, 1997 and expires on December 11, 1998. The
sale was consummated on December 12, 1997.
Placement & Acceptance, Inc., a British Virgin Islands corporation,
acted as sales agent (the "Sales Agent") in the sale of the Common Stock and the
Options and is to receive as consideration $0.112, or 7% of the aggregate
purchase price, per share of Common Stock or Option it sells. Placement &
Acceptance, Inc. is a shareholder of the Company, and its Managing
Director, William Kim Wah Tan, is a Director and is President, Chief Executive
Officer and Chairman of the Board of the Company.
The sale of the Common Stock and the Options was completed offshore
and was exclusively to nonUnited States persons. Consequently, the Offering, by
virtue of Regulation S, is not subject to registration under the Securities Act
of 1933. Furthermore, each of the investors in the Offering has signed a
subscription agreement confirming its compliance with Rules 903 and 904 of
Regulation S (the "Subscription Agreement").
Attached hereto and incorporated herein by this reference are
copies of the Sales Agent Agreement between the Sales Agent and the Company
(Exhibit 10.2), a form of Subscription Agreement (Exhibit 10.3) and a form of
the Option (Exhibit 10.4).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TECH ELECTRO INDUSTRIES, INC.
Date: December 30, 1997 /s/ William Kim Wah Tan
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William Kim Wah Tan,
Chairman of the Board
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Exhibit Index
Exhibit
Number Description
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10.1 Press Release, December 19, 1997
10.2 Sales Agent Agreement, dated October 17, 1997, between
Placement & Acceptance, Inc. and the Company
10.3 Form of Subscription Agreement
10.4 Form of the Option
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Exhibit 10.1
FOR RELEASE 6:30 A.M., EST
December 19, 1997
Tech Electro Industries, Inc. Announces Acquisition of U.S. Computer Group, Inc.
Dallas, Texas. . .
Tech Electro Industries, Inc. (Nasdaq; TELE), a Dallas, Texas-based distributor
of electronic components, announced today that it has signed an agreement to
acquire a controlling interest in US Computer Group, Inc., a complete systems
solution and Information Technology partner headquartered in Farmingdale, NY,
with annual revenues in excess of $25 million.
According to Tech Electro Industries Executive Vice President Steven Scott, "We
are very excited about this pending acquisition. US Computer Group is a dynamic
organization which, over the course of its history, has gained national
recognition for its growth and market-responsive services. This acquisition
follows our strategy of increasing shareholder value through non-dilutive
acquisition."
US Computer Group was recently named to the inaugural Long Island Technology
Fast 50. The list, which includes Deloitte & Touche among its major sponsors,
recognizes the fastest growing technology companies on Long Island. Qualifying
companies were ranked by percentage of corporate growth over a five year period
from 1992 to 1996. Prior to this achievement, US Computer Group had earned the
distinction of placing on the INC. 500 list of the nation's fastest-growing
privately-held companies for five consecutive years, a feat accomplished by only
seven businesses nationwide as of 1996. Additionally, the Company was the only
business in 1996 to place on the annual ranking of the 25 fastest-growing
privately-held companies on Long Island for eight consecutive years. US Computer
Group President Steve Davies was a winner of the prestigious national title,
"Entrepreneur of the Year" in 1996.
US Computer Group serves businesses throughout the Mid-Atlantic region from its
Long Island headquarters in Farmingdale, New York and three fully-equipped and
staffed offices in New York City, NY; Carlstade, New Jersey and Fort Washington,
Pennsylvania. Its services include system maintenance for Digital, IBM Midrange,
Sun and leading brand PCs, new and used equipment sales, and network integration
and design services, and support services such as disaster recovery and business
relocation. The Company recorded annual sales of $25 MM in fiscal 1996, which
ended February 28, 1997.
For additional information, contact: Steven Scott, (212) 805-1551.
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Exhibit 10.2
Agreement for Private Placement of
Common Stock and Options
TECH ELECTRO INDUSTRIES, INC.
Regulation S
Sales Agent Agreement
ACCREDITED INVESTORS ONLY
October 17, 1997
Placement & Acceptance, Inc.
c/o Wisma Stephens, #1209, 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 1,000,000 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 $1.60 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.
2. Representations and Warranties of the Company. The Company
represents and warrants that:
(a) 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.
(b) The offer, sale and delivery of the Shares in the manner
contemplated by this Agreement will comply with the terms and
conditions of Regulation S.
(c) 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).
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(d) 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. 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 direct and
indirect wholly-owned subsidiaries, and Universal Battery
Corporation ("UBC"), the Company's majority-owned subsidiary, the
Company has no subsidiaries 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, other than investments of excess cash.
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.
(e) 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 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.
(f) The financial statements of the Company (including the related
notes and supporting schedules) provided to PAI 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.
(g) King, Burns & Company, P.C., which has certified certain financial
statements of the Company, is an independent public accountant
within the meaning of the Securities Act.
(h) The Company maintains a system of internal accounting control
sufficient to provide reasonable assurance that (i) transactions
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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.
(i) Subsequent to the respective dates as of which information is given
in the Financial Statements and prior to the Closing Date, (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 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.
(j) 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.
(k) 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").
(l) 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 (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
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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.
(m) 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.
(n) 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 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.
(o) The Company has good and marketable title to all properties and
assets described in its financial statements as owned by it, free
and clear of all liens, charges, encumbrances or restrictions,
except as are not material to the business of the Company. The
Company has valid, subsisting and enforceable leases for the
properties used in its business, 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.
(p) 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.
(q) 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
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price of any security of the Company to facilitate the sale or
resale of the Shares.
(r) 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.
(s) The Company is not involved in any material labor dispute nor, to
the knowledge of the Company, is any such dispute threatened.
(t) 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. 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.
(u) 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 provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other
unlawful bribe, rebate, payoff, influence payment or kickback.
(v) There are no material contracts or other agreements to which the
Company is a party which have not been disclosed to PAI (including
being listed as an Exhibit to the Form 10-KSB for the year ended
December 31, 1996). 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.
(w) Except for this sale, 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 financial statements and other materials provided
to PAI.
(x) 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
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threatened relating to a tax deficiency which, if determined
adversely to the Company, might have) a Material Adverse Effect.
(y) 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. 1251 et seq.), Resource Conservation &
Recovery Act (42 U.S.C. 6901 et seq.), Safe Drinking Water Act
(21 U.S.C. 349, 42 U.S.C. 201, 300f), Toxic Substances
Control Act (15 U.S.C. 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. 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 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.
(z) 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 to PAI, 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.
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(aa) 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.
(bb) 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,
(cc) 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 herein.
(dd) 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;
(ee) 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;
(ff) 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.
(gg) The Company acknowledges that William Tan Kim-Wah, Chairman of the
Board, President and Chief Executive Officer of the Company, is
also affiliated with PAI, as a shareholder and as a Chairman and
managing officer.
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 will not
result in any breach of any of the terms or conditions of or
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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 herein and in 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 any other offering
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.
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(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) If, at any time prior to the Closing Date, any event shall occur as
a result of which this Agreement 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, the Company 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 as may be necessary so that the statements contained in
this Agreement as so amended or supplemented will not, in the light
of the circumstances existing at the time, be misleading.
(b) 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.
(c) 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
<PAGE>
the Shares without the prior approval of PAI except the Company
will promptly file a Form 8K reporting the sale of the Shares as
required by Form 8K 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, and any opinion or certificate in connection
herewith.
(d) 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.
(e) 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:
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.
(f) 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.
<PAGE>
(g) 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).
(h) 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
subscriptions to the Shares in accordance with the terms of 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 acceptable to the Company. 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 December 12, 1997 PAI will be
obligated to purchase such number of Shares as are necessary
to complete the offering of the Shares by December 12, 1997.
(ii) The exact number of Shares to be purchased by PAI and/or
the Purchasers shall be not less that one million
(1,000,000) 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., Los
Angeles time on December 12, 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.
<PAGE>
(iv) As compensation for your services pursuant to this
Agreement, PAI agrees that on each Closing Date you shall
receive from the cash portion of the purchase price paid for
Shares purchased at that Closing a cash fee equal to $0.112
per Share or seven percent (7%) of the aggregate purchase
price of the Shares sold by you, or any broker or dealer
selected by you, to purchasers. Such payment shall be made
from the proceeds of the first installment of the purchase
price of the Shares.
(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 this Agreement or any amendment or
supplement thereto contains an untrue statement of a fact which, in
<PAGE>
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.
(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) 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, this Agreement and (A) as of the date hereof, and as
of the Closing Date, this Agreement does 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 Agreement.
<PAGE>
(h) 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 herein, 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.
(i) The Common Stock of the Company shall have been approved for
quotation on the Nasdaq Small Cap Market.
(j) The Company shall have furnished to PAI such further information,
certificates and documents as PAI may reasonably request.
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.
10. 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
<PAGE>
alleged untrue statement of any material fact contained herein, 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 herein, 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 herein, 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 herein,
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.
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.
<PAGE>
(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 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.
<PAGE>
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.
Prior Agreements. This Agreement supersedes all prior agreements oral or
written, covering the same subject matter.
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 ________________________ ________________________
Its: Corporate Secretary Executive Vice President
ACCEPTED AND AGREED TO
this 17th day of October, 1997
PLACEMENT & ACCEPTANCE, INC.
a British Virgin Islands corporation
By __________________________
Its: Chairman/Managing Director
<PAGE>
Exhibit 10.3
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
October 17, 1997
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the "Agreement")
has been executed by the undersigned in connection with the sale of 333,000
shares of Common Stock, $0.01 par value per share ("Common Stocks") and 333,000
options ("Options") of Tech Electro Industries, Inc to purchase Common Stock.
(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 the "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 subscribe for the number of Common Stocks and
Options at a subscription price of $1.60 U.S. per share of
Common Stock, with no additional consideration payable with
respect to Options, payable in United States Dollars. Options
may be exercise only in multiple of 100,000 shares at $1.75
per share at any time commencing on December 12, 1997 (the
"Exercise Date"), and terminating at 2.00p.m. Los Angeles
time, twelve (12) months after the Exercise Date.
(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 Stocks 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;
<PAGE>
(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 Untied 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 (4)) 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's 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
<PAGE>
is exempt from or not subject to the registration
requirements of the Securities Act;
(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 a 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;
<PAGE>
(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;
(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 or 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
<PAGE>
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;
(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 or 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 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, underwriting fees,
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 within 7
days after closing 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
<PAGE>
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.
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 _________________________________________
Name of Purchaser (Individual or Institution):
____________________________________________
Name of Individual representing Purchaser (if an Institution):
____________________________________________
Title of Individual representing Purchaser (if an Institution);
____________________________________________
Signature by : Individual Purchaser of Individual representing Purchaser
____________________________________________
Address:
Telephone:
Telecopier:
NUMBER OF UNITS
AGGREGATE PURCHASE PRICE :
<PAGE>
Exhibit 10.4
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
December 12, 1997
Void After
December 11, 1998
Holder:
Number of Options:
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 $1.75 one share of Common Stock of the Company ("Common
Stock"). 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 October 17, 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.
1. Right to Exercise Options. The rights represented by this Option may be
exercised at any time commencing on December 12, 1997 (the "Exercise
Date"), and terminating at 2:00 p.m., Los Angeles time, twelve (12) 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
<PAGE>
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 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"),
(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
<PAGE>
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.
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
<PAGE>
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:
If to the Company:
Tech Electro Industries, Inc.
1946 Selby Avenue, #305, Los Angeles, California 90025.
Attention: Chief Financial Officer
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.
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
<PAGE>
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.
IN WITNESS WHEREOF, the Company has caused this Option to be signed by its
duly authorized officer, and to be dated as of the date set forth above.
TECH ELECTRO INDUSTRIES, INC.
By:______________________________
Name: William Kim Wah Tan
Title: President/Chief Executive Officer
ACKNOWLEDGED, AGREED AND ACCEPTED BY HOLDER:
By:_________________________________
Name:
Title:_______________________________
<PAGE>
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)
_________________________.
______
Please
Initial
if True
The undersigned hereby certifies to Tech Electro Industries, Inc. that he is not
a U.S. Person and is not exercising this Option on behalf of a U.S. Person as
defined in Regulation S promulgated under the U.S. Securities Act of 1933 and
this exercise is not taking place within the United States.
Dated:____________, ____
______________________________
______________________________
Address
<PAGE>
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.
______
Please
Initial
if True
The undersigned hereby certifies to Tech Electro Industries, Inc. that he is not
a U.S. Person and is not transferring this Option to or on behalf of a U.S.
Person as defined in Regulation S promulgated 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:
______________________________
