EXHIBIT 10.3
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES (AS DEFINED IN
REGULATION S OF THE 1933 ACT) OR TO, OR FOR THE ACCOUNT OF OR BENEFIT
OF, U.S. PERSONS (AS DEFINED IN REGULATION S OF THE 1933 ACT) EXCEPT
PURSUANT TO REGISTRATION UNDER OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT.
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of March
1, 1996 (the "Agreement"), is executed in reliance upon the exemption
from registration afforded by Regulation S ("Regulation S") as
promulgated by the Securities and Exchange Commission ("SEC"), under the
Securities Act of 1933, as amended. Capitalized terms used herein and
not defined shall have the meanings given to them in Regulation S.
This Agreement has been executed by the undersigned A.I.M. OVERSEAS
LTD. as "Purchaser" in connection with the private placement of Six
Hundred Thousand (600,000) shares of the Common Stock, par value $.01
("Common Stock"), of DDL ELECTRONICS, INC., a corporation organized
under the laws of the State of Delaware, with its principal executive
offices located at 2151 Anchor Court, Newbury Park, California 91320
(hereinafter referred to as the "SELLER" or "COMPANY"). Purchaser
hereby represents and warrants to, and agrees with SELLER:
1. Agreement to Subscribe; Purchase Price.
(a) Subscription. The undersigned Purchaser hereby subscribes
for and agrees to purchase Six Hundred Thousand (600,000) shares of the
SELLER's Common Stock (the "Securities") at a price of One U.S. Dollar
and Ninety-Five Cents per share ($1.95), for an aggregate price of One
Million, One Hundred and Seventy Thousand U.S. Dollars ($1,170,000).
(b) Form of Payment. Purchaser shall pay the total
consideration by delivering good funds by wire transfer in United States
Dollars on or before March 8, 1996 into the Company's account as
follows:
First Interstate Bank of Oregon (Portland, Oregon)
ABA Number: 123000123
Account Number: 103-0058106
Account Name: DDL Electronics, Inc.
(d) Closing. Subject to the satisfaction of the conditions set
forth in Sections 6 and 7 hereof, the closing of the transaction
contemplated by this Agreement shall occur on or before March 8, 1996,
or
such earlier date as is mutually agreed in writing by Purchaser and
SELLER.
2. Purchaser Representations; Access to Information.
(a) Offshore Transaction. In connection with the purchase and
sale of the Shares, Purchaser represents and warrants to, and covenants
and agrees with SELLER as follows:
(i) Purchaser is not a natural person and is not organized under
the laws of any jurisdiction within the United States, was not formed by
nor is a U. S. Person (as defined in Section 902(o) of Regulation S) for
the purpose of investing in Regulation S securities and is not otherwise
a U. S. Person. Purchaser is not, and on the closing date will not be
an affiliate of the SELLER;
(ii) Purchaser is outside of the United States as of the date of
the execution and delivery of this Agreement;
(iii) No offer to purchase the Shares of SELLER issuable pursuant
to this transaction (the "Shares") was made by Purchaser in the United
States;
(iv) Purchaser is purchasing the Securities for its own account
and Purchaser is qualified to purchase the Securities under the laws of
its jurisdiction of residence, and the offer and sale of the Securities
will not violate the securities or other laws of such jurisdiction;
(v) None of the Securities have been and will be offered or sold by
Purchaser to, or for the account or benefit of, a U. S. Person or within
the United States until after the end of the one-hundred (100) day
period commencing on the date of closing of the sale of the Securities
to Purchaser (the "Restricted Period"). Upon the completion of the
Restricted Period, Purchaser agrees to deliver a representation letter,
substantially in the form of Exhibit 1 attached hereto, in advance of
any sale of the Securities;
(vi) The transactions contemplated by this Agreement (a) have not
been and will not be pre-arranged by Purchaser with a purchaser located
in the United States or a purchaser which is a U. S. Person, and (b) are
not and will not be part of a plan or scheme by Purchaser, to evade the
registration provisions of the 1933 Act;
(vii) Purchaser understands that the Securities are not registered
under the 1933 Act and are being offered and sold to it in reliance on
specific exclusions from the registration requirements of Federal and
State securities laws, and that SELLER is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments
and understandings of Purchaser set forth herein in order to determine
the applicability ofsuch exclusions and the suitability of Purchaser to
acquire these Securities.
(viii) Purchaser shall take all reasonable steps to ensure its
compliance with Regulation S;
(ix) Purchaser has not conducted and shall not conduct any
"directed selling efforts" as that term is defined in Rule 902(b) of
Regulation S; nor has Purchaser conducted any sale of any of the
Securities in the United States or elsewhere;
(x) This Agreement has been duly authorized, validly executed and
delivered on behalf of Purchaser and is a valid and binding agreement in
accordance with its terms, subject to general principals of equity and
to bankruptcy or other laws affecting the enforcement of creditors'
rights generally;
(xi) The execution and delivery of this Agreement and the
consummation of the purchase of the Securities, and the transactions
contemplated by the Agreement do not and will not conflict or result in
a breach by the Purchaser of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or by-laws (or
similar constitutive documents) of the Purchaser, or any indenture,
mortgage, deed of trust, or other material agreement or instrument to
which Purchaser is a party or by which it or any of its properties or
assets are bound, or any existing applicable law, rule or regulation of
the United States or any State thereof or any applicable decrees,
judgment, or order of any Federal or State court, Federal or other
governmental body having jurisdiction over the Purchaser or any of its
properties or assets;
(xii) All invitations, offers and sales of or in respect of any of
the Securities, by Purchaser and by distribution by Purchaser of any
documents relating to any offer by it of any of the Securities will be
in compliance with applicable laws and regulations and will be made in
such a manner that no prospectus need be filed and no other filing need
be made by SELLER with any rgulatory authority or stock exchange in any
country or any political subdivision of any country;
(xiii) Purchaser will not make any offer or sale of the Securities
by any means which would not comply with the laws and regulation of the
territory in which such offer or sale takes place or to which such offer
or sale is subject or which would in connection with any such offer or
sale impose upon SELLER any obligation to satisfy any public filing or
registration requirement or provide or publish any information of any
kind whatsoever or otherwise undertake or become obligated to do any
act; and
(xiv) During the Restricted Period, neither the Purchaser nor any
of its affiliates has entered, has the intention of entering, or will
during the Restricted Period enter into any put option, short position
or other similar instrument or position with respect to any of the
Securities or securities of the same class as the Securities.
(b) No Government Recommendation or Approval. Purchaser
understands that no Federal or State or foreign government agency has
passed on or made any recommendation or endorsement of the Securities.
(c) Current Public Information. Purchaser acknowledges that it
and its advisors, if any, have had access to or have been furnished with
all materials relating to the business, finances and operations of
SELLER and all materials relating to the offer and sale of the
Securities which have been requested by Purchaser. Purchaser further
acknowledges that it and its advisors, if any, have received complete
and satisfactory answers to such inquiries.
(d) Purchaser's Sophistication. Purchaser acknowledges that
the purchase of the Securities involves a high degree of risk, including
the total loss of Purchaser's investment. Purchaser has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of purchasing the Securities.
(e) Tax Status. Purchaser is not a "10-percent Shareholder"
(as defined in Section 871(h)(3)(b) of the U.S. Internal Revenue Code)
of SELLER.
3. SELLER Representations.
(a) Reporting COMPANY Status. SELLER is a "Reporting Issuer"
as defined by Rule 902 of Regulation S. SELLER has registered its
Common Stock pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the Common Stock is listed
and trades on the New York Stock Exchange ("NYSE"). SELLER has filed
all material required to be filed pursuant to all reporting obligations
under either Section 13(a) or 15(d) of the Exchange Act for a period of
at least 12 months immediately preceding the offer and sale of the
Securities (or for such shorter period that SELLER has been required to
file such material).
(b) Current Public Information. SELLER has either furnished
Purchaser with copies of its most recent reports filed under the
Exchange Act referred to in Section 2(c) above, and other publicly
available documents, or Purchaser has had access thereto.
(c) Offshore Transaction. SELLER has not offered any of the
Securities to any person in the United States, any identifiable groups
of U.S. Citizens abroad, or to any U. S. Person, as such terms are used
in Regulation S.
(i) At the time the buy order was originated, SELLER and/or its
agents reasonably believe that the Purchaser was outside of the United
States and was not a U. S. Person, based on the representations of
Purchaser.
(ii) SELLER and/or its agents reasonably believe that the
transaction has not been pre-arranged with a buyer in the United States,
based on the representations of Purchaser.
(iii) No offer to buy or sell the Securities was or will be made
by SELLER to any person in the United States.
(iv) The sale of the Securities by SELLER pursuant to this
Agreement will be made in accordance with the provisions and
requirements of Regulation S provided that the representations and
warranties of Purchaser in Section 2(a) hereof are true and correct.
(v) The transactions contemplated by this Agreement (a) have not been
and will not be pre-arranged by SELLER with a purchaser located in the
United States or a purchaser which is a U. S. Person, and (b) are not
and will not be part of a plan or scheme by SELLER to evade the
registration provisions of the 1933 Act.
(d) No Directed Selling Efforts. In regard to this
transaction, SELLER has not conducted any "directed selling efforts" as
that term is defined in Rule 902 of Regulation S nor has SELLER
conducted any general solicitation relating to the offer and sale of any
of the Securities in the United States or elsewhere.
(e) Concerning the Securities. The issuance, sale and delivery
of the Shares have been duly authorized by all required corporate action
on the part of SELLER, and when issued, sold and delivered in accordance
with the terms hereof and thereof for the consideration expressed herein
and therein, will be duly and validly issued, fully paid and non-
assessable. There are no pre-emptive rights of any shareholder of
SELLER.
(f) Authority to Enter Agreement. This Agreement has been duly
authorized, validly executed and delivered on behalf of SELLER, and is a
valid and binding agreement in accordance with its terms, subject to
general principals of equity and to bankruptcy or other laws affecting
the enforcement of creditors' rights generally.
(g) Non-contravention. The execution and delivery of this
Agreement and the consummation of the issuance of the Securities, 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 articles of
incorporation or by-laws of 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 law, rule or regulation of the United States or
any State thereof or any applicable decree, judgment, or order of any
Federal or State court, Federal or State regulatory body, administrative
agency or other United States governmental body having jurisdiction over
SELLER or any of its properties or assets.
(h) Approvals. 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 Shares and the Common Stock issuable
upon conversion thereof to persons who are non-U.S. Persons, as
contemplated by this Agreement.
(i) Filings. The COMPANY undertakes and agrees to make all
necessary filings in connection with the sale of the Shares as required
by United States laws and regulations or any domestic securities
exchange or trading market.
(j) Absence of Certain Changes. Since December 31, 1995, there
has been no material adverse development in the assets, liabilities,
business, properties, operations, financial condition or results of
operations of the COMPANY, except as disclosed in the SEC filings, or
otherwise disclosed in the documents annexed hereto.
4. Exemption; Reliance on Representations. Purchaser understands
that the offer and sale of the Securities are not being registered under
the 1933 Act. SELLER and Purchaser are relying on the rules governing
offers and sales made outside the United States pursuant to Regulation
S.
5. Delivery Instructions. The Shares being purchased hereunder
shall be delivered to the Purchaser at such time and place as shall be
mutually agreed by SELLER and Purchaser.
6. Conditions to the COMPANY'S obligation to Sell. PURCHASER
understands that COMPANY'S obligation to sell the Shares is conditioned
upon:
(a) The receipt and acceptance by the COMPANY of this Agreement as
evidenced by execution of this Agreement by the President or any Vice
President of the COMPANY. The acceptance of funds by the COMPANY shall
be deemed to be constructive acceptance of this Agreement;
(b) Delivery to the Company by PURCHASER of good funds as payment
in full for the purchase of the Shares; and
(c) The accuracy on the Closing Date of the representations and
warranties of PURCHASER contained in this Agreement and the performance
by PURCHASER on or before the Closing Date of all covenants and
agreements of PURCHASER required to be performed on or before the
Closing Date.
(d) There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or
requiring any consent or approval which shall have not been obtained.
7. Conditions to PURCHASER'S Obligation to Purchase. The COMPANY
understands that the PURCHASER'S obligation to purchase the Shares is
conditioned upon:
(a) Acceptance by PURCHASER of an Agreement for the sale of
Shares, as indicated by execution of this Agreement;
(b) Delivery of Shares to PURCHASER as herein set forth;
(c) The accuracy on the Closing Date of the representations and
warranties of the COMPANY contained in this Agreement and the
performance by the COMPANY on or before the Closing Date of all
covenants and agreements of the COMPANY required to be performed on or
before the Closing Date; and
8. Offering Materials. All offering materials and documents used in
connection with offers and sales of the Securities prior to the
expiration of the Restricted Period referred to in Section 2(a)(v)
hereof shall include statements to the effect that the Securities have
not been registered under the 1933 Act or applicable state securities
laws, and that neither Purchaser, nor any direct or indirect purchaser
of the Securities from Purchaser, may directly or indirectly offer or
sell the Securities in the United States or to U. S. Persons (other than
distributors) unless the Securities are registered under the 1933 Act or
any applicable state securities laws, or any exemption from the
registration requirements of the 1933 Act or such state securities laws
is available. Such statements shall appear (1) on the cover of any
prospectus or offering circular used in connection with the offer or
sale of the Securities, (2) in the underwriting section of any
prospectus or offering circular used in connection with the offer or
sale of the Securities, and (3) in any advertisement made or issued by
SELLER, Purchaser, any other distributor, any of their respective
affiliates, or any person acting on behalf of any of the foregoing.
9. Notices. Any notice required or permitted thereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given upon personal delivery or three business days after
deposit in the United States Postal Service, by registered or certified
mail with postage and fees prepaid, addressed to each of the other
parties thereunto entitled at the following address, or at such other
addresses as a party may designate by ten days advance written notice to
each of the other parties hereto.
COMPANY:
DDL Electronics, Inc.
2151 Anchor Court
Newbury Park, California
Attn. : Gregory L. Horton
President and Chief Executive Officer
PURCHASER:
A.I.M. Overseas Ltd.
c/o LIS s.a.
31, bd. Prince Felix
L-1513 Luxembourg
Attn: Sylvie Allen
10. No Shareholder Approval. SELLER hereby represents and warrants
that no shareholder approval is required for this transaction.
11. Miscellaneous.
(a) Except as specifically referenced herein, this Agreement
constitutes the entire contract between the parties, and neither party
shall be liable or bound to the other in any manner by any warranties,
representations or covenants except as specifically set forth herein.
The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
hereto. Nothing in this Agreement, express or implied, is intended to
confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly
provided herein.
(b) Purchaser is an independent contractor, and is not the agent
of SELLER. Purchaser is not authorized to bind SELLER, or to make any
representations or warranties on behalf of SELLER.
(c) SELLER makes no representations or warranty with respect to
SELLER, its finances, assets, business prospects or otherwise.
Purchaser will advise each purchaser, if any, and potential purchaser of
the Securities, of the foregoing sentence, and that such purchaser is
relying on its own investigation with respect to all such matters, and
that such purchaser will be given access to any and all documents and
SELLER personnel as it may reasonably request for such investigation.
(d) All representations and warranties contained in this Agreement
by SELLER and Purchaser shall survive the closing of the transactions
contemplated by this Agreement.
(e) This Agreement shall be construed in accordance with the
internal laws of the State of California, and shall be binding upon the
successors and assigns of each party hereto. This Agreement may be
executed in counterparts, and the facsimile transmission of an executed
counterpart to this Agreement shall be effective as an original.
Wherever used, the singular number shall include the plural, and the
plural the singular, and the use of any gender shall be applicable to
all genders.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
taken together shall constitute one and the same document.
IN WITNESS HEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
Official Signatory of SELLER:
DDL ELECTRONICS, INC.
By: /s/ Gregory L. Horton
----------------------
Gregory L. Horton
Title: President
Official Signatory of Purchaser:
A.I.M. OVERSEAS LTD.
By: /s/ Sylvie Allen
----------------
Title: Attorney at Fact
Address of Purchaser:
C/o LIS s.a.
31, bd. Prince Felix
L-1513 Luxembourg
Attn: Sylvie Allen
Telephone: 352 43 9590
Fax: 352 43 4035
Exhibit 1
PURCHASER REPRESENTATION LETTER
Dear Sirs:
The undersigned, A.I.M. Overseas Ltd., has purchased on March 8,
1996, Six Hundred Thousand Shares of DDL ELECTRONICS, INC. ( the
"COMPANY") in the amount of $1,700,000, (the "Shares"). In connection
with such purchase, the undersigned, has executed and delivered a
subscription agreement ("Subscription Agreement") of your design. As
the one-hundred day (100) transaction period has expired, the
undersigned hereby requests that the Shares be transferred into "Street
Name" of Morgan Stanley Bank Luxembourg Acct. A.I.M.
The undersigned represents and warrants and follows:
1. The offer to purchase the Shares was made to it outside of the
United States and the undersigned was, at the time the Subscription
Agreement was executed and delivered, and is now, outside the United
States;
2. It is not a U. S. Person (as such term is defined in Section
902(a) of Regulation S. promulgated under the United States Securities
Act of 1933 (the "Securities Act"); and it has purchased the Shares for
its own account and not for the account or benefit of any U. S. Person;
3. All offers and sales by the undersigned of the Shares shall be
made pursuant to an effective registration statement under the
Securities Act or pursuant to and exemption from, or in a transaction
not subject to the registration requirements of, the Securities Act;
4. It is familiar with and understands the terms, conditions and
requirements contained in Regulation S and definitions of U.S. Persons
contained in Regulation S;
5. The undersigned has not engaged in any "directed selling efforts"
(as such term is defined in Regulation S) with respect to the Shares or
the Common Stock that is issuable upon conversion;
6. The purpose for this request is to facilitate the management of
the undersigned's investment accounts.
7. The undersigned has not entered into any short sales with respect
to the Common Stock of SELLER that during the Restricted Period,
Dated this 7th day of the month of March, 1996.
By:
/s/ Sylvie Allen Luxembourg
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Official Signature of Purchaser Title or Country of Execution